Technology Commercialisation Practical Lessons from other Countries

1
Technology Commercialisation Practical Lessons
from other Countries

• Dr Alistair M. Brett
• Senior Consultant
• Oxford Innovation Ltd
• Oxford, UK
• Opinions expressed are those of the presenter

2
Numbers Trends Opportunities

• Information sources
• The Industrial Research Institute
• European Industrial Research Management
  Association
• Centre for Research on Innovation and Competition
• Institute of Innovation Research
• Manchester University
• Nottingham University Business School
• Association of University Technology Managers

3
A few numbers (2001)
UK USA
Total university spending on research 2.8 109 31 109
Income from licenses 24 million 1.07 109
Average income per license 150,000 168,000
Spin-out companies 175 494
Patents 276 3,721
Commercialisation successes initiated by personal contacts 70
4
Russian Academy of Sciences RDCCs

• Pilot Research Development Commercialisation
  Centre (RDCC) at Chernoglovka Science Centre,
  Moscow Region 2001 2004
• Work supported by the British Council and UK
  Foreign Commonwealth Office
• Based on previous work since 1994 (USAID, Tacis,
  BC, Eurasia Foundation)
• RDCC accepted as model for Russian Academy of
  Sciences research institutes
• Problems Structure, Financing

5
Lessons learned

• Be patient
• Make and maintain personal contacts with
  companies large and small
• Set up open communications
• Dont fall in love with the technology
• Offer solutions not technologies
• Work on multiple projects simultaneously
• Keep new projects in the pipeline

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Lessons learned (2)

• Ownership rules for IP must be clear
• Government funding of research is important
• Industry-directed research at universities does
  not damage scholarship
• Plan for commercialisation early
• manage risk
• One success is better than years of plans
• Monitor costs, including indirect costs

7
Trends

• Motorola
• We are moving more and more of our research off
  shore because of unavailability of the top
  researchers that we needed in growing our
  research efforts
• Survey (2003) of 104 large US/European companies,
  90 said innovation is integral to our current
  strategic goals
• Nokia
• We have 18,000 engineers at 69 sites worldwide
• Infineum (Exxon-Shell)
• We want access to networks of scientists

8
Trends

• RD, products, becoming more complex, more
  embedded knowledge
• Reputation and track record in managing projects
  are more important than cost
• Build long-term strategic partnerships with
  networks of specialists across borders
• Stimulate methods development
• Access to specialized resources rather than
  finished technologies

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Role of Innovation in firms
Industrial Research Institute (IRI) Biggest Problems Facing Technology Leaders in 2003 Industrial Research Institute (IRI) Biggest Problems Facing Technology Leaders in 2003
Growing the business through innovation (acquisition and co-development) 41
Accelerating innovation 12
Balancing long-term/short-term RD objectives and focus 12
Measuring and improving RD productivity and effectiveness 5
New business ventures 3
Improving knowledge management 2
Management of global RD 1
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Opportunities for Latvia

• Take advantage of the trend towards distributed
  RD
• Reduce bureaucracy compared to other countries
• Establish clear point of contact for industry at
  each university
• Support exchanges of scientists between
  universities and industry
• Work with existing Latvian organizations
• Advertise Latvian successes to gain new industry
  customers

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Mis-match of supply and demand

• UK/USA Other

Supply Demand
Supply Demand
12
Positioning strategies

• Feasibility studies Few long-term
• Prototype development benefits
• Internal investment in both More long-term R
  and D to progress benefitsbeyond prototypes

External Investment
Industry
13
Management of intellectual property
inpublicly-funded research organisationsTowards
European Guidelines

• Open Science model - PROs do not retain any
  intellectual property rights (IPR)
• Licensing Model - PROs retain, protect and
  commercialise inventions through licensing the
  IPR to industry and to start-up companies
• Innovation Model PROs have active policy of
  collaborative research with industry and a
  pro-active involvement in the creation of spinout
  companies.

14
Importance of technology transfer factors

• N 150 1 2 3 4 5
  6

Person to person contact
User pull for technology
Product champion at user
Cooperative activities between user/developer
Sense of common purpose
Developer understanding of user environment
15
What drives market opportunities?
effect
Survey of 1000 European firms
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Why Latvia?

• Why should a company look to Latvia to access
  research expertise or outsource RD?
• Is Latvian research of any value, is it
  innovative?
• How can we overcome barriers of language,
  culture, distance?
• Will the cooperative RD be carried out
  efficiently?
• Will our companys IPR be protected?
• How can investors make a return on investment?

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What do Investors want from universities and
research institutes?

• Show me -- dont tell me
• Promote successful ventures
• Recent cases of successful contracts or
  alliances
• Is there a market for the technology?
• What is the size of the market?
• How should the market be entered?
• What are your industrial contacts?
• Finished technology or expertise?
• How will the investor make money?
• Risks?
• How much money is needed?

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Issues

1. Feasibility of conducting technology audits
   at Latvian universities and institutes, or  
2. Accessing and promoting expertise at Latvian
   universities and institutes, previously
   identified and evaluated by the institute 
3. Promoting technologies, expertise, and resources
   from Latvian universities and institutes
   to foreign companies. Industrial Liaison
   Office model Web Portal

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Issues

• Promoting success stories
• Analyse existing contracts with Western companies
  for attractiveness to investors 
• Selecting a small number of companies who can act
  as "bridges" between universities/institutes
  and foreign companies
• Strategies for Latvian Government investment in
  technology commercialisation
• Incentives for innovation, and retention of young
  scientists 
• The "Why Latvia?" question. What is Latvia's
  competitive advantage?  

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Strategic drivers of RD outsourcing

• New markets
• New technologies
• Access to IP
• Access to new specialist expertise
• Filling capability gaps
• Resources flexibility
• Management of risk
• Time to market
• Focus on core activities
• Build on core strategic assets

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Overall New Product Development process
Fuzzy front end
New product development
Traditional Stage Gate Process
Technology Stage Gate Process
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New Product Development Stage Gate Process
Market/customerinput
Preliminaryassessment
Full productlaunch
Testing validation
Businesscase
Development
Gate
Stage
Decision onbusinesscase
Post-developmentreview
Post-commercialanalysis
Post-implementationreview
Initialscreen
Nextscreens
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Six Elements of the Stage Gate Process
TR1 TR2 TR3
Technology Review Committee
Technology Review Process
ProjectCharter
ProcessOwner
New Member joins
Current member leaves
Planning
Technology Development Team
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Tech Stage Gate Process
Stage 2
Gate 2
Gate 1
Stage 1
Technology Review 1
Technology Review 2
Technology Review N
Stage 1 Activities Technical literature
searchPatent and IP searchCompetitive
alternativesResource gapsPlan for feasibility
assessmentExperimental workAnalysis and
interpretationDevelop action plan for Stage
2 Deliverables Understanding of IP
situationDemonstrate feasibilityResults of
experiments
Stage 2 Activities Perform technical workAnalyse
and report resultsCompetitive assessmentEnvironm
ental assessmentCommercial product
possibilitiesPreliminary market
assessmentPreliminary manufacturing
assessmentDevelop action plan for Stage
2 Deliverables Results of feasibility
experimental workResults of commercial
application assessmentForward planning
25
Bio-fuels Stage Gate Process
Reduced risk Increased costs
Technology audits
Otherideas
COMMERCIALTRACK
Seedprojects
2
3
4
5
1
Preliminaryinvestigation
Detailedinvestigation
Commerciallaunch
Development
Validation
B
A
C
Exploratory Research
DevelopmentResearch
Outsideideas
RESEARCH TRACK
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Expected Commercial Value (ECV)
PV
Pcs
Commercialise C
Pts
Development D
ECV
Commercial failure
Technical failure
ECV ( PV Pcs - C) Pts - D
ECV Expected Commercial Value of the
project Pts Probability of technical
success Pcs Probability of commercial
success D Development costs remaining in
the project C Commercialisation costs
PV Present value of projects future
earnings (discounted to today)
27
Risk-Reward Bubble Diagram
Pts
High
10M 8 6 4 2
0 NPV
Low