Technology strategy - Strategic Management

Technology strategy (e.g. as in Information technology (IT)) is a particular generation of an organization's overall objective(s), principles and tactics relating to the technologies that the organization uses. Such strategies primarily focus on the technologies themselves and in some cases the people who directly manage those technologies. The strategy can be implied from the organization's behaviors towards technology decisions, and may be written down in a document.

Other generations of technology-related strategies primarily focus on: the efficiency of the company's spending on technology; how people, for example the organization's customers and employees, exploit technologies in ways that create value for the organization; on the full integration of technology-related decisions with the company's strategies and operating plans, such that no separate technology strategy exists other than the de facto strategic principle that the organization does not need or have a discreet 'technology strategy'.

A technology strategy has traditionally been expressed in a document that explains how technology should be utilized as part of an organization's overall corporate strategy and each business strategy. In the case of IT, the strategy is usually formulated by a group of representatives from both the business and from IT. Often the Information Technology Strategy is led by an organization's Chief Technology Officer (CTO) or equivalent. Accountability varies for an organization's strategies for other classes of technology. Although many companies write an overall business plan each year, a technology strategy may cover developments somewhere between three and 5 years into the future. Henry offers a four-step approach: the audit, assessing the strategic implications of the technology portfolio, an implementation plan, and a technology monitoring programme chapters.

Step 1: The audit
Henry states: ‘A technology-asset audit focuses on determining the real or perceived value that any technology node, or its individual technology links, has in the business benefit – cost chain – from raw material acquisition, to the supply of the produce or service, to the customer’. He suggests that comparisons should be made against the competitors. Several basic questions are proposed for an audit.

  • What are the basic technology assumptions in the company’s current business strategy?
  • What are the basic technology assumptions in competitors’ strategies?
  • Is the customer’s perception of the technological qualities of the companies important?
  • What value, if any, do customers place on the technological qualities of competitors’ products?
  • Is corporate R & D contributing to the improvements in the company’s current technology position, or are improvements starting to take longer and cost more?
  • Are competing technologies becoming cost-effective? Are competitors making gains ahead of the company?
  • How does the company manage information related to these questions?
  • What are the key technologies and ‘know-how’ on which the business depends?
  • What sort of record does the company have in bringing home-grown technology to market, and what are the reasons behind this record?
  • What sort of gap is there between the technological knowledge of the company and that of its key customers?
  • What is the life-cycle position of each of the key technologies?
  • What technologies are emerging which could affect our markets? This question harks back to the environmental assessment discussed in an earlier chapter, and is also the place where technological forecasting may be helpful.
  • Where are the technological strengths and weaknesses: in product or in manufactures?
  • Does the company fully exploit its technologies?
  • Are there any unwanted technologies which could be sold or licensed to other companies?

However Abell suggests a three-dimensional matrix which classifies activities under the headings customer function, customer groups and alternative technologies. Figure shows the shell of such a matrix. It is possible for a business to serve multiple-or single-customer functions, to specialise on a narrow or broad range of customer groups, or to use one or more technologies to meet those functions and the requirements of the customer groups.This method, which pays attention to some of the questions of Henry, although technology might well be defined much ore broadly under the Abell. The Three Dimensional Business Definition framework from Harvard Professor Derek F. Abell is a model that can be used for defining the business of a company. The definition of a business is an issue that should not be taken lightly. In his book "Defining the Business - The Starting Point of Strategic Planning" Abell says that the standard two dimensional way of looking at a business (products and markets) has serious flaws. He suggests a three dimensional model, with the following 3 axes:

  1. Served Customer Groups. Categories of customers. (WHO)
  2. Served Customer Functions. Customer needs. (WHAT)
  3. Technologies Utilized. The way that the needs are being satisfied. (HOW)

shell of such a matrix

Technology-analysis

Figure illustrates a way of trying to define and examine technologies across an organisation. This particular example is derived from an assignment of mine in an unusual organisation which was a cross between consulting engineering and process engineering, although neither term is an accurate description of the activity. In essence, the business was concerned with the application of engineering principles to new applications, up to and including the installation of the proven prototype. The technical strands of a business such as this are of great importance in defining future strategy. To preserve confidentiality I have extended it to a completely different industry.

Technology-the-challenger and the pioneer

Assessing the strategic implications of the technology portfolio

Henry argues: ‘Step 2 of the Analysis is conducted with a view to ascertaining how best to leverage the company’s technology assets to meet tomorrow’s business objectives as defined by the strategic plan.’ Neubauer suggests a technology matrix, a version of which appears in Figure. This has technology position on one axis, moving from weak to strong. The other axis shows relevance of the technology, ranging from low for old technologies of little value to high for new technologies where many applications are possible. Strategic business units are plotted on the matrix .

Technology-matrix

The suggestion is that the final matrix would be used first to check that current investment in technology matches the need, and that priorities are shifted to reduce investment in low-relevance technologies, and increase it in business where the company needs to catch up or maintain leadership.

Neubauer makes the link between the type of portfolio analysis and the technology matrix. This could be made tighter by combining the information. The simplest method might be to colour code the SBUs on the market prospects/competitive position matrix according to their position on the technology matrix. Nine codes may be a little too much to digest, but it should be possible to reduce these to a manageable four by redrawing the grid on the matrix.

Factors-affecting technology acquisition decisions


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