Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman The ARENA Genome: Harmonic Strategic Planning Arena Layers: Corporate, Business Function- Define Hierarchy Refinement Stages: Arena, Focus, Action Create Strategy Business ACTION Dynamic Vectors: Change, Vision, Scenario. Leader Navigates Corporate Layer: Portfolio Businesses Maximize Value Function Layer: Process, Project and Product Agile value drive Business Layer: Positioning Products by Market Strategy Prof. Jacob A. Frankel, Chairman of Sovereign Advisory Group and Global Financial Institutions Group, Merrill Lynch: JIT inventory management will help quick recovery.

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Skimming (Type I disruptive Innovation) PC Processors $D P IV $819->$352 Athlon P III 486 Cyrix K6 Celeron Power PC Diversification, Cow Cannibalization VCRs $D Chasm Ampex $50K Sony Beta Matsushita VHS Cell Phone $D Beeper Pelephone Niche Products Satellite Iridium` Skim Niche Mass Market Distributors Hedged Skimming: Tang, RDC, Velcro Adoption Rate Utility Capacity Time/ Quantity Learning Curve Moors Law Cost Hong Kong Effect Time/ Quantity Cost Leader Follower Advantage Orange Cellcom Focus: Returning R&D investment, Constrained production capacity, Limited demand IBM Effect Gillette Costs-4%/Y

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Storming Storming Pharmaceutical $ D Divide 1. Ethical Viagra Prozak 2. Generic Storming $ D 1.Leader: Apple Closed Architecture Self sufficient 2.Follower: IBM effect Open Architecture Outsourcing 3. Me Too:No Name Hong Kong Effect Compaq Devoted Follower Time 1 st 50% Price 2 nd 50% Patent Apple Peripherals Apple Computer Education Mac OS SW Apple Distributors Motorola HP IBM Cluster IBM Computer Business MS, Lotus DOS/SWPeripherals IBM++ Dealers Intel Compaq Digital Focus: Maximizing revenues during patent duration; Rigid demand Storming $ D Sensor Excel (+60%) Mach3 +35% Atra

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Flooding 1. Server Navigator Acrobat Total Cost Users Utility/User Bob Metcalfs Network Externalities Focus: Market share leadership (Eyeballs, Hits); Lock-in+Oligopoly+Value added 1.IBM White planes Ford Levittown Diners Zara IKEA McDonalds 2.Toyota Honda 1. Client Navigator 2. Explorer NT Sony Economies of Scale Sony: $279+ RealNetworks Nintendo: Dolphin IBM+3D by ArtX MS Xbox $ ($125) Launch: 800K games, $500M marketing budget Dumping $D Leveraged Dumping $D Flooding $D Hybrid Car Dumping $D

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman 1918 Model T Foreign 1/3 Oil Crisis Market consolidation Competitors Disk drive Market Web surfing in US, 50% of time: March 1999, 50B Mins: 11 sites (60%=110) March 2001, 73B Mins: 4 sites (60%= 14) 32% America Online Time Warner 7.5% Microsoft 7.2% Yahoo 3.6% Napster

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Low Cost Positive Loop Quantity Manufactured Cost/unitPrice Quantity Sold Market Demand: Price Elasticity Production Function: Economies of Scale 1:Skimming Low Cost Differentiation Dumping

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Piercing / Guerilla (Type II disruptive Innovation) 2.Red Hat Focus: Penetrating through niche, transforming non-entity into recognized brand 1.Shareware Copy Left: Gnu, Ada Komatsu Toyota, Korean High Retail Margins Dependable-Quality Earth-Moving-Equipment Strong service and Support Worldwide Availability Strong, Loyal Dealer Network High Margins Premium Price Full Line of Quality Products R&D Investment Low Dividends Global Volume Low Cost High Plant Investment Low Debt Local Assembly S.E. Asian Guerilla $D Linux Guerilla $D

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Komatsus strategic Roll-out – Skinning the Cat Maru-C: Encircle Caterpillar Protect home market against Caterpillar (81:50% world earth-moving equipment vs.16%) Licensing deals with: Cummins Engine, International Harvester. Acquire technology and establish benchmarks. Project Ace: Advance quality of small and medium-sized bulldozers above Caterpillars Quality Circles companywide to provide training for all employees Reduce cost while maintaining quality Cost Down Total Cost Down Make Komatsu an international enterprise and build export markets Develop Eastern bloc countries Komatsu Europe marketing subsidiary established Komatsu America established Project B to improve durability and reliability and reduce cost of large bulldozers Project C to improve payloaders Project D to improve Hydraulic excavators Establish presale and service department to assist construction projects in newly industrializing countries Respond to external shocks that threaten markets V-10 program to reduce costs by 10%; reduce parts by 20%. ¥180 program to budget companywide for ¥180/$ when exchange rate was ¥240/$ Response to Oil Crisis: Project E establish teams to redouble cost and quality efforts. Create new products and markets Accelerate product development to expand line. Future and Frontiers program to identify new businesses based on societys needs and company know-how. EPOCHS: reconcile greater product variety with improved production efficiencies. (84:Caterpillar=43% world earth-moving equipment vs.Komatsu=25%)

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action How Has Compaq Stayed on Top of the Server Industry?, HBR Relative Level High Low Time ExpandabilityApplication CompatibilityFile and Print CompatibilityPerformancePrice SystemPro ExpandabilityApplication CompatibilityFile and Print CompatibilityPerformancePrice ProSignia ProLiant 1000 ReliabilityConfigurabilityManageability ProLiant 1000 Rack Mountable StorabilityServicabilitySecurity

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Strategic Grid Present Strategic Impact of Technology High Factory ATM, Airline Strategic Bank Low Support Restaurant, Municipality, Hospital Turnover Bookstore, Insurance, Broker Strategic Grid LowHigh Future Strategic Impact of Technology Support Time Importance Turnover Factory Strategic US Office of Patents commissioner: Everything that can be invented has been invented, 1899 recommendation that his office be abolished. Window of Opportunity Time Importance Great Expectations Disappointment Real Power

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Qualcomm 1999 annual Report p. 23 Mobile-Station-Modem Phone Chipsets Time/ Release Features 1st Generation MSM R&D begins nd Generation MSM Chipset Developed MSM1 3rd Generation MSM Used in QCP800 phone MSM2 4th Generation MSM Highly cost effective MSM2300 5th Generation MSM 200 hours standby Faster data rates<86kbps IS-95A/95B Compliant MSM3000 iMSM Family High Data Rate technology<2.4Mbps Internet; support3rd party OS/Apps MSM5000 2x voice capacity Faster data rates<153.6kbps 6th Generation MSM 50% Smaller; 300Hrs Sand by Mixed signal; USB data interface MSM3100

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Wave PLM Time/Release Features/ Function Points 88: DOS 4 Mar 93:MS-DOS 6 Disk Backup & Compression Windows CE 93 NT3.1: 32 bit 29K copies NT3.5: Faster, Stable SOHO NT3.51: Web Server No need for special SW NT4.0: Large Data Proc update: Cluster 1.6M copies NT: Most Demanding Tasks User/Info Dir, Intelli-mirror Apr 92: Win 3.1: Screensaver, TrueType 95: TCP/IP 98: HTML editor 2000: Premium, Professional, Small Business 4.1 5

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Float-glass process substitution W.Europe

Tel:(972) Fax:(972) www.coman.org ARENAwww.coman.org Management-Of-Technology Copyright 2001 Alex Coman Business Action: Supply/Demand Chasm Approximate Life Cycle of Products (years) Development Cycle (years) Financial Services- Silicon Foundries Retailing&Entertainment Fashion & Textiles Transportation Systems Communications Systems Tobacco Foods Lodging Hotels Mining Forestry, Oil & Gas Reserves Pharmaceuticals Military Weapons Software Electronics Computers Publishing Medical&Dental Automobile Metal Products Photographic Chemicals, Paper Biotechnology Typical Time Horizons by Industry, Mid-to-Late 1980s