Session-VI

Technology Planning

Prof. Sushil
Department of Management Studies, IIT Delhi
profsushil@gmail.com
 Technology Planning
It should involve - top-down-bottom-up
- side ways participation

- Credibility gap between R & D and managers.

- Technology planning involves the recasting of

technology terms and objectives into business terms
and objectives.

- It helps R & D to translate their technology know-how

into business know-how.

Forecasting Technological and Market Trends and Changes

Scenario of – Social, economic, industrial and technological

trends and changes.

- Next 25 years or larger

- should identify the levels of maturity and

potencies of the core technologies of the SBU.
Present SWOT Analysis

- Defining current core technologies Products, Markets

and Competition

- Technology audit of the firms

Future SWOT Analysis

- Formulating the technology plan

- Alternative future scenarios are explored and

alternative technology options and target markets are
evaluated over an appropriate planning horizon

- Firms internal R & D, Technology acquisition and

alliance strategies as well as its business strategy are
determined
 Technological Market
Knowledge Knowledge

Technological/Social
Forecasting
Technology Assessment

Top Down Alternative

Planning Scenarios

Technological
Strategy (ies)

Desired Side-ways:
Side-ways: Scenario (s) Production

Marketing
Services etc.
R & D Budget

Allocations

Longer - Term Shorter - Term

Nondirected Directed Promary/Experimental Secondary Tertiary Pilot/

Fundamental Applied Development Development Development Prototype
Research Research & Design - Production

Bottom Up Individual Projects

Individual Projects
Planning Development/Engineering Staff
R & D staff

Figure 4.4. Technology planning

 INDUSTRIAL CORPORATE
SECTOR BUSINESS
VALUE CHAIN CORPORATE CORPORATE PLAN
CORE TECHNOLOGY TECHNOLOGY
COMPETENCIES STRATEGY

STRATEGIC
TECHNOLOGY BY BUSINESS UNITS
INDUSTRIAL LONG-RANGE
RESEARCH PLANS
SECTOR MATRIX
PLANS

PRODUCT –
DEVELOPMENT
TECHNOLOGY CORE PRODUCT CYCLE MANAGEMENT
S-CURVES DEVELOPMENT

STRATEGIC CONCURRENT
TECHNOLOGY BUSINESS UNITS ENGINEERING
SYSTEMS MARKETS PRACTICES

PRODUCTION –
STRATEGIC IMPROVEMENT
TECHNOLOGY
BUSINESS UNITS PLAN
BOTTLENECKS
CURRENT PRODUCTS

SBU
COMPETITIVE SBU TECHNOLOGY PRODUCT-
NEXT-GENERATION ROADMAP
BENCHMARKING DEVELOPMENT
TECHNOLOGY
MAP
SYSTEM

Figure 4.4 Technology planning process in a diversified firm.

 THE ASSETS PROCESS

Business
Resources
Objectives
Applications Targets

Competitive Specify (2)

Position Technology
Organizational
Strategy
Systems Returns
and
Company Market Impacts
Approach Criteria
Strengths Needs

Execute (4) Results Transfer (5)

Assess (1) Select (3) Plans
Technology Technology Results for
Current
Portfolio Projects Investment Deployment
Situation

Concepts
Adjustments
Operational
Assets
Trends
Business Secure (6)
Environment Long-Term
Positions

External Environment
 CONCEPTUAL MODEL OF THE TECHNOLOGY
SOURCING PROCESS

I. Defining Business Needs and Benefits

IV. V. VI. VII.

II.
III. Evaluating
Conducting Opportunities Negotiating Working
Organizing the Search-and- …Confirming and Together and
Developing a
search Effort Find Fit and Finalizing Achieving
Game Plan
Activities Interest Agreements Success

VIII. Ensuring Organizational Learning and Improvement

 Develop stat –of - art technology

Technological Breakthroughs
Development To JVPs
strategy And other
Transfer
Leapfrogging innovations strategy
Customer
s
Cosmetic
Forecast, Assessment, and Planning

innovations

Decaying
Technology

State – of - art

Develop or
Costomization
Strive for

capability Obsolete
Phase – out
Absorption Innovation
Indigenizatio strategy
n strategy strategy
strategy to exploit Technology
technolog
y

Incremental

Innovations

Leapfrogging innovations

Acquisition
strategy

Radical innovations

Acquire state – of - art technology

Interaction of Technology Strategy Components

 External
Environmen
t
Generic
Markets
&
Opportunitie
s
OL NEW
D

INTERNAL ENVIRONMENT
OLD

Capabilities & Products

Generic Technological

Normal
NEW

Revalu-
tionary
Figure 4.3. Strategy and the technology – market matrix
Technology Planning at Business and
Corporate Levels

SBU - Technology needs to be explicitly

considered as a determinant of competitive
advantage

Corporate - Portfolio of SBU, - financial appeal of

technological possibilities and opportunities
Koerner from GE’s vice president
“The best context for a discussion on the
impact of technology on a particularly competitive
environment is the individual business.”

Corporate level R & D

- Common core technologies

Prahalad and Hamel

- Many organisations have grown by developing
core technologies and competencies across a
number of SBUs.
e.g., 3 M
- core technology of coating materials
- intrapreneurial culture
Japanese
Canon
- Microprocessor controlled optical imaging
Honda
- Engines and power trains
NEC
- VLSI and system integration

Technology planning addressed at SBU –

reviewed at corporate level
SBU Technology Planning
- Merging of currents from both the external and internal environments of
the SBU into a confluence or tide

- goals expressed in societal and economic rather than

technological terms- but achieved largely through the
pursuit of specific tech- based plans and strategies

- Matching evolving technological possibilities and

capabilities to evolving market needs and opportunities

- technology- opportunity matrix

- new technology continuum

- present markets and new markets continuum

 CORPORATE CORE COMPETENCIES

Company Example

Florida Power and Light Transmission network

Sony Miniaturization

Honda Motors
NEC Telecommunications, semiconductors, and
mainframes
Motorola Wireless communications
Black and Decker Fractional-horsepower motors and household
appliances
Boeing Large-scale system integration, efficient
design and manufacturing, and knowledge
of its customers
Corporate Technology Portfolio Analysis

For a multibusiness corporation

- ensure that technology and business plan are

congruent with corporate performance criteria,
strategies and goals.

For a technologically diversified corporation

- evaluation primarily financial

Thus, the corporate level process is a

review of individual SBU plans to see that they are
mutually supportive (Synergies and economies of
scale) and congruent with corporate goals.

e.g., Hitachi – Central Research Laboratory

Technology Portfolio Analysis
 High Bet Draw
Importance
Technology

Cash- Fold
In
Low

High Low

Figure 4.7. Technology portfolio matrix. Source: Reprinted from Long Range Planning, N.K. Sethi et al., “Can
Technology be Managed Strategically?” Pp. 96-97, Copyright 1985, with kind permission from pergamon
Press Ltd., Headington Hill Hall, Oxford OX3 OBW, U.K.
 Technology Portfolio For HHML Products
High
Bet Draw
Splendor CD - 100

Importance
Technology

Cash-In Fold
CD – 100SS Sleek

Low
High Low
Relative Technology Position
What HHML Plans to do
Bet Draw
High
Splendor CD - 100
Importance
Technology

CD – 100SS Sleek
Cash-In Fold
Low
Low
High
Relative Technology Position
 Matching Business and Technology Portfolio
Business Technology

B B
A
E A
Attractiveness
E

Importance
C D C
D

F F

Competitive
Position
Position

Investment Strategy

Bet A
A
Draw E

D
Cash-in A
Fold F

Relative Expenditures

Figure 4.8. Technology-investment matrix. Source: Reprinted from Long Range Planning, N.K. Sethi et al., “Can
Technology be Managed Strategically?” Pp.96-97, Copyright 1985, with kind permission from Pergamon Press Ltd.
Headington Hill Hall, Oxford OX3 OBW, U.K.
 Technology Portfolio Matrix

Bet - promising technology

strong competitive position
should invest in SBUs developing this technology.
following an offensive or defensive strategy.

Draw - promising technology

relatively weak competitive position

Two choices e.g., 3 M uses a very similar approach

Nippon Steel -evaluating diversification
- invest substantially – offensive opportunities into new materials
- divest completely chemicals and biotechnology

Cash in - the alternative situations

- an ageing technology – declining market
- rapidly evolving technology with a modest
market and short product life cycle.
- niche market which may not warrant attention
of large corporation.
Divestment is preferable or only Modest investments.

Fold - divested as quickly as possible

- this identifies technology investment
priorities.
Technology market matrix

It consists of

Forecast evolving technological possibilities and

capabilities together with evolving market needs and
opportunities.

Desegregate this technology market matrix into its

component submatrices and to assess the firm’s future
competitive strengths in order to identify potential
future technology market synergies and options.

Formulate technological innovation mission or plan,

based upon a selection from these options.

Through participation of R&D and other functional

managers best achieved through the use of independent
third parties (consultants) as facilitation.
 Generic
1. Existing Customer Base Served with Existing Products Technology
-Market
2. New Customer Base served with Existing Products
Distribution
and
3. Existing Customer Base Served with New Products Service
Channels

4. New Customer Based Served with New Products

Market
Segments

Old New

Core Production Product Products

Old 1 2
Technologies Methods Lines
New
3 4
 PRODUCT COMPETITITVENESS TECHNOLOGY COMPETITIVENESS

PRODUCT PERFORMANCE COST TECHNOLOGY 1 TECHNOLOGY N

COMPETITOR ‘A’
PRODUCT 1
PRODUCT 2

PRODUCT N

COMPETITOR ‘B’
PRODUCT 1
PRODUCT 2
PRODUCT N

OUR COMPANY
PRODUCT 1
PRODUCT 2

PRODUCT N

Figure 8.8 Competitive benchmarkinng –competitor/technology matricx .

 TECHNOLOGY 1 TECHNOLOGY 2 TECHNOLOGY N
BUSINESS ‘A’
PRODUCT 1
PRODUCT 2
PRODUCT N

BUSINESS ‘B’
PRODUCT 1
PRODUCT 2
PRODUCT N

BUSINESS ‘M’
PRODUCT 1
PRODUCT 2
PRODUCT N

Figure 8.7 Product/technology Matrix.

 Input
Corporate
Vision

Parameters
Situation variables Actor variables
Corporate Objectives
- Organizational learning
- Customer needs - Training needs Core Competencies
- Customer Knowledge - Organizational renewal
of new technology - Innovation culture Industry foresight
- Competition - Image building
- Organizational flexibility Competitiveness

Process Variables
Investment related: Development related:
- Equity participation - Vender development
- Technology pricing - Implementation of new technologies
- Investment in local R & D - Indigenization
- Investment in vendor - Technology acquisition decision
development - Innovation capability
- Chaos handing capability
- Cost effectiveness of technology
Commercialization related - Degree of technology anailability
- Timing strategies - Clarity of technology strategy
- Customer need satisfaction - Innovation flexibility
- Usage flexibility
- Strategic flexibility
- Acquisition flexibility
- Research productivity

L–A-P
Implementation
 Technology Timing Strategies
- timing of technology entry to market
- extent of its segmentation and specialization

Ansoff and Stewart/Feeman

- constitutes a continuum rather than a number of

discrete types.

Each strategy may shade into others and/or

corporation or SBU may pursue one or more strategies
simultaneously in different product- market areas.
Offensive Strategy- Leadership ‘First to Market’

e.g.,
IBM in computers, RCA in television
TI in semiconductors, DuPont in Chemicals
Less well known
Proctor and - Fluoride in toothpastes
Gamble preventing tooth decay
Unsuccessful attempts
Comet airliner- failed due to technology reasons
Concorde - failed for political, economic and environmental reasons.
- Introduce and continue to be first
- Market is performance than price sensitive
- All round excellence in needed.
- R-intensive organisation.
 R & D Requirements
- Non directed research
- May make fundamental contributions
e.g. Bell labs of AT & T

Characteristic of R-intensive organisations (Flexible)

- Non directive work assignments and indefinite
objectives which are broad cast widely
- Continuing evaluation of results and swift perception
of significant outcomes
- Value innovation offers efficiency
- Gives considerable freedom to produce results
- Inspired adhocracy rather than deadening bureaucracy

Pilot/Prototype Production
- Remain stages as swiftly as possible
- Research emphasis is not at the expense of the
development, design, manufacturing, and marketing
- problem cannot be solved by ‘rule of thumb.’

Patents and Licensing

- Strong patent positions
- Technology intensive
- bigger proportions of its budgeting
R&D and related activities than the industry average.

Metaphor – Horse breeding, training and racing

Marketing, User Education and Services

- Tech-push market-pull synergy

- considerable efforts in setting up after-sales servicing
networks and user training programmes
- Market leadership position by introducing incremental
improvements
- information feedback and learning
- high downstream coupling
- open system process with feed forward and feedback
- cybernetic self organising system has the ability to
identify opportunities and threats in environment, and
exploit and adapt to them before the competitors.
- responsiveness
- swift reaction time
- accelerate the chain reaction
- often have pressure-cooker climate.

Marketing Emergent Technologies

- If successful enjoy large sales and consequent learning
curve cost advantages enable to drop prices faster than
competitors.

e.g., Sony – first transistor radio walkman

Japanese Company – low cost VCRs
Defensive Strategy- “Flow the Leader”

- Offensive strategy fraught with risk

- Good profit opportunities occur in performance

maximizing stage

- Emergent stage mortality rate is high

- Defensive innovator averse to risk of innovation, if a

looser it looses nothing
if it is a winner swiftly follows the leader with
its own vision.

- Innovation base with monitors technology market

opportunities actively and continuously

- Operates close to the state-of-the art in its successive phases

- Is able to innovate swiftly

Differences

Company has the scientific knowledge to exploit a new

innovation once it appear to be successful.

Strong in experimental development design engineering

And successive functions in technology base

- less emphasis in education, training and advisory

services

- “piggy back” on the success of leader.

Patent position- defensive annotator must seek to

subvert own patents and use them as bargaining
counters.

Usually a mixed technology strategy is followed

defensiveEuropean
e.g., semiand
in some area conductor industry
offensive followed a defensive strategy in
in others.
deference US

e.g., Texas Instruments developed few IC European Industries followed.

- More recently European Semi conductor manufacturing followed

offensive strategy for next generator DRAM- e.g. Phillips, Siemens,
Thompson by entering into joint ventures.
Defensive v/s Offensive ?

The counter offensive strategy

Pavitt –

The choice of strategy dependent upon firm size

and nature of accumulated technology competencies

Teece –
Well executed offensive strategy to be successful
when
- The key inventive novelty embodied in the
innovation can be effectively protected by
patents, trade secrets, or other form of tacit
knowledge.

- The offensive innovation constitutes the

dominant design.
Imitative strategy – ‘Me-Too’

- Technology moves from fluid to transition to specific

state
-
e.g., Pharmaceutical Industry
Generic drug firms – manufacturing and marketing of
out-of-patent drugs
- IBM PC clone manufacturers

- Development, design, production and service intensive

rather than R-intensive

- Attractive to domestic company in countries which

traditionally lag behind (India)

- Japanese company followed this strategy very

successfully after WW-II before same moved to
defensive on even offensive strategies via absorbent
strategies.
- Truncated technology innovations base

- Efficient enactment of a specific design concept

- Supervision is directive, tasks are structured,

organizational climate favour efficiency rather than
innovativeness.
 Reliability Engineering After
& Sales
Quality Control Services

Tertiary
Technological
Knowledge

Knowledge
Development

Markets
&
Full
Design Marketing
Production
Pilot/
Prototype
Production

Education
&
Advisory
services

New
Test
Product
Marketing
Development

Figure 4.9. The imitative strategy base.

 After
Quality
Sales
Control
Services

Production Marketing

Education
&
Advisory
Services

Figure 4.10. The dependent strategy base.

 Dependent Strategies – ‘Branch Plant’

- subsidiary or specialized dept of a large company.

- national subsidiaries of MNCs

Absorbent Strategies e.g., Japan World War II

- acquires licenses from an offensive – defensive

innovator to exploit innovation in domestic market.

- uses surplus cash flow to assimilate the technology

know-how and build up own R&D capability.

- launch its own performance maximizing and cost

reducing incremental innovations in both domestic and
offshore markets.

Japan - 1200 year old ability of the Japanese

culture to adopt, adapt and improve
offshore ideas.

Other technologically less developed countries seeking

to replicate it.
 Other (non technologically) Innovative Strategies

Drucker

- it is social rather than specific technology

innovation that have the largest impacts.

Simon Ramo

- prudent balance between introduction of

innovations and maintenance and extension of
ongoing operations

- promotion innovations

- distributing innovation

- financial innovations.

Technologically cosmetic
cosmetic innovations are vital in consumer expendable industries

- detergents, personal toiletries, etc.

- judicious synthesis of technology and non technology
innovation.

- BPR

e.g., McDonalds and Beni hana

Commercial success marrying well
established essentially non-innovative
manufacturing management with innovative
marketing approach in fast food and
restaurant.

Xerox - Xerography- revolutionary innovation

innovative-pricing-approach
Charge – per copy basis
may cases higher sale price per unit
because net revenue was higher than sale price.

Texas Instruments and Sony

novel approaches to market distribution and pricing

Business entrepreneur + Technology Entrepreneur