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Managing
Technology As A Strategic Resource
By:
Peter Lytle
Scientists,
technicians and engineers are often caught in the middle
when a company downsizes or moves to a low cost manufacturing
operation, usually the result of product lines maturing
or competitive shifts occurring in the market place. The
directional squeeze is often cutting back or eliminating
R&D or engineering services to meet the new corporate
financial objectives. Why is this group often the first
to go and is there a better way to look at these technologies?
Companies often take their technology for granted when they
do not have a firm understanding of the company's technological
strength, weakness or competitive position in the market.
When a company is not aware of the gift technology has for
developing customer intimacy, it will not continue to support
the staff, services and facilities for an R&D and engineering
group. It is; therefore, up to those individuals that manage
the company technologies, to develop the awareness and knowledge
of the advantages created in a company by having strong
research, development and engineering capabilities.
Companies grow through three primary functions or drivers.
These drivers are: Marketing and all its components from
sales to advertising, Distribution and its components and
Technology which incorporates everything from the phone
systems and information systems to operations systems, research,
equipment, and even various ingredients or supplies (Figure
1). Most studies of the successful companies started in
the twentieth century will show very quickly, they made
it to the top not through the use of savvy marketing, but
through implementation of a special technology or development
of unique distribution systems. |
Once
a company had strong distribution then marketing generated
superior sales, once it had a technology that produced
a better widget consumers wanted, then marketing generated
the customers.
The
resulting product of a technology requires customer need,
the landscape is littered with great ideas no one needs.
Unfortunately when a new product fails in the market place,
R&D and engineering are more often perceived to have
created the failure, especially when the product is based
on a new technology. A company with a strong vision will
develop technologies based on customer needs and accept
the risks associated with being a leader. Technology needs
to be managed as a strategic resource to be successful,
however. Technologies go through a fundamental maturity
curve. This curve is basic to the understanding
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of
a company's ability to survive. (Figure 2). The curve
has two intersecting lines it is measured by: profits
(market response) up and down, and investment (cost
to maintain) left to right. The bottom of the curve
starts with emerging technologies (unproven technologies
yet to yield profits), it moves on to growth technologies
(technologies that are yielding substantial profits),
then to the mature technologies (technologies that no
longer have high return, they are obsolete, have heavy
competition or the market place has excess capacity).
The two pieces of the curve that have the greatest risk
are at the bottom of the curve and the top of the curve.
Both of these pieces require very experienced and cautious
management skills. By plotting the company's technologies
on this curve a risk assessment tool can be created.
Management can now begin the process of technology management.
Figure 3
The S-curve provides management an indication of the
strategic value a company places on technology. The
curve should be well balanced with technologies ranging
from the bottom to the top. Understanding this curve
is extremely important to the survival of the company.
A company that does not have a balanced portfolio will
experience a larger amount of survival risk.
During
the last decade acquisition was the magic way a company
managed the technology portfolio. Unfortunately most
acquisitions occur when a technology has proven itself
and is nearing the top of the growth curve. Acquisitions
have left companies awash in maturing technologies and
many non-core and ancillary technologies.
By
defining technology as the application of a science
we can measure the growth direction technology in food
supply and manufacturing is about to take (Figure 3).
The introduction of new food related technologies was
at its height in the fifties. Gradually these technologies
matured and were shared by
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most
food producing companies, until today we see little
difference among technologies in the market place. Predictions
by leading economists, science advisory boards and researchers
indicate that technology is poised to make rapid changes
in the way we supply and manufacture food and food related
products.
This
change is likely to catch many companies off guard, the
same way the shift in computer technologies to circuit
boards caught vacuum tube makers off guard. Almost all
makers of vacuum tubes went out of business in less then
a decade because they refused to believe their technology
would pass them by. A
company with a solid understanding of the value technology
plays as a strategic resource in corporate survival, will
not end up like the vacuum tube makers of the fifties
and sixties.
To
help your company better understand the technologies they
own and how they fit into a strategic resource-positioning,
do a technology audit. This audit will allow a company
to place its technologies into a portfolio that will measure
a number of key attributes. What are the primary technologies
and how competitive are they? An audit will help focus
on balancing technologies to be sure a company is present
in all four of the following categories:
Base
Technologies:
technologies needed to be in the business competitively
Key
Technologies:
technologies that are unique to keep your business and
create additional values for your customers
Pacing
Technologies:
advanced technologies in the industry that give you a
three to four year lead.
Emerging
Technologies:
something you have in development and others don't, giving
you a future advantage.
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| How
do your technologies fit into the company's core competency,
are they ancillary or are they strategic?
Are
your technologies distractions or complimentary to your
core business? What is your competition doing with their
technologies? Where is technology going in your industry?
By answering these basic questions, a company will find
greater value in its research, development and engineering
services, and find itself more competitive in the marketplace.
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