Technology Strategy in Korean Leading Edge Companies - Survey & Interview
2002. 11
Jong Guk SONG and Jung Won LEE (e-mails: [email protected] ; [email protected]) Science and Technology Policy Institute (STEPI) Korea
Research Framework
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Changes in Business Environment
International environments Acceleration of globalization Rapid development of new technologies(IT, BT, NT etc.) Rapid growing of business R&D expenditure Rising of R&D outsourcing Shortening time to market
Domestic environments Foreign financial crisis in 1997 Changes in the direction of economic policy • Antitrust, unfair trade, etc. Changes in corporate governance Changes in industrial structure
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Survey on technology strategy of Korean Firms
Survey objectives: Identify the changing technology strategy of Korean firms in response to changing business/technology environment such as undergone foreign exchange crisis, globalisation, emerging technologies Sample size of Survey firms: Pick 828 firms (450 large firms, 205 SMEs, 173 venture firms) based on a set of selection criteria (R&D institutes/units, sales volume, R&D manpower) Questionnaire retrieval rate: Total 199 firms(24.0%) : LF 127(28.2%), SMEs 42(20.5%), start- ups 30(17.3%)
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Case Study on Technology Strategy of Korean Companies 1. Operating Results & R&D(2001 ) Unit: billion Won operating contents R&Dexpenditure & long-term results (SV, Remarks company R&D ratio EX,OP) R&D: 89 (1.2% of SV), long-term Fund source: Hyundai Heavy 7404, 6135, 535 R&D: 10% of total R&D corporately funded 22505, 10400, R&D: 1020 (4.5% of SV), long- Fund source: Hyundai Motor 2097 term R&D: 6.2% of total R&D corporately funded SAIT(Fund source: Samsung 32380, 21870, R&D&E: 2,400(7.5% of SV), long- 50% from corporately Electronics 2295 term R&D: total R&D funded, 40% contract R&D: 115(3.2% of SV), long-term Fund source: LG Chemical 3616, 1508, 269 R&D: 15% of total R&D corporately funded R&D: 759(4.6%of SV), long-term Fund source: LG Electronics 16601, 10517, 796 R&D: 3%-4% of total R&D corporately funded
R&D: 21 (0.7% of SV), long-term Fund source: Hyundai Mobis 2965, 1194, 357 R&D: 20% of total R&D corporately funded
R&D: 0.6(0.3% of SV) long-term Fund source: Iljin 221, 122, 1 R&D: 20% of total R&D corporately funded
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conte nts \position Position & Role of CTO
Hyundai Heavy President, Member on board of directors, participate executive meeting
Hyundai Motor Executive of Vice President, No, participate executive meeting
Samsung Electronics President, Member on board of directors, participate executive meeting
LG Chemical President, No, participate executive meeting
President, No, participate executive meeting, LG Electronics Authority of R&D personnel management
Hyundai Mobis President(both R&D and Marketing), Member on board of directors,
Iljin Executive director, No, participate executive meeting
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To increase Value added of current Acquire core technology in main products. Hyundai business sectors and Produce world Direction of R&D is more important than Heavy best products speed (regards to industrial characteristics) Direction of automobile technology: Auto and Focus on future technology Hyundai Environment, Auto and Human, Auto and development such as environment Motor Society, Deal with Environmental issues in related technology development of engine and transmission Take international leadership with Advancement of technology management(6 Samsung own technology, basic technology sigma), advance research in strategic Ele ctronics patents, and international technology, accelerate 3P (people, process, standardization product) innovation To find new business, focus on R&D in future Keep leadership to find new business LG competence of information-electronics fields (R&D driven business Chemical materials and bioscience fields, Develop high development) value added products and process Innovation for the competence of Strengthen the relationship with business unit, LG current business and develop future Executing technology leadership 2005 Ele ctronics complex fields products by innovation program researching new technology Shift aim from intergrated technology Leadership create in frontier technology, Hyundai to source technology, accumulate self Focus on mechatronics tecnology, Acquire Mobis capability in new business own technology in current business (aerospace) Focus on new business fields such as Iljin R&D is creating new future customers optical fibre, ceramics
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4. Organizational Structure for Research Content s Main organizational sub-unit Role of sub-unit Globalization of R&D Company R&D Headquarters, Shipbuilding & Ocean Local research institute in Under the Headquarter 4 Hyundai Research Institute, Industrial Research Hungry & Russia. Employ institutions are working Heavy Institute, Machine-Electricity Institute, foreign manpower in drawing independently Techno Design Institute unit Planning & Coordination Office, Manage and Coordinate Automobile development Institute (3 Hyundai domestic and abroad No foreign researcher in locations), Powertrain Development Motor institutions, R&D priority domestic insitute Institute, Design & Test Institute; in L.A., setting, Detroit, Chiba in Japan, Germany, Sweden, Joint Lab abroad. Researchers Samsung Advanced Institute of Operating Technology Group from Russia and China in Technology(SAIT), Samsung in matrix system and Project domestic research institute. Samsung Semiconductor Research Institute, and 41 team. Process infra team is Establish 24 hours cyber Electronics business unit research Institute, Abroad consist of a special technician research system world wide. Institution in Japan, Britain, Germany, and group of infra maintenace Increase R&D outsourcing up Russia (reduced R&D cost 20-30%) to 30%
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continued Contents Main organizational sub-unit Role of sub-unit Globalization of R&D Company Direction of Business Unit In LG Chem Research Park, Corporate R&D(New Local research institute and Institute(Cash Cow role ): In house Biz Incubation Unit, Core Technology Platform, operation Satellite lab in the LG R&D and Joint Venture . Coporate Process Innovation) and Business Unit USA Liason office in Russia & Chemical R&D Institute : Find New Busine ss Institute(Information Electronic Materials, Battery Europe. 10 foreign res earche rs Se ed, Acquire World Best Core Tech Center, Industrial Material, Petrocemicals) in domestic institute Tech
Cash cow business(Home Local research institute in the LG Electronics Institute of Technology as a central LG appliances): Business related USA & India. M&A or estblish Research institute and several Culture Unit(CU) in Electronics Innovation, LGEIT: Future oriented local start-up company. Few several business units new business foreign res earche rs
Research activities of 20 teams Hyundai compris e de velopment of core parts , Technical Research Institute consist of 20 teams Utilize HMC Relationship Mobis engineering analyses, and test & evaluation.
Optical communication Research Institute and Iljin To find new business field Strategic alliance. Ceramic Research Institute
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5. Decision Process of Strategy and Project Management Content Decision Process of Strategy Project Management s Make a Long-Term business Forcast in each business unit every later half of the year. Decide corporate level 20% of projects are from researchers’ Hyundai strategy in technology policy meeting(with the review free idea, by strategic planning is the Heavy of the council of Technology Development, members rest. are CTO, busuness unit technology executive directors, president of each institute). Select development model through various process including a review of Set up corporate strategy for 10 years and revise it deliberation of products council. Hyundai each year. After completion of long-term products Under the authority of project Motor planning, make a development plan, and make a plan manager prjects of each development of each research institute’s role and function stage are managed comprehensively and systematically. Long term technology startegy document exsists. Select research topic from new technology (or Apply stage gate method to project Samsung product) map. For the selection of project related to management. Invite business unit Electronic current business, discuss topics with business unit persons to take design review in each s every 3 month. For basic research, researchers hand stage. in self-report and checked by self-control inside of institute.
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(Continue d) Content Decision Process of Strategy s Make an alignment process of corporate strategy on corporate level. Reflect technology starategy in Corporate LG strategy to develop new technology and new market Chemical opportunity. Use scnario planning method, technology road map, technology portfolio Long term technology strategy and a year plan is decided LG by business technology strategy meeting every year. Electronics Concesus building process by regular meeting with business unit Set up target technology by top-down and bottom up Hyundai process. Focus on building up core technology capability Mobis in automobile module business and aerospace business.
On the criteria of customer needs and opportunity of Iljin future value Strategy is decided by investment council consists of executive directors.
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6. Methodology of Setting up Technology Strategy contents Methodology company Hyundai Technology tree, Technology tree, negative to use TRM Heavy Hyundai TRM Motor Samsung Technology tree, Technology tree, TRM, and Design for 6 Sigma Electronics LG Chemical TRM, QFD, Tech tree, TRIZ, DOE etc. LG TRM, AHP Electronics Hyundai utilize TRM Mobis Iljin -
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7. Human Resource Management Cont Foci of Performance Mobility and Technology ents Free Research Time Measurement Transfer Company Incentive on royalty within Recently pursue co- works Not officially approved free a certain amount of between researcher and Hyundai research, give an opportunity revenue. Reports or papers engineer in production line. He avy to carry out a research are in difficulty of Technology development in project by researcher’s idea evaluation as an major business products form Operate patents Give free research Hyundai management team. Operate start-up business opportunity and reward for Motor Incentive on royalty within a plaza inside firm excellent paper certain amount of revenue. Operate patent council to Researcers often move out to manage and evaluate production field case by project patent. Individual knowledge 10% of total R&D is and usually return. Estabish Sams ung ca pability is the most allocated to the free theme commercialization architecture Electronics important factor in research for timely technology transfer evaluation. Patent, and shortening time to technology transfer, royalty business. are important measures.
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(Continue d) Contents Mobility and Technology Foci of Performance Measurement Free Research Time Company Transfer
Operatingresearch informal Evaluate both work ability and individual 2% of mobility(quit) every year. syste m. Support re se arch fund for LG qualifiscation. Promote researcher’s technology Shorte ning time from R&D to an informal research actitvities on Chemical transfer to business sector not business Busine ss. Strengthening new technologies(30 research incubating. relationship with business sector. informal is organized now).
Cash cow business(Home Me asure technological and business wise Successful technology transfer, LG appliances): Business related achievement in concensus meeting with manager. Dispatch researcher or research Electronics Innovation, LGEIT: Future Incentive on royalty team to business unit oriented new business
Technology research in Hyundai Consider patent, pape rs, report, and the other not officially approved Aerospace unit dire ctly related to Mobis activity in research industry, mobility low
Focus on team evaluation. Check Research not officially approved. Participatin Technolgy trnasfer is focusing on Iljin mile stone and New products sales volume in 3 in out side seminar new business sectors years. Stock option when spin off the business
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8. Direction and Evaluation on Government S&T Policy contents Direction and Evaluation on Government S&T Policy company Tax incentive scheme is effective. Most of Gov’t R&D program is not matched Hyundai Heavy with business sector needs. Develop a long term basic technology research. Not participate in Gov’t R&D program Participated G7(Highly Advanced National Prjects) Program. Too extreme air Hyundai Motor polution regulation in Diesel automobil engine Samsung Gov’t R&D program is not much effective. Participate just for cooperation among Electronics GRI, University, and business sector Gov’t R&D program is not much effective. Support fund for a project LG Chemical consortiumed among businees sectors or single company. Incremental tax incentive is not much effective in recent business fluctuation environment. Participating in Gov’t R&D rpogram now. Not directly effective to business LG Electronics sector, only networking effect Hyundai Mobis Participate Aerospace launching project. Has been successfully utilize Gov’t R&D program. Now participate in Gov’t R&D Iljin project.
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