1.  INTRODUCTION

  1.1  Cranfield University welcomes the opportunity to give its views on Engineering and Physical Sciences Based Innovation. Cranfield presently has the largest earnings from UK industry of any British University by a substantial margin and also, presently, operates the Teaching Company Directorate on behalf of the Department of Trade and Industry. The University therefore has a significant background of relevance to the inquiry. The author, Professor P Hutchinson, was a member of the Working Group which prepared the response by the Royal Society to the Inquiry and is in full agreement with the observations made there. This response will only add matters that are not dealt with in the Royal Society submission so as to avoid burdensome repetition.

2.  SUMMARY

  2.1  Engineering and Physical Sciences Based Innovation is a complicated process the components of which are now beginning to be elucidated. This clarification could facilitate stimulation of innovation.

  2.2  Government laboratories and independent research and technology organisations have a clear role to play in innovation and technology transfer but can suffer from difficulties associated with inadequate outlets for ageing researchers who lose productivity in research.

  2.3  The undue focus of the Research Assessment exercise on publication in referreed journals and the relatively low weight attached to research for direct application diverts some of the most able researchers away from innovation.

  2.4  The conclusions formed in the Foresight process should be updated and reviewed on a regular basis less they become ossified and irrelevant to current business.

3.  INNOVATION AND TECHNOLOGY TRANSFER

  3.1  Industrial growth means change and more than ever technological change. Widening European and World markets has brought to companies a demand for innovation for more technologically based up-to-date products and more technologically based competition. There are, of course, a number of routes and strategies to help companies acquire technological knowledge. These include: in-house R&D, technology transfer, licence agreements, direct purchase, joint venture projects, company acquisitions and mergers, contract R&D, new personnel and turnkey projects. Each of these has its advantages and disadvantages, but some of the disadvantages of the more formal arrangements include their one-off nature, the time needed to find and choose appropriate partners, lengthy negotiations and often a lack of follow-up support. Indeed it is these difficulties in traditional formal approaches that have, in part, led to the recognition that the search for and acquisition of technology knowledge should be a continuous process rather than a series of one-off periodic steps.

  3.2  It has long been recognised that a key characteristic of technologically progressive firms is their high quality of incoming information. As long ago as 1959, Carter and Williams reported the importance of this in almost 200 firms over a wide range of industries. Many other studies have since demonstrated the value and importance of external information for successful technology development and innovation. For example, SPRU's Project SAPPHO confirmed the need for high quality external linkages, as did Peters and Waterman (1982) and CEST (1990 & 1991). Innovation in companies is now being seen as an on-going process of know-how accumulation based on a complementary mix of in-house R&D coupled with a proactive searching and scanning of technology based knowledge developed elsewhere (Cohen and Levinthal, 1990; Seaton & Cordey-Hayes, 1993; Trott, Cordey-Hayes & Seaton, 1995).

  3.3  This process of search and acquisition of technical information being practised by technologically progressive companies often involves informal networks, partnerships, and formal strategic alliances.

  3.4  A relevant background question is to ask how this practice can be extended more widely to less technologically advanced organisations and to SME's without an R&D activity.

  3.5  To assist such organisations in this process, there has been the evolution of a number of Intermediaries or third parties who aim to aid this knowledge transfer process. These include RTO's, Regional Technology Centres (RTCs), specialist transfer agencies such as Defence Technology Enterprises, and more recently one-stop-shops such as Business Link and the major activity of the Foresight Programme. The performance of these have had a mixed success. Partly this has been because of the emphasis they have placed on making provision of technology ideas, on the assumption that increased exposure to these ideas would in some way result in beneficial technical change in industrial companies. While such provision of "access" to technological ideas is an important and necessary part of technology transfer, it is only one component of a much more complex process.

  3.6  The conceptual framework shown in Figure 1 attempts to illustrate technology transfer more realistically as a series of interacting sub-processes, rather than a simple one-off transaction or decision process. This framework was initially developed following a study of the role of intermediaries in which a mismatch was identified between the needs of potential innovators and the activities of information-centred technology transfer agencies. The research revealed that where much effort appeared to have been devoted to providing "access" to technology knowledge, little effort had been aimed at understanding the needs of organisations acquiring technology knowledge developed outside their own organisation and the transfer channels appropriate to them.

  3.7  The illustration in Figure 1 is considered to provide an appropriate vantage point from which to explore the issues involved in innovation and technology transfer. But firstly, it is necessary to define terms:

Accessibility:  the level of technology knowledge and the availability of related information

Mobility:  the ease of obtaining this technology knowledge and the appropriate channels (eg intermediaries, people movements, networks, partnering) through which technologies are transferred)

Receptivity:  an organisation's overall ability to be aware of, to identify with and to take effective advantage of technology.

  3.8  Any investigation of technology transfer should take account of mobility channels and varying levels of receptivity as well as taking account of levels of technology accessibility.

  3.9  Finally, the remaining terms in Figure 1 need clarification and this can be achieved by expanding the definition of receptivity into a process of search and information acquisition. Thus, receptivity is the capacity of preparedness to:

—  search and scan for information which is new to the organisation (awareness)

—  recognise the potential benefits of this information by associating it with internal organisational needs and capabilities

—  communicating these to, and assimilating them within, the organisation

—  applying them for competitive advantage

  3.10  The paper "Inward technology transfer as an interactive process" by Trott, Cordey-Hayes and Seaton develops these concepts further and is based on studies conducted within ICI Chemicals & Polymers Ltd.

4.  THE INDUSTRIAL APPLICATION OF GOVERNMENT FUNDED RESEARCH

  4.1  The industrial application of Government funded research should be taken much more seriously in the UK than it is presently. This is probably a significant factor influencing UK economic performance.

  4.2  Many Government measures presently miss the mark by taking either an over simple view of the process of technology transfer and innovation (see above) or by positively obstructing it. For example, the undue focus of the Research Assessment Exercise on publication in refereed journals, and the relatively light weight attached to research undertaken for direct application, diverts some of the most able researchers away from innovation and into publishable research.

5.  THE RESPECTIVE ROLES OF GOVERNMENT LABORATORIES AND INDEPENDENT RESEARCH AND TECHNOLOGY ORGANISATIONS

  5.1  These organisations have a clear role to play in innovation and technology transfer. However, they suffer from a key difficulty in that there is no clear onward route for those researchers who, as they age, cease to be productive. By contrast, the Universities have a continuing flow of bright young people committed to research who move through the process of PhD research into post-Doctoral positions and on into Industry and Commerce. It would be useful to find an appropriate association between the Universities, Government Laboratories and independent research and technology organisations. The EPSRC Partnership scheme is a useful example. It might be useful to re-adjust the terms of employment in Government research organisations and independent research and technology organisations so that a relatively small number of people, of established productivity, have permanent appointments, together with a larger group who move through employment in research into employment in the commercial and industrial sectors.

6.  THE OPERATION OF GOVERNMENT SCHEMES DESIGNED TO PROMOTE COLLABORATION IN AND INDUSTRIAL APPLICATION OF RESEARCH

  6.1  There are now many Government schemes designed to promote collaboration in, and industrial application of, research. Much is made of collaboration in many of these schemes, but more often than not they remain firmly focused away from genuine application and exploitation. In order for exploitation and application to occur, the collaborations must be of long duration. Regrettably, many of the schemes have a too near term focus.

7.  INTELLECTUAL PROPERTY RIGHTS AND PATENTING

  7.1  See the observations in the Memorandum from the Royal Society.

8.  THE PROVISION OF FINANCE TO SUPPORT ENTERPRISES IN THE APPLICATION OF RESEARCH AND INNOVATION

  8.1  See the observations in the Memorandum from the Royal Society.

9.  THE ROLE OF THE FORESIGHT PROGRAMME IN FOSTERING NETWORKS AND IDENTIFYING PRIORITIES

  9.1  The Foresight programme was successful in fostering networks but, if this was the aim, it could have been achieved more directly and at much lower cost. The support provided to at least one panel, of which the author was a member, seemed inadequate and there was a consequent tendency to waste the time of panel members. In future exercises this effect would be modified if the panel members, or their institutions, were reimbursed the full cost of members' time.

  9.2  The conclusions formed in the Foresight process should be updated and reviewed on a regular basis, lest they become ossified and irrelevant to current business. There is reason to doubt the generality and soundness of some of the conclusions.

10.  THE ROLE OF THE ENGINEERING AND PHYSICAL SCIENCES RESEARCH COUNCIL IN FOSTERING TECHNOLOGY TRANSFER

  10.1  See the memorandum by the Royal Society.

11.  PROGRESS MADE TOWARDS IMPLEMENTING THOSE RECOMMENDATIONS OF THE SCIENCE AND TECHNOLOGY COMMITTEE IN THE PARLIAMENT IN THEIR REPORT ON "THE ROUTES THROUGH WHICH THE SCIENCE BASE IS TRANSLATED INTO INNOVATIVE AND COMPETITIVE TECHNOLOGY RELEVANT TO THE FIELDS OF ENGINEERING AND PHYSICAL SCIENCES"

  11.1  See the memorandum by the Royal Society.

2 April 1998