Viewpoint: competition between innovators beats picking winners

At the risk of exaggeration, research funding today generally proceeds as follows: smart researchers put their hearts and souls into applying for money from a large pot. If their application is successful against all the competition, they usually receive comfortable funds for three to five years. Evaluations notwithstanding, the chances of receiving a funding extension for another few years are also very good. 

Meanwhile, the competition is left empty-handed. After all, taxpayers shouldn’t have to shoulder the costs of research several times over. 

As far as basic research is concerned, this approach is probably still more or less effective. But it immediately runs into problems when it comes to translational research, in other words applied research in technical disciplines. 

Competition invigorates things here, too, but after funding has been awarded. Our experience at Sprind is that the speed of development and the quality of the results increase, at least in the interim, when several teams work in parallel on the same problem.

Not only do the innovators feel the pressure of time from other teams – time is money in innovation, after all – but the teams also cross-fertilise each other as knowledge diffuses from team to team. This notion of “coopetition”, where teams cooperate and compete with each other at the same time, stimulates business even more than simple competition. 

However, it is important to define clear criteria for success that must be achieved in comparatively short time intervals. Rather than offering one group a lot of money for five years, such challenges distribute a sufficient amount of funding among several groups. 

Only those who can demonstrate initial success based on the defined criteria will receive further funding, in a simple, non-bureaucratic process that will help them to achieve success in the next stage of development. No proof of means is demanded, no evaluation required. Only the results delivered count.

A focus on competition and shorter funding terms could easily be extended to a large part of state innovation funding. But for this to happen, funding bodies would have to learn to let go a little, here and there.

Bureaucratic control prevents innovation

State bureaucracy is riddled with a spirit of mistrust. This is not merely a negative trait of bureaucrats; it is literally systemic. Research bureaucrats are forced to carry out assessments according to a set of rules that even those who drew them up can hardly understand. Otherwise, research administrators violate the rules by which they themselves are governed.

The crazy thing about the whole process is that assessors do not look at the results of projects, but rather at the process. Has the application been submitted correctly according to all criteria? Were all funds spent correctly? And just to be on the safe side, perhaps the auditors’ auditors should do another check to verify that funds have been approved correctly in accordance with all the allocation guidelines? 

Whether or not an R&D project has yielded results in the end becomes a footnote to all this formal madness. 

A little control is good, trust is a prerequisite, results are better. This formula also sums up our experience throughout the first five years of Sprind. It is not the job of innovation managers to make sure that three quotes have been obtained before purchasing printing paper. They need to look at whether an agreed development milestone has been reached after six or 12 months of funding and what this then means for market maturity, further funding requirements, collaboration with potential partners, and so on.

The cat shouldn’t guard the cream

When it comes to the allocation of state research and development funding, the boundaries between advice and vested interests are blurred. Usually, there is no malicious intent. Political decision-makers naturally seek specialist advice on the main innovation topics from subject experts. However, these are often the very people who then apply for funding once their advice has been taken and funds are allocated to a specific field of research. 

All of us, including researchers, consider our own work and actions to be of particular importance. As a result, the current funding system is like asking the cat to guard the cream.

Of course, it is essential that clever minds and institutions with special interests continue to be heard in politics. But what is ultimately required is advice from neutral experts based on extensive expertise in deep technologies and the best data available today. This must include consideration of the most important of all technology issues: which technologies does society want to bet on, and to what end?

Follow the EU Chips Act

The EU Chips Act, which seeks to rebuild Europe’s semiconductor industry with the help of substantial taxpayers’ money, shows that fast, effective action is possible. Without state anchor investments no European start-up ecosystem for chips and computer hardware will emerge. After just a few months, we can already see that the mission of the EU Chips Act is beginning to bear fruit and can very quickly become an investment that pays off economically. What were the success factors?

The goal was clearly described. The EU and German governments did not get tangled up in the minutiae of funding. Germany allowed the global giants of the chips industry to compete for funding. And local administration was unusually non-bureaucratic in its approval procedures.

Even if Intel has put its plans for a chip plant on hold, the EU Chip Act still serves as a proof that high-tech missions with economic and social benefits are possible. 

Of course, which missions we want to tackle and when, and with how much money, must ultimately be decided by parliaments and politicians according to democratic rules. But before it even gets that far, the most important groundwork needs to be laid. State innovation funding must be reformed, and tight budgets are a good reason for setting this in motion. 

As we know from case studies in research, an abundance of resources is not at all conducive to innovation. Necessity is the mother of invention.

Rafael Laguna de la Vera is the founding director of Sprind, Germany’s innovation agency. Thomas Ramge is a writer who has written about the agency’s mission with de la Vera.