A New Approach to Innovation & Growth in the Texas Technology Corridor

Texas faces the challenge of maintaining and growing its capacity to innovate at a time when global competitors are aggressively pursuing markets that have generated economic success for Texas companies in the recent past. The future success of Texas companies will depend on their ability to improve

Digital convergence technologies are increasingly central to the competitive strategies of companies in all sectors. They enable the delivery of fresher food to the grocery, the diversification and personalization of entertainment, the promotion and protection of health, the management of energy use, and countless other activities that directly and indirectly affect daily life. In simple terms, digital convergence is the coalescence of all the functions for the acquisition and utilization of human knowledge in digital form. As such it is the backbone that enables these needs to be satisfied.1

The region that effectively supports a thriving digital convergence sector will have the potential to compete in every major industry. There are approximately 1600 digital convergence organizations in the Texas Technology Corridor that stretches from Waco to San Antonio. These organizations include large and small companies, government agencies, non-profits and universities. The Digital Convergence Initiative (DCI), a university/private/public venture, was established to spur innovation, collaboration, and competitiveness in the region among these organizations.2 DCI's initial focus is on the Texas Technology Corridor but will expand to other Texas regions as the organization develops. This article reports on one of DCI's efforts: the deployment of a method for technology strategic planning developed in U.S. intelligence agencies and used by some of the largest and most successful U.S. corporations but never before deployed in the service of regional economic development.

The case for a New Approach

Despite the opportunity of digital convergence, our ability to create and commercialize advanced technology products is rapidly eroding. In 2004, the U.S. advanced technology product trade deficit for all technology categories reached nearly $40 billion. The trade deficit for information and communications technologies alone reached $73 billion, wiping out gains in other technology sectors. Our largest trade deficits are with China, Malaysia, South Korea, Japan, Ireland and Mexico.3 Many of the states-including Texas-that have driven science and technology excellence in the United Scates in the past are experiencing the erosion of their innovation edge and the consequent loss of technology jobs.

Our ability to turn the tide at the national, state, and regional levels will depend on our ability to develop and use tools to cooperate and to exploit complimentary assets in order to compete globally. Both regions and industries avail themselves of different tools in the struggle to meet this challenge: cluster studies/development, technology road mapping, regional bench-marking, regional innovation systems studies/development, and triple helix studies/development.4 Although valuable, each of these approaches suffers from a fragmented perspective that limits the business insight that drives regions and industries forward. The situation is exacerbated in the rapidly changing digital convergence sector.

What is needed is a framework for assessing the extant regional technological strengths that translates easily into concrete action for creating or sustaining a competitive advantage in a global marketplace. New tools must provide comprehensive, timely, actionable insight to address:

* The large size and diversity of the technology sector;

* The high level of complexity of the technology sector;

* The significant number of competitors pursuing technology; and

* The high level of aggressiveness of the competitors pursuing technology.

Technology Strategic Planning

Technology strategic planning is an established method for assessing and mapping the commercial potential and market positioning of technology, analyzing the movements of extant and potential allies and competitors, and developing responsive and proactive strategies to exact maximum competitive advantage. Due to the confidential nature of the method's origins and subsequent use, there is little public record of the method and no history of empirical research despite its 25-year history. The DCI effort is the first opportunity for such investigation.

Through technology strategic planning, DCI is attempting to dramatically advance the capacity of the region's companies, universities, nonprofits, and public organizations to cooperate 1) by understanding fully the region's real and potential technology assets in the context of market demand and customer needs, and 2) by creating the organizational capacity to facilitate the myriad and complex relationships needed to transform ideas into products. The approach will enable those organizations that choose to participate in DCI to compete through productive partnerships among organizations with compatible objectives through matching of capability, interest, opportunity, and mutual benefit. In contrast to other approaches, which inventory regional assets to pursue supplyside approaches to economic development, strategic planning is a demand-side approach to economic development. The key assumptions of technology strategic planning are:

* The foundation of all competitive advantage is the ability to satisfy the customers' needs better than the competition;

* Technology, when defined as "any application of science to accomplish a function," is the resource that enables an organization to excel at satisfying the customers' needs;

* To excel at satisfying the customers' needs, the organization must exploit the technology more effectively than the competition;

* The exploitation of the technology takes place in four discrete dimensions: technology structure, capability, flow and time;

* To gain a competitive advantage, an organization must outmaneuver the competition in one or more of these dimensions; and

* To outmaneuver the competition, the organization must develop and deploy strategies that are based upon positioning and flexibility within the dimensions.

The first step in the technology strategic planning process is the creation of a "technology map" for a specific technology area. Then, participants (whether they be planners, business owners, or researchers) use the map to develop individual and collaborative strategies. In the case of the digital convergence map for the Texas Technology Corridor, we first defined the boundaries of what constitutes digital convergence, then established a full set of digital convergence technology paths that would be used to satisfy customer needs, and finally detailed the full range of capabilities that could be used to implement the paths to generate a competitive advantage toward satisfying customer needs.

Digital Convergence Defined

In the broadest sense, digital convergence is the coalescence of all the functions for the acquisition, storage, distribution and utilization of all present and fixture human knowledge. Whether the customer plays digital games, manages complex logistics, uses 3-D representations of geological formations to determine where to drill for oil, or requires real-time integrated battlefield intelligence to make decisions, consumers of digital convergence have related needs: to use the widest range of relevant data as easily, quickly, cheaply, safely and securely as possible to best satisfy the greatest number of beneficial purposes. The customer wants their needs met at the appropriate time, place, and cost, at the appropriate level of risk. Digital convergence technologies meet these needs through a number of processes:

1. The digitization of the full range of data. Data can mean the information to which we have become accustomed, such as voice or image information, as well as a host of other information that exists but has not yet been captured, created, or converted to a digital form.

2. The enabling of the data to be used with increasing ease. A key to digital convergence is the customer's ability to satisfy their needs without respect to the source, nature, and complexity of the data.

3. The integration of an increasing percentage of the data handling systems. Data handling systems themselves will continue to become increasingly transparent to the customers as data move seamlessly across software, platforms, and communication pathways.

4. The satisfaction of an increasing portion of the customers' present and future needs. These needs include existing needs as well as those yet to be identified and formed into new markets.

5. The global reach of data, devices, content, communication and customers.

Digital Convergence Technology Map

The above definition of digital convergence bounds the second step in creating the technology map. It identifies the full set of needs that comprise digital convergence. As Figure 1 shows, technology paths for products and services follow all or some portion of a thread of functions that begins with the creation or capture of data and ends with the consumer of the data responding to it, thereby beginning the data creation process all over again.

Each of these functions can be accomplished through multiple technologies. The map is not a mere catalog of the technologies that can used to accomplish a function; rather, as shown in Figure 2, it is a framework for how these technologies must relate to each other to accomplish a function. The objective is not to lay out only the present or most feasible technology paths; rather, the objective is to lay out all the technology paths that are feasible at any point in time.

In Figure 3, we drill down into the map framework, using the example of "store data." The map shows there are five physical processes that technologies exploit for data storage. Drilling down further still, the map framework captures the types of data storage and the actual technology commodities for data storage. At the highest level of resolution, the map shows the technology parameters for each commodity. These parameters are used to assess an organization's technology capability to meet specific customer needs.

In the case of passive optical storage such parameters include measures of data storage density and the speed with which data is stored to and extracted from the medium. These parameters tells us which customer needs are being targeted (i.e. reliability or portability), and which organizations have technologies targeted toward compatible customer needs. This alignment of interest and capability is the foundation for productive alliances in product and service development.

Once the technology framework is established, we map the Texas Technology Corridor assets. Figure 4 presents the level of capability in the Corridor at the highest level of abstraction. Findings are based upon publicly available sources such as patents, scientific journals, company web sites, and trade journals. The technologies assessed may be anywhere in the commercialization continuum from conceptualization, to development, to a product in the marketplace.

As can be seen in Figure 4, the region has some very specific strengths (dark blue) and weaknesses (white).5 The economic development strategy is not to dispatch the chambers of commerce to recruit companies to fill in all those areas where the region lacks capability; rather, the challenge is to determine how we can best leverage the resources in the region to the greatest effect. Recruitment may indeed be necessary, but only as a component of a larger strategy for amplifying the capability and competitive positioning of the existing organizations.

To illustrate the utility of the map at the organization level, we give a highly simplified and hypothetical example based on a real case. Figure 5 shows the technology assets of five organizations and how the assets are being leveraged by an entrepreneur to create a device to monitor high-performance athletes as well as patients recovering from illness or injury. It is important to note that few of the organizations identified are in the human performance device business. The entrepreneur, knowing the functionality he wants in his product, is licensing some technologies that are currently used in oil wells. Many of the sensors, gauges, and communication technologies used in downhole electronics are suitable for the equally inhospitable environment of the human body. The map gives the entrepreneur the perspective required to use existing technologies in new contexts. It enables him to see precisely which technologies from which organizations can fit together in new ways to satisfy unmet customer needs.

Conclusion and Next Steps

The digital convergence technology map is an important milestone in a larger program to assess the Texas Technology Corridor's competitive positioning vis-?-vis the rest of the state, nation, and globe and to develop targeted programs to enhance the competitiveness of the region. The next steps in this project are to:

* Identify and understand the current level of interaction among Corridor digital convergence organizations to facilitate more effective collaborative relationships;

* Assist DCI and participant organizations in the development of individual and collaborative strategies;

* Identify the full set of present and future global digital convergence competitors.

When complete, the digital convergence technology map and technology strategy tools will provide a powerful shared resource for propelling innovation and growth in Texas.