Developing New technology productsWorkshop 21st December 2009

Murray Hunter

Why are you here?

The Farm Family Family & Farm History, Current farm Operation, Current Family Status.

Strategic Business Analysis

Land Labour Capital

Business Goals

Family Values

The Vision “Mission Statement”

Family Goals

Self Assessment

Decision Making Skills Knowledge

Competencies

Personal Goals

Business Competencies

Knowledge

Production & Operations

Marketing

Personnel

Financial

Risk Management

Horizontal and

vertical expansion

Aspirations

Self view

Income needs

Time Horizon

View of retirement

Opportunity cost of doing

other activities

Passion

Family Considerations

Generational

evolution

Grooming successors

Family aspirations

Lifestyle

Attachment

Land & Estate

Valuing the

estate

Liquidity needs

Tax planning

Alternative land use applications

Multi-

use/business

Investment Plan

Time horizon

Investment

options

Risk management

Tax planning

Opportunity cost of doing

other activities

Exit barriers

What Does it take?

Personality Paradigm

Positive Entrepreneur

Attributes

Strategic Paradigm

Action Paradigm

Cultural Paradigm

Chance & Fate

Paradigm

Creativity Paradigm

Skills Paradigm

Interpersonal Paradigm

Invention

Less than 2% of filed patents are ever commercialised

Does a new invention have consumer benefits or create any competitive advantage?

Can consumers accept the new invention?

Laundry Liquids Detergents

Concentrated Laundry Powders

Detergents with Special Additives

Laundry Detergent Tablets

Laundry Detergents Powders

Solid Soaps & Powders

Laundry Blue

Laundry Detergent Bars

Pre 1900’s

Up to Late 1940’s

1950’s until present

1980’s until present

Product Evolution

Evolution Verses Revolution

Changing Technology (slow to Change)Changing Lifestyles

Cheap Clothes Available (substitute)

Had to Reinvent the Company due to Slow Product Development

Products more than 5 years old usually don’t make major

contributions to a company’s revenue

•Technology

•Consumer style change

Products more than 5 years old usually don’t make major

contributions to a company’s revenue

•Technology

•Consumer style change

Why do companies need Innovation?

Innovation Under the

microscope

Vanilla Breakthrough?

New Flavour – New Product

Evolution

Examples of Innovation

Examples of Innovation

Examples of Innovation

Cationic Breakthrough?

To soap or not to soap?

Is this a breakthrough or not?

Prawn fishing successful in Kuala Lumpur

Not all innovations are successful

Why did it fail in Perlis?

Not all innovations are successful

Because these people in Perlis can fish for free by the roadside

Dispelling the myths about innovation

• Most new products are incremental steps in enhancement, rather than something

completely new (similar to the automobile industry)

• Very few really novel innovations are ever launched commercially

• Most companies are followers and not innovators (even the Body Shop)

• Out of 100 new ideas, less than 2 become a commercial reality

•Less than 5% of new products launched on the market are successful

The Past

Present time

We know the past and present Without any changes our

timeline will remain relatively unaltered

The effect of competitor innovation will bring product

evolution

This changes the parallel of the market gradually

A Radical change in technology

Will radically change the timeline into a new industry

The Past

Present time

We know the past and present

Without any changes our timeline will remain relatively unaltered

The effect of competitor innovation will bring product evolution

This changes the parallel of the market gradually

A Radical change in technology

Will radically change the timeline into a new

industry

Areas of Firm Innovation

Styl

e

TechnologyLow High

Low

Hig

h

Hotel Coffee Shop

Kedai Kopi Fast Food

Coffee Bean

Technology/Market Positioning

Many Factors Change Markets and Give rise to Opportunities

Product Opportunity

Gap

Social Social and cultural trends

and drivers Reviving historical trends Influence of international

trends

Technology State of the art and emerging technology Re-evaluating existing

technology Technology applied in new

areas

Economic State of the economy

Shift in focus on where to spend money

Level of disposable income Level of debt

Regulation Restriction of existing

regulations New regulations and impact

on product markets and supply chains

Pioneers Early followers

Early

Majority

Late

Majority

Late

Followers

Product LifecyclePotential Profitability

Time

Concept

Risk Taking

Competitive

Risk Taking

IP Value &

NoveltyIP Value

Profi

t

0 10 20 30

Length of Life Cycle (Years)

Cosmetics

Toys

Tools

Food Items

Pharmaceuticals

Fifty Years Ago

Today

Figure 6.7. The Product Life Cycle Has Shortened Dramatically Over the Last 50 Years

What are the sources of innovation?

Sources of Innovation

Drucker (1984) Identified seven sources of innovation

Unexpected occurrences unexpected success

Unexpected failure

Incongruities

Process needs

Demographic changes

Industry and Market Changes

Perceptual changes

Knowledge based concepts

Types of Innovation

InventionTotally new product

ExtensionNew use or different application of an already existing product

DuplicationCreative replication of an existing concept

SynthesisCombination of existing concepts and factors into new use

Other ExamplesTeflon

Unexpected occurrences

incongruities

incongruities

incongruities

Process Needs

Industry Changes

Demographics

changes in perceptions

New knowledge

Principals of Innovation

• Scan opportunities through purposeful processes• Be both conceptual and perceptual – get out into

industry• To be effective, it has to be simple and focused – has

to be used by average people• Pursue ideas that are going to make major change• Market knowledge is important

New Knowledge Innovation is the most risky

Better to focus on other sources of innovation: ie, applications of existing ideas and technologies as new knowledge technology development is extremely long term.

Bright ideas are the riskiest source of innovation and rarely succeed. Receptability is always the problem (look at patents files but never commercialised)

Issues about University

Commercialization

Introduction

Traditionally Research has been:● Single disciplinary● Followed personal interests of researchers● Research output objectives: ►a paper ►a conference presentation● Not part of any strategic research plan

Researchers’ Environment

• Teaching commitments• Intellectual and market isolation• Research driven by need of funding• Little expectation other than ‘traditional

research output’• ‘Lukewarm’ supportive environment• Something that is expected

Typical Research Model

Idea from Research Institute, University faculty or individual within them

Undertake study with objectives interesting to researchers

Primarily single discipline approach

Objectives based on discipline thinking

Project results and conclusion

Publish

Paper at Conference

Add to CV

Little commercial interest:· Private sector unaware

·No or limited economic study or little consideration to scale up potentialNB: to bioprocess engineer has this as a fundamental consideration (difference between scientist and engineer)

Types of Research

• Pure Basic Research • Experimental and theoretical work undertaken

to acquire new knowledge without looking for long-term benefits other than the advancement of knowledge

Types of Research

• Applied Research • Original work undertaken primarily to acquire

new knowledge with a specific application in mind

Types of Research

• Strategic Basic Research • Experimental and theoretical work undertaken

to acquire new knowledge directed into specified broad areas that are expected to lead to useful discoveries

Types of Research

• Experimental Development • Systematic work, drawing on existing

knowledge gained from research and/or practical experience, that is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed.

Types of Research

• Experimental Development • Systematic work, drawing on existing

knowledge gained from research and/or practical experience, that is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed.

Types of Research

• Collaborative Research • research projects jointly developed by the

university and the external partner

Types of Research

• Contract Research • request made by industry or government

agency for a specified research project to be carried out with identified aims & objectives

Types of Research

• Sponsored Research • granting agencies advertise a call for

applications and applications are normally peer reviewed. Research projects are normally basic or strategic but not normally concerned with commercial outcomes

Types of Research

• Consultancy • project involves buying the skills and expertise

(background IP) of university staff, as well as infrastructure to work on a specified project

Types of Research

• Demonstrative Research • Seeks to answer a question or solve a problem

from data collected, usually un-replicated, for the purposes of demonstrating a concept or process to a group, or a method, part of skill development or experiential learning

Thus research will stem from Basic Research to Applied, Collaborative, demonstrative & Contract Research

Problems Associated

with Commercialization

Problems Associated with Commercialisation

• Market• Technology takers• Legal• Institutional• Technology• Other

Market Problems

• Failure of invention to meet market needs

• Small size of target market• Lower price than expected• Unable to gain distribution• Lack of market research

Technology Taker Problems• Lack of willingness of companies to take up technology• Disagreements on terms and conditions of technology

transfer• Perceived complexity of technology and risk• Limited human resources on the part of companies to put

time into implementing the new technology or launching the product

• Not familiar with industry• Financially weak• Returns not attractive enough• High capital expenditure not worth the risk• Limited distribution capability

Legal Problems

• Lack of Clear and clean patent ownership• Government regulations• Legal costs• Due diligence and burden of risk• License exclusivity • Long period of time for patent grant

Institutional Problems• Too many people to deal with at the university or research

institute• Low priority by university administrators to allocate resources

for patents, contract research, consultancy, technology transfer and education services

• High cost of licensing• Post license technical support offered by university• Researcher leaves institution• Researchers too many projects (time constraint)• Lack of expertise in commercialisation unit

Competency and Strength of Research Institutes/Universities

Laboratory Results

Pilot Plant/Prototype

Industrial Scale

Technology Transfer

Research

Development

Commercialisation

Strong

Moderate/

Strong

Moderate/Weak

Investors expect complete technology transferR&D Institutes offer to development stage

Tan Sri Dr. Yusof Basiron, Commercialisation of R&D Outputs – MPOB Ex

Other Problems

• Unreliable financial estimates• Rely on Government grant that never

comes• Poor follow up

University Organisation

• Hierarchical• Process orientated• Procedurised• Departmentalised• Strong “conformity” values• Social goals verses performance goals THIS IS AN EXCELLENT ORGANISATION DESIGN FOR A

TEACHING INSTITUTION

Conflict Between Organisational Design and the Creative Individual

• Hierarchical design excellent for time and motion activities – In macro terms a teaching organisation is a time and motion logistical exercise

• An organic organisational structure has been found to be much more supportive of a creative environment

Typical Research Project Structure

Problem

Potential Applications of Technology

Basic Technologies

Collaborators ResourcesPotential Product/Process

Outcomes

Milestones/Expected Outcomes

Spin-Offs Downstream/Vertical

Market or Other Significance for Developed Application

Industry

Entrepreneurs

Research Institutions

Technology Needs

Solution

A simple Market Driven Research Model

Industry defined problem or issue

Parameters of problem researched with reference to interdisciplinary frames

Theoretical solution thought out, becomes project objectives, with boundaries of industry requirements

Process designLaboratory trialScaling up

Industry implementation

STEPS IN THE NEW PRODUCT DEVELOPMENT PROCESS

Steps in Commercialisation

• Adopt Market Driven Research Framework• View Research in a Product Development

Framework• View Technology as a means to problem

solving rather than an end (i.e., what basic technologies can be utilised?)

• Seek to develop a multidisciplinary team with industry representatives

Steps in Commercialisation (Cont)

• Once established technology, identify its benefit to particular applications

• Horizontal diversifications• Focus on IDS (Information Delivery Systems)

for user friendliness• Protect IP• Show off Potential applications where

potential takers are

Some Problems

• Finding out what the market requires is a skill that needs to be developed

• There may be no companies involved in a particular niche of an industry sector that we are interested in – This is another barrier to commercialisation in Malaysia

• Scientists are used to working in isolation to industry

The Product Development Process

• Ideation• Developing Product Specifications• Market and Application Planning• Concept and Prototype Generation• Product Registration• Product Design• Further System Development

Steps in the Product Development Process (Cont.)

• Manufacturing System Design• Review Packaging and Product• Marketing Review• Test Market (Optional)• Refining of Product Before Major Launch• Major Launch

Ideation

Evaluate for Opportunity

Develop Product Specifications

Market & Product Planning

Concept & Prototype Generation

Packaging Design

Manufacturing System Design

Product Registration

Further Product Formulation

Final Product & Packaging Review

Limited Test Market Refinement of

Product Before launch

Product Launch

Post Launch Product

Refinements

The generation of an original product idea from some source

Development of a desired list of

product attributes

Idea needs to be evaluated to determine whether it is a viable market opportunity

Early attention needed to prevent delays in final

approval

Difficult to organise because of high customer

concentration

Needed to fix any unforseen product issues immediately before/after

launch

Both technical and market aspects

The design of plant for new product forms will require a

number of product formulation modifications

Concerned about encapsulating desired theme and attributes into packaging

Early product/strategy concepts

Opportunity is a Construct

Ability to make linkages Anchoring a source of innovation

Having the right Skills

Networks

Resources

Product/MarketStrategy

VisionPlatform

Cognitive, hemispherial & field Perception

Opportunity is a Construct

Ability to make linkages Anchoring a source of innovation

Having the right Skills

Networks

Resources

Product/MarketStrategy

VisionPlatform

Dream, ego, aspiration, greed, survival, education

ExperienceReference & Benchmark

Cognitive, hemispherial & field Perception

Source Explanation Examples

The unexpected success, failure or

external occurrence

Success of a revolutionary product or the application of technology from one industry to another, sudden or unnoticed demographic changes caused by wars, insurgencies, migration, etc.

Apple computerRapid decline of Proton’s market share

An incongruity between reality as it actually is and

what it ought to be

A change that is already occurring or can be made to occur within an industry. It may be visible to those inside the industry, often overlooked or taken for granted.

Sugar free products and sugar replacements due to concern for healthIncreasing demand for travel and holidays due to increasing incomes and leisure time

Inadequacy of an existing

technology or business process

An improvement in process that makes consumers more satisfied based on an improvement or change in technology.

Caffeine free productsMicrowave ovensMobile phones

Changes in industry or market

structure

New ways and means of undertaking business based on identified opportunities or gradual shifting of the nature of the industry.

Health care industryEducation industry – private education

Perceptual changes

Changes in peoples awareness founded on new knowledge and/or values or growing affluence leading to new fashions and tastes

Leisure and exercise industry aerobics & gyms

Demographic changes

Gradual shift of demographics in population by age, income groups or ethnic groups, etc

Establishment of more retirement homes

New knowledge New knowledge or application of existing theoretical knowledge into an existing industry that can create new products not previously in existence

Video and VCD industryRoboticsBiotechnology

Product/ Strategy Attributes

Features Benefits Signal Attributes

Channels

General Impression

Spiritual

impression

Tactile and sensory

impression

Impact

Odour profile

Substantively

Ingredients (according to

theme)

Tangible Benefits

Efficacy

Efficacy according to

theme

Pleasant & lasting

fragrance

Intangible Benefits

Romance

Health & Well-Being

Caring

Security

Lifestyle

Association

Concern

Strength

Performance

Variant

Indicator of Use

Life Status

Freshness

Association

Local

International

Consumer Demographics

Mainstream or

Specialised

Form of Promotion &

Association apt to product

theme

Change In User Habits

Risk None

None

Some

Some

Great

Great

Dangerous

High

High

None

Change in how and where people buy the product

Medium

Medium

Medium

Low

Low

Figure 11.14. The Risk Matrix for a New Product/Strategy

Intellectual Property

Commercialisation

Commercialisation of intellectual property is taking or using the idea, expression, invention, process or other intangible item to the marketplace for the benefit of the holder.

PatentIs an exclusive right granted for an invention, which is a product or a process that provides a new way of doing something, or offers a new technical solution to a problem.

Manner of manufacture

A legal term used to distinguish inventions which are patentable from those which are not. Artistic creations, mathematical methods, plans, schemes or other purely mental processes usually cannot be patented.

Industrial Design

An industrial design - or simply a design - is the ornamental or aesthetic aspect of an article produced by industry or handicraft

Trademark

Is a distinctive sign which identifies certain goods or services as those produced or provided by a specific person or enterprise.

Copyright and Related Rights

A legal term describing rights given to creators for their literary and artistic works (including computer software). Related rights are granted to performing artists, producers of sound recordings and broadcasting organizations in their radio and television programs.

Trade Secrets/Undisclosed Information

Is protected information which is not generally known among, or readily accessible to, persons that normally deal with the kind of information in question, has commercial value because it is secret, and has been subject to reasonable steps to keep it secret by the person lawfully in control of the information.

Why?

Recognition To develop public recognition and carry over certain desired values to

consumers Trademarks and certain Copyright Information

Form To develop recognizable literary and

visual forms that add value and assist in creating an inherent

desirability to the form of communication between company

and consumer. Copyrights, Trademarks and

Registered Designs

Emotional Connection To maximise financial returns for

production undertaken by the company, add to product

differentiation and develop an emotional connection with

consumers. Brands and Trademarks

Desirability To enable companies to delivery

good products with superior performance to competitors, new

features, extended product life, etc, so that products are competitive

and desirable. Patents, Registered Designs and Proprietary Knowledge

Competitive Advantage

Compact Disks

Rapid decline of media use after introduction of new media until product ceases to be used anymore, Companies must cease operations or switch to new technology

Floppy Disks

Failure to advance IP and convert into new products results in competition in a price sensitive market where brands don’t attract consumer recognition

Car Air fresheners

Branding

Patents

Rela

tiv

e C

om

petit

ive A

dv

an

tag

e a. Slow Emerging Technology Market Air Fresheners

Gel Air Fresheners

Liquid Air Fresheners

1960s 1970s 1990s Time

Registered Designs

Primary Used IP Protection

Patents

Rela

tiv

e C

om

petit

ive A

dv

an

tag

e

Primary Used IP Protection

1960s 1970s 1990s Time

b. Fast Emerging Technology Market Electronic Media Storage

Pen Drives

Figure 9.10. IP/market scenarios with competitive advantage in slow and fast technology emerging industries

Beware of Becoming Dyfunctional

Identification of Active ingredient in plant

Identification of Active ingredient in plant

Preliminary ASSAY Preliminary ASSAY

Cultivation, harvesting, extraction, refining, stabilisation, etc

Cultivation, harvesting, extraction, refining, stabilisation, etc

Trials in ‘made up’ formulations, eg shampoo, cream

Trials in ‘made up’ formulations, eg shampoo, cream

Go to market and sell product to customers, supermarkets, direct selling, distributors, etc.

Find a distributor

Seek advice on market potential

Collaborate

Collaborate

Various trials and assaysCollaborate

Negotiate Agreements(farming, processing, marketing)

Product Registration

To international market as a raw material fine chemical

Little IP GeneratedMost likely to stay in domestic market

IP Generated that is transferable for ValuePotentially has a global market

Figure 4. Two Pathways for the Commercialisation of Research (example for a plant extract)

Farm to Consumer As an Intermediate Product

Thank You