approaches to technology strategy
DESCRIPTION
APPROACHES TO TECHNOLOGY STRATEGYTRANSCRIPT
APPROACHES TO TECHNOLOGY
STRATEGY
THE POSITIONING APPROACH TO STRATEGY
focuses on market structure and positioning within
an industry,
THE RESOURCE EASED APPROACH TO
STRATEGY
The starting point is the firm’s competencies and
resources.
Firm’s competence is the actual source of
sustainable and long term competitive advantage.
Significant performance differences among firms.
Customer needs change much more rapidly than
firm’s competencies.
RATIONALIST AND
INCREMENTALIST APPROACHES
INCREMENTALIST
includes a strong commitment to a single narrow
or focused technology area,
a comparatively small, informal and changing
organizational structure,
a technological champion as head of the firm or
part of the top management team, and an overall
climate and style of entrepreneurship and risk-
taking.
It is the typical mode of small high-technology
firms.
RATIONALIST AND
INCREMENTALIST APPROACHESRATIONALIST
large scale corporation R&D operating in
multi-division, multi-product, multi-market contexts.
includes strategic choices or tradeoffs along a variety of dimensions:
types of technological innovation,
the specific technologies to develop,
the timing or positioning of technology introduction into the marketplace.
A number of complex internal strategic activities included.
allocation of technological resources,
monitoring and evaluation of technological undertakings,
Historical View
Porter(70s and early 80s,)
A.D. Little(1980)
Booz-Allen & Hamilton (1981)Hax and Majluf (1984)McKinsey (1986)
Prahalad and Hamel
(1989,1990,1993) D’Aveni (1994)
Itami and Numagami (1992)
POSITIONING APPROACH
RESOURCE EASED APPROACH
Review – Chiesa (2001)
Selection
Mod of Acquisition
Timing
Porter’s approach
Selecting the appropriate business area
likely to be profitable in the medium-long term;
Tools: Five Force
Positioning within the selected business area.
Tools: Value Chain
Porter’s approach
technology is a determinant of the industry
structure and therefore affects the profitability
within the industry;
technology affects a firm’s potential to generate
competitive advantages and can be at the basis
of the firm’s positioning within the business area.
Porter’s approach StepsIdentification of the specific technologies and sub-technologies of the firm’s value chain;
Identification of the relevant technologies available in other industrial sectors;
Definition of the probable patterns of technological change;
identification of the technologies critical for the firm’s competitive advantage and favorable for the industry structure;
Valuation of the firm’s capabilities and the required investments.
selection of a technology strategy able to reinforce the firm’s competitive position
Selection of the technologies on which to invest,Be leader or follower, License out technologies(whether to sell or not).
Porter’s approach-Outcome
Three key decisions:
The selection of the technologies to develop;
Be leader or follower;
Sell the technology or not.
Hax and Majlufs Contribution to
Technology Strategy
A.D. Little Methodology
identification of the technologies required,
definition of the strategic importance and
the selection of the technology to achieve
key success factors,
Base :essential to be in the business
key :high competitive impact
Pacing :under experimentation by some
competitors competitive impact likely to be high,
Emerging : competitive impact unknown but
promising
A.D. Little Methodology
determination of the fm’s technological
strengths and weaknesses,
Clear leader :recognized as such in the industry,
Strong :able to express independent technical
actions and set new directions),
Able to sustain technological competitiveness
Tenable :unable to set independent course
Weak :unable to sustain quality of technical outputs
A.D. Little Methodology
technology strategy formulation.
Build
nurture,
maintain,
repair and
invest selectively.
A.D. Little Methodology
Booz-Allen & Hamilton
Methodology
technology situation assessment
identification of the technologies to analyse in a
product/business area,
assessment of the importance of the technologies
to the specific products/businesses,
definition of the firm’s technology relative position
Booz-Allen & Hamilton
Methodology
1. technology portfolio development
identifies the appropriate technology strategy of
the business according to the two key dimensions
which are
technology importance (the extent to which the
technology is vital to compete),
technology relative position (the position of the firm
in that technology relative to competitors).
1. technology portfolio
development
Booz-Allen & Hamilton
Methodology
2. matching business and technology strategy
identify the technologies supporting the best
positioned
Booz-Allen & Hamilton
Methodology
3. define the technology investment priorities
McKinsey Methodology
Foster suggests that the appropriate R&D
strategies should take into
account the potential of technologies for productivity
yield improvements
McKinsey Methodology
Prahalad and Hamel’s Core
Competence
1. identifying the evolutionary patterns of the
concerned industries;
Industry foresight is a key issue and provide the
required basis and the right direction to competence
building and competition.
2. define the strategic architecture;
strategic intent.
The road to achieve the required objectives has to
be designed in details.
3. recognize that competition is played at different
levels and that differentials should be achieved at
each level.
The tangible link between core competencies and
end products is the core product
the core component that generates the value of the
end products.
fix stretched objectives and leverage
competencies (stretch and leverage);
design an appropriate organisation.
D’ Aveni Hypercornpetition
Arenas of which the boundaries are well defined
price and the perceived quality where the
dimensions of the perceived quality are stable over
time.
Arenas of which the boundaries are well defined
where competition is played on two dimensions:
price and perceived quality where the perceived
quality changes over time.
Arenas where boundaries are weakly defined and
competition is played on the ability to generate
new product/market combinations.
D’ Aveni Hypercornpetition
These three categories also address three different
ways of creating competitive advantage:
performing better than competitors on an already
existing dimension of competition (either cost or
already existing dimensions of quality);
establishing a new dimension of quality on which
to compete;
creating a new product/market combination.
Itami and Numagami
The types of interactions between strategy and
technology are three:
between current strategy and current technology;
between current strategy and future technology;
between future strategy and current technology.
Itami and Numagami
The underlying assumptions are that technology
can act on strategy in three ways:
a weapon to differentiate the fm from its
competitors;
a constraint to which firms must adapt;
a threat firms have to guard against and cope
with.