Chapter 8
TM activities refer to the operations firms perform in their day-to-day routines. Therefore TM needs to offer some practical guidelines to apply and reinforce TM concepts within the business so that managers can incorporate TM into their daily routines. This book presents six tools specifically applicable for managing technology: patent analysis, portfolio management, roadmapping, S-curve, stage-gate and value analysis.
The core TM toolkit was decided on the basis of simplicity and flexibility of use, degree of availability and standardization level. In addition, we wanted to highlight tools that are dynamic in nature and applicable to all the dynamic technological capabilities described in the TM process model. So the chosen tools are the prevailing ones across all TM activities and capture internal and external dynamics.
As discussed in Chapter 1 (Introduction), the selection of a small set of tools to be used in TM activities was based on the analogy of a carpenter’s toolbox. There are a large number of possible tools that a carpenter could have in their toolbox, but the carpenter typically carries around only a small set of the most commonly used tools, keeping a larger set of more specialized tools at their workbench. Even then, the carpenter pays an occasional trip to the hardware store for special jobs. So this book suggests a toolkit for TM; a number of tools that will be handy when managers are faced with decisions regarding TM.
Chapter 9
A portfolio is a bundle of projects and/or programmes that are grouped together to facilitate their effective management to meet strategic business objectives. A project has a definable objective, consumes resources and operates under three main constraints,
namely time, cost and quality. This is why the components of a project can be measured, ranked and prioritized (Kerzner, 2003).
Portfolio management is the centralized management of one or more portfolios, which has the steps of identifying, prioritizing, authorizing, managing and controlling projects and programmes to achieve the strategic goals of the business. The goals of a business vary as widely as the ambitions, competence, vision and culture of each business.
Portfolio management is generally used in the financial services industry to define decisions about investment mix and policy, matching investments to objectives, balancing risk against performance, and asset allocation for individuals and institutions. However, portfolio management has also become a field of interest for TM, since increasing globalization forces companies to invest in many R&D activities. Portfolio management is especially important for high-tech firms since the uncertainty faced by these companies can vary greatly. Therefore, strategies should be formed to avoid threats and exploit advantages through forming appropriate project portfolios (Mikkola, 2001).
Cooper et al. (1999) define portfolio management as a dynamic decision process that includes a constant updating and revising of a company’s active new technology projects. The process is dynamic since new projects are continually evaluated, selected and prioritized, whereas ongoing projects may be speeded up, closed or reprioritized, and resources may be reallocated among projects.
Managers are also constrained by the constantly changing opportunities, goals and strategic plans of the company, and the interdependence of projects. Further, managers face the problem of high uncertainty since their decisions concern the products, services and processes that will be launched in the future. All these constraints explain why the portfolio should be closely monitored periodically to make go/kill decisions using a stage-gate process, as described in Chapter 12.
Chapter 10
Roadmapping is extensively used in industry and government to support strategy, innovation and policy. Motorola is widely credited with the development of the roadmapping approach in the 1970s to support integrated product/technology strategic planning (Willyard and McClees, 1987). Since then, the method has been adopted by many organizations in a wide range of sectors and for many purposes.
Bob Galvin (1998), who was CEO of Motorola during the period when roadmapping was established, provides the following definition: A ‘roadmap’ is an extended look at the future of a chosen field of inquiry composed from the collective knowledge and imagination of the brightest drivers of change in that field.
At the heart of the method is the use of simple graphical charts that provide an overview of strategy, in particular how various aspects of strategy are aligned. This concept is illustrated in Figure 10.1 (Phaal et al., 2004b), which is adapted from the approach developed by Philips in the 1990s (Groenveld, 1997; EIRMA, 1997).
The roadmap provides an integrating framework that summarizes at a high level (on one page) the various strategic elements that must be aligned to achieve the overall organizational goals, clearly shown in the Rockwell Automation case (Chapter 7). The roadmap provides a structure (a common visual language) that enables key stakeholders to articulate their perspectives, and identify the key relationships and points of alignment. A major benefit of roadmapping is the communication associated with the development and dissemination of roadmaps.
Chapter 11
S-curves, also known as growth curves, have emerged from an analogy with biological life. S-curves illustrate the life cycle of a phenomenon that starts off slowly, grows rapidly, tapers or levels off, and finally declines, as shown in Figure 11.1. The curve is used to describe many phenomena, including biological growth, demand for a new product and technology adoption rate (Rogers, 1995). The S-curve can be used as a strategic tool to understand the product, industry or technology life cycle. In the management literature, S-curves help to describe the invention, innovation, diffusion,
growth and maturity phases of products/industries/technologies.
The phases in the S-curve are labelled differently in the literature, although generally they refer to similar processes (Laroia and Krishnan, 2005). For example, in Figure 11.1, the S-curve phases are named as embryonic, growth, maturity and ageing. Each phase influences companies differently with respect to the capabilities and resources required to develop the innovation due to the differences in market conditions.
The specific application of S-curves in TM relies on the fact that the ultimate performances of all technical approaches are limited by physical laws. S-curves are defined at the industry level such that their y-axes represent increasing product performance and their x-axes represent the passage of time or the expenditure of engineering effort (Christensen, 1992). Thus, for a given technology, the S-curve defines the relative productivity of exploration or exploitation efforts.
When knowledge about the technology accumulates and the technology reaches a wide adoption phase, the growth rate in performance increases exponentially. This lasts until the maturity phase, where physical barriers make further development costly or sometimes even impossible. Then, a disruptive technology emerges with a new S-curve, replacing the old one (Christensen, 1997). In any industry facing a transition from one technology S-curve to another, or facing a rapid and continual series of technological changes, successfully managing transitions from one technology to another is crucial. Therefore, technology S-curves are fundamental in forming technology strategies. Plotting S-curves for technologies at hand or for those seen as prospective areas for the company can help with the ‘go’ or ‘no-go’ decisions, help to adjust R&D budgets and timing and improve understanding of the competition at component and architectural level. However, it should also be noted that S-curves are usually a descriptive rather than a prescriptive tool (Christensen, 1992).
Chapter 12
Intense competition has forced companies to launch more new products in a shorter period of time but achieving a successful product/service is not an easy goal. According to a study by Cooper and Edgett (2006), 25% of commercialized projects succeed, while 33% of all launched new products fail. Thus, the need for improved product/service development initiated a search for appropriate development techniques. Since market conditions are changing rapidly as well as the technology used, traditional management systems fail in managing these projects. The Stage-Gate® system, which was proposed by Cooper in the late 1980s, is a project management tool for new product development (Cooper, 1988, 1990). After the introduction of the method and wide usage in new product development by companies such as P&G, it has been extended and used in process technology development by companies such as Exxon and Eastman Chemicals (Cooper, 2008). In this system, a new product idea goes through stages and gates before the decision to launch is made. Stages consist of the activities to gather knowledge and obtain information about the new product idea. Each stage is cross-functional, necessitating more than one department working on the project idea at each stage.
After each stage, the idea passes through a gate, where the critical decision of whether to abandon or continue the project is made utilizing the information created at the previous stage. There are three common elements for each gate; inputs, criteria and outputs:
Additionally, operational and marketing plans and prioritization levels are the other outputs at the gates.
The stage-gate method maps the necessary actions of each stage as well as the essential goals of the stage. At each stage, decisions will be made regarding the criteria in production, marketing, finance and technology (Buggie, 2002; Rocque and Viali, 2004). Besides ‘go’ and ‘no go’, a third option is postponing the gate decision until the required actions are taken. The essential part is that collaborative work is required throughout the whole method, since the decision-making process requires the participation of different stakeholders, while the tasks of each stage should be performed by cross-functional teams.
Chapter 13
Value analysis/value engineering is an interdisciplinary problem solving activity to improve the value of the functions required to accomplish the goal or objective of any product, process, service or organization (McGrath, 2004). The economic value of something is how much a desired object or condition is worth relative to other objects or conditions. In marketing, the value of a product is the relationship between the consumer’s expectations of product quality and the actual amount paid for it. It is often expressed as the equation (Melnyk and Denzler, 1996): value = benefits/price, or value = quality received/expectations).
In a way, value is the perceived gain composed of individuals’ emotional, mental and physical condition plus various social, economic, cultural and environmental factors (Normann and Ramirez, 1993).
By identifying the functions of the product or service, it is possible to establish the worth of each one of these functions for customers, and provide only the necessary functions to meet the required performance at the lowest overall cost (Gage, 1967; Miles, 1972). Value analysis focuses on accomplishing the required functions at the lowest overall cost by eliminating or minimizing wasted material, time and product cost, which improves value to the customer. This establishes the link between value analysis and a variety of activities such as business process re-engineering, lean production and six sigma.
Value engineering is also referred as ‘function analysis’, ‘value analysis’ and ‘value management’. It was further integrated into design activities in the 1990s, as in the well-known Toyota cost management process (Monden, 1992). This is why quality function deployment is an important value analysis technique, which extends the minimum essential product function and develops design functions into value engineering (Shillito, 1994). Although value analysis was more or less developed as an engineering tool, it became a strategy tool after the contributions of strategy professors such as Normann and Ramirez (1993) and Kim and Mauborgne (1997, 2005). The original term ‘value analysis’ describes improving pre-existing products, processes or services (including the management of a company), but we prefer to use the term in line with the understanding of ‘value innovation’ to reflect the fact that innovations cannot be limited to improvements. The value innovation concept was first used by Kim and Mauborgne (1997). It is not about making trade-offs, but about simultaneously pursuing exceptional value and lower costs. This is why value innovation is very much an outside-in, customer-oriented approach to innovation (Kim and Mauborgne, 2005). It can be formulated as: value innovation = unprecedented benefits/ lowered costs Dillon et al. (2005) express value innovation as creating exceptional value for the customer. The goal is continuing success to drive a sustained increase in enterprise value.
Value and innovation should be considered as inseparable, since value without innovation can mean value creation that simply improves buyers’ existing benefits, while innovation without value can be too technology driven (Kim and Mauborgne, 2005). In value innovation, instead of the conventional idea of staying ahead of the competition by matching or beating their rivals, firms are expected to focus on the demands of their customers and position themselves accordingly. Thus the value innovation concept provides a relevant support for questioning product or market strategies as well as underlying assumptions in five dimensions:
Chapter 14
The term ‘tool’ can be interchangeably used with ‘techniques’, ‘procedures’, ‘processes’, ‘models’, ‘maps’ and ‘frameworks’. Naturally, there are many tools managers use in dealing with TM. However, the main set of tools for carrying out TM activities might
be from different tool categories such as: auditing tools, business creation tools, creativity techniques, decision-making tools, forecasting and intelligence techniques, knowledge management, marketing tools, problem-solving tools, project management tools,
strategy tools, and TQM tools. As there are a wide range of resources available in rich formats, this section aims to point to some useful references so that the reader can obtain more detailed information on topics of interest to them. The major source to gain a good grasp of tools is books dedicated to management, such as strategy management or project management.
Another source is the wide range of materials available over the internet, prepared either by professional organizations such as EU-funded research projects or by open source communities such as Wikipedia. Given that internet sources are increasing every day, the information presented below is not exhaustive but is a representation of the major resources that any manager dealing with TM might benefit from learning about. Additional sources are listed and updated regularly at the internet site of this book.
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