Cuyamaca College
Environmental Technology Program
Business Principles
All businesses exist to make money--even not-for-profit businesses.. they just make it with a different focus. As you think about the business of technology transfer, or enhancing business with technology, you realize that an understanding of business principles is required. You must understand the technology to determine its applications and to maximize its potential. In addition, you must understand that business side of the equation has to be understood to make the technology package attractive to potential users.
Principles
These basic principles will give you a better understanding of technology transfer and the business segment:
- Technology transfer will not just happen; it has to be helped, and there are no customers for your technology living in your office.
- Business must be viewed as a customer-satisfying process, not a goods-producing process.
- Good businesses make money (legally and ethically).
- All business entities must have goals.
- Businesses must plan.
- Don't allow adversarial relationships to develop between the partners of a technology transfer formulation.
- When in Rome, learn to conduct business as a Roman.
Five Types of Businesses
(1) Service
The service business is the fastest-growing business segment in the United States today. It includes a complete range of services, from the high-technology services (such as analytical engineering, design engineering, facility operations, and research for others), to non-technical services (such as shoe repair, restaurant operations, home services, and vehicle repair).
Corporations range from high-technology service based companies such as SAIC, Mitre, and Rand Corporation, to non-technical companies such as McDonald's, Kelly Services, and accounting and legal firms. Many technologies will be transferred to the technology-based service business community.
(2) Manufacturing Only
Most of the original equipment manufacturing firms (OEMs) that sell recognizable name brands we recognize in the marketplace do not manufacture all of their products. In our economy there is a host of small, medium, and large corporations that manufacture pieces, parts, or components under contract for the name brand producers.
These companies are called OEM support or supplier manufacturers. Their products do not carry their brand name, but become part of an OEM's product line. In some cases a product developed at a laboratory or weapons plant will have to be taken to market by the developer or development team under an OEM's name brand.
The product may be completely developed and manufactured by one company, but due to the cost-effectiveness of using an existing distribution base, it will be manufactured under the distribution company's brand name.
(3) Manufacturing and sales/distribution
These companies develop, manufacture, sell, and distribute brand name products. They include GE, Chrysler, Ford, Motorola, Coca Cola, etc. In addition, there are thousands of brand names recognized only by their customers. Many of the products developed by Federal laboratories will move into this business arena.
(4) Product Development
There are many businesses in the United States that only develop technology for licensing to others. Typically these are small, mostly cottage-industry businesses, developed around an inventor or several inventors. These businesses prosper from royalty payments from products that they have developed.
Several universities have developed a line of royalty-paying products that generate millions of dollars in royalty income each year.
(5) Brokers
A broker is one who acts as an intermediary. There are several types of brokers, including representatives of retail and wholesale businesses, sales representatives, realtors, stock brokers, and many other types of marriage brokers. Although some of the products and services developed at the Federal laboratories will be involved with brokers, this is not a primary business segment for technology transfer.
In actuality, the technology transfer business is a brokerage business. The development of partnerships between Federal laboratories and industry is brokering in its purest sense.
Business Size Is Important
It is important to know and understand not only the business segment to which a technology is applicable, but also the size of the business with which the technology transfer will be working. Selecting a business of appropriate size will probably yield a more meaningful and effective partnership.
Large Business
Organizations grow more complex and diffuse as they become larger. Large businesses have unique challenges. They can be slow to respond, and the decision making is slow and cumbersome. In most cases, several levels of management are involved in decisions.
It is significantly more expensive to transfer technology to a large business because it entails many more meetings, and many more legal staff will be involved. The good news is--if your technology requires large amounts of resources, the "deep pockets" of a large business can be essential. Large investments in product-related research, manufacturing, or the establishment of a distribution system can be used by a large business if the risk vs. reward representation warrants it.
Medium Business
A medium-sized business is typically easier to work with because you can start out working with the decision makers. Medium-sized businesses often move faster in their decision-making process, and they are not normally quite so immersed in company procedures. Medium-sized businesses can apply moderate amounts of resources to the technology transfer effort. In addition, they usually do not need much support to move the technology from its research stage to its commercial stage. Overall, medium-sized businesses are easiest with which to work.
Small Business
Small businesses are commonly the most interesting ones with which to work. They can respond with a minimum of bureaucracy and make decisions rapidly, and one or two levels of management at most are required for most decisions. They are also more willing to take greater risks for high reward potential.
A new product or service can move a small business into the fast lane, and a lot of the risk it is taking is investment of the owner's time with no actual pay coming out of the company. It has fewer resources to invest and, thus, will need more support from the technology transfer staff. The time to market will probably be the shortest for a technology that is transferred to a small business--small businesses they don't have the staying power to allow for long, drawn out product introduction cycles.
Start-up Business
This can be the toughest technology transfer effort. Many start-up businesses originate from the desire of the inventor or inventors to exploit their invention. In most cases the inventor is not a business-oriented or experienced partner.
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 Last update 05/12/98 by Cuyamaca Web Team |