ADVANCING AIC ANNUAL REVIEW

Transcription

1 ADVANCING Australian CommerCIAlisation AIC Annual Review 2008/09 AIC ANNUAL REVIEW

2 Australian Institute for Commercialisation ANNUAL REVIEW AIC ANNUAL REVIEW About the AIC Our mission: To work with Australian industry, research organisations, and governments to create high-value jobs, exports, and wealth by taking innovative ideas to market. The Australian Institute for Commercialisation (AIC) provides innovation and collaboration services that help organisations grow. Nationally, we work with entrepreneurs, businesses, research organisations and governments to identify new business opportunities and convert them into successful outcomes. Using our networks and experience, we deliver services to achieve that by establishing partnerships, improving skills, and providing commercialisation advice. We are also an advocate for commercialisation, and assist government with policy initiatives and thought leadership in the innovation space. The AIC s core competencies include: 1 extensive innovation networks across Australia, including the research sector 1 relationships with many governments 1 the AIC business model independent and notfor-profit, trusted, able to take risk 1 ability to facilitate collaboration across stakeholder sectors 1 know-how, experience and skills in commercialisation planning and execution 1 experience and track record as an innovation intermediary 1 the diversity of skills and experience of AIC staff. Our consultancy services include: 1 facilitation of collaboration along the value chain, for instance between research organisations and SMEs, or governments and industry (intermediary services) 1 commercialisation project management services to achieve and manage technology transfer or brokerage of intellectual property 1 strategic advice around IP management and commercialisation 1 market research and opportunity analysis 1 professional development programs to increase commercialisation skills and successes Clients working with the AIC are able to better develop their ideas and capitalise on opportunities to help them grow through innovation. Welcome to ADVANCING Australian Commercialisation Innovating for our future It was less than two years ago, towards the end of 2007, that almost every economic expert and commentator held that Australia would be decoupled from the US banking crisis, and that commodities were locked in a 30 year super cycle. The great bull run in property, shares, and commodities looked set to continue, as long as government managed the economy carefully and let the markets work their magic. Some in Treasury were even quoted as saying that any government programs or actions that stand in the way of the mining industry are frankly unhelpful. The subsequent turn of events proves once again that the consensus view is often wrong, that real experts are few and far between, and that fact presented as opinion can be extremely damaging. Of course, most of us are already aware of such truisms, but lack the conviction and sometimes evidence at the right time to question the experts. If Plan A held that Australia s prosperity would be sealed by its burgeoning commodity contracts with China and India, then perhaps it is worthwhile revisiting Plan B once again. Plan B holds that a nation s prosperity is built by developing and applying its human and intellectual capital. It is through innovation that intellectual capital is developed and successfully implemented in the marketplace. The mission of the Australian Institute for Commercialisation (AIC) is to help ensure that Australia s great ideas are converted to new products, services, and processes, to create value for all Australians. In other words, to help implement plan B. It is somewhat ironic that the great success of our mining industry is not that Australia is the world s greatest quarry. In fact, Australia does not hold the largest reserves of any of the minerals that we mine (except uranium, and therein lies yet another story). By innovating, we are however the world s most efficient and least cost extractor for many of them, which led to our success with Plan A. By developing the technologies and intellectual property that helped a world class mining industry to prosper, Plan B has not only helped to underpin that industry, it has spawned new ones. However, there are many other industries, some still to emerge, that are less prosperous, and that face the valley of death as their research and ideas struggle to attract sufficient capital and resources to reach their intended markets. Plan B entails the principles of novel idea generation, implementation, and delivery of value. The AIC is working hard with businesses and organisations of all types to help them identify and source new ideas, establish new collaborations so they can be implemented, and facilitate the exchange of knowledge and intellectual property to generate real business benefits. This review is intended to share some of those stories and some of the reasoning behind them. I hope you enjoy our story, and that you will call us if we can help you to innovate in any way. Dr Rowan Gilmore CEO Australian Institute for Commercialisation 2 3 WELCome to AdVANCINg AustRALIAN CommERCIALIsation

3 Innovation around AustRALIA AIC s YEAR in REVIEW AIC s Year in Review During the AIC has: 1 Provided collaboration advice to more than 200 businesses nationally through its TechFast program. The TechFast program has also facilitated more than 130 linkages and introductions between businesses and research organisations and established more than 35 new collaborative research or commercialisation partnerships. 1 Worked with the Queensland Government to successfully launch its Innovation Coaching program in Queensland. The innovation coaches, who are part of the Queensland-Wide Innovation Network (QWIN), work with small to medium businesses to develop and help implement innovation plans. 1 Successfully hosted a number of Technology Clinics (TechClinics) and R&D Forums including Advanced Technologies in Biofuels (Algae), Waste Management in the Marine Industry and Alternative Energy options for Tourism Boat Operators. The objectives of the TechClinics include a better understanding of stakeholders across the industry value chain, access to new research and technology developments, and increased collaborative opportunities. 1 Delivered a Commercialisation of IP Framework for the Malaysian Industry- Government Group for High Technology (MiGHT). Together with the AIC s online Commercialisation Management System (CMS), the commercialisation framework will assist the Malaysian research sector to identify new opportunities and assess their commercial potential. The financial year has been another successful year for the AIC with a number of achievements in commercialisation, innovation and collaboration. 1 Delivered and facilitated a Commercialisation Masterclass workshop to more than 80 attendees from various Cooperative Research Centres (CRCs). Workshop participants were exposed to leading knowledge and practice in intellectual property commercialisation, negotiating technology deals and managing multiple stakeholder relationships. 1 Facilitated an IP Primer for more than 100 representatives from Malaysian universities and research institutes. The workshop aimed to assist researchers and commercial practitioners working in the research sector to identify and capture valuable intellectual property for future commercialisation and utilisation by industry. 1 Provided an online inventor service to provide inventors with tools and resources to enhance commercialisation. The inventor service offers inventors with an online self assessment that generates a report identifying gaps and future actions they should take. The self assessment is a first step in de-risking the opportunity and preparing the inventor for the next steps in commercialisation. 1 Delivered 10 Ideas2Market commercialisation education programs to more than 160 entrepreneurs and small business owners, and several Commercialisation Bootcamp courses to more than 190 participants across Australia. 1 Engaged with the Victorian government to deliver 80 Gateway Enterprise business systems to Victorian SMEs, to increase commercialisation outcomes from informal company innovation activities. 1 Partnered with Enterprise Connect and CSIRO to deliver the Commonwealth Researchers in Business program. The topic of Innovation dominated the agenda for the financial year. The Australian government initiated the Cutler Innovation Review, released its innovation strategy for Australia over the next decade in Powering Ideas: An Innovation Agenda for the 21st Century and surprised the populace with its 2009 Budget package. The Australian government s innovation agenda emerged as a response to the key findings and recommendations from the Venturous Australia Building Strength in Innovation: Review of the National Innovation System chaired by Dr Terry Cutler. The innovation agenda sets out a framework of national innovation priorities and provides a range of recommendations to achieve its objectives. Powering Ideas outlines a vision for innovation in Australia for 2020 which includes: 1 A stronger national innovation system by Seven innovation priorities that address the country s long-term weakness in business innovation, and in collaboration between researchers and industry 1 Increasing the capacity of public research organisations to tackle complex problems, participate in domestic and international collaborations, and undertake multidisciplinary research 1 Developing a research workforce strategy to address expected shortfalls in the supply of research-qualified people 1 Increasing the proportion of businesses engaging in innovation by 25 per cent over the next decade 1 Improving innovation skills and workplace capabilities, including management and leadership skills 1 Using public procurement to drive research, innovation and technology development by Australian firms 1 Researchers, business and governments working collaboratively. 4 5 Innovation around AustRALIA

4 THE BOARD David Barbagallo - Chairman David Barbagallo is the current Chairman of the AIC Board. He is also CEO of the Endeavour Foundation, one of Australia s largest non government organisations, Chairman and non-executive Director of Facet Pty Ltd and a Director of Orchidhouse Pty Ltd, a consultancy in strategic planning and performance management of companies. David is also a non-executive Director of Peak 3 Pty Ltd, a non-executive Director of the CRC for Interactive Design (ACID) and Chairman and non-executive Director of Geogenx Pty Ltd. Previously, David was the Executive Vice President for Solutions Development and Innovation and Market Development, Mincom Ltd and the Chief Executive Officer of the Distributed Systems Technology Centre (DSTC Pty Ltd). He is a member of the AICD, Chairman of the ICT Advisory Group to the Treasurer and Minister for Employment and Economic Development, the Hon Andrew Fraser MP and is a Fellow of the IC2 Institute, University of Texas. DR JOHN BALLARD From THE BOARDroom Dr John Ballard is currently a Director of BR Angels Pty Ltd and the Australian Association of Angel Investors Ltd, a Director of early-stage bioscience companies, Ad Alta Pty Ltd, Neubody Pty Ltd and Applimex Pty Ltd. He is Chairman of BioAngels Inc and of the Australian Proteomic Analysis Facility (APAF). He was previously Managing Director and CEO of GroPep Ltd until He is a recipient of several research awards including the Australian Society of Biochemistry and Molecular Biology s (ASBMB) Boehringer-Mannheim, LKB and Lemberg medals. He has served as Secretary and President of ASBMB and President of the Australian Perinatal Society. Dr Ballard was awarded CSIRO s Business Excellence Medal in 2001, the Centenary of Federation Medal in 2003 and the Clunies Ross Award in 2004 for the role he has played in the development of GroPep and Australia s biotechnology capabilities At the beginning of the 2008/09 financial year, the community of organisations involved with commercialisation in Australia faced great uncertainty. The abandonment of the Commercial Ready program, indifferent support for commercialisation from the Productivity Commission in its review of public support for science and innovation, and an adverse legal finding against a leading university on its ownership of IP caused many to question whether the commercialisation chasm was becoming even wider. PROFESSOR PAUL GREENFIELD Professor Paul Greenfield was appointed Vice Chancellor of the University of Queensland from 2008 and was Senior Deputy Vice-Chancellor from 2002 to Professor Greenfield has extensive experience as a Board Director and is currently a Director on a number of company boards. He has also consulted and worked widely with industry on a range of projects spanning biochemical engineering, wastewater treatment and waste and environmental management, as well as economic evaluation of projects (particularly in the biotechnology and environmental fields). His interests lie in biotechnology, environmental management and R & D management and commercialisation. He is currently Chair of the Scientific Advisory Group of the South East Queensland Healthy Waterways Partnership and was appointed Chair of the Expert Panel on Purified Recycled Water. He is also Chair of the Thiess International Riverprize Committee and the International Water Centre. In 2006 he was appointed to the Board of ANSTO and in 2008 he was appointed to the Defence Science and Technology Organisation (DSTO) Advisory Board representing the academic and research community. From the Boardroom Yet in spite of these challenges, and the global economic downturn, the AIC prospered. Building on its core skills in business innovation, its position as a trusted intermediary, and its numerous linkages with key stakeholders, the AIC was able to innovate in its own service portfolio and adapt to the changed environment. During the year, the AIC increased its engagement with the Australian Government, winning two important new contracts. The first, as a key provider of services to the new Clean Energy Innovation Centre, one of seven under the Enterprise Connect network, positions the AIC at the forefront of what it does best: helping businesses with new products or services understand their markets, technologies, and IP positions; where they fit into the value chain; how to collaborate with research organisations and other businesses; and how to innovate. The second, under the Researchers in Business program, helps businesses to identify a researcher who can help solve their technical or business challenge, and then establish and fund a working collaboration. The AIC also enhanced its presence in Queensland, working to establish a new regional innovation initiative and support systems to help increase by half, in 2020, the number of businesses reporting they innovate. Internationally, the AIC remains a trusted adviser to the Malaysian Ministry of Science, Technology and Innovation, working to develop similar programs in Malaysia. The AIC is also working with the Philippine Department of Science and Technology. Both relationships are also helping AIC connect Australian businesses to these export markets. Tougher economic times have again whetted the community s appetite for entrepreneurship and commercialisation. The AIC enters its seventh year in a strong and vibrant state. The Board of the AIC believes in the value that a not-for-profit, independent organisation like ours can bring to the nation, and thanks all of the AIC s staff for their dedication and commitment to the cause, and our customers for believing in us. PROFESSOR SANDRA HARDING Professor Sandra Harding is Vice-Chancellor and President of James Cook University. She has undertaken a wide variety of roles within the business community and the higher education sector. She is currently the Chair of the Innovative Research Universities Australia (IRUA) alliance and a Board Member of Universities Australia. Professor Harding is currently a Director of the Australian Institute for Commercialisation, Townsville Enterprise Ltd, Advance Cairns and the Australian Institute of Marine Science. She is a Board member of the Business/Higher Education Round Table, TropLinks Inc and the International Scientific Advisory Committee, Great Barrier Reef Foundation. She is also a non-executive Director of the Global Foundation for Management Education Ltd (Montreal). ProFESSor vicki SARA Professor Vicki Sara is Chancellor of the University of Technology Sydney. She is a Fellow of the Australian Academy of Science and the Australian Academy of Technological Sciences and Engineering. Her previous appointments include Chair of the Board of the Australian Stem Cell Centre from , Consul General for Sweden in Sydney , Chief Executive Officer of the Australian Research Council from and Chair of the Council and a member of the Prime Minister s Science Engineering and Innovation Council (PMSEIC), and the CSIRO Board from ROBERT TUCKER Robert Tucker is currently the Managing Director of TradeCoast Central Pty Ltd, a company established to redevelop the old Brisbane Airport site at Eagle Farm into a master planned industrial and commercial community. Robert Tucker has previously launched and operated a major chain of retail pharmacies across Queensland and the Northern Territory, established the Prime Development group of companies that have built and operated shopping centres, pioneered the development of retail showroom centres in south-east Queensland and, in recent years, has rehabilitated large contaminated former industrial sites to create high quality industrial office, warehouse and factory precincts and buildings throughout the Brisbane region. 6 7 The Board

5 THE Executive Team Performance Dr. Rowan Gilmore Dr Rowan Gilmore has been the Chief Executive Officer of the Australian Institute for Commercialisation (AIC) since May 2003, where he is responsible for leading the organisation in its mission to help businesses, research organisations and governments accelerate the commercialisation of their knowhow and technology. Prior to this role, he was based in London and Geneva from 1998 as Vice President of Network Services (Europe) for the airline IT company SITA, now France Telecom s Orange subsidiary. Rowan s career has spanned a variety of senior product and business management roles, with much of his experience gained abroad. His career began in Asia as a field engineer in the oil industry for Schlumberger Ltd., and followed with over fifteen years in the US and Europe in the electronics design and telecommunications industries. Who Engages the AIC to Deliver Services? (by revenue) Where Do We Deliver Service? (by number of Clients per state) He is an engineering graduate and winner of the university medal from the University of Queensland, and he subsequently earned his Doctor of Science degree from Washington University in St. Louis in the US. He continues to have strong links with the University of Queensland, holding adjunct professorships in both the School of Business and the School of Information Technology and Electrical Engineering. Dr. John Kapeleris Dr John Kapeleris has more than 16 years' experience in the biotechnology industry having held a diverse range of roles including R&D Manager, Quality Manager, Business Development Manager, VP Sales and Marketing and Deputy CEO. John has been with the AIC since February 2004 and was responsible for establishing the AIC s TechFast Program "Accelerating Technology Transfer and Diffusion using a Market-pull Approach". In his current role he has assisted numerous organisations and entrepreneurs achieve commercial outcomes from their ideas and technology opportunities. He has been involved in the successful negotiation of numerous technology transfer, licensing and distribution deals. International 6% Private Sector 14% Services on behalf of Government QLD Gov 37% Federal Gov 23% WA 6% SA 15% TAS 3% NSW 6% QLD 39% John currently holds a BSc (Hons) in Microbiology, a Graduate Diploma in Management and an MBA (Technology Management). John received his Doctor of Biotechnology from the University of Queensland, where he currently holds an adjunct Associate Professorship. His interests include knowledge management, creativity and innovation and how these are leveraged to gain competitive advantage in the market. John is the co-author of the book titled Innovation and Entrepreneurship in Biotechnology An International Perspective, which covers a range of topics in commercialisation. SA Gov 5% VIC Gov 15% VIC 30% ACT 1% Alex Blauensteiner Alex Blauensteiner has spent 15 years working in industry-focused innovation and economic development roles. He spent his initial working years in the early and mid 1990s in technology start-ups within the ICT industry. He successfully co-founded and grew an online marketing business in the late 90s, then went on to assist another listed Australian technology business to commercialise its technology in Australia and the US, spending time establishing their business presence in Silicon Valley. excludes individual inventors In 2001 Alex joined AusIndustry to pursue his joint passions of economic development and innovation. This role saw him working side-by-side with industry to assist them access Commonwealth Government innovation and commercialisation support programs. Since 2005 Alex has seeded, developed and managed the AIC s national TechFast program, which assists industry and technology developers across Australia to connect and collaborate to solve industry problems and commercialise innovative new technologies. Alex holds a Bachelor of Business (University of Queensland) and a Masters of Management in Industry Policy (Australian National University). Andrew Fern Andrew Fern is responsible for internal operations within the AIC including systems and processes. His efforts are substantially directed towards internal best practice, strategy, delivery support, and ensuring efficient use of AIC resources. Andrew s experience includes P&L management of Australian businesses, an executive role across Australia and New Zealand in a large international software vendor, and a CIO role in a then ASX 200 corporation. He has experience defining commercial and go-to-market strategy, managing intellectual property and negotiating partner agreements in differing industry sectors nationally and internationally. How Many Clients Do We Service? (by service type) Commercialisation Advisory 9% Innovation Services with Government 21% Technology Clinics 6% Building Collaborations 6% Who are our Clients? Corporates 4% (over $50m turnover) Government 2% (Australia) Entrepreneurs 30% With first hand start-up company experience, Andrew is a contributor to our programs aimed at early stage entrepreneurs. He is passionate about early stage companies and the AIC programs aimed at assisting these companies through the commercialisation process. He holds a Bachelor of Business from Monash University, and is undertaking a Masters by Research in sustainable energy technology diffusion through QUT. Betty Hetherington Betty Hetherington has more than 20 years accounting and administration experience n different industries including manufacturing, aviation, sport and not-for-profit. Market Research 4% Policy Advocacy 1% Raising Skills 53% SMEs 56% (up to $50m turnover) Research Organisations 7% Government 1% (International) The AIC serviced over 1100 customers in The ExECUtIVE TEAm Betty is a member of National Institute of Accountants and holds a Graduate Certificate in Management, an Associate Diploma in Accounting, and a Certificate IV in Workplace Assessor and Training. She is responsible for all the corporate functions of the AIC including finance and administration. Using data obtained from the AIC s clients nationally, the AIC estimates that its TechFast activity alone over the last 5 years has facilitated an additional $64m in R&D commitments by Australian companies and created almost 50 new R&D jobs. From this additional R&D activity a total of $210m in new revenues are forecast resulting in an additional 1105 new manufacturing and service jobs 8 9 PERFORMANCE

6 Building Collaborations Raising Skills what we Do Most people in the community are unaware of what commercialisation involves, so we are often asked what we do. The AIC provides a broad range of services that even some of our closest supporters aren t aware we offer. Innovation can be like that! Policy Advocacy Innovation Consultancy Market Research Technology Clinics We hope this section will help you understand that commercialisation involves the following: 1 Building collaborations Between research organisations and business, as in TechFast 1 I nnovation Consultancy, consisting of four types of services: Market research providing information about customers and competitors Technology Clinics creating new commercialisation projects along new value chains 1 Raising skills To help researchers recognise the value of their IP, through Commercialisation Bootcamps To help entrepreneurs bring products to fruition, through Ideas2Market 1 Commercialisation Policy Advocacy Commercialisation Advisory consulting with clients to commercialise their IP Innovation Services with Government services delivered on behalf of governments Through these activities, the AIC helps our clients to prepare their ideas for investment and ready themselves to reach new markets. Commercialisation Advisory Innovation Services with Government Proposing and designing new programs for governments AIC services diagram AIC services diagram

7 building collaborations Building Collaborations Policy AdvoCACy Raising Skills Innovation ConsultANCy Market Research Commer- CIAlisation ADVIsory Technology ClINICs Innovation SerVICes with Government Building COLLABORATIONS As part of its push to support Open Innovation in industry, the AIC has significantly expanded its collaboration facilitation activities during 2008/2009. Its various collaboration programs work with businesses, research organisations and government departments to help them establish new, commercially focused collaborative partnerships. The AIC continues to deliver its highly successful national TechFast program, now in its sixth year. TechFast provided hands-on assistance during the year to a further 70 SMEs nationally, helping them to identify, assess and engage with new external collaboration partners from both public and private sectors. Businesses assisted with valuable new connections and partnerships include surf apparel business RipCurl in Victoria, natural cosmetics manufacturer Larissa Bright in Queensland and food and beverage processing technology supplier Cavitus in South Australia. Since inception, our TechFast program has established research collaborations with over 140 companies, and these are estimated to have increased total firm revenue by over $210M per year and created over 1100 new jobs. The AIC also commenced two new national collaboration assistance services in partnership with the Australia Government s Enterprise Connect initiative in As part of Enterprise Connect s Researchers in Business (RiB) program the AIC is providing linkage services to help SMEs identify and access research expertise from Australian public research organisations. The AIC is also helping these firms to access up to $50,000 co-funding to enable researchers to spend time in their business working on their projects. The first firm to benefit through this new service was South Australian based La Casa Del Formaggio, manufacturers of premium quality Italian style cheeses. Through the service La Casa was able to access assistance and funding to formally engage the South Australia Research and Development Institute to assist it with improving its manufacturing processes. The second new collaboration service being delivered by the AIC commenced in June 2009 and forms part of the national services offered through Enterprise Connect s Clean Energy Innovation Centre, to which the AIC is a major partner. This service specifically assists SMEs who are developing or commercialising renewable energy or low emission products and services. The AIC is helping these businesses identify and partner with organisations that can provide both technical and commercial expertise or networks required to commercialise their products and services building collaborations

8 Building Collaborations Raising Skills Raising Skills Over the past twelve months, the AIC has delivered a range of educational programs that have assisted over 350 people to convert ideas or intellectual property into successful business outcomes. Policy AdvoCACy Innovation ConsultANCy Market Research Commer- CIAlisation ADVIsory Technology ClINICs Innovation SerVICes with Government Ideas2Market What the PArtICPANts say Commercialisation BootCAmps The Outcome RAISING SKILLS In 2008/09 the AIC delivered ten Ideas2Market workshops across Queensland, assisting more than 160 entrepreneurs and small business owners to take their ideas to market. An initiative of the Queensland Government s Department of Employment, Economic Development and Innovation, the Ideas2Market small business program is delivered by the AIC to provide innovators and small-to-medium-enterprises (SMEs) with information and skills to improve their competitive advantage. The program consists of two separate workshops Introductory and Masterclass. The Introductory workshop is a comprehensive introduction to starting a business and taking an idea to market, designed f or those who would like to start a business, novice inventors, or those with early-stage business ideas. The workshop guides participants through the steps required to determine the feasibility of their idea. It then explores the topics of business planning, how to protect intellectual property, elements of market research and entry strategies for start-ups, how to access funding, and commercialisation pathways. The Masterclass is designed for existing business owners who wish to take their company to the next level, businesses considering export and previous Ideas2Market participants. The content is more advanced, and covers preparing for growth, building a brand, business model innovation, new product development, strategic management of intellectual property assets, exporting and funding for growth. The masterclass workshop concludes with a Mentoring for Growth panel session where participants are able to seek specific advice around issues in their business. These workshops are delivered by the AIC s experienced facilitators and include a range of guest speakers including patent attorneys and real-life business case studies. 1 Mt Isa 1 Mackay 1 Gold Coast 1 Townsville 1 South Brisbane 1 Caboolture / Brisbane North 1 Cairns By attending the Ideas2Market workshops I was able to focus my projects into realistic expectations and with the contacts I made through the workshop I was able to achieve success. Chris Fowler, My Solar Wind The workshop was excellent. It covered so many facets of business experiences by speakers that had been actively involved in business themselves. This made for a worthwhile educational day. It was also great to meet other business owners and develop future networking contacts. Andrew Gallagher, Lollyworld Commercialisation Bootcamps are run by the AIC to provide researchers and commercialisation professionals with a highly interactive and practical introduction to the key principles and issues surrounding the commercialisation of research. The Bootcamps are intended to help researchers begin to appreciate the value their research might bring and the steps they need to consider to realise that value through commercialisation. This year the AIC has run several successful bootcamps across Australia, attended by over 190 participants. Two of the bootcamps held this year were arranged for CSIRO Exploration and Mining Division. CSIRO approached the AIC and requested two Commercialisation Bootcamps to help their research teams in Perth and Brisbane develop a greater working knowledge of the commercialisation process. The AIC worked closely with Lisa Devereaux, CSIRO s Manager for Innovation and Commercialisation, to develop a program that would address CSIRO s goals and objectives, including to: 1 enable researchers to recognise the commercial potential of future research 1 promote the commercialisation policies and procedures of CSIRO 1 assist participants in developing an understanding of intellectual property and related issues 1motivate participants through relevant case studies 1 assist participants to develop and deliver a pitch of an idea to potential investors. The content was also tailored to suit the researchers fields of research and existing levels of understanding. Excellent feedback was received from all participants. The majority of participants stated that as a result of the Bootcamp, they were able to identify changes they could implement immediately to their project proposals and almost all participants felt the workshop enabled them to understand commercial realities more clearly. The Commercialisation Bootcamp provided an opportunity for CSIRO researchers be internal advocates for commercialisation training. It further clarified the importance of IP management (through invention disclosures and patents etc) in the CSIRO pursuit of obtaining the highest possible impact from its science investments. Of high value to all attendees were the discussions that resulted from the real life case studies and further emphasis that the key message of starting with the end in mind is not just a mantra. - Lisa Devereaux, Manager for Innovation and Commercialisation, CSIRO RAISING SKILLS

9 Commercialisation Policy advocacy CommERCIALIsation PoLICY advocacy The AIC is not only a service organisation providing services to help innovators achieve commercial success. We are also advocates for commercialisation, and thought leaders; part of our mission is to provide advice on policies that strengthen commercialisation. Building Collaborations Policy AdvoCACy Raising Skills Innovation ConsultANCy Market Research Commer- CIAlisation ADVIsory Technology ClINICs Innovation SerVICes with Government In fact, the AIC is one of the few service providers in Australia qualified to provide suggestions on evidence-based commercialisation and innovation policy. As a result, our advice is keenly sought by many governments because of our first-hand practical experience in solving the real problems in commercialising technology that are faced by small businesses, entrepreneurs and research organisations. The 2008/09 year was a momentous year for innovation policy in Australia, with the Cutler Review of the national innovation system. The AIC made several separate submissions to the review. In them, we advocated the importance of facilitating collaboration along new value chains to achieve commercialisation; the role of government procurement in fostering demand for innovative new products and services; and the impediments to better collaboration between research organisations and small business. The review committee released its report Venturous Australia in late The report was answered in the 2009 Federal budget, with the announcement of a historic 25% increase in Australian government spending on innovation and science to $8.6 billion, and the release of Powering Ideas an Innovation Agenda for the 21st Century. Within that, $196.1 million was earmarked over the next four years to establish a new Commonwealth Commercialisation Institute. At the time of writing, broad consultations are still underway between governments, industry, and research organisations as to the scope and programs the new organisation will offer. Its governance structure and how the AIC will work with it is yet to be defined.whatever its structure, the AIC is delighted that commercialisation now has a legitimate and prominent place in the Australian government s innovation agenda. Since 2002, the AIC has been a leading advocate for the commercialisation community, particularly the research sector and small business. It sees the announcement as a measure of its success, for the bold new initiative delivers two key messages that the AIC has been advocating since its foundation: firstly, it sends a strong imprimatur from the Australian government that commercialisation is a legitimate mechanism to build national wealth and achieve social and environmental outcomes from our research base; and secondly that scale - an order of magnitude larger than the current AIC - is required to achieve that. The AIC expects that many of the services, tools, systems, and know-how that we have developed will provide a solid foundation for the new institute, which is expected to start operations in early During the year, the AIC also prepared a formal submission to the Garnaut Climate Change Review, on the role of R&D in developing new low emissions energy technologies. We suggested a number of programs, such as TechFast and TechClinics, that could help define and assemble new industry value chains so emerging environmentally sustainable technologies could reach their markets. In a similar vein, the AIC s submission to the Senate Select Committee on the National Broadband Network (NBN) culminated in an invitation to our CEO to give evidence at Parliament House and appear on ABC TV. Dr. Gilmore lamented the lack of an Australian global telecommunications equipment supplier, in spite of historic opportunities presented over the past three decades of telecommunications build, and suggested mechanisms to avoid Australian industry missing the commercialisation opportunities this time around. During the year, we also continued to develop new evidence-based policy by supporting and actively participating in two separate ARC Linkage Grants, the first with UQ and QUT investigating knowledge transfer mechanisms in Queensland, by interviewing scores of past attendees of our Ideas2Market seminars. The second, with Melbourne University, is examining the markets for trade or exchange of IP and technology in Australia, and will survey a diverse group of participants for example patent attorneys, commercialisation offices, and government labs - to analyse the presence of such technology markets, and to document the nature and magnitude of any market failure. Last year, the AIC surveyed a number of CRCs as part of research for the Victorian Government on optimising value from CRC knowledge. This year, the AIC has subsequently developed a model that reconciles the CRC objectives of public good and commercialisation, which are sometimes positioned as binary extremes. The model illustrates how underlying pressure to commercialise has in fact optimally positioned many CRCs to achieve both. We have also developed a similar model to counter the notion that IP developed by publicly funded organisations should be made freely available to the public, in the notion that such open access optimises its use and potential value. Our model of open innovation differentiates between who collaborates to develop and create new IP, and who collaborates to commercialise it. Optimising public value can require multiple forms of collaboration and may in fact require protection of IP rather than open access. The AIC s policy submissions and white papers are freely available on the AIC website Commercialisation PoLICY advocacy

10 The AIC s Market Research service helped us to make an informed decision about the direction of a new business venture Thomas Beck, EDAG Australia, Managing Director. Innovation consultancy Innovation ConsultANCY Building Collaborations Policy AdvoCACy Raising Skills Innovation ConsultANCy Market Research Commer- CIAlisation ADVIsory Technology ClINICs Innovation SerVICes with Government Market Research service The Australian Institute for Commercialisation offers a specialised market research service providing high quality, customised market intelligence to support commercialisation activities. Clients use this information to assess business opportunities, identify market gaps and opportunities, and build credibility with potential investors and partners. Our market research service is distinguished by offering: 1 a strong commercialisation focus 1 a team of technical skilled analysts 1 access to a wide variety of high quality market intelligence databases. Our databases offer timely specialist intelligence on numerous markets across the world, representing major industry sectors such as biotechnology, clean technology, information and communication technology, electronics, nanotechnology, environment and energy and advanced manufacturing. In the AIC s market research service assisted over 40 entrepreneurs, small businesses and other organisations. The AIC s business intelligence service, which provides ongoing access and analysis throughout the year, assisted numerous research organisations including Uniquest, QUT Bluebox, Newcastle Innovation and NICTA. The benefits received by AIC s market research clients included: 1 a better understanding of the market landscape for a new product or service 1 early staged informed decision-making for new opportunities 1 identification of potential partnerships or distribution options 1 market-based valuations for technology and IP 1 greater clarity around investment decisions Market research service

11 Commercialisation Advisory The AIC provides innovators with leading practice advice and professional services that enhance commercialisation capability and assist with converting ideas into successful outcomes. AIC Technology CLINICs AIC Technology ClINICs The purpose of Technology Clinics (TechClinics) is to enhance the leverage of research and development (R&D) for commercial outcomes, ultimately leading to an increase in the level of business expenditure on R&D (BERD). Coming up with complete solutions for urgent problems such as climate change can require the cooperation of many stakeholders, each of whom holds only part of the answer. For example, to make renewable fuels such as biodiesel commercially available requires not only a source foodstock, it also requires a distiller, a distribution network, a refiner, and perhaps adaptation of end-user equipment before it becomes a viable alternative to existing fossil fuels. Such an assembly of producers and users is called a value chain, and in new industries, such value chains can take a long time to assemble. TechClinics bring together researchers, technology providers, potential end-users of research and other significant stakeholders (e.g. regulators and supply chain members) to explore opportunities to target R&D activities to meet end-users potential future needs. The anticipated outcomes from Technology Clinics are targeted collaborative R&D projects which leverage research capability and lead to solutions that can be adopted by end-users in industry. The Technology Clinic process focuses on: 1 Understanding the science and technology needs of end-users and beneficiaries of R&D 1 Translating their needs into targeted strategic research 1 Development of collaborative R&D platforms 1 Defining and scoping collaborative research projects Key objectives of the Technology Clinic Program are: 1 To increase participatory and focused engagement between stakeholders including end-users, researchers and technology providers, to identify pre-commercial R&D priorities. 1 Encourage end-users to develop R&D portfolios that reflect their priorities and enable researchers and technology providers to target R&D and technology to these priorities. 1 Facilitate relationships that lead to end-users co-investing into pre-commercial R&D with researchers and technology providers. 1 Identify and grow the pool of firms that leverage R&D by linking them to relevant research organisations, end-users and/or complementary firms through collaborative R&D projects. The AIC hosted and facilitated the TechClinic Advanced Technologies in Biofuels Algae in Brisbane on 31 March Following on from this successful TechClinic, a number of outcomes were achieved: Firstly, collaborative agreements have been signed in the form of MOU s between a number of TechClinic participants. Of particular note is the MOU signed between GreenCell Environmental Solutions Pty Ltd and the James Cook University (JCU). Secondly, a greater awareness has been established of several algae-derived biofuels activities, including research and development programs at the Institute of Molecular Biosciences, UQ, James Cook University and CSIRO, and industry demonstration plants through MBD Biodiesel and GreenCell Environment Solutions Pty Ltd. Furthermore, the algae-derived biofuels value chain was defined and further developed, identifying the strengths and opportunities for both Queensland and Australia. Finally, new relationships have been created between industry and the research sector, while existing relationships have been strengthened. For example, as a result of the TechClinic, Biodiesel Queensland has established stronger relationships with the research sector and in particular with James Cook University. The AIC s second TechClinic was held in Cairns in June on the topic of New technologies for marine tourism operators and created similar excitement and new activity. With at least five more TechClinics planned on a variety of topics for 2009/10, the AIC is committed to helping accelerate the growth of viable new industries in Australia. The AIC provides innovators with leading practice advice and professional services that enhance commercialisation capability and assist with converting ideas into successful outcomes. Typical AIC clients will have an idea or piece of intellectual property that they are seeking to licence, sell, or turn into a marketable product. Our experienced commercialisation advisory team responds to client requirements by offering customised advice, tools, solutions or professional development programs that will improve their commercialisation outcomes. We provide customised advice for a wide range of other needs including IP policy, IP audits, commercialisation strategy and project management. The AIC has a strong track record and extensive commercialisation experience both in Australia and overseas. Using the AIC s commercialisation advisory services, our clients have achieved: 1 Revenue growth and increased market share from new product or service development resulting from collaboration and innovation services 1 Increased business development opportunities from the AIC s deep innovation networks and strengthening of a firm s value chain 1 Improved negotiated outcomes from collaborations, because of the AIC track record and because the AIC has no monetary interest in collaboration or commercialisation outcomes (other than customer success) 1 Cutting edge or improved products and services that meet customers needs, developed as a result of AIC s linkages with the research sector 1 Improved skills and effectiveness from better understanding, recognition, and utilisation of IP. Outcomes and Achievements During the AIC delivered a wide range of commercialisation advisory services to individuals, small businesses, research organisations, government agencies and large corporations. Some of the key outcomes and achievements include: 1 assisted more than 140 small businesses with their commercialisation needs through the provision of IP reviews, commercialisation plans, and linkages to markets and service providers. 1 facilitated innovation and commercialisation workshops for clients 1 worked with a number of CRCs to drive their commercialisation agendas and help transition their IP into new markets 1 conducted IP audits and reviews for research organisations and government agencies in Australia and internationally 1 engaged with large corporations to broker commercialisation deals, scout for new technologies and identify IP opportunities 1 successfully mentored and guided more than 50 inventors, entrepreneurs and small businesses to commercialisation CommERCIALIsation Advisory

12 Innovation services With GoVERNment The AIC services a number of programs on behalf of state and Commonwealth Governments. It also provides a range of innovation services to government agencies to assist in the commercialisation of IP originating within the government sector. Innovation services with GoVERNmentt The AIC is involved in the delivery of services to the following initiatives for the Commonwealth Government: 1 The Clean Energy Innovation Centre (CEIC) The AIC is a key participant in the centre, together with Newcastle Innovation and the Western Australian Sustainable Energy Association. The initiative is providing hands-on assistance to small and medium enterprises developing new technologies that generate or deliver clean energy, enabling them to tap into expertise, research and technologies through partner organisations and their networks. 1 Researchers in Business (RIB) This innovative support program involves the placement of researchers from universities or public research organisations into businesses where a researcher can help to develop and implement a new idea or solve a problem. In Queensland the AIC runs a number of programs on behalf of the government Department of Employment, Economic Development and Innovation (DEEDI) including: 1 The Queensland Inventor Service (QInS) This service consists of online tools, resources and information and was established in 2009 to assist inventors with the commercialisation of their ideas. Inventors can log into the Inventor s Guide, complete a self assessment questionnaire and automatically receive a report suggesting next steps, based on the information they provided. After they complete the questionnaire the inventors have the option to discuss the information with an AIC consultant. 1 QWIN Innovation Coaching As part of the Queensland-Wide Innovation Network (QWIN) the AIC is responsible for running the Innovation Coaching program. Innovation coaches located in Cairns, Brisbane and the Gold Coast work with DEEDI regional offices to identify and assist SMEs that could benefit from innovation coaching. 1 Innovation Toolbox This is an online service to assist companies to access knowledge, tools and resources to drive their innovative journey. The site contains a range of topics designed to educate and guide companies along their innovation journey. Topics range from Why Innovate through to Measuring Success. The site also contains an upto-date list of current events related to innovation and a discussion forum (blog) area. 1 Regional Commercialisation Access Program The program works with regional SMEs in Queensland to assist in identifying new technologies and linking the businesses to research partners such as universities, CSIRO and CRCs. This program is a great example of demand-driven commercialisation. 1 Technology Clinics (TechClinics) TechClinics are technology forums that focus on bringing together researchers, technology providers, potential end-users of research and other significant stakeholders (e.g. regulators, supply chain members) to explore opportunities to target R&D activities to meet end-users potential future needs. The AIC in partnership with the Victorian Government Department of Innovation, Industry and Regional Development (DIIRD), delivers a number of commercialisation services to SMEs based in Victoria, including: 1 Victorian TechFast Program, accelerating technology and knowledge transfer from research organisations to industry using a market-pull approach 1 Provision of the Gateway Enterprise, an online commercialisation resource that includes leading practice assessment tools, guides, templates and online links to assist businesses with their commercialisation needs. 1 Policy research to inform DIIRD with their future innovation and commercialisation strategies. In South Australia, the AIC on behalf of the government Department of Economic Development and Trade, delivers the South Australian TechFast program, assisting SMEs to enter new collaborations with research organisations. The program involves a market-pull approach to technology and knowledge transfer between the research sector and industry Innovation services with GoVERNment

13 THINGS YOU NEED TO ASK yourself ABOUT 20INNOVATION INNOVATIONQUIZ The Innovation Journey Australian companies are being told that they need to work smarter and more collaboratively to beat the current global economic slowdown; that they will need to be innovative. While we talk about it a lot, ask most people what innovation really means to their organisation and you could be met with a blank look. A simple way to think about innovation is to think of an innovation journey that starts when the organisation is created but never ends. The innovation journey describes how organisations develop their ability to innovate. The first step is about developing a basic strategy and the second about developing a core competency. Firms that have successfully done this are better placed to start to identify and adopt useful new ideas from outside the business (Step 3). Successfully adopting other people s ideas can lead organisations to see new opportunities which may result in new products, processes, services or even a new business model being developed (Step 4). Organisations that regularly innovate or develop ideas may then start to attract or even proactively seek out potential external collaborators to boost their innovation capability. Collaboration offers the opportunity to work with other companies to develop ideas. It decreases the sole reliance on internal capability to develop ideas to improve and grow the business (Step 5). Our organisation has a clear purpose, such as 01 people in some way Our organisation has the specific skills, equipment deliver the services we provide We commit time and resources to changing our better or more cost effective Our organisation focuses on doing certain things 14 We have a clear way of collecting new ideas (about marketing, systems, tools, training methods or technology) and deciding whether to adopt or ignore them. Our organisation invests time or money in training its people. When a customer discusses new requirements or ideas, we invest time and resources in developing solutions for them. We use external experts to help us improve products or services, or to solve problems. STEP1 Develop a strategy and purpose STEP2 Development of core capability STEP3 Development of base level absorptive capacity STEP4 Development of internal innovation capability STEP5 Development of open innovation capability 05 Team members are encouraged to network outside are doing Team members know what the organisation wants 16 We know who our customers are. Our organisation quickly communicates new, useful, or interesting information to interested people and organisations. (Can absorb and adopt external ideas only) (Can actually adapt and create internally) (Can collaborate externally to adapt and create) AIC 2009 We partner with our suppliers or customers to develop or improve products, processes or services. Our organisation makes it easy and encourages other organisations to approach us with new ideas, potential solutions or new opportunities. A study by the consultancy firm Arthur D. Little found that innovative firms enjoyed a 4% boost to their profit margins and that top innovators had over twice the sales of new products and services. A global CEO survey conducted by IBM studied over 1,000 companies and found that of the three most significant sources of new ideas for companies, two were from outside the organisation. Greater collaboration with other organisations can provide new sources of ideas, new routes to market and can also spread and decrease the risk of innovating. While collaboration sounds desirable, many of the CEOs surveyed said that collaborating and partnering is theoretically easy, but practically hard to do. Successful collaboration requires organisations to first develop the necessary skills by successfully completing the first four phases of the innovation journey. Where does your organisation stand along the innovation journey? Whether you re a company selling products or services, a government department or a university, you could still be innovating and implementing new ideas that could make you stand out from the pack and become a leader. Take this quiz to help you understand your organisation s innovative abilities and also to identify a few practical ideas to help your organisation along its own innovation journey. We ask our customers about their current or We commit time and resources to looking for outside the organisation It s clear what products or services we 20 Our customers appear happy with our products or services we receive repeat business, positive comments or few complaints. In our organisation, honest failures are not punished and I feel I could try something new. Our organisation encourages us to suggest ways to improve our processes, products, services, marketing, distribution or other things we do. Innovation Quiz AIC Innovation Quiz

14 SCORE RANGE RECOMMENDATIONS > SCORING 2 your ORGANISATION SCORE RANGE STEP STEP 1 Count the number of times you answered True to the questions. Use your score to identify the appropriate set of simple, practical recommendations that may be useful in helping your organisation improve and move along the innovation journey. RECOMMENDATIONS T O T A L S C O R E 9-12 P O I N T S There appear to be lots of things that your organisation is doing to encourage innovation, but there is always room for improvement. Collaborating with other organisations, improving your internal communication and asking your customers for their ideas might be something to consider. Here are some specific ideas: 1 Innovative organisations collaborate and are open to new ideas. Involve your staff in networking activities these are ways to meet potential customers, become aware of new trends in technology and marketing, or identify other organisations that could be useful partners for you. Think about what other activities could help you make useful contacts or find out about what other organisations are doing. 2 Innovative organisations have good internal communication. Make sure that information and ideas flow to the right people in your organisation. Circulate information about non-sensitive business opportunities, challenges and ideas discussed at management meetings to all team members. 3 Innovative organisations are receptive to the needs and ideas of their customers. Who knows your customers needs better than your customer? Asking them for their ideas is a powerful tool to build stronger customer relationships and to align your products and services to their needs. Identify a number of key clients and arrange to meet with them to discuss their current issues and future needs. Use this information to guide your future planning activity. 1-4 P O I N T S Hopefully this quiz has given you some ideas to think about. There is a range of things you can do to help your organisation become more receptive to innovation. Here are some suggestions. Read through the other recommendations for more ideas. 1 Innovative organisations effectively communicate their objectives to staff and customers. This helps to create better focus and greater customer loyalty. Form a team (including management) to discuss and agree on goals for the organisation, perhaps for the next 12 months. Document these goals and let staff and customers know about them. 2 Describing your products and services effectively is critical to convincing team members and customers that you have something of value to offer. Ask a group of team members to discuss and list the key benefits they believe each product or service offers. Use these key benefits to help you write a simple summary of each product and service, focussing on how it will help your customers. 3 Innovative organisations align their products and services with their strategy. Regularly reviewing this will help keep your organisation on track to achieving its goals and remaining focussed. Once your strategy is clearly defined, form a team to review each product and service to check whether each fits the organisation s strategy P O I N T S Your organisation appears to be already investing in innovation by actively improving or creating new processes, products or services. It seems to invest in the capability of its people and generally uses existing team member s skills to innovate. To help you even further, you might like to consider the following suggestions: 1 Ideas are often best generated through group discussions and brainstorming. Establish an informal ideas workgroup by inviting team members from all parts of your organisation to participate. This group could identify, review and reward the most innovative ideas. 2 Recognising innovative thinking encourages further innovation. Simple recognition of good ideas is a powerful motivator to keep people thinking about better ways of doing things. A practical reward is to ask the person who suggested the idea to lead or assist in its adoption. 3 Innovative organisations are open to ideas from their people. How can you encourage this? You could introduce an ideas box or address for your staff. Review their input periodically and reward the best ideas with a prize or the authority to introduce the new initiative. Innovation Quiz 5-8 P O I N T S AIC 2009 There appears to be an opportunity for you to introduce some new ideas to your organisation to improve how receptive you are to innovation and collaboration. Here are some specific ideas. 1 Innovative organisations have the skills and equipment they need to remain competitive. Review your products and services one by one and list the specific skills and equipment required to effectively get the job done. If gaps are identified, discuss practical ways to your improve skills in that area with team members and management. 2 Innovative organisations ensure their people are trained. Review the skills and training needs of your staff. A quick chat with team members about their formal and informal training and experience is a good way to identify their skills. You can use this information to map the skills and experience across the organisation which can help when considering or pursuing new business opportunities or when considering training activities. 3 Innovative organisations understand who their customers are and what their needs are. You must know your customer to enable you to improve or develop your products and services. You can do this by asking team members to review and define what type of person or organisation you are targeting. Use this as a checklist when planning new development or marketing activities to ensure you are focussing on your customers and that the activities align with your strategy P O I N T S AIC 2009 Congratulations. You are working in an organisation that is well on its way along the innovation journey. Your organisation appears to be open to new ideas from inside and outside the company, invests in training its people and actively creates new processes, products or services. To help you even further, you might like to consider the following suggestions: 1 Innovative companies don t work in isolation. How can you collaborate further? Identify companies that have similar ideas, specialist equipment or face the same issues and challenges as you and plan to build relationship with them. Your competitors can be a source of ideas to help your business grow and by combining your capability, you could increase your ability to win business. For more information on initiatives that can assist businesses to innovate and collaborate please visit: 2 Innovative companies constantly look outside for ideas. Consider attending networking events, trade shows and conferences to see what other organisations are doing. Even a simple key word search of the internet could assist you identify other organisations active in your area of business Innovative companies are generally open to approaches by other people or organisations with new ideas. Can you make better use of the web? Why not encourage your customers to post their suggestions, ideas or opportunities via your website Innovation Quiz

15 Open innovation or open slather? Dr. Rowan Gilmore, CEO, Australian Institute for Commercialisation Open innovation OR open slather In the past twelve months, perhaps encouraged by a couple of recommendations in the National Review of Australia s innovation system, there have been growing calls from some quarters to open up to the public all research or intellectual property (IP) developed using public funds. The theory goes that it is lack of access to information and new knowledge, and particularly valuable IP, which prevents many of society s problems from being solved. After all, if Australian taxpayer money has been used to fund research, the public should have free access to the results of this research, right? Wrong! Apart from the quite erroneous assumption that public value will always be maximised simply by providing easy access at no cost to this research, it also assumes that the public in other countries will not use that information for their own commercial gain and end up charging back the Australian public to appreciate the ultimate benefits. Where does the idea of so-called open access to IP come from in the first place? The debate tends to be fierce in education circles, particularly when it relates to sharing of curricula and course content. Proponents also frequently cite the open source software movement, now embraced by IBM and even more recently by Apple in its new iphone, to illustrate the advantages of widespread community collaboration in the development of new standards and software, and that such free software can still result in widespread commercial application. User-led innovation and community collaboration, as demonstrated in the multiplicity of iphone applications, certainly has its place, provided mechanisms exist for contributors to receive their fair share of the benefits or rewards. However, it is quite wrong to suggest that this is the best, indeed only, form of collaboration that brings triple bottom line benefits to the public. There are many other forms of collaboration when innovating, and many require constraints on access to IP and ensuing developmental outputs in order to fund ongoing development. Open innovation is a broad term that is used to describe the collaborative exchange of IP along the value chain in order to develop new products or services that will deliver value to customers. Proctor and Gamble is the most frequently cited exemplar of the open innovation process, with over 50% of their products the result of deep collaborations with multiple partner organisations that undertake research, development, and cross licensing of IP. Collaboration is nothing new, but it does vary in intensity and form. The AIC has characterised four different modes of collaboration involved in the innovation process, and these are shown in Figure 1. Open innovation involves collaboration in which new knowledge is generated and exchanged between at least two collaborating parties, and will involve varying degrees of access to this IP, depending on its ultimate use. The horizontal axis in Figure 1 shows who might participate in the collaboration, whether the collaboration itself is essentially limited or private (perhaps an elite group of invited collaborators), or open to public contribution. The vertical axis in the figure shows the degree of resulting access to the IP generated by the collaboration, ranging from keeping the IP confidential or private up to publicly available IP. The figure makes it clear that open access is just one form of open innovation. The Open Access quadrant discussed above implies that not only is participation open to everyone in the public, but that the outcomes of the collaboration are also made public. For this model to result in sustainable innovation, it requires organisations with distribution channels (and perhaps manufacturing) to reach the customer, and forms of business models where those involved can reap a sustainable return. In the case of open source software for instance, these returns will often come from use of the IP for subsequent closed innovation that might entail proprietary enhancements, customisation, or specialist services such as documentation, maintenance and support. It is worthwhile noting that even in open source, IP is given freely but nevertheless controlled through copyright and trademarks. The community can still be involved in collaboration even where the IP is retained for private use, as in the Community quadrant. The website InnoCentive, for example, allows companies to post problems and offer rewards to anyone with the best solution, but does not disclose the solution since the company wants to offer a proprietary product based on that solution. The AIC s TechFast program also falls into this type of open innovation quadrant, because it seeks a solution for a single company s challenge from across the entire innovation sector (in this case, defined to be all types of research organisations). of parties to provide a solution can be difficult to manage, and can be slow and labour intensive to sort through and find the best solutions. Collaborations involving a more restricted group of participants can be a more efficient way to find solutions, and can be of higher quality if the participants are carefully selected from a more elite group up front. The Competitive Firm quadrant is a form of open innovation involving a limited group of collaborators, where the resulting IP might be shared among the elite group or perhaps utilised by a single firm. Cooperative Research Centres (CRCs) are a good example of this type of collaboration, where IP is owned by the collaborators who undertake the work. The final quadrant, Industry Wide, allows the IP generated to be made available much more widely for industry benefit. A good example of activity in this quadrant is the AIC s TechClinic, in which several collaborators from various stages of the value chain collaborate to generate IP that is of benefit to the entire industry. All four quadrants are valid and useful mechanisms for building new value. Figure 1. Open Accessibility of collaboration IP Confidential INDUSTRY-WIDE AIC TechClinics COMPETITIVE FIRM CRCs IXC Innovation Exchange By Invitation (Elite) Who participates in the collaboration OPEN ACCESS Wikipedia Open Source R&D Forums Technology Roadmapping However, collaborations such as these which potentially call on an infinite number COMMUNITY InnoCentive AIC TechFast EC -RIB Public Domain open INNovation OR open slather

16 Open innovation, by involving the consumer in the collaboration, can create not just new products or services, but indeed new markets where none existed before. Value arises not just from the inputs alone, but also from the involvement of end users themselves. By casting a broad net to collect and evaluate ideas, the risks of development can be shared, and breakthrough innovation can be the result. However, any subsequent exchange of developed IP does not have to involve the entire public, nor need it be at zero cost. In the case of solving broad problems facing society, such as reducing the impact of climate change, it may be necessary to utilise all four collaborative quadrants to simultaneously create value by both solving the problem and generating new industries. In climate change innovation for example, the Open Access quadrant is the most appropriate for broad sharing of energy saving measures; the development and deployment of measures such as smart metering by an electricity company may involve the Community Quadrant ; an AIC TechClinic in bio-algae in the Industry Wide quadrant can help spur the development of new initiatives along the bio-fuel value chain; and the commercialisation of IP from the CRC for Greenhouse Gas Technology in the Competitive Firm quadrant can help a company that commercially captures carbon to develop better products. open INNovation OR open slather Likewise, products and services that start their development in one quadrant may eventually move to other quadrants. Although Apple s iphone model is well known for its open source software add-ons, its associated itunes service involves industry wide collaboration and proprietary digital rights software that belong outside the Open Access quadrant. Too many people who should know better confuse open innovation with open access. Why does it matter? Because almost everyone agrees that open innovation, involving deep and trusted collaboration, is essential for companies to grow and economies to thrive. Open access is another matter entirely. Proctor and Gamble are fine practitioners of open innovation but certainly do not provide open access to their IP. Is open innovation being used as a Trojan horse so open access becomes the norm? Proponents of open access often denigrate the commercialisation of publicly funded research. However, just as open innovation is not so simple, commercialisation also involves many complex issues and needs careful unpacking, rather than alternative solutions that promise a silver bullet. Most publicly funded research already exists in the public domain by virtue of the fact that most scientists both want to and need to publish. That is the right thing to do, so the frontiers of knowledge continue to advance. But let us not throw the baby out with the bathwater. There is also much IP that should be directly commercialised to bring benefits to society, and that frequently requires IP to be kept confidential. The commercialisation of Gardasil would never have proceeded in an open access regime, because no company could have afforded the clinical trials and development pathway required to bring the drug to the masses without exclusive rights. Optimising public value from publicly funded research will require multiple pathways to usage pathways that find expression in all four quadrants. That public good and commercialisation are not at opposite ends of a one- dimensional spectrum is described in a separate paper. Direct commercialisation of university research rarely yields more than 3-5% of total university income, but this does not invalidate it as one such pathway. Would 0% be more optimal, as the proponents of open access would have it? In fact, the correct expression of value may not even be economic at all, but could be an environmental or societal measure instead. Direct commercialisation of university IP can often achieve all three, even if a Proctor and Gamble or a Merck commercially benefit in the process. Thousands of women who would otherwise suffer from cervical cancer will doubtless support me on this one. Does CommERCIALIsation suffer from Market Failure? The valley of death and the commercialisation chasm are terms often used to describe that period when someone seeking to commercialise their idea or research stumbles for the investment necessary to prove their idea works and has a market. Typically, a small business or entrepreneur needs to develop a proof of concept model of their idea to convince their first potential customers of its feasibility, but no one is prepared to take the risk and make the investment needed to develop that model. As a result, the idea for the new product or service languishes in the valley, or worse, falls to its death. At the AIC, we often speak of fast failure. It is far better for someone to fail in the early stages of developing a new product or service for which there is no market than to suffer potential economic ruin from pursuing a potentially misguided but expensive product development process. But what of those truly great ideas that fail to attract investment? Is this an example where the markets fail? Market failure is a term used by economists to explain scenarios where a free market, left to itself, does not allocate resources optimally. This could occur, for example, when there is a natural monopoly, or there is asymmetric information available to buyers and sellers, or in the provision of public goods (such as defence). Because of pressure on governments to provide support or grants when market failure occurs, it is a term that needs to be used cautiously, as it is often misapplied. In the case of the commercialisation chasm, free marketeers would argue that governments should not intervene to support risks that private sector investors should, but are unwilling, to take themselves. The AIC believes however that government support can be justified when the benefit to the community from the economic, social, and environmental outcomes that will accrue exceed the cost of helping to cross the commercialisation chasm. A government fund to support the development of proof of concept models looks set to be established as part of the Australian Government s 2009/10 budget allocation, allowing more ideas to cross the commercialisation chasm. The challenge will be to leverage capital from industry, and particularly the superannuation funds, to co-invest in technological innovation and through that, to help shape the Australian economy for the future. However, with an Australian culture that prefers investment in real estate and the occasional flutter on penny mining stocks, that could prove difficult. Indeed, most Australian venture capital funds investing in new knowledge-based enterprises have achieved historically poor returns. As measured by their cumulative performance since inception, such funds established between 1985 and 2007 had a pooled return at the end of June 2008 of -1.4%, although that rises to 3.9% measured over a five year horizon MARKET FAILURE

17 MARKET FAILURE Even so, evidence of poor returns is insufficient on its own to justify government help for early stage commercialisation. For example, in 2007 the Productivity Commission argued that government intervention into the commercialisation market for research or new ideas could be justified only when there are costs that have to be borne by a market leader that would benefit other followers (i.e. spillover effects), and when there is additionality (i.e. the firm would not have invested in commercialisation without government incentives). Of course, that was 2007, but the global financial crisis has since caused the finance sector and some economists to change their views. In many countries, we observe much more intervention on the demand side of the economy, rather than solely on the supply side. What seems to be obvious to most of us involved with commercialisation that pumping more money into the supply of research does not automatically increase innovation within an economy seems finally to have become respectable thinking in politics. Measures to stimulate the many new value chains that could be created from this research are back in favour around the world. Furthermore, by helping early stage companies commercialise products and services, government has recognised that as well as yielding demonstrable economic benefits by growing emerging industries, positive environmental and social outcomes also result. The infusion of government-funded stimulus into the clean energy sector is a good example where the outcomes will benefit the nation through new employment, cleaner environment, community health and through adoption of a more sustainable long term use of our resources. So does market failure exist? We believe so. The amount of venture capital invested in Australia in genuine early stage research is so low that markets in early stage IP or pre-revenue companies barely exist, and resulting information asymmetries are large. The evidence of the past 18 months in the biotech sector, where the commercialisation chasm is well documented, is that private capital has essentially dried up totally. In 2008, only $10 million was committed in Australia specifically for seed stage investment, compared with $6.3 billion for all private equity investment. The markets for early stage IP are so thin that the reward rarely justifies the high risk for individual investors. By essentially taking a portfolio approach and spreading the risk over many projects, governments can and should play a role by providing support if there are positive benefits to the sector and the broader community. However, a frequent criticism when governments support markets is the mantra that governments shouldn t pick winners as the market is much better at this. Our view is that bears closer observation. Firstly, the bailout of banks around the world would suggest that even the highest paid and smartest analysts within industry have done an exceedingly poor job at picking winners, or at the very least, in undertaking proper due diligence. One could argue that the due diligence required to receive a $2M injection of funding from a venture capitalist (or a government grant for that matter) is much higher than that which preceded the numerous multi-billion dollar investments by many investment banks into their repackaged derivatives that precipitated the global financial crisis. Further, at least in Australia when allocating innovation grants, it is not government that makes the decision. Typically a panel of research peers or an industry advisory board will review the applications and sort the wheat from the chaff before advising the relevant Minister. The probity standards are exceedingly high and generally well managed. Finally, the number of Australian companies that have suffered lapses in governance with shocking consequences to their investors in 2008/09 (for instance, in timber schemes or child care centres) would seem to indicate that perhaps industry is not as good at picking winners as it might believe. The truth is, neither government nor industry have good track records at picking winners with pre-revenue, early stage companies. It is simply impossible to know from the multiplicity of seeds that are sown which will become thriving plants. What is critical is to ensure that the well-known success factors for growth are in place, and to judiciously reduce both the technical and market risks as the firm develops. Winners will have great management, differentiated and protected IP, customers with a need that can be met, and a sustainable value proposition. Equally important is tolerance for the losers that wither, recognising that in cultures such as Silicon Valley, it is by learning from their earlier mistakes that losers become winners when they try again. Perhaps cognisant of this, governments recognise that supporting early stage commercialisation involves more than cash handouts, it involves removing risk from the development process. Many times, the business or researcher is oblivious to such risk. That is why the commercialisation expertise of individuals and organisations like the AIC is needed to provide additional skills in developing collaborations, and in implementing commercialisation strategies. Although funding and resourcing might be the biggest challenges in commercialising research or ideas, establishing the collaborations necessary to develop a new product or service, and delivering it into new markets are also essential. With the lowest collaboration rate between the university sector and industry in the developed world, this problem must be tackled on a number of levels. The research culture needs to encourage and reward more collaboration with industry, perhaps through the grants process; research application and its transfer should become a performance metric of the public research sector; market research needs to become much more widespread to ensure the value proposition is both unique and has value to a customer; and boards of companies need to recognise the imperative to collaborate and embrace open innovation, rather than do it all alone, if they are to prosper as the world economy recovers. With a 25% increase in Federal government support, innovation is again high on the national agenda. Front-ended by big increases in science, and back-ended by the R&D tax credit, direct support for commercialisation itself and programs on collaboration promise new life for Australia s emerging technological industries. The AIC is gearing up to help seize this opportunity MARKET FAILURE

18 Why the AIC is NEEDED Innovation is the wellspring of economic growth, and commercialisation of new ideas is fundamental to that. Over the past quarter century, both public and private sector initiatives have transformed Australia s economy. What can the AIC do for me? Help to overcome the barriers to successful commercialisation Establish linkages between organisations to commercialise intellectual property Develop knowledge and skills to improve commercialisation management and capability Link with researchers, industry and government Entrepreneurs Start-ups & small business Research organisations & CRCs Service providers Peak bodies Government Why the AIC is NEEded Australia today is one of the world s most competitive and resilient economies. But, while Australia has improved its innovative capacity over time, it has not done so as fast as key international competitors, including some that have leapfrogged Australia through sustained policy action. Establishing Australia as a first-tier innovator nation requires a systematic upgrade to the Australian innovation and commercialisation environments. Such an environment is a result of a combination of factors such as well-trained people, an innovationoriented corporate investment climate and greatly improved collaboration between research organisations and businesses. The early stages of commercialisation are inherently risky and the capital available is often scarce. Because of this, there are many gaps in private sector resources available to service the needs of those seeking to commercialise their intellectual property. The AIC was established to service those gaps and catalyse activity in the sector, partnering with others to create an environment where commercialisation can flourish. Created by government as a not-for-profit organisation with a mission in the national interest, the AIC s goal is to improve the success rate of Australian commercialisation. Because the AIC is not-for-profit, and its mission is supported by government, it can play the role of a trusted intermediary in commercialisation discussions, impartially fostering true collaboration and innovation, without taking sides or driving hidden agendas. Most other commercialisation organisations are aligned with creators of intellectual property, such as universities, and therefore adopt a technology push approach. The AIC has a unique opportunity to stimulate demand for new research and knowledge using a market-pull approach, because of its networks and linkages with industry, its commercialisation skills, access to governments, and knowledge of the national research capability. By engaging in market-pull commercialisation activities, the AIC is stimulating a nationwide marketplace for ideas and research, where IP is more readily available, accessible, and in demand. The attributes of the AIC that make it unique working in the national interest, not-for-profit, well networked, skilled, collaborative, arms length from yet close to both government and business are the very attributes that make the AIC as needed today as when it was first created. Facilitate collaborative partnerships Provide independent assistance with negotiating deals Conduct intellectual property audits and provide intellectual property commercialisation advice Source and analyse business intelligence or market research Accelerate technology transfer into small business and industry Direct commercialisation assistance Provide commercialisation education and training Provide leading practice commercialisation know-how and tools Develop and implement commercialisation frameworks and processes in organisations Prepare an opportunity to pitch for investment Program design and program delivery Provide advice on policy initiatives and thought leadership what can the aic do for me?

19 Brisbane Sydney Melbourne Adelaide Cairns Head Office 1 Clunies Ross Court, Eight Mile Plains, Brisbane, QLD 4113 PO Box 4425, Eight Mile Plains, Brisbane, QLD 4113 t: f: info@ausicom.com AIC ANNUAL REVIEW