Technology Strategy

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Technology Strategy Capturing Value from
Technological Innovation

• Presented by
• Md. Aminul Islam
• Susi Andriani
• Zhi Gang

TIM - 99
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TOPICS

• 1. INTRODUCTION
• 2. TECHNOLOGY STRATEGY
• 3. CAPTURING VALUE FROM TECHNOLOGICAL INNNOVATION
• 4. EXAMPLE CASES OF CAT SCANNER AND IBM

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PURPOSE OF THE PRESENTATION

• ...elaborates the view of technology as a
  functional capabilities and develops an
  evolutionary process framework for discussing
  technology strategy
• ...examines why firms and and nations can lose
  ground in the commercialization of advanced
  technology

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2. TECHNOLOGY STRATEGY

• 2.1 Definition of Technology Strategy
• 2.2 Technology Strategy An Evolutionary
  Process Perspective
• 2.3 Forces Shaping Technology Strategy
• 2.4 Technology Strategy Substance and enactment

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2.1 Definitions

• What is technology?

Technology is define as the ensemble of
theoretical and practical knowledge, knowhow,
skills and artifacts that are used by the firm to
develop, produce and deliver its products and
services.
What is technology strategy?
Technology strategy is a relation between the
development of technology and the persuit of
competitive advantage in specific organisational
and environmental context
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2.2 Technology Strategy An Evolutionary
Process Perspective
Capabilities
Strategy
Experience

• Fig. 1
• An organizational learning framework of
  strategy-making

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2.3 Forces Shaping Technology Strategy
Internal Environment
G E N E R A T I V E M E C H A N I S M S
I N T E G R A T I V E M E C H A N I S M S
Organisational context
Strategic behaviour
Technical Capabilities
Technology Strategy
Experience
Industry context
Technology evolution
External Environment
Fig. 2 An evolutionary process framework for
technology strategy
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2.4.1 Substance of Technology Strategy
2.4 Technology Strategy Substance and Enactment

• Competitive positioning
• Technology and the value chain
• Scope of technology strategy
• Depth of technology strategy

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Acquisition
2.4.2 Enactment of Technology Strategy
? acquisitive functions which import technology
originating outside the firm
Development
? acted out in the functions which develop
technology as products and processes
Support

• ? field service create the interface between
  the firms technical function and the users of
  its products or services

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3. CAPTURING VALUE
3.1 The Phenomenon 3.2 Profiting from
Innovation 3.3 Channel Strategy Issues
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3.1 THE PHENOMENON

• What happened then?
• EMI with its CAT scanner
• was successful within 6 years of its introduction
  
• then company had lost market leadership
• by 8 years had dropped out of the CAT scanner
  business
• others companies succesfully dominate the market

• Computerized Axial Tomographic (CAT) Scanner
  developed by the UK Electrical Musical Industries
  (EMI) Ltd
• the first company who introduce the views of
  human body by CAT
• the greatest advance in radiology since the
  discovery of X-rays

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FURTHER EXAMPLE

• What happened then ?
• both Coca-Cola and Pepsi-Cola followed almost
  immediately and deprived Royal Crown (RC Cola) of
  any significant advantage from its innovation

• Royal Crown Company, Inc
• the first to introduce cola in a can
• the first to introduce diet cola

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IBM Corporation (PC)

• It was introduced (1981)
• IBM PC was fabulously successful and establish
  MS-DOS as a leading operating system for 16-bit
  PCs
• End of 1984 IBM had shipped more than 500,000 PCs

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OUTCOME FROM INNOVATION
INNOVATOR
IMITATOR-FOLLOWER
W I N
L O S E
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3.2 PROFITING FROM INNOVATION

• Regimes of appropriability

• Vary across industries and within industries
• Patent do not work in practice as they do in
  theory
• Trade secrets in processes
• Tacit knowledge and codified

• Complementary assets

• To support commercialization in manufacturing,
  distribution,sales and service
• Kinds of complementary assets Generic assets,
  specialized assets, and co-specialized
  (bilateral dependence)

• The dominant design paradigm

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DESIGN PARADIGM
Product innovation
Rate of innovation
Process Innovation
Pre-paradigmatic Design Phase
Paradigmatic Design Phase
Fig 3Innovation over the product/industry life
cycle
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3.3 CHANNEL STRATEGY

• Contractual relationships

• A contractual relationship becomes a strategic
  partnership
• The IBM / Microsoft case
• The advantage to the small company

• Integration modes

• many difficulties and hazards
• when imitation is easy ? go fast
• No single company has everything ? integration an
  issue for large small

• Mixed modes

• Involving contracting and integration (Computer
  Telecommunication convergence, i.e. Standards/
  Protocols and IBM/Intel)

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4. EXAMPLE CASES (capturing value from the
strategy)

• CAT Scanner (Lose Innovator)

• IBM PC
• (Successful Follower)

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4.1 CAT SCANNER/EMI

• The CAT Scanner which was developed by EMI (UK
  firm) was a high technical solution found for
  hospital.
• A strategic error from EMI
• Two competitors -------General Electric and
  Technicare.
• Conclude gtgtgtgtby 1978 EMI had lost the
  leadership in market share to Technicare.

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4.2 IBM PC

• The beginning of the development----IBM PC.
• The use of new Technology.
• The key to the PCs success

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Analysis

• The success of IBM PC and the failure of the CAT
  scanner indicate that the key to the success is
  not only the technology. The market strategy is
  very important and also maximize the share of
  profit relative to competitors.
• The Importance of Manufacturing to
  International Competitiveness is
• the identity between policy and firm
• the harm of a loose appropriability regime

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CONCLUSIONS

• Technological strategy of a firm through the
  lenses of the underlying capabilities the
  resultant modes of performance
• the ownerships of complementary assets helps
  establish who wins and who loses from the
  innovation
• imitators can often outperforms innovators if
  they are better position and respect to the
  critical complementary assets
• the key to the success is not only the
  technology...the market strategy is very important

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THANK YOU
Thank you !
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DISCUSSION
1. How does the organization strike the delicate
balance between letting technology drive
development and using the marketplace to drive
technology ?2. Who win the innovation ? The
innovator ? The follower ? The customer ?