Welcome OIC!

Ohhh, I see (OIC) … .. With this acronym is born the Open Innovation Community, a new initiative in the field of design and open innovation full of innovative concepts, and which I have the pleasure to be part of now .

This community has the vision of democratising innovation through people empowerment, which refers to making innovation more extensive to all companies by unifying effort by a growing community members, primarily formed by strategists, creative thinkers, designers, anthropologists, marketing and communication people and other.

The initiative is based on the premise that we failed to achieve a better distribution of R&D power and accomplishment through the whole business ecosystem. For instance, corporate R&D expenditure in Spain was 7,159 M€ in 2016, and 35% of such expenditure was made by only 7 companies (Telefónica, Amadeus, Grifols, Iberdrola, Acciona, Indra and Repsol). Having a closer look to this data, and according to the Global Innovation Index, Spain is placed in the 30th position in the world ranking of gross domestic expenditure in R&D (with 0.64% of GDP, equivalent to 7,159 M €); however, this country is ranked as the 13th country with greatest R&D investment by its 3-top corporate investors (which means a total of 1,008 M€ investment, which represents 16% of the total business expenditure in Spain). These data shows a clear gap that needs to be covered if we want to improve the productive model and work on projects with greater impact to people.

I encourage you to join the community through oicteam.com either as Observer or Ambassador, or you can also try the beta-version in Spanish if you are a business willing to request an InnoAmbassador to help you managing change and innovation from a holistic perspective.

What is the actual return on R&D investment?

It is often common to look at the expenditure on R&D to compare how different countries are doing in terms of innovation. But, what about the outputs from this activity? Which countries are more efficient in terms of R&D investment? Which countries have better return of investment (ROI) in R&D?

To provide a comparative overview on the ROI, specific data on 3 key R&D outcomes has been gathered for the top-10 most innovative economies according to the Global Innovation Index or GII (Cornell University, INSEAD, & WIPO, 2017), and compared to Spain. In particular, the following outputs has been selected:

  • Number of scientific and technical journal articles published (NSF, 2013).
  • Number of patents measured as PCT applications filled by country of origin, considering de sum of resident and nonresident applications (WIPO, 2016).
  • Income received from use of intellectual property (IP), a new indicator which provides insights on the balance of payments according to the International Monetary Fund (IMF, 2015)

The data above has been related to the gross domestic expenditure in R&D for each country, which was reviewed on my previous post Research expenditure by top innovators. As a result (see the figure below), specific ROI measures have been calculated as: number of scientific and journal publications per 1000 USD invested, number of patent applications per 1000 USD invested, and income generated from IP exploitation per 1000 USD in invested.

Return on R&D investment in 2017 for the most innovative economies in the world in comparison to Spain. Prepared by Francisco Velasco (www.fvelasco.com). Source: Selected data from NSF (2013), WIPO (2015) and IFM (2015).

Besides any arguable lack of scientific groundings from this approach (as it relates indicators that are not directly correlated and uses data from different sources and years), the model provides a very useful comparative overview across countries ina visual and intuitive manner. As per the figure above, the return of R&D investment in terms of scientific production places USA (265 articles per $1000 invested) as the most efficient country, followed by UK (139 articles per $1000 invested) and Spain (125,6 articles per $1000 invested). However, the ROI in terms of patent production placed also USA in the first position (378,6 patents per $1000 invested), followed by Ireland (49,5 patents per $1000 invested) and UK (32,6 patents per $1000 invested). Finally, the outputs in terms of direct income from IP exploitation, which is a very interesting indicator being recently collected, highlighted again USA as the country with greatest ROI ($78,5 per $1000 invested), followed by UK ($23,3 per $1000 invested) and Netherlands ($41,2 per $1000 invested).

 

REFERENCES

Cornell University, INSEAD, & WIPO. (2017). The Global Innovation Index 2017. (S. Dutta, B. Lanvin, & S. Wunsch-Vincent, Eds.) (10th ed.). Retrieved from https://www.globalinnovationindex.org/gii-2017-report

IMF. (2015). International Monetary Fund. Retrieved from http://www.imf.org/external/datamapper/datasets/BOP

NSF. (2013). National Science Foundation. Retrieved from https://www.nsf.gov/statistics

WIPO. (2016). World Intellectual Property Organization. http://doi.org/10.1016/0172-2190(79)90016-4

 

IP theft or loss issues continue to rise as global fraud increases

82% of companies have suffered a fraud incident in 2016, a seven percentage point increase in comparison to 2015 according to the recently published Global Fraud and Risk Report (Kroll, 2016). The economic impact of losses resulting from this fraud has been estimated in 1-3% of total revenues for most (59%) of the companies surveyed.

The following figure summarises some key findings from the mentioned report:

Graphic representing the fraud incidents and security incidents resulting in theft or loss of IP, prepared by Francisco Velasco (www.fvelasco.com)

Regarding the Intellectual Property (IP) business, the figure shows that 16% of enterprises has experienced Intellectual Property (IP) theft, piracy or counterfeiting fraud in 2016, which means an alarming rise in comparison to a 4% in 2015. Furthermore, 38% of companies suffered a security incident resulting in theft or loss of IP in 2016, being the manufacturing sector the most affected with 56% of the reviewed companies being subject to such incidents in the same year.

These data suggest that there is a growing challenge for enterprises on managing and protecting their intellectual property and confidential information, in order to gain (or not loose) competitive advantage. This challenge that is particularly pronounced due to the effects of global competition (the companies that lead the market are more familiar with intangible management), increased supply chains (longer supply chains make more difficult to trace the flow and use of confidential and protected information), growing hire of external consultants (external experts are more often required and and, and this represents a potential leak of information) is a common, use of open ICT systems (vulnerability toand increased job mobility.

To address this great global challenge, it is highly recommended that companies take urgent measures on conducting IP and trade secrets audits by qualified experts, to identify all intangible assets and determine which ones shall be protected and how. Such processes shall be followed by the implementation of a risk mitigation plan that enables: reconfiguring clauses in contracts with employees, customers and suppliers, defining an information access structures and protocols, prioritising and qualifying intangible assets, making an economic valuation of critical IP, implementing cyber security measures to protect computer and online systems from theft or damage, and other contingency actions to be determined depending on the type and situation of the company.

 

REFERENCES

Kroll. (2016). Global Fraud & Risk Report: Building Resilience in a Volatile World. New York, USA. Retrieved from http://www.kroll.com/en-us/global-fraud-report

R&D Public Policy Strategies: A simplified model

Public policies on R&D and innovation have proved to make a considerable impact on economy in most countries. The range of strategies adopted by governments is so wide and complex that it is difficult to establish a comparison among them, or to make a forecast on the potential outcomes from adopting one or other strategies. Thus, to ease the policy design process there is a need to outline a model that allows visualising the possible strategies and instruments available.

The model presented here (see figure below) provides a generic overview of strategies that may be adopted when making R&D policy, attending to two key parameters: the degree of interventionism, and the level of risk assumed by the managing government. As a results, there are four type of strategies that may be adopted:

Figure showing a model to define R&D and Innovation Public Policy Strategies, designed by Francisco Velasco and licensed under CC BY-NCSA 4.0. Blog de Francisco Velasco: www.fvelasco.com

An attempt has been made to map some of the most common instruments (Di Comite & Kancs, 2015) in the proposed matrix as shown below. This mapped model is yet to be developed further and there is a likely misreading of some of the instruments. I will be happy to listen your views!

Figure showing a model mapping instruments of R&D Public Innovation Policies, prepared by Francisco Velasco and licensed under CC BY-NCSA 4.0. Blog de Francisco Velasco: www.fvelasco.com

An explanation both figures above is provided:

  • Enabling Strategy. Is characterised by low government interventionism and high-risk aversion (understood primarily as financial risk). This strategy is characteristic from economies based on primary industry and with a reduced and unsophisticated innovation ecosystem. Some typical instruments implemented under this strategy are: training programmes to raise the innovation profile of professional staff, promotion and marketing actions to raise public awareness on innovation, or the launch “innovation voucher” programmes that provide a small financial contribution for SMEs to hire external consultants to develop new products, conducting market research, or improving internal processes.
  • Dynamic Strategy. This strategy requires governments to take an innovation facilitator roll and take actions towards fostering R&D collaboration; the most typical instrument in this case is the implementation of funding programmes to R&D projects. The level of risk taken is variable and depends on the level of funding committed to such purposes; and the degree of government interventionism is relatively low, because policies focus on rewarding R&D activity, and not on influencing how such activity shall be conducted.
  • Regulated Strategy is characterised by a high interventionism to define the “game rules”, that is, regulation and legislation that obliges meeting certain standards concerning R&D directly or indirectly. Public Administrations taking this approach assumes relatively low risks, since no great sophistication is required on the design of specific instruments; however, a relatively high investment is required in the preparation of regulatory and tax-related measures. Some common instruments adopted with the regulated strategy are the introduction of corporate tax discounts on R&D, the implementation of ISO standards related to R&D management practice, or the application of green-related normative (such as CO2 emissions requirements, which pushes companies developing novel technological solutions)
  • Open Systemic Strategy. This strategy assumes innovation as an intrinsic part in the way government manages office (the government innovates itself). Such approach implies a high interventionism under the premise of having a good understanding on innovation and R&D strategy, and places the government as a key stakeholder in the country´s innovation agenda. Government thus assumes a high level of risk in the design of new instruments that usually involve participative and co-creative processes with the private sector. This model requires highly qualified personnel with world-class knowledge on innovation and R&D processes, and takes place in the most advanced economies in the world. Some of the usual instruments adopted with this strategy are the public procurement of innovation, technology foresights, or the long-term transformation of the educational system itself to ensure the creation of an innovative culture.

The proposed model is subject to discussion and has no scientific grounds. However, it is based on fieldwork observation and provides the advantage of being simple and building on two solid parameters (interventionism and risk). The model may aid the strategy design process because allows understanding some underlying implications of adopting specific strategies, and designing the appropriate instrument policy mix for each country. I am intending to refine and improve some of the assumptions, and I will be happy to hear your comments!

 

REFERENCES

Di Comite, F., & Kancs, D. (2015). Macro-Economic Models for R&D and Innovation Policies.

 

The Chilean Minister of Economy appeals to the democratisation of innovation at VI Innovation Meet

Picture of speakers at VI Innovation Meet, 29 June 2017, Casamerica, Madrid

Speakers at VI Innovation Meet, 29 June 2017, Casamerica, Madrid

Last 29th June, during the opening of the VI Innovation Meet organised by MRI-International and KIM, the Chilean Minister of Economy, Development and Tourism, Mr. Luis Felipe Céspedes, appealed at the democratisation of innovation and entrepreneurship as a key to address inequality and progress. The Minister´s encouraging speech was followed by an explanation on several programmes implemented by the Chilean government to diversify and sophisticate their economy.

This interesting event took place at Casamerica of Madrid, and aimed at sharing initiatives to foster cooperation on innovation between Latam and Europe. Following the Minister´s intervention, there where three round table discussion:

  • The first roundtable discussed public policy measures across both continents, moderated by Carles Ramió (Pompeu Fabra University) and with the participation of the embassies of Peru, Ecuador, Argentina and Colombian embassies, as well as the Spanish CDTI.
  • The second roundtable focused on cooperation perspective of large Spanish corporations, with a panel moderated by Leitat and formed by Indra, Gas Natural, BBVA, Telefónica, Ferrovial Agroman and ADIF
  • The third roundtable focused on Intellectual Property Management, moderated by the Licensing Executive Society, and with the participation of Repsol, Elzaburu, Clarke, Modet & Co, Tecnalia and KIM

You can visit here the lessons learnt at the VI Innovation Meet (only in Spanish)

Or have a look how was the programme of the event (only in Spanish)