Job Creation Through the Commercialisation of Science: the Challenge Ahead

Since the early 1980s, a rich body of experience has developed in Western Europe, and not least in Britain, as to how best to translate scientific advances into successful business ventures. In CNCP we have taken this experience and tried to adapt it to the conditions which apply in the Former Soviet Union.

The systems which support commercialisation in developed market economy countries are the result of trial and error, transfer of best practice and exchange of experience between different regions and states. An enormous amount of information about these systems has been made available on the Internet by organisations such as the European Union and the OECD. While governments have played an important part in encouraging these developments, the outcome is not a hierarchical structure, but rather a flexible network of private and public sector partners, which interact and complement each other. In the midst of this rich diversity certain key factors are common to virtually all successful science commercialisation systems.

While commercialisation does not necessarily involve patented intellectual property, an effective system of intellectual property rights protection is essential for the development of a knowledge-based economy. The first requirement is an appropriate framework of legislation and regulation which safeguards inventors’ rights and allocates ownership and responsibility for the management of intellectual property appropriately. This will enable the owner of the intellectual property to establish rules for distributing the benefits of commercialisation (such as shares or income from licensing) between inventors, investors and the institute or university. A system of enforcement which is transparent, affordable, and trustworthy is also essential.

In the United States, and later in Britain, legislation which allowed inventors, and their employers, to benefit financially from the commercialisation of the results of state funded research marked a turning point in the development of an effective science commercialisation system. The British Ministry of Defence biological research establishment at Porton Down (which CNCP has visited on a number of occasions), has a formal system which defines which inventions should be protected and rewards the scientists concerned with cash payments at each of a series of stages through to full commercialisation. Once a spin-out business is set up, ownership is divided between the research establishment, the scientific team involved, and the commercialisation unit. As the company develops and outside investors are brought in, the original shareholdings are diluted, but if the company is successful, the total value of each shareholding may grow considerably, providing a strong incentive for scientists to put forward new ideas for possible commercialisation.

In Europe, the development of a core of commercialisation specialists has played a key part in the development of the knowledge economy. This process has been supported by educational opportunities for young people wanting to become involved. These developments have helped to bridge the gap between research and the world of business and to provide professionals to work in development agencies and commercialisation units. Equally important is a recognition that, while they can play a crucial role as directors or technical advisers, scientists generally do not make good managers. Finding people with real business experience to lead new science-based companies is more difficult in the Former Soviet Union than in Western Europe, but will often be crucial to the survival and success of the ventures concerned.

Generally it is difficult for outsiders to build relationships of trust with leading scientists in research establishments. For that reason, special internal units have been developed for this purpose within universities and research institutes. These act as intermediaries between scientists and the business community and assist the process of turning discoveries into saleable products and services. In Britain, a network of such units has developed which now encompasses virtually all of the leading universities and research establishments. The commercialisation teams in Oxford University, Manchester University and the Rutherford Appleton Physics Laboratory are among the best known. In the case of Oxford, the average number of companies spinning out from laboratories in the university rose from around one a year to about six a year following the establishment of the university’s own commercialisation team, with a similar rise in intellectual property licensing deals. CNCP has supported the development of commercialisation units in KIPT, Kharkhov, INP, Tashkent and several other partner institutes to carry out this role. Finding a sustainable basis for the work of these units after 2012 will be very important in determining the longer term impact of the Programme in terms of good quality, knowledge-based, jobs.

Access to adequate material resources is vital in the early stages of commercialisation. International experience suggests a measure of public funding, whether grants or soft loans, can play a key part. In developed market economies this naturally leads on to equity funding, with venture capital providing a source of finance for promising companies which is cheap in the early stages. Public funding needs to be used, wherever possible, to lever in investment from the enterprise sector. In Britain, the Rainbow Fund helps knowledge-based startup businesses through the difficult early years when money is needed for equipment and wages, but sales are not yet generating sufficient income. Hitherto, CNCP grants have addressed this need among the nuclear establishments participating in the Programme. New sources of funding for start up projects in former Soviet research institutions are now urgently needed.

Successful commercialisation depends crucially on the extent to which scientists, technologists, business people and financiers from a wide range of enterprises and organisations become engaged and interact between themselves. This is particularly important for business development involving former weapons establishments, because of the extent to which they have historically been isolated from commerce and, in particular, from potential partners in other parts of the world. Supporting the development of networking has been an important part of the work of CNCP over recent years with a growing emphasis being put on nurturing commercial relationships which can become self sustaining. Encouraging the continuation of this effort will be an important challenge over the coming months.

The challenge ahead

In drawing on international experience and developing with its partners a system which is appropriate for the former Soviet nuclear weapons sectors, CNCP has acted as midwife for a model of commercialisation which is both unique and potentially important for the future. In so doing, it has taken on roles (providing advice and funding and encouraging networking), which in developed market economy countries are supported by local, regional or national bodies. As the Programme approaches its conclusion in 2012, it is becoming increasingly important that we do whatever we can to ensure that the experience embodied within the CNCP model is passed on; that the key services involved are taken up by other agencies; and that those responsible for turning scientific discoveries into jobs, stability, and national prosperity learn from, and build upon, what CNCP has helped to achieve.

Patrick Gray, HTSPE Ltd.
CNCP Programme Leader

[Print version] 

webmaster@cncp.ru