TECHNOLOGY MANAGEMENT ISSUES IN A MATURE INDUSTRY
By Dr A K Chatterjee, Whole-time Director, ACC Limited.
 

EVOLUTIONARY: PROCESS OF AN INDUSTRY
Like any evolution, industries evolve as some forces create circumstances for change. Every industry begins with an initial structure developed around entry barriers, buyer and supplier power, intensity of rivalry among existing competitors, threats of new entrants, threats of substitute products and services etc. which are encountered when an industry comes into existence. This structure is usually quite different from the configuration the industry takes later in its development. The initial structure results from a combination of underlying economic and technical characteristics of the industry, the constraints of small beginning and the skills and resources mobilized as an early entrant. The evolution processes work to push the industry towards its potential structure, which is not always predictable, since the road map is defined by the underlying technology, product characteristics, and nature of present and potential buyers, as well as the direction and success of research and development, marketing innovations, etc. In response to pressures or incentives created by the evolutionary process, firms invest to take advantage of possibilities for new marketing approaches, new manufacturing facilities, and the like, which shift entry' barriers, alter relative power against' supplies and buyers, and so on. Thus, innovation, technological developments, and resources of a firm significantly contribute to the evolutionary process.

MATURITY OF BUSINESS IN A MANUFACTURING FIRM
Although there are a large number of evolutionary processes in an industry such as changes in buyer segments, structural changes in adjacent industries, government policies, etc. the most important and widely accepted concept for predicting the probable course of industry evolution is the "Product Life Cycle" consisting of a number of stages introduction, growth, maturity and decline as illustrated in Fig.1. It is evident that the process of innovation and diffusion of a new product follows an S-shaped curve. According to the life cycle model, the technological change early in the life cycle is focused on product innovations, while the manufacturing process remains flexible. As an industry matures, product designs begins to change more slowly and mass production techniques are introduced. Product innovation gives way to process innovation as the primary form of technological activity. Finally, the entire process of innovation slows down in later maturity as investments in the various technologies in the industry reach the point of diminishing returns. In this context it must be admitted that the concept of product life cycle is not axiomatic and universal.

The duration of the stages may vary from industry to industry. Companies can alter the shape of the growth curve through product innovation and repositioning. Notwithstanding such variations, one may recognise that many industries pass from periods of rapid growth to the more modest growth of what is commonly called "Industry maturity". When it occurs, the transition to maturity is almost always a critical period for 'companies in an industry. It is a period during which fundamental changes often takes place in companies' competitive environment, requiring strategic responses. Moreover, the impact of transition to maturity extends beyond strategic considerations to measures having implications for the organizational structure of the firm and the role of its leadership. 

Stages of the Life Cycle
Transition to Maturity
A graph

The approach towards maturity normally reflects in certain important changes in an industry's competitive environment. The more visible ones are briefly mentioned below:
· Intensified competition for market share due to lower growth rate
· Shift of competition towards greater emphasis on cost and service
· Slowing down of the rate of capacity addition in the industry, as a result of which a firm is confronted with the need to monitor competitors' capacity additions closely and to time its capacity additions with precision ;
· Stability of both the product and process with infrequent technological obsolescence, as a result of which new products and applications are harder to come by 
· Large scale specialized plants with mass production facilities with little secrets of know-hows and do-hows among the competitors 
· Fall of industry profits, in the course of which some firms are affected more than the other The above signals of transition to maturity are quite strong and cannot be ignored. Some organizational issues and some characteristic strategic issues often arise in such transitions, which should be recognized and responded to. The most frequently encountered management concerns are the following: 
· Cost minimization needs 
· Marketing, distribution and cost management skills Competition maneuvering capability .
· Criticality of market share On the whole, more attention to 1.costs, customer service and true marketing (as differentiated from selling) becomes necessary with reduce attention to introducing new products. More emphasis on refining old products turns out to be important. Less "creativity" and more attention to detail and pragmatism is often called for in the mature business.

The firm that is not the overall cost leader in a mature market can sometimes find new cost curves that may actually make it a lower cost producer for certain types of buyers, product varieties or order sizes. This step is quite important in strategizing the business (Fig.2) and would certainly' call for technology management of its own style. 

Alternative Cost Curves TECHNOLOGY MANAGEMENT COMPONENTS IN MATURE INDUSTRIES
Needless to emphasize that technology influences competitive advantage as it has a significant role in determining relative cost position or product differentiation. Since technology is embodied in every value activity and is involved in achieving linkages among activities, it can have a powerful effect on both cost and differentiation. A firm can certainly use technological development to alter drivers in a way that favour it to be the first and perhaps only firm to exploit a particular driver.

The management of technology is generally done through the following components:
· Forecasting
· Development
· Product application
· Acquisition
· Transfer
· Absorption

Broadly speaking for a mature industry the technology management components would seem to be characterized as follows: .
· The technology forecasting would be more market-related than production-based.
· The developments would essentially be incremental and the initiative would centre around efficiency parameters than the basic process itself. Sometimes, refinement or manipulation of products would receive overriding attention. 
· Applications engineering would attract more and more attention and resource of the company to establish a competitive edge. 
· The technology acquisition tends to focus more on hardware and the associated systems software than the basic process in totality and hence, the transfer of technology has the predominance of do-hows than know-hows. The net result is that the technology absorption focuses more on "operation" than "design" In this environment one cannot expect much of generic research idea emanating from within the company, although suggestions for product manipulation and applications engineering do appear both from the research and marketing staff.

Technology Strategy
It is understood that technology strategy of a company is its approach to the development and use of technology. Although it encompasses the role of formal R&D as mentioned above, it should also be treated in a broader perspective as it has a strong impact on the value chain. Since the technological change is powerful enough to influence the industry structure and competition advantage, a firm’s technology strategy becomes an essential ingredient in its overall competitive strategy. The technology strategy must address: what technologies to develop and how.

The technologies that should be developed are those that would most contribute to a firm's most generic strategy. Depending on which generic strategy is being followed,  however, the character of technology strategy will vary as shown in Table I. In many firms R&D programmes are driven more by scientific interests than by the competitive advantage sought. It is clear from Table I that the primary focus of a firm's R&D programme should be consistent with the generic strategy that is being pursued.

It is also important that a firm7s technology strategy extend beyond product and process R&D as they are traditionally defined. Since technology pervades a company's value) chain and since the relative cost and differentiation are a function of the entire chain, a systematic examination of all areas is important in determining how to reduce cost or enhance differentiation. Important technologies in the information system and communication, transportation, materials handling, office automation, etc. deserve more than an informal or adhoc attention. Finally, development in all technological areas must be coordinated to ensure C consistency and to exploit interdependencies amongst them.

Technology Packaging 
Technologies seem to go through a life cycle in which major improvements in early age give way to later incremental ones. Thus, the cost-benefit in improving mature technologies may turn out to be less favourable. 

While the above observation is not untrue, it is still possible to look at the issue from a different perspective. Most products and value activities embody not one technology but several technologies or sub technologies. It is only a combination of sub technologies that can be assured to be mature, not individual sub technologies themselves. Significant changes in anyone of the sub technologies may create new possibilities for combining them that produce dramatic improvements. The advent and application of microelectronics is having a profound impact on many industries due to appropriate "packaging".

Thus, in choosing a technology for investment, a company has to base its decision on a comprehensive understanding of each important technology in its value chain and not on factors like "age" alone. The choice of technologies to develop should not be limited to those that present opportunities for major break-through. Modest improvements several of the technologies in the value chain including those not related to the product or the process, can add up to a greater benefit for competitive advantage. It is often experienced that such moderate aggregate improvements can be more easily saved from the glare of the competitors than a breakthrough, kind of innovation. It should also be borne in mind that the diffusion of technology is often greater for the basic product and process innovations than it is for later improvements, which can mostly be kept proprietary. For sustainability, firms in the mature industry endeavor to slow down the technological diffusion process for the peripheral improvements.

Differentiation in the Technology
Evolution
As already mentioned, the path of technology evolution differs from one company to another or from one industry to another. These differences stem from the following factors:
· A product that can be physically differentiated allows many possible designs and features as one can see in the automobile industry. Hence the industry maturity in those circumstances does not totally slow down the product innovation. A less differentiable product will standardize quickly and other types of technological activity would prevail. 
· Where buyer needs differ substantially, more and more specialise designs can be introduced over time to serve different segment.
· The pressure from substituting is all important determinant of the pattern of technological evolution. Whether substitutes are threatening based on cost or differentiation leads to a corresponding emphasis on the technological evolution in a firm.
· The source of technologies employed in an industry shapes the technological evolution pattern. The path of technological change is more practicable when industry specific technologies are dominant and impact of technologies coming from outside the industry is small. 

CONCLUSIVE OBSERVATIONS
The starting point for analysing the industry evolution is its structural framework. The industry changes carry a strategic significance if they are potent to affect the following structural elements or competitive forces: existing competitors, suppliers, buyers, threats of substitute products/services and potential entrants. The simplest approach is to ask such questions as follows. Do any of the industry trends imply an increase or decrease in entry or exit barriers? An increase or decrease in relative power of buyers or suppliers? If such questions are introspected in a systematic manner for each of the competitive forces and the economic causes underlying it, a picture of the evolution of the industry would emerge.

On this one may superimpose the familiar course of product life cycle. This is an important prediction of industry evolution but it cannot be relied upon a singular indicator as it attempts to describe only the growth rate.

Everything said and done, industry evolution is hard to forecast wid1 certainty as an industry can potentially evolve in a variety of ways with different speeds. Yet there are no dearth of examples to show how an industry matures and what this maturity is. 

One of the most important tools of combating this maturity is the effective management of technology and innovation. Such innovations that change structure can come from outside the industry as well as from within.

The business organisations in general are known to have different levels of intensity of manpower, capital and technology in their operations. In recent times, however, the more successful companies are seen to be predominantly technology-driven. Hence, the management of technology has become progressively more important in mature industry.