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Narayan
THE INNOVATION CHAIN (PROCESS)
IDEA/CONCEPT
TECHNOLOGY DEVELOPMENTInvention -- patents, trade secrets, Intellectual Property (IP)
TECHNOLOGY TRANSFERInvestment Grade -- license, joint venture, start company
TECHNOLOGY COMMERCIALIZATIONBusiness Plan, Strategic Plan, financing/internal funding
Narayan
Stages in Innovation/Concept to Commercialization -- THE PUZZLE
Narayan
New Ideas/InventionsR&D project initiated
Intellectual property creation
University Faculty
Entrepreneurs
StudentsGraduate & undergraduate
Technology Assessment Business & market potential
COST!
Business development infrastructure
Commercialization expertise
?
Technology Development Engineering Economics!
Product specifications, process parameters, pilot scale-up operations
Market analysis, demonstration & evaluation
TECHNOLOGY POTENTIAL
HIGH
LOW
Modify, refine, change or drop project
BUSINESS/COMMERCIALIZATION POTENTIAL
Establish Business Business Plan, Financing, Management
HIGH
LOWNeed more work
NEW BUSINESS JOINT VENTURE OUT-LICENSING
Technology Commercialization Process Model
Institutes, National labs
?
STEP1
STEP 2
STEP 3
STEP 4
Narayan
Life Cycle of Project from Concept to Commercialization
Applied R&DScale-upPreliminary Engineering & Economics
Stage 1
Market AnalysisBusiness Opportunity Analysis
Stage 2
Market Development StudiesEnd-user/Customer Testing & EvaluationBusiness DevelopmentBusiness Plan
Stage 3
Concept R&D
Proof of Technology Concept
PHASE I - Basic / Fundamental Work
PHASE II - Technology to Investment Grade
PHASE III - Commercialization
Semi-works/Commercial plantSalesManufacture
Business PlanStart-up Company
orJoint Venture
orTechnology Sale / Licensing
Narayan
Getting products out fasterThe past five years, major U.S. companies have cut "time to market" for new
products. Average development time, in months for:
0
10
20
30
40
50
60
19911996
Breakthroughproducts
New productlines
Major productrevisions
Minor productrevisions
Narayan
Reducing Product Development Time
Collapse Feedback Loops into One Circle
Business
R&D
Customer
Manufacturing
Sales
Concept R & D Engineering Marketing/Business
Development
Manufacturing Sales
Narayan
Collapsed Feedback Cycle Model for Fast-track Commercialization of Technology (Narayan Model)
In-license TechnologyComplete R&DMay Develop Technology from concept if high success and strong patent/proprietary position
Stage 1Identify Business Opportunity in Area of Expertise and Strength
Market AnalysisBusiness Opportunity Analysis
Stage 3Market Development StudiesEnd-user/Customer Testing & EvaluationBusiness DevelopmentDraft Business Plan
Development Corporation SetupFirst Round of Financing
(Investors)
Stage 2Applied R&DScale-upPreliminary Engineering & Economics
PHASE I - Basic / Fundamental Work
Semi-works/Commercial plantSalesManufacture
Business PlanStart-up CompanyJoint VentureTechnology Sale / Licensing
PHASE II - Technology to Investment Grade
PHASE III - Commercialization
Narayan
Life Cycle of Science & Technology Commercialization
Basic Research
AppliedResearch
Start-upCompany
Roll-outProduct
WorkingCapitalInfusion
SuccessfulCommercial
VentureFundamentalScience
Strategic Research
ProjectInnovation
Seed Capital Venture Capital
MezzanineCapital
Market Risk
Management Risk
Growth Risk
ManagementRisk
Growth Risk
Growth Risk
•Idea•Conceptual Risk•Proof Concept•Technical Feasibility
•Development Risk•Market Risk•Management Risk•Growth Risk
$ $
Narayan
NewInventions
GRTCompanyCreation
MBI Development
New Companies
Bio-Business Incubator of Michigan"Jump-Start"New Companies
Narayan
MBI / GRT "Direct Contributor"
MBI / GRT
Expertise- Scientific- Engineering- Business DevelopmentFacilities- Laboratory- Pilot Plant- IncubatorManagementMarketing/Promotion
CompaniesRevenues
JobsIncubators
Multi-TenantFacilities
Federal GovernmentIndustryState GovernmentFoundations
Worldwide Companies
Seed Venture CapitalVenture Capital
Intellectual Property Inventions
UniversitiesFederal Laboratories Companies
Narayan
• United States is in a significant era of entrepreneurship
• Over 700,00 companies began last year, compared to 50,000 per year in the 1950’s
• Research has shown that all new net job creation comes from new and growing companies
• A 1994 national Gallup poll showed that 70% of high school students want to start their own companies one day
• At the same time, colleges and universities throughout the country have reported tremendous growth in their students interest in learning about entrepreunership and ultimately becoming entrepreneurs
• This dramatic growth in entrepreneurial interest and activity is reinforced by a counter trend – large companies are downsizing, reengineering, and eliminating traditional job opportunities
WHY ENTREPREUNERSHIP?
Narayan
“Entrepreneurial thinking is the ability to see what is there, to see what might be there, and to take the actions necessary to ensure that vision and
create the change”
Narayan
• initiative
• imagination
•flexibility
•creativity
•a willingness to take risks
•the ability to think conceptually
•the capacity to see change as an opportunity.
Entrepreneurial Thinking
“ These qualities can be applied in any business venture, large or small, public or private, corporate or not-for-profit, local or global ”
Narayan
• Engineering students are ideal candidates for entrepreneurship
• Engineers are very practical, have sound analytical skills, good problem solving skills -- all the basic skills necessary to start and run a high technology enterprise
• Builds on their basic skills and opens up their minds to the possibilities of business creation and new product development
• Even if you do not start-up a new business and go to work for an existing business, the knowledge and training in the field would make you more valuable to the company and more sought after by companies
• Entrepreneurial thinking gives students the ability to see what is there, to see what might be there, and to take the actions necessary to ensure the vision and create the change.
THE ENGINEER ENTREPREUNER!
Narayan
The business cycle from the invention or
discovery of a product or service, through
assessing the business opportunity, into
building the market and delivery systems,
and on to further product development and
the financial plans associated with it.
BUSINESS CYCLE
Narayan
ELEMENTS OF A BUSNIESS PLAN
Vision & Mission StatementGoals & Objectives
Company Overview• Legal business Description• Management Team• Board of Directors• Strategic Alliances
Product Strategy• Current Product• Research & Development• Production & Delivery
Market analysis• Market Definition• Customer Profile• Competition• Risk
Narayan
ELEMENTS OF A BUSNIESS PLAN (Contd)
Marketing Plan
• Sales Strategy
• Distribution Channels
• Advertising & Promotion
• Public Relations
Financial Plan
Assumptions
Financial Statements
•Balance Sheets
• Income Statements
•Cash Flow Statements
•Capital Requirements
Exit/pay back strategy
Narayan
CONCEPT OF VISION/MISSION/GOALS/OBJECTIVES STATEMENTS
Where business is headed
How business will be conducted
Necessary levels of achievement
Specific actions to be taken
VISION
MISSION
GOALS
OBJECTIVES
=
=
=
=
Narayan
STRATEGIC PLANNINGmedium to large companies
GOALS CAPABILITIES
BUSINESSENVIRONMENT
Narayan
STRATEGIC PLANNING (Contd)GOALS
Values -- defines what the organization stands for
Products & Services --
Target Market -- satisfies a customer need, Market share
Financial Goals -- Key financial measures/indicators for the company like Sales, Profits, Sustainable rate of growth
CAPABILITIES
Engineering, Manufacturing, R&D, Marketing, Customer services, others
BUSINESS ENVIRONMENT
Threat of new entrants
Threat of substitute product or services
Bargaining power of buyers and suppliers
Competition among existing firms
Narayan
GENERIC STRATEGIES
COST LEADERSHIP
Requires high relative market shareAggressive use of economies of scaleLearning curve to reduce cost
DIFFERENTIATION
Unique -- can be achieved by technology, performance, customer service, brand loyalty
FOCUS
Applicable for small organizations -- market niche can obtain cost leadership and or differentiation.
Narayan
BUSINESS AS A DYNAMIC SYSTEM
Price Volume
Variable costs
Fixed Costs OPERATIONS
Operating ConcernsTarget MarketDeployment of assetsCost effectivenessPricing strategy
Operating leverage
Key MeasuresCurrent RatioReturn on assetsProfit Margins
OperatingProfit
Dividends
Equity
New Investments
RetainedEarnings
Interest
Long Term Debt
Investment ConcernsDividends to ownersInterest to lendersReinvest Profit
Financial leverage
INVESTMENT
Debt to equity ratio
Return onequity
Sustainablerate of growth
Return oninvestment
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