Innovation – you’re more than a spin out to me

Many of us have kicked off 2016 aiming to be healthier. That means taking a look at our lifestyles and being (painfully) honest about what we need to focus on: whether it be drinking less, exercising more, changing our eating habits, or most likely, a large dose of discipline and a combination of all these.

The point is, being truly healthy requires a holistic approach. And that’s true of our research and innovation ecosystem too.

Let’s be clear. Taken together, the Green Paper, Nurse Review and Spending Review amount to the biggest overhaul of research and innovation governance and funding structures in 20 years. That means that 2016 is the best shot we’ve had in a long time to create the best environment for a healthy innovation ecosystem.

We need to examine our motivations and objectives

The objective of a national approach and investment in innovation is pretty uncontroversial: to increase the innovation capacity and consequently the productivity of the UK.

But the precise motivation for the current systemic overhaul is down to a combination of broader trends: a new government, a challenging funding environment, a more collaborative ethos and fundamental philosophical shift concerning the future of the higher education sector.

In innovation policy, the key motivating driver in 2015 was simplification. For Dame Ann Dowling, this meant simplifying the system of innovation support for businesses which can be overly and detrimentally complex. Regarding the BIS 2020 strategy, simplification meant halving the number of organisations that deliver government support for research and innovation.

But the thing that is most likely to change the face of UK innovation support in coming months is the desire to implement Sir Paul Nurse’s suggestion (and it was just that) to integrate Innovate UK into the newly-conceived Research UK.

We need to take a holistic view

What are we trying to achieve with this? The UK has a world-leading research base and scores highly on global innovation indices. But on some measures, we could do better.

Commercialisation of research, as measured by licences and patents, spin-outs and start-ups, is the most frequently cited example. From this perspective (and from within the parameters of Nurse’s original remit to look at the Research Councils), integrating Innovate UK into a new Research UK structure makes sense.

But research commercialisation is just one corner of the innovation ecosystem. And we’ll do our ecosystem a disservice if we focus only on this, and reduce Innovate UK to a ‘tech transfer office for the research councils’. It does so much more.

Don’t get me wrong. The creation of high-tech, high-value spin outs is an important contribution to UK productivity. And the tendency to focus on this in the past is unsurprising: the impacts are easily monetisable in turnover and jobs created. The figures can be impressive, such as this multi-million pound SME spun out from Nottingham Trent University’s 3D X-ray imaging research. 

But an over-focus on the direct commercialisation of research could jeopardise the thousands of other transformative collaborations between universities and businesses that are the lifeblood of a healthy and vibrant innovation ecosystem.

These include universities working with businesses on product and process design and development, allowing SMEs to scale up or explore new markets. Or sharing their facilities and research equipment with small businesses to let them test out their products or ideas.

More broadly, universities bring connectivity to local, national and international networks. University-run SME drop-in centres provide business support that can be a vital lifeline to a range of expertise about building and growing a business, or the introduction to a local partner which creates a new collaboration. (Just some Alliance examples are Forge at Teesside University, the Formation Zone at Plymouth, Fix it Fridays at Sheffield Hallam and Coventry University’s KEEN Network). 

Crucially, this connectivity draws businesses into the national innovation ecosystem, which a smaller business may not have previously known about, or thought relevant to them.

And let’s not forget that people are at the heart of innovation. Universities focus on creating a learning and working environment that produces entrepreneurial and innovative graduates and researchers. They also open their doors, welcoming a high-than-average proportion of industry staff.

The approach improves the overall ‘absorptive capacity’ of the workforce.

So yes, it’s complicated. Yes, the financial returns of these activities are harder to capture than the results of spin outs and numbers of patents (although HEFCE’s annual Higher education-business and community interaction (HE-BCI) survey is a good start). But just because these interactions are complicated, it doesn’t mean that they are not crucial to a dynamic UK innovation system.

We need to design a holistic support system

So how best to support them?

Higher Education Innovation Funding has allowed universities to support these activities. Interactions with SMEs are resource-intensive (much more so than large research contracts which bring direct financial reward). HEIF has shown returns of over £10 for each £1 invested.

This is complemented by Innovate UK’s primarily business-facing activities. Currently, 8% of Innovate UK’s funding is spent directly on university spins outs and only 15% supports the development of activity from the research base. The rest is dedicated to targeted support that goes directly to business.

At their first point of contact with Innovate UK or a university, a business may be far down the innovation chain, but with huge potential. To these companies, research is an alien word. One of the functions of innovation funding is to help to draw these businesses into higher-value innovation activities, helping to increase private investment in R&D. Knowledge Transfer Partnerships (KTPs) form one of the key strands – well-loved and long-running for a reason.

Of course, there are opportunities to be reaped from closer working between Innovate UK and the Research Councils – joint working around the commercialisation of research is one obvious improvement.

But let’s not forget that Innovate UK does so much more. It has built a brand that is well recognised and much valued by UK businesses, which supports all of the many activities that contribute to a growing business. Burying these too far within Research UK risks throwing the baby out with the bathwater. Maybe reconceiving an integrated body as ‘Research and Innovation UK’ might help future governments to commit to this long-term.

So 2016 is our chance. Let’s think holistically, and design an innovation support structure that supports a whole healthy ecosystem. It’s this broader capacity to innovate that will drive up UK productivity.

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