Enactment of
Technology Strategy
Developing a Firm’s Innovative Capability
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Questions
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How a firm’s innovative activities reflect its technology
strategy?
How the enactment of technology strategy serves to further
develop its innovative capabilities?
Outline
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Innovation challenges in established firms
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Strategic management of corporate research
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Managing corporate entrepreneurship
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Conclusion
Innovation Challenges in Established Firms
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Three types of new product and new business development
Induced strategic action
 Incremental & architecture innovation
 In relation to its familiar external environments
 Ex: Next generation of aircraft
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Autonomous strategic action
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Radical innovation
Opens up new environmental niches
Firm’s long-term survival and development
Ex: Electronic fuel injection
A balance act
New Product and New Business Development
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An evolutionary framework of the strategy-making process
in established firms
Autonomous
strategic
action
Induced
strategic
action
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Strategic
context
Concept of
corporative
strategy
Structural
context
Strategic Management of Corporate Research
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
The functions of corporate research
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Managing key interfaces
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Linking corporate research to corporate development
strategy
The Functions of Corporate Research
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Support of existing businesses (induced process)
 Improvements in existing products and processes
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New strategic directions (autonomous process)
 Discover new areas of technology
 Ex: Du Pont’s nylon, EMI’s CT scanner
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Effectively using the output of corporate research
The Functions of Corporate Research
New strategic
directions
Support of existing
businesses
Improving and
strengthening the
understanding of
technologies in use
Diversifying to new
applications and
markets
Identifying product and
process improvements
Discovering and
developing new
technologies
Diversifying to entirely
new businesses
Developing new
processes for established
products
Innovations by:
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The Functions of Corporate Research
Corporate service
by:
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New strategic directions Support of existing
businesses
Intelligence
Opening windows on
new science and
technology
Assessing threats and
opportunities
Human resources
Recruiting new kinds of
skills
Recruiting talented
people with high
potential
Technology
transfer
Identifying acquisition
candidates with needed
technological expertise
Recruiting for all
divisions, from corporate
research to operations
Manage Key Interfaces

Corporate research - divisional R&D interface (induced
process)
 Attitudes of scientists in divisional R&D
 Attitudes of corporate research
 Administrative, geographical, and personal linkages

Corporate research - business research interface
(autonomous process)
 Linking new technological solutions to market needs
 Obtaining additional resources to create a commercially viable new
business
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Manage Key Interfaces
Geographical
Closed
Open
Personal
Personal
Closed
Closed
Open
Closed
Open
Tight
coupling
Administrative
Open
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No
Coupling
Systematic Differences between
Business and R&D People
R&D people
Business research people
1. Structure
Well defined: existence of
research tradition; clearly
described positions
Ill defined: no real research
tradition; positions less
clearly defined
2. Methods
Scientific and codified
Ad hoc and uncodified
3. Database
Systematic and objective
Unsystematic and largely
subjective
4. Work and time
pressures
Mostly internal; how long
does it take?
Mostly external; how long
do we have?
Work environment
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Systematic Differences between
Business and R&D People
R&D people
Business research
people
5. Operating
assumptions
Serendipity
Planning
6. Goals
“New” ideas; can it be
improved?
“Big” ideas; does it
work?
Professional
orientations
7. Performance criteria Quality of investigation
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Quantity of results
Systematic Differences between
Business and R&D People
R&D people
Business research
people
8. Educational
background
Ph.D.
Master’s
9. Experience
Deep and focused
Broad and diverse
Become venture
manager?
Become venture
manager?
Quality of personnel
Personal interests
10. Career objectives
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Linking Corporate Research to
Corporate Development Strategy

Assessing technological opportunity
 Five dimensions of the fundamental uncertainty
 Technological innovations’ usefulness cannot be immediately
appreciated.
 Complementary inventions
 Difficult to conceptualize the new technological systems
 Attempting to solve very specific problems and leading to unanticipated
uses
 The ability to effectively link them to specific categories of human
needs
 Ex: Laser
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Linking Corporate Research to
Corporate Development Strategy
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The role of different levels of corporate research
management
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Technicians
Bench scientists
Group leaders
R&D managers
Director of corporate R&D
Allocating resources to corporate research
Managing Corporate Entrepreneurship
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The managerial challenge posed by autonomous strategic
action
The use of new venture divisions
A framework for assessing internal entrepreneurial
initiatives
Designing alternatives for corporate entrepreneurship
Choosing design alternatives
Implementing design alternatives
The Managerial Challenge Posed by
Autonomous Strategic Action
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Firms almost continuously bring in new talent that interacts
with the firm’s existing resources, competencies, and
capabilities in ways that cannot be fully anticipated.
Ex: Calculator, Gene machine
Top managers should consider the potential implications of
the initiative for the firm’s strategic position.
Interface Problems Involving Venture Divisions
NVD – operating
divisions interfaces
NVD – corporate management
interfaces
Domain protection
issues
 Synergy
considerations
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Administrativ  Rigidities resulting
e/cultural
from management
frictions
system
 Personnel transfer
issues
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Strategic
interferences
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
Lack of diversification strategy
 Limits to rate of strategic change
that can be absorbed
 Effects on corporate image
Circumvention of corporate
rules and regulations
 Inadequate measurement and
reward systems
 Resistance to institutionalization
A Framework for Assessing
Internal Entrepreneurial Initiatives
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Assessing strategic importance
 Considering the implications of an entrepreneurial initiative for the
firm’s product-market position
 Top managers depend on middle-level managers.
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Assessing operational relatedness
 The degree to which an entrepreneurial initiative requires
competencies and capabilities that differ from the corporation’s core
competencies
 Corporate management needs to rely on substantive interactions
with middle level managers.
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Design Alternatives for
Corporate Entrepreneurship
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Determining administrative linkages
 The assessment of strategic importance has implications for the
degree of control over the new business development
 If strategic importance is high, strong administrative linkages are in
order.
 Low strategic importance should lead corporate management to
examine how the new business can best be spun off.
 If unclear, relax the structural context and allow the new business some
leeway in its strategic management.
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Design Alternatives for
Corporate Entrepreneurship
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Determining operational linkages
 The degree of operational relatedness has implications for the
efficiency
 If operational relatedness is judged to be high, tight coupling of the
operations of the new and existing businesses is in order.
 Low operational relatedness may require complete decoupling.
 If unclear, loose coupling seems most adequate.
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Internal Entrepreneurship Initiatives
Assessment Framework
Key dimensions and their implications
Dimensions:
Strategic
importance
Implications:
Degree of
control
Administrative
Linkages
(authority)
Operational
relatedness
Efficiency
considerations
Operational
linkages
(networking)
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Organization
Design
alternatives
Organization Designs for
Corporate Entrepreneurship
Unrelated
Operational
relatedness
Partly
related
Strongly
related
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Special
1
4
2
3
Business
Direct new
Micro
Units
Venture
6
Independent
Business
Units
9
Complete
Spin-off
2
New product
Department
5
New
Venture
Division
8
Contracting
1
Direct
Integration
4
Micro New
Venture
Division
7
Nurturing
and
Contracting
Very important
Uncertain
Not important
Strategic importance
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Implementing Design Alternatives
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First, view the assessment framework as a tool to clarify.
Second, establish measurement and reward systems.
Third, as the development process unfolds, new information
may modify the perceived strategic importance and
operational relatedness; the ventures can move dynamically.
Conclusion
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Corporate research : Evaluate the businesses related to the
corporate.
Managing corporate entrepreneurship : Evaluate the
businesses out of the corporate.
Large established corporations provide a substratum of
discovery and invention that feeds the innovation process.
Many start-ups have been built on ideas that originated
within large established corporations.