Technology

Strategy
PROF. ARUN KUMAR TRIPATHY
MDI GURGAON

Technology Strategy Key Questions

How technology strategies should be funded, supported, reinforced,
and led?
Are technical synergies possible?
Is there duplication of effort that can be avoided?
Are there core technologies that are important for multiple business
units?
What are the skill sets required ? How to manage them?
Allocation of resources to technology programs,
Trade-offs between long-term and short-term projects

Innovation & Invention Some Questions

What is innovation?

Something new. An idea, a device, a method of doing something all can be

considered innovations.

How is innovation different from invention which is also

something new?
It is different because it provides or adds value to use. Meaningful use / large scale
use.

Should all innovations be technical or based on

technology?
Organizational, marketing, financial innovations are possible.
Ford assembly line, Wal Mart stores, Amazon.com are also innovations.

Invention to innovation can take time. Enablers include needs of

people, support technology and other conditions economic,
social and political.
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What is Technology?
Application of Knowledge to transform raw materials,
components, sub-systems through use of manufacturing
and other processes into useful products and services.
Technology is different from science. Research has several
gradations ranging from fundamental research or the search
for knowledge for the sake of knowledge to using
knowledge for various practical purposes.
The connections between science and technology is very
important and does not always involve science leading to
knowledge leading to technology but also technology
leading to science leading to knowledge.

Why do we need to manage technology?

Explosion of knowledge and its applications. Cumulative
combinations increase exponentially leading to new
possibilities of use.
The time from discovery to applications is getting shorter.
Though different for different industries seems to hold across
many industries.
The globalization of markets and technology makes it more
important to understand and manage technology.
If you do not use new knowledge and technology someone
else will and they could gain significant competitive
advantage.
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Framework for defining

Innovation
Core Concepts

Linkages between core concepts and

Components

Reinforced

Overturned

Unchanged

Incremental
Innovation

Modular
Innovation

Changed

Architectural
Innovation

Radical
Innovation
Ref: Architectural Innovation: Henderson and Clark, 1990

Technical Evolution
When a new engineering or economic possibility comes
along, there are several ways to carry it through

Nuclear power- light water/ heavy water/ gas cooled/sodium

cooled
Solar energy- crystalline silicon/ amorphous silicon

These technologies compete for a market of adopters

Technologies become more attractive to subsequent
adopters as the number of adopters increases (Bandwagon)

Technical Evolution: Emergence of a

Dominant Design
Sources of increasing returns to adoption
Learning by using

New airliner design- refinement in payload, aerodynamics, engine efficiency from information from
adoption & use

Network externalities
VHS user- gains from availability of variety in VHS related products

Scale economies in production

As adoption increases, unit cost of product falls

Informational increasing returns

For the risk averse, greater adoption means more information

Technological inter-relatedness
Gasoline technology- refineries/ filling stations/ auto parts
Dismantling such technology may be difficult

What is a technology life cycle ?

It is nothing but a plot of a performance measure of a technology versus
time.
People will spend money and effort to improve a technology if it performs a
useful function or purpose.
When technologies are used for the first time in an absolutely new product
or process or service we do not know whether it will succeed or fail.

If it succeeds it follows a certain trajectory or path.

There are limits at any given point in time that facilitate or retard this process
technical limits or financial constraints or market imposed constraints.
As technical limits are reached one technology is substituted with another.

The success or failure of a technology is linked closely to a product or

industry life cycle
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The Technology S Curve

Life-cycle model:

Any technology with commercial potential passes through a life-cycle.

Horizontal axis- measure of amount of R&D effort expended
E.g. Cumulative R&D expenditure over time; Time

Vertical axis- performance measure critical to technologys commercial

performance
E.g. recording density of a magnetic disc technology

Early stages
Fundamental technical issues are addressed

Later stages
Performance approaches upper limits

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A Typical Technology Life Cycle

Limiting level determined by physical properties

Limits also by markets,

investment .

R&D Effort /Time (cumulative investment)

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Abernathy & Utterback Model

A lifecycle model that includes product as well as
process innovation
Phases

Fluid phase

Intense product innovation

Firms seek best ways to use the new technology

Transitional phase

A dominant design emerges

Rate of product innovation decreases
Rate of process innovation picks up

Specific phase

Incremental innovation becomes the norm

Competitive attrition takes place, number of suppliers decreases

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Dominant Design Paradigm

A lifecycle model that includes product as well as process innovation

Capacity for innovation depends on stage of evolution of the product

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Technology Evolution
Limit of technology B

Technology Performance
measure

Technology B

Limit of technology A

Technology A

R&D Effort/ Time

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Technology Replacement models

Critique of the S curve

Key measure of performance of two technologies can be very different

The new technology may change the overall design of the product than
merely its components
The new technology may be targeted initially at sectors historically deemed
unimportant by incumbents
Technological evolution seems to follow a step function, with sharp
improvements in performance followed by long periods of no improvements
Path of rival technologies may cross more than once or none at all

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A Typical Product / Industry Life Cycle

Incubation

Industry size (number of units)

Growth

Diversity

Decline

Maturity

Technology cycles
linked to product
cycles

B
A

Time
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Strategy & life cycles

Life cycle
stage

Technology
focus

Market
focus

Main
corporate
concern

Key
corporate
resource

Mgt. style

Incubation

Applied
research

Niche
specialised

Product

R&D

Entrepreneur

Diversity

New product
development

New
products

Technology
product link

R&D and
marketing

Informal
system

Sustained
growth

Product
improvement

Product
market
segment

Market share Marketing

Formal
structure

Maturity

Process
improvement

Price
competition

Cost control

Production,
finance

Formal,
SBU

Decline

Cost quality

Price,
quality

survival

Production
finance
technology

Formal,
SBU
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