A UK government minister has praised a scheme that helps mainly small companies boost their profitability and create jobs through academic collaboration. Industrial participants in Knowledge Transfer Partnerships (KTP) have, on average, boosted pre-tax profitability by more than half a million dollars and added eight jobs, as well as improving staff skills. The KTP scheme also gives young graduates a chance to work on transferring academic knowledge into industry.
Margaret Hodge, Minister of State for Industry and the Regions, said: "When an idea is matched with a high-potential business, the explosive effects spark a chain reaction to jobs, wealth and higher productivity. That is what Knowledge Transfer Partnerships are all about."
The KTP scheme has been successfully increasing the level of innovation in small- to medium-sized companies for more than 30 years, using a model based on the "learning by doing" methods applied in teaching hospitals (see www.ktponline.org.uk).
Implementing Academics' Ideas
The approach was launched in 1975 as the Teaching Company Scheme, and was rebranded as Knowledge Transfer Partnerships in 2003. KTPs bring together a company with a problem to be solved, an academic with a possible solution, and a recently graduated "associate" who does the knowledge transfer by working at the company to implement the academic's ideas.
The scheme has had remarkable success in using small projects to increase innovation in small companies. Since the Teaching Company Scheme began, 3,940 partnerships have been completed. At last count there were 1,002 partnerships in progress, together engaged on a total of 1,114 projects.
The money involved in KTPs is modest. The average annual budget is $108,000, with SMEs picking up one-third of the total and the government footing the rest. Larger companies, with more than 250 employees, have to pay half the costs, although only 16% of KTPs go to large companies.
Projects last from 12 to 36 months. The associates who go to work in the target companies are on average 28 years old, with 77% of them having First-Class or "2:1" degrees, and 38% having higher degrees. The academic supervisors provide half a day of support a week to the project.
Despite the modesty of the KTP scheme, an independent analysis of its precursor, the Teaching Company Scheme, carried out by economic consultants SQW Ltd in 2002, suggests that companies that undertake a KTP gain an average increase in profit of more than $568,000, with one company increasing its profitability by $39 million. Companies that undertake KTPs also invest an average of more than $207,000 in new plant and machinery, and create eight jobs-a considerable number given that over half of companies involved in KTP schemes have less than 50 staff. About two-thirds of projects manage to apply intellectual property provided by the academic commercially.
Half of the associates involved in KTPs register for a higher degree during their projects. Three-quarters of them are offered employment by their host companies.
Funding for the KTP scheme comes through government agencies and the industrial partners. In the 2005-2006 financial year, the UK government contributed £36.5 million to the scheme, 14% more than the previous year. Industry contributed more than £54.7 million, up 4% on the previous year.
The KTP scheme is backed by 16 government organizations including the Department of Trade and Industry, the Department for Environment Food and Rural Affairs, the Research Councils, and the regional development agencies.
The SQW analysis shows that each $1.95 million (£1 million) of government investment results in 112 new jobs among KTP companies. It also leads to the training of 214 company staff, a total increase in profit before tax of more than $8.2 million, and a $6.35 million investment in plant and machinery. According to Jo Stevens, marketing manager for the KTP scheme, additional government organizations, including the Arts and Humanities Research Council and the National Health Service, have recently become sponsors "because they see the value in what we do. …