External Collaborations Can Be Key to Growth

IdeaConnection interview with Robert Gruetzmacher, TechIAConnect Robert Gruetzmacher is a highly respected open innovation thought leader with more than 30 years of industrial experience working at DuPont. He was involved in open innovation long before Henry Chesbrough’s landmark book gave it a label.

Dr Gruetzmacher is also the Founder and Principal of TechIAConnect and Associates, an international business development and technology transfer consulting firm.

In this interview he talks about the history and evolution of OI, the issues involved, and his role in the development of a new OI model.

You were already engaged in many practices now known as open innovation when Henry Chesbrough’s famous book was published. What were your thoughts when it hit the shelves?

I met Henry Chesbrough a number of years ago and have had the pleasure of working with him in a number of forums. Those of us in the licensing and technology transfer profession were pleased with the publication of his book, “Open Innovation.” It offered legitimacy to what we have been trying to convince others to do, either with our own employers or potential partners.

To us, Open Innovation was just another of saying you are taking (or will consider taking) advantage of opportunities with external partners, external sources of research capability, IP and/or licensing opportunities. This means initiating new and building on existing relationships. Henry’s book recited a litany of case studies, illustrating how effective OI can be. It opened the eyes of many people to opportunities afforded by working with outside partners.

Of course, the devil is in the details. How do separate and often disparate organizations work together to create mutual value and yet preserve the sanctity of their individual assets? Open Innovation is powerful in theory but how does one make it work, who should consider it and under what circumstances should it not be considered? Some companies are positioned to reach out better than others, and some of these others sought guidance. This expanded the opportunity for third-party intermediaries to play a growing role filling this knowledge gap.

At the time the book was published my role in DuPont was to out-license non-strategic technology and IP. As this was a way of extracting more value from the company’s intellectual assets, in effect this was Open Innovation in the broadest sense of the term but not recognized as such. Later I became equally involved with the in-licensing and external collaborations.

You have been involved in open innovation practices for about a quarter of a century. Does it surprise you that still today, some companies are wrestling with the concepts?

No, many companies are still wrestling with this concept, but, in fact, OI is not for everybody. It depends on the nature of the business, its goals and markets served. OI is a means to an end, not an end in itself. However, there is a trend. The result of polls taken from corporate leaders five years ago compared to polls taken of the same people recently, show a growing belief that external collaborations are to be a key ingredient their companies’ growth strategies.

I think this is likely to increase and maybe at some point companies will be competing for the top-notch external resources. To some extent this is happening now.

Do you feel that take up is accelerating?

The use of the Open Innovation model is increasing but perhaps not accelerating. The volume of service providers working in this space adds to the hype. Prudent companies have to sit back and think through what makes sense for each program. They consider internal expertise vs. external, confidentiality requirements, IP ownership and rights disposition and cost (available funds).

Outsiders should understand that an “OI opportunity” might be the best route to a goal but not necessarily the cheapest. More aggressive companies are forming internal teams to sort these issues out. Others are retaining intermediaries to provide assistance, especially to help find unidentified partners. Some do both.

So IP is one of the biggest issues that companies new to open innovation are wrestling with?

Oh it is. I think almost without question IP is an issue. However, I think this sometimes is blown out of proportion. There’s an organization here in the United States that I have been active since its inception. This is the University Industry Demonstration Partnership (www.uidp.org). Founded by government, public and private sponsorship, the purpose of the UIDP is to deliberate on the causes of, and potential solutions to, the difficulties facing universities and companies when attempting to work together. Members include companies, universities and government agencies. When all of the contentious issues that needed to be ironed out were listed, IP was on top, ownership, background rights and foreground rights.

Upon closer examination and after considerable discussion the conclusion was the importance of IP is situation dependent. For example, a company that engages a university to do a sponsored research project may not have a business need to own ensuing IP or even have controlling rights. So long as they are not blocked from using it they may be willing to share the results publically. So what I have to say in general is that IP issues are pertinent, and something to be reckoned with. The degree to which IP is the stumbling block or the hurdle to a deal needs be considered on a case-by-case basis.

How do you work with companies to get them through their fears?

What I do is ask a company to consider the following: what is the goal, your unique resources, timing and funds. How important is IP and confidentiality? Do you have a partner in mind? The idea is to institute a disciplined process to vet each of these matters and piece together a project plan that makes economic sense.

As an example, they may have been thinking of a university faculty as a partner, but that might not be the best partner. If their confidential information is deemed highly strategic, and it is going to require disclosing this information to the university partner in order for them to do the job you expect them to do, then consider twice. Universities are not set up to manage confidentiality as a company is.

You will need to be diligent and work with the staff and principle investigator to develop the secrecy provisions. Alternatively and in addition to, the company needs to carve out the university’s role so as to minimize the amount of needed confidential information to be disclosed.

Universities, albeit a growing source of innovation, present other challenges too. Universities have varying degrees of experience working collaboratively with companies. Those that do should be the ones sought after first, everything else being equal. Some key research universities are changing their IP policies to accommodate and attract company partners.

So you need to get to know the individuals?

Yes. This brings up the value of “partnership” relationships. It is important to know the capability and work behaviors of a potential partner. This can be gathered ad hoc, and often is, but a long-standing relationship goes a long way. A repeat project may be the most expedient route if the expertise matches. Having this known well-in-advance of signing a contract is necessary. A company that has a partnership relationship with a university is likely to have hired their students, provided gifts in the form of unrestricted grants, and become acquainted with key staff. This is a route to becoming aware of new opportunities, early on and, if needed, to facilitate or trouble-shoot contract development.

What other issues are companies dealing with?

As far as I’m concerned an issue is the incredible volume of available expertise, IP and technology. Sorting through this and finding the nuggets that match a corporate interest is a challenge. Companies have opened themselves up to systematically acquiring new ideas and opportunities but only a fraction of what comes in goes on to a second level of consideration. This was my experience at DuPont.

In order to vet these disclosures meaningfully an internal infrastructure needs to be constructed, which some argue detracts from mainline efforts. Another issue is restructuring R&D to accommodate the OI model. The new role of a scientist or engineer will be one of not only an expert in her/his field but also a hunter and a gatherer and ultimately an evaluator who will piece together a blend of the best from the outside with that of the inside. This requires a change in expectations and compensation metrics. Finally, money matters. Initiating and maintaining a collaborative relationship costs money. This must be accounted for well in advance of exploring a potential external arrangement.

Finally, how else are you applying your extensive knowledge of open innovation?

I have a client in Philadelphia, Ben Franklin Technology Partners of Southeastern Pennsylvania, which receives partial funding by the state to help grow the economy in the region surrounding Philadelphia. One way this is done is to assist technology-based small and startup companies through guidance and financial assistance to achieve their goals.

An initiative I am helping drive is the formation of a regional water alliance consisting of utilities, technology companies working in the water space, investors, startups and other organizations. The idea is to create an ecosystem to mix and match opportunities to accelerate the commercialization of technology to assure the region’s water quality and infrastructure integrity.

The tools I am using to do this involve all the skills (including contacts) that I have acquired in my Open Innovation experience. We started it about two and half years ago and are aggressively building membership. Time will tell if this works. This is another Open Innovation model. The value proposition of this alliance is the creation of a forum that has all the pieces needed to bring innovation to commercial reality more quickly.

I continue to consult and teach on all matters related to IP management, licensing, tech transfer and effective collaboration. I am associated with IntellectualAssets, Inc., the Larta Institute and the O-Innovation Advisors, LLC. At the moment, I have a focus on Latin America.