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Threat and Opportunity Analysis in Technological Development

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DOI: 10.1109/PICMET.2006.296547 · Source: IEEE Xplore

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 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
Threat and Opportunity Analysis in Technological Development
Husam Arman, Allan Hodgson, Nabil Gindy
University of Nottingham, School of M3, Nottingham, UK
Abstract--Globalisation of competition and the accelerating
rate of technology change set difficult challenges for advanced
technology-based industries in the new millennium. Companies
in these industries must now continually reduce costs and
develop better products and services in order to sustain a
competitive advantage in an endlessly changing business
environment.
High research and development (R&D) costs force high
technology companies to select more carefully which tech-
nologies to invest in. Technologies are introduced into a
company in order to make a positive contribution to its products
and services. Companies need technology planning in order to
make better decisions with regard to strategic corporate
planning, R&D management, product development, production
and marketing.
In this paper, we describe a technology planning support
function that is used to analyse relevant information from
various sources in order to optimise the impact of technological
developments on the business and avoid threats that come from
both within and outside the sector/industry. This function
highlights possible threats and so helps planners and decision
makers in making the right decision before the anticipated
problem occurs.
I. INTRODUCTION
Technology is an important strategic asset for many
companies, and technological considerations must be
included in strategic planning processes [1]. Strategic
technology planning can enable companies to anticipate
potential technology-based threats and opportunities and so
react in time to benefit from such developments.
Technology roadmaps have been developed for many
industries with the express purpose of capturing expectations
or intentions within that industry. For example, the semi-
conductor industry’s roadmap [2] provides very detailed,
regularly updated forecasts of developments in the
performances, physical dimensions, etc., of semiconductor
products, components and processing equipment. However,
most technologically advanced industries, for example aero-
space, draw their technologies from many areas of materials
and processes and therefore do not have such a clear view of
the future.
Several tools are used to support technology planning.
The concept that we describe in this paper can support the
process of technology forecasting because it enables
technology managers to make better assessments of the
emerging technologies, and to input alarms for strategic
planning to defend potential threats or exploit potential
opportunities.
9
II. CONCEPTS AND DEFINITIONS
A. Management of technology
The term technology refers not only to physical items
(e.g. machines or tools), but also to methods, techniques, or
software that humans require in order to solve a problem or
gain achievement. It can therefore be categorized as both
“hard” and “soft” [3].
The term technology has evolved more so with the
managerial concept compared to any other concept. When
technology is defined in the literature [4-6] it is described as
applied knowledge focusing on the “know- how” of the
organisation.
Technology management is a process, which includes
planning, directing, controlling, developing and
implementing technological capabilities to shape and
accomplish the strategic and operational objectives of an
organization [7].
Irrespective of what is managed, management involves
concerns about the future. In technology management a
decision must be made by managers today that will affect the
organisation’s future [8]. This decision process needs
accurate inputs to support technology managers in
anticipating the future. This could be using technology
forecasting, which is further discussed in section B.
B. Technology forecasting
Technology is responsible for many changes. By
forecasting technology developments, the decision making
process will be improved due to the greater accuracy of the
future [9].
A technological forecast includes four elements: the time
of the forecast or the future date when the forecast is to be
realised, the technology being forecast, the characteristics of
the technology or the functional capabilities of the
technology, and a statement about probability [10].
Bright, a pioneer in this field, define technology
forecasting as “… a quantified prediction of the timing and of
the character of the degree of change in a technical
parameter” [11]. Vanston [12] shares this view while others,
such as [8;10;13] are willing to accept more qualitative
analyses and approaches (e.g. expert opinions) in the
forecasting exercise.
The greater part of the technological forecasting
literature since the 1960s has been devoted to structured
judgmental approaches such as “Delphi” surveys and “cross
impact” matrices [14]. There are few real industrial
applications of technology forecasting and most of the tools
are described only in theoretical terms [13]. Therefore there
is a need for a systematic process that can generate dynamic
 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
support for technology planning and can use simple and
useful tools.
C. Technology Intelligence (TI)
Most strategic managers claim that their companies keep
up-to-date in their field but they do not have a systematic way
to capture the important elements of technology changes from
the general information around them [15]. Traditional
monitoring processes in most organizations are largely
arbitrary, and are dependent on what individuals or leaders in
the organization are reading, thinking and sharing informally
with each other. In today’s world, such an arbitrary process
is insufficient.
Methods and tools, primarily in the technology
intelligence field such as those described in [15;16] are
needed to offer actions to cope with threats that are not
necessarily obvious to detect. Such a threat, in the form of an
emerging technology or new technological innovation,
product or service, may replace the existing dominant
technology in the market, despite the fact that it may initially
perform worse in terms of the measures used by the current
market leaders; this concept is referred to as disruptive
technology.
Christensen proposes that there are two major types of
technologies, the usual “sustaining” and the less usual
“disruptive” [17]. Sustaining technology relies on
incremental improvements to an already established
technology by making it better and cheaper. Disruptive
technology often has performance problems and lacks
refinement because it is new, appeals to a limited audience,
and may not yet have a proven practical application. Kostoff
consider the disruptive technology as scientific discoveries
that break through the usual product/technology capabilities
and provide a basis for a new competitive paradigm [18].
The activity of collecting and evaluating information on
technology developments has been given several names
including technology intelligence (TI), technology
monitoring, technology forecasting, technology scouting,
competitive technical intelligence and technology watch [19].
Literature on technology intelligence [15;16;20]
describes many processes. Savioz [20] contribute to the
research by proposing a novel concept called Opportunity
Landscape. Peiffer divides the technology intelligence
process into two major steps: identification and assessment of
proposed technology [16]. However, this method has been
criticised because it has a very broad view. Ashton describe a
customer-orientated outlook that utilises a systematic process
that starts with planning for the TI activities then data
collection, analysis, dissemination and application[15].
TI is an important subject matter in this paper in helping
to develop technology watch (TW) framework that will work
as a tool for monitoring; identifying and assessing the
technologies that emerge and could disrupt the business by
affecting or replacing the existing technologies which
comprise the bottom line of the company.
10
III. THREAT AND OPPORTUNITY ANALYSIS IN
TECHNOLOGICAL DEVELOPMENT
Fig. 1 provides an outline of the main inputs, processes
and outputs of technology watch methodology by providing a
step by step presentation on how technology watch is
implemented, maintained and how it functions.
A. Identification of company areas of interest and the critical
“established” technologies
In the beginning, a list of areas and technologies has to
be agreed upon. People from different departments, e.g.
R&D, marketing, and production, are brought together in a
workshop with the purpose of identifying the technologies
that are important now and in the future to the company’s
business.
These technologies should be prioritized using the
analytical hierarchy process (AHP) or another scoring
method. In the workshop, methods such as brainstorming are
used to come to an agreement of the areas of interest and the
important technologies.
B. Identification of the competing technologies for each
“established” technology
Before we proceed in explaining the process, we need to
explain the term ‘competing technology’. Competing
technologies refers to the technologies that can do the same
job or produce the same product or function for the customer,
and could therefore potentially replace the established
technology.
The same people mentioned above in section A, brought
together in a workshop, would identify the competing
technologies that are important and might pose a threat now
or in the future to company’s business.
C. Information collection
This information can arise from external sources,
including:
• Customers, competitors, suppliers, unions subcontractors
and partners
• National government, European Union and international
organisations (e.g. DTI, OECD, WHO)
• Trade fairs, conferences, seminars, exhibition
• Publications (e.g. newspapers, magazines, trade journals,
academic journals, patents)
• Unpublished documents (e.g. computerized database,
meeting notes, correspondences)
• Job vacancies, requests for tenders, contracts
• Industry contacts and friends
• Court appearances
• The World Wide Web (this will become the dominant
information source as it transforms (in part) into a
semantic web)
 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
Fig. 1. Outline of the technology watch methodology
Information also arises from internal sources including:
• R&D engineers and scientists, designers, manufacturing
engineers, shop floor operators, sales personnel
• Intranets, databases, business drivers, forecasts, company
roadmaps
• Feedback from technology watch system users.
Currently, the University of Nottingham’s research team
is concentrating on the internet/intranet as a source of
technology (watch) information.
D. Analysis
1. Threat analysis (a periodic process)
a) Build company ontologies
Ontologies are needed in order to share common
understandings of the structure of information among people
or software agents, and to answer queries from technologists.
11
Several ontologies are initially developed to describe
technology characteristics, related products, and materials.
We need to build the above ontologies before applying
the text mining and Internet search tools. It is important to
decide on the key words and concepts that we would use in
the searching method. Therefore, we need company-specific
“agreed on” concepts that comprise these ontologies.
These ontologies will act as a filter (see Fig. 2). This
filter will pick the issues that concern any of the three layers
(product, process, material). Consequently, money is not
wasted in searching and valuable skills can be allocated
elsewhere. A system is needed to seize any information,
check and analyze it, exploit it and use it in the right way or
simply discard it (if it is not important). For example,
material X is being used in field Y and we could use its
functions/properties; let us test it, is it worthy? Does it fit?
Where?
The system should indicate if the information that it
picks up is important or not. Without such system a company
might lose vital information.
 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET

Product Process Material

------- ------- -------
------- ------- -------
------- ------- -------
Information ------- ------- -------
Drop
------- ------- -------
------- ------- -------

Ontologies
Fig. 2. Ontology function
We need to define and decide about the competency
questions, these questions will serve as the litmus test later:
Does the ontology contain enough information to answer
these types of questions? Do the answers require a particular
level of detail or representation of a particular area? These
competency questions are just a sketch and do not need to be
exhaustive [21].
A sample of competency questions (for our ontologies):
ƒ What are the competing technologies of technology X?
ƒ What are the materials that are used in competing
technologies of technology X?
ƒ What are the products that are used in competing
technologies of technology X?
ƒ What are the functionalities that product Y provides?
ƒ What are the technologies that use material Z?
threats. Logical relationships between the ontological terms
in the brainstorming workshop are used to build the
scenarios. Examples of scenarios are showed in the analysis
section of Table 1.
Morphological analysis is a useful tool that can help in
developing opportunity and threat scenarios, since it is used
for exploring all the possible solutions to a particular
technical problem. By discussing all the dimensions and the
functions of each product, alternative technologies can be
explored and chosen for consideration.
Although morphological analysis is probably not used
widely as technology forecasting tool, it is frequently
mentioned in textbooks along with technological forecasting
tools [22]. In our work it will serve as a technique to
structure a problem or scenario rather than to solve it.

From the technological data stored in the ontologies and
the hidden relations between the company’s technological
concepts several scenarios could be formed.
b) Development of opportunity & threat scenarios
The analysis of opportunities and threats differs from
organisation to organisation. Several issues are considered in
a brainstorming workshop which may be included a SWOT
analysis.
Scenarios are outlines of an expected sequence of
technology-related events that may result in opportunities and
c) Analysis of the significant scenarios
Threats/opportunities should be related to the products,
materials and processes which compromise the organisation
system (see the Fig. 3). We will use our Technological
Threat and Opportunity Analysis (TTOA) method, which is
similar to the widely-used Failure Mode and Effect Analysis
(FMEA) method. It was motivating for University of
Nottingham’s Strategic Technology Acquisition (STA)
subgroup, that our industrial collaborators showed interest
because of the advantage of using similar tool which they are
familiar with.

In Out

- Material
-Product
- Technology Processes
- Service
- Method

Fig. 3. Organisational system

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 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET

TABLE 1. TECHNOLOGICAL THREATS & OPPORTUNITIES ANALYSIS (TTOA) METHOD

No Product Risk
Function Threat & Opportunity scenario
/Part
P S T A
1 Can Hold liquids Glass and plastics as packaging 4 2 1 8
tech will affect the can producers
if they exceeded customer needs
2 Washing Wash clothes and Permanent press fabrics will be 3 3 3 27
machine fabrics used widely in cloth industry and
need special appliance
No Material Function T&O scenario P S T A
1 PC Material for PC will be cheaper than ABS, 4 4 4 64
bottles/containers... which we use in our process
etc (extrusion) now.
No Process Function T&O scenario P S T A
1 Painting/ Painting for cotton Coloured cotton could be obtained 5 5 2 50
dyeing and fabrics from the plants using genetic
concept.
No Market Function T&O scenario P S T A
1 Aircraft Move people Improvement in video- 1 3 1 3
conferencing will affect the airline
companies “business tickets”.
P = probabilities (chance) of threat occurrence
S = severity of the threat
T= likelihood that we will not be able to alleviate the threat.
A = Alarm value
The values of (P,S,T) will be on a scale from 1 to 5 where:
1= very low or none
2 = low or minor
3 = moderate or significant
4 = high
5 = very high or catastrophic

The Alarm value (A) is calculated as follows: The alarm levels are shown in the Figure 3. For example
A=P*S*T if we have scenario that has value 4 (high) for P, 5 (very
high) for S and 3 (moderate) for T, then the alarm value is 60,
so the alarm level is B.

A 64-125
Scenario Alarm value
1 80 B 27-63
2 64 8-26
C
3 50
D 1-7
4 8
Fig. 4 Alarm levels

The alarm value gives an indicator of the threat and
generally, the scenarios with the highest alarm value, which
expressed in the alarm level, should be given first
consideration. Follow up is important and actions to reduce
the impact are needed and critical. These actions should work
on decreasing mainly T value by generating actions as form
of projects to increase the awareness and develop strategies to
avoid these threats.
2. Gap analysis (continuous process)
a) Define the state of the art for each technology
The term: the state of the art (SOA) is the highest level
of development, as of a device, technique, or scientific field,
achieved at a particular time. The earliest known usage of the
term "state of the art" dates back to 1910 from an engineering
manual by H.H. Suplee entitled ‘Gas Turbine’ [23].
To define the SOA, a search through information sources
(such as patents, publications and many other sources) is
used, then by analysing the information in the literature and
from issues related to competitors, a clear image should be
produced to represent the state of the art.
It is useful in all cases to define the SOA, for example, to
a client who is contemplating entry into a particular field, the
state of the art search results can provide evidence of the
suitability of such a decision. Also, another example is that
of a client who is currently active in a particular field, the

13
 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
state of the art search results can lay out the path that must be
followed to design around the current art.
b) Define the gap between the state of the art and the
company’s current capabilities in the established
technologies
Gap
Tech1 Tech2
Threshold (acceptable limit)
Fig. 6. The gap between the state of the art and company’s today situation of the established technologies
The threshold is usually updated but less frequently than
the gap itself (more to do with strategic planning people).
Therefore this will give an indication and tangible measures
of the company’s situation from a technological point of
view. The alarms will be triggered when the gap exceed the
decided threshold limit.
c) Define the gap between the established technologies and
the competing established technologies
Technologies/processes are used to produce components
or products, for example, we produce a product using
technology 1, but somebody else produces the same product
but using technology 2. We consider this competing
technology which is already established.
We need to define technology performance drivers by
watching the needs of the market, what functionalities are
needed and by defining customer buying priorities and
requirements. For example, product attributes that customer
value in their purchase decision could be considered
performance drivers. This may be the same as market drivers
if we are concerned with high-level drivers. However, if we
14
The gap in Fig. 6 is a judgmental value and is measured
on a scale from 1 to 10 where 10 is a very high gap and 0 is
no gap, and all are measured against the state of the art
(SOA). The threshold is a value that should be defined
previously for each technology depending on its importance
to the company.
Alarm
Tech3 Tech4 SOA
are considering detailed drivers associated with specific
processes it is more to do with technology performance
parameters. After we identify these drivers for each
technology, we prioritize them and then the ones given the
highest priority are analysed in the system.
Performance drivers are the critical issues considered by
the customer when he selects process, product, or service.
Paap [24] suggested using performance driver concept in
some cases to understand the nature of technology
substitution. We use this concept as we mentioned earlier in
comparing between technologies and evaluating their
maturities.
Fig. 7 below shows how the analysis is done; we use the
performance driver to assess the technologies. This is done
by comparing the in-house technology and the competing
technology for each driver. The difference between T1
(technology 1) and CT1 (competing technology for T1) is the
gap, which is evaluated by comparing it to the predefined
‘acceptable gap’. If the gap exceeds the ‘acceptable gap’,
then an alarm should be triggered.
 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET

Perf. driver

Alarm
Positive gap
Negative gap

T1 CT1 T2 CT1 Tech’s

Acceptable Gap
Fig. 7. Gap analyses between established technologies and competing technologies

d) Define the gap between the established technologies

and the competing emerging technologies
After identifying the emerging technologies that are
qualified to be competing technologies, a follow up should be
done to make sure that the threats from these technologies are
monitored:
1. Monitor the maturity of the technology using the
technology readiness level (TRL) concept, which was
introduced by NASA, is basically a systematic
metric/measurement system that supports assessments of
the maturity of a particular technology (see Fig. 8). We
observe the TRL for each technology and when it
becomes close to TRL 9, the alarm should work.
2. Monitor performance drivers’ “customer requirements”
for these technologies using performance drivers concept
as well, since the technology becomes a major threat
when it reaches the stage of fulfilling the customer
needs, for example, at a lower cost or higher level of
performance than the established technology.

The alarm should work when the figures show an

Fig. 8. TRL (adapted from NASA)
increase in the performance of the new technology (ECTn)
and it is approaching the performance limit of the established
technology (Tn) (see Fig. 9).

15
 PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
Perf. Driver
Perf. Limit (fulfil the needs)
T1 ECT1
Fig. 9. Monitoring performance drivers for the competing technologies
E. Disseminate the results
Outputs will be targeted to appropriate personnel, based
on the topic area. Many ways are available now with all the
new technologies to disseminate the results, ranging from
face to face conversation to electronic communication forms
such as emails. The material itself could be presentations,
summaries, references, reports and documents. Choosing
between the means of communication depends on company’s
situation, urgency, and targeted staff.
An issue of importance is the feedback from the users of
the system. It is intended that the assessment by users as to
the value of warnings issued by the subsystem (and the
associated reasoning), will enable learning or adaptation via
the modification of the weightings of various concepts, thus
enabling an increasingly sensitive multi-criteria analysis to be
carried out. However, this feature has not yet been developed
as part of the methodology.
IV. CONCLUSIONS
The accelerating rate of technology change is increasing
the risks that technology-orientated companies face. There is
a need for tools to alleviate these risks by providing early
warnings of potential change. The methodology outlined in
this paper is intended to search proactively for information on
potential technology-related developments, and to assess
these prior to supplying relevant personnel with information,
appropriate ‘alarm levels’, plus the associated reasoning.
Keeping an eye on the technological developments in the
same field of industry and outside the sector is a very
important issue, since opportunities implied by changes in the
environment could be exploited for the benefit of the
organisation. By identifying the gaps we defined in this
paper, companies can have an up to date evaluation of their
16
Alarm
T2 ECT2 Tech’s
company situation comparing to the state of the art and will
provide a monitor system that can keeps track of the changes.
The technology watch methodology has been partially
testing using ontologies based on the requirements of a high
technology company. The researchers are currently in
discussion with the research management of this company
with a view to implementing the technology watch
methodology, initially in the manufacturing processes
research and development area.
ACKNOWLEDGMENT
The authors gratefully acknowledge support from the UK
EPSRC.
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