Has the Technology Life Cycle thrown you a curve?

I made the case for scheduling time for strategy development in my post Do you give employees time to goof around? Some do!. I believe all companies should find the right balance for time spent on strategic thinking.

How does your company strategize to best use resources for your current technologies? How do you plan for the products that aren’t yet being considered for R&D?

The starting point for your answer lies with the technology life cycle curve. Every company is constrained by the technology life cycle which approximates how a company investing money on a new technology during the R&D phase can later recoup this money plus some profit during the maturity phase. The intent, of course, is that during the maturity phase your business reaps enough profit from the sale of products that the revenue generated exceeds the earlier R&D costs…the more so the better!

The methods for maximizing your returns lie in predicting and manipulating the variables: predicted cost, profit, and their durations. There’s no one right answer for any company or industry. (See Innovate, Inspire or Imitate – Where does your company operate?)

Since the ultimate goal for every company is to make money, a popular approach is to lengthen the duration of the money making “maturity” phase of the curve to as long as possible while minimizing R&D costs. This shortsighted plan will produce more money today at the expense of tomorrow’s profit.

The reverse model (long R&D phase with short maturity period) is more common to startup companies and can be dangerous as it could lead to an early bankruptcy.

For your company and its strategy, there is an appropriate mix of resource allocation between products in the maturity vs. R&D phase. Your choices will depend on several factors including your desired level of innovation and the amount of competition in your industry.

As these factors accelerate, the potential that someone else will disrupt your plans rises as emerging, adjacent and disruptive technologies can significantly alter the life cycle of your technology. These factors generally increase your risks, and yet, these risks can be mitigated through due diligence on your technology, IP and market space and by responding to change.

In conclusion, I recommend you plot each of your technologies on the technology life cycle curve to ensure your revenue stream both today and in the future.

 

Photo credit: Hermitage17 (Wikipedia)