Technology Commercialisation - Ideas to Market

1. Technology Commercialisation- Ideas to Market A.M. Mubarak Director/CEO Industrial Technology Institute Theme 1- Technological Innovations: Setting the Stage for Commercialization

2. 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

3. Are we competitive globally? Global Competiveness Index 2011-2012

4. 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

5. Why Innovate? • Ice companies – Refrigerators • Western Union – AT&T • Ford – GM

6. 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

7. 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

8. 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

9. Technology commercialization is the process of taking newly developed technologies to the market for the purpose of profit Technology Commercialization

10. 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)

11. 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

12. 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

13. 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

14. 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

15. 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

16. Competence Auditing Particular product/market combinations are the fruit Products & processes = branches & trunks Core technological competences = deep roots from which products and processes grow

17. 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

18. 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

19. INNOVATION CONTINUUM – “S-curve” Commercial/Innovation Piloting/Demonstration Building Partnerships Feasibility/Development Concepts/Fundamentals

20. 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

21. 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

22. 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