Technology acquisition

Technology Management
Activities and Tools
Discuss:
What are the decision criteria for
technology acquisition?
Acquisition channels (1)
BUY
Sponsoring university research
External R&D centers
Consultants
Licensing agreements
Vendors/ suppliers
Acquiring machinery or the firm
Acquisition channels (2)
MAKE
R&D
Acquisition channels (3)
COLLABORATE
Consortia
Joint ventures
Sub-contracting

Make or buy or collaborate decision
depends on: (Chiesa and Manzini, 1998)
1) strength of the organizations own capabilities
(relative costs)
2) respective transaction and governance costs
contract price, cost of information, monitoring
performance, committing specific assets, handling
complexity in reaching agreements
3) dynamic transaction costs
costs of persuading, negotiating, coordinating, and teaching
outside suppliers
There is no ONE best organizational form!

The firm is not only profit maker but
innovator so it should have profits and scale
necessary to finance the overhead expenditures
requried to anticipate change and create future
values.
BUY option
The reasons behind technology
acquisition
Limited resources
Time pressure
Complementary assets
Protecting image
Diversification
Supporting internal technologies
Avoid development risks
Expected resulting impacts of
technology acquisition
productivity
quality
product development cycle
labor-management relations
accuracy of the information flows
production costs
flexibility (volume, machine, process,..)
maintenance costs
service performance
sales
Steps in technology acquisition
Goal setting
Technology & Impact assessment
Finding technology suppliers
Acquisition channel
Choosing acquisition method
Contract preparation and negotiation
Technology transfer
Managing long-term collaboration
Collaboration option
Open Innovation

Research Development Commercialisation
Core Market Focus
Company
Boundaries
Products in-sourced
(e.g. Co-branding)
IP in-licensing
IP out-licensing
Technology
Spin-outs
Ideas &
Technologies
Source: Chesborough 2003 and Docherty 2006
What are the issues when
managing external suppliers and
alliance partners?
Issues in network design:
Aim
Partners
Duration
Contract
Management
Investment / Re-engineering
Division of labour
Strategy
How to decide on the type of network?
The objective of the collaboration
The content of the collaboration
The typology of partners involved


The content of the collaboration (Chiesa
and Manzini, 1998):
1) Definition of the content
2) Firms familiarity
3) Relevance for the firms competitive adv.
4) Technology life cycle
5) Level of risk
6) Appropriability of the innovation
7) Phase of the innovation process
8) Level of assets specialization
9) Divisibility of assets
P&G Case (1)
Collaborations: Open Innovation
(Sakkab, 2002)
P&G Case (2)
P&G is a technology-rich company: 27000
patents, 4000 unique titles and 3000 new patents
each year.
It invests $1.8 billion annually on R&D.
Even though P&G use less than 10 per cent of
its own technologies in company products
P&G Case (3)
Internal website, 18000 innovators across R&D, Engineering,
Market Research, Purchasing, and Patent Divisions.
600 websites for Global Project Teams
Individual problem-solving and connection-making websites for 20
Communities of Practice.
Nearly 9 million documents on line, growing daily.
Automation and artificial intelligence
the latest in webcasting and satellite technology to create an internal
Innovation News Network
Conducting a deal-making/technology trading expo
over 2200 ideas for new products and important new uses of P&G and
external technologies
Identification
Internal acquisition:
R&D
External acquisition
New product
dev.
New process
dev.
Other projects
new product / service equipment / solutions
Exploitation
Selection
Acquisition
Outputs
Business
strategy
Learning
Purchase
Collaborative R&D
M&A
Protection