Success factors and dynamics of the UK Space Cluster at ... · A Dissertation Submitted in...

Success factors and dynamics of the UK Space Cluster at Harwell

A Dissertation Submitted in Part-fulfilment of the Requirements for the Degree of Master of Business Administration of the University of Warwick

“This is to certify that the work I am submitting is my own. All external references and sources are clearly acknowledged and identified within the contents. I am aware of the University of Warwick regulation concerning plagiarism and collusion. No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses of study, and I acknowledge that if this has been done an appropriate reduction in the mark I might otherwise have received will be made.”

Student Name: Adrian Cassidy

ID Number: 1367731

Date: 5th March 2017

Word Count: 14,826

Number of pages: 87

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Table of contents

1 Executive Summary ..................................................................................................... 2

2 Introduction .................................................................................................................. 3

2.1 The UK Space Cluster at Harwell Campus, Didcot, Oxfordshire ............................. 4

2.1.1 Harwell Campus .............................................................................................. 4

2.1.2 UK Space Cluster at Harwell ............................................................................ 7

3 UK Space performance and growth targets ............................................................... 9

3.1 Reported UK Space sector performance ................................................................. 9

3.2 UK Space Sector and cluster growth targets ......................................................... 12

4 Literature review ........................................................................................................ 14

4.1 Cluster definition ................................................................................................... 14

4.2 The proximity paradox .......................................................................................... 15

4.3 Towards an analysis framework ............................................................................ 16

4.4 The Technology Innovation System (TIS) analysis framework .............................. 25

4.5 Intrinsic Motivation (extension to TIS model) ......................................................... 32

4.6 Informal interactions and shared spaces (extension to TIS model) ....................... 36

5 Data acquisition methodology .................................................................................. 40

5.1 UK Space Cluster online survey ............................................................................ 41

6 UK Space Cluster survey results .............................................................................. 43

6.1 Core functions survey results ................................................................................ 44

6.2 Second tier functions survey results ...................................................................... 45

6.3 Core functions survey results – Rating comparisons ............................................. 46

6.4 UK Space Cluster – rating interpretation ............................................................... 47

6.5 Innovation System core function feedback loops .................................................. 70

6.6 Core function organisational reliance .................................................................... 72

7 Conclusion & recommendations .............................................................................. 73

7.1 The analysis framework ........................................................................................ 73

7.1.1 Recommendations ......................................................................................... 73

7.1.2 Future research ............................................................................................. 74

7.2 UK Space Cluster analysis .................................................................................... 74

7.2.1 Recommendations ......................................................................................... 75

8 References ................................................................................................................. 76

9 Appendices ................................................................................................................ 79

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1 Executive Summary

The UK Space Cluster based at Harwell is designated by the UK government as the UK

Space sector’s focus for innovation and growth.

Key stakeholders and policymakers require a framework to analyse the performance of the

cluster and provide guidance on the formation, growth and performance optimisation of

innovation clusters.

There are no suitable innovation cluster models designed to provide guidance for

policymakers. This paper explores how the widely adopted sector level model for

Technology Innovation Systems (TIS) can be adapted to provide cluster specific analysis.

The adapted model is based on the seven core functions of the TIS framework with the

addition of four cluster specific second tier functions.

This model is used to analyse the UK Space Cluster and identify the key system constraints

which are currently degrading performance and growth potential. Structured performance

data was acquired from cluster members through an online survey.

The key constraints are:

Delays in campus infrastructure development

Sub-optimal transport links

Lack of suitable informal shared spaces

Under resourced market development initiatives

Poor growth in global space markets

The cluster is compared to the wider UK Space sector and shows significantly higher

performance in all seven core functions.

The cluster’s functional dynamics are mapped as a series of flows. These flows form closed

feedback loops which illustrate how a change in one core function will lead to changes

throughout the system.

The importance of intrinsic motivation and informal interactions to the core functions

“Resource Mobilisation” and “Knowledge diffusion” are explored in depth.

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2 Introduction

The UK Space Cluster (also known as the UK Space Gateway) at Harwell, which currently

consists of over seventy organisations and supporting agencies, is continuing to expand.

New world class research facilities such the RAL Space test facility and the ESA ECSAT

building have recently come online. The numerous collaboration and networking events on

campus are well attended by enthusiastic cluster members.

The cluster key stakeholders and development partners wish to gain a better understanding

of the performance dynamics of the cluster; what is enabling performance and growth and

conversely which issues are acting as constraints.

A framework is required to analyse the performance of the cluster that is accessible to

managers and can be updated to track progress and developing performance trends.

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2.1 The UK Space Cluster at Harwell Campus, Didcot, Oxfordshire

2.1.1 Harwell Campus

The UK Space Cluster is located at the Harwell Campus in Oxfordshire. The campus has a

unique and distinguished history in the development of science and technology dating back

to the early 1940s. The key scientific and technology events relevant to the UK Space

Cluster at Harwell are listed in

Table 1 (below). These are important not only in terms of infrastructure development but also

in terms of the cluster’s legitimacy and culture.

Figure 1. Aerial view of the Harwell Campus

Table 1. Historic science and technology events of relevance to UK Space at the Harwell

campus. Source: Harwell (2017). * Indicates events of greatest significance to the cluster.

1940s

1945 RAF hands over site to Ministry of Supply

1950s

1957 Rutherford Laboratory (now Rutherford Appleton Laboratory, RAL) is

established to handle high energy physics work

1960s

1962 * Launch of the Allouette Satellite marked the start establishment of RAL Space

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2000s

2000 Harwell Innovation Centre opens with support from the UK Atomic Energy

Authority

2004 * RAL Space engineers the Ptolemy instrument for the Philae lander on the

European Space Agency’s (ESA) Rosetta expedition

2005 ISIS Neutron Source conducts the first experiment to develop glass to replace

bone transplants

2006 £26 million Government investment in construction of a new Research

Complex at Harwell (RCaH)

2006 * UK Government designated Harwell a “science & innovation campus”

2007 * Science and Technology Facilities Council (STFC) is founded, taking control

of RAL at Harwell

2007 The £260 million Diamond Light Source Synchrotron produces its first user

beam and is officially opened by Queen Elizabeth II

2009 * First Space Innovation & Growth Strategy published – recommends

developing Harwell as a focal point for new national space facilities – including

the International Space Innovation Centre (ISIC). Also recommends that

Harwell should be a hub for wider UK growth

2009 * ESA Harwell office opens

2010s

2010 * Government response to the IGS approves funding for ISIC. Development of

ISIC begins at Harwell

2010 * UK Space Agency (exec agency of UK Government) established with Harwell

as the focal point for growth

2011 * Harwell ESA Business Incubation Centre (BIC) opens

2012 * ESA & UK Government sign MoU focused on the development of the ESA

Harwell Centre into a full ESA Facility

2013 The University of Oxford and Harwell formalise a partnership for discovery and

innovation

2013 * Inauguration of ESA’s first UK facility – the European Centre for Space

Applications and Telecommunications (ECSAT)

2013 * The Satellite Applications Catapult is established at Harwell by Innovate UK;

subsumes ISIC

2014 * ESA’s Rosetta mission is first to rendezvous with a comet and lands Philae

probe on its surface

2015 * ESA ECSAT building is opened by Jo Johnson, Minister of State for

Universities, Science, Research and Innovation

2015 * R100’s Space Test and Integration Facility opens, the largest vacuum test

chambers in UK and Europe

2015 * British ESA astronaut Major Tim Peake launched to the International Space

Station (ISS) for expeditions 46 and 47 (Dec 15)

2016 * The Advanced Manufacturing Lab opens, a partnership between ESA and

RAL that adapts 3D printing technologies to be used for application in space

2016

* RAL Space form part of the international LIGO gravitational waves project,

proving that Einstein’s Theory of General Relativity was correct

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Harwell campus is currently home to over 225 organisations employing over five thousand

people from over 60 nations in the following sectors:

Aerospace

Automotive

Big data

Biotech

Chemicals

Consumer products

Cryogenics

Electronics

Energy

Engineering

Environment

Food

Healthcare

Life sciences

Materials

Medical science

Molecular research

Nano and micro science

Pharmaceuticals

Satellite applications

Sensors

Space

Supercomputing

The campus area is over 700 acres and contains over £2bn of world class research

infrastructure.

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2.1.2 UK Space Cluster at Harwell

Whilst RAL space began its involvement in space projects over fifty years ago it’s been the

period since the publication of the space Innovation & Growth Strategy (IGS, 2009) in 2009

that the UK Space Cluster has taken shape. The IGS brought together analysis from

industry, academia and government agencies and highlighted the UK Space sector as an

important growth industry for the UK economy. It also recommended developing Harwell as

a focal point for new national space facilities.

The UK Space Cluster is a significant part of the Harwell campus with over 70 organisations

and agencies on site. Figure 1 shows the wide range of organisations which form the cluster.

Figure 2. Organisations and agencies which together form the UK Space Cluster

The agencies have their own, often convoluted, interdependences; the major links are

shown in Figure 3.

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The Harwell Campus Joint Venture is particularly significant in terms of the development of

the campus physical infrastructure. The Joint Venture is 50% private (Harwell Oxford

Management which manages the development program and has access to private

investment funding) and public (STFC and UK AEA who own the land). Figure 3 links the JV

to the Vale of White Horse district council planning department via a dashed line. This link

should be considered a system constraint and is explored in more depth later in the report.

The government department for Business, Energy and Industrial Strategy (BEIS) provides

funding lines to Innovate UK (which in turn provides funds for the Satellite Catapult), the UK

Space Agency and the STFC. Of the circa £360m annual budget the UK Space Agency

receives 80% goes to ESA. ESA then commit this amount to UK based space sector

contracts. In this way the funding provided by the UK tax payer to ESA makes its way back

in to the UK economy.

Figure 3. UK Space Cluster agency and infrastructure interdependences

Representatives from the key cluster agencies meet three to four times a year for a cluster

board meeting. Members present include: UK Space Agency (chairs), STFC, RAL Space,

AEA, Harwell Oxford Management, ESA, Satellite Applications Catapult, Innovate UK, UK

Space (trade body). This board is not a legal entity and therefore its decisions are not legally

binding. It does however provide a forum to discuss cluster strategy.

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3 UK Space performance and growth targets

The current era of government support for the sector was spearheaded in 2009 by Lord

Drayson whilst minister of state for science and innovation with the creation of the UK Space

Agency and the first Space Innovation and Growth Strategy (IGS) report.

3.1 Reported UK Space sector performance

Every two years The UK Space Agency publishes a report into the size and health of the UK

Space sector (UK Space Agency, 2016). Key findings from the December 2016 report

include:

The UK Space sector is commercially focused, generating just 13.9% of its income

from the public sector

Total income of the UK space industry for the two years up to FY 2014/15 grew by an

average of 6.5% to £13.7bn

The Upstream1 segment was worth £1.7bn whilst the Downstream remained

dominant at £12bn

Broadcasting dominates (56% of total UK space industry income) followed by

Communications (20%) and Position, Navigation and Timing (12%).

There is positive evidence of diversification, as the income share of Broadcasting is

down from 63% in 2012/13

UK space industry directly contributed $5.1bn Gross Value-Added (GVA) to UK

economic output (0.27% of total UK GDP)

Direct employment in the sector increased by 6% to 38,522 in 2014/15.

Sector’s labour productivity equates to £133k (GVA per employee), 2.7 times the UK

average

Three out of every four employees in the sector hold at least one primary degree –

higher than any other sector in the UK

8.1% of GVA reinvested in R&D; 6.5 times higher than UK industrial average

1 Upstream work is focused on sending satellites into space and space exploration, while downstream

utilises the data, research and technology from upstream in a range of different applications.

http://www.spacesafetymagazine.com/space-exploration/

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At around a quarter of one percent of total UK GDP, the UK Space sector is relatively small

compared to say the financial sector. It does however punch well above its financial weight

in terms of overall importance. As highlighted in the report the sector is the most highly

skilled in the UK and many of the scientific and technology advances spill over into other

sectors fuelling secondary waves of innovation. The high levels of media coverage achieved

by Major Tim Peake and the Rosetta mission helps raise the scientific and technical

legitimacy of the UK.

A closer look at the data underlying the UK Space Agency report (2016) does however bring

into question the recent growth figures. The 2013/2014 figure coincides with a change in the

criteria for sector inclusion. The report does caveat that the growth figure between 2012/13

and 2013/14 is likely to be overstated and is mainly driven by the change in this

classification. As such the spike in growth for 2013/14 is unreliable and is likely to be closer

to the extrapolated dotted line shown in Figure 3.

Removing the 2013/14 growth figure from the analysis provides a revised growth figure for

the two years up to FY 2014/15 of only 2.0%; indicating a significant slowing in sector growth

over the last three years. In particular the 2014/15 growth figure of 1.7% was the first year

that the sector had a lower growth than the wider UK economy (2.2%) (ONS, 2016). This

should be put in the context of a difficult year for the global space industry which post

currency fluctuations experienced a small decline in income between 2014 and 2015 (The

Space Foundation, 2016).

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Figure 4. UK Space sector income

Source: UK Space Agency, 2016. *2015/16 London Economics forecast

Similarly restating the 2013/14 growth figure for direct UK Space sector employment as

illustrated by the dotted line in Figure 5 decreases the 6% growth figure for the two years up

to FY 2014/15 to a more modest 3.7%.

Both the sector income and direct employment figures show a significant slowdown in

growth reflecting the recent slower growth of the global market.

Figure 5. UK Space sector direct employment


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3.2 UK Space Sector and cluster growth targets

The Innovation and Growth Strategy sets out the following targets for the UK Space Sector:

10% market share of the global space economy by 2030

Income of £19bn by 2019

Income of £40bn by 2030

Measuring progress towards these targets is complicated by exchange rate (FX)

fluctuations. Figure 6 shows the global market share using the true variable USD/GDP

exchange rate whilst Figure 7 shows the same market share with the exchange rate held

fixed at the 2007 value.

Using a variable exchange rate implies that global market share has fallen over the last few

years, whilst the fixed rate chart shows steady progress towards the 10% target. Whist the

fixed rate market share figure is encouraging the variable exchange rate market share and

the income charts indicate that over the last three years the growth strategy has been

underperforming.

Figure 6. UK Space sector global market share (variable USD/GBP FX)

Source: UK Space Agency, 2016. *2015/16 London Economics forecast FX rates www.xe.com

Figure 7. UK Space sector global market share (fixed 06/07 USD/GBP FX)


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1.6

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UK global market share

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USD/GBP FX (RHS)

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In order to meet the 2019 £19bn income target, starting at the 2015/16 forecast, will require

an average annual growth (CAGR) of 8.2%. To reach £40bn by 2030 will require 7.3%. The

recent income growth rates of circa 2% clearly fall short of these requirements. In addition

the dominant subsectors, broadcasting (56% of sector income) and communications (20%),

are mature industries and are unlikely to be able to deliver the required growth rates. This

places additional reliance on innovation to allow the sector to expand into new markets and

applications. The UK Space cluster is the focus for innovation and therefore a key element of

the growth strategy for the sector.

If it becomes clear that the sector is failing to meet its aggressive IGS growth targets then

the industry’s overall guidance and political legitimacy will be damaged, putting further

pressure on the sector’s performance.

The Harwell Space Cluster has its own direct employment target of 5,000 by 2030. Figure 8

illustrates the recent growth in direct employment at the cluster. The CAGR of 28% (Q2 2015

to Q2 2016) currently exceeds the average rate of 16% required to achieve the 2030 target

but is based off small numbers so is limited as a performance indicator.

Figure 8. UK Space Cluster direct employment

Source: STFC, UK Space Cluster Development

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4 Literature review

Whilst much has been written on the firm level competitive advantage associated with

colocation it is more challenging to find a framework suitable to analyse the performance and

dynamics of the cluster as an entity in its own right.

4.1 Cluster definition

The concept of a cluster in academic literature dates back to Marshall’s Principles of

Economics first published in 1890:

“When an industry has chosen a locality for itself, it is likely to stay there a long time;

so great are the advantages which people following the same trade get from near

neighbourhood to one another.” (Marshall 1920, Ch. 10, Section 3)

Marshall called such locations industrial districts but the elements he describes are typical of

what is termed today as clusters. Porter (2000) notes that clusters have been part of the

economic landscape for many centuries and defines a cluster as:

“A geographical proximate group of interconnected companies and associated

institutions in a particular field, linked by commonalities and complementarities”.

(Porter 2000, p. 16)

He goes on to define the geographic scope of a cluster as the range over which

informational, transactional, incentive, and other efficiencies occur. A cluster consists of

organisations that cooperate vertically and compete horizontally at each stage of the value

chain. Additionally this can include institutions such as trade associations, research institutes

and government agencies.

A review of the academic literature on clusters reveals many different definitions of what is

considered a cluster. For instance Bergman and Feser (1999) provide a non-geographical

interpretation:

“An industry cluster may be defined very generally as a group of business enterprises

and non-business organisations for whom membership within the group is an

important element of each member firm’s individual competitiveness”. (Berman and

Fesser 1999, Ch. 2, Section 2)

Bergman and Feser are utilising competitive advantage to define the cluster rather than

geographical proximity. In the OECD proceedings “Boosting Innovation the Cluster

approach” Roelandt and Hertog (1999) use cluster definitions based on networks of

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production and value chains. Later in the same OECD proceedings DeBresson and Hu

(1999) further widens the cluster definition by stating that clustering has to be determined in

relation to specified spatial dimensions. Examples of possible spatial dimensions or

attributes are then listed as:

“size, internal organisation, etc.; physical transport, communication, cultural,

technological, functional distances, etc.” (DeBresson an Hu 1999, p. 28)

Such a vague OECD approach to defining a cluster adds an additional level of complexity to

judging the relevance of the resulting research.

In contrast the UK Space Cluster is a well-defined localised group of interconnected

companies and institutions in the Space sector; as such it is a close match for Porter’s

geographical cluster definition. It is worth noting that the benefits of a cluster can follow

along dimensions other than geography and blurring the boundaries of even spatially

localised clusters.

4.2 The proximity paradox

When looking at the subject of geographic clusters we are faced with a paradox. In a world

of increasing global competition why are localised clusters not only relevant but becoming

increasing important to innovation and economic growth? Porter states the apparent

contradiction in the introduction to his paper ‘Location, Competition, and Economic

Development: Local in a Global Economy’ (Porter, 2000):

“It is widely recognised that changes in technology and competition have diminished

many of the traditional roles of location. Yet clusters, or geographic concentrations of

inter-connected companies, are a striking feature of virtually every national, regional,

state, and even metropolitan economy, especially in more advanced nations.” (Porter

2000, p. 15)

Porter goes on to add:

“Even as old reasons for clustering have diminished in importance with globalisation,

new influences of clusters on competition have taken on growing importance in an

increasingly complex, knowledge-based, and dynamic economy.”

Cairncross (1997) in the ‘The Death of Distance’ details how the internet is reducing the

significance of location; how this new role of geography is freeing companies to locate

across the globe and time zones. Whilst it is true that many of the traditional roles of location

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have become less relevant, Cairncross’s analysis seems at odds with the growing weight of

research (see, for example, Porter 1990; Porter 1998; Kaufmann, Lehner and Todtling 2003;

Lever 2002; Preissl and Solimene 2003; Malerba and Vonortas 2009) that shows that the

demands of knowledge-based innovation have created new forms of locational competitive

advantage.

So why would knowledge-based innovation benefit from locational advantages? At first

glance this seems to be a contradiction; after all the internet is fundamentally an information

sharing network. An answer lies in the type and quality of the information exchange possible

at distance. Kaufmann, Lehner and Todtling (2003) address this question specifically:

“Highly complex and uncertain situations—like innovation projects, especially those

of a more radical nature—usually require substantial knowledge inputs and the

change of cognitive frames. This can hardly be done without informal and frequent

face-to-face communication, which requires geographical proximity.” (Kaufmann et al

2003, p. 405)

Kaufmann et al conclude that distance independent communications such as email are

limited to the transmission of codified or explicit knowledge (2003). In contrast the transfer of

tacit knowledge, such as experience, insights, intuition, internalized information, requires

interactive learning and consequently frequent face-to-face interactions.

The innovation process is often too diverse to be managed by a single individual, requiring

many different overlapping fields of expertise (Grant, 1996). A shared language and

common cognitive frames need to be developed and evolve alongside the project. This level

of complexity is heavily reliant on tacit knowledge exchange through face-to-face

communication and as such benefit from close physical proximity or clustering. As

globalisation increases competition, and therefore the importance of differentiation through

innovation, there is some irony that the innovation process itself is increasing the

advantages of localising market sectors.

4.3 Towards an analysis framework

“Organisations and their strategies do not operate in a vacuum. They are open

systems that take resources and information from their environment and transform

them into products and services that are fed back into the environment.” (Angwin,

2011, p4)

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This open system perspective illustrates the interconnected relationship between

organisations and their environment. Figure 9 illustrates the multiple levels of an

organisations environment. In this figure the Macro level is conceptualised using the

ESTEMPLE analysis (Angwin, 2011). ESTEMPLE is a process technique which identifies

forces for change in the wider environment. The question facing an organisation is which of

these forces are relevant, how they will change and what effect they will have in a business

context.

Figure 9. The multiple levels of a firm environment

Source: Macro Angwin (2000), Meso Porter (1979)

Porter’s Five Forces model (Porter 1979) is used to represent the level of the Meso

environment. In this model five interacting forces are used to analysis the intensity of

competition and hence the degree of attractiveness or profitability of the industry. An industry

with low barriers to entry, strong supplier bargaining power, strong buyers bargaining power,

many substitute products and intense competition will face low levels of profitability and

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hence be less attractive. The reverse is also true, leading to attractive and profitable

industries.

The organisation or firm constitutes the Micro level which sits within the Meso and ultimately

the Macro level.

Whilst this three tier approach is commonly used by academics and managers when

analysing an organisations environment it does so from the perspective of the organisation

looking out. A different perspective for analysing the performance of the UK Space cluster is

required which focuses specifically on the functional performance of the cluster. Whilst there

is a degree of overlap there is also redundancy with the inclusion of forces over which the

policy makers and stakeholders of the cluster can have no direct influence. A more selective

analysis framework is required.

The competitive advantage of clusters is a focus in much of the academic literature; it is

these economic advantages that explain the existence of clusters (Preissl and Solimene,

2003). The main benefits can be categorised into the following three groups:

Table 2. Competitive advantages associated with clusters

Source: Preissl and Solimene (2003, p. 43)

Benefits related to

Agglomeration Knowledge spillover

Transaction cost economies

Shared infrastructure

Level of activity Economies of scale

Externalities

Specialisation

Interaction Tacit knowledge and trust

Competition and cooperation

The first of these groups, agglomeration, lists benefits directly derived from the proximity of

organisations. Knowledge spillovers assume that R&D results and new concepts are

transferred between organisations through formal and informal interactions at an increased

rate. Examples of potential savings in transaction costs include: transportation, information

and search, contract, enforcement and trust building. Shared infrastructure refers to both the

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sharing of resources and the aggregation of demand. This concentration of demand benefits

the cluster by encouraging government institutions to act and shape its policies to further

enhance the local infrastructure (Preissl and Solimene, 2003).

The second group, level of activity, considers benefits derived from a large number of

organisations with similar characteristics within one region. Economies of scale are created

when concentration of customers allow suppliers to operate at a higher level of production

and reduce transport costs by bundling demand. External economies are gained through

networking and access to potential partners. Specialist skills are more readily available

either through an enhanced education supply or through employees switching between

organisations. Specialisation benefits derive from concentration of demand raising overall

quality and productivity.

The third group, interaction, concerns the benefits from linkages between members in the

cluster. Tacit knowledge and trust increases the circulation of information and spread of

knowledge and experience. Cooperation and competition help shape the dynamics of the

cluster. Organisations not only compete for customers and resources but also gain

confidence and experience through joint projects. Early experimental development phases

can be organised informally with local partners which would require more formal

arrangements with non-cluster members.

Whilst listing the common benefits is useful to identify the key advantages associated with

clusters, it does not, on its own, provide a coherent framework to analyse the performance

dynamics within a cluster.

Porter (2000) provides a framework for the sources of competitive advantage specifically

associated with geographical clusters graphically depicted as a diamond of interrelated

influences. This framework is shown in Figure 10.

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Figure 10. Sources of Locational Competitive Advantage

Source Porter (2000)

This model is more than an expansion of the groups of benefits provided by Preissl and

Solimene (2003). It introduces the concept of interrelated influences forming a dynamic

system. Changes in one influence directly affect the functioning of the others as well as the

overall system performance.

Whilst Porter’s diamond is a step forward it is does not capture the level of relevant detail

required nor does it lend itself easily to a practical analysis or guidance for policy makers.

The field of System Dynamics developed by Jay W. Forrester (1961) takes the concept of

interrelated influences a stage further. It utilises internal feedback loops to provide models of

organisational structures. Roberts (1978) defines System Dynamics as the application of

control system principles and techniques to managerial, organizational, and socioeconomic

problems. This approach has been directly applied to geographic clusters by Chin-Huang Lin

et al (2006) to produce a performance analysis model for clusters. Lin et al consider

organisations or structures in terms of their common underlying flows. These flows create what

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are termed as “causal loops”. Lin et al define four sets of flows which they use to explore the

factors affecting the competitive advantage of clusters. The four flows, or dimensions, are

defined as follows:

Manpower flows: factors include professional demand, channel and speed of

personnel training, number of high quality human resources.

Technology flows: factors include technology spill over, knowledge resources,

entrepreneurial technological level and entrepreneurial competitive strength.

Money flows: factors include substantial investment fund, loan desire of banking

institution, funds raising ability and entrepreneurial usable fund.

Market flows: factors include the attractiveness of regional concentration, the

completeness of related and supporting Industries, the specialized ability of

suppliers, market potential capacity and industrial scale.

Figure 11. The four sets of flows each create a positive feedback loop which are constrained

from runaway expansion by restriction factors which are indicated by red arrows and –ve

symbols.

Whilst conceptualising the performance of the cluster as a series of flows is a powerful tool,

this model has significant drawbacks. Specifically defining a small number of factors as

restricting the expansion of the flow is potentially misleading; a reduction in the relative

performance of any of the factors in the system dynamics diagram would negatively affect

flow. Also arranging the links between factors in static casual loops is a simplification which

makes the model inflexible, limiting its ability to reflect real world events where links are likely

to be more dynamic.

The most significant drawback is that it is simply too complex to form the basis of a

meaningful management tool. The principals of feedback loops and flow are useful concepts

but require a framework which is easier to visualise and provides clear and concise

information for cluster policy makers and stakeholders.

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Figure 11. System dynamics diagram for an industrial cluster

Source Chin-Huang Lin et al (2006)

A model is required which provides the relevant level of detail whilst simplifying or omitting the

irrelevant complexities. Coyle’s (2004) approach to strategic modelling states that a model has

the following three components:

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It has a purpose which is best expressed as a question (or a set of questions) which it

is designed to answer - the model is a tool for thought about those questions.

It is a simplification of reality because reality is too difficult to think about.

Much of reality is irrelevant to the problem - a model therefore embodies assumptions

about what needs to be included and what can be excluded.

Coyle adds several corollaries to these points including:

Simplifying a real problem requires some intellectual courage and the temptation to

add more and more detail in an illusory search for accuracy must be resisted.

Because it simplifies a problem, a model can never be 'right' - the art is to be just wrong

enough to be useful.

A framework is required which is able to analysis the dynamics of the UK Space Cluster,

highlighting the factors which has led to its current level of success whilst drawing attention to

issues that could be improved. Due to the operational complexity of the cluster and its

constituent organisations this model needs to be a greatly simplified version of reality providing

information and guidance that can be easily interpreted by key actors within the cluster.

The literature review found no framework that combined the required level of granularity with

the perspective of the policy maker designed specifically for the analysis of Clusters. The

framework which stood out as having the most useful attributes was a model for analysing

Technology Innovation Systems. In this case the Technology Innovation System (TIS)

corresponds to the wider UK Space industry and the UK Space Cluster is embedded within

and forms an integral part of this TIS.

Figure 12 shows the positioning of the UK Space Cluster within this environment. The formal

definition of a TIS is the set of actors and rules that influence the speed and direction of

technological change in a specific technological sector (Hekkert et al., 2007, Bergek et al.,

2008).

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Figure 12. Positioning of the UK Space Cluster within its TIS environment

Before this TIS model various researchers and policy analysts have used empirical studies

of innovation systems to try to understand their structure and dynamics. However policy

makers often experience difficulties in extracting practical guidance from this type of study

(Bergek et al., 2008). This was previously noted as a significant drawback of the System

Dynamics approach proposed by Chin-Huang Lin et al (2006). The TIS model was

specifically developed to address this issue and has since been adopted by numerous

regional and national public organisations including the OECD and European Commission

(Albert and Laberge 2007, OECD 1997, OECD 1999, OECD 1999b, E. Commission 1996, E.

Commission 2002).

The aim of the framework is to identify key performance issues and give policy guidance

through the identification and assessment of the key functions that influence innovation

performance (Bergek et al., 2008).

The UK Space industry is reliant on technology innovation to fuel its growth and viewing the

sector as an Innovation System is the natural choice for the analysis of its performance and

growth potential. As a subset of the space sector the cluster relies on the same core TIS

functions, with a direct comparison between sector and cluster giving additional insight into

the competitive advantages provided by the cluster.

Adapting the model to analyse technology innovation at the level of a cluster is a logical

evolution of the TIS model and provides clear and accessible guidance for policy makers.

Consequently an adapted version of the TIS analysis model has been adopted for the

analysis of both the UK Space Sector (TIS) and the UK Space Cluster.

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4.4 The Technology Innovation System (TIS) analysis framework

Hekkert et al. (2011) state the purpose of analysing a TIS is to evaluate the development of

the technological field in terms of the structures and processes that support or hamper it.

Three basic steps to analysing the performance of a system are then defined:

Analyse the structure

Evaluate how the system is functioning

Identify system problems that inhibit the functioning of the system

In regards to the first step, the structure is the network of interrelated organisations,

consumers, institutions and technology that make up the UK Space cluster as outlined in

section 2.1.2.

The second step, evaluating how the system is functioning, utilises an analysis framework of

seven core interacting functions (Hekkert et al., 2007, Bergek et al., 2008). These functions

are:

1. Entrepreneurial Activity

2. Knowledge Creation

3. Knowledge Diffusion

4. Guidance

5. Market Formation

6. Resource mobilisation

7. Legitimisation

Whilst there are some minor differences in the titles given to these TIS functions there is

broad agreement in the academic literature as to their scope.

The faculty of Geosciences Utrecht University, of which Professor Hekkert as a staff

member, describes the important difference between the structure of the system and its

functions in a dedicated TIS website.

“The important difference with the structure of the innovation system is that these

system functions are much more evaluative in character. Focusing on functions

allows us to address the performance of an innovation system. In other words: the

structure presents insight in who is active in the system, the system functions

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present insight in what they are doing and whether this is sufficient to develop

successful innovations.” Faculty of Geosciences Utrecht University (2011).

It is the core functions as related to the UK Space Cluster that are the focus of the analysis.

It is these functions that the policymakers can monitor; adapting their policies to enhance the

overall system performance.

The following description of the seven core functions along with examples of functional

performance indicators are based on the definitions outlined by Hekkert et al. (2007) and

Bergek et al (2008).

Core Functions of Innovation System Example Function Indicators

Function 1: Entrepreneurial Activity

The role of the entrepreneur within an

established organisation or start up is to

turn the potential of new knowledge and

ideas into business opportunities by taking

action. Innovation based sectors such as

the UK Space Industry evolve under

considerable uncertainty in terms of

technologies, applications and markets.

Entrepreneurial experimentation is key to

overcoming these risks and bringing new

technologies and applications into the wider

domain

Number of new entrants and

diversifying existing firms

Number of new types of

applications

The breath of technologies

used and the character of

complementary technologies

employed

Support structures for

entrepreneurial activity

A culture not adverse to risk

taking and prepared to learn

from failure

Function 2: Knowledge Creation

The knowledge creation function is

associated with learning through R&D,

academic research and patenting activities

that create variety in the knowledge base

The number, size and degree

of variety in R&D projects

The competitive advantage of

the knowledge base

The rate of patent applications

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The gradient of the learning

curve

The rate and quality of

academic publications

Function 3: Knowledge Diffusion

This function captures how knowledge is

diffused and combined within the cluster

and the wider UK space sector. When the

development of knowledge is diffused

throughout the network, learning on a sector

or cluster level takes place, enhancing

technology, applications and market

development. Knowledge diffusion can also

promote the positive aspects of rivalry and

increase personal motivation

The amount and type of

collaboration within the sector

or cluster

The kind of knowledge that is

shared between organisations

The frequency, type and

'weight' of official gatherings

The frequency and strength of

informal interactions between

individuals from different

organisations

Availability of shared spaces

to facilitate informal

interactions

The frequency and type of

virtual interactions between

individuals and organisations

Function 4: Guidance

Guidance can take the institutional form of

policy targets, but is often realised through

expectations of the lead technology users.

It enhances legitimacy and can stimulate

the mobilisation of resources. Guidance can

also take the form of information regarding

likely future regulatory or legal changes

Certainty regarding specific targets or regulations set by government or industry

Clear communication of lead users’ needs and demands

Belief in growth potential

Articulation of vision or expectations in regards to the core technologies

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Function 5: Market Formation

Emerging technologies often face difficulties

when accessing new markets. Support

for innovation can be provided by

governments but also by other

organisations in the wider innovation

system. Public policy can be used to create

temporary protected spaces through

favourable tax regimes, minimum

consumption quotas or other activities

Existing market growth

potential

Unrestricted access to

potential markets

Institutional stimuli for market

formation

Level of market uncertainties

faced by potential developers

Function 6: Resource mobilisation

The availability and allocation of resources,

human, financial, and infrastructure is a

necessary input to all activities in the

innovation process. Whilst education is a

key driver for the provision and quality of

human resources, financial resources can

take many forms: internal budgets, external

Venture Capital or Equity, government

grants or subsidies. The availability of

complementary specialist equipment or

services through the sector's network also

plays an important role as does the intrinsic

(non-financial) motivation of those working

within the industry. Not only can intrinsic

motivation boost productivity but studies

have shown its important role in enhancing

creativity and innovation

The rate of capital deployment

The availability of capital

across the innovation life cycle

The rate of deployment of

human resources

Matching of education policies

to the sector requirements

Availability of specialist

complementary assets or

services

Availability of infrastructure for

expansion, i.e. office space,

accommodation

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Function 7: Legitimisation

Legitimacy is a measure of social

acceptance and compliance with relevant

institutions. Innovation and its proponents

need to be considered appropriate and

desirable for resources to be mobilised, for

demand to form and for the sector to

acquire political strength. The frequency

and quality of coverage in the media is an

important factor shaping society's

perceptions and helps drive a sector's

political visibility. Legitimacy also influences

expectations amongst managers and by

implication their strategy

Public opinion towards the

sector

How it is depicted in the media

Activity and strength of lobby

groups

Level of institutional and

governmental support

The core functions detailed above are relevant at both the sector and the cluster level. The

cluster has additional functions which reflect the specific benefits of a geographical cluster.

These additional functions work to enhance the core seven functions and are consequently

termed second tier functions in this analysis.

Whilst it is possible to derive many second tier functions from the cluster benefits listed in

Table 2 (page 18) it is important to limit the number considered. The original seven core

functions provide a relatively simple, clear and management friendly analysis; each

additional second tier function diminishes this clarity.

The second tier functions which have been included in the analysis are as follows:

Informal interactions (linked to core function Knowledge Diffusion)

The frequency and quality of unplanned interactions with colleagues

and members of other cluster organisations.

See section 4.6 (page 36)

Availability of informal shared spaces (linked to core function

Knowledge Diffusion)

The physical infrastructure and layout design of buildings that facilitate

informal interactions. This includes shared spaces such as coffee

shops, bars, restaurants and recreational facilities.

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Intrinsic (non-financial) motivation (linked to core functions

Resource Mobilisation)

The drive to work for internal rewards; a sense of purpose, mastery,

new challenges. See section 4.5 (page 32)

Physical infrastructure (linked to core function Resource

Mobilisation)

Operational infrastructure; office and laboratory space, transport links.

This extended TIS analysis framework purely addresses the functional dynamics of the

cluster and the wider innovation system, the UK Space sector. Optimising the performance

of the core functions creates an environment which maximises the potential for innovation

and growth of the system. The framework is focused at the cluster and wider innovation

system level rather than that of the firm. Often these performance dynamics overlap, but not

always. For instance a high level of entrepreneurial activity, whilst performance enhancing

for the system, may introduce disruptive innovations which effect the profitability of individual

firms and their existing products.

The reduction of the innovation system’s complex dynamics to seven core functions provides

enough granularity to capture the key performance drivers whilst achieving clarity and

accessibility as a management tool.

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Figure 13. The TIS model expanded to include cluster related second tier functions

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4.5 Intrinsic Motivation (extension to TIS model)

A key component of the core function Resource Mobilisation is the availability of human

capital. The Space sector is an extreme example of a knowledge based industry requiring

highly skilled and technical personnel. The sector is reliant on innovation to fuel its growth

and as such the technical skills need to be complimented with creative talent.

Hunter, Cushenbery and Freidrich (2012) address the challenging task of identifying and

hiring an innovative workforce. Figure 14 illustrates that there is no single measure of

creative potential, rather it is an aggregate of traits categorised into Knowledge, Skills,

Abilities and “Other” (KSAO). The listed required KSAOs describe an educated high quality

individual with a broad set of abilities. Such an individual will be highly saught after by a wide

range of sectors, some of which will be able to offer significantly greater financial reward

than the space sector.

Figure 14. Interactionist model of an individual’s innovative potential

Source: Hunter, Cushenbery and Freidrich (2012)

In order to analyse the mobilisation of innovative human capital within the Space sector and

the cluster an understanding of personal motivation is required; that which motivates an

individual whilst within the sector and to originally select the UK Space sector for a career.

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One of the longest standing and influential models of Motivation at work was developed by

Abraham Maslow (1954). Maslow’s theory, based on a hierarchy of needs, is often

represented as a pyramid with the most fundamental level “Physiological” at the bottom and

“Self-Actualisation” at the top. In Maslow’s theory basic low level physical and safety needs

have to be satisfied first. Once these “pre-potent” levels are fulfilled then individuals are free

to move up through the remaining levels in sequence.

Figure 15. Maslow’s Hierarchy of Needs

Source: Conley, 2007

Maslow’s Hierarchy of needs shown in Figure 15 contains the following levels:

Self-fulfilment needs:

Self-Actualisation: morality, creativity, problem solving, acceptance of facts

Psychological needs:

Esteem: prestige, feeling of accomplishment, confidence, respect of others

Social/belonging: intimate relationships, friends, interaction with peers

Basic needs:

Safety: physical safety, security of employment, health, security of property

Physiological: breathing, water, food, sleep, warmth

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A deficiency in a basic need, such as a lack of water, will dominate the lives of those

affected. Only once lower level needs are satisfied can individuals move on to higher level

needs and so on up the pyramid. Empirical attempts to validate Maslow’s theory have

achieved mixed results (Latham and Pinder, 2005); many theories of motivation developed

since cast some doubt on whether people have the needs Maslow posited or that the

satisfaction of one leads to the activation of another (Bolman and Deal, 2003).

Whilst the empirical veracity of Maslow’s theory may be in question it does provide a level of

insight that is helpful in understanding why motivation in the workforce is changing over time.

Society in developed countries has largely developed to a point where it meets the basic

needs (Physiological and Safety) of its population. The result is a work force that is

increasingly motivated by Psychological and Self-fulfilment needs.

This change in work force motivation is the focus of a book by Daniel H. Pink (2011). Pink

outlines how society has largely relied on what he terms Motivation 2.0 to encourage

employees to improve performance. Motivation 2.0 is a system based on extrinsic drivers;

managers reward the good and punish the bad. It supersedes the earlier operating system

which dominated in pre-history, Motivation 1.0, which is little more than biological urges; the

will to survive.

Pink perceives Motivation 2.0 as too simplistic and unenlightened; that it suggests

“human beings aren’t much different from horses – that the way to get us moving in

the right direction is by dangling a crunchier carrot or wielding a sharper stick” (Pink

2011, p.19).

He does go on to concede that what it lacked in subtlety it made up for in effectiveness

stating “It worked well – extremely well. Until it didn’t” (Pink 2011, p. 20).

This reflects the earlier observation that society is meeting Maslow’s base needs and work

place motivation is moving towards satisfying higher level drives.

Pink groups Motivation 2.0’s defects or incompatibilities into three categories:

How we Organise What we do

The rise of open source. Unpaid work effectively competing with more traditional

business models; examples include Wikipedia, Linux, and the Firefox browser.

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How we think about what we do

Traditional economics and Motivation 2.0 assumes that individuals are rational

calculators of our own self-interest; that we are wealth-maximisers. Frey (1998)

states, “Human motivation is not restricted to monetary incentives” (p. ix),

adding “People do things by intrinsic motivation when they just enjoy doing

them”.

Pink gives the example of working to master the clarinet on weekends when it won’t

provide any income (Motivation 2.0) or assist in acquiring a mate (Motivation 1.0).

How we Do what we do

The majority of work in the last century was repetitive and followed a set of

prescribed instructions. More recently in developed countries work has become more

creative, interesting and self-directed. This is at odds with Motivation 2.0 that

assumes work is not enjoyable, which is why external rewards and punishments are

required.

It is by considering these incompatibilities that lead Pink to develop what he terms Motivation

3.0. This model is based on three main components:

Autonomy

Individuals desire autonomy over what they do, when they do it, who they do it with

and how they do it.

Mastery

Individuals desire to keep improving themselves and strive for mastery over tasks.

Purpose

In motivation 3.0 Pink doesn’t reject the concept of profits but places equal emphasis

on purpose maximisation. Individuals no longer only work for personal gain, they

desire to work towards a meaningful goal which is larger than themselves; to

motivate employees with the greater vision to which their work contributes.

These three components are intrinsic motivations and as such align themselves with the

higher levels of needs outlined by Maslow.

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It is by considering intrinsic motivation that an explanation can be found as to how the UK

Space sector can attract high quality innovative individuals. Policy makers and key

stakeholders within the sector can have an influence over the sense of purpose associated

with Space. This will have a motivational effect on existing members and in attracting new

talent to the industry. It is for this reason that intrinsic motivation is included as a relevant

second tier function in the cluster analysis framework.

4.6 Informal interactions and shared spaces (extension to TIS

model)

Of the seven core functions the benefits of knowledge diffusion and its associated second

tier functions, informal interactions and informal shared spaces, are perhaps the least

transparent. As such it is worth looking into these functions in more depth.

Tallman et al (2004) look specifically at how knowledge diffusion, or knowledge flows,

establish competitive advantage at both the firm and cluster level. Using a technique created

by Henderson and Clark (1990) and later developed by Matusik and Hill (1998) and, Tallman

et al divide knowledge into two distinct types, component and architectural:

Component knowledge

Specific knowledge resources, skills and technologies that relate to identifiable parts

of the organisation. Subject to discovery through R&D, component knowledge is

potentially transferable to other firms.

Architectural knowledge

Structures, culture and processes for utilising its component knowledge for

productive use. Typically complex, intangible and tacit architectural knowledge is

generally not readily accessible by other firms.

Matusik and Hill (1998) propose that component knowledge can only be kept private for a

limited period of time and as such cannot generate a sustained competitive advantage.

Tallman et al note that firms within a cluster, with frequent informal interactions, personnel

movement and common suppliers will be subject to enhanced inter-cluster component

knowledge transfers.

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This seems to imply that being a member of a cluster would reduce the period during which

component knowledge would provide a competitive advantage. Tallman et al argue that this

is not the case due to the role played by architectural knowledge.

Firms with similar architectural knowledge will have enhanced component knowledge

transfer rates as the similar conditions and activities will improve knowledge absorption. In

addition to architectural knowledge at the firm level Tallman et al propose that a separate

layer of architectural knowledge also exists at the cluster level. This common set of

organisational principles and processes act to increase the transfer of component knowledge

within the cluster whilst inhibiting its movement to non-cluster organisations.

Barney and Hoskisson (1990) have shown that knowledge shared by a limited number of

firms can still generate competitive advantage. Tallman et al propose that cluster-level

architectural knowledge provides sustained competitive advantage to firms in the cluster by

restricting the movement of component knowledge out of the cluster and by providing a

unique common base of know-how for applying such technology.

Informal interactions between individuals within the cluster form the primary channel for

component knowledge transfers and as such form an important part of the cluster analysis.

Another benefit of informal interactions is an increase in intrinsic motivation; cross

organisational conversations spark curiosity and helps enhance the sense of shared

purpose.

Cluster policy makers and infrastructure developers have a significant role in influencing the

frequency and quality of interactions between cluster members. The physical environment

has a significant effect on informal interactions, and therefore component knowledge

diffusion.

An article by Jonah Lehrer (2012) titled “Groupthink” includes a number of case studies

which illustrate the impact of the physical layout of work environments on informal

interactions and knowledge diffusion.

Lehrer notes that the latest generation of architects have tried to increase the occurrence of

informal encounters in research laboratories and that this trend has also spread to the

design of corporate work spaces. Lehrer describes Steve Jobs as a fanatical believer in the

power of building design to enhance the work of groups. Quoting from Walter Isaacson’s

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biography of Jobs (2011) Lehrer describes how Jobs oversaw the planning of the Pixar’s

new headquarters in 1999.

The features that Jobs incorporated into the building included:

Entire building arranged around a central/common atrium

All mailboxes located together in the lobby

All meeting rooms, coffee bar and shop located together at the building’s centre

Only one set of bathrooms located centrally in the atrium

All of these design features where intended to facilitate frequent informal meetings. Whilst

there was initially a degree of scepticism (especially in regards to the single set of toilets) the

staff of Pixar were eventually won over.

“At first, I thought this was the most ridiculous idea”, Dara Anderson, producer at

Pixar films. “I didn’t want to walk all the way to the atrium every time I needed to do

something. That’s just a waste of time. But Steve said, ‘Everybody has to run into

each other.’ He really believed that the best meetings happened by accident, in the

hallway or parking lot. And you know what? He was right. I get more done having a

cup of coffee and striking up a conversation or walking to the bathroom and running

into unexpected people than I do sitting at my desk.” Source Jobs biography, Isaacson

(2011).

Lehrer also considers “Building 20” at MIT. Prior to its demolition in 1998 Building 20 was

widely regarded to as one of the most creative spaces in the world. Built as a temporary

laboratory for radar research during the Second World War, the large two hundred and fifty

thousand square foot building was designed in an afternoon by a local architecture firm. As a

building the structure was unlikely to win any awards. It violated fire codes, ventilation was

poor, and hallways were dim. It was also unbearably hot in summer and freezing in winter.

MIT had promised to demolish the building at the end of the war but an influx of students left

the university short of space. Building 20 became the overflow lab and office space for a

wide range of academic departments. Whilst the majority of these departments were science

or engineering based it was also home to areas of research as diverse as linguistics.

The space forced usually solitary scientists to continually mix and mingle. The largely

horizontal layout encouraged longer encounters whilst walking corridors, rather than brief

interactions in elevators. In addition the counter intuitive room and wing labelling system

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meant that even long-time residents were constantly getting lost, further increasing the

frequency of informal interactions. The urban theorist Jane Jacobs (1969) described these

informal exchanges as “knowledge spillovers”. It was these spillovers, or component

knowledge transfers, that was central to the unparalleled level of innovation and creativity

which lead to the building being referred to as the “magical incubator”.

Whilst Building 20 wasn’t designed to be a world class centre of innovation the lessons

learnt can be applied when designing work spaces and groups of buildings such as clusters.

An environment which enhances innovation requires frequent and high quality informal

interactions; whether through chance meetings moving between locations or through shared

spaces such as coffee shops or recreational facilities.

As for the linguistics department in Building 20, it produced the revolutionary theory of

Chomskyan linguistics; the proposition that every language shares a deep structure which

reflects the cognitive structure of the brain. Chomsky’s work drew not only the discipline of

linguistics but also biology, psychology and computer science. It is not a coincidence that

experts in all these fields where present in Building 20 at the time.

“There was a mixture of people who later became separate departments interacting

informally all the time. You would walk down a corridor and meet people and have a

discussion”. Source interview with Professor Noam Chomsky, Dizikes (2011).

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5 Data acquisition methodology

The process of development of lines of communication, relationship building and data acquisition proceeded through the steps listed in

Table 3.

Table 3. Schedule of key stakeholder meetings

Introductory meeting with Dr Tim Bestwick, Executive Director of Business and

Innovation and Chief Executive of STFC Innovation Ltd. Acquire understanding of

desired management deliverables and access introductions to key cluster

stakeholders

Initial meetings with key stakeholders. Gain insight into the organisations, their

interdependences and cultures. Functional mind map of the cluster. Develop key

line of communication with STFC Cluster development manager

Inter-cluster social media information exchange (Twitter) analysis

Post analysis design follow up meetings with key cluster actors. Feedback on

suitability of model, buy in of key actors into framework. Assistance in marketing

survey. Arrangements for future analysis presentations to cluster members

Online survey publication and marketing. Representation at internal cluster

meetings to encourage survey engagement

Post survey results meeting with Cluster development manager

Appendix A details meetings with Cluster key stakeholders. The formally structured data

acquisition for the cluster analysis was collected through the online survey. The meetings

with key stakeholders were a valuable opportunity to gain insight into the operation of the

cluster from the perspective of different organisations. Their view of recent events proved

valuable for interpreting the survey results. In addition these meetings helped build

relationships and management buy-in for the analysis framework.

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5.1 UK Space Cluster online survey

In order to identify the current system constraints members of the cluster were asked to rate

the relative strength of the seven core system functions plus the four second tier functions

previously outlined via an online survey2. The survey asked for the perception of function

strength using a five level rating scale rather than any asking for specific

performance/financial data. A comment box was included with each of the core functions for

the cluster members to add additional commentary. This high level reflective approach

follows the methods previously employed for TIS systems analysis in the academic literature

(Van Alphen et al 2009, Bergek et al 2008). A benefit of this technique is that the survey can

be kept simple and relatively quick to complete whilst still capturing a wide range of opinions

and performance concerns.

The survey contains a separate page relating to each of the seven core functions. At the top

of the page the function is described and examples of performance indicators listed. This

introduction follows the wording of the functional outline and examples of performance

indicators used previously in section 4.4 (page 25). An example page from the survey is

shown in Appendix B. The Resource Mobilisation and Knowledge Diffusion core function

pages each have two additional second tier function questions and rating requests.

Opinions of the relative performance of each core function and the intrinsic motivation

second tier function were sought with respect to each of the following four reference frames:

UK Space Cluster, Harwell (Recent)

UK Space Cluster, Harwell (Current)

Wider UK Space Sector (Recent)

Wider UK Space Sector (Current)

"Recent" was defined as the three year period prior to June 2016; "Current" from June 2016

to survey completion (Dec 2016). In addition to the direct distribution obtained for each

reference frame, the following comparisons were also analysed:

UK Space Cluster rating (Current) – Wider UK Space Sector (Current)

UK Space Cluster rating (Recent) – Wider UK Space Sector (Recent)

UK Space Cluster rating (Current) - UK Space Cluster rating (Recent)

Wider UK Space Sector (Current) - Wider UK Space Sector (Recent)

2 The online survey was conducted using the Open Source survey application LimeSurvey (www.limesurvey.org) hosted on a local NAS device. Survey link: http://a3c.synology.me:8888/LimeSurvey/index.php?r=survey/index&sid=679136

http://www.limesurvey.org/

http://a3c.synology.me:8888/LimeSurvey/index.php?r=survey/index&sid=679136

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The first two comparisons illustrate the performance enhancement of the Cluster over the

wider UK Space Sector, whilst the second two examine the change in perceived

performance over the last six months. A benefit of defining the current as since June 2016 is

that this captures functional strength pre and post the BREXIT vote.

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6 UK Space Cluster survey results

In this section the survey ratings are presented side by side for each of the core and

secondary functions along with the response distribution’s standard deviation (SD), mean

and standard error (SE) on the mean. The standard deviation, shown as a filled bar is a

measure of convergence of opinion.

A total of 28 cluster members and stakeholders finished the survey. It was not compulsory to

give a rating for each section so the number of responses varied between functions.

The results are later interpreted in section 6.4 (starting page 47).

Figure 16. Key to survey results charts (unless otherwise stated)

Mean

Standard Error on the Mean

Standard Deviation of rating (opinion convergence)

Recent

Current

Very Good

Neutral

Very Poor 1

2

3

4

5

Mean

Standard Error on the Mean

Standard Deviation of rating (measure of opinion convergence)

Recent

Current

Very Good

Neutral

Very Poor

Good

Poor

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6.1 Core functions survey results

Table 4. UK Space Cluster Harwell Core functions


Figure 17. UK Space Cluster Harwell

Figure 18. Wider UK Space Sector

Recent Current

Mean SE SD #Respon Mean SE SD #Respon

Entrepreneurial 3.88 0.16 0.80 26 4.15 0.16 0.82 26

Knowledge Creation 4.13 0.16 0.78 24 4.24 0.16 0.79 25

Knowledge Diffusion 3.58 0.15 0.74 26 3.92 0.13 0.67 26

Guidance 3.76 0.15 0.76 25 3.65 0.14 0.73 26

Market Creation 3.32 0.17 0.84 25 3.46 0.16 0.80 26

Resource Mobilisation 3.25 0.20 0.97 24 3.56 0.17 0.85 25

Legitimisation 3.79 0.19 0.91 24 4.00 0.17 0.85 25

Recent Current





Guidance 3.18 0.24 1.11 22 3.10 0.21 0.97 21

Market Creation 2.86 0.20 0.92 22 2.91 0.19 0.93 23


Legitimisation 3.13 0.22 1.03 23 3.33 0.23 1.11 24

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6.2 Second tier functions survey results



Figure 19. Second tier system function performance

Recent Current


Informal interactions 3.96 0.14 0.73 28 4.11 0.13 0.67 28

Informal Shared Spaces 3.44 0.31 1.30 18 3.45 0.28 1.24 20

Operational infrastructure 2.73 0.24 1.23 26 2.92 0.22 1.11 26

Recent Current


IM, Cluster 4.08 0.17 0.81 24 4.15 0.15 0.77 26

IM, Wider UK Space Sector 3.40 0.26 1.16 20 3.45 0.25 1.20 22

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6.3 Core functions survey results – Rating comparisons



Figure 20. Cluster minus Wider Sector

Figure 21. Current minus Recent

Recent Current





Guidance 3.76 0.15 0.76 25 3.65 0.14 0.73 26

Market Creation 3.32 0.17 0.84 25 3.46 0.16 0.80 26


Legitimisation 3.79 0.19 0.91 24 4.00 0.17 0.85 25

Recent Current





Guidance 3.18 0.24 1.11 22 3.10 0.21 0.97 21

Market Creation 2.86 0.20 0.92 22 2.91 0.19 0.93 23


Legitimisation 3.13 0.22 1.03 23 3.33 0.23 1.11 24

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6.4 UK Space Cluster – rating interpretation

Function 1. Entrepreneurial Activity

How would you best describe the relative performance of

Entrepreneurial activity?

(5)Very Strong (4)Strong (3)Neutral (2)Weak (1)Very Weak

Summary of Entrepreneurial Activity results

Current cluster level function strength 4.15 ± 0.16; cf. cluster average function

strength 3.86 (1.86 SE above average).

Cluster absolute functional strength ranking #2 (out of 7)

Current cluster enhancement relative to sector 1.07 ± 0.22; cf. cluster average

enhancement 0.78 (1.32 SE above average).

Cluster relative to sector enhancement ranking #1 (out of 7)

Change (Current - Recent) of cluster function strength 0.27 ± 0.1; cf. cluster average

change 0.18 (0.84 SE above average).

Cluster function recent change ranking #3 (out of 7)

Figure 22. Entrpreneurial Activity summary

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The core function of Entrepreneurial Activity at the cluster rates highly, providing the greatest

cluster enhancement relative to the wider UK Space Sector of all the core functions.

There is significant UK government and ESA support for entrepreneurial activity at the

cluster which is primarily channelled through the Satellite Applications Catapult and the ESA

Business Incubation Centre (ESA BIC); the STFC manages the ESA BIC on behalf of ESA.

More specifics are given in the Resource Mobilisation core function section.

The Catapult and BIC initiatives help reinforce the strong entrepreneurial and innovation

culture on campus. In addition to start-ups existing firms are eager to have a presence on

campus and be connected to this innovation rich environment; although as stated in the

second respondent comment, they are likely to be more risk adverse and less responsive to

potential opportunities.

Selection of Entrepreneurial survey comments (full comments listed in Appendix. C).

“Recent commitment to investment from UK PLC has increased the level of activity

in the sector, although the developments with Brexit and US administration change

are not helping new growth.” [Respondent ID 18]

“Genuine new start-ups at Harwell show excellent entrepreneurial activity, e.g.

personal risk on behalf of the founder(s) to explore new opportunities and ideas.

'Beach head' offices from the likes of Airbus Defence and Space, Thales Alenia

Space, Lockheed Martin et al, have a more business as usual approach; risk

aversion, preference for proven technologies and dithering over decision making.”

[Respondent ID 26]

“The presence of the ESA Business Incubation Centre and the Satellite Applications

Catapult at Harwell continues to be an important enabler of and support for

entrepreneurial activity on campus.” [Respondent ID 36]

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Function 2. Knowledge Creation

How would you best describe the relative performance of Knowledge

Creation?


Summary of Knowledge Creation results







Change (Current - Recent) of cluster function strength 0.12 ± 0.12; cf. cluster

average change 0.18 (-0.56 SE above average).


Figure 23. Knowledge Creation summary

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Knowledge creation is rated by the survey as the strongest function of the cluster and

represents the second highest cluster enhancement over the wider sector. This core function

at the campus benefits from the following:

Over 50 Universities have a physical presence on campus. These links will continue

to strengthen and grow when the planned Universities Quarter is developed on site

by the Harwell Campus JV.

RAL Space (an integral part of the STFC) and the development of the R100 building

a new space integration and test facility. RAL Space is a world class space research,

technology development and data facility.

ESA and ESA ECSAT helping to drive R&D projects especially in the fields of

telecommunications and climate change.

The Satellite Applications Catapult; primarily intended to enable innovation and

entrepreneurship in satellite applications and technology, the associated continuing

R&D is also contributing to the Knowledge creation core function.

The strength of this function is in strong contrast to the weakness of the core function Market

Creation (function 5). This is reflected by the first of the survey comments which suggests

that the role taken on by the Satellite Applications Catapult and the ESA BIC of turning ideas

into commercial sales would benefit from further expansion.

Selection of Knowledge Creation survey comments (full comments listed in Appendix C).

“The UK is great at basic TRL knowledge creation, and appalling at taking it beyond

that. We see little activity mid TRL, but significant activities below TRL53,

consequently much of the knowhow is either reinvested back into the system (grant

factories), or dissipates overseas.” [Respondent ID 18]

3 Technology Readiness Levels (TRLs). Level 5 refers to Technology Demonstration level (Component and/or bench configuration subsystem validation in relevant environment). Source NASA 2012.

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“The establishment of the SA Catapult and ESA ECSAT facility and related rise of

companies has undoubtedly increased knowledge creation / R&D on campus cf. the

wider U.K.” [Respondent ID 28]

“In addition to the government and industrial R&D capabilities at Harwell, I have

heard that more than 50 UK and overseas universities have some kind or presence

or collaboration.” [Respondent ID 36]

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Function 3. Knowledge Diffusion

How would you best describe the relative strength of Knowledge

Diffusion?


Summary of Knowledge Diffusion results








average change 0.18 (1.35 SE above average).


Figure 24. Knowledge Diffusion summary

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Knowledge Diffusion is mid-rated relative to the other core functions for both absolute

strength and enhancement relative to the wider space sector. Knowledge diffusion or

“knowledge spillover” is central to the competitive advantage of the cluster and has two

associated second tier functions, informal interactions and availability of informal shared

spaces in this analysis.

As previously discussed the main channels for knowledge diffusion are formal and informal

meetings. Whilst codified or explicit knowledge can be exchanged with distance independent

communications such as email, tacit knowledge, such as experience, insights, internalized

information, requires interactive learning and consequently frequent face-to-face interactions

(Kaufmann et al 2003). In addition cluster level architectural knowledge acts to accelerate

the diffusion of component knowledge within the geographical boundaries of the cluster

(Tallman et al, 2004).

Formally arranged cluster wide meetings/networking events are regularly arranged on site

including:

Satuccino - Monthly at the Satellite Applications Catapult. Coffee, cluster members

presentations and networking. Well attended with an informal atmosphere.

SpaceCakes - monthly ESA BIC (STFC managed) networking and collaboration

event similar to “Satuccino”.

Connect Harwell – campus wide bi-monthly networking and event promoting

collaboration.

These formally arranged events not only provide a direct opportunity for collaboration and

knowledge diffusion but also provide introductions which later lead to enhanced informal

interactions.

“Most of my networking is done by bumping into people around campus... but that

requires that I know them first, which comes from personal introductions and

networking events.” [Survey Respondent ID 43]

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Function 3. Knowledge Diffusion Second Tier functions:

Informal interactions

Specifically, how would you describe the frequency and quality of

informal interactions at the Harwell campus between individuals from

different organisations or departments?

(5)Very Good (4)Good (3)Neutral (2)Poor (1)Very Poor

Availability of informal shared spaces

How would you describe the availability of shared spaces at Harwell

which encourage informal interactions: cafes, bars, sport and

recreational facilities?

(5)Excellent (4)Good (3)Adequate (2)Poor (1)Very Poor

Figure 25. Knowledge diffusion Second tier functions

Whilst informal interactions achieve a high rating the availability of informal shared spaces in

significantly weaker. These informal interactions are largely the result of the strong schedule

of networking events. As the Pixar and MIT Building 20 case studies illustrated in order for

an environment to truly drive innovation it also requires a high frequency of unplanned

informal interactions that are so important to the core function of knowledge diffusion.

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The poor provision of informal spaces (as described in the survey comments) should be

considered a constraint to the overall performance of the cluster as an Innovation System.

Selection of Knowledge Diffusion survey comments (full comments listed in Appen. D).

“From a sector perspective, collaborations are increasing - yet more needs to be

done. On campus there has been a welcome increase in opportunities for in-sector

and cross-sector informal networking through organised events (Harwell Connect,

Space Cakes, Sattuccino). However, the quality of infrastructure for informal

meetings has deteriorated - in particular the reduced offering in the Electron cafe.”

[Respondent ID 28]

“Formally organised networking events are a strong feature of the campus. The

provision of shared space for informal interactions is somewhere between poor and

adequate and more is needed.” [Respondent ID 36]

“More formal than informal interactions” [Respondent ID 53]

“Re informal interactions: Good, but could be better. We need more shared space

coffee bars etc.” [Respondent ID 55]

Homogeneity of knowledge diffusion within the cluster

The academic literature on knowledge diffusion treats clusters as a homogenous entity. But

do cluster members interact in this way or do knowledge diffusion and informal interaction

sub-clusters form? Whilst the restricted depth of questions in the survey provide no real

insight in to this question another source of information is publically available which can act

as a proxy; social media.

By creating a Twitter account linked only to cluster members it is possible to trace which

members are following which twitter feeds within the cluster. The resulting relationship matrix

can be analysed using the Wolfram Mathematica4 functions “CommunityGraphPlot” and

“EigenvectorCentrality”. The first function looks to the links to ascertain if there are sub-

4 Mathematica application information available at https://www.wolfram.com/mathematica/

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clusters whilst the second identifies the twitter feeds which are most central to virtual

knowledge diffusion (those that are followed by those that are themselves highly followed).

The 60 most central cluster twitter accounts are listed in Appendix D.

The “CommunityGraphPlot” function produced the plot shown in Figure 26 and shows that

the cluster, at least on a social media basis, is formed of four sub-clusters. Further analysis

shows that members are on average 2.5 times more likely to follow a feed from within their

own sub-cluster than the cluster average. Similar patterns of sub-clustering are also likely to

be present in the physical interactions within the cluster.

Whilst the analysis of the cluster continues to assume homogeneity there is value in

understanding the simplifications and therefore limitations that the model contains.

Figure 26. UK Space Cluster social media (Twitter) sub-clusters Size of data labels signifies the number of followers

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Function 4. Guidance

How would you describe your satisfaction with the level of Guidance

provided by government or industry?

(5)Very high (4)High (3)Neutral (2)Low (1)Very Low

Summary of Guidance results


strength 3.86 (-1.41 SE above average).



enhancement 0.78 (-0.83 SE above average).


Change (Current - Recent) of cluster function strength -0.11 ± 0.09; cf. cluster



Figure 27. Guidance summary

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The performance of the Guidance function is relatively weak ranking fifth out of the seven

core functions. It also shows below average cluster enhancement and most importantly is

the only function to have degraded over the previous six months.

The UK Space Agency does provide a good deal of official sector guidance. With bi-annual

updates to its “The Size & Health of the UK Space Industry” report, the Space Innovation

and Growth Strategy (IGS) report and the Government’s response to the IGS – the Space

Growth Action Plan. Specific sector income targets have been set for 2020 and 2030 which

have recently been reaffirmed. Government is also backing the growth strategy with

corresponding funding initiatives.

At a cluster level there is additional guidance offered by agencies on campus which include

the UK Space agency, Satellite Applications Catapult, ESA, STFC Space Cluster

Development, and ESA BIC.

So why is the Guidance showing relatively weak performance and recently degraded?

Possible reasons include:

BREXIT has created uncertainty as to access to skilled European employees,

markets and involvement in European projects.

The recent downturn in the global space market has cast doubt over the rigid growth

targets in the IGS.

The IGS focus on the needs of lead users doesn’t always resonate with cluster

members who can see this to be in conflict with the process of disruptive innovation.

Guidance as to the development of necessary campus infrastructure is weakened by

the often slow moving local planning process.

Recent leadership changes within the UK Space Agency.

Selection of Guidance survey comments (full comments listed in Appendix C).

“The UK Government's policy targets for the growth of the UK space industry are

clearly defined in the Space Innovation and Growth Strategy. However I question

the strategy of focusing on "Clear communication of lead users’ needs and

demands". Many sectors and markets have shown repeatedly that listening to lead

user needs does not bring about disruptive innovation.” [Respondent ID 26]

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“Government has adopted industry growth targets and increased investment. From a

Harwell perspective (as focal point for U.K. Sector), government has delivered on

commitments to establish R100, ECSAT, SA Catapult and specific support schemes

(e.g. Launch pads). Government has also invested the EU; in Copernicus and Galileo

as data / service drivers for future products / services.” [Respondent ID 26]

“We have reasonable guidance at Harwell (largely of our own making) but the Space

IGS process for UK space sector as a whole has faltered” [Respondent ID 53]

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Function 5. Market Creation

How would you best describe the relative strength of Market

Formation?


Summary of Market Creation results










Figure 28. Market Creation summary

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The performance of the Market Creation function is the weakest of all the core functions,

ranking seven out of the seven. It also shows the lowest cluster enhancement and the

performance (within statistical error) is not showing any recent improvement.

The poor rating of this function is a reflection of the Market creation function’s performance

and of the recently tough global space market (The Space Foundation, 2016).

The contrast between Knowledge Creation and Market Creation ratings is significant and

indicates that the performance of the process of taking ideas through to income generating

sales is a constraint on the overall innovation system performance. Whilst specialist staff are

assigned by agencies and firms within the cluster to gain access to new and grow existing

markets more resources are needed.

The poor performance of the Market Creation function mirrors the classic perception of

British industry; great at creative ideas, poor at commercialisation. A characteristic which

needs to change if the IGS targets are to be achieved.

Selection of Market Creation survey comments (full comments listed in Appendix C).

“Key constraint is resources - that many key technical players are often working hard

on projects that have little slack and find it hard to provide vital inputs to support BD

[Business Development] colleagues working to develop markets.” [Respondent ID

10]

“No specific difference between Harwell and UK Industry has identified growth

markets and have been tasked to develop reports on each market - this work has

been delayed but is now being reinvigorated. Governments can be anchor customers

for services - the UKSA's SSGP programme is doing work in this area but more could

be done with additional resource.” [Respondent ID 28]

“The uncertainty caused by Brexit may be damaging.” [Respondent ID 36]

“The market is limited at present but is growing.” [Respondent ID 55]

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Function 6. Resource Mobilisation

How would you describe the Resource Mobilisation?


Summary of Resource Mobilisation results










Figure 29. Resource Mobilisation summary

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The perceived poor performance of the Resource Mobilisation core function is dominated by

concerns over physical infrastructure and transportation links. Survey comments illustrate

this trend as do conversations with key stakeholders at the cluster. Infrastructure concerns

ranked more highly than the provision of funding or the availability of skilled human

resources. The shortage of infrastructure is the key constraint on the performance and

growth of the cluster. Once this constraint is eased then other resource issues will become

more critical as they in turn become system growth constraints.

Identified areas of key infrastructure weakness:

Shortage of office space and laboratories

Shortage of affordable local housing

Shortage of on-site affordable hotel rooms

Transport links, specifically congestion related to the A34

Shortage of informal shared spaces

Suitability of ESA BIC office space for start-ups

Selection of Resource Mobilisation survey comments (full comments listed in Appenix D).

“Transport is key factor. The campus is located at a site with road infrastructure that

has poor resilience against all manner of problems including bad weather, accidents,

and the generally poor management of roadworks.” [Respondent ID 10]

“Availability of quality infrastructure remains a huge challenge - especially for start-

ups:

1. Hot desking / co-shared space (in Sat Apps) is OK for an individual working alone

but is not suitable for a confidential meeting - more easy access meeting pods are

needed.

2. ESA-BIC space is unsuitable for start-ups. The "1950's" style rabbit-hutch offices

prevent dynamic interaction between other tenants and lead to feelings of isolation.

Investment in a well-lit, open plan style environment (with private meeting spaces)

will return on the investment by being a location that start-ups actually wish to be and

invariably sparking innovation & success. Getting out of the ESA-BIC at Harwell was

one of the best moves my business made.

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3. The need by the JV to seek long term lease agreements is a barrier for SMEs. A

start-up / SME has little idea where its business will be in 3yrs time, let alone in 5 to

10yrs - the typical lease agreement period being sought. Truly innovate and

disruptive tenants will either go bust (the idea simply didn't work) or need different

accommodation arrangements than that they agreed to when little was known about

the future. The only certainly in the first few years of a business's life is that their

business plan and accommodation/infrastructure needs are wrong!

4. Commercial broadband costs on campus are an order of magnitude higher than

domestic services of same quality. The STFC ought to be offer a much better deal.

5. Campus needs a decent budget hotel for visiting guests, staff and customers.

6. Staff and customers routinely report the A34 as a significant reason for disruption

when trying to get to campus.” [Respondent ID 26]

“Infrastructure at Harwell has improved but is still sub-optimal. The PERCEPTION of

Harwell as inaccessible will be difficult to shift, despite some improvements to buses

etc. Office space of the right kind is seen as a real issue.” [Respondent ID 28]

“There is a lack of appropriate accommodation on campus. As we expand we're

likely to end up on Milton Park or similar, which would not be as good as staying

here. Public transport links aren't great. Cycling is OK” [Respondent ID 43]

“Got better recently (finance, buildings, but still more to do).” [Respondent ID 53]

“Needs more space; office buildings and labs” [Respondent ID 55]

The provision of physical infrastructure along with intrinsic motivation were rated separately

in the survey as second tier functions. As shown in Figure 30 (page 66) the cluster

infrastructure rating was the lowest rating of the entire survey although there was a

perception of recent improvement.

Local transport issues aside there is a structure in place which is in the process of delivering

significant new campus infrastructure; the Harwell Campus JV. The JV is a 50/50 Public

Private partnership involving the Atomic Energy Authority which owns the land, the STFC

and Harwell Oxford Management which represents the Private sector shareholding and

provides access to private investment capital.

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The Harwell Campus JV master plan (Appendix E) shows significant development of new

infrastructure which includes residential, office, laboratory, Space cluster specific office and

lab space and a degree of informal shared spaces. As the knowledge diffusion function is

particularly dependent on the quality and quantity of informal interactions the importance of

planning informal spaces should be considered of primary rather than secondary

importance. Traditionally informal spaces have been a concern of providing the required

services rather than the interactions they facilitate; this perspective is ineffective when

designing infrastructure for an innovation cluster.

Whilst there is a plan to develop the campus’s physical infrastructure it is the rate of delivery

that is creating the functional constraint. This constraint is due in part to the time taken to

achieve planning approvals from the local district council. Despite the campus being

designated an enterprise zone planning applications go through a process not designed to

facilitate the rapid development of centres of innovation. Unexpected approval delays can

last years, resulting in deterioration of the Resource Mobilisation function. In addition the

uncertainty inherent in the process is damaging to the Guidance core function.

It should also be noted that the local district council has potentially conflicting priorities to

those of the campus. As previously noted the local transport links are already under

considerable pressure and continued development of the campus will only increase the

strain. Local residents, who the district council ultimately answer to, may not be in favour of

continuing rapid development; a pressure which may surface during the planning approval

process.

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Function 6. Resource Mobilisation Second Tier functions:

Physical infrastructure

How would you describe the availability of physical infrastructure

(office space, accommodation, transport links) to support Cluster

expansion?


Intrinsic (non-financial) motivation

How would you describe your sense of the intrinsic (non-financial)

motivation of individuals?


The second tier function Intrinsic Motivation was

also rated in the Resource Mobilisation section.

Intrinsic Motivation is important to attract the

highly skilled work force required by the cluster to

the sector. This non-financial form of motivation is

strong at the cluster and is enhanced by the

shared sense of purpose experienced on campus.

Whilst attracting skilled employees and

entrepreneurs may not currently be the key

constraint on the Resource Mobilisation function,

as the infrastructure continues to develop it is

likely to become so.

Figure 30. Resource Modilisation

Second tier functions

The potential of a career in the sector and the promise of working towards the meaningful

shared goal of space enabled exploration is something that should be communicated to the

younger generations more effectively. Achieving the IGS 2030 target will require that many

of the brightest current students choose a career path in the space sector.

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Function 7. Legitimisation

How would you describe your perception of the Legitimacy?


Summary of Legitimisation results










Figure 31. Legitimisation summary

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The Legitimisation core function is relatively strong; ranked third out of the seven functions.

The function benefits from the high profile media coverage of Major Tim Peake’s mission to

the ISS and high profile missions such as Rosetta. The UK Space Agency has achieved a

high degree of success in maximising media coverage for recent space related programs.

Whilst such coverage helps promote interest in Space more could be done to promote the

success of the UK Space sector as an important growth sector for the UK economy and as

an attractive career option.

The current governmental support of the sector is in part a response to the Guidance offered

by the Space IGS report. This strategy paper has rigid and aggressive growth targets for the

sector. If growth is slowed by a continued downturn in the global space market then despite

strong system performance within the UK then these targets could be missed. Whilst rigid

targets can gain initial political support and funding, if it becomes clear that they will be

missed then there is a risk is of damaging this support and the Legitimisation core function.

The increased perceived Legitimisation of the cluster relative to the wider sector is a

consequence of the highly visible agency and governmental support on campus and the

long history of world class science and technology innovation at the campus.

As a high technology and innovative sector UK Space is well placed to take advantage of

new communication channels to engage the public. One such development is the wider

adoption of Virtual Reality (VR) technology. VR experiences from the ISS or created from the

Mars rover are an opportunity to not only engage but immerse the public in the experience of

Space. The recently announced SpaceX moon shot planned for 2018 will generate further

interest in the sector and perhaps provide a unique opportunity for a broadcast VR Space

experience.

Selection of Legitimisation survey comments (full comments listed in Appendix C).

“The UK space sector spends a very small % of revenue on promoting its activities to

the public / wider society. Other industries, specifically the motoring sector, invest

considerably more. I doubt anyone outside the space sector could name a single UK

satellite builder. Plenty of people - who don't actually drive - can name 3 motor car

companies. The sector needs to invest more to increase ‘Legitimacy’.” [Respondent

ID 26]

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“Coverage is strong and positive - in particular the sector has capitalised upon Tim

Peake. Harwell has benefited from this along with the rest of the sector.”

[Respondent ID 28]

“Improved by Tim Peake, Rosetta (Philae & lobbying & work with Gov).” [Respondent

ID 53]

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6.5 Innovation System core function feedback loops

The seven core functions are linked. Events which change the performance of one function

will have a secondary effect on the remaining six (Van Alphen et al 2009, Bergek et al 2008).

The strength of these links vary, depending not only on the functions involved but also on the

specific event. Dominate links can form closed loops where changes in functional

performance can form cyclical flows. The current cluster system dynamic started in 2009

with the publication of the IGS report and is mapped in Figure 32.

Figure 32. UK Space Cluster Innovation System feedback loops

IGS report 2009 (start of cycle)

UK Space Agency sector reports

Government responds to

IGS with Space Growth

Action Plan and funding

for growth initiatives

(2010)

Creation of UK Space

Agency (2010)

ISIC (becomes Sat

Apps Catapult) opens

(2010)

ESA BIC opens (2011)

RAL Space Building

R100 (2015, Harwell)

ESA ECSAT building

(2015, Harwell)

Satuccino, Connect

Harwell, and

SpaceCakes regular

Cluster and wider

campus collaboration

and networking events

Improved links

to Universities

and R&D

organisations

Market

development

by firms and

agencies such

as UK Space

Agency, Sat

Apps

Catapult, ESA

and STFC

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Whilst the rate of growth in the number of member organisations and employees at the

cluster is increasing the overall system dynamic is termed a “virtuous cycle” (Jacobsson and

Bergek, 2004). During periods where the rate of growth decreases or even turns negative

the system dynamic is termed a “vicious cycle”.

Figure 33 illustrates the current key system constraints alongside their respective core

functions. These constraints should be prioritised by the key stakeholders if the cluster

dynamics are to remain “virtuous” and the cluster growth targets are to be achieved.

Figure 33. Current cluster feedback loop constraints

Delays in campus

infrastructure

development

Sub-optimal transport

links

Lack of suitable informal

shared spaces

Under

resourced

Market

development

initiatives

Poor growth

in Global

Space

markets

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6.6 Core function organisational reliance

Figure 34 shows an indicative mapping of the current functional reliance of the cluster on the

key agencies. Whilst this mapping is a simplification it can provide a useful starting point

when considering actions designed to enhance functional performance.

Source: conversations with key UK Space Cluster members

Key: 3 Critical, 2 Strong, 1 Significant

Figure 34 . Indicative core and second tier function reliance on cluster agencies and related organisations

Entrepreneurial

Activity

Knowledge

Creation

Knowledge

Diffusion

Guidance Market

Formation

Resource

Mobilisation

Legitimisation

RAL Space 2 1 1 3 3

UK Space Agency 2 1 2 3

Innovate UK 1 1 2 1

Department for Int Trade 1 2 1

ESA 2 1 2 2 1 3

ESA bic 2 1 2 2

Sat Apps Catapult 3 2 3 2 2 2 2

Harwell Campus (JV) 2 1 3 2

Space Cluster Devlopment 2 1 1

OxLEP 2

Vale of White Horse DC 3

University links 1 3 1

Informal

interactions

Informal

shared space

Intrinsic

motivation

Physical

Infrastructure

RAL Space 1

UK Space Agency 3

Innovate UK

Department for Int Trade

ESA 3

ESA bic

Sat Apps Catapult 3 3

Harwell Campus (JV) 2 3 1 3

Space Cluster Devlopment

OxLEP 1 2

Vale of White Horse DC 3 3

University links 1 2

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7 Conclusion & recommendations

7.1 The analysis framework

The Technology Innovation System (TIS) framework is a close match for this analysis. It

provides the correct level of granularity by simplifying performance to seven core functions. It

is also aims at providing guidance to sector level policy makers rather than individual firms.

The model was adapted to include cluster level considerations through the inclusion of four

second tier functions. These functions directly feed into their corresponding core function but

their importance at cluster level warrants that they are analysed separately. The second tier

functions were limited to the most relevant four to keep the models overall clarity and

accessibility as a management tool.

The power of the model is enhanced by the consideration of performance flows between the

core functions. These flows create feedback loops which illustrate how an improvement in

one function will lead to an enhancement throughout the system. Conversely a functions

decline in performance or a functional constraint will act to degrade or limit the performance

of the entire system.

The TIS framework adapted to include second tier cluster specific functions has the right

balance between complexity and clarity to provide a useful tool for cluster level policy

makers.

The performance of the core functions and their links change over time. Consequently the

functional strength and the mapping of the feedback loops should be regularly updated for

the analysis to remain relevant.

The framework is designed to analyse innovation clusters and is not specific to the UK

Space Cluster. Its use would be equally valid for a health-tech cluster or any other innovation

cluster.

7.1.1 Recommendations

The framework along with the current analysis should be presented to the clusters key policy

makers. Assuming the model is seen as providing valuable insight, a cluster organisation

should take ownership of the framework and provide bi-annual updates at the cluster board

meetings. The wider cluster should continue to provide functional performance feedback

through regular publications of the online survey. Members of the cluster should have

access to the analysis.

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7.1.2 Future research

An excel based model was developed during this analysis which simulated the performance

flows around the system. The model varied the strength and timings of links between

functions and produced the virtuous and vicious cycles predicted by the theory. With only

one set of survey data the scope to develop the simulation is severely limited. Once multiple

historic data sets, correlated to cluster functional events, are available then the simulation

could be developed to provide linkage and timing information between the functions. The

ultimate aim would be to produce a simulation accurate enough to provide meaningful

performance forecasts.

7.2 UK Space Cluster analysis

All seven core functions achieve a higher rating at the UK Space Cluster than for the wider

UK Space sector. The cluster average rating is 3.86 whilst the sector is 3.08 (a rating of 3

being neutral, 4 Good and 5 Very Good). As Harwell is designated the focus for innovation

and growth for the space sector by the UK government, a degree of overall enhancement

would be expected. Overall the cluster’s functional performance is healthy and indicates a

strong growth environment.

Except for Guidance each of the cluster core functions showed a recent improvement; the

Guidance function is particularly affected by uncertainty related to Brexit. The average

increase in rating of 0.18 signifies that the cluster is currently in a virtuous loop facilitating an

increase in its rate of growth. A continuing increase is required if the cluster employment

targets are to be achieved.

The survey data and comments highlights the current cluster functional constraints. As

illustrated in Figure 33 (page 71) the key system constraints are:

Delays in campus infrastructure development

Sub-optimal transport links

Lack of suitable informal shared spaces

Under resourced market development initiatives

Poor growth in global space markets

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7.2.1 Recommendations

The most significant system constraint is infrastructure development. The Harwell Campus

JV is working to deliver a campus master plan which will address the majority of the

infrastructure issues. The local district council planning process is a source of significant

delays and sustains the constraint on the Resource Mobilisation function. Attention should

be given to the planning process and the relationship with planning officials by the Cluster’s

policy makers and government agencies. The campus is important to the development of

technology innovation at a national level and yet is constrained by local politics.

The provision of shared high quality informal spaces should be a primary objective of the

future development of the campus. Opportunities for knowledge diffusion are as important as

the provision of electricity or the internet for a centre of innovation. Left as an afterthought

the campus will always underperform its significant potential.

Additional resources at both agency and firm level should be assigned to the development of

markets. Access to new markets is required to achieve the sector growth targets in the IGS

report.

With the recent decline in the growth of the global space market the IGS income growth

targets are under pressure. Failure to meet these highly visible targets will likely degrade the

guidance and legitimacy functions leading to a decline in system performance. The UK

Space sector should elevate the importance of metrics over which the UK sector has more

control, such as percentage of the global market and direct employment, above income

targets.

Policy makers should recognise the importance of intrinsic motivation in providing the

quantity and quality of human resources required by the sector’s future growth ambitions.

Space exploration is perhaps the most visible and exciting of the science and technology

sectors and much can be done to increase engagement with the next generation of potential

engineers, scientists and entrepreneurs.

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9 Appendices

Appendix A. Schedule of meetings with key Harwell UK Space Cluster stakeholders at the

Harwell Campus.

11 Feb

2016

Dr Tim

Bestwick

Exe Dir STFC Business

and Innovation and Chief

Executive of STFC

Innovation Ltd. Board

member of Harwell

Campus.

Initial project buy in. Define scope

& email introductions to key cluster

stakeholders

14 Mar

2016

Angus

Horner

Dir Harwell Science &

Innovation Campus LP.

MD Prorsus Ltd.

Key to development of campus

physical infrastructure. Major

discussion points organisational

interdependencies and

development plans.

14 Mar

2016

Dr Barbara

Ghinelli

Campus Business

Development Director,

STFC

Campus organisational

interdependencies, cultures, future

cluster development

14 Mar

2016

Antonia

Jenkinson

Satellite Applications

Catapult CFO

Catapult operational structure,

resources, culture, and knowledge

diffusion. Funding structures.

Networking events.

14 Mar

2016

Dr Chris

Mutlow

Dir STFC RAL Space RAL Space resources & services,

interdependencies, funding,

culture differences in cluster.

Future R100 building and future

development.

15 Mar

2016

Alan

Brunstrom

ESA Liaison Officer ESA at Harwell, development,

resources, culture. IGS.

Organisational interdependencies.

15 Mar

2016

Colin

Baldwin

UK Space Cluster

programme manager,

UK Space Agency

UK Space Agency resources,

innovation initiatives,

interdependencies. IGS, Sector

performance reports. IGS

performance targets.

15 Mar

2016

Steven

Ringler

Harwell Space Cluster

Development manager,

STFC

Cluster organisational structure,

resource development, growth

strategies. Project buy in. Key

assistance with information

sourcing, data.

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11 Feb

2016

Dr Tim

Bestwick



Executive of STFC


member of Harwell

Campus.

Follow up meeting to discuss initial

meetings with key stake holders.

5 Dec

2016

Angus

Horner

Dir Harwell Science &

Innovation Campus LP.

MD Prorsus Ltd.

Presentation of analysis

framework. Feedback on core

functions. Promote framework as a

cluster management tool.

5 Dec

2016

Colin

Baldwin

UK Space Cluster

programme manager,

UK Space Agency




cluster management tool

5 Dec

2016

Dr Tim

Bestwick



Executive of STFC


member of Harwell

Campus.




cluster management tool.

Dates arranged for formal

presentation of Cluster analysis to

wider group of cluster members

5 Dec

2016

Dr Barbara

Ghinelli

Campus Business

Development Director,

STFC





5 Dec

2016

Alan

Brunstrom

ESA Liaison Officer Presentation of analysis




5 Dec

2016

Steven

Ringler



STFC




cluster management tool. Final

push to lever network to increase

survey response

14 Feb

2016*

Steven

Ringler



STFC

Discussion of survey results.

Sense checking of understanding

of cluster structures and

interdependencies. * All day meeting and analysis workshop

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Appendix B. Example online survey page (Knowledge Diffusion)

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Appendix C. Online survey comments

Function 1. Entrepreneurial Activity (Survey respondent’s comments)

“Co-location of key teams is spurring developments (as you would expect - but

nonetheless good to see)” [Respondent ID 10]

“Recent commitment to investment from UK PLC has increased the level of activity in

the sector, although the developments with Brexit and US administration change are

not helping new growth.” [Respondent ID 18]

“Genuine new start-ups at Harwell show excellent entrepreneurial activity, e.g.

personal risk on behalf of the founder(s) to explore new opportunities and ideas.

'Beach head' offices from the likes of Airbus Defence and Space, Thales Alenia

Space, Lockheed Martin et al, have a more business as usual approach; risk

aversion, preference for proven technologies and dithering over decision making.”

[Respondent ID 26]

“Both Harwell and the wider sector are entrepreneurially strong - an issue is in

definitions as it is often innovation in other sectors that lead to novel uses of space

data / tech. UKSA are increasing support for entrepreneurs through our work with

business incubators.” [Respondent ID 28]

“The presence of the ESA Business Incubation Centre and the Satellite Applications

Catapult at Harwell continues to be an important enabler of and support for

entrepreneurial activity on campus.” [Respondent ID 36]

“May have been a degree of entrepreneurial activity in recent years emanating from

Harwell, but potentially the communication of this activity has been suboptimal”

[Respondent ID 54]

Function 2. Knowledge Creation (Survey respondent’s comments)

“Far too much focus on exploiting existing knowledge. We remain very weak at

encouraging creation of new knowledge - funding of creative staff being the key

issue. This is especially the case for younger people who face high costs from living

in Oxfordshire and repayments of student loans.” [Respondent ID 10]

“The UK is great at basic TRL knowledge creation, and appalling at taking it beyond

that. We see little activity mid TRL, but significant activities below TRL55,

consequently much of the knowhow is either reinvested back into the system (grant

factories), or dissipates overseas.” [Respondent ID 18]

“The establishment of the SA Catapult and ESA ECSAT facility and related rise of

companies has undoubtedly increased knowledge creation / R&D on campus cf the

wider U.K.” [Respondent ID 28]

“I have taken part in the workshops/conferences organised at the Catapult as well as

those by the Institute for Environmental Analytics.” [Respondent ID 35]

“In addition to the government and industrial R&D capabilities at Harwell, I have

heard that more than 50 UK and overseas universities have some kind or presence

or collaboration. I think this would be a useful area to explore, firstly to assess the

5 Technology Readiness Levels (TRLs). Level 5 refers to Technology Demonstration level (Component and/or bench configuration subsystem validation in relevant environment). Source NASA 2012.

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current status and secondly to investigate whether there might be benefits from

bringing the academic presence together more.” [Respondent ID 36]

Function 3. Knowledge Diffusion (Survey respondent’s comments)

“It's important to focus on shared spaces that encourage daytime interactions. Out of

hours interactions work poorly at Harwell simply because people live far from the

campus and often in different directions.” [Respondent ID 10]

“Good interactions but little collaboration.” [Respondent ID 23]

“Shared spaces could be improved by the provision of free and easy Wi-Fi access. If

coffee chains and airports the world over can offer internet access without the need

to obtain printed security log on details, then there's no reason why this cannot be

provided campus wide. Needing to obtain log in codes can destroy the dynamic of a

spontaneous opportunity.” [Respondent ID 26]

“From a sector perspective, collaborations are increasing - yet more needs to be

done. On campus there has been a welcome increase in opportunities for in- sector

and cross-sector informal networking through organised events (Harwell Connect,

Space Cakes, Sattuccino). However, the quality of infrastructure for informal

meetings has deteriorated - in particular the reduced offering in the Electron cafe.”

[Respondent ID 28]

“Formally organised networking events are a strong feature of the campus. The

provision of shared space for informal interactions is somewhere between poor and

adequate and more is needed.” [Respondent ID 36]

“Most of my networking is done by bumping into people around campus... but that

requires that I know them first, which comes from personal introductions and

networking events.” [Respondent ID 43]

“More formal than informal interactions” [Respondent ID 53]

“Re informal interactions: Good, but could be better. We need more shared space

coffee bars etc.” [Respondent ID 55]

Function 4. Guidance (Survey respondent’s comments)

“The UK Government's policy targets for the growth of the UK space industry are

clearly defined in the Space Innovation and Growth Strategy. However I question

the strategy of focusing on "Clear communication of lead users’ needs and

demands". Many sectors and markets have shown repeatedly that listening to lead

user needs does not bring about disruptive innovation. A policy based on listening to

lead users and large incumbents therefore needs to [be] pursued with eyes open, as

disruptive innovations will - and do - get dismissed.” [Respondent ID 26]

“Government has adopted industry growth targets and increased investment. From a

Harwell perspective (as focal point for U.K. Sector), government has delivered on

commitments to establish R100, ECSAT, SA Catapult and specific support schemes

(e.g. Launch pads). Government has also invested the EU; in Copernicus and Galileo

as data / service drivers for future products / services.” [Respondent ID 26]

“We have reasonable guidance at Harwell (largely of our own making) but the Space

IGS process for UK space sector as a whole has faltered” [Respondent ID 53]

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“Pretty good - we spend a chunk of time providing guidance to SMEs” [Respondent

ID 55]

Function 5. Market creation (Survey respondent’s comments)

“Key constraint is resources - that many key technical players are often working hard

on projects that have little slack and find it hard to provide vital inputs to support BD

[Business Development] colleagues working to develop markets.” [Respondent ID

10]

“No specific difference between Harwell and UK Industry has identified growth

markets and have been tasked to develop reports on each market - this work has

been delayed but is now being reinvigorated. Governments can be anchor customers

for services - the UKSA's SSGP programme is doing work in this area but more could

be done with additional resource.” [Respondent ID 28]

“The uncertainty caused by Brexit may be damaging.” [Respondent ID 36]

“We are doing OK but not as well as we need to.” [Respondent ID 53]

“The market is limited at present but is growing.” [Respondent ID 55]

Function 6. Resource Mobilisation (Survey respondent’s comments)

“Transport is key factor. The campus is located at a site with road infrastructure that

has poor resilience against all manner of problems including bad weather, accidents,

and the generally poor management of roadworks. This is compounded by the

proximity of the A34 and its track record of accidents and the knock-on congestion of

local roads. There is an ironic twist to this in that the advent of satellite navigation has

made the problem worse by encouraging diverted traffic to use minor routes.”

[Respondent ID 10]

“Availability of quality infrastructure remains a huge challenge - especially for start-ups:

1. Hot desking / co-shared space (in Sat Apps) is OK for an individual working alone but is not suitable for a confidential meeting - more easy access meeting pods are needed.

2. ESA-BIC space is unsuitable for start-ups. The "1950's" style rabbit-hutch offices prevent dynamic interaction between other tenants and lead to feelings of isolation. Investment in a well-lit, open plan style environment (with private meeting spaces) will return on the investment by being a location that start-ups actually wish to be and invariably sparking innovation & success. Getting out of the ESA-BIC at Harwell was one of the best moves my business made.

3. The need by the JV to seek long term lease agreements is a barrier for SMEs. A start-up / SME has little idea where its business will be in 3yrs time, let alone in 5 to 10yrs - the typical lease agreement period being sought. Truly innovate and disruptive tenants will either go bust (the idea simply didn't work) or need different accommodation arrangements than that they agreed to when little was know about

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the future. The only certainly in the first few years of a business's life is that their business plan and accommodation/infrastructure needs are wrong!

4. Commercial broadband costs on campus are an order of magnitude higher than domestic services of same quality. The STFC ought to be offer a much better deal.

5. Campus needs a decent budget hotel for visiting guests, staff and customers.

6. Staff and customers routinely report the A34 as a significant reason for disruption when trying to get to campus.”

[Respondent ID 26]

“Infrastructure at Harwell has improved but is still sub-optimal. The PERCEPTION of

Harwell as inaccessible will be difficult to shift, despite some improvements to buses

etc. Office space of the right kind is seen as a real issue.” [Respondent ID 28]

“There is a lack of appropriate accommodation on campus. As we expand we're

likely to end up on Milton Park or similar, which would not be as good as staying

here. Public transport links aren't great. Cycling is OK” [Respondent ID 43]

“Got better recently (finance, buildings, but still more to do).” [Respondent ID 53]

“Needs more space; office buildings and labs” [Respondent ID 55]

“Availability of housing and services close to Harwell and transport links to Harwell

site” [Respondent ID 56]

Function 7. Legitimisation (Survey respondent’s comments)

“The UK space sector spends a very small % of revenue on promoting its activities to

the public / wider society. Other industries, specifically the motoring sector, invest

considerably more. I doubt anyone outside the space sector could name a single UK

satellite builder. Plenty of people - who don't actually drive - can name 3 motor car

companies. The sector needs to invest more to increase ‘Legitimacy’.” [Respondent

ID 26]

“Coverage is strong and positive - in particular the sector has capitalised upon Tim

Peake. Harwell has benefited from this along with the rest of the sector.”

[Respondent ID 28]

“2016 was an important year for public opinion about the space sector, triggered by

Tim Peake” [Respondent ID 36]

“Improved by Tim Peake, Rosetta (Philae & lobbying & work with Gov).” [Respondent

ID 53]

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Appendix D. Top 60 UK Space Cluster social media influencers* (Twitter).

*Ranked by centrality within the cluster (Wolfram Mathematica: EigenvectorCentrality function)

Nine out of the top ten twitter accounts are linked to agencies rather than firms.

1 UKSpaceAgency 16 AirbusDefandSp 31 Eutelsat 46 IPF

2 ESA 17 InnovateUKAndy 32 ComDev 47 EOSphere

3 SACatapult 18 UKSpaceAgencyHuntingdon 33 exactEarth 48 NSCO

4 InnovateUK 19 Planetlabs 34 SterlingGeo 49 Proteus

5 SSTL 20 Geocento 35 GVL 50 Teamsurv

6 InnovateUKTim 21 LockheedMartin 36 MDA 51 Huduma

7 KTN 22 BirdI 37 EnvironmentSys 52 CobhamAeroflex

8 HarwellCampus 23 Thales 38 OpenCosmos 53 Terradue

9 STFCB2B 24 DigitalGlobe 39 MeVitae 54 Viasat

10 RALSpace 25 UKSpaceAgencyOrrlyon 40 SmithIns 55 OxfordNanoSys

11 OxfordSpaceSys 26 UKSpaceAgencyJV 41 Qinetiq 56 EMFComp

12 InnovateUKCraig 27 Geoger 42 MullardSpace 57 Neptec

13 DeimosUK 28 Telespazio 43 Electrospinning 58 Honeywell

14 Rezatec 29 BuzzardCam 44 AutoNaut 59 SkyTec

15 InnovateUKAndyG 30 SatsafeTech 45 GMV 60 Quickbird

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Appendix E. Harwell Campus master development plan

Facility Progress

1 Residential Quarter Submit Application Q3 2017, construction Q2 2018

2 HQ Offices 2017 completing Q2 2017

3 The Quadrangle Completion Q4 2017

4 European Space Agency (ESA) Existing (2015)

5 Genesis Building Existing (2016)

6 Antenna Existing

7 University Quarter Planning application Q3 2017

8 R100 RAL Space Existing (2015)

9 Space Cluster Planning application Q3 2017

10 Diamond Light Source Existing

11 Rutherford Appleton Laboratory Existing

12 Public Health England Existing

13 Medical Research Council Existing

14 ISIS Neutron Source Existing

15 Central Laser Facility Existing

16 Research Complex @ Harwell Existing

17 Human Spaceflight Capitalisation Existing

18 Satellite Applications Catapult Existing

19 Scientific Computing Data Existing

Fig E1. Harwell Campus Master Plan. Source: Harwell 2107

Success factors and dynamics of the UK Space Cluster at ... · A Dissertation Submitted in...

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