Design and Implementation of Technology Strategy: An Evolutionary Perspective

Technology Strategy Helps Answer Questions Which distinctive technological competences and capabilities are necessary to establish and maintain competitive advantage ? Which technologies should be used to implement core product design concept and how should these technologies embodied in products? What should be the investment level in technology development? How should various technologies be sourced—internally or externally? When and how should new technology be introduced to the market? How should technology and innovation be organized and managed ? Back

Capabilities-Based Organizational Learning Framework of Technology Strategy Exhibit 1 Technological capabilities Technology strategy Experience Technology is a resource. Technology strategy making  an evolutionary organizational learning process First Next Finally Back

Technological Competence and Capability Core competence The collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies. Three tests: Potential access to a wide variety of markets. Contribute to customer benefits. Difficult to imitate. Core competence vs. capability

Substance of Technology Strategy Competitive strategy stance Value chain stance Resource commitment stance Management stance the deployment of technology To position itself

1. Competitive Strategy Stance Technology choice Design concepts Physical implementation Components Architecture Ex: fans, sports cars Technology leadership / technology entry timing Timing of commercial use First mover / follower Appropriability regimes Control of specialized assets 儘管發展core competence花錢費力但還是應該做

1. Competitive Strategy Stance Technology licensing Firms have to decide to market their technologies themselves or license out 5 reasons for technology license: Not all technologies generated by a firm’s R&D efforts fit into its lines of business and corporate strategy. Companies may need to consider licensing their technology to maximize the returns on their R&D investments, because patents provide only limited protection against imitation by competitors. Smaller firms may be unable to exploit their technologies on their own because of the lack of money or complementary assets. International market development for the technology may require licensing local firms because of local government regulation. Antitrust legislation may sometimes prevent a company from fully exploiting its technological advantage on its own. 儘管發展core competence花錢費力但還是應該做

2. Value Chain Stance Decide the scope of technology strategy Firms should decide “make” or “buy” (outsourcing) Core technology / peripheral Make the decision based on its scale and its business focus Economies of scale / scope, learning effects, synergies Ex: GE 分工合作的概念

3. Resource Commitment Stance Depth of technology strategy Depth of technology strategy can be expressed in terms of the number of technological options that the firm has available Resource commitment determines the depth of technology strategy The more resource, the more technological options the firm has Ex: Cell phone 2G-3G

4. Management Stance Organization fit A science-based firm that has decided to be a technology leader for the long run probably needs to create a central R&D organization Japanese firms use multiple layers of contractors and subcontractors in an external network to foster extreme forms of specialization in particular skills 已有既定策略，來決定分工的程度

Evolutionary Force Shaping Technology Strategy Exhibit 2 Determinants of technology strategy Internal environment External environment Integrative mechanisms Generative mechanisms Strategic action Organizational context Industry Technology evolution strategy Evolutionary theory: variation-selection-retention 四個象限上面各打上一些重要的項目 Technology Evolution: (1)~(6) Industry Context: (1)~(8) industry structure, complementary assets; Strategic Action: inertia autonomous strategic action Organizational Context: industry context exerts strong external selection pressures on the incumbent firms and their strategies; however, a key feature of established firms is that they have an organizational context that allows them, to some extent, to substitute internal for external selection. organizational context serves as an internal environment. organization culture and structure Back

Technology Evolution Technology strategy Technology capabilities Endogenous and exogenous effects Different aspects of technology evolution have been discussed in the literature: S-Curve Dominant design Product-process interplays Technological change competence enhancing competence destroying De-maturity Disruptive technologies

Industry Context Industry structure (Porter’s five major forces ) Appropriability regime Complementary assets Increasing returns to adoption Industry standards Social systems aspects of industry development Non-market forces: government

Strategic Action Induced strategic action Autonomous strategic action

Organizational Context Organizational context serves as an internal selection environment 1.Induced process (sustaining innovation) 2.Autonomous process (disruptive innovation) 3.Balance 1 & 2 Organizational context takes shape over time and reflects the administrative approaches and dominant culture of the firm The founders have lasting impact on the firm’s organizational context. Ex: Foxconn (Hon Hai)

Applying the Framework: Research Disruptive technologies (called substitutes in Economics) Cannibalize existing technologies and undermine the strategic position of incumbent company Ex: transistor, PC, magnetic disk drive Organization rejection and recalcitrance New entrepreneurial firm will find and pursue new customers

Applying the Framework: Practice Consistency of strategic behavior: Ex1: Crown Cork and Seal (CC &S) Competencies / capabilities: Technology evolution: Strategic action: Organizational context: Industry context: Experience Ex2: Marks and Spencer (M&S) Ex3: Banc One Corporation Internal environment Strategic action Organizational context Integrative mechanisms Generative mechanisms Technology strategy Technology evolution Industry context External environment

Applying the Framework: Practice Problems arising when a change in study is not matched. Ex1: National Cash Register Company (NCR) EDP vs. Microelectronics

Experience through Enactment of Technology Strategy Technology sourcing Product and process development Technical support Technological capabilities Technology strategy Experience

Technology Sourcing Internal sourcing External sourcing Depend on the firm’s R&D capacity Ex: IBM (high-temperature superconductivity) External sourcing Through exclusive or preferential licensing contracts or through strategic alliances

Product and Process Development Product and process development activities embody important aspects of the dimensions of technology strategy Strike the delicate balance between letting technology drive product development allowing product development and/or market development to drive technology

Technical Support Two way flows of information are relevant The function commonly termed field service creates the interface between Firm’s technical function The users of the firm’s product or services

Enactment Reveals Substance of Technology Strategy Interactions among Components of substance Enactment in technology strategy making Two conjectures The substance of technology strategy should be comprehensive Technology strategy should be integrated

Enactment Reveals Substance of Technology Strategy Enactment (Modes of Experience) Substance External Technology Sourcing Internal Technology Sourcing Product Development Process Technical Support Competitive Strategy Stance (Choice / leadership / Entry timing / licensing) Value chain stance (Scope) Resource commitment stance (Depth) Management stance (Organizational fit) Exhibit 3 Back

Conclusions A capabilities-based organizational learning frame work of technology strategy Determinants of technology strategy Substance and enactment in technology strategy Answer Exhibit 1 Exhibit 2 Exhibit 3 Questions