Why do people forget why they do things?
14 February 2018 by David Bott
Last year saw a lot of analysis of Catapults. Some, who wondered about the history, made contact with me and other “old lags”, but most seemed to not worry what Catapults had been aimed at, what political constrictions had been applied to change their original goals, and the whole “political” dimension of their existence and how these factors played into their current perceived performance. This was always moderately normal behaviour in government as far as I could see.
The Technology Strategy Board (as InnovateUK was known as for its first 7-8 years) was spun out of the DTI (which became DIUS/BERR, then BIS and now BEIS) in the summer of 2007, but was bequeathed three “instruments” that had been managed by government departments for previous decades. The Collaborative Research and Development Grants were basically rebranded LINK awards. Knowledge Transfer Partnerships were the renamed Teaching Company Scheme grants. And the Knowledge Transfer Networks were the same organisations that had previously been Faraday Technology Transfer Partnerships (a sign that no-one understood the difference between knowledge and technology!). What I remember from the first year or so was just trying to keep up with the ongoing programme of competitions we had inherited and becoming more and more aware that they weren’t necessarily everything companies needed to help them.
Part of what many companies we listened to told us was about the cost of trying new activities. In manufacturing, they knew there were new process machines, or computer controlled operations, but they could not understand what impact these new developments could have on their commercial success without trying them out – and they could not justify the expenditure without trying them out. They were caught in an innovation Catch-22. This challenge was not unique to manufacturing. Getting properly involved in any aspect of offshore renewable energy involved expensive trials – and although there were grants available, their costs had to be justified! The burgeoning area of stem cell therapies required a series of trials, up to human safety testing, before anyone would invest in the companies that were involved. And generating digital data from space required getting the sensors into space – which is not cheap. We agonised about a new mechanism to provide the focussed support all these companies needed to give them – and their shareholders – confidence in these innovative new technologies. Our Advisory Board challenged us in late 2009 to get specific. We made our suggestions of physical centres to our handlers in BIS and they liked the idea. To be fair, government funded centres was not a new idea, but our proposal was specific and targeted on people we had started to build real relationships with. BIS therefore commissioned Hermann Hauser to write a report on the potential for such centres. His report was delivered in early 2010 to the Business Secretary Peter Mandelson (this is all over the cover of the report). Things seemed to be going well.
In May of that year, there was an election and we had a coalition government. The first thing they did was announce a 20% cut in funding for the Technology Strategy Board. To be fair, we were definitely an intervention in business, so not part of the agenda of a non-interventionist policy. But there were people in the new government who openly wondered about whether what we had done was what was needed – and hopefully some companies we had already supported spoke warmly of us – and so we got the money back within a few months, but quietly mourned the centre idea.
And then in October of 2010, as part of a bigger announcement about Tech City, David Cameron announced that the government would be funding “6 to 8” Technology Innovation Centres (TICs) and that the Technology Strategy Board would be organising them. Although our colleagues in BIS had made sure that we were at the meeting, this was the first most of us had heard of it! We had outline plans for the 4 areas mentioned, but we obviously needed to define 2 to 4 more!
And there were complications imposed on us by BIS. There were already several centres dedicated to supporting the manufacturing industry, set up by the Regional Development Agencies (which had been closed by the coalition), and none of them could be closed as a result of whatever we did. This area was also made exempt from our belief that there should only be one centre for each area, and it should be located in the place that would make it most useful to industry (and most used by industry!). We also didn’t like the idea of membership schemes. Since we were asking for taxpayers’ money to give particularly SMEs a leg-up we thought the initial support should be free, but then move into schemes like the Collaborative Research & Development grants for support before evolving into fully commercial work when businesses had the confidence to go forward.
One of the characteristics of the Technology Strategy Board that seemed to appeal to government was the fact that the programme side of the activity was looked after by people who had actually worked in industry. This was usually described as our programmes being “business-led”. However, this disguised a more complicated situation. Many of us had worked with government in previous lives and we had been educated in how government works for the first year or so and we took on the existing programmes and learned our trade. However, setting up these new centres meant taking on a lot more people, and there was no time (or money) to put them through the same process. Also, BIS (and probably the Treasury) had already worked out that these centres would be staffed by a lot of people – so they told us that they would not be part of the Technology Strategy Board itself but must be set up as self-standing organisations largely independent of government.
The recruitment process for the leadership on these centres was therefore targeted on business leaders, and this led to inflated salaries and a worrying lack of accountability to government for delivery.
One of the characteristics of those who have grown up in business is that they are used to clear metrics. If you are in a commercial organisation, and not making a profit (or on a clear path to profit), it is common for the shareholders to replace the management team. For a semi-government organisation aimed at supporting growth by the business it helps, the metric is less clear and difficult to measure. We had lived through this with the TSB, but were helped by the long-standing surveys carried out by DTI/DIUS/BERR/BIS/BEIS. From these we could extract evidence that changing the focus of the Collaborative Research and Development grants from “technology push” to “business-led” doubled the return to the taxpayer, and moving to a coordinated government/business approach in the Innovation Platforms tripled that again. Since there had been no centres previously, it was (and is) difficult to measure how well they are doing. What seems to have evolved is (what is known as an input variable) dependence on how much money is being spent as a proxy for effectiveness. This would never work in the real business world.
There was also a problem of location of Catapults. The logic we had started with was that they should be located as part of the relevant “cluster”. That didn’t stop Ministers asking us to locate them on the sites of closed R&D facilities – or marginal constituencies! As I mentioned earlier, we were strictly forbidden to close anything existing or in the last stages of setting up, and “encouraged” to use existing sites whenever possible. In some cases, this worked, but the RDA habit of trying to be world leading in every trendy field of endeavour had left us with duplication and redundancy! I observe that the temptation to shade location decision for political ends has continued.
So, as the man from Ernst & Young asked me, are the Catapults working? The simple answer is “yes”. They provide access to expensive equipment and services, skilled people to extract the maximum value from feasibility work and insight into what could be done to help the companies grow as fast and far as possible. The question everyone should be asking is “are they yet optimised for delivery?” That is a more difficult question and requires more insight than I have seen applied so far. My biggest disappointment is with the leadership we put in place. We didn’t give them clear metrics, but they also haven’t put much effort into developing them for themselves. It should not be about how much money they spend, but how much support they give to companies (big and small) and how successful that is in helping them grow. Until everyone faces up to the development and use of proper metrics, every politician who wants to make a name for themselves cutting “big government” will find the Catapults a target rich environment. If only they remembered why the Catapults were set up in the first place, maybe they would make the extra effort/