PATHS TO COMMERCIALISATION
From Figure 1, it can be seen that technology
transfer or licensing is only one way for
commercialising an innovative product. Speser [2]
listed three paths to commercialising inventions
and innovative products:
1 Internal development and use: This path
makes sense if the innovator is working for
an organisation, in which the organisation
manufactures and sells the product invented or
applies the process developed by the innovator
to make and sell products. For example, if the
innovator is a Research and Development
Engineer at Panasonic, whose job is to
continuously propose and develop new ideas
and concepts for kitchen appliances such
as microwave ovens, ovens, toasters, fryers,
food processors, refrigerators, et cetera, then
Panasonic is responsible for commercialising
its own innovative products without the need to
pay other organisations for commercialisation
purposes.
2 Set up an organisation to exploit the
i nvention: This is known as a “spin-off
which is a new organisation created to
license researchers’ inventions, products or
technologies. A spin-off funds further research
at institutions with the aim of developing
and improving technologies for licensing by
the organisation. Researchers may become
shareholders of a spin-off. In general, a spin-off
requires more effort than technology licensing
but may generate bigger financial upside in the
long term. A spin-off should only be considered
as an alternative to technology licensing based
on the following criteria:
●●
There is a lack of suitable receptor capacity
(licensee) for intellectual property.
●●
The intellectual property is a solid
foundation for a new organisation and is a
potential platform for additional synergistic
intellectual properties.
●●
There is a potential for the spin-off to be a
US$50 million public organisation.
●●
The spin-off can attract funding and
management.
●●
There is a potential for the spin-off to give
returns to innovators, research institutions
and investors.
3 Technology transfer or licensing: This
refers to an agreement, whereby an owner
of a technological intellectual property (the
licensor) allows another party (the licensee)
to use, modify, and/or resell that intellectual
property in exchange for compensation. The
compensation may take the form of a lump-sum
royalty based on the volume of production (i.e.
running royalty), or right to use the licensee’s
technology (i.e. cross licensing). Small firms
can earn substantial income from markets
that they could not penetrate on their own and
large firms can have foreign affiliates without
high financial and legal risks via licensing of
proprietary technology. The license may be
exclusive, in which only one organisation has
the license for the technology or it can be in
the form of multiple licenses. Generally, it
takes 10 times more time to manage a spinoff than it does for a licensing transaction,
and therefore licensing is a common option
for commercialising researchers’ inventions
in universities, research institutions and
Government bodies.
This is summarised in Figure 2.
THE NEED FOR COMMERCIALISATION
Is commercialisation really necessary? Anderson
[3] highlighted that without commercialisation,
there is usually the temptation to simply take a
research that “works” and then “draw it up and get
it into production.” Although this may appear to be
an effective process and may temporarily please
managers and investors, there are potential pitfalls
associated with skipping the commercialisation
stage. Calson and Willmot [4] have listed five
disciplines for creating what customers want.
The need for commercialisation is explained in
detail below and illustrated in Figure 3. The first
three pertain particularly to commercialisation of
innovations under internal development and use
of a business, whereas the final one pertains to
innovations under spin-off organisations and
technology licensing.
a. Real time-to-market: Time-to-market
refers to the length of time taken in the
product development process, beginning
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