Innovation Hubs are part of 4G Innovation

Innovation Hubs –
What, Why, Who, Where, When and How
Industrial Research Institute
Emeriti Activity Group Webinar
August 22, 2012
Bill Miller, PhD
President, 4G Innovation LLC
CEO, Strategic Radical Innovation LLC

Copyright – 4G Innovation LLC. All rights reserved 1

Agenda of Webinar

Why & What are Innovation Hubs (iHubs)
Describe the Gaps filled by New Core Principles of iHubs
Describe the New Principles an how they are applied in iHubs
Describe the Genealogy of Innovation Theory and Practice in iHubs
Describe Who, Where & When is an Example of an Innovation Hub (iHub)
Department of Energy’s (DOE) Innovation Hub Program begins in 2010
Innovation Hub on Energy Efficient Buildings
iHub built in an Energy Regional Innovation Cluster (E-RIC)
$122 million competitive award from DOE; 754 page grant proposal
Awarded in 2011 to the greater Philadelphia Innovation Center (GPIC)
GPIC has 22 member organizations in a large regional public/private partnership
Goal – Radical Innovation: reduce energy consumption in US Buildings (USB) sector by
50% within 20 years (USB 40% of US energy) ; target retrofit of commercial buildings of
less than 100K SF (58% of commercial USB energy and 99% of all commercial buildings)
with 50% reduction by 2020
Describe How the E-RIC’s iHub is Organized and Governed by Who

Why an Innovation Hub?

Gap Problem: low business growth and weak demand
Gap Cause: poor innovation methods that don’t effectively
create radical innovation that transforms industries for growth
Gap Solution is a new generation of innovation with Hubs which
practice a new approach to R&D and Sales
Example of new sales approach (Insight Selling) :
July – August HBR cover story is The Secret to Smarter Sales
HBR Article “The End of Solution Sales” says
“The old playbook no longer works. Star salespeople now seek to
upend the customer’s current approach to doing business.” And
Hubs are part of the new Insight Selling.
3
Copyright – 4G Innovation LLC. All rights reserved

What is an Innovation Hub?

(What) A new type of fourth generation (4G) innovation
LARGE SCALE private–public partnership and project
integrated with Insight Selling with many members and
linked laboratories in multiple industries with a specific
problem-solving focus, collaboration and funding
(Why) To TRANSFORM A SET OF LINKED INDUSTRIES with
RADICAL INNOVATION –
Modeled after the Manhattan Project of WWII, but using
extended 4G methods

Who forms an Innovation Hub?

(Who) Multiple members from government, academia and industry
centered in a regional cluster with a new goal and who create and
operate a commercial/technical LARGE SCALE test bed

Typically focused on overcoming commercial, technical and regulatory
barriers that block achieving a specific radical innovation goal that
would transform an industry to achieve a new level of economic
performance and other value metrics

Example of a Hub Goal: reduce energy consumption in the USA
commercial building sector by 50% with retrofit of about one million
buildings within 20 years – demonstrate the 50% in a real building
retrofit within three years

4G Integrates Sales with R&D in Hub
Core
Industry
Problem
New
4G R&D 4G
project Dominant
Design

Partners from Multiple industries Insight Selling
Government & Academia

4G Innovation Hub –
4G Sales
Demonstrates a New Way of
Doing Business in an Industry
as a new Dominant Design
6

Sample of USA Regional clusters

Innovation Hubs are located in Clusters


Targeted Industries for
Innovation Hubs on the DOC EDA(1) Roadmap

These industries or sectors of the economy
need radical innovation
to improve productivity and quality,
and reduce costs that have been increasing for decades

Energy (supply, distribution and consumption …)
Healthcare … life sciences
Building Systems …Design, Build (retrofit) Industries are linked
in the Construction Industry
(Buildings consume 40% of energy in the USA)
(1) Reference EDA paper in Science Progress 2009
“The Geography of Innovation”
http://scienceprogress.org/2009/09/the-geography-of-innovation/
8

4G Hubs enable Radical Innovation
in Linked Industries

Economic value
Regulations

Goal: 50% reduction in consumption
Construction
Energy Buildings
Barrier: Retrofit Capability -
People with knowledge, tools,
technology and processes

Information HVAC, windows,
lighting and
Technology (IT) other building
9 materials

Five (5) Department of Energy
Innovation Hubs (to date)
Formed since 2010

Fuels from Sunlight – Joint Center for Artificial Photosynthesis (JCAP) :
Cal Tech & LBNL …
Goal: Fuels from Sun 10 times more efficient than current crops
Energy Efficient Building Systems - Greater Philadelphia Innovation
Center (GPIC) – a hub in a regional cluster
http://energy.gov/articles/energy-efficient-buildings-hub
http://www.eebhub.org/
Nuclear Simulation & Modeling – Consortium for Advance Simulation
of LWRs (CASL): Oak Ridge (ORNL) is lead, NC State, Los
Alamos, EPRI, MIT, Sandia, UofM, TVA, INL, Westinghouse …
Batteries and Energy Storage – Feb 2012 FOA; award pending
Critical Materials Research – May 31, 2012 FOA

Michael Porter’s Model of the Forces of Change
in an Industry is Modified with Hubs

Michael Porter’s Model of an Industry controlled by Five Forces
lacks two forces that block radical innovation and also
lacks linkages in supply chains and between industries
These two missing forces and linkages are managed with Hubs
which create a larger scale of 4G effort following a new 4G
process that is required to create and validate a new 4G
dominant design to transform linked industries
Uncertainty of new market demand for a new dominant
design candidate that can transform linked industries
Lack of individual and coordinated group capability of new
entrants, suppliers, buyers, and substitutes to do radical
innovation that requires creating and validating a new
dominant design with linkages within and between industries
11

Hubs manage New Forces added to
Michael Porter’s Model
6th
With 4G, Manage Uncertainty of
New Market Demand for a New Dominant Design (DD) candidate linking industries

7th
With 4G, Manage Capability
to do Radical Innovation which requires
creating a new DD from
entrants, suppliers, buyers and substitutes


Genealogy of Innovation Hubs
reveals the 4G Principles & Practices
Application of
1. 1998: Michael Porters’s Regional Cluster Theory and Practice
2. 1998 & 2001: Fourth Generation (4G) R&D and Innovation Theory and Practice
• Apply Part of 4G’s 10th principle
• Create new Innovation Application Labs to facilitate
collaborative open innovation involving customers and suppliers
• Apply Part of 4G’s 12th principle
• Create Scalable Radical Innovation Projects to Transform Linked Industries
3. 2009: Federal Government’s DOC EDA Regional Innovation Cluster Initiative
Initial Focus: Energy

Energy - a federal government identified “national challenge”
DOE creates Innovation Hubs …
Example: Energy Efficient Buildings Hub with $122M DOE grant
13

Hub Principles adopted from
fourth generation (4G) innovation

Begin with a Large Problem (Opportunity) in an industry and a goal to
radically transform that industry and linked industries with rapid learning
of customers and suppliers in a large scale collaborative project that pulls
solutions from multiple suppliers in linked industries and regulators
To achieve radical goals - Apply a fast, iterative, prototyping process of
discovering and testing the market needs and business models of both
customers and suppliers that pulls solutions from many suppliers and
regulators – Recognize this effort is much more than open innovation
Have a realistic large scale test bed as a geographic HUB in one location to
“learn by doing” and test revised industry practices and demonstrate
achieved goals and stakeholder values
Involve customers, suppliers and regulators in all the learning and tests

Fast 4G Process with iterative
prototyping of interim objectives

Interim Objective

4G is a NON-linear model of innovation
or process
15

3G Linear Model of Innovation –
now obsolete

Time
Technology
Transfer Market
Product
Basic Applied Or
Research Research Service
Development

Entrepreneurship
With a Business Plan

3G Linear Model of Innovation

Time
Technology
Transfer Market
Product
Basic Applied Or
Research Research Service
Development

Entrepreneurship
With a Business Plan

The Linear Model even with “use –
inspired” research is replaced in Hubs

18

The Linear Model even with “use –
inspired” research is replaced in Hubs

19

Limited University Research Funding
by Industry – Why?

According to NSF data
Only 6% of the $55 million of university science
and engineering research funding in 2009 came
from industry
Conclusion
“Open innovation” is being blocked by the 3G
linear model of innovation promoted by
universities as technology transfer and licensing

Paradigm Shift in 4G Hubs

4G

21

What are NOT Hubs

Research parks, incubators, federal
labs, venture capital funded
entrepreneurship, proof-of-concept
centers, any R&D organization like
SEMATECH OR NIH , P&G “CONNECT AND
DEVELOP”, ATP/TIP projects, SBIR
projects

Example – Energy Efficient Buildings
4G: Begin with an Core INDUSTRY problem and need to
change the dominant design in that industry

Energy Energy
Sources Consumption
Sinks

Problem #1 is low energy efficiency
23

Analysis of Energy Use
in Buildings


4G Dominant Design (DD)
To Achieve the Goal of 50% Reduction in Building Energy Consumption
Radical Innovation is Required to Change the DD

DD has Four Layers:
Top – Economy model consisting of
multiple linked industries (traded and non-traded)
Industry model with linked supply chains & networks
Business models of customer and suppliers in the markets
and market segments in the industry
Capabilities of customers and suppliers
People with knowledge, tools ,technology and processes
influenced by workforce education, regulations …


4G Process: Identify the Root Causes of an
Industry Problem and Define a Solution
Hypothesis as a new 4G Dominant Design

Root cause of the energy efficient buildings problem (high
consumption and cost) is fragmentation of the
construction industry and an inefficient collection of
design, build , operate and maintenance processes
Solution Hypothesis (to be tested) is
New industry structure and practices : “virtual vertical
integration” and “integrated process” enabled with new
information technology (new industry dominant design)
Plus new technologies, education and regulations


Hub Project: Break the Project into
Parts of the Solution as Task Teams
Overall leadership by Penn State University Architecture Department

1. Design Tools – led by IBM
2. Integrated Technologies – led by UTC
3. Policy, Markets and Behavior – led by U of Penn
4. Education and Workforce Development –
led by Ben Franklin Technology Partners
5. Commercialization and Deployment –
led by Princeton U – Plasma Physics Lab


Example: Hub Test Bed

28

HUB Organization & Governance
Public-private partnership
Industry, Academia,
Government
other partners
Regional Innovation Center

Greater Philadelphia Innovation Center

National Problem: Energy Goal #1: Reduce Energy Consumption

DOE Grant: Energy Efficient Buildings – Innovation Hub
22 members

Executive Board
Operating Committee
Task Team Leaders

Operating Committee

31

Task Team Leaders

32

Questions


Innovation Hubs are part of 4G Innovation

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