"The threat for not having a coordinated nanotech effort is missed opportunities, and having your competitors get there first and eating your lunch," Lux Research vice president Matthew Nordan told UPI's Nano World.

"Toshiba could see its $1.8 billion in annual flash-memory sales displaced by nano-enabled alternatives, and nano-fabric treatments could erode the 29 percent of revenue that (Procter & Gamble) earns from fabric and home care products."

Among the changes wasted nanotechnology efforts could trigger is the outpacing of U.S. and European manufacturing and electronics companies by their Asian competitors.

"Asian companies approach nanotechnology much more systematically than their U.S. and European peers," Nordan said. "Expect to see Japanese, Korean and Taiwanese nanotech leadership - already evident in displays and home appliances - extend to other product categories, such as automotive, sports equipment and basic materials that hit closer to home in the West."

To uncover how companies organize their nanotechnology initiatives today, Lux Research interviewed nanotech executives at 33 global corporations, each generating at least $5 billion in annual revenue.

The median size of companies interviewed had sales of $30 billion last year and employed 46,000 people. Nanotech investment by these corporations is rising steadily, and at the median company, currently accounts for 5 percent of R&D spending, and is expected to rise to 9 percent in 2006.

At the same time, however, half of those interviewed firms lack a strategy for exploiting nanotechnology, and fewer than half say their current approaches are very effective. Though 42 percent of the interviewed companies have established centralized nanotechnology programs, roughly the same percentage pursues nanotechnology in decentralized teams that rarely, if ever, communicate.

The result is wasted effort. For instance, one heavy manufacturing company Lux Research interviewed had developed nanotechnology innovations ranging from high-performance structural materials to advanced sensors, but the geographically and organizationally distinct R&D centers could not easily collaborate on them.

"Consequently, they risk duplicating one another's work and failing to benefit from one another's discoveries, skills and capital equipment," Nordan said. "Further, since each R&D center is funded by its respective business unit, the company's designated nanotech coordinator struggles to get each to proportionally fund developments that would benefit them all."

In another case, Lux Research found one pharmaceutical giant had nanotechnology fall under the umbrella of its drug-discovery section when nanotechnology's big impact on the company's products lies in drug delivery - an organizationally separate section lacking its own exploratory research capability.

"The result (is) nano-enabled drug-delivery advances go uninvestigated," Nordan said.

Pharmaceutical companies in particular are least likely to have established a nanotechnology strategy, Nordan said. "They also invest far less people and money than other companies do."

As nanotechnology goes from producing $13 billion in manufacturing revenues today to $292 billion in 2009, corporations that lack coordinated nanotech efforts could miss opportunities, make redundant investments in expensive equipment, duplicate efforts and lose touch with front-line business priorities.

"Minicomputer giants DEC and Wang missed the PC boat, while 8 millimeter home-movie-camera makers such as Bauer, Bolex and Eumig fell to electronic camcorders," Nordan explained.

"With nano-enabled approaches competing to reinvent cancer treatment, transform computer memory and reduce household cleaning requirements, companies like Bristol-Myers Squibb, Toshiba, and P&G face platform shifts attributable to nanotech today."

Asian firms are nearly twice as likely as their U.S. and European counterparts to operate a coordinated nanotech strategy and employ CEOs and boards with a high degree of awareness of nanotechnology initiatives across the corporation.

In response to Asian companies taking the lead, "western nanotech leaders will furiously scrutinize Asian case studies, attend conferences like Japan's Nanotech 2005, and attempt to hire away Asian nanotech innovators to gain competitive parity just as they responded to Japanese just-in-time manufacturing techniques in the 1980s," Nordan predicted.

Four years ago, chemistry giant Air Products, headquartered in Lehigh Valley, Pa., spent a half year developing a strategy to understand the underlying technologies, market opportunities and timeline to nano commercialization, Ron Pierantozzi, the company's director of new business development, told Nano World.

"What we think is robust about our strategy is we recognized the exciting opportunities nanotechnology represents, but that it would take probably five to seven years - maybe longer - for them to reach the marketplace.

"To address these opportunities, we need to build the capabilities for them, and to build those capabilities, we developed technologies and applications for existing markets and customer channels to later springboard to adjacent markets," Pierantozzi said.

Nanotechnology is too diverse, however, for companies to adopt any single approach to exploit it, Nordan cautioned. To determine which nanotech advances are best suited for a corporation, he suggested dividing each nanotech opportunity along two axes.

"First, does the opportunity represent a process innovation that stops at the factory door or a product innovation that is visible to customers?" Nordan asked.

Product innovations - such as flexible solar-cell rechargers that might come with mobile phones in the future - depend on business issues, such as whether customers will pay or how the products can be marketed. As such, line-of-business executives should own them.

On the other hand, process innovations, such as using nanoimprint lithography to pattern microprocessors, are invisible to customers. As such, they do not represent business problems but technology issues, and should fall under the rubric of R&D divisions.

"Second," Nordan continued, "does the opportunity present an evolutionary advance that matches existing competencies, or a revolutionary advance that requires new ones?"

Revolutionary advances - such as novel pharmaceutical agents under development by C Sixty in Houston - require new, separate organizations to foster them, because the existing organizations they threaten are likely to ignore, starve or hobble them.

Evolutionary advances that make use or current skills or extend existing approaches to problems - one example is Pfizer reformulating an existing drug to incorporate a nanoparticulate delivery mechanism - should be owned by existing groups, because they enhance what those teams already do.

Pierantozzi recommended partnering with nanotechnology leaders at companies and universities "to not do it all on one's own and best handle what's going on in the marketplace."

For instance, Air Products has partnered with Nanogate Technologies in Saarbrucken, Germany, and Nanotechnologies in Austin, Texas, to generate nanoparticles.

Nano World is a weekly series examining the exploding field of nanotechnology, by Charles Choi, who covers research and technology for UPI Science News. E-mail [email protected]

All rights reserved. Copyright 2005 by United Press International. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by United Press International. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of by United Press International.

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