Criteria for Public Support of Common Industry Initiatives (or) How to create/avoid Industrial Policy

Essential Guidelines Clearly set goals Identify the public interest based on....? Set a target -- when does it end? Cost sharing arrangement: public/private Identify the market expected to emerge Periodically reassess the objective Set the rules to qualify up-front What’s the exit criteria?

Technology Strategy & Applying Core Competence PPA

What’s Technology Strategy? A Component of the larger Business Strategy Means to accomplish an end Differentiates Products and/or Reduces Cost Used to sustain or expand to new markets?

Strategy Substance Achieve differentiation/gain competitive advantage use of technology across chain resource commitments organization design and management

How is Technology viewed? As an R&D enterprise Input to long-range planning Meeting short term goals Is the technology integral to meeting strategy objectives? How is technology monitored? Incentives

Technology Strategy Identify technology competence and capability to establish/maintain competitive advantage Which technologies for core products? Financing technology development “Make vs. Buy” decision When and how to introduce How should the technology be managed

Example: product acceptability Functional performance acquisition cost use characteristics operating cost relability serviceability compatibility

Example: product acceptability Early phase of introduction, customer orientation is toward functional performance Significance dwindles as market/product matures process innovations must occur after design selected and mkt identified what is maximum profitability achieved?

Elasticity of Technology Demand Responsiveness to improvements in Technology Applications Absolute: Demand is relatively unaffected by changes to selected applications Relative: Demand shifts market shares based on responsiveness to applications

What’s Core Competence? Provides access to markets Makes a significant contribution to perceived customer benefit of product Difficult for competitors to imitate

Organizing Core Competence Strategic Business Units, or Competence focus? Relationship of people, capital, and assets to applications of competence Counter to “decentralization”? shared common functions? Once decided what it is and how to apply it:

Be a Leader? Develops reputation with users Seizes market position Establishes switching costs First access to supply/distribution channels Defines industry standard Establishes regulatory regime (patents, etc.) Early profit potential

Be a Follower? Avoids pioneering cost Permits demand patterns to emerge Clarifies user/customer needs Enables selection of the technology application consistent with core competence Potentially avoids substantial capital investment

Technology Evolution vs. Strategic Action “S” Curve: Performance vs. Time “Learning Curve” Product vs. Process “Complementary assets” -- or has the new technology created a need for new things? Response to new or emerging technologies? Moving from “specialty” to “commodity” “ The Vision Thing” or “Where do you want to be in the industry”

What’s the relationship to public policy choices? Is the industry seeking support of its core competence Or it’s strategic business unit? Does the public support substitute for industry technology strategy? Is the support for technology development or development of core competence?