Technology and scientific principles (Sood and Tellis, 2005)

• Technology
• Systematic application of scientific principles/ knowledge to achieve a specific objective-{productions of goods, provision of services, or development of
new product, process, or service}.

Technology Principle
Display monitor
Cathode ray tube (CRT) Form an image when electrons, fired from the electron gun, converge to strike a screen
coated with phosphors of different colors
Liquid crystal display (LCD) Create an image by passing light through molecular structures of liquid crystals
Plasma display panel Generate images by passing a high voltage through a low-pressure electrically neutral highly
ionized atmosphere using the polarizing properties of light
Organic light emitting diode Generates light by combining positive and negative excitons (holes emitted by anodes
(OLED) and electrons emitted by cathodes) in a polymer dye through the principle of electroluminescence

Computer Printers
Dot-matrix Create an image by striking pins against an ink ribbon to print closely spaced dots that form
the desired image
Inkjet Form images by spraying ionized ink at a sheet of paper through micro-nozzles
Laser Form an image on a photosensitive surface using electrostatic charges, then transfer the
image on to a paper using toners, and then heat the paper to make the image permanent
Thermal Form images on paper by heating ink through sublimation or phase change processes
 Product; Technologies; and Principles

Automotive system= Product (?)

Subsystems= Body, Engine,

Suspension, Electronics, Drivetrain

Component=
Transmission, Clutch, Driveshaft,
Wheel bearing

Technology = Composite material,

Laser technology, CIM, Surface
technology

Principle = (light amplification by

stimulated emission of radiation),
light is emitted through a process Other uses of Laser Technology:
of optical amplification based on optical disk drives, laser printers, and barcode scanners; fiber-optic and free-
the stimulated emission of space optical communication; laser surgery and skin treatments; cutting and welding
electromagnetic radiation. materials; military and law enforcement devices for marking targets and measuring
range and speed; and laser lighting displays in entertainment.
 Principles to technology to Innovation
BASIC APPLIED NEW PRODUCT DEVELOPMENT ON MARKET

Universities & Research Institutes

Some large Corporations Companies (both small & large)

Governments & Private investors Venture Corporate Sales Revenue

Research Councils Capital R&D (ROI)

A process that begins with basic scientific discoveries and ends with commercial products that are adopted by a wide
range of customers

Gestation time = the time it takes for a firm to convert a patent to a commercial product.
The average gestation time for technologies is 14.5 years display monitors, 14.3 years for desktop printers, 9.7 years
desktop memory, and 22.7 years for data transfer technologies (Sood and Tellis, 2005)
Mapping technology
and business profiles
within large firms

Looks like a related

diversification or unrelated
diversification ??

A technology strategy =

the approach that a firm

takes to obtaining and using
technology to achieve a new
competitive advantage, or

to defend an existing
technology-oriented
competitive advantage
 Technology and Strategy
• Technology and competitive strategy:
• Technology influencing Business Strategy:
• Porter’s “generic strategies” concept is a widely used framework for classifying competitive
strategies.
• The generic strategies are:
• Industrywide differentiation
• Focused differentiation
• Industrywide cost leadership
• Focused cost leadership

• Technology influencing Value chain

• Technology and Corporate Strategy

 Technology and Strategy
Generic strategy

Overall cost Overall differentiation Focus-segment cost Focus-segment

leadership leadership differentiation

Technological policies

Product technological change Product development to reduce Product development to Product development to Product design to meet
product cost by lowering enhance product quality, design only enough exactly the needs of the
materials content, features, deliverability, or performance for the particular business
facilitating ease of switching costs segment's needs segment application
manufacture, simplifying
logistical requirements,
etc.

Process technological change Learning curve process Process development to Process development to tune Process development to tune
improvement support high tolerances, production and delivery the production and
Process development to greater quality control, system to segment delivery system to
enhance economies of more reliable scheduling, needs in order to lower segment need in order to
scale faster response time to cost improve performance
orders, and other
dimensions that improve
the ability to perform

Source: Book: Strategic Management of Technology and Innovation by Burgelman, Christensen and Wheelwright, 2009 McGrawHill
 Technology and Strategy
Technology and Product-Market Strategy

• A firm’s strategy is manifested in the products and services it brings to market.

• Harris, Shaw, and Somers (The Strategic Management of Technology, 1981) suggest:
• Step 1: Identify and classify technologies in terms of their importance for competitive advantage
• Step 2: Assess the firm’s position relative to its competitors
• Step 3: Make the strategic choice
 Step 1: Technology needs assessment and types
• Technology audit: Process of clarifying the key technologies on which an organization depends

• Base technologies (yesterday’s source of CA)

• Common place/ commodity (hygiene resources) in the industry;
• everyone must have them to be able to operate= ability to assemble PCB in the electronics industry

• Key technologies (today’s source of CA)

• have proved effective,
• provide a strategic advantage (cost/ performance/ quality) because not everyone (proprietary/
patented) uses them= digital electronics design skills or high speed processor chips

• Pacing technologies (tomorrow’s probable source of CA)

• while not currently being deployed in the industry, have the proven potential of displacing one of the
key or even base technologies= fuzzy logic software, neural networks, parallel processing systems

• Emerging technologies
• are still under development and thus are unproved
 Step 1: Analysis of rent generating potential

Source: Arthur D Little “The Strategic Management of

Technology,” European Management Forum, 1981
 Step 2:
Evaluation of firm’s technology position and its technology competence profile
Technologies Weighting Assessment of Assessment of Relative technology position
factor own business competitor
C1 C2 C3 Strong Medium Weak
Key technologies 3-5
CAD/ CAM 5 4 4 2
FMS 4 3 3 4
Pacing 2-4
technologies
Laser technologies 5 4 5 5
Composite 3 4 3 3
material
Base technologies 1-2
Cast steel surface 4 3 3 3
Ball bearing 3 5 4 5
Over all rating
 Step 3: Making the choice

Technology importance
(is a function of the actual/ Bet Draw
High
(positioned ambiguously;
potential value it brings to (full commitment)
Two options: Invest/ Withdraw)
some class of products for
the customer/ user)

Cash in Fold
(Examine carefully)
(disengage/ redeploy resources)

Low
High Low

Relative technology position

(expressed wrt competitors is a function of patent/ trade
Harris, Shaw, and Somers (The Strategic
Management of Technology, 1981)
secrets/ know-how position; learning curve effects;
talent availability)
 Technology and Strategy

Business Unit Level Audit Corporate Level Audit

• At this level, the audit investigates
• Five important categories of variables that
whether and how the innovative
influence:
capabilities of the corporation are
larger than the sum of those at the
• Resources available for innovative activity individual business units. Five key
• Capacity to understand competitors’ categories are:
strategies and industry evolution with • Resource availability and allocation
respect to innovation • Capacity to understand multi-industry
• Capacity to understand technological competitive strategies and evolution
developments relevant to the business unit • Capacity to understand technological
• Structural and cultural context of the business developments
unit affecting internal entrepreneurial • Corporate structural and cultural context
behavior
• Corporate strategic management
• Strategic management capacity to deal with capability
internal entrepreneurial initiatives
Partial Check List: Business Unit Level Audit
Source: Burgelman, Christensen and
Wheelwright (2009)
Partial Check List: Corporate Level Audit
Source: Burgelman, Christensen and
Wheelwright (2009)
 Technology and Strategy: Value chain implications

Source: M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, New York: Free Press
1985