Enactment of Technology Strategy Developing a Firm’s Innovative Capability

1. Enactment of Technology Strategy Developing a Firm’s Innovative Capability

2. Questions • How a firm’s innovative activities reflect its technology strategy? • How the enactment of technology strategy serves to further develop its innovative capabilities?

3. Outline • Innovation challenges in established firms • Strategic management of corporate research • Managing corporate entrepreneurship • Conclusion

4. 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

5. Autonomous strategic action Strategic context Concept of corporative strategy Induced strategic action Structural context New Product and New Business Development • An evolutionary framework of the strategy-making process in established firms

6. Strategic Management of Corporate Research • The functions of corporate research • Managing key interfaces • Linking corporate research to corporate development strategy

7. 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

8. The Functions of Corporate Research

9. The Functions of Corporate Research

10. 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

11. Manage Key Interfaces

12. Systematic Differences betweenBusiness and R&D People

13. Systematic Differences betweenBusiness and R&D People

14. Systematic Differences betweenBusiness and R&D People

15. 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

16. 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

17. 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

18. 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.

19. Interface Problems Involving Venture Divisions

20. 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.

21. 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.

22. 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.

23. Internal Entrepreneurship InitiativesAssessment Framework

24. Organization Designs for Corporate Entrepreneurship 4 Micro new Venture 1 Direct 3 2 Unrelated Partly related Operational relatedness Strongly related Very important Uncertain Not important Strategic importance

25. 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.

26. 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.