This is the sixth in a series of blogs on the UK Industrial Strategy Green Paper published recently by the UK Government. In Blog #5 we articulated the importance of filling the funding gap around Chasm II and account for changes to the expected funding mix throughout the commercialisation journey.
This blog addresses questions 10, 11, 12 and 13 posed in the Green Paper:
10. Where you identified barriers in response to Question 7 which relate to RDI and technology adoption and diffusion, what UK government policy solutions could best address these?
11. What are the barriers to R&D commercialisation that the UK government should be considering?
12. How can the UK government best use data to support the delivery of the Industrial Strategy?
13. What challenges or barriers to sharing or accessing data could the UK government remove to help improve business operations and decision-making?
The UK has a very strong research base across a wide range of technologies, underpinned by world leading universities. The funding and guidance provided by UKRI (and it’s component funding agencies) is a critical component of this capability in science and technology innovation.
As recognised by virtually all stakeholders, the challenge for the UK lies in commercialising this capability to deliver economic growth and overall societal impact. Tackling this ‘translation’ gap requires a much better understanding of how science and technology-enabled innovation can be converted to create new products, services and businesses.
As discussed previously in Blog #2, the Triple Chasm Model provides the only rigorous data-driven model which addresses this challenge explicitly. This structured approach to understanding commercialisation is based on three critical components:
- Defining the maturity of any concept, proposition, or technology based on understanding the 3 chasms on the growth journey coupled with the more precise metric of Commercialisation Readiness Level (CRL).
- Defining the drivers of growth, based on the definition of 12 main Vectors (with associated sub-vectors and attributes.
- Combining the maturity metric with the growth Vectors to define the Commercialisation Journey for any innovation, which highlights the fact that the translation drivers change when crossing each of the 3 Chasms.
Although this translation gap is now widely recognised as the critical challenge, current orthodoxy, which in turn drives policy decisions and resource allocation still largely reflects a binary view of this challenge: funding of science and technology innovation led largely by the state will lead to adoption by markets where the state should avoid any intervention in order to avoid market disruption. In this view, the state should only intervene in the event of ‘market failure’, which is viewed differently around the world depending on the strategic stakes. In this simplified view of how commercialisation works, Venture Capital should fund the critical translation activities around Chasm II. As we discuss in Blog #5, this is very rarely the case.
Typical Commercialisation Journey
While this challenge is the same in all countries, the fast-growing economies in China and India have chosen to provide much more integrated support, and even in the US, the IRA legislation enables interventions around Chasm II (although the incoming Trump Administration may change this).
In the UK, so far, there has been a strong adherence to this model with most funding for science and technology innovation via UKRI focused around CRL=0-3. For a brief period, the Technology Strategy Board looked towards Chasm II, but once it was incorporated into UKRI as the 9th Agency and re-named Innovate UK, the focus returned to earlier stages of innovation. As a result, we see a major gap in supporting translation across Chasm II in the UK which needs fixing. This has also resulted in the rapid growth of incubators and accelerators which largely focus on the Chasm I challenge and stop well short of tackling Chasm II, although there are a few interventions, particularly in healthcare, trying to tackle this.
The UK Commercialisation Landscape
Probably the most obvious systemic solution to this problem is to separate Innovate UK from the UKRI research focus, and re-cast it as The Commercialisation Agency with a fresh mandate to drive growth.
This re-shaping of the intervention strategy should be accompanied by fresh thinking about this difficult area is funded. The binary model is not working, and as discussed in Blog #5, the way that Venture Capital is set up to work means that, despite the best of intentions, funding choices will be driven purely by financial return criteria, not national strategic considerations (which we discussed in Blogs #3, #4 when we discussed UK priorities in markets and technologies).
The thinking around ‘crowding-in’ investment is the right way to approach this in overall terms, but the conditions governing how this works need to be spelt out clearly, perhaps managed via a new asset class, where national strategic priorities are balanced against the needs of private capital. This could enable new types of interventions to tackle Chasm II, for example the proposed National Centre for Commercialisation in Lifesciences, which could lead in the development of new healthcare solutions with long-term impact (rather than short-term returns on investment).
Given the need to change mind-sets and ensure that state investment is properly managed, we need better criteria to understand and define intervention impact. The Triple Chasm Model improves innovation success by addressing intermediate level economic drivers and mapping commercialisation journeys. It bridges theory and practice, offering data-driven frameworks for scaling impactful solutions.
The current ‘impact metrics’ actually measure a limited number of variables and also tend to reflect inputs not outputs. The typical measures promoted by funding agencies describe funds raised, for example R&D spend as a % of GDP (an input measure) or number of jobs created. Additionally, some metrics look at the overall success of programme delivery based on the metrics, but not the actual value-added to the companies supported. We need a more rigorous measurement based on the differential impact of any intervention. This will also require government agencies to define, collect and analyse data metrics designed to enable policies to be developed, executed and monitored more explicitly. Impact measurement requires systematic approaches across policy, resource allocation, and intervention management. Challenges include ideological divides, inadequate resource granularity, and an overreliance on financial metrics. An intermediate level economic model enables a more precise assessment, considering sustainability, market dynamics, and broader value creation beyond conventional success measures.
Key takeaway from this Blog:
The UK government should establish a set of Centres for Commercialisation for the key market spaces focused on supporting Chasm II transitions and track their effectiveness by measuring their impact with output related metrics.