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 âcomplementary assetsâ, 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 âserendipitous connectionsâ could be engineered. The answer could lie in the AICâs 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 Frameworkâs most visible components are its two workshops: the R&D Forum and Technology Clinic (AIC TechClinicTM). AIC R&D Forums and TechClinicsâ¢ 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-usersâ 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 TechClinicâ¢. The key objective of the TechClinicâ¢ 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 TechClinicâ¢ then promotes the adoption of innovation and technology to solve problems for firms, and build new industry value chains and networks. The TechClinicâ¢ 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 TechClinicâ¢ 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 AICâs 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.
Thatâs practical innovation!