the idealog guide to r&d

The Idealog guide to R&D

AJ

Par

k 10

00

9

The writing is on the wall: we can’t sustain our Audi Q7s and jetski tastes on a budget of selling foreigners

stuff they can grow themselves. If we don’t expand our innovation economy, we may eventually not have

much of an economy left at all. The fix? Read on

R&D the Idealog guide to

� e Ministry of Science and Innovation (MSI) has a proud history of investing in innovative New Zealand businesses like Comvita to accelerate their success through research and development (R&D). If you want to be a global success story, MSI can support your business, whatever your size, using our world-class R&D networks and funding programmes.

Your success will also be ours.

0800 MSI GOVT [email protected] www.msi.govt.nz

The I

deal

og

guid

e to

R&

D

92 / IDEALOG.CO.NZ/BUSINESSPLAN

ContentsThe Idealog Guide to R&D93

New Zealand’s R&D

scorecard 94

100How to get the

cash for R&D

Get the cash for R&D

100

116How to do good R&D

106The R&D ecosystem

From ideas to IP

112

R&D conclusion

117


IDEALOG.CO.NZ/BUSINESSPLAN / 93

T his an issue of national importance. That’s no exaggeration. Because when we talk about the ‘development’ in research and development we are talking about how developed we are as a nation, and whether the way we

live has a hope of keeping up with the most developed nations of the future.

Make no mistake about it, the 21st century is not short of folks who can grow sheep and cows, dig holes or go fishing. Huge nations like Brazil, India and China are powering up gigantic primary sectors that make ours look like a child’s playset.

Scores of middleweight countries are flexing their newly developed economic muscles hoping to go toe to toe with us in any marketplace, any time, anywhere. We are a long way from most of the world’s shoppers and the opposition manufactures the vast majority of the goodies we spend our dollars on, so you could say they already have us over a barrel of shipping oil each way.

So the writing is on the wall: we just aren’t going to be able to keep buying our Audi Q7s and jetskis for much longer by selling foreigners stuff they can grow themselves, or by selling each other flat whites, boutique nik-naks or secondhand stuff on an eBay clone that only works here. If we don’t expand our innovation economy, pretty soon we won’t have much of an economy left at all.

Thankfully, we have a lot going for us. For example, as we shall see, a closer look at our world-famous dairy industry reveals it has survived and thrived not just because of our fabled supplies of clean water and fresh grass, but by pumping out a steady stream of fresh ideas.

Meanwhile, our national mania for tinkering in sheds is already migrating into some of the most complex R&D environments in the world. We now have an innovation infrastructure in place that is forging ever greater links between universities, Crown Research Institutes, government ministries and the best of the country’s business brains. And we have a business-orientated government that has recently opened up some new outlets for R&D funding.

Which leaves you, the bright spark who might just have some answers, or at least some of the right questions, to take Kiwi business to the next level.

“LIKE ACTUALLY ALMOST ALL GOVERNMENTS IN DEVELOPED COUNTRIES IN THE WORLD, R&D IS SEEN BY OURS AS THE KEY DIFFERENTIATOR THAT DEVELOPED COUNTRIES HAVE GOT ON THE STILL DEVELOPING COUNTRIES.” M U R R AY B A I N, C H I E F E X E C U T I V E O F T H E M I N I S T RY O F S C I E N C E A N D I N N O VAT I O N

The Idealog Guide to R&D

A N DY K E N W O R T H Y I S A F R E E L A N C E W R I T E R S P E C I A L I S I N G

I N B U S I N E S S I N N O VAT I O N A N D G L O B A L S U S TA I N A B I L I T Y. T H I S I S H I S T H I R D IDEALOG G U I D E .

A N DY K E N W O R T H Y.C O M

The I

deal

og

guid

e to

R&

D


TO KNOW WHERE YOU’RE GOING, YOU GOTTA KNOW WHERE YOU’RE AT

One of the things the world loves about us is our great sense of national pride. It has provided us with the kind of positive outlook that has kept us smiling through tough

pioneering times. But R&D is serious business, so let’s take a cold hard look at where we are at.

The Powering Innovation report, an independent report commissioned by the Ministry of Science and Innovation released in February, found that besides some stand-out players and some green shoots developing: “There is evidence that the New Zealand high value manufacturing and services sector is under-developed, and could contribute substantially more to the economy than it currently does, particularly through growth in high-productivity advanced technology industries.”

In other words (what I used to always get on my school reports) ‘could try harder’. But they get more specific:

“Notably, there is a relatively low level of investment in research and development by New Zealand business: 0.54 percent of gross domestic product in 2010, compared with the OECD average of approximately 1.5 percent.

“Similarly, there is a relatively low level of overall expenditure on R&D as a percentage of GDP. 1.3 percent in 2010, compared with the OECD average of 2.33 percent. These ratios are considerably less than those in other economies similar to that in New Zealand.”

In response, the report called for a range of measures to get things moving, some of which are now looking large in the light of day. Professor John Raine, head of school of Engineering and pro vice chancellor of Innovation and Enterprise at AUT, was one of the report’s authors. He has advised government and companies on how to stimulate high-quality R&D for at least the past decade, but ultimately he sees the challenge as something fundamental and grass roots.

“The issue is that we don’t have enough young people hanging on to maths and physics when they move on from Year 10 at school. So the demand for engineers way outstrips supply. For us to grow engineering as much as we need to we would need more kids going into engineering,” he says. “There is plenty of opportunity to promote the careers, but to grow the sector we need more kids choosing engineering.”

Fonterra is one of the major companies cited by many as a firm that does R&D well. And Mark Malone, general manager, innovation, agrees that creating an R&D mojo across New Zealand is crucial.

“The R&D and innovation that we do requires a knowledge-based society in which to operate,” he says. “This is a symbiotic relationship where both Fonterra and New Zealand as a whole benefit from the knowledge base that is developed.”

One of the key people whose desks the report landed on is Murray Bain, chief executive of the Ministry of Science and Innovation. He is realistic about our track record to date.

“One of the measures we are behind on is the number of engineers we produce from our universities and tertiary institutions,” he says. “Certainly the percentage of graduates in engineering is a lot lower than Scandinavia and Germany where there is a history of strong engineers, although I was told even Germany is short of 75,000 engineers at the moment, Scandinavia is short of engineers and New Zealand companies are struggling to get enough too. Those are the guys who often turn the science into

New Zealand’s R&D scorecard

The New Zealand high-value manufacturing and services sector is under-developed, and could contribute substantially more to the economy than it currently does



THE TIMES, THEY ARE A-CHANGIN’ Two major items from the Powering Innovation report’s shopping list are now coming off the slipway.

In November, Prime Minister John Key announced that an extra $120-$150 million is due to be pumped into the Crown Research Institute Industrial Research Limited, to transform it into an advanced technology institute that will serve as high-tech headquarters to support industrial innovation.

Meanwhile, the Ministry of Science and Innovation has only just got underway, but is due to be swallowed up and merged with the Ministry of Economic Development and the Department of Building and Housing and Department of Labour to form the new Ministry of Business, Innovation and Employment from July this year.

The National government’s economic tsar Steven Joyce will take the helm of this new mothership, with about 3,200 staff on deck. Mr Joyce has said the new ministry will ensure co-ordination, focus and the government commitment to

Percentage GDP as R&D Funding

economic growth and innovation.“A more efficient and effective ministry focused on lifting

overall productivity and supporting the growth of competitive businesses is a crucial element in creating more jobs and higher wages, and boosting our standard of living,” Joyce has said.

We shall have to wait and see, but already there is some disquiet about the consolidation.

Professor Shaun Hendy, who is president of the New Zealand Association of Scientists, said the merger could have major benefits on the economic development front, but may marginalise important environmental and health research that didn’t have an immediate economic outcome.

“We know that more scientific research is needed to grow industry, manufacturing and exports. But large components of the science system are concerned with the broader view, such as environmental and health science research, areas that do not often deliver an immediate payoff but which can be immensely valuable over longer time frames. Further change such as this is likely to add more uncertainty to funding.”

2010

Investment by NZ business

(private)

OECD AVERAGE NZ AVERAGE

1.5% 0.54%2010

OECD AVERAGE NZ AVERAGE

Government expenditure

on R&D

2.33% 1.3%

The I

deal

og

guid

e to

R&

D


AU

TR

ES

/24

8/I

DE

/R

a piece of machinery that works on the ground, so they are important.”

But his ministry was set up and funded in 2010 with the specific aim of delivering a step change to New Zealanders’ prosperity and wellbeing based on innovation, and he believes that is already beginning to take shape.

“What we are seeing is an increasing number of companies interested in doing R&D, the profile has increased,” he says. “We are seeing a lot more interest in R&D than we did historically. The level of business funding has been increased by government, and the global market situation is certainly putting pressure on companies to innovate to stay ahead of the game. A lot of industry groups like Business NZ as well as the regional economic development agencies, have been stepping up their activities and saying ‘this is important’.”

And looking around us at the sorts of ideas coming through, it is clear that Kiwis still have clever stuff up their sleeves and between their ears: the big challenge is getting the results into the world’s shops and businesses. Scale, as always, is a major barrier, but if New Zealand can create a world-beating rugby team by getting relatively few people trained up and working together properly, it should be possible to do that for research and development as well.

And it’s a virtuous cycle: we need to be world beaters to attract world-class talent to our shores so we can stay ahead in the years to come. Raine and Bain both told me that top-quality engineering staff for both academic and commercial research are difficult to come by at the moment in this country; we simply don’t pay enough and tend to try to make up the difference with an appealing lifestyle. This in turn means that even those engineers we are creating in our universities are liable to head off on the big OE and never return.

“There is world class R&D happening,” says Raine. “It’s just that, taken overall, there is not enough of it. It’s too confined to the larger companies or smaller companies that are almost all R&D, and likely to have been started by university graduates. I think it’s very clear from the OECD data that the level of investment in R&D is tied to growth in GDP per capita. Because the level of investment we have is less than you would want for a high-tech country, then the quality and growth of the high tech sector is likely to be less also.

“We had a lot of people come along to the review saying we think the real issue is that too many New Zealand companies don’t know what they don’t know, they are just bumbling along, with a kind of number eight fencing wire approach.”

So it’s time to get on it and find out how that’s done.

FROM AN ISLAND FAR, FAR AWAY R&D programmes are expensive, so to justify the investment

we usually need global market opportunities.

IT’S COMPLEXThe challenges of staying ahead in food technologies require

ever more sophisticated approaches to R&D. It is no longer sufficient to understand food formulations and applications at a macro level. We need to understand a raft of interactions at

the molecular level. That means adjusting our skill sets and our mind sets. It’s doable, but it takes time.

NEED THE INFORMATIONGetting quality customer/consumer information to help define

the targets for our R&D is always challenging. With clearly defined targets, it is amazing how quickly our R&D teams can find solutions to a problem or opportunity. In contrast, poorly

defined goals may produce a lot of fascinating work, but without a tangible outcome this almost inevitably

ends up as a frustrating exercise for all.

TIM THURLBY, FONTERRA PORTFOLIO MANAGER, LOOKS

AT THE MAIN BARRIERS TO R&D IN NEW ZEALAND’S ALL

IMPORTANT PRIMARY SECTOR

The University for the changing world

OUR ENGINEERS SEE ROBOTS AS A WAY OF UNDERSTANDING

THE HUMAN MIND. NOT TAKING OVER THE WORLD.

1982 was the year Star Wars: The Return of the Jedi went

into production. It was also the year Professor of Artificial

Intelligence, Albert Yeap, became obsessed with the mind.

Thirty years later, Professor Yeap and his team of

researchers at AUT are using robots, once reserved for

epic sci-fi’s, to push our understanding of how the mind

maps the spaces around us.

Professor Yeap’s army of ‘ALBOTS’ use sonar to navigate

through complex spaces. By analyzing the data collected

from these experiments, Professor Yeap is discovering

original insights into how the mind makes the connections

between the physical and the mental.

Using robots in this way is the progressive thinking you’ll

find at AUT and an example of how the brightest minds in

New Zealand are collaborating to push our understanding

of the world forward.

To find out more about research that matters and how our researchers work with industry call 0800 AUT RESEARCH,

email [email protected], or visit aut.ac.nz/research

AU

TR

ES

/24

8/I

DE

/R

C A S E S T U D Y

New Zealand is bursting with clever people coming up with ground-breaking ideas and world-leading innovations. But

good ideas can come to nothing without the research and development needed to get them not only off the ground, but into the market.

That’s where the Ministry of Science and Innovation (MSI) is playing a crucial role in driving New Zealand’s science and innovation sector. Over the past decade, MSI (through the TechNZ programme) has invested more than $500 million into thousands of New Zealand businesses to de-risk R&D activity. MSI has also provided additional value by matching the businesses with global experts, facilitating university interns, promoting best practice in terms of developing IP, and introducing them to potential collaborators in the science and innovation eco-system.

Many of the companies supported by MSI have gone on to be successful and sustainable – employing more staff, growing their revenues and exporting their products and services around the world. One such company is Auckland-based Compac Sorting Equipment. Founded in 1984 by Hamish Kennedy, an electrical engineer who grew up on a kiwifruit orchard, Compac develops and manufactures fruit and vegetable sorting and packing technology, machinery and software solutions that are now sold around the world.

The company exported its first machine, an eight-lane unit for France’s largest kiwifruit packer, in 1991 and now Compac equipment and technology is in use in more than 20 countries throughout the North and South America, Asia and Europe.

Compac R&D manager Nigel Beach has been with the company since the early days and has

All sorted

seen Compac grow from a small business to a global group with more than 300 staff. He believes the company’s success can in part be attributed to its ability to develop and commercialise technology.

“Compac is good at taking technology from the lab and commercialising it, making it robust and reliable in the field. This is quite difficult and I think we do it well. We also focus on hiring really good people,” he says.

Another important driving force is funding for R&D. Ongoing support from MSI has enabled Compac to develop products that have helped it expand internationally, increase its profits to enable further R&D, and kept it ahead of the competition.

Since 2009, Compac has received more than $5.7 million in funding from MSI, including a $3.8 million Technology Development Grant approved in July 2010. Some of this funding was put towards developing software that has led to a multimillion-dollar deal with the world’s largest grower, packer and marketer of citrus fruit, Paramount Citrus. The deal will see Compac supply sorting equipment for Paramount Citrus’ new 57,000m² packing plant in Delano, California.

“We’re building the largest fruit-sorting machine in the world that we know of, for Paramount,” says Beach. “It’s the size of a rugby field and will sort 20 million mandarins a day. It can sort fruit based on their size, colour, shape and surface blemishes.”

The equipment is being manufactured in Compac’s factory in Auckland’s Onehunga and its reassembly and installation at Paramount’s California packing plant should be complete by October this year.

Beach says MSI has been an extremely valuable partner, particularly when it came

to securing an agreement such as the one with Paramount Citrus.

“The sale was based on Compac having the best performing technology,” he says. “In an industry like ours, we need to invest a significant amount of our turnover into new product development. The funding partnership with MSI has helped us accelerate our product development and enter new segments faster than we would otherwise have done. It’s also reduced much of the uncertainty we faced by helping to offset some of the significant costs associated with the R&D for key projects such as the Paramount Citrus solution. We’ve been able to take on additional staff and scale up the organisation to cope with this project.”

Ongoing R&D is extremely important in the fruit sorting and packing industry. Compac invests about 5 percent of its annual turnover in R&D and looks to government funding and grants to supplement that. But it’s an investment that’s seeing excellent returns.

“It’s a technology race in many areas,” says Beach. “If you cannot sort the fruit effectively by automation and save as much on labour as the competitors’ machines, then you lose sales. We’re always trying to push the envelope with automation, especially around inspection, with our machine vision and internal inspection systems.

“We’ve had 16 percent compound annual growth over the past 10 years, and MSI funding for R&D has been a significant reason behind achieving this growth.”

Thanks to its commitment to research and development, Compac Sorting Equipment has grown from a single sorting machine made for the family orchard into a global leader in fruit and vegetable sorting and grading technology


I D E A L O G I N A S S O C I AT I O N W I T H M S I

IN BRIEFThe Ministry of Science and Innovation

(MSI) has provided $5.7 million in funding to Compac Sorting Equipment,

including a $3.8 million Technology Development Grant approved in July 2010. This vital support has enabled the company to become one of the world’s leading providers of sizing, sorting and grading technology for

the fruit and vegetable market.

CONTACTFor more details, go to

www.msi.govt.nz

TE

XT: D

EIR

DR

E C

OLE

MA

N P

HO

TOG

RA

PH

Y: J

ESS

IE C

ASS

ON

Compac R&D manager Nigel

Beach and MSI deputy chief

executive, business, innovation

and investment Brett O’Riley.


The I

deal

og

guid

e to

R&

D


BLUE SKIES RESEARCH “R&D does need some tangible output. This may not always be easy to define, but just as artists will struggle with an ‘art for art’s sake’ argument for funding, so ‘science for science’s sake’ will always struggle for funding. In the Victorian era a lot of science was funded by wealthy patrons who could see the inherent value of knowledge creation. We have modern day examples of this, such as the Bill & Melinda Gates Foundation in the US, but fundamental and ‘blue skies’ research is an area just like the arts where continued government support is vital.”

Tim Thurlby, portfolio manager, Fonterra

SELLING A PRODUCT IS HARD, SELLING AN IDEA IS HARDER Selling just the merest possibility that a good idea might emerge is the hardest task of all. So get ready to explain yourself. There are plenty of sources of funding out there, but first you have to prove to them that you have what it takes to come up with something good, and even then you will probably have to put a lot of your own money on the line to keep their cash company.

Murray Bain has simple advice for anyone chasing the R&D dollars dished out by his team and others. “I would say the first thing they have to have is an aspirational objective – they have to want to grow significantly, not just do stuff for the sake of doing stuff. They have to have an idea of the market need they want to meet, and globally what that market needs,” he says. “And they really have to have a knowledge of the technical application and the risks around that.”

The MSI also often makes it a requirement that the company has a team behind it that knows its assets from its liabilities, at the very least.

Professor John Raine also warns that just being good might not be good enough. “Per research dollar invested, the success rate is right up there with the best, but we are working from quite a low and sparse base of investment.”

How to get the cash for R&D

This government-funded initiative provides about $5 million a year to New Zealand-based businesses by 14 accredited R&D partners, including IRL, AUT and many of the other top academic and commercial research establishments. The vouchers cover half the cost of the project work you do with the accredited partner, the rest you have to find yourself.

It is aimed at businesses requiring R&D expertise in high-value manufacturing and services that need help to get external experts into the mix. It is particularly aimed at R&D technologies in novel materials, health information, communications and agriculture.

The R&D project can be product or process design, trial production, product testing. It can’t be used for IP licensing, economic appraisals, business planning, website development or statutory testing.

COLLECT THE VOUCHERS –

TECHNOLOGY TRANSFER VOUCHERS



IMAG

ES S

UPPL

IED

COUR

TESY

OF

FONT

ERRA

The I

deal

og

guid

e to

R&

D


BELIEVE IN ANGELS“We are beginning to get New Zealanders who have started businesses, sold them off, have a bit of money in their pockets and are putting back into the system some of their expertise, knowledge and resources about how to do it. This growing angel network, covers every major centre.” Connect with them

by going to newzealandinvestmentnetwork.co.nz and angelassociation.co.nz.M U R R AY B A I N, C H I E F E X E C U T I V E O F T H E M I N I S T RY O F S C I E N C E A N D I N N O VAT I O N

DON’T STOP ASKING QUESTIONS Great R&D is all about asking the right questions, so it’s not surprising that the folks who help fund R&D will have also have plenty of their own. If you can’t answer them, and answer them well, you won’t get the cash.

“We always ask ourselves, why should we use taxpayers money to fund this company, what benefit is New Zealand going to get out of it?” Bain says. “For the big guys, we are really looking for the spill-overs. With the smaller companies we are looking to change the risk/reward ratio – if by funding them we can reduce the risk to the point where they can do things better and faster than they otherwise would with their own resources.

“But if they have their own resources, that’s much more preferable, because then they have more skin in the game and that is what drives them to succeed. We try to be careful to ensure they are really stretching.”

The government’s Smart Ideas investment mechanism, which has a share of almost $60 million to hand out each year, has a load more questions they will be asking before parting with any funds, so it’s worth asking them at the outset of your project.

contribution it will make?

the project?

be achieved?

research implemented through multiple channels?

technology platform that can be applied to the benefit of the business, the sector and/or the economy?

THE MONEY FROM THE MINISTRYT O G I V E Y O U A N I D E A O F T H E S U P P O R T AVA I L A B L E , H E R E ’S W H AT M S I I S S P L A S H I N G T H E C A S H O N T H I S Y E A R .

BIOLOGICAL INDUSTRIES RESEARCHFocused on the sustainable productivity growth of New Zealand’s primary industries, and the development of premium food and industrial biological products and technologies responsive to global consumer preferences.

ENERGY AND MINERALS RESEARCHTo increase the contribution of energy and minerals to New Zealand’s economic growth, enhance energy security and assist New Zealand to meet future energy and mineral needs in efficient, affordable and environmentally responsible ways.

ENVIRONMENTAL RESEARCHTo fund environmental research that underpins the management, use protection and enhancement of species, natural ecosystems, land, marine and freshwater resources, climate and atmosphere within New Zealand and Antarctica.

HAZARDS AND INFRASTRUCTURE RESEARCHTo increase New Zealand’s resilience to hazards, support sustainable urban development, building and infrastructure, and help communities to manage growth and change, mitigate risks and maximise infrastructure efficiency.

HEALTH AND SOCIETY RESEARCHThe health component of the appropriation (which is the majority) goes to the Health Research Council and is governed by separate accountability documents. This addresses only the society research component of the appropriation which is managed by the MSI. The objective is to increase understanding of the social and economic factors contributing to improved health and social wellbeing of New Zealanders.

HIGH-VALUE MANUFACTURING AND SERVICES RESEARCHTo diversify New Zealand’s economy by undertaking research, science and technology that will enable the development of new technologies, novel materials and new products, processes and services resulting in the growth of existing, new and emerging industries.

Signing up with a business incubators is a great way to get hold of R&D funding. Here’s a list of those funded by New Zealand Trade and Enterprise.

Centre, Auckland www.bic.aut.ac.nz

North Shore www.ecentre.org.nz

www.theicehouse.co.nz

www.thebcc.co.nz

www.creativehq.co.nz

Incubator, Christchurch www.cii.co.nz

www.upstart.org.nz

INCUBATE TO

ACCUMULATE

Want to grow your business?

Working in partnership with business

Discover the benefits of R&D, how to access relevant funding, and ways you can leverage this to unlock the potential of your high-value manufacturing business. IRL has a proven track record of successful R&D using advanced science and technology.

C A S E S T U D Y

Pavlova is an iconic Kiwi – or should that be Australian? – dessert. While the jury is still out on its origins, this meringue-based treat is certainly

loved on both sides of the ditch. We all know the recipe: separate the egg whites from the yolks, beat them, add in the sugar, beat them some more and then spread the mixture to create the meringue base.

That’s fine if you’re just making one but when you have hundreds to produce, it gets labour-intensive – something Trish Gibson and her staff at Hastings boutique dessert company Country Culinaire know well. Since 2001, when the company switched from making gourmet meatballs for the Hastings Farmers Market and diversified into desserts, they’ve been handmaking their rolled pavlovas.

Soon delis in Auckland were asking to be supplied and the production of Country Culinaire’s pavlova roulades and sticky date puddings stepped up a notch. To keep up with demand, the operation was moved from the kitchen on Gibson’s farm to a more workable factory and purchased larger freezers.

2011 was a year of exciting growth, with the first shipment of Country Culinaire desserts exported to Melbourne. But in order to fulfil her dream of supplying to

What began as a labour of love has grown into a trans-Tasman pavlova exporting business, thanks to some help from Industrial Research Limited

Just dessertsthe Australian market, Gibson knew the production process needed to become more efficient and cost-effective.

She sought help from an engineering company, but they were unable to satisfy her requirements so, on the advice of her son, Gibson approached Industrial Research Ltd (IRL) for assistance. IRL is a Crown Research Institute that helps businesses succeed in the marketplace by applying the latest scientific and engineering know-how and research.

Tony Cooper from IRL’s Industry Engagement Group connected Gibson with IRL’s Engineering Innovation team who carried out an initial scoping study of Country Culinaire’s processes.

“Our engineers determined potential productivity improvements that would reduce bottlenecks and cut operating costs,” says Cooper. “One of the key improvements lay in the spreading the meringue for the pavlovas. This was being done manually and required automating.”

However, the cost of these challenging automation solutions came to around $80,000. It was a significant sum for a small business, but a necessary expense if Gibson wanted to take the next step to grow and develop an export market for her products.

“Improving production efficiency through automating in this case was not straightforward,” says Cooper. “An engineering company had already built a spreading base machine, but the meringue base wasn’t consistent. This meant additional labour was required, defeating the primary objective of the machine to save labour. The challenge was a stretch and IRL’s expert capability was required.

“Every dollar counted, so we supported Country Culinaire with its application for a Technology Transfer Voucher through the Ministry of Science and Innovation. The Voucher was approved in late 2011 and was the first awarded to a Hawke’s Bay company. It provided a 50 percent subsidy for the project, reducing the cost to a much more manageable $40,000, without which we would not have been able to move forward.”

Unsurprisingly, Trish Gibson is delighted with the outcome.

“I couldn’t have achieved what I achieved without Tony’s help,” she says. “I run a small manufacturing business, and there just aren’t enough hours in the day for everything that has to be achieved, let alone applying for grants too. Tony was just brilliant – I just can’t speak highly enough of the work he did for me – and he nicely kept pushing me along. He helped me


I D E A L O G I N A S S O C I AT I O N W I T H I R L

IN BRIEFIndustrial Research Ltd has worked

with boutique dessert manufacturer Country Culinaire to obtain

Technology Transfer Voucher funding and develop automated systems to

improve the company’s manufacturing processes. As a result, Country

Culinaire is now exporting its pavlovas to Australia.

CONTACTFor more details contact Industrial Research Ltd

0508 225 5475 www.irl.cri.nz

so much with all the paperwork involved in applying for the Technology Transfer Voucher, and with the financial side of my business.”

Several of IRL’s specialist automation engineers, (who have experience in automation for New Zealand’s bovine and aquaculture industries) are developing the designs that will help to improve Country Culinaire’s manufacturing processes, including an egg-white separation process.

“Our job is to solve these problems for Trish,” says Cooper. “We don’t compete with quality engineering companies around New Zealand but we come with some pretty substantial brainpower and ideas and solutions that are a stretch for most engineering business, and we’re putting this to good use for Trish.”

Having just been granted a licence to export to Australia, Gibson already has orders from a specialist supermarket chain in Melbourne and is negotiating to supply pavlovas to other outlets in Sydney and Canberra.

“I’m hoping to improve my productivity

and reduce wastage considerably while maintaining staff numbers to cut my costs and be competitive in the export market,” she says. “When the meringue-spreading automation comes on line in October, that will also help increase our output enormously, as we need to grow our volume too.”

Not content to stop there, Country Culinaire is now also producing its own gourmet ice-cream made using the leftover egg yolks from its pavlova production. Packaged in unique roll tubes, the ice-cream is designed to be sliced into rounds for serving. In addition to exotic flavours such as Orange and Cointreau, Liquorice and Black, Tropical Fruit Salad and Chocolate and Chilli, the company is now tailor-making flavours for restaurant menus around the country.

TE

XT: D

EIR

DR

E C

OLE

MA

N

Trish Gibson is getting on with the business of selling pavlovas to Australia.


The I

deal

og

guid

e to

R&

D


The innovation ecosystem is often seen narrowly as a ‘pipeline’ or ‘food chain’ – in other words, a linear commercialisation model that goes from idea to full market establishment with stages in research,

proof of principle development, prototype, product beta testing in trial markets and market launch. This scenario may be true for ‘technology push’ projects that emerge from publicly funded research organisations, but innovation typically paints a much more complex picture. It commonly begins not with a discovery but with the identification of a market need that triggers industry-led innovation, which represents the large bulk of science and technology innovation in New Zealand.

Talking about an ‘innovation ecosystem’ would be unbearably pretentious if it weren’t an accurate analogy of the way things actually work, or at least should work, out in the real world. Ideas don’t just appear at one end of a conveyer belt and get passed on through various agencies to the other end. They ping about all over the place, and are only very rarely taken from conception to commercialisation isolated inside a single organisation, let alone a single individual.

An idea might first appear in somebody’s PhD thesis, then get a bit of government funding to develop, then get transferred to a commercial firm, which passes it back to a Crown Research Institute to take it to the next level, and so on. So the way that all the organisations interact as

they touch on all the R&D going on in the country is vital to the success of the ideas.

These days universities particularly are increasingly open to commercial interactions, where serious commercial research goes on hand in hand with the process of hand-rearing the next generation of idea-makers.

“In most of the schools that have a professional practice element to them, you’ve got research that is linked quite strongly to the profession, and work that is orientated towards more fundamentally curiosity-driven or creative work,” Professor John Raine says.

He is able to point to several hundred links with industry from his department alone, ranging from academics doubling up as commercial consultants to full joint ventures. That said, while some of them are backed by government funding or commercially sponsored, the research funding the university gets for its trouble remains quite modest.

“The research links to industry tend to be on long lead technological or product development,” Raine says. “The short, sharp problem solving, we don’t do a lot of that, except limited staff personal consultancy, but there is an opportunity to do a lot more.

“I think overall the universities are reasonably permeable up to a point, but the number of staff engaged in this sort of thing tends to be a small proportion of the total, because of the internal drivers on staff performance and promotion. If we had a more eclectic approach to that there might be more staff and knowledge mobility between the universities and commercial organisations. We could do a lot more of that for the economic good of the institutions and the country.”

Raine says that fostering close working relationships with business is part of his organisation’s DNA. Joint working is also at the heart of the ethos of Crown Research Institutes such as Industrial Research Limited.

Richard Templer, general manager advanced manufacturing technologies at IRL says: “IRL generates a significant amount of intellectual property every year and the vast majority is licensed out to commercial firms. We work in partnership with commercial firms and we are looking for solutions they can use.

The R&D ecosystem

Ideas don’t just appear at one end of a conveyer belt and get passed on through

various agencies to the other end. They ping about all over the place, and are rarely taken

from conception to commercialisation inside a single organisation



IMAG

ES S

UPPL

IED

COUR

TESY

OF

FONT

ERRA

IMAG

ES S

UPPL

IED

COUR

TESY

OF

FONT

ERRA

The I

deal

og

guid

e to

R&

D


n

The big institutions in New Zealand R&D

Universities

Crown Research Institutes

and Research (ESR)

Limited (IRL)

Water and Atmospheric Research (NIWA)

HELP IS ONLY A PHONE

CALL AWAY

“Quite often we are working with firms that have had a bright idea and need us to do the research to translate that idea into a proof of concept that they can manufacture. For example, we are working with Klein Medical. They had some great ideas, they needed us to do

the research to prove those ideas and their application, which is a step to getting them to a product that they can not only manufacture and produce but that has good science behind it so they can take it to the marketplace.”

Murray Bain points to other countries as a model of how these knock-on effects can work. “Somewhere like Sweden has 20-30 multinationals based there. That has an effect. Partly because of their expectations in terms of their suppliers, partly in people leaving those companies to set up themselves, and partly in the sheer dollars they can throw at R&D. And there is increased interest from students taking those sorts of subjects at university: they can see there is job prospects. So you get a range of things around the large companies that we are short of.

“The trick for New Zealand is to capture the companies and figure out ways to generate more around them, to build clusters around them. Weta has worked with Victoria University to establish a graduate programme in creative IT. Their experienced staff lecture on that programme, and that supplies a new source of talent for Weta and people who can start their own companies with the expertise they have. So you can start developing more companies around your big guys.

“What we are trying to do is think about the number of transactions that are going on between these different organisations – making the early stage startups more visible to the investors and companies that are looking for new ideas and bringing more international investors.

“If there’s more stuff going on, and the ecosystem gets more active, then the players in it will begin to do their own thing. This is not something government controls: we can push and nudge and incentivise, and in some areas fund. But it’s in the private sector, it’s transactions between the ideas and those that can take them to market that really matter. And it’s our job to support that and make it happen faster.”

Weta has worked with Victoria University to establish a graduate programme in creative IT. Their experienced staff lecture on that programme, and that supplies a new source of talent for Weta and people who can start their own companies with their expertise

Full details, our current Disclosure Statement and Qualifying Financial Entity Disclosure Statement may be obtained from any BNZ store or Partners Centre, or viewed on our website bnz.co.nz. BNZ terms and conditions, fees and charges apply. Correspondent bank commissions, fees and charges may also apply. You must be registered for Internet Banking for Business and opt into international payments in Internet Banking for Business.

0800 273 916 bnz.co.nz/internationalpayments

Secure a live exchange rate with BNZ’s International Payments online. It’s convenient, it’s cost-eff ective, and it provides your supplier with an automatic email advising them your payment is on its way.

Contact us today and let’s get you set up for business.

Need to pay Chaoxiang in Beijing? Do it online with live exchange rates.

siness builds Community builds Family builds Community builds Business builds Community b

uild

s Fa

mily

bui

ldsCommunity builds Business builds Community builds Family builds Community builds Business builds

C A S E S T U D Y

Q What are the key ways in which a firm like yours can add value to the R&D process?

A We can share our experience in terms of working with clients at all stages of the R&D lifecycle. Many of our staff have PhDs and/or have worked in research-intensive companies, CRIs or universities. We’ve been involved in research ourselves. At the outset we can offer suggestions on how to structure a research project, including advising on a range of formal agreements including non-disclosure, material transfer, collaborative research and joint ventures. We can give guidance about when researchers should be considering their IP strategy in terms of patents, trade secrets or some form of more open collaboration. We can give our views on what might be protectable, while always focusing on what the commercial outcomes of the research are hoped to be.

For example, a client came to us with a view to manufacturing and selling a diagnostic test kit. We determined that the real IP lay in the test rather than the physical kit itself and we knew that the physical kits are heavily patented. We suggested the client look at licensing the test to a kit manufacturer and leaving the manufacturer to deal with infringement risk around the physical kit. This altered the research path for the client but helped them avoid infringement problems down the track.

Q When assessing a client’s strength in R&D, what key components are you looking for?

A Clients that are strong in R&D typically have motivated and skilled research staff who follow clear processes for conducting their research. The most successful organisations have a clear process they follow which reduces the likelihood of projects heading in directions that were not

Upsize your R&DIntellectual property specialist A J Park acts for more than a third of New Zealand’s top 100 companies and almost half of global Fortune 500 companies. As one of the experts contributing to this Guide to R&D, commercial partner Mark Hargreaves gives his advice on how to get the most out of R&D-generated IP

originally intended. These processes include research committees as well as decision and review points along the way. Often the most successful research organisations are successful because of the decisions not to proceed further with particular research projects and instead focusing more resource on projects that are likely to deliver results.

Q What are some warning signs that R&D may not be happening effectively?

A Companies going to market with products or services that aren’t in demand. In other words, undertaking research that is not aligned with the company’s overall strategy and that isn’t closely tied to the market the company is operating in.

Q What are some indicators for large companies that they should consider outsourcing their R&D?

A Smaller, more nimble players might be moving into areas traditionally dominated by the larger company. This can signal a need to introduce fresh ideas. Invention disclosures might decline which can also indicate the same thing. The companies might find they are simply better at marketing, supply chain and distribution than at putting in place processes and disciplines needed to do great research as well.

Q How does a company ensure it owns the IP its R&D has generated?

A You should not automatically assume that your company owns all IP generated by employees, third party contractors or consultants. It can be difficult to separate your company’s confidential know-how from an employee’s general skill and knowledge. Also, a developer or designer who creates a product or develops

an idea may own the IP even though you have paid them for their time. And in some cases an employee will be the first owner of the IP. Your company’s agreements with its employees, consultants and contractors should be clear on who owns the IP generated by them. These agreements should also require the disclosure of all inventive ideas and the assignment all IP rights to the company.

Q How best can companies keep track of what they have in terms of IP?

A Carry out an annual IP audit. This may cover brands, patents, trade secrets, copyright, and contracts including licences, business information such as customer and marketing lists, and financial information. This also helps the asset valuation process.

CONTACT

Mark Hargreaves is a partner with A J Park Law and A J Park Patent

Attorneys in Wellington.

For more information go to


I D E A L O G I N A S S O C I AT I O N W I T H A J PA R K

Q&

A B

Y A

ND

Y K

EN

WO

RTH

Y

WHO SHOULD BE RESPONSIBLE FOR CAPTURING THE IP?Your IP policy should identify the person or team that:

decisions

HOW TO PROTECT YOUR R&D-GENERATED IPHere are some of the tools top companies use to

WHEN SHOULD R&D TEAMS THINK ABOUT GETTING SPECIALIST IP HELP?

approach IP specialists?

and freedom to operate


The I

deal

og

guid

e to

R&

D


Everybody thinks they do R&D, even if they just ask their mates down the pub if something sounds like a good idea. But for R&D to be effective it must be systematic, consistent and comprehensively monitored. Like

everything else in a business on the hunt for success, it is best left to the most talented professionals.

Keep in mind that it’s never a single linear process, but rather cyclical and constant. It’s not a case of: research a product, then develop it a bit, then stick it on the shelves. It’s more like: do some initial research, develop it a bit to prove the concept, then do some more research on what’s out there and what’s possible, develop it some more, find a particular problem, devote some specific research to that, and on and on, ideally for multiple products at once.

It doesn’t stop when you start selling either. If consumer feedback, distributors or manufacturers uncover issues, whether straight away or as you increase scale, you’ll need more R&D to solve them. And if your product is a world beater, you can bet somebody will be copying it, or the public are hungry for the next big thing, so you will need more research and development to stay ahead.

Richard Templer stresses the importance of focus: “The key thing is a clear understanding of the right problem or opportunity you are working on. You have to be clear on what problem you are working to solve. Sometimes it’s not obvious. Somebody might be thinking, ‘How can I make this product more efficiently?’ when possibly they should be thinking: ‘Where is the market going in the future?’ and ‘Do I need to move into an entirely different market?’”

Professor John Raine says the process is often an “iterative” one – characterised by or involving repetition, recurrence, reiteration, or repetitiousness.

While many companies use a stage-gate process or similar to put each idea through agreed review points at which bad ideas will be binned if they don’t meet a specific set of criteria, most of the big players have customised this to some extent to meet their needs.

TelstraClear chief technologist William Lee says the company has created an internal process to manage and provide governance for projects: “Like stage-gate it’s a formal structured process to take a concept from an idea, through conceptual planning, business case and into development and finally production. Gates with very clear pass/fail requirements ensure that the phases are well-governed and that projects are well-managed through the development process to production.”

Another tool is ‘future casting’ – imagining the future you want to see once the project is completed and then charting the various steps back in time that will allow you to get there. Whatever tools you use, these days you have to have one eye down the microscope to get the detail right, and the other looking out at the world, making sure the whole commercialisation package is shaping up.

“These days we have to integrate our thinking much more,” says Raine. “You have to try to see things as an integrated proposition as you move into commercialisation.”

Templer adds: “The long-term frameworks around R&D are changing in that people are no longer looking at R&D as an activity done in isolation but something that is done in a collaborative network.”

Fonterra general manager, innovation, Mark Malone believes the days of doing research contained within one department are long gone: “Multidisciplinary teams are the key to successful innovation. By its very nature, taking new ideas to market requires multidisciplinary teams. It also requires quality project management to co-ordinate the multiple disciplines and work streams involved.

“New ideas can have multiple origins. They can often be technology driven, arising from ideas within the R&D community, or they can come from our customers, or work that we do on market and consumer insights. Traditionally, the majority of ideas have originated from a technology push, but as an organisation we are placing greater emphasis on market and consumer insights to shape our innovation portfolio instead of being led by what is technically possible.”

Amateur hour is over: How to do good R&D



In an economic climate as turbulent as the current one, there is a temptation to go directly for the gold on every occasion. The argument runs that we simply don’t have time for namby-pamby blue skies thinking: everything has to have an obvious dollar at the end of it.

Our experts counsel otherwise. Raine says: “I think there’s still very fundamental research

going on which is purely curiosity-driven. You need to have that, because you don’t know what you are going to find and it could be useful.” Although he accepts that “the awareness of the need to get a socio-economic outcome from research is growing and you see the focus on the commercial output of research coming in earlier in that blue-skies-to full-commercialisation process than you might have done 20 years ago.”

Templer says: “Applied research is good for enhancing and helping existing industry, but it is the blue skies research that creates the new industries.”

Thurlby says they strike the blue sky/fast results balance by a mixture of conscious resource allocation and the firm’s version of the stage-gate process.

“At the portfolio level we allocate a certain percentage of our resources to new product development, which has defined commercial targets. We also allocate a percentage to capability enabling or new technology development projects. This latter group of projects contains research that could be game-changing but also carries a lot of risk.”

Raine spends much of his working life with potential R&D people. He tells us what it takes.

“I think you’ve got to have a passion for finding out something new or developing something new. At the extreme scientific end you will find people who are just endlessly absorbed with finding something new, your archetypal boffin characters. But when you move into the applied research you get people who really just like the development stage. I think you need a good basic education, discipline, a willingness to think outside the square, persistence, endurance and curiosity. That element of creativeness and inventiveness is important, but there are people who are useful to the team because they will just beaver away.”

But for all the qualities of the born engineer, they can, and should, be trained.

Raine says: “Today most people would fail as engineers without a degree, as they wouldn’t have the tools. Through education you can turn even indifferent students out as proficient professional engineers. But there are those who have a highly inventive, intuitive engineering capability. That’s why you will find from time to time successes with people who are entirely self-taught.”

The perils of lab feverGreat R&D does not necessarily a great business make. While some people can fit a business suit and a lab coat with equal aplomb, most can’t, and not realising you are one of those best left in the shed can be fatal for your entrepreneurial dreams. If you are addicted to testing, retesting and tweaking your product when you should be moving on to others or at least getting this one out into the world at large, seek professional help. IRL has 330 staff in the high-value manufacturing sector and the best part of 200 PhDs at work. They just might be able to help.

LET THE PUNTERS DO IT: R&D IN THE AGE OF SOCIAL MEDIAThe social media sector is still a bit like the Wild West frontier, with plenty of hustlers making money more on the hype and mythology than the reality. But like the Wild West, there is real gold in them there hills. The trick is to tap into it in an effective way, to answer real questions about your business and effectively get some free consumer research, and even development.

There’s no shortage of material to choose from, as any travelling web-optimising salesman will tell you. Clay Shirky, US writer, new media expert and author of Here Comes Everybody: The Power of Organizing Without Organizations says the same thing. He describes online blogging, conversations and socialising as a reflection of the ‘cognitive surplus’ left over after our daily work. This used to be taken up with face-to-face conversation, then reading, radio and television. The process has now become more public and more active, with consumers co-creating the content.

This can provide priceless information for companies, well beyond just Facebook and Google on what people like, don’t like, and much, much more. How do they use or even abuse your products and services? What do they recommend to their friends? How do they like to receive them and interact with the companies?

Get this right, and you will have access to consumers who will use, abuse and develop your product in all sorts of exciting and potentially lucrative directions. You will also know real quick if your previously popular product just cleared the consumer dance floor, or is making them scream for more. This more open philosophy and approach can even lead to a more open process of design, that in turn opens up the potential for a wider audience for your wares.

GREAT R&D STAFF –

NATURE VS NUTURE

GOODBYE, BLUE SKY?

C A S E S T U D Y

PH

OTO

GR

AP

HY:

RO

BIN

HO

DG

KIN

SON

. TE

XT: D

EIR

DR

E C

OLE

MA

N

Andrew Lowe of Pulsecor (left) has formed a strong commercial relationship with AUT University’s Professor Ahmed Al-Jumaily.


I D E A L O G I N A S S O C I AT I O N W I T H A U T

Far from merely being a place of learning and theoretical research, AUT University is directly contributing to the success of

New Zealand businesses and our country’s economic development through commercial research partnerships.

AUT University provides valuable research and development services to its clients through the practice-based researchers in its schools and research institutes, which range in focus from biotechnology and artificial intelligence through to tourism and sports performance.

Among them, the Institute of Biomedical Technologies (IBTec) is a multi-disciplinary research institute that combines the resources of the faculties of Design and Creative Technologies, and Health and Environmental Sciences as well as the School of Engineering. IBTec also collaborates with other universities as well as hospitals and medical industries, and has conducted research for more than 20 different companies.

IBTec’s work for local companies has particularly focused on the area of biomedical devices. One such collaboration has been with Pulsecor Ltd, a New Zealand medical device technology company that’s been researching and developing the next generation in non-invasive cardiovascular assessment technology.

Pulsecor has developed a device to measure arterial stiffness. Previously this could only be measured through surgery, but the Pulsecor device makes it as simple to assess as a blood pressure reading, says director and chief technology officer Andrew Lowe.

“Our vision is to see this technology wherever you find blood pressure equipment – the hospital, operating theatre or even in your home,” he says. “The idea is that we can widely spread technology for measuring arterial stiffness and manage cardiovascular risk much better than it is today.”

of the development advisory board I now have some input into the direction of the IBTec group alongside other industry people.

“My involvement with student research has fed into what’s happening at Pulsecor, and has been great from a technology perspective,” he says.

“Working and collaborating with AUT University has definitely been very valuable in terms of building our fundamental understandings and looking at research questions. It would have been much harder to achieve what we have without AUT’s input. The resource IBTec has been able to bring to bear would’ve been much more difficult for a small company like us to obtain.”

Vital scienceThe technology was invented by New

Zealand anaesthetist Nigel Sharrock, and its development has been greatly assisted through a collaboration with IBTec and its director, Professor Ahmed Al-Jumaily, over the past six years. Professor Al-Jumaily and his team have been working on cheaper, easier, less invasive methods for screening and treating a number of common illnesses, and Pulsecor quickly recognised the outstanding expertise IBTec had in their area.

“Professor Al-Jumaily had a similar focus to what we were doing with Pulsecor and we were both keen to get some projects off the ground,” says Lowe. “Pulsecor had the mathematical knowledge and we were already making progress developing the sensing side of our device, but we needed a fundamental understanding of the physiology in order to make the most of what we were doing.”

Through its relationship with AUT, Pulsecor successfully applied for government funding for the collaboration and secured a vital research grant through TechNZ.

“This grant, over a three-year period, was the first and the most significant grant we’ve received,” says Lowe. “We’ve received around $700,000 in grants from various sources, including a number of fellowships for a group of Masters and PhD students working on the mathematical modelling of arteries.”

Pulsecor’s relationship with IBTec has grown increasingly close. Now, with the bulk of the research and development work concluded, Lowe – who has a PhD and a background in medical engineering research – has remained involved in the IBTec research group and has joined the institute’s advisory board.

“Ahmed has always been keen on having industry links,” says Lowe. “And to be able to build a strong commercial relationship is beneficial for IBTec and for us from the research side. We work very well together. As a member

Medical device company Pulsecor has been collaborating with researchers at AUT University to create non-invasive diagnostic tools for measuring arterial health and heart function

IN BRIEF

AUT University’s Institute of Biomedical Technologies is one of 18 research institutes offering quality research expertise to companies looking to

further their research and development. IBTec has engaged in a long-term

collaboration with Pulsecor to assist in its development of products that enable

non-invasive measurement of arterial health and heart function.

CONTACT

For more details, phone 0800 AUT RESEARCH or email [email protected]


The I

deal

og

guid

e to

R&

D


What R&D really makes is intellectual property. Whether this makes you any money depends on how well you identify it and hold onto it.

The good news is that, according to Anton Gibson, a partner with IP specialists A J Park, most of us at least have some idea of the importance of this. The bad news is that a lot of us wait too long before getting the right advice, so we risk missing out on the most efficient and effective ways to go about IP protection and commercialisation. This comes across as bad planning and also gives the impression to potential investors in your R&D that you don’t really believe you will come up with anything worth protecting.

Getting your IP protection strategy lined up with your R&D strategy is crucial to the success of the whole venture. It will help keep the whole process on track by focusing your thoughts on what you are really hoping to create, and whether it is worth the investment you are making in it. Ideally, an IP lawyer will be an integral part of your R&D team to ensure this happens, but even Gibson concedes that this isn’t compulsory.

“What you need is someone with an enquiring mind who is able to champion all of the threads of good business planning, including IP,” he says. “And to make sure that person is made responsible for IP in their planning, giving them the time and resources, including training if necessary, to ask the right questions at the right time. Ideally, for medium enterprise and larger, this person is in house and the direction to weave IP into planning comes from the highest level. If IP rights are your core asset, you need to develop your team to manage them.”

For smaller firms and shorter projects you are still likely to want to hire in help, in which case make sure you find somebody who really ‘gets’ the business you are in, before they get your business. That means someone with a good understanding of the technology involved, a firm grasp of business planning and the ability to clearly define where you have IP rights, what those are worth, and where you don’t. The local lawyer who handled your house sale or your divorce is very unlikely to be suitable.

Even bigger players can benefit from external advice and technical support. Richard Templer has this advice on how to get the most out of your research partner:

“The key is to engage, rather than just coming along with an isolated problem,” he says. “What we want is to know all about the business, because then we can ensure we are answering the right questions and problems. Then during the course of the research what we want is for the

From ideas to IPcompany to remain involved: to meet regularly, provide input, and be keen to get results. That way we will deliver what the company actually needs. If the company is engaged in that way the technology transfer process is far more simple.”

But no matter who you get, and how good they are, ultimately it is still up to you as head of R&D or inspirational entrepreneur to keep your eye firmly on the ball in terms of the value you are trying to create.

Protect and survive – some golden rules of IP protection

you need to do to derive value from your work.

from better planning. Start your IP planning alongside your innovation and business planning and you’ll be in a better position to protect your work.

innovation choices and business choices.

affect IP protection.

MUST guide innovation and IP protection.

linked to commercialising R&D. Back yourself to succeed by considering IP issues at the earliest stage of planning.

Giving the game away – how we get IP protection wrong

of IP in your business

you don’t need

on securing the IP rights that should be your core asset.

SHOW AND TELSTRA: KEEPING UP WITH THE CONTINUOUS COMMUNICATION REVOLUTION William Lee takes us on a tour of the TelstraClear’s R&D setup.

Most of the fundamental research for the technologies used in TelstraClear’s operations is done by parent company Telstra. Over here the focus is on technical development aimed at meeting local customer needs in a market which moves rapidly.

“Our approach is to partner,” says Lee. “Using the knowledge of Telstra and our vendors, to our and our customers’ best advantage. Complementing their skills with an in-house network engineering and systems development capability.”

The firm invests a lot of time in talking to vendors, suppliers and customers to develop a set of product ‘roadmaps’ and plans spanning three to five years, which are aligned with investment strategies. So it’s worth asking Lee where he believes this sector is headed.

“I believe that the pace of the last few years will continue,” he says. “Material and manufacturing sciences are introducing new techniques and technologies. These will increase opportunities for innovation with the equipment we use in telecommunications. Hardware used in customer devices and networks is getting smaller, faster, more power efficient and is increasingly always on. Software is getting more powerful, and is present in even the smallest electronic devices.

“Meanwhile, end users are getting more control of their network and computing services.”



Looking forward is what R&D is. So to be good at it, this is what we must also do. We must look ahead not just in our own professional lives, in the lives of our companies, nor even in the life of our national economy. We must look ahead

at the global markets that we are trying to capture and make our own.

John Raine reckons he has caught a glimpse of the future, and it’s green.

“Long term we are looking for ways to have a productive and prosperous society that doesn’t’ rely on irreplaceable resources like fossil fuels and precious minerals, that gives us really exciting challenges and the opportunity to make a difference through innovation in sustainable technology.

“New Zealand should be trying to get into R&D that addresses some of the big sustainability issues, global warming, environmental sustainability. Everything I am reading at the moment says green technologies are proving to be real winners in terms of economic development, progress and profitability. The growth is phenomenal and New Zealand has the opportunity to do more in that space.”

Murray Bain is confident that whatever changes may take place, R&D will be increasingly important for industrialised economies in the years to come.

“There is a worldwide trend for two things. Firstly to ensure there are sufficient resources for the creation of step-change science, based on discovery-led research, and an increasing desire to see value created from that. Just creating knowledge is not enough: we need to see value created from that. So you have seen this government put more money into science and the company-facing R&D, and links between them to create the commercialisation of the smart ideas that are coming through.”

But for New Zealand to take its rightful place as one of the smartest nations in the world, rich in every sense of the word, then the changes we need must go way beyond the government, the ministries, and even the businesses

R&D conclusionand their entrepreneurs. It comes down to how we define the Kiwi Dream, and how we live up to it.

Raine says: “We need a science-aware culture in New Zealand, so that we are celebrating the success of science and engineering entrepreneurs as much as we celebrate sporting success. The key is through early education and having kids coming through school realising that there are phenomenally exciting roles to play in science and engineering which have a real element of service to society, as well as the opportunity to do something that is commercially entrepreneurial.”

And Bain reckons that the youngsters coming through have more of what it takes: “If you look at the generations of people coming on there is a different kind of attitude. There is more of a can-do and acceptance that making money is okay. We are seeing that in our science community and entrepreneurship and a willingness to take risks at early stages.”

But it’s clear we are not there yet. Bain says: “We have to be realistic about it. These things

happen gradually and then they accelerate. It’s like a nuclear reaction. I think that’s the sort of space we are in; we are not right at the start. I think we are seeing venture capitalists getting more active, entrepreneurs getting more active, people getting more off the ground and more people getting involved. I think it will be a straight line for a little while and then it is going to start heading up. We have to think of this as a 10-year programme.”

The proof of our success will come in an number of companies graduating out of incubators, the number startups spinning out of our universities, and the amount of venture capital those startups can get their hands on. Businesses need to spend more on R&D, particularly in manufacturing, and do more to link up with universities and the other brain box institutions out there. But ultimately, it will really show through in something more subjective, but infinitely more powerful: an innovation ethos that permeates the whole nation.

Is there plenty to look forward to? Where next for New Zealand R&D?

C A S E S T U D Y

They make products that are solid and permanent, designed to keep things in place, but concrete and mortar manufacturer Cemix is anything

but static. In fact, chief executive officer Bhav Dhillon encourages his staff to show a serious disrespect for the status quo, instead pushing them to think innovatively about everything they do – whether it’s coming up with new product ideas or keeping the factory floor clean.

“Innovation in product development is the lifeline for our business group,” says Dhillon. “We have been growing quite robustly for the past couple of years and when I look back, all that growth has come from new product development. We’ve got a taste of that and now we want to do more of it.”

While it’s been a tough few years for the building industry, Cemix has gone from strength to strength. The company has been manufacturing construction products, including bagged concrete, mortar, tile adhesives and sealers for the past 25 years. In 2011, it was one of the fastest growing companies in New Zealand, coming in at number 21 on the Deloitte Fast 50 index.

Research and development has been a key building block to that growth, says Dhillon. But it’s not the high-cost, scientific-based R&D that most product manufacturers tend to invest in.

“My perception of research and development is different from a lot of other people’s,” he explains. “They view it as thinking about new ways, processes and technologies. For us, R&D means spending more time with our customers, brainstorming with them, understanding how

“We don’t have huge budgets and research and development people with PhDs and white coats. Instead, we work on the typical Kiwi number 8 wire mentality. We only have two and a half people converting the market feedback into product development, but my entire sales team is part of our research and development team. We get all our sales people to play with the product and we develop it together. It’s a team effort.”

Another important component of that team is its financial partner, BNZ, which has been working with Cemix for almost a decade.

“BNZ understands our culture and that we’re a very lean and nimble organisation,” says Dhillon. “Being a small company, the speed of ideas to market is very fast and we need a bank that’s on the same wavelength rather than just being a number cruncher. BNZ buys into our dream and they also run with us at 100mph. They’ve supported our product development with financing and have confidence in us – that’s a big thing because most ideas get shot down by the accountant.”

BNZ managing partner Phil Roach says the bank has a close relationship with Dhillon and Cemix.

“Bhav is very much about us working together and he has a great way of doing business so everyone reaps the benefits,” he says. “The business continues to go from strength to strength. He’s grown the business by introducing new products and services to the market. And he has built a culture of innovation, which together with his forward thinking and strong relationships with his

R&D made easythey’re using our products and discovering what unfulfilled needs they have. Our innovation is customer-centric and all our R&D stems from what our customers want.”

And what Cemix’s customers were asking for, he says, was quite simple: value for money.

“After the recession, our customers wanted their products and dollar to go further,” says Dhillon. “So we focused on how we could help them be in business, have good margins and have a product that delivers.”

Cemix’s newest product, Rubberflex, certainly fits this definition and also satisfies the increasing expectation for environmentally conscious products. Rubberflex is a flexible, lightweight tile adhesive for use on both internal and external walls and floors that provides around 20 percent more coverage than existing products in the market. What’s more, one of its ingredients is recycled truck tyres that would normally have found their way to a landfill.

“Rubberflex is the fastest growing new product we’ve ever developed. It’s only been on the market for a few weeks but New Zealand is a small market and there’s a lot of chatter about our product and how good it is in terms of going further and costing less.”

Like one of Cemix’s other revolutionary products – Envirocrete, which uses recycled crushed concrete – Rubberflex was developed over 18 months of research and testing, with more than 100 different formulations trialled. The feedback from blind testing with tilers was also a critical input.

“That’s what leads to our innovation – listening to our customers,” Dhillon explains.

Forget the 200-strong R&D department. This Kiwi company simply listens to its customers then develops what they ask for


I D E A L O G I N A S S O C I AT I O N W I T H B N Z

PH

OTO

GR

AP

HY:

JE

SSIE

CA

SSO

N. T

EXT

: DE

IRD

RE

CO

LEM

AN

IN BRIEFBNZ has worked with Cemix, New

Zealand’s leading premixed concrete and mortar manufacturer, for nearly a decade.

BNZ supports Cemix’s strong focus on customer-centric, environmentally

responsible research and development, which has led to innovative products such as Envirocrete (using recycled concrete)

and Rubberflex, which incorporates unwanted vehicle tyres.

CONTACTTo find out more about BNZ Partners,

phone 0800 273 916 or visit www.bnz.co.nz

BNZ’s Phil Roach (left) works closely with Cemix CEO Bhav Dhillon.

suppliers and customers will ensure Cemix continues to grow in years to come.”

Cemix is continuing its focus on innovation, developing several other building products that incorporate recycled components. Among them is one that uses crushed glass from residential recycling.

“We’re not a big multinational, but we have a huge pipeline of ideas that we want to develop.”
