Home > Nanotechnology Columns > Vivek Srivastava > Adopting a collaborative approach to generate value in multidisciplinary nanotechnology industry
Given the shortage of managerial talent, resources, and infrastructure, a model for collaborative new product development and launch is presented. The model leverages the core competencies of the partners to accelarate and optimize value generation through nanotechnology products and processes.
August 22nd, 2007
Adopting a collaborative approach to generate value in multidisciplinary nanotechnology industry
Partnering with established players opens up existing market for start-ups
Founders of Qtech Nanosystems narrate a harrowing tale of risk-averse venture capitalists, technology agnostic bankers, and beaurocratic public servants, in their quest for funds for their nanotechnology startup. After a futile search for governmental support and in the absence of an enterprising VC, Qtech Nano decided to shift base to Singapore, which offers a number of advantages over India in terms of
• Access to high quality, cheap, readily available infrastructure and lab facilities
• Availability of governmental support in terms of grants and loans
• Easier entry to global marketplace and access to capital
• Stronger IPR protection
In order to emerge as a major player in nanotechnology, India has to frame policies and establish an eco-system that overcomes these debilitating disadvantages. While some of the issues are generic in nature; access to long term capital and facilities is a matter of survival for a budding, technology intensive nanotechnology industry.
Following three models have been successful employed elsewhere in the world to help start-up companies and potentially can be employed by emerging nanotechnology companies in India.
i) Public - Private partnership (PPP):
PPP between the public and private sectors to deliver infrastructure services for the industry. Minister of state for finance P. K. Bansal admitted that the government is not in a position to make large investment in nanotechnology, and PPP model is required to tap the potential of the segment. In April, 2006, first such project having state-of -the-art institutes and world class facilities was announced for setting up a "nano-city" in the state of Haryana for a total investment of US $2 billion.
ii) Collaboration with LSI/MMC:
This model enables speedy scale up of a commercially feasible technology. The start up can use a high quality infrastructure and good management practices, right in the initial stage, along with a readymade market. This model is gaining increased acceptance from the industry with a number of MNCs having their own venture funds to support these emerging/nascent technologies.
iii) Segment Approach:
The difference between the earlier and this approach is that the partnering companies do not have an exclusivity clause in the agreement. This allows the start-up to work with only one large company in one particular segment. After establishing a foothold in that particular industry segment, the start-up expands by developing applications and products for other segments.
Collaborative approach shares risks and costs for new product development
Several existing businesses are evaluating nanotechnology as a route to create growth opportunities. A number of R&D programs are underway at various organizations aimed at developing new products using nanotechnology. However, due to the IPR related issues most of these efforts are being carried out in isolation. The matrix below (Table. 1) presents a comparative evaluation of traditional technology and product development models viz. inhouse R&D, startup acquisition and technology transfer along three dimensions: Technology and IP issues, cost and expertise required and risk factors. It can be seen that the traditional models only offer advantages in terms of ownership of IP, while have major disadvantages when viewed along other dimensions. One important factor (that is not obvious from the matrix) is the technical expertise requirement. For successful technical development in nanotechnology, there is a need to have interdisciplinary expertise. This can be achieved only by having large teams with experts in fields like science, engineering, product development and domain experts. Assembling such a diverse team can be a delimiting factor and sometimes even not possible due to limited number of scientific and domain experts available. Keeping these factors in mind, a new business model based on "Collaborative New Product Development and Launch (collaborative NPDL)" is proposed.
|Comparative assessment of various product development models|
This model takes a holistic view of the various issues and with a specific focus on the basic nature of nanotechnology. By compromising on ownership of IP, it offers a whole lot of other benefits that more than offset sharing the IP. Moreover, the present IP regime is far from perfect and has numerous loopholes that can be exploited and is a very poor mechanism to achieving sustainable competitive advantage. Exploiting diverse competencies to generate value
The above arguments demonstrate that both: nanotechnolgy start-ups and established businesses stand to gain by collaborating more closely with each other and leveraging their mutual competencies to ensure better execution and smoother launch of new products and technologies into the marketplace. In today's "synconomy", there is growing recognition that businesses are becoming increasing interdependent and need to operate in network of value generating agents. Collaborative New Product Development and Launch model explicitly incorporates these dynamics and adopts them to the nuances of the nanotechnology industry.
Collaborative NPDL model works in a manner that is very similar to the classical outsourcing model (see Figure 1). The technical development part of the business is outsourced to a company that has nanotech as its core strength. This start-up company should have a team of nano-scientists, engineers from all traditional branches and experts in product development. The outsourcing corporate partner/customer would provide domain experts to help build a complete team. This team works closely on product development tapping into the combined pool of human, technical, infrastructural and financial resources such that the costs and risks are shared between all parties. On completion of the development work, the patents can be licensed out for exclusive use of the partner.
|Figure 1 Collaborative new product development and launch model. Expertise of all the partners are l|
A nanotechnology start up based on the above presented model can follow a roadmap presented schematically below
|Step by step approach to establishing a nanotechnology start-up based on collaborative models|
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Vivek hold a Ph. D. in materials science and has published over a dozen papers in international journals and contributed to international conferences and seminars. He has interests in commercialization of nanotechnology & new ventures with innovative business models to exploit the advantages India offers. He consults existing businesses to grow and expand in new technology areas, and serves as mentor to budding entrepreneurs. His current research interest are "severe plastic deformation methods for production of bulk nanomaterials" and "Role of industry dynamics on making R&D funding decisions".