THE PROCESS OF TECHNOLOGICAL

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THE PROCESS OF TECHNOLOGICAL COMMERCIALIZATION
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Outline

• Who are We?
• Accomplishments of Importance for You?
• Why not Marketing and Market Research?
• What is Technological Commercialization?
• Developing the Value Proposition?
• Market Developing Versus Market Focused
  Approaches?
• The Process of Technological Description
• The Right Data for the Right Proposition
• Resources for the Entrepreneur

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The Process of Technology Commercialization - Why
do it?

• Team, Idea, Strategy
• Isnt the Team everything or most things?
• Isnt the Technology (Idea) everything?
• Doesnt the A team make the Strategy
• This Process serves as the Strategic
  Underpinnings of Firms success

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Why not just Marketing and Market Research?

• Marketing and Market research are key components
  of the process but are not the process
• Most Fortune 500 firms have Commercial or New
  Product Development Departments
• Marketing and Market research in large firms
  focus on established Markets and Products

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The Process of Technology Commercialization

• Critical Element in Business Plan writing
• A portion of our activities at UNM
• A feed back, feed forward loop dependant on
  Technology, Products and Markets
• It is more than just Marketing and Market
  research
• It is an Iterative Process ( you must do it many
  times)
• It is not simple nor easy

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Technology Commercialization Components

• Defining the nature of your Technology in
  Business terms
• Defining your Value Proposition
• Defining the nature of your Commercial offering
  in business terms
• Understanding the appropriate Commercialization
  process
• Developing Market(s) Knowledge
• Iterative Market Research

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Model of Technology Commercialization
Feed Forward Loop
Defining Technology
Nature of Commercialization Process
Value Proposition
Iterative Marketing
Feed Back Loop
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Defining Technology

• Disruptive Vs. Sustaining
• Business Technology Categorization
• Process of Technology Description
• Technology Forecasting and Assessment
• Competence Tools
• Technology Audits
• others

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The Technological Audit
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The Technological Audit - Part 2
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Defining the Commercialization Process

• Discontinuous Vs. Sustaining
• Marquis model versus the Walsh-Kirchhoff Model
• Stage of Infrastructure - The Walsh-Linton Model
• Virtuous vs. Emergent Cycle (Kassicieh, Romig,
  Williams and Walsh model)

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Model of the Process of Innovation (Marquis, 1969)
State of Technology
Search, experimentation calculation activity
Solution through invention
Recognition of technical feasibility
Fusion into design concept evaluation
Implementation use
Work out bugs scale-up
Information readily available
Solution through adoption
Recognition of potential demand
State of Societal Demand
1. Recognition 2. Idea formulation 3. Problem
Solving 4. Solution 5. Development 6.Utilization
Diffusion
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Defining The Marketing Process

• Market Focused Vs. Market Developing
• The Process of Market Forecasting
• The Process of Market Understanding
• five forces etc.
• Market Research - tools of the trade, limits and
  uses
• Regression
• Delphi
• others

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Integration - Putting it Together

• The process of Strategic Integration
• Technology Market Matrix
• Licensing and Marketing Technologies
• SWOT
• The Process of Strategic Mapping
• Many others

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Resources for Entrepreneurs

• A Business Plan requires at least 400 hours of
  effort and a skill sets that most entrepreneurs
  do not possess but can develop
• At least 4 Ways to obtain Business Plan
  Knowledge
• Get an MBA or a Masters of Management with a
  concentration in Technology Entrepreneurship
• Hire a Professional to do it
• Utilize a Mentorship program - UNM
• Have critique and then you rewrite focused on
  plan only issues

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STRATEGIES AS PREDICTORS OF SUCCESS IN NEW
TECHNOLOGY INTENSIVE FIRMS

• By
• Steven T. Walsh
• Bruce A. Kirchhoff

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STRATEGIES AS PREDICTORS OF SUCCESS IN NEW
TECHNOLOGY INTENSIVE FIRMS

• Which factors contribute the most to success of
  new technology intensive firms.
• 1. Competencies?
• 2. Capabilities?
• 3. Strategies?

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OUTLINE OF PRESENTATION

• Brief review of underlying theory.
• Description of research questions.
• Industry description.
• Data Collection
• Competencies and capabilities required for
  epochs.
• Entry Strategy Definitions
• Measuring Firm Success
• Results
• Conclusions

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Schumpeter vs Kirzner

• Morone (1994) Entrepreneurs innovative
  capabilities/competencies are the driving force
  that changes the market, i.e., entrepreneurs
  drive markets. Schumpeterian entry or
  entrepreneurial push
• Kirzner (1979) Markets create opportunities for
  entrepreneurial entry, i.e., markets drive
  entrepreneurs. General equilibrium theory or
  market pull
• Both processes are probably at work.

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QUESTIONS FOR ANALYSIS

• 1. Core competencies and capabilities influence
  new firm success.
• 2. Schumpeterian entrepreneurial push will be
  more successful than market pull entry
  strategies.
• 3. Entry strategies are more important
  determinants of new venture success than
  competencies and/or capabilities.

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TARGET INDUSTRY SEMICONDUCTOR SILICON

• Produces single crystal semiconductor silicon for
  creation of electronic components.
• Vital, world wide industry of over 5 billion
  annual sales.
• Rapid growth in demand for a commodity product.
• Prevalence of an industry standard product.
• Industry standard product changes over time.

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Competencies vs Capabilities

• Core competencies Corporate wide technologies
  and production skills that empower individual
  businesses to adapt quickly to changing
  opportunities. 1
• Core capabilities a set of differentiable
  skills, complementary assets and routines that
  provide the basis for a firms competitive
  capacities and sustainable advantages.21.Prahala
  d and Hamel, 1990.2. Pisano and Shuen, 1990

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SEMICONDUCTOR SILICON INDUSTRY CHARACTERISTICS

• Standard product has changed seven times yielding
  seven epochs.
• Epochs are defined by product characteristics.
• Price
• Semiconductor device typology
• Semiconductor design and production
• Technical substitutes for silicon
• Device product drivers.
• Diameter of crystal
• Micro-fabrication critical dimensions.

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SEVEN EPOCHS AND NEW ENTRIES

• Major changes in one or more of these variables
  created significant changes in industry standard
  product.
• Each new epoch was accompanied by one or more new
  firm entries.
• Each new epoch required additional core
  competencies.
• Epoch seven requires 12 competencies.

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DEFINING ENTRY CAPABILITIES AND COMPETENCIES

• Data collected through interviews with all firms.
• Determine the educational background and business
  experience of firms founder(s) at the time of
  firm formation.

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DEFINING MARKET ENTRY STRATEGIES

• BUYER PULL - FADING MARKET Buyers want to
  continue old technology.
• BUYER PULL - INDUSTRY STANDARD PRODUCT Buyers
  want the newest technology.
• BUYER PULL/SCHUMPERTIAN ENTRY Combination of
  both market strategies.
• SCHUMPETERIAN ENTRY Introduce new industry
  standard product.

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DEFINING ENTRY COMPETENCIES

• Inorganic chemistry
• Controlled environ-ment materials processing
• Batch processing
• Scale intensive processing capabilities
• Silane chemistries

• Crystalline material
• Ultra contamination free
• Larger diameter crystals
• Wafering
• Wafer polishing
• Wafer edge rounding

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Technological Competencies Required in Each Epoch
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DEFINING ENTRY CAPABILITIES

• Specific industry relevant business experience.
• Entrepreneurial start up experience
• Experience with materials manu-facturing business
  routines
• Business experience in industry charac-terized by
  high rate of tech change
• Sales or marketing experience with technology
  based products.

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Operationalizing Capabilities and Competencies

• Competency Quotient (CompQ)
• Count the number of competencies present
• Divide by the total possible competencies.
• Capabilities Quotient (CapaQ)
• Count the number of capabilities present
• Divide by five - the total possible capabilities.

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OPERATIONALIZING FIRM SUCCESS

• GREAT - (1) Active in 1997 or was purchased at a
  profit to founders or was in business for at
  least 10 years and (2) sales over 6 million in
  at least one year.
• MODEST - (1) Lived 6 years or more or sold at
  profit (2) achieved sales of 2 to 6 million
• POOR - (1)Lived five or less years or sold but
  not at a profit and (2) never generated revenues
  of over 2 million.

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Proposition 1. Core Competencies and Capabilities
Influence New Firm Success.

• Pearson correlations among compQ, capaQ, sales
  revenue, and life span mostly not significant at
  .05 level.
• CompQ cor. with sales revenue .56.
• CompQ mean significantly greater for positive
  profit firms.
• Thus, competencies are significant.

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Proposition 2 Schumpeterian Entry Yields
Greater Success

• Rev f(lifespan,compQ,capQ, strategy)
• Schump. Strategy 0 Buyer Strategy 1
• Model Significant (p .002)
• Strategy only significant variable
• Life f(rev., compQ, capQ, strategy)
• Model is significant (p .0001)
• Strategy only significant variable.
• CumPrft f(rev, compQ,capQ, strategy)
• Logit model significant (p .0002)
• Strategy is only significant variable

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Proposition 3. Entry Strategies Are More
Important Determinants of New Venture Success
than Competencies and/or Capabilities.

• Three regression show that entry strategies are
  the most important determinant of success.

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Summary of Silicon Producing Independent Entry
Firms
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Summary of Silicon Producing Independent Entry
Firms
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Summary of Silicon Producing Independent Entry
Firms
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Summary of Silicon Producing Independent Entry
Firms
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CONCLUSIONS

• Market entry strategy is significant in
  determining success.
• Schumpeterian entry strategies are more
  successful than pure buyer pull strategies.
• Managerial competencies and capabilities affect
  success through market entry strategy selection.
• Poor market entry strategies cannot be overcome
  with competencies/capabilities.

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CONCLUSIONS (cont.)

• Entrepreneurs with the greatest tech competencies
  choose Schumpeterian entry.
• Entrepreneurs with strong sales/marketing
  experienced choose buyer pull entry and perform
  poorly.
• Competencies and capabilities are important to
  success if proper entry strategies are selected.

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THE END