CPET 575 Management Of Technology. Design and Implementation of Technology Strategy: an Evolutional Perspective

Transcription

1 CPET 575 Management Of Technology Part Two Design and Implementation of Technology Strategy: An Evolutional Perspective References: 1. Robert A. Burgelman, Clayton M. Christensen, and Steven C. Wheelwright, Strategic Management of Technology and Innovation, 2009, 5th edition, McGraw-Hill, pp Michael E. Porter, Competitive Advantages: Creating and Sustaining Superior Performance, The Free Press, 1998, pp Professor Paul I-Hai Lin M.S. Technology Program - IT and Advanced Computer Applications & Industrial Technology/Manufacturing Tracks Purdue University Fort Wayne Campus 1 Design and Implementation of Technology Strategy: an Evolutional Perspective Overview Technological Competence and Capability Substance of Technology Strategy Evolutionary Forces Shaping Technology Strategy Experience Through Enactment of Technology Strategy Enactment Reveals Substance of Technology Strategy Conclusion 2 1

2 Design & Implementation of Technology Strategy Must consider A. Technological Evolution B. Industry Context C. Organizational Context 3 Overview Fundamental Business Strategy Decisions 1) Which distinct technological competences and capabilities are necessary to establish and maintain competitive advantages? 2) Which technologies should be used to implement core product design concepts and how should these technologies be embodied in products? 3) What should be the investment level in technology development? 4) How should various technologies be sourced internally or externally? 5) When and how should new technology be introduced to the market? 6) How should technology innovation be organized and managed? 4 2

3 Overview Technology Strategy Making Technology Strategy: a function of the quantity and quality of technical capabilities and competences Experience: obtained from enacting technology strategy feeds back to technological capability and technology strategy 5 Capabilities Overview Resource availability (financial, human, technology) Complementary assets Competitive manufacturing Distribution Service Complementary technologies Technology & Technology Development (R&D, lab teams, managing technology admin, service function) Marketing, Sales etc 6 3

4 Technological Competence and Capability Distinctive Competence Core Competence Technological and production expertise Differentiated skill Complementary assets Routines, processes used Marketing 1) Provide potential access to a wide variety of markets 2) Make significant contribution to the perceived customer benefits of the end product, and 3) Be difficult for competitors to imitate 7 GTE vs. : Core Competence GTE General Telephone & Electronics Corp., Industry: Telecommunications Fate: Merged with Bell Atlantic Successor: Verizon Communications Founded: 1918 Defunct: 2000 GTE, 8 4

5 GTE vs. : Core Competence s R&D : 2011/9/22 Founded s Strategic Intent: Convergence of Computer & Communications (C&C) 1980: Sales $3.6 billion, GTE comparable technological base and computer business No experience as an operating telecommunications company 1988: World leader in semiconductor, and 1- st tier player in telecommunications products and computers Consolidates its position in mainframe computers Consumer electronics: mobile phones, fax machines, laptop computers s R&D : Products: 2011: Products Computing Products Display Solutions Software Telecom Network Social Infrastructure Electron Devices 10 5

6 s R&D : Products: 2012: Products Computing Products Display Solutions Electron Devices Enterprise Network and Communication Social Infrastructure Software Telecom Network s R&D : Products: 2012: Products Display Solutions: Monitors and Projectors Digital Cinema Computing Products: Servers Disk Storage, Tape Storage Super Computers Thin Client POS Systems Industrial Computers PC (Desktop PCs, Notebooks, Workstations) 12 6

7 2012: Products Software s 2011: Middleware, Embedded System Design, Business Applications 2012: Business Application: Mobility Applications ERP package for process manufacturers Digital Pathology Diagnosis Assistance System, R&D : Products: s R&D : Products: 2012: Products Software 2012: Middleware: High Availability & Disaster Recovery, Service Execution Platform for Age of Cloud-Computing, Integrated Operation Management Software Suite, Software based Web Application Firewall Embedded System Design: Pioneering C-based LSI design: CyberWorkBench, EMI suppression support tool: EMIStream, Power Integrity Design Support tool: PIStream, IC Package Design Support tool: GENISSNX 14 7

8 2012: Products s R&D : Products: Telecom Networks For Telecom Operators: Small Cell Solutions, LTE, Femtocell, PASOLINK, M2M, OSS, Submarine, MVNO-GW, Cloud for Carriers Operation & Management Wireless Access Networks Fixed Access Networks Transport Networks Social Infrastructure Digital Broadcast Postal Automation Products s R&D : Products: Electron Devices Energy Devices, Network Devices and Functional Devices ( TOKIN Corporation) Fiber Optic Devices & MR (Magneto-Resistive) Sensors MR position and rotation detection LCD Module Uncooled IR Detectors Terahertz Imager 16 8

9 2013: Products (Common) Broadcast Products Business Computers Fiber Optic Devices Integrated IT Infrastructure Monitors and Projectors Network Products Outsourcing Sensor & Camera Server Social Infrastructure Software Storage Systems Products: 17 Global R&D C & C Innovation (since 1977) Knowledge Discovery Cloud System Information & media Processing Smart Energy Green Platforms R&D :

10 USA 2015: Products (Common) Broadcast Products Business Computers Fiber Optic Devices Integrated IT Infrastructure Monitors and Projectors Network Products Outsourcing Sensor & Camera Server Social Infrastructure Software Storage Systems Products: 19 USA 2015 USA, Solutions Biometric Business Intelligence Cloud Computing Data Management Managed Services Mobility Optimal Collaboration Software-Defined Networking Industries Education Finance Government Healthcare Hospitality Retail Service Provider Small/Medium Business 20 10

11 Global R&D 2015 Global R & D Labs, s No. 1/Unique Technologies, html? R & D Domains R&D : 21 What is Technology Strategy? 1 Firm s approach to the development and use of technology strategy The creation of a unique and valuable position, involving a different set of activities Making trade-offs in competing Creating fit among a company s activities Must address three broad issues: What technology to develop Whether to seek technological leadership in those technologies The role of technology licensing 1 What is Strategy? Michael E. Porter, Harvard Business Review, Nov-Dec,

12 Substance of Technology Strategy 1. Technology Deployment in Product-market strategy Position/Differentiation (perceived value or quality) Delivered costs Technology-based competitive advantages 2. The Use of Technology in firm s value chain 3. The Firm s Resource Commitment to various areas of technology 4. The Firm s use of organization design and management techniques to manage the technology function 23 Substance of Technology Strategy 1. Competitive Strategy Stance The deployment of technology in the firm s product-market strategy to position itself in terms of differentiation (perceived value or quality) and delivered cost and to gain technologybased competitive advantages; 2. Value Chain Stance The use of technology, more broadly, in various activities comprised by the firm s value chain; 3. Resource Commitment Stance The firm s resource commitment to various areas of technology 4. Management Stance The firm s use of organization design and management techniques to manage the technology function

13 Substance of Technology Strategy Competitive Strategy Stance (Role of technology, Defensive, Offensive) Technology Choice Technology Leadership Technology Entry Timing Technology Licensing 25 Substance of Technology Strategy: Competitive Strategy Stance Technology Choice Careful assessments: technology, market factors, and targets A room fan example (technology choice) Core design concepts: move air Implementations: manual or electrical power Designing and building motors (components): require EE & ME knowledge A product (dominant design): architecture that determine how its components fit and work together Control and monitoring options: wired, wireless, Internet 26 13

14 Substance of Technology Strategy: Competitive Strategy Stance Technology Leadership Developed distinctive technological competence and capabilities (also persistent) Pioneering role vs. Monitoring role Product market strategy Can be the first mover but may chose not to Identifying and tracking key technical parameters Considering the impact on speed and flexibility of product and process development as technologies move through their life cycles Distinguishing common and high impact technologies Paying attention to new technologies 27 Substance of Technology Strategy Technology Leadership Pioneering role vs. Monitoring role Product market strategy Cannon Technology, 2011: hnology/ Canon History: out/history/05.html 28 14

15 Substance of Technology Strategy: Competitive Strategy Stance Technology Entry Timing Timing of commercial use of new technology (relative to rivals) Porter (1985): First mover advantages Teece (1986): Appropriability regimes concerns the first mover s ability to protect proprietary technological advantages Example: the legal battle between Intel and Advanced Micro Devices (Steere and Burgelman, 1994) Control of special assets: a first mover must have access to 29 Substance of Technology Strategy: Competitive Strategy Stance Technology Licensing Technology not fit into firm s business and corporate strategy Maximize the ROI of R&D efforts and discourage imitation Lack the necessary cash and/or complementary assets (manufacturing, distribution, service, etc) International market development for the technology may require licensing local firms Antitrust legislation may prevent a company from fully exploiting its technological advantage on its own 30 15

16 Substance of Technology Strategy Value Chain Activities (page 8, Exhibit 6) Inbound Logistics Related Technologies Transportation, Material Handling, Storage & Preservation, Communication System, Testing, IT & IS Technologies Operations Basic product, Material, Machine Tool, Material Handling, Packaging, Maintenance, Testing, Building Design Operation, IT & IS Technologies Outbound Logistics Transportation, Material handling, Packaging, Communication System, IT & IS Technologies Marketing Sales: Media, Audio, Video, Communication, IT & IS technologies Services 31 Substance of Technology Strategy Elements in Porter s Value Chain, by James Manketlow,

17 Substance of Technology Strategy: Value Chain Stance Developing and enriching technological competences Avoiding from the threats of new entrants Scope of Technology Strategy Broader set of core technologies less vulnerable to attacks Resource constraints (limits & fine tune how may technologies) May be a significant extent by its scale and business focus New technology issues & impacts 33 Substance of Technology Strategy: Resource Commitment Stance R&D Funding (0%, 10%, etc) Depth of Technology Strategy In terms of the number of technological options that the firm has available Correlated with the firms capacity to anticipate technological developments in particular areas early on Greater depth => increase flexibility and ability to respond to new demands from customers/users 34 17

18 Substance of Technology Strategy Technology Leadership Pioneering role vs. Monitoring role Product market strategy Cannon Technology, 2011: hnology/ Canon History: out/history/05.html 35 Canon s Technologies: Elemental (Key) Technologies Color Management Technology Communication Network Technology XML Technology User Interface Platform Technology Image Retrieval Technology DRYOS (Real-Time Embedded Operating System) Elemental (Key) Technologies System LSI Integrated Design Environment Simulation Technologies In-Process Visualization Technology Encoders Laser Doppler Velocimeter Galvano Scanner Micro Laser Interferometer Ultrasonic Motor 36 18

19 Canon s Technologies: 2011 Environmental Technologies High-Performance Bio-Based Plastics Technologies for Replacing Volatile Organic Compounds Ozone-Free Electrical Charging Technology Toner Fixing Technology Energy Conservation Technologies Future Technologies AISYS (Aspectual Illumination System) Mixed Reality Technology SED (Surface-Condition Electron-emitter Display) Organic LED Displays 37 Technology Supporting Canon Today (As of Feb. 2014) Product Technologies (Input devices) Digital SLR Cameras Embedded Operating System) Interchangeable Lenses Digital Compact Cameras Digital Camcorders etc Product Technologies (Output Devices) Inkjet Printers Photo Printers Laser Multifunction Printers 38 19

20 Technology Supporting Canon Today (As of Feb. 2014) Common Platform Common Platform Technologies Technologies Color Management System System LSI Integrated Design (CMS) Technology Environment Image Recognition Software Design and Technology Verification Technologies Communication Network In-Process Visualization Technology Technology Cloud Service Platform Simulation Technologies Technologies Ultrasonic Motor (USM) Security Technology Organic Light Emitting Diode Image Retrieval Technology Displays OS Technology Encoders 39 Substance of Technology Strategy: Organizational Fit Management Stance Meet the organizational requirements flowing from their competitive, value chain and resource commitment stances More likely to have an effective technology strategy 40 20

21 Evolutionary Forces Shaping Technology Strategy How a firm s technology strategy actually comes about and changes over time? Determinants of Technology Strategy (Exhibit 2) Shaped by the generative forces, and mechanisms : Technology Evolution (L,B) Strategic Action (L,U) Organizational Context (R, U) Industry Context (R, B) Generative/Regenerative Mechanism (Left) and Integrative Mechanism (Right) Internal Environment (Top)/ External Environment (Bottom) Applying the Framework: Research and Practice 41 Evolutionary Forces Shaping Technology Strategy: Technology Evolution Technology Adoption Cycle Technology S Curve 42 21

22 Evolutionary Forces Shaping Technology Strategy: Industry Context 1. Five Major Forces [2]: Industry Competitors, New Entrants, Buyers, Suppliers, Substitutes 2. Appropriability Regime associated with a technological innovation (Teece, 1986) 3. Complementary Assets needed to commercialize a new technology (Teece, 1986) 4. Emergence of dominant designs 5. Increasing returns to adoption 6. Emergence of industry standards 7. Social systems aspects of industry development 8. The competitive effects of the interplay of social systems characteristics and technological change 43 Evolutionary Forces Shaping Technology Strategy: Strategic Action Past & current success Lessons learned What actions? When confronted with the threat of radically new technology (switch to new technology, improved existing technology? 5.25 inch disk vs. 14 inch disk drive ) Faced with computer architectural innovations (Example: CICS vs RISC computer architectures) Getting into the new areas of business Corporate R&D capabilities 44 22

23 Evolutionary Forces Shaping Technology Strategy: Organizational Context Reflects the administrative approaches a dominant culture of the firm The dominant culture relates to technology Science (pharmaceutical firms) Engineering (semiconductor firms) Manufacturing (Japanese firms) Services Product development processes driven by technology push, need pull, or a balanced approach) 45 Evolutionary Forces Shaping Technology Strategy: Organizational Context Firm abilities to 1. Exploit opportunities associated with current strategy (induced process) 2. Take advantage of opportunities that emerge spontaneously outside the scope of the current strategy (autonomous process) 3. Balance challenges (1) and (2) at different times in the firm s development Shaping technology strategy Substantive Generic corporate strategy 46 23

24 Applying the Framework: Research and Practice Research Disruptive technologies Examples of their impacts to industries : Magnetic disk drives, Transistors, Electronic fuel injection Personal computer Internet Smart Mobile Devices Smart Power Grid Cloud computing Sustaining technologies (complements) Not receptive to opportunities of the newly discovered technologies (Organizational Context) Sales forces focus on existing customers improving technologies Lack of interest different dimension 47 Applying the Framework: Research and Practice Research - Some effects The initiators of the new technology Leave incumbent firm Start their own to pursue the technological opportunity The new entrepreneurial firm Find and pursue new customers Provide improvements offered by the new technology along the different dimensions Examples - SAP History: , , , 2002 to Today:

25 The History of SAP (as of Feb. 2014) A 41-Year History of Innovation, In 1972, five former IBM employees, launched SAP in Germany with the vision to develop standard application software for realtime business processing Video (5: 26 minutes) : The First 10 Years: First software module, and SAP system : The SAP R/2 Era : The SAP R/3 Era 2002-Present: Real-Time Data Where and When You Need it, Real-time moves to the Web and beyond: Cloud Computing, Mobile, and in-memory computing 49 Applying the Framework: Research and Practice Practice Technology Strategy Crown Cork and Seal (CC&S), Metal Can, Marks & Spencer (M&S), UK s leading retailer, Banc One Corporation, ; acquired by JPMorgan Chase & Co. on July 1, 2004 National Cash Register, Company Overview,

26 Applying the Framework: Research and Practice Practice Technology Strategy National Cash Register, NCR History/Timeline ( ), : Acquired by AT&T 1994: NCR name changed to AT&T Global Information Solutions (GIS) 1995: AT&T GIS spin-off 1996: AT&T GIS changed its name back to NCR Corporation 2012: Launches NCR Silver, a cloud-based POS( point of sales) system for small business. 2013: Completes $650 million acquisition of Retailx, adding innovative retail software and services. 2014: Completes $1.65 billion acquisition of Digital Insight, providing a market-leading SaaS platform to help banks transform their physical and digital business models. 51 Experience Through Enactment of Technology Strategy A Note of Performance (Enactment) as Experience In terms of Outcomes Return of Equity (ROE) = Net Income/ Share Holder Equity P/E (Price Earning Ratio) = Market Value per Share / Earning per Share (EPS) Market share Growth In term of Derived Experience (Feedback) Quantity and quality of the firm s technical competences and capabilities Effectiveness of strategy 52 26

27 Experience Through Enactment of Technology Strategy Implementing Technology Strategy through enactment of key tasks: 1. Technology sourcing: Internal and external 2. Deploying technology in product and process development 3. Using technology in technical support activities 53 Experience Through Enactment of Technology Strategy Implementing Technology Strategy through enactment - key tasks: 1. Technology sourcing: Internal and external Internal sourcing Firm s science-based R&D, applied R&D Absorptive capacity: firm s ability to recognize the value of new, external information, assimilate it, and apply it to commercial ends External sourcing Exclusive or preferential licensing contracts Strategic alliances Acquire certain technologies (structure ways) Continuous improvement in all aspects of the value creation and CPET delivery 575 Management process of Technology,

28 Experience Through Enactment of Technology Strategy: Key Tasks 2. Deploying Technology in Product and Process Development New product/market, and processes Technology drive product development? Product and/or market development to drive technology? Notebook computer => new drive technology, semiconductor Flash memory Three potential benefits (Wheelwright and Clark, 1992) Market position Resource utilization Organizational renewal and enhancement 55 Experience Through Enactment of Technology Strategy: Key Tasks 2. Deploying Technology in Product and Process Development (continue) Technology Integration (Iansiti 1997) Focus on the role of technology evaluation and selection processes that precede actual product development process Concerned with how choices of new technological possibilities (deriving from fundamental research) in relation to the existing application context (represented by the current product, manufacturing, and customer/user systems) affect the speed and productivity of the product development at the project level 56 28

29 Experience Through Enactment of Technology Strategy: Key Tasks 3. Using Technology in Technical Support Activities Field services: an interface between the firm s technical function and the users of its product or services Experience in use: feedback to enhance the firm s technical capabilities Example: Jet Engine Technology feedback from airline operations Two way information flow Expert knowledge from product developer => Enhance => Effectiveness of field operations Feedback from the field => Inform => Future development 57 Enactment Reveals Substance of Technology Strategy Technology Strategy Planning <=> Executing <=> Feedback 58 29

30 Conclusion 59 30