© Fraunhofer IAO Stuttgart / IAT Universität Stuttgart Slide: 1
Fraunhofer IAO, Germany
Developing Integrated Business and Technology Strategies
NITM International Seminar SeriesA series of Seminars for Executives & Managers
NITM, Dublin, September 17th, 2003
Frank Wagner & Flavius Sturm
Fraunhofer Institute for Industrial Engineering
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AgendaAgenda
• Introduction
• Strategic Management for SMEs “Navigating in Turbulent Times”
• Business and Technology Strategies
• Portfolio, Balanced Scorecards and other Tools
• How Scenarios and Roadmaps can help (Cases)
• Business and Technology Scouting
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Linking Linking Business & Business & TechnologyTechnology
Integrated Integrated Strategy Strategy
Development Development
ExamplesExamples
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Linking Linking Business & Business & TechnologyTechnology
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Network Strategy
Corporate Strategy
Business Strategy / Technology Strategy
Strategic Management framework: Business & Technology Strategy
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business
2
Prod/Serv 1 Prod/Serv 2
--
Core product
2
business
1
Core product
1
Corecompetence 1
Corecompetence 2
Corecompetence 3
Prod/Serv 3 Prod/Serv 4
Business & Technology – From core competences to products
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What are Technologies?
Technologies:Bundling of scientific-technical and application-oriented knowledge in respect to possible problem solutions.Technologies therefore represent a specific knowledge base for potential products and processes
Source: Peiffer, 1992, p.36
Product Technologies - are incorporated in products and become part of them.
Process Technologies - are used to develop, produce, or market products- support the achievement of the company goals- are not incorporated in products and do not become part of them
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There are different kinds of Technology
Pacing Technologies - Technologies that have the potential to change the entire basis of
competition but have not yet been embodied in a product or process.- These technologies often develop into key technologies
Key Technologies - Technologies that are most critical to competitive success because they
offer the opportunity for meaningful process or product differentiation- These technologies yield competitive advantage
Base Technologies- Technologies that, although necessary and essential to practice well, offer
little potential for competitive advantage- These technologies are typically widespread and shared
Source: Roussel, Saad, Erickson; Third Generation R&D; 1991
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Parameter
Timing
Technology Source
Technology Utilisation
Field of Application
Options
PerformanceTechnology Leader
Pioneer Early Follower
Technological Presence
Late Follower
Obtain Licences
Contract Research
Acquisition
Self-Utilisation Issue Licences
Technology selling
Used Technology
Unused Technology
New Technology
(Source: Brodbeck, 1999)
Strategic Dimensions of Technology Management
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External Procurement
External Procurement
Internal R&DInternal R&D
Pay for licenses
Buy Components
Buy Technology
Buy Patent
Acquire a business
Joint Research, Joint Venture
Contract Research
Sources of TechnologySources of Technology
(Source: Brodbeck, 1999)
Sources of Technology
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ExternalExternal
InternalInternal
Licence to other Industry
Licence to competitor
Licence to supplier/customer
Shared utilisation in alliances
Shared utilisation in Joint-Venture
Sell patent
Sell technology
Launch Spin-off business
Utilisation of TechnologiesUtilisation of Technologies
(Source: Specht, 1996)
Utilisation of Technology
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cumulated R&D-effort
Cap
acity
of
tech
nolo
gy(b
enfit
/cos
ts)
Source: Krubasik (1982)
Limit of new technology
Limit of old technology
R&D-effort
performance Technology
potential
Newtechnology
Oldtechnology
= Status at the point of time when a change of technology is considered
Problem with Technologies: Substitution potential (Double-S-Curve)
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Very few companies are able to retain dominance in the Fortune 500 (Neely, 1998). These
companies introduce sustainable innovations and continually improve their products and
processes, but they get caught unaware by newcomers who have introduced disruptive
innovations, capturing and transforming traditional markets (Christensen, 1997)
03
Time
Pro
du
ct P
erf r
om
ance
Progr
ess
due
to s
usta
inin
g te
chno
logi
es
Performance demanded at
the low end of the marketPerformance demanded at
the high end of the market
Progr
ess
due
to s
usta
inin
g te
chno
logi
es
Disru
ptiv
e
Tech
nolo
gica
l
Inno
vatio
n
The problem: Disruptive Technologies
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Examples of disruptive technologies
05
• Digital photography has eroded the profits and viability of companies like Polaroid and Kodak.
•
• Digital video recorders (DVRs) — which require no tape medium, allow ads to be skipped, and allow TV shows to be transmitted via the Internet — threaten the business models of pay-for-view TV programming.
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The problem with disruptions: cause for a new business cycle- Business Cycles traditional and disruptive
Source: Cosier & Hughes, 2001
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Metaphor for understanding Technology Development - Cambrian Explosion (Exploration vs. Exploitation)
“In the Cambrian period, some 500 million years ago, a
burst of biological creativity took place. Over a relatively
brief period of time, a vast diversity of fundamentally
different life forms appeared. The way in which
technology evolves is strikingly similar to the
Cambrian explosion. Diverse forms branch out bushily at
the beginning, then the rate of branching declines,
extinction sets in, and, like today's phyla, only a few major
alternative forms persist at the end”.
Source: Kaufmann, 1995
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Why the Need for an Integrated Business & Technology Strategy?Technology Lifecycles and Growth opportunities
Current Current SituationSituation
Product/Technology Lifecycles
Searching for innovative technologies,
searching for new growth opportunities!
Time
Potential / Age
?
• For a good business & technology strategy it is crucial to identify the current maturity level of the technologies applied.
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Classical Options for Business Development: Ansoff‘s Classic Matrix
ExistingMarket
NewMarket
ExistingProduct
New Product
Market Penetration
Product Development
Market Development
Diversification
Why the Need for an Integrated Business & Technology Strategy?Classical Business Strategy Options
Source: Ansoff, ...
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ProductNew Technology
TechnologicalProduct
Substitution
High Technology
Ansoff‘s EXTENDED Matrix – for Technology Intensive Environments
Why the Need for an Integrated Business & Technology Strategy?Dealing with disruptive new technologies
Source: ...
ExistingMarket
NewMarket
ExistingProduct
New Product
Market Penetration
Product Development
Market Development
Diversification
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• Even without technological innovation in an expanding market customers will enter the market place without product knowledge
• The company must not only learn about the new customer but also educate the customer about the product
• The less the customer knows about the product the more difficult the task is for the marketer.
• The customer is often not only unfamiliar with the product but also with its underlying technology.
• The company will have to educate the customer about the technology before the customer can be shown the benefits of the new product
Why the Need for an Integrated Business & Technology Strategy?New Issues in Technology-Intensive Contexts
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Needs
existing
emerging
existing emerging
Currentbusinesspotential
Future business potential
Technologies
Source: CCSO, 1998
Integrated Business & Technology StrategyLinking emerging needs with emerging technologies
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Source: Day et al., 2001
Linking emerging needs with emerging technologies - Example
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Disruptive Innovation –
Ofita Spanish Market Leader in Office Furniture
05
GENIUS - THE INTELLIGENT PLATFORM – disrupting the office furniture market
concept of platform, basing the product on adaptability, easy and simple transformations of the work stations, always using the same parts
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Disruptive Innovation –Networked Home Appliances – Smart Kitchen
New technologies disrupting business models
New strategic alliancesNew value proposition
New pricing strategyNew customer segments
New competitors
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Linking Linking Business & Business & TechnologyTechnology
Integrated Integrated Strategy Strategy
Development Development
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Necessitiy to actively search for technological synergies between
different applications
Up to now new technology investment decisions have not been linked sufficiently with future market
demand and the customer needs
Base Technologies
Product & Process Technologies
Tec
hn
olo
gy
Market A
Market B
Market ...
• Segment A.1• Segment A.2
• Segment B.1• Segment B.2• Etc. etc.
Markets & Applications
...
Market
Cost
Efficiency
Solution Functionalities and Performance Criteria
Quality
Performance
...
Technology Push
Market Pull
Integrated Business & Technology Strategy - considerations
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Business Analysis Innovation Analysis Technology Analysis
Search field Generation
SWOT- Analysis SWOT - AnalysisSWOT- Analysis
Innovation StrategyTechnology StrategyBusiness Strategy
Formulation of Strategic Programm for Business
Units
Formulation of Strategic Programm for Technology
Development Units
Business-portfolio
Technology Portfolio
Innovation Portfolio
Business List Technology List
Source: Bürgel et al., 1996
Strategy Development: Strategic Analysis for integrated Technology and Market Planning
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Pulllback
Selection
Investment
Attractivity of Technology
Strength of resources
Indicators on requirements
Indicators on potential
Potential for further development• Extend of technological
Further development• performance increase
Compatibilitypositive or negative
influences on alreadyused technologies
Broadness of application• Dispersion of technical
further development• fields of application
Strength ofKnow-How
Financialstrength
State of Know-How
BudgetStability of
Know-HowsContinuityof budgets
Technical qualitativedegree of mastery
Quality (economic+techn.)of own solution compared
to competition
PotentialsFurther development potentials in
personnel, financialand legal resources
Speed of action
Speed to market compared to competition
Source: Pfeiffer et al., 1991
Strategy Development: Technology Portfolio Development for the Evaluation of Alternative Solutions (Example)
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External Analysis
Competitors Stakeholders Customers Scenario Development
Scenario I
Scenario II
Scenario III
Markets
Environ-ment
Customers
Society
Competitors
Gap Analysis & Options Development
Business Today
Internal Analysis
- Technologies- Markets- Products- Competencies
Technology Delphi Study
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Delphi-Method
Identify Technology Experts worldwide
Questionaire
Round 1
CoolingTechnology
Questionaire
Round 1
CoolingTechnology
Questionaire
R ound 1
C ooling Technolog y
Questionaire
R ound 1
C ooling Technolog y
Elaborate Questionairebased on expertise of R&D Staff
Send the Questionaire to the Experts
Expert 1
Expert 2
Expert ...
Collect, analyse and advance
Questionaires
Results:•New Technologies identified•Future-scenarios
Questionaire
R ound 1
C ooling Technolog y
Questionaire
R ound 1
C ooling Technolog y
Questionaire
R ound 1
C ooling Technolog y
Questionaire
R ound 1
C ooling Technolog y
Continuous Technology Scouting Process
Technology Assessment
Chances & Risks
External Technology Roadmaps
Technology Portfolios
Technology Strategy
Internal Technology Roadmaps
xx
xxx
Project Portfolios
Make & Buy
Integrated Business & Technology Strategy Development PROCESS
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Assessment of current markets, products, competencies and technologies
Scenarios for the future of the business context
Strategic Gaps and Options for business development
.
.
Integrated Business & Technology Strategy - Typical RESULTS (1/2)
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Strategic Technology Roadmaps for promising technology fields
A robust and integrated Technology & Business Strategy
Continuous Technology Scouting Process and instrumentation
Szenario-feld
GFKAbsatz
Absatz
WerkstoffeWerkstoffe
EnergieverbrauchEnergieverbrauch
GlobalitätGlobalität
TechnologieauswahlT1 T2 T3 T4
Kriterien
PortfolioPortfolio
SzenarioSzenario
KostenKosten
SummeSumme
Innovation Concept/
projects /
Integrated Business & Technology Strategy - Typical RESULTS (2/2)
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Linking Linking Business & Business & TechnologyTechnology
Integrated Integrated Strategy Strategy
Development Development
ExamplesExamples
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Pneumatic handling of micro parts
New production technologies
New services
Medical-technology
as new market
Evaluation criteria
- available and necessary competences of the company
- Integration of different disciplines
- Activities of competitors
- Maturity of technology
- Substitution of technology
- Necessary R&D-Budget
- Time to market
Market potential Changing Environment
- customers demand lighter and smaller devices
- reduced available space for components
- weight reduction of parts and modules - convergence of technologies
Micro- and Nanotechnology as future technology in automation (EXAMPLE)
Holistic evaluation of innovation opportunities and risks
Technology Orientation: Assessing new technologies
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Impact of changing environment on pneumatics
Direct impact on pneumatics
• Pneumatics can be used for new applications micro actuators in medicine technology
micro-fluidic subsystems with pneumatic drives for biotech and gene analysis applications
• New valves and drives can be developed using new production technologies
Indirect impact on pneumatics
• part sizes in the automobile industry have drastically decreased
• engineering industry demands small autonomous subsystems
• tool machines demand higher precision
new handling devices are needed
standard pneumatics can not be used for these applications
Investment in Micro-Technologies will:
open great potential new markets
avoid the risk of loosing important markets
High market potential
Market demands lighter, smaller and integrated devices and parts
Trend towards Micro Technologies
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medium highlow
low
mediu
mhig
h
Integrated Technology Strategy in Micro Technologies
• high market potential
• early state in technology lifecycle
• medium to high ‘time to market’
• high acceptance of Micro Technology
• overall enhancement of competitive position
Technology attractivity
Technology position of the company
• medium relevant R&D competencies
• few activities of the competitors
• high R&D budget available
• technological leader on the market
Strong Investment
Medium
High
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Today short-term medium term long-term
Day-to-day
business
Extrapolate via roadmaps
• Products
• Technologies
• Customer
requirements
Retropolate from
Scenarios:
New markets
New customer requirements
New technologies
New business possibilites
Automation & control
Information & communications
Lighting
Medical
Power
Transportation
individual
society
policy
economy
environment
customers
technology
competition
Strategic visionScenarios = pictures for the Siemens-operation areas
Influencing factors
Source: Austrian Research Center, 2002
Strategy Orientation: Bridging the gaps between today and the future
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Portfolio Management: Market Attractiveness/Probability of Success
medium
low
50 75 10025
high
Probability of Success (%)
Project b
Project h
Project g
Project fProject eProject d
Project c
Project a P
ote
nti
al P
rofi
t
Project costs
1 Mio $
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Portfolio Management: Market/Technology Project Portfolio
new for
known for
new for totally newknown for
totallynew
Project costs
1 Mio $ Technology
Project b
Project h
Project g
Project f
Project eProject d
Project c
Project a M
ark
et
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