Cynensis R&D conference

I had the honor to chair the first day of Cynensis R&D Management conference in Brussels yesterday. The event was much smaller and more intimate than I expected, which in combination of the very impressive speaker and participant roster created very good atmosphere and interesting discussions.

The high director or VP level speakers of the day included:

  • Jean-Jacques Mertens from covering European Investment Bank’s initiatives for R&D financing
  • John Murphy from BAE Systems (think British fighter planes) on how they get the universities into their research
  • Regula Estermann from DSM Nutrition about managing the R&D people
  • Dietmar Hüglin from Ciba (the guys who make your Ferrari’s red paint not to fade in sunshine) on R&D strategy and metrics
  • Rainer Osterwalder from European Patent Office about the… pan-european patents
  • Andreas Bong from Hilti with a very interesting case study on how they research the detailed needs of construction guys to build innovative tools
  • Detlef Müller from EADS (think Airbus A380 and military) on how they manage R&D with their huge organization
  • Jan-Erik Stjernvall from Ericsson about R&D Operations (which as it appears is not a contradiction of terms)

I was overwhelmed a bit by the presentations’ focus on complicated processes, metrics and strategy buzzwords common in the huge enterprise world. Compared to our tiny, 500-person Skype, these people have to keep creative thinking and market impact going with 4000, 12000 or 100000 people organizations. Not an easy task and overall I’m very impressed of what all of them are doing to innovate. Unfortunately, not staying as simple, small, agile and nimble as you’d like is the price you have to pay for success and company growth.

Some notes I made and thoughts I had throughout the day:

  • A quite good definition of the basic terms: Invention is a tangible result of invention process. Innovation is an economically and socially successful deployment of inventions in the market place. You don’t want your people to just invent without the deployment vision, that’s called basic scientific research.
  • However, even if an invention in vacuum (without plans to market) is nonsense, you can’t operate only based on what the market wants. This can only give you gradual improvements, not disruptive world-changing products. The latter type are pushed by technology and R&D, not pulled by market needs.
  • You never get all the brains you want on your payroll (especially the engineering supply is a mess all around Europe) so opening your R&D, working with universities and clusters of development partners is more crucial than ever in order not to loose speed.
  • In the lack of resources situation you have to plan all the required people very early. Easier to do in a dotcom startup, but equally important with 5-10 year projects in pharmacy or chemicals. Involve product management and marketing people even in the earliest stages of new R&D activities where you’d normally think they don’t understand anything and don’t have anything to contribute yet.
  • There was a lot of talk around central R&D “risk funds” in a company versus the everyday investments done on business unit level. On average, corporate pool of risk money is around 10-20% of the global R&D spending. CFO-s hate the idea of a research spending budget line without any measurable outcome, so this allocation needs to have support on the very highest management levels in order not to sacrifice the long term activities in a tough quarter. BTW, even the very conservative European Investment Bank is changing it’s culture to break their past “zero-risk” mindset with technology investments.
  • NPV calculations in evaluating and justifying R&D projects are ALWAYS wrong, it’s just a matter of by how much.
  • Scope change and lack of visibility of end goals hurt R&D projects badly. One tool to overcome that is not to change projects are the life changes. Just kill the current one and start the fresh with a new one based on the killed’s input. The team involved does not only need to understand, but also to accept the targets.
  • Global patent licencing market is estimated to be between 250-500 billion USD a year. For example, it is estimated that the licencing value of involved patents totals to about 50% of the cost of 7-series BMW.
  • Approximately 2% of the ideas in European patent applications succeed on the market. 80% of submitters file 1-5 patents per year. Top 10 submitters file 20% of European patents. However, the European Top 10 is ruled by Asian companies (Samsung, LG, Matsushita…). More than half of the patents in EU are submitted from outside EU.
  • An unbelievable 40% of the European patenting costs is … post-granting translation into all member languages! The absurdity is that there is no central EU patent court (yet). If you go to a local court in Spain or Latvia, the court will turn to the European Patent office again, request an original patent documentation in English, French or German… because the hugely expensive Spanish or Latvian translations doesn’t have the legal power!
  • The movement against software patents was probably the strongest patent lobby ever seen. As a result, you can patent software only in inseparable conjunction with hardware in Europe. But still 20-30% of the patent submission try to patent only software and get denied.
  • Policy in China is shifting from just copying and mass-producing to “Made and invented in China”. Still, “inventing” comes after “making” in this tagline for some reason. The Chinese patent law is very similar to German, but the enforcement mechanisms are still very underdeveloped.
  • Competition’s submitted patent analysis is used widely in industrial intelligence. What are they really investing in (as opposed to what they claim in their annual report)? Who are the stars in their team? Per every 50 submissions of patents with different author names, you see serial inventors with 50+ of single company’s patents solely on their name.
  • Through open innovation involving external participants, the infamous Not Invented Here syndrome becomes Not Entriely Invented Here.
  • EADS has created a type of non-management executive role, Executive Experts in the company to promote engineers and innovators.

Now the second day is underway, with already great presentations around R&D in Nokia and Whirlpool, among others. As I’m not on stage today and the regular work is kicking in, probably will not be able to cover these in the same depth, unfortunately.