Once the economy took an overt turn for the worst in 2008, voices that had been mute for almost a decade came forward to question the wisdom of Ireland investing in Research and Development (R&D). As Science Foundation Ireland (SFI) had been established in 2000 as the vehicle to provide the expertise to deliver the funding to “make Ireland a world leader in research” it was inevitable that attention would increasingly focus on its activities and view them as a cost rather than an investment. Various commentators sniffed at the phrase the “Knowledge Economy” and have not been enthusiastic when the Government launched the “Smart Economy” as the way forward for Ireland “after the crisis”. Having had numerous discussions and debates on the topic, where I and other colleagues showed the beneficial consequences of the SFI activities, I cannot say that the debate has yet been won by us. I wrote an extensive blog on the problem of trying to convince ‘non-believers’ that investment in R&D is essential for Ireland’s enterprise https://frankgannon.wordpress.com/2009/08/27/belief-and-science-policy and the concept of belief and faith is perhaps appropriate, as arguing for investment in science with a skeptic must be similar to an ardent Christian arguing their cause with a convinced atheist.
Formal para-official endorsement of the science skeptics came in the report of An Bord Snip Nua (McCarthy report). This report recommended a 15% cut back in the Science Technology and Innovation (STI) budget. There remains a lot of work to get ‘System’ to understand that the academics that SFI funds today are quite different to the caricatures that are presented as the basis of the disbelief in giving money to labs as the best way of under-pinning the Smart Economy. I won’t repeat the litany of facts that support our contention that the SFI programmes are already, and ahead of schedule, providing very positive inputs to the enterprise economy. Suffice to say that the opinion of two external independent reviews support this – a Value for Money Review of Science Foundation Ireland Prepared for Department of Enterprise Trade and Employment By Indecon International Economic Consultants and Science Foundation Ireland – the First Five Years 2000-2005 Prepared by An International Evaluation Panel, both reports are available on the SFI website – www.sfi.ie
Over the plum-pudding days of Christmas the concern for the future of Ireland “after the crisis” came back to disturb me too frequently to ignore. What, I wondered, would not have happened if SFI had not been established? OK, there would be fewer publications and fewer research groups, and maybe the impressive moves up the world ranking by Irish Universities would not have taken place…..but who in the enterprise sphere really cares about that?. Would business expenditure on R&D have doubled? Would 50% of the new deals entered into by the IDA have been in the area of R&D? Would very large numbers (almost 800) of Irish companies have invested in the development of new products to help them become more competitive? Would we be able to dream of developing and attracting a greatly expanded Green/Clean industrial sector with a projection of 80,000 jobs created? I really think the answer to all those and other practical questions is NO, or at least to do so without the extra highly trained 4th level graduates and the reputation gain from the country by having top-class research groups here would have been extremely difficult and unprecedented world-wide.
Then one day, the pfennig (I was in Germany) dropped. The problem is that SFI and research generally delivers Intangible Assets and those with an antagonistic view are only putting value on Tangible Assets. As I am not an economist, I will not give my version of what the difference between tangible and intangible assets are, although the understanding of the English words is straight-forward. Instead, I add at the bottom of this blog the Wikipedia entry on the topic. I find, in that definition, confirmation of my diagnosis. Both the legal intangibles and the competitive intangibles described there are the primary outcomes from the investments made by SFI. This is what is to be expected and matches the rational for the establishment of SFI. But this is systematically missed by those that see research as a cost rather than an investment. Perhaps they have not reflected on this essential difference. Instead the critical analysts constantly look for tangible assets such as spin-off companies, jobs created and the conversion of the intangible intellectual property to the tangible license cash income. Calls for support only of research that is of direct value to Industry have the same tangible outcome as their basis No wonder there is a miss-match in the discussions. I think it would be good, therefore, to re-engage the debate with this insight in mind.
Time was, when intangible assets had no perceived value. Today, that is completely changed and even the rigours of accounting demand that these are treated and managed like other assets. Many companies invest more in pursuit of Intangible Assets than they do in the more readily measured Tangible Assets. I hope that Irish decision makers and commentators will integrate this into their thinking. Already the SFI budget has drifted away from the multi-annual plan of the Strategy for Science Technology and Innovation (SSTI). Continuation of that trend will certainly make the intangible assets drain away and with that the tangible assets will also be lost.
“Intangible assets are defined as identifiable non-monetary assets that cannot be seen, touched or physically measured, which are created through time and/or effort and that are identifiable as a separate asset. There are two primary forms of intangibles – legal intangibles (such as trade secrets (e.g., customer lists), copyrights, patents, trademarks, and goodwill) and competitive intangibles (such as knowledge activities (know-how, knowledge), collaboration activities, leverage activities, and structural activities). Legal intangibles are known under the generic term intellectual property and generate legal property rights defensible in a court of law. Competitive intangibles, whilst legally non-ownable, directly impact effectiveness, productivity, wastage, and opportunity costs within an organization – and therefore costs, revenues, customer service, satisfaction, market value, and share price. Human capital is the primary source of competitive intangibles for organizations today. Competitive intangibles are the source from which competitive advantage flows, or is destroyed. The area of finance that deals with intangible assets is known as Intangible Asset Finance.”-from Wikipedia 9.1.2010