For gaining a competitive advantage in the current dynamic business landscape, technology is a quintessential part for every organization. To illustrate, be it reducing costs or improving efficiency, technology plays a vital role. It is highly important to make use of technology management tools like Roadmapping, S-Curve, etc. for achieving these milestones we set for our business.
Many a times, people with high technical knowledge that are primarily inventors, do create/invent a technology. For instance, many people don’t know how to add a business angle to the technology. This can actually be a problem for them. Hence, they need to understand the principles of Technology Management for reaping the benefits of their hard work. I am sharing 5 ways in which, you can gain competitive advantage from your invented technology.
What’s in it for me?
- Strategic Alliance
- Selling the technology
- Utilization (internal exploitation)
- Spin-Out Company/Start –Up
License is a legal binding document. It allows a third party firm to use the invented technology for a specific purpose. In addition, License provides financial returns to the firm without investing any more R&D/financial resources. Also, it is the responsibility of the company that the third party exploits the invented product to its best. Since, commercialization will take place only then. Thus, the company is liable for assessing the licensee’s responsibilities.
Further, the terms should protect the firm from the third party sitting on the invented technology. Usually, done by revoking the license and granting it to a more committed firm. Typically, a firm can also give multiple licenses to third parties. This depends on their resources, area of expertise, geography, market share. It ensures that the product reaches the market place as soon as possible. Licensing can be helpful as licensee will take care of the costs of developing the product using the technology. In addition, marketing of the product and the risks involved will also be taken care of. As a result, it will ensure that the firm gets its income over many years with no liability. Therefore, this will result in a competitive advantage.
Example: Qualcomm licensed it’s 3G 4G and 5G technology to HMD Global (under Nokia brand). To illustrate, it is an American MNC which develops technologies that helps us connect through our devices. For instance, 5G, chipset for modems. Specifically, on May 2019 they signed a royalty-bearing license to develop their 3G,4G and 5G single mode. This also included multi-mode complete devices to HMD Global under the Nokia brand.
In order to share the resources, commercialization and liability/profitability of the technology, collaborating with a third party partner is required. So, it is usually for a long time frame and involves commitment between the parties. Only then, they will be able to share the resources with the partner firm both financial and the workforce. Before starting the alliance, it is important to legally finalize the terms of alliance. The ownership of the IP, distribution of revenues and profits must also be confirmed.
Another type of alliance is to share the new technology with the Original Equipment Manufacture. So, this is useful since they are used to the newly invented technology. Hence, this contributes in the developing of the technology. As a result, they become partners to promote and commercialize the technology so that it reaches the right customers. Alliances can also help supply the complementary technology to the customers, needed for the success of the innovation. To summarise, the goal is to create win-win situation for both the parties and obtain a competitive advantage as well.
Example: Alliance between T-Mobile and Ericsson. T-Mobile is a Germany based mobile communication company. Specifically, under the alliance signed in September 2018, Ericsson will provide T-Mobile with the 5G New Radio hardware and software. T-Mobile will leverage Ericsson’s market leading portfolio to expand its network. In turn, Ericsson will be the market leader in providing devices (mobiles and radios) to the customers which support 5G.
Selling the technology
It is a relatively simple strategy as it involves finding the right seller and getting the amount. This is important for making profit out of it. Outright sale of the invented technology might be a good option in some cases. If the firm does not considers developing the technology further then it is viable. Also, if it does not have the resources to fund or maintain the technology it can be useful. It is a good option if the prospect of immediate cash is more lucrative for the firm. This is also viable if the invention is of relatively low value. Hence, selling will protect the firm from any liability and will thus result in competitive advantage.
The company will use the cash received from the buyer to focus on the R&D of a different invention. One drawback will be that there will be no control or influence over commercial exploitation of the technology. As a result, the firm might regret if the product developed from the technology makes unexpectedly large profits.
Example: Ctrl Labs sold their brain interface technology to Facebook which is start-up based out of New York. It focuses on developing a brain computer interface. To illustrate, it does so with the help of a wristband or proprietary software platform. The costs is $500 million – $ 1 billion. According to Facebook, this technology can be the way we connect in the future based on AR/VR.
Utilization (internal exploitation)
The firm can choose to develop the technology if it shows great potential. This is also possible when firm has the resources to exploit the same. Also, it is essential for the company to adopt it into current product or new product design. The firm should have a complete information about the technology. Hence, we must research about the target market and also the needs of the customer. It is important to know how the technology can be integrated in the product/process benefiting the segment. As a result, benchmarking will be necessary to measure the performance of the new product. So, the firm will be able to commercialize the technology. Therefore, it will also be able to exploit the technology based on their decisions. Thus, it will be useful to gain a long term competitive advantage.
Example: Holoportation by Microsoft is a new type of 3D capture technology. High-quality 3D models of people are reconstructed, compressed and transmitted using this technology. In addition, it allows us to make this possible anywhere in the world in real-time.
It is viable if the invention has the potential to be the basis of a new company/start up. Also, if the technology can be combined with a complimentary IP it can create a disruptive product/service. The firm can continue with it’s operations while developing a new venture which will focus on a different segment. This will help increasing the market share and revenue. Thus, customers will trust the new company because of the parent organization. Furthermore, the firm can exploit the invention to the fullest to gain competitive advantage. Generally, this is true in the case of advanced technologies. However, one of the drawback will be that setting up a new venture will be more risky.
Example: Oculus VR is a spin out company of Facebook. It focuses on developing the hardware and software related to VR. As we know, it was formed in 2012 in order to focus just on VR. The goal is not to affect the operations of Facebook.
To conclude, I would like to say that always choose a strategy based on the situation you are in. Finally, keep in mind the kind of goal or type of competitive advantage you want to achieve. Perform all the Technology Management activities for long term success as well. If you wish to learn more about technology management you can check out my blog on Ways to acquire a new technology for your business. You can also check out my blog on Tasks performed by Technology Manager if you want to learn more.