The Commercialization of Technology

The Commercialization of TechnologyDr. Michael Stankosky

Peace and Prosperity Through Science and Collaboration www.crdf.org

OVERVIEW• ENTREPRENEURSHIP• ENVIRONMENTAL ASSESSMENT• GLOBAL OPPORTUNITIES FOR ENTREPRENEURS• INNOVATION ECO-SYSTEM• QUESTIONS

2


ENTREPRENEURSHIP

3


Good work, but I think we might need just a little more detail right here.

Yet so far!

4


Entrepreneurship: An Evolving Concept• “entre prendre” - meaning “to undertake”

• The Entrepreneur: Characteristics– Personal initiative– Ability to consolidate resources– Management skills– Tendency towards autonomy– Risk taker– Competitive– Goal-oriented– Aggressive– Ability to employ HR

• Definition and History– No specific definition– History dates back to the 1700s in France– Linked to free enterprise and capitalism

5


The Entrepreneurial Revolution• Entrepreneurs: Challenging the unknown

– Recognize opportunities– Athletes, Top Gun Pilots, Symphony Conductors

• Entrepreneurship: A Perspective– Dynamic perspective– More than just starting a business– Attitudes

• An Entrepreneurial Economy– Predominance of small firms and new ventures– 10 years - 600,000 new businesses incorporated– 90% of the business population– Provides “net” new jobs– Key to the US success economically

6


Understanding the Entrepreneurial Perspective in Individuals

“We need a person, in whose mind all of the possibilities come together, who believes innovation is possible, and who has the motivation to persist until the job is done.”

• Entrepreneurs as the cornerstone of the American enterprise system - Frank Carey of Pizza Hut– Driven by commitment– Determined perseverance– Work very hard– Optimist– Strive for integrity– Competitive desire to excel– Failure is tool for learning– Confidence in themselves

7


Major Themes that Characterize Entrepreneurship

• Entrepreneurial and managerial domains overlap to a high degree

• Venture financing has emerged since 1980

• Entrepreneurship within large enterprises has gained much attention

• There are key entry patterns and strategies to successful business start-ups

• Great variety of methods to start a new business

• Women and minority entrepreneurs have emerged in unprecedented numbers

• Worldwide entrepreneur growth

• Slow economic and social contributions

• Entrepreneurship education is in high demand

8


ENVIRONMENTAL ASSESSMENT

Market Assessment/ Evaluation of Entrepreneurial Opportunities

9


Commercialization and Marketing Strategy • A Framework for

Marketing Management

– Corporate Missions and Objectives

– Assessment of Market Opportunities

– Market Segments Targeted– Marketing Objectives– Strategy Development– Marketing Mix Formulated– Marketing Program

Established– Tracking System– Evaluation and Control

10


Environmental Assessment: Preparation for a New Venture

“Coping with the constantly changing environment is probably the most important determinant of a company’s

success or failure in a free enterprise system.” Alan J. Rowe

• Environmental Scanning– Efforts of the entrepreneur for examining the external and internal environments before

making a decision– External Environment - opportunities and threats outside the organization– Internal Environment - structure, culture, resources– Task Environment

11


Macro View Assessing the Economic Environment

– Questions to answer to avoid pitfalls • Examples?

– Attitudes and skills needed for a proper assessment • Examples?

– Understanding the regulatory environment• A business must comply with governmental rules and regulations• Government effect on small business

– Tends in policy formation• i.e., Small Business Regulatory Enforcement Fairness Act

12


Marketing Research for New Ventures• Marketing Research

– What is it?

• Specific Objectives of Marketing Research– Six objectives

• Secondary Data– Information already compiled - Inexpensive - Sources?

• Primary Data– New information accumulated through observation and questioning– Surveys - Day to day data accumulation– Interpreting and Reporting the Information– Summaries, tables, charts– EIS? - KM system?

13


Marketing Stages for Growing Ventures• Entrepreneurial Marketing

– Obtaining niche and credibility

• Opportunistic marketing– Market penetration

• Responsive Marketing– Develop the product market and create customer satisfaction

• Diversification Marketing– New business development and managing the product life cycle

14


Marketing Planning• Marketing Research

– Process of determining who the clients are, what they need or want, how they buy

• Sales Research

• Marketing Information System– Compiles and organizes data relating to cost, revenue, and profit from the customer base– Effects strategies and decisions

• Sales Forecasting– Process of projecting future sales through historical data and statistical analysis

• Marketing Plans– Five Areas

• Evaluation

15


Assessment and Evaluation of Entrepreneurial Opportunities

Pitfalls in Selecting New Ventures

– Lack of objective evaluation– No real insight into the market– Inadequate understanding of technical requirements– Poor financial understanding– Lack of venture uniqueness– Ignorance of legal issues

16


GLOBAL MARKETS

17


Global Marketing Objectives• Exploiting market potential and growth

• Gaining scale and scope returns at home

• Learning from a leading market

• Pressuring competitors

• Diversifying markets

• Learning how to do business abroad

18


Driving Forces Affecting Global Marketing

Driving

– Common Customer Needs (Market Needs and Wants)– Technology– Regional Economic Agreements– Transportation and Communication Improvements– Product Development Costs– Quality– World Economic Trends– Transferable Marketing (Leverage)– Global Channels

19


Restraining Forces Affecting Global Marketing

Restraining

– Industry Factors– Internal Resources– Different Mixes– Global Turmoil– Management Myopia and Organizational Culture– National Controls and Barriers

20


Global Opportunities for Entrepreneurs• The International Environment• Entering the International Marketplace

– Conduct research– Prepare a feasibility study– Secure adequate financing– File proper documents– Draw up and implement the plan

21


International Market-Entry Options• Exporting• Contracting

– Licensing– Franchising– Contract manufacturing– Management contracts

• Strategic alliances• Joint ventures

– Advantages Provide path of entry into many foreign markets May open new market opportunities May provide relationship establishment with foreign authority figures

22


Import Barriers• Defined:

– Any obstacle making it difficult for a firm to enter a product market

• Classification of Barriers– Tariff Barriers– Non tariff Barriers

slow customs bureaucratic inertia in processing import licenses Government regulations Manufacturing access (suppliers, distribution channels) Natural barriers

– Brand loyalty, promotional factors Advanced versus Developing Nations Exit Barriers

23


The Exporting Option• Exporting option often is the most attractive mode of entry to the global marketing

newcomer• Indirect Exporting

– Hire a specialist to handle all of your export requirements– Export Management Company (EMC)

• Direct Exporting– Direct influence of the foreign marketing opportunity– Learn how to operate abroad– Develops a strategic involvement with the foreign market– Avoid extra “agent” fees

• Direct Exporting Functions– Review and Discuss the Functions listed in Exhibit 5.2 on page 136

• Export Expansion Strategy– Waterfall Strategy - an orderly expansion of exporting– Sprinkler Strategy - quick penetration, preemptive first mover strategy

Higher Risk - major commitments without the research and understanding of the market

24


INNOVATION ECO-SYSTEM

Management & Commercialization

25


The Management of Technology Innovation

• Why do we innovate?????• Patterns of strategic behavior

– Induced strategic behavior From the corporate perspective Major investment

– Autonomous strategic behavior• Conceptually equivalent to entrepreneurial activity and introduces new categories of opportunity into

the firm’s planning process• Product championing and the informal network• Product champion

– Organization member who creates, defines, or adopts an idea for an innovation and is willing to assume significant risk to make possible the successful implementation of the innovation

26


The Management of InnovationIgniting entrepreneurial spirit

– Market for ideas Pursuing fresh ideas (resource attraction) that will create new business opportunities

– Bringing in new voices into the opportunity seeking process, radically changing the believe that strategy is solely for senior managers

• Cross-functional barriers– Turf – areas of expertise– Interpretive – management opinions of tech project– Communication – interdepartmental

27


Managing Technology• Classifying development projects

• Derivative projects– Centers on incremental enhancements

• Platform projects– Design the design and components shared by a set of products

• Breakthrough projects– New core products, processes and services

• Research and development– Creation of knowledge that leads to new developments

28


New Product Development Process• New product strategy

– Clearly defined strategy – particular product, market, and technology domains

• Anticipating competitive reactions

• Sources of Innovation (new product ideas)

• Lead users– Small numbers of highly influential buying organizations who are consistent early adopters

of new technologies– Designed to unearth new product ideas and to identify a revolutionary approach to

infection control– Staying ahead of customers– Proactively leading customers

29


Evolutionary Forces Shaping Technology Strategy• How a firm’s technology strategy changes over time

• Technology Evolution– S-curve trajectories

• Industry Context– structure, regime, assets to commercialize, emergence of designs, adoption of

technologies, industry standards, social aspects, competitive effects

• Organizational Context– Ability to exploit opportunities– Spontaneous and flexible response– Ability to prioritize and balance challenges

30


Taking Technology (Innovation) to Market• Corporate management of technology requires

– Careful planning of the relationships between Technologies (competencies) Markets Development Activities

• Levels of R&D depend on Available resources Competitive pressures Market requirements Process technologies - efficient product development

• Maximize R&D ROI– Fullest market exploitation of the technology

• Technology - From idea stage to direct sells

31


The Technology Life Cycle (TLC)• A firm needs to understand the

TLC to get the most ROI on its technology

• Stage 1: Technology Development– 3 reasons for development

Obvious application Sufficient financial resources Projected ROI

– Other considerations Partnership? Sell the technology? Staff sophisticated enough to market the

technology

Tec hno logyEn thus ias t V is iona r ie s Pragmatis ts Cons erv a tiv es Skep tic s End o f L if e

The Tec hno log y L if e Cy c le

The Chasm TheMainstre am

MarketThe Early

Market

32


The Technology Life Cycle (TLC)• Stage 2: Technology Application

– Decision to continue to develop or sell the technology– Cost and risk assessment– Consider the potential returns from the technology as a whole - not just immediate sells

• Stage 3: Application Launch - “Performance Maximizing”– Problems with licensing

application of technology may not be refined sufficiently delayed due to long lead times ownership problems - “not developed here” problems associated with buyer and “changes” required

– Delay of launch may be an alternative– Skim the market to recover costs

33


The Technology Life Cycle (TLC)• Stage 4: Application Growth - “Sales Maximization”

– Market penetration considerations market size technology leadership Standardization

• Stage 5: Technology Maturity - “Cost Reduction Phase”– Now in full competitive stage– Production has leveled off for the originator– Transfer to third world countries - turnkey deals

• Stage 6: Degraded Technology– Reached a point of saturation and virtually universal exploitation– License has expired– Low commercial value

34


Some Final Thoughts on Managing Technology Innovation and Commercialization Strategy

• Market-Goal Orientation – Keep it real!– Innovative companies consciously anchor their visions to the practical realities of the

marketplace

• Know that you are Managing Chaos!– Innovation is a process that is rarely planned and controlled– Not analytical - intuitive, tumultuous process– Innovation is probabilistic

• Possible Solution?– Form small, flexible teams to enhance motivation, interactivity, and accelerate progress– Use “determined champions”

35


SUMMARY POINTS• DO YOU HAVE WHAT IT TAKES??• WHAT DO YOU HAVE TO OFFER THAT IS OF VALUE??• HAVE YOU DONE YOUR RESEARCH??• DO YOU HAVE A COMPLETE BUSINESS PLAN??• HAVE YOU GARNERED TEAM AND FINANCIAL SUPPORT??• ARE YOU A LUCKY PERSON??

36


??Q U E S T I O N S

Michael Stankosky, DScGeorge Washington University

(202) [email protected]

www.gwu.edu/~iki

37

Documents

The Commercialization of Technology