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Technology Commercialization Strategy
- 1. 1 Technology Commercialization Strategy ForR&D Institutions Prepared by: Dr. Chulho Park Vice President Strategic Business Insights cpark@sbi-i.com October 2015
- 2. 2 Business Models forTechnology Commercialization
- 3. 3 Classical Role ofUniversity TTO Fundamental Science Basic Research Applied Research Product Development Production University R&D Tech transfer office New companies and licenses Don’t know compelling market or customer needs Lack of interest and resource for application development Mostly individual, small group or distributed research Don’t know/understand state- of-art emerging technologies Technology is not matured for commercialization yet Single IP is not good enough for business development Gap Standard process Administrative Little recognition Risk averse Source: SRI International
- 4. 4 Role of CROand GRO ─ Value Creation Centers Must bridge the entire R&D spectrum Translation science & engineering research Business opportunity idea generation Technology maturation fund IP management and bundling Start-up acceleration fund and service Business incubation fund and service Fundamental Science Basic Research Applied Research Product Development Production University R&D Value creation center New companies and licenses CRO, GRO R&D Source: SRI, SBI
- 5. 5 Key Success Factorsfor Value Creation Centers Fundamental Science Basic Research Applied Research Product Development Production University R&D Value creation center New companies and licenses Aligning technologies with customer needs through product/service Create innovative culture Recruit diversified talent Provide education and practical training Develop innovation principles & process Incentivize start-up and biz incubation Develop mentor (champion) program Source: SRI, SBI
- 6. 6 New Strategic Visionand Alignment with Corporate Strategy and Businesses Business Model for Accomplishing the Value Creation Objectives R&D Activities and IP Management R&D Planning UnlockingUnlocking Existing Intellectual Property22 InventingInventing with a Purpose11 AcquiringAcquiring External Know-How33 CollaboratingCollaborating with Outside Partners44 UnlockingUnlocking Existing Intellectual Property22 InventingInventing with a Purpose11 AcquiringAcquiring External Know-How33 CollaboratingCollaborating with Outside Partners44 Commercialization Activities Commercialization Planning Royalty Equity Revenue IPs IP & $ LicensingLicensing Existing Intellectual Property33 Creating a SpinCreating a Spin--offoff with a Strategy22 Contract ResearchContract Research for Commercializationfor Commercialization44 ConsultingConsulting with Internal Know-How55 Technology/IP TransferTechnology/IP Transfer to SBU or its R&D11 LicensingLicensing Existing Intellectual Property33 LicensingLicensing Existing Intellectual Property33 Creating a SpinCreating a Spin--offoff with a Strategy22Creating a SpinCreating a Spin--offoff with a Strategy22 Contract ResearchContract Research for Commercializationfor Commercialization44 Contract ResearchContract Research for Commercializationfor Commercialization44 ConsultingConsulting with Internal Know-How55 ConsultingConsulting with Internal Know-How55 Technology/IP TransferTechnology/IP Transfer to SBU or its R&D11Technology/IP TransferTechnology/IP Transfer to SBU or its R&D11 Revenue
- 7. 7 Licensing Model Worth Active Marketing? Royalty Licensing Opportunity No Yes Marketing Plan& Strategy Passive Licensing From Spin-off Technology Venture Model Active Licensing
- 8. 8 Spin-off Technology VentureIncubation Model Creating spin-offs requires strong, small development teams. Need Internal Incubation? Spin-off Venture Opportunity Yes No Spin-off New Company Internal Virtual Spin-off Exit Strategy? Sell Spin-off Company Initial Public Offering M&A Ready to Spin-off? Yes Not Ready Fail Demolish team and send staff back to R&D Create a New R&D Lab Active Licensing No Other Options Develop Eng. & Consulting Services
- 9. 9 Technology isnot matured yet for commercialization Need to protect potential new business from IP disputes ─ File patents to protect your right to use for commercialization ─ Find ways to avoid potential patent infringement dispute Unclear target market or application/product Need to demonstrate commercial feasibility or viability Have to provide continuous (on-site) support from its lab such as materials, equipment, and technical support Difficult to find potential investors for a spin-off venture Needs for Internal Incubation Maximize value and reduce risk for technology commercialization
- 10. 10 Quick Check ofReadiness for Spin-off Venture Demand Technology Competition Who are the customers? Why do they buy (needs)? Market size and growth rate? How much are they willing to pay? Will the technology be ready? Is the technology competitive? What is the technical risk? What is the cost? What are differentiation factors? What are competitive advantages? Are they sustainable in long-term? Commercial Success Readiness = RDemand x RTechnology x RCompetition x RStrategic-Fit Must pass the four tests: Will there be markets? Can we make it? Will we be competitive? Does it fit to our strategy? Strategic Fit Sustainable Leadership Does this fit with our strategy? Are we capable of executing this? What is the long-term profitability?
- 11. 11 Funds Required toExecute Spin-off Strategy Need Internal Incubation? Spin-off Venture Opportunity Yes No Spin-off New Company Internal Virtual Spin-off Exit Strategy? Sell Spin-off Company Initial Public Offering M&A Ready to Spin-off? Yes Not Ready Fail Demolish team and send staff back to R&D Create a New R&D Lab Active Licensing No Other Options Develop Eng. & Consulting Services Venture & Licensing Fund CV Fund if available, and VC Funds VC Funds VC Funds R&D Fund Creating spin-offs requires strong development teams.
- 12. 12 Systematic Approach ofBudgets and Funds to Realize Value Potential Patents & Know-How Business Thrusts Royalties, Ventures, or Large Contracts R&D Projects Major Program Potential InvestmentsandValue Illustrative Only Angel Fund Venture & Licensing Budget Strategic Investment Fund Idea Generation Budget Idea Generation Budget Venture Capital Fund Internal Fund External Fund Source: SRI, SBI
- 13. 13 Concentrate resources(capital, R&D, commercialization) on a few selected areas Identify innovation connected to market needs Criteria should include — commercializable, capable, and competitive Develop technical and business “Champions” Pursue an aggressive IP strategy • Strategic patents • Patent ownership Success Factors Related to Business Model
- 14. 14 Case Example: SRI’s FiveDiscipline for Technology Innovation Important Needs Value Creation Innovation Champions Innovation Teams Organizational Alignment Important Client Needs Champions Value Improvement Organizational Alignment SuccessInnovation Teams Source: SRI
- 15. 15 Some Examples ofSRI’s Spin-off Ventures Customer Service Tools* DTV TechnologiesVideo Enhancement Systems LCD technology*Iris Biometric Identification* Panoramic Image Editing Software* DTV Equipment* VOD Services** Secure Content Distribution Wireless mesh networks Virtual Personal Assistant* iPad App, Smart Travel Guide* Speech Recognition for Customer Service Publicly Traded Web App; Real-time Video Streaming & Sharing Content Curation Platform Mobile Productivity App MPEG-4 Compliant Encoding & Authoring Tool Gaming Platform For Children Enterprise Social Media* Electronic Signature Solutions Live Video Insertion System* Mobile Virtual Personal Assistant Technology for K-12 Education *Acquired or merged ** Dissolved Personal Contents Summary* Information Technology Robotics: Electroadhesion Robotics Surgical Robotics Publicly Traded Next-Gen Robot Arms* Anti-counterfeiting Systems Ceramics for Electronics * Portable Power Systems** Optical Network Components Electroactive Polymers* Next-generation Fuel Cells** Publicly Traded Flexible Circuit Materials & Components HQ Phosphor Solutions For LED Lighting* Advanced Materials Nano-porous Material Based Natural Gas Storage Systems Liquid Membrane Separation For Chiral Molecules** Digital Color Printing Applications** Biotechnology/Medical Surgical Robotics Publicly Traded Genetic Profiling Drug Dispensing System* Medical Systems Drug Discovery Disposable Hearing Aid* Drug Development Simplified Diabetes Management Bed Bug Detection Products Business Consulting Business Intelligence & Consulting Services Publications & Consulting Services* IT Consulting Services* Source: SRI
- 16. 16 Case Example: IMEC ResearchPrograms for the Industry Eco System Source: IMEC
- 17. 17 Biz Models andSpin-off Ventures of IMEC IMEC’s Business Model Source: IMEC
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- 19. 19 SBI’s Integrated Frameworkfor Technology Management and Commercialization (R&BD) Knowledge of External Drivers and Dynamics Infrastructure: Organization, Resources, Processes Technology Planning R&D Project Management Business Vision and Strategy • Benchmarking • Scenarios • Market Research • Competitive Analysis Technology Portfolio Planning Project Portfolio Selection Budgeting and Resource Allocation Project Initiation Project Execution Project Management • Management Diagnostic • Structure and Teaming • HR Management • IT & Knowledge Management • Cycle-Time Management • External Network Management Ideation Technology Acquisition Strategy Project Closeout • SWOT Analysis • Technology Intelligence Knowledge of External Drivers and Dynamics Infrastructure: Organization, Resources, Processes • Benchmarking • Scenarios • Market Research • Competitive Analysis • Management Diagnostic • Structure and Teaming • Profit Sharing Model • Business Plan and Model • Venture Financing • External Expert Management • SWOT Analysis • Technology Intelligence Intellectual Property Management Value Creation and Management Technology Valuation IP Portfolio Planning Budgeting & Resource Allocation Technology Licensing Venture Creation Sell, M&A, JV, Alliance Ideation Technology Commercialzn Strategy Internal Use Return on Investment Technology and Intellectual Property Creating IP Assets Turning IP Assets into Value Technology Management Commercialization ManagementIP Management
- 20. 20 Basic Functions ofTechnology Management and Commercialization Technology (R&D) Strategy & Planning R&D Project Management Intellectual Property Management Commercialization Strategy & Planning Commercialization Management Technology (R&D) Management (Creating IP Assets) Technology Commercialization (Turning IP Assets into Value)
- 21. 21 Technology Commercialization Activities IPPortfolio Planning & Management Patent Process Management Technology Commercialization Strategy Licensing Venture Start-up & Incubation Patent Research, Market Research, & Opportunity Search There are many strategic considerations on organizing IP planning and management as well as technology commercialization including licensing and venturing Organizations should be evolutionarily restructured in accordance with changes in strategy, goals, and external environments In general, there are many organizational alternatives to be considered including outsourcing and collaboration.
- 22. 22 Commercialization Process andResponsibility Technology/IP for Commercialization IP Management Technology Transfer (Licensing) Venture Start-up Incubation Support Commercialization Committee Licensing Committee Active Licensing Passive Licensing Licensing Venturing Venture Start-ups Commercialization Strategy
- 23. 23 Alternative Organizational Structures IP Management Technology Transfer(Licensing) Commercial Development Center Commercialization Strategy Venture Start-up Incubation Support Option-3 IP Management Technology Transfer (Licensing) Commercial Development Center Commercialization Strategy Venture Start-up Incubation Support IP Management Technology Transfer (Licensing) Commercial Development Center Commercialization Strategy Venture Start-up Incubation Support Option-3 IP Management IP Management Commercial Development Commercialization Strategy Technology Licensing Venture Start-up Incubation Support Option-2 IP Management IP Management Commercial Development Commercialization Strategy Technology Licensing Venture Start-up Incubation Support IP Management IP Management Commercial Development Commercialization Strategy Technology Licensing Venture Start-up Incubation Support IP Management IP Management Commercial Development Commercialization Strategy Technology Licensing Venture Start-up Incubation Support Option-2 Option-1 Commercial Management IP Management Commercialization Strategy Commercial Development Technology Licensing Technology Licensing Venture Start-up Incubation Support Commercial Management IP Management Commercialization Strategy Commercial Development Technology Licensing Technology Licensing Venture Start-up Incubation Support Option-1
- 24. 24 Centralize oversightof commercialization processes and add Venture Start-up for its own technology commercialization – Leverage resource and database in IP management, IT support, and knowledge management for commercialization activities Assign new business development responsibility to each R&D unit to spearhead commercial efforts – Will scan and identify innovative and marketable technologies within each R&D unit – Will involve each R&D unit commercialization strategy decision making Create a Commercialization Supervisory Board of senior executives as a forum for decision making and oversight – Will act as senior advisors and decision makers; Will assume Board seats on start-ups or joint ventures Review (and modify, as needed) patent/IP policy, profit sharing model, R&D project management systems to expedite technology commercialization activities Recommended Approach at Establishing Stage
- 25. 25 Venture Start-up Teamshould be led by the office head and at least 2 to 4 staff members (in early/beginning stage): Manage small portfolio of opportunities into start-ups – Commercial business development plan and strategy – Coordination of R&D, venture planning, market research, and commercial development – Valuation of emerging technologies and business potential For each selected opportunity: – Development of business plan – Launching new venture – Venture incubation: hiring new staff, venture financing – Management of venture business – Establishment of networks of technical, legal, accounting, consulting, and venture finance experts Formation of Venture Start-up Team
- 26. 26 Organization for CommercializationSupervision Commercialization Supervisory Board (CSB): – Form the Board with 3 to 5 senior officers – Approve portfolio strategy – Preview and approve all venture activities and major licensing deals – Allocate seed funds – Hire CEOs for new ventures – Resolve conflicts among stakeholders R&D Org. Commercial Development Center Commercialization Supervisory Board R&D Divisions R&D Planning & Management Spin-off Ventures Holding Company (Subsidiary)
- 27. 27 Case Examples: VentureBoard Composition SRI: Commercialization Supervisory Board (CSB) – CEO, CFO, VP of Business Development, One of its R&D Division Head (VP), President of SRI Holdings P&G: P&G Innovation Leadership Team (ILT) – CEO, CTO, and One of its global business unit presidents Lucent: Venture board of the New Venture Group (NVG) – President of the NVG division, and 3 VPs, act as the partnership for the internal venture capital firm Nortel Networks: Business Venture Group (BVG) – BVG members, some executives of its SBUs, and outside experts 3M: No corporate-wide venture board – The Corporate Enterprises Development (CED) organization had the leadership
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- 29. 29 Basic Requirements forProfit Sharing Model Encourage researchers to conduct innovative, disruptive, high- impact research Create new culture of technology commercialization and commercial business development through innovation Sustain the top management’s commitment to successful technology commercialization Encourage the technology commercialization team to build a profitable, financially sustainable, and self-motivated organization Provide significant rewards to inventors Retain rewarded inventors and keep them focused on innovative R&D Comply with government regulations Minimize potential conflicts among stakeholders
- 30. 30 The profitsharing policy must have clearly defined rules The profit sharing process must be perceived as fair The policy must be subject to government The company should recover out-of-pocket expenses incurred in producing the royalty/equity income before sharing profits For each allocation, the company must conduct a detailed review of all facts and provide supporting documentation such as written R&D proposals and Lab notes The company must implement a process for an independent review of distributions by a compensation committee of the board: – Approve compensation and supervise execution – Decide compensation of top management (e.g., CEO, CTO, CFO, and VPs) – Resolve conflicts among stakeholders regarding compensation. Implementation of a Profit Sharing Model
- 31. 31 Recommended Distribution andApproval Process for Profit Sharing VP of R&D Div appoints knowledgeable Lead (PI) to recommend allocations Lead develops list of participants, their contributions, and relative % contribution (except the Lead’s %) VP recommends distribution %s, Lead’s %, expenses, and reserve, if any HR distributes the list and top management team reviews recommendations for completeness CEO reviews with top management team the final distributions, expenses, and reserve, if any Compensation Committee reviews and approves distributions, expenses, and reserve, if any
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- 33. 33 Institutional Financial Support Regional Economic Growth World Impact Individual Rewards Objectives of TechnologyCommercialization World-Class Think-tank & Innovator Retain top scientists and engineers Attract new talented technical staff Diversify income sources Increase incomes Prepare rainy days Develop self-sustainable institution Contribute to develop local economy Create a local venture valley Improve national competitiveness Invent innovative, high-impact technologies Demonstrate big success in commercialization Establish centers of excellence Develop world-class reputation Nurture culture of commercialization Increase income sources Achieve financial independence Attract more R&D funds Become a world-class R&D institute Source: SRI, SBI
- 34. 34 Companies Represent aRange of the Commercialization Continuum Passive Licensing Fee for Services Active Licensing Start-up Promotion Venture Incubation Source: SRI
- 35. 35 Technology Commercialization ManagementDiagnostic Identifies the Needs and Leverage Points for Improvement Value Creation • Licensing • Start-ups • Incubating • IPOs Value Creation • Licensing • Start-ups • Incubating • IPOs
- 36. 36 Recommended Strategic Principlesin Technology Commercialization Recommendations Build consensus internally and externally for proactive, strategic technology commercialization Go slow initially Build skills, processes first Spin-off technology ventures are preferred over licensing to maximize value creation Create some early success stories New performance measurement and profit sharing models are needed Typical Situation Require cultural change Need new skills and experience Align with R&D planning needed Have limited capital availability Comply with the government and company regulation and supervision Require legal/policy changes to support various technology commercialization activities and profit sharing