16.6. TECHNOLOGY AND STRATEGY

Most of the decisions about investment in R&D companies to develop technologies are made in the corporate board rooms. An absence of top level involvement with technical education in setting priorities for resource allocation and making tradeoffs among competing demands is very likely to result in underinvestment in R&D. There is ample evidence that this is happening in U.S. industry. For example, Japan and Germany spend approximately 3.1 percent and 2.5 percent, respectively, of their GDP on nondefense R&D, while the U.S. in comparison spends only 2.1 percent. Technology perspectives in industry thus can increasingly become short-term, making U.S. industry less competitive in a technologically intensive world.

Engineers and scientists, who benefit from increased support for R&D, can naturally be viewed as making self-serving arguments for enhanced research support. For an R&D unit in an organization, the arguments need not focus on increased R&D investment. Instead, the R&D units should involve top corporate managers in the research strategic plan development and in ensuring that technology strategy is integrated with corporate strategy. In the long run, we hope, in the United States as in other highly successful industrialized nations like Japan, the top-level research leaders will be represented in the great majority of the U.S. corporate boards, especially in those corporations that are technology-intensive.

Since 1995 there has been a shift in the United States. More Standard and Poors CEOs (the largest U.S. companies) obtained their undergraduate degrees in engineering than in any other field (Science and Engineering Indicators, 2006). This means that top administrative positions in companies are increasingly being occupied by personnel who are trained in technical fields, and thus have an appreciation of the important role science and technology can play in developing business strategy.

A variety of frameworks have been developed expressly to integrate technological issues with business strategy (see, for example, Burgelman, Christensen, and Wheelwright, 2009; Chinowsky, 2001; Hensey, 1991). White (1978), for example, addresses the challenging decision making associated with determining which technological alternatives warrant major investment by breaking the decision down into four variables. The first two variables are related to "technology potency" and address inventive merit and embodiment merit. The second two variables are related to "business potency" and address operational merit and market merit (Table 16.2). Top managers analyze technological directions—for example, algae based biomass energy and wind turbines—in light of the variables, and surface pros and cons for each. Once selected, identifying ways to overcome the cons surrounding a technological alternative helps to set the future research agenda.

The approach to strategy used by the Materials Information Society (also known as ASM International), which has been described by Tucker (2004), provides an example of strategic management in a technically oriented not-for-profit organization. ASM's annual strategic plan is provided on its website: http://asmcommunity.asminternational.org/portal/site/www/About/.