Written evidence submitted by General
Electric (GE) (TIC 72)
1. I am writing on behalf of General Electric (GE)
to respond to the Science and Technology Committee's inquiry into
Technology Innovation Centres (TICs) in the UK.
2. GE recognises that there has been input to government
in the form of the Ingenious Britain report from Dyson and the
Hauser Review. These reports highlight that there is a gap between
university conceptual research and the implementation of commercialised
product technology and process in industry. The discussion assumes
that TICs (in some form) could be utilised to fill this gap, and
that the Fraunhofer model could inform the TIC Model.
3. By way of context, GE is a global company with
a strong commitment to the UK, where we have had operations since
the 1930s. Since 2002, we have invested over £12 billion
in building our UK-based high technology businesses, which currently
employ over 18,000 people across 25 hi-tech industrial manufacturing
sites, with over 60 sites in all. Today, all of our businesses
are represented in the UK. According to the UK R&D Scoreboard
published by the Department for Business Innovation and Skills,
GE invested £158M in R&D in the UK in 2009.
4. Please find below GE's responses to the questions
posed by the Committee.
1. What is the Fraunhofer model and would
it be applicable to the UK?
5. The Fraunhofer model is a German model designed
to carry out application-based research. In Germany, there are
59 Fraunhofer Institutes, with around 17,000 staff members who
are predominantly qualified scientists and engineers. Each institute
was started with government support and direction based on national
opportunity. The model has also been applied globally in modified
forms.
Remit:
6. The Fraunhofer Institutes are focused on application-oriented
research. They contain state-of-the-art facilities which enable
research, prototyping and demonstration and act as contract research
organisations for industry and government. They aim is to:
- transform scientific expertise into applications
of practical utility;
- undertake activity that goes up to, and beyond,
commercial maturity;
- develop solutions of direct practical value to
technical and organizational problems;
- and look at the wide-scale implementation of
new technologies and processes.
7. The research can be associated with societal,
consortia and individual solutions and can involve working directly
with a customer.
8. Some of the research undertaken is directly funded
by the German federal ministry of education and research. This
funding enables each Fraunhofer Institute to conduct advanced
research into technological fields that will help pave the way
to new markets and explore potential new profitable spaces and
competencies.
9. The capability and expertise generated by the
Fraunhofer Institute is then utilised by industry through collaborative
or individual projects.
10. When more complex system solutions are required
several Fraunhofer Institutes will work together to produce an
innovative outcome.
Customers:
11. Research customers of the Fraunhofer Institutes
include both government and industry. This includes companies
of all sizes, in all manufacturing and service sectors. The Institutes
are of special importance to small and medium-sized companies,
which may not have in-house R&D departments. In this way they
provide innovation, research and knowledge transfer along with
the wider services required for technology businesses.
Funding Model:
12. As not-for-profit organisations, the Fraunhofer
Institutes receive an annual research budget of €1.6 billion:
two thirds comes from industrial contract research revenue or
from publicly financed research projects, whilst one third is
institutional funding contributed by the German governments.
Management:
13. The Institutes are overseen by a central
organisation that ensures, through the basis of centralized control
mechanisms, that strategic orientation is on track. This central
element also limits the possibility of duplication and provides
opportunities for cross learning between Fraunhofer Institutes.
Daily management of each institute is decentralized. Each institute
is free to utilise its entrepreneurial spirit to drive its own
agenda.
Scope of engagement:
14. The Institutes also offer services to assist
in the successful take up of any new technology/process, before
and beyond new product introduction. As such, they also deliver:
- products and processes ready for commercial use,
optimized through research, prototyping and test;
- training, either on site or in associated Fraunhofer
Academies;
- support for business and technology uptake and
development through mechanisms such as:
- feasibility studies
- analysis and surveys in areas such as
- market surveys
- trend analysis
- pre-investment analysis
- environmental audits
- provision of funding advice, especially for small
and medium-sized enterprises
- accredited test services.
15. Fraunhofer-type technology and innovation
institutions that have capability, in terms of infrastructure,
people and service offering, to move technology further down the
research and development continuum are attractive propositions.
This is especially so if based on a not-for-profit Public-Private
Partnership. Such institutions should look, as a long-term objective,
to models to generating revenue from IP and licensing.
2. Are there existing Fraunhofer-type research
centres within the UK, and if so, are they effective?
16. GE has not carried out an extensive analysis
of all available centres in the UK. However, from its operational
knowledge and with input from the GE Global Research Centre in
Munich, Germany, we do not believe that there are currently any
research centres that cover the complete remit of the Fraunhofer.
There are elements of the Fraunhofer present in some centres but
none are as yet complete.
17. Many UK research centres are strongly linked
to a University, often integrated within them, rather than being
part of an independent structure. While having an essential role
in the research chain, University associated laboratories are
naturally academically focused on early stage research. This does
not tend to lend itself to understanding the wider industrial
contexts and as such can limit thinking and inadvertently constrain
this type of research centre. Universities' expertise, in any
technology area in the UK, is often spread across numerous University
departments. Therefore, picking one as the location for a research
centre limits the ability of that centre to pull from others.
They also often lack the scale, processes, experience and management
practice to recreate the entrepreneurial approach of the Fraunhofer
Institutes.
18. However, a link between Universities and
Fraunhofer Institutes is that the latter supervise PhD students.
This model could operate in the UK. For example, the EngD students
from EPSRC Engineering Doctorate Centres for example could find,
the opportunity to develop their PhD project work within the TICs.
This would offer a method of keeping the organisation fresh and
flexible, help to attract the best and brightest graduates to
the TICs and continue to create research that develops the UK's
capability.
19. In the field of healthcare, the UK is recognised
as a world leader in medical research. However, infrastructure
to support the movement of early phase research through to clinical
validation via early development (e.g. device prototype development,
pharmaceutical safety studies) is not widely available. As such,
many ideas are abandoned prior to the stage where industry is
prepared to invest more heavily to commercialise them. Dilution
of investment through the UK university network may not be the
most efficient manner to enable advances in healthcare.
20. Other research centres have been highly influenced
by one sector or one or two companies. Others have been established
by regionally focused grants. Therefore across the UK there is
some duplication and narrow sector focus and an approach which
is not founded on open-innovation. If the best advantages are
to be taken for the UK, a landscaping of capability and need should
be drawn up to establish gaps and overlaps. This would be key
to effective planning of the proposed TICs.
21. Most current UK centres deliver a technology
focused agenda but with limited interest in the wider picture.
They are not concerned with the complete skills provision or greater
business support found in Fraunhofer Institutes. While they are
successful within their current scope, they do not deliver the
same level of value to the UK Plc as Fraunhofer Institutes do
to Germany. To achieve the broader scope, the remit of a UK research
centre would need to include skills development and training provision,
based on a sound workforce plan associated with technology product
and process introduction in the future. It would also, for example,
need to cover the transfer of knowledge and technology capability
into the supply chain.
22. Further in the UK there is no central co-ordination
of the centres or even networking or linking to a central body
that pulls across industries and sectors. This means that there
is less ability to develop best practice across the research agenda,
skills provision and supply, and business support agenda and approaches.
There is also potentially less opportunity for several centres
to work together to solve a complex problem.
23. That said where a research centre in the
UK that is working on a key technology area in an open innovation
way, its remit could be expanded and modified, and it could be
provided with government support to better serve the needs of
the UK Fraunhofer model. The newly formed National Composite Centre
(NCC) in Bristol could provide such an opportunity to develop
a UK version of a Fraunhofer Institute, potentially acting as
a pilot, with its current remit extended to include the wider
aspects of a more Fraunhofer type of centre.
24. For example its remit would need to:
- be extended to enable it to deliver the full
UK strategy in composites;
- expand its considerations and provision of business
support and skills, acting as an entry point or "gateway"
for UK business; and
- expand its research coverage to go up to and
beyond commercialisation and new product introduction stages of
the product life cycle.
25. The NCC would require direct government funding
to support the technologies and process with significant promise
for the future and develop core capabilities and funding streams
to support this expanded remit.
26. In our view new centres should only be set
up in areas identified as containing potential high growth for
the UK. Other units operating well but not in this category or
different in nature of provision may need to be sustained by some
other mechanisms.
3. What other models are there for research
centres oriented toward applications and results?
27. GE recognises that there are numerous research
centre models in the UK and globally, but does not have a detailed
understanding of them all at a level that would enable comparative
analysis. The USA has a network of centres and national laboratories
that are based around the needs of their government departments,
as well as national agendas such as National Aeronautical and
Space Administration (NASA) and the Air Force Research Laboratories
(AFRL).
28. UK based laboratories would include:
- Diamond
- Qinetiq
- National Physical Laboratories
- Energy Technology Institute (ETI).
4. Whose role should it be to coordinate research
in a UK-wide network of innovation centres?
29. The type of research carried out in a Fraunhofer
Institute fits into the remit of the Technology Strategy Board
(TSB), because of the technology readiness level at which it is
undertaken, through to industrialisation.
30. If such centres where to be put together
and there was an opportunity for them to work in conjunction with
each other the TSB would be an excellent proponent to:
- help determine the nature and number of centres
with input from industry and government;
- drive and set a strategic view and input on which
centres are needed;
- link to national and industrial agendas;
- coordinate linkage and continuity to universities
for pull through of technology and concepts for university research;
and
- and act to set the boundaries of their governance,
control and content.
31. However, for longer-term management some
central coordination and control may be required (depending of
the number and final scope of such centres) such as a new organisation
or a widening of the existing scope of the TSB. This central coordination
would enable shared best practices and services, joint approaches
on funding and lobbying, and combined landscape setting and analysis.
32. In the setting-up process, other bodies and
sources of funds would have to be included from skills funders
and agenda setters, business support, analysis and technology
and knowledge transfer organisations, practice, thinking and funding
mechanisms.
33. Many of the current centres in discussion
are University owned. However if the Fraunhofer model and the
increased industrial focus it brings is to be delivered, leadership
will need to be reconsidered. Universities' focus and incentives
do not currently match that required in this part of the innovation
landscape to ensure the new centres and their outputs meet the
Hauser objective. Universities are not traditionally entrepreneurial
or commercial in their culture or operation. The proposed centres
will, however, need to naturally take an approach very focused
on new opportunities, growth and commercial risk taking. Understanding
the customer, agility and a focus on delivery of results to industry
will be critical, and not elements well understood or exhibited
in very early conceptual research approaches undertaken in Universities.
The centres will need this type of research to continue to feed
them and it is critical that it must be sustained. Placing the
two sets of demands on one institutional type is unlikely to be
the optimal conclusion.
5. What effect would the introduction of Fraunhofer-type
institutes have on the work of Public Sector Research Establishments
and other existing research centres that undertake Government
sponsored research?
34. An institute with Fraunhofer-like objectives
in UK could fill a well-identified weak spot in the innovation
spectrum/product life cycle. As Hauser identified, conceptual
research needs to be developed and pulled through before it can
be adopted and introduced to commercial production. Throughout
that process, and during production, new issues, difficulties
and opportunities will arise that research activity can overcome
to deliver benefits. Transition of capability, know how, skill
and expertise to business in all its forms are essential for success.
Currently there is no cohesive model in the UK to take concepts
at early technology readiness levels through to commercial introduction
and production.
CONCLUSIONS
35. Two reports from learned UK committees on
different places of the political spectrum, and a model operating
in a similar European country offer evidence that an approach
similar to the Fraunhofer model would bring significant value
to the UK economy, helping to drive and support growth in significant
areas and sectors. As a consequence it is suggested that significant
further thought and development of these concepts, turned to the
UK culture, structures, needs and practice be undertaken. The
resulting TICs built on a "UK Fraunhofer" model, correctly
supported by government and industry, would deliver significant
value for the UK and as such would benefit a strong UK identity
and branding.
36. It is also suggested that the NCC be considered
a pilot and worked with, to develop the UK model for an open innovation
approach to technology and process delivery through to commercialisation,
and in support of the wider spectrum of services and support required
to achieve this.
GE UK
3 December 2010
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