Paving the Way with Licensed Technology

When looking to develop a cutting-edge product, you are bound to encounter new, unproven technologies with the potential to turn your product into a serious revenue source. Incorporating these new technologies is a risky venture, but with thorough analysis and diligence, you can mitigate these risks on your way to a successful product launch.

Identify the Technology Development Stage

Much has been written in licensing literature about technology “stage-of-development.” Most of the work has been done in an effort to provide categories for purposes of valuation discussions. This is certainly useful when negotiating the license, but as a product developer, you really need to identify the remaining technology development tasks that must be completed before the technology is ready to make the jump to productization.

The best way to understand which tasks need to be completed is to consider the technology from your engineering team’s perspective. What information would you expect to have available if you were tasked with taking the technology off the shelf and building a product around it? Examples might include parametric performance data with tolerances, environmental operating data, application notes, evaluation models, theory of operation, etc. Collaborate with your engineering team to develop a list of hurdles that must be overcome before the technology can be deployed in a product.

With wish list in hand, execute a gap analysis identifying the missing pieces of the puzzle. You can then estimate the time and costs required to make your list a reality. The gaps will also point you to potential risks that should be addressed directly with the technology development team or that may require engineering mitigation in the product design.

Review Performance Data

A key diligence activity in sourcing external technology is reviewing the performance data created by the technology development team. Most often this data takes the form of test reports supported by datasets and mathematical analysis. It is important to fully understand the underlying test methodology and data used to generate the reports. Test equipment setups, environment, unit-under-test configuration and analysis algorithms should all be documented. Obtain the raw data so you can replicate the analysis and perform your own. Ask to review the notebooks of the developers. Here you should learn about the twists, turns, successes and failures that the developers experienced as they built the technology you are considering licensing. This review will truly deepen your understanding of the technology.

Ensure Developer Availability

Technologies are developed by people, usually over a period of years. The inventors, lab technicians, grad students, prototype builders and component suppliers all develop extensive and sometimes siloed knowledge of the technology. Much of this knowledge is not formally documented and falls under the “tribal knowledge” umbrella. Identify the key individuals and organizations. Assess their willingness to support the commercialization effort and initiate formal relationships with important contributors as they will prove to be invaluable resources during your product development effort.

Develop Internal & External Capabilities

Introducing a new technology into your product line may require development of new capabilities within your company. These may include manufacturing processes, test and measurement techniques and special customer support abilities. Identify these needs during the assessment activity to ensure that your organization budgets for the time required to develop them. Don’t forget your supply chain. Your trusted suppliers may need to develop new capabilities to support integration of the technology as well.

There is probably nothing riskier in product development than incorporating an unproven new technology. Properly evaluating candidate technology prior to betting the success of your development effort will reduce risk and speed your new product to market.