UK businesses are facing global competition like never before. Amid trade liberalisation and falling production costs in the emerging economies, innovation is the key for many SMEs.

But central concerns to SMEs looking to innovate often include: How do you begin to innovate? Where do you get your ideas from? How can you fund it? Can you minimise the risks? According to the government, knowledge transfer is the answer.

In today’s progressive, information driven economy, knowledge transfer is all about transferring good ideas, research results and skills between universities, other research organisations, business and the wider community, to enable innovative new products and services to be developed.

At the heart of delivering this is the part government-funded programme Knowledge Transfer Partnerships (KTP).

Lincolnshire-based company Infranor, manufacturers of precision motion control systems recently undertook a KTP in response to the September 11th terrorist attacks, which destroyed their business overnight, as their customers immediately migrated to the low cost manufacturing centres in China. Dr. Lee Fenney, Managing Director, Infranor says of the KTP

“The project before was intended to be a means of getting more profits out of the business. Now the project has given us a route to survival and also to tremendous growth.”

KTP utilises the knowledge, technology and skills that reside within UK Knowledge Bases (academic or research institutions). A KTP project is a three-way partnership between a company, which has a specific and strategic project, a Knowledge Base that has skills relevant to the project and a high calibre graduate, who works in the company on the project, whilst being supported by the Knowledge Base. Projects last from one to three years.

KTP has proven to be an important platform from which SMEs can drive their business forward. From well over 1000 partnerships, SMEs represented about 70% of the KTP portfolio last year— reflecting the enormous benefits companies enjoy.

Innovation for SMEs can be a risky business; many high technology SMEs often have to undertake R&D projects which are relatively large in relation to the financial value of the company. KTP helps to minimise this risk. Projects are part funded by the government with the balance of the costs coming from the company partner. An SME can expect to contribute a third of the project costs while a large company would contribute half. Currently, the average annual project costs are around £60,000. Bearing in mind the dedicated resource of experts the company receives throughout the project, the investment the company makes to a KTP project is significantly lower than the cost of raising external finance, as Bob Andrews, Managing Director of High Wycombe-based Fulcrum Systems comments,

“We didn’t just get the Associate, we got the university and we didn’t just get the one Professor half a day a week, we actually got his friends, his colleagues. As they hit problems they were talking around the world…It was that shared benefit that you can’t put a price on.”

The success of KTP is that it helps SMEs to solve barriers to innovation. A much wider range of research can be undertaken and captured, increasing the chances of a successful technological and commercial outcome, as explained by Hugh Stewart, Chairman of Caledonian Alloys Ltd, whose KTP project provided research to take the company into new markets:

“The KTP Associate provided the company with a focus for research, development and innovation… we got clarity and projects started to happen. Getting involved with KTP… had the effect of broadening our horizons and I have no doubt it will help us enter new markets.”

Finally, KTP supports SMEs to adopt business best practise. Research reveals that firms are increasingly required to incorporate new technologies to their products and processes whilst keeping up with an escalating number of changes in business practise. Combined with the quickening pace of technological change, this imposes a burden, felt particularly heavily by SMEs. As a result, many companies are not moving forward as soon as they should. KTP provides businesses with information and solutions to these important issues, encouraging companies to improve their service offerings.

Communications company Cànan remarks,

“The KTP programme brought knowledge, partnerships, confidence, publicity, quality staff and a can-do attitude. The grant allowed these aspects to develop, but the results were much greater than a pure financial investment. I would thoroughly endorse KTP to any organisation who knows what they would like to achieve, but doesn’t know how to go about it.”
Donella Beaton, Ceannard/Chief Executive, Cànan Ltd

Key Facts:

• For each KTP, businesses benefit, on average, from an increase of over £227,000 in annual profits before tax, the creation of three genuine new jobs and an increase in the skills of existing staff

• During the course of 2006/07, the total number of Partnerships in the portfolio increased by around 5% to 1048

• During 2006/07 £114 million was committed to new KTP Partnerships in the form of grant support and company contributions

• KTP covers a diverse and wide range of industry sectors, covering everything from agriculture to social sciences.
Last year, the main categories of technology and knowledge involved in KTP were information technology (25%), engineering (19%), management science (15%) and science (12%).

• Projects vary in length between 12 and 36 months

• Associates are postgraduate researchers, university graduates, or individuals recently qualified to at leave NVQ (Level 4) or equivalent

For more information on how to turn your business into a competitive, innovative and successful business visit the website: www.ktponline.org.uk or call 0870 190 2829 or e-mail companies@ktponline.org.uk