Technology acquisition Technology Management Activities and Tools Asst. Prof. Dr. Yavuz Selim ÖZDEMİR1

Technology acquisitionTechnology acquisition

Technology ManagementTechnology ManagementActivities and ToolsActivities and Tools

Asst. Prof. Dr. Yavuz Selim ÖZDEMİR 1

Discuss:Discuss:What are the decision What are the decision criteria for technology criteria for technology acquisition?acquisition?


Acquisition channels (1)Acquisition channels (1)BUYBUY Sponsoring university researchSponsoring university research External R&D centersExternal R&D centers ConsultantsConsultants Licensing agreementsLicensing agreements Vendors/ suppliersVendors/ suppliers Acquiring machinery or the Acquiring machinery or the

firmfirm


Acquisition channels (2)Acquisition channels (2)

MAKEMAKE R&DR&D


Acquisition channels (3)Acquisition channels (3)

COLLABORATECOLLABORATE ConsortiaConsortia Joint venturesJoint ventures Sub-contractingSub-contracting


Make or buy or collaborate Make or buy or collaborate decision depends on:decision depends on: ( (ChiesaChiesa

andand Manzini, 1998 Manzini, 1998))1) strength of the organization’s own 1) strength of the organization’s own

capabilities (relative costs) capabilities (relative costs)

2) respective transaction and 2) respective transaction and governance costsgovernance costs contract price, cost of information, monitoring contract price, cost of information, monitoring

performance, committing specific assets, performance, committing specific assets, handling complexity in reaching agreementshandling complexity in reaching agreements

3) dynamic transaction costs3) dynamic transaction costs costs of persuading, negotiating, coordinating, costs of persuading, negotiating, coordinating,

and teaching outside suppliersand teaching outside suppliersAsst. Prof. Dr. Yavuz Selim ÖZDEMİR 6

There is no ONE best organizational There is no ONE best organizational form!form!

The firm is not only “profit maker” The firm is not only “profit maker” but innovator so it should have but innovator so it should have profits and scale necessary to profits and scale necessary to finance the overhead expenditures finance the overhead expenditures requried to anticipate change and requried to anticipate change and create create “future values”.“future values”.


BUY optionBUY option


The reasons behind technology The reasons behind technology acquisitionacquisition

Limited resourcesLimited resources Time pressureTime pressure Complementary assetsComplementary assets Protecting imageProtecting image DiversificationDiversification Supporting internal Supporting internal

technologiestechnologies Avoid development risksAvoid development risks


Expected resulting impacts of Expected resulting impacts of technology acquisitiontechnology acquisition

productivityproductivity qualityquality product development cycleproduct development cycle labor-management relationslabor-management relations accuracy of the information flowsaccuracy of the information flows production costsproduction costs flexibility (volume, machine, flexibility (volume, machine,

process,..)process,..) maintenance costsmaintenance costs service performanceservice performance salessales Asst. Prof. Dr. Yavuz Selim ÖZDEMİR 10

Steps in technology Steps in technology acquisitionacquisition

Goal settingGoal setting Technology & Impact Technology & Impact

assessmentassessment Finding technology suppliersFinding technology suppliers

Acquisition channelAcquisition channel Choosing acquisition methodChoosing acquisition method Contract preparation and Contract preparation and

negotiationnegotiation Technology transferTechnology transfer Managing long-term collaborationManaging long-term collaboration


Collaboration optionCollaboration option


The content of the The content of the collaborationcollaboration (Chiesa and (Chiesa and

Manzini, 1998)Manzini, 1998)::1) Definition of the content1) Definition of the content2) Firm’s familiarity2) Firm’s familiarity3) Relevance for the firm’s competitive 3) Relevance for the firm’s competitive

adv.adv.4) Technology life cycle4) Technology life cycle5) Level of risk5) Level of risk6) Appropriability of the innovation6) Appropriability of the innovation7) Phase of the innovation process7) Phase of the innovation process8) Level of assets specialization8) Level of assets specialization9) Divisibility of assets9) Divisibility of assets


What are the issues when What are the issues when managing external managing external

suppliers and alliance suppliers and alliance partners?partners?


Issues in Collaboration Issues in Collaboration network design:network design:

AimAim PartnersPartners DurationDuration ContractContract ManagementManagement Investment / Re-Investment / Re-

engineeringengineering Division of labourDivision of labour StrategyStrategy


How to decide on the type of How to decide on the type of Collaboration Collaboration network?network?

The objective of the collaborationThe objective of the collaboration The content of the collaborationThe content of the collaboration The The type&structure type&structure of partners of partners

involvedinvolved


R&DR&D


Open InnovationOpen Innovation

Research Development Commercialisation

Core Market Focus

Company Boundaries

Products in-sourced (e.g. Co-branding)

IP in-licensing

IP out-licensing

Technology Spin-outs

Ideas & Technologies

Source: Chesborough 2003 and Docherty 2006


The key tasks in designing new The key tasks in designing new process are as followsprocess are as follows (tushman (tushman

and andersen (2004)and andersen (2004)1)1) Identifying process for innovationIdentifying process for innovation

2)2) Identifying change elementsIdentifying change elements

3)3) Developing process visionsDeveloping process visions

4)4) Defining business strategy and Defining business strategy and process visionprocess vision

5)5) Understanding existing processesUnderstanding existing processes

6)6) Understanding the structure and Understanding the structure and flow of the current processflow of the current process

19Asst. Prof. Dr. Yavuz Selim ÖZDEMİR

The key tasks in designing new The key tasks in designing new process are as followsprocess are as follows (tushman (tushman

and andersen (2004) cont.and andersen (2004) cont.7)7) Measuring the performance of the Measuring the performance of the

current processcurrent process

8)8) Designing and prototyping the new Designing and prototyping the new processprocess

9)9) Implementing and operating the Implementing and operating the process and associated systemsprocess and associated systems

10)10) Communicating results and building Communicating results and building commitmentcommitment


Tools for new product Tools for new product developmentdevelopment

1)1) Design for asemblyDesign for asembly

2)2) Design for manufactringDesign for manufactring

3)3) Design for serviceabilityDesign for serviceability

4)4) Design for testabilityDesign for testability

5)5) Design for environmentDesign for environment

6)6) System engineeringSystem engineering

7)7) Value analysis and value Value analysis and value engineeringengineering


New New ProcessDevelopmentProcessDevelopment


Procter&Gamble Case (1)Procter&Gamble Case (1)Collaborations: Open Collaborations: Open

Innovation (Sakkab, 2002)Innovation (Sakkab, 2002)


P&G Case (2) P&G Case (2)

P&G is a technology-rich company: P&G is a technology-rich company: 27000 patents, 4000 unique titles 27000 patents, 4000 unique titles and 3000 new patents each year. and 3000 new patents each year.

It invests $1.8 billion annually on It invests $1.8 billion annually on R&D. R&D.

Even though P&G use less than 10 Even though P&G use less than 10 per cent of its own technologies in per cent of its own technologies in company productscompany products


P&G Case (3)P&G Case (3) IInternal websitenternal website,, 18000 innovators across R&D, 18000 innovators across R&D,

Engineering, Market Research, Purchasing, and Engineering, Market Research, Purchasing, and Patent Divisions. Patent Divisions.

600 websites for Global Project Teams600 websites for Global Project Teams IIndividual problem-solving and connection-making ndividual problem-solving and connection-making

websites for 20 Communities of Practice. websites for 20 Communities of Practice. NNearly 9 million documents on line, growing daily.early 9 million documents on line, growing daily. AAutomation and artificial intelligenceutomation and artificial intelligence the latest in webcasting and satellite technology to the latest in webcasting and satellite technology to

create an internal Innovation News Networkcreate an internal Innovation News Network Conducting Conducting a deal-making/technology trading expoa deal-making/technology trading expo

over 2200 ideas for new products and important new uses over 2200 ideas for new products and important new uses of P&G and external technologiesof P&G and external technologies


Identification

Internal acquisition: R&D External acquisition

New product dev.

New processdev.

Other projects

new product / service equipment / solutions

Exploitation

Selection

Acquisition

Outputs

Businessstrategy

Learning

Purchase

Collaborative R&D

M&A

Protection


Documents

Technology acquisition Technology Management Activities and Tools Asst. Prof. Dr. Yavuz Selim ÖZDEMİR1