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Commercialization Challenges. Eli Fathi, Sorin Cohn & Andrew Maxwell The Federal Partners in Technology Transfer Conference in Ottawa June 17, 2009. Table of Content Innovation & Canada Impact of Globalization - Flat World Commercialization Challenges Gaps to Commercial Success

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Commercialization challenges

Commercialization Challenges

Eli Fathi, Sorin Cohn & Andrew Maxwell

The Federal Partners in Technology Transfer Conference in Ottawa June 17, 2009


  • Table of Content

  • Innovation & Canada

  • Impact of Globalization - Flat World

  • Commercialization Challenges

  • Gaps to Commercial Success

  • Technology Transfer Offices’ Challenges

  • Canada & Innovation in the Flat World


Innovation definitions
Innovation - Definitions

An invention is the creation of a new device or process for the purpose of solving a specific problem and/or need

Not all inventions turn into a viable commercial success:

Technological barriers - not feasible with current technology

Lack of acceptance by the population

Financial - too expensive

Not practical

Innovation takes an invention and overcome these obstacles to generate a viable commercial product/service/process


Innovation dimensions
Innovation - Dimensions

  • Technology Innovation

    • What

    • How (R&D Process, including outsourcing)

  • Manufacturing & Operations Innovation

    • Operations & Scalability

      • Internal Processes

      • External Processes: supply & sales chains

  • Commercialization Innovation

    • Marketing

      • Ingress = get meaningful info from the market

      • Egress = convince market of company info

    • Sales Execution

    • Customer Satisfaction

Globalization has changed the competitive landscape

Proprietary & Confidential to OrbitIQ Inc.


Impact of globalization flat world
Impact of Globalization – Flat World

  • Universal access to information makes competition global

  • Sales and marketing costs are dominant

  • The BRIC factor: Transfer jobs to where the market is. Brazil, India, Russia, China, etc. are becoming significant in market size, manufacturing costs and innovation prowess

  • Net transfer of jobs to developing countries: off-shoring

  • Complex Relationship: Customers, Competitive, Cooperative

  • Ownership is associated with the strongest player in the market chain

  • Industry transition: from Integrated Product paradigm to Specialized Services Industry

June 7, 2014

Proprietary & Confidential to OrbitIQ Inc.


Integrated pr oduct economy
Integrated Product Economy

Design

Development

Manufacturing

Marketing

Sales

Support

Human Resources

IT & Support

It is all about

product control &

direct cost minimization

Proprietary & Confidential to OrbitIQ Inc.


Specialized services economy
Specialized Services Economy

Sales

Services

HR

Services

Investment

Services

Marketing

Services

Design

Services

Manufacturing

Services

Network

Services

Development

Services

Legal

Services

“Office”

Services

Support

Services

IT

Services

It is all about

Collaboration &

Value creation

in Companies

Proprietary & Confidential to OrbitIQ Inc.


Playing in a flat world
Playing in a Flat World

Thomas Friedman success guidelines for global markets:

Do not build walls around your company

Small companies must act big companies

Big companies must act small companies

Collaborate and cooperate with other companies

Continuously examine your operations with the view to improve it

Outsource non-core value operations with the view to grow the company and not to shrink it

Thomas Friedman, The World is Flat, 2005

June 7, 2014

Proprietary & Confidential to OrbitIQ Inc.


Elements of commercialization
Elements of Commercialization

Idea “Commercialization”

from Idea to Technology to Prototype...

Market Channel

Satisfied Customer

Viable Business

Product

Idea

Technology

Product Commercialization

from Product to Channel to Customer to repeat Business...

“Commercialization is the exchange of product/service for money”

(According to Dr. Doug Barber from McMaster )

Proprietary & Confidential to OrbitIQ Inc.


The complete company
The Complete Company

e.g. Telecom – service, h/w, product, etc

e.g. Devices – Si design, Optoelectronics, Fabs, etc

e.g. BioTech - ...

Industry & Domain Expertise (Technical & Market)

  • e.g. Vision

  • e.g. Corporate & Product management

  • e.g. Project delivery

  • e.g. Marketing

  • e.g. Sales execution

  • e.g. Customer support

Management & Leadership Skills

Access

  • e.g. Customers – globally

  • e.g. Capital - globally

  • e.g. Business influencers - globally

June 7, 2014

Proprietary & Confidential to OrbitIQ Inc.


Commercialization problem analysis
Commercialization - Problem Analysis

$Revenues

Employment level

$Earnings

Too many technology companies can not pass certain thresholds

There appear to be barriers other than demand (e.g., access to capital, global channels to market, business savvy) that are insurmountable for most companies

Thresholds and barriers may differ by sector (cluster)

$?? M /yr

“Target”

“Stalled”

$?? M /yr

“Failed”

$?? M /yr

Time

Proprietary & Confidential to OrbitIQ Inc.


Commercialization community impacts
Commercialization & Community Impacts

Commercialization Loss & Company Size Distribution

G

G

$5B

Large

Large

$500M

Commercialization Loss

$50M

Medium

Medium

$5.0M

Small businesses

Small Businesses

$0.5M

Startups (Product)

Maturing Startups (Product Stage)

$0.0M

Early Startups (Technology Stage)

Early Startups (Technology Stage)

Revenues

Balanced Growth Community

Market Throttled Community

Proprietary & Confidential to OrbitIQ Inc.


Gaps to commercial success
Gaps to Commercial Success

Innovation Gap

Idea

Commercialization Gap

Idea

Idea

Start-up

Idea

Viable

Company

Start-up

Idea

Start-up

Idea

Idea

  • Chasm to Market

  • Marketing & Sales

  • Global Culture

  • Investment

  • Access & Connectivity

  • Customer Support

Idea

  • Trench to Product

  • Skills

  • Investment

  • Business Culture

  • Innovation Centres

  • University Labs

  • Government Labs

Proprietary & Confidential to OrbitIQ Inc.


Gaps to full success their solutions
Gaps to Full Success & Their Solutions

  • Innovation Gap - moving from an idea stage to developing first prototype

    Solution: Create and support a culture for entrepreneurship

  • Business Commercialization Gap - turn a prototype into a market-demanded product/service

    Solution: Create a culture of commerce

Conference Board of Canada 2007 ranked Canada in the 14th palace out of 17 countries in Innovation

Proprietary & Confidential to OrbitIQ Inc.


Gaps to commercial success1
Gaps to Commercial Success

Needed

Focus

of

Support

Present

Focus of

Support

Commercialization Support

Idea “Commercialization”

from Idea to Technology to Prototype...

Market Channel

Satisfied Customer

Viable Business

Product

Idea

Technology

Product Commercialization

from Product to Channel to Customer to repeat Business...

Proprietary & Confidential to OrbitIQ Inc.


Innovation in canada
Innovation in Canada

  • Canada’s prosperity in a global economy is dependent on:

    • Be innovative and create Intellectual Property (IP)

    • Commercialize inventions = Successful conversion of inventions into thriving businesses

    • Be timely to market - Rapid implementation of new innovations

    • Identify new market opportunities

    • Expand market reach outside of Canada

  • Canada must rely of innovation to maintain its competitive edge

Technology Transfer Offices play a major role in implementing Canada’s commercialization efforts

Proprietary & Confidential to OrbitIQ Inc.


Challenges for technology transfer offices
Challenges for Technology Transfer Offices

Over 80% of TTOs do not make money from their licensing activities (Bostrom, 2005)

Excluding technologies licensed to inventor, more than 90% of innovations patented by TTOs do not recover costs (Blake,1993)

TTOs rarely have required financial or human resources to optimize commercialization potential (Litan et al. 2007)

TTOs operate under the same as their institution. This limits with decision-making speed and risk tolerance (Lockett & Wright, 2005)

Less than 17% of opportunities commercialized are taken to market through a new venture (Markman et al. 2005a)

June 7, 2014

Proprietary & Confidential to OrbitIQ Inc.


New ventures risks
New Ventures Risks

Competitive risk

Macro-economic risk

Performance risk

Development risk

Financial risk

Implementation risk

Commercial risk assessment, management and mitigation are skills not easily available in a government or academic institution

(Rothaermel et al., 2007)

Proprietary & Confidential to OrbitIQ Inc.


The federal government the ttos
The Federal Government & the TTOs

Focus on knowledge transfer (preferably to Canadian entities) - not license revenue

Commercialization should occur in the private sector:

Streamline transfer processes to accelerate innovations’ emergence from technology labs into actual business undertakings

Mitigate risks for industrial partners to encourage increased industry interactions with TTOs

Nurture collaborative relationships with and within industry: bidirectional knowledge flows , contract research, internships and industrial exchanges

Empower TTOs

Provide adequate Mission, Staff and Program Resources

Staffed by individuals with substantial private sector experience in business development and technology commercialization


What can ttos do to accelerate success
What Can TTOs Do to Accelerate Success?

  • Reduce focus on license income and focus on facilitating new venture creation as a viable option to licensing

    • Increase collaboration with similar institutions and with industry - knowledge flows, contract research, internships and industrial exchanges

    • De-risk technology commercialization by encouraging industrial deployment and/or filing patents

    • Find early adopters and/or foster new technology ventures

  • Support partnerships/collaborations aimed at commercializing innovation

  • Forge relationships with large organizations more capable to access market

  • Minimize effort spent until a real market opportunity is validated

Proprietary & Confidential to OrbitIQ Inc.


Summary canada in global markets
Summary: Canada in Global Markets

  • Investments in R&D innovative ideas are necessary but not sufficient to secure business success

  • Greatest risk factors involve market development and business leadership

  • Developing channels to market is costly and time consuming

Recommendations

  • Foster culture of innovation in academic institutions

    • Become a feeder system/farm team to businesses

    • Encourage support of Colleges to SMEs

  • Accelerate the build up of SMEs

    • Typically idea rich and resource poor

    • Require significant support to get innovation to product to market

  • Outsource effectively and efficiently non-core value operations

  • Develop global connectivity

Proprietary & Confidential to OrbitIQ Inc.


The future is bright
The Future is Bright

Canada has all the ingredients to create global companies and be successful on the global markets (such as RIM)!

  • After all one must remember that you are:

    • Braver than you believe

    • Stronger than you seem, and

    • Smarter than you think

  • as Christopher Robin Told Winnie the PoohinPooh’s Grand Adventure

June 7, 2014

Proprietary & Confidential to OrbitIQ Inc.


Thank You

Eli Fathi, CEO

OrbitIQ

[email protected]

Dr. Sorin Cohn, President Global Operations

OrbitIQ

[email protected]

Andrew Maxwell

Canadian Innovation Centre

[email protected]

www.orbitiq.com


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