Summary
The broad aim of this September 2005 study was to determine the impact that the Commercialising Emerging Technologies (COMET) program has on participating firms in terms of developing knowledge-based skills and innovation capability.
The study framework was based on Koberg’s model of internal innovation management within firms, studies on external networks and innovation, and the concept of the importance of weak network links (outside the usual closely co-located and trusted links) to inducing change. Recent work by the OECD on knowledge-intensive service activities (KISA) has also provided insights.
There were three components to the methodology:
- 10 case studies of COMET-funded companies
- A survey of service providers and a survey and phone discussions with the business advisers who assisted the ten case study companies through COMET (n=19) and
- An analysis of data from the COMET Assistance Plan Completion Questionnaires collected by AusIndustry from 240 COMET-funded companies (out of a total of 620 that have completed assistance under the program).
Broad interpretations of this report's findings are limited by the sample size of the case studies, as well as differences between the focus of this study and the issues addressed in the broader COMET Assistance Plan Completion Questionnaire. Nevertheless, the study has collected the first qualitative stories from recipients of COMET funding, and it has provided an insight into the firms and their service providers.
Case Study Findings
The main findings of the case studies and surveys were:
- The major outcomes of COMET are the formation of strategic alliances, manufacturing agreements and licensing agreements, followed by equity injection, and debt financing. Most of the case study firms now run on cash flow.
- Nine of the case study firms have launched products and six have exported.
- Seven case studies reported that COMET had accelerated product launch.
- Staff growth in case study firms ranged from nil to seven-fold since completion of the program.
- Annual growth in turnover ranged from nil to 52% p.a. since product launch.
- The service providers and business advisers who assisted the case study firms under COMET, reported substantial increases in skills within these companies over the term of the COMET assistance, across the four target areas of the program – business planning (e.g. forecasting and budgeting), market research, intellectual property (IP) management and financial planning.
- Few case study firms have maintained active links with either business advisers or COMET-funded service providers.
- Case study firms have also improved their interactions with service providers, in the process developing confidence and credibility, and have also developed a better understanding of government programs.
The COMET case studies were strongly focused on product development. It was apparent that the drivers for innovation came from both within and from outside the firm, and that the founders (who were often the technical experts) played a major role.
The business advisers and other government agencies were also important sources of new contacts and support the proposition that weak links (basically links to those not close to the firm) can be particularly valuable. However, there was little apparent difference between the contribution of local and distant links in bringing other skills to case study firms.
It is clear that there has been significant learning by COMET case study companies and that there has been successful transfer of skills from service providers to these companies during the course of the program.
Perspectives from the Broader COMET Community
The findings from the COMET Assistance Plan Completion Questionnaire, where they overlapped with the focus of the case study interviews, reinforce the outcomes from the case studies and survey completed for this study:
- The majority of firms reported a positive benefit from COMET.
- The main impact of COMET is in the formation of external linkages (as evidenced by the importance of strategic alliances) which contributes to company survival.
- Business advisers assisting COMET firms add value and management skills to the business.
- Comments on the service providers were generally very positive. Questionnaire respondents ranked 80% of their business planners and/or market researchers, 75% of financial planners, and 57% of IP advisers, as good or very good for their capacity to bring new knowledge and to add value to the firms.
- The Questionnaire did not provide significant insights into internal management of innovation, beyond the finding that 33% of firms had learnt enough to commercialise their technology on their own, 66% felt that COMET had helped them become investor ready, and 80% agreed that COMET had helped them achieve their goals. Software companies generally responded more positively than firms developing other technologies.
The COMET Assistance Plan Completion Questionnaires provide some evidence that the business advisers play an important role in the firms’ external networks. Business advisers help to build external networks, help businesses enter new markets and help businesses to identify potential business partners. In general, however, the COMET Assistance Plan Completion Questionnaire does not adequately permit analysis of the detail of issues of concern in this study, namely the quantum of achievement of COMET firms, and the ways in which business advisers and service providers have assisted firms in developing knowledge-based skills and innovation.
Conclusions
Case study firms demonstrated success in launching products, growth in turnover and growth in staff. It is difficult to identify the factors contributing to success because of the small number of case studies completed. Further, it is clear that companies experience “ups and downs” and that for future studies the timing for measuring growth after COMET completion needs to be consistent. Case study firms with high turnover did not have high staff growth and were run by people with previous business experience. Some companies with high turnover growth also report high growth in their suppliers, suggesting some impact of supply chains.
The findings of the study show that internal innovation management is concentrated on product development and that there are external networks with service providers and customers, these external networks are often being developed by technical staff. These networks, however, show some deficiencies and in general the case study firms are still struggling with developing and maintaining their basic income and cash flow. Some business advisers play important roles as “weak network links” but this role could be improved.
COMET has been a major contributor to the development of the knowledge-based skills of case study firms. However, despite achievement of key milestones, including product launch and turnover growth, there are indications that the support provided is not sufficient to enable them to “go it alone” in commercialisation. In relation to the case studies, this is due mainly to inexperience in the private sector, as many founders had not run or been involved in business before. It is not possible to comment as to how broadly this finding may relate to COMET participants as a group.