The Witty Report: Are SMEs more important than large companies to exploit innovation in health technology?

This is the 3rd of my blogs on the Witty Report, and I want to visit the complex issue of where and how precisely does healthtech innovation happen, and are SMEs really more important than large multinationals?  OK, to be this is not exactly what Sir Andrew says, but he does emphasise the role of SMEs in innovation, and says relatively little about large companies and whether or not universities should continue to focus their attention on multinationals.

I agree with the Witty Report that compelling evidence suggests that innovation now takes place mainly in SMEs.  I have experience of collaborating with innovative SMEs, and I have witnessed at first-hand how academic support can be instrumental in growth and job creation.  While I am therefore a convert to argument that significant benefits will come from improving opportunities for SMEs and universities to work together, it is probably the case that not all academic staff share this view.  The reasons are complex, but one contributory factor is the relative small scale (and perhaps a lack of kudos) associated with working in partnership with a very small SME compared to a global multinational.  Much thought needs to be given to communicating the value of working with SMEs, and the development of incentives and instruments to drive this collaboration.  Indeed, the Witty Report makes a number of recommendations that - if implemented - could change the collaboration landscape in the UK and make a real difference to our economy.

But is it only SMEs that are important in health technology and medical devices innovation?  Obviously not, and again especially in these sectors. Large multinationals (and indeed the largest SMEs) are still very important drivers of innovation, but this is increasingly because of their role in maximising the impact of de-risked innovative technologies developed by SMEs, and by providing greater opportunities for economic growth on the basis of their exploitation. Larger companies have the maturity, expertise, and infrastructure (including specialist knowledge of regulatory affairs, market needs, reimbursement, marketing, and distribution networks) necessary to respond quickly to opportunities created by SMEs.   The supply chains in health technology and medical devices are sophisticated, and the expertise embedded in UK-based multinationals is a critical determinant of our ability to exploit innovation, generating prosperity as well as providing more general socio-economic benefits.  Perhaps even more importantly, large companies are frequently “cash rich” and/or have access to sizeable capital that is necessary to scale up innovation, even those innovations that have already been de-risked by SMEs. 

I will now be taking a short break from blogging, and hopefully people will have time then to digest and comment on my thoughts stimulated by Sir Andrew Witty's Report.  More in the week beginning 4th November. Don't forget you can read the Witty Report for free: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/249720/bis-13-1241-encouraging-a-british-invention-revolution-andrew-witty-review-R1.pdf

The Witty Report: A Role for Large Companies?

After 24 hours, I still believe that the Witty report is welcome and timely, focussing on the opportunities for growth that would be generated if the academic power of UK universities were even more effectively coupled to innovation and wealth creation in the private sector. The report is very perceptive, recognising I think all of the key issues including the “granularity” of business and academic activities, the special role of SMEs in driving innovation, and the challenges faced by government in determining the best strategies for effective deployment of precious resources to maximise benefits for the UK.  These challenges are significant, for example the relative immaturity of the LEPs, but they are not insurmountable and many of these new challenges have arisen precisely because of steady progress over the past decade.

One area of debate raised by Witty is the potential value of sectoral (and specifically regional sectoral) strengths that are mapped against available academic expertise, i.e. is it a good thing to invest tax payers money where University expertise is co-located with an innovative industrial base?  The easy answer is "yes", but I think Sir Andrew is correct to caution against this being seen as the only factor that should determine funding (not least because the greatest added value is often found with wider national or even international partnerships).  Does this mean that I think city regions and larger geographical clusters are a distraction?  No, I and Sir Andrew I think agree that regional strengths are often very important determinants of future growth potential.  One example of this is the tendency of established companies (and their supply chains) to gradually embed skills and knowledge in a region.  

My long experience of working with industry in the medical devices and health technologies sector, and the additional experience of coordinating an S&T mission to Texas and Minnesota to investigate the impact of converging technologies on medical devices, together confirm for me the value of geographical clusters.  In brief, one key reason for their importance is the creation of a regional community who populate all parts of the supply chain and who frequently interact for mutual benefit (the creation of LEP sectoral groups being a logical evolutionary step).  For example, in Minnesota I frequently met entrepreneurs and employees of local companies who had originally worked for - and been professionally developed by - Medtronic.  The same is true in Yorkshire, where many talented people in the medical devices and health technologies sector either work for or used to work for our large companies (such as Smith & Nephew and J&J Depuy Synthes).  Despite recent structural changes in many of our larger companies, their impact on the region remains significant, and the value of the experienced staff they generate should not be understated.  This is particularly true in the medical devices and health technology sector, where the supply chains are sophisticated and the regulatory environment is complex (and rarely fixed). I will say more about this tomorrow, and consider whether or not the Witty Report has underestimated the value of large companies versus SMEs in driving innovation and growth.

An evening with Sir Andrew Witty

I have been eagerly anticipating the release of the final report "Encouraging a British Invention Revolution: Sir Andrew Witty's Review of Universities and Growth" since the preliminary report came out in the summer.  Was I disappointed?  No, most definitely not.  This is a superb report, beautifully written (indeed, crafted), and where every sentence conveys precise meaning and insight.  Will it therefore be welcomed by all academic staff throughout the land? Probably not, but if it is understood by academic leaders and government then it will become the principal force that shapes our academic landscape over the next decade.  Over the next few weeks, I plan to critically evaluate the potential impact of this report on both my own academic discipline and health technology-based  businesses that include the UK's relatively mature medical device sector as well as emerging fields ranging from regenerative medicine to telehealth.  In the meantime, I urge all people with an interest in how universities can help to drive economic growth in the UK by partnership with business to read this report from Sir Andrew (link at the bottom of the blog).

While I am excited about the opportunities for academics to become even more involved in supporting industry, I am also aware that some of the recommendations are radical and will not necessarily be welcomed by all staff, at least not initially.  Of course universities already work extensively with the non-academic world including businesses, and through this and other activities we already make a substantial contribution to economic growth and recovery.  It is my opinion though that the thinking in the Witty report offers an even greater opportunity to harness the intellectual power of the UK academic base, generating benefits on an unimaginable scale while driving societal changes by establishing new ways of working in partnerships.

You can download the report here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/249720/bis-13-1241-encouraging-a-british-invention-revolution-andrew-witty-review-R1.pdf