1. Innovation, Technology Transfer and New Venture Creation Washington, D.C., December 2-3, 2004 From imitator to creator 1954-2004 Wiggo Smeby Chief Technology Officer Anita Krohn Thrane Head of strategic projects, Corporate Technology and Innovation

2. Objective “To safeguard life, property and the environment” Foundation established 1864 2

3. Innovation phases in DNV

4. Maritime Innovation Phase 1950-1970 Success factors: Focus on technology development to create competitive advantage Market growth Technological leadership by Prof. Vedeler Ability to attract talent Innovations: Rules for operation of unmanned engine rooms Design rules for very large ships Design concepts for Liquefied Natural Gas (LNG) ships

5. Innovations: Rules and concepts for steel jackets and drilling rigs SESAM Design procedures and standards against fire and explosion loads Rules and certification schemes for design and installation of sub sea pipelines Offshore Innovation Phase 1970-1980 Success factors: Competence transfer from ship sector Encouragement from Norwegian authorities to foreign oil companies to invest in R&D Technological and innovation leadership by Dr. Egil Abrahamsen Ability to attract talents

6. Innovations: Veritec Risk and reliability technology Concepts for Floating Production and Storage Offshore Veritas Petroleum Services was formed Internationalization Innovation Phase 1980-1990 Succes factors: Following Norwegian maritime customers building ships in Japan and Korea Solid position in the Norwegian oil and gas cluster Strong demand for new technological solutions in the North Sea Large investments in R&D funded by national and foreign oil companies Modern Quality and Loss Control Management philosophy being adopted Recruitment of talent from best international universities

7. Innovations: Management system certification a new business world wide Nauticus life cycle product model technology Total Safety Class combining technical, organizational and human aspects Diversification Innovation Phase 1990-2004 Success factors: Innovation leadership by CEO Sven Ullring Establishment of a strong global infrastructure including IT infrastructure Ability to attract talents in Norway and abroad A culture for zero tolerance for failure developed - “The new risk reality”

8. 1950: DNV imitate Lloyds 1954: R&D creates fundament for “Thought Leadership” 2004: DNV are being imitated Result: Position

9. Result: Revenue 1966 - 2002 Norway Nordic Asia America Europe Mainly due to Research JIP’s

10. mill NOK (1998 money value) 1970 1980 19902000 1000 2000 Other industries Upstream & Process Maritime Result: DNV revenue trends-diversification & new markets 1960

11. Result: The power of clustering The Norwegian maritime cluster The Korean maritime cluster The Norwegian oil and gas cluster The Italian food cluster The Danish wind energy cluster

12. Result, Impact on industry & competitors Maritime & Offshore: Standards, cluster strength, renewal pressure, learning, e.g. DNV Research made ca. 1000 internal DNV-reports since 1984, in addition, ca. 320 public papers & presentations since 2000. Competence centre: DNV considered as “Norwegian graduate school of technology”. Spin-offs: ScanPower, Computas, Underwater Institute (NUI), Fjerndata, Geco etc.

13. Result, Impact on society Reduction of injuries and deaths Protecting environment Supporting the Norwegian welfare state Knowledge generation and distribution Supporting Norwegian technological reputation

14. 50% 37% 6,8% (of its revenue) 13% MI 40% 30% 3.8% (of its revenue) Cons + TS 72% 12% 16% 1.6% (of its revenue) Cert further development BA’s own R&D funding DNV Research budgeted R&D DNVs investment in R&D, 4.2%

15. Fraction of revenue stemming from own R&D Fraction of revenue used on R&D and Innovation 01%2%4% 100% 50% Most Innovative 10% Innovative Least Innovative MI Cons + TS Cert DNVs investment in R&D, 4.2%

16. 18641900195019702000 Growth in Maritime: Competence, Tools & Laboratories DNV would have had considerable challenges to survive without R&D. DNV 1864 – 195? Remarks 1970198019902000 Advisory Classification Offshore success: Competence & Tools from Shipping New competence & credibility New areas: Existing tools & competence

17. R&D, historic perspective The only real growth in human history started with the industrial revolution.

18. Value creation from R&D depends on: 1.Quality, quantity and diversity –Highly educated staff –Critical mass of diverse projects and people –Free funding (not only allocated funds) 2.Organizational interplay –High intra-organizational cooperation –High customer interaction –High degree of R&D personnel transfer (ca. 20%/yr) –Academic cooperation 3.Leadership commitment –Long-term perspective of leadership (R&D results + 10yrs, patience) –Personal interest in and understanding of R&D –Willingness to take risks (only 1 of 10 of R&D succeeds, R&D time horizon 5-10 yrs) 4.Active government participation –Since society benefit most from R&D, and industry under-invests  government must bridge the gap –Co-financing –support industry clusters

19. R&D, in the future Trends: –Shift from corporate to applied R&D –Weakening of the basic research engine –Universities are aggressive in prosecuting patents, less focus on responsibility as defenders of open science –Globalizations has led to two shifts, a) number of qualified people to do research is rising rapidly b) building labs close to the customers Area: Software and services

20. “Everything that can be invented has been invented” The commissioner, US Patent Office 1899 NobelBellDieselBenzPemberton.. a world still to discover, improve, develop and sustain