Wednesday, 19 March 2014

Research & Development in the UK and Western Nations will never Create 'Dynamic Economies', as Government Funds the wrong section - For the Business-University R&D Model is Totally Flawed, Programmed to Fail and where if the terms of reference are vast financial paybacks, it never happens



The main reason why western governments and the UK in particular do not create a dynamic economy and fail the British people is because the business-university model does not allow it. In this respect the UK places its future in this so-called pre-eminent innovative system but where this system is totally flawed. For big business sets the agenda usually in the first place and if something comes to light that would blot out one of their profit earners, that invention or product is not allowed to enter the market. You see big business runs on the steady-state mechanism and if a product or service is providing them with a constant profit, many going into the billions of dollars when analysis is undertaken and where this vast profit generator product is threatened (even though the new product and service is superior), it is shelved. That is why they are always buying up patents, for whoever controls the patent, controls the present and the future. In this respect the longer a corporation can extract financial blood out of a product and service without replacement with a better innovation, the longer vast profits are made for the corporations.

The only time that this new product or service emerges is when they hear that a competitor is bringing something out similar through the grapevine. A prime example of this is the world’s greatest wealth provider (underpinning a global industry turning over $2 trillion annually), the ‘chip’. When the late Nobel laureate Jack Kilby initially invented the ‘chip’ in his spare time and at home (it was like a hobby to him and his employer was not even aware of his private work) and told Texas Instruments what he had invented, they did not want to know about it. But about a year later when a new upstart emerged that through the grapevine were developing a similar technology, Texas Instruments Board realised that this new competition could kill off one of their golden eggs – Valves. At that time TI was making 100s of millions out of the old valve systems that was like printing money as valves did not last that long and were a constant flow of manufacturing gold.

Therefore they asked Jack back into their inner sanctums and where the rest is history. But it is clear that if another new entrant had not come into the market we might have had to deal with valves for at least another 10-years. The same goes for Frank Whittle and the Jet engine where the aircraft industry supported by the British government did not want to introduce such a revolutionary engine. The reason again was that the aircraft industry was making 100s of millions of pounds again out of the old prop engined aircrafts at the time and where commercial profits were increasing year-on-year. It was not until WW2 was looming that they had to take notice of Whittle’s invention that the establishment (aircraft industry and government) had to change their thinking and place winning the war above corporate profits. This is how the system basically works in reality and the ‘don’t rock the boat’ mentality stifles the vast majority of R&D through big business controlling the business-university mechanism.

Oh by the way, that upstart that made TI sit up and think about Jack's invention was the little old firm called INTEL.

Therefore big business does not really want to innovate in the true sense of the meaning but keep with the status quo – the basic commodity that they are into, big profits, shareholder satisfaction (the rich usually) and milking the market dry for all its worth and for as long as they can.

That is why in modern times the pure business-university model has never created a multi-billion dollar industry.

Therefore the big business-university model that all western governments support is totally flawed and screwed in favour of corporate decisions, not university R&D decisions. Indeed even if a university gets a giant transnational to fund research, the big corporation has control as they hold the purse strings, to stop and shelve the R&D. And this is what happens in over 90% of university-big business collaboration.

Indeed as government are ignorant to what is really going on behind closed doors (or if they know they are squandering our tax), the taxpayer is getting a raw deal. In this respect government funds businesses to undertake R&D in collaboration with our universities through grants and tax breaks, but never gets a payback that is greater than the money that they give big business.

Therefore all government is doing is putting billions into this non-performing mechanism and big business is using it to its own ends, not the ends of the universities or the people. It is basically one big con on the taxpayer as there are no paybacks. Indeed for the billions pumped into the business-university model every year, the nation’s investment is negative. That has gone on for years and why the UK will never be a dynamic economy, as big business only takes and does not give anything back in reality. They may provide jobs in the minority, but get the lion’s share of the enormous tax breaks and R&D grants before any others.

Therefore government cannot see the wood for the trees and what they should be doing is to provide the lion’s share of R&D to the small-medium sized businesses, the ones that are growing. In this way new technologies and products would emerge and these would not be shelves. Indeed it would spawn many ‘INTELs’, with the new global wealth that was created by them in their day initially. Therefore government has got it all wrong when it comes to the funding of R&D and where they are giving it to the wrong section of the economy. Think small to medium in this respect is my advice to government and where the UK would through this change to a highly innovative system, create a dynamic Britain once more. But will they, I very much doubt it as they are totally ignorant to what is really wrong with their R&D thinking today.

Dr David Hill
Chief Executive
World Innovation Foundation

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