Realizing the Potential of Advance Material Innovations

Abstract

Advanced material technologies have received considerable attention from the media as potential engines of economic growth in an increasingly knowledge based economy. However, the extensive contributions of novel materials are not yet fully appreciated. Advanced materials have potential to enable other technologies and hence make a substantial and transformative impact on other industries and markets, including green technologies, healthcare, sustainable energy, construction, communications and defense. Like IT and biotech before them, advanced materials face many of the commercialization challenges of radical, generic technologies. Unlike their predecessor technologies, the value creation to which they could give rise is not readily demonstrated to their co-producers, customers or end consumers because of the complexity of their value chains and entrenched competition from incumbent products. This study investigates the market-oriented challenges facing AM University Spin-Outs (USO) and in particular, the evolution of their business models firm in response to other players. The choice of market and business model affects what value needs to be demonstrated to partners and can ultimately determine how much of a material’s potential value to society is realized. We build on the concept of innovation ecosystems to address these upstream innovations. A case study approach is used to elucidate the challenges that these ventures face.

The findings highlight the way relationships between organizations can unlock the potential of entrepreneurial AM innovations. Partners are shown to be critical to a venture’s market selection and value chain positioning, determining not only what resources the venture can access but also the resource-base it needs to build to attract such partners. While current wisdom is that innovative ventures with radical technologies centre their activity on market niches, our cases show that potential partners, often large incumbent firms, may not be drawn by niche markets. Where substitute products already exist, ventures must adapt their business models to secure partner cooperation and clearly demonstrate the value they can offer.

Keywords: advanced materials, university spin-out, new ventures, business model, innovation, radical technology, niche markets

JEL Classification: M13, O3