INCLUDING SMALL FIRMS IN THE TECHNOLOGY TRANSFER PROCESS by Steven T. Walsh, Ph. D., University of New Mexico, USA Bruce Kirchhoff, Chalmers University of Technology, Sweden Paul McWhorter, Ph.D., Sandia National Laboratories, USA

Summary This paper examines the question of whether there is a model that government operated research laboratories can utilize to include small, entrepreneurial firms into their process of technology transfer. The transfer of technologies from government operated research laboratories to commercial firms is a difficult and complicated process. Corporate research and development agreements, intellectual property licenses and other agreements are keys to this process as they offer intellectual property protection to the technology creator. But the high costs of negotiating such agreements make them prohibitively expensive for many small and emerging entrepreneurial firms. Furthermore, these arrangements work well for large firms because large firms are primarily interested in sustaining technologies that lead to rather quick market penetration and rapid returns on the investment in intellectual property agreements. Small entrepreneurial firms, however, focus primarily on disruptive technologies that lead to discontinuous innovations that take much longer to achieve market acceptance and the accompanying revenue generation. Yet, empirical evidence has demonstrated that small firms are more efficient innovators and tend to develop more “major” innovations compared to large firms. Thus, ineffective technology transfer programs for small firms may be causing a rate of innovation for society as a whole that is below the potential that can be attained by national laboratories. This technology transfer problem has been recognized by SNL, which has responded with the SAMPLES program. Herein, we describe the SAMPLES small firm technology transfer model developed at Sandia. We then describe how implementation of this model can lead to commercialization of disruptive technologies and explain how Sandia’s model can provide the impetus to small and entrepreneurial firms to create successful discontinuous innovations that can generate new jobs and new wealth for society. SNL has become a major creator of micro-electro-mechanical systems (MEMS) technologies during the last five to ten years. Worldwide application of MEMS technologies has shown that they are frequently

disruptive leading to discontinuous innovations. And, as is often observed in technology driven industries, most of the discontinuous MEMS innovations have been developed and marketed by small, not large firms. Thus, the transfer of Sandia MEMS technologies necessitated the creation of an alternative pathway in order to include small entrepreneurial businesses into their technology transfer program. This program is call “The SAMPLES Program.” The SAMPLES Program is designed to produce small numbers of MEMS products at a very reasonable cost to the small firms. In this way, the small firm is able to pilot test new devices and provide limited sales to potential customers for field testing. If successful, production moves out of the SAMPLES Program and into commercial production systems. Over the last two years, more than 60 small firms have used the SAMPLES Program to develop new innovative products, some of which have reached the market and demonstrate the value of the technology while generating revenue and growth for the small firms. Success seems assured as more and more small firms are coming to Sandia for help within the SAMPLES Program. Introduction The transfer of technologies from government operated research laboratories to commercial firms has been seen to be a difficult, complicated, costly and non-exclusive process but nevertheless a process that is highly desirable as it reduces the cost of operating government laboratories and assures that the technology benefits the private sector economy. The main vehicles of this transfer in the United States has been the Corporate Research and Development Agreements or (CRADAs), intellectual property licenses (IPLs) and work for others (WFOs) agreements. These types of arrangements often work well for large firms but the high costs of negotiating such agreements make them prohibitively expensive so they have been used sparingly by small entrepreneurial enterprises. Within the last 20 years, evidence has appeared that suggests that small firms are better at bringing disruptive technologies into discontinuous innovations thereby creating increased competition, better product/service performance and greater economic benefits to society. Thus, the paucity of small firms involved in the transfer of technology from government labs to private sector firms is a cause for concern to the national laboratory community in the United States. If there are differences in the nature of technologies which large firms and small firms successfully commercialize, then there is a basis for concern. Large firms are primarily interested in improvements to existing products using sustaining technologies. Such directions in innovation result in continuous innovation rather than disruptive technologies that lead to discontinuous innovations [3] [6]. On the other hand, small, entrepreneurial firms have been associated with the commercialization of disruptive technologies through the 2

process of discontinuous innovation [10] [21]. Empirical evidence of small firm greater efficiency in creation of innovations has been reported by the Futures Group based upon an analysis of U.S. product innovations during 1980-82. This research also showed that major innovations are more likely to emerge from small rather than large firms [30]. If disruptive technologies are important to the national laboratories then there is a cause for concern. The national laboratory community invests heavily in disruptive technologies that they define as important to transfer to the commercial realm [22]. Disruptive technologies are the sources of discontinuous innovations that in turn are the foundations of new industries that make major contributions to economic progress and growth [6]. If there is no adequate mechanisms to engage smaller entrepreneurial firms in the process of transferring the national laboratories technologies to the commercial realm then it is possible the major innovations are being undeveloped and the U.S. economy is suffering. U.S. government agencies such as SNL’s parent the Department of Energy (DOE) do support small businesses and technology transfer through the Small Business Innovation Research (SBIR) program. This program, however, focuses on the technological genius resident in principal investigators at small firms and their efforts and technological abilities brought forth to solve problems identified by the agency. The SBIR program is interested in technology development not transfer of technologies from within the national laboratories to the commercial realm. Many national laboratories have sought to facilitate technology transfer through a process of granting entrepreneurial leave and encouraging spin off start-up businesses [28]. Many of the resulting spin-offs from this entrepreneurial leave program have been successful at transferring lab technology. But this process removes the competent technologists from the lab and does not leverage the skills and knowledge resident in existing small firms to commercialize disruptive technologies. Thus, a new paradigm for technology transfer to small firms had to be developed. SNL has taken a lead in this development. It is helpful when evaluating technology transfer methods to bifurcate technology into disruptive and sustaining so as to assist in the process of categorization of technologies to be transferred to or from a national laboratory or an organization. Here we categorize the MEMS or Microsystems technologies at SNL technology as a SNL disruptive technology [31]. This allows us to examine the differing processes of innovation associated with the two technology categories – disruptive and sustaining. Discontinuous innovation processes are associated with disruptive technologies whereas continuous innovation processes are associated with sustaining technologies. 3

Disruptive Technologies and Discontinuous Innovations There are numerous differing arguments for the exact definitions of either disruptive technologies or discontinuous innovations. Here we describe disruptive technologies as scientific discoveries that break through the usual product/technology capabilities and provide a basis for a new competitive paradigm discussing them similarly to Anderson and Tushman [2] and Bower and Christensen [3]. Similarly we describe discontinuous innovations as products/processes/services that provide exponential improvements in the value received by the customer much in the same vein as Walsh [30], Lynn, Morone and Paulson [18] and Veryzer [29]. Alternatively authors define disruptive technologies as focusing on industry wide product - technology factors [1]; the gap between substitutable technological learning curves on cost or performance basis [22] [30]. Further, definitions of discontinuous innovation focus on customer behavior [25], product newness [5], market factors [17] or some combination of these factors [18]. Moore [26] clarifies this aspect of disruptive technologies by noting that they generate discontinuous innovations that require users/adopters to change their behavior in order to use the innovation. Moore [26] argues that the performance attributes of the innovation must overcome “newness” resistance of customers. Such resistance may be based upon issues of reliability and quality consistency. Summaries of the perspectives of these various authors are shown in Table 1. Florida and Kenney argue that prior to the 1980's, America was noted for the ability of its firms to develop new ideas and new products [11]. Unfortunately, they note, America continued to develop great ideas but was unable to bring many of these products to market. The disappointing performance of US firms in technology intensive markets such as consumer electronics, robotics, automobiles and semiconductor memories has been widely attributed to a failure to continuously and incrementally improve products and processes. Christensen [6] uses the hard disk computer memory industry to validate his observation that management emphasis has shifted from discontinuous innovation to continuous or incremental innovation. He states that most large firms neglect discontinuous innovations and focus their resources on incremental change or continuous improvement. However, he argues, incremental innovation is insufficient for sustained competitive advantage.

4

Table 1 Definitions of Disruptive Technologies and Discontinuous Innovation from Selected Authors Author Mckee (1992)[22]

Carroad and Carroad (1982) [5] Bower and Christensen 11995) [3]

Focus Product-innovation learning curves are based on Foster’s (1986) [12] curves product performance is on y-axis and product development effort on x-axis. The focus is a firm’s product technology paradigm. The relative newness of markets, technology and the firm’s product offering. Disruptive technologies are indirect substitutes for an industry, providing different technology- product-market paradigms. The technology trajectories rather than current state of technology performance is critical. The focus is the firm.

Lambe and Spekman (1997) [17]

A major change in the technological base for a mature industry.

Moore (1991) [26]

The eventual customer’s behavior.

Abernathy and Clark (1985) [1]

Industry product technology paradigm.

Lynn, Morone and Paulson (1996) [18] Walsh (1996) [32]

The creation of product families and Businesses Disruptive technologies

Veryzer (1998) [31]

User benefits and degree of technological newness

Ehrenberg (1995) [9]

Disruptive technologies and the degree of newness

Foster (1986) [12]

Firm ability to make competitive advantage from disruptive technologies.

Definition Discontinuous Innovation occurs as a firm shifts from one product learning curve to a new product learning curve to avoid reaching an upper performance limit. The more discontinuous an innovation is the newer the innovation is in terms of market, product and technology factors. Disruptive technologies offer a different combination of attributes and are valued in new markets by new customers for new applications. The associated technology trajectories outperform the firm’s current technology and the technologies rarely appeal to established firms. Discontinuous innovations are the next killer application or radical innovation. Discontinuous change occurs when a mature industry product innovation starts from new and different technology. Discontinuous innovation displaces an existing technology paradigm and requires customer to change. Disruptive technologies are (1) architectural - disrupt existing technology production competence and create new market customer linkages, or (2) revolutionary - disrupt and make obsolete current technology/production linkages, but conserve existing market customer linkages. Discontinuous innovations have a large degree of technological, marketing and timing uncertainties. Discontinuous innovations are technologies that provide at least an order of magnitude increase in one or more cost or performance ratio, as compared to the currently used technology. Discontinuous innovations are technologically and/or commercially discontinuous. Discontinuities are the gaps between existing and emergent technologies. The larger the gap the more discontinuous the technology. Disruptive technologies are new technologies with greater capabilities 5

Meyers and Tucker (1989)[24]

Technological Myopia Customer familiarity and use.

than existing mature technologies. Discontinuous innovations offer dramatic leaps in terms of customer utility.

6

Additional evidence that firms require more than continuous improvement as a design and manufacturing strategy is offered by Morone [27]. He found that successful Japanese and US firms in different industries were more similar to each other than to unsuccessful firms in the same industry. The successful firms, regardless of country of origin, achieved competitive advantage over rival firms based on a combination of incremental and discontinuous innovation. Continuous improvement and discontinuous innovation used together offer the potential for sustained competitive advantage. Since Morone [27] and Christensen [6] effectively argue for a renewed emphasis upon discontinuous innovation based on disruptive technologies, we focus on this herein. Furthermore, in many technology intensive industries, competitive advantage is built and renewed by discontinuous innovation based on disruptive technologies which creates new families of products and business [12]. Consequently, discontinuous innovation offers the potential for competitive advantage and requires greater attention by management practitioners and academe. Disruptive technologies and discontinuous innovations present a unique challenge and opportunity for the national laboratory community. These labs are no longer funded to provide technology for national security imperatives. Instead, they have been given a new set of objectives that focus on creating technology for commercial use and transferring this technology to the private sector for commercialization. Given the history of these labs, their technologies do not have a proven path from scientific discovery to commercial mass production and therefore require novel approaches. But, the labs posses critically important technologies that could be a wellspring of national wealth creation and new competency generation. The challenge is to effectively transfer these technologies to the private sector. But, many large firms are reluctant to familiarize themselves with these national laboratory technologies since the tradition of secrecy surrounding these labs continues to dominate communication to and from the private sector. The trend seems to be that these firms wait and then react to proven disruptive technologies after they have entered the market. Thus, national laboratory technology transfer is falling short of producing the commercial innovations that it is capable of transferring.

Technology Transfer Some form of technology transfer occurs in all organizations among and between departments in the organization, between manufacturers and vendors and between manufacturers and their customers. Here we are interested in the transfer of technology from the national laboratory community to large and small firms. Kassicieh and Radosevich [15] present many of the mechanisms used for technology transfer and

7

commercialization from public-sector research organizations. Molas-Gallart and Sinclair [25] discuss the challenges posed in the United Kingdom by duality of use requirements (defense and commercial application) faced by defense research establishments, including national labs, and defense producers. The new need for creating technology transfer at UK national laboratories and the need for secrecy provide substantial potential for conflict in the process. Any technology transfer model developed in this environment of conflicting objectives must include a high degree of interaction and communication as a necessary ingredient. This is especially true for disruptive technologies since the high level of uncertainty attached to new-to-the-world technologies requires trial in many different industries and many different products.

Competency and Disruptive technologies The publication of "The Core Competence of the Corporation" by Prahalad and Hamel [28] caused a resurgence and redefinition of the core competence perspective. This work initiated a landslide of academic and practitioner strategic thought and practice centered on firm specific characteristics that are unique, add value to the ultimate customer, and are transferable to many different industrial settings. Competencies are firm specific technologies and production skills [28]. This core competence definition draws on a rich tradition from the literature of economics and management. Capabilities, on the other hand, are firm specific business practices, processes, and culture. These authors also proposed a positive relationship between core capabilities and strategies and success. Yet, can we utilize the concept in regards to the technology transfer process and to the differences between large and small firms? A firm competence and capability are important ingredients for success in the technology transfer process. Kassicieh and Radosevich [15] note that management competencies especially those centered on learning have long been considered important in the technology transfer process. King [16] argues that a firm’s technological competence is important in this same learning process. Further, King describes a process for successful technology transfer centered on sustainable technologies. However, in the absence of national laboratory technology transfer programs targeted to small firms, we do not know if small firms have the necessary competencies to be effective in technology transfer with the national laboratories. To date, the most successful method for small firm involvement in the national laboratory community has been the development of spin-off’s. Spin-offs have been shown to be successful as a transfer mechanism of technology from R&D organizations. Most recently Steffensen, Rogers, and Speakman [29] describe a series of successful spin-offs from the New Mexico University community. Many of these involved

8

SNL scientists and engineers. Their work demonstrates that spin-offs using a technologically competent entrepreneur previously resident at a national laboratory can effectively transfer a technology. Today, such spin-off programs are common at national laboratories in the U.S. Researchers at SNL, for example, have the ability to take an entrepreneurial leave. As good as this has been this drains the national laboratories of key personnel and competencies and does not harness the available managerial competencies that exist in small firms outside the laboratories. As noted earlier, small firms are more efficient innovators and create more “major” innovations so although the spin-off procedure works, it is not enough.

Microsystems Technologies Description Before we discuss the SNL program for technology transfer to small firms, it is useful to describe the technology realm in which the technology transfer is occurring. This is the field of micro-electro-mechanicalsystems (MEMS), micro-systems technology (MST), and micro-machines, terms that are roughly synonymous but applied in the U.S., Europe, and Japan respectively. These terms describe manufacturing technologies that enable the development of many exciting micro-scale or micro-miniaturized products. For convenience here, the terms are lumped together and labeled MEMS. MEMS technologies are the source of many discontinuous innovations already influencing the way we live. MEMS combine a mechanical system with an electronic system all in one miniaturized package. For example, MEMS are in your car to measure accidental impact and explode the air bags in your car. MEMS in your car measure unusual movement in turns and signal the steering and braking computer control systems to adjust to avoid dangerous skids. And, these MEMS devices are as small as your thumbnail. These technologies are creating a second micromanufacturing revolution. The first was microelectronics that brought miniaturization to electronics as well as increased reliability. MEMS technologies enable the manufacture of products that (1) would otherwise be impossible to produce; (2) improve manufacturing efficiencies by as much as an order of magnitude; (3) improve critical performance aspects of currently produced products by as much as an order of magnitude; and/or (4) improve product quality and reliability by reducing component sizes and numbers. Nevertheless, while many firms, large and small, have initiated commercialization activities based on or involving MEMS technologies, and while many governments and national labs also have major MEMS initiatives, commercialization of MEMS technologies have proven problematic. Impediments to M3 commercialization include industry-wide nomenclature differences, manufacturing and marketing infrastructure

9

differences, and inherent problems that face firms trying to gain competitive advantage in an environment characterized by disruptive technologies and discontinuous innovations. MEMS technologies generally fall into one of three categories: traditional bulk micro-machining, sacrificial surface micro-machining and high aspect ratio micro machining (HARM) [33]. The latter includes deep ultraviolet (DUV) lithography techniques and x-ray-based methods such as LIGA (from the German Lithographie, Galvanoformung, Abformung, meaning lithography, electro-forming or plating, and molding). These three technology categories are based in large measure on sophisticated processing methods not unlike those used for producing silicon integrated circuit chips. But there are many differences. For example, unlike semiconductor technologies where nearly all systems are made in silicon, a significant and growing percentage of micro-systems utilize alternative substrates such as glass and plastics. Furthermore, unlike the microelectronics revolution, which generated semiconductor-based products conceptualized primarily in the domain of electrical engineering, MEMS technologies leverage the skills of many other engineering disciplines, chemical, mechanical, physics, and electro-chemical are just a few of these. Firms utilizing MEMS technologies are in the process of creating manufacturing methods to make even more micro-technologies possible. Many times, a firm’s choice of MEMS manufacturing technology, product design, or product application is linked to its historical competencies. Established firms as well as entrepreneurial startups strive to capitalize on their own inherent competencies. In the case of entrepreneurial firms, the choice may be guided by the background of the founders or by a truly novel manufacturing path. The absence of a single MEMS manufacturing paradigm underscores the uncertainty that firms must face when searching for competitive advantage in the MEMS arena. The triple nomenclature problem illustrates not only regional preferences in technological approach, but alludes to the emergent nature of the technologies as well. Nevertheless, there is a trait shared in common by all MEMS technologies and microelectronics. It is their ability, both already realized and potential, to profoundly impact the lives of all human beings. As microelectronics has done in the last half of the twentieth century, so MEMS technologies show potential for doing in the new millennium in terms of benefiting future society. The emergent nature of MEMS technologies continues to challenge existing definitions as well as frustrate suppliers, manufacturers and MEMS users. Marketers and strategists can be overwhelmed when each day seemingly brings new applications that further push the limits of definitions with which they have become comfortable. But if one is to understand the competitive discourse of this emergent industry, awareness of

10

existing differences in definitions is critical. The point is illustrated by considering studies that have been made of the growing MEMS market since 1990. Firms involved in commercializing MEMS technology have been confronted with Year 2000 market forecasts ranging from US$8 billion [13] to $14 billion [8]. Newer studies have created even wider variations. For example, a 1998 market analysis by an agency of the European Commission, the Network of Excellence in Multifunctional Microsystems (Nexus), predicts a market near US$40 billion by 2003 [34]. Considering that the annual market for MEMS products prior to 1995 was less than US$1 billion, all of these studies make two things clear: they predict a significant rate of growth in the MEMS area and they imply an explosion in the number of stakeholder groups. Deriving full benefit from these studies requires that one understand the reference point of each. Variations in study definitions can produce wide differences in market estimates. Those who use market analyses must use them prudently and with insight. Combining the above review of the literature on disruptive technologies with the above description of MEMS technologies makes it clear that these technologies are and have the potential of continuing to be disruptive technologies.

The SNL SAMPLES Model SNL devised the “SAMPLES Program” as a model to transfer MEMS disruptive technologies to small firms. We investigated this model in order to determine if this could be used to develop a generalized model of disruptive technology transfer. SNL’s Microsystems group has taken an inclusive approach in their effort to transfer this technology to the commercial marketplace. The Microsystems group has consistently been a leader at SNL in generating intellectual property licenses (IPLs), corporate research and development agreements (CRADAs) and work for others agreements (WOFs). SNL has developed a generalizable manufacturing design and development system named the Agile Prototyping Module that they license to many firms. However, their goal was more than simply licensing the technology to manufacturing firms. They wanted their system to become a dominant manufacturing system in the marketplace and to accomplish this a new paradigm for technology transfer had to be developed. The Microsystems group under the leadership of Paul McWhorter, Al Romig, and David Williams set out to develop a system to transfer disruptive technologies in a novel manner so that new product design would be based upon their manufacturing technology. Realizing the potential for major disruptive technologies to arise from firms of almost any size, academic institutions, other national labs and even individuals, they decided to

11

create a program that facilitated access to all these groups. The program is called SAMPLES (Sandia Agile MEMS Prototyping, Layout Tools, Education, and Services) [23]. SNL based this evolving system on; the nature of disruptive technologies, the nature of firms that have been associated with the effective commercialization of disruptive technologies and the nature of effective technology transfer processes. Specifically they designed a system that recognized the shortcomings in traditional technology transfer methods when dealing with a disruptive technology. They built a flexible technology transfer system that allowed firms to: 1.

Access MEMS disruptive technologies in a cost affordable manner not possible through traditional technology transfer mechanisms for firms large and small.

2.

Cost effectively familiarize themselves with a disruptive technology learning as much or as little as they desired on a very reasonable pay as you go basis.

3.

Develop multiple means of communications with alternative paths for a firm to “learn by doing” while receiving mentorship regarding the disruptive technology.

4.

Leverage a firm’s managerial competencies centered on commercializing disruptive technologies through a process of discontinuous innovation.

5.

Probe the commercial manufacturing potential of their own ideas utilizing limited financial resources.

The SAMPLES program is a way to provide customers access to the revolutionary, disruptive MEMS technologies developed at SNL. The ultimate objective of the SAMPLES program is to enable customers to develop their own innovative products by leveraging advanced design, fabrication, and characterization technologies originally developed for SNL applications. Participants may attend short courses, design new devices, and have designs fabricated in SNL’s state-of-the-art fabrication facility. This program includes multiple interactive educational courses as well as opportunities for firms to build their own MEMS based devices while receiving mentorship at every stage of design, failure analysis, reliability, operations and a soon to be added commercialization of disruptive technologies course. The typical sequence of participation for an entrepreneur is as follows: 1) Take the Introductory Short Course 2) Take the Reliability Short Course 3) Take the Advanced Design Short Course 4) Design your revolutionary new MEMS product 12

5) Have your Agile Prototyping Module fabricated at Sandia's fabrication facility 6) Participate in larger scale projects (advanced fabrication, reliability, failure analysis, etc.) 7) License a fabrication technology for your product. This seven step technology familiarization process for MEMS at Sandia is unique. It is based on the communication issues identified by Kassicieh and Radosevich [15] as necessary precursors for successful technology transfer by allowing firms and individuals to slowly increased their knowledge and familiarly with a disruptive technology. It provides greater access for firms of all sizes to familiarize themselves with a disruptive technology. It recognizes the problems large firms have with disruptive technologies as described by Christensen [6], Cooper and Smith [7] and by providing prototypes of new products at affordable rates, it recognizes the growth paradox associated with discontinuous innovation [14]. Moreover, it provides the small firm with the low cost opportunity to develop totally new, potentially disruptive technologies and evolve them inexpensively into prototype discontinuous innovations. Once the prototypes are proven, undiscovered markets and potentially great profits lie before the entrepreneur. Furthermore, the great cost of initial production plant construction is postponed or avoided. Alternatively, the major costs of negotiating CRADAs, IPLs or WOFs in order to subcontract parts manufacturing to an existing manufacturing firm are postponed or avoided. The full cost of product design, development and production is postponed until the prototype has been proven.

Demonstrating the Program Success with Small Firms To demonstrate that the SAMPLES program actually assists small firms to develop MEMS innovations, we examined data from the program. We measured the relative participation of firms of all sizes since the program began. The advanced class, the reliability course and the introduction course are limited to 20 people and they are offered on alternative months. Table 2 describes the results of this analysis. It is appropriate to describe how we measured participation in terms of courses, designs and prototyping.

Measuring the Courses More than 440 people have completed the three short course activities at Sandia National laboratory. There have been 332 people enrolled in these courses from April of 1997 through November of 1999. Although the majority of these people have been external to SNL, many SNL employees have signed up for these courses. Of the 332 enrollees, 207 (62 percent) were from outside SNL and 125 (38 percent) were from SNL. These figures include the initial highly internal attendance for courses on reliability and advanced design, courses of

13

special interest to SNL personnel. A summary of the types of organizations the attendees came from is included below in Table 2.

Measure Completed Designs We measure a device design as any new design and any perturbation of an existing design. Each module is design to carry at least ten designs.

Measuring Agile Prototyping SNL runs at least 108 Agile prototyping lots per year, but most are for internal needs. During the past 18 months they have carried out 51 Agile prototyping activities for external customers. Seven of these are large firm prototyping, 19 of these are for other research and educational organizations and 25 of these were for small businesses. This is the first technology transfer activity that SNL’s MEMS group has engaged in that has attracted a reasonable response from the small business community. From the above table, it is apparent that the small firms have been major participants in all activities. The small firms have carried through their work into the Agile prototype module phase more frequently that any other group. Twenty five of the 58 small firms (43 percent) have taken this step compared to less than 11 percent of the large firms. This activity is in sharp contrast to the history of SNL’s micro-systems group since they have previously had little or no contact with small firms. And, the manner in which they are interacting is meaningful tech transfer leading to prototypes that clearly demonstrate a basis for commercialization. Many fiber optic switching firms small and large are now investigating the commercial viability of the MEMS approach for developing improved telecommunication equipment via this SNL technology transfer sequence. Prior to the offering of the SAMPLE program, small firms could not hope to raise the capital necessary to carry out development of such sophisticated technology as micro switches for optical fiber transmission.

Table 2 Level of MEMS Activity Tabulated by Type of Organization Level of activity Intro Course Reliability Course* Adv. Design Course* Device Design Agile Proto Module Larger scale projects (WFO /CRADA/licensees) License

Small Firms 58 1 8 300 25 2

Large Firms 65 3 6 70 7 3

Other Institutions 47 7 12 190 19 2

Total 170 11 26 560 51 7

1

2

0

3 14

* As of the time of data collection only one reliability and two advanced courses had been conducted.

Conclusions The SNL SAMPLES program shows strong evidence that it is reaching out to small firms and transferring technology to them. It defines specific communication techniques that work, drawing small firms into the program and mentoring them through to prototype development. Given the disruptive nature of MEMS technologies, the SAMPLES program shows a high success rate by leading 40 percent of the small firms into the development of a prototype. The SAMPLES program provides insight into what types of activities national labs can initiate that will draw small firms into the technology transfer process. By design, the SAMPLES program postpones up front costs that the small firm would find a prohibitive barrier to entry into the MEMS technology realm. By postponing these costs for the small firm until a measure of market response has been attained, SNL has opened up discontinuous innovation opportunities for many small firms, an opening that should yield a surge in MEMS applications. Other national laboratories can copy this design. The seven steps can be replicated. However, the most important part may be the mentoring of small firms from beginning to end. Note that a new module is being added to the SAMPLES program on marketing disruptive technologies.

References

1.

Abernathy, W. J., and K.B. Clark., 1985, “Innovation: Mapping the Winds of Creative Destruction.” Research Policy Vol. 14: pp. 3-22.

2.

Anderson, P and M. Tushman, 1990, " Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change," Administrative Science Quarterly, Vol. 35 (6), pp. 604-633.

3.

Bower, J. L. and C. M. Christensen, 1995, “Disruptive Technologies: Catching the Wave,” Harvard Business Review, January-February, pp. 43-53.

4.

Birch, D. L., 1987, Job Creation in America: How Our Small Companies Put the Most People to Work. New York: Free Press.

5.

Carroad, P. and C. Carroad, 1982, “Strategic Interfacing of R&D and Marketing.” Research Technology Management, Vol. 25:1, pp. 28-33.

6.

Christensen, C., 1997, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press.

7.

Cooper, Arnold C. and Clayton G. Smith, 1992, "How Established Firms Respond to Threatening Technologies", The Academy of Management Executive, Vol. 6(2).

15

8.

Detleff, W., 1999, Microelectromechanical Systems (MEMS): an SPC Market Study, Systems Planning Corp., Sept.

9.

Ehrenberg, E., 1995, “On the Definition and Measurement of Technological Discontinuities.” Technovation, Vol. 15:7, pp. 437-452.

10. Enos, J., Petroleum Progress and Profits, Cambridge, MA: MIT Press (1967). 11. Florida, R., and M. Kenney, 1990, The Breakthrough Illusion, New York: Basic. 12. Foster, R. N., 1986, “Timing Technological Transitions.” In Readings in the Management of Innovation, ed. M.L. Tushman and W. Moore., Second ed., Ballinger; pp. 215-228. 13. Grace, R. et al, 1992, “Micromechanics: Multi Client Study”, Battelle Institute, Frankfurt Germany. 14. Kaplan, S. M., 1999, "Discontinuous Innovation and the Growth Paradox," Strategy & Leadership, Vol. 27(2), pp. 16-21. 15. Kassicieh, S. K. and R. Radosevich (eds), 1994, From Lab to Market: Commercialization of Public-Sector Technology. N.Y.: Plenum Publishing, 1994, pp. 125-135. 16. King, J., 1999, “Critical fluids support sustainable technologies” Research & Development; Barrington; vol. 41 Issue: 10, pp: 25-28. 17. Lambe, C. and Spekman, R. E., 1997, “Alliances, External Technology Acquisition, and Discontinuous Technological Change.” Journal of Product Innovation Management, Vol. 14:2, pp. 102-116. 18. Lynn, G., J. Morone, and A. Paulson, 1996, “Marketing and Discontinuous Innovation: The Probe and Learn Process.” California Management Review, Vol. 38:3, pp. 8-37. 19. Lynn, G. and Walsh, S, 1991, “Radical Innovation: Challenges and Insights,” The Proceedings of the Product Innovation Management Society Meeting, Product Innovation Management Society,October. 20. Lynskey, M. J., 1999, The transfer of resources and competencies for developing technological capabilities-the case of Fujitsu-ICL,” Technology Analysis & Strategic Management; Abingdon; V. 11 Issue: 3 pp. 317-336. 21. Mansfield, E., (1968a) The Economics of Technological Change. New York: W.W. Norton. 22. McKee, D., 1992, “An Organizational Learning Approach to Product Innovation” Journal of Product Innovation Management, Vol. 9:3, pp. 232-245. 23. McWhorter, P., Sandia National Labs, Personal Communications, 1999. 24. Meyers, P., and F. Tucker, 1989, “ Defining Roles for Logistics During Routine and Radical Technological Innovation.” Journal of the Academy of Marketing Sciences, Vol. 17, pp. 73-82. 25. Molas-Gallart, J. and T. Sinclair, 1999, “From technology generation to technology transfer: The concept and reality of the Dual-Use Technology Centres"; Technovation, Amsterdam; Vol. 19, Iss. 11, pp. 661-671. 26. Moore, G., 1991, Crossing the Chasm. New York: Harper Business Press. 27. Morone, J., 1993, Winning in High Tech Markets. Boston: Harvard Business School Press. 28. Prahalad, C. K. and Hamel, G., 1990, “The Core Competence of the Corporation,” Harvard Business Review, March-April.

16

29. Steffensen, M., E. Rogers, and K. Speakman, 2000, “Spin-offs from Research Centers at a Research University, Journal of Business Venturing; Vol: 15, Issue:1, pp. 93-111. 30. The Futures Group, 1984, “Characteristics of New Products Introduced in the U.S. Economy in 1980-82,” a report prepared for the U.S. Small Business Administration, Office of Economic Research. 31. Veryzer, R., 1998, “Discontinuous Innovation and the New Product Development Process.” The Journal of Product Innovation Management, Vol. 15:4, pp. 304-321. 32. Walsh, S., 1996, "Commercialization of MicroSystems - Too Fast or Too Slow." SPIE, The International Society for Optical Engineering, October, pp. 12-26. 33. Walsh, S., J. Linton, S. Marshall, and R. Grace, 2000, “Commercialization of Microsystems Technology”; a chapter in MEMS 2000, in press: SPIE. 34. Weschung, R., 1999, “Market Analysis for Microsystems”, a Nexus taskforce report; OECD, Paris.

17