A classification of models for technology strategy formulation
Mohammad Reza ARASTI, Mohammad Packniat
Last modified: 2007-09-08
Abstract
The paper reviews and compares models and frameworks discussed in the literature for crafting technology strategy at a firm level. Today, technology plays a crucial role in firms competitiveness. It needs therfore, like other sources of competition, to be managed based on a strategic point of view. The first and most important step of technology management is to develop a long-term strategic plan which determines firms investment priorities and preferences in the field technology development, called Technology Strategy. Technology strategy is concerned with, but not limited to, the following questions:
1. What are the technologies which the companys sustainable competitiveness depends on?
2. Are these technologies all available or feasible?
3. What are the appropriate ways of acquisition for those technologies should be acquired from outside?
4. How can we ensure that we make best ROI in technological assets/capabilities/competencies?
Different models and frameworks have been developed by practitioners as well as academicians in order to help companies top manager in technology strategy formulation. But, firms in different sectors, with different sizes and thus different characteristics may find it difficult to choose the proper model, the most pertinent to their situation. This is because for majority of firms managers is difficult to identify differences between models, their strengths and weaknesses and their limits of applications.
Technology strategy, as a process, consists of three elements: Inputs, Transformation and Outputs. However, inputs are reliant to outputs and transformation process and can not be decided independently. In fact, the type and characteristics of desired outputs as well as the content and sequence of activities should be done in each stage of process determines the required inputs.
The aim of this paper is to evaluate and compare different models and framework regarding their outputs and transformation process.
Processes (technology strategy formulation processes) are evaluated according to the following questions:
1. Whether they are based on positioning or resource-based school of strategic planning?
2. Whether they consider strategic planning as a rational or incremental process?
Our investigation shows that models proposed by Porter, McKinsey, A.D.Little and Hax & Majluf belong to positioning school, and those ones proposed by Chiesa, Burgelman et al. and Tidd et al. belong to resource-based school of strategic planning. A spectrum from the most positioning to the most resource-based models has been also elaborated, using the criterion proposed by Chiesa.
We also argue that models proposed by Chiesa, Burgelman et al and Tidd at al. are developed upon an incremental point of view, while other models such as Porter, Hax & Majluf, McKinsey and A.D.Little are rather based on a rational point of view.
Regarding the outputs of technology strategy, two following bases are taken into account in order to clarify models differences:
1. Decisions linked to technology strategy for which each models is developed. (Which questions mentioned above are supposed to be answered by each model?)
2. The Type of output. According to Mintzberg, the output of strategic planning process, including technology strategy formulation process, may compose of 5Ps: Position, Perspective, Plan, Ploy, and Pattern. Which one of these Ps is considered in each model?
The results of investigation show that every model has a specific set of targets (full paper discuses in detail). However, the majority of models consider three main decisions related to technology strategy: selection (priorities) and mode of acquisition and timing.
From 5Ps of Mintzberg, we have only studied three Ps (Pattern, Position and Plan) and argue that models developed by Chiesa, Burgelma et al. and Tidd et al. accept all three Ps as the essence of strategy. While, models developed by Porter, Hax & Majluf, Ford & Saren, McKinsey and A.D.Little only looks at the strategy as a Plan and Position.
Based on the mentioned evaluations, a classification of models is proposed which helps companies to choose a proper model of technology strategy formulation regarding their specific conditions.
1. What are the technologies which the companys sustainable competitiveness depends on?
2. Are these technologies all available or feasible?
3. What are the appropriate ways of acquisition for those technologies should be acquired from outside?
4. How can we ensure that we make best ROI in technological assets/capabilities/competencies?
Different models and frameworks have been developed by practitioners as well as academicians in order to help companies top manager in technology strategy formulation. But, firms in different sectors, with different sizes and thus different characteristics may find it difficult to choose the proper model, the most pertinent to their situation. This is because for majority of firms managers is difficult to identify differences between models, their strengths and weaknesses and their limits of applications.
Technology strategy, as a process, consists of three elements: Inputs, Transformation and Outputs. However, inputs are reliant to outputs and transformation process and can not be decided independently. In fact, the type and characteristics of desired outputs as well as the content and sequence of activities should be done in each stage of process determines the required inputs.
The aim of this paper is to evaluate and compare different models and framework regarding their outputs and transformation process.
Processes (technology strategy formulation processes) are evaluated according to the following questions:
1. Whether they are based on positioning or resource-based school of strategic planning?
2. Whether they consider strategic planning as a rational or incremental process?
Our investigation shows that models proposed by Porter, McKinsey, A.D.Little and Hax & Majluf belong to positioning school, and those ones proposed by Chiesa, Burgelman et al. and Tidd et al. belong to resource-based school of strategic planning. A spectrum from the most positioning to the most resource-based models has been also elaborated, using the criterion proposed by Chiesa.
We also argue that models proposed by Chiesa, Burgelman et al and Tidd at al. are developed upon an incremental point of view, while other models such as Porter, Hax & Majluf, McKinsey and A.D.Little are rather based on a rational point of view.
Regarding the outputs of technology strategy, two following bases are taken into account in order to clarify models differences:
1. Decisions linked to technology strategy for which each models is developed. (Which questions mentioned above are supposed to be answered by each model?)
2. The Type of output. According to Mintzberg, the output of strategic planning process, including technology strategy formulation process, may compose of 5Ps: Position, Perspective, Plan, Ploy, and Pattern. Which one of these Ps is considered in each model?
The results of investigation show that every model has a specific set of targets (full paper discuses in detail). However, the majority of models consider three main decisions related to technology strategy: selection (priorities) and mode of acquisition and timing.
From 5Ps of Mintzberg, we have only studied three Ps (Pattern, Position and Plan) and argue that models developed by Chiesa, Burgelma et al. and Tidd et al. accept all three Ps as the essence of strategy. While, models developed by Porter, Hax & Majluf, Ford & Saren, McKinsey and A.D.Little only looks at the strategy as a Plan and Position.
Based on the mentioned evaluations, a classification of models is proposed which helps companies to choose a proper model of technology strategy formulation regarding their specific conditions.
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