Yesterday I had the opportunity to attend the yearly half-day seminar of the Licensing Executive Society in Lausanne. The topic was particularly compelling for me this year:
- is outsourcing innovation an opportunity or a threat?
- how does it work in practice, based on case studies from a number of firms experiencing outsourced innovation – a large group, an SME, and innovation consulting companies providing this service?
- how to handle the IP issues in practice?
The seminar started with a quite entertaining presentation by Elmar Mock from Creaholic. Elmar started from his background story as one of the key inventors of the Swatch, shared step by step his long and painful way in experimenting and better understanding the process of innovation as a self-made man after he left his employee position to innovate on his own in the mid 80s, up to building a number of success stories from his Creaholic company. Creaholic makes a large part of its business from outsourced innovation, as it helps large groups as well as SME better innovate thanks to its multidisciplinary workforce of about 30 people; another part of their business is innovating and spinning-of on their own.
The presentation from Elmar was then completed by a presentation from Luc Amgwerd, the IP lawyer from Creaholic, who introduced 3 different partnerships case studies with various licensing out agreements for the Creaholic customers, the most common approach consisting in separating the IP rights generated from the outsourced innovation collaboration based on the field of application (fairly similar to the IP practice I’ve seen in the academic world).
The next presentation by Dietmar Pressner gave us the point of view of a large Dutch group, DSM, who survived through more than 100 years by constantly transforming their business, from coal industry mechanical engineering to biotech through chemical technology and material science. One main driver for outsourcing part of the innovation is the access to more talents (besides the significant internal HR power) and to force a culture of innovation at all levels (I guess the external competition for ideas boosts the internal people to get their share of the pride and rewards associated with successful innovation).
Next, the point of view of an SME was presented by Stéphane Poggi, CEO from Felco Motion SA, a spin-off from Felco SA. Access to extra talent and specialized expertise is key in such a configuration, for instance in terms of ergonomics and specific mechanical engineering, for a small company of 5-6 people. The proximity of high tech labs such as those from EPFL is very useful there. Stéphane also clearly differentiated between short term, mid term and long term goals articulated both in terms of its internal strategy and the choice of external partners. Furthermore, he highlighted the difficulty of implementing the best IP strategy, focusing on mastering and developing more know-how out of the partnerships, but without necessarily patenting, given the associated cost and uncertain ROI of patents.
Charles Perraudin from Innobridge, the innovation and management consulting spin-off from CSEM, introduced the emerging concepts of open innovation: larger communities, more R&D partnerships, more revenue sharing based biz models, as illustrated by the App Stores, Android, etc. Charles also questioned the usefulness of patents in a world where technology life-cycles have become shorter than ever, while the patent processes remain slow and costly – startups cannot easily afford patenting; partnership agreements are as at least as important as formal IP protection in that context. (Of course, this is very much field dependent – I also don’t think it makes sense to enforce the same basic patent laws for pharma/biotech and ICT industries).
The final presentation by Michèle Burnier gave us a dense and well documented checklist review of the 10 key areas to clarify for your lawyer to do a good and easy job in writing an innovation outsourcing agreement, from the early pre-contractual phase up to the specifics of dealing with publications or part-time researchers involvement when dealing with the academic world in particular. Having interfaced myself for several years between the legal department and the R&D engineers in a number of innovation projects with the whole range of possible partnerships (with customers, with subcontractors, with academics, in EU and French funded projects, and even with competitors in the framework of technical standards…), I know how challenging the planet alignment is… Very useful checklist presentation by Michèle Burnier there. (It was just missing the special case of outsourcing innovation through a 50% controlled JV, which is a quite common approach in the telecoms industry – but I understand this case is not stricto senso “outsourcing” from a lawyer point of view, even if it is from the various involved engineering teams point of view 😉 )
The seminar ended with a round table lead by Xavier Comtesse from Avenir Suisse, who shared his quite challenging view that contrarily to what raw statistics do measure, there is not enough innovation in Switzerland. More precisely: not enough good disruptive ideas. There are lots of ideas and lots of them get successfully developed, but that’s not enough. Xavier called for “plus de boxon” (I think we can translate it as “more mess”) to force more creativity at the root of the problems. And he also calls for more story telling; it’s not just about brands or words, it’s about people and stories, and Creaholic is a very good example there. Alternative point of view, definitely enriching the debate.
The following questions and answers at the round-table were as interesting as the whole session. I asked the last one: what about implementing open innovation in practice? The topic had just been briefly touched by the Innobridge presentation. Calling for ideas anywhere in the human talent space, worldwide, using the web and facilitation platforms (including the proper legal framework for IP transfer of course) should give solution-seekers access to a larger search space than working with just this or just that lab or inno team, as creative and as skillful they are. Of course, it is challenging, at all levels… The value chain is unusual (as always in the new connected world!), and business model sustainability remains to be proven. Still, I’m curious how it is going to develop, and this is definitely a topic I will further watch out now.
Outsourcing innovation is not new – the session made me remember I’ve been working in European research projects as early as in 1994 and that was nothing else conceptually… – but fully open innovation is new.