MIT Sloan Management Review

Corporate Strategy, Management of Technology and Innovation

 

Managing Technology as a Business Strategy

By Tamara J. Erickson, John F. Magee, Philip A. Roussel and Kamal N. Saad

April 15, 1990

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THE DRIVE FOR SHORT-TERM PROFITS need not derail a firm's research and development programs, say the authors. By managing technology effectively, executives can ensure that their company's R&D program focuses on developing technologies that support its product and marketing strategy. While radically new products may seize the public's imagination, making incremental improvements in existing product lines and adapting old products for new markets are always less risky and often more profitable.

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THE PRESSURE ON today's corporate managers to maximize short-term profits often seems at odds with the need for a research and development program that will sustain company value over the long term. The solution to this apparent dilemma starts with the recognition that a business enterprise's value depends on the level and rate of growth of its cash flow. A firm's ability to maintain an advantage in market value depends on whether investors perceive that the rate of cash flow growth will be sustained.

The goal of strategic technology management is to contribute to the value of the enterprise by helping assure that the cash flow on which this value depends will be sustained and will continue to grow. Effective management of this kind can help a firm gain and sustain competitive advantages, ranging from incremental improvements in product quality or cost to major breakthroughs that create new market opportunities. Management of technology must, however, be purposeful rather than hopeful or "hands off' and must always be connected with the firm's overall business strategy.

Five sets of questions are useful in systematically examining the relationship of a company's program of managing technology to its business strategy:

  • Does the company have a clear product and market strategy? What markets does it want to attack? How? What markets does it intend to defend? What product and service attributes will... To read the complete article, login or sign-up using the form below.
 
 

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