The are many factors that compel companies to work together on their innovation programmes – learning and exploration of new markets and technologies, or tapping into each others resources and capabilities. But in the UK – when asking SME business leaders what gives them the push to collaborate – the UK’s Technology Strategy Board (TSB) and its grant funded innovation schemes is a major driver for being part of the UK innovation ecosystem.
While ‘Open Innovation’ is often cited in academic literature as being tough for SME’s – they have a “liability of smallness” and don’t have power and influence in their industry or the resources and maturity of multi-nationals – none of that is a barrier for agile and adventurous UK SME companies – and the path to collaboration is made all the easier due to the policy choices of this UK government body.
When performing the literature review for my own research, the world of innovation and collaboration throws up lots of lessons – but when trying to pin down the academic understanding of “What drives successful inter-firm collaboration?” – government intervention was not what I was looking for.
But during 12 semi-structured interviews ‘The TSB” kept emerging. I’m all for the force of innovation and collaboration – but I found that effective macro-economic policy also plays a part in supporting the UK as a place to be ‘open’ in innovation.
Out of twelve C-level interviews, eleven of the candidate use TSB funding.
This is what they said:
“I mean the Technology, Strategy board, actually is probably a fantastic example of enabling Open Innovation in UK because of all the TSB funded projects. We’ve done one – we’ve been involved in three big ones and we’ve got a fourth one where we are putting the final application in now. And they’re obviously, you know, you have a collaboration agreement, you have a number of companies involved and they’re very good at getting people working together. Maybe companies are not being as open as they could be, they don’t have to be totally open, but they do get people sitting around together and talking which is very good.”
“The TSB is picking up a large chunk of the role of the US VC fund because we don’t quite have the same investment culture here. A lot of the early-stage investors have gone away. We don’t quite have the investment culture here in the UK.”
“I must keep highlighting that the Technology Strategy Board has a key role to play – they are pretty good – they could probably do even more if they have more money – but they are a big help – the key mechanism for driving businesses to work with other businesses.”
The TSB and Knowledge Transfer Partnerships and the “_connect” infrastructure also uncover potential new markets
“We are member of a couple of the knowledge transfer networks. We are just in receipt of a confirmation letter from the TSB for a collaborative activity around an innovative use of our equipment.”
While the TSB has formal programmes these can be used to support growth in venturing too
“We have used our IP to form a new company that was done with a TSB grant. We licensed some of our IP into that new company. That company was established and we together assigned a value to the IP that we took as a stake in the company as part of the funding round.”
Working under TSB requirements also give a structure to a partnership and can set out key terms, boundaries and expectations:
“You have to start to be very careful about co-creating explicit IP and if you actually expect to create protected IP. We will do that but we have to go through more detailed negotiations. It tends to be more of the TSB funded grant where you have to make sure that everything is notified in advance. This is inconvenient but we have done it and it’s fairly surmountable and were also on an EU grant at the moment where these things have to be codified in advance.”
The TSB funding is UK-centric – the world may becoming ‘flat’ – but the stimulus is local. Yet opportunity is frames by such boundaries
“Up comes this call for TSB funding and we looked at them and thought this is just perfect for the first time ever I am looking at TSB opportunity that fits exactly what we need and we’ve managed to find UK manufacturing partners and fabricators who are willing to partner in that.”
“I think what the TSB do is fine, within the terms of their remit. The problem is they are not on a firm footing – they are bounded to support UK-only partnerships – and the industrial base of this country has been so badly damaged. If you look at the Fraunhofer Institute in Germany there are so many of them – such a fertile ground because there are just so many small family run manufacturing businesses within with an interest in innovation within Germany.”
Often Universities can be good partners – but more than that the TSB encourages this connection:
“There’s this one particular project I’m working on well with thinking of setting up a knowledge transfer partnership which would involve the University so we’re looking at a particular case because the university have access to a particular expertise that we want to benefit from.”
“You sometimes need a university when you go after aspects of different funding, you need a university partners sometimes to access the funding. If they see ‘multinational company’, ‘service company’ and ‘university’ together then they will fund it if you bring in all three parties.”
“We have had two TSB grants to work with Universities on for Cambridge and one for UCL and we have an ongoing relationship there.”
Buts its not just TSB funding – early stage and highly innovative companies in the bio-tech, chemical, medical device and software also tap into Research Council grants such as EPSRC ,and EU sources of funding permit partnerships beyond the UK.
In the future we see us doing more of our own in-house product development its just and we have programmes in place to do that but again these are grant funded through EU funding that we have been able to secure – we just cant justify the cost of doing that on from investor capitol.
Under the auspices of framework 6 and 7 programs of European Union funded activities we have developed new techniques new service and products.
The choice and approach to funding was strategic and not just a form filling exercise – there are many stakeholders that can help drive your choices and for those that scan the globe in search of knowledge you may build partnerships that allow you to tap into schemes such as DARPA – a practice that has been very successful for some UK businesses as these guys show here.
Understanding funding and its role in innovation is clearly a strategic capability in the UK and Europe.
While innovation partnerships are talked of as burdens on the SME (transactional costs) – leveraging the TSB with the right partners is a rite of passage for the UK innovators I interviewed – connecting knowledge, businesses and facilitating conversation and structured outcomes.
Having a government intervention is not the ideal of free-market efficiencies – but it does seem to making up for market failings – it gives the collaboration conversation some real teeth.
Business was always about scarce resources – with this funding strategy it seems the open innovators are finding what they need.
Well done TSB.