Part 1 :
Analysis of EU-funded
research projects in the field of industrial technologies
into Commercial Success Story ?
How to convert Research
Innovation
Written by
EUROPEAN COMMISSION
Directorate-General for Research and Innovation Directorate G – Industrial Technologies
Unit G.1 – Horizontal aspects and coordination Contact: Doris Schröcker
E-mail: doris.schroecker@ec.europa.eu
RTD-PUBLICATIONS@ec.europa.eu
EUROPEAN COMMISSION
Innovation
How to convert research into commercial success story ?
Part 1 : Analysis of EU-funded research projects in the field of industrial technologies
This study was carried out for the European Commission by
Sascha Ruhland
Project Manager and Senior Researcher Tel.: +43 1 505 97 61 49
Email: s.ruhland@kmuforschung.ac.at Bart Romanow
Senior Analyst
Tel.: +47 98281894
Email: bro@oxford.no
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Luxembourg: Publications Office of the European Union, 2013 ISBN 978-92-79-29715-1
doi 10.2777/10284
© European Union, 2013
Reproduction is authorised provided the source is acknowledged.
Contents
1. EXECUTIVE SUMMARY ... 7
2. INTRODUCTION ... 10
3. STUDY DESIGN AND METHODOLOGY ... 12
3.1. Overall design ... 12
3.2. Selection of case studies ... 14
3.3. Interviews ... 18
3.4. Validation survey ... 20
3.5. Fieldwork report ... 21
4. FINDINGS AND RESULTS ... 23
4.1. Preface: Defining successful commercialisation ... 23
4.2. Examples of pathways of market-oriented exploitation ... 25
4.2.1. Example 1 ... 25
4.2.2. Example 2 ... 27
4.2.3. Example 3 ... 30
4.3. Types of pathways of market-oriented exploitation ... 33
4.3.1. Converting or transforming knowledge? Basic types of market-oriented exploitation ... 33
4.3.2. Transforming knowledge: types and sub-types of market- oriented exploitation ... 34
4.4. Impact factors ... 38
4.4.1. Type of R&D and innovation ... 38
4.4.2. Consortia and cooperation ... 41
4.4.3. Management and governance of R&D projects ... 44
4.4.4. Market knowledge and awareness ... 46
4.4.5. Additional R&D ... 48
4.4.6. Organisational changes ... 49
4.4.7. Dissemination ... 49
4.4.8. Markets and demand ... 50
4.4.9. Internationalisation and international competition ... 52
4.4.10. Standardisation and regulation ... 54
4.4.11. Timing ... 55
4.4.12. Patenting and risk capital ... 56
4.5. Types of impact factors ... 57
4.6. What about ‘open innovation’? ... 63
5. CONCLUSIONS ... 65
6. GOOD PRACTICE IN KNOWLEDGE TRANSFER AND MARKET-ORIENTED EXPLOITATION ... 69
6.1. Public policies ... 69
6.1.1. Scottish Enterprise Proof of Concept Programme, UK ... 69
6.1.2. Validation of the innovative potential of scientific research
(VIP), Germany ... 72
6.1.3. Canadian Innovation Commercialization Program, Canada ... 73
6.1.4. Technology Enterprise Commercialisation Scheme, Singapore ... 75
6.1.5. Commercialisation Australia, Australia ... 76
6.2. Technology transfer organisations ... 78
6.2.1. KU Leuven ... 78
6.2.2. Independent commercialisation companies ... 80
6.2.3. European Investment Fund ... 83
6.2.4. European Regional Development Fund ... 84
6.2.5. European Research Council Proof of Concept ... 85
6.2.6. The European Commission’s intellectual property activities ... 86
7. RECOMMENDATIONS ... 89
7.1. Smart funding ... 90
7.2. Smart project management ... 92
7.3. Smart framework ... 94
8. CASE STUDIES ... 96
8.1. ALTEX (Clearweld) ... 96
Market-orient exploitation ... 96
Lessons learnt ... 97
Fact sheet ... 98
8.2. AMBIO ... 100
The project ... 100
Market-oriented exploitation ... 100
Lessons learnt ... 101
Fact sheet ... 103
8.3. CD-TREATMENT ... 105
The project ... 105
Market-oriented exploitation ... 105
Lessons learnt ... 106
Fact sheet ... 107
8.4. DINAMICS (Lambda) ... 109
The project ... 109
The market-oriented exploitation ... 109
Lessons learned ... 110
Fact sheet ... 111
8.5. EUROLIFEFROM (Villa Real Ltd.) ... 113
The project ... 113
Market-oriented exploitation ... 113
Lessons learnt ... 114
Fact sheet ... 115
8.6. EURO ShoE ... 117
The project ... 117
Market-oriented exploitation ... 117
Lessons learnt ... 117
Fact sheet ... 118
8.7. INMAR (1) ... 120
The project ... 120
Market-oriented exploitation ... 120
Lessons learnt ... 121
Fact sheet ... 122
8.8. INMAR (2) (LMS Int) ... 123
The project ... 123
Market-oriented exploitation ... 124
Lessons learnt ... 125
Fact sheet ... 126
8.9. NANOBIOPHARMACEUTICS ... 128
The project ... 128
Market-oriented exploitation ... 129
Lessons learnt ... 130
Fact sheet ... 131
8.10. NEWBONE (ConMed) ... 133
The project ... 133
Market-oriented exploitation ... 133
Lessons learnt ... 134
Fact sheet ... 135
8.11. SINPHONIA (SCONTEL) ... 137
The project ... 137
Market-oriented exploitation ... 137
Lessons learnt ... 138
Fact sheet ... 139
9. ANNEX ... 141
9.1. Literature ... 141
9.2. Interview guidelines ... 146
9.3. Validation survey ... 157
9.3.1. Impact factors validated ... 157
9.3.2. Figures 161
9.3.3. Questionnaire ... 171
Figures
Figure 1 Research design ... 12
Figure 2 Selection of case studies (process) ... 13
Figure 3 IP analysis (process) ... 15
Figure 4 Pathways of market-oriented exploitation, example 1 flowchart ... 26
Figure 5 Pathways of market-oriented exploitation, example 2 flowchart ... 28
Figure 6 Pathways of market-oriented exploitation, example 3 flowchart ... 31
Figure 7 Main types of market-oriented exploitation ... 33
Figure 8 Categorisation of market-oriented exploitation processes ... 36
Figure 9 Impact factors across stages of the innovation cycle ... 59
Figure 10 Types of impact factors and their relation ... 61
Figure 11 Valley of death ... 64
Tables Table 1 Content of field inquiry ... 16
Table 2 Case studies investigated ... 20
Table 3 Mapping impact factors and innovation process stages ... 57
E XECUTIVE S UMMARY
The overall aim of this study was to retrace the pathways and analyse the impact factors of successful commercialisation of EU-funded R&D projects in industrial technologies. To this end, the research team analysed more than 40 cases of commercialisation processes based on projects funded by the European Framework Programmes 4-6.
As the reality of organisations and individuals creating positive effects for themselves – and ultimately the European economy as a whole – based on research outcome turned out to be rather complex and multifarious, it became evident that the term
‘commercialisation’ was no longer appropriate. Since commercialisation is often understood as the direct, immediate conversion of research into economic success the research team switched to the concept of (successful) market-oriented exploitation, i.e.
any exploitation of research outcome that contributes to a positive economic effect for the organisations involved. In general, there is an immense variety of forms of positive economic effects based on research outcome and an equally large variety of (path-) ways to get there.
Consequently, two main types of pathways were identified. For very few cases a direct and almost linear conversion of research outcome into a commercial success was actually found. They managed to convert their research in a very direct, linear way into a product or service available to the market without including major additional development steps.
However, for the majority of cases the organisations and individuals involved in the market-oriented exploitation process had to put substantial additional effort into transforming their research outcome into a commercially relevant and available product or service. Thus, their pathways to market-oriented exploitation became rather non- linear and complex as they were affected by technological set-backs, feedback loops with other (parallel) innovation or R&D projects etc.
Apart from retracing the pathways of market-oriented exploitation, the study at hand set out to identify and analyse the impact factors (obstacles overcome and challenges met) of such pathways of market-oriented exploitation; in their entirety often referred to as the ‘valley of death’. It turned out to be most relevant and necessary to differentiate the technological from the commercial valley of death. While the valley of death does indeed exist for EU-funded R&D projects, the market-oriented exploitation processes analysed by the study at hand in most cases managed to bridge the former they often struggled with the latter, i.e. finding an avant-garde customer who provides a first return-on- investment and signals the feasibility of a technology to more risk-averse customers is crucial for the success of commercially exploiting research outcome.
Altogether, some 50 impact factors were identified as affecting the success of market- oriented exploitation processes ranging from the type of research conducted, the composition of the original research consortium, management and governance of research and exploitation processes to international competition, standardisation and regulation. The most effective of these impact factors is – not surprisingly – market pull.
Furthermore, there is no successful market-oriented exploitation if the framework
conditions are not favourable. While organisations and individuals involved in market-
oriented exploitation processes do not have much control over market pull or the
framework conditions (and other related impact factors such as the global economic
climate or customers’ investment cycles), there is still a lot that can be done to optimise
the market-oriented exploitation and limit the risks along the way. This includes a variety
of structural, strategic or behavioural elements such as composing a research or market- oriented exploitation consortium including SMEs as fast-moving, niche-seeking organisations, large enterprises with their market power, customers possibly acting as avant-garde purchasers; develop and act upon R&D and exploitation strategies in a flexible manner; establish market awareness as a guiding principle, identify market needs but avoid limiting economic (application) range by blanking out opportunities beside these needs.
Consequently, there are a number of access points for public support aiming for increased and improved market-oriented exploitation of publicly funded R&D projects.
Despite the evidence for converging policies being rather limited, RDTI policies tend to focus on the following issues: lack of market pull for innovative technologies, difficulties in transforming research outcome into innovations, and lack of entrepreneurial activities resulting from publicly funded research. In general, there is a trend towards the general diversification of support mechanisms beyond funding (i.e. co-financing) of collaborative research projects in either thematically specified or open funding programmes. Gap funding and means to support bridging the valley of death not covered by co-financing collaborative R&D projects is increasingly common. The main policy trends seem to generally comprise a changing overall approach to support mechanisms. RDTI policies are increasingly using support ‘systems’ instead of individual collateral funding schemes providing the chance to have one’s research idea or concept being supported all the way through the innovation cycle. All in all, successful market-oriented exploitation of research outcome is a very complex issue with a wide variety of impact factors shaping the pathway from R&D projects to positive micro- and macroeconomic effects. Public support systems – although being sensitive to and aware of this complexity – cannot be tailor-made to fit individual R&D projects or organisations.
Nevertheless, there are modifications of existing RDTI policies that will help to increase the potential for and likeliness of successful market-oriented exploitation of publicly co- financed research. Firstly, funding organisations and programmes need more flexibility because projects and commercialisation pathways are not uniform. This includes more room for manoeuvre for both the funding itself and the funded organisations within the legal framework provided by funding guidelines etc. Secondly, management capacities and capabilities of consortiums and organisations – i.e., their ability to strategically manage impact factors and the complex interaction of organisational, cultural and individual factors – need to be strengthened. To this end, requirements should be raised to ‘force’ organisations to develop management strategies and routines for day-to-day business as well as likely challenges, risks and emergencies. Furthermore, fulfilling these requirements should be enforced through various means. Thirdly, in order to create and increase the economic leverage of public R&D funding and to safeguard the investments made with taxpayers’ money through funding additional activities should be implemented, from entrepreneurial training measures for researchers to evaluating the performance of project coordinators. These main principles for an improved support of R&D projects in their aim to achieve successful market-oriented exploitation led to a number (23) of practical policy recommendations.
Against the background of the study as a whole, the following recommendations’
implementation is considered being especially important with regard to an increase in commercially relevant effects of publicly funded R&D projects:
With regard to the evaluation of proposals, the projects should be divided into at least
two groups: (1) rather basic research and (2) rather applied research (it might be
reasonable to ask the applicants to specifically develop their proposal for one type of project ex-ante). Consequently, the evaluation criteria ‘scientific excellence’ and
‘commercial impact’ will have to have different relevance. Still it is very important to have both groups of research projects funded as commercial conversion goes hand in hand with scientific excellence in the building of new markets.
Risk and emergency management plans for the most likely critical/emergency situations should be mandatorily developed for every research proposal. Consortia should be obliged to analyse and disclose (in their proposal) the most likely risks and develop strategies to deal with these.
Allow projects that were identified or turned out as high-impact projects or projects whose research outcome will likely produce or contribute decisively to disruptive technologies to be supported throughout the whole innovation cycle, i.e. not necessarily only using funding. The support should be coordinated among all potential supporters (e.g. DGs, ERC, national funding agencies etc.) and be based on integrating RDTI policies with demand- and supply-side policies. The additional support could also take the form of prize money, which could extend publicity and thus create additional exploitation possibilities. All of this should limited to the ‘elite’ projects.
Consider the establishment of a monitoring mechanism (at EC level for research fields and/or project level for individual issues) for accompanying projects with regard to the identification of regulations or standards or norms or public opinions that may hinder or prevent the eventual market-oriented exploitation. The importance of this issue may depend on the type of research (and may not be necessary for strong basic research projects).
Include pre-commercial procurement as a means to complete market-oriented
exploitation processes by creating demand.
I NTRODUCTION
In an era of ever-growing global socioeconomic competition, Europe is facing constant challenges of its overall competitiveness. The need for growing sustainability, reduced energy consumption, meeting societal demands etc. are among the core drivers for policies and the question of how to spend tax payers’ money effectively, efficiently and to the benefit of Europe’s societies. As part of the current Europe 2020 strategy
1– developed by the European Commission and published on 3 March 2010 – the stimulation of the economy of the European Union consequently needs to focus on smart, sustainable, and inclusive growth. Research, technology and innovation are seen as crucial elements of this strategy and its aim to safeguard future socioeconomic prosperity by building the knowledge base of the European economy, creating sustainable jobs for highly qualified personnel, developing answers to societal needs and demands. To this end, all elements of the knowledge or innovation chain, from basic research to successfully marketing innovative products or services, have to be strengthened as do their interfaces.
However, there is the so-called ‘European Paradox’
2. The term was coined to describe that Europe is apparently lagging behind North America and the developed countries in East Asia when it comes to transferring research outcome into innovation and economic success despite a comparable, and in some areas leading, scientific performance. Without entering a comprehensive discussion of the issue, it should be noted that there is also evidence for the ‘European Paradox’ becoming less and less an exclusively European but a more global problem, or in fact an increasingly regionalised issue as suggested by findings on different countries or research fields. Furthermore, some studies have argued that this is in fact not a paradox at all since Europe is lagging behind in scientific output as well.
3Against this backdrop, Europe 2020 states the following main goals under its flagship initiative ‘Innovation Union’:
To complete the European Research Area, to develop a strategic research agenda focused on challenges such as energy security, transport, climate change and resource efficiency, health and ageing, environmentally-friendly production methods and land management […];
To improve framework conditions for business to innovate […];
To launch 'European Innovation Partnerships' between the EU and national levels to speed up the development and deployment of the technologies needed to meet the challenges identified […] to shape Europe's industrial future' and 'technologies […];
To strengthen and further develop the role of EU instruments to support innovation […];
To promote knowledge partnerships and strengthen links between education, business, research and innovation, including through the EIT, and to promote entrepreneurship […].
1
European Commission (Ed.)(2010): Europe 2020. A strategy for smart, sustainable and inclusive growth, Brussels.
2
Andreasen, Lars Erik (1995). Europe's next step: organisational innovation, competition and employment. London.
3