Technology Innovation Centres

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;

· 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 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

03 December 2010