INTERIM EVALUATION OF KNOWLEDGE TRANSFER ...

INTERIM EVALUATION OF KNOWLEDGE TRANSFER PROGRAMMES FUNDED BY THE OFFICE OF SCIENCE AND TECHNOLOGY THROUGH THE SCIENCE BUDGET FINAL REPORT MAIN REPORT

INTERIM EVALUATION OF KNOWLEDGE TRANSFER PROGRAMMES FUNDED BY THE OFFICE OF SCIENCE AND TECHNOLOGY THROUGH THE SCIENCE BUDGET FINAL REPORT MAIN REPORT SQW Limited economic development consultants Enterprise House Vision Park Histon Cambridge CB4 9ZR Tel: +44 (0) 1223 209400 Fax: +44 (0) 1223 209401 [email protected] February 2005 JC4056

CONTENTS

Chapter Page

Executive summary ..................................................................................................................i

1 Introduction .......................................................................................................................1 The knowledge transfer programmes..................................................................................................1 Approach .............................................................................................................................................6

2 Higher Education Innovation Fund...............................................................................11 Introduction .......................................................................................................................................11 Progress to July 2003 ........................................................................................................................11 The impacts of HEIF funding............................................................................................................23

3 Science Enterprise Centres...........................................................................................30 Introduction .......................................................................................................................................30 Progress to July 2003 ........................................................................................................................31 Impacts of SEC funding ....................................................................................................................37

4 University Challenge Fund ............................................................................................42 Introduction .......................................................................................................................................42 Progress to July 2003 ........................................................................................................................43 Fund structure and management........................................................................................................47 The importance of UCF to the universities .......................................................................................48 Outcomes...........................................................................................................................................51

5 Synergies between the programmes ...........................................................................53 General synergies ..............................................................................................................................53 CMI ...................................................................................................................................................54

6 Public Sector Research Exploitation Fund .................................................................57 Introduction .......................................................................................................................................57 Progress to July 2003 ........................................................................................................................57 Impacts of PSREF .............................................................................................................................58

7 Lessons for good practice.............................................................................................61 Introduction .......................................................................................................................................61 Identifying requirements – users and/or academic staff....................................................................61 Establishing new structures...............................................................................................................62 Recruitment of KT staff ....................................................................................................................65 Mainstreaming activities ...................................................................................................................66 Internal measures...............................................................................................................................67 External measures – promotion marketing, dealing with clients ......................................................67 Internal monitoring and evaluation ...................................................................................................68 Collaboration with other HEIs ..........................................................................................................68

8 Conclusions ....................................................................................................................70 Progress to July 2003 ........................................................................................................................70 Overall conclusions...........................................................................................................................76 Policy issues ......................................................................................................................................79

Case studies (bound separately) Appendix A: Aide memoire for visits to HEIs and PSREs Appendix B: Institutions visited

Interim evaluation of knowledge transfer programmes funded through the science budget

Executive summary

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Executive summary

Introduction

1. There are five knowledge transfer (KT) programmes funded through the science budget:

• the Higher Education Innovation Fund (HEIF) which provided £80m to English higher education institutions (HEIs) over the period 2000-20041. HEIF funds were aimed at improving HEIs capacities to respond to the needs of business and the community

• The aim of the Science Enterprise Challenge (SEC) was to establish a network of centres in UK universities, specialising in the teaching and practice of commercialisation and entrepreneurialism in the field of science and technology. £45m was made available over the period 1999-2004

• University Challenge Fund (UCF) provided seed funds to HEIs to assist the successful transformation of good research into good business. £45m was made available over the period 1999-2004

• the Public Sector Research Exploitation Fund (PSREF) was a response to the Baker Report. Awards, worth £10m, were made in October 20012 (involving some 15 institutions and 10 lead NHS Trusts) to enable public sector research establishments to develop their capacity to exploit their science and technology potential and to access seed funding to support the commercialisation of research.

• the Cambridge-MIT Institute (CMI) was formed in July 2000 with £65m of government funding over 5 years, this is a collaborative alliance between the University of Cambridge and the Massachusetts Institute of Technology (MIT). The goal is to undertake integrated joint education and research initiatives that will improve entrepreneurship, productivity, and competitiveness in the UK. The National Audit Office reported on CMI’s first phase in 2004 and CMI is implementing a new strategy following an internal review in 2003. For these reasons, CMI was not included in the current evaluation.

1 A second round of HEIF funding has been allocated for the period 2004-06. 2 A second round of PSREF funding was allocated in 2004.


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Impacts to date

2. The focus of both HEIF 1 and PSREF has been on capacity building and development within the institutions. The major impacts of HEIF have been on:

• knowledge transfer strategy and organisation. There has been rationalisation of KT support activities, diversification of the customer base and the opportunity to test new initiatives in a relatively risk free environment

• generating more positive attitudes, and enhanced capabilities, amongst academic staff towards working with businesses. However, in several of the universities we visited HEIF activities have still only reached a relatively small number of staff and one of the challenges which several HEIs face in the future is the extension of KT activities more widely within the institution.

• improved and simplified access by businesses to resources in HE

• new and enhanced collaborations between HEIs, usually on a regional basis

• increased business and RDA representation on advisory and management boards within the HEIs

3. The PSREF projects are focused on KT though licensing and spin-outs. Although, many PSREs were previously involved in KT activities the time scales and uncertainties attached to intellectual property commercialisation, together with limited core funding in some cases, meant that IP exploitation expertise was limited, and in some institutions non-existent prior to PSREF. All the institutions visited considered that they had established an infrastructure for IP exploitation which was appropriate to their needs. However, the revenues generated are still at a low level and activities are unlikely to be sustained without further funding rounds.

4. The ultimate aim of the SEC programme is to produce graduates and postgraduates better able to engage with enterprise in the workplace. It is too early to judge whether this has been achieved, but there are some encouraging signs. In particular, substantial numbers of students now have access to enterprise modules. The programme has also raised the profile of enterprise education and is undertaking important developmental work. There are good prospects for much of the current SEC activities continuing without further financial support. Successful efforts have been made to embed enterprise in the curriculum and many students may be attracted to degree programmes which offer an enterprise component.


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5. The underlying rationale for UCF is that the private sector will under invest in early stage technology development projects and this was confirmed by the funds we reviewed, and in other consultations. The key problem is the high costs associated with making investments in early stage technology projects in relation to the anticipated returns. In addition to the increased availability of funds, the key attractions of UCF to universities were: the ability to make small investments in order to ‘test’ commercial potential; and reduced pressure to establish companies earlier than would be optimum in order to attract external investments. It was hoped that UCFs would build up an endowment which could be used to support IP exploitation in the future, but this appears unlikely. The UCFs are not considered large enough to become self-sustaining and the restriction to £250,000 on the size of investment means that if projects are highly successful the UCF is permitted to retain only a small share of equity after later stage financing.

Conclusions

Outputs

6. UCF is distinct from the other KT programmes in that it has generated tangible increases in spin-outs and licensing. The other programmes, in particular HEIF and PSREF, have been more concerned with developing capabilities, and infrastructures, to support and promote KT. The SECs have also established infrastructures for enterprise education, and the know-how to design and deliver programmes. But they have also delivered enterprise education to substantial numbers of students, although it is too early for this to be reflected in economic impacts.

7. Data from the latest Higher Education Business and Community Interaction (HEBCI) survey is consistent with the hypothesis that the investments supported by the KT programmes are starting to generate tangible outputs. Comparisons of the academic year 2002-03 with 2000-01 indicate substantial increases in most KT activities over the period. The exceptions are some categories of spin-outs and we suspect this reflects a tendency, during this period, for many HEIs to consider more carefully whether spin-outs are the most appropriate commercialisation vehicle. The data do not demonstrate causality, not least because some indicators suggest that KT activity was already on an upward trend, but they are at least consistent with the view that the KT programmes have stimulated activity in the HE sector.

8. The activity additionality of all programmes is high. Most HEIF, SEC and PSREF funds have been devoted to extra staff which the institutions would not have funded on a similar scale from their own budgets. UCF funding has generated additional commercialisation of research ideas and company formation. The additionality arises from the funding gap described above.


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Policy issues

9. The general thrust of recent policy is to enhance the competitiveness of UK business through more widespread adoption of innovation and enhanced skills amongst the work force. The KT programmes are obviously in line with these general objectives but they also complement and support more specific policy objectives including:

• increasing business R&D and Innovation

• engagement of business and HE with the collaborative R&D product and Knowledge Transfer Networks

• strengthening the role of RDAs in relation to innovation in their areas.

• increasing the supply of SET skills

10. The general conclusions for KT policy interventions are:

• HEIF, in particular, illustrates that the time scales from funding to activities and outputs are long. To some extent, this reflects specific issues, notably the difficulties in recruiting KT staff but it also reflects issues intrinsic to capacity building within the HE sector including: the need to establish new structures and management responsibilities; new rules and regulations; and time to impact on staff culture and attitudes

• institutions have learnt from their experiences with the KT programmes and, provided there is some stability amongst KT and academic staff, these lessons will be retained and built on by HEIs and PSREs. Most have also developed new procedures for handing KT activities which will also have a lasting impact. However, few KT activities cover their costs and without external funding KT would be increasingly restricted to those activities which complement and contribute to mainstream activities

• the bidding process has some real advantages. It encourages HEIs to consider seriously KT needs and opportunities and can facilitate the introduction of new approaches. The costs can however be significant, both in terms of bid preparation but, more important, the uncertainty which results and which creates difficulties for planning and recruitment. The intention to move to a formula-based allocation for the majority of funds is therefore welcomed, in principle, by many HEIs


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• the current monitoring reports and statements have a number of deficiencies which could be addressed by standardising requirements and communicating these to institutions. It is also likely that additional indicators will need to be collected. Institutions should also be subject to ‘dip stick’ audits to verify data with occasional dialogue between the institution and the monitoring organisation, rather than a purely paper-based exercise.

• there have been real benefits arising from some collaborative projects including: sharing information, combining complementary expertise and exploiting economies of scale. We suspect that some HEIs may discount the benefits of collaboration and it may therefore require encouragement through special funding. The economies of scale arguments for consolidation are, we believe, especially persuasive in some cases:

� for early stage funding schemes, such as UCF, there are substantial set up and management costs and these could have been shared by more organisations in some cases.

� some of the institutions participating in PSREF, and also HEIF, are very small and there is scope to pool KT resources in order to achieve critical mass and sustainability. This was also a recommendation of the Lambert Review


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1 Introduction

1.1 This document is the final report of an interim evaluation of the knowledge transfer

programmes funded through the science budget. The evaluation was undertaken by SQW

Limited. Two members of the DTI’s Assessment Unit contributed to the study but SQW was

responsible for the evaluation and the views expressed in this report are those of the

consultants.

The knowledge transfer programmes

1.2 The Government’s central economic objective is to achieve high and stable levels of growth

and employment. By increasing UK productivity growth, improving competitiveness and

narrowing the productivity gap with the UK’s major industrialised competitors, the

Government aims to raise living standards in the UK. Government policy to close the

productivity gap focuses on the five key drivers influencing productivity performance. One

of these is innovation:

“UK science and engineering which underpins innovation is world class and we are striving to improve still further its relative international performance. However, the record in the commercial exploitation of new ideas is less successful.”3

1.3 DTI’s current, and previous, PSA targets included a commitment to improve the exploitation

of the science base. In order to make the most of the UK investment in science, engineering

and technology, a number of programmes have been funded through the Science Budget to

promote the transfer of knowledge generated and held in Higher Education Institutions (HEIs)

and Public Sector Research Establishments (PSREs) to the wider economy. There are five

knowledge transfer programmes and summary information is given in Table 1.1. During the

course of the current evaluation, second round funding was awarded under PSRE and HEIF.

These funding rounds have not been considered by this evaluation.

3 DTI Business Plan 2003-2006


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Table 1.1: Knowledge transfer programmes

Programme Total funding

Funding period Management

Science Enterprise Challenge (SEC) Rounds 1 and 2

£44.5m 1999-2004 Within OST

University Challenge (UC) Rounds 1 and 2

£45m 1999-2004 Within OST

Public Sector Research Exploitation Fund (PSREF) Round 1

£15m 2001-2004 Within OST

Higher Education Innovation Fund (HEIF) Round 1

£80m 2000-2004 HEFCE on behalf of OST

Cambridge-MIT Institute (CMI) £65 2000-2006 CMI is a limited company.

Responsibility with Board

1.4 HEIF funding was only available to English HEIs, but SEC and UCF were UK wide

programmes. Many HEIs have received funding from more than one programme and Table

1.2 shows numbers participating.

Table 1.2: Participation in the KT programmes

Programme(s) Number of HEIs4

HEIF, UCF, SEC 22

HEIF and UCF 8

HEIF and SEC 16

UCF, SEC 9

HEIF only 51

UC only 3

SEC only 7

Higher Education Innovation Fund (HEIF)

1.5 The Higher Education Innovation Fund (HEIF) follows, and overlaps with, the Higher

Education Reach Out to Business and the Community fund (HEROBC). Together, the two

programmes are worth £140 million over three years and the aim is to build on universities'

potential to act as drivers of growth in the knowledge economy. HEIF provides special

funding to enable HEIs to respond to the needs of business, (especially SMEs) through both

the continuing development of capacity in universities to interact with business and the

community (building on HEROBC), and large, strategic, collaborative projects to strengthen

university-business partnerships. Awards were announced on 1st October 2001, with a total

of 89 bids being funded.

4 Participation either as lead or partner.


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1.6 HEIF’s aims are:

• improved organisational arrangements and structures within HEIs so that they are better able to respond to business needs and to interact more effectively with business and the community, including with small companies and with a range of bodies in their regions which contribute to economic growth and competitiveness more generally

• better access for business and the community to the trained people, products, resources and services produced in HEIs, and more use of them

• more widespread systematic and rapid transfer to businesses of new ideas, products and processes generated within HEIs

• improved readiness of graduates for employment through the development of work-related skills – especially enterprise, management and leadership

• improved relationships between HEIs and businesses and community organisations at a personal level, including staff exchanges and transfers and the development of lasting working relationships

• enhanced capacity within institutions to respond in a concerted and effective manner to other initiatives promoting employability, enterprise and skills

• enhanced contribution to the economic development of the nation, particularly in economically disadvantaged regions.

• systematic and sustainable change within HEIs in how they relate to business and the community, particularly changes in institutional and academic cultures.

1.7 Applications were invited for single institution bids and also large strategic collaborations to

establish excellence and coherence in meeting regional needs which build upon partnerships

between business and higher education, as well as with other HEIs and HE organisations.

1.8 HEIF encompasses a wide range of activities, including:

• establishing, and strengthening, ‘industrial liaison offices’

• internal promotion of commercialisation through, inter alia, providing IP expertise, business advice and mentoring, incubation support, structuring consultancy provision, enhancing staff awareness

• enhanced information provision to external organisations

• enhanced dialogue with businesses and business support organisations


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• enterprise awareness and training for students.

1.9 In addition to different emphases in the activities undertaken, some are focused on specific

business sectors and some on the local/regional economy and some on the national economy.

Science Enterprise Challenge (SEC)

1.10 The aim of the Science Enterprise Challenge is to establish a network of centres in UK

universities, specialising in the teaching and practice of commercialisation and

entrepreneurialism in the field of science and technology. Twelve SECs were established in

UK universities in the first round of the competition in 1999/2000, with £28.9m of

government funding. The centres support the teaching and practice of entrepreneurship

among science faculty and students, and promote links between universities and business.

Awards worth £15m for a further round of the competition were announced on 1st October

2001, involving some 39 institutions. This funding aimed to help establish a new centre and

expand the twelve existing science enterprise centres set up to promote a culture of enterprise

and facilitate the commercial exploitation of scientific research.

1.11 The broad aims of SEC are to:

• foster the commercialisation of research and new ideas

• stimulate scientific entrepreneurialism

• incorporate the teaching of enterprise into the science and engineering curricula

• support centres of excellence for the transfer and exploitation of scientific knowledge and expertise.

1.12 The scheme is now based around 13 Centres which aim to achieve world class excellence.

Each Centre has partner HEIs and over 60 HEIs in total are participating in the scheme.

Networking is an important aspect of the scheme: between a Centre and research and teaching

within the HEI; between Centre and partner HEIs; with external businesses and business

support agencies; and with CMI (National Competitiveness Network).

1.13 Key activities are:

• teaching enterprise to students, both through dedicated modules and other activities such as project-based work

• assisting academic staff to identify promising ideas

• assisting academic staff to commercialise ideas. This may entail direct assistance from Centre staff but some Centres have also developed mentor networks from within the business community.


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University Challenge Fund (UCF)

1.14 The purpose Of University Challenge is to enable universities to access seed funds in order to

assist the successful transformation of good research into good business. This early funding

is the riskiest stage of the venture process, and many institutions experience a funding gap in

the provision of finance for bringing research discoveries to a point where their commercial

usefulness can be demonstrated and first steps taken to secure their utility. £45m was

allocated in the first round of the competition in 1999, (with 15 seed funds being set up) and

£15m more recently in October 2001 (which provided for an additional 4 seed funds, and 1

extension). Fifty-seven Institutions now have access to UC seed funding.

1.15 The broad objective is to increase the number of high grade companies. As well as the direct

funding, it is anticipated that UC will stimulate others to invest in the science and engineering

base. It is also hoped that HEIs which are particularly successful in investing UCSFs will

generate an endowment fund through IP exploitation.

Public sector research Exploitation (PSRE) Fund

1.16 This fund was a response to the Baker Report (August 1999) on realising the economic

potential of public sector research establishments. Awards, worth £10m, were made in

October 2001 (involving some 15 institutions and 10 lead NHS Trusts) to enable public sector

research establishments to develop their capacity to exploit their science and technology

potential and to access seed funding to support the commercialisation of research. In

addition, the PSRE fund has provided seed funding to support the very early stages of

business formation from ideas emerging out of research in the public sector science base.

Cambridge-MIT Institute (CMI)

1.17 Formed in July 2000 with £65m of government funding over 5 years, this is a collaborative

alliance between the University of Cambridge and the Massachusetts Institute of Technology

(MIT). The goal is to undertake integrated joint education and research initiatives that will

improve entrepreneurship, productivity, and competitiveness in the UK. CMI's mission is to

provide a catalyst to improve economic competitiveness and productivity, while working with

UK universities to encourage the entrepreneurial spirit in higher education. The main

strategic thrusts of CMI's current phase aim to create:

• Research projects, centred on an important idea, developed with consideration of use, and with imbedded innovations in knowledge exchange

• Studies in innovations in knowledge exchange, to systematically learn from our innovations, produce materials for education programmes, and impact more widely university, industry and government policy and practice.


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• Educational programmes and materials for wider dissemination, aimed at educating a generation of learners with the knowledge, skills and attitudes required for effective knowledge exchange.

1.18 It is anticipated that CMI‘s approach will have three kinds of impact, namely:

• Best practice will be migrated to a wide variety of educational programmes for students, graduate students, and professionals from both the university and industry communities

• The specific results of the research will be available for migration to industrial knowledge uptake, and

• The new understanding of KE will influence the policies and procedures of universities, government and industry.

1.19 CMI was not included as a subject for the current evaluation, for three main reasons. First,

CMI began a strategic review of its activities and operations in January 2003 leading to a new

strategy for the Institute. It would have been too early to have made an assessment of CMI

within an evaluation such as the current one. Second, the National Audit Office (NAO)5

published a report on the first phase of CMI in March 2004 and it is unlikely that this

evaluation would have been able to add much to that report. Third, CMI is developing

innovative methodologies for assessing its activities and outputs. These have been agreed

with OST and will provide output measures in due course. However, part of the evaluation’s

remit was to consider the extent to which elements of CMI’s approach and outputs could be

replicated in other programmes. This is reported in a separate paper to the OST.

Approach

1.20 The evaluation comprised two phases. Phase 1 had two main purposes. First, to collate

existing information on KT programmes in order to assess progress to date. Second, to

provide background information for the second phase. Phase 1 was almost an entirely desk-

based review, completed in February 2004, which drew on:

• extracts from the 2002-2003 HEFCE annual monitoring statements (AMSs) through which HEIs report on single institution HEIF projects

• 20002-2003 annual reports on HEIF collaborative, UCF, PSREF and SEC projects

• the original proposals for funding.

5 Cambridge-MIT Institute: Report by the Comptroller and Auditor General, Hc 362 session 2003-2004: 17 march 2004


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1.21 The second phase mainly comprised interviews with institutions which have been awarded

funds under one or more of the KT programmes. Visits, lasting between one and three days,

were made to 26 institutions in total. They were selected to cover a range of types of

institutions and combinations of KT funding. The sample was deliberately biased away from

institutions which had received very small amounts of funding, although some limited

discussions were held with such institution outside the main sample. The basic aide memoire

used for these discussions is presented in Appendix A.

Sample

1.22 Twenty HEIs were visited and these are listed, together with KT programme funding in Table

1.5. Table 1.3 shows programme specification. Of the 16 HEIs receiving HEIF funds, 14 are

participating in collaborative projects, and ten also have solo project funding.

Table 1.3: Types of programme

HEIF 3

HEIF/SEC 4

HEIF/SEC/UCF 9

UCF 1

UCF/SEC 3

Total 20

1.23 The PSRE sample is shown in Table 1.4.

Table 1.4: PSRE sample

PSRE Funding

CCLRC (and manager of Rainbow Seed Fund) £475,000 (£4,000,000)

Guy's & St Thomas' £325,000

NERC £600,000

Central Science Laboratory £231,860

National Museums and Galleries on Merseyside £287,500

Newcastle Upon Tyne NHS Hospital Trust £270,000

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Table 1.5: HEIs visited

KT programme funds (£k)6

Institution HEIF Solo HEIF Collab UCF SEC Total

De Montfort University 506 600 250 1,356

Nottingham Trent University 506 600 250 1,356

University of Cambridge 900 563 3,000 2,900 7,363

Imperial College 3,000 2,000 5,000

London Metropolitan University 1,078 1,078

Queen's University, Belfast 500 790 1,290

University of Teesside 754 260 1,014

University of Northumbria at Newcastle 417 260 677

UMIST 541 2,000 2,250 1,100 5,891

University of Manchester 700 2,000 2,250 1,100 6,050

University of Edinburgh 1,480 7 1,480

Oxford Brookes University 500 2,000 2,500

University of Southampton 531 1,250 1,000 950 3,731

University of Bristol 656 1,404 188 3,550 5,797

University of Wales, Cardiff 1,400 1,400

Aston University 489 840 428 1,758

University of Central England 510 440 428 1,379

University of Warwick 531 840 1,500 428 3,299

Sheffield Hallam 534 500 1,034

University of Leeds 524 1,500 9,667 11,691

6 For collaborative programmes it is assumed that funds are distributed equally between partners. In practice this is not the case. 7 There is a single SEC in Scotland (Scottish Institute for Enterprise) of which Edinburgh is a member.


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Evaluation issues

1.24 The normal approach to evaluating public programmes is to follow a number of steps, as

follows:

• Identify where expenditure has been allocated, for example the employment of business development officers (BDOs) within HEIs

• Identify actions and activities that have arisen, for example marketing of HEI services to businesses

• Evaluate the net benefits of these activities, for example additional outputs generated by businesses working with universities

• Adjust for input and output additionality and displacement to arrive at an overall assessment of the net benefits of public expenditure.

1.25 In practice few, if any, evaluations of HE and KT programmes are as straightforward as this

but this conceptual framework is of limited use in the current context for a number of reasons.

The first relates to the scale of activity which has been generated by the KT programmes. As

Table 1.5 indicates, some HEIs have received substantial funding from the programmes but,

with the exception of UCF8, these funds have in general been thinly spread over a wide range

of initiatives and activities. HEIF funds, for example, have been used by many HEIs to

employ BDOs but these individuals have engaged in a wide range of initiatives, most of

which are small in relation to total expenditure. Our analysis of the Annual Monitoring

Statements through, which HEIs report to HEFCE on the use of solo HEIF funds, showed that

sixty four HEIs were reporting progress against around 450 targets. In most cases these did

not relate to direct interactions with businesses and were mainly concerned with developing

capacities for KT, for example staff awareness, policy design and marketing initiatives. The

result is that a large proportion of the KT funds are directly or indirectly supporting KT

activities which are in themselves small and it is not feasible to follow through and assess an

adequate sample of activities.

1.26 Second, while it is possible to identify how the grants have been spent it is much more

difficult to associate expenditure with specific KT activities:

• In part because of the point made above. Expenditure on BDOs, for example, is properly accounted for and easy to identify, but it is typically not possible for these individuals to allocate meaningfully their inputs between direct KT activities which they may have helped to generate but which are undertaken by academic staff

8 Many of the comments below do not apply to UCF where there is a very direct link between funding and activities and

measurable evidence of outcomes.


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• The KT programmes are only one source of funding for these activities. They were preceded by, and overlapped with, HEROBC funds, and all the HEIs we visited were supporting KT activities from their own funds, at least to some extent. In addition, HEIF funds are frequently integrated with other external sources such as EU, RDAs and KTP9. As such it is difficult to disentangle the impacts of HEIF funding from other sources.

1.27 Third, ideally we would wish to survey businesses to assess the benefit they have derived

from KT programme generated activities but, in practice, this is only feasible in a small

number of cases. The problem again relates to tracing funding impacts through to interactions

with businesses. Where there is an obvious and direct link, for example attendance at a

seminar, receiving newsletters etc, the impact on any individual firm is likely to be too small

to assess via a survey and would in any case provide a very partial assessment of the KT

programmes.

1.28 Finally, there is the issue of time lags between funding and impacts on businesses. This is a

familiar issue with any technology transfer initiative but the problem is compounded in this

instance. As is discussed later in this report, many of the institutions have focused on

developing and extending their KT capabilities and it will take some time for these to feed

through fully into enhanced interactions with businesses, and there will be further time lags

before businesses derive tangible benefits in the market place.

1.29 For these reasons, the current evaluation has focused very much on the activities which the

institutions have undertaken rather than their impacts. It has also relied heavily on

information provided by the institutions themselves, although we have tried, where possible,

to verify this through multiple discussions within a single organisation.

9 Formally known as TCS


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2 Higher Education Innovation Fund

Introduction

2.1 Funding for the Higher Education Innovation Fund (HEIF) was announced following the

Government’s 2000 Spending Review, in order to continue and develop the work of the

Higher Education Reach-out to Business and the Community (HEROBC) initiative. This

established a third stream of funding, to sit alongside the core funding to institutions for

research, and for learning and teaching. HEIF has been established as a partnership between

the Department of Trade and Industry/Office of Science and Technology (DTI/OST), the

HEFCE, and the Department for Education and Employment (DfEE).

2.2 Bids were submitted in July 2001 for funding up to August 2004. One hundred and thirty-six

applications from 128 HEIs, including 34 proposals from consortia of HEIs, were received.

The value of applications totalled approximately £178 million, more than double the funds

available under HEIF. Funding of around £78 million was awarded to 89 applicants,

including 16 collaborative projects. The awards ranged from £150,000 to a single institution

to £5 million for a large scale strategic collaboration

Progress to July 2003

2.3 This section is based on an analysis of proposals and reporting documents. Single institution

projects are reported via the HEFCE Annual Monitoring Statements (AMS) and collaborative

projects through an annual report. Each is dealt with separately below. The data is taken

from reporting statements for the academic year 2002-03. There will have been significant

changes since then but it nevertheless provides a useful overview of activities

Single institution projects

2.4 The AMSs indicate a very diverse range of activities and we have developed the classification

of given in Table 2.1. The classification is intended to capture the diversity between projects

without becoming overly detailed and complex. There is a simple hierarchy as follows:

• A is concerned with the development and implementation of KT policies at the level of the HEI

• B is direct strengthening of KT staff capacity

• C is the establishment of a tangible infrastructure for KT, chiefly incubator and other commercial units


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• D is activities which are primarily internal to the HEI. A distinction between staff and students is made

• E is activities which are primarily external to the HEI - development and implementation of marketing strategies

• F represents actual KT activities, but two caveats should be borne in mind:

� there are overlaps with previous levels. For example, some of the staff placement schemes are designed primarily to enhance staff knowledge of business and their capability to transfer knowledge, although there may also be benefits to the business

� classification of an HEI under one or more of these headings does not necessarily indicate outputs of any significance to date. In most cases there appears to have been some outputs but they may be low volume. In a few cases HEIs have geared up to deliver a specified output but no actual business links have been generated. The classification is, however, a useful indication of project direction.

Table 2.1: Classification of activities

Activity Comment

A.1: KT policy Design and development of new policies, for example in relation to staff rewards an handling IP. In some cases also includes organisational changes within HEI A

A.2: KT senior management Appointment of senior academic managers to posts with KT responsibilities

B.1: KT staff recruitment Recruitment of staff to work on KT B

B.2: KT staff training Training of new and/or existing KT staff

C.1: Funding for KT activities Development of fund by the HEI to support KT funding, e.g. proof of concept activities, development of short courses

C.2: Development of incubators Physical space and associated support services C

C.3: Development of other commercial units

Centres, (e.g. research) within the university intended to provide services to businesses

D.1: Audits Review of commercial opportunities within HEIs

D.2: New courses Development of mainstream courses at UG or PG level as part of strategy to enhance business links

D.3: Academic staff awareness General promotion and raising awareness of issues and opportunities

D.4: Academic staff training E.g. customer relations, marketing, negotiations. Includes dedicated courses, attendance at conferences etc.

D.5: Identifying academic staff with KT responsibilities

E.g. individual within faculty/department who will promote and advises on KT

D.6: Student awareness General promotion and raising awareness of issues and opportunities. Most are focused on ‘entrepreneurship’

D

D.7: Student training See D.6. Mix of voluntary courses and components for curriculum


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Table 2.1: Classification of activities

Activity Comment

E.1: Market research Identifying customer base, needs and marketing approach E

E.2: Marketing Wide variety of approaches but many have developed new web sites and seminars for business are also popular

F.1: Business networks We have restricted this to a formal role in a substantive network. Typically in collaboration with RDAs

F.2: CPD Any form of training for external organisations

F.3: Consultancy/advice Any form of advice to external organisations

F.4: Research Contract, or collaborative with business, research. There is a close overlap with F.10

F.5: Patenting Any part of the process up to grant of patent

F.6: Spin-outs/start-ups Includes company formation by students and individuals from outside the HEI

F.7: Licensing

F.8: Staff placements Staff placements in businesses for any period. Sometimes part of staff development activity

F.9: Student placements Student placements in business

F.10: Access to other funds In most cases, funds from established programmes. TCS/KTP specified most frequently

F

F.11: KT activities not specified Some AMS returns record “assistance to businesses” without specifying the nature of the assistance

Policy, KT staff and infrastructure

2.5 Figure 2.1 shows how the 64 HEIs are classified according to the first three groups of

activities (ABC). The key points are:

• A, B and C represent the basic ‘infrastructure’ for KT in that they cover policies, staff and physical or legal entities. Forty-seven of the projects were engaged in one or more of these activities during 2002-3

• twenty-one projects were engaged in two or more of these activities

• twenty-eight projects were developing policies and/or making senior management appointments. The vast majority of these were policy development.


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Figure 2.1: ‘A, B, C’ classification of HEIs

AMS Returns: 64 HEIs

Policy/Management (A.1,A.2)

28 HEIs

Other

36 HEIs

KT staff (B.1,B.2) 23 HEIs

11 HEIs 12 HEIs

Other activities (D, E, F)

11 HEIs 7 HEIs 8 HEIs 17 HEIs

Infrastructure (C.1,C.2,C.3) 21 HEIs

6 HEIs 4 HEIs 4 HEIs 7 HEIs


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Internal activities

2.6 Table 2.2 shows the number of HEIs engaging in the internal (D) activities listed in Table 2.1.

Staff awareness and training have been aggregated and similarly for student awareness and

training.

Table 2.2: Internal activities

Activity Number of HEIs

D.1: Audit 12

D.2: New courses 4

D.3 & D.4: Staff awareness/training 18

D.5: Identifying academic staff with KT responsibilities 8

D.6 & D.7: Student awareness/training 17

2.7 Analysis of the AMSs reveals:

• twenty-seven of the 64 HEIs did not report any activity in these areas. This seems a surprisingly high number, but may reflect:

� similar activities were completed in the previous year

� the narrow focus of some projects on the commercialisation of existing IPR

� activities not explicitly recorded. Some projects, for example, have appointed KT staff with dedicated IP responsibilities who may be undertaking informal audits. They have recorded the appointment, and aims, but not the actual activities.

• staff and student centred activities are relatively common. However, only six HEIs reported activities in both areas so many appear to have made a decision on where to focus effort. Much of the student related activity is education in entrepreneurship, sometimes integrated into the curriculum

• only two projects which have undertaken audits have also identified academic staff with KT responsibilities. This may reflect a perception that the two sorts of activities are substitutes.

External activities

2.8 This includes:

• market research to identify the market, its characteristics and how to penetrate it

• and, marketing and promotion of the HEI’s capabilities. This mainly involved: seminars; mailshots; web sites; and brochures.


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2.9 Both are concerned with general marketing rather than individual opportunities. Typically

they relate to the HEI as a whole but in some cases more specific capabilities, for example in

a single subject area, have also been included. Marketing of individual opportunities, such as

a single course or piece of IP, have, however, been excluded.

2.10 Thirty-nine HEIs undertook some marketing related activities. Only five were market

research only, with 24 undertaking marketing and 10 both marketing and market research. It

is not clear from the AMSs whether the relatively low level of market research is because this

had been completed previously.

KT delivery

2.11 Virtually all AMSs specify the type of KT they are seeking to achieve and these have been

classified in Table 2.3. In most cases, the projects have actually achieved some outputs but:

• volume (or value) is often not specified

• outputs so far are often small in an absolute sense and the HEI was still working towards the accompanying measures required to realise the potential it has identified.

2.12 For these reasons, Table 2.3 is an indicator of intentions and plans rather than actual

achievements. The main points are:

• a relatively large number of HEIs are engaging in IP exploitation, notably through spin-outs and start-ups

• nearly a third are using HEIF funded activities to access other funds. These are typically research and KT programmes and TCS/KTP is often a target. If and when these efforts bear fruit then more activity will be recorded under ‘research’.

Table 2.3: Intended outputs

Outputs Number of HEIs

F.1: Business networks 9

F.2: CPD 11

F.3: Consultancy/advice 12

F.4: Research 1

F.5: Patenting 7

F.6: Spin-outs/start-ups 16

F.7: Licensing 12

F.8: Staff placements 6

F.9: Student placements 13

F.10: Access to other funds 21

F.11: KT activities not specified 13


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Performance against targets

2.13 The AMS contains statements on progress/activity and on targets. These are provided at a

fairly low level of aggregation so each HEI reports on more than one specific activity. In total

there were almost 450 statements from the 64 HEIs included in this analysis. The AMS does

not include a specific statement of whether a target has been met but we have reviewed all to

try and reach a judgement and categorised them according to:

• No progress. Restricted to those instances where nothing at all has been achieved

• Under target. Target not met but some progress made

• On target. Plans and target fully met

• Exceeded target. (self-explanatory).

2.14 It is not easy to make these judgements on the basis of AMS information alone. The main

difficulty has been that targets are often specified in terms of “to enhance/improve/promote

etc” whereas progress is reported (if at all) in terms of what has been achieved without

reference to whether this does represent an improvement over previous activity and if so

whether of sufficient magnitude. For this reason we have been cautious in making

judgements and have assigned “not known” to a large number of cases. When making

comparisons between activities it should also be remembered that some, such as policy

development, cannot be exceeded, whereas others, which are reflected in continuous

indicators, can. The results are presented in Table 2.4.

Table 2.4: Performance against target

% of cases where known Number of

cases

Activity No

progress Under target

On target

Exceeded target

Not known Total

Policy/management (A.1,A.2) 6% 6% 89% 13 49

KT Staff (B.1,B.2) 12% 88% 9 34

Infrastructure (C.1,C.2,C.3) 12% 85% 4% 7 33

D.1: Audit 33% 56% 11% 4 13

D.2: New courses 25% 75% 4

D.3 7 D.4: Staff awareness/training 32% 55% 14% 11 33

D.5: Identifying academic staff with KT responsibilities 75% 13% 13% 2 10

D.6 & D.7: Student awareness/training 22% 61% 17% 10 28

E.1 Market research 25% 75% 5 17

E.2: Marketing 3% 14% 61% 22% 20 56


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Table 2.4: Performance against target

% of cases where known Number of

cases

Activity No

progress Under target

On target

Exceeded target

Not known Total

F.1: Business networks 29% 43% 29% 5 12

F.2: CPD 38% 38% 25% 8 16

F.3: Consultancy/advice 36% 27% 36% 8 19

F.4: Research 2 2

F.5: Patenting 25% 25% 50% 3 7

F.6: Spin-outs/start-ups 29% 47% 24% 7 24

F.7: Licensing 43% 36% 21% 2 16

F.8: Staff placements 60% 20% 20% 1 6

F.9: Student placements 27% 27% 47% 1 16

F.10: Access to other funds 17% 44% 28% 11% 7 25

F.11: KT activities not specified 44% 39% 17% 1 19

All 3% 25% 60% 13% 134 444

2.15 With these caveats in mind Table 2.4 indicates:

• high rates of progress towards targets in relation to policy/management, KT staff and infrastructure development

• good progress on student awareness/training

• high rates of progress on marketing activities

• poor progress on identifying academic staff with KT responsibilities (although the numbers are small)

• generally, slower progress in relation to the output indicators, although the numbers are again small.

2.16 It is important to know whether some institutions are performing better than others

consistently across their targets. We have addressed this question by calculating, for each

HEI, the proportion of their targets which they have either made no progress towards or

undershot and the proportion they have met or exceeded. The following caveats should be

kept in mind:

• targets are set by the HEIs themselves

• they are not of equal importance, some, for example relate to low key one off activities, others to changes in policies and structures


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• the numbers of targets are in many cases small so % outcomes can be misleading.

2.17 The results are presented in Table 2.5 and indicate that there are real differences in

institutional performance.

Table 2.5: Performance against target by HEI10

% of targets met or exceeded No of HEIs Average number of targets

100% and some targets exceeded 5 5.2

100% and no targets exceeded 19 3.1

70-90% and some targets exceeded 7 9.6

70-90% and no targets exceeded 6 7.7

50-70% 12 5.5

25-45% 5 6.2

0% 7 2.3

Actual outputs

2.18 We have tried to collate data from the AMSs on actual outputs during 2002-2003. The

information is, however, far from complete. Many HEIs will, for example, state that staff

have been supported or businesses assisted but do not specify the numbers involved. The

information which was provided is summarised in Table 2.6. We would make the following

points:

• Table 2.6 under represents outputs levels. Many HEIs are reporting outputs achieved but not quantifying them so they do not appear in the table

• the diversity of HEIF projects means that it is very difficult to devise metrics which will enable meaningful aggregations

• despite these caveats, our initial view is that outputs are low and that this is a reflection of most project activity, to date, being focused on developing systems, approaches and promotion amongst staff as opposed to delivery of services to businesses.

10 In three cases we were unable to judge whether any of an HEI’s targets had been met..


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Table 2.6: Outputs

Type of outputs Volume Indicator

Spin-outs/start-ups11 56

Licenses (number)12 22

Licenses (Value £000s) 259

Academic staff supported/trained 534

Students supported/trained 1,289

Commercial units/incubators established 9

Business contacts13 2,320

Businesses assisted14 730

Awards (numbers)15 51

Awards (value £000s) 2,300

KT staff/Business fellows appointed16 56

Collaborative projects

2.19 There are 16 HEIF collaborative projects. There is a wide range of funding, and number of

partners, and the smallest collaborative projects have less funding than many single institution

projects. Partners are almost invariably17 drawn from the same region and most have an

explicit regional focus.

2.20 The 16 projects have, of course, adopted a wide range of strategies and activities, but we

believe they can be classified under one of the following headings:

• strengthening the business support infrastructure. These projects share a number of common features:

� targeting the region or, in one case, a substantial part of the region

� concerned with most types of KT (collaborative research, consultancy, CPD etc) and most subject areas. There, are, however, differences in emphasis reflecting, in the main, research intensity and also a focus on specific sectors/technologies in some cases

11 These include companies established by students/graduates and companies established with HEI assistance by individuals

not previously connected to the institution as well as academic spin-outs 12 HEIs reported either numbers or values so this and the next category refer to different outputs 13 These are primarily contacts to inform businesses about HEI capabilities and to market those capabilities. 14 It is not always clears from the AMSs, but we suspect that this category includes a wide range of intensity of contacts

including single discussions and research collaborations. 15 See footnote 2 on the previous page. 16 Headcount, not FTEs 17 There is some collaboration between HEIs in the East and West Midlands


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� an important aim is to engage with business as a sector rather than as individual HEIs. This is manifested in a number of ways including: common promotion; allocation of roles and responsibilities according to comparative advantage; and sharing of best practice, experience and ideas. The latter was highlighted in many annual reports and several projects have devoted substantial efforts to developing tools and systems designed to enhance the efficiency of KT

� related to last point, the consortia are engaging closely with regional business support organisations, notably the RDAs. Dialogue appears to be taking place at two levels: strategic to identify roles and opportunities for HE in regional economic development; and also operational to improve cross referrals between business support organisations

� the employment of additional ‘business development managers’ and significant staff development activity

• company start-ups. Most, but not all, of these projects have wider targets than academic spin-outs alone. They are seeking to work with start-ups whatever the origin of the founder and there would appear to be no requirement that the company is based on IP generated by the HEI(s). Most have also sought to establish networks with regional business support agencies, both to generate clients and also to access complementary expertise

• sector specific initiatives. This is the most heterogeneous, group. More information is given below but it includes:

� commercialisation of research outputs in a specific discipline

� a range KT activities targeted on a single business sector

� development of a technical services unit focusing on five technologies. An incubator is also proposed so there are overlaps with the previous category.

2.21 The review of annual reports indicated that:

• these projects have yet to produce much in the way of tangible impacts so far as KT to businesses is concerned. This reflects the focus of most projects on capacity building. It would appear that by July 2003 this had not translated into substantially greater interactions with external organisations. We have little doubt that there have been greater contacts, which have not been detailed in the reports, but there has been little in the way of more substantive interactions


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• several of the projects focussing on start-ups and sector specific activities have achieved more in the way of tangible impacts than others. However, even in these cases the volume of activity is still not especially large in relation to the funding granted

• part of the reason for the low levels of tangible impacts is the emphasis on capacity building. However, progress appears to have been slower than expected in many cases. It is not always possible to identify this from performance against targets, mainly because year 2 targets have often been revised in the light of year 1 performance. However, for a large number of projects spend to date is significantly under original budget. In two cases this reflects longer than anticipated lead-ins to capital (building) spend, but it more commonly reflects recruitment difficulties. Several projects appear to have caught up with their recruitment plans this year, but the knock-on effects of year one are still working through

• many of the projects and not just those concerned with “business support” are claiming closer links and working relationships with RDAs and other regional organisations. This could represent a substantial and long term output from HEIF

• finally, where outputs and impacts are claimed in the reports there is a disappointing lack of discussion of the extent to which these are additional. The difficultly of making these judgments is recognised but, in some cases, the HEIF project appears to have been primarily concerned with enhancing existing activities rather then developing new initiatives. In such cases it is not clear whether, say, numbers of start-ups or consultancy income are meaningful indicators.

2.22 Table 2.7 provides similar data on outputs for collaborative projects to that previously shown

for single HEI projects (Table 2.6). The caveats attached to the previous table also apply

here; in particular projects have not always reported or quantified outputs in relation to some

output measures, notably businesses assisted and awards generated.


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Table 2.7: Outputs, collaborative projects

Type of outputs Volume Indicator

Spin-outs/start-up18s 112

Licenses (number) 1

Licenses (Value £000s) 0

Academic staff supported/trained 766

Students supported/trained 1,360

Businesses assisted 1,540

Awards (value £000s) £666,626

KT staff/Business fellows appointed 118

The impacts of HEIF funding

2.23 The previous section provided summary data on specific activities, and outputs, supported by

HEIF funding. This indicated that the emphasis so far has been on capacity building and

developing infrastructures for KT. The university visits enabled these aspects of HEIF

funding to be explored in more depth and the results are presented in this section.

Strategy and organisation

2.24 The HEIs we visited differ significantly in terms of the extent to which they were engaged in

KT activities prior to HEIF funding, and also the structure and strategies they had adopted.

Most had also benefited from HEROBC funding and had utilised this to initiate new

approaches to KT and, more generally, KT has assumed increasing importance within the

sector over recent years. Nevertheless, we believe HEIF funding had an important impact at

the strategic level in most of the institutions visited. There are two key aspects of HEIF

which were responsible for these responses.

2.25 First, HEIF funding was made available on a programme basis, rather than for individual

projects, and was also subject to competitive bidding. Programme funding meant that

universities could seriously consider addressing infrastructural and organisational issues

which would not have been feasible if funds were only available on a project by project basis.

The pros and cons of a bidding process are discussed later in this report, but it did mean that

applicants were required to consider how they could best use the funds and this brought new

approaches into consideration. Had funding been available on some kind of formulaic basis,

there is a possibility that HEIs would have continued with more of the same rather than

developing new and innovative approaches.

18 Includes graduate start ups and other companies in HEI incubators


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2.26 The second aspect is the scale of funding. HEIF 1 funds were larger than HEROBC19 with

the result that:

• More HEIs became seriously interested in bidding. Although HEIF 1 funds are small compared with research and teaching grants they were large enough to prove attractive to universities

• HEIF funds enabled universities to extend KT activities, internally, to such an extent that the outcomes have been qualitatively different from what was undertaken under HEROBC and previously.

2.27 There have been three main outcomes, although not all apply to all universities visited. First,

a rationalisation of KT activities within universities. In some cases, all KT support units have

been merged into a single organisation since receipt of the HEIF grant and the new unit

typically reports to a PVC/Deputy VC. In one case HEIF (and other KT programme) funds

were an important stimulus to a complete reorganisation of enterprise activities, and them

receiving a much higher priority within the university. Even where support organisations

have not been merged we encountered examples of PVCs being given overall responsibility

for KT activities. These changes, in part, reflect the need to be accountable for the HEIF

grant but also the increased scale of activity generated by the HEIF funding. The result is that

KT assumes increasing importance at senior management level.

2.28 Second, HEIF funding has assisted HEIs to move towards a different customer base. As is

discussed below, the majority of KT activities do not cover their costs and HEIs have sought

subsidies from the public sector, including the EU, for specific projects. This funding

typically comes with restrictions on the type of firms the HEI can work with (usually SMEs),

their location (objective 1 or 2 areas in relation to EU funding) and sometimes the nature of

links (often general business support and consultancy). HEIF has assisted some HEIs to

diversify their customer base to a wider geographical area and type of company.

2.29 Third, HEIF has enabled HEIs to develop new initiative in a relatively risk free environment.

Given the difficulties in generating a surplus on KT activities most HEIs face barriers in

experimenting with KT initiatives since activities are required to generate quickly revenues.

HEIF provided the underpinning resources to develop and test new initiatives.

Attitudes and culture

2.30 Successful KT depends on the engagement and abilities of academic staff and most HEIF

projects have devoted considerable effort in this direction. Several of those we consulted felt

that the existence of the programme, and the success of their university in the bidding process,

had itself started to engage staff in KT. But there were also more direct impacts:

19 HEIF 2 funds were significantly larger still and the Government is committed to further increases for ‘HEIF 3’.


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• Increases in the number of KT staff meant that many universities were able to provide more, and higher quality, support to academic staff which has encouraged more to engage with KT

• Most universities had undertaken awareness raising programmes of some description, designed to reveal opportunities to staff and better prepare them to respond to these opportunities. However, the breadth and depth of these programme varies significantly between universities

• Perhaps most important, many universities have deployed staff to promote KT internally. The method varies. Many have employed additional business development managers (BDMs) whose role is to promote KT internally as well as externally. Others have identified ‘industrial fellows’, typically academic staff, whose role is mainly internally focused within their departments or faculties.

2.31 Most HEIs have used similar measures in an attempt to extend KT activities to departments

which have not traditionally been heavily involved in KT activities, but with perceived

potential. However, in several of the universities we visited HEIF activities have still only

reached a relatively small number of staff. One consultee, for example, estimated that HEIF

had only impacted on less than 10% of academic staff. One of the challenges which several

HEIs face in the future is the extension of KT activities more widely within the institution.

Business access

2.32 One of the issues identified in the Lambert Report is the difficulties businesses face in

accessing skills and expertise within the HE sector, especially those which have had no prior

contact with universities. HEIF funds, predating the Lambert Report, have been used to

facilitate access in a number of ways:

• Contact offices have been merged. Particularly in the larger institutions, there is still more than one entry point depending on services required, but there has been rationalisation in this respect

• Publicity material and web sites have been developed, especially by those HEIs which have been less intensively involved in KT in the past

• A wide range of networking events and business fora have been established. These have been of varying success with a number of HEIs reporting very poor attendance and business engagement.


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Collaboration

2.33 As was mentioned above, there were 16 collaborative projects funded under HEIF 1. HEFCE

encouraged institutions to submit collaborative bids and some of those we interviewed would

have submitted a solo bid had this priority not been signalled. Nevertheless, all the projects

we interviewed had a strong logic for collaboration. Partners were, in most projects, selected

carefully. In some cases there was a natural grouping, for example where the consortium was

addressing a regional issue. But some of those we interviewed stressed the importance of

working with ‘similar’ sorts of HEIs. This invariably meant similar levels of research

intensity, but one university also deliberately chose partners which had structured their KT

activities in a similar way since it felt that this would simplify the interface between them.

2.34 Most universities reported significant administrative costs arising from management of the

consortium, but there was an almost unanimous view that the benefits outweighed these costs

and many of the consortia established during HEIF 1 were maintained for HEIF 2 bids. Some

benefits derive from simple economies of scale but there are also other factors:

• Collaboration can be a means of smoothing the ‘deal flow’. This is related to economies of scale but collaboration can enable the consortium to establish KT support structures which would not be viable if restricted to one HEI. It is in part a question of volume but even where one HEI is creating sufficient volume alone, peaks and troughs in activities can be difficult to deal with

• There are opportunities to transfer best practice between consortium members. This is not simply a question of one member learning from another. Collaboration has enabled consortium members to test approaches in different situations and to develop best practice

• There are, however, also learning benefits. Some of the consortia we interviewed were deliberately structured so that HEIs which had limited experience were able to obtain advice and assistance from more experienced partners. In one case this was provided on a ‘consultancy’ basis in recognition of the demands on the partner providing the advice. The more experienced partners also gained from the economies of scale which collaboration enabled

• Some of the less experienced HEIs also felt that they had gained a higher profile through collaboration than would have been possible with a solo project of the same scale. This usually reflects the benefits of association with a high profile research intensive HEI


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• Finally, as was mentioned above, many of the collaborative projects are regionally-based and have established a natural grouping for the RDA to relate to. The extent of RDA support during HEIF 1 has varied considerably, but the RDAs have generally kept closely in touch and are often represented on steering groups. In one case the activities launched and developed during HEIF 1 will be rolled out more widely within the region with the financial support of the RDA. Relations with RDAs are discussed further below.

Business involvement in KT

2.35 HEIF funding, and some of the other KT programmes, has been used by many universities to

establish discrete KT activities as well as general additions to the KT support unit. These

include, for example, business incubator programmes, sector specific technology transfer

initiatives and proof of concept funds. Most are structured with advisory boards on which

business representation has been secured. In addition, many universities have established

similar advisory boards for their rationalised KT support structures. The result has been an

increase in business representation at various parts of the university. To varying degrees,

these boards have contributed to the effectiveness of the specific initiative but there are likely

to be more general, and longer term benefits, to both parties from the representation.

2.36 The RDAs represent a special, but important, case and there is quite extensive RDA

involvement in the key management structures. This obviously reflects the growing priority

RDAs attach to the HE sector and the maturing of the RDAs independent of HEIF. However,

HEIF has created vehicles and opportunities for meaningful interactions. The value, to the

universities, of this involvement varies from initiative to initiative and region to region, but is

generally viewed as extremely positive by the universities. Some problems have arisen,

chiefly relating to:

• The obvious interest of RDAs on regional initiatives whereas universities are sometimes interested in cross regional, and international, collaborations. However, there are some signs of flexibility in this respect in that several HEIF 2 bids cut across more than one region

• a university seeking to coordinate with the Regional Innovation Strategy (RIS) where this was sometimes incomplete and/or important underpinning measures had not been implemented. Again, we believe that progress has been made since the early days of HEIF 1 in this respect.


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Facilitating access to other funds

2.37 HEIF is essentially a supply side measure which sits alongside other public programmes

designed to stimulate the demand side, for example LINK, KTPs, Faraday Partnerships and so

on. One issue discussed with the universities visited was the extent to which HEIF had

generated a greater uptake of such funds by the universities. In practice we were unable to

identify much evidence to answer this question. In part, because it is virtually impossible to

drill down from discussions with KT staff to the activities of individual academic staff and it

is at this level that most such funding programme will be accessed. However, we would note

the following:

• All those consulted believed that HEIF funded activities had impacted on staff attitudes and capacity towards working with industry. If so, this implies that, at some stage, researchers are more likely to seek KT related grants than at present

• Two public sources where there does seem to have been an impact is RDAs and KTPs. The RDAs are contributing financially to many discrete projects, although to the extent that this comes from their innovation related budgets there is a question over whether it has generated additional funds for the sector as a whole. KTP is a specific programme that a few universities cited as one from which they were consciously seeking to increase grants with HEIF support.

Additionality, displacement and sustainability

2.38 The majority of HEIF funds have been devoted to additional KT staff and associated

expenditure and all those we consulted were adamant that their university would not have

funded expansion on such a scale without HEIF support. The main factor is a perception that

expansion could not be self-funding, especially where SMEs are an important part of the

customer base, and that there would be a significant time lag between expenditure and returns.

In this sense, HEIF has generated significant additional activity.

2.39 The general view was that there was little, if any, displacement since the KT staff represented

a net addition to the universities’ resources. However, as the investment in the KT

infrastructure starts to bear fruit there will be additional demands on academics’ time and this

must displace some other activity. It is difficult to make any judgement on how serious this

might be but it will obviously depend on:

• The extent to which staff not previously engaged in KT become involved. In which case the impacts may be on mainstream teaching and research

• The effectiveness with which the KT support unit is able to act thereby increasing the efficiency of KT activities. We are confident that there will be positive outcomes in this respect, but there must nevertheless be some displacement impacts.


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2.40 Sustainability of the initiatives will depend to a large extent on the continuation of 3rd stream

funding. For the reasons given above, universities are highly unlikely to invest their own

resources in KT at the same level as HEIF, although some of the activities begun under

HEIF1 have been ‘mainstreamed’. Most of the universities we visited were predicating

continuation, and extension, of KT activities on the basis of HEIF 2 funding.


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3 Science Enterprise Centres

Introduction

3.1 The majority of the Centres are collaborative, the three exceptions being Cambridge, Imperial

and Oxford. The number of partners ranges from zero to 12. The SECs are also associated

with other HEIs which are not partners and around 60 HEIs are involved in some way.

3.2 The key aspects of the SECs are:

• adding new capabilities, mainly new staff who facilitate past and current entrepreneurial ventures within the member universities

• some centralisation of activities, in the case of consortia this is often at two levels: a focal point within each participant university; and a forum where all the management of these offices meet together

• entrepreneurial training, all Centres are, of course, engaged in entrepreneurial training, the nature of these activities and performance against targets are discussed in later sections

• continuous professional development (CPD) to external organisations. In all cases this consists of entrepreneurial training.

• research; some Centres are active in research into entrepreneurship, knowledge and technology transfer etc. It is not clear whether such research is funded directly from SEC funds, but certainly the Centres themselves act as a focal point to attract funding from other sources e.g. the Gatsby Foundation. Ten of the 13 SECs reported involvement in this kind of activity

• assistance with IPR exploitation; all centres consider this as one of their main services.


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Enterprise Training

3.3 All those Centres reporting on staff training activities (7) met or exceeded targets, most of the

latter by a large amount (Table 3.1). The Oxford SEC also reported over 5,600 additional

hours of entrepreneurship teaching but there is no allocation of this total between staff,

students and businesses. These hours are not included in any of the tables in this chapter.

Table 3.1: Staff training (NS=Not specified)

SEC Staff Training (Nos)

Staff Target (Nos) % of Target

White Rose Centre for Enterprise 50% (of all staff) 50% 100

Northern Ireland Centre for Entrepreneurship 189 NS Exceeded

Centre for Scientific Enterprise, London 140 50 280

Simfonec 238 160 149

North East Centre for Scientific Enterprise NECSE 134 33 406

Scottish Institute for Enterprise 403 200 202

Manchester & Liverpool Science Enterprise Board 121 60 202

Others NS NS NS

3.4 There is a similar situation with post graduate training where all Centres reported activity and

all but one met or exceeded their targets (Table 3.2).

Table 3.2: Post graduate training

SEC PG Training (Nos)

PG Target (Nos)

% of Target

Wessex Enterprise Centre 233 120 194

White Rose Centre for Enterprise 50% (of students) 50% 100

Institute for Enterprise and Innovation 176 155 110

Northern Ireland Centre for Entrepreneurship 127 138 92


Simfonec 12 10 120


Scottish Institute for Enterprise20 1629 620 263

The Entrepreneurship Centre 300 300 100

Oxford Science Enterprise Centre21 reported in hours; provided 233 hours of training,

20 Figures are combined for Round 1 and Round 2 universities 21 See the comment in paragraph 3.3


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Table 3.2: Post graduate training

SEC PG Training (Nos)

PG Target (Nos)

% of Target

117% of target


University of Cambridge Entrepreneurship Centre 1547 NS NS

Mercia Institute of Enterprise 875 600 146

3.5 In the case of undergraduate training all Centres reported activity. Most exceeded targets by a

large margin, although two undershot substantially (Table 3.3).

Table 3.3: Undergraduate training

SEC UG Training (Nos)

UG Target (Nos) % of Target


White Rose Centre for Enterprise 50% 50% 100




Simfonec 131 40 328



The Entrepreneurship Centre 558 558 100

Oxford Science Enterprise Centre22 reported in hours; it provided 203 hours of training, 102% of target


University of Cambridge Entrepreneurship Centre 160 Not

specified Not specified


22 See the comment in paragraph 3.3


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3.6 There was far less activity reported in “other training” i.e. training outside the university, but

again where reported most targets appear to have been exceeded (Table 3.4).

Table 3.4: Other training

SEC Other

Training (Nos)

Other Target (Nos) % of Target


White Rose Centre for Enterprise NS NS 360%

Northern Ireland Centre for Entrepreneurship 375 NS Exceeded

Simfonec 76 NS Not Specified



Others23 NS NS NS

Knowledge Transfer

3.7 The table below shows the number of patents applied for by each Centre. Activity is centred

in five centres two of which exceeded their targets (Table 3.5).

Table 3.5: Patents applied for

SEC Patents (Nos) Patents Target (Nos) % of Target


Simfonec 7 6 117




Others NS NS NS

23 See the comment in paragraph 3.3


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3.8 Only three Centres reported any activity in terms of numbers of licenses being granted and in

no cases have targets been exceeded, though the Institute for Enterprise and Innovation with

eight licenses has achieved 80% of its target (Table 3.6)

Table 3.6: Number of licenses granted

SEC Licenses (Nos) Licenses Target (Nos) % of Target


Northern Ireland Centre for Entrepreneurship

Reported as a single figure with patents applied for (58) NS NS

Simfonec 0 1 0

Others NS NS NS

3.9 Six centres reported income from licenses granted but it is not clear in all cases whether this is

specific to the SEC funding (Table 3.7). This is a more general issue and also relates to spin-

outs. Some SECs appear to report activity where SEC staff have had at least some direct

involvement. Others appear to be reporting HEI wide activity.

Table 3.7: Value of licenses granted (£k)

SEC Licenses (£k) Licenses Target

(£k) % of Target

Wessex Enterprise Centre 543 1440 37.5

Institute for Enterprise and Innovation >50 50 >100

Simfonec 0 0

North East Centre for Scientific Enterprise NECSE NS NS NS

Scottish Institute for Enterprise NS NS NS

The Entrepreneurship Centre

NS (2,000 from one

Imperial license mentioned)

NS NS

Others NS NS NS

Links with Business

3.10 Only four Centres reported new business links but in all but one cases this equalled or

exceeded targets (there were also two who reported cumulatively on business links (Wessex

and White Rose) and these also met or exceeded their targets (Table 3.8).


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Table 3.8: Number of new business links

SEC Links (Nos) Links Target (Nos) % of Target


White Rose Centre for Enterprise 168 180 93

Institute for Enterprise and Innovation >600 >200 300

Northern Ireland Centre for Entrepreneurship 450 NS NS

Simfonec 230 225 102

Oxford Science Enterprise Centre 250 100 250

Others NS NS NS

3.11 Only three Centres reported publications and all were substantially below targets. All of

those recorded are academic publications concerned with entrepreneurship, and technology

/knowledge transfer. Where they were ‘joint’ the co-author was from within the consortium.

3.12 Most reports of meetings and seminars were substantially over target, (Table 3.9) but these

are difficult to quantify e.g. how many participants were there in each meeting, of what

quality and how long was the meeting. They vary in type from large high profile launch

events involving hundreds of participants to small seminars and workshops.

Table 3.9: Number of meetings/seminars

SEC Meetings/

seminars (Nos)

Meetings/ seminars

Target (Nos) % of Target





The Entrepreneurship Centre 5 NS NS

Oxford Science Enterprise Centre 20 NS NS

University of Cambridge Entrepreneurship Centre 4 4 100

Others NS NS NS

Business Creation

3.13 Nine Centres recorded creation of new spin-outs but there is a lack of consistency in what is

being recorded, and sometimes also a lack of clarity. Data is presented in Table 3.10 but the

following points should be noted:


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• it is not always clear what assistance the SEC has provided to the spin-outs. In other cases support is referred to but it is not clear whether a company has actually been formed or whether it is support for an idea which might develop into a company

• some SECs have not distinguished between: spin-outs started by a member of staff; graduate/alumni start-ups; and start-ups which do not involve university staff and may or may not utilise university IP

• some are working to generate spin-outs but only quote figures attributable to other organisations in the College (Imperial Innovations)

• finally, the Mercia figure is the combined figure for Mercia SEC and the Spinner HEIF collaborative project which involves a similar consortium of HEIs. Probably sensibly, no attempt has been made to attribute spin-outs to one or the other project.

Table 3.10: Number of new spin-outs

SEC New spin-outs (Nos) New spin-outs Target (Nos)

% of Target


White Rose Centre for Enterprise 19 22 86

Institute for Enterprise and Innovation24 5 9 55

Northern Ireland Centre for Entrepreneurship25 8 NS NS

Centre for Scientific Enterprise, London NS NS NS

Simfonec 1 1 100




Summary

3.14 The key conclusions of the annual report analysis are:

• The emphasis of almost all projects is on training in entrepreneurship and the focus is on internal training for staff and students rather than for external organisations

24 Reported as ‘business formation’ 25 Reported as ‘new business activity’ 26 Reported as ‘new business ventures’


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• Almost all projects have performed well against targets so far as this training is concerned, especially in relation to staff and post graduates. Most have also delivered on undergraduate training, although two projects undershot targets by a substantial margin

• Considerably less has been achieved, and targeted, in terms of external activities such as patenting and new business links. Spin-outs are a partial exception to this, but it could be argued that these are essentially an internally focused activity and, as was mentioned above, it is very unclear what the precise role of the SEC in generating these spin-outs was. In addition, the numbers targeted and achieved are in some cases low given the number of universities involved

• The figures suggest comparatively little systematic difference between projects in terms of their success rates.

Impacts of SEC funding

What has SEC funding enabled?

3.15 A simple reading of the annual reports tends to give an impression of unconnected activities

within the SECs. However, as the visits to the SECs revealed, there is in practice a close

connection between the various activities and a clear focus to overall strategy. The SECs are

essentially engaged in:

• Promoting the exploitation of IP, by licensing or spinout formation

• Introducing enterprise into the curriculum, at both under and post graduate levels.

3.16 The first of these is relatively conventional, encompassing activities such as identifying and

protecting IP, appraising market opportunities, assisting staff and students to establish the

appropriate commercialisation vehicle and raising external funding when required. If the

SEC context is special it is because the enterprise curriculum programmes can, and have done

in some cases, encourage more students to establish businesses. In addition, staff who are

assisting commercialisation may also contribute to the development and delivery of the

enterprise curriculum. We encountered three broad approaches to IP exploitation support

services:

• No support provided, typically where the university already had an established and well resourced IP support office

• Delivered by staff located in the SEC. In one case, the SEC started with this model but later separated out IP support as part of a university-wide rationalisation of KT services


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• Sub-contracting to existing support services. In one case the SEC bid contained provision for IP support, in anticipation of extra demands following the SEC, but the additional staff were located within an existing unit.

3.17 We would note that separation of IP support from curriculum development activities does not

necessarily mean that the synergies mentioned above cannot be exploited.

3.18 The innovative aspects of the SECs relate more closely to curriculum development. We

encountered a wide range of activities, which illustrates the diversity between and within the

SECs, including:

• Student modules at post and undergraduate level. All SECs had developed such modules and they account for the majority of inputs and outputs from the programme

• workshops and seminars in technology commercialisation, usually at the post graduate level

• Business plan competitions

• Summer schools

• Business related project work

• Postgraduate degrees with an enterprise focus. For example, one SEC delivers a “Master of Enterprise” – a full time, 12 month taught masters. Students are taught a mixture of enterprise modules and modules from their discipline area and carry out a 12 month business creation project. It has also launched the Enterprise Doctorate – a 4 year programme modelled on the EngD.

3.19 As mentioned above, student modules are the major tangible output of the programme, but

there are marked differences in the status of these modules and the way they have been

developed and delivered. There are a number of considerations here. First, whether the

modules should be voluntary or compulsory. Most SECs have opted for the voluntary route.

Although the aim is to embed enterprise in the curriculum, there is a widespread view that

compulsion would be counterproductive. However, several we consulted said that students

are often strongly advised by their tutors to take these modules, at least in engineering

subjects.

3.20 Second, whether the modules (and other activities) should be restricted to science and

engineering students. SEC funding was intended to develop enterprise for SET students and

they have been the main focus of almost all the SECs. However, in some cases there have

been demands from other subject areas which the SEC has responded to, and in at least one

case they account for a substantial proportion of students. Most of the SECs plan to widen

the spread of subjects covered in the future, sometimes with support from HEIF 2.


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3.21 Third, and a key issue, is whether the modules should be ‘bolt on’ enterprise courses or

whether enterprise should be incorporated into existing modules. Most SECs provide both,

but we believe the majority favour incorporation into existing modules. There are a number

of advantages to this:

• It creates less pressure on the timetable. This is a key consideration in all subjects but especially in engineering where there are concerns over whether the conventional degree length is sufficient. Incorporating enterprise into existing modules means less displacement of the existing curriculum

• Since the modules are delivered by academic staff, the process of developing the modules helps to promote awareness of enterprise issues amongst these staff

• Many universities charge for service teaching provision which provides an incentive for departments to maximise teaching by their own staff. There are sometimes also concerns over the relevance of service teaching to the core subject area. Incorporation into existing modules has therefore assisted the SECs to introduce the modules

• Updating of the modules is less costly, and more likely to be undertaken effectively, if they are controlled by academic staff. There is, therefore a better chance of embedding and continued development.

3.22 The arguments are not, however, exclusively in one direction. One SEC visited makes

extensive use of successful entrepreneurs to deliver a series of lectures on various aspects of

business creation and development. The main advantages are delivery by a practitioner, but

the SEC needs to monitor carefully the quality of teaching.

3.23 The SECs have now reached the stage where a substantial number of science and engineering

students have access to enterprise modules. This position is, we believe, quite different from

prior to the programme where enterprise, if taught at all, was either provided on an ad hoc

basis depending very much on the interests of individual academics or through a joint degree

with business studies. The Enterprise in Higher Education Initiative, which ran during the

late 1980s early 1990s, achieved some valuable impacts but was much less focussed than the

SEC and did not, in general, embed enterprise in the curriculum in the same way that the SEC

has begun to do. As is discussed below, we believe there is a good prospect of much of the

SEC activities continuing after the funding is exhausted.


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3.24 We believe that SEC funding was instrumental in achieving this because of the importance of

the development activity which it has supported. This has included:

• Designing the agenda for enterprise education. This was non-trivial task and each participating university has had to consider carefully where there are opportunities to introduce enterprise, what should be provided and how it can best be delivered

• Gaining acceptance from academic staff. Most SECs have devoted some effort to raising awareness internally of the value of enterprise education

• Developing the modules and other activities. Even where the majority of provision is through incorporation into existing modules, extensive development work has been necessary. SEC staff have provided direct assistance to academics but SEC fund have also been used to buy out the time of academic staff to enable them to develop the new modules. Far fewer modules would have been introduced without this financial support.

Achievements

3.25 The ultimate aim of the SEC programme is to produce graduates and postgraduates better able

to engage with enterprise in the workplace. It is too early to judge whether this has been

achieved, but there are some encouraging signs. In particular, substantial numbers of students

now have access to enterprise modules. Those universities which have undertaken some

assessment of student satisfaction report that the modules are popular with students (and

staff). In addition, several also reported demands to extend enterprise teaching from science

and engineering to other subject areas.

3.26 The programme has also raised the profile of enterprise education and is undertaking

important developmental work. This is most notably through UKSEC, a forum for SECs to

discuss common issues and share good practice which meets on a monthly basis. UKSEC

was originally supported by OST, but is now moving to a subscription based organisation.

The aim is to position itself as the professional organisation for enterprise in HE

encompassing staff development and informing the policy agenda at the regional and national

levels.

3.27 UKSEC is already engaged in the delivery of training for enterprise professionals. UK

universities, and other organisations such as the RDAs, had access to MIT’s Enterprise

Development Programme (EDP) through the CMI initiative. A decision was taken to deliver

the EDP in the UK and this is now being organised under the auspices of UKSEC.


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3.28 Some of the individual SECs have also been involved in staff development. Manchester, for

example, has established Enterprise Fellowships. This is a 2-year programme designed to

address the shortage of enterprise academics. The course consists of parts of the MEnt,

UMIST teaching practice and a business creation project. More generally, several of those

consulted felt that SEC had enabled them to establish expertise in enterprise as an academic

subject. Many SECs have close links with, and are sometimes located in, business schools.

Some academics had been closely involved in the evolution of the programmes and this had

contributed to their mainstream teaching and research agendas.

3.29 We believe there are good prospects of much of the current SEC activities continuing without

continued support. Specifically:

• As was discussed above, the way in which the modules have been introduced and delivered means that future costs will be mainly for updating and these should be minimal compared to development costs

• There is evidence to suggest that students are increasingly sensitive to the quality and employment prospects of the courses they offer, albeit on the basis of imperfect information. Enterprise educations is likely to become increasingly viewed as a core component of a course in which case there will be pressure on universities to continue to provide it.

3.30 It is less clear as to whether the developmental activities of the SECs can continue at their

current scale with out continued subsidy, especially the extension to new subject areas. The

argument about student demand may be important but several of those consulted felt that

without SEC funding activities would decline, and this is reflected in several HEIF 2 bids.


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4 University Challenge Fund

Introduction

4.1 The purpose of the UCF is to increase the availability of early stage seed funding for HEIs in

order to enable them to develop research outputs to the stage where they can attract interest

from external investors. There is a perceived market gap at this stage and the first UCF

competition was launched in 1998 with £45m available27. A further £15m was awarded in

October 2001. Universities were required to provide funds to a minimum of 25% of the total

value of the fund, or of the increased value of the fund when expansion was sought under the

second round.

4.2 There were fifteen successful bids in the first round of UCF bidding, and a further five in the

second round (one of these was an existing first round fund) so that 19 different University

Challenge Funds were in operation across the UK. With two exceptions (Imperial and

Oxford), all are partnerships, involving between two and six universities (and also research

institutes in some cases), but as Table 4.1 shows, there is no systematic relationship between

number of partners and funding. As would be expected given the aims of the programme,

participation in UCF is dominated by research intensive universities.

Table 4.1: Numbers of part and funding received

Size of partnership Average funding received

Single Institution (2 projects) £3 million

2 (8 projects) £2.825 million

3 (4 projects ) £3.19 million

4 (1 project) £2.75 million

5 (2 projects) £2.25 million

6 (2 projects) £3 million

4.3 There were relatively few restrictions placed on investments, but:

• The total investment, from UCF, in any one project was restricted to £250,000

• The expectation was that most investments would be in the £10,000 to £100,000 range. Most funds have in fact distinguished between small initial “pathfinder investments” intended to establish feasibility and larger follow-on investments to develop ideas. Some funds have in fact made investments as low as £5000.

27 £25m was provided through the Science Budget, £18m was contributed by the Wellcome Trust (and restricted to

biomedical areas) and £2m by the Gatsby Foundation.


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• Funds can only be invested in research undertaken by one of the collaborating institutions.

4.4 The funds had a range of strategic objectives but all adopted one of two basic structures:

• Fund management was subcontracted to a professional fund manager for a fee. A board, comprising representatives from the HEI and external individuals with relevant experience, was established to select from proposals for funding. In some cases, the fund manager had discretion to allocate funds to smaller investments

• Similar to above, but the fund management function was undertaken by the university, sometimes requiring it to recruit new staff.

4.5 There are examples of both approaches working well and this issue is discussed further

below.


4.6 During the first phase of this evaluation we analysed annual reports from the UCFs covering

the year up to end July 2003. This analysis was subsequently updated and extended and the

results are reported in this section.28. Table 4.2 presents summary data on 18 of the 19

funds.29 There is considerable variation in the proportion of total funds committed by July

200330 but not to much should be read into this. Interviews we have had with some of the

HEIs subsequent to the production of the annual reports indicate higher levels of

commitments in several cases and both Cambridge and Imperial funds are now fully

committed. Almost half the projects are in the biomedical area. In part, this reflects the

requirements of Wellcome Trust funding but, for many universities, it is the area where they

perceive the best commercial opportunities to lie.

28 The analysis relates to the same period but some reports were not available during phase 1. These have now been

incorporated. The analysis has also been extended to include available information on co-funding of projects. 29 One second round fund (Dundee/Aberdeen/St Andrews) did not report committed funding by July 2003. 30 These exceed 100% of OST/Wellcome/Gatsby funding in some cases because universities were required to contribute a

minimum of 25% of total fund value.


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Table 4.2: UCF activities up to July 2003 (£000s)

Fund OST/Wellcome

/Gatsby funding

Number of

projects

Total UCF Commitment

Average commitment

Commitments as % of funding

Aberystwyth Challenge Fund 1,000 7 339 170 34%

Bloomsbury Bioseed Fund 3,000 8 1896 237 63%

Cardiff Partnership Fund 3,000 39 3344 86 111%

Cascade Fund (2nd round) 3,000 3 357 119 12%

Combined London Colleges 3,000 8 1074 134 36%

Edinburgh Technology Fund Ltd 2,250 73 3099 42 138%

ICENI Seedcorn Fund (2nd round) 3,000 4 584 146 19%

Imperial College University Challenge Seed Fund

3,000 17 1083 64 36%

KinetiQue 3,000 22 2406 109 80%

Lachesis Seed Fund (2nd round) 3,000 8 640 80 21%

Manchester Technology Fund 4,500 14 3046 218 68%

Mercia Fund 3,000 20 3815 191 127%

Oxford University Challenge Seed Fund 3,000 67 3939 59 131%

Strathclyde Fund (Synergy Fund) 3,000 13 1499 115 50%

Sulis Seedcorn Fund (1st and 2nd round) 6,750 38 2862 75 42%

University Challenge Fund (Northern Ireland)

2,000 36 1,700 47 85%

University of Cambridge Challenge Fund

3,000 18 2,299 128 77%

White Rose Technology Seedcorn Fund

4,500 18 4,407 245 98%

All 57,000 413 38,389 93 67%


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4.7 The average size of commitment also varies considerably but this tends to obscure the

different stages projects had reached at the time the reports were submitted. Figure 4.1 shows

the distribution of commitments. Almost 40% of commitments to projects were for £10,000.

This reflects the widespread use of ‘pathfinder’ projects for activities such as market

assessment and securing the IP position. Fifty-five projects received the maximum (total)

commitment of £250,000. These are projects which have gone thought the initial stages of

development and for which the fund considers there is real commercial potential. Over the

remaining life of the UCFs, we would expect more pathfinder projects to undergo further

development and the average size of project commitment to increase.

Figure 4.1: Distribution of UCF commitments by project size

0

10

20

30

40

50

60

70

80

0 20 40 60 80 100

120

140

160

180

200

220

240

260

280

300

320

340

360

380

400

420

440

460

Size of committment (£k)

Num

ber

of p

roje

cts

4.8 The funds are required to report against a range of performance measures and these are

summarised in Table 4.3. The investments in 413 projects have, so far, translated into 59

spinout companies and four licenses. These figures, however, relate to a fairly early stage in

the pipeline and it will take some time for current projects to mature to the commercialisation

stage. However, they do suggest that UCFs have been focused on generating spinouts as

opposed to licensing deals.


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Table 4.3: Performance measures up to July 2003

Patent Applications 134

Patents Granted 19

Patents Strengthened or expanded 55

Spinouts created 59

Licenses established 4

License Income £2.715m

Income through other forms of collaboration

£2.1m

4.9 One measure of the success of the funds is the extent to which projects have secured external

funding. The annual reports provide some information on this which is summarised in Table

4.4. The data should be treated with some caution since the reports indicate that some

projects are close to securing external funding but this has not yet been committed. In these

cases no co-funding has been entered. In addition, some reports indicate that co-funding has

been secured but do not specify the amount. The level of co-funding for all projects is in fact

substantially greater than UCF funding indicating some success on the part of the funds.

Table 4.4: UCF commitment and co-funding known

Fund Name Number of

projects

UCF Total committed

(£k) Co funding

(£k) Average co funding (£k)

Aberystwyth Challenge Fund 2 339 0 0

Bloomsbury Bioseed Fund 8 1,896 10,280 1,285

Cardiff Partnership Fund 39 3,344 396 10

Cascade Fund 3 357 1,200 400

Combined London Colleges 8 1,074 1,015 127

Edinburgh Technology Fund Ltd 22 1,423 3,968 180

ICENI Seedcorn Fund 4 584 133 33

Imperial College University Challenge Seed Fund 17 1,083 0 0

KinetiQue 21 2,406 782 37

Lachesis Seed Fund 8 640 0 0

Manchester Technology Fund 14 3,046 10,430 745

Mercia Fund 20 3,815 3,215 161

Oxford University Challenge Seed Fund 67 3,939 0 0

Strathclyde Fund (Synergy Fund) 13 1,499 130 10

Sulis Seedcorn Fund 29 2,774 6,862 237

University Challenge Fund (Northern Ireland) 36 1,700 7,857 218


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Table 4.4: UCF commitment and co-funding known

Fund Name Number of

projects

UCF Total committed

(£k) Co funding

(£k) Average co funding (£k)

University of Cambridge Challenge Fund 13 2,022 6,895 530

White Rose Technology Seedcorn Fund 18 4,407 6,055 336

All 342 36,348 59,218 173

4.10 However, co funding is concentrated on a small number of projects. At July 2003, 103

projects had secured some co-funding, but two projects accounted for almost a quarter of this

and the top ten for 60%. The main sources of co-funding are shown in Table 4.5. Some

projects received funding from multiple sources and the reports do not specify funding for

each source separately. Venture capital and industrial funding are the major known sources in

terms both of the number of projects and the average size of investments, closely followed by

private equity, although the average investment is of course much smaller.

Table 4.5: Sources of co-funding

Source Total funding

(£k) Number of

projects Average per

project

Venture Capital 16,460 17 968

Industrial Funding 14,017 17 825

Venture Capital & public sector 1,133 1 1,133

Venture Capital & Private Equity 430 2 215

Venture Capital & Private Equity & EU 1,124 1 1,124

Private Equity 2,133 15 142

Private Equity & Venture Capital 167 1 167

Private Equity & Industrial Funding 75 1 75

RDA 2,149 8 269

Other Public sector 1,218 13 94

Other 9,907 10 991

Not Known 10,405 17 612

All 59,218 103 575

Fund structure and management

4.11 The UCFs are structured in a similar way in so far as most have:

• Advisory boards, comprising university staff and external members with business and venture capital experience. Typically the board specifies the overall framework for


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investment criteria, monitors investments and, in some cases, advises on whether or not to support projects above a certain size

• One or more sub-committees which decide on larger investments (if not undertaken by the advisory board)

• A fund manager, responsible for bringing proposals to the board or committee. The fund manager often has discretion to approve smaller investments.

4.12 The funds do, however, differ so far as fund management is concerned. Some have sub-

contracted the function to professional organisations while others undertake fund management

as an in-house activity. In the latter cases, the universities have sometimes recruited specialist

staff. There is tendency for those universities which were active previously in promoting, and

funding, spinouts and licensing to undertake fund management in-house whereas those which

have been less active have tended to contract out fund management. However, there are

exceptions in both directions. The in-house route saves on management fees, but is only

feasible if the university has the funding experience and is facilitated if procedures for dealing

with the commercialisation of intellectual property are well established.

4.13 What is the most appropriate mechanism will, therefore, depend on where the university is

starting from. We visited one university which had initially sub-contracted out fund

management but later switched to in-house delivery. The university felt that the fund

managers were not properly attuned to the issues surrounding the commercialisation of IP

generated by a university and were also too risk averse in the projects they were bringing

forward. As a result, the deal flow was significantly lower than envisaged and this, together

with what the university considered to be relatively high fees, led them to establish fund

management in-house.

The importance of UCF to the universities

Rationale

4.14 The underlying rationale for UCF is that the private sector will, if left to its own devices,

under invest in early stage technology development projects. The universities we visited

were, unanimously, of the view that this rationale was, and remains, valid. The key problem

is the costs associated with making investments in early stage technology projects in relation

to the anticipated returns. The private sector is faced with more attractive options for later

stage investments. These costs arise for three main reasons:

• Assessment of commercial potential, including due diligence costs

• Translating the project into a commercial opportunity, for example recruiting managers to work with a spinout


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• Monitoring the investment.

4.15 The costs, especially the first, are relatively high in relation to technology based projects

because of the high levels of uncertainty. This is, of course, the area where UCF investments

have been made. The costs of assessment are, however, lower for the university than they

would be for an external investor. This is because those universities which have received

UCF already have well established structures and procedures for identifying research with

commercial potential whereas an external investor might be making a one-off assessment. In

addition, since any ‘deal’ is between the university and its staff there is more likelihood that

information will be provided openly, and greater potential to verify technical claims through

discussion with other experts. Any assessment by a university could not, however, substitute

for that which an external investor would insist on undertaking.

4.16 The universities we interviewed31 all claimed that UCF had made a significant addition to the

funds available to them for early stage investments. As such the additionality of the

programme is high.

Benefits of UCF to the universities

4.17 There are various aspects of UCF, over and above the simple availability of funds, which

were welcomed by the universities. These are discussed below. However, it is worth

expanding on the point, made above, that most recipients already had in place a well

developed infrastructure for the commercialisation of IP. Applicants needed to demonstrate

that they were likely to be able to generate a sufficient stream of research outputs, but most

also had structures for:

• Identifying commercialisable IP. This encompasses, for example, formal systems for reviewing research contracts and disclosure, but also more general considerations including policies for rewarding staff (for IP exploitation) and staff awareness of university support mechanisms

• Project support. IP exploitation staff generally provided advice on commercialisation routes and the implications for the development of research outputs

• Business support. A key issue in relation to spinouts is assembling the management team prior to seeking external funding. Several of the universities we interviewed were active in this respect, including bringing in managers from outside the university where appropriate

• Accessing later stage funding, through contacts with a range of sources as described in Table 4.4.

31 The annual reports are also consistent with this statement.


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4.18 UCF was an important addition to this infrastructure, but it could not by itself have generated

the volume of activity which is has.

4.19 In addition to the increased availability of funds, UCF had three main attractions to recipients.

First, the flexibility over size of investment was important, and more specifically the ability to

make small investments in order to ‘test’ commercial potential. As already discussed, the

private sector is generally uninterested in UCF scale investments and would have no interest

in the smaller range of less than £50,000. At the same time, universities are constrained in the

volume of funding they can devote to such activities, yet, given the high levels of uncertainty

there is a real need to test in order to decide where to focus larger investments. In this

context, it is interesting to note the large number of ‘proof of concept’ applications for HEIF 2

funding, many of which envisage quite small average investments.

4.20 Second, and related to the last point, UCF reduced the pressure on universities to establish

companies earlier than would be optimum. In the absence of UCF, there would have been a

requirement to seek external funding at an early stage and the most likely sources, including

Smart awards, require a company to be established. As a result universities were sometimes

establishing companies before ideas had been properly tested and developed, in some cases

without the full engagement of the academic staff involved32. In this sense UCF may be

generating higher quality spinouts, as well as higher volumes.

4.21 Third, it provided more scope for universities to invest in student spinouts where the

university would not, ordinarily, own the IP. In practice we are unsure as to how widespread

student investments have been but it was cited as an advantage by two funds we interviewed.

There is a more general issue here. We believe that most funds have operated as if they were

venture capital funds in that the main aim has been to maximise the long-term return to the

fund. However, at least one fund has taken the view that regional economic development

should be an important strategic consideration. The two aims are not necessarily inconsistent,

in particular they both imply restricting investments to projects with genuine commercial

potential. However, the ‘regional development, approach has led to relatively small

investments in order to maximise the number of ideas which come through for later stage

funding for which external sources will be approached.

32 The implications of the Finance Act for university spinouts almost certainly had the opposite effect during the period

under consideration.


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Outcomes

4.22 Table 4.2 showed funding commitments and Table 4.3 simple performance measures for all

UCFs up to July 2003. The interviews we conducted indicated that the funds have continued

to make progress since that date and, in particular, several others had, or were close, to fully

committing funds by the autumn of 2004. There are still, however, some round one UCFs

which have significant levels of funds uncommitted. Only one of the funds we interviewed

claimed to have had difficulties in generating sufficient numbers of high quality projects,

indeed some of those which are fully committed felt they would have been able to use

additional funds effectively. Where the deal flow has been slower than expected this mainly

reflects longer than anticipated set up times. Although one university referred to above, did

experience management difficulties which led them to change the fund management structure.

4.23 A key issue is the extent to which the UCFs will continue once public funding is fully

committed and it was hoped that they would build up an endowment which could be used to

support IP exploitation in the future. In one sense it is too early to make a judgement on this.

Many of the investments in spinouts are relatively recent, even for round one funds, and one

or two successful floatations could make a substantial difference to a fund’s financial

position. However, only one of the funds we interviewed considered there was a realistic

prospect that returns on investments would cover the costs of investment and generate a

surplus for investment in the future. Two main reasons for this position were given.

4.24 First, the UCFs are not considered large enough to become self-sustaining. It is widely

recognised that technology-based funds which are self-sustaining depend on large returns

from a small number of successful investments which outweigh losses elsewhere. This

requires a large portfolio of investments, and some of those we consulted put this at around

£8m.

4.25 The second point concerns the restriction to £250,000 on the size of investment which UCFs

are permitted to make in a single project. This means if projects are highly successful the

UCF is permitted to retain only a small share of equity after later stage financing. As a result

its ownership, and possible return, will be diluted substantially. In effect, the UCFs are

prevented from sharing fully in any major commercial successes they do generate. In a sense

this represents something of a policy dilemma. In these cases, the private sector has

demonstrated a willingness to invest, and the rationale for continued investment from public

funds is not therefore clear. At the same time, it inhibits the funds from becoming self-

sustaining which might also be a valid policy aim.

4.26 The future for the UCFs is somewhat uncertain at present. Some of those we interviewed

which have committed fully their funds are effectively dismantling the UCF structure because

of lack of funds. Some of these are exploring the possibilities of continuing the fund with a


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private sector contribution but, so far as we are aware, no deals have been done, and whatever

emerges is likely to be on a smaller scale than the current UCF. None made applications to

HEIF 2 for continued funding. The minimum scale necessary for UCF operation would have

taken the university close to the maximum permitted HEIF 2 funding per institution and most

universities considered there were higher priorities for HEIF 2 funds.

4.27 Most of the funds we interviewed claimed two other outcomes from UCF. First, as was the

case with other KT programmes, UCF was a relatively high profile initiative within the

institution which enabled the university to provide direct and tangible support for

commercialisation. As such, it has helped to change staff attitudes towards research

commercialisation.

4.28 Second, it has helped to develop contacts between universities and external funders, both

private equity and venture capital funds. Several funds have established formal relationships

with external funders which give the external party the opportunity to consider projects

emerging from initial UCF funding (although not the right of first refusal). Even where

formal relationships do not exist, the deal flow which UCF has generated has extended

contacts in many cases. There is no evidence to suggest that attitudes towards very early

stage funding have changed, indeed the costs still remain prohibitive for external investors.

But, they have resulted in external investors gaining insights into university research outputs,

and constraints on their commercialisation, and the contacts established will be useful to the

university in the future.


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5 Synergies between the programmes

General synergies

5.1 As was described in chapter 1, many HEIs received funding from two, and sometimes three,

KT programmes. This chapter briefly considers synergies between the KT programmes and

the extent to which they have been mutually reinforcing. These synergies occur at both the

strategic and operational levels

5.2 We consider that strategic synergies arise for three main reasons. First, the programmes

provided an opportunity to coordinate and rationalise ‘enterprise’ activities across the

institution and several of those we visited exploited this opportunity. The scale of the

programmes was important in this respect, since small levels of funding would not have

stimulated organisational change, but the signal that 3rd stream funding would become

permanent was also important. As was discussed in relation to HEIF, several universities

have now established clear reporting lines to senior management for all enterprise activities.

5.3 Second, and again relating to scale, the combination of programmes raised the profile of KT

within the institution and has helped to engender culture change and engagement with KT

activities. The third reason is more speculative, but together the three programmes

encompass all aspects of KT and enterprise. This, and the large total budget compared with

HEROBC, has probably been a powerful signal to the business sector that HE is becoming

more serious about KT.

5.4 So far as operational synergies are concerned, we would first make the point that there is a

significant overlap between the sorts of activities which are funded under the different

programmes. This is especially true of SEC and HEIF and in particular:

• Some universities have used HEIF funds to support enterprise activities which are very similar to those undertaken by the SECs, albeit at a much smaller scale. These include activities such as awareness raising (staff and students); business related projects and work-based learning for students and some attempts to embed enterprise in the curriculum

• SEC funds have been used to support the exploitation of IP in a very similar way to some of the HEIF funds, indeed some SECs have ‘subcontracted such support activities to another support unit within the university. Some SECs, to a lesser extent, have also sought to work with external businesses, both in business support mode and by opening up some of the enterprise curriculum to businesses.


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5.5 The overlaps between HEIF/SEC and UCF are far less, but some HEIF projects have made

proof of concept funds available, usually in smaller amounts than the lowest UCF investment.

5.6 Operational synergies have been exploited in two main ways. First, the HEIF and SEC

activities have generated ideas which have been fed through as UCF projects demonstrating

the potential for the university to support all stages of IP exploitation, up to securing external

funding. Second, both UCF and HEIF supported staff have contributed to curriculum

development, and sometimes delivery, in the SECs.

CMI

5.7 For the reasons given in Chapter 1, CMI was not included in the current evaluation.

However, one of the aims of CMI is to experiment with, and develop, novel forms of

knowledge transfer and the evaluation did consider the transferability of CMI activities to

other contexts33. This is not an easy task. It was outside the scope of the current evaluation to

explore and evaluate CMI activities in any depth so it is difficult to identify those activities

which will be successful. Nevertheless, there are some characteristics of CMI, and activities,

which we believe could be transferable.

5.8 Direct synergies are already being exploited. CMI’s National Competitiveness Network

(NCN) links universities, businesses and government organisations, providing a forum where

ideas can be exchanged, findings can be shared and issues relating to competitiveness,

productivity and entrepreneurship can be explored in depth. Membership includes the

Science Enterprise Centres other higher educational institutions with an interest in

entrepreneurship, UK Regional Development Agencies, and other research and industry

organisations

5.9 NCN disseminates the outputs of CMI and provides forums for knowledge exchange through:

• the annual National Competitiveness Summit, a high-level opportunity for industry, universities and the public sector to debate key issues in converting science and technology into commercial enterprise.

• Competitiveness Forums which facilitate knowledge exchange on policy issues related to competitiveness, productivity and entrepreneurship

• quarterly hands-on workshops jointly with the SECs to share best practice on how to improve competitiveness, productivity and entrepreneurship in the UK.

33 Reported in a separate paper to OST


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5.10 CMI is also developing Knowledge Integration Communities (KICs). KICs have accounted

for a substantial proportion of CMI expenditure and these will almost certainly be CMI’s

main contribution in terms of new models. CMI describes its activities in terms of a Venn

diagram representing research, education and industry. It places the KICs at the intersection

of all three as is shown in Figure 5.1.

Figure 5.1: Location of KICs in knowledge transfer space

Research Education

Industry

KICs

Research Education

Industry

KICs

5.11 KICs seek to address (long-term) economic and social problems, which require a

multidisciplinary approach34. The KIC brings together the knowledge base of different

communities, namely: university researchers; industry collaborators; policy makers; and

educators. Researchers and industry help identify areas that are aligned to their needs. Policy

participants offer guidance and policy responses to help ensure that KIC outputs can be

exploited. The educators design education programmes for innovation using experience

based learning teams on projects in KICs; a major objective is to involve undergraduates,

postgraduates and post doctoral researchers into research with a consideration of use.

5.12 They comprise six components:

• Research. This, of course, accounts for the main share of the KIC budget. All projects are collaborative between Cambridge and MIT, with some also involving other UK universities. Projects must be able to identify the competitive impact on the UK economy

• Commercial enterprise. All projects must have strong industry participation and the priority is to support proposals which will enable two way knowledge exchange. KICs support technologies where the UK has the potential for global leadership and encourages proposals involving multinationals with a significant UK presence. SMEs are also encouraged but the KIC must lead to applications which will benefit the UK economy as a whole

34 In 2004 there were five “fully integrated” KICs: Silent Aircraft; Next Generation Drug Discovery; Pervasive Computing;

Communications Innovation Institute; Centre for Competitiveness and Innovation.


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• Education. A key aim is to increase the capabilities of students to engage in knowledge transfer effectively. As such, KICs have education innovation programmes for under and post graduates students. Most have a focus on M.Phil programmes and placement opportunities

• Public sector. KICs aim to serve as models for national and regional economic development and need to design mechanisms to engage with relevant public sector organisations

• Knowledge exchange. To support CMI’s mission to develop innovative methods of knowledge exchange, all KICs must have a knowledge exchange component.

• Study of innovative knowledge exchange. CMI provides funding and staff to the KICs to study knowledge transfer mechanisms. The two priority themes are the translation of industry generated questions into research projects by university researchers, and, the translation of research outputs into practical use.

5.13 KICs appear to be a novel and potentially effective means for engaging the key communities

in knowledge exchange and integrating educational programmes for students. If successful,

there is evident potential for KICs to continue with private funding or at least a substantially

reduced government contribution. As such the model should be considered seriously in other

contexts. The main scope would appear to be in two areas.

• adoption by another funding body. The research councils are obvious candidates but they might also be relevant to LINK or EU FP funding. Such funding bodies could use KICs to initiate new targeted research programmes but the mechanism could also be used in relation to individual projects outside a targeted research programme although it may be problematic to engage researchers in the knowledge exchange and educational aspects of KIC once they have already received funding

• the CMI KICs have been problem-based but there may be potential to adapt the model to meet regional needs, especially where there are sector-based concentrations of industry. It is likely that regional KICs would differ in important respects from the current programmes. Few regions contain within them all the leading edge companies in a given sector and certainly not on a global basis. As such, research collaborations will be less attractive to university researchers and it may be more difficult for companies to identify research areas where they are willing to share results. However, there might be potential to address problems which are specific to the region but not to any one sector, for example management, logistics and transport or environmental issues. We would note, however, that one of the key characteristics of the KICs is the long-term engagement of business and this may be more difficult to achieve with regional groupings.


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6 Public Sector Research Exploitation Fund

Introduction

6.1 The purpose of the Fund was:

• to enable public sector bodies carrying out research to have access to the skills and expertise needed to evaluate the commercial potential of their work and to take steps to bring ideas towards exploitation;

• to create and enhance the scale of activity in this area so that intellectual property management and commercialisation opportunities can be handled efficiently

• to enable successful institutions to act as exemplars of the success of commercialisation to other public sector bodies, which carry out research.

6.2 Funding was available to support the building of exploitation capability within institutions or

consortia (“Capacity Building”), and to establish one/two Seed Funds that will make seed

funding available to the public sector research community. There was one successful

application for Seed Funds – the Rainbow Fund operated by CCLRC in partnership with

NERC, DSTL and PPARC. The remainder of the bids were for capacity building. In total, 19

bids were funded.


6.3 The concentration on capacity building is reflected in activities recorded in the July 2003

Annual Reports:

• Twenty seven appointments were recorded across nine of the consortia. Six were programme mangers and twelve IP managers

• Almost all projects had provided IP training for staff and/or awareness raising activities

• Seventeen of the 18 projects had undertaken some form of technology audit.

6.4 All the PSREF projects are focused on KT though licensing and spin-outs. As at July 2003

limited progress had been made towards realising this objective:

• 12 of the 18 projects had filed patents, in one case 20 filings

• Only three licensing agreement were reported


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• Eight spin-outs were reported by five of the projects.

6.5 The annual reports also indicated a significant under spend against budget. This appears to be

mainly a result of difficulties in recruiting staff.

Impacts of PSREF

6.6 The PSREs generally, and those in receipt of PSREF, are a very diverse group comprising:

• Small research institutes operating virtually as stand alone organisations

• NHS trusts, many of which are large entities in themselves, and which have collaborated within hub and spoke models for PSREF purposes

• Research Councils have KT responsibilities located at the central offices as well as within the individual research institutes

• Major museums with research responsibilities.

6.7 The current study made visits to six PSREs and we would not claim that the sample captures

all the diversity within the sector. However, a number of general points did emerge from the

discussions which we are confident have wider applicability.

6.8 First, one of the key characteristics of PSREs is that a high proportion of their funding is tied

to specific activities such as research programmes. They have far less scope than HEIs to

allocate core funding in line with strategic aims including commercialisation. In addition,

prior to PSREF there was no source of funding analogous to HEROBC which could be used

to support KT. This does not mean that they did not engage in commercialisation activities.

All the institutions we visited had some track record of generating commercial revenue and in

the case of one NHS Trust turnover is running at around £40m per year.

6.9 However, commercial activities are very much focused on analysis and testing, contract

research, consultancy and the sale of data sets. These activities are relatively low risk and

generate revenues quickly. Only limited resources had been devoted to the exploitation of IP

because the returns are highly uncertain and the timescales lengthy. As a result, IP

exploitation expertise within the PSREs was limited, and in some institutions we visited non-

existent prior to PSREF. For these reasons the additional activity attached to PSREF is high.

The majority of the funds have been devoted towards employing specialist staff, and to a

lesser extent patenting costs and training, and we believe it is unlikely that these appointments

would have been made in the absence of PSREF.


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6.10 Second, the PSREs have largely engaged in similar sorts of activities including35:

• Reviews of staff rewards and incentivisation polices, an important issue identified in the Baker Report

• Appointment of IP specialists. The actual structure has varied between PSREs. The NHS Trust projects have located new staff at the hub as a resource for the consortium members to draw on. In the projects we visited the spokes have identified individuals whose responsibility is to identify potentially exploitable ideas and feed these through to the hub. There are examples of the hub trust employing staff directly, and also of sub-contracting IP support services to external organisations. NERC has also located additional staff at its central office

• Promotion of IP exploitation among staff though awareness raising and training courses

• Establishment of procedures for identifying exploitable IP and assessing its potential. For the larger projects, this chiefly amounts to identifying contacts within participating institutions and establishing working relationships with ‘core’ IP staff. As mentioned above, many PSREs undertook technology audits during the early stage of their projects and several of those we interviewed also mentioned the importance of being able to undertake market research with PSREF funds.

6.11 Fourth, all the institutions visited considered that they had established an infrastructure for IP

exploitation which was appropriate to their needs although this statement does need some

qualification:

• Proof of concept funding was considered a key component of the infrastructure by most we interviewed and some projects had in fact used a small part of their grant, as distinct from the Rainbow Fund, for this purpose. Three of the institutions bid successfully for further proof of concept funding during PSREF 2

• As is discussed further below, one institution failed in its PSREF 2 bid and there are doubts as to whether the current level of activity can be maintained

• Although the infrastructure is largely in place, one of the hub and spoke projects needs to engage spoke organisations more fully in its activities.

6.12 Fifth, despite these positive outcomes the actual level of IP commercialisation in terms of

spinouts and licensing deals does not appear to have increased significantly since the 2003

data was produced. There has been further development of commercial ideas, but this has not

yet translated into revenue of any significance. In part this reflects the lengthy time scales 35 The National Museums and Galleries ion Merseyside project is, we believe, unique in that it was narrowly focussed on

developing a specific technology. See the volume of case studies.


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involved. It should also be recognised that revenue generation is not the primary aim for the

NHS Trusts. Both the Trusts we interviewed emphasised that their main concern was to

improve patient care by the development of ideas emerging from clinical research and

practice and their adoption by the NHS. This may require commercialisation but revenue

generation is a secondary consideration36.

6.13 Finally, there is the issue of the sustainability of activities. Although the costs per institution

are relatively modest, there is little prospect of these being covered by revenue in the

immediate future. Most of the institutions we visited were successful in their PSREF 2 bids

and this will sustain and extend current activities. However, most of those consulted felt that

revenues would still be less than costs over the PSREF 2 period and identified a need for a

third funding round.

6.14 The institution we visited which was unsuccessful in its PSREF 2 bid is interesting in this

context. First round funds were used to employ an IP exploitation manager on a full-time

basis. Originally, the aim was for the post to become self-financing but the current scale of

activity is too small for this to be feasible. Final decisions have yet to be taken, but there is a

real possibility that the post will disappear, in which cases the IP assessment and negotiation

skills would be lost, or that marketing activities will need to be reduced substantially. This

example also illustrated the importance of scale in IP exploitation support. A larger

consortium of organisations could have meant that costs were more thinly spread. The deal

flow would also have been larger with earlier prospects of achieving self-funding.

36 There is a further consideration in relation to NHS Trusts. Non-clinical biomedical research, where IP exploitability is

above average, is often undertaken by university staff within the hospital. The IP from this research is typically owned by the university which is also responsible for its exploitation.


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7 Lessons for good practice

Introduction

7.1 This chapter discusses some of the good practice lessons that we have drawn from the

interviews. Illustrations of the points made in this chapter are given in the 10 case studies, but

this chapter draws on the all 25 visits to HEIs and PSREs. These lessons have been grouped

into thematic areas.

7.2 However, before considering good practice in detail, there is a need to draw attention to a

number of caveats:

• the practices discussed below are those that appear to the evaluators to have contributed to success. The sample of universities visited did not permit all good practices to be identified nor to identify which practices might be considered to have been the best

• the concept of ‘good practice’ needs to be considered in context. Some institutions have developed practices which work very well for them within their specific context to meet their particular objectives. However, institutions developed their knowledge transfer programmes from very different backgrounds and, consequently, appraoches that have proved successful in one context may not be transferable to another

• the impact of individuals in achieving success should not be underestimated. Whilst the use of ‘good practice’ can clearly facilitate success, the drive, experience and knowledge of individuals may be more important.

7.3 The following sections discuss some of the key themes. In the interests of brevity, we have

sometimes used the term ‘3rd stream activities’ and ‘enterprise activities’ to summarise the

total range of activities involved.

Identifying requirements – users and/or academic staff

7.4 Institutions have utilised a range of different approaches in order to identify requirements or

gaps in their own capabilities in relation to 3rd stream activities. The identification of

requirements, however, is not necessarily the only relevant factor since there may be

recognition of the requirements for 3rd stream activities among some academic staff but

insufficient support within senior management and /or other departments to enable

meaningful action to be taken.

7.5 In some universities, the possibility of undertaking 3rd stream activities received less internal

recognition from senior management because teaching and research were seen as the key


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objectives, with 3rd stream activities being seen as a distraction. Some of the approaches used

to identify the requirements for 3rd stream activities and to generate support and credibility

within the university included:

• comparisons of the university with World class institutions where 3rd stream activities were seen as an integral part of their success

• building on the data and experience of HEROBC

• undertaking surveys of the needs of SMEs in the local economic catchment area

• developing better linkages and contacts through existing industry groupings

• developing a better understanding of how enterprise and outreach could be built into existing activities and structures

• using knowledge transfer funding to generate internal credibility for these activities

Establishing new structures

7.6 There are several aspects of the ways in which universities have established new structures as

a consequence of the 3rd steam activities which are considered below.

Integration of activities

7.7 Elements of the 3rd stream activities existed in many institutions before the advent of the KT

programmes. However, in many cases, these activities were partial and fragmented and were

not managed in a coherent or integrated manner or were undertaken on a much smaller scale.

Some universities used the KT funding to bring together disparate activities into a common

structure incorporating, for example, the management of Intellectual Property, due diligence,

screening of investment proposals, outreach onto companies etc. In some cases, activities in

different parts of the university have been brought together into one coherent structure. These

new structures provided opportunities for the role of the enterprise activities to be considered

as a recognised department with a package of activities in which individuals might develop

specialist careers and achieve successes, rather than as an add-on activity to the university’s

other key roles.


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Broadening the scope of enterprise activities

7.8 A further aspect of the integration of enterprise into the University’s activities is the extension

of 3rd stream activities into new subject areas. Frequently, 3rd stream activities are developed

first in engineering, science and technology (including life sciences) and in computing and

software. There are obvious merits in this approach. It has enabled some HEIs to create high

profile demonstrations of potential which helps to encourage other subjects to consider KT.

However, there has been increasing recognition of the opportunities for 3rd stream activities in

non- traditional areas such as creative industries, architecture, finance, food technology,

environment, urban regeneration and social work etc. Some aspects of KT funding are

restricted to science and technology disciplines. Nevertheless, universities are making

progress in developing the enterprise agenda in a wide range of new areas.

7.9 Good practice in these areas includes:

• creating an integrated approach to 3rd stream activities

• recognising the possibilities for enterprise activities in non-traditional areas such as the creative sector and developing analogous programmes

Locating enterprise staff within departments

7.10 A second element in establishing new structures involves the ‘enterprise department’ taking

on staff to work within a major department of the university as full time or part time

representatives of the enterprise function. This might involve, for example, seeking out

technologies and ideas within departments that had licensing or other commercial potential,

assisting academic staff in departments in developing commercialisation plans and acting as a

champion or advocate for the enterprise agenda within departments.

Integration into university decision making

7.11 A third element in the establishment of new structures involves the integration of 3rd stream

activities into the normal decision making processes of the university. For example, some

universities require the staff in the 3rd stream activity to report to the Research Committee and

for the university’s research strategy to take into account aspects such as licensing, spin –outs,

industrial funding and other 3rd stream activities. As such, 3rd stream activities have become

an integral part of university decision making structures rather than an add–on function.


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Internal or external management

7.12 At an early stage, institutions were faced with a choice of whether it was best to manage

activities internally, either buying in the necessary skills or developing these internally37, or to

outsource management to existing professional. This issue was particularly relevant to the

management of seed funds but, especially in the case of PSREF, not restricted to such cases.

In some universities, management of seed funds was undertaken internally, whilst other

universities considered that they did not have sufficient expertise in investment to undertake

this function successfully and contracted out the function to external experts.

7.13 A priori, neither approach can be considered to be better than the other. Scale is obviously

relevant, with larger institutions having more scope to develop capabilities internally, but an

element of success lies in the ability of the university’s decision making systems to recognise

whether or not the chosen approach is delivering what is expected and to make relevant

changes if it is not. One institution we visited encountered problems with external managers

reflecting differences in culture, objectives and understanding of requirements, but it was able

to identify and respond to the problem quickly.

Prescription / bureaucracy

7.14 Institutions were also faced with issues about the extent to which detailed procedures should

be prescribed for new areas of activity. On the one hand, they were seeking to develop an

enterprising management styles that could respond to opportunities and proposals without

unnecessary bureaucracy whilst, on the other, they needed to ensure that proper procedures

and controls were instituted to ensure that large sums of money were properly spent. For

many institutions, this was a learning experience and one measure of their success was the

extent to which they were able to take action if procedures were found to be incapable of

delivering the requirements. Examples of good practice include:

• the modification and streamlining of internal procedures for appraising proposals for seed funding which had been found to be too slow and bureaucratic

• delegation of responsibility to professional staff for smaller investment projects with staff reporting these actions to the formal investment committee subsequently

• a system of specialist investment committees for different subject areas which included specialist outside experts

• a set of eligibility criteria to facilitate decision making

• developing clear policies on potential conflicts of interest. 37 Many institutions we visited recruited staff with limited experience and then sought to develop these staff, sometimes

using external training sources. The Praxis courses were spoken of highly by several we consulted.


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7.15 There is a more general issue concerning bureaucracy. Many HEIs established quite elaborate

structures for the management of their KT funds and the specific activities they supported. In

some cases these structures undoubtedly slowed decision making and may have delayed KT

activities to some extent. However, we believe such structures may have an important role in

the context of the HE sector:

• they have been important in raising the profile of KT within the institution and confirming its legitimacy to staff. This has been important, especially in those HEIs seeking to engage staff in KT for the first time

• they have provided a structure for involving external organisations, both from the private and public sectors, in the management and planning of KT activities

• in some cases at least, they have been necessary to ensure a transparent and equitable allocation of funds between HEIs in collaborative projects. This is discussed further below.

Recruitment of KT staff

7.16 Having staff to manage 3rd stream activities that have the necessary skills, experience and

motivation is a key element for success. However, a key problem is the ability to offer such

staff an attractive career opportunity when funding arrangements for programmes are

available only on a short term contract basis. Some universities have offered enterprise staff

employment on the normal university scales which is seen to have advantages including

closer linkages with the university’s normal activities. Others have taken on staff within

separate companies at individually negotiated market rates. However, either of these

approaches can lead to anomalies in terms of incentives and terms of employment and

universities have needed to review and update policies in relation to incentives for developing

3rd stream activities. Elements of good practice include:

• developing career structures within the enterprise function to allow staff to develop their specialist capabilities

• seeking to develop longer term opportunities and funding for knowledge transfer staff to provide continuity and career progression

• reviewing the continuing relevance and efficacy of policies related to incentives and terms of employment of staff involved in 3rd stream activities


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Mainstreaming activities

7.17 Mainstreaming activities can be understood on a number of levels which are considered

below.

Culture

7.18 A key element in mainstreaming activities is the development of a culture in which 3rd stream

activities are developed as an integral part of the university’s mission. At one university the

Vice Chancellor has elaborated this within the university’s mission strap-line which indicates

top level commitment to enterprise as a vital part of the university’s mission and helps to

ensure that 3rd stream activities are taken seriously both in relation to the university’s policies

and resources..

Building enterprise into existing courses.

7.19 A number of approaches have been adopted including making enterprise a mandatory part of

courses, developing accredited enterprise modules for courses which are voluntary options for

students, providing a supporting framework to encourage students to take voluntary modules

and development of relevant work placements and projects. In this area, perhaps more than

most, the most appropriate approach depends on existing teaching and learning structures, but

examples of what has worked well include:

• analysing existing modules to identify enterprise relevant content and modifying as appropriate

• awarding credits for enterprise courses

• making enterprise courses voluntary, but with strong encouragement from academic staff

• developing opportunities for students to undertake placements with relevant employers to enhance students’ employability

• supporting independent student enterprise clubs

• selective use of guest lecturers with credible enterprise track records

• the introduction of masters level programmes with enterprise as well as subject content


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Internal measures

7.20 Universities have developed a range of practices related to internal promotion, awareness etc.

Examples include developing clear processes and advice for academics who may have ideas

and technologies that have potential for exploitation, bridging the culture and communications

gap by being on campus rather than on a remote location, developing literature, case studies,

seminars, visits etc that facilitate education in the various aspects of the enterprise agenda.

Good practice in this field seems to be mainly related to:

• activities that are relevant

• activities that provide concrete examples and role models

• providing clear routes and procedures for the assessment and development of new ideas

• and, positioning enterprise staff within departments to work alongside the more formalised central enterprise structures. The helps to develop trust and provides and effective means of identifying KT opportunities and providing informal advice to academic staff.

External measures – promotion marketing, dealing with clients

7.21 Universities have utilised a range of measures to identify and promote their enterprise

agendas externally. These need to relate to the specific missions that the different universities

have developed. For example, some universities have developed research oriented missions

with strengths in particular science and technology areas and their external marketing needs to

relate to developing relationships with external companies / organisations in these areas.

7.22 Other universities have developed missions in relation to teaching, widening participation and

local outreach. Here universities have tended to establish linkages with local / regional

industry groupings / committees, to develop internal customer relationship marketing (CRM)

systems to track and assist management of all the university’s relationships with particular

firms e.g. consultancy, research projects, student placements etc. Some universities have

developed training for university staff in ‘customer first’ principles i.e. to ensure that external

organisations receive a good/professional standard of service from the university. Other

universities have developed collaborations and information exchanges with bodies such as

RDAs in the area, sometimes with representation on their board. Good practice in this area

needs to be considered in relation to the university’s particular mission, but might include:

• training academic staff in ‘customer first’ principles


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• establishing systems to record and analyse the university’s contracts/ contacts/ relations with external firms (CRM)

• establishing relationships with external industry committees and representative bodies

• establishing relationships with relevant government / regional agencies

• developing links with professional services and other business support organisations locally.

Internal monitoring and evaluation

7.23 Internal monitoring and evaluation is a relatively new aspect of the enterprise agenda. Most

universities have systems for monitoring of particular activities e.g. the progress of seed fund

investments in particular companies and, more generally, reporting on progress towards

targets to the funding bodies. These formal systems work reasonably well so far as

monitoring the progress of activities is concerned. However, we encountered very little in the

way of formal evaluation of outputs and impacts. In part, because the time elapsed since the

start of these activities has been relatively short, but also because the difficulties, and potential

costs, of assessing impacts are high for the reasons discussed in Chapter 1. As a result, few of

those interviewed were able to offer evidence of systematic evaluation or impact assessment.

7.24 The chief exception to this is in relation to UCF, where there are obvious indicators relating to

spin-outs and licensing, although short timescales limit the value of these indicators so far as

impact assessment is concerned. In addition, some SECs obtain student feedback on

enterprise modules as part of the normal process of teaching and learning assessment. Impact

assessment is, however, mainly an informal process dependent on contacts between KT staff

and the organisations the institution is working with. These processes can be effective in

guiding KT activities, provided the information is assessed honestly and acted upon38.

Collaboration with other HEIs

7.25 Universities have sought to collaborate with other universities and colleges in developing

their enterprise activities for a number of reasons, including the perception that collaborative

bids were more likely to be successful.

7.26 More substantial reasons for collaboration include the possibilities for learning from the

experience of others, the possibility of creating investment funds of critical mass, the

economies of scale in managing activities jointly, possible synergies e.g. through

developments involving complementary areas of research and technological capability in

different institutions, the possibilities for allowing specialist functions to be employed and the 38 However, since they depend largely on judgement by individuals with an interest in the activity, they have limitations for

monitoring by external organisations. This is discussed further in Chapter 8.


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benefits of collaborating in outreach activities where several universities might provide a

single point of contact and source of advice and information for the outside world.

7.27 Universities took a range of factors into consideration when considering collaboration

including geographical proximity, similarity in terms of research intensity, similarity in terms

of stage of development of the enterprise agenda, similar approaches in the management of

the 3rd stream activities.

7.28 The collaborative projects are diverse in terms of objectives, activities and membership, but

some general, perhaps unsurprising, lessons have emerged:

• as with any collaborative venture, there needs to be clarity over what will be achieved through collaboration. For many of the HEIF projects, an important motivation was a perception that the chances of receiving funding would be increased, but the projects had been designed with the aim that each partner would add value

• previous experience of collaboration, and similarities between the partners, almost certainly facilitates collaboration but it is not a necessary condition for a successful partnership

• management structures need to be designed so that the potential benefits of collaboration can be realised. This is perhaps especially so where an important aim is transferring expertise and experience within the consortium. In some cases, for example, more experienced HEIs have been paid to act as consultants to other partners, but this may not always be necessary

• there are advantages in allocating funds within the consortium in response to competitive bids (rather than pre allocations of the total budget). However, this probably requires a more elaborate management structure to ensure agreement between partners over activities and transparency in the allocation of funding. Without this, there is a danger that competition starts to erode collaboration with each partner seeking its ‘fair share’.


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8 Conclusions


8.1 The KT programmes contribute to a number of OST PSA targets, but by far the most relevant

is PSA Target 2:

improve the relative international performance of the UK’s science and engineering base, the exploitation of the science base, and the overall innovation performance of the UK economy

8.2 This explicitly refers to exploitation of the science base which is, initially, to be judged by an

increase in relevant indicators drawn from the following basket:

• Number of patent applications

• Number of patents granted

• The number of licensing agreements

• Income from licensing intellectual property

• Number of spin-outs

• Business representation on Governing bodies

• Income from business

• FTE staff employed in commercialisation/industrialisation liaison offices

• Number of SET students (UG and PG) receiving enterprise training

• Publication and patents jointly authored between science base and industry.

8.3 This section provides aggregate data on these indicators for each of the KT schemes which

have been reviewed. Annual reports do not always quantify activities, even where they

suggest that a given activity has taken place. Thus, for example, some reports may suggest

that patents have been granted but do not give an indication of how many. This is especially

true of the HEIF reports. We have therefore recorded the number of projects where a relevant

activity has taken place, as well as the volume of activity where this information is given.


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HEIF

8.4 The indicators for HEIF are presented in Table 8.1

Table 8.1: HEIF PSA indicators (2002-03)

Number of patent applications 79

Number of patent granted 3

Number of licensing agreements 42

Income from licensing intellectual property £0.8m

Number of spin-outs 58

Business representation on Governing bodies 7

Income from business £12.3m

FTE staff employed in commercialisation/industrialisation liaison offices 69

Number of SET students (UG and PG) receiving enterprise training 1,285

Publication and patents jointly authored between science base and industry 0

8.5 A number of points should be kept in mind when interpreting the data. The general point is

that the table only covers indicators of activities which are explicitly referred to and

quantified in the annual monitoring statements. We suspect that additional activities have

been completed and the indicators are therefore lower bounds. In addition:

• Table 8.1 only includes data from the 2003 annual monitoring statements (and collaborative reports). This refers to activities during 2002-03 and is likely to have captured most indicators. However, projects will have appointed commercialisation staff during 2001-02 which are not included

• the numbers for business representation refer to number of bodies rather than number of representatives39. It is restricted to representatives from businesses, and excludes representation from the RDAs and similar organisations. It is also restricted to formally constituted governing and advisory boards. We suspect that business representation on a less formal basis has been secured in other cases

• we believe that business income is almost certainly underestimated. As already mentioned, only quantified reports are included. A reading of the AMSs indicates that HEIs are often undertaking a wide range of activities with business, for example seminars and information provision, which they might in principle charge for. However, income is very seldom attributed to these activities

39 It is often impossible to tell how many business representatives are involved


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• the spin-out figure is based on companies actually established, but not necessarily trading. Several reports referred confidently to more spin-outs in the pipeline. It excludes graduate start ups40 and, in most cases, the reports seem to be referring to companies established by staff members. However, this is not always explicit and some ‘spin-outs’ could have been established by non-HEI staff (but based on IP generated by the HEI). The indicators do, so far as is possible, exclude companies established through HE incubator programmes unless HEI staff are involved. In some cases, the number of such companies is significant

• the data for students receiving enterprise training is a simple headcount. The activities included range from one-off awareness raising events to regular teaching embedded in the curriculum. Only cases where the students appear to be taking SET subjects are included.

8.6 In order to present a more rounded picture of activities, Table 8.2 shows additional indicators.

Most of the additional indicators refer to number of projects and include those which

undertook a given activity, but did not quantify it, as well as those which provided

quantification. The most noticeable difference from Table 8.1 is that a large number of

projects have generated business income, but have not quantified these receipts.

Table 8.2: Additional HEIF indicators

Number of projects making patent applications 9

Number of projects granted patents 3

Number of projects making licensing agreements 11

Number of projects receiving income from licensing 3

Number of graduate start ups 33

Number of projects receiving Income from business 40

Number of projects where SET students (UG and PG) received enterprise training 18

Number of non-SET students (UG and PG) receiving enterprise training 1,500

Number of projects where non-SET students received enterprise training 6

Number of business fellows 103

Number of projects which have established business fellows 15

40 See Table 8.2


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8.7 Table 8.2 also shows some different, but related indicators:

• 33 companies established by graduates

• non-SET students receiving enterprise training. This category actually refers to students whose main subject area could not be identified and may also include some SET students. There were more students in this group than SET alone

• 110 business fellows identified and 15 projects undertaking this activity. Business fellows are academic staff who have been assigned special responsibility for promoting business links. They are typically given training and some relief from normal academic duties. Seventy-five of the Fellows are working under a single collaborative project41 which is almost exclusively focused on this kind of activity.

Science Enterprise Challenge

8.8 Table 8.3 presents indicators for SEC. The spin-out figures are subject to the caveats given in

paragraph 3.13 and include spin-outs reported by Mercia42. The figures for enterprise training

exclude the 5,600 hours reported by Oxford but not allocated between staff, students and

businesses.

Table 8.3: SEC indicators

1999-2000 2000-2001 2001-2002 2002-2003 Total

Number of patent applications 103 103

Number of patents granted 8 8


Income from licensing IP (including sales) £2.941m £2.94m

Number of spin-outs 21 79 89 100 289

Business representation 49 49

Income from businesses £0.96m £0.96m

FTE staff employed in commercialisation/ILOs 0

Number of SET students (UG/PG) receiving enterprise training 1,467 1,467

Number of other students (UG/PG) receiving enterprise training 2,047 10,525 9,624 16,273 38,469

Publications/patents jointly authored between science base and industry 0

41 The London Technology Network 42 The Mercia SEC and the HEIF spinner project (both led by the University of Warwick) report spinouts jointly


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University Challenge Fund

8.9 Table 8.4 shows the PSA indicators for UCF, together with income generated through other

activities and equity sales.

Table 8.4: UCF indicators

1999-2000 2000-2001 2001-2002 2002-2003 Total

Number of patent applications 17 53 123 85 278

Number of patents granted 1 7 20 28

Number of licensing agreements 4 10 4 18

Income from licensing IP (including sales) £23,000 £2.384m £2.710m £5.117m


Business representation on governing bodies 4 4

Income from businesses

FTE staff employed in commercialisation/ILOs

Number of SET students (UG/PG) receiving enterprise training

Publications/patents jointly authored between science base and industry

Income arising through other forms of collaboration (not Spin-out investment) £1.624m £939,525 £1.879m £4.443m

Equity sales £8,000 £8,000

Public sector research Exploitation fund

8.10 Table 8.5 shows the indicators for PSRE and additional funding leveraged from the NHS.

Table 8.5: PSRE Indicators (2002-03)

Number of patent applications 67

Number of patents granted 4


Income from licensing IP (including sales) £0.14

Number of spin-outs/ start ups 8

Business representation 5

Income from businesses £0.616

FTE staff employed in commercialisation/ILOs 25.5

Number of SET students (UG/PG) receiving enterprise training 0


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Table 8.5: PSRE Indicators (2002-03)

Number of other students (UG/PG) receiving enterprise training 0

Publications/patents jointly authored between science base and industry 0

Leverage of funding (NHS etc) identified in the reports £2,456,000

The four schemes combined

8.11 Aggregate indicators are shown in Table 8.6. The twenty-one spin-outs reported jointly by

Mercia SEC and Spinner HEIF have been (arbitrarily) attributed to the latter and therefore

appear under HEIF.

Table 8.6: Aggregate indicators

UCF PSRE SEC HEIF Total

Number of patent applications 278 67 103 79 527

Number of patents granted 28 4 8 3 43

Number of licensing agreements 18 18 0 42 78

Income from licensing IP (including sales) £5.117m £0.14m £2.941m £0.779m £8.977m


Business representation on governing bodies 4 5 49 7 65

Income from businesses 0 £0.616m £0.96m £12.313m

£13.889m

FTE staff employed in commercialisation/ILOs 0 25.5 0 69 94.5

Number of SET students (UG/PG) receiving enterprise training 0 0 1467 1,285 2,752

Number of other students (UG/PG) receiving enterprise training43 0 38,469 1,500 39,969

Publications/patents jointly authored between science base and industry 0 0 0 0 0

43 Excludes Oxford SEC (5,600 hours unallocated between staff/students/businesses and 436 hours with students but no head

count given)


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Overall conclusions

Programme achievements

HEIF

8.12 HEIF 1, building on HEROBC, made substantial additional funds available to the sector.

They have been largely devoted to establishing and formalising management and reward

structures, building KT support capacities and promoting cultural and attitudinal change

amongst academic staff. There have so far been limited impacts on actual KT in terms of

increased interactions with businesses, although there are some notable exceptions. This was

certainly the case at July 2003. Discussions with universities indicate that activity has

increased to some extent since then, but the picture has not changed radically. This illustrates

the relatively long timescales involved between developing capacities and delivery to

business.

8.13 The nature of the funding available has been important. Programme, as opposed to project,

based funding and the relatively large scale has encouraged some universities to rationalise

and coordinate their KT support services. For many this process began with HEROBC

funding. The commitment to a permanent 3rd stream funding mechanism was important in

giving universities confidence to take such measures.

SEC

8.14 SEC has achieved tangible outputs, most notably that substantial numbers of students are

taking enterprise modules and have access to other forms of enterprise education. We believe

the programme has been instrumental in establishing enterprise education as a legitimate

activity within the universities.

UCF

8.15 There is little doubt that UCF met a gap for early stage funding of technology based ideas.

Several UCFs still have significant funds uncommitted but the number of research ideas

which have been taken closer to commercialisation has increased significantly.

PSREF

8.16 There is a wide diversity of PSREs which is not fully captured in our small sample of six

visits. Nevertheless we are confident about some general points. As with HEIF the main

emphasis has been on capacity building but with a narrow focus on the exploitation of IP.

Spinouts and licensing income, have so far, been at very low levels. Most of the PSREs we

visited are confident that they have now established appropriate infrastructures for IP

exploitation, especially with the launch of proof of concept funds as a result of successful


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PSREF 2 bids. However, one of the smaller PSREs faces some difficulty in maintaining its

infrastructure following an unsuccessful bid to PSREF 2. We suspect that some other smaller

projects may be in a similarly fragile position.

Additionality

8.17 The activity additionality of all programmes is high. Most HEIF, SEC and PSREF funds have

been devoted to extra staff which the institutions would not have funded on a similar scale

from their own budgets. With the exception of SEC, this has not yet been translated into

significant additional KT outputs because of the emphasis on capacity building.

8.18 UCF funding has generated additional commercialisation of research ideas and company

formation. The additionality arises from the funding gap described above.

Sustainability

8.19 HEIF and PSREF supported activities would be very unlikely to continue at their current

levels without continued subsidies. The return to the institutions are too low, lengthy and

uncertain to induce them to invest their own resources.

8.20 We believe there is a good chance of some SEC supported activities continuing without

subsidy. Many universities have established enterprise modules in such a way that they will

mainly require updating which is relatively inexpensive. In addition, it seems likely that

students will become increasingly attracted to high quality enterprise education in the future.

Further developmental work may, however, be restricted without a continued subsidy.

8.21 The future of the UCFs is uncertain. So far as we can judge, none have generated, or are

likely to, sufficient returns on current investments to provide for investments in the future.

Continuation depends on securing private sector partners and we believe this may be

problematic for most, if not all.

Collaboration

8.22 Most of the KT programmes encouraged institutions to collaborate and bidders responded to

this signal. Collaboration has added to the costs of project management, in some cases

significantly so. Nevertheless, most organisations we interviewed considered the benefits to

outweigh the costs. These included exploiting economies of scale, developing and sharing

good practice and learning from more experienced partners. In addition, many HEIF

collaborations are regionally based and this facilitated interactions with the RDAs.


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Recruitment and retention issues

8.23 Recruitment and retention of KT support staff appears to have been a serious issue in relation

to HEIF in particular but also SEC and some PSREF projects. Interestingly few UCFs

reported problems but this probably reflects the opportunity to subcontract fund management

to external organisations.

8.24 Recruitment difficulties were in part a result of the increased demand for staff which the KT

programme gave rise to and OST responded by providing a central budget for training. They

resulted in delays in starting projects and slower progress than anticipated. Many universities

we interviewed were forced to train staff, through organisations such as Praxis and AURIL,

and several made appointments which later turned out to be unsuitable.

8.25 We would speculate that although the short term impact of the KT programmes was to create

excess demand the long term impact should help establish KT support as a distinct career path

within HEI’s. The skills required will probably always be in short supply but the volume of

opportunities and profile engendered by the programmes may attract more suitably qualified

individuals. Several we interviewed also spoke highly of the training opportunities which are

now available.

Programme management by OST and HEFCE

8.26 Almost all the feedback we received on programme management related to HEIF and

concerned the application stage rather than subsequent monitoring requirements. More

specifically, there were two issues. First, several institutions considered the time between the

call for proposals and submission deadline was too short, especially in relation to

collaborative projects where the complexities are greater44. We also interviewed a small

number of institutions which were unsuccessful and they would have welcomed feedback on

the reasons for rejection.

8.27 The second issue concerns the bidding process and the relative merits of a formulaic

allocation. Most of those we spoke to had considered this issue carefully. The main

disadvantages of the bidding process were seen as:

• The costs associated with preparing the proposal

• The uncertainty over future 3rd stream funding which inhibited planning. This also impacted directly on staff retention. Several universities were prepared to underwrite the salaries of HEIF funded posts but not all were able to and some lost staff seeking permanent posts as a result.

44 The call for proposals was issued in May 2001 with a deadline of 20th July 2001 for submissions.


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8.28 For these reasons, many would welcome some kind of formulaic allocation. However, the

difficulties of devising metrics which would adequately reflect KT transfer activities was

widely recognised and there was concern that simple measures, such as number of spinouts or

collaborative research income, should not be used. There was far less consensus on what

might be appropriate measures and, unsurprisingly, interviewees tended to favour measures

which fitted their own KT strategies well.

8.29 Many also saw important advantages to competitive bidding. It particular, it forces

institutions to think seriously about their KT activities whereas a formulaic allocation might

simply result in a continuation of present activities without a full assessment of their value.

Related to this, the bidding process may place the KT support unit in a stronger position vis a

vis departments and faculties. Formula funding typically brings pressure from faculties for

them to be allocated what they have generated. There is a possibility that KT funding might

be used to support other activities and/or capacities will be developed at faculty/departmental

level when resources might be deployed more effectively at the centre. More generally, some

interviewees felt that some funds should be available for ideas of special merit which would

not be picked up through a formula. The upshot is the many saw merit in a combination of

bidding and formulaic allocation, as the government has stated in the 10 year Investment

Framework.

8.30 The actual monitoring process raised very few comments. Collecting performance indicators

across the university is problematic for some but this in part reflects weaknesses in current

MIS rather than defects in monitoring per se.

Policy issues

Data from the Higher Education Business and Community Interaction Survey

8.31 The key policy question is whether the KT programmes have led to increased interaction

between the HE and business sectors. For the reasons given elsewhere in this report, it is

difficult to answer this question, but the latest Higher Education Business and Community

Interaction (HEBCI) survey provides interesting data on the sector as a whole. Data for the

academic year 2002-03 is now available. Table 8.7 compares the latest data with 2000-01 for

selected indicators. 2000-01 has been selected because the two surveys were broadly

comparable in terms of response rates and questions45. In addition, SEC and UCF funds were

available from 1999 and HEIF 1 from 2000. Given the time it took most recipients to

establish structures and operations, 2000-01 represents a reasonable base year.

45 There are, however, some differences.


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Table 8.7: HEBCI data

2000-01 2002-03 % change

Collaborative research involving both public funding and funding from business 412,380 497,179 21%

Other Research contracts with business 266,039 659,708 148%

Of which with SMEs 34,793 42,213 21%

Consultancy contracts 103,451 168,151 63%

Number of patents granted in year 250 371 48%

Non-software licences granted 433 507 17%

Software licenses 230 251 9%

IP income 18,399 37,079 102%

Number established 220 177 -20% Spin-offs with some HEI ownership

Estimated employment in active spin-offs 4,979 6,150 24%

Number established 28 20 -29% Formal spin-offs, not HEI-owned Estimated employment in active spin-

offs 5,731 6,635 16%

Number established 69 74 7% Staff start-ups Estimated employment in active spin-

offs 356 1,988 459%

Number established 228 489 114% Graduate start-ups Estimated employment in active spin-

offs 653 1,607 146%

8.32 Table 8.7 indicates substantial increases in most KT activities over the period. The

exceptions are some categories of spin-outs and we suspect this reflects a tendency, during

this period, for many HEIs to consider more carefully whether spin-outs are the most

appropriate commercialisation vehicle. The data do not demonstrate causality, not least

because some indicators suggest that KT activity was already on an upward trend, but they are

at least consistent with the view that the KT programmes have stimulated activity in the HE

sector.


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Fit with other policy initiatives

8.33 The most recent policy statement in relation to science and KT is the Science & Innovation

Investment Framework 2004-201446. This document builds on the Innovation Report47 and

also incorporates Government’s response to the Lambert Review48. The general thrust of all

these policy documents is to enhance the competitiveness of UK business through the greater

adoption of innovation and enhanced skills amongst the work force. The KT programme are

obviously in line with these general objectives but they also complement and support more

specific objectives.

Business R&D and Innovation

8.34 The aim is to increase private sector expenditure on R&D from 1.24% to 1.7% of GDP. The

KT programmes can contribute to this target in two main ways:

• the general strengthening of KT infrastructures, and the engagement of additional academic staff in KT, may encourage more businesses to invest in R&D both on a collaborative and contract basis. Table 8.7 suggests a substantial increase in both sorts of activities over the last two years

• over the longer term, the SEC programmes in particular, may produce graduates more able and willing to manage innovation and thereby promote more positive attitudes towards innovation and R&D amongst UK businesses.

Knowledge Transfer and Innovation

8.35 The Technology Strategy Board will help to identify technology priorities which will be

implemented through the collaborative R&D product and Knowledge Transfer Networks.

The latter will bring together the science base and businesses, building on the concept of the

Faraday Partnerships. The new KT management structures which some universities have

established under the KT programmes are likely to facilitate their engagement with such

initiatives.

8.36 UCF has had a more specific impact in taking research ideas closer to investment readiness

for venture capital.

46 Science and Innovation Investment Framework 2004-2014, Department for Trade and Industry July 2004

(http://www.hm-treasury.gov.uk/media/33A/AB/spend04_sciencedoc_1_090704.pdf) 47 Innovation Report Competing in the Global Economy; The Innovation Challenge, Department for Trade and Industry

December 2003 (http://www.dti.gov.uk/innovationreport/innovation-report-full.pdf) 48 Lambert Review of Business-University Collaboration, December 2003 (http://www.hm-treasury.gov.uk/consultations_and_legislation/lambert/consult_lambert_index.cfm)


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Regional issues

8.37 RDAs have been given a greater role in promoting business-HE collaboration and (most) have

recently established Science and Industry Councils. We believe that HEIF funding in

particular has strengthened working relationships between HEIs and the RDAs and that this

will prove valuable as RDAs assume a more influential role in relation to science and

innovation in their areas.

Science Engineering and Technology (SET) skills

8.38 Government has identified a number of areas for action to increase the supply of SET skills in

the economy. Again the impacts are likely to be long term, but we expect the SECs to result

in:

• More relevant skills possessed by SET graduates. Many surveys of UK businesses have identified perceived weaknesses in the skills of recent graduates and SEC activities may enable graduates to make a more effective contribution to their employer

• More speculatively, the combination of specialist (SET) with enterprise study which some SECs are offering at masters level may encourage some students to continue with SET who might otherwise have taken pure MBAs or their equivalent

• SECs are specifically mentioned in the Innovation Report as a basis for developing material, to be delivered by others, for training managers of high technology businesses.

Policy conclusions

8.39 This final section of the report draws some general conclusions for KT policy interventions.

Institution’s use of KT funds

8.40 UCF, and to a lesser extent SEC, are targeted programmes in the sense that they are

supporting specific sorts of activities and funding is concentrated on research intensive HEIs.

HEIF 1is quite different; individual HEIs were free to define priorities in the light of their

missions and strategies and the funding was widely distributed across the sector. HEIF has

therefore promoted a wide range, but predictable, range of activities. More specifically HEIs

have tended to focus on:


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• the sorts of activities in which they already have some track record and experience. Thus, for example, research intensive universities have used funds to promote IP exploitation, by a variety of mechanisms, and research relationships. Less research intensive have extended outreach. There has been some movement into new types of delivery, but in quantitative terms this is less important. More generally, most HEIs have sought to develop and enhance existing KT modes, whether research, training, information provision etc., rather than move into a business support mode, not least because other organisations are perceived to serve this market and the difficulties of HEIs addressing business requirements are widely recognised

• customers with which they are already working so far as type (public or private), size of business and location. Again some HEIs have used HEIF consciously to diversify their customer base but the majority of activity is with similar kinds of organisations (although not the same individual organisations).

8.41 The obvious conclusion is that if government wishes to encourage specific sorts of KT

activities, to specific sorts of organisations, then targeted programmes are required which

restrict the sorts of activities which are eligible and, by implication, the sorts of HEIs which

should be funded.

Long timescales

8.42 A point made often in this report is that the time scales from funding to activities and outputs

are long. To some extent, this reflects specific issues, notably the difficulties in recruiting KT

staff but it also reflects issues intrinsic to capacity building within the HE sector including:

the need to establish new structures and management responsibilities; new rules and

regulations; and time to impact on staff culture and attitudes. We believe that the sector, as a

whole, is now better placed to engage in KT but it illustrates the time lags inherent to capacity

building programmes. In contrast, UCF as a targeted programme, has achieved tangible

impacts relatively quickly after establishing basic structures. Not least because funding was

concentrated in HEIs with substantial track records of spin-outs and licensing.

Sustainability

8.43 Institutions have learnt from their experiences with the KT programmes and, provided there is

some stability amongst KT and academic staff, these lessons will be retained and built on by

HEIs and PSREs. Most have also developed new management structures and procedures for

handing KT activities. These represent a significant investment in some cases and are likely

to continue. However, KT staffing levels are crucial if activity is to be increased in the future

and for most institutions this requires continuing subsidy. Comparatively few KT activities

cover their costs and without external funding HEIs would focus more on their core activities

of teaching and research and KT would be increasingly restricted to those activities which


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complement and contribute to mainstream activities. The 3rd stream mission is accepted and

welcomed by all HEIs we consulted, but does not compare financially with teaching and

research.

8.44 The main possible exception to this is the SECs, where efforts have been made to embed

enterprise in the curriculum. This illustrates how effective programmes can be when they

directly complement mainstream activities but also promote innovation to introduce an

explicit KT element.

The bidding process and monitoring and evaluation

8.45 This issue has already been discussed above and the intentions for the next round of HEIF

funding noted. Although the bidding process undoubtedly has some benefits, we believe that

these are outweighed by the unpredictability it brings, and perhaps to a lesser extent, the costs

of preparing bids. There are real difficulties in designing metrics which capture the

complexities of a wide range of KT activities but, if the aim is to embed 3rd stream activity

throughout the sector then would appear to be scope to link at least a major part of funding to

some fairly simple measure of institution scale, such as turnover, grant income or student

numbers. This would be a relatively crude approach but would provide predictability

although it would not reward institutions which had previously invested heavily in KT and/or

were especially successful. A combination of formula and bidding could enable Government

to introduce specific priorities into 3rd stream funding if required.

8.46 Allocation via a simple formula would make monitoring of expenditure and outputs more

important than under the present (HEIF 1 and HEIF 2) system where a proposal for a fairly

specific set of activities is prepared. HEIs could be required to submit KT strategies and

action plans against which progress would be monitored, but we believe the monitoring

system also needs to be strengthened. We are fully aware of the difficulties in monitoring and

evaluating KT programmes and also conscious that of the need to avoid a costly system which

adds limited information and value. Nevertheless, we do believe there is scope for

improvement in this respect.

8.47 The current monitoring reports and statements have a number of deficiencies:

• inconsistencies between HEIs in the ways activities are reported, both across and within the same programme

• failure to make explicit the targets for the year under review

• sometimes limited information on what has been achieved in previous years (although this would not be a problem if consistent data on earlier years existed)


Final report

85

• very limited information on the resources devoted to broad types of activity. This is especially true of HEIF where it is often impossible to tell whether substantial effort has been devoted to a specific activity

• very limited information on the extent to which KT funds have led to activities and outputs. This reflects a number of other issues:

� again mainly in relation to HEIF, it is not always clear whether the activity reported is in some sense supported by HEIF funds

� not all HEIs make a clear distinction between the different KT schemes when they are receiving grants from more than one49

8.48 Many of these issues could be addressed by standardising requirements and communicating

these to institutions. It is also likely that additional indicators will need to be collected. The

monitoring process we envisage is for HEFCE/OST50 to consider trends in the indicators for

each institution. We would expect broad comparisons to be made with similar sorts of

organisations and there may be scope to move to more formal benchmarking exercises as the

indicators develop. Institutions would be subject to ‘dip stick’ audits to verify data and we

would also envisage occasional dialogue between the institution and the monitoring

organisation, rather than a purely paper-based exercise.

Collaboration

8.49 We thinks there have been real benefits arising from some collaborative projects including:

• Sharing information and learning from partners’ previous experience

• Assembling complementary expertise

• Establishing and consolidating regional groupings

• Economies of scale.

8.50 Many of the HEIF 1 collaborative projects have continued as HEIF 2 bids but we suspect that

some HEIs may discount the benefits of collaboration and it may therefore require

encouragement through special funding. The economies of scale arguments for consolidation

are, we believe, especially persuasive:

• For early stage funding schemes, such as UCF, there are substantial set up and management costs and these could have been shared by more organisations in some cases. Most of the UCFs will also face difficulties in generating further investment

49 This will be of more limited importance with the consolidation of KT programmes (for HEIs) into HEIF 50 Depending on the funding source


Final report

86

funds and this might be facilitated by consolidation in some cases, and perhaps partnership with some of the regional investment initiatives. In addition, several UCFs still have funds to invest and while quality projects are likely to come forward in the future there are costs to society of delayed investment which might have been reduced had a larger deal pool been available

• Some of the institutions participating in PSREF, and also HEIF, are very small and there is scope to pool KT resources in order to achieve critical mass and sustainability. This was also a recommendation of the Lambert Review.

APPENDIX A:

AIDE MEMOIRE

Interim valuation of the knowledge transfer programmes Funded through the science budget:

Appendix A: Aide Memoire

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Aide Memoire

All programmes

1. Introduction

1.1. Review understanding from monitoring reports and proposals of

1.1.1. overall aims, e.g. to develop new capabilities, consolidate and extend existing

capacity,

1.1.2. Management structures e.g. are KT programme resources allocated to

departments or is there central provision? How did KT programme resources

build on existing capacities? Who are collaborators (if any) and how is the

collaboration managed?

1.1.3. scope of provision, e.g. work with all departments or focused

1.1.4. target markets, e.g., sectors, SMEs, local businesses

1.1.5. key activities, e.g. policy development, staff development, marketing and

promotion

1.1.6. What has been the institutional contribution (staff, funds etc.)?

1.2. How and why were these strategies/activities decided on?

1.3. Have there been major changes in any of the above since proposal stage? If so

why?

1.4. Did you receive the full amount of your bid? If not what was the reduction and what

impacts did this have on plans and activities



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2. Involvement of external organisations

2.1. Have external organisations been involved in the programme? If so what was there

role e.g.

2.1.1. guidance and/or financial support e.g. an RDA

2.1.2. delivery e.g. through sub contracting activities to an external organisation

2.1.3. advice e.g. business representation on advisory boards

2.2. How effective have these external inputs been?

2.3. Have any other benefits been generated? e.g. continuing relationships outside the

KT programme

3. Collaboration

3.1. Why was collaboration chosen?

3.2. Why were the partners chosen?

3.3. Does the collaboration build on previous relationships

3.4. Are there different roles for different partners? If so how were these defined?

3.5. What added value arose from collaboration?

3.6. What were the additional costs of collaborations?

3.7. Do you believe, in retrospect that the benefits of collaboration outweighed the costs?

3.8. Have other initiatives/actions been developed with partners

4. Synergies between KT programmes (HEIF1, UCF & SEC). For those institutions which

received more than one funding stream

4.1. Were potential synergies considered at the bidding stage?

4.2. In practice, what are the most important synergies that have arisen?

4.2.1. UCF-SEC

4.2.2. SEC-HEIF

4.2.3. HEIF-SEC-UCF

4.3. To what extent do activities overlap?

4.4. How do the management structures relate to each other?

4.5. How have these synergies been exploited?



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4.6. How is the impact of one programme distinguished from that of another for monitoring

purposes?

5. Additionality and displacement

5.1. What did KT funding enable which could not have been done through other sources

(e.g. institutional funds, specific project funds)?

5.2. If KT programme funding had not been available what would have been the likely

impact on activities e.g. would the scale, quality or timing have been affected

5.3. If the KT programme had not gone ahead what would have been the most likely use

of the resources (e.g. staff time, funds, etc) which the institution devoted to the

programme? E.g. might they have been devoted to other KT type activities other

income generating activities, mainstream academic activities?

For HEIF/PSRE see10- 12 below, for SEC see 13- 15, for UCF see 16- 20

6. Future plans and sustainability

6.1. To what extent is the basic ‘infrastructure’ to engage effectively in KT activities now in

place e.g., appropriate policies for KT, sufficient numbers of KT professionals in

place, adequate numbers of academic staff willing to engage in KT activities?

6.2. What, if any, gaps remain in the basic infrastructure?

6.3. What plans are there for the development of the KT related activities over the next 2

to 3 years?

6.4. To what extent are you now better able to:

6.4.1. exploit the outcomes from research undertaken by the HEI/PSRE

6.4.2. access and secure funding from other sources, e.g. Link, KTP, Framework

Programme etc

6.5. To what extent are these contingent on future public (OST/DfES) funding (NB the

outcomes of HEIF 2 should be known)

6.6. How does HEIF 2 (if applicable) build on what has been achieved so far?

6.7. To what extent are these activities ‘self-funding’ (e.g. by generating a financial

surplus, enabling the institution to access other funding sources etc.) or likely to

become so?

7. The bidding process, monitoring and evaluation

7.1. What were the key drawbacks of competitive bidding, e.g. uncertainty for planning

processes, resources required to prepare the bid?



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7.2. Are there any advantages from your perspective? e.g. an opportunity to access

higher levels of funding

7.3. What are the internal procedures for monitoring progress and outputs?

7.4. How is this information fed back into strategy and activities?

7.5. To what extent can outputs be captured accurately by metrics (as opposed to

qualitative information)?

7.6. Do you believe it would be feasible to allocate KT programme funds via formula in the

future? If so what would be the key characteristics of the formula

8. Any other comments

9. Next steps

9.1. Would the institution be prepared to be the subject of a case study

9.2. Are there clearly identified groups whom could be surveyed by post/email

9.2.1. staff

9.2.2. students

9.2.3. businesses

9.3. Are there any internal evaluation documents which could be made available to us

9.4. Are there others we should consult with



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HEIF 1 & PSREF

10. Using the table below as a broad classification of activities

10.1. Which were a significant part of the activities funded under HEIF1?

10.2. Which of these do you consider to have been achieved?

10.3. What were the key reasons for success?

10.4. Which have proved difficult to achieve and why?

Activity example

A.1: KT policy

Design and development of new policies, for example in relation to staff rewards an handling IP. In some cases also includes organisational changes within HEI

A: senior management & policies

A.2: KT senior management Appointment of senior academic managers to posts with KT responsibilities

B.1: KT staff recruitment Recruitment of staff to work on KT B: Strengthening KT professional staff

B.2: KT staff training Training of new and/or existing KT staff

C.1: Funding for KT activities Development of fund by the HEI to support KT funding, e.g. proof of concept activities, development of short courses

C.2: Development of incubators Physical space and associated support services

C: ‘Infrastructure’

C.3: Development of other commercial units

Centres, (e.g. research) within the university intended to provide services to businesses

D.1: Audits Review of commercial opportunities within HEIs

D.2: New courses Development of mainstream courses at UG or PG level as part of strategy to enhance business links

D.3: Academic staff awareness General promotion and raising awareness of issues and opportunities

D.4: Academic staff training E.g. customer relations, marketing, negotiations. Includes dedicated courses, attendance at conferences etc.

D.5: Identifying academic staff with KT responsibilities

E.g. individual within faculty/department who will promote and advises on KT

D.6: Student awareness General promotion and raising awareness of issues and opportunities. Most are focused on ‘entrepreneurship’

D: Academic staff & student centred

D.7: Student training See D.6. Mix of voluntary courses and components for curriculum

E.1: Market research Identifying customer base, needs and marketing approach

E: Marketing

E.2: Marketing Wide variety of approaches but many have developed new web sites and seminars for business are also popular



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Activity example

F.1: Business networks We have restricted this to a formal role in a substantive network. Typically in collaboration with RDAs

F.2: CPD Any form of training for external organisations

F.3: Consultancy/advice Any form of advice to external organisations

F.4: Research Contract, or collaborative with business, research. There is a close overlap with F.10

F.5: Patenting Any part of the process up to grant of patent

F.6: Spin-outs/start-ups Includes company formation by students and individuals from outside the HEI

F.7: Licensing

F.8: Staff placements Staff placements in businesses for any period. Sometimes part of staff development activity

F.9: Student placements Student placements in business

F.10: Access to other funds In most cases, funds from established programmes. TCS/KTP specified most frequently

F: KT delivery

F.11: KT activities not specified Some AMS returns record “assistance to businesses” without specifying the nature of the assistance

G Other

11. Outcomes and outputs (HEIF 1)

The objective for HEIF 1 was for HEIs to build capacity to work with business, in particular small and medium enterprises (SMEs). Its aims were: • Improved organisational arrangements and structures and enhanced ability to

respond to business and community needs • Better access for business and the community to HEIs, and more use of them. • More widespread systematic and rapid transfer to businesses of new ideas, products

and processes generated within HEIs. • Improved readiness of graduates for employment. • Improved relationships between HEIs and businesses and community organisations

at a personal level • Enhanced capacity within institutions to respond in a concerted and effective manner

to other initiatives promoting employability, enterprise and skills. • Enhanced contribution to the economic development of the nation, particularly in

economically disadvantaged regions. • Systematic and sustainable change within HEIs in how they relate to business and

the community, particularly changes in institutional and academic cultures.

11.1. To what extent has the project succeeded?

11.2. Is there any tangible evidence of success?



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12. Outcomes and outputs (PSREF)

The aims of PSREF include: • Significant increase in the number of ideas which are identified as commercialisation

opportunities and/or which are developed into commercially viable concepts. • material improvement in the capacity of successful applicants to identify and exploit

commercialisation opportunities • providing capacity in organisations that had not previously had such capacity, and by

the subsequent development of spin-off opportunities which would not otherwise have been identified

• stimulate others to become actively involved in investing in, interacting with science and engineering base and that the effect of the scheme will reach beyond the winners

• To enable successful institutions to act as exemplars of the success of commercialisation to other public sector bodies, which carry out research

12.1. To what extent has the project succeeded?

12.2. Is there any tangible evidence of success?



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SEC

13. Activities

13.1. What has been the balance of activities between

13.1.1. Working with students

13.1.2. Working with staff

13.1.3. Working with external organisations

13.2. If working with students – has the aim been to embed enterprise as part of the

curriculum or to provide additional optional courses (or both)

13.3. Why was this balance thought appropriate

13.4. Has the focus been on science and engineering students/staff or more general across

subjects

13.5. What has been the role and activities of SEC in relation to IP exploitation (spin-out

companies, patents, licensing)

13.6. How is the contribution of the SEC to spin-outs (as distinct from other parts of the

HEI) identified for annual reporting purposes

14. Networking

14.1. How were the partners selected

14.2. What roles do the partners and the lead HEI play

14.3. How are resources allocated between partners and the lead

14.4. How effective has networking between different SECs been

14.5. What has been the relationship between the SEC and CMI and how valuable has this

been.

15. Outputs and outcomes

The aim of SDEC was the development of a small number of world class centres of excellence, from which others can learn. Its broad aims were: • foster the commercialisation of research and new ideas; • stimulate scientific entrepreneurialism; • incorporate the teaching of enterprise into the science and engineering curricula; • support centres of excellence for the transfer and exploitation of scientific knowledge

and expertise • The promotion of an entrepreneurial culture at all levels within universities • achievement of a critical mass in knowledge transfer from researchers and the

laboratory environment to the commercial arena



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• Increase in the rate of new business creation, and improved performance and competitiveness of existing business through technical innovation and managerial excellence.

• Integrate best practice from within the UK and abroad, act as exemplars of best practice for others to follow.

15.1. To what extent has the project succeeded

15.2. Is there any tangible evidence of success



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UCF

16. Progress

16.1. Update information contained in 2003 monitoring report (NB: should be requested in

advance)

17. Management and structure

17.1. Explain the structure of the fund, especially the relative roles of HEI

(commercialisation) staff and any external fund managers

17.2. What is the process for generating, assessing an selecting projects

17.3. Why was the fund structured in this way and in retrospect would anything have been

done differently

18. Deal flow

18.1. What have been main constraints (if any) e.g. shortage of commercial ideas, people

to commercialise idea through spin-out, co-funding, business support post-SEC

funding

19. Funding gap

19.1. What sources, if any, were used to fund UCF projects previously? What was the

scale of funding?

19.2. To what extent does UCF fill in a gap in private or public provision?

19.3. Why does this gap exist?

19.4. Is there any evidence that UCF has encouraged the private sector to enter this

segment of the market?

20. Outputs and outcomes

The aims of UCF were:

• Increase the number of good ideas which are developed to the stage that they are able to attract funding through existing channels.

• stimulate others to become actively involved in investing in, interacting with and deriving value from the nation’s science and engineering base

• Provide a mechanism for universities that are particularly successful in investing the UCSFs to generate an endowment through the exploitation of their intellectual property.

20.1. To what extent has the project succeeded

20.2. Is there any tangible evidence of success

� �

APPENDIX B

INSTTITUTIONS VISITED

Interim evaluation of the knowledge transfer programmes Funded through the science budget:

Appendix B: Institutions visited

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Universities De Montfort University

Nottingham Trent University University of Cambridge Imperial College

London Metropolitan University Queen's University, Belfast

University of Teesside University of Northumbria at Newcastle UMIST University of Manchester

University of Edinburgh Oxford Brookes University University of Southampton

University of Bristol University of Wales, Cardiff Aston University University of Central England

University of Warwick Sheffield Hallam University of Leeds Public Sector Research Establishments Central Council for the Laboratory of the Research Councils (and manager of Rainbow Seed Fund) Guy's & St Thomas' Natural Environment Research Council Central Science Laboratory National Museums and Galleries on Merseyside Newcastle Upon Tyne NHS Hospital Trust

INTERIM EVALUATION OF KNOWLEDGE TRANSFER ...

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