The company name is only visible to members. I received from Bulgaria a letter by Richard Smits, Managing director of CSI (Catalysis Services International), asking help to connect his company to italian SMEs interested in outsourcing some R&D activities in the field of Chemistry. CSI is a company that mediates between industries that wish to outsource R&D projects in chemistry, and research institutes in Bulgaria. CSI will find the best researchers that are most qualified for answering the questions posed by the industry, form a project team from them, and manage the project locally. Here it is: ” Dear Mr. Provedel, I found your profile as moderator of the Open Innovation group on Xing, so I thought you might be interested in the services I offer in this area. Since I do not understand much Italian, I am not sure if you are in my area of innovation, (chemistry), but you may be able to direct me to someone in your network if you want. My company, CSI, offers mediation and project management for R&D projects outsourced to Bulgarian public research institutes. You can read more about my business concept on . I think my services are especially interesting for innovative small and medium-sized companies (SME’s) that often find it difficult to apply open innovation, especially internationally. Because of my own local presence and large local network, I can make Bulgarian open innovation facilities accessable to SME’s in a very cost-effective way. Italy has many innovative SME’s, and therefore Italy would be a very interesting market for me to explore. However, due to my lack of knowledge of the local market and language, it is difficult for me to access that market, and an intermediate who could help me with this would be very helpful for me. I would be very interested in your views on this subject. I am looking forward to hearing from you. Kind regards, Richard Smits Managing director, CSI +359-2-9620785 +359-899-332283 (mobile) Skype richard-csi Dr. Richard Smits CSI (R&D outsourcing) ” 11 Sep 2008, 11:58 pm The company name is only visible to members. Dear Richard, I posted your letter in “Question & Answers” section and now I want to express my comments on your business vision and requests. CSI , your company, seems to be a kind of broker, offering value added services to Clients (you seem to be interested especially in italian SMEs) who have the idea to outsource some Chemistry R&D projects in a country very competitive from a cost point of view. The costs are important but much more important is the RESULT. I mean that the italian company, but not only italian, are looking first to the SOLUTIONS to their specific innovation requirements. Your value added, as project manager, could be very helpful but is not the first priority. The key question, to my personal view, is the following: “are these R&D centers in Bulgaria able to respond to specific requests, supplying the proper solutions, with the right technology, within the rigth time and costs?” If YES and what is missing is a capability of project management then there is some opportunity. The alternative, which is a traditional outsourcing of an activity held in Italy, seems to me very theoretical. Are there some excellence points in bulgarian chemistry R&D ? What are they ? Can you describe some successful case of SOLUTION providing by these R&D centres? The cases would be very meaningful and could promote adequately the local know how. I am asking our network to give some more comments and ideas ! Bye. Renzo Provedel 12 Sep 2008, 12:27 am The company name is only visible to members. Dear Renzo, Thank you for posting my letter. Of course you are absolutely right: in the end, it is the result that matters. To obtain the desired result, i.e. a new product that can be sold for a profit, a number of items need to be present: 1. a good idea 2. skills and facilities to research the feasibility of the idea 3. skills and facilities to develop the feasible idea into a marketable product 4. skills and experience to select those good ideas that are most likely to lead to a marketable product. To get good ideas is a matter of creativity, and much has been written about it. I think that to get a good idea is independent of location: everywhere in this world one can find creative people with good ideas (though in some cultures it is not promoted to express those ideas). Skills and facilities for research and development are rarer, and here one could look outside the company for help. Indeed CSI is a kind of broker that can help a company find the right people and facilities in Bulgaria to solve a need. I must admit that R&D facilities (not skills) are a weakness of Bulgaria, and I am not always able to find the right people so that I have to reply to a potential customer that this time I cannot help them. However, I think my (unique, as far as I know) added value is that I can also help with the 4th item, which is much more rare than the other 3 because it needs experience that is best gained by working in the R&D department of a company for many years. Such experience is almost absent in public (academic) research institutes. In most cases of research cooperation, this experience therefore needs to be provided by the company, which automatically means that communication over a certain distance needs to take place. I think this is one of the main Problems With Outsourcing of R&D activities. Some large companies have staff dedicated to locating R&D cooperation partners and managing the resulting projects, but many SME’s (not only Italian) lack this and for them CSI’s services may be especially attractive. Concerning R&D costs, there are two extremes. One vision (often seen in Anglican-style businesses) is that investment in R&D is risky compared to investments in sales, marketing, expansion of production capacity, etc. which have much more predictable returns on investment and are therefore more popular with the general management. Cutting R&D costs is a way to increase shareholder value in the short term. I have had customers from such companies, because sending samples to Bulgaria to be measured for a few thousand Euros needed the permission only of the R&D manager, while an investment of several tens of thousands of Euros needed general management approval which was difficult to get. The opposite vision is that R&D is essential for innovative companies, and that the more money is thrown at it, the better. I’ve had difficulties getting these companies as customers because my prices raised their suspicion: if it isn’t expensive, it can’t be good quality… I think that when a company decides to invest in R&D, there are several options (listed on my website) to be considered when deciding how to spend that money. Outsourcing to Bulgaria under CSI management is one of those options. It may be the most attractive one in many, but certainly not all cases. Another issue is that much R&D work is routine data collection without much creativity involved. For example, when a new product is introduced that replaces an old product, one would like to have as much experience with the new product as with the old product to ensure it has no hidden disadvantages. Otherwise it will be difficult to sell to conservative customers (for instance the chemical industry, Asian markets, etc.). This means that you would like to repeat all experiments and pilot tests carried out on the old product on the new product. This work is ideal for outsourcing. Apart from basic experimental skills, no specific knowledge is required, and the work to be performed can probably be described on one sheet of paper without the need for much management (which is not easy from a distance). Another example is development work by trial and error, where a list of things to be tried can be send by email to a subcontractor that can perform the work. This kind of work can probably be performed equally well at many sites all over the world, and then costs can be a decisive factor. A broker like CSI then works like a kind of temporary employment agency, which is again especially attractive for SME’s that can’t easily move staff around. Regards, Richard Smits 15 Sep 2008, 11:19 am The company name is only visible to members. Thanks Richard, your examples of outsourcing to Bulgaria were very clear and helped me to understand better the CSI’s role. Your explanation are useful to our social network participants to understand the Bulgaria opportunity from a concrete, bottom line, perspective. Your innovation process flow from “good idea” to “select those good ideas that are most likely to lead to a marketable product” is close to my vision of innovation process. I want to present briefly the milestones of a scheme of innovation processes I developed with a Partner of mine, a school of Coaching called SCOA ( ), in order to ask you some questions and share some visions about the “innovation” which is a complex issue ! The innovation process I see is a kind of “learning spiral” with three key milestones (obviously recursive): 1. INVENTION =the good idea. 2. SOLUTION=the strong idea, which is the evolution of the good idea after having solved all the problems and obstacles that are typical of “product/service development”; 3. EXPRESSION=the winning idea, which is the phase needed to convince, to align, to emotionalize, to create collaboration, first within the organization, then in the market place. I understood that your value added is concentrated in phase 2, SOLUTIONS, because you were outlining the “test repetion for new products”, for example. I agree with you that this could be an opportunity. You say that you are able also to supply value in the third phase, facilitating the choice of marketable products. That is not so clear to me because of the distance between the product (the good idea with a potential to become an innovative product) and the market (for the innovative product) which are not so well known by your CSI, not for lacking competences but for lack of information and prediction of an evolutive process which start with a good idea but is “unknown” as far as innovative final product is concerned. Can you add some more about that issue ? Considering your value added (CSI and yours) I would recommend you visit the site of NINESIGMA ( ), the broker n. 1 in the world for innovation (technological one) to see if there is an opportunity to become a SOLUTION PROVIDER. In any case you can understand what are the sectors most active and the technolgy most required. Thanks and best regards. Renzo 15 Sep 2008, 2:18 pm The company name is only visible to members. The innovation process that I was referring to is often called the “Innovation Funnel”, a tube that is wide at the beginning where many ideas enter it, and gets narrower towards the other end where succesfull innovations (profitable products) come out. Most ideas don’t make it to the other end but are abandoned somewhere along the way because they appeared not to be so good after all. The trick is of course to abandon the not-so-good ideas as soon as possible before a lot of money is wasted on their developement. This is your phase 2. Your phase 3 has more to do with the “soft”, human side of innovation, which engineers like me often forget about. Indeed I am not as good as the company itself in judging the potential profitability of a new innovative product, which is a general disadvantage of outsourcing R&D. However, because of my experience in one company R&D department, I believe I am better at it than most academic researchers. I can probably save the company quite some time and money by filtering out a number of not-so-good ideas, but I can’t recognise them all. I think I am also better at communicating with the company about this issue because I’ve been on their side before. Thanks for the tip about NineSigma: I am their affiliate and have sent them several proposals. 15 Sep 2008, 3:46 pm The company name is only visible to members. Dear Richard, I appreciate your understanding and “sentiment” about the third phase, the EXPRESSION, which is a crucial point in the process. Italy was and it is an exemplary case of poor EXPRESSION because the innovation started here, in a lot of sectors/products, but, due to a poor involvement/sintony/consciousness.. of italian stakeholder the INNOVATION was done and exploited elsewhere !! I mean in other countries. Take the samples of GUGLIELMO MARCONI (telecommunications), PIERGIORGIO PEROTTO (the first PC in the world, the programma 101 by Olivetti) and so on. In the programm INNOV-ACTION (you could read an italian version only at ) all the process is explained and some benefits for the attendees (project manager, business development, strategists, team) is presented. I am curious to know if you had some contacts with other brokers as Innocentive and Yet2.com and to understand your evaluation of the benefits, if any, and the obstacles you encountered to exploit this route of brokers. We had some interesting exchange, at least from my point of view, but I am wondering if I can be more useful to you; please do not hesitate to give us your questions and/or request for further discussion, exchange and why not…ideas (they are good for definition !!!). Have a nice day. Renzo P.S. if you’d like to receive the brochure of Innov-action (sorry only in italian) please let me have your e-mail 15 Sep 2008, 5:15 pm The company name is only visible to members. There are plenty more examples of technologically advanced products that were exploited by others or didn’t succeed at all in other countries than Italy. Philips in the Netherlands developed compact cassetes, Video 2000 VCR, Laserdisc, compact disc, DVD, etc. which were all very advanced for their time, but it was the Japanese (Sony, JVC, etc.) who earned the most money with them. They developed these because they were able to (“technology push”, but didn’t realise that to become succesful products, they should fulfill a market demand (“market pull”). What I hoped to obtain with my first message to you was a way to avoid the aspect of my work which I dislike most: the aquisition of new customers. I found out that finding new customers is like applying for a job all the time (in fact the product I’m selling is myself). I’d much prefer to do what I’m good at, which is managing research projects, and leave the aquisition work to others who are better at that. If there’s someone reading this who likes to do this kind of work, has a good network among innovative companies in his region and is willing to work for a commission (or knows someone who does), I’d like to hear from her/him! My email address can be found at 16 Sep 2008, 2:22 pm
