Technology Innovation Centres

Written evidence submitted by Durham University (TIC 06)

Technology Innovation Centres

What is the Fraunhofer model and would it be applicable to the UK?

1. Our understanding of the Fraunhofer model, both from direct experience of our staff in working with Fraunhofer Institutes and from our contacts with Directors of Fraunhofer Institutes, is that they were originally envisaged as applied versions of the Max Plank Institutes. However, the distinction is becoming blurred as the Max Plank Institutes seek more third party money.

2. The operational model is mostly bilateral between the Fraunhofer Institute and industry. It is not principally a three-way collaboration between the Fraunhofer Institute, a university and industry, nor is it a mechanism whereby the Fraunhofer Institutes acts as a bridge between university IP and industry. The Fraunhofer Institutes act as independent principals in their own right.

3. Universities may be indirectly involved through the personal roles of the Fraunhofer Directors, who are often also Dozents or Professors at a University. They tend to have minor duties (and here we quote an ex-Fraunhofer Institute Director) "for example, 2 hours of specialist lectures per week".

4. The overall funding scheme is 1/3rd state funding, 1/3rd direct industrial contracts and 1/3rd collaborative public-private projects (e.g. Framework 7 funded). For example, for one institute, there is basic state funding of typically 10-20%, which is dependent on Industrial turnover, between 35% and 60 % funding via direct industrial contracts, and the rest federal or regional funding via collaborative projects with the industry partners. (In most cases the projects are not 100% funded). There are university collaborations mostly via collaborative projects with industry and other partners (e.g. other universities) but this represents a small fraction of activity.

5. In our view, the Fraunhofer Institutes model, as it works in practice, would not achieve the outcomes set out in the Hauser Report. This model is not likely to solve the problems associated with translation of scientific research undertaken in universities into the commercial sector. Nor is it likely to supply the vital flow of ideas and challenges from industry into universities. In some sectors it could actually risk distancing industry and universities (an expensive way of having the opposite effect as that desired!), by interposing an additional organisational layer. A further disadvantage of the Fraunhofer model is that it can promote the poorly-connected "hub and spoke" model of collaborative networks, which suffers from poor and slow communication and is unfit for the necessary rate of communication across science and technology areas, and the rapid building and reforming of multidisciplinary teams that the emerging science based technologies demand.

It could work well in delivering an industry focused research and development facility which would, through provision of specialist skills and facilities, enable companies to accelerate the transition from demonstrator and product. We do not see it acting as the bridge between technology readiness levels 1-4 in universities and 6-9 associated with prototype demonstration in an operational environment onwards. (Hauser Report p 5).

Are there existing Fraunhofer-type research centres within the UK, and if so, are they effective?

6. There are existing research centres which approximate to the Fraunhofer model as it operates in practice. In the North East region, both the PeTeC printable electonics centre at NETPark in Sedgefield, Co Durham and the National Renewable Energy Centre in Blyth, Northumberland have a mixture of public funding (via the RDA and other routes), collaborative public-private research and development projects and direct industrial contracts. These are extremely effective in their industry facing operations. However, they do not presently act as the bridge between university IP and industry.

We believe that the Fraunhofer model was to some degree behind the motivation for the Interdisciplinary Research Centres (IRCs) set up by the EPSRC (with some DTI support) in the 1980s and 1990s. These were designed as vehicles to create shared research projects between industry and university, though they did not address directly the intermediate TRLs. They exhibited various degrees of success, largely depending on effective engagement with industry. They also suffered from finite-timescale, and little or no thinking went into the requirement to become self-sufficient after a 10 or 6 year period.

Some IRCs, such as the Polymer IRC successfully developed a sustainable model by attracting a large industrial "Club" and spawning other externally funded projects. Its success was also based on recognising the fluidity of the UK academic "map" and responding to it. It also exemplified best practice by building interdisciplinary research teams across different university groups and linking those entire teams to industrial consortia, rather than promoting a poorly-connected "hub and spoke" model which has slow technology transfer.

What other models are there for research centres oriented toward applications and results?

7. The TICs need to determine whether they wish to focus on a bilateral relationship with industry, occasionally using university research groups as partners and using joint university-TIC positions to provide strong collaborative links or to focus on providing the bridge between university research and industry. The two processes and activities are very different and the funding models therefore need to differ. In the former model, a funding structure not hugely dissimilar to that operated by the TSB would work well. [There is presently a disincentive to collaborations funded by the Technology Strategy Board to involve significant numbers of university partners, due to the match funding requirements. (Universities must be funded in full from project costs.) This needs to be addressed in developing a genuinely collaborative project model within the TIC framework. The old LINK scheme provided an excellent model, which might be rolled out across the science and technology sectors linked to individual TICs.] In the latter, early stage venture funding must play a role as industry is loath to invest significantly in technologies at readiness level 4. Most importantly, the TICs must not try and fulfil both functions using a single funding methodology.

We believe that the UK is faced with a real opportunity to develop a fresh approach to the national "innovation pipeline". An effective TIC must do the following:

· work in partnership with the entire UK top-tier academic knowledge base in a given area, including a built-in responsiveness to its fluidity and evolution, and exploiting international expertise through the academic network.

· Facilitate knowledge-transfer to and from industry in a highly-connected way, moving on from the inadequate "hub-and-spoke" model. Both UK and international industry should be "customers" of the TIC.

· Contribute where necessary the infrastructure to smooth transfer through intermediate technology levels.

· Able to draw down matched funding from industrial, UK, EU and international sources depending on the readiness level of a specific technology. (an interesting model here is the Dutch NWO scheme where industrial-financial and university-in-kind resource is automatically matched by the government scheme).

· Be equipped to handle different levels of IP so that both generic (consortium) and industry-specific IP can be developed at the appropriate level and speed.

· Promote effective practice in human resource, often located in individuals who spend significant time in both university and industrial environments.

· Be able to handle both long-term and medium-term industrial challenges (so moving into the space vacated by the demise of many industrial research units).

· Coordinate effectively with downstream commercial enterprises, in some sectors dominated by SMEs, so that the economic advantage of new technologies is not retained only by large companies.

An organisation that does the above for sectors such as personal care, sustainable chemistry, renewable energy, etc. does not look like a Fraunhofer Institute, but would be much more effective in the UK context.

Whose role should it be to coordinate research in a UK-wide network of innovation centres?

8. We believe that the Technology Strategy Board is the only body that has a sufficiently wide remit to coordinate this activity. Individual research councils do not have complete coverage and also lack expertise in the commercial sector. The task should not be given to a unit in BIS.

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?

9. Care should be taken in establishing new TICs. We agree that they should be focused on specific technologies where the UK has a good chance of competing significantly on a global scale. Wherever possible, the existing TICs and RTOs should be restructured to achieve these objectives rather than establishing new institutes on top of the existing framework. Where necessary, some existing TICs and RTOs may have to be closed in order to avoid duplication of resource and effort. We note that in a number of sectors existing RTOs have not effectively engaged with the relevant academic community nationally or internationally and are in consequence not competitive in addressing industrial need either.

Dr Tim Hammond

Director

Durham Business & Innovation Services

Durham University

November 2010