The local media yesterday covered the publication of the NI Science Park’s annually commissioned tome from Oxford Economics on the state of Northern Ireland’s “Knowledge Economy”. The report – with lots of tables and data – runs to 50 or so pages. Most of it is a re-hash of publicly available statistics. Its conclusions are that Northern Ireland’s knowledge economy lags the UK’s.
But the report – typical of reports published by Oxford Economics – offers little insight into the causes. But, more fundamentally, it doesn’t even attempt to unpick the meaning of knowledge economy. Nor does it take any positions that help to define policy agendas. In short it’s confused and, therefore, unimportant.
Let’s start with the term “knowledge economy”. It’s patently meaningless. Moreover the definition offered by the authors is so wide – in terms of industrial activity – that the conclusions reached in the report have to be seen to be completely flaky. The authors have included ‘creative and digital media’ alongside ‘IT services’ and ‘other technical services’ and even ‘transport equipment’. (I also noted that the work of Economists wasn’t included in the definition). Also, the work of university researchers seems to be excluded. Nor could I see any reference to knowledge staff employed in sectors outside of IT and pharma.
In short, the report seems to define knowledge as something that exists solely in certain business sectors but not in others – and that doesn’t exist in publicly funded research centres at all (even though universities conduct a great deal of privately commissioned research). Banks employ thousands of knowledge workers. So do retail organisations, engineering firms, hospitals. Indeed, knowledge workers – people with deep technical skills – are employed in just about every sector.
Moreover, many so-called knowledge businesses – especially in the ‘transport equipment’ and ‘other technical services’ category employ a lot of low-skilled and low-paid staff. Because Oxford Economics has merely based its analysis on aggregated data of certain commercial sectors – rather than conduct primary research – it has no idea how many staff in the various categories are real knowledge workers. I’d suspect very few.
Indeed the categorisation is based on the grand-sounding “San Diego CONNECT model”. But it’s not made clear whether this model is one that’s used in other places as a basis for determining the relative size of the knowledge economy.
And because this ‘model’ is used as the basis for future employment projections one really has to question the targets if we’re not even sure how many real knowledge workers are included in the current analysis.
The fact is that the number of knowledge workers in any economy is a function of demand and a function of the size of the commercial sector. Northern Ireland’s commercial sector is squeezed-out by the state. We have grotesquely high levels of state employment and relatively few big companies.
Big companies tend to have the deepest pockets and spend most on knowledge staff in the local area. Hence London is a power-house consumer of knowledge workers. The city of London is sustained by knowledge workers – and they work, typically, in banking. The financial services sector employs tens of thousands of the most able computing specialists. They run huge databases, data mining solutions, real-time transactional processing systems, CRM systems. Manufacturing companies of all types in Manchester and Birmingham (most excluded from the Oxford Economics KE Index) employ business process specialists, supply chain logistics people, specialists in enterprise resource planning, robotics gurus.
Therefore, where we see clusters of big business we see clusters of knowledge workers. We also see the lion’s share of R&D research being commissioned from the leading researchers based at the finest research institutions – such as Imperial College or UMIST.
Yet there is no analysis in the Oxford Economics report of where Northern Ireland has been successful – or where our universities have managed to become global trail-blazers in terms of commissioned R&D.
And yet, that’s where the opportunity lies.
The Oxford Economics “Knowledge Index” is not really a knowledge index it’s the work of people who have never sought to know what Northern Ireland is good at or bad at in terms of creating intellectual property. In some respects Northern Ireland is a great success story. Both our universities undertake important research work. Often it’s much more important than work undertaken by the latest “app” developer located at the Northern Ireland Science Park. But on the down-side, universities are poor at feeding local businesses with IP, local businesses think much too parochially and local business dependence on the state just isn’t healthy.
But the report fails to provide any real insight into where opportunity lies and where clusters of success exist – that could be built upon. Knowledge based intellectual property depends more on ‘clusters’ of talent growing. That’s much more important than imploring “an entrepreneurial culture”. No amount of “entrepreneurial culture” will help create business success if the resultant products or services don’t result in purchase orders and sales invoices. For Oxford Economics’ information we have small but shining jewel clusters of talent (still) in telecoms software, CRM, semiconductor IP, software security and pharma diagnostics.
Oh, and Oxford Economics, state-funded venture capital isn’t the answer either. In fact it may be part of the problem.
The most successful companies are successful because of vision, commitment and sales – not venture capital. Northern Ireland was most successful when businesses were boot-strapped rather than venture funded. Self-reliance is the route to business success – but only when great ideas can be matched with paying customers.
Yet the Oxford Economics report prefers to issue banalities by way of recommendations. It applauds various public sector initiatives rather than argue for what early stage innovative businesses most need – corporate tax breaks, R&D cost breaks, cheap transport to the main population centres, and lack of government meddling.
The Northern Ireland Science Park can do better than this. The report offers no real solutions and is based on a flawed analysis. But thankfully, our most successful knowledge businesses will probably be too busy to notice.