1. ©2004 OpenTTO.org walter.adamson@opentto.org Page 1 DILIGENT™ Business Process Phase 1 - Training OpenTTO.org Business Process - A process model to help high-tech innovators and IP owners develop and manage a commercialization program for greater returns.

2. ©2004 OpenTTO.org walter.adamson@opentto.org Page 2 DILIGENT™ Commercialization With Confidence ™ Contents What is IP, Innovation and Technology? Technology Stages, Phases and Behaviours Commercialization DILIGENT Overview DILIGENT Steps

3. ©2004 OpenTTO.org walter.adamson@opentto.org Page 3 DILIGENT What is Intellectual Property? “Anything generated by human mind/effort which is new, useful, entertaining, aesthetically pleasing, etc.” Article I, Section 8, Clause 8 - U.S. Constitution. "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;" –Copyrights –Patents –Trade Secrets –Know How –Trademarks

4. ©2004 OpenTTO.org walter.adamson@opentto.org Page 4 DILIGENT What is Innovation? Ideas, having Novelty, and Non- Obviousness, pursued with Vigour And Timeliness, becomes first Invention, and with an Owner’s Nurturing, finally… $$$uccess “Ingredients for a successful Innovation Process” Presentation to AURIL # Conference. University of Teesside 17th September 1999 by Dr Martin Fakley, ICI Science & Technology, Policy & Strategy # Association for University and Research and Industry Links (UK).

5. ©2004 OpenTTO.org walter.adamson@opentto.org Page 5 DILIGENT What is Technology? Knowledge by itself is not technology. Technology is a process: It has stages, phases, and typical behaviours It operates and can be understood at different levels (e.g. technology policy, individual scientists) It involves different “stakeholder” perspectives (e.g. developers and users)

6. ©2004 OpenTTO.org walter.adamson@opentto.org Page 6 DILIGENT Technology Stages, Phases & Behaviours A long-term (confusing) process - not a single event: Linearity as convenient fiction (technology push). Caveat: The intellectual elegance of your science or technology won’t necessarily attract market attention. Lots of feedback and recursive loops (market pull). Caveat: Successful technology transfer demands lots of iterations. There are marker events or key milestones (e.g., being awarded a patent, signing a license deal). You need to be in for the long haul.

7. ©2004 OpenTTO.org walter.adamson@opentto.org Page 7 DILIGENT Technology Development is not Linear The model is nonlinear: DEPLOYMENT DEVELOPMENT RESEARCH APPLICATIONS & DEPLOYMENT $$$ (Maybe!) APPLICATIONS & DEPLOYMENT $$$ (Maybe!) Identification of Problems

8. ©2004 OpenTTO.org walter.adamson@opentto.org Page 8 DILIGENT Invention Commercialization Innovation Vastly different activities: Outreach to Customers and Knowledge of Competitors and Markets Innovation Commercialization (DILIGENT) Commercialization (DILIGENT) Invention

9. ©2004 OpenTTO.org walter.adamson@opentto.org Page 9 DILIGENT in Context Company Growth Phases Commercialization TNEGILID Growth Late Stage Mid Stage Early Stage Seed Pre Seed Venture Development Expansion Idea Generation > Develop Design Testing > Marketing Sales > Start-up > Initial Sales > Process Acceptance > Repeat Sales

10. ©2004 OpenTTO.org walter.adamson@opentto.org Page 10 DILIGENT™ Commercialization With Confidence ™ Two key principles drive the DILIGENT model: 1.Early planning and analysis returns disproportionate benefits. The beginning is the most important part of the work (Plato). 2.Elite venture capitalists have deep technology, industry and market understanding. Most commercialization efforts are tactical and do not commence full market, industry, distribution and sales planning until talks with “financiers” commence. DILIGENT and the slogan Commercialization With Confidence are trademarks of Digital Investor Pty Ltd.

11. ©2004 OpenTTO.org walter.adamson@opentto.org Page 11 Key Principle #1 Early Planning and Analysis Typically commercialization efforts are tactical: 1.They focus on point issues – typically: patent law, technology, licensing, agreements, commercial structures and financing. 2.Attention is often focused on an end-point of financing with a fall-back to licensing – which is a natural way for “point advisors” in legal, patents, commercial and financing to channel the process. 3.Market, industry, channels and sales strategies are often not performed, or if at all performed without rigor and method and integration within a total process. Strategy without tactics is the slowest route to victory.Tactics without strategy is the noise before defeat. (Sun Tzu)

12. ©2004 OpenTTO.org walter.adamson@opentto.org Page 12 Key Principle #2 Elite Investors Are Deep and Broad The most successful venture investors: 1.Have deep understanding of their chosen field of technology 2.Possess a vision of the industry and its dynamics 3.Can perceive the value proposition and help articulate it 4.Mentally assimilate channels, partners and global relationships 5.Understand the people and what drives then to succeed 6.Contribute to marketing, sales strategy, and sales itself 7.Seek strategic partners to bring finance and other most importantly complementary resources FINANCING is only ONE RESOURCE that is brought to a deal by these successful venture capitalists.

13. ©2004 OpenTTO.org walter.adamson@opentto.org Page 13 DILIGENT Fully Integrates the Two Principles This creates and captures maximum value: 1.Market and industry analysis is integrated early 2.Channels and distribution analysis adds options for the potential leverage of value 3.Commercial analysis has as input a broad view of potential resourcing, financing alternatives, and structural alternatives 4.People, sales and marketing are considered after the big picture industry, channels and partnering analysis 5.DILIGENT Confidence Index provides regular feedback DILIGENT creates a Business Plan which will attract maximum interest from targeted 3 rd parties and result in capturing maximum value for owners of research and IP.

14. ©2004 OpenTTO.org walter.adamson@opentto.org Page 14 DILIGENT Other Benefits A consistent and holistic process which: 1.Focuses attention on capturing value for the owners - not just creating value 2.Provides high executive visibility into the process 3.Allows for consistent comparison and review between opportunities and across the portfolio of commercialization 4.Scopes and directs the engagement of experts and consultants 5.Is continuously improved through the process model DILIGENT is a enabler of higher returns from commercialization at a lower cost and with higher owner/executive visibility and confidence.

15. ©2004 OpenTTO.org walter.adamson@opentto.org Page 15 200 pages of Methodology delivered: As 12 workshops over 3 months for a real case In part for 1 or 2-day overviews of the process Through audit of existing cases, or As an audit of existing methodologies. DILIGENT Delivery Models A component of a Communications Plan, which in turn is a component of the Commercialization Plan.

16. ©2004 OpenTTO.org walter.adamson@opentto.org Page 16 DILIGENT Confidence Index A tool to enable and provoke discussion: Discussion of different perceptions Resolution of gaps and misunderstandings Input is a number Process is a discussion Output is improved confidence and visibility A component of a Communications Plan, which in turn is a component of the Commercialization Plan.

17. ©2004 OpenTTO.org walter.adamson@opentto.org Page 17 DILIGENT Commercialization Pipeline A weighted portfolio of opportunities: Tools/matrices displaying the current set of projects to enable Executive decision-making. Showing the potential of the total portfolio Linked to the Confidence Index Weighted throughout the process: –Risk v Reward –Customer impact v Type of technology –Resources v Time to launch (or pipeline stage) –Pipeline valuation (anticipated revenues)

18. ©2004 OpenTTO.org walter.adamson@opentto.org Page 18 DILIGENT Pulse™ An interactive continuous survey: Touches all stakeholders to monitor their confidence Measures the process and the results of the process A direct measure of CSFs in commercialization: –Understanding of the goals –Potential of the project –Clarity of the roles –Confidence in the people –Satisfaction with the communication. Typically involves a 60 second survey being completed by up to 20 people once each month

19. ©2004 OpenTTO.org walter.adamson@opentto.org Page 19 DILIGENT Management Assessment Tool DILIGENT provides a framework for selection: To assess Management Teams of funds e.g. pre-seed and incubator, on the basis of competencies required for each stage of DILIGENT To use targeted questions for each stage to assess management skills and experience To rank teams and candidates against the required process competencies

20. ©2004 OpenTTO.org walter.adamson@opentto.org Page 20 DILIGENT Commercialization with Confidence Discover the quality of the IP (knowledge) Involve the market and make the value proposition Learn what drives the industry Investigate alliances, channels and means of leverage Gather funding and commercial alternatives Extrapolate the people and management needs Nuance the sales, pricing and branding models Test and Resource the Plan DILIGENT™ - A methodology to help high-tech innovators and IP owners develop and manage a commercialization program for greater returns. DILIGENT and the slogan Commercialization With Confidence are trademarks of Digital Investor Pty Ltd.

21. ©2004 OpenTTO.org walter.adamson@opentto.org Page 21 DILIGENT Framework Eight Key Performance Areas Global Commercialization Strategy Specific Commercialization Plan 8 7 6 5 4 3 2 1 TRP Test & Resource Plan SPB Sales Pricing Branding MVP Market Value Proposition PMR People Management & Recruitment FCS Funding & Commercial Structures ADC Alliances Distribution & Clusters IDA Industry Dynamics Analysis CPA Competitive Patent Analysis Business Plan Risk Mgt Plan DILIGENTDILIGENT

22. ©2004 OpenTTO.org walter.adamson@opentto.org Page 22 Business Plan Risk Management Plan EMERGES DILIGENT Commercialization Cycle Technology and Ideas ENTER Documentation CPA MVP IDA ADC FCS PMR SPB TRP Tollgates Confidence Index

23. ©2004 OpenTTO.org walter.adamson@opentto.org Page 23 DILIGENT The First Four Steps Test the Technology and the Market Develop the Business Case Second Four Steps Complete the Business Structure & Options Convert Business Case to Business Plan

24. ©2004 OpenTTO.org walter.adamson@opentto.org Page 24 DILIGENT Multistage Screening Major Tollgate IDA FCS SBP ADC TRP PMR MVP CPA X OUT Multistage process: Severe screening at CPA Major Tollgate after ADC Each step weighed May reiterate and recycle Risk Management Plan Business Plan

25. ©2004 OpenTTO.org walter.adamson@opentto.org Page 25 DILIGENT The First Four Steps To determine: The best alternatives to create value To whom to sell the technology How it will be sold The degree of competition for the technology Preliminary view of method of realising value capture The process comprises: CPA – Competitive Patent Analysis MVP – Market Value Proposition IDA – Industry Dynamic Analysis ADC – Alliances, Distribution & Clusters

26. ©2004 OpenTTO.org walter.adamson@opentto.org Page 26 DILIGENT Second Four Steps To map business structure: Optimal transfer and capture mechanism People and team skills plan for lifecycle Sales and pricing – prospects and model The process comprises: FCS – Financial & Commercial Structures PMR – People, Management & Recruiting SPB – Sales, Pricing & Branding TRP – Test & Resource the Plan Complete the Business Structure

27. ©2004 OpenTTO.org walter.adamson@opentto.org Page 27 DILIGENT Spiral of Progress The quality of the commercialization plan spirals better: DILIGENT and the slogan Commercialization With Confidence are trademarks of Digital Investor Pty Ltd. Quality Time 1 2 3 4 5 6 7 8 The DILIGENT process facilitates continuous improvement

28. ©2004 OpenTTO.org walter.adamson@opentto.org Page 28 DILIGENT Universities Have A Precedent Starting a business is like building a research program: New ideas Securing funding (capital) Hiring staff Managing progress Delivering the product Do it again! Learn the lessons from those best at securing research funding! DILIGENT and the slogan Commercialization With Confidence are trademarks of Digital Investor Pty Ltd.

29. ©2004 OpenTTO.org walter.adamson@opentto.org Page 29 DILIGENT The Gap – The Chasm of Pre-Seed