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SETsquared’s response to the Dowling Review

The Dowling Review will examine how government can support the development of more effective collaborations between businesses and university researchers in the UK. SETsquared has responded to the ‘Call for Evidence‘ for this review to demonstrate current initiatives which are successfully bringing together business and academia:

SETsquared is the long-standing enterprise partnership between five leading, research intensive universities – Bath, Bristol, Exeter, Southampton and Surrey. Established in 2002 and funded by the Higher Education Innovation Fund (HEIF), the Partnership is a focus for enterprise activity and new business creation for the five university partners which each run business incubators and enterprise programmes to support innovation in their local areas. Its business incubation programme is ranked by the University Business Incubator Index as the best in Europe and second in the world. 

Whether it’s an entrepreneur with an idea or a very early stage, high-tech start-up company – SETsquared’s mission is to help turn an innovative spark into a thriving, commercial business. Over the last decade it has helped over 1,000 high-tech start-ups to develop and raise more than a £1bn of investment. Independent research carried out by Warwick Economics estimates the economic impact of SETsquared member companies to be £3.8bn over this period, with the creation of 9,000 jobs and that these companies will go on to deliver a further £7.3bn of impact to the UK economy in the decade ahead. 

As well as business creation, SETsquared also has a role in embedding entrepreneurial thinking and behaviour within the universities. This is done through a programme of student enterprise activity and also by supporting researchers and academics to realise the commercial and social impact of their research. 

There are several reflections on key success factors and barriers that SETsquared would like to present to the Review: 

SETsquared reflections on Key Success Factors 

1. Collaborations take time to build and may not deliver a financial return for several years. The SETsquared Partnership uses HEIF funds to support our collaboration and to support at least some of the incubation activity in each University. Even though its central management costs are low, SETsquared would not have been possible without the longer term confidence and stability generated by HEIF. This has created a platform on which the partners could experiment with different approaches and refine the model to produce a highly compelling offer to business. 

2. The SETsquared model is an effective way of engaging SMEs with the knowledge base by helping to grow innovative, high-growth companies that have a higher propensity to engage with the knowledge base. We create demand and role models for growth rather than for University/ industry liaison per se. The building of university relationships comes second after a growth strategy for the companies has been agreed and funded. 

3. Building a wide partnership of universities creates a stronger flow of ideas and opportunity and this is attractive to external funders such as VC and angel schemes. Once there is a flow of ideas it is easier to create a regular rhythm of opportunities and successes and this in turn provides a clear process with deadlines which creates urgency in the system. 

4. Once funders are attracted to a source of ideas it is easier to expand the idea pool to encompass student and academic staff opportunities alongside ideas that are brought to the pool by entrepreneurs. 

5. Universities can plug SMEs into wider networks through open innovation but this is a process that has to be managed. 

6. Supporting more SEIS schemes and University Enterprise Zones will help to develop greater engagement between Universities and Industry. 

SETsquared manages a series of mechanisms to encourage growth in its member companies and university members. 

In this response we have chosen to focus on one of these services – the SETsquared Open Innovation (OI) Programme since it is designed to encourage longer term collaboration. It also embraces the more mature technology and solutions that are developing in each University’s Business Incubators and Accelerators. 

The OI Programme responds to a fundamental set of challenges facing both innovators and major businesses: that is, how to build effective, time and cost efficient, and productive interactions between the two communities: 

  • Innovators are typically time, resource, cash and contact poor. They need ways to reach quickly and easily into key business units in major Corporates for rapid and productive dialogues that lead to early agreements on how best to develop and commercialise innovation that meets defined sets of business needs; 
  • Even the largest global businesses are constrained in the resource they can expend on innovation search. Their key challenge is to sort the wheat from the chaff. So they are keen to interact with those innovator communities where they have confidence that their corporate objectives and requirements can be effectively addressed. 

With these challenges as the backdrop, the OI programme is tasked with bringing together a large group of up to 50 major corporate organisations into a long term partnership with the five SETsquared Universities (and potentially other centres for research and incubation) so as to establish a clear set of pathways through which innovators and businesses can collaborate. This has been done by encouraging the corporates to set a series of “challenges” to the Universities’ innovator communities i.e. the academics and the businesses in their incubator networks including spin outs. 

The initiative covers the full spectrum of research disciplines and technology needs. Although the strategy is to achieve critical mass from business by focusing on the largest corporations who have the widest and deepest sets of needs, the target operating model that is being developed also enables smaller businesses to participate. Also, it provides a natural route for start up businesses to engage with big corporate organisations, for example as providers of ready-made channels to markets. 

Progress achieved over that 12 month period has been exceptional: 

  • some twelve major organisations, national and global, have committed to working closely with SETsquared on Open Innovation opportunities with a further 10 in discussions over participation; 
  • some 60 innovation opportunities have been introduced to and assessed by Corporate Partners; 
  • broad sectorial coverage has been achieved including: life sciences; healthcare products and services; mobile technologies; aerospace and defence; design engineering; business applications and systems integration; financial services; and semi-conductors; 
  • apart from the UK, global coverage has been achieved through interactions with corporate organisations from: Australasia; Japan; North America; France; Netherlands; and Sweden. 

The Critical Success Factors include: 

  • Ensuring that the business partners we engage with have an approach to innovation search and follow up that recognises the challenges faced by the small innovator. We also identify many situations where corporates need substantial help to organise effective and credible open innovation structures and processes and we see one of our key roles being to support individual businesses in building their own more effective OI structures and processes. Our collaboration with the southern group of NHS Academic Heath Science Networks is a good example of how SETsquared can actively support the Enterprise and Translation remits of the AHSNs; 
  • IT systems that: enable rapid communications between corporate partners and innovators; secure confidentiality where needed; provide accessible and useful Management Information for all participants dependent upon their diverse needs; provide ready access to information on where innovation is taking place that is relevant to business needs – and where businesses are seeking innovative solutions and ideas; 
  • As the Intermediary, being recognised as a “Trusted Third Party” by all participants. That requires clear and transparent sets of strategic and operating principles to be defined. And also requires some form of independent assurance and audit; 
  • Being able to leverage scale. The research and innovation grouping needs to be large enough to be able to support a sustainable long term relationship with a business entity and to make it worthwhile for that entity to invest time and effort in the relationship. Equally, there is a limit to the scope of deep engagement that SETsquared, as a cluster, can manage and there is an inflection point where scale defeats efficiency of operation. This points to prioritising strong relationships with large organisations that have extensive requirements for engagements with innovators. And also to exercising caution in respect of the scale of innovation that SETsquared can reasonably embrace; 
  • Promoting a culture amongst the innovator community that perceives business as not simply a source of potential funds for projects, but as a conduit to taking innovation into the wider marketplace where its benefits can be fully realised. 

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