1. Integrating Business Strategy and R&D Strategy Frameworks for R&D Strategy Formulation

2. Critical Decisions in R&D Management Why should the company carry out R&D? How much should the company invest in R&D? What is the role of R&D in the company? What types of R&D should the company engage in? What should the company’s R&D strategy be? Which R&D projects should be selected? What should be the criteria for R&D project selection? How can investments in R&D be allocated optimally? How can the company manage its R&D projects effectively and efficiently? 2

3. Strategic Planning Process Formulating the strategy Scanning the external environment Reviewing the mission Accessing the internal capabilities 3

4. Scanning the External Environment for R&D 1 Practiced throughout the product life cycle Building a comprehensive data base Anticipating the responses of competitors Not feature and function orientation, but business solution and benefit orientation 4

5. Scanning the External Environment for R&D 2 Identifying information needs in detail – Specific topic – Specific focus – Specific time frame Collecting data from various sources available – Understanding the source of information – Understanding the methodology of data collection – Comparing the information from different sources Documenting for own files: sources, methodology, data, and assumptions made 5

6. Essence of Strategic Management Translating – mission, objectives, strategy into policies and tactics – processes – resources – linkages 6

7. Technology Adjustment Reassessment of internal and external environment – Periodic – Triggered by external events – Triggered by own benchmarking activities 7

8. Designing the Technology Strategy Based on the company’s over-all strategy, identify important product-market technologies Use technologies broadly in the various activities within the company’s value chain Commit resources to the selected technologies Align organization design and management techniques to facilitate the technology function 8

9. Maturity of Technology 9 Natural limit of technology EmbryonicGrowthMatureAging Level of technology Time

10. Maturity of Technology 10 Natural limit of technology EmbryonicGrowthMatureAging Level of technology Time

11. Maturity of Technology in Reality 11 Natural limit of technology EmbryonicGrowthMatureAging Level of technology Time

12. Maturity of Technology and Competitive Impact of Technology 1 Maturity of technology is intrinsic to a technology, regardless of the industry Competitive impact of a technology is extrinsic, the impact closely dependent on the industry that applies the technology 12

13. Maturity of Technology and Competitive Impact of Technology 2 Maturity of technology gives insight to the potential for future technological advances Competitive impact of a technology indicates the differences that advances in technologies have to specific industries and specific businesses 13

14. Types of Technologies by Competitive Impact Pacing technologies Key technologies Base technologies 14

15. Pacing Technologies Technologies that have the potential to change the entire basis of competition Have not yet been embodied in products or processes These often develop into key technologies 15

16. Key Technologies Technologies that are most critical to competitive success because they offer the opportunity for meaningful product or process differentiation These yield competitive advantage 16

17. Base Technologies Technologies that, although necessary and essential to practice well, offer little potential for competitive advantage These technologies are typically wide-spread and shared 17

18. Competitive Impact of Technologies Potential to change the basis of technological competition Embodied in products and processes, differentiated in leading companies Essential, but generally known to and practiced by all competitors 18 PacingKeyBase Time

19. Strategic Mission of R&D 1 To exploit the potential for improvements in the competitive position in technologies that are important to the business 19

20. Strategic Mission of R&D 2 Key technologies: main source of competitive advantage Pacing technologies: exploring the future opportunities Base Technologies: should always be mastered for sustaining competitiveness 20

21. Strategic Management of Technology Recognizing important technologies for the business (maturity of technology and competitive impact) Mastering the important technologies to gain sustainable competitive advantage Using technologies effectively by integrating them with the other success factors of the business 21

22. Technological Competitive Strength Measures the degree to which a particular company masters, compared to its competitors, technologies important for the business or critical to the successful conduct of R&D 22

23. Measuring Technological Competitive Strength No rigorous measures Size and competence of the resources that the R&D organization has for achieving the desired results 23

24. Levels of Technological Competitive Strength Dominant Strong Favorable Tenable Weak 24

25. Dominant Technological Competitive Strength Powerful technological leader Strong in commitment, funds, manpower, creativity, … Well recognized in its industry Sets pace and direction for technological development Competitors consistently seek to catch up 25

26. Strong Technological Competitive Strength Able to express independent technical action, set new directions Technological commitment and effectiveness consistently high Technological accomplishments distinguish its strategic business units (SBUs) from lesser competitors Competitors consistently seek to catch up 26

27. Favorable Technological Competitive Strength Able to sustain the technological competitiveness of the strategic business units (SBUs) it serves Has strengths that can be exploited to improve the technological competitive position Not a technological leader except in developing niches 27

28. Tenable Technological Competitive Strength In a catch-up mode Unable to set independent course in development Can maintain the competitiveness of its strategic business units (SBUs), but unable to differentiate them from competitors 28

29. Weak Technological Competitive Strength Declining quality of technical output compared to competitors Short-term firefighting focus Products’ and processes’ costs slipping compared to competitors Difficult but not impossible to turn around 29

30. Technological Competitive Strength Dominant. Technological leader Strong. Sets new directions Favorable. Not leader, except in niches Tenable. In a catch-up mode Weak. Firefighting focus 30

31. Example of a Strategic Situation: Own Company Tenable Result of a technology analysis: own company has “tenable” technological competitive strength and one or more competitors have strong technological competitive strength  then viable options are – making a sufficient investment in R&D to reach at least parity with the competition – abandon the project 31

32. Example of a Strategic Situation: Embryonic Stage Possible for a weak company to catch up by increasing resources devoted to the technology Protection of technology is a key to sustainable competitive advantage 32

33. Example of a Strategic Situation: Mature Industry Stages Catch-up strategy can be costly and risky. Usually there are many players in the market, with substantial resources Mature technologies usually offer limited competitive advantage. Existing technologies are often well understood. Patents have expired or will expire soon 33

34. Example of a Strategic Situation: An Unforgivable Situation Undertaking an R&D project with insufficient knowledge of competition and without analysis of the competitors’ technological strength Resources, which could have been saved, are probably wasted 34

35. Example of a Strategic Situation: Strategies for Small Companies Establish sufficient strength to out-perform competitors Focus on a single technical area – may require mastering of more than one product or process technology Focus on a single business opportunity 35

36. Thank you! Acknowledgements Main source: Roussel, P.A. & Saad, K. N. & Erickson, T. J. (1991) Third Generation R&D: Managing the Link to Corporate Strategy, Boston, Massachusetts, USA, Harvard Business School Press, 192 pages. 36