Starting from the graphical user interface to multitouch, Apple did not invent many critical technologies in creating its remarkable Innovation success. Similarly, Sony did not invent Transistor or Electronic Image sensor technology to create Disruptive innovation successes around them. Like Sony, many Japanese companies like Toshiba and Nichia created mega-success stories out of technology transfer. On the other hand, India’s Hindustan Motors could not develop a sustainable automobile business, let alone grow as a disruptive force upon having access to automobile technology and the market. Such high contrast in outcome raises a question about how to leverage technology transfer for graduating from idea importer to exporter.
Often, technology invention emerges in an embryonic form, having the economic value creation potential latent. Sometimes, the inventor alone cannot develop it further and pursue innovations around it. Furthermore, the benefit of a single technology cannot unfold through a limited number of innovations. On the other hand, due to barriers to access to inventions, aspiring countries and firms cannot pursue the path of Wealth creation out of ideas. Hence, the broader reason for technology transfer is to make technological developments and their exploitation accessible to a broader range of users who can further develop and derive economic benefits. The specific reason could be to meet the immediate need to fill the technology gap in pursuing specific innovation goals.
Within this context, technology transfer could be defined as the transfer of detailed know-how of technology inventions and their advancement and commercial exploitation rights. Commercial exploitation may occur as the technology’s trading or as products and process features. Of course, there are many other well-respected definitions.
Overview of the article: Table of content
- Process, types, and models of technology transfer
- Leveraging options and challenges to derive benefit
- Technology transfer success factors and stories, and also stories of failure
- Impact of technology transfer
- Strategy, policy, and management issues
The technology transfer process, types, and models:
The technology transfer (TT) process may consist of six significant activities in a straightforward term. These steps are (i) invention disclosure, (ii) evaluation, (iii) patent application, (iv) assessment and marketing, (v) Licensing of Patents, and (vi Commercialization.
In many instances, there is a need for continued refinement, as technology has an S-curve-like lifecycle. Furthermore, a substantial amount of technological invention often resides as a Tacit capability among the inventing team members. Hence, as part of TT, the recipient may need to recruit the inventing team. It may even go further to acquiring the technology-owning company as a whole. For example, Apple acquired FingerWorks to get the full benefit from the transfer of gesture recognition technology.
There are three major technology transfer types: (i) technology push, (ii) technology pull, and (iii) spillover. While push and pull are a deliberate attempt for specific commercial interest, technology spillover refers to the unintentional technological benefits to firms or actors associated with research and development efforts. This means appears to be highly effective for developing countries to access emerging technologies through their graduate students.
In addition to types, there are five significant instruments or models for technology transfer such as (i) Licensing, (ii) Joint venture agreement, (iii) Francizing, (iv) Original equipment manufacturer, and (v) Buy-back contacts.
Technology transfer offices:
Often, technological invention takes place in universities and public research laboratories. But, neither universities nor national laboratories are in the business of commercializing them. Hence, their primary vehicle to befit from them is through licensing. But that requires activities for evaluating, packaging, disclosure, patenting, marketing, negotiating, and licensing. These activities comprise significant professional work. Hence, many research-based universities and large national laboratories have opted to have technology transfer offices (TTO). Particularly, universities in the USA are the pioneer. In addition to looking after intellectual property management, TTOs also counsel and facilitate incubating Startups and maintaining industry partnerships for creating the market of their intellectual properties.
Leveraging options:
Recipients may exploit multiple windows to draw economic benefits from access to new technologies. Some of them are cross-licensing, manufacturing technology as components, and pursuing innovations. First of all, the recipient may seek to advance the technology further and license others. The next option is to manufacture components out of the transferred technologies. For example, upon advancing transistor technology, Fairchild semiconductor preferred to advance, make and sell it as a component. Another option for leveraging transfer technology is to pursue product or process innovations. Leveraging in product innovations may take place for serving the purpose of incremental, radical, and sustaining innovation and Reinvention. Sometimes, recipients leverage transferred technology to create barriers to competition. In the worst case, the purpose could be to bury the potential competition.
Challenges to profit from technology transfer:
Access to technology alone does not enable recipients to use it as a seed to create economic benefits from ideas. For example, 8×8 image sensor technology transferred from Bell Labs to Sony offered no commercial benefit to the recipient company. Similarly, Nichia could not extract economic value from access to primitive LED technology. Hence, upon the transfer, the recipients invariably face the challenge of their further advancement for exploitation. In addition to economic viability and technology feasibility, the recipient faces the challenges of having suitable internal capacity, organizational structure, and strategy.
Success factors:
Technology success factor depends on technology maturity, exploitation options, management competence, and organizational suitability—among others. For example, despite being successful in having the first patent of digital cameras, Kodak did not succeed in making the transition from film to electronic imaging. The underlying causes had been improper management and organizational competence. Similarly, although both Sony and RCA received the license for the Transistor from Bell Labs at the same time, Sony’s success with transistor technology transfer destroyed RCA’s business.
Technology Transfer success stories—graduation from idea importer to exporter
Examples of technology transfer success stories include:
- Sony’s license of Transistor and Charge Coupled Devices (CCD), creates disruptive innovations
- Apple’s innovation success out of technology transfer, showing magical performance
- Taiwan’s Semiconductor success distills from technology transfer, turning an idea importer into an exporter
- Canon’s success from camera technology transfer, turning a repairman into an innovator
- Japan’s uprising is a high-level technology transfer success story.
Let’s look at these success stories further:
In 1952, Sony was a 12-person radio repairing workshop in a war-ravaged building in Tokyo. However, two of its founders, Mr. Morita and Mr. Ibuka, were science graduates, and they had experience working for Imperial Navy. Hence, they had insights into the limitation of vacuum tube technology and the likely latent potential of the recently invented Transistor. Therefore, they took the license Transistor from Bell Labs without losing time and embarked on its refinement.
However, instead of focusing on selling Transistor technology as components, Sony got into the mission of reinventing radio and TV by changing vacuum tubes. Sony showed a similar approach to exploit the commercial prospect of CCD technology. Like Sony, Apple has also pursued a strategy of pursuing disruptive innovation out of technology transfer. For example, Apple got GUI technology from Xerox Palo Alto Parc. Upon refinement, Apple pursued the reinvention of the PC by changing the user interface technology core.
Unlike Sony or Apple, Canon got access to Camera technology by copying all the components of Leica’s camera and assembling them. However, instead of selling the duplicate copy, Canon embarked on incremental refinement, leading to reinvention by changing the film with an electronic image sensor.
The technology success story tells another dimension. With the help of RCA, Taiwan got to know about semiconductor manufacturing, leading to the setting up of a small fab. But, in addition to operating imported ideas, Taiwan focused on creating additional ideas for refining the process. This approach of benefiting from technology transfer has empowered Taiwan to graduate from being an idea importer and operator to an idea producer and exporter. Furthermore, due to technology transfer, Japan has been an Innovation Economy success story. It migrated the epicenter of many innovations by reinventing them with transferred technology.
Technology failure stories:
There have been many failure stories too. Upon independence, India embarked on accessing foreign technologies to pursue the dream of building an industrial economy. Among many others, India successfully transferred automobile-making technology from Oxford Morris Motors. However, in addition to making, India did not focus on advancing. Hence, India’s initial automobile-making success did not lead to making idea producers. In addition to automobiles, India also gave protection to make photocopiers, capital machinery, and many more. Unfortunately, none of those initiatives strengthened India’s industrial economy by advancing transferred technology. Hence, installing, operating, and maintaining imported technologies do not lead to creating the dreamed success of technology transfer. Like India, despite having access to technologies through technology transfer, many other developing countries failed to develop an innovation-driven industrial economy.
Impact of technology transfer:
Technology transfer impact could be as little as being a competent lead user of technology. It could also lead to innovating a product or improving existing products and processes incrementally. But its implication could be far-reaching, empowering little ones to rise while destroying incumbent giants. Technology transfer implications may lead to the migration of the epicenter of high-performing innovative products due to reinvention. Consequentially, it may turn inventors into the importer and make technology recipient idea exporters.
For example, with the help of RCA, Taiwan got a small semiconductor plant and access to the know-how to operate it. But from this humble beginning of accessing foreign technologies, Taiwan got into the race of refining semiconductor process technologies making Taiwan a global leader. As a result, the semiconductor-inventing country, the USA, has lost its edge. Hence, US firms have been counting on Taiwan for leading-edge silicon processing services.
The success story of Japan’s uprising is from technology transfer. Notable ones are Transistor, electronic image sensors, LCDs, LED, lithium-ion batteries, flash drives, hard disks, and many more. Japanese companies targeted refining and using those technologies to reinvent major technology products. As they succeeded in nurturing reinvention waves as disruptive innovation, the epicenter of many innovations such as TV, computer storage, display, camera sensor, light bulb, and many more have migrated to Japan. Due to it, firms of technology inventing countries like the USA suffered from destruction. Hence, the impact of technology transfer could vary from minor to radical, like the rise of new entrants and the fall of giants. Lessons from Japan suggest that less developed countries may pursue technology transfer as a strategic tool to develop an innovation economy. But that requires a smart innovation strategy like the one Apple has or Sony had.
Strategy, policy, and management issues:
Strategy, policy, and management issues affect the success and failures of technology transfer. For example, India’s strategy and policy framework were targeted to create an industrial economy by transferring foreign technologies into a protected market. As protection was offering steady profit, producers focused on making import substitution instead of advancing technologies. On the other hand, Japan’s strategy was to win the global competitive race out of innovation. Hence, Japanese companies pursued the advancement of transferred technologies. Furthermore, in addition to incremental advancement, Japanese companies pursued the reinvention strategy for creating and monopolizing the market.
Furthermore, management practice also determines the extent to which the recipient will benefit from technology transfer. For example, benefits realization through Creative Destruction demands very high-level management competence in understanding product dynamics and global competition. In addition to general management, technology and innovation management competence play a vital role.
Often, technology transfer does not sound very difficult. But the challenge is in creating a success story out of it. Hence, although the current technology transfer market offers easy options to acquire technologies from outside, not all companies or countries equally benefit from it. Detecting latent potential residing in technology inventions and nurturing it in creating innovation success stories appears to be the most significant barrier to profit from technology transfer.
...welcome to join us. We are on a mission to develop an enlightened community by sharing the insights of wealth creation out of technology possibilities as reoccuring patters. If you like the article, you may encourage us by sharing it through social media to enlighten others.
Related articles:
Technology Transfer for Development Myth
Appropriate Technology is Inappropriate for Uplifting Developing Countries
