Innovating A New Innovation Model

The stated goal of the Joint Center for Energy Storage Research (JCESR), one of the U.S. Department of Energy’s Innovation Hubs, comprising 14 partner institutions led by Argonne National Laboratory (ANL), is to develop the battery of the future. Like Daniel Burnham, they are making no little plans.

The need for better batteries is obvious:  To modernize the electrical grid so that more renewable energy can be sourced and delivered, thereby reducing our dependency on fossil fuels; and to accelerate the electrification of vehicles, thereby reducing greenhouse gas emissions as well as the consumption of fossil fuels. And if a significant fraction of vehicles were electrified, the grid would need to be upgraded anyway just to handle the load. The need for better batteries is not just about technical superiority, however. It’s also about economic security.

In November 2012 Argonne won a $120 million, five-year grant from the Department of Energy to launch JCESR and to take up a “grand challenge” in energy storage. JCESR’s goal is to make batteries that store five times the energy at one-fifth of the cost within five years.

Great science, of course, is required to achieve these goals. So is great teamwork. To make contributions that advance the state of the art and deliver the technical and economic benefits that justify such a large investment of taxpayer’s money, the unprecedented cooperation of national laboratories, leading universities and industry will be essential.

Peter Littlewood, Director of Argonne National Laboratory, stresses the point, “Batteries are a laggard energy technology, with a substantial gap between theoretical and practical efficiency. And they cost too much. Our goal is to be disruptive in the extreme: new systems, a new model for research, and a new model for how government labs can engage with the market.”

JCESR’s participants include national laboratories like Argonne, Sandia, Pacific Northwest and Lawrence Berkeley, SLAC National Accelerator Laboratory, universities such as the Universities of Illinois, Chicago and Michigan, MIT and Northwestern University, and major corporations such as Dow Chemical, Applied Materials and Johnson Controls. The Clean Energy Trust is a non-profit partner as are 84 affiliates including Chevron, GE and General Motors.

The leaders of JCESR shrewdly recognized that to harness the contributions of such a large and diverse group, they would need to invent an entirely new model for the interactions among the participants. In designing their organization they had a particular emphasis on ensuring that traditional impediments to commercialization were removed.

I believe that JCESR’s lasting legacy will turn out to be the manner in which the organization is structured as well as the rules of engagement. Their playbook is already being studied by other public-private partnerships.

JCESR requires its partners to agree to the following:

1. If they invent something on JCESR’s dime, title to the invention(s) vests with the entity employing the inventors, but ANL is the sole licensing agent.  It is fairly radical for institutions as tradition-bound as universities and as regulation-bound as federal laboratories to cede control of the management of their intellectual property (IP) to another entity. But in so doing ANL will facilitate a company licensing the bundle of IP that they require to bring products to market. This greatly lowers the transactions costs for licensees and removes what has traditionally been a very high barrier to commercialization of products coming out of consortia like JCESR.
2. No one is granted any exclusive rights a priori. Large companies know that their competitors might get a license to the technology they helped develop and they accept that. They recognize that this is the ante that’s required to collaborate with a team of world-class experts and to be the beneficiaries of $120 million of government funding. Plus they also assume that their competitive advantage lies not just in the IP they license, but also with the lead time advantage they get by participating in the initial research.
3. ANL can sign a blanket NDA which binds its partners. This demonstrably lowers the hurdles for collaboration, and makes it easier for entities who are not part of the consortium to work with JCESR. In the old model, an entity would need to execute an NDA with every other party, creating a morass of paperwork.

"I think of JCESR as a virtual Bell Labs model," said Om Nalamasu, CTO of Applied Materials.  "JCESR is a new take on innovation with an audacious goal, a practical IP model, world class talent and rigorous operating rhythm that, in many ways, reminds me of Bell Labs.  JCESR gives us the ability to intimately collaborate with leading academia, government labs and supply chain leaders of the battery ecosystem and fits Applied's open innovation mantra of 'think big, test small, fail fast and learn quick'".

For energy and economic security the U.S. must invest in new forms of energy storage. Without taking risk, we’ll never get the outsize returns we seek—especially in a project that aims as high as JCESR.

The venture capital model of funding innovation has long recognized that to achieve outsize gains and create breakthroughs or “disruptive innovations”, you have to take a lot of risk and expect some failure as a cost of doing business. Despite the failures, on average, this model has been astonishingly successful in creating transformative innovations and companies like Intel, Apple, Google, Amazon.com and Genentech. Of the leadership team at JCESR (14 people), seven have entrepreneurial experience.

JCESR’s Deputy Director for Development and Demonstration, Jeff Chamberlain, spoke at the recent TEDx Naperville event where he said, “We might fail.” I was stupefied to hear these words coming from someone who is shepherding nine figures of taxpayer money, but this recognition on Chamberlain’s part manifestly increases the likelihood that a meaningful breakthrough will emerge from JCESR because it means that they aren’t just funding sure bets—they’re stretching themselves.

Bringing a VC mentality to government projects and acknowledging that to succeed you have to have permission to fail is astonishing. Business as usual isn’t going to achieve breakthrough results. The legacy of JCESR will not be the batteries it develops but rather the way of collaborating.

Yet-Ming Chiang, Professor at MIT and founder of battery developer A123 Systems, said, “Research in the battery area requires multiple scientific disciplines and is most successful when practiced as a team sport.  And JCESR is the best science team I’ve ever played on.”

Chicago was abuzz in February 2014 when the Department of Defense made a $70 million grant as part of a $320 million project that involves nearly 75 participants, mostly companies and universities, for the Digital Manufacturing and Design Innovation Institute (DMDII). It brings a new definition to the term “project management”. Exhibit One:  They studied JCESR’s template for creating the working structure among the parties.

DMDII is much more complex, at least in terms of the number of participants and money involved, than JCESR. "We looked at best practices from across the hubs including JCESR and adopted them in a way that makes sense for a hub focused on digital innovation," according to Dr. William King, the CTO at DMDII and the architect of the UI LABS proposal for DMDII.

George Crabtree, Director of JCESR, sums it up this way, “JCESR’s new paradigm for battery R&D has the potential to significantly accelerate the pace of discovery and innovation, and shorten the time from conceptualization to commercialization. These outcomes are of high value to the nation and the world.”

Crabtree is being modest. The “new paradigm of battery R&D” of which he speaks will become the model for complex, multi-institution research projects. Mark my words.

Neil Kane (@neildkane) is the president of Illinois Partners which helps companies, universities and investors with innovation strategies and technology commercialization. He is a co-founder of a synthetic diamond company based on research performed at Argonne National Laboratory.