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Technology Planning
Prof. Sushi lDepartment of Management Studies, IIT Delhi
[email protected]
Session-VI
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Technology Planning
Forecasting Technological and M arket Trends and Changes
It should involve - top-down-bottom-up
- side ways participation
- Credibility gap between R & D and managers.
- Technology planning involves the recasting of
technology terms and objectives into business termsand
objectives.
- It helps R & D to translate their technology know-howinto
business know-how.
Scenario of Social, economic, industrial and technological
trends and changes.
- Next 25 years or larger
- should identify the levels of maturity andpotencies of the
core technologies of the SBU.
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Present SWOT Analysis
- Defining current core technologies Products, Marketsand
Competition
- Technology audit of the firms
Future SWOT Analysis
- Formulating the technology plan
- Alternative future scenarios are explored andalternative
technology options and target markets areevaluated over an
appropriate planning horizon
- Firms internal R & D, Technology acquisition andalliance
strategies as well as its business strategy aredetermined
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TechnologicalKnowledge
MarketKnowledge
Technological/ SocialForecasting
Technology Assessmen t
AlternativeScenarios
TechnologicalStrategy (ies)
DesiredScenario (s)
R & D Budget
Allocations
Longer - Term Shorter - Term
NondirectedFundamental
Research
Directed AppliedResearch
Promary/ExperimentalDevelopment
SecondaryDevelopment
TertiaryDevelopment
& Design
Pilot/Prototype
- Production
Individual ProjectsR & D staff
Bottom UpPlanning
Individual ProjectsDevelopment/Engineering Staff
Top DownPlanning
Side-ways:
MarketingServices etc.
Side-ways:Production
Figure 4.4. Technology planning
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CORPORATECORE TECHNOLOGY
COMPETENCIES
CORPORATEBUSINESS
PLANCORPORATETECHNOLOGY
STRATEGY
TECHNOLOGY SYSTEMS
TECHNOLOGY BY INDUSTRIAL
SECTOR M ATRIX
CORE PRODUCTDEVELOPMENT
STRATEGICBUSINESS UNITS
PLANS
TECHNOLOGY S-CURVES
PRODU CT DEVELOPMENT
CYCLE MANAGEM ENT
STRATEGICBUSINESS UNITS
MARKETS
NEXT-GENERATIONTECHNOLOGY
SYSTEM
CONCURRENTENGINEERING
PRACTICES
COMPETITIVEBENCHMARKING
STRATEGICBUSINESS UNITS
CURRENT P RODUCTS
TECHNOLOGY BOTTLENECKS
PRODUCTION IMPROVEMENT
PLAN
SBU TECHNOLOGY ROADMAP
SBUPRODUCT-DEVELOPMENT
MAP
INDUSTRIALSECTOR
VALUE CHAI N
LONG-RANGERESEARCH
PLANS
Figure 4.4 Technology planning process in a diversified
firm.
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Specify (2)Technology
Strategy
Assess (1)CurrentSituation
Select (3)Technology
Portfolio
Execute (4)TechnologyInvestment
Transfer (5)Results for
Deployment
Secure (6)Long-TermPositions
BusinessObjectives Resources
Appli cations Targets
Competitive Position
Company Strengths
Market Needs
Approach Criteria
Organizational Systems Returns
andImpacts
External Environment
Operational Assets
Trends
Concepts
Projects
Adjustments
Plans Results
BusinessEnvironment
THE ASSETS P ROCESS
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CONCEPTUAL M ODEL OF THE TECHNOLOGY SOURCIN G PROCESS
I. Defining Business Needs and Benefits
VII.
WorkingTogether an d
AchievingSuccess
VI.
Negotiatingand
Finalizing Agreements
V.
EvaluatingOpportunitiesConfirming
Fit andInterest
IV.
ConductingSearch-and-
Find Activities
I I I .
Organizing thesearch Effort
I I .
Developing aGame Plan
VII I. Ensuring Organizational Learning and Im provement
I. Defining Business Needs and Benefits
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Indigenization
strategy
Absorptionstrategy
Innovationstrategy
Phase outstrategy
Acquisitionstrategy
Developmentstrategy
Developcapability
to exploittechnology
Decayingor
Obsolete
Technology
Incremental
Innovations
Leapfrogging innovations
Radical innovations
Acquire state of - art technology
Interaction of Technology Strategy Components
Costomization
Leapfrogging innovations
Technological B reakthroughs
Develop stat of - art technology
Cosmetic
innovations
S t a t e o
f - a r t
S
t r i v e
f o r
F o r e c a s
t , A s s e s s m e n
t , a n
d P l a n n
i n g
T e c
h n o
l o g y
Transferstrategy
To JVPs And oth er
Customers
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I N
T E R N A L E N V I R O
N M E N T
G e n e r i c
T e c
h n o
l o g
i c a
l
C a p a
b i l i t i e s
& P r
o d u c
t s
NEW
R e v a
l u -
t i o n a r y
N o r m a
l
OL D
NEWOLD
GenericMarkets
& Opportunities
ExternalEnvironment
Figure 4.3. Strategy and the technology market matrix
T h l Pl i B i d
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Technology Planning at Business andCorporate Levels
SBU - Technology needs to be explicitlyconsidered as a
determinant of competitiveadvantage
Corporate - Portfolio of SBU, - financial appeal oftechnological
possibilities and opportunities
Koerner from GEs vice president
The best contex t for a discussion on theimpact of t echnology
on a par ti cu lar ly compet it iveenvironment i s the indiv idual
bus iness.
Corporate level R & D
- Common core technologies
Prahalad and Hamel - Many organisations have grown by
developing
core technologies and competencies across anumber of SBUs.
e.g., 3 M- core t echno logy of coat ing mater ials- int
rapreneurial cul ture
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Japanese
Canon - Microprocessor controlled optical imaging
Honda - Engines and power trainsNEC
- VLSI and system integration
Technology planning addressed at SBU
reviewed at corporate levelSBU Technology Planning
- Merging of currents from both the external and internal
environments ofthe SBU into a confluence or tide
- goals expressed in societal and economic rather
thantechnological terms- but achieved largely through thepursuit of
specific tech- based plans and strategies
- Matching evolving technological possibilities andcapabilities
to evolving market needs and opportunities
- technology- opportunity matrix
- new technology continuum
- present markets and new markets continuum
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CORPORATE CORE COMPETENCIES
Company Example
Florida Pow er and Light Transmission network Sony
Miniaturization
Honda MotorsNEC Telecommunications, semiconductors, and
mainframesMotorola Wireless communications
Black and Decker Fractional-horsepower motors and
householdappliances
Boeing Large-scale system integration, efficientdesign and
manufacturing, and knowledgeof its customers
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Corporate Technology Portfolio Analysis
For a multibusiness corporation
- ensure that technology and business plan arecongruent with
corporate performance criteria,
strategies and goals.
For a technologically diversified corporation
- evaluation primarily financial
Thus, the corporate level process is areview of individual SBU
plans to see that they aremutually supportive (Synergies and
economies ofscale) and congruent with corporate goals.
e.g., Hitachi Central Research Laboratory
Technology Portfolio Analys is
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Bet Draw
Cash-In
Fold
LowHigh
H i g h
L o w
T e c h n o
l o g y
I m p o
r t a n c e
Figure 4.7. Technology portfolio matrix. Source: Reprinted from
Long Range Planning, N.K. Sethi et al., CanTechnology be Managed
Strategically? Pp. 96-97, Copyright 1985, with kind permission from
pergamonPress Ltd., Headington Hill Hall, Oxford OX3 OBW, U.K.
Technology Portfolio For HHML Products
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Bet
Splendor
Draw
CD - 100
Cash-In
CD 100SS
Fold
Sleek
LowHigh
High
Low
T e c
h n o
l o g y
I m p o r t a n c e
Technology Portfolio For HHML Products
Relative Technology Posit ion
Splendor CD - 100
CD 100SS Sleek
LowHigh
High
Low T e c
h n o
l o g y
I m p o r t a n c e
What HHM L Plans to do
Relative Technology Posit ion
Bet Draw
Cash-In Fold
M hi B i d T h l P f li
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Matching Business and Technology P ortfolio
Business Technology
A t t r a c
t i v e n e s s
CompetitivePosition
I m p o r t a n c e
Position
BA
C
E
D
F
B
A
C
E
D
F
Investm ent Strategy
BetDraw
Cash-in
FoldRelative Expenditures
A AE
D
A
F
Figure 4.8. Technology-investment matrix. Source: Reprinted from
Long Range Planning, N.K. Sethi et al., Can
Technology be Managed Strategically? Pp.96-97, Copyright 1985,
with kind permission from Pergamon Press Ltd.Headington Hill Hall,
Oxford OX3 OBW, U.K.
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Technology Portfolio M atrix
Bet - promising technologystrong competitive positionshould
invest in SBUs developing this technology.following an offensive or
defensive strategy.
Draw - promising technologyrelatively weak competitive
position
Two choices
- invest substantially offensive- divest completely
Cash in - the alternative situations- an ageing technology
declining market- rapidly evolving technology with a modest
market and short product life cycle.- niche market which may not
warrant attention
of large corporation.Divestment is preferable or only Modest
investments.
Fold - divested as quickly as possible
- this identifies technology investmentpriorities.
e.g., 3 M uses a very similar approachNippon Steel -evaluating
diversificationopportunities into new materialschemicals and
biotechnology
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Technology market m atrix
It consists of
Forecast evolving technological possibilities andcapabilities
together with evolving market needs and
opportunities.
Desegregate this technology market matrix into itscomponent
submatrices and to assess the firms futurecompetitive strengths in
order to identify potentialfuture technology market synergies and
options.
Formulate technological innovation mission or plan,based upon a
selection from these options.
Through participation of R&D and other functionalmanagers
best achieved through the use of independentthird parties
(consultants) as facilitation.
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CoreTechnologies
ProductionMethods
ProductLines
Products Old
New
1 2
3 4
Old New
MarketSegments
Distributionand
ServiceChannels
GenericTechnology
-Market1. Existing Customer Base Served with Existing
Products
2. New Customer Base served with Existing Products
3. Existing Customer Base Served with New Products
4. New Customer Based Served with New Products
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PRODUCT PERFORMANCE COST TECHNOLOGY 1 TECHNOLOGY N
COMPETITOR A
PRODUCT 1PRODUCT 2
PRODUCT N
COMPETITOR B
PRODUCT 1PRODUCT 2
PRODUCT N
OUR COMPANY PRODUCT 1PRODUCT 2
PRODUCT N
Figure 8 .8 Competitive benchmarkinng competitor/technology
matricx .
PRODUCT COMPETITITVENESS TECHNOLOGY COMPETITIVENESS
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TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY N
BUSINESS A PRODUCT 1PRODUCT 2
PRODUCT N
BUSINESS B PRODUCT 1PRODUCT 2PRODUCT N
BUSINESS M PRODUCT 1PRODUCT 2
PRODUCT N
Figure 8.7 Product/technology Matrix.
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- Customer needs- Customer Knowledge
of new technology- Competi t ion
- Organizat ional learning- Training needs- Organizat ional
renewal- Innovation culture- Image bui ld ing- Organizational
flexibility
Situation variables Actor v ariables
Process VariablesInvestment related: Development related:
- Equity participation - Vender development- Technology pricing
- Implementation of new technologies- Investment in local R & D
- Indigenization- Investment in vendor - Technology acquisition
decision
development - Innovation capability- Chaos handing capability-
Cost effectiveness of technology
Commercialization related - Degree of technology
anailability
- Timing strategies - Clarity of technology strategy- Customer
need satisfaction - Innovation flexibility
- Usage flexibility- Strategic flexibility- Acquisition
flexibility- Research productivity
Implementation
L A - P
Corporate
Vision
I n p u
t
Parameters
Corporate Objectives
Core Competencies
Industry foresight
Competitiveness
Technology Timing Strat egies
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- timing of technology entry to market- extent of its
segmentation and specialization
Ansoff and Stewart/Feeman
- constitutes a continuum rather than a number ofdiscrete
types.
Each strategy may shade into others and/orcorporation or SBU may
pursue one or more strategiessimultaneously in different product-
market areas.
Offensive Strategy- Leadership First to Market
e.g.,IBM in computers, RCA in televisionTI in semiconductors,
DuPont in Chemicals
Less well knownProctor and - Fluoride in toothpastes
Gamble preventing tooth decayUnsuccessful attempts
Comet airliner- failed due to technology reasonsConcorde -
failed for political, economic and environmental reasons.
- Introduce and continue to be first- Market is performance than
price sensitive- All round excellence in needed.- R-intensive
organisation.
R & D Requirements
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- Non directed research- May make fundamental contributions
e.g. Bell labs of AT & T
Characteristic of R-intensive organisations (Flexible)- Non
directive work assignments and indefinite
objectives which are broad cast widely- Continuing evaluation of
results and swift perception
of significant outcomes- Value innovation offers efficiency-
Gives considerable freedom to produce results- Inspired adhocracy
rather than deadening bureaucracy
Pilot/Prototype Production- Remain stages as swiftly as
possible- Research emphasis is not at the expense of the
development, design, manufacturing, and marketing- problem
cannot be solved by rule of thumb.
Patents and Licensing- Strong patent positions- Technology
intensive- bigger proportions of its budgeting
R&D and related activities than the industry average.
Metaphor Horse breeding, training and racing
Marketing User Education and Services
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Marketing, User Education and Services
- Tech-push market-pull synergy- considerable efforts in setting
up after-sales servicing
networks and user training programmes- Market leadership
position by introducing incremental
improvements- information feedback and learning- high downstream
coupling
- open system process with feed forward and feedback- cybernetic
self organising system has the ability toidentify opportunities and
threats in environment, andexploit and adapt to them before the
competitors.
- responsiveness
- swift reaction time- accelerate the chain reaction- often have
pressure-cooker climate.
Marketing Emergent Technologies- If successful enjoy large sales
and consequent learning
curve cost advantages enable to drop prices faster
thancompetitors.
e.g., Sony first transistor radio walkmanJapanese Company low
cost VCRs
Defensive Strategy- Flow the Leader
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Defensive Strategy- Flow the Leader
- Offensive strategy fraught with risk
- Good profit opportunities occur in performancemaximizing
stage
- Emergent stage mortality rate is high
- Defensive innovator averse to risk of innovation, if alooser
it looses nothing
if it is a winner swiftly follows the leader withits own
vision.
- Innovation base with monitors technology marketopportunities
actively and continuously
- Operates close to the state-of-the art in its successive
phases
- Is able to innovate swiftly
Differences
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Company has the scientific knowledge to exploit a newinnovation
once it appear to be successful.
Strong in experimental development design engineeringAnd
successive functions in technology base
- less emphasis in education, training and advisoryservices
- piggy back on the success of leader.
Patent position- defensive annotator must seek tosubvert own
patents and use them as bargainingcounters.
Usually a mixed technology strategy is followed
defensive in some area and offensive in others.e.g., European
sem i conductor industry followed a defensive strategy in
deference US
e.g., Texas Instrum ents developed few IC European Industries
followed.
- More recently European Semi conductor manufacturing
followedoffensive strategy for next generator DRAM- e.g. Phillips,
Siemens,Thompson by entering into joint ventures.
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Defensive v/ s Offensive ?
The counter offensive strategy
Pavitt
The choice of strategy dependent upon firm sizeand nature of
accumulated technology competencies
Teece Well executed offensive strategy to be successfulwhen
- The key inventive novelty embodied in theinnovation can be
effectively protected bypatents, trade secrets, or other form of
tacit
knowledge.
- The offensive innovation constitutes thedominant design.
Im itat ive strategy Me-Too
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- Technology moves from fluid to transition to specificstate
-e.g., Pharm aceutical Industry
Gener ic d rug firms manufacturing and market ing o f
out-of-patent drugs
- IBM PC clone m anufacturers
- Development, design, production and service intensiverather
than R-intensive
- Attractive to domestic company in countries whichtraditionally
lag behind (India)
- Japanese company followed this strategy verysuccessfully after
WW-II before same moved todefensive on even offensive strategies
via absorbent
strategies.- Truncated technology innovations base
- Efficient enactment of a specific design concept
- Supervision is directive, tasks are structured,organizational
climate favour efficiency rather thaninnovativeness.
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Reliability Engineering&
Quality Control
AfterSales
Services
TertiaryDevelopment
& DesignPilot/
PrototypeProduction
FullProduction Marketing
NewProduct
Development
TestMarketing
Education&
Advisoryservices
T e c
h n o
l o g
i c a
l
K n o w
l e d
g e
M a r k e t s
K n o w
l e d g e
Figure 4 .9. The imitative strategy base.
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QualityControl
AfterSales
Services
Production Marketing
Education&
AdvisoryServices
Figure 4.10. The dependent strategy base.
Dependent Strategies Branch P lant
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- subsidiary or specialized dept of a large company.
- national subsidiaries of MNCs
Absorbent Strategies e.g., Japan W orld W ar II
- acquires licenses from an offensive defensiveinnovator to
exploit innovation in domestic market.
- uses surplus cash flow to assimilate the technologyknow-how
and build up own R&D capability.
- launch its own performance maximizing and costreducing
incremental innovations in both domestic andoffshore markets.
Japan - 1200 year o ld abi li ty o f the Japaneseculture to
adopt, adapt and improve
offshore ideas.
Other technologically less developed countries seekingto
replicate it.
Other (non technologically) Innovative Strategies
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Other (non technologically) Innovative Strategies
Drucker
- it is social rather than specific technologyinnovation that
have the largest impa cts.
Simon Ramo
- prudent balance between introduction ofinnovations and
maintenance and extension ofongoing operations
- promotion innovations
- distributing innovation
- financial innovations.
Technologically cosmetic
cosmetic innovations are vital in consumer expendable
industries
- detergents, personal toiletries, etc.
- judicious synthesis of technology and non technology
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innovation.
- BPR
e.g., McDonalds and Beni hana Commercial success marrying
well
established essentially non-innovativemanufacturing management
with innovativemarketing approach in fast food andrestaurant.
Xerox - Xerography- revolutionary
innovationinnovative-pricing-approachCharge per copy basismay cases
higher sale price per unit
because net revenue was higher than sale price.
Texas Instruments and Sony novel approaches to market
distribution and pricing
Business entrepreneur + Technology Entrepreneur
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