1 design and implementation of technology strategy: an evolutionary perspective
TRANSCRIPT
1
Design and Implementation of Technology Strategy:
An Evolutionary Perspective
2
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 ?
Back
3
Capabilities-Based Organizational Learning Framework of Technology Strategy
Exhibit 1
Technologicalcapabilities
Technology strategy Experience
Back
4
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
5
Substance of Technology Strategy
Competitive strategy stance Value chain stance Resource commitment stance Management stance
6
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
7
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.
8
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
9
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
10
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
11
Evolutionary Force Shaping Technology Strategy
Exhibit 2 Determinants of technology strategy
Internal environment
External environment
Inte
grat
ive
mec
hani
sms
Gen
erat
ive
mec
hani
sms
Strategic action
Organizational context
Industrycontext
Technology evolution
Technology strategy
Back
12
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
13
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
14
Strategic Action
Induced strategic action Autonomous strategic action
15
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)
16
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
17
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
grat
ive
mec
hani
sms
Gen
erat
ive
mec
hani
sms
Strategic action
Organizational context
Industrycontext
Technology evolution
Technology strategy
18
Applying the Framework: Practice
Problems arising when a change in study is not matched. Ex1: National Cash Register Company (NCR)
EDP vs. Microelectronics
19
Experience through Enactment of Technology Strategy
Technology sourcing Product and process development Technical support
Technologicalcapabilities
Technology strategy
Experience
20
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
21
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
22
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
23
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
24
Enactment Reveals Substance of Technology Strategy
Exhibit 3
Back
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)
25
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