Post on 11-Jan-2016
Jonathon MoteThe George Washington University
Gretchen B Jordan360 Innovation LLC
Rosalie RueggTIA Consulting
Using Netchain Analysis to Explore the Formation ofRobust Supply Chains for Innovative Technologies
Work prepared for the U.S. Department of Energy (DOE), under contract with Lawrence Berkeley National Laboratory (LBNL). Opinions expressed do not necessarily reflect those of the U.S. DOE or LBNL.
Introduction
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Team brought together to develop evaluation framework for specific set of the DOE’s Office of Energy Efficiency and Renewable Energy initiatives:
Includes Thomas Choi (Arizona State) and Angela Becker-Dippmann (Pacific Northwest)
Establish an evaluation framework that will guide impact and process assessments of DOE/EERE R&D and related investments aimed at accelerating innovation, advancing manufacturing and creating a domestic supply base and early markets in the U.S.
Where resulting evaluations speak to multiple audiences including program managers, senior managers, industry partners, OMB and Congress.
Evaluation perspective: focus on interim periodNet Cash Flow
Time
With DOE Initiative
Without DOE Initiative0
FOCUS
Types of initiatives – supply chainInterim Effects
CoveredBrief Description Related EERE Program Areas
and ActivitiesAccelerated development and commercialization of energy technologies in the U.S.
New products, processes and/or business models are introduced and accepted faster than without EERE support
BioRefinery Initiative
Growth in U.S. manufacturing
Growth in U.S. production within the target areas
Advanced Manufacturing Office
Capabilities for continued innovation
Flow of new ideas and invention within a supportive environment as technologies and markets change
Innovation Ecosystem Initiative
Added value to characteristics of a new product
New or better performance characteristics and functions, or costs, or both
SunShot for Photovoltaics
More and stronger firms in the product value chain
Development of a viable industry base in the area of the product of focus
Buildings Innovation Hub
Stronger product supply chain
An emergent supply chain begins to deliver products to early adopters.
Advanced Batteries for Vehicles
Current evaluation guides and practices not sufficient
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Government R&D to
develop & prototype
technology
Government encourages deployment
of a technology
Energy, environment, economic &
security benefits
Industry scales up,
validates & commerciali
zes a technology
Existing Evaluations
New Evaluation Guide
Government R&D to
develop & prototype
technology
Government encourages deployment
of a technology
Energy, environment, economic &
security benefits
Public-Private
Partnerships help Industry
scale up & commercializ
e a technology
Accelerated innovation; Domestic
suppliers & producers in the supply
chain
Retrospective Cost Benefit Studies (minimal attention to intermediate events)
Deployment Impact Studies
Evaluate Interim Impacts
Peer ReviewStage Gate ReviewTechnical Milestones
A logic model – theory of change
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A tool for evaluation planning
Describes what an intervention aims to do and how
Thus illuminates what to measure, from inputs to outcomes
This draft is high level, attempts to summarize detail
of the R&D process,
supply chain management,
netchains, and
partially, government role.
A logic model – theory of change
Growth in US manufacturing
Strengthened/ developed supply chain
Available capital for
R&D, scale up, production
EERE Investments/Activities and Collaborations(Technical, Information/Relationships, Business, Policy)
U.S. Global Competitiveness in Manufacturing Energy TechnologiesNational Energy and Economic Benefits
Added value to character-istics of new
product
Stronger networks, knowledge exchange
Accelerated new product commer-cialization, adoption
Capabilitiesfor continued
product innovation
Strengthened product value chain
O 3
O 1
O 2
C 2C 1 C 3C 4
C 5C 6 C 7
Inputs
Short & Interim Outcomes -
Conditions for Progress
Ultimate Impacts
Broader Interim
Outcomes
External Influences:Technical.
Information/ Networks, Economic,
Policy
Added capabilities (product process,business model)
Supportive supply chain practices, gov’t. policies
Supply chains, value chains and networks Previous work on supply chain networks (Choi) and
netchains (Lazzarini) suggested the use of social network analysis to assess impact on value chains for specific alternative energy industries
Focus on near-term (early stage) changes and intermediate indicators
Focus on connectedness of firms within value chain, as well as other relevant actors (R&D, finance, etc)
Is the DOE-EERE fostering networks that lead to positive outcomes?
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Network indicators Netchain – set of networks comprised of
horizontal ties between firms in an industries, such that networks (or layers) are sequentially arranged based on vertical ties between firms in different layers (Larrarini et al, 2001)
Focus primarily on the “horizonal” level of industry netchains – ties within the same layer
Also ties outside layer to other actors – financial, R&D
Three principal areas of indicators Connectivity Overall Network Health Intended Interim Outcomes/Impacts
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Network indicators - connectivity Connectivity
Does the structure enable efficient sharing of info, ideas and resources?
Is the network growing (new actors, but new links as well)?
Is the network more interconnected (more dense)? Does the network bridge clusters? How are actors connected? – suppliers, buyers,
communication, collaboration, alliances, joint ventures
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Network indicators – overall health Overall Network Health
Who are the primary leading actors (organizational leaders in horizontal networks)? What role are they playing—controllers or collaborators?
How diverse is the network? Small/large (horizontal networks), suppliers, manufacturers, distributors, R&D, universities, agencies, venture capital/private equity (netchains)
Is the network balanced and growing – able to grow more inclusive and sustain collaboration?
Is the structure appropriate for the work of the network (different horizontal networks may require different structures)? Assumed core/periphery is optimal, but may not be the case.
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Network indicators – interim impacts
Intended Outcomes/Impacts Evidence of greater coordination and collaboration –
alignment of priorities/R&D, working agreements, alliances, joint ventures, etc.
Identification of key actors (either within or outside the networks) for future network weaving.
More innovative products being developed for market and deployed – movement through the TRLs and MRLs.
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Network “Weaving”
Identifying important actors and assessing emerging network patterns could allow for network “weaving”
Strategic interventions to make connections that strengthen the network
The innovation ecosystem
R&DInstitutions Sources of
Capital, Other Resources
Other actors involved with product Component,
Sub systemSuppliers
Manufacturers/Assemblers
Distributors, Sellers Service Providers
Consumers
Raw Material Suppliers
Technical:Competing, complementary technologies…
Economic:Market characteristics, NGOs...
Government:Policies, procurement … (including EERE)
Information, Culture: Human resources, networks, beliefs…
Innovation Ecosystem
Product Value Chain
Product & Marketof Focus
Product Supply Chain firmsOther firms in the industryOther elements contributing to product, market
Supply chains, value chains and networks
Opportunities and challenges
Opportunities Network analysis able to capture complexity of
innovation ecosystem (one-mode, two-mode and multi-level)
Suggests interim indicators based on how firms are interacting (or not)
Challenges Network theory and methodology still nascent Data gathering of this magnitude
A hypothetical example – li-ion batteries for vehicles
Application of netchain analysis to real-world Hypothetical dataset based on parameters of li-ion
battery industry and the EERE li-ion batteries for vehicles initiative
Utilized existing industry analysis conducted by Marcy Lowe at Center on Globalization Governance & Competitiveness (Duke University)
Constructed a hypothetical value chain with linkages that attempted to mirror real-world linkages
Hypothetical Value ChainFirm Type by Category
Number of Firms
OEM 7Supplier – Battery Pack
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Supplier - Anode 9Supplier - Cathode 8Supplier - Lithium 4Supplier – Other 41
Li-ion value chain, firms and recipients
Li-ion value chain, firms and recipients – time 1
Li-ion value chain, firms and recipients – time 2
Network Measures Over TimeMeasures Time 1 Time 2Size 75 74Network Density .024 .025Network Centralization .323 .322Network Closeness .016 .083Degree Centrality (individual firms)
Top 5.338 Firm 43 (Supplier-Battery).189 Firm 17 (Supplier-Battery).135 Firm 33 (OEM).122 Firm 1 (OEM).068 Firm 9 (Supplier-Battery)
Top 5.338 Firm 43 (Supplier-Battery).196 Firm 17 (Supplier-Battery).135 Firm 33 (OEM).122 Firm 1 (OEM).074 Firm 9 (Supplier-Battery)
Closeness (individual firms)
Top 5.039 Firm 38 (Supplier-Lithium).039 Firm 33 (OEM).039 Firm 43 (Supplier-Battery).038 Firm 17 (Supplier-Lithium).038 Firm 34 (Supplier-Anode)
Top 5.111 Firm 73 (Supplier-Lithium).107 Firm 17 (Supplier-Battery).103 Firm 33 (OEM).102 Firm 19 (Supplier-Anode).101 Firm 38 (Supplier-Lithium)
Betweenness (individual firms)
Top 5.333 Firm 43 (Supplier-Battery).289 Firm 33 (OEM).232 Firm 17 (Supplier-Battery).231 Firm 38 (Supplier-Lithium).039 Firm 1 (OEM)
Top 5.409 Firm 43 (Supplier-Battery).391 Firm 17 (Supplier-Battery).326 Firm 33 (OEM).244 Firm 38 (Supplier-Lithium).193 Firm 1 (OEM)
Isolates 7 4
Conclusion
Need for interim indicators suggested new methodology
Development of new products in emerging industries does not happen in isolation – supply chains
Netchain analysis (network analysis across product value chains) offers one potential avenue
Questions?
Gretchen Jordan – Gretchen.Jordan@Comcast.net
Jonathon Mote – jmote@gwu.edu
Thanks for your time!