TECHNOLOGY

ENTREPRENEURSHIP
INTRODUCTION
Technology entrepreneurship – or tech entrepreneurship – is something every
aspiring entrepreneur needs to know about.

From facebook to Google, and Skype to Snapchat, tech entrepreneurs, have

fostered entirely new ways of creating value and doing business – whilst also
creating entirely new industries of their own!

As a result, the tech-sector has become one of the most important sectors of
many developed nations around the globe. A sector that creates huge
investment and plenty of economic benefit – not to mention the positive impact
it has on peoples lives.
TECHNOLOGY ENTREPRENEURSHIP –THE IMPACT
We all know facebook, twitter and google – some of the great examples of tech
entrepreneurship.

Companies like these have created new industries all on their own, creating billions
of dollars of value, boosting economies in the countries from which they grow.

Through tech-entrepreneurship comes investment and jobs. Through investment

and jobs comes greater competitive advantage on an international scale, which in
turn attracts more even investment which can be used to further develop the nation.

Countries like Israel, for example, have enjoyed great economic growth thanks to
their tech talents – so much so they now boast regions that can compete with the
Silicon Valley!
TECHNOLOGY ENTREPRENEURSHIP –THE IMPACT
So in addition to social media, thanks to tech entrepreneurs, we can now enjoy thingslike:
• Access to global markets and talent – through things like elanceand alibaba
• Work on the go wherever we are – through things like smartphones and tablets
• The ability to connect around the globe with ease – through things like Skype and Google
Hangouts; and
• Enjoy process efficiency better than ever before – through things like Basecamp andEvernote.

As a result of all of this, not only do we get amazing tech-businesses, but we also see impact in other
industries too.

Like Zara for example. Thanks to the tech platforms they utilise, they can design, manufacture, ship
and sell new fashion ranges around the globe, in as little as 2 weeks. And on the other end of the
spectrum, medical tech-entrepreneurs help children manage their Cystic Fibrosis by playing video
games in which their breathing is the controller!

In instances like this, tech entrepreneurship can be seen as an enabler for other sectors to innovate –
which is an equally important benefit of tech ventures.
WHAT IS TECHENTREPRENEURSHIP?
Well, It’s just like ‘normal’ entrepreneurship, except with a particular focus on
opportunities that require, or become amplified by, technology.

So this means that tech entrepreneurs spot and identify opportunities in much
the same way as others, and essentially go about developing solutions in much
the same way too. The big difference is that they utilise and rely on their unique
‘tech’ skillsets to create their competitive advantage.
HIGH-TECHVENTURES
Another concept that you’ll come across, is “high-tech” ventures.

They’re essentially the same thing and like so many other concepts, are hard to
specifically define. However, common threads see that high-tech ventures involve:
• Heavy investment in R&D, aka Research and Development – which is the
pursuit of creating new solutions, products and possibilities,
• Heavy employment of engineers and scientists, to support the R&D;
• Innovative and technologically advanced products – as a result of the R&D: and
• Short product development cycles – to stay ahead of the game!

Tech ventures are fast-paced and ambitious. They fuse tech expertise with
entrepreneurial spirit, to create awesome new possibilities.
ELEMENTS OF SUCCESSFULTECH ENTREPRENEURSHIP

First of all, there’s the need to create Unique Value – these days, many
people strive to solve the same problem or offer the same value. As a result,
particularly in the tech field, creating truly unique value is of critical importance. As
soon as a customer sees something they’ve seen before, it’s probably not long before
they’re not your customer anymore!

You’ve also got to stay up-to-date – not only with the way that value can be
delivered, but also the type of value that’s actually demanded. There’s no point doing
something unique that is outdated, or something that’s outdated, that is unique! And
when it comes to tech, it’s not long before things are outdated - so this is a
particularly important consideration.
ELEMENTS OF SUCCESSFULTECH ENTREPRENEURSHIP
You’ve got to get the right people – because more so than other ventures, tech
ventures need talented people who not only have the technical smarts to create the
unique, ever-evolving value required, but also a commitment to growing companies
– and this is a hard balance to find.

And another thing, is the size of the target market - thanks to all the
requirements of staying unique and up-to-date with uniquely talented and clever
people, tech-ventures can be very expensive. Therefore, having the ability to sell to
hundreds of thousands of customers, or even millions of customers, is important –
especially when investors are involved. Thankfully, unlike services, for example, the
cost of serving one thousand customers and the cost of serving one MILLION
customers, isn’t very different, which means profit grows rapidly and makes all the
risk and investment worthwhile… Assuming you do a good job.
 Only read the underlined
topics

Chapter 2 - Technology Transfer

2.1 Introduction

The laws of nature ultimately limit technological improvement in any field. For
example, the number of transistors that can be placed on a silicon chip is
limited by the crystal structure of silicon. Most industries are however far from
these limits, and they are much more likely to come up against practical
technological limits. For instance the efficiency of today's car engines can
greatly be improved, when the operating temperatures can be increased.
Current alloys however cannot withstand these temperatures, but there are
materials such as ceramics that can operate at these temperatures. The
problem, however, is that ceramics are not practical to use because of
characteristics like their strength. Ongoing research is taking place in this
field.'

Researchers therefore strive to narrow the gap between the current

technology and the limit be it practical or physical. This gap is called the
technical potential of technology. Many believe that the technology with the
greatest potential, will take control of the market. Researchers must realise
that technological advancement is not only achieved by improving current
technology, but also through the development of new technology. Often there
are gaps between current and new technology, and that is what makes
developing new technology so difficult. These gaps may also be just big
enough for people not to see the benefits of the new technology. This
blindness has effected almost every industry. Aspects that may stand in the
way of adopting new technology and discarding the old may include 3 :

Incorrect perspective of technical limits

Inability to measure technological progress
Faulty interpretations of market signals
Misinterpreted customer needs
Culture

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 Gap between old and new technology is too big.

Senior personnel very often mis-time their investigations into new technology,
because they believe that the growth experienced halfway through the
Iifecycle of a technology, will continue. On the well-known S-curves (Figure
1.2) it is clear that this growth is not indefinite and the development reaches a
plateau at some point. It is estimated that investigations into new technologies
can be as late as 5 to 7 years in a technology with a lifecycle of 20 years.

Relative
Performance

Time
Figure 2. 1: S-Curves

It is very important to know when to start looking at new technology. It does

not seem economically sound to start looking at new technology when the
current technology, used by the organisation, experience rapid development
and improvements (indicated by no.1. in Figure 1.2). But as the S-curves
indicate this is not sustained. If an organisation opts to stay with current
technology and do not investigate what is available to them, the growth phase
in the replacing technology (indicated by no. 2 in Figure 1.2) can easily be
missed, as indicated in Figure 1.2 by the two S-curves. The biggest problem
lies in a competitor seeing the window of opportunity and they move into the
market with the new technology. If management then decides to stick with the
current technology and exploit any small advances, the competitor will still

10
have the advantage enabling him to develop his product/service unhampered
with regard to competition and he has the additional projection of
development in the technology employed.

Can an organisation really sit and wait for market clues before they change
their technology? Certainly not. An organisation must realise that the clues
from the market are signalled to all competitors in the market. Organisations
must also be aware of the fact that the market is becoming more and more
sophisticated and educated. This means that they want their needs to be
satisfied in a unique way. The strategy to copy the competitor's way of
satisfying needs might therefore not be enough, and such organisations will
act as followers to the leaders in the industry.

The biggest impediment in the introduction of new technology into an

organisation is company culture. People do not like change and they would
rather stick to what they are familiar with, rather than introducing something
new. Another obstacle, which can also be associated with culture, is the
mindset to introduce a new technology and then put a lot of effort into
protecting and defending it. This might not be the best strategy. An
organisation is not married to the technology it employs. Organisations must
see technology as an expendable tool and if the need change, so must the
tool.

The question may then be asked, "what is the best strategy"? There is not
one strategy that can be classified as 'best', but the following aspects should
be incorporated in a strategy:

• Knowing the technology welfare of your organisation

• Knowing the technology position of the competition
• Knowing what technologies are available

Since the shift to new technology can take as long as a decade, companies
need an early warning system of advancing new technology. One way is to

11
identify technological alternatives on a continuous basis. People in decision-
making positions should stay abreast of developments in their industry. They
must therefore be aware of what is available to them, what their current
technological position is and in what technological position their competitors
are3 in.

Technology can therefore playa major role in business and is an aspect that
is receiving growing attention. Acquiring the most appropriate technology can
therefore place an organisation in a very competitive position.

The need to initiate a technology transfer project can originate from two
forces'. The first can be described as a technology push. In this case a
technology has been developed and is 'searching' for an application. This is
very often a spin-off from another research program, and the technology was
not developed with an application in mind. In essence the technology was
identified before the need.

The second situation is a demand-pull. In this situation the need is identified

before the technology is developed. The technology can either be developed
exclusively to satisfy the need, or an existing technology can be transferred
and customised in order to satisfy the need.

It is clear that the strategies will differ between a technology push and a
demand pull situation. In the first case a company will transfer technology,
because they feel they can usefully apply the technology. The technology can
be applied either in a new application or in a current application, thereby
updating older technology. Senior management, however, must have the
vision and insight to employ such a strategy, because they must make the
connection between the technology and the application thereof.

In the second case a solution to a problem is sought and that will be the
motivation for transferring the appropriate technology. For the purpose of this
investigation the focus will be on a demand-pull situation.

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Technology can be broken down into three main areas. The three areas are
knowledge, skills and equipmenf. For the purpose of this investigation
technology transfer is defined as the process where all three these aspects
are transferred.

Given the three areas of technology, all the mechanisms of transfer can be
categorised in two main categories. Those that are external to the
organisation (also referred to as formal) and those that are internal to the
organisation (also referred to as informal). External transfer of technology can
be controlled in a far easier way than internal transfer. External transfer is the
result of conscious decisions (e.g. going to seminars, attending conferences
etc.) and can therefore be controlled and managed. External transfer also has
a greater strategic intent than internal transfer. Certain aspects of internal
transfer can also be controlled, but there are aspects like informal discussions
in the workplace or the obtaining of information from experienced co-workers
that cannot be controlled. The transfer of only one of the areas will, for the
purpose of this research, not be seen as technology transfer, but only as a
part of the whole process. Because of its growing importance, a brief look will
be taken at knowledge transfer and the management thereof. Complete
technology transfer, therefore, takes place when knowledge, skills and
equipment are transferred from developer to user.

2.2 Technology Transfer Process

The transfer process of technology can be coupled to the general innovation

process. Technology transfer is, however, not present in every step of the
innovation process and we will only look at those steps where transfer is
involved. The steps can be defined as follow:

Identifying appropriate technology

Evaluate the technology
Secure the technology
Protect the technology

13
 Produce prototype
Obtain technology awareness training
Product specific training

In order to apply these steps in a more general environment Cooke and

Mayes5 defined the major steps of the technology transfer process as being:

Searching
Finding
Evaluating
- Acquiring
Customising
Operating

It is important to note that in the transfer process, extensive use is made of

project management principles. A transfer project is a unique endeavour until
the technology is operational in the company. Companies should therefore
ensure that they are familiar with project management principles in order to
ensure a smooth transfer process.

In the remainder of this chapter each aspect of the transfer process will be
looked at in greater detail.

2.2.1 Recognising a need or opportunity

As mentioned before, the initial step in the transfer of technology process is

the recognition of a need. This need must be satisfied by current technology
applied differently, or it must be satisfied by new technology. Needs can arise
from the following 5 :

Scientific changes
Competition
The market

14
 Legislation
Human inquisitiveness
Innovation as company policy

Scientific changes can bring about new products, utilising new technologies.
An example would be the development of nylon, which made it possible to
solve needs in a technologically advanced way.

Competition together with the market may be one of the greatest initiators of
the need to transfer new technology. The market is becoming increasingly
fragmented and more sophisticated. This means that an organisation's
products or services must be tailored to address the specific needs of
individuals. If an organisation does not have the technological capability to do
so, it will lose that market to its competitors. Technology can give a business
the competitive advantage it needs, to secure its position in the market.

Legislation may also create a need that has to be solved by obtaining new
technology. If we think about the aviation industry in general there are, for
example, restrictions on the noise levels of aircraft over populated areas
surrounding airports. This legislation disqualifies older aircraft from using
these airports. A new need arose and subsequently engine noise was
reduced by developing 'hush kits', which at that stage was a new technology
in the aviation industry. Human inquisitiveness together with innovation as
company policy (R&D), always ensures advances in technology.

2.2.2 Searching for technology

After defining a need, an organisation must search for appropriate technology

that will best satisfy the need. There are several strategies that can be
followed and they can be divided into two major groups. The first is
developing the technology yourself and the second is looking for the
technology outside the organisation. We will look in more depth at the second
case.

15
Information plays a big role in the search for new, or the most applicable
technology. Organisations are particularly interested in information on
products, research activities, finance and patent information. One of the
successful sources of information and co-operation is higher education
institutions in the form of universities. Partnerships with these institutions help
companies to:

• Access new technologies

• Keep abreast of new technologies
• Access consultancy skills
• Develop new technologies jointly

The transfer of technology from university to industry can be established in

several ways. One must keep in mind that knowledge, which is part of
technology as explained in the introduction to technology transfer, is part of a
person and resides in their mind. Therefore technology can be transferred
through the movement of people.

The first of the transfer mechanisms is graduate employment. At university

level people build up a knowledge base in their respective field and this
knowledge base is then transferred to industry by employing that person.
Industry will often make grants available for people to complete their
university studies. In this way they assure a smooth transfer process. A
second mechanism is through sabbaticals. Sabbaticals enable university
lecturers to work in a company. This is a reciprocal transfer mechanism. The
lecturer's knowledge is exploited in the company and the university is
exposed to the industry, through the lecturer's practical experience. Further
very successful and often used mechanisms include consulting services
offered by the universities, contract research, industry/university research
units, university or industry liaison units and forums for the exchange of
information.
Another major source of information and assistance is technology transfer
agencies. These agencies offer a wide variety of services from searches on

16
information, products and patents, to legal advice and conSUltancy. These
agencies can be very useful for some of them specialise in certain industry
areas and therefore have extensive knowledge in that area of industry. For
an organisation that does not have specialised skills in the area of technology
transfer, this is an excellent alternative to consider. In some cases an external
party has a more objective view on the industry and can therefore deliver a
more objective opinion, as opposed to individuals inside an industry.

A tremendous amount of research goes into universities, research bodies and

industry. For any organisation it is essential that this research be exploited
and transferred, in order to strengthen their technological function.
Organisations that do not have the capability of doing their own research
should seriously consider partnering with these institutions, in order to have
access to relevant research.

2.2.3 Identify and Monitoring Information

Before a technology can be identified that may satisfy a newly identified need
senior personnel (managers and above) must have an accurate knowledge of
not only the company's technological position, but also knowledge about the
market and competitors. This strategy will insure a well-organised approach
in obtaining new technology.

Cooke and Mayes5 identify the prominent roles found in companies

concerning the knowledge of technologies. The first is the godfather. This is
the person, usually in a senior position in an organisation that watches over
the technology transfer process. This person often introduces other senior
staff members to the idea of new technology. This is the person that is up to
date with the latest developments in his field or market segment, although it is
not part of his work description. The role of the godfather may be limited to the
development phase of transfer project, or even just the role of initiator. The
role might, however, continue throughout the whole transfer project.

17
The second role found in companies is that of champion. The champion is
often found at the middle-management level. The people in this role are often
highly skilled and will most probably oversee the implementation of new
technology programs initiated by the godfather. The role of champion may
eventually mature into the role of godfather. The champion has excellent
knowledge on internal politics and skills. The person in this role also has
great people skills and is a good communicator.

Out of these two roles we see that the godfather's role has knowledge on the
internal (to the organisation) state of technology, but even greater knowledge
on the external state of technology. If a need arise this is often the person
you go to, to ask "How are we going to solve this?" A person can fulfil the
godfather role in an unofficial capacity, but with organisations, which realise
the importance of technology and the acquiring thereof, this is very often an
official role. Where the godfather's main role is over-seeing the transfer
process from the external environment, the role of the champion is mostly
concerned with the internal environment. His role does not include the
identification of new technology, but he is an excellent evaluator of chosen
technology, because of his knowledge of internal affairs. The champion will
be able to comment on the appropriateness of the technology. Again, the
champion's role can be official or unofficial. The role of the champion can be
seen as that of a gatekeeper, who not only has excellent technical knowledge,
but also has great people skills and excellent leadership qualities.

For organisations that are concerned with keeping up to date with technology,
it is important to identify people that might unknowingly fulfil these roles of
champion and godfather and exploit their capabilities. It might even be
feasible to give these people official capacity in an organisation to fulfil these
roles.

18
2.2.4 Evaluating the Technology

When identifying technology it should be evaluated in order to find the most

suitable technology. Aspects that should be addressed in the evaluation
process include:

• Strategic implications
• Effect on market and customer
• Operational changes
• Personnel
• Training

Before starting the transfer process an evaluation criterion should be defined

in order to evaluate each identified technology. The team responsible for the
transfer of the technology, should define aspects to be evaluated and the
measurement criteria for each aspect. It is important to involve as many
people as possible, especially those that will work with or will be effected by
the new technology. By involving all concerned, an objectively defined opinion
should be possible and the most appropriate technology can be selected. It
must be stressed that the evaluation criteria should consist of objectives and
specifications already defined, after the identification of the need . This will aid
in the transfer process, for each aspect in the transfer process will be
measured or evaluated according to the defined criteria.

2.2.5 Transfer

Transfer of technology takes place via certain mechanisms. These

mechanisms can be identified per area of technology as folioWi:

Technology in the form of knowledge can be conveyed through the following

mechanisms:

• In print through technical journals

19
• In print through learned journals
• Scientific magazines
• Patents
• Orally at conferences
• Orally at learned societies
• In discussions with colleagues
• In discussions with acquaintances
• In discussion with consultants
• On television or radio
• Courses
• Service bulletins
• Data packs
• Specifications

Technology in the form of skills is acquired by doing something. It can be

conveyed by:

• Watching someone doing something

• Watching a video of someone doing something
• Demonstrations at courses
• Hands on training

Technology in the form of equipment is conveyed via the following

mechanisms:

• Products
• Trade magazines
• Trade conventions
• Sales representatives
• Advertisements
• Direct mail
• Contacts in other companies

20
2.2.5.1 Company-to-Company Transfer

Technology can be transferred between countries or regions, but most

technology transfer happens between companies. Not only is research and
development done by institutions in the public domain like universities, but
also by private companies outside the public domain. Research done by
private companies not always delivers the results they anticipated. For
instance technology was developed to be used in a product that does not fit in
with their current product portfolio, or the return on a product is too small.
This potential product may however, be suitable to another company to
develop further. Somehow the cost of research must be covered and if a
company cannot properly utilise a product, the cost of research will be lost.
A good strategy would be joint ventures with other organisations, which
benefits both parties. Company-to-company transfer is usually beneficial to
both parties, except in the case where transfer is attempted between a large
established company and a small start-up company. Larger companies are
reluctant to put effort into a smaller company to help with their development
without a proportional stake. Many governments, however, believe that the
future prosperity of their countries, will depend on the speed and effectiveness
of small companies to implement technology spin-offs from larger private and
public institutions. The success will therefore be dependent on the
relationship between the companies.

It is clear that the collaboration between companies is the major technology

transfer mechanisms in the private to private domain. There are several
forms of collaboration, but for the purpose of this research we will focus on
technical collaboration. One form of technical collaboration is where partners
increase their expertise through sharing knowledge, skills and equipment.
Another form is where one partner is in possession of technology, which the
other needs for it's new product. Cooke and Mayes5 identified the main aims
of collaboration between companies as follows :

• Sharing risk
• Sharing cost
21

; \ C'j ,(,"0"7 i ?-.'1

• Growing of technological knowledge
• Helping in product development
• Developing industry standards together
• Acquiring and/or penetrating new markets
• Improving speed to market

Developing new products is a risky and costly business and therefore

companies will rather share the risk and cost involved in these projects.
Companies also feel more assured if they concentrate on a business area
they are familiar with, while leaving other aspects to partners that are more
familiar with business in those areas.

Collaboration in itself can be risky because of the fact that companies differ in
several aspects. The biggest of the differences may be company culture.
Despite all the differences there are several examples of successful
collaboration between companies. One of these examples is the Renault
Company in France. They are researching together with six partners, new
material technology to be used in their products. The six partners are all
leading manufacturers of materials. Renault might not see this as one of their
core competencies, therefore the partnerships. Collaboration can be a major
strategy in an organisation in obtaining relevant technology. One of the most
promising collaboration agreements is one where you move away from the
traditional client vendor partnership, into a more mutually beneficial
relationship. Remuneration will still be sought, but the main benefits for both
parties will be the technology transfer between the parties. The transfer will
not be one way, but both ways. This is called reciprocal technology transfer6 .
Each party will have an active role to play in negotiations and in decision-
making . These partnerships are characterised by mutual goals. Often the one
party will be strong in the knowledge field and the other in implementing the
knowledge. They will therefore not compete for the same technology, but
rather work together applying their specialised expertise to reach the
communal goal. These partnerships are often found between universities and
industry. Universities need industry in applying their knowledge, and industry

22
needs universities to effectively apply their skills. Both parties need each other
and this factor may have very positive effect on any partnership. Again the
greatest stumbling block, also for reciprocal transfer partnerships, is the
cultural differences

2.2.5.2 Modes of Transfer

All transfer models can be divided into two major categories. The first
category is passive and the second is active2 This classification refers to the
level of activity in applying the technology in the transfer process. If the
technology transfer mechanism presents the technology to the potential user,
without assistance regarding it's application, then the mode is said to be
passive. In the passive mode only the knowledge part of technology is
transferred. The skills surrounding the technology are not transferred . These
mechanisms can include presentations in a report. If, on the other hand the
provider of the technology assists with the application of the technology, then
the mode is said to be active. These mechanisms include training, etc. The
boundaries between passive and active are not easy to define and therefore
a semi-active mode is also defined .

Figure 2.2: Transfer modes

(Adapted from: Louis N. Mogavero and Robert S. Shane')

23
Passive Mode 2

The most widely used mechanism in the passive mode is the instruction
manual or "cookbook" approach. This is the only contact between the
originator of the technology and the user. Millions of products are made and
sold with transfer occurring in this form. Just think of one's own motor car.
These self-teaching manuals used in this mode all have one thing in common:
they presume that the user has some level of knowledge and competence in
the specific technological area. It is an important point in this mode of
transfer. A mechanic can assemble a component perfectly from an instruction
manual. This becomes more intricate when we think of other technologies
like glassblowing, sheet metal work and woodwork. In these areas the skill
that lies with the user must be far greater. This is important to keep in mind if
you want to transfer technology. The skill resting in the user of the technology
must be clearly defined by the originator, because this will have a definite
impact on the success of the transfer process. If you give someone who does
not know how to drive a motor car, that technology, it will be useless to the
person, because it cannot be used.

Figure 2.3: Passive Technology Transfer Mode

(Adapted from: Louis N. Mogavero and Robert S. Shane2 )

24
Semi-Active Mode'

In the semi-active mode there is intervention from a third party in the transfer
process. This is usually in the form of a transfer agent. In the semi-active
mode the role of the transfer agent is limited to that of adviser. Very often in
the semi-active mode, the transfer agent only screens information in the
relevant field of interest and passes it on to the final user. He therefore
ensures the relevance of the information, because of his knowledge, not only
about the user's needs, but also because of his knowledge about the
technology. The role of the transfer agent is therefore one of communicator
between the technology and the user. If his role is beyond this, then the
mode of transfer becomes active.

T~ogy
Tra~

• Secondary advisor
for application of
technology
•
contacts

Figure 2.4: Semi-Active Technology Transfer Mode

(Adapted from: Louis N. Mogavero and Robert S. Shane')

The most widely used source of technical information is in the form of written
technical documentation and therefore the passive mode of transfer is the
most widely used. Because of this, care should be taken in the writing of
these documents. Very often data banks and published material are searched

25
in order to obtain information on relevant subjects. Experience has shown
that what the first would-be user wants to read is a non-technical description
of the technology. Because the reader will be trained in one or more technical
disciplines, it will be easy for him to judge the relevance of the document.
Because of the increasing amount of data this becomes more relevant. This
is a time consuming effort and often it is 'outsourced' to a transfer agent. He
will then be responsible for identifying relevant information and transfering it to
the user. The transfer agent can be in the form of one or several people
working in a team, each within their own field of expertise. An additional
benefit of using a transfer agent, is that the user of the technology may have
interpreted the problem incorrectly and this is leading them along the wrong
path in their search for a solution. Here the agent can be of help because of
his knowledge of the user's needs.

The passive and semi-active modes are therefore recognised by the fact that
no third party participates in the application of the technology. Only limited
assistance in identifying relevant technologies is experienced in the semi-
active mode.

Active Mode 2

Prfmary adopter
of technology

contacts

Figure 2.5: Active Technology Transfer Mode

(Adapted from: Louis N. Mogavero and Robert S. Shane2)

26
 Chapter 3

The Process of
Technology Transfer

.
Contents

Page
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Factors Affecting Technology Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Characteristics of the Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Characteristics of the Technology Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Characteristics of IndividuaIs Using the Technology . . . . . . . . . . . . . . . . . . . . . . . . , 24
Characteristics of Organizations Using the Technology . . . . . . . . . . . . . . . . . . . . . . 24
Attitudes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Research Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Regulation and Reimbursement Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Methods for Measuring and Evaluating Technology Transfer . . . . . . . . . . . . . . . . . . . 26

List of Figures
Figure Page
2. The Process of Technology Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
 .

Chapter 3
The Process of Technology Transfer

INTRODUCTION
Technology transfer, as an explicit concept, application in clinical practice.** It is the means
has been used in the health field only in the last by which medical technologies move through
decade. Its increasing use has paralleled the in- their lifecycle, beginning at the stage where new
creasing development of policies related to med- knowledge is translated into new technology
ical technology. Definitions are numerous, rang- through applied research and ending at the stage
ing from the narrow and more specific to the where it is applied to the population. Figure 2
broad and general, The common thread among depicts the technology transfer process. Though
them, however, is that technology transfer represented in a linear fashion for the purpose of
represents a process that includes a series of discussion, the process is rarely, if ever, linear.
events. It cannot be described as one activity or Technology transfer is related to the innovation
one point in time, although discrete activities process* * * and can be viewed as the subset of
can certainly be the focus of the process. that process that is concerned with innovations
that are technologies.
The first type of definition is exemplified by
Brown, et al. (10), who define technology trans- Technology transfer occurs either informally
fer as “instances where the given technology or formally. Informal technology transfer refers
moves from one situation to another, which to transfer that happens without directed efforts
may require changes in the technology, the con- toward putting a technology into clinical use. It
text to which it is moved, or both . . . . [It] usually occurs prior to evaluation of the technol-
diverts the movement of the technology toward ogy, through activities such as personal experi-
increasing specificity [which occurs in the in- ence, peer interaction, and publications. Formal
novation process] by either changing the tech- technology transfer is a directed series of ac-
nology to fit a new application or, conversely, tivities designed to facilitate appropriate applica-
by changing the specificity of an application to tion of the technology. These activities are the
fit the technology.” The second type, the broad components of the ideal model of the lifecycle of
definition, is represented by Dans (18), who medical technology development and use, in-
defines the term “technology transfer” as “short- cluding evaluation activities, demonstration and
hand for the diffusion of technology from its dis- control programs, and directed education of the
covery to its appropriate application. ” professional and lay communities in the use of
the new technology. All types of evaluation,
The National Institutes of Health (NIH) stated
then, including technology assessment, are an
definition (57) falls into the broad category:
important part of the formal technology transfer
“Technology transfer involves the transfer of re-
process. Information dissemination activities
search findings to the health care delivery sys-
assist both informal and formal technology
tern. ” Yet this definition has been made narrow
transfer.
in its operation by a focus on only two activ-
ities—the development of technical consensus In general, the overall objective of studying
on new interventions and the demonstration of technology transfer is to develop (and refine)
these new technologies in the health care system. methods and activities to affect the process
As with its definition of medical technology, ’
* *In the context of this report, the term “technology transfer”
OTA defines technology transfer broadly. Med- actually refers to “medical technology transfer. ” “Medical
ical technology transfer is the process of moving technology transfer” c o u l d also be called “health-related
medical technologies from their creation to their technology transfer;” the important point is that the process occurs
in the health care system.
●● *For a discussion of the innovation process, see Stratcgit’s ft)r
*See ch.2. Medic~~/ TQr/7t10/cJg.v A55c5s)tIctIt (92.

21
 22

.
Figure 2.—The Process of Technology Transfer

●
9

Basic Applied Development Application

research * research * of * Evaluation * Demonstration * Adoption * in medical * Obsolescence
Stages in technology practice
*
the Iifecycle
of medical
technology
Nonuse

SOURCE: Office of Technology Assessment,

—either to accelerate its pace, to slow it down, the technologies whose movement through the
to modify it, or to stop it entirely. For technol- transfer process will be accelerated or slowed.
ogies showing promise early in their lifecycle or When evaluating the technology transfer proc-
for those evaluated to be useful in certain clinical ess, mechanisms for identification of technol-
applications, it is desirable to hasten the process. ogies (at any of the stages of development)
On the other hand, for technologies not yet eval- should be assessed. These mechanisms at NIH
uated or for those with early indications of being are presented in this report.
inefficacious or even harmful, it is desirable to
The technology process will also vary accord-
slow or, in extreme cases, stop the process.
ing to its “clients’’ -those who learn about the
The specific objective of looking at technol- technology and actually put it to use. Clients of
ogy transfer for any particular technology will the process include: other scientists, who
vary according to that technology’s state of develop the technologies further or discover new
development—emerging, new, existing, or new applications; industries, who produce, test, and
application of existing technology. * In any of market hard technologies (e. g., drugs and de-
these cases, however, there is a need to identify vices); physicians and other health personnel,
———— who apply the technologies; patients, who re-
‘Existing technologies are those that have already been “trans- ceive the benefits (and risks); policy makers, who
ferred. ” However, they may, as in the case of radical mastectomy, use the information to make decisions affecting
be candidates for transfer activities that “should have been” con-
ducted prior to their adoption. Once evaluated (or reevaluated),
future technology transfer; and the general
transfer activities can be used to influence adoption under the very public, who may fall into the other categories at
specific circumstances. any time.
 23
.

FACTORS AFFECTING TECHNOLOGY TRANSFER

There is a large body of literature concerned described. The purpose is to place NIH activ-
with the diffusion of innovations; by definition, ities, described in chapters 5 through 7, in
then, it is also concerned with medical technol- perspective; thus, the description is not com-
ogy transfer. It can be divided into three plete.
sources:
1. sociological research on the diffusion of in- Characteristics of the Technology
novations in social systems;
2. the effects of communication variables on The nature of the technology itself will affect
attitudes and behavior; and the technology transfer process. Previously
3. the scattered, nontheoretical literature in mentioned characteristics include the stage of its
medicine, consisting of descriptive studies development (emerging, new, existing, new ap-
of dissemination and adoption of different plications of existing technology) and its medical
medical innovation (92). purpose (preventive, diagnostic, therapeutic,
etc. ) Other characteristics include its complexity
Factors affecting technology transfer can be and perceived effectiveness (18), its initial suc-
placed into categories, including characteristics cess or failure when tested, and its potential for
of the technology, characteristics of the technol- marketability (where an actual product is the
ogy developer, characteristics of individuals objective) (99).
using the technology, characteristics of organi-
zations (and their members) using the technol-
ogy, attitudes, research policies, and regulation Characteristics of the
and reimbursement policies. As is usually the Technology Developer
case with categorization in this area, these cate-
If the new technology developer is an individ-
gories are created more to facilitate discussion
ual, his or her characteristics may influence
than to convey a sense of discrete sets. In fact,
technology transfer. They include personality,
there is a great deal of overlap and interrela-
degree of fame, access to other scientists, and
tionships among them. For example, factors in
ability to appreciate the importance of the
the last three groups (which are mostly “exter-
discovery (99). For example, an unknown physi-
nal” factors) often influence factors in the first
cian named Hammer diagnosed coronary artery
four groups (“internal” factors). And although
occlusion in one of his patients. His published
there have been many studies about these fac-
report in 1878 received no attention, and it was
tors, the only consensus is that there is much
34 years until another scientist named Herrick
more to learn.
made the same discovery. Access to resources is
The primary reason for understanding factors another factor important for individual and
which affect technology transfer is to use the organizational technology developers. For
knowledge to improve transfer activities. How- organizations, particularly companies, their size
ever, understanding these factors and their inter- may influence their ability to develop new
relationships heIps to explain why the best ef- technology. It has been found that small compa-
forts by public and private organizations to af- nies contribute most to innovation in the early
fect technology transfer do not always work. In stages of a technological field, but large compa-
the remainder of this section, the factors will be nies dominate by the time the field matures (92).
—

24

Characteristics of Individuals Using often overriden by others—organizational com-

the Technology plexity, centralization of decisionmaking, and
formalization of rules and behavior.
The effects that characteristics of individual
users have on technology transfer have been Attitudes
widely studied, particularly for physicians. Fac-
tors influencing transfer include amount of and Attitudes is a class of factors influencing the
access to information on the technology; degree technology transfer process at all stages.
to which the individual can be described as Favorable attitudes can speed up the process,
cosmopolitan or local; amount of education; while negative attitudes can slow it down. At-
preference for the goal of quality health care titudes of the individuals potentially adopting or
rather than economic efficiency (10); and the developing a new technology will interact with
degree of openness to trying new ideas (99). the attitudes of the society around those in-
dividuals in affecting the decision to develop or
A crucial distinction has been made between
communication that informs physicians about adopt. For example, if the general attitude of
novel technologies and that which influences society regarding technological intervention in
physicians to act. Clearly, both types are part of the birth process had been negative, it is possible
the technology transfer process. The most im- that the widespread use of electronic fetal moni-
toring prior to demonstration of its efficacy
portant source of new knowledge about im-
provements in medical technologies is profes- would not have occurred. Similarly, that tech-
sional literature. However, physicians cite pro- nology has been a relatively recent focus of in-
terest and concern (4), in part because of current
fessional colleagues more often as sources they
increasingly numbers negative attitudes toward
turn to when actual implementation of new pro-
such intervention. A final point to be made here
cedures is contemplated. Physicians of greater
prestige tend to hear about innovations sooner; is that it is unlikely, if not impossible, that con-
tribution of attitudes to technology transfer will
they are mentioned by their fellow professionals
as influential sources on the medical practice of ever be quantified. However, their importance
must be recognized.
others (92).

Characteristics of Organizations (and Research Policies

Their Members) Using the Technology While it is true that various types of research
are actually part of the technology transfer proc-
If the technology user is an organization, its
ess, it is also true that several types of research
organizational structure as well as characteristics
policies affect the process. First, the way total re-
of individuals within it will affect technology
search funds are distributed among the stages of
transfer. There has been a great deal of socio-
the transfer process will affect the transfer which
logical research in this area, and there are nearly
occurs. While basic research is not actually part
as many theories as there are studies. Not sur-
of technology transfer, it provides the knowl-
prisingly, the results have been conflicting. No
edge base for technology development (several
attempt will be made here to resolve the con-
examples are provided in ch. 2). Thus, the rela-
flicts, although it should be noted that character-
tive amount of funds devoted to basic research
istics of the technology being adopted may affect
will affect the amount of knowledge ready to be
the effects of the organization.
applied, the amount of funds devoted to applied
Greer (29) summarized some of the work on research will affect the amount of technologies
organizational structure variables. Size and to be developed and transferred, and so forth.
resource base are important variables, In gener- The amount of funds available for evaluation
al, the larger the organization and the greater its and demonstration will not necessarily affect the
resource base, the more likely it is to adopt in- amount of technologies transferred, but it will
novations. Yet the effects of these variables are affect the amount of technologies that are
 25

transferred appropriately (i. e., those that are technologies are efficacious, have acceptable
transferred after being shown to be efficacious, risks, and are used appropriately (e. g., are used
safe, cost effective, etc. ). cost effectively). Private industry determines
which drugs and devices it will develop primari-
Second, the criteria used for setting research
ly through market-based criteria. To address
priorities, both overall for an organization and
perceived deficiencies of the market approach,
within any program for specific projects, will af-
governmental actions infuse additional criteria
fect the types of technologies transferred. Within
based on social and political concerns. These
an organization, research programs could place
governmental actions have generally been reg-
priority on filling gaps in knowledge in areas
ulatory in nature, concentrating on the costs to
that:
our health, safety, and environment. Because
1. Americans fear most (such as cancer); these costs are diffuse, they can be addressed
2. are associated with a greater loss of “quali- through collective, governmental actions but
ty adjusted life years;” not as effectively by individuals. Government’s
3. have the greatest cost impact on individuals role as a purchaser of technologies, of great sig-
or society but do not necessarily affect the nificance in health care because of government’s
greatest number of people (such as renal role as insurer, has also led to a need to minimize
dialysis); reimbursing for the use of ineffective technol-
4. have the greatest cost impact as a result of ogies. This role has also created a need for ways
affecting the greatest number of people; to help decide which among the array of tech-
5. have the greatest opportunity for study; nologies are the most appropriate. In the regula-
6. happen to be in vogue scientifically or tory process, diffusion into the marketplace is
politically; or unquestionably slowed, and some technologies
7. have the greatest impact as a result of a are filtered out. Reimbursement policies can also
combination of high cost, high morbidity, slow (or speed up) diffusion. Slowing the dif-
and high mortality (18). fusion of new technologies may allow for more
informed and timely decisions before wide-
Within programs of an organization, projects
spread use.
can be selected according to scientific merit,
potential usefulness in clinical applications, The effect on innovation (or technology trans-
political popularity, total cost, and past con- fer) from regulatory and reimbursement policies
tributions of the principal investigator, among is not simply one of whether the process is in-
others. hibited but also whether the alterations in it are
unintended or undesirable. Government support
Finally, the places where research is con-
of R&D has long sought to alter the process,
ducted will affect technology transfer with
most notably to accelerate its pace and push it in
respect to the degree to which the research
certain directions. Regulation, particularly when
organization is plugged into the professional
it alters the competitive market, can alter the
literature or into clinical practice. For example, a
direction that innovations take. Reimbursement
top medical school associated with a top teach-
policies probably have more effect on the pace
ing hospital is more likely to have a new pro-
of the process. There is general agreement that
cedure move into widespread application than a
competition among medical care providers is
relatively unknown clinic.
typically not based on price. Under current
reimbursement policies, there are incentives to
Regulation and Reimbursement adopt all available diagnostic tools and to pur-
Policies* sue any therapy anticipated to have any value,
especially in hospitals. Third-part y coverage
Regulatory actions and more informed reim-
currently accounts for about 90 percent of ex-
bursement decisions help to insure that emerging
penditures for hospital care. As the price of
.———.—
● Thi\ d[;cussic~n I\ adapted from St~,~t(14yICS f[)t Ll,[ii, [~1 TLIclI- technology has little effect on providers and pa-
~ 1, ~ ~[ 1 Q u ,~~ . \LT\ +) )~t,} ~ t ( Q2 ) tients under existing health insurance ar-
26

rangements, a greater adoption of technology pact of regulatory requirements must be reached

can be expected to occur (and has actually oc- with caution. Regulation is expected to change
curred in many cases) than under more price the innovation process. The issues are whether
competitive reimbursement arrangements. the specific changes were intended and whether
the benefits of regulations are worth the price
At a simple level of comparison, recent
paid in resulting alterations of the innovation
changes in current regulatory and third-party
process.
reimbursement policies can be thought of as ap-
proaching some middle ground from opposite
In reimbursement policy, a need is to infuse
ends of the spectrum. Regulation purposefully
more price sensitivity into the dissemination and
slows down the innovation process, particularly
use of new medical technologies. Taken together
at the diffusion stage, and modifications are now
with the regulatory approach, these changes
being sought (e.g., in premarket approval re-
would theoretically: 1) allow into the market-
quirements for drugs) to insure that this slowing
place innovations which have met social criteria
of the innovation process is no more than
of worthiness, and 2) make it possible for those
necessary to achieve the regulatory program’s
new technologies which have passed the regula-
objectives. Current reimbursement policies, on
tory test to then compete with each other on a
the other hand, are seen as boosting the diffu-
price basis. Curtailing excessive demand by a
sion of new medical technologies beyond what
more price-sensitive approach, however, means
would take place under more price competitive
changing the conditions of the current medical
systems, and reforms are being aimed at con-
technology innovation process. Again, the ques-
straining the adoption process.
tion here is whether such major changes in the
Because regulation’s purpose is to infuse social demand for new medical technologies will affect
criteria into judgments of a new technology’s the innovation process in unintended and unde-
worth, conclusions based on the economic im- sirable ways.

METHODS FOR MEASURING AND EVALUATING

TECHNOLOGY TRANSFER
Methods for measuring and evaluating med- usually extend beyond the development stage of
ical technology tranfer as a coherent process are the process to implementation in medical prac-
not nearly as well developed as methods for tice.
measuring the effects of any one part of the
An alternative to the case study approach is
process. There are methods available to measure
the assessment of activities which occur as part
the way physicians adopt a new technology, to
of the technology transfer process. In this ap-
evaluate the efficacy of a procedure, or to deter-
proach, the focus is on the environment in which
mine if a demonstration program met its stated
the technology is transferred rather than on the
goals. Yet there are no well-developed and
technology itself. The major weakness of this
highly structured research methods that can be
approach is that it does not look at the entire
used to answer questions about the translation
process at once; however, by examining all ac-
of science to health care (99).
tivities in one study, the effects of this weakness
The most promising approaches are refine- are lessened. In addition, the connection be-
ments of case study methods like those used to tween the activities and the actual transfer must
trace the scientific lineage of major technological be assumed, although the influence of other fac-
breakthroughs. The most prominent examples tors is well known. The major strength of the
of past work are the studies (and their follow- method is the potential for examining any activ-
ups) by Comroe and Battelle-Columbus Labora- ity in depth, including its relationship to other
tories for the President’s Biomedical Research methods. It is also most useful when the focus of
Panel (99). These past studies, though, do not study is one particular organization.