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Article Excerpt
New product development that depends on technology transfer among partners is difficult. For technology-intensive firms, a range of factors--from the nature of competition to an enterprise's market position--will influence the difficulty of collaboration (1). Especially troublesome is the lack of attention given to the selection of appropriate supply chain partners, both upstream and downstream. To improve the chances of effective technology transfer, a strategic alliance must mirror respective objectives; a partnership is most effective when enterprises carefully match the type of technology to be transferred to the type of relationship between the technology supplier and recipient (2).
Defining the relationship is difficult because the situation is complex. Original equipment manufacturers (OEMs) competing in the high-tech environment expect suppliers to help generate ideas for differentiating products, offer solutions to technical design problems, and communicate insights into the needs of global markets (3). If the dominant voice within a team considering a strategic alliance espouses the perspective of sustainable competitive advantage, "vulnerable strategic position" becomes the key reason for collaborating (4). However, if a team's conversation allows for other voices, different rationales emerge. Strategic alliances with suppliers can reduce cost, improve the quality of purchased materials, reduce product development rime, and improve access to and application of technology (5). The resulting ideal strategic alliance benefits everyone: improving functional performance, offering more differentiated products to a wider customer base, and engendering deeper competitive competencies.
The purpose of this paper is to introduce technology managers to a tool--an alliance scorecard--to help them incorporate all these voices into their thinking about strategic alliances. This tool is robust; it is useful not only for brainstorming the likely problems to be encountered in a proposed collaboration, but also for defining the metrics to gauge success after a partnership has been formed. Our insights derive from two sets of managers: one set works at a United States OEM involved in producing a new generation of audio-visual displays, and the other works at a Taiwanese supplier. Conversations with these managers illustrate the usefulness of the alliance scorecard: its flexibility, in particular, and its implications for the different members of any supply chain.
The Situation
The situation for the OEM and the supplier is typical of many high-technology constellations where alliances reflect the competitive landscape. Most U.S. enterprises focus on value-added activities other than manufacturing. On the other hand, Taiwan is acclaimed for its production of PC-related products, such as notebook computers, scanners, motherboards, monitors, keyboards, and hubs. Consequently, many U.S. vendors have close OEM relationships with Taiwanese allies.
The partners' interests focused on new product development via technology transfer, not on fostering a better alliance, per se. All were familiar with a strategic alliance integrating a new generation of display technologies into a variety of consumer and business-to-business electronics; key principals in the collaboration shared their views with us about key criteria leading to success, in general.
The specific product involved is a micro-portable projector aimed at the market segment that hand-carries such devices for business presentations. Digital light processing forms the core technology. Both the OEM and the major sub-tier supplier are from the U.S.; the integrating supplier is Taiwanese. The initial rationale for the product came about from a desire on the part of the developer of the core technology to broaden sales beyond traditional audio-visual distribution. The OEM managed the relationship.
The Conversations
Our personal interviews with the OEM's projector team involved a number of management sponsors and champions, along with a seven-member team and committed team members from different functional areas. The core team included a core team leader (who acted as the engineering program manager), marketing product manager, supply chain manager, finance, business planning, service, and program coordinator. The committed functional areas included engineering, marketing, packaging, documentation, quality, and tooling.
The conversation with the integrating Taiwanese supplier covered the same topic areas as with the U.S. OEM. However, issues linked to differences in corporate culture meant that the importance of particular success criteria was gauged in a more general, less quantitative manner. Consensus building was the key. As a consequence, the data reflect agreement about criteria that are considered "important" or "very important" overall.
The conversations were guided by a questionnaire. The guiding framework built on the seminal work of Kaplan and Norton, who emphasize the advantages of four, balanced perspectives in strategy development (6). But, following the suggestions of other researchers such as Neufeld, Simeoni and Taylor (7), the questionnaire transformed their perspectives into something more attuned to strategic alliances, especially those aimed at technology transfer. The new framework has four major dimensions: Asset Management, Value Discipline (8), Enterprise Equity (9), and Knowledge Management. Each, in turn, has several sub-dimensions to better capture the inherent complexity of a strategic alliance built around technology assets (10). All criteria were captured via a question; the OEM's core team leader approved all questions.
Emphasis on Balanced Criteria
Tables 1, 2 and 3 show the perceptions of the partners regarding the success of any strategic alliance, especially those that involve technology transfer. For the U.S. OEM, the tables represent the thoughts of two dozen teammates (management sponsors and champions, core team members, representatives from various functional areas, etc.). The six columns to the right highlight those OEM groups who viewed a specific success criterion as "important" or "very important." The entries for the Taiwanese supplier reflect consensus among several internal groups about criteria for success.
In general, the perceptions imply that a balanced view helps prospective partners structure their decision-making about a strategic alliance....
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