No government industrial policy, but improve framework for business research

The first is almost as important as the second. While it might be tempting to pick the fashionable technology of the day (for example solar power, batteries, AI) and encourage its growth, the government is not well placed to pick winner technologies. Solar power is one example. Germany once strongly encouraged domestic production – and unsuccessfully. The much better route is to provide the framework for R&D and let business decide what to work on. An important part of that framework is taxation: for example, the corporate tax reform patent boxes, which provide incentives for R&D.

A second important aspect is talent, both domestic and foreign. Digital and entrepreneurial skills should feature more strongly in school curricula, without undermining essential underlying subjects, such as languages or mathematics. The framework for international talent mobility currently puts Switzerland at a disadvantage compared to other leading business locations. More emphasis needs to be placed on attracting highly talented graduates, fostering international intra-company mobility and digitalising and harmonising immigration processes.

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Secure Switzerland’s participation in Horizon Europe

An attractive framework includes participation in international research initiatives. The largest in the world is the EU’s Horizon Europe initiative, the ninth instalment of which is slated to run from 2021-27 and has a budget of about EUR 100 billion. Just as important, if not more so, is the opportunity for Swiss research institutions to collaborate in this initiative with their peers across Europe. Swiss participation is currently under negotiation; securing it should be a priority. Success depends on wider Swiss-EU relations, and therefore a framework agreement is important, as well as preservation of the bilateral agreements.

Foster R&D clusters and collaboration

Research benefits immensely from clusters: geographic concentrations of specialised businesses and associated institutions, as in Silicon Valley. The state has a role to play in particular in universities. The Federal Technical Universities play an immensely important role in creating start-up and business research clusters in the regions around them. Universities in general can incubate and encourage research and foster cooperation and commercialisation. This applies not only at the very top – a big business, revolutionary research. Cooperation between SMEs and smaller universities should be encouraged as it can help generate smaller, streamlined and focused research programmes. Activities to foster clusters should be maintained and, where they are proving beneficial, increased.

A further role for government is to finance research that is directly in the public interest. A notable – and timely – example would be in the area of health. While vaccines tend not to be hugely profitable for pharmaceutical companies, they provide major public health benefits.

Implement agile development processes

Business has a crucial role to play in R&D. Internal development processes are the first area they should look at, accelerating programmes through iterative instead of linear processes in order to adjust more rapidly to the fast-changing environment. Useful techniques are Scrum, Design Thinking and Lean Start up; ‘fail fast’, ‘pivot fast’. Accept that a problem might not be fully defined upfront, that circumstances are changing fast, customers might change their preferences and competitors might leap ahead with a new development. Adapting an evidence-based, lean, iterative process can accelerate R&D in the midst of uncertainty. This is not least important with view to the return of investment of R&D. The pharmaceutical industry has experienced declining returns over the past decade, as the Deloitte report 10 years on shows. Agile development processes can help halt or reverse that decline.

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Foster talent for R&D

Attracting and developing talent to drive research is crucial. Digitalisation has been increasing during the pandemic, in both depth and breath, expanding into sectors formerly less digital. More and more companies are therefore competing for digitally skilled talent. Companies need to attract this talent as well as invest in the skills of the workforce they already have. Top talent is attracted by a stimulating, diverse working environment, offering an opportunity to develop skills further in a digitally-savvy company. Diverse teams tend to be more productive. Exchange and diversity are major factors in building knowledge and allowing employees as well as their employers to improve their skillset. Diversity includes making stronger use of traditionally overlooked talent segments, such as older employees, or less conventional types of employment, such as part-time work, remote work or gig workers. Companies should encourage interest in lifelong learning and actively support upskilling.

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Leverage collaboration across the board

Collaborate with external partners, both traditional and non-traditional. Collaboration with universities, including between smaller universities and SMEs is also important. Digital technologies are disrupting R&D. Data is now being used in different ways, driven by technological partnerships and opening the way for non-traditional partnerships as well. These include collaboration with peers, such as in the form of joint ventures, to accelerate development of an expensive technology crucial for all partners, such as batteries for electric vehicles. The value of collaboration highlights the benefits of research clusters and should encourage business to relocate their R&D activities strategically, to take advantage of and strengthen these clusters.

Customer engagement and feedback to accelerate R&D

Non-traditional collaboration can also increase the use of customer feedback in the R&D process. One example would be pharmaceutical research. Traditionally, such research obtained patient information from doctors. This can be complemented by direct feedback loops from patients, both in the form of clinical trials or engaging patient groups as well as accessing patient feedback digitally, such as online forums. However, gathering patient feedback can be both time- and cost-intensive and the costs and benefits need to be monitored throughout.