O Asset Management for Successful...

Turning creative dreams into revolutionary products through cross-industry partnering.

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Asset Management for Successful Innovation

TAPPI International Research Management Committee

Jason Lye Ph.D. - Lyco Works Incorporated

Corrine Sukiennik Ph.D. - C-Synergies LLC

December 8th, 2015

Atlanta GA

AGENDA

• Introduction - What is Innovation? - Strategic use of Tangible and Intangible Assets

• Culture and Resources for Innovation - Innovation Leadership - Cultural Driver - Collaborative Approach

• Technologies - Emerging Trends - Case Studies

- Acoustic Drying - Regulatory / RM compliance

- Tech Scouting Approaches - Innovation Metrics

• Key Take-aways

Defn: Innovation “The Successful Commercialization of Invention”

Invention

Reduction to PracticeIdea +Invention

Definition of Innovation: “The Successful Commercialization of Invention”

Invention

Reduction to PracticeIdea +

Innovation

Invention Successful Commercialization

The “Successful Commercialization of Invention” requires a process…

What is “Open Innovation”?

• Unsolicited ideas submission • Garnering public opinions • Crowd Sourcing problem solving • Request for Proposals • Expert Assistance • Outsourced development • Co-development • Joint Development • Joint Ventures • Co-investment • Early stage and Venture Investment • Technology transfer • Solution providers

Henry Chesbrough “Open Business Models”

What is “Open Innovation”?

• Unsolicited ideas submission • Garnering public opinions • Crowd Sourcing problem solving • Request for Proposals • Expert Assistance • Outsourced development • Co-development • Joint Development • Joint Ventures • Co-investment • Early stage and Venture Investment • Technology transfer • Solution providers

Henry Chesbrough “Open Business Models”

Strategic Use of Tangible and Intangible Assets Talent, Technology, and Collaborative Culture

Tangible Assets Intangible Assets

• Production Assets • Production Capacity • Talent

• Training & Guidance • Intellectual Property

• Employee Goodwill • Supplier Relationships • Institutional Memory

• Collaborative Culture

Strategic Use of Tangible and Intangible Assets Talent, Technology, and Collaborative Culture

Tangible Assets Intangible Assets

• Production Assets • Production Capacity • Talent

• Training & Guidance • Intellectual Property

• Employee Goodwill • Supplier Relationships • Institutional Memory

• Collaborative Culture

AGENDA

• Introduction • What is Innovation? • Strategic use of Tangible and Intangible Assets

• Key Take-aways

McKinsey - Global innovation report of 1400 executives: - 94% said people and corporate culture were the

most important drivers of innovation.

Accenture CEO Survey: - 93 % long-term success depends on ability to

innovate. - Fewer than 1 in 5 believe innovation is paying off - 46 % had become more risk averse - 18 % say they’re seeing their investments in

innovation pay off

Booz Allen - “The elements that make up a truly innovative company: - a focused innovation strategy, - a winning overall business strategy, - deep customer insight, great talent, and - the right set of capabilities to achieve successful

execution.

Innovation Comes From the Company’s Culture

Source: McKinsey Quarterly: “Leadership and Innovation” J.Barsh, M.Capozzi , J. Davidson 1/08; Booz Allen : The Global Innovation 1000 - Why Culture is Key”, Strategy + Business; Winter 2011 Accenture: “CEO;s Say Inveting in Innovation is Not Paying Off”, Bloomberg Business, May 16, 2013

Innovation ✓ x

Papermaking Towards the Future

Source: Inventia-“Papermaking Towards the Future”, TAPPI Ahead of the Curve ; May 14, 2014

Innventia - Global Report

Survey from 130 respondents from 21 countries:

• 84% in the pulp and paper industry, • 77% who work in R&D, and • 37% who refer to themselves as "futurists."

“What resources will be in shortest supply?”

Water -- 68%

Recycled fiber -- 80%

Skilled labor -- 82%

Lyco Works Incorporated C-Synergies LLC

Innovation Successful

Innovation Not Very

Successful

Percent, N= 984 Global Executives who are involved in major innovations

Fully AccountableActively Involved from early stagesinvolved only in major decisionsInvolved only upon commercializationNot at all involved

Sr. Leadership Involvement Greatest predictor of Innovation Outcomes

Source: McKinsey Global Survey Results Lessons From successful Innovators, ‘McKinsey Quarterly July 2008

CEO’s See Need Adapt More Quickly

Increase in capital investment

Approach to managing risk

Organizational structure

M&A, joint venture, alliances

Divestiture plans

Managing corporate reputation

Increase in technology

Increase in R&D and innovation

Strategies for managing talent

Customer growth / retention / loyalty strategies

Source: PWC Survey - http://www.pulpapernews.com

Leadership Accountabilities

Source: * Pierre Ollivier: Innovatinon Ensures Corporate Survival in the Medium and Long Term P.Ollivier Blog, 10/14/2014

Tension in the C-Suite?

Innovation for Long-term Success

vs. Current Business Operations?

Nevertheless, Innovation accountabilities include:

• Create an environment where employees are encouraged to innovate

• Model behavior and act as a catalyst, encouraging innovation

• Celebrate and reward innovation milestones and results

• Hold middle management accountable for continuous improvement in innovation

• Balance risk inherent in innovation

• Value diversity and encourage ongoing innovation training, mentoring and support

• Welcome change as an opportunity for new growth

Leadership Accountabilities

Source: * Pierre Ollivier: Innovatinon Ensures Corporate Survival in the Medium and Long Term P.Ollivier Blog, 10/14/2014

Tension in the C-Suite?

Innovation for Long-term Success

vs. Current Business Operations?

Nevertheless, Innovation accountabilities include:

• Create an environment where employees are encouraged to innovate

• Model behavior and act as a catalyst, encouraging innovation

• Celebrate and reward innovation milestones and results

• Hold middle management accountable for continuous improvement in innovation

• Balance risk inherent in innovation

• Value diversity and encourage ongoing innovation training, mentoring and support

• Welcome change as an opportunity for new growth

Work with Target Schools to Better Align Curricula with Business Needs*

Who will be your next hire? What will be their major?

Will they have been trained in business / innovation processes

How do you test out their skills?

Resource Need: Combination of Higher Order Skills

• Visionary • Strategic • Creative • Analytical / Predictive • Flexible / Change Agent • Communicates across Levels/functions • Ability to Sell Ideas • Project Management Abilities • Interpersonal • Self Starter • Collaborative • Risk-Taker • Culturally Diverse • Transferrable Knowledge Base • Knowledge Sharing • Thirst for Ongoing Learning

Sources: GE Global Innovation Barometer January 2013 “Pulp Industry Energy Research gets $2.7 M in Funding; Media Release Sept 23, 2013; Univ. of British Columbia

James Olson of University of British Columbia’s Pulp and Paper Centre received a $2.7 million to reduce energy and green house gas emissions of one of B.C’s largest industries by 50 per cent before 2020.

Boosting Innovation

• Engage Diverse Teams - vary levels, functions, experience

• Executive Sponsorship - VPs actively participate and motivate

• Encourage Risk Taking - safe for opposing approaches

• Focus; Learn to say ‘no’ - eliminate low priority programs

• Get early feedback from customers

• Ensure ongoing training and coaching

Best Results - Collaborate Across the Enterprise

•Be inclusive — - Break down functional silos. - Ensure enterprise-wide

understanding of your markets and drivers.

•Encourage broader understanding of the value chain: - cost savings,

- process improvements - alternate business models can impact the bottom line.

Source: *GE Global Innovation Barometer: Global Research Findings and Insights 1/2013

Technology

Investment

Valley of Death“Where Projects Stall”

Adaption of “Valley of Death”

Discovery Concept Phase

Feasibility Pilot / Scale Up

Working Prototypes

Proof of Concept

Commercial Operations

Goal: Move technology from the laboratory to the market-place

Source: Adapted from:

http://www1.eere.energy.gov/commercialization/images/valleyofdeath_sm.jpg

Technology Risk

Stage of Development

Valley of Death“Where Projects Stall”Risk

Innovation Option(s) - Collaborative Approach Discovery Concept Phase

FeasibilityPilot / Scale Up

WorkingPrototypes Proof of

ConceptCommercialOperations

Universities / GovernmentERC’s/ SBIR

Universities/ERC’s / Government

Private FirmPartnershipVenture, Incubator,

Joint Development

Technology Brokers,Divestiture,

License

Source: Adapted from:

http://www1.eere.energy.gov/commercialization/images/valleyofdeath_sm.jpg

AGENDA

• Key Take-aways

Pulp & Paper Industry Trajectory

* Innventia Global Outlook: Papermaking Towards the Future, 2014, and other sources

Global Drivers *

Product Trends: “Static” to “Smart”

Industry & Demographics: “Western World” to “Global Middle Class”

Industry Dominance: “Products & Services” to “Bio-Economy”

Top 3 Most Important 2025 Paper Attributes *

20+ Year Projection *Today• Environmental / Health / Safety • Interactivity / Intelligence • Recycled / Recyclability

• Weight • Strength • Printability

* Innventia Global Outlook: Papermaking Towards the Future, 2014, and other sources

100 Most Recent Pulp & Paper US Patent Issued

Survey: Top 3 Tech Needs:

Novel FibersIncreased Production

Increased Energy Efficiency

100 Most Recent Pulp & Paper US Patent Issued

Strengths

• Tissue Products

• Specialty Packaging

• Industry Positioning for Bio

Products

Weaknesses

Opportunities Threats

• Bio-Economy Participation

• Electronic Paper

• Resource-efficient production

• Talent: Paucity of skilled labor

• Media grade paper

• Writing & Printing grades

AGENDA

• Key Take-aways

Recent Success: by Avery Dennison Collaboration throughout the value chain…

Bio-Based PE Label

Case Study #1

What if I showed you a proven technology that…

• …increases productivity without significantly increasing footprint…

• … can be retrofit often without cutting into existing assets…

• … is energy efficient and gentle on substrates…

Technology BenefitsAddition of Acoustic Enhancement:

• Increased thermal transfer by > 4x

• Increased mass (e.g. water) transport by > 4x

Value Proposition

When installed in other industries, we have observed:

• Increased Line Speeds - 50% - 300%

• Shortened Dryer Footprint - < 1/8th original

• Reduced Energy Requirement - 50% - 75%

• Reduced dryer air temperature ~75’F cooler

Introducing Acoustic Drying Acoustically Enhanced Heat and Mass Transfer System

Case Study #2: Paper Tempering / Moisture Control Replacement of Existing Dryer by Acoustic Dryer

Dryer Length Line Speed

Existing System 20 ft 600 fpm

Spectra HE Ultra 1.3 ft 900 fpm

% Change Area repurposed for printing. 50% Increase

• Customer Goal - Eliminate paper moisture variability to 3% at press spec speed.

• Replace “band-aid” dryer, and restore line speed.

Additional Advantage: • With an Ultra HE system installed to temper the paper just ahead of it, the first

color station was reinstated to printing, restoring the full capability of the press.

Case Study #3: Drying a Water Based Adhesive Coating Addition of Acoustic Dryer to Existing Dryer Regimen

Spectra HE Ultra - addition 1.5 ft 250 fpm

% Change 2 % Increase 47% Increase

• Customer Goal - Increase Line Speed.

• 25g/m2 dry weight

Additional Advantage: • Line speed increase was achieved without incursion into existing drying

equipment footprint.

Case Study #4: Pressure Sensitive Adhesive Addition of Acoustic Dryer to Existing Dryer Regimen

Spectra HE Ultra - addition 1.5 ft 1,000 fpm

% Change 7% addition 25% Increase

• Customer Goal - Increase Press Max Line Speed.

• 5.15 g/m2 dry weight, 35% solid.

• Line speed limited by ability to dry adhesive.

Additional Advantage: • Line speed increased with spare capacity

Reconciling cultural differences can be tricky…

• Build mutual trust

• Set and maintain appropriate expectations for each party

• Show Flexibility

• Be Transparent

Cultural differences often trump significant financial motivations.

Large Pulp & Paper Product Company Profile

• Large companies: 10,000 - 50,000+ employees

• Established operating rhythm of business practices, processes, and procedures

• Established hard assets; barriers to making changes

• Conservative. Potentially pestered by smaller entities wanting to do business.

Cultural differences often trump significant financial motivations.

Heat Technologies Inc. Company Profile

• Founded by Russian political refugee

• Founder invented a disruptive technology, and built a company from nothing.

• Academic vs. industrial background

• Small, nimble company - 19 employees world-wide.

Cultural differences will trump significant financial motivations.

…where successful, cultural differences were mutually ACCEPTED

• Concerns were heard; considered by both parties

• Accepted that each party had different priorities

• Expectations on both sides were appropriate

• Flexibility & Transparency were demonstrated

Introducing: Sourcify Environmental data transformed into business intelligence.

Example Technology

Cloud based Software as a Service

Risk mitigation & prevention software that analyzes, tracks & trends the environmental

footprint & associated cost margins.

Enables organizations to:

•  Identify and avoid pollution creation

•  Track & measure environmental cost-of goods-sold

•  Realize substantial cost avoidance

•  Delivers accurate environmental financial data for; regulatory, insurance and stakeholder reporting

Sourcify: impact on a large CPG Environmental data transformed into business intelligence.

Value Proposition Case Study

Sourcify found:

an annual repeatable $43 Million

in Cost Avoidance For a $20B Consumer Packaged Goods

Manufacturer in the paper industry.

Cost Avoidance!Communication $1M!Emissions $7.1M !Energy $5.4M !Ingredients $20M!Waste/Recycling $5.4M !Water $4.5M ! Total = $43.4M !

Case Study #5

AGENDA

• Key Take-aways

C-Synergies LLC

Best Practices on External Technology Scouting

• Know what you are looking for • Clearly define what’s strategic and what’s out of scope • Understand financial impact of the technology on your

customer

• Become a learning organization. • You don’t even know what you don’t know when you

first pick up the telephone to make your first call…

• Ensure expectations are set when opening dialog.

Talent development through training is required.

C-Synergies LLC

Where can you look for partners?

Brokers / Dealmakers

• ~ 150 IP brokers in the USA

• yet2.com - marketplace

• FRI, Timax, Ocean Tomo,

others…

SBIR / STTR funded

Venture Capital

Govt. Labs / Universities

• Co-investment

• Acquisition or Sale exit strategy

• $48 BN in US in 2014

• 41 US Fed Funded R&D Ctrs

• Long range, basic research

• CRADA & licensing

• $36 BN funded 21,000 co.s

• ~$50 BN co-funding private

• ~100,000 US patents issued

• E.g.: Lasik, iRobot Roomba

yet2.com - Electronic Paper Technology …

Fiber Based Conductive Paper Graphene Conductive Paper

AGENDA

• Key Take-aways

Innovation - Can Be Hard to Manage Effectively

• 70% + of corporate leaders tout innovation as a top three business priority • However, only 22% set innovation performance metrics

• You can’t manage or improve what you can’t measure . . .

Source: “How to Measure Innovation” Soren Kaplan 6/14

Innovation Metrics and Asset Management

• Resources / Organization: - Health of the Innovation Culture - Innovation process integration - Ongoing training of resources

• Technology - Project Status: - Pipeline ideas being screened - Intellectual property protection - Success of Collaborative Projects - Barriers removed - Projects launched - Projects shelved

• Return on Investment: - Customer satisfaction - Projected vs actual financials - Revenue: sales, royalties, divestitures

Innovation Metrics Dashboard:

AGENDA

• Key Take-aways

Key Take-Aways

• Tangible and Intangible Assets - Align to enable Talent, Technology, and Collaborative Culture

• Innovation & Collaboration Skills can be Taught - Training up and down chain of command

• Make Innovation Systemic - Includes marketing, sourcing, finance, others…

• As leaders, foster the collaborative culture - Use metrics for continuous system improvements & communication - Celebrate early successes to protect long term innovation

investments

Turning creative dreams into revolutionary products through cross-industry partnering.

• Copy here

Asset Management for Successful Innovation

TAPPI International Research Management Committee

THANK YOU!

Jason Lye Ph.D. - Lyco Works Incorporated

Corrine Sukiennik Ph.D. - C-Synergies LLC

December 8th, 2015 - Atlanta GA

O Asset Management for Successful...

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