KNOWLEDGE ECONOMY FORUM VI Developing Networks and a Market for Knowledge Brokerage

1. KNOWLEDGE ECONOMY FORUM VIDeveloping Networks anda Market for Knowledge Brokerage Gilbert Nicolaon Cambridge April 19, 2007

2. Knowledge economy and traditional sector industry

3. R&D and the Economy • The “end” users of R&D (Knowledge) • Multinationals • High tech SMEs • Traditional sectors SMEs

4. Public R&D and Industry • Public R&D relation with industry : • Multinationals : • Through Industrial R&D labs • High tech SMEs (often spin-offs) : • Usually tight relations • Traditional sectors SMEs : Very limited cooperation (research scientists and traditional SMEs managers do not know each other)

5. Industry in Europe • Industry in Europe : • Multinational : a few hundred • High Tech SMEs : a few thousand • Traditional SMEs : over 200 000 (+ Recently, Services sector SMEs) • « Traditional » sector SMEs represent • a large potential market for technology

6. Traditional Sectors and Technology • The demand for technology from « Traditional » sector industry is limited • BUT : • Technology is important for SMEs competitiveness • SMEs competitiveness is essential for the economy • Economic growth is essential for every country

7. A Paradox ! • Traditional sector industry (mainly SMEs) offers a very large market… • BUT… • …This market is usually not targeted by Scientists ! • Because traditional sectors industrialists : • Have limited interest for R&D.. • Use outdated equipment… • ….

8. « …Technology absorption is as important as innovation… » • Shigeo Katsu • V.P. World Bank • April 17, 2007

9. Absorption and Innovation • Traditional sector industry offers a Mkt. for : • Technology Absorption • Which requires technology services • + • Innovation • Technology Push • Market Pull

10. Technology Push From the Lab to the market Idea of a scientist Limiting step : selling the idea to : An industry An entrepreneur TOP DOWN Market Pull From market needs to the lab AND Back to market Need identified by industry Limiting step : Identifying the customer Identifying the need BOTTOM UP Push or Pull ?

11. Push or Pull ?

12. A double « challenge » • Traditional sector industries are not very attractive for research scientists • Technology is not the priority for traditional sector industries managers’ • BUT…

13. The « Challenge » • Technology is essential for competitiveness • Competitiveness is essential for economic development • CONCLUSION • Technology demand has to be « stimulated »

14. “Stimulated” bottom up • A 3 Partners cooperation : • Governments or/and International Org. • Stimulate the process to boost the economy • Provide training • Provide support and « assistance » • The Public Research laboratories • Provide the appropriate technology services • The Industrial SMEs(+, recently, service SMEs) • Identify the market needs

15. Technological Innovation • Requires a wide range of expertise • Usually not available « internally » • Networks are widely used to : • Identify appropriate technology providers • Identify appropriate partners : • Financial engineering • Market analysis • I.P.R.

16. The components of Innovation

17. Technology Networks • Many active networks • National (and Regional) Innovation agencies • Venture Capitalists • Federation of Industries • E.U. Framework Program • International networks

18. National Networks • Ministries of Industrial Development • Many countries have a national agency • U.S.A. : S.B.A. • France : Oséo group • Netherlands : Senter • Finland : Tekes • Croatia : Bicro (created with W.B. support) • ….

19. A National Agency :Oséo-innovation(France) • Assistance for innovation and Technology Dvp. • Financial support • Soft, conditional loans • Small grants to support external consulting • Economical (Market studies) • Legal (Legal agreements,; I.P.R.) • Partnership (Partner search) • « Expertise » assistance • Technical • Financial (Business Plan) • Legal

20. A National Agency :Oséo-innovation(France) • A networking activity • Technical • Through the Technology Dept. BUT ALSO … • Economical • With specialized consultants • Financial • With V.C., Banks, Business Angels…

21. International Networks • World Bank • An activity which started in the 80s’ • Covering numerous eligible countries • European Union • Framework Program • ERA-NET • Eureka

22. Brokerage events • Invented in the early 90s’ • The goal : • For technology providers To meet with • Technology buyers • The « challenges » • A good balance between Buyers and Providers • A « qualitative » mutual interest

23. Brokerage : an example • Euro-Trans Days Oct. 15-16, 2007 • A E.U. event on Surface Transportation • GOALS • Stimulate SMEs, R&D, Stakeholders cooperation • Stimulate Tech. Transfer • CONTENT • Plenary sessions • Workshops • One to One confidential meetings

24. A few examples

25. An example of success • An applied R&D project • A French SME (Elmetherm, 40 employees) • A major British china producer (Royal Dolton) • An academic lab. (University of Limoge) • An innovative way of producing china cups • With assistance and support from : • The French Innovation Agency • A French Regional administration • D.T.I.

26. An example of success • World Bank Tech. Dvp program • India(1988-96) • NCL restructuration program • NCL 1988 : A R&D public Institute • Limited contact with Indian industry • Limited financial resources

27. An example of success • NCL restructuration program • An “ambitious” restructuration program • Intensive training focused on Mkt. Oriented R&D • Training about I.P.R. (B.T.G., London, U.K.) • Equipment financing • … • A “side” success • A patented new plastic • A partnership NCL-G.E. • A major R&D investment by G.E. in India

28. An example : The French textile industry • 80s, 90s Competition from Morocco, Turkey • Numerous French enterprises have disappeared • Some have survived and are profitable • Which are those which survived ? • Those which improved productivity by introducing technology in their production facilities • Those which improved their product by focusing on « technical textiles » with high Added Value • In this « traditional » sector the enterprises which survived are those which focused on technology

29. Conclusion • Technology commercialization requires a very wide range of expertise: • Technical BUT ALSO : • Economical, Financial, Legal, Cultural…. Bringing these expertise together is a key success factor for technology development (whether it is Tech. Push, Mkt. Pull, or Tech Absorption)

30. Thank you for your attention Gilbert Nicolaon win.tech@club-internet.fr

32. Suggestion Nb. 1 • Give more attention to traditional sectors : • High Tech industries need innovation BUT • Traditional sector industries need technology • To update their production facilities • To adapt to environmental regulations • To save energy • To improve their competitiveness • DO NOT « NEGLECT » TRADITIONAL SECTORS INDUSTRIES

33. Suggestion Nb. 2 • Do not think only : “Technology push” (Selling what you know how to do) • BUT • Think also “Market Pull” (Offering what your potential customers needs) THINK « MARKET PULL »

34. Suggestion Nb. 3 • Do not neglect close by potential customers • Every industry needs technological services (Including traditional sectors industry) • International markets are more risky and costly to tackle (*). They should not be your only target • DO NOT NEGLECT CLOSE BY CUSTOMERS • (*): Rule of thumb :The cost of a cooperation is proportional to the square of the distance between the partners

35. Suggestion Nb. 4(For policy makers) • The Process has to be « catalysed » • Strong incentives are needed • Researchers have to be motivated • Industrialists have to be motivated • Financial incentives on top of legal incentives • Financial support for Research/industry partnerships • Individual financial rewards for researchers • « STRONG » INCENTIVES ARE ESSENTIAL

36. Suggestion Nb. 5(For policy makers) • A legal framework stable over a long period of time is essential • Innovation takes time • Incentives should be stable over long period of time • Legal (Tax) system should be stable • THE RULES SHOULD NOT CHANGE WHILE THE INNOVATIVE PROJECT IS GOING ON

37. Gilbert Nicolaon • 1/3 R&D (1963-1975) • University (France and USA) • Industry (Franco-American joint venture) • 1/3 Scientific « diplomacy » (1976-1985)(Sci. policy) • U.S.A. (Houston, Chicago, New York) • U.K. French Embassy (London) • 1/3 Innovation engineering (1985- ) • ANVAR French Innovation agency • British Technology Group (London) • EUREKA program (European mkt oriented program)

38. A few exemples • The rusty cans Convince SMEs • The expensive chocolate Legal agreement • The rickshaw Local innovation • The tea cup Sme/Univ/Large Co • The microplane Invest. Abroad • The endless C.D. Large and small • The biodegradable Large and small • The by-product Serendipity (CLEF) • The very High Tech. Spin-off (Soitec)

39. An example : The European textile industry • 25 years ago : • Numerous enterprises in Western Europe • Very different in size • Some with international markets • Some with regional markets • A very tough competition from cheaper labour countries (Turkey, Morocco,…)

40. An example : The European textile industry • Tomorrow : • Turkish textile industry is now moving to… • …China! (*) • (*) learned yesterday, from a Turkish participant.