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1. Introduction
2. Background: The management of R&D
within organisations
3. R&D and the link with corporate strategy
Nov 2007
What is R&D?
“R&D is the purposeful and systematic use of
scientific knowledge to improve man’s lot even
though some of its manifestations do not meet with
universal approval.”
(Twiss, 1992)
Introduction
scientific verification application and
suggestion, product Revenue
engineering Growth
discovery,
recognition, Maturity
new concept. Decline
Investment
Accumulated investment
Time
-12 -10 -8 -6 -4 -2 0 2 4 6
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Marketing FMCG
activities
Food and drinks industries
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• Complementary technologies
Additional technologies
• Peripheral technologies
Whose application contributes to the business
• Emerging technologies
Long-term significance
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Classification of research
knowledge and R&D continuum
concepts
Basic research
Applied research Close to market
Development
Technical service
Physical
products
Product tangibility
low high
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Applied research
Work involving basic knowledge for the solution of a problem.
Development
The application of known facts and theory to solve a particular
problem through exploratory study.
Technical service
Cost and performance improvements to existing products,
processes or systems.
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References
Roussel, P.A., et al. (1991) Third Generation R&D,
Harvard Business School Press, Boston, MA.
Trott P (2005) Innovation Management & NPD 3rd ed.,
Prentice Hall.
Twiss, B. (1992) Managing Technological Innovation,
Lithedin FT: Pitman publishing, London.
UK R&D scoreboard 2001, DTI (2002).
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Learning objectives
• Understand the role of intellectual
property in appropriating gains from
innovation
• Understand different forms of protection
available for intellectual assets
• Appreciate the limitations of the patent
system
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Mechanisms of appropriability
• Secrecy
– Trade secrets
• Legally protected intellectual assets are
termed intellectual property (IP)
• Control of complementary assets
– Other assets such as distribution, service
capability, customer/supplier relationships,
complementary products
• Lead time (Winter, 2000)
– First-mover advantage
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Trade secrets
• Often applied to ways of working, price costings
or business strategies
• Also applied to products (e.g. Coca Cola)
• Legal definition unclear
• Maintain secrecy during product development
– Risk of information leakage?
– Inhibits internal knowledge transfer?
– Limits inter-company collaboration?
• Difficult to maintain once marketed
– Reverse-engineering by competitors?
• No protection against independent invention by others
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Trade secrets
No sign of the recipe on the can!
“The secret to one of the world's most famous brands lies deep in a bank
vault somewhere in Georgia, US. Its exact location is reportedly known
only to between two and four Coca-Cola executives.
It is rumoured that measures are employed to protect the chosen
few – the executives never travel together, and must approve a
successor should one of them die.
Outlets which make the drink are simply supplied with syrups
and other ingredients from Coca-Cola – but not the original recipe.
People have revealed what they claim to be the official recipe
after analysing the drink, but Coca-Cola remains tight-lipped.”
Source: Tom Geoghegan, ‘What we still don’t know’, bbc.co.uk/1/hi/business 2nd June 2005
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Copyright ©
• Applies to:
– Original literary, dramatic, musical and artistic works
(70 years a.d.)
– Sound recordings, films, broadcasts and cable
programmes (50 years post publication)
– Typographical arrangements or layout of a published
edition (50 years post publication)
• Automatic protection
• Cannot copyright ideas
– Must be in tangible form (e.g. written)
– Copyright applies to the presentation of the idea.
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Copyright
"Dan Brown copied from The Holy Blood and the Holy Grail and
therefore the publication of the result by the defendant is in
infringement of the copyright of my client in the United
Kingdom."
Registered design
• Intended for designs with aesthetic appeal
– Toys, electrical appliances, packaging, etc.
• New designs:
– Not published in the UK
• Maximum of 25 years
– Exclusive rights for initial five years, renewable for
up to five five-year periods
• Similar in operation to the patent system
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Registered design
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Registered trademark ®
• Distinctive names, marks and symbols identifying
a company’s products
• Must be:
– Distinctive in itself
– Non-deceptive
– Not confusing.
• International registration
• Many brands are registered trademarks
• Licensing
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Trademarks
Orange colour clash set for court
A row over the colour orange could hit the courts after mobile phone
giant Orange launched action against a new mobile venture from Easyjet's
founder.
Orange said it was starting proceedings against the Easymobile service
for trademark infringement.
Easymobile uses Easygroup's orange branding. Founder Stelios Haji-
Ioannou has pledged to contest the action.
The move comes after the two sides failed to come to an agreement
after six months of talks.
Orange claims the new low-cost mobile service has infringed its rights
regarding the use of the colour orange and could confuse
customers – known as "passing off".
Patents
• 20-year monopoly to make, use or sell
• Legal right to prevent others using the invention
• Public disclosure of details of the invention
• Novelty
– Must not be part of ‘state of the art’
• Inventive step
– Not obvious to a person skilled in the art
• Industrial application
– Machine, product, process
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Limitations of patents
• Annual fees required
• National patent protection
• Patent harmonisation
– European Patent Convention (EPC)
– Paris Convention – 114 countries
– First-to-file (EU) vs first-to-invent (US)
• Legal costs of defence
• Limited effectiveness in some industries
– Patent life vs ‘imitation lag’
• Inventing around patents
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Limitations of patents
Creative wins MP3 player patent
"The first portable media player based upon the user interface covered in
our Zen Patent was our Nomad Jukebox MP3 player," said Creative CEO Sim
Wong Hoo.
"The Apple iPod was only announced in October 2001, 13 months after we
had been shipping the Nomad Jukebox based upon the user interface
covered by our Zen Patent."
In its press release, Creative said Apple had filed for a patent for a user
interface in a multimedia player in late 2002, but its application had been
recently rejected.
Source: bbc.co.uk 30th August 2005
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Strategic alliances
1. Introduction
2. The fall of the go-it-alone strategy
3. The rise of the octopus strategy
4. Forms of strategic alliances
5. Reasons for entering alliances
6. Risks and limitations with strategic alliances
7. Licensing
8. Critical success factors
9. Case study: The film industry
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Learning objectives
• Understand the reasons for increasing use of
strategic alliances
• Recognise different forms of strategic alliance
• Identify factors critical to the success of strategic
alliances
• Appreciate the risks and limitations of strategic
alliances
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Introduction
• Collaborating with suppliers and customers is
not new
1. Licensing
2. Supplier relations
3. Joint venture
4. Collaboration (non-joint ventures)
5. R&D consortia
6. Industry clusters
7. Innovation networks
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Licensing
• Licensing is granting another business permission to use
your intellectual property.
• Payment of a fee in return for access to the technology.
• Very often the technology in question will be protected by
patents.
• Level of involvement varies considerably.
• Mutual self-interest is key driver.
• Product, manufacturing process and brand, which is
protected by patents; or a product or service, which is
protected by a trademark or copyright.
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Licensing (Continued)
• Licensing is the main income generator for many firms
e.g. Microsoft, BTG, etc.
Licensing (Continued)
Licensing brand names
Licensing (Continued)
• Negotiate with care . . .
Licensing (Continued)
Other reasons for licensing are (Rothberg, 1976):
Licensing (Continued)
Other reasons for licensing are (Rothberg, 1976):
The end