Innovation, Technology Transfer and New Venture CreationWashington, D.C., December 2-3, 2004

From imitator to creator 1954-2004Wiggo Smeby

Chief Technology Officer

Anita Krohn ThraneHead of strategic projects, Corporate Technology and Innovation

Objective

“To safeguard life, property and the environment”

Foundation established 1864

2

Innovation phases in DNV

Maritime Innovation Phase 1950-1970

Success factors:• Focus on technology development to create competitive advantage• Market growth • Technological leadership by Prof. Vedeler• Ability to attract talent

Innovations:• Rules for operation of unmanned engine rooms• Design rules for very large ships • Design concepts for Liquefied Natural Gas (LNG) ships

Innovations:• Rules and concepts for steel jackets and drilling rigs • SESAM• Design procedures and standards against fire and explosion loads• Rules and certification schemes for design and installation of sub sea pipelines

Offshore Innovation Phase 1970-1980

Success factors:• Competence transfer from ship sector • Encouragement from Norwegian authorities to foreign oil companies to invest in

R&D• Technological and innovation leadership by Dr. Egil Abrahamsen• Ability to attract talents

Innovations:• Veritec• Risk and reliability technology• Concepts for Floating Production and Storage Offshore • Veritas Petroleum Services was formed

Internationalization Innovation Phase 1980-1990

Succes factors:• Following Norwegian maritime customers building ships in Japan and Korea• Solid position in the Norwegian oil and gas cluster• Strong demand for new technological solutions in the North Sea• Large investments in R&D funded by national and foreign oil companies• Modern Quality and Loss Control Management philosophy being adopted • Recruitment of talent from best international universities

Innovations:• Management system certification a new business world wide• Nauticus life cycle product model technology• Total Safety Class combining technical, organizational and human aspects

Diversification Innovation Phase 1990-2004

Success factors:• Innovation leadership by CEO Sven Ullring• Establishment of a strong global infrastructure including IT infrastructure• Ability to attract talents in Norway and abroad• A culture for zero tolerance for failure developed - “The new risk reality”

1950:

DNV imitate Lloyds

1954:

R&D creates fundament for “Thought Leadership”

2004:

DNV are being imitated

Result: Position

Result: Revenue 1966 - 2002

0

1 000

2 000

3 000

4 000

5 000

6 000

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Mill N

OK

Norway

Nordic

Asia

America

Europe

Mainly due to Research JIP’s

mill

NO

K (

1998

mo

ney

val

ue)

1970 1980 1990 2000

1000

2000

Other industries

Upstream & Process

Maritime

Result: DNV revenue trends-diversification & new markets

1960

Result: The power of clustering

• The Norwegian maritime cluster • The Korean maritime cluster • The Norwegian oil and gas

cluster • The Italian food cluster• The Danish wind energy cluster

Result, Impact on industry & competitors

• Maritime & Offshore:Standards, cluster strength, renewal pressure, learning, e.g. DNV Research made ca. 1000 internal DNV-reports since 1984, in addition, ca. 320 public papers & presentations since 2000.

• Competence centre: DNV considered as “Norwegian graduate school of technology”.

• Spin-offs: ScanPower, Computas, Underwater Institute (NUI), Fjerndata, Geco etc.

Result, Impact on society

• Reduction of injuries and deaths

• Protecting environment

• Supporting the Norwegian welfare state

• Knowledge generation and distribution

• Supporting Norwegian technological reputation

50%

37%

6,8%(of its revenue)

13%

MI

40%

30%

30%

3.8%(of its revenue)

Cons + TS

72%

12%16%

1.6%(of its revenue)

Cert

further development

BA’s own R&D fundingDNV Research

budgeted R&D

DNVs investment in R&D, 4.2%

Fra

ctio

n of

rev

enue

ste

mm

ing

from

ow

n R

&D

Fraction of revenue used on R&D and Innovation

0 1% 2% 4%

100%

50%

Most Innovative

10%

Innovative

Least Innovative

MI

Cons + TS

Cert

DNVs investment in R&D, 4.2%

0

10

20

30

40

50

60

70

80

90

100

1864 1900 1950 1970 2000

• Growth in Maritime: Competence, Tools & Laboratories

• DNV would have had considerable challenges to survive without R&D.

DNV1864 – 195?

Remarks

1970 1980 1990 2000

Advisory

Classification

• Offshore success: Competence & Tools from Shipping

New competence & credibility

• New areas: Existing tools &

competence

R&D, historic perspective

The only real growth in human history started with the industrial revolution.

Value creation from R&D depends on:

1. Quality, quantity and diversity– Highly educated staff – Critical mass of diverse projects and people– Free funding (not only allocated funds)

2. Organizational interplay– High intra-organizational cooperation– High customer interaction – High degree of R&D personnel transfer (ca. 20%/yr)– Academic cooperation

3. Leadership commitment– Long-term perspective of leadership (R&D results + 10yrs, patience)– Personal interest in and understanding of R&D – Willingness to take risks (only 1 of 10 of R&D succeeds, R&D time horizon 5-10

yrs)

4. Active government participation– Since society benefit most from R&D, and industry under-invests government

must bridge the gap– Co-financing– support industry clusters

R&D, in the future

• Trends:– Shift from corporate to applied R&D– Weakening of the basic research engine– Universities are aggressive in prosecuting patents,

less focus on responsibility as defenders of open science

– Globalizations has led to two shifts, • a) number of qualified people to do research is rising

rapidly • b) building labs close to the customers

• Area: Software and services

“Everything that can be invented has been invented”

The commissioner, US Patent Office 1899

Nobel Bell Diesel Benz Pemberton

.. a world still to discover, improve, develop and sustain