1. Bridges for Innovation Between Public & Private Sectors: Experiences, Failures & Potentials
Phil Cooke
Visiting Prof, Center for Innovation, Bergen University College, Norway.
Presentation to Public Innovation Conference, Elverum, Norway, 26 February, 2015

2. Structure of Presentation
Evolution of Public Innovation
Treorci, Rhondda, Wales (2013) Commemoration of D. Davies
Experience of Public innovation was once strong. Neo-liberal emphasis on “market” saw it fail
Yet, due to wars, military innovation & large scale public ownership of production facilities (coal, steel, shipbuilding) and utilities (telecom, energy, water etc.) the “model” retained potential
Keynesian pact between public innovation (e.g. Donald Davies, NPL, inventor of packet switching [basis of Internet]) and private commercialisation (ARPANET > Google, etc.)
The newer Israeli “model” widely admired translation of public (often military) R&D for Civilian purposes

3. Norwegian Model of Public Innovation
Arose strongly in new Oil & Gas Extraction & Equipment Industry in the 1970s
Establishment of Statoil & NPD regulatory regime in “Entrepreneurial” phase (after Engen, in Fagerberg et al. 2009)
Followed by “Early Consolidation” phase “Norwayisation” of engineering supply industry (Kvaerner, Aker > concrete drilling platforms > Condeep “Troll A” – overall - K30-K40 jobs)

4. Norwegian Model (continued)
“Maturation” phase: emergent NIS/RIS exposed to tough competition but also enhanced “Goodwill Agreements” R&D from NRC in universities (expensive; big tax reliefs – 78%)
Followed by “Reorganization” phase: decline of infant industry protection & more liberalised/globalised NIS/RIS. Oil price $9 per barrel (!) in 1986.
NORSOK (1993) consortium to cut NIS/RIS costs by 50%. Oil policy& Regional policy interact. High NRC and private R&D expenses as NIS/RIS liberalises (e.g. RUTH Program – successful > Shell Ullrigg Stavanger)

5. Eclipse of the Norwegian Public Innovation Model in Oil & Gas
Finally, “Second Consolidation” phase seeks to halve innovation costs again. Simpler, cheaper innovations; job losses; NRC & Private R&D increases for innovations in
Subsea technologies, IT controls & floating rigs; more involvement from SMEs; organisational innovations help cut headcount costs but higher oil price gives some protection.
Aker-Kvaerner merge & internationalization grows (Azerbaijan, Angola, Nigeria); Statoil & Hydro Gas & Oil merge which completes the ending of Norway’s public innovation regime in oil & gas.

6. Israeli Model of Public Innovation
Recognise and recruit talented citizens and in-migrants
Realise Civilian Innovation Potential from Commercialised Military and Other Public Investments
Establish (Yozma) venture capital pool
Establish decentralised National Incubator programme(s)
Aim to commercialise innovative publicly-funded knowledge as Listed (NASDAQ) start-ups and spin-offs

7. Benign Variant: Kinrot Ventures & Cleantech Incubator
Kinrot, is a water technology incubator formed by the Israeli Government’s Technological Incubators Program
Kinrot has invested in around a dozen cleantech start-ups since its privatisation in 2007
Incubator includes companies like Aqua Digital, which is developing a remote water metering solution
AquAgro Fund ($110 m.) acquired a stake in Kinrot Technology Ventures from Stern Partners Inc. of Canada
AquAgro will reportedly be required to inject at least $3 million into Kinrot over the next three years.

8. Israel’s Public/Private Start-up Evolution
Pythagoras Solar was founded in 2006 by Gonen Fink, previously at Check Point Software, The company has an R&D centre in Hakfar Hayarok, Israel and a US office in San Mateo, California
Ben-Gurion University of the Negev, a leader in research and development of technologies in the fields of water, energy and the environment, will invest in Israel Cleantech Ventures, Israel’s first cleantech focused venture capital fund
Israel Cleantech Ventures was established in 2006 to invest growth capital in Israel's energy, water and environmental leaders. To date, the Fund has invested in 6 companies
Israel Cleantech Invests in Pythagoras Solar Pythagoras is a solar energy company developing innovative photovoltaic technology to revolutionize the cost of solar electricity.
Israel Cleantech Invests in AqWise AqWise develops and implements innovative solutions for biological wastewater treatment and rapid filtration using movable plastic biomass carriers
Israel Cleantech Invests in Emefcy Bioenergy Systems Emefcy is designing an innovative wastewater treatment system which will harness the energy inherent in organic components in wastewater
XJet Solar Energy Entrepreneur from Semiconductors
Orion Solar Energy Entrepreneur from Aerospace

9. Kinrot Cleantech Portfolio
Eltav Wireless Monitoring Ltd. -
Wireless monitoring of industrial ball valves
TACount Ltd. -
Near real time sensor  for detection of reproducible microorganisms
Aquarius Spectrum Ltd. -
Municipal leak detection solutions
Diffusaire Ltd. -
An ENERGY SAVING technology for the Wastewater industry. A market sector hungry for innovation!
SPC Tech Ltd. -
Sophisticated Pressure Control
HydroSpin Monitoring Solutions Ltd. -
self powered water monitoring
Wadis Ltd. -
Water Disinfection Solutions
FiltofleX Ltd. -
Fine Filtration Media
Kolmir Water Technologies Ltd. -
Ultrasonic solutions for water and wastewater treatment
Aqua Digital Ltd. -
Digital flow meter solutions
EcoChemTech Ltd. -
Sophisticated Brine Management
Cooltek2GO Ltd. -
"on the move" cold drinking water device
PML Ltd. -
Innovative laser based particle monitoring technologies
Additional Cleantech Portfolio
Eltav Ltd.
TACount Ltd.
Aquarius Spectrum Ltd.
Diffusaire Ltd.
SPC Tech Ltd.
HydroSpin Ltd.
Wadis Ltd.
Filtoflex Ltd.
Kolmir Water Technologies Ltd.
Aqua Digital Ltd.
EcoChemTech Ltd.
CoolteK2GO Ltd.
PML Ltd.

10. Rotem Industrial Complex & Incubator, Negev

11. Eilat-Eilot Cleantech Center
The Office of the Chief Scientist at the Ministry of Industry, Trade and Labor in 2010 chose the Eilat-Eilot group to establish and operate a new renewable energy technology center.
The Eilat-Eilot consortium includes a range of partners such as Rafael Advanced Defense Systems Ltd., Elbit Systems Ltd. Ormat Industries Ltd. ProSeed Venture Capital Fund, Consensus Business Group (UK), and Ben Gurion University of the Negev.

12. Modular, Challenge Driven Cleantech Platform
Climate
Change
Mitigation
Challenge
Level
Cluster
Level
Agro-food & Water Cluster
Solar Cluster
Agro-food B
Firm Level
Solar C
Water A
Solar B
Solar A
Water B
Agro-food A

13. Israel’s Key Cleantech Firm Categories
Water
Solar
Other Renewables
Other
AquaPure
Arava
CellEra (fuel c.)
Arrow (waste mgt)
Aquarius
Chromagen
Citrine (biogas)
BioPetroClean (purif)
AqWise
DiSP
Coriolis (wind)
EER (waste mgt)
Atlantium
EDIG
CQM (energy e.)
Elcon (waste mgt)
Bio-Pure
IC Green Energy
ELSPEC (wind)
GreenRoad (trans)
Blue-I
Luz II
EMEFCY (waste)
IDE (desalination)
CheckLight
MST
IQWind
Levgum (recycling)
Dorot
Orion Solar
Medis (fuel cell)
Lextran (air purif)
GES
Pythagoras
Metrolight (e.e.)
Project Better Place (t)
Mekorot
SolarEdge
Ormat (geothermal)
TGE Tech (waste mgt)
Netafim
Solar Power
Phoebus (e.e.)
Vortex (pollution con)
Nirosoft
Solel Solar
Power Elect. (e.e.)
UniqKleen
XJet
REN (waste)
ZenithSolar
Techtium (battery)

14. Less Benign but Non-Lethal IDF Applications: Unit 8200
Unit 8200 is IDF’s Surveillance and Big Data Information Gathering Agency (NSA; GCHQ)
Encourages most talented Info-engineers to become Tech-entrepreneurs
Past successes: Check Point (world-leading IT Firewalls security firm); Metacafe (world-leading video site); Comverse (“Logger” telecom software, 4,000 employees)

15. Unit 8200 (continued)
Other successes: NICE (data security) 3,600 employees); NASDAQ value $5 billion.
New Dimension Software (enterprise software) – sold (1999) for $675 million to BMC Software (Houston, TX). Reinvestments by Roni Einav in dozens of Israeli tech start-ups.
Palo Alto Networks (cyber-security) NASDAQ valued at $10bn
ICQ (instant messaging) sold in 2010 to Digital Sky Technologies (Private Equity: HQ Moscow) for $200 million

16. Evolution of Unit 8200 Entrepreneurship
Until 2003, Unit 8200 was a secret. Then, it starred in the book Start-Up Nation: The Story of Israel’s High Tech Miracle (2009) by Dan Senor & Saul Singer (Twelve Publishers, NYC)
Book showed Israel had more venture capital investment per person than anywhere in the world and the largest number of NASDAQ-listed companies (63) after the US and China.
So, in 2010, Unit 8200 alumni decided formally to offer their expertise to other young Israeli entrepreneurs.
The result was the 8200 entrepreneurship and innovation support program (EISP), a five-month high-tech incubator in which Unit 8200 alumni volunteer to mentor early-stage startups.
Between 2010 and 2013, 22 received funding totalling $21m (£13.5m/135 m NOK) and employ 200 people, joining the 230,000 employees of Israel's 5,000 tech companies that earn $25bn a year – a quarter of Israel's total exports.

17. Global Venture Capital Series Comparison
$billion
2009
2011
2013
USA
24.5
36.2
33.1
Europe
5.7
7.3
7.4
Israel
0.9
1.9
1.7
Canada
0.5
1.2
1,0
China
2.8
3.5
India
0.8
1.5
1.8
NORWAY
0.2
0.1
0.4

18. Historic UK Public Medical Innovation Model: Niche>Regime>Landscape for Regenerative Joint Therapy (Source: Author; Background after Geels, 2006)
Dominant Design
POLYETHYLENE
TEF
LON
STS 3
STS 1
STS 2
Limited Collaboration with Thackray Medical Instruments of Leeds
Competing Prosthetics
1961 Charnley Manchester (Wrightington Hospital Hip Surgery Centre)
1975
Charnley Wins Lister Prize for Surgery

19. Potential New UK Public Innovation Model (Source: Oliver Wright, The Independent, 1/1/2014
Influenced by Israeli Unit 8200 Experience
Smart Young GCHQ Spies May Become Entrepreneurs. Using GCHQ “Big Data” IPRs (e.g. Cyber Security)
Based on UK’s “Teach First” programme success
Bright graduates work in challenging schools for two years on promise of commercial job if they leave teaching
To further this, GCHQ set up 11 university cyber-research centres & 2 virtual-research institutes.
In 2014 its first cryptography app released under National Cyber Security Strategy designed gor firms and public sector to combat cyber attacks (e.g. N. Korea)

20. Discussion & Conclusions
Much innovation originates at public initiative (“collective” or “demand-driven” innovation)
But public sector has traditional conventions and rules against exploiting taxpayer funds for risk-investments
Where funding is strategic (and enormous) as in defence and healthcare, this risk-fear is lower
Or strategic (e.g. Energy) where an institutional innovation like a Sovereign Wealth Fund also has wider commercial innovation support potential
The strongest source for public innovation today is from spying; i.e. Big Surveillance Data for Cyber Security e.g. Israel, NSA & GCHQ
Others are “Grand Challenges” like Healthcare and Climate Change where public “demand-driven” innovation is strong and private sector needs some kind of ECT “global controller” where it fails to “self-organise” innovation.
But private sector, when controlled, cheapens production innovation and obsolesces public production innovation function (e.g. as in Norway oil & gas case)