Those who cannot remember the past are condemned to repeat it
30 April 2016 by David Bott
One of the things I have been doing in my enforced inactivity is reading those newsletters that pick up on your past interests and force-feed you their views. I have therefore seen a lot of speculation about my old employer – the organisation formally known as the Technology Strategy Board, but now known as InnovateUK. There seem to be questions about whether (and how) it will become part of Research UK, and more about whether its grants will be turned into loans to ensure the taxpayer gets a direct return from their investment in backing projects, but the one that intrigued me most was about the relationship between the core organisation and their most identifiable offspring – the Catapults. They seem to be seen as distinct from the rest of the organisation in a way that I believe will do them and their goal harm.
By way of back story, the provenance of the TSB was the Innovation Unit in the Department of Trade and Industry. The manifestation that led to the TSB was set up in 2004 as a result of the Innovation Report. There were about 75 civil servants who looked after (among other things) the combination of the grant systems that had descended/evolved from the LINK scheme, and which was known as the Technology Programme. To ensure that they addressed business relevant issues, the DTI set up an Industrial Advisory Board consisting of 12 senior business people – representing both large and small companies. It was known as the Technology Programme Strategy Advisory Board – which got shortened to the Technology Strategy Board. When they felt it was working quite well, the DTI leadership imagined that it would work better as what they called a non-departmental body at arms length from government. This was decided in 2006 and given a completion date of July 2007. There was no time for new legislation, so it was launched using the existing legislation that was used to set up the research councils. It is amusing to note that we were always told we couldn't change the name without an act of Parliament, so although it is now “trading” as Innovate UK, the organisation is presumably still called the Technology Strategy Board!
After it was set up, and the new executive team looked at their task and tools, they realised that it was a bit of a mess. As well as the grants, we had the Faraday Partnerships (which had been renamed the Knowledge Transfer Networks) and the Teaching Company Scheme (which was renamed the Knowledge Transfer Partnerships). Outside the organisation, the Regional Development Agencies looked after was is now called the SMART Awards (although at the time they were known as Grants for Research and Development). There was also a fair amount of activity on science parks, business parks, and incubators set up by the RDAs, but they tended to be competitive between the regions rather than collaborative on behalf of the UK. (When the RDAs were closed, responsibility for the SMART scheme came to the TSB but with less money allocated!). The more we talked to companies as we tried to focus our grant schemes for the benefit of the UK economy, the more we realised that many companies needed expensive assets, or access to the underlying science, or to their potential customers, but that dealing with these challenges in a piecemeal way would waste money and probably end up with decisions made on lobbying ability rather than business potential. (The main evidence we had for that was the implementation of the recommendations on nanotechnology, where the key report suggested 2 centres but it ended up with 23 – our review suggested very little contribution as a result!)
We started talking to anyone who would listen about the idea of focussed national centres where SMEs could access all those expensive, or difficult to organise, things that they couldn’t afford – or sometimes even find! It was not a unique idea and both the civil servants in BIS and the Conservative Party were examining the same idea. BIS asked Hermann Hauser to lead their evaluation of the idea and James Dyson led the other “team”. Everyone came up with similar ideas. A small number of centres, located near the business activity would provide access to the missing ingredients for business success. The election put everything on hold, but by October 2010, the Coalition Government had decided that there would be 6-8 centres and that the Technology Strategy Board would organise the process for deciding what and where.
One aspect we did all agree on was the need for a mixed funding stream. In addition to core funding, the Catapults are supposed to win collaborative grant funding (in conjunction with businesses) to take projects through the risky development stage by supplying the physical and intellectual assets that companies needed, and also get direct project funding from industry for later stage projects. There is an obvious transition from early stage, risky work with 100% Innovate UK funding, through collaborative work where the risk is shared and mitigated, to purely commercial research work.
It was common knowledge that the first would be in manufacturing, but the added requirement BIS imposed on the process was that none of the pre-existing RDA developed centres would be closed. Given that some activities of the RDAs had been more competitive than collaborative, the process of building one organisation was tortuous and probably more expensive than it needed to be and resulted in an extra layer of management.
Subsequent Catapults mostly ended up being located at or near the centre of the largest cluster of that activity, and they stayed with the original idea of getting extra focus by having one centre for the whole of the United Kingdom. They are now several years old, and are beginning to mature as organisations, but it is still probably too early to judge overall success. When we set them up, we pointed out that the most usual comparator, the Fraunhofers, not only existed in a different funding context but also had been going for more than 60 years and that everyone should be aware of the tension between early stage measurement and long term success.
Now the request of anyone who wants funding from government to support their area is for a Catapult. When a local industry is in trouble, the request is for a Catapult. When there is a new area of science, the request is for a Catapult. This raises the question of how a Catapult should be specified and implemented? And, for me, how much mission creep has there been?
They are supposed to be a one-stop shop. The goal is to help companies to quickly evaluate and develop innovative ideas that will help them grow. In many cases, the need is for capital assets that could not be financially justified for a early-stage, risky project, but it is more than just the equipment that is needed. Trained operators that enable the effective use of the assets are a must. There is a lot of potentially suitable equipment distributed around the university system through the various rounds of HEIF, but having tried to use them in my industrial days, we often found them in a poor state of repair and therefore unusable and mostly without the technician support that made use practicable. To an extent this service was also already available in some areas through pre-existing RTOs and establishing new, government subsidised competitors would not be an efficient use of taxpayers’ money. However, what we also realised was that to maximise the usefulness, the companies needed to understand the theoretical background and the context in which the equipment could (and should) be used.
Business-led is a state of mind and does not mean run by business managers. To be fair, it took us a while to recognise this. Catapults are not businesses in and of themselves. They are there to provide the support businesses need to grow and generate the economic growth intended. I shiver when I remember some of the ideas we had in the early days of the Technology Strategy Board, and the kind and gentle civil servants who took us through the potential outcomes and made us realise that helping business is not the same as being in business. I have watched some of the Catapult management teams go through the same process, probably making the same mistakes. Having a large pot of money and a large collection of equipment doesn’t do anything more that take the money out of the economy (and therefore is the antidote to growth). It is only when that capability is used to help companies go faster from concept to commercialisation that their goal is realised.
It is tempting to succumb to the need for “political relevance”. Aside from the fact that this is as distinct and transitory as tears in the rain, it is useful to remember that politicians are mostly interested in announcing new things and opening things (hopefully that they announced because that shows action). Unfortunately for them, the work that counts toward economic growth is the hard, often boring stuff in-between. When we were setting up the original Catapults, we were often asked if they could be more distributed around the UK, and particularly in marginal constituencies. The autonomic response to ask for a Catapult to address any perceived problem suggests that the system has evolved to accommodate political will rather than business impact.
One of the senior civil servants we worked with at the TSB once put together an analysis of how the UK government fell in and out of love with national centres. There was, if I remember correctly, about a 30 year cycle, where centres were set up, became expensive and poorly targeted, were privatised and often failed, before the whole cycle started again. One of the problems I see with the current attitude to Catapults is that they are used, not as an integral part of the UK innovation infrastructure, but as a stand-alone initiative. Politicians like this interpretation because they can decide the what and where. Those who manage them seem to be falling into a behaviour pattern where they will do whatever they are paid for either directly by government or directly by existing businesses (where they act as variable outsourced development costs). With the alleged cuts in Innovate UK’s money available to support projects where companies up and down a supply chain work together to understand and mitigate risk, the original strategic role of Catapults is in danger or being forgotten. As I mentioned before, comparisons are often made with the German Fraunhofers. They exist is a very different funding context, but they have longevity and consistency on their side. As long as the UK government directs Catapults both with direct funding to deliver their goals as opposed to wider business goals, those comparisons will always be unfavourable and we will not be able to translate the world-class science done in the UK into commercial competitiveness.