Open Innovation & Technology Transfer Innovation Management Kevin O’Brien

Learning Objectives Recognise the importance of technology transfer to innovation management Be able to summarise the technology/knowledge transfer process Explain why a ‘receptive’ environment is necessary for technology transfer Understand the role of tacit knowledge in technology transfer Identify barriers to technology transfer

Introducing technology transfer Much written about the subject; became extremely popular in the late 1980's. Governments believed it could solve problems of national budget deficits! Collaboration on technology development encouraged. Large companies established Technology Transfer units. Universities also established Industrial Liaison units and Technology Transfer units. The panacea for industry's problems did not materialise.

Economics of technology transfer Existing R&D projects and developed technology Transfer to industry and private enterprise it has already been paid for! The attraction of technology transfer was that companies and industry could benefit from technology that had already been paid for.

‘Technology Transfer is the application of technology to a new use or user. It is the process by which technology developed for one purpose is employed either in a different application or by a new user. The activity principally involves the increased utilisation of the existing science/technology base in new areas of application as opposed to its expansion by means of further research and development’ (Langrish et al., 1982). Definition of technology transfer

DTI Knowledge Transfer Partnership University Firm Student Iracroft Ltd £10,000,000 company Its main customer is JCB 80% of its business is JCB What to do? Diversify? What to make? What new products services to offer?

Science Parks A Science Park is a business support and technology transfer initiative that: Supports the development of links to strengthen technology transfer to help the growth of business enterprise Promotes initiatives of value to the Science Park tenants Facilitates the interchange of concepts, ideas and experiences Provides a forum for developing collaborative initiatives First established in 1970 (Cambridge) Now approximately 100 parks across the UK (Source: UK Science Park Association)

Technology Brokering at IDEO Solutions to client’s Design problems Existing technologies (40 industries) Original combinations of existing knowledge

Open Innovation Co-operative R&D projects reached a new peak in the 1990s New emphasis on opening firm boundaries to outside innovation Inbound open innovation Leverage discoveries of others Don’t rely exclusively on own R&D Outbound open innovation Look for external organisations better suited to commercialise a given technology (Chesbrough, 2003)

Open Innovation Research Projects Research Development The Market Boundary of the firm The closed innovation model Research Development Current Market Research Projects Boundary of the firm The open innovation model New Market (Chesbrough, 2003)

Open Innovation Philips’ High-technology campus in Eindhoven open innovation ‘ecosystem’ 40 companies & institutes 50 nationalities, 7,000-8,000 people € 500 million investment by Philips

Tangibility of Knowledge Relevance to the firm Intangibility Projects & activities of the organisation Knowledge Know-how Action Information Data (Adapted from Cooley, 1987)

Limitations of Models They fail to understand the recipient organisation's needs Technology viewed in terms of technical attributes Underestimate the extent of interaction required Assume an ability on the part of organisations to communicate their problem in the form of a technical requirement AccessibilityMobilityReceptivity Too much emphasis here Need greater emphasis here

Absorptive Capacity The ability to evaluate and utilise outside knowledge is largely a function of the level of prior related knowledge Prior knowledge includes basic skills, shared language, knowledge of recent scientific or technological developments in the field Prior related knowledge confers the ability to recognise the value of new information, assimilate it, and apply it to commercial ends These abilities collectively constitute ‘absorptive capacity’ (Cohen & Levinthal, 1990)

Receptivity AccessibilityMobilityReceptivity AssimilationAwarenessAssociationApplication (Trott & Cordey-Hayes, 1996)

Receptivity ActivityProcess AwarenessProcesses by which an organisation scans for and discovers what information on technology is available AssociationProcesses by which an organisation recognises the value of this technology (ideas) for the organisation AssimilationProcesses by which the organisation communicates these ideas within the organisation and creates genuine business opportunities ApplicationProcesses by which the organisation applies this technology for competitive advantage (Trott & Cordey-Hayes, 1996)

Organisational Learning Acquisition of technology from outside Skills Routines Embedded in the organisation as capabilities Level of learning Individual Group Organisation Continual flow of tacit and explicit knowledge

References Chesbrough, H.W. (2003) The era of open innovation, MIT Sloan Management Review, 44(3), Chesbrough, H.W. (2003) Open Innovation – The New Imperative for Creating and Profiting from Technology, Boston: HBSP. Cohen, W.M. & Levinthal, D.A. (1990) Absorptive capacity: a new perspective on learning and innovation, Administrative Science Quarterly, 35, Cooley, M. (1987) Architect or bee? The Human Price of Technology, London: Hogarth Press. Langrish, J., Evans, W.G. & Jerans, F.R. (1982) Wealth from Knowledge, London: Macmillan. Trott, P. & Cordey-Hayes, M. (1996) Developing a ‘receptive’ environment for inward technology transfer: a case study of the chemical industry, R&D Management, 26(1),