Technology Strategy

Key takeaways from the article by Yin (2015) are that, economically speaking, technology is the method by which an organization produces outputs from inputs. It encompasses everything from the tools and equipment used, the organization of labor, the skills required, and the procedures followed. Different companies within the same industry can utilize different technologies to suit their unique competitive positions. For this reason, each firm must have a comprehensive technology strategy - an integrated approach to employing new technology to generate superior financial returns over the long term. This strategy must consider whether a firm should introduce a new technology or adapt to one developed by its competitors.

The concept of technology change is critical to understanding its strategic impact. Yin (2015) shows that the competition from new technology that provides a decisive cost or quality advantage can even threaten the very foundations of existing firms. This cycle of creation and destruction, termed "creative destruction," is one of the key drivers of economic growth and wealth creation.

The next big takeaway is that technologies go through a lifecycle of birth, growth, maturity and death when a new technology supersedes them. This cycle is characterized by long periods of incremental change, often interrupted by radical improvements or discontinuities. Overall, however, the importance of technology strategy varies across industries. It is particularly critical in sectors where performance improvements due to new technology are larger or more frequent, such as biotechnology, information and communications, electronics, and advanced materials. Even industries that seem stable can be disrupted by novel technology.

Companies wishing to innovate and exploit new technologies need to address various questions around the innovation process, the creation of a capable organization, and the financing of the technology startup. Furthermore, when it comes to new technologies, the timing of introduction to the market and positioning for the future are critical strategic considerations.

References

Yin, P. (2015). Technology strategy. HBP.