Risk and Reward: sustaining a higher value-added economy - Business and Enterprise Committee Contents


Examination of Witnesses (Questions 220-239)

BIRMINGHAM AND COVENTRY UNIVERSITIES

12 MAY 2008

  Q220  Roger Berry: That would be true of some other regions as well but that explains the difference in comparison with the South East and the East and so on. Obviously research comes up with ideas, those need to be commercialised if they are going to have an impact on the local economy and so forth. In your experience, from the university angle, what do you see as the main barriers to commercialisation of your product, research, ideas?

  Dr Wilkie: I am responsible for two areas at the university, just so you understand where I am coming from. I have a group of people that help university be more competitive and attract research funding, and also I am managing director of the separate trading company that the university operates in order to be able to license its intellectual property and receive payments for that. Historically Birmingham has focused much more on attracting licence revenues from its intellectual property portfolio than trying to set up, for example, a spin-out company, and I know you will hear something later on about spin-out companies which are successful in their own right, but they are a different way of a university engaging in the world outside. Interestingly, on licensing, just to come back to the question on barriers, if you have a good idea and you have it intellectually protected, first, you will sell it anywhere in the world, it will not just be this region that will benefit; those licence revenues, most of ours, for example, will probably accrue from abroad rather than just the United Kingdom. Secondly, discussions around that kind of interaction of the intellectual capital over HEI with the outside world historically tend to be the province of the larger organisation. So if I am trying to license something it is more likely that a large major multinational will be interested in talking to us about it than a regional SME, for example. Partly that is because there is an education process that needs to go on in your small and medium-sized enterprise, and let's not forget these are very busy people running moderately small turnover businesses who do not have necessarily the time or the understanding to find it easy to engage with someone such as ourselves, which is why part of the remit of not just the University of Birmingham but Coventry and Warwick and other universities in this region is to set up some sort of unit that is able to engage with the region as well as to do the international deals, and a large proportion of that is education of these businesses in the way in which they need to work to interact, and the effort it will take them to interact successfully with an HEI. One possible way of lowering that barrier would be to provide resource for those commercial entities to interact with the higher education institution. The INDEX voucher scheme was mentioned, we have also been offering another scheme out of the University of Birmingham which does exactly this, which has also been funded in our case by Advantage West Midlands. I am also relatively new both to this region and to this job; I joined the University of Birmingham after a complete career in industry last year, and my observation is that in the engagement or the promotion of the assistance of that process for a university to engage with the regional outside world, I find Advantage West Midlands very enlightened in that respect compared to other agencies that I have seen. That is licensing. Spin-outs are completely different because a spin-out company by its nature is very small and almost always very local, and there you are talking about creating lower barriers, and having the right kind of managerial capacity available on tap to help the academics or the people with the new good idea to take the business forward, and I think my experience in this region is we have a substantial pool of very experienced businessmen and individuals who could be involved in this—some are—and one of the things we could do in this region is expand that interaction in a similar way that, for example, Oxford is very well networked into its particular region. There is no prima facie reason why we should not be able to do that here; we just maybe have not done it historically as well as we could.

  Q221  Mr Wright: Moving on to the SMEs, part of the Lambert Review indicated several areas to be improved upon, one of which was the question of government support for business research and development in SMEs. Evidence sessions we had in Cambridge, for instance, highlighted the fact this does not appear to be working, whereas alternatively in the States, for instance, they have an amount of protection for funding of SMEs. It has also been highlighted by many of the other universities that we have this particular problem about the lack of money. What do you think we can do to improve this particular area, as far as business R&D in SMEs?

  Professor Atkins: Is this a question about research into it, or assisting?

  Q222  Mr Wright: Assisting, but also into the innovation side.

  Professor Atkins: Well, I think there are a number of things that could be brought forward and, again, it is a question of barriers coming down in large measure. Michael and Ian have both mentioned the INDEX voucher scheme, and that does seem to have quite a lot of potential to me. At the moment it is limited effectively to product consultancy: I think it could be extended to knowledge transfer consultancy, high level skills training and so on. That is one area. A second, I think, is around better ways of enabling SMEs to get access to very high quality kit, and very high quality skills to run that kit that they cannot afford themselves. For example, we have a metrology lab here, which is again part-funded through government sources and through Advantage West Midlands, and that does enable SMEs who are in the very high value game to get the consultancy and to be able to bring their measurement problems to the kit here on campus, kit they could never conceivably afford.

  Q223  Chairman: Metrology is measuring, is it?

  Professor Atkins: Yes. It is not the weather! It is measuring, and there is a range of SMEs that use that centre, and the big guys as well.

  Professor Popplewell: We have a constant flow of small true SMEs from the West Midlands and further afield who come to the centre both for training and for consultancy and testing out of ideas. The main observation we would make about them is that most of them do not have a great deal of understanding of what they should be measuring or how, and they get a lot of benefit from discussing the possibilities and the technology and the underlying theory behind that technology. That is at the SME end. We also run courses on metrology which are franchised by the National Physical Laboratory through our centre, and those are delivered again to SMEs and to slightly larger organisations such as Rolls Royce Aero-engines. We take the consultancy a little bit wider than that and get into fairly cutting edge stuff as well. We do not do cutting edge research but we also work with the International Thermo Nuclear Energy research project based in Grenoble, which is attempting to build one might say yet another fusion reactor to produce energy, but it is a very big major international project with something like a 30-year time horizon, and we are providing a lot of input to how they would measure their reactors and ensure they are assembled as they should be before they start making bangs with them.

  Professor Marshall: In terms of value added, certainly in the manufacturing sector metrology is an example of a skill where most SMEs probably do not have enough on-the-ground staff who have that skill, so they need to be able to get access to it when they need it and to turn it off when they do not. But again, if you look at development in that area of just pure measurement, most of the higher value businesses that exist in and around Coventry have some need for it, and that ranges from the SME population up to the large manufacturing companies. The large manufacturing companies can take care of themselves, as you would expect, but the small to medium-sized need access to facilities, resources, training and expertise and they need it today and now, not in three weeks or three months' time.

  Q224  Mr Wright: There are also increases in terms of the start-up and the development stages and beyond that, in terms of product development or even service.

  Professor Atkins: Absolutely, and the point I made before, which is that the assistance that we give to SMEs is increasingly around process and service, and not just around product I think would be a trend that many universities would echo. We do about six thousand assists to SMEs each year, that is a pretty high number. Within that it ranges from the kind of work at the metrology lab through to working with a micro developing their business plan to go to get funding from a bank. So there is a whole range out there that we can get involved with. I think our Institutes are one probable way forward for us in terms of a model because they combine space for SMEs, and applied research and the students on placement. The students are pretty much involved in working with those companies, and then those companies tend to take on that high level graduate, as an employee, and then you begin to get a virtuous circle, because often these micros and SMEs have not had graduates in their labour force until that point. So that is another quite critical area, and the more we can get real projects sourced from SMEs into the university and students working on them and then reporting back to those SMEs on what they have done, the more I think it is easy to get those SMEs across that boundary between ourselves and the SME. It seems one of the major ways to facilitate progress.

  Q225  Mr Wright: In terms of the United States, do you think there is more of a case for ring-fenced funding for SMEs in this direction, rather than just overall?

  Professor Atkins: What we observe is there are lots of different pots and they come and go. The point is that we do not have a consistent pot that you can really plan around. Rather for two years we are going this way and then oops, we have a bit of money left in the ERDF, and suddenly you have to rush to get projects in. So it is not steady and coherent and therefore does not very easily lend itself to the kind of planning you might want to see in terms of that engagement. We do get steady funding through HEIF from our Funding Council which is very important.

  Q226  Chairman: I do not know whether it is just what we have seen in Coventry, but there are quite a lot of examples of your university providing services of one kind and another to the SME sector—design, marketing, metrology—where they are coming here either for free or paying for metrology services.

  Professor Popplewell: In some cases.

  Q227  Chairman: Does that mean they are getting all the R&D they need but it is hidden entirely from any measurement system, because you are providing it and it does not show on their books?

  Professor Atkins: Yes. That would be a fair analysis.

  Professor Clarke: Anecdotally, it looks to us as if an SME is more likely to come to a university for assistance if it is being run by or heavily influenced by graduates. That does perhaps suggest that universities of all kinds look a bit inhibiting from the outside, or it may not be obvious where to go to, or indeed even the question to ask. I well remember spending a day with a metal-bashing SME in the Black Country hearing a managing director who was not a graduate saying that he had been to every university in the West Midlands and was now working through the East Midlands one by one trying to get the answer to the question he had and the help he wanted, and I got him to try and explain and he clearly had a great deal of difficulty in articulating the question, and because he had some difficulty articulating the question he had gone to the wrong people, university after university after university, and he felt as if he was banging his head against a brick wall.

  Q228  Mr Wright: And how did he resolve that?

  Professor Clarke: Well, he was hoping that his conversation with the University of Birmingham was going to solve it, but it did not.

  Q229  Mr Wright: So what was the solution?

  Professor Clarke: I got a group of people to sit down with him and talk through what the essence of the real problem was.

  Q230  Mr Wright: Whose responsibility should that be, to make sure that that business or that SME is aware of where they can go to? RDAs?

  Professor Clarke: BusinessLink on the one hand and I think probably in this region we are quite good, as universities, about passing the inquiries one to the other where there is expertise that we know would be helpful.

  Professor Atkins: The Manufacturing Advisory Service is the other excellent service funded by Advantage West Midlands, and all the BusinessLinks are coming together. Having said all of that, at the end of the day there is no substitute probably for more graduates going into those SMEs and being able to work the boundary from the other side.

  Q231  Mr Oaten: On Peter's point, you said there is this hidden amount of R&D going on. Is it possible to have some estimate of the value that is put on this amount of R&D that you are putting in? Also how do you decide if you are going to charge or not charge?

  Professor Atkins: That is usually governed by whether there is a scheme that can be used to fund that particular piece of work. So that is all sorts of European-funded schemes and Advantage West Midlands funded schemes and others too. I think probably the best way of putting a value on it would be to look at the university's returns under the Higher Education Business and Community Index, which we have to make each year, where we have to put a value on our interaction with SMEs. And I can tell you, for example, ours from last year, (and Birmingham no doubt have their own data to add), we assisted 6000 SMEs and 600 bigger organisations last year, and the total income that that generated one way and another was over £2 million.

  Q232  Mr Oaten: But it is the work you are doing for nothing that I am interested in.

  Professor Atkins: The way one would get at that would be to look at the funding schemes that these SMEs are coming in on. It would have to be tackled from that direction.

  Q233  Mr Oaten: Is it more than two million?

  Professor Atkins: I would have thought so. In aggregate across our universities a huge sum.

  Mr Oaten: Significant.

  Roger Berry: Very.

  Q234  Mr Wright: In relation to HEIF, can you value how successful HEIF has been in assisting knowledge transfer, and can you give us examples of where that has made a difference?

  Professor Clarke: I am normally averse to hypothecated funding streams; it does not help us in our management of our institutions. However, HEIF and its predecessor HEROBC, struck me as one of the exceptions that in a sense proved the rule, and I think I would want to articulate it in terms of the culture change which has been the effect of that funding. If you turn the clock back 8-10 years, certainly in my kind of institution and I am sure the same in many respects would be true of Coventry, academic colleagues were not immediately thinking about the commercialisation of what they were doing, the commercial value. What that funding stream has done, I think, has been really to shift more than its designers would have guessed, I guess, the culture to make academic support staff and so on aware of the commercial possibilities of their teaching, their research and their other activities. I guess it is fair to say that we have all looked for different ways of finding levers which we could pull to use HEROBC and HEIF funding to that end, but I doubt whether there is an institution around which has not shifted significantly. To be specific, the first thing we did was to allocate some of our original HEROBC income to pay for a group of people who are best described as boundary spanners, people who either fought well and truly in academic community as teachers and researchers, but who also had a foot in the business community, and their task was to help their academic colleagues find ways of exploiting what they were doing in the business community, working with the business community to help them identify ways in which they could use the assistance of the first category. Now, I will not say that every one of those appointments was as completely successful as it might have been, but taken together they have moved us on a very great space in a relatively short space of time, and what has been interesting has then been to see the parts of the university, because after all we are a very big institution, untouched by those original appointments—preferably I would want money from the Funding Council to do the same thing but actually prepared to spend our own money to make similar appointments to ensure that activity is going forward.

  Professor Atkins: We would echo that. We have achieved 50% year-on-year growth in the income obtained through partnering with industry and commerce and to some extent the public sector through HEIF funding. Like Birmingham we established a team of business development managers in every faculty. Yes, they have also been transforming our culture. The other successes I would point out from the HEIF funding that we have had, and Birmingham as well, are that as a collective the universities in this region decided to put some of their money into an investment pool which could support early stage development of commercialisation, and that has been very successful for Coventry University. We have seen a number of disclosures taken through to early stage development and then on to proper spin-out or licensing as a consequence of that. We have also used some of our money for what is known as the Speed programme. This gives undergraduate students who have good business ideas up to £4,500 to commercialise those ideas while they are students on course. We have something like 80 students on that Speed programme from Coventry, and that is beginning to pull through into a very much more entrepreneurial outlook amongst the students, and many more successes in terms of potential spin-outs from those student cohorts. So at every level it has touched the student experience and the academic experience, it has certainly improved our relationships with businesses large and small. We would say we only wish it was twice the size.

  Q235  Mr Wright: So it is a bid for more money then?

  Professor Atkins: For us the RAE is not particularly significant; we are not a university that particularly does discovery research. Cutting edge innovation, yes; discovery not so much. But with the kind of work we do we are capped at the top end of HEIF—we are one of those universities that has reached the maximum, and we could do twice as much.

  Q236  Mr Wright: Overall, then, the programme is a successful programme?

  Professor Marshall: Yes. One of the issues certainly for SMEs is to have access for a translator, someone who can take you through the corridors to the right person and then broker a meeting which means the SME comes out knowing what the problem is, what the issues are, and so does the academic. One of the bigger investments that we have made is into this translational capability; we have put into every faculty business development managers, business development officers, and, indeed, like Birmingham, some faculties are now putting additional resource in because they have proved to be so useful. For the SME, coming in through the gates of the university, if they have no experience of university at all it is very daunting, and having people who have a foot in the business camp and in the academic camp who can work as guides and translators certainly is a great help.

  Professor Clarke: And the other way around, because the most brilliant researcher is not necessarily the best communicator—and nor should we worry about that, provided there is somebody to help in that process.

  Dr Wilkie: But what you are also hearing, apart from the translation and the boundary management issues, is the need for ourselves as HEIs to have the wherewithal to generate the right internal infrastructure to deal with those things, and it will be different for different HEIs in different places on the delivery chain, but nonetheless we need that internally. It is very easy to sell the services of a university in the general sense, the sales pitch is not that difficult. The hard part is making sure you create a project which is properly managed and which that particular institution is able to deliver in a way. This is the normal tension in business between marketing and sales and production people, but in our case it is the tension between our ability to sell the HEI outside and the academics' ability within the institution to be culturally aligned so we can deliver what we promise.

  Professor Atkins: That is very important, and one of the things we have invested our HEIF funding in is project managers where, when we have got an SME or even a big company and the academics together, we put in a project manager to make sure that we deliver on time and so on. Because a lot of the feedback we were getting, and I think this is quite common, is that companies like the cleverness and the knowledge of HEIs, they do not like sloppy delivery.

  Q237  Chairman: I am now very sorry you are not joining us for dinner this evening, Professor Clarke, because I want to sit you down with QinetiQ and see whether you are in competition or collaboration. I can see now they are in the same game as you!

  Professor Clarke: Undoubtedly collaboration. Interestingly enough, as you will hear from QinetiQ when you visit tomorrow, one of their new projects is about trying to build links with the research base to do what after all they used to do but no longer are in a position to do which is fundamental research.

  Q238  Chairman: Is there anything you want to say about that issue publicly at this stage?

  Professor Clarke: Just to say that I think QinetiQ is a really interesting example of an organisation which is pitched somewhere on the spectrum between full market and fundamental research, and they are developing a very interesting facility to take part in the translation business.

  Q239  Chairman: Which has your full support?

  Professor Clarke: Absolutely.


 
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