BUS306: Contemporary Business Issues and Trends

BUS306: Contemporary Business Issues and Trends

Lecture Week 9: Technology & Innovation

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Recognition of Traditional owners and Indigenous cultures

Charles Darwin University acknowledges the traditional custodians of the land on which we’re meeting and pays respect to Elders both past and present and extends that respect to all Aboriginal and Torres Strait Islander people.

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Learning objectives

Upon completion of this week’s topic, students should be able to:

Examine the key emerging technologies and innovations in the business space.

Understand what the new tech-driven innovation trends in business are, and why they matter.

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Learning objectives (cont’d)

Upon completion of this week’s topic, students should be able to:

Examine the core principles and key challenges of tech-driven innovation trends in business.

Understand and explain the implications of tech-driven innovations on businesses.

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PART 1: Tech-driven Innovation Trends: Overview

Technology & Innovations in Business

Given the threats of such disruptive innovations, companies are scrambling to jump onto the digital transformation bandwagon.

A study by Ernst & Young shows that 90% of companies are elevating digital priorities in their strategic planning over the next two years (Qui, 2018).

Similar research by Forrester also shows that 85% of companies surveyed are investing in digital transformation in 2018; 59% feel that they are already too late (Dyble, 2018).

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Emerging Technologies in Business

Technology today is evolving at such a rapid pace, enabling faster change and progress. Examples of new technologies

Artificial Intelligence (AI) and Machine Learning

Virtual Reality and Augmented Reality

Blockchain

Internet of Things (IoT)

5G

Robotic Process Automation (RPA)

Edge Computing

Quantum Computing

Cyber Security

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Helpful Works:

Weill & Woerner, 2015; Dremel et al., 2017

Business Innovations

Today, digital technology is advancing constantly, opening countless opportunities for technology-driven innovations.

Once the technology has been developed, business leaders can incorporate its features and capabilities into the business strategy.

Technology-driven innovation usually results in a competitive advantage for businesses.

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Business Innovation Types

Examples of different types of innovation includes:

Design-driven innovation revolves around advances in design that add new meaning to existing technology

Market-driven innovation occurs as a result of demand from the marketplace

Technology-driven innovation refers to the development of new business models, ideas, and processes that are enabled by new technological capabilities

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Business Innovations

Leveraging on technology-driven innovation opportunities can help boost:

Organizational speed and agility

Operational efficiency

Customer engagement

Product/service innovation

Drive ecosystem transformation

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Helpful Works:

Pisano, 2015; Dremel et al., 2017

Technology & Innovation trends for Business

1. Distributing Co-creation

Technology now allows companies to delegate substantial control to outsiders—cocreation—in essence by outsourcing innovation to business partners that work together in networks.

Example: DHL’s famous Parcelcopter is a result of co-creation process. Company executives were initially sceptical that crowdsourcing ideas would bring any value. Customer satisfaction scores are over 80% and on-time delivery performance is 97% or higher worldwide.

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Helpful Works:

Cennamo & Santalo, 2015; Davenport and Westerman, 2018; Kane et al., 2015

Technology & Innovation trends for Business

2. Using consumers as Innovators

Companies that involve customers in design, testing, marketing (such as viral marketing), and the after-sales process get better insights into customer needs and behavior and may be able to cut down cost on acquiring new customers.

Example: Bank of America has learned that mortgage offers presented through an ATM at the moment of customer contact don’t work well because customers have neither the time nor the inclination to engage with them, whereas they might be receptive to the same offers during a walk-in.

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Technology & Innovation trends for Business

3. Tapping into a world of talent

This trend should gather steam in sectors such as software, health care delivery, professional services, and real estate, where companies can easily segment work into discrete tasks for independent contractors.

Example: Study by the Bridgespan Group and the Rockefeller Foundation found that more than 80 percent favored hiring youth under 25, even those without a college degree, in part because they wanted staff to reflect more diverse or younger customers, and believed it was easier to train younger workers, particularly in technology-based skills – Walmart, Starbucks etc.

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Technology & Innovation trends for Business

4. Expanding the frontiers of automation

Companies have put in place systems to automate tasks and processes: forecasting and supply chain technologies; systems for enterprise resource planning, customer relationship management, and HR; product and customer databases; and Web sites.

Example: Merrill introduced the Cash Management Account (CMA), based on an information system that combined customers’ checking, savings, credit card, and securities accounts into a single statement, automatically investing unused funds in interest-bearing money market fun.

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Technology & Innovation trends for Business

5. Unbundling production from delivery

Unbundling allows asset-intensive businesses— factories, warehouses, truck fleets, office buildings, and data centers to raise their utilization rates and therefore their returns. This offers users access to resources and assets that might otherwise require a large fixed investment or significant scale to achieve competitive marginal costs.

Example: Amazon has expanded its business model to let other retailers use its logistics and distribution services. It also gives independent software developers opportunities to buy processing power on its IT infrastructure so that they don’t have to buy their own.

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Technology & Innovation trends for Business

6. Putting more science into management

Just as the Internet and productivity tools extend the reach of and provide leverage to desk-based workers, technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models.

Example: The cement manufacturer Cemex optimizes loads and routes by combining complex analytics with a wireless tracking and communications network for its trucks.

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Technology & Innovation trends for Business

7. Extracting more value from interactions

Technology tools that promote tacit interactions, such as wikis, virtual team environments, and videoconferencing, may become no less ubiquitous than computers are now. As companies learn to use these tools, they will develop managerial innovations—smarter and faster ways for individuals and teams to create value through interaction.

Example: Xerox provides master production schedules on- line to suppliers to facilitate just-in-time deliveries, reduced inventory costs, and improved supplier relationship

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PART 2: Core Principles and Challenges of Tech-driven innovations

Core principles and practices of Tech-driven innovation companies

Consider technology a core input

Instead of viewing technology only as enabler of their business strategies, such companies consider it as a primary input into strategy formulation – on par with other necessary variables such as customers, markets and competitors.

Example: Hewlett-Packard and Polaroid based their strategies on the unique market application of an existing integrated set of technologies rather than requiring technological breakthroughs.

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Core principles and practices of Tech-driven innovation companies

Revisit strategy and technology context regularly

Innovative companies continuously manage and revise strategy to proactively take advantage of the evolving technological environment rather than reacting to technology-induced changes to their markets and businesses.

Example: Hertz has continually leveraged wireless and satellite technologies to create new operational capabilities and customer solutions that deliver value to the customer and differentiate its services in the market.

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Source:

Core principles and practices of Tech-driven innovation companies

Uniquely manage emerging business opportunities

Companies need separate organisational procedures, structures and policies to manage emerging business opportunities differently than their core businesses – allowing market insight and technological know-how to intersect and innovations to take root.

Example: Norwich Union embarked on usage-based auto insurance policies Hertz has continually leveraged wireless and satellite technologies to create new operational capabilities and customer solutions that deliver value to the customer and differentiate its services in the market.

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Core principles and practices of Tech-driven innovation companies

Focus technology on the customers’ priorities

Companies must also concentrate on problems their customers are trying to solve and identify technologies and new business models that can impact those particular issues. This holistic perspective help companies to consider the entire business process.

Example: Siemens has not only focused on improving medical imaging product but how to make imaging information available to clinicians. Siemens “Syngo” platform provides speech recognition features and online discussion capabilities to support surgeons needs, and automates routine workflow activities.

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Core principles and practices of Tech-driven innovation companies

Manage for today’s and tomorrow’s context

Businesses need to manage a diversified portfolio of capabilities – comprised of both sustaining technologies (used to keeop pace with the innovation cycles in the existing business) and emerging technologies (technologies that can create new markets or potentially disrupt current markets).

Example: Charles Schwad Corporation has remained at the forefront of the technological advances that are pertinent to its existing business. The company begun to explore emerging technologies back in early 2000s. With its newfound capability, Schwab has dramatically improved its relationship with customers.

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Source:

Challenges of Tech-Driven Innovation

Challenge of staying on the cutting edge of emerging technologies

Artificial intelligence and computer vision are nascent technologies. The tools, frameworks and algorithms change significantly multiple times per year. Despite that technology can offer significant opportunities, the nascent nature of these technologies poses challenges for innovation.

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Challenges of Tech-Driven Innovation

2. Difficulties in managing a growing backlog

Though the business impacts of backlog vary from industry to industry, every one of these boils down to poor customer experience and innovation challenges. Though tech-driven innovation can confer a competitive advantage, companies sometimes are unable to support all of the new processes, workflows, and technologies organizations need to innovate and stay ahead of the competition.

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Challenges of Tech-Driven Innovation

3. Skill gap for new digital technologies

In a market where there is a talent shortage and shifting technology landscape, businesses are faced with challenges that undermine their abilities to embrace emerging digital technologies. Many businesses seem to be heavily dependent on their partnerships with technology companies to train their workforce. Without businesses stepping up and providing the necessary training, they fail to maximise innovations that can be driven by technology.

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Challenges of Tech-Driven Innovation

4. Cyber risks

Companies pursuing tech-driven innovations are constantly faced with new threats and vulnerabilities from the technology they adopt. Technological innovation also creates uncertainty and risk for incumbents because its outcomes can be only imperfectly anticipated. Many of such companies are undertaking security-awareness training for all employees so that everyone is informed on how to detect and respond to different attack methods.

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PART 3: Implications of technology-driven innovations on business

Implications of technology-driven innovations on business

Changed the basis of competition

Tech-driven innovative companies mostly different themselves through a new dimension that exploits an emerging market need, which makes them stand out among its competitors.

Example: A service company might shift the basis of competition from price to convenience – such innovation delivers new value to customers. The Airline industry is an example.

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Source:

Implications of technology-driven innovations on business

Break the rule of scale

Within each industry, certain set of implicit rules (selling x amount of cars to break even) often exist around scale. Innovative companies often leverage on its technology to deliver profit at a lower scale point – achieve scale advantage where previously none existed.

Example: eBay managed to create scale advantage in a market that was long considered regional and hyper-fragmented.

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Source:

Implications of technology-driven innovations on business

Help to introduce totally new business model

In each industry, a dominant business model usually prevails. Tech-driven innovation allow companies to constantly adopt alternative business models that does not rely on the traditional operating model or profit mechanisms. have the ability to disrupt the incumbent industry business model.

Example: Dell turned its industry’s traditional build-to-stock model to direct-to-consumer & build-to-order model – which allowed the company to avoid high-cost channels and excess inventory that often plagued rivals.

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Source:

Implications of technology-driven innovations on business

Keeps Organizations Relevant

Technology continually proves to be a driving factor in the need for change. These changes have led to a new age of innovation across business models and industries, allowing new businesses to enter the market with new products and services.

In pharmaceuticals distribution, McKesson provides its pharmacists with computer terminals that allow them to enter orders directly, simultaneously improving customer service and increasing switching costs.

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Implications of technology-driven innovations on business

Helps organizations to differentiate themselves

If your organization is using innovation on its processes, it’s because doing so will save you time, money, or other resources, and give you a competitive advantage over other companies stuck in their systems.

Federal Express drivers use hand-held computers and a sophisticated data management system that improve service and reduce costs, making overnight delivery services profitable and affordable to customers.

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Relevant reading List

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1. Tony Qui, “How Can You Aspire to Lead in the Digital Economy?” Ernst & Young, January 30, 2018, .

2. Jonathan Dyble, “85% of Firms Plan to Invest in Digital Transformation in 2018,” Technology Magazine, March 27, 2018, .

3. Christian Dremel, Jochen Wulf, Matthias M. Herterich, Jean-Claude Waizmann, and Walter Brenner, “How AUDI AG Established Big Data Analytics in Its Digital Transformation,” MIS Quarterly Executive, 16/2 (2017)

4. Peter Weill and Stephanie L. Woerner, “Thriving in an Increasingly Digital Ecosystem,” MIT Sloan Management Review, 56/4 (Summer 2015): 27-34.

Relevant reading List

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Carmelo Cennamo and Juan Santaló, “How to Avoid Platform Traps,” Sloan Management Review, 57/1 (Fall 2015): 12-17; Available here:

6. Thomas H. Davenport and George Westerman, “Why So Many High-Profile Digital Transformations Fail,” Harvard Business Review Digital Articles, March 9, 2018, Available here:

7. Gerald C. Kane, Doug Palmer, Anh Ngueyn Phillips, David Kiron, and Natasha Buckley, “Strategy, Not Technology, Drives Digital Transformation,” MIT Sloan Management Review and Deloitte University Press, July 14, 2015, Available here: .

8. Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard business review, 92(11), 64-88. Available here:

9. Pisano, G. P. (2015). You need an innovation strategy. Harvard business review, 93(6), 44-54. Available here:

Thank you!!!

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