Christopher John-Hull, Secretary General, European Association of Research and Technology Organisations

 

EARTO assists around 350 RTO s to make best use of R&D funding opportunities to improve quality of life and increase economic competitiveness in Europe. Christopher John Hull, Secretary General, introduces how these organisations work and the challenges they will have to adapt to in the coming years

 

The term ‘Research and Technology Organisations’ is relatively new, but the kind of organisations to which it refers generally dates back to the World War II period. The term was invented when the European Association of Research and Technology Organisations (EARTO ) was formed in 1999. The founding organisations knew they had something distinctive in common, but there was no agreed name: some called themselves ‘contract research organisations’, others used the label ‘public research organisations’, a few were ‘industrial research centres’, and still others billed themselves as ‘technology centres’. They tended to define themselves in terms of what they were not: universities or scientific research organisations.

EARTO was created to put Research and Technology Organisations (RTO s) on the map – to create and promote this category of organisations which are important players on the European R&D landscape. They account for almost one-third of EU Framework Programme (FP) funding, and often coordinate complex FP projects. Together they turn over about €23 billion annually and have an economic impact of upwards of €40 billion per year, according to the Technopolis Group.

EARTO defines RTO s as organisations which as their predominant activity provide research and development, technology and innovation services to enterprises, governments and other clients. RTO s see themselves as linking the knowledge base in universities and elsewhere with the needs of the economy and society.

The great majority of RTO s have a publicly-sanctioned mission to support economic competitiveness and to help their home government to address major issues of the day whenever technology can be part of the solution. Few of them are directly or entirely owned by government, but practically all receive some element of public core funding to help them develop and sustain the competence which is the foundation of the technology and innovation services which they provide. Where these services benefit individual customers, they are charged at commercial rates, with surpluses being reinvested in the organisation.

RTOs in an Ever-Changing World

To stay at the forefront of scientific and technological developments for business and society, RTO s need to continually adapt their strategy and organisation. Many RTO s have changed beyond all recognition over the past 25 years. The Dutch research organisation TNO, for example, was essentially a collection of sector-facing research centres in the 1980s, rather similar to the old UK Industrial Research Associations. Today, after several mutations in the intervening years, TNO focuses its research on seven societal themes, from healthy living and the environment to defence and transport, and each is operated as a separate business.

Looking to the Future

In order to think about what RTO s may look like in 25 years time, the most appropriate frame of reference is perhaps National Innovation Systems (NIS) – recognising that they are likely to become increasingly International Innovation Systems – which may be defined as a set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process. As such, it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artefacts which define new technologies.

Perhaps the best illustration of the interaction between NIS and RTO s is Finland, which is considered by some to have among the best NIS worldwide. The consequence of this systematic and systemic approach to promoting and supporting innovation is that roughly every five years there is a fundamental review and rethink about what needs to be done to further boost innovation and, concomitantly, who should be doing what. That means that the positioning and role of an organisation like VTT, the major RTO in Finland, is periodically changed. In the latest shift, VTT is being challenged to refocus, and to adapt its service offerings, from science and technology to innovation. This means adopting a still stronger market-led approach, and increasing engagement with industry, even to the point of including, for example, market foresight and business modelling into the services offered to firms.

Moreover, it may seem paradoxical that just a few years after the creation of a European Research Council dedicated to curiosity-driven research we may be witnessing a shift in policy practice towards a more instrumental approach to research: what has been termed Mode 2 research – context-driven, problem-focused and interdisciplinary research in which multidisciplinary teams come together for short periods to work on specific real-world problems. The proposed new EU Horizon 2020 programme, with its predominant focus on building and sustaining industrial leadership and tackling societal grand challenges, is a case in point. This suggests an enhanced role for RTO s, as Mode 2 research is central to their mission.

Four Challenges for RTOs in the Years Ahead

If there is a shift in policy practice, it is accompanied by an equal shift from research to innovation: what counts is not the new knowledge as such, but its operational, value-adding application. Research and technology often help to generate innovation but on the whole, innovation involves much more. One of the challenges for RTO s in the coming years will be to reconfigure their service offerings into more holistic innovation-focused packages. It does not seem plausible that RTO s (or anybody else) can become all-purpose innovation support organisations. However, they can – and do – ally themselves with others to form innovation service clusters – eg. with investors, business strategists, design consultants, intellectual property experts – offering together a broader, complementary range of services. As the example of VTT shows, however, some RTO s may integrate business services into their portfolio; one could also cite the example of Germany’s Fraunhofer Institute, which has considerable expertise in business organisation.

Open innovation practices are a second, and related, challenge for RTO s. Open innovation is arguably both a threat and an opportunity. It is a threat inasmuch as firms are likely today to seek technology from other firms – something that two decades ago they would probably have done less willingly – or from universities or other sources. Today, firms which once were long-term RTO customers can no longer be expected to return more or less automatically for repeat business.

But the shift to innovation also opens up new opportunities for RTO s. The challenge of innovation ecosystems, and of open innovation, is to be able to identify and pull together all of the relevant pieces. There is a need for ‘spiders in the web’ – organisations that can search out and bundle together disparate service offerings of complementary value to a particular client. This is essentially an extension of RTO s’ traditional role of linking the knowledge base with the needs of government and the economy.

Globalisation is a third challenge. When traditional nationally-based customer firms locate facilities abroad, they often source their research and technology needs there, too. Europe can no longer claim the supremacy in knowledge production that it could 50 years ago. Excellent and relevant science and technology are now to be found everywhere. Often, though, firms will invite a trusted RTO to co-locate with them abroad to help manage, quality-control and integrate local research and technology inputs. Beyond that, there is a challenge for RTO s to locate abroad in order to engage with the world-class companies operating there: working with the best is the best way to be the best! Finally, there is a tendency to think of globalisation as a one-way street whereby Europe’s firms locate in emerging countries, with no countervailing trend. But as firms in those countries mature, and increase their trade with Europe, it seems probable that they may well seek out innovation inputs from Europe so as to increase the attractiveness of their products for European customers. European RTO s could well benefit from such a development.

A fourth challenge is the future role of universities, or tertiary education institutions more generally, as providers of research and innovation services akin to those offered by RTO s. Some countries have actively encouraged their universities to develop in this direction: the UK is a case in point. Others have declared that it should happen, but have been less successful, as in Sweden, for example. The difference lies perhaps in the attitudes of academics and the incentives offered to them: in the UK, a period of public austerity encouraged university personnel to seek income from other sources; in Sweden, academics remained more wedded to the traditional incentives of scientific publication and academic-career promotion.

One can ask to what extent universities can realistically balance the different demands of academic education and research, on one hand, and more applied research and technological development for external customers, on the other. It is, quite clearly, not impossible; engineering-based universities and faculties have some considerable experience of doing this. What we may see in the future is a further extension of the Fraunhofer-type model in which an RTO is ‘docked’ onto a university faculty, with the director of the Fraunhofer Institute simultaneously occupying a faculty chair. The model clearly works well, keeping the university and RTO functions separate, but organically linked, and offering interesting possibilities for postgraduate students at the university to do practice-orientated PhDs. The Catapult centres being created in the UK do not follow quite the same model, but there may well come to be strong similarities as they develop.

Staying Agile to Stay Ahead

RTO s have proven themselves to be adaptive to change. In a sense, they have no choice: because their revenues depend in significant part on selling services to industrial and other customers, either they adapt or they go under. In addition, most of them operate in NIS and are subject to periodic review and often made to re-position themselves in line with changed circumstances. It is an on-going but rewarding challenge, and will no doubt continue to be so.

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