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Technology Commercialisation- Ideas to MarketA.M. MubarakDirector/CEOIndustrial Technology Institute
Theme 1- Technological Innovations: Setting the Stage for Commercialization Theme 1- Technological Innovations: Setting the Stage for Commercialization
Agenda
•Are we Competitive Globally?•Why Innovate?•The Business of R&D•Technology Commercialization
• Technology push vs Market pull• Open vs Close Innovation systems• Innovation Pressure
•Keys to bringing R&D output to market
•Ideas to Market - PRIs perspective•Final thoughts!
Are we competitive globally?
Country Rank/142
Switzerland 1
Singapore 2
Sweden 3
Qatar 14
Korea 24
China 26
Sri Lanka 52
India 56
Global Competiveness Index 2011-2012
Basic requirements (65)•Institutions•Infrastructure•Macroeconomic environment•Health & primary education
Efficiency enhancers (69)•Higher education & training (65)•Goods market efficiency•Labour market efficiency•Financial market development•Technological readiness (85)•Market size
Innovation & sophistication factor (34)•Business sophistication (32)•Innovation (42)
Key for Factor driven
economies
Key for Efficiency driven
economies
Key for Innovation
driven economies
12 Pillars of Competitiveness (Overall ranking 52/142)
Why Innovate?
•Ice companies – Refrigerators•Western Union – AT&T•Ford – GM
Innovation drivers• Emergence of powerful new technologies• Shortening technology life cycles• Increase trade liberalisation• Increasing globalisation• Changing regulatory framework• Increasing sources of competition• Changing basis of competition• Growing customer power
To thrive –or at least survive-
innovation is essential
The Business of R&D• The world spent $640 Billion on R&D in 2004
• $384 Billion by top global 1000 corporations alone
• Most of the money was spent on Electronics and computing (25%) Health and medicine (20%) Automobile (18%)
• No relationship between R&D spending and sales growth, earnings or shareholder’s returns
• Superior result seems to be a function of organization’s innovation process – the bets it makes and how it pursues them
Booz Allen Global Innovation report 2005
ROI from R&D - USA (2002)
Research$ 37.02 billion
Discovery15,573 disclosures1 per $2.38 million
Intellectual Assets
7,741 new US patents
Technology transfer4673 licenses; 450 start
ups
• 10 years for an institution & 20 years nationally to obtain a (+) rate of return
• Cost of an effective TT system ~1% of R&D exp
• License income - $1.27 bn• ~1-4% of R&D exp• World average ~1.7% Source: AUTM Survey
Technology Commercialization
Technology commercialization is the process
of taking newly developed technologies to
the market for the purpose of profit
Technology commercialization -Processes
Applied
Research Basic
Research
Discovery Stage
Product Development
Product Research
MarketAdoption
Business Creation Stage
OpportunityIdentification
Business Need
TechnicalSolution
Technology &EngineeringDevelopment
BusinessSolution
DiscoveryStage
A B C D
Strategic Agenda Development
1 23 4 5
Commercialization happens in three different ways
When an invention is made (1,2,3,4,5) When a technology business idea is developed (A,B,C,D) When a technology is ready for commercialization(3,4,5)
A Closed Innovation System
Source: Henry Chesbrough, Open Innovation
OpportunityScanning
BusinessConcept
Development
TechnologyDevelopment
Commercialized Products/Services
BusinessIncubation
DiscoverDefine Develop Launch
The Marke
t
The Marke
t
S&T BaseS&T Base
• If I discover it, I will find a market
• If I discover first, I will own it
• Important technologies I will need can be anticipated in advance
• The best people in this field work for us
Open Innovation Paradigm
Source: Henry Chesbrough - Open Innovation, 2002
Technology In-Sourcing
Commercialized Products/Services
Current
Market
Current
Market
Internal Technology Base
Internal Technology Base
External Technology Base
External Technology Base
Technology Spin-offs
Out-Licensing
NewMarke
t
NewMarke
t
New Firm’sMarket
New Firm’sMarket
• Good ideas are widely distributed. No one has a monopoly on useful knowledge
• Being first to discover is neither necessary nor sufficient to win in the market
• A better business model beats a better technology
• IP must be managed as a perishable asset
• Not all the smart people in the world work for us
Innovation Pressure
Source: McKinsey TIC-Team
ChipChipComputer
gamesComputer
games
Auto-motivesAuto-
motives
PharmaPharma
FoodFood
SteelSteel
AerospaceAerospace
0
20
1 100Percent R&D outsourced
Openness to the market
10
Low High
Low
Hig
h
HORIZON 3
HORIZON 2
HORIZON 1
IThardware
IThardware
Consumer electronic
s
Consumer electronic
s
Special chemicals
Special chemicals
Keys to bringing R&D output to market•Set Market strategy
▫Understand firm’s existing & potential market▫Understand company capabilities▫Develop company marketing strategy
•Develop company technology strategy in line with market strategy▫Identify technology & how to get it to meet
market goals•Implement technology
▫Use Stage-Gate process to reduce risk▫Eliminate barriers/resistance to change
Portfolio mapping
Can use but need to keep track of best sources of supply
Keep close watch
Keep close watch
Keep watching
Keep watching
Invest in R&D
Must maintain
Possible future products/processesPlanned newproducts/processes
Coreproducts/processes Basic/Generic Pacing EmergingProprietary
Competence Auditing
Products & processes = branches & trunks
Particular product/market combinations are the fruit
Core technological competences = deep roots from which products and processes grow
Sources of technology• Seizing tacit
knowledge• Internal R&D• Internal R&D with
Networking• Reverse Engineering• Covert acquisition
with internal R&D• Covert Acquisition
• Technology transfer with absorption
• Contract R&D• R&D Strategic
partnership• Licensing• Purchasing• Joint venture• Acquisition of company
with technology
Ideas to Market – PRIs perspective• Core business is to provide R&D output & not
Goods & Services▫Public good applied R&D▫Leading edge contract R&D▫Technology commercialisation
• Help economic development (create wealth) by supporting industry▫Increase production▫Add value▫Improve productivity▫Create new products/services
INNOVATION CYCLE
TECH
NOLO
GY
MAT
URIT
Y
Concepts/Fundamentals
Feasibility/Development
Piloting/Demonstration
Commercial/Innovation
INNOVATION CONTINUUM – “S-curve”
Building Partnerships
Building Partnerships
Outsourcing R&D: win-win mode•By outsourcing from Universities and PRIs
firms can:▫reduce the time required to market a technology▫reduce the costs of research▫defray the risks associated with developing new
technologies•Licensing their technologies allows PRIs to:
▫ take advantage of established distribution channels
▫reduce the high costs and high risks of commercializing a technology themselves
▫generate faster revenues
Culture Gap
•Incentives for the private sector▫Market penetration, profit, equity
•Motivation for the R&D institutions▫Publications, promotions, tenure, peer
image
Gap should be reduced/eliminated for meaningful contribution to
national development
Slicing an Apple• Apple does not make the iPhone itself
• Assembled by Taiwanese Foxconn in China using components from several suppliers
• Flash memory & DRAM -Samsung (26% of the component cost)
• Apple one of Samsung’s largest customers Samsung one of Apple’s biggest suppliers!
• Apple’s strengths- designing elegant, easy to use combinations of hardware, software & services
• Who takes the bigger slice?Foxconn-$16; Components-$178; Apple-$368
The Economist, Aug 10th 2011