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Defining Innovation vs R&D

Posted on July 05 2016 | Author: Doug Knox


In a report from the Canadian Government’s-The Standing Senate Committee on Agriculture and Forestry, Senate, entitled - Innovation in Agriculture: The Key to Feeding a Growing Population, June 2014 , the following excerpt is an attempt to position “Innovation”. Here, we will try to expand definitions to include the global community views.

The follow-on from these definitions and the proposed financial input for innovation is to be able to measure the impact of these investments on the economic health of the nation.


Innovation could be interpreted from different perspectives. Agencies who defined innovation believe that innovation can result from the transformation of knowledge, a new idea, or a technological breakthrough to improve or create new business or manufacturing products, services or processes. However, as one witness pointed out in citing a definition from the Business Development Bank of Canada, innovation can also be stimulated by vision and entrepreneurship.

Innovation is really about responding to change in a creative way. It’s about generating new ideas, conducting R&D, improving processes or revamping products and services. At another level, it’s also about a mindset in your business: one where your staff, whether in the executive offices or on the shop floor, are always focused on continuous improvement and constantly thinking outside of the box. (Mr. Rory McAlpine, Vice-President, Government and Industry Relations, Maple Leaf Foods, 25 April 2013)

According to witnesses, innovation must also create added value. Innovation is not limited to research activities; it is therefore imperative that the innovation continuum include a commercialization stage with prototype development or a pilot project and its transfer to the field. Support activities relating to training and extension are also needed to facilitate the adoption of changes resulting from the innovation continuum. Innovation is also driven by the establishment of an appropriate legislative and regulatory framework as well as appropriate financial support measures. Innovation in Agriculture: The Key to Feeding a Growing Population, Page 37. 


Innovation Definitions (Based on OECD "Oslo Manual", 3rd edition, 2005)
Definitions compiled by: Rajnish Tiwari  20008   Hamburg University of Technology (TUHH)
 

  • An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.
  • The  minimum requirement  for  an  innovation  is  that  the  product,  process,  marketing method or organizational method must be new (or significantly improved) to the firm.
  • Innovation activities are all scientific, technological, organizational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations. Innovation activities also include R&D that is not directly related to the development of a specific innovation.
  • An innovative firm is one that has implemented an innovation during the period under review.
     

Main Types of Innovation
1) A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. Product innovations can utilize new knowledge or technologies, or can be based on new uses or combinations of existing knowledge or technologies.

2) A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. Process innovations can be intended to decrease unit costs of production or delivery, to increase quality, or to produce or deliver new or significantly improved products.

3) A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Marketing innovations are aimed at better addressing customer needs, opening up new markets, or newly positioning a firm's product on the market, with the objective of increasing the firm's sales.

4) An organizational innovation is the implementation of a new organizational method in the firm's business practices, workplace organization or external relations. Organizational innovations can be intended to increase a firm's performance by reducing administrative costs or transaction costs, improving workplace satisfaction (and thus labor productivity), gaining access to non-tradable assets (such as non-codified external knowledge) or reducing costs of supplies.


Defining Research and Development (R&D) (Based on OECD's "Frascati Manual", 2002 edition)
In accordance with the approach advocated by the Frascati Manual, this defines R&D as  "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications". The term "research and experimental development" is used as synonymous to the term "research and development" and both are abbreviated by the expression "R&D".


The term R&D covers three activities: basic research, applied research and experimental development:

  • Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view.
  • Applied research is also original investigation undertaken in order to acquire new knowledge.  It  is,  however,  directed  primarily  towards  a  specific  practical  aim  or objective.
  • Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, which is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed. R&D covers both formal R&D in R&D


The boundaries of R&D: Clarification of specific cases
The basic criterion for distinguishing R&D from related activities is the presence in R&D of an appreciable element of novelty and the resolution of scientific and/or technological uncertainty.

  • A prototype is an original model constructed to include all the technical characteristics and performances of the new product. The design, construction and testing of prototypes normally falls within the scope of R&D.
  • The construction and operation of a pilot plant is a part of R&D as long as the principal purposes are to obtain experience and to compile engineering and other data.
  • Those elements of industrial design work, which include plans and drawings aimed at defining procedures, technical specifications and operational features necessary to the conception, development and manufacturing of new products and processes.
  • Clinical trials are divided into four standard phases, three of which take place before permission to manufacture is accorded. By convention, clinical trial phases 1, 2 and 3 can be treated as R&D. Phase 4 clinical trials, which continue testing the drug or treatment after approval and manufacture, are treated as R&D only if they bring about a further scientific or technological advance.

 

Doug Knox
Vice President of Technology

Sources
Innovation In Agriculture: The Key To Feeding A Growing Population, June 2014
Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition
Frascati Manual 2002: Proposed Standard Practice for Surveys on Research and Experimental Development

 






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Are You Fit to Fly in the Field?

Posted on November 19 2015 | Author: Doug Knox

The proliferation of UAVs or Drones for both recreational and business usage is presenting some potentially difficult regulatory conditions to navigate. AAFC published a short note in the Agri-info Newsletter in May 2015.

You may need permission to fly.

You are responsible for flying your aircraft safely and legally. If you are using a UAV to support your agricultural operations, you may need to apply for a Transport Canada Special Flight Operations Certificate (SFOC). The process allows experts to review your specific situation and determine if extra precautions are needed.

If your unmanned aircraft weighs less than 25 kg, you may qualify for an exemption that would allow you to fly without a SFOC.

Agriculture Agri-Food Canada, Agri-info Newsletter, May 2015

I have supplemented the information with a slightly broader survey of the issues and risks of ignoring the regulatory scene.

IT World Canada addresses the regulations and provided some resources for UAV operations.

Transport Canada has published the current status and requirements for UAV flying.

Transport Canada Infographic for a quick assessment of how the regulations apply.

The Canadian Bar Association comments on the need for legal understanding of the UAV usage.

Legal firm, Fasken Martineau provides an overview of the regulations and their application.

Doug Knox
Vice-President, Technology

Photo Credit: Flickr

 






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Ontario Biomass Producer Cooperative Field Event

Posted on October 08 2014 | Author: Doug Knox

On September 5, 2014, biomass growers and interested farm producers gathered to exchange information and views on the potential for purpose grown biomass crops. The event was hosted by Don Nott at his farm facility near Clinton, Ontario. The event attracted close to a hundred participants from near and far.  Some notable experts from Quebec and Pennsylvania were in attendance, and brought valuable insights into the specifics of switchgrass — in particular, for new genetics that exhibit better yields, quality and early vigor among other traits. While the crop is showing great promise from an agronomic perspective, there is still a great deal to be done to develop a market for the harvest.

The current information on the business case for purpose grown biomass can be found in the 2012 assessment study and available from the OFA at the following link.

Anyone interested in acquiring more information on the association can contact Urs Eggimann, urs.eggimann@ontariobiomass.com.






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Medical Marijuana Program Regulations

Posted on April 24 2014 | Author: Doug Knox

The recent change in the Medical Marijuana regulations has resulted in a flurry of activity in attempts by many entrepreneurs to establish a licensed growing facility. With the exit of the government’s involvement with the growing operations and the discontinuing of the licenses to grow for personal use by individuals, the new government regulations for commercial production growing is an attempt to mitigate the growing need for the prescribed products.

To date, there are twelve licensed operators in or very near production of their first crop. There are locations in British Columbia, Saskatchewan, Manitoba, and Ontario. However, there are a huge number of applicants in the license queue.

License seekers face several hurdles in their quest.

  • Applicants must present Health Canada with a comprehensive plan for the proposed site including an acceptable security implementation for the proposed site.
  • Depending on the location facility, the security build-out requirements could require implementation costs upward of $1 million or more. The plan must be executed before production begins.
  • There will be no direct marketing to prescribed patients.
  • Producers must ship directly to prescribed patients by secure courier.
  • Current financing options are limited since none of the major banks are willing to enter into the risk associated with the projects.
  • Private investment is the most likely course. At least one of the companies has secured financing from US capital sources.

The Tweed facility in the decommissioned Hershey building in Smith’s Falls is the first to become a public company. Trading for the company commenced April 4,2014.

“Tweed rose to $2.52 at 2:07 p.m. in Toronto Friday, up 183% from the issue price of 89 cents based on a private placement on March 7. The shares sank from an opening price of $5.10 at the start of public trading and were the third-most traded in Canada with 9.64 million shares changing hands.” (Financial Post 2014-04-04)

It will be interesting to follow the list of licensees as the industry establishes itself!

Check out the list at: http://www.hc-sc.gc.ca/dhp-mps/marihuana/info/list-eng.php

Doug Knox
VP Technology






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Due Diligence: Checking for Your Entrepreneurial Blind Spots

Posted on April 10 2013 | Author: Doug Knox

The term “due diligence” conjures up images of bankers, investment analysts, regulatory and tax investigators who dig through volumes of documents in order to “discover” the good, the bad, and potentially the ugly or illegal “truth” about the workings of a company. In fact, for the Entrepreneur, the term should be a guidepost for what needs to be researched and confirmed before attempting to bring a new product or service to a consuming public.

There are some common assumptions made by entrepreneurs that become “blind spots” that can disrupt the plan and progress of a new or evolving company. Some indicators of potential blind spots are in statements made by the Entrepreneur. These are starting points for due diligence on the validity of the statement. Here are a few representations with some of the actions the entrepreneur should cover to validate the assumption.

“Nothing like it in the market”:
This immediately raises the questions – “What is it?” and “Why is there nothing like it?”
If it is truly innovative, the discovery activity should focus on:

  • How does it work? What makes it so unique?
  • Does it address a market need?
  • What is similar in the market segment or some other market?
  • What will it replace that is serving the market currently?
  • Are there similar products in other parts of a global market?

“There are no competitors”
This assertion typically follows the assumption above. Believing the product or service is absolutely unique puts the blinders on when looking at the market to be entered. In general, a skilled analyst will find a perceived competitor in as little as 5 and 15 minutes. The entrepreneur then has to attempt to justify the statement or concede an error in perception.
In fact, identifying competitors does a number of things for the program:

  • It validates the perception that there is a market.
  • It assists in establishing the market size and market value.
  • It assists in identifying market niches and targets.
  • It provides a measure of the scope and breadth of the market beyond the local region.

“Everybody will see the benefits of this product”
The perception of value in all aspects of an individual’s life is formed by understanding, experience and education. Perception cannot be negotiated. As a result, a product or service entering the market needs to take advantage of the “prior art” in the commercial space.
To that end, the product should be perceived as:

  • An enhanced market offering to sustain a market edge
  • A replacement of existing products to take a market lead
  • A novel offering in an existing market to “push the envelope”

On the other hand, there may be a requirement for significant effort in educating the potential market if the offering is perceived as:

  • A market disrupter making an advancement that could not have been foreseen
  • A paradigm shift that creates an entirely new market definition

Regardless, education takes time and money!

“This premium product will get a premium price”
An understanding of the pricing strategies in the target market is critical to a successful market entry. There are a couple of comparisons that could be made among the competitors in the market.

  • Price / performance
  • Price / benefit
  • Price / durability or product life

If the differentiation between the existing offerings and the new offering is strong, perhaps a premium price can be achieved.

“There’s a huge global market”
Identification of markets for a product around the globe involves a considerable effort. The research must first decide how to define the global regions. This partitioning can be different for various products or services. Here are some of the possible regional definitions:

  • Canada East / West
  • USA East / West
  • North America including Mexico
  • South America
  • Europe Western / Eastern
  • Middle East
  • Africa
  • Australasia
  • Southeast Asia
  • India
  • China
  • Pacific Rim

Once identified, the research should attempt to size the market in each region. Sizing should be in terms of volume and revenue.The real issue is the strategy to address a global market or any market beyond the local market.
Market access in each region and its ability to support the pricing and cost structure will be the limiting factors. The cost of entry and the time to develop the sales base often eliminate regions from a plan.

“We have proven it in the lab”
This is a deadly assumption where processing technologies are required to produce the product. The controlled environment of the lab and the very precise application of weights and measures to the development can mask the pitfalls of scaling a process to commercial levels. Typical of the issues are:

  • The precision of the weights and measures when increased to several hundred or thousand times the lab input
  • The control of the quality and consistency of the input
  • The monitoring and control of the processing technology as the volumes increase
  • The impact of the cost of the commercial scale equipment on the pricing of the product.

Mitigating these issues is the role played by organizations that specialize in providing “pilot plant and process” facilities and services to optimize the scale up.

Due diligence is a vital activity in the development of a company’s strategic plan. It is worth the effort and the time to seek the resources that are available to assist in providing information to complete your research. Look to your local innovation and business development centres for early advice.

Doug Knox
VP Technology






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