Conference papers

Science Parks as an Instrument for Industry & University Technology Transfer

D.N.E. Rowe

Science Parks and their objectives
Despite the fact that virtually any Science Park Park visited will be founded and operated in a different way to any other Science Park visited there is suhstantial common ground between them. This is best encapsulated in the definition of a Science Park developed by the UK Science Park Association which says:

The term Science Park is used to describe a property based initiative which:

• Has forual and operational links with a University or other Higher Education Institution;
• Is designed to encourage the formation and growth of knowledge based businesses and other organisations normally resident on site;
• Has a management function which is actively engaged in the transfer of technology and business skills to the organisations on site.

It is the last of these three elements of the definition which this paper is going to concentrate on. It is one of the more significant elements distinguishing a Science Park from a pure property initiative.

The essence of a Science Park is to provide an environment which facilitates the interchange of resources, ideas, people and equipment between companies and a major research organisation, typically a University.

The Development of the UK Science Park Movement
In 1982, only five years ago, there were just two Science Parks: Heriot Watt and Cambridge. Between them they accommodated about 30 companies employing around 400 staff on site. As Table 1 shows, the growth in the Science Park movement since then has been dramatic. By December 1986 the number of operational Science Parks had risen to 28 with 412 tenant companies employing over 5300 staff This has involved a cumulative investment of over £92m in property for nearly 2 million square feet of space and a further £61m of investment has been earmarked for further accommodation on new and existing Science Parks over the next year or two. Science Parks are a growth industry in themselves!

A brief analysis of the companies on Science Parks (March,1986) shows that:

• 64% are single-site, small independent enterprises (Table 2)
• 82% have fewer than 16 employers (Table 3).
• 65% are 3 years old or less (Table 4).

However, despite the large number of young, small enterprises the failure rates amongst companies on Science Parks have been particularly low, just 2.8% in 1986, which is better than one-third of the average for company failures in this category nationally.

A major survey carried out by the UK Science Park Association~ with Peat Marwick during 1986 (Porter,1986) also showed that the companies on Science Parks have an impressive growth rate. During the year the 60 Science Park companies surveyed in detail showed an increase in staff employed of 80% compared to 28% growth for high technology firms not on Science Parks and an average fall of 1% of staff employed in small companies generally. The companies on Science Parks were also characterised by employing a high proportion of qualified scientists and engineers, 47%, compared to 33% in high technology firms generally.

Thus, it is not surprising to learn that the same survey discovered that companies on Science Parks devoted a high proportion of their turnover to research and development - higher than high technology firms generally. Furthermore, the Science Park companies are more likely to file patents (Table 5). (Weild/Quintas, 1986)

These characteristics provide a background which makes the reasons for such companies to establish themselves on Science Parks understandable. Table 6 confirms that companies on Science Parks use their University in a variety of ways and interviews with the Heads of over 100 Science Park companies solicited the view that they believe that moving onto a Science Park had significantly improved the environment for generating ideas for new products and services.

The University of Warwick Science Park
Development of the University of Warwick Science Park and its Tenants exemplifies well the general trends highlighted above and provides some useful case history material to illuminate and give form to the statistics.

The University of Warwick Science Park was established by the University together with Coventry City, Warwickshire County and the West Midlands County Council. These organisations assembled the land and infrastructure and set up the Science Park as a Company to manage and promote the site as a Science Park. The first project was an Incubator Building funded speculatively by Barclays Bank plc and now extending to nearly 40,000 sq ft at a total cost of £l.75m.

Of the first 18 companies taken into this building in early 1984, 13 have moved into larger space and 5 of these have expanded out of the Incubator Building altogether into much larger premises in other buildings on the Science Park. Coventry City Council and the now abolished West Midlands County Council invested over £1 m each in larger units on the Science Park to accommodate this growth. From the opening of our first building in February 1984, the Science Park now has over 150,000 sq ft of built space with a further 70,000 sq ft in planning to accommodate 38 resident companies with more waiting in the wings to join as soon as additional premises can be built.

The companies range from international majors such as Westinghouse, Computervision, Olivetti and Coopers & Lybrand to many new start ups.

The Companies working with the University at Warwick
Whether large or small the companies on the Science Park are establishing a wide range of relationships with the University. However, there is a contrast between the nature of interactions of the smaller companies on the Science Park and the University and the interactions of the larger companies. Not surprisingly, the smaller companies with their relatively low turnover and profits do not have the capability to sustain large joint projects - but they get a considerable amount of benefit nevertheless.

Frank Grunfeld, the Managing Director of Nima Technology illustrates this point well. Nima Technology is in the laboratory equipment business supplying apparatus for making thin films by Langmuir-Blodgett techniques to laboratories involved in chemicals and materials research. Frank Grunfeld is a Warwick Graduate and although he learned his thin-film technology at the City University undertaking a PHD, he decided to set up his Company at Warwick where he also had contacts in the Physics, Engineering and Chemistry Departments. A small multi disciplinary team of academics in the University was just starting work on an application of thin films at the time Nima was set up and this gave the Company the opportunity to make their first all important sale. This particular sale enabled Nima to obtain a considerable amount of collaborative feed-back from a sympathetic and supportive customer. The following year Nima sponsored two Engineering students' third year projects in which the students had to come up with electronic answers to replace manual and electro-mechanical controls. One of the projects was highly successful and Nima refined the technology and incorporated it in the latest versions of their equipment. The student receives a Royalty on sales. This year, Nima is sponsoring further projects with the aim of developing applications of their equipment. Nima is now successfully selling their equipment throughout the UK and in Germany, Eire and Japan.

The second case study by contrast involves a substantial international company - Automatix International Limited - a US Company by origin who established their Euoprean headquarters on the Science Park in 1984. The Company is involved in machine vision systems which it develops and supplies to many sectors of industry, particularly the automotive industry, but also to such process oriented industries as the food and drink sector and chemical industries.

Automatix was born from technological ideas developed at MIT and when they moved into Europe the Company looked for somewhere where they could obtain relevant technical support. David West, the Managing Director of Automatix International, put it this way: "It was essential that we should find a University that was industrially aware and had their feet on the ground - so far as I was concerned the chemistry at Warwick was right, so we moved into the Science Park there."

The Company has sponsored several large research and development projects with the University over the past 3 years. During 1986 the Company took on the daunting task of developing an automated vision system to measure to within 0.lmm the body shell of the new Rover 800 series car. It was the first time this had ever been attempted as an "in-line" process for every vehicle on a track and Automatix are generous with the acclaim they give to the University for their part in helping the company to establish the technology as a fully operational £0.5m installation at Cowley early in 1987.

For both Nima and Automatix their relationships with the University are important to them and the nature and extent of that relationship would not exist if the Companies were geographically remote from the University. They have both built the benefits out of regular contact which has resulted in new ideas which have been exploited collaboratively to produce new products and new business.

The Science Park Dimensions in University Industry Technology Transfer relationships
There is no doubt that a Science Park can provide a special mechanism for technology transfer between companies and a University, but that does not mean that a University should restrict this relationships to those companies it can attract to its Science Park. In the UK it is a well known fact that 80% of industrial R & D is performed by about 50 companies. It is also a fact that these companies are not, in general to be seen on UK Science Parks - although it is interesting to note that GEC has now announce a £10 million R & D complex to be located on the Cambridge Science Park.

However, it must be in the interests of the large R & D spending companies to maintain long term working relationships with Universities. Indeed, the University of Warwick, like many good Universities had developed powerful links with the R & D departments of most of the larger R & D company laboratories in the UK long before it established a Science Park. Now that the university has a Science Park those same links continue.

Thus, a Science Park is but one element in a University strategy for diversifying and strengthening its relationships with the industrial and commercial sector. The particular ways in which a Science Park can strengthen these ties include:

• University academics can multiply the technological input they can offer their major company collaborators by attracting a range of high technology companies onto the Science Park who can work with them in creating the increasingly complex technology needs of major companies.
• It can facilitate an interchanqe with the smaller technology based companies, like Nima, who have yet to reach the big R & D league.
• It can provide a medium for academic staff who want to commercialise their ideas either by them selves or in partnership with a company. Science Parks have a particularly strong enterprise culture amongst their companys and this affords a valuable commercial input into academic spinout businesses.
• The proximity between University and company means that the wide range of University facilities and resources can be made available to the onsite companies on a regular basis. This type of interaction becomes impractical as soon as a geographical displacement occurs.

Universities are also involved in many other programmes designed to bring them closer to the needs of industry. For example, new types of post-experience training or retraining are being developed by institutes of higher education which are tailored to the needs of individual companies.

These courses are not linked to degree programmes and can range from a few hours of awareness and appreciation 1 through to activities designed to give hands on experience of the new technologies to more extensive modular courses leading to some form of qualification.similarly, government and company sponsored teaching company schemes are enabling university R & D teams to work inside industry and in harness with industry, on real problems identified by the companies themselves. These and other initiatives are growing rapidly alongside the more traditional technology transfer mechanism of consultancy and contract research.

Therefore, from a University viewpoint a Science Park needs to be seen in the context of a broadly based strategy of becoming more closely involved with the needs of industry with the Science Park serving as just one dimension in the undoubtedly complex process of technology transfer.

Science Parks Offer New Opportunities To Larger Companies
The long standing consultancy and contract research relationships that many UK R & D majors have with Universities are frequently put forward as the reasons that they do not need to become involved with University Science Parks. Furthermore, they argue that they do not want to be tied to one university by locating on a Science Park and in addition they have more space in their existing premises than they know what to do with. Therefore, they conclude that Science Parks have little or no interest for them. As indicated above this line of argument entirely misses the point and in addition is depriving larger companies from receiving two further important benefits.

Firstly, the Science Park represents an ideal medium for a larger company to set up new project teams geared to technological products or services. By selecting a Science Park linked to a university with the appropriate skills, the in-house expertise of the company team can be considerably enhanced. Furthermore, Science Parks have very positive enterprise cultures and can be an ideal proving ground for a company to develop its best entrepreneurial managers. This same manager, kept within the corporate culture of its headquarter or plant facilities will have all the constraints of corporate procedures which are undoubtedly essential to running a large business but which can stifle a new project and give the project manager far to many excuses for failure. In addition, because of the challenging environment of a Science Park backed by buildings and landscaping which people like to work in, and a University which adds campus life dimensions, they are places which can attract and hold the most able staff. This is often a critical asset for any technology based initiative.

Secondly, and even more significantly, many larger companies are failing to see the potential of small companies on Science Parks for adding a new dimension to their research and development strategies. Acquisitions and mergers appear to be ever more popular in the corporate sector and some argue that larger corporations should take stakes in smaller high technology growth companies as a means of diversification etc. Personally, I suspect this may be the wrong starting point. Most of the small companies on Science Parks are far too small to be seriously considered for their acquisition potential. Even with super-growth few of these companies could ever come to represent a meaningful fraction of a large company's turnover and profitability on any relevant timescale. Indeed, the recent history of acquisitions by major companies such as BTR and Hanson shows that, in general, these acquisitions need to be increasingly large if they are to benefit the company's financial performance.

However, there is a case for looking at some of the smaller concerns typically found on a Science Park as a part of a Research and Development strategy. The level of resources that would need to be committed to investment, and the timescales for obtaining a return are far more relevant to research and development than they are to creating short term asset value. If a company's research and development department identifies the areas for such investments and becomes involved in the investee companies they can extend and deepen their own involvement in the technology but perhaps more importantly they will come into direct contact with the market for the technology. A major strength of small high technology firms is the absolute priority they have for identifying and, if necessary, creating the markets for their products and services. This sharp end market knowledge can be an invaluable input to any company's R & D strategy, identifying where and how the market will mature and how best the large company might enter the market. From the statistics presented earlier in Tables 5 and 6, it is clear that Science Park companies tend to be more leading edge than most and in many cases they would also have much to gain from partnership with a larger company.

A few major companies have clearly identified this opportunity, but regrettably most of them are not UK companies. In a recent paper, Dr Arnaldo Pasini a former Vice President of Research and Development for Olivetti said:

"Olivetti has made substantial investments in small high technology companies with a view to acquiring extended R & D capabilities. So far the experience in our 35 investee companies has been largely positive. Failure rates have been low and from a purely financial viewpoint there has been a very positive paper gain from the investments. In addition, there is the future flow of technology back into Olivetti, where Olivetti, like other companies, would not be able to start R & D programmes in all the areas. So, in fact, the key factor prompting this involvement in small companies has not been internal finance, nor insensitivities to new areas of development, but rather it is the fact that setting up new research groups in a large company is a rather slow process - and we have wanted to leapfrog that bottle neck and go ahead much more rapidly.

I suggest that this is a highly positive basis for major UK research and technology led companies to become more involved with Science Parks. t is not essential that they become Tenants as such, but by working with Science Park managements they could ascertain whether there are companies with technology of interest to them and by becoming involved with selected companies they could strengthen their own futures and hopefully that of the smaller company at the same time.

References

(1) Charles Monck, Science Park Tenants and Their Growth in Science Parks and the Growth of Technology Based Enterprises - Proceedings of the UKSPA/Peat Marwicks Conference, December 1986 Published by UKSPA.

(2) R. B. Porter, Management and Development Issues For Science Park Companies, ibid.

(3) D. Wield, P Quintas, The Technological Relevance of Science Parks, ibid.

DNER
April 1987

Table 1

Source - UKSPA

Table 2

Source - UKSPA/Peat Marwick

Table 3

Source - UKSPA/Peat Marwick

Table 4

Source - UKSPA/Peat Marwick

Table 5

Table 6