Creating successful R&D proposals to benefit small and medium enterprises

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Creating Successful R&D Proposals to Benefit

Small and Medium Sized Enterprises.

Peter Rosenthal, ing., M.B.ANovember 2, 2016

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Objectives

Define importance of SME InnovationPresent structure and contents of R&D proposalsDescribe best practices related to project definition

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AgendaIntroductionInnovation in CanadaWhat is R&D?Eligibility for FundingThe R&D ProposalTest CasesR&D Support Programs in CanadaConclusionQ&A

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Introduction

Peter Rosenthal• Mechanical design engineer• Industrial Technology Advisor for NRC-IRAP• Program Manager in Avionics Industry• Clients: Airbus, Boeing, Eurocopter, Thales, DND, USAF, Bell Helicopter,

Lufthansa, Qatar Airlines• Sub-contractor Management• Operations Management and PM instructor• Six Sigma Black Belt• Education: B. Eng., MBA (McGill, JMSB)

Introduction

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Some of my R&D ProjectsIntroduction

Introduction

What is innovation?“Application of better solutions through more effective products, processes, services, technologies or ideas”

Introduction

Why innovate?• For business growth

• Product improvement• New products and processes

• To remain competitive• Competitors are innovating• New business strategies

• To empower employees• Innovation requires creativity from

personnel

Innovation in Canada

Top Canadian Industries

Energy Manufacturing Aerospace

IT

Agriculture

Services

Importance of SMEs• 1.2M Businesses in Canada• 1.15M are Small and Medium Sized Enterprises

(SMEs)• SMEs are defined as 500 or less employees

Large Firm (0.5%) SME (99.5%)

Innovation in Canada

• Small & Medium sized Enterprises (SMEs)– Comprise the vast

majority (99.5%) of employers

– Yet, accounted for only 50% of R&D expenditures

• Lack of R&D expenditure directly impacts firms’ ability to innovate

• SME R&D declining (2011-2013)

Percentage SME in Quebec (Ref. Industry Canada)

Small -98%

Med-1.5%

Large-0.5%

What are the challenges impacting innovation?

Innovation in Canada

Key challenges faced by SMEs that limit Innovation:1. Lack of financial resources2. Resources have no or negative capacity to work

on R&D projects 3. Projects in high technology are complex and

risky4. Lack of skilled technical workers and resources

Innovation in Canada

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What is R&D?

“…activities a business conducts to improve existing products …or lead to the development of new products” (Ref investopedia.com)

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Technology Readiness Levels

TRL 1: Basic principals of concept observed

TRL 2: Practical applications defined

TRL 5: Basic technological components tested in a simulated environment

TRL 4: Validation in a lab environment

TRL 3: Analytical and experimental lab studies

TRL 6: Prototype demo in simulated environment

TRL 7: Prototype demo in actual environment

TRL 8: Actual technology completed and qualified through demonstration

TRL 9: Actual technology successfully deployed in an operational setting

Concept

Demo

Prototype

Preliminary R&D

Commercialize

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Eligibility for Funding

For Profit?Incorporated in Canada?

Firm Size? Capacity for R&D?

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The R&D Proposal

Important Notes: 1. Contact your Advisor, Local Rep to discuss your project and funding programs before writing the proposal

2. There are many Federal, Provincial and Municipal financial support programs. Please check with your rep for specific guidelines

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Proposal Contents

1. Your Firm2. Your Business and Opportunity3. Your Project4. Budget5. Financing6. Impact7. Declaration

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Your FirmLegal Status, CRA, Address, Inc, For ProfitOwnership and Management StructureHead OfficeHistory of Management TeamContact Info

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Your Business

• Overview – Describe your:• Main products and services• Main customers• Main competitors• Business plan

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SalesProfitMarginCOGSPayback

The OpportunityTarget Market

Fit with Trends

Market Growth

rate

Barriers to entry

Timing

Clients:

ProfileBenefitsSocial issuesResearch done to date

IP

Risks

CompetitorsSWOT New Tech

Advantages

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Your Project

Summary

• Title• Description• Duration

Objectives

• Quantifiable• Measurable• Aligned

with project activities

TechnologyEnvironment

• Project innovations

• Solves what problem?

• Why select this tech?

Challenges &Uncertainties

• Technological uncertainties?

• Risks• Mitigation

plans

Activities

• Gantt• Milestones• Critical path• Methodology

Ethical and Environmental Considerations:• Human or animal experimentation requires approvals• Specify environmental protection method if required

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Proposal: Budget

• Senior management typically not included (in overhead)

• Include contractors here• External sub contractors

• Materials• T&L, Machines

• Total project cost including overhead

Direct Salaries

Sub-contractor Costs

Other Costs

Summary

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Proposal: FinancingCapacity to finance your part of the project

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Proposal: Impact of Contribution

The Firm GlobalCanada

• Hire qualified resources• Accelerate development• New know-how• IP• Broaden the scope of the

project

• Increased Employment• Increased R & D

Expenditures• Development of New

Products• Social Benefits

• Increased Safety and security

• Reduced carbon emissions• Environmental

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Proposal Contents

1. Your Firm2. Your Business and Opportunity3. Your Project4. Budget5. Financing6. Impacts7. Declaration

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Test Cases

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New Energy Source

The Firm: Well established machine shop, $20M annual sales, profitable

Finances: $500,000 cash available

Technology: Perpetual motion water pump

Business Case: Endless Source of Energy

GO/NO-GO?

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Solar Rechargeable Batteries

The Firm: 2 year old SME, 3 employees$100K annual sales in technical consulting (electronics), almost profitable

Finances: $10,000 cash available

Technology: Consumer batteries (AA, AAA, 9V that canbe recharged by sitting discharged batteries in sunlight)

Development cost: $100,000, 12 months

Business Case:3 billion batteries thrown away every year

GO/NO-GO?

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Low Cost Composite Vehicle ChassisThe Firm: World class manufacturer of composite structures for aircraft, SME, 25 years incorporated

Finances: $10M annual revenue, profitable

Technology: Lower cost composite materials based on aircraft recipe to develop lighter and stronger vehicle chassis

Business Case: Applies to gas, hybrid and electric vehicle designs, lower cost than metal, lighter saves fuel, stronger and safer

GO/NO-GO?

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R&D Support Programs (samples)

COM

MER

CIAL

IZAT

ION

INCREASING INDUSTRY INVOLVEMENT/FUNDING

TRL 9

TRL 1

PRODUCTS

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Summary• SME Innovation key to Canada’s Economy• R&D Proposals need well defined project,

business case and align with the firm competencies

• Advisors can help you find the right program and prepare proposals

• Many support programs available for R&D at every TRL

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For Further Information• Peter.rosenthal@nrc.ca• (514) 396-8800 ext :7806• IRAP: 1-877-994-4727• NRC Concierge: 1-855-53-GUIDE

Merci!Questions?

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