Winning through Co-Creation of Innovation

1. Winning through Co-Creation of Innovation Dr Mark Wareing Date: Dec 2012

2. What / Who is Pera Technology? • A Leading Product Development Contractor • Creating growth and sustainability for businesses through: • Conceiving new products and processes • Creating value for clients • Commercialising innovations • Home to the UK’s: • Materials Research Institute • Intelligent Systems Research Institute • Health and Environment Research Institute • Paint and Coatings Research Association • European Research Institutes “a Jewel in the Crown of British Industry” Patricia Hewitt, MP, UK Secretary of State for Trade and Industry 2001 - 2005

3. Why Innovate? What are the Problems? • Invention is the discovery of something previously unknown (usually carried out by Universities and Large Enterprises). “Research” • Innovation is the application of known, proven technologies to create a novel product or process to meet a quantified market need. “Development” Most Western SMEs (and many LEs) cannot compete on labour costs, access to raw materials, service. The most effective way to build sustainable, competitive growth is through Innovation. Innovation (R&D) carries risks: • Lack of Innovative Ideas and Unknown or Confused market needs • No In-House skills, incomplete market and SOA knowledge and non-innovative culture • Finance of R&D projects • Lack of, or inappropriate Capabilities and Competences • No Commercialisation capabilities (route to market; supply chain; subcontractors) • Timescales

4. Market Extension – Local and Export Business As Usual Sales and Marketing Cost management Process improvement Problem solving Training and Fixing Competitor intelligence Market analysis Legislation Export market development Distributor location Greenfield M&A Product Extension Product differentiation Range extension Price point development Contiguous sector exploitation Leveraging existing capabilities New Product and Markets Domestic and Export “the unknown” RISKY ………… and expensive

5. Market Extension – Local and Export Pera Tech Provides: Process Development; Quality improvement; Cost reduction; Single Client projects; Training; Supplier Management; IP Management; Project Management Pera Tech Provides: Business Intelligence; Partnering; Competitor analysis Customer analysis PESTLE analysis SOA Reviews Product Extension Pera Tech Provides: Innovation; Market Needs Identification and Quantification; Idea Generation; State of the Art review; Business modelling; IP Management; Supply chain building; R&D work programmes; Outsourced R&D; R&D partnering; Competitor analysis; Customer analysis; Finance – Private and Public; Project management Pera Tech Provides: Single Client R&D; Outsourced R&D; Product sourcing; Competitor analysis; Customer analysis;

6. The Innovation Logic Train • Identify the NEED – who is going to buy the innovation and why? • How is this NEED currently satisfied – what is the State of the Art? • Detail your IDEA that meets the NEED and overcomes the SOA. • Work out the BARRIER that must be overcome to creating the IDEA. Why can’t you “Just Do It”? • Identify the TECHNOLOGIES required and where they are – who is going to help you create the IDEA. How are you going to join together? Can you do this to: • Spread the risk? • Share the cost? • Share the work? • Share the effort? • Share the knowledge? • Share contacts and networks and customers? • and Share the rewards? Technology Co-Creation

7. Diffusion of innovations Rogers (1962) espoused the theory that there are four main elements that influence the spread of a new idea: the innovation, communication channels, time, and a social system. This process relies heavily on human capital. The innovation must be widely adopted in order to self-sustain. It is often this that stops an innovation being successful/profitable. By contracting with others an Innovation benefits from the partners’ networks, supply chains, brand, client base, logistics, etc.

8. Contracting with Partners • Identify and protect your background Intellectual Property • Identify the best partners – not just your friends • Agree the partnership/consortium agreement to cover: • Areas of responsibilities and no-go areas • Work packages, budgets, timescales, outputs, milestones, • Identification of risks and mitigation plans – order the risks and address the most risky first • Conflict resolution • Roles – co-ordinator, exploitation, financier, etc. • Have a plan for the commercialisation at the start and engage with customer before, during and after the development • Define the foreground IP and its protection and exploitation options. • NOBODY LIKES SURPRISES!!

9. The Pera Innovation Process Idea Generation – based on broad, rigorous market needs analysis; State of the Art assessment; competitor profiling; voice of customer analysis; technology dissection and analysis; technology landscape mapping; IP search; white space analysis; environmental, political, legal, societal, economic trends analysis; etc. Technology and Project Requirements – a complete DOW and tasks required to take Idea to prototype. Utilisation of internal competences and identification of the best resource from across Europe. Commercial partnering – building consortia of non-competing project members and R&D partners and also development sub-contract capabilities to take prototype to market. Involvement of end-use customers to ensure commercial viability and market access. Financing – from private, and public grant funding. Pera are Europe’s most successful organisation for winning public, grant funding to pay for R&D of new products and processes for SMEs.

10. Example F&D Innovations - Fornax Fornax – development of a high-value manufacturing production process for puff and laminated pastry that increases the current output rate by 50% and reduces manufacturing costs by 10%. It also offers the opportunity to replace 50% of the hard fat layers with unsaturated oils to produce a new low fat croissant. Pera Technology proposed this process and based the innovation on technology which first originated in the plastics processing industry. 2 tasting trials have confirmed that the new croissant is well received and the process is now being scaled up.

11. Example F&D Innovations – Isa-Pack ISA-Pack – development of an innovative, flexible, sustainable, active and intelligent technology for the packaging of fresh food produce, targeting extended shelf life and quality, enhanced safety and reduced food and packaging waste. It will extend food shelf life by over 50% and reduce food wastage by up to 75%. It will develop two novel biopolymer materials to fulfil the needs of two different food groups: The conventional PVC stretch films and also in the modified atmosphere packaging ‘MAP’,including vacuum packaging sector. To date the project is exceeding milestone outputs on all fronts.

12. Summary – the Innovation Partnership Pera works with companies from across Europe to: • Identify the best and most profitable ideas if there is not one already • Undertake comprehensive SOA analysis • Write appropriate project plans and if required, funding proposals to minimise the cost so as to make the project less risky, more successful, profitable and valuable. Pera will then: • Construct suitable non-competitive, supportive and commercially viable project teams to deliver the work which are potential manufacturing supply-chain subcontractors • Build commercial routes to market with suppliers and consumers included • Project manage the entire process and ensure complete compliance.

13. £53 Bn to be spent between 2007 and 2013. • £33 Bn for projects in 10 thematic areas – Health, New Materials, ICT, etc. Also funded – European Space Agency, Fast Hadron Collider, Marie Curie • But …. • €1.3 Bnspecifically available to pay for the R&D costs for non-R&D capable SMEs in ANY area. • FP8 – Horizon 2020 – part of the European budget currently being negotiated but indications are it could be €80+Bn

14. UK Technology Strategy Board -1 • Smart (previously known as Grant for Research and Development) available to single SME companies. • Proof of market grant • Projects < 9 months, max grant £25k, up to 60% of total project costs funded (TPV £40k). • Proof of concept grant • Projects <18 months, max grant of £100k, up to 60% of total project costs funded (TPV £167k). • Development of prototype grant • Projects <2 years, max grant of £250k; up to 35% of total project costs for medium enterprises, or up to 45% for small and micro enterprises funded (TPV £555k to £714k). • You must have the “matched funding” available before grants are released. • You must be able to undertake the proposed work.

15. UK Technology Strategy Board -2 • Collaborative research and development (R&D) is designed to assist communities to work together on R&D projects in strategically important areas of science, engineering and technology - from which successful new products, processes and services can emerge. • Regular “competitions” for funding of collaborative R&D projects. • Research & Development competitions are mainly collaborative; however with exception may be won by a single company. • The TSB will give an indication of the size of funding and, where relevant, the anticipated total project costs, for each competition. • The funding levels, thresholds and maximum grant sought limits for projects are provided in the Guidance for Applicants document and the Competition Brief for each competition. • Companies have to wait and hope for an appropriate competition to be announced … and then hope to win some funding.