Chapter 2

Technology
Part 1 (2 weeks ago)
The Value of Technological Strength;
Core Competence
The Technological Gap

Part 2 (today)
Strategic Management of Technology

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Chapter 2

Part 2

Strategic Management of Technology

2.6. Strategic Technology Plan

2.7. Technology Road Mapping

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2.6. Strategic Technology Plan

Company needs Core Competence in order to grow

Important element of core competence in a technology driven
company is company’s key technology

Technology is always changing, progressing

Company needs to plan to manage its technology strategically

Ingredients of strategic technology management:

strategic technology plan
technology planning
technology road map
internal/external R&D support

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We repeat the 3 basic elements in technology:
1. Maturity of technology in the company
2. Its competitive impact in company products
3. Its competitive position compared outside

Optimizing these elements in the way as discussed before provides the

Core Technological Competence.

And combining this with the company strengths in market and

business leads – as we have seen - to the overall concept of Core
Competence.

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 The Need for Strategic Technology Plan and Technology
Road Mapping

Core Technological Competence – Company’s Key Technologies

Management of these Key Technologies for growth of the company:

Management of Technology (task CTO)
These Key Technologies have to be developed further / to be planned

World Class products remain world class as long as the competition stays
behind, as long as the company product’s key technology stays ahead –
continuous development.
Company cannot develop all technologies: planning needed, Technology
Road Mapping needed.

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 Corporate Plan/Corporate Objectives

Company mission (not the mission statement!!)

(mostly: make profit)

“Corporate Plan”
The Corporate Plan is the collective of Corporate Objectives
Examples of Corporate Objectives (besides “Profit Making”):
1) Mobile Phone Division in Consumer Electronics Company “Belong to top 3 players in mobile world
within 2 years”
2) Medical Systems Division in Electronic Equipment Company: “Become No. 1 in the World”
3) Top Storage Company (magnetic) “Wants to stay on top, even when optical storage will break through”

Corporate objectives then answer the following questions:

“Where do we intend to go?”
“When do we plan to arrive”

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Corporate Strategy
The corporate strategy selects the path to reach the corporate objectives. To formulate this strategy one needs to
consider SWOT
opportunities (outside)
threats (outside) Michael Porter and Core Competence
capabilities (inside) together

In most cases several strategies are possible. They can be offensive or defensive
“Offensive” example (1,2)
Acquire/merge; specifically # 2
Develop internally (increase capacity); specifically # 1
Aggressive marketing (against cost price)
advertising policy
“Defensive” example (3)
Form JV in optical storage with leader in optical technology
Increase aggressively magnetic capacity
Reduce cost aggressively

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Corporate objectives
corporate strategy, setting business objectives
business strategy to meet the business objectives

always Technology involved

Business needs Technology , and

Technology is there for the Business

Challenge:
The Right technology
at the right Time
for the right Cost

Company has to make a Strategic Technology Plan

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 Definitions in strategic technology management

Strategic Technology Plan:

“description of the technology needs within the framework of the Corporate
Strategy to reach the Corporate Objectives”

Technology Planning:
“identifying, selecting and investing in the technologies required for the
Company’s products”

Technology Road Mapping:

“a needs-driven technology planning process to help identify, select and develop
technology alternatives to satisfy a set of product needs”

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he Strategic Technology Plan
This Plan contains the following elements:
Which technologies are needed
When are they needed
Which are core/non-core
Are the core technologies in house available at the right time
Are the non-core technologies outside available at the right time
Is the investment in the technologies justifiable re the business
These considerations include all steps in the product creation from R&D till
manufacturing.

The Strategic Technology Plan is owned by the CTO of the company. It must have been
co-created and fully supported by the Marketing and Sales department and approved by
the CEO.

A necessary tool to come to the Strategic Technology Plan is TRM , which means:
“Technology Road Mapping” (paragraph 2.7). TRM provides the necessary
Technology Options. 10
(Cont’d)

Technology Road Mapping is thus a tool to prepare the Strategic Technology

Plan of the Company.

The Strategic Technology Plan shows

the technologies linked to the business targets
and makes use of Technology Road Mapping

The strategic technology plan maps out first and for all: the need and
subsequent development of core technological competences to perform the
business

Examples: 1) William J Walsh (Eaten Corp, Carol

Stream IL, USA) – electromechanical and
electronic controls (see Chapter 2.2)

7 Core Technology Competencies

2) Philips – CD (JV: PDO)

planning example 11
CD – Business Strategy
(technology related)

CD: successor of VLP (technology-wise)

Smaller in size, more user friendly

1st year on market: one million disks

Cost price : below DM 7.=

2nd year on market: 2 to 3 million disks

Cost price: below DM 3.50

Market introduction: within 500 days

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D – Technology Planning

Every CD disk consists of:

Plastic body (containing the digitized information)
Reflective layer (to read the digitized information)
Protective layer

Variables:
Plastic: material (PMMA, polycarbonate, etc.)
process (embossing, printing, injection molding, etc.)
Reflective layer: material (Al, Au, Ag, etc.)
process (batch process, in-line process)
Protective layer: material (many polymers)
process (spinning, printing, etc.)

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 CD – Technology Road Mapping
(example of reflective layer)

Potential technologies:
evaporation of Al (batch process)
sputtering of Au (batch process)
wet silvering of Ag (line process)

Team from business and technology charts possibilities, based:

on time line (when available for mass production)
on price target (material, equipment, manpower)
on quality issues (durability of product, process yield)

Choice made (2 techniques possible, in time, same price):

evaporation of Al (expensive process, cheap material)
wet silvering of Ag (simple process, expensive material)

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 (example cont’d)

Technology planning 1st step:

Which technologies are available? (mentioned already)
Which can be used in mass production?
Make a first choice (based on expected difficulties, on price, on time, etc.) and define
the manufacturing process.

Technology planning 2nd step:

Can other technologies be developed (later), which would provide a better
price/quality?
What are the time-to-market consequences?

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Updating Strategic Technology Plan

The Strategic Technology Plan

--- shows the link between technology resources
(inside or outside the company) and the business
objectives
--- shows the technology options to the business

Business objectives are in constant motion and technologies mature or are

replaced --- so the link is very volatile

As a conclusion: constant updating of the Strategic Technology Plan is

mandatory. Task of CTO in company.

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2.7. Technology Road Mapping

Major tool for the CTO is road mapping

linking resources to company objectives over time (next

slide)

Examples of such roadmaps are:

- Motorola
- bike manufacturer (artificial)
- CD-roadmap.

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 Roadmaps link resources to
objectives Layers connect:
Past Now Plans Future Vision Time (know-when)
Market / Customers / Competitors / ‘purpose’
Environment / Industry /
(know-why)
Business / Trends / Drivers / Threats /
Objectives / Milestones / Strategy

l
ul
tP
ke
Products / Services / Applications /

ar
Services / Capabilities / Performance /
‘delivery’

M
Features / Components / Families /
Processes / Systems / Platforms / (know-what)
Opportunities / Requirements / Risks

h
us
Technology / Competences / Knowledge

p
gy
Skills / Partnerships / Suppliers /
‘resources’
o
Facilities / Infrastructure / Organisation /
ol
Standards / Science / Finance / R&D Projects
hn

(know-how)
c
Te

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Next slide is the famous Motorola roadmap,

(Willyard, C.H. & McClees, C.W.,

“Motorola’s Technology Roadmap Process”,
Research Management, Sept.-Oct. 1987, 13-19.)

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 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Tuning push button push button – synthesizers touch pad -- synthesizers voice activated

Selectivity ceramic resonators SAWs digital signal processors

Subcarrier stereo paging data maps

IC-technology linear 5u CMOS 3u CMOS 1u CMOS

Display LEDs liquid crystal fluorescence

Vehicular LAN single wire glass fiber

Digital modul. 500 kHz bandwidth

PRODUCTS RECEIVER 1 RECEIVER 2 RECEIVER 3 NEXT FUTURE

GENERATION GENERATION
stereo plus plus plus
- scan - personal - stock markets - a new service
- seek paging - road info - super Hi Fi
- remote ampl. - local maps 20
- remote contr.
Next slide is from Dr. Robert Phaal,
University of Cambridge
Institute for Manufacturing

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 Bike Manufacturer:
Now +2y +5y Time + 10 y
Trends: leisure, health, disposable income Competition Legislation: VAT off bikes; cycle paths, etc.
Business Market
(Ext.)
Drivers

New owner Demonstrator New Range 2nd Generation

- Investment “Design your own bike”
(Int.)

Style Designer look Expand range On-line design

“Super-bike”
Ergonomic Moulded
Product

Comfort Customised frame £500-1000

design seat
Technical Direct drive “Chip-on-bike” Automatic”
Networked Networked
Internet mass customisation
business factory
Technology

design Materials / Ergonomics

mechanics CADCAM Visualisation
Electronics Security Communications

Alliances: gear / drive; styling; electronics

Resources /
Other

Skills Capital Branding & promotion Sportco

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(cont’d)

Refining the road map:

(further) automation production line
reduction production time
long term quality of product

REMARK: this road map (before refinement) meant for the period
development/pilot-production. Refining the road map was done in
Development after start up of pilot production (repeated on a monthly
basis).

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Technology Road Mapping (TRM) in Singapore

TRM is used already for decades by most MNCs (examples:

Motorola, Philips)
Still challenging, especially for smaller companies
Especially keeping it “alive” very difficult

Dr. Robert Phaal – University of Cambridge, Institute for

Manufacturing – “T-Plan”, especially for SMEs
Dr. Chris Holmes & Mr. Mike Ferrill – SIMTech, adapted this “T-
Plan” to accommodate the Singapore industry. They reach out to the
LEs in Singapore using the following brochure:

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 OTR – Operation &Technology
Roadmapping
Module 1 Module 2 Module 3 Module 4 Module 5
Market Product / Service Technology Charting
• Identify current operation • Customer requirements / • Product feature • Technology • Linking
performance wants concepts / service solutions technology
• Identify current level of • Market / business offerings • Grouping resources to
technology drivers • Grouping • Impact ranking future market
•Understand current • Prioritisation • Impact ranking opportunities
market position • Product strategy

Can be customized to suit your requirements…..

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Cases for next week 7 September

D-ETM Lecture 2 26
Class Participation (20%)
- prof Hang 10%
- my part 10%

… is NOT class attendance.

You are expected to analyze case study assignments and contribute to class
discussions.

Important: No marks are subtracted if you say something "wrong". This helps other
students clarify their misconceptions. However, if you do not say anything at all, it
does not help you. If you find something to say, no matter how silly, raise your hand.
Class participation helps you build self-confidence and improve your ability to
articulate your views.

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Introduction of 3 case studies

Homework for next week Wed September 7:

-Core Competence
-Incubators
-Partnership in Innovation

Class interaction and individual participation counts

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Case Study on Core Competence

Situation in Economic Crisis

Exam question
November 2009

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 Remarks on Core Competence

Lessons learned:

Core Competence essential to compete, essential for growth

For technology-driven companies the key ingredient of their CC is Key

Technology

Key Technology remains Key only though R&D

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 Recession, economic crisis

Company turnover dwindles; companies make losses

Companies scale back to reduce costs

Cost cutting to occur in all departments

Also in R&D

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 Question

Cutting costs in R&D in a technology-driven company is cutting in its

competitive position and will block future growth.

Some R&D managers will say:

“we cannot cut, because what is the value of saving the company today, if
there is no future?”

Questions:
1. Is this true? Please explain your answer.
2. Can you find company examples of cost cutting in R&D departments in
2008/2009?

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Case Study: Incubators

for hi-tech and medium-tech start-ups

(where the Gap is relatively small)

short introduction

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 From invention to company

ideas in the academic world inventions

inventions patents

most often patents remain on the shelve

Remark:
in companies most ideas lead to innovations with or without patents;
if patents are applied for, they are used for protection
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In academic world rewarding of staff was based only on numbers
(kilograms!) of publications; patents are seen as publications
end in itself

This was the past; nowadays:

academia want/need extra income
academia must also produce entrepreneurs
students like to exploit their own ideas

Universities and Polytechnics start incubators for their

entrepreneurial students and staff

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 What is an incubator
(in an University environment)?

An incubator is an active and stimulating nursery for good business ideas,

living among students and staff.

An incubator provides all necessary facilities to the innovative technostarter

from “idea” till “proof of principle”. It provides support in:
housing
financing
coaching

The “incubation” time from a high tech innovative idea till proof of
principle: 2-3 years; without an incubator it would be 5-7 years

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 schematic
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

number of
ideas/initiatives

universities
polytechnics
public RIs
incubators
start-up companies successful
start-ups public comp.

knowledge
“wild ideas”

financing
ministry of education incubator-money seed capital – BAs -- VCs IPO

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Phase 1 : thousands of ideas

Phase 2 : hundreds of initiatives in incubator per year depending on size of

resource; let us assume: 100 per year

Phase 3 : half of initiatives in incubator die within year;

50 remain and get status of start up

Phase 4 : 1/3 of starters disappears; 1/3 continues, but remains

very small --- spin off, exist marginally or disappear later;
about 15 get support from BA or VC

Phase 5 : 2 or 3 --- go for IPO

Will one idea become an MNC, a real winner ??

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arbitrary but useful definitions:

initiatives in incubator : 1, 2 or 3 persons per initiative;

willing to work hard on their idea;
getting space and facilities for free; financed by an interest
free loan.

start-ups : 3-6 persons;

receive seed money (subsidy/grant);
have a sound business plan; enter the market
with their products.

successful start ups : 15 – 100 persons;

receive financing from BA or VC; have
turn-over of US$ 1 to 10 million; make profit.

going for IPO : independent of number of staff

expand through equity
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 Spider in its web: the incubator

Good initiatives; potentially- successful wild ideas MUST be nurtured to result

in business success!

It is not an automatic process that ideas become businesses; nurturing in

incubator helps tremendously.

Incubators can be the second step in academia ( Phase 2 )

Outside universities incubators
can be organized as support to SMEs
are nowadays organized in MNCs

In each of these 3 different categories the successful start-ups show normally an

extra order of magnitude in turn-over (MNCs are only interested in turn-over
above US$ 100M).

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 Questions

How do you think an Incubator can bridge the “Technology Gap”?

Do you know existing Incubators?

What is the status of Incubators at NUS?

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 Case Study: Partnership in Innovation

Bridging the Technology Gap as seen from the SMEs

(practical tips)

(free after Dr. Geert Hellings, MD of MikroCentrum, The Netherlands)

MikroCentrum is a platform to improve the business of high tech SMEs

through upgrading by seminars, conferences and training.

MikroCentrum reaches out to more than 400 companies

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Classical Innovation Model (1980s)

The process is linear; closed innovation model; practice in 2nd generation R&D

This sheet was in actual use in Philips Research end 80s (FC)

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 Different roles in innovation

The sheet shows specifically the different roles when bringing an invention
to the market.

inventor (source)
entrepreneur (from idea till commercialization)
project manager (organization)
Sponsor (financing, coaching, protecting)
gate keeper (technology support, marketing support)

To bring an invention to business needs many different kinds of people

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 What are the problems for the Technostarter ? (here often called:
Technopreneur)

Often the Technostarter has only knowledge of technology (he is “the

source”); he normally lacks
marketing and business experience
financial and administrative background
organizational aspiration

And most seriously: he lacks interest in those areas!

Because of these lacks business often fails.
Support by MNCs normally leads to either killing of the initiative or by
absorbing it into the large company.

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SMEs can be “partner in innovation”

Therefore: make technostarter and SME partner

For the Technostarter and Technopreneur the SME can:

bring the product to the market
develop the “complementary assets”
perform proto-typing
manufacture

Often SMEs are specialized in one of these areas, where on the contrary the
inventor lacks experience. Sometimes not just one but several SMEs could
form a partnership with the technostarter at the same time, each with his
own area of expertise.

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 Questions

What are the normal hurdles for the Technostarter to find a SME/LE
partner?

What are the normal hurdles for the SME/LE to find a Technostarter as
partner?

Do you know of initiatives in Singapore similar to the mentioned

MikroCentrum in The Netherlands?

Can you think about practical tips for both parties?

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