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