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Enactment of Technology Strategy
Developing a Firm’s Innovative Capability
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Questions
How a firm’s innovative activities reflect its technology strategy?
How the enactment of technology strategy serves to further develop its innovative capabilities?
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Outline
Innovation challenges in established firms
Strategic management of corporate research
Managing corporate entrepreneurship
Conclusion
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Innovation Challenges in Established Firms
Three types of new product and new business development Induced strategic action
Incremental & architecture innovation In relation to its familiar external environments Ex: Next generation of aircraft
Autonomous strategic action Radical innovation Opens up new environmental niches Firm’s long-term survival and development Ex: Electronic fuel injection
A balance act
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New Product and New Business Development
Autonomous strategic
action
Strategic context
Structural context
Concept of corporative
strategyInduced strategic
action
An evolutionary framework of the strategy-making process in established firms
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Strategic Management of Corporate Research
The functions of corporate research
Managing key interfaces
Linking corporate research to corporate development strategy
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The Functions of Corporate Research
Support of existing businesses (induced process) Improvements in existing products and processes
New strategic directions (autonomous process) Discover new areas of technology Ex: Du Pont’s nylon, EMI’s CT scanner
Effectively using the output of corporate research
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The Functions of Corporate Research
Innovations by:
New strategic directions
Support of existing businesses
Improving and strengthening the understanding of technologies in use
Diversifying to new applications and
markets
Identifying product and process improvements
Discovering and developing new technologies
Diversifying to entirely new businesses
Developing new processes for established products
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The Functions of Corporate Research
Corporate service by:
New strategic directions Support of existing businesses
Intelligence Opening windows on new science and technology
Assessing threats and opportunities
Human resources Recruiting new kinds of skills
Recruiting talented people with high potential
Technology transfer
Identifying acquisition candidates with needed technological expertise
Recruiting for all divisions, from corporate research to operations
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Manage Key Interfaces
Corporate research - divisional R&D interface (induced process) Attitudes of scientists in divisional R&D Attitudes of corporate research Administrative, geographical, and personal linkages
Corporate research - business research interface (autonomous process) Linking new technological solutions to market needs Obtaining additional resources to create a commercially viable new
business
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Manage Key Interfaces
Geographical
Closed Open
Personal Personal
Closed Open Closed Open
Administrative
ClosedTight
coupling
Open No
Coupling
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Systematic Differences betweenBusiness and R&D People
Work environmentR&D people Business research people
1. Structure Well defined: existence of research tradition; clearly described positions
Ill defined: no real research tradition; positions less clearly defined
2. Methods Scientific and codified Ad hoc and uncodified
3. Database Systematic and objective Unsystematic and largely subjective
4. Work and time pressures
Mostly internal; how long does it take?
Mostly external; how long do we have?
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Professional orientations
R&D people Business research people
5. Operating assumptions
Serendipity Planning
6. Goals “New” ideas; can it be improved?
“Big” ideas; does it work?
7. Performance criteria Quality of investigation Quantity of results
Systematic Differences betweenBusiness and R&D People
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Quality of personnelR&D people Business research
people
8. Educational background
Ph.D. Master’s
9. Experience Deep and focused Broad and diverse
Personal interests
10. Career objectives Become venture manager?
Become venture manager?
Systematic Differences betweenBusiness and R&D People
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Linking Corporate Research toCorporate Development Strategy
Assessing technological opportunity Five dimensions of the fundamental uncertainty
Technological innovations’ usefulness cannot be immediately appreciated.
Complementary inventions Difficult to conceptualize the new technological systems Attempting to solve very specific problems and leading to
unanticipated uses The ability to effectively link them to specific categories of human
needs
Ex: Laser
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Linking Corporate Research toCorporate Development Strategy
The role of different levels of corporate research management Technicians Bench scientists Group leaders R&D managers Director of corporate R&D
Allocating resources to corporate research
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Managing Corporate Entrepreneurship
The managerial challenge posed by autonomous strategic action
The use of new venture divisions A framework for assessing internal entrepreneurial
initiatives Designing alternatives for corporate entrepreneurship Choosing design alternatives Implementing design alternatives
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The Managerial Challenge Posed byAutonomous Strategic Action
Firms almost continuously bring in new talent that interacts with the firm’s existing resources, competencies, and capabilities in ways that cannot be fully anticipated.
Ex: Calculator, Gene machine Top managers should consider the potential implications of
the initiative for the firm’s strategic position.
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Interface Problems Involving Venture Divisions
NVD – operating divisions interfaces
NVD – corporate management interfaces
Strategic interferences
Domain protection issues Synergy considerations
Lack of diversification strategy Limits to rate of strategic change that can be absorbed Effects on corporate image
Administrative/cultural frictions
Rigidities resulting from management system Personnel transfer issues
Circumvention of corporate rules and regulations Inadequate measurement and reward systems Resistance to institutionalization
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A Framework for AssessingInternal Entrepreneurial Initiatives
Assessing strategic importance Considering the implications of an entrepreneurial initiative for the
firm’s product-market position Top managers depend on middle-level managers.
Assessing operational relatedness The degree to which an entrepreneurial initiative requires
competencies and capabilities that differ from the corporation’s core competencies
Corporate management needs to rely on substantive interactions with middle level managers.
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Design Alternatives for Corporate Entrepreneurship
Determining administrative linkages The assessment of strategic importance has implications for the
degree of control over the new business development If strategic importance is high, strong administrative linkages are in
order. Low strategic importance should lead corporate management to
examine how the new business can best be spun off. If unclear, relax the structural context and allow the new business some
leeway in its strategic management.
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Design Alternatives for Corporate Entrepreneurship
Determining operational linkages The degree of operational relatedness has implications for the
efficiency If operational relatedness is judged to be high, tight coupling of the
operations of the new and existing businesses is in order. Low operational relatedness may require complete decoupling. If unclear, loose coupling seems most adequate.
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Internal Entrepreneurship InitiativesAssessment Framework
Key dimensions and their implications
Dimensions: Implications:
Strategic importance
Degree ofcontrol
AdministrativeLinkages
(authority)
Operationalrelatedness
Efficiencyconsiderations
Operationallinkages
(networking)
OrganizationDesign
alternatives
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Organization Designs for Corporate Entrepreneurship
Unrelated
Stronglyrelated
Partlyrelated
Very important Uncertain Not important
Operationalrelatedness
Strategic importance
321Direct4Micro newVenture
3Special BusinessUnits
6IndependentBusinessUnits
9CompleteSpin-off
2New productDepartment
5NewVentureDivision
8Contracting
1Direct Integration
4Micro New Venture Division
7NurturingandContracting
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Implementing Design Alternatives
First, view the assessment framework as a tool to clarify. Second, establish measurement and reward systems. Third, as the development process unfolds, new information
may modify the perceived strategic importance and operational relatedness; the ventures can move dynamically.
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Conclusion
Corporate research : Evaluate the businesses related to the corporate.
Managing corporate entrepreneurship : Evaluate the businesses out of the corporate.
Large established corporations provide a substratum of discovery and invention that feeds the innovation process. Many start-ups have been built on ideas that originated within large established corporations.