integrating business strategy and r&d strategy frameworks for r&d strategy formulation
TRANSCRIPT
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?
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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
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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
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Essence of Strategic Management
• Translating – mission, objectives, strategy
• into policies and tactics– processes– resources– linkages
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Technology Adjustment
• Reassessment of internal and external environment– Periodic– Triggered by external events– Triggered by own benchmarking activities
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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
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Maturity of Technology
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Natural limit of technology
Embryonic Growth Mature Aging
Level of technology
Time
Maturity of Technology
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Natural limit of technology
Embryonic Growth Mature Aging
Level of technology
Time
Maturity of Technology in Reality
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Natural limit of technology
Embryonic Growth Mature Aging
Level of technology
Time
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
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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
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Types of Technologies by Competitive Impact
• Pacing technologies• Key technologies• Base technologies
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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
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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
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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
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Strategic Mission of R&D 1
• To exploit the potential for improvements in the competitive position in technologies that are important to the business
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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
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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
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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
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Measuring Technological Competitive Strength
• No rigorous measures• Size and competence of the resources that the
R&D organization has for achieving the desired results
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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