Any old R&D just won’t do

There is plenty of debate on how we use the R&D resources that we have in the UK, and whether there should be a common strategy to promote research. But this process is to a large extent back to front with respect to generating value. The real question is

From a businessman’s point of view, the country needs first-class companies with first-class products, and the ability to manage R&D as a means of generating profit.

Bringing more R&D into the system is an expensive and rather less effective answer to the problem. The most rewarding R&D is the product of an appropriately market-led business process. This is what we need to generate more of in the UK.

R&D is expensive, and must be managed cost effectively. The cost of badly managed R&D overruns rapidly, and key engineers are demotivated, leading to serious waste and lost opportunities.

Where should R&D be done? Essential technology should be nurtured in real centres of excellence, preferably in-house, even though this is expensive and difficult to sustain.

The next alternative is within or close to universities. It is a university’s role to teach and maintain excellent centres of knowledge. We can tap into their knowledge, and correspondingly feed the sustenance of more knowledge.

The Government’s support of ideas to bring together universities and industry is well-intentioned, but government-led bureaucracy does little to help industry/university relationships. Sadly, EU funding tends towards this direction.

R&D should not be done in customer laboratories. The common problem is wasteful competition between such laboratories and those of the supplier. For a government customer which cannot find appropriate expertise, it is much better to nurture a supplier, as is done in industry.

There is an important emphasis nationally on smaller companies, and their ability to develop high technology rapidly.

At the other end of the scale, with globalised companies, the role of innovation is much increased. They do not stay ahead for long, and can easily be left behind.

From an investor’s point of view, it should be the results of R&D, and the effectiveness of its management, that is recognised in a premium value for the company. If companies are fairly open about their medium-term strategies and policies for new products and R&D, the City is increasingly prepared to take this into account.

Alan Jones is chief executive of BICC and formerly chief executive and chairman of Westland. This is an edited version of a presentation given at the Royal Academy of Engineering