Encouraging of Industry to R&D

”From expenditures to investments”

Dr. Heikki Kotilainen

S&T Balance

S T

S&T Balance

Fortaleciendo la alianza público-privada en América Latina:Salir de la crisis mirando estratégicamente el futuro

3-4 noviembre 2009, Santiago de Chile

National R&D Policy and Strategy

Topic Question to be answered

Main responsibility

Policy Why? Government,

Ministries, Industry

Confederations

Strategy What?

Priorities,choices

Authorities,agencies, industry, universities + all stakeholders

Tactics How? National agencies for implementation

(C) S&T Balance

2- 4 years

1- 2 years

< 1 year

Time frame

Characteristics, Concerns and Common Features of Different Cultures

Administration Company Cluster Academic

Maincharacteristics

Working with rulesSlow Motion

Common understandingof business

CompetitivenessInnovation

Scientific ambitionQuality of research

Slow Motion

Time scale ofactions

1-3 years 1-3 years 5-10 years

Generalconcern

Policy frameseconomical/social/

regional

CompetitionLegislative changes

Productivity

NetworkingSpecialisationProductivity

IPR

Quality of resourcesQuality of research

Attractivity of research

Immediate concern

Paperwork Deadline

Fraud

SalesCash

Client needsIPR

RivalryDemand conditions

Market access

PublicationsContinuityFinance

Biggestfear

Contractualfailures

Misuse of publicmoney

ConfidentialityProduct outdateMarket collapse

Rules and legislation(antitrust)

Loss of competenceand scientific

excellencePeer failure

Common ground

Values of societyEmloyment

Working ”TripleHelix”

Positive innovationatmosphere

Supportive legislationObjectives of company

Diamond modelTriple Helix

Key services, key suppliers

Sufficient publicand private

fundingAttractivity of knowledge

FlexibilityQuick decisionsFast moving

MonthsWeeks (SME)

Cultures© S&T Balance

Circulation of innovation policy

Setting policy agenda

Analysing policy

Implementation

Public interest Private interest

National strategy

Sector policies

Implementation of strategies

Instrument set-up

Research

Strategic intelligence

Policy evaluation

Impact evaluation

Performance evaluation

Policy circulation

Source: Tekes

(Council, audit)

(Ministries, agencies, universities, industry)

(Ministries, agencies, universities, industry,Evalution + outside experts)

© S&T Balance

Guidelines and Prerequisites for Establishing Innovation Policy

•Main target: High return of R&D investment

•Do not copy – no directly adaptable features

•Environment is dynamic – create a continuous process

•Consider methodology – not single tasks. Single tasks can serve as concrete examples for the creation

of process/methodology

•Iterative process- questions & answers – solutionsGuarantee the implementation of the policy

•Statistical data

•Auditing the innovation infrastructure

Guidelines© S&T Balance

Prerequisites for administration involvement in R&D

•Business and research understanding

•Genuine interest in facilitating development

•Trust by industrial community

•Trust by research community

•Money and funding opportunities

Admini.involvement© S&T Balance

BALANCE BETWEEN THE SCIENCE, TECHNOLOGY AND SOCIAL DEVELOPMENT

MAINTAIN CLEAR NATIONAL FOCUS

MANAGE KEY DEMANDS

PROACTIVE VISION

(Science and University Community, Society)

BOTTOM-UP REQUESTS

ADAPTING TO CUSTOMERS

(The Business Community, Society)

NATIONAL POLICY

National AuthoritiesAnd

Agencies

© S&T Balance

IndustryIndustryIndustryIndustry

MinistriesAgencies

Patent offices, IPR

Regional centresTE-centres

Centres of ExcellenceTechnology/Science ParksKnowledge CentresSectorial InstitutesTech Transfer officesInstitutes, labs

The Triple Helix

UniversitiesResearchinstitutes

Government

Industry

Science & Technology

Policy Council

Confederations ofIndustry

BanksVenture CapitalBusiness angels

EU Commission-state aid

-regulations-FP

SemiprivateSITRA

FinveraIndustrial Invest

Clusters

© S&T Balance

Definition of innovation

RESEARCH, KNOWLEDGE, IDEA,TECHNOLOGY

INVENTION

INNOVATION

IMITATION

BU

SIN

ES

S

Innovation def.© S&T Balance

”If innovation is the commercial application of existing knowledge in a new context,

technologically driven innovation is only one form of this. Innovation is distinct from

research, which results in new knowledgeand from the entrepreneurial function that

spots market opportunities for products and services. It is the result of the interaction of

these two functions””Innovate for a competitive Europe”,

A new Action Plan for Innovation, European Commission, 2004

CUSTOMERS

MARKETS

BUSINESS MODELS

Innovation Trends

• User-based innovations

•Merger of manufacturing and service

•Mulitidisciplinary innovations

•E-Business

•Public and private sector innovations

•Globalisation of innovations

•Small firm innovations- large firm interventions

Innov.trends

Key questions

Are you going to compete tomorrow with yesterday’s technology ?

Where are your competitors? What technology are they applying?Where are they located?

Encouragement:

National technology and innovation policy

(C) S&T Balance

Change of mindset

Don’t spend money on R&D!

You have to invest in R&D!

Consequences: You must expect return of the investment (ROI)You have to prioritize you investmentsYou have to have your own technology strategyi.e. What are the core competencies related to your business and revenue creation?What is necessary to keep in house and what can be outsourced?What are the requirements for personnel?What kind of cooperation will be needed (clusters,networks, international cooperation, university relations etc.)?

(C) S&T Balance

Technology strategy

Preservingcurrent

positionsStrategic renewal

DeclineFormation of

strategic clusters

Geographicalstrategy

Glo

bal

Nat

iona

l

Action strategy

Defensive Offensive/proactive

Tech.strat

CORE COMPETENCES

Primary capabilities

(Outsource, cooperate)

Critical capabilities(cooperate)

Core compentences

(strengthen)

CriticalSupportRelated

TECHNOLOGY FIELD PRIORISATION

Active Active Active

MonitorDevelop, ifstrategic Active

Sell SellActive, license

transfer

Follower Equal Leader

Mature

Evolving

Embryonic

© S&T Balance

1. Business definition

1. Business definition

Vision/Business target

Vision/Business target

Driftwood alternativeDriftwood alternative

Where are we?

Where should we get to?

Where are we going?

Capabilities?•Commercial•Technological•Operational•Financial

How to reach to the target?

Competitive idea•Benefit to customer

•Benefit to the companyBusiness

environment

Definition of objectives

© BCD/S&T Balance

Mission

Development Program for Business & Technology Strategy

© Business Concept Development Oy/ S&T Balance Oy

Work programme Company X

Business 2 Business 1 Business 3

1. Business definition 1B Core competencies?1A. Business area?

2. Business environment

2.E Devlmnt of envirmnt

2.F Best practice’s SWOT

2.G SWOT of our own?

2.H Company values?

2.A Markets?

2.B Customer needs?

2.C Success factors?

2.D Trends?3. Business target?

4. Competitive strategy? 4.B Competitive idea?4.A Competitive profile?

5. Way to operate?

5.D Organization?

5.A Marketing strategy?

5.B Product strategy?

6. Resources?6.A Personnel?

6.B Financing?6.C Space.location?

M1M1

M2M2

M3M3

M0M0

5.C Key contacts

Development Program for Business & Technology Strategy

10. Decision making rules7.A Principles?7.B Rules?

7.C Alloc. of resources?

11. Prioroties/actions?

12. Checking approvalTech. strategy

8.A Key issues? 8.B Action plan?

9.DCompetitive strategy?

9.E Follow up?

9.A Business definition?

9.B Business target?

9.C Description of IS

M5M5

M6M6

7.Technology needs?7.Technology needs?

M4M4

8. Importance of technologies?

8. Importance of technologies?

9. Technology sources?9. Technology sources?

Supporting Technologies

Auxiliary technologies

Key technologies?

Mark./serv.technologies

Product technologies

Manuf. technologies

Administr. technologies

Own R&D

Cooperative partners

Sub-suppliers

Technology transfer

Development Program for Business & Technology Strategy

4B1A, 3

(C) BCD/S&T Balance

TECHNOLOGY APPLICABILITY

CUSTOMER NEEDS COMPETITIVE POSITIONTECHNOLOGY

1

2

3

4

5

© S&T Balance

What is the innovation process?Projects typically proceed in three very distinct phases

Market intelligence

Customer intelligence

BusinessBusiness intelligenceintelligence

Competitor intelligence

Technology intelligence

Product definition

& specification

Product conception

&design

Production preparation

& engineering

Explore…Explore…

Pre-conceptPre-concept

Choose/plan superblyChoose/plan superbly……

PlanningPlanning ImplementationImplementation

Product development

&

engineering

Run like hell!!!Run like hell!!!

Go decision

Market ideas& wishes

Technologyideas

Concurrent conception Concurrent engineering

Costs start to run

Source: IMDTypicalGoodBetter

Process Character of Technology Transfer

CURIOSITY

KNOWLEDGE CREATION

SCIENTIFIC EXCELLENCE

PUBLICATIONS

CUSTOMER NEEDS

MARKET&MARKETABILITY

STRATEGYPRODUCT

PORTFOLIOR&D PORTFOLIO

COMPETENCEMONEY&

FINANCINGIPR

REVENUES

RESEARCH INDUSTRY

TE

CH

NO

LO

GY

T

RA

NS

FE

R

Transfer process

ADAPTATION OFSCIENTIFIC

RESULTSFOR

TECHNOLOGICAL USE

”Requirement fortechnological success”

ADAPTATION OF

TECHNOLOGICAL KNOWLEDGE

FOR INDUSTRIAL

USE

”Requirement formarket success”

Is it possible? Can we do it? How we do it? How we market it?

© S&T Balance

Cooperative research Product development

Formulation of a National ProgrammeCase: Finland

RESEARCH FACILITATOR ENTERPRISES

QUALITY:APPROPRIATE

STANDARD

RELEVANCE

EFFICACY

PUBLIC FINANCE

NATIONALPROGRAMMES

VENTURE CAPITAL

IPR PROTECTION

ARTICULATION OF NEEDS

APPROPRIATETECHNOLOGY

ABSORB NEWTECHNOLOGIES

Pres/ priorit,innovation system

SUPPLY DEMAND

Technology programmes

#54280

Steering• enterprices

Tekes• preparing• co-ordi- nating• decision making

Grants

GrantsLoansCapital loans

Company R&D projects

Public research projects

SynergyNetworking

Concurrent developmentMatching funds

Implementation of results of public research is basedon parallel execution and networking with company projects.

23 on-going programmes in 2004 with a total extent of EUR 1.2 billion a programme lasts typically 3–5 years annually 2000 company participations annually 800 research unit participations Tekes usually finances - 60–80 % of university projects - 25–50 % of company projects

(C) Tekes

Technological success rate of enterprise research projects concluded in 2002

concluded 1145 projects

611 mio. €

905 projects511 mio. €

No information 240 projects, 100 mio. €

Stopped or failed projects37 projects, 17 mio. €

Otherwise as expected, but late 188 projects

117 mio. €

Success as expected or

better525 projects278 mio. €

16 %

84 %

3 %

23 %

54 %

Number and volume of projects

Success less than satisfactory, 155 projects

99 mio. €

19 %

57305,04-2003 Copyright © Tekes

SUCCESS FACTORS for FUTURE• Curiosity

• Activity

• Cooperation ability

• Knowledge management

• Absorbing knowledge

• Application of knowledge

• Internationalisation

Prepare answer for questions, which will be asked after 5 years!!© S&T Balance

Don’t forget creativityat all levels!!

Success comes before work only in a dictionary!

(C) S&T Balance

Thank you for your kind attention!S&T Balance

S T

S&T Balance