Identifying Technological Changes

'The telephone is a fantastic invention. I am sure that every city will get one!'

This quote epitomizes the uncertainty of future outcomes with new technological developments at the time of their appearance, as opposed to the dramatic impact that they exert not only on businesses but also

Table 6.1 Dimensions and factors that influence strategic performance

Strategic Performance Dimensions

Factors Influencing Performance

1

Markets, customers and competitors.

• profitability and other financial performance indicators;

• competitors' business models;

• customers' value perceptions;

• customer satisfaction;

• market opportunities;

• competitive positioning;

• demand generation.

2

Technological advances.

• new technologies (i.e. nanotechnology, biomedical, etc.);

• product innovations.

3

Macro-economic, regulatory and political conditions.

• globalization;

• international conflicts;

• international treaties;

• increasing price of carbon;

• increasing prices of resources;

• political will to push technological changes;

• stricter regulations (on fuel efficiency, environmental compliance, etc.).

4

Social changes.

• aging societies;

• social acceptance of new technologies;

• sustainable and empowered communities.

5

Environmental changes.

• depletion of some resources.

on everyday life styles. Companies that could not identify significant technological changes in a timely manner were left struggling to maintain their market position, or in the worst cases were forced out of business. Figure 6.6 illustrates the fast pace of technological change and related developments over past decades. What lies ahead of us and what are the future changes that will impact upon our business, are questions that require constant searching for answers.

For the effective identification of important external influencing factors and signs of change, there is an array of so called 'foresight' methods and techniques. Foresight - or exploring the future - is, first and foremost, a cross-functional systematic approach to considering alternative possible future developments and their outcomes and to planning adequate responses. The 'systematic approach' is equally important as an emphasis on 'exploring the future'. Changes occur as new properties and opportunities emerge from the complex systems of innovation, R&D, discoveries of new materials and technological advancement.

Figure 6.6 A timeline of developments in technology and management, Energy Foresight Network (2008) Institute of Studies for the Integration of Systems, Rome, Italy

year

Figure 6.6 A timeline of developments in technology and management, Energy Foresight Network (2008) Institute of Studies for the Integration of Systems, Rome, Italy

Those changes cascade outward to affect businesses. New products, new policies, programs and regulations, or changed societal values can act as a sometimes unexpected enticement triggering the emergence of new dynamics within the business environment; and significant changes that have to be identified in a timely manner. The emphasis is on 'timely manner' because significant changes should be identified at an early stage, enabling a lead time for a company's preparation of strategic responses.

The key issues that any applied methodology needs to cover in order to enable the planning of the responses are:

(1) identifying and monitoring change;

(2) analyzing the impacts of change;

(3) preparing a strategic response;

(4) defining adjusted policies, objectives and targets;

(5) implementing strategic responses and adjusted polices.

Identifying and monitoring change involves the assessment of patterns of change in the past as well as collecting baseline data on current conditions against which future technological developments are monitored. This statement resembles what we have said and elaborated upon already in Part I Chapter 3, but in a different context. Such efforts provide a background against which we can look for ongoing cycles, trends, or emerging issues of change, such as technological innovation or societal value shifts or climatological aberrations.

Analyzing impacts of change means assessing both the effects that cascade from ongoing change throughout a company's macro environment and also evaluating what impact those effects have on its operations: how will day-to-day operations change? Who has been newly advantaged or disadvantaged by the advent of the change? What trade-offs might we face as a result of change?

Preparing a strategic response follows naturally from the extrapolation of trends and the consideration of the medium to long-term effects and impacts of emerging factors of change. Preparing a strategic response may involve scenario building and analysis that serves two purposes in technology foresight. First, scenarios of alternative future developments allow for exploring possibilities and uncertainties so that we may create contingency plans for the surprises the future might bring our way. Secondly, exploring alternative possible responses heightens the creativity and flexibility with which we imagine preferred future outcomes, because understanding potential alternatives helps us create richer visions.

Defining policy adjustments, adjusted objectives and targets involves creating models of the preferred future situations that we would like to create for the business. It is an act of visioning, which is the first step in response planning, setting objectives and providing leadership for achieving the targets. It requires a careful explicit articulation of our medium to long-term visions and missions and the values that contribute to them.

Implementing the desired polices and responses requires, first of all, a commitment to act. As already emphasized (Part I Chapter 1) this commitment must come firstly from the highest level of the company in order to champion actions which contribute to turning the vision into reality, and supporting the operational teams in finding the resources necessary to implement the plans which will result in the preferred outcomes.

These five activities are interrelated: data and actions flow from one to the next, and they are most effective when performed in concert, progressively and continuously. Once a significant change has been detected and a strategic response devised, the implementation plans must be effected and progress monitored, which in turn requires further monitoring of the changing emerging issues that have triggered the strategic response. Thus, these activities link back to create a full circle of foresight activities, an infinite loop.

As an organization begins the process of planning and implementing a response to an observed external change, it should monitor its own success in implementing the response actions and also keep an eye open for new external factors emerging on the horizon. Thus, the cycle continues with activities designed to identify, observe, and track changes, plan and implement responses and monitor success.

The disciplined practice of continuous performance monitoring and improvement, is precisely that which was introduced by implementing an EEMS, as described in Part I Chapter 5.

It is important to note that although strategic management, in a same manner as operational management, is a continuous process, the time scales may differ. While operational management almost as a rule would require daily data gathering and analysis in order to keep performance at its peak, strategic management, while it also needs reliable input data sets, would seldom require daily data gathering.

One of the main problems for strategic management, when managers have sought to drive strategy down and across their companies, was to transform strategies into practical metrics which could provide input for a meaningful analysis of the cause-effect relationships that, if understood, could provide valuable insight into operational decision making. This is the core problem of integrating strategic and operational management, which is only compounded by a lack of adequate data - both on the internal and external aspects of business operations.

At this point the performance measurement system comes into play again. As we have said earlier, only when based on hard and good data and information can the required strategic responses and operational management decisions be made. A well designed performance measurement system will ensure that a company's available performance data works for the benefit of specified goals and that the data provides information that is actually useful in achieving those goals. Integrated performance management, strategic and operational, needs reliably measured input in order to analyze the discerning patterns and meaning in the data, and to respond to the resulting information. Simply put, integrated performance management steers companies towards achieving their strategic goals by aligning strategic and operational objectives and by mobilizing and empowering people to achieve the agreed targets.

The backbone of an integrated performance management is an integrated performance measurement system. But, what is the main barrier to an integrated approach? In our experience, it is organizational fragmentation! This situation still persists in many companies where different business units and departments build walls between themselves, instead of creating and maintaining open and effective communication and coordination channels. Therefore, before proceeding further with integrated performance management, we will consider briefly the aspects of organizational fragmentation.

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