Oxford Innovation Ltd 2003 Technology Commercialisation Practical Lessons from other Countries Dr...

Oxford Innovation Ltd 2003

Technology Commercialisation Practical Lessons from other Countries

Dr Alistair M. Brett

Senior ConsultantOxford Innovation Ltd

Oxford, UK

Opinions expressed are those of the presenter


Numbers Trends Opportunities

Information sources:

The Industrial Research InstituteEuropean Industrial Research Management AssociationCentre for Research on Innovation and CompetitionInstitute of Innovation ResearchManchester UniversityNottingham University Business SchoolAssociation of University Technology Managers


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%


Russian Academy of Sciences: R&DCCs

Pilot Research & Development Commercialisation Centre (R&DCC) 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)

R&DCC accepted as model for Russian Academy of Sciences research institutes

Problems: Structure, Financing


Lessons learned

Be patient

Make and maintain personal contacts with companies – large and small

Set up open communications

Don’t fall in love with the technology

Offer solutions not technologies

Work on multiple projects simultaneously

Keep new projects in the “pipeline”


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


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”


Trends

R&D, 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


Role of Innovation in firms

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 R&D objectives and focus

12 %

Measuring and improving R&D productivity and effectiveness

5 %

New business ventures 3 %

Improving knowledge management 2 %

Management of global R&D 1 %


Opportunities for Latvia

Take advantage of the trend towards distributed R&D

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


Mis-match of supply and demand

UK/USA Other

Supply Demand Supply Demand


Positioning strategies

Feasibility studies Few long-termPrototype development benefits

Internal investment in both More long-term “R” and “D” to progress benefitsbeyond prototypes

IndustryExternal Investment


“Management of intellectual property inpublicly-funded research organisations:

Towards 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.


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


What drives market opportunities?

0

10

20

30

40

50

60

changes incustomer

needs

changes intechnology

new geographicmarkets

changes inregulations

Survey of 1000 European firms

% effect


Why Latvia?

Why should a company look to Latvia to access research expertise or outsource R&D?

Is Latvian research of any value, is it innovative?

How can we overcome barriers of language, culture, distance?

Will the cooperative R&D be carried out efficiently?

Will our company’s IPR be protected?

How can investors make a return on investment?


What do Investors want from universities and research institutes?

“Show me” -- don’t 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?


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


Issues

4. Promoting success stories5. Analyse existing contracts with Western

companies for attractiveness to investors 6. Selecting a small number of companies who can

act as "bridges" between universities/institutes and foreign companies

7. Strategies for Latvian Government investment in technology commercialisation

8. Incentives for innovation, and retention of young scientists

9. The "Why Latvia?" question. What is Latvia's competitive advantage?


Strategic drivers of R&D 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


Fuzzy front end New product development

Traditional Stage Gate™ Process

Technology Stage Gate™ Process

Overall New Product Development process


Gate Stage

New Product Development Stage Gate™ Process

Market/customerinput

Preliminaryassessment

Full productlaunch

Testing &validation

DevelopmentBusinesscase

Initialscreen

Nextscreens

Decision onbusinesscase

Post-developmentreview

Post-commercialanalysis

Post-implementationreview


ProjectCharter

Six Elements of the Stage Gate™ Process

TR1 TR2 TR3 ……

Technology Development Team

Technology Review Committee

Planning

ProcessOwner

Technology Review Process

New Member joins

Current member leaves


Gate 2 Stage 2Gate 1 Stage 1

Tech Stage Gate™ Process

Technology Review 1

Technology Review 2

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 assessmentEnvironmental assessmentCommercial product possibilitiesPreliminary market assessmentPreliminary manufacturing assessmentDevelop action plan for Stage 2

Deliverables

Results of feasibility experimental workResults of commercial application assessmentForward planning

Technology

Review N


2 3 4 5Preliminaryinvestigation1

Technology audits

Otherideas

Seedprojects

Detailedinvestigation

Development Validation Commerciallaunch

Exploratory Research BA Development

Research C

RESEARCH TRACK

COMMERCIALTRACK

Outsideideas

Bio-fuels Stage Gate™ Process

Reduced risk Increased costs


Development$ D

Commercialise$ C

$ ECV

Pts

Technical failure

$ ECV = [($ PV * Pcs - $ C) * Pts - $ D]

Pcs

$ PV

Commercial failure

$ 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 project’s future earnings (discounted to today)

Expected Commercial Value (ECV)


High

Low

$10M 8 6 4 2 0 NPV

Pts

Risk-Reward Bubble Diagram

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