Technology strategy is basically concerned with choices between alternative new technologies, the manner in which they are implemented into new products and processes and the utilization of resources that will allow their successful implementation. It cuts across such functional policies as finance, manufacturing, marketing, R&D as well as corporate wide policies regarding product market focus, personnel allocation and control.
Technology strategy is an important but often ignored link. It is not altogether eliminated or reduced by technology intensive companies. But is considered as part of other functional strategies such as marketing. This is understandable, as the concept of technological strategy is relatively new and is yet to take firm roots in the management skills set. With new technologies making serious inroads into the manufacturing processes of most industries in recent times, a technological strategy needs to be given proper weightage and the importance. To develop such a strategy, several major issues should be considered thoroughly.
*Developing strategies for technology based businesses in corporate portfolio.
*Choosing product market combinations in the light of their evolving technological needs.
*Understanding sources of technologically based synergies and technological leverage.
1) What technologies should be the basis of our business?
2) How should those technologies be embodied into products?
3) Where should we obtain the requisite technologies?
4) How much should we invest in technological development or purchase?
5) When should the technology be introduced to the market?
While making choices regarding technology, a firm has to pay special attention to the following issues:
Selection: What technologies to invest in and what are they promising from the perspective of existing, new, or related product lines? How should proposals for new technologies / products be evaluated? What technologies provide opportunities for improved product performance or lower costs?
Embodiment: How should these technologies be utilized in new products?
Technology sources: To what extent should a firm rely on internal development? To what extent should external sources, such as contract research and licensing from individual inventors, research and engineering firms and /or competitors be relied upon?
Consider the benefits of leading versus the risk of uncertain market acceptance of a new product. The benefits in developing an improved product after allowing a competitor to go first, then evaluating market acceptance can be considered.
Level of R&D investment in technologies and internal staffing versus external staffing shall be looked into.
Organization and policies for R&D: It is prudent to have a central R&D facility. A separate career track is needed for scientists with compensation compatible with or leading the industry. Project teams versus matrix organization for the sharing of resources. The top management should be involved in technological decisions very closely and allocate funds for R&D projects adequately. The top management must also formulate policies concerning patents, publications and protecting technological know-how.
Competence levels: Given the competitive environment, the technology close to the state of the art must be chosen. The firm should become proficient in understanding and applying the technology. The firm must emphasise on straightforward applications of the technology through product engineering or emphasise advancing knowledge of technology through basic or applied research.
In physics the term leverage is used to indicate mechanical advantage that is given by a lever (a rigid rod) that is rooted to the ground to the ground at a point called fulcrum. Through appropriate positioning of the fulcrum, a lever can be used to move or lift huge loads by applying minimal effort. The act of employing a correct lever, thus, gives a distinct mechanical advantage. Likewise, the act of exploiting the technological edge (superiority, rareness or inimitability etc.) to derive specific business advantages may be called technological leverage.
Let us make the case of Sundaram Fasteners Ltd, (SFL) to illustrate the point. The company’s commitment to quality goes back a long way. It was the first company to get ISO certification in 1990. Nobody in India had heard of ISO then. It re-engineered its plant and production processes and continuously expanded its capacity and today it is recognized as a world class giant with virtually zero breakdowns, zero accidents and zero defects. Spending close to 3 per cent on R&D where the industry average is just one per cent or so, Sundaram Fasteners today have developed world class – design and development facilities and top class tooling capabilities. It has won several awards for its HR programmes and its extensive training programmes on quality.
All the plants operate at full capacity and the per worker productivity of the company is a topic of discussion in academic and industry circles. Not surprisingly it won the General Motors award for quality for the fourth successive year recently. Over the years SFL has used its design, manufacturing and tooling capabilities to gain superiority over its rivals – combining technology, human resources and leadership skills in an admirable way.