Co-OPerative Technology Roadmapping

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Co-operative Technology Roadmapping

CO-OPERATIVE TECHNOLOGY ROADMAPPING

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June 1st, 2003

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preface

An integral part of the master course xxxxxxxxxxxxxxxx is to individually explore a subject relevant to

contemporary developments in the particular field of interest. The findings of the exploration are to be

summarized in a thesis.

This thesis focuses on the subject of Co-operative Technology Roadmapping. In brief, this subject

entails the collaborative use of the technology planning tool for making investment decisions. I first got

acquainted with Technology Roadmapping during a presentation of Mr. G. Muller for the Capita Selecta

course. Because I was interested a lot in it and in search for a subject to do my literature thesis, I began

reading other literature on Technology Roadmapping. A student project group assignment at the

NorthWestern University gave me the idea of combining co-operation with Technology Roadmapping.

I learned that roadmapping is receiving a lot of attention the last couple of years and not only for

technology purposes, because also organizations involved in environmental issues are seen to profit by

this technique. Moreover, at the moment of writing the leaders of Israel and Palestina seem to make more

progress than ever in the peace process, thanks to the Roadmap to Peace introduced by U.S. officials.

The Abstract provides a concise overview of the research of this thesis. However, readers that are

interested in the specifics of Technology Roadmapping or the use of the TAO model are recommended to

read respectively chapter 2 or 4. More detailed information about Real Options theory is provided in

paragraph 5.2.

I would like to thank xxxxxxxx, my coach, for guiding me in my research and for taking time to discuss

my subject with other academics and specialists in the field. He provided useful insights especially on the

use of the TAO model and Real Options theory. Furthermore, I would like to mention that the relative

large size of this thesis is due to the inclusion of the case examples and the many pictures needed to

visualize both TRM and TAO.

I enjoyed working on this thesis a lot, because I was free to invent and design my own research subject.

And I hope it will enhance the understanding of the inter-organizational use of Technology Roadmapping.

TOA

June 1st, 2003

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TABLE OF CONTENTS

PREFACE.................................................................................................................................................... I

TABLE OF CONTENTS......................................................................................................................... III

TABLE OF FIGURES..............................................................................................................................VI

GLOSSARY.............................................................................................................................................VII

ABSTRACT...............................................................................................................................................IX

1 INTRODUCTION...............................................................................................................................1

1.1 OBJECTIVE AND METHODOLOGY .................................................................................................... 2

1.2 STRUCTURE OF THE THESIS ............................................................................................................2

2 TECHNOLOGY ROADMAPPING.................................................................................................. 5

2.1 TECHNOLOGY MANAGEMENT ........................................................................................................5

2.2 WHAT IS ROADMAPPING / A ROADMAP? .........................................................................................7

2.3 WHY ROADMAPPING? .................................................................................................................. 12

2.4 CREATING A TECHNOLOGY ROADMAP.........................................................................................14

2.5 NEGATIVE ASPECTS......................................................................................................................16

3 CO-OPERATION .............................................................................................................................17

3.1 WHAT IS CO-OPERATION? ............................................................................................................17

3.2 SEQUENTIAL CO-OPERATION ........................................................................................................20

3.3 PARALLEL CO-OPERATION ...........................................................................................................21

3.4 REASONS, RISKS AND SUCCESS FACTORS TO CO-OPERATING AND PARTNERING ..........................22

4 ANALYSIS WITH THE TAO MODEL .........................................................................................25

4.1 EXPLANATION OF THE TAO MODEL.............................................................................................25

4.2 VALUE CREATION ........................................................................................................................28

4.3 CO-OPERATION AND THE TAO MODEL.........................................................................................29

4.4 TRM PLACED IN THE TAO MODEL ..............................................................................................32

5 THEORETICAL APPROACH........................................................................................................37

5.1 MOTIVATION FOR CO-OPERATIVE TRM ....................................................................................... 37

5.1.1 Sequential co-operation ............................................................................................................. 38

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5.1.2 Parallel co-operation................................................................................................................. 41

5.1.3 General Drivers .........................................................................................................................42

5.2 VALUE CREATION THROUGH CO-OPERATIVE TECHNOLOGY ROADMAPPING ................................ 43

5.2.1 Real Options Theory .................................................................................................................. 44

5.2.2 Real Options and Emerging Technologies ................................................................................. 45

5.2.3 Real Options and Co-operative Technology Roadmapping....................................................... 47

5.3 WAYS AND RISKS OF CO-OPERATIVE TECHNOLOGY ROADMAPPING ............................................ 51

5.3.1 Introducing co-operative Technology Roadmapping .................................................................51

5.3.2 Structure of the co-operative roadmap(ping process)................................................................52

5.3.3 Potential risks and problems...................................................................................................... 53

6 SITUATIONS IN PRACTICE......................................................................................................... 55

6.1 EXAMPLES OF SEQUENTIAL CO-OPERATION IN TRM.................................................................... 556.1.1 Motorola.....................................................................................................................................55

6.1.2 Philips ........................................................................................................................................58

6.1.3 Supplier Integration for Product Development .......................................................................... 59

6.1.4 AT&T.......................................................................................................................................... 61

6.2 EXAMPLES OF PARALLEL CO-OPERATION IN TRM ....................................................................... 62

6.2.1 SIA.............................................................................................................................................. 62

6.2.2 IMTR ..........................................................................................................................................63

6.2.3 MATI ..........................................................................................................................................66

6.2.4 Vision2020 ................................................................................................................................. 67

6.3 CONCLUSIONS OUT OF PRACTICE .................................................................................................68

6.3.1 Sequential relationships............................................................................................................. 68

6.3.2 Parallel relationships................................................................................................................. 69

7 CONCLUSION.................................................................................................................................. 72

7.1 EVALUATION OF THEORY AND PRACTICE ..................................................................................... 72

7.2 CONCLUSION ............................................................................................................................... 74

7.3 RECOMMENDATIONS.................................................................................................................... 76

REFERENCES.......................................................................................................................................... 78

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APPENDIX A: THE "ROAD MAP" METAPHOR..I

APPENDIX B: ROADMAPPING PROCESS.III

APPENDIX C: REAL OPTIONS EXAMPLE..V

APPENDIX D: MOORE'S LAW..VI

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TABLE OF FIGURES

Figure 1: Technology management framework ............................................................................................ 6

Figure 2: The Roadmap integrates five views............................................................................................... 8

Figure 3: Generic Roadmap ..........................................................................................................................9

Figure 4: Hypothetical Technology Roadmap ............................................................................................10

Figure 5: Multi-Scenario Roadmap............................................................................................................. 10

Figure 6: Roadmapping Taxonomy ............................................................................................................11

Figure 7: Roadmap Planning in four steps.................................................................................................. 15

Figure 8: Possible alliance partners along the Supply Chain ...................................................................... 18

Figure 9: The growth of newly established R&D partnerships (1960-1998) .............................................. 19

Figure 10: The share (%) of high-tech, medium-tech, and low-tech industries in all newly establishedR&D partnerships ............................................................................................................................... 19

Figure 11: The Base Model...25

Figure 12: The TAO model.........................................................................................................................26

Figure 13: Value creation in the TAO model.............................................................................................. 28

Figure 14: Extended value chain in TAOs.................................................................................................. 30

Figure 15: Satisfaction at Technology level................................................................................................ 30

Figure 16: Sequential co-operation in the TAO-model............................................................................... 31

Figure 17: Parallel co-operation, stacks of TAOs....................................................................................... 32

Figure 18: Time scale in the TAO-model. .................................................................................................. 33Knowledge cycles with different bandwidths ............................................................................................. 33

Figure 20: Value stream towards customer................................................................................................. 34

Figure 21: The location of TRM in TAO.................................................................................................... 35

Figure 22: TRM in TAO ............................................................................................................................. 36

Figure 23: Dynamic Real Options Framework ........................................................................................... 46

Figure 24: Real Options in the TAO-model................................................................................................ 49

Figure 25: Information exchange in sequential co-operative TRM ............................................................ 52

Figure 26: Information exchange in parallel co-operative TRM................................................................. 52

Figure 27: External Roadmap Injection ...................................................................................................... 56Figure 28: Roadmap Integration Process .................................................................................................... 57

Figure 29: Future Lithography Technology Alternatives............................................................................ 63

Figure 30: IMTR Roadmapping Methodology. .......................................................................................... 65

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GLOSSARY

AMB Arbitration, Matching and Balancing

ODM Original Design Manufacturer

OEM Original Equipment Manufacturer

PCS Personal Communications Sector

R&D Research & Development

RO Real Options

SCM Supply Chain Management

S&T Science & Technology

TAO Technology Application Organization (model)

TRM Technology Roadmapping

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ABSTRACT

Firms today are expected to be more responsive to technological change and to manage their technology

assets more strategically. Meanwhile, technology decisions have shifted to people unfamiliar with the

pacing and dynamics of technology in the lab or in the marketplace. Technology integration and reuse

suffer without coordinating structure or cross-business planning forums. The solution, according to some,

is a methodical approach to integrated technology planning called Technology Roadmapping, which has

gained wider interest in the past decade.

Also, with accelerated time-to-market demands in technology markets firms may want to gain first-mover

advantage. However, it may not always be realistic for a firm to develop or acquire the capability on their

own, because of the rising investment costs and increasing uncertainty. Co-operation with other firmsgives a company the ability to get such capabilities more quickly and is also seen to be a global trend.

The subject of this thesis is the combination of these two trends, which both are focused on developing

and using technologies to be more competitive. And the key question is whether co-operation on

Technology Roadmapping creates value for the companies involved. To answer this question further

exploration of both subjects is needed before they can be linked.

Technology Roadmapping is a technique for supporting technology management and planning. It helps

identify product needs, map them into technology alternatives, and develop project plans to ensure that the

required technologies will be available when needed. Technology Roadmapping helps presenting the

critical information to make the appropriate technology investment decisions and to leverage those

investments. A roadmap is a visualization of the future integrating the business aspects market, products

and technology/resources, and revealing the time dimension of technological progress. Multiple future

scenarios can be displayed in a roadmap and it can have various purposes, like industry understanding or

product development. Next to providing information to help make better technology investment decisions,

a benefit of Technology Roadmapping is the enhancement cross-organizational communication and

alignment of objectives. A roadmap generally is created through a series of meetings between cross-

functional stakeholders and updating the contents is supposed to be a dynamic process.

Collaboration is co-operation with another unconnected group to achieve a common goal. It involves

human interaction and communication of information. Companies can co-operate sequentially as well as

parallel. Sequential co-operation is done with companies in the same supply chain, such as suppliers and

customers. The common goal is creating customer value for the same product. Parallel co-operation is

done with companies in other supply chains, like complementors and competitors. Here, the customer

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value is created by each company individually in its own value chain. The main reasons to co-operate at

technological level are gaining cost efficiencies and speeding time-to-market of new products. Also,

access to another companys resources and skills as well as access to new markets are advantages of

partnering. Sufficient commitment and mutual trust lead to the success of an alliance.

The TAO model is a good tool for linking Technology Roadmapping and co-operation between

companies. It consists of the columns Technology, Organization and Application, which are split up into

decision-making boxes with different time horizons at five vertical levels. The time dimension of a

Technology Roadmap coincides with the time scale in the TAO model and the business aspects

technology/resources, product and market conveniently correspond with the columns Technology,

Organization and Application respectively. With Technology Roadmapping placed in the TAO model,

sequential and parallel co-operation can respectively be modeled by linking TAOs in chains and by

representing them as stacks. The actual value is generated at the bottom (operational) level at the

application side, where the cash flow is created.

From a theoretical approach, the most important motives for co-operative Technology Roadmapping are:

access to the partners knowledge, technologies and resources; risk/uncertainty reduction; long-term

alignment of technology strategies; and enhancing trust through better communication. The value creation

with Technology Roadmapping can be explained with Real Options theory. This technology investment

valuation method is based on the belief that the flexibility of the management to react external and internal

developments is extremely valuable. Therefore, the possibility to exercise, abandon or defer an option is

taking into account making the financial feasibility calculation. In theory, the key question is answered

affirmatively, because co-operative Technology Roadmapping will provide sufficient high quality options

at the right time and at low cost.

From case examples can be concluded that most of the motives thought of in theory are also experienced

in practice. The most important inconsistency between theory and practice is the assumed trust

enhancement, which is identified as a problem in the practical situations. The actual use of Real Options

theory was not identified in any of the case examples, but there exist resemblances implicitly supporting

this theory.

The conclusion of this thesis is that co-operation between companies on Technology Roadmapping does

create value for the companies involved. This answer is supported by the conclusions that through co-

operative Technology Roadmapping companies are better able to recognize, to create and to exercise

(technology) options. Whether co-operative Technology Roadmapping improves the valuation of the

options depends on the method used.

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1 INTRODUCTION

Firms today are expected to be more responsive to technological change and to manage their technology

assets more strategically. Meanwhile, organizational diffusion of technology planning, like to business

units and product managers, has shifted the bulk of technology decisions to many people unfamiliar with

the pacing and dynamics of technology in the lab or in the marketplace. Technology integration and reuse

suffer without coordinating structure or cross-business planning forums. The solution, according to some,

is a methodical approach to integrated technology planning called Technology Roadmapping (TRM). [1]

In the new product development process, shorter product life cycles and increasing consumer demands for

product customization make time-to-market critical, especially for technology based products. Although

the firm may want to gain first-mover advantage, with accelerated time-to-market demands in technologymarkets, it may not always be realistic for a firm to develop the capability on their own, and actual

acquisition can be costly in rapidly evolving high-technology industries. Alliances give a firm the ability

to get capabilities more quickly. [2] Co-operations between companies in networks and integration of

companies along the supply chain are widely acknowledged phenomena nowadays. Also, statistics show

an acceleration of newly established R&D partnerships in the last two decades. [3]

In the first article about Technology Roadmapping, published by Motorola in 1987, the focus of roadmaps

and roadmapping is implied to be on the individual company and for internal use. Their roadmaps even

comprise data on patents and on competitors who are active in the same areas as Motorola and who may

have established a proprietary position. [4]

This early vision on TRM justly shows that roadmaps can have a significant strategic content for a high-

tech company and are not desired to become public, let alone to be shared with competitors.

However, as the use of Technology Roadmapping has gained broader interest and it is adopted in a larger

gamma of firms, alternative applications of roadmaps are more often researched by the persons concerned.

At the Northwestern University students are assigned to research supply chain integration of Technology

Roadmapping. [5] This area of interest is also indicated by Albright [6], who points out that roadmaps can

be used to coordinate with suppliers and align with customers. He identifies the possibility to extend to

joint roadmaps with customers and suppliers as one of the learnings from roadmapping experiences.

Furthermore, the Technology Roadmap of the Semiconductor Industry Association (SIA), which is widely

acknowledged throughout the literature as a model roadmap, involves a broad network of participating

companies. Thus, the idea of collaboration in the roadmapping process is not new. Yet the structure and

methods employed by SIA are clearly unique. [7]

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It can be questioned whether this uniqueness is justified. The fact that the semiconductor industry needs to

co-operate to achieve the desired speed in development obviously has something to with it, but do not all

high-tech industries have this need? In other words, can this technology planning tool be useful for

collaborating firms in general?

The latter questions provide the motive for doing research on the newly invented matter, which is called

Co-operative Technology Roadmapping.

1.1 Objective and methodology

The objective of this thesis is primarily to identify what Co-operative Technology Roadmapping entails

and what its advantages could be for the companies involved, in theory and in practice.

To guide and delimit the research for this literature thesis a clear key question has been posed: Does co-

operation between companies on Technology Roadmapping create value for the companies involved?

To find an answer to this question some essential sub-questions are answered throughout this thesis. What,

in fact, is Technology Roadmapping and what is its purpose? How do companies co-operate, especially at

technology level?

The TAO model is used to link co-operation and Technology Roadmapping, along with value creation.

After explaining what this model entails, the mentioned subjects are modeled with TAO separately, with

the objective to become aware of their relative positions.

This awareness enhances the theoretical approach for answering the key question. Next to identifying the

drivers for Co-operative Technology Roadmapping, in this approach also the theory of Real Options is

used to explain how value could be created through co-operation on Technology Roadmapping.

Finally, to validate this freshly generated theory, a number of case examples of co-operation on

Technology Roadmapping is discussed. This provides a possibility to evaluate theory and practice, before

coming to the final conclusion: the answer to the key question.

The information sources used for this research primarily consist of literature available in books, journalsand conference papers. Occasionally, information was gathered from company and university websites.

1.2 Structure of the thesis

The structure of the report is the following. In the first place, the phenomenon Technology Roadmapping

is dealt with in chapter 2 and more about co-operation between companies is explained in chapter 3. In

both chapters the benefits and uses of the subjects are discussed, along with some risks to applying them.

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After these separate overviews of Technology Roadmapping and co-operation, chapter 4 explains what the

TAO model is and where value is created in this model. And, it identifies where co-operation and TRM

can be placed in the TAO model.

Chapter 5 provides the theoretical approach to key question. The possible motives for co-operative

Technology Roadmapping are presented and the issue of value creation is argued by means of Real

Options theory. Also, this chapter provides a quick view on the way to perform Co-operative Technology

Roadmapping best and the risks of doing so.

Then, a number of case examples is given in chapter 6 and a practical approach to the key question is

provided. The evaluation of theory and practice is provided by chapter 7 as well as the final conclusions of

this thesis. Based on these conclusions the key question is answered and some recommendations for

further research are given.

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2 TECHNOLOGY ROADMAPPING

All companies have a vision or a mission statement. Such a vision tells the internal and external

stakeholders or anyone interested what the company wants to be for them. Mostly it is stated rather

vaguely and maybe even utopian. The company activities, however, to which the employees have to

commit themselves and on which customers can base their expectations have to be concrete.

Roadmapping can be of help coming from a vision to a concrete plan for the activities and Technology

Roadmapping (TRM), in particular, is a tool for technology planning, which can help companies to better

position themselves and their products.

This chapter provides an insight on what Technology Roadmapping is and why it is practiced. Also the

way to create a roadmap is discussed along with the pitfalls for doing so. But first, a framework for

technology management is given.

2.1 Technology Management

To give a better understanding of Technology Roadmapping, first, the more general matter of technology

management is discussed and the meaning of technology must be defined. Technology can be considered

as a specific type of knowledge, distinguishing itself from more general knowledge types with the key

characteristic that it is applied, focusing on the know-how of the organization. While technology usually

is associated with science and engineering (hard technology), the processes which enable its effective

application are also important for example new product development and innovation processes, together

with organizational structures and supporting knowledge networks (soft aspects of technology). [8]

Almost a similar definition is given by Hkansson: Technology is the application of knowledge to useful

objectives. It is usually built on previous technology by adding new technology inputs or scientific

knowledge. Technology may even involve little or no science, as scientists define the term. For new

technology is also created through the combination of two or more technologies without much true

scientific intervention the portable transistor radio, which combined the technologies of the radio, the

battery and the transistor, broke no new scientific ground. [9]

Technological knowledge generally comprises both explicit and tacit knowledge. Explicit knowledge is

that which has been articulated (e.g. in a report, procedure or user guide), together with the physical

manifestations of technology (equipment). Tacit knowledge is that which cannot easily be articulated, and

which relies on training and experience (such as welding or design skills). [8]

Like for technology, there are many definitions of technology management in the literature. The

European Institute of Technology Management proposes the following definition [8]:

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Technology management addresses the effective identification, selection, acquisition, development,

exploitation and protection of technologies needed to maintain a market position and business

performance in accordance with the companys objectives.

This definition highlights two important management themes [8]:

Establishing and maintaining the linkages between technological resources and company

objectives is of vital importance and represents a continuing challenge for many firms. This requires

effective communication and knowledge management, supported by appropriate tools and processes.

Of particular importance is the dialogue and understanding that needs to be established between the

commercial and technological functions in the business.

Effective technology management requires a number of management processes: Identification,

Selection, Acquisition, Exploitation, and Protection of technology. These processes are not always

very visible in firms, and are typically distributed within other business processes, such as strategy,

innovation and operations.

Figure 1: Technology management framework [8]

Technology management addresses the processes neede to maintain a stream of products and services to

the market. It deals with all aspects of integrating technological issues into business decion making, and is

directly relevant to a number of business processes, including strategy development, innovation, and

operations management. Healthy technology management requires establishing appropriate knowledge

flows between commercial and technological perspectives in the firm, to achieve a balance between

market pull and technology push. The nature of these knowledge flows depend on both the internal and

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external factors, such as business aims, market dynamics, organizational culture, etc. These concepts are

illustrated in Figure 1.

Technology Roadmapping represents a powerful technique for supporting technology management and

planning in the firm. [8]

2.2 What is roadmapping / a roadmap?

Generically, a road map is a layout of paths or routes that exist (or could exist) in some particular

geographical space. In everyday life, road maps are used by travelers to decide among alternative routes

toward a physical destination. Thus, a road map serves as a traveler's tool that provides essential

understanding, proximity, direction, and some degree of certainty in travel planning. The single word,

"roadmap" has surfaced as a popular metaphor for planning science and technology resources. See for an

explanation of this metaphor Appendix A. The process of "roadmapping," a new verb that describes the

social mechanisms involved in constructing a roadmap, is both a learning experience as well as a

communication tool for roadmap participants. [7]

Technology Roadmapping is an effective technology planning tool to help identify product needs, map

them into technology alternatives, and develop project plans to ensure that the required technologies will

be available when needed. It helps develop a framework for organizing and presenting the critical

information to make the appropriate technology investment decisions and to leverage those investments.

Roadmaps reveal the time dimension of technological progress and roadmapping is, amid the many tools

and techniques of managing technology, itself a trend, while it seeks to exploit the trends underlyingtechnology. [10] Technology Roadmapping differs from other methods of technology planning and

forecasting due in large part to its inherent practical nature. A roadmap is not a prediction of future

breakthroughs in science or technology, but rather an articulation of requirements to support future

technical needs. A roadmap assumes a given future and provides a framework toward realizing it. [7]

A framework for roadmapping is given in Figure 2. It indicates that the market is a driver for the product,

the technology, the process and the people. Vice versa, these people, the processes and the technology

enable the products and support the needs of the market. [11] Technology Roadmapping can be seen as

bridging two extremes, namely market pull and technology push. Market pull is about the question how toreach a goal and involves planning with a market focus. It has a deterministic and convergent character

and is customer driven. Technology push, on the other hand, obviously has a technology focus, is looking

for opportunities and is open-ended and divergent. [12]

The elements of this framework are also called the know-why, know-what and know-how factors. [13]

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Figure 2: The Roadmap integrates five views. [11]

A roadmap is a visualization of the future integrating the business aspects of Figure 2. It is based on the

generic vision and mission of the company and makes the strategy much more specific in time as well as

in contents. The roadmap should provide an immediate insight in the most relevant developments on the

business aspects for approximately the next five years. It shows the relation in time between the five issues

and should be considered as a shared snapshot of the future and not as a committal plan. The roadmap

itself does not contain hard decisions but it is used as an input to create a committal plan with a shorter

time span (e.g. a year). [11]

As in the case of ordinary highway maps, a technology roadmap can be viewed as consisting conceptually(if not always physically) of nodes and links. These roadmap nodes and links can have, in the most general

case, quantitative and qualitative attributes. A link in a roadmap could represent the qualitative attribute of

the degree of impact a science program could potentially have on a technology program, and / or the

quantitative attribute of the time estimated to proceed from the science program to the technology program

to useful application. [7]

The generic Technology Roadmap consists of spatial and temporal dimensions (see for example Figure 3).

The spatial dimension reflects the relationship among science and technology programs, product projects

and the market developments at a given point in time, while the time dimension accounts for the evolutionand metamorphosis of the same layers and relationships. As in the highway map, the roadmap nodes and

links are also vectors that need both magnitude and direction for full description. [7]

With the know-why, know-what and know-how factors identified, the roadmap then: establishes their

relative priorities, extends them using forecasts to set targets, and links them, which justifies R&D

investments and coordinates the efforts of responsible groups. [10]

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Figure 3: Generic Roadmap [12]

An example of how a Technology Roadmap can look like is given in Figure 4 on the next page. A certain

future market M2 is pictured and is addressed to by product (concept) P2, which can be realized by the

application of technology T2. This technology has evolved out of a parent technology T1, which in turn is

a result out of a Research & Development program RD1. Just like this path from RD1 to M2, there are

other paths imaginable using other technologies developed in other R&D programs, and addressing the

market with another product concept. It is a product concept because at present time the exact design isstill unknown, only a few functional properties delivered by specific technologies are forecasted. With this

forecast in mind, or rather made explicit on paper, the availability of resources needed to execute the

various paths is planned at the bottom.

Figure 5 on the following page gives a clearer presentation of how multiple scenarios can be displayed and

used in a Technology Roadmap. In the central scenario there are moments in time when a decision about

the further path has to be made. These are called the critical decision points and are represented by the

diamond shapes. These moments are preceded by a period in which a potential switch to scenario B can be

prepared. Whether or not this switch will be made depends on the key external developments and the

internal situation. By forecasting both scenarios like this, the company can organize its resources in a way

compatible to both.

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Figure 4: Hypothetical Technology Roadmap [14]

Figure 5: Multi-Scenario Roadmap. [15]

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Roadmapping (the activity) can be done for different purposes, while roadmaps (the documents) can

address different aspects of a planning problem. Figure 6 presents a taxonomy of roadmapping that

attempts to give some clarity in the definitional confusion.

Figure 6: Roadmapping Taxonomy [10]

The industry roadmap has an industrial context and typically articulates a technical thrust and the

competitive landscape. The need for an inter-company agenda, a complex supply chain, and large capital

investment drive the need for industry roadmaps. When specific product plans are combined with

marketplace and technology trends the resulting product-technology roadmaps highlight the links between

product generations and successive technology generations. Product roadmaps articulate a direction and

schedule for product evolution to communicate with customers and internal audiences. These different

levels of roadmapping require different commitments in terms of time, cost, level of effort and

complexity. [10] At the application level, a product-technology roadmap is a disciplined, focused, multi-

year, business planning methodology. For the product manager, a roadmap's implementability is as

important as its strategic value. Obviously, there is no single definition that satisfies all the uses of

roadmaps. In fact, the metaphor "road map" can and has been used in just about any planning context. [7]

Roadmapping enables a team to plan and execute a path to achieve their objectives, just as a roadmap

enables a traveler to decide among alternative routes to reach a destination. Roadmaps link strategy to

future actions and explicitly incorporate a plan for needed capabilities and technologies to be in place at

the right times.Product-Technology Roadmaps link market and competitive strategy to product plans to

technology strategy with quantitative targets and plans for achieving objectives. Industry Roadmaps

provide a shared industry vision and the path for the industry to achieve that vision. Science and

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Technology Roadmaps enable teams to link applications, technical challenges, and technology

development for science-driven technologies. [16]

Additionally, a hierarchy of roadmaps for science, technology, product, and some combination of these

becomes increasingly evident in the literature. From the industry roadmaps can be traced related

technology, product, and even component product roadmaps. [7]

In this survey the focus will be on corporate Technology Roadmapping, which comprises Product-

Technology Roadmaps and Product Roadmaps, but obviously having linkages to the other roadmapping

areas. This focal area will be referred to as Technology Roadmapping in the rest of the report, unless

explicitly mentioned otherwise.

2.3 Why roadmapping?

The main function of roadmapping is to provide a shared insight and overview of the business in time.

With this insight and overview better management of the elements mentioned in Figure 2 can be achieved.

Roadmapping has an anticipating value, which is especially important for long lead-time processes, such

as technology, people and process. Businesses without roadmapping activities are seen to suffer from the

following effects [11]:

Frequent changes in product policy caused by lack of time perspective.

Late start up of long lead activities, such as people recruitment and process change.

Diverging activities of teams.

Missed market opportunities.

The three major uses of Technology Roadmapping are [1]:

It can help develop a consensus about a set of needs and the technologies required to satisfy those

needs.

It provides a mechanism to help experts forecast technology developments in targeted areas.

It can provide a framework to help plan and coordinate technology developments in both within a

company or an entire industry.

The main benefit of Technology Roadmapping is that it provides information to help make better

technology investment decisions. It does this by [1]:

Identifying critical technologies or technology gaps that must be filled to meet product

performance targets.

Identifying ways to leverage R&D investments through coordinating research activities either

within a single company or among alliance members.

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Other related benefits of establishing a formal roadmapping process, accepted by the enterprise, are:

effective knowledge management practice; focus on critical business objectives, issues and strategies;

increased capacity for continuous innovation; focus on vision and core competencies. [17]

Kappel [10] argues further that the roadmapping process not only produces more informed individual

decisions, but brings with it better alignment of organizational decision making. One example of this type

of synergistic effect has occurred at Lucent Technologies in the form of uncovering common technology

needs through cross-roadmap reviews. Through a top-level review of multiple wireless communications

product-technology roadmaps, it was discovered that all the individual roadmaps addressed the need for

gating battery and antenna technologies. With this information, the corporate technology strategy office

was able to recommend sharing and consolidation of R&D, supply-line, and other common resources [6].

Technology roadmapping is critical when the technology investment is not straightforward. This occurs

when it is not clear which alternative to pursue (e.g. enhance an existing technology or replace it with a

new technology), how quickly the technology is needed, or when there is a need to coordinate the

development of multiple technologies. [8]

Many of the benefits of roadmapping are derived from the roadmapping process, rather than the roadmap

itself. The process brings together people from different parts of the business, providing an opportunity for

sharing information and perspectives. The main benefit of the first roadmap that is developed is likely to

be the communication that is associated with the process, and a common framework for thinking about

strategic planning in the business. Several iterations may be required before the full benefits of the

approach are achieved, with the roadmap having the potential to drive the strategic planning process. [8]

To conclude, the ten reasons to roadmap indicated by Albright are [16]:

1. Roadmapping is just good planning, for all the areas that contribute to a successful product line.

The roadmapping process leads a cross-functional planning team to fully examine potential

competitive strategies and ways to implement those strategies. Technology decisions are made as

an integral part of the plan, not just an afterthought.

2. Roadmaps incorporate an explicit element oftime. Roadmapping helps the team make sure that

they will have the technologies and capabilities at the time they will be needed to carry out their

strategy.

3. Roadmaps link business strategy and market data with product and technology decisions.

Roadmapping prompts a team to be specific with respect to planned features or performance in

terms of value for customers.

4. Roadmaps reveal gaps in product and technology plans. Areas where plans are needed to achieve

objectives become immediately apparent, and can be filled before they become problems.

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5. Roadmaps prioritize investments based on drivers. At every stage of the roadmapping process,

the focus is on the few most important things: customer needs, product drivers or technology

investments. The team is prompted to identify, implement, develop, or acquire the most

important things first, spending time and resources in the best way. Also, with a set of roadmaps

in a common format, portfolio decision makers are better equipped to make the tradeoffs and

choices that meet the corporations objectives.

6. Roadmapping helps set more competitive and realistic targets. Product performance targets are

set in terms of the industry competitive landscape. For example, experience curves are an

especially useful tool for establishing industry-based targets. Recognizing that a winning product

strategy usually cannot be all things to all people, the team sets objectives to lead, maintain

parity, or lag competitors in specific areas.

7. Roadmaps provide a guide to the team, allowing the team to recognize and act on events that

require a change in direction. Part of the process of developing a roadmap is to create a risk

roadmap, identifying those events or changes in conditions that signal a need to reevaluate and

revisit the plan during the development journey.

8. Sharing roadmaps allows strategic use of technology across product lines. Cross-roadmap

reviews look across the plans of several product lines to find common needs, capabilities that can

be leveraged, or development costs that can be shared. Roadmaps can also support a common

corporate database of available or needed technologies.

9. Roadmapping communicates business, technology and product plans to team members,

management, customers, and suppliers. With a roadmap, a team can clearly explain to customers

and suppliers where they are going. A roadmap gives customers information they can use in their

own planning, and can be used to solicit their reaction and guidance. With suppliers, a roadmap is

a framework for partnership and directions setting. The roadmap also tells the larger development

team, corporate management, and other development teams where the product line is headed.

10. Finally, roadmapping builds the development team. The roadmapping process builds a common

understanding and shared ownership of the plan, incorporating ideas and insights from team

members representing the many functions involved in a successful development process.

2.4 Creating a Technology Roadmap

Technology roadmapping, as a practice, emerged from industry as a practical method of planning for new

technology and product requirements. Therefore its adoption rate is much greater than its more academic

cousins such as technological forecasting and technology foresight. And, basically, construction of a

roadmap requires identifying the nodes, specifying the node attributes, connecting the nodes with links,

and specifying the link attributes. [7]

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A roadmap is joint effort of all stakeholders, which can be for instance in a typical high-tech company the

business manager, the marketing manager, the people and technology manager the operational manager

and the architect (who creates a bridge between technology and product). [11]

Muller indicates that the roadmap creation process can exist of three phases, all ending with a large

collective meeting in which explicit business decisions are made. First, all who are involved take time to

prepare the first meeting. The target of this first meeting is a shared vision on the market, on the possible

products as an answer to the market and share technology status, as starting point for technology roadmap,

then to explore people and technology status. After some days/weeks to digest the first meetings result and

to prepare the second meeting there is another collective meeting. The target for the outcome of the second

meeting is obtaining a shared vision on the desired technology roadmap, sharing the people and process

issues required for the products defined in the first iteration, and analyzing a few scenarios for products,

technologies, people, and process. Again some time should be taken before the third and final meeting, in

which a shared roadmap is created. [11]

Garcia and Bray [1] mention an extra phase in the process, the follow-up activity. For this phase all key

decision makers involved in the first phase are to critique, validate and accept the roadmap. An

implementation plan has to be developed. This plan has to be routinely reviewed and updated. In fact,

Technology Roadmapping should be seen as a continuous process.

Appendix B provides an example of a five-step Technology Roadmapping process.

Figure 7: Roadmap Planning in four steps [13]

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The essential questions to be asked at what time are shown in Figure 7. The push-pull mechanism is also

indicated for the know-why, know-what and know-how levels. At every level important

information has to be gathered and decisions have to be made. Finally, all this data has to lead to a To-

Do summary and action plan.

2.5 Negative aspects

Next to some success factors of a Technology Roadmapping initiative, such as management commitment

and the disciplinary breadth of the participants, there also exist some deficiencies and limitations of

Technology Roadmaps. [7] The following negative aspects or pitfalls can be identified:

Roadmaps are both forecasts of what is possible or likely to happen, as well as plans that

articulate a course of action. Roadmapping is not an objective but usually a subjective exercise

that balances possible futures with likely and advantageous futures. [10]

Roadmapping enjoys more success in the presence of a recognized external threat. Needing to

respond to a competitive threat gives a motive for decision makers to getting involved. [10]

Limits on Inclusion. One major weakness of most Technology Roadmaps is that criteria for

inclusion or exclusion of Science&Technology (S&T) programs are rarely specified. How similar

do S&T programs have to be to the central theme of the roadmap to be included? [7]

Linearity or the tendency toward linear thinking. That is, the structured (and linear) design of

some roadmaps limits the field of alternative paths, often based simply upon extrapolating past

performance of a single scenario into the future. [7]

One-Time, Static Exercise. Often, technology roadmaps do not have a sufficiently flexible

structure to incorporate dynamic changes. Further, there is an important distinction between a

roadmap (product) and roadmapping (process). Some incorrectly confuse the two and thus see a

roadmap as simply a 'book' and fail to realize the full potential available from a dynamic process

of roadmapping. [7]

Isolated Decision Aids and "De-Coupling". To be most effective, roadmapping and other

management decision aids need to be fully integrated into the strategic planning and business

operations of the organization. Employment of roadmaps in a band-aid or afterthought mode will

result in a fragmented product with limited potential for organizational implementation. An

interrelated problem is referred to as "de-coupling," occurring when an organization attempts to

formalize roadmapping, but in fact its apparent adoption is only a paper exercise, not truly linked

(coupled) to any broader strategy. [7]

Being aware of these pitfalls helps avoiding them, which is essential for the roadmapping success.

Succesful Technology Roadmapping has a lot of advantages for an individual company, whether these

hold for a co-operative approach is to be investigated in the following chapters.

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Figure 8 sketches these various relations between companies along the supply chain.

Complementors

Competitors

CustomersDistributorsFOCAL FIRMSuppliers

Figure 8: Possible alliance partners along the Supply Chain [19]

There can be identified three basic levels of technological collaboration: pure technology transfer;

development-related technology transfer; and joint development. Pure technology transfer entails

transferring and applying technological knowledge that is not developed or processed any further.

Development-related technology transfer is concerned with the creation of new technologies, as in the

case of R&D co-operation. In some cases, the transferred technology is adapted or further developed by

the receiving company before putting it into use if the new technology has to be integrated with internal

technologies. In other cases, the development related technology transfer is combined with product

transfer. Finally, joint development means that both parties actually bring together their R&D resources

(or divide the work-load) and together develop a new product or technology. [20]

Hagedoorn [3] refers to R&D partnerships as the specific set of different modes of inter-firm collaboration

where two or more firms, that remain independent economic agents and organizations, share some of their

R&D activities.

These R&D partnerships are examples of inter-firm collaboration or strategic partnering, a topic that has

recently attracted attention in both the academic literature and the popular press. A probable reason for

this is that joint R&D by companies is considered by many observers as one of the, until recently, least

expected activities that companies would be willing to share with others. However, there is a clear pattern

of growth in the newly made R&D partnerships if one looks at the historical data since 1960. In the early

years of these four decades, there is a steady growth pattern with an acceleration since the 1980s as shown

in Figure 9.

The explanation for the overall growth pattern of newly made R&D partnerships is generally related to the

motives that force companies to collaborate on R&D. Major factors mentioned in that context are related

to important industrial and technological changes in the 1980s and 1990s that have led to increased

complexity of scientific and technological development, higher uncertainty surrounding R&D, increasing

costs of R&D projects, and shortened innovation cycles that favour collaboration. [3]

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Figure 9: The growth of newly established R&D partnerships (1960-1998). [3]

R&D partnerships are primarily related to two categories, i.e. contractual partnerships and equity-based

joint ventures. Recent studies have established that contractual forms of R&D partnerships, have become

very important modes of inter-firm collaboration as their numbers and share in the total of partnerships has

far exceeded that of joint ventures. Compared to joint ventures, the organizational dependence between

companies in an R&D partnership is smaller and the time-horizon of the actual project-based partnerships

is almost by definition shorter. [3]

Figure 10: The share (%) of high-tech, medium-tech, and low-tech industries in all newly established

R&D partnerships. [3]

Inter-firm partnerships are associated with so-called high-tech sectors and other sectors, where learning

and flexibility are important features of the competitive landscape. These partnerships enable companies

to learn from a variety of sources (partners) in a flexible setting of (temporary) alliances for various

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company activities across the value chain. [3] The expected dominance of R&D partnering by high-tech

industries is also demonstrated in Figure 10.

3.2 Sequential co-operation

Supplier relationships

During the last decade, there has been an increasing interest in the development of co-operative supplier

relationships. The collaboration can be targeted towards different strategic or more operational areas; for

example, improvement of logistical procedures through earlier and more efficient exchange of

information, reduction and simplification of administrative and financial issues, and co-ordinating and

harmonizing quality inspections and control systems. This development of closer relationships is often

accompanied by a reduction of the firms total number of suppliers. This occurs because of two reasons.

First, reducing the supplier base is associated with increased dependency of the manufacturer on the

remaining ones. In order to prevent this dependency turning into risk, the manufacturer needs to get

closer to the remaining suppliers. Secondly, collaboration takes time and effort, which are scarce

resources. Therefore, the total number of collaborative ventures has to be limited and hence the number of

suppliers is reduced. [20]

Collaborative relationships that are built around common procedures and intensive information sharing

mean that the suppliers operations can be more closely fitted to the customers needs. Moreover, early

supplier involvement is also useful in developing innovations in supplies that can help differentiate the

customers product in downstream markets. For example, a firm may choose to form partnerships with

key suppliers whose skills and experiences complement its strength to develop next-generation

technology. Chip manufacturers and computer manufacturers are working closely together to develop

next-generation computers. Because chips are a supply used in computers, this is an example of supplier to

OEM (original equipment manufacturer), or sequential, relationship. [19]

One of the most common and important reasons for firms to develop closer relationships with suppliers is

to benefit from their technological knowledge. This points to the underlying assumption that technological

collaboration with suppliers is promoted by long-term relationships, as opposed to the market-based

transactions with changing suppliers. The reasons of long-term relationships benefiting technological

collaboration are, simply stated the reduction of the efforts and increase in returns of the collaboration.

Long-term relationships facilitate information exchange, communication and understanding through

shared experiences, and in that way reduce the costs and efforts involved in collaborating. Relationships

also decrease the uncertainty regarding the returns on investments in the collaboration. [20]

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Distributor relationships

Distributors create value for the product by making sure that the products are on the right place, at the

right time, in the right amount. Interaction with the distributors is probably the first relationship that gave

rise to co-operation within the supply chain. However, the process of distribution is typically executed at

operational level, therefore little technological collaboration takes place. There exist technological

alliances in the transportation and distribution industry but these are about technological developments on

wireless communication systems, location systems, vehicle performance systems and information systems.

[21] The service of distribution is an end-product of a different value chain, with different equipment

suppliers and so on. In fact, the distributor can be seen as just the next company downstream in the value

chain, so as a customer of the focal company. And the customer relationships are discussed below.

Customer relationships

A new theory getting a lot of attention at the moment is Customer Relationship Management (CRM). Thisapproach is based on the recognition of the value of using marketing as a process of building long-term

relationships with customers to keep them satisfied and to keep them coming back. [19] The basic idea is

that it is more efficient to retain good loyal customers than to attract new ones through extensive

marketing campaigns. Knowing your customer means a establishing a relationship with two way

communication where the initiative for this communication can originate from both sides, for good and for

bad. [22] In this form of Marketing the customer has a long-term time horizon, accompanied with high

costs for switching to another vendor. The customer system is often integrated and the buyer focus is on

the technology or vendor, rather than on the product or person. [19]

3.3 Parallel co-operation

Complementor relationships

Firms that provide jointly used, complementary products can also have interaction. These relationships

provide customers a product that delivers a complete, integrated solution. Such alliances are referred to as

complementary alliances, and the members are referred to as complementors. This form of parallel co-

operation is not necessarily between direct competitors. For example, in 1997, Hewlett-Packard and

Kodak jointly decided to pursue the digital photography market. The alliance relied on Kodaks thermal

dye transfer process to produce prints on HPs printers. [19] Similarly, the demand for Intel chips

increases when Microsoft creates more powerful software. Microsoft software becomes more valuable

when Intel produces faster chips. It is mutual success rather than mutual destruction. [23]

Competitor relationships

Competing firms may choose to join forces to develop next-generation technology. This can be done to

define standards for new technologies, to provide market access in an area that one firm lacks, or to be a

stronger force against a larger competitor. An example of defining standards for new technologies is the

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partnership of GM and Toyota in the development of alternative fuel vehicles. They have shared research

in fuel cell technologies in the hopes that by their combined size they will be able to set technical

standards regarding what fuel the industry will use. Just like Philips and Sony who collaborated in the

development of the compact disc to make it an industry standard. Competitive collaboration between firms

is also a form of parallel co-operation, because these firms typically compete at the same level of the

supply chain. Another name given for this type of collaboration is co-opetition, whereby firms compete in

some arenas and collaborate in others. For example, in the mid-1980s, when the U.S. semiconductor

industry was in danger of losing its competitive edge to Japanese competitors, a variety of firms in the

industry decided to join forces to develop a next-generation semi-conductor. [19]

Business is co-operation when it comes to creating a pie and competition when it comes to dividing it up.

In other words, companies providing to the same market are complementors in making markets and

competitors in dividing up markets. [23]

3.4 Reasons, Risks and Success Factors to co-operating and partnering

Corporate relationships tend to open the way towards a variety of new solutions rather than tying the

actors down to one or at least so it seems when technological co-operation comes into the relationships.

The commitment then possesses a dynamic element, and instead of having an inhibiting effect it provides

fertile soil for change. Relationships which in themselves may be seen as a tie or an obstacle may in fact

represent the grounds for technological development; without them, perhaps, no change would have either

necessary or feasible. [9]

By partnering, firms are able to gain access to such resources and skills in a timely and cost-efficient

manner. Also other reasons for partnering are mentioned by Mohr [19], given in the enumeration below.

The benefits of collaboration in research and

development in particular are in line with the

reasons for partnering in general, with the

following additional benefits mentioned by

Allen and Jarman. Collaboration in

manufacturing R&D reduces the financialexposure and risk of technology failure and

reduces the time it takes to get new

technologies applied in a companys process. It exposes company personnel to new ideas and cultures and

broadens the recognition individuals and organizations get for good work. Furthermore, collaborative

R&D provides a means for developing constructive business relationships as well as a means for creating

Reasons to Partner or Co-operate:Access resources and skillsGain cost efficienciesSpeed time to marketAccess new marketsDevelop innovations and new products

Develop complementary productsDefine industry standardsGain market impact

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new businesses. Also, a very significant benefit is accelerated technology commercialization, meaning

getting the new technology applied in industry and eventually the adoption in society. [24]

Table 1: Barriers to supplier integration. [25]

Despite the many reasons to co-operate, starting a relationship with another company does have its

problems. A research done on supplier integration resulted in defining the barriers shown in Table 1.

And co-operating or partnering does not go without risks as can be read below [19]. The most important

risks originate from the resistance to sharing sensitive information, which is experienced in many

companies. Secrecy is an effective means for companies to get the most out of a particular technological

innovation, but is very limiting in efforts to try to grow and evolve a concept. Many people have believed

that the compromise of a companys base technology would jeopardize the existence of the company. In

actuality, it is generally the competence of the personnel and processes in place to effectively use the

technology that comprises the fundamental corporate competence. The ability of the companys personnel

and processes to develop product and process technologies that complement and/or evolve the foundation

technology will ensure the company stays in business. At present, collaboration is a tool most comfortable

for those who are not afraid to share information even

if its counter to their business culture; those who can

quickly learn and grasp new concepts; those who can

visualize the application of technology and the type

of business it can generate. [24]

Risks to Partnering:Loss of autonomy and controlLoss of trade secretsLegal issues and antitrust concerns

Failure to achieve objectives

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Whatever the reason for an alliance, it is any voluntary agreement between firms that involves exchange,

sharing, or co-development of products, technologies or services, and can include contributions in the

form of capital, technology, or firm-based assets. Next to the success factors mentioned below [19], two

variables are very important in making alliances work: commitment and trust. Commitment to the

relationship is seen as an essential part for the success of long-term relationships. Substantial commitment

from both parties helps to create shared trust and develop social norms. Commitment also aids in

regulating long-term relational exchanges and reducing opportunism.

Equally important is trust; without trust in a future

business partner, creating the contract for an alliance

that must specify all the potential areas where

opportunism could occur is nearly impossible. Inter-

organizational trust is associated with increased

performance, lower cost of negotiation, and

decreased conflict.

Success Factors:CommitmentTrustInterdependanceAppropriate governance structuresCommunication

Compatible culturesIntegrative conflict resolution

Anticipating the matter of value creation in the key question we can conclude that not every technology in

a companys portfolio has to be homegrown. In many cases, it makes more sense to acquire them

externally. External technology drives value in three ways [26]:

1. It can add to, and diversify, the portfolio of high-value new opportunities, often quite

inexpensively.

2. It extends the technology options available to the firm.

3. The company can bring projects to the marketplace faster and with lower risk, implicitly

expanding the number of attractive opportunities.

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4 ANALYSIS WITH THE TAO MODEL

In the former two chapters the phenomenon Technology Roadmapping and the reasons for co-operation

between companies are explained. To answer the key question of this survey those two issues have to be

linked and the TAO model will be used as a tool to do this. By first explaining the TAO model and then

placing TRM in it as well as defining co-operation with the model, their relative position will be

determined.

4.1 Explanation of the TAO model

The model for the management of Technology, Application and Organization, or the TAO model, is

developed by the Dutch Institute of Management and Innovation for the purpose of communication

between partners with different backgrounds, both within and outside the organization. It not only aims at

synchronizing at logistic level, but also at the level of product- and organizational innovation and -

strategy. It maps the innovation process, supporting communication at all levels. [27]

At the basis of the TAO model lays the base model, shown in figure W. In this base model Technology

is broadly defined as the sum of the competencies an organization can get to make an impact on its

business. [27]

The topside of the base-model concerns the

matching of the technology to particular

areas of use requiring (new) technology or

knowledge. Both areas are relatively low in

dynamics as they are both strongly related to

human learning processes and routines. This

is in contrast to the lower half, which con-

centrates on the more dynamic areas of

product and production engineering, mar-

keting, sales and distribution. Vision and

development represent the creative transla-

tion of the short and the longer term both ways. Figure 11: The Base Model [27]

Technology

Appreciation&

Acceptation

Effectivety

&Efficiency

Environment&

Use

Knowledge&

Experience

Application

Organization

Vision&

Development

To be able to use this basis we need to build another layer on top. Working out the arbitration, matching

and balancing (AMB, see 4.2) issues in more detail provides a 15 element matrix, the TAO model , as

shown in figure X. In this layer the prime areas of interest are translated to the more specific decision

areas and processes concerned. It provides both recognition of functional departments and the

environment in which AMB decisions need to be taken.

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The layout of the TAO model consists of an overlay of two distinct dimensions. Vertically a relative

timeframe, because from top to bottom the time horizon of decision-making is decreasing. Horizontally

the value added, similarly to the Value Chain. The center column represents the organization with its

different timeframe dependent decision planes, the classical planning process. From the top down, we find

here the mission, strategy & vision, tactics and operations. The left and right columns represent the

different worlds between which the organization arbitrates, at the left the inside and upstream decisions

are made. And at the right the interaction with the outside, the decisions aimed at downstream impact.

These worlds can represent any environment as long as arbitration takes place. It could be Technology and

User, but also Author and Reader etc.

Technology Application

TAO Model

Organization

Industrial organization

Design Engineering

Technology man.

lead users

logistics sales

design marketing

Satisfaction

Value perceptions

Needed functions

Process of use

Users

Distribution

Product

Product concepts

Vision

Business developm.

Production

Engineering

Potential functions

Technology

Science

Figure 12: The TAO model [28]

This arbitration, the economic basis of the organizations role and survival will take shape at all levels

within the model. Its horizontal lines bridge areas that need to be considered in balance and in the same

timeframe. Within its timeframe the bridges are the basis of the decisions controlling Value Streams, the

building blocks of modern corporate value. The combination of these dimensions provides the most

important process blocks for the organizations innovation processes. Each of these blocks interacts with

all of its neighbours. At the bottom, the transactions take place, the primary process. The lower two levels

represent the original Value Chain.

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For example, in the model shown in Figure 12 for a technology driven organization, Technology

assessment and User scenarios influence the Vision for the organization, which provides boundary

conditions for its product concepts. Also Production engineering and Value engineering (marketing)

combine into the final product definition as both influence the margins to be obtained in transactions with

the product. This in turn will interact with distribution. [28]

From the upper to the lower echelons of the model, the timeframe of reference tends to become shorter, in

other words, the upper echelons provide the boundary conditions for the lower ones. Only when a viable

balance is found at all levels, the organization will thrive. This also means that all competencies involved

need to be available within the organization or, through its network, to the organization. Deviation from

these rules implies higher risk or lower return.

The availability of competencies implies also relationships, which have their basis at any level, with

different scope and time-horizon, providing support to the management of different types of alliances.

Especially important are the differences within each column, i.e. between user and market and product-

and production technology. The former differentiates functionality from customer value, the latter

product- from production technology. The possibility to explicitly make these differences and put them in

a proper time perspective is one of the important advantages of the model.

The model, through its columns and process-blocks provides language and context for many multi-

disciplinary decisions. Focus on relevant issues is also provided by the mentioned aggregation level option

for scalability. The complexity of reality is buried in a number of layers and elements, to be addressed

when needed for a particular purpose, but only then. In addition, the time-axis relation with the vertical

axis of the model gives the chance to focus on a specific period relevant for the decision involved. [28]

The TAO-model is used by organizations to identify the competence & relationships necessary for

successful innovation. It supports both the strategic and the operational planning of product development

without cluttering the overall view with details. Through the different roles in the process and their

communication patterns, the issues in inter- and intra-company cooperation can be identified. The prime

use of the model is communication of intent and decision. (The discussion about boundary conditions is

the inverse of learning. In this respect, the model identifies in the vertical relations the areas at which

learning processes should be supported. Due to its scalability, individual, departmental and corporate

learning can be made explicit.)

Recently the model has been used in research networks to identify value streams and support evaluation of

the relative value of knowledge transfers. [28]

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4.2 Value creation

To be able to address basic decision-making we need to start by defining basis economic value creation.

For the purpose here we concentrate on a particular set of economic processes for value creation [27]:1. Arbitration(A). Bringing together supply and demand. The separation can be in time, in place or

in function. Straightforward examples are storage, distribution and product development but in

reality often a combination provides the optimal value creation. Arbitration provides a channel or

value stream.

2. Matching(M). Closely related to the first process and an important process for any organization,

matching is the process of tuning a set of competencies and assets to a set of requirements.

3. Balancing(B). Balancing assets and investments in the short and the long term to provide an

efficient use of these assets is both a requirement of competitiveness and continuity.

These three principles (AMB) are not independent, but are concentric around a companys core

competence and assets. Arbitration defines an outer layer of interaction with the external, matching is the

process of tuning the value exchange, balancing is part of basic entrepreneurial optimization of the use of

assets and competencies. The organizations AMB decision-making is represented in the TAO model by

the middle column. [27]

Figure 13: Value creation in the TAO model

Although arbitration takes place at all levels, eventually the actual measurable value is created at the

bottom right corner element where customer satisfaction is converted into actual cash flow. So here the

value is exchanged for cash. This is also represented by the Sales arrow shown in the model of Figure

12.

value

value

Needed functionsProduct ConceptsPotential functions

Satisfaction

Value perceptions

Process of use

Users

Distribution

Product

Vision

Business develop.

Production

Engineering

Technology

Science

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Every element or process in the model may cost money, but for the company to make profit or even

survive, this costly activity will have to make a contribution to the value chain at the bottom. E.g., when

investments are made for technology development the value of these investments will, to make them

efficient, some how stream to the bottom right element Satisfaction. This can occur in various ways,

because new or better technologies can enhance both the Potential functions and the Vision, from

where the value can follow many paths, see figure 13.

Potential functions can transfer the value downwards enabling better or cheaper Engineering. This, in

turn, results in advantages in Production, to eventually improve Satisfaction for the end-user through

quality and delivery time. Customers pay for satisfaction and generate cash flow for the company.

Also, technology development may change a companys Vision, thereby her ideas of new Product

concepts resulting into the Product shape or functionality, and its location in time (Distribution). Other

combinations of value flows between these mentioned decision frames are possible.

Through a balance (B) between spending time and money in Engineering or Marketing margin can be

created. Engineering might re-engineer or increase volume for lower unit cost, Marketing might increase

price or volume to increase income. Part of the value perception comes out of the customer value of

product or service function. This is a particular match(M) between what functionality one can supply and

the functionalities required. The ability to identify proper matches in turn depend on the communication

with users and understanding their processes of use. This involves both the present and the future

scenarios. [27]

4.3 Co-operation and the TAO model

The TAO model is developed as an innovation

Documents

Co-OPerative Technology Roadmapping