Tuesday 4 October 2011

Next generation networked research and development

Next generation networked research and development

The AIC and AIRG (Australian Industrial Research Group) recently held a joint conference on Next Generation Networked R&D. This conference focused on examining new thinking about how R&D and Innovation really works in Australasia.

Over the past two decades, several clear global trends in the management of industrially oriented R&D have emerged. In general terms, the goal of these initiatives was to move beyond the corporate technology and business unit technology group roles of the late C20th as primarily company internal drivers of technology outcomes for innovation. Initially, this transformation involved a broader, company or organization-wide alignment towards the achievement of growth through innovation. Later, it further changed to encompass extensive global outreach to achieve innovation-driven corporate growth through external resourcing and outsourcing through what has become known as �open innovation� (OI).

It is recognized that these trends in R&D management approaches have enhanced our understanding of the complex game that is innovation management. Nonetheless, the Australasian Industry Research Group�s (AIRG) 2011 winter conference, titled �Next Generation Networked R&D�, and arranged jointly with the Australian Institute for Commercialisation (AIC), was designed to ask whether these initiatives have fully
captured the scope of what it takes to succeed in technology innovation in Australasia.

As the world works its way out of recessionary pressures, most businesses have recommenced their search for sources of innovative concepts from all over the globe.

Increasingly, pre-competitive research for certain industries is even being organized globally. The OI concept has challenged organizations to take an even more networked approach. In some cases this has been transformational for companies, although in certain other cases, it seems to have only resulted in reduced R&D capability and diminished innovation.

Open innovation in Australasia
In Australasia, at an aggregated level, OI does not appear to have made a major impact on BERD or GERD levels. Therefore, the conference considered whether it has helped to substantially change the way in which the public and private sectors interact. Attendees discussed which business sectors are seeking what from public sector and other external sources. Generally speaking, it seems that this depends on many factors � such as the industry sector, the size and maturity of the business concerned and the type of technology requirement (e.g., across the spectrum from breakthrough research to customer technical support).

Various speakers and panel sessions at the conference pointed out that there may not be one model for success, nor might it be too linear a process.

Specific conclusions for the conference
OI is being practiced across many of the Australian AIRG and AIC member organizations represented at the conference, but with the use of more targeted models rather than the truly open source type of innovation, initially introduced by Proctor and Gamble in USA and practiced elsewhere, e.g., by Cadbury in the UK.

With regard to OI, many attendees indicated that, in their views, ideas were cheap and relatively easy to come by, while the hard part of the innovation process is in the translation and delivery of the idea into commercial application.

Several common themes were communicated across a range of presentations:

1. Effective relationships are critical
Speakers emphasized that there is a critical need to manage both the depth and breadth of
relationships in OI based projects. Therefore, finding the right partners to work with in the OI
environment can be the greatest challenge with regard not only to technology requirements but to cultural fit and compatibility.

Additionally, the availability of internal resources, time and funds can be limitations to the effective management of external relationships, with face-to-face meetings being desirable, but not always possible. Some noted that even within any one research manager�s own personal networks, it does take considerable time to keep well connected.

2. A critical feature of effective open innovation is excellent intellectual property management
IP management was observed to be a key component of a number of presentations at the meeting. Speakers commented that there is a high level of complexity in managing intellectual property well, especially when multiple external partners are involved in a rapidly evolving field of IP. In the current environment, in some cases, IP can be the product that needs to be managed, e.g., as a royalty revenue stream as the result of an effective biotechnology program. Thus the effective management of IP requires greater attention today than in the past.

There are many emerging alternatives and novel approaches to the effective management of IP and the capture of a return from IP as the product of innovation. At times, finding the right choice to pursue for any individual program may seem a daunting task. While effectively managing complex IP can be costly and a time consuming task, in the OI IP environment, wealth clearly accrues to the owner of IP rights, thus making IP worth managing very carefully.

Furthermore, given the different requirements of different legal jurisdictions around the world,
speakers advised that an IP manager should avoid joint IP ownership, wherever possible.

3. Open innovation models are rapidly evolving
Speakers pointed to the benefits and limitations of a number of different models, including IP
trading; �speed dating� related approaches; effective web portals; technology road-mapping; and business model innovation. What is apparent is that the right strategy and open innovation model needs to be considered for each project and that a simplistic universal model of how open innovation should operate is not appropriate.

4. A number of gaps/ disconnects remain in the Australasian environment
Across Australasia, the currently low availability of suitable funding for Proof of Concept has a
snowball effect on the quality of downstream activities. For example, several speakers from the venture capital community observed that the quality of proposals received for corporate or venture capital funding is in need of improvement.

Furthermore, they observed that the level of connectivity between Universities, Industry, SMEs and VCs in the Australasian environment is still in need of improvement. They considered that, in part, this deficiency could be due to the lack of alignment in measurements and language across the different elements of the innovation sector.

Most importantly, key speakers recognized that the common comparison of USA and/or European examples of successful OI directly with the Australasian experience is not easy and can lead to erroneous conclusions. In their view, this is due to the very different market places, each with different strengths and weaknesses.

OI opportunities exist
It was apparent that significant players in Australasia are leveraging off from models that have been seen to be working well already. One example if the emulation of Uniquest�s (at the University of Queensland) in-house commercialization advisory services in the University sector.

A number of Australian companies are clearly positioning themselves correctly to take advantage of the next growth phase through the use of OI approaches (though, as pointed out above, perhaps in more limited OI approaches than taken overseas.)

The conference also heard that key Australasian companies have been seeking to build virtual Centres of expertise around some of their core areas of technology. They are doing this in order to better access and utilize global expertise. In this regard, BHP-Billiton�s experience provided a strong and highly strategic example.

During the panel session, held late in the conference, panellists recognized that there is a clear need for more facilitators and translators who can bridge the research outcome/early technology definition out to commercialization gap and that this gap still exists between the commercial and research (especially public research) environments.

Additionally, panellists commented that greater OI involvement globally might result from considerably better marketing of Australia's talented researchers into specific global markets for new technology.

Lastly, the conference panel believed that there is an obvious need for more and better education on innovation, entrepreneurship and technology commercialization and that this should commence at the high school level.

For full details on the topic and program, please see the AIRG AIC Winter Meeting 2011 Booklet. 

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