Formulating Technology Strategy by pptfiles



     BPT 3113 – Management of Technology
Chapter Outline
•   Introduction
•   Definition of Strategy
•   Linking Technology & Business Strategies
•   Significance of Strategy
•   Formulating Technology Strategy
•   Technology Innovation Leader
Lesson Outcomes
• Appreciate technology as a strategy component
  of organizations
• Know how to develop a technology strategy
• Identify advantages and disadvantages being a
  leader in technology innovation
• Effective technology management is based on successfully
  linking business and technology strategies
• The two strategies must be closely intertwined and highly
   ü Technology – core of system designed to satisfy societal /
     customer needs
   ü Business – to gain a sustainable economic advantage that
     provides a competitive edge

             Blurred visions of the     Well-coordinated and focused
                    future            organizations are more competitive
Definition of Strategy
§ Strategy
  o Plan that needs to be followed to compete and win – long term
  o A broad formula of how an organization intends to succeed

§ Strategic Management – consisting of 3 important and
  interrelated components
  o Strategic planning
  o Strategic implementations
  o Strategic evaluation
   Linking Technology and
     Business Strategies
• First step toward integrating business and technology strategies
  is to get the business and technical sides of corporate
  management to agree on a common set of priorities.
• Integrating technology strategy and business strategy can be
  thought of as two sides of a coin: Either side is worthless
  without the other

                                                   Framework for
                                                   Formulation of
                                                    Business and
  Linking Technology and
    Business Strategies
A number of generic questions that should be addressed by strategic
planners on both the business and the technical sides:
   1. To what extent is technology relevant to business?
   2. Which business strategies require technology?
   3. Where will we get it (the technology)?
   4. What are our core technologies for the business?
   5. In which technologies should we focus our research effort?
   6. What new strategic options will technologies provide?

                  Product A   Product B   ...   Product N
   Required       Relative                      Relative    Product Technology Matrix
   Technology 1   Strength                      Strength
                                                            To identify the relationship
   Required                   Relative                      between products / services
   Technology 2               Strength                          and the underlying
   Required                   Relative          Relative            technology
   Technology 3               Strength          Strength
Significance of Strategy
  Realizing Mission and Vision

   Focus on Right Technology

  To Keep Abreast of Changes

  To Take Advantage of Technological Innovation
Formulating Technology Strategy

                        Design &

       Purchasing &                     Human
       Outsourcing                     Resources

                       Strategies of
 R&D                                             Distribution



 The Wheel of Competitive Strategy [Porter, 1980]               A Model For Strategy Development
Formulating Technology Strategy
1.   Identify the mission, vision and goals
2.   Know the firm’s posture
3.   Make aggregate project plan
4.   Decide an acquisitions and organization
5.   Make resource allocation
6.   Lead the innovative effort
7.   Set-up evaluation methods
8.   Choose market entry strategy
Formulating Technology Strategy
1. Identify the Mission, Vision and Goals
   – Survive in competitive markets – efficient, competent and offer
     uniqueness  innovation
   – Organization without a strategy is like a body with a dead brain
     while an organization with poor strategy is like a sick patient
   – Core of the strategy is based on the vision, the mission and the
     objectives and goals that need to be realized

    Profitability     Innovation      Manager Performance      Physical and
                                       and Development      Financial Resources
    Productivity    Market Standing   Worker Performance         Public
                                         and Attitude         Responsibility
Formulating Technology Strategy
2. Know the Firm’s Posture
   – Examine the opportunities – within the firm, external to the firm,
     trajectories of technology
               Action              Posture                Risk
       Continue with Existing      Inactive               High
             Imitation            Reactive                Low
            Incremental            Active               Medium
              Radical             Proactive               High

        Context in Which
      Competitive Strategy is
Formulating Technology Strategy
3. Make Aggregate Project Plan
   – Basic steps in constructing such a plan:
     a. Mapping the varying kind of development projects
     b. Making capacity decisions
     c. Make provision for gaining critical skills and capabilities

4. Acquisitions and Organization
   – Sources of technology available to business operation
     a. Within the business operation
     b. From the corporate or other company laboratories
     c. From outside the corporation
Formulating Technology Strategy
5. Make Resource Allocation
   – Size of resources allocation and approaches vary from firm to
     firm (budget for a new product development, NPD)
      a. Some company may encourage more number of projects
         with a hope to hit one or two (open end budget)
      b. Some companies may decide the frequency of new product
         introductions and work back (objective – task method)
      c. Some companies may relate the investment to their sales
Formulating Technology Strategy
6. Lead the Innovative Effort
   – Consideration in leading for innovation are:
      a. Innovation climate
      b.   Innovation culture
      c.   Right people
      d.   Research as a team effort
      e.   Product champions
      f.   Performance appraisals

7. Set-Up Evaluation Methods
   – Measurable criteria are essential to assure benefits from
     innovation effort:
      a. Time – product or process introduction
      b. Cost
Formulating Technology Strategy
8. Make Market Entry Decisions
   – Divided into 3 categories:
      a. First movers (pioneer / leader)
      b. Early followers
      c. Late entrants (laggard)
   – To be first entrant – firm must posses the core capabilities
     required to produce the technology when needed
   – Intends to beat the earlier entrant to market with new version of
     this technology, it must have fast-cycle development processes
To Be First Mover
             •   Research and and
                 Brand loyalty development
                 technological leadership
             •   Preemption ofsupply assets
                 Undeveloped scarce and
             •   distribution channels
                 Exploiting buyer switching
             •   costs
                 Immature enabling
             •   technologies and complements
                 Reaping increasing returns
             •   advantages of customer
Leader in Innovation
•   Name recognition               •   Huge costs
•   Large market share             •   Inflexibility
•   A chance to define the         •   Pricing problem
    industry standard              •   Threat of competition
•   A head start on the learning
•   Protective barriers
•   High profit
•   Delayed customer switching
•   Favorable response by

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