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1 ANNA UNIVERSITY CHENNAI

EMERGING TRENDS IN TECHNOLOGY MANAGEMENT

UNIT I

INTRODUCTIONIntroduction

In this knowledge management era with ever changing technology and emergingtechnologies it is mandatory to keep in tune with the change and changing policies. Be alertto leverage knowledge and know how world class organizations have succeeded. Thisunit provides insight into such issues.

Learning Objectives

To know about The principles of a Knowledge Leveraging Community Infrastructure Supporting

Technologies Why should you be a Learning Organisation ? How to create a Learning Organisation Facets of World Class Organisation How to build a world class organisation

1.1 SCIENCE AND TECHNOLOGY POLICY SYSTEMS

Science and technology have profoundly influenced the course of human civilization.Science has provided us remarkable insights into the world we live in. The scientificrevolutions of the 20th century have led to many technologies, which promise to heraldwholly new eras in many fields. As we stand today at the beginning of a new century, wehave to ensure fullest use of these developments for the well being of our people.

Science and technology have been an integral part of Indian civilization and cultureover the past several millennia. Few are aware that India was the fountainhead of importantfoundational scientific developments and approaches. These cover many great scientificdiscoveries and technological achievements in mathematics, astronomy, architecture,chemistry, metallurgy, medicine, natural philosophy and other areas. A great deal of thistraveled outwards from India. Equally, India also assimilated scientific ideas and techniquesfrom elsewhere, with open-mindedness and a rational attitude characteristic of a scientificethos. India’s traditions have been founded on the principles of universal harmony, respect

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for all creation and an integrated holistic approach. This background is likely to providevaluable insights for future scientific advances. During the century prior to Independence,there was an awakening of modern science in India through the efforts of a number ofoutstanding scientists. They were responsible for great scientific advances of the highestinternational caliber.

In the half century since Independence, India has been committed to the task ofpromoting the spread of science. The key role of technology as an important element ofnational development is also well recognised. The Scientific Policy Resolution of 1958 andthe Technology Policy Statement of 1983 enunciated the principles on which the growth ofscience and technology in India has been based over the past several decades. Thesepolicies have emphasized self-reliance, as also sustainable and equitable development.They embody a vision and strategy that are applicable today, and would continue to inspireus in our endeavors.

With the encouragement and support that has been provided, there is today a soundinfrastructural base for science and technology. These include research laboratories, highereducational institutions and highly skilled human resource. Indian capabilities in scienceand technology cover an impressive range of diverse disciplines, areas of competence andof applications. India’s strength in basic research is recognized internationally. Successesin agriculture, health care, chemicals and pharmaceuticals, nuclear energy, astronomy andastrophysics, space technology and applications, defense research, biotechnology,electronics, information technology and oceanography are widely acknowledged. Majornational achievements include very significant increase in food production, eradication orcontrol of several diseases and increased life expectancy of our citizens.

While these developments have been highly satisfying, one is also aware of the dramaticchanges that have taken place, and continue to do so, in the practice of science, in technologydevelopment, and their relationships with, and impact on, society.

Particularly striking is the rapidity with which science and technology is moving ahead.Science is becoming increasingly inter- and multi-disciplinary, and calls for multi-institutionaland, in several cases, multi-country participation. Major experimental facilities, even inseveral areas of basic research, require very large material, human and intellectual resources.Science and technology have become so closely intertwined, and so reinforce each otherthat, to be effective, any policy needs to view them together. The continuing revolutions inthe field of information and communication technology have had profound impact on themanner and speed with which scientific information becomes available, and scientificinteractions take place.

Science and technology have had unprecedented impact on economic growth andsocial development. Knowledge has become a source of economic might and power. Thishas led to increased restrictions on sharing of knowledge, to new norms of intellectual

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property rights, and to global trade and technology control regimes. Scientific andtechnological developments today also have deep ethical, legal and social implications.There are deep concerns in society about these. The ongoing globalisation and the intenselycompetitive environment have a significant impact on the production and services sectors.

Because of all this, our science and technology system has to be infused with newvitality if it is to play a decisive and beneficial role in advancing the well being of all sectionsof our society. The nation continues to be firm in its resolve to support science and technologyin all its facets. It recognizes its central role in raising the quality of life of the people of thecountry, particularly of the disadvantaged sections of society, in creating wealth for all, inmaking India globally competitive, in utilizing natural resources in a sustainable manner, inprotecting the environment and ensuring national security.

1.2 POLICY OBJECTIVES

Recognizing the changing context of the scientific enterprise, and to meet presentnational needs in the new era of globalisation, Government enunciates the following objectivesof its Science and Technology Policy:

To ensure that the message of science reaches every citizen of India, man and woman,young and old, so that we advance scientific temper, emerge as a progressive andenlightened society, and make it possible for all our people to participate fully in thedevelopment of science and technology and its application for human welfare. Indeed,science and technology will be fully integrated with all spheres of national activity.

To ensure food, agricultural, nutritional, environmental, water, health and energysecurity of the people on a sustainable basis.

To mount a direct and sustained effort on the alleviation of poverty, enhancing livelihoodsecurity, removal of hunger and malnutrition, reduction of drudgery and regional imbalances,both rural and urban, and generation of employment, by using scientific and technologicalcapabilities along with our traditional knowledge pool. This will call for the generation andscreening of all relevant technologies, their widespread dissemination through networkingand support for the vast unorganized sector of our economy.

To vigorously foster scientific research in universities and other academic, scientificand engineering institutions; and attract the brightest young persons to careers in scienceand technology, by conveying a sense of excitement concerning the advancing frontiers,and by creating suitable employment opportunities for them. Also to build and maintaincentres of excellence, which will raise the level of work in selected areas to the highestinternational standards.

To promote the empowerment of women in all science and technology activities andensure their full and equal participation.

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To provide necessary autonomy and freedom of functioning for all academic andR&D institutions so that an ambience for truly creative work is encouraged, while ensuringat the same time that the science and technology enterprise in the country is fully committedto its social responsibilities and commitments.

To use the full potential of modern science and technology to protect, preserve, evaluate,update, add value to, and utilize the extensive knowledge acquired over the long civilizationalexperience of India.

To accomplish national strategic and security-related objectives, by using the latestadvances in science and technology.

To encourage research and innovation in areas of relevance for the economy andsociety, particularly by promoting close and productive interaction between private andpublic institutions in science and technology. Sectors such as agriculture (particularly soiland water management, human and animal nutrition, fisheries), water, health, education,industry, energy including renewable energy, communication and transportation would beaccorded highest priority. Key leverage technologies such as information technology,biotechnology and materials science and technology would be given special importance.

To substantially strengthen enabling mechanisms that relate to technology development,evaluation, absorption and upgradation from concept to utilization.

To establish an Intellectual Property Rights (IPR) regime which maximises the incentivesfor the generation and protection of intellectual property by all types of inventors. Theregime would also provide a strong, supportive and comprehensive policy environment forspeedy and effective domestic commercialisation of such inventions so as to be maximal inthe public interest.

To ensure, in an era in which information is key to the development of science andtechnology, that all efforts are made to have high-speed access to information, both inquality and quantity, at affordable costs; and also create digitized, valid and usable contentof Indian origin.

To encourage research and application for forecasting, prevention and mitigation ofnatural hazards, particularly, floods, cyclones, earthquakes, drought and landslides.

To promote international science and technology cooperation towards achieving thegoals of national development and security, and make it a key element of our internationalrelations.

To integrate scientific knowledge with insights from other disciplines, and ensure fullestinvolvement of scientists and technologists in national governance so that the spirit andmethods of scientific enquiry permeate deeply into all areas of public policy making.

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It is recognized that these objectives will be best realized by a dynamic and flexibleScience and Technology Policy, which can readily adapt to the rapidly changing worldorder. This Policy, reiterates India’s commitment to participate as an equal and vigorousglobal player in generating and harnessing advances in science and technology for thebenefit of all humankind.

1.3 LEVERAGING KNOWLEDGE

Knowledge evolves knowledge-leveraging practices with the communities that embodythem. Knowledge-leveraging practices and communities — where practitioners think andact together to transform information and experience into insights and insights into products,services and competencies — enhance an organization’s ability to live in change and thus,to continue to deliver value in the midst of uncertainty, paradox, complexity and the unknown.Knowledge-leveraging practices and communities engage the fullness of our human abilityto learn, create, change. Thus, e-Knowledge adds value to knowledge-leveraging initiativesprimarily by participating — as co-learner and empathic provocateur — in the journey ofoptimizing organizational performance. Specific services include:

assessing an organization’s knowledge base (its “common sense” shaping itsdecisions and practices);

identifying and seeding communities that upgrade and leverage knowledge strategicto business strategy and core competencies;

creating and implementing online collaboration environments to support communitiesof practice, e-learning, virtual teams;

developing database-driven solutions to complement face-to-face services as wellas administrative, fundraising, marketing and evaluative functions;

offering the full range of “Internet presence” services: web hosting, domain nameregistration, e-commerce, SSL certificates, Internet marketing.

Principles of a Knowledge Leveraging Community Infrastructure

Community implies a common interest and it is the pursuit of this common interest thatthe knowledge-leveraging infrastructure must support. Whether the common interest is todeal with a situation, avoid something, maintain something, or accomplish something, thecommon interest serves as the basis for the purpose and vision of the community.

A community, however, does not exist in isolation and is part of a larger body orsystem. The system is made up of the community and those with whom the communityinteracts. These participants in the system may be temporary or ongoing and are definedas follows:

Community Members - Those individuals with a common interest who will benefit fromemploying the leveragable body of knowledge. It is expected that the community membersare not entirely capable of creating the leveragable body of knowledge on their own.

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External Contributors - Those individuals outside the community who possess relevantknowledge that the could be leveraged by community members, and as such must becomepart of the leveragable body of knowledge. Community members must interact with externalcontributors to clarify and crystallize their purpose, vision, and values. The needs of thecommunity members guide the external contributors.

Facilitators - It is expected that neither the community members nor the externalcontributors have the capacity to manage the leveragable body of knowledge. Thus,facilitators are responsible for managing the interactions which create and maintain theleveragable body of knowledge and for maintaining the infrastructure interactions.

The following figure 1 depicts the flow of interactions within the system. Note thatthere are no half-loops; every participant is able to interact with every other participant.The participants interact with each other and with the leveragable body of knowledgethrough various forms of input, and receive feedback produced by each of the otherparticipants and by the system.

Figure 1 Interaction Principles

The extent to which knowledge leveraging can occur within a community is dependenton the nature of the interactions within the community and within the larger system. Certainprinciples must be at the core of these interactions. These principles relate to the followingaspects of knowledge leveraging.

Geographic Distribution - Participants in the system are likely to be geographicallydistributed. This means face to face interactions will be difficult for most. The system mustsupport multiple modes of interaction to accommodate the preferences and learning stylesof the individual members.

Purpose, Mission, Vision and Values - The community is not likely to begin with a clearand precise shared definition of its purpose, mission, vision, and values. You might say thatthe community knows only that it needs, but lacks clarity as to just what it needs. The

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infrastructure must facilitate interactions between members of the community, externalcontributors, and facilitators to develop a clear and consistent understanding of the purpose,mission, vision, and values of the community.

Changing Participants - Community members, external contributors, and facilitators willchange over time. New participants will enter and existing participants will depart. To helpnew participants ramp up to the current state of community evolution, the infrastructuremust provide concise documentation of the agreements and decisions the community hasmade to date. This will allow new participants to ramp up without impeding seasonedparticipants from continuing to move forward. The intent is to avoid a continuous rehashingof past decisions because of issues raised by new participants who are unfamiliar with thedecisions of the past and simply don’t know what they don’t know.

Purpose Challenge - Once the community has established and documented its purpose,mission, vision and values, there must be a mechanism for challenging the established doctrineson a recurring basis. For the doctrine to remain valid and avoid becoming dogma, it mustevolve over time.

Personal Development - In order to support the evolution of the body of knowledge,individual members of the community must personally develop. The infrastructure mustenable individuals to assess their capacity to contribute to the effort and provide a basis forpersonal development. This will enable individuals to develop their capacity to support theevolution of the leveragable body of knowledge.

Roles and Responsibilities - Facilitated interaction between community members,facilitators, and external contributors serves as the basis for defining the roles andcontributions of the facilitators and external contributors. These definitions also need to bedocumented for future reference by all participants in the infrastructure.

Feedback - Community members interacting with the leveragable body of knowledgemust be able to provide feedback in several critical areas and the feedback mechanismmust be supported by the infrastructure.

Content - Feedback on accessed knowledge must be submitted for review to theappropriate individuals to act on the feedback. This is a basis for continuing evolution ofthe leveragable body of knowledge.

Participants - The value of facilitator and external contributor contributions must beevaluated by community members on an ongoing basis.

Subgroups - Because it is expected that there will be subgroups of community membersworking in a project capacity, the community needs to provide feedback to the subgroupregarding the value of its contribution. Subgroups must evaluate their own perceptions ofthe value of their contributions as well as the level of contribution by their participatingmembers.

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Return on Investment - Facilitators and external contributors must be able to continuallyreflect on their perceived return on investment from supporting the infrastructure. Thisprovides a basis for determining whether alterations are appropriate to adjust the return oninvestment and the facilitators’ and external contributors’ interactions with the system.

Support Facilities - Subgroups working together must have multiple support facilities toenhance their interactions. At present there is no known single technology that willaccommodate the myriad of interactions required. Interactions of subgroups essentiallyrepresent a microcosm of the interactions of the whole system. The infrastructure mustfacilitate the establishment of subgroup objectives, facilitate their ongoing interactions,provide a repository for what the subgroup produces, enable the group to evaluate itself,and allow the community to evaluate the contributions of the subgroup.

Supporting Technologies

As stated, no single technology exists which will facilitate all the interactions requiredfor a community to develop, maintain and evolve a leveragable body of knowledge. It isbelieved that there are sufficient technology components available, which, when integrated,will produce an infrastructure that will support the community in the manner described.

Because there are multiple types of interactions with differing intended contributions,it seems best to describe the technologies from the perspective of the interactions theymust support. In this manner it should then be possible to evaluate a technology based onits capacity to enable and deliver value to the interaction it is supposed to support.

The following provides some perspectives on particular technology components andtheir role in the infrastructure.

The Leveragable Body of Knowledge

The leveragable body of knowledge is all the knowledge available to the communityvia all participants in the system. The repository for “captured” knowledge, theknowledgebase, must provide feedback in support of its own continued development andevolution. It must also support the following types of interactions from each of the participantswithin the system.

Participant Feedback - All participants interacting with the body of knowledge must beable to provide feedback regarding the perceived quality of the knowledge they access.The most important dimensions are perceived to be:

Findability - Was the user able to find what they were looking for in a timely manner? Ifwhat they were looking for didn’t exist within the body of knowledge, it forms the basis foradditional content development. If what the user was looking for existed, did they find it inan acceptable time-frame?

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Usability - The extent to which the knowledge was able to be used to serve the user’sintent.

Relevance - Was the knowledge found appropriate to what the user was looking for?

Accuracy - Was the knowledge found correct and did it solve their problem?

Precision - Was the knowledge found of the appropriate level of detail? Was it too general?Was it too specific? Was it just right?

Content Evolution - All participants interacting with the leveragable body of knowledgemust be able to provide foundations for additional content. This may be in terms of:

Questions - Questions for which appropriate answers were not found in the knowledgebaseshould serve as the basis for the development of additional content by the facilitators andexternal contributors.

Perspectives - As members of the community gain insights from employing facets of theleveragable body of knowledge, the infrastructure must provide a way for this to form thebasis of new content for others to access.

Contributions - As members develop new learning, it must serve as the basis for newcontributions to the knowledgebase.

System Feedback - All participants must receive feedback from the body of knowledgeon an ongoing basis. This feedback serves as a basis for corrections to the modes andmethods of interaction as well as for the continued development of the content of the bodyof knowledge. Some of the most relevant components of this feedback are:

Value - Feedback must be established regarding the perceived quality or value of thebody of knowledge. This feedback is based on some combination of the number andfrequency of community member interactions with the body of knowledge, in conjunctionwith the feedback that participants have provided on the knowledge accessed. Thisfeedback is considered valuable to community members, facilitators, and externalcontributors.

Knowledge Quality - Based on the comments submitted by community members, feedbackshould be provided to the facilitators and external contributors as to the perceived qualityof the content they have developed. This feedback also provides the basis for developingnew content and revising existing content.

Note that from a composite sense, feedback serves to establish the communitymembers’ perceived value of the interactions by the facilitators and external contributors.The infrastructure should also support the community members’ qualitative evaluation offacilitators and external contributors via blind survey. The idea is to balance direct andindirect feedback about the value of interactions.

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Facilitating Distributed Interaction

It is assumed that, for the most part, the members of the community will be distributedworldwide. There may be small, co-located groups of community members, yet this willbe the exception rather than the rule. In addition to being geographically distributed, it isexpected that individual community members will have different preferences as to whenand how to interact. Therefore, it is essential that the infrastructure facilitate the interactiondynamics in such a way as to accommodate the time and space differentials of communitymembers.

Personal Profiling - We seem to interact in a more comfortable fashion with individualswe think we know. We develop this sense of knowing from various interactions withindividuals. The system must provide a profiling facility to develop a reference backgroundfor the participants. This should include personality types (Myers-Briggs, Adizes PAEI,Human Dynamics MEP, etc.), background, desires and aspirations, and special interests.Profiles must be developed online and be readily accessible to anyone that chooses to usethem as a basis for better understanding those they are interacting with.

Developmental Profiles - The foundation of the system is the common interest of thecommunity, yet this cannot be pursued at the expense of individual aspirations. There isnothing more important to each of us than what we personally desire to accomplish.Therefore, the system must support individual development profiling in a manner whichintegrates individual development and community development.

C - Strategy and Implementation Plan

Keeping in view these broad objectives, it is essential to spell out an implementation strategythat will enable identification of specific plans, programmes and projects, with clearly definedtasks, estimates of necessary resources, and time targets. Some of the key elements of theimplementation strategy will be as follows: -

1. Science and Technology Governance and Investments

Suitable mechanism will be evolved by which independent inputs on science andtechnology policy and planning are obtained on a continuous basis from a wide crosssection of scientists and technologists. It will utilize the academies and specialized professionalbodies for this purpose. These inputs will form an integral part of the planning andimplementation of all programmes relating to science and technology, as also in governmentdecision making and formulation of policies in socio-economic sectors.

A greater integration of the programmes in socio-economic sectors with R&D activitieswill go a long way in ensuring a wider, more visible and tangible impact. This will call for acertain percentage of the overall allocation of each of the socio-economic ministries to bedevoted for relevant programmes and activities in science and technology. The States will

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also be encouraged and assisted in the use of science and technology for developmentalpurposes through mechanisms set up for this, and in establishing linkages with nationalinstitutions for solving their regional and locale-specific problems.

A concerted strategy is necessary to infuse a new sense of dynamism in our scienceand technology institutions. The science departments, agencies and other academicinstitutions, including universities i.e. the science and technology system as a whole, wouldbe substantially strengthened, given full autonomy and flexibility, and de-bureaucratized.

Mechanisms will be established to review on a continuous basis the academic andadministrative structures and procedures in the science and technology system at all levels,so that reforms could be effected to meet the challenges of the changing needs.

It will be ensured that all highly science-based Ministries/Departments of Governmentare run by scientists and technologists. All the major socio-economic Ministries will havehigh-level scientific advisory mechanisms.

Government will ensure continued existence of an Apex S&T Advisory Body whichwill assist in formulating and implementing various programmes and policies. It will haveappropriate representation of industry leaders, leading scientists and technologists andvarious scientific departments.

Government will make necessary budgetary commitments for higher education andscience and technology. It will, through its own resources and also through contribution byindustry, raise the level of investment to at least 2% of GDP on science and technology bythe end of the Tenth Plan. For this, it is essential for industry to steeply increase its investmentsin R&D. This will enable it to be competitive, achieve greater self-reliance and self-confidence, and fulfill national goals.

2. Optimal Utilization of Existing Infrastructure and Competence

Science and technology is advancing at a very fast pace, and obsolescence of physicalinfrastructure, as also of skills and competence, take place rapidly. Steps will be taken tonetwork the existing infrastructure, investments and intellectual strengths, wherever theyexist, to achieve effective and optimal utilization, and constantly upgrade them to meetchanging needs.

3. Strengthening of the Infrastructure for Science and Technology in AcademicInstitutions

A major initiative to modernize the infrastructure for science and engineering in academicinstitutions will be undertaken. It will be ensured that all middle and high schools, vocationaland other colleges will have appropriately sized science laboratories. Science, engineeringand medical departments in academic institutions and universities and colleges will be selected

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for special support to raise the standard of teaching and research. To begin with, a significantnumber of academic institutions, specially the universities, as also engineering and medicalinstitutions, would be selected for this support to make an impact. Flexible mechanisms forinduction of new faculty in key areas of science would be developed. Constancy of supportand attention will be ensured over at least a ten-year period.

4. New Funding Mechanisms for Basic Research

The setting up of more efficient funding mechanisms will be examined, either by creatingnew structures or by strengthening or restructuring the existing ones, for promotion ofbasic research in science, medical and engineering institutions. In particular, administrativeand financial procedures will be simplified to permit efficient operation of researchprogrammes in diverse institutions across the country.

Creation of world class facilities in carefully selected and nationally relevant fields willbe undertaken, to enhance our international competitiveness in areas where we havestrengths, opportunities or natural advantages. Indigenous expertise will be used to themaximum extent possible. This would help in nurturing high quality talent and expertise inexperimental science and engineering.

5. Human Resource Development

The number of scientists and technologists, while being large in absolute numbers, isnot commensurate with the requirements in quality and when measured on a per capitabasis. The demand is bound to increase in the coming years with more intensive activitiesinvolving science and technology. There is need to progressively increase the rate ofgeneration of high quality skilled human resource at all levels. This process would naturallyentail reversing the present flow of talent away from science, by initiating new and innovativeschemes to attract and nurture young talent with an aptitude for research, and by providingassured career opportunities in academia, industry, Government or other sectors.In orderto encourage quality and productivity in science and technology, mobility of scientists andtechnologists between industry, academic institutions and research laboratories will beensured.

For building up the human resource base in relevant areas, the agencies anddepartments concerned with science and technology will make available substantial fundingfrom their allocation. Flexible mechanisms will be put in place in academic and researchinstitutions to enable researchers to change fields and bring new inputs into traditionaldisciplines, and also to develop inter-disciplinary areas. There will be emphasis on acontinuing process of retraining and reskilling to keep pace with the rapid advances takingplace. Wherever considered necessary, training abroad will be resorted to, so as to buildup a skilled base rapidly.

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Women constitute almost half the population of the country. They must be providedsignificantly greater opportunities for higher education and skills that are needed to take upR&D as a career. For this, new procedures, and flexibility in rules and regulations, will beintroduced to meet their special needs.

New mechanisms would be instituted to facilitate the return of scientists andtechnologists of Indian origin to India, as also their networking, to contribute to Indianscience and technology.

Schemes for continuing education and training of university and college teachers incontemporary research techniques and in emerging areas of science will be strengthenedand new innovative programmes started.

It will also be ensured that higher education is available to the widest possible sectionof creative students, transcending social and economic barriers.

6. Technology Development, Transfer and Diffusion

A strong base of science and engineering research provides a crucial foundation for avibrant programme of technology development. Priority will be placed on the developmentof technologies which address the basic needs of the population; make Indian industries— small, medium or large — globally competitive; make the country economically strong;and address the security concerns of the nation. Special emphasis will be placed on equityin development, so that the benefits of technological growth reach the majority of thepopulation, particularly the disadvantaged sections, leading to an improved quality of lifefor every citizen of the country. These aspects require technology foresight, which involvesnot only forecasting and assessment of technologies but also their social, economic andenvironmental consequences.

The growth rate in productivity of the Indian economy has been below its true potential,and the contribution to it of technological factors is inadequate. Similarly, Indian exportstoday derive their comparative advantage through resource and labour rather than throughthe power of technological innovation. The transformation of new ideas into commercialsuccesses is of vital importance to the nation’s ability to achieve high economic growth andglobal competitiveness. Accordingly, special emphasis will be given not only to R&D andthe technological factors of innovation, but also to the other equally important social,institutional and market factors needed for adoption, diffusion and transfer of innovation tothe productive sectors.

Intensive efforts will be launched to develop innovative technologies of a breakthroughnature; and to increase our share of high-tech products. Aggressive international bench-marking will be carried out. Simultaneously, efforts will be made to strengthen traditionalindustry so as to meet the new requirements of competition through the use of appropriatescience and technology. This industry is particularly important as it provides employment

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at lower per capita investment, involves low energy inputs, and carries with it uniquecivilizational traditions and culture. Value addition, and creation of wealth throughreassessment, redistribution and repositioning of our intellectual, capital and material resourcewill be achieved through effective use of science and technology.

Deriving value from technology-led exports and export of technologies will be facilitatedthrough new policy initiatives, incentives and legislation. This will include intensive networkingof capabilities and facilities within the country.

Rigid Quality Standards, and Accreditation of testing and calibration laboratories accordingto international requirements, will be given an enhanced push to enable Indian industry toavoid non-tariff barriers in global trade.

A comprehensive and well-orchestrated programme relating to education, R&D andtraining in all aspects of technology management will be launched. To begin with, IndianInstitutes of Management (IIMs), Indian Institutes of Technology (IITs) and other selectedinstitutions will be encouraged to initiate these programmes.

7. Promotion of Innovation

Innovation will be supported in all its aspects. A comprehensive national system ofinnovation will be created covering science and technology as also legal, financial andother related aspects. There is need to change the ways in which society and economyperforms, if innovation has to fructify.

8. Industry and Scientific R&D

Every effort will be made to achieve synergy between industry and scientific research.Autonomous Technology Transfer Organizations will be created as associate organizationsof universities and national laboratories to facilitate transfer of the know-how generated toindustry. Increased encouragement will be given, and flexible mechanisms will be evolvedto help, scientists and technologists to transfer the know-how generated by them to theindustry and be a partner in receiving the financial returns. Industry will be encouraged tofinancially adopt or support educational and research institutions, fund courses of interestto them, create professional chairs etc. to help direct S&T endeavours towards tangibleindustrial goals.

There has to be increased investments by industry in R&D in its own interest toachieve global competitiveness to be efficient and relevant. Efforts by industry to carry outR&D, either in-house or through outsourcing, will be supported by fiscal and other measures.To increase their investments in R&D, innovative mechanisms will be evolved.

9. Indigenous Resources and Traditional Knowledge

Indigenous knowledge, based on our long and rich tradition, would be further developedand harnessed for the purpose of wealth and employment generation. Innovative systemsto document, protect, evaluate and to learn from India’s rich heritage of traditional knowledge

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of the natural resources of land, water and bio-diversity will be strengthened and enlarged.Development of technologies that add value to India’s indigenous resources and whichprovide holistic and optimal solutions that are suited to Indian social-cultural-economicethos will be developed. A concerted plan to intensify research on traditional systems ofmedicine, so as to contribute to fundamental advances in health care, and leading tocommercialisation of effective products will be undertaken; appropriate norms of validationand standardization will be enforced. A purposeful programme to enhance the Indian shareof the global herbal product market will be initiated.

10. Technologies for Mitigation and Management of Natural Hazards

Science and technology has an important role in any general strategy to address theproblems of mitigation and management of the impacts of natural hazards. A concertedaction plan to enhance predictive capabilities and preparedness for meeting emergenciesarising from floods, cyclones, earthquakes, drought, landslides and avalanches will bedrawn up. Measures will be undertaken to promote research on natural phenomena thatlead to disasters and human activities that aggravate them. This will be with a view todeveloping practical technological solutions for pre-disaster preparedness, and mitigationand management of post- disaster situations.

11. Generation and Management of Intellectual Property

Intellectual Property Rights (IPR), have to be viewed, not as a self-contained anddistinct domain, but rather as an effective policy instrument that would be relevant to wideranging socio-economic, technological and political concepts. The generation and fullestprotection of competitive intellectual property from Indian R&D programmes will beencouraged and promoted.

The process of globalisation is leading to situations where the collective knowledge ofsocieties normally used for common good is converted to proprietary knowledge forcommercial profit of a few. Action will be taken to protect our indigenous knowledgesystems, primarily through national policies, supplemented by supportive international action.For this purpose, IPR systems which specially protect scientific discoveries and technologicalinnovations arising out of such traditional knowledge will be designed and effectivelyimplemented.

Our legislation with regard to Patents, Copyrights and other forms of IntellectualProperty will ensure that maximum incentives are provided for individual inventors, and toour scientific and technological community, to undertake large scale and rapidcommercialization, at home and abroad.

The development of skills and competence to manage IPR and leveraging its influencewill be given a major thrust. This is an area calling for significant technological insights andlegal expertise and will be handled differently from the present, and with high priority.

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12. Public Awareness of Science and Technology

There is growing need to enhance public awareness of the importance of science andtechnology in everyday life, and the directions where science and technology is taking us.People must be able to consider the implications of emerging science and technologyoptions in areas which impinge directly upon their lives, including the ethical and moral,legal, social and economic aspects. In recent years, advances in biotechnology andinformation technology have dramatically increased public interest in technology options inwide ranging areas. Scientific work and policies arising from these have to be highlytransparent and widely understood.

Support for wide dissemination of scientific knowledge, through the support of sciencemuseums, planetaria, botanical gardens and the like, will be enhanced. Every effort will bemade to convey to the young the excitement in scientific and technological advances and toinstill scientific temper in the population at large. Special support will be provided forprogrammes that seek to popularize and promote science and technology in all parts of thecountry. Programmes will also be developed to promote learning and dissemination ofscience through the various national languages, to enable effective science communicationat all levels.

A closer interaction of those involved in the natural sciences and technology, socialsciences, humanities and other scholarly pursuits will be facilitated to bring about mutualreinforcement, added value and impact.

13. International Science and Technology Cooperation

Scientific research and technology development can benefit greatly by internationalcooperation and collaboration. Common goals can be effectively addressed by poolingboth material and intellectual resources. International collaborative programmes, especiallythose contributing directly to our scientific development and security objectives, will beencouraged between academic institutions and national laboratories in India and theircounterparts in all parts of the world, including participation in mega science projects asequal partners. Special emphasis will be placed on collaborations with other developingcountries, and particularly neighbouring countries, with whom India shares many commonproblems. International collaboration in science and technology would be fully used tofurther national interests as an important component of foreign policy initiatives.

14. Fiscal Measures

Innovative fiscal measures are critical to ensure successful implementation of the policyobjectives. New methods are required for incentivising R&D activities, particularly in industry.New strategies have to be formulated for attracting higher levels of public and privateinvestments in scientific and technological development. A series of both tax and non-taxfiscal instruments have to be evolved to ensure a leap-frogging process of development.

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The formulation of a focused strategy and the designing of new methods and instrumentsrequires inputs from economists, financial experts and management experts and scientists.For this purpose, the apex S&T advisory body will constitute a dedicated task-force tosuggest appropriate fiscal measures to subserve the policy objectives.

15. Monitoring

Effective, expeditious, transparent and science-based monitoring and reviewingmechanisms will be significantly strengthened, and wherever not available will be put inplace. It will be ensured that the scientific community is involved in, and responsible for,smooth and speedy implementation.

16. The New Vision

To build a new and resurgent India that continues to maintain its strong democraticand spiritual traditions, that remains secure not only militarily but also socially andeconomically, it is important to draw on the many unique civilizational qualities that definethe inner strength of India; this has been intrinsically based on an integrated and holisticview of nature and of life. The Science and Technology Policy 2003 will be implementedso as to be in harmony with our world view of the larger human family all around. It willensure that science and technology truly uplifts the Indian people and indeed all of humanity.

1.4 LEARNING ORGANISATION

The Learning Organisation is a concept that is becoming an increasingly widespreadphilosophy in modern companies, from the largest multinationals to the smallest ventures.What is achieved by this philosophy depends considerably on one’s interpretation of it andcommitment to it. The quote below gives a simple definition that we felt was the trueideology behind the Learning Organisation.

“A Learning Organisation is one in which people at all levels, individuals andcollectively, are continually increasing their capacity to produce results they reallycare about.”

The Definition

An organisation that learns and encourages learning among its people. It promotesexchange of information between employees hence creating a more knowledgableworkforce. This produces a very flexible organisation where people will accept and adaptto new ideas and changes through a shared vision.

Background and History

The importance of learning was first put forward by a Chinese philosopher, Confucius(551 - 479 BC). He believed that everyone should benefit from learning.

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“Without learning, the wise become foolish; by learning, the foolish becomewise.”

“Learn as if you could never have enough of learning, as if you might misssomething.”

The underlying cause for recent emphasis on organisational learning is because of theincreased pace of change. Classically, work has been thought of as being conservative anddifficult to change. Learning was something divorced from work and innovation was seenas the necessary but disruptive way to change. The corporation which is able to quicklylearn and then innovate their work will be able to change their work practices to performbetter in the constantly changing environment. Change is now measured in terms of monthsnot years as it was in the past. Business re-engineering used to concentrate on eliminatingwaste and not on working smarter and learning.

History

Major research into ‘the art of learning’ did not actually start until the 1900’s. In the1950’s, the concept of Systems Thinking was introduced but never implemented. Gould-Kreutzer Associates, Inc. defined Systems thinking as:

“A framework for seeing interrelationships rather than things; to see the forest andthe trees.”

This means that organisations need to be aware of both the company as a whole aswell as the individuals within the company. Up until the introduction of this concept,companies concentrated on their own needs not the needs of their workers. SystemsThinking tries to change the managerial view so that it includes the ambitions of the individualworkers, not just the business goals.

One of the systems used was called Decision Support Systems (DSS). This was forthe use of corporate executives to help them make decisions for the future. It was in factthe building of the models, which defined the systems, that benefited the managementrather than the system’s operation. This was because the building of the model focused onwhat the business really was and the alternatives available for the future.

One benefit of DSS was that it made implicit knowledge explicit. This makes extraknowledge available to the organisation and will tend to allow the organisation to learnbetter because explicit knowledge will tend to spread faster through an organisation. Inthis respect DSS can be considered as an additional method of communication inorganisations. This systems tool was predicted to be necessary for every executive’sdesktop. But this did not happened.

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In the 1970’s, the same idea was renamed to Organisational Learning. One of theearly researchers in this field was Chris Arygris from Harvard. He published a book on thesubject in 1978. Even with this published information the concept still wasn’t physicallytaken on by any companies.

In the 1980’s, companies discovered time as a new source of competitive advantage.This lead to ‘capabilities-based competition’ which included the capability of learning.Many other people have continued along this line of research, such as Peter Senge - one ofthe modern day gurus. Information on the topic has been passed into various companies.These companies are now trying to become Learning Organisations. If the changeover toa Learning Organisation happens overnight, the environment around the workers will becomplex and dynamic. There will be agitations and confusion which means learning maynot take place because of the chaos caused. So it can only be introduced into a companythat is prepared to reach a balance between change and stability, i.e. a balance betweenthe old and the new. Organisations must interact with the environment around them, so theenvironment must be suitable for that interaction.

Becoming a Learning Organisation seems a logical step for all companies to followand hopefully this document will give a clear understanding why.

Why a Learning Organisation ?

A company that performs badly is easily recognisable. The signs you need to spot ar?

Do your employees seem unmotivated or uninterested in their work? Does your workforce lack the skill and knowledge to adjust to new jobs? Do you seem to be the only one to come up with all the ideas? And does your workforce simply follow orders? Do your teams argue constantly and lack real productivity? Or lack communication between each other? And when the “guru” is off do things get put on hold? Are you always the last to hear about problems? Or worst still the first to hear about customer complaints? And do the same problems occur over and over?

Can you spot the signs?

If any of these points sound familiar the answer for you could be a LearningOrganisation.

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Creating a Learning Organisation

Before a Learning Organisations can be implemented , a solid foundation can bemade by taking into account the following :

Awareness Environment Leadership Empowerment Learning

Awareness

Organisations must be aware that learning is necessary before they can develop intoa Learning Organisation. This may seem to be a strange statement but this learning musttake place at all levels; not just the Management level. Once the company has exceptedthe need for change, it is then responsible for creating the appropriate environment for thischange to occur in.

Environment

Centralised, mechanistic structures do not create a good environment. Individuals donot have a comprehensive picture of the whole organisation and its goals. This causespolitical and parochial systems to be set up which stifle the learning process. Therefore amore flexible, organic structure must be formed. By organic, we mean a flatter structurewhich encourages innovations. The flatter structure also promotes passing of informationbetween workers and so creating a more informed work force.

It is necessary for management to take on a new philosophy; to encourage openness,reflectivity and accept error and uncertainty. Members need to be able to question decisionswithout the fear of reprimand. This questioning can often highlight problems at an earlystage and reduce time consuming errors. One way of over-coming this fear is to introduceanonymity so that questions can be asked or suggestions made but the source is notnecessarily known.

Leadership

Leaders should foster the Systems Thinking concept and encourage learning to helpboth the individual and organisation in learning. It is the leader’s responsibility to helprestructure the individual views of team members. For example, they need to help theteams understand that competition is a form of learning; not a hostile act.

Management must provide commitment for long-term learning in the form of resources.The amount of resources available (money, personnel and time) determines the quantityand quality of learning. This means that the organisation must be prepared to support this.

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Empowerment

The locus of control shifts from managers to workers. This is where the termEmpowerment is introduced. The workers become responsible for their actions; but themanagers do not lose their involvement. They still need to encourage, enthuse and co-ordinate the workers. Equal participation must be allowed at all levels so that memberscan learn from each other simultaneously. This is unlike traditionally learning that involves atop-down structure (classroom-type example) which is time consuming.

Learning

Companies can learn to achieve these aims in Learning Labs. These are small-scalemodels of real-life settings where management teams learn how to learn together throughsimulation games. They need to find out what failure is like so that they can learn from theirmistakes in the future. These managers are then responsible for setting up an open, flexibleatmosphere in their organisations to encourage their workers to follow their learning example.

Anonymity has already been mentioned and can be achieved through electronicconferencing. This type of conferencing can also encourage different sites to communicateand share knowledge, thus making a company truly a Learning Organisation.

Implementation Strategies

Any organisation that wants to implement a learning organisation philosophy requiresan overall strategy with clear, well defined goals. Once these have been established, thetools needed to facilitate the strategy must be identified.

It is clear that everyone has their own interpretation of the “Learning Organisation”idea, so to produce an action plan that will transform groups into Learning Organisationsmight seem impossible. However, it is possible to identify three generic strategies thathighlight possible routes to developing Learning Organisations. The specific tools requiredto implement any of these depends on the strategy adopted, but the initiatives that theyrepresent are generic throughout. The three strategies are:

Accidental

For many companies, adopting a learning organisation philosophy is the second stepto achieving this Holy Grail. They may already be taking steps to achieve their businessgoals that, in hindsight, fit the framework for implementing a Learning Organisation. This isthe accidental approach in that it was not initiated through awareness of the LearningOrganisation concept.

Subversive

Once an organisation has discovered the Learning Organisation philosophy, they mustmake a decision as to how they want to proceed. This is a choice between a subversiveand a declared strategy. The subversive strategy differs from an accidental one in the level

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of awareness; but it is not secretive! Thus, while not openly endorsing the LearningOrganisation ideal, they are able to exploit the ideas and techniques.

Declared

The other option is the declared approach. This is self explanatory. The principles ofLearning Organisations are adopted as part of the company ethos, become company“speak” and are manifest openly in all company initiatives.

The Golden Rules

As an organisation which learns and wants its people to learn, it must try to followcertain concepts in learning techniques and mould itself to accommodate for a number ofspecific attributes. In particular:

Thrive on Change Encourage Experimentation Communicate Success and Failure Facilitate Learning from the Surrounding Environment Facilitate Learning from Employees Reward Learning A Proper Selfishness A Sense of Caring

Thrive on Change

“In a fast-paced, continually shifting environment resilience to change is oftenthe single most important factor that distinguishes those who succeed from thosewho fail.”

- Tom Peters

The crux of this idea is that for a Learning Organisation to be achieved many changesmust be implemented. There can be no doubt that an organisation that enters such changeswithout a full commitment to them will not succeed. Hence it is constantly re-framing ;looking at problems from different angles or developing and exercising skills. In short, it isnever static. To comply with this, the people in the organisation must continually adapt tochanging circumstances.

It is vital that the changing process be driven from the very top levels of the organisation:the managers must lead the changes with a positive attitude and have a clear vision of whatis to be achieved. It is crucial that the management all agree to the strategy and believe init so that they exude a sense of security and self-assurance.

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Encourage Experimentation

Every change requires a certain degree of experimentation. To allow thisexperimentation is the central concept behind a Learning Organisation. Giving employeesopportunities and responsibilities is a risk and can be costly in terms of resources. Howeverfor a company to learn it is a necessary risk, and approached in a positive manner, willbring many benefits. Innovation, after all, is what sets a company apart.

A Learning Organisation needs to experiment by having both formal and informalways of asking questions, seeking out theories, testing them, and reflecting upon them. Itshould try to predict events and plan to avoid mistakes — be active rather than passive.One way to do this is to review their competitors’ work and progress and try to learn fromtheir experiences. A Japanese strategy is to send their senior executives on study visits toother countries, raising questions and gathering ideas. They then review the visits and try tolearn from them.

Just like the changing process, the learning process has to start from the top of theorganisation and finds its way throughout. However there is a danger in delegating thequestions and theories to lower groups, as the senior executives could feel no ownershipof the process and are unlikely to take risks with the conclusions. When John Harvey-Jones became chairman of ICI, he gave a lot of time and attention to creating space for thetop executives to question, think and learn.

Communicate Success and Failure

It is important for a company to learn from its mistakes and also to appreciate itssuccesses. Discussion and contribution in a team framework is vital, followed by assessmentand planning. Each member should be encourage to self-assess their own performance.Thisrequires continuous feedback and assessment which is easy to implement as a LearningCycle which is shown in Figure 2:

Figure 2

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The learning should not just stop at the team, however. Lateral spread of knowledgethroughout the company can be implemented by a number of mechanisms. Oral, writtenand visual presentations; site visit and tours; personnel rotation programmes; educationand training programmes will all encourage the spread of knowledge and experiencesalong with reduction of hierarchy and red tape present in many stagnant companies.

To learn from ones mistakes, one must be able to accept failure, analyse the reasonsfor the failure and take action. Disappointment and mistakes are part of the changingprocess and essential to learning. A true Learning Organisation will treat mistakes as casestudies for discussion, thus learning, and ensuring the same mistake does not happen again.

For this to be done without blame, and with implied forgiveness, the learning has tobe guided by a neutral mentor or coach. This figure may be from inside or outside theorganisation, and need not necessarily possess much authority. It is often beneficial to anorganisation to form a list of mentors, whose services they can rely on. If this is the case,then it is a pointer to the fact that the organisation has accepted the theory behind possessingnegative capability.

In order to keep a leading edge over its counterparts, the learning organisation has tokeep abreast with the happenings in its internal and external environment. Technical andpolitical issues which may exert pressure on the organisation’s current and future operationsare identified and monitored.

Internal sources of information can be work teams, departments or affiliated companies/institutes within the organisation.

Outside consultants, other players in the same field and even customers are potentialexternal sources.

Disseminating the value-added information in an efficient manner so that it is easilyaccessed by everyone within the organisation. One suggestion that stands out in the fore-coming age of information highway is putting the computer database on the internet systemwith limited employee-only access.

Joint-ventures provide precious opportunities of actively observing how others’systems are run. In such cases, learning objectives should be clearly stated in the contractualagreements between the allies to avoid any future misunderstandings. Accusations ofcorporate spying are serious matter hence everything should be brought out in the openright from the start and nothing should be done on the sly.

Customers represent the best research and development source as they know exactlywhat they and the market in general want. Moreover, this invaluable resource is free!Hence, it is worthwhile to try to involve the customers in product/ service design.

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Facilitate Learning from Employees

“Some of the most effective consultants your organisation could ever hire are alreadyworking for you.”

- Jim Clemmer (Firing on all Cylinders)

“Employees themselves, more often than not, know what needs to be done to improveoperations.”

Kanter, Moss (The Change Masters)

The above quotes are very true, however it could also be said that in the past acompany’s employees were there most under-rated and under-used consultants. Theimportance of this point cannot be overemphasised. The financial implications of learningfrom within are an obvious long term bonus. It is estimated that only 20% of an employeesskills are utilised. This inefficiency can easily be overcome by training and multi-skilling.

Reward Learning

“A learning culture rewards breakthroughs and initiative.”

— Al Flood (The Learning Organisation)

The performance appraisal is meant to reflect the organisation’s commitment to createa learning culture, that is, to promote acquisition of new skills, teamwork as well as individualeffort, openness and objectivity and continuous personal development. The fragile humanego yearns for acknowledgement from superiors and fellow colleagues for one’s work, insome form of reward or, simply, feedback. Everyone wants to feel that he or she is doinga ‘real’ job and actively contributing to the proper functioning of the organisation.

Caution should be taken when defining benchmarks for performance appraisal. Noself-conscious member in the organisation should be left feeling neglected. When individualslose confidence or give up hope, the learning organisation has failed. Therefore, the effortsput in and learning gained throughout the process should be recognised as well as the end-result. In addition, considerations taken in the performance appraisal should be incorporatedinto criteria for hiring new employees and promoting current staff.

Annual performance reviews for pay-raise and promotion serve well for long termfeedback and reward. However, it is also very important to have feedback and reward ona short term basis such as having one’s mistake pointed out on-the-spot, and receivingappreciation and recognition there and then. Sometimes, being able to witness the overallaccomplishment of one’s work is self rewarding.

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A Proper Selfishness

If the Learning Organisation is properly selfish, it is clear about its role, its goals, itsfuture, and is determined to reach them. This may sound extremely obvious, but does “tomake profits” really suffice ?

Rather it should be asking: What are the strengths, talents and weaknesses of the organisation? What sort of organisation does it want to be? What does it want to be known for? How will its success be measured, and by whom? How does it plan to achieve it?

The answers for most organisations must start with the customer or client — who arethey? What do they really want and need ? . This is really the essence of the phrase “aproper selfishness” — it is right that the organisation think of itself in the ways outlinedabove, but it must remember why it is there. It is there for the sole purpose of servingcustomers and clients (otherwise how could it exist?). If an organisation neglects this fact,it is exhibiting “improper selfishness” , and is ultimately set for failure.

A Sense of Caring

Learning Organisations want everyone to learn and they go to great effort to makethat possible. Apart from the points developed above, there are other initiatives:

Tuition reimbursement schemes (as found in many American companies) Opportunities to sit in higher level management meetings (as in Japan) Projects to encourage personal development Horizontal careers to open up new possibilities Brainstorming parties around new problems Rewards tied to output, not to status; to performance, not age Public encouragement of questions at all levels The encouragement of initiative Constant celebration of achievement

These points can all be summed up into one phrase — care for the individual. Peopledo not take risks with those that they do not trust or genuinely care for. It then follows thatorganisations which possess a friendly and trustworthy working environment are morelikely to succeed in today’s climate of change, when calculated risk taking is part of gettingahead of the field.

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People Behaviour

Behaviour to Encourage

There are five disciplines (as described by Peter Senge) which are essential to alearning organisation and should be encouraged at all times. These are:

Team Learning Shared Visions Mental Models Personal Mastery Systems Thinking

Team Learning

Virtually all important decisions occur in groups. Teams, not individuals, are thefundamental learning units. Unless a team can learn, the organisation cannot learn. Teamlearning focusses on the learning ability of the group. Adults learn best from each other, byreflecting on how they are addressing problems, questioning assumptions, and receivingfeedback from their team and from their results. With team learning, the learning ability ofthe group becomes greater than the learning ability of any individual in the group.

Shared Visions

To create a shared vision, large numbers of people within the organisation must draftit, empowering them to create a single image of the future. All members of the organisationmust understand, share and contribute to the vision for it to become reality. With a sharedvision, people will do things because they want to, not because they have to.

Mental Models

Each individual has an internal image of the world, with deeply ingrained assumptions.Individuals will act according to the true mental model that they subconsciously hold, notaccording to the theories which they claim to believe. If team members can constructivelychallenge each others’ ideas and assumptions, they can begin to perceive their mentalmodels, and to change these to create a shared mental model for the team. This is importantas the individual’s mental model will control what they think can or cannot be done.

Personal Mastery

Personal mastery is the process of continually clarifying and deepening an individual’spersonal vision. This is a matter of personal choice for the individual and involves continuallyassessing the gap between their current and desired proficiencies in an objective manner,and practising and refining skills until they are internalised. This develops self esteem andcreates the confidence to tackle new challenges.

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The Fifth Discipline - Systems Thinking

The cornerstone of any learning organisation is the fifth discipline - systems thinking.This is the ability to see the bigger picture, to look at the interrelationships of a system asopposed to simple cause-effect chains; allowing continuous processes to be studied ratherthan single snapshots. The fifth discipline shows us that the essential properties of a systemare not determined by the sum of its parts but by the process of interactions between thoseparts.

This is the reason systems thinking is fundamental to any learning organisation; it is thediscipline used to implement the disciplines. Without systems thinking each of the disciplineswould be isolated and therefore not achieve their objective. The fifth discipline integratesthem to form the whole system, a system whose properties exceed the sum of its parts.However, the converse is also true - systems thinking cannot be achieved without the othercore disciplines: personal mastery, team learning, mental models and shared vision. All ofthese disciplines are needed to successfully implement systems thinking, again illustratingthe principal of the fifth discipline: systems should be viewed as interrelationships ratherthan isolated parts.

The Laws of the Fifth Discipline

Today’s problems come from yesterday’s solutions. Solutions shift problems fromone part of a system to another.

The harder you push, the harder the system pushes back. ‘Compensating feedback’:well intentioned interventions which eventually make matters worse.

Behaviour grows better before it grows worse. The short-term benefits ofcompensating feedback are seen before the long-term disbenefits.

The easy way out usually leads back in. Familiar solutions which are easy toimplement usually do not solve the problem.

The cure can be worse than the disease. Familiar solutions can not only be ineffective;sometimes they are addictive and dangerous.

Faster is slower. The optimal rate of growth is much slower than the fastest growthpossible.

Cause and effect are not closely related in time and space. The area of a systemwhich is generating the problems is usually distant to the area showing the symptoms.

Small changes can produce big results-but the areas of highest leverage areoften the least obvious. Problems can be solved by making small changes to an apparentlyunrelated part of the system.

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You can have your cake and eat it too - but not at once. Problems viewed from asystems point of view, as opposed to a single snapshot, can turn out not to be problems atall.

Dividing an elephant in half does not produce two small elephants. A systems’properties depend on the whole.

There is no blame. The individual and the cause of their problems are part of a singlesystem.

Behaviour to Discourage

An organisation which is not a learning one also displays behaviours, however theseshould definitely not be encouraged. Rosabeth Moss Kanter studied a range of largeAmericam corporations and came up with rules for stifling initiative :

Regard any new idea from below with suspicion — because it is new and because itis from below

Express criticisms freely and withhold praise (that keeps people on their toes). Letthem know they can be fired at any time

Treat problems as a sign of failure

Make decisions to reorganise or change policies in secret and spring them on peopleunexpectedly (that also keeps people on their toes)

Above all, never forget that you, the higher-ups, already know everything importantabout business.

These rules are expanded in her book “The Change Masters”. The LearningOrganisation needs to break every one of these rules frequently.

Why Learning Organisations Work

The People Develop

A Learning Organisation encourages its members to improve their personal skills andqualities, so that they can learn and develop. They benefit from their own and other people’sexperience, whether it be positive or negative.

Greater motivation

People are appreciated for their own skills, values and work. All opinions are treatedequally and with respect. By being aware of their role and importance in the wholeorganisation, the workers are more motivated to “add their bit”. This encourages creativityand free-thinking, hence leading to novel solutions to problems. All in all there is an increasein job satisfaction.

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The workforce is more flexible

People learn skills and acquire knowledge beyond their specific job requirements.This enables them to appreciate or perform other roles and tasks. Flexibility allows workersto move freely within the organisation, whilst at the same time it removes the barriersassociated with a rigidly structured company. It also ensures that any individual will be ableto cope rapidly with a changing environment, such as those that exist in modern times.

People are more creative

There are more opportunities to be creative in a learning organisation. There is alsoroom for trying out new ideas without having to worry about mistakes. Employees’ creativecontribution is recognised and new ideas are free to flourish.

Improved social interaction

Learning requires social interaction and interpersonal communication skills. Anorganisation based on learning will ensure members become better at these activities. Teamswill work better as a result.

Teams and Groups Work Better

Learning Organisations provide the perfect environment for high performing teams tolearn, grow and develop. On the other hand these teams will perform efficiently for theorganisation to produce positive results.

Knowledge sharing

“ Openness Creates Trust “

A team is composed of highly specialised members who can not and are not expectedto know everything about a job. In this case the sharing of common knowledge is quiteimportant for the completion of a job. Within learning organisations in general, and teams inparticular, information and knowledge flows around more freely. This makes for higherproductivity within teams and between teams as they build on each others strengths. Trustbetween team members increases and hence they value each others opinions more.

Interdependency

In any organisation people depend on each other for the completion of their jobs.Learning Organisations will increase this awareness, and improve relations between peopleat a personal level. By knowing more about other people’s roles, needs and tasks, memberscan manage their time better and plan their work more efficiently. This dependency isdecreased as learning is enhanced, letting people get on with their own job better as theyrely less on others.

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The Company Benefits

An active learning organisation will have at its heart the concept of continuous learning.Therefore it will always be improving in its techniques, methods and technology.

Breakdown of traditional communication barriers

The old hierarchical communication barrier between manager-worker has devolvedinto more of a coach-team member scenario. Leaders support the team, not dictate to it.The team appreciates this which in turn helps them to be highly motivated.

All workers have an increased awareness of the company’s status, and all that goeson in other departments. Communication between and across all layers of the companygives a sense of coherence, making each individual a vital part of the whole system. Workersperform better as they feel more a part of the company; they are not just pawns in a game.

Customer relations

A company’s first priority is its customer’s needs. A Learning Organisation cuts theexcess bureaucracy normally involved with customer relations allowing greater contactbetween the two. If the customers requirements change, learning organisations can adaptfaster and cope more efficiently with this change.

Information resources

Over time a company builds up a pool of learning, in the form of libraries, and humanexpertice. This pool of knowledge within learning organisations is larger than average.New problems and challenges can be met faster using this increased resource.

Innovation and creativity

As more people in every level of a company engage in continual learning a validcontribution can come from any member of the company, and from any part of the company.Being innovative and creative is the responsability of the whole workforce and allowslearning organisations to adapt to changes in the state of the market, technology andcompetition efficiently.

Moreover, this creativity gives rise to an increased synergy.The interaction betweenhigh performing teams produces a result which is higher than was planned or expected ofthem.

Facets of World Class Organisation

Attitude

Our attitude with respect to our work and environment, and our attitude toward ourbuilt in individual biases. How do we perceive our organization and its relevance to theISU mission?

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To develop attitudes for a world-class culture:

Be Knowledgeable

Share

Network

Collaborate

Improve Products

Be Flexible

Be Innovative

Change Your Orientation

Keep the Proper Balance

Process

The processes within our individual unit function. Seek methodologies to adapt tomeet changes, to speed delivery of our services, and to meet future challenges. Conductinternal benchmarking and transfer skill and knowledge to our people.

Internal Benchmarking is the process of identifying the “Best Practices” developedwithin an organization and creating a business case for their implementation.

Transferring Skill and Knowledge means the process of identifying, demonstrating,and transferring a successfully demonstrated process or practice to other units.

Tools

What tools help us to do our jobs better, faster, and easier – within budget and ontime (quality, speed, cost, and delivery)? Seek both low-tech and high-tech solutions.Embrace technology and adopt new skills through training and continuous improvement.

World Class Organisations

To achieve world-class status, an organization must stimulate creative thinking,encourage dialogue and introspection and promote understanding and new actions. Mostimportant, it must give people - inside and outside the organization - something to careabout.

When people think of “world-class organizations, chances are widely admiredcompanies such as General Electric, Microsoft, British Airways, Hewlett-Packard, Coca-Cola and Disney spring to mind. Yet what elevates these and other companies from merely“successful” to the more desired status of “world-class?”

A closer look at the “best of the best” reveals several shared characteristics. Besidesbeing the premier organization in their industries, world-class companies have talented

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people, the latest technology, the best products and services, consistent high-quality, ahigh stock price, and a truckload of awards and accolades acknowledging their greatness.Dig deeper and you’ll also find that communication is practiced as a strategic processwithin these companies that’s woven into their business planning, decision-making andorganization-wide priorities. It defines their cultures by encouraging dialogue, feedback,interpretation and understanding.

The Secret Behind World Class

Something else also distinguishes world-class companies from all the others. World-class companies give people - their customers, employees, suppliers, even the people inthe communities in which they operate - something to care about. While it may soundsimple, a closer look at some of the world’s most respected and most successful companiesindicates it’s true.

Look at Disney, for example. Beginning with CEO Michael Eisner, everyone at Disneygives people a reason to care about the company because everyone there takes greatpains to make their “guests” believe in make-believe. All new hires at Disney experience amulti-step training program where they quickly learn the language: Employees are “castmembers,” customers are “guests,” a crowd is an “audience,” a work shift is a“performance,” a job is a “part,” a job description is a “script,” a uniform is a “costume,”the personnel department is “casting,” being on duty is being “on stage,” and being off dutyis “backstage.” The special language along with the complete immersion into the company’shistory and mythology, reinforces the Disney frame of mind, starting with its new employees.All this acts to strengthen the sense of purpose and cult-like unity, ultimately intensifying theunderlying ideology: To make people happy. These things, including unity of purpose andpreservation of image and ideology, work together to make Disney world-class.

Building a World Class Organisation

Building Block One: Loyal Customers

Becoming a world-class organization starts by determining what kind of experienceyou want your customers to have. How would you like customers to be treated as theyinteract with every part of your company?

Now compare your vision of ideal customer service to what is currently happening inyour organization. Look and see where things don’t quite match up. If your organization islike most, it will have quite a few bumps and warts that you will want to address. You willalso want to consider your company’s consistency factor. Delivering your product or serviceproperly time after time after time without fail is the foundation of creating loyal customers.Consistency is critical because consistency creates credibility. Consistency is the key tocreating loyal customers.

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The worst thing you can do is meet expectations one time, fall short another, andexceed every now and then. That will not only drive your customers crazy, but also sendthem running into the hands of your competition the first chance they get.

Building Block Two: Engaged Employees

It takes excited and passionate people to create a customer-focused culture. Youcannot treat your people poorly and expect them to take good care of your customers.Empowering your people and permitting them to act as owners is essential.

There are three things you can do to get—and keep—people excited about theirjobs:

Worthwhile work—People want to know that the work they are doing is important andmakes a difference. Make sure that everyone understands the significance of their particularrole in achieving the company’s overall vision. Remind people of their significance on aregular basis.

In control of achieving the goal—Let people have a say in how they do their jobs. It isincreasingly important to place the responsibility for decision making directly on employeesthemselves. The good news is that employees are more motivated when they know theyare being counted on to use their own judgment versus simply carrying out policies thatallow for little, if any, individual discretion.

Cheer each other on—Everyone loves to be recognized for a job well done. Create acollaborative climate where milestones and other measures of improvement are celebratedand people feel acknowledged. Reward and recognition focused on catching people doingthings right is one of the best ways to positively reinforce a motivating work environment.

Building Block Three: Great Managers

Great managers hold everything together. They know that leadership is not aboutthem; it is about serving the vision and the people who make it come alive. Great managersrealize that they cannot do it all themselves, so they empower people to make decisionsand then support them all the way.

Today’s manager must be a coach, facilitator and cheerleader for the employees theysupport. To be world-class, make sure your managers support their direct reports in fourways:

Provide access to information and training that gives people the right start and helpsthem to grow. Lets employees know why what they do is important to your company andhow it provides value to your customers.

Use performance management as a way to give people the direction and support theyneed—when they need it—so employees can accomplish their goals and the organizationcan succeed.

NOTES



Provide recognition frequently and celebrate performance over time. Catch directreports doing things right instead of wrong to keep them inspired and focused on what’simportant.

Keep employees growing through ongoing career planning. Give direct reports theopportunity to develop skills that will make them more valuable employees.

The process of building a world-class organization takes time, energy, and commitment.It all starts by developing a shared vision that is focused on the customer and the experienceyou want your customers to have when they interact with your company. It continues withengaged employees who are passionate about delivering that experience and understandhow their role fits into the overall picture. Finally, it is held together by great managers andleaders who recognize that their goal is to have the right people, in the right roles, fullyengaged and growing if their organization is going to succeed in the long term.

At The Ken Blanchard Companies we don’t think organizations set a goal forthemselves to be “no worse than the competition.” Instead, we think that people andorganizations want to be world-class. It’s the job of leaders to bring out that magnificencein people and create the environment in which employees feel safe, supported, and readyto do the best job possible in accomplishing key goals on behalf of their organization.

1.5 DUAL-USE TECHNOLOGY

Dual-use is a term often used in politics and diplomacy to refer to technology whichcan be used for both peaceful and military aims. It usually refers to the proliferation ofnuclear weapons, but that of bioweapons is a growing concern.

Many types of nuclear reactors produce fissile material, such as plutonium, as a by-product, which could be used in the development of a nuclear weapon. However, nuclearreactors can also be used for peaceful, civilian purposes: providing electricity to a city, forexample. As such, a nation which wanted to develop a nuclear weapon could build areactor, claiming it would be used for civilian purposes, and then use its plutonium to builda nuclear weapon.

During the Cold War, the United States and the Soviet Union spent billions of dollarsdeveloping rocket technology which could carry humans into space (and even eventuallyto the moon). The knowledge gained from this peaceful rocket technology also served inthe development of intercontinental ballistic missile technology as well.

The International Atomic Energy Agency attempts to monitor dual-use technology incountries who are signatories of the Nuclear Non-Proliferation Treaty, to make sure thatfissile material is not diverted to military functions. In recent events, both Iran and NorthKorea have been accused of having nuclear weapons programs based on dual-usetechnology.

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Lax biosecurity at laboratories is worrying researchers and regulators that potentialselect agents may fall into the hands of malevolent parties. It may have been instrumental tothe 2001 anthrax attacks in the United States, and unintentional SARS virus leaks led tolethal outbreaks in China, Taiwan and Singapore over 2003 and 2004. Universities mayflaunt regulations, complacent of the dangers in doing so. Though the majority of breachesare benign, the hybridization of Hepatitis C and dengue-fever viruses at Imperial CollegeLondon in 1997 resulted in a fine when health and safety rules were not observed.A researchprogram at Texas A&M was shut down when Brucella and Coxiella infections were notreported. That the July 2007 terrorist attacks in central London and at Glasgow airportmay have involved medical professionals was a recent wake-up call that screening peoplewith access to pathogens may be necessary. The challenge remains to maintain securitywithout impairing the contributions to progress afforded by research.

Most industrial countries have export controls on certain types of designated dual-use technologies, and they are required by a number of treaties as well. These controlsrestrict the export of certain commodities and technologies without the permission of thegovernment. The principal agency for dual use export controls in the United States is theDepartment of Commerce, Bureau of Industry and Security.

More generally speaking, dual-use can also refer to any technology which can satisfymore than one goal at any given time. Thus, expensive technologies which would otherwiseonly serve military purposes can also be utilized to benefit civilian commercial interestswhen not otherwise engaged such as the Global Positioning System.

1.6 ROAD MAP TO TECHNICAL PLANNING

Overview of the Roadmapping process

Figure 3 The Technology Roadmapping phases.

NOTES



The Technology Roadmapping Process conducts 3 phases (see figure 3): preliminaryactivities, the development of the roadmap and the follow-up activities phase. Because theprocess is too big for one model the phases are modeled separately. Only the first twophases are considered. In the models no different roles are made, this is because everythingis done by the participants as a group.

Phase 1: Preliminary phase

The first phase, the preliminary phase, consists of 3 steps: satisfy essential conditions,provide leadership / sponsorship and define the scope and boundaries for thetechnology roadmap. In this phase the key decision makers must identify that they have aproblem and that technology roadmapping can help them in solving the problem.

Satisfy essential conditions

In this step it must become clear what the conditions are (they have to be identified)and if they are not met that somebody will take the actions necessary to meet the unmetconditions. These conditions include for example the following: there must be a need forthe technology roadmap, input and participation from several different parts of theorganization (e.g. marketing, R&D, the Strategic Business Units ) with different planninghorizons and different perspectives and the process should be needs driven. All the conditionsshould be satisfied (or someone is going to take the actions necessary) in order to continueto the next step. The participants can have zero or more conditions of their own. It appliesto all the conditions that they have the attribute to be met or not. Insert non-formatted texthere

Provide leadership / sponsorship

Committed leadership is needed because time and effort is involved in creating thetechnology roadmap. Additionally the leadership should come from one of the participants,one of them provides leadership / sponsorship. This means that the line organization mustdrive the process and use the roadmap to make resource allocation decisions.

Define the scope and boundaries for the technology roadmap

In this step the context for the roadmap will be specified. In the company a visionshould exist and it must be clear that the roadmap can support that vision. If the vision doesnot exist one should be developed and clearly stated. When that is done the boundariesand the scope of the roadmap should be specified. Furthermore the planning horizon andthe level of details should be set. The scope can be further divided into the technologyscope and the participation scope.

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In table 1. all the different sub-activities of the preliminary activity phase can be seen. Allthe sub-activities have concepts as end “products”, these are marked in uppercase. Theseconcepts are the actual meta-data model , which is an adjusted class diagram .

Table 1 Activity table for the preliminary activity phase.

Activity Sub-Activity Description

Identify essential conditions When all the participants come

together essential conditions, like

what groups should be involved,

what are the key customers and

what are the key suppliers, can

be identified.

Satisfy

essential

conditions

Take action to satisfy

conditions

For Technology Roadmapping to

succeed conditions from the

participants must be satisfied.

Provide

leadership /

sponsorship

The part of Leadership /

Sponsorship should be taken by

line organization; they must

drive the Roadmapping process

and use the roadmap to make

resource allocation decisions.

Clearly state vision The already existing vision has to

be clear

Develop vision The vision is developed and

stated clearly.

Define scope The scope of the project can

further define the set of needs,

planning horizion and level of

detail. The scope can be further

divided into the Technology

Scope and the participation scope

Define the

scope and

boundaries

for the

technology

roadmap

Define boundaries Also the boundaries should be

included

NOTES



Phase 2: Development phase

The second phase, the development of the technology roadmap phase , consists of 7steps: identify the “product” that will be the focus of the roadmap, identify the criticalsystem requirements and their targets, specify the major technology areas, specifythe technology drivers and their targets, identify technology alternatives and theirtimelines, recommend the technology alternatives that should be pursued and createthe technology roadmap report.

These steps create the actual roadmap.

Identify the “product” that will be the focus of the roadmap

In this step the common product needs are identified and should be agreed on by allthe participants. This is important to get the acceptance of all groups for the process. Incase of uncertainty of the product needs scenario-based planning can be used to determinethe common product needs. It can be seen that the participants and possibly the scenario-based planning provide the common product needs.

Identify the critical system requirements and their targets

Once it is decided what needs to be roadmapped the critical system requirementscan be identified, they provide the overall framework for the technology roadmap. Therequirements can have targets (as an attribute in figure 3) like reliability and costs.

Specify the major technology areas

These are the areas which can help achieve the critical system requirements. For eachtechnology area several technologies can be found. Example technology areas are: Marketassessment, Crosscutting technology, Component development and System development.

Specify the technology drivers and their targets

In this step the critical system requirements from step Identify the critical systemrequirements and their targets are transformed into technology drivers (with targets) forthe specific technology area. These drivers are the critical variables that will determinewhich technology alternatives are selected. The drivers depend on the technology areasbut they relate to how the technology addresses the critical system requirements.

Identify Technology alternatives and their timelines

At this point the technology drivers and their targets are specified and the technologyalternatives that can satisfy those targets should be specified. For each of the alternatives atimeline should be estimated for how it will mature with respect to the technology drivertargets.

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Time

This factor can be adapted suitable for the particular situation. The time horizons forE-commerce and software related sectors are usually short. Other distinctions can bemade on scale and intervals.

Recommend the technology alternatives that should be pursued

Because the alternatives may differ in costs, timeline etc. a selection has to be madeof the alternatives. These will be the alternatives to be pursued in figure 3. In this step a lotof trade-off has to be made between different alternatives for different targets, performanceover costs and even target over target.

Create the technology roadmap report

At this point the technology roadmap is finished. It can be seen that the technologyroadmap report consists of 5 parts: the identification and description of each technologyarea, critical factors in the roadmap, unaddressed areas, implementation recommendationsand technical recommendations. The report can also include additional information. Intable 2. all the different sub-activities of the development phase can be seen.

Table 2 Activity table for the Development phase.Activity Sub-Activity Description

Identify needs This critical step is to get the participants to identify and agree on the common product needs. This is important to get their buy-in and acceptance.

Use Scenario-based planning

If there is major uncertainty about the common product needs scenario-based planning can be used. Each scenario must be reasonable, internally consistent and comparable with the other scenarios.

Identify the “product” that will be the focus of the roadmap

State needs These are the needs for the product. Define critical system requirements

The critical system requirements provide the overall framework for the roadmap and are high-level dimensions to which the technologies relate. These include things like reliability and costs.

Identify the critical system requirements and their targets

Define targets For each of the system requirements targets have to be defined.

NOTES



Phase 3: Follow-up activity phase

This is the moment when the roadmap must be critiqued, validated and hopefullyaccepted by the group that will be involved in any implementation. For this a plan needs tobe developed using the technology roadmap. Next there must be a periodical review andupdate point, because the needs from the participants and the technologies are evolving.

Planning and Business Development Context for Technology Roadmapping. Theprocess of technology roadmapping fits into corporate strategy, corporate strategic planning, technology planning and the business development context. 3 critical elements should beconnected: needs, products and technology.

Specify the major technology areas

Transform requirements into technology oriented drivers

The major technology areas should be specified to help achieve the critical system requirements for the product. The critical system requirements are then transformed into technology drivers for the specific technology areas.

Specify the technology drivers and their targets

Select technology alternatives with their targets

Technology drivers and their targets are set based on the critical SYSTEM requirement targets. It specifies how viable technology alternatives must be to perform by a certain date. From the available technology alternatives a selection has to be made.

Identify technology alternatives and their timelines

Identify alternatives and their timelines

The technology alternatives that can satisfy the TARGETS must be identified. Next to this the TIMELINE from each alternative has to be identified.

Recommend the technology alternatives that should be pursued

Select subset of technology alternatives to be pursued

Determine which technology alternative to pursue and when to shift to a different TECHNOLOGY. Consolidate the best information and develop consensus from many experts.

Create the technology roadmap report

Create the report Here the actual technology roadmap report is created. This report includes: identification and description the technology, critical factor, unaddressed area, And implementation recommendation and technical recommendation.

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Knowledge and skills requiredConsultant with skills

In order to create a technology roadmap it is required to have a certain set ofknowledge and skills. This means that some of the participants must know the process oftechnology roadmapping. Next to this group-process and interpersonal skills are requiredsince the process includes a lot of discussions and finding out what the common need is. Ifthe amount of participants is really large there might be need for a consultant or facilitator.

The variety in technology RoadmappingThe purpose of technology Roadmapping

Product planning:This is the most common type of a technology roadmap; linking the insertion of

technologies into products. This can overlap between generations.Programme planning:

This type is more directed to the implementation of strategy and related to projectplanning. Figure 5 shows the relationships between technology development phases,programme phases and milestones.The formats of technology RoadmappingBars

Almost all the roadmaps are (partly) expressed in bars for each layer. This makes theroadmaps very simple and unified, which makes the communication and integration easier.Graphs

Also a technology roadmap can be expressed as a graph, usually one for each of thesub layers.Summary

This unit gave some insight into the policies of technology management systems,methods to build and maintian a learinging and a world class organisation and the dual usetechnology alogwith a road map to technical planning.QuestionsHave you understood?

1. Are policies a boon or a bane to technology management?2. Why and how can knowledge be leveraged?3. Elaborate on the steps in creating a learing organisation.4. How can you differentiate a world class organisation from a medoicare organisation?5. Prepare a road map towards techinal planning for a project of your choice.

NOTES



UNIT II

CRITICAL FACTORS IN MANAGINGTECHNOLOGY

Introduction

The need for flexibility in Management, opting for multiple technology choices andtechnology sourcing has been long felt. An overview of such topics have been dealt in thisunit. Issues relating to managing complexity and chaos have also been discussed.

Learning Objectives

To know about

How to bring about flexibility in Management ?

Role of Management in Change

Choice of Technology in SSE’s

What is Technology Sourcing?

Meaning of complexity, chaos and Uncertianty.

2.1 TOTAL FLEXIBILITY MANAGEMENT

Total flexibility management is a managerial approach for developing flexible resources.An extensive variety of management tools and approaches are available to achieve businesssuccess in today’s competitive global environment. Management approaches such as just-in-time manufacturing (JIT), employee involvement, activity-based management, time-basedcompetition and total quality management (TQM) all attempt to meet the needs of thecustomer —cheaper, faster and better. However, many world-class companies are realizingthat success in the future will go to the organization with the strategic advantage of flexibility.

The flexibility of a resource, or the degree to which it may be used in multiple ways oras a substitute for other, less plentiful resources, is a crucial attribute of all resources.Today, a token effort given to improve flexibility may be as futile as many initial half-hearted quality programs were in the early 1970s. The company-wide focus crucial tosuccessful TQM programs is also needed in developing total organizational flexibility.

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Flexibility is an important characteristic of all types of resources, not just materials ormachine tools. These include traditional resources, such as people and machines as well asless traditional resources, such as the organization’s structure, information flows, cultureand decision making processes. Furthermore, a resource with a high degree of flexibilityhas increased utility as a potential substitute for other resources. By leveraging thischaracteristic, effective companies achieve more with less.

Defining resources and flexibility

Viewed broadly, a resource may be defined as anything, tangible or intangible, that isunder an organization’s control and that may be used in pursuit of its mission. Some obviousexamples of resources include plant and equipment, raw materials, employees and financialresources.

Within the above definition, a manufacturer’s customers are not a resource. Althoughthey do contribute to the accomplishment of the firm’s mission, they are not under itscontrol. However, the firm’s relationships with its customers are under its control, at leastin part. Thus, a comprehensive view of resource management must include the intangiblepossessions of the organization. These include its relationships (reputation, standingagreements, etc.), its existing knowledge or experience base and the possibly undiscoveredand unused talents of its work force.

Flexibility management is also gaining importance due to the changes in the demandmanagement strategies. Fig. 2 shows various demand management strategies adopted byfirms to meet the demands of dynamic markets for products/services. Companies operatingin a make-to-stock environment produce the items and stock them based on the demandforecast, and the focus of the management will be on maintaining the optimum level of thestock. The next level is an assemble-to-order environment where the products are stockedin a ready-to-assemble condition and assembled to meet the orders. This environmentprovides certain flexibility to build a limited and known variety of products using highlystandardised and modular designs. Beyond this, the items will have to be produced usingthe available designs. This will lead to a make-to-order situation.

The emerging environment is leading towards an Engineer-to-Order (ETO) situationwhere new products are engineered to order by modifying the existing designs. Thefundamental assumption of this approach is that the designs are readily available and varietycan be accomplished simply by building flexibility into the manufacturing systems. However,the real competence for customisation lies beyond this, that is, in the ability to quickly andefficiently design new products using available competencies and development of newcompetencies wherever required. We call this as an Innovate-to-Order (ITO) environment.The future organisations are required to operate and compete in this new environment. Aswe move from make-to-stock situation towards the innovate-to-order level, therequirements for flexibility increases and there will be greater need for flexibility management.

NOTES



Emergence of Flexibility

The concept of flexibility in the operations of the firm seems to have been originatedin the later part of 1930s in economics literature and ever since attracting growing attentionfrom industry as well as academic researchers. However, in spite of intense research effortsand large number of publications, especially during the last two decades, flexibility remaineda conundrum, a confusing puzzle, defying even a universally accepted definitions.

Flexibility is recognized as a complex, multi-dimensional and polymorphous concept,which means different things to different people and is highly context specific. Severalattempts are being made in literature to comprehend this complex concept and capture itsessence with the help of unified frameworks, taxonomy, models and measures. However,in spite of all these efforts, there are so many gaps in understanding the concept of flexibility,especially from a practitioner’s point of view. It was observed that, beyond the intuitiveand rudimentary perception of the importance of flexibility, there exists little understandingof its nature, and of its effect on manufacturing performance. Other observations havebeen that, while the potential benefits of flexibility are familiar, the concept of flexibility itselfis not well understood. There are many questions in the minds of the practitioners, such as,what is flexibility? Why do we need it ? How does it matter for business performance ?How it is created and exploited, etc.? Hence, there is a need to advance the currentunderstanding of the flexibility and this paper is a step in this direction.

There are three areas that are encompassed under the umbrella of ManagementFlexibility which allow both supervisors and employees to accomplish their goals, improveoperating efficiency, take care of personal needs, and adapt to the changing needs of theUniversity and the individual. Those areas are Flexible Scheduling, Telecommuting, andInternal Promotion of Employees.

2.2 CHANGE MANAGEMENT

The change management process in systems engineering is the process of requesting,determining attainability, planning, implementing and evaluation of changes to a system. Ithas two main goals : supporting the processing of changes – which is mainly discussedhere – and enabling traceability of changes, which should be possible through properexecution of the process described here.

There is considerable overlap and confusion between change management,change control and configuration management. Change management is an importantprocess, because it can deliver vast benefits (by improving the system and thereby satisfyingcustomer needs), but also enormous problems (by ruining the system and/or mixing upthe change administration). Furthermore, at least for the Information Technology domain,more funds and work are put into system maintenance (which involves change management)than to the initial creation of a system. Typical investment by organizations during initialimplementation of large ERP systems is 15-20% of overall budget.

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In the same vein, Hinley describes two of Lehman’s laws of software evolution: thelaw of continuing change (i.e. systems that are used must change or automatically becomeless useful) and the law of increasing complexity (i.e. through changes the structure of asystem becomes ever more complex and more resources are needed to simplify it).

The field of manufacturing is nowadays also confronted with many changes due toincreasing and worldwide competition, technological advances and demanding customers.Therefore, (efficient and effective) change management is also of great importance in thisarea.

It is not unthinkable that the above statements are true for other domains as well,because usually, systems tend to change and evolve as they are used. Below, a genericchange management process and its deliverables are discussed, followed by some examplesof instances of this process.

The process and its deliverables

For the description of the change management process, the meta-modeling techniqueis used.

Activities

There are six main activities, which jointly form the change management process.They are: Identify potential change, Analyze change request, Evaluate change, Plan change,Implement change and Review and close change. These activities are executed by fourdifferent roles, which are discussed in Table 1. The activities (or their sub-activities, ifapplicable) themselves are described in Table 2.

Table 1 Role descriptions for the change management process Role Description

Customer

The customer is the role that requests a change due to problems encountered or new functionality requirements; this can be a person or an organizational entity and can be in- or external to the company that is asked to implement the change.

Project manager

The project manager is the owner of the project that the CHANGE REQUEST concerns. In some cases there is a distinct change manager, who in that case takes on this role.

Change committee

The change committee decides whether a CHANGE REQUEST will be implemented or not. Sometimes this task is performed by the project manager as well.

Change builder

The change builder is the person who plans and implements the change; it could be argued that the planning component is (partially) taken on by the project manager.

NOTES



Table 2 Activity descriptions for the change management process

Activity Sub-activity Description Identify potential change

Require new functionality

A customer desires new functionality and formulates a REQUIREMENT.

Encounter problem

A customer encounters a problem (e.g. a bug) in the system and this leads to a PROBLEM REPORT.

Request change

A customer proposes a change through creation of a CHANGE REQUEST.

Analyze change request

Determine technical feasibility

The project manager determines the technical feasibility of the proposed CHANGE REQUEST, leading to a CHANGE TECHNICAL FEASIBILITY.

Determine costs and benefits

The project manager determines the costs and benefits of the proposed CHANGE REQUEST, resulting in CHANGE COSTS AND BENEFITS. This and the above sub-activity can be done in any order and they are independent of each other, hence the modeling as unordered activities.

Evaluate change

Based on the CHANGE REQUEST, its CHANGE TECHNICAL FEASIBILITY and CHANGE COSTS AND BENEFITS, the change committee makes the go/no-go decision. This is modeled as a separate activity because it is an important process step and has another role performing it. It is modeled as a sub-activity (without any activity containing it) as recommended by Remko Helms (personal communication).

Plan change

Analyze change impact

The extent of the change (i.e. what other items the change effects) is determined in a CHANGE IMPACT ANALYSIS. It could be argued that this activity leads to another go/no-go decision, or that it even forms a part of the Analyze change request activity. It is modeled here as a planning task for the change builder because of its relationship with the activity Propagate change.

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Deliverables

esides activities, the process-data diagram also shows the deliverables of each activity,i.e. the data. These deliverables or concepts are described in Table 3; in this context, themost important concepts are: change request and change log entry.

few concepts are defined by the author (i.e. lack a reference), because either no(good) definitions could be found, or they are the obvious result of an activity. Theseconcepts are marked with an asterisk (‘*’). Properties of concepts have been left out of

Create planning

A CHANGE PLANNING is created for the implementation of the change. Some process descriptions (e.g. Mäkäräinen, 2000) illustrate that is also possible to ‘save’ changes and process them later in a batch. This activity could be viewed as a good point to do this.

Implement change

Execute change

The change is ‘programmed’; this activity has a strong relationship with Propagate change, because sometimes the change has to be adapted to other parts of the system (or even other systems) as well.

Propagate change

The changes resulting from Execute change have to be propagated to other system parts that are influenced by it. Because this and the above sub-activity are highly dependent on each other, they have been modeled as concurrent activities.

Test change

The change builder tests whether what (s)he has built actually works and satisfies the CHANGE REQUEST. As depicted in the diagram, this can result in an iterative process together with the above two sub-activities.

Update documentation

The DOCUMENTATION is updated to reflect the applied changes.

Release change A new SYSTEM RELEASE, which reflects the applied change, is made public.

Review and close change

Verify change

The implementation of the change in the new SYSTEM RELEASE is verified for the last time, now by the project manager. Maybe this has to happen before the release, but due to conflicting literature sources and diagram complexity considerations it was chosen to model it this way and include this issue.

Close change This change cycle is completed, i.e. the CHANGE LOG ENTRY is wrapped up.

NOTES



the model, because most of them are trivial and the diagram could otherwise quickly becometoo complex. Furthermore, some concepts (e.g. CHANGE REQUEST, SYSTEMRELEASE) lend themselves for the versioning approach as proposed by Weerd [6], butthis has also been left out due to diagram complexity constraints.

Table 3 Concept descriptions for the change management process Concept Description

REQUIREMENT A required functionality of a component (or item; NASA, 2005).

PROBLEM REPORT

Document describing a problem that cannot be solved by a level 1 help desk employee; contains items like date, contact info of person reporting the problem, what is causing the problem, location and description of the problem, action taken and disposition, but this is not depicted in the diagram (Dennis, et al., 2002).

CHANGE REQUEST

Document that describes the requested change and why it is important; can originate from PROBLEM REPORTS, system enhancements, other projects, changes in underlying systems and senior management, here summarized as REQUIREMENTS (Dennis, et al., 2002). Important attribute: ‘go/no-go decision’, i.e. is the change going to be executed or not?

CHANGE LOG ENTRY*

Distinct entry in the collection of all changes (e.g. for a project); consists of a CHANGE REQUEST, CHANGE TECHNICAL FEASIBILITY, CHANGE COSTS AND BENEFITS, CHANGE IMPACT ANALYSIS, CHANGE PLANNING, TEST REPORT and CHANGE VERIFICATION. Not all these have to be included if the process is terminated earlier (i.e. if the change is not implemented).

CHANGE TECHNICAL FEASIBILITY

Concept that indicates whether or not “reliable hardware and software, technical resources capable of meeting the needs of a proposed system [i.e. change request] can be acquired or developed by an organization in the required time” (Vogl, 2004).

CHANGE COSTS AND BENEFITS

The expected effort required to implement and the advantages (e.g. cost savings, increased revenue) gained by implementing the change. Also named economic feasibility

CHANGE IMPACT ANALYSIS An assessment of the extent of the change

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Besides just ‘changes’, one can also distinguish deviations and waivers. A deviation isan authorization (or a request for it) to depart from a requirement of an item, prior to thecreation of it. A waiver is essentially the same, but than during or after creation of the item.These two approaches can be viewed as minimalistic change management (i.e. no realsolution to the problem at hand).

Examples

A good example of the change management process in action can be found in softwaredevelopment. Often users report bugs or desire new functionality from their softwareprograms, which leads to a change request. The product software company then looksinto the technical and economical feasibility of implementing this change and consequentlyit decides whether the change will actually be realized. If that indeed is the case, the changehas to be planned, for example through the usage of function points. The actual executionof the change leads to the creation and/or alteration of software code and when this changeis propagated it probably causes other code fragments to change as well. After the initialtest results seem satisfactory, the documentation can be brought up to date and be released,together with the software. Finally, the project manager verifies the change and closes thisentry in the change log.

Another typical area for change management in the way it is treated here, is themanufacturing domain. Take for instance the design and production of a car. If for examplethe vehicle’s air bags are found to automatically fill with air after driving long distances, thiswill without a doubt lead to customer complaints (or hopefully problem reports during thetesting phase). In turn, these produce a change request (see Figure 2 on the right), whichwill probably justify a change. Nevertheless, a – most likely simplistic – cost and benefitanalysis has to be done, after which the change request can be approved. Following ananalysis of the impact on the car design and production schedules, the planning for theimplementation of the change can be created. According to this planning, the change canactually be realized, after which the new version of the car is hopefully thoroughly testedbefore it is released to the market.

Change management in industrial plants

Since complex processes can be very sensitive to even small changes, propermanagement of change to industrial facilities and processes is recognized as critical tosafety. In the US, OSHA has regulations that govern how changes are to be made anddocumented. The main requirement is that a thorough review of a proposed change beperformed by a multi-disciplinary team to ensure that as many possible viewpoints areused as possible to minimize the chances of missing a hazard. In this context, changemanagement is known as Management of Change, or MOC. It is just one of manycomponents of Process Safety Management, section 1910.119(l).1

NOTES



Change Management is a structured approach to transitioning individuals, teams, andorganizations from a current state to a desired future state. The current definition of ChangeManagement includes both organizational change management processes and individualchange management models, which together are used to manage the people side of change.

Individual change management

A number of models are available for understanding the transitioning of individualsthrough the phases of change.

Unfreeze-Change-Refreeze

An early model of change developed by Kurt Lewin described change as a three-stage process[1]. The first stage he called “unfreezing”. It involved overcoming inertia anddismantling the existing “mindset”. Defense mechanisms have to be bypassed. In the secondstage the change occurs. This is typically a period of confusion and transition. We areaware that the old ways are being challenged but we do not have a clear picture to replacethem with yet. The third and final stage he called “freezing” (often called “refreezing” byothers). The new mindset is crystallizing and one’s comfort level is returning to previouslevels. Rosch (2002) argues that this often quoted three-stage version of Lewin’s approachis an oversimplification and that his theory was actually more complex and owed more tophysics than behavioural science. Later theorists have however remained resolute in theirinterpretation of the force field model. This three-stage approach to change is also adoptedby Hughes (1991) who makes reference to: “exit” (departing from an existing state), “transit”(crossing unknown territory), and “entry” (attaining a new equilibrium). Tannenbaum &Hanna (1985) suggest a change process where movement is from “homeostasis and holdingon”, through “dying and letting go” to “rebirth and moving on”. Although elaborating theprocess to five stages, Judson (1991) still proposes a linear, staged model of implementinga change: (a) analysing and planning the change; (b) communicating the change; (c) gainingacceptance of new behaviours; (d) changing from the status quo to a desired state, and (e)consolidating and institutionalising the new state.

Kübler-Ross

Some change theories are based on derivatives of the Kübler-Ross model fromElizabeth Kubler-Ross’s book, “On Death and Dying.” The stages of Kubler-Ross’s modeldescribe the personal and emotional states that a person typically encounters when dealingwith loss of a loved one. Derivatives of her model applied in other settings such as theworkplace show that similar emotional states are encountered as individuals are confrontedwith change.

Formula for Change

A Formula for Change was developed by Richard Beckhard and David Gleicher andis sometimes referred to as Gleicher’s Formula. The Formula illustrates that thecombination of organisational dissatisfaction, vision for the future and the possibility of

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immediate, tactical action must be stronger than the resistance within the organisation inorder for meaningful changes to occur.

ADKAR

The ADKAR model for individual change management was developed by Prosciwith input from more than 1000 organizations from 59 countries. This model describes fiverequired building blocks for change to be realized successfully on an individual level. Thebuilding blocks of the ADKAR Model include:

1. Awareness – of why the change is needed

2. Desire – to support and participate in the change

3. Knowledge – of how to change

4. Ability – to implement new skills and behaviors

5. Reinforcement – to sustain the change

Organizational change management

Organizational change management includes processes and tools for managing thepeople side of the change at an organizational level. These tools include a structured approachthat can be used to effectively transition groups or organizations through change. Whencombined with an understanding of individual change management, these tools provide aframework for managing the people side of change. People who are confronted by changewill experience a form of culture-shock as established patterns of corporate life are altered,or viewed by people as being threatened. Employees will typically experience a form of“grief” or loss.

Dynamic conservatism

This mode by Donald Schön explores the inherent nature of organisations to beconservative and protect themselves from constant change. Schön recognises the increasingneed, due to the increasing pace of change for this process to become far more flexible.This process being one of ‘learning’. Very early on Schön recognised the need for what isnow termed the ‘learning organization’. These ideas are further expanded on within hisframe work of ‘reflection-in-action’ the mapping of a process by which this constant changecould be coped with.

The role of the management

Management’s responsibility (and that of administration in case of political changes)is to detect trends in the macroenvironment as well as in the microenvironment so as to beable to identify changes and initiate programs. It is also important to estimate what impacta change will likely have on employee behaviour patterns, work processes, technologicalrequirements, and motivation. Management must assess what employee reactions will be

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and craft a change program that will provide support as workers go through the process ofaccepting change. The program must then be implemented, disseminated throughout theorganization, monitored for effectiveness, and adjusted where necessary. Organizationsexist within a dynamic environment that is subject to change due to the impact of variouschange “triggers”, such as evolving technologies. To continue to operate effectively withinthis environmental turbulence, organizations must be able to change themselves in responseto internally and externally initiated change. However, change will also impact upon theindividuals within the organization. Effective change management requires an understandingof the possible effects of change upon people, and how to manage potential sources ofresistance to that change. Change can be said to occur where there is an imbalance betweenthe current state and the environment.

Other Approaches to Managing Change

Appreciative Inquiry, one of the most frequently applied approaches toorganizational change, is partly based on the assumption that change in a system isinstantaneous (‘Change at the Speed of Imagination’)

Scenario Planning: Scenario planning provides a platform for doing so by askingmanagement and employees to consider different future market possibilities in whichtheir organizations might find themselves.

Theory U of Otto Scharmer who describes a process in which change strategiesare based on the emerging future rather than on lesson from the past.

2.3 CHOICE OF TECHNOLOGY

Technology choice has important implications for growth and productivity in industry.The use of technology is always tied to an objective. Because various types of technologiescan be used to achieve an organization’s objectives, the issue of choice arises. The conceptof technology choice assumes access to information on alternative technologies and theability to evaluate these effectively. Moustafa (1990) asserted that effective choice is basedon pre-selected criteria for a technology’s meeting specified needs. Further, it depends onthe ability to identify and recognize opportunities in different technologies. The expectedoutcome is that the firm will select the most suitable or “appropriate” technology (AT) in itscircumstances.

The concept of AT has been a subject of debate for many years. Stewart (1987)contrasted two general views. First, welfare economics defines AT as a set of techniquesfor making optimum use of available resources in a given environment. Second, socialscientists and those working in AT institutions associate AT with a specific set ofcharacteristics. According to Stewart, the characteristics defining AT normally include “morelabour-using, less capital-using, less skill-using, making more use of local materials andresources, and smaller in scale.”

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It is also sometimes emphasized that AT should not affect the environment negativelyand that it should fit in with the socioeconomic structures of the community. The suggestedcharacteristics are too numerous, which implies that a technology can be appropriate insome ways and inappropriate in others. Kaplinsky examined the trade-offs involved in thechoice of technology and found that mechanized production can, at times, turn out aninexpensive, higher quality product for consumers, whereas normal production of a lowerquality and higher cost product generates more employment (ATI 1987). This illustratesthe dilemma involved in evaluating technology and raises the question, Appropriate forwhom? This article is concerned with the gaps in knowledge, skills, or resources thathinder effective choice of technology at the enterprise level. In this context, the termappropriate is used loosely to mean technology that is most advantageous to the enterprise’spurpose and circumstances.

Small enterprises

The heterogeneity of the SSE sector complicates the problem defining it. The conceptis defined in different ways, depending on the purpose of classifying firms as micro, small,medium sized, or large. Technologically, the sector is said to use low-level inputs and skills,to have much greater labour intensity, to produce lower priced products, and to operateon a small scale. The study on which this article is based focused on enterprises in thecarpentry and hair-care subsectors employing fewer than 20 employees. It covered microand small enterprises operating at various levels along the formality–informality continuum.The “Private Sector Diagnosis Survey” (USAID 1989) found that most small enterprisesin Kenya had fewer than 20 employees.

Choice of Technology in SSE’s

Private-sector development as a suitable alternative for promoting sustainable andbalanced growth in India has attracted considerable attention. Many governments anddevelopment organizations have focused on the promotion of small-scale enterprises (SSEs)as a way of encouraging broader participation in the private sector. The promotion ofSSEs and, especially, of those in the informal sector is viewed as a viable approach tosustainable development because it suits the resources in India.

A number of factors have helped to direct the attention of development agencies tothe merits of SSEs. For instance, at the peak of the economic crisis in the early 1980s, theSSE sector grew tremendously and exhibited unique strengths in the face of recession. Thesector continued to grow, despite hostile economic, regulatory, and political environments.The entrepreneurs in this sector came to be regarded as highly opportunistic and innovative.They emerged spontaneously to take advantage of opportunities that arose in the changingbusiness environment. Moreover, they demonstrated great creativity in starting enterpriseswith minimal resources.

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SSEs have characteristics that justify promoting them in a development strategy. Theycreate employment at low levels of investment per job, lead to increased participation ofindigenous people in the economy, use mainly local resources, promote the creation anduse of local technologies, and provide skills training at a low cost to society (ILO 1989).

It is generally recognized that SSEs face unique problems, which affect their growthand profitability and, hence, diminish their ability to contribute effectively to sustainabledevelopment. Many of the problems cited have implications for technology choice. Theseproblems include lack of access to credit, inadequate managerial and technical skills, lowlevels of education, poor market information, inhibitive regulatory environments, and lackof access to technology.

Factors influencing the choice of technology by SSEs

Entrepreneurs decide at the enterprise level which technologies to use. The mainfactors influencing their choice of technology include the objectives of the firm, the resourcesavailable, the nature of the market, and their knowledge of available technologies (Stewart1987). Moreover, the entrepreneurs need technical and managerial skills to choose, adapt,and effectively use technology.

Additionally, one would be in a better position to choose a technology if one were able toassess the demand for the firm’s products, estimate the rate of change in the market thatmay call for change in technology, gather information about alternative technologies, andestimate the potential return on investment for each alternative. However, manyentrepreneurs in this sector lack the education, training, management experience, and othercompetencies needed to respond to these issues. Because of their economic andorganizational characteristics, many SSEs lack information about technologies and haveno way of gauging the appropriateness of those they are aware of (Neck and Nelson1987).

Macropolicies also affect technology choice at the firm level through the overallsocioeconomic, political, and legal forces. It has been suggested that general socioeconomicenvironment, industry-specific regulations, taxes, subsidies, trade and financing policies,science and technology research, and dissemination policies tend to favour large-scaleenterprises (ATI 1987).

Problems hindering the effective choice of technology by SSEs

The literature indicates that SSEs face unique constraints that hinder the effectivechoice of technology. Many SSE owners or managers lack managerial training andexperience. The typical owner or managers of small businesses develop their own approachto management, through a process of trial and error. As a result, their management style islikely to be more intuitive than analytical, more concerned with day-to-day operations thanlong-term issues, and more opportunistic than strategic in its concept (Hill 1987). Although

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this attitude is the key strength at the start-up stage of the enterprise because it providesthe creativity needed, it may present problems when complex decisions have to be made.A consequence of poor managerial ability is that SSE owners are ill prepared to facechanges in the business environment and to plan appropriate changes in technology.

Lack of information is a key problem affecting SSE’s access to technology. Harper(1987) suggested that technologies used by SSEs in developing countries may beinappropriate because their choice is based on insufficient information and ineffectiveevaluation. Neck and Nelson (1987) suggested that ignorance is a key constraint affectingthe choice of technology by SSEs. Further, level of education is relevant, as it may determinethe entrepreneurs’ access to information. Generally, the ability to read and write, exposureto a broader world, and training in the sciences enhance one’s ability to understand, respondto, use, and control technologies (Anderson 1985).

Lack of access to credit is almost universally indicated as a key problem for SSEs.This affects technology choice by limiting the number of alternatives that can be considered.Many SSEs may use an inappropriate technology because it is the only one they canafford. In some cases, even where credit is available, the entrepreneur may lack freedomof choice because the lending conditions may force the purchase of heavy, immovableequipment that can serve as collateral for the loan. Another related problem is the lack ofsuitable premises and other infrastructure.

The national policy and regulatory environment has an important impact on technologydecisions at the enterprise level. The structural adjustment programs (SAPs) currentlyimplemented in many African countries are aimed at removing heavy policy distortions,which have been viewed as detrimental to the growth of the private sector. However,much as these policies may in principle favour SSE growth in the long run, concern hasbeen shown about the ability of the SSE sector to increase production and create morejobs under conditions of declining demand (Henk et al. 1991). SAPs tend to severelyaffect vulnerable groups in the short run and have been associated with the worseningliving conditions in many African countries (USAID 1991). Furthermore, severe cutbacksin government services, such as health and education, force many small-business ownersto draw more money from their businesses to meet these needs, thus hindering investmentin technology and business expansion. In addition, the resulting reduction in employmentand real wages leaves many potential customers without the ability to buy, thus reducingdemand.

Some evidence from the fieldThis section highlights the findings of a study carried out on the SSE sector in Kenya.

The survey used a random sample of 140 SSEs operating in the carpentry and hair-caresubsectors in Kenya. The two subsectors are largely dominated by small and microenterprises. Interviews were conducted with owner and managers of SSEs. The literature

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survey included a review of policy documents outlining government policy objectives forSSE development and technology issues in Kenya (for a detailed report of this study, seeNgahu [1992]).

The findings of the study correspond to those in the literature. Most of the SSE(78%) were individually owned, and the others were partnerships. The SSEs had notgrown much over the years. More than 51% had fewer than 5 workers, and only 22% hadmore than 10 employees. Sixty-three percent of the owners surveyed had secondaryeducation. More than 60% had some kind of training in a technical area of business, butonly 13 and 12% had any training in general business management and marketing,respectively.

Most tools and equipment used in the two subsectors were imported from Europe orAsia. In some cases, even simple tools, such as brushes, hammers, and tape measures,were imported. In the hair-care subsector, the chemicals, materials, and equipment weremainly imported. The tendency to rely on foreign sources and the large-scale industrialsector for supply of equipment sometimes led to an incompatibility of the needs and capacitiesof the SSEs. Wangwe (1993) suggested that SSEs are trying to avoid risk by avoidingunproven technologies.

To get information about products, tools, equipment, and processes to use in business,many SSEs rely heavily on friends, competitors, and training courses. More than 64% ofthe respondents indicated that friends were their main source of information on availabletechnologies. Other sources include training courses, magazines, and sales people. Thehigh reliance on friends as a source of information may explain the similarities among productsand services from this sector. Both subsectors serve markets that are clearly segmented,and technologies in enterprises serving the same market were very similar. The key methodfor technology choice in these enterprises seemed to be simple imitation based onobservation.

Although imitation strategies have unique merits for small firms because they serve tominimize risks, imitation can be risky in the absence of adequate market information. ManySSEs lack information about consumer demand and competition. Moreover, they lack theskills and resources to conduct market research. As a result, many imitators find themselvesin a congested market. The similarity of their products, coupled with the tendency to servethe same market segments, erodes any competitive advantage. This forces them to competeby reducing prices, which in turn reduces profits and opportunities for growth. Most SSEowners were influenced by customer expectations and tastes, current trends, and thetechnology that competitors were using. Generally, the technologies adopted in bothsubsectors were labour intensive.

Most respondents expressed concern about high prices, inability to determine quality,lack of information about serviceability, and lack of alternatives. They also raised the issueof inadequate infrastructure, high taxation on equipment, lack of access to credit, and lackof appropriate training courses.

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The government policy on the use of technology in the production of goods andservices is to encourage “the application of technologies that minimize wastes and exhibitrecycling possibilities; the use of local and renewable materials; the use of local talents andinputs wherever possible; and the active development of innovations and inventions”(Government of Kenya 1989). Although the policy objectives appear explicit, it is notclear which policy measures or government interventions have been intended to affect theprocess of technology choice by SSEs.

Policy implications

SSEs are obviously incapable of sourcing, evaluating, and adapting technologieseffectively. The government policy should, therefore, aim to develop these capabilities inSSEs through supportive institutions. Policy can encourage the development of assistanceprograms to facilitate SSEs’ access to resources, information, training, and technology.Further, policy should promote the development of technologies appropriate for SSEs.Although it is possible to develop policies designed to improve the circumstances of SSEs,it may be more feasible to support the development of technologies compatible with theSSEs’ circumstances.

Policies should aim to encourage and promote the development of local technologies.Emphasis should be on the promotion of the local tool industry to reduce reliance onimports. SSEs are said to face a “liability of smallness.” Because of their size and resourcelimitations, they are unable to develop new technologies or to make vital changes in existingones. Still, there is evidence that SSEs have the potential to initiate minor technologicalinnovations to suit their circumstances. However, for SSEs to fully develop and use thispotential, they need specific policy measures to ensure that technology services andinfrastructure are provided. Further, research and development institutions that are publiclyfunded should be encouraged to target the technology needs of SSE.

The problem of access to information may be attributed to the inadequacy of SSEsupport institutions. This points to the need for a supportive policy to encourage theestablishment of documentation centres and information networks to provide informationto SSEs at an affordable price. Market characteristics significantly influence technologychoice. The government can facilitate the SSEs’ choice of technology by creating anenvironment that is conducive to fair competition.

The crucial focus of policy should be an enabling environment for technology decisionsat the enterprise level. There is a need to go beyond statements of policy objectives and totake specific and consistent measures to ensure that the policy objectives will be achieved.There is a need to address the overall policy framework to ensure that the policy instrumentsare consistent with key objectives. In some cases, there appears to be an obviouscontradiction between policy and implementation.

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2.4 TECHNOLOGY SOURCING

Today’s global competition, forces manufacturing companies to re-evaluate their existingprocesses and technologies in order to focus on strategic activities. This issue has createdan awareness of the importance of the make-or-buy decision and its long-term impact onthe organisation. Undertaking make-or-buy decisions requires an analysis of in-house andoutside manufacturing technologies and capabilities. Therefore, companies should be ableto understand and identify the way the technology portfolio should be built in order tobalance in-house and outsourced technologies. This paper discusses the different optionsfor technology sourcing resulting from the importance/competitiveness matrix. This matrixindicates a range of sourcing options as a result of technology process analysis in terms of:importance of the technology to the business. The ability to influence the business keysuccess factors; and competitiveness with which the technology is deployed. This involvesassessing the company’s level of performance in the use of technology against potentialsuppliers or competitors. In particular, a critical dimension for technology sourcing, thetechnology life cycle, is presented, emphasising the importance of understanding andmonitoring the life cycle of technologies. This paper particularly shows the critical importanceof technology life cycle consideration in the choice of technology sourcing options

2.5 MANAGING UNCERTAINTY (RISK MANAGEMENT)

Managing change — particularly in the context of Extended Services — often requiresschool change teams to rely on other things ‘falling into place’ and other people playingtheir part. In these situations, that is, when the outcome is not entirely under your control,you are faced with uncertainty and the risks that arise.

Rather than make an assumption and hope it all works out OK, change managers canuse this tool to help reduce and eliminate the risks involved in their change projects byproactively and systematically managing the uncertainty from which all risks stem.

The tool, Managing uncertainty (risk management), differs from customary riskmanagement methods in that it focuses attention on the underlying uncertainty rather thanthe risk, and it proposes a way of effectively tracking the impact of actions taken so thatyou avoid managing a crisis!

What is it?

Managing uncertainty (risk management) is a form-driven tool to ensure you identifythe uncertainties that present risks to the success of your change project

The tool helps the team to understand the assumptions they have made in puttingtheir project plan together

It enables you to raise confidence in assumptions, reduce uncertainty and, hence,reduce or eliminate risk to successful change

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When would you use it?

During the deliver stage

Are there any rules? Use it always when planning your implementation As action is taken, revisit and reappraise confidence in assumptions and criticality

of risks

2.6 COMPLEXITY MANAGEMENT

Managing complexity

A content management system (CMS) requires contributions from many differentskill sets and coordination across diverse departments and roles. A CMS project can costhundreds of thousands or even millions of dollars and require months or years to designand implement. Because of the high planning, purchasing, and design costs, there is a needto effectively manage the complexity of CMS projects. Here are ten lessons in managingcomplexity gleaned from real-world, successful CMS projects. Ideally you’ll considerthese at the beginning of a project when they can have the most impact:

1. Keep the team small.

A big team usually requires a lot of coordination and communication, especially if it isspread across different departments, offices, or cities. This coordination increases thepoints of failure and quickly reaches a level of diminishing returns for systems that needclose collaboration to be designed well.

To overcome this problem, one financial services firm formed a multidisciplinary teamof only five experienced people to create their content management system. The teamincluded people who both had skills to contribute and could make executive decisions.This team consulted with additional, specialized staff only when needed. In the end theysucceeded in building a system in a few months in a company where other efforts typicallyspent several months and failed.

2. Don’t try to fix everything at once.

A CMS alone is complex enough; combining that effort with a site redesign, newworkflow, new content, and more may be asking for trouble.

An international retailer decided to expand their content management system in away that required multiple new software packages. To reduce complexity, they swappedin the new CMS without changing the design of either their online or print catalogs.

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3. Only build what you need.It’s important to remember the main benefit of content management systems is efficiency.

Anything done with a CMS can be done without a CMS by people with the right skills,albeit in much less efficient ways. Websites often use content management when there is alarge volume of content, frequent content updates, content distributed across several media,and so on, tasks that would be arduous when done manually. But if more effort is neededto implement a CMS than to manage the content manually, the return on investment isquickly lost.

The potential features of CM software spiral out in all directions, so discipline isneeded to decide which features are needed most. At the beginning of a project we canexamine which features bring us the most benefit compared with how difficult it is toimplement those features, and choose the features with the most value.

A new media group at a bank took this approach and built the absolute simplestCMS that would serve their needs, and then gradually added one feature at a time as theneed became clear.4. Create an efficient information architecture.

A content management system with a different template for every published pagewould not be very efficient. And if efficiency is the main benefit of a content managementsystem, then it makes sense to use fewer templates. As designers, we must be very cleverabout how to arrange diverse information into a small number of templates while still retainingsome flexibility in the presentation.

A large technology company achieved this efficiency by creating templates as well asreusable modules of information—such as a list of related links—that fit inside thosetemplates. By creating rules that determined how templates could use certain modules thecompany struck a balance of CMS efficiency with display flexibility.5. Show your content some love.

Of all tasks in a content management project, the creation, editing, and migration ofcontent are probably the most frequently underestimated on the project plan. The surveyabove reveals this void as the biggest problem with CMS. Amid much sexier design andtechnology issues, the creation and/or re-formatting of content can be delayed until thiseventual necessity delays the project.

To counter this problem, one non-profit organization settled on an article layout at thebeginning of a project so it could start preparing the content earlier, then continued thecontent work in parallel with the design and technology work.6. Hire bouncers as project managers.

Perhaps this is going a little too far, but you do need rigorous project managers thatunderstand CM issues who will babysit the team to make sure every little task is gettingdone. These project managers must do more than make sure documents are delivered ontime, they must help connect the work that all team members do.

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One large retail firm took this to heart by using two project managers: one to oversee thebusiness and user interface issues and another to oversee the technology issues.

7. Tightly integrate design and technology.

Content management software involves certain components, such as content entryscreens, that require a combination of interaction design, information architecture, writing,and database programming skills. Few people do all these things well, and having differentpeople or groups design these components in isolation risks poor quality and consistency.

My smoothest experience designing these components was when my desk was locatedright next to the programmer’s desk and we constantly discussed the design as it evolved.

8. Buy the right size.

In the survey cited above, the number one problem with software is the expense. Youmight think the solution to this problem is to buy a less expensive software package, but Ithink a better solution is the buy the right size software package.

Tips for choosing the right software

Buy small software if you’re a small organization. Organizations like Boxes andArrows, the Asilomar Institute of Information Architecture, and Adaptive Path alluse Movable Type to manage content, which was originally designed for weblogs.As content management software, it doesn’t provide many basic functions, but itsimplifies the publishing process enough for occasional publishing needs.

Buy big software if you’re a large organization. One big CMS can actually bemore efficient than many different, smaller packages. One financial services firmemploys a federated model of CMS by using one software platform to publishmany websites, avoiding the extra training and technical work needed to workwith several different software packages.

Buy no software at all if you really don’t need it. In the decision to buy vs. build,we can also avoid software all together.

9. Design faster than business can change.

You must design and implement your system faster than your organization can change.

For example, a large computer networking company found that it required threeyears to roll out a new website design across all its departments and websites. Before theycould finish, the organization had undergone significant changes that needed to be reflectedin a new site design. Designing fast may mean keeping the scope small, but it can also meanfinding innovative approaches to problems rather than simply following conventional methods.Building a Metadata-Based Website is an example that speeds design of very large sitesby focusing management on the business concepts instead of the content.

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10. Get a second opinion.Content management is an elaborate, dynamic field and there are several solutions to

any problem. Just as in medicine, it’s sometime necessary to get a second or third opinionto hear approaches that arise from different philosophies.

One international retail company brought in a CMS expert to consult to the teamwithout doing any of the work herself. As an expert who didn’t work for the company orany of the contracted vendors, she was in a good position to provide impartial guidance.As a disinterested third-party, the expert can help smooth interaction within the team whileleveraging experience from previous projects.

Now you have a list of problems others have had and ten ways to address thecomplexity of content management. Will following this advice solve your CMS problems?Not entirely. If you’ve only heard the hype from software vendors, you may have very highexpectations that need to be reconciled with reality. Content management systems are nota silver bullet, but they can make your most onerous tasks more efficient if you activelymanage the inherent complexity.2.7 WHAT IS CHAOS AND COMPLEXITY?1. What is Chaos? - The first concept comes from Chaos, which is defined as “theirregular, unpredictable behavior of deterministic, non-linear dynamical systems.”Chaos is fast replacing bureaucracy as the new science of organizations.The relevant generalization here is that we live in an uncertain and turbulent environmentand, even with massive amounts of available information, it has become increasingly difficultfor us to choose appropriate organizational survival behaviors. No one seems to disagreewith the assertion that human systems exhibit chaotic behavior. However, managementtheorists have yet to acknowledge that the deterministic element of chaos can be beneficialin forming viable survival strategies. They have focused almost exclusively on preparing theorganization to react quickly to changes in the external environment.What is Chaos Management? The translation of Chaos Theory into management practiceis, at best, a loose analogy that has been built upon three generalizations of scientific concepts:Chaos, Complexity Theory, and Complex Adaptive Systems. It has always been somewhatproblematic to apply a scientific theory - one that was intended to explain natural phenomena- to explain the affairs of human organizational systems. The relatively new science ofchaos is one such application that has made inroads into the realm of management andorganizational behavior.Summary Point: Chaos has positive and negative features. 2. What is Complexity? The second concept comes from Complexity Theory, whichstates that “critically interacting components self-organize to form potentially evolvingstructures exhibiting a hierarchy of emergent system properties.”

A system normally has two choices of operational modes: stability or instability. In thestable mode, a disturbance will eventually converge back toward the system’s initial

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conditions. In the unstable mode, a disturbance will cause a progressive divergence awayfrom initial conditions. Self-organizing systems operate in a third mode - between stabilityand instability - where optimal system performance can be achieved in a turbulentenvironment. This transition zone is known as the edge of chaos, “a region of boundedinstability” in which there is “unpredictability of specific behavior within a predictable generalstructure of behavior.”

The relevant generalization here is that for a human social system to become self-organizing, it must become a learning organization. That is, survival strategies are developedcontinuously in response to changing environmental conditions. Recognition of rudimentarydeterministic environmental patterns allows the organization to move beyond mere survivalto the possibility of a thriving existence.What is the Positive and Negative Side of Chaos?Positive Side of Chaos - The new theory of organizations is how to create what is called“edge of chaos” patterns of organizing. In this approach individuals and units are givenmore flexibility and local control and terms are expected to self-organize under theassumption that it is possible to achieve greater adaptability to the customer demands andother environmental shifts and flows. Daryl Conner, author of Managing at the Speed of Change and Leading at the Edge ofChaos: How to Create the Nimble Organization, asserts. “Change now breeds itself,” hesays, so the challenge is, “how do we deal with perpetual unrest?”

The concept of the “nimble organization” is key to Conner’s work. In fact, the firstline in his book Leading at the Edge of Chaos reads: “the focal point for this book isleadership’s role in building resilient, nimble organizations.” Organizations that are not nimble,Conner says, are constrained. To build nimble organizations, he explains, leaders “mustbring to the human side of change the same level of rigor and discipline that are applied tothe organization’s financial assets.”

As Conner (2000: 18) puts it: Running a corporation that survives and thrives at theedge of chaos has become almost a full-time job. Mergers and acquisitions are creatingstrange bedfellows, the market is becoming more sophisticated, and the very nature of ourbusinesses is shifting. Some leaders are questioning their abilities to remain competitive ina market where disruption is the norm.

Negative Side of Chaos - In its popular usage, chaos is a negative. People say “Ihate chaos, let’s get organized.” While the theorists give us fractal, strange attractor, andedge of chaos metaphors, we have to work in the chaos soup. Of concern here, is howdoes it feel to stare into the abyss, or worse to work in a chaos abyss? One definition ofChaos Narrative comes from Frank (1995)

“It is the story we tell when we are unable to tell a story; it is the “anti-narrative of timewithout sequence, telling without mediation, and speaking about oneself without being fullyable to reflect on oneself.”

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There is an obvious need to balance theories of chaos management with how peopleexperience chaos as the void of buzzing confusion and being out of control.

How are Chaos and Complexity inter-related?

What are Complex Adaptive Systems? The third concept is a characterization of theonly known type of system that is capable of thriving at the edge of chaos. A ComplexAdaptive System is defined as “a system of individual agents, who have the freedomto act in ways that are not always totally predictable, and whose actions areinterconnected such that one agent’s actions changes the context for other agents.”

The relevant generalization here is that to optimize system performance, managerialcontrol must be loosened enough to allow uninhibited communication and interaction amongall members of the organization. Creative and adaptive solutions to external constraints willemerge as the learning organization gains the mobility and freedom to actively navigatethrough uncertainty and turbulence. The behavior of a mature complex adaptive organizationcan even move into the realm of predictability.

How to Control Chaos?

Control chaos by applying these basic office management principles:

1. Establish office management routines and stick to them.

Routine tasks need routine procedures if you want to stay organized and keep thingsrunning smoothly. Set up routines for handling paperwork and office systems. For instance,every piece of paper that comes into your office should be handled once, acted upon, andfiled – not haphazardly piled on a desk. Office systems, such as computers, will need bothadministration and what I call panic mode procedures. When the system crashes or acomputer-related piece of equipment fails, everyone in your office needs to know who tocall and what not to do (such as try to fix the problem themselves). These data managementarticles provide helpful tips for everything from office filing systems through computer backupprocedures.

2. Set up clearly delineated responsibilities.

Good office management depends on people knowing who is responsible for what –it’s people who are accountable who get things done. What would happen, for example, ifthe purchasing for your small business was done by whoever whenever? Would you beable to find a paper clip when you wanted one? Or print off a report when you needed to?Putting one person in charge of ordering all equipment and supplies solves the problemand keeps things running smoothly. It’s the same with (computer) systems administration.You need to have one person responsible for the security of your computer system andkeeping track of things such as accounts, passwords and software. Otherwise, chaos willproliferate.

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3. Keep records – and keep your business records updated.

Keeping records sounds like the easiest part of good office management – until youconsider the need to keep those records both accessible and updated. But my first rule forcontrolling chaos will help you get a grip on this; make updating records an office routine.When you get a new customer or client, for instance, it only takes a moment to enter himinto your contacts database. Then it will only take another moment or two to update therecord after you’ve spoken to him on the phone. Note that records of customer permissionswill have to be kept and customers need to have access to their records.

4. Take a walk through your office and have a sit.

Is your office an example of space management or space mis-management? Whenyou walk through the office, do you have to detour around obstacles or run the risk oftripping over something? When you sit down at a desk, could you actually work comfortablythere? Are things logically arranged so that the things that you would use most at the deskare closest to hand? There are a lot of things crammed into offices nowadays, from printerstands through filing cabinets. For good office management, you need to be sure that all thethings in the office are arranged for maximum efficiency – and maximum safety. The Basicsof Small or Home Office Design provides tips for safely meeting the power, lighting andventilation needs of your office space.

5. Schedule the scut work.

It’s too easy to put off things that you don’t like doing, and I don’t know very manypeople that enjoy scut work. Unfortunately, an office, like a kitchen, won’t function wellwithout a certain amount of scut work being done. If you are a small business owner who’sin the position of not being able to assign whatever you view as scut work to someone else,force yourself to get to it regularly by scheduling time each week for it. Take a morning orafternoon, for instance, and spend it making the cold calls or catching up on the accounting(or updating the records).

6. Delegate and outsource.

In a perfect world, everyone would only be doing what he or she had time to do anddid well. As the world is not perfect, instead a lot of people are doing things that they don’thave the time or talent to do well. Delegating and outsourcing can not only improve yoursmall business’s office management, but free you to focus on your talents as well, therebyimproving your bottom line. Virtual assistants can handle many of your office oradministrative tasks. For more on delegating, see Decide to Delegate.

7. Make business planning a priority.

Many small business owners spend their days acting and reacting – and then wonderwhy they seem to be spinning their wheels. Business planning is an important component ofgood office management and needs to be part of your regular office management routine.

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Successful small business owners spend time every week on business planning, and manyuse daily business planning sessions as a tool for goal setting and growth. If you have staff,involve them in business planning, either formally or informally.

Don’t let chaos interfere with doing business. Once you start applying these sevenprinciples of good office management, you’ll be amazed at the difference good officemanagement makes – and how much more business you do.

2.8 R & D PRODUCTIVITY

In recent years, both economists and policymakers have focused increased attentionon the role that R and D plays in promoting economic growth. Despite the fact that R andD activities exist in many countries, only a handful of nations consistently create leadingedge technologies, from communication advances to biomedical revolutions. Americanscientists, engineers, and other highly skilled professionals are tops in generating “new-to-the-world” technologies; only Switzerland had a per capita patenting rate comparable tothe United States in the 1970s and 1980s. However, Japan, Germany, and Sweden didjoin the top tier in the 1980s.

Why do some nations excel at technological breakthroughs while others lag behind?Put somewhat differently, why does location matter for innovation when ideas easily crossborders, because of global communications networks, relatively open capital markets,and consistently increasing international trade in goods and services? The answers aremore than intellectually intriguing. Governments and policymakers are concerned aboutwhich resources and policies are likely to be effective in improving their science andtechnology infrastructures. A better grasp of the complex links between broad public policiesand a nation’s ability to produce genuine high-tech innovations could lead to more effectivestrategies for improving economic growth.

These are the ambitious issues motivating The Determinants of National InnovativeCapacity (NBER Working Paper No. 7876) by Scott Stern, Michael Porter, andJeffrey Furman, which evaluates the factors driving variation in R and D productivityamong a sample of 17 OECD countries between 1973 and 1996. The key concept framingtheir analysis is “national innovative capacity,” defined by the authors as “the ability of acountry — as both a political and economic entity — to produce and commercialize a flowof innovative technology over the long-term.”

The national innovative capacity concept is built on three distinct scholarly strands.First are the theories of ideas-driven growth, closely associated with the work of PaulRomer. Then there are the microeconomic models of national competitive advantage basedon an understanding of industry clusters, a research agenda largely identified with Porter.Finally, the authors draw upon the rich national innovation systems literature among whosemost notable authors is Richard Nelson. The national innovative capacity framework

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highlights three factors that drive a nation’s ability to innovate at the world’s technologicalfrontier: 1) a common innovation infrastructure, which includes support for basic researchand higher education, as well as a country’s cumulative stock of technological knowledge;2) the extent to which the conditions of a nation’s industry clusters promote innovation-based competition; and, 3) linkages between the common innovation infrastructure andthe industry clusters that allow the resources broadly available for innovation in the economyto flow to their most competitive use. “The productivity of a strong national innovationinfrastructure is higher when specific mechanisms or institutions, such as a strong domesticuniversity system and funding mechanisms for new ventures, migrate ideas from the commoninfrastructure into commercial practice,” write the authors.

Porter, Stern, and Furman’s quantitative analysis concentrates on uncovering therelationship between international patenting (patenting by foreign countries in the UnitedStates) and the variables making up the innovative capacity framework. Their results suggestthat a number of factors are especially important in determining a nation’s overall level ofinnovative outputs, including national policies, such as international patent protection andopenness to international trade, and factors describing the composition of R and D effort inthe economy, such as the share of research performed by the academic sector and theshare funded by the private sector. In expanding their analysis to examine the relationshipbetween innovativeness and competitiveness, the authors find that a country’s level ofnational innovative capacity also has a substantial impact on commercial success in high-tech markets at home and abroad.

The authors document a striking convergence in innovative capacity among the OECDcountries over the past two decades. Whereas the United States and Switzerland hadbeen the world leaders with respect to R and D productivity in the mid-1970s, Japan,Germany, and Sweden have become their peers in the innovation marketplace. The secondtier of innovator nations also has expanded with Denmark, Finland, and other countriesmaking genuine strides in improving their commercial exploitation of frontier technologies.The trend toward convergence also may reflect a lessening of America’s traditionaldominance. Since the passing of the Cold War, the United States has been increasing itsinvestments in its national innovation infrastructure at a lower rate. Consequently, the authorsspeculate, as a wider set of countries continue to invest substantial resources in nationalinnovative capacity, we may see that the commercial development of emerging technologiesbecomes less geographically concentrated in the next few decades than it was in the 50years of the post-World War II era.

2.9 BUSINESS APPRAISAL OF TECHNOLOGY POTENTIALS

Aims

To provide manufacturing (and other) companies with the means to assesssystematically, the benefit of new technologies to their business. The objectives and outputsare:

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To review the tools and techniques currently available to managers in industry forthe assessment of technology for business purposes.

To identify the gaps and limitations related to the use of these tools and techniques. To develop selected new approaches which integrate and complement existing

tools and techniques, filling significant gaps. To apply the developing tools in selected case examples. To provide guidance to potential users in the application of these new approaches.

Background

The issue of assessing technology for business application remains a foremost concernfor managers in industry. Companies are pushed towards diversifying their portfolio oftechnology as well as accelerating commercial exploitation. They do this by increasingresources directed towards growth and by acquiring developed or developing technologies.This has increased the trading of technology between firms, and these technologies mustbe valued. Other reasons to value technology include obtaining finance and valuation fortax purposes. In practice, many managers know that there is something unsatisfactoryabout the standard use of Discounted Cash Flow (DCF) techniques, particularly whenthere is high uncertainty and flexibility.

In recent years much progress has been made, however many key questions remain,in particular that of estimating the value of a particular technology to a particular organisation,now and in the future. This is of central concern in the choice of development projects, andwhen considering the acquisition of technology external to the firm. Valuing technology ismore of an art than a science and methods have been developed from tools used to valuetangible assets, and thus there is still a huge amount of scope for research in this area.Recent advances in options and hybrid-model thinking have opened up new paths, but theapplication of these ideas in practice is very limited.

Research approach

Initial interviews in a range of companies to determine issues, current practice andfuture requirements.

Multi-company workshops to firm up concepts for further development. Case studies or collaborative projects in companies to develop new techniques.

Deliverables

Review of literature & practice, based on working papers and company interviews& cases

Framework principles for technology evaluation T-VAL cd to raise awareness of integrated nature of technology evaluation -

concepts, techniques and resources

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Value roadmapping guide to support the evaluation of early stage technologies Decision tree software tool to support more enlightened use of quantitative

approaches, supported by two management guides (Beyond DCF and Get betterestimates for input into quantitative models)

2.10 DESIGN MANAGEMENT

Design management refers to an approach whereby organizations make design-relevant decisions in a market and customer-oriented way as well as optimizing design-relevant (enterprise-)processes. It is a long-continuous comprehensive activity on all levelsof business performance. Design management acts in the interface of management anddesign and functions as link between the platforms of technology, design, design thinking,management and marketing at internal and external interfaces of the enterprise.

Historical development of design management

The roots of design management go back into the 1920s with and the 1950s and1940s with. For a long time design management was used as a term, but thereby notunderstood correctly, since it could be attributed neither directly to the design northe management.

1940s

Design is a function within corporations, or as independent consultancies have notalways collaborated well with business. Clients and the market have traditionally vieweddesign as an expressive and production function, rather than a strategic asset. Designershave focused their skills and knowledge in the creation of designed artifacts, and indirectlyaddressed larger issues within this creative process. Designers have been uneasy aboutarticulating their value to business in terms that business could understand. There weremoves to bridge this gap. In England, the British Design Council was founded in 1944 bythe British wartime government as the Council of Industrial Design, with the objective “topromote by all practicable means the improvement of design in the products of Britishindustry”.

1950s

Chicago industrialist Walter Paepcke of the Container Corporation of America foundedthe Aspen Design Conference in the United States after World War II as a way of bringingbusiness and designers together – to the benefit of both. In 1951, the first conferencetopic, “Design as a function of management,” was chosen to ensure the participation of thebusiness community. After several years, however, business leaders stopped attendingbecause the increased participation of designers changed the dialogue, focusing it not onthe need for collaboration between business and design, but rather on the businesscommunity’s failure to understand the value of design. While designers were trying to

NOTES



make connections to the business community, there were business people that were tryingto make connections to the design community. Individuals from both communities beganmaking connections between the goals of business and how design could be a subject inthe management suite. Design management’s foundations are European in nature and oneof the strongest early advocates was Peter Gorb, former Director of the London BusinessSchool’s Centre for design management.

1960s to 1970s

In 1966 the term design management was mentioned in the Anglo-American literatureby Farr. Design management focused on how to define design as a business function andprovide the language and method of how to effectively manage it. In the late 1960s andinto the 1970s Gorb and others began to write articles that were drafted to designers tolearn about business, and to business professionals to understand the untapped potentialof design as a critical business function.

“And what designers need to learn, and this is the most important thing, is thelanguage of the business world. Only by learning that language can you effectivelyvoice the arguments for design.” (Peter Gorb)

In 1975 the Design Management Institute was founded in Boston and developedfollowing the Harvard Business School. The DMI is an international nonprofit organizationthat seeks to heighten awareness of design as an essential part of business strategy andbecome the leading resource and international authority on design management. Economicalfaculties used the possibility first (after some books regarding this topic were published) ofestablishing economical courses of studies for design management. Slowly also designfaculties followed to take up studies for design management into their academical curricula.Apart from the economical and design-oriented courses there are today also pure mastercourses in design management (the Westminster university was one of the first in Europe)as well as co-operation programmes, like the International Design Business ManagementProgramme in Helsinki (co-operation programme of universities from design, technologyand management). In the late 1970s design management refers to the movement in GreatBritain, Europe and America, which focusses on design resources in corporate business.

1980s to today

In the beginning, design management was seen by many only as short-lived fashion,but over time it has proved its worth (Design Council 2004), supported by the increasingrole of design within the development of social, economic, ecological, technological andcultural processes. And design management grew in importance “[...] through the changefrom a strategy of cost leadership, over the quality leadership to the strategy of performanceleadership” (Koppelmann 1993). Today, one has to understand design in its entire,contemporary spectrum and thereby not be reduced on linear areas (product design,

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communication design, industrial design, etc.). Any adjustment of design to certain fields ofwork would not deal fairly with the social and economic task of design in any way. Designmanagement intervenes here, organizes, mediates and structures in an increasing morecomplex enterprise and economic world. 1986 saw the launch of the leading periodicaldevoted to design: Design week.

Views on design management

Different views on design management

Design management is no model that can be projected on any enterprise, no applicationwith linear functionalities and no specific way that leads to success. Rather designmanagement processes are accomplished by humans with different authorities and trainings,who work in different fields of enterprises with different sizes, traditions and industries andthey have very different target groups and markets to serve. Design management ismultifarious and like that are their different opinions about design management. The designmanagement topics show an overview of the spectrum what design managers deal with.Many agencies are limited to subranges and supplement thereby their classical applieddesign range (see hand-on-design).

Design management and marketing

Design management and marketing have many common intersections. In the marketing,which was developed in the 1960s, design became ever more important. In the beginning,design was understood as a marketing instrument, it further developed itself and today itcan be seen on the same level as management. Today’s management theories speak of anequal partnership between marketing management, product management and designmanagement.

Design management versus design leadership

In the every-day-business design managers often operate in the area of designleadership. But design management and design leadership are not interchangeable. Likethe differences between management and leadership they differ in their objectives,achievements of objectives, accomplishment and outcomes. Design leadership is pro-activeit leads from a vision, over the communication, the convey of meaning and collaborationthrough motivation, enthusiasm and attaining of needs, to changes, innovations and creativesolutions. Thereby it describes the futures needs and chooses a direction in order to get tothat described future. In contrast, design management is re-active and is responding to agiven business situation by using specific skills, tools, methods and techniques. Designmanagement and design leadership depend on each other, design management needs designleadership to know where to go and design leadership needs design management to knowhow to go there.

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Ranges of design management

Design management can be divided by its different fields of application into the threeranges operational design management, tactical design management and strategic designmanagement. By Borja de Mozota design management was divided additionally into thelevels of strategy, planning, structure, finances, human resources, information, communicationand research & development.

Operational design management

The goal of operational design management is to achieve the objectives set in thestrategic design management part. It deals with personal leadership, emotional intelligenceand the co-operation with and management of internal communications. The following listin Table 4 shows what the operational design management is coping with:

Table 4 Function – Level – Applicationfunction level application

strategy Translation of visions into strategies Defining the role design plays in the brand.

planning

Translation of strategies into a design brief. Decisions about product quality and consumer experiences. Defining policies for design, products, communication and brands.

structure

Selection of external design agencies/individuals Creation of alliances. Defining of design teams and people who are in touch with designers. Creation of an atmosphere for leadership and creativity.

finances

Managing of design project budgets Estimating of design costs. Reducing of designcosts, resp. shift of investments from cold-spots to hot-spots.

human resources developing of competences

information Advising of product managers and CEO's.

communication

Creating of symbioses between universities and other companies. Creating of an understanding of companies goals among designers.

operational

research & development

Creation of design criteria and standards of valuation for design.

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Tactical design management

The goal of tactical design management is to create a structure for design in the company.It includes the managing of design departments and fills the gap between operational andstrategic design management tasks. The following list in Table 5 shows what the tacticaldesign management is coping with:

Table 5

Strategic design management

The goal of strategic design management is to support and strengthen the corporatestrategy, to create a relationship between design, strategy and the identity/culture of thecompany. It controls the consistency of design in the company, allows design to interactwith the needs of corporate management and focuses on design’s long-term capabilities.The following list in Table 6 shows what the strategic design management is coping with:

Function Level Application

strategy Coordination of the design strategy with the

departments of marketing, communication and innovation.

planning

Defining quality policy. Structure of design(-management) tools and

language Introducing and improving general design

processes. Adaption of design processes to innovation

processes.

structure Implementation of a design in-house service. Stabilization of the role of design in the innovation

process. finances Managing to meet the budgetplans. human resources

Creation of an understanding of design among the company partners.

information Creation of marketing, design and production plans.

communication

Organization of the design language across all design disciplines.

Creation of an understanding of and attention on conscious decisions on all levels of the enterprise.

tactical


Transformation of design theories into practical research tools.

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Table 6

Commercializing and Managing Innovations

Economic growth depends on the successful commercialization and management of

innovation and the retention and reinvestment of profits from those innovations. The ability

to produce different kinds of innovations, commercialize them, and manage the various

phases of innovation provides a sustained competitive advantage. Mature firms have the

resources to fund research and product introduction, but often fail to capitalize on

innovations, sometimes because they are threatened by them. Entrepreneurial firms are

able to get an innovation to market, but often lack (and fail to develop) the capabilities

needed to compete in a mature product environment. The dot com failures exemplify this.

The research for this paper includes an investigation of the practices of ten software

companies between 1980 and 2000. I have chosen four of these companies for further

consideration because their primary focus was delivering innovative software products,

Function Level Application

strategy

Definition of a business strategy which includes design goals.

Definition of design strategies which are linked to the enterprise strategy.

planning Managing of design projects Creation of design standards.

structure Creation of an atmosphere for leadership, design

and creativity. Support of the corporate strategy with design tools.

finances Securing a budget, high enough to be able to apply the design strategy

human resources

Influencing the hiring and the managing of designers

information Informing about the design mission/vision in the company.

communication

Implementing design thinking in the top management level.

Articulation of explicit and implicit communications, which reflect the enterprise values.

Planning, introduction and improvement of means of communication on all channels to the figuration of the total brand experience towards the customer.

strategic


Creating links between technology-development and design

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rather than system integration, application integration or consulting. Further research for

this paper includes a review of the literature in order to extend the results to other industries.

In order to understand how to successfully manage innovations, we first need to

understand the nature and dynamics of innovations. In the next section, we will consider

several different types of innovation and then explore the characteristic patterns of innovation.

With this conceptual model, we will then define the capabilities needed for each phase of

innovation. Finally we will consider ways in which firms can incorporate both sets of

capabilities.

2.11 INNOVATION MANAGEMENT

Characteristics of Innovations

What are the characteristics of innovations? Since there are many types of innovationsand various ways to describe their dynamics, I need to simplify, even oversimplify mydescription. But this simplification will help us see some patterns that innovations take.

A Taxonomy of Innovations

First, let’s look at the types of innovation. I have classified innovations along threedimensions: discontinuous and incremental; product, process and conceptual; andreplacement and enhancement.

Discontinuous and Incremental Innovations

Discontinuous innovations are not on a continuum with previous technologies; theyinvolve the application of a new technology. The printing press, telegraph, telephone andcomputers form a series of discontinuous innovations. Such innovations cause a dramaticshift in the way people or firms perform some activity. Christensen, who prefers the term“disruptive innovations,” emphasizes the risk that they pose for high-performing incumbentfirms. Each discontinuous innovation disrupts the existing technology. The printing press,for example, put scribes out of business.

Discontinuous innovations emerge for two primary reasons. The first reason occurswhen a technology exceeds customers’ needs and a simpler, cheaper, less powerfultechnology is adequate to meet their needs. Mainframe computers provided far moreperformance and functionality than most people needed, and the personal computer industrydisrupted the mainframe industry. The second reason involves reaching technical limitations.If a technology is inadequate for customers’ needs, but has reached a technical limitation,then scientists may apply a different technology to replace the current one. During WorldWar II governments found the power and speed of propeller-driven aircraft to be inadequate;jet engines met their increased needs for air superiority. For hundreds of years, peoplecommunicated with ships at sea using visible mechanisms such as flags and lights andaudible mechanisms such as bells and horns. In the nineteenth century, navies found this

NOTES



technology inadequate; it had reached its limits. In the twentieth century, radio replaced theearlier modes of naval communication. Discontinuous innovations allowed progress.

The commercial use of the Internet provides a clear and obvious example of adiscontinuous innovation. The Internet has fundamentally changed the way that businessescommunicate with each other.

Discontinuous innovations typically disrupt an industry and occasionally disrupt theway consumers engage in some activity. Despite the fact that an innovation disrupts existingsystems and causes chaos, it still follows regular and predictable patterns. We will explorethese patterns in the next section.

On the other side of the spectrum are incremental innovations. Once a technology iscommercially accepted, firms compete by incrementally adding functionality and improvingperformance. In the late 1980s thousands of people used email. Some of the incrementalinnovations added very useful functionality to email, such as compatibility among disparateemail systems, the standardization of addressing conventions so that users no longer had totype arcane address symbols including “%” and “$” to delimit address names and to directone email system to communicate with a different system.

Most innovations are incremental; people and firms continue to perform an activity ina familiar way. The innovations simply improve performance, functionality or ease of use.

Product, Process and Conceptual Innovations

Another way to classify innovations is to consider whether they are product, processor conceptual innovations. Product innovations include such things as the personal computer.Process innovations include Henry Ford’s assembly line, Walmart’s supply chain processesand Dell’s build-to-order manufacturing processes. Conceptual innovations includeCopernicus’s theory of astronomy.

Replacement and Enhancement Innovations

We can also classify innovations by whether they replace or enhance an existing

technology. Sharp and Texas Instruments introduced calculators in the 1960s, Hewlett-

Packard improved calculators in the 1970s, and by the mid-1970s, they had almost

completely replaced slide rules. Similarly, personal computers with word processing systems

have almost completely replaced typewriters.

Some innovations enhance the ways in which people perform some activity. AlthoughHollywood feared that the introduction of videotapes would mean the end of the movieindustry, it in fact enhanced people’s opportunities for entertainment. Citibank introducedATMs in the early 1970s enhancing the ways in which people can interact with their bankingsystems and extending the reach of a given bank worldwide.

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Table 7 shows discontinuous and incremental product and process innovations.

Patterns and Phases of Innovation

A successful innovation typically follows a predictable pattern of behavior. It beginswith a discontinuous innovation and proceeds through several phases until the technologyis mature when it is once again disrupted by a discontinuous innovation. Foster introducesthe notion of an S-curve comparing performance and effort, a “graph of the relationshipbetween the effort put into improving a product or process and the results one gets backfor the investment.” He is concerned with limits; reaching the limits of the technology spellsthe flattening out at the top of the S-curve. It becomes harder and harder to improve theperformance of the technology. At the limit of technology, no matter how hard you try, youcannot continue to make improvements.

Rogers also looks at an S-curve, but with a difference in the graph’s axes, percent ofadoption vs. time. In his work on the diffusion of innovations, he characterizes innovationsaccording to relative advantage, compatibility, complexity, trialability, and observability.The characteristics help explain the rate of adoption.

Rogers describes the take-off phase for an innovation as being driven by social forcesand “interpersonal network exchanges.” He describes the dissemination of the use of hybridcorn and the social network effect of farmers learning from each other.

Metcalfe’s Law, named after Robert Metcalfe, the inventor of Ethernet networkingtechnology, says that the value of a network grows in proportion to the square of thenumber of users. The network effect plays a significant role in the pattern and dynamics ofinnovation which involve communication, such as the fax machine, telephones and software.Once an innovation reaches a critical mass, its acceptance accelerates.

We can also see the S-curve as a graph of the total number of adopters on the Y-axisand time on the X-axis. Three inflection points divide the S-curve into four distinct phases.The first inflection point represents the point in time at which entrepreneurs see thecommercial value of the innovation. The second inflection point occurs when a standardemerges, and the third inflection point occurs when users’ needs are met or exceeded orwhen no further performance improvements can expected.

Product Process Discontinuous Calculator

Videotapes Jet propelled aircraft

Walmart’s supply chain Dell’s build-to-order manufacturing

Incremental New versions of software Different models of aircraft

Continuous process improvement

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Managers face different challenges at different phases of innovation. In order tounderstand the challenges, we must first understand the dynamics. In this section, I presentthe regular patterns exhibited throughout history. Each cycle begins with a discontinuousinnovation. If the innovation is successful, it proceeds through subsequent phases andincludes later incremental innovations.

The Innovation Phase

The first phase is the creation of the innovation. Communities tend to see the innovationas a toy with little or no commercial value and to see the innovators as hobbyists orenthusiasts. 3M managers were skeptical about adhesive that made only intermittentcontact when their scientists invented the adhesive for Post-It Notes in the 1970s.

When Samuel Morse presented the United States Congress with a prototype of histelegraph machine in 1838, his audience did not take him seriously. Even after Morsereceived government funding and set up a telegraph line between Washington D.C. andBaltimore, people still saw little practical use for it. But Morse and his partners implicitlyunderstood the network effect. They pushed ahead and built a network of telegraph linesbetween U.S. cities, hoping that customers would begin to appreciate the value of thetelegraph.

Firms tend to see the innovation as inadequate to meet their customers’ needs. In the1970s the mainframe computer industry viewed personal computers as toys for hobbyistswho purchased kits to build them. Few firms saw the personal computer as having anyreal commercial value.

Chaos and Commercialization Phase

The first inflection point on the S-curve occurs when entrepreneurs see the commercialvalue of the innovation and try to build a business around the innovation.

As entrepreneurs saw the commercial value of the telegraph, dozens of companiesbegan building telegraph networks, stringing lines haphazardly across the United States.To avoid patent infringements, companies developed unique telegraph systems, incompatiblewith each other. Creating the telegraph infrastructure was expensive, and dozens ofcompanies failed before becoming profitable. In Europe and England, the telegraph systemsgrew with government sponsorship. But each country’s system was incompatible with thatof its neighbors. Standards did not yet exist.

As entrepreneurs saw the value of PCs, many companies emerged to give us theKayPro, the Commodore, the Apple Lisa, the DEC Rainbow and the Victor 9000, noneof which was compatible with the others. Software written for one did not work on anyothers. And they did not communicate with one another. This is not surprising. Just as wehave no laws to govern something we have never imagined before, we have no standardsto guide discontinuous innovations.

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The characteristics of the Chaos and Commercialization Phase are hype,disappointments, fear, suspicion, many entrants, incompatible systems and no standards.

An indicator that this phase is coming to a close and the next phase is about to beginis that governments see the innovation as important to national interests. Both governmentsand consumers call for standards and interoperability.

Standards Phase

The Standards Phase has three characteristics: the emergence of a standard or dominantdesign, rapid growth, and industry consolidation. The industry as a whole reaches acritical mass, grows rapidly, and all participants aligned with the standard benefit. Duringthis phase, incremental innovations are important.

The 1865 international conference on the telegraph yielded the International TelegraphUnion, still in existence today. This early standards body worked to unify the many disparatesystems and marked a turning point in the telegraph industry. Its work helped to expandthe telegraph throughout the world at a remarkable speed.

The pace of adoption has accelerated since the mid-nineteenth century. In the computerindustry, IBM introduced the IBM PC in 1982. With its strong brand and high level of trustfrom the business world, it created a standard overnight. This marked the turning point forthe personal computer industry. Those participating in the standard flourished. Compaqand Dell began building PCs; Microsoft, Lotus, Borland, Oracle and WordPerfect beganbuilding software; Intel’s processor business grew rapidly. Service providers began offeringcustom software to run businesses.

Once a standard emerges, industry consolidation follows quickly. Almost all thecompanies building personal computers (other than IBM PC-compatibles) failed in 1983.In general, at this phase, companies whose products are not aligned with the de factostandard fail; companies whose products are aligned with the standard grow. Companiescompete during this phase by adding functionality through continuous, incrementalimprovements to their products.

Market Maturity Phase

The final inflection point on the S-curve comes when products meet or exceedconsumers’ needs for functionality, or when the technology has reached its natural limits.Competition shifts to customer service and to production and distribution efficiencies.Process innovation is most important at this phase.

The personal computer industry is in this phase now. Dell, whose strength is in just-in-time production, rather than in enhancing functionality through R&D, has a competitiveedge for this phase.

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Capability Framework

Different phases and kinds of innovation require different management, engineering,

marketing, and operations capabilities. For our purposes, we will consider the Early Phase

to include both the discontinuous innovation itself, and the Chaos and Commercialization

Phase. The Later Phase will include the Standards Phase and the Mature Phase.

Early Phase Capabilities

What are some of the cultural norms and behaviors that foster discontinuous innovation?

A culture that encourages strong ties with customers, risk taking, experimentation and

openness is more likely to foster successful innovation.

My study of software product companies included two firms that introduced innovative

products and gained a large majority of market share. The first firm produced a mainframe

financial planning tool in the late 1970s and was among the top 20 software product

companies in the world in annual revenues by 1980.

What were the capabilities that contributed to the financial planning software company’s

success? It provided a complete solution for customers, including the installation,

configuration, customization, consulting and support of its product. Employees had strong

ties with customers, and the relationships were characterized by trust and involvement.

The scientist who created the product understood the business needs, the customer needs

and the delivery dates. He was ultimately able to handle all the tasks that others had failed

to complete on time.

The second firm produced networking operating system software, and held 70%

market share of a growing market. The capabilities that contributed to its success are very

similar to those of the financial planning software company. During the early phase, 1986-

1989, this firm provided an end-to-end solution, including hardware, installation,

configuration, customization, consulting and support. Its culture fostered a collaborative

relationship with customers. And the engineer who designed the product understood the

business needs, the customer needs, and was able to direct closely the efforts of other

engineers to bring the product to completion.

Both of these first two firms had difficulty in designing and scoping their initial products,

and in both cases flexibility and the commitment of the principal engineer contributed to

success. During the early phase of an innovation there are a significant number of unknown

issues that are only uncovered during development. So effective scoping is an inherent

problem.

A third firm produced web-based configuration software. It was able to gain some

early success, but failed quickly. It lacked the close relationship with customers and,

although product designers were able to complete the products, they did not understand

either business needs or customer needs.

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A fourth firm produced web content management software. It had a far more mature

approach to software development than the configuration software provider, but also lacked

a close relationship with customers. It had some early success but is now struggling.

Managing involves using various control systems. Control systems include both formal

control systems and social norms. What is an effective way to manage or control an

innovative organization where work is non-repetitive and not routine? Change is frequent.

It is a little bit like ordering Rumplestiltskin to spin straw into gold. You give him the goal,

but you don’t tell him how to do it. Formal control systems are inappropriate here.

Formal control systems involve instructing employees in what to do and how to do it, and

monitoring their behavior. Instead, managers in departments responsible for innovation

need to be clear about the firm’s vision and objectives and rely on employees’ judgment.

This held true for both the successful software firms.

In departments with predictable, regular and repeated activities such as IS, inventory

management, cash flow management and human resources, managers can rely on formal

control systems. This organizational behavior is in tension with that in the R&D departments.

We’ll address this tension in the section on Ambidextrous Organizations.

Kanter, et. al., suggest “routinizing the unpredictable” in their study of Raytheon’s

New Product Center, where the goal is to aid the company’s growth and profits by

developing new products. They found that characteristics such as having modest goals, a

patient sponsor, good coordination with the rest of the company, client involvement, product

champions and prototypes led to the Center’s success. They found that the relationship

with clients, including trust and good channels of communication so that the innovators

could understand the client business, was the “make-or-break” issue.

3M is well known for its approach to innovation. Employees are encouraged to

spend 15 percent of their time engaged in exploration and innovation. The 3M lab system

includes three levels of labs, more closely or loosely aligned with a given business unit.

And 3M’s stated goal is to have 30 percent of revenues come from products introduced in

the last four years. A discontinuous innovation is typically designed for functionality, rather

than designed for manufacturing. Companies such as 3M understand the need to move

quickly to design for manufacturing.

Let’s summarize the capabilities needed during the early phase. When an innovative

product is first introduced, firms need skills and capabilities to cope with fear and chaos in

the marketplace. Companies need to provide an end-to-end solution. This serves two

purposes. First, it mitigates the fear that accompanies the innovative phase. And second,

during the early phase of an innovation, there are typically no available partners. When an

invention first comes to market, there is no industry to install or service that product.

Innovative products are usually proprietary, lacking compatibility or interoperability.

NOTES



A second capability that differentiated the successful firms from the less successful

ones is the relationship of trust and collaboration with initial customers. In addition to

helping to mitigate customer fears, it also provides the innovators with a better sense of

what is valuable to the customers.

All four of the software firms in this study understood that the initial product development

teams would have difficulty in designing and scoping their products. All exhibited flexibility

and planned for buffers to accommodate this difficulty.

Late Phase Capability

What are the capabilities that firms need to manage during the Standards and Mature

Phases of a innovation cycle? Once a standard emerges, competition shifts to incremental

innovations and product enhancement. The firm’s focus moves to operational efficiency.

Process innovations can help a firm compete with more operational efficiency. Additionally

interoperability and alliances play a significant role.

The financial planning software firm developed processes for source control, managing

the software build process, regression testing, planning, designing and scoping. These were

repeatable, optimized processes. The relationship with customers continued to be important,

but the primary engineers were sheltered by intermediaries, typically product managers.

These all contributed to its continued success.

The network operating system firm developed similar processes and disseminated

them throughout a geographically dispersed development group. This firm also divested

itself of all activities that were not core to its competitive advantage. Prior to 1989, 50%

of revenues came from hardware sales (approximately $250 million). In 1989, the firm

seeded the market for partners by giving away the hardware designs, and its revenues

continued to increase. It also encouraged the growth of the industry by providing training

to potential partners in installation, administration, customization and consulting. Instead

of providing an end-to-end solution, the firm relied on partners to provide all the tangential

aspects of the business.

The web content management software firm has made some attempts to build alliances

and partnerships. However, it is caught in a very typical tangle: it relies heavily on the

revenues from its consulting business and has been unable to build significant alliances. It

has been successful at improving repeatable processes.

Finally, during the last part of the late phase, firms need to attack and cannibalize

themselves. They need to understand limits and when it is time for the next discontinuous

innovation. The financial planning software firm, which had been so successful, failed

because it could not move from mainframe to PC software.

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Firms in mature industries must shift and replace the quest for efficiency with the

quest for competitiveness. While efficiency is the capability that works during the mature

phase, at some point it will be undermined by a new technology. Table 2 summarizes the

capability framework.

The Capability Bridge

How do firms make the leap from innovative and entrepreneurial to mature? The first

two firms in the study successfully made this transition. They both had good leaders who

articulated the vision and goals.

Both the financial planning software firm and the network operating system firm built

internal infrastructures which included systems for repeatable, efficient execution, including

quality groups, process improvement groups, planning and sophisticated documentation

organizations. The network operating system firm set the standard for its industry, and led

the growth of that industry through fostering alliances and partnerships.

Finally, the latter firm divested itself of non-core business and created a strategy

based on its competitive advantage and on maintaining control of the platform. The platform

provided the source of value in that industry.

Table 8 - Capability Framework

Early Capabilities Mature Capabilities Types of Innovations Discontinuous Incremental

Process Customer involvement

Close relationship with customers

Good relations with customers but with more distance

Product focus Features Cost Product driver Inventor / engineer

drives development to completion

Product completion is a more routine team effort

Product breadth

Provide end-to-end solution

Focus on core competency and enable partners for non-core areas

Scheduling Flexible, adaptable Efficient, process-oriented

Posture Aggressive Take Risks Attack existing technology

Defensive Defend present position Ultimately, need to attack yourself

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AMBIDEXTROUS ORGANIZATIONS

Why is it so difficult for companies to have both kinds of capabilities? Clearly thecapabilities are in tension with each other. Tushman, et. al. use the term “ambidextrousorganization” to describe the approach managers must take to handle both theentrepreneurial and mature aspects of a firm.

Managers understand that their firm needs innovations in order to grow and they areoften supportive of innovative efforts. But all firms deal with the reality of limited resources,and during the debates on resource allocation, established managers will attempt to controlresources even if that means denying them to the entrepreneurial units of the business.

In addition to the inherent tension between capabilities such as flexibility and efficiency,managers often undermine innovation because of what I call the Chronos Syndrome. InGreek mythology, Chronos feared that his children would overthrow him. He had himselfdefeated and overthrown his father. When Chronos’ son Zeus grew up, he too defeatedhis father and became the king of the gods. Managers face this same issue; it is difficult tosupport the efforts that will lead to your own demise.

Ambidextrous organizations have the capabilities to support simultaneous discontinuousand incremental innovations. They are inherently unstable, just as Chronos’ hold on theuniverse was unstable. They require leadership that can see the longer term value that theability to produce different kinds of innovation provides.

Mastering the technology transfer from labs to business units is difficult, but aided byclose relations between the innovators and the clients or customers. Defining workablesolutions such as Raytheon or 3M have done provides a long term advantage.

Acquisitions are notoriously perilous, but provide another alternative for firms such asCisco and IBM.

Doing basic research and coming up with innovations is laudable. But firms that fail totake the innovation to the next stage lose the VALUE of the innovation. Summary

An overview of flexibility and Change in management alongwith design and innovationmanagement has been dealt with. An extensive discussion on business appraisal oftechnology potentials have also been dealt with.Questions

1. What is the effect of flexibility in management on prdductivity?2. Is there a relationship between need for sourcing technology and the choice of

technology? Explain.3. Elucidate on the menas of increase productivity in research and design.4. Perform a business appraisal of an emerging technology of your choice.5. Define innovation. How does in help in survival of a business. – Explain.

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UNIT III

BUSINESS STRATEGY AND TECHNOLOGYSTRATEGY

Introduction

This unit is meant to throw a bit of light on technology planning, strategy and alliances.The objectives and advantages of joint ventures are also discussed. Three cases ontechnology bridging have been illustrated. A brief discussion on corporate venturing isdocumented.

Learning Objectives

To have a fair idea about Variables in global competitiveness Basic Principles of Technology Planning Consensus building and buy-in Typical structure of a (IT) technology strategy When are joint ventures used? Common uses of corporate venturing

3.1 GLOBAL COMPETITIVENESS

The Global Competitiveness Report is a yearly report published by the World EconomicForum. The first report was released in 1979. The 2007-2008 report covers 131 majorand emerging economies. The report “assesses the ability of countries to provide highlevels of prosperity to their citizens. This in turn depends on how productively a countryuses available resources. Therefore, the Global Competitiveness Index measures the setof institutions, policies, and factors that set the sustainable current and medium-term levelsof economic prosperity.” It has been widely cited and used by many scholarly and peer-reviewed articles.

Somewhat similar annual reports are the Ease of Doing Business Index and the Indicesof Economic Freedom. They also look at factors that affect economic growth, but not asmany as the Global Competitiveness Report.

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One part of the report is the Executive Opinion Survey which is a survey of arepresentative sample of business leaders in their respective countries. Respondent numbershave increased every year and is currently just over 11,000 in 125 countries.

The report ranks the world’s nations according to the Global Competitiveness Index.The report states that it is based on the latest theoretical and empirical research. It is madeup of over 90 variables, of which two thirds come from the Executive Opinion Survey, andone third comes from publicly available sources such as the United Nations. The variablesare organized into nine pillars, with each pillar representing an area considered as animportant determinant of competitiveness.

The report notes that as a nation develops, wages tend to increase, and that in orderto sustain this higher income, labor productivity must improve in order for the nation to becompetitive. In addition, what creates productivity in Sweden is necessarily different fromwhat drives it in Ghana. Thus, the GCI separates countries into three specific stages: factor-driven, efficiency-driven, and innovation-driven, each implying a growing degree ofcomplexity in the operation of the economy.

In the factor-driven stage countries compete based on their factor endowments,primarily unskilled labor and natural resources. Companies compete on the basis of pricesand sell basic products or commodities, with their low productivity reflected in low wages.To maintain competitiveness at this stage of development, competitiveness hinges mainlyon well-functioning public and private institutions (pillar 1), appropriate infrastructure (pillar2), a stable macroeconomic framework (pillar 3), and good health and primary education(pillar 4).

As wages rise with advancing development, countries move into the efficiency-drivenstage of development, when they must begin to develop more efficient production processesand increase product quality. At this point, competitiveness becomes increasingly drivenby higher education and training (pillar 5), efficient markets (pillar 6), and the ability toharness the benefits of existing technologies (pillar 7).

Finally, as countries move into the innovation-driven stage, they are only able to sustainhigher wages and the associated standard of living if their businesses are able to competewith new and unique products. At this stage, companies must compete by producing newand different goods using the most sophisticated production processes (pillar 8) and throughinnovation (pillar 9).

Thus, the impact of each pillar on competitiveness varies across countries, in functionof their stages of economic development. Therefore, in the calculation of the GCI, pillarsare given different weights depending on the per capita income of the nation. The weightsused are the values that best explain growth in recent years. For example, the sophisticationand innovation factors contribute 10% to the final score in factor and efficiency-driveneconomies, but 30% in innovation-driven economies. Intermediate values are used foreconomies in transition between stages.

NOTES



Variables

1. InstitutionsA. Public institutions1. Property rights1.01 Property rights

2. Ethics and corruption1.02 Diversion of publics funds1.03 Public trust of politicians

3. Undue influence1.04 Judicial independence1.05 Favoritism in decisions of government officials

4. Government inefficiency (red tape, bureaucracy and waste)1.06 Wastefulness of government spending1.07 Burden of government regulation

5. Security1.08 Business costs of terrorism1.09 Reliability of police services1.10 Business costs of crime and violence1.11 Organized crimeB. Private institutions

1. Corporate ethics1.12 Ethical behavior of firms

2. Accountability1.13 Efficacy of corporate boards1.14 Protection of minority shareholders’ interests1.15 Strength of auditing and accounting standards

2. Infrastructure2.01 Overall infrastructure quality2.02 Railroad infrastructure development2.03 Quality of port infrastructure2.04 Quality of air transport infrastructure2.05 Quality of electricity supply2.06 Telephone lines (hard data)

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3. Macroeconomy3.01 Government surplus/deficit (hard data)3.02 National savings rate (hard data)3.03 Inflation (hard data)3.04 Interest rate spread (hard data)3.05 Government debt (hard data)3.06 Real effective exchange rate (hard data)

4. Health and primary educationA. Health4.01 Medium-term business impact of malaria4.02 Medium-term business impact of tuberculosis4.03 Medium-term business impact of HIV/AIDS4.04 Infant mortality (hard data)4.05 Life expectancy (hard data)4.06 Tuberculosis prevalence (hard data)4.07 Malaria prevalence (hard data)4.08 HIV prevalence (hard data)B. Primary education4.09 Primary enrolment (hard data)

5. Higher education and trainingA. Quantity of education5.01 Secondary enrolment ratio (hard data)5.02 Tertiary enrolment ratio (hard data)B. Quality of education5.03 Quality of the educational system5.04 Quality of math and science education5.05 Quality of management schoolsC. On-the-job training5.06 Local availability of specialized research and training services5.07 Extent of staff training

6. Market efficiencyA. Good markets: Distortions, competition, and size

1. Distortions6.01 Agricultural policy costs6.02 Efficiency of legal framework

NOTES



6.03 Extent and effect of taxation6.04 Number of procedures required to start a business (hard data)6.05 Time required to start a business (hard data)

2. Competition6.06 Intensity of local competition6.07 Effectiveness of antitrust policy6.08 Imports (hard data)6.09 Prevalence of trade barriers6.10 Foreign ownership restrictions

3. Size0.00 GDP – exports + imports (hard data)6.11 Exports (hard data)B. Labor markets: Flexibility and efficiency

1. Flexibility6.12 Hiring and firing practices6.13 Flexibility of wage determination6.14 Cooperation in labor-employer relations

2. Efficiency6.15 Reliance on professional management6.16 Pay and productivity6.17 Brain drain6.18 Private sector employment of womenC. Financial markets: Sophistication and openness6.19 Financial market sophistication6.20 Ease of access to loans6.21 Venture capital availability6.22 Soundness of banks6.23 Local equity market access

7. Technological readiness7.01 Technological readiness7.02 Firm-level technology absorption7.03 Laws relating to ICT7.04 FDI and technology transfer7.05 Cellular telephones (hard data)7.06 Internet users (hard data)

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7.07 Personal computers (hard data)8. Business sophistication

A. Networks and supporting industries8.01 Local supplier quantity8.02 Local supplier qualityB. Sophistication of firms’ operations and strategy8.03 Production process sophistication8.04 Extent of marketing8.05 Control of international distribution8.06 Willingness to delegate authority8.07 Nature of competitive advantage8.08 Value-chain presence

9. Innovation9.01 Quality of scientific research institutions9.02 Company spending on research and development9.03 University/industry research collaboration9.04 Government procurement of advanced technology products9.05 Availability of scientists and engineers9.06 Utility patents (hard data)9.07 Intellectual property protection9.08 Capacity for innovation

3.2 TECHNOLOGY PLANNING

The following is a working definition of technology planning established by the RTECTechnology Plan Task Force:

A technology plan serves as a bridge between established standards and classroompractice. It articulates, organizes, and integrates the content and processes of education ina particular discipline with integration of appropriate technologies. It facilitates multiplelevels of policy and curriculum decision making, especially in school districts, schools, andeducational organizations that allow for supportive resource allocations.

In general, planning is an ongoing process that translates organizational, public policy,and technology needs into concrete actions. It allows educational organizations to takeadvantage of technology innovations while minimizing the negative impact of unexpectedchallenges. Planning provides a road map for the implementation of technology and canresult in more efficient expenditure of limited resources and an improvement in studentachievement.

NOTES



Technology plans reflect the policy and educational environment of a state or district.However, a technology plan by itself is not enough to ensure change. The RTEC TechnologyPlan Task Force believes that the processes of technology plan development,implementation, and evaluation are essential components of educational reform. A well-designed technology plan is a dynamic tool providing guidance for local innovation.Technology plans also represent opportunities for dialogue and professional developmentthat encourage local decision making.

Basic Principles of Technology Planning

The Guiding Questions for Technology Planning, Version 1.0, tool is designed to helpbegin a technology planning process, select a planning model, and move the process forward.It is considered most useful when it is used within a larger planning process and not simplyas an add-on or one-time discussion. A good technology planning process can be summedup in six or seven basic principles. These principles have been adapted by Hopey andHarvey-Morgan (1995) and are based in part on a model developed by Shirley (1988).

Technology planning for education should:

Be an organized and continuous process, use a simple straightforward planningmodel, and result in a document that improves how technology is used for instruction,management, assessment, and communications.

Take into account the mission and philosophy of the organization and be “owned”by that organization, its administrators, and instructors. (While outside assistance,such as that provided by a consultant, can bring a broad perspective andknowledgeable opinions to the technology planning process, the process musthave the commitment of decision makers and staff.)

Be broad but realistic in scope, with economical and technically feasible solutions. Involve all the stakeholders—including administrators, instructors, staff members,

students, parents, community leaders, and technology experts—with experiencein education.

Identify the strengths and weaknesses of the organization and how each will impactthe implementation of technology.

Formalize the procedures and methods for making technology decisions, includingthe setting of priorities and the purchase, evaluation, upgrading, and use oftechnology.

Be driven by educational goals and objectives rather than by technological developments.

3.3 TECHNOLOGY STRATEGY

A Technology strategy (as in Information technology) is a planning document thatexplains how information technology should be utilized as part of an organization’s overallbusiness strategy. The document is usually created by an organization’s Chief Information

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Officer (CIO) or technology manager and should be designed to support the organization’soverall business plan.

Consensus building and buy-in

One of the principal purposes of creation of a technology strategy is to create consensusand stakeholder buy-in. There are many methods to this process such as the delphi method.Organizations that have the option of using a non-biased outside facilitator frequently buildconsensus quickly using these processes.

Successful strategies take into account the collective knowledge of many levels withinan organization and attempt to remove bias of one or more individuals. The use ofanonymous feedback has been shown to prevent highly destructive passive aggressiveemployee behavior.

Typical structure of a (IT) technology strategy

The following are typically sections of a technology strategy:

Executive Summary - single page summary of the IT strategy.o High level organizational benefitso Relationship to overall business strategyo Resource summary

Staffing Budgets Summary of key projects Internal Capabilities

o IT Project Portfolio Management - An inventory of current projects being managedby the information technology department and their status. Note: It is not commonto report current project status inside a future-looking strategy document.

o Current IT departmental strengths and weaknesses External Forces

o Summary of changes driven from outside the organizationo Rising expectations of users

Example: Availability of open-source learning management systems

o List of new IT projects requested by the organization Opportunities

o Description of new cost reduction or efficiency increase opportunities

NOTES



o Description of how Moore’s Law (faster processors, networks or storage at lowercosts) will impact the organization’s return on investment - ROI for technology

Threatso Description of disruptive forces that could cause the organization to become less

profitable or competitiveo Analysis IT usage by competition

IT Organization structure and Governanceo IT organization roles and responsibilitieso IT role descriptiono IT Governance

Milestoneso List of monthly, quarterly or mid-year milestones and review dates to indicate if

the strategy is on tracko List milestone name, deliverables and metrics

Audience

A technology strategy document is usually designed to be read by non-technicalstakeholders involved in business planning within an organization. It should be free oftechnical jargon and information technology acronyms.

The IT strategy should also be presented to or read by internal IT staff members.Many organizations circulate prior year versions to internal IT staff members for feedbackbefore new annual IT strategy plans are created.

One critical integration point is the interface with an organization’s marketing plan.The marketing plan frequently requires the support of a web site to create an appropriateon-line presence. Large organizations frequently have complex web site requirements suchas web content management.

Presentation

The CIO, CTO or IT manager frequently creates a high-level overview presentationdesigned to be presented to stakeholders. Many experienced managers try to summarizethe strategy in 5-7 slides and present the plan in under 30 minutes to a board of directors.

It is also common to produce a professionally bound booklet version of the strategy- something physical that IT teams can refer to, rather than the more disposable presentationslides.

Scope and size

Although many companies write an overall business plan each year, a technologystrategy may cover developments somewhere between three and 5 years into the future.

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Relationship between strategy and enterprise technology architecture

A technology strategy document typically refers to but does not duplicate an overallenterprise architecture. The technology strategy may refer to:

High-level view of Logical architecture of information technology systems

High-level view of Physical architecture of information technology systems

3.4 TECHNOLOGY ALLIANCES

Technology Alliances Extend the Value of Enterprise Reporting Applications

Actuate works with a select number of Strategic Partners to help organizations betterutilize their information assets to create world class Enterprise Reporting Applications.Actuate’s Strategic Partners develop applications that interface with Actuate products toenhance and extend the range of capabilities for joint customers. Together, Actuate and itspartners build integrated solutions to enhance Actuate’s interoperability with otherapplications.

Actuate and its industry-leading partners encourage companies to truly improvecorporate performance by creating Enterprise Reporting Applications that are adopted by100% of the targeted users.

Actuate and its Partners Improve Business or Industry

Customers leverage Actuate’s tightly integrated partnerships in ERP, applications,database, development environment and other key technology areas to build applicationsthat address fundamental business processes by streamlining financial management,improving sales tracking and management, providing better visibility into customer accountsand delivering that same account information directly to end-customers for self-service.

Organizations across industries have realized the business benefits that come frombringing customers, partners, and employees closer to the information that drives day-to-day business operations.

3.5 JOINT VENTURES

A joint venture (often abbreviated JV) is an entity formed between two or moreparties to undertake economic activity together. The parties agree to create a new entityby both contributing equity, and they then share in the revenues, expenses, and control ofthe enterprise. The venture can be for one specific project only, or a continuing businessrelationship such as the Sony Ericsson joint venture. This is in contrast to a strategic alliance,which involves no equity stake by the participants, and is a much less rigid arrangement.

NOTES



The phrase generally refers to the purpose of the entity and not to a type of entity.Therefore, a joint venture may be a corporation, limited liability company, partnership orother legal structure, depending on a number of considerations such as tax and tort liability.

When are joint ventures used?

Joint ventures are common in the oil and gas industry, and are often cooperationsbetween a local and foreign company (about 3/4 are international). A joint venture is oftenseen as a very viable business alternative in this sector, as the companies can complementtheir skill sets while it offers the foreign company a geographic presence. Studies show afailure rate of 30-61%, and that 60% failed to start or faded away within 5 years. (Osborn,2003) It is also known that joint ventures in low-developed countries show a greaterinstability, and that JVs involving government partners have higher incidence of failure(private firms seem to be better equipped to supply key skills, marketing networks etc.)Furthermore, JVs have shown to fail miserably under highly volatile demand and rapidchanges in product technology.

Some countries, such as the People’s Republic of China and to some extent India,require foreign companies to form joint ventures with domestic firms in order to enter amarket. This requirement often forces technology transfers and managerial control to thedomestic partner.

Another form joint ventures may take are the Joint Ventures (JV’s) in the U.S., Canada,and Mexico dedicated to the conservation of priority bird species and their associatedhabitats. Each of these JV’s is different in how they go about their respective missions, butall try to follow the principles of Strategic Habitat Conservation (SHC). SHC combinesbiological planning, conservation design, conservation delivery, and evaluation andmonitoring. Gulf Coast Joint Venture, Lower Mississippi Valley Joint Venture, and PrairiePothole Joint Venture are just three of the 20+ JV’s found in North America.

Brokers

In addition, joint ventures are practiced by a joint venture broker, who are peoplethat often put together the two parties that participate in a joint venture. A joint venturebroker then often make a percentage of the profit that is made from the deal between thetwo parties.

Reasons for forming a joint venture

Internal reasons1. Build on company’s strengths2. Spreading costs and risks3. Improving access to financial resources

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4. Economies of scale and advantages of size5. Access to new technologies and customers6. Access to innovative managerial practices

Competitive goals

1. Influencing structural evolution of the industry2. Pre-empting competition3. Defensive response to blurring industry boundaries4. Creation of stronger competitive units5. Speed to market6. Improved agility

Strategic goals

1. Synergies2. Transfer of technology/skills3. Diversification

What is a Joint Venture?

Joint Venture companies are the most preferred form of corporate entities for DoingBusiness in India. There are no separate laws for joint ventures in India. The companiesincorporated in India, even with up to 100% foreign equity, are treated the same as domesticcompanies. A Joint Venture may be any of the business entities available in India

A typical Joint Venture is where:1. Two parties, (individuals or companies), incorporate a company in India. Business

of one party is transferred to the company and as consideration for such transfer,shares are issued by the company and subscribed by that party. The other partysubscribes for the shares in cash.

2. The above two parties subscribe to the shares of the joint venture company inagreed proportion, in cash, and start a new business.

3. Promoter shareholder of an existing Indian company and a third party, who/whichmay be individual/company, one of them non-resident or both residents, collaborateto jointly carry on the business of that company and its shares are taken by the saidthird party through payment in cash.

Some practical aspects of formation of joint venture companies in India and theprerequisites which the parties should take into account are enumerated herein after.

NOTES



Foreign companies are also free to open branch offices in India. However, a branchof a foreign company attracts a higher rate of tax than a subsidiary or a joint venturecompany. The liability of the parent company is also greater in case of a branch office.

Government Approvals for Joint Ventures

All the joint ventures in India require governmental approvals, if a foreign partner oran NRI or PIO partner is involved. The approval can be obtained from either from RBI orFIPB. In case, a joint venture is covered under automatic route, then the approval ofReserve bank of India is required. In other special cases, not covered under the automaticroute, a special approval of FIPB is required.

The Government has outlined 37 high priority areas covering most of the industrialsectors. Investment proposals involving up to 74% foreign equity in these areas receiveautomatic approval within two weeks. An application to the Reserve Bank of India isrequired. Please see Foreign Investment in India - Sector wise Guide for sectorwiseguidelines under automatic route. Besides the 37 high priority areas, automatic approval isavailable for 74% foreign equity holdings setting up international trading companies engagedprimarily in export activities.

Approval of foreign equity is not limited to 74% and to high priority industries. Greaterthan 74% of equity and areas outside the high priority list are open to investment, butgovernment approval is required. For these greater equity investments or for areas ofinvestment outside of high priority an application in the form FC (SIA) has to be filed withthe Secretariat for Industrial Approvals. A response is given within 6 weeks. Full foreignownership (100% equity) is readily allowed in power generation, coal washeries, electronics,Export Oriented Unit (EOU) or a unit in one of the Export Processing Zones (“EPZ’s”).

For major investment proposals or for those that do not fit within the existing policyparameters, there is the high-powered Foreign Investment Promotion Board (“FIPB”).The FIPB is located in the office of the Prime Minister and can provide single-windowclearance to proposals in their totality without being restricted by any predeterminedparameters.

Foreign investment is also welcomed in many of infrastructure areas such as power,steel, coal washeries, luxury railways, and telecommunications. The entire hydrocarbonsector, including exploration, producing, refining and marketing of petroleum products hasnow been opened to foreign participation. The Government had recently allowed foreigninvestment up to 51% in mining for commercial purposes and up to 49% in telecommunicationsector. The government is also examining a proposal to do away with the stipulation thatforeign equity should cover the foreign exchange needs for import of capital goods. Inview of the country’s improved balance of payments position, this requirement may beeliminated.

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How to Enter into a Joint Venture Agreement?

Selection of a good local partner is the key to the success of any joint venture. Oncea partner is selected generally a Memorandum of Understanding or a Letter of Intentis signed by the parties highlighting the basis of the future joint venture agreement.

A Memorandum of Understanding and a Joint Venture Agreement must be signedafter consulting lawyers well versed in international laws and multi-jurisdictional laws andprocedures.

Before signing the joint venture agreement, the terms should be thoroughly discussedand negotiated to avoid any misunderstanding at a later stage. Negotiations require anunderstanding of the cultural and legal background of the parties.

Before signing a Joint Venture Agreement the following must be properly addressed: Dispute resolution agreements Applicable law. Force Majeure Holding shares Transfer of shares Board of Directors General meeting. CEO/MD Management Committee Important decisions with consent of partners Dividend policy Funding Access. Change of control Non-Compete Confidentiality Indemnity Assignment. Break of deadlock Termination.

The Joint Venture agreement should be subject to obtaining all necessary governmentalapprovals and licenses within specified period.

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Drafting International Joint Venture Agreements

Madaan & Co. has helped US companies & Foreign companies in setting up theirJoint Venture operations in India and other countries. Business Joint Ventures are morelikely to be beneficial if Joint Venture Entry Strategies are carefully formulated. NegotiatingJoint Ventures properly is very important for a win-win Joint Venture. Proper drafting ofJoint Venture Agreements are very important for the success of any joint venture. We canhelp you in setting up your Joint Venture: from entry strategies, to negotiations to draftingagreements to compliance programs.

Escorts Construction ties up with Altec

Escorts Construction Equipment Ltd (ECEL), a major player in the construction andmaterial handling sectors, will enter the growing earth moving equipment business in 2008-09 fiscal.

Last week, the Faridabad-based company — part of the Escorts Group — signedup with Altec of US, a global major, and is establishing a large manufacturing facility inBallabgarh to give a push to these diversification plans.

While the Ballabgarh plant, its fourth (others are in Faridabad, Sahibabad and Bhiwadi)and largest integrated seamless construction facility is expected to commence operationsin April 2008, another small unit is also being set up in Rudrapur, according to Mr RajeshSharma, Associate Vice-President (Marketing & Sales).

The Rs 417 crore (2006-07) turnover ECEL had earlier exited from its joint venturewith JCB for earth moving equipment by selling its stake.

“The decision to go on our own is based on the huge opportunities the sector offeredand also to turn ECEL into an integrated player with strengths in all segments of constructionequipment,” Mr Sharma told Business Line here.

The agreement signed with Altec will allow ECEL to bring in a host of equipment toserve the power network maintenance business, which promises to grow fast in India.

With projected addition of 1,00,000 mw power capacity, power utilities will findmaintenance easier with these latest equipment, which do not need power shutdown, heexplained.

ECEL, which has a total capacity of manufacturing 5,000 equipments per year, hopesto expand to a capacity of 15,000 equipment per year once the two new plants arecompleted, Mr Sharma, who was here to launch the company’s first crawler crane, said.

On the company’s own growth, he said Escorts TRX 2319, largest PickNCarrycrane in the world, would be exported soon.

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“We are discussing with an Australian buyer (I cannot disclose name now), who hasshown interest to buy 100 units in the first year,” he said.

The company sold the first machine to the Lanco Group recently. ECEL is geared upto tap opportunities being thrown up by the growth of infrastructure and real estate sectors,he added.

According to industry estimates the construction and earth moving equipment industryis at around Rs 9,000 crore and expected to grow to about Rs 40,000 crore by the year2015.

Tatas, Boeing to float joint venture for aerospace parts in India

The Tata group and the US aircraft major Boeing are forming a joint venture companyfor making defence-related aerospace components in India.

The components are for exports to Boeing and its international customers. The jointventure hopes to export components worth $500 million initially.

Under the memorandum of agreement signed by Boeing and the Tata group, it iscontemplated that the joint venture company will be established by June, a press releaseissued today said. A research and development centre for advanced manufacturingtechnologies is also contemplated, said a statement issued by Tatas.

“This joint venture between Tata and Boeing is an important part of our strategy tobuild capabilities in defence and aerospace,” said the statement quoting Mr Ratan Tata,Chairman of the Tata Group, in the statement. “I look forward to the joint venture becominga world-class facility in India.”

The joint venture will bring “real and lasting value to India’s aerospace industry, whilemaking Boeing products more globally competitive,” said Mr Jim Albaugh, President andCEO of Boeing Integrated Defence Systems.

Investment details

When asked about investment details, a Boeing spokesperson said, “this is still undernegotiation”. But the sources close to Tatas said that the Indian business conglomeratewould hold the majority stake in the joint venture. The Tata Group and Boeing signed thememorandum of agreement in December last year.

Boeing, in December, had signed a 10-year memorandum of understanding with state-owned Hindustan Aeronautics Ltd (HAL) also to source sub-systems for fighter aircraftand helicopters.

“The initial intention of the joint venture is making aerospace components for Boeingand its international customers. Production for the domestic market is not in the plan,” Mr

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Brian Nelson, Global Director of Communication, Boeing Integrated Defence, told BusinessLine.

The joint venture will utilise the existing manufacturing capability of Tatas and “developnew supply sources throughout the Indian manufacturing and engineering communities forboth commercial and defence applications,” the statement said. However, aboutmanufacturing locations, Mr Nelson said there was no decision yet.

The manufacturing capabilities established within the joint-venture company would inlater phases be leveraged across multiple Boeing programmes, including the Medium Multi-Role Combat Aircraft (MMRCA) competition.

In the first phase of the agreement, Boeing would potentially issue contracts for workpackages to the joint venture company involving defence-related component manufacturingon Boeing’s F/A-18 Super Hornet for the US Navy and Royal Australian Air Force, CH-47 Chinook and/or P-8 Maritime Patrol Aircraft, the statement said.

BPCL in pact with Kenyan firm for LPG bottling plant

Bharat Petroleum Corporation Ltd (BPCL) has entered into an equal joint venturewith the Kenya Pipeline Company Ltd for setting up an LPG bottling plant in Nairobi,Kenya.

The plant will have a capacity of 2,000 tonnes with LPG coming from Mombassa,Kenya.

Funding plans

The initial investment in the project is expected to be around $15 million and will befunded through a 70:30 debt equity ratio, the Kenyan Energy Minister, Mr Kiraitu Murungi,told reporters here on Saturday.

The Minister is in India with a delegation to discuss the details of the project with theIndian company.

He said the Kenyan energy sector has enormous investment opportunities and Indiancompanies and investors can take advantage of it.

With Kenya being a net importer of oil, it is looking for technical-tie ups in the energysector.

Kenya is seeking Indian collaboration for developing storage, bottling and handlingfacilities for oil and gas.

The country is setting up a 500-km pipeline connecting Mombassa and Nairobi totransport petroleum products at a cost of $110 million.

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It is being implemented by China Petroleum Pipeline Engineering Corporation andsupervised by Petroleum India International.

3.6 TECHNOLOGY BRIDGING

Illustrated below is classic case of technology can be bridged with the society.

Case:

There are an estimated 45m PCs in Brazil, making it the world’s fifth biggest marketfor computers. The more striking number, however, is the fraction of the population thatdoes not have access to technology. “Last year’s figures showed that 59% of Brazilianshave never accessed the internet or used a computer,” said Rodrigo Assumpcao, head ofa committee that advises President Lula’s government on what they call ‘digital inclusion’.But measures are underway to change all that, Mr Assumpcao told the BBC’s GarethMitchell. He feels that being technologically educated is just as important as the basics ofnumeracy and literacy.

A digital or social divide?

“When you think of Brazil, you think of country that is extremely divided between richand poor and areas that are developed and under-developed,” said Mr Assumpcao. Hefeels that the class divide within Brazilian society is to blame for the technological divide.

“In the 50’s there was a brilliant Brazilian educator who said that public schools weremeant to provide for poor children - everything that the rich children had in their homes.”

Most middle-class children are brought up with computers, so it becomes secondnature to them, Mr Assumpcao asserts.

“It’s like a Swiss army knife, a tool with multiple uses that serves him, that’s theexperience of a middle-class child in Brazil.”

In contrast, a poor child may not gain access to a computer until his teenage years, bywhich time it is a necessity in the working world.

“Only by the time he is twelve or fourteen, if he is lucky to live beside a neighbourhoodassociation that has a computer, he will only then be taught on some kind of word-processingor web browser.

“He will be taught that he needs to learn these skills in order to have some rightswithin the job market,” added Mr Assumpcao.

“He is taught that he has to comply with technology and this perception, this differencebetween who commands this technology and who is commanded by technology determinesin our society who rules and who is ruled, who has access to money and who hasn’t andwho has access to rights and who hasn’t.”

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Online for change

Mr Assumpcao said that 56,000 public schools are presently being fitted withbroadband internet, with an aim to have all of the urban public schools in the countryconnected by 2010.

The Brazilian government is also involved with the One Laptop Per Child (OLPC)project, which provides a basic mobile computer for children in developing countries.

Its makers were able to produce a low-cost machine by using a less powerful processorand stripping out expensive parts like the hard disk drive.

Roseli Lopes from the University of Sao Paulo has co-ordinated a trial of the OLPCproject at the Ernani School, northwest of Sao Paulo, that is now in its second year.

“It’s a wonderful experience for the children as they love coming to school and don’twant to stay at home,” said Prof Lopes.

The laptop project works well in classes with large numbers of children, as computersenable individuals to go at their own pace and level.

“It’s active learning, they take part in the search for information and they are notwaiting for the teacher,” said Prof Lopes.

“They are having more fun using this technology, not only to read and write but tomake videos and take pictures,” she added.

Children in Brazil only spend between four or five hours at school, so being able totake the laptop home extends the time that they have to learn.

“That is the most important thing about this project: when they go home they cancontinue learning and include their families in the process,” said Prof Lopes.

“Even if the parents can’t read and write, they can use the camera to take picturesand make the learning more rich.”

Other solutions

The Brazilian government is also trialling a number of other laptop projects in fiveother cities, employing Intel’s Classmate and Encore’s Simputer.

The main concern in using different laptops is that they need to be interoperable, sothat is one issue that Prof Lopes and her colleagues are constantly evaluating.

However, the idea of children being able to access the technological hardware is onlypart of the solution in bridging this digital divide.

“We thought it was a good idea but immediately we decided that could not beconducted as the search for the next gadget,” said Mr Assumpcao.

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“Also, the Brazilian government has a profound conviction that free software is theway to go, so we are demanding that there is a whole suite of free and open-sourcesoftware installed in these computers.

“The whole idea of having closed software on public computers is something whichstrikes me as wrong,” he added.

With widely available broadband, laptops on the desk of many of Brazil’s youth, anda culture of open-source, free software, Brazil’s digital divide looks to be narrowing.

Case on WLL and bridging technology

WLL Threat: Cellular Companys In Direct Marketing Overdrive

In a bid to retain its existing customers, major cellular companies are now opting fordirect marketing plans and educational programmes to combat the WLL threat. Incidentally,some cell firms are even educating subscribers about the benefits of GSM technology overWLL (wireless local loop). After the price war, cellular companies will shift their focus toaggressive marketing plans, predict market analysts.

For starters, Airtel has already started sending direct mailers to its existing customersacross the country. According to Airtel customers in Mumbai, Bharti’s direct mailers talkabout the company’s new offering which are in the pipeline. “In addition, the mailers alsohighlight the benefits of GSM over WLL. As per the mailer, 80 per cent of the world’smobile population prefers GSM over WLL,” informs an Airtel user. When contacted byFE, Bharti was reluctant to divulge further details on its ‘direct marketing’ initiatives.

So, what’s going to be Bharti’s gameplan to take on the new entrant, RelianceInfocomm? Says Bharti Cellular Ltd chief operating officer Mumbai Circle Atul Jhamb:“The entry of new operators will lead to a significant growth in the market. With a presenceacross 16 states in India, we are in a strong position to take full advantage of this growth.Also we provide GSM that offers unlimited mobility and the freedom of choice,” explainsMr Jhamb.

Industry sources say that Bharti has plans to step up its online marketing plans as italready has a strong data base in place.

With the entry of a new player in the over-crowded category, BPL Mobile is alsostepping up its marketing plans to retain customers. Says BPL Mobile president and COODeepak Varma: “Conventional wisdom suggests that all mobile technologies are the same,therefore all networks deliver the same products and services with tariffs and prices beingthe only differentiators. But nothing is further from the truth.”

Mr. Varma believes that ‘service’ will be the key differentiator in the current scenario.“And BPL Mobile is delivering service at the subscriber’s doorstep by increasing customer

NOTES



touch points to 75 outlets—this includes 21 BPL Mobile galleries and 54 exclusive BPLMobile shops,” he adds.

As a part of its marketing strategy, BPL Mobile also sends direct mailers to itscustomers informing them about the latest in services and applications in the cellular industry.”In addition we clear myths about various technologies and services too. I think a mobileservice or experience is the ‘experiential sum’ of the brand experience which includesanticipating and meeting consumer needs,” elaborates Mr Varma.

As for Hutch’s marketing plans, says Ogilvy & Mather India executive director NishiSuri (the ad agency which handles the advertising account of Orange): “Orange will ensurethat it has a competitive edge with effective marketing plans. Today, customers are smartenough to figure out the value-for-money equation between the GSM and WLL technology.

With competition intensifying in the cellular industry, it’s customers who’ll reap rich benefitsin the new year

Case on Nokia and GSM solution for WLL

AFTER making a hue and cry over the Government’s decision to allow limited mobilityservices based on wireless in local loop (WLL), almost all the big cellular operators, includingBharti, Hutchison, and Idea Cellular, are evaluating the feasibility of deploying the end-to-end GSM 800 WLL solutions introduced by Nokia Networks.

According to Mr Sanjay Bhasin, Director - India Strategy, Nokia Networks, thecompany has had discussions with all the leading cellular operators to enable them to rollout cost-efficient WLL services. The operators will, however, take a decision only if theysee a strong business sense, because it would mean that they would have to acquire abasic service licence too.

As per the Government regulations, the basic operators can offer limited mobilityWLL services on the 800 MHz frequency band. The GSM operators have been allocated900/1800 MHz band for their cellular services. So for the mobile operators to deployWLL services, they will have to first acquire a basic licence if they do not have one (Bhartialready offers basic services in many circles) and then deploy Nokia’s GSM 800 Solution.

Mr. Bhasin was confident that the operators would be interested in Nokia’s offering,as he said it is “an open standard enjoying huge economies of scale, GSM allows significantsavings in capex and opex for operators deploying and managing 800 MHz WLL service,making it ideal for providing economic mass-market service in India and other markets.’’

In the infrastructure-sharing approach, existing GSM networks can be modified tosupport the 800 MHz WLL band by simple network upgrades, resulting in the most cost-efficient approach to deploying and managing WLL services, he said.

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“Operators can extend their current GSM services to the 800 MHz WLL band toclearly benefit from synergies with their existing network deployment. The same standardGSM core and radio network technology, including billing and management solutions isalso used for GSM 800,’’ Mr Bhasin noted.

He said that this type of deployment will lower not only the overall capital expenditureseven further, but also the operational costs of running their network since one network isable to offer both mobile and WLL services. Such convergent network deploymentmethodology will be a crucial advantage for mobile operators, since subscribers can alsoenjoy the wide choice of GSM handsets and features available in the market.

According to Mr Jussi Ware, Vice-President, GSM/EDGE Marketing and Sales,Nokia Networks, GSM is the natural technology for WLL, bringing a wide range of benefitsboth because of its competitive services and terminals and because it is highly cost-effectiveto deploy and operate.

With more than 70 per cent of the global market, subscribers to GSM networksenjoy the widest choice of terminals, offering different styles, features and prices.

Based on the three cases it is evident that technology bridging is concerned withmaking technology adoptable by the society.

3.7 CORPORATE VENTURING

Investment in a new or existing venture by another company. Usually corporateventuring is undertaken by large firms investing in start-ups or small, rapidly growingcompanies. Corporate venturing means that growing firms have access to more venturefunding and are able to receive advice from the investing company. One disadvantage isthat large companies can use corporate venturing as a means of stifling competition, throughacquisition.

Description

Corporate Venturing provides an alternative to traditional methods of growing acompany. A company invests in new products or technologies by funding businesses thathave a reasonably autonomous management team and separate human resource policies.The goals can be to develop products to expand the core business, to enter new industriesor markets, or to develop “breakthrough technologies” that could substantially change theindustry. Corporate Venturing can be done in one of four ways: by taking a passive, minorityposition in outside businesses (corporate venture capital), by taking an active interest in anoutside company, by building a new business as a stand-alone unit, or by building a newbusiness inside the existing firm with a structure allowing for management independence.

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MethodologyCorporate ventures require managers to:

Establish strategic objectives. Venturing requires companies to create and screennew ideas identified in-house. It is best used for long-term projects that developknowledge key to the core business. Managers should evaluate ventures based onstrategic needs and ensure that they fit with overall strategy.

Develop the correct approach. Managers must then decide which method to useto pursue the new idea. Corporate venture capital, which provides access (throughinvestments) to breakthrough technologies being investigated by startups, can bean effective prelude to a decision to acquire or build a stand-alone business. Insome instances, however, firms will want to build the new business themselves toeither lock in the value created or leverage close linkages with an existing part ofthe business;

Establish a team. Once the approach is selected, a team can be created with thecapabilities, resources, and sufficient independence to manage the program;

Create processes to monitor progress and incorporate knowledge. Develop strictmetrics and timetables to monitor the development process. In some instances,employ staged funding to ensure progress is on schedule. In all cases, look formeans to transfer knowledge from the venture into the broader organization.

Common UsesCorporate Venturing may be initiated to:

Diversify; Foster relationships with companies key to a firm’s growth; Access new technology, experts, and research; Build businesses adjacent to the core.

Business building may be initiated to: Strengthen the core business; Provide new avenues for growth, or build adjacent businesses; Enter new and emerging markets; Shorten development cycles; Motivate employees to take calculated risks.

What is ‘corporate venturing’?

The term ‘corporate venturing’ covers a range of mutually beneficial relationshipsbetween companies. The relationships range from those between companies within thesame group, through those between unrelated companies, to collective investment bycompanies in other companies through a fund. The companies involved may be of any size,but such relationships are commonly formed between a larger company and a smallerindependent one, usually in a related line of business.

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The larger company may invest in the smaller company, and so provide an alternativeor supplementary source of finance. It may, instead or as well as,

Make available particular skills or knowledge, perhaps in technical or managementareas, which a smaller company would otherwise not have access to, and

Provide access to established marketing and distribution channels, orcomplementary technologies.

In addition to any financial return it receives from an investment the larger companymay gain a competitive advantage by

Being able to make better use of its own resources, and Gain access to Research or development, or other work in an area it is interested in new ideas A more entrepreneurial culture.

Forming corporate venturing relationships can be a way for large companies to developand broaden their business without acquiring other companies, and a way for smallcompanies to grow faster than they otherwise would. A typical outcome would be thedevelopment of a new product or process, perhaps involving an exclusive licensing dealbetween the two companies.

Corporate venturing is well established as a growth strategy in the United States. Inthe United Kingdom (UK) it is currently more limited, being found mainly in areas such asbiotechnology, telecommunications and information technology. The Corporate VenturingScheme (CVS) is intended to encourage corporate venturing involving equity investmentin the UK.

An overview of the Corporate Venturing Scheme

The CVS is aimed at companies considering direct investment, in the form of a minorityshareholding, in small independent higher-risk trading companies or groups of suchcompanies. It provides tax incentives for corporate equity investment in the same types ofcompanies as those qualifying under the Enterprise Investment Scheme (EIS) and VentureCapital Trust (VCT) scheme. The incentives are available in respect of qualifying sharesissued between 1 April 2000 and 31 March 2010. The aims of the Corporate VenturingScheme (CVS) are to

Increase the availability of venture capital to small higher-risk trading companiesfrom corporate investors, and through this

Foster wider corporate venturing relationships between otherwise unconnectedcompanies.

The tax reliefs available are investment relief - relief against corporation tax of up to 20% of the amount

subscribed for full-risk ordinary shares, provided that the shares are held throughouta qualification period

NOTES



deferral relief - deferral of tax on chargeable gains arising on the disposal ofshares on which investment relief has been obtained and not withdrawn in full, ifthe gains are reinvested in new shares for which investment relief is obtained

loss relief - relief against income for capital losses arising on most disposals ofshares on which investment relief has been obtained and not withdrawn in full, netof the investment relief remaining after the disposal.

Creating a Technology Road Map

Does your business have a road map to address your business challenges andopportunities with new technologies?

If you answered ‘no,’ then you’ve come to the right place.

With the new year comes new and emerging technologies to consider for your business.For instance, in 2006 you might want to take advantage of wireless Internet Protocol (IP)phones, unified messaging or videoconferencing. All three are now available for smallbusinesses, and all three can improve operational efficiencies, employee productivity andprovide substantial cost savings—crucial competitive advantages for any small business.

Before you invest in any technology, however, you need a plan—a road map thatmatches short-term and long-term business goals with specific technology solutions to helpyou meet those goals.

But small businesses often don’t have a plan for technology acquisition. Instead, theytraditionally add technology as a means of only addressing an immediate problem. Thatapproach can set the stage for problems as companies evolve.

In other words, without a road map, you may be investing in the wrong technologyfor your business at the wrong time. In addition to wasting money, you may be creatingmore problems than the technology was intended to solve in the first place.

Here’s how to create a technology road map for your business.

Step 1: Identify current and potential business challenges Identifying what your most pressingobstacles are today—and what they’ll likely be tomorrow—can help you accuratelydetermine the best technology solutions for overcoming those challenges. Some commonchallenges small businesses face include:

improving operational efficiencies, enhancing customer responsiveness, containing costs of doing business, and keeping data secure.

Step 2: Map the new technology solution to the biggest business challenge

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For your 2006 (and beyond) technology plan, connect the dots between your biggestbusiness challenge and the specific technology solution that addresses that challenge.

For example, if improving operational efficiency is your biggest challenge, considerinvesting in a secure computer network foundation. Such a flexible communications platformsupports wireless networks, virtual private networks (VPNs), and other communicationstools. A secure computer network foundation goes a long way toward improving yourbusiness’s operational efficiencies by enabling employees to communicate more easilywherever they go.

Similarly, if reducing operating costs is your top priority, consider a converged networkcapable of carrying voice and video as well as data. You’ll have only one network tomanage, which reduces costs; you can take advantage of voice over internet protocol, agreat way to cut telecommunications costs; and so on (read “Should Your Business Switchto VoIP?”).

Step 3: Determine what phase your business is in

Is your business in its foundation, growth or optimization phase? Knowing the answercan help you determine the core technology investment and road map your business islikely to need.

In the foundation phase, a small business is seeking to get established. Communicatingeffectively—with employees, customers and suppliers—is especially critical. So yourtechnology road map should take into account the need to provide the easiest possibleaccess to information, offering the best service to customers, and keeping informationsecure.

Businesses in the growth phase are established and looking to be more efficient andcost-effective. Technology considerations might include offering workers the ability to workfrom home or on the go. You might also want to enhance your communications infrastructureto provide greater operational efficiencies and cost savings through IP telephony.

In the optimization phase, it’s time to differentiate your business with customers andsuppliers. To do so, implementing customer relationship management, sales-force automationand call-center applications to enhance information sharing may be your priority.

Step 4: Ensure that the immediate technology choice will help evolve your business overtime

Whichever technologies you decide on, only invest in solutions that’ll help your businessachieve your goals today and also support—with minimal upgrades—the needs you’llhave in the future as your business evolves.

NOTES



Small-business buyers often go for the lowest-priced technology that meets theirneeds today. This generally means buying products that don’t offer as many capabilities asothers. But this approach can actually cost you money and time in the long run. For example,to save money, some small businesses purchase PCs with 512MB of memory or less. Forabout $200 more, they could have a PC with 1GB of memory or more. The more memorya PC has, the faster applications will run. And, by extension, the faster the PC’s performanceis, the less time you or an employee wastes. The goal is to get the best value over time, notthe lowest upfront cost.

To get the best long-term technology investment for your business, make sure anyvendor you’re considering offers easy financing for its technology solutions. Manytechnology vendors now provide flexible financing and leasing options especially tailoredfor small- and medium-sized businesses.

In addition, take into account what’s available in terms of service and support for anysolution you’re considering. Look for vendors that can provide system design and ongoingsupport for both minor and major software upgrades. In some cases, such services areavailable from a technology company’s local resellers. Also, make sure your solution vendorscan help train your staff so they can handle routine maintenance.

A Few More Tips Before You Buy Now you’re ready to make solid investments in2006 that’ll help your business be more agile, efficient and competitive. But before youspend your hard-earned money, I’ll leave you with a few more tips.

Minimize the number of vendors. It might save you money to buy network routersfrom vendor A, firewalls from vendor B, and network storage from vendor C. But you’llhave three vendors to deal with if something goes wrong. And guess what? Vendor A willinvariably point a finger to vendor B as the culprit, and vice versa, leaving you caught—without a solution—in the middle. Spare yourself the agony and the time (and remember,time is money) by getting as much of your technology solutions from one vendor as possible.

Remember, you’re not alone. Talk to trusted peers, partners, suppliers, friends—even competitors. Find out what technologies are working for them, and which ones aren’t.Ask them about the specific benefits they’ve received. Find out if they experienced anyunpleasant surprises, and if so, how they dealt with them.

Stay tuned. As for the new and emerging technologies mentioned earlier in this column,keep reading this column. In the coming months I’ll explain 2006’s hot new technologiesand how they can help your small businesses thrive this year—and beyond.

Summary

After reading this unit you must have had a fair idea about being globally competitive,corporate venturing and advantages of joint ventures.

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Questions1. What parameters are significant for being globally competitive?2. Elaborate on technology alliances3. Explain the objectives and methodology of joint ventures.4. Using an example of your choice explain corporate venturing.5. How can business be mapped to technology? Explain.

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UNIT IV

TECHNOLOGY MANAGEMENT IN EMERGINGINDUSTRIES

Introduction

This unit deals with the globalisation of the industry and the comtemprory technologiessuch biotechnology, biopharm, nanotechnology and biological engineering. The effects ofglobalisation is discussed alongwith the applications of the existing technologies.

Learning Objectives

Measuring Modern globalization Effects of globalization Fundamental concepts of Nanotechnology History and applications of Bio-technology Genetic testing and Gene Therapy Basic elements of telecommunication

4.1 GLOBALISATION OF INDUSTRY

Globalization (or globalisation) in its literal sense is the process of transformationof local or regional things or phenomena into global ones. It can also be used to describea process by which the people of the world are unified into a single society and functiontogether. This process is a combination of economic, technological, sociocultural andpolitical forces. Globalization is often used to refer to economic globalization, that is,integration of national economies into the international economy through trade, foreigndirect investment, capital flows, migration, and the spread of technology.

Modern globalization

Globalization in the era since World War II is largely the result of planning by economists,business interests, and politicians who recognized the costs associated with protectionismand declining international economic integration. Their work led to the Bretton Woods

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conference and the founding of several international institutions intended to oversee therenewed processes of globalization, promoting growth and managing adverse consequences.

These institutions include the International Bank for Reconstruction and Development(the World Bank), and the International Monetary Fund. Globalization has been facilitatedby advances in technology which have reduced the costs of trade, and trade negotiationrounds, originally under the auspices of the General Agreement on Tariffs and Trade (GATT),which led to a series of agreements to remove restrictions on free trade.

Since World War II, barriers to international trade have been considerably loweredthrough international agreements - GATT. Particular initiatives carried out as a result ofGATT and the World Trade Organization (WTO), for which GATT is the foundation, haveincluded: Promotion of free trade:

o Reduction or elimination of tariffs; creation of free trade zones with small or notariffs

o Reduced transportation costs, especially resulting from development ofcontainerization for ocean shipping.

o Reduction or elimination of capital controlso Reduction, elimination, or harmonization of subsidies for local businesses

Restriction of free trade:o Harmonization of intellectual property laws across the majority of states, with

more restrictions.o Supranational recognition of intellectual property restrictions (e.g. patents granted

by China would be recognized in the United States)

The Uruguay Round (1984 to 1995) led to a treaty to create the WTO to mediatetrade disputes and set up a uniform platform of trading. Other bilateral and multilateraltrade agreements, including sections of Europe’s Maastricht Treaty and the North AmericanFree Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducingtariffs and barriers to trade.

Measuring globalization

Looking specifically at economic globalization, it can be measured in different ways.These center around the four main economic flows that characterize globalization:

Goods and services, e.g. exports plus imports as a proportion of national incomeor per capita of population

Labor/people, e.g. net migration rates; inward or outward migration flows, weightedby population

NOTES



Capital, e.g. inward or outward direct investment as a proportion of national incomeor per head of population

Technology, e.g. international research & development flows; proportion ofpopulations (and rates of change thereof) using particular inventions (especially‘factor-neutral’ technological advances such as the telephone, motorcar,broadband)

As globalization is not only an economic phenomenon, a multivariate approach tomeasuring globalization is the recent index calculated by the Swiss think tank KOF. Theindex measures the three main dimensions of globalization: economic, social, and political.In addition to three indices measuring these dimensions, an overall index of globalizationand sub-indices referring to actual economic flows, economic restrictions, data on personalcontact, data on information flows, and data on cultural proximity is calculated. Data isavailable on a yearly basis for 122 countries, as detailed in Dreher, Gaston and Martens(2008). According to the index, the world’s most globalized country is Belgium, followedby Austria, Sweden, the United Kingdom and the Netherlands. The least globalized countriesaccording to the KOF-index are Haiti, Myanmar the Central African Republic and Burundi.

Effects of globalization

Globalization has various aspects which affect the world in several different wayssuch as: Industrial - emergence of worldwide production markets and broader access to a

range of foreign products for consumers and companies. Particularly movement ofmaterial and goods between and within national boundaries.

Financial - emergence of worldwide financial markets and better access to externalfinancing for borrowers. Simultaneous though not necessarily purely globalist is theemergence of under or un-regulated foreign exchange and speculative markets.

Economic - realization of a global common market, based on the freedom of exchangeof goods and capital.

Political - some use “globalization” to mean the creation of a world government, orcartels of governments (e.g. WTO, World Bank, and IMF) which regulate therelationships among governments and guarantees the rights arising from social andeconomic globalization. Politically, the United States has enjoyed a position of poweramong the world powers; in part because of its strong and wealthy economy. With theinfluence of globalization and with the help of The United States’ own economy, thePeople’s Republic of China has experienced some tremendous growth within the pastdecade. If China continues to grow at the rate projected by the trends, then it is verylikely that in the next twenty years, there will be a major reallocation of power amongthe world leaders. China will have enough wealth, industry, and technology to rival theUnited States for the position of leading world power.

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Informational - increase in information flows between geographically remote locations.Arguably this is a technological change with the advent of fibre optic communications,satellites, and increased availability of telephony and Internet.

Cultural - growth of cross-cultural contacts; advent of new categories of consciousnessand identities which embodies cultural diffusion, the desire to increase one’s standardof living and enjoy foreign products and ideas, adopt new technology and practices,and participate in a “world culture”. Some bemoan the resulting consumerism and lossof languages. Also see Transformation of culture.

Ecological- the advent of global environmental challenges that might be solved withinternational cooperation, such as climate change, cross-boundary water and airpollution, over-fishing of the ocean, and the spread of invasive species. Since manyfactories are built in developing countries with less environmental regulation, globalismand free trade may increase pollution. On the other hand, economic developmenthistorically required a “dirty” industrial stage, and it is argued that developing countriesshould not, via regulation, be prohibited from increasing their standard of living.

Social (International cultural exchange) - increased circulation by people of allnations with fewer restrictions.o Spreading of multiculturalism, and better individual access to cultural diversity

(e.g. through the export of Hollywood and Bollywood movies). Some considersuch “imported” culture a danger, since it may supplant the local culture, causingreduction in diversity or even assimilation. Others consider multiculturalism topromote peace and understanding between peoples.

o Greater international travel and tourismo Greater immigration, including illegal immigrationo Spread of local consumer products (e.g. food) to other countries (often adapted

to their culture).o World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa,

Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible tothose who have Internet or Television, leaving out a substantial segment of theEarth’s population.

o World-wide sporting events such as FIFA World Cup and the Olympic Games. Technical

o Development of a global telecommunications infrastructure and greater transborderdata flow, using such technologies as the Internet, communication satellites,submarine fiber optic cable, and wireless telephones

o Increase in the number of standards applied globally; e.g. copyright laws, patentsand world trade agreements.

Legal/Ethicalo The creation of the international criminal court and international justice movements.

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o Crime importation and raising awareness of global crime-fighting efforts andcooperation.

Decreased by 50.1% compared to a 2.2% increase in Sub-Saharan Africa.

Although critics of globalization complain of Westernization, a 2005 UNESCO reportshowed that cultural exchange is becoming mutual. In 2002, China was the third largestexporter of cultural goods, after the UK and US. Between 1994 and 2002, both NorthAmerica’s and the European Union’s shares of cultural exports declined, while Asia’scultural exports grew to surpass North America.

4.2 MANAGING TECHNOLOGY

Technology has changed the rules of business and provided more tools to capitaliseon new opportunities. However, it has also brought a complexity that comes with managingcomputers, networks, websites and more. These articles can help you understand importanttechnical issues that you will face in running your business.

How to Protect Your Computers

Computer security is one of the most important issues that any business faces. Learnabout improving the safety and security of your business computers.

As businesses rely more and more on technology to run a smooth operation, computersecurity has become a critical issue. These articles provide you with a sound starting pointfor setting up policies and instituting practices to help safeguard your company’s computers.

5 Key Elements for Your PC Security Plan

Experts agree that you need to think carefully about computer security, whatever sizebusiness you run. Here are five things to consider when you draft your PC security plan. 5Key Elements for Your PC Security Plan

Protecting your private business information from the outside world is one thing. Butwhat about from prying eyes inside your own office? Here are five things to consider.

Without an internal PC security plan at your business, all of the files on your company PCscould be available for anyone in your office to see. That could include strategic documents,financial files, and employee records.

That can’t be what you want. Yet many small-business owners fail to devise such aplan, and end up paying the consequences. Not only is their business information at risk,but they also threaten confidentiality pledges made to employees and customers.

You need a formal PC security plan that is simple to understand.

Here are five basics that should be part of your security plan:

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1. Use Password ProtectionProtecting files with passwords ensures that only authorisedusers can open a data file. Your operating system most likely has a built in passwordprotection system and most software applications — including Microsoft Office— let you password-protect files and folders.

2. Choose Creative PasswordsYour spouse’s, child’s or dog’s name should be off-limits as passwords. The reason: People in the office know them and could guessthat they may be your password. The same rule applies to birthdates, streetaddresses, favourite bands or singers, and other terms or words that people arelikely to associate with you. Also, keep in mind that it is harder to crack a passwordthat is made up of a mixture of numbers and letters in upper and lower case, aswell as one that is changed frequently. Facilitate use of passwords by providinginstructions to everyone in your company on how to create them, when to changethem, and how to protect files and folders.

3. Use EncryptionOne way to protect the valuable information on your business PCsis to encrypt data. Encryption software turns data into a string of gibberish thatyou need the correct software key to decipher. Encryption software is commonlyused to limit access to highly confidential files such as financial and customer lists,to safeguard laptop PCs that will be used outside of the office, and to protect topsecret emails.

4. Never Leave Data UnattendedSomething as simple as encouraging your staff toclose files before leaving their desks can limit PC security risks. Without thisprecaution in place, a break for lunch can leave PC files open to anyone whopasses by. Support PC security by imposing rules that require staff to close alldocuments while not in use.

5. Limit Laptop BreachesThe use of laptop PCs enhances productivity, but it alsothreatens the security of your business if proper precautions are not taken.Encourage all remote workers to keep security in mind outside of the office byusing small fonts when working on confidential documents in public place. If yourstaff members use public technology resources, show them how to ensure thatdocuments remain on their laptop hard drives, rather than on the resource’scomputers. Encryption can also protect laptop computers that are used outside ofan office.

Clean the Hard Drive Before Dumping Your PC

Even when it comes time to get rid of your old computers, security is an issue. Learnhow you can ensure that important company information doesn’t fall into the wrong hands.

Defend your Business with a Firewall

Learn what a firewall is and how it can help discourage unwanted intrusions into yourbusiness data and private information.

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Internet Use at Work Growing

The reality is that an increasing number of companies are making this investment.Mostly, it’s because of increased business use of the internet. As more and more businessesprovide high-speed internet access to their employees, they seek to stop employeesaccessing pornography or games or doing excessive personal business through the weband email.

Worldwide, the number of employees who have their internet or email use at workunder surveillance is estimated at 27 million, according to a 2001 Privacy Foundationstudy. Though still largely the domain of corporations, an increasing number of smallbusinesses are monitoring. In-Stat/MDR found that as far back as 2000, 19% of the smallbusinesses it surveyed were monitoring employee web use, with 10% of the respondentsalso taking action to “block” certain sites considered inappropriate.

Monitoring products vary from piecemeal solutions to comprehensive. Websense,for example, is a frequently used product to monitor employee internet use; it can filter outwebsites as appropriate. Likewise, MIMEsweeper, is a popular e-mail monitoring product.

Meanwhile, WinWhatWhere from TrueActive Software monitors every email, instantmessage and document sent and received, and also every keystroke typed on a PC whereit is installed. The latest version even snaps pictures from a WebCam, saves screenshots,and reads keystrokes in multiple languages. Company founder and CTO Richard Eatonsays about 80% of its sales have been to businesses, and the remainder to governmentagencies, parents monitoring their kids’ PC use and men or women suspicious of theirlovers.

If you are satisfied with your answers here, follow these five tips:

A word to employees: Never send an email or instant message at work that youwouldn’t be afraid to read the next day on the front page of a newspaper, Gartenbergwarns. Likewise, don’t visit websites at work with URLs you’d mind seeing posted, nextto your name, in a public forum.

Performance and Reliability

Find out how computers can help you cut down on travel costs, reduce your relianceon paper and keep you connected while you and your employees are on the road.

As computing performance and reliability increase, computers provide more efficientand cost-effective ways to tackle everyday business tasks. Here are some approachesthat will help you capitalise on your existing investment.

Virtual Meetings Cut Travel Costs

Face-to-face meetings will always be an important part of the business process. Butthere are alternatives, such as videoconferencing, Web conferencing and more.

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Virtual Meetings Cut Travel Costs

Trying to cut back on business trips? Find out how new advances in technology cansubstitute time-consuming face-to-face meetings.

“A majority of companies have higher travel expenses than they need,” says AlisaJenkins, senior director at Bredin Business Information, a business consulting firm. “Thisdoesn’t mean you have to cut out all travel. There are still many cases where meeting faceto face is best. But there are also good ways to meet virtually that can make many of yourbusiness trips unnecessary.”

Alternatives to business travel — such as web conferencing with Microsoft OfficeLive Meeting or similar products — continue to improve with advances in internet andrelated technologies, most agree. We’ll address the options, including video conferencing,teleconferencing, online collaboration tools and the web conferencing in detail below.

But first: When do you absolutely need to meet? Here are some scenarios mentioned byexperts:

You are meeting a new client. You are introducing new people — perhaps your replacement — to an ongoing

but important business relationship. You are attempting to close a significant sale or cut an important deal. You are delivering a product that you must demonstrate. You need to resolve a controversial or complex problem, or discuss top-secret

matters such as an acquisition or merger. You need to meet with an attorney to discuss legal matters. You need to solicit money from an investor. You are making sales or training presentations and your materials are best presented

in person. Your competitors are meeting face to face with a client you want.

Perhaps you could add other scenarios specific to your company or industry. Thepoint is, meetings remain critical to the success of your business.

However, there are many meetings where technology can substitute for travel easilyand effectively.

“Virtual meetings” may not be as much fun, but they can allow you to get a lot of workdone at less expense. Here’s a rundown of the alternatives:

Video Conferencing

An interactive use of video, computing and communication technologies to allowpeople in two or more locations to meet — either one-on-one or in groups of up to a

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dozen people or so — without being physically together. Video can be streamed over theInternet or broadcast over television monitors.

Pluses: High-end video conferencing systems (such as those owned by many largercorporations) can bring together large groups of people in disparate locales to hear speechesand presentations in a broadcast-quality setting. But video conferencing today also can bedone on the cheap, with inexpensive webcams and free or low-cost software, such asMicrosoft NetMeeting.

Minuses: Unless you go to a video conferencing centre, audio and video equipment mustbe purchased. (NetMeeting, for example, requires a PC sound card with a microphoneand speakers, as well as a video capture card or camera for video support.) Most videoconferencing providers charge by the hour, so you may feel pressured to end on the hourand leave business undone.

Web Conferencing

Video conferencing without the video — or, put another way, teleconferencing withthe addition of the web for interactive presentations, using PowerPoint, Excel or otherdocuments. Audio can be transmitted by telephone and/or PC microphones.

Pluses: All you need is Internet access and a phone. You can make presentations at onceto as many as 2,500 people in different locations. You don’t have to email the PowerPointslides or other documents to your audience ahead of time — you use the visuals andhighlight points in real time. Other participants can also use drawing tools to make pointsor take control of your presentation as well. NetMeeting works well for web conferencingas well.

Minuses: It’s certainly not the same as meeting in person, and you miss out on people’sfacial expressions and body language, unlike video conferencing. But for straightforwardbusiness plan reviews, sales meetings, software demonstrations and customer presentations,it works — and brings a lot of people from far and wide together for one meeting.

Teleconferencing

Teleconferencing services are offered by long-distance carriers or independent servicebureaus using sophisticated call connection “bridges” to join many different phone callsinto a single conversation.

Pluses: Calls can be set up quickly and easily, at relatively low cost. All you need is atelephone. Accompanying documents can be faxed, emailed or shipped overnight to meetingparticipants in advance, if necessary.

Minuses: Teleconferences work well for simple information sharing and straightforwarddecision-making that require no visual presentation. But they are not a suitable way to

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discuss more-complicated matters, which could be presented better via web conferencing.Teleconferencing also is not a desirable way to begin or even further an important businessrelationship. But, in a pinch, it can accomplish a lot.

Online Collaboration Tools

While email remains a key business tool, this discussion will focus on extranets —private websites that allow you to share files, documents and use message boards withselected customers or partners.

Pluses: Having an extranet won’t take the place of a long-distance meeting using one ofthe alternatives above. But it can, over time, reduce the need for some meetings by allowingyou to have ongoing communication and document-sharing.

Minuses: You can communicate in real time using chat or instant messaging, but mostcommunication is not interactive. Extranets, however, effectively can turn a teleconferencingsession into a web conferencing one if all of the participants have access to the private site.

4.3 NANOTECHNOLOGY & MATERIAL SCIENCE

Nanotechnology refers to a field of applied science whose theme is the control of matteron an atomic and molecular scale. Generally nanotechnology deals with structures 100nanometers or smaller, and involves developing materials or devices within that size.

Nanotechnology is a highly diverse and multidisciplinary field, ranging from novelextensions of conventional device physics, to completely new approaches based uponmolecular self-assembly, to developing new materials with dimensions on the nanoscale,even to speculation on whether we can directly control matter on the atomic scale.

Nanotechnology has the potential to create many new materials and devices withwide-ranging applications, such as in medicine, electronics, and energy production. On theother hand, nanotechnology raises many of the same issues as with any introduction of newtechnology, including concerns about the toxicity and environmental impact of nanomaterials,and their potential effects on global economics, as well as speculation about variousdoomsday scenarioes. These concerns have lead to a debate among advocacy groupsand governments on whether special regulation of nanotechnology is warranted.

Fundamental concepts

One nanometer (nm) is one billionth, or 10-9 of a meter. By comparison, typical carbon-carbon bond lengths, or the spacing between these atoms in a molecule, are in the range0.12-0.15 nm, and a DNA double-helix has a diameter around 2 nm. On the other hand,the smallest cellular lifeforms, the bacteria of the genus Mycoplasma, are around 20000 nmin length.

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To put that scale in another context, the comparative size of a nanometer to a meter isthe same as that of a marble to the size of the earth. Or another way of putting it: ananometer is the amount a man’s beard grows in the time it takes him to raise the razor tohis face.

Two main approaches are used in nanotechnology. In the “bottom-up” approach,materials and devices are built from molecular components which assemble themselveschemically by principles of molecular recognition. In the “top-down” approach, nano-objects are constructed from larger entities without atomic-level control.

A number of physical phenomena become pronounced as the size of the systemdecreases. These include statistical mechanical effects, as well as quantum mechanicaleffects, for example the “quantum size effect” where the electronic properties of solids arealtered with great reductions in particle size. This effect does not come into play by goingfrom macro to micro dimensions. However, it becomes dominant when the nanometer sizerange is reached. Additionally, a number of physical (mechanical, electrical, optical, etc.)properties change when compared to macroscopic systems. One example is the increasein surface area to volume ratio altering mechanical, thermal and catalytic properties ofmaterials. Novel mechanical properties of nanosystems are of interest in the nanomechanicsresearch. The catalytic activity of nanomaterials also opens potential risks in their interactionwith biomaterials.

Materials reduced to the nanoscale can show different properties compared to whatthey exhibit on a macroscale, enabling unique applications. For instance, opaque substancesbecome transparent (copper); stable materials turn combustible (aluminum); solids turninto liquids at room temperature (gold); insulators become conductors (silicon). A materialsuch as gold, which is chemically inert at normal scales, can serve as a potent chemicalcatalyst at nanoscales. Much of the fascination with nanotechnology stems from thesequantum and surface phenomena that matter exhibits at the nanoscale.

Molecular nanotechnology: a long-term view

Molecular nanotechnology, sometimes called molecular manufacturing, is a term givento the concept of engineered nanosystems (nanoscale machines) operating on the molecularscale. It is especially associated with the concept of a molecular assembler, a machine thatcan produce a desired structure or device atom-by-atom using the principles ofmechanosynthesis. Manufacturing in the context of productive nanosystems is not relatedto, and should be clearly distinguished from, the conventional technologies used tomanufacture nanomaterials such as carbon nanotubes and nanoparticles.

It is hoped that developments in nanotechnology will make possible their constructionby some other means, perhaps using biomimetic principles. However, Drexler and otherresearchers have proposed that advanced nanotechnology, although perhaps initially

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implemented by biomimetic means, ultimately could be based on mechanical engineeringprinciples, namely, a manufacturing technology based on the mechanical functionality ofthese components (such as gears, bearings, motors, and structural members) that wouldenable programmable, positional assembly to atomic specification (PNAS-1981). Thephysics and engineering performance of exemplar designs were analyzed in Drexler’s bookNanosystems.

In general it is very difficult to assemble devices on the atomic scale, as all one has toposition atoms are other atoms of comparable size and stickyness. Another view, put forthby Carlo Montemagno, is that future nanosystems will be hybrids of silicon technology andbiological molecular machines. Yet another view, put forward by the late Richard Smalley,is that mechanosynthesis is impossible due to the difficulties in mechanically manipulatingindividual molecules.

Nanomaterials

This includes subfields which develop or study materials having unique propertiesarising from their nanoscale dimensions.

Interface and Colloid Science has given rise to many materials which may beuseful in nanotechnology, such as carbon nanotubes and other fullerenes, and variousnanoparticles and nanorods.

Nanoscale materials can also be used for bulk applications; most presentcommercial applications of nanotechnology are of this flavor.

Progress has been made in using these materials for medical applications; seeNanomedicine.

Bottom-up approaches

These seek to arrange smaller components into more complex assemblies. DNA nanotechnology utilizes the specificity of Watson-Crick basepairing to

construct well-defined structures out of DNA and other nucleic acids. Approaches from the field of “classical” chemical synthesis also aim at designing

molecules with well-defined shape. More generally, molecular self-assembly seeks to use concepts of supramolecular

chemistry, and molecular recognition in particular, to cause single-moleculecomponents to automatically arrange themselves into some useful conformation.

Top-down approaches

These seek to create smaller devices by using larger ones to direct their assembly. Many technologies descended from conventional solid-state silicon methods

for fabricating microprocessors are now capable of creating features smaller than100 nm, falling under the definition of nanotechnology. Giant magnetoresistance-

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based hard drives already on the market fit this description, as do atomic layerdeposition (ALD) techniques. Peter Grünberg and Albert Fert received the NobelPrize in Physics for their discovery of Giant magnetoresistance and contributionsto the field of spintronics in 2007.

Solid-state techniques can also be used to create devices known asnanoelectromechanical systems or NEMS, which are related tomicroelectromechanical systems or MEMS.

Atomic force microscope tips can be used as a nanoscale “write head” to deposita chemical upon a surface in a desired pattern in a process called dip pennanolithography. This fits into the larger subfield of nanolithography.

Functional approaches

These seek to develop components of a desired functionality without regard to howthey might be assembled.

Molecular electronics seeks to develop molecules with useful electronicproperties. These could then be used as single-molecule components in ananoelectronic device. For an example see rotaxane.

Synthetic chemical methods can also be used to create synthetic molecularmotors, such as in a so-called nanocar.

Speculative

These subfields seek to anticipate what inventions nanotechnology might yield, orattempt to propose an agenda along which inquiry might progress. These often take a big-picture view of nanotechnology, with more emphasis on its societal implications than thedetails of how such inventions could actually be created.

Molecular nanotechnology is a proposed approach which involves manipulatingsingle molecules in finely controlled, deterministic ways. This is more theoreticalthan the other subfields and is beyond current capabilities.

Nanorobotics centers on self-sufficient machines of some functionality operatingat the nanoscale. There are hopes for applying nanorobots in medicine, but it maynot be easy to do such a thing because of several drawbacks of such devices.Nevertheless, progress on innovative materials and methodologies has beendemonstrated with some patents granted about new nanomanufacturing devicesfor future commercial applications, which also progressively helps in the developmenttowards nanorobots with the use of embedded nanobioelectronics concept.

Programmable matter based on artificial atoms seeks to design materials whoseproperties can be easily, reversibly and externally controlled.

Due to the popularity and media exposure of the term nanotechnology, the wordspicotechnology and femtotechnology have been coined in analogy to it, althoughthese are only used rarely and informally.

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Applications

As of April 24, 2008 The Project on Emerging Nanotechnologies claims that over609 nanotech products exist, with new ones hitting the market at a pace of 3-4 per week.The project lists all of the products in a database. Most applications are limited to the useof “first generation” passive nanomaterials which includes titanium dioxide in sunscreen,cosmetics and some food products; Carbon allotropes used to produce gecko tape; silverin food packaging, clothing, disinfectants and household appliances; zinc oxide in sunscreensand cosmetics, surface coatings, paints and outdoor furniture varnishes; and cerium oxideas a fuel catalyst.

The National Science Foundation (a major source of funding for nanotechnology inthe United States) funded researcher David Berube to study the field of nanotechnology.His findings are published in the monograph “Nano-Hype: The Truth Behind theNanotechnology Buzz”. This published study (with a foreword by Anwar Mikhail, SeniorAdvisor for Nanotechnology at the National Science Foundation) concludes that much ofwhat is sold as “nanotechnology” is in fact a recasting of straightforward materials science,which is leading to a “nanotech industry built solely on selling nanotubes, nanowires, andthe like” which will “end up with a few suppliers selling low margin products in huge volumes.”Further applications which require actual manipulation or arrangement of nanoscalecomponents await further research. Though technologies branded with the term ‘nano’ aresometimes little related to and fall far short of the most ambitious and transformativetechnological goals of the sort in molecular manufacturing proposals, the term still connotessuch ideas. Thus there may be a danger that a “nano bubble” will form, or is formingalready, from the use of the term by scientists and entrepreneurs to garner funding, regardlessof interest in the transformative possibilities of more ambitious and far-sighted work.

Implications

Due to the far-ranging claims that have been made about potential applications ofnanotechnology, a number of serious concerns have been raised about what effects thesewill have on our society if realized, and what action if any is appropriate to mitigate theserisks.

One area of concern is the effect that industrial-scale manufacturing and use ofnanomaterials would have on human health and the environment, as suggested bynanotoxicology research. Groups such as the Center for Responsible Nanotechnologyhave advocated that nanotechnology should be specially regulated by governments forthese reasons. Others counter that overregulation would stifle scientific research and thedevelopment of innovations which could greatly benefit mankind.

Other experts, including director of the Woodrow Wilson Center’s Project on EmergingNanotechnologies David Rejeski, have testified that successful commercialization depends

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on adequate oversight, risk research strategy, and public engagement. More recently localmunicipalities have passed (Berkeley, CA) or are considering (Cambridge, MA) -ordinances requiring nanomaterial manufacturers to disclose the known risks of theirproducts.

The National Institute for Occupational Safety and Health is conducting research onhow nanoparticles interact with the body’s systems and how workers might be exposed tonano-sized particles in the manufacturing or industrial use of nanomaterials. NIOSH offersinterim guidelines for working with nanomaterials consistent with the best scientificknowledge. Longer-term concerns center on the implications that new technologies willhave for society at large, and whether these could possibly lead to either a post scarcityeconomy, or alternatively exacerbate the wealth gap between developed and developingnations. The effects of nanotechnology on the society as a whole, on human health and theenvironment, on trade, on security, on food systems and even on the definition of “human”,have not been characterized or politicized.

Health and environmental concerns - Nanotoxicology

Some of the recently developed nanoparticle products may have unintendedconsequences. Researchers have discovered that silver nanoparticles used in socks toreduce foot odor are being released in the wash with possible negative consequences.Silver nanoparticles, which are bacteriostatic, may then destroy beneficial bacteria whichare important for breaking down organic matter in waste treatment plants or farms.

A study at the University of Rochester found that when rats breathed in nanoparticles,the particles settled in the brain and lungs, which lead to significant increases in biomarkersfor inflammation and stress response.

A major study published more recently in Nature nanotechnology suggests someforms of carbon nanotubes – a poster child for the “nanotechnology revolution” – could beas harmful as asbestos if inhaled in sufficient quantities. Anthony Seaton of the Institute ofOccupational Medicine in Edinburgh, Scotland, who contributed to the article on carbonnanotubes said “We know that some of them probably have the potential to causemesothelioma. So those sorts of materials need to be handled very carefully.” In the absenceof specific nano-regulation forthcoming from governments, Paull and Lyons (2008) havecalled for an exclusion of engineered nanoparticles from organic food.

Regulation of Nanotechnology

Calls for tighter regulation of nanotechnology have occurred alongside a growingdebate related to the human health and safety risks associated with nanotechnology. Further,there is significant debate about who is responsible for the regulation of nanotechnology.While some non-nanotechnology specific regulatory agencies currently cover some products

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and processes (to varying degrees) – by “bolting on” nanotechnology to existing regulations– there are clear gaps in these regimes.

Stakeholders concerned by the lack of a regulatory framework to assess and controlrisks associated with the release of nanoparticles and nanotubes have drawn parallels withbovine spongiform encephalopathy (‘mad cow’s disease), thalidomide, genetically modifiedfood, nuclear energy, reproductive technologies, biotechnology, and asbestosis. TheWoodrow Wilson Centre’s Project on Emerging Technologies conclude that there isinsufficient funding for human health and safety research, and as a result there is currentlylimited understanding of the human health and safety risks associated with nanotechnology.

The Royal Society report identified a risk of nanoparticles or nanotubes being releasedduring disposal, destruction and recycling, and recommended that “manufacturers ofproducts that fall under extended producer responsibility regimes such as end-of-liferegulations publish procedures outlining how these materials will be managed to minimizepossible human and environmental exposure” (p.xiii). Reflecting the challenges for ensuringresponsible life cycle regulation, the Institute for Food and Agricultural Standards hasproposed standards for nanotechnology research and development should be integratedacross consumer, worker and environmental standards. They also propose that NGOsand other citizen groups play a meaningful role in the development of these standards.

4.4 BIOTECHNOLOGY

Biotechnology is technology based on biology, especially when used in agriculture, foodscience, and medicine. The United Nations Convention on Biological Diversity definesbiotechnology as:

Any technological application that uses biological systems, living organisms, orderivatives thereof, to make or modify products or processes for specific use.

Biotechnology is often used to refer to genetic engineering technology of the 21st century,however the term encompasses a wider range and history of procedures for modifyingbiological organisms according to the needs of humanity, going back to the initialmodifications of native plants into improved food crops through artificial selection andhybridization. Bioengineering is the science upon which all biotechnological applicationsare based. With the development of new approaches and modern techniques, traditionalbiotechnology industries are also acquiring new horizons enabling them to improve thequality of their products and increase the productivity of their systems.

Before 1971, the term, biotechnology, was primarily used in the food processingand agriculture industries. Since the 1970s, it began to be used by the Western scientificestablishment to refer to laboratory-based techniques being developed in biological research,such as recombinant DNA or tissue culture-based processes, or horizontal gene transfer inliving plants, using vectors such as the Agrobacterium bacteria to transfer DNA into a

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host organism. In fact, the term should be used in a much broader sense to describe thewhole range of methods, both ancient and modern, used to manipulate organic materials toreach the demands of food production. So the term could be defined as, “The applicationof indigenous and/or scientific knowledge to the management of (parts of) microorganisms,or of cells and tissues of higher organisms, so that these supply goods and services of useto the food industry and its consumers.

Biotechnology combines disciplines like genetics, molecular biology, biochemistry,embryology and cell biology, which are in turn linked to practical disciplines like chemicalengineering, information technology, and robotics. Patho-biotechnology describes theexploitation of pathogens or pathogen derived compounds for beneficial effect.

History of Biotechnology

Brewing was an early application of biotechnology. The most practical use ofbiotechnology, which is still present today, is the cultivation of plants to produce foodsuitable to humans. Agriculture has been theorized to have become the dominant way ofproducing food since the Neolithic Revolution. The processes and methods of agriculturehave been refined by other mechanical and biological sciences since its inception. Throughearly biotechnology, farmers were able to select the best suited and highest-yield crops toproduce enough food to support a growing population. Other uses of biotechnology wererequired as crops and fields became increasingly large and difficult to maintain. Specificorganisms and organism by-products were used to fertilize, restore nitrogen, and controlpests. Throughout the use of agriculture farmers have inadvertently altered the genetics oftheir crops through introducing them to new environments and breeding them with otherplants—one of the first forms of biotechnology. Cultures such as those in Mesopotamia,Egypt, and Pakistan developed the process of brewing beer. It is still done by the samebasic method of using malted grains (containing enzymes) to convert starch from grainsinto sugar and then adding specific yeasts to produce beer. In this process the carbohydratesin the grains were broken down into alcohols such as ethanol. Ancient Indians also usedthe juices of the plant Ephedra Vulgaris and used to call it Soma. Later other culturesproduced the process of Lactic acid fermentation which allowed the fermentation andpreservation of other forms of food. Fermentation was also used in this time period toproduce leavened bread. Although the process of fermentation was not fully understooduntil Louis Pasteur’s work in 1857, it is still the first use of biotechnology to convert a foodsource into another form.

Combinations of plants and other organisms were used as medications in many earlycivilizations. Since as early as 200 BC, people began to use disabled or minute amounts ofinfectious agents to immunize themselves against infections. These and similar processeshave been refined in modern medicine and have led to many developments such asantibiotics, vaccines, and other methods of fighting sickness.

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In the early twentieth century scientists gained a greater understanding of microbiologyand explored ways of manufacturing specific products. In 1917, Chaim Weizmann firstused a pure microbiological culture in an industrial process, that of manufacturing cornstarch using Clostridium acetobutylicum to produce acetone, which the United Kingdomdesperately needed to manufacture explosives during World War I.

The field of modern biotechnology is thought to have largely begun on June 16, 1980,when the United States Supreme Court ruled that a genetically-modified microorganismcould be patented in the case of Diamond v. Chakrabarty. Indian-born AnandaChakrabarty, working for General Electric, had developed a bacterium (derived from thePseudomonas genus) capable of breaking down crude oil, which he proposed to use intreating oil spills.

Revenue in the industry is expected to grow by 12.9% in 2008. Another factorinfluencing the biotechnology sector’s success is improved intellectual property rightslegislation — and enforcement — worldwide, as well as strengthened demand for medicaland pharmaceutical products to cope with an ageing, and ailing, U.S. population.

Rising demand for biofuels is expected to be good news for the biotechnology sector,with the Department of Energy estimating ethanol usage could reduce U.S. petroleum-derived fuel consumption by up to 30% by 2030. The biotechnology sector has allowedthe U.S. farming industry to rapidly increase its supply of corn and soybeans — the maininputs into biofuels — by developing genetically-modified seeds which are resistant topests and drought. By boosting farm productivity, biotechnology plays a crucial role inensuring that biofuel production targets are met.

Applications

Biotechnology has applications in four major industrial areas, including health care(medical), crop production and agriculture, non food (industrial) uses of crops and otherproducts (e.g. biodegradable plastics, vegetable oil, biofuels), and environmental uses.

For example, one application of biotechnology is the directed use of organisms forthe manufacture of organic products (examples include beer and milk products). Anotherexample is using naturally present bacteria by the mining industry in bioleaching.Biotechnology is also used to recycle, treat waste, clean up sites contaminated by industrialactivities (bioremediation), and also to produce biological weapons.

A series of derived terms have been coined to identify several branches ofbiotechnology, for example:

Red biotechnology is applied to medical processes. Some examples are thedesigning of organisms to produce antibiotics, and the engineering of genetic curesthrough genomic manipulation.

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Green biotechnology is biotechnology applied to agricultural processes. Anexample would be the selection and domestication of plants via micropropagation.Another example is the designing of transgenic plants to grow under specificenvironmental conditions or in the presence (or absence) of certain agriculturalchemicals. One hope is that green biotechnology might produce moreenvironmentally friendly solutions than traditional industrial agriculture. An exampleof this is the engineering of a plant to express a pesticide, thereby eliminating theneed for external application of pesticides. An example of this would be Bt corn.Whether or not green biotechnology products such as this are ultimately moreenvironmentally friendly is a topic of considerable debate.

White biotechnology, also known as industrial biotechnology, is biotechnologyapplied to industrial processes. An example is the designing of an organism toproduce a useful chemical. Another example is the using of enzymes as industrialcatalysts to either produce valuable chemicals or destroy hazardous/pollutingchemicals. White biotechnology tends to consume less in resources than traditionalprocesses used to produce industrial goods.

Blue biotechnology is a term that has been used to describe the marine andaquatic applications of biotechnology, but its use is relatively rare.

The investments and economic output of all of these types of applied biotechnologiesform what has been described as the bioeconomy.

Bioinformatics is an interdisciplinary field which addresses biological problemsusing computational techniques, and makes the rapid organization and analysis ofbiological data possible. The field may also be referred to as computationalbiology, and can be defined as, “conceptualizing biology in terms of moleculesand then applying informatics techniques to understand and organize the informationassociated with these molecules, on a large scale.” Bioinformatics plays a key rolein various areas, such as functional genomics, structural genomics, and proteomics,and forms a key component in the biotechnology and pharmaceutical sector.

Application of Biotechnology in Medicine

In medicine, modern biotechnology finds promising applications in such areas as pharmacogenomics; drug production; genetic testing; and gene therapy.

Pharmacogenomics

DNA Microarray chip — Some can do as many as a million blood tests at once.Pharmacogenomics is the study of how the genetic inheritance of an individual affects his/her body’s response to drugs. It is a coined word derived from the words “pharmacology”and “genomics”. It is hence the study of the relationship between pharmaceuticals and

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genetics. The vision of pharmacogenomics is to be able to design and produce drugs thatare adapted to each person’s genetic makeup.

Pharmacogenomics results in the following benefits

1. Development of tailor-made medicines. Using pharmacogenomics, pharmaceuticalcompanies can create drugs based on the proteins, enzymes and RNA moleculesthat are associated with specific genes and diseases. These tailor-made drugspromise not only to maximize therapeutic effects but also to decrease damage tonearby healthy cells.

2. More accurate methods of determining appropriate drug dosages. Knowing apatient’s genetics will enable doctors to determine how well his/ her body canprocess and metabolize a medicine. This will maximize the value of the medicineand decrease the likelihood of overdose.

3. Improvements in the drug discovery and approval process. The discovery ofpotential therapies will be made easier using genome targets. Genes have beenassociated with numerous diseases and disorders. With modern biotechnology,these genes can be used as targets for the development of effective new therapies,which could significantly shorten the drug discovery process.

4. Better vaccines. Safer vaccines can be designed and produced by organismstransformed by means of genetic engineering. These vaccines will elicit the immuneresponse without the attendant risks of infection. They will be inexpensive, stable,easy to store, and capable of being engineered to carry several strains of pathogenat once.

Bio-Pharmaceutical products

Most traditional pharmaceutical drugs are relatively simple molecules that have beenfound primarily through trial and error to treat the symptoms of a disease or illness.Biopharmaceuticals are large biological molecules known as proteins and these usuallytarget the underlying mechanisms and pathways of a malady (but not always, as is the casewith using insulin to treat type 1 diabetes mellitus, as that treatment merely addresses thesymptoms of the disease, not the underlying cause which is autoimmunity); it is a relativelyyoung industry. They can deal with targets in humans that may not be accessible withtraditional medicines. A patient typically is dosed with a small molecule via a tablet while alarge molecule is typically injected.

Small molecules are manufactured by chemistry but larger molecules are created byliving cells such as those found in the human body: for example, bacteria cells, yeast cells,animal or plant cells.

Modern biotechnology is often associated with the use of genetically alteredmicroorganisms such as E. coli or yeast for the production of substances like syntheticinsulin or antibiotics. It can also refer to transgenic animals or transgenic plants, such as Bt

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corn. Genetically altered mammalian cells, such as Chinese Hamster Ovary (CHO) cells,are also used to manufacture certain pharmaceuticals. Another promising new biotechnologyapplication is the development of plant-made pharmaceuticals.

Biotechnology is also commonly associated with landmark breakthroughs in newmedical therapies to treat hepatitis B, hepatitis C, cancers, arthritis, haemophilia, bonefractures, multiple sclerosis, and cardiovascular disorders. The biotechnology industry hasalso been instrumental in developing molecular diagnostic devices than can be used todefine the target patient population for a given biopharmaceutical. Herceptin, for example,was the first drug approved for use with a matching diagnostic test and is used to treatbreast cancer in women whose cancer cells express the protein HER2.

Modern biotechnology can be used to manufacture existing medicines relatively easilyand cheaply. The first genetically engineered products were medicines designed to treathuman diseases. To cite one example, in 1978 Genentech developed synthetic humanizedinsulin by joining its gene with a plasmid vector inserted into the bacterium Escherichiacoli. Insulin, widely used for the treatment of diabetes, was previously extracted from thepancreas of abattoir animals (cattle and/or pigs). The resulting genetically engineeredbacterium enabled the production of vast quantities of synthetic human insulin at relativelylow cost, although the cost savings was used to increase profits for manufacturers, notpassed on to consumers or their healthcare providers. According to a 2003 study undertakenby the International Diabetes Federation (IDF) on the access to and availability of insulin inits member countries, synthetic ‘human’ insulin is considerably more expensive in mostcountries where both synthetic ‘human’ and animal insulin are commercially available: e.g.within European countries the average price of synthetic ‘human’ insulin was twice as highas the price of pork insulin. Yet in its position statement, the IDF writes that “there is nooverwhelming evidence to prefer one species of insulin over another” and “[modern, highly-purified] animal insulins remain a perfectly acceptable alternative.

Modern biotechnology has evolved, making it possible to produce more easily andrelatively cheaply human growth hormone, clotting factors for hemophiliacs, fertility drugs,erythropoietin and other drugs. Most drugs today are based on about 500 moleculartargets. Genomic knowledge of the genes involved in diseases, disease pathways, anddrug-response sites are expected to lead to the discovery of thousands more new targets.

Genetic testing

Gel electrophoresis

Genetic testing involves the direct examination of the DNA molecule itself. A scientistscans a patient’s DNA sample for mutated sequences.

There are two major types of gene tests. In the first type, a researcher may designshort pieces of DNA (“probes”) whose sequences are complementary to the mutated

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sequences. These probes will seek their complement among the base pairs of an individual’sgenome. If the mutated sequence is present in the patient’s genome, the probe will bind toit and flag the mutation. In the second type, a researcher may conduct the gene test bycomparing the sequence of DNA bases in a patient’s gene to disease in healthy individualsor their progeny.

Genetic testing is now used for: Determining sex Carrier screening, or the identification of unaffected individuals who carry one

copy of a gene for a disease that requires two copies for the disease to manifest Prenatal diagnostic screening Newborn screening Presymptomatic testing for predicting adult-onset disorders Presymptomatic testing for estimating the risk of developing adult-onset cancers Confirmational diagnosis of symptomatic individuals Forensic/identity testing

Some genetic tests are already available, although most of them are used in developedcountries. The tests currently available can detect mutations associated with rare geneticdisorders like cystic fibrosis, sickle cell anemia, and Huntington’s disease. Recently, testshave been developed to detect mutation for a handful of more complex conditions such asbreast, ovarian, and colon cancers. However, gene tests may not detect every mutationassociated with a particular condition because many are as yet undiscovered, and the onesthey do detect may present different risks to different people and populations.

The bacterium E. coli is routinely genetically engineered.

Several issues have been raised regarding the use of genetic testing:1. Absence of cure. There is still a lack of effective treatment or preventive measures

for many diseases and conditions now being diagnosed or predicted using genetests. Thus, revealing information about risk of a future disease that has no existingcure presents an ethical dilemma for medical practitioners.

2. Ownership and control of genetic information. Who will own and control geneticinformation, or information about genes, gene products, or inherited characteristicsderived from an individual or a group of people like indigenous communities? Atthe macro level, there is a possibility of a genetic divide, with developing countriesthat do not have access to medical applications of biotechnology being deprivedof benefits accruing from products derived from genes obtained from their ownpeople. Moreover, genetic information can pose a risk for minority populationgroups as it can lead to group stigmatization.

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3. At the individual level, the absence of privacy and anti-discrimination legalprotections in most countries can lead to discrimination in employment or insuranceor other misuse of personal genetic information. This raises questions such as whethergenetic privacy is different from medical privacy.

4. Reproductive issues. These include the use of genetic information in reproductivedecision-making and the possibility of genetically altering reproductive cells thatmay be passed on to future generations. For example, germline therapy foreverchanges the genetic make-up of an individual’s descendants. Thus, any error intechnology or judgment may have far-reaching consequences. Ethical issues likedesigner babies and human cloning have also given rise to controversies betweenand among scientists and bioethicists, especially in the light of past abuses witheugenics.

5. Clinical issues. These center on the capabilities and limitations of doctors andother health-service providers, people identified with genetic conditions, and thegeneral public in dealing with genetic information.

6. Effects on social institutions. Genetic tests reveal information about individuals andtheir families. Thus, test results can affect the dynamics within social institutions,particularly the family.

7. Conceptual and philosophical implications regarding human responsibility, free willvis-à-vis genetic determinism, and the concepts of health and disease.

Gene therapy

Gene therapy using an Adenovirus vector. A new gene is inserted into an adenovirusvector, which is used to introduce the modified DNA into a human cell. If the treatment issuccessful, the new gene will make a functional protein.

Gene therapy may be used for treating, or even curing, genetic and acquired diseaseslike cancer and AIDS by using normal genes to supplement or replace defective genes orto bolster a normal function such as immunity. It can be used to target somatic (i.e., body)or germ (i.e., egg and sperm) cells. In somatic gene therapy, the genome of the recipient ischanged, but this change is not passed along to the next generation. In contrast, in germlinegene therapy, the egg and sperm cells of the parents are changed for the purpose of passingon the changes to their offspring.

There are basically two ways of implementing a gene therapy treatment:1. Ex vivo, which means “outside the body” – Cells from the patient’s blood or bone

marrow are removed and grown in the laboratory. They are then exposed to avirus carrying the desired gene. The virus enters the cells, and the desired genebecomes part of the DNA of the cells. The cells are allowed to grow in thelaboratory before being returned to the patient by injection into a vein.

2. In vivo, which means “inside the body” – No cells are removed from the patient’sbody. Instead, vectors are used to deliver the desired gene to cells in the patient’sbody.

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Currently, the use of gene therapy is limited. Somatic gene therapy is primarily at theexperimental stage. Germline therapy is the subject of much discussion but it is not beingactively investigated in larger animals and human beings.

As of June 2001, more than 500 clinical gene-therapy trials involving about 3,500patients have been identified worldwide. Around 78% of these are in the United States,with Europe having 18%. These trials focus on various types of cancer, although othermultigenic diseases are being studied as well. Recently, two children born with severecombined immunodeficiency disorder (“SCID”) were reported to have been cured afterbeing given genetically engineered cells.

Gene therapy faces many obstacles before it can become a practical approach fortreating disease. At least four of these obstacles are as follows:

1. Gene delivery tools. Genes are inserted into the body using gene carriers calledvectors. The most common vectors now are viruses, which have evolved a way ofencapsulating and delivering their genes to human cells in a pathogenic manner.Scientists manipulate the genome of the virus by removing the disease-causinggenes and inserting the therapeutic genes. However, while viruses are effective,they can introduce problems like toxicity, immune and inflammatory responses,and gene control and targeting issues.

2. Limited knowledge of the functions of genes. Scientists currently know the functionsof only a few genes. Hence, gene therapy can address only some genes that causea particular disease. Worse, it is not known exactly whether genes have more thanone function, which creates uncertainty as to whether replacing such genes is indeeddesirable.

3. Multigene disorders and effect of environment. Most genetic disorders involvemore than one gene. Moreover, most diseases involve the interaction of severalgenes and the environment. For example, many people with cancer not only inheritthe disease gene for the disorder, but may have also failed to inherit specific tumorsuppressor genes. Diet, exercise, smoking and other environmental factors mayhave also contributed to their disease.

4. High costs. Since gene therapy is relatively new and at an experimental stage, it isan expensive treatment to undertake. This explains why current studies are focusedon illnesses commonly found in developed countries, where more people can affordto pay for treatment. It may take decades before developing countries can takeadvantage of this technology.

Human Genome Project

The Human Genome Project is an initiative of the U.S. Department of Energy (“DOE”)that aims to generate a high-quality reference sequence for the entire human genome andidentify all the human genes.

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The DOE and its predecessor agencies were assigned by the U.S. Congress to developnew energy resources and technologies and to pursue a deeper understanding of potentialhealth and environmental risks posed by their production and use. In 1986, the DOEannounced its Human Genome Initiative. Shortly thereafter, the DOE and National Institutesof Health developed a plan for a joint Human Genome Project (“HGP”), which officiallybegan in 1990.

The HGP was originally planned to last 15 years. However, rapid technologicaladvances and worldwide participation accelerated the completion date to 2003 (making ita 13 year project). Already it has enabled gene hunters to pinpoint genes associated withmore than 30 disorders.Cloning

Cloning involves the removal of the nucleus from one cell and its placement in anunfertilized egg cell whose nucleus has either been deactivated or removed.There are two types of cloning:

1. Reproductive cloning. After a few divisions, the egg cell is placed into a uteruswhere it is allowed to develop into a fetus that is genetically identical to the donorof the original nucleus.

2. Therapeutic cloning. The egg is placed into a Petri dish where it develops intoembryonic stem cells, which have shown potentials for treating several ailments.

In February 1997, cloning became the focus of media attention when Ian Wilmut andhis colleagues at the Roslin Institute announced the successful cloning of a sheep, namedDolly, from the mammary glands of an adult female. The cloning of Dolly made it apparentto many that the techniques used to produce her could someday be used to clone humanbeings. This stirred a lot of controversy because of its ethical implications.AgricultureImprove yield from crops

Using the techniques of modern biotechnology, one or two genes may be transferredto a highly developed crop variety to impart a new character that would increase its yield(30). However, while increases in crop yield are the most obvious applications of modernbiotechnology in agriculture, it is also the most difficult one. Current genetic engineeringtechniques work best for effects that are controlled by a single gene. Many of the geneticcharacteristics associated with yield (e.g., enhanced growth) are controlled by a largenumber of genes, each of which has a minimal effect on the overall yield (31). There is,therefore, much scientific work to be done in this area.Reduced vulnerability of crops to environmental stresses

Crops containing genes that will enable them to withstand biotic and abiotic stressesmay be developed. For example, drought and excessively salty soil are two importantlimiting factors in crop productivity. Biotechnologists are studying plants that can cope with

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these extreme conditions in the hope of finding the genes that enable them to do so andeventually transferring these genes to the more desirable crops. One of the latestdevelopments is the identification of a plant gene, At-DBF2, from thale cress, a tiny weedthat is often used for plant research because it is very easy to grow and its genetic code iswell mapped out. When this gene was inserted into tomato and tobacco cells (see RNAinterference), the cells were able to withstand environmental stresses like salt, drought,cold and heat, far more than ordinary cells. If these preliminary results prove successful inlarger trials, then At-DBF2 genes can help in engineering crops that can better withstandharsh environments (32). Researchers have also created transgenic rice plants that areresistant to rice yellow mottle virus (RYMV). In Africa, this virus destroys majority of therice crops and makes the surviving plants more susceptible to fungal infections (33).

Increased nutritional qualities of food crops

Proteins in foods may be modified to increase their nutritional qualities. Proteins inlegumes and cereals may be transformed to provide the amino acids needed by humanbeings for a balanced diet (34). A good example is the work of Professors Ingo Potrykusand Peter Beyer on the so-called Goldenrice.

Improved taste, texture or appearance of food

Modern biotechnology can be used to slow down the process of spoilage so that fruitcan ripen longer on the plant and then be transported to the consumer with a still reasonableshelf life. This improves the taste, texture and appearance of the fruit. More importantly, itcould expand the market for farmers in developing countries due to the reduction in spoilage.

The first genetically modified food product was a tomato which was transformed todelay its ripening (35). Researchers in Indonesia, Malaysia, Thailand, Philippines andVietnam are currently working on delayed-ripening papaya in collaboration with theUniversity of Nottingham and Zeneca (36).

Biotechnology in cheese production: enzymes produced by micro-organisms providean alternative to animal rennet – a cheese coagulant - and an alternative supply for cheesemakers. This also eliminates possible public concerns with animal-derived material, althoughthere is currently no plans to develop synthetic milk, thus making this argument lesscompelling. Enzymes offer an animal-friendly alternative to animal rennet. While providingcomparable quality, they are theoretically also less expensive.

About 85 million tons of wheat flour is used every year to bake bread. By adding anenzyme called maltogenic amylase to the flour, bread stays fresher longer. Assuming that10-15% of bread is thrown away, if it could just stay fresh another 5–7 days then 2 milliontons of flour per year would be saved. That corresponds to 40% of the bread consumedin a country such as the USA. This means more bread becomes available with no increase

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in input. In combination with other enzymes, bread can also be made bigger, more appetizingand better in a range of ways.

Reduced dependence on fertilizers, pesticides and other agrochemicals

Most of the current commercial applications of modern biotechnology in agricultureare on reducing the dependence of farmers on agrochemicals. For example, Bacillusthuringiensis (Bt) is a soil bacterium that produces a protein with insecticidal qualities.Traditionally, a fermentation process has been used to produce an insecticidal spray fromthese bacteria. In this form, the Bt toxin occurs as an inactive protoxin, which requiresdigestion by an insect to be effective. There are several Bt toxins and each one is specificto certain target insects. Crop plants have now been engineered to contain and express thegenes for Bt toxin, which they produce in its active form. When a susceptible insect ingeststhe transgenic crop cultivar expressing the Bt protein, it stops feeding and soon thereafterdies as a result of the Bt toxin binding to its gut wall. Bt corn is now commercially availablein a number of countries to control corn borer (a lepidopteran insect), which is otherwisecontrolled by spraying (a more difficult process).

Crops have also been genetically engineered to acquire tolerance to broad-spectrumherbicide. The lack of cost-effective herbicides with broad-spectrum activity and no cropinjury was a consistent limitation in crop weed management. Multiple applications ofnumerous herbicides were routinely used to control a wide range of weed species detrimentalto agronomic crops. Weed management tended to rely on preemergence — that is, herbicideapplications were sprayed in response to expected weed infestations rather than in responseto actual weeds present. Mechanical cultivation and hand weeding were often necessaryto control weeds not controlled by herbicide applications. The introduction of herbicidetolerant crops has the potential of reducing the number of herbicide active ingredients usedfor weed management, reducing the number of herbicide applications made during a season,and increasing yield due to improved weed management and less crop injury. Transgeniccrops that express tolerance to glyphosate, glufosinate and bromoxynil have been developed.These herbicides can now be sprayed on transgenic crops without inflicting damage on thecrops while killing nearby weeds (37).

From 1996 to 2001, herbicide tolerance was the most dominant trait introduced tocommercially available transgenic crops, followed by insect resistance. In 2001, herbicidetolerance deployed in soybean, corn and cotton accounted for 77% of the 626,000 squarekilometres planted to transgenic crops; Bt crops accounted for 15%; and “stacked genes”for herbicide tolerance and insect resistance used in both cotton and corn accounted for8% (38).

Production of novel substances in crop plants

Biotechnology is being applied for novel uses other than food. For example, oilseedcan be modified to produce fatty acids for detergents, substitute fuels and petrochemicals.Potatoes, tomatos, rice, tobacco, lettuce, safflowers, and other plants have been genetically-

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engineered to produce insulin and certain vaccines. If future clinical trials prove successful,the advantages of edible vaccines would be enormous, especially for developing countries.The transgenic plants may be grown locally and cheaply. Homegrown vaccines would alsoavoid logistical and economic problems posed by having to transport traditional preparationsover long distances and keeping them cold while in transit. And since they are edible, theywill not need syringes, which are not only an additional expense in the traditional vaccinepreparations but also a source of infections if contaminated. In the case of insulin grown intransgenic plants, it is well-established that the gastrointestinal system breaks the proteindown therefore this could not currently be administered as an edible protein. However, itmight be produced at significantly lower cost than insulin produced in costly, bioreactors.For example, Calgary, Canada-based SemBioSys Genetics, Inc. reports that its safflower-produced insulin will reduce unit costs by over 25% or more and reduce the capital costsassociated with building a commercial-scale insulin manufacturing facility by approximatelyover $100 million compared to traditional biomanufacturing facilities.

Criticism

There is another side to the agricultural biotechnology issue however. It includesincreased herbicide usage and resultant herbicide resistance, “super weeds,” residues onand in food crops, genetic contamination of non-GM crops which hurt organic andconventional farmers, damage to wildlife from glyphosate, etc.

4.5 BIOLOGICAL ENGINEERING

Biotechnological engineering or biological engineering is a branch of engineering thatfocuses on biotechnologies and biological science. It includes different disciplines such asbiochemical engineering, biomedical engineering, bio-process engineering, biosystemengineering and so on. Because of the novelty of the field, the definition of a bioengineer isstill undefined. However, in general it is an integrated approach of fundamental biologicalsciences and traditional engineering principles.

Bioengineers are often employed to scale up bio processes from the laboratory scaleto the manufacturing scale. Moreover, as with most engineers, they often deal withmanagement, economic and legal issues. Since patents and regulation (e.g. FDA regulationin the U.S.) are very important issues for biotech enterprises, bioengineers are often requiredto have knowledge related to these issues.

The increasing number of biotech enterprises is likely to create a need for bioengineersin the years to come. Many universities throughout the world are now providing programsin bioengineering and biotechnology (as independent programs or specialty programs withinmore established engineering fields).

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Bioremediation and Biodegradation

Biotechnology is being used to engineer and adapt organisms especially microorganismsin an effort to find sustainable ways to clean up contaminated environments. The eliminationof a wide range of pollutants and wastes from the environment is an absolute requirementto promote a sustainable development of our society with low environmental impact.Biological processes play a major role in the removal of contaminants and biotechnology istaking advantage of the astonishing catabolic versatility of microorganisms to degrade/convert such compounds. New methodological breakthroughs in sequencing, genomics,proteomics, bioinformatics and imaging are producing vast amounts of information. In thefield of Environmental Microbiology, genome-based global studies open a new era providingunprecedented in silico views of metabolic and regulatory networks, as well as clues tothe evolution of degradation pathways and to the molecular adaptation strategies to changingenvironmental conditions. Functional genomic and metagenomic approaches are increasingour understanding of the relative importance of different pathways and regulatory networksto carbon flux in particular environments and for particular compounds and they will certainlyaccelerate the development of bioremediation technologies and biotransformation processes.

Marine environments are especially vulnerable since oil spills of coastal regions andthe open sea are poorly containable and mitigation is difficult. In addition to pollutionthrough human activities, millions of tons of petroleum enter the marine environment everyyear from natural seepages. Despite its toxicity, a considerable fraction of petroleum oilentering marine systems is eliminated by the hydrocarbon-degrading activities of microbialcommunities, in particular by a remarkable recently discovered group of specialists, theso-called hydrocarbonoclastic bacteria (HCB).

4.6 TELECOMMUNICATIONS

Telecommunication is the assisted transmission of signals over a distance for the purposeof communication. In earlier times, this may have involved the use of smoke signals, drums,semaphore, flags, or heliograph. In modern times, telecommunication typically involves theuse of electronic transmitters such as the telephone, television, radio or computer. Earlyinventors in the field of telecommunication include Alexander Graham Bell, GuglielmoMarconi and John Logie Baird. Telecommunication is an important part of the worldeconomy and the telecommunication industry’s was estimated to be $1.2 trillion dollars in2006.

Basic elements

A telecommunication system consists of three basic elements: a transmitter that takes information and converts it to a signal; a transmission medium that carries the signal; and, a receiver that receives the signal and converts it back into usable information.

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For example, in a radio broadcast the broadcast tower is the transmitter, free spaceis the transmission medium and the radio is the receiver. Often telecommunication systemsare two-way with a single device acting as both a transmitter and receiver or transceiver.For example, a mobile phone is a transceiver.

Telecommunication over a phone line is called point-to-point communication becauseit is between one transmitter and one receiver. Telecommunication through radio broadcastsis called broadcast communication because it is between one powerful transmitter andnumerous receivers.

Analogue or digital

Signals can be either analogue or digital. In an analogue signal, the signal is variedcontinuously with respect to the information. In a digital signal, the information is encodedas a set of discrete values (for example ones and zeros). During transmission the informationcontained in analogue signals will be degraded by noise. Conversely, unless the noiseexceeds a certain threshold, the information contained in digital signals will remain intact.This noise resistance represents a key advantage of digital signals over analogue signals.

Networks

A collection of transmitters, receivers or transceivers that communicate with eachother is known as a network. Digital networks may consist of one or more routers thatroute information to the correct user. An analogue network may consist of one or moreswitches that establish a connection between two or more users. For both types of network,repeaters may be necessary to amplify or recreate the signal when it is being transmittedover long distances. This is to combat attenuation that can render the signal indistinguishablefrom noise.

Channels

A channel is a division in a transmission medium so that it can be used to send multiplestreams of information. For example, a radio station may broadcast at 96.1 MHz whileanother radio station may broadcast at 94.5 MHz. In this case, the medium has beendivided by frequency and each channel has received a separate frequency to broadcaston. Alternatively, one could allocate each channel a recurring segment of time over whichto broadcast—this is known as time-division multiplexing and is sometimes used in digitalcommunication.

Modulation

The shaping of a signal to convey information is known as modulation. Modulationcan be used to represent a digital message as an analogue waveform. This is known askeying and several keying techniques exist (these include phase-shift keying, frequency-

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shift keying and amplitude-shift keying). Bluetooth, for example, uses phase-shift keying toexchange information between devices.

Modulation can also be used to transmit the information of analogue signals at higherfrequencies. This is helpful because low-frequency analogue signals cannot be effectivelytransmitted over free space. Hence the information from a low-frequency analogue signalmust be superimposed on a higher-frequency signal (known as a carrier wave) beforetransmission. There are several different modulation schemes available to achieve this (twoof the most basic being amplitude modulation and frequency modulation). An example ofthis process is a DJ’s voice being superimposed on a 96 MHz carrier wave using frequencymodulation (the voice would then be received on a radio as the channel “96 FM”).

Society and telecommunication

Telecommunication is an important part of modern society. In 2006, estimates placedthe telecommunication industry’s revenue at $1.2 trillion or just under 3% of the grossworld product (official exchange rate).[ There exist several economic, social andsovereignistic impacts.

Microeconomics

On the microeconomic scale, companies have used telecommunication to help buildglobal empires. This is self-evident in the case of online retailer Amazon.com but, accordingto academic Edward Lenert, even the conventional retailer Wal-Mart has benefited frombetter telecommunication infrastructure compared to its competitors. In cities throughoutthe world, home owners use their telephones to organize many home services ranging frompizza deliveries to electricians. Even relatively poor communities have been noted to usetelecommunication to their advantage. In Bangladesh’s Narshingdi district, isolated villagersuse cell phones to speak directly to wholesalers and arrange a better price for their goods.In Cote d’Ivoire, coffee growers share mobile phones to follow hourly variations in coffeeprices and sell at the best price.

Macroeconomics

On the macroeconomic scale, Lars-Hendrik Röller and Leonard Waverman suggesteda causal link between good telecommunication infrastructure and economic growth. Fewdispute the existence of a correlation although some argue it is wrong to view the relationshipas causal. Because of the economic benefits of good telecommunication infrastructure,there is increasing worry about the inequitable access to telecommunication services amongstvarious countries of the world—this is known as the digital divide.

SMS

In 2000, market research group Ipsos MORI reported that 81% of 15 to 24 year-old SMS users in the United Kingdom had used the service to coordinate socialarrangements. The cellular telephone industry has had significant impact of

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telecommunications. A 2003 survey by the International Telecommunication Union (ITU)revealed that roughly one-third of countries have less than 1 mobile subscription for every20 people and one-third of countries have less than 1 fixed line subscription for every 20people. In terms of Internet access, roughly half of all countries have less than 1 in 20people with Internet access. From this information, as well as educational data, the ITUwas able to compile an index that measures the overall ability of citizens to access and useinformation and communication technologies. Using this measure, Sweden, Denmark andIceland received the highest ranking while the African countries Niger, Burkina Faso andMali received the lowest.

Telegraph and telephone

The first commercial electrical telegraph was constructed by Sir Charles Wheatstoneand Sir William Fothergill Cooke and opened on 9 April 1839. Both Wheatstone andCooke viewed their device as “an improvement to the [existing] electromagnetic telegraph”not as a new device.

Samuel Morse independently developed a version of the electrical telegraph that heunsuccessfully demonstrated on 2 September 1837. His code was an important advanceover Wheatstone’s signaling method. The first transatlantic telegraph cable was successfullycompleted on 27 July 1866, allowing transatlantic telecommunication for the first time.

The conventional telephone was invented independently by Alexander Bell and ElishaGray in 1876. Antonio Meucci invented the first device that allowed the electricaltransmission of voice over a line in 1849. However Meucci’s device was of little practicalvalue because it relied upon the electrophonic effect and thus required users to place thereceiver in their mouth to “hear” what was being said. The first commercial telephoneservices were set-up in 1878 and 1879 on both sides of the Atlantic in the cities of NewHaven and London.

Radio and television

In 1832, James Lindsay gave a classroom demonstration of wireless telegraphy to hisstudents. By 1854, he was able to demonstrate a transmission across the Firth of Tay fromDundee, Scotland to Woodhaven, a distance of two miles (3 km), using water as thetransmission medium. In December 1901, Guglielmo Marconi established wirelesscommunication between St. John’s, Newfoundland (Canada) and Poldhu, Cornwall(England), earning him the 1909 Nobel Prize in physics (which he shared with Karl Braun).However small-scale radio communication had already been demonstrated in 1893 byNikola Tesla in a presentation to the National Electric Light Association.

On March 25, 1925, John Logie Baird was able to demonstrate the transmission ofmoving pictures at the London department store Selfridges. Baird’s device relied upon theNipkow disk and thus became known as the mechanical television. It formed the basis of

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experimental broadcasts done by the British Broadcasting Corporation beginning September30, 1929. However, for most of the twentieth century televisions depended upon thecathode ray tube invented by Karl Braun. The first version of such a television to showpromise was produced by Philo Farnsworth and demonstrated to his family on September7, 1927.Computer networks and the Internet

On September 11, 1940, George Stibitz was able to transmit problems using teletypeto his Complex Number Calculator in New York and receive the computed results back atDartmouth College in New Hampshire. This configuration of a centralized computer ormainframe with remote dumb terminals remained popular throughout the 1950s. However,it was not until the 1960s that researchers started to investigate packet switching — atechnology that would allow chunks of data to be sent to different computers without firstpassing through a centralized mainframe. A four-node network emerged on December 5,1969; this network would become ARPANET, which by 1981 would consist of 213nodes.

ARPANET’s development centred around the Request for Comment process andon April 7, 1969, RFC 1 was published. This process is important because ARPANETwould eventually merge with other networks to form the Internet and many of the protocolsthe Internet relies upon today were specified through the Request for Comment process.In September 1981, RFC 791 introduced the Internet Protocol v4 (IPv4) and RFC 793introduced the Transmission Control Protocol (TCP) — thus creating the TCP/IP protocolthat much of the Internet relies upon today.

However, not all important developments were made through the Request for Commentprocess. Two popular link protocols for local area networks (LANs) also appeared in the1970s. A patent for the token ring protocol was filed by Olof Soderblom on October 29,1974 and a paper on the Ethernet protocol was published by Robert Metcalfe and DavidBoggs in the July 1976 issue of Communications of the ACM.Modern operationTelephone

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Optical fiber provides cheaper bandwidth for long distance communication

In an analogue telephone network, the caller is connected to the person he wants totalk to by switches at various telephone exchanges. The switches form an electricalconnection between the two users and the setting of these switches is determinedelectronically when the caller dials the number. Once the connection is made, the caller’svoice is transformed to an electrical signal using a small microphone in the caller’s handset.This electrical signal is then sent through the network to the user at the other end where itis transformed back into sound by a small speaker in that person’s handset. There is aseparate electrical connection that works in reverse, allowing the users to converse.

The fixed-line telephones in most residential homes are analogue — that is, the speaker’svoice directly determines the signal’s voltage. Although short-distance calls may be handledfrom end-to-end as analogue signals, increasingly telephone service providers aretransparently converting the signals to digital for transmission before converting them backto analogue for reception. The advantage of this is that digitized voice data can travel side-by-side with data from the Internet and can be perfectly reproduced in long distancecommunication (as opposed to analogue signals that are inevitably impacted by noise).

Mobile phones have had a significant impact on telephone networks. Mobile phonesubscriptions now outnumber fixed-line subscriptions in many markets. Sales of mobilephones in 2005 totalled 816.6 million with that figure being almost equally shared amongstthe markets of Asia/Pacific (204 m), Western Europe (164 m), CEMEA (Central Europe,the Middle East and Africa) (153.5 m), North America (148 m) and Latin America (102m). In terms of new subscriptions over the five years from 1999, Africa has outpacedother markets with 58.2% growth. Increasingly these phones are being serviced by systemswhere the voice content is transmitted digitally such as GSM or W-CDMA with manymarkets choosing to depreciate analogue systems such as AMPS.

There have also been dramatic changes in telephone communication behind the scenes.Starting with the operation of TAT-8 in 1988, the 1990s saw the widespread adoption ofsystems based on optic fibres. The benefit of communicating with optic fibres is that theyoffer a drastic increase in data capacity. TAT-8 itself was able to carry 10 times as manytelephone calls as the last copper cable laid at that time and today’s optic fibre cables areable to carry 25 times as many telephone calls as TAT-8. This increase in data capacity isdue to several factors: First, optic fibres are physically much smaller than competingtechnologies. Second, they do not suffer from crosstalk which means several hundred ofthem can be easily bundled together in a single cable. Lastly, improvements in multiplexinghave led to an exponential growth in the data capacity of a single fibre.

Assisting communication across many modern optic fibre networks is a protocolknown as Asynchronous Transfer Mode (ATM). The ATM protocol allows for the side-by-side data transmission mentioned in the second paragraph. It is suitable for public

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telephone networks because it establishes a pathway for data through the network andassociates a traffic contract with that pathway. The traffic contract is essentially an agreementbetween the client and the network about how the network is to handle the data; if thenetwork cannot meet the conditions of the traffic contract it does not accept the connection.This is important because telephone calls can negotiate a contract so as to guaranteethemselves a constant bit rate, something that will ensure a caller’s voice is not delayed inparts or cut-off completely. There are competitors to ATM, such as Multiprotocol LabelSwitching (MPLS), that perform a similar task and are expected to supplant ATM in thefuture.

Radio and television

In a broadcast system, a central high-powered broadcast tower transmits a high-frequency electromagnetic wave to numerous low-powered receivers. The high-frequencywave sent by the tower is modulated with a signal containing visual or audio information.The antenna of the receiver is then tuned so as to pick up the high-frequency wave and ademodulator is used to retrieve the signal containing the visual or audio information. Thebroadcast signal can be either analogue (signal is varied continuously with respect to theinformation) or digital (information is encoded as a set of discrete values).

The broadcast media industry is at a critical turning point in its development, withmany countries moving from analogue to digital broadcasts. This move is made possibleby the production of cheaper, faster and more capable integrated circuits. The chiefadvantage of digital broadcasts is that they prevent a number of complaints with traditionalanalogue broadcasts. For television, this includes the elimination of problems such as snowypictures, ghosting and other distortion. These occur because of the nature of analoguetransmission, which means that perturbations due to noise will be evident in the final output.Digital transmission overcomes this problem because digital signals are reduced to discretevalues upon reception and hence small perturbations do not affect the final output. In asimplified example, if a binary message 1011 was transmitted with signal amplitudes [1.00.0 1.0 1.0] and received with signal amplitudes [0.9 0.2 1.1 0.9] it would still decode tothe binary message 1011 — a perfect reproduction of what was sent. From this example,a problem with digital transmissions can also be seen in that if the noise is great enough itcan significantly alter the decoded message. Using forward error correction a receiver cancorrect a handful of bit errors in the resulting message but too much noise will lead toincomprehensible output and hence a breakdown of the transmission.

In digital television broadcasting, there are three competing standards that are likelyto be adopted worldwide. These are the ATSC, DVB and ISDB standards; the adoptionof these standards thus far is presented in the captioned map. All three standards useMPEG-2 for video compression. ATSC uses Dolby Digital AC-3 for audio compression,ISDB uses Advanced Audio Coding (MPEG-2 Part 7) and DVB has no standard for

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audio compression but typically uses MPEG-1 Part 3 Layer 2. The choice of modulationalso varies between the schemes. In digital audio broadcasting, standards are much moreunified with practically all countries choosing to adopt the Digital Audio Broadcastingstandard (also known as the Eureka 147 standard). The exception being the United Stateswhich has chosen to adopt HD Radio. HD Radio, unlike Eureka 147, is based upon atransmission method known as in-band on-channel transmission that allows digitalinformation to “piggyback” on normal AM or FM analogue transmissions.

However, despite the pending switch to digital, analogue receivers still remainwidespread. Analogue television is still transmitted in practically all countries. The UnitedStates had hoped to end analogue broadcasts on December 31, 2006; however, this wasrecently pushed back to February 17, 2009. For analogue television, there are threestandards in use. These are known as PAL, NTSC and SECAM. For analogue radio, theswitch to digital is made more difficult by the fact that analogue receivers are a fraction ofthe cost of digital receivers. The choice of modulation for analogue radio is typically betweenamplitude modulation (AM) or frequency modulation (FM). To achieve stereo playback,an amplitude modulated subcarrier is used for stereo FM.

The Internet

The Internet is a worldwide network of computers and computer networks that cancommunicate with each other using the Internet Protocol. Any computer on the Internethas a unique IP address that can be used by other computers to route information to it.Hence, any computer on the Internet can send a message to any other computer using itsIP address. These messages carry with them the originating computer’s IP address allowingfor two-way communication. In this way, the Internet can be seen as an exchange ofmessages between computers.

As of 2008, an estimated 21.9% of the world population has access to the Internetwith the highest access rates (measured as a percentage of the population) in North America(73.6%), Oceania/Australia (59.5%) and Europe (48.1%) In terms of broadband access,Iceland (26.7%), South Korea (25.4%) and the Netherlands (25.3%) led the world in2005.

The Internet works in part because of protocols that govern how the computers androuters communicate with each other. The nature of computer network communicationlends itself to a layered approach where individual protocols in the protocol stack runmore-or-less independently of other protocols. This allows lower-level protocols to becustomized for the network situation while not changing the way higher-level protocolsoperate. A practical example of why this is important is because it allows an Internetbrowser to run the same code regardless of whether the computer it is running on is connectedto the Internet through an Ethernet or Wi-Fi connection. Protocols are often talked aboutin terms of their place in the OSI reference model (pictured on the right), which emerged in

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1983 as the first step in an unsuccessful attempt to build a universally adopted networkingprotocol suite.

For the Internet, the physical medium and data link protocol can vary several times aspackets traverse the globe. This is because the Internet places no constraints on whatphysical medium or data link protocol is used. This leads to the adoption of media andprotocols that best suit the local network situation. In practice, most intercontinentalcommunication will use the Asynchronous Transfer Mode (ATM) protocol (or a modernequivalent) on top of optic fibre. This is because for most intercontinental communicationthe Internet shares the same infrastructure as the public switched telephone network.

At the network layer, things become standardized with the Internet Protocol (IP)being adopted for logical addressing. For the world wide web, these “IP addresses” arederived from the human readable form using the Domain Name System (e.g. 72.14.207.99is derived from www.google.com). At the moment, the most widely used version of theInternet Protocol is version four but a move to version six is imminent.

At the transport layer, most communication adopts either the Transmission ControlProtocol (TCP) or the User Datagram Protocol (UDP). TCP is used when it is essentialevery message sent is received by the other computer where as UDP is used when it ismerely desirable. With TCP, packets are retransmitted if they are lost and placed in orderbefore they are presented to higher layers. With UDP, packets are not ordered orretransmitted if lost. Both TCP and UDP packets carry port numbers with them to specifywhat application or process the packet should be handled by. Because certain application-level protocols use certain ports, network administrators can restrict Internet access byblocking the traffic destined for a particular port.

Above the transport layer, there are certain protocols that are sometimes used andloosely fit in the session and presentation layers, most notably the Secure Sockets Layer(SSL) and Transport Layer Security (TLS) protocols. These protocols ensure that thedata transferred between two parties remains completely confidential and one or the otheris in use when a padlock appears at the bottom of your web browser. Finally, at theapplication layer, are many of the protocols Internet users would be familiar with such asHTTP (web browsing), POP3 (e-mail), FTP (file transfer), IRC (Internet chat), BitTorrent(file sharing) and OSCAR (instant messaging).Local area networks

Despite the growth of the Internet, the characteristics of local area networks (computernetworks that run at most a few kilometres) remain distinct. This is because networks onthis scale do not require all the features associated with larger networks and are oftenmore cost-effective and efficient without them.

In the mid-1980s, several protocol suites emerged to fill the gap between the datalink and applications layer of the OSI reference model. These were Appletalk, IPX andNetBIOS with the dominant protocol suite during the early 1990s being IPX due to its

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popularity with MS-DOS users. TCP/IP existed at this point but was typically only usedby large government and research facilities. As the Internet grew in popularity and a largerpercentage of traffic became Internet-related, local area networks gradually moved towardsTCP/IP and today networks mostly dedicated to TCP/IP traffic are common. The moveto TCP/IP was helped by technologies such as DHCP that allowed TCP/IP clients todiscover their own network address — a functionality that came standard with theAppleTalk/IPX/NetBIOS protocol suites.

It is at the data link layer though that most modern local area networks diverge fromthe Internet. Whereas Asynchronous Transfer Mode (ATM) or Multiprotocol LabelSwitching (MPLS) are typical data link protocols for larger networks, Ethernet and TokenRing are typical data link protocols for local area networks. These protocols differ fromthe former protocols in that they are simpler (e.g. they omit features such as Quality ofService guarantees) and offer collision prevention. Both of these differences allow formore economic set-ups.

Despite the modest popularity of Token Ring in the 80’s and 90’s, virtually all localarea networks now use wired or wireless Ethernet. At the physical layer, most wiredEthernet implementations use copper twisted-pair cables (including the common 10BASE-T networks). However, some early implementations used coaxial cables and some recentimplementations (especially high-speed ones) use optic fibres. Optic fibres are also likelyto feature prominently in the forthcoming 10-gigabit Ethernet implementations. Where opticfibre is used, the distinction must be made between multi-mode fibre and single-modefibre. Multi-mode fibre can be thought of as thicker optical fibre that is cheaper tomanufacture but that suffers from less usable bandwidth and greater attenuation (i.e. poorlong-distance performance).

Summary

This unit would have given an insight into some of the contemprory technologies suchas nanotechnology and biophram and biotechnology alongwith the fundamentals oftelecommuncations.

Questions

1. What do you understand by globalisation of the industry? Explain using examples.2. Write briefy on a. Nano-technology

a. Nano-materialsb. Bio-technologyc. Bio-pharma industryd. Gene therapy

3. Elaborate on the types of contemporary communcation devices.

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UNIT V

TECHNOLOGICAL COMPETITIVENESS INCOUNTRIES

Introduction

In this unit a little light is thrown on exiting procedures such as BPR and TQM andhow these procedures enable global competitiveness. Additionally, a little discussion oncollaborative intelligence is also documented. Some technology compertitiveness ofdeveloped and developing countries are also discussed.

Learning Objectives.

History and methodology of BPR

Quality management evolution

Examples of collaborative knowledge

The Importance of High-Technology Industries

Share of World Markets

Global Competitiveness of Individual Industries

Exports by High-Technology Industries

Foreign Markets

Industry Comparisons

Competition in the Home Market

National Demand for High-Technology Products

National Producers Supplying the Home Market

Global Business in Knowledge-Intensive Service Industries

Major Technology Areas

New technological Frontiers in India

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5.1 BUSINESS PROCESS REENGINEERING

Business process reengineering (BPR) is a management approach aiming atimprovements by means of elevating efficiency and effectiveness of the processes thatexist within and across organizations. The key to BPR is for organizations to look at theirbusiness processes from a “clean slate” perspective and determine how they can bestconstruct these processes to improve how they conduct business. Business processreengineering is also known as BPR, Business Process Redesign, Business Transformation,or Business Process Change Management.

History

In 1990, Michael Hammer, a former professor of computer science at theMassachusetts Institute of Technology (MIT), published an article in the Harvard BusinessReview, in which he claimed that the major challenge for managers is to obliterate non-value adding work, rather than using technology for automating it. This statement implicitlyaccused managers of having focused on the wrong issues, namely that technology in general,and more specifically information technology, has been used primarily for automating existingwork rather than using it as an enabler for making non-value adding work obsolete. Mostof the work being done does not add any value for customers, and this work should beremoved, not accelerated through automation. Instead, companies should reconsider theirprocesses in order to maximize customer value, while minimizing the consumption ofresources required for delivering their product or service.

This idea, to unbiasedly review a company’s business processes, was rapidly adoptedby a huge number of firms, which were striving for renewed competitiveness, which theyhad lost due to the market entrance of foreign competitors, their inability to satisfy customerneeds, and their insufficient cost structure. Even well established management thinkers,such as Peter Drucker and Tom Peters, were accepting and advocating BPR as a new toolfor (re-)achieving success in a dynamic world.

Hammer and Champy (1993) define BPR as

“... the fundamental rethinking and radical redesign of business processes to achievedramatic improvements in critical contemporary measures of performance, such as cost,quality, service, and speed.”

In order to achieve the major improvements BPR is seeking for, the change of structuralorganizational variables, and other ways of managing and performing work is oftenconsidered as being insufficient. For being able to reap the achievable benefits fully, the useof information technology (IT) is conceived as a major contributing factor. While ITtraditionally has been used for supporting the existing business functions, i.e. it was usedfor increasing organizational efficiency, it now plays a role as enabler of new organizationalforms, and patterns of collaboration within and between organizations.

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BPR derives its existence from different disciplines, and four major areas can beidentified as being subjected to change in BPR - organization, technology, strategy, andpeople - where a process view is used as common framework for considering thesedimensions. Business strategy is the primary driver of BPR initiatives and the other dimensionsare governed by strategy’s encompassing role. The organization dimension reflects thestructural elements of the company, such as hierarchical levels, the composition oforganizational units, and the distribution of work between them. Technology is concernedwith the use of computer systems and other forms of communication technology in thebusiness. In BPR, information technology is generally considered as playing a role as enablerof new forms of organizing and collaborating, rather than supporting existing businessfunctions. The people / human resources dimension deals with aspects such as education,training, motivation and reward systems. The concept of business processes - interrelatedactivities aiming at creating a value added output to a customer - is the basic underlyingidea of BPR. These processes are characterized by a number of attributes: Processownership, customer focus, value adding, and cross-functionality.

The role of information technology

Information technology (IT) has historically played an important role in thereengineering concept. It is considered by some as a major enabler for new forms ofworking and collaborating within an organization and across organizational borders.

The early BPR literature, identified several so called disruptive technologies thatwere supposed to challenge traditional wisdom about how work should be performed.

Shared databases, making information available at many places

Expert systems, allowing generalists to perform specialist tasks

Telecommunication networks, allowing organizations to be centralized anddecentralized at the same time

Decision-support tools, allowing decision-making to be a part of everybody’s job

Wireless data communication and portable computers, allowing field personnel towork office independent

Interactive videodisk, to get in immediate contact with potential buyers

Automatic identification and tracking, allowing things to tell where they are, instead ofrequiring to be found

High performance computing, allowing on-the-fly planning and revisioning

In the mid 1990s, especially workflow management systems were considered as a significantcontributor to improved process efficiency. Also ERP (Enterprise Resource Planning)

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vendors, such as SAP, JD Edwards, Oracle, PeopleSoft, positioned their solutions asvehicles for business process redesign and improvement.

Methodology of BPR

Although the labels and steps differ slightly, the early methodologies that were rootedin IT-centric BPR solutions share many of the same basic principles and elements. Thefollowing outline is one such model, based on the PRLC (Process Reengineering LifeCycle) approach developed by Guha et.al. (1993).

Simplified schematic outline of using a business process approach, examplified forpharmceutical R&D:

1. Structural organization with functional units2. Introduction of New Product Development as cross-functional process3. Re-structuring and streamlining activities, removal of non-value adding tasks

Envision new processesSecure management supportIdentify reengineering opportunitiesIdentify enabling technologiesAlign with corporate strategyInitiating changeSet up reengineering teamOutline performance goalsProcess diagnosisDescribe existing processesUncover pathologies in existing processesProcess redesignDevelop alternative process scenariosDevelop new process designDesign HR architectureSelect IT platformDevelop overall blueprint and gather feedbackReconstructionDevelop/install IT solutionEstablish process changesProcess monitoringPerformance measurement, including time, quality, cost, IT performance

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Link to continuous improvement

Loop-back to diagnosis

Benefiting from lessons learned from the early adopters, some BPR practitionersadvocated a change in emphasis to a customer-centric, as opposed to an IT-centric,methodology. One such methodology, that also incorporated a Risk and Impact Assessmentto account for the impact that BPR can have on jobs and operations, was described byLon Roberts (1994). Roberts also stressed the use of change management tools toproactively address resistance to change—a factor linked to the demise of manyreengineering initiatives that looked good on the drawing board.

BPR, if implemented properly, can give huge returns. BPR has helped giants likeProcter and Gamble Corporation and General Motors Corporation succeed after financialdrawbacks due to competition. It helped American Airlines somewhat get back on trackfrom the bad debt that is currently haunting their business practice. BPR is about theproper method of implementation.

General Motors Corporation implemented a 3-year plan to consolidate their multipledesktop systems into one. It is known internally as “Consistent Office Environment” (Booker,1994). This reengineering process involved replacing the numerous brands of desktopsystems, network operating systems and application development tools into a moremanageable number of vendors and technology platforms. According to Donald G. Hedeen,director of desktops and deployment at GM and manager of the upgrade program, hesays that the process “lays the foundation for the implementation of a common businesscommunication strategy across General Motors.” (Booker, 1994). Lotus DevelopmentCorporation and Hewlett-Packard Development Company, formerly Compaq ComputerCorporation, received the single largest non-government sales ever from General MotorsCorporation. GM also planned to use Novell NetWare as a security client, MicrosoftOffice and Hewlett-Packard printers. According to Donald G. Hedeen, this saved GM10% to 25% on support costs, 3% to 5% on hardware, 40% to 60% on software licensingfees, and increased efficiency by overcoming incompatibility issues by using just one platformacross the entire company.

Ford reengineered their business and manufacturing process from just manufacturingcars to manufacturing quality cars, where the number one goal is quality. This helped Fordsave millions on recalls and warranty repairs. Ford has accomplished this goal byincorporating barcodes on all their parts and scanners to scan for any missing parts in acompleted car coming off of the assembly line. This helped them guarantee a safe andquality car. They have also implemented Voice-over-IP (VoIP) to reduce the cost of havingmeetings between the branches.

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The most frequent and harsh critique against BPR concerns the strict focus on efficiencyand technology and the disregard of people in the organization that is subjected to areengineering initiative. Very often, the label BPR was used for major workforce reductions.

Other criticism brought forward against the BPR concept include Lack of management support for the initiative and thus poor acceptance in the

organization. Exaggerated expectations regarding the potential benefits from a BPR initiative

and consequently failure to achieve the expected results. Underestimation of the resistance to change within the organization. Implementation of generic so-called best-practice processes that do not fit specific

company needs. Overtrust in technology solutions. Performing BPR as a one-off project with limited strategy alignment and long-

term perspective. Poor project management.

Development after 1995

With the publication of critiques in 1995 and 1996 by some of the early BPR proponents,coupled with abuses and misuses of the concept by others, the reengineering fervor in theU.S. began to wane. Since then, considering business processes as a starting point forbusiness analysis and redesign has become a widely accepted approach and is a standardpart of the change methodology portfolio, but is typically performed in a less radical wayas originally proposed.

More recently, the concept of Business Process Management (BPM) has gainedmajor attention in the corporate world and can be considered as a successor to the BPRwave of the 1990s, as it is evenly driven by a striving for process efficiency supported byinformation technology. Equivalently to the critique brought forward against BPR, BPM isnow accused of focusing on technology and disregarding the people aspects of change.

5.2 QUALITY MANAGEMENT

Quality management is a method for ensuring that all the activities necessary to design,develop and implement a product or service are effective and efficient with respect to thesystem and its performance. Quality management can be considered to have four maincomponents: quality planning, quality control, quality assurance and quality improvement.Quality management is focused not only on product quality, but also the means to achieveit. Quality management therefore uses quality assurance and control of processes as wellas products to achieve more consistent quality. Quality Management is all activities of theoverall management function that determine the quality policy, objectives and responsibilities

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and implement them by means such as quality control and quality improvements within aquality system.

Quality management evolution

Quality management is not a recent phenomenon. Advanced civilizations that supportedthe arts and crafts allowed clients to choose goods meeting higher quality standards thannormal goods. In societies where art and craft (and craftsmanship) were valued, one of theresponsibilities of a master craftsman (and similarly for artists) was to lead their studio,train and supervise the work of their craftsmen and apprentices. The master craftsman setstandards, reviewed the work of others and ordered rework and revision as necessary.One of the limitations of the craft approach was that relatively few goods could be produced,on the other hand an advantage was that each item produced could be individually shapedto suit the client. This craft-based approach to quality and the practices used were majorinputs when quality management was created as a management science.

During the industrial revolution, the importance of craftsmen was diminished as massproduction and repetitive work practices were instituted. The aim was to produce largenumbers of the same goods. The first proponent in the US for this approach was EliWhitney who proposed (interchangeable) parts manufacture for muskets, hence producingthe identical components and creating a musket assembly line. The next step forward waspromoted by several people including Frederick Winslow Taylor a mechanical engineerwho sought to improve industrial efficiency. He is sometimes called “the father of scientificmanagement.” He was one of the intellectual leaders of the Efficiency Movement and partof his approach laid a further foundation for quality management, including aspects likestandardization and adopting improved practices. Henry Ford also was important in bringingprocess and quality management practices into operation in his assembly lines. In Germany,Karl Friedrich Benz, often called the inventor of the motor car, was pursuing similar assemblyand production practices, although real mass production was properly initiated in Volkswagenafter world war two. From this period onwards, north American companies focusedpredominantly upon production against lower cost with increased efficiency.

Walter A. Shewhart made a major step in the evolution towards quality managementby creating a method for quality control for production, using statistical methods, firstproposed in 1924. This became the foundation for his ongoing work on statistical qualitycontrol. W. Edwards Deming later applied statistical process control methods in the UnitedStates during World War II, thereby successfully improving quality in the manufacture ofmunitions and other strategically important products.

Quality leadership from a national perspective has changed over the past five to sixdecades. After the second world war, Japan decided to make quality improvement anational imperative as part of rebuilding their economy, and sought the help of Shewhart,Deming and Juran, amongst others. W. Edwards Deming championed Shewhart’s ideas in

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Japan from 1950 onwards. He is probably best known for his management philosophyestablishing quality, productivity, and competitive position. He has formulated 14 points ofattention for managers, which are a high level abstraction of many of his deep insights.They should be interpreted by learning and understanding the deeper insights and include:

Break down barriers between departments Management should learn their responsibilities, and take on leadership Improve constantly Institute a programme of education and self-improvement

In the 1950s and 1960s, Japanese goods were synonymous with cheapness and lowquality, but over time their quality initiatives began to be successful, with Japan achievingvery high levels of quality in products from the 1970s onward. For example, Japanese carsregularly top the J.D. Power customer satisfaction ratings. In the 1980s Deming was askedby Ford Motor Company to start a quality initiative after they realized that they were fallingbehind Japanese manufacturers. A number of highly successful quality initiatives have beeninvented by the Japanese (see for example on this page: Taguchi, QFD, Toyota ProductionSystem. Many of the methods not only provide techniques but also have associated qualityculture aspects (i.e. people factors). These methods are now adopted by the same westerncountries that decades earlier derided Japanese methods.

Customers recognize that quality is an important attribute in products and services.Suppliers recognize that quality can be an important differentiator between their ownofferings and those of competitors (quality differentiation is also called the quality gap). Inthe past two decades this quality gap has been greatly reduced between competitive productsand services. This is partly due to the contracting (also called outsourcing) of manufactureto countries like India and China, as well internationalization of trade and competition.These countries amongst many others have raised their own standards of quality in orderto meet International standards and customer demands. The ISO 9000 series of standardsare probably the best known International standards for quality management.

Quality improvement

There are many methods for quality improvement. These cover product improvement,process improvement and people based improvement. In the following list are methods ofquality management and techniques that incorporate and drive quality improvement.

ISO 9004:2000 - Guidelines for performance improvement.

ISO 15504-4: 2005 - Information technology — Process assessment — Part 4: Guidanceon use for process improvement and process capability determination.

QFD - Quality Function Deployment, also known as the House of Quality approach.

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Kaizen - Japanese for change for the better; the common English usage is continualimprovement.

Zero Defect Program - created by NEC Corporation of Japan, based upon StatisticalProcess Control and one of the inputs for the inventors of Six Sigma.

Six Sigma - Six Sigma is based upon Statistical Process Control.

PDCA - Plan Do Check Act cycle for quality control purposes.

Six Sigma’s DMAIC method (Design, Measure,Analyze, Improve, Control) for moregeneral improvement purposes.

Quality circle - a group (people oriented) approach to improvement.

Taguchi methods - statistical oriented methods including Quality robustness, Qualityloss function and Target specifications.

The Toyota Production System reworked in the west into Lean Manufacturing.

Kansei Engineering, an approach that focuses on capturing customer emotionalfeedback about products to drive improvement.

TQM - Total Quality Management is a management strategy aimed at embeddingawareness of quality in all organizational processes. First promoted in Japan with the Demingprize which was adopted and adapted in USA as the Malcolm Baldrige National QualityAward and in Europe as the European Foundation for Quality Management award (eachwith their own variations).

TRIZ meaning “Theory of inventive problem solving”

BPR - Business process reengineering, a management approach aiming at ‘cleanslate’ improvements (i.e. ignoring existing practices).

Proponents of each approach have sought to improve them as well as apply them toenterprise types not originally targeted. For example, Six Sigma was designed formanufacturing but has spread to service enterprises. Each of these approaches and methodshas met with success but also with failures. Some of the common differentiators betweensuccess and failure include commitment, knowledge and expertise to guide improvement,scope of change/improvement desired (Big Bang type changes tend to fail more oftencompared to smaller changes) and adaption to enterprise cultures. For example, qualitycircles do not work well in every enterprise (and are even discouraged by some managers),and relatively few TQM participating enterprises have won the national quality awards.There has been well publicized failures of BPR, as well as Six Sigma. Enterprises thereforeneed to consider carefully which quality improvement methods to adopt, and certainlyshould not adopt all those listed here. It is important not to underestimate the people

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factors, such as culture, in selecting a quality improvement approach. Any improvement(change) takes time to implement, gain acceptance and stabilize as accepted practice.Improvement must allow pauses between implementing new changes so that the change isstabilized and assessed as a real improvement, before the next improvement is made (hencecontinual improvement, not continuous improvement). Improvements that change the culturetake longer as they have to overcome greater resistance to change. It is easier and oftenmore effective to work within the existing cultural boundaries and make small improvements(i.e. Kaizen) than to make major transformational changes. Use of Kaizen in Japan was amajor reason for the creation of Japanese industrial and economic strength. On the otherhand, transformational change works best when an enterprise faces a crisis and needs tomake major changes in order to survive. In Japan, the land of Kaizen, Carlos Ghosn led atransformational change at Nissan Motor Company which was in a financial and operationalcrisis. Well organized quality improvement programs take all these factors into accountwhen selecting the quality improvement methods.

Quality standards

The International Organization for Standardization (ISO) created the QualityManagement System (QMS) standards in 1987. These were the ISO 9000:1987 seriesof standards comprising ISO 9001:1987, ISO 9002:1987 and ISO 9003:1987; whichwere applicable in different types of industries, based on the type of activity or process:designing, production or service delivery. The standards have been regularly reviewedevery few years by the International Organization for Standardization. The version in 1994and was called the ISO 9000:1994 series; comprising of the ISO 9001:1994, 9002:1994and 9003:1994 versions. The last revision was in the year 2000 and the series was calledISO 9000:2000 series. However the ISO 9002 and 9003 standards were integrated andone single certifiable standard was created under ISO 9001:2000. Since December 2003,ISO 9002 and 9003 standards are not valid, and the organizations previously holdingthese standards need to do a transition from the old to the new standards. The ISO9004:2000 document gives guidelines for performance improvement over and above thebasic standard (i.e. ISO 9001:2000). This standard provides a measurement frameworkfor improved quality management, similar to and based upon the measurement frameworkfor process assessment.

The Quality Management System standards created by ISO are meant to certify theprocesses and the system of an organization and not the product or service itself. ISO9000 standards do not certify the quality of the product or service.

Recently the International Organisation for Standardisation released a new standard,ISO 22000, meant for the food industry. This standard covers the values and principles ofISO 9000 and the HACCP standards. It gives one single integrated standard for the foodindustry and is expected to become more popular in the coming years in such industry.

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ISO has a number of standards that support quality management, one group describesprocesses (including ISO 12207, ISO 15288)and another describes process assessmentand improvement ISO 15504. The Software Engineering Institute has its own processassessment and improvement methods, called CMMi (Capability Maturity Model -integrated) and IDEAL respectively.

Quality management terms

Quality Improvement can be distinguished from Quality Control in that Quality Improvementis the purposeful change of a process to improve the reliability of achieving an outcome.

Quality Control is the ongoing effort to maintain the integrity of a process to maintain thereliability of achieving an outcome.

Quality Assurance is the planned or systematic actions necessary to provide enoughconfidence that a product or service will satisfy the given requirements for quality.

5.3 COLLABORATIVE KNOWLEDGE

A Collaborative Innovation Network, or CoIN, is a social construct used to describeinnovative teams. It has been defined by the originator of the term, Peter Gloor (a ResearchScientist at MIT Sloan’s Center for Collective Intelligence) as “a cyberteam of self-motivatedpeople with a collective vision, enabled by the Web to collaborate in achieving a commongoal by sharing ideas, information, and work.”

COINs feature internal transparency and direct communication. Members of a COINcollaborate and share knowledge directly with each other, rather than through hierarchies.They come together with a shared vision because they are intrinsically motivated to do soand seek to collaborate in some way to advance an idea.

The five essential elements of collaborative innovation networks (what Gloor callstheir “genetic code”) are that they evolve from learning networks, feature sound ethicalprinciples, are based on trust and self-organization, make knowledge accessible to everyone,and operate in internal honesty and transparency. COINs rely on modern technology suchas the Internet, e-mail, and other communications vehicles for information sharing. Creativity,collaboration, and communication are their hallmarks.

COINs existed well before modern communication technology enabled their creationand development. Peter Gloor and Scott Cooper, in their book, describe Benjamin Franklin’s“Junto” organization in Philadelphia as a COIN paradigm. Franklin brought together peoplewith diverse backgrounds, from varying occupations, but of like mind to share knowledgeand promulgate innovation.

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Similar is the concept of the “Self-Organizing Innovation Network” which have beendescribed by one author, Robert Rycroft of the Elliott School of International Affairs ofGeorge Washington University as follows:

“The most valuable and complex technologies are increasingly innovated by networksthat self-organize. Networks are those linked organizations (e.g., firms, universities,government agencies) that create, acquire, and integrate diverse knowledge and skillsrequired to innovate complex technologies (e.g., aircraft, telecommunications equipment).In other words, innovation networks are organized around constant learning. Self-organization refers to the capacity these networks have for combining and recombiningthese learned capabilities without centralized, detailed managerial guidance. The proliferationof self-organizing innovation networks may be linked to many factors, but a key one seemsto be increasing globalization. Indeed, globalization and self-organizing networks may becoevolving. Changes in the organization of the innovation process appear to have facilitatedthe broadening geographical linkages of products, processes, and markets. At the sametime, globalization seems to induce cooperation among innovative organizations.”

—Robert Rycroft

Examples

An example of the COIN idea at work may be SpineConnect, a community of spinesurgeons interacting in a variety of ways, ultimately with the goal of producing innovation.It cannot be stated with certainty that the group had its genesis as a COIN, but it doesillustrate some of the concepts. Starting out as a knowledge sharing community, enablingsurgeons from around the world to share difficult and unusual cases, it quickly emerged asa community to produce innovation collaboratively. Since its launch in October 2005, thesurgeons have used SpineConnect to produce original research and take their ideas andcreate patents. As the community matures, more ambitious goals are being pursued, suchas creating a better classification system of disease for spine.

Isotelesis is a collaborative project which seeks to facilitate innovation and the semanticintegration of the world’s knowledge. This global network may change the way scientificand technological research will be conducted, accelerating discoveries and enhancinginteroperability. Since this multidimensional framework may be thought of as a global mind,Isotelesis seeks to use this intelligence for global projects. This would shift the paradigmfrom centralized and decentralized databases, to a distributively integrated database. Thisallows humanity to contribute to its future development, working together with coherentintelligence towards common goals. Iso= same, equal + Telesis= attainment of desiredends through intelligence. isotelesis: the principle that any one function is served by severalstructures and processes.

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Collaborative intelligence is a measure of the collaborative ability of a group or entity.Knowledge derived from collaborative efforts is increasing proportionally to the reach ofthe world wide web, collaborative groupware like Skype, NetMeeting, WebEx,iPeerAdvisory and many others.

[IQ][1] is a term readily used to describe or measure an intelligent quota of a person.[EQ]has been used to measure the Emotional Intelligence of a person to describe how aperson handles emotions in a given situation. CQ or Collaborative Intelligence measuresthe collaborative ability of a group. CQ is a fairly new term arising from the visibility ofcollaborative efforts of companies and entities.

CQ is a situation where the knowledge and problem solving capability of a group ismuch greater than the knowledge possessed by an individual group member. As groupswork together they develop a shared memory, which is accessible through the collaborativeartifacts created by the group, including meeting minutes, transcripts from threadeddiscussions, and drawings. The shared memory (group memory) is also accessible throughthe memories of group members.

Distributed collaborative intelligence is the act of a group collaborating within a virtualsphere of interaction. Group members can interact in real time or asynchronously eventhough they are not located within the same physical space. Technologies used to enhancedistributed collaborative intelligence and to facilitate group problem solving are:

Messaging Synchronous conferencing technologies like instant messaging, online chat and

shared white boards. Asynchronous messaging like electronic mail, threaded, moderated discussion

forums and web logs. Stigmergy Wiki Social evolutionary computation

The ability of a group to solve a problem collectively is potentially directly proportionalto the number of members in a group; however effective architecture of interaction isneeded to achieve this.

Critical success factors for a high collaborative intelligence quotient are:

Group moderation and facilitation Adherence to a small set of fundamental rules relate to member interaction No limits to thinking; or the promotion of creative thinking Strong group membership feedback Quality control.

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Ideas need to be nurtured, but the solutions should be upheld after a critical peerreview.

The construction of a deeply documented group memory or knowledge base

Most countries acknowledge a symbiotic relationship between investment in S&T andsuccess in the marketplace: S&T support competitiveness in international trade, andcommercial success in the global marketplace provides the resources needed to supportnew S&T. Consequently, the nation’s economic health is a performance measure for thenational investment in R&D and in science and engineering (S&E).

The Organisation for Economic Co-operation and Development (OECD) currentlyidentifies four industries as high-technology (science-based industries whose productsinvolve above-average levels of R&D): aerospace, computers and office machinery,communications equipment, and pharmaceuticals.

High-technology industries are important to nations for several reasons:

High-technology firms innovate, and firms that innovate tend to gain market share,create new product markets, and/or use resources more productively High-technologyfirms develop high value-added products and are successful in foreign markets, whichresults in greater compensation for their employees Industrial R&D performed by high-technology industries benefits other commercial sectors by generating new products andprocesses that increase productivity, expand business, and create high-wage jobs .

5.4 TECHNOLOGY COMPETITIVENESS IN DEVELOPED COUNTRIES

The Importance of High-Technology Industries

The global market for high-technology goods is growing at a faster rate than that forother manufactured goods, and high-technology industries are driving economic growtharound the world. During the 19-year period examined (1980–98), high-technologyproduction grew at an inflation-adjusted average annual rate of nearly 6.0 percent comparedwith 2.7 percent for other manufactured goods. Global economic activity was especiallystrong at the end of the period (1995–98), when high-technology industry output grew at13.9 percent per year, more than three times the rate of growth for all other manufacturingindustries. Output by the four high-technology industries, those identified as being the mostresearch intensive, represented 7.6 percent of global production of all manufactured goodsin 1980; by 1998, this figure rose to 12.7 percent.

During the 1980s, the United States and other high-wage countries devoted increasingresources toward the manufacture of higher value, technology-intensive goods, often referredto as “high-technology manufactures.” During this period, Japan led the major industrializedcountries in its concentration on high-technology manufactures. In 1980, high-technology

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manufactures accounted for about 8 percent of total Japanese production, approaching 11percent in 1984 and increasing to 11.6 percent in 1989. By contrast, high-technologymanufactures represented nearly 11 percent of total U.S. production in 1989, up from 9.6percent in 1980. European nations also saw high-technology manufactures account for agrowing share of their total production, although to a lesser degree than seen in the UnitedStates and Japan. The one exception was the United Kingdom, where high-technologymanufactures rose from 9 percent of total manufacturing output in 1980 to nearly 11 percentby 1989.

The major industrialized countries continued to emphasize high-technologymanufactures into the 1990s. In 1998, high-technology manufactures were estimated at16.6 percent of manufacturing output in the United States, 16.0 percent in Japan, 14.9percent in the United Kingdom, 11.0 percent in France, and 9.0 percent in Germany.

Taiwan and South Korea typify how important R&D-intensive industries have becometo newly industrialized economies. In 1980, high-technology manufactures accounted forless than 12 percent of Taiwan’s total manufacturing output; this proportion jumped to16.7 percent in 1989 and reached 25.6 percent in 1998. In 1998, high-technologymanufacturing in South Korea (15.0 percent) accounted for about the same percentage oftotal output as in the United Kingdom (14.9 percent) and almost twice the percentage oftotal manufacturing output as in Germany (9.0 percent).

Share of World Markets

Throughout the 1980s, the United States was the world’s leading producer of high-technology products, responsible for more than one-third of total world production from1980 to 1987 and for about 30 percent from 1988 to 1995. U.S. world market sharebegan to rise in 1996 and continued moving upward during the following two years. In1998, the United States high-technology industry accounted for 36 percent of world high-technology production, a level last reached in the 1980s.

Although the United States struggled to maintain its high-technology market shareduring the 1980s, Asia’s market share followed a path of steady gains. In 1989, Japanaccounted for 24 percent of the world’s production of high-technology products, movingup 4 percentage points from its 1980 share. Japan continued to gain market share through1991. Since then, however, Japan’s market share has dropped steadily, falling to 20 percentof world production in 1998 after accounting for nearly 26 percent in 1991.

European nations’ share of world high-technology production is much lower and hasbeen declining. Germany’s share of world high-technology production was about 8 percentin 1980, about 6.4 percent in 1989, and 5.4 percent in 1998. The United Kingdom’s high-technology industry produced 6.7 percent of world output in 1980, dropping to about 6.0percent in 1989 and 5.4 percent in 1998. In 1980, French high-technology industry

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produced 6.1 percent of world output; it dropped to 5.3 percent in 1989 and 3.9 percentin 1998. Italy’s shares were the lowest among the four large European economies, rangingfrom a high of about 2.7 percent of world high-technology production in 1980 to a low ofabout 1.6 percent in 1998.

Developing Asian nations made the most dramatic gains since 1980. South Korea’smarket share more than doubled during the 1980s, moving from 1.1 percent in 1980 to2.6 percent in 1989. South Korea’s share continued to increase during the early to mid-1990s, peaking at 4.1 percent in 1995. Since 1995, South Korea’s market share hasdropped each year, falling to 3.1 percent in 1998. Taiwan’s high-technology industry alsogained world market share during the 1980s and early 1990s before leveling off in the later1990s. Taiwan’s high-technology industry produced just 1.3 percent of the world’s outputin 1980. This figure rose to 2.4 percent in 1989 and leveled off at 3.3 percent in 1997 and1998.

Global Competitiveness of Individual Industries

In each of the four industries that make up the high-technology group, the UnitedStates maintained strong, if not leading, market positions between 1981 and 1998.Competitive pressures from a growing cadre of high-technology-producing nationscontributed to a decline in global market share for two U.S. high-technology industriesduring the 1980s: computers and office machinery and communications equipment. Bothof these U.S. industries reversed their downward trends and gained market share in themid- to late 1990s, thanks to increased capital investment by U.S. businesses. For most ofthe 19-year period examined, Japan was the world’s leading supplier of communicationsequipment, representing about one-third of total world output. Japan’s production surpassedthat of the United States in 1981 and held the top position for the next 14 years. In 1995,U.S. manufacturers once again became the leading producer of communications equipmentin the world, and they have retained that position ever since. In 1998, the latest year forwhich data are available, the United States accounted for 34.4 percent of world productionof communications equipment, up from 31.5 percent in 1997.

Aerospace, the U.S. high-technology industry with the largest world market share,was the only industry to lose market share in both the 1980s and the 1990s. For most ofthe 1980s, the U.S. aerospace industry supplied more than 60 percent of world demand.By the late 1980s, the U.S. share of the world aerospace market began an erratic decline,falling to 58.9 percent in 1989 and 52.1 percent by 1995. The United States recoveredsomewhat during the following three years, supplying about 55 percent of the world marketfrom 1996 to 1998. European aerospace industries, particularly the British aerospaceindustry, made some gains during the period examined. After fluctuating between 8.5 and10.5 percent during the 1980s, the United Kingdom’s industry slowly gained market share

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for much of the 1990s. In 1991, the United Kingdom supplied 9.7 percent of world aircraftshipments; by 1998, its share had increased to 13 percent.

Of the four U.S. high-technology industries, only the aerospace and pharmaceuticalindustries managed to retain their number-one rankings throughout the 19-year period; ofthese two, only the pharmaceutical industry had a larger share of the global market in 1998than in 1980.

The United States is considered a large, open market. These characteristics benefit U.S.high-technology producers in two important ways. First, supplying a market with manydomestic consumers provides scale effects to U.S. producers in the form of potentiallylarge rewards for the production of new ideas and innovations. Second, the openness ofthe U.S. market to competing foreign-made technologies pressures U.S. producers to beinventive and more innovative to maintain domestic market share.

Exports by High-Technology Industries

Although U.S. producers benefit from having the world’s largest home market asmeasured by gross domestic product (GDP), mounting trade deficits highlight the need toserve foreign markets as well. U.S. high-technology industries have traditionally been moresuccessful exporters than other U.S. industries and play a key role in returning the UnitedStates to a more balanced trade position.

Foreign Markets

Despite its domestic focus, the United States was an important supplier ofmanufactured products to foreign markets throughout the 1980–98 period. From 1993 to1998, the United States was the leading exporter of manufactured goods, accounting forabout 13 percent of world exports.

U.S. high-technology industries contributed to the strong export performance of thenation’s manufacturing industries. During the same 19-year period, U.S. high-technologyindustries accounted for between 19 and 26 percent of world high-technology exports,which was at times twice the level achieved by all U.S. manufacturing industries. In 1998,the latest year for which data are available, exports by U.S. high-technology industriesaccounted for 19.8 percent of world high-technology exports; Japan was second with 9.7percent, followed by Germany with 6.5 percent.

The gradual drop in U.S. share during the 19-year period was in part the result ofemerging high-technology industries in newly industrialized economies, especially in Asia.In 1980, high-technology industries in Singapore and Taiwan each accounted for about2.0 percent of world high-technology exports. The latest data for 1998 show Singapore’sshare reaching 6.4 percent and Taiwan’s share reaching 5.0 percent.

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Industry Comparisons

Throughout the 19-year period, individual U.S. high-technology industries rankedeither first or second in exports in each of the four industries that make up the high-technologygroup. In 1998, the United States was the export leader in three industries and second inonly one, pharmaceuticals. U.S. industries producing aerospace technologies, computersand office machinery, and pharmaceuticals all accounted for smaller shares of world exportsin 1998 than in 1980; only the communications equipment industry improved its shareduring the period. By contrast, Japan’s share of world exports of communications equipmentdropped steadily after 1985, eventually falling to 12.5 percent by 1998 from a high of 36.0percent just 13 years earlier. Several smaller Asian nations fared better: for example, in1998, South Korea supplied 5.9 percent of world communication product exports, upfrom just 2.4 percent in 1980, and Singapore supplied 10.6 percent of world office andcomputer exports in 1998, up from 0.6 percent in 1980.

Competition in the Home Market

A country’s home market is often considered the natural destination for the goodsand services domestic firms have produced. Proximity to the customer as well as commonlanguage, customs, and currency make marketing at home easier than marketing abroad.

With trade barriers falling, however, product origin may be only one factor amongmany influencing consumer choice. As the number of firms producing goods to worldstandards rises, price, quality, and product performance often become equally or moreimportant criteria for selecting products. Thus, in the absence of trade barriers, the intensityof competition faced by producers in the domestic market can approach and, in somemarkets, exceed that faced in foreign markets. U.S. competitiveness in foreign marketsmay be the result of two factors: the existence of tremendous domestic demand for thelatest technology products and the pressure of global competition, which spurs innovation.

National Demand for High-Technology Products

Demand for high-technology products in the United States far exceeds that in anyother single country; in 1998, it was larger (approximately $768 billion) than the combinedmarkets of Japan and the four largest European nations—Germany, the United Kingdom,France, and Italy (about $749 billion). In 1991, Japan was the world’s second largestmarket for high-technology products, although its percentage share of world consumptionhas generally declined since then. Even though economic problems across much of Asiahave curtailed a long period of rapid growth, Asia continues to be a large market for theworld’s high-technology exports.

National Producers Supplying the Home Market

Throughout the 1980–95 period, the world’s largest market for high-technologyproducts, the United States, was served primarily by domestic producers, yet demand

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was increasingly met by a growing number of foreign suppliers. In 1998, U.S. producerssupplied about 75 percent of the home market for high-technology products; in 1995,their share was much lower—about 67 percent.

Other countries, particularly those in Europe, have experienced increased foreigncompetition in their domestic markets. A more economically unified market has madeEurope especially attractive to the rest of the world. Rapidly rising import penetrationratios in Germany, the United Kingdom, France, and Italy during the latter part of the1980s and throughout much of the 1990s reflect these changing circumstances. Thesedata also highlight greater trade activity in European high-technology markets comparedwith product markets for less technology-intensive manufactures.

The Japanese home market, the second largest market for high-technology productsand historically the most self-reliant of the major industrialized countries, also increased itspurchases of foreign technologies over the 19-year period, although slowly. In 1998, importsof high-technology manufactures supplied about 12 percent of Japanese domesticconsumption, up from about 7 percent in 1980.

Global Business in Knowledge-Intensive Service Industries

For several decades, revenues generated by U.S. service-sector industries have grownfaster than those generated by the nation’s manufacturing industries. Data collected by theDepartment of Commerce show that the service sector’s share of the U.S. GDP grewfrom 49 percent in 1959 to 64 percent in 1997. Service-sector growth has been fueledlargely by “knowledge-intensive” industries—those incorporating science, engineering, andtechnology in their services or in the delivery of those services. Five of these knowledge-intensive industries are communications services, financial services, business services(including computer software development), educational services, and health services. Theseindustries have been growing faster than the high-technology manufacturing sector discussedearlier. This section presents data tracking overall revenues earned by these industries in68 countries.

Combined sales in 1997 dollars in these five service-sector industries approached$8.4 trillion in 1998, up from $6.8 trillion in 1990 and $4.8 trillion in 1980. The UnitedStates was the leading provider of high-technology services, responsible for between 38and 41 percent of total world service revenues during the entire 19-year period examined.

The financial services industry is the largest of the five service industries examined,accounting for 31 percent of revenues in 1998. The U.S. financial services industry is theworld’s largest, with 52.9 percent of world revenues in 1998. Japan was second at 5.9percent, followed by Germany at 4.1 percent.

Business services, which includes computer and data processing and research andengineering services, is the second largest service sector, accounting for nearly 28 percent

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of revenues in 1998. The U.S. business services industry is the largest in the world, with36.0 percent of industry revenues in 1998. France is second with 17.1 percent, followedby Japan with 12.9 percent and the United Kingdom with 6.1 percent. Unfortunately, dataon individual business services by country are not available.

Communications services, which includes telecommunications and broadcast services,is the fourth-largest service industry examined, accounting for 12.3 percent of revenues in1998. In what many consider the most technology-driven of the service industries, theUnited States has the dominant position. In 1998, U.S. communications firms generatedrevenues that accounted for 36.8 percent of world revenues, more than twice the shareheld by Japanese firms and six times that held by British firms.

Because in many nations the government is the primary provider of the remaining twoknowledge-intensive service industries (health services and educational services), andbecause the size of a country’s population affects the delivery of these services, globalcomparisons are more difficult and less meaningful than those for other service industries.The United States, with the largest population and least government involvement, has thelargest commercial industries in the world in both health services and educational services.Japan is second, followed by Germany. Educational services, the smallest of the fiveknowledge-intensive service industries, had about one-fourth of the revenues generatedby the financial services industry worldwide.

U.S. Trade Balance in Technology Products

Although no single preferred methodology exists for identifying high-technologyindustries, most calculations rely on a comparison of R&D intensities. R&D intensity, inturn, is typically determined by comparing industry R&D expenditures or the number oftechnical people employed (e.g., scientists, engineers, and technicians) with industry valueadded or the total value of its shipments. Classification systems based on R&D intensity,however, are often distorted by including all products produced by particular high-technologyindustries, regardless of the level of technology embodied in each product, and by thesomewhat subjective process of assigning products to specific industries. In contrast, theclassification system discussed here allows for a highly disaggregated, more focusedexamination of technology embodied in traded goods. To minimize the impact of subjectiveclassification, the judgments offered by government experts are reviewed by other experts.

Ten Major Technology Areas

The Bureau of the Census has developed a classification system for exports andimports that embody new or leading-edge technologies. This classification system allowstrade to be examined in 10 major technology areas:

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Biotechnology—the medical and industrial application of advanced genetic research tothe creation of drugs, hormones, and other therapeutic items for both agricultural andhuman uses.

Life science technologies—the application of nonbiological scientific advances tomedicine. For example, advances such as nuclear magnetic resonance imaging,echocardiography, and novel chemistry, coupled with new drug manufacturing, have led tonew products that help control or eradicate disease.

Opto-electronics—the development of electronics and electronic components that emitor detect light, including optical scanners, optical disk players, solar cells, photosensitivesemiconductors, and laser printers.

Information and communications—the development of products that process increasingamounts of information in shorter periods of time, including fax machines, telephone switchingapparatus, radar apparatus, communications satellites, central processing units, andperipheral units such as disk drives, control units, modems, and computer software.

Electronics—the development of electronic components (other than opto-electroniccomponents), including integrated circuits, multilayer printed circuit boards, and surface-mounted components, such as capacitors and resistors, that result in improved performanceand capacity and, in many cases, reduced size.

Flexible manufacturing—the development of products for industrial automation, includingrobots, numerically controlled machine tools, and automated guided vehicles, that permitgreater flexibility in the manufacturing process and reduce human intervention.

Advanced materials—the development of materials, including semiconductor materials,optical fiber cable, and videodisks, that enhance the application of other advancedtechnologies.

Aerospace—the development of aircraft technologies, such as most new military and civilairplanes, helicopters, spacecraft (with the exception of communication satellites), turbojetaircraft engines, flight simulators, and automatic pilots.

Weapons—the development of technologies with military applications, including guidedmissiles, bombs, torpedoes, mines, missile and rocket launchers, and some firearms.

Nuclear technology—the development of nuclear production apparatus, including nuclearreactors and parts, isotopic separation equipment, and fuel cartridges (nuclear medicalapparatus is included in life sciences rather than this category).

To be included in a category, a product must contain a significant amount of one of theleading-edge technologies, and the technology must account for a significant portion of theproduct’s value.

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Importance of Advanced Technology Product Trade to Overall U.S. Trade

Advanced technology products accounted for an increasing share of all U.S. trade(exports plus imports) in merchandise between 1990 and 1999. Total U.S. trade inmerchandise exceeded $1.7 trillion in 1999; of that, $381 billion involved trade in advancedtechnology products. Trade in advanced technology products accounts for a much largershare of U.S. exports than of imports (29.2 percent versus 17.5 percent in 1999) andmakes a positive contribution to the overall balance of trade. After several years in whichthe surplus generated by trade in advanced technology products declined, exports of U.S.advanced technology products outpaced imports in 1996 and 1997, producing largersurpluses in both years. In 1998 and 1999, the economic slowdown in Asia caused declinesin exports and in the surplus generated from U.S. trade in advanced technology products.

Technologies Generating Trade Surpluses

Throughout the 1990s, U.S. exports of advanced technology products exceededimports in 8 of 11 technology areas. Trade in aerospace technologies consistently producedthe largest surpluses for the United States. Those surpluses narrowed in the mid-1990s ascompetition from Europe’s aerospace industry challenged U.S. companies’ preeminenceboth at home and in foreign markets. Aerospace technologies generated a net inflow of$25 billion in 1990 and nearly $29 billion in 1991 and 1992; trade surpluses then declined13 percent in 1993, 9 percent in 1994, and 4 percent in 1995. In 1998, U.S. trade inaerospace technologies produced a net inflow of $39 billion, the largest surplus of thedecade, and 1999’s surplus was only slightly smaller at $37 billion. Trade is more balancedin five other technology areas (biotechnology, flexible manufacturing technologies, advancedmaterials, weapons, and nuclear technology), with exports having only a slight edge overimports. Each of these areas showed trade surpluses of less than $3 billion in 1999.

Although U.S. imports of electronics technologies exceeded exports for much of thedecade, 1997 saw U.S. exports of electronics exceed imports by $1.1 billion, whichjumped to $4.2 billion in 1998 and $9.4 billion in 1999. This turnaround may be attributedin part to Asia’s economic problems in 1998 and a stronger U.S. dollar, which may havereduced the number of electronics products imported from Asia in 1998. Imports fromAsia recovered to pre-1998 levels in 1999, with the largest jumps in imports coming notfrom Japan but from South Korea, the Philippines, and Malaysia.

Technologies Generating Trade Deficits

In 1999, trade deficits were recorded in three technology areas: information andcommunications, opto-electronics, and life science technologies. The trends for each ofthese technology areas are quite different. Only opto-electronics showed trade deficits ineach of the 10 years examined. U.S. trade in life science technologies consistently generatedannual trade surpluses until 1998. Life science exports were virtually flat in the last two

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years of the decade, while imports jumped 24 percent in 1998 and 21 percent in 1999.Interestingly, in a technology area in which the United States is considered to be at theforefront (information and communications), annual U.S. imports have consistently exceededexports since 1992. Nearly three-fourths of all U.S. imports in this technology area areproduced in Asia.

Top Customers by Technology Area

Japan and Canada are the largest customers for a broad range of U.S. technologyproducts, with each country accounting for about 11 percent of total U.S. technologyexports. Japan ranks among the top three customers in 9 of 11 technology areas, Canadain 7. European countries are also important consumers of U.S. technology products,particularly Germany (life science products, opto-electronics, and advanced materials),the United Kingdom (aerospace, weapons, and computer software), and the Netherlands(life science products and weapons).

Although Europe, Japan, and Canada have long been important consumers of U.S.technology products, several newly industrialized and emerging Asian economies now alsorank among the largest customers. South Korea is a leading consumer in three technologyareas (electronics, flexible manufacturing, and nuclear technologies) and Taiwan in two(flexible manufacturing and nuclear technologies).

Top Suppliers by Technology Area

The United States is not only an important exporter of technologies to the world butalso a consumer of imported technologies. The leading economies in Asia and Europe areimportant suppliers to the U.S. market in each of the 11 technology areas. Japan is a majorsupplier in six advanced technology categories; Canada, France, Germany, Taiwan, andthe United Kingdom in three. Smaller European countries are also major suppliers oftechnology to the United States, although they tend to specialize. Belgium was the topforeign supplier of biotechnology products to the United States in 1999, the source for25.5 percent of imports in this category. Switzerland also was among the top three suppliersof biotechnology products with 11.3 percent.

Many technology products come from developing Asian economies, especiallyMalaysia, South Korea, and Singapore. Imports from these Asian economies and fromother regions into one of the world’s most demanding markets indicate that technologicalcapabilities are expanding globally.

U.S. Royalties and Fees Generated From Intellectual Property

The United States has traditionally maintained a large trade surplus in intellectualproperty. Firms trade intellectual property when they license or franchise proprietarytechnologies, trademarks, and entertainment products to entities in other countries. Thesetransactions generate net revenues in the form of royalties and licensing fees.

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U.S. Royalties and Fees From All Transactions

Total U.S. receipts from all trade in intellectual property more than doubled between1990 and 1999, reaching nearly $36.5 billion in 1999. During the 1987–96 period, U.S.receipts for transactions involving intellectual property were generally four to five timeslarger than U.S. payments to foreign firms. The gap narrowed in 1997 as U.S. paymentsincreased by 20 percent over the previous year and U.S. receipts rose less than 3 percent.Despite the much larger increase in payments, annual receipts from total U.S. trade inintellectual property in 1997 were still more than 3.5 times greater than payments. Thistrend continued during the following two years, and by 1999, the ratio of receipts topayments had dropped to about 2.7:1.

U.S. trade in intellectual property produced a surplus of $23.2 billion in 1999, downslightly from the nearly $24.5 billion surplus recorded a year earlier. About 75 percent ofthe transactions involved exchanges of intellectual property between U.S. firms and theirforeign affiliates. Exchanges of intellectual property among affiliates have grown at aboutthe same pace as those among unaffiliated firms, except during the late 1990s, when thegrowth in U.S. firm payments to affiliates exceeded receipts. These trends suggest both agrowing internationalization of U.S. business and a growing reliance on intellectual propertydeveloped overseas.

U.S. Royalties and Fees From Trade in Technical Knowledge

Data on royalties and fees generated by trade in intellectual property can be furtherdisaggregated to reveal U.S. trade in technical know-how. The data describe transactionsbetween unaffiliated firms where prices are set through a market-based negotiation.Therefore, they may better reflect the exchange of technical know-how and its marketvalue at a given time than do data on exchanges among affiliated firms. When receipts(sales of technical know-how) consistently exceed payments (purchases), these data mayindicate a comparative advantage in the creation of industrial technology. The record ofresulting receipts and payments also provides an indicator of the production and diffusionof technical knowledge.

The United States is a net exporter of technology sold as intellectual property, althoughthe gap between imports and exports narrowed during the late 1990s. During the first halfof the 1990s, royalties and fees received from foreign firms have been an average of threetimes the amount U.S. firms pay foreigners to access their technology. Between 1996 and1998, receipts plateaued at about $3.5 billion. In 1999, receipts totaled nearly $3.6 billion,little changed from the year before but still more than double that reported for 1987. Japanis the world’s largest consumer of U.S. technology sold as intellectual property, althoughits share declined significantly during the 1990s. In 1999, Japan accounted for about 30percent of all such receipts. At its peak in 1993, Japan’s share was 51 percent.

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Another Asian country, South Korea, is the second largest consumer of U.S. technologysold as intellectual property, accounting for nearly 14 percent of U.S. receipts in 1999.South Korea has been a major consumer of U.S. technological know-how since 1988,when it accounted for 5.5 percent of U.S. receipts. South Korea’s share rose to 10.7percent in 1990 and reached its highest level, 17.3 percent, in 1995.

The U.S. trade surplus in intellectual property is driven largely by trade with Asia, butthat surplus has narrowed recently. In 1995, U.S. receipts (exports) from technology licensingtransactions were nearly seven times the U.S. firm payments (imports) to Asia. That ratioclosed to just more than 4:1 by 1997, and the most recent data show U.S. receipts fromtechnology licensing transactions at about 2.5 times the U.S. firm payments to Asia. Aspreviously noted, Japan and South Korea were the biggest customers for U.S. technologysold as intellectual property; together, these countries accounted for more than 44 percentof total receipts in 1999.

Until 1994, U.S. trade with Europe in intellectual property, unlike trade with Asia,fluctuated between surplus and deficit. In 1994, a sharp decline in U.S. purchases ofEuropean technical know-how led to a considerably larger surplus for the United Statescompared with earlier years. The following year showed another large surplus resultingfrom a jump in receipts from the larger European countries. In 1999, receipts from EuropeanUnion (EU) countries represented about 35 percent of U.S. technology sold as intellectualproperty, more than double the share in 1993. Some of this increase is attributable toincreased licensing by firms in Germany, the third largest consumer of U.S. technologicalknow-how. In 1999, Germany’s share rose to 9.3 percent, up from 6.9 percent in 1998and more than double its share in 1993. These latest data show receipts from France andSweden rising sharply during the late 1990s, causing a considerably larger surplus fromU.S. trade with Europe in intellectual property in 1998 and 1999.

U.S. firms have purchased technical know-how from different foreign sources overthe years, with increasing amounts coming from Japan, which since 1992 has been thesingle largest foreign supplier of technical know-how to U.S. firms. About one-third ofU.S. payments in 1999 for technology sold as intellectual property were made to Japanesefirms. Europe accounts for slightly more than 44 percent of the foreign technical know-how purchased by U.S. firms; the United Kingdom and Germany are the principal Europeansuppliers.

Footnotes

In designating these high-technology industries, OECD took into account both directand indirect R&D intensities for 10 countries: the United States, Japan, Germany, France,the United Kingdom, Canada, Italy, the Netherlands, Denmark, and Australia. Directintensities were calculated by the ratio of R&D expenditure to output (production) in 22industrial sectors. Each sector was given a weight according to its share in the total output

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of the 10 countries using purchasing power parities as exchange rates. Indirect intensitycalculations were made using technical coefficients of industries on the basis of input-output matrices. OECD then assumed that, for a given type of input and for all groups ofproducts, the proportions of R&D expenditure embodied in value added remained constant.The input-output coefficients were then multiplied by the direct R&D intensities.

5.5 SCIENCE AND TECHNOLOGY IN INDIA

A New Frontier

The tradition of science and technology (S&T) in India is over 5,000 years old. Arenaissance was witnessed in the first half of the 20th century. The S&T infrastructure hasgrown up from about Rs. 10 million at the time of independence in 1947 to Rs. 30 billion.Significant achievements have been made in the areas of nuclear and space science,electronics and defence. The government is committed to making S&T an integral part ofthe socio-economic development of the country.

India has the third largest scientific and technical manpower in the world; 162universities award 4,000 doctorates and 35,000 postgraduate degrees and the Council ofScientific and Industrial Research runs 40 research laboratories that have made somesignificant achievements. In the field of Missile Launch Technology, India is among the topfive nations of the world.

Science and technology, however, is used as an effective instrument for growth andchange. It is being brought into the mainstream of economic planning in the sectors ofagriculture, industry and services. The country’s resources are used to derive the maximumoutput for the benefit of society and improvement in the quality of life. About 85 per cent ofthe funds for S&T come directly or indirectly from the Government. The S&T infrastructurein the country accounts for more than one per cent of the GNP. S&T in India is entering anew frontier.

Atomic Energy

The prime objective of India’s nuclear energy programme is the development and useof nuclear energy for peaceful purposes such as power generation, applications in agriculture,medicine, industry, research and other areas.

India is today recognised as one of the most advanced countries in nuclear technologyincluding production of source materials. The country is self-reliant and has mastered theexpertise covering the complete nuclear cycle from exploration and mining to powergeneration and waste management. Accelerators and research and power reactors arenow designed and built indigenously. The sophisticated variable energy cyclotron at Kolkataand a medium-energy heavy ion accelerator ‘pelletron’ set up recently at Mumbai arenational research facilities in the frontier areas of science.

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As part of its programme of peaceful uses of atomic energy, India has also embarkedon a programme of nuclear power generation. Currently eight nuclear stations are producingeight billion kilowatt of electricity. Four more nuclear power stations are planned. The newnuclear reactors are designed in India. The peaceful nuclear programme also includesproducing radioisotopes for use in agriculture, medicine, industry and research.

Space

The Indian Space Research Organisation (ISRO), under the Department of Space(DOS), is responsible for research, development and operationalisation of space systemsin the areas of satellite communications, remote sensing for resource survey, environmentalmonitoring, meteorological services, etc. DOS is also the nodal agency for the PhysicalResearch Laboratory, which conducts research in the areas of space science, and theNational Remote Sensing Agency, which deploys modern remote-sensing techniques fornatural resource surveys and provides operational services to user agencies. India is theonly Third World Country to develop its own remote-sensing satellite.

Electronics

The Department of Electronics plays the promotional role for the development anduse of electronics for socio-economic development. Many initiatives have been taken fora balanced growth of the electronics industry. The basic thrust has been towards a generalrationalisation of the licensing policy with an emphasis on promotion rather than regulation,besides achieving economy of scale with up-to-date technology. A multi-pronged approachhas been evolved for result-oriented R&D with special emphasis on microelectronics,telematics, and high-performance computing and software development.

Application of electronics in areas such as agriculture, health and service sectors hasalso been receiving special attention. For upgrading the quality of indigenously manufacturedproducts, a series of test and development centres and regional laboratories have been setup. These centres for electronic design and technology help small and medium electronicsunits. A number of R&D projects have been initiated to meet the growing requirements ofthe industry.

Oceanography

India has a coastline of more than 7,600 km and 1,250 islands, with its ExclusiveEconomic Zone covering over 2 million sq. km and continental shelf extending up to 350nautical miles. The Department of Ocean Development was established in 1981 to ensureoptimum utilisation of living resources, exploitation of non-living resources such ashydrocarbons and minerals, and to harness ocean energy. Two research vessels, ORVSagar Kanya and FROV Sagar Sampada, are assessing and evaluating the resourcepotential.

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Survey and exploration efforts have been directed to assess sea bed topography, andconcentration and quality of mineral nodules. In August 1987, India was allotted a minesite of 150,000 sq. km in the central Indian Ocean for further exploration and developmentof resources. India is the only developing country to have qualified for Pioneer Status bythe UN Conference on the Law of the Sea in 1982, and it is the first country in the worldto have secured registration of a mine site.

India has sent 13 scientific research expeditions to Antarctica since 1981, and hasestablished a permanently manned base, Dakshin Gangotri. A second permanent station,an entirely indigenous effort, was completed by the eighth expedition. The objective is tostudy the ozone layer and other important constituents, optical aurora, geomagnetic pulsationand related phenomena. By virtue of its scientific research activities, India acquiredConsultative Membership of the Antarctic Treaty in 1983 and acceded to the Conventionon the Conservation of Antarctic Marine Living Resources in July 1985. India is also amember of the Scientific Committee on Antarctic Research, and has played a significantrole in adopting a Minerals Regime for Antarctica in June 1988.

A National Institute of Ocean Technology was set up for the development of ocean-related technologies. It is also responsible for harnessing resources of the coastal belts andislands.

Biotechnology

India has been the forerunner among the developing countries in promoting multi-disciplinary activities in this area, recognising the practically unlimited possibility of theirapplications in increasing agricultural and industrial production, and in improving humanand animal life. The nucleus of research in this area is the National Biotechnology Board,constituted in 1982.

A Department of Biotechnology was created in 1986. Recently, the BiotechnologyConsortium India Ltd. was set up. It will play the role of a catalyst in bridging the gapbetween research and development, industrial and financial institutions. Some of the newinitiatives taken include developing techniques for gene mapping, conservation of biodiversityand bioindicators research, special biotechnology programmes for the benefit of thescheduled castes and scheduled tribes and activities in the area of plantation crops.

The areas which have been receiving attention are cattle herd improvement throughembryo transfer technology, in vitro propagation of disease resistant plant varieties forobtaining higher yields, and development of vaccines for various diseases.

Council of Scientific and Industrial Research (CSIR)

CSIR was established in 1942, and is today the premier institution for scientific andindustrial research. It has a network of 40 laboratories, two cooperative industrial research

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institutions and more than 100 extension and field centres. The council’s researchprogrammes are directed towards effective utilisation of the country’s natural resourcesand development of new processes and products for economic progress. It is now playinga leading role in the fulfilment of the technology missions evolved by the Government.

5.6 TECHNOLOGY TRANSFER

Technology transfer is the process of sharing of skills, knowledge, technologies,methods of manufacturing, samples of manufacturing and facilities among industries,universities, governments and other institutions to ensure that scientific and technologicaldevelopments are accessible to a wider range of users who can then further develop andexploit the technology into new products, processes, applications, materials or services.While conceptually the practice has been utilized for many years (in ancient times, Archimedeswas notable for applying science to practical problems), the present-day volume of research,combined with high-profile failures at Xerox PARC and elsewhere, has led to a focus onthe process itself.

Transfer process

Many companies, universities and governmental organizations now have an “Officeof Technology Transfer” (also known as “Tech Transfer” or “TechXfer”) dedicated toidentifying research which has potential commercial interest and strategies for how to exploitit. For instance, a research result may be of scientific and commercial interest, but patentsare normally only issued for practical processes, and so someone — not necessarily theresearchers — must come up with a specific practical process. Another consideration iscommercial value; for example, while there are many ways to accomplish nuclear fusion,the ones of commercial value are those that generate more energy than they require tooperate.

The process to commercially exploit research varies widely. It can involve licensingagreements or setting up joint ventures and partnerships to share both the risks and rewardsof bringing new technologies to market. Other corporate vehicles, e.g. spin-outs, are usedwhere the host organization does not have the necessary will, resources or skills to developa new technology. Often these approaches are associated with raising of venture capital(VC) as a means of funding the development process, a practice more common in the USthan in the EU, which has a more conservative approach to VC funding.

In recent years, there has been a marked increase in technology transfer intermediariesspecialized in their field. They work on behalf of research institutions, governments andeven large multinationals. Where start-ups and spin-outs are the clients, commercial feesare sometimes waived in lieu of an equity stake in the business. As a result of the potentialcomplexity of the technology transfer process, technology transfer organizations are oftenmultidisciplinary, including economists, engineers, lawyers, marketers and scientists. The

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dynamics of the technology transfer process has attracted attention in its own right, andthere are several dedicated societies and journals.

Technology assessment (TA, German Technikfolgenabschätzung) is the study andevaluation of new technologies. It is based on the conviction that new developments within,and discoveries by, the scientific community are relevant for the world at large rather thanjust for the scientific experts themselves, and that technological progress can never be freeof ethical implications. Also, technology assessment recognizes the fact that scientistsnormally are not trained ethicists themselves and accordingly ought to be very carefulwhen passing ethical judgement on their own, or their colleagues´, new findings, projects,or work in progress.

Technology assessment assumes a global perspective and is future-oriented rather thanbackward-looking or anti-technological. (“Scientific research and science-basedtechnological innovation is an indispensable prerequisite of modern life and civilization.There is no alternative. For six or eight billion people there is no way back to a lesssophisticated life style”. TA considers its task as interdisciplinary approach to solvingalready existing problems and preventing potential damage caused by the uncriticalapplication and the commercialization of new technologies. Therefore any results oftechnology assessment studies must be published, and particular consideration must begiven to communication with political decision-makers.

The United States Department of Defense (DOD) assesses technology maturity usinga measure called Technology Readiness Level.

The ETC Group has proposed an international treaty for technology assessment -entitled ICENT - International Convention for The Evaluation of New Technologies

Some of the major fields of TA are: Information technology Nuclear technology Molecular nanotechnology Pharmacology Organ transplants Gene technology Health technology assessment (HTA)

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Technology Readiness Level

Uses of Technology Readiness Levels

The primary purpose of using Technology Readiness Levels is to help management inmaking decisions concerning the development and transitioning of technology. Advantagesinclude:

Provides a common understanding of technology status

Risk management

Used to make decisions concerning technology funding

Used to make decisions concerning transition of technology

Disadvantages include:

More reporting, paperwork, reviews

Relatively new, takes time to influence the system

Systems engineering not addressed in early TRLs

5.7 COLLABORATIVE INTELLIGENCE

Collaborative intelligence is a measure of the collaborative ability of a group or entity.According to Stephen James Joyce author of Teaching an Anthill to Fetch – Developing

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Collaborative Intelligence @ Work, “collaborative intelligence (CQ) is the ability tocreate, contribute to and harness the power within networks of people and relationships”.Knowledge derived from collaborative efforts is increasing proportionally to the reach ofthe world wide web, collaborative groupware like Skype, NetMeeting, WebEx,iPeerAdvisory and many others.

IQ is a term readily used to describe or measure an intelligent quota of a person. EQhas been used to measure the Emotional Intelligence of a person to describe how a personhandles emotions in a given situation. CQ or Collaborative Intelligence measures thecollaborative ability of a group. CQ is a fairly new term arising from the visibility ofcollaborative efforts of companies and entities

CQ is a situation where the knowledge and problem solving capability of a group ismuch greater than the knowledge possessed by an individual group member. As groupswork together they develop a shared memory, which is accessible through the collaborativeartifacts created by the group, including meeting minutes, transcripts from threadeddiscussions, and drawings. The shared memory (group memory) is also accessible throughthe memories of group members.

Distributed collaborative intelligence is the act of a group collaborating within a virtualsphere of interaction. Group members can interact in real time or asynchronously eventhough they are not located within the same physical space. Technologies used to enhancedistributed collaborative intelligence and to facilitate group problem solving are:

Messaging1. Synchronous conferencing technologies like instant messaging, online chat and

shared white boards.2. Asynchronous messaging like electronic mail, threaded, moderated discussion

forums and web logs. Stigmergy

1. Wiki2. Social evolutionary computation

The ability of a group to solve a problem collectively is potentially directly proportionalto the number of members in a group; however effective architecture of interaction isneeded to achieve this.

Critical success factors for a high collaborative intelligence quotient are:1. Group moderation and facilitation2. Adherence to a small set of fundamental rules relate to member interaction3. No limits to thinking; or the promotion of creative thinking4. Strong group membership feedback

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5. Quality control. Ideas need to be nurtured, but the solutions should be upheld aftera critical peer review.

6. The construction of a deeply documented group memory or knowledge base.

Summary

Some insights about BPR, TQM, Tranferred Technology, Collaborative Innovation,Technology in developed and developing countries have been given.

Questions

1. Explain when BPR is to be done and what steps are to be followed.2. Does Quality play a role in technology upgradation? – Explain3. How is technology used in developed countries?4. How can technology speed up the growth in developing countries?5. Elaborate on Collaborative Knowledge.

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dba1736-emerging trends in technology management

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