20 October 1994 - 22 October 1994

Science, Public Purposes and Wealth Creation: Roles for Government and Business

Chair: Sir Ronald Oxburgh KBE FRS

We met against the background of a deepening sense, at least in the older countries of the developed West, that the challenges of sustaining economic growth and competitiveness increasingly required nimble and effective innovation, and that science, technology and engineering (hereinafter mostly "science", for brevity) had prima facie a crucial part to play. This sense was heightened by the realisation that with the post-Cold War decline of defence budgets businesses would increasingly have to manage without the bonus which defence R & D had long provided. In the United Kingdom a special governmental initiative had recently been launched to refocus publicly-funded science effort and to help co-ordinate and direct it more effectively in support of national purposes.

Successful innovation, we reminded ourselves, did not spring solely from science (still less solely from leadership in science, for the skills of evaluating, imitating and adapting advances made by others were often important and legitimate components of economic and commercial success). But science was often a crucial element, and society as a whole expected it to be exploited well in the service of community goals. We were concerned that in some of our countries comprehension and interaction between scientists and its governmental and business customers were not effective enough to seize the opportunities fully, especially amid accelerating technological change. Scientists best understood what might be possible; they tended to understand much less well what would be necessary or useful for wealth-creation.

The shortcomings no doubt lay in part on the customers' side. Few of us believed that the intelligent customer for science was yet adequately common among business users, and we heard about the comparative rarity with which scientists were to be found in general decision-making positions at board level (though we were not sure whether this was the result or the cause of weaknesses elsewhere in our systems). At the same time, we acknowledged that some of the deficiencies lay on the scientist side. Effective sharing in top decision-making (including the making of hard choices) required a breadth of understanding and an infusion of non-scientific competences which, in several of our countries, neither the content of scientist education nor the pattern, culture (sometimes almost anti-commercial) and reward systems of scientist careers were well calculated to provide. Many of us urged degree courses less narrowly specialised, and with more inter-disciplinary elements (including the disciplines of the social sciences). American and European participants were minded to look rather enviously at Japanese corporate performance, reflecting a constant and vivid sense of market need and opportunity fully shared by scientists. It was, we heard, this close blending of scientific understanding and commercial awareness that distinguished the success of many firms now that Japan's catch-up phase (the stage through which the smaller Asian "tigers" were now passing and which made those an unreliable model for more mature economies) was long past.

There was indeed no one institutional or procedural model for good wealth-creating use of science in business - the routes by which scientific knowledge led to profit in the market were diverse and sometimes indeed opaque even to hindsight. The key, it was suggested, lay more in good scientists - resourceful problem-solvers - than in science itself. But we were minded to think also that attitudes among investors and top managers needed to shift, for example with greater willingness to accept long-run balancing - "win some, lose some" - and to try many things and discard failures quickly. We did not however altogether resolve an apparent tension between this last point and the argument that business exploitation of science often had very long time scales and therefore needed especial patience; in the same context, many noted but not all accepted the familiar suggestion that in Britain and the United States the characteristic behaviour of major investors like pension funds often imposed upon firms a short-term perspective damaging to risk-taking innovation.

We debated what governments could or should do to foster successful science-based innovation in the private sector. Direct subsidy, with its "winner-picking" connotations of governmental attempts to judge what were and were not good projects and technologies for the future, found little support; quite aside from the inherent intellectual difficulty of such judgements, political pressures would too readily steer them towards the preferences of institutions or the defence of high- employment sunset industries. Tax breaks - provided that they were durably sustained and not constantly tinkered with - could be useful, though they entailed exchequer cost just as subsidy did, and could not always be easily drawn to preclude manipulation (for example on the classification of expenditures as R & D); experience overall was uneven. We had a notably interesting albeit inconclusive discussion of the advantages and disadvantages of structures like patents to protect intellectual property rights and so encourage innovation by facilitating benefit-capture; in our weighing of this against the wider advantages of free information flow there was perhaps a preponderant inclination for a starting presumption against protection, alongside a recognition that major exceptions (for example in the pharmaceutical field) might be able to make a good case, especially where the likely alternative to patenting (which was itself a form of controlled disclosure) might be an undesirable secretiveness or simply a failure to invest.

We recognised a variety of other aspects in which public policy, well designed, could help scientific exploitation - the fostering of competition, for example; the setting of sensible frameworks, and stimuli to improvement, in environmental and other regulatory contexts; possibly also a basis for altered treatment of R & D costs on corporate balance sheets, as investment asset rather than just expenditure.

The cardinal duties of governments, however, we believed to lie in sustaining the fundamental infrastructure of scientific advance - the knowledge component in basis science, and the people-component in a sufficient flow of scientifically-educated individuals (in addition, we observed, to an underpinning of scientific awareness and sympathy across the population more generally, both as of value in itself and as a necessary long-term condition of political support for science-related public expenditures). Some unease was expressed, in respect of the United States, about a perceived shift in national R & D investment as a whole away from R towards D - a shift perhaps encouraged by the growing incidence (much to be welcomed on other grounds) of university/industry partnerships.

We acknowledged that discharging governmental duties towards basic science posed awkward practical problems in several ways. Resources were never adequate for the pursuit of every interesting avenue of enquiry, and someone had ultimately to make choices - amid uncertainty, and often with techniques of cost/benefit analysis very imperfect even in retrospect, let alone when decisions had to be taken. It was, we felt sure, important to involve both the scientific community and business somehow alongside government in these choices - and preferably as decision-sharers, not just as narrow corner-fighting advocates. We were less sure about quite how to do this, especially in respect of business.

We heard about initiatives and structures, for example in Britain and France, to systematise and inform government choice better - and also to ease the organisational problem, not entirely avoidable, that most public R & D expenditure fell to be sized, overseen and managed not as a comprehensive R & D block but within Ministry-related budgets primarily serving other kinds of public purpose like defence or transport. But we realised that there was no perfect solution, and that constant adjustment to decision-making structures carried its own costs. We paused also on the question whether the government should be in the business (through directly-owned and directly-managed laboratories) of undertaking basic-science work itself; most of us were at least sceptical of this.

We noted, finally, two dimensions of our subject that were of mounting importance. The first was the international dimension: more and more scientific research was being done - some indeed, because of sheer scale, had to be done - on an international basis. This was in principle to be welcomed; but there were practical drawbacks, both in the cumbersome management arrangements it often imported and in securing fair burden-sharing in open international effort and benefit when public money ultimately came from diverse and uneven national decision-making structures.

The second dimension was the growing weight of consumer/customer power, whether exerted through particular pressure groups or otherwise. There were risks in this - risks of distortion through single-issue or fashion-driven expectations, especially when low public comprehension of science’s nature oscillated between wild fears and magical hopes. But in the long run, so most of us thought, demanding customers, provided that they understood enough, were good for science and for its fruitful exploitation.

This Note reflects the Director's personal impressions of the conference. No participant is in any way committed to its content or expression.

Chairman: Sir Ronald Oxburgh KBE FRS
Rector, Imperial College of Science, Technology and Medicine, London


Mr John Chisholm
Chief Executive, Defence Research Agency

The Lord Dainton FRS
Life Peer (Cross Benches) (1986); Chancellor, Sheffield University

Dr Laura Garwin
Physical Sciences Editor, Nature

Dr K W Gray
Technical Director, THORN-EMI plc

Sir John Kingman FRS
Vice Chancellor, University of Bristol
Mr Alastair Macdonald CB
Deputy Secretary, Department of Trade and Industry

Ms Bronwen Maddox
Leader Writer, Financial Times
Dr Malcolm McIntosh
Chief of Defence Procurement, Ministry of Defence, London

Sir Robin Nicholson FRS
Director, Pilkington pic

Sir Alastair Pilkington FRS
President, Pilkington pic

Dr George Poste
Chairman, Research and Development, SmithKline Beecham Pharmaceuticals and Research Professor, Department of Pathology and Laboratory Medicine, University of Pennsylvania

Sir Mark Richmond FRS
Group Head of Research, Glaxo Research and Development Ltd

Dr Geoffrey W Robinson
Director, IBM United Kingdom Laboratories Ltd

The Earl of Selborne KBE FRS
Chairman, House of Lords Select Committee on Science and Technology

Professor Sir William Stewart FRS FRSE
Chief Scientific Adviser and Head of Office of Science and Technology, Cabinet Office
Dr Michael J Tricker
Director of Technology Interaction, Natural Environment Research Council.

Dr Geraldine A Kenney-Wallace
President and Vice-Chancellor, and Professor of Physics and Chemistry, McMaster University
Mr Alan B Nymark
Assistant Deputy Minister, Industry and Science Policy, Industry Canada

Professor Stephen Wallace
Professor of Chemistry, University of Toronto

Mr Richard Escritt
Scientific Director, Union des Assurances de Paris

Professor Dervilla M X Donnelly
Professor of Phytochemistry, University of Dublin

Monsieur Jean-Jacques Duby
Scientific Director, Union des Assurances de Paris

Dr Uwe Thomas
Advisor to German Social Democratic Party on Science and Technology Policy

Dr Yukio Noguchi
Professor of Economics, Hitotsubashi University, Tokyo

Dr Frederick M Bernthal
President, Universities Research Association, Washington DC

Mr Donald W Davis
Senior Lecturer, Massachusetts Institute of Technology

Professor Richard L Garwin
IBM Fellow Emeritus, Thomas J Watson Research Center, New York

Dr Judith T Kildow
Massachusetts Institute of Technology (MIT): Associate Professor of Ocean Policy (1976-); Head, Program in Marine Environmental Systems

Professor J David Litster
Professor of Physics (1975-), Vice President and Dean for Research, Massachusetts Institute of Technology

Mr Verne L (Larry) Lynn
Deputy Under Secretary of Defense for Advanced Technology
George M Newcombe Esquire
Partner, Simpson, Thacher & Bartlett, New York
Dr Albert H Teich
Director of Science and Policy Programs and Fellow, American Association for the Advancement of Science (AAAS), Washington DC