Tech innovation s8_strategy

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Learn the principle involved in formulating and implementing a technology strategy for short term and long term win.

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Tech innovation s8_strategy

  1. 1. Technology and InnovationManagement:S8Technology StrategyRaj C Thiagarajan, PhDToSIBM SIII MBA Students ATOA Scientific Technologies Engineering Simulation For Innovation
  2. 2. What is Technology Strategy?• Technology aspects related to business objective of wealth creation• Objective= Maximize Value• Value = Benefit – Cost Technology Strategy• Strategy to create – Customer Value – Shareholder Value – (Wealth) creation ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  3. 3. Strategic Planning• Corporate Strategy refer to Firms positioning in terms of – responsiveness, – cost leadership and – product differentiation• Corporate strategy <=> Technology, Operations, Finance, Marketing strategy• A sound technology strategy is critical for Success• key to operational superiority, competitive edge.• Technology strategy will have an effect on all aspects of the organization. ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  4. 4. Operations Strategy at Wal-Mart ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  5. 5. TIM Strategy ComponentsHow will we create value? • Customer experience • Technology evolution • Market Dynamics • Organizing for innovationHow will we capture value? • Competitive advantage • Technology portfolio Management • NPI leadershipHow will we deliver value? • Execution of successful strategy • Strategic Decision Making ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  6. 6. Strategy Flow @ the hand Product ProcessInvention Innovation of the Innovation Innovation Customer Product Strategy Market Strategy Technology Strategy and Innovation Firms Short and Long Term Success ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  7. 7. What are attributes of a winning strategy? • What are attributes of a winning strategy? • Win in the market place. – Value – Market – Industry ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  8. 8. Dreaded Delta• Incremental – Line extension – New range – Short term – Industry turbulence – Future incompetence Source: R. E Johnston, J. D Bate, The power of strategy innovation, American Management Association, New York, 2003. ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  9. 9. Market opportunityFirms Potential for winning Objectively attractive market• Geography attractiveness • Possible product / service (Political , economic) for creating customer value• Strong Industry basics (size, • Do you have a competitive growth, profit, comp..) edge• Winning Trajectory (Growth, • How to or can gain to technology trends) deliver value? ©ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 9
  10. 10. Technology investment Analysis• Where you want to in next five years?• Portfolio grid matrix High ? PROBLEM STAR (Convert to (Invest)• Boston box star) Market Growth• Investment opportunity Rate DOG CASH COW (Liquidate) (milk them) Low Low high Market Share ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  11. 11. Attractiveness• Economic – Potential to invest High Develop Target • Revenue capability Segment • Cost to serve Economic• Fit Attractiveness ? – Ability to serve Avoid Improve Value • Firms strategy • Position Low Low Fit: Ability to serve High ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  12. 12. Profit 30Match the Industry 25 Profit 20• Industry to profit level 15 – Easier to make money in profitable industry 10 5 – Changes in profitability 0 may indicate changing Industry Industry Industry Industry Industry industry dynamics 1 2 3 4 5 Industry Profit – Profitability varies with in Auto and CV Manufacturing 5 a industry Computers and office machines 4 Petroleum production 1 Pharmaceuticals 2 Soft drinks 3 ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  13. 13. Growth 16Match the Industry Growth 12Industry growth level • Easier to grow in large 8 and high growth industry 4 • Revenue growth even 0 without market share Industry Industry Industry Industry Industry gain 1 2 3 4 5 -4 • Market share is relatively easier Industry Growth • Higher growth is Auto and CV Manufacturing 4 typically associated with Computers and office machines 5 higher profitability. Petroleum production 1 Pharmaceuticals 3 Soft drinks 2 ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  14. 14. Industrial Value DriversPorter’s five forces• Buyer power Barrier to Threat of Entry new players• Supplier power• Entry opportunities Industry Buyers• Substitute Rivalry possibilities• Competitor rivalry Competitive landscape You Bargaining power of Buyers Suppliers Substitutes Bargaining Threat of power of substitutes suppliers ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  15. 15. How to add Value• Value = Benefit – Cost Value = Benefits - Cost• Decrease cost  Product Price,• Increase benefit  Products innovation Reliability Best Product• What you provide• How you provide Expertise Hassle free Services Customer Ease of doing Best Services Understanding business Best Total Lowest Cost Solution Total Solution ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  16. 16. Value propositionType of Value proposition Examples• Lowest Total cost • Walmart, Big bazzar• Best Product • BMW,• Best Service • Airtel• Best Total Solution • Toyota ©ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 16
  17. 17. Business model vs Value Proposition Value Best Total Best Lowest Total Proposition solution Product solution Rule Solve the Self destructive Variety kills clients broader success with efficiency problem breakthroughs DNA, Value, Empowered Flexible structure Hierarchical COH front end Decisive Structured Customer Risk oriented procedures Centre Metrics Customer Time to market Unit cost, Cost retention Vitality , profit experience Customer Product line profitability profitability ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  18. 18. Technology vs market Positioning Marketing Impact Entirely new benefit Improvement No change Radical Breakthrough Platform Technology Reach Derivative Product Off the shelf Support ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  19. 19. Strategic Planning vs Innovation ProcessStrategic Planning Process Strategy Innovation Process• Analytical • Creative• Numbers-driven • Insights-driven• Company-centric • Market-centric• Logical/linear • Heuristic/iterative• Today to tomorrow • Tomorrow to today• Extend current value • Create new value• Fit the business model • Create a new business model ©ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 19
  20. 20. Innovative Technology Strategy• Strategy innovation is a process of applying innovative thinking to the entire business model of a company.• Create Value for the Customer and firm efficiently.• Change the rules of the game – Cricket: Test -> 1 Day –> T20• Competitive advantage • Size does not matter• Deliver Value to the customer better• For: Technology Roadmap, Product pipeline, Financial Success ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  21. 21. Strategy example Product Kodak Polaroid • Film/Silver halide • Instant photography Digital imaging • R&D Focus form silver • Patented Technology halide to Hybrids • CD, online +++ • Ignored the disruptive technology• Dominant force in Digital photography • Filed for bankruptcy ©ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 21
  22. 22. Strategy Example Service Compaq Dell• Traditional Supply chain • Virtual Integration• Low customer pull • High customer pull• Fixed product specification • Very high product or configurations. customization• Specialized distribution • Direct fulfillment - no channels/ intermediaries intermediaries• Produce first sell later • Production only after order• Relative high inventory at • Very low finished goods various stages. inventory (costs) ©ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 22
  23. 23. Strategy example Wining Strategy Lost Strategy • IBM • Digital Equipment corporation • Apple • US airways • Microsoft • Enron • Nokia • Worldcom • GE • K-mart • Corning©ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 23
  24. 24. Market Rewards Innovation Industry Innovation Share price Key Share price Segment Premium growth Competitor growth (%) Automobile Toyota 150% GM -35% Computers Apple 700% Dell -10% FMCG P&G 65% CP 15% Soft drinks Pepsi 30% Coke 5%• Share Price Growth over the five years range (2002- 2007)• Innovation Premium vs Key competition Source: R Jonash et.al, Balanced Scorecard Report, Harvard Business Review,, Vol 9, No 2, March-April 2007 ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 24
  25. 25. Balanced Score Card• The Balanced Scorecard is a management system used to focus and prioritize management energy toward achieving both short and long term organizational.• Strategic plan into action• ‘Balances’ short and long term needs• Are we learning and innovating in business critical areas?• How are core processes performing?• How do we look in eyes of our customers?• How are we doing at managing costs and making margins? ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 25
  26. 26. Balanced Score Card• Links strategy and vision with – objectives for business performance – measures of each objective – target values for measures – specific initiatives to improve and Objectives Measures Targets Initiatives innovate ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 26
  27. 27. Technology InvestmentsThe Link Innovation premium Growth from Improved Cost Financial new and existing and Efficiency The Brand Value Customer Features & Price Ease of Use Service Reliability functionality Growth & Innovation NPI Sourcing & Process Commercialization Collaboration Leverage Launch existing Internal Programs Development partnerships Process Establish Ideation Identify new partnerships Process Collect Intelligence and generate insights Learning The Innovative Company and Build innovation competencies Develop innovation Develop cross functional Create a culture of and skills leaders teams innovation Growth After R Jonash et.al, Balanced Scorecard Report, Harvard Business Review,, Vol 9, No 2, March-April 2007 ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management 27
  28. 28. Industrial Value DriversPorter’s five forces• Buyer power Barrier to Entry• Supplier power Sustainability Buyers• Entry opportunities• Substitute possibilities• Competitor rivalry Digitization You Substitutes• ++• Globalization Globalization Suppliers Industry• Digitization Rivalry• Sustainability ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  29. 29. Explore and Exploit• Learn• Collaborate• Prototype• Strategize• Architect• Develop• Deploy ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  30. 30. Successful firms:• Get the strategy “right”• Create real value through linking technologies to customer & consumer needs• Capture the value through a deep understanding of potential business models and competitive realities• Organized for successful value creation.• Manage successfully for both short term and long term success of the firm ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management
  31. 31. References• R. E Johnston, J. D Bate, THE POWER STRATEGY INNOVATION, American Management Association, New York, 2003.• Managing Technology and Innovation for Competitive Advantage – V.K. Narayanan – Chapter 8• R Jonash et.al, Balanced Scorecard Report, Harvard Business Review,, Vol 9, No 2, March-April 2007 ATOA Scientific Technologies Pvt Ltd | SIBM , III Semester MBA| Technology and Innovation Management

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