Scotland: Towards the Knowledge Economy

CHAPTER 2: INCENTIVE STRUCTURES WITHIN HIGHER EDUCATION INSTITUTIONS

The taskforce was asked to develop recommendations on refining or developing academic incentive and career structures within universities to remove barriers to all forms of industrial collaboration and improve its esteem.

2.1 This chapter

provides an outline of the current barriers to academic-industry collaboration;

gives an indication of the range of existing incentive mechanisms operating within HEIs in Scotland to encourage academic staff to engage in industrial collaboration, including, inter alia, commercialisation of research, technology transfer and industrial consultancy; and

recommends an initiative by SHEFC to invest £2million per annum in a new scheme to promote further the "professionalisation of the commercialisation of research".

BACKGROUND

2.2 The taskforce consid-ered a recent report6 commissioned jointly by the UK Higher Education Funding Councils on industry-academic links within the United Kingdom, which concluded that across the UK there has been a "spec-tacular growth in recent years" in the scale, number and variety of linkages between higher education and industry. The report examined three main areas: collaboration through research and consultancy; HEIs' commercialisation of their research; and linkages made in the context of teaching and training. Cutting across these areas were two main themes: the effect of public policies designed to support the higher education system and changes in the broader operating environment for HEIs which have impacted upon academic-industrial linkages

2.3 A number of findings in the report were of interest to the taskforce. Scottish respondents ranked lack of influence on academic careers as the main barrier to establishing consultancy links with industry. However, whilst still citing lack of influence on academic careers as a barrier, they felt that the main barrier to establishing research links with industry, was differences in the respective objectives of industry and higher education. Whilst keen to strengthen links with industry, HEIs believe that it is essential that these activities do not adversely affect the traditional academic ethos of research in the pursuit of the expansion of knowledge.

2.4 A frequently cited problem in managing and maintaining research and consultancy links with industry was the lack of a professional approach to collaboration on the part of some HEIs. In addition, academics often had other priorities, mainly due to the competing demands for staff time from other research and teaching activities. A further difficulty was found to be a lack of resources to support these links (eg infrastructure, facilities, and management resources for liaison).

2.5 On the specific issue of commercialisation of research, the taskforce was interested to note that the most frequently cited problem was the lack of capital or seedcorn development funds. (This was dealt with in Chapter 1.) Other significant difficulties included securing sufficient time commitment from staff in the face of other priorities and the lack of expertise in business or, more basically, in obtaining sound advice on how to commercialise research.

2.6 The report concluded that: "incentives and barriers to industrial collabo-ration occur at all levels in the system" and that more needed to be done to restructure, refine and develop incentive structures and to remove barriers to industrial collaboration. It reco-mmended that additional targeted incentives of equivalent influence to the Research Assessment Exercise would be necessary. The taskforce took note of the recommendation.

2.7 The taskforce also noted the findings of a recent report of a CVCP mission to a number of US universities in November 1998.7 This mission sought to explore how some of the most successful US universities had approached technology transfer and what lessons could be learned for the UK. The report found that the US universities have "strengths in organisation, in resourcing, in the support they give their inventors, in patent searches and setting up new companies, in royalty sharing schemes and in thinking about potential conflicts of interest. They encourage their staff to engage in consultancy as a way of strengthening the links with business that will support and enhance technology transfer. They encourage a co-ordinated approach to the management of technology transfer offices and offices engaged with industrially sponsored research and institutional development". The report concluded that there were no simple solutions to the challenge of promoting tech-nology transfer in the UK.

I unreservedly welcome Lord Macdonald's decision to set up the taskforce not just because COSHEP members - the universities and the other HEIs - share his vision of a 'new' Scotland, with the knowledge economy at its heart, but because of their conviction that they have a crucial role to play in helping to realise that vision. This report amply justifies that view and powerfully demonstrates how the Scottish higher education sector is uniquely placed to build on its already high reputation for innovative commercialisation which, in partnership with others, can be further encouraged and developed along the lines proposed here to meet the great educational, economic and technological challenges of the future.

DR IAN GRAHAM-BRYCE Convener COSHEP

CURRENT INCENTIVE STRUCTURES WITHIN SCOTTISH HEIs

2.8 The taskforce concluded from both reports that a range of measures - addressing resources as well as culture - would be required to give the commercialisation of research and technology transfer a status equivalent to teaching and research. In order to assess the particular position in Scotland, COSHEP, on behalf of the taskforce, carried out an informal survey of its member institutions to identify the range of incentives used to promote commer-cialisation. A number of perceived impediments to involvement by academics in commercialisation or industrial collaboration were identified in the survey. These proved to be similar to those cited by the above reports. One of the main barriers in Scotland appears to be uncertainty over the implications for the careers of academic staff who become involved in these activities. For, example, academic progression is still (particularly in many of the 'old universities' in Scotland) heavily dependent on publication. Thus, significant involvement in commercialisation activities, necessarily limits the ability to publish: the opportunity-cost of time spent on commercialisation activities equates to lost time for generating publications. Moreover, activities of potential interest to, or supported, by the private sector are likely to be of less commercial interest once they are in the public domain and hence available to competitors. Since publication reduces the commercial value of some knowledge it is not encouraged.

2.9 To help address these barriers and to support and promote commercialisation and industrial collaboration, Scottish institu-tions operate a variety of incentive structures and mechanisms. The sector is not, of course homogeneous and, accordingly, the range of structures and mechanisms vary according to each institution's individual needs. Examples are shown in the box below.

2.10 The taskforce acknowledged that circumstances vary within and between institutions. It cannot therefore recommend a partic-ular set of incentives that should be adopted by all institutions. However it believed that a range of measures exist that should assist institutions to develop their own particular package. More widespread adoption of some or all of these measures could reduce some of the barriers to academic staff that were highlighted in the two reports.

EXAMPLES OF INSTITUTIONAL INCENTIVES FOR COMMERCIALISATION

Salary enhancements for staff involved in collaboration with industry/professions: Promotion criteria, including commercialisation or industrial collaboration. Release of staff time from mainstream duties and extra administrative and infrastructure support. Examples include: an allowance of 30 working days per annum which may be given over to consultancy services; and inclusion within contracts of the possibility of 1 day per week devoted to consultancy type work. Consultancy arrangements whereby individual staff members receive a percentage of the income earned (in one HEI this can be as much as 60% of the income). Sharing in the proceeds of commercialisation, including: the sharing of royalties between the individual staff member, the relevant department/faculty and the HEI; or the individual staff member receiving an equity share in a company spin-out; or disbursing commercialisation income on a sliding scale, whereby the innovator(s) receive the majority of the initial income, with the HEI proportion increasing as the absolute amount increases. A proportion of indirect costs recovered in commercial contracts can be made available to the researcher concerned to support their general research. (In one institution, where a member of staff is involved in industrial collaboration through a research project, 90% of the indirect costs generated are returned to the relevant department with, wherever possible, an element of these being put at the disposal of the researcher or his/her group.) Collaboration with industrial partners, including Teaching Company Schemes, staff secondments and arrangements for staff to receive retainer payments from companies for the on-going provision of advice. Research/industrial liaison/commercialisation offices or centres that help established and potential researchers submit high quality applications for research funding, promote the institution's capabilities to industry and liaise with LECs to facilitate commercial developments. They also take responsibility for the negotiation of contracts, overheads and IPR. Awards for innovation. Peer recognition is without doubt a significant motivator and a number of HEIs either currently award prizes for innovation or are in the process of developing plans to do so.

RESOURCES

2.11 The taskforce recognised that a lack of resources could pre- vent HEIs from undertaking commercialisation activity, and that these barriers would remain. During its grant allocations for 1999-2000 SHEFC approved the establishment of a £1million annual funding stream to give the commercialisation of research more professional support. The taskforce welcomed this, but concluded that it was insufficient. As a result The Scottish Office will match this funding by making a further £1million available to SHEFC to increase the total available for this activity to £2million for the 3 years from 1999-2000. (This will match the SE funding shown for 1999-2000 set out in Chapter 1.)

2.12 The proposed scheme will offer each HEI resources to improve their infrastructure for, and management of, commercialisa-tion. Careful consideration will be given to designing a resource allocation mechanism that increases the incentives to commercialise. It may be that resources will be allocated in proportion to each institution's research activity or research income. However, it is clear that institutional ownership of the commercialisation processes appropriate to each institution's own circumstances and mission will be an important determinant of success. SHEFC therefore proposes to adopt an objective-led but non-prescriptive approach to the use of the resources.

Examples of possible uses are shown below: Funding commercial sabbaticals (internal and external) for academic staff who are able to take their ideas closer to market. This would ensure that teaching and research (particularly RAE ratings) in the home department would not suffer; Strengthening and improving the central management of commercialisation within HEIs to give better advice in the early stages of commercialisation, and creating an internal capacity to assist in the management aspect of ideas and inventions; Encouraging and supporting collaboration and exchange of expertise among institutions.

2.13 The scheme, as outlined, is intended to help strengthen the internal capacity of individual HEIs for knowledge transfer. It will complement any Centre for Enterprise that might be set up in Scotland as a result of a successful bid under the Science Enterprise Challenge initiative (see Chapter 4).

2.14 The taskforce wel-comed the SHEFC initiative. It also recognised that not only news of success, but also analysis of the determinants of success will be important. A further critical factor will be recognition of efforts that turn out to be successful. Accordingly, SHEFC intends to fund a study of best practice in the sector after the funding stream has been in operation for a year or so. The study will aim to build on the best practice guidance developed by the Scottish Universities Research Policy Consortium (SURPC). The possibility of establishing workshops to stimulate ideas and disseminate good practice will also be considered once the scheme is underway. However, in order to avoid any duplication with the previous work of the SE Technology Ventures Initiative (as set out in Chapter 1), any such activities must bring added value to the sector.

2.15 The taskforce hoped that the higher education sector and SHEFC would continue to work closely together to help ensure that the proposed scheme achieves its full potential.