the co-evolution of technologies and markets...zunderstand how customer needs will evolve zdevelop...
TRANSCRIPT
Technology StrategyTechnology Strategy
Professor Rebecca Henderson
MIT Sloan School of Management
Effective strategies address Effective strategies address three key problems:three key problems:
How will we Create value?
How will weCapture value?
How will weDeliver value?
And answer seven critical questions:And answer seven critical questions:How will we create value?How will we create value?–– How will the technology evolve?How will the technology evolve?–– How will the market change? How will the market change?
How will we capture value?How will we capture value?–– How should we design the business model? How should we design the business model? –– Where should we compete in the value chain? Where should we compete in the value chain? –– How should we compete if standards are important? How should we compete if standards are important?
How will we deliver value?How will we deliver value?–– How do we manage the core business and real growth How do we manage the core business and real growth
simultaneously?simultaneously?–– How do we use our strategy to drive real resource allocation?How do we use our strategy to drive real resource allocation?
I assumed that you knew:I assumed that you knew:How will we create value?How will we create value?–– How will the technology evolve?How will the technology evolve?–– How will the market change? How will the market change?
How will we capture value?How will we capture value?–– How should we design the business model? How should we design the business model? –– Where should we compete in the value chain? Where should we compete in the value chain? –– How should we compete if standards are important? How should we compete if standards are important?
How will we deliver value?How will we deliver value?–– How do we manage the core business and real growth How do we manage the core business and real growth
simultaneously?simultaneously?–– How do we use our strategy to drive real resource allocation?How do we use our strategy to drive real resource allocation?
Thus the course focused on:Thus the course focused on:How will we create value?How will we create value?–– How will the technology evolve?How will the technology evolve?–– How will the market change? How will the market change?
How will we capture value?How will we capture value?–– How should we design the business model? How should we design the business model? –– Where should we compete in the value chain? Where should we compete in the value chain? –– How should we compete if standards are important? How should we compete if standards are important?
How will we deliver value?How will we deliver value?–– How do we manage the core business and real growth How do we manage the core business and real growth
simultaneously?simultaneously?–– How do we use our strategy to drive real resource allocation?How do we use our strategy to drive real resource allocation?
Why have a strategy?Why have a strategy?
1. 1. To make choicesTo make choices
Why have a strategy?Why have a strategy?
2. 2. To be able to change itTo be able to change it
The strategic challengeThe strategic challengeevolves down the S curveevolves down the S curve
Performance
Time
Ferment
Takeoff
Maturity
Discontinuity
The nature of technical work changesThe nature of technical work changes
Performance
Time
Will it work? Exploration, fun, creativity key
Can we make100,000?And service them?
We need to be responsive & flexiblebut controlled
Will it work? Exploration, fun, creativity key
The marketing challenge evolvesThe marketing challenge evolves
Performance
Time
Who needs this?
Do we haveany referencecustomers?
Stay close to yourcustomer – really close
Who needs this?
The ways in which a firm captures value also The ways in which a firm captures value also evolve dramaticallyevolve dramatically
Performance
Time
Speed, IPDifferentiation,Frontier performance key
We can sell it, make it, service it, ship itMost of the time
We may not be leading edgebut you’d rather buyfrom us because…
Speed, IPDifferentiation,Frontier performance key
The organizational challenge changesThe organizational challenge changessignificantlysignificantly
Performance
Time
“EntrepreneurialEnergy” critical
“Coordination & control” critical
“EntrepreneurialEnergy” critical
Successful firms thus need Successful firms thus need severalseveral strategiesstrategies
Performance
Time
“Ferment” Strategy
“Growth” Strategy
“Mature” Strategy
“Takeoff” Strategy
How shall we create value?How shall we create value?
Creating Value:Creating Value:
Understand how technologies will evolveUnderstand how technologies will evolve–– (Both your own and those on which you rely)(Both your own and those on which you rely)
Understand how customer needs will evolveUnderstand how customer needs will evolve
Develop world class products and services that meet Develop world class products and services that meet customer needscustomer needs
Tools for value creationTools for value creation
Predicting Technological ChangePredicting Technological Change–– The Delphi ModelThe Delphi Model–– Trend extrapolationTrend extrapolation
Predicting the Evolution of Customer NeedsPredicting the Evolution of Customer Needs–– Basic segmentationBasic segmentation–– Crossing the chasmCrossing the chasm–– New technologies, new needsNew technologies, new needs
Delphi ModelsDelphi Models
Ask the experts!Ask the experts!–– A committee?A committee?–– Structured questionnaires?Structured questionnaires?
ProsPros–– Field experts are often years ahead of day to day Field experts are often years ahead of day to day
practice: technologies do not “come from no where”practice: technologies do not “come from no where”
ConsCons–– They sometimes have little knowledge of possible They sometimes have little knowledge of possible
applicationsapplications–– They can be enthusiasticThey can be enthusiastic
Trend extrapolation: SemiconductorsTrend extrapolation: Semiconductors
0
100
200
300
400
500
600
1984 1986 1988 1990 1992 1994 1996 1998 2000
Year
Freq
uenc
y (M
Hz)
0
1
2
3
4
5
6
7
8
9
10
# Tr
ansi
stor
s (m
)
Frequency (M Hz)# transistors(m)
Issues in Trend ExtrapolationIssues in Trend Extrapolation
Which parameter shall I predict? Which parameter shall I predict? Do all good things come to an end?Do all good things come to an end?Exploring the difference between progress as a result Exploring the difference between progress as a result of the passage of time, and progress as the result of of the passage of time, and progress as the result of returns to effortreturns to effortPredicting progress in complementary technologiesPredicting progress in complementary technologies
Do all good things come to an end?Do all good things come to an end?Technological exhaustionTechnological exhaustion
Physical limit?
Performance
Time
Performance is ultimately constrainedby physical limits
E.g.:Sailing ships & the power of the windCopper wire & transmission capabilitySemiconductors & the speed of the electron
Modeling the returns to Modeling the returns to efforteffort vs. vs. timetime
Performance
Effort
Performance may be a non linearfunction of effort expended: in mature industries more and more effort may lead to less and less progress, while progress in emerging industries may be “surprisingly” fast
The Evolution of MarketsThe Evolution of Markets
oror
Predicting the pattern of Predicting the pattern of customer needscustomer needs
Market Evolution over the Life CycleMarket Evolution over the Life Cycle
Market segmentationMarket segmentationCrossing the chasmCrossing the chasmNew markets, new needs: New markets, new needs: –– The Innovator’s DilemmaThe Innovator’s Dilemma
The Key Question:The Key Question:Who buys a technology as it evolves?Who buys a technology as it evolves?
Performance
Time
Understanding market dynamics:Understanding market dynamics:Basic segmentation (Rogers)Basic segmentation (Rogers)
UnitsBought
Time
Innovators
EarlyAdopters
EarlyMajority
LateMajority
Laggards
Adopters differ by, for example, social, economic status --particularly resources, affinity for risk,knowledge, complementary assets, interest in the product
Understanding market dynamics:Understanding market dynamics:Crossing the chasm: (Moore)Crossing the chasm: (Moore)
Time
Innovators
EarlyAdopters
EarlyMajority
LateMajority
Laggards
Making the transition from “early adopters” to “early majority” users oftenrequires the development of quite different competencies: e.g. service, support capabilities, much more extensive training.
Crossing the chasm?
UnitsBought
Managing customers at momentsManaging customers at momentsof discontinuityof discontinuity
Performance
Time
Who buys a technologywhen it is firstintroduced?
New technologies sell to:- New customers- With new needs- Often at lower margins
Initially, PDAs did not seem to be a Initially, PDAs did not seem to be a threat to PCs:threat to PCs:
Speed,Power,Memory
Time
PCs
PDAs
?
PDAs sold to customers with different PDAs sold to customers with different needs:needs:
Speed,Power,Memory
Weight/cost
PCs
PDAs
But as PDAs improve they may come to But as PDAs improve they may come to challenge PCschallenge PCs
?Speed,Power,Memory
Weight/cost
PCs
PDAs
Or consumer preferences may changeOr consumer preferences may change
?
Speed,Power,Memory
Weight/cost
PCs
PDAs
““Disruptive” technologies may threaten Disruptive” technologies may threaten established firmsestablished firms
Performance
Time
Established technology
Mainstream customer needs
Niche customer needs
Invasive Technology
Clay Christensen: The Innovator’s Dilemma
Managing the change in customer Managing the change in customer groups may be the hardest task!groups may be the hardest task!
Performance
Effort
Leading edge customerfocused research may be a critical capability
The marketing strategy issue at a major The marketing strategy issue at a major materials supplier: materials supplier:
The Market
SBU 3
SBU 2
SBU 1
?$100m
Biomaterialswork
CR&DCR&D
?
What can be done?What can be done?
““Ready, aim, fire”Ready, aim, fire”Small scale experimentsSmall scale experimentsVirtual productsVirtual productsLead user research
} Significantresources required!
Lead user research
How shall we capture How shall we capture value?value?
Uniqueness, Complementary Assets & Uniqueness, Complementary Assets & the Structure of the Value Chainthe Structure of the Value Chain
Or: Or: What determines the Inventor’s Share?What determines the Inventor’s Share?
Customers
Inventor
Suppliers
Imitators,followers
Is it the case that Is it the case that great ideas = pots of money?great ideas = pots of money?
Coca ColaCoca ColaWal MartWal Mart
DellDell ViagraViagraNylonNylon
Xerox (early)Xerox (early)Valuecaptured
Xerox (late)Xerox (late)AppleAppleRC ColaRC Cola
Value created(through “raw” invention)
Two key ideas:Two key ideas:
UniquenessUniqueness–– Do great ideas make great riches?Do great ideas make great riches?
•• Controlling the knowledge generated by an innovationControlling the knowledge generated by an innovation
Complementary assetsComplementary assets–– Can we make money without being unique?Can we make money without being unique?
•• Controlling the assets that maximize the profits from Controlling the assets that maximize the profits from innovatinginnovating
Complementary assets are:Available Tightly
held
Easy to maintain
Uniqueness is:
Hard tomaintain
Uniqueness & Complementary Assets Uniqueness & Complementary Assets over the Life Cycle:over the Life Cycle:
Figure by MIT OCW.
Managing discontinuities means Managing discontinuities means managing complementary assets:managing complementary assets:
Performance
Time
Ferment
Takeoff
Maturity
DiscontinuityWhich of my complementary assets are useful?
Using the model to dive deeper:Using the model to dive deeper:
Taking advantage of positive feedback to build strong Taking advantage of positive feedback to build strong complementary assets:complementary assets:–– In marketing & R&D (Calloway)In marketing & R&D (Calloway)–– In process technology (Goodyear)In process technology (Goodyear)–– In network externalities (Qualcomm, Nokia)In network externalities (Qualcomm, Nokia)
Building an understanding of which assets may be Building an understanding of which assets may be available:available:–– Are there spillovers?Are there spillovers?–– What is the shape of the learning curve?What is the shape of the learning curve?–– What is the structure of demand?What is the structure of demand?–– Do network externalities create value?Do network externalities create value?
Managing discontinuities means Managing discontinuities means managing complementary assets:managing complementary assets:
Performance
Time
Ferment
Takeoff
Maturity
DiscontinuityWhich of my complementary assets are useful?
Power in the Value ChainPower in the Value Chain
Porter’s “5 (actually at least 7) Forces”: Porter’s “5 (actually at least 7) Forces”: Thinking about the balance of powerThinking about the balance of power
EntrantsEntrants
SubstitutesSubstitutes
SuppliersSuppliers BuyersBuyersRivalsRivals
Political, regulatory and institutional context
“Complementors”
C.Assets/Uniqueness speak to Rivalry C.Assets/Uniqueness speak to Rivalry and the Threat of Entry.and the Threat of Entry.
EntrantsEntrants
SubstitutesSubstitutes
SuppliersSuppliers BuyersBuyersRivalsRivals
Porter reminds us to think about the Porter reminds us to think about the structure of the value chain:structure of the value chain:
EntrantsEntrants
SubstitutesSubstitutes
SuppliersSuppliers BuyersBuyersRivalsRivals
Powerful suppliers and buyers may Powerful suppliers and buyers may constrain profitabilityconstrain profitability
SuppliersSuppliers BuyersBuyers
Does this mean that if the Does this mean that if the money is down (up) stream money is down (up) stream
we should forwards we should forwards (backwards) integrate?(backwards) integrate?
If the money is in lobster If the money is in lobster restaurants, restaurants,
should the lobster fisherman go should the lobster fisherman go into the restaurant business?into the restaurant business?
Key Questions:Key Questions:
When should an entrepreneurial firm develop it’s own:When should an entrepreneurial firm develop it’s own:–– Manufacturing Manufacturing –– DistributionDistribution–– SalesSales–– ….. capabilities?….. capabilities?
When should a mature firm outsource it’s:When should a mature firm outsource it’s:–– Manufacturing Manufacturing –– DistributionDistribution–– SalesSales–– ….. capabilities?….. capabilities?
Comparing “make” vs. “buy”Comparing “make” vs. “buy”
Startup
Asset
Supplier
Startup
Asset
Supplier
Key Considerations:Key Considerations:
How easy is it to write contracts?How easy is it to write contracts?–– How tight is the IP regime?How tight is the IP regime?–– How much uncertainty is there?How much uncertainty is there?–– “Specificity” of the asset “Specificity” of the asset –– how “thick” is the market?how “thick” is the market?
What will happen to “entrepreneurial energy”?What will happen to “entrepreneurial energy”?
What will be the key complementary assets going What will be the key complementary assets going forward?forward?
Make vs. Buy over the life cycleMake vs. Buy over the life cycle
Performance
Time
Mostly Buy?
Mostly Make? ????
????
So “make” (i.e. do it inSo “make” (i.e. do it in--house) if:house) if:
There are significant IP worriesThere are significant IP worriesThere are likely to be contractual problemsThere are likely to be contractual problems–– We can’t be sure of getting the “fair” priceWe can’t be sure of getting the “fair” price–– We can’t be sure they’ll do the work “right”We can’t be sure they’ll do the work “right”–– I.e., when market are “thin” or there is limited I.e., when market are “thin” or there is limited
informationinformationWe have unique competencies that are relevant We have unique competencies that are relevant –– Or could create themOr could create them
And if buying won’t destroy everyone’s incentives to And if buying won’t destroy everyone’s incentives to be creative and energeticbe creative and energetic
But remember…But remember…
One cannot “buy” profit One cannot “buy” profit –– if everyone knows it is there if everyone knows it is there –– it will be in the priceit will be in the priceBesides, shouldn’t we “stick to our knitting”?Besides, shouldn’t we “stick to our knitting”?Wouldn’t you rather deal with an independent firm, Wouldn’t you rather deal with an independent firm, whom you could fire, than an internal subsidiary?whom you could fire, than an internal subsidiary?
Make vs. BuyMake vs. Buy
EntrepreneurialDrive,Freedom from the “old ways” Buy?
Make?
Control & Coordination
Standards and Strategy:Standards and Strategy:Competing in Increasingly Competing in Increasingly
Open WorldsOpen Worlds
Thinking about the dynamics of the Thinking about the dynamics of the strategic spacestrategic space
Control is:
Public
Private
Access is:Open Closed
Details of standard aremade available to all:but owner has control over how the standard evolves and may charge for use
E.g. Nintendo, Palm OS
Details of standards are available to all: nosingle firm has control over how they evolve: no charge for their use
E.g. TCP/IP, HTML
Standards are owned and controlled by thepublic sector but are not freely available
E.g. Cryptography
Technology may be standard, but detailsare not made availablebeyond the firm
E.g. Landmark Graphics, IBM 360
In practice these boundaries are fuzzy:In practice these boundaries are fuzzy:
IBM360
Control is:
MorePublic
MorePrivate
Access is:MoreOpen
MoreClosed
Linux
Symbian
CDMAWindows
Mercury/Corba
What do producers prefer?What do producers prefer?Access is:
MoreOpen
MoreClosed
MorePublic
Control is:
MorePrivate
What do customers prefer?What do customers prefer?Access is:
MoreOpen
MoreClosed
MorePublic
Control is:
MorePrivate
If network effects are important, If network effects are important, markets may “tip”markets may “tip”
280
1
0 1
Probabilitythe next consumer chooses to buy A
A’s share of installed base
Tipping dynamics differ with the Tipping dynamics differ with the strength of network effectsstrength of network effects
Value toconsumer
Actual (or anticipated) size of the installed base
Products withextensive N.effects
Conventional product
Products with“threshold”
network effects
Markets with moderate network effects only Markets with moderate network effects only tip once critical thresholds are reachedtip once critical thresholds are reached
Probabilitythe next consumer chooses to buy fromFirm A
1
0Firm A’s actual or anticipated share of installed base
1
Will this market tip?Will this market tip?
Network Operation
Applications
Operating Systems
Device Design
Chipset Design
UI
VodafoneNTT DoCoMo
Motorola Siemens
TI
Qualcomm
Device Manufacture
Chipset Manufacture
Service Provision
MotorolaI-250 and beyond Infineon
OrangeT-Mobile
MicrosoftLinux
VodafoneLive!
W-CDMA
BREW
SavaJeWindows
Windows
Microsoft
Live!
SonyEricsson
Clones and Asians
EMS Players
Samsung
MicrosoftUIQ
Nokia
Symbian
Series60-90
Series60-90
Symbian SymbianSymbian
Market Share
Valu
e Sh
are
Making money in Making money in an open worldan open world
Where’s the money?Where’s the money?Competition in a closed, private worldCompetition in a closed, private world
Where’s the money?Where’s the money?Competition in an open private worldCompetition in an open private world
Where’s the money?Where’s the money?The challenge of an open public worldThe challenge of an open public world
Making money in an open public worldMaking money in an open public world
Competing on a level playing field:Competing on a level playing field:–– Do it better, faster, cheaper, in a more integrated way…Do it better, faster, cheaper, in a more integrated way…–– Leverage “complementary assets”Leverage “complementary assets”
Be part of the evolution of the playing field:Be part of the evolution of the playing field:–– Exploring “soft” standardsExploring “soft” standards
Soft standards in action:Soft standards in action:
Publicstandard
“Soft” standard
Perf.
Time
Connecting to Other Connecting to Other Strategy FrameworksStrategy Frameworks
PIEPIE& &
The Delta ModelThe Delta Model
P.I.E.=Value CreatedP.I.E.=Value Created
PIE represents the upper bound on the actual earnings of an industry.
Industry Demand
Opportunity Cost of ResourcesPIE
$
Industry Quantity
Main drivers of P.I.E.Main drivers of P.I.E.
Absence of good Absence of good substitutessubstitutes pushes out demandpushes out demand
Presence of strong Presence of strong complements complements pushes out demandpushes out demand
Population/Income growth pushes out demand Population/Income growth pushes out demand
Changes in the longChanges in the long--term industry cost structureterm industry cost structure
Value Capture=The Four SlicesValue Capture=The Four Slices
Even if potential earnings are high, actual Even if potential earnings are high, actual earnings are limited by the extent that:earnings are limited by the extent that:A.A. Entry is easy.Entry is easy.B.B. Competition with existing rivals is intense.Competition with existing rivals is intense.C.C. Suppliers control needed inputs.Suppliers control needed inputs.D.D. Buyers act as one to bargain hard.Buyers act as one to bargain hard.
Essentially, all of these forces act to drive price Essentially, all of these forces act to drive price to marginal cost (or vice versa), eliminating to marginal cost (or vice versa), eliminating producer surplus.producer surplus.
Three Distinct Strategic OptionsThree Distinct Strategic OptionsSystem LockSystem Lock--InIn• System Economics• Market Dominance• Achieving Complementor
share
The Delta Model:The Delta Model:
Total Customer SolutionsTotal Customer Solutions• Customer Economics• Cooperation• Achieving Customer Share
Best ProductBest Product• Product Economics• Rivalry• Achieving Product Share
System Lock-In
Best Product
Proprietary StandardProprietary StandardMicrosoft, Intel
Low CostLow CostSouthwest Airlines,Nucor
Dominant ExchangeDominant ExchangeeBay, Yellow Pages
Horizontal BreadthHorizontal BreadthFidelity
Exclusive ChannelExclusive Channelrural Wal-Mart
Redefining theRedefining theCustomer RelationshipCustomer Relationship
Saturn
CustomerCustomerIntegrationIntegration
EDS
Total Customer Solutions
DifferentiationDifferentiationSony Wega
The Triangle:The Triangle:Options for Strategic PositioningOptions for Strategic Positioning
ManagingManagingOrganizational CompetenceOrganizational Competence
The last of the three key questions...The last of the three key questions...
How will we Create value?
How will weCapture value?
How will weDeliver value?
How can we manage the How can we manage the core business and real core business and real
growth simultaneously?growth simultaneously?
In summary:In summary:““I see”, he said, “you’re suggesting that we invest I see”, he said, “you’re suggesting that we invest millions of dollars in a market that may or may not millions of dollars in a market that may or may not exist but that is certainly smaller than our existing exist but that is certainly smaller than our existing market, to develop a product that customers may or market, to develop a product that customers may or may not want, using a business model that will almost may not want, using a business model that will almost certainly give us lower margins than our existing certainly give us lower margins than our existing product lines. You’re warning us that we’ll run into product lines. You’re warning us that we’ll run into serious organizational problems as we make this serious organizational problems as we make this investment, and our current business is screaming for investment, and our current business is screaming for resources. Tell me again just why we should make this resources. Tell me again just why we should make this investment?”investment?”
- Divisional Manager, Telecommunications Equipment Provider
The Organizational Challenge:The Organizational Challenge:
Successful growth unites entrepreneurial insight with
effective coordination
StartupsStartups
B as UB as U
EntrepreneurialDrive,Freedom from the “old ways”
Control & Coordination
What can be done?What can be done?LeadLead::–– Build the “ambidextrous” senior team: Build the “ambidextrous” senior team:
communicate the strategy, allocate resourcescommunicate the strategy, allocate resourcesStructureStructure: : –– Explore transitional and intermediate formsExplore transitional and intermediate forms
IncentIncent::–– Explain “just what’s in this for me?”Explain “just what’s in this for me?”
BuildBuild: : –– Lay the foundations for a new culture, new Lay the foundations for a new culture, new
expectationsexpectations
Choose a structure that fits the firm’s Choose a structure that fits the firm’s strategic positioning and skillsstrategic positioning and skills
EntrepreneurialEnergy
Jointventure/alliance
Internalventure
Build insideexisting unit
Acquire/Partner
Control & Coordination
Manage it using every lever that you Manage it using every lever that you havehave
EntrepreneurialDrive,Freedom from the “old ways”
Acquire/Partner
Build inside existing units
Jointventure/alliance
?
Internalventure
Build insideexisting unit
Control & Coordination
Recognizeopportunity?
NO
YES
Invest inmarket?
NO
YES
Build newbusiness model?
NO
YES
Organizeambidextrously?
NO
YESActually
fund project?NO
YESEmbracesuccess?
NO
YESBuilding growth thus requires doing Building growth thus requires doing manymany things rightthings right
Recognizeopportunity?
NO
YES
Invest inmarket?
NO
YES
Build newbusiness model?
NO
YES
Organizeambidextrously?
NO
YESActually
fund project?NO
YESEmbracesuccess?
NO
YES
Strategic Issues
Org.Issues
Actually Doing Technology Actually Doing Technology & Product Strategy& Product Strategy
The innovation funnelThe innovation funnel
Phase I Phase II Phase III Launch
A Range of ToolsA Range of Tools
Risk adjusted NPV Decision Trees Simulations e.g. Monte Carlo
Closed Formulas e.g. Black-Scholes
Differential Equations
Pros• Established
methodology widely accepted and understood
• Relatively easy and quick to implement
• A building block for more complicated valuation methods
• Incorporates decision making and uncertainty
• Determines optimal decisions
• Transparent and easy to understand.
• Building block for other more complicated valuation methods.
• Allows for complicated and multiple uncertainties spanning both discrete and continuous outcomes.
• Easier to model non-standard uncertainties
• Elegant, easy to implement with formula in hand
• A numerical solution incorporating optimal decisions and (possibly) both continuous and discrete uncertainties.
Cons• Does not allow for
contingent decisions
• Collapses many decisions and outcomes down to a single scenario
• Does not account for managerial ability to react to information.
• Trees can become complicated with many decisions and uncertainties.
• Essentially limited to discrete decisions and discrete characterization of uncertainties.
• Methods do not determine optimal policies.
• Programming becomes complicated with many decisions and uncertainties.
• Less transparent than trees
• Limited to relatively simple decisions and uncertainties.
• Many simplifying assumptions usually have to be made to obtain closed form solutions.
• Extremely difficult, if not impossible, to implement in realistic situations.
• Time Consuming• Does not allow for
many different uncertainties.
An ExampleAn ExampleLowResource
HighResource
ModerateResourceConsumer Value Perception
EnablingTechnology
New CoreProduct
NewBenefits
Radical
Incremental
Base
NextGeneration
Derivative
Platform
Breakthrough
No ChangeImprovement Variant
Product Support
Successful Implementation: Successful Implementation: Common LessonsCommon Lessons
Senior management commitment & involvementSenior management commitment & involvement–– Senior steering committee Senior steering committee –– Empowered championEmpowered champion
Diagnostic phaseDiagnostic phase–– Aligned with the marketAligned with the market–– As well as with the existing culture and organization As well as with the existing culture and organization
A designed implementation planA designed implementation plan–– Up frontUp front–– With appropriate expectationsWith appropriate expectations
Allocating resources to match the design. Allocating resources to match the design.
SummarySummary
Effective strategies address Effective strategies address three key problems:three key problems:
How will we Create value?
How will weCapture value?
How will weDeliver value?
And answer seven critical questions:And answer seven critical questions:How will we create value?How will we create value?–– How will the technology evolve?How will the technology evolve?–– How will the market change? How will the market change?
How will we capture value?How will we capture value?–– How should we design the business model? How should we design the business model? –– Where should we compete in the value chain? Where should we compete in the value chain? –– How should we compete if standards are important? How should we compete if standards are important?
How will we deliver value?How will we deliver value?–– How do we manage the core business and real growth How do we manage the core business and real growth
simultaneously?simultaneously?–– How do we use our strategy to drive real resource allocation?How do we use our strategy to drive real resource allocation?
Understanding the life cycle is critical :Understanding the life cycle is critical :
Ferment
Takeoff
Maturity
TechnologyMarkets
CompetitionOrganization
Startup
Asset
Supplier
Technology strategy on one slide:Technology strategy on one slide:
Create
CaptureDeliver
?
NFigure by MIT OCW Text
Good Luck!Good Luck!