Mind to Market

Tuesday, August 29, 2006

Technology Transfer I

Technology transfer is the process of transferring a body of knowledge or specific technology from one entity to another. No big deal, this happens every second of every day, in fact it is happening now as the knowledge of this blog is transferred to your brain (or, if you're a Web crawler, this is being transferred to a search engine's database). However, in the official definition, tech transfer is the transfer of technology developed at a scientific institution as the result of their research efforts, to a commercial organization for the purposes of commercializing the technology into a product or service that has value to a larger market. Fundamental to this process is the concept of core competency; a scientific institution's core competency is research and a commercial company's core competency is developing and marketing products and services for profit. Since many scientific institutions are non-profit, employing commercialization resources is not within their mission and therefore must be outsourced.

Exactly where this division between research and commercial is is not clearly defined; during economic periods of growth research can be transferred at an earlier stage of development than during periods of slow growth. This amounts to the ability of the commercial entity to accept risk; during periods of slow growth the capital markets are tighter and have a lower tolerance for risk. Research laboratories that receive the majority of their funding from government sources are not as sensitive to economic cycles, in fact their funding usually increases during periods of slow growth (recessions) due to government fiscal policies.

In general the capital markets determine the point at which the technology is commercializable. Research laboratories use a variety of methods to promote their technologies including forming relationships with entrepreneurs, venture capitalists and spinning off their own entrepreneurial efforts. Some university systems have technology transfer offices set up to facilitate this process. The bottom line is; no one has a formal process at this point, it's much more an art than a science. One thing is clear: research organizations in the U.S. are sitting on huge amounts of valuable intellectual property; their ability to translate this property into capital rests on their ability to successful transfer the technology.

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