The Idealog Guide to R&D


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If we don't expand our innovation economy, we may not have much of an economy left at all.

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The Idealog Guide to R&D

  1. 1. The Idealog guide to R&D the Idealog R&D guide to The writing is on the wall: we can’t sustain our Audi Q7s and jetski tastes on a budget of selling foreigners stuff they can grow themselves. If we don’t expand our innovation economy, we may eventually not have much of an economy left at all. The fix? Read onAJ Park 10009
  2. 2. e Ministry of Science and Innovation (MSI) has a proudhistory of investing in innovative New Zealand businesseslike Comvita to accelerate their success through research anddevelopment (R&D). If you want to be a global success story,MSI can support your business, whatever your size, using ourworld-class R&D networks and funding programmes.Your success 0800 MSI GOVTwill also be ours.
  3. 3. guide to R&D The Idealog Contents The Idealog 93 Guide to R&D 100 How to get the New Zealand’s cash for 94 R&D R&D scorecard 100 106 The R&D Get the cash for R&D ecosystem How 116 117 112 to do From good R&D ideas R&D to IP conclusion 92 / IDEALOG.CO.NZ/BUSINESSPLAN
  4. 4. The Idealog guide to R&DThe IdealogGuide to R&DT his an issue of national importance. That’s no exaggeration. Because when we talk about the ‘development’ in research and development we are talking about how developed we are as a nation, and whether the way welive has a hope of keeping up with the most developednations of the future. Make no mistake about it, the 21st century is not shortof folks who can grow sheep and cows, dig holes or gofishing. Huge nations like Brazil, India and China are A N DY K E N W O RT H Y I S Apowering up gigantic primary sectors that make ours look FREELANCE WRITER SPECIALISINGlike a child’s playset. I N B U S I N E S S I N N O VAT I O N A N D Scores of middleweight countries are flexing their newly G L O B A L S U S TA I N A B I L I T Y. T H I Sdeveloped economic muscles hoping to go toe to toe with I S H I S T H I R D IDEALOG G U I D E .us in any marketplace, any time, anywhere. We are a long A N DY K E N W O RT H Y.C O Mway from most of the world’s shoppers and the oppositionmanufactures the vast majority of the goodies we spendour dollars on, so you could say they already have us overa barrel of shipping oil each way. So the writing is on the wall: we just aren’t going to beable to keep buying our Audi Q7s and jetskis for muchlonger by selling foreigners stuff they can grow themselves,or by selling each other flat whites, boutique nik-naks orsecondhand stuff on an eBay clone that only works here.If we don’t expand our innovation economy, pretty soonwe won’t have much of an economy left at all. Thankfully, we have a lot going for us. For example,as we shall see, a closer look at our world-famous dairyindustry reveals it has survived and thrived not justbecause of our fabled supplies of clean water and freshgrass, but by pumping out a steady stream of fresh ideas. Meanwhile, our national mania for tinkering in sheds is “LIKE ACTUALLY ALMOST ALLalready migrating into some of the most complex R&D GOVERNMENTS IN DEVELOPEDenvironments in the world. We now have an innovationinfrastructure in place that is forging ever greater links COUNTRIES IN THE WORLD, R&Dbetween universities, Crown Research Institutes, IS SEEN BY OURS AS THE KEYgovernment ministries and the best of the country’sbusiness brains. And we have a business-orientated DIFFERENTIATOR THAT DEVELOPEDgovernment that has recently opened up some new COUNTRIES HAVE GOT ON THEoutlets for R&D funding. Which leaves you, the bright spark who might just have STILL DEVELOPING COUNTRIES.”some answers, or at least some of the right questions, to M U R R AY B A I N, C H I E F E X E C U T I V E O F T H E M I N I S T RYtake Kiwi business to the next level. O F S C I E N C E A N D I N N O VAT I O N IDEALOG.CO.NZ/BUSINESSPLAN / 93
  5. 5. guide to R&D The Idealog New Zealand’s R&D scorecard TO KNOW WHERE YOU’RE GOING, YOU “The issue is that we don’t have enough young people hanging on to maths and physics when they move on GOTTA KNOW WHERE YOU’RE AT from Year 10 at school. So the demand for engineers way outstrips supply. For us to grow engineering as much as we need to we would need more kids going O ne of the things the world loves about us is into engineering,” he says. “There is plenty of opportunity our great sense of national pride. It has to promote the careers, but to grow the sector we need provided us with the kind of positive outlook more kids choosing engineering.” that has kept us smiling through tough Fonterra is one of the major companies cited by many pioneering times. But R&D is serious business, so let’s as a firm that does R&D well. And Mark Malone, general take a cold hard look at where we are at. manager, innovation, agrees that creating an R&D mojo The Powering Innovation report, an independent across New Zealand is crucial. report commissioned by the Ministry of Science and “The R&D and innovation that we do requires a Innovation released in February, found that besides some knowledge-based society in which to operate,” he says. stand-out players and some green shoots developing: “This is a symbiotic relationship where both Fonterra “There is evidence that the New Zealand high value and New Zealand as a whole benefit from the knowledge manufacturing and services sector is under-developed, base that is developed.” and could contribute substantially more to the economy than it currently does, particularly through growth in high-productivity advanced technology industries.” The New Zealand high-value manufacturing In other words (what I used to always get on my school reports) ‘could try harder’. But they get more specific: and services sector is under-developed, and “Notably, there is a relatively low level of investment in research and development by New Zealand business: could contribute substantially more to the 0.54 percent of gross domestic product in 2010, compared with the OECD average of approximately 1.5 percent. economy than it currently does “Similarly, there is a relatively low level of overall expenditure on R&D as a percentage of GDP. 1.3 percent One of the key people whose desks the report landed in 2010, compared with the OECD average of 2.33 percent. on is Murray Bain, chief executive of the Ministry of These ratios are considerably less than those in other Science and Innovation. He is realistic about our track economies similar to that in New Zealand.” record to date. In response, the report called for a range of measures to “One of the measures we are behind on is the number get things moving, some of which are now looking large of engineers we produce from our universities and in the light of day. Professor John Raine, head of school of tertiary institutions,” he says. “Certainly the percentage Engineering and pro vice chancellor of Innovation of graduates in engineering is a lot lower than Scandinavia and Enterprise at AUT, was one of the report’s authors. and Germany where there is a history of strong engineers, He has advised government and companies on how to although I was told even Germany is short of 75,000 stimulate high-quality R&D for at least the past decade, engineers at the moment, Scandinavia is short of engineers but ultimately he sees the challenge as something and New Zealand companies are struggling to get enough fundamental and grass roots. too. Those are the guys who often turn the science into 94 / IDEALOG.CO.NZ/BUSINESSPLAN
  6. 6. The Idealog guide to R&D Percentage GDP as R&D Funding 2010 2010 OECD AVERAGE NZ AVERAGE OECD AVERAGE NZ AVERAGE 1.5% 0.54% 2.33% 1.3% Investment by Government NZ business expenditure (private) on R&DTHE TIMES, THEY ARE A-CHANGIN’ economic growth and innovation. “A more efficient and effective ministry focused on liftingTwo major items from the Powering Innovation report’s overall productivity and supporting the growth of competitiveshopping list are now coming off the slipway. businesses is a crucial element in creating more jobs and higher In November, Prime Minister John Key announced that an wages, and boosting our standard of living,” Joyce has said.extra $120-$150 million is due to be pumped into the Crown We shall have to wait and see, but already there is someResearch Institute Industrial Research Limited, to transform disquiet about the into an advanced technology institute that will serve as Professor Shaun Hendy, who is president of the New Zealandhigh-tech headquarters to support industrial innovation. Association of Scientists, said the merger could have major Meanwhile, the Ministry of Science and Innovation has benefits on the economic development front, but mayonly just got underway, but is due to be swallowed up and marginalise important environmental and health researchmerged with the Ministry of Economic Development and that didn’t have an immediate economic outcome.the Department of Building and Housing and Department of “We know that more scientific research is needed to growLabour to form the new Ministry of Business, Innovation and industry, manufacturing and exports. But large components ofEmployment from July this year. the science system are concerned with the broader view, such The National government’s economic tsar Steven Joyce as environmental and health science research, areas that do notwill take the helm of this new mothership, with about 3,200 often deliver an immediate payoff but which can be immenselystaff on deck. Mr Joyce has said the new ministry will ensure valuable over longer time frames. Further change such as this isco-ordination, focus and the government commitment to likely to add more uncertainty to funding.” IDEALOG.CO.NZ/BUSINESSPLAN / 95
  7. 7. guide to R&D The Idealog a piece of machinery that works on the ground, so they are important.” But his ministry was set up and funded in 2010 with the specific aim of delivering a step change to New Zealanders’ prosperity and wellbeing based on innovation, and he believes that is already beginning to take shape. “What we are seeing is an increasing number of companies interested in doing R&D, the profile has increased,” he says. “We are seeing a lot more interest in R&D than we did historically. The level of business funding has been increased by government, and the global market situation is certainly putting pressure on companies to innovate to stay ahead of the game. A lot of industry groups like Business NZ as well as the regional economic development agencies, have been stepping up their activities and saying ‘this is important’.” And looking around us at the sorts of ideas coming through, it is clear that Kiwis still have clever stuff up their sleeves and between their ears: the big challenge is getting the results into the world’s shops and businesses. TIM THURLBY, FONTERRA Scale, as always, is a major barrier, but if New Zealand can create a world-beating rugby team by getting PORTFOLIO MANAGER, LOOKS relatively few people trained up and working together properly, it should be possible to do that for research AT THE MAIN BARRIERS TO and development as well. And it’s a virtuous cycle: we need to be world beaters R&D IN NEW ZEALAND’S ALL to attract world-class talent to our shores so we can stay ahead in the years to come. Raine and Bain both told me IMPORTANT PRIMARY SECTOR that top-quality engineering staff for both academic and commercial research are difficult to come by at the moment in this country; we simply don’t pay enough and FROM AN ISLAND FAR, FAR AWAY tend to try to make up the difference with an appealing R&D programmes are expensive, so to justify the investment lifestyle. This in turn means that even those engineers we we usually need global market opportunities. are creating in our universities are liable to head off on the big OE and never return. IT’S COMPLEX “There is world class R&D happening,” says Raine. “It’s The challenges of staying ahead in food technologies require just that, taken overall, there is not enough of it. It’s too ever more sophisticated approaches to R&D. It is no longer confined to the larger companies or smaller companies sufficient to understand food formulations and applications at that are almost all R&D, and likely to have been started a macro level. We need to understand a raft of interactions at by university graduates. I think it’s very clear from the the molecular level. That means adjusting our skill sets and our OECD data that the level of investment in R&D is tied mind sets. It’s doable, but it takes time. to growth in GDP per capita. Because the level of investment we have is less than you would want for NEED THE INFORMATION a high-tech country, then the quality and growth of Getting quality customer/consumer information to help define the high tech sector is likely to be less also. the targets for our R&D is always challenging. With clearly “We had a lot of people come along to the review defined targets, it is amazing how quickly our R&D teams can saying we think the real issue is that too many New find solutions to a problem or opportunity. In contrast, poorly Zealand companies don’t know what they don’t know, defined goals may produce a lot of fascinating work, they are just bumbling along, with a kind of number eight but without a tangible outcome this almost inevitably fencing wire approach.” ends up as a frustrating exercise for all. So it’s time to get on it and find out how that’s done. AUTRES/248/IDE/R 96 / IDEALOG.CO.NZ/BUSINESSPLAN
  8. 8. The University for the changing world OUR ENGINEERS SEE ROBOTS AS A WAY OF UNDERSTANDING THE HUMAN MIND. NOT TAKING OVER THE WORLD. 1982 was the year Star Wars: The Return of the Jedi went into production. It was also the year Professor of Artificial Intelligence, Albert Yeap, became obsessed with the mind. Thirty years later, Professor Yeap and his team of researchers at AUT are using robots, once reserved for epic sci-fi’s, to push our understanding of how the mind maps the spaces around us. Professor Yeap’s army of ‘ALBOTS’ use sonar to navigate through complex spaces. By analyzing the data collected from these experiments, Professor Yeap is discovering original insights into how the mind makes the connections between the physical and the mental. Using robots in this way is the progressive thinking you’ll find at AUT and an example of how the brightest minds in New Zealand are collaborating to push our understanding of the world forward. To find out more about research that matters and how our researchers work with industry call 0800 AUT RESEARCH, email, or visit
  9. 9. CASE STUDY All sorted Thanks to its commitment to research and development, Compac Sorting Equipment has grown from a single sorting machine made for the family orchard into a global leader in fruit and vegetable sorting and grading technology N ew Zealand is bursting with seen Compac grow from a small business to to securing an agreement such as the one clever people coming up with a global group with more than 300 staff. He with Paramount Citrus. ground-breaking ideas and believes the company’s success can in part “The sale was based on Compac having world-leading innovations. But be attributed to its ability to develop and the best performing technology,” he says. good ideas can come to nothing without the commercialise technology. “In an industry like ours, we need to invest research and development needed to get them “Compac is good at taking technology from a significant amount of our turnover into new not only off the ground, but into the market. the lab and commercialising it, making it robust product development. The funding partnership That’s where the Ministry of Science and and reliable in the field. This is quite difficult with MSI has helped us accelerate our product Innovation (MSI) is playing a crucial role in and I think we do it well. We also focus on development and enter new segments faster driving New Zealand’s science and innovation hiring really good people,” he says. than we would otherwise have done. It’s also sector. Over the past decade, MSI (through the Another important driving force is funding reduced much of the uncertainty we faced by TechNZ programme) has invested more than for R&D. Ongoing support from MSI has helping to offset some of the significant costs $500 million into thousands of New Zealand enabled Compac to develop products that have associated with the R&D for key projects such businesses to de-risk R&D activity. MSI has helped it expand internationally, increase its as the Paramount Citrus solution. We’ve been also provided additional value by matching profits to enable further R&D, and kept it able to take on additional staff and scale up the businesses with global experts, facilitating ahead of the competition. the organisation to cope with this project.” university interns, promoting best practice in Since 2009, Compac has received more than Ongoing R&D is extremely important in the terms of developing IP, and introducing them $5.7 million in funding from MSI, including fruit sorting and packing industry. Compac to potential collaborators in the science and a $3.8 million Technology Development Grant invests about 5 percent of its annual turnover innovation eco-system. approved in July 2010. Some of this funding in R&D and looks to government funding Many of the companies supported by MSI was put towards developing software that has and grants to supplement that. But it’s an have gone on to be successful and sustainable led to a multimillion-dollar deal with the investment that’s seeing excellent returns. – employing more staff, growing their revenues world’s largest grower, packer and marketer “It’s a technology race in many areas,” and exporting their products and services of citrus fruit, Paramount Citrus. The deal will says Beach. “If you cannot sort the fruit around the world. One such company is see Compac supply sorting equipment for effectively by automation and save as much Auckland-based Compac Sorting Equipment. Paramount Citrus’ new 57,000m² packing on labour as the competitors’ machines, then Founded in 1984 by Hamish Kennedy, an plant in Delano, California. you lose sales. We’re always trying to push electrical engineer who grew up on a kiwifruit “We’re building the largest fruit-sorting the envelope with automation, especially orchard, Compac develops and manufactures machine in the world that we know of, for around inspection, with our machine vision fruit and vegetable sorting and packing Paramount,” says Beach. “It’s the size of a and internal inspection systems. technology, machinery and software solutions rugby field and will sort 20 million mandarins “We’ve had 16 percent compound annual that are now sold around the world. a day. It can sort fruit based on their size, growth over the past 10 years, and MSI funding The company exported its first machine, an colour, shape and surface blemishes.” for R&D has been a significant reason behind eight-lane unit for France’s largest kiwifruit The equipment is being manufactured in achieving this growth.” packer, in 1991 and now Compac equipment and Compac’s factory in Auckland’s Onehunga and technology is in use in more than 20 countries its reassembly and installation at Paramount’s throughout the North and South America, California packing plant should be complete Asia and Europe. by October this year. Compac R&D manager Nigel Beach has been Beach says MSI has been an extremely with the company since the early days and has valuable partner, particularly when it came98 / IDEALOG.CO.NZ/BUSINESSPLAN
  10. 10. I D E A LO G I N A S S O C I AT I O N W I T H M S I IN BRIEFThe Ministry of Science and Innovation (MSI) has provided $5.7 million infunding to Compac Sorting Equipment, including a $3.8 million Technology Development Grant approved in July 2010. This vital support has enabled TEXT: DEIRDRE COLEMAN PHOTOGRAPHY: JESSIE CASSON the company to become one of the world’s leading providers of sizing, sorting and grading technology for the fruit and vegetable market. CONTACT For more details, go to Compac R&D manager Nigel Beach and MSI deputy chief executive, business, innovation and investment Brett O’Riley. IDEALOG.CO.NZ/BUSINESSPLAN / 99
  11. 11. guide to R&D The Idealog How to get the cash for R&D BLUE SKIES RESEARCH COLLECT THE “R&D does need some tangible output. This may not VOUCHERS – always be easy to define, but just as artists will struggle TECHNOLOGY with an ‘art for art’s sake’ argument for funding, so ‘science for science’s sake’ will always struggle for funding. In the TRANSFER Victorian era a lot of science was funded by wealthy patrons VOUCHERS who could see the inherent value of knowledge creation. We have modern day examples of this, such as the Bill & Melinda Gates Foundation in the US, but fundamental and ‘blue This government-funded skies’ research is an area just like the arts where continued initiative provides about government support is vital.” $5 million a year to New Tim Thurlby, portfolio manager, Fonterra Zealand-based businesses by 14 accredited R&D partners, including IRL, AUT and many SELLING A PRODUCT IS HARD, of the other top academic and commercial research SELLING AN IDEA IS HARDER establishments. The vouchers cover half the cost of the Selling just the merest possibility that a good idea might project work you do with the emerge is the hardest task of all. So get ready to explain accredited partner, the rest yourself. There are plenty of sources of funding out there, but you have to find yourself. first you have to prove to them that you have what it takes to It is aimed at businesses come up with something good, and even then you will requiring R&D expertise in probably have to put a lot of your own money on the line high-value manufacturing to keep their cash company. and services that need help Murray Bain has simple advice for anyone chasing the to get external experts into R&D dollars dished out by his team and others. “I would say the mix. It is particularly the first thing they have to have is an aspirational objective aimed at R&D technologies – they have to want to grow significantly, not just do stuff in novel materials, health for the sake of doing stuff. They have to have an idea of the information, communications market need they want to meet, and globally what that market and agriculture. needs,” he says. “And they really have to have a knowledge The R&D project can be of the technical application and the risks around that.” product or process design, The MSI also often makes it a requirement that the company trial production, product has a team behind it that knows its assets from its liabilities, at testing. It can’t be used the very least. for IP licensing, economic Professor John Raine also warns that just being good might appraisals, business planning, not be good enough. “Per research dollar invested, the success website development or rate is right up there with the best, but we are working from statutory testing. quite a low and sparse base of investment.” 100 / IDEALOG.CO.NZ/BUSINESSPLAN
  13. 13. guide to R&D The Idealog DON’T STOP ASKING QUESTIONS THE MONEY FROM THE MINISTRY Great R&D is all about asking the right questions, so it’s not INCUBATE T O G I V E YO U A N I D E A O F T H E S U P P O RT surprising that the folks who help fund R&D will have also have TO AVA I L A B L E , H E R E’S W H AT M S I I S S P L A S H I N G plenty of their own. If you can’t answer them, and answer them ACCUMULATE THE CASH ON THIS YEAR. well, you won’t get the cash. “We always ask ourselves, why should we use taxpayers BIOLOGICAL INDUSTRIES RESEARCH money to fund this company, what benefit is New Zealand Focused on the sustainable productivity growth of New going to get out of it?” Bain says. “For the big guys, we are really Zealand’s primary industries, and the development of looking for the spill-overs. With the smaller companies we are Signing up with a business premium food and industrial biological products and looking to change the risk/reward ratio – if by funding them we incubators is a great way to technologies responsive to global consumer preferences. can reduce the risk to the point where they can do things better get hold of R&D funding. and faster than they otherwise would with their own resources. Here’s a list of those funded ENERGY AND MINERALS RESEARCH “But if they have their own resources, that’s much more by New Zealand Trade and To increase the contribution of energy and minerals to New preferable, because then they have more skin in the game and Enterprise. Zealand’s economic growth, enhance energy security and that is what drives them to succeed. We try to be careful to assist New Zealand to meet future energy and mineral needs ensure they are really stretching.” in efficient, affordable and environmentally responsible ways. The government’s Smart Ideas investment mechanism, which Centre, Auckland has a share of almost $60 million to hand out each year, has a ENVIRONMENTAL RESEARCH load more questions they will be asking before parting with any To fund environmental research that underpins the funds, so it’s worth asking them at the outset of your project. North Shore management, use protection and enhancement of species, natural ecosystems, land, marine and freshwater resources, contribution it will make? climate and atmosphere within New Zealand and Antarctica. the project? HAZARDS AND INFRASTRUCTURE RESEARCH To increase New Zealand’s resilience to hazards, support sustainable urban development, building and infrastructure, be achieved? and help communities to manage growth and change, mitigate risks and maximise infrastructure efficiency. research implemented through multiple channels? Incubator, Christchurch HEALTH AND SOCIETY RESEARCH technology platform that can be applied to the benefit of the The health component of the appropriation (which is the business, the sector and/or the economy? majority) goes to the Health Research Council and is governed by separate accountability documents. This addresses only the society research component of the appropriation which is managed by the MSI. The objective is to increase BELIEVE IN ANGELS understanding of the social and economic factors contributing “We are beginning to get New Zealanders who have started to improved health and social wellbeing of New Zealanders. businesses, sold them off, have a bit of money in their pockets and are putting back into the system some of their expertise, HIGH-VALUE MANUFACTURING AND SERVICES RESEARCH knowledge and resources about how to do it. This growing To diversify New Zealand’s economy by undertaking research, angel network, covers every major centre.” Connect with them science and technology that will enable the development by going to and of new technologies, novel materials and new products, M U R R AY B A I N, C H I E F E X E C U T I V E O F T H E M I N I S T RY processes and services resulting in the growth of existing, O F S C I E N C E A N D I N N O VAT I O N new and emerging industries. 102 / IDEALOG.CO.NZ/BUSINESSPLAN
  14. 14. Want to growyour business?Discover the benefits of R&D, how to accessrelevant funding, and ways you can leveragethis to unlock the potential of your high-valuemanufacturing business.IRL has a proven track record of successfulR&D using advanced science and technology.Working in partnership with business
  15. 15. CASE STUDY Just desserts What began as a labour of love has grown into a trans-Tasman pavlova exporting business, thanks to some help from Industrial Research Limited P avlova is an iconic Kiwi – or should the Australian market, Gibson knew the “Improving production efficiency through that be Australian? – dessert. While production process needed to become more automating in this case was not straightforward,” the jury is still out on its origins, this efficient and cost-effective. says Cooper. “An engineering company had meringue-based treat is certainly She sought help from an engineering already built a spreading base machine, but loved on both sides of the ditch. We all know company, but they were unable to satisfy her the meringue base wasn’t consistent. This the recipe: separate the egg whites from the requirements so, on the advice of her son, meant additional labour was required, defeating yolks, beat them, add in the sugar, beat them Gibson approached Industrial Research Ltd the primary objective of the machine to save some more and then spread the mixture to (IRL) for assistance. IRL is a Crown Research labour. The challenge was a stretch and IRL’s create the meringue base. Institute that helps businesses succeed in the expert capability was required. That’s fine if you’re just making one but marketplace by applying the latest scientific “Every dollar counted, so we supported when you have hundreds to produce, it gets and engineering know-how and research. Country Culinaire with its application for labour-intensive – something Trish Gibson Tony Cooper from IRL’s Industry a Technology Transfer Voucher through and her staff at Hastings boutique dessert Engagement Group connected Gibson with the Ministry of Science and Innovation. The company Country Culinaire know well. Since IRL’s Engineering Innovation team who Voucher was approved in late 2011 and was the 2001, when the company switched from making carried out an initial scoping study of Country first awarded to a Hawke’s Bay company. It gourmet meatballs for the Hastings Farmers Culinaire’s processes. provided a 50 percent subsidy for the project, Market and diversified into desserts, they’ve “Our engineers determined potential reducing the cost to a much more manageable been handmaking their rolled pavlovas. productivity improvements that would $40,000, without which we would not have Soon delis in Auckland were asking to be reduce bottlenecks and cut operating costs,” been able to move forward.” supplied and the production of Country says Cooper. “One of the key improvements Unsurprisingly, Trish Gibson is delighted Culinaire’s pavlova roulades and sticky date lay in the spreading the meringue for the with the outcome. puddings stepped up a notch. To keep up with pavlovas. This was being done manually “I couldn’t have achieved what I achieved demand, the operation was moved from the and required automating.” without Tony’s help,” she says. “I run a small kitchen on Gibson’s farm to a more workable However, the cost of these challenging manufacturing business, and there just aren’t factory and purchased larger freezers. automation solutions came to around $80,000. enough hours in the day for everything that 2011 was a year of exciting growth, with It was a significant sum for a small business, has to be achieved, let alone applying for grants the first shipment of Country Culinaire but a necessary expense if Gibson wanted to too. Tony was just brilliant – I just can’t speak desserts exported to Melbourne. But in take the next step to grow and develop an highly enough of the work he did for me – and order to fulfil her dream of supplying to export market for her products. he nicely kept pushing me along. He helped me104 / IDEALOG.CO.NZ/BUSINESSPLAN
  16. 16. I D E A LO G I N A S S O C I AT I O N W I T H I R L TEXT: DEIRDRE COLEMANTrish Gibson is getting on with the businessof selling pavlovas to Australia. so much with all the paperwork involved in and reduce wastage considerably while applying for the Technology Transfer Voucher, maintaining staff numbers to cut my costs and and with the financial side of my business.” be competitive in the export market,” she says. Several of IRL’s specialist automation “When the meringue-spreading automation IN BRIEF engineers, (who have experience in automation comes on line in October, that will also help Industrial Research Ltd has worked for New Zealand’s bovine and aquaculture increase our output enormously, as we need with boutique dessert manufacturer industries) are developing the designs that to grow our volume too.” Country Culinaire to obtain will help to improve Country Culinaire’s Not content to stop there, Country Culinaire Technology Transfer Voucher funding manufacturing processes, including an is now also producing its own gourmet ice-cream and develop automated systems to egg-white separation process. made using the leftover egg yolks from its improve the company’s manufacturing “Our job is to solve these problems for Trish,” pavlova production. Packaged in unique roll processes. As a result, Country says Cooper. “We don’t compete with quality tubes, the ice-cream is designed to be sliced Culinaire is now exporting its pavlovas engineering companies around New Zealand into rounds for serving. In addition to exotic to Australia. but we come with some pretty substantial flavours such as Orange and Cointreau, brainpower and ideas and solutions that are Liquorice and Black, Tropical Fruit Salad and CONTACT a stretch for most engineering business, and Chocolate and Chilli, the company is now For more details contact we’re putting this to good use for Trish.” tailor-making flavours for restaurant menus Industrial Research Ltd Having just been granted a licence to export around the country. 0508 225 5475 to Australia, Gibson already has orders from a specialist supermarket chain in Melbourne and is negotiating to supply pavlovas to other outlets in Sydney and Canberra. “I’m hoping to improve my productivity IDEALOG.CO.NZ/BUSINESSPLAN / 105
  17. 17. guide to R&D The Idealog The R&D ecosystem T he innovation ecosystem is often seen they touch on all the R&D going on in the country is vital narrowly as a ‘pipeline’ or ‘food chain’ – to the success of the ideas. in other words, a linear commercialisation These days universities particularly are increasingly model that goes from idea to full market open to commercial interactions, where serious commercial establishment with stages in research, research goes on hand in hand with the process of proof of principle development, prototype, product hand-rearing the next generation of idea-makers. beta testing in trial markets and market launch. This “In most of the schools that have a professional practice scenario may be true for ‘technology push’ projects element to them, you’ve got research that is linked quite that emerge from publicly funded research organisations, strongly to the profession, and work that is orientated but innovation typically paints a much more complex towards more fundamentally curiosity-driven or creative picture. It commonly begins not with a discovery but with work,” Professor John Raine says. the identification of a market need that triggers industry- He is able to point to several hundred links with led innovation, which represents the large bulk of science industry from his department alone, ranging from and technology innovation in New Zealand. academics doubling up as commercial consultants to full joint ventures. That said, while some of them are backed by government funding or commercially Ideas don’t just appear at one end of a sponsored, the research funding the university gets for its trouble remains quite modest. conveyer belt and get passed on through “The research links to industry tend to be on long lead technological or product development,” Raine says. “The various agencies to the other end. They ping short, sharp problem solving, we don’t do a lot of that, except limited staff personal consultancy, but there is about all over the place, and are rarely taken an opportunity to do a lot more. “I think overall the universities are reasonably from conception to commercialisation permeable up to a point, but the number of staff engaged in this sort of thing tends to be a small proportion of the inside a single organisation total, because of the internal drivers on staff performance and promotion. If we had a more eclectic approach to Talking about an ‘innovation ecosystem’ would be that there might be more staff and knowledge mobility unbearably pretentious if it weren’t an accurate analogy between the universities and commercial organisations. of the way things actually work, or at least should work, We could do a lot more of that for the economic good of out in the real world. Ideas don’t just appear at one end the institutions and the country.” of a conveyer belt and get passed on through various Raine says that fostering close working relationships agencies to the other end. They ping about all over the with business is part of his organisation’s DNA. Joint place, and are only very rarely taken from conception to working is also at the heart of the ethos of Crown commercialisation isolated inside a single organisation, Research Institutes such as Industrial Research Limited. let alone a single individual. Richard Templer, general manager advanced An idea might first appear in somebody’s PhD thesis, manufacturing technologies at IRL says: “IRL generates then get a bit of government funding to develop, then get a significant amount of intellectual property every year transferred to a commercial firm, which passes it back to and the vast majority is licensed out to commercial firms. a Crown Research Institute to take it to the next level, We work in partnership with commercial firms and we and so on. So the way that all the organisations interact as are looking for solutions they can use. 106 / IDEALOG.CO.NZ/BUSINESSPLAN
  19. 19. guide to R&D The Idealog “Quite often we are working with firms that have had a bright idea and need us to do the research to translate that idea into a proof of concept that they can manufacture. For example, we are working with Klein Medical. They had some great ideas, they needed us to do Weta has worked with Victoria University to establish a graduate programme in creative IT. Their experienced staff lecture on that programme, and that supplies a new source of talent for Weta and people who can start their own companies with their expertise the research to prove those ideas and their application, which is a step to getting them to a product that they can not only manufacture and produce but that has good HELP IS science behind it so they can take it to the marketplace.” ONLY A PHONE Murray Bain points to other countries as a model of how these knock-on effects can work. “Somewhere like CALL AWAY Sweden has 20-30 multinationals based there. That has an effect. Partly because of their expectations in terms of their suppliers, partly in people leaving those companies to set up themselves, and partly in the sheer dollars they The big institutions in can throw at R&D. And there is increased interest from New Zealand R&D students taking those sorts of subjects at university: they can see there is job prospects. So you get a range of things Universities around the large companies that we are short of. “The trick for New Zealand is to capture the companies and figure out ways to generate more around them, to build clusters around them. Weta has worked with Victoria University to establish a graduate programme in creative IT. Their experienced staff lecture on that programme, and that supplies a new source of talent for Weta and people who can start their own companies with the expertise they have. So you can start developing more companies around your big guys. Crown Research Institutes “What we are trying to do is think about the number of transactions that are going on between these different organisations – making the early stage startups more visible to the investors and companies that are looking for and Research (ESR) new ideas and bringing more international investors. “If there’s more stuff going on, and the ecosystem gets more active, then the players in it will begin to do their own thing. This is not something government controls: Limited (IRL) we can push and nudge and incentivise, and in some n areas fund. But it’s in the private sector, it’s transactions between the ideas and those that can take them to market Water and Atmospheric that really matter. And it’s our job to support that and Research (NIWA) make it happen faster.” 108 / IDEALOG.CO.NZ/BUSINESSPLAN
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  21. 21. CASE STUDY Upsize your R&D Intellectual property specialist A J Park acts for more than a third of New Zealand’s top 100 companies and almost half of global Fortune 500 companies. As one of the experts contributing to this Guide to R&D, commercial partner Mark Hargreaves gives his advice on how to get the most out of R&D-generated IP Q What are the key ways in which a firm like originally intended. These processes include an idea may own the IP even though you have yours can add value to the R&D process? research committees as well as decision and paid them for their time. And in some cases A We can share our experience in terms of review points along the way. Often the most an employee will be the first owner of the IP. working with clients at all stages of the R&D successful research organisations are successful Your company’s agreements with its employees, lifecycle. Many of our staff have PhDs and/or because of the decisions not to proceed further consultants and contractors should be clear have worked in research-intensive companies, with particular research projects and instead on who owns the IP generated by them. These CRIs or universities. We’ve been involved in focusing more resource on projects that are agreements should also require the disclosure research ourselves. At the outset we can offer likely to deliver results. of all inventive ideas and the assignment all suggestions on how to structure a research IP rights to the company. project, including advising on a range of formal Q What are some warning signs that R&D agreements including non-disclosure, material may not be happening effectively? Q How best can companies keep track of what transfer, collaborative research and joint A Companies going to market with products they have in terms of IP? ventures. We can give guidance about when or services that aren’t in demand. In other words, A Carry out an annual IP audit. This may researchers should be considering their IP undertaking research that is not aligned with the cover brands, patents, trade secrets, copyright, strategy in terms of patents, trade secrets or company’s overall strategy and that isn’t closely and contracts including licences, business some form of more open collaboration. We can tied to the market the company is operating in. information such as customer and marketing give our views on what might be protectable, lists, and financial information. This also helps while always focusing on what the commercial Q What are some indicators for large the asset valuation process. outcomes of the research are hoped to be. companies that they should consider For example, a client came to us with a view outsourcing their R&D? to manufacturing and selling a diagnostic test A Smaller, more nimble players might be kit. We determined that the real IP lay in the moving into areas traditionally dominated by test rather than the physical kit itself and we the larger company. This can signal a need to knew that the physical kits are heavily patented. introduce fresh ideas. Invention disclosures We suggested the client look at licensing the might decline which can also indicate the same test to a kit manufacturer and leaving the thing. The companies might find they are simply manufacturer to deal with infringement risk better at marketing, supply chain and distribution around the physical kit. This altered the than at putting in place processes and disciplines research path for the client but helped them needed to do great research as well. avoid infringement problems down the track. Q How does a company ensure it owns the CONTACT Q When assessing a client’s strength in R&D, IP its R&D has generated? Mark Hargreaves is a partner with what key components are you looking for? A You should not automatically assume A J Park Law and A J Park Patent A Clients that are strong in R&D typically have that your company owns all IP generated by Attorneys in Wellington. motivated and skilled research staff who follow employees, third party contractors or consultants. For more information go to clear processes for conducting their research. It can be difficult to separate your company’s The most successful organisations have a clear confidential know-how from an employee’s process they follow which reduces the likelihood general skill and knowledge. Also, a developer of projects heading in directions that were not or designer who creates a product or develops110 / IDEALOG.CO.NZ/BUSINESSPLAN
  22. 22. I D E A LO G I N A S S O C I AT I O N W I T H A J PA R KWHO SHOULD BE RESPONSIBLE FOR WHEN SHOULD R&D TEAMS THINKCAPTURING THE IP? ABOUT GETTING SPECIALIST IP HELP?Your IP policy should identify the person or teamthat: approach IP specialists? decisions and freedom to operate Q&A BY ANDY KENWORTHYHOW TO PROTECT YOUR R&D-GENERATED IPHere are some of the tools top companies use to IDEALOG.CO.NZ/BUSINESSPLAN / 111
  23. 23. guide to R&D The Idealog Amateur hour is over: How to do good R&D E verybody thinks they do R&D, even TelstraClear chief technologist William Lee says the if they just ask their mates down the company has created an internal process to manage and pub if something sounds like a good provide governance for projects: “Like stage-gate it’s idea. But for R&D to be effective it a formal structured process to take a concept from an must be systematic, consistent and idea, through conceptual planning, business case and into comprehensively monitored. Like development and finally production. Gates with very everything else in a business on the hunt for success, clear pass/fail requirements ensure that the phases are it is best left to the most talented professionals. well-governed and that projects are well-managed Keep in mind that it’s never a single linear process, but through the development process to production.” rather cyclical and constant. It’s not a case of: research a Another tool is ‘future casting’ – imagining the future product, then develop it a bit, then stick it on the shelves. you want to see once the project is completed and then It’s more like: do some initial research, develop it a bit to charting the various steps back in time that will allow you prove the concept, then do some more research on what’s to get there. Whatever tools you use, these days you have out there and what’s possible, develop it some more, find to have one eye down the microscope to get the detail a particular problem, devote some specific research to right, and the other looking out at the world, making sure that, and on and on, ideally for multiple products at once. the whole commercialisation package is shaping up. It doesn’t stop when you start selling either. If consumer “These days we have to integrate our thinking much feedback, distributors or manufacturers uncover issues, more,” says Raine. “You have to try to see things as an whether straight away or as you increase scale, you’ll integrated proposition as you move into commercialisation.” need more R&D to solve them. And if your product is Templer adds: “The long-term frameworks around a world beater, you can bet somebody will be copying it, R&D are changing in that people are no longer looking or the public are hungry for the next big thing, so you will at R&D as an activity done in isolation but something need more research and development to stay ahead. that is done in a collaborative network.” Richard Templer stresses the importance of focus: “The Fonterra general manager, innovation, Mark Malone key thing is a clear understanding of the right problem or believes the days of doing research contained within one opportunity you are working on. You have to be clear on department are long gone: “Multidisciplinary teams are what problem you are working to solve. Sometimes it’s not the key to successful innovation. By its very nature, taking obvious. Somebody might be thinking, ‘How can I make new ideas to market requires multidisciplinary teams. It this product more efficiently?’ when possibly they should also requires quality project management to co-ordinate be thinking: ‘Where is the market going in the future?’ and the multiple disciplines and work streams involved. ‘Do I need to move into an entirely different market?’” “New ideas can have multiple origins. They can often Professor John Raine says the process is often an be technology driven, arising from ideas within the “iterative” one – characterised by or involving repetition, R&D community, or they can come from our customers, recurrence, reiteration, or repetitiousness. or work that we do on market and consumer insights. While many companies use a stage-gate process or Traditionally, the majority of ideas have originated from similar to put each idea through agreed review points a technology push, but as an organisation we are placing at which bad ideas will be binned if they don’t meet greater emphasis on market and consumer insights to a specific set of criteria, most of the big players have shape our innovation portfolio instead of being led by customised this to some extent to meet their needs. what is technically possible.” 112 / IDEALOG.CO.NZ/BUSINESSPLAN
  24. 24. The Idealog guide to R&D GREAT R&D STAFF – NATURE VS NUTUREThe perils of lab feverGreat R&D does not necessarily a great business make. While LET THE PUNTERS Raine spends much of hissome people can fit a business suit and a lab coat with equal working life with potentialaplomb, most can’t, and not realising you are one of those best DO IT: R&D IN THE R&D people. He tells usleft in the shed can be fatal for your entrepreneurial dreams. If what it are addicted to testing, retesting and tweaking your product AGE OF SOCIAL “I think you’ve got towhen you should be moving on to others or at least getting this have a passion for findingone out into the world at large, seek professional help. IRL has MEDIA out something new or330 staff in the high-value manufacturing sector and the best developing something new.part of 200 PhDs at work. They just might be able to help. The social media sector is still a bit like the Wild At the extreme scientific end West frontier, with plenty of hustlers making you will find people who are money more on the hype and mythology than the just endlessly absorbed with reality. But like the Wild West, there is real gold finding something new, your in them there hills. The trick is to tap into it in an archetypal boffin characters. effective way, to answer real questions about your But when you move into GOODBYE, business and effectively get some free consumer the applied research you research, and even development. get people who really just BLUE SKY? There’s no shortage of material to choose from, like the development stage. as any travelling web-optimising salesman will tell I think you need a good you. Clay Shirky, US writer, new media expert and basic education, discipline, author of Here Comes Everybody: The Power of a willingness to think outsideIn an economic climate as turbulent as the current one, there Organizing Without Organizations says the same the square, persistence,is a temptation to go directly for the gold on every occasion. thing. He describes online blogging, conversations endurance and curiosity.The argument runs that we simply don’t have time for namby- and socialising as a reflection of the ‘cognitive That element of creativenesspamby blue skies thinking: everything has to have an obvious surplus’ left over after our daily work. This used to and inventiveness isdollar at the end of it. be taken up with face-to-face conversation, then important, but there are Our experts counsel otherwise. reading, radio and television. The process has people who are useful to Raine says: “I think there’s still very fundamental research now become more public and more active, with the team because they willgoing on which is purely curiosity-driven. You need to have that, consumers co-creating the content. just beaver away.”because you don’t know what you are going to find and it could This can provide priceless information for But for all the qualities ofbe useful.” Although he accepts that “the awareness of the need companies, well beyond just Facebook and the born engineer, they can,to get a socio-economic outcome from research is growing and Google on what people like, don’t like, and much, and should, be see the focus on the commercial output of research coming much more. How do they use or even abuse your Raine says: “Todayin earlier in that blue-skies-to full-commercialisation process products and services? What do they recommend most people would fail asthan you might have done 20 years ago.” to their friends? How do they like to receive them engineers without a degree, Templer says: “Applied research is good for enhancing and and interact with the companies? as they wouldn’t have thehelping existing industry, but it is the blue skies research that Get this right, and you will have access to tools. Through educationcreates the new industries.” consumers who will use, abuse and develop your you can turn even indifferent Thurlby says they strike the blue sky/fast results balance product in all sorts of exciting and potentially students out as proficientby a mixture of conscious resource allocation and the firm’s lucrative directions. You will also know real quick professional engineers. Butversion of the stage-gate process. if your previously popular product just cleared the there are those who have “At the portfolio level we allocate a certain percentage of consumer dance floor, or is making them scream a highly inventive, intuitiveour resources to new product development, which has defined for more. This more open philosophy and approach engineering capability. That’scommercial targets. We also allocate a percentage to capability can even lead to a more open process of design, why you will find from timeenabling or new technology development projects. This latter that in turn opens up the potential for a wider to time successes withgroup of projects contains research that could be game- audience for your wares. people who are entirelychanging but also carries a lot of risk.” self-taught.” IDEALOG.CO.NZ/BUSINESSPLAN / 113
  25. 25. CASE STUDY PHOTOGRAPHY: ROBIN HODGKINSON. TEXT: DEIRDRE COLEMAN Andrew Lowe of Pulsecor (left) has formed a strong commercial relationship with AUT University’s Professor Ahmed Al-Jumaily.114 / IDEALOG.CO.NZ/BUSINESSPLAN
  26. 26. I D E A LO G I N A S S O C I AT I O N W I T H A U TVital scienceMedical device company Pulsecor has been collaborating with researchers at AUT Universityto create non-invasive diagnostic tools for measuring arterial health and heart functionF ar from merely being a place of The technology was invented by New of the development advisory board I now learning and theoretical research, Zealand anaesthetist Nigel Sharrock, and its have some input into the direction of the AUT University is directly development has been greatly assisted through IBTec group alongside other industry people. contributing to the success of a collaboration with IBTec and its director, “My involvement with student researchNew Zealand businesses and our country’s Professor Ahmed Al-Jumaily, over the past six has fed into what’s happening at Pulsecor,economic development through commercial years. Professor Al-Jumaily and his team have and has been great from a technologyresearch partnerships. been working on cheaper, easier, less invasive perspective,” he says. AUT University provides valuable research methods for screening and treating a number “Working and collaborating with AUTand development services to its clients through of common illnesses, and Pulsecor quickly University has definitely been very valuablethe practice-based researchers in its schools recognised the outstanding expertise IBTec in terms of building our fundamentaland research institutes, which range in focus had in their area. understandings and looking at researchfrom biotechnology and artificial intelligence “Professor Al-Jumaily had a similar focus questions. It would have been much harderthrough to tourism and sports performance. to what we were doing with Pulsecor and to achieve what we have without AUT’s input. Among them, the Institute of Biomedical we were both keen to get some projects off The resource IBTec has been able to bring toTechnologies (IBTec) is a multi-disciplinary the ground,” says Lowe. “Pulsecor had the bear would’ve been much more difficult forresearch institute that combines the resources mathematical knowledge and we were already a small company like us to obtain.”of the faculties of Design and Creative making progress developing the sensing sideTechnologies, and Health and Environmental of our device, but we needed a fundamentalSciences as well as the School of Engineering. understanding of the physiology in order toIBTec also collaborates with other universities make the most of what we were doing.”as well as hospitals and medical industries, Through its relationship with AUT, Pulsecorand has conducted research for more than successfully applied for government funding20 different companies. for the collaboration and secured a vital IBTec’s work for local companies has research grant through TechNZ.particularly focused on the area of biomedical “This grant, over a three-year period, wasdevices. One such collaboration has been with the first and the most significant grant we’ve IN BRIEFPulsecor Ltd, a New Zealand medical device received,” says Lowe. “We’ve received around AUT University’s Institute of Biomedicaltechnology company that’s been researching $700,000 in grants from various sources, Technologies is one of 18 researchand developing the next generation in non- including a number of fellowships for a group institutes offering quality researchinvasive cardiovascular assessment technology. of Masters and PhD students working on the expertise to companies looking to Pulsecor has developed a device to measure mathematical modelling of arteries.” further their research and development.arterial stiffness. Previously this could only be Pulsecor’s relationship with IBTec has grown IBTec has engaged in a long-termmeasured through surgery, but the Pulsecor increasingly close. Now, with the bulk of the collaboration with Pulsecor to assist indevice makes it as simple to assess as a blood research and development work concluded, its development of products that enablepressure reading, says director and chief Lowe – who has a PhD and a background in non-invasive measurement of arterialtechnology officer Andrew Lowe. medical engineering research – has remained health and heart function. “Our vision is to see this technology involved in the IBTec research group and haswherever you find blood pressure equipment joined the institute’s advisory board. CONTACT– the hospital, operating theatre or even in “Ahmed has always been keen on having For more details, phone 0800 AUTyour home,” he says. “The idea is that we can industry links,” says Lowe. “And to be able RESEARCH or email spread technology for measuring to build a strong commercial relationship isarterial stiffness and manage cardiovascular beneficial for IBTec and for us from the researchrisk much better than it is today.” side. We work very well together. As a member IDEALOG.CO.NZ/BUSINESSPLAN / 115