COMMERCIAL PROFILE:It is almost impossible to pick up any business article without mention somewhere of the "knowledge economy". These articles stress the need to invest in research and development in order to stay competitive with the developing economies and that "continuous innovation" is the key to business success. Another term starting to appear almost as regularly is equally cryptic – "open innovation".
Open innovation recognises that RD is expensive. In some industries, it can be prohibitively expensive for smaller firms. Open innovation advocates that the outputs of RD are shared with competitors and even with companies in other sectors. The concept of open innovation is that everybody can benefit in a win-win model.
This idea is not new. In fact, any manufacturer producing goods under licence or any reseller of goods or services has benefited from somebody else’s RD. Such trading arrangements have been around for at least as long as the concept of intellectual property has existed. What’s different about open innovation is the explicit recognition by companies that innovation in their products and services may come from outside the organisation, and that their own RD outputs may be best used elsewhere.
The term is thought to have been coined by Prof Henry Chesbrough at the University of California in 2003. He said that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.
He argued: “The boundaries between a firm and its environment have become more permeable; innovations can easily transfer inward and outward. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research but should instead buy or license processes or inventions from other companies. In addition, internal inventions not being used in a firm’s business should be taken outside the company through licensing, joint ventures or spin-offs.”
Dr John MacRae is technology commercialisation manager at the University of Ulster. Along with colleagues Jennifer Cook and Caroline McGoran he is responsible for management of University of Ulster’s intellectual property portfolio.
For the most part, this means generating a financial return through licence agreements or creating spin-out companies. The university has a wholly owned venturing company, Innovation Ulster Ltd, which provides the initial funding for spin-out companies.
MacRae has been puzzling over what open innovation means for his organisation: “Ulster’s RD programmes have generated over 300 new technology disclosures, many of which have produced new patent filings,” he explains. “Each year, we work actively on licence agreements with industry and create new spin-out companies for about 5 per cent of these disclosures. That means there is still a lot of innovation sitting on the shelf that could be making money for somebody.”
Finding licensees and investing in spin-outs is time consuming. Typically it takes a couple of years for a new technology to progress from proof of concept – from laboratory in other words – to licensee or spin-out. That’s the time it takes to find licensees or entrepreneurs, develop initial business plans, raise start-up finance, execute the necessary legal agreements, ensure a competent team is put in place to drive a spin-out, and find an experienced chairman.
It’s easy to see why Dr MacRae and his colleagues at the University of Ulster can actively manage only 5 per cent of Ulster’s technology disclosures; promoting just one technology to potential licensees at a trade show can take many weeks of planning.
For most universities, open innovation means listing the technologies available for licence on their technology transfer web pages. The University of Ulster has been doing this too for some years. It gets a few enquiries but it isn’t having the impact on business and the wider community, as well as financial return that the institution desires. Clearly, open innovation where it applies to universities needs a rethink.
So what are the alternatives? “Intellectual property is an asset in its own right, and there are various types of business dedicated to brokering IP; finding buyers and sellers and making money from commission on the transfer of ownership,” MacRae points out. “Patent trolls are known for their more aggressive model; they buy your IP and look for infringers that they can sue. Are these models even open innovation? Probably not, but does that matter if they provide financial return from intellectual property assets?”
What the University of Ulster really wanted was to find a better way of engaging with business and the wider community; delivering innovation predominantly to local industries and engaging with local entrepreneurs to create new companies and, therefore, employment based on Ulster technology. “More of the same really, but done in a way to make the engagement by companies and entrepreneurs as straightforward and quick as possible,” MacRae adds.
OpenUlster is University of Ulster’s new take on the open innovation model. It still features a website with Ulster technologies listed, but as MacRae points out, there are some significant differences.
“OpenUlster is a service in its own right. Technologies that are available for licence are listed on the site. Entrepreneurs, firms and other interested parties can see immediately the ones that are under evaluation and ones that are available,” he says. “To take out an evaluation licence – which costs just £1 – you just click on the link to download the documents, fill out two forms and return them both to us. When the licence is countersigned by one of our commercialisation team, the firm has exclusivity to evaluate that technology.
“Full information will be provided along with any published patents, experimental data and prototypes or software. At the end of the evaluation period, which can be as short as three months and as long as one year depending on the nature of the technology, the evaluation licence can be converted into a full commercial licence.”
Creation of a distinct brand also makes the OpenUlster service easier to promote. In addition to normal outreach activities, every time a new technology is added the university’s partner network will be notified using social media such as Facebook, Twitter and, particularly, LinkedIn. Using social media as a marketing tool in this way gets OpenUlster connected and close to the community it wants to engage with.
Sitting behind Ulster’s public face of open innovation is a new process of evaluating which technologies are suitable for OpenUlster. The ones chosen have to have “hard” intellectual property such as patents or designs and be capable of legal protection and will be offered with an exclusive evaluation licence. The technology must also have reasonably complete evaluation data and self-explanatory documentation. Software and any other prototypes will be provided to licensees if available.
This background selection process is designed to ensure that any business taking an evaluation licence will have everything they need to understand the technology and assess the fit with their business and aspirations.
The big question is whether it works. According to Noel Kilpatrick, director of Tribus Training and Consultancy, it certainly does. “We set Tribus up a couple of years ago as a specialist provider of training and consultancy in commercial security. We signed an evaluation agreement with University of Ulster to look at its digital watermarking technology, to see if this could become a Tribus OEM product alongside our consultancy work.
“The university gave us all the technical documentation, and a web-based software tool which we are now demonstrating to potential customers. I expect we will be back for a full commercial licence. This is technology which we could never have developed by ourselves.”
If OpenUlster leads to more companies following the example set by Tribus, then Dr MacRae and his colleagues will be happy to provide them with more of the same.
* Further details on the existing portfolio of spin-out companies can be found innovation-ulster.com
