The growing proliferation and ambition of R&D institutes

A growing number of technology and research institutes are cropping up around the world, looking to pioneer the latest products and develop new businesses. Governments are especially keen to capture the economic benefits of the companies appearing within their borders, and have offered considerable tax breaks to foster such development hubs.

Many, such as the area around Cambridge in the UK, have developed as offshoots of successful, nearby universities – but it would seem unlikely a private company would open its doors to potential competitors. Wouldnít it? Well, over the past 10 years, Dutch electronics giant Philips has supported a technology park in the southern city of Eindhoven that has fostered a number of pioneering new companies.

High Tech Campus Eindhoven was formerly the hub of all Philips’ research operations. Since welcoming outside firms in 2003, the campus has grown to house over 115 companies, with many others using its facilities. The campus’ Managing Director, Frans Schmetz, spoke to The New Economy about how it has helped spur innovation and why it is such an attractive model for developing countries around the world.

Splitting off
Towards the end of the 1990s, Philips decided to consolidate much of its research operations – which were spread across the Netherlands, Belgium and Germany – into one area in Eindhoven. There would be a seamless integration of its diverse businesses and studies. At the same time, however, the company was being restructured and much of its production moved overseas.

This, Schmetz says, was part of a trend: larger businesses that were successful in the region expanded and then sold off non-core aspects of their operations. Formerly dominant in the consumer electronics sector, Philips divested itself of many of its businesses in order to focus on a few core areas:

“Philips was active in around 10 business lines over 10 years ago. Now it is only active in healthcare, lighting and what they call consumer lifestyle: so around one-third of the businesses it was active in before.”

Many of those businesses Philips sold off continue to operate in the region. ASML is one such company and is still active on the campus. Schmetz says: “ASML is very well known in the world of wafersteppers, and bigger chipmakers like Intel and Samsung are using their machines to produce the latest microchips, and it spun off from Philips in
the mid-1980s.”

Attracting outsiders
Schmetz says: “In 2001, the management [of the former Philips High Tech Campus ] said “If we want to keep this state-of-the-art infrastructure, we need more volume. We need more people and companies here [who are involved] in research and development”. So they started to look at other companies and decided to get rid of all the fences and security in the area, which was only accessible by Philips’ people.”

You can do experiments in an environment and with equipment that you would not otherwise be able to afford – because you are a relatively small company

However, the proposition for outside companies to share a facility with one of their biggest competitors was not initially attractive to many. Asian firms were particularly wary of renting space from Philips. It was only when Philips began to sell off many of its consumer electronics businesses that rivals decided to move in.

Now these companies see the advantage of moving to the campus and sharing the facilities, particularly smaller firms that would otherwise not be able to afford such advanced research equipment, explains Schmetz: “They have got access to all the technical facilities that Philips built up over the previous 10 or 15 years. That means that a medium-sized or start-up company looking at this area can use these technical facilities because they are open to non-Philips companies.”

“You can rent a cleanroom for however long you need. You can do experiments in an environment and with equipment that you would not otherwise be able to afford because you are a relatively small company. The financial hurdle, which especially at the moment is very high, is removed.”

Another advantage of the campus’ location is the extended network it has built up with neighbouring areas. Both the Belgian and German borders are close and the organisation has extended its network into these key regions through links with other research facilities. Schmetz says the ‘Eindhoven-Leuven-Aachen triangle’ is a key region for developing healthcare research and life science technologies:

“In Belgium, in the Leuven area, there is the very famous IMEC (Interuniversity Microelectronics Centre), which is a research centre where all the world-famous names in silicon development – such as Broadcom, Intel, Samsung, Sony, Panasonic, Philips, Microsoft and HP – are part of a consortium. We have strong links with IMEC. These networks attract foreign companies because they can see the expertise available in the area.”

Collaborating with the competition
The core areas on which the campus focuses are healthcare, renewable energy and smart environments. Schmetz says: “There are other competitors in the world, such as the Kista area of Stockholm, Munich in Germany and Cambridge in the UK. We look very much at open innovation, where we like to encourage collaboration.”

Although the campus is made up of many individual companies, it fosters collaboration through an open environment.  “We made a lot of effort to get people out of the secluded area of their companies and help them collaborate with others. We do this by organising a lot of events at the campus. There are about 200 annually, ranging from very technical content to more general business interests.”

“We also encourage social networking, outside of, or during, working hours. It can be through pub quizzes each month, or through our large sport centre. We want to make it an inviting environment to meet other people. We want a community of 8,000 people, not just a group of buildings that house 8,000 people. We share knowledge and infrastructure, and so are able to help these companies flourish and quickly get their ideas to the market place.”

Schmetz describes the campus as the ‘bridge’ between universities and startup businesses, and its facilities are able to take all manner of research onto the next step towards being commercially viable. Medical universities and researchers work together in the campusí life-sciences laboratory to develop the latest groundbreaking technologies.

One company, Sapiens Steering Brain Stimulation, has been developing a series of deep-brain stimulation systems to help with disorders such as Parkinson’s disease. Such key research into an area that benefits society means public authorities are keen to offer assistance; the campus’ companies receive funding for research projects from both local and central government.

With regards to the energy sector, the campus has a number of companies focused on renewables, such as solar researchers Solliance and SunCycle, as well as solar consultancy Free Energy Consulting. The campus also houses businesses that are developing a range of smart automation products. These include Segula technologies, Test & Measurement Solutions and Axxerion.

The future
The campus has invested as much as €500m over the last 10 years and is now at around 75 percent capacity. It plans to invest between €25m and €30m annually towards continued expansion. Beyond its walls, the campus is looking to offer its expertise to emerging economies that are developing their own technology hubs.

Schmetz adds this is particularly relevant in Asia, where governments hope innovation will drive growth: “We want to get much more known in places like Taiwan, China and Japan. Not only is the market potential there, but the governments also recognise that innovation is the best way of driving the economic development and welfare of their countries.”

Such technology campuses are a growing trend in countries hoping to develop and research potentially lucrative new products. While some may close off their facilities to a close group of preferred companies, Eindhoven’s approach has been to encourage a more collaborative strategy, as Schmetz concludes: “Our campus is an engine that drives open innovation and knowledge is its fuel.”