How do you find, define and, most importantly, exploit ‘exploitable’ technology?

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This is the fourth article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

By Francis Moran and Leo Valiquette

In his book, Making Technology Happen, Denzil Doyle makes the valid point that “technology” is not found only in research laboratories or other establishments that form part of what is commonly known as the “knowledge industry.”

“A farmer who develops an add-on device for a piece of farm machinery is not only creating technology, but is advancing it along the innovation chain by turning it into a useful product,” Doyle wrote. “If a few neighbours buy it and they find it a useful product, it has been taken through the entire length of the innovation chain, from the idea stage to the distribution stage. The farmer has simply not formalized the innovation process by writing a proper business plan, raising some investment capital and starting a business.”

Anyone looking for exploitable technology is therefore advised to look beyond the university laboratory. On the other hand, pure and applied research at post-secondary institutions and government organizations are a prime source of new exploitable technology. Almost all government organizations and universities have staff dedicated to promoting technology transfer opportunities.

Where the challenge arises is in making the connection between an idea or a research project and a commercially successful product derived from that research.

As Doyle notes, “the people who use technology and the people who produce it are on opposite ends of the innovation chain and are often motivated very differently.”

Researchers are typically focused on advancing the science on which the product is based, while the end user is interested in features and benefits. If the end user is a business, there is the added emphasis on value for money and ROI, considerations that are often far off the radar of a researcher.

For an entrepreneur to bridge this gap, a balance of “convergent” and “divergent” thinking is required, said John Stokes, a partner at Montreal-based Real Ventures.

Research often tends to be about convergence – having a problem to solve or premise to challenge. Divergence, on the other hand, is looking at all the avenues that could be taken to an objective. According to Stokes, a “good” entrepreneur has a commercial mindset that is a balance of both to create innovative solutions to existing problems. In other words, to identify and address a clear market need.

Identifying that market need is not only key to determining if a technology can be exploited, but if it is worth exploiting:

  • Are customers willing to pay for it in sufficient numbers to support a viable business?
  • What features, functionality and price points must it have to achieve mass adoption and be competitive?

In many instances, research may result in a useful process that can improve an existing operation. While this may have value that can be realized through a licensing deal, it is not a sufficiently strong basis on which to found a company.

The role of ‘champions’

It often takes much more than a savvy startup entrepreneur who can connect the dots to realize the potential of an exploitable technology. The support of someone within a large and established enterprise is needed.

Didier Leconte and Thomas Martinuzzo, both active in Quebec’s technology transfer scene, spoke to us about the importance of these “champions” to support technology transfer and development.

Leconte is president and director general of MSBi Valorisation, the technology transfer organization for Bishop’s, McGill and Sherbrooke universities, while Martinuzzo is project manager for business development, sciences and engineering at Gestion Univalor, the tech transfer arm of the Université de Montréal.

According to Leconte, a “champion” is someone with decision-making authority within an established organization, perhaps a future CEO, who sees the value in a new technology and will support it by either investing money and resources into it, and/or adopting it within his or her own organization.

Too often, large companies will turn a cold shoulder to new technology looking for a market. Martinuzzo cited the experience of trying to introduce a new polymer to a large company and getting a curt email response along the lines of, “we have the best polymer engineer there is in house. We don’t need what you have, thank you.”

However, there are large multinationals that have set an example for others to follow with programs to foster innovation, such as Proctor & Gamble, IBM, Merck and Intel.

Leconte and Martinuzzo’s idea of “champions” also applies another way – established companies must be willing to share their needs, their pain points, and challenge both R&D folk and entrepreneurs to develop relevant solutions they can use.

“To commercialize, we need companies with an innovation vision willing to share risk,” said Martinuzzo.

Ultimately, the onus still rests with the startup entrepreneur looking to bring technology to market.

Only by connecting with as many people as possible can opportunities, and the resources needed to exploit them, be unearthed. Validating that opportunity still requires in-depth market research and development to identify an innovation that is competitive enough to support company creation and growth. As our associate Peter Hanschke discussed in his post yesterday, one way to take the pulse of the market to guide product development and shorten the commercialization curve is with a Minimum Viable Product approach.

In his book, Doyle states, “more new ventures fail because of poor marketing than because of poor engineering or poor financial management.”

We will explore this statement in future posts, but next up, we take a look at what it takes to incubate a technology startup and whether or not Silicon Valley really is where it is at.

/// COMMENTS

7 Comments »
  • David French

    February 23, 2011 10:09 pm

    David French writes:

    Francis and Leo, I read your above blog posting and found it most thoughtful. This is one of the biggest challenges facing an entrepreneur: identifying exploitable technology. In preparing my materials for my workshops on obtaining meaningful patent rights, I have come to the conclusion that the first four of the six discussion points that I have developed relate to identifying the right innovation, appropriate “exploitable” technology, before you even get to the issue of patenting considerations.

    I like to reduce the six points to an initial three points:

    1. Right innovation
    2. Right market circumstances
    3. Right patenting conditions

    These three break up into six as follows

    1. Right innovation: a product which customers will want to buy and which can be manufactured at a price that customers are willing to pay

    2. Right market circumstances: an innovation for which there is no close substitute being presently provided by competitors and for which competitors will have difficulty generating a competing alternative in the future

    3. Right patenting conditions: a relevant feature inherent in the innovation which meets patent novelty requirements and an invention sufficiently well understood in all of its possible variants to support preparation of an effective patent document

    Far too many inventors and entrepreneurs, besides neglecting to fully appreciate points 1 and 2, turn the issue of appropriate patent conditions over to their attorney, asking for a simple “go – no go” report. They don’t bother to understand the scope of patent protection that can be obtained and whether it will have a meaningful impact on market exclusivity. The truth is it’s always possible to obtain a patent, always. But on what?

    This is hard stuff when you first address it, but it is manageable and engineers, managers, investors and purchasers of intellectual property rights should get smart on these principles so that they are not fooled by the simple label: “patented!”.

    Thank you for posting such a provocative discussion

    David

    David J. French LLB BEng PEng
    Second Counsel Services
    Ottawa, Canada

    http://www.SecondCounsel.com
    http://www.CanadaPatentblog.com

    Second Counsel Services provides in-house workshops and training in the understanding and management of Intellectual Property.

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