Technology Innovation Centres

Written evidence submitted by Professor L Gladden, University of Cambridge and Professor D Begg, Imperial College London (TIC 31)

TECHNOLOGY INNOVATION CENTRES

Imperial College London and Cambridge University have been preparing a proposal for a Technology and Innovation Centre (TIC) in the field of plastic electronics, in which the two universities have particular, recognized strengths and strong industrial relationships. We wish to make the following observations to the questions posed by the Select Committee.

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

1.1 The innovation landscape in Germany is more facetted than that in the UK. In between the universities and industry there is a dense network of several different intermediate institutions. These include the Max-Planck Society focussing on fundamental scientific research, the Leibniz Society, performing scientific research into major themes of strategic interest as well as providing scientific infrastructure, and the Helmholtz Society, which is responsible for the development of technological solutions to major societal challenges, such as energy or healthcare. The Fraunhofer institutes are at the most industry facing end of these intermediate institutions. They work closely with industry to develop technological solutions to today’s industrial problems and invest in the development of new technologies, which are considered important to address future industrial needs on a short to medium term timescale. In spite of their industry facing role many Fraunhofer institutes maintain close links to German universities. Directors of Fraunhofer institutes commonly hold professorships at universities and run academic research groups in parallel to their Fraunhofer roles. The institutes offer PhD projects in the applied sciences. Several Fraunhofer Institutes have departments that are embedded into university departments.

1.2 In the UK, universities are covering a wider part of the innovation chain than German universities and are engaged in important strategic as well as applied industry-facing research. It will be important to adapt the Fraunhofer model to take into account the role that UK universities already play in the innovation chain. Given the international level of excellence of UK universities in many areas of science it would be undesirable to reduce the effectiveness of technology transfer from universities to industry. TICs need to be structured such that they achieve maximum leverage from the academic excellence of leading UK universities, enhance the effectiveness of technology transfer but, at the same time, address the key weaknesses of the current UK innovation system, which, in our view, is the lack of an efficient mechanism for translating specific inventions and research breakthroughs into integrated offerings to industry. Too often, inventions made in UK universities have as their only exploitation pathway the licensing route to large multinational companies at relatively low valuation, because UK bodies do not have the capabilities and resources to integrate these inventions into systems and demonstrate their value in the context of real-world applications. In contrast, the Fraunhofer institutes in Germany are able to deploy significant development resources in order to address major technological challenges and to develop integrated solutions to industrial needs that require addressing a range of technological requirements in a highly coordinated manner. They are able to develop broadly applicable technology platforms with high levels of integration, demonstration and prototyping capability. These provide industry with meaningful evaluation of technologies in the context of concrete application requirements.

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

2.1 There are a number of University-hosted, intermediate organisations in specific areas of technology, and some of these institutes have indeed achieved a high level of international leadership. However, on average the international visibility of these institutions is not as high as that of the Fraunhofer institutes. This is demonstrated by the mere fact that the Select Committee is considering this question.

2.2. The need for more effective technology commercialisation from the excellent UK academic research base has been recognised by the Research Councils some time ago. EPSRC established Integrated Knowledge Centers (IKCs) which aim to bridge the gap between academic research and industrial technology and product development by providing universities with facilities for demonstration and prototyping and by developing best-practice models for more effective technology transfer and commercialisation. The IKCs operate very effectively and have had significant impact. The Cambridge Integrated Knowledge Center (CIKC), developing advanced manufacturing technologies for electronics and photonics, started in 2007 and has already led to one spin-off company and several follow-on projects drawing on commercial funding for demonstrators in applications with large market opportunities. At Imperial College London, the Centre for Plastic Electronics interacts with a large cluster of industrial partners and involves the research activities of 25 academic staff and some 150 students, postdocs and visitors.

2.3 However, many of the existing University-hosted, intermediate institutions, such as the IKCs, operate on a scale (in terms of annual budget or number of permanent staff) which is at least an order of magnitude below that of typical Fraunhofer institutes. This is not necessarily an issue when commercialisation of specific technology components is concerned, for which industrial partners can be identified. However, it means that these institutions are limited in their ability to apply the same level of focus as Fraunhofer institutes to address major technological challenges and offer to industry complex integrated solutions and systems that address a range of important requirements. When integrated teams of 20-50 engineers are required to develop next-generation technology and manufacturing platforms for emerging industries, current university-hosted intermediate institutions such as the IKCs are unable to compete with international centres such as the Fraunhofer Institutes. This risks leaving the UK at a disadvantage in technology areas where the UK has proven academic excellence and international leadership in early stage academic research and technology demonstration, but is unable to move as fast as other countries in integrating these technologies into technology platforms and systems that meet real-world application requirements.

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

3.1. We note that Fraunhofer-style institutions exist in many countries with established and emerging high technology industries. In Taiwan the Industrial Technology Research Institute (ITRI http://www.itri.org.tw/eng/) has worked for 35 years to literally transform the Taiwanese economy. ITRI has an annual operating budget of ~ $500M (50% government, 50% industry) and its 6,000 employees work on advanced technology R&D, on IP business and new ventures and on the provision of industrial services. Of the 160,000 alumni of the Institute 140,000 are currently employed in the industry/business community. It generates 2000 patent applications per year and provides 30,000 Taiwanese companies per year with consulting and other technical services. ITRI also nurtures start-ups through its ‘Open Lab’ programme. Open Lab has assisted 150 start-ups (and 105 other companies) and ITRI has invested some £1 billion in this activity alone. Open Lab also provides entrepreneurship and related training. In specific relation to plastic electronics, in 2007 ITRI opened a Flexible Electronics pilot laboratory for ‘integrative tasks from material synthesis, development, product design, to trial production.

3.2. In Japan the National Institute for Advanced Industrial Science and Technology (AIST http://www.aist.go.jp), established in its current form in 2001, fulfills a similar role. It is has an ~ £830M annual budget (66% direct from government via METI, 6% direct from industry (intended to grow to 10%) and 28% competitive grant funding via NEDO, JST, etc with ~ 5,000 employees and ~ 4,000 secondees from universities and companies. 75% of AIST employees are based in Tsukuba. AIST has formal partnership agreements with CNRS (France), KOCI (Korea), ITRI (Taiwan), CAS (China), A*STAR (Singapore), NSTDA and TISTR (Thailand), VAST (Vietnam), and various institutions in Germany and USA. It has no formal links with the UK because, in the words of a senior member of the 'international affairs division', there are no obvious organisations in the UK with which to work.

3.3 There is a similar organisation in Korea, namely the Korea Research Council for Industrial Science and Technology (IstK http://www.koci.re.kr) which is run by the Ministry of Knowledge Economy and oversees thirteen research institutes KITECH, ETRI, NSRI, KICT, KRRI, KFRI, KIGAM, KIMM, KIMS, KIER, KERI, KRICT, and KIT. IstK also cooperates internationally, including with the Fraunhofer Society in Germany, with China, Japan, Vietnam, Indonesia and the USA.

3.4 For TICs to be implemented successfully in the UK, they will have to recognize the strengths of the present UK innovation landscape and aim to achieve maximum leverage from the recognized research excellence of many UK universities. At the same time they will have to be strongly industry led, have a clear industrial discipline in technology selection and project management in order to become similarly effective as the Fraunhofer institutes in addressing pressing, short- and medium-term industrial needs. Over the last six months Imperial College and the University of Cambridge, as two of the leading research universities in the UK, have been developing a model for TICs, which we believe satisfies these important requirements. We aim to put this model to practice with a TIC in plastic electronics, a technology area where the two universities have particular strengths, including industrial partnerships with leading national and multinational players. We believe that, if successful, the model could be applied to other technology areas. Some of the key principles of the proposed organisation model are:

a) Organisation structure: The TIC would be hosted by the two universities as a not-for-profit company limited by guarantee and owned initially by the two universities, but with independent management and governance structures. In this way we hope to achieve maximum leverage from the academic excellence of the two universities, but, at the same time, the centre will be strongly industry led and will not be a direct source of research funding for university groups. The TIC will be fully focussed on industrial needs and its technology programs will be run according to strict industrial discipline and best practice.

b) Generation of business opportunities for industry: The centre will directly support industrial customers (with a focus on UK companies and on attracting inward investments) and will help these companies to open new business opportunities. It will also support the formation and nurturing of spin-out companies. The centre will be able to effectively support industrial customers who are interested in collaborating with specific academic research groups in any UK university, but are also keen to have a route for system integration and technology prototyping.

c) Intellectual Property: IP generated by the employees of the TIC will be owned by the centre and will contribute to the generation of a valuable pool of IP, with effective management for licensing. This will enable spin-outs, further supporting inward investment, and allowing a revenue stream. A TIC working with a number of sources of IP (self-generated, universities, government laboratories, SME and other companies) could assemble a portfolio of greater significance. An example of this approach in action is the Holst Centre in plastic electronics in the Netherlands (co-owned by IMEC (Belgium) and TNO (Netherlands)) which pools IP and offers it to a consortium of industrial partners who pay a subscription to have sight and opportunity to license. Holst appears to be very successful - it is growing rapidly.

d) Skills: Flow of trained top quality engineering and science graduates/PhDs towards industry will be enabled by job/training opportunities in the Centre. This will enhance training opportunities which the universities can provide to their graduates, but will also allow the centre to recruit highly qualified engineers. Highly-skilled employees originating from the centre will generate employment for others.

e) Income: Generation of income from commercial contracts is very important, and we anticipate that after an initial period reliant more strongly on government funding the centre will have income streams similar to those of the Fraunhofer institutes in Germany.

f) Training: There is currently an overall skills shortage in emerging technology fields, such as plastic electronics, and one of the key outputs of the Centre will be the well-trained staff needed to stimulate and drive forward these emerging industries. Various schemes will be used to develop training including, (i) the presence of appropriate technical experts, (ii) the setting up of formal training programs (via SEMTA, COGENT and other agencies) and (iii) continued refinement of the EPSRC Doctoral Training Centre MRes programme at Imperial College London.

g) Career paths: The Centre will expect to hire substantial numbers of early-career scientists and engineers whose ambitions will be to gain training at the Centre and then move through to industrial positions. An excellent route for this is the transfer of staff along with technology developed in the Centre to manufacturing.

h) Involvement of other UK universities: The relationships of the TIC with universities will not be limited to the two hosting universities. The management of the TIC will be free to work with any academic research group in the UK and the selection of academic partners will purely be based on the identification of the most capable partners, wherever they are based.

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

4.1. Individual Fraunhofer institutes enjoy a high level of independence and freedom in defining their strategies. The Fraunhofer Society provides an overarching governance structure with each institute being represented in the Senate. The Senate elects the Executive Board which is responsible for the coordination of the individual institutes, the definition of major strategic directions, external and international representation and the negotiation of the institutional funding, which is then distributed among the individual institutes. However, this organisation model evolved as the number of Fraunhofer institutes grew from 9 institutes in 1959 to about 60 institutes today

4.2. We believe that at an early stage, where the number of institutes is less than 10, a loose network of institutes that provides individual institutes with a high level of freedom to operate and to develop successful models is most appropriate. As the number of institutes grows it will become increasingly important to ensure effective coordination, in particular to exploit synergies between institutes that can offer complementary technological capabilities. The Fraunhofer Institutes are very good at this level of coordination and, as a result, they are very effective in bidding for European research funding, because they are able to offer a highly integrated set of competencies. The coordination role could be taken by a Fraunhofer Society-like independent body or by a government body such as the TSB. Whatever the nature of the coordinating organisation, however, it needs to report to an industrially-led board with broad representation from major UK companies in order to ensure that the focus of the organisation remains the addressing of major UK industrial needs.

4.3. Looking at the Japanese model, their equivalent of TSB, namely NEDO, does not run AIST. AIST reports directly to a government department, i.e. METI. AIST does however receive a significant budget from NEDO but via a competitive tendering for project grants. If TSB is going to operate funding calls for projects that a TIC would wish to bid for then there could be potential conflicts of interests if the TSB was both the governing body overseeing the TICs and the grant organisation. This might reduce the pressure on TICs to be suitably competitive in seeking funding via open calls for proposals.

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?

5.1. As stated above it will be important to set up the TICs in a way that they do not compete with universities for industrial contracts or research grants and force UK universities to retrench to purely academic research. TICs should not be funded by reallocating existing research council funding which would damage our excellent UK research base, but rather from new money provided by the TSB. The university-linked TIC model outlined above should enhance the effectiveness of technology transfer from academia to industry. The close link between universities and TICs will enable the TICs to provide access to advanced prototyping facilities and allow universities to evaluate promising technologies that result from fundamental research in a more integrated manner. In very active technology fields it can be difficult to use isolated pieces of IP on their own. It often requires several pieces to be linked together to form something that is usefully exploitable. Pooling 'orphaned' pieces of IP that are difficult to exploit on their own with other IP and know-how within a TIC might be an attractive option for more effective exploitation. One potential advantage of a TIC in relation to IP is in concentrating sufficient pieces of a jigsaw to generate enhanced value.

5.2. Another benefit of the university-linked TIC model is to enable UK universities to bid more effectively for industrial research grants as well as large integrated research projects, such as those funded by the European Commission. Companies are often discouraged from engaging with academic research groups on particular subjects because they would prefer to work with partners that can offer a more integrated set of competencies. University-linked TICs could make it more attractive for companies to fund academic research since the TICs could offer a route to technology demonstration and prototyping. UK universities are also often effectively precluded from participating in large European framework projects as major partners because they cannot offer a competitive level of demonstration and prototyping capabilities to those of intermediate institutions in other European countries, such as the Fraunhofer Institutes in Germany or TNO in Holland. By linking the recognized excellent research of leading UK universities with the integration capability of TICs we predict that the UK will be more effective in taking up its fair share of European research funding and in partnering with organisations like the Fraunhofer Institutes and TNO.

5.3. Finally, we would not expect the existence of TICs to negatively impact on PSREs like RAL, Daresbury, Diamond and NPL. In Japan, Taiwan, Korea and Germany TIC-like organisations co-exist with large scale national facilities and with metrology centres.

Professor L Gladden, Pro-Vice-Chancellor (Research), University of Cambridge

Professor D Begg, Pro-Rector (Research), Imperial College London

01 December 2010