Technology Management: Strategy, Implementation, and Competitive Advantage
Chapter 4: Managing Technology
Meaning and Role of Technology
Technology encompasses practical knowledge (when, how, and why to use equipment), physical targets (equipment and tools), and procedures (rules and techniques to operate equipment and tools) used to generate products and services.
Advantages: It is the primary driver of increasing global competition. Companies investing in and properly applying new technologies often have stronger financial positions.
Disadvantages: Investment risk can be prohibitive, with uncertainties in demand and per-unit profits. There may be hidden maintenance and operation costs.
Support Networks: Technology is integrated into support networks, encompassing physical relations and organizational information, allowing it to function as intended (e.g., communication systems, infrastructure).
Technology Management: Linking R&D, engineering, and management to plan, develop, and implement new technologies. It also involves supporting the selected technology throughout its implementation and ensuring a positive attitude among staff. Managers should learn about the technologies fundamental to their company’s capabilities and develop strong internal technical advisory sources.
Primary Areas of Technology
1. Product Technology
Engineering groups develop and research when creating new products or services.
2. Process Technology
Helps improve the working methods used by company employees. Technologies support processes in the Supply Chain of products and services.
3. Information Technology
Present in all areas, facilitating cross-functional coordination and linking a company’s basic processes. It serves to acquire, process, and communicate information for more effective decision-making.
Components of Information Technology:
- a) Hardware (computers and connected devices)
- b) Software (programs to operate hardware and applications for various tasks)
- c) Database (collection of data or reports stored in a device)
- d) Telecommunications (fiber optics, telephone, modem, fax, etc.)
The Impact of the Internet:
Global internet access provides organizations with extensive market and process information (those leveraging it effectively gain a competitive advantage). The internet is also transforming retail operations with new online purchasing alternatives. Electronic Commerce is the paperless exchange of business information. Security concerns regarding credit card data transmission have led to encryption, encoding customer information for secure internet transmission.
Creation and Application of Technology
Research and Development Stages:
1. Basic Research: Generates new knowledge and initiates technological progress. It is not focused on specific products or processes and is conducted in government laboratories, large corporations, and universities.
2. Applied Research: Applies basic research findings, typically performed by large firms, leading to improvements in products, processes, and services.
3. Development: Creates new products or processes to meet market demands, involving concept development, technical feasibility, detailed product/service design, and process design.
Fusion Technology
Combines multiple technologies and existing scientific disciplines to create hybrid technologies. Sometimes, the combination yields a whole greater than the sum of its parts (e.g., electronics and optics creating fiber optic communication systems).
Technology Strategy
Given rapid technological changes and numerous options, decisions must be intelligent and well-informed to select appropriate technologies aligning with corporate strategies and operations, providing a sustainable advantage.
- Technology as Competitive Advantage: Increase product value, reduce time-to-market, or lower material and labor costs (through automation).
- Adaptation to Competitive Priorities: Leverage technological change to meet competitive priorities of cost, quality, time, and flexibility.
- Fundamental Skills: Identify Fundamental Technologies vital to business success, prioritizing those offering the greatest competitive advantage due to resource constraints.
- First-Mover Considerations:
- Advantages: Early market share, entry barriers, patent acquisition, strong reputation, and supplier negotiation advantages.
- Disadvantages: Financial and market position risks due to high R&D costs, speculative demand, and potential for rapid obsolescence.
- Economic Justification: Assess the economic viability of technology investments, defining expectations, quantifying costs, and setting performance goals. Combine financial measures with qualitative and intangible factors (customer service impact, delivery times, inventory, resource flexibility, etc.).
- Revolutionary Technologies: Possess attributes not yet valued by existing customers or have lower performance in certain valued attributes but can quickly surpass current technologies when refined. Companies can address this by recognizing the technology’s potential, exploring new markets, comparing performance improvement slopes with market demand, or managing disruptive technologies separately within the organization.
Guidelines for Implementation
1. Acquisition of Technology
Define the company’s R&D involvement (basic research, applied, or development). Larger companies are more likely to engage in early R&D stages.
Main acquisition options:
- a) Internal Sources: In-house R&D or engineering departments refine product designs and processes during development.
- b) Cooperative Relationships: Acquire and refine existing technologies from other companies (used by smaller companies without R&D). Options include:
- Funding university or laboratory research.
- Licensing technology from another organization.
- Participating in Joint Ventures or Alliances.
- Acquiring companies with desired technological knowledge.
- c) Suppliers: Often provide parts for technology products or equipment used in processes.
2. Integration of Technology
Interdisciplinary teams implement new technologies, bridging R&D and manufacturing, shortening time-to-market, and enabling competition based on time and quality.
3. Human Aspect
New technology impacts employment at all levels. Companies must anticipate changes, prepare through education and employee involvement, identify new technological possibilities, and prepare staff for new or modified roles.
4. Leadership
Managers have multiple, often conflicting, roles in technology management. They must:
- Adhere to budgets and strict work programs.
- Continuously monitor goals and program completion dates.
- Realistically assess risks, costs, and benefits of new technology.
- Maintain a technical perspective and pursue goals with perseverance.
- Commit to projects and provide full support.
- Monitor individual performance.