Transcript Innovation

L4: Partnering
EC10 Innovation & Commercialisation
Acquiring and managing relationships
within a technology based business.
Marcus Thompson
[email protected]
Partnering Outline
 Screening
the Idea
 Licensing & Joint Ventures
 Technology Transfer
 Exit Routes
4. PartneringL1: Team Building
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1. Screening The Idea
Finding the Idea
Opportunities & Ideas
"An opportunity has the qualities of being
attractive, durable, and timely and is anchored in
a product or service which creates or adds value
for a buyer or and user" (Timmons 1999).
"Those situations in which new goods, services,
raw materials and organising methods can he
introduced and sold at greater than their cost of
production " (Casson 1982).
An idea which may be a "Plan formed in the
mind by thinking" (Oxford dictionary 1981)
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Entrepreneurs & Inventors
Finding or spotting a viable business ideas
is as much an art, or matter of luck, as the
use of systematic techniques.
the starting point for developing new
business ideas lies inside the prospective
entrepreneur rather than in the
marketplace, laboratory, business plan
inventors and innovators do not
necessarily make good business people.
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Idea generation
Most of the worlds most successful
entrepreneurs do not have a EUREKA moment.
They grasp concepts and deliver them to
customers in a more profitable way than others.
They find customers who are unfulfilled.
–
–
–
–
Cheaper ways of making or selling existing products.
Delivering an existing product in a new way.
Identifying an unfulfilled market niche, or local market.
Inventing a new product that people need.
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Idea generation
Observations:
– Necessity is the mother of invention.
– Learn how businesses operate – work in them first.
– Learn from other successful people or experts.
– Learn about products from all over the world.
– Consider markets where products do not exist.
– Very few will invent and patent; don’t be precious.
– Always challenge assumptions and status quo.
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Putting A different Light on Things
The idea of a lighted flower pot may strike us as pretty humorous, but it was the answer to a
lifelong struggle for a Russian immigrant named Conrad Hubert. Hubert came to the
United States in 1890 when he was about 35 years old. He was flat broke. He did what
he could to earn a living. He worked in a cigar store, ran a restaurant for a while and
managed a boarding house. He even tried fanning and repairing watches. Whatever he
did, however, he never made much money. All he wanted was to stop worrying about
making ends meet. Now Hubert had a friend named Joshua Lionel Cowen who was very
interested in electricity. Joshua had invented a flower pot with a battery in it. Electricity
from the battery made the flower "light up" when a button was pressed. Hubert decided
he would try to sell these flower pots. Meanwhile, Joshua became interested in
something new, electric trains and he sold his friend the flower pot idea for almost
nothing.
Fortunately, Hubert never went ahead with the flower pots because he had had an idea for a
modification. He took the battery, the bulb and the paper tube from the pot and remade it
into what he called "an electric hand torch." Hubert sold his invention at first as a
novelty, but the usefulness of the flashlight soon became apparent. When he died in
1928 it must have seemed to Hubert a long time ago that he was poor. He was worth
$8,000,000.
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Six Stages to Evaluating an
Idea
The Audit
The strategic audit addresses where are you are now and where are you
going. It deals with ways to build on your (internal) strengths while
minimising your weaknesses and also identifies the opportunities and
converts threats that your business faces. From the audit a set of
objectives is defined which guides the growth and direction that the
business is to take. An Audit may raise uncomfortable issues but it will
also address how to overcome barriers to growth of which you may not
(yet) be aware!
Customer Survey
The next stage is a Customers Survey to find out what potential customers
really think of your idea and what else they would like. It is always a
mistake to assume they you already know about your customer wants
and needs. If questions are asked, interesting opportunities arise!
The trick is to know how to choose and how to ask customers the right
questions. Ask the wrong question you get the wrong answer and this
leads to the wrong conclusion!
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The Six Stages
Repositioning
– Once information has been gathered it is analysed and the results are
used to reposition the business in terms of its customers and the
competition. Our approach, which can include existing and potential
customers, will allow you to “segment” customers into groups. Care is
taken to develop a method to record, on an on-going basis, customers’
needs and wants.
Targeting
– The fourth stage is to use all this information to target the different
groups of customers with the messages that they want to hear. This
means mixing and matching different types of media whilst making sure
that a coherent and consistent approach is adopted. Our approach
means that there is less wastage because information is targeted and
also because there are a number of ways the promotions industry uses
to keep costs down. The Promotions Strategy will aim to take account
of existing promotional material and it will include direct marketing.
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Six Stages
Delivery
The next session concentrates on maximising your
resources. Particular attention is made to ensuring
that your company develops multi-channel methods
to deliver and monitor its services.
Market Plan
Finally the information is gathered together into a
working Marketing Plan. The Plan combines the
findings from the audit, customer survey and
promotions strategy into a single source for
growing the customer base profitably.
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Creativity & Conflict
One common way managers kill creativity is by assembling
homogeneous teams. The lure to do so is great. Homogeneous
teams often reach “solutions” more quickly and with less friction
along the way. These teams often report high morale, too. But
homogeneous teams do little to enhance expertise and creative
thinking. Everyone comes to the table with a similar mind-set. They
leave with the same”.
Amabile, T, “How to Kill Creativity”, HBR, Sept - Oct 1998, pp 77 85,
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Creative Thinking
“But the truth is that the winning strategies
are smart, innovative and original, and
break the rules, and most times there is
someone somewhere who has seen
through conventions and traditional
assumptions to create a new business
idea" Piercy 2002, p 269
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2. Licensing
& Joint
Ventures
Building an International
Network
Uncertainty in Technology Environments
Technological
uncertainty
Sources of
Uncertainty
Market
uncertainty
Selection process for
standards and dominant
designs emerge is complex
and difficult to predict,
e.g. future of 3G
Customer acceptance and
adoption rates of innovations
notoriously difficult to
predict, e.g. centrino, i-pod,
Wi-fi, video conferencing
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Risk in Technology Environments
Cooperating with lead users
early identification of customer requirements
–assistance in new product development
Strategies
For
Managing
Risk
Limiting risk exposure
—avoid major capital commitments
(e.g. lease don’t buy)
—outsource
—alliances to access other firms’
resources & capabilities
—keep debt low
Flexibility
—use speed of response to adapt
quickly to new information
—learn from mistakes
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To Lead or to Follow

Is innovation appropriable and
protectable against imitation?
– If so, advantages in leadership.

Is owning/ controlling industry
standard critical to competitive
advantage?
– If so, advantage in being a leader.

The role of complementary resources.
– Followers may be able to avoid investing
in complementary resources due to
better- established industry
infrastructure.
– Firms possessing portfolio/resources
have the luxury of waiting.
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The Profitability of Innovation
Legal protection/IPR.
Organisational resources.
Expected
Return on
Investment
Value set against
cost structure
Imitability of the technology.
Turbulence/Churn.
Ability to
communicate the
value of the
innovation to
target customers.
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Global Drivers.
Window of Opportunity.
Time to Market.
Endorsements.
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Assessing Emerging Opportunities
Process is interactive – each
cycle refines the opportunity
Information
Market Characteristics
Product Characteristics
Buyer Characteristics
Analysis
Synthesis
Critical relationships
Key Success Factors
Refine Critical
relationships
Wickham, Strategic Marketing, Pitman, p158, 1998
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New Opportunity
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Uppusala Model

A sequential process of functional migration
based on a firm’s
‘.. Gradual acquisition, integration & use of
knowledge about foreign markets & operations,
and on its successively increasing commitment to
foreign markets..’
.. Its about learning
.. To overcome ‘psychic distance’
.. Over time, firms enter foreign markets
with greater psychic distance
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Networks & Collaborations
 Firms
not seen as bounded legal
entities
 Instead as a complex set of ‘exchange
relationships’
within & outwith the firm
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Networks & Collaborations…
 Existing
used to:
relationships are resources
– develop exchange relationships with
‘actors’ in new networks
– to make the firm’s own resources
interdependent with resources of firms
in other networks or areas
– Internationalization develops from the
co-operative development of new
exchange relationships
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Drivers for Internationalisation
Product Scope
Geographic Scope
NARROW
BROAD
Restricted
National
Market
Narrow Niche
Strategy
National Broadbased Strategy
International
International
Niche Strategy
International
Broad-based
Strategy
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Need for Globalization
in Production
Bartlett & Goshal’s
Identification of Needs model
Need for National
Responsiveness in Selling
HIGH
LOW
LOW
HIGH
Globalization
Strategy
Mixed Strategy:
Mixed Strategy:
International
Standardization
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think global; act local
National
Responsiveness
Strategy
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Foreign Direct Investment (FDI)
 Greatest
Control (supposedly)
 Greatest Direct Investment Cost
 Massive local knowledge requirement
 Greenfield & Acquisition alternatives
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Joint Ventures
 Control
achieved through joint
ownership (supposedly)
 Variable Direct Investment Cost
 Local knowledge requirement can be
lessened (depending on partner)
 Many alternatives of structure/
organization possible
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Contractual Agreements
 Some
Control retained, according to
contract
 Low or negative cost possible
 Can avoid local knowledge need
 Many alternatives of structure/
organization possible
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Licensing / Franchising
 Some
Control retained, according to
contract
 Low or negative cost possible
 Can avoid local knowledge need
 Many alternatives of structure/
organization possible
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Exporting through
Distributors / Agents
Little
Control retained
Low cost, low reward
Explicitly avoids local
knowledge need
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3. Technology Transfer
Sources of Innovation and their
diffusion from pure science to
commercial product
Technology Perspectives
 Technology Innovations
– exploitation of new ideas – incorporating new
technologies, design and best practice is the
key business.
 Commercial Innovation
– Venture management strategies and structures
that bring these new technologies to market.
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Commercial Innovation
 Commercial Innovation is about doing things new or
different (from your competitors).
 It is a management process that centres on being creative
& visionary.
 It presents itself as the ability to filter and then
commercialise.
 It applies to:
– new products
– new business practices
– new market applications
 These are the skills of the entrepreneur. Are they
the skills of the scientist?
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Innovation Triggers
 Push Innovation.
– Where an organisation is already active in a market and needs to
maintain competitive advantage. Here the innovator can be a
prisoner to their own R&D Success. Ideally this form should be
continuous. Downside - can be product-centred organisation.
Upside is that it is sustainable model.
 Pull innovation.
– Where an emerging technology allows innovations to exceed what
a customer thought was possible. These are quantum scientific
leaps. These are the real scientific innovations. These are
disruptive innovations.
– Downside - the pull innovation is discontinuous and extremely
risky. Discontinuous innovation can also be a one product wonder.
SME’s or Corporates??
 This is where the venture management skills comes in.
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Measuring Innovations
 Distinctiveness
– A distinctive innovation rewrites the rules.
 How is this innovation distinct from other ideas that have
historically emerged?
 Is it the first of its kind in any form?
 Is it the first successful implementation?
 Companies should also ask questions that help us understand if
the “rules of the game” really have been rewritten:
 Does your innovation make others react to what you have
created and now offer?
 Are others forced to make changes based on your actions?
 Does this innovation change the basis of competition?
Chen, E, Kai-ling Ho, 2001
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Measuring Innovation
 Impact
– Impact differentiates the innovations from the
mere inventions.
 Is a company only dealing with primary impact? Or is
it also valuing the effects of the innovation beyond
the scope of its primary customers and achieving
secondary impact?
 Is a company evaluating measurable impact today as
well as the future potential impact?
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Technology Transfer
 Tech transfer is the flavour of the decade:
– EU White Paper on Growth Competitiveness and
Employment
– EU Green Paper on Innovation
– DTI Competitiveness White Paper
– HEFCE Reviews of University-Industry Linkages
– Lambert Review
– Regional initiatives – PoC, RSE Fellowships
– ‘Entrepreneurship’ initiatives – EHE, Science Enterprise
Challenge
– The ‘third income stream’ debate
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Non Conformity
 New and small firms are not a homogeneous
group with equal enthusiasm, ability,
resources or inclination to grow.
 Whilst new and small firm sector in aggregate
continues to make a significant contribution to
the total employment pool, the aggregate
data masks a highly skewed distribution.
 Whilst most firms employ a few people, only a
few provide significant employment.
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Industry Collaboration
 All focus on closer links (both actual and
desired) between universities, industry and
government, and all essentially predicated
on a view that increased UIC is a ‘good
thing’
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UNIVERSITIES & Technology?

Calls to reinterpret the role of the
university as a:
Hotbed of entrepreneurship
 Locus of economic development
 Agent of regional transformation

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SEN Policy Towards Academics

“If you are an academic, or academic researcher, working in one of Scotland's
higher education institutions, NHS trusts or research establishments, Scottish
Enterprise can help you to bring your work to the marketplace.
– Proof of Concept Programme funding to early-stage ideas that have typically
reached patent level, and could lead to the creation of new businesses, or the
licensing of innovative technologies.
– Enterprise Fellowship programme, funded by Scottish Enterprise and delivered by
the Royal Society of Edinburgh, helps individual academic researchers to develop
spin-out companies.
– The University of Edinburgh Stanford University link aims to help establish Scotland
as a global leader in the commercial development of language technology.
– Kelvin Institute aims to transform the ground-breaking research taking place in
participating universities today into high-value, commercial, innovative solutions,
delivering substantial benefits to everyone involved.
– These initiatives are a part of Scottish Enterprise's commitment to increase the flow
of good ideas from the research base into Scottish industry and commerce.
– We also part fund Technology Ventures Scotland which was set up to provide a
strategic and overarching role in encouraging the commercialisation of Scotland's
Science and Technology base.”
http://www.scottish-enterprise.com/sedotcom_home/sig/academics.htm
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University Technology Issues
 Three issues
– The technology transfer process
 What is it and what drives it?
– The spin-out company process
 Organising early stage technology development
– The entrepreneurial curriculum
 Rethinking the basis for learning in universities?
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Technology transfer agenda
 Focus on commercialisation of
scientific and technical knowledge
– Instrumental – ‘tax dollars have paid for
this’
– Principled – ‘we ought to make an
economic contribution (or, ‘save the
planet’)’
– Utilitarian – ‘we need a return on
expenditure on research’
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FORMS OF COMMERCIALISATION
 Commercialisation and technology transfer
takes many forms:
– Licensing technology
– Spinout company formation
– Collaborative research and TT projects
– Faculty/student/industry exchange and
internship programs
– Consultancy/applied research
– Teaching, education and outreach programs
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WHY TECH TRANSFER?
 Funding (especially to replace reduced
government core funding)
 access to new ideas and techniques
 improved contribution to economic needs of region
 broaden researchers’ experience
 improve quality of research: firms as ‘efficient
testing instruments’
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THE BARRIERS TO TT







Lack of internal resources - individual staff
Lack of internal resources - institutional
RAE and the ‘publish or perish’ culture
Lack of academic recognition for collaborative activities
Culture gap: researchers vs industrialists
Priority conflict: publish vs protect IPR
Attitude of business (SMEs especially) - ivory tower
stereotype
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INDUSTRIAL PARTNERS
 Lack of commercial awareness (markets,
timescales) by academics
 Short-term problem solving emphasis by industry
(tech transfer is not always ‘leading edge’)
 ‘Culture shock’ in terms of university timescales
and project management
 Mismatch between absorptive capacity of local
industry and the knowledge/technology available
for transfer
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IMPLICATIONS
 Most effective forms of technology transfer are
consulting and contract research - improved
efficiency of collaboration
 Need for improved ‘marketing’ of tech transfer
activities and support internally and externally
 Review ‘reward and recognition’ for involvement in
tech transfer
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4. Exit Routes
Conflicts & Power within a
Channel
 Traditional Channel Management is about
dominance.
 Stern and E1 Ansary (1988):
 Power is the ability of one channel member to get
another channel member to do what the latter
would not otherwise have done. Power is the
inverse of dependence: the more highly
dependent one channel member is on another,
the more power the latter has relative to the
former.
 New paradigm – Trade Marketing = win-win
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 Partnering
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 TM as a common effort by suppliers and
retailers to optimize relations and harmonize
resources so as to better serve the consumer
and/or try and achieve mutual economies of
scale... It is a question of the supplier
considering the retailer as a customer, with all
that that involves. The retailer is no longer a
mere subcontractor, he has become a partner
– and more than a partner, he has become a
customer and should be treated as such.
Marc Dupuis and Elisabeth Tissier-Desbordes, (1996) Trade marketing and retailing: a European approach,, ESCP, Paris Graduate School of
Management, 79 av. de la R~publique, 75011 Paris, France.
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Supply Chain Management
 an emphasis on joint reduction in channel
inventories;
 a focus on channel-wide cost efficiencies;
 a long-term horizon;
 a information sharing as required for
planning and monitoring processes;
 an emphasis on speed of inventory
operations and information;
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Alternatives for Exploiting Innovation
Licensing
Risk &
Return
small investment
risk, but small
returns also
limited (unless
patent position
strong) Some
legal risks
Limits capital
investment, but
may create
dependence on
supplies/partner
s
Few
Permits
accessing of
outside
resources and
capabilities
Konica
licensing its
digital camera
to Hewlett
Packard
Pixar’s computer
animated movies (e.g.
“Toy Story”) marketed
and distributed by
Disney Co.
Competing
Resources
Examples
Outsourcing
certain
functions
Strategic
Alliance
Joint
Venture
Internal
Commercialisation
Benefits of
flexibility,
risks of
informal
structure
Shares
investment and
risk. Risk of
partner
disagreement
and culture
clash
Biggest investment
requirement and
corresponding risks.
Benefits of control
Permits pooling of the
resources and capabilities
of more than one firm
Apple and
Sharp build
the “Newton”
PDA
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Substantial
requirements in
terms of finance,
production capability,
marketing capability,
distribution, etc.
Microsoft and TI divestment of
NBC formed
its Digital Signal
MSNBC
Processing
Chips
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Route Adopted
Directorship
Form a management team, raise finance and launch.
Licensing
Level
Commercial arrangement through which licensor of IPR allows licensee to develop
sell or use in return for a royalty payment.
of
Control
Assignation
Sell rights and transfer the ownership of the invention and IPR to third party for lump
sum.
Joint Venture & Partnerships
Collaboration with one or more organisations to exploit IPR. Includes sharing of costs
and revenues.
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To Lead or to Follow
 Is innovation appropriable and protectable
against imitation?
 If so, advantages in leadership.
 Is owning/ controlling industry standard
critical to competitive advantage?
 If so, advantage in being a leader.
 The role of complementary resources.
 Followers may be able to avoid investing in
complementary resources due to betterestablished industry infrastructure.
 Firms possessing portfolio/resources have the
luxury of waiting.
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Assessing Emerging
Opportunities
Process is interactive – each
cycle refines the opportunity
Information
Market Characteristics
Product Characteristics
Buyer Characteristics
Analysis
Synthesis
Critical relationships
Key Success Factors
Refine Critical
relationships
Wickham, Strategic Marketing, Pitman, p158, 1998
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New Opportunity
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Going to Market
Value Definition
Analytical
Information
Behavioural
Interpreting
Understanding
Organisational
Learning
Value Development
Operations
Motivation
Value Delivery
Logistics/
Supply Chain
Attitudes
Behaviour
Responsiveness
Reinvention
Process of Going to Market
Customer Value
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