Research Profile

Friday, 21 June 2013

Unleashing the commercial potential of academic research

If we are to unleash the potential of our academic entrepreneurs; government, universities and the business community need to remove the barriers to commercialisation of research.

The purpose and impact of universities

Universities carry out three core activities. Firstly, education: to enable students to develop a deep understanding of their subject of choice and acquire relevant skills. Secondly, fundamental research: to create new knowledge and insight. Thirdly, impact: to apply knowledge outside of academia for the good of society. 

UK universities do an exceptionally good job at the first two of these elements. While there is much exemplary achievement in the third element, impact, universities require a supportive environment in order to boost the success of academic endeavours.

We know that academic research has the power to change lives through broader application and that the major challenges we face – for example in climate change, in food security, in health, in digital innovation – will need a combination of curiosity-driven and applied research in order to develop effective solutions.

But we also know that the most transformational findings are most likely to emerge from unfettered research endeavours. Research Councils UK estimates that £45bn of current economic value in the UK accrues as a consequence of investment in fundamental research.  As President Barack Obama noted in his 2013 state of the union speech, “Every dollar we invested to map the human genome returned $140 to our economy.”  It is certainly the case that ongoing and sustained investment in ‘blue skies’ research will create discoveries and new knowledge that can drive future innovations and industries.  

But we should also remember that our universities already contribute substantially to the immediate economy. The UK HE sector employs more than 650,000 people and, according to a study by Universities UK in 2009, generated more than £59bn per annum in the economy. Many universities are their region’s largest employer and most play a key role in attracting overseas investors.

The knowledge exchange landscape

The commercialisation of research has over the last few decades become a very important element of the broader activity known as knowledge exchange (KE). This is the two-way process by which we enable the communication, translation and application of knowledge between academic and non-academic communities. There are many forms of KE, among them consultancy, continuing professional development, and collaborative and contract research (see panel). These activities generate around £3.4bn per annum, income which universities reinvest in our students, our staff and our communities, to fuel education, research and innovation.

New inventions or discoveries made in academic research laboratories can clearly have the potential to be converted into a commercial product. Although such ventures can generate a financial return for universities, this may not be the primary driver. Indeed data show that income derived by UK universities directly from IP is around £70m per annum, approximately 1.1% of research income, whereas in the USA it exceeds £1.1bn, more than 3% of research income. Nevertheless a commercial approach is often pursued because it is simply the most effective method for maximising the impact and benefit of academic research.

Commercialisation is a key instrument for effective knowledge exchange and impact

So how have universities evolved their approach to commercialisation?

The most common approach is for universities to establish technology transfer offices (TTOs), dedicated to the commercialisation of research. Typically, their mission is aligned with the core values of the university rather than oriented toward profits. In the majority, they seek to maximise the impact of the knowledge created through commercialisation and to reinvest any surplus in the academic mission.

TTOs mostly work with academics to take promising ideas through proof-of-concept and into the early phases of commercialisation. The business managers need to be very skilled in working with the academic community and balance the ongoing academic imperatives with commercial considerations.

However, it is still relatively difficult for academic entrepreneurs to successfully spin-out companies in the UK. Presently the most significant barrier is the lack of financial capital available for long-term development work and to maintain the costs of patents. Inventors and universities often find themselves “diluted out” before the enterprise reaches a significant value. There is considerable pressure to seek capital overseas, where a healthier, less risk-averse investor community exists. Until we can make it easier for entrepreneurs to access local capital on the right scale, their bridge across the ‘valley of death’ will take them overseas.

The relative inaccessibility of finance might explain the strong preference within the UK to progress innovation through partnering and licensing. In such cases a third party organisation takes the lead in development phases and the inventors are rewarded through a revenue sharing arrangement.

Building on our success in knowledge exchange and commercialisation

The UK is far better at KE and commercialisation than is often recognised, but we can and must do much better. But if we are to do so we must be more ambitious, so that the individual entrepreneurs and innovators can realise their potential. There are some specific actions that universities and government can take.

What can universities do better?

Universities need to do far more to foster a culture of entrepreneurship within their academic and student communities. This means re-examination of their policies, promotion criteria and reward structures, and the provision of time to pursue innovation. Universities need to tear down bureaucracy within their organisations and be less risk averse. Universities need to invest more in innovation within their organisations and be more explicit about both its value to society and its role in enhancing the university mission. Finally, universities need to get better at working with business, seeing long-term collaborations as an investment, rather than a source of short-term income.

What can government do?

Government has a key role to play. Firstly, it needs to recognise our universities' strengths, rather than simply assuming that all good innovation happens overseas. Secondly, we need continued investment in translation and innovation, but not at the expense of funding for basic research. We have a wide range of reasonably effective instruments already in place: HEFCE, research councils, the Technology Strategy Board (TSB) and Capital for Enterprise, so lets use them rather than invent new ones. Thirdly, government needs to focus on policy initiatives that will benefit the UK, rather than those – such as IP giveaways and ill-considered open access requirements – that will benefit our competitors’ economies. Fourthly, we need a coherent and modern approach to industrial strategy, and we need to create the conditions for individuals to succeed: backing, not picking, winners. Our business community needs a simpler approach to regulation, improved infrastructure, a skilled workforce and an attractive tax environment. Finally, we need to make it clear we are open for business, and that means competing effectively for global talent and making the UK the destination of choice for world-class innovators, entrepreneurs and employees wherever they come from.


Commercialisation of the intellectual property generated through research is an important part of the knowledge exchange landscape in the UK. Despite this, at present there are significant barriers, which impede the UK’s academic entrepreneurs. If we are to unleash the entrepreneurial spirit and potential of the academic community, we need concerted effort from universities, from government and from business partners. 

This article was published in Science in Parliament

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