A Business Strategy Formulation For Commercializing

University-created Technology: A University Spin-offs

Iqbal Wahyu Saputraa), Wahyudi Sutopob) , and Roni Zakariac)

Department of Industrial Engineering, Faculty of Engineering, Sebelas Maret University, Jl. Ir. Sutami No. 5
Surakarta 57126, Central Java, Indonesia
a)
Corresponding author: iqbalwahyusaputra@gmail.com
b)
wahyudisutopo@gmail.com
c)
ronizakaria@staff.uns.ac.id

Abstract. There are some mechanism to commercialize the innovations that have been developed by academic scientists
in universities, i.e. patenting, licensing, start-up creation, and university–industry partnerships. The start-up creations or
university spin-offs (USOs) company is a very special start-up company that is founded by an academic inventor and the
university with the aim to commercialize the technological innovation that created by the university. However, it is not
always as smooth as expected. The market competitiveness of the USOs obviously has many challenges to be able to
compete with the existing companies, analysis need to be done to get the right business step so the business strategy will
be efficient. In this article, we discuss a real case study of a university spin-off that owned by Sebelas Maret University for
Commercializing Battery Lithium. The aim of our research is twofold: first, to identify the gap in the literature of business
strategy formulation between a conventional and USOs. Second, to propose a business strategy formulation for
commercializing university-created technology, i.e. battery lithium as core business of a university spin-off as a case study.
We conduct surveys, observation and FGD in order to collect the data and information to build the company objective and
goals. The analytical tools to generate the solution of business strategy are SWOT analysis, IFE-EFE matrix, and QSPM
model so the result will be the most attractive and suitable for the company. The result shows that the case study of USO
company is classified on conservative continuous improvement phase so the suitable strategy for this company are product
development and business strategy integration.

INTRODUCTION
University spin-off especially the technology invention has increased significantly because of the increasing
phenomenon whose called techno-entrepreneurship which come from techno-innovation [1]. Techno-
entrepreneurship or technopreneurship is described as the interaction between science and industry with the intended
output of new economic activity [2]. These innovation product is a result from the Science and Technology Parks
(STPs) in the universities or research institutes [3]. Research has shown that there is a need to strengthen the role of
Science and Technology Parks in moving the intellectual property created in the universities to the local, regional and
global economies [4]. If the companies can put forth SMEs [5], in university and research institute can be described
as spin-offs company [6].
A spin-offs company is a brand new company which formed by who were a part of an organization that concerning
about a university or research institution intellectual research [7]. University spin-offs are founded on some
technological advance rather than on the presumption of competitive advantage. The most founders are engineers and
scientist part, with some marketing/sales and business experience present inside multifounder teams [8], the formation
of university spin-off company is an output of university research related activity and an outcome of the university's
purposive technology transfer efforts [9]. There are many factors,that affect success of a spin-off company, one of
them is funding. Access to government funding for RnD stage and ventura capital to start up the company that produce
by technology commercialization in university are the main funding of a spin-off company. University are also highly
funded to ensure that they engage in R & D that is aimed at generating innovative products [10,11]. In other hand,
policies development also had a great effect to the spin-offs company around the world. Case in the UK,
entrepreneurial universities lobbied the UK Finance Ministry (HM Treasury) in the wake of tax rules that effectively
university prohibited spin-offs.In the Netherlands, there are members of universities active in the national “innovation
platform” who’ve reinforced enthusiasm within the Dutch government for better funding for spin-offs such as the
Biopartner programme [12] also the government support program [13].
This study discuss about a university spin-off in Indonesia which engaged in the technological product. The
company main product for last 2 years is lithium ion battery. Lithium ion battery produced by this spin-off company
have greater energy density than the conventional battery on market nowadays. This advantage’s invented by
engineering the electrode layer in nano scale, which made the layer bigger so the energy density will be increased too.
This kind of battery isn’t available yet in Indonesia [14]. The technology invented in the university have to be tested
in incubation scheme and using Technological Readiness Level (TRL) in order to be commercialized. In Sebelas
Maret University, the incubation scheme using bridging system between technology and business so it will prevent
the spin-off to the ‘valley of death’. Beside the university incubation there are BPPTs incubation scheme after
university scheme to increase the readiness of the technological invention to be a spin-off company [15]. To develop
the technical feasibility commercialization efforts of Li-ion battery spin-off company in Sebelas Maret University
there are four steps have been done, namely testing technical features, developing working models, assessing
premilinary manufacturability, and finalizing design of the technology [16].
University spin-off have increase significantly around the world from early 2000s, for example in Spanish
universities have improved their contribution to the national research system by increasing the activities related
to the commercial exploitation of knowledge. For instance, they created about 143 spin-offs in 2006. The
research contracts have increased considerably in recent years, growing from 100 million Euros in 1996 to
428 million Euros, also the request of patents made in the Spanish University System have growth from the 282
requests in 2000 to 572 in 2006 [17] but the distribution is uneven, for example in Italy there’s still few attention
to their universities spin-offs company can be seen from the number of researches that uphold the USOs in Italy [18].
Spin-off company need to be examined to know their position and the strategy they should implement to reach
their long term goals. SWOT is one of the performance measurement tool that can be used to measure an organization,
there are internal and external factors matrix ( IFE and EFE matrix ) to consider the right step for the company to
choose, PEST’s is involved to analyze the spin-off company, actually observations have revealed that SWOT analysis
shows weaknesses in evaluation and measurement [19], to cope with that QSPM method are involved so the strategies
that appear from SWOT method can be checked sequentially and simultaneously so the solution will be the most
suitable strategy for the company [20]. QSPM has limitations, it always requires intuitive judgments and education
assumption Another limitation of the QSPM is that it can be only as good as the prerequisite information upon which
it is based [21].
The aim of this research’s to know about the most suitable strategy with a study case in a university spin-off
company which later will be analyzed and will be given some information about the position and the right step to
choose to develop and commercializing a university spin-off company.

METHODS
This research used SWOT tools to formulate the strategies for a spin-off company, especially the battery Li-ion in
Sebelas Maret University. Using the SWOT ( Strength, Weakness, Opportunity, Threats ) tools to generate the
strategies.
In other hand, there were 3 stages to generate the strategies [22], there are :
1. Input stage, the first step formulation by identify and analyze the internal and external factors from a spin-off
company and then input on a EFE and IFE matrix table, in other words this stages purpose is to input the basic
information about the company
2. Matching stage, the second step is focusing on generate the alternatives strategies by cross checking the internal
and external factors. The result of SWOT analysis will be a score that needs to apply on IE matrix to know
which stage a company should take [23] Conservative Continuous Improvement (WO), Invasive Growth and
Development (SO), Reduction, Relaxation and Dissolution (WT), also the Competitive Gradual Challange (ST)
 3. Decision stage, last step which determine the most optimal solution using QSPM method. Like mentioned
before, QSPM help SWOT analysis to prioritize the strategies generated by SWOT analysis. QSPM use
Attractiveness Score as the scoring method and the result of QSPM will be divided into 3 stages [7] Horizontal
integration strategy, International strategy, and Market penetration,
Because of QSPM needs intuitive judgments and education assumption, so we need involve experts from spin-off
organization and the parent of them [21], using questionnaire and some interview and then divided into 2 analysis,
Strengths compared with weaknesses and opportunities compared with threats. It will generate the weight for each
factors and cumulatively will become the weight score as in the end will be the most suitable strategy that this USOs
company should take.
SWOT analysis combined with QSPM tools are widely used to asses a company, for example SWOT and QSPM
used to analyze and evaluate a restaurant in Malang, Indonesia to choose the most suitable strategy about their
marketing concept [20]. PEST analysis involved to generate the internal and external factor from this university spin-
offs. The IFE EFE matrix hold the role which factors we should combine in QSPM strategies. The highest average
combination for these strategies will be the most suitable implementation for this strategy.

Internal Factor Analysis

There are some requirements to get some information about the management, finance, production, marketing, also
research and development [22] Internal strategy are generated from the proposal of this battery USOs company.
1. Management, this USOs company have 5 employees, there are 1 employee as admin , 2 employees as
researcher in RnD section, and 2 employees in production section also backed up [14]. Also supervised by STP
in Sebelas Maret University for their development.
2. Finance, first seed of this USOs company is Rp. 250.000.000,00, the company income on 2015 reach Rp
150.000.000,00, and have Rp 40.000.000,00 income per month in 2015 [14]. Fund source are from individual
because Indonesia still have obstacles on funding for start-up stage and early stage [10] but in this case use
University Program to raise their fund.
3. Product, the type of battery lithium ion 18650 Cilindrical Rechargeable cell Lithium Ferri Phosphate (LFP
18650) produced by this USOs are new and unavailable yet in the conventional market, it has greater density
energy than the conventional battery in market nowaday. This USOs company also have 9 patents, such as Li-
ion battery anode composition with registration number P00201504979, battery integration method by nilai
hambatan with registration number P00201504976, etc. which shows that this USOs have a high grade in
originality [14].
4. Marketing, the marketing strategy of this USOs mainly relied on consignation, internet, and exhibition, there
are no outlet selling this product [14].
5. Research and Development, the product and process development’s good because this USOs have graduated
from incubation scheme on PIT Sebelas Maret University and also BPPT to business firm (USOs company)
[15].

External Factor Analysis

There are 6 categories from external factor, economic situation, government, social cultural, technological,
competition situation also supplier and consumer [22]
1. Market demand and trend, market demand for batteries product’ve increased for example as an impact from
increasing technology in automotive industry (hybrid car)
2. Consumer, consumer awareness for batteries product also increased, many factors affect this trend, such as for
a better environment, battery safer than using fossil oil
3. Policies, policies needed to control the USOs such as Halal, etc. but in this battery USOs there are no regulated
goods [14], it affects the products development
4. Government and Institution, government have a big impact for a USOs to develop [13] like mentioned before,
in Indonesia the government support the growth of USOs by giving fund to the institution or university to
commercializing their STPs invention.
5. Competitior, there are some kind of competitors for this USOs such as another company that sell the subtitution
good for battery lithium ion
 RESULT

SWOT Internal and External Factors Evaluation Matrices

This USOs company have some evaluation matrices that gained from literature review based on battery li-ion
company and this USOs proposal, then scored by 4 expert as stakeholders of this USOs company through the
questionnaire, the internal matrices contained the strength and weakness from this USOs and the external matrices
contained opportunity and threat for this USOs.

Table 1. IFE Matrix

Internal Strategy
Description Weight Score Weighted Score
Factors
STRENGTH
Brand new technology that have greater density
New Technology
than conventional battery
0,1056 4,0000 0,4222
Competent Human Resource from University
Good management
Technology Park
0,1083 4,0000 0,4333
Environmental Have a lighter chance to blow than a cobalt-
friendly product based battery
0,1139 3,0000 0,3417
Have patents Due to 2015, this USOs have 9 patents 0,1111 3,5000 0,3889
Funding and
Financial
Funds raised from university program 0,1222 4,0000 0,4889
WEAKNESS
Raw material suppliers are from foreign
Raw material company, if this USOs buy more than 100kgs 0,0917 1,5000 1,5000
will be held by the customs
Defects from machining process nearly hit 20%
Machine efficiency
from total production
0,0750 1,0000 1,0000
Only use exhibition and contract with another
Marketing method company, not yet available on conventional 0,0833 1,5000 2,0000
market (mass-sold)
Waste and scrap katoda anoda only discarded
Waste management
into a regular trash bin
0,0944 1,0000 1,5000
There are no standard operating procedure for
SOP availability
storing and purchasing activites
0,0944 2,0000 1,5000
Total 15,0000 1,5403

Table 2. EFE Matrix

External
Description Weight Score Weighted Score
Strategy Factors
OPPORTUNITY
Market demand for battery product are
Demand product
increased significantly
0,1488 3,0000 0,4464
USOs have increased significantly and there are
USOs trend
policy from institution
0,1667 3,0000 0,5000
Consumer Increased consumer awareness to start using
awareness battery power than a fossil-fuel i.e. automobile
0,1488 3,0000 0,4464
Unlike the food product, the battery products
Non regulated
products
have so many kind and purposes that can be 0,1667 3,0000 0,5000
done
 THREAT
Same product Competing with the same product competitor 0,1369 3,0000 0,4107
Substitute Competing with the substitute product
product competitor
0,1131 3,0000 0,3393
New entry Potential entrance of new competitors 0,1190 3,5000 0,4167
Total 1,0000 21,5000 3,0595

Figure 1. Internal and External Factor Matrix

Quantitative Strategic Planning Matrix

The Tables 3 and 4 show the Attractiveness Score (AS) gained from the internal and external factor of the QSPM.
QSPM used to prioritize the strategies. AS score has 3 range, 1 is not attractive; 2 is reasonably attractive; 3 is highly
attractive. As the IFE EFE matrix showed that Conservative Continuous Improvement are the most suitable strategy,
so we generate some strategies from the Weakness and Opportunity factors of this battery li-ion USOs company or
we state it as WO. The highest average combination for these WO strategies will be the most suitable implementation
for this strategy.
Table 3. Quantitative strategic planning matrix (internal factors)
WO1 WO2 WO3
Internal Factors Weight
AS TAS AS TAS AS TAS
Strengths
S01 0,1056 1,5 0,1584 2 0,2112 3 0,3168
S02 0,1083 3 0,3249 2 0,2166 1,5 0,1624
S03 0,1139 1,5 0,1708 1,5 0,1708 2 0,2278
S04 0,1111 2 0,2222 1,5 0,1667 2 0,2222
S05 0,1222 2 0,2444 2 0,2444 1,5 0,1833
Weaknesses
W01 0,0917 1,5 0,1375 2 0,1833 3 0,2750
W02 0,0750 3 0,2250 2 0,1500 2 0,1500
W03 0,0833 2 0,1667 3 0,2500 1,5 0,1250
W04 0,0944 1,5 0,1417 3 0,2833 1,5 0,1417
W05 0,0944 1,5 0,1417 1,5 0,1417 2 0,1889
Total Sum 1,9333 1,9333 2,0180
 Table 4. Quantitative strategic planning matrix (external factors)
External WO1 WO2 WO3
Weight
Factors AS TAS AS TAS AS TAS
Opportunities
O01 0,1488 1,5 0,2232 1,5 0,2232 1,5 0,2232
O02 0,1667 2 0,3334 2 0,3334 2 0,3334
O03 0,1488 1,5 0,2232 2 0,2976 1,5 0,2232
O04 0,1667 3 0,5001 1,5 0,2501 3 0,5001
Threats
T01 0,1369 1,5 0,2054 2 0,2738 2 0,2738
T02 0,1131 1 0,1131 2 0,2262 2 0,2262
T03 0,1190 1,5 0,1785 1,5 0,1785 1,5 0,1785
Total Sum 1,7769 1,7828 1,9584

Table 5. Prioritized WO strategies

Attraction of Attraction of
Strategies Average
External factors Internal actors
WO1: fulfill consumer wants, machine efficiency and
consumer awarenessm with the consumer awareness
opportunity the production needs to be increased so can fulfill
1,9333 1,7769 1,8551
the consumer wants
WO2: fulfill market demand, machine efficiency and market
demand, with the increased demand on battery , the production 1,9333 1,7828 1,9004
needs to be increased so can fulfill the market demand
WO3: market penetration, marketing and consumer awareness,
with the increasing of consumer awareness is a grezt
opportunity to solve the marketing weakness, by involved in
more complex marketing like entry on a conventional market
2,0180 1,9584 1,9758
needs to be done

DISCUSSION
Based on the result, the SWOT analysis found that the suitable strategy are combining the W (Weakness) and O
(Opportunity). There are some strategy can be implement on this USOs, there are :
1. W02 and O03, with the consumer awareness opportunity the production needs to be increased so can fulfill
the consumer wants
2. W02 and O01, with the increased demand on battery , the production needs to be increased so can fulfill the
market demand
3. W03 and O03, with the increasing of consumer awareness is a grezt opportunity to solve the marketing
weakness, by involved in more complex marketing like entry on a conventional market needs to be done.
And by QSPM analysis the WO3 combination is the most optimal strategy for this USOs company.
Implementation need to be discussed with the stakeholder of university spin-off company to know the feasibility and
company’s ability.
Vertical business integration marketing strategy can be implement in this strategy to support the market
development, in the vertical strategy a coordination between the departments needs to be done so the marketing needs
doesn’t mislead to the production availability [23[. This USOs only have small production line, so the channel
centralized vertical systems doesn’t need to be implement, so the coordination cost won’t be a big one [24] Joint
investing also can be implement to support the marketing strategy by joining or make a contract with some
convenience store, automotive industry, etc.[25]
 Comparison strategy between research on University Spin-offs , and what unique strategy from my paper. Research
on University spin-offs also found that the USOs needs to increase the current products sale into the existing market
[12], and also found that the market and business aspects are showed haven’t been ready to be a start up [16]. Even
these strategies can be implemented in this study case, this study case main needs isn’t that, it’s about the market
penetration, also the managerial implication procedure to obtain these objectives weren’t mentioned in their article,
which actually important to achieve the objectives.
Comparisonpeh between my strategy in USOs and in General , whats different ? Strategies proposed for this USOs
company are different than the strategies for a general company, from the SWOT result above the spin off company
generally needs to prove themself in the market (26). Managerial implication this USOs should take for this study case
in long term (more than 3 years) are set the objectives above and make KPIs for each objectives made, for the mid
term strategy (1-3 years) this USO company can focusing on KPIs that have been set before, especially about market
penetration as a respond from the increasing of consumer awareness and short term (less than 1 year) this USOs need
to penetrate on new market section and deliver themself into the convenience market through the listed procedure.
As it is suitable in this USOs company, the others USOs company also can implement this strategy, especially as
mentioned in the managerial implication to develop their marketing strategy which are the most important thing to
develop a USOs company. The specific strategy are depends on the situation of the USOs company.

CONCLUSION
SWOT analysis is a complete tools for analyzing the company from internal and external factors, using three stages
of formulating strategy, the input stage, matching stage, and decision making stage, and found some suitable strategy
that this USOs company need to take. From a study case in Sebelas Maret USOs that’ve become a business firm since
2 years ago, the integration strategy that combine weakness and opportunity needs to be done. USOs which mainly
have same situation, can implement the same strategy to solve their problem with some adjustment based on their
company. And based on the QSPM analysis the most attractive strategy is WO3 trategy which are a marketing strategy
based on the consumer awareness.
Managerial implication this are set the objectives above and make KPIs for each objectives made, for the mid term
strategy (1-3 years) this USO company can focusing on KPIs that have been set before, especially about market
penetration as a respond from the increasing of consumer awareness and short term (less than 1 year) this USOs need
to penetrate on new market section and deliver themself into the convenience market through the listed procedure.
The others USOs company also can implement this strategy, especially as mentioned in the managerial implication to
develop their marketing strategy which are the most important thing to develop a USOs company depends on the
USOs company situation

ACKNWOLEDGEMENT
I would like to thank for every respondent which their answers become the resource data of this article, I hope the
research about University spin-off’ll be increase over time, and solve the spin-offs around the world, so the technology
transfer from the university’ll be optimum and won’t end up in the ‘valley of death’

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