Commercialising ideas is the key to generating value from them. Without this, they’re worthless thoughts. Many people (especially those in government) believe that all innovation requires academic or scientific support. We demonstrate how this theory is totally detached from the reality of commercialising various types of innovation.
Academia offers essential support to innovation, but should never be the driving factor – the reason for this, is that the services they offer are still too far from commercial impact.
Setting the scene with the various types of innovation
This one’s always an interesting subject for me, and is generally one that academic organisations we work with agree upon. To maximise the return on public investment in innovation projects, the challenges encountered with traditional academic support must be addressed. Their individual strengths must each be recognised and used within the right context.
To fully understand and appreciate this, there are two fundamental issues that we need to consider.
1. Innovation doesn’t have to be “new to the world”
One of the biggest misconceptions around innovation is that it’s about developing something which no one has ever seen before. This is not true. Approximately 70-80% of innovation is transferred from knowledge which already exists in another commercial context. This is why we define three types of innovation which address the “newness” of any given idea:
2. Technology Readiness Levels (TRLs) help understand the role of academia in Innovation
Understanding TRLs helps us understand where knowledge development and transfer is best suited to commercial development. This system was initially devised by NASA to assess and monitor technology development for space programmes. However, it is now used in a much wider role as the principles can be applied to almost any developmental programme.
The scale runs from 1 to 9, with TRL 1 suggesting that “basic principles have been observed”. On the other end, TRL 9 states that the “actual system is proven in an operational environment”. Universities excel in the early stages of the TRL process within a laboratory style environment. The knowledge is primarily academic, and usually lacks the commercial context – that is, the ability to be direct transferable to an immediate application.
We won’t cover Local Innovation in this blog, as it’s less relevant in the context of academic support. So let’s start big, and look at Universal (new to the world) Innovation.
Various types of Innovation I: Universal Innovation
It is well understood that higher educational institutes typically develop an idea through to around TRL 4. This is the point at which an idea is validated in a lab or equivalent environment. However, companies typically want solutions which are ready to implement. They require something which has been developed to at least TRL 7-8. This is the point at which the “system” is ready for commercial use.
This leaves a significant gap which is often referred to as the “valley of death”. In more basic terms, it’s lacking what we would call “applied development”. Ultimately, a project at TRL 4 still carries considerable risk, and usually requires considerable investment to get it to a commercially useful stage.
There is no doubt that Universities excel at early stage R&D. However, R&D only becomes “Innovation” if exploited in a commercial context. How many new ideas developed in Universities actually reach commercial realisation? To be useful in an industrial context, it has to traverse the complete route from TRL 1 to TRL 9, and traverse the “applied development” gap.
In the occasional case that an organisation has an idea that is “new to the world”, completing the project in-house or with carefully selected partners helps traverse the “applied development” gap. The solution is in providing partners who share the same ethos with regard to commercial timescales. The driver for this, however, is often financial or resource intensive.
Various types of Innovation II: Sectoral Innovation
Sectoral innovation differs in that it involves the transfer or knowledge and/or technology from other application areas. As the early stage development has already been performed and proven, the route to market is usually considerably shorter. In most cases the system in question is already demonstrated to TRL 8 or 9. While transferring knowledge to a new sector may require some re-application, this rarely takes it back as far as TRL4. The risk and investment required for commercialisation are considerably lower that something being developed from a blank sheet.
This suggests that the project requires no academic support. Any support which is required can be performed in a commercial (close to market) context. Some academic projects do exist to provide applied development (typically ERDF style interventions) but they rarely bridge the full gap. The usually provide a degree of assistance, but still leave too much unsolved to be commercially useful. They expect the commercial partner to complete activities to achieve the level they require, which is often beyond their capability.
If it the applied development was performed with an academic partner, the same problem rears it’s head. This is, that academic partners tend to have capabilities that develop systems at the earlier TRL stages. They rarely address the applied stages required for commercialisation and the requirements of the commercial partners involved.
The Valley of Death
This “valley of death” has often been described as a considerable barrier to innovation. However, wider consideration of the picture demonstrates that it is primarily a barrier in innovation projects that involve academic partners. The expectation of commercial partners involving academic partners, is usually that something will be developed which is ready for commercialisation. However, the applied development gap which still exists on the completion of such R&D projects is the primary reason that many companies choose not to collaborate further with academic partners.
This is precisely why the majority of successful commercial – academic partnerships involve a small number of larger companies. These companies can afford to use academic support for early stage R&D as a part of their portfolio of innovation activities. This approach to developing a successful innovation portfolio includes investment in higher risk projects. This is usually beyond the financial and resource capabilities of many smaller organisations.
As a result, many academic support schemes tend to attract micro and early stage companies, who will simply not provide the return on investment expected from these projects. There is a low chance of commercial exploitation, and even with the successful projects, usually a limited impact.
Addressing the problem
How do we bridge this gap and resolve this problem? The first requirement is to better understand the various types of innovation. The second is to stop putting the full responsibility for developing innovation in the realm of the educational institutes. They do have an essential role to play, but not as the driving bodies. R&D is essential as are the projects funded through sources such as ERDF. However, this has to be (a) in the context of a wider commercially driven set of innovation incentives, and (b) should only be supported where there is a clear path to exploitation beyond the academic support.
While they may play an essential part in the 20-30% of innovation projects that are new to the world, this is only a small part of a much bigger picture.
- Universal (new to the world) Innovation is important – particularly in an academic context – but only contributes c. 20-30 % of the total Innovation agenda
- Governing bodies need to either (a) provide “closer to market” support services or (b) need to ensure that any “applied development gap” can be traversed prior to investing public funding
- Companies need to drive their own innovation projects and look at more cross company / sector knowledge transfer. Mechanisms need to be implemented to recognise and support this.
For information on my experiences and studies, please feel free to contact me.
Richard Harrison has considerable experience with sector support organisations, the North West Regional Development Agency and other government funded business support projects in projects connecting academic research to industrial exploitation. These findings are a result of the analysis of innovation projects spanning several sectors, combined with interactions with many academic and commercial organisations. Geminus currently provide a series of services to promote continual growth through innovation, addressing the issues suggested in this paper.
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