Technology Life Cycle for Competitive Advantages

A thorough exploitation of a company’s technology now-a-days should include not only product applications but also technology sales.

A company that wants to get the most out of its technology must plan carefully to realize the full market value of that technology at all stages of its Technology Life Cycle (TLC) evolution. The TLC generally identifies the various phases that product technologies go through during their lifetimes.

Technology Development begins long before any production, when research shows a potentially valuable technology. Since everything is in Micronics stage, the major focus will be on whether further development of technology should take place.

The technology fits with the company’s overall strategy and finds application in an identifiable market.

The company has financial resources to develop the technology and the technology is compatible with the company’s production and marketing skills.

The projected returns on development are favourable when compared to alternative investments.

The technology may have several potential but unclear and possibly unrelated applications. It may be clear as to which application would produce rewards matching investments. When the picture is not clear companies go after joint ventures or even sell the technology at a remunerative price.

Once a company decides to apply a technology to a new product whether for its own products or for production by others it incurs its first major costs. In view of the heavy initials costs, companies usually take a cautious approach at this stage. When incorporating technology in a product, companies incur heavy costs in developing associated process and product technologies available with other companies. It may be necessary to join hands either through licensing or joint bearing strategies.

Possible applications of technology becomes clearer and finances will be readily forthcoming when the technology begins to take a concrete shape and comes to the pre-production stage. Generally, depending on the cost and revenue projections, companies decide on appropriate strategies. Dolby Laboratories initially sold noise reduction units to recover a part of investment involved in noise reduction technology for tape equipment. After gaining a foothold in the market the promoter started introducing the technology into mass market for consumer tape recording equipment.

If a technology has been developed to the point of a product launch without the involvement of potential buyers, decisions on its exploitation become more complex. There may not be enough companies around with requisite skills to employ the new technology properly. Sale of technology at this stage may also get delayed because of long lead times involved in customers purchase of a relatively unproved technology.

Lack of governmental patronage may add to the woes. The sale of technology may also be not possible if the technology has strategic or military implications – as for example in such fields as computer networks, high-energy lasers, wide-bodied aircraft etc. The originating company may also delay the sale of a technology (so that it will find innumerable applications outside) until it recovers its costs by taking advantage of the opportunity to skim the market as a monopoly supplier.

Application growth is the stage of maximization. The originating company begins to reap the rewards of increasing product sales. Competitors evince keen interest to have their own alternative versions of products based on the technology. A technology sale at this stage is most difficult but it is always better to get out before customer interest lessens and competitors come out with improved technologies. A realistic assessment, often, depends on several other issues.

Market size may be difficult to exploit an innovative technology through own production facilities. Selective license arrangements with regional players may be a better option to expand market size quickly.

Technological leadership, the originating company is willing to share the technology with others. The originator of a technology enjoys the early bird advantage and the first product becomes the standard. However competitors may come out with alternative technologies and if they enjoy any production advantages, they may flood the market with their own versions. In such a scenario active sale of licenses may help the original company incorporate its technology into the production of as many companies as possible. For example, Philips N V successfully achieved such standardization in the market for pocket dictating machine cassettes. Although Philips does not produce all the cassettes for all the machines in the world, most are produced as per its design and are subject to a royalty payment to Philips.

Technology Maturity implies awareness, active participation and successful implementation of process surrounding a technology. Both the originator and competing companies have their own versions of technology applications covering the market place in various degrees. No longer is timing of technology sales crucial. The focus now shifts to other issues such as production costs, relations with buyers and own production facilities. The originator’s production will level off or decline as the market stabilises at a particular level. The only fresh markets for the technology will now be found in less developed countries that are eager to substitute their own production for imports.