This article is the second of a three part series on the analysis of ecosystems.
The first article of the series focused on the identification of innovation ecosystems. This second part focuses on technology evolution (technology roadmapping) and the identification of value within the product segments and architectures (value chain).
A high level roadmap identifies key strategic issues in a single page representation of technologies within an industry or sub-segment. It identifies key market drivers and mega trends, technology maturity, from first application and obsolescence. It can also assess the potential risk/reward profile of each technology all mapped in a 10-15 year timeline.
Technology roadmaps provide a vision of; (1) why the technology is needed in the market, communicating consumer preferences, business trends, and legislation that impact the need for new technology. (2) When each technology or solution is needed in the market place, and when the product development and advanced engineering needs to start. (3) What technologies best meet the identified need? All supported with cost benefit analysis, technology evolution visions, portfolio gap analysis and scenario analysis.
The next image shows an illustrative roadmap for wind turbine blades. We start by identifying the drivers. The main product driver is to lower the Levelized Cost of Energy (LCOE) to compete with fossil fuel generation, we added U.S. Department of Energy goal of 5c per kWh by 2020. We can translate market drivers into technical drivers, so we achieve a better LCOE by increasing system efficiency and reducing loads, also improvements capital expenditures of production achieving higher volumes and larger systems and weight reductions mostly due to the correlation of size to weight and cost of the materials.
With the drivers in place, we focus on the design options for load control functions, such as individual pitch and passive and active aeroelastic control, once the design options are defined we can move to identify the manufacturing process and enabling technologies or materials required to achieve those designs.
Once roadmaps are completed a peer review is completed for verification and consensus. At this point, we can further identify technology readiness and market activity (pre-competitive or competitive). From the corporate side we can also annotate internal capability for each of the technologies or processes identified. These technology roadmaps are an on-going living document, relevant for 2-3 years, as such they need to be refreshed every year and updated every 3 years.
A technology roadmap supports corporate innovation and marketing planning, so the firm can consistently deliver new technology and products. Furthermore, the roadmap is useful in defining the enabling technologies.
Value Chain Analysis
The value chain analysis consists of a Work Breakdown Structure (WBS) of the product, including all the steps in the value chain and indicating the value of each of step in the process. Additional competitive intelligence data, such as market share, value, key player and providers, etc., can be included in the analysis.
Let’s continue the example of a wind turbine. A simplified turbine WBS, illustrated below, shows the four systems it is composed of, (1) the tower, (2) the rotor, (3) the nacelle, and (4) the control and electronic system. If we continue with the rotor we have the blades and the hub assembly. We can continue the development of the work structure to the level of detail required for the specific analysis.
Once the WBS is completed we can map and identify the high value steps for that specific component or component. High value components are those with high barriers of entry, due to cost and/or know-how requirements to enter the market, additionally in mature markets or segments we can use financial metrics such as ability to secure net margin.
Using the wind turbine rotor as an example, the rotor assembly consists of the blades, 45-55 meter long composite structures, and the hub assembly 15-20 ton cast iron component. The graph below shows the value analysis for the rotor system. We have identifies several high value opportunities hub castings, blade development, tooling and materials, active surface and controls as key high value components. While the hub casting and the tooling is mostly a capital investment vs. accessible market play, the development and controls is a know-how barrier, as significant technical capability is required to execute a successful program difficult to have internally.
The combination of the technology roadmaps and value chain analysis allows the firm to minimize product development risks by identifying market and technology trends early, while developing appropriate technology acquisition plans, prior to product development.
Technology roadmapping is a critical business tool, which provides objective insight over the future direction of an industry and the potential products and services required to excel in the market.
Industrial Technology Roadmaps can be translated into detailed multi-generation Product Plans and the required Innovation programs for the corporation. With any product, it is essential to know what the next step is, and the one after, and options beyond that. We work industry to develop a 15-year vision, 3-4 product life cycles, for your offering, with scenarios for each step. The nearer steps are, the more robust they are and become product plans driven by market needs. For an initial consult please contact Pedro Guillen at [email protected]
About the Author
Pedro Guillen is the managing partner at the Detroit office and founding member of Kinetik Partners. Pedro specialized in corporate innovation strategy and new technology commercialization.
Pedro received his MBA from the Ross Business School, University of Michigan, and holds a Master of Engineering in Manufacturing from the University of Michigan. He also received dual B.S. degrees from Columbia University with concentrations in Mechanical Engineering and Liberal Arts.
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