Strengthening SME Capacities

through
Technology Management
Business Definition
Customer Functions (What)

Customer Group (Who)

Alternative Technologies
(How)

Ack.: Derek Abell - Defining the Business: Starting Point of Strategic Planning
Porter’s Generic Business
Strategies
Broad
Target Cost Leadership Differentiation

Narrow
Focussed Cost Focussed
Target
Leadership Differentiation

Low cost products /

services Differentiated products /
services
Building Competitive Advantage
Around Technologies
 In the globalized world, mobility of the
capital, communication and transport
technologies diminish competitive
advantage
 Thus businesses have more difficulty
finding ways of differentiation
 The alternative is to be more and more
innovative through use of technology in
products, services and processes
Build Competitive Advantage
Around Technologies
 Businesses must therefore build competitive
advantage around technologies
 Develop and implement Technology
Strategy in the same way as the financial,
marketing and operational strategy.
 Integrate this strategy with the environment,
customers, suppliers and other relevant
agencies for the Firm.
The Value Chain and
Technology
 Competitive advantage is based on firm specific

combination of scientific and technical knowledge

and know-how
leading to
&
embedded in
products, services and management systems
 Technologies are embedded not only in product
but in all the primary and support activities of the
Firm.
Competition and demanding customers
have shifted the balance to demand side

 Industry has been moving away from

traditional high volume / low variety model
to low volume / high variety situation to
serve market niches
 Further complications because of shortened
product life
(Each model change requires changes in plant
lay out, handling / transport, storage and skills)
Customer Satisfaction through
Non-Price Factors

The emerging trend is to move away from

low cost production to higher added value
through non-price factors like design,
quality and reliability
Changing Basis of Competition
Non Price Factors
Customers Demand
 More variety
 More customization
 Frequent model changes
 High quality
 Faster delivery
 Better Service
 Advanced design
Understanding the Technology
Management Challenge
 Traditional trade offs – between price and
quality or between price and choice – are
replaced by competitive prices and whole
set of non-price factors.
 Quality used to be a differentiator earlier -
now if you cannot offer quality, you cannot
be in the market.
 “Order Winning” factors are replacing
“Order Qualifying” factors
Managing Globalization
 Managing Technology
 Managing Finance
 Managing Market
 Managing Digital Divide

Technology is the key asset for a

Firms competitiveness
Interplay of Technology Elements

HARDWARE HUMAN RESOURCES

TECHNOLOGY

TECHNICAL INFORMATION ORGANISATIONAL FRAMEWORK

STRATEGY:
SUPPORT THESE DISTINCT ELEMENTS TO IMPROVE TECHNOLOGY
CAPABILITY OF SMALL INDUSTRIES
The Imperfect Technology
Market
 Technology is a marketable commodity
 Technology transfer is a commercial
transaction between seller & buyer
 Technology ownership is protected by
proprietary rights
The Technology Market is
Imperfect
 Critical information is closely guarded and
price is determined by relative bargaining
positions of the seller & buyer

 A buyer with high technological capability

stands a better chance of negotiating
favourable terms
Technology Creation at Users End
 Successful technology upgradation process
would include acquiring the knowledge
needed to face the changes and internalizing
the knowledge so acquired.

 Thus stress has to be on the process of

technology creation at the level of the user
rather than transfer of technology,
production techniques or equipment.
Technology Creation at Users End
 While transfer of technology puts the emphasis on
the supplier, technology creation process puts the
emphasis on the user by trying to solve a specific
problem in a given context.

 The supplier can deliver information and services,

the user has to know his precise requirement

 Thus in the technology creation process the role of

the user is much increased and the role of the
supplier is relatively reduced.

Ack: J.D. Bandt (CNRS, France)

Innovations Drive
Competitiveness
Three dimensions around which
developments take place in a commercial
entity :
 Product: new or modified,
 Market: new or existing,
 Technology: new or existing
Each change in one or more of the
three dimensions will be an innovation
The Value Chain and
Technology
Firm Infrastructure M
Support

A
Human Resource Management R
Activities

G
Technology Development I
N
Procurement
M
Primary

A
Inbound Outbound Marketing Service R
Operations
Logistics Logistics and Sales G
I
N

Acknowledgement - UNIDO: Guidelines for the Formulation of

Technology Strategies for Hi-tech Companies
The Dynamic Nature of
Technology
 Developing a Technology Strategy is
complex due to ever changing nature of
technology.
 Simultaneous MARKET PULL &
SCIENCE PUSH ensure rapid changes in
technology in various sectors
 Pace of technological change is dictated by
high investment in R&D in developed
countries
The Dynamic Nature of
Technology
Hitting a moving target …
Dimensions of the challenge:
 Range of factors is increasing
 Price remains important
 Increasing non-price factors
 Changing pattern of key factors
 Firms need to be agile, able to react and
keep up with changes
Managing Technology

The tree
 draws on its roots
– the underlying knowledge base
 and develops branches
– the structured arrangement of technological knowledge
 on which fruit
– new products, processes and services
 can grow
Key Trends
 Emergence of major new fields
– Biotechnology
– IT & Communication technology
– New Materials
– Micro machines / nano technologies
 Integration and blurred boundaries
– Integration within activities
– Integration between activities
– Integration between processes
– Integration between organisations
Key Trends (contd.)
 New organisational concepts
– Cellular organisation
– Lean Manufacturing
 Increasing
– rates of change in technologies and products
– expenditure on R&D
– linkages and alliances to coop with complexity
 Parallel rather than sequential development
Technology Mapping
Basic / Generic Technologies, Proprietary Technologies,
Pacing Technologies and Emerging Technologies

Possible future
products / Keep
Can use watching
processes but need
to keep
Planned new Keep
track of Invest in
products / close
best R&D
processes watch
sources of
supply
Core products / MUST
processes MAINTAIN

Basic Proprietary Pacing Emerging

Managing Technology
In order to grow organisations do not just have to
build technological competence – they are also
have to learn how to do this effectively.
 What are the best ways for acquiring and
deploying knowledge?
 How can it be done with a high chance of success?
 How can the learning processes around an
organisation be integrated and captured?
Managing Technology

Experience

Experiment
Reflection

Concept
Tools and mechanisms for effective
learning of technology management
Reflection Conceptualise Experiment Experience

Post project Theories and Testing and Capture

reviews models prototyping experience – on
video, via diaries
Benchmarking New structures R & D activities
project records,
and process
etc.
designs
Sharing
Structured audits Formal planning Designed experience – via
reviews experiments and display, direct
simulations exchange, etc.
Project evaluation Training and Documentation
development
Measurement Pilot projects

Ack:- Learning Cycle (Kolb & Fry)

Impact of Technological Change
 Technological change allows firms to
produce the same rate of output using fewer
inputs
 Technological change may be input neutral,
labour saving or capital saving
 Single most source of economic growth in
the USA has been “Technological Change”
Response Strategy to cope with
Change
 Positioning :
• Is the SME dependent on a single large
company?
• Is the SME dependent on a large number of
small customers?
• Is the SME vulnerable from a supplier
perspective?
• What are the risks and the opportunities to this
position being engendered by the new
commercial context as identified?
Response Strategy to cope with
Change (Contd.)
 Processes
• What is the process that is used in the manufacture of the
product?
• Do we clearly understand it?
• Is there a different way of achieving the same end result?
• What are the elements and chemicals used in its
manufacture?
• What are the environmental resources used?
• Is there a licensing implication in the process?
• Are there risks from the stakeholder circle?
• Is the process amenable to change?
• What type of precaution, prevention and elimination ideas
could be generated?
Response Strategy to cope with
Change (Contd.)
 Products
• What product is the company making?
• Is that product environmentally acceptable?
• Are there short-, medium-, or long-term risks in
the continuation of this product?
• Should this product be re-designed to take
account of the environmental issue?
• What are the risks and what are the
opportunities presented?
Response Strategy to cope with
Change (Contd.)
 Technologies
• Have technologies moved on?
• Is there an opportunity to innovate with
technology?
• Is there room to modify existing technologies?
• Could these technologies be better used?
• Is operator training adequate?
• What are the risks in opportunities?
Response Strategy to cope with
Change (Contd.)
 Competitors
• Who are the enterprises competitors?
• Who are the local, national and international
competitors?
• What are these competitors doing?
 Are they designing products and processes for the
environment?
 Are they marketing their products in an innovative way?
 Are they driving down costs through environmental
innovation?
 What risks do I face in comparison to my competitors?
TECHNOLOGY CLIMATE
 Uniform measures for technology
upgradation may not succeed even in the
same sector of industry as measures adopted
at different places can yield different results
due to technology climate being different
from one region to another and from one
sector to another. In a supportive
technology climate, better results would be
obtained than in a less supportive climate.
Quality Function Deployment
Allocating Design & Mfg. Resources to Features
Most Valued by Customer
Product Feature Customer Your Product Competitor A’s Competitor B’s
Weightage Score Total Score Total Score Total
Price 6 10 60 5 30 8 48

Operating Cost 8 8 64 8 64 10 80

Performance 3 7 5 35 6 42 6 42

Performance 4 10 9 90 10 100 7 70

Feature 5 2 10 20 5 10 4 8

Feature 6 5 6 30 4 20 10 50

Feature 7 7 0 0 10 70 0 0

Feature 8 3 10 30 0 0 5 15
Total 329 336 313

Ack. QFD Institute

Accessing New Technologies
Literature shows eleven ways to access new technologies
2. In-house R&D
3. Non-equity R&D joint ventures
4. Equity R&D joint ventures
5. Equity R&D consortia
6. Sub-contracted R&D
7. License purchase
8. Patent purchase
9. License swap
10. Specialists recruitment
11. Firm take-over
12. Joint take-over
Key Factors of Change

Science Technology Innovation

Best of Institution-Industry Linkages

Industry-Institution Linkages

R&D labs &

Industry
Institutions

Technology
Best Practices
Innovation
PROBLEM

How to introduce market oriented behavior into the

R&D system?

RESULTING IN

Improvement in the level of commercialization of

R&D results
 IMPROVE THE LINKAGES BETWEEN
PRODUCTION SECTOR AND R&D
INSTITUTIONS THROUGH

– Establishment of technology promotion

centers.

– Increased participation of end users in the

decision making process .
Developing Technology Linkages

 Develop / Improve linkages between basic &

applied research through cooperative relationship
with industrial enterprises.

 Combine the production capabilities (engineering

/tech) of the enterprises with the intellectual
capabilities of research organizations.
Developing Technology Linkages
 Establish applied research companies to take up contract
research for private companies.

 Promote horizontal linkages among firms - adopt

consortium approach for setting up common R&D
facilities.

 Competing enterprises within and across national borders

are forming strategic alliances for joint R&D.(European
networks like ESPIRIT for information technology, RACE
in telecom, BRITE in manufacturing technology, EUREKA
in high technology)
Developing Technology Linkages
 Encourage inter company strategic alliances extending to
developed countries. e.g
– Singapore govt. initiated Digital Media Consortium bringing
together three public research institutes and three local multimedia
companies to collaborate with Media Lab at MIT,USA.
– Power PC Consortium in Taiwan collaborating with Motorola &
IBM to develop personal computer products using Power PC
microprocessor.

 Network R&D systems in the region to disseminate

information at national level about new technologies for
small &medium enterprises.
Developing Technology Linkages

 Create dedicated web portals facilitating

technology search

 Develop suitable entrepreneurial courses for scientists and

research personnel.
Encourage secondment of research personnel to
industry particularly during commercialization of
research projects.

 Establish Science & Technology parks and business

incubators.
Developing Technology Linkages

 Technology blending can create new markets. (Integration

of newly emerging technologies with traditional
technologies)

 Legal framework - no linkages can work without strong

government support.
Reward risk takers and utilize the dynamism of private
sector
International Cooperation Initiatives

Identify strong and viable Indian Enterprises and

play upon their strengths

Thrust is on sustainable
partnerships
and not on one-way transactions
International Support Initiatives
 Strengthening the present activities:

• Exchange of Business/Technology missions

with various countries.

• Facilitating Enterprise to Enterprise

cooperation, JVs, Technology Transfer &
other forms of sustainable collaboration.
International Partner Institutions

Small Business Corporation (Formerly known as Small & Medium

Industry Promotion Corporation - SMIPC), South Korea

Taipei World Trade Center (TWTC), Taiwan

Bundesverband Mitteistandische Wirtschaft (BVMW), Germany

Confederation Of Small Industries (CONFAPI), Italy

Israel SMEs Authority , Israel (Formerly SBAI)

Social Fund for Development (SFD), Egypt

Proposed model for PDTCs – Fostering Industry-Institution
Linkages
Data & Information
Universities Center Intranet
High Tech
Companies
Technology
Pole I Specialized projects

Research Labs Training

Regional Pole
Technology or Technology Fund
Pole II Management Mobilization
Center
Govt./Local
body relations

Technology
Pole n Project 1 P2 P3 Pn
Acknowledgement

Material in this presentation has been taken

from various UNIDO publications including
UNIDO - ICS Trieste Manual on
Technology Management