Technology Commercialisation Practical Lessons from other Countries

1. Technology CommercialisationPractical Lessons from other Countries Dr Alistair M. Brett Senior Consultant Oxford Innovation Ltd Oxford, UK Opinions expressed are those of the presenter Oxford Innovation Ltd 2003

2. Numbers Trends Opportunities Information sources: The Industrial Research Institute European Industrial Research Management Association Centre for Research on Innovation and Competition Institute of Innovation Research Manchester University Nottingham University Business School Association of University Technology Managers Oxford Innovation Ltd 2003

3. A few numbers (2001) Oxford Innovation Ltd 2003

4. 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 Oxford Innovation Ltd 2003

5. 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” Oxford Innovation Ltd 2003

6. 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 Oxford Innovation Ltd 2003

7. 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” Oxford Innovation Ltd 2003

8. 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 Oxford Innovation Ltd 2003

9. Role of Innovation in firms Oxford Innovation Ltd 2003

10. 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 Oxford Innovation Ltd 2003

11. Mis-match of supply and demand UK/USA Other Supply Demand Supply Demand Oxford Innovation Ltd 2003

12. Positioning strategies Feasibility studies Few long-term Prototype development benefits Internal investment in both More long-term “R” and “D” to progress benefitsbeyond prototypes External Investment Industry Oxford Innovation Ltd 2003

13. “Management of intellectual property inpublicly-funded research organisations:Towards European Guidelines” Open Science model - PROs do not retainany intellectual property rights (IPR) Licensing Model - PROs retain,protect and commercialise inventions through licensing the IPRto industry and to start-up companies Innovation Model – PROs have active policy of collaborative research with industryand a pro-active involvement in the creation of spinout companies. Oxford Innovation Ltd 2003

14. Importance of technology transfer factors N= 150 1 2 3 4 5 6 Oxford Innovation Ltd 2003

15. What drives market opportunities? % effect Survey of 1000 European firms Oxford Innovation Ltd 2003

16. 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? Oxford Innovation Ltd 2003

17. 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? Oxford Innovation Ltd 2003

18. Issues Feasibility of conducting technology audits at Latvian universities and institutes, or – Accessing and promoting expertise at Latvianuniversities and institutes, previously identified and evaluated by the institute  Promoting technologies, expertise, and resources from Latvianuniversities and institutes to foreign companies.Industrial Liaison Office modelWeb Portal Oxford Innovation Ltd 2003

19. Issues Promoting success stories Analyse existing contracts with Western companies for attractiveness to investors  Selecting a small number of companies who can act as "bridges" between universities/institutes and foreign companies Strategies for Latvian Government investment in technology commercialisation Incentives for innovation, and retention of young scientists  The "Why Latvia?" question. What is Latvia's competitive advantage?   Oxford Innovation Ltd 2003

20. 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 Oxford Innovation Ltd 2003

21. Overall New Product Development process Fuzzy front end New product development Traditional Stage Gate™ Process Technology Stage Gate™ Process Oxford Innovation Ltd 2003

22. New Product Development Stage Gate™ Process Market/customerinput Businesscase Testing &validation Full productlaunch Preliminaryassessment Development Gate Stage Decision onbusinesscase Post-developmentreview Post-commercialanalysis Post-implementationreview Initialscreen Nextscreens Oxford Innovation Ltd 2003

23. Six Elements of the Stage Gate™ Process TR1 TR2 TR3 …… Technology Review Committee Technology Review Process ProjectCharter ProcessOwner New Member joins Current member leaves Planning Technology Development Team Oxford Innovation Ltd 2003

24. Tech Stage Gate™ Process Stage 2 Gate 2 Gate 1 Stage 1 Technology Review 1 Technology Review 2 Technology Review N 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 Oxford Innovation Ltd 2003

25. Bio-fuels Stage Gate™ Process Reduced risk Increased costs Technology audits Otherideas COMMERCIALTRACK Seedprojects 1 2 3 4 5 Preliminaryinvestigation Detailedinvestigation Commerciallaunch Development Validation A B C Exploratory Research DevelopmentResearch Outsideideas RESEARCH TRACK Oxford Innovation Ltd 2003

26. Expected Commercial Value (ECV) $ PV Pcs Commercialise$ C Pts Development$ D $ ECV Commercial failure Technical failure $ ECV = [($ PV * Pcs - $ C) * Pts - $ D] $ 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) Oxford Innovation Ltd 2003

27. Risk-Reward Bubble Diagram Pts High $10M 8 6 4 2 0 NPV Low Oxford Innovation Ltd 2003