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Technology Transfer Prof. Crawford EN 90. What is Technology Transfer? The technology transfer...

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Technology Transfer Prof. Crawford EN 90 Slide 2 What is Technology Transfer? 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. Slide 3 Technology Transfer Marketing (Diffusion) Innovation Design Invention Slide 4 Simple Example Incredible that 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 Slide 5 Inventions Some are nothing more 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 1950s Fiber Optics 1971 First I Prototype Gas discharge laser 1950 100 Years 90 Years 43 Years Slide 6 Inventions Some inventions have immediate appeal X-Rays (1895 William Rontgen) Few Years 1900s Used in Medical Profession Slide 7 Inventions Some Inventions are forced The need preceded the product Nothing happened 35 years 1940s successful need WWII Radar (Patent, 1914) unworkable Slide 8 Inventions The need proceeded the 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 Slide 9 The complicated path of 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, 1960s Theory of attenuation resulting from impurities, Kao and Hockman 1960 Minimum attenuation losses achieved Maurer, 1970 TODAY Telecommunications, Medicine, dentistry, displays Slide 10 A Fundamental Question of 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 todays marketplace, speed to market dictates success or failure Slide 11 Innovation This period of development is characterized by INNOVATION! Invention Product Slide 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 Slide 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 Slide 14 Design Design is part 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 Slide 15 Diffusion Sometimes referred to 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 Slide 16 Relationship Invention, Innovation, Design, and Diffusion Nave Model - Linear Invention Innovation Design Diffusion Whats Wrong with this Model? Feedback from each stage No real beginning and end, invention is often continuous Slide 17 Realistic Model Innovation Embrace the entire Process Technology Transfer Means to achieve innovation Invention Technology transfer Design Diffusion Innovation Embraces the entire process Slide 18 Some Working Definitions Technology TransferTechnology Transfer The transactions between changing technology and invention, innovation, production, and diffusion InnovationInnovation The exploitation of new ideas Slide 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 Slide 20 Innovation as a Policy 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. Slide 21 Benefits to Innovation Apart from innovate to survive; Competitive Advantage Increased Market Share Higher Growth Rates Slide 22 1RCA HughesTI TITI Motorola 2Sylvania TransitronFairchild FairchildMotorola TI 3GE PhilcoMotorola NationalNational NEC 4Ratheon SylvaniaGI IntelIntel Hitachi 5Westinghouse TIGE MotorolaNEC National 6Amperex GERCA Rockwell Fairchild Toshiba 7Nat Video RCA Sprague GI Hitachi Intel 8Rawland WestinghousePhilco/Ford RCA Signetics Philips 9Eimac Motorola Transitron Philips Mostek Fujitsu 10Lansdale CleviteRaytheon AmerMicro Toshiba Fairchild Manufacturing Companies 1945 - 1982 1965 1950 1955 (Semi- 1975 1980 1982 Rank (Vacuum Tube) (Transistor) conductor) Slide 23 Information Inventors and Innovators 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 Slide 24 Information Skills based information information acquired by doing something. Its 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. Slide 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. Slide 26 Technology Technology is key 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 Slide 27 Technology Transfer Process IBM grants 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 Slide 28 Innovation Process Checklist Technology Transfer is a subject of Innovation Identify Technology Evaluate Technology Secure Technology Protect Technology Prototype Technology Awareness Training Product Specific Training Slide 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 ideas products can be destroyed by poor marketing or not listening to customers Slide 30 Information Collection Slide 31 Where do I get Market Information? Customers89% Business contacts82% Competitors82% Suppliers74% Employees70% Trade representatives67% Business affiliates63% Industry experts 60% Manufacturers salesforce59% Social networks48% Friends48% Subcontractors41% Consultants33% Family members30% Slide 32 Impersonal Sources of Information Trade magazines96% Sales brochure70% Advertising63% National newspapers60% General magazines56% Journals56% Local newspapers52% Manufacturer materials 52% Catalogs51% Annual reports41% Government publications22% Slide 33 Innovation: Value to Company 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 Slide 34 Information Collection Well organized approach for monitoring technological and scientific intelligence Good R&D organization to encourage information flow (both internal and external) Accurate Knowledge of the companys own technological position and capabilities (technology reviews and audits) Efficiently organized information on markets and competitors Slide 35 Research and Development Hitachi Model (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 Slide 36 Hitachi Model (cont.) Commissioned Research 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 Slide 37 How much to spend on R&D Company% Sales on R&D Country Cannon11%Japan 3M7%US Philips3%Netherlands The norm of US companies is about 3% A small company (like yours) needs to define a research policy Slide 38 Assessing Technology Assessing future technological 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) Slide 39 Technology Portfolio Technology Importance Business Attractiveness 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 Slide 40 Market Potential Identifying Potential Customers Recording Data Classifying External Influences Analyzing Results This can help dictate R&D resources Slide 41 Benchmarking Benchmarking results help understand 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 Slide 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? Slide 43 Using Higher Education Research 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. Slide 44 Linking Organizations to Educational 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. UniversityIndustry Slide 45 University Industry Partnership Product ideas, real world perspective, focused problems, prototyping facilities, market experience New results, interesting devices, research with seemingly no applications, professors, and students Information Slide 46 Paths of Technology Transfer 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 no Slide 47 Company to Company Transfer 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. Slide 48 Company to Company Transfer 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 Slide 49 Collaborations between Companies Agreements for organizations 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. Slide 50 Technical Partnerships Another form of 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 Slide 51 Why Collaborate? If you are 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 Slide 52 Barriers to Transfer What hinders 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 doesnt work. Slide 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. Slide 54 Barriers With Regard to Collaboration Technical Problems which are generally overcome, but which add time and money and frustration Resource Limitation Poor budget control Change in Projects Structure Loss of key members or loss of partner Organizational Problems due to a partner losing or changing interest in the technological side. Slide 55 Evaluating the Technology Large companies 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. Slide 56 Financing Innovation Has major influence through innovation process and technology transfer Before funding is obtained, costs and benefits need to be thoroughly analyzed What is the payback period? Slide 57 Protecting Technology IP plays a 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 Slide 58 To Prototype or Not 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 AdvantagesDisadvantages Slide 59 Prototyping Assists in the following areas Planning of implementation Feasibility Clarification of necessary requirements Explore Options Improve product Improve understanding Verify Design Explore maintenance issues Slide 60 Prototyping Risks Increased time-to-market (increased development) Prototyping too early Insufficient testing of materials (components) Lack of knowledge in new technical environment Slide 61 Example of Response Time of New Product Development of Mechanical Transmission Develop design concept23 Complete layout and design13 Design review1.51 Detail design14 Manufacture prototypes2.56 Pilot test and power test12 Field test48 Manufacture first product47 Total Time1734 Slide 62 Prototypes A well designed prototype can help you market your idea to potential partners. Slide 63 Determining the Value of 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 doesnt make sense, stacy) Slide 64 Royalties Running Royalty is 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 Slide 65 Royalty: % of Net 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 Slide 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 Slide 67 Lump-sum Payment Sometimes royalty payments are impractical A process The technology is a small part of a complicated system Slide 68 Other Compensation 1.Royalty fee 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 Slide 69 Ball Park Ranges IPRANGE Patent Licenses 0.2 35% Trade Secrets 0.2 15% Tabulated from biological, chemical, electrical, mechanical Slide 70 Present Value of Royalty R(1+r) -n For the licensor, the investment is in the past YearExpected Royalty $1.00Amount 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% Slide 71 Fixed Sum Equivalents of 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 Slide 72 Simple Model for Negotiating 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 Slide 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). Slide 74 Royalty Rate Matrix-Type Array Variables affecting royalty Bi(1)Bj(2)Ci(1)Cj(2) A 1 (1)B 1 (1)B 1 (2)C 1 (1)C 1 (2) A 2 (1)B 2 (1)B 2 (2)C 2 (1)C 2 (2) A 3 (1)B 3 (1)B 3 (2)C 3 (1)C 3 (2) Total B i (1) B j (2) C i (1) = P C j (2) $ Amt. assigned to variable New $ Amt. after negotiation P% beginning royalty New royalty after negotiation Slide 75 Sample Calculation Variables affecting royalty Amt. Proposed Amt. Negotd. Royalty Impact New Royalty Net Sales50,00060,0003.554.26 Exclusivity30,000 2.25 Immunity from lawsuits (10,000) (.70) New Product risk (heavy marketing) (20,000) (1.45) Patent20,000 1.45 Total70,00080,0005.005.71 Slide 76 Examine 1 st Row A Variable Bi(1) Amt. Requested Bj(2) Amt. Negotiated Ci(1) Royalty Impact Cj(2) New Royalty Impact Net Sales50,00060,0003.55 Bi(1)/ Bi(1) * 5% = 50,000/70000 * 5% 4.26 Bj(2)/Bi(1)*Ci(1) = 60,000/50,000 * 3.55 TOTALS70,00080,0005.05.71 Slide 77 Summary Technology Transfer 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.

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