Examination of Witnesses (Questions 500-519)
TECHNOLOGY STRATEGY
BOARD
20 NOVEMBER 2008
Q500 Chairman: On the question of
funding, I have some reservations personally—I do not know
whether I share them with the Committee or not—about the
25% you are spending on creating innovation climate. Everyone
seems to be out there doing their bit to stimulate interest in
enterprise, engineering, science, mathematics. Explain to me how
that 25% of your money is spent and would it not be better spent
on a bigger, more coherent pot with all different players including
the chartered institutes and universities who all seem to be doing
their bit here but all very fragmented.
Mr Gray: I wear a number of different
hats outside the Technology Strategy Board and I share some of
the concerns that you may have about the promotion of the science
agenda, the STEM agenda and the cultural side of things. In the
innovation space and the innovation climate there is a key role
that we can play. There are a couple of very key initiatives that
are central to our strategy, one is what we have called the knowledge
transfer network mechanism. There are some 24 knowledge transfer
networks. We are reviewing the effectiveness of those as we speak.
I think there are some 35,000 members of the knowledge transfer
network type mechanisms covering a broad range of disciplines.
That is a key initiative. The other key initiative that we have
underneath the innovation climate is what we call knowledge transfer
partnerships. Knowledge transfer partnerships came out of the
teaching company scheme. It is a very long standing type of initiative,
an initiative that brings small business and universities together.
There are some 975 KTPs and we have actually committed to double
the number. When we look at the innovation climate there is a
broad aspect of culture and recognition, but in terms of the budget
itself it is very clearly targeted against some key initiatives.
Q501 Chairman: That is on innovation
and marketing strategies, on actual tangible deliverable things
that will actually promote that climate.
Mr Gray: From the knowledge transfer
partnership scheme you will see real delivery.
Q502 Chairman: Are you sure you have
the skills to enable you to do this leadership role, the technology
enabled innovation? Are you happy about your resources and the
ability of your staff?
Mr Gray: The organisation is a
new organisation. It has a fascinating set of dynamics because
of it. As we said in an earlier answer we have brought people
in from business so there is a very broad range of skills in the
organisation. Twelve months on we have probably spent the first
six months very much transitioning across some legacy aspects
of what were previous DTI collaborative programmes and we have
proved that we are capable of doing that. We did not drop any
balls. Business came back and said we had done a very good job
of doing that. We spent the second six months in terms of establishing
a strategy. The team is out there every day of the week in terms
of talking to business, out in the regions. We have an extremely
good team. It is a dynamic arrangement and coming back to a key
theme of the organisation it is keeping that sort of dynamism,
it is keeping that business currency live.
Q503 Chairman: When Tony Wright asks
his questions we will want comparisons with DARPA in particular
because their model is a fascinating one. Is there a risk, do
you think, that because you are so focussed on technology-enabled
innovation you look at all the sexy stuff and the stuff that we
all say is frightfully important—life sciences, nanotechnology
and all these things—and actually turn your eyes away and
therefore all us policy makers' eyes away from the really important
stuff that is going on elsewhere in the economy? The service sector
is huge, for example; we have had evidence from NESTA on that.
There are also very important but maybe boring and dreary sectors
like food manufacturing. I have a list here of value-added sectors
of the economy. There are some very dreary things which are frightfully
important in underpinning our economy. Are you the glittery tinsel
that distracts our attention or are you actually making a really
important contribution to our future?
Mr Gray: Again we would see our
organisation being positioned in a very substantial leadership
role across a much broader range of innovation topics than perhaps
the title of our organisation, the Technology Strategy Board suggests
it is recognised and it is important that we actually focus on
the actions and not focus on the name. The Technology Strategy
Board has a name; it is misleading in the context of one of our
key objectives, for example, we have identified, creative industries,
the financial services sector as being hugely important for us.
That is a departure from what previous DTI collaborative R&D
programmes might have recognised. We are very much moving into
that service territory. Of course when we come back to some of
the more conventional technologies like manufacturing technology
it will not be lost on people that a lot of the big major manufacturing
players are actually involved in the service economy and their
business model is much, much more than just traditional manufacturing
and production. It is the whole business of the service economy.
I see us as an organisation playing a strong role right across
the innovation spectrum.
Q504 Chairman: Would you like us
to re-brand you, make a recommendation for a new name? Or do you
think you have your name now and you will live with it?
Mr Gray: I think you can spend
a lot of energy and time in terms of—
Chairman: — is the correct answer!
Tony Wright?
Q505 Mr Wright: You picked two areas—technology
areas and key application areas—but how do you actually
make those priorities? Does this really result in the government
picking winners?
Mr Gray: If you look at the selection
criteria we have, we have identified technology areas, as you
say, and we have identified application areas. They have come
through a consultation process with trade associations, with government
departments, with Foresight type committees. The prioritisation
has come from a number of different areas. What we have identified
is those areas that we think we are world leaders, where we have
real world leading capabilities. We have identified technology
areas where we can build on excellence; we have identified application
areas where we can identify market led challenges, government
societal challenges which are massively important drawing on information
from many areas. It is not about picking individual companies;
it is about choosing areas where we think we can make a real difference
in terms of UK economic benefit.
Mr Bott: The areas that we put
in the strategy are the sort of things where everybody says that
it is the detail underneath that counts. It is what we pick in
any of those areas that makes the real difference. We work very
hard. We analyse those areas, we publish strategies openly on
the web; we consult widely through workshops and we get back from
the industry what they could achieve and what the barriers are
to achieving those absolute goals. We are actually putting our
money where it has the maximum effect on the productivity of UK
businesses.
Q506 Mr Wright: We travel around
and in many of the developing countries—India, China—and
the States, they are similar areas where they are really high
profile in terms of the universities and the graduates coming
through. They are all aiming towards bioscience and nanotechnology;
it is very competitive out there. Was there something else that
we should probably have added in? Did you consider other areas
that we should have looked at?
Mr Gray: What is quite interesting
from my perspective is that if you look at the themes in our strategy
we have identified the three investment strands: the technology-inspired
innovation agenda, the challenge-led innovation area and the innovation
climate. The technology-inspired innovation is some fairly classic
technology areas but when you move into the challenge-led approach
it is, by its very nature, multi-disciplinary. Medicine and healthcare
are drawing on technologies in the electronics business, technologies
in the pharmaceutical business and the bioscience business. The
challenge application areas are a real way of pulling in together
multi-function and multi-disciplinary subjects all working together.
That to me is one of the key differentiators again between the
way the Technology Strategy Board is approaching the innovation
agenda rather than just a more conventional technology push type
of approach.
Mr Bott: To give an example, the
quantum technologies that were mentioned earlier by the Chairman,
we are looking at that and the emerging technologies area. We
are certainly aware of how quantum electronics can change things
in the electronics, photonics and molecular systems area. We are
also aware in the network security innovation platform of how
quantum cryptography can probably change the way we think about
authentication. It is a very complicated picture and the way we
present it to the outside world is actually quite important. We
give people the absolute opportunity to show their creativity
in the way they address the problems or the development of capabilities.
Q507 Mr Wright: So really we are
not picking the winners, it is challenges. Also we would not say
that anybody who is not on that list is a loser.
Mr Bott: Some of the very cleverest
ideas come in from out of field.
Mr Gray: It is also fair to say
in response to the specific question of have we missed anything
off, this of course is an evolving strategy and the whole issue
about the challenge-led approach is to identify future challenges
as they arise. By no means is it a closed book.
Q508 Mr Wright: Moving on now, we
did actually visit DARPA in the States earlier this year, as the
Chairman mentioned earlier. Do you compare yourselves with DARPA
when pursuing the challenge-led innovation?
Mr Gray: There are a number of
similarities and there are a number of very significant differences
between us. I think the similarities revolve around the issue
of culture, the issue of drawing people in from business, people
who have ideas, supporting ideas, moving them forward. There are
similarities in the culture of risk, increasing the risk bar.
The things which are fundamentally different are that DARPA, as
the name itself suggests, is focussed around defence and it is
focussed around defence procurement. There is a very, very significant
difference in terms of the scale of funding associated with DARPA
and the Technology Strategy Board. I met Dr Tony Tether when he
was across in the UK to try to identify those parts of DARPA which
we could really import and build on in our own model. It was quite
interesting listening to him that some seven or eight years ago
DARPA actually did look at effectively dropping the "D"
and looking at a broader remit, but it did not work. There are
lessons to be learned from DARPA; DARPA in its own right is not
necessarily the absolute answer for what we need to do here in
the Technology Strategy Board but we are very closely watching
what they are doing. We are connected with that organisation and
certainly my personal objective is to draw in what I think is
one of the key strengths of DARPA: increasing risk and that sort
of constant recycling, keeping a business currency inside the
organisation.
Q509 Mr Wright: Are there any other
organisations around the world that you consider you would be
looking at to find good practice and bad practice?
Mr Gray: Absolutely, and again
one of our key roles is to identify where best practice occurs
and draw that best practice into a UK type model. We met with
the Dutch equivalent model, SenterNovem, just a few weeks ago.
We talk regularly to other governments. The Canadian Government,
for example, came over to try to understand what the Technology
Strategy Board was doing and I am very proud that they took back
from those discussions some of what we were doing as best practice,
so it is a two-way type of communication. One of the objectives
that we have is to identify where best practice is going on, pull
that across and absorb that into our own ways of working.
Q510 Mr Wright: You did mention earlier
that part of your strategy is to connect and catalyse and then
you go on to say "then let the markets select the best solutions".
How do you actually connect and catalyse?
Mr Gray: "Connect" comes
in all sorts of different ways. The question about the innovation
climate is one way we would do it. We have these knowledge transfer
networks which bring different people from different sectors together.
Quite often the spark that makes something happen in an innovation
sense is when you bring unexpected parties together, maybe a cross-section
of one sector into another one, so a business into a completely
difference business environment. Knowledge transfer networks are
a key way of us doing that. The innovation platforms which is
a challenge-led approach actually in its own way is a framework
which draws multi-discipline topics together, different types
of business, quite often businesses that have never talked to
each other. Drawing on an example like medicine and assisted living,
suddenly getting an electronics or a sensor company talking to
a pharmaceutical company or a bioscience company, I would say
all the mechanisms we have try to bring not just those people
together that are naturally talking to each other but connecting
across dissimilar types of sectors. All our mechanisms are about
connecting so "connect" is a key word in our strategy
title. "Catalyse" was just a bit more symbolic but it
was a representation of the fact that the initiatives and the
interventions we do are to do something different, make something
happen that would not otherwise have happened. "Connect"
is a vital part of the innovation climate.
Mr Bott: The technologists who
look after all those areas spend about 50% of their time out on
the road either listening to people in business or trade associations
or talking to people to spread the message of our capability and
intentions. We are all doing an awful lot of communicating.
Q511 Chairman: Somehow DARPA has
broken free of that awful mindset here in the UK that you can
succeed 20 times and not be noticed but fail once and you will
pilloried and lose your job. You are the accounting officer presumably
for the Technology Strategy Board are you?
Mr Gray: I am, yes.
Q512 Chairman: So there is a risk
that you will hear from the Committee of Public Accounts at some
stage in the future and be torn limb from limb for some mistake
you have made while all the good things go unnoticed. We have
a completely different culture here. DARPA is flourishing because
of its devil may care attitude; you cannot do that here in the
UK. We are so cautious and so nervous about failure, are we not?
Mr Gray: As I said, there are
some similarities and some differences. Let us not forget that
DARPA is something 50 years old, it is not a new organisation—we
are a new organisation—it has got a track record. In terms
of risk and accountability they look at things in a portfolio
sense rather than on an individual project or programme sense.
From the Technology Strategy Board point of view and a cultural
point of view we need to get into that culture of looking at things
in a portfolio sense. Some things will succeed; other things we
will try an experiment and they will not succeed. That is a cultural
issue. It is a very, very significant issue for us all but I think
it is an issue that big companies have faced; it is an issue that
we have now got to stand up to, looking at risk in a portfolio
sense rather than looking at risk on an individual project sense.
Q513 Chairman: Do you not feel frustrated
about the climate in which you are working here in the United
Kingdom where we are risk averse certainly when it comes to public
expenditure?
Mr Gray: There is a long way to
go and I think if you go back into a business context it is quite
often difficult times which actually force changes and changes
in behaviours.
Q514 Chairman: You are ultimately
a civil servant and you are operating in an environment which
stultifies innovation and radical thinking, are you not?
Mr Bott: I take exception to the
fact that people in the UK are not good at handling risk. We have
gone out and met some of the most amazing companies.
Q515 Chairman: The companies do;
it is you, you are spending public money and you are under the
microscope. DARPA is free from all that. Companies have made some
fantastic mistakes in business here in the UK but you poor civil
servants, as you now are, are constrained by all the machinery
of the state. The press are not here today to report your great
successes, but they will never do that; they will only report
your failures. DARPA has somehow managed to make a breakthrough;
you need to do that to be effective. Do you think you can do that?
Mr Bott: Part of that, Chairman,
is the culture of our organisation. We come from business. I have
watched videos of the Committee of Public Accounts; they use them
to scare us. I have been hauled over the coals by board members
where I have invested real money in the outside world and they
give just as hard a time. If you have done it right in a portfolio
sense, as Iain said, you actually get away with it. You are allowed
a couple of mistakes; it is when you consistently make mistakes
that you deserve to be pilloried. Actually taking the occasional
one is part of the deal.
Mr Gray: I would just reflect
on a couple of things. I think the Innovation Nation report
that was issued earlier this year very much acknowledged and reflected
the fact that the behaviours inside government—whether it
be related to procurement, whether it be related to the way we
do things—is an important aspect of what we are about. The
role the Technology Strategy Board can play I think is a very
key role, as I said, drawing on some of the best practices of
DARPA and getting people to recognise that kind of approach. The
innovation climate is equally applicable in that context inside
government as outside government.
Q516 Chairman: Tony Tether is a great
guy and of the really ruthless things he has there is that you
are in for four years and then you are out again. It is constantly
refreshed to keep that cutting edge there, constantly refreshing
the skills base of the organisation. It does not matter how good
they are, they are off, they have to be off. That is a really
radical thing to do which really gives the organisation an edge.
Will you do that sort of thing?
Mr Gray: It is a key part of our
HR strategy to draw people in and people then move out of the
Technology Strategy Board.
Q517 Chairman: Will you sack them
and tell them they have to go, tell them to go back to the private
sector?
Mr Gray: With respect, I do not
think DARPA use the word "sacked". What DARPA do is
to maximise the bringing people into business. They have a good
recruitment policy that brings people in who have ideas and who
will take risk and make things happen. They give them an opportunity
and a platform in which they can exhibit those characteristics
and do something. After four years they have learned something
and can go back out to business. It is an HR policy.
Mr Binley: You were founded in 2006;
you have just told us you have been doing an awful lot of talking.
You cost almost £1.5 billion. Let me tell you what the Engineering
Employers Federation said about you: "There have been many
changes and fine words on reforming public procurement and departmental
research expenditure to get the most out of innovative business
yet there has been little progress outside the MoD". You
mentioned QinetiQ; I never know how to pronounce the silly name!
Chairman: It is a great name and a great
organisation.
Q518 Mr Binley: These are pretty
expensive words, are they not?
Mr Gray: I am not a 100% sure
that I agree totally with the facts and we can provide some evidence
in terms of the facts. We are a new organisation; we were formed
in July 2007. We have a very specific budget over a three year
spending review period of some £711 million. As one of our
objectives we have been given an alignment budget target with
the regions and an alignment budget target with the research councils.
The numbers themselves to my mind do not a 100% add up but the
spirit of the question—
Q519 Mr Binley: They add up together,
do they not? If you had been in business you would be adding them
on your profit and loss account.
Mr Gray: Since we have been formed
in July 2007 we have invested just under £300 million. We
have about £500 million worth of collaborative R&D projects
on our books at the moment. They go across a wide range of sectors.
We have said that we go out, we talk to a lot of people because
connecting and talking to people is a key part of disseminating
what we are about and gathering user needs and feeding those into
our priorities. We are also an organisation that is very, very
much about action. The collaborative R&D programmes that we
have are making a big difference in a very, very broad sectorial
sense.
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