1. Strategic Technology Planning - Lecture 21 Strategic Technology Planning – Lecture 2 Case Studies © 2009 ~ Mark Polczynski

2. Strategic Technology Planning - Lecture 22 Technology Strategy How will you get these technologies? Core Technologies Where are you starting from? Technology Roadmap What technologies will you need? Goal is to create a strategy for technology development What, why, when, who, where, how? End Game Product Roadmap What products will the world need from you? Core Technology Definition What is a core technology? Starting Points Starting Points

3. Strategic Technology Planning - Lecture 23 Example: Company X Core Technologies* Mechanics Force/power transmission (gears/levers/etc.) Fluid mechanics (air/liquid) High durability in harsh environment Low-cost, mass-producible “Miniaturization” (high power density) Low noise/vibration Electronics High power Low power High reliability in harsh environment Low-cost, mass-producible Miniaturization (high power/control density) Communications Optimized architecture (interoperability) Robust/secure Efficient bandwidth utilization Algorithms/Software System Performance optimization Diagnostics/prognostics Embedded Real time Minimal hardware Robust (harsh environment) Fundamental Sciences Metals Polymers Coatings Fluids Electrochemistry Electromagnetic fields Arc science Let’s examine this core technology at Company X

4. Strategic Technology Planning - Lecture 24 How does this work in practice? Electronics per se can be considered a “commodity” (e.g. consumer electronics). But for Company X the ability to design and manufacture electronics to all of the following requirements constitutes a core technology: 1. Miniature and 2. High and low power and 3. Harsh environment and 4. Low cost, mass producible. A competency in miniaturization, for example, does not constitute a core technology for Company X. Only the combination of all five capabilities provides a competitive advantage. This total set of five competencies provides a source of competitive advantage if competitors find this difficult to do or get.

5. Case Study: $3B Manufacturer of Fluid Power Components 5Strategic Technology Planning - Lecture 2

6. Fluid Power Group: Customer Value/Need Cost (component/system) Purchase (get it) Operation (make it work) Maintenance (keep it working) Performance (what you bought it for) Density (mass/volume) Efficiency (energy) Speed (response time) Emissions (what you didn’t buy it for) Acoustic emissions (zero noise) Liquid/gas leakage (zero leak) 6Strategic Technology Planning - Lecture 2 Always start here!

7. Fluid Power Group: Technical Capabilities Hardware (Physical) Electronics (for controls, sensors, and actuators) Materials/structures Mechanisms (making mechanical components do something) Transducers (sensors) Software (Virtual) Control algorithms (how things are supposed to work) Diagnostic/prognostic algorithms (what to do when they don’t work) Communications (architecture, protocols…) Human interface Systems (Solution) System architecture design (how things go together) System/component modeling/simulation/verification (how things behave) System/component optimization (optimize cost, performance, emissions) 7Strategic Technology Planning - Lecture 2 Long list

8. Fluid Power: Core Technologies Hardware (Physical) Electronics (for controls, sensors, and actuators) Materials/structures Mechanisms (making mechanical components do something) Transducers (sensors) Software (Virtual) Control algorithms (how things are supposed to work) Diagnostic/prognostic algorithms (what to do when they don’t work) Communications (architecture, protocols…) Human interface Systems (Solution) System architecture design (how things go together) System/component modeling/simulation/verification (how things behave) System/component optimization (how to optimize cost, performance, emissions) 8Strategic Technology Planning - Lecture 2 Short list

9. Fluid Power: Core Technology Top Priorities Electronics - High power - High temperature - Miniaturized Materials - Elastomers - Coatings - Fluids - Composites Control algorithms - Mixed-technology (electrohydraulic) feedback control - Adaptive control - Non-linear system control Diagnostics/prognostic algorithms - Fluid condition monitoring - Arcing fault - Smart pump - Smart hose System architecture design - Fluid power generation/distribution/actuation - Electrical power generation/distribution/actuation - Cooling system System/component modeling/simulation/verification - Acoustic noise generation/transmission/attenuation (NVH) - Fluid (liquid/gas) flow (CFD) - Heat transfer 9Strategic Technology Planning - Lecture 2 Goes in this year’s strategic technology development plan

10. Strategic Technology Planning - Lecture 210 Technology Strategy How will you get these technologies? Core Technologies Where are you starting from? Technology Roadmap What technologies will you need? Goal is to create a strategy for technology development What, why, when, who, where, how? Core technology top priorities Product Roadmap What products will the world need from you? Core Technology Definition What is a core technology?

11. Fluid Power: Core Technology Detail Electronics - High power - High temperature - Miniaturized Materials - Elastomers - Coatings - Fluids - Composites Control algorithms - Mixed-technology (electrohydraulic) feedback control - Adaptive control - Non-linear system control Diagnostics/prognostic algorithms - Fluid condition monitoring - Arcing fault - Smart pump - Smart hose System design architecture/optimization - Fluid power generation/distribution/actuation - Electrical power generation/distribution/actuation - Cooling system System/component modeling/simulation/verification - Acoustic noise generation/transmission/attenuation (NVH) - Fluid (liquid/gas) flow (CFD) - Heat transfer 11Strategic Technology Planning - Lecture 2 Complex harmonization!

12. Case Study: $10B Diversified Industrial Manufacturer 12Strategic Technology Planning - Lecture 2

13. Controls Current Applications - Electrical - Mechanical - Hydraulic Current Products Current Situation: 13Strategic Technology Planning - Lecture 2 Comm.Human Interface Fault DetectionFault ProtectionSensorsActuatorsPower Generation Power Transmission Power Consumption Question: What new technologies will be needed to help create and support future growth opportunities?

14. Future: Major applications will not change: power generation, transmission, and consumption in electrical, mechanical, and hydraulic systems. Basic products will not change: sensors, actuators, fault detection and protection, and controls. Problems: Growth opportunities here do not match growth requirements. Current products are physical/tangible, and therefore capital intensive, further limiting ability to grow. Solution: Develop value-added solution and value-added services products. Such products provide incremental growth opportunities founded on current basic products. These are non-physical, intangible intellectual capital products. 14Strategic Technology Planning - Lecture 2

15. Controls Current Applications - Electrical - Mechanical - Hydraulic Current Products Strategic Technology Development Plan: 15Strategic Technology Planning - Lecture 2 Comm.Human Interface Fault DetectionFault ProtectionSensorsActuatorsPower Generation Power Transmission Power Consumption Performance Monitor Performance Optimization Degradation Monitor Degradation Compensation Performance MonitorAdapt Degradation New Products

16. Future Growth Opportunities There are four distinct value-added solution/service new product opportunities. The areas are defined according to: Performance - relates to expected, planned, desired behaviors, i.e., systems that are “in control”. Degradation - relates to unexpected, unplanned, undesired behaviors, i.e., systems that are “out of control”. Monitor - relates to simply determining the condition of a system. Adapt - relates to changing the behavior the system. Performance Monitor Performance Optimization Degradation Monitor Degradation Compensation Performance MonitorAdapt Degradation 16Strategic Technology Planning - Lecture 2 Value-Added - Solutions - Services

17. There are four distinct value-added solution/service opportunities: - Performance monitor - Performance optimization - Degradation monitor - Degradation compensation There are three areas of application: - Power generation - Power transmission - Power consumption There are three market segments: - Electrical systems - Mechanical systems - Hydraulic systems The growth opportunities for are beyond comprehension! 17Strategic Technology Planning - Lecture 2

18. Good News: Because Company X has excellent understanding of customer applications, it is in an excellent position to provide these value-added solutions/services. Bad News: Beyond some rudimentary abilities to monitor performance, very few people really know how to do this stuff for large, complex systems, which is where all the money is! Most success stories utilize “conventional wisdom” to provide these functions, not “technology” per se. 18Strategic Technology Planning - Lecture 2

19. Strategic Technology Plan Recommendation: The technology of “Intelligent System Architectures” is just developing. Anyone that wants to make lots of money in this area needs to “institutionalize” this new technology. Company needs access to this technology (internal or external) to grow in this area. 19Strategic Technology Planning - Lecture 2

20. Recommendation: 1. Add a new research group called “Intelligent System Architecture”. 2.Group would be to create/acquire general models and algorithms for: - Performance monitoring, - Performance optimization, - Degradation monitoring, - Degradation compensation, for large, complex power generation, transmission, and consumption applications for electrical, mechanical, and hydraulic systems. How would this affect Company X Research and Development? 20Strategic Technology Planning - Lecture 2

21. How Should We Organize Corporate Technology? Algorithms/Software System Performance optimization Diagnostics/prognostics Embedded Real time Minimal hardware Robust (harsh environment) Fundamental Sciences Polymers Electrochemistry Electromagnetic fields Arc science Mechatronics/Sensors/Actuators Force/power transmission “Miniaturization” (high power density) High durability in harsh environment Low-cost, mass-producible Electronics/Controls Miniaturization High power Low power Full frequency range Harsh environment Low-cost, mass-producible Communications Architecture Robust/secure Bandwidth utilization Previous R&D group organization 21Strategic Technology Planning - Lecture 2

22. How Should We Organize Corporate Technology? Embedded Software Real time Minimal hardware Robust (harsh environment) Fundamental Sciences Polymers Electrochemistry Electromagnetic fields Arc science Intelligent System Architectures Performance monitoring Performance optimization Degradation monitoring Degradation compensation Mechatronics/Sensors/Actuators Force/power transmission “Miniaturization” (high power density) High durability in harsh environment Low-cost, mass-producible Electronics/Controls Miniaturization High power Low power Full frequency range Harsh environment Low-cost, mass-producible Communications Architecture Robust/secure Bandwidth utilization New proposed R&D group organization 22Strategic Technology Planning - Lecture 2