NITM - Integrated Strategies

1
Fraunhofer IAO, Germany Developing Integrated
Business and Technology Strategies
NITM International Seminar Series A series of
Seminars for Executives Managers NITM, Dublin,
September 17th, 2003
Frank Wagner Flavius Sturm
Fraunhofer Institute for Industrial Engineering
2
Agenda

• 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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Increasing requirements for companies make new
planning methods necessary
Times of innovation become shorter
Influence of demand groups and stakeholders
increases
Product diversity increases
Internationalization gains more importance
CompanyStrategy Leadership
Technology becomes more complex and interconnected
The amount of information increases very strongly
Production becomes more capital intensive
RD becomes more capital intensiv
Source Gausemeier et al.,1996
4
Wrong forecasts of reputable experts (I)
It is not easy to predict the future ... !!
1897 Lord Kelvin important mathematician and
inventor
The radio will have no future at all."
1901 Wilbur Right With his brother one of the
most important flight pioneers
Man will not manage within the next 50 years to
become airborne with a metal produced plane ."
1932 Albert Einstein Inventor of the theory of
relativity pathfinder of the nuclear energy
There is no sign at all, that we will ever be
able to develop nuclear energy"
Quelle Gausemeier et al.,1996
5
Wrong forecasts of reputable experts (II)
It is not easy to predict the future ... !!
1943 Thomas J. Watson Chief Executive Officer of
IBM
I think there will only be a need on the world
market for 5 computers."
1945 Vannevor Bush Chief Commander of the USA
"I wish, the Americans would finally stop
talking about the phantasm intercontinental
ballistic missile "
1957 Lee de Forest Inventor of the cathode pipe
Despite all progress, man will never be able to
reach the moon.
1977 Ken Olsen Chief Executive Officer of the
computer manufacturer Digital
I can not see any reason at all, why an
individual should have its own computer."
Source Gausemeier et al.,1996
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Strategic technology management
... but you can try to be as sure as possible
Scenario planning
Strategic Foresight
Strategy development
Develoment of strategic options
Derivation and definition of strategy
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Agenda

• Introduction
• Case study scenario technique
• Scenario technique
• Technology Roadmapping
• Case studies Technology Roadmapping and
  Technology Strategy

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Case Study 1 Scenario-Technique
Company Classification Sector Automation
Drive Company Size 10.000 employees Turnover 1,
2 Mio. Type of Customers OEM (2nd or 3rd
tier) Strategy Technology leader / pioneer
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Approach for generating market environment
scenarios
PHASE I PHASE 2 PHASE 3 4
Internal Workshops
Umwelt
Zulieferer / Partner
Management Organisation
Technologie
Mitarbeiter
Gesetz/ Politik
Produkte / Dienst-leistungen
Gesellschaft
Entwicklung
Kunden
Kunden der Kunden
Wettbewerber / Märkte
Wirtschaft
Creation of a company relevant environment
Recording of influence factors by interviews and
workshops and creation of key factors
Description of future model characteristics by
scenarios
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Overview of interviewed partners
Customer interviews
Internal Interviews
Purchasing Production Member of the
board Design RD Sales New Markets Development Dis
tribution Europe Distribution Germany
Internal Workshops
Product management Branch management
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Definition of force field
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Identification of key factors (1/2)
Changes within environment customer's view
Society KF1 Worldwide population
development KF2 Degree of indivdualisation
Law/Politics KF3 Work rules/ law
Economy KF4 Product life cycles KF5 Location
Germany KF6 Change of economical structure KF7
Source of value adding
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Identification of key factors (2/2)
Change of market, technologies and suppliers
customer's perspective
Suppliers market KF16 Market structur constellat
ion KF17 Entry of new competitors KF18 Competit
or's service variety KF19 Market
dynamics KF20 Innovation velocity
Demand market KF8 Market structure KF9
Market dynamic KF10 Branch dependence
of market need KF11 Consumer behaviour KF12
Structure of value added chain KF13 Kind of
competitive advantage KF14 Specificity of
regional demands KF15 Rules/prinziples
of collaboration
Technology KF23 Convergence of
technologies KF24 Automation in
Manufacturing technique KF25 Nano
technology KF26 Biotechnology KF27 Substitution
of technology in propulsion technology KF28 Ma
terial innovation KF29 Production
engineering KF30 Importance of information
and communication
Supplier/Partner KF21 Supplier's
service variety KF22 Degree of supplier
integration into value added chain
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From interviews to key drivers and scenarios
Creation of KF and projection
Interview extract
Society The increasing degree of Individualism is
a visible trend recognizeable by diminishing
edition numbers. This fortifies the trend
towards personalized digital print. Additionally
a trend towards more intensive sophisticated
advertisement upcoming (Demands for optic,
design, image, quality) Information are needed
and demanded faster and more individualized
(Results for newspapers and print industry in
general)
Individualisation of information demand A The
demand for information is steady and mainly
covered by specialiced print media B The
demand for information in specific groups is
covered equally by digital and print media
C The increasing individualistic need for
information is more and more covered by
digital information
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From key factors to scenarios
Key factors
Clustering of projections
Projection of KFs
Environment KFx Demand market KFx Supplier
market KFx Supplier/Partner KFx Technology KFx
.
.
.
.
Time
.
.
.
.
today
Future horizon
Source changed after Gausemeier et al., 1996
.
... for those, several development options are
conceived ...
The relevant measures are taken out of the
network environment of enterprises ...
... And finally condensed to consistent scenarios
.
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Example KF 8 Market structure
From key factors to scenarios
Economies change of structure leads to global
multinational enterprises, which combine
different industry branches and destroy SME's
structures.
The coalescence of different industry branches
leads to a division of labor following steps in
the value added chain and not to a division
ordered by branches. Low wages countries take
over work intensive value added chain steps while
high price countries specialize on core
competences in development, montage,
etc.. International goods traffic will increase
strongly. Some enterprises will cover the entire
service spectrumwhile smalle ones will earn their
money with specialized functions.
Scenario 1 "Arctic"
Change of structure leads to a specialized niche
industry at the interfaces of the big industry
sectors, which provides the connecting elements
Scenario 2 "Sierra Nevada"
Scenario 3 "Amazonas"
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Scenario construction market- environment
Scenario A Arctic
Structure of customer market

• Homogeneous structure of customer markets
• Similar customer needs
• Huge, global orientated enterprises
• Strong Homogenity of production concepts

C
flexible
Text
B
Scenario B Sierra Nevada

• Need diverse structure of
• customer markets
• Segment specific
• customer needs
• SMEs in networks
• Middle variance of
• production concepts

A
flexible
flexible
Production concepts
Competition Structure
Scenario C Amazonas

• Heterogeneous structure of customer markets
• Specific customer needs
• Numerous small, flexible niche enterprises
• Wide specificity of production concepts

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Agenda

• Introduction
• Case study scenario technique
• Scenario technique
• Technology Roadmapping
• Case studies Technology Roadmapping and
  Technology Strategy

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Strategic early warning 5 stages of scenario
management
scenario - preparation
Scenario platform Contains the definition and
analysis of the investigation object as well as
the definition of the area, the scenarios are
created for.
1
scenario field - analysis
Key factors name relevant influence factors
2
scenario - forecast
Future projections For any key factor several
development possibilites in terms of future
projections will be created
3
scenario - creation
Scenarios Complex future images, whose
occurrences are not able to be forecasted with
absolute security
4
scenario - transfer
Vision/Mission Strategy
5
Source Gausemeier et al.,1996
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Strategic early warning scenario creation
scenario field - analysis
scenario - forecast
scenario - creation
.
.
.
.
time
today
Future horizon
.
.
.
.
.
time
today
Future horizon
By linking the measurements of the company and
the environment, the relevant influence
parameters will be detected ...
... And afterwards they are summerized to
consistent scenarios.
... For these parameters several development
possibilites are created...
Source Gausemeier et al.,1996
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Strategic early warning Application possibilites
of scenario management
Objectiv planning
Resource planning
Future robust business vision and objectives
Future robust Strategies for companies and
business units
Future robust visions and objectives within
product management
Future robust Strategies for general and specific
products
Design area technology
Scenario-based technology assessment (TA)
Technology visions
Future robust technological solutions in new
products
Global Design area
Future robust global objectives, e.g. for
organizations or policy
Future robust global strategy e.g. for
organizations or policy
Source Gausemeier et al.,1996
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Strategic early warning forms of scenarios
Typical fields of scenarios
Typical design areas
business scenario
pure business- scenario
business- system- scenario
business- environment- scenario
product scenario
pure product- scenario
product - system- scenario
product - environment- scenario
technology- scenario
pure technology- scenario
technology- system- scenario
technology- environment- scenario
global- scenario
pure global- scenario
global system- scenario
global environment- scenario
types of planing
Source Gausemeier et al.,1996
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Strategic early warning Proceeding of the
workshop approach

Project description
problem
1.1
project plan
Force field analysis
scenario-platform
1.2

Creation of influence areas
workshop 1 scenariofield-construction and
descriptor formation
2.1
Creation of influence factors
influence factor-catalog
2.2
Elaboration of key factors
key factor-catalog
2.3
Source Gausemeier et al.,1996
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Strategic early warning Proceeding of the
workshop approach

Processing key factors
workshop 2 future project planning and
consistency planing
3.1
Creation of future projections
3.2

Projection bundling
Projection bundle catalogue
4.a
Raw-scenario formation
raw-scenario catalogue
4.b
Future space mapping
future space
4.c
Source Gausemeier et al.,1996
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Strategic early warning the proceeding of the
workshop approach

scenario-description
4.d
scenarios
main field of application of scenario-software

impact analysis
workshop 3 scenario transfer
5.a
eventual planing
5.b
robust-planing
future robust visions/objectives/strategies
5.c
implementation controlling
Source Gausemeier et al.,1996
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Strategic early warning the proceeding of the
scenario field analysis
definition of scenario-fields
sub-stage 1 Formation of impact areas The
scenario field will be seperated in individual
impact areas.
sub-stage 2 Formation of impact factors The
individual impact areas will be described by the
key factors as complete as possible.
sub-stage 3 development of key factors The
interconnection of the influence factors will be
investigated to identify the scenario typical key
factors.
key-factor- catalogue
source Gausemeier et al.,1996
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Agenda

• Introduction
• Case study scenario technique
• Scenario technique
• Technology Roadmapping
• Case studies Technology Roadmapping and
  Technology Strategy

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Substitution potential (Double-S-Curve)
Capacity of technology (benfit/costs)
Old technology
cumulated RD-effort
Source Krubasik (1982)
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Technology-Roadmaps
Time
O3
Future
O1
O1
O2
O1
O1
O2
Objects
today

• Technology Roadmaps allow a visualisation of
  future technological developments
• Technology Roadmapping captures and bundles
  knowledge of experts
• Leads to the derivation of concrete options of
  action

Source Specht et al., 2000
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Technology-Roadmaps / Proceeding
Phase 1 Definition of searching field
Phase 2 Analysis of product-technology linkages
Phase 3 Needs analysis and prognosis
Phase 4 Potential analysis and prognosis
Structuring of searching field
Phase 5 Generation of Roadmap
Phase 6 Analysis / Evaluation
Phase 7 Action plan
Source similar in Specht et al., 2000
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Technology-Roadmaps - Analysis of
product-technology linkages
Accoustics
Market 1
Product 1
Function 1
Technology 1
Product 2
Function 2
Thermodynamics
Market 2
Technology 2
Product 3
Function 3
Internet
Technology 3

• Detailed analysis and description of
  market/product combinations
• Analysis of product / function / technology
  linkages
• Visualisation of results oin consistent chains

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Technology-Roadmaps Understanding the
technology complex
Manufacturing Technologies
Regarded product technologies
Customer requirements
Pre-technologies
Follow-up technologies
Technology of direct competitor products
Complementary technologies
Substitutive technologies
Source Zahn, 1994
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Technology-Roadmaps Needs and Potential
analysis by scenario technique
Accoustics
Market 1
Product 1
Function 1
Technology 1
Function 2
Thermodynamics
Product 2
Market 2
Technology 2
Function 3
Internet
Product 3
Technology 3
Global scenarios
Technology scenarios
Product scenarios
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Technology-Roadmaps Generation and Verification
of Roadmaps
Source Specht et al., 2000
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Technology calendar

Strategy
Products
Technology
Current Products
New Products
Current Technology
Make or Buy ? Keep or Sell ?
A
D
B
E
New Technologies
Product Technology
Product Technology 1
98
99
Make
Product Technology 2
Sell
Product Technology 3
98
Buy
Product Technology 4
Process Technology
Process Technology 1
Sell
Process Technology 2
98
98
Buy
Process Technology 3
Make
Process Technology 4
Source Tschirky/Koruna, Technologiemanagement
(1998)
36
Technology-Roadmaps Summary

• Advantages of Technology Roadmaps
• Integrated product and technology development
  and planning
• Enhanced transparency of product and technology
  planning
• Identification of gaps in medium and long term
  product and technology planning
• Bundling of existing and new technology and
  market know how in a central organisation
  unit
• Matching of expectations of RD and marketing
  department

Source Specht et al., 2000
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Agenda

• Case studies Technology Roadmapping and
  Technology Strategy
• - How companies do technology foresight
• - How companies organise technology
  foresight
• - What results do companies achieve with
  technology foresight

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Case Study Siemens Corporate Research
Scenarios pictures for the Siemens-operation
areas
Influencing factors
Strategic vision
individual
Automation control
Day-to-day business

• Retropolate from
• Scenarios
• New markets
• New customer requirements
• New technologies
• New business possibilites

society

• Extrapolate via roadmaps
• Products
• Technologies
• Customer
• requirements

Information communications
policy
economy
Lighting
environment
Medical
customers
Power
technology
Transportation
competition
Today short-term medium term
long-term
Source Austrian Research Center, 2002
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Case Study Organisation of early warning and
strategic product and technology planning in a
medium-size german high tech company
CTO
Head of strategic product and technology
planning
Strategic Planning of products and systems
Business Development
Scenario Management
Patent Management
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Case Study Schindler Group Ltd. Trends within
the development of sensorsystems

• Integration
• smart sensor systems
• complex systems
• wireless
• digital, partly bus-compatible

• Performance
• high precision of measurements
• high linearity
• high reliability
• low maintenance

Signal processing
Multi-sensing

• Standardisation of interfaces
• economies of scale
• interoperability

mechanical
Actors
chemical
electrical

• Miniaturisisation
• smaler scales
• lower energy consumption
• feedback free

magnetic
radiation
thermal

• Intelligence
• self-identification
• self diagnosis
• self calibration

Trends in sensor systems Smarter, cheaper,
embedded decentrally, self-screening
Source Gassmann/Kottmann, 2002
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Case Study Schindler Group Ltd. Development of
the sensor technique between technology-push and
market-pull
Technology push

• Manufacturing technology
• microelectronics
• material technology
• modularization

Technology driver

• System technology
• communication technique
• decentral intelligence
• interfaces

• Product technology
• semi-conductor
• telemetry
• complex measurement
• categories

Market pull
Dynamics
low
high
Source Gassmann/Kottmann, 2002
42
Case Study Schindler Group Ltd. Cycle of
Sensor technology a strategic perspective
high
prototype
invest
motion sensor
image sensor
absolute encoder
approach sensor
accelerometer
IR-image-sensor
inductive sensor
optimize
sonic sensor (voice recognition)
power sensor
Strategic relevance
3D sensor
Optical contactor/ Light- IR sensor
magnetic sensor
observation
ultrasonic detector
strain gauge
position sensor
Chemical sensors Rust detection, etc.
Image sensor (CMOS)
disinvest
Linear incremental encoder

• Biometric senors
• language identification
• thumbprint

contact sensor
low
mechanical contactor
high
low
Stage of maturity, Resources
Core Competence
New Technology
Source Gassmann/Kottmann, 2002
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