The Royal Society of Edinburgh (RSE) is pleased to comment on the Scottish Higher Education Funding Council (SHEFC) and Scottish Enterprise (SEn) report of the Task Group on Research and Knowledge Transfer. This response has been prepared under the direction of the General Secretary, Professor Andrew Miller, with the assistance of RSE Fellows with substantial experience in this area.

Despite notable achievement in research and outstanding discoveries, Scotland has found it difficult to turn the scientific output of its universities and research institutes into jobs and prosperity in the Scottish business sector. To help address this problem, the Royal Society of Edinburgh and Scottish Enterprise undertook a wide-ranging Commercialisation enquiry which, in 1996, resulted in the Technology Ventures Strategy. This aimed to encourage greater commercialisation of appropriate science base research by identifying the main barriers to commercialisation and proposed various measures to reduce them. Since then, the RSE has remained actively engaged in promoting the commercialisation of the Scottish science base, and the promotion of a better understanding of the issues involved in innovation and commercialisation. We were much involved in the creation of Technology Ventures Scotland Ltd, which is co-funded by SEn and SHEFC, and is an important forum to improve the interfaces between the research base and industry for commercialising research.

The Task Group Report retraces many well-worn paths. Whilst most of what is said is not new, it is summarised in a way that will be helpful to those considering the policy issues in this complex area. The recommendations are sound, without being overly radical, and they will help address some of the failures that have been identified.

The context analysis quite correctly identifies that one of the great problems of the Scottish economy is the lack of industry ‘pull’ on research technology application. Scotland has very few large research-intensive companies, which can create a ‘knowledge pull’ from research in Scottish universities. Most Scottish companies are small to medium sized enterprises (SMEs), often in rather ‘traditional’ sectors. In many of these SMEs the barrier to knowledge uptake is that the companies are not able to analyse their business process in a way that allows them to envisage technological solutions. Moreover, there is a paucity of university staff with the knowledge, ability and time to undertake the kind of business or process analysis required to interact successfully with these companies.

The omission of the Scottish Agricultural and Biological Research Institutes (SABRIs) from the Task Group Report is unfortunate. These Institutes already have a remit for technology transfer as part of their funding framework (as is proposed for the higher education (HE) sector). It would, therefore, have been informative to establish how effective that type of financial provision has been in facilitating knowledge transfer to Scottish industry. With the exception of the Scottish Agricultural College (SAC) (which has a specific and separately funded technology transfer arm) the consensus amongst the SABRIs would probably be that there is greater technology transfer into companies outwith Scotland than occurs locally.

Our comments on the specific proposals for action identified in the Report are as follows:

A distinctive dual approach to the funding of "Knowledge Transfer" should be established with two funding streams
The RSE welcomes the provision of additional funding to universities for knowledge transfer. The Report, however, rightly warns that attempts to encourage Scottish universities to adopt the additional goal of knowledge transfer will endanger the research base unless adequate additional funds are provided. Universities have a major teaching role and a major role in fundamental research. This means that commercialisation has to take its place among these other priorities. Universities can make a contribution to commercialisation but their ability to be mobilised "in a major way in support of economic development" should be kept in context. If sufficient funds for this new activity are not provided, the attempt to include knowledge transfer as a goal of universities may damage the universities without refreshing Scottish industry.

Universities should ensure that incentives are in place for individual academics. Universities will also need to enhance their engagement with the private sector, either individually or in collaboration.
Whilst some leading research workers may excel at technology transfer, this is the exception rather than the rule, and is likely to remain so, with few academic staff having skills in knowledge transfer. There is, therefore, a need to recruit/train a cohort of people who regard technology transfer as a significant part of their job purpose and who have the required skill and ability to work with industry. That will not (and perhaps may never be) the prime driver of university staff who are rewarded and applauded professionally for their skills in research and teaching. It should also be appreciated that the majority of knowledge transfer is undertaken through teaching graduates who then take up jobs in industry and other organisations. Similarly, it should be recognised that enhanced engagement is a two-way process and the Scottish business community should also be encouraged to engage with the university sector. Interestingly, the 1996 Commercialisation Enquiry Final Research Report noted that Scottish academics were more likely to work closely with business or industry as a result of their work (44%) than academics in the US (28%). A System 3 survey of companies in Massachusetts also showed some evidence that Scottish companies actually have more academic links than their US counterparts, but that these links were likely to relate to staff development, and not in technology related areas.

With regard to enhancing universities’ engagement with the private sector, appropriate infrastructure and personnel in commercialisation departments is an important issue. There is anecdotal evidence of a linear relationship between the volume of research and benchmarks used to measure a university’s commercialisation success. Therefore small HEIs need to be exceptionally lucky to get enough financial reward to justify the financing of a technology transfer office, unless they share the cost of commercialisation. It is the size of the research base rather than the quality of the technology transfer office that is the primary factor (for example, experience from the large universities has been that most royalties came from 1 or 2 products.) At present, each university has its own industrial opportunities team. SEn and SHEFC should consider funding a small number of bodies that could take advantage of expertise from more than one institution. This possibility is considered in the Report, but only for smaller institutions. It has merit for larger institutions too.

Universities should explore ways to stimulate the creation of start-up companies by alumni and employees
The importance of encouraging and supporting graduate start-ups was recognised at the RSE’s Science Base Research Commercialisation Workshop summary event at the RSE on 21 August 2001. The role of the Scottish Institute for Enterprise in this respect was highlighted in terms of identifying graduates with an interest in commercialisation, and in providing them with appropriate skills. Similarly the Scottish Enterprise ‘upstarts Incubation’ programme was suggested as a useful mechanism It was commented, however, that while universities could give students a ‘tool box’ of business skills to assist them in business, such courses could not necessarily give them the motivation to do it.

The RSE in partnership with Scottish Enterprise has, however, run a successful series of Enterprise Fellowships since 1997. These one-year Enterprise Fellowships have equipped post-doctoral researchers, or younger lecturers, with the hands-on business knowledge to enhance the commercialisation potential of their own research. They encourage the establishment of new start-up companies and allow young researchers to devote time to develop their research from a commercial perspective. In Spring 2001, Scottish Enterprise commissioned SQW Ltd to carry out an independent review and evaluation of the 13 Enterprise Fellowships that had been completed at that point. Its report concluded that: "The Enterprise Fellowship programme is shaping up to be an excellent contributor to economic development in Scotland. It is enabling progress to be made in the commercialisation of university research and the establishment of technology-oriented new businesses." The companies which these Enterprise Fellows have created to date include: Intense Photonics, Microemissive Displays, Surfactant Solutions, Edinburgh Biocomputing Solutions, Photonic Materials, Kymata and Intrallect. In recognition of this, Scottish Enterprise announced this year a major expansion in the number of Enterprise Fellowships to be run by the RSE, with funding of £5.5 million for a further 80 new Enterprise Fellowships in Scotland.

A programme should be developed to agree good practice by commercialisation departments of universities
A targeted training programme for commercialisation professionals would be valuable. At present, continuing professional development in the knowledge and technology transfer area is not co-ordinated. Further attention could also be given to the need for the SEn network to improve its own performance in this context.

SHEFC and SEn should examine and promote the adoption of international leading practice in knowledge and technology transfer.
The report provides a number of potential routes for technology transfer. The development of a more entrepreneurial culture should be supported and the suggested approach of creating "intermediate institutions" should be positively considered. Such institutions could develop a more focussed, market-driven approach to commercialisation than is always possible within universities. In addition, as the report recognises, such institutions might help fill the gap which exists at present in providing support for those SMEs who wish to innovate by developing their R&D. However, it is important that such an investment does not result in resources being transferred away from the Research Base nor duplication of existing university initiatives.

From a Scottish Enterprise standpoint there could be consideration of providing small businesses with grants to assist them in buying consultancy input to ‘review’ their businesses and determine areas where new technology could achieve worthwhile economic benefits. In many small businesses there are areas of operation where incremental improvements would bring significant benefits in competitiveness and profitability. In some cases these could be achieved through the application of existing technology. In other cases they might require research. However, they often remain unrecognised because the business managers do not identify the technology opportunities.

SHEFC and SEn should support attempts by Scottish universities to win major funds from outwith Scotland in areas of strategic priority.
The Society welcomes the proposals to support Scottish universities in winning major funds from outwith Scotland in areas of strategic priority.

Mobility between industry and universities should be stimulated
The Society also supports the proposals to increase mobility between industry and universities, for example through programmes such as TCS or through industry-university Fellowships, which should also be introduced on a national level in Scotland. Such Industry Fellowships are currently available on a UK wide basis through the Royal Society of London; of the 19 current Fellowships, one is currently held by a researcher from a Scottish company. The Royal Society of Edinburgh, therefore, identified the establishment of a new scheme of such Industry Fellowships for Scotland as one of its goals in its Corporate Plan. These Fellowships would be open to applicants from industry who wished to work with a Scottish university or Research Institution on a topic aligned to priority areas and which would lead to enhanced innovation by industry. The Society is seeking funding to develop a new Scottish scheme of Industry Fellowships.

Research support to indigenous companies should be facilitated by a brokering process involving funders such as SHEFC, Scottish Enterprise, Local Enterprise Companies and university research providers.
Whilst the ways of increasing knowledge transfer described all have a potential role to play, care should be taken that they do not also erect barriers to economic development. One of the hazards with the creation of the entrepreneurial university model (including spinouts and consultancy) is the increased profile given to the value of intellectual property. As a consequence, universities and individual academics have begun to seek early financial reward for the intellectual property they acquire. This can create a barrier to engagement with the SME sector, since many small companies become concerned that they may face significant costs in gaining technology access without any guarantee of gaining business benefits.

In bridging the university/industry gap, the Report also focuses primarily on expanding university activities. There could also be scope for schemes to facilitate industry involvement as well, through targeted grants and more structured lines of communication with chambers of commerce and professional associations. We believe there is an important role being played by Technology Ventures Scotland (TVS) in bringing together all the major stakeholders in the area of commercialisation and technology transfer. With improved links currently being established with the industrial sector (e.g. through the CBI, Institute of Directors and Chambers of Commerce), it is important that support for TVS be continued at this time.

SHEFC and Scottish Enterprise should have reciprocal membership and observer status on each other’s boards
The RSE welcomes the proposal for SHEFC and SEn to have reciprocal membership and observer status on each other’s boards as a means of improving co-ordination and co-operation. It should be recognised, however, that there will only be a small pool of people suitable for active board membership of both SHEFC and SEn. Consideration should also be given to enhanced staff liaison between SHEFC and SEn and more joint projects.

Additional Information
In responding to this consultation the Society would like to draw attention to the following Royal Society of Edinburgh responses which are of relevance to this subject: Commercialisation Enquiry: Final Report (1996); A Framework for Economic Development (March 2000); Research and the Knowledge Age (April 2000); A Science Strategy for Scotland (July 2000); The Are We Realising Our Potential Inquiry (July 2000; January 2001); Review of Research Policy and Funding (April 2001); Review of the supply of scientists and engineers (August 2001) Scottish Higher Education Review (January 2002) and Scottish Higher Education Review: Second Consultation Paper (August 2002). 

September 2002

Further information is available from the Research Officer, Dr Marc Rands