When putting together a strategy for developing and commercializing a new product or service it is no longer possible to do so without taking into account the Internet, which as of 2014 had more than 280 million users in the United States and more than 3.2 billion users worldwide (approximately 40% of the world’s population had an Internet connection). More and more users and businesses have embraced the opportunities of “electronic commerce” as an important sales and marketing channel for their new and existing products and businesses and consumers all over the world regularly transact business over the Web. Surveys indicate that the number of digital shoppers in the United States as of 2014 exceeded 191 million and that business-to-consumer e-commerce volume in the United States in that same year was approximately $703 billion and retail e-commerce sales were approximately $236 billion. When access to the Internet via mobile devices, such as smartphones, is factored in, it becomes clear that businesses must integrate online marketing and sales into their overall business models.
The International Center for Growth-Oriented Entrepreneurship has just released a chapter on “Online Marketing and Sales Activities” from its Library of Resources for Growth-Oriented Entrepreneurs on Product Development and Commercialization which is available for free downloading and sharing by clicking here.
Some important things you need to know about planning for, and launching, online marketing and sales activities include the following:
1. The range of business uses of a website has expanded rapidly and an online presence has become an essential way for companies to disseminate basic information about their business and products. Businesses may use, or become involved with, the Internet in a variety of ways. For example, businesses use the Web to provide instant information about their products and services; expand customer service; test-market new goods and services; open up distant markets; augment traditional advertising with online advertising campaigns; provide customers a means of monitoring orders; target specialized markets; provide 24-hour accessibility; and raise “seed” financing directly from potential customers to underwrite the costs of developing new products. Additional advantages to having an online presence include the ability to provide customers with the opportunity to interact in “real time” with an online advertiser and leave comments or to request information from the advertiser; the ability to collect information about actual and prospective customers; and the ability to contract online with retail customers and/or other businesses interested in trading-partner relationships.
2. Launching an online business requires attention to the same level of detail as is required with any type of business. The site owners should prepare a detailed business plan that describes the proposed business, including the anticipated business model, target market, financing requirements and promotion strategies. While the initial plan should focus on launching the website and establishing the business, consideration should also be given to possible expansion of the business into new geographic and/or demographic markets. As part of the planning process, arrangements should be made to obtain the necessary financial support for the launch and early stage operation of the e-business, including capital from investors and/or banks or other commercial lenders. A website development and hosting strategy should be selected and other important launch-related activities include selection and registration of desired domain names; acquisition of rights to use desired content on the website; development and implementation of strategies for perfecting and protecting all intellectual property rights associated with the e-business and the website, including copyrights, patents and database protections; and development or other acquisition of tools to facilitate the sale and purchase of goods through the website.
3. While companies may have a substantial amount of in-house expertise regarding website development and maintenance, it is still quite common to rely on outside contractors for assistance in designing and operating a new website and these services will provided under the umbrella of a website development agreement. Website owners also look to outside hosting companies for connecting their servers and other equipment to the Internet. Content for the website will be supplied by employees and independent contractors engaged on a “work-for-hire” basis and the website owner should have appropriate employment and content development agreements with those parties. Companies may also gain access to content for the sites through content licensing and linking agreements. Promotion of the site and the products and services highlighted thereon may be provided by outside parties through marketing and advertising agreements and sales of the company’s products through the website may be conducted through online shopping agreements with vendors specializing in fulfillment of online orders.
4. The value of the Internet to any particular business depends on whether the business can design and operate an effective and functional website. Before serious design work begins, the site owner needs to carefully consider the type of information that will be included on the site and the way it should be placed and organized among the various pages that make up the site. While every site and business is different, there are certain elements that consistently appear on top-flight websites. Among the things that need to be considered are a home page; a legal page including various notices, disclaimers and site usage guidelines described elsewhere in this chapter; navigational tools; graphics; and multimedia content. In addition, the website should always contain information about the company such as a vision or purpose statement; products and services information, including most commonly asked questions, technical specifications, parts lists and troubleshooting, and ordering information; business resources and information including industry and legislative trends and articles and reports; commendations and testimonials; job opportunities and recruitment; and organizational, financial, and investment information.
5. In many ways, establishing a website is similar to creating and publishing a new book or magazine and the success of the site often depends on understanding the importance of content and presentation and being cognizant of various content acquisition strategies and associated legal issues. Companies often rely on employees and independent contractors to create original content for their websites; however, more often than not it will be necessary of desirable to acquire the rights to use, display and publish the creative works of third parties. Accordingly, website owners and their counsel will need to seek and secure content licenses or assignments of third party intellectual property rights covering a wide array of creative works and information including text, data, database content, software, graphics, sound and music and video and audiovisual works. Linking agreements may also be used to ease the process of making relevant content from other sites available for visitors. In order to keep track of the entire process, an inventory should be made of the form, content, and source of all information that is to be available on the website in order to properly review the legal ramifications of using the materials and facilitate the creation of the records necessary to demonstrate the website owner’s proprietary rights in the materials.
6. Site owners often have a fixed idea of what they are looking for with respect to development of their site and, in many cases, the appropriate arrangement will be dictated by the sophistication of the functions and activities associated with the proposed site. While it is not necessarily the best strategy for the long term, a smaller site owner can begin with a “do-it-yourself” approach to developing the site if sufficient in-house time and expertise is available. If this is not practical, or the scope of the project is relatively large, outside contractors can be brought in for assistance in designing and operating a new website. The degree of involvement of an outside contractor will vary depending on the circumstances, including the site owner's budget and the sophistication of the overall development project. Deciding between in-house and outside hosting depends on the sophistication and purpose of the site. If the site owner has a small site with plain HTML pages, it can probably get away with hosting the site on its own or turning hosting responsibilities over to one of the online community sites that offer such services. On the other hand, if the site owner is seeking to establish a high-traffic and commerce-enabled site, it will need the processing and bandwidth capabilities that can only be offered through a big-time Web server located in the site owner's office or at an outside hosting service with the capabilities to support a big site.
7. The time and amount of difficulty associated with selecting a website developer will vary depending on a number of factors, including the in-house resources at the company and the type of project. The site owner should begin by taking steps to bolster its knowledge of the Internet through some form of self-directed site owner education program. The site owner should then begin to put together a list of desired features, functions, and graphics by conducting a review of comparable sites. The next step is for the site owner to develop a “request for proposal”, or “RFP” to send out to prospective developers to elicit bids or other indications of interest in taking on the site owner's project. Upon receipt of indications of interest, the site owner should carefully evaluate all prospective developers by conducting a due diligence investigation as well as meetings and interviews. The final step is negotiation of fees, design specifications, timetables and schedules for completion of the project and other terms of the development agreement (i.e., ownership rights, acceptance testing, maintenance and updating and warranties and indemnification).
8. Like development agreements, hosting agreements come in various shapes and forms. Hosting agreements may need to be modified to fit the specific requirements of the industry or market in which the site owner is engaged. For example, an agreement covering the hosting of an online mortgage services provider should take into account applicable regulatory requirements regarding content and use of visitor records. From the site owner's perspective, a comprehensive form of website hosting agreement should cover the hosting services; the compensation to be paid to the host for its services; acceptance procedures; representations and warranties from the host regarding performance of the site; and representations and warranties regarding non-disclosure of confidential information relating to the site and the materials provided by the site owner. Performance-related issues include response time and throughput capacity connectivity and system redundancy. Other concerns include portability, user support procedures and security procedures.
9. Some developers recommend a “soft launch,” in which the site is activated without advance publicity and the resultant limited usage provides a way to test the site and determine whether there are any problems. Once the bugs have been worked out, the promotional campaign can begin. The launch should always be preceded by a rigorous program of testing and acceptance by the site owner. The testing and acceptance procedures should be laid out in detail in the development agreement and sufficient time should be left for any required changes. The days and weeks prior to launch of the site should also include close attention to the details of developing and implementing a site promotion strategy that includes registration of the site with Web search engines; meta-tagging; participation in mailing lists and newsgroups; linking arrangements; and advertising. Finally, the site owner should confirm the readiness of desired payment systems for online transactions to be conducted through the website.
10. Launching and maintaining a commercial website that disseminates information to viewers regarding the products and services of the website owner raises a wide array of potential legal issues that need to be addressed in the design process. The situation becomes even more complex when website are used to conduct commercial transactions, such as online sales of products, and/or collect information from viewers to be used in the website owner’s marketing and other operational activities. Website owners must be concerned with the enforceability of online contracts; jurisdictional issues; laws and regulations pertaining to privacy and security, including rules regarding protection of specific classes of viewers such as children; registration of domain names; copyright and trademark law issues; potential liabilities from linking and framing, as well as the possibility that linking and framing activities of others will cause harm to the value of their sites; potential liabilities for defamation; the need to comply with consumer protection laws that have been extended to cover online sales activities; regulation of e-mail marketing communications and “spamming”, and state taxation of online sales activities. Site owners should always include one or more notices or disclaimers on their site to protect themselves from potential liabilities and to perfect their legal rights with respect to content that they might create and post on the site. Robust and comprehensive terms and conditions of use are essential and should be accompanied by copyright and trademark notices, linking notices, warranty notices, privacy and security policies, limitations on damages and disclaimers of third-party postings.
Giang provided a summary of the results of a study conducted by the global consulting firm EY (formerly Ernst & Young) that collected and analyzed data from more 1,200 professionals—managers and non-managers–from different generations and industries in an effort to understand how they perceived the strengths and weaknesses of workers from each of three generational groups: Millennials, Generation X and Baby Boomers. According to Giang, the respondents perceived Millennials as being “tech-savvy”, but not very good at collaboration and teamwork. Generation X workers were praised for their entrepreneurial thinking; however, they ranked low on “executive presence”. Finally, the consensus about Baby Boomers was that they were loyal to their companies and were “team players” but they often had difficulty adapting to change. Specific findings reported by Giang on the strengths and weaknesses of the three generations and the things that they were likely to find most important as “motivators” were as follows:
- Millennials were perceived to the most “tech-savvy” and adroit at using social media tools to leverage opportunities. Millennials also were the most enthusiastic about their jobs; however, the group scored lower than the other two groups on being a "team player", "hardworking" and being "a productive part of my organization". Knowing when and how to get a promotion was more important to Millennials than to members of the other two groups.
- Members of Generation X were recognized as the “most effective managers” compared to managers from the other generations and also scored highest with respect to being a "revenue generator", possessing traits of "adaptability", "problem-solving" and "collaboration". The group fared poorly on measures of “executive presence” and “being cost effective”. Members of Generation X could be distinguished from the other two groups by the greater importance they placed on “workplace flexibility”.
- As mentioned above, Baby Boomers outdid their colleagues from other generations in areas such as “being a productive part of the organization”, being "hardworking", and being a "team player". Baby Boomers also enjoyed mentoring others; however, the group ranked the lowest on being adaptable and collaborative. Not surprisingly given the specific challenges associated with their age, Baby Boomers were more likely than their younger colleagues to focus on the health care and retirement benefits offered by their organizations.
For technology-based companies the most significant asset is generally their intellectual property rights—patents, copyrights, trade secrets, and trademarks—and there is a real and substantial risk to those companies if they fail to take the necessary steps to preserve the value of these assets. In order to analyze the legal risks in this area, and take appropriate steps to minimize and manage those risks, companies should conduct regular audits that focus upon the creation of the assets and ownership rights therein; the procedures used to perfect and maintain all legal rights in the asset; and the risk that the use of the assets might infringe upon the valid legal claims or the contractual rights of others.
Extensive covers of intellectual property audits is available in Chapter 202 of Business Transactions Solutions on Westlaw Next. In particular, you should review the executive summary for clients regarding intellectual property audits (§202:71) and distribute it to your clients. Some important things you need to know about intellectual property audits include the following:
1. The audit process begins with the collection of information through a review of statutory intellectual property rights, business information being protected as trade secrets, technology rights agreements, employment and consulting agreements, court filings and correspondence relating to actual or potential litigation with respect to technology used by the company, questionnaires, searches of company files and interviews. Once the information has been collected, it should be carefully subjected to ownership analysis, perfection and protection analysis, valuation analysis and infringement analysis. If appropriate, a report or summary of findings and proposed remedial actions should be prepared and delivered to the senior management of the company.
2. The information collected during an intellectual property audit can be used for a number of different purposes: whenever the investigation is done in the context of a proposed transaction involving technology rights, the information will be used by both parties to negotiate, structure, and document the terms of the transaction; training company personnel on proper procedures for protecting the company’s intellectual property rights; identifying remedial actions which might be taken in order to enhance the competitive utility of the technology assets; and improving the procedures which the company uses to protect its intellectual property rights (e.g., developing a corporate patent program or implementing a trade secret security program).
3. The analysis of ownership rights requires a review of public records, agreements with employees and consultants involved in the development of innovations that might be eligible for intellectual property protection and both inbound and outbound license agreements. Once ownership rights have been determined, the company's technology portfolio should be reviewed to ensure that the various components thereof have been perfected and kept up to date. An investigation should be done to verify that patents remain valid; and all statutory registrations should be maintained, by the filing of appropriate fees, and renewed. The company's trade secret protection program should be fully reviewed. With respect to technology rights licensed from third parties, contractual restrictions and covenants should be reviewed to verify that the company is not in default.
4. There are at least two common areas of concern in assessing the possibility that the company will become subject to a third party infringement or misappropriation claim. The first arises when employees or independent consultants may have used the trade secrets or statutorily protected rights of a former employer or hiring party in developing new products for the company. A second set of issues is created when a new product or service is substantially similar to an existing product or service of a third party, since an allegation might be made that the new work has been unlawfully "copied."
5. Even though the company may have clear title to its intellectual property assets, and the use thereof does not infringe upon the rights of third parties, there nonetheless may be various other limitations and restrictions which should be accounted for in assessing the commercial utility of the technology. Among the areas of inquiry would be restrictions and limitations which may have been imposed in contracts pursuant to which the technology rights are being used, as well as clouds raised by litigation or similar disputes surrounding the intellectual property rights.
6. The intellectual property audit may reveal unprotected technology, defects in the chain of title, or that a third party has rights in the technology. Where there is a defect in the chain of title, remedial action may include obtaining written assignments from parties that may have an interest; licensing the rights of third parties; reverse engineering the technology or part thereof; or using “clean room” procedures to independently develop the technology or part thereof.
Once the ideas for new products have been identified and vetted and the product development process is largely completed, the full attention of the company should be focused on the activities directly related to promoting and selling the products and tending to the post-sale needs of customers with respect to service and support. In the initial stages of the company’s development reliance is often placed on one or more of the members of the founding group with significant experience in sales and marketing and, in fact, many companies are established in order to meet a need in a specific market where the founders have worked in the past. However, as time goes by, and the company matures and expands, experienced professionals will be brought in as senior managers of the sales function to create and develop sales channels for the company’s products. Even when companies have brilliant ideas about solutions for their customers, they will not be successful unless and until they figure out the best way to close the sale.
The International Center for Growth-Oriented Entrepreneurship has just released a chapter on “Introduction to Sales and Distribution Activities” from its Library of Resources for Growth-Oriented Entrepreneurs on Product Development and Commercialization which is available for free downloading and sharing by clicking here.
Some important things you need to know about sales and distribution activities include the following:
1. Among the key factors to consider when developing the initial sales and distribution strategy is the nature of the product and required sales effort and the size and composition of the target market. For example, if the target market for the initial product is relatively narrow or the sales effort is focused on a small number of potential original equipment manufacturers, then it is likely that the firm will elect to emphasize a direct selling effort using either in-house personnel or “manufacturers’ representatives” who are compensated on a commission-only basis. However, although it is certainly possible for one company to possess the financial and technical resources for internal development of products and direct sales of the products to end users without the use of intermediaries, it is more likely that one or more outside partners will eventually assist in distribution. Engaging with sales representatives and distributors allows companies to minimize the costs of creating and maintaining an internal sales force, the cost of which can exceed the cost of developing many products. Creation of an in-house sales team is also not warranted, or cost-effective, when the firm is entering a market in which the customer base is fragmented and individual sales transactions involve relatively small dollar amounts. In those situations, the firm must base its sales strategy on developing a network of independent sales representatives and/or distributors that already handle a broad line of similar products in the target market and who are willing to carry the company’s products as additional items.
2. The advantage of outsourcing sales activities is that sales representatives and distributors are in the business already, have established accounts, and can accelerate the time to market. Even if such sales representatives or distributors are asked to handle the company’s products on an exclusive basis, and not sell any other products, their experience will make the roll out much faster. A side benefit of hiring individual sales representatives as independent contractors is that they are not employees, and the restrictions in many jurisdictions on hiring, treatment and termination of employees do not apply. On the other hand, selling through outside agents can be a challenging undertaking for small firms with no track record and little initial bargaining power with the agents, particularly larger distributors who prefer to focus on products that have already established themselves as high volume items and the distributor’s sales personnel rarely have the time or qualifications to engage in the direct sales effort normally required to inform customers about the attributes of a new, and relatively unheralded, product. The relationship with any distributor will usually be conditioned upon attainment of agreed minimum sales volumes and slow moving products will generally be dropped by the distributor after an initial trial period.
3. Sales transactions will be governed by applicable laws and regulations pertaining to the content and enforceability of sales contract, such as Article Two of the Uniform Commercial Code in the United States. Other legal issues which should be considered when offering and selling goods, either directly or through intermediaries, include product liability laws; government product testing and safety requirements; antitrust laws; intellectual property laws; laws proscribing the use of deceptive acts and practices in the sale of goods; consumer credit laws and regulations; export controls and import laws of foreign countries in which selling activities are occurring; foreign laws relating to the relationship between foreign manufacturers and any local agents; and anti-bribery laws.
4. The sales and marketing functions can lower production costs by increasing demand for the product and the lower costs can be converted into higher margins or lower prices that contribute to even more success in the volume of sales and the level of market share. The sales and marketing functions can also create differentiation advantages by creating and implementing sales and marketing strategies for targeted customer groups, tailoring product designs and features to customer requirements, and developing and promoting brand names. The important elements of the business plan for the sales activities of any company should include a statement of the overall mission or purpose of the plan, identification and description of specific goals and objectives and an explanation of the strategies and tactics that will be deployed in order to achieve the stated goals and objectives. Creating an effective strategy calls for consideration of pricing, promotional techniques, negotiating strategies, opportunities for adding value for prospective customers, service and support capabilities, technology relating to sales activities, internal processes for reviewing and approving sales transactions, design of the sales organizational structure and implementation of effective sales compensation programs.
5. Use of sales agents varies depending on the industry, the specific market and competitive conditions; however, studies have found that a significant number of companies rely on outside sales agents for support in promoting and selling some or all of their products. Companies must consider a number of factors when choosing the appropriate mix of internal and external sales activities including cost and efficiencies; the nature of the market, sales force factors, internal expertise and resources and the nature of the product; and how much control the company needs over the sales process.
6. Outside sales relationships can take a variety of forms including sales agency arrangements, basic distributorship arrangements, original equipment manufacturer arrangements; manufacturing and distribution licenses and dealership arrangements. While many companies provide short-term rewards and bonuses for distributors that are successful in their sales activities, the most successful companies develop and implement formal reseller programs that form the basis for forging and maintaining long-term relationships based on shared visions and goals. Reseller programs should include various rewards and incentives including marketing dollars, product and training discounts and other support; however, it is important for the company to condition these items on attainment of clear and mutually agreed revenue and profitability requirements. In addition, once the reseller relationship is in place, the company should be prepared to work on building the relationship and maintaining close communications. Finally, the program should establish procedures for measuring the performance of resellers against the goals and expectations included in the program and conducting period reviews of the relationship.
7. The key design principals when designing the sales organization structure include building around the most strategically appropriate marketing dimension such as geography, products, market, types of sales activities or specific large customer accounts; striking the proper balance between the need for centralized authority and providing managers and salespersons at lower levels with sufficient latitude to make decisions needed to close sales transactions within acceptable parameters; and processes for coordinating activities among different sales groups working on common projects or types of accounts.
8. The enthusiasm and effectiveness of the sales team, as well as the way they go about organizing their sales presentation and negotiate with customers, are highly dependent on the sales compensation plans adopted by the company. When the sales compensation program is properly designed it will provide incentives for salespeople to act in ways that support the business objectives of the company and will clearly reward those salespeople who are able to make the type of contribution thought necessary by senior management for the company to succeed. Companies generally rely on some mix of base salary, commissions and sales prizes; however, practices vary by industry and it is important to carefully evaluate the plans offered by competitors as part of the process of designing a compensation plan. The terms and conditions of any commission or bonus plans should be clearly stated to avoid misunderstandings. Companies should revisit commission and bonus plans on a regular basis and should consider structuring such plans to create specific incentives for certain activities such as the pursuit of business from new accounts.
Jones and George observed that Taylor believed that the systematic study of the relationships between people and tasks using “scientific management” techniques, rather than intuition or informal rule-of-thumb knowledge, was the best way to determine the most efficient division of labor and capitalize on the advantages of using specialization in the production process. In general, Taylor pushed for employers to take steps to reduce the amount of time and effort expended by workers in producing a unit of output and Jones and George summed up the four core principles of “scientific management” that Taylor developed from his experiments and observations as follows:
- Study the way workers perform their tasks, gather all the informal job knowledge possessed by workers, and experiment with ways of improving the way tasks are performed to increase efficiency.
- Codify the new methods of performing tasks into written work rules and standard operating procedures.
- Carefully select workers to ensure that they possess the skills and abilities that match the needs of the task and train them to perform the tasks according to the established rules and procedures.
- Establish a fair or acceptable level of performance for a task and then develop a pay system that provides a higher reward for performance above the acceptable level.
Jones and George noted that scientific management was widely known and practiced by 1910. For example, executives at Ford Motor Company celebrated that scientific management had allowed them to achieve the right mix of worker-task specialization and align people and tasks with the desired speed of the production line. Franklin Motor Company reported that it had redesigned its work process using scientific management principles and had seen daily production averages increase from 45 to 100 vehicles. At the same time, however, scientific management was subject to widespread criticism from individual workers and the unions that represented them. Among the problems reported by Jones and George were the failure of employers to shares gains in productivity and performance with workers in the form of bonuses; increased job dissatisfaction due to job redesign that resulted in specialized, simplified jobs that were monotonous and repetitive; unreasonable expectations from managers who believed that as performance improved workers should do even more work for the same pay; and concerns among workers that advances in productivity would reduce the number of workers required and eventually lead to employers pushing to reduce their workforces through layoffs. While Jones and George concluded that selective application of scientific management principles often did more harm than good, Taylor’s theories had an enduring influence on management of production systems.
Source: G. Jones and J. George, Essentials of Contemporary Management (6th Ed) (New York: McGraw-Hill Professional Publishing, 2014), Appendix A (“History of Management Thought”) to Chapter 1.
Every company, regardless of its size and activities, is touched in some way by technology. For example, the use of computer hardware and software has now become commonplace for recording the terms of business transactions and creating and maintaining business records and even the smallest firms need to be attentive to improvements in computing tools that can lead to lower costs and greater efficiencies. Technology becomes even more important for the firm as its activities expand to include product development and manufacturing and it looks to stake out a technology-based competitive advantage. Given the importance of technology in so many of the activities engaged in by their companies, the founders and other members of the executive team need to understand the science and practice of technology management and the steps that should be taken to develop and implement the company’s technology strategy, conduct technology assessments and audits, create an effective management structure for technology, develop and implement plans for acquiring necessary technologies and perfect and protect the company’s legal rights to use its intellectual property.
A new chapter on Technology Management (Chapter 206) has been added to Business Transactions Solutions this month and its available on Westlaw Next. Among the practice tools that you can put to immediate use are the following:
- Executive summary for clients regarding intellectual property rights (§206:43)
- Executive summary for clients regarding intellectual property audits (§206:44)
- Management guide on technology management (§206:45)
- Slide Deck presentation: Technology Management (§206:46)
- Business Counselor’s Guide to Technology Management (§206:47)
Some important things you need to know about technology management include the following:
1. While the competitive advantage offered by technology will vary from among industries and markets, it is fair to say that companies have often leveraged technologies to reduce costs associated with production and distribution of products, increase efficiencies in production and distribution processes, support product differentiation strategies based on higher levels of quality and/or reliability, facilitate circumvention of barriers to entry and competition with established firms, trigger a radical change in the basis for competition in a specific industry and/or create new markets and industries through discovery of solutions to problems that are important to consumers.
2. Effective technology management requires the development and implementation of a clear technology strategy that defines the role that technology is expected to play in the overall business strategy of the firm. The technology strategy will determine the focus of the company’s internal research and development activities, as well as the need to look to outside sources for technology, and also impacts the selection of market sectors for the company’s new products and the way those products are positioned in the eyes of potential customers. There is no single method for defining and determining the technology strategy of a company or business unit; however, one possibility is to focus on the degree to which the company is dedicated to becoming a “technology leader,” as opposed to pursuing a “follower strategy”, and the balance that should be struck between these two extremes across the company’s technology portfolio. Selection of a technology strategy requires consideration of the likely rate of diffusion and adoption of new technologies or innovations, both within companies and among their customers. A variety of factors influence diffusion and adoption including politics and governmental policies; societal culture; understanding of, and experience with, elements of information systems (i.e., people, hardware, software, communications networks and data resources); and economic, geographic and geopolitical factors, particularly income levels and characteristics of populations (i.e., skills, educational qualifications, literacy rates, productivity and the cost of labor).
3. Key issues relating to technology management include identification and evaluation of potentially valuable technologies, selection and implementation of strategies to access needed technologies, identification of markets for exploitation of new technologies, creation of the optimal organizational structure for management of new technologies, establishment of procedures for perfecting and maintaining intellectual property rights associated with new technologies and establishment of scanning and forecasting procedures to anticipate future trends in technology development and use.
4. Companies should designate one person, often a “chief technology officer”, who will be responsible for the advance of existing strategic technologies and identification of the future technology requirements of the company and who will be responsible for a number of different activities including technology audits, benchmarking the company’s technology portfolio in relation to competitors, technology forecasting, defining the strategic technology requirements of the company, and establishing procedures and practices for keeping informed of new developments and acquiring and protecting those technologies that are crucial to the business strategies of the company.
5. As part of the administering the technology strategy for the entire company, senior management must also conduct regular assessments of the individual technology policies and practices of each internal department or business unit. Technology-based activities should be reviewed against strategic benchmarks and progress made by other participants in the relevant markets and industries. In addition, legal review and compliance efforts should focus on creation of intellectual property assets, identification and perfection of ownership rights, procedures for maintaining legal usage rights and procedures for avoiding infringement of the legal claims or contractual rights of others.
6. Companies may elect to develop desired technologies using internal resources; however, in most instances companies lack the capital and resources to do all of the work on their own even if success would give them maximum flexibility and allow them to harvest all of the benefits of the work. The reality is that as companies establish priorities with respect to research and development, they typically rely on one or more methods for acquiring new technologies from outside parties, including contract R&D arrangements, purchasing and licensing arrangements, joint development arrangements, joint ventures and strategic alliances and acquisitions.
7. Investment in the development or other acquisition of key technologies is only warranted if the company will be able to appropriate and protect the advantages of such technologies. The most commonly used methods for appropriating the gains from innovation include reliance on statutory intellectual property rights and non-statutory protection of trade secrets, complimentary assets, multiple technologies and lead time.
8. Companies may use their proprietary rights with respect to valuable technologies in licensing arrangements to gain access to the technology assets and other unique skills and resources of other companies. Technology rights can also be used as contributions to new business ventures and can serve as barriers to technology strategies of competitors. In addition, the value of technologies can be enhanced through “knowledge management”, which include the processes and techniques used by an organization to create, acquire, transfer and protect the information and knowledge necessary for the organization to be successful, and the steps that must be taken to identify improvements to the existing knowledge base that must be pursued in order to respond to competitive challenges and changes in the operating environment.