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Technology & Innovation...

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The Early
Market
Te
c
En hnol
thu og
sia y
sts

The
Chasm
Vis
io

na

rie
s

The
Mainstream
Market
Pr
ag
ma
tis

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Co
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va

Sk
tiv
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ep
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cs

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
ENTREPRENEURS 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

ENTREPRENEURIAL

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

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
Dept
Equity
Other

Financial
requirements
Driven by:
Burn rate
Operating needs
Working capital
Asset requirements
and sales

Business strategy
Marketing
Operations
Finance
Value creation

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
Young

5. Growth through
COLLABORATION

AGE OF ORGANIZATION

Evolution stages
Revolution stages

Mature

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 Early
Market
The
Chasm
Te
Vis
c
En hno
ion
thu log
ari
y
s ia
es
sts

The
Mainstream
Market

Pr

ag

ma
ti

Co

s ts

ns e

rv a

tiv
e

Sk
ep
tic
s
s

Amar Bidh Framework


Regular
Start-ups
Promising

High

Revolutionary
VC Backed
Startups

UNCERTAINTY

Marginal

Corporate

Low
Low

High

Regular
Corporation

SCALE
Uncertainty: unqualifiable and immeasurable risk
Scale:

expected total profit from opportunity

On Innovation
Why do firms innovate?
Product
innovation

Novelty
Escaping from
perfect competition

Appropriability
(patent, secrecy...)

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

B
SM

SM
F1

F2

F3

F1

F4

F2

SM

F3

F1

F4

F2

F3

F4
P1

P2

P3

Functional matrix

Functional
D

SM

P2
P1

P3

P4 F1 F2

F3

SM
P1

P2

P3

Balanced matrix

P4

SM
P1

P2

P3

P4

F1
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
Product

Company

SPECIALIST

Conservative

C
th ros
e C si
ha ng
sm

Technology
Enthusiasts

Developing the
Mainstream Market

Developing the
Early Market

Visionaries

GENERALIST

Pragmatist

Technology

Market
SKEPTICS

Define the Battle


SUPPORTERS
Benchmarks
Product Reviews
Design wins
Initial sales volumes
Trade press coverage
Visionary endorsements

SPECIALIST

Revenues and profits


Strategic partners
Top tier customers
Full product line
Business press coverage
Financial analyst endorsements

Product Company
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

GENERALIST

Discontinuity and Life Cycle


High

Early Market

Prototypes
Pure
Science

Chasm
Technology
Enthusiasts

Visionaries

Conservatives

Pragmatists

PARADIGM
SHOCK

End of
Life

Main Street

Low

Bowling
Alley

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:
Organizations
- 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

RETURN

Product Line
Extension
Low

Low or
Negative

Push

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

New
Technology
Vector

Core
Technology
Region

TECHNOLOGICAL
ATTRACTIVENESS

Aging
Technology

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
Competitors
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

Market
Evolution

Advertising
Intensity

Buyers
Investment in
Cospecialized
Assets

Response
Time

Later-Entrant
Advantages
Imitation Costs
Free-Rider Effects
Scope Economics
Learning from
Pioneers Mistakes

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

Low

Realistic
Investors

Banks

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

Davenports Investment Risk-Return


Space
100

Data from
Venture
Capitalist

80

EXPECTED
ANNUAL
RETURN
(%)

Davenports 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

Project

ASSETS

Production
Marketing
Service

Procedures

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)

140
120

Linking Technology
to Business

Changing Culture
and Values in R&D

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 search
Patent Mapping
with competitors
patents

Patent strategy

Patent abstracts

Patent
writing

Brain Maps
Key Know How holder maps
(competitors)

Positioning and Evaluating Assets

Clear
Extension
for
Eastman

Technology Push
Technology Risk
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

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

Long-term investments within


core competencies
ROI must be lined up in the
long term, short-term success
rather not possible

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


N
ne ew
w p
c o lat
r e fo
pr r m
od /
uc
im pro N
t
pr du ew
ov ct
ed li
pl ne
at /
Variants for
m

High

RELEVANCE FOR NEW


MARKETS / MARKET
SEGMENT

Va Variants
ria
nt
s
Low
Low

High
INTRODUCTION OF
NEW TECHNOLOGIES

A Balanced Portfolio - The Risk-Reward


Diagrams
High

Pearls

PROBABILITY OF
TECHNICAL SUCCESS

Bread and Butter

10M
REWARD (NPV)

White Elephants
(difficult to kill)

Low

Oysters

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
Cat/Chem
Process

Project D
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!

It
works!

New costs
look great

We need help

Documentation
done!

We dont
have enough
resources

The market
estimate
was wrong

The boss hates


the project

and inventory

We have all
the sizes

No, he
loves it
They
need
all the
sizes

Failures in
field trail

and the
approvals

We need
documentation

Its not
proprietary

I have an idea

and orders

Installation
problem!

It
doesnt
always

Despair

Well
make it

We have
a fix
Costs are
too high

Sounds great

They
like it

Costs are
better

Deliveries
are late
Serveral
failures
reported

Time

Possible Timeline for Transmission


Technology Evolution

Japan

Europe

PDC

W-CDMA

Personal Digital Cellular

Wideband CDMA

GSM

GPRS

Global System for Mobile communication

Global Packet Radio Service

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
Buyer 4

Seller 2

Platform 3
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

E-mail

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

Customers:

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