AT 6001 Fundamentals of Management of

Technology
Lecture 4
Technology Planning

Dr. Manzila Islam Tuheen

Assistant Professor
Institute of Appropriate Technology (IAT)
Bangladesh University of Engineering and Technology (BUET)
 9 Technology Planning

Learning objectives
 Technology Planning – the necessity
 Framework of technology planning
 Forecasting technology
 Methods of technology forecasting
 Technology audit and TAM
 Planning according to technology life cycle
 B-TECH approach to technology planning
 Chief technology officer (CTO)
 9.1 Technology Planning
Technology planning is a central component of corporate business planning. It is needed both at the corporate
level and at the strategic business unit (SBU) level. Large successful corporations view technology planning as vital
to their ability to offer customers superior value based on superior technology.
 There is a difference between strategizing and planning.
 Strategizing should be creative and revolutionary, while planning is systematic and follows established
methodologies.
 Whereas strategy determines the formula by which the firm intends to win, planning charts the procedures and
actions to be followed. Planning is essential for successful strategy implementation and evaluation.

Planning is a central managerial function leading to the other important management functions of organizing,
staffing, motivating, and controlling activities of an organization. The strategic planning time horizon may vary
according to the organization's objectives. Short-range plans of one to three years, midrange plans of three to
five years, or long-range plans of more than five years are common in industry.

The process used in planning is in itself at least as important as the plan developed. The process includes:
 Examining all points of view in the organization.
 Setting clear, realistic objectives.
 Charting a path or paths toward achieving those objectives.
 Obtaining commitment for execution.
 Executing and following up on the plan.
 9.1 Technology Planning (Cont.)
Porter et al. ( 1991) proposed a technology planning framework based on the work of Madox, Anthony, and
Wheatley (1987). This framework follows the general process of strategic planning used by many corporations.

 Forecast the technology: This is the starting point of technology planning. Project both internally owned
technology and that available in the marketplace over the planning period.
 Analyze and forecast the environment: Identify key factors in the organization's environment, potential
states of the environment, key uncertainties, major threats (especially competition) and opportunities.
 Analyze and forecast the market/user: The development of a requirements analysis that identifies the
current needs of major customers. It is imperative that this step includes direct contact with potential
customers.
 Analyze the organization: Delineate the major assets and problems; develop a catalog of available human
and material resources; and assess recent performance against stated objectives.
 Develop the mission: Specify critical assumptions; establish overall organizational objectives and specific
target objectives for the planning period; and specify criteria by which to measure the attainment of those
objectives.
 Design organizational actions: Create candidate actions; analyze and debate them; develop a consensus
strategy limited to a few key actions, possibly attendant on several key contingencies.
 Put the plan into operation: Develop timely sub-objectives, if appropriate; specify action steps, schedule,
and budget; develop tracking mechanisms; and specify control mechanisms in case performance falls
below established standards.
 9.1 Technology Planning (Cont.)

 Figure 9-1 shows a model suggested by Martin (1994), in

which technology planning involves top-down, bottom-up,
and sideways participation. This approach calls for
involving not only corporate or SBU managers, as may be
deemed necessary by the structure of the organization,
but also R&D, production, and marketing staffs.
 The arrows shown in Figure 9-1 indicate the directions of
information flow necessary for developing optimal plans.
The outcome is scenarios that identify the technologies
needed to achieve business objectives.
 9.2 Forecasting Technology
Forecasting provides visions of the future that can be used to guide actions of the present in anticipation of future
states. Technology forecasting (TF) is based on following established methodologies to forecast the character and
role of technological advancement.

 Traditional forecasting methods depend primarily on

projecting past performance into the future.
 This has an inherent weakness in that the future may
not behave like the past.
 Figure 9-2 shows three extrapolations of the possible
future growth pattern of a technology.
 Technology forecasters could have predicted that
technology of nuclear power plants would follow the
pattern of the top S-curve in Figure 9-2. Environmental
concerns and market conditions have forced a
change in the growth pattern of that technology.
 9.2 Forecasting Technology (Cont.)
 The problem of predicting the future is more difficult with technology that is experiencing rapid change.
Management must be able to predict discontinuities, which occur when one technology threatens to
replace another.
 S1 is the technology progress curve of technology 1.
 A company committed to that technology may decide to continue with it even though a replacement
technology, technology 2, designated by the technology progress curve S2 , might be looming on the horizon.

 A competitor using the second technology which has a

superior performance parameter, even though starting
late, at time t1 , will progress on an entirely new path,
and its technology will outperform that of the first
company.
 In this case, the first company’s strategy to protect
technology 1 will be futile in the long run, and
management must make the decision to migrate to new
technology 2 in a timely manner.
 There are many historical technological discontinuities-
the steamship replacing the sailing ship, the transistor
replacing the vacuum tube in electronics, and the
personal computer replacing the typewriter.
 9.2 Forecasting Technology (Cont.)
 Figure 9-4 shows S-curves of a series of transportation
technologies that contributed to the improvement of
transportation speed.
 Each technology follows its own S-curve to its natural limit of
performance. The upper envelope of the set of progress curves
of the different modes of transportation technology form a
cumulative overall progress-curve pattern for transportation
speed.
 Innovation pushes the envelope of the technology by defining a
new natural limit for transportation speed.
 In the meantime, each emerging technology threatens an older
one and may render it obsolete. For example, trains and
automobiles replaced the Pony Express.
 9.2 Forecasting Technology (Cont.)
 A technology forecaster predicts the natural performance limit
of each mode of transportation technology.
 Technology managers must use this information to guide
decisions about when to start using or abandon a technology
before the competition renders it obsolete.
 They can also use the information to make decisions about
investing in a new technology, R&D, or new products or about
acquiring a new company that has the technological capability
of the emerging mode of technology.
 Figure 9-5 is a plot of the technology S-curves of incandescent
lamps and fluorescent lamps, showing the rate of change of
the performance parameter in lumens per watt over time.
 9.2 Forecasting Technology (Cont.)
 In order to develop a good forecast, a technology forecaster must have a good understanding of
technology life cycles and the factors that influence technological development and the rate of innovation.
It is important for technology managers to understand the inherent strengths and weaknesses of each
forecasting technique.

 A good forecast must have:

 Credibility and utility.
 An accurate information base.
 Clearly described methods and models.
 Clearly defined and supported assumptions.
 Quantitative expression whenever possible.
 A stated level of confidence in the forecasted information.
 9.3 Methods of Technology Forecasting
Porter et al. describe five methods of technology forecasting: (1) monitoring, (2) expert opinion, (3) trend analysis,
(4) modeling, and (5) scenarios. Exhibit 9-2 provides a description of these methods, together with an analysis of
their strengths, weaknesses, and uses.

Exhibit 9-2 Forecasting Methods

Monitoring Expert Opinion

 9.3 Methods of Technology Forecasting (Cont.)

Exhibit 9-2 Forecasting Methods (Cont.)

Trend Analysis Modeling

 9.3 Methods of Technology Forecasting (Cont.)

Exhibit 9-2 Forecasting Methods (Concluded)

Scenarios
 9.4 Technology Audit
 A technology audit is an analysis performed to identify the strengths and weaknesses of the technological
assets of an organization. Its aim is to assess the firm's position in technology in relation to its competitors
and the state of the art.
 The technology audit is a continuous process of assessment, unlike some accounting audits, which typically
are performed on a one-time basis or at a specific date, such as the end of a year.

According to Ford ( 1988), a technology audit should provide answers to the following questions:
1. What are the technologies and know-how on which the business depends?
2. How does the company's technology position compare to its competitors? Is it a leader, a follower, or a laggard?
3. What is the life-cycle position on which the company depends?
4. Where is the company's strength? Is it in product or production technologies or a combination of technologies?
5. Is the company effectively protecting its distinctive core technologies?
6. What emerging or developing technologies, inside or outside the company, could affect its technological
position?
7. What is the value of the company's technology to its customers? Is there a big technology gap that gives the
company an advantage in knowledge as well as in pricing its products?
8. Does the company have a systematic procedure and a supporting organizational structure that allows optimal
exploitation of its technologies internally and externally?
9. Does the company have technological assets that it can share with other companies?
10. What social, political, or environmental factors might impede the natural progress of the company's
technological plans?
9.4 Technology Audit Model (TAM)
 9.5 Planning According to the Technology Life Cycle
 Whether to invest in technology is decided according to the competitive impact of the technology. This impact is
dependent upon the position of the technology on the S-curve (Figure 9-11 ).
 If the technology is in the embryonic/development phase but has not yet demonstrated potential for changing the
basis of competition in the future, it is considered an emerging technology. Companies interested in this
technology sector should monitor emerging technologies.
 If the technology is further along the curve of progress and has demonstrated its potential for changing the basis
of competition, it is deemed a pacing technology. Companies interested in being players in the technology
arena should consider investing selectively in pacing technologies (Figure 9-12).
 9.5 Planning According to the Technology Life Cycle
 Key technologies are those that have a strong impact on the value-added stream of performance, cost, and
quality. They allow a company to develop a proprietary position in products or processes. Key technologies are
essential to the success of companies.
 As technologies mature, they become known as base technologies. These are necessary for participation in
business, but they provide a firm with little or no competitive advantage . Base technologies are considered
commodities, usually available to all competitors.
 In the aging stage of technology, a company must have already developed its strategic options; otherwise, it will
suffer the consequences of going out of business.
 9.6 B-TECH Approach to Planning
 B-TECH views technology planning as a major set of activities much larger than the traditional planning for R&D
in companies. R&D is but one part of an overall technology planning effort that encompasses assessment,
creation, purchase, diffusion, and the protection of technology. Figure 9-13 illustrates important functions that
should be performed in a comprehensive planning effort.

 However, it proposes that each strategy initially follows a

separate development path before the two are fully
integrated. This initial separation in the planning effort is
desirable for several reasons:
 The two analyses require different inputs.
 The planning for the business and technology aspects of
the firm is often in a different state of development within
the company, or the two have not been developed in a way
that easily permits merging them.
 Because the business aspects of planning sometimes
submerge the technological ones in the "customary
analysis," it is important to create a corporate culture that
promotes the integration of technology and business and
prevents one element from overwhelming the other.
 9.7 Chief Technology Officer(CTO)
 A CTO's major role is to bring a technology perspective to bear on all strategic issues. The CTO is the
orchestrator of the company's technology strategy and is deeply involved in its coordination with the business
strategy as well as its implementation.
 A CTO's role is different from that of a vice president for R&D or a research laboratory director in that the CTO
oversees a comprehensive technology plan that extends beyond R&D. A CTO coordinates the forecasting,
acquisition, licensing, exploitation, and gatekeeping of all the technologies in the company's technology
portfolio.
 The CTO focuses on:
 Forecasting technology and analyzing prospective acquisition targets.
 Building the company's technical competence.
 Devising an acquisition plan for corporatewide technology resources and maintaining a healthy technology
portfolio.
 Conducting technology audits.
 Organizing programs of technical education to increase the skill level of employees.
 Ensuring that technologies are transferred and disseminated throughout the company.
 Protecting the intellectual and technological rights of the company.
 Exploiting other companies' technologies without compromising his or her company’s distinctive
competitive advantages.