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Technology Commercialisation - Ideas to Market. A.M. Mubarak Director/CEO Industrial Technology Institute. Theme 1- Technological Innovations: Setting the Stage for Commercialization. Are we Competitive Globally? Why Innovate? The Business of R&D Technology Commercialization
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Technology Commercialisation- Ideas to Market A.M. Mubarak Director/CEO Industrial Technology Institute Theme 1- Technological Innovations: Setting the Stage for Commercialization
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! Agenda
Are we competitive globally? Global Competiveness Index 2011-2012
12 Pillars of Competitiveness (Overall ranking 52/142) • Basic requirements (65) • Institutions • Infrastructure • Macroeconomic environment • Health & primary education Key forFactor driven economies • Efficiency enhancers (69) • Higher education & training (65) • Goods market efficiency • Labour market efficiency • Financial market development • Technological readiness (85) • Market size Key for Efficiency driven economies • Innovation & sophistication factor (34) • Business sophistication (32) • Innovation (42) Key for Innovation driveneconomies
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 • 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 Discovery15,573 disclosures1 per $2.38 million Intellectual Assets7,741 new US patents • License income - $1.27 bn • ~1-4% of R&D exp • World average ~1.7% Technology transfer4673 licenses; 450 start ups Source: AUTM Survey
Technology commercialization is the process of taking newly developed technologies to the market for the purpose of profit Technology Commercialization
Technology commercialization -Processes Technology & Engineering Development Business Need Technical Solution Business Solution Discovery Stage A B C D Applied Research Basic Research Product Development Market Adoption Opportunity Identification Product Research 5 4 1 2 3 DiscoveryStage Strategic Agenda Development Business 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 Launch Define Develop S&T Base The Market Commercialized Products/Services • 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 Technology Development Business Incubation Business Concept Development Opportunity Scanning Source: Henry Chesbrough, Open Innovation
Open Innovation Paradigm New Firm’sMarket Out-Licensing Technology Spin-offs NewMarket Internal Technology Base • 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 Current Market Commercialized Products/Services External Technology Base Technology In-Sourcing Source: Henry Chesbrough - Open Innovation, 2002
Innovation Pressure 0 Chip Computer games Consumer electronics Product life cycle (YY) IT hardware Innovation Pressure HORIZON 3 Special chemicals Auto-motives Food Low High Pharma Steel HORIZON 2 Aerospace HORIZON 1 20 100 1 10 Percent R&D outsourced 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 products/processes Can use but need to keep track of best sources of supply Keep watching Planned newproducts/processes Invest in R&D Keep close watch Must maintain Coreproducts/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 • 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 CONTINUUM – “S-curve” Commercial/Innovation Piloting/Demonstration Building Partnerships Feasibility/Development Concepts/Fundamentals
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