Growing Value Business-University Collaboration for the 21st Century

Enhancing Value Task Force Compiled and written by: David Docherty, David Eyton, Alan Hughes and Shirley Pearce Foreword

This is the fourth and final report of the Enhancing Value Task Force. At the beginning of the Task Force, we set out to review and research ways of enhancing the value of universities and the public research base, and to make key recommendations to support value creation. In this report, we draw on our three research reports and extensive consultations with business and academic leaders in particular our Steering and Working Groups. We would like to thank everyone involved in what has been a wide ranging and deep engagement with this most vital of challenges for the UK economy.

David Eyton Professor Shirley Pearce Group Head of Technology Former Vice-Chancellor BP Loughborough University

Steering Group Members

Task Force Chairs David Eyton Group Head of Technology BP Prof. Shirley Pearce Former Vice-Chancellor Loughborough University Strategic Partners Dr. David Docherty Chief Executive CIHE Prof. Alan Hughes Director CBR and UK~IRC Steering Group James Baker Managing Director – Advanced Technology Centre BAE Systems Prof. Genevieve Berger Chief R&D Officer Unilever Prof. Sir Leszek Borysiewicz Vice-Chancellor University of Cambridge Prof. David Delpy RCUK CEO, Champion for Impact EPSRC Prof. Peter Downes Vice-Chancellor University of Dundee Prof. Malcolm Grant President & Provost University College London Iain Gray CEO Technology Strategy Board Dr. Hermann Hauser Partner Amadeus Capital Partners Prof. Julia King Vice-Chancellor University of Aston Prof. Patrick Loughrey Warden Goldsmiths, University of London Dr. Menelas Pangalos EVP Innovative Medicines AstraZeneca Prof. Ric Parker Director of Research & Technology Rolls-Royce Lord Sainsbury of Turville Chancellor University of Cambridge Phil Smith Chief Executive Cisco UK and Ireland Dr. David Sweeney Director of Research, Innovation & Skills HEFCE Mark Thompson Former Director General BBC Prof. Patrick Vallance President, Pharmaceuticals R&D GSK Sir Tim Wilson Non-Executive Director The Unite Group

2 Contents Introduction...... 5 Conclusions...... 6 Recommendations...... 7 Innovation for the 21st Century...... 12 Innovation and Collaboration in the UK...... 14 Innovation and Collaboration in Four Sectors...... 22 Innovation, Collaboration and Industrial Strategy...... 25

Pharmaceuticals and Biotech...... 26

Creative, Digital and IT (CDIT)...... 27

Energy...... 28

Construction...... 30 Case Studies in Collaboration...... 32 GlaxoSmithKline Biomedical Cluster...... 33 Rolls-Royce UTC network...... 35 BP Institute for Multiphase Flow - Cambridge...... 38 Cisco, National Virtual Incubator...... 39 BG Technology Strategy in Brazil...... 41 Caterpillar and Loughborough University...... 42 Costain, Building the Innovation Network...... 43

Endnotes...... 44 Bibliography...... 45

3 Growing Value 4 1 See p.34 casestudy:Biomedical Cluster forGSK innovation.” their central goal,andare expectedtobethealmostexclusive sourcesof firms thathave theincentives andgovernance structures tomakeinnovation are naturally inventive. Conversely, inmodernfree marketeconomies,itis understanding ofnatural phenomenaandtechnologies:inthistaskthey “Universities are… firstandforemost designedtoachieve anew on the proximity of academia, industry andbiotech?” on theproximity ofacademia,industry “Why strugglealonewhenyou canworktogether?Andwhynotcapitalise “It isthejobofuniversities to‘topupthehopper’ ofideas.” system ofknowledge production andinnovation” connections…between differently fundedandmotivated ina research efforts It isinsteadaboutanalysinghow besttounderstandandmanage “…the issueisnotaboutisolatingtheimpactofpublicly-fundedresearch… Foray andLissoni,HandbookoftheEconomics ofInnovation Ric Parker, Director ofResearch, Rolls Royce Powering Up H ughes and Martin, The ImpactofPublicughes andMartin, Sector R&D GSK Casestudy GSK iii ii 1 i

5 Growing Value 5

3 ,commissioned from the UK Innovation the UK,commissioned from Innovation iv Creating Value Value Creating research base in four sectors By Andrea Mina and Jocelyn Probert By Andrea Business interaction with the UK Enhancing Value Task Force Task Enhancing Value Enhancing Collaboration 4 By Alan Hughes and Ben MartinBy Alan The Value of Public Sector R&D of Public Sector Value The Enhancing Impact Enhancing Value Task Force Task Enhancing Value the UK cannot afford to become the world’s best contract researcher for other researcher best contract to become the world’s afford the UK cannot But 2 Identify and prioritise a small set of key actions for change that will enhance the Identify and prioritise a small with business. and collaboration of publicly-funded research value Place UK public and private sector research in an EU sector research and global context. Place UK and private public sector research. public and private between Explore and synergies the similarities appropriate business sectors and explore of different Isolate the characteristics systems of innovation. sectoral • • • • Enhancing Value Task Force Task Enhancing Value March 2012 and Revised Reprinted Mina Hughes and Andrea Alan

The UK R&D Landscape This group set out to: This group

2 The World Economic Forum Report lists the UK as number 2 in university-business collaboration, behind Switzerland and ahead of the US. Global Competi- Report behind Switzerland lists the UK collaboration, Economic Forum as number 2 in university-business World The 2 12:04. Table Report 2011-12 tiveness - collabora was supported of highly-experienced business-university Group a working group The Steering by members on p.2. Group full list of Steering 3 See tion specialists, see p.46. 71 interviews in R&D. through with senior business leaders, academics and charitable investors this objective addressed We 4 the CIHE by elsewhere amongst others. covered which has been extensively skills development, took a conscious decision not to focus on research We 5 Following extensive research on the first three of these tasks on the first three research extensive Following Responding to this challenge, the Council for Industry to this challenge, the Enhancing and Higher Education established Responding Vice-Chancellor then Pearce, and Shirley BP, at Technology of Head Eyton, David by led Force, Task Value former Minister the UK’s Sainsbury, included David The steering group University. of Loughborough of R&D directors science-based entrepreneurs, foremost of Britain’s some Innovation, of Science and was supported other CIHE by Force Council Task The Vice-Chancellors. and senior global companies, CBI. of the Lambert,Members, such as Sir Richard former Director-General . Its inventiveness must be pulled through into innovation within firms to create within firms to create into innovation through must be pulled . Its inventiveness development countries’ and jobs. economic growth

The quality of intellectual inventiveness in the UK is self-evident. Four of the world’s top ten universities universities top ten of the world’s in the UK Four is self-evident. inventiveness of intellectual The quality and the UK England, another in south-east of one miles within fifty are US only to the is second in world-beating flows in our universities articleacademic inventiveness world class from citations. And innovation. Introduction Research Centre at Cambridge University and Imperial College, we have reached ten conclusions and reached have College, we and Imperial at Cambridge University Centre Research (see over). four principal recommendations Growing Value 6 Conclusions 10. 9. 8. 7. 6. 5. 4. 3. 2. e isaglobaltrend towards greater opennessinresearch andcollaboration between 1.

funded by overseas businesses, andtheirvalue isnotcaptured intheUK. growth trajectories,particular andrequires specificpolicysupport. setofstrategicof publicresearch requirements funding.Eachsectorhasaparticular and for localleveragefewer opportunities oftheresearch baseandalackofstrategic prioritisation across allsectors.Equally, manytechnologieshave multipleapplicationsacross manysectors. bullet’ solution toenhancingthevalue and impactofuniversity inventiveness thatwouldwork structure,industries, industry maturity, andthesignificanceofIP. There isnosingle‘silver activities. strongly positive where capacity exists to absorb the research into business and community also more dramatic. companies have fewer resources andanarrower makingfailure terminal,butsuccess portfolio, innovation Failures pipelineandportfolio. occurregularly andare tobeexpected.Smaller inherently risky. Large companiesare practised atthisandhave theability to manage the whole The commer to alackofresources andrelevant ‘bridging’ skills,bothinthecompaniesanduniversities. those seekingtoinnovate oftenstruggletoleverage theuniversity andfundingsystems,due expenditures andinfrastructure. Smallercompaniesaccountforasmallfraction ofR&D,and companies choose to invest where they can find the best people, leveraging national research the capacity universitiesto interface effectively and funding organisations.with UK These same Lar infrastructure andfinanceinachievinggrowth. companies through of and from to major multi-nationals, as well start-up as the importance systems-based approach, whichrecognises thelinkagesfrom research through todeployment, Enhancing theimpactofU prosperity andsustainedinvestment inthehighereducationandresearch base. wide-scale deployment theUK’s ofnewconceptsandproducts, inorder tosupport economic share. needstocompeteforagreater shareThe UK ofsupplychains,from research through to R innovation systemswithlittleornofollow-on benefittotheUK. ‘athigher educationandresearch service cost’ totheworld. This wouldprofit othercountries’ countries incentivise inward could increasingly investment, be viewed or the UK as providing a But this extreme position carries risks. This investment could go elsewhere as developing firms. hastheworld’sThe UK highestpercentage ofR&Dcomingfrom foreign subsidiaries. The opennessandex institutions beingleadingpractitioners. companies andresearch institutions. These dynamicsare withsome present intheUK, Ther Despite havingavibr The absenceofanindustrialstr Inno The impactofpublicly-fundedr esearch is a competitive, global activity and developing countries are capturing market ge international companies accountforthemajorityofUK’s businessresearch andhave vation pathways vary by sector, depending for example on the ‘clock-speed’ of specific cialisation of research isoneofmanywaysinwhichvalue iscreated anditis cellence of the UK research baseisreflectedcellence oftheUK initsattractiveness tooverseas ant financial services industry in the UK, UK inventions oftenendupbeing UK intheUK, industry ant financialservices K’s highereducationandresearch baserequires ajoinedupor esearch isdifficulttoquantify, butisconsistentlyassessed as ategy hasarguably resulted inoffshoring of manufacturing, Recommendations

1. Maintain the excellence of the UK Research Base through long-term strategic commitments from government.

2. Prioritise and finance collaboration, and the sharing of best practice in innovation, between UK universities and businesses, local and global.

3. Promote entrepreneurship and entrepreneurial corporate management in universities in order to enhance risk-taking and innovation in business.

4. Develop consistent differentiated sector strategies to incentivise university-business interactions designed to match specific sectoral systems of innovation.

7 Recommendations 8 7 Rolls Royce hasone oftheoldestuniversity-business collaboration programmes. See p.35 foracasestudyonitsUTC network. SMEs, e.g. through R&D procurement. Here the US SBIR isagoodmodel. e.g.through R&Dprocurement.SMEs, Here SBIR theUS to later-stage demonstration (e.g.viathe TSB). These shouldbereinforced by demand-sidepoliciesfor intermediating institutionsandprogrammes topullthrough attracting research commercial support, Once theresearch base is secure, additional ‘in-year’ resource allocationsshouldbetargeted at to develop thescience andengineeringinfrastructure. £700m of private and charitable funding and is a good example of the long-term commitment necessary commitment to the Research Investment Partnership Fund, is targeting administered a further by HEFCE, base, and flexed upwards when strategic programmes are ready for investment. The £300m government is notatapwhichcanbeturnedonandoff;itneedstosustainedforthemaintenanceofinstalled fromcommitment, nottactical swings infunding by category oneyear tothenext.Capitalexpenditure investing atanincreasing rate. Research fundingpolicyrequires asteadyhandandsustainedlongterm changing government prioritiesandreduced fundinginreal termsatatime whenothercountriesare HigherEducationandResearchThe excellence oftheUK Baseisfundamental.Itatriskfrom strategic commitmentsfrom government 1. Maintaintheexcellence oftheUKResearch Basethrough long-term Recommendations as Rolls Royce of businessanduniversities isapowerful force forcollaboration –witnessthemanycompanies,such based translational research centres. Our research onEnhancing Collaboration concluded that proximity Strongin andfortheUK. evidenceoftheintentiontocreate suchvalue wouldbetheexistenceofUK- should favour with businesses that demonstrably university generate partnerships the greatest value istobemore thantheworld’sIf theUK bestcontract research system,government R&D expenditure tohave orsponsors. largethe needforSMEs companypartners recognises thatfewsmallcompanies have direct routesFurthermore, SBIR tomarketsandemphasise who invest inR&D, and crucially, itslinktopublicprocurement ofthetechnologysolutionsitsupports. are thescaleofinvestment init,itsthree-stage processthe SBIR across multiplegovernment agencies R&D in the UK are atarelativeR&D intheUK disadvantage withoutsuchamechanism. patents –isanexample.Manyothercountries are already givingsimilartax breaks. Companies doing global R&D decision making. The Patent Box concept – where corporation tax is reduced on profits from target of3%.And webut notetheEU-wide also back well-targeted thatrespond fiscalinterventions to acoursetoinvesting 2.5%ofGDP shouldchart inR&Dby 2014, We theambitionthatUK support are significantlyharmingthescienceandresearch base. perceived government commitmentastheyare present reality. Recent changesinimmigration policies to their relocating are to the UK. Their decisions based on as whether much to on locate in the UK the brightestmindsfrom around theworld,andensure thatthere are nobureaucratic impediments However, ofalong-term strategic commitment totheR&Dbase,we alsoneedtocompetefor aspart likely toflow from theseR&Dcollaborations. research scientists or activities onto university are campuses. British jobs, products more and services 7 , Lloyds Register, Jaguar Land-Rover, and Boeing which have moved or are moving their v The keystothesuccessof 9 Recommendations

vi 8 Enhancing connections locally and nationally by building on university-business intermediation, intermediation, on university-business building locally and nationally by Enhancing connections Board’s Strategy Technology such as the in partnership initiatives or collaboration with funding Exchange Networks and Partnerships, and the Knowledge Transfer Knowledge Catapult Centres, These initiatives Councils. Research within the Centres and Knowledge Innovation Programme’s in the way that change within universities of cultural must be part programme of a broad-based they engage with firms and sectors. big companies, and the innovation- universities, between symbiotic interactions Promoting SMEsintensive chains. in their supply and council funding to universities with research in combination Using public procurement, base, science the from SMEs emerging innovative to flow cash increase to investment, TSB This will help ensure for the economy. particularly areas potentially high-growth those in when the financial markets are even high-technology companies, in disruptive investment unwilling to accept the risk. knowledge holistic long-term on focus that strategies investment IPand university Developing revenues. than on maximising licensing rather exchange • • • • Businesses must, of course, take responsibility for their own innovation and increase their capacity to to their capacity and increase innovation their own for responsibility course, take must, of Businesses for major companies in working with universities is a role There understand, absorb and utilise research. chain. And trade behaviour in the supply and value innovative of collaborative, the level to increase base to research should work with the publicly-funded organisations associations and major employer SMEs. the engagement of innovation-curious increase 8 This work has already begun with the TSB. (See Ternouth, Garner, Wood, and Forbes 2012). and Forbes Wood, Garner, Ternouth, (See TSB. begun with the This work has already 8 The Council for Industry and Higher Education, working with intermediate organisations such as the the such as for IndustryCouncil organisations The intermediate with working Education, Higher and a priority for into these objectives make research councils, should and the funding and research TSB as part and Businesses which was proposed of the for Universities of the National Centre the first year collaboration. of business-university Review Wilson We need to build on many of the good collaborative policies and behaviours of the past decade to policies and behaviours the good collaborative need to build on many of We system: key challenges for the innovation on four initiatives and fresh research develop There are many good UK examples of collaboration between universities and companies locally, locally, and companies UK many good universities between are collaboration examples of There UKThe at successful been also has R&D. conducting in and funds sourcing in both globally, and regionally competition national of intensity the given EU.the through funding However, research university raising attention of leading multinationals, UKfor scarce R&D strategies focussed funds, and the increasingly of international funding opportunities, for a bigger market share competition needs to shift towards the UKin universities work terms, to In simple need scale-up. commercial to through research from funding for major projects. for overseas with companies, to compete successfully and better together, 2. Prioritise and finance collaboration, and the sharing of best practice in practice best of sharing the and collaboration, finance and 2. Prioritise global. local and businesses, and UK universities between innovation, Recommendations 10 the understandingofhow tocommercialise them. inbusinessshouldbedeveloped andpromotedand R&Ddepartments toincrease theflow ofideasand More structured programmes of knowledge exchange between university researchers and PhD students, component ofentrepreneurship programmes. doctoral staff and lecturers in business-inspired problem solving and research activities as the central andschools should takeresponsibility forengagingstudents,postgraduates, post- departments themwithformaleducationandmentoring.Business-facinguniversity andsupporting in start-ups, These challengesneedtobeaddressed, forexampleby encouraging studentstolearnfrom participation competition. and in their supply and value chains if they are to continue to evolve and grow in the face of global USA. a perception thattheentrepreneurial isonaverage culture intheEU more risk averse thanin,say, the analysis. Anditistothese we now turn. of the Task Force flow from extensive research and These detailedrecommendations and theconclusions outcomes. ofinnovationthe inherent skewnessanduncertainty investments,their dependenceoncomplementary and stages through whichtheprocess ofinnovation moves, emphasise theneedfordifferent measures atthevarious are acontributiontothisprocess. byThey theUK~IRC The trajectory measures developed forthe Task Force attributable tothatspend. simple Return OnInvestment numbersbasedontotalspendandimpossible-to-measure finaloutputs and engagementindifferent sectoral innovation systems. This approach ispreferable torelying on research andfundingcouncils and business,todevelop measures ofimpactthatreflect connectivity worktobedoneby theGovernmentThere isalsofurther anddevolved administrations, workingwith benefits oftheUK’s research base. fundingandresearch councilstocoordinateand theHE messagesandcampaignsonthestrength and more closelywiththeBritishCouncilandproposed NationalCentre forUniversities andBusiness government charged with encouraging department global businesses should to work invest in the UK, and businessworkingtogethertofosterinnovation eco-systems].UK Trade the andInvestment (UKTI), sponsor [theOfficeofLifeScienceandtheAutomotive Councilare successfulexamplesofgovernment universities andbusinessestocapture higherglobalsupplychainmarketshares intheindustriesthey scale deployment canbedecades.Government shouldberesponsible forworkingwith departments investment. trueforR&Dintensive industries,whereThis isparticularly thetimefrom invention towide- Clarity andconsistency of government messages to business reduce theperceived riskassociatedwith of innovation. university-business interactions designed to match specific sectoral systems 4. Develop consistentdifferentiated sectorstrategies toincentivise on theskillsofmanagementteamthanqualitytheirtechnicalinnovation. companiesisdependentmore Most venturethatthesuccessorfailure ofstart-up capitalistsassert universities inorder toenhancerisk-takingandinnovation inbusiness. 3. Promote entrepreneurship andentrepreneurial corporate managementin viii Furthermore, majorcompaniesrequire resourceful, inventive talentwithintheirown companies vii There isalso Image holder

11 Innovation for the 21st Century 12 equality legislation, apprenticeships schemes, orpensionprovision. 6 Labourmarketinstitutions reflect thelevel are, collective andnature inthelabour market.Examples ofstateinterventions bargaining, healthandsafety, Innovation forthe21stCentury managing the golden triangle of government, There isbroad consensusamongtheoriststhat within thesystem. They dependdeeplyonpatternsofinterconnection region. The relationships are organic and historic. mechanically (ormagically)inagiven sectoror cannot pullasinglelever toseegrowth appear industrial strategy occurbecausegovernment perfect process orsystem.Lively arguments over There are noeasyanswers tocreating the science base. systematically with innovator companies and the procurers, suchasinhealthcare, failtoengage to share in the risks; or if massive public sector if thefinancialmarketsare unwillingorunable risk-taking businessleadersandentrepreneurs; scientists, engineersandtechnologists,aswell as not produce enoughskilledworkers,talented all probability failiftheeducationsystemdoes companies andsectorstoinnovate, theywillin ministries dointermsoffinancialincentives for the business department. Whatever the economic government notjustthe Treasury departments, or innovation is,therefore, acrucialrole forall of growth. Promoting, stimulatingandmaintaining ideas are effectively exploitedistheinnervitalism equilibrium or at rest, and the process by which new ‘there’. Aninnovative capitalist systemisnever in economies andfirmsgetsuccessfullyfrom ‘here’ to At itssimplest,innovation isthemeansby which Managing Innovation groups met. when the Task Force’s Steering and Working drivers thatwere ever-present inthediscussion on someoftheunderlyingeconomicandstrategy intellectual orapolicybubble,sowe wanttotouch This investigation has notbeenconductedinan Post-War World. Joseph Schumpeter, Capitalismina capitalism isacontradiction interms.” still beasocialisteconomy, stationary socialisteconomywould a stationary would stillbeafeudaleconomy, and “Whereas feudaleconomy astationary ix institutions. additional pointsbeingfinancialandlabourmarket a GoldenPentangle thanatriangle,withthe The shape of an innovation system is more like value ofsuchconnectivity. innovation andthemechanismsthatmaximise captured tounderstandeconomically-successful that thefullrange ofinterconnectedness hastobe emerged time and again in our work. We found it doesnotcapture afundamentalpointthat Technology Strategy Furthermore, Board intheUK. Innovation Research Programme orthe intheUS, activities andbodies,suchastheSmallBusiness technologies, or with the role of intermediating the financialmarketsthatfundnewideasand But thistriangularmodelfailstoengagewith successful integration ofaninnovation system. business anduniversities iscentral tothe transfer ofinventiveness intoinnovation. ofthesuccessful of connectivityisattheheart (See exhibit1)Aswe seelater, thepaceandease be connectedandcoordinated inpolicyterms. five keyareas. in transformational global changes, particularly system ofinnovation isfunctioning atatimeof We were extremely conscious that the UK’s connectivity between businessesanduniversities. understanding, managingandcoordinating the innovation focuson pentangle, withaparticular We have sought tocapture issuesacross this 1: Exhibit The GoldenPentangle 6 Crucially, eachofthepoints must 13 Innovation for the 21st Century These are what Sir John Beddington, the UK’s UK’s the Beddington, John Sir what are These “TheChief Scientific Advisor called: inescapable In this Century.” challenges of the early 21st innovation context, our view is that a successful to be judged system should not and collaboration start-of number the – by mainly or even – solely basket of a spin- outs, but by ups or university of the the health that demonstrate measures system, and of connectivity within the innovation that follows. course the economic growth The banking and sovereign debt crisis sovereign The banking and difficult to manage and messy. is risky, Innovation nerves often deep pockets. and strong It requires crucial system, where financial In a de-leveraging capital and where in venture appeared gaps have volume equity is unwilling to fund a high private of start-ups of innovative high-volumes or sustain and in stimulating SMEs, of government the role becomes the financing of innovation coordinating significant. more challenges of energy, The interconnected food and climate: water, Global business and global innovation global and business Global reporttheme of this A recurring will be the whether shown of innovation, nature globalised multinationals of foreign in the decision-making as British the UK, in investing in reverse or in the R&D capacity abroad, companies build companies to digital and creative choices of small and their in Russia sites designed their web have in India. middleware , creator of the term, of creator , x “Open innovation is a paradigm that is a paradigm “Open innovation assumes that firms can and should as internal use external ideas as well paths ideas, and internal and external to market, as the firms look to advance that This assumes their technology. partnersrewards.” risks and share The transformational force of these technologies force The transformational what and platforms lies not just in moving music, was once physical – shopping, reading, television – to digital, but also in the alteration Plane wings that itself. of physical production being now once designed in hangars are were using computer simulation; drugs that developed being in labs are once patiently discovered were speeds; and simulated using petaflop processing 3D printing will bring customised manufacturing than rather consumer, the to closer physically The examples lowest. wages are locating it where for the endless and the implications profound are in the UK. management of innovation The power of the Internet and high- The power performance computing Traditional models of closed innovation within innovation models of closed Traditional between innovation open way to giving are firms publicly-funded research companies and many are There universities. institutions, usually theoryboth in and innovation such of models the definition of Berkeley took but we practice, Henryacademic, Chesbrough The rise of Open Innovation The rise Five disruptive innovation innovation disruptive Five challenges As we shall see later, the adoption of this approach the adoption of this approach shall see later, As we to major crises in in response to innovation biopharmaceutical the business models of the of entrepreneurial or in the emergence industry, and digital industries, clusters in the creative in which implications for the ways has profound policies must be set up to innovation sectoral economic impact. achieve as our guide: Innovation and Collaboration in the UK 14 France, Switzerland, Mexicoandelsewhere. Why mightthathave happened? There are three theories: plaster board, aggregates andthelike. Today, nearlyallofthemhave beenacquired by companiesfrom andactive alloverwere intheUK headquartered theworldmakingcement,concrete, roofing tiles, in Germany.times the proportion Back in the 1980s, many leading building material manufacturers affiliates, and nearly 25 per cent of business R&D funds were coming from abroad, more than five manufacturers. By2007,over 30percentofmanufacturingemployees were workingforforeign One strikingfeature ofthepastdecadehasbeenarapid increase inforeign ownership ofUK could reach apointwhere theirown businesseswillhave tomove elsewhere. 96 to36percentbetween 1979and2009.Somelarge thatweaknesses inthesupplychain firmsworry component makinghasshiftedoffshore: theBritishcontentofJCB’s famousbackhoeloadersfellfrom Big companieshave becomeincreasingly concernedaboutthehealthoftheirdomesticsuppliersas the UK’s wastheslowest intheOECD area. manufacturingexports exchange rate hammered itsshare ofworldtrade inthedecadeto2007.Duringthisperiod,growth in industrialised nations, and at just over 10% of GDP is at an all-time low. Furthermore, a high sterling bleaker. Manufacturing’s economyhasdeclinedmore share rapidly oftheUK thaninotherleading to look more closely at what has happened in the past But years,start and the picture becomes againpuncheswell abovethe UK itsweight. Pharmaceuticalsandlifesciencesare otherresearchworld motorsports. intensive industrieswhere combined, anditsskillsinhighvalue engineeringare evidentinthewayitsmanufacturers dominate hasmore globally-leadingaerospaceThe UK firmsthanFrance, Germany, Italy, Spain andtheNetherlands Manufacturing aCrisis? This hasprofound implicationsfortheUK’s innovation pentangle. economy hasinthepastthree decadesshifteddramatically awayfrom manufacturingtowards services. always subjecttochangesinbroader economicandpoliticalforces, suchasthewayinwhichUK the designanddynamismofsystemicconnectionsbetween themainplayers. Butthissystemis the economy. Aswe notedearlier, themostcrucialfactorinpullinginventiveness intotheeconomyis which these values are to dynamic growth embodied are of vital importance and job creation throughout successful innovation system,whetherincompaniesor countries. The mechanismsandcontextwithin valuesCourage, focus,opennesstonewideasandenduringcommitmentsare forany heartland which included: In September 2012 Vince Cable,theUK’s businesssecretary, outlinedanewvisionforeconomic growth Innovation andCollaboration intheUK • • • commitment farbeyond afive year parliament orspendingreview period.” astheydevelop; focusonthethingswe dobest;andanenduring opportunities “…the courage totakedecisionsthatbearfruitover along period;opennesstonew damaging. This view isonlynow being challenged,asaconsequence ofthefinancial crisis. has grown by government thatanyintervention intheworkings oftheeconomy islikelytobe No clearandconsistent sectoral strategy from government. years, theview Over thepastthirty the spaceofafewyears by ineptfinancial engineering. decades twooftheUK’s manufacturingcompanies.Both were destroyed mostimportant within to allkindsofcorporate manoeuvring inthenameofshareholder value. were ICIandGEC for especially vulnerable because their large to these extremes, book of fixed in part assets has led Too great anemphasis onshareholder Manufacturers value have andtheshort-term. been suffered. 41.1 percentforChina. This couldmeanthatlong-terminvestment inplantandinfrastructure as ashare ofGDP:16.8percent,compared with21.9percentforFrance andanextraordinary companies viasavings. isatthebottomof leaguetableforinvestment ratesThe UK expressed Too manufacturing muchconsumptionby consumersandnotenoughinvestment intoUK xi 15 Innovation and Collaboration in the UK - And 9

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0.5 0.0 1.5 1.0 2.5 2.0 GDP of % Data source: Office for National Statistics Data source: There is an R&D expenditure gap between the UK gap between competitor nations. is an R&D expenditure and comparable There R&D is concentrated in the UK’s biggest firms and their supply and value chains. their supply and value biggest firms and in the UK’s R&D is concentrated is simultaneously open and vulnerable. system The UK innovation • • • 9 Although we relied substantially on these research reports, our conclusions and recommendations draw on the debates within and between the working on the debates within and between reports, draw our conclusions and recommendations research substantially on these relied we 9 Although on collaboration. the case studies and from and steering groups, and adver market research which include design, copyright development, conscious that R&D must be analysed alongside intangible investments are We 10 Moreover, in international comparative terms, R&D expenditure relative to GDP seems to be weakening weakening be to seems GDP to relative expenditure R&D terms, comparative international in Moreover, heavily and the UKFinland investing China and static (see Chart 2). Korea, time, with over tising, software development, training and skills development, and broader organisational change. However, our evidence shows that they were all declining that they were our evidence shows change. However, organisational and broader and skills development, training development, tising, software 11). p. Hughes and Mina (2012 the early 2000s onwards. in money terms from 11 GERD:Gross Expenditure on R&D BERD: Business Expenditure on R&D HERD: Higher Education Expenditure on R&D Expenditureon R&D GovERD: Government Chart 1: UK R&D Expenditure as a percentage of GDP a) The Expenditure Gap a) has been a fall of there to GDP, research of higher education in the ratio despite an increase Overall, been 1990s, which has only recently since the early to GDP in R&D relative expenditure total gross checked (see Chart1). The UK R&D Landscape The UK R&D messages: Core The UK’s Innovation Pentangle, and the relationship between business and universities, must therefore therefore must universities, and business between relationship the and Pentangle, Innovation UK’s The and at the service of industrial strategies of the economy, shape of the broad in the context be managed research three commissioned we issues these of understanding our aid To sectors. high-growth for particularly R&D Landscape, on the context; second, an international in first on the UK’s the projects: sectors. within key and innovation collaboration and finally on research; public sector impact of it is to those that we now turn. now that we it is to those Innovation and Collaboration in the UK 16 £million for 56%. R&Din2009,andthe50largestThe 10 largest businessR&Dspendersaccountedfor34%ofallUK b) R&Disconcentrated inbigcompaniesandtheirsupplychains 2:GERD:gross domesticexpenditure onR&D,1999and2009(as%ofGDP) Chart independent smallandmediumsized 3). businessesemploying fewer than250people(seeChart small andmediumsized businesses,1999to2009 on R&D performed in 3: UK Expenditure businesses by all businesses and by Chart

xii Onlyaround 3.5%ofthetotalinvestment inR&Dcamefrom themanythousandsof 10000 12000 14000 16000 18000 2000 4000 6000 8000 Note: The 0-249group includes subsidiariesoflarger businesses. group isindependentfirmswithlessthan 250employees.The SME Source: Hughes2012 andHughesMina2012 Data source: OECD 0 Finland

1999 Sweden

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2001 2008)

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China spenders 56%. R&D 50 Top spenders34% R&D 10 Top SMEs 0 Total

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%

17 Innovation and Collaboration in the UK

(2006) Finland States United Japan France United Kingdom United (2007) Sweden (2007) Norway (2007) Germany % Data source: OECD Data source: 0 20 40 60 xiii Having reviewed the relative scale and shape of investment into R&D, the research team turned to the into R&D, the research scale and shape of investment the relative Having reviewed and in particularimpact of that investment, sector R&D. that of public Alongside this inward investment, there has been an outward flow of R&D funding to other countries. flow an outward has been there investment, this inward Alongside In 2009, UK funded £11,519 million of R&D in the UK, businesses £2,228 they invested but in addition was a ten to one ratio there 2000 time: in the year over has increased And this ratio million overseas. five to dropped had figure the UK2009 the in R&D in by but abroad, invested and sums the between to one. Chart 4: R&D expenditures generated by foreign-controlled affiliates, 2008 (as a % of BERD) affiliates, 2008 Chart by foreign-controlled generated R&D expenditures 4: Over 40% of R&D investment comes from foreign subsidiaries, making the UK subsidiaries, making foreign open – but the most comes from 40% of R&D investment Over world (Chart system in the industrial 4). – innovation vulnerable c) An Open But Vulnerable Innovation System Innovation Vulnerable But c) An Open The loss of a major research facility from a global business would require literally tens of thousands of thousands tens literally require would business a global from facility research a major loss of The must have SMEsof new of UK Governments the volume its impact on compensate for to research. SMEs corporates, If one part and academia. in large of to supportpolicies innovation and stimulate is not supportedthis triangle the other parts and fails, then atrophy. Innovation and Collaboration in the UK 18 12 See p.38 foracasestudyonBP InstituteforMultiphaseFlow. The Value ofPublicSector R&D objective Cambridge todofundamentalworkonmulti-phaseflow withnoimmediateoreven mid-termcommercial that maybenefitthecompany, butwhich mayjustbeanhonourable deadend;BP setupaninstitutein Google famouslyexpectsitssoftware engineerstospend20percentoftheirtimeonpersonalprojects of metricsbefore committingtoR&D,butnoneexpectevery pound,dollaroryuantobeproductive. never asimplequestion ofcalculatingthereturn oninvestment. All boards ofbusinessesreview arange Holding theinnovation systemtoaccountby evaluating theimpactofpublicinvestment poundis Core Messages: no significantshiftsover time. quadrants, andthebalanceshows in volume ineachofthenamed publicsector R&D takesplace UK 2). understanding (seeExhibit versus the quest for fundamental between considerations ofuse innovators, andshowing the balance representative scientistsand approaches toR&Dnamedafter vivid meansofexpressing different developed theStokes Quadrant –a and appliedsciencewhenhe and fastdistinctionbetween basic Princeton challenged the hard to impact. Donald E Stokes at research, anddifferent paths across different waysofdoing research is,andshouldbe,spread In thesameway, publicsector appetite forrisk. alone thecompany–where dependingon the thesuccessfulstrikerate isoneinten,twenty orthirty that willhave clearcommercial potential,andresearch thatmaytransform –let thewholeindustry • • • • • innovation landscapeinorder toguidepolicydevelopment. and trajectory-based measures, must be adopted across the research collaboration and More sophisticated systems-based methods of impact measurement, emphasising intermediate as evidenceofthehealthinnovation system. heroic assumptions,anditmaybeaseriouspolicymistaketorely onrate ofreturn calculations Where itispossibletoquantifyimpact,attemptsreduce ittoasinglerate ofreturn require the return. As with all innovation-related investment, a small number of successes account for the bulk of alongside. The impactofpublicsectorresearch investment dependscriticallyontheprivate sectorinvesting time period. wider socialterms;rates ofreturn canrange between tentotwenty-five percent over along public sector researchUK investment yields substantial benefit to society in economic and 12 ; andmanycompaniesengagedininnovation allocateresources between product-led work Exhibit 2:StokesQuadrant Exhibit category in 2007/8. Experimental R&Daccountedfor 2.8% in2007/8.Experimental category Note: Percentages refer totheamountofresearch councilfundingaccountedforby each Source: Adaptedfrom Stokes (1997)andDasguptaDavid(1994) Quest for fundamental understanding?

No Yes The Republic ofScience Pure basicresearch No 33.7% (Bohr) Consideration ofuse? The Realm of Technology Pure appliedresearch basic research User-inspired (Pasteur) (Edison) 34.6% 28.9% Yes 19 Innovation and Collaboration in the UK

43

Consultancy services 9 33

Setting of physical facilities

38

49

37 Employee training Contract Research

Sitting on boards advisory 27

research Joint

Hosting personnel 10

External secondment

87

Research consortia

Attending conferences 35

Prototyping Prototyping testing and Joint Publications solving solving activities - 10

46

6 Problem

57 xiv Curriculum development Informal advice Enterprise education

28

14 setting -

7 31 Formed/run consultancy Standard forums

Patenting

activities 4

out -

5

Commercialisation Commercialisation Licensed research

Spun company 67

Participating in networks based activities based -

- 15

Public exhibitions People

based -

3 33

Community based activities

Student placements

Community sports 30

65

38 Schools project Lectures for Lectures community the Giving invited lectures

To measure impact, therefore, you have to measure the health of the innovation system. Instead of return system. Instead of return the health of the innovation to measure have you impact, therefore, measure To of direction positive a of sense clear a provide will that measures trajectory propose we investment, on process. stages of the innovation the various change and which benchmark systematic success across the Higher Education Funding from Funds The formula for the allocation of Higher Education Innovation and developing such as strengthening measures, includes trajectory Council for England already foundation for a good partnerships, and forming strategic and these provide networks of innovation which allocates funding based on Excellence Framework, the new Research use. Furthermore, broader of business- of the health measures benchmarks for long-term trajectory provides impact, inherently collaborations. university Source: Hughes and Kitson (2012) Source: in each of the pathways shown. all disciplines in all UK interactions from higher education institutions and could record drawn were Note: Respondents Exhibit of UK Academics Pathways 3: Impact years) three in the last reporting(% of academics an external organisation with each interaction The current rich pattern of impact pathways is shown in Exhibit 3. of impact pathways is shown rich pattern The current As the US National Academy of Engineering notes: ‘numerous diverse, robust, and often mutually mutually often and robust, diverse, US As the ‘numerous notes: Engineering of Academy National of students, graduates, hiring direct including to industry, academic research link vectors reinforcing research industry-sponsored consultancy; faculty of researchers; exchanges temporary and faculty; consortia; licensing; technology centres; programmes; liaison industrial research grants; and contracts start-up and conferences’. publications; companies; Innovation and Collaboration in the UK 20 government, regulators andcharities. withasampleof 71top-level sources fromin-depth interviews large andsmallfirms,universities, and theirimpactongenerating value, Innovation theUK Research Centre conducted aprogramme of behaviour (strategic versus sporadic). See exhibit5. To deepenourunderstandingof thesecharacteristics intense), varying speedsofinnovation (long-runtorapid-fire), anddifferent approaches tocollaborative different industrialstructures (concentrated todiffuse),varied reliance oninnovation (moderate to 13 CDIT taskforce toencompasstheconverging wasanacronym coinedby aprevious nature CIHE oftheseindustriesandtheir innovation systems. energy, creative-digital-IT (CDIT), To understandsuchsectoral systemsofinnovation, we commissionedresearch onthepharmaceuticals, colleagues. companies, which employ topscientists who workasequals on research problems with their university topharmaceutical are more important technology; orthatjointpublicationsand science consortia informal adviceandnetworking,rather thanby formingnewfirmsviaspin-outsorthrough licensing For thatacademicsengagewithcreative through example,itmaybemore important anddigitalSMEs Business. for thefundingandresearch councils,aswell astheproposed NationalCentre forUniversities and these pathways,disciplines,andtechnologies,fordifferent sectors,shouldbeanurgent priority As we note inour recommendations, developing appropriate benchmarking trajectory measures across There are clearpositive returns oninvestment forpublicsectorR&D Source: Hughes and Martin (2012) Source: HughesandMartin 4: Exhibit Time, Attribution,Impact through intoapplications. input andmoneyfrom businessgrows asthepublicinvestment in invention ismatchedby firms’ pull- particular, 4 demonstrates, investment as Exhibit the impact of complementary of time, intellectual a commercially developed product. Andalongtheway, successistheproduct ofmanyparents. In through feedbackloops,failures, breakthroughs, setbacksandfinancialchallengesbefore itbecomes a simplelinearpathwaythatflows from fundedinputstofundingimpact.Instead,research proceeds SCALE TIME Feedback loops (Funding) High Low Inputs 0 5 10 15 20 RESEARCH (Research) Activities 13 andconstructionsectors. These were chosenbecausetheyhave (eg Publications) (eg Publications) Development Exploratory Outputs (Clinical Trial) Outcomes development and community Scalable socio xv , buttheseare nottheproduct of - economic effects (New intervention) 25 Impact High Low YEARS

Exhibit 5: Industrial Sector Characteristics

Bio-Pharmaceuticals Construction Size: £30bn+ turnover Size: £122bn Employees: 75, 000 Employees: 2.1m Structure: Concentrated Structure: Overall diffuse, but varying with market Approximately 350 companies, with fewer than segment in a fragmented value chain. 20% of firms employing nearly 90% of total Overall 256,441 construction companies, but the workforce and the top 37 companies accounting total turnover of the top 100 biggest builders in the for approximately 83% of total turnover. UK was around £64bn in 2011. Collaborative approach: Consistent Collaborative approach: Sporadic Technology Solution clock-speed: long run Technology solution clock-speed: Medium run

Energy CDIT Size: £49bn+ Size: £102bn gross value add Employees: 173,000, the UK oil and gas supply Employees: 2.5 million including freelancers chain, support services, supports employment Structure: Diffuse of 407,000 people in the UK, around half in Some major players, but tens of thousands of small Scotland. businesses, e.g. 485 games companies, 11,000 film Structure: Concentrated and TV companies employing c. 154,000 people, Six vertically integrated companies in electricity 330,000 “software professionals” and 64% of dominate both generation, 67%, and supply, software businesses employ fewer than 50 people. 99%. Four oil companies account for the bulk of Collaborative approach: Sporadic oil production. Renewables: diffuse. Technology Solution clock-speed: long run: fibre, Collaborative approach: Consistent servers, platforms, and rapid-fire: user-interfaces, Technology solution clock speed: Long and software, design. medium run

Sources: HM Government (2011) ‘Strengths and Opportunity 2011: the landscape of medical technology, medical biotechnology, industrial biotechnology and pharmaceutical sectors in the UK.’ December. CIHE (2010) ‘The Fuse: Igniting High Growth for Creative, Digital and Information Technology Industries in the UK’. September. DECC (2010) Energy Market Assessment. Constructing Excellence (2011) UK Industry Performance Report 2011. The Construction Index Top 100 2011

21 Innovation and Collaboration in Four Sectors 22 partnerships andprojects. (See partnerships Ternouth, Garner, Wood, andForbes 2012). mechanisms, underpinning systemsandprocesses withintheKnowledge Transfer (KTP)programme Partnership contribute tothesuccessofindividualKTP and commissioned by the 16 A recent reviewTechnology conducted by the CIHE Strategy Board and the Research Councils clarifies how the various players, 15 See theCaterpillarCaseStudy p.42. ment instimulatingtheirknowledge-economy. 14 See BG Group case study, p.41. This exemplifies how boards make global decisions about where to do R&D, and reveals the role of the Brazilian govern - the UK innovationthe UK system. sector-specific innovation, we present five cross-sector whichourresearch observations identifiedabout There were individualchallengesineachofthesectors,butbefore we turntothoseandtheissueof materials ortools. Successful collaborations rely oninvestment; inthetimespentonjointworkandexchange ofideas, oftheexchange andtheresearch between industry only part base. i) Collaboration isaresource-intensive activityonbothsides,andfinancialresources represent Core Messages: Innovation andCollaboration inFour Sectors and pharma,newindustriessuchasCDIT, are progressing atdifferent speeds. making more orlessprogress, andfrom industry, where traditional sectorssuchasautomobile,aerospace inevitably uneven –bothontheuniversity side,withdifferent institutions,disciplinesorresearch groups of howunderstanding in industry to manage the relationship and how to gain value from it. Progress is As well asmaturinguniversity andacademicbehaviour, have beenimproved partnerships by better clarity ofmotives andtransparency inconduct. organisations operate;which partner ashared visionoftheobjectives forthecollaboration; andtrust, • • • • • • Pharmaceuticals Executive input intothecollaboration. We are intellectuallyinvested.” we are“When Italkaboutpartnership, notjusthandingover money;we are puttingintellectual Energy Executive been acriticallearningforus.” challenges. to workonindustry We have setupourvarious openinstitutes thatwayandithas “We ofacademicfreedom inattracting stress thebestPrincipal theimportance Investigators sector. structures, andtherefore trajectory measures mustbedeveloped thatare appropriate toeach Each sectorrequires amixofpoliciesandcollaboration approaches relevant totheirindustrial Innovating forthegrand challengesrequires cross-disciplinary, cross-institution collaboration. smoothly andspeedily. do notcapture theprocesses andcompetencesneededtomanagethiscollaboration effectively, fail tocapture therichnessandvalue-creation possibilitiesofthis relationship. Furthermore, they One-way modelsoftechnologyorknowledge transfer between businessanduniversity always across allsectors,andvitallysoinpharmaceuticals. Open innovation meansofdeveloping isanincreasingly newproducts important andservices partnerships withismadeatglobalboard level. partnerships toformthese for science-based business, and thedecisionastowhich country particularly Many big companies are developing fewer but longer-term with universities, strategic partnerships Universities strategic are role playinganincreasingly insector-specific important innovation. 15 This involves thedevelopment ofanunderstandingtheinstitutionalframework in 14 16 23 Innovation and Collaboration in Four Sectors “When somebody is coming up for a promotion, it is important that there is due value given given it is important for a promotion, “When somebody is coming up is due value that there partnerships,to commercial of to consultancies, to industrial income as much as to some the other forms of academic scholarship.” Academic Senior “The challenge has always been about how one manages to marry the academic sector’s “The manages to marry one sector’s the academic been about how has always challenge for whereas end in itself, can be an research Academic objectives. corporate with objectives has to outcome and to lead to a tangible has investment research organisations corporate to collaborate agree when you careful to be very have You a business objective. by be driven aligned.” that those two things are sure to make a project around Executive CDIT “Some universities are strangling innovation. They think they’re being business-like at IP being business-like They think they’re innovation. strangling are “Some universities is that The net result to do any work with them. hard actually making it very but they’re nothing happens, so nobody benefits.” Executive CDIT “You would expect IP to be a problem but it’s never been one that’s really impossible to impossible to really been one that’s never but it’s would expect IP to be a problem “You people will find a way is something genuinely valuable, if there The chances are resolve. amongst the academic partners awareness about is a growing and also I think there through IPR make that much money from they don’t the grants; make their money from They that. in reality.” Business Executive When opportunities for rapid response research projects arise, universities cannot always respond, cannot always respond, arise, universities projects When opportunities research response for rapid Money in does not workload allocation for teaching and research. because they work on an annual enough to move Nor is staffing flexible way. a fast and effective in contributions out in always result to this, for example tryingThe EPSRC to respond are and other organisations quickly. people around which some are funding for universities, flexible These provide Accounts. with Impact Acceleration arising business challenges. quickly to address staff time to deploy using to provide Academic incentives, especially promotion criteria, are still built mainly around publications and publications built mainly around still criteria, are especially promotion Academic incentives, This hinders or industry than industry experience. collaborations rather proposals successful grant industry expertise where industry between labour mobility even and academia would be useful in activities. education or commercialisation research, But for others, particularly smaller companies and in emerging collaborative sectors, the challenge of But for others, particularly collaborative smaller companies and in emerging a barrier. simplifying IP negotiation remains For many businesses, particularlyFor big companies, IP of the is less of an issue than it was because more considerably are and consultancies contracts that grants, in universities realisation growing valuable. iii) Critical barriers to commercialisation of academic research involve the management of involve of academic research iii) Critical barriers to commercialisation intellectual property and lack of business know-how. rights, financial constraints ii) Businesses and academia have different institutional objectives and timeframes, and and timeframes, objectives institutional different have academia and ii) Businesses two cultures. the and reconciling understanding from flows success collaborative Innovation and Collaboration in Four Sectors 24 funding went intoseedcapital,and7%start-ups. some sectors. The British Venture thatin2011only6%ofitsmembers’ CapitalAssociationreported framework butmainlytothepoorappetiteamonginvestors forfirstandsecondstagefundingin ofearly-stageinnovationThere tothecurrent isashortage macroeconomic funding,attributedinpart regularity asabarriertoinnovation andthecreation ofvalue. v) The conservative attitudeto risk amongboth investors andacademicsemerged withsome challenge forthefuture. the Technology Strategy Board, andby manyuniversities offtheirown bat,butremains anenormous by theResearch initiativesdisciplinary supported Councils,theHigherEducationFunding Councilsand citiesorclimatechange. grandThis hasbeenrecognised challengessuchassmart by cross- In universities, asilo mentalitymaydiscourage interdisciplinarity andhindertheabilitytoaddress iv) Cross-disciplinary R&Disvital toaddressing thegrand challengesofthefuture Pharmaceuticals Executive inmind.Notallfundingbodies,however,not withadepartment getit.” positive isourproblem” reaction becausewe comewithaproblem, towhenwe say:“This up to that and have integrated themselves. Those are the universities that we get a very some problems we have toworkacross boundaries.Some universities have really woken functional excellence environment. withinamulti-disciplinary It’s cleartousthatsolve “We stillhave tobreaksilomentalityofproblem-solving theuniversityand department Energy Executive higher levels inparticular, oftechnologyrisk.InEurope, andintheUK itisnot.” seedequityisavailableof finance.IntheUS, fornewtechnologieslikethiswithsimilaror reason we haven’t“The gotourtechnologyrunningtodayispurely down totheavailability Pharmaceuticals Executive sector.” the CityofLondon, theirshareholder base,forinvesting inthistypeofcompanyor isthetotallackofappetitefrom number one problem in thebiotechsectorUK “The xvi 25 Innovation, Collaboration and Industrial Strategy

“There is a lot government could do: I think one of the things that still is apparent when could do: I think one of the things that still is apparent “There is a lot government and the right for you the UK, work in the US are versus you is getting facilities that really and the R&D tax extension work for those sites. And the patent box way that landlords very because that’s looked like it was going to disappear at one point, but it stayed, credit at least, it’s important. at the level And I think maintaining the funding in medical research, the into academic of out things important. translate help to incredibly is incentives And that can help that is useful.” early phase companies. Any incentive Pharmaceuticals Executive “Suddenly like London buses we get computer science being announced for schools, we science being announced for schools, we get computer buses we “Suddenly like London tax credit get a production we being announced, broadband get high-speed, super-fast has certainly for finally got to be congratulated The Government announced in the Budget. of [this] industry UK.” in the seeing the value Executive CDIT “What doesn’t work for industry is government policy saying “I’m doing this today” but today” this doing “I’m saying policy industryfor work government is doesn’t “What energy about talking particularlywork; you’re when doesn’t That changed. has it tomorrow years.” twenty over technologies developed Executive Energy

Many respondents in the research felt that industrial strategies are required to pull through pull through to required are strategies felt that industrial in the research Many respondents particularly into firms and the economy, inventiveness based on university research commercialised manufacturing and smartThese should be underpinned by such as advanced cities. in key areas, the participationlong-term policies which ensure This means supporting of UK-based companies. the capacity of UK-based firms to exploit technologies and solutions, but also improving home-grown elsewhere. technologies developed Winners don’t train themselves. There is a clear need for an approach to sectors and technologies which to sectors is a clear need for an approach There themselves. train don’t Winners that encourages a stable framework to provide required understanding the fine-grained recognises in thinking and investment of fresh forms broader This also involves to R&D. firms to commit more design and marketing. skills, training, intangibles such as software, This is not so much about picking winners, but instead involves choosing sectoral races and placing races choosing sectoral winners, but instead involves This is not so much about picking system is well- bets, and supporting innovation ensuring that the sectoral bets by those innovation joined-up notes, executive CDIT supported following coordinated, the understood, As and integrated. a platform for innovation. thinking creates The senior business leaders in our research felt there had been a number of missed opportunitiesmissed of number a been had there felt research our in leaders business senior The UKand for by particularly plc, the perceived and officials, sector among public aversion to risk due would enable businesses that long-term strategies coherent in formulating of government weakness plans. investment to implement long-term The role of government remains a significant issue for many respondents to these interviews. There interviews. to these There for many respondents a significant issue remains of government The role successful but no role; is to have of government role that the school of thought is a free-market financial and input, both government strong always had world have the systems across innovation of dollars of billions of hundreds all, and the source cluster of the most famous Valley, Silicon strategic. the Internet. and software of semi-conductors, funding defence – mainly – federal built on was of value, death’, of the ‘valley carryingdollars through industries these federal and investment, such Without happened. have may never Web Wide World the commercialised Innovation, Collaboration and Industrial Strategy Industrial and Collaboration Innovation, Innovation, Collaboration and Industrial Strategy 26 academic teams.Asoneoftherespondents inourresearch noted: withpotentialforstrong contributions from biotech community intheUK, entrepreneurialsupported smaller firmsanduniversities. challengeistothegrowthThe complementary ofadynamicandwell- level ofoutsourcing for independentR&Dproviders, andcollaboration bringsgreater opportunities In consequence,thesectorisincreasingly externalisingR&Dthat was previously donein-house. A higher noteintheircasestudy: models. AsGSK A key issue for pharmaceutical companies is the renewal of the industry’s research and business Pharmaceuticals andBiotech withothers. The sectionsare inpartnerships intendedtobeexploratory rather thanexhaustive. the CIHE engagements withbusinessanduniversity by leaders.Itisaworkinprogress andwillbetakenfurther The following inoursample,andsubsequent insightsonsectorstrategy draw ontheinterviews science base. incentives,balance offiscalandmonetary andwhichensure effective pathwaystoimpactfrom the distinctive challenges,we needtodevelop coordination frameworks thathelpdesigntheappropriate different problems. Ifwe are tocollectively develop appropriate strategies thatrespond tothese innovation withappropriate measures andinnovation systems.Eachofthesectorswe chosehad We have sector-specific mademuch in ourrecommendations and analysis of theneed to support Sector-specific Innovation, Collaboration andIndustrialStrategy inFour Sectors government agencies,fundingandresearch councils,andthe Technology Strategy Board had to remain a significant area of focus. We put into this area acknowledge by the significant effort base andgovernment are stillseenasnotbeingsufficiently effective. Ourrespondents feltthatthis Finally, andcrucially, thechannelsthatfacilitatecollaboration between innovative theresearch SMEs, Brussels andtheEuropean Commissionmore effectively. There wasalsoageneral frustration aboutbureaucracy, abouttheneedtomanage andinparticular Pharmaceuticals Executive very positive.” It has been talent, andtheabilityto potentiallytapintosmallcompaniesforpartnerships. ofbiotech cluster areas. Onehas got better access to academics, better access to the sort “A bigtrend isthelocationofbasicresearch unitsintoareas ofhighacademicconcentration, fledgling ideastoturnintolife-changingmedicines.” hastoreinventindustry itsbusinessmodel,becomemore efficient,andfindhigherpotential, change. The productivity levels ofthepastfifteenyears are proof thatthepharmaceutical “It isnotasecret thatthefully-integrated pharma R&Dmodel is out-dated and needsto Energy Executive invention thatendsupbeingcommercialised inChinaorJapan.” another smart well asotherEuropean do. nationsor the US We shouldbehavingjobshere, notproducing big structural changes.Itdoesn’t lookafterits littlecompanies,inanindustrialsense,as inmyviewhasgenerally thatare beenpretty goingthrough UK poorathelpingSMEs “The CDIT Executive confusion willjustslow usdown.” regulations, bothregulations from regulator], Brusselsandfrom andasaresult [theUK that regulations, more easilythanwe have today. Atthemomentthere are risksofdouble across Europe more easilythanwe have today. Atthemomentthere are risksofdouble better withEurope means thatwe have theabilitytohave more consistentapproaches “[One area forimprovement] istoworkbetterwithEurope rather thanagainstit. Working 27 Innovation, Collaboration and Industrial Strategy 18 “Things have changed in recent years, in the last decade, with universities and research. I and research. in the last decade, with universities “Things years, changed in recent have that knowledge using in is interest there that universities within grown has awareness think specifically for industry.” to be developed might be available Executive CDIT “This is one of the true advantages of clusters where different approach and knowledge and knowledge approach different “Thisof clusters where of the true advantages is one boundaries the like would We solving. of problem a powerhouse in together brought are the NHS, Academia, to become much and Pharma Institutes between Biotech, Research all parties if But this can only be achieved are can develop. so the ecosystem porous more best specialist hospitals, the world’s some of have the cluster we Within represented. well to grow.” biotechs need to encourage and we universities, institutions and 18 See Cisco Case Study p.39 Cisco Case Study 18 See In CDIT there is a growing recognition of the need to engage with universities. Many companies, large Many companies, large of the need to engage with universities. recognition is a growing there In CDIT to develop if they are access to all the science they require that they do not have realise and small, now to the digital economy. approach an outward-facing The CDIT sector is emerging like a thousand archipelagos slowly becoming a continent. Its birth slowly like a thousand archipelagos has sector is emerging The CDIT systems can booms and busts, that government by pains so racked and its growing been so rapid, hundreds businesses, of small thousands tens of it. It comprises measure alone it, let describe barely and a smattering of UK-originatedof thousands of freelancers, platform companies such as ARM. Google, as such companies Internet and the UKencompasses it IT global of Furthermore, branches in a colossus network, and WPP IBMas the companies, such Oracle, and Cisco, world-leading creative space the development companies provide and software the major IT The platforms built by the BBC. to the point where platforms which in turn push those companies to build value, for shoals of smaller value. more yet and create rebuilt they are Creative, Digital and IT (CDIT) Digital and IT Creative, The pharma challenge will bring together the thirty companies which account for most of the turnover, thirtythe together bring will challenge The pharma of the turnover, for most account which companies which do the NHS providers in this area, and private the research which do most of the ten universities companies. chain of small innovative and the supply the bulk of the procuring, The metrics of successful university-business collaboration for bio-pharma in an open innovation for bio-pharma in an open innovation collaboration The metrics of successful university-business identified in Exhibit activities we 3, in the joint-problem increases likely to show are environment namely: informal advice, participation consortia, physical plant in research joint papers, prototyping, research. co-location, and contract Furthermore, if a UK bioscience cluster is to rival those of Boston and the San Francisco Bay Area, there there Bay Area, those of Boston and the San Francisco if a UKFurthermore, cluster is to rival bioscience as to point Force Task the on companies pharmaceutical major the which problems infrastructure are terrible buildings, and plant for permission planning gaining of difficulties the include They crucial. coordination and Cambridge, and the need for government transport Oxford connections between planning for the economy that goes issue about strategic This is an of high performance computing. collaboration. university-industry beyond There is a range of different initiatives that we note, such as the Cell Therapy Catapult, the Therapy Cell note, such as the that we initiatives of different is a range There approaches the new regulatory and the Biomedical Catalyst Fund, Centre, Crick multidisciplinary Francis would caution, We drugs’. for ‘breakthrough such as the Early Access Scheme to drug development, system, that companies in the innovation of big on the role Force Task work of the in the light of the of SMEs. on the role As drugs become more is predicated life science strategy much of government’s likely to be inside the supply and more funded - are privately specialised, those SMEs if they are – even adding collaboration It is crucial to join up this strategy, chains of the major pharma companies. value companies. insurance and providers with the NHS, health care private GSK has invested heavily in this idea with the Stevenage Bioscience Catalyst, and is investing more more is investing and Catalyst, Bioscience Stevenage with the idea in this heavily GSKinvested has clusters: innovation in open generally Innovation, Collaboration and Industrial Strategy 28 technology. An example is the Cisco British Innovation initiative. (BIG) Gateway The firstgroup ontopicssuchasfibre mightincludejointpapersandresearch orserver consortia Appropriate trajectory measures forcollaboration inCDIT are bothlong-runandclosetomarket. arrangementsthat theirIP andnegotiationsare notlengthyandoff-putting. –includingbusinesses-mustensure orworkplacementsforPhDstudents.Andallparties support to increase their volume ofIP. This might involve joint technology development, spin-outs, business TSB Creative Economy Catapult, and theResearch Councils’ Digital and Creative Economy Programmes, involve increased consultancy, sandpits,technologyexhibitionsandbusinessservices. Humanities Knowledge Programme Exchange at Queen Mary’s torunaprogramme likethisforLondon SMEs. London20 CreativeThe £5mERDF the andDigitalFusionWork programme bringstogether theCIHE, Foundation, London and universities, and the Arts 19 See Cisco CaseStudy p39. number offactors: rarely Energy Sector theneedforinnovation existsonanationalbasis.IntheUK isbeingdriven by a All nationswantsecure, sustainableandaffordable energy. The reality, however, isthatthiscombination Energy in BrightonpossessedexploitableIP. that will enable the businesses to grow into largerfrom SMEs businesses. Only 3% of the companies The core issue for most of the companies is or their other lack exploitable of assets Intellectual Property are already by thehealthandenergy sectors. where weindustries suchaspost-production, have animationandfilmservices, thrivingfirms,asthey to ensure that developments in e-infrastructure and high performance computing are taken up by because itcrosses over Amore coherent approach DCMSandBIS. must betakenby government Unlike theautomotive andlifesciences,CDIT industry isnotrepresented coherently ingovernment system. To failtomeasure theinnovation systemisto fail tocapture it. of thebusinessesself-identifiedasCDIT companiesdonotappearinthegovernment classification project onCDIT,Fuse project, whichwasspawnedby theCIHE percent demonstrates thatatleastforty the creative and digital industries is measured within government are grossly out ofdate. The Brighton To understand CDIT, you have to measure it properly. The categories by which the gross value added of • • • • • • CDIT Executive is atrend over timetodomore collaborative research.” because the internet is a complex system with many interfaces and I would say that there of problems thatwe are tosolve. trying You can’t solve internetproblems onyour own “I thinkthatthere isatrend towards more collaboration becauseoftheincreased complexity decrease infossilcarbonemissionsby 2050, aheadofanyothernationonEarth. In response has legislated foran80% toclimateandbroader sustainabilityconcerns, the UK to refreshing andenhancingitsnuclearpower capabilities. Many oftheUK’s nuclearpower stationsare nearingretirement hasnot yet committed andtheUK resources. The UK’s oil,gas and coal industries are mature, and henceare declining as uses of natural in respect ofthe UK’sparticularly ageddomestichousingstock. few. Nonethelessenergy supply, distributionandconsumptionremain notoriouslyinefficient, if notall,othersectors-includingnuclearphysics, geologyandbiotechnologytonamebuta The energy integrates industry abroader array oftechnologiesintoitsactivitiesthanmany, local. oil anditsderivatives electricityare are more global,whereas marketsforgasandinparticular energyThe easieritistostore andtransport forms,themore globalthemarket.Marketsfor decades andhave alow marginal costofsupply. is exacerbatedby thecapitalintensityanddurability ofenergy supplyassets. They lastfor most formsofrenewable energy (except hydro andnuclear)intermsofcostsupply. This Fossil fuelsare ineffectconcentrated sunlight,andassuchhave anatural advantage over xvii Akeyrole foruniversities istowork withthesecompanies,the 19 The second might 20 29 Innovation, Collaboration and Industrial Strategy 21

xviii “We are in the process of identifying a group of tier-one universities where we will have will have we where universities of tier-one of identifying a group in the process are “We for a product negotiating an IP contract spend a year can’t We in place. solid frameworks want to bring to market in a year.” that we Executive Energy Their expectation of what they could control up with one or two other universities. gave “We in terms of IPR was completely unacceptable to us. Having tried to negotiate with one up.” gave we project, interesting for 14 months on what was a really university Executive Energy “Historically, we hooked up with whoever we liked the look of. You couldn’t accuse it of accuse couldn’t You liked the look of. we hooked up with whoever we “Historically, a want to have we picked about ten universities have we Now being a focused strategy. a over strong extremely either are they believe we because with, collaboration long-term important to us.” specific niche in a particular very that’s area field or in a very, broad Executive Energy “We have a big programme to form closer links to universities to get good connectivity, get good connectivity, to to form closer links to universities a big programme have “We in-house.” have good expertise don’t we that Executive Energy However, despite this commercial focus, there is a clear sense that the problems in energy are often are in energy that the problems is a clear sense focus, there despite this commercial However, basic research. and user-inspired would call both pure what Stokes long-run and require And this focus on deep relationships is spreading into expectations about commercial negotiations. commercial into expectations about is spreading And this focus on deep relationships Furthermore, there is trend towards a greater concentration on fewer, more strategic partnerships. strategic more on fewer, concentration a greater towards is trend there Furthermore, There is good evidence, however, that energy businesses are increasingly regarding their relationships their relationships regarding increasingly businesses are that energy is good evidence, however, There looking for long-term interactions. and that they are way, strategic in a more with universities Knowledge exchange between the energy industry and the public research base is well-established, base is well-established, industry and the public research the energy between exchange Knowledge well as out, carried are demonstrations and ETI,as the research such applied groupings where through ensures Industry involvement and universities. companies between arrangements bilateral as through academia and contact between needs, but community of the sector’s communication to the academic than it might be. limited policy makers still appears more The government’s response to the innovation and R&D needs of UK and R&D needs – and of the UK businesses energy to the innovation response The government’s the possible of climate change against threats – inevitably has to balance the system as a whole energy that is no price on carbon. It is crucial, therefore, there places where off-shoring of manufacturing to long- leaders and academics to ensure energy access on a systematic basis to senior have government term consistent policy-making. There are many energy innovation coordinating bodies at the interface with government – for example – for example with government the interface at bodies coordinating innovation energy many are There Carbon the Low Development, Energy for Renewable on Climate Change, the Office the Committee capacity Partnership is a growing – and there Research and the Energy Group Coordination Innovation (ETI) Institute and the Department of Technologies for example in the UKfor quality analysis, Energy itself. and Climate Change Energy These circumstances give rise to twin challenges for the UK. The first is the need to (re)develop the (re)develop need to is the first The the UK. for challenges to twin rise give circumstances These is to The second system. energy sustainable to a more the transition needed to manage skills base which without subsidies, without fuels fossil with compete can which technologies energy new invent 1% of GDP huge - perhaps stake are The sums at nations. against other the UK disadvantaged may be the UK - but on the flipside, period to 2050 the innovations any opportunity has an over to leverage system. global energy into the 21 See BP Case Study p.38. Case Study BP 21 See Innovation, Collaboration and Industrial Strategy 30 in thesector. network rather than on a single firm, which often makes system integration a key aspect of innovation Performance andcompetitiveness are dependentontheefficientfunctioningofentire project who isresponsible forfinaldelivery totheclient. model inwhichmultipletiersofsuppliersprovide specialistskillsandproducts totheprimecontractor, invest relatively littleintraining orinnovation. Firmsare organised onaproject managementbusiness cost, operate underconditionsoffrequent conflict,sufferfrom low, unpredictable profitability, and Many componentsoftheconstructionsector’s value chainworkonthebasisoflowest development Construction these attitudesare changingunderthe combinedimpactofclimatechangeandfinancial pressures. and theconstructorsthemselves.industry These includemanagement, leadershipandculture. However, There are significantbarrierstocollaboration withuniversities amongboththeclientsofconstruction All ofwhichleadstosignificantchallengesforuniversity-business collaboration. factor andcondemnsthemtocontinuecompete forworkpurely onprice. investments innewtechnologies. This inturnprevents firmsfrom usingtechnologyasadifferentiating for theindustry’s poorrecord on innovation, becausetheydiscourage firmsfrom makingsignificant preferences, which limits economies of scale from innovation. Low margins are also cited as a reason customisation associatedwitheachconstructionproject isrelated tositespecificsaswell asclient problem-solving nature of construction work, most of this knowledge remains tacit. The degree of Whereas on-site innovation and learning do occur at individual project team level due to the inherent production techniquessuchasmodularisationandpre-fabrication are beingadoptedslowly. crucial given thecore role ofcontracting inthisindustry arrangements andassemblymethods.Mass or lower carbon emissions. Official statistics ignore advances inorganisational processes, which are manufacturers leadstosubstituteproducts thatofferbenefits,suchaslower cost,greater durability by constructionfirmsisrelatively infrequent. Yet significantinnovation by product suppliersand “Innovation” isgenerally withintheconstructionindustry notassociatedwithR&Dactivity. Patenting composition oftheworkforce, butalsotraining andattitudestoinnovation. there integration islittlevertical withinfirms.Extensive useofsub-contracting notonlyaffectsthe informing policydevelopment fortheenergy sector. engineering knowledge exchange andthepublicsectorin andtheengagementofacademia,industry with universities, researchpartnerships councils and the TSB, focused on fundamental science and In conclusion,themosteffective trajectory measures fortheenergy sectorshouldbe:strategic Construction Executive this beliefthattheeducationsystemisonething andbusinessisanother.” isageneral lackofconnectivitywith university“There orresearch organisations. There is Energy Executive otherwise theymightneglectalotofbrilliantideasatthebeginning.” Academic researchers have tobemore open-minded than we can be inthecompany, research), tomimicwhatwe are becauseotherwise theywouldbetrying doingin-house. “It’s goodinsomewaysthatthere isstillthisdifference (between academicandindustry Energy Executive we address theworld’s energy challengeforthenextfiftyyears.” “…the challengesofrefinery andchemicalplanttechnologyare afundamentalplanktohow xix In the UK, more thanincontinentalEuropean IntheUK, countriessuchasFrance andGermany, 31 Innovation, Collaboration and Industrial Strategy of business-university collaboration, and the willing engagement and the collaboration, of business-university xx The measures would include rises in pre-competitive collaboration between companies and companies between collaboration rises in pre-competitive would include The measures 22

“If you had asked me five years ago, when we were without even trying the best there was, was, trying there the best even without were we when ago, years me five asked had “If you and the doing this are UK what [a leading do, we care university] “I don’t said: have I would want it says: “we the client then all of a sudden knees”. And the bee’s we’re client thinks they doing What are doing? university what is the asking are we 20% less”. Now done for will see universities into cars? I think get technology you do How management? with traffic an going to want are because people research, in terms of out of this difficulty coming more R&D-stimulated step change.” innovative Construction Executive

22 See Costain Case Study p.43. Costain Case Study 22 See The increasing desire and need for the construction industry to increase its engagement with its engagement industry need for the construction and to increase desire The increasing such as measures, trajectory problem-solving of range the whole in to increases should lead universities consultancy services, external secondments, contracts, physical and shared research informal advice, space. universities, secure research environments to enable cooperation on clusters of problems, sandpits problems, of clusters on cooperation enable to environments research secure universities, must be part collaborations challenges, and vitally R&D of the up the innovation and advice to open in the has to be included Innovation projects. infrastructure for major government process procurement with intermediate working to enable the industry, developments specification for flagship construction should there of death’. Finally, the ‘valley over to take new innovations and universities organisations for disciplines and the construction industry, non-engineering between collaborations be increasing sustainable, rather sciences to stimulate more in behavioural harnessing insights example through and construction. to procurement than cheaper at point of sale approaches

Following the 2003 Lambert Review Following Conclusion of government, funding and research councils, and university management teams over the past ten management teams over councils, and university funding and research of government, become have leaders and academics feel that relationships is no doubt that many business there years, must these relationships However, healthier. and culturally and strategic, focused more are They better. potent, embedded, measured more ever they become to ensure and develop to evolve be encouraged paraphrase To Century. of the 21st economic circumstances to the ever-fluctuating and relevant in terms. a contradiction systems are Schumpeter: stationary innovation Case Studies in Collaboration Each study was authored by the company

32 33 Case Studies GlaxoSmithKline Biomedical Cluster Biomedical GlaxoSmithKline “We are looking for new medicines for diseases of the eye. All our research is conducted is research our All eye. the of diseases for medicines new for looking are “We the Institute of Ophthalmology, Hospital and Eye like the Moorfields externally with groups has top scientists in this area with some of the world’s Working College London. University for GSK shorta very in in ophthalmology becoming a key disease area resulted period of time.” Claudine Bruck, head of Ophthalmology “I joined GSK from academia. I saw great science being carried out, but I also saw a company out, but I also carried being science great saw academia. I “I joined GSK from in the science integrated I wanted us to be more the world. that was a bit closed off from the doorstep.” on especially as it was there environment, Pharmaceuticals R&D, GSK President, Vallance, Patrick Likewise GSK depth and experience in turning concepts wants to work with biotechs and has a lot of two one or who may have scientists take. SMEsinto medicines a patient can entrepreneurial have GSK happy to partner is very to take the in, but can only take their ideas so far. they specialise areas with these teams of scientists up to work in close proximity setting ourselves but by ideas forward, of clusters, where This is one of the true advantages potential to spark new ideas. greater is even there We solving. of problem together in a powerhouse brought are and knowledge approaches different academia, the NHS,would like the boundaries between institutes and Pharma to biotech, research all parties if But this can only be achieved so the ecosystem can develop. porous become much more hospitals, institutions best specialist some of the world’s cluster are the Within represented. well are Trust Wellcome is why GSK,That the biotechs to grow. need to encourage and we and universities, The R&D Centre. supported co-located with GSK’s have of a Science Park the creation and Government bioscience campus, opened for first open innovation Bioscience Catalyst (SBC), the UK’s Stevenage months of the science a few Within ). (http://www.stevenagecatalyst.com 2012 business in February at the SBC to embark of Cambridge announced it would base researchers park opening, the University science parks in Cambridge already are There with GSK. of scientific open collaboration on a programme was cluster, South-East the of of the site to the rest with GSK,to work but the chance and the proximity too good an opportunity to miss. Working together of course is a lot easier when you are near each other. GSK is a global organisation GSK organisation is a global near each other. are you together of course is a lot easier when Working access We UK,in the R&D, based in people 10,000 than China. the USA,and Belgium more with Spain, within centres research medical and universities best the of some have we but globe, the over all ideas R&D sites at Stevenage, GlaxoSmithKline’s of our UK-based complexes. major research throw a stone’s and happily and London Cambridge triangle of Oxford, within the geographical are and Harlow Ware with collaborate to not folly be would It research. best world’s the of some of middle in the positioned who can apply their thinking to our common problems. some of the best scientific minds GSK has learned that you need to become partGSK that you has learned sharing ideas and great of the science environment, made It has disease. against in the fight forward to move on how the debate as entering as well science, as initiatives research pre-competitive in several involved and is now few years strides in the past great data, in particular compound library sharing doors by as opening up its own of the for the benefit well world. diseases of the developing It’s not a secret that the fully-integrated pharma R&D model is out-dated and needs to change. The to change. and needs model is out-dated pharma R&D the fully-integrated that not a secret It’s industry that the pharmaceutical to reinvent has proof are years of the past fifteen levels productivity to turn fledgling ideas potential, helping and find higher efficient, more model, become its business the not have that it does ago years several recognised GlaxoSmithKline medicines. into life-changing and academia, where links with biotechs stronger set about forging and has monopoly on innovation for medicines into them translate to help need which assets stage early and ideas creative are there specialised research, and also pursuing excellent are organisations health patients. Government to each understanding of disease. Playing our in many fields, which is advancing leading the world our efforts and combining strengths for patients. the way forward is other’s Case Studies 34 learning is that GSK should be an integral part ofbringingtogether otherswhohave shouldbeanintegral acommongoal learning isthatGSK part from, whetheritisacademia,biotechorindustry, allwanttomakeadifference topeople’s lives. Our If we get this right the ultimate beneficiaries are ptients. Scientists, whichever direction they come andbiotech? industry Why strugglealonewhenyou canworktogether?Andwhynotcapitaliseontheproximity ofacademia, such asasenseofbelongingtoscientificcommunityandtheabilitymove across thesectors. individual entity. whichbringssofterbenefits Clusterscanbecomemagnetsfortalentandexpertise, and attract otherleadersintheirfieldstomove tothearea. The stronger thecluster, thestronger the get a different perspective; and close enough to form strong foundations that will sustain investment enough insomecasestowalkandoutofeachother’s premises; tohave staffrotate intopositionsto of this growing are beginning to see the advantagesAs part cluster all parties of co-location – close of initiatives togrow theUK’s presence isareas suchasbiotechthrough seedingmoneyandfacilities. government clearlyrecognises thatscienceandmedicineare alonggame andhasbeenvery supportive thatthefundinghasbeenhealthyandmaintainedoverhave beenfortunate thepastfewyears. The This isonevery visibleexampleofthegovernment’s forscienceandtechnologyintheUK. We support Jamie, Chemist to relocate todoit.” now workingforBiotechcompaniesnearby andtheyhaven’t had inthearea. Someofmyfriendsfrom are GSK of opportunities up a family. It gives a sense of security to know that there are lots great placetobuildyour career whileatthesametimebringing “Living inanarea where there isworldclassresearch makesita Image courtesy ofGSK Image courtesy together? you canwork alone when Why struggle 35 Case Studies Rolls-Royce UTC network UTC Rolls-Royce ‘I can use fresh material in my lectures, and in addition welcome visiting professors like professors visiting welcome in addition and lectures, in my material use fresh ‘I can exciting and unique to deliver Technology, and of Research Director Rolls-Royce Ric Parker, could be – many of which working on in the UTC insights into the technologies students are time.’ years in service the world in five-ten use around “Unlike our major competitors, Rolls-Royce does not have a large corporate research centre. centre. research corporate a large does not have Rolls-Royce “Unlike our major competitors, Centres Technology on our University totally dependent made our selves have Instead, we partners Our global university than rise to this challenge” more technology. for our future Technology and of Research Director Rolls-Royce Ric Parker, Each UTC is ‘owned’ by an internal Rolls-Royce business unit. This is typically the engineering team business unit. an internal Rolls-Royce by is ‘owned’ Each UTC to play a part capability of a supply chain unit seeking new technology and fresh in new product a distinct technical discipline, including noise, combustion, addresses Each UTC development. engineering, and many more. electrical systems, manufacturing, nuclear performance, aerodynamics, as they formal ‘gates’ and pass through reviews regular undergo The technologies being developed Rolls-Royce offers a number of secondment opportunities to academics and students from UTCs, offers a number of secondment opportunities UTCs, to academics and students from Rolls-Royce employees own its sends also The company opportunitythem the giving company. the work inside to completed PhDs in this engineers have and a number of Rolls-Royce to work and study within UTCs, Academy of Engineering Industrial Society and Royal Royal received both sides have from Staff way. staff UTC science and industry. between projects them to work on collaborative allowing Fellowships either independently or in conjunction 400 technical papers annually, publish around and researchers eight and ten with between 450 patents annually, applies for over with company engineers. Rolls-Royce network. with the UTC our interaction from per cent of these resulting UTCs facilitate exchanges of people and knowledge. of people and knowledge. facilitate exchanges UTCs According to Dr Jon Carrotte, Deputy Director of Loughborough’s UTC in Combustion and Aerodynamics: in Combustion and Aerodynamics: UTC Loughborough’s of Deputy Director to Dr Jon Carrotte, According boon to teaching. is a real ‘The research of applied high-impact nature Each UTC is led by a senior academic with a global reputation in their field. They are supportedThey are by in their field. global reputation a senior academic with a is led by Each UTC and a cohort assistants, technicians research of students undertaking fellows, academics, research network at any one time, with working in the UTC are 600 people Over PhDs and other higher degrees. network. UTC the through 400 PhD students being supported Rolls-Royce by over The UTC model is highly-regarded and widely recognised. It has developed over two decades and over It has developed and widely recognised. model is highly-regarded The UTC industry between and academia. relationship of an effective as a prime example is widely regarded in 1990 University in the UKCollege and Oxford set up at Imperial concentrated Initially – the first were 19 are There global footprint. increasingly the company’s network reflects international UTC – today’s USthe Sweden, Norway, Italy, in others and UKuniversities 14 German at at four centres universities, in development. are Further relationships and Korea. The company derives considerable value from this approach. Formalised, long-term relationships with long-term relationships Formalised, this approach. from value considerable The company derives the development allow research, efficient access to high-quality more offer the company much UTCs the wider academic connect the company with based on trust, relationships of deep and long-lasting of experts. the next generation and developing for training a mechanism world, and provide The global UTC network is part of the company’s integrated approach to research and technology, and technology, to research approach integrated part network is of the company’s The global UTC specialists, teams, company technology research with its highly focused strategic and works closely portfolio for its broad of technologies required the new to identify and develop and business leaders and services.products A network of Rolls-Royce University Technology Centres (UTCs) lies at the heart of the company’s heart lies at the of the company’s (UTCs) Centres Technology University of Rolls-Royce A network to secure and vision the company’s to deliver helping technologies, to developing approach long-term advantage. competitive Case Studies 36 blade forthe Trent 900thatpowers theAirbusA380. No fewer thansixRolls-Royce UTCs contributedtechnologiesduringthedevelopment oftheswept fan the Example Trent 900fan bladedevelopment with accesstoworld-classskillsandhighlymotivated staff. research staff. Inreturn, Rolls-Royce staysdirectly connectedtocutting-edgeacademiccapabilities, continuity andstabilityaswell asthereal-world technicalchallenges soattractive tohigh-class With long-termfunding, along with privileged access to data, tools and people, universities secure by theRolls-Royceelsewhere, supported launchedin2009. withtheEPSRC strategic partnership alloy production andjoiningtechnologies.Additionalcapabilityisdrawn from materialspecialists University, materialsprocess modellingandstudiesmanufacturingissuessuchas whichundertakes andlife-cycle in thetestingandunderstandingcapability;Birmingham of mechanical properties Cambridge University, whichdrives high-temperature alloy research; Swansea University, specialising within UTCs cangenerate significantresults. The materialsacademicresearch teamcomprises For existing thenextgeneration ofmaterials,theblue-skyvisionandfocusedtechnicalexpertise UTCs have contributedsignificantlytoallofthese. the tough,speciallydeveloped coatingsandtheelaborate coolinglabyrinths withintheblade’s core. the materialsfrom whichtheyare made. This isduetotherefined alloys structure, andsingle-crystal they canruningasstreams withtemperatures hundreds ofdegrees hotterthanthemeltingpointof oftheengine.Manufactured ofnickel alloy asasinglecrystal toeliminate grainhottest part boundaries, The high-pressure turbinebladeisoneofthemostdemandingindividualcomponents,asitsitsin and reduce harmfulemissions. superalloys – that will enable engines to run hotter in order to raise thermal efficiency, cut fuel burn using gasturbines,onechallengeistofindradically newmaterials–beyond today’s nickel-based is materialsresearch. all current commercialWith aircraft virtually andmuchpower generation plant There have beenawiderange ofsuccessfulresearch collaborations inrecent years. Onekeyarea Laboratory, incorporating anewturbineresearch facility, atacostofaround £10 million. the Heat Transfer andAerodynamics UTC atOxford hasrecently relocated andre-equipped itsOsney investments toimprove theirscientificinfrastructure andattract themosttalentedstaff. For example, As a consequence of this long-term relationship, universities are in a position to make strategic the Council (EPSRC), Technology Strategy Board, learnedsocietiesandregional agencies. theEngineeringandPhysicalSciencesResearch and,intheUK, sources suchastheEU complementary Royce. offundamentalandcollaborative Additionalfundinginsupport research maybeprovided from strategic viewofhow toachieve specifiedresearch programme targets, agreed togetherwithRolls- Funding isprovided through rolling five-year contracts, whichenableUTC teamstotakealong-term, be utilisedasafeature ofnewproduct designs. it towards TRL6 through large andexpensive riganddemonstrator programmes, atwhichpointitcan (TRL3/4) before anewtechnologyistransferred tothecompanyconductvalidation activityadvancing mature. AUTC willgenerally level takedevelopment oftechnologyreadiness tothethird orfourth • • Director, Professor Peter Ireland. continuity ofouractivityasaUTC,’ wouldsimplynothave‘This beenpossiblehadtheuniversity nothadconfidenceinthe entering the front of the engine, from large birds to runway debris) on the very large fan blade. The SolidMechanicsUTC atOxford addressed the effects of‘foreign objectdamage’ (anything behaviour ofcracks innon-uniformstress fieldsatelevated temperatures. model resistance through fracture mechanics, enabling designs to bemadethatcontrol the Birmingham’s Materials UTC set to work characterising material properties. They measure and 37 Case Studies Image courtesy of Rolls-Royce It developed models to understand and predict material behaviour under high strain-rate high strain-rate under behaviour material predict and to understand models It developed failure. blade to resist to design the engineers allowing conditions, undertakenwas integrity blade into London. Complementary College Imperial by research with vibration bladed-disc aeroelasticity, modelling, unsteady flow focused on The College modal test planning. and resonance) (to avoid mistuning behaviour, on non-linear emphasis These models. flow fan of range a developed Cambridge in Laboratory Whittle the in Research studies, experimental detailed through validated calculations, flow 3D on complex based were to inlet distortion still tolerant yet efficiency design embodying increased that enabled a blade off-design operation. for safe margin sufficient surge and providing which Southampton, from came design blade fan 900 Trent the benefiting inputs UTC Other tones liner to eliminate the fan an acoustic on fan noise, introducing effects studied the flow issues, manufacturing in specialises which Nottingham, and noise; ‘buzz-saw’ generate that tooling particularly delivered and processes, complex environments fixturing and tooling for process. production efficient blade used in a more concepts now of the development contributed technologies during the UTCs than six Rolls-Royce No fewer 900. Trent fan blade for the swept • • • Case Studies 38 are: The keyfactors which have enabledtheBPI toplaythepositive role whichitisperceived to have done automotive lubricants. translated into technology development and deployment, in enhanced oil recovery and in advanced mechanisms but whichcanyieldextraordinary results. Fundamental insights into surfacescience have canbeconstructedthatdonothaveThe BPI hasdemonstratedovert commercial thatpartnerships theboundariesandapplicationsofitsresearch.business problems tofurther existing andpotentialchallenges.Inturn,theInstitutecanlearnfrom thecompany’s technicaland basic sciencereasoning andideas,todraw oninsightsfrom thesetoinformthewaythataddresses BPI’s keycontributiontoBP’s widersetofobjectives is theabilityitprovides forthecompany toaccess involves industrialrelationships from topaintandfood. oilindustry multiphase flow andsurfacechemistry. The topicsrange from themicroscale tooceanmixing,and maintenance. The Instituteconducts openresearch across awiderange oftopicsunderthetheme approximately £25m which created the building and funds sixresearch staffand ongoing staff, support The BP Institute for Multiphase Flow was established by BP in 1999/2000 via an endowment fund of • • • • • • • • • and theInstitute. These allow connectionstobemadewhichcanleadnewprojects. The variety of formal and especially informal mechanisms of interaction between the company with easeacross theindustry-university boundary. holders inBPI toengagewiththecompany and display thecapacitytounderstandandmove The BPI Director’s leadershipqualities,andtheabilityofDirector andseniorendowed post spanners linkingBP toBPI. The qualityofindividualswhohave from timetoplayed therole ofgatekeepersorboundary homes. their widerdepartmental platform forinteractions andresearch collaborations withthoseindividualsandpotentially to fill the posts endowed at the Institute, and facilitated the establishment of a very strong development path within a knowledge exchange setting. This hasattracted excellent candidates The provision foracademicstopursueatenure-based through career theBPI oftheopportunity The development oftrustataninstitutionalandindividuallevel, basedonrepeated interactions. BP. new, insightful and first-principles thinking toproblems arisingintheday-to-day operations of The demonstrated abilityofBPI toaugmenttheproblem-solving capacityofBP by adopting Institute isfinanced. The long-termnature oftherelationship onthebasisofendowment through whichthe risk oftheinvestment whentheInstitutewassetup. The existenceofasetstrong personalrelationships, which greatly moderated theperceived potential value forthecompany. desirability andcredibility offundingfundamentalresearch asawayofdeveloping insightsof The scientificandcorporate reputation oftheInstitute’s founders,whichhave establishedthe BP InstituteforMultiphaseFlow -Cambridge 39 Case Studies Cisco, National Virtual Incubator National Cisco, strengthen the UK innovation ecosystem, particularly by creating greater access to and ecosystem, particularly greater the UK creating by strengthen innovation ideas, expertise, skills, experience and funding; of relevant exchange enhanced communication and through and depth of innovation pace, breadth enable increased collaboration; and which supportbuild partnerships programmes innovation and deliver to create entrepreneurship; extend the opportunities and similar activities and benefits of the Cisco BIG programme, undertaken the UK; NVI Members, throughout by clusters, and associated organisations and research enable international links for UK innovation and individuals; • • • • • Goals of the NVI Alliance Goals of the NVI Alliance to: are The goals of the NVI Alliance The NVI will be implemented under the auspices of the NVI Alliance. The central focus of the NVI focus of the central The Alliance. of the NVI the auspices The NVI will be implemented under a set of common goals that will support is to define and achieve and Alliance and expedite the creation initiatives; of start-upsocial innovation (and/or growth enterprises companies and small-to-medium with high growth those focused on network-enabled digital innovation but not exclusively, particularly, potential. Purpose of the NVI Alliance Purpose Collectively, the organisations responsible for these NVI Nodes are known as the NVI Alliance. The as the NVI Alliance. known for these NVI Nodes are responsible the organisations Collectively, NVI Node whose members will use their of organisations but a group is not a legal entity, NVI Alliance network-enabled, innovation. to borderless, approaches new facilities to pioneer and promote The NVI brings organisations together by creating a network of leading centres of research, innovation innovation of research, a network of leading centres creating by together The NVI brings organisations These NVI Nodes will use a common platform of advanced “NVI Nodes”. and business incubation called and services programmes and innovation entrepreneurship technologies to deliver video collaboration the supportWith of JANETto an expanding NVI audience. (UK), will be located across these NVI Nodes the world. At the time of writing, around the UK of innovation to similar centres and will be linked Coventry Manchester, Shoreditch, Cambridge, Birmingham, Greenwich, in established being are Nodes in the pipeline. and Dundee, with more Purpose of the NVI Purpose When Cisco looked at the UK’s “innovation ecosystem” it was clear that it possessed many world- clear that it possessed many ecosystem” it was “innovation at the UK’s When Cisco looked in the form of JANET network high-speed research and an established organisations leading innovation deal of latent potential that could be unlocked was a great (UK), that there apparent but it was also and experience global has Cisco where area an is This collaboration. better and more enabling through the NVI. the UK with creating capabilities that it wants to share through The NVI initiative is based upon a very straightforward, but powerful, Cisco point of view: in the 21st Cisco but powerful, straightforward, upon a very is based The NVI initiative striving to and nations that are local. Cities, regions cannot be entirely century innovation successful and be the engines of job creation growth economic businesses that will drive the innovative develop nationally both with each other, and collaborate capabilities to connect, communicate need unmatched and internationally. In 2011, Cisco UKI made a major commitment to supporting the development the UK’s digital economy, economy, digital Cisco UKIIn 2011, to supporting a major commitment made UK’s the the development of the major elements One of the Gateway (BIG - see www.ciscobig.co.uk). British Innovation called the Virtual Incubator (the “NVI”). National establishment of the so-called is BIG programme Case study: Cisco, National Virtual Incubator Cisco, National Case study: Case Studies 40 UK to continue to nurture andpubliclyinvest tocontinuenurture inthiscriticalnationalcapability.UK wider innovation ecosystem.Itistobehopedthatthis decision by Ciscoevidencestheneedfor the of itsown bolsteritscapabilitiestosupport volition, hasdirectly (UK) invested tohelpJANET Ciscohasseentheincredible potentialthisinfrastructure (UK). representsembodied inJANET and, a tremendous innovation, capacityfor21stcentury including thecriticalnetworkinfrastructure Although in itsinfancy, already has acriticalmessageoftheNVIforpolicymakersisthatUK choices are notlimitedtothoseprovided by Cisco. not prohibitive. Importantly, theopenstandards nature ofthetechnologiesinquestionmeansthat point,additionalmemberswillneedtobeartechnologycoststhemselves. certain These costsare organisations canbereachedso thatacriticalmassofparticipating asquicklypossible.Past a Cisco hastakenituponitselftoprovide videocollaboration technologiestoaninitialsetofnodes The NVIisanot-for-profit initiative, andnofeesorothercharges are leviedonNVIAlliance members. Image courtesy ofCisco Image courtesy • • pioneer andpromote newapproaches toborderless, network-enabled,innovation. not exclusively, thosefocusedaround networkeddigitaltechnology;and businesses,particularly, andSME-type accelerate thecreation andincubationofstart-up but 41 Case Studies BG Technology Strategy in Brazil in Strategy Technology BG BG Group is working in partnership with the Brazilian Government to ensure that the R&D Levy funds the R&D Levy that to ensure is working in partnershipBG Group Government with the Brazilian that utilising believes BG Group in Brazil. oil and gas knowledge-base help to establish a broader sharing and transfer, will facilitate knowledge requirements partnerships to implement the R&D Levy in R&D. investment BG Group’s industry to benefit from enabling the Brazilian Through its relationships with the Brazilian Government, BG Group understands the Government’s understands the Government’s Group BG Government, with the Brazilian its relationships Through example, BG partnerships For in helping to establish public private in Brazil. priorities and is active Dilma flagship programme was the first company to announce its participationGroup in President’s BG abroad. students and researchers Brazilian which aims to send 100,000 “Science without Borders”, the partnership and in implementing Million to this programme expects to contribute up to $100 Group Post- and Doctoral of cluster first The worldwide. Universities leading in researchers trainBrazilian on they will focus where of Aberdeen at the University being trained currently students are Doctoral (CNPq) Development Technological and the National Council for Scientific and BG Group Sedimentology. long-lasting collaboration is encouraging BG Group economic costs of this training. the full will cover UKbetween and their counterparts Universities in Brazil. The GTC will coordinate dedicated BG Group Institutes within Brazilian Universities and these will look Universities within Brazilian Institutes dedicated BG Group will coordinate The GTC Gas BG Carbonate Rocks, Utilisation, Carbon Management). (for example, at specific fields of interest promoting and it is actively academia-industry activities to bridge the gap in Brazil is developing Group levy requirements. partnerships to cover The GTC itself will not be a research centre: there will be no labs, no white coats. Rather, the Centre will the Centre no white coats. Rather, will be no labs, there centre: itself will not be a research The GTC determine that at least half the regulations The R&D Levy with partners R&D projects source in Brazil. Institutes, whilst the other half can be and Research Universities obligation is spent within Brazilian suppliers with many includes, for example, private This industry of Brazil. and outside spent through facilities in Brazil. research establishing of these companies now The construction of BG Group’s Global Technology Centre (GTC) in Rio de Janeiro’s Science Park is Park Science in Rio de Janeiro’s (GTC) Centre Technology Global The construction of BG Group’s Group’s working on global technology activities within the already with employees underway, currently BG by faced challenges technology identifying in role pivotal a play will GTC The facilities. existing solutions to these challenges work to source will The Centre and in its assets worldwide. in Brazil Group of the world. and the rest within Brazil both from The Brazil R&D levy, as it is commonly known, is having profound consequences for how BG Group is BG Group for how consequences is having profound known, as it is commonly R&D levy, The Brazil opportunitiesthe embraced that actively has Group BG strategy. technology global its implementing activities in Brazil. key global technology and has centralised the R&D levy creates Based on BG Group’s activity in Brazil, concession agreements have been put in place with the Brazilian the Brazilian been put in place with have agreements concession activity in Brazil, Based on BG Group’s gross will allocate 1% of that BG Group in Santos Basin stipulating for the sub-salt fields Government The 1% levy is a contractual (R&D) in Brazil. Development and such fields to Research from revenues a specific surpasses oil and gas production their to all concessionaries whenever obligation applied up in R&D in Brazil $2 Billion approximately expects to invest BG Group result, field. As a by threshold to 2025. BG Group is building a significant business in Brazil through oil and gas reserves in the Santos Basin’s Santos Basin’s in the reserves oil and gas through Brazil business in a significant is building BG Group portfolio, ease of reserves, offering significant Group’s asset in the a key growth is Brazil pre-salt. gas market. domestic and a growing world crude markets access to Case Studies 42 the process. of share aviewthatallaspectsoftheirinteraction should beincludedandmanagedaspart partners are developed atthehighestlevel (University VC; VP andCTO atCAT) andat alllevels below. Both long termbenefitincollaboration, and arange ofpeople committedtomakingthiswork.Relationships ofthis successfulrelationship wereother companies.Atthe heart organisations thatcouldsee mutual established asaleaderinenginesresearch andislevering thepositiontodevelop collaborations with engagement withLoughborough helpsthoseactivitiesremain competitive. Loughborough isnow employing moreCaterpillar hasmajorengineeringactivities in theUK, than11,000people. The Learning CAT Foundation. oneofonlyfive suchUniversities.UK, This makestheUniversity eligibletoreceive fundingfrom the is sponsored by Perkins/CAT. Loughborough University hasbeengiven Partnership” “UK statusby CAT Academy, Peterborough. TDA isthelargest singlesiteCityAcademyintheGovernment programme and For Loughborough exampleinSTEM, hosted thefirstever ScienceSummerSchool for the Thomas Deacon recruitment, subjects. CPD,promoting STEM times. Inparallel, developments continuedonarange of“people related” areas –Caterpillargraduate dramatically. Significantleverage hasbeenobtainedforCAT investment inresearch –around 1.75 A clearframework wasestablishedinrelation toIP, speedingupthecontracts negotiationprocess and developed toderive bestvalue forallparties Itenabledtherelationship tobemanaged termdirectly fundedworktobeundertaken. through toshort The I&RCof activities allowed– ranging from a portfolio long term, collaborative and co-funded projects £1Bn Energy Technologies Institutepublic-private whichalsohasitsHQatLoughborough. partnership, (such astheRolls Royce UTC atLoughborough). inthe Caterpillarhad alsobecomeafoundingpartner internally. Anewmodelwasdeveloped withLoughborough –buildingonexperienceswithotherpartners Caterpillar neededtoachieve greater scaleandefficiencyinresearch andthiscouldnotbeachieved Consolidating astrategicThe CaterpillarInnovation partnership: andResearch Centre (I&RC) Loughborough. Contactswere builtwiththemainCaterpillarR&DfacilityinUS. combustion andenginedesignatonestagemore than40%ofPerkins graduate recruits were from the range ofshared research interests. LinkscontinuedwithPerkins, includingCPD coursesin A teamofresearchers from Sussex,already engagedwith CAT, relocated toLoughborough broadening innovation tomeetdemandingemissionstargets. research projects were developed inmore fundamental areas ofresearch that woulddrive future engine forCAT funding). EU This wasimportant toexpand research activityandsecure leverage. Aseriesof and DTI R&Dprojects– andothercompaniesUniversities(e.g.withEPSRC, –inmulti-partner withLoughboroughPeterborough R&D.Caterpillarbegantopartner site,andbegantocollaborate inUK Loughborough continued.Aninitially small CaterpillarR&Dteamwasestablished at thePerkins In 1997Caterpillaracquired Perkins ina$1.3billiondeal.Crucially, thedepthofengagementwith An expandinglink–becomingembeddedinfundamentalCaterpillarresearch therefore, onbothexcellent underpinningresearch capabilityandthe supplyoftalentedengineers. Perkins alsosponsored aChairatLoughborough intheenginesresearch field. The relationship isbased, Loughborough University, spanningresearch, graduate recruitment, andCPDforPerkins engineers. The relationship withCaterpillarbeganintheearly1990’s between Perkins and withapartnership Early years –arelationship withPerkins Long drivingvalue termstrategic forbothorganisations partnership Caterpillar andLoughborough University: 43 Case Studies Costain, Building the Innovation Network Innovation the Building Costain, So how does this sustain? Costain is clear that a traditional accountancy-led approach to business approach accountancy-led does this sustain? Costain is clear that a traditional So how The networked inadequate. is action and return, between management, looking for simple relationships which, for Costain, level, only at the whole systems subtle: success can be measured is more approach out, and successful spin-outs weeded are failing initiatives Whilst obviously bottom line. is at the firm’s with researchers because they can innovate effects such as staff motivation celebrated, and projects and partners, But such can be too subtle to measure. or the particular of a relationship, benefits and is organised project While a well-run complexity is home territory to the construction professional. is business as normal for the complex systems Taming nature. it is not so by linear in its execution, networked era. strides in the new, great and that positions it to make sector, Costain looks beyond the technical. Planning permission, driven by community acceptance of schemes, by Planning permission, driven the technical. Costain looks beyond communities to make has worked with local Costain the industry. on is one of the biggest constraints phase of the disruptive to want once complete, but also through schemes not only good enough has projects of roads a sequence where Wales South been in The best successes have construction. to stimulate the local supply employment, into regular inactive been used to place the economically Finance into local schools and community groups. professionals construction chains and to put trained stalled schemes such as the to re-activate new approaches Costain is trialling is another constraint; These innovations maintenance. local authority A14 in Cambridge and is finding new ways to address the across efficiencies and new business streams releasing in social science and business model are link departments of social science and threads’ The ‘golden sectors. and private public, regulated business schools with artists, writers, financiers and lawyers. Success has come from building close relationships with universities at student, graduate and research and research at student, graduate universities with building close relationships from Success has come partnershipwater a is on there programme where Examples with Brighton, Costain are for levels. is working with the Engineering Department Costain engineering, at Cambridge, where on wireless in agent-based advances applications, and at Sheffield, where sensor technologies in tunnelling our understanding of a to advance environments co-evolutionary being trialled in live, modelling are project transport of effects from optimisation, public safety management and effective network range and secondments, recruitment not only of ideas and technologies; is exchange There procurement. bodies such as engage and extend to research all partThese programmes sabbaticals are the mix. of to SMEs Institute, and specialist groups Technology and the Energy Laboratory Research Transport the customers is critical in the engagement of the industry’s The of industry customers. and to a group that is served; for and understand the societal need they responsible as they are construction sector, will be made. change where access to the infrastructure also control Networks have nodes, in this case centres of research excellence, and they have connections. Costain’s connections. Costain’s have and they excellence, of research in this case centres nodes, Networks have while supportingapproach, and in particular been to focus on the connections, has the ‘nodes’, the link of these best The exploitation. commercial and trails live to that lead connections of chains and joint in the supply chain, business technologists, designers, specialists customers, researchers, the link which threads’ ‘golden The aim is to create units. business own partners and Costain’s venture that implement. (or the making of them), to those those who hold the solutions issue at hand, through solution to a societal need. better value a better quality and which delivers Success is a collaboration The most potent forms of industrial innovation through the 19th, 20th and 21st centuries have been been centuries have 20th and 21st the 19th, through of industrial innovation potent forms The most team and research dedicated corporate then the innovator, inspired the work of the by in turn, driven, creatively. this change to embrace has been approach Costain’s network. the collaborative now Endnotes

i. Foray and Lissoni (2009 p.282) ii. Hughes and Martin (2012 p.13) iii. Powering Up. Business and Universities Collaborating for Manufacturing Competitiveness. CIHE (2011 p.18) iv. The Task Force reports are all available online: The UK R&D Landscape, Hughes, A. and Mina, A., www.cihe.co.uk/RDlandscape. Enhancing Impact, The Value of Public Sector R&D, Hughes, A and Martin, B. R. www.cihe.co.uk/ impact. Enhancing Collaboration, Creating Value, Business Interaction with the UK Research Base in Four Sectors, Mina, A. and Probert, J. www.cihe.co.uk/eccv-main. v. The Small Business Innovation Research Program (SBIR), introduced in the United States in 1982, requires government agencies’ (mainly Department of Defense, National Institutes of Health, NASA, National Science Foundation and the Department of Energy) external R&D budgets to set aside 2.5% of teir funds for the programme, which offers competition-based awards to small innovative firms in three phases: 1) (six months), $100 000 for a feasibility study allowing small firms to test the scientific and technical value of their R&D effort and its feasibility; 2) two years, $750 000 for a full R&D effort; and 3) the firm pursues – with non-SBIR funds – the commercialisation of the technology. Phase 3 follow-on projects can benefit from US government R&D funding; awards are then funded from mainstream budget lines. The SBIR programme is worth over $2 billion annually and makes over 4000 awards each year. SBIR funds are designed as a first step on the procurement ladder. Awards are linked to public sector customer requirements. Historically, a quarter of the companies are first-time winners. The UK’s SBRI programme was relaunched by the TSB in 2009/10 with around £40 million for a similar two- stage investment process. vi. Wilson (2012 p.5). vii. Macmillan, Siegel and Subba Narasimha (1985 p.119-128). viii. PWC (2012 p.11). Also see Mina and Probert (2012, p.39). ix. Schumpeter (1943 p174.) x. Chesbrough (2003). xi. For an extended version of this section, see Sir Richard Lambert: Can Britain Make it? Prospect Magazine September 2011 xii. Hughes and Mina (2012, p.24). xiii. Hughes and Mina (2012 p.1). xiv. National Academy of Engineering (2003 p.227). xv. See Hughes and Martin, Docherty ed (2012 p.3) and Hughes and Martin (2012) passim. xvi. BVCA Report on Investment Activity p.5 xvii. http://www.brightonfuse.com/ xviii. Mina and Probert (2012 p12). xix. Mina and Probert (2012 p.15). xx. Sir Richard Lambert (2003) 44 Bibliography

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45 Working Group Members

Working Group Chairs Prof. Michael Caine Associate Dean, Enterprise Loughborough University Dr. Robert M Sorrell VP Public Partnerships BP Working Group Dr. Aileen Allsop Consultant Richard Biers Programme Leader S&T Futures DSTL Pete Digger Leader - UK Science Relations AstraZeneca Sally Devine Task Force Coordinator CIHE Alice Frost Head of Knowledge Exchange and Skills HEFCE Chris Ganje Policy Advisor BP Dr. Andy Leonard Vice President BP Cambridge Dr. Andrea Mina Senior Research Fellow CBR and UK~IRC Dr. Declan Mulkeen Director Research Programmes MRC Prof. Douglas Paul Director of the James Watt Nanofabrication Centre University of Glasgow Dr. Jocelyn Probert Senior Researcher CBR and UK~IRC Dr. Allyson Reed Director of Enterprise & Communications TSB Dr. Douglas Robertson Director of Research and Enterprise Services, Chair of PraxisUnico Newcastle University Dr. Malcolm Skingle Director Academic Liaison GSK R&D Philip Ternouth Associate Director CIHE Nigel Townley Engineering Director, Enhanced Customer Aligned Test Services Cisco Dr. Alison Wall Associate Director, Impact ESPRC Andy Wilson Head, Centre of Technology BBC

Contact details for Task Force: Sally Devine, [email protected] ,0207 383 7667 Support from

47 Council for Industry and Higher Education UK Innovation Research Centre (CIHE) Top Floor, Judge Business School Building Studio 11, Tiger House, Burton Street, University of Cambridge London, WC1H 9BY Trumpington Street w. www.cihe.co.uk Cambridge, CB2 1AG e. [email protected] e. [email protected] t. +44 (0)207 383 7667 t. +44 (0)1223 746575 f. +44 (0)207 383 3433 f. +44 (0)1223 765338 © CIHE December 2012 ISBN 978-1-909071-04-9 Photo Credits: i-stockphoto.com 48