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Selection:Selection:Understanding Technology Understanding Technology Evolution and Technology Evolution and Technology
StrategyStrategy
Technology Management
Activities and Tools
ContentsContents
DefinitionContextualizing “selection” within:
– The TM framework– Technological evolution
Strategy approaches / conceptsTechnology strategy
Selection ProcessesSelection Processes1 Technology audit2 Forecast the technology3 Analyse and forecast the environment4 Analyse and forecast the market/user5 Analyse the organization
6 Develop the mission7 Design organizational actions
8 Implementation
Strategicanalysis
Strategicchoice
Exploitation
TM framework and StrategyTM framework and Strategy
The major TM processesThe major TM processes
Identification
Selection
Acquisition
Learning
ExploitationProtection
Technology EvolutionTechnology Evolution
Technological innovation process Technological innovation process is a result ofis a result of::
Inventions, discoveries CreativitySerendipitous A function of economic demand
and growth
Complex and long process
The process of technological advance:the combination of chance events and
inventions (variation), direct social and political action of
organizations in selecting between rival technical regimes (selection),
as well as by incremental, competence-enhancing, puzzle-solving actions of many organizations learning-by-doing (retention).
Technology develops in response to the interplay of history, individuals, and market demand. Function of both variety and chance as well as structure and patterns.
SO:
Technological progress constitutes an evolutionary system.
Retention
Variation
Selection
Technological DiscontinuityCompetence enhancingCompetence destroying
Era of Incremental ChangeElaborate dominant designArchitectural innovation
SubstitutionDesign competitionCommunity-drivenTechnical change
Dominant Design
A technology cycle. (Source: Tushman and Andersen, 1997)
Era of Ferment
Competence-enhancing discontinuities significantly advance the state of the art yet build on, or permit the transfer of, existing know-how and knowledge.
Competence-destroying discontinuities significantly advance the technological frontier, but with a knowledge, skill, and competence base that is inconsistent with prior know-how.
Technology life cycle/ S-curvesTechnology life cycle/ S-curves
Stage 1. Technology developmentStage 2. Technology applicationStage 3. Application launchStage 4. Application growthStage 5. Technology maturityStage 6. Degraded technology
Strategy conceptsStrategy concepts
Strategic thinkingStrategic thinking
Where are we?Where do we want to go?How will we reach to our goal?
If a ship does not know where to go, none of the winds can be helpful.
(Chinese proverb)
Technologies are occasionally included Technologies are occasionally included explicitly in typical corporate strategy reviews explicitly in typical corporate strategy reviews
and corporate planning, since:and corporate planning, since:
Most managers are not trained in science or engineering.
Little knowledge on the process of technological change.
Limited experience and lack of adequate frameworks.
Technological change proceeds slowly: significant change requires 5-10 years.
Most firms are organized around the production process not the technological innovation process.
Strategy stepsStrategy stepsInternal & external analysisPlanning
– Mission– Vision– Values– Strategic goals– Strategy
Execution Evaluation and control
MissionVision
Evulationİnternal factors
FormulationEvulationexternal factors
Long-andShort-termobjectives
Generate,evaluate,And select appropriate
strategy
Establish functionalUnits,organizationalStructures and policies
Implementation Set plans of actionAnd schedules
Allocateresources
Develop performanceMeasures and reward
systems
Evaluation Evaluateresults
Feedback
MissionMission
Mission: The reason behind the existence of a firm.
HP: Technical support to the advancement and welfare of mankind.
Merck: To protect human life.Walt Disney: To make people happy.
VisionVision
Vision: Creativity and foreseeing the position of the firm in near future.
Nike: To beat AdidasWal-Mart: To become 150 billion $ worth
of by year 2002General Electric: To be number one or two
in all markets where it has production and services.
ValuesValues
Values: Expectations and norms that affect the behavior of employees as well as their relationships
Walt Disney:Believe in peopleDevelop and diffuse American-way of lifeCreativityConsistency and detail-focused
Strategy goalsStrategy goals
Strategy goals needs to be:clearmeasurableaggressive but reachablewithin time-perspective
StrategyStrategy
Institutional Strategy:growth (revenue, ….)sustainability (market share,…)
Operational strategies:cost leadershipdifferentiationfocus (market, region, product)
Example of strategyExample of strategyStrategic goal: To become the biggest
distributor for beauty products in Istanbul
Strategies:To construct centers in Asian and European
side of IstanbulTo increase distributor contracts with
producers To increase imported beauty productsTo increase sales personnel
Strategy implementationStrategy implementation
Operational plansShort, medium, and long-term plansPeriodically reviewed - revisied if neededWritten action plans
Diffusion into the organization
Strategy evaluation and Strategy evaluation and measurementmeasurement
Comparison with the goalsFinding the differences and their reasonsUpdating the plan if needed
Resource-based view/ Resource-based view/ Capabilities viewCapabilities view
& strategy& strategy
Strategy is the art of creating valueStrategy is the art of creating value (Source: Normann and Ramirez, 1993)(Source: Normann and Ramirez, 1993)
It allows a company’s managers to identify opportunities for bringing value to customers and for delivering that value at a profit.
2 resources that matter in today’s economy: * competence and * relationships (customer and supplier)
Innovate: Not just add value but reinvent it.
Core competenceNot only performance improvement but also
opportunity creation.
Performance improvement includes quality, costs, cycle time, logistics, and productivity, while
opportunity creation consists of growth, new business and market development, strategic direction.
Core competencies are: The collective learning in the organization,
especially how to coordinate diverse production skills and integrate multiple streams of technologies.
The organization of work and the delivery of value.
Communication, involvement and a deep commitment to working across organizational boundaries.
Does not diminish with use.
1 2 3
Business1
Core product 2
Core product 1
Competence1
Competence2
Competence3
Competence4
4 5 6
Business2
7 8 9
Business3
10 11 12
Business4
Source: Prahalad and Hamel, 1990
3 3 TTests to identify core competencies. ests to identify core competencies. Core competenceCore competence
(Source: (Source: Prahalad and Hamel 1990Prahalad and Hamel 1990))
1) provides potential access to a wide variety of markets.
2) should make a significant contribution to the perceived customer benefits of the end product.
3) should be difficult for competitors to imitate.
Embedded skills that give rise to the next generation of competitive products cannot be rented in by outsourcing and original equipment manufacturer supply relationships.
the costs of losing a core competence can be only partly calculated in advance.
core competencies take time.
Core products are the components or subassemblies that actually contribute to the value of the end products.
Well-targeted core products can lead to economies of scale and scope.
Technology strategyTechnology strategy
Business GoalsObjectives
AndNeed-drivenExpectations
Business GoalsObjectives
AndNeed-drivenExpectations Environmental scanning
• innovations and competitive assessment
Environmental scanning• innovations and
competitive assessment
Technologyawereness
ofmarketableinventions
Technologyawereness
ofmarketableinventions
Business strategy
and planning
Business strategy
and planning
Technologyforecasting
andplanning
Technologyforecasting
andplanning
Technologydesign
developmentand
advancement
Technologydesign
developmentand
advancement TechnologyAdoption andintroduction
TechnologyAdoption andintroduction
Ongoingimprovement inthe innovation
and technology management process
Ongoingimprovement inthe innovation
and technology management process
TechnologyobsolescenceTechnologyobsolescence
Managing theindividual and organizationalconsequencesof technology
Managing theindividual and organizationalconsequencesof technology
Assessment oftechnology
outcomedimensions
Assessment oftechnology
outcomedimensions
Technologyimplementations,
project monitoring,and control
Technologyimplementations,
project monitoring,and control
• Intervention• Internal and external veritable• Trade-off analysis• Justification for new ideas• Corrective action loops
• Intervention• Internal and external veritable• Trade-off analysis• Justification for new ideas• Corrective action loops
• Product strategy• Science• Industry analysis• Functional strategy• Market and manufacturing analysis
• Product strategy• Science• Industry analysis• Functional strategy• Market and manufacturing analysis
• Productivity• Employment• Quality of working life• Organizational impact• Human factors• Product quality
• Productivity• Employment• Quality of working life• Organizational impact• Human factors• Product quality
Types of industriesTypes of industries(1) well defined boundaries & competition by
price and the perceived quality is stable over time
(2) well defined boundaries & competition by price and perceived quality changes over time
(3) weakly defined boundaries & competition by the ability to generate new product/market combination.
Types of strategyTypes of strategy
Performing better than competitors on an already existing dimension of competition
Establishing a new dimension on which to compete
Creating a new product/market combination
T Strategy for dynamic competitionT Strategy for dynamic competition
** Take into consideration the constituent technologies embodied into the product and the production process used to manufacture it
** Extend the technology analysis to the whole value chain.
** Formulating a technology strategy means defining the 'trajectory' by which technological resources are accumulated, acquired and used
Some possible technology strategies: Some possible technology strategies: (source: (source: Chiesa, Giglioli and Manzini,Chiesa, Giglioli and Manzini, 19991999))
Competence deepening Competence fertilizingCompetence complementingCompetence refreshingCompetence destroying
Example of a Strategy Tool used in audits:Example of a Strategy Tool used in audits:S W O T AnalysisS W O T Analysis
InternalAnalysis
ExternalAnalysis
SStrenghttrenght
WWeaknesseakness
OOpportunitypportunity
TThreathreat
External analysisExternal analysis
Focuses on the identification of the value perceived by the customer and its evolution.
Demands could be not only the satisfaction of existing needs but also the creation or the explicitation of latent or non-articulated needs.
Internal analysisInternal analysis
Identifying the competence and skill base Benchmarking skills against other firms
(the breadth addresses the range of applicability of a certain skill, whereas the depth addresses the degree of appropriability of a skill)
Identifying the critical skills
(S)(S)
What are the strength areas?
Where are the best performances?
(W)(W)
What could be improved?
What are the weaknesses?
What could be prevented?
Be realistic
Consider the views of
others
Self-AssessmentSelf-AssessmentSelf-AssessmentSelf-Assessment
SWOTSWOT
(O)(O) Changing technology
changing markets
changing government policies
changing life-style
What new opportunities arise?
(T)(T) What is the position of competitiors?
What are the risks of change?
SWOTSWOT
Always leave Blank
STRENGTHS (S)1.2.3.4. List Strenghts5.6.7.8.
WEAKNESSES (W)1.2.3.4. List Weaknesses5.6.7.8.
OPPRTUNITIES (O)1.2.3.4. List Opportunities5.6.7.8.
SO STRATEGIES1.2.3.4. Use strengths totake5. Advantage of opportunities6.7.8.
WO STRATEGIES1.2.3. Overcome4. Weaknesses by taking5. Advantage of opportunities6.7.8.
THREATS1.2.3.4. List Threats5.6.7.8.
ST STRATEGIES1.2.3.4. Use strengths to5. avold threats6.7.8.
WT STRATEGIES1.2.3.4. Minimize weaknesses 5. And avoid threats6.7.8.
Identification
Operations plan DevelopmentPlan
Production plan
Acquisition plan
Exploitation plan
Marketing plan
Financial plan
Implementation
Measurement andevaluation
Gap analysis/Value analysis
Selection: Strategic choices
Outputs
Businessstrategy
Learning
Protection plan