Scientists need to be entrepreneurs

Fairfax Media

THE BUSINESS OF SCIENCE: Kiwi science and innovation is excellent, but the business of science and innovation is not.

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OPINION: Kiwi science and innovation is excellent, but the business of science and innovation is not.

In the past 10 years taxpayers have invested about $10 billion in Research Science & Technology.

It's time to ensure we get a much bigger return on the next $10 billion invested - by encouraging scientists to become entrepreneurial, reducing the level of competitive funding, and making tax- funded R&D organisations accountable for increasing entrepreneurial behaviour.

The changes required are significant, but not extensive.

The most obvious sector to examine first is the public sector where taxpayer money is used directly. Crown research institutes represent about half the money spent in the public sector. Matters to be dealt with include:

* Inappropriate application of conventional business strategy to research and development (R & D); the need to build mature science/industry relationships and to develop scientists' business capabilities.

* The true cost of the competitive funding system.

* A culture that focuses on compliance and contracts to the detriment of entrepreneurship.

Conventional business strategy and practice is based on the principle that performance relies on focus on the core business. Thus, a business might have 10 per cent or even 20 per cent of its expenses invested in R & D to support the core business (80 per cent of the operation).

CRIs are not conventional businesses in which there is a core business that drives R & D.

In CRIs R & D drives the business. Applying conventional business strategy to highly unconventional 100 per cent R & D operations has led New Zealand down the path of creating separate CRIs with separate "core" research functions, and restricting funding to projects deemed to fit the strategic "focus" of each institute.

This approach has been replicated within the CRI structures so that highly creative scientists are put into scientific silos, making multidisciplinary collaboration more difficult than the competitive funding system already makes it, and reducing their ability to develop commercial opportunities.

The path from R & D to wealth - financial or social - is virtually impossible to predict. That means CRIs have to be encouraged to adopt an entrepreneurial, rather than a conventional, business approach.

This does not preclude strategic planning and disciplined processes, but it does mean supporting ideas and opportunities that are likely to generate commercial revenue whether or not they fit the CRI's science "focus". With time and money any worthwhile project can be aligned with strategy - even by sale to another CRI or business if necessary.

The nature of the relationship between New Zealand R & D and business is immature.

It will not improve until CRI scientists are made to feel part of the decision-making process about their work - from the decision to apply for funding to the allocation of resources when a proposal is funded.

Opportunities to invest in on-the-job business training for scientists could have significant payoffs.

At present the tension be tween patenting and publishing is biased against scientists' in terests to gain peer recognition - by the delay and sometimes inability to publish - all in return for an uncertain commercial gain.

The scales could be balanced by an entrepreneurial approach recognising that some of the most successful innovation companies worldwide have been led by scientists- turned-entrepreneurs.

Businesspeople are unlikely to become scientists, but scientists can become businesspeople.

Therefore business managers should mentor scientists to take greater control and motivate them to learn to make business judgments over their own work.

Another problem is that the fundamental plank of the Upton science reforms was to use competition to improve RS&T performance. The reforms have caused several problems, including the following three:

* First, a funding system which peer reviews our most intelligent, creative, motivated and over peer-reviewed people and then "fails" more than 75 per cent of their proposals because of insufficient research funds is bad for morale, and makes science an unattractive profession.

* Second, competition discourages collaboration and sharing, a vital requirement for R &D, and even more vital in a tiny country like New Zealand.

* And third, the overheads of servicing a competitive $476 million funding system are too high. The relatively modest $17 million cost of the Foundation for Research, Science and Technology is the "tip of the iceberg". Other overheads include the time spent by our best scientists writing proposals doomed to fail, and the continuing cost of lack of collaboration.

The solution is to significantly unwind the Upton competitive funding processes and replace them with performance measures that don't penalise our best resource - our creative scientists and the youngsters we should be motivating.

CRIs have a tough task - they must comply with private sector laws as well as demanding public accountability requirements that come with spending taxpayer dollars. The logical response has been to rely on "red tape" and structures that help meet compliance needs but work against successful entrepreneurial activity and risks overall commercialisation failure.

For example, heavy reliance on legal contracts to form the basis of business partnerships especially at an early stage dampens innovation and the motivation to take risk just at a point when it is most needed.

The irony is that risks associated with lack of compliance have become more important than risks associated with underperformance in R & D commercialisation.

New Zealand science and innovation is excellent, but the business of science and innovation is not.

The changes required to improve the business of doing research in New Zealand are significant, but not extensive.

For example, consideration should be given to introducing: entrepreneurial measures to monitor CRIs; measures to relax the focus on science sectors and to increase the focus on financial or social returns; business training and mentoring for scientists.

It would also be helpful to establish the real costs of competitive tendering for research funding, as well as to examine business practices of research organisations and how these impact on both internal scientific relationships and external business relationships.

* Godfrey Bridger is a business consultant, Foundation for Research, Science and Technology reviewer and a former Crown Research Institute science manager.