chapters 10 and 11 for technology and management

what a license looks like

A license agreement usually describes in detail what is being licensed and the circumstances in which the licensee can use the technology. The latter includes the kind of license it will be. In exclusive licenses, only one licensee can use the technology under a specific set of conditions (this also excludes the owner of the technology from using it within the specific conditions of the license). In partially exclusive licenses, either the total number of permitted licensees is spelled out or the exclusivity ends after a certain specified time period. A non-exclusive license means you may license your technology to an unlimited number of licensees at any time. Exclusive licenses are generally more expensive than the other types (higher up front payments, royalty rates, minimums, etc.). Aside from deciding the exclusivity of the license, you can also spell out the specific activities the licensee may engage in. They may only be licensed to manufacture or sell the product, or both; perhaps the licensee may only conduct additional product development. Also, you can construct the license for specific circumstances; for example, the licensee may only distribute the product in three distinct geographic regions, may only use it for medical purposes, may only use it in certain industries or in certain products, etc. The license agreement should spell out whether or not the licensee has the right to sub-license the technology to others, and if so, under what circumstances.

advertising intensity

Established firms are better than new firms at innovation in advertising-intensive industries because advertising is subject to economies of scale and takes time to have an effect

capital intensity

Established firms are better than new firms at innovation in capital-intensive industries because new firms need to finance innovation through external capital markets

licensing strategy

Negotiate the terms of your license carefully. Don't "give away the store" by granting an exclusive worldwide license for all uses with low minimum payments, rather than a number of non-exclusive licenses for individual uses at reasonable minimums for each. At the same time, don't place undue limits on the licensee, as it could become impossible for your product to be profitable.

average size of firms

New firms are better than established firms at innovation in industries where the average size of firms is small because the disadvantages of being a small start-up firm are minimal

concentration

New firms are worse than established firms at innovation in concentrated industries because concentrated industries provide firms with market power

basic elements of a licensing plan

Scope - IP; Geography; Exclusivity Options; Field of Use; & Duration Terms - Signing Fee; Royalty Rate; Minimum Royalty; Patent Reimbursement

core rigidities

The inability to do new things in areas outside of the firm's core competencies Often limit the way in which people can work together or solve problems, and what activities they believe are acceptable and unacceptable

obtaining architectural control

allows firms to limit compatability of their products to companies that are not a competitive threat, to bias compatibility to their own products and to control the type and pace of product improvements

industry analysis

an important part of technology strategy is to analyze the attractiveness of an industry -some industries are more attractive than others making the companies in them consistently more profitable than those in other industries

Teeces model

based on the idea that imitators are more successful than innovators when innovators are easy to imitate a dominate design has emerged in an industry and imitators control the key complementary assets in the industry complementary assets are upstream or downstream assets that are used to develop, produce or distribute an innovative new product or service

moving up the learning curve

by moving up the companies become more efficient at making products and develop product features that competitors cannot match learning curve advantages exist only if learning is proprietary and firms are good at learning

appropriability mechanism

companies need to determination to appropriate the returns to investment in innovation

penetrating strategy

companies set a low price to get the highest possible market share

price skimming

companies set a side high price to earn the highest possible profit

dynamics of creative accumulation

entrepreneurs enter challenge established firms on the basis of their new ideas. however established firms defend their old ways of production organization and distribution and the new firms tend to fail

dynamic of creative destruction

entrepreneurs enter with new firms challenge established firms on basis of new ideas disrupt the old ways of production, organization and distribution and replace the old firms

easy to imitate part 2

generic- if they do not need to be modified to fit the innovation -specialized- if they need to be modified when innovators do not have control specialized complementary assets intellectual property protection is weak and a dominant design exists being an imitator is a better strategy than being an innovator

first mover advantages

help to appropriate the returns to investment in innovation in several ways -obtain control over key resources -target the best customers in the market - exploit switching costs or the cost to customers of changing suppliers

effective pricing depends on many factors

how the timing of the companies entry into the market will affect what customers will pay for the new product -the market in which one is selling the product or service -how products are paid for in the industry

difficult to imitate

in industries in which innovators are difficult to imitate innovators tend to capture the returns to innovation

easy to imitate

in industries in which new products and services are easy to imitate and a dominate design has not yet been established innovators success depends on their ability to make their technology the dominant design.

late mover advantages

many late movers have been more successful than early movers because -benefit from the investment that the first mover makes in creating supply infrastructure and distribution channels -can design products that correct the mistakes that the first mover has made in meeting customer needs -leapfrog ahead of the first movers technology

establishing a reputation

matters more in industries that serve consumers than industries that serve businesses because businesses are less likely to be swayed by perceptions than by the economics of a transaction

exploiting a first mover advantage (lead team)

the advantages that accures to a company from being the first to enter a market - often results in higher market share and higher profits than late entrants

a resource based view

the creation of sustainable competitive competitive advantage (SCA) depends on resources and capabilities

exploiting economics of scale

the reduction in unit costs that occurs as production volume increases -can reduce their costs to less than those of their competitors and make entry by other firms unprofitable