Technological innovation leadership
Jun 09 2014
The key success factors for a corporation’s technological innovation competitiveness are: critically looking at status quo, openness to new ideas and developments, and willingness to embark on change. The starting point is to reflect how does the organisation see itself? This is an important question for deciding the strategic direction and long-term well-being of the company. For example, if Bharat Earth Movers Limited (BEML) — a central public sector undertaking — considers itself just as a production centre of Czech-designed and developed Tatra, based on parent company’s designs and blueprints, then it becomes one thing; but if BEML were to think and act itself as a global player in the design and manufacturing of state-of-art-art engineering solutions to mobility requirements of armed forces and equipment, then it will develop relevant competences and create resources accordingly. Otherwise why should a supposedly technology-heavy country like India still have to import trucks for carrying missiles and artillery guns?
Technology, perhaps, is the only external force on the company which creates divergences and therefore pressures for re-alignment; otherwise most of the other external forces such as political, social, and legal factors create pressures for convergence. In that sense, technological innovations require firms to constantly destabilise the environment and thereby itself to remain relevant in the marketplace. Think of evolving fortunes of Motorola Mobility — a company bought over by Google and then resold to the Lenovo, the Chinese computer maker. In the US, it has had to close down its factories due to poor demand and offtake for its mobile phones; but in India, it has transformed the industry landscape with its disruptive technologies in the form of Moto G and Moto E smartphones. The traditional retail outlets, similarly, are facing an existential crisis with the rapid growth of e-retail commerce. Motorola’s entire distribution strategy in India is based on partnership with Flipkart and its backend supply chain.
Another example of how technology is transforming buying behaviour was seen recently when a friend wanted to purchase a top-end water purifier. As usual, she visited number of white goods suppliers in the city for a demo and price-bargaining. Having done her homework, she visited an e-commerce website and got a quote that was almost 20 per cent lower than quoted by authorised distributors. The latter simply could not match the web-price. The well-known water purifier company assured the lady of quick installation and service no matter where she purchased the product from. Ultimately, she bought her machine from the e-seller who delivered it within two days at her home and she could save more than a thousand bucks!
Technology and innovation performance is related to the importance given to it in the organisational strategy and structural frameworks. Daimler — the company which designed and developed the first car — registered 2,105 patents in 2010 (almost same as in 2009). More than 1,000 patent applications related to the issue of emission-free mobility, in particular, electric drive systems using power from batteries or fuel cells. The biggest battles in the automotive sector are being fought in the areas of drive systems, fuel efficiency, and safety and Daimler has aligned its research activities to anticipate technological and customers’ trends and thus make design changes in the car. The technology portfolio and core competencies of Daimler are accordingly organised to ensure that customers remain satisfied. The company wants to maintain the tradition of Gottlieb Daimler and Carl Benz, inventors of the automobile 125 years ago, who wanted the company to be a pioneer and driver of innovation in the automotive industry. Obviously, the driving force in this is the top management’s focus on research and development which is treated as a key factor for Daimler’s future success as a premium brand.
Effectively, technological leadership can come only from boardroom interest and focus. After all, good corporate governance aims to create sustainable value through responsible corporate management actions based on certain widely accepted principles. The capability to think ahead and strategise is one of the core foundations of long-term value creation and corporate longevity. Financial stability and a sound balance sheet are outcomes of thinking and acting ahead of time. Thinking ahead, taking initiative, seeing the opportunities that change brings rather than just the risk must be the motto of technology companies. It is a matter of survival and prosperity.
(The author is a professor of strategy and corporate governance