tmitti 1 © sakari luukkainen t-109.5410 technology management in the telecommunications industry (3...

© Sakari Luukkainen

TMitTI 1

T-109.5410 Technology Management in the Telecommunications Industry (3 cr)


TMitTI 2

Background of the course

• R&D investments in Finland are 5 billion € of which is privately financed 72 %, major R&D performed by telecommunications industry

• Telecom company´s cost structure is dominated by the R&D cost, which is biggest fixed cost

• Majority of those fixed costs are sunk costs which can not be easily recovered if technology commercialization fails


TMitTI 3

Growth by industrial sector

Source: Stat Finland

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

8 000 000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

Pro

du

ctio

n

Electronics

Paper


TMitTI 4

• Current slowdown - the development moves two steps forward and one step backward

• Media catalysts overestimated expectations in growth phase, and panic in decline phase

• Asymmetric information in the technology financing market

• High 3G license costs delay development

• Most of the success is related to GSM technologies, hyper price competition in mobile voice and SMS

• No history data of business – difficult to forecast, unreliable market research



TMitTI 5


• VC financing has so far resulted in a very few new success stories

• Only 20 % of R&D performed by companies can be exploited commercially

• The role of liquidity constraints is negligible in determining R&D investment – steady R&D spending

• Market uncertainty is however high - many technical possibilities open up with unclear market need - many failures and unexpected success

• Incumbent companies often lose their competitive position in discontinuous technological change


TMitTI 6

Goal of the course

• To describe technology management as a part of the business process of a telecommunications company

• The course handles the structure of the telecommunications industry and its innovation characteristics, technology choices, R & D financing, standardization and product strategy


TMitTI 7

Graduating the course

• The course is especially designed to students taking Telecommunications Management / Networking Business for their major or minor, but is suitable for all students that are interested in techno-economic issues related to telecommunications

• The preferred but not compulsory prerequisite for this course is TU-91.2005 Strategic Management of Technology and Innovation, it can be graduated e.g. parallel during this course

• Replaces courses T-109.410, T-111.050 and TU-91.126


TMitTI 8


• 9 lectures, 2 industry speakers, on Tuesdays hall T3, at 10.15-12

• Exam requirements consist of the lectures and the following books:

Carl Shapiro, Hal R. Varian, Information Rules, A Strategic Guide to the Network Economy, 1999Michael E. McGrath: Product Strategy for High Technology Companies, 2001

• Following books will also be touched in the lectures:

Mäenpää, K., Luukkainen, S.: From Telecommunications Technology to Multimedia Communications: The Competitiveness of the Telecommunications Cluster, 1994 Luukkainen, S: The Effect of the Developmental Dynamics of the Line of Business on the International Competitiveness of the Telecommunications Industry, 1996 Gawer, A., Cusumano, M.: Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation, 2002 Christensen, C.: Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, 2004 Afuah, A.: Innovation Management: Strategies, Implementation and Profits, 2003 Palmberg, C., Martikainen, O.: Overcoming a Technological Discontinuity - The Case of the Finnish Telecom Industry and the GSM, 2003


TMitTI 9


• First examination is 17.12.2006 at 9 - 12 in lecture hall T1 and the enrollment to the exam will be done via Topi, 4 exams / year

• Exam consists of three essay questions of which two is compulsory, six concept definitions and one applied question concerning some real life business case


TMitTI 10Telecom Management / Networking Business

Telecommunications(Application area,research target)

IndustrialManagement (Theory)

Internet & Multimedia(Application area,research target)


TMitTI 11

TU-91.2005 Strategic Management of Technology and Innovation 5

S-38.3001 Telecommunications Forum 1-5

S-38.3041 Operaattoriliiketoiminta 3-5

T-109.7510 Research Seminar on Telecommunications Business 5

T-124.5100 Verkottuneet liiketoimintaprosessit ja –mallit 4

Related courses


TMitTI 12

Master’s Thesis Scope

Emerging technology / Product strategy analysis

New telecom service design

Integration of ICT & business processes


TMitTI 13

Product Management Organization

Vice President, Sales and Marketing

MarketingServices

Advertising MarketingResearch

ProductManagement

Sales

ProductManager

ProductManager

AccountManager

AccountManager


TMitTI 14Product management is business process management

Product Manager

R&D

TopManagement

Sales

FinancePurchasing

Production

Customers Legal

Marketing


TMitTI 15Business Assessment: Hierarchy of Strategies

VisionCorporate StrategyDivisional StrategyProduct/Market StrategyMarketing TacticsCustomer Satisfaction

Source: Gorchels

Focus ondeveloping andleveraging corecompetencies

Focus oncustomer-specific needs


TMitTI 16PM´s balance of management activities

strategicstrategic

the goal the reality

short-term

day-to-day

short-term

day-to-day

Source: Gorchels


TMitTI 17

Characteristics of Innovation

• New or improved product, service or process from market point of view, which contains new technological solutions and has been commercially successfully introduced to the market

• Radical, disruptive, sustained, incremental, architectural, service and process innovations

• Innovator gets competitive advantage through timing advance and IPR protection by patents – short monopoly

• Monopoly will loosen through trade of patents and licenses or knowledge spillovers when competitors copy the technology and proprietary technology gets common to all players in the industry


TMitTI 18

Science base

Generictechnologies

Proprietarytechnologies

R&Dinvestment

Technology push

Market appeal

Product innovation

Service innovation

Process innovation

X.400, ISDN, WAP, ERMES, ATM, UMTS?

GSM, Internet, fax, I-mode, Ethernet, IN, ADSL, CATV data

Innovation process


TMitTI 19

Discontinuous technology

Incremental change

Discontinuous change

Mag

nitu

de o

f C

hang

e

Time

Impr

ovem

ent t

rajec

tory

of in

cum

bent

s

Source Tushman, 1997


TMitTI 20

Era ofIncrementalChange

Era ofFerment

TechnologicalDiscontinuity

DominantDesign

Variation

Selection

TechnologicalSubstitution

Retention


Era ofFerment


DominantDesign

Variation

Selection

Retention


Era ofFerment


DominantDesign

Variation

Selection

TechnologicalSubstitution

Retention


Era ofFerment


DominantDesign

Variation

Selection

Retention

Technology cycle

Source Tushman, 1997


TMitTI 21

Disruptive technology

Per

form

ance

Time

Improve

ment trajecto

ry of in

cubents

Disruptive technology

Source Christensen, 1997


TMitTI 22

Technology Management

• Technology is a resource that is as pervasively important in the organization as are financial and human resources

• The deployment of technology in the firm´s product-market strategy strategy to position itself in terms of differentiation and cost, and gain technology-based competitive advantage

• The firm´s resource commitment to various areas of technology

• The firm´s use of organization design and management techniques to manage the technology function

• Vieving technology as a functional capability implies the need to develop a technology strategy


TMitTI 23

Technology Strategy

Interrelated decisions related to

• Technology choice

• Technology sourcing

• Level of technology competence

• Level of funding for R&D

• Organization for R&D

• Timing

• Technology introduction in new products/services

• Marketing of products/services


TMitTI 24

Technological change

Market change

Standardization Productization MarketingR&D

TechnologyAssessmentand Forecasting

MarketAssessmentand Forecasting

Innovation process


TMitTI 25

Technology strategy process in firms

Autonomous strategic

action

Induced strategic

action

Emergingcontext

Existing context

Concept of corporate strategy


TMitTI 26

Technology strategy enactment in firms

Induced- applied research on new technologies opportunities and

threats to support existing businesses- standardization, alliances- product development- joint ventures- acquisitions

Autonomous- science-based research- internal corporate venturing- external corporate venturing: VC, venturing alliances

and if they fail the last change is followership by copying / contracting / licensing without timing and cost advantage


TMitTI 27

Timetable

25.9. Introduction, Sakari Luukkainen2.10. R&D Management, Sakari Luukkainen 9.10. Standardization Strategy, Sakari Luukkainen16.10. Product Strategy, Sakari Luukkainen 30.10. Market Dynamics of Telecom Industry, Sakari Luukkainen6.11. Cases ERMES and GSM, Sakari Luukkainen13.11. Cases DOCSIS and ADSL, Sakari Luukkainen20.11. Technology Management in Nokia Siemens Networks, Ossi Pöllänen27.11 Technology Management in Ericsson, Visa Friström

17.12. Examination

tmitti 1 © sakari luukkainen t-109.5410 technology management in the telecommunications industry (3...

Documents

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sakari luukkainen background

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sakari luukkainen growth

sakari luukkainen goal

technology management

course rd investments