Following is the outline of this presentation: The Role of Research and Technology Institutes (RTIs) - Introduction Strategy and Organizational Structure Technological Competencies and Networking Process Management Human Resources Management State Financing Governance Legal and Regulatory Framework Country Examples in RTI Reform Conclusions

1. Findings of the Government Review Committee
1
 “Presence of government culture”
 “Lack of focus and direction”
 “Sub-optimal scale of operations”
 “Lack of unified set of objectives among laboratories”
 “Lack of interaction between CSIR and its actual or potential users”

2. India’s Council of Scientific and
Industrial Research (CSIR)
2
 Restructured in the 1990’s
 Emphasis on output, performance, and industrial income
 Laboratories became corporate subsidiaries, were given autonomy and were
rewarded for meeting targets
 External Performance Appraisal Board (PAB) was introduced to review
performance of laboratories every 3 years
 Dedicated marketing and business development functions established
 Redundant laboratories and staff were cut
 Results from 1995 to 2006
 Patent filing abroad x 5
 External revenue x 2
 Scientific quality did not deteriorate

3. The Role of Research & Technology
Institutes Within the Innovation Systems of
Emerging Economies
Jean-Louis Racine, The World Bank
Innovation Policy Platform and OLC, February 16, 2016

4. Outline
4
 The Role of Research and Technology Institutes (RTIs)
 Strategy and Organizational Structure
 Technological Competencies and Networking
 Process Management
 Human Resources Management
 State Financing
 Governance
 Legal and Regulatory Framework
 Country Examples in RTI Reform
 Conclusions

5. The Role of RTIs

6. 6
Broad trend of RTI reforms
 Applied research vs. Basic research
 Demand pull vs. Technology push

7. 7
“Basic research” institutes belong with
universities
 They have limited spillovers since they do not have customers or involve
students.
 Eastern Europe’s Academy of Science model: being integrated with
universities, being left to wither away or being closed down.
 Facilities-based institutes (e.g. CERN) and institutes covering strategic
areas (e.g. defence, nuclear) are special cases.

8. Demand pull is key to success
8
Technology push
 Idea from a scientist
 From the lab to the market
 Limiting step:
 Selling the idea and project to
industry
More “fancy” technology but
takes time and very risky.
Demand pull
 Need identified by industry
 From the market to the lab …and
back to the market
 Limiting step:
 Identifying the customer
 Identifying the need
Less exotic results but higher
success rate.

9. RTI classification
9
Technology
push
Demand
pull
Private goods
& services
Public goods &
services Quadrant I Quadrant II
Quadrant III Quadrant IV
Function
Strategy
Source: World Bank (2009) Restructuring of R&D Institutes in Eastern Europe and Central Asia

10. Profile of successful RTIs in Europe & Asia
10
 Focus on the middle ground of the innovation process:
 Engineering, experimental development, design work, process improvement,
problem solving.
 Successful activities are carried out in close cooperation with firms.
 Technology-push activities never play a major role.
 “Soft” activities help RTIs expand their markets and generate revenues:
 Testing, technology diffusion, consultancy, troubleshooting, seminars, training,
standards and certification.

11. 11 Source: Association of European Science and Technology Transfer Professional (ASTP) ,2010

12. 12
Customers who expect practical results go
to RTIs, not to universities
 Well equipped
 Project management routines are in place
 Timeliness
 Can address focused research questions
 Used to working with industry
 Understand real industry processes and products
 Understand industrial customer needs

13. Strategy & Organizational
Structure

14. Implications of “changing times” for RTIs
14
 Impossible to stay on the cutting edge of technology for all
customer needs:
 Focus on core competencies
 Seek partners through national and international competence networks
 Be a technology broker
 Work with global firms
 Enhance staff mobility between RTIs and industry
 Transfer knowledge rather than “packaged” technology
 Become services-oriented

15. Restructuring is a continuous process
15
Organization of the Fraunhofer Society (Germany)
Source: Åström et al .(2008) International Comparison of Five Institutes

16. Example of a displine-based structure in
Indonesia (LIPI)
16
Chairman
Deputy for
Technical
Sciences (IPT)
Deputy for
Scientific
Services (Jasil)
Physics
Chemical
Electricity and
Mechatronics
Electronics and
Communication
s
Informatics
Deputy for
Biology (IPH)
Deputy for
Geosciences
(IPK)
Deputy for
Social Sciences
& Humanties
(IPSK)
Biology
Biotechnology
Bogor B.G
Conservation
Center
…
…
…
…
…
…
…
…
…
…
…
…
…

17. Example of a customer-oriented matrix
structure in Finland
17 Source: VTT website

18. Technological Competencies

19. Locally relevant and globally competent
What are key industrial
challenges and opportunities,
now and in future?
Can the institute contribute to
solving these challenges, now
and in future?
Source: Arthur D. Little. Prism /1/201019
Key inputs provided by technical
experts and industry/government
customers
Key inputs provided by
independent expert review panel

20. Focusing technological competencies
20
 Mediate restructuring
 Technical experts with international experience
 Industry and government customers
 Create internal competition to develop areas of
strength
 Align research programs with major client funding streams

21. Process Management

22. To keep up with customer demand, RTIs need
to adopt industry management processes
22
 High-level processes: strategy, resource allocation and prioritization,
marketing, progress and performance control.
 Execution Processes:
 Project management:
 Flexible, quick, consistent project delivery processes, responsive to the client.
 Project managers are given full budgetary and technical responsibility.
 Knowledge management
 IPR management

23. Successful large RTIs decentralize their
management
23
 Fraunhofer (Germany), VTT (Finland), Sintef (Norway) and
A*STAR (Singapore) each have autonomous and decentralized
branch structures with their own individual Boards.
 Fraunhofer Statute: “Within the framework of the Institute’s focal area of
research […] the Institute Management is free to organize its own scientific
projects, and is not subject to restrictions concerning the choice, order and
manner of execution of the Institute’s scientific projects. […].”
 This allows easy interaction with industrial customers and
organizational efficiency.

24. Human Resource
Management

25. Well-trained staff are key, but need to
reflect the RTI’s strategy
25
Staff educational profile
Indonesia

26. Human resource processes need to be aligned
with the RTI’s strategy
26
 HR processes include recruitment, training, appraisal, remuneration and
career development.
 If the strategy is to respond to promote innovation, staff incentives need
to reflect this.
 R&D commercialization revenue-sharing arrangements.
 Start-up support schemes.
 Bonus and promotions based on patents, business development, successful
proposals, etc.

27. Staff mobility is key to absorbing and
diffusing knowledge
27
 This requires policies for:
 Recruiting staff from industry
 Flexible employment contracts
 RTI staff secondment to industry
 Temporary placement of industry staff in the RTI
 Entrepreneurship sabbaticals for entrepreneurial staff

28. State Funding

29. RTIs where funding is spread very thinly
across researchers are less effective
29
Total funding per staff
Source: World Bank (2009) Restructuring of R&D Institutes in Eastern Europe and Central Asia
Indonesia

30. Passive Funding Structure
30

31. Adaptive Funding Structure
31

32. Sources of funding of the budget
32 Source: World Bank Survey of
RTIs
Indonesia

33. There is more than one way to give out
research funding
33 Source: Åström et al .(2008) International Comparison of Five Institutes
Denmark Norway Germany NetherlandsSweden

34. Performance-based funding
incentives
34
 Objective
 Keep ratio of industry to institutional funding within a desired range.
 Strategy
 Each institute receives additional 0.4 euro of institutional for each euro
raised from industry.
 This amount falls to 0.1 euro if industry revenues fall outside the range
35-55% of institute income.
Source: European Commission (2000) Getting More Innovation from Public Research

35. Governance

36. Lessons from reforms in the European Union
36
 Reforms in European RTIs share many common themes in
governance reform:
 Increased role of stakeholders.
 Professionalization of management.
 Changes in organization to become more outward-facing.
 Increased autonomy to define and implement strategy.
 “Contractualization” of relations with founders and customers via
various kinds of performance contracts, often accompanied by
performance indicator systems.
 Increased external quality control through the market.

37. Governance reflects stakeholders
37
Composition of the Board of Directors
(Indonesia)

38. Consider A*STAR’s Board
38
insiders
universities
industry
others
Source: A*STAR 2007-8 Yearbook

39. Legal and Regulatory
Framework

40. Successful European and Asian RTIs have a
mixture of legal statuses
40
 Fraunhofer (Germany) is fully independent, with only a minority
of government-appointed board members.
 SINTEF (Norway) is partly controlled by universities.
 TNO (Netherlands) is a company but its board is appointed by the
state.
 A*STAR (Singapore) is a government agency but benefits from an
exceptional national public sector regime.
 ITRI (Taiwan, POC) is a non-profit organization.

41. In all cases, successful RTIs are
autonomous organizations
41
 Most OECD RTIs are now responsible for their own strategic
development, usually within fairly broad boundaries set by their owner,
main shareholder or legal mission.
 This has led to:
 Greater responsiveness to market needs
 Growth of entrepreneurial behavior
 Professionalization of technology commercialization

42. And in all cases they are free of red tape
42
 RTI’s ability to deliver services that genuinely facilitate
commercially successful transfers of knowledge demands
the elimination of rigid and bureaucratic rules and
procedures.

43. Country Examples of
RTI Reform

44.  RTI restructuring supported by World Bank Knowledge and Innovation
Project
 Objective:
 Improve performance and market-orientation of 10 RTIs
 Approach:
 Strategic review and planning exercise of restructuring RTIs
 Grant support for organizational, financial, human resource and commercial
restructuring
 Grant support for competitive research projects gradually replaced direct allocations
 Operational autonomy of RTIs + Board of Directors with local and international
productive sector representatives
 Results
 Improved relevance and higher quality research → Publications rose by 21% in 5 years
 Outreach to users → Self-generated revenues rose 87% in 7 years
44
Mexico: Strategic leadership from stakeholders
and competitive funding, a recipe for success

45. Conclusions

46. Lessons from international experience
 What do successful RTIs do?
 They mostly stay away from basic research
 They do not do “commercialization” in addition to their core business -
commercialization is their core business
 RTIs do not innovate, companies do: they focus on offering knowledge
rather than products
46

47. Lessons from international experience
 How do successful RTIs operate?
 Management and governance are influenced by market forces
 Flexible and autonomous: able to continuously adapt to changing
markets and changing times
 Customer-focused organizational structures
47

48. Lessons from international experience
 How do governments foster successful RTIs?
 Set their mission but not their strategy
 Set them free of bureaucracy
 Use funding as a lever
48