Process for Formulating an R&D Strategy by Integrating Business Directions with
Technology Foresight and Capabilities
United Technologies Research Center
September 16, 1999

• Technology plans for each Business Unit (BU)
– 2-3 technologies for marketplace redefinition
– technologies that support business and product/service strategies
• BU-integrated strategy for UTRC
– technology innovations required
(context for emerging ideas and “gamechangers”)
– strategy for synergy across BU’s and risk reduction
– distinctive competencies and capabilities required to support present and future BU technology plans
2

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
3

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
4

• Current business environment and product/process/service challenges summarized in a “T” chart (one chart for each business unit)
Business Environment Product/Process Challenges
5

2
Business Environment
•
No end in sight to cost/price pressures
– Development and manufacturing costs (cite data)
– Commercial products heavily discounted to meet competition (cite data)
•
Competitors aggressively growing installed base by sales (cite data)
•
Competitors aggressively growing aftermarket business by acquisitions (cite data)
• Customers’ orders for product line W … (cite data); for product line N … (cite data); for product line R … (cite data)
– BU
2
– BU
2
’s response to the wide-body market is …
’s response to the narrow-body market is …
– BU
2
’s response to the regional market is …
• Orders for military product lines … (cite data)
– BU
2
’s military product strategy is ...
• Growth opportunities are in the following areas …
•
Increasing environmental stringency on noise (cite data)
Product / Process
Challenges and Opportunities
•
Development and Manufacturing Cost
– Reduce part count
– New product family
– One-build product design
– Greener materials and processes
•
Competitive differentiation
– Increased reliability
– Quiet product
– Ease of maintenance
•
Aftermarket
– Repair technologies
– Integrated diagnostics and prognostics
– Asset management
– Shorten turn-around times
6

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
7

• Understand our “Business Intent” for making money
• Focus on major strategic business issues/dilemmas
– decisions required about future directions
– decisions within our control
• Construct future scenarios
– imagined or perceived social, economic, political, technological, or ecological mega-trends, situations, and events
– relevant to major strategic business issues
– plausible realizations, sometimes outside of our control
• Play emerging technology “cards” in each scenario
• Analyze and synthesize strategies, technologies, capabilities
– robustness to scenarios
– fit with “Business Intent” (or needed modification)
8

Driver
Marketplace
Business Case
Market
Leadership
Shareholder
Value
Competitive
Advantage
Consumer
Demographics
Trend
Marketplace is global and increasingly integrated via information networks

Margins are in systems and services; components erode to commodities

E-commerce is revolutionizing the business theories of many industries
Leading the future with innovations in customer value brings the most growth
Intellectual capital (people, core competencies, partnerships, corporate knowledge,…) is replacing capital assets as the measure of a firm’s value
 Employees are a firm’s greatest source of creativity and competitive advantage

Basis of competition is knowledge

Consolidation across industries
Juxtaposition of value systems:
 aging population vs. n-gen’ers
 developed vs. developing nations
UTC Dilemma/Decision

Centralized vs. decentralized approach
(global vs. regional products/services)

Component supplier vs. systems/services supplier

Low-cost vs. high-tech differentiation

New business theory based on e-commerce
*

Innovation follower vs. innovation leader

Balance of investments in continuous innovation vs. radical innovation

Quality/reliability vs. time to market

IC investment, growth, and return vs. capital investment, growth, and return

IC synergy, infostructure, and make-buy
(virtual organization) decisions

Mobile, flexible, skilled workforce responsive to change

Long-term employees vs. free-agents

Acquisitions vs. strategic alliances

Short-term view (money) vs. life-cycle view
(social conscience, ecology)

High-tech vs. benefits/features
9
* Subject used in example

Bombay
Large emerging markets; Rapid growth of mega-cities; Focus on infrastructure development.
Hertz
Most capital goods are leased, not purchased for ownership;
Customers demand no down-time, low acquisition costs, and real-time accommodation of changing needs.
Green
• Social
• Political
• Environmental
• Science & Technology
• Economic
• Financial
Protection of environment is no. 1 priority;
Depletion of raw material resources; Stagnant or falling standard of living; Negative GDP growth
Clockspeed
Speed of business is firm’s one competitive advantage, driven by competitive intensity and technological innovation; metacompetency is management of capabilities supply chain
Netscape
Information age is commercial driver;
Seamless and unrestricted communications;
Information democracy;
Information Marketplace
10

Dilemma -- Components or Systems Business?
Bombay Clockspeed
Netscape
Hertz
Green
Robust Winning Strategy for UTC
(if Netscape, Hertz, Green come true)
Components
User-Centric
Systems
Market-Centric
Systems
Components-to-Systems Continuum
11

Buchanan Bombay
Hertz
Green Netscape
Negative 5%/yr Positive 5%/yr
Growth of Aircraft Market
12

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
13

• Revenue Growth
– grow with the market
– increase share of market
• Industry Consolidation
– acquisitions
• Margin Expansion
– engineering and product development
– quality/reliability
– supply management
– shared services
– cost reduction
Importance of Drivers Will Be Different for Each BU
14

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
15

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Emerging
Technologies
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
16

• The technologies important to UTC’s future [10year horizon] are known now
– emerging and developing technologies not yet exploited by UTC
– full importance and impact is usually not known
• Impact of emerging technologies
– emerging technologies are “mini scenarios”
– to assess impact: play emerging technologies as wildcards in the main scenarios and drivers
– combine powerful synergies into themes
(e.g., information technology; modeling, analysis, simulation, and computation; aftermarket technology; green products and processes)
17

Customer Service Scenario
Customer
• Price
• Reliable Function
• Customer Service
• User Interface
Product Scenario
Products
• Communications/Software
• Controller/Sensors & Actuators
• Mechanical Components
Enterprise Scenario
5/21/98 Rev 0
Enterprise
• Manufacturing
• Product Development
18

Pro-E
Pro-M
MES
Manufacturing Plant
5/21/98 Rev 0
IPD Team
Employees
Customers
Suppliers
Partners
Supplier
Distribution
19

Service Center
• Upgradable Features
• AVOS
• Information repository
• User Services
• Building Integration
• Security
• Optimal Dispatch
• Safety & Ride Quality
• Smart Badge
20

Airport
5/21/98 Rev 0 Service Center
Airport
Parts Factory
21
5

Emerging Technologies for Materials and Structures
Scenario
Green S
W Hertz
Bombay W
W Netscape
Clockspeed M/S
17
W
M
S
M
S
25
W
W
S
M
W
15
M
S
S
S
S
39
W
W
S
W
W
13
S
W
W
W
W
13
W
S
S
M
S
31
S
W
S
W
W
21
64
20
26
26
36
22

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
23

1
Key Technology Areas
BU
1
2000+
Technologies for Market
Re-definition
Opportunities
Alternative Designs for Safety
Global Materials Supply
. . .
Focus on MASC
. . .
5
Green
Emerging Technologies
Derived Importance
Normalized Importance
3
1
4
3
S
M
S
S
M
S
S
S
M
S
S
M
S
M
M
S
S
75 108 126 66
3 4 5 3
M
S
M
S S
S
S
66
3
66
3
S
M
57
2
5
Correlation:
S - strong
M - moderate
W - weak
- none
3
2
1
0
5
4
3
1
4
2 3
3
4
3
5
3
6
2
7
24

Current
Business Environment
Future
Business Scenarios
Key Strategic Drivers
Product/Process Challenges and
New Product/Process Opportunities
Technology Outlook
Emerging Ideas Potential Gamechangers
Competencies & Capabilities
Gamechangers
25

• Catalog your department’s present core and enabling technology capability areas together with a numerical estimate of your department’s capability gaps in these areas.
• Use Quality Function Deployment (QFD) to derive the numerical importance of your department’s core and enabling technology capability areas to the needs of UTC’s business units
• Integrate your analyses into a Technology Capability Portfolio.
• Define your department’s strategy by going through a structured, question-driven development process that blends your knowledge and intuition with the preceding analyses.
• Implement a quality check of your strategy.
26

5.0
Protect
4.0
C
D
3.0
E
2.0
1.0
1.0
Maintain/
Watch
2.0
B
3.0
Capability Gap
Strengthen
F
A G
Watch/
Abandon
4.0
5.0
Label Technology Area
A Information, Communication, Computers
B Advanced, Embedded Electronics
C Active Control (with Sensors, Actuators)
D System Dynamic Modeling & Life Prediction
E Computational Fluid Dynamics
F Life-cycle Design
G Surface Engineering
27