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L4: Partnering


L4: Partnering EC10 Innovation & Commercialisation Acquiring and managing relationships within a technology based business. Marcus Thompson wmt1_at_stir.ac.uk – PowerPoint PPT presentation

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Title: L4: Partnering

L4 Partnering
  • EC10 Innovation Commercialisation
  • Acquiring and managing relationships
  • within a technology based business.
  • Marcus Thompson
  • wmt1_at_stir.ac.uk

Partnering Outline
  • Screening the Idea
  • Licensing Joint Ventures
  • Technology Transfer
  • Exit Routes

1. Screening The Idea
  • Finding the Idea

Opportunities Ideas
  • "An opportunity has the qualities of being
    attractive, durable, and timely and is anchored
    in a product or service which creates or adds
    value for a buyer or and user" (Timmons 1999).
  • "Those situations in which new goods, services,
    raw materials and organising methods can he
    introduced and sold at greater than their cost of
    production " (Casson 1982).
  • An idea which may be a "Plan formed in the mind
    by thinking" (Oxford dictionary 1981)

Entrepreneurs Inventors
  • Finding or spotting a viable business ideas is as
    much an art, or matter of luck, as the use of
    systematic techniques.
  • the starting point for developing new business
    ideas lies inside the prospective entrepreneur
    rather than in the marketplace, laboratory,
    business plan
  • inventors and innovators do not necessarily make
    good business people.

Idea generation
  • Most of the worlds most successful entrepreneurs
    do not have a EUREKA moment.
  • They grasp concepts and deliver them to customers
    in a more profitable way than others.
  • They find customers who are unfulfilled.
  • Cheaper ways of making or selling existing
  • Delivering an existing product in a new way.
  • Identifying an unfulfilled market niche, or local
  • Inventing a new product that people need.

Idea generation
  • Observations
  • Necessity is the mother of invention.
  • Learn how businesses operate work in them
  • Learn from other successful people or experts.
  • Learn about products from all over the world.
  • Consider markets where products do not exist.
  • Very few will invent and patent dont be
  • Always challenge assumptions and status quo.

Putting A different Light on Things
  • The idea of a lighted flower pot may strike us as
    pretty humorous, but it was the answer to a
    lifelong struggle for a Russian immigrant named
    Conrad Hubert. Hubert came to the United States
    in 1890 when he was about 35 years old.  He was
    flat broke. He did what he could to earn a
    living.  He worked in a cigar store, ran a
    restaurant for a while and managed a boarding
    house. He even tried fanning and repairing
    watches. Whatever he did, however, he never made
    much money.  All he wanted was to stop worrying
    about making ends meet. Now Hubert had a friend
    named Joshua Lionel Cowen who was very interested
    in electricity. Joshua had invented a flower pot
    with a battery in it.  Electricity from the
    battery made the flower "light up" when a button
    was pressed.  Hubert decided he would try to sell
    these flower pots.  Meanwhile, Joshua became
    interested in something new, electric trains and
    he sold his friend the flower pot idea for almost
  • Fortunately, Hubert never went ahead with the
    flower pots because he had had an idea for a
    modification.  He took the battery, the bulb and
    the paper tube from the pot and remade it into
    what he called "an electric hand torch."  Hubert
    sold his invention at first as a novelty, but the
    usefulness of the flashlight soon became
    apparent.  When he died in 1928 it must have
    seemed to Hubert a long time ago that he was
    poor.  He was worth 8,000,000.

Six Stages to Evaluating an Idea
  • The Audit
  • The strategic audit addresses where are you are
    now and where are you going. It deals with ways
    to build on your (internal) strengths while
    minimising your weaknesses and also identifies
    the opportunities and converts threats that your
    business faces. From the audit a set of
    objectives is defined which guides the growth and
    direction that the business is to take. An Audit
    may raise uncomfortable issues but it will also
    address how to overcome barriers to growth of
    which you may not (yet) be aware!
  • Customer Survey
  • The next stage is a Customers Survey to find out
    what potential customers really think of your
    idea and what else they would like. It is always
    a mistake to assume they you already know about
    your customer wants and needs. If questions are
    asked, interesting opportunities arise!
  • The trick is to know how to choose and how to ask
    customers the right questions. Ask the wrong
    question you get the wrong answer and this leads
    to the wrong conclusion!

The Six Stages
  • Repositioning
  • Once information has been gathered it is analysed
    and the results are used to reposition the
    business in terms of its customers and the
    competition. Our approach, which can include
    existing and potential customers, will allow you
    to segment customers into groups. Care is
    taken to develop a method to record, on an
    on-going basis, customers needs and wants.
  • Targeting
  • The fourth stage is to use all this information
    to target the different groups of customers with
    the messages that they want to hear. This means
    mixing and matching different types of media
    whilst making sure that a coherent and consistent
    approach is adopted. Our approach means that
    there is less wastage because information is
    targeted and also because there are a number of
    ways the promotions industry uses to keep costs
    down. The Promotions Strategy will aim to take
    account of existing promotional material and it
    will include direct marketing.

Six Stages
  • Delivery
  • The next session concentrates on maximising your
    resources. Particular attention is made to
    ensuring that your company develops multi-channel
    methods to deliver and monitor its services.
  • Market Plan
  • Finally the information is gathered together into
    a working Marketing Plan. The Plan combines the
    findings from the audit, customer survey and
    promotions strategy into a single source for
    growing the customer base profitably.

Creativity Conflict
  • One common way managers kill creativity is by
    assembling homogeneous teams. The lure to do so
    is great. Homogeneous teams often reach
    solutions more quickly and with less friction
    along the way. These teams often report high
    morale, too. But homogeneous teams do little to
    enhance expertise and creative thinking.
    Everyone comes to the table with a similar
    mind-set. They leave with the same.
  • Amabile, T, How to Kill Creativity, HBR, Sept
    - Oct 1998, pp 77 - 85,

Creative Thinking
  • But the truth is that the winning strategies are
    smart, innovative and original, and break the
    rules, and most times there is someone somewhere
    who has seen through conventions and traditional
    assumptions to create a new business idea"
    Piercy 2002, p 269

2. Licensing Joint Ventures
  • Building an International Network

Uncertainty in Technology Environments
Selection process for standards and dominant
designs emerge is complex and difficult to
predict, e.g. future of 3G
Technological uncertainty
Sources of Uncertainty
Market uncertainty
Customer acceptance and adoption rates of
innovations notoriously difficult to predict,
e.g. centrino, i-pod, Wi-fi, video conferencing
Risk in Technology Environments
  • Cooperating with lead users
  • early identification of customer requirements
  • assistance in new product development

Strategies For Managing Risk
Limiting risk exposure avoid major capital
commitments (e.g. lease dont
buy) outsource alliances to access other firms
resources capabilities keep debt low
Flexibility use speed of response to adapt
quickly to new information learn from mistakes
To Lead or to Follow
  • Is innovation appropriable and protectable
    against imitation?
  • If so, advantages in leadership.
  • Is owning/ controlling industry standard critical
    to competitive advantage?
  • If so, advantage in being a leader.
  • The role of complementary resources.
  • Followers may be able to avoid investing in
    complementary resources due to better-
    established industry infrastructure.
  • Firms possessing portfolio/resources have the
    luxury of waiting.

The Profitability of Innovation
Legal protection/IPR. Organisational
resources. Imitability of the technology. Turbulen
ce/Churn. Global Drivers. Window of
Opportunity. Time to Market. Endorsements.

Value set against cost structure
Expected Return on Investment
Ability to communicate the value of the
innovation to target customers.
Assessing Emerging Opportunities
Information Market Characteristics Product
Characteristics Buyer Characteristics
Process is interactive each cycle refines the
Analysis Critical relationships Key Success
Synthesis Refine Critical relationships
New Opportunity
Wickham, Strategic Marketing, Pitman, p158, 1998
Uppusala Model
  • A sequential process of functional migration
    based on a firms.. Gradual acquisition,
    integration use of knowledge about foreign
    markets operations, and on its successively
    increasing commitment to foreign
    markets.... Its about learning .. To
    overcome psychic distance .. Over time, firms
    enter foreign markets with greater psychic

Networks Collaborations
  • Firms not seen as bounded legal entities
  • Instead as a complex set of exchange
    relationshipswithin outwith the firm

Networks Collaborations
  • Existing relationships are resources used to
  • develop exchange relationships with actors in
    new networks
  • to make the firms own resources interdependent
    with resources of firms in other networks or
  • Internationalization develops from the
    co-operative development of new exchange

Drivers for Internationalisation
Product Scope
Restricted National Market
Narrow Niche Strategy
National Broad-based Strategy
Geographic Scope
International Broad-based Strategy
International Niche Strategy
Bartlett GoshalsIdentification of Needs model
Need for National Responsiveness in Selling
Globalization Strategy
Mixed Strategythink global act local
Need for Globalization in Production
National ResponsivenessStrategy
Mixed StrategyInternational Standardization
Foreign Direct Investment (FDI)
  • Greatest Control (supposedly)
  • Greatest Direct Investment Cost
  • Massive local knowledge requirement
  • Greenfield Acquisition alternatives

Contractual Agreements
  • Some Control retained, according to contract
  • Low or negative cost possible
  • Can avoid local knowledge need
  • Many alternatives of structure/ organization

Exporting through Distributors / Agents
  • Little Control retained
  • Low cost, low reward
  • Explicitly avoids local knowledge need

Joint Ventures
  • Control achieved through joint ownership
  • Variable Direct Investment Cost
  • Local knowledge requirement can be lessened
    (depending on partner)
  • Many alternatives of structure/ organization

Licensing / Franchising
  • Some Control retained, according to contract
  • Low or negative cost possible
  • Can avoid local knowledge need
  • Many alternatives of structure/ organization

  • A strategic alliance describes any relationship
    between companies involving a sharing of common
  • It is an agreement between two or more partners
    to share knowledge or resources that could be
    beneficial to all involved.

Types of Alliance
  • Intra-industry alliances
  • used to 'protect the home turf.' eg US carmakers
    entered into an alliance to develop a new battery
    for an electric car. If successful, the battery
    alliance could help fight off foreign
  • Inter-industry alliances
  • used to pool expertise and create synergy.
  • Eg the alliance between chemical giant DuPont and
    pharmaceutical giant Merck existed to combine
    DuPont's RD ability with Merck's capital and
    market rights.

Why are alliances formed
  • To avoid barriers to entry
  • To create synergy by pooling resources and
    sharing expertise
  • To reduce/share risk
  • To gain access to new markets
  • To source raw materials

Influencing Factor
  • The state of technology is a major influencing
    factor in selecting partners for alliances.
  • Firms seeking immediate competitive advantage
    will seek alliances in new but readily available
  • The fusion of technology, whereby one partner is
    used to contribute the specific knowledge of a
    process that is critical to gain competitive

Critical Issues
  • Goal compatibility
  • Without this, alliance partners may pull in
    different directions
  • Synergy
  • One is strong where the other is weak. This is
    the major reason for and the advantage of the
    alliance. The partnership must be more efficient
    and effective than if each alliance partner was
    performing the similar tasks individually
  • Value chain
  • There must be a clear understanding of the value
    each partner will bring to the alliance.
  • Balancing contributions
  • This is ne34eded in order to avoid one partner
    dominating the alliance.

Vya, N, Sleburn W, 2001
3. Technology Transfer
  • Sources of Innovation and their diffusion from
    pure science to commercial product

Technology Perspectives
  • Technology Innovations
  • exploitation of new ideas incorporating new
    technologies, design and best practice is the key
  • Commercial Innovation
  • Venture management strategies and structures that
    bring these new technologies to market.

Commercial Innovation
  • Commercial Innovation is about doing things new
    or different (from your competitors).
  • It is a management process that centres on being
    creative visionary.
  • It presents itself as the ability to filter and
    then commercialise.
  • It applies to
  • new products
  • new business practices
  • new market applications
  • These are the skills of the entrepreneur. Are
    they the skills of the scientist?

Innovation Triggers
  • Push Innovation. 
  • Where an organisation is already active in a
    market and needs to maintain competitive
    advantage.  Here the innovator can be a prisoner
    to their own RD Success.  Ideally this form
    should be continuous.  Downside - can be
    product-centred organisation. Upside is that it
    is sustainable model.
  • Pull innovation.
  • Where an emerging technology allows innovations
    to exceed what a customer thought was possible. 
    These are quantum scientific leaps.  These are
    the real scientific innovations. These are
    disruptive innovations.
  • Downside - the pull innovation is discontinuous
    and extremely risky.  Discontinuous innovation
    can also be a one product wonder. SMEs or
  • This is where the venture management skills comes

Measuring Innovations
  • Distinctiveness
  • A distinctive innovation rewrites the rules.
  • How is this innovation distinct from other ideas
    that have historically emerged?
  • Is it the first of its kind in any form?
  • Is it the first successful implementation?
  • Companies should also ask questions that help us
    understand if the rules of the game really have
    been rewritten
  • Does your innovation make others react to what
    you have created and now offer?
  • Are others forced to make changes based on your
  • Does this innovation change the basis of

Chen, E, Kai-ling Ho, 2001
Measuring Innovation
  • Impact
  • Impact differentiates the innovations from the
    mere inventions.
  • Is a company only dealing with primary impact? Or
    is it also valuing the effects of the innovation
    beyond the scope of its primary customers and
    achieving secondary impact?
  • Is a company evaluating measurable impact today
    as well as the future potential impact?

Technology Transfer
  • Tech transfer is the flavour of the decade
  • EU White Paper on Growth Competitiveness and
  • EU Green Paper on Innovation
  • DTI Competitiveness White Paper
  • HEFCE Reviews of University-Industry Linkages
  • Lambert Review
  • Regional initiatives PoC, RSE Fellowships
  • Entrepreneurship initiatives EHE, Science
    Enterprise Challenge
  • The third income stream debate

Non Conformity
  • New and small firms are not a homogeneous group
    with equal enthusiasm, ability, resources or
    inclination to grow.
  • Whilst new and small firm sector in aggregate
    continues to make a significant contribution to
    the total employment pool, the aggregate data
    masks a highly skewed distribution.
  • Whilst most firms employ a few people, only a few
    provide significant employment.

Industry Collaboration
  • All focus on closer links (both actual and
    desired) between universities, industry and
    government, and all essentially predicated on a
    view that increased UIC is a good thing

  • Calls to reinterpret the role of the university
    as a
  • Hotbed of entrepreneurship
  • Locus of economic development
  • Agent of regional transformation

SEN Policy Towards Academics
  • If you are an academic, or academic researcher,
    working in one of Scotland's higher education
    institutions, NHS trusts or research
    establishments, Scottish Enterprise can help you
    to bring your work to the marketplace.
  • Proof of Concept Programme funding to early-stage
    ideas that have typically reached patent level,
    and could lead to the creation of new businesses,
    or the licensing of innovative technologies.
  • Enterprise Fellowship programme, funded by
    Scottish Enterprise and delivered by the Royal
    Society of Edinburgh, helps individual academic
    researchers to develop spin-out companies.
  • The University of Edinburgh Stanford University
    link aims to help establish Scotland as a global
    leader in the commercial development of language
  • Kelvin Institute aims to transform the
    ground-breaking research taking place in
    participating universities today into high-value,
    commercial, innovative solutions, delivering
    substantial benefits to everyone involved.
  • These initiatives are a part of Scottish
    Enterprise's commitment to increase the flow of
    good ideas from the research base into Scottish
    industry and commerce.
  • We also part fund Technology Ventures Scotland
    which was set up to provide a strategic and
    overarching role in encouraging the
    commercialisation of Scotland's Science and
    Technology base.

University Technology Issues
  • Three issues
  • The technology transfer process
  • What is it and what drives it?
  • The spin-out company process
  • Organising early stage technology development
  • The entrepreneurial curriculum
  • Rethinking the basis for learning in universities?

Technology transfer agenda
  • Focus on commercialisation of scientific and
    technical knowledge
  • Instrumental tax dollars have paid for this
  • Principled we ought to make an economic
    contribution (or, save the planet)
  • Utilitarian we need a return on expenditure on

  • Commercialisation and technology transfer takes
    many forms
  • Licensing technology
  • Spinout company formation
  • Collaborative research and TT projects
  • Faculty/student/industry exchange and internship
  • Consultancy/applied research
  • Teaching, education and outreach programs

  • Funding (especially to replace reduced government
    core funding)
  • access to new ideas and techniques
  • improved contribution to economic needs of region
  • broaden researchers experience
  • improve quality of research firms as efficient
    testing instruments

  • Lack of internal resources - individual staff
  • Lack of internal resources - institutional
  • RAE and the publish or perish culture
  • Lack of academic recognition for collaborative
  • Culture gap researchers vs industrialists
  • Priority conflict publish vs protect IPR
  • Attitude of business (SMEs especially) - ivory
    tower stereotype

  • Lack of commercial awareness (markets,
    timescales) by academics
  • Short-term problem solving emphasis by industry
    (tech transfer is not always leading edge)
  • Culture shock in terms of university timescales
    and project management
  • Mismatch between absorptive capacity of local
    industry and the knowledge/technology available
    for transfer

  • Most effective forms of technology transfer are
    consulting and contract research - improved
    efficiency of collaboration
  • Need for improved marketing of tech transfer
    activities and support internally and externally
  • Review reward and recognition for involvement
    in tech transfer

4. Exit Routes
Conflicts Power within a Channel
  • Traditional Channel Management is about
  • Stern and E1 Ansary (1988)
  • Power is the ability of one channel member to get
    another channel member to do what the latter
    would not otherwise have done. Power is the
    inverse of dependence the more highly dependent
    one channel member is on another, the more power
    the latter has relative to the former.
  • New paradigm Trade Marketing win-win
  • Partnering

  • TM as a common effort by suppliers and retailers
    to optimize relations and harmonize resources so
    as to better serve the consumer and/or try and
    achieve mutual economies of scale... It is a
    question of the supplier considering the retailer
    as a customer, with all that that involves. The
    retailer is no longer a mere subcontractor, he
    has become a partner and more than a partner,
    he has become a customer and should be treated as

Marc Dupuis and Elisabeth Tissier-Desbordes,
(1996) Trade marketing and retailing a European
approach,, ESCP, Paris Graduate School of
Management, 79 av. de la Rpublique, 75011 Paris,
Supply Chain Management
  • an emphasis on joint reduction in channel
  • a focus on channel-wide cost efficiencies
  • a long-term horizon
  • a information sharing as required for planning
    and monitoring processes
  • an emphasis on speed of inventory operations and

Alternatives for Exploiting Innovation
Outsourcing certain functions
Strategic Alliance
Joint Venture
Internal Commercialisation
Biggest investment requirement and corresponding
risks. Benefits of control
small investment risk, but small returns also
limited (unless patent position strong) Some
legal risks
Limits capital investment, but may create
dependence on supplies/partners
Shares investment and risk. Risk of partner
disagreement and culture clash
Benefits of flexibility, risks of informal
Risk Return
Permits accessing of outside resources and
Substantial requirements in terms of finance,
production capability, marketing capability,
distribution, etc.
Permits pooling of the resources and
capabilities of more than one firm
Competing Resources
Konica licensing its digital camera to Hewlett
Pixars computer animated movies (e.g. Toy
Story) marketed and distributed by Disney Co.
Apple and Sharp build the Newton PDA
Microsoft and NBC formed MSNBC
TI divestment of its Digital Signal Processing
Route Adopted
Directorship Form a management team, raise
finance and launch.
Licensing Commercial arrangement through which
licensor of IPR allows licensee to develop sell
or use in return for a royalty payment.
Level of Control
Assignation Sell rights and transfer the
ownership of the invention and IPR to third party
for lump sum.
Joint Venture Partnerships Collaboration with
one or more organisations to exploit IPR.
Includes sharing of costs and revenues.
To Lead or to Follow
  • Is innovation appropriable and protectable
    against imitation?
  • If so, advantages in leadership.
  • Is owning/ controlling industry standard critical
    to competitive advantage?
  • If so, advantage in being a leader.
  • The role of complementary resources.
  • Followers may be able to avoid investing in
    complementary resources due to better-
    established industry infrastructure.
  • Firms possessing portfolio/resources have the
    luxury of waiting.

Assessing Emerging Opportunities
Information Market Characteristics Product
Characteristics Buyer Characteristics
Process is interactive each cycle refines the
Analysis Critical relationships Key Success
Synthesis Refine Critical relationships
New Opportunity
Wickham, Strategic Marketing, Pitman, p158, 1998
Going to Market
Value Definition
Value Development
Value Delivery
Logistics/ Supply Chain Attitudes Behaviour
Information Interpreting Understanding Learning

Operations Motivation Responsiveness
Process of Going to Market
Customer Value
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