Technology Commercialisation
- Ideas to Market
A.M. Mubarak
Director/CEO
Industrial Technology Institute
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?
Global Competiveness Index 2011-2012
Country Rank/142
Switzerland 1
Singapore 2
Sweden 3
Qatar 14
Korea 24
China 26
Sri Lanka 52
India 56
12 Pillars of Competitiveness (Overall ranking 52/142)
Basic requirements (65)
•Institutions Key for
•Infrastructure Factor driven
•Macroeconomic environment economies
•Health & primary education
Efficiency enhancers (69)
•Higher education & training (65)
•Goods market efficiency Key for
•Labour market efficiency Efficiency driven
•Financial market development economies
•Technological readiness (85)
•Market size
Innovation & sophistication factor (34) Key for
•Business sophistication (32) Innovation driven
•Innovation (42) economies
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 To thrive –
• Changing regulatory framework or at least survive-
• Increasing sources of competition innovation is
• Changing basis of competition essential
• Growing customer power
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 • 10 years for an institution & 20
$ 37.02 billion years nationally to obtain a (+)
rate of return
Discovery • Cost of an effective TT system
~1% of R&D exp
15,573 disclosures
1 per $2.38 million
Intellectual Assets
7,741 new US patents
• License income - $1.27 bn
• ~1-4% of R&D exp Technology transfer
4673 licenses; 450 start ups
• 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
Technology &
Business Technical Engineering Business
Need Solution Development Solution
Discovery Stage
A B C D
Basic Applied Opportunity Product Product Market
Research Research Identification Research Development Adoption
1 3 2 4 5
Discovery Strategic Agenda Business
Stage Development Creation Stage
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
Discover
Define Develop Launch
S&T Commercialized The
Products/Services
Base Market
market
• If I discover it, I will find a Business
Technology
Business Development Incubation
Concept
• If I discover first, I will own it
Development
Opportunity
Scanning
• Important technologies I will need can be
anticipated in advance
• The best people in this field work for us
Source: Henry Chesbrough, Open Innovation
Open Innovation Paradigm
New Firm’s
Out-Licensing
Market
Technology Spin-offs
New
Internal • Good ideas are widely distributed. No one
Market
Technology has a monopoly on useful knowledge
Base
• Being first to discover is neither necessary Current
Commercialized
Products/Services
nor sufficient to win in the market Market
External
Technology A better business model beats a better
•
Base
technology
• IP must be managed as a perishable asset
Technology people in
• Not all the smart In-Sourcing the world work
for us
Source: Henry Chesbrough - Open Innovation, 2002
Innovation Pressure
0
High Chip
Consumer Computer
Product life cycle (YY) electronics games
IT
Innovation Pressure
hardware
Special
HORIZON 3
chemicals Auto-
Food motives
Pharma
Steel
HORIZON 2
HORIZON 1
Aerospace
Low
20
1 10 10
Percent R&D outsourced 0
Low High
Openness to the market
Source: McKinsey TIC-Team
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
Possible
future Keep
products/ Can use watching
processes but
need to
Planned keep Keep
new Invest in
track of close
products/ R&D
processes
best watch
sources
of
Core supply Must
products/ maintain
processes
Basic/Generic Proprietary Pacing Emerging
Competence Auditing
Particular
product/market
combinations are
the fruit
Products & processes =
branches & trunks
Core technological competences = deep roots
from which products and processes grow
Sources of technology
• Seizing tacit knowledge • Technology transfer with
• Internal R&D absorption
• Internal R&D with • Contract R&D
Networking • R&D Strategic partnership
• Reverse Engineering • Licensing
• Covert acquisition with • Purchasing
internal R&D • Joint venture
• Covert Acquisition • 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 CONTINUUM – “S-curve”
Commercial/
TECHNOLOGY MATURITY
Innovation
Piloting/
Demonstration
Feasibility/ Building
Development
Concepts/
Partnerships
Fundamentals
INNOVATION CYCLE
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