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Series on Technology and Social Priorities NATIONAL ACADEMY OF ENGINEERING Managing Innovation Cases from the Services Trusties Bruce R. Guile and James Brian Quinn Editors NATIONAL ACADEMY PRESS Washington, D.C. 1988
National Academy Press ~ 2101 Constitution Avenue, NW ~ Washington, DC 20418 NOTICE: The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is auton- omous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of En- gineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievement of engineers. Dr. Robert M. White is president of the National Academy of Engineering. Funds for the National Academy of Engineering's Symposium Series on Technology and Social Priorities were provided by the Andrew W. Mellon Foundation, Carnegie Corporation of New York, and the Academy's Technology Agenda Program. This publication has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee. The views expressed in this volume are those of the authors and are not presented as the views of the Mellon Foundation, Carnegie Corporation, or the National Academy of Engineering. Library of Congress Cataloging-in-Publication Data Managing innovation: cases from the services industries/ Bruce R. Guile and James Brian Quinn, editors. p. cm. (Series on technology and social priorities) Bibliography: p. Includes index. ISBN 0-309-03926-6: $32.50. ISBN 0-309-03891-X (pbk.): $22.50 1. Service industries Technological innovations Management. I. Guile, Bruce R. II. Quinn, James Brian, 1928- . III. Series. lID9980.5.M343 1988 658.5/14-dcl9 88-19631 CIP Copyright ~3 1988 by the National Academy of Sciences No part of this book may be reproduced by any mechanical, photographic, or electronic process, or in the form of a phonographic recording, nor may it be stored in a retrieval system, transmitted, or otherwise copied for public or private use, without written permission from the publisher, except for the purposes of official use by the United States Government. Printed in the United States of America
Preface Services now account for more than two-thirds of the U.S. gross national product and close to three-quarters of U.S. employment. This is not a new phenomenon, but important questions remain unanswered. How sophisticated are services industries in their use of technology? Are the productivity im- provement issues in services fundamentally different from those in manu- facturing businesses? Is the competitive performance of U.S. services industries threatened by underinvestment in technology or by poor management of innovation? What is the effect of global economic integration brought about in part by advances in services such as transportation and communications- on the structure and performance of U.S. services industries? These ques- tions, and other similar questions, are addressed in this book and its com- panion volume Technology in Services: Policies for Growth, Trade, and Employment. The two books-one focused on the management of technology in services and the other on public policy issues-set forth an important message: ser- vices such as banking, software development, communications, air trans- portation, and health care are technologically dynamic and crucial to the performance of both U.S. manufacturing and the entire economy. Whether the task is linking world financial markets through computer and communications networks, lowering the cost of delivering volatile materials or urgent packages, or designing dams and bridges for U.S. or foreign governments, the challenges to technology and management in services in- dustries are significant. Productivity in such industries suffers from many of the same problems identified for manufacturing industries. As the papers in this volume demonstrate, capital availability, human resource development, . . .
1V PREFACE quality, and scale economies are as important in services as they are in manufacturing. R&D or innovation in services industries can create a com- petitive edge just as they do in manufacturing. In short, if reasons exist for distinguishing between the importance and character of manufacturing and services, they do not arise from the role of technology in the industry. The principal focus of this volume is on examples of the application of technology in services businesses, either at the level of an individual business or at the level of an industry. Much of the material in this book was presented at an NAE symposium entitled "Technology in Services: The Next Econ- omy" held in Washington, D.C., on January 28 and 29, 1988. I would like to thank James Brian Quinn, who chaired the NAE activity on technology in services, and Bruce R. Guile, the principal staff officer for the project, for their efforts. Together they assembled a first-rate advisory committee, worked with the advisory committee to organize an excellent workshop and subsequent symposium, and have moved quickly to get this material published. Also, on behalf of the Academy, I would like to thank the advisory committee (listed on page 195) for the project end the authors who participated in the workshop and symposium. Special thanks are due to Jesse H. Ausubel, director of the NAE Program Office, Stephen L. Murphy, an NAE summer fellow who helped in the early stages of the project, H. Dale Langford, NAE editor, and to Marjorie D. Pomeroy, administrative assistant in the NAE Program Office who, although she has moved on to other employment, was involved in the project for almost 18 months. ROBERT M. WHITE President National Academy of Engineering