Read my posts to learn about my way of LIFE! In short I call it LTM (Life Technology Management)

Activities related to innovation within a company can include research and development; acquisition of machinery, equipment and other external technology; industrial design; and training and marketing linked to technological advances.

Lets look at the various innovation expenditures and try to find a correlation. Three types of innovation expenditures are

1) R&D expenditures, or, more precisely, current expenditures on R&D.
2) Current innovation expenditures, which are not comprised under the heading R&D that is current non-R&D innovation expenditures. These include product design, trial production, training, acquisition of products and licenses, market analysis and other expenditures.
3) Investments in relation to innovation, as for instance the acquisition of new technology through investment in new machinery and equipment


On average, 53% of all companies in the manufacturing sector in 12 EEA Member States were considered as 'innovative' in the period 1994-96. An innovative enterprise is classified as one that has either brought new or improved products to the market, or has introduced new processes. Large enterprises were found to be notably more innovative than SMEs - 81% of businesses employing more than 250 people met these criteria. The percentages for medium-sized and small enterprises were 59 and 44, respectively.

There is a widespread agreement on the opinion that innovation is a management concern mainly in large firms, that can invest a large amount of resources in R& D activities.
The available data of some surveys seem to support this opinion; however small and medium firms do innovate; the way in which they do it is different and often not so visible.

“Large firms are more prone to have innovation expenditures than small firms, but their innovative efforts are less intense”

Looking at the qualitative differences we can observe that innovation in large firms is still often carried out by dedicated innovative units; but even if it is managed by the whole organization under the leadership of a “Coordination Board”, its characteristic is given by the planning of all the necessary steps, from acquisition of information, to exploration of technological opportunities, to implementation of new products/processes. In a few words, the most part of large (and innovative) companies pursues codified and systematic innovation strategies. These strategies are often focused on the synergies: large firms having a wide product portfolio can exploit a particular technology for more than a single family of products, and in the same time, a single product may yield experience and learning that are likely to be used in other product families.

In SMEs, on the other hand, the process of innovation is rarely planned in the above way. The improvement process of the existing products/processes is due to the entrepreneurial approach of managers more than to a real awareness of the strategic importance of innovation. In this sense, it is important to note that managers of SMEs are less linked to bureaucratic procedures than their colleagues of large firms; hence SMEs may undertake all the necessary actions to maintain a good level of competitiveness in short time.
The core differences between large companies and SMEs, when we analyze them in the perspective of the way in which they manage innovation, are:

• Spontaneous management behavior is the starting point of innovation in SMEs, more than a (formal) research activity.
• Large firms may enjoy a solid culture of innovation, supported by ad hoc structures and units, and required funds for R&D. On the other hand SMEs are more flexible and ready to capture, interpret and implement all the signals coming from the outside, even if they have modest or nonexistent budgets for R&D.
• Large companies can plan their future, but are slow to change and less reactive. SMEs do not have enough economic resources enabling them to plan, but are sufficiently flexible to react when facing new external conditions.

From these statements, we can also understand why there is a general agreement on the observation that innovations in SMEs are less visible than they are in the large ones (and this may be one of the reasons why SMEs are said to be less innovative.)

Typically, in assessing rates of innovation, innovative activity is reflected by the use of one or both of two indicators – an input indicator (for example, R&D expenditure, percentage of skills of different sorts in the labor force) or an output indicator (notably patents). But there are so many difficulties that are involved (like the effectiveness of patents as a barrier to entry varies across sectors). Clearly, none of these input or output indicators of innovation are ideal; So, at best, we need to apply a range of innovation indicators, in each case interpreting the results with care.
Some of the innovation indicators include efforts of (R&D) employees, expenditures on innovation, use of subsidies and other arrangements, extra-organizational co-operation, knowledge-diffusion practices, use of external knowledge sources, use of information technology (IT), training & education, market research, design and testing, presence of bottlenecks like poor market knowledge, non-qualified personnel, lack of finance, introduction of new products, services and/or processes, effects of innovative output (profit, growth), possession of patents and Organizational renewal activities.

Is quantity of resources (like R&D expenses, etc) correlated with innovation?

No, not necessarily, because it may never be IMPLEMENTED, nor satisfy a real market need. Quantity of resources allocated can help us to find a new way of perceiving or reconfiguring data.

Innovation, by contrast, is the implementation of such activity.

The main argument for free global trade is that countries can gain from trade if they specialize in producing goods in which they have a comparative advantage, those goods that can be produced at relatively low opportunity. But one of the most controversial issues against globalization is the concern that free trade hurts the environment, both locally and globally. However many researchers argue that free trade can help the environment. Some ways in which free trade benefit the environment are: countries with little trade and centralized decision making contaminate more than countries with free markets; Polluting industries have comparative advantage in rich countries with tighter environmental regulations; and that subsidies are harmful to the environment.
According to Douglas Irwin in the greatest environmental disasters in recent years have taken place in Eastern Europe and the former Soviet Union, countries that were among the most isolated countries of their era. With little trade or interaction with the outside world, “The horrible air pollution caused by state-run . . .industries . . . owe nothing to free trade, but resulted from a system of centralized decision-making that valued resources less wisely than a system of decentralized markets with well-established property rights and prudent government regulation.
One argument against free trade is the “pollution haven” hypothesis, which states that free trade will prompt polluting industries to move to poor countries where environmental regulations are lax. Nevertheless Copeland and Taylor find no evidence to sustain this hypothesis. By the contrary their results suggest that rich countries have a comparative advantage in capital-intensive polluting industries, so these industries are likely to stay in rich countries even if environmental regulations are tighter. So free trade can benefit the environment since Polluting industries have a relatively low opportunity cost in countries with tighter environmental regulations.
But the main argument that supports that free trade can benefit the environment is that government efforts to promote domestic industries with subsidies are harmful to the environment. For example, when fisheries started to decline, government subsidies were introduced to relieve the industry’s economic problems. But this increased the number of fishermen and depleted stocks even further. Today, excess fishing capacity exists worldwide, leaving many formerly productive fisheries in collapse. Now economists suggest that had the industry been left to find its own balance, fish populations would not have been exploited to extinction. Catch rates would have declined to such low levels that further fishing became unprofitable. There are many examples of perverse subsidies that are both costly to the taxpayer and cause environmental damage. But the beneficiaries such as fishermen and farmers are politically powerful, and the subsidies live on despite repeated attempts to kill them off.

International trade has the potential to benefit all participating countries because of the following reasons: Comparative advantage and the gains from trade; Misallocation of resources: Resources will be diverted to producing goods for which there is a high opportunity cost rather than for goods with lower opportunity costs; Costs of tariffs exceed benefits .For example, it was estimated that it costs U.S. consumers $60,000 or more to buy U.S. made clothing for each job "saved" by protectionism; Retaliation: Often, countries imposing tariffs on imported goods find their exports are subject to high tariffs; Negative Rates of Protection. Tariffs on industrial goods increase costs to domestic producers diminishing their international competitiveness; And because free trade Promotes competition in domestic markets. Eliminating trade barriers and tariffs may be very important in promoting competition in domestic markets in which monopolization might otherwise result. Especially in small countries, economies of scale may create natural monopolies where domestic markets are small. However, producers can achieve economies of scale by producing for both domestic and foreign markets. Also if a country trades, the competition from imports may stimulate grater efficiency at home. This extra competition may prevent domestic monopolies/ oligopolies from charging high prices. It may stimulate greater research and development and the more rapid adoption of new technologies.
On the other hand countries typically restrict their trade because of the perils of trade, which in many cases lead to less competition. For example:
Protection of infant industry, there may be industries that are in infancy, but which have a potential comparative advantage. With out protection, these infant industries will not survive competition from abroad; therefore if countries do not protect these industries they may allow the establishment of foreign-based monopolies in the future; Changing comparative advantage and the inflexibility of markets. Comparative advantage can change over time, either natural or as result of deliberate policies, thus free trade may reflect past comparative advantages rather than the present. These industries could be regarded as infants and thus warranting protection. Prevent dumping and other unfair trade practices. A country may engage in dumping by subsiding its exports or firms may practice price discrimination by selling at lower prices than its actual costs to gain market share and eliminate competition in foreign countries.
To sum up, We can say that free trade can led to competition by eliminating trade barriers if they have mature industry with comparative advantage and foreign countries are not subsiding their own industries; and if the comparative advantage can be sustained through a long period. On the other hand free trade can lead to less competition when an industry is an infant or senile industry; when company is using unfair practices or a government is subsiding an industry.


Technological progress increases economic growth; it cut the average cost of production and it creates new products to the market. But R&D requires of investment and a resource of companies, so governments protects these investments by patents and intellectual property rights to encourage organizations to invest in developing new technologies. However in the World Trade Organization the TRIPS agreement (Agreement on Trade Related Aspects of Intellectual Property Rights) has come under increasing criticism in a variety of areas. The agreement has been described as unbalanced, in that it disadvantages developing countries and prevents them from setting and implementing policies to achieve legitimate development goals. And that TRIPS agreement harms developing countries in the areas of food, biodiversity and agriculture, and health.
First of all TRIPS rules must be fair and balanced. Following this philosophy TRIPS want to provide incentives for innovation and research so society can benefit from it. But the poorest countries argue that their societies do not benefit from these agreements. In first place, developed countries have little knowledge to protect. And in second place when patent law comes into force they will suddenly have to pay more to import knowledge in knowledge-intensive products. TRIPS shifted the global rules in favor of the industrialized countries. Therefore the more advanced developing countries may eventually gain as well from patent protection as they develop further.
Undeveloped nations argue that WTO agreement on TRIPS disregards the interests of farmers in developing countries because of the following reasons: Farmers constitute majority population of most of the developing countries and will directly be affected by this agreement. TRIPS agreement is threatening the real owners of natural resources on demands being made by some of the industrialized countries. TRIPS are a protectionist device promoting corporate monopolies of seeds and, genes. It shifts the balance of control away from public interest to the private gains of patent holders. The main concern in this issue is that transnational companies, through genetic modification technology, will acquire patents and will, eventually, control everything from genes, seeds, plants, and agricultural harvests.
Other concern is that transnational companies have an unfair advantage against farmers. Since farmers lack the scientific capability to innovate and patent genetic materials and are not even able to catalogue the natural resources they currently have. On the other hand, bio-tech companies are putting increasingly more resources and expertise to patent these. This is also true in developed countries where farmers are not able to contend with companies.
One of the main arguments against TRIPS is that access to essential medicines is very unequal across different countries and regions:
• 75% of the world’s population live in developing countries.
• They account for 8% of the pharmaceutical sales.
• 1/3 of the world’s population does not have access to essential medicines.
• In the poorest parts of Africa and Asia, over 50% of the population do not have access.
• There are 33.4 million people infected with HIV worldwide, of which 83% are in sub-Saharan Africa and another 11% in Asia and Latin America.

The main reasons for these differences are the inability of governments to provide access to medicines. The most common types of problems in turn hinder access to medicines are:
• Prohibitive drug prices
• Lack of research and development (R&D)
• Supply problem
• Regulatory problems

The main argument concerning health is that many medicines are not like CD-ROMs, Barbie dolls or computer games. For millions of people they are a matter of life and death. Many pharmaceutical companies have offered essential medicines at reduced prices – although not at a loss – to developing countries. Many governments and public health civil associations welcome these schemes, although they emphasize that there is a need for drugs to be offered for longer periods and for a wider range of products. They do not see the utility of preferential pricing schemes as a long-term solution. Such schemes ultimately leave governments dependent upon the goodwill of pharmaceutical companies; they may also effectively restrict governments by tying them to certain conditions. Industry insists that charitable schemes of this sort can be made available as long as they are needed: however, developing countries would like the freedom to be able to independently plan and implement their own national health strategies.


In the second half of the 1990s the United States was experiencing its longest business cycle expansion. This caused speculation that a new economy was emerging, on the basis of a strong productivity growth and rising competition, which lead to high output and low inflation. Particular noteworthy was the substantial increase of the Total Factor Productivity (TFP) that occurred in the United States after 25 years of disappointing productivity performance. Along with these productivity gains, substantial investment was taking in Information Technologies and Communication equipment (ITC) The stock ITC related capital has increased dramatically since the mid 1970s but accelerated after 1995 with the development of the World Wide Web. So those countries ahead in the technological race Technology will tend to get further ahead as the dynamic forces of technology enhances their competitiveness, improve their profits, and provide yet further potential technological advances. So governments should have technological polices to encourage firms to conduct R& TD. Some policies that governments can apply to improve the knowledge networks in the economy are:
Public Provision: by implementing this policy the government might provide the necessary R&D itself, either through its own research institutions or by funding to universities and other research councils.
Subsidies: the government might provide subsidies to companies conducting R&D in IT industries, this policy not only would reduce the risks and cost for business, but it would ensure that the outcome from R&D activities is more rapidly diffused through the economy than might otherwise be expected.
Cooperation in R&D: The government might encourage the cooperation between business to invest in R&D, because the benefits of that can be achieved if the technological developments are widespread in the economy. The government might take various roles like a facilitator bringing private companies together or as an active partner being involved in the R&D process. The main advantages of this policy are it will: reduce the potential for duplication, reduce the costs of R&D, spread more efficiently the outcomes of new technologies in the economy, and allow a more efficient way to allocate resources.
Intellectual rights protection: the strengthens of legal rights over the development of new technologies will encourage business to invest in R&D, as they will be able to protect their investments in from used from other companies.
Training and Education: a key factor in implanting and developing new technologies in an economy is the skills and education of its workforce, so the government might: give subsides to companies that invest in their workforce training and education as well invest in education via scholarships, subsides to universities etc.


The economies of the industrialized countries are being reshaped by the rapid development and diffusion of advanced information and communications technologies. Access to information is unprecedented, and the ability to process and exchange information has helped businesses increase efficiency. So the business firms, industries or economies, which is able to successfully utilize these global trends, will gain a competitive advantage. One-way of doing so is setting standards within the IT industries. Some reasons are:
One reason is that historically companies that have set standards in emerging technologies have gained substantial advantage in their markets. Some examples are General Electric how was able to consolidate its position in the generation and distribution of electricity industry by developing and setting its own standards.
Another important reason is that Companies that don’t set standards now may not be able to compete successful against other producers because some segments of the IT industry (for microprocessors, operating systems, packaged business applications) are virtually closed off because the leading companies in the market, like Intel and Microsoft, set the standards. Other segments of the industry require large capital investments and specialized skills or have already been preempted by earlier entrants. Some larger countries like China and India are, however, in a more advantageous position than small nations since they can negotiate with multinationals for production and technology transfer in return for market access.
Also because the companies that set up new standards in ITC may benefit from patents that would allow them to set up a temporary monopoly. Therefore gaining a significant bargain power. One example is Microsoft that has been accused of being a monopoly in both its operating system business and its browser application.
And finally because the knowledge and expertise gain in the R&D process to establish the standards will give them a competitive advantage against other countries that doesn’t invest in IT developments.
To sump up countries that are engaged in developing IT standards in the new economy will not achieve an economic power because of the high cost to compete in this sector, the monopolies that can emerge in this sector and because they will lack of the human resources experts to compete in the future.

Today's world is also becoming more and more global. The links and interactions between countries and regions are developing rapidly and the need to integrate different kinds of expertise is a must for successfully implementing any project, be it a development project, a public action or a private business. This is especially true of "emerging" countries that offer enormous opportunities due to their big potential and rapidly evolving environment.
Transferring IT technologies do not only benefit emerging countries but also it benefit developed countries as well. On one hand emerging countries benefit because IT transfer help them gain as sustainable growth in their economies by increasing its knowledge, skills and methodologies to improve the whole production cycle. Where technology has been effectively transferred, there should be a visible change - from the person to the production system as well as compatibility with the needs, in the institutional framework, skills, training, financial capacity, promotion, and active support of endogenous capacity and appreciation of the natural environment of the recipient country.
On the other hand the main reasons why developed countries are interested in transfer technology to developing countries are:
Help partners in emerging nations. By transferring technology developed countries may avoid the breaking of traditional subcontracting links that existed between large corporations and small/medium enterprises in developed countries.
The opportunity to access new markets: Liberalization of decades of socialistic practices (both political and economic) on the part of developing countries. This has effectively helped open up their economies to previously has previously rejected external investment, as well as create greater opportunities in a global level playing field for their industries and professionals. A good example is MATAV case a Hungarian own-state company that was sold to Ameritech and Deutsche Telekom (an American and a German telecommunication companies). During the whole process of acquisition there was an intensive technological investment to transfer new technologies to MATAV.
Develop the necessary infrastructure to invest in these countries. A growing sense of hollowing-out on the part of advanced countries, where rising costs related to production, labor, transportation, communication etc. has prompted them to move out of their home countries to emerging economies. For instance in the last years their has been a continue investment from software companies in India mainly because the labor cost to program in India is significant lower then in more developed countries.
Finally we can say that Technology transfer not only benefit develop emerging countries. By helping them gain a sustainable growth. But it also help the developed countries by generating access to new markets, consolidating partnerships with companies based in emerging countries and by accessing to countries where they can produce goods at a relative low opportunity cost.


Reference:


• Anderton, Alain “Economics.” Second Edition. Causeway Press. 1995.
• http://www.daviddfriedman.com/Academic/Standards/Standards.html
• http://www.countercurrents.org/en-venkat090104.htm
• http://www.csrstds.com/fundeco.html
• http://www.epfl.ch/tsd/context.htm
• http://www.gdrc.org/uem/techtran.html
• Miles, David and Scott Andrew “Macroeconomics, Understanding the Wealth of Nations” John Wiley & Sons, Inc. 2002.
• Report on the Conference organized by The Netherlands Ministry of Foreign Affairs and The Quaker United Nations Office, Geneva A TRIPS agenda for development: Meeting food, health and biodiversity needs12-13 October 2001, The Hague.
• Sloman, John and Sutcliffe “ Economics for Business” Prentice Hall Europe 1998.

Let me start of by defining what fashion is to me. Fashion is something, which is uncommon. People crave to have products, which are not easily available in the market. Owning such products gives them a feeling of being unique in the world. Most of the clothing products are “fads” which are easily accepted by consumers who always want change. Fads enter the market quickly, achieve peak sales and die quickly. They last only a short time and tend to attract only a limited following. People are ready to pay high prices at the start, as these products tend to be unique. As the products become common in the market, the demand for these products comes down. In order to keep the demand for such products at a constant pace, the manufactures reduce the price, sell products at throwaway prices and attract consumers with less buying power. These consumers with less buying power as a result of discounts always like to be associated with branded and fashionable products even when the products are at the end of the season.

Every product goes through a lifecycle – it is born, goes through several phases, and eventually dies as newer products come along in the face of changing tastes, technologies, and competition. Technological innovations or improvements introduced in car industry have made it easier to develop sophisticated cars with different size and shape of a car’s body. These innovations have increased the fixed costs dramatically and the net result an increase in total costs

Conversational(hearing) : Data exchanged between human beings or group of human beings
Advantages :
• Typically, conversational data are combined with each other in order to provide comparative results which can provide a more complete understanding
• Chat, bloggs, journals, letters,meetings,telephone conversation and orally told stories are all interesting methods of data gathering and will help to motivate people, feel less tired and make it more lively .
• Collect lot of information in less time
• A problem can be solved with great ease by exchanging information
• Collaborative data gathering yields qualitative and quantitative inputs
Disadvantages :
• Time consuming process which requires patience
• Sometimes confusing with too much of data
• Differences of opinions/data gives rise to chaos
• Complex procedures to collect data
• Always anticipate and be fully prepared to avoid unnecessary surprises
• Can offend people who are sensitive
• Always need to be prepared to ask the next question
• Data collected could have been influenced by personal biases or perspectives (gender, ethnicity, age, academic/social theories adhered to, etc.) and hence can mislead

Observational(seeing) : Data that we collect from observing our environment
Advantages :
• Less time consuming
• Simple
• Seeing is believing
Disadvantages :
• Inferred from own personal experiences (tempts people to assume things from their own experience).
• We only see what our eyes want us to see…seeing is believing. So we might not be able to look at things at a different perspective
• Often people perceive their behavior and beliefs as an ultimate norm, forgetting that their culture is just one of the multiple cultures existing in the world. A person acts according to the values and norms of his or her culture; another person holding a different view might interpret his or her behavior from an opposite standpoint. This situation creates misunderstanding or conflicting data
• Our thinking is driven by brain patterns -- beliefs, values, assumptions, stereotypes, emotions, culture, level of understanding, short-term and long-term memory, and entrenched views. These patterns or mindsets are invisible but the behaviors and resultant performance they generate impact observational data.
• Tends to be less qualitative as the results obtained cannot be compared
• Cannot be used for quantitative data gathering.
• Cannot cope with the changing dynamics

Experiential (smell) : Data collected as a result of an intervention in the environment. ‘Learning by experience,’ behavioural knowledge
Advantages :
• Able to get accurate results as it always causes the environment to change/respond and in turn generate new data
• Gives a competitive edge as the data is highly upto date
• Can help us to find the trends in the industry
• Data collected from customer response can help to identity areas of improvements
Disadvantages :
• Unstructured interviews/questionnaire may be used to collect data
• Complex procedures which might yield confusing information
• Honesty and trust (Is the participant being truthful in exchanging data?) Respondents might try to give the answers that they think will make them appear in a good light.
• Sometimes participants do nothave full knowledge of what is being asked
• Difficult to observe body language and gestures closely to read between the lines. Kinesic analysis examines what is communicated through body movement. This approach is based on the assumption that all human beings, although they may be unaware of it, act and react to situations nonverbally as well as verbally. Kinesics can be especially useful when employed in conjunction with other qualitative methods such as interviews and narratives to triangulate data. Kinesics must be used thoughtfully and carefully, as movements and gestures can be easily misinterpreted and presenting findings without giving context renders the data useless

Conclusion :
All of us collect/sort data through our three senses : sight, hearing and smelling.
But each of us receive, organize,interpret this sensory information in our own individual way. Our individual perception plays a vital role in selecting, organizing and interpreting data to form knowledgeable picture of the world.

Decisions about which kind of research method to use may also be based on one’s own experience and preference, the subject being researched, the proposed audience for findings, time, money and other resources available. Too little data can lead to false assumptions about behavior patterns. Conversely, a large quantity of data may not be effectively be processed. It is important to realize that all the three methods discussed (Conversational, Observational and Experiential) can be used in conjunction with each other to make the data more valid and effective.

Knowledge Management provides Tools designed to leverage an organization's information by converting it into knowledge. It enables organizations to efficiently aggregate, associate and disseminate knowledge to the parties that require it to conduct critical business activities. While most organizations have an abundance of information, it generally has not been digested or leveraged. As a result, this information that once had the potential to become useful knowledge remains a collection of stats and facts. Due to the vast amount of information and the infinite number of situations in which it can be used, it becomes progressively more difficult to provide the appropriate knowledge at the proper time. The inability to effectively capture information and convert it into knowledge has proven to be a source of significant inefficiencies for many organizations.

Knowledge Management not only enables organizations to intuitively associate and organize knowledge, but it also presents it in a manner that is efficient to digest. This approach has repeatedly created an impact on many organizations and provided them with the opportunity to improve profitability.

Focus of Knowledge Management in 2009 and beyond:

• Improving the performance of organizational systems and processes
• Preventing future bottlenecks and solving existing ones
• Cashing in on opportunities
• Persuading people to share
• Leveraging and using the uniqueness of the organization “to capitalize on the mix of people, processes, services and products that defines its identity and place in its competitive market”
• Building and exploiting the organization’s intellectual capital effectively
• Making knowledge more visible throughout the organization
• Increasing the abilities of employees to improve services and products
• Increasing customer satisfaction with services
• Enabling staff to handle a wider range of issues
• Shortening the durations of calls and reducing the escalation rates of problems
• Balancing the productivity objectives for KM with the requirements of knowledge workers' core jobs
• Integrating knowledge and the process of knowledge management with the organization’s strategic direction
• Taking on a specialized set of aims and objectives within a human resource management perspective, where recruitment may be seen as not being done to fill job vacancies, but with the idea of filling knowledge and skills gaps
• Capturing tacit knowledge: Most of the organizations focus on using knowledge to control costs, and maintain or increase market share and competitive advantage. This leads to a concentration on developing the technology required to capture and store the organization’s explicit, and more easily measured, knowledge base, almost to the exclusion of the more elusive, difficult to capture, tacit knowledge
• Identifying why knowledge management initiatives fail
• Viewing the organization as a human community capable of providing diverse meanings to information outputs generated by the technological systems, instead of the traditional emphasis on command and control.
• De-emphasizing the adherence to the "way things have always been done" so that such prevailing practices may be continuously assessed from multiple perspectives for their alignment with the dynamically changing external environment
• Encouraging diverse viewpoints by avoiding premature consensus on issues that need deeper analysis of underlying assumptions. Often, viewpoints of persons with differing backgrounds and expertise can provide a much broader focus that is essential for completely grasping the essence of the core issues, particularly when the changing context demands a fresh look at what was yesterday defined as a "benchmark" or a "best practice."
• Encouraging greater proactive involvement of human imagination and creativity to facilitate greater internal diversity to match the variety and complexity of the wicked environment.
• Giving more explicit recognition to tacit knowledge and related human aspects, such as ideals, values, or emotions, for developing a richer conceptualization of knowledge management
• Implementing new, flexible technologies and systems that support and enable communities of practice, informal and semi-informal networks of internal employees and external individuals based on shared concerns and interests
• Making the organizational information base accessible to organization members who are closer to the action, while simultaneously ensuring that they have the skills and authority to execute decisive responses to changing conditions
• Defining and communicating knowledge performance.
• Identifying key knowledge positions. In some positions, the way employees deal with knowledge can mean the difference between company success and failure. These jobs will need knowledge performance targets to match.
• Developing knowledge-sharing proficiencies. People across the organization need to know what it means to share and use knowledge. A dedicated team will need a special skill set to act as knowledge "brokers."
• Rewarding knowledge-sharing behaviors. Rewarding can be planned, explicit, and purposeful. If knowledge performance objectives are not part of a manager's job, the company will have little success in spreading the word.
• Encouraging networking and respect communities. Face-to-face or team meetings have a natural dynamic which transfers tacit knowledge. While KM needs to be incentivized and strongly embedded, be careful not to stifle Communities of Practice (COPs), which are often spontaneous hubs for knowledge transfer and a fertile seedbed for new ideas.
• Capturing best practice. From customer service to technical problems, most scenarios have already occurred. A little knowledge will go a long way.
• Mapping knowledge. "Content management" is often overlooked as part of a KM strategy. Mapping pulls together all sources of knowledge and creates a "virtual roadmap" so people can easily find the information they need, and helps lock KM into a course aimed at meeting business objectives.

For any HR practises to be successful one needs to identify the cultural agents and address them. Culture is changing but the process is far from being finished.
“Culture is, in fact, the very web of our lives” Philip R. Harris, Managing Cultural Difference, vol1, P.364

How to measure a culture change is a big question. We would like very much to know, it would make us rich, as many companies do not know how to assess if a change is effective within an organization. At least, changes should be measured all along the process by:
• Analyses of the feedback
• Adequate questionnaires to workers and managers. Questionnaires should extract workers point of view about the company’s defined objectives, goals, vision, strengths and weaknesses.
• Bonding between the management and the employees.
• Sense of security among the employees
• Responsibility and the initiative of the employees
• Surely, there is no overall recipe as all the factors of changes: strengths, weaknesses, processes, context, leaders, cultures are not the same from one company to the other and from one country to the other.

From my experience I can conclude the following pre-conditions that should exist in order to successfully implement large scale initiatives like TQM:
• Track record of effective responsiveness to the environment
• Ability to successfully change the way it operates when needed
• Champion leaders
• People need to feel a need for a change
• Mechanisms or structures to enable the change to occur and become institutionalized
• TQM processes and models of employee participation are such mechanisms
• Participative orientation
• Interdependency relationship
• Shared responsibility
• Definition of purpose
• High communication
• Focused future
• Focused tasks
• Creative talents
• Rapid response
MACRO
• Crisis
• Leaders championing new ideas
• Continuity of political leadership
• Healthy civic infrastructure
• Key leaders having shared vision and goals
• Trust among those in power
• Outside resources
• Models to follow
MICRO
• Top management support
• Customer focus
• Long-term strategic plan
• Employee recognitions and training
• Employee empowerment and teamwork
• Measurement and analysis of products and processes
• Quality assurance

Bad time to implement TQM
• If an organization has been historically reactive and has no skill at improving its operating systems, there will be both employee skepticism and a lack of skilled change agents
• If it has significant problems such as a very unstable funding base, weak administrative systems, lack of managerial skill, or poor employee morale, TQM would not be appropriate

Well in the beginning, I expected all ready-made solutions to the various IT problems. I was of the opinion that one can develop Strategic IS on the fly and then query the system and get all the answers to the problems. Following were some of my misbelieves of SIS:
• They have an internal focus
• They can be easily copied and applied to various situations
• They cannot change the way the firm competes
• They are aimed at cost reduction
• They are technology driven
• They are a single all-encompassing strategic system


My experience has helped me to appreciate and understand various frameworks and models. It has also helped me to reflect back on the problems / failures I experienced in my previous IT project. My experience has helped me to work on alternate strategies and back up plans.

As I started to record my thoughts and insights regarding the difference in my understanding of the subject, patterns started to emerge.
Following each of these patterns/leads/experiences and digging them as far as possible, I started to create new ideas, which sounded very ridiculous to me as an IT consultant, but I didn’t let my mindset to censure any ideas at this stage. The way to come up with one great idea is to generate many of them and this has helped me to

• Having a clear-cut business strategy (even if it’s a dummy business strategy as of now)
• Anticipate new IT developments
• Associate people and politics

My learning outcome assumed that I had

• The power to make decisions in the organization
• Clearly understand the goals and to translate business objectives and strategies into action plans
• People management skills
• Change management skills

My mental map changed when I started to ask the following thought-provoking questions from different perspectives:

• What are the success factors in SIS?
• How is this situation similar to others I have faced before?
• Why do IT strategies fail?
• How would someone else solve this problem?
• What are the problem or obstacles on launching IT project?
• What experts could I call upon to help me solve this problem?
• What are some excellent sources of information on this topic or related areas?
• If this problem involves another person, how does he or she view this situation?
• How to anticipate new IT developments?

I realized that a simple solution could be the answer for a very complex problem only when we dig deep and think out of the box. My mind is now open to all ideas - big and small. I will take a mental "walk" around my problem. Imagine hanging it from a hook in the center of the room and then walking slowly around it, viewing it from all sides.

I have realized the importance of devoting time for thinking, reflecting, connecting, acting and creative problem solving. It deepens our inner conscious that often gets overlooked during the busy-ness of our everyday lives. It allows us to consider our opportunities and challenges, goals and dreams. It frees us from needless worry and allows us to focus on more constructive pursuits. It's been said that successful people have as many problems as anyone else. What gives them such tremendous leverage over their lives is a simple, systematic method for analyzing and solving their problems


Most of the time my actions were the consequence of my past experiences. I always let my mindset interfere with my actions. While undergoing the process of learning, I slowly started to know the importance of seeing and perceiving things in a different way. My mental map changed when I Started to ask myself incisive, well thought-out, open-ended questions -, questions that cannot be answered with "yes" or "no." Open-ended questions can yield a treasure trove of valuable information and insights. This helped me to cultivate an "insight outlook" -- consider information, trends and other data from multiple perspectives, and try to identify the inferences, underlying trends or connections they may contain. And when we do so, our perspective changes. Solutions that may have been hidden from us are now suddenly obvious. Obstacles to the progress, seen in a new light, are often much smaller than they appeared to be. And barriers that once seemed insurmountable often evaporate under this rigorous scrutiny.

Well, please read ahead if you'd like to know more about Strategic Information System.

Strategic Information Systems
An information system that enables business is considered a strategic information system. A strategic information system is defined as an information system that creates or enhances the company's competitive advantage or changes the industry structure by fundamentally changing how business is conducted. "Strategic information systems are conventional informational systems used in innovative ways. For the most part, they are transaction based, simple, evolve over time, and solve problems." (Chalero 2000)
“Strategic information systems change the goals, operations, products, services, or environmental relationships of organizations to help them gain an edge over competitors” Source: Kenneth c Laudon, Jane P. Laudon “Managing the digital firm” 8th Edition

What are the characteristics of an SIS that make it strategic?

Unique
First of its kind
Hard to imitate
Raises entry barriers.
Creates new dependencies
(i.e. provides solutions to the five forces)

Frameworks & methodologies
IT solution providers and consultants employ (often proprietary) methodologies. Many times, these methodologies are supported by tools that contain a rich encyclopaedia/dictionary of high-level data structures of almost universal applicability [Bytheway, 1995]. These are then "specialised" or customised to fit the needs of individual clients or customers. The methodologies are typically supported by a specific structural view of the organisation and IT, as embodied in underlying more theoretical frameworks such as the Zachman framework [Zachman, 1987; Evernden, 1996].
Strategic planning methodologies are unique to each application. There is no "one size fits all" methodology. Strategic planning methodologies come in different shapes and sizes. Each methodology is a conglomerate of best practices that are tailored to specific organizational needs. Strategic business and information system plans that are implemented today may not meet the needs of doing business tomorrow. Furthermore, the strategic planning methodologies that were effective today may not be effective tomorrow. As a result, business and information system plans, as well as, strategic planning methodologies are continuously evaluated in order to guarantee that the desired long-term business gains are achieved.
Three Era Model

Data Processing Era
To improve operational efficiency by automating information-based processes

Management Information Systems Era
To increase management effectiveness by satisfying their information requirements for decision-making

Strategic Information Systems Era
To improve competitiveness by changing the nature or conduct of business –IS/IT as a source of competitive advantage
Why use strategic frameworks?
• structure to analyze complex systems
• relation between business strategy and information technolgy becomes clear
• it is a shorthand for complex relationships
• it highlights dimensions of importance
Negative aspects of Strategic Frameworks:
• they are not theories, they cannot be proven
• they are not empirically verifiable
• they are not enough for making decisions, they are descriptions
• they try to categorize, make static, relationships which are dynamic
• they do not explain how to use information technology
Types of Frameworks
Frameworks can be used by managers to understand the firms business environment and to seek opportunities for improvement. We will discuss some of the frameworks in detail in the next few classes. Here again, is a summary of the types of frameworks.
• Foundation Frameworks - Porter's Forces Model (Porter,1980), InterOrganization Systems, Wiseman's Strategic Thrusts. These help to understand the industry structure.
• SIS Opportunity Seeking Frameworks - Value Chain Analysis, Strategic Options Generator. These examine where the firm fits within the industry and searches for strategic opportunities.
• Strategic Impact/Value Framework - Strategic Grid. This Assesses the value and cost of adding IT. What will IT do the the firms position in the industry?
• Contingency Factors Framework - Critical Success Factors, Sustainability Analysis. These identify factors which are unique or specifically significant to an individual firm or industry.
How do firms identify and gain a strategic advantage?
Frameworks can be used by managers to understand the firms business environment and to seek opportunities for improvement. This is one way to create categories of frameworks.Different frameworks use different initiatives to achieving a Competitive Advantage
Initiative #1: Reduce Costs

• Lower Costs
• Lower Price
• Bigger Market Share

Initiative #2: Raise Barriers to Entrants

• Patenting
• High expense of entering industry

Initiative #3: Establish High Switching Costs

• Explicit Switching Costs
• Fixed and nonrecurring
• Implicit Switching Costs
• Indirect costs in time and money of adjusting to a new product


Initiative #4: Create New Products and Services

The advantage lasts only until other organizations in the industry start offering an identical or similar product or service for a comparable or lower price.




Initiative #5: Differentiate Products and Services

• Product differentiation
• Brand recognition

Initiative #6: Enhance Products and Services

Initiative #7: Establish Alliances

• Combined service may attract customers
• Lower cost
• Convenience

Initiative #8: Lock in Suppliers or Buyers

• Bargaining Power
• Purchase volume
• Strengthen perception as a leader
• Create a standard


Michael Porter's Competitive Forces Model

A wide variety of schemes visualizing the strategic planning process are available. In essence they usually consists of a series of steps (building blocks).
The analysis starts with defining the business and formulating a vision and then goes on to assess the internal and external environment. The strategic planning process ends with the financial budget and goes into a feedback loop

The main steps in the strategic planning process are
Analysis- Planning -Implementation -Control

The essence of formulating a strategy is relating a company to its environment. Therefore the analysis phase is crucial to the outcome of the total planning process. A major part of the analysis phase is a diagnosis of the external environment. Several tools and techniques have been developed to assist the planners in evaluating the external environment. Of particular interest is the assessment of the profit potential in the industry.

Michael Porter's Competitive Forces Model (commonly referred to as Porter's Five Forces Model) is by far the most widely used framework for an assessment of the profit potential in the industry. The collective strength of the so-called five forces differ from industry to industry. Each of those five forces is based on structural features (dimensions), which collectively impact the profit potential. All five forces jointly determine the intensity of the industry competition and profitability. The strongest forces become crucial from the point of view of strategy formulation.


The Porter Competitive Forces Model is an industry level analytical model used to describe the external influences on the firm, especially the theats and opportunities. The model links
• Customers / buyers (bargaining power),
• suppliers (bargaining power),
• competitiors (position of competitors),
• substitutes (products and services),
• industry rivalry (new entrants).
Potential New Entrants:
• can lower profit margins,
• lower prices to consumers,
• decrease the size of market shares,
• the threat of new entry can encourage existing firms to put up barriers to entry.
Barriers to entry:

These are the important structural components with an industry to limit or prohibit the entrance of new competitors. The major components are scale economies (advantage of experience, learning and volume), differentiation (brand image and loyalty), capital requirements (new entrants will face a risk premium), switching cost involved by the customer, access to distribution channels and cost disadvantages (patents, location, subsidies).

Sources of barriers to entry are:
• raising switching costs,
• economies of scale,
• high investment in IT base,
• economies of experience,
• limited access to a choice of distribution channels,
• government policy, and asymetric treatment of firms.
Rivalry among existing competitors:

In most industries, especially when there are only a few major competitors, competition will very closely match the offering of others. Aggressiveness will depend mainly on factors like number of competitors, industry growth, high fixed costs, lack of differentiation, capacity augmented in large increments, diversity in type of competitors and strategic importance of the business unit.
• Rivalry invokes counter moves.
• Rivalry can result in lower prices, long run reduced profit margins, and weaker industry.
• Or it can result in quality improvements, diverse products.
The intensity of rivalry is influenced by the following industry characteristics:
1. A larger number of firms
2. Slow market growth
3. High fixed costs.
4. High storage costs or highly perishable products
5. Low switching
6. Low levels of product differentiation.
7. Strategic stakes are high
8. High exit barriers
9. A diversity of rivals
10. Industry Shakeout
Substitutes or new products:
These are products or solutions that basically perform the same function but are often based on a different technology. Depending on the level of abstraction nearly everything can be a substitution. In general the only factor that really matters is a shift in technology. These substitutes put pressure on providers to improve products. Price can increase if the new product in non-standard. Substitutes can raise the cost to compete. Often they introduce a non-sustainable advantage because others will try to imitate.
Powerful Buyers:
Powerful Buyers can force prices down, can bargain for better service, can improve quality.
A buyers strength is characterized by:
• the percent of its suppliers sales that it is responsible for,
• if they purchase standard products,
• if they face few switching costs,
• if they can buy (integrate) its supplier firm.
Powerful Suppliers can demand higher prices, or decrease quantity or quality.
Suppliers are powerful if
• they can lock-in buyers,
• provide differentiated products,
• pre-select buyers that are not in a position to threaten,
• if they can merge with customers.
Through addressing these dimensions which make up the Five Forces we have outlined factors which will be taken into account and applied to support the formulation of Information Strategy. It will still be the expert’s in-sight who will assert the value of impact of each individual variable. Another aspect is the relative weight of each of the factors in the overall assessment.
Use of Competitive Strategies
The individual advantages of the firm determine the firms ability to deal with threats from the market. In other words, how do firms compete? Porter has outlined several Competitive Strategies:
• Product Differentiation: use of innovation to produce different products or services that cannot be easily copied. The firm attempts to develop brand loyalty. This strategy can address threats such as: position of competitors and substitutes.
• Focused Differentiation (niche): the firm uses a niche strategy, it targets its product for a specific section of the market. It tries to serve the market segment better than the competition. This addresses: position of cometitors and new entrants.
• Develop tight links to customers and suppliers: the firm can try to lockin either suppliers or customers. They try to lock suppliers into a delivery time table and price structure. They also can try to lock buyers into a price structure. The idea is to raise the switching costs of the supplier/buyer or try to lower the bargaining power of the supplier/buyer. This addresses: bargaining power theats and position of the competitors.
• Become the Low Cost producer: Offer the same quality or level of service as competitors at a lower price. This addresses: threat of new entrants and the position of the competitors.
• Establish Partnerships: participants in partnerships can share costs, benefits and risks. Often this redefines the firms relationship with competitors. This addresses: position of competitors and the threat of new entrants.