Design and Implementation of
Technology Strategy:
An Evolutionary Perspective
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Technology Strategy Helps Answer Questions
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Which distinctive technological competences and capabilities are
necessary to establish and maintain competitive advantage ?
Which technologies should be used to implement core product design
concept and how should these technologies embodied in products?
What should be the investment level in technology development?
How should various technologies be sourced—internally or externally?
When and how should new technology be introduced to the market?
How should technology and innovation be organized and managed ?
Capabilities-Based Organizational Learning
Framework of Technology Strategy
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Exhibit 1
Technological
capabilities
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Technology
strategy
Experience
Technological Competence and Capability
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Core competence
 The collective learning in the organization, especially how to
coordinate diverse production skills and integrate multiple streams
of technologies.
 Three tests:
 Potential access to a wide variety of markets.
 Contribute to customer benefits.
 Difficult to imitate.
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Core competence vs. capability
Substance of Technology Strategy
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Competitive strategy stance
Value chain stance
Resource commitment stance
Management stance
1. Competitive Strategy Stance
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Technology choice
 Design concepts
 Physical implementation
 Components
 Architecture
 Ex: fans, sports cars
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Technology leadership / technology entry timing
 Timing of commercial use
 First mover / follower
 Appropriability regimes
 Control of specialized assets
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1. Competitive Strategy Stance
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Technology licensing
 Firms have to decide to market their technologies themselves or
license out
 5 reasons for technology license:
 Not all technologies generated by a firm’s R&D efforts fit into its lines
of business and corporate strategy.
 Companies may need to consider licensing their technology to
maximize the returns on their R&D investments, because patents
provide only limited protection against imitation by competitors.
 Smaller firms may be unable to exploit their technologies on their own
because of the lack of money or complementary assets.
 International market development for the technology may require
licensing local firms because of local government regulation.
 Antitrust legislation may sometimes prevent a company from fully
exploiting its technological advantage on its own.
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2. Value Chain Stance
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Decide the scope of technology strategy
 Firms should decide “make” or “buy” (outsourcing)
 Core technology / peripheral
 Make the decision based on its scale and its business focus
 Economies of scale / scope, learning effects, synergies
 Ex: GE
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3. Resource Commitment Stance
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Depth of technology strategy
 Depth of technology strategy can be expressed in terms of the
number of technological options that the firm has available
 Resource commitment determines the depth of technology strategy
 The more resource, the more technological options the firm has
 Ex: Cell phone 2G-3G
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4. Management Stance
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Organization fit
 A science-based firm that has decided to be a technology leader for
the long run probably needs to create a central R&D organization
 Japanese firms use multiple layers of contractors and subcontractors
in an external network to foster extreme forms of specialization in
particular skills
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Evolutionary Force Shaping
Technology Strategy
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Exhibit 2
Determinants of technology strategy
Generative mechanisms
Strategic
action
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Organizational
context
Technology
strategy
Technology
evolution
Industry
context
External environment
Integrative mechanisms
Internal environment
Technology Evolution
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Technology strategy
Technology capabilities
Endogenous and exogenous effects
Different aspects of technology evolution have been
discussed in the literature:
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S-Curve
Dominant design
Product-process interplays
Technological change
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competence enhancing
competence destroying
 De-maturity
 Disruptive technologies
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Industry Context
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Industry structure (Porter’s five major forces )
Appropriability regime
Complementary assets
Increasing returns to adoption
Industry standards
Social systems aspects of industry development
Non-market forces: government
Strategic Action
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Induced strategic action
Autonomous strategic action
Organizational Context
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Organizational context serves as an internal selection
environment
1.Induced process (sustaining innovation)
2.Autonomous process (disruptive innovation)
3.Balance 1 & 2
Organizational context takes shape over time and reflects the
administrative approaches and dominant culture of the firm
The founders have lasting impact on the firm’s organizational
context.
 Ex: Foxconn (Hon Hai)
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Applying the Framework: Research
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Disruptive technologies (called substitutes in Economics)
 Cannibalize existing technologies and undermine the strategic
position of incumbent company
 Ex: transistor, PC, magnetic disk drive
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Organization rejection and recalcitrance
New entrepreneurial firm will find and pursue new
customers
Applying the Framework: Practice
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Consistency of strategic behavior:
 Ex1: Crown Cork and Seal (CC &S)
 Ex2: Marks and Spencer (M&S)
 Ex3: Banc One Corporation
Internal environment
Strategic
action
Organizati
onal
context
Technology
strategy
Technology
evolution
Industry
context
External environment
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Integrative mechanisms
Competencies / capabilities:
Technology evolution:
Strategic action:
Organizational context:
Industry context:
Experience
Generative
mechanisms
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Applying the Framework: Practice
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Problems arising when a change in study is not matched.
 Ex1: National Cash Register Company (NCR)
 EDP vs. Microelectronics
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Experience through Enactment of
Technology Strategy
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Technology sourcing
Product and process development
Technical support
Technological
capabilities
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Technology
strategy
Experience
Technology Sourcing
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Internal sourcing
 Depend on the firm’s R&D capacity
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Ex: IBM (high-temperature superconductivity)
External sourcing
 Through exclusive or preferential licensing contracts or through
strategic alliances
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Product and Process Development
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Product and process development activities embody
important aspects of the dimensions of technology strategy
Strike the delicate balance between
 letting technology drive product development
 allowing product development and/or market development to drive
technology
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Technical Support
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Two way flows of information are relevant
The function commonly termed field service creates the
interface between
 Firm’s technical function
 The users of the firm’s product or services
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Enactment Reveals Substance of
Technology Strategy
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Interactions among
 Components of substance
 Enactment in technology strategy making
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Two conjectures
 The substance of technology strategy should be comprehensive
 Technology strategy should be integrated
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Enactment Reveals Substance of
Technology Strategy
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Exhibit 3
Substance
Enactment (Modes of Experience)
External
Technology
Sourcing
Internal
Technology
Sourcing
Product
Development
Process
Development
Technical
Support
Competitive Strategy
Stance
(Choice / leadership /
Entry timing / licensing)
Value chain stance
(Scope)
Resource commitment
stance
(Depth)
Management stance
(Organizational fit)
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Back
Conclusions
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A capabilities-based organizational learning frame work of
technology strategy Exhibit 1
Determinants of technology strategy Exhibit 2
Substance and enactment in technology strategy Exhibit 3
Answer Questions