Case | HBS Case Collection | May 2006

A123Systems

by H. Kent Bowen, Kenneth P Morse and Douglass Cannon

Abstract

A 123Systems was a young company that was founded on basic materials science research at the Massachusetts Institute of Technology. A co-founder of the company, Yet-Ming Chiang, was a full professor at MIT and served as scientific adviser. Intellectual property based on the science, which offered a radical way to construct lithium-ion batteries that promised higher energy densities, was licensed from MIT. The concept for the company was based on laboratory demonstrations that the three components of battery cells could be selected and treated so that they would self-assemble (due to intrinsic molecular forces). This resulted in finer battery structures and better performance. Following 14 months of research and development, the company found that it required more time and resources than originally anticipated to take the self-assembled battery to market. However, additional IP for a new cathode material, which presented an intermediate market opportunity, had also been licensed from Chiang's lab at MIT. The new material had advantages over the incumbent electrode material: It met the criteria for self-assembly, and it could replace the electrode in the millions of lithium-ion batteries currently in production. The management team needed to decide whether to pursue the breakthrough self-assembly technology or move resources to commercialize the new electrode material and then return to the original breakthrough technology.

Keywords: Intellectual Property; Business Startups; Research and Development; Commercialization; Technological Innovation; Science-Based Business; Product Development; Battery Industry; Electronics Industry; Massachusetts;

Citation:

Bowen, H. Kent, Kenneth P Morse, and Douglass Cannon. "A123Systems." Harvard Business School Case 606-114, May 2006.