How can the UK make sure its start-ups fly?
You need more than a good idea to launch a successful high-tech business. Harnessing the power of design, British firms are discovering, can make the difference
Article by Simon Creasey
“Not every idea deserves to live.” David Evans, the head of the British government’s Technology Strategy Board, understands the concern over how hard it is for high-tech start-ups in the UK to attract funding. The Technology Strategy Board, now part of the newly formed Department for Innovation, Universities and Skills, has a brief to support technological innovation with funding. But Evans says a balance must be struck. There is no point in investors squandering millions on ideas that are doomed to join floating furniture, the pat-on-the-back machine and the revolving hat in oblivion.
Ideally, the bad ideas should die as quickly and cheaply as possible so the UK can spend more time and money developing the good ones.
The cliché, repeated ad nauseam in the media, is that the UK is very good at the science and pretty good at the technology but not so hot – certainly when compared to the US – at bringing either to market.
Evans begs to differ. “It’s true we don’t have a Microsoft in the UK but we do have Vodafone, a world leader in a significant high-tech sector.”
British universities are spinning off more companies than they were a decade ago and are earning more licensing income, and the UK, he suggests, is as good as any country in Europe at exploiting its science and technology.
He admits the US does better, though he thinks there are cultural reasons for that. “America has a large number of self-made entrepreneurs who, when they’ve made it, want to invest in people like themselves.”
‘If we confine ourselves to high-tech and forget design, we’ll end up with a lot of kit in labs and very little product in the hands of customers’
There is an understandable patriotic pride in seeing British innovations exploited in Britain but Evans says it would be wrong to judge the UK’s record in commercialising science and technology purely on that basis. “In a global market, it may make more sense for someone who has a good idea to sell it to another company who may have access to the right market. If, in such circumstances, the individual or company ends up earning licensing income which they can then reinvest, how is that bad for the British economy?”
In a globalised economy, reality is a bit more complex than cartoon images of exploitative Americans ripping off crazed British inventors. For a start, foreign investment actually accounts for 45% of business spending on R&D in the UK – a tribute to the country’s growing reputation in research.
Evans is not complacent. He does believe that the reality of science and technology in the UK is obscured by some outdated stereotypes. But he also admits that the UK could still improve its record at nurturing high-tech start-ups.
For the entrepreneurs who found these companies, the issue is often stark and simple: how to describe what they have in such a way that they will attract the right investment and be able to develop their technology and take it to the market. A growing number of the 15,000 start-ups in the UK are now discovering that design can help.
Andrew Fraser admits he once knew little about design. His company, Synature, produced online search technology that connected web users to like-minded products and services.The major obstacle was attracting investment and customers. Like many technology start-ups, Fraser had problems selling his product in an easily digestible way, yet within two years of joining Design Council’s Designing Demand Innovate service, his company had secured six-figure venture capital funding and won its first major licensing deal.
'Since 2004 the government has contributed to a £900m investment supporting over 600 projects in 40 technology areas'
The proper use of design is key to the commercial exploitation of new technology. Whether it’s the architecture, the branding, the packaging or the physical look of the product, design plays a crucial role in turning an innovative concept into a tangible product. Owlstone is a classic example of how important design can be. It had devised ground-breaking chemical detection technology that was a lot smaller and cheaper than existing products, but needed to develop a market strategy and get investors on board. “We were aware of the importance design plays in successful products and realised this had to be central in our strategy,” says the company’s co-founder Billy Boyle.
Working with a design mentor as part of the Innovate service, Boyle was soon alerted to the possibility of expanding beyond its original target market of domestic military security.Owlstone also enrolled post-graduate design students to suggest new application ideas for the technology, and worked with design consultancies to create a corporate brand and website to establish the firm’s credibility.
Within two years, the company had attracted significant investment. Boyle says: “An emphasis on design within all parts of the business has helped place more emphasis on customer problems as opposed to pure technology development.”
Another high-tech start-up which has made design part of its corporate DNA is KeCrypt Systems. The company, which spun out of Marconi in 2001, had developed identity management technology which ran on other vendors’ hardware. Joining up with Innovate design associate John Boult encouraged it to develop a low-cost signature device of its own – an idea which had previously been dismissed as too costly and time consuming. Now KeCrypt has a design concept for the hardware and is in talks with two banks about the signature and its device.
KeCrypt managing director John Dale says: “Design ensured we developed – and will continue to develop – user-centric tried and tested products. It is core in our message to investors, staff, customers and partners.” He found that design was especially good at helping the company get its pitch to investors straight. “Before we had tailored our story depending on who we were presenting to,” he says. “Design helped us clarify what our company was about and we used that as the basis for a consistent story we presented to customers and investors.”
To sceptics, using design to help high-tech start-ups might sound about as useful as giving a dictionary to a goldfish. Many entrepreneurs may question whether the appliance of design could help. But design thinking provides structure to the expansion of ideas and gives credibility to selection and focus to the end objective. Clever product design can bring products to market quicker, drive sales and bolster profit margins. “Good design is a necessity in bridging the gap from technology to world-beating products,” says Owlstone’s Billy Boyle. “If we confine ourselves to high-tech and forget design we’ll end up with a lot of kit in labs and very little product in the hands of customers.”
Ian Pearson MP, minister for science and innovation
Innovation is key in helping Britain thrive in an increasingly competitive world, and science and technology are intimately linked with it. From scientific discovery comes innovation and new technologies. All are shaping our daily lives at an ever increasing rate.
There are thousands of companies, both small and large, using innovative practices and developing products which improve our economy and our quality of life.
There are many fantastic small, high-tech companies which are an asset to the UK and a credit to their creators.
The newly created Department for Innovation, Universities and Skills (DIUS) aims to help the UK to boost its cutting-edge research, improve technology and develop the highly skilled workforce we need to help us compete in the global economy.
We must strive to work cleverly, to embrace technology and encourage its development. In particular, we need to ensure our universities produce more quality graduates in science, technology, engineering and maths, as it is these students who will become innovators.
The Government has doubled its budget on science and innovation in the last decade, to £3.4bn this year. We have many ways to support businesses developing new technologies, including offering tax credits to boost R&D, and the new business-led Technology Strategy Board (TSB), set up by government, which offers funding for the development of new technologies.
Working with industry, the TSB uses a market-led approach, offering government funding for collaborative research into technologies where UK business can secure a future commercial advantage.
There is no doubt that this collaborative funding allows business and research communities to work together on projects and helps create successful new products, processes and services.
By bringing together businesses and researchers, we are working to improve our economy and the chance of future financial rewards. By helping businesses identify and develop new opportunities at an early stage, we can open the doors to profitable new products and services.
The UK can draw upon distinctive skills in innovation and creativity to produce high-value goods and services. For example, we have contributed £1.2m to a project led by PowdermatriX which is helping to develop new materials to allow jet engines to operate more efficiently and emit less carbon. A new suite of design software will enable the materials to be used more effectively.
Since 2004 the Government, through the TSB, has supported more than 600 projects across 40 technology areas with a combined business and Government investment worth over £900m. This has enabled many businesses to move into the market place.
Our goal is to make the best use of our world-class science base; capitalising on our innovation, our design and our creativity. In the rapidly changing global economy, it is those businesses that innovate and create that will succeed.
Article first published in Design Council Magazine, Issue 3, Winter 2007