Submission – Professor John Raine, Pro Vice-Chancellor Innovation ...

Submission – Professor John Raine, Pro Vice‐Chancellor Innovation and Enterprise, AUT University
(Chair of Powering Innovation Review)
Email: john.raine@aut.ac.nz
The following remarks are personal observations and do not necessarily reflect the views of other
members of the Powering Innovation Review Panel. Following my recent return from an absence in
Europe, I have paraphrased a few specific comments from correspondence with Murray Bain during
August 2012.
1. I look forward to seeing the ATI gather momentum, but have a few concerns with the model
that appeared to be evolving at the time of the Minister’s announcement.
2. Continuity of Thinking:
It appears that a number of the ATI Establishment Board members are new to the background
of last year's reviews and to some of the key drivers for change that were identified in the
Powering Innovation report. To stay on track it will be vital for them to take soundings with
people in business and the R&D sector who have been close to the thinking around this
development.
3. Corporate Identity – Projects versus Funding Agency:
In early August 2012, I spent some time discussing with the MSI project team the matter of
what funding streams might sit with the ATI. I feel that it is vital that the ATI not be perceived as
some kind of merge of the Foundation, NZTE and Better by Design, but that it look much more
like an expanded and industry contract‐ and market‐driven version of IRL. I believe the
organisation needs to be perceived as a "doing" organisation primarily with strong in‐house
engineering capability, less a funding body, although I am comfortable with non‐contestable
money sitting with ATI, particularly around knowledge access.
At the time of the Powering Innovation review last year the panel recommended that the
Global Expert programme operate from within the ATI. The ATI has a key role in providing a
knowledge portal to technical and business expertise and I think funding for this sort of activity
can sit comfortably in the ATI. The Better by Design programme could also sit well in ATI,
expanded to encompass the SME sector. In this case it could also usefully become a broader
programme which encompasses not only design thinking but also enablement of an R&D/
innovation culture right across the various industry sectors.
From reading the ATI Cabinet paper, and subsequent conversation with Richard Bentley (MSI), I
have real concerns about putting contestable funding streams from the TechNZ funding
programme into ATI. In the Powering Innovation report recommended changes that would
really drive collaborative behaviour in the R&D and innovation eco‐system. If the ATI is shaped
to have hundreds of engineers working closely with industry, CRIs and universities on partnered
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projects, it must be perceived as a politically neutral player in regard to funding to support R&D
projects. If not, then other parties are going to see the ATI as have the whip hand in funding
projects, e.g. "Work with us or miss out on funding". Many partnerships will be directly
between universities and industry, or CRIs and industry. It is highly desirable that many other
partnerships will be three‐way between universities (or polytechnics), an industry and the ATI.
However, there should be no sense within the R&D organisation sector that the ATI is other
than a capable, neutral partner. The proposed model seems to put this at risk and in my view
may not help drive collaborative behaviour.
A number of people have approached me as Chair of the Review last year expressing their
concern about this aspect of the ATI. While I have not been involved in the architecture of the
new organisation other than through reflective conversations with Peter Crabtree, Richard
Bentley and Kevin Jenkins early in the process, I very much want to see the ATI succeed, and
hope that its structure is not evolving in a way that may militate against achievement of
objectives in the Power Innovation report.
4. Collaborative Behaviour:
It is vital that this structural change in the New Zealand innovation eco‐system facilitates
greater staff mobility between the rest of the R&D sector, the ATI, and industry. Ultimately the
Board needs to keep in mind the aim to lift industry R&D investment to the OECD average or
better and this should mean ATI (i) on its own behalf partnering with industry on matching
funded projects (ii) likewise with other R&D organizations and industry partners. ATI needs to
look collaborative and capable as a technical and business organisation.
5. Capability:
Given the intended spread of activity for ATI, e.g. anything where high tech added value can be
generated through industry intervention (therefore including more of food and fibre sector
than covered in the Powering Innovation report), it will be vital that ATI has both broad internal
capability and networked external capability. For example as part of its virtual capability it
would have contracted access to specialist facilities and people in universities and CRIs, e.g.
rapid prototyping at AUT, Advanced Materials Labs at the University of Auckland, Electronics
Labs at the University of Canterbury, and numerous CRI facilities. In this ATI would need its own
employees embedded at such places, in a similar manner to the operation of the Fraunhofer
institutes in Germany.
However, I think it is essential that ATI has a substantial critical mass of its own specialist
engineers in various disciplines and that it also owns and runs specialist facilities which would
come and extend on those from IRL. These would complement those it accesses in its virtual
network. Therefore, overall I think the mooted number of staff of 400 must be seen as a
starting minimum which could build as more engineers become available. As universities in
particular cannot easily prioritize industry responsiveness to R&D problem solving, it is not
possible to create the organisation we want to see without substantial in‐house engineering
capability alongside that needed to deliver other ATI services. I acknowledge challenges
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around supply of enough engineers, and even 400 as an overall staff could be a challenge at the
beginning.
ATI has a key role in breaking down the silo behaviours that exist in our system at present and
in helping develop a culture that sees capability in NZ more as a network, where shared
knowledge can enable all to be more effective and profitable, and where we build up strong
specific industry networks that are mutual learning organisations and not simply lobby groups.
We see that to some extent already with the IT clusters and maybe one or two others. In all of
this, as noted previously, it is critical that ATI is designed so that Universities and CRIs see it as a
desirable partner and facilitator.
6. The Funding Model:
Clearly, providing a funding base for the ATI will be critical to give it momentum at the
development stage. In late August I was in Copenhagen, where I visited the Danish
Technological Institute (DTI) and other units in the Danish GTS system
The GTS system has some attractive features. GTS institutes can access about
� 10% of their annual revenue direct from government (but competing with each other)
on the "performance" contracts,
� 30% from government on projects partnered with a public body and private industry,
and
� about 60% in direct industry client contracts.
There is a significant question for the ATI establishment board around what revenue model and
partnered project models will enable them to manage the transitional start‐up phase and build
momentum on industry partnered contracts while not being seen as a quasi Ministry funding
agency. I think the model that would get best buy‐in from the other R&D organizations would
be to place a relative minimum of core funding in the organisation but working with a big pool
of industry‐linked project funding held at MBIE which ATI can access through partnered projects
with other R&D institutions plus industry partners. What amounts to an underwriting of risk
might be necessary during the transition.
7. Inventor support
Quite apart from the successful business incubator system in Denmark, one attractive unit of
the DTI was the inventor consultancy support service, available only to private inventors,
assistance with licensing and assessing 1000 inventions per annum with final filtering down to
typically seven licenses signed up to business/ industry licensees per annum. Revenues from
this activity grown by the licensee businesses have been massive. It is a low cost scheme that
we could launch in NZ within the ATI, with support from other parties like university
consultancy and commercialization offices but a core expert team as part of ATI.
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