The imperative of commercializing university research
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An overview of why technology commercialization is important for those undertaking research in universities - insights into why the current process is broken and some insights into new apporaches.
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The imperative of commercializing university research
- 1. Importance of Commercializing University Research Role of Innovation Andrew Maxwell P.Eng.
- 3. Why is Innovation Important? It Supports Research Activity
- 4. Universities accountable to communitiesWhy is Innovation Important?
- 5. Why is Innovation Important?There is a Moral Imperative
- 6. Incremental vs. disruptive innovation
- 7. 80% of University TTOs operate at a loss What is the problem?92% of disruptive innovations never reach first customer 75% of university TTO activities focus on licensing
- 9. Root cause analysis 8. Researchers don’t have required commercialization expertise 9. Researchers not motivated to achieve commercial success 10. Research designed to resolve a technical problem - not commercialization 6. Flawed assumptions about initial customers and their adoption decisions 7. Flawed assumptions about technology features and applications 5. Commercialization process only starts after the research is finished 3. Commercialization is a function undertaken by TTOs not innovators 4. Incorrect assumptions about the business model likely to succeed 1. Limited resources to reduce technology risk before customer adoption 2. Technology design does not sufficiently consider customer needs
- 10. Isn’t this why we have Design Thinking?
- 11. Design Thinking Technology Centric Using Technology as a Competitive Advantage Epicentres of Innovation
- 12. Creative Problem Solving Process (CPS) DesignThinking StageGate RealOptions, PortfolioApproaches Jobs-to-be-Done InnovationAdoption &-Diffusion, Behaviors Epicentersof Innovation, BusinessModels LeanStartup CompetitiveAdvantage Approaches used at Different Stages of Innovation Journey
- 13. TechConnect - Technology Driven – Customer Centric
- 14. What jobs can the technology do?
- 15. What is the compelling value proposition?
- 16. How can you use a new business model to overcome barriers to adoption?
- 17. Future research?
- 18. “Making your mark on the world is hard. If it were easy, everybody would do it. But it's not. It takes patience, it takes commitment, and it comes with plenty of failure along the way. The real test is not whether you avoid this failure, because you won't. it's whether you let it harden or shame you into inaction, or whether you learn from it.” Barrack Obama Reflection
Editor's Notes
- Today I would like to talk about innovation and specifically the type of innovation that derives from university research. I want to talk about why it’s important, to explain why we are doing a bad job and why this should be of concern to everyone working in an academic research environment. I will then share with you my problem finding research and provides insights into solutions that are now being adopted at York and around the world. I will explain how we are gathering information on the effectiveness of this approach, and how the insights we are gathering set up the next phase of this research.
- Let me start by talking about why innovation is important, which of course requires me to first define what innovation is….. “Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs.” wikipedia
- Innovation, as it applies to the commercialization of university research is important for three reasons: Supports research activity NSERC Discovery grant “NSERC wording -Proposed research program is clearly presented, is extremely original and innovative and is likely to have impact by leading to groundbreaking advances in the area and/or leading to a technology or policy that addresses socioeconomic or environmental needs.” NSERC STRATEGIC Partnership Grants “It is expected that these grants will generate new knowledge/technology with the strong potential to strengthen Canada’s industrial base, generate wealth, create employment and/or influence Canadian public policy” Innovation is important in the research context, as research commercialization or translation) is increasingly a component of the funding process, as funding agencies are under increasing pressure to demonstrate the return on investment from academic research.
- Universities are adapting their roll in local communities to become drivers of regional economic activity, jobs, wealth creation and investment. This is in part a response to the financial constraints under which they are operating, and partly due to the increasing importance of innovation in a globally connected knowledge economy, where universities can be viewed as nodes on a global network. While the single most important role of Universities remains educating undergraduates and creating highly qualified graduates – there is a growing recognition of the importance of creating local employment opportunities. Increasingly in the knowledge economy, companies created by local university graduates, or linked to university research, represent an important component of this community building role. Interestingly, there is increasing recognition that venture creation has a greater positive long-term impact on universities than licensing.
- New technologies have an increasingly important role to play in addressing the Grand Challenges for society. Yet, as I will discuss in a minute, most (90%) of new technologies are never adopted by users and simply remain on the lab shelf, or hidden away in academic papers. Given the challenges we face, and the investment made in research which produces limited results, the idea that we have solutions, releasing the underutilized potential of these innovations becomes a moral imperative, and to some extent a key element that motivated my research.
- Before discussing the nature of the problem, the challenges we face, and identifying some solutions, it is important to recognize that there are two fundamentally different types of innovation – incremental innovation and disruptive innovation. As the differences between the two highlight some of the false assumptions and challenges associated with technology commercialization. The difference between incremental innovation, which offer slight improvements in performance over existing technologies, and disruptive innovation, which offer new levels of performance, and often create levels of performance that enable new applications and markets – is the impact each has on how people behave. Incremental innovation primarily replace an existing technology solution, to offer slightly enhanced features or increased benefits. Most importantly, they require minimal changes in the way the technologies are offered to users, or in how users adopt the new technology. In contrast, disruptive innovations, are called disruptive because they disrupt the marketplace, creating new products, services, processes and business models – and changing, in fact disrupting, what people and organizations do, and how they behave. It is this focus on behaviours that offers a key insight into the challenges of technology commercialization and the poor success rates – and offers some pointers for my embedded research approach
- Evidence of the problem can be seen in three simple pieces of data: - 92% of disruptive innovations that emerge from research never reach a first customer - 80% of university technology transfer offices operate at a loss - 75% of university commercialization activity focuses on licensing In combination, we can conclude that: - either most research is not suitable for use by customers, or that we do not know how to offer it in a way that attracts users - that university TTOs are not designed or resourced to achieve rates of success that enable them to achieve commercial viability - that there is a disconnect between university licensing activities and the increasing focus on building regional economic activity This sets up the fundamental problem – what causes this poor performance?
- Embedded research is an approach where direct involvement in the process is designed to improved outcomes, and results are extended and linked to theory to develop new insights and approaches with practical imlications.
- As anyone taking my undergraduate class will know, the most important aspect of creative problem solving is to identify the problem you are trying to address and specifically the root causes of this problem. In my case, and based on evidence I gathered in three years at the University of Toronto’s Innovation Foundation, and subsequently, I identified ten root causes. 10. Research designed to resolve a technical problem - not commercialization 9. Researchers not motivated to achieve commercial success 8. Researchers don’t have required commercialization expertise 7. Flawed assumptions about technology features and applications 6. Flawed assumptions about initial customers and their adoption decisions 5. Commercialization process only starts after the research is finished 4. Incorrect assumptions about the business model likely to succeed 3. Commercialization is a function under taken by TTOs not innovators 2. Technology design does not sufficiently consider customer needs 1. Limited resources to reduce technology risk before customer
- Before explaining Tech-Connect our Technology Driven – Customer Centric Approach, it is worth explaining why other approaches to this challenge are less than effective. Specifically, most of these approaches, often characterised as Lean StartUp or Design Thinking. Each of these approach is called a customer centric approach, designed to help you better understand the customer and anticipate the customer needs. Why this provides a great driver from a business perspective, it ignores a fundamental issue, that better understanding customer needs does not automatically put you in the best position to address them. This explains why our approach always starts from the technology, and either the development of a proprietary technology, or an enhanced understanding of the application of a new technology, that creates a competitive advantage. Embedding competitive advantage into your technology business gives you the competitive advantage that you will likely need for commercial success. Only after you have understood this and identified the jobs your novel technology can do, can you use a design thinking approach to better understand the user/customer and anticipate how they are likely to behave.
- Our approach, designed to be deployed in parallel with the technology development process, provides a series of interventions, or stages, asking fundamental questions about the technology at each stage. Based on the answers to these questions, the innovator can decide to continue on to the next stage of the process, kill the project or pivot. Pivoting usually involves: changing the application, changing the form of the technology, or changing the business model. I will explain three of the challenge stages to help explain why each involves a potential pivot:
- In general – innovators assume a specific application for their technology, without considering other technology applications. For example, LED lights were originally designed to save energy, but their long-life, and IP controllability, allowed them to be installed on the outside of buildings for decoration. This moved the product from a replacement product for existing bulbs (with a much less frequent replacement time) to create new markets – where the technology can be used to fulfil a different job. Attacking this external building market requires a fundamental difference approach to marketing replacement high-efficiency bulbs. This is important – as in the case of disruptive technologies, a first user will be more motivated to adopted, when there are no direct alternatives
- We define the value proposition of a new technology as the motivation for a user to adopt the new technology, based on assessing the sum of all the benefits adopting that technology (financial, security, reliability and emotional benefits) minus all of the costs associated with adoption (costs, risk, ….). Importantly, as most of us are unwilling to change behaviours – due to innovation inertia – adoption by a user requires a compelling value proposition that makes the adoption decision easy, it must also offer more value than the other innovation projects the user is currently considering.
- The third step I want to mention, is the idea that trying an innovative solution in a large organization is a lot more complex than persuading a single user. In fact, as we know from strategic selling, there are multiple stakeholders who may influence the adoption decision. We often forget impact that financial person can have on a purchase decision, or the influence of health and safety on the decision to adopt a new piece of equipment. Analyzing each of the stakeholders, and identifying their barriers to adoption, might suggest alternate business models that would be more likely to be successful. For example, concerns about the reputational risk of trying a new technology might be addressed by purchasing the technology through a partner, while reliability concerns might be addressed by a try-before you-buy approach. Overcoming barriers to adoption, can often be addressed by an alternate business model, which can mean that the technology itself has to be modified.
- Deploy the process across Universities in Canada and US Build innovation labs in larger companies to both learn more about the adoption decision, to stimulate innovation within these companies – and to create receptor capacity for university research.