WEDNESDAY 20 MAY 1998

DR GORDON EDGE AND DR RALPH ECCLESTONE

  340. Would you extend that to say that, broadly speaking, we are neglecting putting enough money into development?
  (Dr Edge) Yes.

  341. In which case, we have had government schemes and European schemes that have concentrated on supporting pre-competitive research. If that is right, is that the right way of doing it?
  (Dr Edge) Do we have experience of that?

  342. I am asking you.
  (Dr Edge) We have experienced one and the administrative burden of working on a pre-competitive project in the European Union is as much as the value of the project and for an organisation like ours, it was such a bureaucracy for getting through the programme that it extended the timescale, or certainly did for this project, by twice what it should have been.

  343. My question is if the problem is arising at the development end towards the market and even the early stages of the market, what is the point of putting the money in at the pre-competitive stage?
  (Dr Edge) I do not think money is the issue anyway. The issue is one of effectiveness. The basis of modern competition is added value, so whatever product I make, whether it is a watch or a bottle of water, added value controls the relative pricing which I can get for that product. The only correlate of added value is skill intensity. Skill intensity is the cost of employing knowledge-based educated skill. Now, if I employ the same number of people as my competitor, then the skill intensity must be the same. Therefore, competitive advantage comes from effectiveness, not from cost, so the key thing is to get your organisation effective and that means doing away with time. Time is not an issue. People should be thinking of working 24 hours a day, if they wish, seven days a week. They have to be able to work in an environment and at a pace which suits them and not be over constrained. So I would come back to the point that it is not money at all, but it is an issue of effectiveness and if I have got an effective organisation, I will not have a problem in raising money for a development programme if I need it, but to use governments for this and the European Union for this I think is a mistake.

  344. We have been told, and I think it was by 3i, that what was needed for taking on ideas into commercial products was what they called "serial entrepreneurs" who would come in and, if you like, bring the business acumen to marry up with the technical competence of the inventor. How do you see that?
  (Dr Edge) Well, again seriality implies a handing over.

  345. Their concept is that we should get people out of their safe, big companies where they have got senior positions, where they move in, assist one company and then when that is well on its road to doing well, move on; this sort of culture, to use your term, exists in America, but not in this country.
  (Dr Edge) It does because people in large American corporations have grown up in a management environment which supports risk, which teaches people to manage cash and which teaches people the importance of marketing and selling. Now, these people do not exist in those numbers in this country because the big companies do not have that type of culture, and by bringing someone out of a major company and putting them in as the chairman of a start-up is a recipe for disaster and it has been demonstrated to be so.

  346. So you do not think that we should try and emulate that model, or should we; and, if so, how?
  (Dr Edge) Well, I would like to emulate it in the sense that the major companies should adopt the American model of technology orientation, risk orientation, with everyone involved in the process and not saying, "Cash management is your problem and technology is your problem". Any successful major American corporation behaves in this particular way. There are some of course which do not which are just as bureaucratic as ours, but the best companies in the United States, and Hewlett Packard is certainly one of them, General Electric is another, where anyone you talk to in the organisation, you know what that company does and they reflect everything about it.

  347. Are there any British companies that you would hold out?
  (Dr Edge) As I say, I think Zeneca is a very good example.

  348. In your submission you said, regarding Foresight, that the process "has not been developed to the optimum beneficial level". Can you explain this and how can we put it right? If there are any other examples similar to Foresight abroad, perhaps you can give us those.
  (Dr Edge) Here I am a poacher and a gamekeeper. I am on the ITEC Foresight Panel with John Taylor of Hewlett Packard. One of the fundamental problems is this: that Foresight's role is really to encourage industry to think about emerging science and technology in the context of new business development, but I am a human being, I know a lot of emerging science and technology which is going to be important to our competitive advantage. Now, am I going to put that on the table so that my competitors can get it? It is a difficulty. You can speak in allusion and you can speak in metaphor, but it is still a problem, so Foresight tends to gravitate towards what I would see as the obvious, the sort of "gee whiz" type of our developments, and does not concentrate on the importance of the science base and its translation into industrial products and what areas of science in the long term are necessary, so it tends to get pushed into a corner because the really exciting stuff does not get on the table, the other stuff is talked about, and that leads then to shorter-term thinking and that is really what I meant and I am sorry to knock it in that sense because I think that—

  349. But what would you do to put it right because the next consultation document is out?
  (Dr Edge) Yes, I know.

  350. So what would you do to put it right because the Government is looking for the way forward?
  (Dr Edge) I think your assumption is that the mechanism can be put right. I am not so sure it can. What I would rather do is what I have been saying before, which is to encourage the senior management structure in British companies to be far more technologically aware of themselves because the people who come to the Foresight Committees are not the chief executives of these companies, they are not the people who should be there listening to what is going on because they cannot, so they send their R&D people and they all know what it is all about anyway, so it is really preaching to the converted around the table.

  351. So we need a different set of people around the table?
  (Dr Edge) I think it is more fundamental than that really. I really do think that the issue is one of awareness amongst senior boards of management in companies in this country of the way in which technology translates into competitive products and for them to participate in that process and that means they have to have some technological training, knowledge and information.

  352. How could we bring that about? Is there a role for government in this?
  (Dr Edge) We see it again, and maybe we are our own worst enemies, but the City tends to go for the throat of technology-oriented businesses, and British Biotech is the latest one, where they feel there is a naivety about the business practice of the organisation because it is being run by technologists. If you remember the old Rolls Royce break-up, it came from the same problem, that the technologists themselves were not sufficiently keen to interest themselves in business. So it is this breadth issue again, I am afraid.

  353. I think we could go on for ages, but unfortunately time is against us and we have to finish now. If there any points that have arisen out of this discussion which you feel you would like to elaborate on, and I know there are lots of questions we could ask, please let us know. I think we have found the day extremely enjoyable and interesting, and once again thank you for being here and for allowing us to be here too.
  (Dr Edge) Well, either individually or collectively, you are most welcome to come back at any time you wish. We have enjoyed the day and it has been very stimulating for us because it is so important that people in your role participate in the debate as seen from our perspective which is sometimes a long way away.

  Dr Jones: Thank you very much.