Viterbi School of Engineering Technology Transfer Center Commercial Assessment Process (CAP): A web-based tool used for primary market research Workshop on Promoting Business Development in Technology 2005 FLC National Meeting Ken Dozier NASA Far West Regional Technology Transfer Center May 5 th,2005

Viterbi School of Engineering Technology Transfer Center “When the Rate of Change Outside is Greater Than the Rate of Change Inside, The End Is In Sight” Jack Welch, Former Chairman General Electric The Future

Viterbi School of Engineering Technology Transfer Center “ According to Silicon Valley CEO’s, 60 % of the high-tech items they manufacture today did not exist 10 months ago” Lon Hatamiya, Secretary - California Trade and Commerce Agency “Startups are now expected to go public within 6-18 months after venture investment” Donna Jensen, Founder and CEO of startups.com Velocity

Viterbi School of Engineering Technology Transfer Center Knowledge is a New Kind of Asset –The foundation of industrialized economy is shifting from natural resources to intellectual assets (Hansen 99) (Davis 98) –Knowledge assets are viewed as factors of production that may be more important than traditional resources of capital, labor and land. (Davis 98) –Converging technologies and rapid innovations can transform markets Overnight. Administrative systems no longer provide the underpinnings of value creation. (Teece 98) –Reward goes to those who are good a sensing and seizing opportunities. Dynamic capabilities are most likely to be resident in firms that are highly entrepreneurial. (Teece 98) 1 st Perspective

Viterbi School of Engineering Technology Transfer Center Source: The 2003 World Competitiveness Yearbook IMD International 3.Canada 4.Malaysia 5.Germany 6.Taiwan 7.United Kingdom 8.France 9.Mexico 10.Thailand Global Competition 1. 2.

Viterbi School of Engineering Technology Transfer Center TruthKnowledgeBelief Universal No Debate Effect Social Converge on debate Cause Personal Diverge on debate Cause 10 Philosophical Mistakes (Adler 85) What is Knowledge?

Viterbi School of Engineering Technology Transfer Center “where... The ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computer in the the future may have only 1,000 vacuum tubes and weigh only 1.5 tons” - Popular Mechanics, 1949 “I predict the internet... Will go spectacularly supernova and in 1996 catastrophically collapse ” - Bob Metcalfe, 3COM founder and inventor, 1995 “This ‘Telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us” - Western Union, Internal memo, 1876 “The problem with television is that the people must sit and keep their eyes glued on a screen; The average American family hasn’t time for it” - New York Times, 1949 “There is no reason anyone would want a computer in their home” - Ken Olson, president and founder, Digital Equipment Corp., 1977 “Man will never reach the moon, regardless of all future scientific advances” Lee De Forest, Radio Pioneer, 1957 The Future

Viterbi School of Engineering Technology Transfer Center Knowledge Taxonomies (Teece 98) –Tacit (Social) / Codified (Explicit) –Observable[product] / Not Observable[process] –Positive (Failures)/ Negative (Successes) –Autonomous (Stand Alone)/ Systematic (Part of a System) –Protected (Patent, TM, CW) /Not Protected (Trade Secret) Business Taxonomy

Viterbi School of Engineering Technology Transfer Center Industry Clusters (ERI/McGraw Hill,”America’s Clusters”,1995)

Viterbi School of Engineering Technology Transfer Center Motion PicturesAviation Electronics Defense Aviation Automobile Manufacturing Food Processing Agriculture Theme Parks Motion Pictures Television Computer Peripherals Defense Instruments Commercial Aviation Metal Products General Manufacturing Information Processing Defense Aerospace Theme Parks/ Tourism Visual Media Production Professional Services Multimedia Technology Engineering Services Technology-Based Manufacturing General Manufacturing Information Processing Business Services The Evolution of Industry

Viterbi School of Engineering Technology Transfer Center Entrepreneurship Super Normal Wealth Creator –Business Environments Have Become Hypercompetitive because of the High Magnitude and Velocity of Interfirm Rivalries (D’Aveni, 94) –Innovations in Products, Services, Business Processes, and Organizational Designs are Creating Dramatic Discontinuities in Product- Market Spaces and Disrupting the Traditional Approaches to Competitive Strategies and Business Conduct (Christensen, 97) –In the Short Run, Entrepreneurial Firms Reaps Supernormal Returns (Create Wealth) as Established Incumbents and Rivals Seek to Understand the Competitive Disruptions in their Market Space.(Christensen 97) –Thus Competition Occurs in the Form of a Series of Market Disruption Moves by New Entrants or Entrepreneurial Firms and Efforts by Incumbents and Rivals to Shape Their Response Actions (Young et al 96) 2 nd Perspective

Viterbi School of Engineering Technology Transfer Center Make & Sell vs Sense & Respond Chart Source:“Corporate Information Systems and Management”, Applegate, 2000 Chabol (large companies) hierarchy, products based, (push) Federal Agencies, SBIR: Mission Based, Linear (push) Universities: Curiosity Based, emerging, (push) Venture: Niche markets, public trading (pull) Incubators and Science Parks created to bridge gap between development and commercialization

Viterbi School of Engineering Technology Transfer Center Typical Waterfall model Six Stages basic research, development research, product and process ideas, prototype, production, diffusion Criticisms Too much focus on the solution “push” basic research not the only initiator stage relationship between research and commercialization is too complex to be linear. Users are the key “pull” to the problems and markets Traditional Entrepreneurship Source: Sung

Viterbi School of Engineering Technology Transfer Center 2001 study of startup companies across: Software telecom (35%), Bio-med (19%), Computers (16%), and Semi-conductors (10.8%) Most innovation at application stage (55%), development ( 22%), research (12%) production (9%) Age: Linear older ( 35-45), non linear (25-35) Education: Linear more (28%P,42%M,30%B), Non Linear (7.5%P, 22%M,67%B) Experience: Linear narrower (59% research, 35% commerce), Nonlinear (37% research, 29% commerce, 17% education) Both groups agreed on success factors: business plan, leadership, technical skills, management skills, and location New Non-Linear Model

Viterbi School of Engineering Technology Transfer Center Developers Drivers Gates “Microsoft”Xerox Jobs “Apple” Xerox Clark “SGI” E&S, Stanford Clark “Netscape”University of Illinois New Non-Linear Model

Viterbi School of Engineering Technology Transfer Center Market Redefinition: Radical Change Seven Organizational Change Propositions Framework, “Framing the Domains of IT Management” Zmud 2002 Business Process Improvement Business Process Redesign Business Model Refinement Business Model Redefinition Supply-chain Discovery Supply-chain Expansion Market Redefinition

Viterbi School of Engineering Technology Transfer Center Seven Organizational Change Propositions Framework, “Framing the Domains of IT Management” Zmud 2002 RTTC Focus:Discovery

Viterbi School of Engineering Technology Transfer Center Entrepreneurial Firms Represent a New Online Community Network computing, supported by advanced communications infrastructure, can facilitate collaborative entrepreneuralism (Teece 98) Successful business models set themselves apart in their communication design leading to a deconstruction of traditional value chains and the emergence of value Webs. (Lechner 01) The most critical factor for a venture business success is how to implement and commercialize lab-based technology/knowledge/ideas into actual products and/or services (Sung 01) Entrepreneurial firms use knowledge to reshape clusters of assets in distinctive and unique combinations to serve ever changing customer needs. (Teece 98) The key sources of wealth creation at the dawn of the new millennium will lie with new enterprise formation. (Teece 98) 3rd Perspective

Viterbi School of Engineering Technology Transfer Center Subscribers Netiquette Self Organized Non-Commercial Culture Community = Set of Agents + Medium Agents = user groups Medium = Internet Communities - Business Models and System Architectures: The Blueprint of MP3.com, Napster and Gnutella Revisited, Lechner Online Community

Viterbi School of Engineering Technology Transfer Center Components of a Medium Knowledge Intention Communities - Business Models and System Architectures: The Blueprint of MP3.com, Napster and Gnutella Revisited, Lechner

Viterbi School of Engineering Technology Transfer Center Secondary Market Research as practiced by expert communities may be not be producing market knowledge fast enough or broad enough for modern high velocity markets –Market analysis of existing markets was not encouraging A KMS that uses IT to gather primary market information rapidly, facilitates the complex transformation between basic research (IP) and commercialization (Wealth) –Online research for potential markets has changed the lens –MOB/WOB community is rich with profitable SMEs Evidence from Practice

Viterbi School of Engineering Technology Transfer Center PROBLEM ADDRESSED separation of auditory inputs by simulation of different source locations TECHNICAL APPROACH (1) use of synthetic auditory head related transfer function (HRTF) to simulate different virtual spatial source locations for up to five auditory signals; (2) analog-to-digital conversion for noise-free processing with HRTF, and subsequent digital-to-analog conversion for presentation of modified signals to right and left ears POTENTIAL APPLICATIONS teleconferencing, aeronautical communications, virtual reality video games, command and control BENEFITS (1) binaural hearing advantages: substantial improvement (6-8 dB)in signal to noise; faster reaction times, less listening fatigue, increased perception and immersion; (2) less expensive than general purpose 3D audio displays; (3) customizable; (4) user-friendly, not requiring computer interface MULTI-CHANNEL SPATIALIZATION SYSTEM FOR AUDIO SIGNALS U.S. patent 5,438,623 (August 1, 1995) Dockets

Viterbi School of Engineering Technology Transfer Center Secondary Market Research: MAP

Viterbi School of Engineering Technology Transfer Center The Radar

Viterbi School of Engineering Technology Transfer Center CAP Tools (Explicit) In the CAP, say you need to build a Technology Status Report. Clicking on the link, brings up more information about what is a Technology Status Report (TSR), including an example. Clicking on the details button reveals more information about the TSR.

Viterbi School of Engineering Technology Transfer Center Market Research Repository You can sort or filter you selection Each technology list the available primary marker research we have done.

Viterbi School of Engineering Technology Transfer Center Market Wanted Innovations Results for Audio Spatialization CAP Real time General Solution (360 sphere) Low Cost Head Orientation Sensitive Set Top Box Sound Card Add in Listener Location Independence

Viterbi School of Engineering Technology Transfer Center Market Size CAP3 Determines Market Use in conjunction with various published journals/online tools to determine market size. –Manufacturing USA –Predicast Basebook –U.S. Industry & Trade Outlook

Viterbi School of Engineering Technology Transfer Center Market Share CAP3 Tools will help you determine. –Market in particular industry. –Extrapolate today's market share based on published data. –Determine portion of industry segment that new technology will affect. –Determine what a potential company market is based on # of companies in that industry segment.

Viterbi School of Engineering Technology Transfer Center Market Analysis Example Annual Average Market Share of Industry $400,000,000 Percentage of Market Share20.00% Percentage Industry Company Segment 1% Annual Single Company Market$800, Annual Royalty Rate 10%$80,000 Up Front Fees 10% for 10 years$80,000

Viterbi School of Engineering Technology Transfer Center Changing Assumptions CAP3 Tools allow you to quickly change any of the assumptions to determine difference technology values and royalty rates. –Change market size –Change portion of market size –Change lifetime sales Allow user to compare different scenarios

Viterbi School of Engineering Technology Transfer Center INC. Magazine May 1999 Michael Porter - Harvard University just formed ICIC (Institute for a Competitive Inner City) Recently completed a 5 year study of 100 inner city growth companies: –46% compound annual growth rate –Generated on average 50 jobs/year per company for five years –Annual hourly wage $13/hour high wage jobs at $26/hr Ride the Information Technology and Telecommunications wave Location, Location, Location Images courtesy of INC. magazine Media Perspective

Viterbi School of Engineering Technology Transfer Center MOB/WOB Firm Breakaway –On going profitable south central MOB IT Service Business –Strong Private and Public Network –No Products –Access to Capital Financing Far West –Assisted with Business Plan –We located Physicist –Located Chip Designers –Located Short Run Factory for prototype chips –Located an Incubator –Assisting with SBIR and STTR to ensure dual use

Viterbi School of Engineering Technology Transfer Center Breakaway will take lead on SBIR Phase I and Phase II (hopefully) Far West RTTC will support USC School of Engineering will support STTR work. Large Chip manufacturer is monitoring process Large Set Top Box manufacturer is monitoring process VC is monitoring process Investment Bank is monitoring process DoD is monitoring process Time to Market 24 to 36 months Leveraging Existing Network