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Discover how the International Copper Association redefined its technology approach to drive innovation, find new applications, and enhance industry collaboration for sustainable growth and market leadership.
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Creating and Executing a Technology Strategy for a Global Industry Hal StillmanDirector of TechnologyInternational Copper Association, Ltd. 20 October 2006 hstillman@copper.org
ICA TECHNOLOGY Research, develop, and commercialize new and improved product and process technologies, and create new uses for copper • Very complex situation • How to start • How to achieve success
COPPER PROPERTIES • Electron structure is origin of many valuable properties • Single electron at fourth energy level is highly mobile; fills only 1 of 32 available positions • Electron has gas-like behavior; moves to transfer charge, collides to transfer vibration (heat) • Easy to create copper ion: copper ions readily penetrate microbes when mobilized in adsorbed water • Other properties arise from cubic crystalline structure: malleability, color, alloying
COPPER/ALLOY ADVANTAGES • High electrical conductivity • High thermal conductivity • Range of valuable mechanical properties • Corrosion resistance • Aesthetic qualities • Antimicrobial surface • Essential for life • 100% recyclable • Integral to energy efficient design • Integral to technological development
INDUSTRY VALUE CHAIN Producers Fabricators
END MARKET APPLICATIONS Fabricators End Users 60% of copper use is electrical applications
ABOUT ICA • A not-for-profit industry trade association* • 39 member companies represent >85% of world copper production • Focus is promoting and developing copper use • Headquarters in New York • 27 offices globally with ~200 technical marketing staff • 2006 budget $45 million plus $20 million co-funding
ICA MISSION • Advance copper as the material of choice for current markets and new applications given its superior attributes in terms of technical performance, sustainability, essentiality for life, and its contributions to a higher standard of living.
THE UNSTATED MISSION Do what you can within anti-trust guidelines to assure that there is demand for just a little more copper than the industry can produce
SITUATION IN 2002 • Very little innovation in the industry • Copper industry ceding markets to alternative materials • Little effort to create new applications • Price at bottom of cycle • Rapidly developing economies expected to raise demand • Concern about price volatility • Industry highly fragmented • Strong competition in each stage of value chain • Producers, fabricators and end-users are not collaborating to provide superior products for consumers
SITUATION IN 2002 • 15 million tonnes from mine production • 5 million tonnes recycled • Total value in 2002: • 20 million x $2000 = $40 billion of commodity material • Low industry profitability • Opportunity for technology development recognized • Avoid repeating experience of automotive radiator market
AUTOMOTIVE RADIATORS • In 1975 copper had 100% of the market and did not believe that situation could be changed • By 2002 market share was less than 10% with loss of >100,000 tonnes • Real reasons for the success of aluminum automotive radiator is not weight but: • 25-year development effort of the aluminum industry • Total neglect in that same period on the part of the copper industry
AIRCON HEAT EXCHANGERS A similar story about to happen… Aluminum Copper Same performance at half the size
ICA TECHNOLOGY INITIATIVE • With the support of ICA’s Technology Steering Committee, the Director of Technology will: • Create and execute a plan for the development of an infrastructure for research work and the search for promising technologies or products that would benefit from/or be developed with ICA funded research • Develop a concept for an external venture capital company to further development and commercialization of promising new products and technologies*
SOME CONSTRAINTS • Can not engage in “ordinary business” • Retain not-for-profit status • Anti-trust concern prohibits price discussion • Members are competitors (in many ways) • Slow decision-making • Vocal member opposition to diverting funds to R&D • Wary insider opposition to outsider leading organization in new direction • Must achieve tonnage impact
BEFORE ICA: INCRA • International Copper Research Association • Previous industry research organization • Operated from 1958 - 1990 • 459 projects in 32 years spending $90 million • Outstanding technical managers • Bookshelf of detailed project reports • Excellent research quality • No lasting commercial successes • In 1990, industry shut down activity and focused solely on promotion
THE CHALLENGE • Re-start some type of technology activity but do a better job than INCRA • What would you do?
LEARNING FROM INCRA FAILURE • Surprise: many of the same ideas thought to hold promise in 1960 still held promise in 2002 • Great job of spotting opportunities, but spread R&D effort too thinly • Prematurely stopped work on problems that were worth solving • Technical breakthroughs needed to achieve market success had not been made • Puzzling: once-a-decade review of new opportunities and commercialization possibilities • What were they thinking?
LEARNING FROM INCRA FAILURE • Governance barrier to getting directly involved in commercialization • Don’t compete with members • Put R&D results into the public domain and hope for the best • Belief that a great research result is sufficient to spark commercialization • Single product “Product Engineer” insufficient to drive commercialization
CONCLUSION #1 • Research should hold a persistent focus on real opportunities despite short-term technical setbacks • Multiple attempts should be made to find a solution path to a promising market opportunity • Focused efforts should not be constantly diverted by the search for new opportunities
CONCLUSION #2 • Find a way to connect technology to the market through entrepreneurial business development • An entrepreneur will persist in trying to find a technical solution to a market opportunity • Protect intellectual property to capture potential value • Persistent effort will be needed to find a workable approach for ICA • Attract potential commercialization partners and supporters • But…organization really not ready to embrace venture capital-like approach to commercialization*
EXECUTION PATH • Articulate desired state When business and technical people think about innovation…copper comes to mind
EXECUTION PATH • Form a Steering Committee that helps prioritize activities and provides political guidance* • Quarterly meetings with briefing book in advance • Dialogue begins where briefing books ends • Achieve consensus on major processes and concepts • Take significant directional decisions • Do R&D, but talk about commercialization • Multi-lingual, multi-cultural, multi-level, multi-company team • Tell your story in pictures
ICA NETWORK CONCEPT ICA R&D Stimulus Motivation ICA R&D funding Challenge ICA Technology Priorities Management Interconnection of R&D domains Connect to a number of networks within key domains and stimulate thinking about copper-related technology Materials science, metallurgy and materials processing networks Application and design engineering networks relevant to copper Government funding initiatives and networks associated with copper • R&D and academic organizations with a potential contribution to copper technologies • Understand past/current projects and their relevance to copper • Leverage ICA funds through their sources of funding • Expand on current ICA contact base • Academic, industrial and development organizations that apply copper in commercial applications • Identify possible programs relevant to copper; remove technology roadblocks • Leverage ICA funding • Understand linkage between copper and government funding priorities • Profile types of projects being funded • Create new funding initiatives that involve copper • Connect individuals in other domains to appropriate funding sources H. Stillman November 2002
PROJECT APPROVAL PROCESS 3 7 Technology Committee Non-secret, small, simple project may gain rapid approval 6 9 ICA President 2 4 X Technology Director 8… Project Management Team Periodic review of project by Project Management Team with decisions to continue, change or terminate X activities. At least one member is on Project Manager Team. 5 X Legal Counsel Due diligence process for commercial, legal and technical review; applies to all projects but with special emphasis on projects undertaken in X collaboration with external firms or organizations Subject Matter Experts in which disclosure of project information to members is limited to protect secrecy and (can include members) intellectual property rights 1 Project Proposer Decisions 5. Legal agreements for R&D 1. Submit R&D proposal/concept 2. Proposal passes screening 6. Proposal passes due diligence If proposal exceeds approve d 4. Investigate and resolve conditions technology budget, Advisory 3. Conditional approval 7. Funding authorization Committee approval is required 8. Reviews by Steering Committee 9. Proceed with commercialization
Positive Negative
IMPACT MATRIX 2007-2011 _ + Impact of emerging/evolving technologies on copper usage 100 80 Probability (%) 60 40 20 0 Aug 2006 *: ICA projects shown in red
PORTFOLIO ASSESSMENT AntiM CMR Aquaculture Cages Deep sea cables Cupro- Braze Server cooling Internal HX PoE CAT 6 RTPF HX Flat tube PHE DGWH SuperC Tube corrosion UltraC Nanocoat 2007-2011 Impact Higher Low (<10000 tons) Medium (<50000 tons) ISG High (> 50000 tons) GeoSolar CAT 7 GeoSol Probability of technical success Conform EB MEGA Heat exchange systems Kompact Electrical energy Fuel/ Natural gas-S Mech. alloy Antimicrobial VAE SSM FC catalyst Cu BMG Tarnish resistance Cu2S PV Lower Later Sooner Timing
PROJECT SELECTION PROCESS January 200Y April 200Y June 200Y October 200Y January 200Z Portfolio planning and priority setting Background research and strategy discussions Budget allocation and project recommendations Budget approval and project proposal assessment Project contracting and initiation Discussion across ICA Network On-going updates TSC meetings …XX Jan 0X Dec/Jan April June/Sept Oct/Nov 200X R&D portfolio 10 year impact matrix of new/evolving technology Proposed 200Y Technology budget 200X PRC meeting Due diligence and approval processes more copper less copper $ px hy 200Y Technology Plan 100 — st — impact risk probability 0 200Y R&D priorities $/tonne impact Project proposals Approved 200Y Technology budget Member poll and 200Z R&D priorities project $ tonnes 1.___________ 2.___________ 3.___________ 4.___________ 1.___________ 2.___________ 3.___________ 4.___________ • strategic overview • budget/timing • impact • risks $ Discuss Technology Roadmap elements Discussions with R&D organizations and ICA Network members Private conversations with fabricator members to manage potential conflicts of interest Project proposals from R&D Network Formal Technology Roadmap document . . . Continuous posting of updated planning documents, project reports and proposals on the ICA intranet
10 Gbit/sec New projects starting 2006 ICA TECHNOLOGY PIPELINE Continue development to make process more competitive: wider tolerances, more efficient braze coating Seek non-automotive market opportunities; license to product companies; apply new Cu technology developments Coating production source available; coating formulation will be available to members; members involved in project Support with ICA market promotion; push market development in touch surfaces and aircon Provide breakthrough to interested companies to stimulate market development Engage fabricators and industry to produce prototypes; aim for widespread application Fund start-up to demonstrate system; engage industry from the start; possible ownership position through R&D funding Engage tubing companies in development project; quick commercialization if economically viable Form company to focus solely on Cu alloy SSM; support with market promotion; leverage with government funds Assist foundries and manufacturers; charge access fee; leverage with government funds * Electronics cooling bus Chemically grafted coatings Flat copper HX conduits Antimicrobial copper/alloy surfaces Semi-solid metal forming Copper motor rotor Cuprobraze MEGA ICA pre-competitive R&D funds move technologies towards commercialization Commercialization • New project sources: • R&D network • ICA network • Market intelligence • Venture capital network New projects not shown: • Round tube/plate fin all copper aircon HX • Plate heat exchangers • Lower cost solar thermal systems • Thin section extrusion • Subsea cables • Plumbing tube coating • Water heating heat pump • * Rationale for ICA role to accelerate commercialization • $2 – 10 million need for technology and market development • Market development best pursued by motivated entrepreneurial company • Likely to attract external capital to grow a company • Success would create substantial new copper use
EXECUTION PATH • Set down principles and socialize them • Buy-in from 15 companies with inconsistent outlooks • Initiate member-to-member interactions • Push the group just beyond lowest common denominator of acceptance • Assure appropriate level of discomfort • Give members time for stress relaxation* • Expose to comparable organizations with similar issues • Visit Gas Technology Institute • Soybean Board
ICA’s R&D PRINCIPLES Focus on creating new, high tonnage, global applications Support pre-competitive R&D where ICA funding can make a difference No internal resources; global R&D network Involve members and customers in projects Take active role in technology commercialization Leverage with external funding Each is a difficult sell*
EXECUTION PATH • Build personal relationships with member firms, end-users organizations and R&D organizations • Visit all ICA members – discuss market dynamics and technology • Visit key copper users – understand attitude towards copper use • Visit universities, research institutes, corporate labs – find the leading edge of research • Stimulate open debate of relevant issues in Technology Steering Committee • Demonstrate competence and discretion to gain credibility
EXECUTION PATH • Establish initial pre-competitive projects • Mix of new applications and unaddressed needs • Mine the bookshelf; identify new challenges • Select high risk, learn-as-you-go projects • Overcome basic obstacles • Engage full supply chain • ICA members have first access to developments* • Deal with major exception: secret project with global automotive OEM • Initiate activities to gain co-funding
COMMMERCIALIZATION CONCEPTS • Focus and sustain effort to achieve tonnage impact • Understand potential market impact and possible commercialization route from the start • Build credibility through co-funding • Connect technology with entrepreneurial effort • Prefer technology transfer, licensing or royalty over equity ownership • Equity ownership in business in exceptional cases • Exit ownership position when strategic benefit achieved
TECHNOLOGY DEVELOPMENT PROCESS Merge market and technology insights Pre-competitive research/development Commercialization • Technical capabilities • Properties • Processes Technology feasibility demonstration Member/supply chain participation New copper application Market/business innovation Venture creation / entrepreneurial effort • Application knowledge • Industry pain points • Market dynamics
ICA’s R&D FOCUS Create and commercialize application-directed technology breakthroughs in a few high potential technology domains Heat exchange systems Automotive Antimicrobial surfaces Renewable energy Electrical energy Data communications
HEAT EXCHANGE SYSTEMS Plate heat exchanger Condensing demand gas water heater CO2 heat pump Flat multichannel tube Small diameter aircon tubes
AUTOMOTIVE HYBRIDS Electromagnetic transmission Integrated starter generator
ANTIMICROBIAL Antimicrobial surfaces Antimicrobial aircon heat exchangers
RENEWABLE ENERGY Emergence BioEnergy GeoSolar system
ELECTRICAL ENERGY Deep sea electrical cable sheathing Copper motor rotor (industrial, appliance and automotive applications)
DATA COMMUNICATIONS Data communications beyond 10 Gbps Power over Ethernet
UNIVERSITY RESEARCH • Wear-resistant mechanically alloyed alumina/copper dispersion • Silicon carbide reinforced copper for high temperature heat-transfer applications • Copper-based bulk metallic glass • Copper sorbents for desulphurization of fuels and natural gas (licensed) • Copper catalyst for methanol-to-hydrogen conversion
CO-FUNDED R&D CONSORTIA EcoSea GeoSol Super Calefont
CURRENT SITUATION • Active for ~4 years • ICA funding: ~$12 M cumulative • External funding attracted: ~$12 M cumulative • Estimating 2006-2010 impact of 200,000 tonnes ($1.6 billion) • Major growth opportunities coming from Technology • Global R&D Network established (140 active researchers in 2006) • Commercializing R&D results
SYSTEM ARCH. FRAMEWORK _________________________________________________ Source – Ed Crawley, MIT, ESD34.J