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I ’ve got a great idea, but what do I need
to make it a successful product? I’ll definitely
need some money and materials, and maybe some people to
help me out. I’ll need some space to put it all together
too. Am I a good organiser?
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The
person who says this is about to start finding and managing
their resources. Every innovator, whether an individual
or a multinational company, must obtain resources and
manage them effectively if their innovation is to succeed.
Resources include people, knowledge, funds and facilities.
Resources can be obtained in many different ways –
borrowing funds and people’s time, obtaining royalties
from licensing agreements, reinvesting early profits or
selling products/services. Once these resources are obtained,
they need to be managed throughout the life of the project.
One of the most important resources for a firm wanting
to innovate is the expertise and adaptability of its staff.
Innovators usually need to find a team of people with
the appropriate knowledge and skills to make and market
their innovation. Considerable investment is needed to
ensure the technical and managerial skills necessary for
innovation to continue.
Facilities to develop the innovation, whether it’s
a small room or a large factory, are crucial for the innovation
to succeed. Finding the appropriate facilities and utilising
them efficiently can make the innovation process much
easier.
AusIndustry commercialisation information http://www.ausindustry.gov.au
Innovation Management Toolkit (Canada) http://prodt.businesscanada.gc.ca/CFDOCS/Firm_en/index.html
Innovation Management Association of Canada http://www.imac-acgi.ca/home.html
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Redfern photonics group – managing a new industry
Australia in the late 1980s was performing world-leading
research in the area of photonics. The formation of the
Australian Photonics Cooperative Research Centre (CRC)
using the Commonwealth Government Program brought together
this research and focussed it on commercialising innovation.
The CRC launched its first company in 1996, called Indx.
The company produced a world leading innovative optical
filter that enabled large amounts of information to be
transferred along optical fibres. The CRC later sold this
company and was the first CRC in Australia to have such
a significant commercial success.
A network of companies then sprang from the Australian
Photonics Cooperative Research Centre. Nine years after
being established, the centre had created eleven start-up
companies or joint ventures to commercialise its technology.
One of the keys to its success was managing resources
to combine the right kind of financial support with the
right people to keep innovating.
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| Don Nicol, co-founder of OFTC
and Chair of Australian Photonics Pty Ltd. Courtesy
Redfern Photonics. |
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The
opportunity in an emerging industry
Co-ordinated research in Australia into the applications
and use of photonics began in 1989, when the Optical Fibre
Technology Centre (OFTC) was formed at the University
of Sydney. At about the same time, the Photonics Research
Laboratory (PRL) was established at the University of
Melbourne. Other pioneers of photonics in Australia were
the Optical Sciences Centre at the Australian National
University and the Optical Communications Group at the
University of New South Wales.
The existence of these optical communications and photonics
research groups established an opportunity for Australia
to participate in the developing global communications
industry. The challenge was how to make best use of Australia’s
world leading research in photonics.
Don Nicol, from the Overseas Telecommunications Commission
(OTC) had a vision of creating a photonics industry for
Australia. He along with Mark Sceats, George Molditch,
Mori O’Connor, Tony Stokes and Ian Bassett formed
the Optical Fibre Technology Centre (OFTC) at the University
of Sydney. They recruited Simon Poole to be the founding
director. One of the important aims of the centre was
to commercialise its photonics research.
I believed that photonics was a key telecommunications
technology with great growth potential and that Australia’s
early presence in the field and the relatively low cost
of setting up component fabrication ... made it a suitable
area where we could build up an industry.
Don Nicol, co-founder of OFTC and Chair of Australian
Photonics Pty Ltd.
In 1991 an opportunity arose to expand Australia’s
photonics research and development by forming a national
research group. The Commonwealth Government started up
the Cooperative Research Centre (CRC) program which gave
funding to universities, CSIRO and industry groups to
collaborate on research and development. The OFTC and
others at The University of Sydney, University of Melbourne,
Australian National University and University of New South
Wales formed the Australian Photonics CRC in 1992, with
the CSIRO and five industry partners all contributing
to the research and development programs. The Australian
Photonics CRC co-ordinated over 90% of Australia’s
research into photonics.
Because of the CRC we now have a much deeper and
richer set of possibilities.
Don Nicol, co-founder of OFTC and Chair of Australian
Photonics Pty Ltd.
The Cooperative Research Centre Program was launched by
the Australian Commonwealth Government in 1990. It aimed
to strengthen collaborative links between industries,
research organisations, educational institutions and government
agencies. The CRCs undertake collaborative research and
education programs in the areas of natural sciences and
engineering. By 2001 the program was supporting 64 centres.
The Government contributes approximately $140 million
per annum to the Centres, with a large amount of support
from industry partners. The program has survived changes
in Government and has made a significant contribution
to Australia’s innovation system.
For more information about the Commonwealth Government
CRC Program see http://www.dist.gov.au/crc/index.html.
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| The Indx company logo. Courtesy Redfern Photonics. |
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| Chris Howells, CEO of Redfern Photonics and former
non-executive chairman of Indx. Courtesy Redfern Photonics. |
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Starting
to commercialise
The Australian Photonics CRC was set up in 1992 with the
assistance of government funding and industry partners.
An important aim for the CRC was to commercialise the
products of its research. This was necessary to bring
in funding to enable research and development to continue.
The first commercial success for the CRC was the formation
of the company Indx Pty Ltd in February 1996. Indx was
founded and managed by Simon Poole, who had been the founding technical director of OFTC and important in setting up the CRC.
I had long had an entrepreneurial streak and had
been looking for the right opportunity to create a start-up…
Indx was the right one to take the plunge with.
Simon Poole, Founding Director of Indx.
The company was formed to manufacture and market optical
filters that enable large amounts of information to be
transferred along optical fibres. Indx products were based
on unique, world-beating manufacturing technology developed
and patented by the CRC.
The most difficult part of managing the company’s
resources was getting cash to make the business grow.
Simon and the Indx board members explored every avenue
to find people to financially support the business.
What ultimately was the success for Simon was that
he connected to a customer.
Chris Howells, CEO of Redfern Photonics and former non-executive
chairman of Indx.
The company was able to find an important customer for
their technology in Fujitsu. Indx created a market for
its products by working with Fujitsu to develop products
specific to Fujitsu’s needs.
In 1997 the CRC sold the Indx intellectual property, technology
and the staff of six people to US company Uniphase Inc.
By 2001 the company, part of JDS Uniphase, employed 300
people in North Ryde and was still expanding. The company
in turn became an industry partner in the Australian Photonics
CRC.
When it became clear to Uniphase that
Simon had great technology, a good team, and also had
customers starting to buy the products, it was just
so easy.
Chris Howells, CEO of Redfern Photonics and former non-executive
chairman of Indx.
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| The CRC-Redfern photonics network
of companies. Courtesy Redfern Photonics. |
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Continuing
innovation
The Australian Photonics CRC continued innovating. It
used the profit from selling Indx to invest in a new company
and by 2002 nine new companies had been created by commercialising
technology developed by the CRC. To manage the large amount
of important intellectual property being generated by
the CRC it created the private company Australian Photonics
Pty Ltd. Another company called Redfern Photonics was
formed to commercialise this intellectual property.
Redfern Photonics raised money from investors and brought
together the right combination of people to successfully
commercialise R & D from the CRC. It supported smaller
companies until they were large enough to be independent.
The Redfern Photonics network of companies grew to include
seven subsidiaries or investee companies by the end of
2001. For more information about Redfern Photonics see http://www.redfernphotonics.com.
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| Redfern Photonics uses trade fairs and exhibitions
to promote its products and raise funding. Courtesy Redfern
Photonics. |
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| Mark Sceats. Courtesy Redfern Photonics. |
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Managing
resources
The CRC and Redfern Photonics were careful in managing
resources. They formed small companies around important
innovations and key intellectual property. They needed
financial backing from investors, people to manage the
businesses and facilities to house them.
Redfern Photonics acted as an incubator company. When
an innovation was ready to be commercialised, a company
was formed around the innovation. Redfern Photonics nurtured
the company and helped it survive and grow. It provided
management assistance and access to business, marketing,
human resources, financial and technical support services,
and helped to seek financial support. It also invested
its own finances to start the company off. This process
was designed to create companies that became financially
viable, independent and ready to leave the incubator in
two to three years.
Intellectual property
Knowledge, or intellectual property, is a key resource
that every innovator needs to manage. The Australian Photonics
CRC produced so much important intellectual property that
it set up a separate company to manage it called Australian
Photonics Pty Ltd. Intellectual property is such an important
part of the innovation process that there is another separate
case study devoted to it. For more information see Patent — protect your intellectual property.
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| Redfern Photonics recruited for talented staff
using these billboards. Courtesy Redfern Photonics. |
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The right people
An important part of Redfern Photonics’ success at
creating new businesses was the team of people involved.
Chris Howells, CEO of Redfern Photonics, had been involved
in the information and communications technology industry
for some time. He founded NetComm, a private company,
in 1982 which later grew to generate A$50 m turnover annually
and was listed on the Australian Stock Exchange. Chris’s
experience starting up NetComm was of tremendous value
when he became involved in Redfern Photonics. He used
his network of colleagues and recruited nine people from
his previous NetComm team. Together they had the right
knowledge of international markets, trends, technologies
and brand positioning. Because they had worked together
before and maintained the network of communication, they
could ‘fast start’ Redfern Photonics and get
things happening.
I think Redfern was able to pretty rapidly deal with
the opportunity because we were able to learn from so
much of the stuff we got out of the NetComm base…
there’s no question.
Chris Howells, CEO, Redfern Photonics.
The key people involved in forming the CRC, including
Don Nicol, Mark Sceats and Simon Poole, were all focussed
on making their research relevant and commercial. While
there was no initial plan for how this would happen, the
driving force of people brought about the initial formation
of Indx. This company demonstrated that photonic technology
could be commercialised successfully and inspired the
CRC to commercialise more of its work.
While the CRC may create some bits of intellectual
property, it really is the bringing in of talented people
from the world of commerce, with all their experience
and back pains from failures, that is really important
there.
Mark Sceats, CEO, Australian Photonics CRC.
Raising money
For the CRC to market and sell its innovations, the first
thing it needed was money. The Government through their
CRC program allowed the CRC to use future grant funds
to get Indx started. When Indx was sold, the net profits
were more than ten times the initial investment! The Government
got its money back with more left over to fund new businesses.
Redfern Photonics was established by the CRC using some
of the revenue from the sale of Indx. Redfern Photonics
then took care of finding more funding to establish and
grow new businesses out of the innovation happening at
the CRC.
Each new innovation to be commercialised was unique. Once
a business case for the innovation had been developed,
Redfern Photonics approached people in the venture capital
industry to encourage them to invest in the new company.
Redfern Photonics understood the products to be sold,
the customers who were going to buy them and the risks
involved in commercialising each product.
The early stage of getting an innovation into the marketplace
can be very expensive. For every dollar you spend researching
and developing an innovation, you need to spend maybe
$100 to make and market your innovation. As the company
had little success in sourcing the funding they needed
in Australia, Redfern Photonics approached investors in
the US, Europe and Asia to get this early stage funding.
From March 2000 to the end of 2001 the group had raised
more than A$200 million in venture capital.
Once the investors agreed to support the business, the
new company could get started on making and selling its
products, and hopefully making a profit for the investors.
At the end of 2001 there was only one out of the seven
subsidiary or investee companies that was making revenue
by manufacturing and selling a product. The others were
still developing their products and manufacturing techniques
while trying to keep the company afloat. Redfern also
invested in each of the subsidiary or investee companies
it built, creating an incentive for it to help the companies
succeed.
We look to maximise the value of the business…
but… there’s no textbook on how you do it.
Chris Howells, CEO, Redfern Photonics.
Not only did Redfern Photonics have to find money to help
other businesses grow, it had to develop itself as a company.
Its role was as a business that builds and sells companies.
To attract people to work at Redfern Photonics, it offered
employees share options in the company.
It’s vital for new emerging industries to have
that incentive. Otherwise people are very nervous about
going into an industry they don’t know.
Karen Emanuel, Group Marketing Manager, Redfern Photonics.
The shares, or stock options, have given staff an incentive
to stay and make the business successful. In 2002, Redfern
Photonics aimed to become a public company by listing
on the stock exchange.
Most of what we do is not really rocket science.
The real rocket science is done in the CRC… If
you’ve got good products, finding customers and
selling products is no big deal…It’s…actually
designing the products and manufacturing high yields…
that’s hard.
Chris Howells, CEO, Redfern Photonics.
For more information about venture capital see the Australian
Venture Capital Association website http://www.avcal.com.au.
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| The home of Redfern Photonics
at the National Innovation Centre, Australian Technology
Park. Courtesy Redfern Photonics.
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| The planar waveguide facilities
at UNSW. Courtesy Redfern Photonics. |
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Facilities, communication and networks
A place to run your business and create your product or
service is a necessity for any company. The location of
Redfern Photonics has been of huge importance to the success
of its business.
Redfern Photonics and the Australian Photonics CRC are
based in Sydney, NSW, at the Australian Technology Park
(ATP) http://www.atp.com.au.
The Australian Technology Park was set up to house university
research centres and start-up businesses together. The
universities and businesses interact, creating opportunities
for new ideas and collaborations. Information flows between
people both formally and informally.
Whenever you go to get a coffee downstairs
the coffee shop is always buzzing. There’s a lot
of information flowing and interaction between people.
Karen Emanuel, Group Marketing Manager, Redfern Photonics.
Communication between staff at all levels of Redfern Photonics
is vital to the success of the business. From Directors
exchanging their experiences with other start-up companies
to engineers discussing how products can be improved.
The network (or cluster or groups) that has formed between
universities, industry partners and new start-up companies
has created a unique environment that facilitates productive
communication. Photonics researchers, managers and marketers
are all within the same building and can easily meet to
discuss new ideas. The cluster of companies that have
formed from the CRC is a unique model for Australia. In
other countries where several companies producing related
technologies have formed in the same proximity there have
also been many benefits.
Once a cluster forms, the whole group
of industries becomes mutually supporting. Benefits
flow forward, backward and horizontally... Interconnections
within the cluster, often unanticipated, lead to the
perception of new ways of competing and entirely new
opportunities.
Porter, M. E., The Competitive Advantage of Nations,
The Free Press, New York, 1990.
The products made by the group of Redfern Photonics companies
cover many aspects of photonics communications technology.
The customer or supplier, or both, may be another Redfern
Photonics subsidiary or investee. These relationships
between the companies enable cross-fertilisation of ideas.
Companies can improve their products more easily by communicating
directly with their customers and addressing their needs.
For more on clusters in information and communications
technology (pdf) see http://www.warren.usyd.edu.au
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The future
It took Taiwan 20 years to establish its
micro-electronics industry. So we have given ourselves
20 years to develop a photonics industry in Australia.
Redfern are about half way through, and it has to be
said that the first eight years were about changing
the research culture.
Mark Sceats CEO Australian Photonics CRC.
The Australian Photonics CRC continues to enhance its
internationally recognised and commercially relevant research
in photonic technology. It aims to expand Australia’s
photonics industry by improving the transfer of photonic
technology into industry through commercialisation. To
achieve this, it needs a supply of scientists, engineers
and people skilled in the area of photonics. The CRC provides
postgraduate training opportunities for students. It is
also focussed on promoting awareness of photonics as a
career opportunity for school students.
The mission of Redfern Photonics is to build ten global
information and communications technology businesses by
the year 2006, and be the major participant in one of
the leading suppliers of high volume photonics components
and systems.
A lot of what these guys today build in a box in
ten years time will be on a single chip, a photonic
chip as opposed to an electronic chip.
Chris Howells, CEO, Redfern Photonics.
We are just on the verge of the photonics integrated
circuit, so that is the next big thing.
Mark Sceats, CEO, Australian Photonics CRC.
There is a huge way to go. The task is exponentially
becoming more difficult because scale creates more complexity:
we have to engage with a lot of very skilled people
in the world of finance, commerce and technology, other
than core photonics, in order to be successful.
Mark Sceats, CEO, Australian Photonics CRC.
The signs are right for Australia to be a global
presence in a fast growing important industry. This
means vigorous industrial activity, good jobs and exports.
Don Nicol, co-founder of the OFTC and Chair of Australian
Photonics Pty Ltd.
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Links and references
Australian photonics CRC http://www.photonics.com.au
The Photonics Institute http://www.photonics.edu.au
Redfern Photonics http://www.redfernphotonics.com
The photonics dictionary http://www.photonicsdictionary.com
Photonics forum http://www.aeema.asn.au/photonicsforum
Optical fibre technology centre http://www.oftc.usyd.edu.au
See photonics http://www.see-photonics.org.uk/introducing/links.html
Communicating with light — fibre optics http://www.science.org.au/nova/021/021key.htm
Scientific American article http://130.94.24.217/2001/0101issue/0101stix.html
Beginners guides to optical networking http://www.lightreading.com/section.asp?section_id=29
Virtual photonics (second spin-off company) http://www.virtualphotonics.com/index.html
AusIndustry commercialisation information http://www.ausindustry.gov.au
Looking for ways to fund your company? Australian Technology
Showcase article http://ats.business.gov.aus
Australian Academy of Technological Sciences and Engineering, Commercialising
Innovation – ‘The Second Step’ Workshop Proceedings,
Sydney, 10 May 2001 http://www.atse.org.au/publications/reports/nsw-commercialising.htm
Porter, M E The Competitive Advantage of Nations, The Free Press,
New York, 1990.
Unpublished, Powerhouse Museum interview with Chris Howells, CEO of Redfern
Photonics, and Karen Emanuel, Group Marketing Manager, Redfern Photonics,
23 Jan 2002.
Key
people
Dr Don Nicol, OTC and co-founder of the CRC
Prof. Mark Sceats, co-founder of the CRC
Prof. Rodney Tucker, co-founder of the CRC
Dr Simon Poole, founder of Indx
Chris Howells, CEO of Redfern Photonics
Jobs
and skills required
Research scientist/physicist
Electrical Engineer
Process Engineer
Technical Managers
Marketing Officer
Financial Officer
Patent Attorney
Business Analyst
Venture Capitalist
Discussion
questions
K-6
1. How many different ways can you think of to send a
message to someone far away?
2. How have lighthouses been used to communicate messages
using light? Find out the main differences between lighthouses
today and lighthouses of the past.
3. What are the benefits of faster communication systems?
How do different people around the world use these communication
systems?
4. List the kinds of things at home, school or in the
workplace which might be able to utilise ‘photonic’
technology (eg. computers, email, internet).
7-10
1. What does Chris Howells, CEO of Redfern Photonics,
consider to be the key ingredients to success when developing
an innovative product?
2. Describe the types of resources needed to make an innovation
successful.
3. Design a communication system using light ‘relay
stations’ so that the messages can be sent around
corners or up stairs. What is the role of the relay station?
Consider how you might adjust this ‘innovation’
for the visually impaired. Use a table to document your
signals and their meaning. Work as a group and assign
different students to different jobs - eg. data recorder,
table-maker, machine builder.
4. Identify some applications for photonics communication
systems. What is the benefit of using photonic systems
over traditional methods for these applications?
11-12
1. What is a ‘CRC’? Explain its importance in
terms of securing government funding. Discuss some of
the risks involved in the formation of CRCs.
2. Explain the importance of industry partners. What role
did they play in the development of the Australian Photonics
network of companies? What are the advantages of cooperative
structures compared to individualistic and competitive
approaches?
3. Explain the difference between a company and a public
company.
4. Locate and record definitions of the term ‘innovation’
using a variety of sources. Discuss what is innovative
about Redfern Photonics and the Australian Photonics network
of companies.
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