Kior’s technology innovation process Essay Example

technology, products, customers (biorefineries), and applications (Betz, 2003; Schilling, 2008). According to Schilling (2008), networks of pioneers who leverage knowledge/resources from various sources are powerful drivers of technological advancements. Additionally, an individual with moderate knowledge in a specific field can generate more creative solutions than someone with extensive knowledge solely explaining why the technology was successful at universities.There are two ways to describe the alteration in innovation. Firstly, it can be categorized based on the type of innovation (Product, Process or Service). Secondly, it can be classified based on the extent to which innovations (Transformational, Radical or Incremental) change existing market situations.

According to Abernathy and Utterback (1978) and Damanpour and Gopalakrishnan (2001), as presented in Damanpour et al. (2009), the KiOR invention falls under Product Innovation and has radically transformed the "process" of deriving biofuels from feedstock.

Furthermore, Johannessen et al. (2001) conducted empirical research on different levels of novelty and concluded that the level of radicalness is the most distinctive factor in determining the novelty of innovation.

On one hand, researchers like Rosenbloom and Cusumano (1987) and Bassalla (1988) argue that technological change is gradual and incremental. However, Tushman and Philip Anderson (1986) present contrasting views suggesting that technological change can be rapid and discontinuous, progressing through "waves of creative destruction" as proposed by Schumpeter in 1934.From a speciation standpoint (Day and Schoemaker, 2000), scientific progress may be gradual, but the discontinuous "creative destruction" occurs when there is a shift in application sphere, as exemplified by KiOR. Despite Biofuels being prevalent in the market for many years, KiOR has disrupted it with its disruptive BCC technology, completely transforming how the world, particularly the US, approaches the

growing energy demand.

Key factors that contribute to KiOR's dominance in design include increasing returns to adoption, as described by Schilling (2008). This means that the more a technology is adopted, the more valuable it becomes. This can be attributed to learning-curve effects where greater production and usage enhance understanding and development, resulting in improved performance and lower costs.

Another crucial factor for increasing returns is network externality effects. Network outwardness effects occur when the value of a good increases for users as more people use it. There are several reasons for this phenomenon, such as compatibility demands or availability of complementary goods. In industries with increasing returns, only a few companies may capture most of the market due to winner-take-all dynamics. The value of a technology to buyers encompasses various aspects like productivity, simplicity, and cost. In industries with increasing returns, this value heavily relies on both the technology's installed base and availability of complementary goods.Customers' evaluations of technology involve both objective and subjective information. As a result, their perceptions and expectations are just as important, if not more so, than the actual value provided by the technology. Companies can influence customers' perceptions and expectations through advertising and public announcements regarding preorders and distribution agreements.

The dominance of one technology over another in terms of market share is determined by a combination of network externality benefits and technological utility. In certain industries, achieving the full benefits of network externalities requires only a minority market share level. These industries often have multiple designs that coexist.

Key Success Factors

1. Having knowledge of intervention is crucial as it is a complex procedure that necessitates extensive user preparation.
2. Sourcing a

large amount of feedstock is essential, particularly accessing biomass on the front end. The excess in the mush and paper industry in the southeastern United States can be utilized for this purpose; however, feedstock prices will likely increase over time.
3. Acquiring sufficient biomass to fill the biorefinery for production economics is crucial in the long term. This may involve working with individual landowners producing biomass and establishing contractual relationships; building these relationships could take several years with assistance from agents or intermediaries.
Having knowledge of the contact action and thermal snap on the production terminal is crucial. The text also discusses BCC's Multiple Dimensions of Value, KiOR's Successful Timing of Market Entry, and the Scheme of first mover. There is a table that lists the advantages and disadvantages of being a first mover. According to Schilling (2008), first movers can benefit from brand loyalty, technological leadership, control of scarce resources, and exploiting buyer switching costs. They may also profit from increasing returns to adoption. However, some studies argue that first movers have higher failure rates due to research and development expenses and consumer ambiguity.Second movers can benefit from the research and development and marketing efforts of first movers, which allows them to create a technology that is less costly to develop and corrects any mistakes made by the first mover. However, first movers may encounter difficulties in underdeveloped provider markets, distribution channels, and the availability of complementary goods. These challenges can make it challenging for them to successfully introduce their new product or service. Additionally, immature enabling technologies can hinder the performance of the new technology. The primary disadvantage for first movers is uncertainty regarding customer

demands since customers themselves may be unsure about what features or form they desire in a new innovation. This uncertainty can lead to significant losses for companies until customer preferences become more certain. Factors that influence when it is best to enter the market include the advantages offered by the new innovation, the state of enabling technologies and complements, customer expectations, competitive entry threats, industry returns, and a company's available resources.Regarding customer preferences, end-users desire affordable prices and environmentally-friendly energy. Refineries should aim to sell their products at costs that are compatible with existing systems in order to meet these demands.

The cost of care for KiOR's strategic location can be evaluated using a rating system. A green rating represents 100% compatibility, yellow represents 50%, and red indicates 0%. Based on the information provided in the tables above, it is evident that factors such as the presence of a biofuels research center, close connections with DOE's NREL, and attractive grants make Denver (Colorado) an appropriate choice for establishing KiOR's central offices.

On the other hand, Houston (Texas) is considered the preferred location for manufacturing works due to its proximity to feedstock and availability of skilled labor.

When evaluating the BCC technology used by KiOR, various perceived risks must be taken into account. According to Day and Schoemaker (2000), risk profiling helps managers consider three specific types of risks associated with this technology. These risks need to be thoroughly analyzed alongside financial, competitive, and organizational impacts before making any investment decisions or commercializing the BCC technology.

Early-stage financial analysis involves estimating development costs, market size evaluation, determining product pricing and sales potential, as well as assessing market penetration possibilities.Competitor's actions

in the business realm can involve various activities, such as hostile or friendly takeovers, cross-licensing of technology, legal challenges to intellectual property positions, and engaging in price competition. The impacts of new engineering on organizations also encompass the need for appropriate organizational structures for production and gaining access to market channels.

Moreover, McDermott and O'Connor (2002) argue that KiOR's BCC technology, which is a revolutionary innovation still in the Concept Development stage of the New Product Development Process, carries significant uncertainty both in terms of market acceptance and technological aspects. Consequently, it is crucial for KiOR to have a comprehensive understanding of their clients' (biorefineries) market needs to mitigate risks associated with this emerging technology.

The main challenge identified from the analysis revolves around how to effectively commercialize this technology. To address this issue, Twiss (1986) emphasizes the importance of environmental forecasting as a means to capitalize on opportunities and tackle potential threats arising from future changes in the business environment. Furthermore, having insight into how competitors will respond to environmental changes would be particularly advantageous for KiOR since they hold a leading position in this technology and should anticipate competitive entries into the market.In the realm of environmental forecasting, KiOR must assess future opportunities and threats by utilizing Porter's 5 forces model and conducting a SWOT analysis. To further enhance their analysis, it is recommended by (2000) and Twiss (1986) that KiOR also take into account market restraints and demand-side thresholds as they can impact the progression of their technology and available resources. Since biorefineries represent the largest market for KiOR's BCC technology, it is vital for them to determine if implementing BCC would be profitable

and whether the resulting product would meet industry standards. Furthermore, KiOR should ascertain which market to target with their BCC technology: either the intermediate or main market. Following Day and Schoemaker's advice from 2000, selecting market contexts for a product rather than products for a fixed market context is advised. By thoroughly exploring various markets, KiOR will be better equipped to make informed decisions. In order to cater to diverse consumer demands and preferences, it is suggested by (2000, 70) that KiOR needs to analyze market heterogeneity and create well-structured marketing plans for each target group. Additionally, Morone (1993) explains that companies often acquire knowledge about markets in relation to the areas they explore; thus demonstrating how market diversity can limit expansion opportunities for KiOR. Consequently, choices regarding market research and adaptation carry significant implications for learning and strategic adjustments as highlighted by Nelson et al., 1982; March et al., 1958).Additionally, it is crucial for KiOR's management, as well as its investors like Khosla Ventures and shareholders, to assess the profitability of the project. This assessment includes estimating expenses such as research and development costs, pilot plant construction, capital investment in manufacturing facilities, and initial marketing costs. It is important to understand the financial aspects of the project in order to make informed decisions and ensure the benefit of all stakeholders involved.
Estimating Gross Sales Volume is a difficult task but necessary for determining success. Twiss (1986) proposes a model for predicting sales volume based on market size, market share, product life, and chance of commercial success. The pricing of a product plays a significant role in sales volume and is influenced by the perceived value

of the product and the pricing of competing products. Profitability depends on both price and cost, making it challenging to assess without a finalized product.

References:
- Abernathy, W.J. and Utterback, J.M. (1978), Patterns of industrial innovation, Technology Review 80:40-7.
- Betz, Frederick (2003), Managing Technological Innovation: Competitive Advantage from Change
- Day George S., Schoemaker Paul J., "Wharton on Managing Emerging Technologies"Damanpour, F. and Gopalakrishnan, S. (2001), The dynamics of the adoption of product and process innovations in organizations, Journal of Management Studies, 38, 45-65.
Damanpour, F., Walker, Richard M., and Avellaneda, Claudia N. (2009). Combinative Effects of Innovation types and Organizational Performance: A Longitudinal survey of service organisations. Journal of Management Studies.
Cozijnsen, A., Vrakking, W. (1993). Handbook of Innovation Management. Blackwell Business.
Johannessen, J. A., Olsen, B., and Lumpkin, G. T. (2001). Innovation as newness: what is new, how new,and new to whom? European Journal of Innovation Management,
4(1), 20-31.
McDermott,C.M.,and O'Connor,G.C.(2002). Managing radical invention: an overviewof emergent strategy issues.The Journalof merchandiseInnovationdirection,
19 ,424-438.See for illustration ,Giovanni Dosi,"Technological Paradigmsand Technological Trajectories,"ResearchPolicy,voll I983 ),pp .147 -62;George Bassalla ,The EvolutionofTechnology(Cambridge ,England :CambridgeUniversityPress,I988); Roichard RosenbloomandMichaelCusumano,"Technological Pioneeringand CompetitiveAdvantage:TheBirrhofthe VCR Industry,"CaliforniaManagementReview(I987),pp .51-76.See for illustration ,MichaelTushmanandPhilipAnderson ,"TechnologicalDiscontinuitiesandOrganizational Environments ,"AdministrativeScienceQuarterly,voll3I(I986),pp .439 -454;andRichard D'Aveni,Hpercompetition(NewYork:FreePress,l994)The text contains references to various books on the topics of innovation, technology, and management. These include:

1. Rogers, E.M. (1995), Diffusion of Innovations.
2. Schumpeter, Joseph A., "The Theory of Economic Development" (1934).
3. Tidd, J., Bessant, J., and Pavitt, K. (1997), Managing Innovation: Integrating Technological, Market and Organizational Change.
4. Twiss, B., Managing Technological Innovation (1986).
5. Verburg, Robert M., Ortt, J.Roland, and Dicke Willemjin M.Dicke(2006), Managing Technology and Innovation.
6. Melissa A.Schiling,"Strategic Management of Technological Innovation" (2008).
7. Joseph G.Morone,"Winning in High-Tech Markets: The Role of General Management: How Motorola, Corning

and General Electric have built Global Leadership through Technology" (1993).
8.Richard Nelson and Sidney Winter,"An Evolutionary Theory of Economic Change"(1982)
9.James G.March,and Herbert A.Simon,"Organizations"(1958).

These books cover a range of concepts related to innovation management in different industries such as high-tech markets or general management strategies for building global leadership through technology.The authors provide insights into diffusion theory,cultural change,and strategic decision-making processes that contribute to successful technological innovation within organizations.These texts highlight the importance of integrating technological advancements into market strategies while considering organizational changes.

Overall,the mentioned publications offer valuable knowledge on managing innovation effectively in various settings