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IAMOT 2017, Vienna, Bruno Lindorfer: “Management of Technologies in the 21rd DIGITAL Century” Page 1

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“MANAGEMENT OF TECHNOLOGIES

IN THE 21RD DIGITAL CENTURY”

BRUNO LINDORFER1

Email: [email protected]

INTRODUCTION

In the paper the two aspects of Management of Technologies (“MoT”) are lined out:

a) Management of Technologies for Regions and Countries

b) Management of the Technology Portfolio for Enterprises

Strategic MoT for regions and countries is done to reinforce the competitiveness of the region in the

ever harder global completion to ensure employment, the standard of living, social welfare and the

quality of living (work‐life balance).

As far as the “MoT” for enterprises is concerned, it is good to remember that there is but one

reason for innovation: TO MAKE PROFIT! Profit is the difference between the prices that can be

achieved and the production costs. Better (premium) prices can be achieved with

Product Innovation, the production costs can be lowered with Process Innovation.

In two chapters of this paper the “Most important Success Factors in Innovation of Technical

Products in Enterprises” are described, in another chapter the “Major widest spread

Misconceptions in Innovation of Technical Products” are line out.

Within these two chapters many alleged doctrines of innovation management are disrupted!

For example the “obsession for cooperation in innovation” is rebutted, but also some fairy tales

about “Technology Transfer” and other myths of MoT.

On the other hand the importance of some old, very basic rules for success in innovation are brought

back into memory, like the “PIMS‐Concept” of the 1970‐ies , or the findings of

some famous professors for innovation, Dr. Ansoff , Dr. Prahalad as

well as Prof. Kondratjew in the 20th century

It is shown that Management of Technologies (“MoT”) with Digital Technologies is no Rocket Science

but a professional task for Innovation Professionals ‐ no more – no less!

According to the author, much less MoT‐projects will fail in the 21rd DIGITAL Century NOT because of

NOT‐knowing the specific rules for innovation of digital technologies, but because the new young

CTOs in the 21rd century do not any longer remember the “Lessons Learned” for successful

innovation of the 20th century!

It is ‐ however – lined out in the paper that for “INDUSTRY 4.0”, one major application of

digital technologies, Europe is falling behind the global leaders in terms of IPR relevant for

1 Dipl. Ing. Bruno Lindorfer (Email: [email protected] ) studied Mechanical Engineering at the Technical University of Vienna and has been working in several leading positions in R&D in industry: 1980‐1987 VOEST‐ALPINE AG, Linz, Austria 1987‐1990 Head of CAE at ENGEL Maschinenbau, Schwertberg, Austria 1990‐2005 CTO of Voest‐Alpine Industrieanlagenbau GmbH, Linz, Austria 2005‐2008: CTO SIEMENS VAI, Linz, Austria 2008‐2015: CEO of the Upper Austrian TMG GmbH, Linz, Austria . Bruno Lindorfer retired at end 2015 as CEO of the TMG, but still holds several functions within the innovation community, e. g. Lecturer for “Technology and Innovation Management” at the Johannes Kepler University, Linz/Austria, etc.




INDUSTRY 4.0. A list with the global TOP 40 enterprises regarding IPR relevant for INDUSTRY 4.0 is

presented and discussed in the paper.

At the end the author outlines his “Twelve Commandments to increase the Probability for Success

in Innovation” – as his legacy from his 18 year experience in innovation as CTO of large global

Engineering Industries!

Acknowledgement

The content of this paper is the view of the author and the author, only.

The author has been the CTO of SIEMENS VAI Linz from 1990 thru 2008 and has been responsible in

this period for the approx. 6000 patents, held by then globally by VAI and for an annual R&D‐ budget

of approx. 40 mio €.

The author does not speak in the name of any organization or any institution.

The author is grateful to all his employers in his career, because that is where he learned his

experience in “MoT‐GC” (Management of Technologies in Global Competition).




INDUSTRY 4.0 ‐ THE GLOBAL COMPETITON

When talking about “Management of Technologies (“MoT”) in the 21rd DIGITAL Century”, it must be

pointed out that in our globalized world of today this MoT always has to be seen in the context of

global competition.

As a consequence, it does not really help e. g. Upper Austria, which is the leading region of Austria´s

nine regions regarding industrial technologies, that regarding INDUSTRY 4.0 Upper Austria has a

stronger performance than the “Burgenland”!

Upper Austria has to compete and to compare itself with leading regions in the EU – e. g.

Baden‐Württemberg or regions in the US or Korea etc.

“INDUSTRY 4.0” is one major application of digital technologies. “INDUSTRY 4.0” (and “CPPS”, “IoT”

etc.) are discussed very intense currently. That is why “INDUSTRY 4.0” is also taken as one important

example for MoT in this paper.

It is not the task of this paper to go into detail regarding the numerous definitions that exist for

INDUSTRY 4.0, however some short remarks on the definition of INDUSTRY 4.0 are given below.

INDUSTRY 4.0 ‐ an incremental or radical innovation?

From a technological perspective INDUSTRY 4.0 is clearly "just" an incremental innovation, in the

author´s view as an engineer, because "Industrial Automation", "digital sensors", "software", PPS,

INTERNET etc., do exist for quite some time and thus are not at all "radically new"!

Regarding the Business Models INDUSTRY 4.0 for sure is a "Radical Innovation", potentially even a

"Disruptive Innovation"!

"Disruptive Innovation" (studied and named "Disruptive Technologies" in the book "The Innovators

Dilemma” –see ) are technologies the performance of which improves

faster than the requirements of the market/ customers, and therefore ‐ from day “x” onward ‐

cannibalize the conventional technologies.

Disruptive technologies are not plannable ex ante and are often excreted in early stages of the

innovation process in strictly professionally managed innovation processes, because

a) the business plan of these disruptive technologies at the beginning often is too vague and

weak

and

b) No CEO likes to “disrupt” and “cannibalize” the good business with existing “cash cow”

products with new disruptive technologies.

In the author´s opinion a short, but nice definition of INDUSTRY 4.0 would read:

“New business models enabled by the digital(‐ization) revolution (INTERNET….) in global

manufacturing value chains including all related services”

INDUSTRY 4.0 can also be defined by the common intersection of the three domains /

characteristics (see Figure 1):

a. Smart Factory ( "Automated Factory", CPPS = Cyber Physical Production System)

b. Internet of Things ( "IoT")

c. Virtualization, modeling etc.




Figure 1: The three main Features of INDUSTRY 4.0

One decisive factor for INDUSTRY 4.0 is the "smartness", i. e. “intelligent workpieces" being

equipping with RFIDs, which have “on‐board” complete information about its material, temperature

history and machining steps already made and still to come etc.

Is INDUSTRY 4.0 the 6th Kondratieff‐Cycles?

The large‐scale, global use of radical new technologies (so‐called "Technology Push" Innovations)

always has inspired massive positive economic cycles in economic history.

These cycles were among others ‐ examined by the Russian economists Kondratieff and they are

therefore named after him as a so‐called Kondratieff Business Cycles (see Figure 2).




Figure 2: Kondratieff‐Cycles

Currently the issue is being discussed by economics researchers which "technology" will be the next,

the “6th Kondratieff cycle”?

According to the author “INDUSTRY 4.0” or “DIGITALIZATION”, respectively, definitively will become

the “6th Kondratieff cycle”.

GLOBAL RANKING OF COUNTRIES BASED ON THEIR (INDUSTRIAL) STRENGTH REGARDING

INDUSTRY 4.0:

One major indicator for measuring the strength of the companies of a country in specific technologies

is a global analysis of relevant patents (IPR = Intellectual Property Rights) ‐ see also the so‐called

Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") of a region (Lindorfer, 2016).

The method (steps) to evaluate the strength of the companies of a country in INDUSTRY 4.0":

First, the "INDUSTRY 4.0" relevant patent classes were defined as follows:




• CPPS

• Robotic

• Automation and Control

• Sensors

• Data Mining and Processing

• Identification and Tracking Systems

• Virtual Product Development

• Virtual Reality

• Cloud Technologies

• Secure Communication

• Additive Manufacturing

Fortunately the patent classes are uniformly standardized worldwide, i.e. the patent class

"H04B5/02" is defined worldwide as:

"CARD RFID IC TAG MANUFACTURING ELECTRONIC MODULE CHIP COMMUNICATION CARRIER".

For quantitative analysis, approximately 250,000 patent applications of the past 10 years

(2003 thru 2014) have been evaluated by over 90 patent offices worldwide, and the geographic

allocation based on the residence of the inventor has been carried out.

This ensures that the place of knowledge creation is precisely captured.

As the major result of this global evaluation the global TOP 40 global patent holders of INDUSTRY 4.0

relevant patents are shown in Figure 3 and Figure 4, respectively.

Figure 4 shows, that the global patent battle regarding INDUSTRY 4.0 patents is a battle between US

and Japan, only. Enterprises of all other countries, including all countries of the EU, are more or less

just spectators, not more. All companies of the EU 28 countries (including Germany) show a poor

performance regarding global INDUSTRY 4.0 patent portfolio. No German company is among the

TOP 5 INDUSTRY 4.0 global patent leaders.

Among the TOP 40 there are only three German companies:

SIEMENS number 10, SAP ranked 32 and BOSCH number 37.

These findings "relativize" the supposed strength of Germany in "INDUSTRY 4.0"!




Figure 3 The TOP 40 global patent holder of INDUSTRY 4.0 relevant patents

Source: Bruno Lindorfer, Upper Austrian TMG, and Wolfgang Stadlbauer, Fa. Techmeter.

"Double Strength Field Analysis INDUSTRY 4.0", 2012, Linz / Austria

Figure 4: The TOP 40 global patent holder of INDUSTRY 4.0 relevant patents

One may question the method and results (critical for Europe) of the author, however they are in

perfect agreement with the recently published "OECD Science, Technology and Industry Scoreboard

2015" (“OECD STI‐SB 2015” see http://www.oecd.org/science/oecd‐science‐technology‐and‐

industry‐scoreboard‐20725345.htm ).

In this OECD STI‐SB 2015 e new "OECD Science, Technology and Industry Scoreboard 2015" Europe

as a whole, but also Germany (and Austria), show a poor performance in many STI‐criteria, which are

very important for INDUSTRY 4.0.




Figure 5: Top players in selected disruptive technologies, 2005‐07 and 2010‐12 Economies' share of IP5 patent families filed at the USPTO and EPO, selected technologies

Figure 5 shows the strength of strong patent industry‐ and technology States ("top players") 2005‐07

and 2010‐12, in the following selected disruptive technologies:

- Advanced Materials

- New IC‐Technologies

- Health related Technologies

Figure 5 shows once more: Korea has ignited the “afterburner” in RTI (Research, Technology and

Innovation)!

Korea is the only country which is in all three technologies shown in Figure 5 ‐ significantly better in

2012 as compared to 2007.The EU 28 have fallen back and are worse in 2012 than in 2007 in all

three technologies.

In the authors opinion it is critical for Europe that e. g. in "Advanced Materials" Korea ALONE is

outperforming all EU 28 states together (incl. Germany).

The same is true for ICT‐related patents (see Figure 6):

Regarding ICT‐related patents Japan clearly leads ‐ ahead of the USA and Korea.

The EU 28 (including Germany) are far behind and are continuing to fall back.

The EU 28 are very weak when you consider that Korea alone has more ICT‐related patents than all

the EU 28 countries together (including Germany)!

The global patent strength (world market patent shares) of the EU 28 and the USA declined

significantly in the 10 years from 2003 thru 2013.

Korea has more than doubled its world share of ICT‐related patents in only 10 years (2003 => 2013).

In only 10 years (2003 => 2013) China´s ICT‐related patent portfolio rocketed by a factor of ten!

Figure 6 ICT‐related patents, 2000‐03 and 2010‐13

Economies' share in IP5 patent families




METHODOLOGY FOR THE IDENTIFICATION OF THE SO‐CALLED

INDUSTRY‐R&D‐DOUBLE‐STRENGTH‐FIELDS ("IRDSF") OF A REGION

The Austrian province Upper Austria clearly is the leading province of the nine Austrian provinces in

terms of industrial production and technological patent applications.

Upper Austria also has a strong record in terms of Cluster Strategies and Strategic Economic and

Research Programs. Upper Austria has developed and started its first Strategic Economic and

Research Program as early as 1998. In these Strategic Programs the status quo of Upper Austria´s

performance in the global competition is analyzed and clear goals and measures are defined. During

the preparation of the Strategic Economic and Research Program Upper Austria 2020 (see

http://www.ooe2020.at/ . This Program is synchronized with the EU HORIZON 2020 and thus runs

from 1.1.2014 thru 31.12.2020)

DI. B. Lindorfer (Lindorfer, 2014) and Dr. W. Stadlbauer have developed a methodology for the

identification of the so‐called Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") of a region for a

particular field of technology (e.g. INDUSTRY 4.0).

According to the "IRDSF"‐methodology the R&D (science) strength is measured by evaluating the

scientific publications (in the period of the last 10 years) and the industry strength by evaluating the

global patent applications (with publication date within the last 10 years).

If one wants to identify the Industry‐R&D‐Double Strength Fields of a Region in a specific Industry/

Technology (e. g. „Energy Technology“) this Industry is first divided into 10 to 15 sub‐domains or

sub‐technologies (see Figure 7).

Then this sub‐technologies are plotted in a portfolio with their „Relative

Scientific Publication Strengths“ as the position on the horizontal axis and the „relative

Patent /Inventor Strengths“ on the vertical axis.

It is a (helpful) fact that more than 90% of all Scientific Publications of a Region are made by the

Scientific Players (universities, research centers…) of this region.

I. e. the „Relative Scientific Publication Strengths“ correlate very nicely with the Scientific Strengths

of a Region.

More than 90 % of all Patent applications are made by the Enterprises. I. e. the „Relative Inventor

Strengths“ correlate very nicely with the Industrial Strengths of a Region.

The availability of actual global data is excellent for both axis:

For Scientific Publications as well as for Patents excellent global commercial databases are available.

On the next slide the Industry‐R&D‐Double Strength Fields (“IRDSF”) Portfolio of Upper Austria for

Energy Technologies is shown as an example.

In the upper right quarter the Double Strength Fields are to be found etc.

The lower right quarter is defined by “Strong Science / Weak Industry”




Figure 7: Industry‐R&D‐Double Strength Fields (“IRDSF”) Portfolio of Upper Austria

for Energy Technologies

For the computation of the "relative strength of a region" a meaningful (leading) benchmark region

must be defined. E. g. for mechanical engineering &automation (INDUSTRY 4.0) Baden‐Württemberg

is a global leading region and thus an ideal benchmark.

The Relative Strength of a region corresponding to the region's share of patent applications or

scientific publications compared to the benchmark region. The shares (ratios) are defined as relative

inventor‐ or relative publication strengths.

The computation of double strength fields "IRDSF" has been largely automated with a special

software "Techmeter® Innovation Portal", by the company Techmeter, Linz.




Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") Portfolio concerning INDUSTRY 4.0 for the selected

EU NUTS 2 region Baden‐Württemberg (see Figure 8):

Figure 8: Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") Portfolio

INDUSTRY 4.0 for Baden Württemberg Source: B. Lindorfer and W. Stadlbauer: "Double Strength Field Analysis INDUSTRY 4.0",

2013, Linz / Austria

The picture of Baden‐Württemberg is characterized by the above‐average and in absolute terms very

high industrial innovation output, measured by the inventors density, especially in topics

Cloud Technologies (CLD), Data Mining (Dmin), sensors (SENS), and the very dynamic topic Robotic

(ROB), CPPS and Automation& Control (A&C).

In any case, this methodology of identifying the Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") of a

region is are very important and very powerful tool for the computation of any S3‐Strategy for any

region of the EU! (S3 = Smart Specialization Strategies).

MANAGEMENT OF TECHNOLOGIES FOR REGIONS AND COUNTRIES

Strategic MoT for regions and countries is done to reinforce the competitiveness of the region in the

ever harder global completion to ensure prospering of the economy, employment, the standard of

living and social welfare.

As far as technology strategies for regions is concerned, the EU ‐ since 2012 ‐ bets on “S3” (Smart

Specialization Strategy) (Commssion, European, 2013). “S3” ‐ in simple words – is betting on the

specific strengths fields of a region. As a matter of fact, there are several strengths in a region:

Strengths of enterprises and technologies, strengths in universities and research, strengths in

infrastructure etc.

Regarding the technological competitiveness of the region in the global competition, two strengths

are decisive: The strength in enterprises and the strengths in R&D (IPR).

If a specific region has a technological strength in both ‐ enterprises and R&D – this technology is

called a “double strength technology field” or Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") of the

region.

DI. B. Lindorfer and Dr. W. Stadlbauer in 2012 have derived a new concept for identifying the

Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") of a region (Lindorfer, 2014) (Lindorfer, 2016).

The computation of these IRDSFs of a region – which can be done highly automized – is shown on a

few examples.




This IRDSF‐concept could ‐ for example ‐ be used in the frame of the elaboration of EC´s

S3‐strategies of Europe´s regions.

One major input to the "IRDSF"‐methodology is a global patent analysis for the specific technology

field.

However, more very valuable conclusions can be drawn out of the global patent data retrieved for

the IRSDF‐concept. B. Lindorfer and W. Stadlbauer felt that the “Flow of IP” (or the “Flow of

Inventions / Patents”) for a specific industry field between Countries would be one of such valuable

conclusions!

Let us look at the example of the the specific industry field “INDUSTRY 4.0”:

They defined the “Flow of IP” for INDUSTRY 4.0 for e. g. Austria as the difference between all

INDUSTRY 4.0 patents granted to and owned by Austrian legal entities (enterprises) (within the last

ten years) MINUS all patents granted for INDUSTRY 4.0 with Austrian inventors (within the last ten

years).

If this difference is POSITIVE for a country, this means, that the specific country could attract /

acquire IP from inventors of foreign countries. If this difference is NEGATIV (which unfortunately is

the case for Austria ‐ see Figure 9) this means that this country (Austria) is losing a part of its

INDUSTRY 4.0 IP of Austrian inventors to enterprises of foreign countries (i. e. has a IP‐drain and

NEGATIVE balance).

If one divides this (positive or negative) difference by the total number of patents invented by

inventors of country “X” one gets a “Relative Flow of IP” (see Figure 9).

One has to be cautious with the figures for those countries with a little number of patents relevant

for INDUSTRY 4.0, like CY, LT, LV, RO, BU, GR, SK and PT, because due to the small number of

evidences, the results may be misleading and may be partly artificial digital effects.

The country with the highest number of patents relevant for INDUSTRY 4.0 within the last 10 years in

Europe clearly is Germany (“DE”). It is very interesting to note, that Germany has a very well

balanced patent flow: 5253 INDUSTRY 4.0 patents with inventors from Germany and 5294

INDUSTRY 4.0 patents, which are held by German companies. The absolute difference is just ‐41 and

the relative difference is just ‐1%, i. e. the IPR balance for Germany is nicely balanced (see Figure 9).

France, too, has relatively balanced INDUSTRY 4.0 IPR balance with just ‐3% relative negative flow.

Out of the group of the countries with a significant number of INDUSTRY 4.0 patents, Switzerland

(“CH”) has the highest positive relative IPR Flow (+90%), but also the Netherlands (“NL”) have a high

positive relative IPR Flow (+40%)!

Out of the group of the countries with a significant number of INDUSTRY 4.0 patents, Austria

unfortunately has the highest negative relative IPR Flow (‐44%). This means that almost half of all

INDUSTRY 4.0 patents invented by Austrian inventors are owned by foreign, non‐Austrian companies

(High IPR‐drain for INDUSTRY 4.0 inventions by Austrian inventors). This is critical for Austria,

especially in the 21th century, which is the century of the knowledge based (“IPR‐based”) industries.

This IPR‐drain also lowers Austria´s position in all RTI‐rankings, e. g. in the European Innovation

Scoreboard, because patents are an important indicator in all RTI‐rankings!

As a matter of fact this IP‐drain differs strongly between the nine provinces of Austria:

Lindorfer and Stadlbauer did not do a detailed analysis on the “level of provinces”, because the

global data bases just give the data on national level, not on the level of provinces. However, from a

rough estimate of the Austrian INDUSTRY 4.0 patents it can be concluded that Upper Austria and

Vorarlberg do have a little IP‐drain (if any), whereas Vienna and Carinthia have a considerable

IP‐drain.

Also Sweden (“SE”) has a negative relative IPR Flow (‐29%) – see Figure 9.




The pressing question of course is what is the reason for this negative relative IPR Flows?

A detailed analysis would go beyond the scope of this paper, but the main reason is that in Austria

(and Sweden) there are many daughter companies of large foreign technology groups. The

inventions of the (Austrian) daughter companies are applied for as patents in the country and with

the ownership of the head quarter. In the case auf Austria more than 70% of these Austrian

daughter companies and their INDUSTRY 4.0 inventions are owned 100% by German Head Quarters.

I. e. in the case of Austria this INDUSTRY 4.0 IPR‐drain primarily goes to Germany (approx. 1/3 of all

INDUSTRY 4.0 inventions invented by Austrian inventors).

Figure 9: Absolute and Relative Flow of IP (patents) relevant for INDUSTRY 4.0

between all 28 EU Countries

If the Figures of the IPR‐Drain is are divided by the size (million inhabitants) of the specific countries

computed one gets a Normalized IPR Flow “per million inhabitants” and the figures of all countries

can be compared, regardless of the size of the countries (see Figure 10).




Figure 10: Absolute and Relative Flow of IP relevant for INDUSTRY 4.0

per million inhabitants between all 28 EU Countries

In any case the methodology of identifying the Industry‐R&D‐Double‐Strength‐Fields ("IRDSF") of a

region the as well as the concept of Absolute and Relative IPROP‐Flow (“ARIPOF”) for selected

technologies (e. g. INDUSTRY 4.0) are very important and very powerful tools for the computation of

any S3‐Strategy for any region of the EU! (S3 = Smart Specialization Strategies) – see

http://ec.europa.eu/regional_policy/sources/docgener/informat/2014/smart_specialisation_en.pdf.

Thus it is strongly recommended to utilize "IRDSF" as well as “ARIPOF” much more intense in the

preparation of S3‐strategies for (European) regions!

Regarding the derivation of RTD‐strategies (“S3”‐strategies) for regions, the following general

lessons learned by the author should be obeyed:

Small countries ‐ like Austria ‐ are well advised to focus on existing strengths and thematic

niches instead on the great challenges of the big players of the world (against which the

small Austria cannot compete anyhow). Austria´s Strategy must focus on intelligent niches

rather than running a "ME TOO Strategy”.

Optimum ratio for the Thematic Setting of an “S3”‐ RTD‐Strategy:

80% BOTTOM UP <=> 20% TOP DOWN

Industry (= BOTTOM UP) usually knows better than the bureaucrats in Vienna

or Brussels (=TOP DOWN) on which topics their R&D has to be focused to improve global

competitiveness!

Sustainability in innovation, and the ability to generate TECHNOLOGY PUSH innovations

needs a commitment of industry to basic research, too ("knowledge with a long half‐life") in

a well‐balanced relationship with application‐oriented R&D.

As far as the generation of “basic research knowledge with long half‐life" for industry is

concerned, Austria has a unique, relatively small, but smart concept: The so called




Christian‐Doppler Research Laboratories (CD‐labs) ‐ which are in an intelligent way

“embedded” in technical universities ‐ utilize the knowledge of the very university institute

for technology transfer to industry – see https://www.cdg.ac.at/.

The trademark slogan of the CD‐labs is: “Knowledge Creates Value (for Industry and

Society)”. One important key for this value creation is the integration of the CD‐labs into the

scientific community of the technical universities.

This model of the Christian‐Doppler Research Laboratories (CD‐labs) could be a role model

(“benchmark”, “best practice”) for all knowledge intensive regions in Europe (and

globally)!

MANAGEMENT OF THE TECHNOLOGY PORTFOLIO FOR ENTERPRISES

As far as the “MoT” for enterprises is concerned, it is important to remember that there is but one

reason for innovation: TO MAKE PROFIT!

Profit is the difference between the prices that can be achieved and the production costs.

Better (premium) prices can be achieved with Product Innovation, the production costs can be

lowered with Process Innovation.

That is the reason why Product Innovation and Process Innovation is so important for Enterprises!

Regarding Product Innovation, it is good to recall common sense knowledge, e. g. regarding the

strategies / possibilities for Acquisition‐of‐Technologies:

Figure 11: Possibilities for Technology Acquisition

Figure 11 shows the different ways of acquiring a technology and the blue columns show

qualitatively the size of costs, risk, time needed and profit potential for these different ways.

(Lindorfer, 2017)

This figure makes us aware that the 100% in‐house development is by far not the only way "to get

access to technology", but generally the most time‐consuming and associated with high

(development) costs, but also with high profit potential, as the profit needs not to be shared with

anybody else (licensor and/or development partner or lead customer).




The acquisition of a license from a Licensor ‐ to pick out another example from Figure 11 – can be

done very quickly and with relatively little risk associated, but one has to pay to the licensor licenses,

so that the profit potential is relatively low.

Another important knowledge which should be considered in any Product Innovation are the findings

of Prof. Ansoff (Ansoff, 2007).

Figure 12 shows the so‐called Ansoff‐Diagram (or Ansoff Matrix) of innovation.

This diagram has been derived by Prof. Igor Ansoff by analyzing approximately 1000 innovation

projects from reputable U.S. companies. The ANSOFF‐diagram has retained its validity until today.

Additional information see e. g. http://www.pwcglobal.com/gx/eng/ins‐sol/spec‐

int/ansoff/igor.html

The ANSOFF‐Diagram structures INNOVATIONS into two categories:

"Existing" or "New" (from the perspective of the company) for the dimensions of

"Products/technologies" and "Markets".

Prof. Ansoff then allocated the innovation projects according to the analysis to one of the four

quadrants forming the MATRIX.

Figure 12: Ansoff Diagram

It is remarkable and critical, for example that in the quarter New Technology / Product (i.e. a

company developed a new product in one of the companies known markets / industry sectors), the

probability of success decreases down to as low as 33% and the relative costs go up to a frightening

800% compared to the simple case, "market penetration".

For the most difficult case "diversification" (lower right quarter in the diagram, i. e. new product in a

new industry sector for the company) the probability of success falls down to only 5%, and the

relative cost amount to 1400%!

Cooperations / collaborations in R&D

Cooperation / collaborations in innovation have advantages and disadvantages.

Any possible cooperation must therefore be decided individually and very carefully.




Advantages of cooperation / collaborations in innovation from an industry perspective:

Accelerating the speed of innovation through cooperation with scientific and industrial

partners (Lead Customer) by utilizing all available relevant know‐how (preventing

re‐inventing the wheel twice) ("Leadership in Innovation").

Sharing of the high costs and high risk of R&D

Increased chance of TECHNOLOGY PUSH Innovations. TECHNOLOGY PUSH often are

generated (“by chance”) in communication between various science disciplines /domains.

Cooperation often is a precondition for receiving (higher) public R&D funding.

E. g. the EC requests at least 5 project partners for many R&D funding programs.

Disadvantages of cooperation / collaborations in innovation from an industry perspective:

Any cooperation means additional complexity and problems such as:

Difficult and time consuming decision process, since the managements of all

partners have to agree.

Communication problems, especially in the case of different mother tongues of

the innovation partners

Overcoming the “not invented by me syndrome” of each partner

Who gets how much of the IP‐rights (IP = Intellectual Properties) and the

subsequent marketing / revenue of the invention?

What, if the partnership breaks up? Who gets then what?

Different technical standards, high travel costs etc.

Since the disadvantages and problems of collaborations in innovation can be severe,

collaborations should be done only if there is a clear, strong benefit of the collaboration or if

collaboration is absolutely necessary. According to the experience of the author

collaborations with two or more “equally strong partners” are most critical and very

problematic. Collaborations with one clear, strong leader and one or more small partners

are less critical and their probability of success is somewhat better.

In any case small, efficient research collaborations with max. 2‐3 partners should be

preferred (rather than inefficient “mega‐collaborations” with more than 5 partners with

different mother tongues).

Unfortunately the EU/EC is enforcing these un‐efficient mega‐multi‐collaborations in all

innovation projects funded by the EU (e. g. HORIZON 2020 etc.).

This is of the major reason for the relatively low rate‐of‐success of EU‐funded R&D‐projects.

US or Korean R&D funding schemes, e.g., do not enforce un‐effective collaboration.

Cooperations & collaborations in R&D and innovation usually are rather “formal” and

inflexible with strict agreements and rules. There are other forms for enterprises of

“working together”, which are less formal and thus less critical: E. g. “working together” in

clusters! Upper Austria is the leading CLUSTERLAND in Austria and has a long lasting

excellent experience in “working together” in clusters industry‐by‐industry (e. g. the

Upper Austria Automotive Cluster (http://www.automobil‐cluster.at/en/), the

Mechatronics Cluster (http://www.mechatronik‐cluster.at/) etc.).

The author has 20 years of personal experience with clusters and thus would like to

encourage regions and companies to cooperate in clusters!




MoT with Digital Technologies

Management of Technologies (“MoT”) with Digital Technologies is no Rocket Science, but a task

which needs experienced Innovation Professionals ‐ no more – no less!

Theses Innovation Professionals have of course to know some old, very basic rules for success in

innovation, like the “PIMS‐Concept” of the 1970‐ies (PIMS = Profit Impact of Marketing Strategies,

see ‐ https://de.wikipedia.org/wiki/PIMS‐Konzept ), or the findings of the two professors for

innovation, Dr. Igor Ansoff (Ansoff, 2007) and Dr. Hamel Prahalad (Prahalad, 1994) as well as

Prof. Nikolai Kondratjew (Kondratieff, 1972).

According to a prognosis of the author based on his 28 years of experience in industrial innovation,

much less MoT‐projects will fail in the 21rd DIGITAL Century NOT because of NOT‐knowing the

specific rules for innovation of digital technologies, but because the new young CTOs in the

21rd century do not any longer remember the old “Lessons Learned” for successful innovation of the

20th century!

Thus some of the most important old “Lessons Learned” for successful innovation as well as

widest spread misconceptions in innovation of technical products and services are given below:

MOST IMPORTANT SUCCESS FACTORS IN INNOVATION OF TECHNICAL PRODUCTS IN ENTERPRISES”

Success Factors in innovation of technological products

Focus on performance and the price / performance ratio of the new product / technology

from a customer perspective.

Customer benefits must always be the central focus of the development.

Is there a market demand for the product and if so, what price are the customers prepared

to pay?

"The worm must taste to the fish, not the fisherman!"

"The most powerful weapon in the hands of the sales manager is the competitive product"

Focus on speed in the implementation of R&D results on the market, because this is one

key factor for success in the global innovation competition

"De‐bottle‐necking the Chain of innovation"

The renowned US Innovation expert, Prof. Prahalad, analyzed in the 1980‐ies in his famous

book "Competing for the Future" (Prahalad, 1994) in a comparative study the innovation

performance of the United States, Japan and Europe in the electronics industry.

The most essential result of Prof. Prahalad´s analyses and comparison is that Europe is much

too slow in the implementation of new technologies on the market.

Only the first with a new product on the market achieved good profit margins, the

second winner is actually already a loser in our fast economy and Europe is usually the

second or third winner ("time to market" "window of opportunity")

Focus on Communication in Innovation

Innovation is generated primarily through personal communications of interdisciplinary

team (not via email, not via video conferences). Therefore, the physical proximity of all

members of an innovation team is extremely important and irreplaceable.

Communication as the biggest enabler for innovation:




Without communication there is no innovation. Since the days of working alone

“Gyro Gearloose” (“Daniel Düsentrieb”) are over and since the process of innovation almost

always involves various disciplines and domains today, communication plays a key role.

T. Allen (Allen, 1970) (Allen, 1980) and his co‐investigators showed correlation of spatial

distance and communication probability of employees that the biggest hurdle start at

approximately 30 meters. Within this zone, coffee corners still be shared and the same copy

machines are used. Therefore, random and informal contacts are more frequent. These are

central to innovation. This has not changed drastically with emails. Most e‐mails sent

between spatially close‐fitting counterparts, as shown by empirical studies.

According to studies only 2% of 350 examined successful innovation ideas were created in

scheduled sessions. 98% of the ideas were generated outside of meetings, such as the

common coffee or jogging. In spite of these findings still an innovation managers spend too

large an amount of time in meetings!

Knowledge transfer

Knowledge transfer is in fact only possible via PHYSICAL PROXIMITY and via heads (and

NOT via thick research reports that no one reads)

Stopping of R&D projects (with little potential for ultimate success)

The R&D output can be increased by 3 ways:

a) More input (more money)

b) Increase effectivity ("Doing the right things")

c) Increase efficiency ("Doing things right")

The authors experience shows that (innovation) management talks to much about a) but

addresses points b) and c) too little.

One of the most important tasks of any CTOs (Chief Technology Officer) at all is "Stopping of

R&D projects with little potential for ultimate success".

The authors experience shows that R&D projects once initiated are "then towed" for far too

long, even when success becomes less likely (that is, in my experience both for research at

universities as well as for R&D in industry). Whether it is because these R&D projects are

darlings to senior managers or senior professors or because the company has already spent

so much money on a project X thus nobody dares to stop the R&D project.

One point can be learned from the United States: The Americans not only think in real

R&D‐costs, but also consider the so‐called opportunity costs i. e. what could be done with

the money / researchers, if not the old R&D project would have to be dragged along.

A key to sustainable, successful collaborations is to ensure a

WIN‐WIN‐situation for all partners!




Summary of the most important (industry independent) success factors for innovation of

technological products:

Focus on the benefit / price‐performance ratio of the new technology (product and/or

service) from a customer perspective

USP (Unique Selling Position) = Unique feature of the new product (patent protection)

Speed in implementation and market penetration (“Time to market”, Technology

push vs. Market pull)

Market size& Market growth:

Evidences show that new products/services (R&D‐results), which are not sold

multiple times (1000 or 1 mill times) never reach break even

in costs in "production".

Global market share in the specific industry (see PIMS‐Study

‐ see https://de.wikipedia.org/wiki/PIMS‐Konzept ), financial strength

“Brutal” Stopping of R&D projects (with little potential for ultimate success

Leadership, Entrepreneurship

Professional innovation‐management, project‐management and IPR management

WIDEST SPREAD MISCONCEPTIONS IN INNOVATION OF TECHNICAL PRODUCTS

The market (customer) is ready to pay a premium for new, innovative products, which are

better than the established ones.

WRONG: New products must be better AND cheaper to become best sellers

Innovations are generated in the R&D laboratories or in the R&D departments

WRONG: Innovations are generated within the market. An innovation is successful if

the new product / technology is in high demand by the customers (“demand” is

something different than “need”).

Most ideas for new products can be learned from the customers

WRONG: Customers usually complain about the shortcomings of existing products.

Thus you can get suggestions from customers for incremental improvement of

existing products only, but no ideas for radical new innovations.

The ideas for radical innovations have to be generated within the company.

The classic, traditional concepts of technology transfer work properly

WRONG: According to studies by Prof. Kriegesmann (Kriegesmann, 2008)

(Kriegesmann, Kerka, & Kley, 2008) the classical, traditional concepts of

technology transfer do not work and have never worked.

By "traditional concepts" it is meant that a research institution or university

develops something, writes a scientific paper and a glossy flyer and then passes the

research results onto a company that makes big profits out of it. This is exactly how

it does NOT work. Knowledge transfer works in innovation only via heads.




CONCLUSIONS

The Twelve Commandments to increase the probability for success in innovation

from the author´s 18 year experience in innovation as CTO of large global Industry:

1. Do a STOP‐check on each R&D‐project twice a year and are very “brutal”

with the STOPPING decisions.

2. Do focus on as few R&D‐projects as possible

3. Do stick to the goals set at the beginning. Do not change the goals of the project.

(Never shoot on a moving target!)

4. Are “very cautious” before entering into a cooperation / collaboration in innovation, since

collaborations do add a lot of complexity and problems

5. If you need a third party know how, IP or technology:

First priority is to acquire a respective company (if available), second priority is licensing

and only third priority is collaboration.

6. If you are faced with the choice of

a) investing more money in the current fiscal year

or

b) delaying the project, i.e. extending the final dead line

do invest more money in the current fiscal year (do not delay the project)!

7. Do install one strong, responsible project leader (not 2 (weak) leaders)

8. Do throw out of the team immediately any “grumbler”, who does not any longer believe in

the success of the project (the sooner, the better).

9. Personal communication is the key in innovation. Personal communication needs physical

proximity. Enforce that all members of one R&D‐project work together in one (big) office.

It is important for the success that all members share the same coffee machine.

10. If you would have to make a poor compromise to receive public funding:

Abstain from the public funding.

11. Do involve Marketing & Sales from day one onwards and entrust them with clear tasks

and work (not just as “spectators” and smart commentators)

12. Do implement a professional innovation‐management, project‐management,

IPR‐management and quality‐management (including documentation and

knowledge‐management) from the first day on.

The paper is concluded with the well‐known slogan of the famous Peter F. Drucker:

"The CEO of an Enterprise only has two Functions ‐

Innovation and Marketing!"




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