1. © PEP 2005 All rights reserved “Connecting the Dots… from Researcher to Market” Harvesting the value of innovation Courtney Price, Ph.D.

2. © PEP 2005 Overview—Technology Commercialization at Federal Laboratories VentureQuest Overview Synopsis of Federal Laboratory Programs Six-Step Commercialization Process Quick Commercialization Opportunity Screening Tool Lessons Learned

3. © PEP 2005 Mission “Harvest the value of innovation and technology to create enduring companies.”

4. © PEP 2005 History Founded in 1988 as PEP (Premier Entrepreneurship Programs) Selected by the Kauffman Foundation as the “best entrepreneurship training initiative in America” Programs used by over 200,000 participants worldwide Founders authored the Internationally recognized Premier FastTrac programs Consult with federal labs, technology companies, and universities Broad industry and organization experience through strategic alliances and associate relationships

5. © PEP 2005 Lab Commercialization Projects Managing Intellectual Property Guide (LANL) Management Overview: Accelerating Technology Commercialization (LLNL) Technology Commercialization Overview (for PIs and researchers) (ORNL) Technology Opportunity Assessment (LLNL) Market Validation (LANL) Commercialization Plan (DOE) Licensing Guide for Technology Valuation (LLNL) Technology Opportunity Presentation Toolbox (NASA) Technology Data Sheets(SNL)

6. © PEP 2005 A member of the audience commented that, in his experience, the interns got more out of the process than he did. He frequently got useful models or other information; however, the successful use of this information required the application of professional expertise beyond the experience of most interns.

7. © PEP 2005 Audience Members Suggested: Passion for the technology Acceptable payback period Low risk of losses

8. © PEP 2005 Commercialization Evaluation Venture Capitalists investment decision based on: 1. People 2. Market 3. Technology Technology Transfer Professionals evaluate inventions based on : 1. Technology 2. Market 3. People Should technology managers place more emphasis on the inventors and the market?

9. © PEP 2005 Licensee Evaluation Company history and background Management Philosophy Technical Portfolio Analysis Management & Organization Market Analysis Financial Considerations

10. © PEP 2005 IP Universe

11. © PEP 2005 Six-Step Commercialization Process Think 1. Idea Generation Screen 2. Pre- screening Protect 3. Idea Protection Assess 4. Business and Market Development Validate 5. Product Development and Testing Execute 6. Commercial- ization Strategy ©PEP 2005 Scientific discovery Opportunity discovery Customer- driven problem solving Laboratory notebooks Disclosure forms Technical evaluation Lab prototype? Business Concept Seven-Step Opportunity Evaluation Model Opportunity Patent Copyright Trademark Trade secret Opportunity Assessment Executive Summary Innovation Team Product/ Service Analysis Market Strategy Financial Projections Valuation Analysis Market validation Experts Competitors Customers Licensees Customer prototype Beta test Refinement Maturation Commercial- ization Plan Licensing Bartering Work-for- hire R&D funding Spin-in Business Plan Spin-out Joint Venture Strategic partnership

12. © PEP 2005 Commercialization Practices???

13. © PEP 2005 Scientist, engineers, and innovators focus on opportunities Idea creation is disconnected from core business Typical Innovative Process Opportunity Generation Pre-Screening Internal Market Analysis Business Strategy IP Protection  IP committee  Functional evaluation  Focus on potential revenue before market validation  Outside legal council  “Glory Patents”  Inadequate strategy and protection  Company vs. Inventor  Industry analysis  Size of opportunity  “Water-cooler” research  Develop and execute business plans with unvalidated assumptions  Inflated “Hockey Stick” projections not achieved

14. © PEP 2005 Ideas (not viable business concepts) Unrealized projected revenue No customer prototype Slow process (typically, 12-18 mo.) Poor innovation success rates Missed window of opportunity Lack of innovation protocols Inadequate market validation process Little innovator involvement Typical Innovation Results

15. © PEP 2005 Technology Commercialization Challenges

16. © PEP 2005 Innovation to Market Challenges? Too early stage Overvaluation of opportunity Too many features, too few benefits Weak value proposition Competition barriers Unvalidated market assumptions Over reliance on technical evaluations Too risky Unproven business model Slow adoption curve Your Challenges??

17. © PEP 2005 Technology Adoption Curve Market Size Time Mature Saturated Market Rapid Growth Early adopters Niche markets Declining Market New Replacement Technology

18. © PEP 2005 Prescreening Technologies Opportunity Quick Screening Tools Concept Development Seven-Step Opportunity Evaluation Model Technology Screening Tool Summary

19. © PEP 2005 Screening Tool Summary 7- Step Score (45) Product Service Score (70) Market Score (70) Financial Score (50) Legal Risks Score (50) Total Score (285) Ranking Opportunity A17394934211603 Opportunity B35624547282171 Opportunity C32516438192042 Average Category Score 51 B 53 B 40 B+ 23 C 194 B+

20. © PEP 2005 Technology Truths Reinforce with inventors/researchers… Technology has no inherent value Value occurs when it’s commercialized Technology commercialized using different business models yields different economic values

21. © PEP 2005 Action Plan Diagnosis: Where are you today? Determine: Where do you want to be? Plan: Next steps?

22. © PEP 2005 Wrap-Up In Conclusion…. Innovation is a journey on a rocky road Intellectual property creates value Validating the opportunity is a process Market validation minimizes risks and establishes a commercialization strategy Your innovation hit rate can be improved