Innovation Management and New Product Development PDF

Innovation Management and New Product Development 6th edition Chapter 11 Open innovation and technology transfer Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Introduction Information is central t...

Innovation Management and New Product Development 6th edition Chapter 11 Open innovation and technology transfer Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Introduction Information is central to the operation of firms. It is the stimulus for knowledge, know-how, skills and expertise and is one of the key drivers of the innovation process. Those companies that spend the most on R&D are also some of the biggest licensors of technology; and dynamic, innovative firms are likely to buy in more technology than their static counterparts. This chapter examines the complex subject of technology transfer, increasingly being referred to as knowledge transfer. It explores its role in the innovation process and its influence on organisational learning. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved The dominant economic perspective Technology that has already been produced, and hence paid for by someone else, could be used and exploited by other companies to generate revenue and, thereby, economic growth for the economy. Fig. 11.1.The economic perspective of technology transfer Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved  It was with this theory in mind that governments began encouraging companies to be involved in technology transfer. They set up a whole variety of programmes trying to utilise technology that had been developed for the defence or space Industries. They also encouraged companies to work together to see if they could share technology for the common good. Universities have become increasingly adept at developing and transferring their technology: since 1980, the transfer of technology from universities to private industry has become big business, particularly in the United States. E.g. During 2003: technology transfer revenues were approximately $1.3 billion. the economic benefits that flowed from the technologies that were transferred into the private sector were estimated to have exceeded $41 billion in value. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Open innovation the process of innovation has shifted even further from one of closed systems, internal to the firm, to a new mode of open systems (Chesbrough, 2006). This seems to be supported by the increasing application of network theory into more and more areas of business management (Parkhe et al., 2006). Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved  Chesbrough (2003) presents six notions that lie behind the so-called closed model of innovation: Source: Chesbrough, H. (2003) Open Innovation: The new imperative for creating and profiting from technology, HBS Press, Boston, MA. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Information transfer and knowledge transfer Fig. 11.3.The tangibility of knowledge This fig. helps distinguish information from knowledge and knowhow, according to its context. It is argued that it is the industrial context that transforms knowledge into action, in the form of projects and activities. It is only when information is used by individuals or organisations that it becomes knowledge. The application of this knowledge then leads to actions and skills (projects, processes, products, etc.). Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Models of technology transfer Licensing Science park model Intermediary agency model Directory model Knowledge Transfer Partnership model Ferret model Hiring skilled employees Technology transfer units Research clubs European Space Agency (ESA) Consultancy Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved licensing Licensing is the act of granting another business permission to use your intellectual property. This could be a manufacturing process that is protected by patents or a product or service that is protected by a trademark or copyright. licensing involves the technology owner receiving a licence fee in return for access to the technology. Very often, the technology in question will be protected by patents. The details of each licensing agreement will vary considerably. Sometimes, the licensor will help the licensee in all aspects of development and final use of the technology. In other cases, the amount of involvement is minimal. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Science park model The idea is to develop an industrial area or district close to an established centre of excellence, often a university. technology- or science-based companies can set up close to the university so that they can utilise its knowledge base. E.g. Silicon Valley (a collection of companies with research activities in electronics); the ‘research triangle’ in North Carolina (has several universities at its core); the Cambridge Science Park in U.K. The science park notion separates the innovation process: the R&D is conducted at the science park, but manufacturing is done elsewhere. Business parks, however, combine all activities. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Intermediary agency model They act as the intermediary between companies seeking and companies offering technology. Directory model Companies, such as Derwent World Patents, Technology Exchange, NIMTECH and Technology Catalysts, offered directories listing technology that was available for licence. Some universities in the United States also produced directories of technology available from the university’s own research laboratories. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Knowledge Transfer Partnership model Previously called ‘the teaching company scheme’, this UK Research Council-funded programme aims to transfer technology between universities and small companies. Students registering for a two-year MSc at a university are linked to a local company-based research project. The student studies part time for two years with the university, say two days a week, and the other three days are spent at the company working on the project. The university provides support to the student and offers other expertise to the company. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Ferret model It was used first by Defence Technology Enterprises (DTE). DTE resulted from a joint initiative between the UK Ministry of Defence (MOD) and a consortium of companies experienced in encouraging, exploiting and financing new technology. The raison d’être of DTE was to provide access to MOD technology and generate commercial revenue. This was achieved through the use of so-called ‘ferrets’, qualified scientists and engineers who would ferret around for interesting defence technology that could have wider commercial opportunities. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Hiring skilled employees one of the most effective methods is hiring people with the necessary skills and knowledge. For R&D managers who wish to establish a range of research projects in an area of technology where the company has limited knowledge or experience, this is one of the fastest methods of gaining the necessary technology. People are recruited either from other organisations, including competitors, or from university research departments that have relevant expertise. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Technology transfer units In the 1980s, the US Federal Labs and other researchbased organisations, including universities, established industrial liaison units and technology transfer units to bring in technology from outside and/or to find partners to help exploit in-house developments. Technology transfer units use elements of the intermediary and licensing models. Research clubs This is a UK Department of Trade and Industry (DTI) funded programme that tries to bring companies together with common interests, in particular research areas. Some conduct collaborative research, others exchange information, knowledge and/or experience. This approach adopts the science park model of technology transfer. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved European Space Agency (ESA) The ESA offers access to space research in virtually all fields of science and technology. This is achieved using a combination of three models: the intermediary agency model, the directory model and the ferret model. Consultancy Consultants were formerly employed in a research capacity within a large organisation. After developing their knowledge and skills in a particular area of science, they offer their unique skills to the wider industry. R&D research groups within large organisations often will contact several consultants prior to establishing a research project in a particular field related to the consultant’s area of expertise. Consultants are able to offer help, advice and useful contacts to get the research project off to a flying start. Frequently, they will remain part of the research group during the early years of the project. This is a very popular method of technology transfer and, essentially, adopts the hiring skilled employees model. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Limitations of models They fail to understand the recipient organisation's needs. Technology viewed in terms of technical attributes. Underestimate the extent of interaction required. Assume an ability on the part of organisations to communicate their problem in the form of a technical requirement. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Figure 11.4 Conceptual framework of technology transfer and inward technology transfer Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved  Figure 11.4 views technology transfer and inward technology transfer as a series of complex interactive processes as opposed to a simple decision process. It breaks down the transfer process into a series of subprocesses. The initial framework was developed following a study of the role of intermediaries in the technology transfer process. A mismatch was identified between the needs of potential innovators and the activities of information-centred technology transfer intermediaries. This deficiency was illuminated through the use of the conceptual framework: Accessibility– Mobility–Receptivity (AMR). An organisation’s overall ability to be aware of, to identify and to take effective advantage of technology is referred to as ‘receptivity’. Figure 11.4 breaks down the receptivity element into four further components. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Developing a receptive environment for technology transfer Inward technology transfer will be successful only if an organisation has not only the ability to acquire but also the ability effectively to assimilate and apply ideas, knowledge, devices and artefacts. Organisations will respond to technological opportunity only in terms of their own perceptions of its benefits and costs and in relation to their own needs and technical, organisational and human resources. The process view of inward technology transfer, therefore, is concerned with creating or raising the capability for innovation. This requires an organisation and the individuals within it to have the capability to: search and scan for information that is new to the organisation (awareness); recognise the potential benefit of this information by associating it with internal organisational needs and capabilities; communicate these business opportunities to and assimilate them within the organisation; and apply them for competitive advantage. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved These processes are captured in the following stages: awareness, association, assimilation and application. This four-stage conceptual framework (4A) is used to explore the processes involved in inward technology transfer (see Table 11.2). Table 11.2. 4A conceptual framework of technology transfer Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Linking external technology to internal capabilities The process of searching for and acquiring technical information is a necessary activity for organisations in order to maintain their knowledge base. This can be achieved effectively by scanning the technological environment, either through the scientific literature or through interactions with other people (often called networking). Thus, innovation within firms is a process of know-how accumulation, based on a complementary mix of inhouse R&D and R&D performed elsewhere, obtained via the process of technology scanning. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved  Given the importance of an awareness of external information and the role of technological scanning and networking, awareness is seen as the necessary first stage in the inward technology transfer process. In order for an organisation to search and scan effectively for technology that will match its business opportunities, it needs to have a thorough understanding of its internal organisational capabilities. This can be achieved effectively via internal scanning and networking, which will enable it to become familiar with its internal activities. The coupling of internal technology scanning with external technology scanning activities can be seen in Figure 11.5. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved  Inward technology transfer, however, involves more than identifying interesting technology; it is necessary to match technology with a market need in order to produce a potential opportunity for the business. The scanning process needs to incorporate commercial scanning as well as technology scanning so that technological opportunities may be matched with market needs. Such levels of awareness increase the probability of individuals being able to develop and create associations on behalf of the organisation between an internal opportunity and an external opportunity. This process of association is the second stage in inward technology transfer. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Fig. 11.5 A conceptual framework for the development of genuine business opportunities Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Managing the inward transfer of technology The final stage in the inward technology transfer process is the application of the business opportunity for competitive advantage. This is the stage where the organization brings about commercial benefit from the launch of a new product or an improved product or manufacturing process. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Technology transfer and organisational learning Organisational know-how is captured in routines, such as particular ways of working. The relationship between knowledge transfer between individuals and groups and the whole organisation may be expressed as two interlinked systems. Fig. 11.6. Interlinking systems of knowledge-transfer relationships Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved  In order for inward technology transfer to take place, members of the organization must show an awareness of and a receptivity towards knowledge acquisition. Individual learning involves the continual search for new information of potential benefit to the organisation. In order for the organisation to learn, the knowledge must be assimilated into the core routines of the organisation. That is, the knowledge becomes embedded in skills and know-how. In the manner of double-loop learning, the individual and organisational cycles are interrelated and interdependent (Argyris and Schon, 1978). The learning process forms a loop, transferring knowledge from individual into the group. The process of assimilation and adoption of this new knowledge within the inner cycle moves the knowledge into the wider environment and thus into the loop of organisational learning. Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Table 11.3 Patent search results for nappies and sensors Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved Figure 11.7 A nappy patient moisture monitoring system Copyright © 2018, 2013, 2008 Pearson Education, Inc. All Rights Reserved