Fraunhofer IAO, Germany Developing Integrated Business and Technology Strategies

© Fraunhofer IAO Stuttgart / IAT Universität Stuttgart Slide: 1

Fraunhofer IAO, Germany

Developing Integrated Business and Technology Strategies

NITM International Seminar SeriesA series of Seminars for Executives & Managers

NITM, Dublin, September 17th, 2003

Frank Wagner & Flavius Sturm

Fraunhofer Institute for Industrial Engineering


AgendaAgenda

• Introduction

• Strategic Management for SMEs “Navigating in Turbulent Times”

• Business and Technology Strategies

• Portfolio, Balanced Scorecards and other Tools

• How Scenarios and Roadmaps can help (Cases)

• Business and Technology Scouting


Increasing requirements for companies make new planning methods necessary

CompanyStrategy & Leadership

R&D becomes more capital intensiv

The amount of information increases

very strongly

Technology becomes more complex and

interconnected

Product diversity increases

Times of innovation become shorter

Influence of demand groups and stakeholders

increases

Internationalization gains more importance

Production becomes more capital intensive

Source: Gausemeier et al.,1996


Wrong forecasts of reputable experts (I)

1897 Lord Kelvinimportant mathematicianand inventor

1897 Lord Kelvinimportant mathematicianand inventor

1901 Wilbur RightWith his brother one of the most important flight pioneers

1901 Wilbur RightWith his brother one of the most important flight pioneers

1932 Albert EinsteinInventor of the theory of relativity;pathfinder of the nuclear energy

1932 Albert EinsteinInventor of the theory of relativity;pathfinder of the nuclear energy

„The radio will have no future at all."„The radio will have no future at all."

„Man will not manage within the next 50 years to become airborne with a metal produced plane ."

„Man will not manage within the next 50 years to become airborne with a metal produced plane ."

„There is no sign at all, that we will ever be able to develop nuclear energy"

„There is no sign at all, that we will ever be able to develop nuclear energy"

Quelle: Gausemeier et al.,1996

It is not easy to predict the future ... !!


1943 Thomas J. WatsonChief Executive Officer of IBM

1943 Thomas J. WatsonChief Executive Officer of IBM

1945 Vannevor BushChief Commander of the USA

1945 Vannevor BushChief Commander of the USA

1957 Lee de ForestInventor of the cathode pipe

1957 Lee de ForestInventor of the cathode pipe

1977 Ken OlsenChief Executive Officer of the computer manufacturer Digital

1977 Ken OlsenChief Executive Officer of the computer manufacturer Digital

„I think there will only be a need on the world market for 5 computers."

„I think there will only be a need on the world market for 5 computers."

"I wish, the Americans would finally stop talking about the phantasm intercontinental ballistic missile "

"I wish, the Americans would finally stop talking about the phantasm intercontinental ballistic missile "

„Despite all progress, man will never be able to reach the moon.

„Despite all progress, man will never be able to reach the moon.

„I can not see any reason at all, why an individual should have its own computer."

„I can not see any reason at all, why an individual should have its own computer."

Wrong forecasts of reputable experts (II)


It is not easy to predict the future ... !!


Strategic Foresight

Strategic technology management

Develoment of strategic options

Derivation and definition of strategy

Strategy development

Scenario planning

... but you can try to be as sure as possible


Agenda

• Introduction

• Case study scenario technique

• Scenario technique

• Technology Roadmapping

• Case studies Technology Roadmapping and Technology Strategy


Case Study 1 – Scenario-Technique

Company Classification:

Sector: Automation & Drive

Company Size: 10.000 employees

Turnover: 1,2 Mio. €

Type of Customers: OEM (2nd or 3rd tier)

Strategy: Technology leader / pioneer


Tech

nolo

gie

Zulieferer / Partner

Kunden

Kunden der Kunden

Gesellschaft

Umwelt

Wirtschaft

Gesetz/

Politik

Wettbewerber / Märkte

Mitarbeiter Management Organisation

Entwicklung

Produkte / Dienst-leistungen

Creation of a companyrelevant environment

Recording of influence factorsby interviews and workshopsand creation of key factors

Description of future model characteristics by scenarios

Text

flexible

B

Concept ofproduction

Competition-Structure

A

Structure of customer market

Cflexible

Internal Workshops

Approach for generating market & environment scenarios

PHASE I PHASE 2 PHASE 3 & 4


Internal Interviews

Internal Workshops

Customer interviews

Product managementBranch management

PurchasingProduction Member of the boardDesignR&DSales New MarketsDevelopmentDistribution EuropeDistribution Germany

Overview of interviewed partners


Tech

nolo

gy

Supplier / Partner

Customers

Customer's clients

Society

Environment

Economy

Law/

Politics

Competition / Markets

Employees Management Organisation

DevelopmentProducts / Services

Definition of force field


Society:KF1: Worldwide population development KF2: Degree of indivdualisation

Changes within environment; customer's view

Law/Politics:KF3: Work rules/ law

Economy:KF4: Product life cyclesKF5: Location GermanyKF6: Change of economical structureKF7: Source of value adding

Identification of key factors (1/2)

Tech

nolo

gy

Supplier / Partner

Customers

Customer's clients

Society

Environment

Economy

Law/

Politics

Competitioner / Markets


Develop-ment

Products / Services


Tech

nolo

gy

Supplier / Partner

Customers

Customer's clients

Society

Environment

Economy

Law/

Politics


Employees

Management Organisation

Develop-ment

Products / Services

Demand market:KF8: Market structureKF9: Market dynamicKF10: Branch dependence of

market needKF11: Consumer behaviourKF12: Structure of value added

chainKF13: Kind of competitive

advantage KF14: Specificity of regional

demandsKF15: Rules/prinziples of

collaboration

Change of market, technologiesand suppliers; customer's perspective

Suppliers market:KF16: Market structurconstellationKF17: Entry of new competitorsKF18: Competitor's service

varietyKF19: Market dynamicsKF20: Innovation

velocity

Supplier/Partner:KF21: Supplier's service

varietyKF22: Degree of supplier

integration into valueadded chain

Technology:KF23: Convergence of

technologiesKF24: Automation in

Manufacturing techniqueKF25: Nano technologyKF26: BiotechnologyKF27: Substitution of

technology in propulsiontechnology

KF28: Material innovationKF29: Production engineeringKF30: Importance of

information and communication

Identification of key factors (2/2)


From interviews to key drivers and scenarios

SocietyThe increasing degree of Individualism is a visible trend recognizeable by diminishing edition numbers. This fortifies the trend towards personalized digital print.

Additionally a trend towards more intensive sophisticated advertisement upcoming (Demands for optic, design, image, quality)

Information are needed and demanded faster and more individualized (Results for newspapers and print industry in general)

Individualisation of information demand

A The demand for information is steady and mainly covered by specialiced print media

B The demand for information in specific groups is covered equally by digital and print media

C The increasing individualistic need for information is more and more covered by digital information

Interview extract Creation of KF and projection


.

...

Future horizon

... for those, several development options are conceived ...

... And finally condensed to consistent scenarios .

Key factors Clustering of projectionsProjection of KFs

Tech

nolo

gie

Zulieferer /

Partner

Kunden

Kunden der Kunden

Gesellschaft

Umwelt

Wirtschaft

Gesetz/

Politik

Wettbewerber / Märkte

Mitarbeiter

Management Organisation

Entwicklung

Produkte / Dienst-leistungen

Environment:KFxDemand market:KFxSupplier market:KFxSupplier/Partner:KFxTechnology:KFx

Time

.today

.Source: changed after Gausemeier et al., 1996

From key factors to scenarios

...

The relevant measures are taken out of the network environment of enterprises; ...


Example: KF 8 Market structure

Tech

nolo

gy

Supplier / Partner

Customers

Customer's clients

Society

Environment

Economy

Law/

Politics



Develop-ment

Products / Services

Scenario 2 "Sierra Nevada"Scenario 3 "Amazonas"

Economies change of structure leadsto global multinational enterprises, which combine different industrybranches and destroy SME's structures.The coalescence of different

industry branches leads to a division of labor following steps in the value added chain and not to a division ordered by branches. Low wages countries take over work intensive value added chain steps while high price countries specialize on core competences in development, montage, etc..International goods traffic will increase strongly. Some enterprises will cover the entire service spectrumwhile smalle ones will earn their money with specialized functions. Change of structure leads to a specialized

niche industry at the interfaces of the bigindustry sectors, which provides the connecting elements

Scenario 1 "Arctic"

From key factors to scenarios


Text

flexibleflexible

B

ProductionconceptsCompetition

Structure

A

Scenario A Arctic

• Heterogeneous structure of customer markets

• Specific customer needs

• Numerous small, flexible niche enterprises

• Wide specificity of production concepts

Structure of customer market

Cflexible

• Need diverse structure of customer markets

• Segment specific

customer needs

• SMEs in networks

• Middle variance of

production concepts

• Homogeneous structure of customer markets

• Similar customer needs

• Huge, global orientated enterprises

• Strong Homogenity of production concepts

Scenario C Amazonas

Scenario B Sierra Nevada

Scenario construction market- & environment


Agenda

• Introduction






Strategic early warning: 5 stages of scenario management

scenario - preparationscenario - preparation

scenario field - analysisscenario field - analysis

scenario - forecastscenario - forecast

scenario - creationscenario - creation

scenario - transferscenario - transfer

Scenario platformContains the definition and analysis of the investigation objectas well as the definition of the area, the scenarios are created for.

1

2

3

4

5

Key factorsname relevant influence factors

Future projectionsFor any key factor several development possibilites in terms of future projections will be created

ScenariosComplex future images, whose occurrences are not able to be forecasted with absolute security

Vision/MissionStrategy



scenario field - analysisscenario field - analysis scenario - forecastscenario - forecast scenario - creationscenario - creation

.

.time

.

.today Future horizon

.

.

.today Future horizon

.time

.

By linking the measurements of the company and the environment, the relevant influence parameters will be detected; ...

... For these parameters several development possibilites are created...

... And afterwards they are summerized to consistent scenarios.


Strategic early warning: scenario creation


Strategic early warning: Application possibilites of scenario management

Future robust business vision and objectives

Future robust business vision and objectives

Design area

Business

Design area

product

Design area

technology

Global Design area

Objectiv planning Resource planning

Future robust visions and objectives within product management

Future robust visions and objectives within product management

Future robustStrategies for companiesand business units

Future robustStrategies for companiesand business units

Future robustStrategies for general andspecific products

Future robustStrategies for general andspecific products

Scenario-based technology assessment (TA); Technology visions

Scenario-based technology assessment (TA); Technology visions

Future robust global objectives, e.g. for organizations or policy

Future robust global objectives, e.g. for organizations or policy

Future robusttechnological solutions in new products

Future robusttechnological solutions in new products

Future robustglobal strategy e.g. for organizations or policy

Future robustglobal strategy e.g. for organizations or policy



Strategic early warning: forms of scenarios

pure global-

scenario

pure technology-

scenario

globalsystem-scenario

globalenvironment-

scenario

technology-system-scenario

technology-environment-

scenario

pure product-scenario

purebusiness-scenario

product -system-scenario

business-system-scenario

product -

environment-

scenario

business-environment-

scenario

global-scenario

technology-scenario

productscenario

business scenario

design-area

scenario

system-

scenario

environm

ent-

scenario

Res

ourc

e pl

anin

g

Obj

ect

pla

nnin

g

types of planing

Typical fields of

scenariosTypical design areas



Strategic early warning: Proceeding of the workshop approach

Project description

1.1

1.2

2.1

Creation of influence areas

Creation of influence factors

2.2

2.3

Elaboration of key factors

Force field analysis

internal scenario-team

external scenario-team

Business

management

workshop 1scenariofield-constructionand descriptor formation

problem

project plan

scenario-platform

influence factor-catalog

key factor-catalog



Strategic early warning: Proceeding of the workshop approach

3.1

3.2

4.a

Projection bundling

Raw-scenario formation

4.b

4.c

Future space mapping

Creation of future projections

Projection bundle catalogue

future space

workshop 2future project planning and

consistency planing

raw-scenario catalogue

Processing key factors




Business

management


Strategic early warning: the proceeding of the workshop approach

4.d

5.a

impact analysis

eventual planing

5.b

5.c

robust-planing

workshop 3scenario transfer

scenarios

scenario-description

future robust visions/objectives/strategies

implementationcontrolling

= main field of application of scenario-software




Business

management


Strategic early warning: the proceeding of the scenario field analysis

definition of scenario-fields

definition of scenario-fields

key-factor-catalogue

key-factor-catalogue

sub-stage 1Formation of impact areas

The scenario field will be seperated in individual impact areas.

sub-stage 2Formation of impact factorsThe individual impact areas will be

described by the key factors as complete as possible.

sub-stage 3development of key factors

The interconnection of the influence factors will be investigated to identify

the scenario typical key factors.

source: Gausemeier et al.,1996


Agenda

• Introduction






cumulated R&D-effort

Capaci

ty o

f te

chnolo

gy

(ben

fit/

cost

s)

Source: Krubasik (1982)

Limit of new technology

Limit of old technology

R&D-effort

performance Technology

potential

Newtechnology

Oldtechnology

= Status at the point of time when a change of technology is considered

Substitution potential (Double-S-Curve)


Technology-Roadmaps

Technology Roadmaps allow a visualisation of future technological developments

Technology Roadmapping captures and bundles knowledge of experts

Leads to the derivation of concrete options of action

O1

O1‘

O1‘‘‘O1‘‘

O2

O2‘

O3

today

Future

Time

Objects

Source: Specht et al., 2000


Technology-Roadmaps / Proceeding

Phase 1: Definition of searching field

Phase 2: Analysis of product-technology linkages

Phase 3: Needs analysis and prognosis

Structuring of searching field

Phase 4: Potential analysis

and prognosis

Phase 5: Generation of Roadmap

Phase 6: Analysis / Evaluation

Phase 7: Action plan

Source: similar in Specht et al., 2000


Technology-Roadmaps - Analysis of product-technology linkages

Market 1

Market 2

Product 1

Product 2

Product 3

Function 1

Function 2

Function 3

Technology 1

Technology 2

Technology 3

Detailed analysis and description of market/product combinations

Analysis of product / function / technology linkages

Visualisation of results oin consistent chains

Accoustics

Thermodynamics

Internet


Technology-Roadmaps – Understanding the technology complex

Manufacturing Technologies

Technology of direct competitor

products

Complementary technologies

Customer requirements

Regarded product technologies

Pre-technologies

Follow-uptechnologies

Substitutive technologies

Source: Zahn, 1994


Technology-Roadmaps – Needs and Potential analysis by scenario technique

Market 1

Market 2

Product 1

Product 2

Product 3

Function 1

Function 2

Function 3

Technology 1

Technology 2

Technology 3

Accoustics

Thermodynamics

Internet

.today Future horizon .

today Future horizon

.today Future horizonGlobal

scenarios Product scenarios

Technology scenarios


P1

P1‘

P1‘‘‘P1‘‘

P2

P2‘

Product Roadmap

Technology-Roadmaps – Generation and Verification of Roadmaps


P2‘ Function 1

Function 2

T1‘

T2

T3‘‘

Technology Roadmap

T1

T1‘

T1‘‘T2‘

T2 T3

T3‘GAP!

Function 3

??

T2‘P3

??GAP!

P2‘ Time consitency


Source: Tschirky/Koruna, Technologiemanagement (1998)

Technology Strategy

Make or Buy ?Keep or Sell ?

Current Technology

New Technologies

Products

Current Products New Products

A DB EProduct Technology

Process Technology

Make

Sell

Buy

Sell

Buy

Make

9997 0097 0198 0198

Product Technology 1




Process Technology 1




98

98

99

98 98

98

98 98

98

Technology calendar


Technology-Roadmaps – Summary


Advantages of Technology Roadmaps:

Integrated product and technology development and planning

Enhanced transparency of product and technology planning

Identification of gaps in medium and long term product and technology planning

Bundling of existing and new technology and market know how in a central organisation unit

Matching of expectations of R&D and marketing department


Agenda


- How companies do technology foresight

- How companies organise technology foresight

- What results do companies achieve with technology foresight


Today short-term medium term long-term

Case Study – Siemens Corporate Research

Day-to-day

business

Extrapolate via roadmaps

• Products

• Technologies

• Customer

requirements

Retropolate from

Scenarios:

New markets

New customer requirements

New technologies

New business possibilites

Automation & control

Information & communications

Lighting

Medical

Power

Transportation

individual

society

policy

economy

environment

customers

technology

competition

Strategic visionScenarios = pictures for the Siemens-operation areas

Influencing factors

Source: Austrian Research Center, 2002


Case Study – Organisation of early warning and strategic product and technology planning in a medium-size german high tech company

CTO

Head of strategic product and technology planning

Scenario Management

Patent Management

Strategic Planning of products and

systems

Business Development


Case Study – Schindler Group Ltd. Trends within the development of sensorsystems

Actors

Performance• high precision of measurements• high linearity • high reliability• low maintenance

Miniaturisisation• smaler scales• lower energy consumption• feedback free

Intelligence• self-identification• self diagnosis• self calibration

Integration• smart sensor systems• complex systems• wireless• digital, partly bus-compatibleSignal

processing

Trends in sensor systems:

Smarter, cheaper, embedded decentrally, self-screening

Multi-sensing

mechanical

chemicalelectrical

magnetic radiation

thermal

Source: Gassmann/Kottmann, 2002

Standardisation of interfaces• economies of scale• interoperability


Case Study – Schindler Group Ltd. Development of the sensor technique between technology-push and market-pull

Technology push

Technology driver

Marketpull

low high

Product technology• semi-conductor• telemetry• complex measurement categories

System technology• communication technique• decentral intelligence• interfaces

Manufacturing technology• microelectronics• material technology• modularization

Dynamics



Case Study – Schindler Group Ltd. Cycle of Sensor technology – a strategic perspective

prototype

observation

invest

optimize

disinvest

low

low

high

Stage of maturity, Resources high

image sensor

IR-image-sensor

sonic sensor(voice recognition) 3D sensor

motion sensor

accelerometer

absolute encoder

inductive sensor

approach sensor

Chemical sensorsRust detection, etc. Image sensor

(CMOS)

Biometric senors• language identification• thumbprint

Optical contactor/Light-& IR sensor

power sensor

magnetic sensor

strain gauge

ultrasonic detector

position sensor

contact sensormechanical contactor

Linear incremental encoder

Core Competence New Technology


Strategic relevance


Fraunhofer IAO, Germany Developing Integrated Business and Technology Strategies

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