2.1MOT & types of innovation

Possessing excellent technology and succeeding in business with it are not the same thing. Managing technology coherently from R&D through commercialization and business development, and tying it to competitive advantage and profit—this is the perspective of MOT (Management of Technology). As the bridge between corporate strategy and technology, the IT strategist judges "which technology, what form of innovation, done in-house or with partners." This section frames innovation on three axes (product/process, sustaining/disruptive, open/closed) and covers, as strategic choices rather than memorized definitions, which policy is optimal under constraints of a firm's technical capability, funds, and speed.

2.1.1Product innovation and process innovation

• Product innovation renews the product or service itself, delivering value customers have not had before. It is a source of differentiation and can create new markets, but carries large uncertainty over market acceptance.
• Process innovation renews the processes, manufacturing methods, and workflows that produce a product, improving cost, quality, and speed. It underpins the competitiveness (cost leadership) of existing products but alone rarely creates new customer value.
• The two are complementary. A typical sequence is to open a market with a new product (product innovation), then secure profit through mass production and efficiency (process innovation), with the emphasis shifting over the business life cycle.

2.1.2Sustaining/disruptive, closed/open

• Sustaining innovation continuously improves a product along the performance axis existing customers value (speed, capacity, accuracy, etc.). It is the domain established firms excel at, but once performance exceeds customers' required level it can become over-engineering.
• Disruptive innovation is initially inferior on the existing performance axis, but captures a new customer segment on a different value axis (cheaper, smaller, simpler) and, as its performance improves, encroaches on the mainstream market. Established firms tend to overlook it (the innovator's dilemma, next section).
• Closed innovation completes R&D entirely in-house and locks up the results and IP. It excels at control and secrecy but is slow and confined to the firm's own knowledge. Open innovation takes in external technology, ideas, and talent (and lets its own technology out), accelerating development and supplementing capabilities the firm lacks.

The IT strategist of a mid-sized industrial-equipment maker is about to propose a technology strategy for a new IoT-sensor business to the management meeting. The market is expanding rapidly and a large overseas rival has already launched a product. The firm is strong in embedded control but weak in cloud-side data-analytics platforms and AI-model development; building these from scratch in-house is estimated to take over two years to market. Here the strategist judges the innovation policy as "build everything in-house (closed) vs partner via open innovation to take in external resources." The axes of judgment are the firm's technical capability (weak in cloud/AI) and market speed (rival ahead, rapid growth = a short first-mover window). Building the cloud-analytics platform and AI models from scratch in-house has the merit of locking up IP and control in-house, but a two-year delay risks missing the market window, and since it would grow capabilities the firm lacks, the failure probability is high too—being dragged along by the assumption that "self-reliance is superior" is a strategic error here. By contrast, if the firm partners with external platform companies or startups in the cloud-analytics and AI domain (technology licensing, joint development) and concentrates on crafting the embedded sensor body that is its strength—open innovation—it can cut time-to-market by more than half and supplement, from outside, the capabilities it lacks. Yet open innovation has its price: depending on outsiders even for the core differentiating technology (such as the sensor's measurement algorithms) makes it easy to imitate and forfeits long-term advantage. The optimal answer is therefore the separation "lock up the core technology—the embedded sensor body—in a closed way, and go open, partnering externally, for the non-core complementary domain of cloud/AI." Open vs closed is thus not a two-way creed but a resource-allocation judgment against capability and speed constraints: which technology is core (a differentiation source to lock up) and where should the firm buy speed by borrowing outside strength.

2.1.3Section summary

• MOT is the perspective of managing technology from R&D to commercialization and tying it to advantage and profit
• Innovation is framed on three paired axes: product/process, sustaining/disruptive, closed/open
• Open vs closed is not a creed but a resource-allocation judgment against capability and speed: lock up the core, partner externally for the non-core