The State of Ohio knew it had to grow revenue.
As middle market companies play an important role in overall GDP and don’t have the resources of larger companies, helping these firms grow was a smart strategic move.
Targeting companies with revenues from $10 million to $1 billion, the State decided to provide funds to enable these companies to have access to technology that would push products under development to market faster. Finding innovative technologies that they can buy or license would jump start growth.
Working though the Ohio Third Frontier’s Open Innovation Incentive program, $2 million was appropriated to accelerate adoption of open innovation. The open innovation process allows specialized research companies to bid on providing solutions. The group tapped Nine Sigma, who has supported companies such as Electrolux, Johnson Controls, Kraft Heinz, Pfizer, Tata Steel and Unilever, to facilitate the process.
“We give companies access to technology that they didn’t even know was available,” explains Andy Zynga, CEO of Nine Sigma.
Part of the company’s expertise is helping companies frame the problem they are trying to solve in a way that protects their intellectual property rights. NineSigma will help a company write a request for proposal and then put the project out to bid connecting the company with a large community of technical experts. The company has a network of two million solutions over the 15 years it has been conducting open innovations.
“It’s hard to navigate the world for innovation pockets,” explains Zynga. When his company is searching for a solution provider typically 60% of the solutions come from industry (two thirds of which are small businesses), 30% comes from universities and 10% comes from independent labs.
To understand the scope of projects that Nine Sigma is facilitating for manufacturers in Ohio, below is a list of four searches. Over the past two and half years the company has completed 60 projects.
Company 1:
Highly combustible environments can generate carcinogenic particles, which can become embedded in the protective apparel used by field workers in the Oil & Gas, Mining, Military & Defense, and Public Safety industries. This can increase the inherent long-term health risks to the wearer.
An apparel manufacturer sought technologies or materials to eliminate carcinogenic particles, such as Polycyclic Aromatic Hydrocarbons (PAH) and related molecules, which can become embedded in protective textiles during use. These technologies will enable the manufacturer to decrease the long-term health risks of such field workers, as well as generate new market sales.
Company 2:
Odor-generating compounds are volatile by nature, so the characteristics of a scent will naturally degrade and change over time; this issue is further compounded by the poorly understood phenomenon where we tend not to notice a specific odor after a latency period of 20 minutes. This desensitization is a major hurdle in the personal care, food and beverage, and fragrance industries.
A supplier of fragrances sought partners with technologies which offset these issues, and produce longer lasting fragrances. A successful partnership will give the organization a competitive advantage in the market place and generate an increase of sales, up to $4 million.
Company 3:
Complete and efficient combustion requires precise mixtures of fuel and air. The exact ratios are dependent on a variety of factors such as altitude, pressure, humidity, temperature, and gas type. Optimizing combustion conditions is important for increasing efficiency to minimize fuel use while maximizing heat output.
A supplier of heating equipment sought technologies to automatically adjust air/fuel ratios for efficient combustion. These technologies would affect various industries and end applications including home and industrial HVAC, home and commercial cooking, automotive, and aerospace. The organization would gain a competitive advantage, by increasing the efficiency of combustion.
Company 4:
Conventional component temperature control depends on heat transfer effects from a compressible fluid flowing over motor and oil, allowing for the maintenance of safer operating temperature of a mechanical system. Current systems are limited in their ability to respond autonomously to variations in the operating environment.
A equipment manufacturer sought technologies to increase the efficiency of pump technologies that will enable continuous and autonomous regulations of temperatures within mechanical systems. This advance in the refrigerant pump would give the organization a competitive advantage, by affecting many industries.
These searches and many others are expected to produce $340 million in additional revenue for the State of Ohio. Over the period of the program (five years) the State is expecting to create over 350 jobs.
These collaborations are catching on across the country. In a 2015 study by Harris Poll, over 300 executives at companies with $1 billion or more in revenues were polled.
Some highlights of the finding include:
- 85% say their company has the resources and capabilities to leverage innovations from external partners.
- 72% expect their company’s investment in projects with outside innovation firms to increase in 2016.
- 85% say their company effectively leverages innovation to stay ahead of competitors.
- 77% of corporate executives expect their company to increase its budget for innovation programs in 2016.
“The Ohio Third Frontier’s Open Innovation Incentive program has been successful on many levels,” said Zynga. “We expect other states will see it as a model for incentivizing innovation and helping regions be more globally competitive, more attractive to companies and more robust economically."
