Bureau of Business Research College and Graduate School of Business, University of Texas at Austin October 1992 The Commercialization of New Technologies: The Case of DTM Corp U.S. industry needs to find faster and more efficient ways to commercialize homegrown technologies, strengthen its global competitive­ness, and create jobs.1 The list of breakthrough technologies produced in federal and industrial laboratories and research universities only to benefit U.S. industrial competitors is long and growing. An important and telling exception can be found in the case of DfM (Desk Top Manufacturing) Corp. DfM Corp provides an example of how new forms of university­government-business alliances are helping to commercialize Texas-developed technologies. DfM had its origins in the Department of Mechanical Engineering at the University of Texas at Austin. During the mid-1980s, Carl Deckard, a graduate student in the department, became interested in the commercial potential of using computer-aided lasers to build prototype parts. The creation of mcxlels and prototypes, particularly those with complex geometrics, presents a major barrier between conceptual de­sign and mass production and commercializa­tion. Traditional manual prototyping . methods are slow and labor intensive and involve expen­sive and time-consuming numerically controlled machining and electric discharge machining. With the support of Joseph Beaman, an assistant professor in the department, Deckard developed the Selective Laser Sintering™ (SLS) process. This process prototypes products rapidly and directly from computer-aided designs without part-specific tooling or human intervention, thereby dramatically reducing time to market for new manufactured products. In 1980, the commercialization of university- developed research such as Deckard's was facili­tated by two federal acts. The Bayh-Dole Act permits nonprofit organizations that receive government funding to keep the title rights to inventions they develop. The Patent and Trade­mark Amendments Act gives universities rights to federally funded inventions. These federal policy changes prompted Deckard to look for commercial applications for his re­search. On the state level, his efforts were facili­tated by the establishment of the University of Texas Center for Technology Development and Transfer (CTDf) in 1986 to help speed the com­mercialization of university-developed research. In 1987 and 1988, the CTDf assisted DfM's founder, Dr. Paul F. McClure, on the licensing of Deckard's Selective Laser Sintering™ process from the University of Texas at Austin. In 1988, start-up was aided by a $50,000 grant from the Small Business Innovation Research (SBIR) Pro­gram of the National Science Foundation. Supplementing this public sector support was an investment from the private sector. In 1989, B.F. Goodrich Co. acquired an equity interest in , DfM and became licensed to use the SLS tech­nology. Goodrich is currently developing and certifying special polymers to be marketed for use with DfM's SLS System. Through its as­sociation with Goodrich, DfM established a strategic partnering relationship in the area of materials and process development. By the time DfM became the second member company of the Austin Technology Incubator in 1989, the corporation already had a patented state-of-the-art technology, a management team in place, and a large institutional investor. Nevertheless, DfM gained considerable benefits from joining the ATI. Tangible benefits included subsidized office space and secretarial support, phone service, and office supplies and equip­ tLtl I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJJr ment. However, it was the intangible benefit­the know-how network provided by the ATI­that DTM's founders considered most signifi­cant. The know-how network provided access not only to ATI's resident managerial and ser­vice staff, the other in-residence entrepreneurs, university professor and graduate student sup­port, but also to experienced pro bono talent in management, marketing, legal, and accounting services from the Austin business community. The ATI resources gave DTM a base of opera­tion and access to expertise that guided the fledgling company as it negotiated sound busi­ness decisions leasing office and manufacturing space, hiring employees, and launching its proto­type products. The assistance provided by the ATI helped DTM gain competitive advantage over some thirteen competitors-including half a dozen U.S. companies, two large Japanese firms, and an Israeli company-that have entered the rapidly emerging marketplace of desk top manu­facturing. DTM graduated from the ATI in 1990. In late 1989, DTM introduced its prototype SLS machine to the marketplace. Two service bureaus were opened in mid-1990, one at the company's Austin headquarters and one at Goodrich's Brecksville, Ohio, research facility. These service bureaus provide both a low-cost, low-risk means for customers to use the SLS technology and an opportunity for DTM product designers to learn from the experiences of lead customers. Production units were designed to in­corporate the lessons learned from the service bureau experiences. Between 1989 and 1990, DTM's staff increased from ten employees to 53 technical and managerial personnel. The corporation continued to grow rapidly. By mid-1992, DTM employed over 70 people and occupied 30,000 square· feet of office and manufacturing space in the Austin area. New applications will include three-dimensional "tele­fax" systems with CAD designs transmitted electronically and built at remote sites and "parts on demand" applications wherein fully functional parts are fabricated from bulk materi­als only as needed. Direct sales of SLS Systems are scheduled to begin in late 1992. With the process already being used in U.S. automotive, aerospace, computer, consumer goods, foundry, and medical industries, long-range plans antici­pate profitability by early 1993 and the creation of several hundred jobs to support DTM's worldwide operations by 1997. From concept to commercialization, the case of DTM exemplifies how new forms of university­govemment-business alliances are ensuring that U.S. technological and intellectual resources are used to enhance U.S. economic competitiveness, benefit regional economic development, and create high value jobs. -David V. Gibson Associate Director Center for Technology Venturing and Research Fellow IC 2 Institute University of Texas at Austin and Paul R McClure President and CEO Paradigm Enterprises, Inc. Austin, Texas Note 1. R.B. Reich, "The Quiet Path to Technological Pre­eminence," Scientific American, 261 (4), 1989, 41-47, and G. Kozmetsky, "The Corning Economy," in Technology Transfer: A Communication Perspective, edited by F. Williams and D. Gibson, California: Sage Publications, pp. 21-40. 11 Texas and U.S. Unemployment Rates (Seasonally adjusted) 10 9 8 7 6 5 tLtl I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJJr ltl I I I I i I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJDr Employment and Unemployment Rate by Metropolitan Area Total nonagricultural employment (thousands) Total employment (thousands) Unemployment rate Area July 1992 July 1991 Percentage change July 1992 July 1991 Percentage change July 1992 Abilene 48 .6 47.5 2.3 48.3 47.4 1.9 6.6 Amarillo 80.6 79.2 1.8 94.9 93.7 1.3 5.3 Austin 388.8 382.2 1.7 436.3 427.1 2.2 4.9 Beaumont-Port Arthur 153.8 149.2 3.1 167.1 161.7 3.3 8.8 Brazoria 73.0 71.5 2.1 91.4 89.2 2.5 7.5 Brownsville-Harlingen 80.7 78.5 2.8 101.1 98.4 2.7 12.0 Bryan-College Station 55.4 53.3 3.9 61.8 60.1 2.8 3.9 Corpus Christi 137.l 137 .1 0.0 157.7 157.2 0.3 9.5 Dallas 1,371.8 1,374.1 -0.2 1,377.1 1,377.1 0.0 6.8 El Paso 212.5 208.0 2.2 232.8 227.4 2.4 10.6 Fort Worth-Arlington 592.7 588.2 0.8 709.9 704.4 0.8 6.7 Galveston-Texas City 79.6 79.4 0.3 108.9 108.1 0.7 8.8 Houston 1,638.6 1,646.4 -0.5 1,691.9 1,699.8 -0.5 7.1 Killeen-Temple 77 .2 74.7 3.3 95.2 92.4 3.0 7.2 Laredo 49 .3 47.1 4.7 52.9 50.7 4.3 9.1 Longview-Marshall 70.8 70.4 0.6 76.0 75.8 0.3 8.9 Lubbock 98.1 %.6 1.6 Ill.I 109.4 1.6 6.7 McAllen-Edinburg-Mission 105.1 101.1 4.0 136.9 132.2 3.6 16.4 Midland 45.9 46.4 -I.I 46.9 47.6 -1.5 7.5 Odessa 44.3 45.5 -2.6 49.7 50.8 -2.2 10.3 San Angelo 38.2 37.2 2.7 43.8 42.4 3.3 5.6 San Antonio 531.5 523.l 1.6 585 .5 575.4 1.8 6.8 Sherman-Denison 36.3 37.6 -3.5 43.9 44.7 -1.8 7.8 Texarkana 47.1 46.0 2.4 54.6 52.8 3.4 8.1 Tyler 64.1 63.8 0.5 71.6 71.1 0.7 6.8 Victoria 30.1 30.l 0.0 36.7 36.4 0.8 6.1 Waco 81.4 81.1 0.4 87.2 87.1 0.1 7.2 Wichita Falls 49 .6 49 .3 0.6 51.9 51.7 0.4 7.5 Total Texas 7,226.6 7,156.4 1.0 8,215.9 8,141.9 0.9 7.4 Total United States 108,333.0 107,926.0 0.4 119,754.0 118,751.0 0.8 7.6 Note: Data are not seasonally adjusted. Figures for 1991 have undergone a major revision; previously published 1991 figures should no longer be used. Revised figures are available upon request. All 1992 figures are subject to revision. Sources: Texas Employment Commission and U.S. Department of Labor, Bureau of Labor Statistics. Nonagricultural Employment In Five Largest Texas Metropolltan Areas (January 1984=1.00) 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 ) 0.90 ...__.,___.,___.,___....__....__....__...___+--­ 1~ 1~ 1~ 1~ 1~ 1~ 1~ 1~ 1~ Total Employment In Five Largest Texas Metropolltan Areas (January 1984=1.00) 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 ltl1111 ! I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJDr tdtl I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJQr Figure 2 UTQC Selected Course Listings, Fall 1992 Course title Description TQM--What is it? Why have it? Discusses the history, the basic principles, and the benefits of TQM, as well as leadership and vision. Changing the culture--how to implement TQM Designed for senior management. Outlines steps to take in planning, implementing, and sustaining TQM in an organization. Facilitating quality improvement Covers the techniques and tools necessary to a successful facilitator. Topics include:ground rules and operating procedures, roles and responsibilities, and effective negotiation. Managing service excellence Focuses on successful strategies and techniques for implementing service excellence. Benchmarking Explains the benchmarking process and methods for identifying organizations to benchmark. Note: For a complete listing, contact UTQC, PO Box 7459, Austin, Texas 78713-7459; FAX 471-1063. Total Quality Management (continued) units as they begin to implement Total Quality Management in their operations. 2. U1QC will gather information for its clients, collecting, compiling, and maintaining resource data concerning 1QM. 3. U1QC, in partnership with appropriate university, state, and community organizations, will develop a communication network to ensure that 1QM-related information is shared and ex­changed effectively. As part of the U1QC agenda, the Center is offering workshops during the 1992 fall semester (figure 2) and will customize courses for clients as requested. These potential clients, as current­ly defined, include both UT Austin and the ad­ministration and component institutions of the University of Texas system. Other clients are the community of Austin-its educational organiza­tions, Travis County governmental units, and business and industry-and the state of Texas, including its educational organizations, state and local governmental units, as well as selected businesses and industries (figure 3). Adapting Total Quality Management principles to U1QC clients' needs, our environment, and our state can help assure that the University of Texas remains a place that honors its responsi­bility to society and accepts its role as a leader. -Dr. Edwin R. Sharpe Vice President for Administration, University of Texas at Austin and Director, University of Texas Quality Center and Ms. Michelle 0 'Reilly Associate Director University of Texas Quality Center Figure 3 Selected Organizations Trained by UTQC, 1992 University of Texas Divisions College of Engineering, Dean's Office Department of Electrical Engineering Department of Mechanical Engineering Office of Student Affairs Senior Executives Bureau of Business Research School of Nursing Student Services Office, selected faculty and staff Government State Comptroller's Office Texas Department of Health Texas Department of Insurance Texas Department of Transportation Texas Guaranteed Student Loan Corporation TexasMHMR tdtl I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I IJQr ltllll lll llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllDr Total Quality Management in the Public Sector: The University of Texas Quality Center The 90s, it is predicted, will be the "Decade of the Customer." If this is true, Total Quality Management (1QM) is likely to shape the busi­ness culture of the 90s. A business management philosophy, 1QM aligns employee activities with the common 'focus of customer satisfaction, the goal being higher quality and lower cost pro­ducts and services that respond more quickly to customer needs (figure 1). History The quality approach first surfaced as an or­ganized philosophy in the postwar Japanese bus­iness world. ''A 1980 NBC telecast portrayed how an American statistician, Dr. W. Edward Deming, helped Japan become a major threat to American industry in the years after World War II. This broadcast is credited with launching the quality movement in America;' according to Mama Whittington, Executive Vice President, University of Pennsylvania. Frustrated with the slow adoption of 1QM in the United States, six business chief executives challenged college and university leaders in the December 1991 Harvard Business Review, stating in an open letter: "We believe business and academia have a shared responsibility to learn, to teach and to practice total quality manage­ment. If the United States expects to improve its global competitive performance, business and academic leaders must close ranks behind an agenda that stresses the importance and value of 1QM." Answering that challenge on the local level, the University of Texas at Austin, the City of Austin, and the Greater Austin Chamber of Commerce founded the Greater Austin Quality Council in 1991. The Quality Council is a group of business, government, and educational organi­zations that promote the widespread use of qual­ity principles in the workplace. The central involvement by UT Austin fulfills part of the public service mission of the university and con­tinues its commitment to community service. UT Quality Center The University of Texas Quality Center (U1QC) is an outgrowth of Total Quality Management efforts on the campus over the past several years. As these efforts increased, then-President William Cunningham determined that a campus organization was needed to assist the implemen­tation of 1QM. The result was the creation of the University of Texas Quality Center in May 1992. The primary point of contact between UT Austin and the Greater Austin Quality Council, the University of Texas Quality Center is designed to facilitate and support the implementation of 1QM principles within the university and in the larger community. In its first year of operation, the University of Texas Quality Center is concentrating on three main goals: 1. U1QC will provide appropriate training op­portunities for organizations and organizational (continued on preceding page) Figure 1 Four Principles of Total Quality Management 1. Pursuing continuous improvement. An organization should conduct an ongoing study of its processes and products. This involves making initial improvements, testing and then revising them based on further evaluation. 2. Managing by fact. Decisions should be based on reliable information. 3. Respecting people and ideas. The assumption here is that most workplace challenges are caused by problems in the system rather than by the people who operate within that system. 4. Satisfying those we serve. Customer expectations must be satisfied and, when possible, these expectations should be exceeded. Source: University of Michigan ltlllll lll lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllDr 11t1 1 1111 1 1111111111111~111111111111111:nr F.ditor: Lois Glenn Shrout Assistant F.ditor: Sally Furgeson Texas Business Review is published six times a year (February, April, June, August, October, and December) by the Bureau of Business Research, Graduate School of Business, University of Texas at Austin. Texas Business Review is distributed free upon request. The Bureau of Business Research serves as a primary source for economic and demographic data on the state of Texas. An integral part of UT Austin's Graduate School of Business, the Bureau is located on the sixth floor of the College of Business Administration building. Announcement Scheduled for completion this fall is a new Bureau publication entitled Texas Demographic Trends, 1970.:...1990: Highlights from Three Censuses. Providing an overview of the state's population characteristics through charts, maps, and tables, the book emphasizes recent trends in the state and its major urban areas. "P3lS3Db3.I UOJl:>3.I.IO:> SS ·is•~s 6~i'l xog Ud )11·1 t:Jd HJaV3:s::rn ss3:Nisna lO mrnana NilSflY iY Xl dC AINO S31 VMHI, NJS-SI063V S,VI~JS £~£IO