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