Director: Forget all about specific yields from innovation collaborations
Debate: Demands for co-financing and guaranteed successes are keeping SMEs from diving into innovation coalitions. The idea that the value of innovation can be measured in billable hours and invoices must be put down, writes LINX-director Jacob Becker Christensen.
No rare-earth elements. No precious metals. Only a small amount of oil.
Denmark’s meagre bank account of natural resources makes innovation its number 1 raw material.
Even with that in mind we are still outpaced by countries like Sweden and the Netherlands on the index over most innovative nations from the UN-organ WIPO (World Intellectual Property Organization).
So too last Wednesday, where Denmark came in as an honorable sixth.
Large and merited companies are responsible for the main portion of what we call innovation. Much of it is done in publicly funded projects together with knowledge institutions, particularly universities. These coalitions keep us in the top ten, which is admirable. However, if we want to have a better placement large innovation projects must be supplemented by something smaller to address simpler issues – the small steps.
In short: Expert knowledge in a toolbox format.
Demands of success deter
Initially, there must be a demand for a break with the conception of measurable and guaranteed successes in public-private collaborations.
These conceptions have been the lay of the land since Helge Sander was the Danish minister of science shortly after the turn of the millennium, when he came up with the infamous slogan, ‘from research to billables’. This phrase has been the white cane for many foundations and has brought about high demands for levels of ambition in applications.
What does a small or medium-sized enterprise, an SME, do when it looks for a knowledge-partner to solve a small or simple challenge that may be critical for the innovation process? Only few will, unless they are overselling, swear to a quick and specific yield.
Nonetheless, the more prosaic, truthful, and unsexy end up at the back of the line to be left with slim pickings.
Even universities cry out at the demands. The technological readiness level is typically not at the high end when a small enterprise needs expert knowledge from them.
In this respect it is not helpful that public-private projects in Denmark are so massive – from a couple of millions and up. With this much money foundations often require attestation of something sellable and a yield countable in nickels and dimes.
Do not get me wrong, I am all for billables, growth and creation of jobs – that is the final objective.
But the heart of innovation is to step into the deep end and hope to swim. This notion is being watered down and forgotten.
In other words, we have, in Denmark, politically – consciously or unconsciously – set a course towards innovation projects that favor the big, the ambitious, and the apparently lucrative.
From research to billables
There are exceptions, and LINX, which I head, is an umbrella organization for some of them.
LINX is a long-term initiative supported by Innovation Fund Denmark, that invests in many small projects, and innovation by increments.
None of LINX’ projects are expensive, but the amounts are large enough for SMEs to dare participate. This is a bright spot because they mostly depend on public funding for innovation – and have the most to gain from external expert knowledge.
As the system is now, SMEs that have the hardest access to both money and knowledge. My experience is that they would rather fight on blindly than seek out a knowledge-partner.
They are afraid to drown in the process, they do not know the receiving end, i.e. the foundations, properly, and the applications take too much time. And even when they take these risks, which happens, they remain worried.
They invest money and time in preparations and application, but their financial support is paid out later. Succinctly put: The risk analysis or sense of defeat wins.
This paradox is a sign that something is wrong.
We must enable micro innovation
The road ahead is therefore a financial ecosystem that supports the simple, the low-risk, and the inexpensive micro innovations by small increments.
Politicians must make it easy and flexible to apply for funding for small and simple enterprise-university coalitions. And the co-financing demand must be dialed down.
The co-financing demand is an enormous barrier to risk exploring a new frontier. We must minimize time-consumption and risks that go along with applications, and we must pursue the delivery of university knowledge in a tool-box format.
We must remain aware that the future, ultimately, does not discriminate between innovation originating from a multinational corporation or a garage.