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STEM innovation in constrained economic times – the UK in an international context by Professor Ian Walmsley, Provost of Imperial College

  • 27 March 2023
  • By Professor Ian Walmsley
  • This blog has been kindly written for HEPI by Professor Ian Walmsley, the Provost of Imperial College London and former Pro-Vice-Chancellor for Research and Hooke Professor of Experimental Physics at the University of Oxford. 

This year, 2023, began with both the Prime Minister and the Leader of the Opposition talking about Britain’s future. This focus has intensified with measures intended to ‘to cement this country’s place as a scientific superpower’ by 2030. The PM has delivered changes to the way government works, with for example the new Department for Science, Innovation and Technology. He has spoken of world-class strengths in research and the UK having the third biggest tech ecosystem in the world.

I welcome this focus on science and innovation, and Eric Schmidt at the launch of the I-X initiative at Imperial’s White City Campus also emphasised the critical impact of such investment on society globally. We must invest in research and technology if the country wants to attract global talent and compete internationally.

Yet the UK has a problem in innovation, decades in the making. Long-standing underinvestment, combined with current global realignments and self-imposed changes like Brexit, mean our economic growth languishes at the bottom end of OECD rankings with productivity a full 20% below that of the US. We also rank worryingly low among other economically developed nations for R&D spending, standing at 11th across the OECD.

Universities are key to reversing this trend, acting as local anchors for innovation districts that will help drive regional renewal. The ideas which will drive innovation and opportunity are to be found in our labs and research groups, if only they can be put to work commercially. 

This is how universities see it too. Founding charters and modern mission statements point to a desire to make a difference to the world based on deep understanding. To move from ideas to impact, benefitting society.

Universities pursue this goal through the ideas we come up with and develop in our research, and by teaching and training students. We take what we discover and share it with practitioners, the NHS, companies, policymakers and the market. And as we share our ideas and grapple with how they can be applied to create solutions and products, we learn, our research questions evolve, we become partners in innovation. 

Here at Imperial College where I first began as a student 45 years ago, our commitment is to providing ‘the most advanced training, education research and scholarship in science, technology and medicine, especially in their application to industry’. Every day I see what this means in practice. And research with impact is found right across the university sector as colleagues work on nuclear energy in Manchester and satellites in Surrey, on city-wide innovation towards net zero in Glasgow and on immunity against infection in Cardiff. 

I’m deeply rooted in STEM, but I know this aspiration is also true across all fields and disciplines. The biggest income-generating arm of Oxford University, for example, is the Oxford University Press, which employs 6,000 staff. Perhaps the University’s first start-up 450 years ago, it is now a global brand in its own right also successfully pursuing new opportunities in digital innovation. At the other end of the scale, Universities UK reports a company was started, on average, every two hours over the last five years in UK universities. 30,000 employees work at UK graduate start-ups generating more than £1 billion for the UK economy.

For all the stereotypes of universities, it is this I often wish the general public understood better. That from tech to bioscience, the creative industries to advanced manufacturing, there is an unmatched power in universities to light a spark that in turn leads to solutions and to new business based on world-beating ideas. 

Across all four nations, UK universities are creating spin outs at a rate faster than any other nation in Europe, and second only to the USA per capita. The much-cited high-speed vaccine rollout was possible largely because of longstanding academic research and deep existing relationships between academia and the pharmaceutical industry. Here in London, the White City Innovation District is transforming Hammersmith and Fulham into a global economic hotspot for the careers of the future in science, technology, engineering, maths, medicine and media. University research is a catalyst for urban regeneration and economic renewal. 

But we do need help if we are to play our full part in building the UK’s future in a highly competitive world. We also need global ambition and determination not to lose even what we already have. 

Turning global attention into UK commercial success? 

So, how can we – universities, businesses and government together – do better to help position the UK as the ‘Knowledge-Shop of the World’? 

To begin with, we need to understand and value what we have, or we are at real risk of losing even that. Intellectual property enables a new company to attract investment. If you can’t keep your ideas intact, what chance do you have against someone with more resources taking advantage of them first? And then there is the need to value and reward those who generate ideas in the first place.

Traditional approaches to intellectual property (IP) are not always the most effective means to deliver the greatest impact. Those who exploit ideas, and gain personally from doing so, are not necessarily those who came up with the ideas. Additional commercial skills and expertise are often needed to run a successful company. 

Universities and individual academics want to see their ideas have an impact, to be used and to be useful. But how can they do this in a sustainable way that supports and rewards those generating the ideas? We need a financial model that enables commercialisation to happen sustainably, while academics and the venture funders and partners they work with need the lowest possible barriers to setting up a company.

I’ve been on both sides of this dichotomy, as Pro-Vice-Chancellor responsible for research and innovation at the University of Oxford, and in my current role as Provost of Imperial College London. But also as co-founder of a spin-out company building on IP I co-invented as a professor.  On the one hand, I know it’s important for universities to generate and manage IP effectively. On the other, I want a licensing and spin-out model that enables my company to conserve scarce cash and which enables fund-raising and talent acquisition by freeing up as many shares as possible.

It’s challenging on the university side of the equation too. Managing IP costs money, and universities don’t have a separate source of income to support this activity. Innovation needs to be self-sufficient so we can grow it to scale, and increase the opportunity for impact. Without this, it is yet another drain on the only major, adjustable source of income we have, tuition fees from overseas students. 

Universities also have to enable high-risk research over a long period of time and across a broad swath of areas. You can’t just pick one topic and expect quick results – to solve complex problems we need a conjoined set of activities, supported over long periods, and many of these will not lead to immediate opportunity for impact. For the ecosystem to work, we need the ability to generate and explore ideas, to recognise ideas that are ripe for translation, and make it easy for this to happen. And we have to lower cost barriers for companies to have access to IP, but with a clear upside if things go well.  

That means low and simple licensing agreements, with safeguards to ensure the IP is actually used. And a reasonable return when sales generate significant revenue or the company is sold or merged. What makes this difficult is the simultaneous duty of universities to manage publicly funded research for long-term public benefit through innovation and translation without compromising the interests of academics and researchers who are inventors and also company founders or employees.

To do this, academic leaders and research managers need to build trust and proper verifiable frameworks. Universities  need to continue to invest in encouraging and supporting entrepreneurship even when funds are so scarce, and founders and venture funders will have to understand the value in giving away equity with the long-term view of sustaining the ecosystem from which they benefit. All this demands a major change in approach and culture. 

It also means businesses  must properly assess the value of the initial IP in providing a basis for their long-term product or service development. Early-stage IP may only have a small part in what is actually sold, yet it is vital for the start of a company attracting initial seed funding investments. This initial IP is the seed by which a return of success can help universities with their roles in supporting long-term, high-risk, high-reward research.

The good news for policymakers, universities and scientists is there are models that work. A rapid licensing offer, with clear, simple and easily negotiable terms, and a return based on a stake in the company and delayed royalties is an option at several universities.  When tied to a large-scale fund that understands the long-term mutual benefit of a thriving ecosystem, this can stimulate formation of new companies with a real opportunity to develop ideas into impact rapidly. 

But universities can’t do it alone. We need proof-of-concept funding to enable laboratory proof-of-principle demonstrations to be developed to the point where it’s possible to determine the viability of a commercial outcome, and so to de-risk investment in early-stage technologies. We might for example adapt successful programmes elsewhere in the world like the Small Business Innovation Research and Small Business Technology Transfer funds allocated by the US government.

Innovation and global talent 

But it is pointless focusing on ideas without thinking much more carefully about the people who develop them. In all areas, but perhaps especially in STEM innovation, that means we are nothing if we are not international, even if simply from a numbers perspective. We are a small nation with a big appetite for innovation. Even having empowered all of our UK entrepreneurs, we will still need skills, expertise and entrepreneurial drive from everywhere we can get it. Many of these people will eventually move elsewhere or return home. That helps us as a nation too – they carry with them the networks, values and knowledge that will build strong social and economic links for the future 

Great ideas and the people who have them are drawn to vibrant, open and welcoming global research and innovation cultures. Beyond Brexit, the UK needs to seriously up its game if we are to attract, reward and retain the talented people needed to drive new companies. Harnessing the enthusiasm and energy of naturally entrepreneurial students and researchers is fundamental, as is enabling these motivated individuals to have some agency in their actions to have an impact. 

So what hope for the UK‘s innovation future as a global competitor at a time of constrained resources? The jury is out. We have many of the pieces to drive innovation further, and the ideas and energy from our universities to underpin this. To unleash this potential, we need serious commitment from investors, and coherent policies from government.

Our political leaders are right to talk about the importance of innovation to the nation’s future. From the great inventions of the Victorians to the breakthroughs of our own time, Britain has had the advantage of extraordinary research talent far beyond our size as a nation. But they need to move beyond the rhetoric to the how. We multiply our advantage by attracting talented and capable people from around the world, and harnessing the diverse strengths of universities, industry and government to achieve more than we can separately. As the scientist, start-up founder, investor and now Chief Executive of the Advanced Research and Invention Agency (ARIA) Ilan Gur said, ‘some of the most important breakthroughs and ambitious pursuits are stifled by incentives, disciplinary silos and sclerotic processes.’ Now is the moment to work together to do something about that. 

  • On 25 April 2023, there will be an interactive webinar on ‘Universities as Drivers of FDI into UK R&D’. Register for a free place here.

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