A systematic approach to technology transfer - Technology

Chief Executive, The, Nov-Dec, 1992 by Roy Serpa

Pouring millions into R&D with insufficient innovation and paltry returns? One solution: Revamp the process of bringing a product to market by integrating the efforts of technology and marketing personnel.

Some experts believe the Japanese are faster and more cost-effective than U.S. firms at bringing products to market. Apparently, corporate America thinks so, too: In order to compensate, spending on research and development totaled more than $1 trillion during the 1980s. But R&D is no panacea: Technological development can only help if it is commercialized in a timely fashion. Stateside, this application or transfer of technology has been a critical, missing ingredient.

At some companies, this message has already hit home. During the mid-1980s, IBM junked a technology transfer process that funneled product ideas from market research to R&D, design engineering, manufacturing, and, finally, to sales and marketing. It now assembles product development teams comprising technology, marketing, and support personnel. Team members receive ongoing commercial input and are in constant communication with one another--monitoring and revising the process in line with market fluctuations and changes in customer needs. One result: The four-year development cycle for the AS/400 midsized computer has been trimmed to 20 months.

IBM's achievement should be an inspiration to other large corporations with talented staffs eager to boost the bottom line. But for others to follow, CEOs must gain a better understanding of the technology transfer process: Support for invention and innovation must begin at the top.

KEY FUNCTIONS

Following is one model for technology transfer (see graphic in this story). Roughly speaking, it begins with market research and technical assessment; proceeds through internal testing, pilot production, and field evaluation; and ends with broad sampling, initial sales, and ultimately, the commercialization of a product. Generally, the initial steps involve minor investment. After the tentative business plan is approved, however, substantial expenditures are often incurred.

There are two key functions that must be defined at the outset of the transfer process. They are commercial development, normally a function within the marketing department; and technical development, usually the responsibility of the R&D department. The commercial development function usually identifies the need for new products or the modification of existing products, prepares the justification for the activities required to meet this need, assists in planning for the development of products, and introduces them to the marketplace.

The technical development function usually assesses the technical/economic feasibility of the product need, conducts the experimental work required to prepare the product, outlines the manufacturing process, assists in establishing specifications, and prepares sample quantities for customer evaluation. In addition to these functions, market research, engineering, production, accounting, and sales personnel participate as part of a project team. In some cases, representatives from customer companies become part of the team.

According to an article in The Wall Street Journal, Ingersoll-Rand employed the team approach to slash its product development time by two-thirds. A team headed by a product manager--including personnel from sales, marketing, engineering, and manufacturing--eliminated the "walls" and autocratic mind-sets that impede successful product development and commercialization.

Generally, a new product opportunity is reported by sales, technical service, or marketing personnel. A customer or potential customer may have indicated an existing product requires improvement or that a system in the concept state will require a new component. In other cases, someone in R&D may have an idea to develop a product that could offer an outstanding property, or a combination of properties, not available in the market. Whether opportunity takes the form of a need awaiting a new product or a new product idea in search of a market, the same general approach can be applied. The Post-It|R~ note from 3M was an example of a need satisfied through the use of a low-tack adhesive that had been discovered "accidentally." The discovery had been shelved, simply because no one had found an application for it.

The first action step in systematic technology transfer generally begins with marketing management authorizing a preliminary market survey by market research. The objective of this survey is to estimate a new product's potential. It should define or estimate:

* The market size (the number of customers with an existing or potential need).

* Acceptable performance level.

* Quantities required.

* Price parameters.

* Deadlines for the product development cycle.

Consultation with sales personnel can assist in determining which industries, manufacturers, or consumers should be contacted to gather relevant information in the shortest time period.