Importance of Technology Strategy in Firm Decision Making
Technology strategy plays a vital role in the success of a firm, involving critical decisions on technology choices, investments, development, deployment, and divestment. It encompasses the appropriation, deployment, and value chain aspects of technology, shaping a firm's technical capabilities and product offerings. This definition explores the revealed pattern in firms' technology choices and the principles underlying technology strategy formulation.
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Presentation Transcript
DEFINITION TECHNOLOGY STRATEGYISTERMTODESCRIBETHESTRATEGICALLY IMPORTANTTECHNOLOGYCHOICESMADEBYAFIRM. FIRM SSUCCESSDEPENDEDCRITICALLYONITSTECHNOLOGY- RELATEDDECISIONS, SUCHASTHECHOICEOFAPPROPRIATE TECHNOLOGIES, ASWELLASTHEDIVESTITUREOFTECHNOLOGIES WHOSETIMEHADRUNOUT. THISDECISIONSINVOLVEINVESTINGINPROGRAMSTODEVELOP TECHNOLOGIESFORCOMMERCIALAPPLICATIONS, THEKINDOF TECHNOLOGIESTHATAREEMBODIEDINTHEPRODUCTSMARKETEDBY THEFIRM, ASWELLASTHECHOICEOFTECHNOLOGIESTODEPLOYIN ITSVALUECHAIN.
DEFINITION TECHNOLOGYSTRATEGYISTHEREVEALEDPATTERNINTHE TECHNOLOGYCHOICESOFFIRMS. THECHOICESINVOLVETHE COMMITMENTOFRESOURCESFORTHEAPPROPRIATION, MAINTENANCE, TECHNOLOGICALCAPABILITIES. THESETECHNOLOGYCHOICESDETERMINETHECHARACTER ANDEXTENTOFTHEFIRMS PRINCIPALTECHNICALCAPABILITIES ANDTHESETOFAVAILABLEPRODUCTANDPROCESS PLATFORMS. DEPLOYMENT, AND ABANDONMENT OF
FOUR IMPORTANT POINTS ARE CAPTURED IN THIS DEFINITION: TECHNOLOGYSTRATEGYFOCUSESONTHEKINDSOFTECHNOLOGIESTHAT AFIRMSELECTSFORACQUISITION, DEVELOPMENT, DEPLOYMENT, OR DIVESTMENT. COMMITMENTSSURROUNDINGTECHNOLOGYSELECTIONDEFINE TECHNOLOGYSTRATEGIES. WEUSEDTHETERMREVEALEDPATTERN, I.E. PATTERNSTHATARENOTMERELYINTENDEDBUTACCOMPLISHED. TECHNOLOGYSTRATEGIESARENOTCONFINEDTOHIGH-TECHNOLOGY INDUSTRIES. EVENACAPACITY-DRIVENINDUSTRYORACUSTOMER-DRIVEN INDUSTRYREQUIRESATECHNOLOGYSTRATEGY. FINALLY, TECHNOLOGYSTRATEGIESEMBRACEBOTHTHEHARDWAREAND SOFTWAREELEMENTSOFATECHNOLOGY.
WE WILL TRY TO ANSWER SUCH QUESTION AS: WHAT IS TECHNOLOGY STRATEGY? WHAT ARE THE PRINCIPLES UNDERLYING THE FORMULATION OF TECHNOLOGY STRATEGY? WHAT ARE THE STEPS INVOLVED IN FORMULATING A TECHNOLOGY STRATEGY?
THE DOMAIN OF TECHNOLOGY CHOICE FIRMS MAKE MYRIAD TECHNOLOGY CHOICE AS THEY COMPETE IN THE MARKETPLACE. BROADLY, SUCH CHOICE ARE MADE IN THREE DOMAINS: TECHNOLOGY APPROPRIATION, OR COMMITMENTS TOBUILDTECHNOLOGY CAPABILITIES. DEPLOYMENTINPRODUCT, OR COMMITMENT TO EXPLOIT TECHNOLOGICAL CAPABILITIES THROUGH NEW PRODUCT DEVELOPMENT; AND DEPLOYMENTINVALUECHAINS, OR COMMITMENTS TO EXPLOIT TECHNOLOGICAL CAPAIBLITIES IN OPERATIONS.
TECHNOLOGY APPROPRIATION APROPRIASI TEKNOLOGI MENYANGKUT PENENTUAN TEKNOLOGI YANG SESUAI DENGAN KEBUTUHAN PERUSAHAAN DALAM MEMENANGKAN PERSAINGAN BAIK UNTUK DITERAPKAN DALAM PRODUK MAUPUN DALAM VALUE CHAIN. KEPUTUSAN APROPRIASI TEKNOLOGI MEMPENGARUHI KEMAMPUAN UNTUK MEMBANGUN BISNIS BARU, UNTUK MENYADI PIONER MARKET BARU, DAN UNTUK MELIHAT ARAH KEBIJAKAN BARU. TECHNOLOGY APPROPRIATION MEMILIH BAIK TEKNOLOGI SOFTWARE- DOMINANT DAN HARDWARE-DOMINANT.
DEPLOYMENT IN PRODUCT MENERAPKAN TEKNOLOGI YANG SUDAH DIPILIH KE DALAM PRODUK YANG DIHASILKAN OLEH PERUSAHAAN, CONTOH: TEKNOLOGI EFI YANG DITERAPKAN DI PRODUK OTOMOTIF YANG DIHASILKAN OLEH PABRIK OTOMOTIF.
DEPLOYMENT IN VALUE CHAIN A FIRM S VALUE CHAIN, AS CURRENTLY CONFIGURED, REPRESENTS INNUMERABLE TECHNOLOGY CHOICES MADE OVER A PERIOD OF TIME.
KEY PRINCIPLE YANG MENDASARI STRATEGI TEKNOLOGI
KEY PRINCIPLES OBJECTIVE DRIVERS DECISION CRITERIA CHOICE OUTCOME
Objective > Driver > Decision Criteria > Choice C O M P E T I T I V E ENVIRONMENT FIRM A D V A N T A G E T E C H N O L O G Y MARKET DIMENSION S T R A T E G Y F O C U S Competitive Domain Strategic Positioning TECHNOLOGY DIMENSION Competitive Position Technological Environment SCHEME FOR ARRAYING THE PRINCIPLES
OBJECTIVE TUJUAN UTAMA SETIAP PERUSAHAAN ADALAH PENCIPTAAN NILAI BAGI CUSTOMER DAN INVESTORNYA. (THEFUNDAMENTALOBECTIVEOFANYFIRMISTHE CREATIONOFVALUEFORITSCUSTOMERANDITS INVESTOR)
DRIVERS BECAUSE COMPETITIVEADVANTAGE IS THE PRIMARY OBJECTIVE IN TECHNOLOGY MANAGEMENT, BOTH TECHNOLOGY AND STRATEGIC CONSIDERATION SHOULD BE WEIGED IN THE PROCESS OF ARRIVING AT THE TECHNOLOGY CHOICE THE PROCESS SHOULD FOCUS ON TWO MAJOR QUESTION: a) DOES THE ENVIRONMENT OFFER SITES FOR VALUE CREATION? IF SUCH PROFITABLE SITE DON T CURRENTLY EXIST, CAN THEY BE CREATED? b) IS THE FIRM WELL POSITIONED TO EXPLOIT THE SITES?
DECISION CRITERIA TECHNOLOGY CHOICE IMPLY COMMITMENT OF LIMITED RESOURCES. FIRM CHANNEL THEIR RESOURCES TO THOSE ALTERNATIVES THAT PROMISE THE MOST EFFECTIVE ROUTE TO COMPETITIVE ADVANTAGE TECHNOLOGY CHOICES COMPETE WITH OTHER ALTERNATIVES FOR RESOURCES, ON THE ONE HAND, AND AMONG THEMSELVES, ON THE OTHER. THE UNDERLYING LOGIC OF TECHNOLOGY STRATEGIY IS ONE OF FOCUS: THE RESOURCES OF A FIRM SHOULD BE FOCUSED ON A LIMITED NUMBER OF CHOICES, WHERE THE FIRM CAN EXPECT TO GAIN SIGNIFICANT COMPETITIVE ADVANTAGE BASED ON THE AVAILABILITY OF PROFIT SITE AND THE FIRM S STRATEGIC POSITION
o TECHNOLOGY LEADERSHIP STRATEGY o NICHE (LIMITED) STRATEGY o FOLLOWER STRATEGY o TECHNOLOGY RATIONALIZATION
TECHNOLOGY LEADERSHIP STRATEGY CONSIST: ESTABLISHING AND MAINTAINING THROUGH BOTH TECHNOLOGY DEVELOPMENT AND DEPLOYMENT A PREEMINENTPOSITION IN THE COMPETITIVE DOMAIN IN ALL THE TECHNOLOGIES FOR A DOMINANTMARKET POSITION.
NICHE STRATEGY CONSIST: FOCUSING ON A LIMITED NUMBER OF CRITICAL TECHNOLOGIES TO SEEK LEADERSHIP. TECHNOLOGY DEVELOPMENT IS SELECTIVE, AND DEPLOYMENT IS ORIENTED TOWARD EXPLOITING THE TECHNOLOGICAL STRENGTHOF THE FIRM IN SELECTED TECHNOLOGIES TO CREATE COMPETITIVE ADVANTAGE.
FOLLOWER STRATEGY CONSISTS: MAINTAINGIN TECHNOLOGICAL ADEQUACY IN A BROAD SET OF TECHNOLOGIES. THIS STRATEGY IS FOCUSED ON DEPLOYMENT, AVOIDING THE RISKS OF BASIC RESEARCH. FOR THIS FIRMS, TECHNOLOGY IS NOT THEIR PRIMARY INSTRUMENT FOR SEEKING COMPETITIVE ADVANTAGE.
TECHNOLOGY RATIONALIZATION INVOLVES: MAINTAINING ADEQUACYONLYIN A SELECT SET OF TECHNOLOGIES. FOR THESE FIRMS, THEIR TECHNOLOGY DEFICIT SHOULD BE COMPENSATED BY OTHER COMPTITIVE STRENGHTS IN ORDER FOR THEM TO SURVIVE IN MANY COMPETITIVE DOMAINS.
Scope Full Selective Full Line Technology Leader Niche Player Leadership Leadership Technology Rationalizer Technology Follower Followership TECHNOLOGY STRATEGY TYPE
APPROPRIATENESS OF TECHNOLOGY STRATEGY TYPE IN THE ERA OF INCREMENTAL INNOVATION, TECHNOLOGY LEADERSHIP STRATEGY IS APPROPRIATE FOR FIRMS THAT HAVE STRONG TECHNOLOGICAL AND MARKET POSITION. NICHE STRATEGY IS RECOMMENDED FOR TECHNOLOGICALLY STRONG BUT COMPETITIVELY MODERATE POSITIONS. TECHNOLOGY FOLLOWERSHIP REQUERES A STRONG COMPETITIVE POSITION IN THE MARKETS, ALTHOUGH THE FIRM MAY LACK TECHNOLOGICAL SUPERIORITY. IF THE FIRM IS COMPETITIVELY WEAK, THEN IT MAY BE FORCED TO ADOPT A TECHNOLOGY RATIONALIZATION STRATEGY IN THE ERA OF TECHNOLOGY EMERGENCE, THE LEADER STRATEGY IS MUCH MORE BROADLY APPLICABLE, BECAUSE THE TECHNOLOGIES AND MARKETS TEND TO BE HIGHLY FLUID. THUS, THERE ARE MORE OPPORTUNITIES TO GAIN COMPETITIVE ADVANTAGE.
ERA OF TECHNOLOGY EMERGENCE LATE STAGES OF INCREMENTAL CHANGE COMPETITIVE POSITION STRONG MEDIUM WEAK STRONG MEDIUM WEAK S T R O N G LEADER LEADER FOLLOWER LEADER FOLLOWER ACQUIZITION T E p C O H S N I O T L I O O G N Y M E D I U M FOLLOWER FOLLOWER LEADER ACQUISITION NICHE RATIONLIZATION NICHE RATIONALIZATION W E A K JPOINT VENTURE JPOINT VENTURE RATIONALIZATIO N NICHE RATIONALZATION
DIVERSIFIED FIRMS TECHNOLOGY-RELATED DIVERSIFIERS: THERE ARE SIGNIFICANT SYSNERGIES AMONG THE TECHNOLOGY STRATEGY OF VARIOUS BUSINESS MARKET-RELATED (CONGLOMERATE) DIVERSIVIERS THE TECHNOLOGY STRATEGIES OF VARIOUS BUSINESSES TEND TO BE UNRELATED.
FRAMEWORK FOR FORMULATING TECHNOLOGY STRATEGY
A FRAMEWORK FOR FORMULATING TECHNOLOGY STRATEGY STRATEGIC DIAGNOSIS FORMULATION OF TECHNOLOGY STRATEGY o CRAFTING AN IMPLEMENTATION APPROACH EXECUTION o o o
1. STRATEGIC DIAGNOSIS FORMULATION OF TECHNOLOGY FOCUSES ON ADDRESSING THE TECHNOLOGICAL AND THE BUSINESS CONTEXT OFN THE FIRM INVOLVE TWO MAJOR ACTIVITY: 1. ENVIRONMENTAL ASSESSMENT, BOT TECHNOLOGICAL AND COMPETITIVE, AND 2. THE COMPETITIVE POSITION OF THE FIRM IN BOTH THE TECHNOLOGIES AND MARKET.
2. FORMULATING OF TECH. STRATEGY THREE MAJOR AREAS OF DECISIONS ARE INVOLVED: o APPROPRIATION OF TECHNOLOGY o DEPLOYMENT IN PRODUCT o DEPLOYMENT IN THE VALUE CHAIN.
3. CRAFTING AN IMPLEMENTATION APPROACH DURINGIMPLEMENTATION, AFIRMHASTOADDRESSTHREEMAJORQUESTIONS PERTAININGTOTHEMODEOFIMPLEMENTATION, WAYSTOPROTECTTHEVALUE FROMTECHNOLOGYCHOICE, ANDTHEORGANIZATIONFORIMPLEMENTATION: SHOULDWEGOITALONEORSHOULDWECOLLABORATEWITHOTHERFIRMSIN ORDERTOEXECUTETHEDECISION? HOWSHOULDWEPROTECTTHEINVESTMENTSINTECHNOLOGYCHOICESFROM BEINGDISSIPATEDTHROUGHVARIOUSMEANS? HOWSHOULDWEORGANIZEINTERNALLYFORIMPLEMENTATION?
4. EXECUTION DURING EXECUTION, A FIRM DEVELOPS DETAILED OPERATIONAL PLANS AND HUMAN FESOURCE DEPLOYMENTS NECESSARY FOR THE EXECUTION OF THE TECHNOLOGY CHOICES. DURING THIS STAGE, SIGNIFICANT INTERACTION NEEDS TO TAKE PLACE BETWEEN IMPLEMENTERS OF TECHNOLOGY STRATEGY AND THOSE PERFORMING KEY BUSINESS FUNCTIONS: MARKETING, MANUFACTURING, FINANCE, AND STRATEGY.
