Narayan

THE INNOVATION CHAIN (PROCESS)

IDEA/CONCEPT

TECHNOLOGY DEVELOPMENTInvention -- patents, trade secrets, Intellectual Property (IP)

TECHNOLOGY TRANSFERInvestment Grade -- license, joint venture, start company

TECHNOLOGY COMMERCIALIZATIONBusiness Plan, Strategic Plan, financing/internal funding

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Stages in Innovation/Concept to Commercialization -- THE PUZZLE

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New Ideas/InventionsR&D project initiated

Intellectual property creation

University Faculty

Entrepreneurs

StudentsGraduate & undergraduate

Technology Assessment Business & market potential

COST!

Business development infrastructure

Commercialization expertise

?

Technology Development Engineering Economics!

Product specifications, process parameters, pilot scale-up operations

Market analysis, demonstration & evaluation

TECHNOLOGY POTENTIAL

HIGH

LOW

Modify, refine, change or drop project

BUSINESS/COMMERCIALIZATION POTENTIAL

Establish Business Business Plan, Financing, Management

HIGH

LOWNeed more work

NEW BUSINESS JOINT VENTURE OUT-LICENSING

Technology Commercialization Process Model

Institutes, National labs

?

STEP1

STEP 2

STEP 3

STEP 4

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Life Cycle of Project from Concept to Commercialization

Applied R&DScale-upPreliminary Engineering & Economics

Stage 1

Market AnalysisBusiness Opportunity Analysis

Stage 2

Market Development StudiesEnd-user/Customer Testing & EvaluationBusiness DevelopmentBusiness Plan

Stage 3

Concept R&D

Proof of Technology Concept

PHASE I - Basic / Fundamental Work

PHASE II - Technology to Investment Grade

PHASE III - Commercialization

Semi-works/Commercial plantSalesManufacture

Business PlanStart-up Company

orJoint Venture

orTechnology Sale / Licensing

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Getting products out fasterThe past five years, major U.S. companies have cut "time to market" for new

products. Average development time, in months for:

0

10

20

30

40

50

60

19911996

Breakthroughproducts

New productlines

Major productrevisions

Minor productrevisions

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Reducing Product Development Time

Collapse Feedback Loops into One Circle

Business

R&D

Customer

Manufacturing

Sales

Concept R & D Engineering Marketing/Business

Development

Manufacturing Sales

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Collapsed Feedback Cycle Model for Fast-track Commercialization of Technology (Narayan Model)

In-license TechnologyComplete R&DMay Develop Technology from concept if high success and strong patent/proprietary position

Stage 1Identify Business Opportunity in Area of Expertise and Strength

Market AnalysisBusiness Opportunity Analysis

Stage 3Market Development StudiesEnd-user/Customer Testing & EvaluationBusiness DevelopmentDraft Business Plan

Development Corporation SetupFirst Round of Financing

(Investors)

Stage 2Applied R&DScale-upPreliminary Engineering & Economics

PHASE I - Basic / Fundamental Work

Semi-works/Commercial plantSalesManufacture

Business PlanStart-up CompanyJoint VentureTechnology Sale / Licensing

PHASE II - Technology to Investment Grade

PHASE III - Commercialization

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Life Cycle of Science & Technology Commercialization

Basic Research

AppliedResearch

Start-upCompany

Roll-outProduct

WorkingCapitalInfusion

SuccessfulCommercial

VentureFundamentalScience

Strategic Research

ProjectInnovation

Seed Capital Venture Capital

MezzanineCapital

Market Risk

Management Risk

Growth Risk

ManagementRisk

Growth Risk

Growth Risk

•Idea•Conceptual Risk•Proof Concept•Technical Feasibility

•Development Risk•Market Risk•Management Risk•Growth Risk

$ $

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NewInventions

GRTCompanyCreation

MBI Development

New Companies

Bio-Business Incubator of Michigan"Jump-Start"New Companies

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MBI / GRT "Direct Contributor"

MBI / GRT

Expertise- Scientific- Engineering- Business DevelopmentFacilities- Laboratory- Pilot Plant- IncubatorManagementMarketing/Promotion

CompaniesRevenues

JobsIncubators

Multi-TenantFacilities

Federal GovernmentIndustryState GovernmentFoundations

Worldwide Companies

Seed Venture CapitalVenture Capital

Intellectual Property Inventions

UniversitiesFederal Laboratories Companies

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• United States is in a significant era of entrepreneurship

• Over 700,00 companies began last year, compared to 50,000 per year in the 1950’s

• Research has shown that all new net job creation comes from new and growing companies

• A 1994 national Gallup poll showed that 70% of high school students want to start their own companies one day

• At the same time, colleges and universities throughout the country have reported tremendous growth in their students interest in learning about entrepreunership and ultimately becoming entrepreneurs

• This dramatic growth in entrepreneurial interest and activity is reinforced by a counter trend – large companies are downsizing, reengineering, and eliminating traditional job opportunities

WHY ENTREPREUNERSHIP?

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“Entrepreneurial thinking is the ability to see what is there, to see what might be there, and to take the actions necessary to ensure that vision and

create the change”

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• initiative

• imagination

•flexibility

•creativity

•a willingness to take risks

•the ability to think conceptually

•the capacity to see change as an opportunity.

Entrepreneurial Thinking

“ These qualities can be applied in any business venture, large or small, public or private, corporate or not-for-profit, local or global ”

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• Engineering students are ideal candidates for entrepreneurship

• Engineers are very practical, have sound analytical skills, good problem solving skills -- all the basic skills necessary to start and run a high technology enterprise

• Builds on their basic skills and opens up their minds to the possibilities of business creation and new product development

• Even if you do not start-up a new business and go to work for an existing business, the knowledge and training in the field would make you more valuable to the company and more sought after by companies

• Entrepreneurial thinking gives students the ability to see what is there, to see what might be there, and to take the actions necessary to ensure the vision and create the change.

THE ENGINEER ENTREPREUNER!

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The business cycle from the invention or

discovery of a product or service, through

assessing the business opportunity, into

building the market and delivery systems,

and on to further product development and

the financial plans associated with it.

BUSINESS CYCLE

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ELEMENTS OF A BUSNIESS PLAN

Vision & Mission StatementGoals & Objectives

Company Overview• Legal business Description• Management Team• Board of Directors• Strategic Alliances

Product Strategy• Current Product• Research & Development• Production & Delivery

Market analysis• Market Definition• Customer Profile• Competition• Risk

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ELEMENTS OF A BUSNIESS PLAN (Contd)

Marketing Plan

• Sales Strategy

• Distribution Channels

• Advertising & Promotion

• Public Relations

Financial Plan

Assumptions

Financial Statements

•Balance Sheets

• Income Statements

•Cash Flow Statements

•Capital Requirements

Exit/pay back strategy

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CONCEPT OF VISION/MISSION/GOALS/OBJECTIVES STATEMENTS

Where business is headed

How business will be conducted

Necessary levels of achievement

Specific actions to be taken

VISION

MISSION

GOALS

OBJECTIVES

=

=

=

=

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STRATEGIC PLANNINGmedium to large companies

GOALS CAPABILITIES

BUSINESSENVIRONMENT

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STRATEGIC PLANNING (Contd)GOALS

Values -- defines what the organization stands for

Products & Services --

Target Market -- satisfies a customer need, Market share

Financial Goals -- Key financial measures/indicators for the company like Sales, Profits, Sustainable rate of growth

CAPABILITIES

Engineering, Manufacturing, R&D, Marketing, Customer services, others

BUSINESS ENVIRONMENT

Threat of new entrants

Threat of substitute product or services

Bargaining power of buyers and suppliers

Competition among existing firms

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GENERIC STRATEGIES

COST LEADERSHIP

Requires high relative market shareAggressive use of economies of scaleLearning curve to reduce cost

DIFFERENTIATION

Unique -- can be achieved by technology, performance, customer service, brand loyalty

FOCUS

Applicable for small organizations -- market niche can obtain cost leadership and or differentiation.

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BUSINESS AS A DYNAMIC SYSTEM

Price Volume

Variable costs

Fixed Costs OPERATIONS

Operating ConcernsTarget MarketDeployment of assetsCost effectivenessPricing strategy

Operating leverage

Key MeasuresCurrent RatioReturn on assetsProfit Margins

OperatingProfit

Dividends

Equity

New Investments

RetainedEarnings

Interest

Long Term Debt

Investment ConcernsDividends to ownersInterest to lendersReinvest Profit

Financial leverage

INVESTMENT

Debt to equity ratio

Return onequity

Sustainablerate of growth

Return oninvestment