Robotics and the Pennsylvania

Economy
 Vertical Integration

Andrew Carnegie coined the term, in the late 1800s, to

describe the structure of his company, U.S. Steel, which
owned its entire steel supply and distribution chain.
I

Andrew Carnegie and US Steel established a

paradigm for the 20th Century.
   Vertical integration was typified by a single firm engaged
in different parts the production process, acquiring raw
materials, manufacturing, marketing new products,
transportation and sales of finished goods.

Horizontal Integration was the consolidation of many

competitive firms, engaged in the same part of the
production process, into one company.
  
Horizontally and vertically integrated companies were able to
gain competitive advantages in a single market or industry.

Companies became self-sufficient ‘castles,’ protecting their

products and intellectual property, with little incentive for
communication or interaction outside corporate boundaries.
 Carnegie Technical Institute, 1912

US Steel focused heavily on developing talent internally, from

the bottom up, rather than importing it from other companies.
Later on, Andrew Carnegie even established an exceptional
institute of higher learning to teach the steel making processes
to the next generation.
Carnegie Technical Institute served as a center of industrial
and scientific education in southwestern Pennsylvania.
Begun in 1900, and renamed with degree granting status in
1912, Carnegie Tech merged with the Mellon Institute in 1967
to form Carnegie Mellon University (CMU.)
At the beginning of the 20th century most universities and
government agencies were not involved in commercial
applications of science.

Vertically and horizontally integrated companies invested in

R&D departments to control product development cycles
inside their companies.
 Closed Innovation

For years, the logic of closed innovation was held to be self-

evident, it was the "right way" to bring new ideas to market.
Successful companies all played by the same rules.

Firms invested heavily in internal R&D, more than their

competitors and they hired the best and the brightest, to reap
the rewards of the industry's smartest people.
For most of the 20th century the paradigm worked and
worked well. One has only to think of the Thomas Edison
and Bell laboratories.

At its peak, Bell Laboratories was the premier facility of its

kind, developing a wide range of revolutionary technologies,
including radio astronomy, the transistor, the laser,
information theory, the Unix operating system and the C
programming language.
Closed Innovation: new business development
processes and the marketing of new products are
isolated and take place within a firm’s boundaries.
In 21st century, a number of factors have combined to erode the
underpinnings of Closed Innovation…

Information flows cheaply and instantaneously over the Internet, corporate

isolationism and the bunker mentality cuts people off from new ideas,
stifling innovation.

Smart people are widely dispersed but more closely connected than ever
before. Ideas bubble up in organizations of all kinds and sizes, not just in
large research labs.
In the 21st century we are seeing a dramatic rise in the
number and mobility of knowledge workers, which makes it
increasingly difficult for companies to control their
proprietary ideas and expertise.

Knowledge workers are ever more mobile, willing to jump

ship and take their ideas and talent to whatever firm will
develop them.
Another important factor in the erosion of Closed Innovation
is the growing availability of private venture capital.

It helps to finance new firms and their efforts to commercialize

ideas that have spilled outside the silos of corporate research
labs.
Open Innovation is a trend that is reshaping how
organizations structure innovation processes.

An accelerating shift in managing human capital is underway,

from closed innovation, in which R&D is vertically integrated
within a single organization…
… to an open model, in which firms learn to use ideas
wherever they find them.

A flexible business model is emerging that is open to a

broad spectrum of arrangements. Company insiders are
contributing to external projects and outside innovators
are able to influence internal product development cycles.
 Henry Chesbrough (University of Berkeley,
Haas Business School)

In his landmark book, Open Innovation, Henry Chesbrough

demonstrates that because useful knowledge is no longer
concentrated in a few large organizations, business leaders
must adopt a new, "open" model of innovation.
Open Innovation describes a new paradigm for the management of industrial
innovation in the 21st century.

Companies are rethinking the ways in which they generate ideas and bring them
to market, harnessing external ideas while leveraging their in-house R&D outside
their current operations.
"...Companies can no longer keep their own innovations
secret unto themselves.
... the key to success is creating, in effect, an open platform
around your innovations so your customers, your employees
and even your competitors can build upon it, because only
by that building will you create an ongoing, evolving
community of users, doers and creators."
Open Innovation, Henry Chesbrough
Open Innovation, combines internal and external ideas
as well as internal and external paths to market to
advance the development of new technologies, like
biomedical engineering, nanotechnology and robotics.
Robotics is a 100 billion dollar industry that consists of next-
generation, intelligent, some times mobile devices, vehicles,
and machines.

The robotics industry and its rapid technological evolution

has become a leading indicator of a regional economy's
ability to change.
How does the promotion of robotics in the European Union
(EU) and the robotdalen (robot valley) in Central Sweden
compare with the US and the Robotics Corridor in
southwestern Pennsylvania?
In the robotdalen companies collaborate with the academic
and public institutions to secure Central Sweden in its
position as a world leader in the manufacturing, research and
development of robot-based automation.
The EU uses industry clusters to foster regional development,
creating regional brand names for the clusters.

The concept of a territorial branding is not a mere marketing

wrapper, but a value-added proposal that changes perceptions
and preferences and drives investments in the EU community.
The EU finances needs-driven research and helps develop
open innovation systems, based on the interactions
between academia, business and the public sector, the
“Triple Helix.”
The Triple Helix is a model for understanding and guiding
interactions in university, industry and government relations.

The linkages implied by this approach are at three levels,

between firms, between firms and organizations and between
organizations.
In the 20th century, each actor had its own tasks:

Universities produced science.

Industries applied research and manufactured.

Governments secured a stable framework for interaction and exchange.

The Triple Helix approach evolved from a more
conservative co-operation model (often discouraging
innovation) to an open model supporting would-be
innovators.

Open Innovation in regional industry clusters leads to

interactions that support invention, creativity and
experimentation.
  

Research that leads to radical new innovations is especially

important for long-term growth.

Engaging industry, academia and the public sector in co-financed

investments in order to increase their impact and share risk is
important for achieving this.
Geographical proximity between different players creates
competitive advantages in terms of co-operation, learning,
access to know-how and expertise.
Although information flows instantaneously, knowledge is
localized in a region and rooted both in the local labor force
and in local institutions and organizations.
In a rapidly changing economy, résumés alone don’t reflect
potential and college degrees are not a proxy for technical
skills or competency. Hiring and retention of employees is
often based on skills, abilities and competence.

This perspective, with its focus on localized knowledge, has,

in light of the Silicon Valley phenomenon, resurfaced
strongly among industrial and regional economists over the
last few decades.
Economists and Industrial Engineers have noticed that Triple
Helix collaboration leads to upgrading education:

Companies help develop and fund customized degree

programs.

Academics get retrained, leading to curriculum development

that begins to meet the needs of industry.

A new emphasis on moving the workforce up the ladder rather

than simply graduating more students begins to take hold.

University to industry linkages are strengthened as education

focuses on local needs.
Regions that realize this and that have a capacity for
renewal can radically develop their competitive
advantages.

However, this also requires that companies, researchers,

and the public sector work actively towards realizing joint
strategic ideas.
The robotdalen in Sweden is an example of an EU
investment in an industry cluster and strategic
branding.
Within the Central Swedish geographic valley, business,
academies, municipalities and public players work together
to lead robot development and have established the
reputation of the region in robotic education, research and
development.
Participation in innovative projects and support for ideas leads
to the commercialization of products and services, robotdalen
has, in just a short time, become an globally recognized
innovator in robotics, especially healthcare robotics.
 Bestic Giraff

Bestic, the eating aid, a Swedish firm’s table top robotic

arm with a spoon as the end effector.

Giraff, a remote controlled robot with a camera and display

that enables nursing staff and relatives to quickly and
easily come in contact with a patient or family member.
Like the robotdalen in Sweden, the Robotics Corridor in
southwestern Pennsylvania, has the possibility of being
shaped into a coherent and easily identifiable platform for a
regional innovation system and a regional brand name.
A regional innovation system extends the cohesive and
systematic approach to Open Innovation from the shop
floor production system to the institutional system of a
territory.
 Welcome to Pittsburgh.

A single regional innovation system is necessary for regional

place strategy to work.

A partnership between the territory and the local government,

academic and entrepreneurial forces, is a must for any
territorial branding strategy.
Creating a culture for modern, effective and rational
promotion of a territory as an industry attractor and
investment destination begins with the requirements of
communication, based on the identity and the existing
values of the region.
A regional innovation system generates a collective
learning process, the rapid diffusion of knowledge and
best practices. This leads to better communication.
The first law of communication is,

“You can not ‘Not ’ communicate!”

But it helps to communicate with one voice!

Pittsburgh is robot country.

Growing out of its industry roots, Pittsburgh is now the Silicon
Valley of droid design.

Wall Street Journal dubbed the city "Roboburgh." National

Robotics
Engineering
Consortium

Agile Robotics Alliance

Roboville Robot City

Agile Robotics Industry Partnership

 An untapped goldmine of
knowledge and innovation

$48.8 billion is invested every year in U.S. university research

with very few spinoffs and less than $2 billion in license
revenue.

European university investment is much lower than the U.S.,

but generates three times as many startups.
 Common Problems with Commercialization

Academics have brilliant ideas, but often lack the business

sense necessary to bring them to market. University
technology is often half-baked, proof of concept is not
funded.

The institution of commercialization is an incomplete system,

the legal and financial conditions for technology transfer may
be in place, but industry links, corporate development,
marketing, and sales are missing.

Academics want to disseminate knowledge and publish

papers rather than encourage its use. What comes first,
graduating more students or commercialization?
 Solutions
Foster entrepreneurship at its source, the workforce.
Focus on moving the workforce up the ladder rather than
graduating more students.

Make our investments in research more effective and

commercialize university research.

Understand globalization and create new business

models which leverage innovation.
 The Gates Center and Hillman Center
for Future-Generation Technologies
at CMU
A university's contribution to regional strategy works best when the university understands
what is happening in the regional economy and what they have to offer to change it.

Even when robotics technologies were relatively primitive, their potential role in boosting
the productivity and competitiveness of the United States was foreseen by CMU.
The Robotics Institute at CMU was established in 1979 to conduct basic and applied
research in robotics technologies relevant to industrial and societal tasks.

In 1994, Red Whittaker and other CMU scientists agreed that mobile robotics
technology had matured sufficiently to enable commercial applications in markets
such as agriculture, construction, mining and electric/gas utilities.
The National Robotics Engineering Consortium (NREC) opened on July 29, 1996. At
NREC, theoretical concepts and laboratory technologies are converted into functional,
reliable and cost-effective robotics systems.

Today, NREC thrives as home to more than 100 of the world’s leading robotics experts
conducting applied research and development on more than two dozen innovative
projects, many of which have been licensed for commercialization and are being
deployed successfully in real-world applications.
The Robotics Corridor Project involves two dozen industry
partners who have joined with CMU and other Pittsburgh area
universities and community colleges to create an associate
degree program that will train technicians to build and maintain
robots and other automated systems.
CMU’s Collaborative Machining Center is a new type of student-oriented
machine shop, a place for translating ideas into reality and connecting students
to the global economy through collaborative projects with industry partners.
The center is tailored toward student participation. The work space is equipped
with manual and CNC machine tools, metrology tools, six-axis industrial robots
and rapid prototype machines.
Faculty, students and industry partners work together in the
Collaborative Machining Center on real problems.
Student teams work with engineer mentors, to solve
problems posed by joint projects. The goal of the center is to
foster in students the ability to solve systems engineering
problems independently.
Collaboration with industrial partners provides students with
real-world experience and practical skills. The relationships
formed in the process help retain students in the region after
graduation.
 Industry Partnerships
in Pennsylvania

The Robotics Industry Partnership in southwestern Pennsylvania is a regional

organizing effort initiated by the CMU Collaborative Machining Center and
Pennsylvania Workforce Development.

Its mission is to unify the diverse robotics efforts in southwestern Pennsylvania into
one system and speak with one voice.
 Summary

Establishing southwestern PA as a center of excellence in

robotics requires a transition to an Open Innovation model of
development.

Strengthening the links between education and industry is key

to making the transition to a sustainable model in the 21st
century economy.

In order to compete in the global economy, the region needs a

globally recognized territorial brand name, like the Robotics
Corridor. To do that, the players must work inside of one
system and speak with one voice, hence the need for a
Robotics Industry Partnership.

We can compete on American strengths. In other words, let’s

do what we do better.