OUR COMMUNITY     Facts About Technology Transfer

What is Technology Transfer and what is it good for?

The term Technology Transfer (TT) is commonly used for the transfer of a new scientific recognition or generic understanding from one entity to another, for instance, from a university to a company. TT can be performed through the licensing of an invention or through starting a new company. TT has developed, however, into a much broader operation and is becoming an increasingly important instrument for the creation of economic growth, jobs, and increased wealth and standard of living. Governments around the world recognize this fact and support academic and industrial efforts to collaborate and transfer the development of new technologies into products.

TT is becoming an increasingly complex process and can, if done right, significantly increase the return on investment (ROI); however, if done poorly, it can reduce, or even eliminate, the financial, market, and other business growth expectations.

From an inventor’s point of view, TT can be performed through the licensing of an invention or through starting a new company. An existing business would consider the integration of new technologies for the development or production of new or improved products in order to increase market size, profit margin, or customer- valued performance of a product or service. In each case, the new technology could result from company-internal technology developments or from external sources, such as business partners or industrial or academic research labs.

The fast changing product and service requirements in the world market, driven by knowledge economy, compels companies of all sizes to incorporate new technologies faster and more effectively than ever before, to shorten the time-to-market, to reduce production and distribution costs, and to provide the customer with ever more improved products. 

Intellectual property is a precondition for the formation of a profitable business and its sustainable growth. Significant, but still underestimated and undervalued, issues for the success of a company are: 
- which technologies should be incorporated, and 
- how the incorporation is prepared to grow profits and expand markets.

OttoConsulting’s key thrust is to support and advise industry and research institutions on an effective and concurrently time and cost efficient Transfer of Technologies so that all stakeholders, including inventors, investors, and customers, benefit from outstanding products and services.

New products are only possible through the application of new technologies, which first have to be created/invented. Knowledge and experience can generate new high-tech technologies; special facilities are usually required to produce new technology-based goods. The transfer of new technologies can happen between various institutions, such as research organizations and different-sized companies and also between different countries. Publication of inventions can also be seen as a form of technology transfer. Inventions must first be patented if the inventor plans to commercialize the invention. Funding of the development, production, and sale of a new product would hardly be obtainable without securing the intellectual property through a strong patent.

Figure 1 shows the stakeholders and their interaction in the technology transfer process. The key to success will always be high quality and motivated people with different knowledge and experience in the various aspects of technology transfer and business development. People are the center of the technology transfer triangle.

Figure 1: Technology Transfer involves many stakeholders beyond inventors and investors.


Definition of Technology Transfer

The U.S. Federal Laboratory Consortium (FLC) defines Technology Transfer as “the process by which technology or knowledge developed in one place or for one purpose is applied and used in another place.” 

This definition, although broad, covers all the aspects and processes of transferring technologies. The U.S. recognized the importance of Technology Transfer and instituted the FLC in 1985 in order to promote to industry the transfer of technologies, specifically those developed by the National Labs.

The various forms of Technology Transfer are shown in Figure 2.

Figure 2: Technology Transfer Opportunities


New Technologies, based on know-how and intellectual property, can be, after careful consideration of technology transfer preparations, transferred in a wide variety of ways:
          by researchers of one university to researchers of another, 
          by researchers of one lab to manufacturers in another country, or
          by product developers of a company in one country to scientists in a research facility of another country,
         and in any way beyond that, as is graphically shown in Figure 2.

One example may illustrate the large number of TT opportunities, where a company transfers technology to a research institution, and receives a new technology back: a company needs to expand on an invention in order to produce a viable product and can do so through the incorporation of a special knowledge that resides in a research institution. To this extent a research contract can be established between the company and the institution. The company’s knowledge can be transferred to the institution, which adds to that knowledge and transfers the resulting new technology back to the company.

Another example: TT from one country to another country can, as shown in Figure 2, also come about through different avenues – ranging from licensing the patent of a company in one country to a company in another country, to selling a product in one country which was invented and developed in another country. 

What is required to do it right?

The Technology Transfer Process

The recipient of a new technology determines the number of steps in which the new technology is transferred. Figure 3 shows the Technology Transfer process as it could occur during the TT from an inventor to a start-up company. Investors might see that process divided into six major phases:

          Feasibility Study Phase – to proof the concept for a new product
          Development Phase – product development and start of manufacturing
          Product Introduction Phase – with customer interest and early sales 
          Breakeven Phase – sales are growing
         Growth Phase – profits are accumulating
         Maturity Phase – the company might go public to finance further growth.

Figure 3: TT Phases of a start-up company


One element in the Technology Transfer process, which advances throughout the whole TT effort is the ongoing progression of business planning. Business planning starts already in the feasibility study phase, and is continuously pursued with ever increasing intensity, while various parts of the business planning steps assume different importance along the TT phases. 

Government can play a significant financing role in the TT process, as described in Appendix 2.  Small Business Innovation Research (SBIR) grants are only one of many R&D and commercialization support measures the U.S. government offers.  Similar support is provided by European countries and the European Union.  OttoConsulting will be able to work with you to find the appropriate governmental financing sources, which can be substantial and can be obtained not only by small and minority businesses but by medium and large businesses, as well.


Strategic Business Planning

The Technology Transfer Equation

The commercially successful Transfer of a new Technology into a valuable product can only be achieved through the effective implementation and execution of a thoughtfully developed Strategic Business Plan (SBP). The following equation expresses that very strong and iterative relationship between the two complex processes:

Technology Transfer = Strategic Business Planning

The commercial success of a product which draws its customer-valued, competitive advantages from a new technology, an invention or a new process will only be accomplished within the framework of a continuously reviewed SBP, independent of the environment in which the transfer process will take place – be it in an established company or in a start-up.

Strategic Business Planning, as seen by a small or medium company, is aimed at increasing profitability, expanding existing market shares, or growing into new markets. New technologies can be employed to accomplish these goals. These new technologies may have been developed within the company and need to be transferred from the lab bench to product development and manufacturing, or they have to be transferred from outside into the company and have to be integrated into the existing corporate structure.

Both the selection of a new technology, as well as the integration of a new technology, is a complex process which requires careful analysis and consideration of

- corporate goals
- external opportunities and threats, and
- internal strengths and weaknesses.

The external analysis has to cover current and potential customers, price sensitivity and elasticity, trends which might change markets and market sizes, competitors, suppliers, regulators, as well as presently employed technologies and new technologies under development.

The internal analysis will be concerned with the core competencies of the company, the financial condition of the company, the key people, and the corporate culture – does the knowledge and expertise exist in the company, not only concerning the technology but also regarding new market, sales, service, and regulatory aspects; – does the company have the ability to finance the costs related to the activities resulting from the new strategy; – are the key people prepared and able to change; – does teamwork, accountability, success, drive and special effort, respect for others, and attention to implementation of “new” and “change” get rewarded?

Based on the outcome of the analysis work, the strategy framework and strategy moves will be determined, always considering the advantages the employment of new technologies will yield.

Finally, the operations related implementation process has to be defined and put into motion, while progress has to be carefully monitored, as technology-based, personnel-related, and externally-evolved hurdles can dramatically reduce or even destroy the expected advantages. Technology transfer and strategic business planning and implementation expertise will contribute significantly to achieving the targeted financial success.

Strategic Business Planning, as seen by an entrepreneur or a start-up company, can be divided into 12 steps, shown in Figure 4:

- Customer Interviews
- Product Specification
- Technology Validation
- Market Analysis
- Competition Analysis
- Sales Strategy
- Regulatory Requirement Compliance
- Product Development
- Manufacturing
- Determination of Subsequent Products
- Human Resources
- Funding

All 12 business planning steps have to be thoroughly worked on, especially during the feasibility study, as indicated in Figure 3. The great advantage, which an entrepreneur or a start-up company has when establishing a strategic business plan, lies in the fact that pre-existing conditions, as in the case of an already established company, do not have to be dealt with. Of course, the business plan will have the goal of penetrating a certain market and of growing a profitable business. However, developing and implementing the plan is not easier, as compared with the development of a strategic plan for an existing small or medium company – the opposite is true, as failing to put appropriate efforts into any one of the in Figure 4 displayed 12 business planning steps, or to just poorly or superficially work on one of them, will result in significant time delays and dramatic cost increases in getting a new enterprise started or in achieving expected growth. It can even result in the failure of the Technology Transfer and the loss of expected commercial success. 

Figure 4: the 12 steps of business planning

The key values of business planning are to reduce the risk of failure and to accelerate the transfer of the product concept from the lab stage to the customer. A thoroughly prepared business plan considers investment decision steps which an investor takes before considering an investment and, thus, substantially increases the motivation of investors to finance the technology transfer when the plan shows a realistic avenue to a high return of investment.

Figure 5 shows schematically the “risk reduction – increase of investment” relationship. Friends and business angels, as well as governmental support systems, usually help inventors financially to demonstrate that the new technology will be able to generate the features which are to be expected from a new product. This feasibility phase is also the period where most of the risk reductions occur. As the risk of failure decreases, the amount of investment will increase. With the onset of first sales most of the needed investments will be made by venture capitalists. Later, when growing sales indicate that the business is a viable one, investment banks will provide the money to support corporate growth and expansion plans.

Business planning, especially when already performed at the feasibility study level, will promote the business success. It is obvious that the planning process will emphasize different business aspects as the technology transfer progresses; in these later stages the transfer will most often be performed within the company and will require different skills.

Figure 5: Risk reduction attracts investments.


Outstanding Technology Transfer Operations 

The Process

Unnecessarily high product development costs have a negative impact on the return on investment. Delays in time-to-market can result in the reduction or in the loss of a market share. OttoConsulting has developed an outstanding Technology Transfer process which can considerably reduce the cost of product development and time-to-market.

This Technology Transfer process is displayed in Figure 6. This process includes 11 process groups: 

Figure 6: 11 process groups have been established for the completion of an outstanding technology transfer.


a) Assessment of the company’s goals:

In order to assure the transfer of the appropriate new technology to an established company, it is essential that the company’s goals are sorted-out, regarding the path the company has decided to follow, and are focused on the targeted customers and their needs to be satisfied by the new product. Any introduction of a new product, especially when based on a new technology, requires consideration of corporate changes, which might have to be made in order to reach new goals - even changes in the company’s established goals.

b) Definition of goals and vision: 

The display of a company’s goal options is the first step to the definition of the goals, which are expected to be reached by the transfer of a new technology into the company. The adoption and communication of a corporate vision, which embraces the goals, will motivate and excite employees to reach the set goals timely and efficiently.

c) Customer interviews:

Determination of customer needs and how they could be satisfied is a key step toward the success of a new product and the growth of a company. Such interviews have to be performed with care, as they will yield fundamental information for an effective product development.

d) Market and competitor analysis:

Before efforts are made to transfer a new technology into an established company, the market, the existing and alternative products, and the competitor strengths and weaknesses have to be determined. In doing so product requirements, as specified by the customer, can be refined to achieve characteristic performance and/or cost advantages. The result of this analysis will lead to the technology characteristics required for the fabrication of the new product.

e) Review of available technologies:

The review of available technologies has the goal of selecting the technology which best will be able to realize the product requirements. It is also performed in order to detect competing technologies which should be considered when designing the product or be acquired to assure success of the business.

f) Validation of IP and status of the selected new technology:

A strong protection of the intellectual property (IP) is a precondition for the formation, growth, and expansion of a business. Strong patents will prevent or reduce legal expenses involved in patent infringement suits, and they will also secure the advantages which are patented to sustain the success of the business.

g) Business planning at the feasibility level:

Business planning starts already at the company goal setting process, and continues with the review of available technologies, the determination of how the selected technology would achieve the product performance requirements, how the technology might impact market size and sales, what development and production might involve and might cost, how corporate partners could contribute to success, and how competing technologies and competitors might threaten the enterprise. The sooner a clear picture can be established, the faster risks can be reduced. 

h) Product development and prototyping:

Emphasis of business planning in the product development phase will be to define all the features of the product and its components, to establish the steps needed to achieve the performance features and to combine the components to the targeted product, to list the people and skills which will be required, and to display the time and cost needed to get the prototype to the customer for evaluation and approval. 

i) Validation of the prototypes by the customer:

Business plans for the product development phase will, most often, also cover in detail the prototype validation process: 
which customer groups will test the product in which way, 
which questions will the customers have to answer, 
who will report and analyze the test results, and 
to whom in the product development group will the results be reported. 
This part of the product development phase is critical, as it will result in passage or rejection of the results of the product development efforts. 

j) Manufacturing and product introduction:

A thorough business plan will provide for the participation of marketing, sales, and manufacturing in the product specification and design phases. This important procedure will result in a smooth technology transfer process, not only from product development to manufacturing, but also from manufacturing to marketing and sales and, most importantly, to the customer. Manufacturing will follow plans which will lead to high quality and reproducible products, as well as to low production costs. Marketing and sales will follow its branding, advertising, and sales and service strategies - plans which should be established and refined already during the product development phase together with development and manufacturing, as product design and market and sales strategies can have strong impacts on each other.

k) Sales, service, sales expansion and corporate growth: 

As technology transfer moves progressively from manufacturing to sales and to the customer, business planning will concern all aspects of expanding the company: its finances, human resources, organizational structures, corporate and strategic partners, and acquisitions and diversifications. Important marketing, sales, and service considerations are summarized in Appendix 1 below. Integration and dispersion of technologies will play an important part also at that stage of the company, as new technologies are always a part of the foundation for corporate growth. 

What can go wrong?

7 mistakes commonly made in the Technology Transfer process

1. Lack of vision and goal of where to go:

A clear vision of the company’s objective is a precondition for success. The vision, when conveyed to and accepted by all employees, will significantly increase the company’s overall success. 

The management has to determine the specific goal which should be reached through the integration of a new technology. This decision will determine which technology should be transferred and how the transfer process has to be designed to reach the goal.

2. Insufficient understanding of customer needs:

New technologies, which lead to new products, require a good understanding of customer needs so that the feature of the new products will satisfy them, or better, exceed the customers’ expectations. Only close interaction with customers will yield the commercial success of the new products.

3. Absence of a plan for how to reach the goal:

Technology Transfer should be carried out in accordance with a detailed business plan. This plan has to be adjusted along the way, beginning before the feasibility study in the lab and beyond to the maturity of the commercialization process.

4. Poor selection of the new technology:

Selection of the appropriate technology depends not only on the new products or services the company wants to offer, but also on the human capital the company has and how it can be attuned to carry out the technology integration task. 

5. Underestimation of work to fit new technology into old company structures:

Transfer of a new technology from a research entity into a newly formed company is relatively easy, since human resources, rooms, labs, and instrumentation can be built with the requirements in mind to transform a new technology into a product. Integration of new technologies in established companies require not only modification or expansion of existing space and equipment, but has to accommodate changes in operations, safety, logistical procedures which may have evolved over years and become routine in the company.

6. Personality fit – new knowledge carriers versus established experts:

In the vast majority of the new technology-integration processes in an existing company the employees have specific know-how and expertise, which is highly important for the development and production of existing products. Training of employees and integration of new employees who are familiar with the new technologies has to be carefully laid out in order for the integration of the new technologies to proceed smoothly and effectively.

7. Poor business planning and execution:

Detailed business planning is usually initiated after the feasibility study is completed. Until then a rough business concept layout is commonly in use which can result in insufficient preparation for product development. The practice of late business planning very often results in product design and development modifications, poor plan execution, and time delays and cost-to-market increases, which significantly impact the market penetration, the sales growth curve, and the return on investment.


Customer-oriented marketing, sales and service tasks

Market Validation: A clear understanding and definition of customer demographics and customer usage of the proposed product’s functional features in the intended global regions of distribution is required. The validation process includes one-on-one customer interviews and a carefully crafted customer survey questionnaire that incorporates the functional features of the product. Correct administration of the survey to database customer lists will provide rapid statistical validation of the demographics and usage patterns for the product by the target end users of the product.

User Requirements: After the results of the market validation are compiled, the user requirements can be defined for the product specifications to direct product development. The specifications would include global regulatory requirements for worldwide distribution of the product and all user-specified functions and features of the product. Language localization of the product is also a key consideration that is defined in the user requirements. Manufacturing codes of practice to meet ISO or equivalent global industry standards is also identified as part of the user requirements.

Go-to-market Plan: This outlines the market strategy for the new product. A timeline rollout of the go-to-market activities and collateral requirements is defined in this plan. Product messaging and positioning are a key part of this plan and relate to planning press and editorial releases, trade show participation for public viewing of the new product and generation of sales collateral including price lists, brochures, mailing flyers and product specifications sheets. Distribution channels are identified and Sales introduction is part of the timeline. The go-to-market plan includes: ship date, messaging strategy – usually use a PR agency, product positioning, target markets, target customers, competitive analysis, SWOT analysis, marketing communications plan, part numbering and parts lists, global pricing, internal launch to sales organization, external launch to the public (press releases, industry trade shows, etc.), technical support, and service plan including a warranty extension plan.

Product Introduction Plan: Definition of the market includes including maturity, size, market segments, and competitive market share breakdown. Product description, product strategy and product positioning, the target markets, target customers, and competitive landscape highlighting the competitive advantages of the new product, are key elements for product introduction to the sales organization. The timing and venue for Sales and Public introductions at trade shows and other customer events are detailed in this plan. Sales demo inventory is identified for each of the Sales centers in the domestic and international locations.

Marketing Communications Plan: This plan includes timing of press releases, editorial opportunities, participation at trade show events, advertising publications, and sales collateral for raising product awareness of the new product in the market. A time-lined rollout plan is developed to ensure all of the elements for successful product introduction to the market are in place for public launch of the product in domestic and international venues.

Advertising Plan: A budgeted time-lined annual advertising plan is developed for placement of product advertisements in selected domestic and international industry trade magazines, tabloids, and journals.

Service Plan: Domestic and international Technical and Service support centers are identified. The plan provides a time-lined rollout for Service introduction and training on the new product usually conducted in parallel to the internal Sales launch. Product logistics are planned for availability of the product itself and Service manuals at each of the identified centers to allow hands-on training of the local service organization. Service manuals must be completed and distributed in time for the training. The plan will incorporate warranty and warranty extension plans as well as service inventory.



The role of Government in the Technology Transfer process

Economic growth leads to wealth and improved standard of living. Part of the created wealth flows back to the community. Countries have long discovered that governmental support of technology transfer will not only result in economic growth but will be the determining factor in the scale and sustainability of that growth in the faster, ever-changing technology-driven world economy. 

The U.S. Government invested, as shown in Figure 7, during the last years annually about $90 B in R&D. About $50 B of that amount is invested in research at the National Labs, about $25 B is dispersed for applied research, about $15 B is supporting research and development projects, and about $2 B is set aside for the award of small business innovation research (SBIR) grants. These grants finance small and mid-sized companies in turning new technologies into new products. SBIRs are provided for each project in two phases: $100,000 for Phase I to demonstrate the feasibility of a new technology for a specified application, and $750,000 for Phase II to develop a pre-prototype of the product. The awarded company is expected to approach investors or corporate partners to finance all subsequent business expansion.

The government’s financial support of small business innovation research, however, misses covering an important step: the outstanding technology transfer operations process with a solid business plan as the center of that step. This step is the final procedure of the Phase II SBIR, where the development results should be transferred into a commercial product. Governmental support of this procedure is becoming increasingly critical, as angel financing, as well as VC financing, is moving to later, lower risk stages of the business development. 

A governmental contribution of just about $0.04 B would provide every one of the SBIR Phase II awardees with sufficient funds for the development of a substantiated business plan by way of Outstanding Technology Transfer Operations. Such business plans could foster Technology Transfer of all SBIR-based developments to commercialization; they could also elevate the interests of investors to further fund the realization of SBIR grant awardees’ business plans. The resulting increase in commercially successful technology transfers will boost on a long-term scale the U.S. economy and will elevate it to new levels.

Figure 7: Investment of the U.S. Government in basic and applied research, new product development, and prototyping.