8
OPEN INNOVATION: A FRAMEWORK FOR COLLABORATIVE PRODUCT DEVELOPMENT BETWEEN INDUSTRY AND UNIVERSITIES
Aruna Shekar
Massey University
8.1 Introduction
This chapter presents a collaborative Product Development program and demonstrates how industry practitioners can successfully access university resources for Open Innovation. A useful framework for collaborations and approaches to managing university-industry project partnerships is presented. The chapter builds on research in the field and empirical studies on active collaboration over two decades, and offers real-life lessons and recommendations. Most of the literature on this topic is on the educational benefits to universities, while this chapter presents the advantages that companies can gain from accessing the resources and expertise at universities. Examples from collaborative projects have been used to present concrete and practically grounded material.
New product development (NPD) benefits most from multidisciplinary teams, with people of different backgrounds and disciplines working together toward a common goal. Having academics and practitioners bring their different perspectives to a product development project is an advantage, as both groups can build on each other's perspectives and strengths. This kind of collaboration in Open Innovation (OI) is a top priority with world-class universities for the benefits it has been shown to provide. Staff and students have the opportunity to work with industry partners on projects that are relevant to society and can make a difference to real people. There is huge potential to make an impact by delivering solutions that contribute to wealth creation, where wealth is defined in its broadest sense, which is enhancing the quality of life socially, environmentally, and economically.
The 21st century requires innovations for progress, and innovators in industry and universities need to be able to solve real-world problems. Collaborations between universities and industry enable a mingling of different skills and knowledge that are critical to 21st century problem-solving. As centers for information and leading-edge knowledge, universities are in an excellent position to foster Open Innovation and collaborative problem-solving with industry.
This chapter covers the important role that industry-university partnerships can play in sharing their resources for Open Innovation, and how it can work in practice. It details the advantages to firms of working with universities, and covers some of the keys to success and pitfalls to avoid. The structure of the partnership, the roles of key participants, and the selection criteria for projects are also covered.
8.2 Open Innovation Program
The Open Innovation Program described in this chapter is based on product development collaborations between industry and the School of Engineering and Advanced Technology, Massey University in New Zealand. This section covers the structure and selection of projects, the collaborative framework, the initiation of the project, and the methods employed while working with the university on Open Innovation.
Structure of the Collaborative Partnership
The Open Innovation partnership described here consists of three main groups of people: students, academic staff, and industry personnel. Managing the relationships between the three partners (students, academic staff, and industry representatives) is vital to a successful collaboration. Project team members consist of the core team (Table 8.1), which includes the students, supervisors (i.e., staff from the School of Engineering and Advanced Technology), and the academic course coordinators. The team members in this OI program are structured into three types of members: core, extended, and ad hoc teams. The extended team members include a representative from the client company (usually a project manager, design engineer, product development engineer, or in the case of small companies, it could be the managing director), and Advisory Board members. The Advisory Board consists of senior industry practitioners of product development, either from an engineering or a business development background. Members have also been drawn from specialists in intellectual property protection, business analysis, venture capital, and government policy formation. The Advisory Board meets at critical points of decision making to evaluate the progress of the project. The ad hoc team members include end users, specialist staff, workshop technicians, key stakeholders, student peers, and external experts, who may be contacted whenever required during the development process. This structure does not have to be rigid, as for some projects the end users may be heavily involved as part of the extended team. The core team meets more often and are more heavily involved than the other two sets of members.
Table 8.1 Team Members for Open Innovation
| Team | Function and Frequency of meetings | Members |
| Core | Meet frequently (weekly) to discuss and guide students, review their work and weekly plans | Students (engineering undergraduates)
Academic staff (engineering, design, and management backgrounds) academic course coordinator |
| Extended | Meet at the four scheduled review meetings, to monitor progress and give feedback | Company representative
Advisory Board members |
| Ad hoc | Invited when required during the project | End users
Workshop technicians Specialist staff Key stakeholders Student peers External experts |
Weekly project meetings are held with the core team of staff supervisors and students. Students are expected to invite ad hoc team members to specific meetings when required in their particular project. For a highly confidential project, the meetings are restricted to the core team only. For other projects, weekly group meetings of around 10 to 15 projects are held, as this encourages collaborative learning, and contributions from a wider group of staff and senior students. These meetings are discussions on what students have achieved in the previous week and what their plans are for the following week. Staff supervisors guide students with their plans, make suggestions, and encourage them, to think about alternative ways of approaching the problem.
8.3 A Framework for Open Innovation between University and Industry
The key question of how best to make an OI collaboration work successfully between university and industry is addressed here. The framework (Figure 8.1) described here represents an OI partnership in product development between Massey University and industry partners. This model of partnership has proven to be successful in terms of repeat partner companies, as well as client, student, and staff satisfaction.
Figure 8.1: Industry-University Framework for Open Innovation
University students involved in the Open Innovation program are in their fourth and final year of a Bachelor of Engineering degree. Prior to commencing the partnership project, they have completed three years of study, comprising core engineering papers, and commercially oriented topics in practical finance and project management.
The size of the company does not really matter for the short-term undergraduate program. Geographic location of the company does affect the project to some extent, as the core team is able to meet face-to-face more often when partner companies are in the same city as the university. In most cases, the company staff are delighted to have a senior student assist with the process of creating a commercial product from an idea, and support the student in the process, to meet their particular objectives.
The framework (Figure 8.1) has two columns—one for the product development core team, led by the students and supervised by university staff, and the other for the client company representative. The product development area is further divided into three columns: economic (shaded in light gray), technical (medium gray), and marketing functions (dark gray). However, these activities are interconnected and interdependent, as shown by the arrows. This integrated process framework has been developed by the author and used for these projects over the years. It helps with visually explaining the respective roles, expectations, and time scales. It also indicates when company management (client representative or Advisory Board member) can formally assess the project, along with academic staff, and provide valuable feedback.
Companies are informed of project time constraints due to students undertaking other courses at the university, but occasionally business pressures demand a quick response. Students are made aware of these real-world pressures of time and have risen to these challenges very well, and it has been to their advantage. It is mutually beneficial when all three parties meet at critical times during the process, as per the framework schedule's review milestones. It is important for companies to set aside these dates and times so that they can be involved in the progress and direction of the project.
A holistic, multidisciplinary approach to the process of product development allows for a range of perspectives to be explored, concurrently whenever possible. It allows for client reviews and input at key stages, checking that milestones have been reached as specified, and that the schedule is on target. This framework gives clients confidence that they can see the direction in which a project is heading at key points during development, and can provide input or steer it in a way that suits their objectives.
The product development process and framework provide a systematic structure to reduce some of the risks and ambiguity in complex problems, and to manage the interface between the three parties involved, while also allowing for some flexibility. It also saves the time of having to set up preliminary logistical details for each and every project. For Open Innovation, effective communication is important, and the framework serves as a communication tool to review and monitor progress, and to convey key milestones and deliverables.
Selecting the Project
The selection of suitable projects is critical to successful project outcomes. It is vitally important that the project has the potential to meet the university's requirements, the requirements of the industry partner, and the capabilities of the student. The university's requirements are made clear to industry partners in terms of time duration (of nine months), complexity level of the problem, and student skills and knowledge. Projects are selected based on the following:
- A good fit with the students' knowledge and skill levels (typical examples are shared with industry)
- A fit with the timeline, allowing the opportunity to go through all of the major stages of development
- The scope of the project must be sufficiently wide to allow student creativity, and at the same time focused on a clear problem or need
- A clear definition of company requirements, expectations, and innovation strategy
- Opportunity for stakeholder input and application to design
- Sufficient opportunity to consider commercialization options as part of the project—including economic, marketing, and manufacturing plans
Initiating the Project with the University
Each collaborative project has a partner company, which initiates the research and provides the brief. It is important that the brief defines a problem or an opportunity. The projects run from March to November each year, and are closely supervised by university staff. The projects cover a wide range of product categories: from appliances to software; from agricultural products to safety equipment; and from consumer electronics to medical devices. Each project is unique and may have a slightly different emphasis. One may focus on the feasibility of a technology, while another may investigate the adaptability of a product for a new market and the associated technical, financial, and marketing challenges. Yet another may examine the reuse of waste material or industrial by-products to form a novel application. The goal for all of the projects is to research and develop appropriate solutions that meet an identified opportunity or need.
The university department sends out an invitation to potential new companies and previous partner companies requesting suitable projects in September of the previous year (see Appendix A). The invitation has the details of the program, the timing, duration, and the type of projects that are sought. Companies are encouraged to contact the university projects coordinator, to discuss potential projects. The course coordinator matches the student's interests and skills with the project's requirements, and selects the most suitable student who is interested in the area. Potential projects are also listed on an internal university website for the projects course. Only students who enroll in the course have access to this website, and can express their interest and select a project. At times some clients express their desire to interview and select a student, and this can be accommodated. If the scope of the project is large, then two or three students are selected for the project, and the work is divided fairly evenly.
The students, supervisor, and course coordinator meet with the client company representative to discuss the background to the brief and context of the problem or opportunity, and the scope of the project. The expectations from both parties on the outcomes and outputs are defined. This is followed by a discussion around capabilities and expertise on both sides, and how best to leverage these strengths during co-development. A contract is signed between the student, the client and the university, which details the project timeline, ownership of intellectual property, responsibilities, and milestones (Appendix B).
The students write a proposal as per the template provided (see Appendix C). In their proposals, students are expected to include what the product type is, if known at that early stage, or state the problem or need that is being researched and the areas of focus for innovation. Project briefs and aims should be neither too broad (as this does not provide sufficient direction) nor too narrow (as this does not allow for creativity and a range of solutions to be explored).
- Examples of broad, open briefs:
- To make a product for the Canadian market.
- To increase company profits by 15 percent.
- Examples of narrow or closed briefs:
- Build an electric toothbrush based on the specifications and material supplied.
- Make a portable medical device as per the dimensions provided.
- Examples of more suitable aims are:
- Research and design an automatic electronic monitoring system for asthma inhaler use, which can capture data on frequency and timing of usage.
- Investigate the performance and use conditions of wheelchairs available in the market. From these results, a new design solution, which addresses stakeholder needs, is to be formulated.
- Design a medical device for carrying medicines (specified by the client) at the right temperature range, and whose portability promotes compliance and enhances the life of patients.
As a part of their proposal, students also create a Gantt chart to show the tasks and schedule of activities (Figure 8.2). The Gantt chart shows parallel tasks and milestones to be reached during the nine-month period. At times, it is also useful to have a list of tasks for each week or two, or even from one review meeting to the next. This serves as a lower-level timeline, focused on specific activities and shorter deadlines. The Gantt chart helps team members to keep track of the project, manage their time and tasks efficiently and share the workload.
Figure 8.2: Example Gantt Chart
Working with the University
It is important for all parties in this collaboration to be clear about each other's expectations and roles in the collaboration. Failures in the relationship are largely due to poor communication or poor management of the program, and not knowing each other's roles. In Open Innovation, all of the team members should have an open mind, trust each other, and be willing to listen to each other's perspectives. The following are guidelines on the roles and expectations for students, supervisors, industry representatives and Advisory Board members.
- Students' Role
- Take on the role of a project manager for all aspects of the project.
- Develop a communication plan among key stakeholders in the project, specifically the core team members including the university supervisor(s) and the client representative(s).
- Work within the prescribed framework and timetable for the project, but demonstrate individuality in approaching the specific project. Meet all prescribed review requirements and deadlines with practical reporting.
- Ensure good workshop practices, consistent with all safety regulations.
- Maintain standards of confidentiality and professionalism at all times.
- University Supervisors' Roles
- Check work plans and reports, and provide guidance and input to the project.
- Assess project expenditures, and monitor the budget and financial arrangements.
- Maintain contact with the project client, participate in project review meetings.
- Be a support person for the student, and ensure that the student meets the high standards expected of the product development project.
- Role of the Industry Partner
- Allocate one person as their liaison officer, to communicate with the student and the university supervisor on the project.
- Involve other personnel such as design, research, marketing, sales, and shop floor staff at appropriate times during development.
- Make company resources available to the student to enable successful completion of the project.
- Maintain regular contact with the student, attend, or provide feedback and input during project reviews.
- It is up to the company to decide how much more contact (in addition to the scheduled review meetings) they would like to have during the project period.
- Role of the Advisory Board
- The Advisory Board members mainly assist by providing an external unbiased perspective on key project decisions, and may sometimes be called upon for project selection or scoping of projects.
- For the students, the Board represents a real-world industry group who must be convinced of their skills and their innovations. The presence of the Advisory Board at oral examinations gives the students exposure to the environment of new product presentations that will occur in their careers—be it a new product approval forum or a presentation to the board of directors of a company. Such experiences sharpen the persuasive abilities of the students who must know the research and facts to justify their decisions. The relationship between the Board and students mirrors business practice. Advisory Board members have grilled the students in a “Dragons' Den” style questioning format, to ensure that students have considered all of the critical elements of successful product development. The perspective of a public good that motivates each Board member to be involved is also a powerful role model to the students as they develop their community values.
- For industry partners, the Board members serve as an additional source of expertise, which can provide an objective and neutral view on aspects of the project. Patent attorneys on the Board can advise clients on the process of taking out provisional patents, if and when appropriate.
8.4 An Example of an Open Innovation Project
An example of a project can help with understanding the value of such Open Innovations with the university. This section describes a project example, and covers the main stages of project definition, design and development, and deliverables.
Design of a Lighting System for Hi-Tech Underground Pipe Profilers
This project involved the research and development of a lighting system for Company X's underground pipe profiler system. The company specializes in the design and manufacture of multi-sensor inspection equipment for water and wastewater pipelines. The profiler attaches to a powerful camera and provides pipeline contractors and maintenance engineers with precise measurements of ovality (roundness), capacity, and other internal pipe conditions in new and existing pipelines. This information is used by local councils for the management and repair of pipelines. The company exports profiler systems to 35 countries worldwide. For purposes of confidentiality the company is referred to as Company X and some of the commercially sensitive details of the project are not provided here. However, it presents the essentials required to understand a typical project and how to openly innovate with a university.
Stage 1: Project Definition
The project began with a meeting of the core team members—the student (in this case a product development final-year student), company representative (one of their Design Engineers), and the staff supervisors (from the School of Engineering and Advanced Technology, Massey University). Confidentiality agreements (nondisclosures) were signed by team members, as required in this case, before the start of discussions. At the meeting, the student, client, and a representative from the university department discussed the collaboration, and then read and signed the contract (Appendix B). The student then carried out research to gather information to understand the problem and opportunities, and wrote a proposal as per the guidelines (Appendix C). This was due around March 14 (refer to Figure 8.2), two weeks after the start of the semester. The university staff supervisor and the company representative assessed the proposal to ensure that it had captured what was discussed at the collaborative meeting. This stage was completed by the end of March, and helped to clarify the goals of the project, the scope, deliverables, timeline, and milestones.
The brief or aim of this project was to create a new lighting system that would effectively profile large (up to 4 meters diameter) underground pipelines. In this particular case, the brief was to design and test a new configuration of lights that is compatible with the company's profiler system (that contains a hi-tech camera on a float that moves down the pipe with the flow of water), and overcome current problems of uneven light and poor quality of internal pipe images.
The student undertook a number of research activities to understand the problem fully. The student examined current systems available in the market (Figure 8.2, Task: Initial research and idea generation). Initial research included field studies and visits along with the company's technical staff on their regular profiling measurement tasks. Scuba diving photography and videography lighting systems were examined, and a patent search was carried out (Figure 8.2, Task: Competitor research and patent search). In order to gain a better understanding of the problem and context, and how different lights perform above the water surface and underwater, some preliminary experiments were undertaken. The tests were performed in a swimming pool underneath a pool cover at night, to replicate a dark pipe. This preliminary research and initial experiments were carried out over a period of approximately three to four weeks.
A large testing environment (that mimics real pipelines) was then designed and built at the company location by the student over the next three weeks. This was done so the current lighting system could be tested for baseline reference data, and then improved systems could be tested in the same test-rig for comparisons. The tests showed that the current lighting system used in conjunction with the company's profiling system and camera were insufficient to gather high quality (1024 × 768 pixel) images in large 4 meter pipes, and produced over- or underexposed images when the profiler system moved even slightly to either side of the pipeline. A lighting expert within the university was contacted for his input, advice, and use of his sophisticated equipment for light measurements. The light output was graphed using a light meter to measure the light output in lumens at positions around the color grid in the test pipeline. The current system was not only inadequate in large diameter pipelines and not provide an even spread of light, but also did not direct enough light farther down the pipeline.
Research into LED (light emitting diode) technologies and other technologies was carried out during the following three weeks, along with working in parallel on ideas to help solve the identified problems (Figure 8.2, Task: Concept generation and selection). Several LED emitters were compared on performance and criteria such as lumens, color, temperature, forward voltage, and cost. Target design specifications were set as follows, after consultations with end users and company personnel:
- Total output in lumens: 9000 lx
- Optimized array position for even spread of light
- Waterproof design (under up to 3 meters of water)
- Attaches to current profiler system without the need for disassembly
- Does not create interferences with current float system
The first review meeting was held around end of May (see Figure 8.2). At each review meeting, the extended team members come together to discuss progress, critically evaluate the situation and make suggestions for the next stages.
Stage 2: Design and Development
Many different concepts were generated with different alignments and configurations of light emitters. The target specifications stated above were used to select the best concepts to take forward into simple models and mock-ups.
The prototypes were assembled using metal strapping plates. Use of the metal strapping allowed for quick and easy evaluations of the various prototypes. This stage included a number of iterations and experiments. Several prototypes were tested in the new test rig and the results were graphed and compared across all of the prototypes. The tests showed that the light emitters needed to be angled to achieve a consistent light spread. A second review meeting was held in mid-August (Figure 8.2).
Further prototype development and testing was done. With the optimum alignment selected, the next step was to design a housing to hold the emitters in the desired position in a waterproof enclosure. Two enclosures were designed for testing. Rapid prototypes were made, tested, and refined based on the test results. Basic financial assessments were made. One of the top pods was removed, which reduced the parts and the cost of the system. The third review took place at the start of October.
Refinements and testing showed positive results (Figure 8.2, Task: Refinements). A comparison of the images from the test rig showed clearly that the new system produced significantly more light, as well as a more even spread of light. With the new system there were no patchy spots and the pipe was much better illuminated farther down the pipeline. This greatly increased the area of the pipe that can be analyzed with each frame recorded, saving time during inspections.
Another problem addressed by the student, concerned the float drifting closer to one side of the pipe, and also swaying when going around corners, due to the irregular water flow in the pipeline. The problem was that the image of the side of the pipe that the system drifts to becomes overexposed and the other side underexposed. The solution considered was to automatically adjust the left and right light pods so that the correct amount of light is always provided. In order to achieve this, the brightness of the pods needed to be varied independently, or a system that could detect the brightness of the image and adjust the lights accordingly would need to be designed. The latter, a smart system, was designed and tested by the student in the month of October.
A detailed bill of materials (BOM) table was created with a list of all the parts, suppliers, description, unit cost, quantities, and total cost. A financial analysis was done based on a three-year plan, with sales predictions based on current sales data provided by the company. Detailed information on the final prototype, technical drawings, test results, and the financials was recorded.
Stage 3: Deliverables (Demonstrate, Document, Display)
The project ended with a final formal presentation (See Figure 8.2 Review 4) and a demonstration of the prototype to company representatives and academic staff. A comprehensive report, along with the final prototype, was delivered to the company. The prototype was displayed (after gaining company permission) at the annual degree show exhibition (mid-November) along with all of the other projects. This is a celebration and conclusion of the partnerships for the year. The projects are also showcased on the university website, while the local media covers selected projects.
Company X has implemented the new LED emitters into its current profiling systems. This provides a 64 percent increase in brightness and 50 percent cost savings. The new emitters are compatible with the existing systems; that is, they mount in the current light pods and work with the current driver circuit. The new emitters also provide a longer battery life. In addition to the substantial increase in brightness and decrease in cost, there was also a decrease in production time. The lighting that was previously used required soldering onto printed circuit boards before they could be mounted into the light pod. The new emitters do not require this process, which means a difficult and time-consuming task is removed from the production process. This also means that a lesser skilled technician can assemble the light pods.
THE KEY ACHIEVEMENTS OF THIS PARTNERSHIP PROJECT WERE:
- Designing and building a large diameter testing environment at the company premises.
- Designing a high-power lighting system with more than double the output of the previous system.
- Designing an optimum lighting arrangement to produce an even spread of high-quality light within the pipeline, and forward this into the pipe.
- The design of a smart automatic brightness-adjusting subsystem.
- Contributions to company knowledge and expertise in lighting technology.
- A commercialization plan that included manufacturing, marketing, and financial plans for the product.
The value of the successful outcome was that the company could enter a new market. Previous systems did not survey large-diameter water pipes. The value of this system to end users is that Councils and infrastructure management companies will be able to assess their water systems and perform both urgent and preventative maintenance on their pipelines as required, rather than waiting for a problem to surface. The construction of a large testing environment enabled the company to perform real-world repeatable tests by in-house staff at their premises.
Company X has worked on Open Innovation projects with the university over a period of five to six years. The partnership with this company has gone beyond collaborative projects, to include summer work experience for students in their third year, leading to their fourth-year projects and then employment as soon as they graduate.
8.5 What Industry Partners Can Expect from Open Innovation Projects
Industry partners can expect a comprehensive report and a well-designed prototype that meets stakeholder needs. The projects integrate technical, customer, and market needs throughout the process, and students are expected to iterate across these areas to arrive at an appropriate solution. This behavior by innovators is also confirmed by Griffin et al. (2012) in their study of serial innovators in industry.
Documentation of the entire product development process: While undertaking these projects, students are guided by experienced staff to utilize the latest technologies and maintain details of progress. All the projects require regular record-keeping and documentation by the students, and the companies can have access to these. Visualization techniques are applied early and frequently, such as sketching, and two-dimensional and three-dimensional drawings. Early model-making and prototyping, including aesthetic and functional prototypes, and written and oral reports form part of the requirements. In addition, each student is required to keep a design notebook. Sketchbooks are used for this purpose, with blank sheets to encourage freehand sketching. An electronic design folder or logbook is sometimes used to record and share project progress, and contains alternative concepts, along with notes on the strengths and weaknesses, calculations, and modeling data. Student team members communicate with each other informally and formally in meetings, and through online networks such as Google docs, to which staff can have access to.
Adherence to Company Objectives: Solution concepts are assessed against the client's objectives and target design specifications. Clients appreciate the student's ability to balance product features based on accuracy required, time, and budget available. For example, students may buy a small part that is readily available off-the-shelf (such as buckles for an innovative safety harness system), and focus their design energy and time on parts that are of most value or provide differential advantage. Another example of sensible design would be to use a less expensive part when the level of functionality or sophistication is not required, or when it may be contained inside a product that has a very short lifecycle, such as a trigger in a disposable drug applicator. Students are expected to balance benefits versus costs when deciding on features, or appropriate materials to be used. Design decisions are made using a number of analytical techniques and optimizations. These analyses and computer modeling data are valuable to the company for reference and for future projects. Companies appreciate getting this objective information on decisions. Companies can also expect project decisions to take into account optimal use of resources, and considerations of the quadruple bottom line: that is, economic, environment, social and cultural factors.
Use of Modern Communication Technologies: Another benefit to industry partners has been the information gathered through the use of online discussion forums, YouTube, and social media to connect with potential or current users to determine the required features and current problems. The students' use of modern methods of gathering field and user data save time and provide sufficient data during the early stages of innovation. The students are tech-savvy and are open to trying new techniques, such as capturing field data on their cameras and videos (in their cellphones or iPads) and uploading them onto their electronic logbook for team members to view from any location.
Access to University Resources: Companies have access to university resources such as workshop equipment, including new rapid prototyping machines, three-dimensional printers, laser sintering, and computer-numerical control machines. They can access university specialists in material design, industrial design, packaging expertise, ergonomics, and various technical specialists related to product development. Industry partners have been impressed with the rapid prototypes that students are able to make, early in the development process to represent their ideas and demonstrate functional features. Students also design and build test rigs (say, for field testing, accelerated or drop testing, impact testing, and optimization testing) when standard tests are not available for new products, thus creating additional resources for industry, as in the example project with company X.
Commercialization Plans: The final report includes a commercialization plan that encompasses a manufacturing plan, a marketing plan, and a financial plan. The manufacturing plan includes detailed technical drawings, materials, and manufacturing specifications. The marketing plan takes into account target market characteristics, pricing, distribution channels, and promotional methods. Lastly, the financial plan includes a bill of materials, capital equipment, working capital, and a return on investment. The projects end with a formal presentation and review, and an annual exhibition hosted by university staff and students, to which industry partners are invited. The reviews and logbooks serve as evidence of the progression of thinking, decision making, and reflections on practice.
University students can bring a different point of view and fresh ideas as they are generally not fixed in their thinking by traditions or company constraints and time pressures. The university's leading-edge research and staff expertise together with the client's sharing of in-house commercial experience, can lead to successful innovations.
8.6 Challenges in University-Industry Collaborations
Challenges in university-industry collaborations arise from the differences in goals between the two environments. Universities are more interested in facilitating good student learning experiences, while industry is more focused on the commercial realities and financial returns. The applied research within universities tends to be more discovery-oriented or exploratory, while industry is driven more by practical and economic benefits. Unfortunately, for many academics and industrialists, these interactions are not common, and are sometimes seen as too difficult or not conducive to the traditional type of theoretical publications expected of university staff. Industry professionals sometimes tend to perceive students as more work rather than looking at the benefits of the relationship. Twenty-first-century universities are not only about teaching and researching, but also engaging in real-world problem-solving that add value to society.
In order for the Open Innovation partnership to work well, both partners should be willing to overcome the challenges and respect their differences. They should be prepared to engage with each other from the inception of the product idea or opportunity, right through the process of development to commercialization. With a better understanding of each other's cultures and perspectives, there can be mutually beneficial interactions, and sharing of knowledge and resources by both key partners.
The main challenge is in achieving a clear understanding and agreement of roles and expectations. These can be achieved by better communication, clarification of roles and responsibilities, and using the framework, agreements, and proposal documents provided in this chapter.
Both key partners need to be receptive to this form of cooperation and involvement. Students must respect company confidentiality and their obligations to deliver as per the objectives. Universities must be a little flexible and not too prescriptive with the project's review dates as they may vary slightly between projects. Hence, each project review is based more on the status of the project. Companies should understand that this collaborative project is only a part of the students' final-year program and that they have other papers and assignments to complete during the year.
8.7 Company Feedback from Industry Partners
Surveys have been done with partner companies over a period of several years to monitor their satisfaction with the Open Innovation program. Comments from companies have included:
Commercial Advantages:
- “The program helps keep up with competitors.”
- “It is a very economical approach to designing a new product or to simply help make a decision on product feasibility.”
- “Reduced our development cycle time.”
- “A good practical program, with financial benefits.”
- Many of the respondents said that they would recommend this program to other firms.(Lim et.al. 2001).
- One comment received on recommendation was: “I would recommend the program to others, except to competitors in my field!”
Information Gains and Access to Resources: Another survey of 22 partner firms revealed more benefits of the partnership. A very large percentage (84 percent) of firms found their experience, “much better than or better than expected.” Some of their comments were:
- “Very good periodic updates on progress.”
- “The final report was comprehensive and informative.”
- “Appreciate the effort put in.”
The main benefits gained by firms were found to be market and technology information, fresh ideas, and access to low-cost university resources (Shekar et.al. 2007). This supports previous researchers who found knowledge transfer as a key motivator and benefit in collaborative partnerships (Chesbrough 2006).
Eighteen in-depth interviews were carried out, which further confirmed some of the survey findings. It was mentioned that the framework (Figure 8.1) of university-industry partnerships serves to reassure companies of the structure and organization of the Open Innovation system. Some mentioned that the value of a product is enhanced in the eyes of consumers, when they know that it has been developed in collaboration with a university. Overall, partner companies appreciated and supported the OI program (Shekar et.al. 2007).
8.8 Keys to Success
This and the following section outline the keys to success and pitfalls to avoid in OI projects between university and industry, based on the experience of coordinating many of these student projects, as well as the survey and feedback gathered from clients.
- Nature of Project: It is important that companies provide a project that is a good fit with the discipline or major that the program is associated with, in this case product development projects (generally a wide range of manufactured consumer products that address a need, including social innovations for developing countries). Ideally, the project should go through all of the major stages of development starting from project definition to commercialization plans, and have the potential to be commercialized, if found to be feasible. The company benefits more from a project that allows for students' creativity, and not one that specifies exactly what to build and test. So it is better for a company to provide a broad or open brief as input to these collaborative projects. The university can provide examples of previous projects, to help clarify the scope and nature of projects that are suitable.
- Commitment and Support: Industry and universities should approach the relationship as equals and with a mindset of contributing to the final outcome together. Students are motivated and committed to a project that they see has the potential to be realized, and sometimes have the joy of seeing it commercialized by the client company in the following year. Actually seeing their product in the market gives them a sense of pride and achievement far greater than good grades alone. Commitment and support from the university and partner companies contribute to better outcomes. For example, the client company may appoint a specific person to oversee the project, and they may provide a desk and computer to the student when students are available to visit the company (such as during study breaks or a day in the week that has been assigned for project work). The company can provide access to background material and introduce them to relevant staff in research and development, as well as in finance, manufacturing, and production.
- Communication: Communication is very important between the students, the staff, and the client. It has been found that some clients initially are overly concerned about giving away competitive secrets. It is important for people involved in Open Innovation to share information on the vision and motivation for the project, and also on how it fits with the company's innovation strategy. Clients who are concerned about company secrets being given away can either have a nondisclosure agreement (Appendix D) signed by all, or withhold sensitive information. It has been observed that companies that share relevant information get more value out of the projects. The project outcomes were better aligned to their needs.
- Ongoing Partnership: It is in the interest of all parties to meet often and discuss progress. The proposal usually clarifies the opportunity and the scope of the project. The framework lays down the entire process for the development collaboration, and the timings, and what can be expected as outputs (Figure 8.1). In addition to the milestones and review meetings, there is flexibility on how often the student or client wishes to communicate. Industry must share as much as it can in terms of how this project fits within its innovation strategy and provide relevant literature on the nature of the problems. Any new information received by any of the partners once the project has commenced must be shared in a timely fashion for successful outcomes for all. It is recommended that the contract agreement is kept short and simple, as elaborate documents may put off potential collaborators.
- Long-term Relationship: Rather than viewing this project as a one-off, both key partners should see it as an opportunity for larger and longer-term projects. A change in mindset by industry, from perceiving students as additional supervisory work to seeing this as an opportunity to access fresh ideas and talent has been a key to success. At times it is seen as a chance for the company to check a potential employee out, almost like a year-long interview. This is an opportunity for all three parties to understand each other better and build long-term relationships. Companies can employ students during the summer break, which can provide a head-start to the project just before the commencement of the program. A suggestion in order to build longer-term relationships is for industry to provide projects each year for a few years, which will save time for both parties in terms of paperwork, logistics, and the time it takes to get to know people. This will enable fruitful partnerships and can set the ground for much larger and longer-term projects.
- Companies are advised to take advantage of some of the government funds that are available to students who work with industry, while others are aimed at firms to work on Open Innovation. Companies can build relationships with universities by participating in Advisory Boards of departments where they are well positioned to develop stable partnerships.
- Intellectual Property: In these short-term projects, IP is best shared in a way that is beneficial to all parties. A suggested way is for universities to be able to use the project material for teaching purposes and for publications (after the industrial partner has protected any IP that has been generated). The client companies can benefit from the commercialization of the new product and the financial gains from doing so.
8.9 Pitfalls to Avoid
- Real-world complex problems are generally not solved by a single discipline, so team members should be comfortable thinking outside their own specialization and interacting with a multidisciplinary team. Breakthrough innovations are often done in inter-disciplinary teams (Ulrich and Eppinger 2012). Hence, it is important to avoid working in isolation on the entire project, and for company staff to be involved as much as possible and be open to including other key stakeholders in important decision making.
- It is critical not to over-promise and underdeliver on commitments and agreements. Partners should keep in mind that the achievements expected should be realistic.
- Companies should not provide projects that are critical to their survival or projects that are due to be launched in a couple of months. When industry needs the unconstrained mindset and capabilities that a university offers, it is the right choice. The timelines should be suitable and acceptable to both key parties.
- Companies can be flexible about their contributions to projects and can negotiate support by providing it “in kind” such as in the form of prototyping materials and/or access to industrial manufacturing facilities, or additional in-house supervision.
- Projects should not be left unattended. It is important to manage the process by using the framework (Figure 8.1), and staying involved, for mutual benefits.
- Company representatives can negotiate intellectual property (IP) ownership and work out details on a case-by-case basis if required. Partners tend to stay away from rigid approaches to IP protection.
- If on the rare occasion there are two client companies within the same industry, extra precautionary measures need to be taken to ensure that there is no conflict of interest. This can be done by having separate teams of students and staff involved in the two projects, and team members signing nondisclosure agreements (Appendix D).
8.10 Benefits of the Open Innovation Program
This program is beneficial to the partner companies and to university staff and students. Companies have access to leading-edge knowledge, low-cost labor (in terms of a senior student for approximately 375 hours over nine months), and project supervision by academic staff, while students gain an insight into the business environment and hands-on experience. Access to experts across the university and at other universities is encouraged, allowing for a wider interdisciplinary input. Companies benefit from not only the practical technical solutions, but also the students' creative and innovative skills, and the important “people connections” made during the project. The students produce extremely useful research material about the market, the consumer, and the product, along with prototypes and testing information for a new product, which the company can then take on board to commercialize and reap benefits from. Companies have patented some of the products of this program and many have won national and international awards.
Companies benefit from creative ideas and expertise from people external to their organization. They benefit from resources at the university—in terms of staff time, student time, knowledge, equipment, and resources. Alumni in industry from this program often contact the university to provide projects and have found value from doing so (as they understand the program well); so it is a sustainable win-win-win model of partnership.
Small and medium enterprises that lack some of the resources required for complex product innovation, such as rapid prototyping equipment, three-dimensional printers, testing equipment, access to library facilities, or access to specific research and expertise can gain access to these benefits through such a program. Generally, expensive equipment at the university may not be fully utilized during semester breaks, when companies can have access to them at relatively lower costs.
8.11 Conclusions
Industry can benefit from collaborating with universities in Open Innovation, and especially small and medium enterprises that typically may not have all of the resources required for complex new product development. A vast number of valuable new ideas often never take off due to lack of resources and time. This chapter conveyed the mutual benefits of Open Innovation between universities and industry and offered a successful framework structure of operation. The framework is versatile, allows for scheduled review meetings during development, and displays key milestones visually. This collaborative program brings the manufacturing sector into close contact with the university community.
This partnership is not well developed in many countries, despite being considered critical by many experts for the development of an innovation ecosystem. Industry and universities must work together to contribute to global and humanitarian development, and solve problems that are of urgent need to society and have a global impact
As the number of such partnerships increases over time, there can be more sharing of resources and knowledge across partners around the world. It has been found on a number of occasions that a solution or idea in one industry can spark a new application in another industry. The future will see more such collaborations due to the advantages they bring, resulting in new innovation ecosystems. More and more insulated organizations should transform into open systems with joint teams and innovative people. New forms of IP sharing may emerge in the future as more Open Innovations take place. Why reinvent the wheel when one can access knowledge anywhere in the world rapidly through modern communication technologies, and speed up their own product development via Open Innovation?
Acknowledgement: The author wishes to thank all the client companies, students, and staff who have been involved in these collaborations.
References
- Chesbrough, H. W., 2006, Open Business Models: How to Thrive in the New Innovation Landscape. Cambridge MA: Harvard Business School Publishing.
- Griffin, A., R. Price, and B. Vojak, 2012, Serial Innovators: How Individuals Create and Deliver Breakthrough Innovations in Mature Firms, Stanford University Press.
- Lim, S. S., E. L. Loo, and A. Shekar, 2001, Product development partnership programme and its evaluation. In R. A.Dwight, and E. J.Colville (Eds.), The 8th Australasian Conference of Engineering Management Educators (pp. 129–137).
- Shekar, A., S. S. Lim, A. M. Anderson, and J. A. Gawith, 2007, “University-Industry Partnerships in Product Development.” Paper presented at the 14th International Product Development Management Conference, European Institute for Advanced Studies in Management (EIASM), Porto, Portugal.
- Ulrich, K. T., and S. D. Eppinger, 2012, Product Design and Development, 5th ed., NY: McGraw-Hill.
About the Contributor
- Aruna Shekar is Senior Lecturer in Product Development at the School of Engineering and Advanced Technology, Massey University, Auckland, New Zealand. She has lectured in the areas of product innovation processes, methods, and management since 1994. Prior to this she worked for Cadbury Schweppes, Australia, and Telecom New Zealand. In 2003, she received her PhD in Product Development from Massey University, and has supervised several postgraduate students. She has served as Major Leader for the Bachelor of Engineering degree in Product Development for more than a decade, and is Dean of First Year Engineering and Technology (Albany campus) She has lead several research and consultancy projects and received external grants for industrial projects. She has won several awards, published extensively, and presented at national and international conferences. Dr. Shekar has coordinated Massey's collaborative Open Innovation projects with industry for several years. She initiated the establishment of the Product Development & Management Association in New Zealand (www.pdma-nz.org) in 2007and continues to be a Foundation Board member. She is also part of the Innovationz Group, a team of researchers funded by the New Zealand government to support local manufacturers to help them enhance their product development practices. She is passionate about fostering creative and innovative thinking, and providing project-based learning opportunities in product development education.