Mr . Ian Cooper

1. Mr. 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

2. R&D Institute RestructuringInnovation & Competitiveness Practitioners Workshop 19-21 April 2004 • Ian Cooper • Deputy Director UK Water Research Centre • CEO British Hydromechanics Research Group • Advisor to World Bank Technology Projects in; Philippines, Chile, Mexico, Pakistan, India, Turkey, Mexico Director Operations The Royal Society

3. R&D Institute Restructuring • Why is it important? • International experience • What we are trying to achieve • What have we got to get right • Key steps in the transformation process • Results • Key lessons

4. Why is it important? • The role of science engineering & technology (set) in a modern economy • Scarce resources to be best used • Industry worldwide funding higher proportion of total spend on R&D • Governments worldwide funding lower proportion of total spend on R&D • But only as a part of a total package

5. Some statistics (OECD) • Industrial funding as % of total R&D spend: OECD average 20% increase in 5yrs, USA 33% in 5yrs • Government funding as % of total R&D spend: OECD average 16% reduction in 5 yrs, USA 23% in 5 yrs • Gross domestic expenditure on R&D (GERD) as % of GDP 2000: EU 1.89%, USA 2.72%, Turkey 0.64% • Number of researchers 2000: EU 971k, USA 1.26m, Turkey 23k • % of GERD financed by industry:1991-28%, 2001-45% • % of GERD financed by Government: 1991-70%, 2001- 47%

6. Where has this been done? • UK – RAs, DERA, NPL, AEA etc • Other European countries: FhG, TNO etc • Mexico: SEP CONACYT • Philippines: ITDI, MIRDC • Chile: CONACYT • China • India: CSIR • South Africa: CSIR • Australia: CSIRO • Turkey: MRC

7. What are we trying to achieve? • Make the best use of scarce resources (people and facilities) to promote economic growth • Ensure the relevance of research institutes in a modern economy • Provide scientific and technological support to local industry to assist in improving their competitive position • Sustain and improve the scientific and technological quality of research • Maintain high quality curiosity driven research

8. Typical problems prior to restructuring • Largely Government funded – focus on maintaining or increasing this source of funding • Generally a haven for the Country’s best technical talent • Not market orientated – expensive ‘toy’ for the scientific establishment • Many small projects aimed at ‘reinventing the wheel’ • Emphasis on R&D and not many other services • Antagonistic relationship with industry • Financially and commercially illiterate

9. What characterises a successful RI? • Identify their markets and potential clients • Are service orientated and have various ways, formal and informal of interacting with current and potential clients • Ensure quality of people and services match best international standards • Build feedback mechanisms with clients and technical community • Have client confidentiality and IPR policies • Innovative approaches to building new capabilities & learn from others • Renews its science and technology • Adopts best international practice for business processes • Financially and commercially aware

10. Government has an important role • Motivate the restructuring process • Ensure structures avoid bureaucracy • RIs need flexibility and autonomy (but with accountability) • Stimulate demand (especially for SMEs) • Provide relevant legal structures ( including IPR) • Provide policy framework • Provide support for strategic ‘blue skies’ R&D

11. What have we got to get right? • Reform is not partial – needs a clear vision • Essential that there is strong leadership and a competent core team • The reform works to meet demand • Well thought out business plan • Key business processes reformed: marketing, commercial, financial (MIS), project management, IPR exploitation • Key reforms undertaken: governance, quality systems, overhead reduction, training, HR policies, infrastructure renewal, legal

12. 8 steps in restructuring • Establish a sense of urgency • Form a powerful coalition • Create a clear vision and objectives • Communicate this vision • Empower others to act on the vision • Plan for and create short term wins • Consolidate improvements and produce still more change • Institutionalise the new approaches

13. The results • CSIR India – Prof Mashelkar – Economist article 3 April 2004 ‘Innovative India’ • CSIR South Africa: 4x increase in turnover/head in 7 years, 6x increase in number of patents filed over 4 years, 250% growth in contract research income in 6 years. • Many other examples

14. The results Turkey MRC • Self sufficiency ratio increased from 13% 1999 to 49% 2003 and 65% 2004 (target) • Contract income increased from 2002 to 2003 by $5.7m • Private sector income increased 200% 2001-2003 • Number of industrial services 1999–1800, 2003-7925 • Contract income/staff 1999-$4543, 2003-$17500 • Central admin costs reduced by $800k 2002-2003 • Research staff 52% of all staff 2000 will be 66% 2004 • Support staff 45% of all staff 2000 will be 33% 2004 • Scientific output increased: 317 publications 2001, 411 2003 • Set up technology park

15. Key Lessons - MRC • Strong leadership a key to success – clear vision • Time spent in business planning is not wasted –scenarios • Improve staff communication/involvement • Tackle the difficult operational, process, legal and HR issues early not late – if not they delay the transformation • Need a robust, simple to use and effective MIS early in the process • A strong PIU and change manager to coordinate the many parallel activities taking place • Learn from others – it has been done • It is difficult and will take time

16. 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

17. But also remember:the reward for success is very significant – for the Institute, for the researchers, for local industry and for the national economy

18. Mr. 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