INNOVATION: THE GRAND CHALLENGE - Imperial College London

imperial.ac.uk

INNOVATION: THE GRAND CHALLENGE - Imperial College London

INNOVATION: THE GRAND CHALLENGE

Results from the Innovation and Productivity Grand Challenge


IPGC: THE INNOVATION AND PRODUCTIVITY GRAND CHALLENGE

The Innovation and Productivity Grand Challenge (IPGC) is a major research project which

has been funded by the two UK research funders – the Engineering and Physical Science

Research Council and the Economic and Social Research Council – since 2006.

Made up of a network of five UK universities – Cambridge, Cranfield, Imperial College,

Liverpool and Loughborough, working together with the ESRC/EPSRC’s Advanced Institute

for Management Research (AIM), the Innovation and Productivity Grand Challenge explores

the implications of the changing 21st-century context of networked, global and increasingly

open innovation, in a world in which knowledge flows become as important as knowledge

creation.

IPGC's work explores four major themes:

• How the current system works and its strengths and weaknesses.

• How new firms form from new knowledge.

• How infrastructures can catalyse or enable innovation from knowledge.

• How existing firms sustain and grow through taking in new knowledge.

The challenge is to make UK plc more competitive by helping to make the process of

converting knowledge into innovation more effective.

The contents of this publication are the copyright of the authors and the Partnership Universities.


CONTENTS

4

5

9

10

12

13

14

15

16

17

19

20

22

25

27

28

30

Innovation: The Grand Challenge

IPGC: What is it?

Dealing with discontinuous innovation

John Bessant

Overcoming barriers to university collaboration

Ammon Salter

Selectively revealing your intellectual property – challenges and solutions

Ammon Salter and Oliver Alexy

Shortening the tail – developing absorptive capacity to increase demand

for knowledge

John Bessant

Tools for effective innovation management

John Bessant

The 21st-century research and technology institutes

John Bessant, Andy Neely and Jeff Readman

Making university–industry collaboration work

Markus Perkmann and Kathryn Walsh in collaboration with Pablo d’Este

Brokering across organisational boundaries enables ecosystems to open up

innovation

David Gann

Towards more effective knowledge transfer in the services sector

Richard Adams

Having their cake and eating it: Can UK HEIs reconcile business engagement with

the pursuit of high-quality research performance?

Andy Neely, Surya Mahdi and Pablo D’Este

University–business interactions: Why bother?

Andy Neely, Surya Mahdi, and Pablo D’Este, in collaboration with Markus

Perkmann, Kate Bishop, Johan Bruneel and Ammon Salter

Targeting barriers to innovation

Sue Morton and Neil Burns

Getting to grips with university knowledge transfer systems

Hossein Sharifi and Weisheng Liu

Spinning out sustained high-tech innovation

Elizabeth Garnsey

Achieving the impossible: how established firms make innovation breakthroughs

Simon Ford and David Probert

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

3


Innovation: The Grand Challenge

Innovation matters. The celebrations of Charles Darwin’s bicentenary remind us that

organisations – as much as any other species – need to adapt to survive. If organisations

do not change what they offer to the world – their products and services – and the ways in

which they create and deliver those products ands services, then they may not survive in

the long term.

-So far, so obvious. But the challenge of innovation, of picking up on new possibilities and

carrying them through to successful completion is not simple. Above all it is a challenge

that concerns the effective use of knowledge. Managing innovation is a bit like trying to

work with knowledge spaghetti, weaving complex strands of technological, market, legal,

financial and other knowledge together to create an exciting new dish.

This has always been the innovation challenge – but arguably the current context in which

organisations are trying to manage this challenge has changed dramatically. It is a world

in which:

• Knowledge production has grown enormously – estimates suggest close to $1 trillion is

spent every year on public- and private-sector research and development;

• Knowledge production is fragmented and globalised – even relatively small countries

like Singapore or Denmark are major players in the global knowledge marketplace;

• Markets – the demand side of innovation – are similarly global, fragmented – and

increasingly virtual (social networking sites like Facebook and My Space have

populations larger than most countries and their citizens play an increasingly powerful

role in shaping developments in fields such as music and entertainment);

• Technology, in the form of mobile communications, the Internet, and so on, has opened

up radically new possibilities for connecting across this knowledge ocean.

Faced with this very different knowledge landscape, the Grand Challenge in innovation is

to find new ways of working with it to create economic and social value. Organisations

need to learn new tricks and adapt some of their old repertoire to make sure they can

compete. How are they doing this? What lessons can others learn? These questions are at

the core of a major research programme – the Innovation and Productivity Grand

Challenge (IPGC), a programme which the UK’s Engineering and Physical Sciences

Research Council (EPSRC) and Economic and Social Research Council (ESRC) have been

funding for the past three years.

The Grand Challenge in innovation is to find new ways of

working with it to create economic and social value.

4

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


IPGC: What is it?

The Innovation and Productivity Grand Challenge (IPGC) explores the implications of the

changing 21st-century context of networked, global and increasingly open innovation, in

a world in which knowledge flows become as important as knowledge creation. It

involves a network of five UK universities – Cambridge, Cranfield, Imperial College,

Liverpool and Loughborough, working together with the ESRC/EPSRC’s Advanced

Institute for Management Research (AIM).

The challenge is to make UK plc more competitive by helping to make the process of

converting knowledge into innovation more effective.

IPGC has focused its work on four major themes:

Recent headline findings from the project include the following:

• In a world with so much knowledge production going on, innovation policy (in firms and

at a national level) needs to move to enabling effective knowledge flows as well as

stimulating knowledge creation. An important question here is how to manage

knowledge trading.

• The UK’s record on knowledge creation – the science base – is very good in parts but

less so in others (for more on this see our IPGC/AIM Science Census report,

www.aimresearch.org/aim-publications/academic-publications). But a worrying trend is

seen in recent IPGC/AIM work looking at correlations between perceived relevance and

value on the user side and scientific excellence as measured by citation counts etc. This

raises policy questions around research assessment and the targeting of funding.

• A major finding in IPGC is that universities are key players in the knowledge/innovation

system – but the relationship is not a simple one. Rather than focusing on one part of

the innovation link – the potential for universities to create high-tech spin-off

businesses – we need to recognise that relationships run along a much broader frontier

and that a variety of mechanisms are important in converting knowledge to innovation.

Examples include consultancy, technical services and support and, of course, the supply

of trained human resources. The policy message here is around continuing and

extending mechanisms which build bridges across this long frontier – for example, the

UK’s Knowledge Transfer Partnerships (KTP), the third stream of the UK Higher

Education Innovation Fund (HEIF/3rd stream) among others.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

5


• Although we argue for a broadening of emphasis, it is important to recognise that there is considerable

mileage in the university high-tech growth option – and the Cambridge Phenomenon provides a good

example. IPGC research shows that this has been a powerful source of growth over decades – but also that

there are now concerns that the model may be running out of steam. The key issue seems to be less about

founding spin-off businesses than in sustaining them as they mature – suggesting that policy in this area

should be aimed at mid-career support rather than just focusing on start-ups.

• Much emphasis is placed on the supply side – knowledge creation and the development of increasingly

sophisticated mechanisms to bring the supply side (universities and the RTIs, the research and technology

institutes formerly core-funded by government) closer to end users. But focusing on the demand side is also

significant and IPGC has been looking at absorptive capacity (AC) and how this might be developed

Firms grow through what they know, and our work looks at when and why they might seek external

knowledge. In particular we have sought to understand the ways in which AC can be developed and have

identified three complementary modes through which policy agents (government, but also supply chain

‘owners’, trade associations and regional agencies) might intervene. These are the broadcast mode, agent

assist mode, and peer-supported mode. For example, Profitnet – a 400-firm study in the South East –

suggests that building learning networks of small and medium-sized enterprises (SMEs) can help develop AC

and increase the demand for knowledge within higher education institutions (HEIs).

Innovation

policy (in

firms and at a

national level)

needs to move

to enabling

effective

knowledge

flows as

well as

stimulating

knowledge

creation.

• Related to the discussion about absorptive capacity is the need to develop awareness of innovation and how

the process can be organised and managed on a continuing basis. This raises questions of measurement (a

theme which is being picked up in the NESTA Innovation Index work) and development of capability. The role

of agencies like Knowledge Transfer Networks and Business Links in this is important – IPGC has been

working extensively with Chemistry Innovation KTN, for example, on a programme of innovation capability

assessment followed by development assistance targeted at SMEs. Some initial discussions have taken place

between the UK Strategy Board and Imperial College London around this theme.

• Open innovation is becoming increasingly significant, and is moving from a mere slogan to a central element

in firm strategy. Recognising that ‘not all the smart guys work for us’ is an important starting point, but

finding ways to access and mobilise external knowledge requires significant adjustments. An important

theme which has policy relevance is the development and support of brokering/bridging mechanisms. In

larger firms this may be an internal role (such as IBM’s engineers or Procter and Gamble’s technology

entrepreneurs, for example) but for SMEs there is growing reliance on external agencies and service

providers like IXC, IDEO, Innovaro, as well as increasing use of Internet-based bridges such as

innocentive.com and ninesigma.

Understanding the needs of this emerging knowledge market – where it works, where there are market

failures, how best to support the development of brokering/bridging infrastructure – raises policy questions.

Given the global nature of the knowledge market in open innovation, there may also be significant growth

opportunities for UK service firms in the future – perhaps becoming international knowledge traders in the

way that 18th-century merchants built global business on physical trade.

6

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


• One key theme in open innovation is the challenge posed to the intellectual property regime and the need to

update this to deal with a world in which knowledge flows are on the increase.

• While most innovation takes the form of steady state – doing what we do, but better – there are occasional

patterns of discontinuity. New technologies change the rules of the game, new markets emerge, new

business models find application, and so on – and the evidence is that these situations represent

opportunities for new entrant entrepreneurs but often significant threats for established incumbents.

• One strand of IPGC work has looked at breakthrough/disruptive innovation of this kind and particularly at

how established players can survive and grow through these discontinuities. Our work suggests that smart

firms need to add to their repertoire of innovation management capability in three areas: how they search at

the edge of their radar screens; how they manage the corporate immune system and get resource allocation

for risky and different ideas; and how they pursue such ideas through to implementation.

• While much of this is the province of the firms themselves in terms of corporate venturing and related

approaches, our work suggests an important potential role for policy agents. In particular, one characteristic

of discontinuous innovation is that it often transcends sector boundaries – so that providing opportunities to

explore cross-sectoral opportunities and to develop novel combinations may be an area for policy

intervention. This might build on past experiences, with foresight and futures work, and with collaborative

research and development aimed at creating novel futures, and within this framework there may be roles for

TSB and Knowledge Transfer Networks.

• The uncertain nature of discontinuous innovation means that firms are working with concepts which are

fuzzy, poorly articulated and essentially emergent. Dealing with this requires adding to their innovation

management toolkit, and an important but perhaps underutilised set of resources lie in the field of design.

The skills set in this world and the tools – such as prototyping – could be more widely applied, and this

underlines policy themes outlined in the UK’s Cox Review of Creativity in Business and is now being taken

forward in activities such as Design London.

Firms grow through what they know, and our

work looks at when and why they might seek

external knowledge.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

7


Dealing with discontinuous innovation

John Bessant (Imperial College Business School)

Innovation is not an option, it is essential. Unless organisations change what they offer the world and the ways

in which they create and deliver those offerings, they risk falling behind in today’s turbulent and complex

business environment. Smart firms know this and they invest time and trouble to create systems, structures

and processes that ensure a sustained flow of innovation.

John Bessant

When

confronted

with the need

to explore

doing

something

radically

different,

many

companies fail

the test.

But while these firms are highly competent at what we might call ‘steady state’ innovation (doing what they do

but doing it better), problems can occur when they have a need for discontinuous innovation (DI) – when events

disrupt normal activities, rewriting the rules of the game.

History tells us that when technologies shift, new markets emerge, the regulatory rules of the game move or

someone introduces a new business model – as we have seen with low-cost airlines, the music industry or across

the Internet – then established players can suddenly become vulnerable. When confronted with the need to

explore doing something radically different, many fail the test.

A key part of the problem is that dealing with discontinuity requires a very different set of capabilities for

organising and managing innovation. Searching in unlikely places, building links to strange partners, allocating

resources to high-risk ventures and exploring new ways of looking at the business – all these capabilities

challenge the normal way we approach the innovation problem. And while we know a lot about how to manage

the steady state kind of innovation, we are much less clear about where and how to start building discontinuous

innovation capability. Smart firms are carrying out various experiments in this direction, but no one can claim to

have found the definitive answer.

So how do firms deal with this discontinuous innovation? How do they work at the edge of chaos, where new

threats and opportunities are only dimly visible? How do they search for innovation triggers or pick up on weak

signals about emerging – but possibly radically different – futures? What do they do when these weak signals

come into the organisation and hit the mainstream processes and criteria for allocating resources to strategic

innovation projects? How do we avoid radical new ideas being rejected by the corporate immune system? And

even if we do decide to take these wild ideas forward, how do we organise this, when by definition they are often

projects which break the rules or require us to make up some new rules as we go along?

These are not trivial questions. Nor are they easily answered by making better use of our existing approaches to

organising and managing innovation. Indeed, excelling at steady state innovation can actually be a barrier to

mastering discontinuous innovation. When faced with new challenges our temptation is to do more of what has

worked in the past, but this may sometimes be the very worst thing to do. Think about trying to hear weak

signals from a newly emerging market; the wrong course of action is to drown these signals out by working even

harder at hearing the existing voice of the customer.

Our research in the DI Lab attempts to get a better understanding of the questions that firms need to ask and the

experiments which they try out, when developing new approaches to managing innovation. As a result we broke

the challenge down into three areas: How do firms search for weak signals about new directions? How do they

select which of these signals to respond to? How do they implement the DI projects they have chosen?

One way of getting to grips with this challenge is for firms to learn together about managing discontinuous

innovation – sharing experiences, trying new things out, reflecting on what has and has not worked and looking

at new ideas and models. By linking up with other firms, working with practically minded academic researchers,

and drawing on experience in different sectors and countries, there’s a chance to compare, contrast, share and

develop an understanding of this major challenge.

A research-led

institution: Imperial

College Business

School in London.

This is the basic idea behind the Discontinuous Innovation (DI) Lab which involves networks of firms in 12

countries working through a shared learning process. Outputs from the Lab include several executive briefings on

the core themes and a growing toolkit of strategies to help firms manage DI more effectively.

For more information, please see www.innovation-lab.org

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

9


Overcoming barriers to university collaboration

Ammon Salter (Imperial College Business School)

The study by the Advanced Institute of Management Research (AIM) university collaboration reveals that

despite a wave of UK government initiatives designed to increase interaction, businesses are finding it more

difficult to collaborate with universities than ever.

Ammon Salter

Interest in university-industry collaboration has increased in academia and government in recent years.

Numerous policy initiatives, including the University Challenge Fund, the Science Enterprise Challenge, and the

Higher Education Innovation Fund have been designed to increase the value of these interactions.

One issue, however, is that the informal relationships between scholars and business people have increasingly

come under scrutiny by university administration. Universities’ officials, sometimes technology transfer offices

(TTOs), are increasingly seeking to capture the value of intellectual property (IP) related to research projects

and, according to businesses responding to study, they may have unrealistic expectations about the economic

value of the work they are now mediating.

There is a perception in industry of a rising tide of university red tape. This is an early warning sign for the UK

economy, as collaboration between universities and industry is critical for the UK’s economic well being. Action

needs to be taken to stem this trend before it undoes much of the good work that recent policy has achieved.

Over half of the respondents questioned in the study (55 per cent) blamed administration and regulations,

including confidentiality, and the ownership and value of IP, for limiting their collaboration with universities.

Half (49 per cent) felt that universities consistently overvalued IP.

Although only a modest share of UK firms work directly with universities, these interactions have a

considerable economic impact. Almost a quarter of firms which took part in the study rely on university

research for more than 40 per cent of their innovation projects. Universities are most valuable as a source of

ideas and talent, rather than as a cheap way of outsourcing research and development activities.

What the research reveals is that UK universities provide a rich pool of talent for firms to draw on, and that

interactions between universities and industry are having a critical impact on economic development, which is

why the rising level of barriers to these interactions is so troubling.

Our research highlights other developments that may contribute to this situation: the 2008 Research

Assessment Exercise may have made researchers more long-term oriented in their research, and therefore less

interested in collaboration with industry; universities have created stricter regulations to govern the research

conduct of their staff; and the application of Full Economic Costing in the university sector may have increased

the cost to industry of engaging with university partners.

If government efforts to promote collaboration are to be successful, they need to reflect the wide variety of

collaboration modes between industry and universities. The research offers several routes towards developing

more effective policies.

We need to recognise that the benefits of successful, high-quality university collaboration are broader than IP

alone. Incentives and targets for universities need to encourage a broad range of relationships between

business and universities. Focusing on university patenting and licensing income may distract from other more

economically important forms of interaction.

10

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


Other recommendations include: developing a Research Council-wide system that monitors the number and

scale of industry involvement in publicly funded research projects; making greater attempts to track the flows of

university-trained talent through the economic system to provide new insights into the nature and scale of

contributions of universities to economic wealth.

There is no question but that these are key issues for public policy. It may be necessary to develop potential

remedies to these problems, before they start to undermine the rich and varied set of interactions between

industry and universities in the UK.

References

Advanced Institute of Management Research: www.aimresearch.org

Higher Education Innovation Fund, www.berr.gov.uk/dius/science/knowledge-transfer/heif/page12054.html

Science Enterprise Challenge, www.berr.gov.uk/dius/science/knowledge-transfer/schemes/Science_Enterprise_Challenge/page12138.html

Universities Challenge Fund: www.berr.gov.uk/dius/science/knowledge-transfer/schemes/University-Challenge-SEED-Fund/page12117.html

The benefits of successful, high-quality university

collaboration are broader than IP alone.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

11


Selectively revealing your intellectual property –

challenges and solutions

Ammon Salter and Oliver Alexy (Imperial College Business School)

‘Selective revealing’ is where firms choose to voluntarily give away some of their intellectual property (IP).

They do this in order to obtain potential benefits such as lower costs, faster time-to-market, better quality

and higher market impact.

Ammon Salter

Oliver Alexy

A prime example of firms selectively revealing their IP is where firms engage in open source software (OSS)

development. In this case, firms waive some of the IP rights to the software they develop and instead grant

access and modification rights to third parties in order to achieve the advantages mentioned above.

Despite the potential benefits available and the increasing numbers of firms embracing OSS development, the

proportion of firms actively revealing some of their IP is still relatively small. Additionally, even among those

firms long active in OSS, problems regarding selective revealing are common.

We conducted a series of interviews and empirical studies with industrial partners such as IBM, Siemens,

Nokia, Microsoft and Google. As a result of these interviews, we identified two main roadblocks to further

engagement in OSS.

The first roadblock is IP management. The role of intellectual property, such as patents, has to shift

dramatically in an environment in which firms want to actively reveal some of their IP. Firms need to develop

competences in IP management that go beyond mere ‘file everything’ or other defensive IP strategies.

Another roadblock is research and development management. Working in OSS development, where selective

revealing is common, is inherently different from traditional software development. This difference has a

significant impact on the daily job routines of the individuals involved, whose tasks and responsibilities will be

affected. The resulting change for these employees might cause them to resist working in such a selective

revealing environment if they cannot see a benefit to it.

Preliminary findings from this series of studies also indicate that both these roadblocks may be tackled

successfully through top management involvement.

First, top management needs to develop and lay out an innovation and IP strategy that appropriately accounts

for selective revealing. For example, IBM’s IP strategy is targeted at leveraging the IP generated in-house

through selective revealing. As part of this strategy, IBM has actively pledged several hundreds of patents

from its portfolio to the OSS community, which is now able to make free use of these patents.

Second, top management needs to create an organisational culture that promotes selective revealing. This

may be achieved, for example, by modifying employees’ incentive schemes to reward them for engaging in

selective revealing.

To delve deeper into this issue, more case studies with multinational organisations and additional interviews

with current industrial partners will be conducted. In these studies, we will analyse whether and why firms

decide to reveal some of their IP. More specifically, we intend to examine the antecedents, goals, and eventual

outcomes of the revealing decision, and study the processes and people involved. From this, we hope to gain a

better understanding of how IP may be revealed successfully, and which measures firms and their

management may undertake to ensure a positive outcome to their revealing endeavours.

Top management needs to develop and lay out

an innovation and IP strategy that

appropriately accounts for selective revealing.

12

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


Shortening the tail – developing absorptive

capacity to increase demand for knowledge

John Bessant (Imperial College Business School)

John Bessant

Firms grow through what they know. A key theme in innovation is the extent to which firms are prepared and

able to take on new external knowledge in order to do new things – a concept which has been termed

‘absorptive capacity’ (AC). This capability is not equally distributed across firms – some are clearly well

equipped to take on and use external knowledge and even become net ‘exporters’ of useful knowledge to

others. But at the other end of the spectrum are many firms that may not even realise the need for change, still

less where and how to access external knowledge to help them achieve it.

This raises important questions around innovation and productivity. If we are able to enhance and develop

absorptive capacity, it would enable weaker firms to take advantage of knowledge and innovate in products,

processes and services. The challenge becomes one of ‘shortening the tail’ – meeting the needs of the long tail of

firms in the UK, often small and medium-sized enterprises (SMEs), which do not tap into the rich knowledge base

already available.

In our research we have been looking at ways in which AC might be developed and how this increases the

demand pull aspect of the innovation and productivity challenge. This is an issue of concern to a variety of policy

agents – national and regional governments but also trade and sector business associations and supply chain

‘owners’ who recognise that their success is often dependent on the weakest link in the chain.

We have identified and explored three modes of intervention to help develop absorptive capacity within less

experienced firms:

• Broadcast mode – making information widely available, for example through awareness campaigns, websites,

business briefings, etc.

• Agent assisted mode – helping firms develop capability through the use of intermediaries such as innovation

counsellors, Manufacturing Advisory Service, etc.

• Peer-to-peer assisted mode – bringing groups of firms together to enable peer-to-peer learning and support for

capability development – for example via regional clusters and sectoral initiatives such as Industry Forum, etc.

In one of our projects, Profitnet, a sample of approximately 400 firms was involved in around 30 learning

networks – essentially peer-assisted groupings of SMEs where the emphasis has been on learning together how

to grow and develop their businesses. This study strongly suggests that the demand for using external

knowledge – from other firms, from suppliers and significantly from higher education institutions – is

considerably enhanced as a result of working in such learning networks. There is also a strong indication of longterm

capability development – having learned the value of using external knowledge, and opened up channels for

doing so, such firms are increasingly likely to do so in the future.

In another study, working with UK Trade & Investment, a government body, the value of working internationally –

learning by exporting – to develop absorptive capacity has also been explored.

A third project, working with Chemistry Innovation – the Knowledge Transfer Network for the chemistry using

industries – is looking to develop innovation capability (and hence AC) through a programme of workshops and a

supporting innovation management toolkit. Around 75 SMEs from this important sector have been involved in

this work.

Many firms may not even realise the need for

change, still less where and how to access

external knowledge to help them achieve it.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

13


Tools for effective innovation

management

John Bessant (Imperial College Business School)

John Bessant

A key theme within IPGC has been the development of a ‘toolkit’ to help organisations

manage the innovation process more effectively. Targeted particularly at small and

medium-sized enterprises (SMEs), this is a growing resource which aims to translate

some of the useful findings from the IPGC research into practical resources. We have

been testing the toolkit with a number of partner organisations and extensively with the

Chemistry Innovation Knowledge transfer Network and their associated partners

including Scottish Enterprise, and with Chemicals Northwest.

The core tool is an Innovation Audit approach which offers the firm a ‘health check’ on the

ways it thinks about, organises and manages innovation, including elements of:

• Innovation strategy

• Innovative organisation

• Pro-active external linkages

• Core enabling processes

• Learning and continuous improvement

Under the label ‘Innovation Fitness Test’, this diagnostic tool has been used within the

chemistry-using sector as a way of engaging firms with the innovation challenge. The test

results are explored through a series of workshops which we have held across the UK.

From this a more detailed Innovation Action Plan can be developed with priority areas for

development within the firm. The toolkit offers a range of resources to help with this

process, including tools for:

• Search and exploration

• Managing the innovation decision process

• Implementing effective stage-gate systems

• Building high involvement across the organisation

• Developing creativity

• Managing the open innovation challenge

In each case there is a workshop and supporting resources to enable the firm to explore

and implement the relevant tool. Many of these have been extensively tested – for

example, the ‘Search and exploration’ tools have been developed through the

‘Discontinuous Innovation Labs’ (another IPGC project) network with firms and academic

partners across several countries.

14

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


The 21st-century research and

technology institutes

John Bessant (Imperial College Business School), Andy Neely (Cranfield University)

and Jeff Readman (Cranfield University)

In 2006, expenditure on research and development in the UK was £23.2 billion. This

includes investments from business, government, higher education and the not for

profit sectors. While many initiatives occur internally, an increasing number come from

collaborations between organisations and their customers or suppliers, and higher

education. This collaborative approach to R&D is driven by the need to share risks and

the recognition that technological and innovation expertise does not reside in any one

firm. In the UK, one set of technology specialists are research and technology institutes

(RTIs), intermediaries or bridging institutions that facilitate technology transfer and

diffusion in the UK and abroad.

The ‘Benchmarking Research and Technology Institutes’ project profiled 15 RTIs drawn

from the Association of Independent Research and Technology Organisations (AIRTO).

This sample includes private businesses, not for profit companies, government-funded

technology institutes and one university technology centre. This six-month study is

reaching its conclusion, and initial results portray an important - and diverse - group.

Our findings indicate:

Firstly, that innovation and technology support services remain important for 87% of

RTIs. In particular, front-end activities, such as the acquisition of scientific and technical

information, undertaking feasibility studies and applied research, are performed by

nearly all RTIs. Other customer services include:

• Scientific and technology conferences (organised by 53% of RTIs)

• Government programmes (implemented by 47% of RTIs)

• Technical skills training (offered by 47% of RTIs)

John Bessant

Andy Neely

Jeff Readman

Secondly, that RTIs have a global presence: on average, RTIs sell services to four unique

geographic markets. All the RTIs we surveyed support UK industry. Other markets which

RTIs sell services to include other EU countries (60% of RTIs), the USA (53%), India (47%)

and China (33%). RTIs also have, on average, one branch office either in another EU

country or abroad. RTIs sell their services to customers from an array of industries, which

suggests that these organisations are not limited to a single sectoral base but provide

competences in specific technologies to different sectors and industries.

Finally, RTIs are innovative organisations in their own right. They engage in new service

development and assess their innovation capabilities to be of national and international

standards. On average, new or improved service products contributed 44% to overall

turnover in 2008.

Figure 1. Contribution

to 2008 turnover

UK research and technology institutions have proved resilient: not only have they

weathered financial uncertainty, many RTIs have become global leaders in their field. For

more information, please contact: Jeff Readman (email: jeff.readman@btinternet.com).

Ever since core government funding was discontinued

in the 1990s, UK research and technology institutes

have had to re-invent themselves.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

15


Making university–industry collaboration work

Markus Perkmann (Imperial College) and Kathryn Walsh (Loughborough University),

in collaboration with Pablo d’Este (Cranfield University)

Evidence points to increasing collaboration between university researchers and industrial partners. Last

year, UK universities made over £1 billion from collaborative projects with industry, including collaborative

research, contract research and consulting. On the other hand, universities only received approximately

£40 million from leveraging their intellectual property. These figures suggest that the number of academic

researchers involved in collaborative projects with industry is much greater than those researchers who

patent or found university spin-off companies.

Markus Perkman

Kathryn Walsh

In the light of this contrasting evidence we set out to shed some light on the success factors and barriers in

university–industry collaboration.

The main finding from our research is that the major benefits of university–industry collaboration are best

attained by cross-fertilisation, rather than by placing academics at the service of industrial application.

Collaboration is fruitful when it not only facilitates industrial application, but also contributes to academic

research. Indeed, the one-sided emphasis on commercialisation and technological transfer practised by

some policymakers and universities seems misplaced.

The main finding of the research is supported by a number of specific points arising from our study.

Most academics collaborate with industry to further their research, rather than commercialise it or achieve

personal financial gain. From their position as academic faculty, they tend to engage with industry through

collaborative research, contract research and consulting, rather than by establishing spin-off companies or

becoming involved in existing companies.

Pablo D’Este

The major

benefits of

university–

industry

collaboration

are best

attained by

crossfertilisation,

rather than by

placing

academics at

the service of

industrial

application.

The best researchers are the ones who most value the benefits of collaboration to their research. They

collaborate with industry so long as the relationship generates benefits for their research. This is particularly

the case in disciplines such as engineering, where research excellence goes hand in hand with high industry

involvement. In other fields, such as the social sciences and the basic natural sciences, the best researchers

tend to interact with industry to a lesser extent than their lower-ranked peers.

The research did find, however, that complementarity between excellent research and industry involvement

is determined by the way interaction between the two is structured. For instance, consulting for industry can

contribute significantly to an academic’s research performance by generating ideas for follow-on research or

access to research material. Even though engagement in very applied projects often fails to produce

academic outputs such as journal articles, such projects can provide important opportunities to learn about

industry applications, and so inform directions for future research.

Another finding was that the mere act of maintaining an institutional difference between academia and

industry is conducive to radical and often unexpected innovation. Because academics and industry staff

work towards different objectives and respond to different incentives, collaboration is likely to generate

different results from routine industrial research and development. In this scenario academia provides a

space for industry to try out new ideas without incurring major risks.

Our research also shows that companies can benefit from participating in projects with open intellectual

property regimes. A case study of the Structural Genomics Consortium, part-funded by pharmaceutical

companies and operating out of the Universities of Oxford and Toronto and the Karolinska Institutet in

Stockholm, illustrates how industry can still profit from academic work without necessarily owning property

rights to all the outputs generated. This finding fits with recent doubts about the efficacy of intellectual

property-centred strategies favoured by policy-makers and universities.

Finally, the research has implications for how university–industry relationships should be managed and

measured. Collaborative university–industry initiatives work best if they are governed to provide dual

benefits. These initiatives work less well when they are managed to provide a one-sided benefit to one or

other of the partners. Hence, performance measurement must take into account various metrics important to

both partners. Often this means that successful initiatives might be better run by an intermediary

organisation, rather than by cumbersome bilateral committees.

16

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


Brokering across organisational boundaries

enables ecosystems to open up innovation

David Gann (Imperial College Business School)

Next-generation innovation processes have a vital role to play in stimulating growth in the economy, enabling

firms to launch successful new products and services. To be competitive, firms have to be good at managing

and applying new ideas, taking advantage of opportunities in science, technology and the marketplace, and

opening up their boundaries to co-create and co-develop with the community.

David Gann

A range of research studies highlight the distributed, open nature of the processes in which ideas are created

and developed through networks of innovators, often working with universities.

Despite the importance of innovation brokers in spanning boundaries between different communities in these

networks, few research projects have explored the nature and content of these roles.

The IPGC Open Innovation project carried out an in-depth study and survey of the roles of ‘innovation brokers’

at IBM, focusing on why and how Distinguished Engineers and IBM Academy Members provide a bridge

between ideas that come from inside and outside the organisation. We explored how external ideas are brought

into IBM and how innovation leaders within the company balance internal and external engagement with

collaborators in order to achieve success.

A total of 615 innovation leaders were surveyed and workshops were held with a representative sample to

provide detailed exploration of activities within different networks.

Our results revealed a high variation in the rate of converting ideas generated externally into useful innovations

within the company. The most important determinants of success relate to the number and type of partners

that individual innovation leaders attempt to collaborate with. Too few, and there is little to be gained from

designating a specific innovation brokerage role. Too many, and efforts are so diluted that transfer of ideas

across boundaries becomes ineffective.

The key to successful brokering therefore relates to how many and what type of relationships can be sustained

by specific individuals for a significant period of time. A balance needs to be struck between the positive effects

of engagement with external partners and the need to ensure sufficient depth of engagement in order to derive

the maximum benefits.

These findings have consequences for the ways in which individuals allocate their time between internal and

external activities, and for the periods they devote to the reflection necessary to process ideas so that value

can be created by others.

Our results revealed a high

variation in the rate of

converting ideas generated

externally into useful

innovations within the company.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

17


Towards more effective knowledge transfer

in the services sector

Richard Adams (Cranfield University)

A number of studies show that knowledge created in public research institutions can contribute positively to

the innovation activities of firms in the private sector. As a result, it is important that the mechanisms are

found to ensure this knowledge, derived from public research institutions, can be transferred effectively into

the world of practice.

Richard Adams

Studies exploring the transfer of knowledge generated in universities into the world of practice have tended to

focus on the manufacturing industry and on some of the more formal transfer channels, such as the use of

patents and contractual relationships.

Results from national surveys, however, indicate that proportionately more services sector firms employ

university-generated knowledge (UGK) in support of their innovation activities than firms in the manufacturing

industry, although the services sector is less likely to make use of patents and other of the more formal

research collaborations investigated in previous studies

This research addresses three related questions. First we asked: Which knowledge transfer channels do the

service industries prefer to access UGK? And with respect to innovation activity, which knowledge transfer

channels are most important to the service industries?

Knowing the answers to these two questions should make it possible to look for congruence between

academics’ preferred dissemination methods and users’ preferred channels, and improve the effectiveness of

that transfer. However, the current research does not lose sight of the fact that UGK is one of the sources that

organisations, regardless of sector, least frequently turn to when searching for external knowledge in support of

their innovation activity. Consequently, a third question is also examined: How do potential users in the services

sector perceive UGK and what are the implications of those perceptions for its wider use?

Cranfield

Management

Research Institute,

which houses the

School of

Management’s

twelve research

centres.

The context for the study was the UK business consulting industry. Consultancies were chosen as the focus for

the study because consulting is a knowledge-intensive industry in which a firm’s ability to identify and exploit

knowledge resources to create solutions for clients is a main source of competitive advantage. Data collection

was by means of a survey of a sample of business consulting firms and case studies of exemplars of transfer

channel usage.

We adopted a collaborative research design which, as well as providing the opportunity to validate results

within the context of practice, incorporates practitioners into the research process. This approach ensures that

the thematic focus remains relevant to the needs of practitioners and maximises the opportunity for the results

of the research to be disseminated into practice. To this end, we have collaborated closely with the Institute of

Business Consulting.

Studies exploring the transfer of knowledge

generated in universities into the world of practice

have tended to focus on the manufacturing industry.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

19


Having their cake and eating it: Can UK HEIs reconcile

business engagement with the pursuit of high-quality

research performance?

Andy Neely, Surya Mahdi and Pablo D’Este (Cranfield University)

The connections between the science base – a large part of which consists of the research and post-graduate

teaching capacity of the UK’s universities – and business, play a crucial role in innovation.

Andy Neely

Surya Mahdi

Pablo D’Este

However, despite increasing awareness among policy makers and practitioners of the importance of

knowledge and technology transfer processes, many aspects remain poorly understood – particularly at the

university department level.

We set out to discover the extent to which UK higher education institutions engage with business, and whether

business engagement and academic performance are strongly or weakly linked.

Before investigating the correlation between knowledge production and business engagement, we

investigated the extent to which knowledge production performance and the phenomenon of business

engagement differed across UK academic departments. We did this by building a large dataset covering all UK

scientific disciplines, bringing together data on citations for all papers submitted to the UK Research

Assessment Exercise (RAE), 2001, and data on the different sources of income for research at the department

level (including research income from industry).

The data show that both scientific excellence and industrial funding differ widely across UK academic

departments, even within narrowly defined scientific disciplines. There are significant differences in scientific

excellence across UK institutions in terms of the quality of knowledge production outputs (measured by the

average citation per paper) in every disciplinary field investigated. There is also considerable diversity in terms

of industrial funding, with some institutions relying heavily on this type of funding to support their research,

while others do not rely on industry funding at all.

The research revealed some distinct patterns of funding across certain disciplinary subjects:

• In the majority of science, engineering and biology subjects, industrial funding is a common phenomenon,

with the majority of institutions relying on research funding from the private sector.

• For some specific subjects such as business, mining, pharmacology and food, industry funding is essential,

with a significant proportion of funding for the majority of institutions coming from industry.

• The presence of business in the above group of subjects is surprising considering that industrial funding is

only marginal – a few institutions receive funding from the private sector – for social-science related subjects.

• For arts, humanities and languages-related subjects, industry funding is even less common.

For those institutions receiving funding from industry, how compatible is the activity of engaging with business

with the traditional university mission of producing high-quality scientific output? While some scholars argue

that these two activities are difficult to reconcile, others say that they are not only compatible but likely to

reinforce each other. This was the issue we looked at next.

Based on RAE 2001 data, coupled with citation data across UK higher education institutions in various

subjects, we found that the relationship between industry funding (as a proportion of total research income)

and the quality of scientific outputs is negative for disciplines related to engineering and physical sciences, as

well as for biomedical sciences. In other words, academic departments achieving high academic impact from

their research engage comparatively less with businesses, while departments with a strong orientation to

business tend to generate academic publications of lower scientific excellence.

20

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


Academic

departments

achieving

high

academic

impact from

their research

engage

comparatively

less with

businesses.

This finding implies that the two research missions are generally difficult to reconcile, and has two immediate

implications. Firstly, that the so called “laissez faire” strategy of focusing on one particular research objective,

expecting that the other will automatically follow, may not be effective. A deliberate effort by university

management is called for in order to attenuate the potential conflicts between business engagement and the

pursuit of high academic impact research.

Secondly, if academic departments are to be assessed according to the societal impacts of their research

activities (i.e., research that addresses industry problems among other societal interests), then scientific

excellence cannot be the only evaluation criterion. Given the multidimensional nature of higher education

research, if the societal impact is not given an appropriate weighting in research evaluation processes,

departments focusing on more practical research matters could be unfairly penalised.

This second point is also supported by our finding that the correlation between two different measures of

academic performance – the RAE scores and citations from publications – is strong in only a limited number of

disciplinary fields. For the majority of subjects (including engineering fields) the correlation is weak or

nonexistent. This suggests that citation data is a weak alternative to peer review assessment of research

performance. Consequently, this result further supports the argument that higher education research is a

multidimensional activity which cannot be satisfactorily captured by a single performance indicator, such as

citations.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

21


University–business interactions: Why bother?

Andy Neely, Pablo D’Este and Surya Mahdi (Cranfield University), in collaboration with Markus

Perkmann, Kate Bishop, Johan Bruneel and Ammon Salter (Imperial College Business School)

Our research on the performance of UK Higher Education Institutions (HEIs) shows that the activity of

engaging with business is not easily reconciled with the pursuit of high-quality academic outputs. But if

this is the case, then why do academics engage with industry?

Andy Neely

In this project stream, we aim to gain a better understanding of the reasons why academic researchers and

industrial practitioners engage in knowledge transfer activities, and what benefits they obtain from those

interactions.

To do this, we used data from two surveys, one on academic researchers and another one on companies.

With regards to our analysis of academic researchers, we first identified four types of reasons why

academics engage with industry: (i) commercialisation – the willingness to generate outputs such as

intellectual property (IP) rights and licences; (ii) learning – obtaining insights for furthering academic

research; (iii) access to in-kind resources; and (iv) access to funding.

Pablo D’Este

Surya Mahdi

Kate Bishop

Johan Bruneel

Interestingly, commercialisation plays a lesser role in motivating academics to work with industry than

learning or resource access. Motivations such as ‘applicability of research’, ‘information on industry

problems’, ‘feedback from industry’, ‘information on industry research’, and ‘becoming part of network’ (the

items used to construct the Learning rationale) as well as ‘research income from government and industry’,

are ranked highly by academics when asked about their main motivation for engaging with industry.

Conversely, ‘source of personal income’ and ‘seeking Intellectual Property Rights (IPR)’ (the measures for the

Commercialisation rationale) are mostly low ranking.

We also found that the majority of interaction channels, such as joint research, contract research, and

consultancy, among others, are underpinned by research-oriented rationales, rather than by the desire to

commercialise technology. This finding is important for policymaking because many current HEI policies in

university-industry relationships are focused towards securing university property rights in relation to

current and future exploitation of research outputs, even though these commercialisation rationales are very

rarely mentioned by academics as their main incentive in engaging with industry.

We discovered that the research characteristics of academic researchers who are good at identifying

commercial opportunities are not necessarily the same as of researchers who are good at exploiting these

them. Identification of commercial opportunities seems to be closely aligned with conducting high-quality

research, while exploitation capabilities appear to be more related with having developed a wider cognitive

base and the multidisciplinary nature of the research.

This finding suggests that there should be a deliberate effort by HEIs to introduce entrepreneurship training

for academics who want to exploit their research outputs commercially. Being an excellent researcher may

well help to identify breakthrough ideas, but exploiting those ideas requires a broader set of skills.

With regards to the business side, our survey revealed a number of interesting insights.

Our results reveal that firms benefit in very different ways from their interactions with universities.

Ammon Salter

Firms value improvements in their understanding of the foundations of particular phenomena, which they

get from obtaining access to the outputs of scientific research. Also important to firms is the direct

assistance in problem solving that academic researchers are able to provide, as well as the access to skilled

personnel through recruitment, and the contribution of interactions with university personnel to the

enhancement of downstream activities.

22

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


It is interesting to note that the two most frequently cited benefits are based on different rationales. While

‘access to fundamental understanding’ conforms to the model characterised by science push contributions from

university, ‘access to direct assistance in problem solving’ conforms to a model characterised by demand pulldriven

contributions, where university scientists respond to specific problems posed by industry.

The fact that over 50 per cent of the firms in our study consider these two benefits highly important indicates the

presence of strong complementarities between these two types of benefits.

On the other hand, with regards to the barriers encountered by companies in their collaboration with

universities, we found that although the classic barrier of university-industry collaboration – the long-term

orientation of the university – remains a powerful barrier to collaboration, other factors are central in creating

barriers to collaboration, especially those related to IP and administration.

And more importantly, while prior experience and breadth of interactions equip firms to handle, and potentially

overcome, barriers related to conflict of interests on research priorities, they do not equip firms to handle IPrelated

barriers better. Our results show that IP-related barriers are particularly sensitive to government policies

and higher education governance.

…IP-related barriers are particularly sensitive to

government policies and higher education governance.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

23


Targeting barriers to innovation

Sue Morton and Neil Burns (Loughborough University)

The breadth and complexity of potential resistance to innovation within organisations can be described in

relation to a company’s culture for innovation, the freedom for its people to innovate, and the desire of

individual employees to innovate.

Sue Morton

Neil Burns

Organisations

that want

innovation

success

should invest

in maximising

employee

involvement.

Our research looked at how organisations could overcome resistance, and foster improvements, to productivity.

In doing so we examined a range of factors, including: motivational issues; the barriers and enablers of

innovation; the culture and the climate within an organisation; and the capacity of the individual, the group and

the organisation to learn.

Much of the work we have done with our collaborating partner organisation has focused on the following:

investigating what mechanisms for innovation are employed at the workgroup/team level; relating the

psychological contract to innovation and learning; identifying the determinants of learning from other

organisations, particularly in relation to absorptive capacity, that is, a firm’s ability to recognise, value and

assimilate new external information; and participative safety, that is team participation and safety, associated

with worker involvement.

Through interaction with key players we aimed to improve our understanding of knowledge about the innovation

system and how it operates. Analysis has taken place at both the organisation and production system levels,

enabling us to gain an understanding of industry mechanisms and allowing us to test ideas in their context of

application.

Use of innovation and psychometric inventories and measurements has helped us to identify and relate the

factors that create barriers to innovation, and those that enable innovation, and to provide advice on how, for

example, firms can be more effective at learning from external sources – the primary purpose for participation in

this project by the main industrial collaborator.

We have assisted in raising awareness and encouraging teams to investigate the potential for adopting and

adapting innovation from outside their working area. One survey we conducted showed that an individual’s

perception of their own creative ability is a common barrier to innovation. Common misconceptions are that

innovative ideas need to be radical or need to come from someone far more intelligent.

But innovation is not necessarily a major leap in product and process technology. It is also the implementation of

many small incremental improvement ideas that exist in a factory environment: for example, a change to the

machine-load sequence to achieve an additional part per hour.

Our research shows that through coaching sessions, and by fostering teamwork, you can empower the

workforce to become more innovative, and, as a result, more productive. The theory is that the coaching

sessions and increased teamwork create a more satisfied workforce, increasingly motivated to generate further

ideas and improve their own working environment. It develops a cycle of success. The more the new ideas are

implemented in a business, the more effective the working environment becomes, which results in an overall

improvement of the organisation.

For example, one team of machining operatives identified a probable 12 per cent saving of energy in its work

cell; a reduction of almost 2,000 kilowatt-hours a week – the equivalent of approximately 2,000 single bar

electric fires switched on for an hour. This energy reduction figure rises to 6,000 kilowatt-hours a week overall

when the potential for similar reductions to be made in comparable work cells is taken into account.

The Department of

Aeronautical

Automotive

Engineering at the

University of

Loughborough.

On the assembly side of the plant, a second cell generated ideas for reworking and cost savings that also

resulted in improvement of the plant overall. This second cell was subsequently identified as the model for the

overall plant, with the work done and lessons learned rolled out to other work cells across the rest of the

organisation.

What these results highlight is that innovation success is dependent on people and their motivations. Our

findings suggest that organisations wanting innovation success should invest in maximising employee

involvement. In the face of the current global financial climate, it is important not to lose sight of people and

what they are able to contribute.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

25


Getting to grips with university knowledge

transfer systems

Hossein Sharifi and Weisheng Liu (Liverpool University)

The increasing role of science-based industries and a renewed policy emphasis on third stream activities –

knowledge transfer between further and higher education institutions as well as business and wider social

communities – have led to a new strategic role for universities in the knowledge-based economy and to the

development of the entrepreneurial university.

Hossein Sharifi

However, knowledge transfer from universities and their governing system, which has traditionally focused on

commercialising intellectual property (IP), is facing new challenges. Such challenges include the need for new

solutions to protect and promote all kinds of ideas and knowledge; avoiding overprotection of IP; efficient and

effective processes of knowledge transfer to satisfy the users’ expectations; and incentivising academics to

commercialise their knowledge, while not hampering the pursuit of high-quality open science.

From a policy perspective new agendas harbour fresh challenges for universities and the practitioners. Recent EU

policy urges member states to take steps to encourage ‘open access’ to research knowledge created with public

funds, for example.

Weishang Liu

Knowledge

transfer and

university

knowledge

transfer offices

remain

peripheral

despite

strategic plans

which state

that they are

critical.

One area that is viewed as a potential barrier to more open access in the university knowledge transfer system is

the university knowledge transfer office (UKTO). The solution, however, does not lie in the usual areas of

improvement such as efficiency and professionalism, but in turning the innovation culture within the university

knowledge transfer process from one of accidental innovation into a culture that is open and based on business

models, managing ever more complex processes, and at the same time improving the process of generating

knowledge and science within the universities.

Our research looked at the position, structure, performance and processes in UK UKTOs with the intent of gaining

a thorough understanding of their current status, as well as of the emerging landscape for the governance of

university knowledge transfer.

The study addressed a range of issues arising from the challenges for university knowledge transfer systems. For

example, we looked at the strategies, goals and objectives of knowledge transfer at universities and UKTOs, and

considered how different types of universities should approach knowledge transfer and whether a business

model-based approach provides an answer.

Other areas covered included the organisation and process management of university knowledge transfer,

looking at new integrated and flexible models, and considering what capabilities needed to be developed and

what structures adopted.

We also looked at knowledge transfer and its relationship with various stakeholders, the promising practices in

this respect, and considered how government agendas and regional development agencies should be dealt with.

The research findings reveal that knowledge transfer and UKTOs remain peripheral despite strategic plans which

state that they are critical, and this partly correlates with the economic contribution of knowledge transfer

activities to the higher education institutions (HEIs).

The Management

School at the

University of

Liverpool,

established in 2002

as a merger of

existing

departments,

institutes and units.

Also, despite a plethora of adopted new practices in HEIs to promote knowledge transfer, a strategic

misalignment of the governance system is a barrier to these new practices making an impact. Encouragingly,

among a range of approaches from counterproductive to highly proactive, some promising integrated, business

model–based and open approaches to university knowledge transfer have been introduced in some institutions.

Our research suggests that, given their position as the institutional establishment in the university-industry

interface, UKTOs should play a critical role in mobilising stakeholders to create and capture value.

Finally, it is clear from the research that the open nature of university knowledge generation and transfer has a

close proximity to the emerging model of open innovation, the adoption of which requires informed strategic

intent and implementation, networking, appropriately designed IP management regimes and a business modelbased

approach to knowledge transfer.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

27


Spinning out sustained high-tech innovation

Elizabeth Garnsey (Cambridge University Institute for Manufacturing)

High-tech firms often help to develop and diffuse innovative technologies which then flow into

other sectors of the economy, where they raise productivity, lower costs and make new activities

possible.

Elizabeth

Garnsey

IPGC research sought a better understanding of how these high-tech firms operated – firms such

as Metalysis, founded in 2002 by Dr Derek Fray and his Cambridge University colleagues. They

developed a process (FCC) that produces metals from metal oxides at a fraction of the usual cost

and without the hazardous by-products of conventional processes.

Metalysis aims to develop these more energy-efficient processes, which have a much less adverse

environmental impact than conventional processes. The company has a hybrid business model

involving in-house manufacturing, joint ventures, acquisitions and licensing. Since 2004,

Metalysis has been located in South Yorkshire and is working with international partners to

develop the FCC process for a range of metals, most notably titanium and tantalum.

We set out to understand the origins of companies such as Metalysis, their business models and

the way in which they emerge and grow. New firms spun out from universities are especially likely

to achieve breakthroughs when their technologies, originating from the logic of scientific

discovery, provide new and unexpected solutions to industrial and consumer problems. If they are

to have a positive impact on the economy, however, these tech-based firms must also

demonstrate growth.

A database of all high-tech firms in the Cambridge area was used to trace the growth of firms in

diverse sectors. A firm’s longevity and its progeny (spin-outs) proved to be important to the

accumulation of local competencies, as measured by patents.

Our research findings show that to trace the impact of firms originating in the university, it is not

enough to look at the first generation of firms. You must also consider the spin-outs from

previously spun-out firms, which create new clusters of activity over time, and where there is a

higher chance of giving rise to successful firms.

We traced the development of new clusters, the Cambridge ink jet printing cluster and the display

technology cluster, which originated from one university spin-out firm, Cambridge Consultants

Ltd. Ink jet printing is not just a printing technology but can transform the way in which intelligent

materials are created. One promising example is the display technology cluster, with high-growth

start-ups such as Cambridge Display Technology and Plastic Logic.

The Institute for

Manufacturing,

Cambridge, part of the

Department of

Engineering. Image

courtesy Institute for

Manufacturing.

Returns captured by technology investors are highly cyclical. More important to the economy in

the longer term is the way in which tech-based firms build up local competences and apply these

to new and diverse industrial fields. Here they give rise to further innovation in response to

international demand. Cambridge tech firms have been sensitive to cyclical trends in the economy.

Though resilient over a quarter of a century, they have been showing signs of contraction since

the technology downturn. They are subject to a variety of pressures, including pressure from the

financial sector to achieve more rapid revenue streams and returns to investors. It is important to

ensure that these firms have the funds to create new value for users, without which financial

returns cannot be sustained.

To trace the impact of firms originating in the

university, it is not enough to look at the first

generation of firms.

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge

29


Achieving the impossible: how established

firms make innovation breakthroughs

Simon Ford and David Probert (Cambridge University)

Conventional wisdom suggests that it is small new entrepreneurial firms that tend to be responsible for

radical innovation, while large established firms are only successful at making gradual improvements to

existing products and services.

Simon Ford

David Probert

Yet revolutionary products, such as the catalytic converter developed by chemicals company Johnson

Matthey, tech giant Apple’s iPod, and the Mindstorms programmable toys from Lego, are testament to the fact

that established firms can achieve breakthrough innovations which both sustain their competitiveness in

existing markets and create advantages in new markets. So how do established firms sustain and transform

their competitiveness by developing breakthrough innovations? By studying the different approaches taken

by established technology-based firms attempting to overcome organisational inertia and resistance to

change, we have discovered how new ways of working make breakthrough innovations possible.

These new ways of working – alternative organisational regimes – have distinctive characteristics, particularly

with respect to their design and strategic logic. The working practices are either formally designed by senior

management (structured); or developed informally and organically through the efforts of intrapreneurs

(emergent). Similarly, the strategic logic of the new organisational regime concerns the objectives: whether to

identify ideas and develop new technologies to the demonstration stage (exploration); or to commercialise

technologies and intellectual property which have already been demonstrated (exploitation).

Technology incubators created in corporations are good examples of structured organisational regimes. In

2000, for example, the Chief Technology Officer (CTO) at BT, the telecommunications giant, founded BT’s

Brightstar incubator in an attempt to identify and develop latent ideas within the firm’s research laboratories.

Key to the incubator’s exploration brief was the notion that there were no bad ideas – all ideas were welcome.

At roughly the same time, Dutch consumer electronics firm Philips established its own incubator. In contrast

to Brightstar, the Philips Technology Incubator focused on exploitation. By adopting a set of entry criteria

similar to those used by venture capitalists, Philips ensured that the projects entering the incubator were

aligned with the firm’s strategic objectives and had the potential to become significant revenue generators.

Last but

not least,

encouraging

breakthrough

innovation

should not be

at the expense

of motivating

people to work

on ‘business as

usual’ projects.

New ways of working are not only created through senior management initiatives; they can also be brought

about through the intrapreneurial efforts of individuals within the firm. At semiconductor developer ARM, two

engineers brought an idea to their CTO for a product outside ARM’s usual remit. Initially rebuffed, the

engineers continued to work informally within ARM for almost 18 months before they were able to gain the

resources necessary to pursue development formally. During this exploratory phase, it was the enthusiasm

and drive of these individuals that kept the project alive, along with the support of senior managers who

encouraged them not to give up.

A more advanced project at Rolls-Royce involving fuel cells was pursued by a lone intrapreneur who only

presented his research to management once he was satisfied that it was sufficiently technologically

advanced. The intrapreneur had to work on development outside of regular working hours, but did have

access to shared company resources.

These examples show how breakthrough innovation can be pursued through new ways of working. It is worth

noting, however, that organisations attempting to emulate the achievements of these firms, must do so with

their own specific strategic objectives in mind. Last but not least, encouraging breakthrough innovation

should not be at the expense of motivating people to work on ‘business as usual’ projects.

Figure: Observed modes for breakthrough innovation

Strategic logic of organisational regime

EXPLORATION

EXPLOITATION

Organisational Structured BT Brightstar technology incubator Philips Technology Incubator

regime design Emergent ARM mbed project Rolls-Royce fuel cells

30

Innovation: The Grand Challenge

Results from the Innovation and Productivity Grand Challenge


EDITORIAL PRODUCTION

Peter Wrobel, Science Business Publishing Ltd

DESIGN

Chris Jones, Design4Science Ltd

ILLUSTRATION

Mathew Cooper/Début Art

PRINTERS

Holbrooks Printers Ltd, Norway Road, Portsmouth,

Hampshire PO3 HX, UK

THE INNOVATION AND PRODUCTIVITY GRAND CHALLENGE

Contacts

Andrew Fletcher: Imperial College London – a.fletcher@imperial.ac.uk

Andy Neely: Cranfield University – a.neely@cranfield.ac.uk

David Probert: Cambridge University – drp@eng.cam.ac.uk

Hossein Sharifi: Liverpool University – h.sharifi@liverpool.ac.uk

Neil Burns: Loughborough University – n.d.burns@lboro.ac.uk

www.ipgc.ac.uk

More magazines by this user
Similar magazines