Synthesizing R&D planning and business strategy: some preliminary findings

The need for firms to compete in the longer run by offering superior products at competitive prices requires better integration of R&D, and technology in general, into business strategy development. A survey based on personal interviews of 40 respondents from "Fortune 500" U. S. industrial firms reveals that their shift in emphasis toward new product/process R&D is providing the impetus for placing R&D in a strategic context. However, R&D has not been fully integrated into the strategic planning process of many organizations. The results of the survey reveal that certain communication channels can be more fully utilized to meld R&D planning into business strategy. Specific suggestions to facilitate information exchange, dissemination of planning data, and integration of various R&D plans into a cohesive technology strategy are given.     

Synthesizing R&D planning and business strategy: some preliminary findings

The need for firms to compete in the longer run by offering superior products at competitive prices requires better integration of R&D, and technology in general, into business strategy development. A survey based on personal interviews of 40 respondents from “Fortune 500” U. S. industrial firms reveals that their shift in emphasis toward new product/process R&D is providing the impetus for placing R&D in a strategic context. However, R&D has not been fully integrated into the strategic planning process of many organizations. The results of the survey reveal that certain communication channels can be more fully utilized to meld R&D planning into business strategy. Specific suggestions to facilitate information exchange, dissemination of planning data, and integration of various R&D plans into a cohesive technology strategy are given.     

Strategy transformation through strategic innovation capability – a case study of Fanuc

This paper presents a theoretical framework under which large companies should be able to bring about strategy transformation. First, we present the concept of ‘strategic innovation capability’, a corporate system capability to achieve corporate strategy transformation by strategic innovation. Then, we consider strategic innovation capability by comparing it with previous theories (dynamic capability, major innovation, dynamic capability, breakthrough innovation capability). Second, we present the case example of strategy transformation at Fanuc, a company that holds the top global share in the numerical control (NC) market. In this case study research, we consider and analyze historically how the company aimed for new creativity in the NC market, developed innovative NC technology for the machine tool market, and used that technology energetically for commercialized products. From the strategic innovation capability framework, the core theory of this paper, we also analyze and consider how top management made conscious efforts to form a new development organization within the company, and the processes involved in achieving strategy transformation to establish competitive superiority in this field. Finally, we discuss the implications drawn from this case analysis, and the issues for future research.     

Networking as a Means to Strategy Change: The Case of Open Innovation in Mobile Telephony

The purpose of this article is to investigate how innovation networks can be used to deal with a changing technological environment. This study combines different concepts related to research and development (R&D) collaboration strategies of large firms and applies these concepts to R&D alliance projects undertaken by Nokia Corporation in the period 1985–2002. The research methodology is a combination of in‐depth semistructured interviews and a large‐scale quantitative analysis of alliance agreements. For the empirical analysis a distinction is made between exploration and exploitation in innovation networks in terms of three different measures. As a first measure, the difference between exploration and exploitation strategies by means of the observed capabilities of the partners of the contracting firms is investigated. The second measure is related to partner turnover. The present article argues that in exploration networks partner turnover will be higher than in exploitation networks. As a third measure, the type of alliance contract will be taken; exploration networks will make use of flexible legal organizational structures, whereas exploitation alliances are associated with legal structures that enable long‐term collaboration. The case of Nokia has illustrated the importance of strategic technology networks for strategic repositioning under conditions of change. Nokia followed an exploitation strategy in the development of the first two generations of mobile telephony and an exploration strategy in the development of technologies for the third generation. Such interfirm networks seem to offer flexibility, speed, innovation, and the ability to adjust smoothly to changing market conditions and new strategic opportunities. These two different strategies have led to distinctly different international innovation networks, have helped the company in becoming a world leader in the mobile phone industry, and have enabled it to sustain that position in a radically changed technological environment. This study also illustrates that Nokia effectively uses an open innovation strategy in the development of new products and services and in setting technology standards for current and future use of mobile communication applications. This article presents one of the first longitudinal studies, which describes the use of innovation networks as a means to adapt swiftly to changing market conditions and strategic change. This study contributes to the emerging, but still inconsistent, literature on explorative and exploitative learning by means of strategic technology networks.     

External Technology and In-House R&D's Facilitative Role

A number affirms use external sourcing of technology to create technological change in their organizations. In this article, Falguni Sen and Albert Rubenstein develop a rationale to support the concept of an integrative technology development strategy which emphasizes the role of in-house R&D during the planning and implementation process for externally sourced technology. They divide the external sourcing process into two major components: an acquisition phase and an implementation phase. Next, they define five distinct stages within both phases. Based on a review of the literature, the authors identify some common problems with external sourcing and discuss potential ways that in-house R&D can alleviate them by becoming involved in specific steps in each of the ten stages. The data in the article have been obtained from thirty-one cases of external sourcing of technology from a diverse group of industries in the United States and India. R&D's involvement in the external technology process varies among firms and is generally low in the acquisition phase. In the research, R&D managers describe barriers to their involvement, and the article develops measures of effectiveness of the activities in each stage of the external sourcing process. The authors recommend removing relevant barriers, especially in those stages where the involvement of in-house R&D groups could increase the effectiveness of the process.     

Commercializing Nascent Technology: The Case of Laser Diodes at Sony

To develop really new products, a company often needs to get a handle on really new technologies. Although some breakthrough products simply combine existing technologies in novel ways, other innovations require the successful commercialization of nascent technologies. In other words, such innovations depend on entirely new structures and methods that have been demonstrated in a research environment but have not yet been refined to the point where they are ready for production. The path from nascent technology to full-scale production presents numerous managerial challenges that must be overcome if a company is to develop really new products that involve really new technologies. Samuel Wood and Gary Brown discuss these challenges, and they describe methods for managing the successful commercialization of nascent technologies. They illustrate these methods by examining Sony's commercialization of laser diodes—semiconductor devices that play an important role in the operation of CD players and other optical disk readers. They divide the process of commercializing nascent technology into three stages: appropriation, implementation, and manufacture. The first stage—appropriation—involves monitoring, assessing, and capturing new technologies. Sony handles this stage with a small, loosely structured research organization, separate from the development organization. In this stage, management must ensure that the objectives pursued by the research organization support the development organization's long-term goals. To foster coordination between research and development, Sony employs such network-building techniques as internal research symposia and technology expositions, orientation periods for researchers, transferring managers between research and development, and transferring researchers to development and other functions. The implementation stage involves transferring knowledge to development, as well as refining the technology to the point where it is reproducible, testable, and documented. Sony facilitates technology commercialization by transferring project team members from research to development and making those people responsible for implementation. To reach the final stage, manufacture, the firm must find the means for developing and refining mass production tools and procedures. Meeting this challenge requires close interaction and integration between process and production engineers.     

中国战略性技术及其产业化的七大问题

在国际经济竞争越来越激烈的今天，大国之间的竞争更多地表现为战略技术的竞争和战略产业的竞争。所以，无论美国还是欧盟，无一不是把发展自己的战略技术和战略产业放到了重要的地位。中国作为一个大国，要想在世界竞争格局中获得相对优势地位，没有自己的战略技术和战略产业是不可能的。但是，中国发展自己的战略技术和战略产业，也存在着相当的困难。这些问题有些是来自战略技术和战略产业自身属性的，有些则是根源于中国基本经济结构和产业发展水平。21世纪是战略技术和战略产业竞争的世纪，谁拥有更多的战略技术并成功地使其产业化，谁将在未来的竞争中胜出。中国要在这样一场竞争中获得优势位置，必须解决好自身所面临的七个重大问题。即战略产业的高度战略化和低度市场化、高度战略化与高度市场化、低端技术市场化与高端技术政治化、巨量资金需求与筹资渠道狭窄、绝对比较劣势与相对比较优势、跟踪战略与超越战略、国家意志与民营载体。     

Strategic planning as a complex and enabling managerial tool

Research summary : The role of the strategic planning process in the ongoing generation of innovative knowledge is vital to the survival and growth of a firm, especially when technologies and market conditions are rapidly changing. We analyze data from a survey of firms in high‐technology industries to determine whether it is possible to break the commonly experienced trade‐off between strategic planning's positive influence on firm profitability and its negative influence on firm innovation. We draw on Adler and Borys's (1996) conceptualization of bureaucratic process types to identify several firm characteristics that have the potential to affect whether employees perceive strategic planning as enabling to their creative endeavors. We find that contingent effects between strategic planning and the identified firm characteristics exist that can break the trade‐off. Managerial summary : A tension exits in the literature about whether strategic planning hurts or helps innovative activity. Our analysis of data from 227 business units in high‐technology industries indicates that strategic planning is a complex process that can be perceived by employees as enabling or coercive. Our results confirm that strategic planning negatively affects innovative activity but positively affects profitability for average firms. We find, however, controllable firm characteristics—risk‐taking and knowledge‐based reward systems—affect the trade‐off. Given the higher levels of risk‐taking and knowledge‐based reward systems, firms can use strategic planning to achieve both high returns on investment and a high level of innovative activity. Copyright © 2015 John Wiley & Sons, Ltd.     

Achieving success in technology alliances: The Rover-Honda strategic collaboration

Dynamic changes within global markets are creating a need for different strategies for firms in the pursuit of competitive advantage. International technology alliances are one mode of organising the acquisition of competitive technologies which is especially important in technology-intensive industries. However, managers have an especially difficult challenge when trying to deal with problems of high technical risk, frequent changes in technologies, different cultural and managerial styles and perspectives. This article addresses these issues as it examines the planning and implementation of the international technology alliance between Rover and Honda, during the past fourteen years. By most criteria used, this alliance was highly successful, and the article discusses not only the areas of successful technical impact which the alliance had on these companies, but also the insights learned by Rover from the management process of the alliance. It also develops a framework of issues which managers can use to implement and manage international technology alliances.     

Toward a comprehensive framework of value proposition development: From strategy to implementation

Value propositions (VPs) can play a major role for the strategy development and implementation process in B2B markets. While being recognized as one of the firm's most important organizing principles, the VP concept is still poorly understood and executed in many B2B firms and scholarly research provides limited guidance on how to develop and implement VPs in B2B markets. This article re-assesses the VP in the context of both strategy and implementation. It undertakes a review of extant conceptual frameworks and identifies key elements that are overlooked and/or not addressed. A new conceptual framework for addressing VP design and development is offered, which incorporates five key interrelated phases of implementation that need to be comprehensively addressed. This research provides a theoretically sound and practically applicable VP development framework, integrating the firm's strategic considerations, ensuring a fit between its business model and customers' needs, and reflecting the nature of B2B markets through its dynamic perspective. In addressing key implementation issues, the article provides firms with a robust approach to addressing the dynamic competitive environment, as well as taking into account changing customer needs.     

Applying multiple perspectives to the design of a commercialization process

Most commercialization models begin by taking an idea through some sort of stage‐gate product development process. There is much talk about building market thinking into this process, but this paper argues that much more is required. The research identified three perspectives required to be present at all stages of product development. The first is labelled ‘technical and operational’, the second ‘strategic’ and the third ‘commercial’. The paper argues that each perspective is required at every stage to drive the right activities that lead to successful commercialization. The science, idea and opportunity stage leads onto the technology and feasibility stage, which in turn leads onto the product and market readiness stage. The research applied the grounded theory methodology to categorize and represent data obtained from interviews and desk research. The resulting model was introduced to a New Zealand Crown Research Institute during a consulting assignment in 2004. Three external experts were selected based on their particular perspectives and experience in the area of product development. Each perspective was built into the commercialization process. Applying multiple perspectives has led to a more robust approach to product development and a greater awareness of how multiple tools work together to create a holistic product development process. Each perspective of the commercialization process can be broken down into detailed stages. The technical and operational perspective addresses areas such as opportunity creation, proof of concept and market readiness. The strategic perspective addresses areas such as strategic fit, strategic analysis/choice and pathways to market. Finally, the commercial perspective addresses areas such as opportunity assessment, feasibility study/business planning and launch.After being in place for 18 months, the challenges faced in implementation were discussed with the current commercialization manager and the model was adapted to another institute wishing to develop a design‐led commercialization process. A key finding of the research was the common understanding of language and meaning across three distinct disciplines and the involvement of each discipline in the decision‐making process. All parties accepted the value of each other's contribution once the different perspectives were understood and accepted. The paper provides useful insights for those involved in the design of commercialization processes and establishes a multi‐dimensional framework that assists in facilitating the different perspectives required for successful commercialization.     

An integrated approach to the development of channel strategy

For many manufacturing firms, a successful strategy for product distribution can play a key role in the delivery of product and technology excellence to their customers. This article presents a framework for an effective industrial distribution strategy for the manufacturing firm that allows it to find the best possible balance between its corporate strategic goals and the interests of its distributors. Our strategy addresses three critical issues: distributor loyalty, distributor effectiveness and capability, and conflict resolution. The strategy is grounded in a literature review of emerging trends and issues in industrial distribution. It is hoped that the proposed strategy can help firms find direction for managing their distribution efforts into the year 2000 and beyond.     

Research notes and communications co-ordinating mechanisms,consensus between marketing and manufacturing groups,and marketplace performance

This exploratory study investigated the relationship among use of various co-ordinating mechanisms, degree of consensus between marketing and manufacturing groups, and marketplace performance reputation. Consensus between marketing and manufacturing groups on key competitive strengths, company goals, and implementation actions was measured in 15 firms in the carpet industry. Those firms which made more frequent use of planning techniques (formal forecasting procedures, management-by-objectives linked to performance appraisal, and a written strategic plan) experienced higher levels of interdepartmental consensus. Consensus between departments was strongly related to marketplace performance reputation.     

An evolutionary approach to the introduction of corporate planning in the company

When corporate planning has been tried by a number of organizations a number of difficulties have arisen. These are often a consequence of the planning system itself and the manner of its introduction to the organization. A new approach is described in this paper by which planning is introduced in stages. Each is a logical development of the previous one but each makes a reasonable demand on the staff and there is time to ensure that the data needed at each stage by the staff is available. Furthermore, the staff contribute to the development of the planning system which, at each stage in its evolution, is adapted to their needs. Having thus described the introduction and evolution of a planning system in an organization, a later paper will review how the technical function of a company can link into it.     

Stock Market Response to Strategic Technical Alliances between Drug and Biotechnology Firms

Traditionally, firms in the pharmaceutical industry have depended on their internal research and development (R&D) capabilities to maintain a productive new product pipeline. During the past two decades, however, the industry's pipeline productivity has decreased compromising the industry's ability to meet shareholder expectations. As a strategy to invigorate pipeline productivity, and impact financial performance, pharmaceutical firms have increased utilization of strategic technical alliances. Earlier research shows that the degree of financial impact resulting from strategic technical alliances varies in terms of partnership type and differences between client and partner firms. This research studies strategic technical alliances between pharmaceutical and biotechnology firms from 1985 to 2012. Event study methodology is used to determine the relationship between stock market response to alliance announcements, measured as cumulative abnormal returns, and factors representing the absorptive capacity of the pharmaceutical firms in the sample. Then, variables indicating the development stage of the drugs included in the alliances are added to assess the effect of project risk on the market response. The study finds that, in general, the stock market responds in a positive manner to strategic technical alliances in the pharmaceutical industry reflecting the market's immediate response, and expectations of future firm value, resulting from the alliance. The degree of the market's response varies in terms of the client firms’ absorptive capacity with new product introductions being the strongest driver. The market responds similarly to alliances across different drug development stages, however, a stronger response is observed in preclinical and extension stages.     

New Product Strategies of Large, Dominant Product Manufacturing Firms: An Exploratory Analysis

Although researchers have expended considerable effort exploring the links between new product strategy and firm-level performance, most studies of this subject focus on small- to medium-sized firms. Compared to smaller firms, however, large companies typically maintain broader portfolios of products and have easier access to capital markets. Such fundamental differences suggest the need for closer examination of the relationship between new product strategy and the performance of large firms. Based on a study of 459 new products introduced during a 5-year period, Richard W. Firth and V. K. Narayanan profile the new product strategies of 18 large companies. They examine the methods used to acquire new products (internal development or external sources) as well as three dimensions of each firm's new product introductions: newness of embodied technology, newness of market application, and innovativeness in the market. In other words, these profiles identify the degree to which a firm's new product introductions involve core technologies and markets that are new to the firm, as well as the degree to which the market views these products as innovative. Because new product strategy is an investment decision, the study also examines the relationship between these strategic profiles and two facets of firm-level performance: risk and return. The study identifies five archetypes of new product strategy: Innovators, who produce innovative products by using their existing resources; Investors in Technology, who focus on expanding their technological base. Searching for New Markets, firms that venture into unfamiliar markets by introducing products closely aligned with those in their existing portfolios; Business as Usual, firms that rely on existing technologies and products to serve existing markets; and Middle-of-the-Road, firms content to introduce new products rated as low to moderate along all three dimensions of the strategic profile. For new products closely aligned with their core markets and technologies, the firms in this study typically rely on internal development. To introduce products involving new technologies or market applications, they turn to acquisition from external sources. Firms that emphasized market innovativeness in their new product introductions enjoyed higher returns than less innovative firms. And contrary to conventional wisdom, they gained this advantage without an accompanying increase in risk. In other words, continual innovation might provide a large firm with the means for achieving higher returns without higher risk.     

Identifying Technology Commercialization Opportunities: The Importance of Integrating Product Development Knowledge

New product development (NPD) is a knowledge‐intensive activity, perhaps even more so in recent years given the shift toward more open innovation processes, which involve active inward and outward technology transfer. While the extant literature has established that knowledge is critical for NPD performance, knowledge generated through NPD can have an additional impact on external technology exploitation—as when firms go beyond pure internal application of knowledge to commercialize their technologies, for example, by means of technology outlicensing. Grounded in the knowledge‐based view of the firm, this paper examines how the integration of domain‐specific knowledge, procedural knowledge, and general knowledge generated through NPD affects a firm's proficiency in identifying technology commercialization opportunities. Additionally, analysis of how technology opportunity identification relates to technology commercialization performance is provided. Empirically, the paper draws on survey data from 193 Swedish medium‐sized manufacturing firms in four industries active with NPD, and regression analyses and structural equation modeling were used to test the hypotheses. The results highlight the importance of integrating domain‐specific and general NPD knowledge to proficiently identify technology licensing opportunities. The empirical findings also provide strong support for a subsequent link between technology opportunity identification and technology commercialization performance. Altogether, these results point to strong and previously unexplored complementarities between inward and outward technology exploitation, that is, between NPD and technology licensing. As such, the results provide important theoretical implications for research into the fields of knowledge integration, technology exploitation, opportunity identification, and technology markets. Moreover, the results have significant managerial implications concerning how knowledge generated through NPD can help firms to achieve both strategic and monetary benefits when trying to profit from technology. In particular, to set up proficient technology commercialization processes, it appears beneficial for firms to integrate knowledge that is gained through the ordinary activities of developing and commercializing products. Specifically, the integration of domain‐specific knowledge and general knowledge helps firms to match their technologies with new applications and markets, which is often the critical barrier to successful technology commercialization activities. Managers are thus encouraged to integrate domain‐specific knowledge and general knowledge from NPD to reap additional benefits in profiting from investments in innovation and technology.     

Strategic HR functions and firm performance: The moderating effects of high-involvement work practices

Although the strategic human resource management literature has emphasized the value of the integration of human resource management into strategic management, the mechanism through which the strategic integration of HR functions contributes to the improvement of firm performance is relatively unknown. Assuming that HR strategies cannot be successfully implemented without employee support for and commitment to these strategies, this research focuses on high-involvement work practices, which allow employees to participate in management decisions as potential moderators of the integration of HR functions in strategic management and firm performance. Using a sample of 203 unionized Korean firms, this research found that the effects of a strategic HR function on firm performance were moderated by high-involvement work practices such as a pay-for-performance program, a career-development program, union participation in company strategy, and temporary worker benefits. The results suggest that a strategic HR function will not be successful without institutional mechanisms that foster employee involvement.     

Technology—An increasingly dominant factor in corporate strategy

The paper considers the implications for future corporate strategy of the probability that the capitalist world is in the down-phase of a 50-year long-wave Kondratieff' economic cycle. Without commitment to a universal theory of long-wave generation the author proposes a lifecycle model of a whole industry or dominant technology. He deduces from this the likelihood confirmed by some historical data that major industries will at best survive one cycle and will almost inevitably decline after the next. Individual firms within such sectors will go down with the industry unless they face the need early enough in the decline phase to embrace a new technology in the next up-phase. The author provides a framework for diagnosing the phase of the lifecycle occupied by an industry or firm. He suggests that by combining this with an existing model of corporate strategy a company can plan a course of action that will improve its chances of survival.