If you’re after the newest and most exciting ideas about what technology can
achieve, a university laboratory is often a good place to look. The kind of
intellectual experimentation that leads to true innovation is what academic
institutions thrive on, and the northwest is no exception.
With the largest concentration of educational establishments in Europe,
including 12 universities and more than 50 research institutes, the area is
home to more than 50,000 full-time students and benefits to the tune of
billions of pounds a year from its academic base.
This has fostered an air of innovation that has spilt over into the commercial
life of the region. UMIP, the University of Manchester Intellectual Property
department, claims to have licensed more than 60 inventions and established
40 spin-off companies in the past 20 years. Notable examples include the
drug company Renovo, which started with two employees in 2000 and floated on
the stock market valued at £200m two years ago, and technology firm
Transitive, founded by lecturer Alasdair Rawsthorne, which developed
software that helped Intel processors and Apple computers to work together.
As Paul Smith, area director commercial business, Manchester, at Bank of
Scotland Corporate, says: “There is a huge number of graduates and research
institutions in the area, which means that a lot of innovative concepts are
being developed here. They start off in the universities and become much
bigger.”
The Northwest Regional Development Agency (NWDA) has launched a £4m scheme to
help to strengthen relationships between businesses and academia. Small and
medium-sized companies can apply for an “innovation voucher” up to the value
of £3,000, which can be used to purchase support from knowledge providers.
Funding is being provided by the northwest’s European Regional Development
Fund and the NWDA. The initiative was set up to encourage firms that would
not normally work with academia to establish relationships with institutions
in order to find ways to increase productivity and/or competitiveness. The
target is to recruit 1,100 businesses across the northwest to take up
innovation vouchers over the next two years.
Gelert, founded in 1975 as a retailer supplying the farming industry, designs,
manufactures and distributes wholesale a range of outdoor clothing,
footwear, tents, sleeping bags and rucksacks for the camping and trekking
market.
“We’re aimed at the family market, offering good, reliable products,” says
Mick Welden, the managing director. “We don’t sell direct to customers but
our key is to drive the brand to our retailers, both online and on the high
street, such as Argos.”
The company is based in Porthma-dog, North Wales, but has gone south to find a
university that does what it needs. While looking to register intellectual
property rights on a quickpitch tent design, it discovered that a student at
Bournemouth University was working on a similar project. Gelert formed a
partnership with the university to work on product design. Welden says:
“We’ve got a good design team here but we complement that with a strong
relationship with Bournemouth University. We use their design and
engineering departments to work within specific areas.”
Gelert provides a brief for the students, who work on the design and produce a
prototype. The two teams go though the concept, which could be anything from
a lightweight sleeping bag to a new specification of waterproof jacket, and
then Gelert sources the product from manufacturers in Europe and Asia.
Gelert has the exclusive licence on the products but the students keep the
intellectual property rights to their designs and are paid a royalty based
on the numbers sold.
It takes about 12 months from idea to product, and for every design that makes
it, one will be discarded or at least sent back to the drawing board for
more work, such as current plans to make a family-sized version of the
QuickPitch tent. The original tent takes just seconds to put up thanks to
flexible poles, which spring into shape when unpacked, leaving just the pegs
to be put in. It is one of Gelert’s biggest successes. More than 120,000
tents have been sold this year and the design won the accolade of “best
festival gadget” on Five’s The Gadget Show.
The company, which has 150 staff, is now designing its 2010 product range, and
Welden believes the credit crunch could actually be a boon for the business.
“I don’t have a crystal ball but our industry should perform quite well with
the current economic climate as people take holidays in the UK and look to
budget activities such as camping and trekking,” he says. Turnover this year
is expected to grow by 30% to £27m and the company’s immediate plans are to
continue to invest in its product line and consider acquisitions in the
future.
When it comes to seeking finance for an innovation-led company, the key
attraction is a strong management team, says Smith at Bank of Scotland
Corporate: “We back teams with depth and experience to generate the cash to
repay us and service any debt.” With innovation-led companies that rely on
research and development to produce products, Smith recommends being
conservative when making predictions.
“With the best will in the world, people say that they will get a product to
market by a certain date but it frequently overruns,” he says. “So if you
think that your product is going to be in the market by the first quarter of
2009, why don’t you add three or six months onto that timetable and base
your numbers and discussions with the bank around that? A good management
will always consider what could happen if things are delayed and make
contingency plans.”
A similarly prudent approach should be used when predicting sales figures: “If
you think that you are going to make £2m, why not plan for making £1m and
see where that leaves you? A bank never got upset with a client who overshot
a forecast. The problems occur when you undershoot and run the risk of
breaking your banking covenants.”
Other pitfalls for companies that launch new products or go off in different
directions can be losing touch with core products and the strategy of the
business, or even being too successful in selling a new product and being
unable to fulfil orders.
As for the possible effect of the credit crunch on innovative businesses,
Smith says: “There is some uncertainty and caution out there, but maybe now
is the time to be bold. Businesses that take calculated risks may well be
ahead of the competition at the other end of the economic difficulties.”
