Australian Innovation

Practical Innovation 101 – Energising Small Firms

Dr. Rowan Gilmore
CEO, Australian Institute for Commercialisation


Innovation is regarded as vital by both governments and academics, and is one of the holy grails to which advanced economies aspire to excel. Rightly so, but most firms remain nonplussed by all the fuss.

In their daily activities, good firms will be focussed on understanding their customer needs, developing products and services that delight those customers, and watching their own cash flow.

Innovation means developing novel products or services that bring value to customers. To the firms just described, the innovation challenge might lie in actually reaching their end customer, as the product might need to pass through a variety of hands before it truly does have value. The challenge could also lie in accessing “complementary assets”, which are other services or products needed so their own service or product can be usable by the ultimate end-customer.

The way in which that value is eventually realised for the customer is called the value chain. As its name implies, the value chain is the linkage of all the contributions made by numerous other firms before value is created in the hands of the end user. The real innovation challenge for many small firms seeking to meet new customer needs is that others in the value chain may not be accessible, or in the case of a new industry, perhaps may not even exist at all. Even though a firm has a new product or service, if it cannot enter the value chain, the potential value its product may bring might never be realised

Such is the case for example in deploying renewable energy sources in remote Australia, for example with indigenous communities or at mine sites. The outback has the highest solar intensity in the world, so it should be relatively easy to install solar cells to power such communities, right?

Unfortunately not. Existing power providers use diesel generators, and although solar cells (or wind generators) can offer increased capacity, diesel generators are still required because of intermittent cloud cover that prevents renewable solutions providing base load power capacity. A range of small Australian firms are developing energy storage solutions (such as batteries or flywheels) to provide power continuity when the supply drops, but the integration challenges are so numerous that most energy companies are unable to offer the penetration of renewables they otherwise would if their power were constant. The difficulties are not just technological. In fact, most relate to the inability of small supplier firms to negotiate (indeed, create) the value chain that is required. The barriers include scale (too much or too little energy storage); cost; the regulatory and approval process; understanding the specifications for modelling and design; system integration; interoperability (for instance, with diesel generators); and remote system control and maintenance. Solutions might exist in isolation, but broad innovation is hindered because a multiplicity of connections needs to be made before the innovating firm can ever satisfy its potential end customers (in this case, the energy suppliers).

In fact, the entire industry could innovate much faster if only more ‘serendipitous connections” could be engineered. The answer could lie in the AIC’s Industry Innovation Framework.

The Framework consists of a series of structured programs designed by the AIC to help build collaborations for stakeholders along emerging value chains in new or existing industry sectors. The Framework’s most visible components are its two workshops: the R&D Forum and Technology Clinic (AIC TechClinicTM). AIC R&D Forums and TechClinics™ bring together researchers, technology providers, potential end-users of research and other significant stakeholders (e.g. regulators, supply chain members, government agencies) to explore opportunities whereby research or development activities can be leveraged to meet end-users’ existing or future needs.

The facilitated process tracks the very definition of innovation itself by:

1. Exploring and properly articulating a current customer need (the R&D Forum);
2. Mapping the possible value chain to meet that need;
2. Creating value for the customer by helping innovating Australian firms join the value chain to provide novel products or services (the TechClinicTM).

The objective of the R&D Forum is to frame a contemporary industry challenge and reach a common understanding of the alternative solutions available, with a view to building collaboration between researchers, technology suppliers and end users. Once the R&D Forum has been conducted, the pathway to implementation is surfaced by mapping a project-related value chain, undertaking market research around the opportunity, and bringing potential collaborators (projects and participants) together as a group in a subsequent TechClinic™. The key objective of the TechClinic™ is to develop a list of joint actions that progress the necessary steps towards collaboration and innovative solutions.

This process has already created real innovation outcomes in a number of industry sectors, including food processing, tourism, social sciences, mining, and most recently, clean energy (see sidebar).

A successfully facilitated innovation process will avoid jumping to point solutions that may result in suboptimal outcomes. By using its extensive networks among governments, research organisations, and industry, the AIC is able to invite a diverse array of stakeholders from across the entire value chain to be represented in the process. Through the R&D Forum and its initial research mapping and discovery process, the AIC is able to identify the most challenging barriers to greater industry collaboration, and ensure that all aspects of industry growth are considered (for example, the need for regulators, standards, and community opinion to follow). With its familiarity of the barriers to collaboration and commercialisation, and deep knowledge of the research sector, the AIC is able to guarantee that new project opportunities will surface during this part of the process, and is able to help facilitate pathways to commercialisation for these.

The subsequent TechClinic™ then promotes the adoption of innovation and technology to solve problems for firms, and build new industry value chains and networks.  The TechClinic™ provides a platform to match industry needs to relevant, capable and interested organisations.  By developing an agreed list of action items as its outcome, the TechClinic™ defines a path showing how firms can provide solutions to market gaps or address opportunities, and where they fit in the value chain.

For organisations participating in the AIC’s processes, this framework has provided:

-->    High level networking opportunities with potential customers and partners;
-->    Identification of and access to new commercial opportunities;
-->    Solutions to technical and commercial challenges;
-->    Linkages between industry and leading edge research;
-->    Access to current market intelligence; and
-->    Opportunities to discuss industry-wide issues and workshop solutions.

That’s practical innovation!

 

In 2009 the AIC was appointed by the Australian Government’s Enterprise Connect Clean Energy Innovation Centre to run a series of R&D Forums and TechClinics™ to accelerate innovation in the development of a clean energy industry in Australia.

The R&D Forum participants were specifically selected from a broad cross section of industry, research organisations and government, based on their organisation’s role in clean energy storage, or their specific knowledge, networks, and expertise.  The Forum was organised and managed by the AIC with assistance from its partners. It was attended by 50 experts in their fields, including representatives from sixteen leading Australian energy storage SMEs.  Facilitation was conducted by AIC CEO Dr Rowan Gilmore.

The R&D Forum commenced with six brief, focussed presentations from relevant experts in the energy storage field. Although the event started like a conference, it quickly moved into a sequence of facilitated workshops, in which a series of tools helped to gain agreement on industry drivers and gaps, market trends, and critical success factors. As a result of the process, the remote, off-grid energy storage market emerged as a viable opportunity for Australian firms, and a number of real and immediate projects emerged. These were chosen as the topics for the subsequent TechClinic™.

After the R&D Forum, the AIC was able to map a potential value chain, to identify key relationships and industry participants. It highlighted various stakeholders and provided key insights to assist in developing collaborations to address market gaps and opportunities within this sector.  This specific value chain map included stakeholders such as government agencies; shire and land councils; renewable energy developers; integrated utility companies; short and long term energy storage technology providers; support programs and many others.

A briefing paper was also developed by the AIC to share an understanding of the core problem in greater detail, and establish the best course of action for TechClinic™ delivery. This report assisted in developing a complete understanding of the key TechClinic™ metrics, and entailed impact mapping (impact and industry size), ION Mapping (Issues,  Opportunities, and Needs), value chain mapping (stakeholders) and solutions mapping (solutions).  The brief also included full market and industry research data, and helped the AIC to determine the most appropriate format of TechClinic™ to achieve maximum impact.

Five candidate projects led by Horizon Power (WA), Ergon Energy (QLD) and Hydro Tasmania (TAS) emerged from the R&D Forum and were explored in the TechClinic™. All involved development and piloting of remote off-grid power and storage solutions.  The respective business leader for each presented their projects with a specific emphasis on communicating key technology challenges or capability gaps.  

The TechClinic™ was attended by the project proponents, approximately 25 SMEs, five research organisations, and ten interested government entities (Austrade, DRET, etc).  The day commenced with a description of the challenges the projects were facing on the pathway to implementation, and through the facilitated process that followed, identified several barriers and proposed solutions.   Numerous firm-to-firm introductions resulted from the discussion on the day, including some specific solutions. For example CapX’s super-capacitor technology, previously unknown to any of the project proponents, appeared to be a perfect fit for Horizon Power’s need for lower cost, small scale storage suitable in installations for communities of less than 150 dwellings.

Equally important, significant actions with potential impact on the entire energy storage industry were agreed. These included:

•    Agreement by Sydney University and Horizon Power to lead the formation of an Australian Energy Storage Association, which would be a collaborative industry group to address the barriers raised during the forum;
•    Agreement by attending SMEs to establish a sub-group to offer or develop standardised models for their energy storage devices, that were needed by the project proponents to model and understand the application of specific technology within their systems;
•    Agreement by all attending SMEs to write strong letters of support for Hydro Tasmania’s bid to government to establish a user-led test bed for storage devices at its King Island project facility, enabling feasibility testing and in-situ trial results to be achieved; and
•    Agreement by the three project proponents to work with the proposed association to develop more standardised specifications that would better communicate their technical requirements.

 

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