Daniel Susskind: UK should look to Google for R&D lessons

From his chats with Tesla boss Elon Musk to his Stanford University sweaters, Rishi Sunak has made no secret of his admiration for Silicon Valley and its start-ups-turned-tech behemoths.

But has the UK prime minister, who worked in California from his mid-twenties to his early thirties, drawn the right lessons about why Google, Apple and Facebook are so wildly successful, asks the economist Daniel Susskind in Growth: A Reckoning, his new book exploring how politicians might deliver on oft-repeated promises to fix sluggish productivity and kick-start growth.

Resources for higher education professionals on research management

Specifically, does Mr Sunak appreciate the immense continuing research and development investments made by the world’s leading technology companies? For example, Google’s parent company, Alphabet, spent $27.6 billion (£22 billion) on R&D in 2020, or 15.1 per cent of its revenue, while Facebook ploughed $18.5 billion (21 per cent) into research and Microsoft $19.3 billion (13 per cent), noted Professor Susskind, a research professor in economics at King’s College London whose 2018 TED Talk on the future of work has been viewed more than 1.5 million times.

In contrast, the Westminster government “slapped itself on the back” when it announced that UK Research and Innovation’s budget would hit £8.8 billion in 2024-25, Professor Susskind observed about the “first-order problem” of unambitious R&D spending, a failing not confined to the UK either, given the “investment drought” seen in other developed countries since the mid-1970s.

“Rishi is pro-business and pro-R&D and knows research investment is important,” Professor Susskind, who served as a Downing Street adviser under Gordon Brown and Lord Cameron of Chipping Norton, told Times Higher Education. “But if you look at what he’s done, he maybe thinks R&D isn’t important enough,” he said, referencing the government’s innovation outlay, which despite having risen to almost 3 per cent of gross domestic product and nearly £20 billion annually, is still well behind other nations with science superpower ambitions of their own.

“If you compare us to Israel or South Korea, our R&D investment is very low. But other comparisons are more astonishing, with innovative companies routinely investing 15 per cent of revenues into R&D,” continued Professor Susskind. “While a company is not a country, this level of investment gives you an idea of the importance of this spending.”

For Professor Susskind, the question of how to generate more economic growth is really the “same thing as asking, ‘How do we generate more ideas?’”, he writes in his follow-up to A World Without Work, his acclaimed 2020 best-seller. His prescription is “investing vastly more in R&D”, with universities key to this. “Universities are ideas factories – it’s where people should be spending time. They’re incredibly important, though the key issue is less the effectiveness of universities [in developing products and companies] but their role in the innovation ecosystem,” he said, adding that “the most impressive innovations tend to arise through collaborations with industry”.

Professor Susskind’s impassioned call for “far more” R&D spending is also critical of university-based research, drawing attention to the “administrative bloat” that he links to a decline in research productivity. In the US, for example, managerial and professional staff outnumber faculty and indeed undergraduate students at Harvard and Yale universities, he explains in Growth.

With researchers spending about 40 per cent of their time on grant administration “rather than coming up with new ideas”, there is “no doubt that our universities have a case to answer” for sometimes underwhelming results, Professor Susskind concludes.

Given this situation, far higher investment in technology might be the key to raising research productivity and boosting economic growth, rather than “ever more education and training”, suggests Professor Susskind, who notes that Google’s artificial intelligence arm, DeepMind, managed within just a few years to generate 3D visualisations of protein molecules, providing a solution that had long eluded academic researchers.

In future, R&D policy should “turn to technology and build computer systems that either help researchers in their hunt for new ideas or even replace them altogether”, writes Professor Susskind, who believes that “new ideas will be found and shared outside our minds”.

“There are few things that politicians agree upon, but the need for more economic growth is one of them. But they have a very 19th-century conception of where it comes from: building impressive physical things like new roads or train lines,” said Professor Susskind, who claimed that spending £200 million to improve poor wi-fi on British trains would deliver about a third of the economic benefit of HS2’s high-speed London-Birmingham rail line at about 0.5 per cent of the cost.

In the same way, comparatively modest investments in artificial intelligence will be “absolutely critical in driving the creation of new ideas”, Professor Susskind said.

“There are investments which aren’t exciting, but they are low-hanging fruit – these are what drives growth in today’s economy,” he said.

jack.grove@timeshighereducation.com