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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

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Commercialization Challenges

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  1. Commercialization Challenges Eli Fathi, Sorin Cohn & Andrew Maxwell The Federal Partners in Technology Transfer Conference in Ottawa June 17, 2009

  2. 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

  3. 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

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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.

  13. 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.

  14. 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.

  15. 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.

  16. 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.

  17. 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.

  18. 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.

  19. 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

  20. 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.

  21. 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.

  22. 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.

  23. Thank You Eli Fathi, CEO OrbitIQ eli@orbitiq.com Dr. Sorin Cohn, President Global Operations OrbitIQ sorinc@orbitiq.com Andrew Maxwell Canadian Innovation Centre amaxwell@innovationcente.ca www.orbitiq.com

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