The Innovation Continuum: Moving Promising Technologies off the Shelf

Genome Canada GPS Policy BriefCanadian Science Policy Conference

Calgary, November 5, 2012

Professor Jeremy HallBeedie School of Business

Simon Fraser University

Editor-in-Chief Journal of Engineering and Technology

Management

Professor Jonathan LintonPower Corp Professor for the Management

of Technological Enterprises, Institute for Science, Society and Policy,

University of Ottawa

Editor-in-ChiefTechnovation: the Journal of Technological

Innovation, Entrepreneurship and Technology Management

1

2

Context• Increased emphasis on publically funded research for invention,

leading to commercialization for societal benefits– How can new scientific endeavours be commercialized to

provide societal benefits?– How can we get promising technologies from public research off

the shelf?• Science-based innovation is a complex process involving different

individuals throughout cycle, where individuals variously enter and exit (Langford et al, 2006)

• High heterogeneity in knowledge; heuristics to exploit opportunity (Hall and Martin, 2005)

3

Context• Scientific/technical knowledge migrate across institutional

boundaries through (Reamer et al, 2003)– Cooperative research and development– Licensing or sale of intellectual property (IP) and spin-offs– Technical assistance– Information exchanges– Hiring skilled people

• Idiosyncratic, context dependent• Currently available indicators for university research outcomes

‘blurs’ the idiosyncrasies and unique path dependencies (Langford et al, 2006)

4

Context: Genome Canada Research

• Increasingly moving beyond discovery research towards “translation of discoveries” for the global bioeconomy (Halliwell and Smith, 2011) – Not just medical but also industrial applications – including:

manufacturing, chemicals, bioremediation, biomonitoring tools and biofuels (Sheppard et al, 2011)

– More integrated GE3LS research• Consistent with recent discourse on more reflexive , interactive

approach to innovation rather than linear “technology push” (Nightingale, 2004; Guena et al, 2003)

• Costs of greater integration?

5

Key issue: A need to understand heterogeneous, idiosyncratic features of innovation

• Heuristics, incentives differ among key technology developers, users, other stakeholders– Insights from wide range of stakeholders needed, but…– Adds complexity; ambiguity, e.g. difficult to identify salient

stakeholders, their interests, heuristics (Matos and Hall, 2007. • Industrial setting plays key role in whether a public technology

will be sought out and commercialized by firms– Some actively monitor, engage with university researchers

(e.g. pharmaceuticals), most industries more passive• Are technology transfer offices, scientists, early developers

adequately prepared to manage relationships with passive industry players?

6

Theoretical UnderpinningsThe Challenges of New Product Development

Clark and Wheelwright

Number of new ideas

Concept Commercialisation

7

The Challenges of New Product DevelopmentClark and Wheelwright

Number of new ideas

Concept Commercialisation

Ability to influence outcome

8

The Challenges of New Product DevelopmentClark and Wheelwright

Number of new ideas

Concept Commercialisation

Ability to influence outcome

Actual management activity

9

‘Contemporary’ Development Funnel Clark and Wheelwright

Technology Assessment &

Forecasting

Market Assessment &

Forecasting

Development goals &

objectives

Aggregate project plan

Project mgmt & execution

Post-project learning &

improvement

Technology Strategy

Product/Market Strategy

10

Technological Uncertainties

Development goals &

objectives

Aggregate project

plan

Project management & execution

Post-project learning &

improvement

Commercial Uncertainties

Organizational Uncertainties

Social Uncertainties

Exogenous technological developments, market trends, global financial conditions, etc. that affect cognitive legitimization processes

Social trends, legal issues, controversies etc. that affect socio-political

legitimization processes

TCOS Framework

Typology of Innovative UncertaintiesHall and Martin, 2005; Matos and Hall, 2007; Hall et al, 2011

1. Technological uncertainty: • Does it work? • Domain of scientists, engineers

2. Commercial uncertainty• Is it commercially viable? • Domain of marketing, business analysts

3. Organisational uncertainty• Will your organisation accept/adopt the technology and

appropriate the benefits? • Domain of the strategists, business development experts

4. Social Uncertainty• Is it acceptable to civil society? • Domain of ??

11

The TCOS Framework (Hall et al, 2011)Paradigmatic issues

Kuhn, 1962 Creative destruction (Schumpeter, 1934, 1942) Changes in selection environments; breaking org.

routines & heuristics (Nelson & Winter, 1982) Competency-enhancing vs. destroying innovation

(Abernathy & Clark, 85; Henderson & Clark, 1990) Impact on innovation value-added chain (Afuah, 1998)

↓Impact/Influence

TCOS UncertaintiesHall & Martin, 2005 Technological Commercial Organizational Social

Risk CharacteristicsKnight, 1921;

Simon, 1959

Variables & interactions can be identified, probabilities estimated

More variables (complexity), some not easily identified

(ambiguity)Type of Legitimacy

Aldrich and Fiol, 1994 Cognitive Socio-political

HeuristicsPopper, 1945, 1959 Conjecture – refutation Piece-meal social

engineering12

Organizational and Social Uncertainty

• Organizational uncertainty: can organization appropriate the benefits of the technology (e.g. Teece & Teece et al):– Org. capabilities, complementary assets, legal/institutional

settings for IP protection (appropriability regime) determines who profits from the innovation

• Social uncertainty: how diverse secondary stakeholders may affect, or be affected by technology development– Differ from TCO uncertainties: more interacting variables

(more stakeholders beyond value chain, some which may be difficult to identify - complexity and ambiguity)

– Require different heuristics

13

14

TAIGA Forest Health: Forest Pathogen Detection and Monitoring

• Early detection/prevention best strategy for managing forest health, using new genomics-enhanced pathogen detection & monitoring tools for rusts, cankers leaf spots, root diseases

• Reg. agencies rely on visual inspection for known pathogens; proposed technology faster, more accurate

• Nurseries another potential market• Potential market size unknown; certification regulations in flux• While good for industry and society (socio-political legitimacy),

may be resisted by individual stakeholders– Some firms may be proactive; others reactive

15

• Forest biomass can replace petroleum through lignin-based polymers for aromatics, resins, carbon fibers, biofuels – Renewable; can reduce env. impacts– May affect forestry, chemicals, energy industries

• More efficient lignocellulose degradation via genomic/metagenomic approaches such as manipulating naturally occurring metabolic diversity of forest soil communities

• But… “You can make anything from lignin except money”– Regulatory pressures, increased concerns over non-renewable

feedstocks provide socio-political legitimacy • Promising products include lignin-based vanillin and resins

Biocatalyst Lignin Transformation Technology

16

TCOS Uncertainty Analysis Pathogen Detection RHA1 Vanillin LPF Resin

Tech

nolo

gica

l

Leve

rs Potential to enhance

certainty in risk assessments Demonstrated proof of principle

Demonstrated proof of principle

Hur

dles

Cannot detect if pathogen is dead or alive False positives and negatives Screening for key genera and race may be needed

Production scalability Particle size, distr’n, solubility, viscosity of solutions

Production scalability Strict certification (extreme temperatures & moisture; National and international building codes)

Com

mer

cial

Leve

rs

Trade most significant application; may expedite confinement time at borders Voluntary phytosanitary certification programs may benefit private sector

Petroleum free; potential eco–products Abundant, renewable and stable supply

Eco products increasing market niche Renewable; not dependent on fluctuating oil prices Reduces input costs

Hur

dles

Phytosanitary Certificates (inter-provincial Nurseries problem) End use differs - not defined Industry price sensitive Int. trade complexities Perceived only as a reg. tool

Compliance with market needs R&D to develop new applications Skepticism regarding making profit from lignin

Thin margins Need for reliable supply High transport costs Skepticism regarding profit from lignin Fluctuations in construction industry

17

TCOS Uncertainty Analysis Pathogen Detection RHA1 Vanillin LPF Resin

Org

aniz

ation

al

Leve

rs

Adds value in risk assessment procedures; help protect Canada against pathogens Complementary collaborative relationships

Patentable Out-licensing opportunity ‘Low hanging fruit’; establish cognitive legitimacy

Patentable, opportunity to out-license Specialty resin suppliers possess compl. assets, capabilities

Hur

dles

Lack of guidelines, Training issues May provide too much info (e.g. may identify problems that do not have solutions)

Access to compl. assets Need to secure patents Tech-transfer offices not equipped to deal with low margin industries

Capabilities & compl. assets weak Tech-transfer offices not equipped to deal with low margin industries

Soci

al

Leve

rs

Protects forests Could impact agriculture Climate change may be key driver

Env. attributes provide socio-political legitimacy

Renewable; no formaldehyde concerns Favorable for LEED cert. Env. attributes provide legitimacy

Hur

dles

Short term trade implications NGOs, local communities, First Nations unclear Stakeholder ambiguity issues Need clear post detection actions

Need to ensure env. sound practices through-out life cycle stages Need regulatory approval

Need to ensure env. sound practices throughout life cycle stages Need regulatory approval

18

ImplicationsEarly Scanning • Key for innovative success: early scanning of industry features

and market dynamics, firm capabilities and appropriability issues, and potential social/env. impacts. • Gatekeepers’ link between research team & environment: • Technological gatekeepers • Market gatekeepers • Stakeholder gatekeeper

The Role of Technology Transfer Offices: • Passive versus active role, depending on industry• Must move beyond medical (active) if translational model is to

engage the bio-economy • Training for heterogeneous skills?

19

ImplicationsOpportunity Identification• Early interaction reduces risks, plus identifies opportunities • Enroll unanticipated users for future applications, identify

opportunities otherwise beyond scope of initial project• The role of the ‘gate-opener’

• Temporary project structure/ short term funding, versus long term potential applications needed for translational model

Learning Levers for Legitimization: • New technologies compete against well established

incumbents with scale economies (cognitive legitimacy)• Effect of learning (Linton and Walsh, 2004)• Social/env. attributes as lever - different value proposition

based on social legitimacy, which can provide developers with time to improve technological and commercial attributes.

20

ImplicationsThe Cost of Translation• While benefits are promising, there are also costs: – Increased transaction costs (finding industry partners,

potential customers, consultations with more stakeholders)– IPM legal & admin costs– Increasingly demanding accountability/research ethics

• Individually all provide utility, but also time-consuming, requires skills, heuristics peripheral to lead researchers

• Schumpeterian vs. Kirznerian entrepreneurship - researchers creating new knowledge expected to take on larger share of the risks, admin under translational research, but currently not clear if rewards go to them or others

• Are we expecting too much from our scientists?

21

AcknowledgementsTCOS Lab Contributors• Senior Researchers (and co-authors of this brief): Drs. Stelvia Matos; Vern

Bachor & Robin Downey• Adjuncts: Dr. Mike Martin (retired); Dr. Bruno Silvestre (UofW)• Students: Deb Farias; John Prpic• Research Projects

• Genome Canada and Genome BC Studies• Genomics-based forest health diagnostic and monitoring (PI:

Richard Hamelin, UBC)• Harnessing microbial diversity for sustainable use of forest

biomass resources (PIs: Lindsay Eltis and Bill Mohn, UBC)• SSHRC & others: Brazil studies on innovation & entrepreneurship in

poor communitiesWe would also like to acknowledge our colleagues Professors Edna Einsiedel and Cooper Langford, and special thanks to Karine Morin for organizing this session