Technology & Innovation... 100 Slides
The Early Market
The Chasm
The Mainstream Market
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Key Words... Entrepreneurship – Venture Models – Driving Forces – Venture Capital – Growth Phases – Technology Life Cycle – The Chasm Model – The Transilience Map – Diffusion Curve – Technology Strategies – Knowledge Creation Process – Innovation Management – First Mover Advantage – Technology Acquisition – Core Technologies – Technology Portfolio – Patent Management – Intellectual Property – Innovation Types – Kano Model – R&D – New Technologies – Risk Bubble Diagram – Technology Evolution – E-Business Models – Growth Strategies – Start-up – Private Equity – Financing Life Cycle – Product Innovation Process
Who is the Entrepreneur?
High
Inventor
Entrepreneur
Promoter
Manager, Administrator
CREATIVITY AND INNOVATION
Low
High GENERAL MANAGEMENT SKILLS, BUSINESS KNOW-HOW, AND NETWORKS
Fit of Entrepreneur and Venture Capital
High
Low
Potential for singles or doubles, but many strike out
Potential for triples and home runs
Not hat and no cattle
Big hat, no cattle
ATTRACTIVENESS OF VENTURE OPPORTUNITY
High
Low ENTREPRENEUR‘S FIT AND BALANCE
Central Issues in Entrepreneurial Finance Shareholders
Value Creation
Customers
Employees
Allocating risks and returns Slicing the value pie Cash-Risk-Time
Debt: Take control Covering risk Equity: Staged commitments
Dominant Venture Modes Seed/Startup
High Growth
Maturity
Most
Most
Higher potential, growth-minded ventures
Higher potential, growth-minded ventures
ENTREPRENEURIAL
CHANGE AND UNCERTAINTY
Lifestyle, Mom and Pop ventures
Mature, bureaucratic dinosaurs
Least
Least Least
Most ADMINISTRATIVE Entrepreneurial domain Administrative domain
Principle Driving Forces
Seed/Startup Most
High Growth Driven by:
Maturity Most
Driven by:
• Collaboration within the firm • Opportunity focus • Resource requirements expanding
• Rejuvenators and innovators • Opportunity focus • Resource ownership
Organization: Informal; fluid
Organization: Formal
ENTREPRENEURIAL
CHANGE AND UNCERTAINTY
Driven by:
Driven by:
• Administration/trustees • Few owners • Product focus • A specific product • Burdensome resource requirements • Resource ownership Least Organization: None or too rigid
Organization: Formal
Least
Least Most
ADMINISTRATIVE Entrepreneurial domain Administrative domain
Financial Strategy Framework Opportunity
Financial strategy Degrees of strategic freedom:
Time to OOC Time to close Future alternatives Risk/Reward Personal concerns
Sources and deal structure
Business strategy
Dept Equity Other
Marketing Operations Finance Value creation
Financial requirements Driven by: Burn rate Operating needs Working capital Asset requirements and sales
The Five Tasks of Strategic Management Fund conception Target investment opportunities Raise capital for investment
Generate deal flow New and young companies with high potential Fund conception Target investment opportunities Fund conception Target investment opportunities
Typically 5 to 10 year window
Add value via: • Strategy development • Acitve board membership • Attract outside expertise • Attract later round investors • Attract other stakeholders, management • Provide contacts, access to info, people, institutions Craft and execute exit strategies • Sale • Liquidation • IPO • Alliances • Merger
Flows of Venture Capital Investors
Venture Capital Firms
Portfolio Companies
Provide capital
• Identity and screen opportunities • Transact and close deals • Monitor and add value • Harvest • Raise additional funds
Use capital
MONEY Limited partners Pension funds Individuals Corporations Insurance companies Foreign Endowments
2-3% ANNUAL FEE General partners 15-25% of capital gains
MONEY Opportunity Creation recognition and execution Entrepreneurs
IPOs/Mergers/Alliances
Return of principal plus 75-85% of capital gain
EQUITY
Value-creation and harvest
Growth Phases Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Large 5. Crisis of ?
4. Crisis of RED TAPE 3. Crisis of CONTROL
SIZE OF ORGANIZATION
2. Crisis of AUTONOMY 1. Crisis of LEADERSHIP
4. Growth through COORDINATION
3. Growth through DELEGATION 2. Growth through DIRECTION
1. Growth through CREATVITY
Small
5. Growth through COLLABORATION
Young
Evolution stages Revolution stages
Mature AGE OF ORGANIZATION
A Way to Think about Potential
Not Obvious
Black Holes
Home Runs
CONCEPT
Filling Stations
Squirrel Cages
Obvious
Small
Large GROWTH / ULTIMATE FINANCIAL POTENTIAL
Four Archetypal Structural Approaches to Coordination
High
Laissez-faire Management
Professional Management
Entrepreneurial Management
Bureaucratic Management
DELEGATION OF RESPONSIBILITY
Low Low
High USE OF FORMAL CONTROL MECHANISMS
The Technology Adoption Life Cycle
• Innovators
• Technology Enthusiasts
• Early Adopters
• Visionaries
• Early Majority
• Pragmatists
• Late Majority
• Conservatives
• Laggards
• Skeptics
The Chasm
The Mainstream Market
The Early Market The Chasm
Amar Bidhé Framework „Regular“ Start-ups
Promising
High
Revolutionary VC Backed Startups
UNCERTAINTY
Marginal
Corporate
Low
„Regular“ Corporation Low
High SCALE
Uncertainty: unqualifiable and immeasurable risk Scale:
expected total profit from opportunity
On Innovation Why do firms innovate? Product innovation
Appropriability (patent, secrecy...)
Novelty
Escaping from perfect competition Consumers accept to pay a higher price
Price > marginal cost Monopoly rent Economic value
Rent X market share (trade off) Monopoly rent Price > marginal cost Costs are decreasing
Process innovation
Escaping from perfect competition Novelty
Appropriability (patent, secrecy...)
Framework for Investigating the Impact of Innovation on Growth and Employment TECHNOLOGICAL CHANGE Industry-specific opportunities for innovation in firms
Behavior of firms:
NON INNOVATING FIRMS
FIRMS INNOVATING MAINLY IN PROCESSES
FIRMS INNOVATING MAINLY IN PRODUCTS
Innovative strategy of firms:
No R&D and innov. exp.
Some R&D and innov. exp. mainly for investment Growing productivity through restructuring Defence of market shares through cost reductions
High R&D and innov. exp. mainly for new products Growing productivity through higher quality Expans. of market share Search for new markets and monopoly profits
Active price competitiveness
Technological competitiveness
Stable productivity Cost savings, low quality Competitive strategy: External conditions of markets and demand: Outcomes for the firm:
Passive price competitiveness Stagnant
Losing out to competitors
Outcomes for the industry: Strong fall of value added and employm.
Growing
Stagnant
Growing
Stagnant
Growing
Falling or stable market shares
Stable or slow growing market shares (at the expense of competitors)
Fast growing market shares Developm. of new markets
Stable value added, falling employm. with growth of productivity
Slow growth of value added, stable employm. with growth of productivity
Strong growth of value added, some employm. growth
Types of Lock-In and Types of Switching Costs Type of lock-in
Switching costs
Contractual commitments
Compensatory or liquidated damages
Durable purchases
Replacement or equipment; tends to decline as the durable ages
Brand-specific training
Learning a new system, both direct costs and lost productivity; tends to decline as people learn to learn
Information and data bases
Converting data to new format; tends to rise over time as collection grows
Specialized suppliers
Funding of new supplier; may rise over time if capabilities are hard to find
Search costs
Combined buyer and seller search costs; includes learning about quality of alternatives
Loyalty programs
Any lost benefits from incumbent supplier, plus need to rebuild cumulative use
The Transilience Map
BREAKTHROUGH
Architectural
Niche creation
Technology Market
Customers Production
Revolutionary
Regular CONTINUITY
Organizational Capabilities A
C
B SM
SM F1
F2
F3
F1
F4
F2
SM
F3
F1
F4
F2
F3
F4 P1
P
P2
P
P3
Functional matrix
Functional
D
E
SM
P3 P2 P1
F
SM P1
P4 F1 F2
P2
P3
Balanced matrix
P4
SM P1
P2
P3
P4
F1
F3 F4
F2 F3 F4
Project matrix
Project-led organization
Project-based organization
A New Kind of Competition: Winner-Take-All
100 Winner
MARKET SHARE (in %)
50
Battle zone
Loser 0 TIME
The Classical Diffusion Curve Adoption Dynamics Saturation
Takeoff NUMBER OF USERS
Launch
TIME
Positive Feedback's Should not be Confused with Growth Popularity Adds Value in a Network Industry Virtuous cycle
VALUE TO USER
Vicious cycle
NUMBER OF COMPATIBLE USERS
The Whole Product Model
Potential Product Augmented Product
Expected Product Generic Product
The Simplified Whole Product Model Standards and Procedures
Training and Support
Additional Software
Generic Product
Additional Hardware
System Integration
Cables Installation and Debugging
Anything else you would need to achieve your compelling reason to buy
The Competitive-Positioning Compass SUPPORTERS
Visionaries
Conservative
Developing the Mainstream Market
Company
Developing the Early Market
Product
SPECIALIST
Technology Enthusiasts
GENERALIST
Pragmatist
Technology
Market SKEPTICS
Define the Battle SUPPORTERS • Benchmarks • Product Reviews • Design wins • Initial sales volumes • Trade press coverage • Visionary endorsements
• Revenues and profits • Strategic partners • Top tier customers • Full product line • Business press coverage • Financial analyst endorsements
Product Company SPECIALIST
GENERALIST Technology Market • Architecture • Schematics • Demos • Trials • Technology press coverage • Guru endorsements
• Market share • Third party support • Standards certification • Applications proliferation • Vertical press coverage • Industry analyst endorsements
SKEPTICS
Discontinuity and Life Cycle
High
Early Market
Prototypes
Pure Science
Chasm Technology Enthusiasts
Visionaries
Conservatives
Pragmatists
PARADIGM SHOCK
End of Life
Bowling Alley
Main Street
Low
Tornado
High
Low APPLICATION BREAKTHROUGH
Development of Technological Entrepreneurial Regions
Available Capital
Venture Capital
Academic Institutions
Scientific/ Technical Knowledge
Technological Enterprise
Trained Individuals
Service Enterprise Growth Economic & Employment Growth Successful
Spin-Off Enterprise
Unsuccessful
Technological Enterprise Space
High
TECHNOLOGY Future New MARKET Emerging Existing
Low Incremental Existing
Radical
New Generation
INNOVATION
Technological Strategic Planning Model
Core Competencies • Overall • Strategic Business Units
Evaluation of: • Organization‘s - Strengths - Weaknesses • Environmental - Opportunities - Threats
Corporate Strategy
Technological Strategy
Vision, Objectives, Goals
Environmental Analysis • Internal • External
Emerging Technologies • Assessment • Technological Forecast
Action Plan
Knowledge Creation Pyramid
Competitive Advantage
Continuous Innovation
Knowledge Creation
Technology Strategy Risk-Return Space
High
Cost Reduction Technology Peripheral
Pull
Push
RETURN Product Line Extension Low Low or Negative
Trend Expanding Market
RISK
High Trend Mature Market
Two-Dimensional Technological Space
Radical
New Generation
TECHNOLOGY Incremental
Existing
Existing
Emerging
New
MARKET
Future
Innovation Feedback Process
Expertise Technology, customers, markets, expertise, patents, trademarks, trade secrets
Invention
Implementation
Market space, competitors, suppliers
Economic Power
Market Penetration
Nested Enterprise Strategy Sets
Strategy Mission Vision
Key Elements of Business and Technological Strategy Domains Business Elements
Technology Elements
Market Forecasts
Technology Forecasts Enterprise Objectives
Programs Mission Space
Technological Space
General Needs
Technologies
Drives Bounds
Increasing Detail
Specific Requirements
Technological Applications
Projects
Technological Risk Domain
High
RISK
Moderate
Low
Existing
Incremental New Improvement Generation
TECHNOLOGY
Radical
Trilogy of Strategic Technology Decisions Which Way to Go Decision
Leadership Team Technological Potential
Make or Buy Decision
Technologies
Structures
Processes
Product, Process $ or Service
System Functions
Keep or Sell Decision
Relationship of Needs, Core Technologies and Competencies
Needs
Technologies to Meet Needs
Defining Capabilities
Market Products, Processes or Services
Core Technologies
Core Competencies
Strategic Technology Position
1
New Technology Vector
Core Technology Region
TECHNOLOGICAL ATTRACTIVENESS
Aging Technology
0
10 COMPETITIVE TECHNOLOGICAL STRENGTHS
Technological SWOT Analysis Diagram Numerous Enterprise Environmental Opportunities
Turnaround Strategy
Aggressive Strategy Substantial Enterprise Technological Strengths
Critical Enterprise Technological Weaknesses Defensive Strategy
Diversification Strategy
Major Technological Environmental Threats
Technological Strategic Clusters Emerging technology market with rapid growth
(„Go-for-it“) Strong technological competitive position
(„Niche“)
I II IV III
(„Partnering“)
Weak technological competitive position
(„No-Go or Change it“)
Existing technology market with slow to moderate growth
Internal and External Interactions for Technological Strategy Development External Environment
External Forces
Differentiating Capabilities Competencies and Technologies
Enterprise Business Strategy Technological Strategy
Internal Culture Enterprise Internal Environment
Organizational Learning
Components of a Competitive Analysis What drives the competition?
What the competition is doing and can do?
? ?? ? ?
? ?? ? ?
Future Goals
Current Strategy Competitor‘s Response Profile Strengths
Opportunity
Assumptions Held about itself and the industry
Weaknesses
Threats
Capabilities Strengths and weaknesses
Impact of Competitive Advantage SIZE OF TECHNOLOGICAL COMPETITVE ADVANTAGE Small
Large
Volume
Stalemate ROI
ROI
Few NUMBER OF WAYS TO ACHIEVE TECHNOLOGICAL COMPETITIVE ADVANTAGE
Market share
Market share
Specialization
Fragmented ROI
ROI
Many Market share
Market share
Barriers of Entry to Technological Market Space
Technological Competitive Differentiation
First Mover Advantage Model Environmental Opportunity Attractiveness First-Mover • Distinctive Competencies • Resources
Competitive Strategy
Later-Entrant • Distinctive Competencies • Resources
Competitive Strategy
First-Mover Positional Advantages
Cost
Differentiation
Economic Factors
Pre-emption Factors
Technological Factors
Behavioral Factors
Demand Uncertainty
Pre-emptive Investment
Technological Innovation Characteristics
Nature of Good
Entry Scale
Product Characteristics
Technological Change & Discontinuity
Market Type
Efficient Scale-toMarket Size
Later-Entrant Advantages • Imitation Costs • Free-Rider Effects • Scope Economics • Learning from Pioneer‘s Mistakes
Market Evolution Buyer‘s Investment in Cospecialized Assets
Advertising Intensity Response Time Scope Economies
Overall Magnitude of First-Mover Advantage Market Share Performance • Absolute • Relative
Profitability Performance • Return on Assets • Return on Sales
Financing Life Cycle Venture Capitalist
FFF & Angels
Seed Capital & Early Stage
Early Growth
Enterprise Cash Flow
Investment Banks & Banks
Later Growth
Mezzanine 3rd
Public Market
2nd
Initial Public Offering
1st
Valley of Death
Break-even point
Emerging Growth
Time
Enterprise Financing
Break-Even Regions
Cash flow Returned capital breakeven
Cumulative revenue
Cash flow breakeven
$ EVA breakeven
Opportunity cost based on capital risk assumed
P&L breakeven
Financial Strategy Framework Due dilligence process
Investor Investment strategy
Alternative Investments
Time to close deal
Financial Strategy
Risk/Reward Space
Opportunity
Debt
Entrepreneurial concerns Time to out of cash Future alternatives
Sources and Deal Structure
Equity Other
Burn Rate Operating Requirements
Financial Requirements
Business Strategy
Working Capital Market Strategy Asset Requirement
Technological Strategy
Financing Space Highest cost for enterprise
Preferred stock
Subordinated Debt
Stock
Options
Highest risk for investors but lower potential risk to enterprise
Lowest risk for investors but highest potential risk to enterprise
Lowest cost for enterprise
RISK PLANE
Senior Debt COST PLANE
Investor Perceived Risk-Return Space
Angels High
FFF VCs Entrepreneur
PERCEIVED RETURN
Moderate
Realistic Investors
Banks Low
Low
Moderate PERCEIVED RISK
High
Technological Risk-Return Space
High
RISK
Moderate
High Moderate
Low
Low Incremental Radical Existing New Generation TECHNOLOGY
RETURN
Technological Market Risk Space
High
RISK
Moderate
New Low
Developing Existing Low
Moderate
High
POTENTIAL MARKET GROWTH
MARKET DEVELOPMENT STAGE
Enterprise Risk-Return Space
100 80 ANNUAL RETURN (%)
60 40 20
High Moderate Low
0 Seed & Early Later Mezzanine Buy-out Early Stage Growth Growth or IPO ENTERPRISE STAGE
RISK
Davenport’s Investment Risk-Return Space 100 Data from Venture Capitalist 80
EXPECTED ANNUAL RETURN (%)
Davenport‘s Risk/ Return Space
60
40
20
0 Low
Moderate
Risky
INVESTMENT RISK
Most Risky
New Enterprise Growth Space
Ability to Grow
Propensity for Growth
Low
High
Life-style
High-growth
Marginal
Successful and growing
Three-Dimensional Technological Management Model Management skills Management roles SKILLS & EXPERTISE
Critical functions Managerial functions Functional Management
Technology buildup Preproject
Resources
Procedures
Project ASSETS
Production Marketing Service
PROCESSES
Structure Strategy
Culture
Internal-External Technology Acquisition Model
Technology Relatedness Degree of Competitiveness
Decision Mechanism
Core Enterprise Technology
Degree of Protection Managerial Capabilities Life of Technology Enterprise Experience with External Technology
External Technology Acquisition
Technology Leadership Space
High HUMAN RESOURCES ORIENTATION
Life style focus
Team focus Public Enterprise
Low
Unfocused
Authority focus
Growth Early Stage Start-up
Low
High
GROWTH ORIENTATION
DEVELOPMENT STAGE
Enterprise Management Process Decision Process Enterprise Structure
Mission & Strategy
Customer Satisfaction
Value Improvement
Enterprise Learning
Benchmarking
The 7 Elements Overview Focus on customer benefits – not on customer
Strategic framework
Controlling of project portfolio (innovation controlling)
Fast project realization
Management of pre-project phase Tools (methods)
Create innovative environment
Technological Challenges
Managing the USE of Technology Rapidly Changing Technologies
Managing organizational response to the introduction of rapidly changing technologies e.g.: • Identifying and using IT • Using technology for new services
Slowly Changing Technologies
Developing organizations that can make the most efficient and costeffective use of established technologies e.g.: • Labor-intensive retailing and service organizations
Managing the CREATION of Technology
Managing highly skilled technologists to create new technologies e.g.: • Managing R&D labs • Marketing high-tech products
Managing the most efficient and cost-effective creation of new products e.g.: • World-class, low-tech manufacturing • Consumer-oriented prod. design & marketing
Timing and Impact of Management Attention and Influence
PHASES
Knowledge Acquisition
Concept Investigation
Basic Design
High Ability to Influence Outcome
INDEX OF ATTENTION AND INFLUENCE Actual Management Activity Profile Low
Prototype Building
Pilot Production
Manufacturing Ramp-Up
Priority Issues in Technology and Innovation Management 200
GROWING IMPORTANCE Building Seamless Innovation Processes
180 160
IMPORTANCE LEVEL (NEXT 5 YEARS)
Linking Technology to Business
Changing Culture and Values in R&D
140 120
Building/Leveraging Competences
100 80
Managing for R&D Efficiency
Managing R&D in a Global World
60
Rethinking Technology Management DECLINING IMPORTANCE
40
40
60
80 100 120
140
160
180
200
IMPORTANCE LEVEL (PAST 5 YEARS)
Technological Progress I
Base Technology
PERFORMANCE OF THE TECHNOLOGY
Key Technology
Pacemaker Technology
CUMMULATED R&D SPENDING
Technological Progress II
Higher Potential PERFORMANCE OF THE TECHNOLOGY
Old Technology
CUMMULATED R&D SPENDING
New Technology
Core Competencies: Open Markets, Difficult to Imitate
Processes
Core Competencies Technologies
Capabilities
Core Competencies: Market and Resources Low
Company View
High
High
Competency 1 Competency 5
Market View
Competency 4
Competency 6
Low
Competency 2 Competency 3
A Consumer Products Competency Map Customer Care
Trade Partnering
Space and Replenishment Management
Service Excellence
Electronic Data Interchange
Trade Marketing
Service Innovation
Category Management
Space Management
Promo Management
Customer „Partners“
Core Competency
End Customer Delight
Expectation Trend Management
Delight and Loyalty Measurement
Capabilities
Processes
Sub-Processes
Customer Database
Resources
Technology Portfolio: 5 Generic Strategies
Investing Pilot project STRATEGIC RELEVANCE
Optimizing
Observation
Desinvesting
TECHNOLOGICAL MATURITY/ STRENGTH (INTERNAL VIEW)
Platforms Link Technology and Market INTEGRATION OF MARKET AND TECHNOLOGIES VIA PRODUCT PLATFORM Technologies
Technical core competencies
„MarketInformation flow“
Product platforms
Product groups Individual products Market segments
Customer needs
„Technology flow“
Platforms: Management Focus
Vision
IN THE PAST
Platforms
Product family
Individual products
TODAY
Value vs. Volume
Value
Decisions
Knowledge
Information
Volume
Data
Innovation & Distinctive Capability = Competitive Advantage Innovation
Patent
Secret
Strategy
Valium
Coke
Sony Walkman
Competitive Advantage
A Model of a Knowledge Company
INTELLECTUAL CAPITAL
Human Resources
STRUCTUAL CAPITAL
Intellectual Assets
A Model of Intellectual Capital
Human Resources
Intellectual Assets Intellectual Property
The Intellectual Capital of the Firm Intellectual Assets
Human Capital
Documents Drawings Programs Data Inventions Processes
Experiences Know-how Skills Creativity
Intellectual Property Patents Copyrights Trademarks Trade Secrets Semiconductor Masks
Knowledge Management Strategies
Unfocused Strategy Codification Strategy Increase the absolute level of codification across all dimensions of codification and knowledge.
Tacitness Strategy
Decrease the absolute level of codification across all dimensions of codification and organizational knowledge.
Focused Strategy For each type of organizational knowledge decrease the level of codification on those dimensions of codification which transfer knowledge fastest and most accurately.
For each type of organizational knowledge decrease the level of codification on those dimensions of codification which pose greatest risks of involuntary transfer of knowledge.
Intellectual Property Management Defending Patents
Patent selling, buying, licensing
Identification of Patent weaknesses
Infringement of Patents
Patent analysis for technology trends
Work with external Patent Consultants
Intellectual Property Management
Patent strategy
Patent search
Patent abstracts Patent Mapping with competitors‘ patents Patent writing
Brain Maps Key Know How holder maps (competitors)
Positioning and Evaluating Assets
Technology Push Technology Risk Clear Extension for Eastman
Existing Business
MARKETS Known to Industry
Unknown Market to World
Technology & Market PushLarge Risk
Market Push Market Risk
Incremental for Eastman
New to Eastman TECHNOLOGY TYPE
New to the World
Separate Pre-project and Implementation: Open vs. Tight Concept and planning
Implementation Project planning
Specs and business plan Generation of ideas
Market & Product concept
Detailed specs Detail Design
Potential influence Product specifications and costs
Few structured activities
Prototype
Freezing Point / Release of tools any jigs
Structured processes
etc.
Types of Innovation: Cost of Change is Important High
Aircraft turbines
Software
Multimedia electronics
Cars
TECHNOLOGY INTENSITY
Cosmetics
New restaurant concept
Low
Low
High
COST OF ENGINEERING CHANGE AT LATE STATE
Selection of the Right Project Organization Coordination (Lightweight team)
Team (Heavyweight team)
• Specialists
• Specialists • Coordination
• Management • Rapid
• Clear priority • Rapid
• Slow • Big control circ
• Slow • Project leader difficult position
• Line / Project
• Subculture • Spec know-how
Functional
+ _
Stable environment
Integration
Pressure of time
Task-Force
Fire brigade New business
Indicators of Horizontal Relations Between Core Firms Position of the other
Independent
Cooperation or Competition
Independent with Influence
Interdependent
Dependent with Influence
Dependent without Influence
Compliance
Coalition
Direct Control
Structural Control
One directional technology flow Attitude of (second sourcing, licensing) core firm System integration (common standards) Controlling (minority) share in core firm Technology/patent exchange (cross-licensing, technology share) Joint R&D (research, pacts, joint development) Production consortium and/or cartel (joint production) Merger, Joint Venture (50/50) Direct investment, minority share Acquisition OEM agreement Distribution
Five Major Trends Drive the Evolution of R&D Organization Synergy
Decentral R&D
Polycentric decentralized R&D
Integrated R&D Network
Competences
R&D Hub Model
Tapping
Central R&D
Ethnocentric centralized R&D
Competition
Costs
External Orientation
Geocentric centralized R&D
Cooperation
Survey of R&D Tools Product = Process Planning Ideas
Strategy
Product program
Product = Process Realization Concept
Goals
Development
Integration and test
Production
Introduction
Target Costing
Marketing information system
Cost reduction for existing products Cost management for suppliers Quality Function Deployment
Creativity techniques
Statistical Process Control Failure Mode and Effect Analyses
Conjoint Analysis
Design for ... Computer aided ... Database-, Simulation-, Expert Systems Design of Experiments
Pilot lot
The Kano Model CUSTOMER SATISFACTION
Excitement Performance DEGREE OF ACHIEVEMENT
Basic
New Product from the Pipeline Market and Competence Driven Corporate Strategies • Navigator Book • Corporate Product Strategy
Market Pull
Market Requirements • Field Operations • Customers
Product Management Product Creation Process
Technology Push
Core Competencies • Skills • Technologies • Resources
Technology Management
Product Planning • Harmonization with Field Operations • Resources Check • Idea Backlog
New Products
The Core Competence Process: Actions are Important! Identification of actual Core Competencies
Technology Forecasting Market Strategy
Definition of Future Core Competencies
Evaluation of Technology Portfolio
Gap-Analysis
Actions
Road Maps, R&D projects
Resource Allocation
R&D Organization
Human Resources
Outsourcing
Portfolio of Technical Competencies
High
Invest Pilot project • Strategic impact is recognized • Pilot projects with scantly budgets, „High-Risk-High-Impact“-Projects • External partner helps to build up internal competence
STRATEGIC IMPACT
• Long-term investments within core competencies • ROI must be lined up in the long term, short-term success rather not possible
Optimize • Core Competence, but strategic impact is medium or rather decreasing • ROI should be lined up in the short term
Observation • No budget available • Technology-owner is responsible • Visit exhibitions, congresses • Study magazines • Cooperation with universities
Low
Desinvestment • No competitive advantages within the next 5 or 10 years • Resources should decrease and be freed for new technology potentials
Low
High INTERNAL RESOURCES
Tasks of IT in Dispersed R&D Teams Rational Level: Information richness Emotional Level: Social Presence Explicit Knowledge
INFORMATION – EXCHANGE high
COORDINATION SUPPORT high
low
high
CREATIVITY – PROMOTION
high DEVELOPMENT OF INFORMAL NETWORK
Tacit Knowledge
Project Categories: Market / Technologies
High
RELEVANCE FOR NEW MARKETS / MARKET SEGMENT
Variants Variants
Low Low
High INTRODUCTION OF NEW TECHNOLOGIES
A Balanced Portfolio - The Risk-Reward Diagrams High
Pearls
PROBABILITY OF TECHNICAL SUCCESS
Bread and Butter
0
10M REWARD (NPV)
White Elephants (difficult to kill)
Oysters Low
Market and Technology Risk Bubble Diagram
Very high
MARKET RISK
Moderate
Very low
Very low
Moderate
TECHNOLOGY RISK
Very high
Rohm and Haas - Strategic Intent Bubble Diagram Project A Food/Pharm Project B Sugar Project D Cat/Chem Process
Project C
Project F MARKET SEGMENTS
Nuclear
Drink Water Industrial Water Project E Other Defend
Grow
New Application
New Fundamental Business
STRATEGIC INTENT
The New Business Enthusiasm Curve The field trail worked
Ecstasy
We have an order!
Yes it is! The customers like it!
It works!
New costs look great
We have a fix Costs are too high It‘s not proprietary
Despair
Documentation done!
No, he loves it
We don‘t have enough resources
The market estimate was wrong
We need help
Deliveries are late „Serveral“ failures reported
Time The boss hates the project
and inventory
We have all the sizes
We need documentation
They need all the sizes
Failures in field trail
and the approvals
Installation problem!
It doesn‘t always
I have an idea
and orders
We‘ll make it
It works!
Sounds great
They like it
Costs are better
Possible Timeline for Transmission Technology Evolution
Japan
PDC
W-CDMA
Personal Digital Cellular
Wideband CDMA
GSM
GPRS
Global System for Mobile communication
Global Packet Radio Service
Europe
UTMS Universal Mobile Telecommunications System (same as W-CDMA)
EDGE
TDMA
Enhanced Data rates for Global Evolution
Time Division Multiple Access USA
CDMA Code Division Multiple Access
1997
1998
1999
2000
CDMA 2000
upgrade 2001
2002
CDMA 3G Standard
2003
Key: 2 G
2004
2.5 G
2005
3G
The Virtual Marketplace Model
B2B Marketplace
Buyer 1
Platform 1 Seller 1
Buyer 2 Platform 2
Buyer 3
Seller 2
Platform 3 Buyer 4
Seller 3 Platform 4
Infomediary: Multiple buyers to multiple sellers
Competitive bidding: Auction / Exchange / Reverse auction / Grouped buying
Seller 4
Illustrative Map of E-Enabled Business Processes
Eprocurement
Online R&D
Suppliers: • Energy • Equipment • Non-core products
Online construction facilitator E-transmission control
E-shop E-monitoring
Online Meter reading
B2E
E-trading
Risk manager online
Information Exchanger
Customers: online billing
Idea webgenerator
Finance ASP
Online Customer Service
• Large • Small/Medium • Residential
Illustrative Map of E-Business Models in Part of Traditional Value Chain Eprocurement
Network Negotiation
Network companies
Energy producers
Market forecaster
Marketing Capacity broker
Risk management
Aggregator Value chain integrator
E-trade & auctions
Sales
Billing
Sale agt price comparer
Customer Service
Energy saver
Energy purchasing Product development Consumption analyst
Retail market place
Virtual Community
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