Research basic to Philips - oecd.org · 1 2 Research basic to Philips OECD Workshop on Basic Research Oslo, October 29-30, 2001 Jan van den Biesen Vice President, Philips Research

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Research basic to PhilipsResearch basic to Philips

OECD Workshop on Basic ResearchOECD Workshop on Basic ResearchOslo, October 29-30, 2001Oslo, October 29-30, 2001

Jan van den BiesenJan van den BiesenVice President, Philips ResearchVice President, Philips Research

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ContentsContents

•• Introducing Philips and its R&DIntroducing Philips and its R&D

•• Shifting emphasis in Philips’ R&D interestsShifting emphasis in Philips’ R&D interests

•• Funding researchFunding research

•• Dividing labourDividing labour

•• Valorising resultsValorising results

•• Concluding remarksConcluding remarks

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Global electronicscompany,

established in1891 as a lamp

factory

Shares listed onNew York,London,

Amsterdam andother stockexchanges

Multinationalworkforceof 212,390employees

Headquarters:Amsterdam

The Netherlands

Results 2000in millions EUR USDSales 37,862 34,864Net income 9,602 8,842

Sales andservicein 150

countries

Royal Philips ElectronicsRoyal Philips Electronics

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# 3 in Medical Imaging

# 1 in Lighting # 1 in Shavers

# 1 in LCD Display Systems

# 3 in Consumer Electronics

# 3 in Optical Storage

Selected global market positionsSelected global market positions

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Invented by PhilipsInvented by Philips

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Technology focusTechnology focus

StorageStorageDisplayDisplay

ConnectivityConnectivity

Digital VideoDigital Video

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Philips R&DPhilips R&D

•• R&D costs: R&D costs: 7.3% of sales (EUR 2,766 million)7.3% of sales (EUR 2,766 million)

–– Including nearly 1 % of sales for Philips ResearchIncluding nearly 1 % of sales for Philips Research

•• R&D staff: R&D staff: 22,00022,000

–– 19,000 in Product Divisions and Centre for Industrial Technology19,000 in Product Divisions and Centre for Industrial Technology

–– 3,000 in Philips Research 3,000 in Philips Research

•• Strong IPR portfolioStrong IPR portfolio

–– 70,000 patent rights70,000 patent rights

–– 22,000 trademark registrations22,000 trademark registrations

–– 6,000 design rights 6,000 design rights

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Aachen [400]

Briarcliff Manor [250]Suresnes [180]

Redhill [260]

Shanghai [100]

Eindhoven [1650]

Philips ResearchPhilips Research

Total staff of nearly 3,000 includes branch labs inTotal staff of nearly 3,000 includes branch labs in•• BangaloreBangalore (India) (India)•• Hamburg (Germany)Hamburg (Germany)•• LeuvenLeuven (Belgium) (Belgium)

•• MonzaMonza (Italy) (Italy)•• Taipei (Taiwan)Taipei (Taiwan)•• Xi’an Xi’an (China)(China)

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Philips Innovation Centre Philips Innovation Centre BangaloreBangalore

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Philips Research Labs Philips Research Labs Xi’anXi’an opened opened

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ContentsContents







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LIGHTINGLIGHTINGIlluminationIllumination DischargeLamps

DischargeLamps

CONSUMERELECTRONICS

CONSUMERELECTRONICS

X-rayimagingX-ray

imagingImage-

intensifierImage-

intensifierMEDICALSYSTEMSMEDICALSYSTEMS

Light BulbLight Bulb

X-ray TubeX-ray Tube

TWTPlumbicon

TWTPlumbicon

ELECTRONICCOMPONENTSELECTRONIC

COMPONENTSOscilloscopeOscilloscope

Picture TubePicture Tube

Radio ValveRadio Valve PolyGramPolyGram

Domestic Appl.& Personal CareDomestic Appl.& Personal Care

AudioAudio Loud-speakers

Loud-speakers

FerroxcubeFerroxcube

TelevisionTelevision Line OutputTransformersLine Output

Transformers

Growth based on ResearchGrowth based on ResearchBuilding on “combining glass, metal and vacuum”Building on “combining glass, metal and vacuum”

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Philips Research 1914 - 1945Philips Research 1914 - 1945

•• Period of growth and diversificationPeriod of growth and diversification

•• Gilles Gilles HolstHolst hired to start hired to start

Research on Jan. 2, 1914Research on Jan. 2, 1914

•• Research guided by Research guided by Holst’sHolst’s 10 Commandments 10 Commandments

#8: #8: Don’t budget per project and don’t give Business Don’t budget per project and don’t give Business

Groups financial authority over research programmesGroups financial authority over research programmes

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Philips Research 1945 - 1970Philips Research 1945 - 1970

•• Period of expansionPeriod of expansion

–– “Research leads to new products”“Research leads to new products”

–– “The sky is the limit”“The sky is the limit”

•• Appointment of Appointment of Hendrik CasimirHendrik Casimir

–– Theoretical “Theoretical “CasimirCasimir effect”: applicable after 60 years? effect”: applicable after 60 years?

–– Science - Technology spiral: innovation is Science - Technology spiral: innovation is nonlinearnonlinear

•• Ample room for basic researchAmple room for basic research

–– Physics, materialsPhysics, materials

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Philips Research 1970 - presentPhilips Research 1970 - present

•• Research much more tied to industrial activitiesResearch much more tied to industrial activities

•• 2/3 of Philips Research geared to Product Divisions2/3 of Philips Research geared to Product Divisions

–– Contract research introduced in 1988Contract research introduced in 1988

•• 1/3 of Philips Research kept more exploratory1/3 of Philips Research kept more exploratory

–– Corporate fundingCorporate funding

•• Emphasis shifted from physical sciences to multi-Emphasis shifted from physical sciences to multi-

disciplinary work on devices, systems and softwaredisciplinary work on devices, systems and software

–– Theoretical & Experiments Physics Groups terminatedTheoretical & Experiments Physics Groups terminated

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Balanced portfolio of research projectsLong-term goals with short-term deliverables

Balanced portfolio of research projectsBalanced portfolio of research projectsLong-term goals with short-term deliverablesLong-term goals with short-term deliverables

Am

bit

ion

of

Pro

ject

pro

po

sal

Time to Deliver

Long-Range Technical Objective

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Technology alone is not enoughTechnology alone is not enough

•• Some statistics from literatureSome statistics from literature

–– 60 % of R&D projects reach technical completion60 % of R&D projects reach technical completion

–– 10 % of R&D projects earn economic profit10 % of R&D projects earn economic profit

•• Main lesson: business analysis at start of innovationMain lesson: business analysis at start of innovation

improves probability of economic successimproves probability of economic success

–– Adapting innovation to results of business analysisAdapting innovation to results of business analysis

–– Preparing other parts of company for dealing with innovationPreparing other parts of company for dealing with innovation

Assess economic potential as soon as possible!Assess economic potential as soon as possible!Assess economic potential as soon as possible!

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Transfer ofskilled people

Transfer ofskilled people

Creating value is keyCreating value is key From technology-rich company to rich technology company

Brand image&

Customersupport

Brand image&

Customersupport

Transfer toexisting Lineof Business

Transfer toexisting Lineof Business

Creatingnew Line ofBusiness

Creatingnew Line ofBusiness

RESEARCHRESULT

S

LicensingIPR

LicensingIPR

Selling know-how to third

parties

Selling know-how to third

parties

Spinningout new

businesses

Spinningout new

businesses

RESEARCHRESULTS

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Why basic research lost its relevance to PhilipsWhy basic research lost its relevance to Philips

•• Firms invest if expected return exceeds cost of capitalFirms invest if expected return exceeds cost of capital

•• Basic research (Basic research (FrascatiFrascati definition) no longer creates definition) no longer createsenough value to warrant active involvement by Philipsenough value to warrant active involvement by Philips–– Shorter product life cycles leave less time to recoup R&D costsShorter product life cycles leave less time to recoup R&D costs

–– Competitive pressures reduce times-to-marketCompetitive pressures reduce times-to-market

–– New basic discoveries in ICT take longer to become applicableNew basic discoveries in ICT take longer to become applicable

–– Innovation requires much more than basic research aloneInnovation requires much more than basic research alone

–– ICT dynamics make long-term research riskierICT dynamics make long-term research riskier

•• Basic research remains of indirect interest to PhilipsBasic research remains of indirect interest to Philips–– Education and training of good researchers at universitiesEducation and training of good researchers at universities

–– General advancement of scienceGeneral advancement of science

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Philips’ windows on world of S&TPhilips’ windows on world of S&T

•• Partnering with other R&D actors hasPartnering with other R&D actors has

economic and strategic advantageseconomic and strategic advantages

–– Increases added value per employee by 6%Increases added value per employee by 6%11

•• 1000+ R&D partnerships in recent/current European1000+ R&D partnerships in recent/current European

programmesprogrammes

–– EU Framework Programme, EUREKAEU Framework Programme, EUREKA

–– Including 370 partnerships with universities and research institutesIncluding 370 partnerships with universities and research institutes

•• 200 research contracts between Philips Research 200 research contracts between Philips Research EindhovenEindhoven

and universities or institutesand universities or institutes

•• 30 part-time professors from Philips Research30 part-time professors from Philips Research

•• Numerous students, R&D trainees, Numerous students, R&D trainees, postdocspostdocs1. A. Poot and E. Brouwer, Ministry of Economic Affairs, The Hague, 2001

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Flexible displaysFlexible displays

Non rectangular, flat displays

Display on flexible devices

Conformal, curved displays

Rollable displays

Wearables

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ContentsContents







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Rationale for public funding of R&DRationale for public funding of R&D

•• R&D boosts economic growth [OECD/DSTI, 2001]R&D boosts economic growth [OECD/DSTI, 2001]

–– 1 % more public R&D generates 0.17 % productivity growth1 % more public R&D generates 0.17 % productivity growth

–– 1 % more business R&D generates 0.13 % productivity growth,1 % more business R&D generates 0.13 % productivity growth,

in addition to extra private returnsin addition to extra private returns

•• Public support for R&D is justifiedPublic support for R&D is justified

–– For basic research because of public good characteristicsFor basic research because of public good characteristics

–– For business R&D because of positive externalitiesFor business R&D because of positive externalities

•• Public support compensates for spill-over to societyPublic support compensates for spill-over to society

–– Social return on private R&D is at least double of private returnSocial return on private R&D is at least double of private return

–– ICT is increasing social return on R&D, but not necessarily privateICT is increasing social return on R&D, but not necessarily private

return [Luc return [Luc SoeteSoete, MERIT], MERIT]

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Public funding for private R&D: a balancing actPublic funding for private R&D: a balancing act

ProPro•• Correcting marketCorrecting market

failuresfailures•• Stimulating R&DStimulating R&D

and growthand growth•• Creating welfareCreating welfare

Contra• Distorting

competition• Destroying

welfare

GATT Agreement of 1994 and EU State aid rules of 1996impose restrictions on public funding for R&D

• Fundamental research: 100 % max • Precompetitive development: 50 % max

• Industrial research: 75 % max• Beyond first prototype: 0 %

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Outdated distinctionsOutdated distinctions

•• WTO and EU rules build on linear innovation modelWTO and EU rules build on linear innovation model

–– Separated, sequential stages from fundamental research throughSeparated, sequential stages from fundamental research through

industrial research and industrial research and precompetitiveprecompetitive development to first development to first

prototypesprototypes

•• Successful innovation requires cyclical process withSuccessful innovation requires cyclical process with

interaction between knowledge creation and applicationinteraction between knowledge creation and application

–– R&D stages have blurred and become partly concurrentR&D stages have blurred and become partly concurrent

•• R&D definitions in WTO and EU rules hamper effectivenessR&D definitions in WTO and EU rules hamper effectiveness

of governmental programmes to stimulate R&Dof governmental programmes to stimulate R&D

–– Outdated straitjacket doesn’t fit reality of business R&DOutdated straitjacket doesn’t fit reality of business R&D

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ContentsContents







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deliverablesdeliverables

go

als

go

als

short-termshort-term

sho

rt-t

erm

sho

rt-t

erm

long-termlong-term

lon

g-t

erm

lon

g-t

erm

academicacademicresearchresearch

industrialindustrialdevelopmentdevelopment XX

industrialindustrialresearchresearch

Dividing labour in R&DDividing labour in R&D

•• Enhance applicability ofEnhance applicability ofacademic researchacademic researchthrough interaction withthrough interaction withindustryindustry

•• Leave near-market R&DLeave near-market R&Dto private sectorto private sector

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ContentsContents







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Patenting policy for public researchPatenting policy for public research

•• BayhBayh-Dole Act (1980) enabled/urged patenting of results-Dole Act (1980) enabled/urged patenting of results

from federally funded research by US universities andfrom federally funded research by US universities and

public research institutespublic research institutes

–– Licensing now provides considerable income (?)Licensing now provides considerable income (?)

•• Controversial AWT report ( Dutch S&T Advisory Council)Controversial AWT report ( Dutch S&T Advisory Council)

recommends academe to leave patenting to industryrecommends academe to leave patenting to industry

–– Proper use of knowledge is key, not licensing incomeProper use of knowledge is key, not licensing income

–– Fair price to be paid for knowledge from academiaFair price to be paid for knowledge from academia

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Concluding remarksConcluding remarks

•• Research is basic to Philips – The Technology CompanyResearch is basic to Philips – The Technology Company

•• Basic research has lost direct relevance to PhilipsBasic research has lost direct relevance to Philips

•• R&D definitions in restrictions of WTO and EU on publicR&D definitions in restrictions of WTO and EU on public

funding do not match reality of innovationfunding do not match reality of innovation

•• Reviewing definitions of R&D is neededReviewing definitions of R&D is needed

•• Is basic research closer to new products in biotech?Is basic research closer to new products in biotech?

–– In biotech, European Commission describes basic research asIn biotech, European Commission describes basic research as

“research that can have many indirect commercial applications but“research that can have many indirect commercial applications but

that is not necessarily commercially applicable itself” that is not necessarily commercially applicable itself” [COM(2001)454][COM(2001)454]

Documents

Research basic to Philips - oecd.org · 1 2 Research basic to Philips OECD Workshop on Basic Research Oslo, October 29-30, 2001 Jan van den Biesen Vice President, Philips Research