BY MARK B. MONDRY | ORIGINALLY PUBLISHED IN PDMA VISIONS MAGAZINE, QUARTER 1, 2013 • VOL. 37 • NO.1
We built today’s global innovation economy from collaboration. Identifying new ways of solving problems and serving needs, these collaborations created new products that are better, faster and/or cheaper. This is the essence of col-laborative creation; building relationships that offer new resources, new perspectives and new insights in identifying and capturing new opportunities.
Yet, as we have painfully experienced, not all collaborations are equal. In the future, our need for collaboration will only increase as we continue to struggle with the hard reality, famously proffered by Bill Joy, co-founder of Sun Microsystems, that “not all the smart people in the world work for you.” So, reach out and tap the best minds, spread risk and gain access to competencies your organiza-tion doesn’t have. Collaborate to innovate.
The Decline Ambitions of Collaborative Innovation
We need to ask: Does collaboration lead to better innovation? Innovation emerges from new ways of thinking, and collaborative forms of interdisciplinary research and new product development (collectively R&D) intersect to pollinate this new thinking. The traditional scope of R&D and its quest for innovation has swelled as a result.
The concept of “research” has expanded from the confines of scientific research to in-clude design research, ethnography and other elements of opportunity definition. Likewise, “development” has expanded to include user experience design, brand development and digital media. This expanding scope of R&D should, one would expect, provide fuel for greater innovation capacity. That capacity compounds further through collaborative R&D partnerships. Yet, this exponential in-crease in capacity seems to generate only a flood of incremental innovation. Why?
Perhaps the answer lies in our focus on short-term return on investment (ROI). R&D is expensive and risky. Even world-class internal R&D groups, the few that are still around, are forced to justify their existence on an annual basis. The pressure to reduce R&D costs is constant.
These cost pressures and our focus on ROI is morphing corporate R&D into a modern form. This form casts R&D as a composition of translators and seekers, first translating new product development goals into a list of deliverables and then seeking out external resources to “collaborate” with in the creation of those deliverables. In our quest to reduce costs, reduce risk and accelerate results, we seek out existing off-the-shelf technolo-gies—at best, incremental innovation results. R&D descends into a series of short-term tactical endeavors—becoming a “hunter and gatherer” of existing technology. After all, the pace of technological change is accelerating, thereby increasing R&D specialization and costs, so why not just outsource it and put the heavy lifting on other providers? We’ll just call it “collaborating.”
This is where the collaboration lexicon gets confusing. We seem to confuse terms like “col-laboration” and “cooperation” or “resourcing” and “outsourcing” when we talk about the effort of creating new products and services. So, let’s clear-up some of the ambiguity in the common terms used in the R&D context:
- Collaboration is often overused, but it generally means combining the resources or complementary expertise of two or more firms in an effort to reduce risk, cost and/or time to market in fulfilling a previously unrealized business opportunity. Collaborative R&D is most common along shared value chains or with intersecting technologies from non-competing industries.
- Cooperation is sometimes used in the R&D context to describe the sharing of costs between two or more firms to secure resources needed to advance a more general interest shared by the participants. An example might be to share costs of operating industry consortia or to create a nonprofit to explore the development of technology standards.
- Partnering is used broadly to indicate a wide range of business relationships between organizations. A partner alliance could fall anywhere from a formal joint venture to a superficial association like posting another company’s logo on your website.
- Resourcing is a term used to define traditional sub-contracting where a service or product is purchased from a supplier in accordance with a detailed, previously established specification. In this light, resourcing often looks at the specified service or product as a near “commodity” that could be sourced from several alternatives.
- Outsourcing means transferring complete in-house functions or activities to an external service provider. The outsourced provider has authority and control over how the activity is performed, but it is responsible for meeting agreed upon performance criteria.
Clearly, applications of these terms overlap somewhat. The intent here is to advance true collaboration as a significant undertaking; an undertaking intended to create something new while providing lasting benefits to both parties. This raises the stakes in our collaboration goals and in choosing the partners we collaborate with. I call it impact collaboration.
Refocusing on Impact Versus Output
Typically, most R&D-related partnering between companies is focused on achieving pre-defined outputs. These relationships are usually targeted to current business needs and often to specific products, services and deliverables. Interestingly, about 22 percent of all R&D performed in the United States is applied research (only 18 percent is basic research), and a whopping 60 percent of all R&D spend is directed to some type of development.1 Industry shoulders 91 percent of this U.S. development activity. Much of it is accomplished through partnering of some type, but it is short-term output-focused part-nering. Herein lies the opportunity.
What if we shift more of our collaboration efforts on partnerships that have more long-term impact? Collaboration (combining complimentary resources) is most powerful when engaged to accomplish big things. It becomes strategic. Sure, tactical collaborations focused on outputs produce important incremental value, but big opportunities require strategic collaborations that are strategically established to help both parties create lasting impact.
Lasting impact makes the organization better at what it does. Impact could mean the discovery of new disruptive platform technologies that change entire industries. Impact could be developing new automated fabrication technologies that diminish geographical labor cost discrepancies and allow localized and customized manufacturing. Impact could mean creating new organizational competencies that lead to new sources of revenue. These are big things with long-term impact.
When impact collaboration is the goal, partner selection is key. These types of collaboration partners should possess broad competencies that can provide value over the long term. The collaboration should provide learning that flows both ways, fortifying the relationship and extending benefits into new areas.
Think of this collaboration refocus as “more bang for your buck.” It is a long-term investment that rewards a serious commitment of time and resources with long-term impact. Granted, much of your collaboration partnerships will be focused on less ambi-tious goals. Output-based collaborations will always be required to meet short-term objectives. But setting aside resources for impact collaboration is essential for long-term competitive advantage. One category of prospective collaborators is uniquely positioned to fulfill this need: large research universities.
Collaborating with Universities for Impact
Highly ranked research universities usually possess strong engineering schools, vibrant design departments and vigorous business schools. These are exactly the kind of competencies that can help your company create long-term impact. Large research universities have become increasingly important participants in the collaborative innovation ecosystems worldwide. The traditional notion of seeing universities narrowly as a source of basic research has been replaced. The large research university is now sought out as:
- Collaboration partners that can provide new technology, applied research and advanced development under contract with industry;
- Cooperation partners that help to identify intersections in technologies, identify trends and define new business opportunities;
- Resourcing providers of highly qualified job candidates from pools of graduating students and experienced alumni; and
- Outsourcing providers of training, education and information that build managerial competencies and update employee skills through executive education programs, online courses and web-based resources.
These activities can create real impact on your organization. The key is to choose an institution that can provide resources that are aligned with your organizational strategy.
In with the New
University-industry relationships are not new. So, what has changed to make them more valuable as collaboration partners? University administrators have witnessed the decline of industry R&D resources and have experienced the increase of collaborative global partnerships. Many large universities are re-designing and redefining their relationships with industry, donors and the community to be more user-friendly. The results include simplified gateways to university resources and better, stronger connections to the resources that matter.
External R&D collaborations increased again in 2012, according to a recent study surveying R&D managers. In the study, 36 percent said their R&D budgets for 2012 included increases in grants and contracts for university R&D programs.2 In the United States, more than 80 percent of manufacturing firms surveyed in 2011 reported that they were involved in collaborative R&D activity, and more than half were involved in collaborations with academia.3 These same patterns are seen globally. The university-industry relationship is growing to fill strategic, long-term needs for creating creative, collaborative impact that improves your organization. This is impact collaboration. Think big!
Mark B. Mondry, NPDP, Managing Partner, Phase M, LLP works in a variety of industries to identify and establish international collaboration opportunities around the creation and commercialization of innovation. He is an engineer, patent attorney and certified licensing professional (CLP) focusing on Asia-United States business transactions.
1. 2012 Global R&D Funding Forecast, www.battelle.org, citing the National Science Foundation as a source.
2. Industrial Research Institute 2012 R&D Trends Forecast, accessed on Oct. 31, 2012 at http://goo.gl/KV41Z.
3. The Battelle 2012 Global R&D Funding Forecast, www.battelle.org.