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Design and Implementation of Technology Strategy:

An Evolutionary Perspective

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Technology Strategy Helps Answer Questions

Which distinctive technological competences and capabilities are necessary to establish and maintain competitive advantage ?

Which technologies should be used to implement core product design concept and how should these technologies embodied in products?

What should be the investment level in technology development? How should various technologies be sourced—internally or externally? When and how should new technology be introduced to the market? How should technology and innovation be organized and managed ?

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Capabilities-Based Organizational Learning Framework of Technology Strategy

Exhibit 1

Technologicalcapabilities

Technology strategy Experience

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Technological Competence and Capability

Core competence The collective learning in the organization, especially how to

coordinate diverse production skills and integrate multiple streams of technologies.

Three tests: Potential access to a wide variety of markets. Contribute to customer benefits. Difficult to imitate.

Core competence vs. capability

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Substance of Technology Strategy

Competitive strategy stance Value chain stance Resource commitment stance Management stance

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1. Competitive Strategy Stance

Technology choice Design concepts Physical implementation

Components Architecture

Ex: fans, sports cars

Technology leadership / technology entry timing Timing of commercial use

First mover / follower

Appropriability regimes Control of specialized assets

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1. Competitive Strategy Stance

Technology licensing Firms have to decide to market their technologies themselves or

license out 5 reasons for technology license:

Not all technologies generated by a firm’s R&D efforts fit into its lines of business and corporate strategy.

Companies may need to consider licensing their technology to maximize the returns on their R&D investments, because patents provide only limited protection against imitation by competitors.

Smaller firms may be unable to exploit their technologies on their own because of the lack of money or complementary assets.

International market development for the technology may require licensing local firms because of local government regulation.

Antitrust legislation may sometimes prevent a company from fully exploiting its technological advantage on its own.

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2. Value Chain Stance

Decide the scope of technology strategy Firms should decide “make” or “buy” (outsourcing)

Core technology / peripheral

Make the decision based on its scale and its business focus Economies of scale / scope, learning effects, synergies Ex: GE

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3. Resource Commitment Stance

Depth of technology strategy Depth of technology strategy can be expressed in terms of the

number of technological options that the firm has available Resource commitment determines the depth of technology strategy The more resource, the more technological options the firm has

Ex: Cell phone 2G-3G

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4. Management Stance

Organization fit A science-based firm that has decided to be a technology leader for

the long run probably needs to create a central R&D organization

Japanese firms use multiple layers of contractors and subcontractors in an external network to foster extreme forms of specialization in particular skills

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Evolutionary Force Shaping Technology Strategy

Exhibit 2 Determinants of technology strategy

Internal environment

External environment

Inte

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Strategic action

Organizational context

Industrycontext

Technology evolution

Technology strategy

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Technology Evolution

Technology strategy Technology capabilities Endogenous and exogenous effects Different aspects of technology evolution have been

discussed in the literature: S-Curve Dominant design Product-process interplays Technological change

competence enhancing competence destroying

De-maturity Disruptive technologies

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Industry Context

Industry structure (Porter’s five major forces ) Appropriability regime Complementary assets Increasing returns to adoption Industry standards Social systems aspects of industry development Non-market forces: government

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Strategic Action

Induced strategic action Autonomous strategic action

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Organizational Context

Organizational context serves as an internal selection environment

1.Induced process (sustaining innovation)

2.Autonomous process (disruptive innovation)

3.Balance 1 & 2 Organizational context takes shape over time and reflects the

administrative approaches and dominant culture of the firm The founders have lasting impact on the firm’s organizational

context. Ex: Foxconn (Hon Hai)

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Applying the Framework: Research

Disruptive technologies (called substitutes in Economics) Cannibalize existing technologies and undermine the strategic

position of incumbent company Ex: transistor, PC, magnetic disk drive

Organization rejection and recalcitrance New entrepreneurial firm will find and pursue new

customers

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Applying the Framework: Practice

Consistency of strategic behavior: Ex1: Crown Cork and Seal (CC &S)

Competencies / capabilities: Technology evolution: Strategic action: Organizational context: Industry context: Experience

Ex2: Marks and Spencer (M&S) Ex3: Banc One Corporation

Internal environment

External environment

Inte

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mec

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sms

Gen

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mec

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sms

Strategic action

Organizational context

Industrycontext

Technology evolution

Technology strategy

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Applying the Framework: Practice

Problems arising when a change in study is not matched. Ex1: National Cash Register Company (NCR)

EDP vs. Microelectronics

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Experience through Enactment of Technology Strategy

Technology sourcing Product and process development Technical support

Technologicalcapabilities

Technology strategy

Experience

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Technology Sourcing

Internal sourcing Depend on the firm’s R&D capacity

Ex: IBM (high-temperature superconductivity)

External sourcing Through exclusive or preferential licensing contracts or through

strategic alliances

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Product and Process Development

Product and process development activities embody important aspects of the dimensions of technology strategy

Strike the delicate balance between letting technology drive product development allowing product development and/or market development to drive

technology

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Technical Support

Two way flows of information are relevant The function commonly termed field service creates the

interface between Firm’s technical function The users of the firm’s product or services

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Interactions among Components of substance Enactment in technology strategy making

Two conjectures The substance of technology strategy should be comprehensive Technology strategy should be integrated

Enactment Reveals Substance of Technology Strategy

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Enactment Reveals Substance of Technology Strategy

Exhibit 3

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Enactment (Modes of Experience)

Substance External Technology

Sourcing

InternalTechnology

Sourcing

Product Development

Process Development

TechnicalSupport

Competitive Strategy Stance

(Choice / leadership / Entry timing / licensing)

Value chain stance(Scope)

Resource commitment stance

(Depth)

Management stance(Organizational fit)

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Conclusions

A capabilities-based organizational learning frame work of technology strategy

Determinants of technology strategy Substance and enactment in technology strategy Answer

Exhibit 2

Exhibit 3

Exhibit 1

Questions