Scotland: Towards the Knowledge Economy

CHAPTER 4: SCOTLAND AND THE SCIENCE ENTERPRISE CHALLENGE

The taskforce was asked to develop a blueprint that Scottish Universities could adopt, if they wish, for a collaborative bid under the Science Enterprise Challenge for a single, entrepreneurial Centre serving all of Scotland.

4.1 This chapter:

Sets out the view that the benefits of a science and enterprise centre should be spread to all of Scotland's HEIs; and

Provides a possible blueprint for that.

BACKGROUND

4.2 The taskforce objec-tive followed a Government announcement8 of a £25 million competition to establish up to 8 centres of enterprise in UK universities. These centres would aim to be world class establishments for the commercialisation of research, for fostering scientific entrepreneurialism and incorp-orating the teaching of enterprise into the science and engineering curricula. The taskforce took into account the guidelines for the competition9 which suggested that bids should include: The intention and capability to establish a world class and self-sustaining centre able to make a major impact on the entrepreneurial culture of the institution(s); The ability to achieve critical mass in the transfer of knowledge from researchers and from the laboratory environment to those who can make profitable use of that knowledge; Innovative ideas in terms of content and process in the teaching and training of enterprise techniques to scientists and engineers at different stages of their careers; and Access to appropriate skills and expertise and their integration into the university.

4.3 These guidelines also stressed that collab-orative bids would be welcomed where the logic for collaboration was substantial and that universities10 applying to establish centres of enterprise would be expected to bring substantial financial input from non-UK Government sources to place alongside awards made under the initiative.

THE ROLE OF THE TASKFORCE

4.4 The taskforce recognised it had no direct role in the Challenge which is the responsibility of the Office of Science and Technology. How-ever, as will be clear from previous chapters, a number of inter-related policies and initiatives currently support the development of the knowledge driven economy in Scotland. Science Enterprise Challenge is a very valuable addition to that portfolio. The taskforce judged that it would be very important to ensure that the objectives and functions of any Centre(s) for Enterprise in Scotland could integrate with, and add-value to, existing policy, activity and initiatives.

4.5 The taskforce therefore set out to draw up a "blueprint": an outline model taking account of Scottish circumstances and needs. This could be used - if the universities wished - either in an initial bid, or to sub- sequently develop a centre from one or more universities into a national resource. The taskforce drew on the general competitiveness policy context and lessons drawn from relevant developments in other countries (see Annex C). It made the blueprint (below) available to institutions in advance of the bidding deadline.

KEY DECISION FACTORS

4.6 The detailed analysis available to the task-force covered a number of key inter-related decision factors.

STRUCTURE

4.7 There are normally a number of viable options relating to a consortium structure - they could be large or small, led by one institution or completely democratic, multi-centred or organised on a hub and spoke basis. In this case there are some key considerations on the basis of experience from other Challenge competitions: Large consortia with complex lines of account-ability would be unlikely to attract support; wheras a track record of successful collaboration would likely be an asset. The roles, responsibilities, and the potential risks and benefits, relating to each of the partners should be clear at the outset.

4.8 The development of the Institute of System Level Integration (see case study box on following page) was recognised as one of a number of good examples of effective collaboration involving Scottish universities and HEIs. These precedents should provide proven templates for administrative and contractural arrangements.

Case Study - The Institute for System Level Integration

'Project Alba' is about keeping Scotland at the forefront of the electronics revolution by developing infrastructure and expertise in System Level Integration. This is the design and development of silicon chips which contain elements for computing, memory, graphics processing and wireless communications, which currently reside on separate chips.

As a key part of 'Project Alba', the creation of the Institute for System Level Integration, will ensure a ready flow of qualified people who, in turn, will keep Scotland at the forefront of the electronics revolution. The Institute's mission is to undertake commissioned research, deliver training and education in the emerging discipline of SLI, and to commercialise its own design output.

In 1997, extensive and detailed negotiations were undertaken between Scottish Enterprise and the Universities of Edinburgh, Heriot-Watt, Glasgow and Strathclyde to establish the partnership agreements necessary for 'Project Alba' to succeed. The relationships between the partners in the Institute are embodied in a lengthy Members Agreement. The Agreement identifies both functional parts of the organisation and their mechanisms of interaction.

In November 1998, the Institute was established, comprising the Departments of Electronic Engineering and Computer Science at the four universities, together with a Company, System Level Integration Ltd, owned by the universities and Scottish Enterprise. Scottish Enterprise will fund up to £4.5 million to the Company to support its activities over the next 5 years (there is a Funding Agreement to regulate the use of this finance).

The Directors of SLI Ltd are a mix of academics and experienced industrialists. The Institute Council and the Industrial Committee give further opportunities for industry to guide and support the Institute.

LOCATION

4.9 Similarly, there are number of options in relation to location, and the relative merits of physical or virtual organisations. The mixed option of a small "gateway-office" fronting a more substantial virtual structure seemed to the taskforce to be the most attractive, given that it achieves the optimum balance between modernity, minimising costs and ensuring visibility and ease of access. A key point is the importance of ensuring that any consortium agrees the physical location in advance.

FUNDING

4.10 Universities applying to establish Centres of Enterprise must bring substan-tial financial input from non-UK Government sources to supple-ment awards made. Although Scottish universities have a strong track record in attracting substantial private sector investment, the taskforce recognised the difficulties faced in this case. In particular it recognised that the Challenge objectives relate to both commercialisation and the teaching of enterprise. The view of business is very likely to depend on whether or not these are given equal priority in the Centre's operations.

COMMERCIALISATION VS EDUCATION

4.11 A strong focus on commercialisation, if combined with the sort of structural arrangements described in Annex D, could in theory be more likely to attract business investment. However, while the scope for greater private sector involvement would increase under a centralised commercialisation model, it is also evident that such structures can deter academics. The CVCP report referred to earlier (see Chapter 1) found that, in the United States, "it is rare for a technology transfer office to cover its costs and to make more than a modest contribution to the university's income stream (even the best generate only somewhere between 1-3% of overall research income)".

4.12 In contrast, a strong education focus could perhaps discourage investment, leaving the Centre to depend upon contributions from business, earnings from the sale of courses to students' or their employers, or support from Local Enterprise Companies or European funds. (Based on advice from The Scottish Office that LEC surpluses would be regarded as private sector monies, and so could be referred to in initial Science Enterprise Challenge bids, several LECs have already indicated interest in discussing this possibility in the light of suc-cessful first round bid(s).)

4.13 Nevertheless, there may be a greater need to stimulate a new phase of entrepreneurial education. Many of the spin-out companies in the large US universities are created by entrepreneurial alumnii rather than academics employed by the university. That is not to diminish the existing strong track record in entrepreneurial training in Scotland. The taskforce noted that Scottish universities could draw on an independent report11 evaluating entrepreneurial education in Scotland. It confirmed the taskforce view that, while there is obviously a compelling need to address both objectives of the Challenge, there was a strong case for making education the core function and component of any bid. Scotland needs to do significantly more to change the culture of our graduates and post-graduates towards wealth creation and commercialisation. There was particularly strong support for the view that the Centre should aim to develop a key role in developing team entrepreneurship in SMEs. There was also agreement that the involvement of the business sector in these courses is crucial.

Extract from "Evaluating Entrepreneuship in Scottish Universities" by Dr Geoff Hayward, Oxford University.

Scottish universities have the opportunity to develop their own unique ways of teaching entrepreneurship building on the excellent start that they have made. To achieve this requires the development of a more theoretical basis for the teaching of entrepreneurship and questioning the appropriateness and adequacy of other approaches for teaching entrepreneurship, such as that used at Babson College, for the Scottish context and students. Demonstrating excellence in the teaching of entrepreneurship, based on high quality applied and fundamental research, ultimately remains the best way of spreading the message of entrepreneurship across the university.

THE BLUEPRINT

4.14 The taskforce produced its blueprint based on the above analysis. It's vision was of collaboration leading to the establishment of a world-class centre of entrepreneurship which would rank with those of MIT, Stanford and The University of California, San Diego.

4.15 The Centre would be founded on existing enterprise education and commercialisation experience within a small number of institutions. It would be built on world-class science and technology research and existing experience in incorporating entrepreneurship into the curriculum at both undergraduate and post-graduate levels. The Centre would ideally - at least in the longer term - have open access to other institutions and business across Scotland through the use of information technology.

PROPOSED MODEL

4.16 Critical success factors are: To have a small, tightly constructed management group which can be focused and cost effective; To have core partners with a strong record of enterprise education and commercialisation. To have experience of working together. To have a robust financial package tailored to the core objectives of the Centre.

4.17 A possible working model would comprise the following: The Centre would be established on a "core and gateway" principle, with the issue of the location of the core agreed in advance; The founding partners would establish a management committee to drive the Centre forward, set objectives, monitor performance against targets and manage resources; Other Scottish Higher Education Institutions and other bodies, such as research institutes, Connect and Local Enterprise Companies would be invited to become associate members.

Meeting the objectives of the Centre

4.18 The blueprint envis-ages the objectives of the centre being met as follows:

To be a world-class self-sustaining centre for the development of entrepreneurial culture in Scotland

4.19 It would focus on expansion of existing entrepreneurial courses already established in Scottish universities, build on existing examples of joint working between their commercialisation offices, draw in successful entrepreneurs to act as mentors, and use global best practice through international links.

To achieve a major shift in enterprise education and knowledge transfer

4.20 It would develop and promote best practice in commercialisation, built on universities' record of commercialising science, and promote best practice from the establishment of university spin-outs. In addition, it would extend and integrate current continuing professional development courses into post-graduate and under-graduate courses. It would also strengthen links with small and medium sized enterprises through close working with local development agencies. And it would have the capacity, where agreed and appropriate, to act as a focal point for taking forward specific commercialisation opportunities.

To develop and promote innovative methods for promoting creativity and entrepreneurship

4.21 It would integrate entrepreneurship into the science and engineering curricula (as is now done with IT), and explore models of entrepre-neurship and innovation in large and small firms. The Metropolitan Area Networks would be used to allow wider access for distance learning.

4.22 The taskforce Blueprint is there-fore primarily about supporting a potentially pan-Scottish Centre which would build on existing relationships, capabilities and structures and mobilise synergies amongst the universities and other HEIs , the corporate base and the venture capital organisations in Scotland while taking account of the status of enterprise and commercia-lisation policy and activity in Scotland.