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ASCI
Journal of Management

Volume 21, 1992
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Managing Innovation and Technology Transfer
A W Pearson
Professor, Manchester Business School, Manchester, U K   

Innovation and technology transfer are easy words to say but less easy to define.  In this paper, they are used to embrace all activities which lead from ideas to implementation It is then possible to focus attention on a process which involves many parts and on which there has been much research A number of examples from literature and information from two currently active projects are used to draw out some of the key management issues.  The conclusions are that there are many factors which influence the success or otherwise of innovation and technology transfer, and that if these are identified and understood, benefits to all parties will be increased


The importance of innovation to many organisations has been well documented.  This is particularly so for those which are technology based where the ability to introduce new products and processes and to regularly update old ones provides a major competitive edge.  Innovations may arise from ideas which are generated internally, although they may have been stimulated by external interactions, or they may be introduced into an Organisation through, for example, inward licensing, joint ventures, and acquisitions.  The source is not so important as the process by which such ideas are developed and managed through to successful implementation. 

Research into the innovation process makes it clear that there are many areas which require particular attention and that these often occur at interfaces.  These may lie within the Organisation, for instance, between research, development, production, and marketing departments.  They can also be external, for instance, between licensees and licensors, and between different companies involved in collaborative technology agreements.  The interface between producers and users must also be taken into account, as difficulties often arise due to a lack of understanding by the former of the latter's needs.  These differences are often made worse when innovations cross international and cultural boundaries. 

In much of the early research, all of these areas of concern tended to be loosely grouped together as problems of technology transfer.  However, it was not always clear what people meant by this latter term.  Definations were not necessarily very helpful, which is perhaps not so surprising in such a complex subject area.  The suggestion that "technology transfer is putting technology into a different context" would appear to be limiting, implying as it does that something already exists which can be transferred almost as it is to another setting.  This is very rarely the case.  Brooks (1966) in considering the wider aspects of the subject draws a distinction between horizontal and vertical transfers - the former implying the adaptation of a technology from one application to another, the latter the process by which technology is transferred from the more general to the specific.  Both horizontal and vertical transfer can require considerable effort, and successful implementation is helped by an understanding of the area into which the new technology is to be introduced.  However, outside these definitions we find many types of innovation which Include, for instance, the combination of the existing technologies which lead to novel outputs from both a technical and a marketing point of view. 

This narrowness of definition led Bradbury et al (1978) to consider "transfer processes in technical change" a better umbrella under which to consider the many facets of Innovation.  Since the mid-70s, much has changed in the environment which has impacted upon the way organisations operate and in the way they manage their scientific and technical resources. However, this wider description still has much to commend it, and helps to focus our attention on the key factors which practitioners and researchers have found to influence success rates.  Such factors can be easily identified from case studies of specific innovations and some of these are illustrated in the next section, using information drawn from the literature.  In the following section, two recent case studies are discussed which illustrate the complexity of the process.  Finally, implications for managers are identified and some conclusions drawn about specific actions which should improve the process from idea to implementation and result in increased benefits to all participants 

Variety of innovation
The many facets of innovation and technology transfer are nicely illustrated by examples which have been well researched and written about in the literature.  The case of Xerography is often cited (Lamb, 1987).  It started when a physicist working in a patent attorney's office, and observing the large amount of carbon paper used to make multiple copies, wondered whether this waste can be reduced.  The thought that this might be eliminated led to much effort searching through the scientific and patent literature to try to identify prior ideas which could be built upon to develop a new process.  The end result we all know. and photocopying is an essential feature of most organisational activities.  Sony's Walkman innovation opened up a totally new market in the portable music systems area and came about as a result of putting together two known technologies in a way which had not previously been identified as having market potential.  Overnight parcel delivery, introduced and made famous by Federal Express, was based on well-known ways of doing things - it was the whole, not the individual parts, that produced the innovative outcomes (Nayak.  Ketteringham, 1986).  Zapmail, a later attempt at innovation from the same company, was less than successful (Block, 1989).  Using the existing means, essentially coupling the relatively new FAX technology with the already established rapid delivery network looked to be a potentially profitable venture.  In fact, it was overtaken by other events, including the rapid diffusion of company and even personal - fax machines.  This was due, in part, to the significant reduction in prices of the necessary equipment which enabled individuals to manage their own communication links more effectively. 

Polarvision is another frequently quoted failure, following as it did the very successful polaroid instant photography development.  Difficulties with the technology and long time scales to develop left the way open for approaches based on electronic know-how to take over and video effectively filled the market need at which the chemically oriented film processes were -gearing up to meet (Block, 1989). 

Development in electronics have opened up many opportunities, many of which have still not been grasped.  It Is well known that there are "windows" which open up and close.  You can be too early or too late timing is important.  Coin operated machines, with all their problems of size, weight, and lack of flexibility, are being replaced in many areas by card operated payment systems.  In the early days, these would probably have been bought already "loaded" with a specified number of currency units.  Now it is possible to "fill them up" and replenish them as the need arises.  The credit card with its ability to handle multiple currencies is a boon to many travellers, particularly in areas like Europe where frequent country changes are associated with the need to carry a variety of monies in order to cope with simple day-to-day activities, such as telephones, and parking meters. 

The use of laser technology in bar coding, measuring devices, guidance systems, and surgery are so well known now that many people probably forget that a major input into these products is a common know-how that about 30 years ago was described as "a technology looking for a use".  An important point to make in this respect is that the windows of opportunity can and do open and close at different times for different uses.  A further point is that we are only just touching on the potential of some of these technologies.  For instance, the use of the so-called "smart cards" as portable data carriers (PDC) is still being explored.  As has been recently stated that with the variety of potential applications, as well as the assortment of PDC products, it is not surprising that identifying effective applications and integrating systems has become especially important" (International Journal of Technology Management, 1989). 

The link between stimulus and use has been a subject for much discussion.  Technology push and market pull are frequently refer-red to as alternative starting points, with research tending to show that the latter is more likely to lead to successful and more rapid implementation.  However, a key issue is not so much the starting point, but the combination which makes best links of scientific and technical know-how, whether old or new, to user need, whether this is really identifiable before the event or not. 

It must be remembered that what constitutes a market need is not always clear.  Nobody asked for the overnight delivery service, the Walkman was not driven by a large market demand. and certainly the oft quoted 3M Post-it note- pads opened up a previously unidentified market.  In fact, in the last case, it is reported that a number of attempts to exploit the non-stick technology has proved to be a failure prior to the now accepted market success.  It is not surprising, therefore, that innovation often comes from outside an industry, or that new uses are identified by scientific and technical ideas which might not at first sight have been foreseen.  These can and do create new markets, often with higher added value.  Velcro is an example of this, where early applications for this new fastening device were recognised by the NASA space agency - Its novel characteristics having significant comparative advantage over other available technologies, and its markets now include shoes, textiles, and medical (Krantz, 1989). Finding new and niche markets is well recognised as a good entry strategy to adopt, particularly as it is also well known that the existing organisational structures do not always encourage the introduction of ideas which are different from the well known and established patterns.  The not invented - here (NIH) syndrome is not yet dead.  Finally, It is well known that success with technology can be obtained by being first or second in the field, and factors affecting this include appropriability and complementary assets (Teece, 1987).  The role of patents and licensing can be important here as the well known cases of Pilkington Float Process, and the EMI CAT scanner illustrate.  Me former company is still a world leader in the technology it pioneered, the latter was taken over after protracted negotiations about patent rights and rapid developments in the technology caused problems if found difficult to cope with. 

The wisdom literature and research publications and case studies all tell a similar story and clearly show that innovation and technology transfer are not easy to manage.  We should not. therefore, expect to find a simple set of rules which, if followed, will guarantee successful implementation and benefits to all.  But we can look for important points which arise time and again, and which provide important messages for organisations.  An analysis Of the literature suggests that the following list contains many of the most important ones for consideration: 

Important Messages for Organisations
 
 

Users can be an important stimulus to innovation 

Linking of the existing knowledge or capability in a new way can be very productive 

Market pull and technology push are equally valued starting points 

Innovations can stimulate market needs 

First to market does not always lead to long term success 

Appropriability and complementary assets can be important 

Outside sources of help may be required both in technical problem solving, and in marketing 

Innovations often come from outside the industry 

The external environment can change over time to positive and negative effect

Innovation and Technology Transfer: A Web of Interactions

In the previous section. the range of issues raised in the innovation and technology transfer process were briefly discussed by referring to a variety of reported examples.  In most situations, more than one of the issues is encountered, and it often requires considerable personal characteristics, time and effort to cope with the problems, and to ensure that the innovation survives.  This has been well documented with respect to large companies, with the many writings on "intrapreneurship" emphasising the importance of recognising the different stages in the process of creating benefits and wealth, often from ideas which are not easily progressed through the existing procedures and organisational structures (Burgelman, Sayles, 1986).  The role of the so-called "bootlegging" has been emphasised as a major factor in a number of well known innovations (as has the persistence of individual innovators - Wyeth, 1988). 

Large Organisations have tried many ways of identifying and exploiting technology, not always successfully.  Two much publicised approaches, one in the public sector, and one in the private, have recently been discontinued.  In the former case, a company set up in the UK to fund commercial spin-offs from military technology has effectively been closed.  It has withdrawn its so-called "ferrets" from four government research establishments mainly, it is reported, because It was incurring considerable costs without producing any significant benefits.  In a second case, a major multinational recently closed its innovation group.  This was originally set up with the objective of identifying new ideas from any source which could be exploited by the Organisation.  Not surprisingly, the people involved in this potentially exciting activity deny that they were unsuccessful in their search for new opportunities, but when profits were reduced, it was one of the first things to go.  Unfortunately, these are not isolated cases. 

Innovative small companies often face different problems.  They do not usually lack the "entrepreneurial" characteristics and their structures are potentially more flexible.  They can and do run into trouble in a variety of ways which are- only overcome by perseverance and dedication.  In the process, they are usually exposed to considerable risks, and ultimately to potential collapse - to the loss of personal wealth, and in some cases, health, and family.  Fortunately, there are many which are ultimately successful, however long and tortuous the route is. 

There are many interesting cases of Individual and small companies which show the variety of issues which arise in attempting to exploit innovative Ideas.  Xerography is an obvious example of this, Involving as It did lengthy search procedures, multiple experiments, external technical assistance, rejection by the existing industry, and an almost chance matching with an Organisation looking for new products.  But it made it.  Two currently active projects show a similar level of complexity, although some of the factors differ, as the following brief descriptions show.  The first case involves the transfer of technology from one application to others as well as across national boundaries.  The technology is essentially one of surface coating, but with a difference.  The difference relates to the ability to provide a pattern on one side of a transparent material which cannot be seen from the other - an analogy perhaps with the concept of a one-way mirror.  The original development arose out of the request to a structural engineering company to build up a portable squash court which would allow the spectators, and television cameras, to see inside from all angles, but which was opaque to the players inside the court who would not want to be distracted by movements outside.  None of the alternatives considered proved to be satisfactory, and a new approach was sought.  Innovative ideas were generated and a completely new process suggested.  Comments from people with technical knowledge suggested that it was unlikely that a feasible solution existed.  Certainly nothing seemed to be readily available.  Undaunted by a lack of chemical knowledge, the engineer progressed the idea, the product has won many innovation awards, and strong patent position has been established.  But the costs of development to this stage cannot be recovered from the original market area and a question being addressed now is how to identify potential applications for such a technology.  Again, there is no shortage of ideas, but means of exploitation have to be found, with costs being a key issue for a small company which has few complimentary assets to draw upon.  Licensing, joint ventures, wholly-owned operations, are all possibilities.  The choice not easy and must take into account the demand for resources. 

Figure 1: Steps in Innovation Process

Table Page No.114

The choice of route is not the end of the If, for example, a licensee is chosen s not effectively exploit the innovation, much time and efforts have to by the licensor.  The personal as I as intellectual demands on the entrepreneur can, therefore, be very ;considerable, particularly when exploitation attempted across cultural and international boundaries.  Interesting and Important points of the process are summarised in Figure 1, with the opening up process being a not unusual feature of innovation and technology transfer. 

Many issues are raised by a case like this, including for example, the importance of a product champion, innovation from outside the industry. the suggestion by some experts" that it would not work, and the difficulty of planning and prioritising among the many opportunities when resources are limited and the means of exploitation difficult to manage. 
 

Fig 2: Page:115

Another case which neatly illustrates the complex and often tortuous nature of the innovation and technology process involves a small company.  Ihis has been recently acquired by a division of a large multinational essentially for its technology and for the strong position it has managed to develop in a relatively small but increasingly Important niche market.  This may not be surprising, but the history of the technology is (Duff, 1988).  The original need was perceived by an academic following a well publicised crisis situation.  A search of the available literature suggested that there were a few good means of meeting the needs of this situation, and with the help of a student project some preliminary work was undertaken.  Progress on this led to a product which generated interest from the research centre within a major multinational.  Further work was supported by a division within the company which unfortunately was sold after rationalisation of the company's activities following economic recession.  Ihis resulted in the return of the technology to the university, which not only sought other users but also provided the research funds to continue the necessary developmental work.  A patent was also filed before a small company was found with the help of publicity through a local innovation centre and later development assistance was provided through a government department.  Over this period, a major company had acquired the operations of the divested division from the originally involved company.  The former Organisation has now made the acquisition which added the activities of the small company, and hence the patent, to its portfolio of operations.  The wheel has, therefore, turned full circle, and one might well ask why it took so long and followed such a tortuous route which could have led at any stage to the loss of this technical development.  Some of the key stages in the process are summarised in Figure 2. 

There are many examples of successful technology transfer agencies, including those established to help exploit ideas from universities.  Innovation centres of various types have been set up in many countries, by local authorities as well as universities.  Companies facing changing external conditions often have to reduce the number of people in their labour force.  In some cases, they have contributed money, time, and expertise with a view to helping people to establish and grow their own businesses, often building on ideas and technologies developed but not used in the Organisation from which they are spinning off. Science parks are another means of bringing academia and industry closer together in anticipation of fruitful collaboration to mutual benefit.  The role of these technology transfer agencies would appear to be increasing in importance, making "agents" and "agencies" the key words in the innovation process. 

Other Influences
These, admittedly oversimplified, cases of innovation and technology transfer illustrate the complexity of the process and the variety of ways it can go wrong.  We must not think, however, that they embrace all the areas for concern.  Of increasing importance are those of a social, political, environmental, and legal nature.  In a recent special report on aspects of transport in the US (Jurgen, 199 1). it was stated that "rapid progress in control, communications, and computers makes practical technical solutions to highway problems possible".  Put together, these lead to a concept known as Intelligent Vehicle Highway Systems (IVHS) in the US, and Road Transport Informatics in Europe.  The report states that "the basic goals of these programmes are the same: to incorporate a range of technologies and ideas to improve mobility and transportation productivity, enhance safety, maximise the use of the existing transportation facilities and energy resources, and protect the environment".  There would be little argument that these are all worthwhile objectives, but in the same report. it is argued that the benefits from IVHS will only come about if the infrastructures for it can be put in place, which include large capital investment from government agencies and from equipment manufacturers willing to gamble on a new, largely unguaranteed market.  The latter ns likely the typical conditions faced by )innovators and entrepreneurs.  However, ,e are additional Important features of which it is said that "forming a cloud over socioeconomic IVHS scene is concern ut potential legal liabilities and the costs of liability insurance.  No one knows for ascertain what these liabilities will be once drivers no longer rely solely on themselves for routes taken and the control of their vehicles".  Factors such as these are increasingly becoming important in many areas, and there is no doubt that they do have an impact upon people's attitudes to, and willingness to be involved in, the innovation process. This has certainly been a point for discussion in, for example, the medical and health care business. 

Discussion and Concluding Remarks
Innovation and technology transfer is inevitably a highly uncertain activity.  There are many factors which affect the success or failure of the outcome other than those of a technical nature.  Economic, social, political, environmental, and legal factors are having an increasing impact in many areas.  Much of the impetus in the past has come from individuals or organisations who have taken considerable risks and those that have been successful usually admit to having been "lucky" at some point along the way.  If questioned closely they would almost certainly admit to not knowing at the outset the extent of the problems they would meet along the way.  With hindsight knowledge, many would not have entered the game.  A few, however, regret their Involvement. and freely admit that the excitement of the chase is considerable. 

The question to raise then is whether we can reduce the risks by better management based on research and practice.  The answer is not so straightforward.  There is much valuable information available to guide us, but the cases illustrate just how difficult it can be to get it right, for both large and small companies, for entrepreneurs and for entrepreneurs.  Lessons leaent include the need to look widely for potential applications before making a commitment to one area.  Similarly, to be willing to accept, in fact, encourage, inputs from outside to help solve technical problems.  To be aware of emerging trends and try to get the timing right to match with windows of opportunity are obvious but often neglected points. 

The innovation and technology process is indeed a complex web and we should not expect its management to be easy.  We must be aware of how attitudes, structures, and policies can encourage or not innovative activity and can Impact upon the successful exploitation.  But ultimately, we must rely on individuals and on organisations to continue to be entrepreneurial, and we should endeavour to provide as much support as possible through both public and privately funded agencies.  Alternatively, and particularly for those who do not feel such intervention is necessary, we must recognise where the barriers to innovation and technology transfer lie.  We probably already have enough research to tell us what these are.  If this is accepted. we need to be aware of the actions we can take to reduce the height of these barriers at every stage in the process. 


References
Block Z (1989): From: Damage control for new corporate ventures.  Journal of Business Strategy Mar April. 

Bradbury F, Jervis P, Johnston R. et al (1978): Transfer Processes in Technical Change.  Sijthoff and Noordhoff. 

Brooks H (1 966): National Science Policy and Technology Transfer.  In. Proceedings of a Conference on Technology Transfer and Innovation NSF. 67-5, Washington D C. 

Burgelman R A, Sayles L R (1 986): Inside Corporate Innovation New York, The Free Press. 

Duff E J (1988): The T-disc oil skimmer.  Industry and Higher Education September, 174-77. 

International Journal of Technology Management (1989): Smart cards. 4(3), 361-6. 

Jurgen R K (1981): Smart cars and highways go global.  IEEE Spectrum May, 26-36. 

Krantz K T (1989): How Velcro got hooked on quality.  Harvard Business Review Sept-Oct, 34-40. 

Lamb R B (1987): Running American Business.  New York, Basic Books, 137, 138, 144. 

Nayak P R, Ketteringham J M (1986): Breakthroughs.  Rawson Associates, 314-42. 

Teece D J (1987): Profiting from Technological Innovation: lmplications for Integration, Collaboration, Licensing, and Public Policy.  In Teece D J. Ed.  The Competitive Challenge: Strategies for Industrial Innovation and Renewal.  New York, Ballinger Publishing. 

Wyeth N C (1988): Inventing the PET bottle.  Research Technology Management Jul-Aug, 53-5.