Introduction to Technology StrategyIntroduction to Technology Strategy

STMB TELKOM Managing Technology and Innovation (MTI) Module –DT

Technological Innovation

STMB TELKOM Managing Technology and Innovation Module –DT 2

Key ConceptsAt the origin of technological innovation process are inventions or discoveries.Webster: “We discover what before existed, though to us unknown; we invent what did not before exist.” The criteria for success regarding inventions and discoveries are technical (Is it true/real?) rather than commercial (Does it provide a basis for economic rents?)

Technology refers to the theoretical and practical knowledge, skills, and artifacts that can be used to develop products and services as well as their production and delivery systems. The criteria for success regarding technology are also technical (Can it do the job?) rather than commercial (Can it do the job profitably?). Technologies are usually the outcome of development activities to put inventions and discoveries to practical use.

Some innovations are technology-based; other, are facilitated by new technology. The criteria for success of technological innovation are commercial rather than technical.

Technological entrepreneurship refers to activities that create new resource combinations to make innovation possible, bringing together the technical and commercial worlds in a profitable way.

STMB TELKOM Managing Technology and Innovation Module –DT 3

The Relationship Between Key Concepts

Technical world Technological entrepreneurship Commercial world

Administration Capabilities

Inventions/discoveries/technologies Technological innovations

Researchactivities

Developmentactivities

Product/Process

developmentactivities

Marketdevelopment

activities

Tinkering/experimenting

Results

Activities

STMB TELKOM Managing Technology and Innovation Module –DT 4

Shifting From an Industry Focus to a Resource FocusShifting From an Industry Focus to a Resource Focus

THE INDUSTRYENVIRONMENT

CompetitorsCustomersSuppliers

STRATEGYSTRATEGY

THE FIRM

Goals and Values

Resources and Capabilities

Structure andSystems

The Firm-Strategy interface

The Strategy-Environment Interface

STMB TELKOM Managing Technology and Innovation Module –DT 5

Resources as the Basis for Superior ProfitabilityResources as the Basis for Superior Profitability

((Tangible and IntangibleTangible and Intangible))

Rate of Profitin Excess of the

Competitive Level

BrandsProduct technologyMarketing capabilities

Process technologyPlant sizeLow-cost inputs

Bargaining power with suppliers

Market share

PatentsBrandsRetaliatory capability

DifferentiationAdvantage

CostAdvantage

Vertical Power

Monopoly

Barriers to Entry

Industry Attractiveness

Resources and capabilities

STMB TELKOM Managing Technology and Innovation Module –DT 6

TechnologyTechnology

• Allan Afuah:– Technology is in a broad sense the knowledge and

skills used by an organization to transform inputs into outputs.

– Technology in this broad sense can be viewed as an organization’s ‘knowledge base’

– Most organizations can be better viewed as having multiple technologies - a technology exists for every flow of activities that require knowledge and skills and transforms inputs to outputs.

• Codified versus tacit knowledge

STMB TELKOM Managing Technology and Innovation Module –DT 7

Technology and Product-Market Strategy

TechnologyTechnology Product AProduct A Product BProduct B …… Product NProduct N

Technology 1

Technology 2

.

.

.

Technology K

(*)

Note: Each entry (*) should establish the firm’s relative strength vis-à-vis the state of the art. This matrix should be followed by more detail explanation about the strength of firm’s capabilities.

STMB TELKOM Managing Technology and Innovation Module –DT 8

Matching Business and Technology Portfolios

STAR QUESTION MARK

CASH COW DOG

BusinessBusiness

Competitiveposition

Att

ract

iven

ess

BET DRAW

CASH IN FOLD

TechnologyTechnology

Position

Imp

orta

nce

A

BB A

Harris, Shaw, Somers suggest examining the relationship between the traditional portfolio business matrix and the technology portfolio matrix. Such analysis offers the possibility of investigating the match (or mismatch) of a firm’s business and technology portfolios and resulting technology investment priorities.

STMB TELKOM Managing Technology and Innovation Module –DT 9

Technological Evolution and Forecasting

Life CycleLife Cycle Importance of Technologies for Competitive AdvantageImportance of Technologies for Competitive Advantage

IEmerging Technologies

Have not yet demonstrated potential for changing the basis of competition.

IIPacing Technologies

Have demonstrated their potential for changing the basis of, competition.

III Key Technologies

Are embedded in and enable product/process.

Have major impact on value-added stream (Cost, performance, quality)

Allow proprietary/patented positions

IVBase Technologies

Minor impact on value-added stream; common to all competitors; commodity.

Technology Life Cycle

Stages in Technology

STMB TELKOM Managing Technology and Innovation Module –DT 10

Assessing Innovative Capabilities

At least three question must be addressed by the assessors:

1. How has the firm been innovative in the areas of product and service offerings and/or production and delivery systems?

2. How good is the fit between the firm’s current business and corporate strategies and its innovative capabilities?

3. What the firm’s needs in term of innovative capabilities to support its long-term business and corporate competitive strategies?

STMB TELKOM Managing Technology and Innovation Module –DT 11

Innovative Capabilities

Innovative capabilities can be defined as the comprehensive set of characteristics of an organization that facilitate and support innovation strategies.

Innovative capabilities exist at the business unit and corporate levels.

Business Unit: a unit for which a particular strategy and resource commitment posture can be defined because it has a distinct set of product markets, competitors, and resources.

Corporate: an audits at this level identifies the critical variables that influence both the relationships between corporate and business unit levels in term of innovative capabilities and the formulation and implementation of overall corporate innovation strategy.

STMB TELKOM Managing Technology and Innovation Module –DT 12

Business Unit Level Audit

Resource availability

Understanding business unit technological environment

Business unit strategic

management capacity

Understanding competitors’ innovative

strategies and industry evolution

Business unit structural and

cultural context

Business Unit

innovative strategy

• Timing of market entry• Technological

leadership or followership

• Scope of innovativeness

• Rate of innovativeness

STMB TELKOM Managing Technology and Innovation Module –DT 13

Corporate Level Audit

Resource availability

and allocation

Understanding corporate

technological environment

Corporate strategic

management capacity

Understanding competitors’ innovative

strategies and multi-industry

evolution

Corporate structural and

cultural context

Corporate innovative strategies

• The scope and rate of development of new product and services and /or production and delivery systems that are derived from combining innovative capabilities across existing business unit.

• The scope and rate of new business development based on corporate R&D and technology development effort.

• Timing of entry with respect to the above.