Three Big Ideas #59

Transferring blame, disrupting class, and patent absurdities

Welcome to our fortnightly Three Big Ideas roundup, in which we serve up a curated selection of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.

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🔬 Mann Virdee, Head of Science and Technology

It’s not new or insightful to note that Europe struggles when it comes to converting bright ideas and cutting-edge science into unicorns.

What is new, however, is a recently published comparative study in the Journal of European and International IP Law which seeks to explain why. The researchers looked at the legal frameworks of the United States, the United Kingdom and Italy and found a structural difference in how these countries deal with technology transfer (TT). In particular, they claim that the strictness of regulation is less important than the clarity of the regulation.

On one side you have the US model, rooted in the 1980 Bayh-Dole Act. This Act transformed TT by allowing universities, small businesses and non-profits to retain IP for inventions developed from federally funded research, as well as to license discoveries from that research to private-sector partners. That provided a big incentive for universities and researchers to turn discoveries into viable consumer products.

The authors of this study argue that the US model has succeeded because it has created a predictable and coherent regime which gave universities clear ownership of IP, and which also gave investors confidence to invest. The UK has tried to mirror the US model and has been moderately successful, resulting in what the authors call a ‘relatively mature environment’. Both the US and UK models benefit from having clear institutional ownership and Technology Transfer Offices (TTO).

On the other side, there’s Italy’s fragmented model. Italy produces lots of spin-outs but no unicorns (with the notable exception of Bending Spoons, a Milan-based tech conglomerate whose focus is on acquiring and managing products such as Evernote). In Italy, the lack of clear, universal legislation creates a network of ‘autonomous rules’ that leaves founders and investors in a state of constant uncertainty.

So while the US and UK have stricter regulations around academic-entrepreneurial roles than Italy, the authors of this research contend that the ‘coherence, accessibility, and institutional robustness of TT regulation are decisive factors for the emergence of university-born scale-ups’.

Or, to put it another way, clear regulations — even if stricter — are better than vague ones. When a founder knows exactly how many days they can consult (for example, around 13 days at Stanford) and who owns the IP, they can get on with the business of scaling.

Although the UK is in a strong position, there’s more work to be done to streamline TTO processes. Scientific excellence is only half the battle. The other half is ensuring our legal and institutional frameworks are configured to let that excellence evolve into global success.

📚Philip Salter, Founder

In 2008, Clayton Christensen’s Disrupting Class was published, arguing that schools were on the verge of being disrupted. Built around a factory model of standardised content, uniform pacing and batch processing of children, he argued that they were structurally incapable of personalising learning to individual needs. Technology, he contended, offered a way out — not by improving the existing model, but by routing around it entirely.

Christensen predicted that 50% of high school courses would be delivered online by 2019. They weren’t. Billions had been spent putting computers into schools, yet the technology has simply been co-opted into the existing model of instruction.

Last week’s government announcement, which invites EdTech companies to build AI tutoring tools for disadvantaged pupils in the UK, is encouraging. As the press release acknowledges, private tutoring can accelerate learning by up to five months, but it remains the preserve of those whose parents can afford it.

The ambition is right, but Christensen’s insights call into question the design: “Plugging a disruptive innovation into an existing business model never results in transformation of the model; instead, the existing model co-opts the innovation to sustain how it operates.” The Pioneer Group — eight companies, curriculum-aligned, teacher co-designed and DfE safety-approved — is structurally set up to do exactly that. Given the constraints any government programme operates under, it’s perhaps inevitable.

The Pioneer Group will co-design, pilot, evaluate and report, with national rollout targeted for 2027. While this is a relatively ambitious timeline for government, the technology is moving at breakneck speed. There is a real risk this programme institutionalises a version of AI the market has already moved two generations beyond.

In truth, the disruption Christensen predicted is already happening. A motivated 14-year-old with a capable AI can already access something closer to a genuine Socratic dialogue on any subject than most classrooms offer — without a Pioneer Group, without curriculum alignment and without waiting until 2027.

🎓Ayushma Maharjan, Centre for Policy Studies

The UK is one of the best places in the world to produce ideas. But few of those ideas are turned into commercial strength at home. Britain’s academic strength is hard to dispute. Ten of the world’s top 50 research universities are British. However, that scientific excellence has failed to proportionally translate into a dense network of R&D-active firms and the scale-up ecosystem needed to translate research into economic output.

The gap is clear in the data. Cambridge and Oxford rank only 69th and 77th globally as innovation clusters, a striking contrast to their top five standing in university rankings. A country can be brilliant at science and still underperform if little R&D happens inside businesses.

Analysis done by the Centre for Policy Studies suggests that the UK higher education sector performs a relatively high share of national R&D, at around 24%, compared with 11% in the United States. The UK business sector, by contrast, performs about 70% of total R&D, below the roughly 80% share seen in the United States. In leading innovation economies, every dollar invested in higher education R&D is matched by $7 to $9 in business R&D. In the UK, that ratio is less than $3.

One plausible explanation for the UK’s position is that Britain’s wider business environment is not attractive enough for firms to build, test and scale. This is clear from companies like AstraZeneca and OpenAI, which have chosen to halt investment or move activity elsewhere citing tax burden, regulatory complexity and high energy costs.

If Britain does not address this problem, the economic returns on British science will continue to be captured elsewhere. Evidence suggests 80% of UK university spin-out IPOs have taken place overseas since 2012. Likewise, despite ranking highly in AI research, the UK retains only 48% of its talent.

No amount of tax credits or industrial strategies can compensate for a hostile business environment. The UK needs a more innovation-friendly economy. For entrepreneurs, that means a simpler and predictable business environment, competitive taxation, and stronger incentives to stay and scale in Britain.

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