Integrating Technology Planning with Business Planning

Five `best practices ' emerge from a two-year study of 50 companies. OVERVIEW: A subcommittee of the Industrial Research Institute that has been studying the integration of RD 2) Foster active involvement between RD 3) Get top management commitment; 4) Organize for effective technology planning and buy-in by all functions; 5) Hold R&D and the business units accountable for measurable results. Linking technology planning with strategic business planning is a perennial top issue among technologyintensive companies. A two-year research effort in this area by the Industrial Research Institute identified five "best practices" among approximately 50 companies. This article highlights these practices and reviews specific case examples from IRI and Arthur D. Little research to illustrate the impact of their successful implementation. 1. Establish a structured process for technology planning.-In our work at Arthur D. Little, we have observed many different approaches to this practice. The critical element is that a structure be established as the foundation of the planning process, and that this structure involves certain common ingredients, as illustrated in Figure 1. Step 1: Create a "vision of success" and a picture of the future business environment. Step 2: Define the company's sources of competitive advantage and a range of technology options that might contribute to or create these advantages. Step 3: Evaluate these technology options and build them into a balanced technology portfolio. This portfolio should include short- and long-term payback, as well as both high-risk and low-risk technologies. A shared vision of success provides a picture of what business success means for the company, and of R&D's role in that success. The vision must be crafted so that everyone across the company can identify with it. We see companies encountering problems such as suddenly being beaten by their competition or finding that their technology pipeline is dry without knowing why. This notion of a vision of success, meaning that you are not only driven by your external environment but that you can proactively create your own future, is an important ingredient in technology planning to avoid such pitfalls. To illustrate the process of establishing a structured process for technology planning, consider two companies from Arthur D. Little research that offer examples of structured technology processes. Hewlett-Packard (HP) provides a good example of a leading organization's process for setting long-term technology priorities and targets. Highlights of HP's successful implementation include: Senior managers from HP Laboratories meet annually to set research priorities and allocate resources. Priorities are based on knowing the vision for each product line five years out, and then working backward to determine what Research needs to do in the coming year to make the vision happen. All research managers are responsible for tracking the needs of individual business segments, which may rely partly, but not totally, on their own area of research. HP Labs seeks to take a broad view that includes a unique way of thinking about long-term planning, called "Innovative Understanding of User Needs." Research people are encouraged to listen carefully to what the business units have to say, not only about their business goals and plans, but also about what technology directions should be. At the same time, researchers are encouraged to think "innovatively" about the real technical needs of each business unit. At a leading worldwide process engineering company, we found an effective system for shorter-term technology planning. As Figure 2 illustrates, this process has many of the same elements described earlier in the three-step planning process. …