Could you tell us about what NCMS seeks to gain in linking these organizations?
Nowadays, most innovation is happening at startups and smaller companies. For them to engage with organizations that have funding, especially the public space and government, can be daunting. We match the end users and the tech developers with the financial means to collaborate. NCMS offers the expertise needed to bridge the gaps, essentially providing the infrastructure that ties it all together.
One of our key goals at MLFUSA is to bring a diversity of players to the table – increasingly we see large businesses looking to talk with ‘Innovation Pioneers’ – agile, fast-moving startups – for example our keynote Dale Easdon of Snap Kitchen. Do you think it’s still possible for larger companies to be agile, or have their own in-house innovation projects?
If you look back to the early 1980s and even the 1970s, in almost all R&D, the innovation was at very large companies. Nearly all the major players had significant internal R&D capabilities, where a lot of the intellectual property (IP) was developed.
Over the last 30 years, that has really transitioned away from large companies. We’re seeing things like Silicon Valley developing in the US and other places, dominated by small- and medium-sized supply chain companies. Where in the early 80s, around 80% of innovation came from large companies, now, that’s completely been turned on its head. Now, 80% of innovation IP is being developed in these small startup companies – I think there’s a couple of reasons for that.
One is the agility you mentioned – clearly these small companies can just go faster, but they don’t always have the resources to sustain themselves until they find a customer. The other one is that the breadth of technology has grown so fast. Whether it’s information technologies, or how innovation happens, it’s been very hard for large companies to keep up while also remaining true to what they really do.
Big players in the automotive industry have some great examples. They are experts at making cars and integrating the latest technologies, but they no longer innovate much of the disruptive technologies. A lot of companies are going to be working on new tech for autonomous vehicles, and they’ll be innovating as they go. The automaker OEMs are massive organizations that are not realistically capable of keeping up on every technology innovation curve with these smaller businesses. It’s impractical for them not to be outsourcing their new tech, but that means outsourcing their innovation with it.
It’s interesting you say that previously they would have been able to keep this kind of innovation and they would have been at the forefront. Access to tech, especially to software and programming would have been more restricted in the past – so they’ve lost their monopoly.
There’s a lot of things – between the internet, cloud computing, the open-source wave that has hit – it’s hard to keep up without trying to scale your workforce at a ridiculous level. I think a lot of companies tried that, and they tried to be everything.
Unfortunately, what this does is really pull away from their original selling point. What a lot of companies are now trying to figure out now is: “What is it that we do?” Next step: “Could we partner with smaller businesses that can cover all the bases that we need, but that we don’t do?”
You get a junior high kid with a Raspberry Pi and a computer that has internet, and they’re off working miracles
The R&D spend of most organizations is not nearly what it used to be in large companies. With the onset of cloud, open source and internet, you don’t need enormous infrastructure to have effective R&D.
I think you’re right on that. A lot of larger organizations’ leadership are a little bit more set in their ways. The thought process of updating processes turns to innovation quickly followed by throwing a lot of money into new technology, when, in fact, that’s not necessarily needed anymore.
Yes, you get a junior high kid with a Raspberry Pi and a computer that has internet, and they’re off working miracles. It really is amazing what people are capable of with not a whole lot of resources. At NCMS, we have a long-standing belief that Innovation happens at the intersection of talent, investment and infrastructure. If you put some smart people in a position where they have the tools they need and enough resources (investment-wise), then the sky’s the limit. It does not take a 10-story building with 5,000 scientists to do this stuff.
And it won’t necessarily work if you do have that!
You’re exactly right, you can’t just process or invest yourself to innovation. It needs to be deeply embedded.
At MLFUSA, your session is discussing how larger companies can take advantage of these technology organizations and partnerships. In an ideal world, what is the dream scenario and process for a large business looking to take on this new tech or to outsource to a smaller supplier?
Large companies usually know what their problems are, they know their challenges, and they think they have all the suppliers or resources they need to reach the solution. Unfortunately, many of them are just now realising that’s not the case. There’s a massive world of companies with incredible new capabilities out there. If I have a problem, from how I repair composites on a plane to how we look at quality issues – there are endless bottlenecks on the manufacturing side – I need to consider if I’m even looking at the right solutions.
If I’m an Aerospace company, I may not know about 10 Automotive suppliers that could eat the lunch of the current suppliers I already have, with better technologies, or vice versa. Just because they’re not in your industry, doesn’t mean they don’t have a new, faster solution for you. NCMS works with hundreds of these companies.
This is a relatively new way of doing things – getting larger organisations to collaborate. Manufacturing companies traditionally dog-eat-dog world, but what happens when Amazon comes along? It’s hard to compete with one another as well as one of these giants coming out of the left field.
A great example of this right now would be autonomous vehicles. GM. Toyota, Ford and others are putting a lot of investment into this, but their strongest competitor could easily be Google. You think you know who your competitor is, and then somebody comes out of nowhere! Look at Elon Musk and how he’s doing things, you’re suddenly competing on a new playing field, you have to see how a company like his is going to build a car versus how you build a car. You are already working in a box with your own competitors, and someone new comes along and just throws away the box and changes the rules.
With that in mind, picking up the smaller tech companies that do bring new ideas the table, seems to be the way to win.
Truthfully, in a lot of cases it’s going to be the way they survive. The day we stop innovating is the day we die! You must stay ahead of the game, which means you have to innovate. if you’re not aware of what these new clever ideas are out there, you’re going to be sitting on a typewriter when everybody else is on their computer – or worse, the cloud!
So when you do bring these organizations together, what would you say are the challenges that you find within these collaborations?
The two biggest challenges are pretty clear: transparency, and trust. I’ll start with transparency – if you are a large company, it’s hard to be transparent about your issues. For example, if you’re an airline, you probably don’t want it in the public domain that your composite repair procedures aren’t working, or people are flying airplanes with things that the public may be nervous about. Having them be transparent about their issues is a real challenge.
On the flip-side, suppliers don’t like being transparent because they’re afraid that the big company will steal their IP, or just knock their margins down to zero. Trying to get companies on both sides to be fully transparent with each other about what they’re trying to do is a key thing, which then leads to the trust factor – how do we then protect the IP that’s being developed? If we’re going to do all this work, how do we know we’re getting the business? That is certainly one of the biggest challenges that we see in this space.
I know for NCMS, in what we call the demonstration space (right before commercialization), we’re getting the technology in the hands of the end-user, greasing the skids for the supplier to sell their stuff – that last step of getting contractual agreement is the major hurdle.
However, that’s really a problem that we can’t solve. We try to stay neutral at that stage, the change needs to come from within the organizations themselves.
As a final thought, if you were VP of manufacturing in a Fortune 500 company, and you needed to take on a new technology supplier, or the other way around – a small tech developer about to start working with a Fortune 500 company – what would your advice be for each of those sides?
I would say, “Don’t assume that you have the solutions already – you don’t. You need to look for avenues that you may never have expected, and work with businesses coming completely out of the left field. It’s the only way you can continue to grow.” That’s for the large guys.
For the little guys: You HAVE to make yourself known. Step out there repeatedly – you may not land that big contract on the first meeting, but if you don’t open yourself up, you’ll never get there. Persistence, that would be my advice to the small guys. I’ll say it one more time for the big guys: Assume nothing. You only know what you know.
Jon Riley is Senior Vice President, Technology, for The National Center for Manufacturing Sciences (NCMS) the largest cross-industry technology development organization in the US. Its aim is to improve the competitiveness and strength of the US industrial base, by leveraging its network of members and partners to research, develop, demonstrate and transition innovative technologies more efficiently.