Innovation to Business

Innovation to Business - Integrative Technology Commercialisation as a Good-Practice Example

Wolfgang Kniejski and Veneta Ivanova

Technology transfer is the process through which knowledge, products or processes are transferred from one organization to another for business benefit. Indeed, the study of technology transfer is not new; however, recent years have witnessed the emergence of new paradigms for technology transfer, reflecting the internationalisation of the economy, shorter process-cycles and the diversity of roles of the different parties involved.

The understanding of technology transfer is different for the different stakeholders: governments and end-users need to understand the costs and benefits of a technology; innovators need to understand how to adapt it; and firms need to understand how to market it and how it meets user needs. A successful commercialisation process needs to consider the interests of each stakeholder and to guarantee long-term sustainability.

INI-Novation GmbH has successfully developed an innovative and novel approach for technology transfer and technology commercialisation, covering and linking all the elements in this process and supporting the entrepreneurs from identifying the commercial potential to winning the first customers.

1 Paradigm shift in technology transfer

1.1 Challenges to innovation processes in a modern world

Globalisation, new technologies and growth in the service sector are all combined to quicken the pace of change today. In a knowledge-driven economy innovation has become essential for achievements in the business world. With this growth in importance, large and small organisations have begun to re-evaluate their products, their services, and even their corporate culture, in the attempt to maintain their competitiveness in the global markets of today.

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Furthermore, there is a broad consensus across Europe that the creation of innovative firms, which are often spin-offs from academic institutions and R&D centres, has proven to be an effective mechanism for improving the innovative application of research results and consequently for contributing to socio-economic development. In this respect, an effective interface between the R&D system and industry is a crucial element in fostering new innovative businesses.

Organisations in both the public and private sectors have launched initiatives to develop methodologies and tools to support entrepreneurship and management of innovation and technology transfer. Institutions for higher education, business schools and consulting companies continue to develop the appropriate methodologies and tools, while public authorities design and set up education and training schemes aimed at disseminating best practice among businesses of all kinds.

The innovation research community has tracked many of these trends, but only a few governments yet reflect them in their innovation policies. Around the world, innovation policies assume innovation to be synonymous with scientific and technological invention - a subset of innovation only relevant to a small proportion of the economy. This is no ignorance or indifference, but a result of the failure of the R&D-system and policymakers collectively to develop meaningful policies that could support new forms of innovation.

There is now a need for this matter to be solved urgently. An increasingly competitive global economy and the failure of traditional approaches to meet pressing social challenges mean that innovation management is now a necessity, not a luxury. So, innovation policy needs to respond to the challenges set out there instead of remaining based on a linear view of the innovation process. The problem today is that knowledge transfer from universities and R&D institutions to industry is still not accomplished on the required scale. The traditional linear or “pipeline” process of technology transfer has failed to withstand the emergence of new sectors or the new forms of innovation that accompany them. Processes still exist but are increasingly superseded by more interactive and turbulent activities.

1.2 The meaning of technology transfer

For the term technology transfer many definitions can be found. In the sixties it was used to describe the European thriving for technological equalization with the USA, as well as the western export of technological know-how to countries of the so-called third world. Local companies that exported technologies to their foreign subsidiaries also used this term. The German term “Wissenschaftstransfer” was established in context with the target-motivated cooperation of science and industry. The focus was often on some important cases rather than on the general definition. Nowadays, technology transfer is understood as the transfer of technologies from science (universities and publicly funded research organisations) to industry.

The relationship between science and industry is characterized by the phenomenon of different systems. While science focuses on improving the general standard of knowledge in every area regardless of its economic exploitation potential, industries follow market rules and show investing behaviour. Therefore they only get involved in research to gain profits. As the ideal exploitation of existing knowledge is essential for the technological competitiveness of an economy, an active technology transfer has to ensure that existing technology is not only transferred in time, but also with regard to the economically acceptable conditions of the location, where it is needed. The economic realisation of transfer projects becomes more and more relevant for public research institutions, meaning that research results are supposed to be exploited to gather external revenues as so called third-parties’ income.

However, specialists criticize the dissatisfying entrepreneurial spirit, traditional organisational structures, and cost-minimizing strategies. The coordination of technology transfer requires a technology management. As the technology transfer process has an essential influence on this management, the following chapters focus on explaining the necessary elements of technology management that provide the basis to enable a value- oriented, well-planned, temporary exchange between organisations that target the transfer of technologies from their scientific origin to a commercial exploitation'.

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Figure 1: Technology transfer scheme

2 Integrated technology transfer and its reference implementation

2.1 Integrated technology transfer processes

Technology transfer, as a general term for all sources of external access to technological knowledge, is defined as the planned transfer of technological and scientific knowledge between individuals and organisations targeting inventions and innovation.

The terms “innovation” and “invention” often occur in the same context. Invention describes the process of knowledge generation by finding a technical, commercial, organisational or social solution, linked to a point of time. An invention of technical nature and new to the professional can be exploited commercially and can therefore be the basis for an innovation. Schumpeter was right to emphasize the distinction between invention and innovation: “There is an enormous difference between 'working' under laboratory conditions and working under commercial conditions”. Schumpeter used the expression 'innovation' to connote the first introduction of a new product, process, method or system into the economy. Pavitt explains three sub-processes of innovation: production of knowledge, transformation of knowledge and continuous matching of the latter to market needs and demands.

It is to Schumpeter that we owe the threefold distinction between invention, innovation and diffusion of innovations, which has now become the generally accepted convention in analysis of technical change. Innovation is a process that refines inventions and translates them into usable products. The capability of innovations to promote a radical change in structure underlines their extraordinary function. Long economic cycles explain the impact of pioneering innovations on the macroeconomic development. Focusing on macroeconomic effects of innovation, there is no widely accepted theory of firm-level processes of innovation. Nevertheless, the diffusion of innovations through a population of potential adapters is crucial for the achievement of productivity gains and successful competitive performance.¹

Innovation processes involve the exploration and exploitation of opportunities for new products, processes and services, based either on an advance in technical practice (“know­how”), or a change in market demand, or a combination of the two. Innovation is therefore essentially a matching process. Within a technology transfer process all kind of strategic, managerial and technical support is necessary for the development and commercialisation of innovative business ideas and technological applications. Examples are services directed to entrepreneurs, scientists and those directly offered to investors. They should be divided into the three different areas Basic Services, Composite Services, and Managed Services as illustrated and summarised in figure 2 below:

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Figure 2: Services to be offered within an integrated technology transfer process

Strategically oriented services are the key to success. Therefore, the entire technology transfer process has to integrate services in the broad range from identification and awareness, via screening, breeding, incubation, product development and final commercialisation up to post-commercialisation support. Furthermore, the services ought to be focused on the identification of entrepreneurs, development of their entrepreneurial skills, and also the development of an expert infrastructure to support the needs of technology based ventures. INI-Novation embraces all the different phases of entrepreneurship: from opportunity identification and motivation, up to issues of monitoring and control once the firm has been set up or a technology has been licensed.

The INI-Novation provides its partnering regions with new experiences and good practices in technology transfer, while supporting all staff, students and graduates of partnering universities and R&D institutions who are interested in the creation, identification, protection and exploitation of the research results and inventions. The methods are illustrated hereinafter. They provide the lines of business of which the technology commercialisation process itself generates profit.

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¹ Schumpeter (Theorie der wirtschaftlichen Entwicklung, 1911), p. 858.