Crossing the Valley of Death: Delivering Innovative Solutions to Security Needs

 By Dr Tristram Riley-Smith

Two reports, the RUSI and RAND reports, have recently addressed the challenge of harnessing R&D to deliver innovative solutions to defence and security needs.

The UK is an intellectual powerhouse. With 0.9% of the world’s population, we generate 15.9% of the world’s most highly cited scientific papers. But we fail to turn this world-class science into wealth-generating products and services. Not only has gross expenditure on R&D as a percentage of GDP been in decline since 1985 (falling from 2.1% to 1.7%), but there is a deeper malaise in Britain that fails to capitalise on the potential within the nation’s research base:

• Since the thirties, commentators have observed a failure in the market for financial resources to help early-stage companies cross the “Valley-of-Death”. In 2007, statistics show that most Venture Capital Funds in the UK focussed on safer, later-stage investments, with less than 1.8% of  total outlay  being spent on early-stage technology companies;
• Cultural and systemic obstacles are to be found in rigid government procurement systems and engrained mistrust between civil servants, venture capitalists, industrialists, entrepreneurs and researchers.

The good news is the stars appear to be aligning as increasing efforts are made to address this problem:

• Government is looking to transform its procurement processes, with the new Contracts Finder website designed to assist SMEs.
• There are new platforms for technology transition, including the Catapult Centres, Scotland’s Innovation Centres and the Security Innovation Demonstration Centre.
• Initiatives like the Rainbow Seed Fund, the Angel Co-Fund, the UK Trade and Investment Innovation Gateway and the new European Union Horizon 2020 SME instrument are helping to address market failures.
• GCHQ and the CPNI have established a number of cybersecurity research institutes.
• In line with these efforts, our Partnership has recently launched an Academic Marketplace in collaboration with RISC, where researchers can showcase their work to the security and intelligence sector and engage with industry partners to help them ‘cross the Valley of Death’.

The RAND and RUSI reports contribute to the momentum. But we all need to make small changes to alter the way that different cultural components engage with one another. I have two recommendations:

• Use intermediaries to establish effective partnerships, build trust and exchange knowledge. For instance, the Defense Venture Catalyst set up in the Pentagon runs a network of almost 30 Venture Capitalist Funding Managers who act as scouts for new investments. In the UK, MRCT helps prepare early stage medical research for the market
• Look for the low-hanging fruit; a distinctive feature of In-Q-Tel – examined in the RUSI paper – is its focus on de-risked technologies developed for other markets.

In order to transform our dysfunctional culture of innovation, Britain is going to need a strong strategic vision and the investment of significant stakeholders to create an ecosystem where R&D and innovation can flourish. But let’s not forget the opportunity to grasp low-cost quick wins and extract value from intermediaries.

Dr Tristram Riley-Smith is the External Champion to the Partnership. He was appointed to the role in April 2013. He is also Director of Research at the University of Cambridge Department of Politics and International Studies and an Associate Fellow at the Centre for Science and Policy.