Strategic Technology Outlook Process for Formulating an R&D Strategy by Integrating Business...

Strategic Technology Outlook

Process for Formulating an R&D Strategy by Integrating Business Directions with Technology Foresight and Capabilities

United Technologies Research CenterSeptember 16, 1999

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Desired Outcome• Technology plans for each Business Unit (BU)

– 2-3 technologies for marketplace redefinition– technologies that support business and product/service

strategies

• BU-integrated strategy for UTRC– technology innovations required

(context for emerging ideas and “gamechangers”)– strategy for synergy across BU’s and risk reduction– distinctive competencies and capabilities required to

support present and future BU technology plans

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Key Strategic Drivers

Product/Process Challenges andNew Product/Process Opportunities

Technology Outlook

Emerging Ideas Potential Gamechangers Gamechangers

Competencies & Capabilities

Business Environment Business ScenariosCurrent Future

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Technology Outlook




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Current Business Environment

• Current business environment and product/process/service challenges summarized in a “T” chart (one chart for each business unit)

Business Environment Product/Process Challenges

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• No end in sight to cost/price pressures– Development and manufacturing costs (cite data)– Commercial products heavily discounted to meet

competition (cite data)

• Competitors aggressively growing installed base by sales (cite data)

• Competitors aggressively growing aftermarket business by acquisitions (cite data)

• Customers’ orders for product line W … (cite data); for product line N … (cite data); for product line R … (cite data)

– BU2’s response to the wide-body market is …

– BU2’s response to the narrow-body market is …

– BU2’s response to the regional market is …

• Orders for military product lines … (cite data)– BU2’s military product strategy is ...

• Growth opportunities are in the following areas …• Increasing environmental stringency on noise (cite

data)

Product / Process

Challenges and Opportunities

• Development and Manufacturing Cost– Reduce part count

– New product family

– One-build product design

– Greener materials and processes

• Competitive differentiation– Increased reliability

– Quiet product

– Ease of maintenance

• Aftermarket– Repair technologies

– Integrated diagnostics and prognostics

– Asset management

– Shorten turn-around times

Example: BU2Business Environment

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Technology Outlook




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Future Business Scenarios• Understand our “Business Intent” for making money• Focus on major strategic business issues/dilemmas

– decisions required about future directions

– decisions within our control

• Construct future scenarios– imagined or perceived social, economic, political, technological, or ecological mega-

trends, situations, and events

– relevant to major strategic business issues

– plausible realizations, sometimes outside of our control

• Play emerging technology “cards” in each scenario• Analyze and synthesize strategies, technologies, capabilities

– robustness to scenarios

– fit with “Business Intent” (or needed modification)

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Issues Shaping UTC’s FutureDriver Trend UTC Dilemma/Decision

Marketplace Marketplace is global and increasinglyintegrated via information networks

⟨ Centralized vs. decentralized approach(global vs. regional products/services)

Business Case ⟨ Margins are in systems and services;components erode to commodities

⟨ E-commerce is revolutionizing thebusiness theories of many industries

⟨ Component supplier vs. systems/servicessupplier

⟨ Low-cost vs. high-tech differentiation⟨ New business theory based on e-commerce

MarketLeadership

Leading the future with innovations incustomer value brings the most growth

⟨ Innovation follower vs. innovation leader⟨ Balance of investments in continuous

innovation vs. radical innovation⟨ Quality/reliability vs. time to market

ShareholderValue

Intellectual capital (people, corecompetencies, partnerships, corporateknowledge,…) is replacing capital assetsas the measure of a firm’s value

⟨ IC investment, growth, and return vs. capitalinvestment, growth, and return

⟨ IC synergy, infostructure, and make-buy(virtual organization) decisions

CompetitiveAdvantage

⟨ Employees are a firm’s greatest sourceof creativity and competitive advantage

⟨ Basis of competition is knowledge⟨ Consolidation across industries

⟨ Mobile, flexible, skilled workforce responsiveto change

⟨ Long-term employees vs. free-agents⟨ Acquisitions vs. strategic alliances

ConsumerDemographics

Juxtaposition of value systems:⟨ aging population vs. n-gen’ers⟨ developed vs. developing nations

⟨ Short-term view (money) vs. life-cycle view(social conscience, ecology)

⟨ High-tech vs. benefits/features

*

* Subject used in example

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Five ScenariosBombay

Hertz

Green

Clockspeed

Netscape

• Social• Political • Environmental• Science & Technology• Economic• Financial

Large emerging markets; Rapid growthof mega-cities; Focus on infrastructuredevelopment.

Information age is commercial driver; Seamless and unrestricted communications;Information democracy; Information Marketplace

Protection of environment is no. 1 priority;Depletion of raw material resources; Stagnant or falling standard of living; Negative GDP growth

Most capital goods are leased, not purchased for ownership; Customers demand no down-time, low acquisitioncosts, and real-time accommodation of changing needs.

Speed of business is firm’s one competitive advantage, driven by competitive intensity and technological innovation; meta-competency is management of capabilities supply chain

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Use of Scenarios: ExampleDilemma -- Components or Systems

Business?

Bombay Clockspeed

Netscape

Hertz Green

Robust Winning Strategy for UTC

(if Netscape, Hertz, Green come true)

ComponentsUser-Centric

SystemsMarket-Centric

Systems

Components-to-Systems Continuum

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Example: Aircraft Engine Business

Negative 5%/yr Positive 5%/yr

No

Impr

ovem

ent

Con

stan

t Im

prov

emen

t

No

ise

an

d E

mis

sio

ns

Reg

ula

tio

ns

Growth of Aircraft Market

Green

Bombay

Netscape

Buchanan

Hertz

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Technology Outlook




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UTC Key Strategic Drivers

• Revenue Growth– grow with the market– increase share of market

• Industry Consolidation– acquisitions

• Margin Expansion– engineering and product development– quality/reliability– supply management– shared services– cost reduction

Importance of Drivers Will Be Different for Each BU

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Technology Outlook




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Technology Outlook




EmergingTechnologies

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Emerging Technologies• The technologies important to UTC’s future [10-year

horizon] are known now– emerging and developing technologies not yet exploited by UTC

– full importance and impact is usually not known

• Impact of emerging technologies – emerging technologies are “mini scenarios”

– to assess impact: play emerging technologies as wildcards in the main scenarios and drivers

– combine powerful synergies into themes (e.g., information technology; modeling, analysis, simulation, and computation; aftermarket technology; green products and processes)

5/21/98 Rev 0 18

Example: Information Technology

Customer• Price• Reliable Function• Customer Service• User Interface

Products• Communications/Software• Controller/Sensors & Actuators• Mechanical Components

Enterprise• Manufacturing• Product Development

Customer Service Scenario

Product Scenario

Enterprise Scenario

5/21/98 Rev 0 19

Enterprise Productivity Scenario

IPD Team

Manufacturing Plant

Pro-EPro-MMES

Distribution

EmployeesCustomersSuppliersPartners

Supplier

5/21/98 Rev 0 20

Service Center

Product Scenario(Smart Products)

• Information repository

• User Services

• Building Integration

• Security

• Optimal Dispatch

• Safety & Ride Quality

• AVOS• Auto PC

• Smart Badge

• Upgradable Features

5/21/98 Rev 0 21

Airport

Service Center

Parts Factory

Customer Service Scenario(Smart Service)

Airport

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Longer Range Emerging Technologies

Wildcards in Scenarios - Materials Example

Assembly ApproachesComputational Materials DesignSurface TechnologySmart ProductsGreen ProcessesSuperconductivityIntelligent ProcessingH2 Economy

Scenario

Green S S S S S W S S 64

Hertz W M M S W W M W 20

Bombay W W W M W S W S 26

Netscape W M W S W W S W 26

Clockspeed M/S S W S W W S W 36

17 25 15 39 13 13 31 21

Emerging Technologies for Materials and Structures

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Technology Outlook




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Importance of Technology Capabilities to BU1

BU1 2000+

Technologies for Market

Re-definition

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Technology Outlook




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Technology Capabilities -- by Department

• Catalog your department’s present core and enabling technology capability areas together with a numerical estimate of your department’s capability gaps in these areas.

• Use Quality Function Deployment (QFD) to derive the numerical importance of your department’s core and enabling technology capability areas to the needs of UTC’s business units

• Integrate your analyses into a Technology Capability Portfolio.

• Define your department’s strategy by going through a structured, question-driven development process that blends your knowledge and intuition with the preceding analyses.

• Implement a quality check of your strategy.

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Technology Capabilities Portfolio and Strategy

StrengthenProtect

Maintain/Watch

Watch/Abandon

C

D

B

F

E

A G

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