ED MORRISON FEBRUARY 11, 2014

ACCELERATING INNOVATION STRENGTHENING PURDUE’S INNOVATION ECOSYSTEM

1

The Innovation Gap at PurdueStrengthening Purdue’s Innovation Ecosystem

The Fraunhofer Connection Insights from the Global Leader in Applied Research

Purdue’s Innovation Acceleration NetworkUsing “Link and Leverage” Networks to Monetize Purdue Assets in New Ways

Launching the Network Defining “next steps” to implementation

Overview

The Gap in Purdue’s Innovation Ecosystem

9

8

7

6

5

4

3

2

1Purdue Research System

Purdue TAP

Basic Technology Research

Feasibility Research

Technology Development

Technology Demonstration

System & SubsystemDevelopment

System Test, Launch& Operations

Technology Readiness Levels

Time to Market

Mid term: 6-18 months

Short term: 0-6 months

Long term: 18-48 months

Gap

Purdue’s Agricultural Research and Engagement System extends across technology readiness levels, but the same is not true for other technology fields. That leaves a gap. Purdue TAP and Discovery Park partially fill this gap, but not completely. This presentation explores this gap and how to fill it.

The Gap in National Innovation Ecosystem

The Design Team for the National Network for Manufacturing Innovation identified a similar gap at the national level.

Source: National Science and Technology Council, National Network for Manufacturing Innovation: A Preliminary Design (2013), page 8.

“The focus of the NNMI lies squarely in the applied research region, after basic research has been conducted and prior to full commercialization of a technology..TRLs 4-7.”

Committee on Science, Space and Technology

U.S. House of Representatives May 12, 2012

The Gap in National Innovation Ecosystem

Manufacturing companies involved in the National Network for Manufacturing Innovation have expressed this gap in another way.

Source: Conrady, C. and Carrick, G., “American Manufacturing Innovation Network”

Structural problem requires a structural solution

Universities, NSF Centers, Federal Labs •  High-risk research •  Long time horizon

•  Not focused on shop floor implementation

Industry, NIST MEP

•  Incremental improvement •  Off the shelf technology

•  Short time horizon

Time to deployment

Tech

nica

l Inn

ovat

ion

Best Practices

Basic Research/ Education

Manufacturing Technology Innovation

Missing Middle •  Manufacturing technology

innovation, maturation, commercialization, insertion

•  Medium time horizon •  High impact

The Gap in an International Context

Source: Hauser, H., The Current and Future Role of Technology Innovation Centres in the UK (2010).

The UK government, facing a similar gap between its universities and the market, is implementing a series of Technology and Innovation Centers (TICs). Called Catapult Centres, these centers are designed to transform the UK innovation system.

Filling the Gap involves expanding research that will:

• Focus on Technology Readiness Levels 5 through 9, converting knowledge and technology into money;

• Fit between typical multi-year government research contracts and short-term Purdue technical assistance contracts;

• “Face the market” in that industry managers -- not academic researchers -- will define the research agenda;

• Focus on accelerating innovation: the application of knowledge to generate money

• Accelerating the transfer of knowledge into revenue generation by business firms

Filling the Gap: Expanding Market-Facing Research

Technology Readiness Levels 1-5

MoneyTechnology

Technology Readiness Levels 5-9

Purdue’s Research System

Purdue’s Engagement System

Filling Purdue’s Innovation Gap will:

1. Create new pathways to expanded market-facing research where the industry sets the agenda;

2. Create new innovation hot spots to accelerate innovation across Indiana;

3. Provide new, powerful learning experiences that are market-driven, multi-disciplinary, and team-based.

Key Success Metrics: Examples

For Purdue Colleges For Discovery Park For Indiana

• Increased diversity of research projects across TRLs

• Powerful learning experiences for students and graduates

• Increased industry research

• Increased cross disciplinary innovation initiatives addressing large scale innovation challenges

• Accelerate innovation among Indiana SMEs revenues from new products and services

• Increased retention and value of Purdue graduates

Filling the Innovation Gap

Creating new pathways to expanded market-facing research at Purdue involves:

• Organizing Purdue around strategic thematic areas

• Developing new paradigms of industry research collaboration and creating networks and alliances of researchers around each thematic area;

• Designing rapidly deployable, agile and sustainable platforms for continuous engagement of industry with Purdue; and

• Generating new revenue from Purdue’s extensive research assets.

Filling Purdue’s Innovation Gap will:

1. Create new pathways to expanded market-facing research at Purdue;

2. Create new innovation hot spots to accelerate innovation across Indiana; and

3. Provide new, powerful learning experiences that are market-driven, multi-disciplinary, and team-based.

Filling the Gap: Expanded Industry Research

Creating new innovation hot spots to accelerate innovation in key strategic areas within Indiana means:

• Increasing access to proven technology and innovation management tools;

• Supporting Indiana companies with an agile innovation infrastructure to accelerate the development and introduction of new products, processes, and services;

• Providing customized connections to the world’s advanced applied research networks; and

• Expanding access for Indiana’s small and medium size enterprises (SME’s) to globally sophisticated innovation infrastructures

Filling Purdue’s Innovation Gap will:

1. Create new pathways to expanded market-facing research at Purdue;

2. Create new innovation hot spots to accelerate innovation across Indiana; and

3. Provide new, powerful learning experiences that are market-driven, multi-disciplinary, and team-based.

Filling the Gap: New Innovation Hot Spots

Providing powerful learning experiences involves:

• Experiential learning by students engaged in real-world projects defined by industry;

• Working directly with industry partners;

• Expanding beyond traditional student/professor relationships to work in teams; and

• Providing unique and global educational experiences

Filling Purdue’s Innovation Gap will:

1. Create new pathways to expanded market-facing research at Purdue;

2. Create new innovation hot spots to accelerate innovation across Indiana; and

3. Provide new, powerful learning experiences that are market-driven, multi-disciplinary, and team-based.

Filling the Gap: Powerful Learning Experiences

Filling the Innovation Gap will strengthen horizontal ties across Purdue’s colleges and vertical ties to the market economy:

• Horizontal ties will come from multi-disciplinary research; • Vertical ties will come from research agendas defined by

industry partners.

Filling the Gap: Horizontal and Vertical Connections

Filling the Gap

x.y<process name>

<pro

cess

na

me>Strengthen

vertical ties with industry

Strengthen horizontal ties across

Purdue

9

87

6

5

4

3

2

1Basic Technology

Research

Feasibility Research

Technology Development

Technology Demonstration

System & SubsystemDevelopment

System Test, Launch& Operations

Technology Readiness Levels

Engineering133.4

Agriculture61.6

Science61.6

Health26.7

Veterinary13.4

Pharmacy11.6

Technology9.4

Liberal Arts5.7

Education3.7

Rese

arch

Foc

us Appl

ied

Basic

Market Economy

Purdue's Engagement System: Engaged Research

Purdue's Extramural Research Awards, 2011-2012 (in $millions)

Other18.6

Purdue's Research System: Academic Research

Start-up firms Investor networks

Colleges and universities

Skilled talent pool

Innovating Growth

Companies

Provides ideas, incubators

and smart people

Provides capitaland expertise

Recruits smart people

Recruits and trains smart people

Provides networkand mentoring to

start-ups

Provides R&D partners

Recruits and supplies

smart people

Provides investment

and generates wealth

Provides technology support and training

Acceleratesnew venture investment

Source: Ed Morrison

Universities Operate Within Ecosystems

Startup Ecosystem

Innovation Ecosystem

Two Purdue Ecosystems for Market Engagement

Purdue anchors two “ecosystems” to translate technology into money.

Small and Medium Sized Companies

with Growth Potential

+Bundled Innovation

Management Frameworks and Tools

+Purdue and Corporate

Partner Teams

Existing

Existing

New

New

Technology

Markets

Efficiency Innovation

-Market Penetration

Sustaining Innovation

-Product Extension

Transformative Innovation

-Product Market Diversification

Sustaining Innovation

-Market Extension =

More Growth

Higher rates of innovation among Indiana companies

Purdue’s Innovation Ecosystem

Purdue’s Startup Ecosystem

Technology Talent

Intellectual Property

University Innovation Inputs

+Business Model and

Lean Start-up Frameworks

+Business Formation and

Support Networks

=More Growth

Spin-out Companies

Ecosystem Strategic Focus Existing Anchors Primary Customers Outcome Metrics

Purdue Entrepreneurship Ecosystem

Producing start-ups from Purdue technology

Purdue Foundry Purdue research faculty

Number of Purdue start-ups

Purdue Innovation Ecosystem

Accelerating innovation in existing companies using technology and innovation management tools

Purdue TAP

Purdue Extension

High growth SMEs and Consortia of industrial firms facing a common innovation challenge

Revenues coming from improved and new products and services

Two Purdue Ecosystems for Development

Purdue can attract more investment to the university by strengthening these two ecosystems. Steps are being taken to strengthen the Startup Ecosystem. More can be done to strengthen the Purdue Innovation Ecosystem.

MoneyTechnology

Purdue’s Research System

Purdue’s EngagementSystem

Purdue’s Innovation Ecosystem

Purdue’s Startup

Ecosystem

PurdueFoundry

PurdueResearch

Foundation

DiscoveryPark Purdue

TAP

PurdueExtension

The Innovation Gap at PurdueStrengthening Purdue’s Innovation Ecosystem

The Fraunhofer Connection Insights from the Global Leader in Applied Research

Purdue’s Innovation Acceleration NetworkUsing “Link and Leverage” Networks to Monetize Purdue Assets in New Ways

Launching the Network Defining “next steps” to implementation

Overview

Purdue Innovation Ecosystem: Fraunhofer as Partner

17

To determine how to fill the Innovation Gap, a Purdue team from the College of Technology and the Purdue Center for Regional Development explored Fraunhofer as a model.

The Fraunhofer Society (Gesellschaft) formed in 1949 and named after a famous inventor, scientist and entrepreneur: Joseph von Fraunhofer (Think Edison).

Now the largest applied research organization in EuropeApplied research, technology licensing (e.g., mp-3 format), and spin-out companiesSimilar to (but about 10X the size of) SRI International (formerly Stanford Research Institute)

Purdue Innovation Ecosystem: Fraunhofer as Partner

18

Applied Research

Basic Research

Predominantly public Predominantly private

Characteristics of Research

Funding

Federal/German Länder Institutes

HGF

WGL

Universities

Industry (internal and

external expenditures)

AiF

MPG

HGF Hermann von Helmholtz-Gemeinschaft WGL Wissenschaftsgemeinschaft Gottfried Wilhelm Leibniz AiF Arbeitsgemeinschaft industrieller Forschungsvereinigungen MPG Max-Planck-Gesellschaft

Source:: Fraunhofer

In the German research landscape, Fraunhofer occupies a pivotal position between public and private sectors.

The Gap

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nEstablished in 1949, Fraunhofer represents one of the world’s largest applied and most successful applied technology agencies with over 80 institutes and centers

nMore than 22,000 employees: 4,000+ PhD’s

nAn annual research volume of €1.9 billion, of which €1.6 billion is generated through contract research. n70% of this research revenue derives

from contracts with industry and from publicly financed research projects.

n30% is contributed by the German federal government and the Länder governments in the form of matching funds.

München

Holzkirchen

Freiburg

Efringen-Kirchen

FreisingStuttgart

PfinztalKarlsruheSaarbrücken

St. IngbertKaiserslautern

DarmstadtWürzburg

Erlangen

Nürnberg

Ilmenau

Schkopau

Teltow

Oberhausen

Duisburg

EuskirchenAachen St. AugustinSchmallenberg

Dortmund

PotsdamBerlin

RostockLübeck

Itzehoe

Braunschweig

Hannover

BremenBremerhaven

Jena

Leipzig

Chemnitz

Dresden

CottbusMagdeburg

Halle

Fürth

Wachtberg

Ettlingen

Kandern

Oldenburg

Freiberg

Paderborn

Kassel

GießenErfurt

AugsburgOberpfaffenhofen

Garching

Straubing

Bayreuth

Bronnbach

Prien

Hamburg

Leuna

Fraunhofer: Global leader in applied research

Fraunhofer: Groups, Alliances and Networks

Over 60 Fraunhofer institutes are organized into 7 Groups…

Information and Communication TechnologyLife SciencesMicroelectronicsLight & Surfaces Production Materials and Components Defense and Security

with multiple internal alliances…

Adaptronics

Ambient Assisted Living

Building Innovation

Digital Cinema

E-Government

Energy

Food Chain ManagementAdditive Manufacturing

Cloud Computing

Advancer

Nanotechnology

Simulation

Optic Surfaces

Photocatalysis

Polymer SurfacesCleaning Technology

Water Systems

Traffic and Transportation

Vision

Automobile Production

Lightweight Structures

Embedded Systems

…and global networks.

Fraunhofer: Market Facing, Market Driven

21

Matching Funding

Industry and Government Contract Research

Institute business model:• Institutes work as profit centers: incentive

to “run to cash”• Institutes keep most of what they

generate • Private sector funding matched with

public sector dollars• Spinoffs by Fraunhofer researchers are

encouraged

Customer base: • Industrial and service companies• Public sector

R&D activities:• Application-oriented research based on

industry’s agenda• Application-oriented basic research with

longer time horizons• Research for German Defense Ministry €0

€500

€1,000

€1,500

€2,000

2006 2007 2008 2009 2010 2011 2012

Total Business Volume

Design: The model of innovation of the Fraunhofer Society can be described as a network model,…The network, together with a strong reputation, makes it fairly easy for small and big firms to establish a contact with the Society.

Drivers: The Fraunhofer model allows the organization to set up new institutes where it sees a new market demand.

Åström, Eriksson, Niklasson and Arnold, International Comparison of Five Institute Systems (2008)

Fraunhofer: Design and drivers

“

“

“”

”

The Innovation Gap at PurdueStrengthening Purdue’s Innovation Ecosystem

The Fraunhofer Connection Insights from the Global Leader in Applied Research

Purdue’s Innovation Acceleration NetworkUsing “Link and Leverage” Networks to Monetize Purdue Assets in New Ways

Launching the Network Defining “next steps” to implementation

Overview

The Central Idea: Achieve Scale with Coherence

Current Engagement Systemfor Innovation

a loose collection of components that lacks coherence

Proposed Engagement Systemfor Innovation

achieve scale with shared market-facing innovation disciplines

Purdue’s Innovation

Acceleration Network

1 2 3 4Deploying shared frameworks

An Innovation Acceleration Network will provide the common language, frameworks, platforms and tools needed for Purdue innovation projects to scale across campus. With common understandings, innovation becomes more “plug and play” across Purdue.

Building on sharedplatforms

Developing shared metrics

Using shared processes

Use new, emerging models of technology and innovation management

Define new innovation processes based on open and collaborative innovation

Achieve scale through common platforms that connect different networks

Rely on shared metrics to evaluate “what’s working” across campus

Example: Technology Readiness Levels

Example: Open innovationStrategic doing

Example: Purdue One Hub

Example: Common knowledge transfer metrics developed in the UK

Outcome: Achieving Scale through a Shared Platform

Innovation Acceleration Networkwith Market-Facing

Innovation Disciplines

The Innovation Acceleration Network

As the Innovation Acceleration Network establishes itself across campus, it will bring coherence, speed, and “link and leverage” opportunities to expand industrial investment in Purdue’s market-facing research.

University and College

CentersUnviersityUnviersityUnviersityUniversity

College1College

1

College2College

2College2

Colleges and Departments

CollegeCollege

CollegeCollege 1 Departments

ExistingEngagement

Networks

Purdue Extension

Purdue TAP

To achieve scale in innovation engagement, Purdue will need to pioneer new approaches to market-facing research and engage industrial firms in ways not currently taking place on the Purdue campus.

The Innovation Acceleration Network includes:

1. A core innovation lab; and

2. Multiple innovation labs (iLabs) within colleges across the campus and Indiana.

This network would:

1. Increase market-facing industry research in Discovery Park and across Purdue colleges and departments;

2. Link more effectively with global partners conducting similar market-facing research;

3. Create new multi-disciplinary learning opportunities for Purdue students locally and globally;

The Innovation Acceleration Network

Purdue Core Innovation Lab

(Core Lab)

Innovation lab

(iLab) 1

iLab 2

iLabn

The Core Lab will provide:

1. Common pool of innovation assets.— Assemble and support a shared pool of tools, frameworks, platforms and training for innovation and technology management.

2. Asset leverage across campus.-- Provide a market facing innovation infrastructure to departments and centers.

3. External linkages to additional innovation assets.-- Identify and link to external innovation assets that can be rapidly deployed by Purdue’s industrial partners and research teams.

4. Powerful learning experiences.— Provide Purdue students opportunities to engage with global research teams.

Functions of the Core Lab

The Core Lab provides servicesto all iLabs and manages the external relationships with multi-disciplinary applied research institutes, such as Fraunhofer (Germany); ITRI (Taiwan); VTT (Finland); A*STAR (Singapore)

iLab 3

iLab 2

Purdue Core Innovation Lab

(Core Lab)

iLab1

Core Lab’s Common Pool of Innovation Assets

• Technology and Market Assessments.— Evaluating technology readiness and market opportunities.

• Agile Strategy Discipline.— Developing and implementing collaborative strategies;

• Network and Alliance Development.— Designing and supporting technology and innovation networks and alliances;

• TechnologyRadar.— Identifying, evaluating emerging technologies in existing markets;

• MarketExplorer.— Identifying market opportunities for existing technologies;

• Shared IT and Open Innovation Platforms.— Designing IT support for technology and innovation management;

• Operations.— Organizing innovation and research and development (R&D) effectively and efficiently using lean processes;

• Technology and Innovation Management Training.— Conducting training to increase the capacity for innovation among Purdue and its partners;

• Innovation Metrics.— Developing metrics to evaluate innovation performance

iLab 3

iLab 2

Purdue Core Innovation Lab

(Core Lab)

iLab1

Purdue iLabs provide industry partners with:

1. Customized, agile innovation infrastructure.-- Each iLab will design an lean infrastructure to rapidly meet an industry research agenda;

2. Access to powerful innovation tools on demand.-- Each iLab will have a portfolio of the latest innovation tools, frameworks and training supported by the Core Lab;

3. Access to researchers, faculty and students on demand.— Each iLab will be staffed by Purdue researchers, faculty and students with a background in the technologies of interest to the industry partner.

The iLabs Value Proposition to Industry

PPI core innovation lab

Innovation lab1

Innovation lab2

Innovation lab3

Industry support for iLabs will come in a variety of ways:— Base funding commitments to each iLab— Contract research— Donations of equipment— Unrestricted gifts from alumni

Scaling Purdue’s Innovation Acceleration NetworkR

even

ues

in $

000

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Year 1 Year 2 Year 3 Year 4 Year 5

Year 1 Year 2 Year 3 Year 4 Year 5Number of iLabs

Small ($100-200K) 2 5 10 15 25Medium ($300-500K) 0 1 2 5 10Large ($700-900K) 0 0 1 2 5

Core Lab ($1.5M-$3M) 1 1 1 1 1

• Potential Scale.— Deploying the network across campus and Indiana could increase industry support for Purdue research by $20 million to $25 million in 5 to 7 years.

• Timing.— Revenue generation will accelerate as the network grows.

• Drivers.— Success will depend on how many iLabs can be “franchised” by the Core lab.

Metrics: A Purdue Innovation Dashboard

Northwestern University has developed an “innovation radar” to measure the innovation performance of individual companies. A similar innovation metric could be developed for individual Purdue centers, departments and colleges. This metric would enable measured, focused improvements in performance.

Fraunhofer has developed similar dashboards to evaluate innovation productivity and efficiency across different Fraunhofer institutes.

Company A Company BThe Core Lab would develop and deploy an Innovation Management Dashboard to promote:• Common Metrics.— Create a

campus-wide performance metric for innovation

• Improved Focus.— Enable focused improvement on critical characteristics of effective and efficient innovation

• Continuous Learning and Improvement.— Promote a collaborative culture of continuous improvement

• Global benchmarking.— To the extent that Purdue aligns ints metrics with Fraunhofer, enable global comparisons

The Innovation Gap at PurdueStrengthening Purdue’s Innovation Ecosystem

The Fraunhofer Connection Insights from the Global Leader in Applied Research

Purdue’s Innovation Acceleration NetworkUsing “Link and Leverage” Networks to Monetize Purdue Assets in New Ways

Launching the Network Defining “next steps” to implementation

Overview

Launch of the Core Lab will take place in Year 1. Development of the Core Lab will occur coincident with the development of the first iLab. Configuration and launch of iLabs will be flexible, driven in part by industry expressions of interest.

Launching the Network: Strawman Schedule

Year 1 Year 2 Year 3

Core Lab

iLab 1

iLab 2

iLab 3

iLab 4

iLab 5

iLab 6

iLabs 7-13

Next Steps

The next steps to developing the Innovation Acceleration Network include:• Workshop at Purdue.— Assemble a

core team to review this presentation and develop a set of detailed outcomes to engage with Fraunhofer.

• Workshop at Fraunhofer.— Conduct a 1.0 to1.5 day workshop at Fraunhofer: • Develop detailed specifications for Core

Lab and iLab.• Draft agreement with Fraunhofer IAO on

design and management of the Network.

• Preparation of detailed prospectus.— Prepare a business plan and investor prospectus for the Network.

© Fraunhofer IAO, IAT Universität Stuttgart

For more information, please contact:

Antonino ArdilioDr.-Ing. Dipl.-Ing. Des. Head of Technology ManagementTelephone : + 49 (0) 711 / 970-2246E-mail: antonino.ardilio@iao.fraunhofer.de

Joachim Warschat Univ.-Prof. Dr.-Ing. habil. Director and Head of Technology & Innovation ManagementTelephone : + 49 (0) 711 / 970-2081E-mail: joachim.warschat@iao.fraunhofer.de

Ed Morrison Regional Economic Development Advisor Purdue Center for Regional DevelopmentTelephone : + 1 216 650 7267E-mail: edmorrison@purdue.edu

http://www.iao.fraunhofer.de