MrMr.. Ian Cooper Ian Cooper

• Deputy Director, UK Water Research Centre

• CEO, British Hydromechanics Research Group

• Advisor,World Bank Technology Projects

Philippines, Chile, Mexico, Pakistan, India, Turkey

• Director, Operations; UK Royal Society

R&D Institute RestructuringInnovation & Competitiveness Practitioners Workshop 19-21 April 2004

Ian CooperIan Cooper Deputy Director UK Water Research CentreDeputy Director UK Water Research Centre CEO British Hydromechanics Research GroupCEO British Hydromechanics Research Group Advisor to World Bank Technology Projects in;Advisor to World Bank Technology Projects in;

Philippines, Chile, Mexico, Pakistan, India, Turkey, Philippines, Chile, Mexico, Pakistan, India, Turkey, MexicoMexico

Director Operations The Royal SocietyDirector Operations The Royal Society

R&D Institute Restructuring

Why is it important?Why is it important? International experienceInternational experience What we are trying to achieveWhat we are trying to achieve What have we got to get rightWhat have we got to get right Key steps in the transformation processKey steps in the transformation process ResultsResults Key lessonsKey lessons

Why is it important?

The role of science engineering & technology The role of science engineering & technology (set) in a modern economy(set) in a modern economy

Scarce resources to be best usedScarce resources to be best used Industry worldwide funding higher proportion of Industry worldwide funding higher proportion of

total spend on R&Dtotal spend on R&D Governments worldwide funding lower proportion Governments worldwide funding lower proportion

of total spend on R&Dof total spend on R&D But only as a part of a total packageBut only as a part of a total package

Some statistics (OECD)

Industrial funding as % of total R&D spend: OECD average Industrial funding as % of total R&D spend: OECD average 20% increase in 5yrs, USA 33% in 5yrs 20% increase in 5yrs, USA 33% in 5yrs

Government funding as % of total R&D spend: OECD Government funding as % of total R&D spend: OECD average 16% reduction in 5 yrs, USA 23% in 5 yrsaverage 16% reduction in 5 yrs, USA 23% in 5 yrs

Gross domestic expenditure on R&D (GERD) as % of GDP Gross domestic expenditure on R&D (GERD) as % of GDP 2000: EU 1.89%, USA 2.72%, Turkey 0.64%2000: EU 1.89%, USA 2.72%, Turkey 0.64%

Number of researchers 2000: EU 971k, USA 1.26m, Turkey Number of researchers 2000: EU 971k, USA 1.26m, Turkey 23k23k

% of GERD financed by industry:1991-28%, 2001-45%% of GERD financed by industry:1991-28%, 2001-45% % of GERD financed by Government: 1991-70%, 2001- % of GERD financed by Government: 1991-70%, 2001-

47%47%

Where has this been done?

UK – RAs, DERA, NPL, AEA etcUK – RAs, DERA, NPL, AEA etc Other European countries: FhG, TNO etcOther European countries: FhG, TNO etc Mexico: SEP CONACYTMexico: SEP CONACYT Philippines: ITDI, MIRDCPhilippines: ITDI, MIRDC Chile: CONACYTChile: CONACYT ChinaChina India: CSIRIndia: CSIR South Africa: CSIRSouth Africa: CSIR Australia: CSIROAustralia: CSIRO Turkey: MRCTurkey: MRC

What are we trying to achieve?

Make the best use of scarce resources (people and Make the best use of scarce resources (people and facilities) to promote economic growthfacilities) to promote economic growth

Ensure the relevance of research institutes in a modern Ensure the relevance of research institutes in a modern economyeconomy

Provide scientific and technological support to local Provide scientific and technological support to local industry to assist in improving their competitive positionindustry to assist in improving their competitive position

Sustain and improve the scientific and technological Sustain and improve the scientific and technological quality of researchquality of research

Maintain high quality curiosity driven research Maintain high quality curiosity driven research

Typical problems prior to restructuring

Largely Government funded – focus on maintaining or Largely Government funded – focus on maintaining or increasing this source of fundingincreasing this source of funding

Generally a haven for the Country’s best technical talentGenerally a haven for the Country’s best technical talent Not market orientated – expensive ‘toy’ for the scientific Not market orientated – expensive ‘toy’ for the scientific

establishmentestablishment Many small projects aimed at ‘reinventing the wheel’Many small projects aimed at ‘reinventing the wheel’ Emphasis on R&D and not many other servicesEmphasis on R&D and not many other services Antagonistic relationship with industryAntagonistic relationship with industry Financially and commercially illiterateFinancially and commercially illiterate

What characterises a successful RI?

Identify their markets and potential clientsIdentify their markets and potential clients Are service orientated and have various ways, formal and informal of Are service orientated and have various ways, formal and informal of

interacting with current and potential clientsinteracting with current and potential clients Ensure quality of people and services match best international Ensure quality of people and services match best international

standardsstandards Build feedback mechanisms with clients and technical communityBuild feedback mechanisms with clients and technical community Have client confidentiality and IPR policiesHave client confidentiality and IPR policies Innovative approaches to building new capabilities & learn from Innovative approaches to building new capabilities & learn from

othersothers Renews its science and technologyRenews its science and technology Adopts best international practice for business processesAdopts best international practice for business processes Financially and commercially awareFinancially and commercially aware

Government has an important role

Motivate the restructuring processMotivate the restructuring process Ensure structures avoid bureaucracyEnsure structures avoid bureaucracy RIs need flexibility and autonomy (but with RIs need flexibility and autonomy (but with

accountability)accountability) Stimulate demand (especially for SMEs)Stimulate demand (especially for SMEs) Provide relevant legal structures ( including IPR)Provide relevant legal structures ( including IPR) Provide policy frameworkProvide policy framework Provide support for strategic ‘blue skies’ R&DProvide support for strategic ‘blue skies’ R&D

What have we got to get right?

Reform is not partial – needs a clear visionReform is not partial – needs a clear vision Essential that there is strong leadership and a competent Essential that there is strong leadership and a competent

core teamcore team The reform works to meet demandThe reform works to meet demand Well thought out business planWell thought out business plan Key business processes reformed: marketing, commercial, Key business processes reformed: marketing, commercial,

financial (MIS), project management, IPR exploitationfinancial (MIS), project management, IPR exploitation Key reforms undertaken: governance, quality systems, Key reforms undertaken: governance, quality systems,

overhead reduction, training, HR policies, infrastructure overhead reduction, training, HR policies, infrastructure renewal, legalrenewal, legal

8 steps in restructuring

Establish a sense of urgencyEstablish a sense of urgency Form a powerful coalitionForm a powerful coalition Create a clear vision and objectivesCreate a clear vision and objectives Communicate this visionCommunicate this vision Empower others to act on the visionEmpower others to act on the vision Plan for and create short term winsPlan for and create short term wins Consolidate improvements and produce still more changeConsolidate improvements and produce still more change Institutionalise the new approachesInstitutionalise the new approaches

The results

CSIR India – Prof Mashelkar – Economist article CSIR India – Prof Mashelkar – Economist article 3 April 2004 ‘Innovative India’3 April 2004 ‘Innovative India’

CSIR South Africa: 4x increase in turnover/head CSIR South Africa: 4x increase in turnover/head in 7 years, 6x increase in number of patents filed in 7 years, 6x increase in number of patents filed over 4 years, 250% growth in contract research over 4 years, 250% growth in contract research income in 6 years.income in 6 years.

Many other examplesMany other examples

The results Turkey MRC

Self sufficiency ratio increased from 13% 1999 to 49% 2003 Self sufficiency ratio increased from 13% 1999 to 49% 2003 and 65% 2004 (target)and 65% 2004 (target)

Contract income increased from 2002 to 2003 by $5.7mContract income increased from 2002 to 2003 by $5.7m Private sector income increased 200% 2001-2003Private sector income increased 200% 2001-2003 Number of industrial services 1999–1800, 2003-7925Number of industrial services 1999–1800, 2003-7925 Contract income/staff 1999-$4543, 2003-$17500Contract income/staff 1999-$4543, 2003-$17500 Central admin costs reduced by $800k 2002-2003Central admin costs reduced by $800k 2002-2003 Research staff 52% of all staff 2000 will be 66% 2004Research staff 52% of all staff 2000 will be 66% 2004 Support staff 45% of all staff 2000 will be 33% 2004Support staff 45% of all staff 2000 will be 33% 2004 Scientific output increased: 317 publications 2001, 411 2003Scientific output increased: 317 publications 2001, 411 2003 Set up technology parkSet up technology park

Key Lessons - MRC

Strong leadership a key to success – clear visionStrong leadership a key to success – clear vision Time spent in business planning is not wasted –scenariosTime spent in business planning is not wasted –scenarios Improve staff communication/involvementImprove staff communication/involvement Tackle the difficult operational, process, legal and HR Tackle the difficult operational, process, legal and HR

issues early not late – if not they delay the transformationissues early not late – if not they delay the transformation Need a robust, simple to use and effective MIS early in the Need a robust, simple to use and effective MIS early in the

processprocess A strong PIU and change manager to coordinate the many A strong PIU and change manager to coordinate the many

parallel activities taking placeparallel activities taking place Learn from others – it has been doneLearn from others – it has been done It is difficult and will take timeIt is difficult and will take time

Remember

‘It must be considered that there is nothing more difficult to carry out nor more doubtful of success, nor more dangerous to handle than to initiate a new order of things.

For the reformer has enemies in all those who profit by the old order and only lukewarm defenders in all those who would profit by the new order’

Machiavelli

But also remember:

the reward for success is very significant – for the Institute, for the researchers, for local industry and for the national economy

MrMr.. Ian Cooper Ian Cooper

• Deputy Director, UK Water Research Centre

• CEO, British Hydromechanics Research Group

• Advisor,World Bank Technology Projects

Philippines, Chile, Mexico, Pakistan, India, Turkey

• Director, Operations; UK Royal Society