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Management of Technology – from invention to innovation
June 2009, Japan

001K Srinivasan, ELCINA

The APO emphasizes the importance of creating multiplier effects from its projects so that the benefits can be shared with as many stakeholders as possible. Thus we were glad to learn that a participant in the APO multicountry observational study mission on Management of Technology held in Japan in June this year had contributed an article to ELCINA Electronics Outlook (July 2009 issue). In the article, he describes the key findings of the study mission and his analysis of the subject. The APO thanks Mr. K. Sriniasan for his initiative in sharing the knowledge he gained. We are pleased to be able to post the article on our Web site with the kind permission of the journal.

002

Management of Technology (MOT) is emerging as an important tool to leverage the outcome of research for commercial gains and thereby getting ahead of competition. Value creation and value capture are two aspects of MOT. Value creation arises from the germination of ideas and its tangible development in research laboratories. Value capture is capturing the dynamics of a product and its market behaviour. The purpose of value creation and value capture for an organization is to identify and develop capabilities that are hard to copy by peers and competition.

Research and Development (R&D) in commercial organizations have acquired an identity as a core business focus, distinct from being a mere shadow and secondary position to manufacturing and services in earlier years. Research itself can be seen to be in two parts: basic research, largely in the realm of pure sciences and applied research or innovation, transcending the limits of pure science. Applied research leads to technology development. While science is based on theory, technology is based on practice.

Value creation resulting in business expansion derives its strength from outcomes of research. Value creation in business can be either by improving the efficiencies of existing business activities or through the introduction of a new business activity.

Harnessing the outcome of research results in value creation for a business enterprise and for society in general. However, navigating the route from research to commercial exploitation is most challenging, a tortuous path posing extreme difficulties. There are two major barriers between research outcome and commercial exploitation. The first barrier is during transition from basic research to innovation and new business. This barrier is also known as the “Valley of Death” as it is here that even the best of research outcomes can die before becoming a commercial product because of the lack of proper support, including funding and marketing capabilities. The second barrier, known as the “Darwinian Sea”, separates commercialization (product development and marketing) and industrialization (market expansion). It symbolises the struggle of inventions to become innovations. The Darwinian Sea is so called because only the fittest will survive. A new product will fail to succeed unless the company or the product beats its competitors in a combination of old and new forms of market competition; thus, the company or product undergoes natural selection.

Good ideas from research that do not survive the valley of death are left to lie unused, resulting in delayed benefits to society and delayed profits to business enterprise. While funding for research is largely available through government support and allocation, and corporate sponsorship, there are very few sources of funding for creating a marketable product arising from invention.

It is here that MOT comes to the fore. MOT is crucial in the successful translation of research outcomes to business practice and benefit to society.

The focus of MOT is on value creation which is largely customer driven. MOT not only helps bridge the gap between research and innovation but also provides a new direction to business.

Dynamic companies go through The Valley of Death and Darwinian Sea during their growth process. Typical gaps associated with the Valley of Death and Darwinian Sea are insufficient infrastructure, difficulties in financing, insufficient human resources and management capabilities, risk-aversion, uncertain market conditions and economic environment, to name a few.

Gaps confront all types of companies, small companies as well as large corporates. Small sized businesses have constraints of finance, manpower, managerial capabilities and the capacity for taking risk. Gaps for large-sized companies arise from slow decision-making, entering new and small markets and coping with speed of change.

In every case, successful deployment of MOT will be based on analysis of the strength, weakness, opportunities and threats of an enterprise (SWOT Analysis), a commitment to take up challenges and planning for the future.

The Asian Productivity Organization’s Observational Study Mission on Management of Technology served to bring together representatives from different Asian countries to present MOT as practiced in some of Japan’s leading organizations. The programme included lectures by experts from academia, case study from world-class R&D organization and site visits to leading companies, all of whom have successfully, but in their own ways, integrated MOT in their businesses.

The key common factors for success of enterprises as learned from the APO study mission are:

  • Product and process customization: a customer-centric approach in deployment of technology has always resulted in success
  • Value creation and value capture: MOT is driven by value creation for all stake holders in the business enterprise and society
  • Risk management: the capacity to take risks is based on a combination of the managerial capability, team spirit, market analysis and planning for the future
  • Speed of response and innovation: the speed of change is crucial for staying ahead of competition. The ability to create a new business before the existing one declines and speeding the growth of new business are essential requirements for staying ahead of competition.

The three key factors for beating competition are timely identification of technological opportunities, integrating them into operations and subsequent transfer into the marketplace. This requires the understanding of technological innovation and technology transfer processes, as well as the effect of these new technologies on management practice, organizational structure, operational procedures, labor relations and marketing.

MOT as a strategic tool justifies deployment for business growth of SMEs and large corporate bodies. There are many common factors for success in business of SMEs and large corporates. These factors are: the ability to take risk, anticipating changes in customer preferences, the desire to excel and innovation as a key to overcome challenges, and exploring strategic partnerships.

It is often a common argument that SMEs do not posses the resources to undertake research nor acquire new technology. However, SMEs have advantages which may not be available to large companies. These advantages are access to government support for funding research, co-operative venture with other SMEs for co-development of products and processes, access to pooled resources, flexibility to access small markets and speed of change. Partnerships and alliances strengthen value chains. Small businesses are seen as increasingly instrumental in bringing the benefits of research to the marketplace.

The APO Technical Expert Service provides support through dissemination of information and consultancy on MOT.

There is much awareness on research and invention. There is also enough awareness on the financial and business world. However, there is very little understanding of what goes in between. This is where Management of Technology plays a crucial role.

“R&D”

It is not the “R”
It is not the “D”
It is the “&” in between
Phil Auerswald

Acknowledgements and References:
  • Asian Productivity Organization, Tokyo – for organizing the Observational Study Mission on MOT
  • Japan Productivity Centre, Tokyo – the implementing organization for the programme
  • National Productivity Council, India – the nodal organization for facilitating participation
  • Dr, Hiroshi Miyanaga, Professor, Graduate School of MOT, Tokyo University of Science – for the presentation on concept creation and a perspective of MOT in Japan
  • Dr. Robert Kneller, Professor, Research Centre for Advances Science and Technology, University of Tokyo – for the presentation on technology transfer from universities and government research institutes
  • Mr. Hirohide Ikeno, Executive Chief Advisor, Automobile R&D Centre, Honda R&D Co. Ltd.  – for the case study titled “Challenge to Dreams”
  • The managements of Elionix Inc., Kao Corporation, Nissan Motor Co. Ltd and Bayer CropScience – for facilitating site visits

Please click here to view the article published in the magazine.