While hard science, and the need to sell it to the public and to protect it from government cuts, has grabbed much of the attention surrounding the 350th anniversary of the Royal Society, the UK’s self proclaimed premier science academy is not ignoring the commercial facts of life. Some of the £100 million that the Royal Society hopes to raise in its anniversary year is earmarked for Royal Society’s Enterprise Fund (RSEF) which is already backing new businesses based on research carried out in the UK.

It has never been easy for researchers who want to commercialise their science to raise money. This is especially true for anyone seeking relatively small amounts of money to fund the first steps towards commercialising an idea. “Apart from the government and regional funds virtually nobody is doing seed funding,” says Dr Andrew Mackintosh, Chief Executive of the RSEF.

“Getting that first-round money is really really difficult,” says Dr Mackintosh. A few venture capital funds would back an idea, from small to big as Mackintosh puts it, but those days are long gone. Thanks to the economic crisis, the issue has become even more pressing than it was four years ago, when the Royal Society started to think about its fund.

The RSEF has already looked at more than 200 ideas that were seeking backing, “and they keep rolling in,” says Dr Mackintosh. And this is despite taking a low key approach. “We are not pushing it hard,” says Dr Mackintosh. “The deal flow is very good already.” They also wanted to develop a modus operandi for what is a new activity for the Royal Society.

Current investments

So far, the fund has invested in three new businesses. The first of these, Novacem, is developing ‘carbon negative’ cement technology. The company has already picked up several awards, including a Science|Business ACES award, and signing up further investment from Lafarge, “the world leader in building materials”.

Earlier this year the fund also put money into Base4Innovation Ltd, which is based in Cambridge and is developing a new generation of ultra-fast DNA sequencing technology. The fund’s third investment was in Nano-Porous Solutions Ltd (n-psl), a ‘green’ air-filtration company developing research at the University of Bath in its Gateshead facilities.

So far the RSEF has put around £250,000 into each business it has backed. But this is not meant to be a particular pattern. “We don’t really have a minimum” for the amount the fund will invest, says Dr Mackintosh says that.

Philanthropic donations

Money to back these ventures came from philanthropic donations from wealthy individuals. So far the fund has raised some £6½ million of its target of £20 million. The idea is that the RSEF will be an evergreen fund. Any profits it makes will go back into the fund to support further ventures.

In its early days, the RSEF expects to concentrate on ideas from the physical sciences. In part this reflects the influence of Roger Brooke, one of the fund’s first donors. Brooke was a founder of Candover Investments and a founding director of IP Group.

As Dr Mackintosh puts it, the view is that physics based companies find it even harder to get funds than ideas in the life sciences, where there are already established sources of finance.

Evergreen fund

The idea of a self perpetuating evergreen fund is a part of the appeal to the people who put money into the fund, says Dr Mackintosh. “It is a very powerful model.” Donors like the notion that their money will carry on working.

Researchers seeking money also welcome the idea. “Academic founders particularly like the idea of us recycling our money,” says Dr Mackintosh.

Backing good ideas is just one of the goals that the Royal Society set for its fund. It also wants to influence thinking inside and outside the scientific community. The idea is that the name of the Royal Society will persuade other investors to support technology start-ups.

“Part of what we want to be able to do is to encourage and catalyse other investments into this area,” says Dr Mackintosh. He believes that there has already been some evidence of this. Other investors have backed ideas when they have seen that the RSEF is prepared to put money into them or even just to look kindly upon them.

Changing attitudes

The fund also hopes to change attitudes within the research community. In its early days, the Royal Society showed a healthy interest in turning science into profits. There was, though, a large gap of a couple of centuries, when many of the organisation’s fellows, make that Fellows, saw money making as a slightly mucky occupation. Such sentiments persisted until fairly recently.

Another of the fund’s goals is to accelerate this change attitudes, especially among the Fellows of the Royal Society who tend to be of an older generation than the younger researchers who now see it as natural to commercialise their own work. Here too the Royal Society is playing a part. A course in business matters is a part of the training for the bright young researchers on its scheme of University Research Fellowships for “outstanding scientists, who should have the potential to become leaders in their chosen field”.

A subtle way to change attitudes is for the fund to tap into the expertise of FRSs, drawing them into the assessment of commercial ideas. When it wants to check out a proposal, the RSEF can call on the knowledge of some of the brightest scientists in the country. And the nature of the Royal Society means that it can cover all scientific disciplines.

A commercial fund

For all of these ambitions, Dr Mackintosh insists that the RSEF is a commercial fund. It may not have to provide profits for investors, but it has to maintain the fund if it is to be able to invest not just in the start up of new ventures but also in their growth. The fund does not plan to severe its links with its companies as they grow. It was to be in a position to maintain a holding in the businesses.

It would not take many successes to replenish the RSEF. Dr Mackintosh is, though, accepts that it could take time. The physical sciences may not come up with ideas that take decades to shepherd through expensive clinical trials, but you cannot change the shape of a juggernaut like the cement industry overnight. Then again, the industry is so big that taking just a small share of the market could fuel the pipeline for quite a number of bright ideas.

It may be the ephemeral nature of the business, but you don’t see as many mentions of computer games when talk turns to high-tech businesses. This is, though, a massive money maker for the UK, and an area where academic research has made a significant contribution.

When the House of Lords debated the creative industries in 2008, Lord Watson of Invergowrie spelled out the extent of the business: “In 2008, the UK video and computer games industry generated £2.5 billion and more than 20,000 people were employed in games development, publishing and retail.” Making packets of money does not stop the UK’s computer games industry from begging for extra tax breaks, something that isn’t the norm in other high tech sectors.

David Willetts, the Minister for Universities and Science in the new UK government, highlighted the sector in his first major speech on research. He fingered Dundee and Abertay University as an exemplar high-tech cluster, which makes a nice change from the constant references to the Cambridge cluster. Perhaps not coincidentally, his colleague, Ed Vaizey, the Culture Minister, has been up to Dundee to launch another project in the games area.

Money from the UK Government (£2.5 million), the European Regional Development Fund (£1 million) and the University of Abertay Dundee (£1.5 million) will go into “new computer games prototypes, creating new businesses and giving fledgling companies the chance to attract further investment by developing their intellectual property”. The university is one of a number that runs degree courses in computer games, perhaps upsetting old-school computer scientists.

The Dundee computer games cluster is clearly important for the region. Over the past decade or so, “an estimated £1 billion” has gone into the region. So much so that Dundee, once famous for jam making, “is responsible for 10 per cent of Britain’s digital entertainment industry, with an annual turnover of £100 million”.

“The previous government appeared to think of innovation as if it were a sausage machine. You’re supposed to put money into university-based scientific research, which leads to patents and then spinout companies that secure venture capital backing.” The fact that this statement appeared in, as he put it, his “first major science speech” meant that this statement, one of many in the speech, by David Willetts, Minister for Universities and Science, provoke more interest than usual.

No matter that that the “previous government” that he referred to was beginning to change its tune before the electorate told Gordon Brown and his team to take its policies elsewhere, the sausage machine, or linear model of innovation as some academics describe it, certainly held sway when, as Chancellor, Brown, reversed a long period of decline for research budgets. After a decade of throwing money into science, the Treasury certainly started to demand evidence that this spending was having “impact”, a word that universities came to dread.

Pass the axe

The government likes to use the phrase “rebalancing the economy” when it talks about the massive cuts it is making in public spending. With a major spending review under way, it is too soon to know how heavi8ly the axe will descend on universities and science. Mr Willetts did, though, say that “Government wants science to emerge from this period to be strong, sustainable and effective”. This will not happen if the area has to fall in with the 40 per cent cuts mooted for some areas of government spending.

Other pointers in the speech were to Willett’s belief in clusters, a notion that also appealed to one of his predecessors, Lord David Sainsbury, who Willetts referred to in glowing terms. “I’m a firm believer in clusters,” Willetts said, adding that these are “best defined as a low-risk environment for high-risk activity”, a description that might baffle those who try to sell them as up market real estate.

The example of a cluster that Willetts gave was Dundee, where, “according to the city council, some 350 computer game and creative industries companies are based around Abertay University. The area around Dundee is now home to about three quarters of all British jobs in computer game development. At the same time, Dundee has made a name for itself in life sciences, where first-rate research has attracted significant investment from multinational businesses.”

Willetts believes in concentration in general. “I do believe in concentration on excellent research – and excellence is to be found in individual departments.” Some have interpreted this as meaning that the UK should focus its research spending on fewer universities, those with a reputation for research.

Where is the evidence?

Scientists may not have spotted this, but Willetts can even come up with an explanation as to why having a coalition government is good news. As he explains it “coalition, I believe, is good for government and for science, given the premium now attached to reason and evidence”. So, the fact that the two parties involved have to persuade one another that their ideas make sense, they have to cast aside their natural inclinations to fall back on party dogma. Instead, they have to pile the table with evidence.

Researchers may, then, want to heed Willetts’s observation that “Public spending on science, just like everything else, has to stand up to rigorous economic scrutiny”, a line that could all too easily morph into  the same Treasury scrutiny that Willetts decried.

It is the research community’s job to provide evidence on this that will pass this scrutiny. Fortunately, this is where Willett’s view on the sausage machine rears its head. He doesn’t buy the “money in/technology out” line. He refers to the “the benefits – often unanticipated – which accrue from blue skies research”. So don’t try to look too hard for “impact”.

Research with impact

When the previous government started to demand evidence of impact, the academic community, and the Research Councils and the like that support them, worked themselves up into a frenzy to demonstrate their impact, with reports, web sites, exhibitions and so on that boldly rode the impact bandwagon. Willetts warned that “The surprising paths which serendipity takes us down is a major reason why we need to think harder about impact. There is no perfect way to assess impact, even looking backwards at what has happened.”

Willetts has not completely given up on the bean counting approach to measuring impact. He referred approvingly of “interesting developments underway in the United States, where the Star Metrics initiative is seeking to track the science dollars pumped into universities through the recovery programme and will then trace their impact on the broader economy”.

While Willetts approved of the clusters that also appealed to Lord Sainsbury’s, he is less sold on the overwhelming importance of another old Sainsbury favourite, spin-out companies. It isn’t that the new minister doesn’t like them, he lauded ARM Holdings and Autonomy Corporation, but he acknowledges their minor place in the innovation firmament. “There are many other ways of harvesting benefits from research.” After all, as he pointed out: “On average the amount that universities generate from commercialising their IP (through licenses and selling stakes in spinouts) is less than 3 per cent of their total income from business and charities.”

It is too early to know just what the new government will do for research and innovation. It probably doesn’t know itself yet. But Willetts says all the right things, albeit without going into much depth, so some of the community’s worst fears might not come to anything.

Openness and innovation

It is hard to disagree with the view that “The challenge we face is to make best use of our science base.” There is even sense in the line “Especially in a time of austerity, we inevitably think of the way it can contribute to economic growth.” And who could possibly disagree with the line that “that contribution may come best if we encourage openness and innovation, not if we try to micromanage our universities, direct researchers or count patents”.

Universities, and their supporters in industry, have been saying this for quite some time. If Willetts manages to protect research from a terrible financial mauling, he may win over a few sceptics in the research community.

Just a few years ago, anyone bewailing the state of manufacturing in the UK would find it hard to get a hearing. There was, as the ERA Foundation (ERAF), describes it a “widespread belief emanating from the Government downwards that the UK was entering a ‘post-industrial era’ with an economy based upon financial and business services”.

Even before the financial turmoil of recent years, ERAF, which says that it “contributes to the economic vitality of the UK by supporting activities that help bridge the gap between research and exploitation in electrotechnology”, set out to show that manufacturing still matters. It commissioned a set of studies and talking to some eminent people. The results of this cogitation appear in the document that contains these quotes The Sustainability of the UK Economy in an Era of Declining Productive Capability.

Some might have seen it as a lost cause when, a couple of years ago, before the bankers turned out to have feet of clay, ERAF’s chairman, Sir Alan Rudge, prompted the organisation to think about manufacturing. Now, even bankers would not seriously argue that financial services are the answer to our problems. But ERAF is still of the view that governments have yet to get the point about manufacturing.

For a quarter of a century, says ERAF, successive UK Governments “have been committed to developing and maintaining a favourable environment for financial services” so much so that policy makers deemed a declining manufacturing industry “to be relatively unimportant”.

ERAF’s leading lights know something about changing government attitudes to manufacturing. The foundation is built on money that came from the ‘privatisation’ of an operation that existed to do R&D for industry, funded in large part by governments.

When the government decided that it wasn’t in the R&D business, going so far as to sell off much of its own defence R&D operation, ERA Technology, once known as the Electrical Research Association (ERA), was cut loose, along with dozens of other RAs that supported manufacturing and other businesses making stuff. Pulling the plug on R&D subsidies for independent research and technology organisations, which still play a significant role in some countries, was all a part of a pattern that said, in effect, stuff manufacturing.

Decades of decline

The latest document from ERAF brings the story up to date by charting the decline of manufacturing in the UK. “Under the Conservative Governments of Thatcher and Major, manufacturing declined from 25% to 22% of the economy; this has accelerated rapidly under the Blair and Brown administrations and has now reduced to 12% of GDP.” Over time the UK has fallen from being fourth to seventh largest manufacturing nation in the world.

It isn’t as if the miraculous boom in financial services had really saved the UK’s economic bacon, “over the past decade, and in contrast to widespread claims to the contrary, the deficit in manufacturing has not been compensated for by the growth in financial and business services”. The result is a deficit in the trade of manufactured goods of £55 billion per year and almost £20 billion per year in food and beverages. The bottom line is that “the overall picture of the past twelve years is that of a nation consuming more goods than it is able to pay for by trade and earnings from abroad”.

Manufacturing isn’t quite dead: “even at its current level it provides half of all UK exports, three quarters of all business Research & Development and employs nearly 3 million people”. Then there is the fact that “manufacturing exports are still three times as large as those from financial services or all of the other knowledge intensive services combined”.

Back in fashion

Things have moved on since ERAF started to fret about the state of manufacturing. Lord (Peter) Mandelson, the UK’s business secretary, and Lord Drayson, science minister, have started saying nice things about manufacturing. Earlier this year, there was also the announcement of government investment of £70 million in “a series of state-of-the-art manufacturing research centres across the UK”. Even before that he had, as we wrote back then, complained that “we sometimes have a glib notion in this country that we don’t really make anything any more, that we are no longer an industrial economy”.

The UK shouldn’t think that it alone has seen the possible benefits of throwing research at manufacturing. In the US, the President’s Council of Advisors on Science and Technology is on the case. It has set up a web site for input into its “study on how the nation can enhance its advanced manufacturing capabilities”.

Quite what ERAF wants the British government to do is a bit vague. Most of its calls for action are couched in general terms. “The environment for manufacture and investment in industry requires attention, but above all there is the need for leadership from Government to establish the framework, implement the necessary environmental enhancements and lead and encourage the return to a more balanced economy and culture.”

Its report lists 30 or so “parameters” that need attention. Few of them are unique to manufacturing. A hairdresser would like action on “Business start-up support”. Betting shops might also welcome moves on corporation tax, for example.

The problem may be that, at heart, ERAF is torn between wanting to be left alone to get on with things and wanting the government to bang the drum.

Unsustainable energy bills

One idea in the report, a call for “Competitive energy supply and costs”, also came up at a press lunch that ERAF held to talk over the issue. Ruth Lea, an economist with decidedly free-market leanings, complained that the UK has set itself unrealistic targets to reduce greenhouse emissions, especially from energy production. The UK already has the most expensive electricity in Europe. Manufacturing uses more energy than many other activities and is therefore hit harder by higher energy prices.

Lea dismembers the UK’s energy policy in a report written with Jeremy Nicholson for the think tank, Civitas, British energy policy and the threat to manufacturing industry. They point out that Britain starts with very little renewable energy, so it has to work harder than other countries to reach the targets set under the EU’s Renewables Directive. Lea and Nicholson warn that “business could be facing additional costs on electricity bills of up to 70 per cent, depending on the degree of overlap already referred to, because of ‘green’ policies by 2020″.

The document for Civitas also points out that reducing carbon emissions from energy production does not necessarily reduce the UK’s contribution to climate change. By importing manufactured goods, for example, we simply export the production of greenhouse gases. “If emissions caused by producing goods imported from overseas (many of which used to be produced here) are added in and aviation and shipping emissions ‘costs’ are taken into account, it has been calculated that UK carbon ‘consumption’ actually increased by 19 per cent between 1990 and 2005.”

The complex interactions between energy and manufacturing costs are just one example of how unintended consequences can clobber manufacturing in the UK. Perhaps that is the point of another of ERAF’s “Parameters identified as requiring urgent action”.

Alongside “Competitive energy supply and costs”, “Availability of technical skills (non-professional)” and “Encouragement especially of the young towards industry and manufacture” we have one other parameter. ERAF wants to see “A long term, well publicized, Government commitment to manufacturing.”

If a government really did take up this idea, it might be less likely to implement other policies that have unintended consequences. For example, talk of technical skills might prompt the government, whatever its colour, to pander less slavishly to demands that it “do something about immigration”.  Perhaps it could set quotas on the number of bankers working in the UK while allowing in more engineers and people with technical skills.

For a sector that account for “over 40% of public R&D spending” it is surprising that there is so little comment about the role of the Research and Technology Institutes. This is the label that Arthur D. Little (ADL) attaches to the “organisations that provide research and development, technology and innovation services to governments, industry and other clients”.

A new ADL report, Research & Technology Institutes – Meeting the Challenges of the Post-Recession World, explains that many RTIs started life as government funded research labs. In the UK, for example, many RTIs once carried the label “research association”, a tag that continues to this day in the name of such organisations as Pira International, set up in 1930 as the Printing Industry Research Association, and PERA, the erstwhile Production Engineering Research Association.

While many of the UK’s RAs have vanished into the clutches of other businesses or even into the hands of investment companies, the model is still highly visible elsewhere in Europe. Germany has institutes its much admired Fraunhofer-Gesellschaft with an annual research budget of € 1.5 billion, two thirds of it from contracts with industry. In the Netherlands, TNO received €195 million of its turnover of €600 million from the government. VTT Technical Research Centre of Finland, established in 1942, has a turnover or around € 250 with 30% from the government.

This level of government investment does not mean that the RTIs are safe. The ADL report suggests that they face three key challenges:

• the lack of a clearly-defined strategic role
• decreasing core/state funding
• more demanding stakeholders

The first of these challenges arises from the fact that RTIs often “operate within a national or regional STI system in which their precise role and mission is insufficiently defined or inadequately focused”. It does not help that an RTI can find itself working at the behest of stakeholders with conflicting objectives, “for example, different government bodies may have different requirements (eg regional vs national or international, industrial development departments versus environmental or health departments)”.

Over the years ADL has worked with various RTIs and draws on that experience to offer advice in this report. This comes down to developing a strategy –one that ADL likes to label as a “trade mark” – that helps the RTI “to be explicit about the role of the institute and to begin to prioritize its R&D project portfolio”.

Working for companies

RTIs also have to remember what they are there for, to do R&D that can make a difference to the companies that commission their services, and to ensure that their researchers not only know this but also behave accordingly. This means that they should not act like academics, where the priority is to prove your expertise through the number of publications and citations that a researcher’s work generates. If even some universities worry about excess pressure to deliver on this front, it does not make sense if, as the ADL report puts it, “researchers are incentivised primarily on the basis of demonstrated scientific performance”. Instead, it helps if RTIs judge individuals on things like “utilization on projects, and achievement of specific (non-academic) development objectives”.

One bit of advice is that RTIs should “focus on challenges rather than research areas”. ASDL suggests this approach because it “creates a technical end goal around which it is possible to structure future activities”. An example of this tactic is that “rather than saying ‘micro-electronics is an attractive area’, we specify a challenge to be addressed such as ‘Achieving desalination costs of less than 4.0kWhr/m3′”.

The pursuit of money is clearly important for any research organisation. The enthusiasm with which governments seek ways to cut their spending clearly threatens RTIs that depend on state support to stay in business. “Increasingly, RTIs are expected to demonstrate much more clearly how their use of public funds delivers added value to society – be it economic, environmental, social, strategic or tactical added value.” To cope with these pressures the advice is to “follow the money” by “aligning research programs better with client funding streams; improving commercialization returns through partnership; and making a stronger justification for STI funding”.

The academic community has already paved the way for the last of these points. Also faced with government demands to justify the money spent on academic research, universities and Research Councils are eager to demonstrate their ‘impact’.

An invisible sector

While academics have made their sales pitch as visibly as they can, bombarding anyone who will listen with examples of where they have made in impact, the RTIs are less visible. They are less silent on the research that they do, but where are they making the case for their place on the R&D landscape?

They are certainly silent in the UK. The Association of Independent Research and Technology Organisations (AIRTO), the umbrella body for RTIs in the UK – with 35 independent companies, it proclaims itself “the largest community of techno-business consultants and contract research organisations in Europe” – has not updated its web site in some years.

ADL’s report points out that the general R&D climate should actually provide RTIs with opportunities to make a stronger case for their services. As the study puts it “They have the potential to become even more important in the post-recession ‘new normal’ world of virtual, networked corporations and collaborative innovation – provided that they can face up to the challenges of change.”

Hot on the heels of the UK’s R&D Scoreboard, actually a few days before it, comes the annual survey of Germany’s R&D spending from the Centre for European Economic Research (ZEW) in Mannheim. The survey, conducted last summer, asked companies about their investment in innovation. The answers show that they expected “innovation expenditures” to decline by 10 per cent in 2009, from a record high of 128.1 billion euro in 2008. This decline was, though, less than the 18 per cent fall in company profits.

The good news, as ZEW sees it, is that “firms have largely spared the investments for [R&D]“. “In 2009, firms plan to spend only 114.5 billion [euro] for innovation projects. This is a decrease of 11 per cent compared to 2008. The innovation expenditures therefore drop below the level of 2006.”

ZEW reports that the decline in investment in innovation was less than the fall in corporate profits. It also says that expenditures on R&D “probably will stay the same in 2009 because they are important for the long-term competitiveness”.

The picture differs depending on the size of the company. “The decline of the innovation budget has been considerably large for small and medium-sized firms with less than 500 employees.” SMEs “plan to lower their innovation expenditures by 21 per cent from 33.4 billion euro in 2008 to only 26.5 billion euro in 2010″.

The survey offers several interesting snippets on the effect of innovation spending on corporate performance:

• “16.8 per cent of all firms’ turnovers in Germany were earned with newly introduced products” (16.3 per cent in 2007)
• “In the research-intensive sector, 38 per cent of turnovers were made with new products (39 per cent in 2007)”
• “In 2008, the German economy was able to save costs of about 3.9 per cent per piece by means of process innovations.”

As in the UK, 2008 was a good year for R&D spending in Germany. But the growth was limited to “research-intensive industry … especially vehicle construction, mechanical engineering, and the electric industry”. Innovation expenditures in the research-intensive industry rose by 6.5 billion euro, an increase of nine per cent. Other sectors “could only increase their innovation expenditures slightly by 0.4 per cent”. Especially hard hit were “finance services, wholesale and transport” where “innovation expenditures decreased considerably”.

The annual bean count of R&D spending in the UK offers the usual opportunities to pick the data that suits whatever argument you want to make. Lord Paul Drayson, Minister of State for Science and Innovation, uses The 2009 R&D Scoreboard to point out that the year in question, 2008, “saw an encouraging increase of 9.2% in UK investment against the previous year – and strong comparative growth in R&D, second only to Switzerland”.

Drayson is too bright to ignore the fact that this impressive increase predated what he admits has been “the worst of the global economic downturn”. Next year’s statistical exercise could be a much grimmer affair if many companies indulged in the knee jerk response of previous recessions and shouted “cut the R&D budget”. There have certainly been some signs of that, with more than one pharmaceuticals company pulling the plug on a lab in the UK.

As Science|Business has already pointed out, one value of the scoreboard is that this exercise has been going on for a long time, this is the 19^th edition, and has been a great source of numbers to crunch over the years.

This year’s report offers its own set of key points:

• the top 1000 UK companies in the R&D league spent £26.6 billion in 2008
• just 100 companies did 81% of that R&D
• globally, the top 1000 companies invested £396 billion on R&D in 2008, “an increase of 7% on the previous year”
• 80% of that spending happened in five countries: the US, Japan, Germany, France and the UK

The biggest R&D spender continues to be the “global pharmaceuticals and biotechnology sector”. But with a year on year increase of 7.6% it was behind “software and computer services” which, with 9.3% growth, increased investment most.

It may have slowed its growth but pharmaceuticals and biotechnology accounted for 36% of the UK1000 total, “six times as much as the next biggest sector”. This is down to the sheer size and number of the sector. “There are 134 pharmaceuticals and biotechnology firms in the UK1000 and 116 in the G1000.” The G1000 is a list of the “1000 most R&D active companies globally”.

Further analysis of what went on in particular sectors shows that the companies in the UK’s top 1000 that are also in the G1000 increased their R&D investment “more quickly than their global peers in the banking, aerospace and defence, and software and computer services sectors, but increased their R&D more slowly in the oil and gas producing and the technology hardware and equipment sectors”.

A load of bankers

In recent years the scoreboard has tried to count spending in sectors other than those traditional associated with R&D. So as well as the top two sectors, banking appears as one of the five, alongside aerospace and defence and automobiles and parts.

Banks certainly spend money on R&D, although quite how much they get out of it is an open question in the light of recent events. “Three banks were among the top 25 UK investors in the UK1000,” says the report. They accounted for 88% of the sector’s total spending on R&D “and over 5% of the UK1000 spend in 2008″.

Digging further down shows that only one company in “automobiles and parts”, GKN, is UK owned. So while the sector is number five in the UK, when it comes to the G1000 it is the second largest investor in R&D.

Foreign owners

The ownership of companies inevitably influences where they concentrate their R&D. One intriguing bit of evidence on this front relates to the fact that “slightly less than three quarters (74%) of R&D investment in 2008 came from UK-owned companies. And yet 43% of UK1000 companies were foreign-owned. You would have to work out the relative sizes of those businesses to work out if this really is an indicator that foreign owned businesses are less keen than indigenous companies to perform R&D in the UK.

Look no further than the report’s table of “Biggest increases in R&D expenditure in the UK1000″ for more evidence on the propensity of locals to spend more on R&D. Of the 20 firms in the table, just 25 per cent are foreign-owned firms. On the other hand, look at the 20 firms in the table for the “Biggest decreases in R&D expenditure in the UK1000 and the picture flips with 75 per cent of the companies in foreign ownership.

The report leaves it to readers to draw their own conclusions.

Talk of “technology intelligence” could conjure up thoughts of business espionage, but it also describes the attempts that companies make to stay ahead of the game and to anticipate nasty surprises that could wreck an otherwise profitable enterprise. A paper in the latest issue of the journal R&D Management describes a formalised approach to technology intelligence, or TI as they call it.

In their paper, Combining methods in the technology intelligence process: application in an aerospace manufacturing firm, Husam Arman of the University of Nottingham and James Foden of Rolls-Royce Plc put forward an approach to a “practical TI methodology” that can, they believe, help companies to cope with the “increasing speed of innovation and product life cycles, growing R&D expenditures and others” as they put it.

Arman and Foden have developed what they call the Strategic Technology Alignment Roadmapping (STAR) system. STAR, they say, “provides software-supported steps for the collection of technology-related data through to the evaluation, ranking and selection of R&D projects”.

Developing STAR involved building a knowledge base of internal and external technological information. The TI process then involves a set of defined stages, including, for example, identifying and assessing competing technologies and defining the “state-of-the-art” for each technology. The process also includes benchmark a company’s position against that state-of-the-art along with scenario analysis.

One important factor, they say, is to include “market considerations” in TI. Arman and Foden believe that this is essential because “the only indication of a disruptive threat to a company may be the ‘poaching’ of its marginal customers”.

Keep it formal

One advantage of a formalised approach to TI is that it encourages systematic recording of technological information in a process that draws on a wide range of sources, such as “information that can arise from external sources, including competitors, suppliers, trade fairs, conferences, publications and patents”. Internal information can include “sources such as R&D engineers and scientists, designers, shop floor operators, intranets, databases and company’s roadmaps”.

TI uses all this information “to identify promising technologies, to show their potential and limitations, as well to take the advantage of technological changes”.

In their paper, Arman and Foden describe the various steps and workshops that a company has to complete in a TI exercise. The processes can include workshops to identify the critical technologies that are “essential to the present and future of the company in providing competitive advantage”. It is also essential to have formal internal and external technology networks of key contacts who “are knowledgeable of a particular technological area and provide comprehensive expertise through their involvement in subsequent TI stages”.

Another step in the process is to determine the cost and performance criteria that the company will use to assess the technologies that compete against the key technology that the TI is considering. It is also important to take in details of business plans and market requirements, as well as external factors such as legislative, political, social and environmental issues.

A visual approach

Using these tools, the TI process that Arman and Foden suggest can create visual representations of competing technologies. They illustrate this with an example that shows that, when it comes to costs, the established technology of plasma arc welding is inferior to competing technologies.

The paper illustrates the TI process with a case study of “a world-leading provider of power systems and services for use on land, at sea and in the air, operating in four global markets – civil aerospace, defence aerospace, marine and energy”. Arman and Foden describe a four-session process that involved two workshops.

The end result is, the authors say, better and more informed decision making on R&D. Their intention, they say, was to “enable proactive searches for information on potential technology-related developments” The TI process can then assess these developments to that the messages reach the right people “with information, appropriate ‘alarm levels’ and the associated reasoning”.

Company culture

Arman and Foden see TI as a “people tool”. As much as anything, going through the steps that go into TI is itself valuable. Participants get a better understanding of what is going on, which should allow them to make better decisions. Whether or not this happens, the authors say, depends on a company’s culture. Companies that are equipped to “technology management processes” will get more out of TI than those that lack these resources.

Arman and Foden believe that “The deployment of TI strengthened the company’s ever-developing view on the importance of tools, particularly within the early stages of technology management.” The techniques proved so successful that “TI now forms an integral part of the company’s technology management activities and has been captured as an internal ‘How-To’ document.”

When Professor Mike Gregory started to plan to move the Institute for Manufacturing (IfM) from the mostly subterranean old building it shared with rats in the middle of the city, it might have looked like a final fling for a dying activity in the UK. Back then, some four years ago, just about the only people that governments listened to when devising economic policy were the masters of the universe in the financial sector. Manufacturing in noisy factories was yesterday’s way of making money.

By the time that Cambridge was ready to invite the Duke of Edinburgh, who describes himself as “the world’s most experience plaque unveiler,” to officially open the IfM’s new building, manufacturing was back in fashion. The attempts to revive the economy after the recent implosion of the financial system not only involved desperately shovelling money into banks, there was also support for manufacturing, in the shape of ‘incentives’ to keep open car making factories.

The M word now features regularly in politicians’ speeches who seem to have suddenly realised that making things is still a sizeable chunk of the UK’s economy. A select committee of MPs was one of many posses of politicians to point out, in a report earlier this year, that “In 2008, it was the world’s sixth largest manufacturing nation” and “In 2007, it was the eighth largest exporter of manufactured goods”.

Just this week, Lord Mandelson, the Business Secretary, complained that “we sometimes have a glib notion in this country that we don’t really make anything anymore, that we are no longer an industrial economy,” a notion that he dismissed, albeit in the context of the motor industry, a major importer of manufactured goods. He also announced new investment totalling £22 million “to further advance the development of ‘composite’ materials”

Another change since all that Gregory had to show of the IfM, a part of the engineering department at Cambridge University, was an architect’s model, has been further confirmation of China’s central position in manufacturing, with even more companies moving production to Chinese factories. If anything, this just confirms IfM’s steady move away from concentrating on the nuts and bolts of manufacturing, how to introduce robots on to the factory floor, for example.

China’s rise as a manufacturing giant has also provided the IfM with more research ideas. One outcomes was the report “Understanding China’s manufacturing value chain”

It might seem “a bit sad” as Gregory puts it, but “we like factories. So the robots, top of the line kit from Japanese manufacturers, still have a home in the new building’s automation lab. These days, though, the robots work alongside researchers who cover the “full cycle, from understanding markets and technologies through to products,” as Gregory said at last week’s opening of the new IfM on Cambridge’s west campus.

Unlike the buildings you traditionally associate with the university, those on the mostly undergraduate free west campus are more likely to appeal to makers of modernistic science fiction films than period movies. The new £15m home, with its ultra-green environment rating, might be a million miles from the IfM’s old home in the middle of the city. IfM now sits alongside other new Cambridge ventures, such as the IT department’s William Gates building and the Hauser Forum “a focal point for entrepreneurship and technology transfer”.

Like these other buildings, the IfM’s new facility gets its name from a major donor. Dr Alan Reece, founder of Pearson Engineering, which develops “combat engineer systems and equipment,” chipped in with a £5 million contribution to the building costs. A further £5 million came from the Gatsby Charitable Foundation, the vehicle that Lord David Sainsbury uses in his efforts to give away “at least £1 billion” during his lifetime, adding to £7 million or so that it has put into the IfM since 1991.

The manufacturing label hasn’t been an accurate reflection of everything that IfM does for some time now, which explains why it has added “technology” and “policy” to its banner heading. With 240 researchers and other staff, up from 50 a decade ago, the IfM also houses the Centre for Technology Management and is active in studying such hot topics as open innovation, for example.

You have to admire the Research Councils for their persistence when it comes to urging the researchers they support to pay more attention to what happens to all that new science after they have sent off the inevitable research publications. The Engineering and Physical Sciences Research Council has just told us that it is putting £55 million over the next three years into grants for 12 Knowledge Transfer Account and 13 Knowledge Transfer Secondments.

The cash involved ranges from £450,000 to £8.3 million. But this isn’t just a case of lobbing money at a bunch of academics and leaving then to get on with it. EPSRC’s announcement says that “An essential element in the success of these grants will be universities and the potential users of research outputs being involved together in setting strategy and targeting resources.”

EPSRC’s web site lives up to is arachnid tag, so you have to follow a lot of threads to land on details of these grants. Do so and you will find that the big one, a staggeringly precise £8,298,190, goes to the Manchester Business School and Professor Rod Coombs, a long time player in research into innovation, who even comes with the job title “Vice President (Innovation And Economic Development)”. The details of the grant tell us that among the things that Manchester gets up to is “joint horizon-scanning which focuses on helping researchers and users to explore technology/problem domains and develop novel strategies to solve them”.

Training, CPD as they put it, lapsing into the jargon that seems to be obligatory in such things, is also a part of the Manchester package. The details of the grant, which runs from 1 October to 30 September 2012, promise “Masterclasses on a given technology domain” that “will enable users to develop strategies to exploit it”.

Another big grant is the £5,749,200 for the University of Sheffield’s Knowledge Transfer Account. This time the Principal Investigator, a title that they use even when there isn’t much in the way of research going on to investigate things, is Professor Tony Ryan, who spent some years advising ICI, the now defunct chemicals, on what went on at the frontiers of chemistry research.

A part of Sheffield’s plan is its Virtual Corporate Laboratory. It describes this as “an exemplar programme to fuel the product pipelines of corporate partners; working on collaborative programmes to convert University R into company focused D”.

There is stuff in Sheffield’s description about the group’s philosophy. For example, they write of their belief that “the point of contact between the academic researcher and the end user is critical to effective knowledge transfer”. You can say that again. It is good to see that some universities appreciate this simple fact of life.