Session VII

Technology Planning
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 & 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.
 Technology Planning
Technological Market
Knowledge Knowledge

Technological/Social
Forecasting
Technology Assessment

Top Down
Planning Alternative
Scenarios

Technological
Strategy (ies)

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

Individual Projects Bottom Up Individual Projects

R & D staff Planning Development/Engineering Staff
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 organizations 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, mainframes
Motorola Wireless communications
Black and Decker Fractional-horsepower motors and
household appliances
Boeing Large-scale system integration,
efficient design and manufacturing,
knowledge of its customers
Corporate Technology Portfolio Analysis
For a multi-business 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
 Technology Portfolio Matrix

High
Technology Importance
Bet Draw

Cash-In Fold
Low

High Low

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
- invest substantially – offensive
- divest completely
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.
e.g., 3 M uses a very similar approach
Nippon Steel - evaluating diversification
opportunities into new materials
chemicals and biotechnology
 Technology Market Matrix
It consists of

Forecasting evolving technological possibilities and capabilities together

with evolving market needs and opportunities.

Desegregate this technology market matrix into its component sub-

matrices 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.
 Product/Technology Matrix

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
 Environ-
mental
Co e
rpo rat

Input
Str
r ate orpo hy
eng C
i lo sop
ths
Ph
Corporate
Vision

Actor variables Parameters

Situation 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 - Vendor 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/Freeman

- 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 rather than price sensitive
- All round excellence is needed.
- R-intensive organization.
 R & D Requirements
- Non directed research
- May make fundamental contributions
e.g. Bell labs of AT & T (Now Nokia Bell Labs)

Characteristics of R-intensive organizations (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 organizing 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- “Follow 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 defensive in
some area and offensive in others.

e.g., European semi conductor industry followed a defensive strategy

in 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.
 The Imitative Strategy Base
Reliability Engineering After
& Sales
Quality Control Services

Tertiary
Technological

Development
Knowledge

Knowledge
Markets
&
Full
Design Marketing
Production
Pilot/
Prototype
Production

Education
&
Advisory
services

New
Test
Product
Marketing
Development
Dependent Strategies
- 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.
Thank You