SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Technology Management Class 5: Managing Advanced R&D John A. Hengeveld February 4, 2003

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Subjects to Hit today Written Assignment for next week: SGI Case Articles: –Managing Ambidextrous Organizations – continued Tim Bennington-Davis Take 2 Product Development at Dell – Yet another laptop problem.

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Advanced Technology Development Keys to remember… Fundamentally about KNOWLEDGE. Access to knowledge shared broadly generates a faster rate of learning. Must be informed by BUSINESS strategy and systemic realities. John Hengeveld method: Challenge advanced technology development to solve critical customer problems in new ways.

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Ambidextrous Organizations Congruence Model – from the book this was a part of.

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Congruence Model Tushman and O’Reilly Formal Outputs Balanced ScoreCard: Financial Growth Profitability CUSTOMER Internal Learning and Growth Environment Resources History Formal Organization Financial Systems Organizationa l Structure Policies Etc Informal Organization - Characterize the Way things Really get done People Management Training Technical Skills Functional Skills Long term development needs Strategy Critical Tasks - The few key tasks whose success is essential to implementatio n of strategy

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Key to Congruence Analysis Assess the degree of alignment of each “link” Organizations where these 7 items are “congruent” (represent the same shape and size, although projected into different axis) have a far superior chance of successful implementation to strategy The agenda for change is fixing the links.

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Technology Cycles Rate of Innovation Time Product innovation Process Innovation Substitution Event DD

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Examples of Technology Cycles VCR Audio Recording and Distribution Computers? Telecommunication?

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Types of Innovation and Innovation Streams T&O, Winning Through Innovation, figure 7.3 Inexpensive Mechanical Watch Smaller, Thinner Mechanical Watches Swatch Continuous Aim gunfire First Watch Quartz Watch New Existing Markets Incremental Small Extensions of Existing Technology Architectural Reconfigures Existing Technology Discontinuous New operating principles in Core Subsystems&/or Discontinuous Process innovation

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Organizational Cycles The success syndrome FIT SUCCESS Size and Age Inertia: Structural Cultural Success in Stable Markets Failure in Market Shifts

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Ambidextrous Organizations from WTI, figure 7.6 Executive Team Provide Clear, Simple Vision Balance Multiple Architectures Makes Bets on Shifting Innovation Manage Ambidextrously Today/Tomorrow Large/Small – Incremental/Discontinuous Inc Culture Promoting Continuous Improvement Incremental Change Eliminate Variability Reward Volume & Cost Arch Culture Promoting Linkage Across Units Adding and Linking Subsystems Reward Integration Disc Culture Promoting Breakthroughs Many Small Failures Learn by Doing Reward Experimentation and Innovation

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Dell Product Development Case

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Dell Product Development Discussion Questions: 1.What are the competitive forces shaping the computer industry in 1993? 2.What is the state of Dell Computer prior to and including 1993? Financially? Market Strategy? Products? Development Processes? 3.Why has Dell Senior Management introduced the 18 month process? What problem were they trying to solve? 4.What battery option should the Holliday team select?

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Exhibit 6-1: Basic Elements of a Project Management Framework Senior Management Review and Control Real Time/Midcourse Correction Product Definition (scope, bounds objectives) Project Org and Staffing Project Management and Leadership (Phases, task management, checkpoints) Problem Solving, Testing and Prototyping Shipment

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Managing Development Flexibility In today’s fast moving environments, the ability of business processes is key to competitive success. In high product complexity situations, traditional management approaches for forecasting future needs is reduced. “Development flexibility” is the turning radius of a firm. Managers can be more responsive to change and become less reliant on accurate long term forecasting

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Steps in Managing Flexibly Adopt Flexible Technologies –Find technologies that allow for fast and los cost design changes Adopt Flexible Management Processes: –Progressively lock down requirements –Keep multiple back-up approaches and have a rapid decision making model –Measure Reaction Time –Make piecewise commitments versus binary choices Adopt Flexible Design Architecture –Use Modular Product Structures –Isolate Volatile elements See Agile Product Development: Managing Development Flexibility in Uncertain Environments, CMR vol 41 no 1, Fall 1998

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Flexibility Defined Development flexibility can be expressed as a function of the incremental cost of modifying a product as a response to external (Customer needs) and internal change(better solutions) High cost-> low flexibility (extra door on minivan) See Agile Product Development: Managing Development Flexibility in Uncertain Environments, CMR vol 41 no 1, Fall 1998

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Uncertainty Cost Matrix Cost of Change High Low Low High Uncertainty Invest in Flexibility Create and Preserve Options

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Dell Punch Line Without ANY formal analysis, Dell made the gamble of going with LiOn Engineers overdesigned a little to hedge the bets, but had LiOn not worked it would have been another disaster. Primary positioning of the product. Dell consumed ALL of Sony’s LiOn production for the next two years.

SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Next Week Very intense class –SGI Case –Product Development at Timberline Software