Commercialization and Innovation Best Practices

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Experiments, observations, new products, and non-traditional ideas are often discoveries and innovations that can add significant value in the commercial sense. However, understanding how research and development (R&D) can be translated into profit can be complex. Practitioners see that this process is both art and science, which requires the careful balancing act among innovation, the available mechanisms of funding, the government, and the industry. In order to build on the success of the research, it is critical to know the minutia of commercialization, including the gaps in processes, incentives, support systems, and growth opportunities. The aim of this white paper is to discover the best practices or commercialization and innovation programs as well as the increased R&D commercialization, their internal investments, and the leverage of private industries’ investment for new capabilities development.

Overview of Open Innovation & Triple Helix Innovation Models

The Open Innovations model has been compared to the Triple Helix of University-Industry Government relations as a way of finding surplus value when it comes to bridging the gap between industrial innovation and public research and development. At first, the two models appear to have in common their stated objective of bringing industrial innovation closer to public R&D; however, upon closer analysis, it becomes clear that they vary in terms of their disciplinary background and objectives related to policy implementation (Puangpronpitag, 2019). It is necessary to note that open innovation is a notion that assumes that organizations can and should be using external and internal ideas, with internal and external paths to the market, when such firms aim to advance their technologies; therefore, firms represent principal agents.

This calls the questions of how to the innovation systems can be improved. For example, when it comes to considering the way in which a university can be transformed into an entrepreneurial university, the mechanisms of social coordination can function differently from and beyond the market (Leydesdorff & Ivanova, 2016). Considering the fact that applied research should be commercially driven, with the university not having to invest in market development. An example of this is the University of Amsterdam, which, in the middle of the 1990s, decided to sell the science park to the Zernicke group, which was investing in international innovation (Leydesdorff & Ivanova, 2016). At the same time, the faculty of natural sciences has been focusing on an Amsterdam Science Park, which was much larger. Nevertheless, in the study on technology transfer performance of Dutch universities concluded that the majority of higher education institutions failed to translate the high research output into successful technology transfer and commercialization.

Thus, beyond opening the process of innovation to third parties, the Triple Helix innovation model is a model of innovation in which the third parties are specified in regard to selecting environments and the processes among them (Leydesdorff & Ivanova, 2016). In contrast to the carrying layer in which innovation is seen to have historical development, there are different contexts that provide meaning to innovation from specific perspectives (Puangpronpitag, 2019). At multiple levels, such perspectives can be viewed as differently coded systems of communication. Such codes are not present in other ways as expectations structuration while the way and the extent to which the constructs interact on matters for the innovational climate regarding the numbers of options available for innovation and reduce uncertainty.

The Open Innovations and the Triple Helix models provide the opportunity to programmatically examine the processes of knowledge and information exchange among partners that have various institutional roles and perspectives. The traditional method of codes of communication exchange has shown to increase redundancies, which enrich innovation processes by making more and innovative options available. This means that the enrichment of the knowledge-related regime context forces stakeholders into establishing a feedback loop to enhance the specify of selections and legitimize knowledge-based decisions. By realizing this additional loop, it becomes easier to facilitate the transition from a politics and economics framework to one that includes the production of organized knowledge as the third but crucial method of social coordination.

Comparison of Traditional Acquisition and New Trends in Defense Acquisition Reform

The traditional approach to the acquisition process tends to be complicated, rigid, and slow, thus limiting the agility to innovation. The defense acquisition industry is of particular relevance here as it can illustrate the limitations to innovation and explain the need for improvement trends. In most measures, the system is seen as broken because of the inconsistencies between the purchasing and production efforts. For example, between 2001 and 2011, the Department of Defense (DoD) spent more than $45 million on weapons systems that have never even been produced (Weisberger, 2011). This creates a problem in terms of wasted resources and money. In addition, as suggested by the poll of the Government Business Council, more than 25% of personnel in the Defense industry were not sure if the process of acquisition provided the military with the weapons it needed (Weisberger, 2011). The main problem lies in the fact that acquisition reforms have often been unsuccessful because there is no easy or straightforward way to significantly improve acquisition outcomes.

As a response to the challenges in the acquisition processes, updates have been made; however, the main principle behind the new trends is learning “as we go” to try new approaches and, if they work, reinforce them (Weisberger, 2011). At the present time, there has been an increase in spending coinciding with a significant shift in strategic DoD priorities characterized by product spending and the partial displacement of traditional contracts. Besides, the emerging defense acquisition trends under the Biden-Harris administration have aligned with the new National Security Strategy.

The steps for improving the acquisition process since 2015 have been emphasizing innovation, flexibility, and access to commercial advancements in the tech sector. The use of Other Transaction Authority (OTA) agreements, the implementation of the Adaptive Acquisition Framework (AAF), and the release of proposals through the Defense Innovation Board have been imperative for defense acquisition transformation (Weisberger, 2011). While the increase in OTA use has been greatly welcomed by policymakers, the trends in DoD purchasing have also implied a decline in the share of competed obligations, a key indicator for competitive environment maintenance. Notably, almost 50% of obligations went toward non-competition contacts, which represented the highest share in the past two decades. Some part of this trend can be explained by foreign military sales where competition can occur on the end of the recipient. Considering the new trends, the defense acquisition system expects to witness a transformation.

The Power of Prototyping and Alignment with Defense Acquisition Reform Activities

The DoD is responsible for operating across the full lifecycle of capability development, including such areas as experimental science, R&D efforts, production and deployment, operations and sustainment, and disposal. With the help of prototyping, the DoD has been upholding the lifecycle while also keeping up with change and uncertainty (Spero, Topolosky, & Kappra, 2020). The approach that DoD has been taking with prototyping emphasizes the latter as an enabler across all levels of system development, including exploratory S&T, Research and Development, as well as acquisition, not considering the program context of prototyping implementation.

In the context of aligning defense acquisition reform activities, prototyping presents as an essential process capturing all relevant stages of the lifecycle, helping understand critical issues for improvement, coming up with alternative solutions, assessing them, learning from failure, as well as making informed decisions. Being able to implement quick progression from an idea to a prototype provides for the timely and ongoing testing of hypotheses. By doing so, the US DoD can stay committed to pursuing operational viability as well as full operational capability. Because of this, it is imperative to continue promoting the importance of prototyping as a part of the operational strategy within defense acquisition reform activities. It can help to significantly reduce the time necessary for the development and facilitate the continuous delivery of mission-customer solutions through finding a balance between mission engineering, digital engineering, early synthetic prototyping, and high-level manufacturing (Spero et al., 2020). The conceptual, developmental, and operational uses of prototypes allow for the capturing of the full potential of DoD capabilities to ensure the smooth implementation of defense acquisition reform activities.

The Power of Partnerships

For DoD, partnerships have played an essential part in the sphere of commercialization programs, as shown by the example of the Defense Innovation Unit (DIU). The DIU was set up under the Office of the Secretary of Defense to take the role of a middleman for relevant DoD sponsors (Mehta, 2021). This way, it will become easier for the DoD to remain an appropriate partner for the companies in the commercial sector that can be transitioned into service. By partnering with DIU, DoD has acknowledged the need to be upfront with the plan of a project before it is put in action. Namely, having a transition plan and writing a production contract to ensure that the available resources meet the demand of projects within partnerships.

Partnerships are also relevant because, in the instances of the DIU, there are abundant opportunities for expansion and moving at a quick pace together with commercial technologies. For example, through budget flexibility that has been adopted between the DIU and DoD, it becomes possible to move quickly compared to the previous trends and implement careful and precise strategic planning for the future (Mehta, 2021). An example of what DoD is trying to achieve through DIU partnership is the Chinese approach – bringing high-level technologies into the military as a part of its Military-Civil Fusion strategy, which illustrates the effective collaboration between military and civil technology fields. Therefore, DoD has to address the available challenges with the help of incentivization to move things quicker as the demand for innovation is high.

Mission Alignment with Industry Partners

No matter how powerful the government is, it cannot do everything on its own and requires the players in the industry and commercial markets to co-invest and co-develop solutions that can serve the interests of both DoD and its potential customers. Because of the dual purpose of solutions offered by industry partners, it becomes possible to shift the risks from governmental institutions. An example of mission alignment with industry partners can be illustrated in the space industry. Thus, the development of SpaceX and its further technological advancement plays a crucial role in enhancing the mission of NASA.

It is worth noting that the Pentagon does not have enough financial resources to address all governmental needs when it comes to establishing its scientific goals and lines of effort. However, the partnership with industry players can be used as a way for meeting the defense needs through the integration of capabilities (Hallman, 2020). For example, in the Nasa and Space X partnership, the integration of capabilities is essential for the US DoD to be a relevant competitor in the space industry, potentially leading the global race. Thus, partnerships of this kind should be prioritized early and nurtured with great attention.

DoD Innovation Ecosystem Which Improves Engagement with Industry Partners

When one starts thinking about innovation, such places as Silicon Valley come to mind. In such a context, the success of entrepreneurial processes depends on the improved engagement among industry partners because innovation is not in the hands of one person. Instead, the building of the innovation ecosystem that implies close partnerships, including the defense industry, is fundamental for success. As suggested by Lewis (2021) for the Center for Strategic & International Studies, the increased integration of the innovation ecosystem can allow enhancing the processes related to funding, culture, as well as processes and authorities.

To facilitate the engagement of industry partners within DoD, there are abundant opportunities for leveraging innovation that takes place between entrepreneurs and non-traditional players. DoD now can expand its options and capabilities in diverse fields that require engagement and collaboration. These can include Artificial Intelligence, robotics technologies, quantum computing, resilient networks, cybersecurity, space, and many others (AiDA, 2020). Through the collaboration with the Defense Innovation Unit (DIU), DoD has the capacity to accelerate commercial technology growth in the military to facilitate the national security innovation bases (AiDA, 2020). The collaboration and engagement of industry partners are possible in multiple areas, from the services industries to components of combatant commands and defensive agencies to the rapid prototyping and advancing commercial solutions that serve the interests of national security.

Entrepreneurship Mindset Driving the Culture of Innovation

Sandia National Lab is an example of the entrepreneurial mindset in action, facilitating entrepreneurship training for scientists and staff. The focus of the training within the framework is to encourage them to think as an entrepreneur and make sure they understand customers and develop solutions with human-centric principles in mind. Moreover, it is notable that the successful implementation of the knowledge-based model goes hand-in-hand with the imposition of favorable environments conducive to innovation (Puangpronpitag, 2019). Thus, the success of Scandia National Lab can be attributed to the combination of systematic knowledge development, collaborative activities, and the entrepreneurial activity of relevant players.

The tech transfer success of which Sandia is proud is concerned with the enhancement of public-private partnerships among between the organization, Los Alamos, and the state of New Mexico, connecting business owners with engineers and scientists that provide technical help (Salem, 2015). The prospective opportunities that Sandia offers to its relevant professionals are concerned with the improvement of access and the building of connections within relevant communities (Atherton, 2015). Thus, the entrepreneurship mindset allows contributing to communities and getting technologies to do good for the public.

Best Practices for Commercialization Programs

There are several reasons for the adoption of the Open Innovation and Triple Helix Innovation models in the DoD. These reasons are concerned with the funding of prototyping, the strengthening of the partnerships within and between industries, ensuring mission alignment with partners, as well as the increased participation in innovative activities with the entrepreneurial mindset considered as one of the core principles. Importantly, when a new product is developed in the industry of defense, the institutional practices supporting innovation and its impact on industrial markets can lead to decreased performance when it comes to quality, costs, and time of delivery. Because of this, the Triple Helix and Open Innovation models can be put in place to address the challenges from a systematic standpoint to improve relationships between actors, defense institutions, and organizations. The core emphasis of the innovation system perspective is on interactive learning as one of the driving forces of economic development with implications for the sectoral levels.

Another example is illustrated by the State of Michigan Economic Development Office, which has leveraged innovation funding through the Department of Treasurer’s Local Development Finance Authority funding non-profit SmartZone’s across the state (Austic et al., 2019). Such zones are intended to provide free services to small businesses to include the development of business plans, financial plans, federal grants, and government contracting. The fifteen SmartZone’s allow for the mining of technologies from the university and private organizations, help entrepreneurs and companies build relevant business structures, conduct product development, and help secure much-needed start-up financing. The interplay between the relevant processes facilitates the increased exchange of information between actors, thus making the system more sustainable on a long-term basis.

Within the systematic perspective, the Triple Helix model can be based on the hybridization of the components of university, industry, and government that will generate new production forms, transfers, and application of knowledge. The model offers the DoD the opportunity to get a closer grasp of innovation actors and the connections between them, accommodating both individual and institutional roles transcending the sectoral and technological limitations. Through open innovation, the DoD can carry out major changes in regards to the ways of working and organizational aspects, network governance, both collective and individual mindsets, as well as business model rationales. Besides, it becomes easier to increase the agility of the organization as the principle of breaking the organizational and institutional limitations, as well as introduce multidisciplinary teams in which individuals from different backgrounds can share their knowledge and expertise and create solutions together.

In the US, policymakers in the sphere of defense are responsible for adapting and reshaping innovation governance. Through being open to new trends in innovation, the defense industry of the country can gain a significant competitive advantage on a global scale through the continuous development of military capabilities. Therefore, a push toward open innovation and Triple Helix is a mandatory option to ensure that the DoD can remain in the game of the dynamics of innovation as a relevant actor on a long-term basis.

References

AiDA. (2020). DoD innovation ecosystem.

Atherton, P. (2015). Implementing an entrepreneurial leave program (ELP).

Austic, E., Crane, S., Finn, P., Sorrell, P., & Wilson, S. (2019). Maximizing innovation and technology commercialization of federal research investments: Best practices at innovation and economic prosperity universities.

Hallman, W. (2020). Industry partnerships key for space superiority.

Lewis, J. A. (2021). National security and the innovation ecosystem.

Leydesdorff, L., & Ivanova, I. (2016). “Open Innovation” and “Triple Helix” models of innovation: Can synergy in innovation systems be measured? Journal of Open Innovation Technology Market and Complexity, 2(1), 1-12.

Mehta, A. (2021). Defense innovation unit chief on keeping the office relevant.

Puangpronpitag, S. (2019). Triple Helix model and knowledge-based entrepreneurship in regional engagement: A case study of Thai and UK universities. Procedia Computer Science, 158, 565-572.

Salem, N. (2015). Out the door: DOE aims to expand lab ties to private sector.

Sanders, G. (2021). 2021 defense acquisition trends: Topline DoD trends after a half decade of growth.

Spero, E., Topolsky, Z., & Kappra, K. A. (2020). The importance of early prototyping in defense research, engineering, acquisition, and sustainment.DSIAC, 7(2).

Weisberger, M. (2011). Slow and steady is losing the defense acquisition race.

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