MoTaI 3-4.4

o
M o d u l e3
TECHNOLOGY
ACQUISITION
o
T r a i n i n g o u r s eo n
T e c h n o l o g ya n a g e m e n t
o
T A B L E O F C O N T E N T S
1. SIGNALSFOR CHANGE
1.1 TheInnovation lmperative ............3
1.2 Understanding theChallenge ,..,..........13
1.3 TheTrouble withTechnology,..,,.. .............39
1.4 B u i l d i nagT o o l k i t ...................51
1.5 Summary ...................67
2. TECHNOLOGYSTRATEGY
2.1 lntroduction to Technology
Strategy ............77
2.2 Strategic Analysis.,. ......95
2.3 Strategic Choice .......111
2.4 S t r a t e gPi cl a n n i n g ..,,..,..,..,..,131
2.5 Summary .............137
3. TECHNOLOGYACQUISITION
3.1 Technology
AcquisitionOptions............. ................147
3.2 GhoosingAppropriate
Options.............. .................183
3.3 Technology
AcquisitionOptionDetails .................1Gs
3.4 Summary .................197
4. IMPLEMENTING TECHNOLOGY
4.1 Introduction............,.. ...,..,20S
4.2 Technology Development Projects ............219
4.3 Developed Technology Projects ....221
4.4 l m p l e m e n t a tPi or onb l e m s . . . . . . . . ..................241
4.5 Project Organization............, ...........2Ts
4.6 Parallel lmplementation........ ..............321
4.7 Change Management......,.... ....UT
4.8 FromPlanto Action ..................381
4.9 Summary ..................401
5. LEARNINGTO IMPROVETECHNOLOGY MANAGEMENT

5.1 lntroduction.....,... ......411
5.2 Leamingto lmproveTechnology Management ,..,..,...........413
5.3 Mechanisms forLearning,,.....,.... ,.,,.,.....419
5.4 Continuouslmprovement........ .....,....U1
5.5 TechnologyManagement Audit .................4O9
5.6 Summary ....493
Thismoduleexploresthe differentroutesthroughwhicfra firm can acquirethe tecfrnological knoMedgeit needsto
exploitstrategic
options,lt willilluminate
theadvantages andpitfallsof eachroute.lt willprovidea framework to help
in makingkey decisionsaboutthe technologyacquisition optionsthat can be considered.Finally,it will provide
informationthatwill helpa firm learnfrom its technology
transferprocessso that it will developthe skillsto be a
leamingorganization thatwillcontinueto accesstechnologyto improveits positionin the marketplace.
Theinformationin thismoduleis arrangedas ouilinedbelow

Explanation of technology acquisition
options
. intemalacquisition
. extemalacquisition
. combination of intemalandexternal
Choosingappropriate options
. auditof companycapabilities andgrowthplans
. keycost/benefit issues
Detailson eachtechnology acquisition
option
. advantages and benefits
. disadvantages andrisks
. costfactors
Theterms'technology transfe/'or"technologyacquisition"
havea varietyof meaningsdepending on the person's
experience or orientation,
Somewillsaythattechnology transfermeanslicensing technology.
Othersthinkof buying
equipmentwithembeddedtechnology.Stillothersthinkthesewordsdescribethe acquisition of information
that
helpsthefirmdo thingsit couldnotdo before.Thefactof thematteris thatallthesemeaningsandmoreareconect.
Technology transferaddresses the acquisition fromanysour@- internal,extemal,or a combination
of technology
of both.
Througha combination of watchingfor signalsthat revealthreatsand opportunities and the processof strategy
development, a firmwill cometo a decisionas to whattechnology it needsto acquire,At this pointthe firm must
leavethe worldof conceptsand analysisand becomepractical.Thefirm mustleamaboutthe possiblesourcesof
itsdesiredtechnology,
makesomeharddecisions aboutwhicfrsour@is mostappropriate, andputthe agreements
andplansin placethatwill resultin the acquisition
of the tecfrnology.
I
I
TrainingGourseon
Technologyl!|anagement 147
Intemaltechnology acquisitionis the resultof technologydevelopmentefiortsthatare initiatedandcontrolled
by the
companyitself. Internalacquisition requiresthe existenceof a technological capabilityin the company.This
capability
couldvaryfromoneexpertthatunderstands thetechnological
applicationwellenoughto managea projed
conducted by an outsideresearchanddevelopment (R&D)groupto a full blownR&Ddepartment.lt alsoincludes
the lesswell-knownprocessof seizingtacitknowledge(understanding and codifyingknowledgethatalreadyexists
insidethe company, but is notwellenoughunderstood or widelyused).
Intemaltechnology acquisition
optionshavetheadvantage thatanydevelopment becomestheexclusive propertyof
the company.In addition,the resultingtechnology will be tailoredto meetthe company's need.However,intemal
development alsohas risks. The development of technology generallytakeslongerthanacquiringand adapting
already-developedtechnology fromexternalsources.lnternally-developed technologiesgenerallycostmorethat
thoseacquiredexternally.This is primarilybecausethe development costsare oftenwrittenoff againstthe
application
for whichit was originallydeveloped.Thereforethosesellingtechnologies generallydo not haveto
recoverthefulldevelopment costsin theirsellingprice.And,last,butnotleast,is thefactthatthecompanymaynot
havethe expertiseto developor evenmanagethe development of a technologyintemally.
Extemaltechnologyacquisitionis the processof acquiringtechnologydevelopedby othersfor use in the company.

Extemaltechnology generally
acquisition hasthe advantage of reducedcostandtimeto implement, andlonerrisks.
However,almostall technology availablefromextemalsour@swas originallydeveloped for difierentapplications.
Thereforeextemalacquisitionusuallymustcontainan aspeclof adaptionto the acquiringcompany's application.
Theacquiringcompanymustrealizethatthisaddsbackin somecosts,time,andrisksto the project.
Externalacquisitioncantaketheformof licensing, purchasing equipment

withembedded technology,investmentin
a jointventurewhichhas a technologydevelopment purpose,or eventhe acquisition of a companythat hasthe
desiredtechnology. Whichexternalacquisitionchannelto takegenerallydependson whicfrchannelhasthe desired
technologyavailable.Assumingthe technology is availablefromseveralsources,the cfroicebecomesa business
decisionwherecostsand benefitsof eachoptionare comparedand the bestall-aroundchoiceis selected.Care
mustbe takento considerall the factorswhenmakingthisdecision.The valueof fairlyintangible thingslikelong-
andpublicimagemustbe considered
termrelationships alongwithmoretechnicalissueslikethefit of thetecfrnology
to the need,qualityissues,function,andprice.
T r a i n i n gC o u r s e o n
T e c h n o l o g yM a n a g e m e n t 149
Manyformsof technologyacquisition are a combination of externaland internalactivities.Combination options
includethe additionof networking to internalactivities,reverseengineering (whereinternalpeopledecipher
developments accomplishedby others),covert acquisition(the more blatantcopyingof anothercompany's
technology),contractingothersto conductR&Dfor you, and forminga R&D partnership whereportionsof the
technologydevelopment are sharedwith others.In fact the listof optionsdiscussedin this paperforma continuum
frompurelyintemaltopurelyextemal.
Giventhe parameters of the worldin whichwe livethe first step is to acceptthe fact thattherewill not be a perfect
solution.All optionshaveadvantagesanddisadvantages.Generallythe advantages that a companyis lookingfor
will not all residein oneoption. In addition,
the disadvantages thatthe companymayfindhardestto dealwithwill
oftencomewiththe optionwiththe advantages mostsoughtafter.Thecompanymanagement mustinvestigateeach
option,considerthe prosand consof eachand makethe selectionthat has the bestoverallcombination of assets
and problemsfor the company.
PurelyInternal PurelyExternal
1. SeizingTacitKnoMedge X
2. IntemalR&D X
3. IntemalR&DwithNetworking X
4. ReverseEngineering X
5. CovertAcquisition
withIntemalR&D X
6. CovertAcquisition
7. TechnologyTransferandAbsorption
8. ContractR&D
9. R&DStrategicPartnership X
10.Licensing
11,Purchasing
12.JointVenture X
13.Acquisition
of CompanywithTechnology X
l.;) i,i:l,l!l
t
TrainingQourseon
Technology$anagement 151
The advantagesand disadvantagesof internal,external,and combination
intemal/externaltechnology
acquisition
sour@swillbediscussed
in thefolloringsix pagesundertheheadingslistedin theslideabove.
CompanyTechnologicalGroudfi
The company'sneedfor technological growthmustbe an importantconsideration whendecidingamong

technologyacquisition options. ldeally,the companyshouldgrowtechnicatly fromeverytechnology
acquisition.
Thisis desirable becauseif thetechnology acquisition developsintemalcapability thecompany
becomeslessdependanton others. lt is ableto dealwith problemsthat ariseder the introdudionof the
newtechndogyandit is aHeto developits ownenhancements of thattechnology.
Thisreducesits needto
purchaseseMcesfromothers,makesit betterableto seMceits orn custorners in a tinrelyandresponsive
manner,and increasesits potentialto developexclusiveproductsor processeswhichwill give it a
competitive
advantage in the marketplace. Companymanagersmusthavea planfor groringthe company,
andgroring itstechnological capabilityhasto be partof that plan. Theacquisitionof newtechnologymust
be consideredin lightof the company's planfor growth.
Internaltechnology sourcesandthosethat accessexternalinformation whilebeingdrivenby internal

activitiesofferthe bestopportunities
fortechnological gronrth.Wren thecompany'spersonnel aregrappling
withthe hands-onissuesof developing technology, theyunderstand its strenghsandweaknesses in a way
thatcannotbetoldto thembyothers.Enhancing intemalcapabilityby acquiring inforrnationvia networking
or reverseengineering is goodbecausethe company'sknowledgebaseis broadenedwithoutloosingits
hands-onfeelfor the technology. Extemalacquisitionoptionsare the leastlikdy to developtechnological
strengthin the company.Thereare,of coutse,manysituations wherethe acquisition of technology from
externalsourcesis the best,or perhapsthe onlyoption,thatwill morrethe companyahead.Caremustbe
takento addressthe needfor companytechnological grorth by designingthe technology transferprocess
in a waythatrnaximizes theenhancement of the company's technological Thisgenerally
capability. means
thattrainingsessionson thetheoryandpracticeof thetechnology mustbe includedin the acquisition.
'i
'I
T r a i n i nC
g o u r s eo n
Technology Management 153
Exclusivity/GompetitiveAdvantage
Manycompaniesrelyon a technological
advantageto differentiatetheirproductfromtheircompetitors.
Thesecompanies mustuseinternaltechnologydevelopment viainternalresearchanddevelopment or
contractingR&Dfrom an exclusivesupplierto maintaintheircompetitive advantage.Technology
acquisitions
thatdo not givethemexclusiveaccessto the technology makesit impossible to prevent
theircompetitors
fromhavingthe sametechnology in theirproducts.
Thereare someexceptionsto this generalcase. lf a companycan negotiatethe exclusiveuse of

anothercompany'stechnologyin a marketthat is not beingservedby the companyowningthe
technology,it can havea competitive
advantageoverits localcompetitors.A commonexampleof this
is whena companyin a developingcountryacquiresthe use of a technologyfrom a companyin a
developedcountry.The technology transferagreementin thesecasesgenerallyspecifythat the
acquiringcompanycanusethetechnology in theircountryandthe providing
companywillnotcompete
in the marketin thatcountry.Anotherexampleis whenthe acquiringcompanyusesthe technology in
a differentcustomermarketin the same geographically area,such as applyinga machinetool
technologyto the healthcare market.The acquiringcompanymay havethe customerbaseand
reputationsuchthat it wouldbe muchmoresuccessful thanthe developingcompanyin the new
market.
Caremustbe takento addressthe future. Eventhoughthe technology maygivethe

acquisition
companya competitive advantage, thatadvantage will not last. Othercompetitors willdevelopsimilar
or perhapsbetterversions.Manyacquiring companies includethe rightto futureenhancements made
by the providingcompanyin theirtechnology transferagreements. This assumesthe marketthe
providingcompanyis servingis demanding the sameenhancements as the marketbeingservedby
the acquiringcompanyand that the providingcompanyis proactively developingimprovements.In
orderto be fully ableto maintaina competitive advantagethe acquiringcompanymustdevelopan
internalcapabilityso that it can maintainthe technological leadershipin its marketthat the external
technologyacquisition first provided.
:
TrainingGourseon
TechnologyManagement 1 55
CompanyCapability
Obviouslya companywithoutinternaltechnicalcapabilities cannotconductinternaltechnologyacquisition.

Companies with internaltechnological havea greaternumberof optionsthan thosethat do not,
capabilities
Companies mustmaketheiracquisition decisionswith a full understanding (or lackof
of theirintemalcapabilities
them).A companyshouldnotoverestimate itsintemalcapability.lt shouldnotputitspeopleintoa positionof making
decisions
or managing situations
thatare beyondtheirknowledge base. Thiscan resultin enorsthatcanseriously
impactthe company'shealthor evenbe fatal. The companylackinginternaltechnicalcapability musthavea
consultant
thatit trusts,likeone of its ownemployees, to helpit makegoodtechnological decisionsbothin the
technology processandafter.
acquisition
As highlighted
earlier,a companyshouldbe acquiringtechnology in a fashionthatbuiHsitstechnological capability.
Thisis especially
trueof the companythatis completely
dependant on outsidesupport.Thesecompanies mustpay
specialattentionto be surethattheirtechnologicalacquisitionprojectsare structuredin a way that the internal
growsat leastto the pointthatit canmanagethe tecfrnical
capability aspectsof extemaldevelopment projectswith
itsownpeople.
Timeto Market
Thelengthof timefromtheacquisition of technologyuntilthecompanybeginsto recoverrevenuefromitsinvestment

via the saleof productsor servicesresultingfromthe newtechnologyis a keyfactorin the acquisition decision.
Internalacquisitiongenerallytakeslongerthanacquiringalready-developed technology fromexternalsources.
Managers haveto weighthe reducedcapability development opportunitiesandpossiblelackof exclusivity offeredby
internaldevelopment againstthe fastertimeto marketofferedby extemaltechnology acquisition.ln manycasesit
makesabsolutely no senseto developtecfrnologythatalreadyis ableto producethe products or servicesdesiredby
the company.Thisdoesnot meanto saythatextemalacquisition is instantaneous.Timemustbe allowedfor the
acquisitionprocess,equipment set-up,modificationto meetlocalraw materialrequirements, stafftraining,andthe
necessarychangesto the company'spromotional material.However,the opportunity costof takingthe time to
developthe company's ownsolutionmaybe suchthatacquiring existingtechnologyis the bestchoice.
Risk of Failure
Thereare risksin all typesof technologyacquisition.However,the riskschangewith the typeof acquisition.The

risksof technologicalfailureare greatestwith intemaland contractR&D. No matterhor goodthe researcl'rers and
designers are,R&Dprojectsmaynotattaintheirgoals.Research anddevelopment,
by definition,
requirestravelling
intounknorn tenitoryandwheneverone is dealingwiththe unknownit is difiicultto predictthe outcome.A related
andcommonriskis notabsolute failure,butthedevelopment takingmuchlongerthanexpected. ln thiscasethe risk
is morein the areaof unknowncostsand lengthof time untilthe development can begineamingthe company
money.Purchasing proventechnology greatlyreducestheriskof technologicalfailure,butdoesnoteliminate it. The
companystillhasto adaptthe acquiredtechnology to itsapplication whichmayhavecharaderistics thatare difierent
enoughfromthosewherethe technologyis successful, that it fails.
Thereis anotherareaof riskthatalsohasto be considered.Thatis the riskthatthe technology will not be accepted
by the company's employees.Failurein thisareais usuallydueto lackof education andcommunication aboutthe
benefitsof the nerr technology.Mostpeoplesee changeas a threat.Changethat incorporates the acquisitionof a
new pieceof equipmentthat doeswork that usedto be doneby peoplethreatenspeoplewheretheyfeel most
vulnerable - theirjobs. Thisis a riskthatcanbe managed, butif it is not,it cankilla projectthatin everyotherway
is viable. This risktendsto be greaterin externalacquisitionprojectswherethe potentialfor apparentsudden
introductionof the newtechnology canleadto thegreatestfears. Intemalacquisition projectsaremoregradual,and
althoughtheyare not ftee of this kindof risk,peopletendto be morewillingto accepta new development created
intemallythanonethatarrivesfromabroad.
Costs and Affordability
The cost of eachtechnologyacquisitionoptionis last but not leastin this list of issuesto consider.The key to
addressing thisproperlyis beingsurethatallcostsareconsidered in theanalysis.In thecaseof extemalacquisition,
the up-frontcostand royaltycostsare generallyquiteclearand relativelyeasyto compareagainstthe benefits.
However,it is easyto overlookthe costof installation, adaption,andtrainingin the areawherethe newtecfrnology
is to be introduced,
not to mentionthe costsassociatedwith the impactthe newtecfrnologyhas on the restof the
organization. Thedifficultyin estimatingthetotalcostincreaseswithinternalacquisitiondueto the increasednumber
of unknornsinvolved .: l
TrainingGourseon
TechnologyManagement 159
Gostand Afiodability (Confdf
Anotherareathat is difiicultto estimate,but an importantconsideration in assessingthe costof various

optionsversustheirbenefits,is to makean estimateof the valueof the benefits.Forexampleonetypeof
technology acquisition
maycost moreto acquire,butwhenthe valueof the benefitssuchas increased
companytechnological capabilityare deductedfromthe cost,it rnaybe the bestchcice. The highercost
optionmayperformthe requiredfunctionmoreefiiciencyor makea superiorproduct.In thesecases,even
thoughit costsmoreto acquirethe technology, aftera timethis difierenceis morethan madeup for by
increasedsalesfromthe additionalor betterresultingproduc{.Thebestwayto do costestimating is forthe
lifeto the technology.Thiswill oftenleadto the resultthatthe highestinitialcostchoicewill be the lorest
costoptionoverthe life of the technologydue to factorslike loweroperating@sts,higherefficiency, and
betterquality.
Finallyoncethecompanyhasestimated the costandnetbenefit(benefitsaftercostsarededuded)of each

option,the choicemaystill boil downto whichone is affordablewith the company'spresentcashand
borrowingcondition.Evenif the "ffordability''conditionresultsin the acquisition
of the lorrestinitialcost
optionwhichwouldhavebeenthe choicewithoutthe analysis,the companyhas learnedaboutwhat
improvements couldbe rnadeonceit is in a bettercashposition.lt will at leastknowthat it haschosena
lowervalueoptionand will haveexpectations that are in accordwith the potentialthat the optioncan
provide.
Makinga Decision
Thefdlovttingtablesummarizes the informationprovidedaboveand providessomegeneralguidelinesto

helpguideinitialthinking.However,generalities do not applyto everysituation.Eachcasemustbe
consideredby itself. The companymustdevelopa list of the pros and cons of each optionbeing
considered.Theareashighlighted in theCONSIDERATIONS columnprovidea guideto whatthingsto look
at. The keyto makinga finaldecisionis to providea currencybasedestimateof the valueor impact
(negativeand positive)of the eachtechnologyoptionfor eachof the considerationarea. The sumof the
valuesandimpactsoverthe lifeof the technology will showwtrichoptionhasthe bestpotentialfor meeting
the company'sneeds. j
TrainingCourseon
Technologyfllanagement 161
Ghoosingthe Best TechnologySourcefor YourCompany
c0ilsrDERAnoils II{TERI{ALTECH}IOLOGY
COTHNANOilOF ENERilALTECHilOLOGY
SOURCE IiITERI{ALAilD
EXTERilALSOURCE
COMPAI.IY
TECHNOLOGICAL potentid
highest potential
medium - mustaddress
potential
lowest
GROWTH waystogrortechnically
EXCLUSIVIW
/ COMPFNTME potentid
highest br maymaintdn exclusivity, generdlydonothavea unique
ADVANTAGE prodwt
uniqtc orprooess mayhaveb share productorpro@ss,
maynegotiate
withpartrnrs maket
br a specified
COIUPANY
CAPABILITY mustberelatively
stong bchnbal shengh
isrcquired, bchnicalsteng$isanasset
technicdly butit canbeweaker butnotessentid
TIMETOMARKET genaally
longest canbereduced
dueto should
beshortest
inbnnation
added
RISKOFFAILURE - highest
bchnicdly medium
risk - lowest
bchnically
- lowest
acceptance - highest
acceptance
COST generally
ANDAFFORDABILITY highest
costhigh usually
nBdium
ost belowest
should
c+ability;
developrnnt
vdue ofhidden
beware cosb
The companymustthen lookat what it can affordrelativeto the up-frontor short-termcostof eachoption. The
bestoptionmaynot be affordable.lt canthen chooseto selectan affordableoptionknowingfull well that it will
not be acquiringall the benefitsthe bestoptionwouldafford.Thecompanyneedsto documentits analysisalong
withthe assumptions uponwhichit was basedso that it can learnfromwhatactuallyhappenscomparedto what
wasprojectedin the decisionmakingprocess.Thiswill makefuturedecisionmakingeffortsbetterandwill provide
the basisfor decidingto upgradeto a bettertechnology financialpositionimprovesto the
optionif the company's
pointthata betteroptionbecomesaffordable! ,, .:.1,
Training{ourse on
T e c h n o l o gMya n a g e m e n t 1 63
Technology keyto globalcompetitiveness
is absolutely as illustrated
by the dataabove.
Wth the breadthof optionsthata companyhasto consider, it musthavethe internalabilityto logically

considerall of them and decidewhichis mostappropriate.This abilitymustspantechnicaland
nontechnical issues. A companywith internaltechnicalstrengthis temptedto alwaysdevelop
technology when otherformsof acquisitionmay be a betterchoicefrom a financialor long-term
perspective.On the otherhand,a companywithoutany technicalstrengthis at a great
relationship
disadvantage when it comesto managinga development projectconductedby an outsideR&D
organizationor licensinga technology.Companies acquiringtechnology fromexternalsourcesmust
havesufficientcapabilitiesinsidethe companyto understand the advantagesand disadvantages of
the choicesbeforeit. Lackinga technicalpersonwho understands the technological
aspectsof the
opportunity
well enoughto discernthe prosand consof the variousoptions,will leavethe decision
makingentirelyto thosewho will decidebasedon priceor long-termrelationships. A companymust
makedecisionsbasedon an informedunderstanding of all technicaland nontechnicalissuesif it is to
havea successfultechnologytransfer. This sectionwill providesomeinformationthat will helpyou
chooseamongtechnology acquisition
options.
ri
TrainingCourseon
SeizingTacitKnowledge
Companiesshouldmake a consciouseffortto documentthe tacit knowledgeof its employees.Thorough

documentation wouldconvertthe tacitknowledge to codifiedknowledge makingit readilytransfenable.However,
sincetacitknowledgeis the resultof experience it is by definition
constantly
changing,Codifyingtacitknowledge
runsthe riskof stiflinginnovation
by forcingeveryoneto conductan activityaccordingto the instructions
thatresult
fromthe codifiedknowledge.
The solutionis to createan environment wheretacitknowledge is transferred

witha minimalamountof codifying.
Onemethodis to rotateemployees througha varietyof jobs. Thiscreatesthe situationwhereeachemployeeis
constantly learningfromotheremployees abouthowto performnewjob functions.Thetacitknowledge thatalready
existsis taughtto the personnewto thejob by onethatalreadyhassignificantexperience. Thepersonleamingthe
newjob acquirestacitknowledge thatmayenhancehis/herregularfunction.Thepersonexperienced in a job, has
theopportunity to leamfromthenewpersoncomponents of hiVhertacitknowledge fromanotherapplicationthatcan
enhancethejob beingtaught.
The investment
in havingmanypeoplespendthetimeit takesto comeup the leamingcurveon manyjob functions
is morethanmadeup by thefollowingbenefits:
' Tacitknowledgeis spreadthroughoutthe organization andproductivity

resultingin innovations gainsin other
partsof company.
' Thecompanyis notvulnerable to havingkeypiecesof tacitknowledge in oneof a few people.
contained
' Employees to innovatebecausetheyseetheirjob securityincrease
are motivated withthe knowledge to
performmorethanonejob andtheirjob satisfaction
increased by the increasedvarietyof work.
Seizingtacitknowledge haslowcostandlorrrisksbecausethe knowledge alreadyexists.lt will improveprocesses

in otherpartsof the companyandwillnot leavethecompanywhena keypersonleaves.Thecostsinvolvedinclude
thefactthatproductivitywill sufferin the shorttermbecausemorepeopleare on leamingcurves,andjob functions
thatcouldbe doneby one will at timesbe staffedby an expertand a leamer.Therewitlalsobe somecostsfor
documentation andin-house training.
T r a i n i n gC o u r s eo n
Internal R&D
Technologyacquisitionvia intemal R&D consistsof having a researchand developmentgroup within the companythat
createsthe technologythat the companyuses. The size of the grouprelativeto the sizeof the companyis dependantpartly
on the degree of sophisticationof the niche that the company serves and partly on the attitudeof managementtoward the
valueof technologyand technologydevelopment.Althoughno one is entirelyfree of influenceftom outsidesour@s,we are
usingthe term "intemalR&D"to describethe form of technologyacquisitionthat uses creationof new technologybasedon
ideas from within as its primarymethodology.This is to be distinguishedfrom "internalR&D with networking"(to be
discussednext)that, althoughthe company'stechnologydevelopmentactivitiesare donewithinthe company,its R&D stafi
puts some concertedeffort into knoring wtrat others in their field are doing.
Havingan intemalR&D group is surprisinglycommonwith small companies.Many smallcompanieshave grownfrom the

developmentof a new productidea by the companyfounder. This has often led to the creationof a small group in the
companycalled R&D that continuesto improvethe existingproductby developingsolutionsto problemsthat it may have,
createsrelatedproductssuch as ones with highercapacityor more features,and developsother productsthe company
could make in the future, The intemalR&D groupsin smallcompaniesare reallyproductdevelopmentgroupsthat do
almostno researcl't.In fad, if the strictdefinitionof technologyis used,they oftendo not developtechnology.Rather,they
assembleexistingtecfrnologiesinto productsthat can be made and sold by the company.Sincethe productstend to take
on the characteristics
of uniquetechnologiesthey becometreatedas a technologiesin their own right.
IntemalR&D groupsin smallcompaniestend to sufierin a numberof ways. They oftenlackthe technicalstrengthto do the
functionrequiredof them. Many R&D groupshave either no engineersor are staffedby very junior engineers. They are
often managedby an owner or anotherlong-timeemployeethat has much experiencebut very littletheoreticaleducation.
These people,becausethey have no idea wtratengineeringcan do, will not let the engineersdo engineering.Rather,they
conduct productdevelopmentby trial and enor. This limits the degree to which the R&D group can develop excellent
technologiesand products.They are oftenvery poorlyfundedwhictrevenfurtherlimitstheirabilityto accomplishtheirgoals.
In spiteof these @mmonshortcomings,companieswith internalR&D have some significantadvantages.They knor their

productsfrom a hands-on perspec{ive.They understandthe technologiesused in the product. \Men the prcdud fails or
when relatedopportunitiesare discoveredin the market,they can react quickly. Becausethey have createdthe productsor
technologiesthat they sell,their produds tend to be unique. This givesthem a basisfor a competitiveadvantage. \Ahen
a competitordevelops an improvedversion of their product,they are better able to understandthe technologybehind the
improved product and create an even better one.
InternalR&D has an additionaladvantagein some environments.Many govemmentsencouragethe creationof technologyby
offeringdevelopmentgrants or tax reductionincentives. Companiesin countrieswith these incentivescan have a portionof
their technologyacquisitioncosts paid by the govemment.
Intemal R&D has several significantdisadvantageswhen comparedto some forms of externaltechnologyacquisition.

Developingtechnologyusually takes longer,often significantlylonger,than acquiringand adaptingalready-developed
technology.This meansthat the companyacquiringtechnologyfrom an extemalsourcewill generallyget their productto the
marketsoonerthan the one developingintemally.lt will be makinga retum on its investmentwhile the intemalR&D company
is still investing. lf the companyfirst in the market handlesthe businessproperly,they will be very difficultfor the second
companyto dislodgeas the preferredsupplier. This situationis complicatedfurther by the fact that not only does intemal
developmenttake longer,the lengthof time is also unknown. Thereis a significantriskthat the projed will not be completedby
the time projectedand that the actualcompletion,even afterit has passedthe originalplannedcompletiondate,will stillbe very
difiicultto establish.
In-housedevelopmentis often moreexpensivethan acquiringtechnologyextemally.This is because the developingcompany,

especiallyif it is small,will generallybe limitedin the areas of technicalcapabilityof its staffand equipment.In addition,a
companyofferinga technologyfor sale is generallymakingits main revenuesfrom the sale of the productsit has developed.lt
does not have to re@verits developmentcostsfrom the sale of technology.In fact, any amountrecoveredin this fashionmay
be consideredas a windfall. Therefore,it will oftenoffertechnologyfor sale at less than the full developmentcosts.
Riskof failureis anotherdisadvantagethat must be addressedwhen consideringintemalR&0. There is alwayssome riskthat

an R&D projectwill not accomplishits goals. The more difiicultthe projectand higher the risk. There are some risks with
acquiringand implementingexistingtechnologyas well, but with good planningand executionthese can be managed.
However,some things either cannot be done at all or cannot be done by the companywith the knowledge,experienceand
facilitiesavailableto it. lf the projectfails to accomplishits goals,the companylosestwice. lt losesthe moneyinvestedin the
developmentand the time spent conductingthe R&D that could have been spent implementingknown technology. These
lossescan be significantenough to be fatal.
The cost factors involvedwith internal R&D include acquiringand paying for the staff, equipment,and space for offices,
laboratoriesand prototypingshop space. This cost alone relativeto other sourcesof technologymay be enoughto lead a
companyto not chooseintemalR&D. lt may also indicatepreferencefor use of a combinationof smallintemalR&D capability
and extemalsourcesof tectrnology.This is especiallytruefor companieseitherin the start+p phaseor thosethat havenot had
an intemalR&D funclionto this point.
TrainingCourseon
InternalR&Dwith Networking
InternalR&Dwith networkinghas all the sameadvantages and disadvantages discussedunder

InternalR&D. The maindifferenceis the factthatthe R&Dstafi makea fairlyconcertedefiortto keep
currenton the stateof developmentof the technologiesaffectingtheir products.They networkwith
technologycreatorsat conferencesand trade shows. They follow technologicaldevelopments
publishedin magazinesandjournals. Theyfollowthe developments madeby their competitors by
readingmagazines, journals,and salesliteraturewherecompetingproductsare discussed.They
attendmeetings,demonstrations,and tradeshowswheretheircompetitors' productsare on display.
Thisaddssomeupfrontcoststo operatingan internalR&Dgroup,but providesthe staffwithexposure

to otherideas. lt keepsthemfrom"re-inventing the wheel". lt reducesthe riskof failurebecausethe
staffis workingwith a betterknowledgebase. For the samereason,it reducesthe time to market
which more than makesup for the added costs for networkingactivities. The only possible
disadvantage of this approachwhencomparedto pureinternalR&Dis the possibility that the st#s
inventivenesswill be curtailedbecausetheirvisionmay becomelimitedby the alternatives exhibited
by theircompetitors.
Thisapproachactuallyimprovesthe company's externaltechnologyacquisitioncapabilities.

lts R&D
staffare familiarwith optionsthat are readilyavailablein the market. This uncoverstechnology
acquisitionoptionsthat mightnot be consideredby a purelyinternalR&Dcompany.
TrainingCourseon
ReverseEngineering
Reverseengineering is the determiningof the technologyembeddedin a productthroughrigorousstudyof its attributes.lt

entailsthe acquisitionof a productcontaining a technology
thatthe companybelieveswouldbe an asset,disassembling it,
and subjectingits components to a seriesof testsand engineeringanalysisto ascertainhor it worksand the engineering
designcriteriausedin the productscreation.Thetestsuseddependonthetechnologies involved.Forexample,mechanical
devicesrequirephysicalmeasurements includingthe measurement of manyduplicatepiecesto learnthe statistical
tolerances involvedin the originaldesign. Theyrequirestructuraltests
to learnaboutdeflection versusload,chemicaltests
to accuratelydetermine the materialfiomwhichthe piecewasmade,abrasionteststo determine thewearcapabilities,
etc.
Similarly,electronicproductshavea seriesof teststhat can be conductedto determinethe designcharacteristics of the
products,chemicalproductshaveanotherset,andso on.
Reverseengineering requiresa verygoodunderstanding the productbeingstudiedis usedin so thatthe

of the application
testsusedto ascertainits designcriteriaare appropriate.lt also requiresstrongengineering capability.To be a good
reverseengineer, onemustbe a gooddesignengineer.He/shemustunderstand engineering principles
verywell. He/she
mustbe ableto designand conductteststhat producethe kindof engineering datathat can be usedto producea design
capableof duplicating the originalproduct.A person(or company)with a build-and-try designstrategywill not havethe
capabilityto reverseengineerproducts.The materials,the tolerances,the shapes,the assemblyof the originalproductall
havedesignimplications andthe reverseengineermustunderstand them.
Reverseengineeringis a seriousdisciplinein the automobileand machineryindustries.Beforedesigningcompeting

products,companiesreverseengineertheircompetitors' productsto ascertaintheirstrengthsand weaknesses.New
designsmaintainthe strengthsand solutionsare developed for the weaknesses resultingIn a competingproductthat is
betterthanthe originals.Reverseengineering is lesscostly,lessrisky,andtakeslesstimeto marketcomparedto intemal
R&D. lt createsthe opportunity to resultin a productthat meetsthe competitionin all its areasof strengthand has a
competitiveadvantagein the competito/sareasof weakness.On the negativeside,it hasthe potentialto resultin a "me-
too"product.Me-tooproductsare essentially the sameas the competito/sandofferthe customerno reasonto switchfrom
thecompetitor.Thereis the possibility
thatthe reverseengineering teamdid not properlyunderstandthe originaldesignand
the neurproductis actuallypoorerthanthe onestudied.Thereis alsopotentialthatthe reverseengineered productinf1nges
on patentsor otherlegalprotedionthe originalproducthas,leadingto legalcosts.
ti'-:rliD{: {
.t
t
Trainingdourseon
Technologyl$}|anagement 175
Covert acquisition with Internal R&D
Covert acquisitionhas similaritiesto reverseengineering. However,it is less above board. lt entails

finding out about technologydevelopmentsbeing conductedby a competitorthat are not open to the
public. Mostcompaniesdo this to some extentby questioningsuppliersaboutcomponentsbeingsold
to the competitoror by socializingwith the competitor'semployees. The less scrupulouscompanies
becomeinvolvedin industrialespionageusing cameras,binoculars,and break-and-enter techniques
to learnaboutthe happeningsinsidethe competitor'splant.
UsinginternalR&D alongwith covertacquisitionhas the same benefitsas reverseengineering.lt can

resultin a productthat is similarbut not exactlya me-tooproduct. InternalR&D can improveupon the
competitorsproductby addingvalue and solvingtechnicalproblemsit may have. Companiesthat are
good at covert acquisitionand internalR&D can capitalizeon being second into the market because
they can improveupon the introducer'smistakes.
Costs,risk, and time to marketcan all be reduced. However,risks includebeing sued and developing
a reputationof being an unscrupulouscompany. Customerswho would othenrise appreciatethe
lower price or improvedproductthat a companywith this strategycan offer, may also be unwillingto
givetheir businessto this company.They may havethe thinkingthat anyonewho would"steal"product
ideasand technologicalknowledgeis not to be trustedin businessdealings. In situationswhere the
ratio of covertacquisitionto internalR&D is high,a companymay not developmuch technicalstrength
and may producea me-too product. This situationresultsin a companythat is less able to adapt to
changesin the marketand more likelyto be sued for infringingon the rightsof its competitor.
Govert Acquisition
CovertacquisitionwithoutinternalR&D guaranteesthe productwill be a copy (generallya poorcopy)of the

competito/sproduct. The companycan introduceit at a lower price becausethere are no development
costs to recover. However,with the exceptionof price,the productwill have no competitiveadvantage.
WithoutinternalR&D it is likelythat the produclwill not be copiedaccuratelyand the productwill actually
be worse than the original. A companywith this technologyacquisitionstrategyis likelyto have inferior
products,an inabilityto improveits products,an inabilityto deal with technicalproblemsthe productsmay
have,a poorimage,and highlegalcosts.
Technology Transfer and Absorption
Technologytransferand absorptionis similarto lntemal R&D with networking. The dffierenceis that there is much
more effortput into searchingfor, learningabout,and translatingexisting,no-costtechnologiesto the company's
applications.Internaltechnicalcapabilityis requiredto understandthe technologiesfound and to developthem into
solutionsfor the company'sapplications.This approachis relativelylow cost becausethe extemaltechnologyis not
paid for. Internalcosts includethe salariesof the internaltechnicalstaff, search and networkingcosts and the
developmentof company-uniqueequipmentusing the technologyfound in public sources. Dependingupon the
degreeof in-housedevelopmentrequired,lab and shop space may also be requiredto buildand test prototypesand
final solutions.
Technologytransferand absorptionis most often used with processtechnologies,An examplewould be where the
companyfinds a processtechnologythat has been inventedby a universityor governmentinstitution,and applies
the technologyto its own productionline by acquiringcomponentsand attachingthem to its existingequipment,
Another exampleis the situationwhere a companyacquiresthe componentsof a technologythat is proven in one
applicationand installsthem in a completelynew application.Bothof thesehave lessriskcomparedto internalR&D
becausethe technologyhas been shownto work in some situations.However,it is stillquite riskydue to the potential
for not fully understandingthe technology,the application,and the interactionbetweenthe technologyand the
application.
A companyemployingthistypeof technologyacquisitionis usingexternallydevelopedtechnologywith littlepossibility

for acquiringsupport.On one hand, this helps developtechnicalcapabilitybecausecompanypersonnelare forced
to work with the technologyin a hands-onfashion. On the other,the lack of readily-available
supportresultsin many
mistakesand wrong decisions. Generallycompaniesthat take this approachdo not like to pay for technology.They
prefer to develop things themselves,althoughthey are more than willing to acquire technologyfrom any extemal
sourcethan those employingintemalR&D, providedthe technologyitselfis no cost. With the right team of in-house
expertisethis can be a very effectiveform of technologyacquisition. However,if the approach results in the
applicationof new technologyto an applicationwithoutenough attentionto detail,it can have disastrousresults.
GontractR&D
Companies chooseto contractresearch anddevelopment for a varietyof reasons.Thisis an idealoptionfor thosethatlack

the necessary
facilitiesandexpertise to conductthe requiredworkbut stillwantto maintaincontroloverthe development
andownthe resultsexclusively.lt is alsoa goodchoicefor thosethatneeda specialized setof equipment or expertise for
occasional
short-term projects.Thisavoidsthe investment in thesefacilities
andthe ongoingcommitment to staffthat
wouldnormallybe underutilized.lt allowsshort-term ac@ssto world-class personnelandfacilitiesfor specializedprojects
thatwouldothenrvisebe completely beyondthe company's means.
Somecompanies withstronginternalR&Dstillchooseto contractout R&Dprojects. Onesuccessful strategyis to maintain

internalstrengthin technologies coreto the company's business.R&Dneedsin otherareasare contracted out. This
ensuresthatdevelopments crucialto the company's
successareconducted underthe company's roofwhilethosethatare
importantfor a project,but not for the company'soverallbusinessare doneby thosemoreexpertin the field. A simple
exampleis a electronics product-oriented companydoingits electronicand softwaredevelopments in housewhile
contracting mechanical aspectsof productdevelopment and its processdevelopment activitiesto others. Another
successful strategyis to occasionally contractR&Din coretechnology areasas well. Thisexposesthe company's R&D
personnel to technology expertsin otherenvironments. Thisformof technology acquisition
hasthe sidebenefitof staff
enrichment,
Contracting R&Dreducesthe company's hands-onexperience withthe technology. Thosecompanies mostsuccessful at

contractingR&Dhavean intemalprojectmanagerwhoiswellversedin thetechnology involved.Thisenablesthecompany
to acquirethe benefitsof avoidinginvestment
thatwouldbe underutilizedandaccessing peoplewhilestill
highly-specialized
maintaining controland learningfromday-to-day happenings on the project.AlthoughcontractR&Dofiersthe benefitof
acquiringextemaltechnology withoutsharingownership,it is moredifficultto keepthe workconfidential.Caremustbe
takento ensurethatthe contracting organization
meetsthe company's confidentiality
standards.
Thefollowing checklistwillhelpwhensearchingfor an R&Dsupprier:

. necessary skills(technical
andbusiness)
. trackrecord
. confidentiality
. facilities
. @mmunication skills
. specialized expertisein desiredtechnology
area
TechnologM y anagement 183
Prolect managersmust be capable and willing to deal with contractualissues. Many contract R&D
performersare expertsin their technologyareas,but are quite poor in the contractingside of the business.
Havinga standardcontraclwhich containsa standardset of the company'srequirementswill help when
dealingwith these organizations.Key issuesto be addressedare ownershipof technology,confidentiality,
deliverables,schedules,price,projectcommunications, and consequencesfor not meetingcommitments.
Companiesmust be willingto be flexibleon the consequencesaspectconsideringthe unpredictablenature
of R&D. Horyever,scientificinstitutionscan be moreinterestedin the sciencediscoveriesthatthe R&D may
uncoverthan the company'swelfare.Companyprojectmanagershave to conveyto the contractorthat the
decisionto contractR&D was a businessone and the resultsof the work have seriousimpactson the
company'sbusiness.Regularprojectcommunicationis essentialbecauseissueslike delaysor unexpected
findingscan be discoveredearly and adjustmentscan be made.
The followingmust be addressedin the contract
. clear deliverables
. clear milestones(schedule)
. o\ /nershipof technology
. @mmunications plan
. @ntingency plan (exit clause)
On the surface,contractingR&D has the same risksof failureas internalR&D. However,with the selection
of the rightcontractorfor the work required,the companyshouldbe able to havea morecapableteamthan
it could assembleintemally.So, providedthe contractualand communicationissuesare handledproperly,
the risk of projectfailureshould be reduced.The companyhas to be especiallycarefulthat overallfailure
does not happenat the next step,which is the introductionof the resultsto an applicationin the company.
It must be sure that it fully understandsthe resultsin light of the company'sapplication.
R&DStrategicPartnership
R&Dstrategicpartnerships
havemuchin commonwithcontrac{ing R&D. Theygeneratty consistof a group
of companieswitha commonneedthat collectiuely
contrada researchinstitutionto conductthe workfor
them.Thisallowsthecompaniesto sharethe riskandcost.lt alsocreatesa situation
wheretheycanleam
fromeachotheras well as fromthe expertsconducting the research.All the samecontracting and
communicationissuesdiscussed
undercontractR&Dapplyhereas well.
Thecompanies in R&Dstrategicpartnerships areofiencompetitors.Thereforethe kindof projectsthatare

mostconduciveto this type of technologyacquisitionare precompetitive research.Theseare usually
appliedresearchprojectsthataretoo riskyandtoo expensive for anyonecompanyto handte,butif certain
resultswereachieved the industryas a wholewouldbenefit.As a result,thecompanymusthaveeitheran
internalR&Dor a contractR&Dcapability to translatethe resultsof theapptiedresearchintotechnology
the
companycanuse. Companies mustbe awarethatthe company's shareof the R&Dstrategicpartnership
costsare notall the costs.Thecostsof developing thefindingsfurtherandimplementing themmustalso
be considered.
R&Dstrategicpartnerships canbe initiatedby onecompanyinvitingothersto join,by an informalgroupof

companies, by a formalized
association of companies in an induEtry,or by the R&Dinstitutionitsetf.The
last modelis the mostcommon. The institutionis motivatedby its needto haveits work funded.
Companies, who aregenerally too competitive to considerinvitingothercompanies to join withthem,are
willingto considera proposalpresented by an independent organization. Thisis especiallytrueof small
companies.R&D strategicpartnerships are becomingrelativelycommonwith largecompaniesin
eledronics/computers, automobiles,cil,andmining,whiletheyarestillveryrarewithsmallcompanies.
Licensing
Licensingexistingtechnology is a popularandefiectiveformof tecfrnology

acquisition.lt enablescompanies to skipthe
technology development phase of technologyacquisitionand movedirectlyintoimplementation. lts majorbenefitis a
significant
reduction in timeto marketrelativeto formsof technologyacquisition
thatrequiredevelopment. lt alsoenables
the acquiringcompanyto sharethe financialrisksof acquiringthe technology withthe providerbecausethe bulkof the
paymentsare generallyin the formof a royalty- a percentageof salesof productmadeusingthe nenrtecfrnology.
It hasthe appearan@ of beinglorr-riskto almostrisk-free.lf the acquiringcompany's applicationis identical

to the one
for whichthe technologywas developedit can be fairlylcnrrrisk. Technological risksare almosteliminatedbecausethe
technologyhasbeenprovento workin the applicationbeingconsidered.However,thereare stillimplementation risksto
be addressed.Themainpotential for failurein implementationis resistance to cfrangeby the company's employees.lf
the newtechnologyis perceived to put theirjobs at risk,employees will stronglyresistimplementation resultingin the
failureof proventechnology.Specialattentionmustbe madeto communications ensuringthe acquisitionprocessto
ensurethatemployees willnotkilltheproject.Theproviding companycanhelp.Thelicensing agreement shouldinclude
trainingandcommunication supportso thattheacquiringcompanycanbenefitfromthedeveloping company'sexperience.
Whenthe new applicationis not identicalthe riskscan be significant.Theseprojectscan quicklybeginto resemble

intemalR&Dprojects.lf companies realizethisandplanaccordingly the resultscanbe verypos1pe.Manycompanies,
including
smallones,havelicenseda technology thatwas eitherdevelopedfor anotherapplication
or hasnot beenfuly
developed.Theyhaveaddedtheirown R&Dand havebeensuccessfulin the marketwith a nerivand uniqueproduct.
However,thereare alsomanyfailureswherea companymistakenlythoughtit couldlicensea technologyanduse it for a
nar application
with littleeffort.
Costscan be (andshouldbe) lowerfor the receivingcompanybecausethe providingcompany(presumably) is making

sufiicientrevenuesfrom its use of the technologyto pay for the investmentmadein developingit. Thereforeit is in a
positionto licenseat a pricethat is lowerthanthe cost of development.However,thereare costsin additionto the
licensingfee thatare not obviousat first.Additionalintemaldevelopment and implementation oostshavealreadybeen
mentioned.Anotherfactorto addressis thatfactthat if donepoorlylicensingcan do littlefor the developmentof intemal
technicalstrength.The developingcompanyhassignificanttechnicalcapabilityand experience withthe technologythat
shouldalsobe transfened to the acquiringcompany.Thiscanaddto the initialcost,butwill resultin a companythatis
muchmorepreparedto dealwithcustomerserviceandfutureproductdevelopment issues.
1
T r a i n i nQ
g o u r s eo n
Technology Management 1 89
Purchasing
A commonand effectiveexternaltechnologyacquisitionmethod is purchasingtechnology.This is normallydone in

the form of buyinga piece of productionmachinerywith embeddedtechnology.This is generallythe quickestform
of technologytransfer because the technologyis already packaged and ready to use. lt is low risk because the
equipmenthas been proven to work technicallyand evidencecan be acquiredfrom other users to back up the
providingcompany'sclaims, In addition,the providingcompanycan also provideimplementation supportin the form
of set-upand training. The costswill be lowerthan developingthe technologybecausethe providingcompanyis
generallyin the businessof providingthe machinescontainingthe technologyto many userstherebyspreadingthe
developmentcosts over severalcustomers.
Care must be taken to not overlookthe costs of internalactivitiessuch as staff time spent on training and the
disruptionof the presentproductionthatwill happenduringthe installation of the new equipment.The temptationwill
be to considerthe price paid to the providerto be the entire cost of the technologyacquisition. lt also must be
understoodthat the providingcompanyis generallyin the positionof sellingmachineryto as many usersas possible
which makes exclusivityhighlyunlikely. The acquiringcompanyhas the same potentialresistanceproblems
discussedunderLicensing.The implementation projectmust be designedin a way that these risksare minimized.
Technologyacquisitionin thisform also does littleto buildinternalstrength.This may not be an issue,as in the case
where the purchasedproductionequipmentis not the company'score technology, They need only address
maintenanceand operationtrainingwhich can be acquiredfrom the provideras part of the purchase.
Anotherform of purchasingtechnologyis to pay for the know-howbehinda technologyand the right to use it in the
company'sapplication.This is very similarto licensing,except it is a one-timepurchaseratherthan an ongoing
relationship.lt has all the same risksand benefitsof licensinga technologyfor a new applicationdiscussedin the
Licensingsection, The major differenceis in the areas of cash flow and risk. The purchasingcompanygenerally
pays for the technologyin one or a very few payments. Licensingnormallyhas the bulk of the paymentsmade in
relationto the salesthe acquiringcompanymakes usingthe technology.The paymentsin a purchasingsituationare
for an agreed price and are not tied to any revenuesthe acquiringcompanyreceiveswith the technology. The
acquiringcompanyis carryingmore of the risk in hopes of greaterreturnsin the future becausethey do not have to
be shared. As a resultthe price of technologypurchasedin this fashion in generallylower.
Joint Venfurewith TechnologyProvider
Enteringintoa jointventureagreement witha techndogyprovideris anotherformof extemalacquis16n

that can be veryeffective.Typicallythis is a partnershipbetweena companyw1ha technologyand a
companywith marketaccess. lt can takethe form of the creationof a newcompanywith eachof the
partnersowningsharesin the new companyin proportion to the vatueof theircontribution
to the new
company.In this case,production facilitiesare installedin the newcompanywiththe partnersbringing
technologyandmarketknor-howalongwithcapitalinvestment intothe newcompany.Thedistribution and
marketingof the productmay usethe systemthatthe companywith rnarketac@sshas in place,or that
company'sknow-hoflmaybe usedto createa dedicatedsystemfor the newcompany.
Anotherversionof this is very similarto licensing.The providingand acquiringcompaniesform a

contractualagreement describing
whoprovides whatandhor the revenues areto be shared.Theprimary
difierencebetween thisandlicensing
is thefactthatthetechnology providerhasan expandedrelationship
withthe acquiring company.Theymakejointdecisions aboutproduction and marketingeventhoughthe
acquiringcompanyactuallyproduces the produc{and provides it to the market.Theadvantage is thatboth
companies learnfromeachother.Thedisadvantage is thateithercompanycannotmakedecisions on its
own,the partnershaveto agree.
Bothformsof joint venturewith a technologyprovidergenerallyhavethe advantageof low risk. The

technology is provenand immediately-implementable technology (aftertrainingand installation).
The
acquiringcompanywill get exclusivityin a region.lt will havean ongoingrelationship withthe provider
providingopportunityto leamfromthe provider.Therearesomemarketrisks. Eventhoughthe acquiring
companywill likelyhavea@essto the market,the neurproductmaynot be acceptedby the market.Joint
venturestypicallyhavehigherupfrontcoststhanlicensing, especially
whena nevycompanyis created.
Bothalso havethe constraintof the partnershavingto agreeon operationat issues. This may be an
advantageor a disadvantage dependingon the situation.
Trainingiourse on
Technology Management 1 93
Acquisition of a Company with the Technology
The final form of externaltechnologyacquisitionto be discussedin this course is the acquisitionof a

companythat has the technologydesiredby the acquiringcompany. This can happenwhen one company
has a technologicalinnovationthat is impactinganother company'sbusiness. Rather than trying to
duplicateor improve upon the first company'sinnovation(whichwould take time and may not have the
desiredresults),the secondcompanynegotiatesto purchasethe entire company. This can resultfrom a
defensiveaction as mentionedabove or it can be a deliberatetechnologyacquisitionstrategy. This option
has very littletechnicalrisk,and if the productis on the marketand doingwell, it can also have low market
risk.
Acquiringcompaniesto get technologydoes have sore areas of concern. lf the acquiredtechnologyis to

be used in a differentapplication,some internalR&D with its associatedrisks and problemsmay be
required. The acquiredcompanymay have other problemssuch as an undisciplinedwork force or poor
image with the publicdue to an unrelatedproblemlike an environmentatspill. lf the acquiredand the
acquiringcompanieshaveto work togetheras one organization,there will be systemintegrationissuesto
deal with. There could be key membersof the acquiredcompanywho resentthe take-over,causingthem
to leaveand take key undocumentedtacit knowledgewith them.
The cost shouldbe proportionalto the value of the cornpany'sassetsincludingthe technology. However,
this is not alwaysthe case. The company'shard (physical)assets may be of little value to the acquiring
companywhich may increasethe cost of the acquisitionabovethe value of the technologyalone. On the
other hand,the providingcompanyorvnersrnay be in a desperatefinancialsituation,and willingto sell the
entire companyfor considerablyless than its full marketvalue. \Mren negotiatingsuch a purchase,the
acquiringcompanymust havea full understandingof the value of the thingsit wants. Thesewould include
the technology(includingthe impact of the reducedtime to market),and perhapsits market reputation
and/or its productioncapabilities. So long as the purchase price is less than the value of the desired
componentsand this plus the internalcosts are affordable,technologyacquisitionvia purchasinga
companyis viable.
TrainingCourseon
Consider truestory'A Taleof TwoCompanies,,.
thefolloiying
A smallcompany wasfoundedbya farmerwhohadinvented thecompanysinitialprodrct lt grel veryslorvlyop€ratingoutcf

hisfam yardoverthefr.rst20yearsuntilthedayit licensedanoth€rinverionfromanotherfarmerwhichgt€atlyenhancsth€use
of its coretedtmlogty.At thistimeit mo/edintotheW ands€tup operations park
on theeastsideof a stieetin an industrlal
andhircditsfirstengineer.Aboutthistime,a uniwrsivprofessor whohadsta.teda comp€ny to commercialize
a technology he
haddevelopcd at a universitymoveto the loton thewestsideof the streetdircctlyacrossfilrn the eastcomperry.Thetu/o
companies wer€bolhservingtheagriculturalm*hinerymaket,hrt withcompletely difier€ntproducbusirEcompletely difierent
technologies (mechanbal fortheeastcompany andelectrical
br theoneonrrcst).
Theeastcompany beganto groivrapidlyasit pursu€d a strategy

oftedrnologyacquisition.O\ierthealmostthirtyyearsthathave
passedtromthetimeit setupontheeastsuo of thestreetit us€deveryfurmof tecfinology acquisition
disqJssed in thismodule
exceptcove.tacquisitbn.Mostof itsearlyacquisitions qeandeditsproductlineandincreased itscap€bility
initscor€tedtnology
area. Onlyafrerit wasveryrell es{ablished did it moveto acquiretedrnologyin newbutcornplementary areas.lt greriv
to its
pr€se.tdaysituationof beingthe hrgestagricultural machin€rycompanyin Canadawith1900employ€es andan intemalR&D
@artmentthstboasts70enginee6and1m supportstiafi.lt hasa dominant position
in theCanadian mafietandsollspmducts
onti\€ cor inents.
Ttlefortunesof thecomp€ny onthewestsideof thestr€etwerenotsogood.lt b€gsnto noticethesuccess of itsneighbor,

and
eventhoughit originallywasnotin themechanically products
basedagricultural business, it decidedthatit couldproduce
products of thesametype. lt beganto "lookoverthefence"andcreateproducts thetwereverysimilarto theonesbeing
developed on theeastside. Sosimilarthatthe eastsidecompany suedit fo,rpatontiffiingem€r on severaloccasions.The
company gre\rv
to about2m (including
twoengineers)andthenbeganto shrinkas itsrepuiatlon asthelo,vcost(andlowquality)
Foducerbeg€nto costit morebusiness thatit eamed.
Theweslsidecompany novsrtooka technologyacquisition

strategy,
choosingratherto copyitsneighborthinkingit coulds€lllo\,tt
dueto reduced development
cost.Theraslivwasthatit neverundeBtood theproducts it w99copyingwellenoughto copythem
\rvellor to servicethemproperly.Wthin20 yearsof settingup on the samestr66iwitha similarsizedoperationas the east
comPany, thewestcomPany suedfor bankruptcy.Someformeremployees boughtthe assetsandcontinueto op€ratsin th€
samefashionas thefounder, withlhe samelovelof success.lt p€sentlycontinues witha prcductlinemuchliketheaagtside
company, no engin€€rs,
anda staf thatfluctuates
from20 to 50 people,depanding
onseasonal demaid.
Asthetaleof twocompanies
shoivs,choosing
theappropriats
technology
acqulsition canhavsa profound
strategy impaclon a
company's inthemaketplace.
srJccess
T r a i n i nC
g o u r s eo n
T e c h n o l o gMya n a g e m e n t 197
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Killing,Peter. 'TechnologyAcquisition:LicenseAgreementor JointVenture",ColumbiaJournalof WorldBusiness,
Fall, '1980,pp. 38-46.
Lowe, J. F. and N. K. Crawford. "New ProductDevelopmentand TechnologyLicensingfor the SmallerFirm",
lndustrialManagement& Data Systems,SepUOct,1983,pp.26-2g.
Contractor,FarokJ. Licensingin International Strategy: A Guidefor Planningand Negotiations,QuorumBooks,
Westport,1985,pp. 173-218.
Index
acquisitionof a company 149,195
communication 159
contractR&D 151,159,193-195
covertacquisition 151, 177-189, 197-1gg
document 163
future 155,163,187
innovation 1 6 9 1, 7 7 , 1 8 3
intemalR&D 1511 , 6 9 - 1 7 1 ,7 7 1
, 9 71 , gg
internaltechnologyacquisition 149,157
international 1 7 7 , 1 9 1 ,9 11, 9 3
jointventure 149,151, 193-195
leadtime 191
licensing technology 147
measuring 179
networking 151,151 37 , 1,177,197
purchasing 1 4 9 , 1 5 11,5 9 1
, 921 , 96,200,201
R&D 1 4 9 , 1 5 11,5 5 1
, 5 9 ,1 6 5 1
, 69-171,11 79
73-197 1 ,9 5 - 1 9 7 , 1 9 9
R&Dstrategicpartnership 151,187
resource 187
reverseengineering 1 5 11, 5 3 1 , 75,197
risk 159, 1 6 3 1 , 97,201
strategy 147,179-191, 193,194,1 8 7 , 1 9 11,9 9
tacitknowledge 149,1 5 1 , 1 6 7 , 1 9 7
team 177,193
technology acquisition 1 4 7 , 1 4 9 - 1 5135,5 1
, 571, 591 , 611 , 651 , 91,197,199
technology development 1 4 9 , 1 5 11,5 5
technology transfer 1 4 7 , 1 5 11,5 3 1, 55,165 1 ,8 1
O
M o d u l e4
IMPLEMENTING
TECHNOLOGY
o
T r a i n i n g o ur s e o n
Technology anagement
o
T A B L E O F C O N T E N T S
1. SIGNALSFOR CHANGE
1.1 TheInnovation
lmperative ............3
1.2 Understanding
theChallenge ...........13
1,3 TheTroublewithTechnology............. ..........39
1.4 Building
a Toolkit ........51
1.5 Summary ....................67
2. TECHNOLOGYSTRATEGY
2.1 lntroduction
to Technology
Strategy ............77
2.2 Analysis,..
Strategic ..,..............,...95
2.3 Strategic
Choice .......111
2.4 Planning
Strategic ....131
2.5 Summary ..,....,..........137
3. TECHNOLOGY ACQUISITION
3.1 Technology
Acquisition
Options.......... .......147
3.2 Appropriate
Choosing Options.... ...............153
3.3 Technology
Acquisition
OptionDetails ......165
3.4 Summary ..................197
4. IMPLEMENTINGTECHNOLOGY
4.1 Introduc'tion
........... ..................205
4.2 TechnologyDevelopmentPrcjects.. ......213
4.3 Developed TechnologyProjects.......... ...................221
4.4 fmplementation Problems ......241
4.5 ProjectOrg nization........... ....275
4.6 Parallellmplementation...... ..............321
4.7
4.8 FromPlanto Ac'tion..... ...........381
4.9 Summary ...........401
5. LEARNINGTO IMPROVETECHNOLOGYMANAGEMENT
5.1 Introduction.............. ......,..,........411
5.2 Leamingto lmproveTechnologyManagement........ ..413
5.3 Mechanisms forLeamin9............ ...............419
5.4 Continuouslmprovement........ ...................41
5.5 TechnologyManagement Audit .................469
5.6 Summary .....493
Technology acquisitionis the processof takingownershipof technology.Oncea companyhas ownershipof a
technology,it mustimplement it, or insertit intoan application
withinthecompanyin orderforthecompanyto benefit
fromthe technology.Module4 discusses technology implementation. lt explores
. the designof technology projects

implementation
. implementation problems
. designing andusingprojectteams
. parallelimplementation
. changemanagement
. projectlaunch
Thismoduleprepares thereaderformovingfromthemorecerebralactivities of planningandnegotiatingto the more

activeprocessof launching thenewly-acquired technology intothecompany.Upto thispoint,theUNIDOtecfrnology
management programhas repeatedly madethe pointthatwithoutproperplanningand analysisof the information
availableto the company, the technology acquisition
and implementationprocessis likelydoomedto failure.From
thispointfonrard,the emphasis will shiftfromplanningto action.Justas projectswithoutplanningare likelyto fail,
technology thatis not successfully
implemented is guaranteed to fail.
Module4 willprovideinformation
on projectdesignfor bothtechnology
development
andtechnology implementation
projects,Theabsoluteimportance of effectiveteams,projectcommunication,
andeffectivedecisionmakingwill be
stressed.
ln addition,the modulewillelaborate
on sometoolsandtechniques thatwillfacilitate
thetecfrnology implementation
process.This discussion
wouldbe enhancedif the trainercan provideexamplesof technology strategysu@esses
andfailuresfromhis/herexperience, especially
if the examplesarefromcompanies in the participant's
region.
TrainingCourseon
lmplementing technologyis fundamentally a technology transferprocess.lt startswiththe transferof technology
ftomexternalandintemalsourcesto thoseresponsible for the researchanddevelopment p@ect.Thisis trueeven
if the technologyis developedentirelyoutsidethe company.Nextthereshouldbe interaction betweenthe R&D
peopleand thosethatwill ultimatelyusethe technologyonceit is ready. Thistechnologytransferis two-way.The
researchers communicate whatthey are leamingas they proceedwiththe development activitiesto the usersand
the usersinformthe developers aboutthe application and how the developmentwill or won't be usefulto the users.
The betterthis two-waycommunication is the morelikelythe resultingtechnology will meetthe needsof the
application. Finally,
thecompleted technology is transfened in a physicalsenseto theapplication. lt is implemented
or installedintothe application.
However, technology transferat thisstageis morethanphysical.Theinstallers and
the usersmustbe taughtaboutthe technology, howto useand maintainit properly.Technology implementation is
abouttechnologytransfer.
lmplementing technology in developedanddeveloping technologyprojectshavesomethingsin common,in spiteof
theirfundamental differences.lmplementing technology involvesfinancialcommitment.The amountinvested
usuallyincreases as timegoesby. lmplementation needto be structured
activities in a way that,as the amountat
stakeincreases,the uncertaintyinvolvedin the technologydecreases.Reductionsin uncertaintyreducethe riskof
failure.Structuring
implementationactivities
according to thefollowingconceptswill helpreducerisk.
Methodsof technologyacquisition,as pointedout in Module3, fall into three categories:intemal,extemal
and some combinationof internaland external. Even a cursorylook at these will revealthat internal
acquisitionmethods and those with a significantcomponentof internal acquisitionwere generally
technologydevelopmentprojects. At the same time it will be seen that externalacquisitionmethodsand
those combinationsthat were primarilyexternal acquisitiontend to be dealing with already-existing
technologyor developedtechnology. Technologyimplementationprojects,thereforetend to fall into two
categories: implementingtechnologydevelopmentprojectsand implementingdevelopedtechnology.
These categorieshave some fundamentaldifferences.Sections4.2 and 4.3 of Module4 will addresshow
to conduclprojectsresultingin these two types of technologyimplementation.
The fundamentaldifierencebetweendevelopingand developedtechnologyprojectsis that they are two

differentsteps on the road to the use of technology. Both are necessary,but in the case of developed
technologyimplementation, someoneelse has completedthe creationprocess.lt needsonlyto undergoan
implementationprocessto make it usefulto the company.Developingtechnologyprojectsmust complete
both the technologycreationprocessand the step of being insertedinto the companyin a fashionwhich
makes the technologyuseful.This fundamentaldifferenceresults in other characteristicdifferences.
Developingtechnologyprojectsare done by researchand developmentpeople,whiledevelopedtechnology
projectsare implementedby operationalpeople. These peopletend to be difierentin nature,education,
and prioritiessuggestinga needfor some difierencesin approach. Finally,developingtechnologyprojects,
regardlessof how well they are planned,have a degree of uncertaintyabout them, while developed
technologyprojectsare more straightforward.This difierencemust also be addressed.
Technologydevelopmentprojectsare characterizedby uncertainty.The developersbegin with a collection
of known informationand a goal or conceptualdescriptionof the final output. The gap betweenwhat is
knownand the final outputis unknown.Althoughthe primarypurposeof a technologydevelopmentproject
is to create the output, the project itself consists of a set of activitiesthat are designedto convert the
unknownsinto knowns. The project must be structuredin a way that uncertaintyis driven out and those
responsiHefor the projectcan make informeddecisions. An effectivestructureis the Stag+Gate Process.
The projectis divided into the follorring seven stageswith GO/NO-GOdecisiongates betweeneach stage:
. idea
. preliminaryassessment
. COOC€pt
. developrnent
. testing
. trial
. launch
Each stageis designedto reduceuncertaintyto a new leveland to providethe company'sdecisionmakers

with the informationthey need to decide if the projectshould continueto the next stage or be scrapped.
Robert Cooper of Canada's McMaster University, developed a process that is now used by many
companiesall over the world.
TrainingCourseon
Dr. Coope/s stage'gateprocessforcesthe companyto continuallyconsiderand evaluatethe technology
being developedfrom technicaland market perspectives. The flow chart on this and the next page
illustratesthis. The center column of boxes containthe project'sstages. To the right of the column of
stages are the technicalactivitiesthat need to be done. To the left of the column of stages are the market-
related activitiesthat need to be completed. The project cannot proceedto the next stage unless the
technicaland marketactiWieshave been done and the resultsare en@uragingenoughthat the company
managementcan justify the further investmentthat the next stage will require. lf proceedingto the next
step is not justifiable,then the projectis killedand sentto the graveyard.This forcesthe company'slimited
resourcesto be spent on projectsin which the unknownsare convertedinto knowns,and the neul-found
knownsprovideevidencethat the projectwill be successful.
The first stageconsistsof idea generation.The idea can comefrom an identifiedmarketneedthat requires
a technologicalsolutionor from a technologicalbreakthroughthat needsdevelopmentto resultin a product
or processthat will benefitthe company.An initialscreeningof the idea by companymanagement,against
companygoals,will lead to discardingof ideasthat do not fit the company'splans. Those that appearto
have a fit are permittedto proceedto the next stage. The preliminaryassessmentis done from both
technicaland marketperspectives.The preliminaryassessments,which are "quickand dirty",look at the
marketand the technicalhurdlesto be encounteredin the technologybeingconsidered.A descriptionof the
productsand roughestimateof the salesthat could resultfrom the technologyto be developedis made. In
addition,a descriptionof the technicalunknownsthat stand betweenthe presentstate of the technology
and the conceivedproducts,a roughestimateof the moneyand time neededto achievethe technological
goals, and an assessmentof the likelihoodof success is made. This informationis submittedto
managementfor a decision. Managementlooks at the issuesinvolved,comparesthe benefitsand costs,
considersthe risks in light of the company'sfinancialand technologicalposition. lt then decidesif the
project is to proceedto the next stage or if it is to go to the graveyard.
Technicalor market activitiesthat producea negativeanswer to an unknownare blessingsin disguise.

Althoughno one wantsto leam that the technologydevelopmentthat was plannedwill not work,the sooner
this is found out, and investmentin a "dead horse" is stopped,the better. The stage-gateprocessis
designedto find out the most obvious projectstoppersearly in the process before inrestment is too great.
The stag+gate processis iterative. The technicaland marketassessmentsare repeatedin severalstages,
each time in greaterdetail.
Easy-teidentifyreasons(i.e. low monetaryand time investment)to kill the projectare found as early as
possiHeto minimizeinvestmentin a projectthat cannotsucceed. More elaborateassessmentsare made
in the concept,development,testing,and trial stages,each time tryingto establishwhetherthe projectwill
succeedor shouldbe killed.
In the conceptstage, conceptualdescriptionsof the ultimateproduct(s)are developedfrom a marketand

technicalperspective. This further defines market and technicalissues that must be solved. Some
hypothesesare developedand experimentsdesignedand conductedto prove or disprovethe theories
behindthe technologybeing developed. The technicalwork can be describedas applied researchand
experimentaldevelopment. Initial market studies are conductedto see if the productsconceivedhave
marketpotential.The conceptsand the resultsof the technicaland markettests conductedare submitted
to managementfor a third GO/NO-GOdecision. lf the pQect survivesthis stage it moves to the
developmentstage. Here full-fledgedproduct (or process)developmentactivitiesare conducted. On the
technicalside, remainingexperimentaldevelopmentwork is completed,engineeringdesign is done and
prototypesare put together. On the market side the marketingplan is developed. Managementreviews
the resultingprototypeand the marketingplan againstits goalsfor the projectand again makesa GO/GG
NO decision.
The product(s)that can result from the new technologyhave now reached a stage where they can be
thoroughlytestedfor technicalperformanceand marketacceptance.These tests can un@verissuesthat
will kill the project,even at this late date, or will requirefurtherdevelopmentto address. Management
considersthe resultsof the technicaland markettests and decidesto kill, go on to the trial stage or retum
the projec{to the developmentstage for further work. The trial phase producessmall amountsof product
that are sold to customers. The marketacceptanceof the product,along with the problemsencounteredin
the trial production,form the inputsto the last evaluationpoint. The managementlooks very hard at the
resultsfrom a businessperspective.The projectshould have uncoveredand dealtwith any negativeissues
by this point. However,it is possiblethat market or productionissues not knoamuntil the project reaches
this stagecan still kill it becausethe riskof the impactof failureon the restof the companymay be too great.
It is also possiblethat some solvablemarketor technicalissueshave been identified. Management,after
being suppliedwith an estimateof the cost and time to addressthese issues, can decide to return the
projectto an earlierstagefor furtherdevelopment.lf, howevel all the signalsare "GO", the development
projectis completeand the productis launched.
The stage-gateprocess as describedabove is focused towards technologydevelopmentprojectsthat
result in a product that the company makes and sells. In those cases where the technology
developmentprojectresultsin a processimprovementthat makesit possiblefor the companyto make
its current product better,the stage-gate process is very similar. One differenceis that the "market"
includesthose responsiblefor the productsmade with the presenttechnology. They must be able to
see that new technologywill have the improvementsexpected without introducingunexpected
problems. Anotherdifferenceis that once the projectreachesthe launchstage,it is placedinto a new
project,a developedtechnologyimplementationproject. This topic will be coverednext.
T r a i n i nC
g o u r s eo n
lmplementingdeveloped technology hasa lot in commonwith implementing developing pro,iects.The
technology
mostimportantsimilarity
is thefactthateachimplementationis a distinctprojectwitha beginning
andan end. The
projectneedsa planwith a scheduleand clearGO/NO-GOdecisionpoints,a projectteam,and well laidout
responsibilities.
The stage-gateprocesswith some modifications is well suitedto implementing
developed
projects.
technology
The areasof difierencehavemoreto do with peopleand circumstances thanwiththe processitself. Developed

technology implementation projectshavelesstechnicaluncertainty butmorepeopleuncertainty. Peopleuncertainty
is partlydue to the fact that the projectis to be doneby operational peopleratherthan development people.
Operational peoplehavelessexperience and feel lesscomfortable with uncertainty.Theyare morelikelyto feel
threatened by the newtechnology.Muchmoreemphasismustbe placedon trainingand communication of the
benefitsof thetechnological improvement. In additionto thisis anothermajordifference.Thepeopleimplementing
developed technology alsohaveto copewiththe day-to-day businessas usualwhiletheypreparefor the transition
to the new technology.They,in effect,haveto do twojobs. The personworkingon a technologydevelopment
projectdoesnothavethisaddedburden.
T r a i n i nC
g o u r s eo n
The first key to successfulimplementationof developedtechnologyprojects is to realize and rememberthat the
implementationis a projectwith a beginningand an end. \Mth this understanding,a team of affectedpersonscan
developa projectplan by usingthe checklistin the slide above.
Documentingthe project plan by developingand writing down the details associatedwith eacl'rof the items in the
failure- poor communication.Documentingthe plansgives
checklistaddressesthe first majorcauseof implementation
everyoneinvolvedsomethingto referto. Everyoneis then at leasttryingto "singfrom the same song sheet."
TrainingCourseon
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T r a i n r n gC o u r s e o n
A flowchartillustrates
theflowof workfromthe beginning of the projectuntilits completion.lt consists
of boxescontainingwords describingeach step or set of activitiesconnectedby arrowsthat
demonstrate the orderof the work. lt illustratesdecisionpointsby showingstepsthat if certain
conditionsare not met the projecteitherstopsor returnsto an earlierstep. lt showswhen some
activitiescan be donein parallelandwhentheyhaveto be donechronologically.
The projectmilestonestatusreportputsa startand end dateon eachstep(theset of activitiesin a box on the flow
chart).The milestonestatusreportalso recordsactualcompletiondateswhichprovidesfeedbackto the project
plannersandthe performersas well as management as to hcnrwell the projectis meetingthe schedule.
TrainingCourseon
A Ganttchartgraphically illustrates
the information
in the milestonestatusreport. lt consistsof the list of project
stepson theverticalaxisandtimeon the horizontal andendpointplannedandactually
axis. lt showsthe beginning
experienced for eachstep. SomeGanttchartsalsocontaina columnthat indicateshoweachstepcomparesto the
othersin termsof the amountof effortrequired.This is oftencalledweightand is expressedin percentof the total
budgetor person-hours required.
The Ganttchartabovehastwo barsfor eachstep. The whitebar is the planfor eachstepand the cross-hatched
barshowswhathasactuallyhappened.TheGanttcfrartis botha planninganda pQect management tool.
A Ganttchartcanbe enhanced by addingan S-curve.TheS-curveillustrates the plannedexpenses throughout

the
projectin percentage
termsfromthe beginning(0%)to the end (100o/o). Plottingactualstartand end datesand
actualexpenses(S-curve)on the Ganttchartprovidesmanagement and the projectteamwith a very quick
understandingof howthe projectis doingrelativeto the planin termsof completionof stepsandexpenditures.
In theS-curveexampleshownon theslide,the actualexpenditure rateis slightlybehindthatplanned.Thiscouldbe

becausethe projectis behindscheduleor becauseactivitiesare beingcompletedbelowbudget. The Ganttchart
showsthat someactivities werebehindwhichis whathas causedexpenditures planas
to lag the expenditure
representedby the dashedS-curve.
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Ganttchartsclearlyillustrate the project'sstepsand theirtiming However, theydo not showthe interconnectedness

betweensteps In orderto showthat an activityin Step2 must be completedbeforeanotheractivityin Step 3 can
begin,the flowchartor a versionof the flow chartusedfor morecomplexprojectscalleda networkdiagramis used.
T he f low c harV n e tw o rk
d i a g ra ms a c ri fi c e th
s e cl ear rel ati onshiw
p i th ti me that the Ganttcharthas i n returnf or
illustratinginterconnectivity betweensteps
T e c h n o l o g yM a n a g e m e n l 233
Anotherusefultool is the work-breakdown
structure.Thisshowsthe rolesof eachparticipatingdepartmentin each
step.The flor chartand Ganttchartshowwheneachstepis to be done. Thisshowswhateachgroup'srolein the
projectis. Thisaddsthe "bywho"aspectto the projectplanningactivityin moredetailthenthereis roomto put on
the flow chartor Ganttctrart.
TrainingCourseon
An essentialtoolfor a successfully
developedtechnologyimplementation projectis projectteammeetings.The
p0ect teamshouldbe a multidisciplinarygroupthattogetherhasthe setof skillsandknowledge neededto properly
introducethe newtechnology.lt shouldincludethoseinvolvedin the technology's oeation(fromin-houseR&Dor
fromthe technology supplier),thoseresponsible for the physicatconstruction activities(internalmaintenance
personnel and externalcontractors),
thosethatwill be responsible for usingthe technology afterit is installed
(production workersand management), and a representativefromthe company'smanagement.The primary
purposeof themeetingis to ensurethatallarekeptabreastof happenings on the project.Projectmanagement tools
likethe milestonestatusreport,Ganttchart,S-curve,complexnetworkdiagramand work-breakdornstructureare
updatedandpresented at the meeting.Problems encountered are discussed anddecisions made.
Thoseknowledgeable aboutthetechnology arenecessary becauseimplementation plansmayincludedecisions that

will negativelyaffectthe performance of the technology.For exampletemperature controlmay be criticalfor
successful operation.Withouttechnology expertson the team,thisfactcouldbe overlooked andno provision made
for controlling
temperature to the accuracyrequired.The production workersthatwill usethe equipment will have
suggestions aboutphysicallayout,locationof thecontrolpanels,andinteraction withotherprocesses that,if heeded,
will leadto long-termefiiciencies.The construction peoplewill be ableto adjusttheirplansto deal
and installation
with suggestions and requirements from productionand the technologyexperts. Finallythe management
representative will bringthe decisionmakingauthorityto enabledecisionsto be madein the meeting.This is
especiallyimportantif issuescomeup that requireadditional expenditures. The management representative can
eithermakea decisionon the spotor,dter hearingthe arguments for the additional be in a posit6nto
expenditure,
makethe requestto the restof the management teamin a timelyfashion.
TrainingCourseon
Communication to the restof the organization
is alsocritical.A majorhurdleto be overcomein anynewtechnology
introduction is the needfor acceptance of and overallenthusiasm for the newtechnology.This hasto startlong
beforephysicalwork begins.Thenewtechnology shouldnotbe a surpriseto anyonein thecompany.Peoplemust
seehowthe newtechnology will helpthe companysurviveandthrivetherebyprotecting theirjobsratherthanbeing
a threatto them. Evenif the newtechnology will resultin somestaffreductions,the pointhasto be madethatif this
companydoesnotdo thisandthe competitor doesall thejobsare in jeopardy.
Thelevelof detailrequireddependson the roleof the peoplereceiving thecommunication.Themostcompleteand

frequentcommunications will be withinthe projectteam. The company'smanagement needsstatusreports
highlighting any issuesor variancesfrom the plan. Thoseaffected,the production workersthat will use the
technologyand thoseinteracting with the technologysuchas beingresponsible for providingmaterialto be
processed by the newequipment needbe informedaboutthingsthataffectthem. Thisincludesannouncements of
progress, explanationof reasonsfor delays,andtoursof the siteso theycanbeginvisualizing
thenewenvironment.
Theyalsoneeda forumto discussconcemsandto pointout anyshortcomingstheysee in the plan. The greater
the levelof involvement in the planningandconstruction phasethatthesepeoplehave,the lessresistance to the
newprocesswillbe experienced. Thelastgroupthatneedsto be communicated witharethosein thecompanythat
are not reallyaffected.Thesepeoplestill needto be informedof plansand progressso that theyfeel involved.
Highlightsof progresspostedon bulletinboardsshourdbe sufficient.
Technology implementationis fraughtwith problems.On one handthereare a numberof factorsencouraging
technologicalchange.Thepotential benefitsof thetechnology itselfandtheevangelistic
endeavorsof thetechnology
expertspushfor change.Theneedsandfrustrations of the usercanprovidea "marketpull". However,thesefactors
musthaveenoughenergyto breakthroughthe barriersto technologytransferthat form a wall of resistanceto
change. The morethat can be doneto reduceor eliminatethe baniersto technologytransfer,the greaterchance
that the energyprovidedby the factorsencouraging changecan breakthroughthe wall. Barriersto technology
transfercanbe understoodby lookingat theproblemsin technology implementation
andtheirsolutions.Thissection
looksat problemsandsolutionsin implementing technology projects.
Technology implementation projectproblemsvarydepending on whetherthe projectis to implement developing or

developedtechnology.Commonproblemsincludethe lackof appropriate measures,poorcommunications, and
slippingschedule.Technology development projectsalsosufferfrom a poorunderstanding of risksand costs,poor
understanding of the ultimateapplication of the technology,lackof decisionpoints,and inconsistent management
commitment.lmplementing developed technology projectssufierfromresistance to change,poormanaging of the
project'slogistics,and the fact that thoseinvolvedare oftenpreoccupied with the presentoperationsthat must
continuesimultaneously withthe implementation project, Section4.4, lmplementation Problems, will discuss
problemsand solutionsin thesetwo typesof projects.
T r a i n i nC
g o u r s eo n
Technology developmentprojectsoftensufferfroma lackof understanding of the costs,risksand benefits.Thisis
normalbecausethe verynatureof technology development is thatthe resultis unknown.Therefore the timeand
coststo accomplishthe development canonlybe estimated.Theactualimpactof the developed technologyis also
unknown.Thereare risksin beingable to accomplishthe development as plannedand concernsthat the
development maynothavethe impacthopedfor. Eventhedegreeof riskcanonlybe estimated.The idealsolution
to thisproblemwouldbe a methodthatdefined@sts,risks,and benefits.However, this is not possible.\Mat is
possibleis to undertakea concertedeffortto establishcostsand benefitsand to updatethemas findingsin the
projectchangethe information
available.
lmposinga projectmanagement systemlikethe stage-gate processalreadydescribedis the beginning of dealing

withthe costsideof the equation,Thosein chargeof theprojectmusttakemorecarein estimating costsin orderto
makea planwhichsuccesswill be measured against.The keyto doingthis is to firstestablish
whatis knownand
predictable.Then,for the moredifficultaspectsof the development, establishbest-andworst-case scenarios,and
makesomeassumptions thatwill enablethe conversion of this rangeintoa discreteestimate.Gommunicate and
document the assumptions, as wellas the best-andworst-case scenarios.As the projectproceedsnewinformation
willbe developed thatwillconvertsomeof theunknowns intoknownsandwillchangesomeof theassumptions. Use
this informationto updatethe planso thatmanagement is alwaysdealingwiththe bestinformation.Be sureto
includemanufacturing costsin the discussions,In orderfor management to fullyunderstandthe coststheyneedto
seethecostsfromthe beginning throughto installation
of the resulting
technology.
To properlyestimatethe benefits,the revenueimpacton the companyresultingfromthe technology development

mustbe made. Thisentailsconceiving the product(s)
thatwill be possiblewiththe technology,
estimating their
marketandthe impacton the company.The company's marketing personnelmustbe keyplayersin thisprocess.
The sameprocessof establishing what is known,definingthe best-andworst-casescenariosfor the unknowns,
documenting, and constantlyupdatingas moreinformation is developed,shouldbe usedfor benefitsas was
proposedfor costs. Management needsto understand the costsof the technology developmentin lightof the
benefitsto fullyassessthe valueof the project.
A relatedissueto consideris the fact that researchers do not tendto thinkaboutcostsor benefits.Theyare more
motivatedby the newdiscoveries that couldresultfromtheirworkthanfromthe businessaspectsof revenuesand
expenses.Managers,on the otherhand,do not understand the risksand problemsinvolvedin technology
development.Theyexpectto be ableto treatpredictingcostsand outcomeswith the samelevelof confidenceas
otheraspectsof the business.Thefirststepto dealingwiththeseproblemsis recognizing thattheyexist. When
researchers realizethatmanagers needto seetechnology development in business
termstheycancommunicate in
the managers'language.Usinga stage-gate processand reportingresultsagainsta planand schedulewill go a
longway towardhelpingthe managerunderstand the technology development process.Whenmanagersseethe
controlsin placethat they can understand, their mindsbecomemorefree to appreciatethe difficulties that
researchers face. Theywill thenbuild contingencies intofutureplansto enablethe organization to dealwiththe
uncertaintiesof R&D.
There is plenty of evidenceto supportthe theory that if the technologydevelopmentteam does not
understandthe applicationfor the technologythey are developing,the resultof their effortswill not meetthe
company'sdefinitionof success. The companywants developmentsthat have a positiveimpact on its
bottomline. lt is unlikelythd developingtechnologythat does not directlyfulfillthe needsof an application
will have a positivefinancialimpact. The solutionto minimizingthe risk of not meetingthe apptication's
needsis for the techndogy developmentteam to understandthe applicationin completedetail. There are
severalproblemsworkingagainstthis. First,researcherspreferto spendtheir time in their labs and ofiices.
They do not like it out there in the plant. Second, no matter how much efiort researchersput into
understanding the application,it is not the mainfocus of their life. They will never knowas much aboutthe
applicationas the those that work with it daily.
The solutionto the first problemis to take the researcherinto the plant. ldeallyhe/sheshouldbe assigned
to work along side the productionworkerfor a fal days. Give him/herample opportunityto see what the
processis intendedto accomplish,to experiencethe limitationsand frustrationsof the presenttechnology,
and to understandother constraintsimposedby other processesand the environment.This may not be
practicalfor all of the projectteam, but there must be at least one of the researchersthat can see the
problem from the application'sperspective. Since the researcherscan never fully understandthe
application,an applicationpersonshouldbe on the technologydevelopmentteam.
There is a third problemin the understandingof the applicationarea. This is the fact that application
personnelcan be a hindrancein the technologydevelopmentprocess becausethey do not understand
technologywell enoughto see the potential.This can be dealtwith by constantcommunication.Placingan
applicationperson on the team will create the forum for this. In addition,conductingexperimentsthat
furtherdemonstrdethe capabilitiesof the technologyrelativeto the applicationwill shonrthat there is more
to the theoriesthan words. People involvedin applicationstend to be motivatedby practicaland visual
experience,while those in the more academicactivitieslike R&D tend to relate better to conceptsand
theories. This communicationstyle gap must be bridged.
TrainingCourseon
Lack of appropriatemeasuresof progress result in projectsthat run on and on, constantlydraining
funds and never accomplishingtheir goals. Part of the problemsis a lack of understandingof the
project'sgoals, how the projectgoalsfit into the company'splans,and knowingwhat to measure. The
root of the problemis in the culturaldifferencebetween R&D personneland management. R&D
people are primarilyinterestedin science and development,while the company'smanagementis
interestedin financialviability. lt is not necessaryto change these culturaldifferences,it is just
necessarythat they are understood. When managementrealizesthat R&D is not motivatedto study
the company'sfinancial situation,they can provide informationto help R&D see their role in the
company'sbig picture. When R&D sees how the company'sfinancialsuccessrelatesto what they do
and how financialsuccess makes it possiblefor them to continueto do what they do, they become
more willingto providethe measuresmanagementneeds.
The next issue is knowing what to measure. This can be established by understandingwhat
informationis neededto reduce risks quickly. lnstitutingthe stage-gateprocesswith clear milestones
and decision points is key. At each decisionpoint certain informationis neededfor managementto
make decisions,and agreementmust be reachedbetweenthe researchteam and managementas to
what informationis neededto make those decisions. This will dictatewhat has to be measured.
T r a i n i nC
g o u r s eo n
The never-endingprojectis oftenthe productof the inabilityto decide. Inabilityto decidecoststhe company
in severalways. At times, spendingon the projectcontinueseven though resultsdo not suggestthat the
investmentis wananted. This is purelya waste of resources.On otheroccasions,the projectcontinuesin
R&D even though the technologyhas been developedfar enoughto be implementedand earn some
revenue. This is also a waste of resources,although it does not appear as bad becausethe project has
had technicalsuccess. However,untilthe technologyis implementedinto a revenueearningapplication,
the resultis the same.
The problemhas two sides. The first is a lack of decisionpclints.Withoutdeliveriesand schedutes,there

is never any time or reasonto evaluatethe project. The lack of milestonesjust allow it to continue
indefinitely.A properly-managedstag+gate processsolvesthis. The decisionpcints are specifiedand the
decision makersare presentedwith the informationthey need to make their decision. The second side is
that the responsibilityfor the decisionhas not beenassignedto the rightperson. Oftenthe headof the R&D
group is expectedto make decisionson technologydevelopmentprojeds. Although he/she needs to be
accountableforthe activitieswithinthe group, this is usuallynot the rightperson. The R&D managertends
to put his/her love of scienceand developmentahead of the company'sbest interests. A personwith the
needs of the businessas his/herfirst prioritymust be the decision maker.
Poorcommunications tendto be at the rootof manyproblemareasin organizations, andtechnology
development projectsare no exception.The problemcan lie withthe developersnotcommunicating
poor
progressand/or potentiallyproject-killing
problems. managemeril
lt canalsoliewitha disinterested team.
Eithercan haveseriousimpacton the successof a technologydevelopment project.WhenbothproHems
are presentthe projectis doomedto failure.
Tohaveeffective communications, an environment of trustmustbe creded.R&Dmustknovv thattheirjob

is not on the lineif they revealproject-killing
information.ln facttheyshouldbe rerrardedfor savingthe
companyfromwastingresources.They mustunderstand the connectionbetweenoverallcompany
suc@ssandthe continuation of theirR&Dactivity.Thecommunication processcan be furtherenhanced
by usingprojectstatusforms.lf providing goodinformation is easyto do,it is morelikelythatlt willhappen.
The bestway to interestmanagement in the resultsof technologydevelopment projectsis to present

informationin theirlanguage.Thismeansdiscussing technologydevelopment in lightof the company's
strategicplans. lt meanstalkingin costsand benefitterms,and makingrecommendations basedon cost
and benefitlogic.They mustdemonstrate that thoseinvolvedin the technologydevelopment projects
understand the company's overallgoalsand knowwhatparttheiractivities contribute to thosegoals.The
bestwayto encourageR&Dpersonnel to revealthe truthabouttheirprojectsis to buildan attitudeof trust.
R&Dpersonnelhaveto feelsafein the presenceof seniorrnanagement.
-T-
Training{orrr" on
Technology
f.|anagement
253
Technology development projectsareofteninitiatedin companies withthe initialapprovalof management, butwhere
management hasno realcommitment to theprojec{.
Thisis especiallycommonin smallcompanies whicharegenerally
cashpoor. lt is hardfor the manager (usuallytheowner)to spendmoneyin technology development thatis notgoing
to haveimmediate retumswhenit is neededin otherareaslikosalesor produc{ion thatwillhavequickerresults.Ofien
the managerdoesnot understand the proiector believein the benefits.Relatedto this is that he/sheexpectsthe
solutionto happenquicklyandhasno feelfor hqfl muchmoneyhe endeavor will require.
Thesolution to thisis twofold. First,thecommunication andcontolmethodsalreadydiscussed willhelpthemanag€r

understiand the problemsand benefilsandwill at leastprovidelogicaltimesfor stoppingthe proled(i.e.at a gate).
Second,dealwiththetinancialpertof fis problem.Wth thethoroughcost$timatinganalysisaheadydiscussed, the
managercanbe infomedof the best-andworst-casecostscenarios.Similarly,the potentialbenefitscanbe quantified.
\A/iththis information, assumingthe projectis viable,the managerbecomesknoflledgeable €noughto dgcidsif the
projectis wo hy of the investment r€quired,notjust a drainon the companysresources.He/shewillthenbe willing
to putthefinancingin placelo managethe cashf,or duringthe d€velopment period. Theprojectshouldnotbe started
unlessthEfinancialplam havebeenputin place.\Mthfinancesundercontrol,the manageris fiee b makeGO/NG
GOdecisions basedon technical andmarftetinformation generated by the projectratherthanoubidepressur$.
Anotherproblemthatb commonin smallcompanies is he companyo$rnerwantsto micromanago th€ proiect.This

is especiallytrue in companiesthat grew out of an inventionthat the ownermade. Technology and product
dgvelopmenti3 this person'sfirst lor,€.Ho$/ever,the orlrnerdoesnot havetime to devoleto tecfinologyde\relopmenl
whilealsorunningthe busin€$. Proiecimanaggrs arefrusiratedbecausethe bossfliesin withideas(thatthe stafi
pr€sumeto be orders)andfiiesoutagain.Themanage/sauthorityis undermined andhe is leftto deanup the mess
cau36dby poorlythoughtout ideas.\ rorse,theotlrnergetsups€twih stafifor notkeepingon schsdule, notrcalilng
thatthe maincauseof delaysis his d€mands.
Theprojec{teamwiththestag$gateprocessofiorsa solution.Theownershouldbe on theteam.Takeadvantage of

his/herloveand talentsin the developm€nt area.Sincehe/shehas to makethe milestonedecisionsanyway,the
kn(nflledge
devslopedfrombeingon ihe teamwill be an assetat decisiontime. Theovne/s rclewouldbe limitedto
teammeetings.Therestof the timecanbe spentrunningthe businoss.He/shehasto agreeto bringideasto he
teamto be discusssdanda teamdecisionmadeaboutwhatto do withthem. In thiswaythegoodideaswillbe tested
andusedandthepooroneswillbe a$essedanddiscarded thestafiontodifierentpaths.Theproiect
withoutdiverting
"suggestion"
manageris no longsrplacedin ths positionof havingto eitherundotheefiec{of theo$rner's or havingto
be viewedas in opposilion
to theo$rner.Nov h€/sheis responsible for implementing
teamdecisions, knotrring
fullwell
thathe/shehasthesupportof theowner.
T
T r a i n i n g{ o r r . " o n
Technology
[|anagement
255
Technology development projectsusuallyget behindschedule.The development is neveras straightfonrardas it
seems.Theowner/manager hasto acceptthisrealityandbudgetfor it. However,
the projectteamshouldbe given
the originalbudgetandscheduleandexpectedto deliverwithintheirconstraints.lf the originalbudgetis expanded
to includethe contingency, thenthe teamwillexpandtheworkto fill the newbudgetandstillbe short. lt is human
nature,at leastthe natureof the humanswhogo intotechnology development. Thetechnology or productis never
goodenoughfor them. Thisis why it is essential to havebusiness-orientedpeoplemakingthe decisions.The
designof theprojectis critical.Theteamhasto identifywhichaspectsaremostlikelyto maketheprojectimpossible
or at leastunaffordable.Theseneedto be donefirstso thatif NO-GOdecisionsresult,theycan be madeearlyin
the process.The teamhasto be willingto be openaboutits dfficultiesso thatfinancialor otheradjustments such
as contractingspecialized expertisecanbe made.
r"lF
T r a i n i n dg o r r r " o n
Technology
flanagement 257
tl
Pro b1crns il irnplernrn izy,ctc-tn

e-t
i cIev.-lc-t
p'.tI
-ttVIPl-ElzIEt[T'l f G
ptctgg;j t?r:,Iayt:
lOg,y ...
T'ECfII IC:LCGY
' ?-c':i':t?tJtc'Jru C,Itutg.-
tI.zt,
' J-ogt'.ii,:s
In2ltunrtzy.iic-tt- "'ltaztcltclutztttt'.ioLvg?s
Prtbileus
, L,cLC,kr_t
i' ZtrlpIr-,tpIt?.tt:a 1il9?Liltt..i)
' Ce.tfitrtt;tl-:-:r:?yirutts
''P rtCg,:ytpiZC . r!. r i * tr.iswt,
t optJft!!:lu!!i
, Sli1rptttg'tc,Inclulc
l rustrrg Ct'-t:'x ltt

' q y
!' ;! p -r12'1 t /-'r*tl-t,4+
rne rt
lm plem ent a ti oonf d e v e l o p e dp ro c e s ste c h n ol ogyhas some of the same probl emsas i mpl ementi ng
techno logy
development projects.Theseincludelackof appropriate measures,poorcommunications, and slippingschedules.
lmplementing developedprocesstechnologyprojectsare more proneto failuredue to resistanceto change,poor
management of the project'slogistics, and the factthatthoseinvolvedare oftenpre-occupied withpresentoperations
that mustcontinuesimultaneously withthe implementation project.
Resistance to changeis probablythe biggestproblemfacingthe implementation of developed projects.
technology
lf it is not the biggest,it is at leastthe mostfrustrating.Management, havinginvestedin the acquisition
of a
technology that can benefitthe company,cannotaffordto havethe investment wastedbecausethe usersof the
technology sabotage theprojectby resistingitsimplementation. Thisproblemmustbe solvedbeforeit happens.The
solutionis realizing the fearsof the peopleafiected.Theyare operating froma mucfrsmallerknowledge basethan
thoseinvolvedin thedecisionto acquirethetechnology.Becausetheydo notknowthe positiveimpactsof the new
technology, theywill assumetheworst- thatit will replacetheirjob. Resisting the useof the equipment
thatwill
replacethemseemslikea logicalthingto do by someonewho believesthattheywill be removedoncethe new
processis up andrunning.Thisreactionis especially likelywhenthe peopleaffectedare"surprised" onedaywhen
theycometo workandthe newtechnology is sittingin a crateon the shopfloor.
The peopleaffectedmustbe involvedearly. Theyshouldbe well awareof the benefitsof implementing the new
technologyandthe dangersof not implementingit longbeforeit anives.ldeally,someof themshouldbe involvedin
the technology decision.Evenif the new technologyresultsin somejob loss,this fact has to be
acquisition
communicated longbeforetheequipmentanives.Decisions aboutwhowillstayhaveto be madeso thatthosewho
willworkwiththe newequipment havethe seolritythattheywill stillbe thereafterthe implementation is complete.
Openness andhonestywitheveryoneinvolvedis the beststrategy.In returnfor earlyandopencommunication, the
companyhas the rightto expectcommitment from its employees.Afterall, it is the companythat issuesthe
paycheque.Theycan expectcooperation in return. However,it is in the company'sinterestto give its employees
the information
theyneedwhentheyneedit so thattheywillinglycooperate.
"r
Traininglfourseon
Technology 261
!lanagement
Logisticalproblems,resourcesnot being availablewhen they are needed,are generallythe result of poor planning.
lmplementation of developedtecfrnologydoes not havethe unknownsthat technologydevelopmentprojectshave. The
companyshould know (or be able to find out) everythingthat is needed to completethe implementation.lt should
identiff suppliersand find out deliverytimesfor the variouscomponents.This informationis used in the creationof the
projectschedule.The scheduleneedsto be communicatedto all involvedso that everyoneknowswhen his/trerpiece
of the projectmust be deliveredto mesh with the other activities. In short,the solutionto most logisticalproblemsare
makingplansand beinggoodat communications.
There are some logisticalproblemsthat are beyondthe company'scontrol. A commonexampleis when a local
supplierpromiseddeliveryon a certaindate, but could not deliverbecausean internationalsupplierdid not deliverto
them. Buildinglate chargesinto the contractwill help reducethese o@uren@s. Sometimesthey are unavoidable.
ldentiff for which piecesof equipmentthis is likelyto happenand developa contingencyplan for each one. This
consistsof alterativeactivitiesfor the projectimplementation
crew if the equipmenthas not anived on time.
-r-
T r a i n i n {go r r . . o n
Technology
t|anagement 263
Developedtechnologyimplementationprojectsthat run out of money are the result of poor planning.
Developedtechnology projects consist of known entities. lt has been done before. lt is the
responsibility
of the implementation team to have a full list of the thingsto be done and the associated
costs. Quotationsshould be acquiredfor equipmentand servicesprovidedby outsidesuppliers,
leavingonly the internalactivitieswith a variablecost. The developmentof the implementationplan
requiresconsiderableeffort. Nothingshould be missed. But, since we are human and fallible,
managementneeds to set aside some budget for contingencies.The project should not be started
unlessthere is money to completeit. However,if the company'sfinancialsituationchangesafter the
project has begun and expected resourcesare not available,the company needs to identifythis as
early as possibleand postponethe project until financescan be arrangedto completeit. Losingthe
company to acquire new technology,no matter how wonderful it is, makes no sense. lf the
implementationprojectis drainingall the cash to the pointthat it cannotcontinueoperating,the project
must be stopped.
,:ri.Lrr;t
r.,
g
T r a i n i n gQ o u r s eo n
T e c hn o l o g y l ! | a n a g em e n t 265
The problemof lackof appropriate measuresof progresshastwo components:knowingwhatto measureand not
takingthe measurements. Notknorving whatto measureis relatedto the planningprocess.Thosewho havedone
a goodjob of planningalongwith Ganttchartswith S-curveswill knowwhatto measure.Theyknowthatthe
expenditures havebeenplannedovertime,andplottingthe actualexpenditures on the samesheetas the planwill
showhowcloselythe actualimplementation is keepingto the plan. Theywillalsohaveestablished milestonesthat
are to be accomplished accordingto a schedule.Plottingthe actualstartand end pointsfor completedactionswill
showhowwellthe projectis keepingto its timeschedule,Fortasksunderway, the projectmanagercan estimate
whatpercentage of the workis completeto prediclhowclosethe currenttaskwill be to its predictedend date. lt
almostgoeswithoutsayingthatthosewhodo not knowwhatto measurehavenotdonea goodjob of planning.
Havingmeasuresplannedbut not takingthemis a symptomof otherproblems.Perhapsthe plandid not identiff

who was responsible for a taskandthereforeno one is doingit. Thisis easyto rectifyas soonas it is identified.
Perhapseverything is in placeand it is stillnot happening.Thisis likelya symptomof lackof commitment to the
project.The persondoesnot realizethe financialimplications of the projectbeingoff schedule.Or the persondoes
notrealizethatearlydetection of a slippingschedule offersopportunityto accelerate
otheractivities
or evendo some
thingsin parallelthatwereplannedto be consecutive.Theseproblemscan be fixedwith someeducation.lf the
explanations havebeenmadeandthe personpersistsin not providing the neededinformation,he/shewitlhaveto
be replaceby someone whowilldo it. Notonlyhastheprojectteambeenforcedto makedecisions withoutimportant
information,the person'sattitudewill havea negativeimpacton othersinvolved.The technology implementation
protectis too important to riskpeoplewhoare notcommitted to the process.
trln
T r a i n i n{go u r r " o n
Technology 267
$anagement
tl
-r
r'evelo
rr peLLpt'oceiJieghri olofJf plojett ploblems
lrrzPlErvlEr [T'Ir l.G
Couturtrricatir-tns
T'EC't tCiLCG't
Pi,-CSI.ETVIS SCL.UT'.ICIIS
tl ,rl
, i'-:si:i L?Ln9?rc,,slnutgz E-- ctp?n, Inr r e ul?--Llttgi,
[tnpIctr]'irrtittian ' Duutg iln 'i/ru:Lg il:r-:rt'4 In't e zL9 c-) r ilru\\l::"tric-t st
P rtr-tl=rt: , t'[ot clcttrrZrltrtg: p,ILtt, t-!iu. *t-
9 clllrrlr LIr.rt : ucir-tn pltt t
'
I' t' ztfutttty, |r ; ;y';;9 r;11
' .-':t 'I'Ct
I r rL Io g / !\/ IztrvLg=r r ?,r fi f 7,.( 3UCCi':,}'i
Q "[ ! [:,Qr_1
1/IE /\J-;J, B,rfJ,_IEi S tu C C_)
! t l |\/IU}.J]C;\T' _lCrI
As with technologydevelopment projects,good communications are essential,All barriersto communication

must
be overcome The pro.lect planmust rncludea communication plan This outlineswhatwill be toldto whom,wnen,
and by whom Poorcommunications are the maincauseof resistanceto change,and,as has alreadybeenpointed
out,the bestsolutionto resistance
to changeis communicationsPoorcommunications can causeteam members
to do the wrongthingor to leaveout necessaryactivities
whichcouldhavea seriousimpacton the schedule
Tr ,r -a, t^n, t^n^g n

\ -^o, u, .r ^s ^e o
^-
n
Technology Management
Preoccupation with presentoperationsranksnear to resistanceto changeas a chiefcauseof technology
implementation projectfailure. Newtechnology implementation projectsare oftenconducted at the sametimeas
production continues withexistingtechnologyby the same people. As the sayinggoes'Whenyou are up to your
ass in alligators,it is hardto rememberthat yourobjectivewas to drainthe swamp". Eventhoughdrainingthe
swampwouldget rid of the alligators, you stillhaveto dealwith themas longas theyare there. Likewisein the
production environment, problemsof runningthe old technology
the day-to-day willcontinue,eventhoughthe new
technologypromisesto get rid of those problems. lf the frustrations of dealingwith the old and the new
simultaneously arecoupledwithsomeresistance to changethe resultcanbe deadly.
Management mustaccountfortheadditional workinvolved withintroducing

newtechnology whilecontinuing
existing
operations in the plant. Someadditionalstaffwill be needed,althoughthe completecrewdoesnot needto be
replaced.Oneor two personshaveto be dedicated to the newprojectwhileoneor two difierentpersonshavethe
responsibilityto keeptheoldprocessrunning.Theotherpeoplecanbeshr,rffled backandforthas needed.Everyone
will haveto contribute moreduringthe changeover period.lf the communication efforthas beenhandledwell,the
staffwill be enthusiastic
aboutthe changeandwillingto givethe extraeffort. lf the stafiare notenthusiastic
about
the newtechnology, be preparedto spenda lotof timeandenergyfightingalligators.
-r
T r a i n i n g{ o u r r " o n
Technology
$anagement
271
The schedulewill slipwith developed technology implementationprojects,althoughthe slippageshouldnot be as
seriousas withtechnology development projects.Theslippageis usuallydueto someaspectof the implementation
thattookmoretimethanwas planned.lt couldalsobe dueto latedeliveryon keycomponents.Management has
to expectsomeof thisto happenandbuildsomeslackintothescheduleandthe budgets.Addressdifficultpartsfirst
if possibleso that if delayshappen,there is moreopportunity to make up the time or at leastadjustpost
implementation plans. Alsobe willingbringin outsideexpertiseto helpwith problemsratherthanstruggling with
themalone.Generally theopportunitycostof the postponedproductionfar outweighsthe costof hiringan expertto
dealwitha specialized problemthatis holdingtheprojectback. Scheduleslippagecanalsobe causedby resistance
to change,As hasalreadybeendiscussed, resistanceis bestdealtwithby earlyandfrequentcommunication.
ilF
T r a i n i n g{ o r r s e o n
Technology
!|anagement
273
Index
benchmarking 277
communication 205, 207, 223, 225, 241, 249, 255, 257, 31g, 391, 397
complexnetworkdiagram 239
concurrent engineering 323,347, 409
continuousimprovement 397
culture 369
document 245
flow chart 217, 229, 231, 235, 237
future 247, 395
Ganttchart 233, 235, 237, 239
GO/NO-cO 219, 223, 257
innovation 295,297, 369, 3gg
launch 205,215,221,399,401
leadtime 341
leadingchange 377, 409
logistics 243
management commitment 243
marketing plan 215,2' 19
measure 251, 397
micromanage 257
milestone 231, 233, 239, 257
parallelimplementation 205, 319, 323, 337, 347, 361
productivity 261
projectmanagement 239
projectmanagement tools 239
projectmanager 257
projectteam 223, 233, 239, 241, 249, 257, 259, 293, 294
purchasing 319
resistance to change 243, 263
risk 209, 219, 245, 249
s-curve 233,239
slippingschedule 243,275
stage-gate 215, 217, 221, 223, 245, 247, 251, 253, 257, 294, 347
technology acquisition 205,211
technology development205,211, 217, 221, 223, 244, 247, 249, 253, 255, 257, 259, 397
technology management 205,407, 409
technology transfer 207, 243, 275, 397
termination 2gg, 321
T
T r a i n r n g{ o u r s e o n
Technology
$anagement
N7

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5. LEARNINGTO IMPROVETECHNOLOGY MANAGEMENT

Theinformationin thismoduleis arrangedas ouilinedbelow

Extemaltechnologyacquisitionis the processof acquiringtechnologydevelopedby othersfor use in the company.

Externalacquisitioncantaketheformof licensing, purchasing equipment

The company'sneedfor technological growthmustbe an importantconsideration whendecidingamong

Internaltechnology sourcesandthosethat accessexternalinformation whilebeingdrivenby internal

Thereare someexceptionsto this generalcase. lf a companycan negotiatethe exclusiveuse of

Caremustbe takento addressthe future. Eventhoughthe technology maygivethe

Obviouslya companywithoutinternaltechnicalcapabilities cannotconductinternaltechnologyacquisition.

Thelengthof timefromtheacquisition of technologyuntilthecompanybeginsto recoverrevenuefromitsinvestment

Thereare risksin all typesof technologyacquisition.However,the riskschangewith the typeof acquisition.The

Costs and Affordability

Anotherareathat is difiicultto estimate,but an importantconsideration in assessingthe costof various

Finallyoncethecompanyhasestimated the costandnetbenefit(benefitsaftercostsarededuded)of each

Thefdlovttingtablesummarizes the informationprovidedaboveand providessomegeneralguidelinesto

Wth the breadthof optionsthata companyhasto consider, it musthavethe internalabilityto logically

Companiesshouldmake a consciouseffortto documentthe tacit knowledgeof its employees.Thorough

The solutionis to createan environment wheretacitknowledge is transferred

' Tacitknowledgeis spreadthroughoutthe organization andproductivity

Seizingtacitknowledge haslowcostandlorrrisksbecausethe knowledge alreadyexists.lt will improveprocesses

Havingan intemalR&D group is surprisinglycommonwith small companies.Many smallcompanieshave grownfrom the

In spiteof these @mmonshortcomings,companieswith internalR&D have some significantadvantages.They knor their

Intemal R&D has several significantdisadvantageswhen comparedto some forms of externaltechnologyacquisition.

In-housedevelopmentis often moreexpensivethan acquiringtechnologyextemally.This is because the developingcompany,

Riskof failureis anotherdisadvantagethat must be addressedwhen consideringintemalR&0. There is alwayssome riskthat

InternalR&Dwith networkinghas all the sameadvantages and disadvantages discussedunder

Thisaddssomeupfrontcoststo operatingan internalR&Dgroup,but providesthe staffwithexposure

Thisapproachactuallyimprovesthe company's externaltechnologyacquisitioncapabilities.

Reverseengineering is the determiningof the technologyembeddedin a productthroughrigorousstudyof its attributes.lt

Reverseengineering requiresa verygoodunderstanding the productbeingstudiedis usedin so thatthe

Reverseengineeringis a seriousdisciplinein the automobileand machineryindustries.Beforedesigningcompeting

Covert acquisitionhas similaritiesto reverseengineering. However,it is less above board. lt entails

UsinginternalR&D alongwith covertacquisitionhas the same benefitsas reverseengineering.lt can

CovertacquisitionwithoutinternalR&D guaranteesthe productwill be a copy (generallya poorcopy)of the

A companyemployingthistypeof technologyacquisitionis usingexternallydevelopedtechnologywith littlepossibility

Companies chooseto contractresearch anddevelopment for a varietyof reasons.Thisis an idealoptionfor thosethatlack

Somecompanies withstronginternalR&Dstillchooseto contractout R&Dprojects. Onesuccessful strategyis to maintain

Contracting R&Dreducesthe company's hands-onexperience withthe technology. Thosecompanies mostsuccessful at

Thefollowing checklistwillhelpwhensearchingfor an R&Dsupprier:

The followingmust be addressedin the contract

Thecompanies in R&Dstrategicpartnerships areofiencompetitors.Thereforethe kindof projectsthatare

R&Dstrategicpartnerships canbe initiatedby onecompanyinvitingothersto join,by an informalgroupof

Licensingexistingtechnology is a popularandefiectiveformof tecfrnology

It hasthe appearan@ of beinglorr-riskto almostrisk-free.lf the acquiringcompany's applicationis identical

Whenthe new applicationis not identicalthe riskscan be significant.Theseprojectscan quicklybeginto resemble

Costscan be (andshouldbe) lowerfor the receivingcompanybecausethe providingcompany(presumably) is making

A commonand effectiveexternaltechnologyacquisitionmethod is purchasingtechnology.This is normallydone in

Enteringintoa jointventureagreement witha techndogyprovideris anotherformof extemalacquis16n

Anotherversionof this is very similarto licensing.The providingand acquiringcompaniesform a

Bothformsof joint venturewith a technologyprovidergenerallyhavethe advantageof low risk. The

The final form of externaltechnologyacquisitionto be discussedin this course is the acquisitionof a

Acquiringcompaniesto get technologydoes have sore areas of concern. lf the acquiredtechnologyis to

A smallcompany wasfoundedbya farmerwhohadinvented thecompanysinitialprodrct lt grel veryslorvlyop€ratingoutcf

Theeastcompany beganto groivrapidlyasit pursu€d a strategy

Ttlefortunesof thecomp€ny onthewestsideof thestr€etwerenotsogood.lt b€gsnto noticethesuccess of itsneighbor,

Theweslsidecompany novsrtooka technologyacquisition

. the designof technology projects

Thismoduleprepares thereaderformovingfromthemorecerebralactivities of planningandnegotiatingto the more

The fundamentaldifierencebetweendevelopingand developedtechnologyprojectsis that they are two

Each stageis designedto reduceuncertaintyto a new leveland to providethe company'sdecisionmakers

Technicalor market activitiesthat producea negativeanswer to an unknownare blessingsin disguise.

In the conceptstage, conceptualdescriptionsof the ultimateproduct(s)are developedfrom a marketand