Small Business

Industrial Collaboration Leads to Pay Dirt

More and more big and small companies are teaming up to develop new products.

By Richard Sammon, Senior Associate Editor, The Kiplinger Letter

Jonathan N. Crawford, Researcher-Reporter, the Kiplinger letters

October 8, 2009

Cooperation, not competition, is the route for much new research. Private companies have long worked in tandem with the U.S. government on defense, energy, agriculture, health and myriad basic science research projects.

Increasingly, however, private businesses are teaming up on mutually beneficial research. Strained corporate budgets, limited federal funds for research and development and shortages of talent are pushing behemoths such as Intel and IBM to combine resources -- with each other, with niche firms, even institutions sponsored by foreign governments.

Intel employees partner with software and chip engineers from European companies and from Max Planck Institutes of Germany. The company has also opened three small labs in Germany, where it manages teams of software and computer chip engineers. IBM, meanwhile, collaborates with labs in Massachusetts, New York and Texas on innovations in supercomputing and on software for electrical grid management.

Hewlett-Packard has teamed with Tsinghua University to have labs in Beijing, China, and in Palo Alto, Calif., where new hard-drive technology and keyboard advances are being developed with local firms. Moreover, HP holds competitions for non-HP scientists to develop research projects in computer engineering. On other fronts, collaborative labs bring together IBM, Texas Instruments, Eli Lilly and Swiss university ETH Zurich.

The private collaboration trend is a boon to small firms with a knack for innovation. It allows them to develop and possibly cash in on their ideas without having to give up equity or drum up financing at a time when venture capital is tight.

Among recent examples: California-based Corium International, a small biomedical firm that works on adhesives and drug delivery systems, teamed with Procter & Gamble to improve the seal on Crest Whitestrips, a tooth whitening product. The licensed product -- Crest Whitestrips Advanced Seal -- was launched last year. San Francisco-based VerticalResponse partnered with Intuit Inc. to develop software for e-mail marketing, online surveys and direct mail software. And Kraft Foods Global is collaborating with Minneapolis-based Medisyn Technologies to accelerate discovery of natural ingredients that provide health benefits.

Clearinghouses and matchmakers pair small business technology researchers with larger partners. A leading one is NineSigma Inc., based in Cleveland. Another is the Center for Commercialization of Advanced Technology in San Diego. The joint corporate, academic and government-sponsored partnership puts together partners and resources aimed at development innovative technologies. It also helps to find funding quickly.

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