Technology acquisition Technology Management Activities and Tools Asst. Prof. Dr. Yavuz Selim ÖZDEMİR1

Discuss: What are the decision criteria for technology acquisition? Asst. Prof. Dr. Yavuz Selim ÖZDEMİR2

Acquisition channels (1) BUY Sponsoring university research Sponsoring university research External R&D centers External R&D centers Consultants Consultants Licensing agreements Licensing agreements Vendors/ suppliers Vendors/ suppliers Acquiring machinery or the firm Acquiring machinery or the firm Asst. Prof. Dr. Yavuz Selim ÖZDEMİR3

Acquisition channels (2) MAKE R&D R&D Asst. Prof. Dr. Yavuz Selim ÖZDEMİR4

Acquisition channels (3) COLLABORATE Consortia Consortia Joint ventures Joint ventures Sub-contracting Sub-contracting Asst. Prof. Dr. Yavuz Selim ÖZDEMİR5

Make or buy or collaborate decision depends on: (Chiesa and Manzini, 1998) 1) strength of the organization’s own capabilities (relative costs) 2) respective transaction and governance costs contract price, cost of information, monitoring performance, committing specific assets, handling complexity in reaching agreements contract price, cost of information, monitoring performance, committing specific assets, handling complexity in reaching agreements 3) dynamic transaction costs costs of persuading, negotiating, coordinating, and teaching outside suppliers costs of persuading, negotiating, coordinating, and teaching outside suppliers Asst. Prof. Dr. Yavuz Selim ÖZDEMİR6

There is no ONE best organizational form! There is no ONE best organizational form! The firm is not only “profit maker” but innovator so it should have profits and scale necessary to finance the overhead expenditures requried to anticipate change and create “future values”. The firm is not only “profit maker” but innovator so it should have profits and scale necessary to finance the overhead expenditures requried to anticipate change and create “future values”. Asst. Prof. Dr. Yavuz Selim ÖZDEMİR7

BUY option Asst. Prof. Dr. Yavuz Selim ÖZDEMİR8

The reasons behind technology acquisition Limited resources Limited resources Time pressure Time pressure Complementary assets Complementary assets Protecting image Protecting image Diversification Diversification Supporting internal technologies Supporting internal technologies Avoid development risks Avoid development risks Asst. Prof. Dr. Yavuz Selim ÖZDEMİR9

Expected resulting impacts of technology acquisition productivity productivity quality quality product development cycle product development cycle labor-management relations labor-management relations accuracy of the information flows accuracy of the information flows production costs production costs flexibility (volume, machine, process,..) flexibility (volume, machine, process,..) maintenance costs maintenance costs service performance service performance sales sales Asst. Prof. Dr. Yavuz Selim ÖZDEMİR10

Steps in technology acquisition Goal setting Goal setting Technology & Impact assessment Technology & Impact assessment Finding technology suppliers Finding technology suppliers Acquisition channel Acquisition channel Choosing acquisition method Choosing acquisition method Contract preparation and negotiation Contract preparation and negotiation Technology transfer Technology transfer Managing long-term collaboration Managing long-term collaboration Asst. Prof. Dr. Yavuz Selim ÖZDEMİR11

Collaboration option Asst. Prof. Dr. Yavuz Selim ÖZDEMİR12

The content of the collaboration (Chiesa and Manzini, 1998): 1) Definition of the content 2) Firm’s familiarity 3) Relevance for the firm’s competitive adv. 4) Technology life cycle 5) Level of risk 6) Appropriability of the innovation 7) Phase of the innovation process 8) Level of assets specialization 9) Divisibility of assets Asst. Prof. Dr. Yavuz Selim ÖZDEMİR13

What are the issues when managing external suppliers and alliance partners? Asst. Prof. Dr. Yavuz Selim ÖZDEMİR14

Issues in Collaboration network design: Aim Aim Partners Partners Duration Duration Contract Contract Management Management Investment / Re-engineering Investment / Re-engineering Division of labour Division of labour Strategy Strategy Asst. Prof. Dr. Yavuz Selim ÖZDEMİR15

How to decide on the type of Collaboration network? The objective of the collaboration The objective of the collaboration The content of the collaboration The content of the collaboration The type&structure of partners involved The type&structure of partners involved Asst. Prof. Dr. Yavuz Selim ÖZDEMİR16

R&D Asst. Prof. Dr. Yavuz Selim ÖZDEMİR17

Open Innovation Research DevelopmentCommercialisation Core Market Focus Company Boundaries Products in-sourced (e.g. Co-branding) IP in-licensing IP out-licensing Technology Spin-outs Ideas & Technologies Source: Chesborough 2003 and Docherty 2006 Asst. Prof. Dr. Yavuz Selim ÖZDEMİR18

The key tasks in designing new process are as follows (tushman and andersen (2004) 1) Identifying process for innovation 2) Identifying change elements 3) Developing process visions 4) Defining business strategy and process vision 5) Understanding existing processes 6) Understanding the structure and flow of the current process 19Asst. Prof. Dr. Yavuz Selim ÖZDEMİR

The key tasks in designing new process are as follows (tushman and andersen (2004) cont. 7) Measuring the performance of the current process 8) Designing and prototyping the new process 9) Implementing and operating the process and associated systems 10) Communicating results and building commitment 20Asst. Prof. Dr. Yavuz Selim ÖZDEMİR

Tools for new product development 1) Design for asembly 2) Design for manufactring 3) Design for serviceability 4) Design for testability 5) Design for environment 6) System engineering 7) Value analysis and value engineering 21Asst. Prof. Dr. Yavuz Selim ÖZDEMİR

New ProcessDevelopment 22Asst. Prof. Dr. Yavuz Selim ÖZDEMİR

Procter&Gamble Case (1) Collaborations: Open Innovation (Sakkab, 2002) Asst. Prof. Dr. Yavuz Selim ÖZDEMİR23

P&G Case (2) P&G is a technology-rich company: patents, 4000 unique titles and 3000 new patents each year. P&G is a technology-rich company: patents, 4000 unique titles and 3000 new patents each year. It invests $1.8 billion annually on R&D. It invests $1.8 billion annually on R&D. Even though P&G use less than 10 per cent of its own technologies in company products Even though P&G use less than 10 per cent of its own technologies in company products Asst. Prof. Dr. Yavuz Selim ÖZDEMİR24

P&G Case (3) Internal website, innovators across R&D, Engineering, Market Research, Purchasing, and Patent Divisions. Internal website, innovators across R&D, Engineering, Market Research, Purchasing, and Patent Divisions. 600 websites for Global Project Teams 600 websites for Global Project Teams Individual problem-solving and connection-making websites for 20 Communities of Practice. Individual problem-solving and connection-making websites for 20 Communities of Practice. Nearly 9 million documents on line, growing daily. Nearly 9 million documents on line, growing daily. Automation and artificial intelligence Automation and artificial intelligence the latest in webcasting and satellite technology to create an internal Innovation News Network the latest in webcasting and satellite technology to create an internal Innovation News Network Conducting a deal-making/technology trading expo Conducting a deal-making/technology trading expo over 2200 ideas for new products and important new uses of P&G and external technologies over 2200 ideas for new products and important new uses of P&G and external technologies Asst. Prof. Dr. Yavuz Selim ÖZDEMİR25

Asst. Prof. Dr. Yavuz Selim ÖZDEMİR26