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Friday 13 March 2009

TCD-UCD Innovation Partnership: a cottage industry perhaps ?

The Times Higher Education/QS World University Rankings, published in last October, showed Trinity College Dublin breaking into the global top 50 universities, ranked at 49 - up from 53. TCD became the first Irish third-level institution to make it into the elite global top-50 group. The rankings also delivered very good news for University College Dublin (UCD), now ranked 108 worldwide, and up from 177 last year.

Last wednesday, both universities announced an intention to further enhance their world class positioning, by integrating together their fourth level (ie postgraduate) activities, and merging the activities of their respective technology licensing offices into a single unit. The text of the press release is here.

The most significant aspect of the announcement, in my view, is the focus on innovation as an equal core part of their mission as universities alongside both research and education. They have set themselves an ambitious target of creating at least 300 new companies of scale, and of high value, by 2019. They will jointly offer new facilities for pre-competitive research and design, prototyping and process innovation - to help harness and commercialise new ideas, knowledge and inventions. They also promise to prioritise the establishment of a wider support framework of educational, legal, financial, technical, management and marketing capabilities and support needed to set good new business ideas on their way.

I strongly believe that an overall national policy objective should primarily be fostering dynamic young companies based in Ireland. While I believe that foreign multinational investments into Ireland have served us extremely well over the last forty years or so, I fervently believe that sustainable wealth and employment should be based on a vigorous breeding ground of young companies. Perhaps in the past, there has been an over-dependence on relatively rapid creation of employment by major multinational investment, and a sense that our indigenous companies were "not playing at Croker". There was a sense perhaps that the multinationals were the "A" team, and the indigenous technology companies were just a "cottage industry".

In fact, I think that's absolutely right: the indigenous technology sector in Ireland has been pretty much a cottage industry, and long may it continue to be so. We need many many more "cottages". In my view, the indigenous technology sector in Silicon Valley is also in effect a cottage industry. A vibrant community of innovative small companies, each with a relatively short life-cycle, but with re-cycling of its engineers and business leaders, is actually the foundation of Silicon Valley.

If the TCD-UCD partnership is to succeed, I believe it should do so by creating many small innovative companies. I hope most of them don't last too long: a few years each, and certainly less than a decade each. Most of these companies should exit and be bought out, and then both the human capital and financial capital re-cycled into replacement new ventures. By re-cycling, competence, expertise, wisdom, capability, and wealth are all nurtured and grown. A few of these companies may perhaps emerge to become global champions, but fostering global champions should not in itself, in my view, be a primary national strategy. Rather global champions are a by-product of a successful innovation environment.

Its perhaps ironic that an Irish Green Party Minister is in Silicon Valley this week and currently positioning Ireland as the potential Silicon Valley of Europe: I wonder does he agree with me that re-cycling (not of materials, but of human and fiscal capital) is at the core of the Valley's success.

Technology advances, and so a company founded on one exciting new technical development has only a limited window in time to be successful: it - the people and the capital behind it - should then move on. A company which overgrows itself can find itself limited in its strategic options: too small to be a sustainable global top ten player, but too big to be easily acquired.

Stating that our national technology enterprise policy should be akin to a vibrant cottage industry is probably heresy to some! But I believe that it is precisely because of the large number of small, relatively short lived, companies in Silicon Valley that giants of the Valley like HP, Oracle, Google, eBay and Cisco have emerged. These larger companies have emerged for a number of reasons: there are bounteous estate of dynamic young companies to acquire; R&D can be augmented by acquisition; emerging markets can be pump-primed by dynamic young start ups; experienced human capital can be sourced who have lived through at least one successful business expansion; and seed and investment capital can demonstrably work.

One danger inherent in the TCD-UCD announcement is the public perception that innovation is primarily the outcome of University led research. Ordinary mere mortals - not the elite fourth level and PhD types - might not expected to produce new companies of value. There is a further danger that there may be a public perception that a major - no, the major - reason for tax payers funding the universities is precisely to create new companies and new employment.

On the contrary, I believe that in principal anyone can be innovative. In my view, the primary source for innovation is intelligent insight into a market opportunity. Thus innovation is primarily (not solely of course) led by market intelligence: a deep understanding of a market opportunity that in general leads to an evolution from where the market already is today, rather than a complete revolution. In general, revolutionary new ideas take considerable marketing investment and muscle to become successful; incremental step forwards from what the market already understands are in general easier to introduce and commercialise.

Being successful in the global marketplace requires a careful holistic orchestration of various activities: market and opportunity analysis; technology assembly and integration; field testing and early, reference, customers; go-to-market capability and channel reach; funding; and leadership. I refer to this orchestration as an "innovation score", in the same sense that a musical score synchronises concurrent orchestral activities into an overall harmonious effect.

The technology underpinning innovation need not always be developed in Ireland: innovation scoring requires technology assembly and integration, identifying and selecting the correct technologies, regardless of their global origin. Tax payer funded Irish based science may as a result not be exploited in Ireland: equally, successful young Irish companies should not limit their source of technology to Irish based science. Most of all, a successful innovation may simply bring together pieces of technology which already exist, but which have never been put together before in such an innovative way.

At a recent event in the Science Gallery, a composite map of the world was shown at night. It clearly shows the industrialised world against the darkness of the third world.

The presenters, the Lebone group (pronounced "le-bone-nay"), met as undergraduate engineers at Harvard University. They observed that the coupling of two existing technologies - microbial fuel cells and standard high efficient light emitting devices (LEDs) - could provide light in rural Africa. The same technology can also be used to re-charge mobile phones. Their product is used by simply inserting two wires into rotting compost or dung, and the microbes bio-electrochemically generate small amounts of direct current which is then used to power highly efficient LEDs, or to re-charge mobiles. The product has been field-tested in Tanzania over several months, and the project is now supported by the World Bank.

This example shows how an innovative, pragmatic solution was derived by understanding a market problem (off-the-grid power generation throughout much of the third world), identifying existing technologies (microbial fuel cells and new generation LEDs) invented and researched elsewhere, bringing these technologies together into a new product, field testing and then initiating a new business venture. The successful innovation score did not require extensive scientific research to be carried out by the innovators.

Technology can come from latent and unexploited intellectual property within major corporations. As just one example, Hewlett Packard has just closed their second global call for their Innovation Research Programme, in which they requested proposals from innovators outside of HP anywhere on the planet, to license specific intellectual property from HP in areas such as analytics, cloud computing, intelligent infrastructure, digital commercial print and so on. This enables HP to test new emerging technology markets via young dynamic partner companies.

In the current global economic climate, it is not unusual for major corporations to in effect out-source their R&D. Acquiring young companies who are each proving that a new innovation is successful in an early stage market, but which do not have the global channel reach, may be a less expensive way to enhance their product portfolio and innovate, than funding internal R&D and product teams. As a further consequence, internal R&D and product development teams have increasing difficulty getting internal budget, increasing the possibility of spin-outs from the corporation, and increasing the possibility of licensing intellectual property out of the corporation. HP has completed 116 acquisitions in its life time: it is now actively licensing intellectual property out of HP.

An insightful understanding of the current state of a market can come from emerging global industry standards, particularly when there is end user pull. IONA Technologies was successful precisely because we personally participated in such an initiative. For a time IONA was able finesse the global industry by using global end user feedback and experience of IONA products to improve these standards, creating global industry leadership and a "catch-up" game for other global vendors.

I've probably written enough in this blog article. In summary, I very much welcome the TCD-UCD link up, and fervently hope that it results in more commercial research being attracted. But I also fervently hope that we can create a small company culture, with reasonably frequent re-cycling of human and financial capital, and from which a small number of larger companies may eventually emerge. I also fervently hope that we can foster "innovation scores" in which anyone with insight, skill and sheer determination can build a great company, whether or not they happened to gain a PhD from UCD-TCD (or anywhere else).


Fionn Murtagh said...


I agree with you on many issues. However I do not agree in regard to your comments on national champions. We have to grow these as a matter of priority. They should be in key domains and they have to have a national platform with clear global ambitions. That does not necessarily mean starting from scratch. Cf. Nokia. I'll get back to a discussion of this topic of national champions shortly. The (fairly recent) Digital France strategy document is worthwhile reading in my view. Some notes from it follow below. What holds for France certainly holds for Ireland too.


France Numérique 2012, Plan de développement de l’économie numérique,

In France as in Europe generally there are no actors of significant size in the digital economy, with rare exceptions like SAP (in D), and Dassault Systèmes (in F). R&D is critical in the software sector. An actor of sufficient scale is taken as having a turnover greater than €500 million and an international presence. Having actors of sufficient scale is essential for the French ecosystem in order to drive activity around focused, convergent themes. Start-ups cannot easily locate the financing to get established on the global scale; they are bought up then by foreign-located companies, and thus break the connection – technology and jobs – with the (European) country of origin. Software companies must aim at the global market from the start. Growth is a function of internationalization. Therefore software companies must have potential clients in a range of countries, to gain international standing, from the word go.

The digital economy is the principal factor in gain of competitiveness in the developed economies. The digital economy represents now more than 25% of GDP growth. This will have increased to 30% within 5 years. France suffers from an overly weak contribution of ICT to growth in the areas of software, online services and computer fabrication. France really does not figure at all in these sectors on a world scale. In ICT, 6 out of the 25 largest US companies stared out after 1960; whereas only 1 out of the 25 largest European ICT companies did so.

chris horn said...

My point is that in silicon valley, in my view, global companies are a by product of a very healthy lively mix of small young dynamic companies. Small dynamic, relatively short lived, companies have so far been the key driver in the Valley.

Having national champions as the top enterprise development priority in Ireland, in my view, is misguided.

And in any case, if the Irish Government really were to focus on building national champions, then surely the first rationale thing it would do would be to procure from these companies! Largely, at the moment, the Irish Government, its agencies, and pretty much the entire tax payer funded public sector, do not do and has not done so.

I certainly agree that software companies in Ireland should focus from the start on the global market. However, as the software market has proven time and time again, building a global market does not always require building a (expensive) global presence.

Neil said...


There's great advice in there for start-ups and lots of encouragement for small companies setting up.

I agree with you that successful young Irish companies should not limit their source of technology to Irish based science. It's so easy to get work done outside Ireland now and it's essential for competitiveness to have some of the work done outside Ireland.


Allen said...

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