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en90-crawford-TECHNOLOGY-TRANSFER.ppt
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- 2. What is TechnologyTransfer? The technology transfer process helps a manufacturing company more effectively use its human, physical, and capital resources by providing knowledge, information, or assistance, which leads to improvements in its facility, equipment, manufacturing methods, management methods, or marketing methods.
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- 4. Simple Example • Incrediblethat people a million years ago invented the wheel that would be useful for so long. They saw the need for such a device that would make certain tasks easier – invention. • Someone needed to device a way to utilize the wheel – innovation • Turn idea into reality and implement other ideas to use the wheel – design • Further developments need promotion and device/idea needs to be disseminated - diffusion
- 5. Inventions Some are nothingmore than scientific curiosity for years before being transformed into a working device, prototype, or product Aluminum (H. Saite-Claire Deville, 1854) Total Internal Reflection (William Wheeler, 1881) Theory of Lasing (A. Einstein, 1917) Utensils, mast for sailboats window frames – late 1950’s Fiber Optics 1971 First I Prototype Gas discharge laser 1950 100 Years 90 Years 43 Years
- 6. Inventions Some inventions haveimmediate appeal X-Rays (1895 – William Rontgen) Few Years 1900’s Used in Medical Profession
- 7. Inventions Some Inventions areforced The ‘need’ preceded the product Nothing happened 35 years 1940’s successful need WWII Radar (Patent, 1914) unworkable
- 8. Inventions The need proceededthe product – another example The vacuum tube was bulky, fragile, power hungry, and had lifetime issues – it was inherently unreliable The need for a transistor existed long before its invention Bell laboratories poured money into it resulting in the first patent of the resistor (1940) In 1951, the first point – contact transistor was manufactured
- 9. The complicated pathof Invention Total internal reflection, W. Wheeler, 1981 Long uniform quartz fibers; Boys, 1887 Bundles of glass Fibers; Baird, 1927 Cladding on fibers Van Hell, 1952 Guiding output of cathode discharge lamps; Reeves, 1950 Laser, 1960’s Theory of attenuation resulting from impurities, Kao and Hockman 1960 Minimum attenuation losses achieved Maurer, 1970 TODAY – Telecommunications, Medicine, dentistry, displays
- 10. A Fundamental Questionof Technology Transfer • Why do inventions, in some cases, take so long to reach the market place? • What factors govern the time lag between invention and application? In today’s marketplace, speed to market dictates success or failure
- 11. Innovation This period ofdevelopment is characterized by INNOVATION! Invention Product
- 12. Innovation vs. Invention •Invention = Original Concept • Innovation = the development, refinement, and change of an existing idea / product • E.g. easier to manufacture, Cheaper to Fabricate, Better Performance, More reliable
- 13. Then and Now •The wheel has been improved over thousands of years – improvements evolved slowly • Consumer Electronics Industry, time to market: 1980 = 1.5 years 1990 < 1 year • Today, there is a lot more effort on conscious design and modeling
- 14. Design • Design ispart of the innovation process, sophisticated modeling and software shaves years off the development process • Many issues can be identified during the modeling stage, before prototyping – saves time and money
- 15. Diffusion • Sometimes referredto as marketing, – everything that is involved in the promotion and sale of the product • Also important is promotion by use of publication • Users and customers have important input on how to improve or refine the product • Can conflict with IP
- 16. Relationship – Invention, Innovation,Design, and Diffusion Naïve Model - Linear Invention Innovation Design Diffusion What’s Wrong with this Model? • Feedback from each stage • No real beginning and end, invention is often continuous
- 17. Realistic Model Innovation –Embrace the entire Process Technology Transfer – Means to achieve innovation Invention Technology transfer Design Diffusion Innovation Embraces the entire process
- 18. Some Working Definitions •Technology Transfer The transactions between changing technology and invention, innovation, production, and diffusion • Innovation – The exploitation of new ideas
- 19. Reasons to Innovate •Competition – Keep ahead of Competitors • Science & Technology – Technological change can be the result of science push and changes in the science and technology base lead to product innovation • Market – Customer feedback influences innovation leading to product improvements • Legislation – Government can force innovation (e.g. safety, environment, economic Policy) • Human Nature – Curiosity “what happens if I do this…?”; Laziness “There must be an easier way to do this”
- 20. Innovation as aPolicy • Innovation does not guarantee success, but a lack of it will ultimately lead to failure • Innovation and invention are integral and key to many companies (e.g., Philips, 3M) • Each year Nissan holds a competition for its employees to come up with a novel form of transport • Innovation is policy, change is inevitable and in part is driven from within the company. The company is not simply waiting to respond to one another of the external proximal cases, but is itself a vehicle for change.
- 21. Benefits to Innovation Apartfrom innovate to survive; • Competitive Advantage • Increased Market Share • Higher Growth Rates
- 22. 1 RCA HughesTI TI TI Motorola 2 Sylvania Transitron Fairchild Fairchild Motorola TI 3 GE Philco Motorola National National NEC 4 Ratheon Sylvania GI Intel Intel Hitachi 5 Westinghouse TI GE Motorola NEC National 6 Amperex GE RCA Rockwell Fairchild Toshiba 7 Nat Video RCA Sprague GI Hitachi Intel 8 Rawland Westinghouse Philco/Ford RCA Signetics Philips 9 Eimac Motorola Transitron Philips Mostek Fujitsu 10 Lansdale Clevite Raytheon Amer’Micro Toshiba Fairchild Manufacturing Companies 1945 - 1982 1965 1950 1955 (Semi- 1975 1980 1982 Rank (Vacuum Tube) (Transistor) conductor)
- 23. Information • Inventors andInnovators need information available to them • Knowledge – Base information – often academic and abstract, contained in journals, scientific magazine, patents, and at conferences. – Ex. Transmission of light through a glass fiber is limited by impurities in the glass rather than inherent properties of glass. This was published in an archival journal, but did lead glass manufacturers to improve the quality of glass by reducing impurities – this paved the way for fiber optics
- 24. Information Skills based information– information acquired by doing something. It’s hands-on experience. Skills learned by training and participation. Go to another institution where the skills are practiced, or skilled personnel can be brought in.
- 25. Information Equipment based knowledge– Knowledge conveyed via products/devices. Knowing what machine tools are available and what they do, what merchandise is available in the marketplace and what features it has. Also conveyed in trade journals, magazines, and conventions. Another information channel is through sales reps, advertising, other companies, etc.
- 26. Technology • Technology iskey to economic growth and international competition • Research must be exploited to produce new products / devices • Technology transfer becomes vital, especially today when time-to-market is key to success • Scientific push is usually not an engine for technology transfer • Science often predates its application by decades • Without scientific curiosity, there would be no technology transfer • With continual invention and innovation, technology will become outdated
- 27. Technology Transfer Process IBMgrants a license to the government of Taiwan – the computer corporation undertakes a transfer of knowledge. French cheese maker passes on recipes to Japanese firms – transfer of knowledge Brown University organizes a short-course – transfer of educational and technology information The flow of information and knowledge are various and wide ranging. Flow of information
- 28. Innovation Process Checklist TechnologyTransfer is a subject of Innovation Identify Technology Evaluate Technology Secure Technology Protect Technology Prototype Technology Awareness Training Product Specific Training
- 29. Barriers to Innovation •Management Attitude: Upper level management does not embrace change easily • R&D effectiveness: Needs to be continuous, not discretely when a new product is needed • Short Term Pressures: Companies take a short term perspective by not investing in higher risk, long term payoffs • Resistance to Change: Same-old, same-old; comfortable with current position • Poor Information Flow: Need to maximize flow of information around the company… poor information flow hinders technology transfer • Weak Links: Good idea’s products can be destroyed by poor marketing or not listening to customers
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- 31. Where do Iget Market Information? Customers 89% Business contacts 82% Competitors 82% Suppliers 74% Employees 70% Trade representatives 67% Business affiliates 63% Industry experts 60% Manufacturer’s salesforce 59% Social networks 48% Friends 48% Subcontractors 41% Consultants 33% Family members 30%
- 32. Impersonal Sources ofInformation Trade magazines 96% Sales brochure 70% Advertising 63% National newspapers 60% General magazines 56% Journals 56% Local newspapers 52% Manufacturer materials 52% Catalogs 51% Annual reports 41% Government publications 22%
- 33. Innovation: Value toCompany • Increased Competitive Advantage • Improvement in Quality • Cost Savings • More Flexibility • Better Service to Customers • Reduction in lead times Companies with strong investments in innovation tend to achieve better cash flows and earnings performances R&D correlates with long term growth
- 34. Information Collection • Wellorganized approach for monitoring technological and scientific intelligence • Good R&D organization to encourage information flow (both internal and external) • Accurate Knowledge of the company’s own technological position and capabilities (technology reviews and audits) • Efficiently organized information on markets and competitors
- 35. Research and Development HitachiModel (Japan) Independent Research • Basic Research plus elementary technological research • At advanced research lab, central research lab, and the nine corporate labs • Funded by head office – long range research strategy
- 36. Hitachi Model (cont.) CommissionedResearch • New Product Development • At Central and Corporate Labs • Sponsored by business unit, factory, subsidiary companies Product Improvement • In the development departments at the factory • Funded by factory
- 37. How much tospend on R&D Company % Sales on R&D Country Cannon 11% Japan 3M 7% US Philips 3% Netherlands The norm of US companies is about 3% A small company (like yours) needs to define a research policy
- 38. Assessing Technology Assessing futuretechnological innovations is usually done in a technology review or audit 3 Parts 1. What is the competitors Technology (what do they got?) 2. Review companies own Technology (“what do we got?”) 3. Review what state-of-the-art Technology (“what could we have”)
- 39. Technology Portfolio Technology Importance BusinessAttractiveness Low Position High Importance A High Position High Importance B C Low Position Low Importance D High Position Low Importance A: Attractive Business, not much competitive position, use R& D Resources to gain competitive advantage B: Attractive Business, good competitive advantage. Company should sustain funding and resources, be prepared for counter attack C: Poor Position, company should not use resources here D: Mixed, not important technology for company, move to cell B or eliminate
- 40. Market Potential • IdentifyingPotential Customers • Recording Data • Classifying External Influences • Analyzing Results This can help dictate R&D resources
- 41. Benchmarking Benchmarking results helpunderstand the amount of changes required to set strategic targets and guide planning efforts. There are four types of benchmarking. Internal: Comparison of Internal Operations Competitive: Competitor-to-Competitor comparisons for products/services of interest Functional: Comparisons to similar functions – with the same broad industry or to industrial leaders Generic: Comparisons of business processes on functions that are very similar regardless of industry
- 42. Searching for Technology •Very few small to medium size companies will have the necessary expertise or R&D resources and infrastructure to provide new technology. • Companies that want to develop something must be able to find other organizations that can help them • Information is key to finding new technologies • Companies must know where they can go to find information on products, research activities, finance, IP, etc. • How can a small company leverage off of a university?
- 43. Using Higher EducationResearch and Development Universities can often help small and big companies with R&D. The University often offers much cheaper rates than a private research company. • Access to new technology (A lot of pie in the sky stuff) • Keep abreast of new developments • Access consultancy skills • Professors are possible technical board members • Develop joint new technology, benefits both.
- 44. Linking Organizations toEducational Establishments Forming Links 1. Graduate Employment – companies hire graduates and create a natural link back to their alma mater 2. Sabbaticals – Companies hire university professors to work on-site for a year or semester to bolster in-house expertise (pretty cheap) 3. Industry/University Research Units – Organized research units where focused groups at the university partner with companies (e.g. in the US, NSF, MRSEC). Companies gain access to professors, students, and earn results 4. University/Industry Liaison Units – Universities are creating internal organizations that are in charge of protecting and developing valuable new technologies to be transferred to industry. At Brown, the campus based technology transfer unit is BURF, Brown University Research Foundation. University Industry
- 45. University – IndustryPartnership Product ideas, real world perspective, focused problems, prototyping facilities, market experience New results, interesting devices, research with seemingly no applications, professors, and students
- 46. Paths of TechnologyTransfer Government Funding University research Invention Campus-based technology transfer group Funding University research Invention Campus- based technology transfer group option Option to exclusive right Company w Company x Company z No exclusive right Exclusive right to use it Company x Exclusive right to use Company w Company x Company z Company y no
- 47. Company to CompanyTransfer • Private companies with R&D facilities ‘produce’ a lot of innovative ideas that they may or may not patent or develop. These ideas may not be in their business plan, not within their core competencies, or returns are too small. These ideas may be suitable for another company. • A small company company acquired by a big company or selling off its technology to a big company • Inter-Company transfers. Your idea is now being transferred to products group or manufacturing.
- 48. Company to CompanyTransfer Company x research Innovation idea Company SB Small Business Company x products group Innovation idea Spin-off of Company X Company Y buys technology Company Z buys company SB on right to invention
- 49. Collaborations between Companies Agreements fororganizations to work together • Alliances • Networks • Cooperatives • Collaboration These arrangements could be with suppliers, customers, and even competitors Many times manufacturers form alliances to work together but retain their individual brand names.
- 50. Technical Partnerships Another formof technology transfer is through technology / engineering collaborations to increase their expertise by sharing knowledge, skill, and personnel. What is the goal of a technology collaboration? - To improve the Innovation Process
- 51. Why Collaborate? If youare faced with a problem that you cannot solve yourself – technical, financial, or commercial problem: • To share risks • To share costs • To gain technological know how • To speed up product development • To develop industry standards •To gain additional markets • Reduce time-to-market
- 52. Barriers to Transfer Whathinders technology transfer and what cause joint projects to fail? • Lack of awareness – what technologies are available to them • Lack of knowledge – If staff of company is lacking technical knowledge, it may not be able to capitalize on the technology being offered in the transfer • Lack of funds – company may not be able to afford the development costs of the technology being transferred • Lack of common interests – Individuals putting the interests of their own company ahead of the alliance • Conflict of interest – Even in collaborations on the technical level or strong, it has been found that collaborations between competing companies doesn’t work.
- 53. Barriers to Transfer(cont.) • Lack of Trust – If little trust exists between companies, it is doomed to fail • Poor communications – Fail to keep each abreast on everything relevant to the collaboration, activities, thoughts, processes, goals, direction of venture • Lack of infrastructure – company may lack equipment and facility in infrastructure to take on the transfer • Over-committed – The company may be over- committed on current projects and simply lacks the time needed for success.
- 54. Barriers – WithRegard to Collaboration • Technical Problems – which are generally overcome, but which add time and money and frustration • Resource Limitation – Poor budget control • Change in Project’s Structure – Loss of key members or loss of partner • Organizational Problems – due to a partner losing or changing interest in the technological side.
- 55. Evaluating the Technology Largecompanies solicit proposal on new and innovative ideas. There will be well defined criteria for the assessment of new proposals • Is proposal consistent with company strategy • Any synergy with existing efforts on projects • Have the risks, advantages, potential payoffs, and implications been considered in detail Proposals may be evaluated by internal or external reviewers For small companies, startups, they are contained in business plans.
- 56. Financing Innovation • Hasmajor influence through innovation process and technology transfer • Before funding is obtained, costs and benefits need to be thoroughly analyzed • What is the payback period?
- 57. Protecting Technology IP playsa vital role in technology transfer. Those interested I the technology will want to hear that there is a strong IP position. If others have IP that is close to yours, this may muddy the waters! • Patents • Trade-Secrets • Trademarks • Copyrights • Confidential Information The Importance of IP cannot be over-emphasized
- 58. To Prototype orNot To Prototype, That is the Question By prototyping you can minimize risk and uncertainty at the expense of cost and time Identify issues and potential problems Expensive and time consuming Save money & Time to market Could miss design flaw, for example Prototype No Prototype Advantages Disadvantages
- 59. Prototyping Assists in thefollowing areas • Planning of implementation • Feasibility • Clarification of necessary requirements • Explore Options • Improve product • Improve understanding • Verify Design • Explore maintenance issues
- 60. Prototyping Risks • Increasedtime-to-market (increased development) • Prototyping too early • Insufficient testing of materials (components) • Lack of knowledge in new technical environment
- 61. Example of ResponseTime of New Product Development of Mechanical Transmission Develop design concept 2 3 Complete layout and design 1 3 Design review 1.5 1 Detail design 1 4 Manufacture prototypes 2.5 6 Pilot test and power test 1 2 Field test 4 8 Manufacture first product 4 7 Total Time 17 34
- 62. Prototypes A well designedprototype can help you market your idea to potential partners.
- 63. Determining the Valueof your Invention: License Agreement • Value – How much the licensor is entitled to as compensation from the licensee in exchange for licensing rights • Compensation (Royalty) – Income for the licensor at the expense of the licensee • How to arrive at a fair royalty: Many Models • Simple model to calculate impact on royalty rates and compensation by fixed dollar payments have differing effects on pricing behavior. (that doesn’t make sense, stacy…)
- 64. Royalties • Running Royaltyis most popular. The sharing of success, achieved through the distribution of profits – This is considered a good indication: – Profits: A share of 25% of profits • Profit is not an ideal metric to base royalty payments on because of the different accounting ways that can be represented. – Net Sales: A share of 5% of net sales
- 65. Royalty: % ofNet Sales (many models) • % may be constant • It might also decline beyond certain base levels as sales rise (incentive to licensee to promote sales) • Increase at higher volumes
- 66. Royalty Rate Payment •Often accomplished by up-front payment – License Fee • A minimum annual royalty payment Up front money serves a few purposes: • Immediate returns to licensor • Incentive for licensee to bring technology to market
- 67. Lump-sum Payment Sometimes royaltypayments are impractical • A process • The technology is a small part of a complicated system
- 68. Other Compensation 1. Royaltyfee for sub-licensees 2. Stocks 3. Equity (works for many small start-ups) (2) and (3) allow licensor to participate in profits and increased control of business
- 69. Ball Park Ranges IPRANGE Patent Licenses 0.2 – 35% Trade Secrets 0.2 – 15% Tabulated from biological, chemical, electrical, mechanical
- 70. Present Value ofRoyalty R(1+r)-n For the licensor, the investment is in the past Year Expected Royalty $1.00 Amount 1 $200,000 .91 $182,000 2 $200,000 .83 $165,000 3 $200,000 .75 $150,000 4 $200,000 .68 $137,000 5 $200,000 .62 $124,000 Total: $ 1 M $758,000 (Present value of royalty payments) r =10%
- 71. Fixed Sum Equivalentsof Running Royalty • If the market interest rate is 10%, this is the opportunity cost or rate that is forgone if the licensor elects a running royalty • Lump sum payments can be invested in the market
- 72. Simple Model forNegotiating Royalty • An array of considerations or variables judged to impact the royalty • Reasonable estimates on dollar valuations of the variables impacting the royalty • Weights impacting relative worth on the variables impacting royalty
- 73. Variable Affecting Royalties •Degree of Exclusivity (exclusive, non- exclusive) • Anticipated Net Sales • Type of License (Patent or know how) • Term of License • Terms of Licensee (guarantees, immunities, etc).
- 74. Royalty Rate Matrix-TypeArray Variables affecting royalty Bi(1) Bj(2) Ci(1) Cj(2) A1(1) B1(1) B1(2) C1(1) C1(2) A2(1) B2(1) B2(2) C2(1) C2(2) A3(1) B3(1) B3(2) C3(1) C3(2) Total Bi(1) Bj(2) Ci(1) = P Cj(2) $ Amt. assigned to variable New $ Amt. after negotiation P% beginning royalty New royalty after negotiation (2) (1) j i B xP B (2) ( (1)) (1) j i B x i B
- 75. Sample Calculation Variables affecting royalty Amt. Proposed Amt. Negot’d. Royalty Impact New Royalty Net Sales50,000 60,000 3.55 4.26 Exclusivity 30,000 30,000 2.25 2.25 Immunity from lawsuits (10,000) (10,000) (.70) (.70) New Product risk (heavy marketing) (20,000) (20,000) (1.45) (1.45) Patent 20,000 20,000 1.45 1.45 Total 70,000 80,000 5.00 5.71
- 76. Examine 1st Row A Variable Bi(1) Amt. Requested Bj(2) Amt. Negotiated Ci(1) RoyaltyImpact Cj(2) New Royalty Impact Net Sales 50,000 60,000 3.55 Bi(1)/Bi(1) * 5% = 50,000/70000 * 5% 4.26 Bj(2)/Bi(1)*Ci(1) = 60,000/50,000 * 3.55 TOTALS 70,000 80,000 5.0 5.71
- 77. Summary – TechnologyTransfer • Innovation and Technology transfer is exciting, but it is a complex process • Innovation and Technology transfer are a judicious mix of management and science, creativity with technology.