Collaborative R&D: What is it and why do it?

1. Collaborative R&D: What is it and why do it? Paul Johnston Vice President, Operations

2. An outline … • What are they? • Why do we use them? • What are the key elements of success? • What are the benefits?

3. What are they? • Definition: three or more organizations working together, sharing expertise, sharing resources to tackle a significant R&D issue or research domain • Compare: contract? partnership? joint venture?

4. Precarn Incorporated • Founded in 1987 by industry • Independent, not-for-profit, member-owned • Supported by Industry Canada • Funds, manages and promotes • collaborative R&D projects • Delivers related services What are Precarn and IRIS? IRIS Institute for Robotics and Intelligent Systems A federally funded Network of Centres of Excellence Founded in 1990 13 Universities, 80 PIs, 18 Projects Created and managed by Precarn

5. Human-Machine Interfaces Security - Aerospace - Transportation - Forestry Intelligent Systems emulate or enhance the human ability to Perceive Sensors Vision systems Object modeling Pattern recognition Reason Artificial Intelligence Knowledge systems Data mining Modeling & simulation Decision support Diagnosis, planning, scheduling Act Robotics Control systems Actuators Telecommunications - Energy - Agri-Food Manufacturing - Earth Sciences - Environment Mining - Health Care - Banking - Defence - Microelectronics

6. 0 10 20 30 40 50 60 Percent of collaborators mentioning a particular reason Why do firms collaborate? These labels intentionally left blank Source: Collaborating for Innovation, 2nd Annual Innovation Report, Conference Board of Canada, 2000

7. Why use them? • “There is considerable corporate risk involved with a company’s technology strategy. A company’s future is determined by where and how it invests in research and development. There is no certainty that the development of a particular technology will work. We don’t know what we don’t know.” • “Companies have a limited amount of resources consisting of (1) personnel with varying types of expertise, (2) finances, and (3) established infrastructure …” From Collaborative R&D: Manufacturing’s New Tool, Gene Allen & Rick Jarman, John Wiley & Sons Inc., 1999, p. 14

8. Key structural elements for success • End-user champion • Technology-developer vision • Network of expertise (people) • Commitments • Funding • Minimal organizational “overhead” • Timing

9. A successful collaborative R&D model Build Canada’s intelligent systems industry Improve productivity and competitiveness Technology developer partner Typically, a young, high-tech SME Technology user partner Typically, medium to large & mature Beta test site/first customer Intelligent Systems R&D Project Pools expertise - Shares risk and cost - Accelerates development Leads to demonstrated prototype, with IP owned by the project team (One partner must be a company that can commercialize the technology) Costs $2-4 m, lasts 12-36 months Gets max. 40% (or max. $1 m) from Precarn Other partners Government labs Other companies Other universities IRIS researchers Scientific partner A university (or proxy) Advances the state of the art Introduces students to companies Develop highly qualified entrepreneurial people

10. EUSCEnhanced Urban Signal Control Package • Led by Delcan Corporation, Toronto, with • NOVAX Industries, Vancouver • EIS Electronic Integrated Systems, Toronto • City of Vancouver • University of Calgary Completion Date: June 2003 • Advanced traffic control system featuring new traffic detectors supplying data to • a Multiple-Criteria Adaptive Control algorithm. The algorithm computes optimal • signal timing parameters on a real-time basis

11. A system to empower a mobile field worker to make decisions while dealing with large data volumes and bandwidth constraints, employing intelligent agents, semantic web techniques, novel inference techniques and wireless Internet access. Led by MacDonald Dettwiler and Associates, Richmond, BC, with Noranda Inc., Toronto University of Calgary University of Alberta Completion Date: January 2004 Smart GITSSmart Geophysical Information Technology System

12. Key process elements for success • Recognize and define roles and responsibilities at the beginning • Establish good communication links from the beginning • Agree to a clear legal framework (“it’s the IP, stupid”) • Establish an economical management structure • Build in means to address problems quickly

13. But, what is the real bottom-line reason?

17. What are the benefits to firms? Reducing the risk that the technology won’t work or directly benefit the firm Reducing the time to “market” or “application” Reducing the cost to develop new technologies Exposing the firm to new ideas and cultures Providing a means to develop new product lines, new markets, or new business relationships

18. What are the benefits to innovation? … the innovation gap CFI NCE’s, incl. IRIS IRAP Granting Councils Precarn TPC $ Funding support Longer term Science driven Medium term Application driven Shorter term Market driven

20. National Summit on Innovation and Learning“Improving Research, Development and Commercialization”Priority Recommendation No. 1: Enable the relationship between the receptor community and universities, colleges and researchers. Strengthen receptor capacity. • “Strengthen research and business collaboration. Establish clusters and managed networks for sustained interactions among stakeholders, especially between academic institutions, government laboratories, businesses and financiers . . . Utilize “fourth pillar organizations” to facilitatepartnerships between key stakeholders.“ (italics added)

21. Some conclusions … • Why would a firm join an R&D Alliance? … because it is in their self-interest to do so. • Why should a firm join an R&D alliance? … because it is in their self-interest to do so. • Why should we care about this? … because the model adds economic value (faster development, shared risk, shared cost, competitive advantage)

22. Thank you … Paul Johnston Vice President, Operations johnston@precarn.ca