Tools for Assessing Technical Capabilities within Firms:

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Tools for Assessing Technical Capabilities within Firms:

  1. 1. Presentation at the OECD Workshop on "The Development of Practical Tools for Improving the Innovation Performance of Firms" OECD, Paris, June 30, 1997 Tools for Assessing Technical Capabilities within Firms: Examples from German and Swiss Corporations Prof. Dr. Alexander Gerybadze Center for International Management and Innovation University of Hohenheim D-70599 Stuttgart Tel. 0049-711-459 3249 Fax 0049-711-459 3446 E-mail agerybad@uni-hohenheim.de International Management & Innovation PRÄS9710.PPT Page 1
  2. 2. Introduction to the Center for International Management and Innovation • Master Curriculum on International Management with Focus on - International Management of Technology - Competence-based Strategy in Transnational Corporations • Research Projects and Databases - International R&D and Innovation Study (Interis-Study) - Benchmarking Management of Technology at the Corporate Level (SMTC) - Distributed Competence Metric (DCM) - Core Competence Assessment (CCA) • Close Collaboration with Corporations in German-speaking Countries/ Development and Implementation of Strategic Management of Technology • • Refinement of Concepts and Tools for "Managing Competences Across Institutional Boundaries" - Distributed Competences within Firms (Competence-based Teams) - Distributed Competences across Firms (Competence-Alliances) International Management & Innovation PRÄS9710.PPT Page 2
  3. 3. Technological Capabilities in Multi-Technology and Multi-Product Firms Business Markets/ Project R&D Technologies Product Unit/ Customer Ideas Projects Division Groups Product Strategy Technology Strategy Business Strategy -Idea Project Technology Product Planing Organisational Decisions for Generation Allocation Program Alloc. -Many/few Decisions Selection of -Project -Many/few -Many/few Products -Formation of Particular Selection Projects Technologies -Product Focus Bus. Units Markets and -Radical vs. -Strategic Im- -Product Archi- -Reportling Customer incremental portance of T. tecture and Lines Groups/Mar- Projects -Technology Design -Interdepart- keting and -Project Port- Portfolio and -Product Port- mental Com- Service Stra- folio Program folio munication tegy International Management & Innovation PRÄS9710.PPT Page 3
  4. 4. Technological Competences: The Ability to Deploy Complex Bundles of Resources in a Directed, Value-Enhancing Mode Project R&D Technologies Product Business Markets/ Ideas Projects Complementary Unit/ Customer Competences in: Division Groups Production Marketing/ Product Design Core Focus for Management of Technology Idea Generation Process/Creativity/ Business Strategies/Strategic New Project Idenfication Planning/Marketing International Management & Innovation PRÄS9710.PPT Page 4
  5. 5. Assessing Technological Capabilities on the Basis of their Strategic Fit with Customer Needs/Key Product Attributes Step 1: Step 2: Step 3: Need Assessment/ Product Design/ Evaluation of R&D Analysis of Potential Analysis of Compe- and Technological Problem Solution and tence and Service Capabilities Potential for Value Configuration Creation External System of Demand Articulation Configuration Customer R&D Key Success Factors/ Technologies of Product and Ser- Needs and Projects vice Attributes Key Product Attributes Requirements External System of R&D and Innovation International Management & Innovation PRÄS9710.PPT Page 5
  6. 6. Technologies, Business Unit Strategy and Corporate Strategy must be Closely Interconnected Corporate Strategy (CS) and Vision Technology Business Strategy Strategy (TS) (BS) Analysis of Analysis of Key Technological Success Factors and Capabilities (AT) Business Processes (AS) International Management & Innovation PRÄS9710.PPT Page 6
  7. 7. Procedure for Assessing Technological Competencies Based on Customer Requirements and Key Success Factors CS TS BS AT AS Segmentation, Customer Require- ments and Key Success Factors Analysis of Technological Capabilities Evaluation of Technology Position and Competitive Position Generic Technology Strategy Technology Program Implemen- tation (Build-or-Buy Decisions etc.) International Management & Innovation PRÄS9710.PPT Page 7
  8. 8. Technology Unbundling and Competence Decomposition/ The Case of Automobiles and Automotive Supply Technology Component/Module Subsystem Automotive System Composite Transmission Body Materials Metal Clutch Engine Materials Passenger Car Laser Driveshaft Drive- Technology train Surface Differential Electronics Technology Wheel- Other CIM Bearing International Management & Innovation PRÄS9710.PPT Page 8
  9. 9. Analysis of Key, Pacing and Base Technologies High Key Technologies Value-Added and Rent that can be Appro- Pacing priated by a Firm Technologies using this parti-cular Technology Embryonic Base Technologies Technologies Low Pre-Competitive Technology Applied Technology is Basis of Competi- Basic Research by Early Innovators Key for Compe- tion in Industry, on a Trial Basis titive Success Widely used, No competitive Diffusion of this Particular Technology Differentiation within Relevant Industry Group Pre-Paradimatic Phase Paradigmatic Phase International Management & Innovation PRÄS9710.PPT Page 9
  10. 10. Identification of Key, Pacing and Base Technologies Customer Requirements 2001-2005 ("Future") Customer Requirements 2000 ("Tomorrow") Technologies Customer Require- ments 1997 T1 T2 T3 T4 T5 T6 TN Key Success Factors KSF 1 * * KSF 2 ** *** KSF 3 ** ** * KSF 4 *** ** . *** . Key Performance Characteristics KPC 1 * ** KPC 2 *** 3 * ** KPC * KPC * ** ** 4 . ** ** *** Very strong Impact of Technology on KSF/KPC ** Strong Impact Key Technologies * Some Impact International Management & Innovation PRÄS9710.PPT Page 10
  11. 11. Evaluation of a Firm's Technology Position and its Profile of Technological Capabilities Technologies Weighting Techological Technological Capabilities of Major Relative Technology Position Factor Capability of Competitors our Company C C C ... C strong medium weak 1 2 3 K Key-Technologies (3-5) • Application Engineering 5 3 5 3 4 • Test and Measurement 4 4 4 3 3 • CIM 2 4 4 4 3 • Flexible Manfacturing 4 2 3 2 2 • Tool Technology 4 4 4 3 3 Pacing-Technologies (2-4) • Laser Technology 4 4 2 2 1 • Composite Materials 3 3 2 2 1 • Integration Wheelbearing 3 3 4 4 2 Base Technologies (1-3) • Integration Differential 3 3 3 1 1 • Casting Technology 4 4 4 4 4 • Surface Technology 5 2 4 2 1 • Wheelbearing Technology 4 4 5 5 4 Technology Position for - Key Technologies - Pacing Technologies - Base Technologies Overall Score for Technological Capabilities International Management & Innovation PRÄS9710.PPT Page 11
  12. 12. Technology Strategies must be Based on the Evaluation of a Company's Technology and Competitive Position Technology Position strong medium weak strong Technological Technological Akquisition Leadership Presence Competitive medium Technological Technological Position Niche Rationalisation weak Technological Technological Technological Joint Venture Rationalisation Draw-back International Management & Innovation PRÄS9710.PPT Page 12
  13. 13. Technological Capabilities Differentiated by Strategic Types of Technologies Type of Technology Position Technolgy weak medium strong 1 2 3 4 5 Embryonic T18 Technologies T17 (ET) T16 T16 T9 Pacing Technologies T7 T10 (PT) T8 T1 T2 Key T4 Technologies T6 (KT) T5 T3 T11 T12 Base Technologies T13 T14 (BT) T15 International Management & Innovation PRÄS9710.PPT Page 13
  14. 14. R&D Budget Breakdown in Selected Large German Corporations Type of Technology Position Technolgy weak medium strong 1 2 3 4 5 Embryonic 10-20 Technologies (ET) Pacing Technologies 10 (PT) Key Technologies 10-20 (KT) Base Technologies 50-70 (BT) Size represents percentage of R&D Budget Allocated to this 30 Type of Technology International Management & Innovation PRÄS9710.PPT Page 14
  15. 15. Technology Leadership Strategy only Feasible for Strong and Balanced Capability Profiles Type of Technology Position Technolgy weak medium strong 1 2 3 4 5 Embryonic Technologies 10 (ET) Pacing Technologies 30 (PT) Key Technologies 40 (KT) Base Technologies 20 (BT) Shaded area represents ideal type of competence distribution. Weaknesses (left of shaded zone) and Overshooting/"Gold-plating" (right of shaded zone should be overcome International Management & Innovation PRÄS9710.PPT Page 15
  16. 16. Technological Build-or-Buy and Keep-or-Sell Strategies to be De- rived on Basis of Technology Strategy and Competence Profile Generic Competitive Technology Technology- Position Position Strategy Assessment of Technological Type of Capabilities Technology Build or Generic Options for Keep or Buy? Building and Leveraging Sell? Competences Strategic Types of Technological Relative Strenghts Importance of Build-or-Buy/Keep-or- Related to this Competence Sell Decisions Competence International Management & Innovation PRÄS9710.PPT Page 16
  17. 17. Generic Build-or-Buy and Keep-or-Sell-Strategies High Acquisition of Strong In-house Technological Capabilities/ R&D and Competence Build-up of Competence Leveraging (Priorities and Inhouse Required Level of Competence de- (Depending on Techno- pendent on Technology logy Strategy) Strategy) Strategic Importance of Technological Competence Technological Coope- ration or Licensicy of Sourcing-in of External Technological Know-how Technological Low (specific Form dependent Capabilities on Technology Strategy) weak strong Relative Strength of a Unit related to a Particular Technological Competence International Management & Innovation PRÄS9710.PPT Page 17
  18. 18. Competence Alliances and Consortia Dynamics/ The Case of Medical Implants Technological Cooperation of Companies A and B Unique Techno- Privileged Strong logical Capabilities Product Position Access Company A Company A to Lead Market Unique Techno- Privileged Weak logical Capabilities Product Position Position Company B Company B in Lead Market International Management & Innovation PRÄS9710.PPT Page 18
  19. 19. Technological Capabilities' Profile in Medial Implants - Partnership Arrangement between Company A and B Technological Product Capabilities Architectur Ceramics Shaft Sintering Ceramics Shaft Company A Company A Powder Metal- Metal- Casting Caput Metall- Caput Alloys Alloys urgy Hipjoint Hipjoint Implant Implant Aceta- Surface Aceta- Poly- Poly- Forging bulum Techno- bulum ethylene ethylen Coxae logy Coxae Compo- Technological Compo- Product- Sintering Cortex Cortex sites Capabilities sites Architecture Company B Company B International Management & Innovation PRÄS9710.PPT Page 19
  20. 20. Can Innovation Research and R&D Policy Learn from Technology Management within Firms? • Well-proven Tools have been Developed and Implemented for - Profiling Technological Capabilities for Vertical Supplier-User Relationships - Distributed Competences within Strategic Alliances - Distributed Competences for Units/Locations within Firms • Similar Concepts can be Applied for Research Centers, Universities and Technology Policy. Problems: - Reformulation of "Customer" Concept - Multi-Constituencies - No clear-cut Strategies Defined • Most Existing Methods for Measuring Innovation Performance are Research- Driven and Input-Oriented • Critical Need Assessment and "House-of-Quality"/SMT Concepts to be Developed for "Basic Research" International Management & Innovation PRÄS9710.PPT Page 20
  21. 21. Technological Capabilities and Competence Boundaries of the Firm Project R&D Technologies Product Business Markets/ Ideas Projects Unit/ Customer Division Groups Außerhalb des schraffierten Bereichs: Kompetenzen und Leistungsbereiche außerhalb der Unternehmung (Kooperation bzw. Zukauf) Kompetenzen und Kern-Leistungsbereiche der Unternehmung (Integration) International Management & Innovation PRÄS9710.PPT Page 5

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