Leveraging talent: spin-off strategy at industrial research

The formation of new businesses from research organisations has historically been seen as one of the more effective ways in which new knowledge and technology is commercialised. These spin-offs result from the transfer of people and intellectual property from the parent institution. It is the transfer of the tacit knowledge embodied in the human capital that differentiates this technology commercialisation mechanism from technology sale, licensing or joint ventures and alliances. Science parks and cooperative centres associated with universities are examples used internationally of incubator environments designed to nurture spin-offs. In New Zealand, however, there have been very limited attempts to develop such incubators. However, one Crown Research Institute, Industrial Research, has recognised that developing a spin-off strategy is a valid way for it to leverage its intellectual property and motivate its scientific talent, in order to satisfy the institute's mandate to 'create benefit for New Zealand'. It is rare to find studies of the spin-off activity focused primarily on the parent. This paper charts the development of Industrial Research's spin-off strategy over the past eight years from an unintentional consequence of restructuring and changing funding priorities, towards a purposive strategy requiring different management structures and processes. A three-stage model is developed to describe the spin-off strategy evolution and the risks, benefits and components of such a strategy are discussed.