Issue 16 spring 09

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Links EIRMA’s conference on translating science into innovation Bang and Olufsen Professor Sigvald HarrysonSIG Combibloc Lafarge NANOCEM consortium VTT Zora Biosciences PorscheMercedes Quilts of Denmark NASAThe Danish Asthma and Allergy Association (in Danish)Copenhagen University Outlast VTT Ventures British American Tobacco Philips SKF Research and Development SCA Mid Sweden University

eIQ Action Points – Making technology transfer work

Industry has been looking for new sources of the fundamental science it needs to underpin a stream of new products and services ever since it started to cut funding for central research laboratories. Academia has proved one rich source of such science, although there has usually been a mismatch between the maturity of the science that academia produces and the needs of industry. Open innovation, in which industry seeks partners to help it do the work it would previously have done for itself, is bridging the gap between the two sides. But what does it take to turn science into innovation in this more fluid, decoupled world? And how can you increase your chances of success?

Success stories

Let’s be clear. Open innovation is working well for some companies, in both big and small ways. High-end TV and audio equipment maker Bang and Olufsen is using open innovation to increase its chance of running successful innovation projects, according to Professor Sigvald Harryson, visiting associate professor at the Copenhagen Business School.

“On internal resources alone, the company could do 10 out of 30 possible projects each year,” he said. “With academic collaboration it can do 20 out of 30.”

SIG Combibloc, a Tetrapak collaboration, uses open innovation to outsource research problems to an invention centre, which identifies the right skills within a network of universities across the European Union.

Lafarge, a company whose positions in the markets for cement, concrete, gypsum and plasterboard have secured its annual revenues of €17.6 billion, has been using open innovation for years to access the fundamental science it needs to evolve its offerings.

“We’re developing innovation in the company through strong collaborative research with academia, trying to move beyond a commodity business through science,” said Dr Jacques Lukasik, senior vice president for scientific affairs at the company.

It has already created a multidisciplinary team, drawn from multiple universities and public research organisations, to develop a much more fundamental understanding of concrete. Working with academics has provided access to the latest research in the field, as well as providing training for staff and potential employees, and references for environmental and health issues.

A wider group, the NANOCEM consortium, now has 14 industrial and 23 academic partners working together to generate basic knowledge about how cement and concrete works, as well as educating graduates and seeding a pool of potential employees.

But both sides of such collaborations need to recognise that they are part of a balance, says Lukasik: “There’s no technology without science, but science stimulates technology, which then makes new demands on science.”

Releasing the tension

Despite the uptake of open innovation, there are still tensions between the objectives of academia and those of industry. Lukasik argues that the goals of academia are to teach, to generate knowledge and to disseminate it. The goals of industry, on the other hand, are to survive, create value for shareholders, and to contribute to sustainable development.

What does industry expect from academia? High-quality fundamental research of both excellence and originality, a multidisciplinary approach, curiosity about industry and its problems, and a recognition of the importance of sustainable development issues such as the environmental aspects of the research, reliability and life cycles.

What isn’t expected of academia? Lukasik argues that industrialists don’t expect academics to know everything about an industry’s products and processes, or to develop its new products and processes: “We don’t expect them to solve our problems”. Nor does he want academics undertaking basic research tasks such as parametric studies: “I have good technologists in my lab and they can do that.

We do want academics to be able tell me why something works or doesn’t

“But we do want academics to be able tell me why something works or doesn’t.”

Catherine Bounsaythip, a senior research scientist at VTT who helped spin off Zora Biosciences for the Finnish research organisation, said that working at the interface of academia and industry could offer other, personal benefits: “Being a researcher you don’t really care if an experiment works or not, but once you have been on the other side you think, will this be useful?

“It’s good to have this kind of collaboration. Industry looks two to five years out while research looks 10 years out.”

Multiple approaches

There are many approaches to open innovation, from casual collaborations to joint laboratories.

According to Harryson, for example, engineering consultancy and car maker Porsche has 2000 engineers on staff but supplements them with 600 Masters students each year. Its staff engineers are highly networked, because Porsche relied on engineering consultancy until 1997, when it finally started making money on its cars.

When Porsche decided it wanted to use ceramic brakes on its cars because of their superior performance at high temperatures, its first thought was to work with Mercedes, because Mercedes already employed 50 ceramics engineers. But Mercedes turned Porsche down so Porsche set up a year-long competition between two German universities to develop a material that would run at up to 1000°C and have a wear life of more than 300,000km.

At the end of the competition Porsche hired the best students from the two universities and used them as the basis of a new ceramic-brake engineering centre, whose expertise was broadened through access to the Porsche engineering network. The result was the development of lighter and better brakes, within a company that had started without any ceramics expertise.

“What’s really impressive is that a company with zero experience in this area managed to use external researchers to become a world leader,” said Harryson.

David and Goliath get a good night’s sleep

Hans-Erik Schmidt, co-owner and founder of Quilts of Denmark, decided that the fact his company was a start-up wasn’t going to stop him collaborating with NASA, one of the world’s largest developers and users of technology.

The company’s premise is that we get fewer hours of sleep today than we did 70 years ago, and that sleep deprivation causes stress and can lead to accidents. So Schmidt wanted to develop a product that could be shown, using scientific techniques, to promote healthy sleep: “I wanted to collect the best team within the industry, and not be a textile company but a provider of good sleep.”

Quilts of Denmark initially collaborated with sleep scientists in local hospitals, Copenhagen University, the Danish Asthma and Allergy Association and with physiotherapists to understand how to improve sleep. The team found that temperature control was really important: sleepers should cool down as they fall asleep and then be kept at an even temperature until waking. Eventually the team realised that NASA had developed a material that offered such fine temperature regulation, for use in space suits.

“So I called them up and started sharing information with them by e-mail,” said Schmidt. Because of the mismatch in size between his four-person start-up and the 160,000 strong NASA organisation, Schmidt also found another company, called Outlast, to help cover the costs of accessing the NASA material. The result was the development of TempraKON, a material with a non-linear phase-change characteristic that was sewn into the company’s quilts. Outlast took the rights to use it in building insulation.

Even though you’re a small company you should not be scared to approach big ones in order to seek co-operation

“We became the only European company with a space certification from NASA,” said Schmidt. “Even though you’re a small company you should not be scared to approach big ones in order to seek co-operation.”

Spin-offs

Catherine Bounsaythip was born in Laos and educated in France, taking a PhD in automation and electrical engineering before moving to VTT, the Finnish national research organisation, to work on natural-language processing and machine translation. She later became a senior research scientist in bio-informatics, before becoming a deputy group leader in 2005.

By that time a team was forming around a piece of bio-informatics software developed at VTT. In June 2005 the program was recognised as one of the five best innovations in the company, and the idea of spinning it out as a company took hold.

Up to this point the only way to commercialise VTT technology was through licensing: the organisation was not allowed to own stakes in other companies.

“But this was so new that we had to create the market ourselves for something we called metabolomics,” said Bounsaythip, where metabolomics meant the study of metabolites in the blood which have travelled around the body and so carry information about the processes going on within it.

“In the US, companies had been getting between $5m and $8m in start-up funding since around 2000 [for this kind of work] but we had to wait until 2006 before VTT was allowed to own a business and we could start our spin-off,” she said. They transferred five patents into the company from VTT and set it up as a service.

The spin-off was supported by VTT Ventures, which identified Bounsaythip as the champion to manage the process, provided finance until the IP was transferred to the company and supported it until funding and management was in place. It also provided seed capital to pay for market research and the business plans.

Success factors

Each of these approaches is a different route through which to translate science into innovation. But they have some common factors that have helped their success.

Harryson says that Porsche managed to commercialise ceramic brake technology because of a number of factors: the bravery of its approach; its use of early, broad patent applications that were refined during development; and its network of engineers, who could spot problems and find people to solve them. The company also had a clear target and timeline, and made early partnerships with suppliers, to ensure there were strong links from science to manufacturing.

At Lafarge, one of the first outputs of its collaborative approach was Ductal, a high-performance concrete. [The material was used to build the bridge shown at the beginning of this article]. According to Lukasik, one reason that project went well was that the project managers had strong scientific backgrounds and good industrial experience.

In the subsequent NANOCEM consortium, the success factors are likely to include the choice of public research labs to work with, the presence of a motivated team leader, and the use of people with PhD or postdoctoral skills.

It was important to find people who can translate between industry and academia and define objectives on the two sides

“It was also important to find people who can translate between industry and academia and define objectives on the two sides,” said Lukasik. “In these cases management needs to invest time, and you need to choose managers with a scientific background to manage your contracts. It is also useful to have steering committees.”

For Schmidt at Quilts of Denmark, “You should choose partners with care and structure the partnership so everyone benefits.”

He has extended this philosophy of openness so that the company now innovates with an even broader group, including artists, design and construction partners, customers, material and knowledge partners, and medical advisors. The idea is to get the broadest understanding of what makes for the most comfortable possible sleep.

In one area, though, Quilts of Denmark has gone against the outsourcing tide, bringing its manufacturing back from China to Denmark, despite the fact that China is becoming a good market for the company.

Paying attention

One of the most important ways to support a collaboration is to pay attention to it.

Dr Martin Ward, head of risk characterisation at British American Tobacco, said: “When collaboration works, it works because people put the time in. For me it’s not just money but the culture of having to put the time in.”

Lukasik agreed: “The most important part in reintegrating knowledge from academia is very strong personal involvement. It really doesn’t work to wait for a final report or a thesis. Instead you should use a steering committee, with two or three people following each PhD.

Collaboration with academia requires our own efforts and if you don’t want to do that then don’t even start

“Collaboration with academia requires our own efforts, our own investment and our own time and if you don’t want to do that then don’t even start.”

People issues

Turning academic science into commercial success usually also demands a champion, to drive the project through against all the odds.

Schmidt took this role at Quilts of Denmark: “The way I developed the collaboration with NASA was that I didn’t give up. I found out who did [the key work we were interested in] and I went over to talk to them, engineer to engineer. I developed a very strong personal relationship with them, which opened doors all the way to the top.”

Bounsaythip took a similar role at Zora Biosciences, the VTT spin-off: “My role as a champion was to communicate between the researchers, VTT and the investors; to supervise the consultants on the market analysis; to develop a business plan; to recruit the team and the personnel; and do the marketing, administration, facilities and procurement roles as well.”

Others highlighted the importance of finding people who can perform a specific bridging role between industry and academia.

Dr Lisette Appelo, director of public-private partnerships at Philips, said the company employed between 40 or 50 people in this role, to promote mobility between the disciplines and to educate translators who can build bridges between the two worlds.

Alejandro Sanz, director of science and technology for SKF Research and Development, sounded a warning, though, about who companies should choose for such roles: “Don’t put scientists in charge of collaborative relationships because they fall in love with the technology. We have seen ‘submarine behaviour’, in which projects are submerged only to re-emerge later several times.”

Location

Location can also be a factor in the success or otherwise of open innovation projects, giving access to skills, facilities and sometimes even a willing stream of undergraduates and postgraduates who may later become employees.

According to Harryson, Bang and Olufsen spun off a key technology into a standalone company, which was then situated close to two universities. The company runs training courses in the universities to develop the kind of students it needs, as well as running projects with them. This enables it to have up to five interactions over five years with Masters and PhD students, as a way of spotting potential employees.

Similarly, paper and pulp products company SCA moved its corporate R&D centre on to the campus of Mid Sweden University from a location 3km away, which was considered too far away for effective collaboration. It is now 30m away, with a skywalk between it and the university.

“The main idea was to use the immediate proximity to establish closer relations and get an atmosphere which is more creative and entrepreneurial than in a traditional R&D centre,” said Harryson.

China

Handling open innovation in China remains a special case, according to Harryson. Companies are beginning to move R&D into China and to collaborate with local universities, to cut costs and access the talent there, as well to be allowed to trade locally and to develop influence with local and national standards bodies.

Making a choice of partners in China can be bewildering, so Harryson recommends starting with a list of the top 100 universities in the relevant field, choosing the top three engaging in competitive collaboration and then looking for partners through rigorous and time-bound processes.

Competitive collaboration is more complex in China

“Competitive collaboration is more complex in China,” he warns. “You need to have someone on the ground to check that they’re actually working on the problem.”

He suggests that weekly interactions are necessary with Chinese teams to keep them on track and to look out for any warning signs that the collaboration is failing. “You also need to be cautious about taking core technologies to China using this method.”

Conclusions

Open innovation provides a way of sourcing fundamental science and adapting it to the needs of business. Although the technique offers the opportunity to access science from multiple sources, doing so is a more complex process than setting an internal lab to work and then waiting. Open innovation is also not a replacement for internal scientific expertise: you still need to employ good scientists to tell you what you should be caring about, who might know something about it, and whether their work is turning out as you hoped.

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