Ch 8 Technology Strategy Overview DEFINITION TECHNOLOGY STRATEGY

Ch. 8 Technology Strategy: Overview

DEFINITION • TECHNOLOGY STRATEGY IS TERM TO DESCRIBETHE STRATEGICALLY IMPORTANT TECHNOLOGY CHOICES MADE BY A FIRM. • FIRM’S SUCCESS DEPENDED CRITICALLY ON ITS TECHNOLOGYRELATED DECISIONS, SUCH AS THE CHOICE OF APPROPRIATE TECHNOLOGIES, AS WELL AS THE DIVESTITURE OF TECHNOLOGIES WHOSE TIME HAD RUN OUT. • THIS DECISIONS INVOLVE INVESTING IN PROGRAMS TO DEVELOP TECHNOLOGIES FOR COMMERCIAL APPLICATIONS, THE KIND OF TECHNOLOGIES THAT ARE EMBODIED IN THE PRODUCTS MARKETED BY THE FIRM, AS WELL AS THE CHOICE OF TECHNOLOGIES TO DEPLOY IN ITS VALUE CHAIN.

DEFINITION • TECHNOLOGY STRATEGY IS THE REVEALED PATTERN IN THE TECHNOLOGY CHOICES OF FIRMS. THE CHOICES INVOLVE THE COMMITMENT OF RESOURCES FOR THE APPROPRIATION, MAINTENANCE, DEPLOYMENT, AND ABANDONMENT OF TECHNOLOGICAL CAPABILITIES. • THESE TECHNOLOGY CHOICES DETERMINE THE CHARACTER AND EXTENT OF THE FIRMS’ PRINCIPAL TECHNICAL CAPABILITIES AND THE SET OF AVAILABLE PRODUCT AND PROCESS PLATFORMS.

FOUR IMPORTANT POINTS ARE CAPTURED IN THIS DEFINITION: • TECHNOLOGY STRATEGY FOCUSES ON THE KINDS OF TECHNOLOGIES THAT A FIRM SELECTS FOR ACQUISITION, DEVELOPMENT, DEPLOYMENT, OR DIVESTMENT. • COMMITMENTS SURROUNDING TECHNOLOGY SELECTION DEFINE TECHNOLOGY STRATEGIES. WE USED THE TERM REVEALED PATTERN, I. E. PATTERNS THAT ARE NOT MERELY INTENDED BUT ACCOMPLISHED. • TECHNOLOGY STRATEGIES ARE NOT CONFINED TO HIGH-TECHNOLOGY INDUSTRIES. EVEN A CAPACITY-DRIVEN INDUSTRY OR A CUSTOMERDRIVEN INDUSTRY REQUIRES A TECHNOLOGY STRATEGY. • FINALLY, TECHNOLOGY STRATEGIES EMBRACE BOTH THE HARDWARE AND SOFTWARE ELEMENTS OF A TECHNOLOGY.

The Key Principles Underlying Technology Strategy

WE WILL TRY TO ANSWER SUCH QUESTION AS: • WHAT IS TECHNOLOGY STRATEGY? • WHAT ARE THE PRINCIPLES UNDERLYING THE FORMULATION OF TECHNOLOGY STRATEGY? • WHAT ARE THE STEPS INVOLVED IN FORMULATING A TECHNOLOGY STRATEGY?

THE DOMAIN OF TECHNOLOGY CHOICE FIRMS MAKE MYRIAD TECHNOLOGY CHOICE AS THEY COMPETE IN THE MARKETPLACE. BROADLY, SUCH CHOICE ARE MADE IN THREE DOMAINS: • TECHNOLOGY APPROPRIATION , OR COMMITMENTSTO BUILD TECHNOLOGY CAPABILITIES. • DEPLOYMENT IN PRODUCT, OR COMMITMENT TO EXPLOIT TECHNOLOGICAL CAPABILITIES THROUGH NEW PRODUCT DEVELOPMENT; AND • DEPLOYMENT IN VALUE CHAINS, OR COMMITMENTS TO EXPLOIT TECHNOLOGICAL CAPAIBLITIES IN OPERATIONS.

TECHNOLOGY APPROPRIATION • APROPRIASI TEKNOLOGI MENYANGKUT PENENTUAN TEKNOLOGI YANG SESUAI DENGAN KEBUTUHAN PERUSAHAAN DALAM MEMENANGKAN PERSAINGAN BAIK UNTUK DITERAPKAN DALAM PRODUK MAUPUN DALAM VALUE CHAIN. • KEPUTUSAN APROPRIASI TEKNOLOGI MEMPENGARUHI KEMAMPUAN UNTUK MEMBANGUN BISNIS BARU, UNTUK MENYADI PIONER MARKET BARU, DAN UNTUK MELIHAT ARAH KEBIJAKAN BARU. • TECHNOLOGY APPROPRIATION MEMILIH BAIK TEKNOLOGI SOFTWARE-DOMINANT DAN HARDWARE-DOMINANT.

DEPLOYMENT IN PRODUCT • MENERAPKAN TEKNOLOGI YANG SUDAH DIPILIH KE DALAM PRODUK YANG DIHASILKAN OLEH PERUSAHAAN, • CONTOH: TEKNOLOGI EFI YANG DITERAPKAN DI PRODUK OTOMOTIF YANG DIHASILKAN OLEH PABRIK OTOMOTIF.

DEPLOYMENT IN VALUE CHAIN A FIRM’S VALUE CHAIN, AS CURRENTLY CONFIGURED, REPRESENTS INNUMERABLE TECHNOLOGY CHOICES MADE OVER A PERIOD OF TIME.

KEY PRINCIPLE YANG MENDASARI STRATEGI TEKNOLOGI

KEY PRINCIPLES • OBJECTIVE • DRIVERS • DECISION CRITERIA • CHOICE OUTCOME

Objective > Driver > Decision Criteria > Choice C O M P E T I V E A D V A N T A G E ENVIRONMENT FIRM MARKET DIMENSION Competitive Domain Strategic Positioning TECHNOLOGY DIMENSION Technological Environment F O C U S Competitive Position SCHEME FOR ARRAYING THE PRINCIPLES T E C H N O L O G Y S T R A T E G Y

OBJECTIVE TUJUAN UTAMA SETIAP PERUSAHAAN ADALAH PENCIPTAAN NILAI BAGI CUSTOMER DAN INVESTORNYA. (THE FUNDAMENTAL OBECTIVE OF ANY FIRM IS THE CREATION OF VALUE FOR ITS CUSTOMER AND ITS INVESTOR)

DRIVERS • BECAUSE COMPETITIVEADVANTAGE IS THE PRIMARY OBJECTIVE IN TECHNOLOGY MANAGEMENT, BOTH TECHNOLOGY AND STRATEGIC CONSIDERATION SHOULD BE WEIGED IN THE PROCESS OF ARRIVING AT THE TECHNOLOGY CHOICE • THE PROCESS SHOULD FOCUS ON TWO MAJOR QUESTION: A) B) DOES THE ENVIRONMENT OFFER SITES FOR VALUE CREATION? IF SUCH PROFITABLE SITE DON’T CURRENTLY EXIST, CAN THEY BE CREATED? IS THE FIRM WELL POSITIONED TO EXPLOIT THE SITES?

DECISION CRITERIA • TECHNOLOGY CHOICE IMPLY COMMITMENT OF LIMITED RESOURCES. • FIRM CHANNEL THEIR RESOURCES TO THOSE ALTERNATIVES THAT PROMISE THE MOST EFFECTIVE ROUTE TO COMPETITIVE ADVANTAGE • TECHNOLOGY CHOICES COMPETE WITH OTHER ALTERNATIVES FOR RESOURCES, ON THE ONE HAND, AND AMONG THEMSELVES, ON THE OTHER. • THE UNDERLYING LOGIC OF TECHNOLOGY STRATEGIY IS ONE OF FOCUS: THE RESOURCES OF A FIRM SHOULD BE FOCUSED ON A LIMITED NUMBER OF CHOICES, WHERE THE FIRM CAN EXPECT TO GAIN SIGNIFICANT COMPETITIVE ADVANTAGE BASED ON THE AVAILABILITY OF PROFIT SITE AND THE FIRM’S STRATEGIC POSITION

TECHNOLOGY STRATEGY TYPES

FOUR BROAD TYPES OF TECHNOLOGY STRATEGIES O TECHNOLOGY LEADERSHIP STRATEGY O NICHE (LIMITED) STRATEGY O FOLLOWER STRATEGY O TECHNOLOGY RATIONALIZATION

TECHNOLOGY LEADERSHIP STRATEGY CONSIST: ESTABLISHING AND MAINTAINING THROUGH BOTH TECHNOLOGY DEVELOPMENT AND DEPLOYMENT APREEMINENT POSITION IN THE COMPETITIVE DOMAIN IN ALL THE TECHNOLOGIES FOR A DOMINANT MARKET POSITION.

NICHE STRATEGY CONSIST: FOCUSING ON A LIMITED NUMBER OF CRITICAL TECHNOLOGIES TO SEEK LEADERSHIP. TECHNOLOGY DEVELOPMENT IS SELECTIVE , AND DEPLOYMENT IS ORIENTED TOWARD EXPLOITING THE TECHNOLOGICAL STRENGTH OF THE FIRM IN SELECTED TECHNOLOGIES TO CREATE COMPETITIVE ADVANTAGE.

FOLLOWER STRATEGY CONSISTS: MAINTAINGIN TECHNOLOGICAL ADEQUACY IN A BROAD SET OF TECHNOLOGIES. THIS STRATEGY IS FOCUSED ON DEPLOYMENT, AVOIDING THE RISKS OF BASIC RESEARCH. FOR THIS FIRMS, TECHNOLOGY IS NOT THEIR PRIMARY INSTRUMENT FOR SEEKING COMPETITIVE ADVANTAGE.

TECHNOLOGY RATIONALIZATION INVOLVES: MAINTAINING ADEQUACY ONLY IN A SELECT SET OF TECHNOLOGIES. FOR THESE FIRMS, THEIR TECHNOLOGY DEFICIT SHOULD BE COMPENSATED BY OTHER COMPTITIVE STRENGHTS IN ORDER FOR THEM TO SURVIVE IN MANY COMPETITIVE DOMAINS.

Full Leadership Followership Full Line Technology Leader Technology Follower Scope Selective Niche Player Technology Rationalizer TECHNOLOGY STRATEGY TYPE

APPROPRIATENESS OF TECHNOLOGY STRATEGY • ITYPE , N THE ERA OF INCREMENTAL INNOVATION TECHNOLOGY LEADERSHIP STRATEGY IS APPROPRIATE FOR FIRMS THAT HAVE STRONG TECHNOLOGICAL AND MARKET POSITION. NICHE STRATEGY IS RECOMMENDED FOR TECHNOLOGICALLY STRONG BUT COMPETITIVELY MODERATE POSITIONS. TECHNOLOGY FOLLOWERSHIP REQUERES A STRONG COMPETITIVE POSITION IN THE MARKETS, ALTHOUGH THE FIRM MAY LACK TECHNOLOGICAL SUPERIORITY. IF THE FIRM IS COMPETITIVELY WEAK, THEN IT MAY BE FORCED TO ADOPT A TECHNOLOGY RATIONALIZATION STRATEGY • IN THE ERA OF TECHNOLOGY EMERGENCE, THE LEADER STRATEGY IS MUCH MORE BROADLY APPLICABLE, BECAUSE THE TECHNOLOGIES AND MARKETS TEND TO BE HIGHLY FLUID. THUS, THERE ARE MORE OPPORTUNITIES TO GAIN COMPETITIVE ADVANTAGE.

ERA OF TECHNOLOGY EMERGENCE LATE STAGES OF INCREMENTAL CHANGE COMPETITIVE POSITION STRONG LEADER T E C H N O L O G Y p O S I T I O N MEDIUM LEADER WEAK FOLLOWER LEADER ACQUISITION NICHE JPOINT VENTURE RATIONALIZAT ION S T R O N G M E D I U M W E A K STRONG MEDIUM WEAK LEADER FOLLOWER ACQUIZITION FOLLOWER RATIONLIZATI ON NICHE RATIONALIZAT ION JPOINT VENTURE RATIONALZATI ON

DIVERSIFIED FIRMS • TECHNOLOGY-RELATED DIVERSIFIERS: – THERE ARE SIGNIFICANT SYSNERGIES AMONG THE TECHNOLOGY STRATEGY OF VARIOUS BUSINESS • MARKET-RELATED (CONGLOMERATE) DIVERSIVIERS – THE TECHNOLOGY STRATEGIES OF VARIOUS BUSINESSES TEND TO BE UNRELATED.

FRAMEWORK FORMULATING TECHNOLOGY STRATEGY

A FRAMEWORK FORMULATING TECHNOLOGY STRATEGY O STRATEGIC DIAGNOSIS O FORMULATION OF TECHNOLOGY STRATEGY O CRAFTING AN IMPLEMENTATION APPROACH O EXECUTION

1. STRATEGIC DIAGNOSIS FORMULATION OF TECHNOLOGY FOCUSES ON ADDRESSING THE TECHNOLOGICAL AND THE BUSINESS CONTEXT OFN THE FIRM INVOLVE TWO MAJOR ACTIVITY: 1. ENVIRONMENTAL ASSESSMENT, BOT TECHNOLOGICAL AND COMPETITIVE, AND 2. THE COMPETITIVE POSITION OF THE FIRM IN BOTH THE TECHNOLOGIES AND MARKET.

2. FORMULATING OF TECH. STRATEGY THREE MAJOR AREAS OF DECISIONS ARE INVOLVED: O APPROPRIATION OF TECHNOLOGY O DEPLOYMENT IN PRODUCT O DEPLOYMENT IN THE VALUE CHAIN.

3. CRAFTING AN IMPLEMENTATION APPROACH DURING IMPLEMENTATION, A FIRM HAS TO ADDRESS THREE MAJOR QUESTIONS PERTAINING TO THE MODE OF IMPLEMENTATION, WAYS TO PROTECT THE VALUE FROM TECHNOLOGY CHOICE, AND THE ORGANIZATION FOR IMPLEMENTATION: • SHOULD WE GO IT ALONE OR SHOULD WE COLLABORATE WITH OTHER FIRMS IN ORDER TO EXECUTE THE DECISION? • HOW SHOULD WE PROTECT THE INVESTMENTS IN TECHNOLOGY CHOICES FROM BEING DISSIPATED THROUGH VARIOUS MEANS? • HOW SHOULD WE ORGANIZE INTERNALLY FOR IMPLEMENTATION?

4. EXECUTION • DURING EXECUTION, A FIRM DEVELOPS DETAILED OPERATIONAL PLANS AND HUMAN FESOURCE DEPLOYMENTS NECESSARY FOR THE EXECUTION OF THE TECHNOLOGY CHOICES. • DURING THIS STAGE, SIGNIFICANT INTERACTION NEEDS TO TAKE PLACE BETWEEN IMPLEMENTERS OF TECHNOLOGY STRATEGY AND THOSE PERFORMING KEY BUSINESS FUNCTIONS: MARKETING, MANUFACTURING, FINANCE, AND STRATEGY.