Technological strategy

Technological strategy is the process by which companies use their technological resources to achieve its objectives. Technological strategy is the way a company chooses to acquire, develop and use technologies. A closer definition content deemed “technological strategy is the task of building, maintaining and exploiting technological assets of the company”. The purpose of technology strategy is to identify, develop and foster technologies that will be crucial for long-term competitive position of the company. These technologies have the potential to create value for customers. A coherent technology strategy focuses explicitly on customer requirements, as identified today and what is likely to become in the future.

Technological strategy is part of overall corporate strategy and business strategy, and technological decisions must be consistent with corporate strategy. Once the company has identified technology needs of the company, she is faced with a decision to make or buy. If you decide to manufacture the technology, it will be necessary to carry out a process for developing product/process. However, if the company decides to buy the technology, it will engage in a process of acquisition of the technology.

Burgelman et al. (2004) suggests that to facilitate the formulation of technology strategy must answer the following questions:

• which are the essential technological skills necessary for a company to gain and maintain competitive advantages?
• what technologies should be used and incorporated into essential products?
• which are the sources for technology?
• when and how to introduce new technology to the market?
• what kind of organization is needed for technology management?

Technology strategy formulation process includes three main steps:

• technology assessment that includes identification technologies, analyzing the competitive impact of technologies, and technological capability assessment of the company;
• selection of technologies;
• defining technology portfolio.

Technology assessment

Technology assessment involves gathering information on the current status and future technology development, assessing the importance of each technology in the context of competition and the company’s technological capability in each technology. Technology assessment will have to analyze and evaluate the desirable and undesirable consequences, opportunities and risks of technologies, both the existing (established) and new technologies, innovations obtained.

The first phase of technology assessment is to identify technologies. This identification involves:

• Detailed analysis of the structure of the company’s technology portfolio, that includes product technologies (included in the product) of the production technology and technology support (information technology resources, software packages, communication networks, etc.);
• Evaluation of those technologies that may impact the future. These are emerging technologies;
• Analyze the competitive impact of technologies. This review aims to evaluate the importance of each technology for the competitive position of the company on the market. Examples of successful competitive factors relating to the products obtained by different technologies can be: functional performance, sale price, facilities usage, operating costs, reliability, maintainability. As a result of this analysis can determine which critical (decisive) technologies, ie technologies with the greatest impact on competitive factors of success and that bring the biggest competitive advantages for the company. Based on this analysis will be possible to select and prioritize business-critical technologies. As a result of this phase is possible to obtain a list of critical technologies and priorities.

Assessment of technological capability of the company

This evaluation aims to determine the capability of the company in each critical technology compared to leading competitors. Capability assessment provides a measure of the risk associated with technology development: the capability level is lower, the higher the risk involved in adopting technology.

Technological capability variables to be considered are:

• The R-D funding;
• Human resources: the extent and level of available qualifications;
• Equipment, devices and laboratories;
• Patents and other types of intellectual property;
• Allocation of funds for incremental and/or radical innovations.

Assessment of technological capability of the company allows identifying variables that need to be improved relative to a particular technology (equipment, human resources, etc.)

Selecting technologies

The large number of technological alternatives for a company can be reduced by classifying technologies based on competitive advantages they offer. This classification highlights the critical technologies for which the company must prioritize investments. The result of this stage of selecting technologies will be a list of priorities contained in a technology action plan.

In the case of very complex manufacturing systems, the selection of technologies must specify the new system of manufacturing in the future state that will satisfy planning technologies. The new manufacturing system results from a combination of existing technologies in its present state (hardware, software, equipment, procedures and processes) with new or modified equipment and existing staff and new, featuring new skills. Specifying new manufacturing system is a process with a high degree of creativity, which depends on the skill of experienced system engineers, manufacturing constraints, existing environment, the state of existing technologies, the degree of familiarity with new technologies.

Defining portfolio of technologies

In this stage of formulating the technology strategy is determined the set of technologies to be addressed in the long term, ie is performed an analysis of selected technologies. This analysis may indicate the need for the following actions:

• Increase the budget available to allow development of a broader set of technologies;
• Development of projects for technological development and research;
• Consideration of external sources of technology acquisition.

Foreign acquisition can achieve very different ways, for example:

• Research consortia;
• Contract with a research institute or university;
• License;
• Joint venture;
• Strategic alliances between companies.

Masayuki Kondo (2001) considers that there are three ways (ie strategy) for the technological industrial development of a country:

• The introduction of foreign technology;
• Improving existing technologies;
• Development of indigenous technologies through formal or R-D production experience.

In the early stages of technological development of developing countries, technology acquisition is the most important.

Acquisition of technologies from abroad is possible through foreign direct investment (FDI) by the “build, operate and transfer” system, licensing, transfer of know-how, consultancy and so on. FDI brings not only technology but also management skills and connections to markets.

With the “build, operate and transfer” system, foreign investors build, manage and operate factories or plants or other large projects until their investments are recovered. To fully use imported technologies is important for these technologies to be assimilated and disseminated. Then these technologies are improved and new technologies are developed on their basis. Japan’s experience has shown that imported technology must be accompanied by internal R-D to assimilate imported technology and adapt this technology to domestic conditions.