Technology Innovation Centres

Written evidence submitted by the Institution of Chemical Engineers (IChemE) (TIC 81)

Technology Innovation Centres

Enquiry Remit:

1. What is the Fraunhofer model and would it be applicable to the UK?
2. Are there existing Fraunhofer-type research centres within the UK, and if so, are they effective?
3. What other models are there for research centres oriented toward applications and results?
4. Whose role should it be to coordinate research in a UK-wide network of innovation centres?
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?

Introduction

"Intermediate institutes", of which the Fraunhofer institutes are perhaps the best-known but not the only example, operate in many countries as a vital "bridge" between the academic research and technology base and the commercial world of industry and commerce. While varying in ownership, structure and modes of operation, they perform an effective and highly regarded role in many countries as part of the overall innovation system. Within Europe, organisations such as TNO in the Netherlands and VTT in Finland, along with Fraunhofer, have been widely studied as models that could be of value elsewhere.

There are a number of aspects of the Fraunhofer Institutes that make them successful, however, this does not necessarily mean that the model can be easily replicated in the UK, The research they carry out is generally demand led by specific market needs whereas in the UK research tends to be led more by fundamental research. They have had a significant length of time in which to grow and cement their position and reputation within the academic and business communities. Potential centres in the UK would need to establish themselves much more quickly in an already crowded research landscape both at home and abroad. But perhaps the most important aspect is that of funding. The Fraunhofer Institutes are heavily funded by both government and industry to the tune of €1.6bn per year, mostly through contract work, which is considerably more that the £200 million over four years being proposed in the UK. The funding of Fraunhofer Institutes also tends to be over a much longer-term than in the UK where grants only cover periods of around 3-5 years. This is critical as it enables the institutes to recruit high calibre staff and give them time to build their reputation.

Institutions of this type are poorly represented in the UK, where traditionally a great deal of reliance is placed on universities as drivers for the innovation process. Whilst the UK’s high quality university base makes an important contribution to this end, over reliance can raise significant problems. Universities are well placed to work with industry on genuine research and development through to the application stage. However, the "cultural gap" between academia and industry sometimes widens as the work progresses through to an exploitation stage and this inhibits effective collaboration at the pre-commercial phase. The incentives applicable to university staff and research teams are seen by many outside academic circles as being not conducive to the intermediate role, since they focus primarily on research performance and publication output as the basis of appointment, career progression and funding. The environment within universities is seldom as "businesslike" as industry would wish for pre-commercial research and development, with practical concerns about confidentiality and intellectual property management sometimes being raised. In addition, university staff enjoy a good deal of latitude to pursue their personal research interests (which often lies at the heart of innovation of course) and this can detract from a focus on the needs of industrial partners, who may have very specific views of how they wish to develop an opportunity.

That said, there are many good examples of university-associated institutes playing an important intermediate role. These include:

· Warwick Manufacturing Group

· Rolls-Royce Defence Technology Centres

· Surrey Space Centre

· Advanced Manufacturing Research Centre at the University of Sheffield

· Cambridge Institute for Manufacturing

In addition to the university based organisations there are also Government facilities such as the National Physical Laboratory, the STFC sponsored science and innovation campuses at Daresbury and Harwell and industry based facilities with companies such as QinetQ (although these are in serious decline).

However, such institutions necessarily adopt a different ethos and employment terms to those which are the norm within the university sector and this can lead in some circumstances to tensions between the unit in question and the host university. This suggests that there is a strong case to be made for intermediate institutes that are complementary to, but separate from, universities. Moreover, this need has been heightened following the decline and closure of many corporate R&D centres. These centres often involved staff who were comfortable dealing with academics engaged in fundamental research and their disappearance has widened the gap between academia and industry – as such, the need for a bridging body is more pressing than before.

The working relationships between industry, business and universities have improved significantly in recent years, with many examples of successful exploitation through spin-outs, licensing and collaborative R&D. However, the absence of a significant network of ‘bridging institutes’ between academia and industry is seen by some as one of the factors at the heart of the UK’s well-known and long-lamented failure to achieve a commercialisation and innovation performance commensurate with the superb quality of our fundamental research base. If this shortfall is to be redressed, intermediate institutes will play a vital role.

These considerations were apparent at the beginning of the millennium when the newly-formed Regional Development Agencies sought to more fully exploit their regions’ R&D and knowledge assets in the interests of economic development. A further examination of this process is useful in identifying common concerns and potential solutions for innovation centres.

Centres of Excellence

The RDAs secured private sector consultancy support in order to address this challenge. Typically the process included a detailed and realistic analysis of each region’s R&D assets, a systematic strategy for innovation, and the creation of regional Science & Industry Councils designed to achieve a coherent view of needs and opportunities across industry and other partners on a regional basis. In the particular case of North-East England, a pressing need was identified to exploit some very specific knowledge assets to help transform the economy of what at the time was a severely disadvantaged region and one strongly dependent on the petrochemical and process industries.

The measures proposed [1] included the creation of a number intermediate institutes, termed Centres of Excellence (CoEs). They were designed to "pioneer an innovative new model for industry-science links in the UK" and to "...address some of the difficulties encountered in relation to industry-science links, partly reflecting the very different cultures and reward systems that apply in industry and in the science base – especially in universities." The concept was described as follows:

In essence, a Centre of Excellence (CoE) is an association of university, company and other R&D groups and associated teams that derive benefit from working together. If one makes a simple, albeit inadequate distinction between basic research, strategic research, applied research and development, the focus of the Centres will be primarily – but not exclusively - on the strategic and applied areas rather than on basic research, which might be best conducted in the universities, or on development of specific products and processes in a way best handled within a company. The Centres will provide a mechanism for ‘proof-of-concept’ projects, i.e. further downstream than a university laboratory project but not yet developed sufficiently to form the basis of a full commercial investment proposition.

Projects within the Centres’ programmes will typically be conducted under a common project leadership and to an agreed plan by directly-employed staff and by partners (such as universities and companies), working in collaboration. The balance between them will vary from Centre to Centre and from project to project. An important aspect of the Centre’s work will be to facilitate, and where appropriate to manage, effective interfaces between the R&D base and businesses within the relevant clusters and beyond.

The Centres took account of a detailed analysis of stakeholder expectations: a sample analysis is presented in modified form in Appendix 1.

Several key success factors were identified that are relevant to any potential UK initiative:

· The active involvement and support of companies within the relevant clusters, based on recognition that the Centres will benefit their business interests;

· The active involvement and support of the relevant universities, based on conviction that the universities’ own interests are served by the successful development of the Centres;

· Effective support by the public sector, while allowing autonomy of operation and fast decision-making;

· Access to a range of funding streams;

· Ability to accommodate a diversity of participants and relationships, with some organisations highly dedicated to a Centre while others have a more selective relationship with it;

· Recognition externally for research excellence and industry relevance; and

· Creation, through the Centres, of an efficient and effective professional interface between the science base and industry.

Preventing potential conflicts was also a key consideration:

· The CoE must not be perceived as competing for profit with its own members / stakeholders – this points to each CoE as a company limited by guarantee;

· Focus on right to use IP not on IP ownership;

· Distinguish use for research and use for commercial gain, and avoid restricting universities’ or CoE’s right to use IP in future research;

· IP ownership should normally rest with the lead party responsible for its generation: CoE ownership may be appropriate in some instances as a better alternative to messy joint ownership;

· Universities must be able to accrue credit for CoE work (including if possible work done outside ‘university’ groups - e.g. via academic status for senior industry scientists, where the latter have the required track record in terms of external recognition, publications, etc); and

· Companies must have easy access to academic expertise via a professionally managed interface, with guaranteed speedy response - a gatekeeper, but one who opens the gate and helps you through it, not one who gets in the way.

The Centre model was deliberately designed to accommodate both directly-employed staff and groups from companies and universities which could be hosted, physically or virtually, within the Centre. The role of the Centre Chief Executive and his/her team would be to marshal all of these groups around a common set of strategic aims. The model is described in more detail in Appendix 2.

The model offered flexibility within an overall "family likeness" taking into account

· Who is involved in a specific project, and who leads;

· The extent to which participants draw on CoE activities as distinct from just being located there;

· The mechanisms by which R&D is translated into products, processes and wealth creation;

· The academic / industry balance;

· The balance between long term and short term R&D; and

· The degree to which the CEO / core team manage activity directly

The proposals were implemented by One NorthEast and as intended, the Centres evolved in different ways appropriate to their sector. Particular note should be taken of the New & Renewable Energy Centre at Blyth (Narec), Northumberland, and to the Centre for Process Innovation (CPI) on Teesside – recently merged with the Centre of Excellence for Nano, Micro and Photonic Systems (Cenamps). Both have proved extremely successful in building up strong reputations, excellent links with industry, and in particular attracting and retaining major national and international companies within the UK, aided by access to both the physical facilities and the expertise available through the Centres

Conclusions

This experience suggests that institutes of this nature could play a central role in any future innovation system in the UK. It is not the only model available but the features listed above highlight issues that should be taken into account when designing innovation centres for the UK. It is also helpful to gain experience of working within the UK where the culture within both industry and academia may be a barrier to adopting other models from around the world.

Funding and governance arrangements are unlikely to follow the Fraunhofer model exactly given that it is better suited to an environment where substantial national and regional public funding are available – pressures on public expenditure dictate that this is unlikely to be the case in the UK for some time to come. It is important that such centres are able to achieve critical mass, both in business and academic activities, which means that they should be few and large, not many and small, and that they are given time to develop rather than being rushed into too rapid a move to financial sustainability, as the latter would drive an undesirable short-termism. They should focus on areas where the UK has a distinctive and sustainable strength in a particular sector, or at least a realistic opportunity of achieving and maintaining one. Both assembly and process manufacturing falls squarely into this category and the UK should build on existing centres, using further funding to consolidate and further strengthen that position and notwithstanding the loss of other sources of public support.

They should have access to research funding from sources such as Research Councils, typically in collaboration with universities. The relationship with universities and with industry should be underpinned by the availability of joint appointments both with universities (there is for example a precedent in this with a CPI-sponsored chair at Newcastle University), and joint appointments with major companies. It is extremely important that these Centres are be able to collaborate well with industry and universities. It is equally important that they do not duplicate/displace existing centres or relationships, or be seen to be in competition with universities (or other research organisations). There must be a net gain in capability rather than any potential substitution of a TIC, for, say existing established university-industry relations or we may find that the innovation base is eroded.

Coordination should be led by the Technology Strategy Board (TSB) as they are already well placed to carry out the function of networking the centres. However, care should be taken to ensure their role is to provide a strategic overview and enable innovation through collaborations and not to add an unnecessary layer of bureaucracy. IChemE believes that in this manner the strength of the UK’s fundamental research base can be more effectively translated into innovation and commercial success.

About IChemE

IChemE (Institution of Chemical Engineers) is the hub for chemical, biochemical and process engineering professionals worldwide. With a growing global membership of over 30,000, the Institution is at the heart of the process community, promoting competence and a commitment to best practice, advancing the discipline for the benefit of society, encouraging young people in science and engineering and supporting the professional development of its members. For more information, visit www.icheme.org

Institution of Chemical Engineers (IChemE)

08 December 2010

Appendix 1

Centres of Excellence - Stakeholder Expectations

Appendix 2

Centre for Excellence (CoE) model

The component groups of the CoE can include the following, each gaining specific advantages from participation in the Centre which are listed on the right:

Components 8 and 9 are groups managed directly by the core team. These could include:

· Analytical / measurement services (complementary to those in universities and elsewhere)

· Common scientific or pilot plant facilities

· Joint project teams with secondees from companies, universities and others

· Conference / seminar services

· Training services

· Technology transfer teams

· Investment / exploitation services

At the heart of the CoE are the CEO and core team, who:

· develop and implement a strategy for the centre as a whole, involving all participants and based around technology platforms of common relevance

· promote and expand its role

· initiate and co-ordinate collaborative proposals e.g. EU Framework, national facilities, inward investment propositions

· guide and facilitate ‘proof-of-concept’ work

· secure funding

· manage joint projects

· manage shared facilities

· provide a professional academic-industry interface, through understanding both ‘sides’ in depth

· understand and access financial and other resources for commercialisation

· provide a ‘window on the future’ for participants, e.g. by undertaking or facilitating forecasting / foresight of technology and related trends for companies; or by identifying and interpreting emerging research themes and industry priorities for academic and other researchers

· provide feedback to research providers on current and anticipated market requirements