bringing new technology to market
Kathleen R. Allen
Instructor’s Manual
3
Table of Contents
Chapter 1 1
Chapter 2 8
Chapter 3 17
Chapter 4 23
Chapter 5 29
Chapter 6 34
Chapter 7 39
Chapter 8 44
Chapter 9 49
Chapter 10 55
Chapter 11 61
Chapter 12 66
Chapter 13 72
Chapter 14 77
Chapter 15 83
NOTES TO SAMPLE SYLLABI 89
SAMPLE SYLLABI 90
Bringing New Technology to Market
Chapter
1
1
Bringing New Technology to Market
Innovation and Commercialization
t
he process of taking an invention from idea to business concept and then to market is called technology commercialization. This dynamic process faces a unique set of challenges and opportunities in a fast-paced market. Consequently, products must be developed faster, prototyped earlier, and brought to market in record time. Small entrepreneurial companies are in a good position to do that as they tend to be more flexible and quick to respond to environmental changes. In contrast, large established companies have the challenge of breaking away from traditional strategic thinking and the inertia of success.
icon key
1 Supplementary Lecture Material
: Additional Web Resources
Answers to Discussion Questions
It is important that students begin with a fundamental understanding of what is meant by technology, technological change, innovation, and commercialization. With a good ground and common terms, it will be easier to get into more detail later on. The focus of this book is radical innovation because I believe that every technology business at one time or another needs to engage in radical innovation to sustain its competitive advantage. Radical innovation presents a more complex and difficult challenge for the commercialization process. Therefore, if students can understand and have practice experiencing strategies for radical innovation, they can easily modify those strategies to accommodate the far less complex and challenging strategies associated with incremental innovation.
This chapter
· Discusses the effect of technological change on economic principles.
· Explores the foundations of technological innovation
· Presents key disruptive technologies for the new millennium
· Details the innovation and commercialization process
1
Supplementary Lecture Material
The following material provides some “sound bytes” that can be used to stimulate additional discussion or to inspire the instructor to introduce a variety of new topics into the curriculum. As the field of technology commercialization changes rapidly, it’s important to supplement the foundational material in the text with current examples on a regular basis. For each of the supplements a resource has been given and I encourage you to explore the original source for additional information and links.
Wireless Technology Hits the Dirt
Take a wireless Ethernet connection, a laser-based measuring device, a mound of dirt, and what can you do? You can estimate the cost of excavation of a building site, a task that has always been difficult if not impossible to measure with any degree of accuracy. The National Institute of Standards and Technology (NIST) is developing information networks that have the potential to automate every element of a construction project. The system can generate a 3-D model of a construction site’s terrain before excavation, which makes it easier to measure what needs to be excavated. It is expected that eventually the system will measure more than dirt; it will be able to track pipes, beams, and even hammers at a site. It should be ready by 2006. To learn more and find related stories, go to “Building Bots” by Kevin Hogan, Technology Review, May 2002. http://www.techreview.com/articles/innovation50502.asp
Thinking Out of the Box
In 1974, Robert Langer, a professor of Chemical and Biomedical Engineering at MIT, began a postdoc at the cancer lab at Boston’s Children’s Hospital. Though he was out of his field of synthetic polymers among surgeons and scientists, he discovered that he could take what he knew about molding materials and come up with revolutionary medical cures. He has managed to build from plastic implantable dispensing machines for drug therapies. Not content to rest on his success, he is now delving into the field of tissue engineering where his synthetic polymers help researchers grow replacement body parts in the laboratory. The common thread is all of Langer’s inventions is biomaterials, any substance other than food or drugs that comes in contact with biological tissues or fluids. Dental fillings are a good example and, in fact, are the most common biomaterial in use today. Biomaterials have the potential to revolutionize the way we treat many medical problems with smart systems that behave like real body parts. What are the potential opportunities for this core technology?
Source: Antonio Regalado, “Ideas are Like Children,” MIT Technology Review, January-February, 1999. http://www.techreview.com/articles/qa0199.asp
Is Technology Taking Over?
Futurist John Naisbitt believes that technology is changing faster than humans can adjust. Will humans lose in the end? Naisbitt and others are not so pessimistic. In fact, they believe that humans are in a good position to shape their future. Until recently, technology had been driven by economics—the computer at the expense of the poet, in the words of Naisbitt. But now, instead of technology being at the forefront, it is becoming a ubiquitous part of everyone’s life. John Sculley, former CEO of PepsiCo and Apple Computer, believes that humans eventually will be “always on;” that is, they will wear wireless connections that keep them in touch with anything they want to stay in touch with. But this constant association with technology and the barrage of information it brings us is causing a syndrome that Linda Stone, former VP at Microsoft, calls continuous partial attention. It describes the way people cope with the deluge of information that hits them daily. She believes that to have a successful business, a CEO needs to tune out, pause, reflect, and focus. Is all the information that technology is providing helping or hurting? Will technology ever fall to the background as Bill Gates predicted it should?
Source: Jill Hecht Maxwell, “Stop the Net, I Want to Get Off,” Inc Magazine, January 1, 2002.
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Additional Web Resources
Invention Dimension: The Lemelson-MIT Awards Program. http://web.mit.edu/invent/ This is a great source for stories on interesting inventors.
Transistorized: The History of the Transistor. http://www.pbs.org/transistor/ The transistor is arguably the most important invention of the 20th century. This site presents the story of the invention.
Innovation: Cracking the Code. http://www.pbs.org/wnet/innovation/ This is a three-part series that features ground-breaking biomedical treatments and research. It contains original articles and animations that help explain the treatments, among other resources.
Innovation: The Magazine of Research and Technology. http://www.innovationmagazine.com/ This magazine explores the latest in technology from a Pacific Rim perspective.
Films to Rent
“Biomedics”
How technology is helping doctors improve diagnosis and treatment to provide better health care. Includes a discussion of hip implants and digitized instruments
www.films.com
26 minutes
Item: BVL7553
Format: VHS
List Price: $129.95
Rental Price: $75.00
“Material World”
This program stresses the role of computer technology in the design and development of materials, and examines the evolution of materials engineering. Materials were the basis of the tiles on the space shuttle and many medical implants.
www.films.com
25 minutes
Item: BVL7551
Format: VHS
List Price: $129.95
Rental Price: $75.00
“Surviving the Technology Revolution: Promise or Peril?”
This program explores the impact of technology transformation on business and society, and explains how people can prepare for the relentless progress of the brave new digital world.
www.films.com
26 minutes
Item: BVL7554
Format: VHS
List Price: $129.95
Rental Price: $75.00
Answers to Discussion Questions
1. Why is continual innovation critical to business success today?
Continual innovation is required to meet the demand for better, faster, cheaper technology products in a rapidly changing marketplace. Intellectual property, once a cost center for most corporations, has now become an important revenue center and a critical competitive advantage for the firms that hold it. However, as the text points out, incremental innovation will only carry a company so far. Radical innovation is critical for long-term sustainability, and this is where most companies have had far less success. Many companies have disappeared from the corporate map because they failed to innovate and were overtaken by their more agile counterparts. Fully 40 percent of major corporations in business in 1975 are not in business today due in large part to their failure to link emerging technologies with emerging markets.
2. In what ways has the product development process changed and why?
An increase in venture capital funding, in addition to the enormous infusion of corporate capital, is driving innovation and causing it to accelerate. Venture capital stimulates new competition and the need for companies to innovate and get to market quickly. This translates into faster product development times
and shorter product life cycles.
Globalization has increased the level of competition in the market and resulted in companies from all parts of the world imposing their standards on products and processes. But globalization has also contributed to the increase in innovation by providing new partners and cost effective ways to manufacture.
Customers are more sophisticated, which means that companies must differentiate their products on many levels just to compete. Customer demand superior performance and value-based pricing, which is difficult to achieve from a product development standpoint. Customers are also savvy about the value of incremental innovations and may refuse to purchase additional bells and whistles in favor of a radically new innovation.
Technology is changing at an increasingly rapid pace. But mainstream customers purchase technology based on its ability to solve a need or provide a solution. To compete and capture the attention of customers, companies must not only produce innovative technologies and their associated products, they must also develop innovative processes that are integrated with their products, making it difficult for a competitor to produce at the same quality level and at the same cost.
New products are subject to shrinking product development timelines. These shortened product life cycles are forcing companies to innovate constantly just to stay ahead of the game. They are also effectively shortening the temporary monopoly enjoyed by companies with proprietary technology.
3. When it comes time to commercialize an invention, what options are available to an inventor to navigate the business side of commercialization, and what are the advantages and disadvantages of each?
The answer to this question comes from understanding the overview of the commercialization process. It requires that students think about the requirements of commercialization and the expertise that a scientist/engineer inventor may or may not have. Three options come to mind: 1) the inventor handles the business side himself; 2) the inventor seeks partners with business expertise; 3) the inventor connects with a university or other organization that may be able to provide business expertise.
The inventor handles the business side himself. This approach is fraught with problems if the inventor is a scientist or engineer with no business experience. Understanding how to conduct feasibility analysis and answer all the questions related to deciding customers, entry strategy, first application, and so forth represent a domain of knowledge that the scientist/engineer generally does not possess.
The inventor seeks partners with business expertise. Here the inventor will look for a partner or partners that have experience starting and running businesses, or at a minimum have a degree in business. It’s important to bring this business expertise into the picture early in the development of the technology to make sure that the market and potential customers can provide input.
The inventor connects with a university or other organization that may be able to provide business expertise. Many entrepreneur programs in universities have courses in feasibility analysis and business planning with students who are eager to work on a real development team.
4. Choose one of the principal disruptive technologies for the next decade. What are two possible businesses that could be developed to exploit that technology that were not mentioned in the text?
The answer to this question will vary by student. This is an excellent question to get the students to move beyond the text and do an Internet search to read more about one of the disruptive technologies mentioned in the text: gene therapy, nanotechnology, and wireless technology. In their search, they will encounter a variety of potential business opportunities. Good sources are www.techreview.com, www.wired.com, and www.inc.com,
5. What are the advantages and disadvantages of a first mover or pioneering strategy? Under what conditions would first mover be essential?
The first mover or pioneer disrupts the technology that preceded it and requires customers to identify with a need they didn’t know they had. The primary advantage to this strategy is that it provides the pioneer with a temporary monopoly or quiet period in which to establish the technology in the market before competitors enter. This temporary monopoly is the result of intellectual property protections. The pioneer also has the opportunity to establish the technology standard and reap the enormous profits that ultimately come from successfully introducing a radical technology.
Disadvantages of the first-mover strategy are that it is more costly to execute (disruptive technologies often do not reap their full value until they achieve mass-market acceptance and the valley of death is much longer), the pioneering products typically display poor performance and address a latent need that the customer has yet to recognize, and, therefore, it’s difficult to get the mainstream market to switch to the new technology. Clayton Christensen’s research has studied the incumbent’s curse, which is the fact that incumbents, generally large companies, suffer from technology inertia or the fear of straying too far from their successes, so they are not very successful at the pioneering strategy.
Chapter
2
8
Bringing New Technology To Market
Recognizing and Screening Technology Opportunities
i
deas and opportunities are not the same concepts. An opportunity is an idea that can be turned into a business or commercialized in some manner. Today nearly every technology company is pursuing new opportunities and new ways to serve customers and solve problems. Opportunities typically come about when a need is apparent. But breakthrough innovations are normally the result of a serendipitous connection that, with experimentation, leads to a new technology and eventually a product in the market. This chapter is designed to help the reader understand the process of invention and opportunity recognition so that the reader can create an environment that encourages creativity, innovation, and opportunity recognition.