Sustainable Growth:

Innovation Strategy

Formulation of a Technology Strategy

Guidelines on Technology Management for Small and Medium-scale Enterprises (SMEs)

Partially adapted from "Guidelines on Technology Management by SMEs", by International Centre for Science and High Technology (ICS)

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Radical Innovation Innovation Strategy Continuous Improvement Firm (CIF)

Technology Assessment

Technology Selection   

Definition of Portfolio of Technological Projects

The process of technology strategy formulation has three main phases:

  1. technology assessment;

  2. technology selection; and

  3. definition of portfolio of technological projects.

These steps are fundamental to definition of the content of a technology strategy i.e. the technological areas where investment should be made, and the technological projects to be selected.

 

1.    Technology Assessment

Identification of technologies involved    Analysis of the competitive impact of technologies    Technological capability assessment

The process of technology assessment aims to collect information on the current and future state of technology development, to evaluate the importance of each technology in the competitive arena and the strength of the enterprise in each technology.

The key tasks encompassed in the technology assessment are:

  • identification of the technologies involved;

  • analysis of the competitive impact of technologies; and

  • technological capability assessment.

1.1.    Identification of the technologies involved

The technologies are the set of technological knowledge and skills that have an impact on the overall competitive position of the enterprise in the marketplace, currently and in the future.

Criteria to be followed in order to identify the technologies are the following:

  1. Detailed analysis of enterprise's technological structure, including:

     
    • product technologies i.e. to identify the technologies embodied in the product, including the tools used to develop a new product (e.g. technologies used in the design phase)

    • production process technologies i.e. to analyze the production process and to identify technologies used;

    • support technologies i.e. those technologies used to perform a certain activity of the enterprise and not embodied in the enterprise's product or production process (typical support technologies are IT tools, software packages, networks). To support the identification of the enterprise's technologies, it may be helpful to map the technologies used in the activities of the enterprise's value chain, i.e. inbound logistics, outbound logistics, distribution, sales, after-sales service, customer relationship, supplier relationship, etc.

  2. Include in the assessment also those technologies that may have an impact in the future. These are often defined as emerging or pacing technologies, i.e. technologies not yet in use but whose potential could be significant in replacing technologies used in current products or in generating new products. To this end, technology forecasting techniques can be useful in identifying emerging technologies.

This process leads to identification of the technologies that will form the unit of analysis of the formulation of enterprise technology strategy.

The following table could be used to present a comprehensive summary of the assessed information concerning the enterprise's technologies, and also includes information on external sources of each technology.

TABLE 1. Identification of the technologies involved

 

Type of technologies

Technologies

Sources

Product technologies

 

 

Production/process technologies

 

 

Support technologies

  • inbound logistics

  • outbound logistics

  • distribution

  • sale

  • after-sale services

  • customer relationship

  • supplier relationship

 

 

The result of this step is a detailed list of the technologies relevant to the enterprise's business.

 

1.2    Analysis of the competitive impact of technologies

This analysis aims to evaluate the competitive importance of each technology and its relevance in sustaining the market competitive factors.

The analysis should take into account:

  • how far the technologies are relevant to sustaining firm's competitive factors; and

  • the importance for future competition i.e. to what extent that competence will be critical in future competition.

A useful tool could be the matrix shown in Table 2, where competitive factors are shown in relation to each. In the cells of the matrix, a score is given reflecting the impact of the specific technology on a specific competitive factor. A value scale from 1 to 5 where 1 means that the technology has no impact on the specific competitive factor, while 5 means that it is a critical input to meeting that factor.

To obtain representative results, it is important to involve in this analysis personnel from different division and with different functions (sales, technical assistance, technicians, engineers, production, etc.) and, if possible, suppliers and customers.

TABLE 6. The competitive factors

 

Competitive factors

T1

T2

T3

T4

T5

CF1

 

 

 

 

 

CF2

 

 

 

 

 

CF3

 

 

 

 

 

etc.

 

 

 

 

 

As a result of this analysis, it will be possible to detect the critical technologies (CT). These are the technologies with the strongest impact on the competitive factors.

The competitive impact analysis provides an overall assessment of the competitive importance of each technology, supports the selection of the critical technologies for the business, and prioritizes them. The output of this exercise will be a list of critical technologies.

1.3    Technological capability assessment

 

The technological capability assessment aims at defining the strength of the enterprise in each critical technology. This is achieved by evaluating an enterprise's technological capabilities for each critical technology against its major competitors.

The variables to be considered are:

  • R&D funding (absolute value as well as percentage of sales value)

  • expenses for technical innovation sustained in other technical functions

  • human resources (breadth and depth of skills available)

  • equipment and tools

  • patents and other intellectual property

  • allocation of funds (criteria, orientation: incremental vs. more radical innovations), and

  • other.

The evaluation can be carried out using a matrix that takes into account the strength and dimensions of the different variables in relation to the relevant technologies. The cells record a score value from 1 to 5, where 1 means very weak, 2 weak, 3 on the average, 4 mildly strong, and 5 strong. The evaluation of the strength of the enterprise in a specific technology can be then obtained qualitatively or by constructing a merit table as a weighted average.

The managing director/top management, assisted by the enterprise's technical managers should lead this phase.

TABLE 3. Technology capability assessment

 

Technological capability dimensions

CT1

CT2

CT3

CT4

CT5

Comments

Level of R&D funding

  • in absolute terms

  • as percentage of sales

  • as compared to main competitors

  • as compared to leading competitors

Expenses in other technical activities:

Human resources:

  • breadth

  • depth

Equipment and labs:

Patents:

Allocation of funds for:

  • existing product improvement;

  • development of new products for the enterprise;

  • development of new product for the product.

The internal analysis provides an overall assessment of the strength of the enterprise in each technology.

The result of this exercise is to identify strengths and weaknesses in the critical technologies. Technologies where the enterprise is found to be strong and not critical for competitiveness can be licensed out. >>> Next page