Strategic Technology Management Support: Models 1.Technology Product and Process Life-Cycles...

Strategic Technology Management Support: Models

1. Technology Product and Process Life-Cycles2. Sequential and Simultaneous Innovation

Models3. Technology S-curve4. Technology and Market Matrices5. Expert System Decision Support: NEWTECH

1. Technology Life Cycle Models

• Technology Product LC

• Technology Product & Process LC

Technology Product LC

The change of sales/revenue/profits of a company/industry/sector in a longer time perspective

Main phases:

* Introduction;

* Growth;

* Maturity, and

* Decline.

Technology Product Curve

Sales/Revenue/Profit

Time

Introduction

Growth

Maturity

Decline

Corporate/Business/Technology Strategy and Product LC models

Time

Sales/Revenue/Profit

Product A

Product B Product C

Product D

Product E

1

23

4

5

R&D, Marketing Strategy Options – investment into R&D projects

• 1 - Short term development of existing product

• 2 - Effort to prolong product life

• 3 – Early introduction of the new product

• 4 – Late introduction of new product

• 5 - Long term development of new product generation

Sequential and Simultaneous Innovation Models

Sequential innovation model

Marketing and/orR&D

Newproductgeneral

specific.

NPD project

Process design

Production

New productconcept

Functionalspecification

Productspecification

Process specification

Discontinuity of Sequences/phases

Simultaneous innovation model (concurrent engineering model)

Time

NPD phases

New productconcept

Functionalspecification

Product specification

Process specification

Production

Sequential and SimultaneousInnovation Models

Time

NPDphases

Simujltaneousdevleopment

Sequential development

Simultaneous model: Cross-functional interdisciplinary teams

• NPD realized throughout with representatives of all the functions and organization areas in the earliest phases:

• 1. Marketing (customer needs, competitors, special needs and demands);

• 2. R&D (activities from idea generation to commercialization, patent protection and EoL considerations);

• 3. Finance ( investment funds management, financial feasibility studies, costs forecasting and planning);

• 4. Legal aspects (external legal conditions, legal protection of intellectual property);

Simultaneous model: Cross-functional interdisciplinary teams

• 5. Purchasing & Sales ( relations with suppliers, customers, costs of material and components);

• 6. Engineering and Production ( new engineering design, product safety, prototype building, manufacturing/process feasibility studies, resourse flexibility, product service potentials).

Managing the new product development process

• The conditions for innovation to occur are necessary but insufficient

• The process is managed and operated by people• NPD is not the preserve of one department• It involves a variety of people across the

organisation• Teams of people and project teams is at the heart

of NPD

New products as projects

The NPD process as a series of linked activities

Strategic planning

Assembling knowledgeR&D

Marketresearch

Scientific andtechnologicaldevelopments

Generating businessopportunities

Society andmarketdevelopmentsleading to needs

Development ofproduct prototypes

Product concept generationScreeningand evaluation is not a one-off activity –it is a continual process and takes place at every stage.

Market introduction

Market and technical testing

Senior management

Marketing Research andtechnology

Sales Production Finance

BusinessTeam 1

BusinessTeam 2

BusinessTeam 3

Full time

Part-time

Matrix organisation structure

Knowledge baseof the organisation

Recruitment of good people

Networking byorganisations’employees (gatekeepers)

Licensing,contract research,patents

Other companies includingcustomers,suppliers,competitors, etc.

Publications,databases

Conferences, etc.

Technologymonitoring by R&D department

Internal R&D

Company’s ownmarket research

Assembling knowledge

Generation of business opportunities

Existingproducts

Technology

Unexploitedpatents

customers andvendorssenior and

top management

Brainstorming andsynetics

Individuals

Generating new business opportunities

Competitors’ productsand reverse engineering

Evaluation of research project ideas

Numberof researchideas

1 successfulproduct

2 productslaunched

3 prototypes for technical & market testing

6 potential products worthy of further development & analysis

12 ideas worthy of evaluation through:Technical evaluation & market research analysis

60 ideas are evaluated for:• Technical feasibility• Financial feasibility• Suitability

Evaluating research projects

Criteria Typical questions

1 Technical Do we have experience of the technology?Do we have the skills and facilities?What is the probability of technical success?

2 Research direction and balance

Compatibility with research goals?Balance of risk in project portfolio?

3 Competitive rationale

How does this project compare relative to the competition?Is it necessary to defend an existing business?Is the product likely to be superior?

4 Patentability Can we get patent protection?What will be the implication for defensive research?

5 Stability of the market

How stable is the technology?Is the market developed?Is there an industry standard?

Evaluation criteria

Criteria Typical questions

6 Integration and synergy

What is the level of integration of this project relative to other products and raw materials?Will it stand alone?

7 Market What is the size of the market?Is it a growing market?Is there an existing customer base?Is the potential big enough to warrant the resource?

8 Channel fit Do we have existing customers who might be interested, or do we have to find new customers?

9 Manufacturing Can we use existing resources?Will we require new equipment, skills, etc?

10 Financial Expected investment required and rate of return.

11 Strategic fit Does it support our short term and long term plans for the business?

Evaluation criteria (Continued)

• It is not a single, one-off activity;• It occurs at every stage of the new product development process;• Do we have the necessary commercial knowledge and experience?• Do we have the technical know-how to develop the idea further?• Would such a product be suitable for our business?• Are we sure there will be sufficient demand?• The main purpose of screening ideas is to select those that will be

successful and drop those that will not – herein lies thedifficulty e.g.

RCA identified TV but not VCR. Kodak and IBM failed to see the potential in photocopying butXerox did

Screening

• Scientists and engineers are often heard berating their commercial colleagues for failing to comprehend the technical aspects of the project;

• The main barriers to effective R&D/marketing interface have been found to be related to perceptual, cultural, organisational and language factors (Wang, 1997).

The R&D/marketing interface

• Cultural difference results from the different training and backgrounds; Marketing managers tend to focus on shorter time spans than R&D managers who adopt much longer time frames for projects;

• Language barrier;• The extent of the integration required between

marketing and R&D varies between industries.

The R&D/marketing interface (Continued)

Technology Substitution Strategic Analysis

• 1) External technology analysis- review of new technology that could substitute existing products based on technology competitor technology analysis, new technology development and technological forecasting;

• 2) Timing aspects based on time analysis – the projected moment when new products are expected to be introduced on the market;

• 3) Assessment of the rate/pace at which new products will penetrate the market;

• 4) Assessment of the timing/moment when new product is to be launched on the market;

Technology Product & Process LC - TLC

• Technology Life cycle is represented by technology product and process innovation dynamics;

• The model is based on overall technology life cycle analysis based on detailed view of the product and process innovation potentials within the life cycle.

TLC curve – industry/firm analysisInnovationRate

Time/Innovation

Product

Process

Fluid Transition Focused

TLC – phases based on process & product innovation dynamics

• 1. Fluid

• 2. Transition (Transmission)

• 3. Focused (Specific, Maturity)

Time

InnovationRate

I FluidIntensive product change in the earlyphases of product introduction; in searchof the product that best satisfies customerneeds.

II TransitionDominant productcharacteristics achieved; productinnovation projects decline, process innovation projects rise towardsstandard processdevelopment for massproduction.

III FocusedEvolutive/incrementalprocess innovation, process & product innovation projects decline, highspecialization, cost reduction,quality enhancement, efforts to prolong the TLC while still generating revenue.

Corporate/Business/Functional Strategy and TLC – Fluid phase

Strong external orientation, intensive relations with firm environment; high product flexibility with intensive R&D projects coupled with market research (needs, competitors, institutes, laboratories, etc); organizational design oriented at high flexibility – matrix, project structures dominant;

Corporate/Business/Functional Strategy and TLC – Fluid phase

• Dominant market orientation, intensive research of customer needs, competitor actions, demand projections and analysis, new market perspectives, global market penetration

• High integrativeness of all functions, parts and domains of organization – marketing, R&D, technology, production, HR;

• Multifunctional teams, Matrix/project organizational design

Corporate/Business/Functional Strategy and TLC – Transition phase

Process innovation becomes dominant oriented at R&D projects leading to cutting costs, enhancing process characteristics and quality. In traditional manufacturing universal equipment is changed and special equipment installed for mass manufacturing and achieving economies of scale. Developing relations in the supply-chain.

3. Corporate/Business/Functional Strategy and TLC: Focused phase

• Developing more rigid organizational structure (hierarchical levels defined, functional, departmental)

• More centralised org. design and decision making

• Clear definition of tasks and responsibilities in relation to corporate/business/functional goals

Main

features

Fluid phase Transition

phase

Focus

phaseCompetitive

strategy

Basic functional product performance

Product variety Cost reduction

Innovation

incentives

Customer needs New potentials due to higher knowledge and competence levels

Challenges for cost cutting and quality enhancement

Dominant

Innovation type

Frequent production changes

Process innovation dominant

Incremental product and process innovation towards higher efficiency

Product Diversified with variety of form and design

At least one dominant product with stable demand

Standard products with potential slight adjustments

Main

features

Fluid phase Transition

phase

Focus

phaseProcess Flexible and

inefficientBecoming more rigid with small changes

Efficient

Equipment Universal Some process segments automated

Special

Material Use of available, easily reached material

Special material, contract with suppliers

Specified material, strong supplier relation

Staff Flexibility and

mobility

Specific qualification

Job design and HR planning

Organization and Mangament

Informal, entrepreneurial, decentralized

Developing teams, project structure

Rigid structure, centralization

Flexible Technology Model

Product Innovation

Process Innovation

InnovationRate

Time

Source: MIT Sloan Mgt review, 2001

Utterback – 4 phases in TLC

• Fluid phase:– high level of technology & market uncertainty – pioneering products enter

the market – need to promote technology – alliances, licensing & acquisition of start-ups

• Transitional phase:– emergence of dominant design – improvement of technology – growth

strategy & increase in production capacity – licensing when have dominant design or acquisition of those who have it…

• Mature phase:– emphasis on process innovation – R&D alliances to share costs & risks –

acquisitions, alliances with suppliers & divestures

• Discontinuities phase:– New technologies emerging – existing technology can become obsolete –

volatile market – new entrants

Alliances & Technology life cycle


Alliances in Fluid phase• To promote technology as the industry standard:

– Microsoft MSDOS with IBM PC

• Adoption of licensing strategies:– SUN: SPARC & JAVA

• Marketing alliances with key players in the supply chain or with one of the industry leader:– Ariba B2B solutions to find channels

• Technology alliances with established companies: equity investments, JV’s:– Trusted Computing Platforms Alliance – In 1999, Compaq, HP, Intel, Microsoft

& IBM joined forces to propose better security solutions on PC platforms– Acquisition of start-ups to get access to key technologies: Cisco, Microsoft

acquired 15 companies & made 26 minority investments in Internet related technologies & application software.


Alliances in Transitional phase


• Licensing by dominant design firm:– Texas Instruments, Philips, Microsoft

• Joint R&D ventures to improve dominant design & develop extensions:– VHS from JVC with Matsushita & RCA

• Marketing alliances & supply agreements to guarantee consistent quality, price & availability:– VHS from JVC with Matsushita

Alliances in Mature phase

• Joint R&D ventures to share risks & costs of technology development:– Fujitsu Toshiba alliance in 1Gb DRAM (2000)– Microsoft 36 JV’s between 1988 & 1994

• Marketing alliances to attack latent markets or lure customers away from competitors:– Microsoft

• Manufacturing alliances to ensure availability of essential products

• Open alliances with suppliers & customers


Alliances in Discontinuities phase

• Marketing alliances to gain market recognition• Licensing by attacker to supply technology:

– Microsoft licensing of Windows CE for AT&T set-top boxes - 1999

• Incumbent’s acquisition of the disruptive technology:– Intel: acquisition of 15 companies in networking &

communications - 1999/2000


Region 1980–84 1985–89 Total

Europe 17. 7 20. 1 19. 2Europe – USA 22. 1 22. 5 22. 4Europe\Japan 6. 5 5. 7 6. 0USA 22. 9 25. 3 24. 4USA – Japan 17. 6 11. 7 13. 9Japan 4. 2 6. 2 5. 4Triad – LDC 2. 2 2. 4 2. 3Triad – MDC 1. 3 1. 5 1. 7Other countries 5. 5 4. 4 4. 9

Total 100. 0% 100. 0% 100. 0%

Number alliance1560. 0 2632. 0 4192. 0

Total 37. 2% 62. 8% 100.0%

Cooperation with clients

Cooperation withcompetitors

Cooperation with Ministries/agencies

ADVANTAGES DRAWBACKS

1. Technological

Access to latest innovation of partner (info, design specific., R&D results, software) Sharing of R&D costs;Sharing competence, strengthening powers, synergy; Concentrated potentials for R&D;Critical mass for innovation (financial, creative, material) extended

Leakage of strategic infoPotential info abuse by partnerThreat of third party gaining strategic info

ADVANATAGES

DRAWBACKS

2. Marketing and sales

Access to new marketsUsing partner reputationSharing costs of promotionUsing partner’s existing distribution network, post-sales services, maintainance and servicingNegotiating prices and avoiding price warsUsing well known brand names

Giving the partner access to own marketConstraints on scale and market penetration ratePressures on own distribution network to answer to the extended needs of the partnerLoss of control over own trade mark, brand nameConstraints to promotion strategies


3. Manufacturing

Infoon new products and processesAccess to partner’s resourcesCheaper components and partsAccess to product assembly linesAdvantages of augmented purchasing potentialGreater potentials in licencing productionRoyalties from licencing

Dependence on partner in supplyConstraints in supplier choice and introducing new suppliersQuality problems


4. Finances

Opportunities in revenue distributionAttractive financial sources for joint ventureNew opportunities for improving cash flowsDecreased dependency on exchange rate changes

Certain loss in financial freedom of choiceLimited investments

5. Managerial

Using individual and joint experienceExchange of labourJoint efforts in training and development programmess for employees and management Presence in geographical regions where delegating own people would be too costly

Serious problems in managing joint-ventureDistinctive need for special mechanisms of coordinationConstraints in the sphere of own programme development schemes

2. TEHNOLOGY “S” CURVE

• Model that shows potentials of technology development in relation to a selected/specific technical parameter

• Based on the insight that every technology has a physical/development limit to which specific technical parameter (performance) can be enhanced.

Technology S curveTechnicalParameter/performance

Time-engineering effort

Limit

Different positions on the S curve of the same technology in relation to different

techn. parameters

Time TimeT T

Techn.par. B

Techn par. A

Technology Substitution

T.p.

Time

Techn. A

Techn. B

t1 t2

Limits to techn. A

Limits to techn. B

TECHNOLOGY S CURVE DEPLOYMENT - STEPS

1. IDENTIFY PRODUCT (GOODS/SERVICES) ATTRIBUTES OF MAJOR SIGNIFICANCE TO MARKET SUCCESS;

2. IDENTIFY RELATIONS BETWEEN PRODUCT ATTRIBUTES AND TECHNICAL PARAMETER/PERFORMANCE;


3. Define the growth/development limit of the identified parameter – physical limit with given technology;

4. Assess the present position of the selected technical parameter on the S curve and analyse the proximity to the development limit idnetified in previous step;

Investment strategy and technological trajectories

Time

Techn.parameter

Point of decision makingEarly stage position of techn. parameter

Investment strategy:HighMediumLow

Investment strategy and technological trajectories

Point of decisionMakingLate/mature stageOf techn. parameter

Techn. parameter

Difference dueto higher investments

TimeAt the late/mature stage investment strategy does not affectTechnology prospects


6. Make a decision after S curve extrapolation and techn. parameter positioning:

A) At the early stages, high investments mean good result expectations, investment strategy also depends on the character of the techn. parameter – how critical it is to create products satisfying customer needs

B) Decide on Technology substitution when the maturity/late stage is reached as investment strategy has no major effect on expected result.

3. Technology and Market Matrices

3. Technology and Market Portfolio Analysis – Matrix model

A B

C

D

B

A

D C

Technology matrix

CTP

RTD

CTP- Current technology positionRTD – Rate of technology development

Market matrix

MS

GPMS – Market shareGP – Growth potential

Strong

Weak

High Low

High

High

Low

Low

4. Expert System for Decision Support: New tech Expert Choice

Decision Support Systems and Expert Systems

• Expert Sytems for Decision Support – developed for management of new technology in firms

• Technology Decision Making Aalgorithm • Technology alternatives in firms: a) rationalizing, enhancing existing technology, and b) introducing new technology.

• The decision is made based on benefits/advantages and weaknesses of each alternative.

New technology decision making algorithm

Deciding on new technology in firm

New technology, yes or no?

Yes No

Select new technologyRationalizetechnology

Using technology

Expert system:1. Assess existing firm technology;

2. Assess technology of competitor;

3. Assess the supply of new technology

offered on the market;4. Assess the existing

technology on the industry LC curve

Decision support to technology management

• Expert systems are gaining impoertance in management activities;

• Expert systems can be viewed as means by which new capability is developed to understand specific knowledge related to the problem and to use that knowledge in an intelligent way so that optimal choice for further action is made.

Expert Systems are used in the following cases:

• (1) When problems in a certain domain are difficult to define analytically, i.e. when they are unstructured;

• (2) When the number of feasible solutions is great and optimal choice is to be madeaccording to criteria;

• (3) When the knowledge domain is broad and should be used selectively.

NEWTECH Expert Choice(expert system for decision support in

technology management)• Software developed in the USA based on

software Expert Choice Package• Decision support to the crucial problem of

whether to introduce new technology or continue using existing one – New technology: YES or NO

• Uses over 100 varaibles to come to resolution of the problem

New Tech Model

• The managing team provides individual assessment of the rank based on relative importance of variables according to the specific situation in concrete oeganization. Ultimately, as result, a scale is generates with ranking for two alternatives:

• 1. Adapt New Technology – ( New Technology YES)

• 2. Maintain previous state (New Technology – NO)

Model Based on the Model AHP

• Analytical Hierarchical Process (AHP) - developed by Satti

• Hierarchical/network structures are used for presenting the decision problem, then, priorities are generated based on the decision makers` assessment on the importance/significance of variables in relation to the to decision alternatives

• The alternatives are then ranked and their relative position is determined on a specific scale with probability and inconsistency measures.

Strategic Technology Management Support: Models 1.Technology Product and Process Life-Cycles...

Documents

Transcript of Strategic Technology Management Support: Models 1.Technology Product and Process Life-Cycles...