Examination of Witnesses (Questions 560-582)
TECHNOLOGY STRATEGY
BOARD
20 NOVEMBER 2008
Q560 Mr Weir: How would you do that?
Mr Gray: We have said a number
of times that as an organisation we have a strong leadership role
to play across the regions and devolved administrations in determining
what is going on from a national point of view. We have uniquely
brought together through the strategic advisory group with the
science and industry councils a roadmap of what is going on across
the nation. That gives us for the first time an opportunity to
really see where there is duplication, where there is benefit
to come from rationalisation and making decisions so we do not
end up with technologies which are the technology of the day and
we have invested in a little cluster in every single part of the
UK to support it.
Q561 Mr Weir: Do you see clusters
purely as a geographical thing or can a cluster be or, for example,
with the modern communications perhaps you do not need everybody
to be centred around one particular place? Do you develop clusters
by putting innovators in different parts or different regions
together? Has that caused problems with the different RDAs? In
setting these up do you have to act as an arbitrator between differing
views and ambitions of the various RDAs?
Mr Gray: Clusters happen. The
investment that goes into clusters and the investment of facilities
we do have a role to play if we have a particular bit of governance
that will help facilitate decision making and processes to make
sure we do not duplicate things where we do not need to duplicate
things. From my perspective there is a very strong role that the
Technology Strategy Board can play. We do not want to have clusters
around particular centres of excellence duplicated all around
the UK.
Q562 Mr Weir: I think we are all
agreed about that but I am not clear what your role in this actually
is. We can all agree that we do not want to reinvent the wheel
in every university campus around the country. What I am trying
to get at is what is your role in the development and maintenance
of clusters in preventing this duplication?
Mr Gray: We are the only body
that brings all the science and industry councils together, for
example. We are the only body that actually pulls together that
roadmap of what is happening across the whole of the UK. We have
a specific role in terms of advising people on what we think are
the right things to do and we have talked a little bit already
about the alignment budgets that we have, so there is a mechanism
by which we can actually start to influence how decision making
is happening throughout the UK to ensure that we do not have that
duplication where we do not need it.
Mr Bott: Can I just add something
to that? Porter's original model which was borne in an earlier
communication age was that you could drive to anywhere in a day,
so that is most of the UK to be honest. Your point about how communication
has changed since Porter's original analysis is well made in that
we are aware of some virtual clusters growing up. To come back
to the innovation platforms, when you put sensor companies and
clinicians together there is a personal bond and they drive their
own virtual clusters as well. I think that that model is going
to change over the next five years.
Q563 Mr Weir: You made the point
about disease which is all very interesting, but it seems to me
that is the perfect example of where a virtual cluster can grow
up between various microbiotic or technology departments around
the country, but I am still not clear about your role. Is your
role purely to say that that is a good idea, we will put some
money into it? Or is your role to say that Professor X in Edinburgh
is developing this, this is along similar lines to Professor Y
in Bristol, let us get them together to work together in a virtual
cluster to try to drive this forward for common benefit?
Mr Bott: The truth is that we
can put them in touch with one another and show them the advantages
of how working together can make things happen faster but we cannot
mandate that they do so.
Q564 Mr Weir: If, say, a cluster
in Edinburgh is developing something and another cluster in Bristol
is doing the same thing, do you say that this is a better, more
advanced idea and put money into this and not to that, in effect
choose the winner of these two clusters or would you put money
into both? Or would you say to one that there is no point in doing
this because somebody else is more advanced.
Mr Gray: There could be a number
of different things we could do. We could get people talking to
each other; that is quite often a cheap thing to do but massively
important in terms of influencing what is going on. That is part
of the connect, making two people talk to each other. In terms
of investment in two types of facilities, two different sorts
of areas, two different clusters, that is a different question
to one where you had, say, 50 different clusters in every different
part of the country. It may well be in that instance that we would
support projects that would go on in a number of different areas.
Q565 Mr Weir: When it comes to the
crux of the matter about the duplication of effort, it is the
same argument we have had when looking at RDAs, that RDAs are
wasting money competing against each other on a similar project.
Is the coordinating role in your organisation to choose the cluster
and say that is where national investment is going to develop
this project rather than in another cluster? Or are you saying
that everybody will get some of the money and allow them to develop?
Mr Gray: It is certainly not the
situation that our organisation would like to see everybody getting
a slice of something; it is about at some point in time maybe
drawing together some quite difficult decisions and making those
decisions on a UK-economic basis.
Q566 Mr Weir: Do you have the power
then to say "This cluster is the one that is going to develop;
that is the one and investment is not going elsewhere"?
Mr Gray: We have the mandate to
determine where we invest our own money.
Q567 Mr Weir: You cannot determine
how RDAs then invest the money.
Mr Bott: We can advise them.
Q568 Mr Weir: Can you tell me how
the knowledge transfer networks operate in practice and also what
sort of demand there is for them?
Mr Gray: As I said earlier we
have some 24 or 25 knowledge transfer networks in existence at
the moment. There is a mixed view if you go across those knowledge
transfer networks. Some are more effective than others; some work
very much across different sectors than others. Over the last
six months we have actually been carrying out a review; we have
had an independent review done on the effectiveness of knowledge
transfer networks. We have had some very strong feedback in some
areas about just how effective they are and the ability to build
communities, the ability to draw different people together and
some strong anecdotal evidence of things that have happened as
a result of having these knowledge transfer networks. We have
also had one or two areas where people have come back and said
that there is a bit of confusion out there, that maybe four or
five different knowledge transfer networks are all apparently
covering much the same sort of territory. So we are looking again
at how we can rationalise and organise knowledge transfer networks
to make them really, really effective. In my view the ability
to draw together dissimilar businesses, different sized businesses,
academics and public sector people against given knowledge transfer
themes is a very, very powerful agent and if you talk to people
outside the UK in terms of them looking in on some of the best
practice we have, quite often the knowledge transfer network mechanism
is one of those aspects of best practice we have here in the UK
that others look in on. My answer is that there is a job to be
done to make sure that they are effective but it is a very vital
part of the innovation eco-system and climate in which we work.
Q569 Mr Weir: How does your organisation
in encouraging technology-enabled innovation fit in with the efforts
of other government departments in promoting innovation? Do you
see yourselves as leading across government, that there is competition
between you and other government departments?
Mr Gray: Just to be clear, our
sponsoring department is the Department of Innovation, University
and Skills and one of their roles is to look at the innovation
landscape across other government departments. The role of the
Technology Strategy Board is part of that broader role; it is
not the entirety of that role. From the Technology Strategy Board
point of view the role that we do play in we are very, very strongly
encouraged by our sponsoring department to work across other government
departments.
Q570 Chairman: I want to ask one
question about knowledge transfer partnerships. These look to
be a very good idea to me but obviously this Committee is concerned
about the current economic situation. Is there a risk to the health
of those partnerships and those who participate in them in the
current economic situation?
Mr Gray: That is a very relevant
question and one we are tracking very, very closely. To date we
have seen really good participation from SMEs in the knowledge
transfer partnership scheme. In the last few weeks we have seen
one or two early indications that it is something we should pay
attention to. There are no businesses pulling out of the knowledge
transfer partnership type of approach. One of our objectives is
to double the number of knowledge transfer partnerships and to
engage new companies, new SMEs, who have not participated in that
scheme before. It is something that is a challenge to us and we
are prepared to be innovative in the way that we are looking at
that scheme. We are, for example, introducing what is called a
short KTP scheme which is something which is more 12 to 40 weeks
type arrangement which we think would suit some of the creative
industry type businesses or maybe some of the more faster moving
businesses. We are looking at ways we can adapt the KTP scheme
and we are watching that space very, very closely.
Chairman: Perhaps you could send us a
note about how you think that scheme should respond to the current
economic circumstances; I think it is a matter of some concern
to the Committee.
Q571 Mr Binley: You all have an esteemed
record in the private sector and I bet when you were in that private
sector you used to moan like hell about the burdens placed upon
you, about the regulations created by government and about the
money they spent which you thought was a waste of time. The second
point I want to make is that you know that small businesses are
in serious trouble. We were told in evidence by the Federation
of Small Businesses that a third of small businesses are considering
throwing in the towel life was getting that difficult. The final
thing you would have done in your business life would have been
to create priorities. It is very difficult to prioritise on occasions.
Given the money you spend, should we be diverting that at this
very moment to help the survival of small businesses or do you
still think it is right to spend the money you are spending in
the light of present conditions?
Mr Gray: I hold a very strong
conviction—and if I were in business today I would be holding
the same conviction—that in difficult times difficult decisions
need to be taken, but in actual fact it is the investment in innovation,
the investment in doing things differently which will make your
business stronger when we come out of the difficult times. I think
the Technology Strategy Board has a role to play in that. It is
not a Technology Strategy Board role per se to look at
some of the very, very immediate issues that small businesses
face, but it is the role of the Technology Strategy Board to look
at how we can help small businesses to continue to invest in innovation
to make them stronger so that when we come out the other side
of the current situation we have small businesses that can survive
and compete on a global basis. My perspective is priority around
small businesses and we should be looking at those areas where
we can help them to continue to invest in innovation for the long
term.
Q572 Mr Binley: So you have no doubts
at all.
Mr Gray: I have no doubts in that
regard.
Q573 Mr Binley: How do you measure
your effectiveness? That is our job; that is the difficulty we
have. Indeed, there is a view that it is very difficult for the
Technology Strategy Board to measure the success of a high proportion
of the mechanisms at its disposal to boost technology. It is also
difficult to measure how much of the result is due to the investment
from the Technology Strategy Board and how much is due to other
factors. Some might say that that is a very comfortable position
to be in. Indeed, you recognise it yourself because you argue
that the very nature of innovation presents challenges. You went
on to say that separating your own impact from that of other drivers
is bound to be difficult. Again I would say that is a very comfortable
position to be in. How do you set your milestones, your targets
and what are they? Give us an idea of what some of them are so
that we have an understanding of how we can measure your value
to the tax payer.
Mr Gray: I can assure you that
I do not feel in a comfortable position with regard to measurements.
Measurements are a key part of what we are about and in fact I
will call on Graham to talk a little bit about specifically what
we are doing on measurements, but I would put it into two categories.
There are those measurements related to the effectiveness of us
as an organisation in managing what we are doing and there are
those measurements related to the impact that we are having in
a longer term.
Mr Hutchins: On the key areas
that we split our measurements down into at the moment we have
on the input side what you would describe as our delivery plan
which has objectives for us as an organisation to deliver against
on specific timelines, for example the development and implementation
of the innovation platforms, the identification of the new subject
matters we will be addressing as we go across the CSR period.
Secondly, against that, there are the other areas we look at,
for example the KTPs. On the KTPs again measuring input of what
we do is relatively easy. We understand how much we have spent
and how much we have invested or granted to grant recipients to
be able to say that this is what we have done. We have some very
clear measures that come out of the knowledge transfer partnership
programme because that comes out in measurements of increase to
turnover, increase to gross profit, net profit before tax, additional
research and development capital investment and jobs created.
Q574 Mr Binley: I will stop you there.
How do you use those factors in a private company to argue your
own import in that respect?
Mr Hutchins: We can measure against—
Q575 Mr Binley: Turnover? You could
have a better sales manager. How do you separate your own bit
out of it to measure your own impact?
Mr Gray: In terms of the KTPs
it is a big challenge; no-one is shying away from the fact that
it is a big challenge to know what our own impact is. On the KTPs
we are actually asking business to identify what the impact of
the KTP has been.
Q576 Mr Binley: The business that
is getting money from you? I would be telling you that you were
effective quite frankly if I were getting money from you.
Mr Gray: In actual fact the business
itself is a financial partner in the KTP scheme and the business
is a beneficiary of any knowledge transfer from an academic institute.
So business is actually paying for the KTP. Business is seriously
considering the benefit from a knowledge transfer point of view;
it is not a grant like a collaborative R&D grant. The way
they would look at it and the way they would measure the benefit
of a KTP is quite specifically to look at the benefit they are
gaining from that knowledge exchange.
Q577 Mr Binley: If you were on my
board I would say that I have heard a lot of nice words but you
have not convinced me, so would you write to us and put down exactly
how you judge your impact and measure your effectiveness and tell
us what the rewards are for the tax payer in those terms.
Mr Bott: I spent many years running
product development groups in corporations. I would develop the
product up to the demonstrator phase; I would then work with a
manufacturing director to make sure it could be made cost effectively;
I would then work with the marketing director to make sure it
was sold in an effective manner and I would actually go out on
sales visits with salesmen. I would have claimed that without
the work of my team at the beginning none of the rest of it would
have happened, but in truth they all added value to the final
return to the company.
Mr Binley: Can I stop you because again
you are talking in management speak without giving real facts.
I have been a managing director of a company too for a very long
time so I do know the inter-action of the various departments
within a company. I am well aware of that. I want the facts. I
want the facts of how you measure and I want the outcomes to see
whether those measurements make real sense in terms of accounting
to the people who provide your money and that is the tax payer.
Q578 Chairman: In your strategy document
you say that you are trying to develop a best practice appraisal
and evaluation regime for all your own activities. I think that
is what Brian is asking you, what is that best practice regime
that you have committed to in your document? How far forward are
you with that regime and when will it be available?
Mr Gray: We will provide a written
response to the specific question, in particular around KTPs.
What we have been trying to draw out is that we are measuring
our effectiveness in two respects, one is that we do have our
internal effectiveness measures (we share those with our sponsoring
department). We are also looking at impact measures. We are working
very closely with NESTA, for example, on the development of the
innovation index. So there are some longer term plays in terms
of how we put in place what is acknowledged to be a difficult
area to manage. What we will do is we will provide you with a
paper that describes what our current approach to measures are.
Q579 Mr Binley: Can I ask whether
you have any concerns that your budget might be cut back at any
time, including perhaps this particular time bearing in mind the
economic situation, bearing in mind the government's cash flow
problems? Do you place that concern against the fact that it is
very difficult to judge your effectiveness in terms of hard, real
facts about performance and performance enhancement?
Mr Gray: I have said previously
I have a strong conviction that now is the time to invest in innovation
and R&D.
Q580 Mr Binley: My question was,
are you worried that your budget will be cut back by the government?
Mr Gray: I am saying that I believe
now is the time to invest. I have no evidence which says that
the budget that we have now will be cut back. On the contrary,
the kind of discussions I am having when we look at the increase
in our budget on a year to year basis, one of the key things that
we see increased year on year going in in terms of the exploitation
of science and technology. For me that is massively important
and I would argue a case which says that that trend needs to continue.
Q581 Mr Binley: How do I tell the
tax payers, on the evidence you have given today, that you are
about the business of business and not about the business of government?
Mr Gray: How do you tell the tax
payers?
Q582 Chairman: We will not have enough
time to pursue that question. It is an important point that Brian
is making, to what extent are you simply coordinating other government
activities already going on and just need to be pulled together
and to what extent are you adding value. You can have 30 seconds
to respond to that and then we will have to draw things to a conclusion.
Mr Gray: For me the testimony
will come from business. When business says that the Technology
Strategy Board is making a difference to what they are doing then
that for me is the strongest testimony that you can have, the
strongest message that you can give back to people. That is our
job, to work with business and the testimony should come from
business.
Chairman: It is very frustrating that
we have to end there; I would like to pursue this at greater length
but we cannot do so today. Mr Gray and colleagues, I am very grateful
to you; thank you very much indeed for coming before us today.
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