Turning ideas into profit: the UK’s biggest challenge
We have the technology, but getting it to market is another matter. Clint Witchalls explores the issues around reinventing the way Britain invents
If Bill Gates had been British, former Design Council chair Sir George Cox once remarked, he’d be running the largest software company in Guildford by now. The observation reflects the UK’s inconsistent record of commercialising the ideas it generates. But, as the finance sector’s share of GDP shrinks, commercialising good ideas – and selling them to the world – becomes central to the UK’s strategy for sustainable growth.
Circuit board (Jason Homa/Getty Images)
Technology is the new great hope – green tech, clean tech, nanotech, biotech, infotech. High-tech start-ups can spur innovation, create jobs, generate revenue and protect UK manufacturing, which isn’t dying so much as evolving, becoming more productive, qualified and cutting edge. One quarter of British exports are defined as high-tech (compared to 22% for the US, 15% for France and 11% for Germany).
Britain’s power-generating capacity and transport infrastructure need major investment, and the shift to a low-carbon economy will create opportunities. The key point, as CBI director general Richard Lambert noted recently, is whether the UK can capture the intellectual property and high-value jobs created by this investment, and that partly depends on protecting the country’s manufacturing supply chain.
“A lot of businesses believe that if production goes abroad, you can keep R&D in the UK, but that’s not always the case. When you lose one, you often lose the other,” says Simon Coward, centre director of Norwich-based Hethel Engineering Centre, a local authority-owned enterprise hub that supports high-performance engineering and manufacturing companies and individuals.
Coward says the UK cannot compete with China as a mass producer, so companies should focus on advanced manufacturing. The UK is comparatively strong in high-value manufacturing such as aerospace, defence, pharmaceuticals and life sciences and in June the government promised to invest £150m to help this kind of manufacturing flourish.
The UK is second only to the US as the preferred location for foreign high-tech investment. Lambert believes “the astonishing alchemy that comes from mixing great academics and great manufacturers” and the country’s “great engineering and design skills – think Dyson, Smith & Nephew or BAE Systems” could prove pivotal to the UK’s competitive strategy.
Adam Afriyie, shadow minister for innovation, shares Lambert’s enthusiam, but adds a note of caution: “From the foundations of fibre optics at Imperial College to the development of the contraceptive pill at the University of Manchester, our scientists have led the way in a fast-changing technological world. But the UK’s strong history of scientific research has, sadly, not been matched with the ability to commercialise discoveries.”
Ability, altruism and American culture
So how does this country close the gap between research and commercial development? The road from concept to long-term income can be long and arduous. Patents must be sought, ideas demonstrated, risks identified, commercial products integrated into the supply chain and marketed. While regional enterprise hubs such as Hethel can help with funding and specialist support, some pundits believe the UK just doesn’t have the entrepreneurial culture to succeed.
“There is no shortage of creativity in this country, but the US is significantly better at commercialising technology,” says Matt Rogers, founder of technology start-up Aroxo, an online negotiating tool that matches buyers and sellers. “In the UK, we seem ashamed of seeking extraordinary success, and this holds us back.”
Afriyie thinks there’s more to it. “We have the talent and capacity to do better. It’s often said the climate in America is more suited to investment in innovative technology and commercialisation. There are regulatory and funding barriers to address to release the UK’s latent innovation.”
Recognising that the US sets the gold standard for entrepreneurship, the British government and the Kansas City-based Kauffman Foundation have set up scholarship programmes for British innovators to learn from American entrepreneurs.
Simon Phelps was one of 15 graduates on the Kauffman Global Scholarship Programme in 2007. While studying science and computer-aided design at Bournemouth University, Phelps had invented a new kind of flood barrier and wanted to know how to commercialise his invention.
In an intense six-month programme, graduates learned everything from business plans to marketing, and were mentored by American entrepreneurs. Phelps was struck by the level of altruism among successful, self-made Americans. “They will give their time for free to aspiring entrepreneurs,” he says. “They’ll open up their Rolodex and give them contacts. In the UK, people are more reticent to help you in an altruistic way.”
Such initiatives are worthwhile, but a broader structural approach is needed. That’s why the Design Council is helping British universities convert great ideas into commercial products with a programme called Innovate for Universities (see left). The scheme aims to accelerate the commercialisation of 24 breakthrough technologies and build design capability at technology transfer offices – university functions set up to identify promising technologies and take them to market.
Many of these offices are staffed by people with science PhDs but scant commercial or design experience. “Technology transfer offices are traditionally happy spending money on patenting and market research, but less confortable spending on more exploratory stuff like design,” says Jesse Belgrave, a design and innovation manager at the Design Council. “We have an idea for a product, but who might the customer be? Let’s deal with that now rather than try and protect things that might not be worth much.”
Innovate for Universities will help technology transfer offices understand early on that design can help inventors visualise what is different about their creation so they can attract investors. By shifting the focus from the technology to users and markets, the design associates who mentor the technology transfer offices can help reduce risk, maximise IP value and accelerate time to market.
Credit, cash flow and design
“Technology companies or universities with great ideas and research need to build solutions rapidly and roll them out,” says James Swanston, founder of Carbon Voyage, a car-booking service people can use to reduce their carbon footprint. “It is easy to continue to innovate in a research environment, but without testing against a real audience, great ideas can become redundant.”
Cash flow is the other incentive for companies to get to market quickly. Even before venture capitalists went into hiding, they only invested a fraction of their cash in early-stage UK technology (£200m out of £34bn in 2007). While banks are lending again, credit is more expensive, so start-ups are more cash-strapped than ever.
“When you’re in development, you’re not earning any revenues, so you need to get launched as fast as possible to stabilise the business,” says Aroxo’s Rogers. He and his business partner, Andrew Culpan, spent nearly three years developing their business and software. The website, launched this year, has already seen more than £40m of stock posted online from a wide variety of sellers, but the company has yet to seek investment from outsiders.
Technological ideas that seem useful to inventors can leave customers bewildered, indifferent or hostile Jaideep Prabhu, Cambridge University
Rogers believes that British high-tech start-ups need to start ‘bootstrapping’: using the founders’ personal money and doing everything as cheaply as possible. The Aroxo logo and brand was designed by a Croatian creative agency for £200, software development is outsourced to India and the company uses as much free, open-source software as it can.
Fundraising can easily take a founder six months of full-time work. By raising funds at a later stage, a company will be more attractive to investors and get its finance on better terms.
The downside to this approach is that rapidly dwindling cash and the fear of rival launches can cause start-ups to cut corners and launch too early.
Jaideep Prabhu, Jawaharlal Nehru professor of Indian business and enterprise at Judge Business School, Cambridge University, says this can be fatal. When Prabhu studied the conversion rates of ideas into commercially successful products at pharmaceuticals companies, he found that firms pursuing a small number of new products over a moderate period of time commercialise more ideas than those that pursue lots of ideas in the hope some will sell.
Companies, individuals and universities could save themselves time and money if they asked tough questions about their idea up front. Who will use this product? What customer need does it fulfil? How would you describe your product to someone you’d just met? “Technological ideas that seem obviously useful to inventors often leave customers bewildered, indifferent or hostile,” says Prabhu.
Early over-valuation of an idea’s worth can lead university staff to fret about selling intellectual property too cheaply and leave potential partners worrying about disproportionate royalty cost. By appraising how a customer might actually use a concept, design can bring realism into this process.
Britain is getting better at commercialising science and technology: in pre-credit crunch 2007, universities received £2.64bn from businesses and public services. But more could be done. “Other countries are getting better too,” cautions Belgrave. “There’s a race going on.”
From research to innovation
The Design Council’s Innovate for Universities programme matches design teams with university research departments to speed up the development of technology ideas.
Six universities are receiving 12 months of intensive design mentoring for their projects, including:
Leeds University
iPAM
Intelligent Pneumatic Arm Movement (iPAM) is a robotic system that helps stroke victims to exercise independently, allowing physiotherapists to see more patients.
University College London
Prospective Crime Mapping
ProMap software maps crime and uses the data to help police work out hotspots. Although focused on burglary, it could track any offence.
Nottingham University
Food allergy test kit
This uses nanotechnology to reveal a patient’s full food-allergy profile from a single blood sample.
University of Aberdeen
Clean water technology
A solar-powered fuel cell cleans dirty water by breaking down its organic compounds, and produces electricity at the same time.
University of Cambridge
Velox
This small, battery-powered device uses oxygen to speed up the healing of chronic wounds (such as leg ulcers) in the patient’s home.
York University
Automatic face-description software
Working from audio or video footage of faces, this software can work out age, ethnic background and gender instantly – ideal for market researchers.
From research to results
David Secher on the UK’s commercial success stories
In the past decade, sustained government funding to stimulate enterprise and external engagement in higher education has allowed UK universities to build the capability to turn research into products and create knowledge-based companies.
The claim that the UK is good at inventing but poor at developing inventions into products is no longer true. The capabilities and performance of UK universities are now on a par with those in the USA.
The culture among academics has changed. Most accept that universities play a key role in the competitiveness of British business and that entrepreneurship is vital to the economy. A recent Higher Education Funding consultancy services and 13% have taken out a patent. But it is still rare for scientists to move between universities and industry, and there is still a belief that sabbaticals in industry will damage academic careers.
Since 2002, the Praxis programme has trained more than 2,000 technology transfer professionals in skills ranging from IP protection and commercialisation, to setting up a consultancy and design.
In his 2007 review of British science and technology, Lord Sainsbury highlighted the benefits of incorporating design at an earlier stage into the process of commercialising university research and asked how design advice might be made available to universities. A joint workshop organised by Unico (now Praxis-Unico) and the Design Council has explored this question and, building on successful pilots at University College, London and Oxford, six leading universities have recently won a year’s design support for their technology transfer offices.
The exciting combination of British design and universities holds great promise for the identification and delivery of the products of the future – surely a key part of our economic recovery.
Article first published in Design Council Magazine, Issue 7, Winter 2009
Cover design www.purpose.co.uk. The PANTONE® Chips used on the front cover of this magazine are solely for artistic purposes and not intended to be used for specification. Refer to current PANTONE Color publications for accurate color. PANTONE® and the PANTONE Chip Design are the property of Pantone LLC. Produced with the written permission of Pantone.