Exploiting our research—the future of UK manufacturing

The mantra is that Britain is second only to the US in the quality of our research, but poor at exploiting it. Our science base is world-class at invention – the conversion of money into ideas – but we are weak at innovation: the transformation of ideas into wealth.

Actually, we are not that bad. The clusters of innovative companies that surround, for example, universities such as Cambridge and my own, Southampton, are evidence of that.

At Southampton there is a "photonics estuary" of 10 or so leading manufacturing companies that have their roots in the work done in the Optoelectronics Research Centre under sustained funding from the Research Councils over four decades.

Three of them have been acquired by global companies, creating inward investment in the local economy. We work with many international and UK companies, and dozens of our inventions are on the market.

Does this mean the Research Councils, which invest about £3bn of taxpayers' money a year in research, have done an outstanding job, while Britain's engine for innovation, the Technology Strategy Board (TSB), with its £317m budget, is sitting on its hands?

The short answer is no. While the former is demonstrably true, the TSB was only formed in 2007 - and in the innovation game, maturity is everything.

It takes as many as 20 years from the first cry of "Eureka!" in a university lab to a product with a volume market; major company product cycles are often five to 10 years. Contrast this with a political cycle of three to five years and the expectation for a quick economic fix and you see how difficult it is to take the vital long-term view. Sustained backing of winners through the full cycle of innovation requires leadership.

Meanwhile, we are still wondering how to spot winners, be they people or technology areas. The traditional approach was to spread the money thinly and back everything. We are now hoping to target our investment into areas that create wealth and growth, as smaller economies have had to do for years. And for the first time since I can remember, we have a government that is prepared to utter the "M" word – manufacturing.

To speed up this nascent process of selection and targeting we need to understand the somewhat uncoordinated cultures of academia, government and commerce and turn them into an engine for growth. We have heard a lot about multi-culturalism recently and it is no less present in the "electrons to enterprise" chain of wealth creation.

Universities now accept that the taxpayer does not owe them a living – governments fund research to gain competitive advantage. We should therefore expect to be called to account for our contributions to society, wealth and wellbeing. This does not lead to short-termism provided that the people auditing our impact recognise the timescales involved in the innovation cycle. The difference between "pure" and "applied" research should be only the level of risk involved and the time horizon to exploitation. The further the horizon, the greater the risk, hence the need for sustained public backing of winners.

The culture of commerce revolves around profit, so often forgets that professors have three roles: education, research and, increasingly, enterprise, too. Ours is not the world of next quarter's numbers, we provide vision and transfer inventions, not products: that is industry's job. And no, it will not be ready by next quarter – it could take 20 years, remember. While research is a lifestyle choice, we are often world-class at what we do. We are ego-driven and love the thrill of discovery, especially if industry can turn our ideas into products.

The role of government, a third player, is not to become involved in the process itself, but to create the environment where innovation and growth can thrive. Ultimately, the market will decide. So what should government do to bridge the gap?

Germany, with its manufacturing-driven economy, is a good role model. More than 60 years ago it set up the Fraunhofer Centres to conduct applied research of interest to private and public enterprise. Today there are 60 of them with an annual research budget of €1.66bn (£1.45bn), of which about 40pc comes from the public purse. So successful are they in bridging the gap between academia and commerce that they are going international, possibly even coming to the UK.

Meanwhile, our own government through the TSB has invested £200m over five years in six Technology Innovation Centres (TICs), the first three of which have been announced. While this might seem small beer compared with our German competitors, it is a start.

Moreover, we do not have the brownfield environment of post-war Germany to build on, but decades of somewhat piecemeal investment in far too many centres around the country, so the challenge is to make something of our existing bricks and mortar.

It would be a shame if this led to distributed "virtual centres" of expertise to appease regional political interests with the consequent management headaches, rather than the single-centred and single-minded Fraunhofer model. I fear we are about to repeat the British thing and spread the money so everyone gets a prize.

Yet Britain is a resilient, flexible place that has a research base of which we can be proud. Thirty years ago, when my colleagues and I started up our first company, I met fierce resistance from many academics. Today several universities have a strong record of spin-out activities and working with industry.

But we need leadership to aid the innovation process through bridging the cultural gap; celebrating it, not eliminating it. TICs will do that, but let us make sure we get them right.

Published: 24 August 2011