Integrating Technology and Strategy
Elements
• Key concepts concerning technological innovation
• Elements of the integration of technology with corporate
strategy
• Frameworks for auditing and accessing a firm’s innovative
capability
Integrating Technology and Strategy
Definition of Terms
Invention versus discovery:
• “We discover what before existed, though to us unknown; we
invent what did not before exist.” – Webster
Basic versus applied research:
• Basic research refers to activities involved in generating new
knowledge; applied research is geared to solving particular
technological problems
Integrating Technology and Strategy
Definition of Terms
Technology:
• This refers to the theoretical and practical knowledge, skills
and artifacts that can be used to develop products and
services as well as their production and delivery systems.
Technology can be embodied in people, materials, cognitive
and physical processes, plant, equipment and tools
Integrating Technology and Strategy
Definition of Terms
Technological Innovation:
• This can be technology-based or facilitated by technology.
We define successful technological innovation as that which
returns the original investment plus some additional returns
Integrating Technology and Strategy
Definition of Terms
Innovation process:
• This can be defined as the combined activities leading to
new, marketable products and services and/or new
production and delivery systems
Integrating Technology and Strategy
Definition of Terms
Types of Technological Innovation:
• Incremental innovation: adaptation, refinement and
enhancement of existing products or services
• Radical innovation: entirely new product and service
categories
• Architectural innovation: reconfigurations of the systems or
components that constitute the product
Integrating Technology and Strategy
Technology and Competitive Strategy
Porter’s “generic strategies” concept is a widely used
framework for classifying competitive strategies. The
generic strategies are:
Industrywide differentiation
Focused differentiation
Industrywide cost leadership
Focused cost leadership
Integrating Technology and Strategy
Generic strategy
Overall cost Overall Focus-segment cost Focus-segment
leadership differentiation leadership differentiation
Technological policies
Product technological Product development to Product development Product development Product design to
change reduce product to enhance to design only meet exactly the
cost by lowering product quality, enough needs of the
materials content, features, performance for particular
facilitating ease of deliverability, or the segment's business
manufacture, switching costs needs segment
simplifying application
logistical
requirements, etc.
Process technological Learning curve Process development Process development Process development
change process to support high to tune to tune the
improvement tolerances, production and production and
Process greater quality delivery system delivery system
development to control, more to segment to segment need
enhance reliable needs in order to in order to
economies of scheduling, faster lower cost improve
scale response time to performance
orders, and other
dimensions that
improve
the ability to perform
Integrating Technology and Strategy
Technology and Product-Market Strategy
A firm’s strategy is expressed in the products and services it
brings to market. One way to get at the integration of a
firm’s technology and product-market strategy is:
Decompose each product or service into its constituting
technologies and assess the relative strength—the degree
of distinctive competence—the firm has with respect to
that technology
Integrating Technology and Strategy
Technology Portfolio
Harris, Shaw, and Somers suggest:
Once various technologies have been identified, they
can be classified in terms of their importance for
competitive advantage
Next, the firm’s position relative to its competitors can
be assessed
Integrating Technology and Strategy
High
Technology importance
Bet Draw
Cash in Fold
Low
High Low
Relative technology position
Integrating Technology and Strategy
Technology Forecasting
It is the capacity to perform systematic technological
forecasting. Some useful techniques for forecasting are:
Technological progress functions (S-curves)
Trend extrapolation
The Delphi method
Scenario development
Integrating Technology and Strategy
Business Unit Level Audit
This framework measures five important categories of
variables that influence the innovation strategies of a
business:
Resources available for innovative activity
Capacity to understand competitors’ strategies and
industry evolution with respect to innovation
Capacity to understand technological developments
relevant to the business unit
Structural and cultural context of the business unit
affecting internal entrepreneurial behavior
Strategic management capacity to deal with internal
entrepreneurial initiatives
Integrating Technology and Strategy
Resource
availability
Understanding
Understanding
competitors’
business unit
innovative
technological
strategies and Business unit environment
industry evolution innovative
strategy
Business unit
Business unit
strategic
structural and
management
cultural context
capacity
Integrating Technology and Strategy
Corporate Level Audit
At this level, the audit investigates whether and how the
innovative capabilities of the corporation are larger than
the sum of those at the individual business units. Five key
categories are:
Resource availability and allocation
Capacity to understand multi-industry competitive
strategies and evolution
Capacity to understand technological developments
Corporate structural and cultural context
Corporate strategic management capability
Integrating Technology and Strategy
Resource
availability
and allocation
Understanding
competitors’ Understanding
innovative corporate
strategies and technological
multi-industry Corporate
environment
evolution innovative
strategies
Corporate structural Corporate strategic
and cultural context management capacity
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology
Companies
Technology development
Product development
Business strategy
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology Companies
Technology Development - Pros
• Breakthroughs Be first
• Big competitive advantage
• Attract top talent Motivating
• Capitalize on the efforts of others
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology Companies
Technology Development - Cons
Time to market too Slow
Always starting from scratch
Locked-in with one approach
Difficult to manage well
Big bets on untested approaches
Dependent upon others
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology Companies
Product Development - Pros
• Champion exists Strong commitment
• More customer oriented
• Clear intent Easier to manage
• Build product facilities Maximize learning
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology Companies
Product Development - Cons
• More short term oriented
• One product company Lack of continuity
• Multiple directions Lose focus
• Less push for infrastructure (all are different)
• Inward looking Lose touch with market requirements
(disruptive technologies)
• Over-stretch resources (no trade-offs)
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology Companies
Business Strategy – Pros
• Clear direction
• Explicit about competitive advantage
• Support infrastructure for new product development
product development
• Focus and tradeoffs
• Long term
• Beyond one product
• Outward looking
Integrating Technology and Strategy
Key Drivers of Strategic Actions in High Technology Companies
Business Strategy – Cons
• May be difficult to initially change the environment
with no clear industry structure
• May not be able to implement (lacking technology
or market need)
• Wellthought-out and articulated business strategies
carry their own seeds of inertia
