Production Management I (Prof.

Schuh) Lecture 01

Production Management I
- Lecture 1 -
Technology Management I

Assistant Lecturer:
Dipl.-Wirt.-Ing. Christoph Haag
Christoph.Haag@ipt.fraunhofer.de
Fraunhofer IPT, Steinbachstraße 17, Raum 243
Tel.: (02 41) 89 04 – 2 75

© WZL/Fraunhofer IPT

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Production Management I (Prof. Schuh) Lecture 01

Short summary of the lecture

Industrial firms and business enterprises have always had to adjust to the changed
conditions on the sales, procurement and job markets, as well as to new laws and
regulations. This was accompanied by a paradigm shift and varying objectives and
assessment standards. This change will continue and accelerate even.

The globalization and the expansion of the European Union result in the fact that German
companies are increasingly exposed to pricing pressure. Many companies attempt to
maintain their market shares by adjusting their prices. However, you cannot win the price
war despite far-reaching cost reductions since the decline in costs between the production
location in Germany and the so-called low-wage countries is much too large.

However, the solution for German companies is not fight a hopeless price war. Instead,
they should concentrate on their innovative power and the development of excellent
technical products in order to distinguish themselves from their competitors. Manufacturing
innovative products and launching these on the market requires corresponding product,
manufacturing and material technologies.

The objective of technology management and the methods of technology management is

to enable companies to manage their technology basis successfully, to focus their
resources on the relevant technologies and developments purposefully and, finally, to
market the products.

The forecasting technology has the objective of recognizing relevant technological

developments for the company and of assessing their effects on the company and its
environment. The insights attained are used as the basis to decide which technologies
used within the company must be rejected and which new technologies must be developed
or acquired.

The technology planning evaluates and concerns itself for instance with the fact how new
technologies must be integrated in the company and at which point in time an integration
and/or new development must take place.
It is hereby critical that all activities consistently focus on one strategy. This necessitates
the formulation of a »technology strategy«. In turn, the technology strategy must be aligned
with the corporate strategy so that the objectives and activities, which are pursued within
the technology management, correspond with the company’s overall objectives.

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Table of Contents
„ Introduction to Technology Management
– Definition of Technology and Technique
– Motivation for the Management of Technology
– Challenges of Management of Technology
„ Technology- and Competitive Strategy as guardrail for the
Management of Technology
„ Process of Management of Technology
– Technology Forecasting
– Technology Assessment
– Technology Planning
– Technology Usage

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Definition of Technology and Technique

„ Technology includes

– Knowledge, facts and abilities for solving technical problems

as well as
– Equipment and methods for the practical realization of
scientific results

„ Techniques are

– The material realization of a technology and

– A subsystem of a technology
© Fraunhofer/Peter Bornemann (upper left)
and Fraunhofer IPT (others)

Traditional Definition Integrated Definition

Technology Technology

Technique Technique

source: Binder/Kantowsky 1996

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Production Management I (Prof. Schuh) Lecture 01

Where do we encounter technologies in everyday life?

Mobile Phone with Bluetooth

source: Siemens
Data Interface
Injection moulding tool for mobile phone cases - manufactured using Graphit SEDM
and HSC Technology

Î Technologies are everywhere – yet not always visible

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Production Management I (Prof. Schuh) Lecture 01

Definition of Management of Technology

Brockhoff suggests that the External acquisition
Externer Erwerb of

Technologiemanagement
management
interface between technology- technological know-how
technologischen Wissens
and innovation management is Innovationsmanagement
Innovation i.w.S
management i.b.s.
the R&D-Management (right Storage
Speicherung
and internal
und interner ErwerbImplementation Implementation
acquisition
picture). of technological know-how of a new product- of an innovation
insbesondere durch
in particular by R&DF&E einer Neuerung into
innovation einerthe
Neuerung
market
Binder and Kantowsky have

Technology
nearly the same perception R&D-Management
F&E- Management Innovation
Innovationsmanagementi.e.S
management i.c.s
(picture below). ExternalUtilisation
Externe utilisation of
technologischen Wissens
technological know-how
source: Brockhoff 1997

Technology management TM Innovation management IM R&D-Management Overview

Design Utilisation Design Utilisation Design Utilisation Design Utilisation
Output
Output

Output
Output
IM

R&D-M.
Technology

Technology
Technology

Technology
TM

source: Binder; Kantowsky 1996

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Definition of technology management:

Predominantly, any tasks of corporate management are understood to be strategic

aspects of technology management. These tasks are intended to create and control
technological and market-oriented success positions (Bullinger 1994). Subsequently,
this also includes the determination of the technological actual situation of the company.
This situation is quantitatively determined by key figures. Qualitative criteria, however,
make it possible to distinguish the technology position of the company with regard to that
of the employees.

Additional partial tasks of the strategic technology management also include:

- the recognition of technologies that relevant for the company and its business areas,
- the classification of the pertinent technologies according to their lifecycle phase and
their strategic significance.
- the mastering of technologies with their high strategic significance,
- the definition of technological competitive positions and strategies,
- the direction of F&E and innovation processes to technologies pertinent to the
competition,
- the strategic input of technology attuned to other performance potentials of the
company that are pertinent to the market and competition.

Explanation of the illustration:

The lower four illustrations depict the classification of technology management,
innovation management and R&D management into a system that consists of four
quadrants.
This shows to what extent each management task deals with Desing and/or Utilization of
Technologies and/or Outputs.
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Production Management I (Prof. Schuh) Lecture 01

What will be there the longest has to be carefully planned!

„ Technologies generally have a longer Typical Lifecycles of Products, Production
lifecycle than products Equipment and Technologies
„ Technologies are less likely to be 30 Jahre
substituted quickly
„ The company’s competitive edge has 25
a long-term effect Turning
20

Î Management of Technology has to steer 15

Lathe
the build-up and the usage of
10
technological competence in a company Shaft

0
Product Production- Technology
equipment (Principle)

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Comments on this slide:

The fact that life cycles of technologies are times longer than the ones of products
and production machinery can impose chances as well as threats to companies:

Chances:

- Competencies – once built up – sustain rather long (in comparison to products)

- higher reliability for long-range planning

- higher imitation barriers, as technology acquisition takes longer than product

development

Risks:

- missed technological developments of competitors can not be easily compensated

- Decision for a wrong technology wastes a lot of resources, adjustment and definition
of a new direction is only feasible in long term

Companies can actively influence, whether technological change means threats or

chances. This is the core objective of technology management.

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Management of Technology means…

Product technologies Competitive Environment

Material technologies Business Area
Manufacturing technologies Company
Forecasting Assessment Corporate Strategy

Planning Development Products and Processes

Utilisation Optmisation

Acquisition Transfer

... to adapt the performance

... to build up, use and protect
of technologies, products
technological capabilities and
and processes to the
commercial potential!
corporate strategy!

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As visible in slide 5, an explicit classification/definition of technology management is extremely difficult.

For this reason, this slide tries to provoke some thoughts and to link the variety of tasks and areas with
possible goals of technology management.

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Inhalte der Vorlesung

„ Introduction to Technology Management
– Definition of Technology and Technique
– Motivation for the Management of Technology
– Challenges of Management of Technology
„ Technology- and Competitive Strategy as guardrail for the
Management of Technology
„ Process of Management of Technology
– Technology Forecasting
– Technology Assessment
– Technology Planning
– Technology Usage

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Process of Management of Technology

Competitive Strategy

»Market Pull«

Technology Technology Technology Technology

Forecasting Assessment Planning Usage

»Technology Push«

Technology Strategy

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Process of Technology Management:

The process of technology management is used for the operational realization of the
goal of TM, which is to steer the buildup and the usage of the technological potential of
a company.

The proceeding in the process steps is determined by the two big influences competitive
and technology strategy, which are derived from a superior corporate strategy.

The process which is being described on the above slide represents on possible
structuring of the proceeding for technology management. When executing the four
steps Technology Forecasting, -Assessment, -Planning and –Usage, the number of
involved technologies decreases with each step through a selection based on influences
related to competitive and technology strategy. In a first step, all interesting technologies
are searched, identified and screened, to be evaluated in the next step. Useful
technologies are then integrated into the company‘s planning and, in the case of
success, are put towards technology usage.
Definition Market Pull and Technology Push: see page 17

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Options for the competitive strategy

Strategic advantage

Uniqueness from
Cost advantage
customer‘s view

Compelte market
Differentiation Complete cost
leadership

- Features/ Quality - Price/ Cost

- Uniqueness - Standard products
strategic
aim
Limited on one market

(concentration)
segment

Niche strategy
-Limited need - specific need
-- Flexible price - unflexible price

source: Porter 1997

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Competitive strategy

Porter differentiates three strategic basic behaviour patterns:

cost management
differentiation
focusing (specialization)
As depicted in the image, these strategic basic behaviour patterns are described by two
dimensions:
1. Strategic target object: targets on sectional markets or targets on overall market
2. Strategic advantage: targeting the cost/price advantage or targets from qualitative
differentiation.
(1) Strategy of cost management:
The cost manager is the party that has the lowest (unit) costs of comparable
competing products/service performances. For this reason, the strategy of cost
management pursues the principal objective of achieving a cost edge before the
competitor. The company will focus its entire strategy on keeping costs low, although
other areas such as quality, service, etc. cannot be disregarded.
(2) Strategy of differentiation:
The differentiation process follows the objective of separation from the competition
through the offer of a “unique” service performance or a “unique” product.
Differentiation can be done in many dimensions such as design or brand name,
technology, customer service or in other areas.
(3) Strategy of focusing/specialization
This strategy concentrates on market niches such as certain buyer groups, a certain
segment of the product program or a geographically restricted market. In relation to a
sectional market, the concentration can either lead to cost management or to
differentiation in the served market segment.
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Value of differentiation for a company‘s success:

technologies are the fundamental basis for uniqueness
Differentiation is the only succesful strategy
normative

„ European companies cannot compete in

Potential for benefit
alignment production costs
Strategic „ Downward spiralling of prices destroys
Success
chance for yield
position
strategic

Strategic
Î Only differentiation enables to skim yields
success
potential for uniqueness from the market
Impact on competition
opertional

bundeling Unique requirements

capacilities
„ technological Resources and capabilities
Resources
source: Binder/Kantowsky 1996 enable a unique potential for success
company market environment

Î To aim for uniqueness is a chance for european companies to reach successful

and lasting differentiation!
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Comments on this slide:

Technological capabilities and resources, which are present in the company on

operative levelm are basis for differentiation. The synergetic composition of capabilities
and resources leads to strategic success potentials within the company. If these
potentials can be successfully implemented on products on the market, they define the
strategic success position of the company. By means of the super-ordinate alignment
of the company, those strategic success potentials can be turned into sustaining
benefit potentials on a normative level.

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Elements of a technology strategy

Technological „ Future capabilities and core competences
proficiency level
„ »Non-Follower«-decisions

„ real leadership vs. technological presence

Innovation timing „ Pioneer- vs. Imitation strategies (fast/late Follower)

Technology sources „ Interne R&D vs. contracted research

„ Acquisition and cooperation policy

utilization „ Internal vs. external utilization

„ Licence policy (e.g. setting industry standards)

source: Wolfrum 1995

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Explanation of terms:
Core competences: Core competences are systems of ressources and capabilities that are in their
interaction valuable for customers and unique compared to competitiors. (Specht/Möhrle 2002)

See slide 13 for the following terms:

Non Follower
Pioneer Strategy = First Mover
Imitation Strategy = fast or late follower

Remark:
The inclusion of external aspects like acquisition or cooperation policies and the external usage of
technologies distinguish technology management from R&D management.

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Competitive and Technology strategy: example Porsche

Corporate strategy Technology strategy Boundary conditions

„brake
Development of the champion“
company
First Valveforce
„ growth „ laws
„ stabilization
Mover control
(BMW)
„ disinvestment „ Company size
Fast
Competitive advantages Follower
„ Resources
„ Cost leadership electronic traction control
„ differentiation „ Customer
„ niche Late „ expectations
Follower
Autonomy Strategy „ Brand conformity
Diesel technology
„ Autonomy
„ Cooperation Non
„ Core competences
„ Integration Follower

source: Porsche

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Explanation:
Porsche’s corporate strategy is shown in italic letters (growth – niche – autonomy).

First Mover: The company aims at being the first to market with a new technology in order to reach innovation
leadership. In the example of Porsche this is the case for their brakes.
Fast Follower: The goal of the company is to bring the technology to market shortly after the first mover – in this
example, Porsche followed shortly after BMW with the electronic valveforce control.
Late Follower: Like Porsche with the electronic traction control, Porsche aims at a late market entrance.
Non Follower: In this case – like Porsche with the diesel technology – a company decides for strategic reasons
not to enter a market.

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From single application to technology platform

further
Products/
n- Derivates easy
si g
De tform to realize
pla
gy-
h n olo
m
Tec latfor Tec
p
t- l ev hnol o
er a gy
duc gin
Pro tform Ec g
pla on Obtain
al of s omie
lo gic cal s
maximized use
hno tion Single e from technology
Tec nova app Develop new fields
In of application
lica
tion

Î The challenge consists in building up the potential of the technologies far

enough to create the basis for a technology platform!
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Comments on this slide:

The picture shows how to derive new fields of applications from single technological
solutions. The technology platform leads to the effect of „Technology Leveraging“ that
helps the technological competencies to a longer lever (i.e. more fields of application).
In the next stage, it is possible to derive design platforms (i.e. on product level) which
enables to create products from existing modules.

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Management of technology is also management of technology

platforms
„ Focus of technology
development Unique usefulness for customer

Environ-
ment
„ Technology platforms combine
resources and capabilities in a Products
Products Products
single network

competition
- hard to imitate Technological
- longlasting in impact Use uniqueness
- significant in use for customers potential Technology
Build up platform
„ Carrier for differentiation
strategy potential

„ Independent/neutral towards Core competences

products

company
Technology
„ long lifecycle strategy technical competences

„ dynamic
Technical capabilities
„ „inside-out“ p.o.v.
Resources
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Comments on this slide:

Technology platforms are a concept of thought that supports the build-up of the
previously mentioned strategic success potentials. Starting from the operative
capabilities and resources, those are stepwise bundled into technological
competencies and then into technological core competencies.

The technology platform based on those core competencies is far more complex than
the single technological capabilities, hence hard to imitate. At the same time, the
platform is more resistant against change, as the loss of single ressources and
capabilites is covered by alternative solutions

The company‘s target is to position these technology platforms for unique

differentiation in several markets. This broad market diversification reduces the
dependency on single markets and opens up opportunities for growth.

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Technology platform: example Schott AG

Technology potential:
„ Fabrication of break proof, mechanically stable and optically perfect glass!

Ceran cooking ... glasses ... TV screens

Glass cast

Core competence glass

cast Technical competences

Glass cutting
Heat measurement
Quartz- Techncial capabilities
making
experts Software
Resources
Patents
Human Raw materials
Resources (Quartzes) source: Schott AG
Machines
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Comments on this slide:

Example from Germany-based, worldwide operating company Schott AG, which with ist
competency in manufacturing a diversity of glass products realises broad diversification
on several markets.

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»Technology Push« and »Market Pull«

Market Pull „ Product- or Process innovations starting from existing
customer needs
Î Rather incremental improvements (product care)

Î pragmatical

Î Small risk

Technology Push „ Product- or Process innovations based on existing

technological ressources
Î Frequent radical technological improvements
(Breakthrough-Innovations)
Î visionary

Î high risk (technology for it‘s own sake?)

Quelle: vgl. Gerpott 2005

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Remark:
Market Pull and Technology Push are idealized influences, which can be found in reality only as mixed
versions of both of them.

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Bibliography
Cited Literature:
BIND96 Binder, V.; Kantowsky, J.: Technologiepotentiale – Neuausrichtung der Gestaltungsfelder des
Strategischen Technologiemanagement. Wiesbaden: DUV, 1996.

EVER96 Eversheim, W. / Schuh, G.: Betriebshütte – Produktion und Management. Springer- Verlag.
Berlin, Heidelberg, New York. ISBN 3-540-59360- 8. 1996

BROC94 Brockhoff, K.: Forschung und Entwicklung. Oldenbourg Verlag. München.

ISBN 3-519-06367-0. 1994

PORT97 Porter, M.: Wettbewerbsstrategie (Competitive Strategy). Campus Verla. Frankfurt a.M., New
York. ISBN 3-593-33266-3. 1997

WOLF95 Wolfrum, B.: Alternative Technologiestrategien. in: Zahn, E. (Hrsg.): Handbuch des
Technologie-Managements. Schäffer-Poeschel. Stuttgart. 1995
GERP05 Gerpott, T.: Strategisches Technologie- und Innovationsmanagement. Schäffer-Poeschel.
Stuttgart. 2005
LICHT03 Lichtenthaler, E.: Technology Intelligence – Improving Technological Decision-Making. in:
Tschirky, H.; Jung, H.-H.; Savioz, P. (Hrsg.): Technology and Innovation Management on the
move. Orell Füssli Verlag AG. Zürich. 2003
PORT86 Porter, M.: Wettbewerbsvorteile: Spitzenleistungen erreichen und behaupten. Campus
Verlag. Frankfurt a.M. 1986
ASHT97 Ashton, W.B.; Klavans, R.A.: Keeping Abreast of Science and Technology: Technical
Intelligence for Business. in: Columbus, OH: Battelle Press. 1997
KELL97 Keller, G.: Erstellung eines Informationsquellenmix zur Beschaffung von strategischen
Informationen für die Technologiefrühaufklärung. Projektarbeit ETH Zürich. 1997
PEIFF 92 Peiffer, S.: Technologie-Frühaufklärung. Steuer- und Wirtschaftsverlag. Hamburg. 1992
BULL94 Bullinger, H.-J.: Einführung in das Technologiemanagement. B.G. Teubner. Stuttgart.1994
EVER02 Eversheim, W.: Innovationsmanagement für technische Produkte, Berlin: Springer. 2002
SERV85 Servatius, H.-G.: Methodik des strategischen Technologie-Managements. 2. Aufl., Berlin:
Schmidt, 1985
WOLF91 Wolfrum, B.: Strategisches Technologiemanagement. Gabler Verlag. Wiesbaden. 1991
PFEI87 Pfeiffer, W.: Technologie-Portfolio zum Management strategischer Zukunftsgeschäftsfelder.
Vandenhoeck & Ruprecht. Göttingen. 1987
SCHT96 Schmitz, W.: Methodik zur strategischen Planung von Fertigungstechnologien – Ein Beitrag
zur Identifizierung Innovationspotentialen. Diss. RWTH Aachen, 1996
KORU98 Koruna, S.M.: Externe Technologie-Akquisition. in: Tschirky, H.; Koruna, S. (Hrsg.):
Technologiemanagement. Orell Füssli Verlag. Zürich. 1998
BROD99 Brodbeck, H.: Strategische Entscheidungen im Technologiemanagement. Orell Füssli Verlag.
Zürich. 1999

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Production Management I (Prof. Schuh) Lecture 01

Further Reading:
BOOZ91 Booz, Allen & Hamilton (Hrsg.): Integriertes Technologie und Innovationsmanagement. E.
Schmidt Verlag. Berlin. 1991
BULL99a Bullinger, H.-J. et al.: Innovations- und Technologiemanagement. In: Eversheim, W.; Schuh,
G.: Betriebshütte. Produktion und Management. Berlin: Springer, 1999.
BULL99b Bullinger, H.-J. et al.: Forschungs- und Entwicklungsmanagement. In: Eversheim, W.;Schuh,
G.: Betriebshütte. Produktion und Management. Berlin: Springer, 1999.
MÜLL01 Müller-Stewens, G.; Lechner, C.: Strategisches Management. Wie strategische Initiativen
zum Wandel führen. Stuttgart: Schäffer-Poeschel, 2001.
PFEI90 Pfeiffer, W.; Weiss, E. (Hrsg.): Technologie-Management: Philosophie, Methodik, rfahrungen.
(Reihe: Innovative Unternehmensführung; Band 17). Göttingen: Vandenhoeck & Ruprecht,
1990.
SPEC02 Specht, D.; Möhrle, M. (Hrsg.): Gabler Lexikon: Technologie-Management. Management von
Innovationen und neuen Technologien im Unternehmen. Wiesbaden: Gabler, 2002.
SPUR98 Spur, G.: Technologie und Management. Zum Selbstverständnis der Technikwissenschaft.
München: Hanser, 1998.
WOLF94 Wolfrum, B.: Strategisches Technologiemanagement. 2. Aufl., Wiesbaden: Gabler, 1994.
ZAHN95 Zahn, E.: Handbuch Technologiemanagement. Stuttgart: Schäffer-Poeschel, 1995.
ANSO80 Ansoff, H. I.: Strategic Issue management. Strategic Management J. 1. S. 131-148 1980
MUEL93 Mueller-Stewens, G.; Krystek, U.: Frühaufklärung für Unternehmens. Stuttgart: Schaeffer-
Poeschel. 1993
PEIF92 Peiffer, S.: Technologie-Frühaufklärung. Hamburg: S+W Steuer- und Wirtschaftsverlag 1992
VDI 92 VDI Technologiezentrum (Hrsg.): Technologiefrühaufklärung. Stuttgart: Schaeffer-Poeschel
1992
FORD81 Ford, D./Ryan, C.: Taking Technology to Market, in: Harvard Business Review, 2, S. 117-
126, 1981.
PFEI82 Pfeiffer, W./ Metze, G./ Schneider, W./ Amler, R.: Technologie-Portfolio zum Management
strategischer Zukunftsgeschäftsfelder. Göttingen: Vandenhoeck & Ruprecht, 1982.
HEIT00 Heitzsch, J.-U.: Multidimensionale Bewertung alternativer Produktionstechniken. Ein Beitrag
zur technischen Investitionsplanung. Diss. RWTH Aachen, 2000.
SCHT96 Schmitz, W.: Methodik zur strategischen Planung von Fertigungstechnologien – Ein Beitrag
zur Identifizierung Innovationspotentialen. Diss. RWTH Aachen, 1996

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