Examination of Witnesses (Questions 67 - 99)
WEDNESDAY 29 APRIL 1998
MR
JOHN
CHISHOLM
and DR
ADRIAN
MEARS
Chairman
67. Mr Chisholm, Dr Mears, may I start by apologising on
behalf of the Committee and its Members for the late start of
this Committee. It was for circumstances apparently beyond our
control for the time being. We do like to start on time and we
apologise for having kept you waiting outside for ten minutes.
May I welcome you both to the Committee. Thank you for coming
and helping us with this inquiry. Mr Chisholm, we will direct
our questions to you in the first instance. If you wish to pass
them to Dr Mears then we would be delighted to hear from him and
as we get under way we might start directing a few to Dr Mears.
Could I ask you in the first instance to introduce yourself to
us and I shall invite Dr Mears to do the same.
(Mr Chisholm) I am John Chisholm and I am Chief Executive
of the Defence Evaluation and Research Agency. We tend to say
DERA with a soft "e".
(Dr Mears) I am Adrian Mears and I am the Technical
Director and Chief Knowledge Officer of DERA.
68. We were fascinated by, and we had ten minutes to discuss,
the title Chief Knowledge Officer. Are you Officer of Chief Knowledge
or are you Chief Knowledge Officer? What does it mean?
(Dr Mears) Well it relates to the increasing importance
of knowledge management. DERA's product is knowledge. We take
in knowledge from the world of science and we provide knowledge
to the MoD primarily.
69. So knowledge is your commodity?
(Dr Mears) Knowledge is our commodity and therefore
its management is crucial to our business.
70. That helps us. Thank you very much indeed. Perhaps I
can start. Can I address my comment to you, Mr Chisholm. You will
know that this inquiry is looking at why it is in shorthand terms
that we have a good science base and seem to be good at inventions
but do not seem to be always able to translate those inventions
into developments that have an economic or commercial use and
we are trying to find out why. We have heard much from our witnesses
that there is a development gap in the civil sector that prevents
some of those inventions being turned into exploitable goods.
We wondered if you had that similar situation within the defence
industry and, if not, how you overcame that particular gap?
(Mr Chisholm) Well it is a very good question of course
and one which develops a theme on both sides, but turning to the
defence side the advantage that the defence community has is continuity
of a customer base through the development process. The end user
customer is the Ministry of Defence in this country and that to
a degree sponsors the development from its earlier stages to actual
purchase of equipment at the end of the day. It is not a wholly
linear process and I would not want to give you that impression
because there are phases through which development has to go.
It passes from our labs into industry and within industry it has
to go through a build up of people who make components and devices
into subsystems and eventually into total equipments. So there
are a number of transfers in the process but the advantage that
the military has over the civilian scene is that there is a continuity
of customer interest, a customer that actually wants to see all
that happen. Therefore, there are funding mechanisms available
which mean that a fair proportion of what is originally researched
does eventually yield product at the end of the day.
71. Yes, because you are tailoring, as you have said, your
research work through to development work and there is hardly
a gap; it is a continuum in a way. What if you wish to branch
out, as you tell us you do, into civil application? Do you find
that sometimes you have got ideas that you think should have civilian
use; you do not quite know what they are but with a bit of effort
and financial backing there should be a civilian commercial application
for it, but it just stops dead either through lack of funds, lack
of interest or lack of effort?
(Mr Chisholm) That does happen. Our organisation is
a comparatively large organisation. We have 250 or so specialist
teams in the organisation and within that there is a constant
vibrant flow of new ideas and new concepts which are being developed
and researched. The opportunities for exploiting them sometimes
come in the way that you express which is a discrete piece of
intellectual knowledge which could be developed into a discrete
product. It can just as easily be an idea for a process or an
idea for an application which also has civil exploitable opportunities
but not necessarily as a particular product. The part that you
were referring to is in many ways the most difficult where you
have a discrete and exploitable product. Can I give you an example
just to help illustrate the point?
72. Please do.
(Mr Chisholm) When I was on my very first tour of
laboratories when I took up my job in 1991 in one of the laboratories,
I was shown a flat piece of material with a probe behind it. The
story was that this came out of the research that was being done
for the Merlin helicopter to fly long distances and to carry a
lot of military equipment with it. It had to be made from lightweight
material, as little as possible, and it had to be strong. The
helicopter was a successful project. The trouble was the pilots
got deafened and then we had to do another project to stop the
pilots being deafened. One of our scientists wondered why it was
the pilots got deafened in the helicopter so he took a piece of
material, put a probe on to it, played something on it and it
turned out to be a perfect loud speaker. When shown that, that
struck me as one of these classic examples; an idea that could
make a product and furthermore a very good one because in order
to exploit a technology into a market you have to have an industry
and a channelled market for that to happen, ie, companies in the
United Kingdom that have channels into that market. As we all
know the United Kingdom is not absolutely flush with companies
which are strong in the consumer market but in the loud speaker
business we are well placed.
73. And the end of the story?
(Mr Chisholm) The end of story is that we went out
and marketed it to the loud speaker companies. A company called
Verity picked it up. They make or made Wharfedale emission speakers.
Over a period of five years—this is how long these things
take to go from an original idea to a fully developed product
that can be licensed and sold—they sunk more than the net
worth of their company into that product also establishing rights
all round the world and channels all round, that sort of thing.
The good news is that the City backed them despite the fact they
make losses at the moment and their turnover went down because
they were developing this product. They are actually worth many
times more than their turnover on the London Stock Exchange. What
that demonstrates is that if you have a good idea and you have
a company that has got a position in the market that is able to
develop it, it can be done, but those are quite rare because you
do not often get that combination of circumstances lined up.
Dr Gibson: Is that because this was just a crazy boffin that
saw it? They must see lots of things like this that they could
develop if there was a culture which encouraged it. You say it
is fairly rare. How rare is rare in that kind of environment where
people are making discoveries and finding things out?
Mr Turner
74. I seem to remember hearing about a flat television screen
that could be followed up from DERA. Is that right?
(Mr Chisholm) That has not got to that final stage
yet.
Chairman
75. Let us have an answer to Dr Gibson first. How rare is
rare was his question.
(Mr Chisholm) It is not rare like it is only in one
or two circumstances, but it is awash with opportunity which could
be developed in that way.
Dr Gibson
76. That is a lot.
(Mr Chisholm) We have 250 specialist teams who all
have several of them. There are a lot of possible opportunities
within the organisation. There are three areas where we have got
to work at improving connections. The first is within DERA. We
come from a culture of secret research establishments and cultures
are long-term things to change and we are working hard at improving
that and providing stimulus and motivation for scientists to think
of the exploitation of their technologies. Secondly, it will not
be we who manufacturer and sell things. We have got to find partners
who are able to manufacturer and sell and so we have to find companies
in industry who are willing to find someone else's technology
and make it into a product for themselves. Surprisingly, we find
that quite difficult, though we work hard at it. Thirdly, we have
got to have a better networking process to link those two together
and we are working at that, too.
Chairman
77. I am sure we shall come on to that in the course of questions.
One last small point before Dr Gibson asks his question. In this
continuum that you described to us at the beginning, Mr Chisholm,
there may be an occasion when you have something you are developing
and you have got part way through the first part of this continuum
which is just the assessment phase before whatever you get to
in the development and you suddenly say: "This isn't going
to work for military application. It just is not what we want.
But with a little more effort, probably another two or three months
research on this, it could actually be a fairly significant civilian
application." What do you do at that stage? Do you drop it
off because it is not going to be a military application or do
you invest a bit more public money in it for the next two or three
months thinking there could be a good civilian spin off?
(Mr Chisholm) You touch on an important point. I would
not describe it in quite the way that you describe it. Rather
than saying this is not going to work for military approach, what
we see is that things which we are working on which have clear
military goals could possibly have a civilian benefit as well.
In some parts of our programme for historic reasons we have had
the opportunity of DTI funding alongside the MoD funding. You
find our best links with industry in those areas. The CARAD programme
has been very effective indeed in ensuring that there is the maximum
leverage off the MoD programme into civil applications.
78. I do not think you quite answered my point. I am saying
that you know at a certain stage it is not what you want for your
military clients but you see that with a little more effort there
could be civilian value. What do you actually do? Do you stop
or do you continue on?
(Mr Chisholm) As I was trying to explain, if we have
a source of other funding, for instance from the DTI, which makes
it legitimate to continue, that is a source.
79. I misunderstood you. I beg your pardon. Thank you very
much.
(Mr Chisholm) I do have within the trading fund resources
which I can invest the Enterprise Fund and that is money that
we have earned from the private sectors and the Government gets
us to invest it back in that community. So we can and we do spend
comparatively small sums of money on trying to achieve that linkage.
Dr Gibson
80. I want to mention the Defence Diversification Agency.
As you know, there is a Green Paper out for consultation at the
minute. This Agency is going to focus on the wider exploitation
of existing technologies. To what extent do you think it would
also have a role in overcoming this invention exploitation barrier?
Is this one of the initiatives that you were talking about earlier
in making these things happen?
(Mr Chisholm) The concept that is spelt out in the
Defence Diversification Green Paper rather addresses the third
of the three things that I spoke of, which is the linkage issue.
It is quite clear to me that we need to establish richer links
of all sorts. Like any network, it is going to have lots of redundant
links and you cannot tell which ones are going to work well, but
the more links you can put in to the network the more chances
you are giving yourself of getting hit. The Defence Diversification
Agency is there to build upon the experience which we have already
had in things like the south-east of England Relay Centre, which
we do for the European Community and to provide a more broadly-based
infrastructure for giving us those links so that people in industry
or our own laboratories can use that as a networking opportunity.
81. There are things out there that you might pick up on
as well and you need to know about them. As well as giving things
back, it is a reverse process. Do you think the Diversification
Agency will help that process?
(Mr Chisholm) Like all these things, no one tool is
the magic tool which is going to be the complete solution, but
I am absolutely sure that a mechanism for achieving links of that
sort is very worthwhile.
82. Is the DDA going to have any effect on some of your initiatives
now, like your technology clubs, for example? Will there be any
interaction or crossfire between each other or what?
(Mr Chisholm) The way that the DDA is described in
the Defence Diversification Green Paper is that it provides an
oversight capability over all these mechanisms and draws it together
into a coherent framework. To a degree it does not describe anything
which we are not in some way or another already doing. What it
does do is put major impetus behind what we are doing. Lots of
virtuous things have been going on in the Agency over many years
but not necessarily with strong sponsorship. So what we are trying
to do is bring this all together in a coherent way.
83. A final coherence might be the Agency and the DTI, for
example. The DTI want to exploit research. How is that going to
work with the Diversification Agency? It is obviously part of
a network.
(Mr Chisholm) The DTI have an important role. They
already have programmes which they sponsor, like the government
regional officers, the LINK programme and all the rest which are
important tools. You do not want to duplicate all of that, you
want to find ways of building upon it and making it more valuable.
So the DTI have an important role through that. They also have,
as described in the Green Paper, a steering role in relation to
the directions that the DDA takes up. They will be part of the
Steering Group.
84. So the Diversification Agency will be the pivot for all
of this, will it? It will be its role to pull all that together
and you are quite happy with that.
(Mr Chisholm) Pivot is a good word.
Dr Williams
85. Could I ask about the dual-use technology centres? Could
you elaborate broadly on what they are and how successful they
are?
(Mr Chisholm) The dual-use technology centres, first
of all, capture those parts of our technology which are inherent,
the dual use, essentially technologies lower down the product
chain, materials and software in devices of one sort or another
where at that level of technology the application is some way
away and research in that area produces innovations that can be
applied to the market. Since we are doing that anyway and we are
at a level where the application can be in either direction our
concept is to open up those laboratories and make them more available
to other interested parties, particularly civil industry and academia,
to come and share in what we are doing. For instance, in the software
engineering centre, which is involved in both software engineering
and systems engineering, 20 per cent of the staff within that
come from industry and they are gaining benefit with us in the
technologies within. The SEC has recently done extra-ordinarily
important work in publishing standards really for the first time
in the United Kingdom in the area of systems engineering, a very
important issue for building major systems both in the civil and
the military area. Clearly having industry in that with us gives
them an opportunity to learn at the same time as we are learning.
86. So the information flow and benefits are both ways?
(Mr Chisholm) Exactly so.
87. Out of your total staff of 12,000, what proportion of
those are in these dual-use technology centres? Is it a very small
percentage?
(Mr Chisholm) The biggest one is the Structural Materials
Centre which is about 600 staff. The rest will add up to that
altogether. You will be of the right order.
88. In the order of 1,200, about ten per cent. Are you looking
for further areas for dual-use centres?
(Mr Chisholm) Yes certainly there are other opportunities
within the Agency for that and we are looking at our centres,
yes.
89. I noticed earlier in reply to one of Dr Gibson's questions
you actually used the word "awash" with ideas. Does
that mean for industry out there there are lots of possible spin-offs
if only the information people had within DERA were available?
(Mr Chisholm) I believe so, yes.
90. Finally, that person who developed a flat loud speaker;
is it possible for somebody with a good idea to leave DERA and
set up his own small company or if there was a team who was developing
something with a spin-off, is it possible for them to leave unrestricted
to develop that within their own small company?
(Mr Chisholm) Yes it is. We are trying to work out
protocols to make that easier and better understood. I am extra-ordinarily
keen that we become a vibrant source of such spin-offs and creation
of new kernels of growth within the economy. I am keen to see
that happen. There are difficulties with the fact that we are
all public servants and there are concerns within the public service
code about public servants earning profits as a consequence of
their employment and that is a difficulty which we are seeking
to find a way over at the moment. But in principle, we are very
keen for that to happen.
91. Right. I should ask as well about your partnership with
Rolls Royce in the CARAD programme. How successful is that partnership?
Is it affected by the impending take-over of Rolls Royce?
(Mr Chisholm) It is a different Rolls Royce. The Rolls
Royce we are talking about is the aerospace organisation. You
will get a chance to ask them that question yourself next week.
Our belief is it is very successful. When I write a list of major
corporations who make good use of us I put Rolls Royce near the
top of it. We have a system called Blue Book where together we
write down a list of all the research programmes we are doing
and all the research programmes they are doing and we prioritise
them and see how they can gain advantage from each other and we
look at everything we are doing and see how Rolls Royce can take
advantage from that. We believe that Rolls Royce capture most
if not all of the advantage of the research that we do.
92. I am a little surprised in your replies to us so far
that you at no stage have mentioned the problem of secrecy. Is
it perhaps no different to commercial confidentiality? If you
are in a partnership with a company it has strict regard for its
own. Is the fact you are operating within the defence sector not
a severe restriction?
(Mr Chisholm) There are areas of what we do where
it would be inappropriate to exploit in a commercial sense for
secrecy reasons, but they are actually quite rare. The majority
of what we do is very important for defence but is exploitable.
Chairman
93. Thank you very much. Just before I ask Dr Kumar to come
in, can you tell me out of interest where your Materials Development
Centre is?
(Mr Chisholm) That is at Farnborough.
Chairman: Thank you very much indeed. Dr Kumar?
Dr Kumar
94. When you are looking for suitable partners to take part
in your Civil Aerospace Research and Development programme, how
do you identify those partners? Are you looking for some technological
objectives to be met as part of your key reason?
(Mr Chisholm) The identification of partners sometimes
falls out naturally out of our military work in that we work in
specialist areas where there are relatively few companies. For
instance GEC and Rolls Royce are both big partners of ours because
they fall naturally into our sphere of activity. Where we are
looking rather more creatively for people who do not come from
that we have a variety of different techniques. For instance,
in the Structural Materials Centre we ran a three-day event where
on each of the three days we had different sorts of people who
came and up to 200 companies at a time went through our laboratories,
got a presentation, got data packs, got information as to how
to gain access to the information. On the first day was the big
companies, on the second day the academic world and on the third
day SMEs. Out of that dropped a number of projects and programmes
which have subsequently been followed up.
95. How many? Do you have any idea?
(Mr Chisholm) I cannot give a precise number but there
are a number which appear in the Green Paper which have resulted
in new products pretty much already.
96. The existing schemes that you have designed to promote
technology transfer, are they affected by the Defence Diversification
Agency and the Green Paper?
(Mr Chisholm) I do not think we would want to stop
any of the schemes we have got at the moment but rather to build
them more coherently into the framework of the Defence Diversification
Agency, particularly those organisations which are not normally
in our sphere of activity and find an easy way into that. One
of the difficulties of dealing with DERA is that it is a very
large organisation and it is easy, if you do not know your way
around, to find yourselves in the wrong place or to be given an
answer which is too complicated for your particular need. So a
route into the organisation which helps signpost you to talk to
the right expert so you can get to the thing which actually solves
your particular need is part of what the Defence Diversification
Agency will do and the Defence Diversification Agency will have
an inventory of the processes which we have available. If somebody
has a project which they would like funding on, for instance,
which they think would satisfy some of our programmes like Pathfinder
then the Defence Diversification Agency would point them to that.
If it is something where a group of companies can be got together
through a Business Link process or something like that, DDA would
point them to something like that. It is something of a telephone
switch to help organisations find a solution to their particular
need.
Chairman
97. Thank you very much. I would like to ask, if I may, Mr
Chisholm, a question about the Pathfinder schemes. Before I do,
can I just make sure that I am clear in my mind the difference
between the Pathfinder programme and the Priority Pathfinder programme.
As I understand it, the Pathfinder programme was more a dialogue
between your Agency and companies that had got an interest in
some of the development work you were doing, whereas with the
Priority Pathfinder, funds come into play and there is a jointly-funded
project or projects. Is that the principal difference, the funding?
(Mr Chisholm) Not quite. In both instances the Pathfinder
provides the opportunities for companies to make proposals to
us which we would fund or part fund. I should reinforce something
that is probably obvious to all of you, which is that we are a
service organisation ourselves. We bid for contracts from our
customers and we do not have a pot of gold to hand out because
we are feeling generous. So the Pathfinder process is a way, from
our point of view, of us providing better value to our customers.
To those people who want to participate in Pathfinder we give
an outline of the things which our customers are asking us to
do in a very detailed document saying: "These are the things
which we are currently being asked to do by our customers for
which we are looking for solutions. If there is something which
you are doing for the purposes of your business which happens
in some way to relate to those, then please come forward and make
a proposal." That is the idea. Normally when we go out for
support from industry we write a detailed specification and we
say: "Our customers have asked us to do this job and there
is this bit of it which we would like to subcontract. Here is
the detailed specification." That works alright. In Pathfinder
there might be a more value added way because industry might know
things which we do not and which did not go into our specification.
The idea was that they could propose for that. The difficulty
with Pathfinder as it currently stands is timescale. Our core
business is the Ministry of Defence which has a long-ish planning
cycle. In order for Pathfinder proposals to get into what we propose
to the Ministry of Defence they have to be offered to us 18 months
before we can actually make the contract with anyone. Most of
the industry is pretty bored with the idea 18 months later and
so the difficulty with Pathfinder is it tends to appeal only to
those companies who are pretty much into the defence arena already.
With Priority Pathfinder we thought it would be a better idea
if we latched on to some of the activities we know we can definitely
fund and reduce it to a six month time-frame and we also added
in the idea that when industry made these proposals to us they
should make them joint proposals between industry and one of our
labs. This was trying to get this networking going. By happy chance
we have found that it has worked very well.
98. You say in your memorandum that, under the Priority Pathfinder
scheme, "projects to a value of £16 million have been
selected and all of these will be under contract by the end of
March". In actual fact, were they all?
(Dr Mears) No, there is one which is not under contract
and that is because it is with one of the major civil companies
who are bringing a very large amount of civil IPR to it.
99. IPR?
(Dr Mears) Intellectual property. So it actually breaks
new ground in terms of contract arrangements. So in that particular
case, although we had an aim to get them all in place by the end
of March, we relaxed it in just one instance because of the precedents
that it was establishing.
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