Agreed Template for Terms of Reference for Action 8

Agreed Template for Terms of Reference for Action 8

1.  Action Title: Spin-Ins

2.  Background & Rationale/justification for the action, including the precise needs being met.

Each of the partner regions have a significant number of large indigenous companies, MNC’s and large public administrations located in the region which are a potential source of new entrepreneurial ideas and ventures.

Traditionally large organisations find it difficult to innovate to maintain their market leadership position as they are often unable to transform themselves to pursue new market opportunities and change themselves from one business type into another. Often these types of organisations are victims of their own previous success, their vast market shares and revenues make it very difficult them to commit the time and resources to pursue investment in, initially small-scale, risky ventures.

This creates a paradoxical situation: A large company will not pursue new markets unless the markets are large or extremely profitable – but new markets are initially small and low margin by definition. If a company fails to introduce new products or enter new markets, eventually the margins on their existing products erode to nothing as their products become commodities.

There are a number of ways in which large organisations can design their R&D growth strategies to deal with this problem, namely:

•  M&A – acquire a business or product line in the strategic area that you want to move into.

•  Internal R&D – invest in existing product and processes.

•  Joint Ventures (JV) – set up a new business with a partner company and use the resulting pooled resources to develop new products / markets which both parties could not have easily done before the JV.

•  Strategic Alliance - joining of forces and resources with a partner company, for a specified or indefinite period, to achieve a common objective.

•  “Corporate Venturing”, “Intreprenuership” or “Spin-Ins” - develop a separate business within the corporate entity which is given the freedom to pursue new products and/or markets.

•  This is the source of the potential “Spin In” companies for this action.

Spin-In Definition

•  Involves an activity new to the organisation.

•  Is initiated or conducted internally.

•  Involves significantly higher risk of failure or large losses than the organisations core business.

•  Is characterised by far greater uncertainty than the organisations core business

•  Will be managed separately at some point during its life.

•  Is undertaken for the purpose of increasing sales profit, productivity, or quality.

A survey completed by Block and Subbanarashima in their paper “Corporate Venturing: Practices and Performance in the U.S. and Japan” in 1989 highlighted the following as the key reasons to engage in Corporate Venturing.

Reasons for Venturing / US Companies (%) / Japanese Companies (%)
Maturity of the business base / 70 / 57
To meet strategic goals / 76 / 73
To provide challenges to managers / 46 / 15
To develop future managers / 30 / 17
To survive / 35 / 28
To provide employment / 3 / 24

Large organisations must learn how to create a structured innovation competency that is continually providing new ideas, products, process and business that are relevant to the organisations industry.

The rationale for this action is to design and deliver a programme to meet this need.

3.  Specific objectives of the action (the changes that the action will bring about).

The objective of the Spin-Ins action is that the participating partners will design and deliver a “Spin-In” programme which will be used to promote the concept of Spin Ins to large organisations in their regions with the specific objective of these organisation eventually forming new “Spin-In” companies either on-site or in participating partners business incubators. The latter would be the preferred outcome as this will give the resulting ventures the opportunity to operate with minimal interference from their parent organisation. Additionally “Spin-In” ventures will benefit from access to business and networking supports and entrepreneurship training opportunities which are usually provided within such business incubators.

4.  Precise definition of who the intended beneficiaries will be.

The beneficiaries will be regional large indigenous companies, MNC’s and large public administrations who are considering creating new ventures for some of the following reasons:

·  Generate revenue from unused technologies/products/services that have been previously developed by the organisation.

·  Seed fund new ideas which need to be explored outside of the parent organisation which may eventually allow the parent organisation to develop new products and/or markets.

·  Meet the long term strategic goals of the parent organisation.

·  Invest in complementary businesses which may become part of the parent organisation in the long term or may create new markets into which the parent organisation can sell its product/services.

·  Shields parent organisation from failures and perceived damage to the parents brand.

·  Creates a huge amount of learning for the parent organisation in a previously unknown technology/market space.

·  Retain staff expertise who may otherwise consider leaving the parent organisation to establish the venture themselves.

5.  Detailed Action Plan

The first step in this action will be for each partner region to investigate potential organisations who may be interested in participating in the Spin-In programme. This will initially involve desk-based research to profile large organisations in each partner region. Each partner will use their local development agencies, such as local authorities, industrial development agencies, chambers of commerce and Industry associations and their existing business networks to identify potential participants in the Spin-In programme.

When the foregoing has been completed a high level summary description of what the proposed “Spin In” programme will look like will be designed by the participating partners. This summary may need to be modified to target different organisation types (e.g. by business sector, public/private, indigenous/MNC, etc.).

This summary will be used when making initial contact with the potential participants to highlight the purpose of the Spin-In programme and the benefits of participating in it. After making initial contact with the potential participants a number of industry seminars will be held across the participating partners regions to promote the Spin-In programme, to obtain feedback from potential participants on the proposed design of the programme and to tailor the proposed programme design where appropriate.

After the seminars have been completed and feedback has been collated from potential participants, the participating partners will design a programme to highlight the potential of entrepreneurship and innovation through the Spin-In model and to help to create a culture within large private and private sector organisations to promote entrepreneurship, to encourage staff to be innovative and entrepreneurial and hence become involved in new Spin-In ventures supported by the parent organisations.

The pilot programme will also provide a platform for the debate and examination of matters such as the possible management and ownership structures for the parent organisations, the location of new ventures (the programme will encourage the setup of new ventures in participating partners business incubators) and whether or not to retain some equity or other interest in the Spin-In new enterprises with potential for first option on a future buy-out if the Spin-In venture is successful.

Support Tools to be created

Support tools to be created will include a common trans-regional briefing document on the key steps towards creating Spin-Ins as well as joint learning materials. A Spin-In training programme for use across the TESLA partner regions will be developed.

Timeframe for delivery of key stages of the action

The action will be delivered in 2013 and 2014. See draft project plan in Appendix A.

Partners Involved & Roles

The participating partners are and role/ deliverables are as follows:

Partner / # of Industry Seminars delivered / # of Participating Organisations / # of Spin-Ins identified
CIT (Lead) / 5 / 20 / 4
Tilburg / 2 / 10 / 5
Lionra / 4 / 20 / 6
LMT / 1 / 10 / 3
Total / 12 / 60 / 18

Locations for delivery

Locations for delivery will be mainly within business Incubation Centres in the participating partners regions, namely:

·  Cork, South West Ireland – NUTS III: IE025

·  Tilburg, The Netherlands – NUTS III: NL412

·  LIONRA, Ireland – NUTS III: IE023

·  Laval Mayenne Technopole, France - NUTS III: FR513

·  Bangor, Wales– NUTS III: UKL12

6.  Selection Process (for Experts / Beneficiaries)

Experts

The participating partners will design a job description for the Spin-In experts that will be located across the participating partner’s regions. The experts will be used to design and/or deliver the Spin-In programme which will be delivered across the participating partner regions. These job descriptions may vary depending on the requirements of each of the participating partners. It is planned that the job description will assess the practical and academic expertise of the applicants when selecting an appropriate expert.

Each of the partners participating in this action will, in line with their internal recruitment, national procurement procedures and respecting European regulations on procurement, identify and contract suitable Experts to deliver these services.

Beneficiaries

The beneficiaries of the Spin-In action will be large companies and public sector organisations in the participating partner regions.

The participating partners will identify potential beneficiaries in their regions using their local development agencies and their existing business networks. To participate in this action the client organisations will complete a Needs Assessment form which will describe the following items with regards to their application:

·  Company Details.

·  Description of the venture (if a venture has been identified).

·  Stage of investigation of feasibility of starting a venture (if any).

·  Existing business start-up expertise.

·  Business start-up training requirements.

·  Number of potential participating employees.

·  Preferred timing of delivery of Spin-In programme.

The application will be reviewed by an approved panel and the Spin-In expert within each participating partner organisation and each application will be informed whether or not they are suitable candidates to participate in the Spin-In programme.

7.  Promotion to Potential Beneficiaries

The Spin-In Action will be promoted to all potential participant organisations across each partner region, by making direct contact with potential partners and using a summary document to describe the action to generate interest in the programme. Following on from this activity, industry seminars will be used to explain the nature and objectives of the pilot action and to help design the final programme delivered to participants.

8.  Format of the application form to be used.

Potential Beneficiaries will be requested to complete a Needs Assessment form which will be modified in each participating partner region to suit the requirement of their participating beneficiaries. The partners and experts will assess the companies requirements and support profiles will be generated, including specific recommendations for the Spin In programme.

9.  Selection Criteria / transnational Screening of applicants

The selection criteria will be based on a scoring system which will be agreed by all participating partners and the Spin In experts. An interview process will also take place between the partner and expert and the prospective Beneficiaries to fully understand their reasons and objectives for participating in the Spin In programmes

10.  Conditions of Participation / Eligible Costs that will be covered

The condition of participation is that Beneficiaries will submit an application form to participate on the Spin-In programme and this application will be approved as determined under section 9 above.

Eligible Costs will be a set number of hours spent delivering industry seminars and the resulting Spin-In programme to large organisations within the partner regions

11.  Indicative Action budget by partner

The indicative budget for the action is broken down between supports delivered by staff and supports delivered by external experts. Cost inputs are estimated as follows

Partner / Staff / External experts / Other / Total
CIT (Lead) / €67,000 / €15,000 / €24,370 / €106,370
Tilburg / €34,963.50 / €0 / €23,093.25 / € 58,056.75
Lionra / €10,000 / €26,000 / €4,000 / €40,000
LMT / €23,752
Total / €228,179

12.  Expected Outputs & Results (with reference to the approved TESLA application)

The expected outcomes of this pilot action are that each of the participating partners will have developed the following:

·  Promotional materials and presentations for industry seminars which will be used to promote and describe the Spin-In programmes which will be delivered across the participating partners regions.

·  A Spin-In programme for Beneficiaries which will highlight the potential of entrepreneurship and innovation within large organisations and to create a culture within large private and private sector organisations to promote entrepreneurship, to encourage staff to be innovative and entrepreneurial and hence become involved in new Spin-In ventures supported by the parent organisations. The pilot programme will also provide a platform for the debate and examination of matters such as the possible management and ownership structures for the parent organisations, the location of new ventures (the programme will encourage the setup of new ventures in participating partners business incubators) and whether or not to retain some equity or other interest in the Spin-In new enterprises with potential for first option on a future buy-out if the Spin-In venture is successful.

·  Identification of new Spin-In ventures which will potentially be established across participating partners regions.

The participating partners will deliver the following specific Results

Partner / # of Industry Seminars delivered / # of Participating Organisations / # of Spin-Ins identified
CIT (Lead) / 5 / 20 / 4
Tilburg / 2 / 10 / 5
Lionra / 4 / 20 / 6
LMT / 1 / 10 / 3
Total / 12 / 60 / 18

13.  Complementarities with other Initiatives (TESLA and others)

The Spin-In action has many complementarities with the other actions such as the Entrepreneurial Finance, Mentor+, Internationalisation and Soft-Landing actions. All are designed to expedite the route to international markets for HPSU companies, within the TESLA Partner regions.

14.  Transnationality (frontline partners and other partners) in design, development, decision-making, implementation and dissemination.