CONNECTED TO RESEARCH

Ocean Industry Innovation Pool An industry approach to innovation The Ocean Industry Innovation Pool represents a new model for industrial innovation that addresses the challenges facing industries breaking out of their traditional “silos” to explore new opportunities for development. The model is not industry-specific but is based on market needs and therefore has to be organized around a group of market players that provide global market access and know-how. “Ocean industry” is a broad category that encompasses three of Norway’s most important industries, each with a very strong position globally. At the same time the offshore energy, maritime and seafood sector share many resources and the huge and well-defined opportunities of the ocean economy (OECD) GOALS 1. Radically improve the speed of innovation by demonstrating an approach that combines “market pull” with “technology push” before presenting investment cases. 2. Reduce the risk for investors by focusing on new applications of available technology, verified and backed by industry players with global market access. 3. Mobilize a broad range of world-class professional services to be found in Oslo for the benefit of clusters across the entire country. POSITIONING The Innovation Pool could very well be the core of a business network or industry cluster. But rather than serving one region and one specific industry sector, the initiative is designed to be shared by many regional clusters and to be set up for any industry sector that relies on a supply chain of global market players. Specifically designed for international B2B (business-to-business) sectors with a complex integration of systems and services, where multiphase and multilevel decision making on the customer side is the norm, the Innovation Pool is an innovation accelerator. As such, it presents an alternative to the start-up model by facilitating collaboration between mature, global organizations and small, agile innovators. Comparison to the national cluster program and Toppindustrisenteret While the Norwegian Innovation Clusters program includes numerous regional and industry-specific initiatives, the Pool is an initiative open to all Norwegian clusters as well as international participants within a specific sector. Although the Pool is led by Ocean Industry Forum Oslofjord, it is designed to serve all clusters in the “ocean space”. Toppindustrisenteret aims to coordinate the digitalization of all industries but the Innovation Pool has no such thematic focus. Instead, its main challenge is to: ● Identify global market needs where Norway-based companies can play a sustainable role based on its complete set of competitive advantages — from natural resources to technology and finance. Once demonstrated in the ocean industry, the model can be reused for other sectors. The Innovation Pool is also supported by a different mindset than that of the projects supported by Norwegian Innovation Clusters, and Toppindustrisenteret, While cluster support programs focus on regional dynamics and Toppindustrisenteret calls for a national dugnad (voluntary work), the Pool is designed to connect innovation to global B2B market players. It is not about “winning” the competition with other countries, it is about value creation in a global ecosystem. SMEs and specialized entities rely on finding their role in the supply chain of a few big players gain market access. Comparison to the start-up model B2B marketing is about the integration of products and services into systems and packages. Market demand trickles down through the supply chain and occasionally allows small players to launch disruptive solutions. The Innovation Pool is an attempt to tame disruption for a bigger harvest and set up an innovation process where each player does what it excels at. Building a global organization takes decades. The majority of customers prefers proven and well-integrated solutions and is conservative in its buying. This works against start-ups with new solutions unless they network and integrate with existing market players. While the main challenge for the startup is “crossing the chasm” as Geoffrey More put i, large corporations have a challenge dealing with accellrated change.Our model utilizes existing channels and organizations for market access and only when a new product deserves to be launched as a new venture, will a start-up be our preferred solution. However, when that happens, the startup will have been vetted by leading industry players and have had the opportunity to attract their backing as reference customers and strategic investors. Not only the entrepreneur, but a team qualified to take the company straight into its growth phase, will be in place to reduce the risk and attract capital far beyond the limited early-phase funding available. Finding a good balance between growth and innovation for existing corporations and start-ups is crucial for creating value and jobs in the short term. Existing companies outperform start-ups by a factor of 10 when it comes to job creation. One reason is that the cost of bringing a product to the market is usually much more costly than developing the product itself. Three academic institutions will integrate with the Innovation Pool through a “lab” each. The collaboration between the three labs and the Pool will aim at developing new operational models for the industry, including business models, working environments and training. An “Ocean Industry Business Lab” with research on strategy, new business models and methods for value creation has been initiated by BI Norwegian Business School, the only Norwegian business school with triple international accreditation. An “Ocean Industry Concept Lab” has already been established by The Oslo School of Architecture and Design (AHO). It focuses on advanced, user-centric design processes for services, systems and physical products. AHO specializes in early-stage, radical innovation, where multi-disciplinary competence and advanced technology deliver safe effective working environments. Finally, the University College of Southeast Norway (USN) will include the Pool in its profession-oriented and industry-related research. With its 17,000 students and 1,500 employees at eight campuses in the region, the USN is set to become Norway’s second largest university. Simulation of new operational models Together, the three labs cover business models, design processes and operations in a way that enables early-stage simulation of entire operations. Innovation at this level could pave the way for radical improvements of solutions that otherwise are too risky for businesses to implement. The design and testing of entire new business operations, not only of a piece of new equipment, could be done in a digital world made realistic with affordable VR/AR technology now driven by the gaming industry. Virtual supply chain The creation of a “virtual supply chain”, where there is competition between component suppliers and integration into packages and total solutions, would be a game changer for SMEs. Today smaller players are often locked out by rigid tender processes reserved for big players only. In the future the selection of subcomponents could take part in a simulated world, where smaller specialists can demonstrate their solutions. While the sharing of 3D-models between the various disciplines is common, the next step is to arrange this as a more user-centric and market-oriented process with a digital supply network. POOL FUNCTIONS The Innovation Pool will be a platform for effective collaboration, a pool of innovators, a contact point for researchers, a market of ideas, a pool of products under development, a test bed for new business concepts, a launch pad for new growth companies and a digital platform. A platform for effective collaboration To be a robust platform for effective collaboration, the Innovation Pool needs to build a strong culture for sharing. We believe that this is secured by first removing obvious sources of risk and conflict: Our ambition is to attract the world’s leading market players and establish a practice that complies with the two largest and most influential systems of competition regulation: the US antitrust law and EU competition law. For small players, IPR (intellectual property rights) will be equally important to take care of. A legal framework that protects the rights of smaller players will make the pool attractive for early-stage sharing and help build a trust-based culture without free riders. Like any other strong community, the Pool will have a clear code of conduct as the foundation for a culture of freedom and generosity. Taking the role of a facilitator, this lean and competent organization will be backed by a pool of volunteer advisers from the member companies, who would see their first priority as to run the Innovation Pool as an effective platform for collaboration between market players and innovators. All other functions are secondary. A pool of innovators Projects will come and go, hopefully at a very fast pace, but the pool of innovators will remain and grow. By registering their areas of expertise in a structured way, members will contribute to a resource database, where new teams can be mixed and matched. Attracted by challenges submitted by market players with global reach, innovators will register and promote their competences and references. Eventually the active ones will build a track record of achievements within the Pool. Should we like to widen the circle, NASA’s open innovation approach could be adopted. Challenges, prize competitions, and crowdsourcing could be organized to involve various “solvers” in the sub- challenges of a bigger mission. In this way our database of innovators could recruit students still at university to join the pool. Innovators would also include intrapreneurs, as the platform should provide a framework that allows intrapreneurs to bring their ideas to the Pool without first having to quit their jobs. Allowing intrapreneurs to run a project outside, but linked to their big-corporation employer, could be a win-win situation. Entrepreneurs with a strong ambition to develop their own company could enter the Pool as a growth candidate, and seek strategic investors and partnerships to shorten their path to internationalization and growth. A contact point for researchers Each research project that needs to team up with companies becomes a challenge for businesses preoccupied with their daily business. Researchers will, through the Pool, find ongoing innovation projects, where research can become an integral part of the process. The members of the Pool have been recruited as research partners for the long run, and several research projects may be aligned to optimize value for both the companies and researchers. A market of ideas Developing an abundance of ideas before picking the most promising ones is good for the quality of development work. Formulating an idea can be easy for some, and very valuable to others. Hiding ideas for later can be avoided if the originator of ideas is given due credit by having these ideas registered. Discussions will also be available for the next person who comes up with a similar idea. A database of product and business ideas can be a time saver and inspire new ideas. A short route from idea to the person behind it will be a trigger for networking. A pool of products under development Once a product is under development in the pool, it could hold calls for participation to other innovators. A big challenge could be broken down into sub-challenges and a winner of one mandate could delegate tasks to other Pool members. This overview of ongoing product developments would in itself be of value; to avoid doubling up efforts and to see opportunities for defining both sub-challenges under each project and “super challenges” on top of several ongoing developments. SMEs would build a large, shared product development unit and market players would prepare in advance for the launch of new products. The financing of the development phase should be defined partly at the handover from an “innovation cell” formed by 2–3 market players to the Pool and partly based on who wins the development mandate. The cell members, the winning innovators, a seed capital fund and other grants from public programs could be sources of funding and the Innovation Pool will act as the deal maker by managing these options through standardized contracts. A test bed for new business concepts Through access to major market players, academic partners and a wide range of specialists, development efforts should not stop at the product itself. Before launching a company, alternative methods of commercialization could be explored; for example, integration with systems already in the market, distribution agreements, replacement of outdated products, launch of new product brands by existing market players, etc. Once the preferred method of commercialization is identified, the business case could be tested with partners rather than through trial and error as a start-up. A launch pad for new growth companies Should the best option for commercialization be a start-up, the Pool would have the resources to give that company a flying start. Big brand reference customers, partner agreements, strategic investments and access to top-notch advisors from major market players, experienced professionals, who join the start-up team or act as board members, would be a dream combination for private investors that do not possess the competence or capacity to evaluate this. A reduction of risk seen from the general private investor’s perspective would allow for an early exit for angel or VC investors and also accelerate their contribution. A goal for the Innovation Pool would be to launch growth-ready companies that set out to enter the Merkur Market list on Oslo Børs in order to tap into a big pool of private capital rather than fight over limited pockets of capital available for early-stage companies. A digital platform The Innovation Pool will present content from the above-mentioned functions online. At first it will be a conventional web site and social media presence, then extend these to a toolbox for innovation by integrating with the best online resources. The Pool’s web platform should focus on content and engagement to build a vibrant community. The digital platform will, for many, be the first point of contact, and the Pool will manage its users by controlling access to various layers of content and functionality. THE INNOVATION PROCESS The overall innovation process of the Pool is best explained if we see innovation as a process from market need to company growth. New growth companies with success in the market would use the Pool as their development resource to stay ahead and go “full circle” by posting challenges to new innovators. Our model divides the innovation process into phases with several options at the handover to the next phase. Keeping options open is valuable both in terms of not making decisions ahead of time and as security for the participants. A PDF of the model can be downloaded here.Starting with a small innovation cell, the barrier for sharing is low, and having the option to feed the result back to own business rather than share it with more stakeholders, works like a safety valve. Companies can engage in limited sharing and pull out if the development is strategically important. By opening up step by step, we believe that more companies will participate and that, as trust is being built, sharing goes deeper. Innovation cells: Market players define innovation opportunities Market players with global reach are usually large organizations with a high business volume and potential for adding new products to their portfolio quickly and at low cost. They can also be small players who have succeeded internationally in a niche or have acquired market knowledge through previous jobs in multinational corporations. What qualifies them to represent “market pull” is that they have first-hand knowledge about what paying customers want. They can spot needs that are underserved or where failing products create a demand for innovation. In the B2B supply chains, each supplier is the customer for the next in line. The player that best represents market pull is the one that translate his customers’ needs into a product performance specification for what he wants to source. By focusing on needs and the performance criteria set by real customers, the opportunity for innovation is kept open for the next phase. By forming a small cell and sharing the opportunity scouting with a partner with complementary expertise, the product performance specification is not the only output. The discovery of opportunities for knowledge exchange and partnerships can become a main motivator for creating new cells. The methodology for spotting new market and collaboration opportunities should be developed by the Pool to make self-organized innovation cells popular as a way to ensure market orientation. Handover to the Pool: Market opportunity and product performance At the end of an innovation cell’s work, the result might be within the scope of what the participants very well can realize themselves. This is the shortest route back to the market and will support innovation in the business model, distribution, customer experience or development efforts that can be handled in internal product development. However, a defined market opportunity with estimates of the size of the market and with a clear product performance specification and price point would be a flying start for developers. The specification should be published without bias as to which technology or methodology to use, allowing the challenge to attract new players. Developers from other industries might have advanced and proven solutions to offer. At the handover of a defined Market Opportunity and Product Performance Specification, the terms for the publishing of this challenge should be agreed. Several alternatives could be available through standard contracts. The cell members could be credited for the market research with or without monetary compensation. They could reserve the option to invest in the product to come or reserve the right to participate in the development team. Call for innovators: Market pull meets technology push Once the challenge handover to the Pool is completed, a challenge should be published. Innovators could be prequalified after a Request for Information (RFI) before a group is selected to compete for a mandate through a Request for Proposal (RFP). After offering terms that make it attractive and safe for innovators to share their ideas with the Pool, material would be prepared for a committee to pick the winning bid. The winner could be required or encouraged to delegate sub-challenges to smaller players to create opportunities for learning and growth among the newer or more specialized innovators. Development project: From opportunity to market-ready product Without necessarily establishing a new company, a development team translates the Product Performance Specification into a market-ready product. In consultation with the market players that identified the opportunity, the team will have access to pilot customers that can verify that the product meets the success criteria set for the business opportunity. The time and energy that a start-up normally spends on building a company, finding the first customers, etc, is expended by the Pool and all energy goes into product development. Final handover: Choose method of commercialization In the case where the product fits into a bigger package or product portfolio that one or more major market players deliver, this is a fast track to the market. With no need for a new company, a new product reaches paying customers in record time and supports value and job creation in a well functioning organization with global reach. However, the new product might have a potential beyond the distribution channels of the Pool members. Instead the Pool members who initiated the project sign up as the first reference customers. An angel investor might have followed the project and be interested in backing a new company and a pre-launch investor group would then be established to make sure a solid team, capable of running a growth company, can be recruited. The Innovation Pool would then hand over a product to a market player or a lead investor that then launches a new company. Either way, there is an exit for the Pool as soon the method of commercialization has been chosen. MEMBERSHIPS The Pool will invite all members of OIFO and other business networks and clusters to join the Pool in one or more of four roles: ● Observer ● Market player ● Innovator ● Service provider ● Investor Observers are organizations or individuals that will have access to general information about the Innovation Pool’s projects and members and access to networking events and conferences. Access to information, tools and workshops will be limited, but sufficient to stay well informed about opportunities and the value of being a full member. All OIFO members will automatically have observer membership and other business networks and clusters that can collectively give all their members observer membership as part of a partner agreement. All full members will also be allowed to give employees individual observer membership. Market players are companies that can take the role of defining market opportunities and innovation challenges in the form of Product Performance Specifications. They form self-organized innovation cells to collaborate or can individually hand over innovation challenges to the Pool. Market players represent possible channels for commercialization of solutions developed in the Pool Innovators are individuals or companies that respond to Requests for Proposals (RFPs) based on input from Market Players in the form of innovation challenges submitted to the Pool. Observers will have access to innovation challenges published and respond to RFIs (Requests for Information), but need to register as innovators to present proposals and participate in competitions and workshops. Companies with Market Player or Innovator membership have the right to give their intrapreneurs individual Innovator memberships. Service providers are companies that offer professional services relevant to the innovation activities. They may participate in RPI/RFPs and respond to sub-challenges posted by the Innovators. Investors are companies that want to follow development projects and have access to detailed profiles of innovators. They will receive invitations to make early-stage investments in projects where companies are formed. A PDF of the model can be downloaded here.