Barriers to Innovations and Scale-up Adam Cenian

1. Barriers to Innovations and Scale-up Adam Cenian Institute of Fluid-Flow Machinery, Polish Academy of Sciences, Gdańsk

2. Innovative Gdańsk – history, science, politics ‘Solidarity’

3. Motivation Identification of methods of support that could be madeavailable for entrepreneurs and universities trying to bring their innovations to the business

4. Forbes Most Innovative Companies 2016 - top 10: • Tesla Motors, innovation score - 84.82 • Salesforce, innovation score - 77.81 • Alexion Pharmaceuticals, innovation score - 72.50 • Regeneron Pharmaceuticals, innovation score - 72.13 • ARM Holdings, UK innovation score - 69.76 • Unilever Indonesia, innovation score - 67.90 • INCYTE Corporation, innovation score - 67.85 • Amazon, innovation score - 67.64 • Under Armour, innovation score - 66.56 • Biomarin Pharmaceutical, innovation score - 65.19

7. Valey of death issue

8. Barriers for innovation in Poland (Questionnaire) • Time-consuming patenting procedures, costs, 5 • The procedures and requirements for new designs within the EU rules 3 • Lack of capital, and often no wish to take any risk. Disbelief that despite the risks, the innovative product is able to yield high profit. 2 • Lack of knowledge & law assistance regarding EU patenting procedures; • No serious treatment of potential scientific partners by foreign (especially from more developed countries); • Lack of interest of some of the representatives of the Science sector towards dealing with specific challenges/problems coming from industrial sector; • Complicated procedures to obtain support, difficult forms for involvement of specialized services,

9. Main reasons for the fact that only little of the excellent research produced is not translated into marketable products (European Paradox) • Research is not adjusted to the development potential of theenterprises; 3 • system of regulations and permits, reducing the level of market access 2 • Difficulties with raising capital, especially for projects with very high risk 2 • Mismatch between research potential and market demand; 2 • mentality of EU residents, accustomed to a high level of social security, and thus relatively little prone to risk. 2 • Lack of willingness/readiness of the banking system to support new ideas with risk ; • Complicated laws and regulations inside EU, system of permits and approvals; • In some sectors there is reluctance to use a new product, especially originating from new enterprises with little or no history on the market. • no readiness from business to implement the scientists’ achievements. • relatively closed domestic market, not forcing the strong competition with the outside world.

10. Main factors inhibiting faster scale-up of SMEs Poland Lack of investors willing to take risks, in contrast to US 3 The extensive system of social protection common in EU countries, which causes among citizens a strong feeling of security and the low risk of extreme poverty. In countries outside the EU, the level of security is much lower, increasing the natural desire to take risks. The reluctance of private capital to take the risks. 3 Expanded system of regulation and control of the market,

11. Availability of venture capital in your country on a scale of 1 - 10 4 2 3 2 2 Willingness of companies to invest in scaling up production on a scale 1 - 10 • 3 • 2

12. Appropriate policies and/or instruments to support innovation and scaling-up? a. On the national level b. On the European level c. On the regional Level • + simplification of application form for supportprograms, • + limitations with respect to the market control should be eliminated in order to foster increase in economic freedom; • + increase of access of SME to the research project at the EU level, lower the minimal value of the projects; • + limitations with respect to the market controlin order to foster increase of economic freedom; • + create a support mechanism for the protection of intellectual propertyin the case of a conflict with a large corporation • c. + I do not see any barriers at the regional level, • + introduction of small R&D projects with simplified format/applicattion form to the possible extent; 2 • + decrease in financing of large programmes, dedicated for large companies with focus on implementation process, at the EU level; • foundationsshouldeducate andencourage to take risks, includingprivate sector. • no administrative actions are able to increase or decrease the level of innovation

13. How do you rate the importance of the following EU approaches? a. SME instrument b. FTI pilot c. Procurement d. Prizes No idea 5

14. Barriers to implement innovation oriented procurement (public and private) Creation of a bigger and more available system of assistance, not only with respect to the research, but mainly with respect to the support of the implementation process of the developed product into the industrial practice; More attention towards situation, where product ready to enter internationals markets is already present, but the biggest difficulty lies in the begining of the both production and selling processes; reduction of formal requirements may result in increasing the level of innovation and improve the speed of product marketing. the support for entrepreneurs implementing already developed products for industrial practice could be expanded. lack of programs encompassing the protection of patent rights and intellectual property at every stage of the product life. lack of program to assist in the implementation of the product into industrial practice.

15. Three elements that EU could add over and above your level to accelerate innovation • Creation of the support mechanisms to protect EU patents on its territory but also outside of it 4 • Decrease in the amount of the law regulations, certificates, permits 4 • Creation of special (small) funds for projects with a low chance of success but of high added value in the case of the success (also at the stage of product launch and marketing), 4 • Simplification of the application process and EU project accounting (currently, the assistance of the external specialized company is needed toapply for a project and to realize it from financial/administrative side)

16. Is there anything else you would like to add ? No 5

17. Quality Statement (Academy)  To whom did you distribute the questionnaire?  Did you conduct personal interviews?  What was the response rate?  Were other experts than academy members targeted?  How would you rate the overall quality of the responses? All the questionnaires were directed to the enterprises, which already have a large potential for innovation and are exporters as well as to the large companies with great potential and possibilities. Questionnaires were delivered in the written format, and some clarifications were done via phone. Unfortunately, response rate was very low despite the fact that full anonymity is ensured (12% of responses). Respondent was a businessman (owner) exporting its products (up to several tens of percent); the product is technologically advanced, of own designs. Industry: energy sector.

18. Source: Forbes http://www.forbes.com/sites/johnhall/ 2013/04/29/10-barriers-to-employee -innovation/#792c82511133 John Hall 1. Closed-Mindedness 2. Traditions 3. Jealousy 4. Money 5. Generational Differences/Age 6. Communication 7. Size 8. Education 9. Thought Leadership 10. Resources

19. The hidden barriers to innovation – Key obstacles to innovation • Obstacles that will need to be addressed if you expect to establish a sustainable culture of innovation: • Lack of a shared vision, purpose and/or strategy • Short-termthinking/focus • Lack of time, resources or staff • Lack of “spec time” to develop new ideas and opportunities • Innovation not articulated as a company-wide commitment • Lack of ownership by senior leaders • Leadership expects payoff sooner than is realistic • Lack of a systematic innovation process • Management incentives are not structured to reward innovation • No reward and recognitionprograms • Constantlyshiftingpriorities • Belief that innovation is inherently risky • Lack of systematicinnovationprocess • Internal process focus rather than external customer focus • Inadequateunderstanding of customers • Focus on successes of the past rather than the challenges of the future • Unwillingness to change in the absence of a burning platform • Unwillingness to acknowledge and learn from past “failures” • Politics – efforts to sustain the status quo to support entrenched interests • Rewarding crisis management rather than crisis prevention • Hierarchy – over-management and review of new ideas • Micromanagement Torben Rick Experienced senior executive source: http://www.torbenrick.eu/blog/strategy/30-key-obstacles-to-innovation/

20. Conclusions • Research is not adjusted to the development potential of the enterprises; • Mismatch between research potential and market demand; • Reaserchfocussed on hightech - too high for polish industry • Why ? - science implementation is not high on priorities of institutes valorization system • High H - index is more important than innovation-implementation • PAN Institutes good in implementation and worse in publication get low marks • Often polish institutes are working for foreign industry • Difficulties with raising capital, especially for projects with very high risk • Time-consuming patenting procedures, costs • system of regulations and permits, reducing the level of market access • mental barrier against innovation/change

21. Conclusions Solutions: + change of mental attitude towards innovations, both among scientists (higher valorization priority) and society (motivation) + simple grant system for implementation stage (not only development and prototyping) + decrease of administration regulations (including procurements procedures) + easier patent application procedures

22. Thank you for your attention source: http://www.torbenrick.eu/blog/strategy/30-key-obstacles-to-innovation/