Whilst the ‘special relationship’ between the UK and the US has been put to the test this week following a diplomatic dispute, it’s clear that there are still mutually beneficial investment opportunities for the two nations - particularly in the field of robotics and artificial intelligence (RAI).
That was the view of a cohort of leading experts from the UK’s RAI research, start-up and enterprise communities, who were taken out to California and Texas in March of this year on a mission to meet with some of the US’s leading aerospace, marine and cross-cutting technology companies.
The cohort included people from D-RiskQ, Shadow Robot, Rolls Royce, London Southbank University, Brunel University, Soil Machine Dynamics, Forth Engineering, Autonomous Devices, Headlight.AI and HyBird.
Their feedback was presented at an event yesterday in central London, alongside the publication of their findings in new Knowledge Transfer Network (KTN) report - ‘USA Robotics & AI in Extreme Environments 2019’. I’d recommend reading the report for a full overview of the mission and the RAI opportunities available.
The mission was focused specifically on RAI in extreme environments - which is an obvious opportunity for the sector, given how autonomous, intelligent vehicles could improve safety and add value.
However, what was most interesting about the feedback from the teams that travelled out to the US was that the learnings were less about the technologies and more about how UK RAI companies and communities need to think differently about business models and about how they need to adapt to US-styles of working.
In other words, “get more brash”, as one delegate put it, and consider the impact of ‘Uberization’ on RAI business models.
Some of the organisations that the cohort met with on their trip to California and Texas include NASA, JPL, Aerospace, Jacobs and Northrop Grumman.
Speaking at the event yesterday, Paul Larcey, KTN mission lead, said:
We found new insights into the challenges and the opportunities that exist in the US market. Also, how you can expand your technologies into new markets. All the organisations we met with were extremely positive towards the UK. I think we all know that we punch above our weight in so many technology sectors. And that's certainly true in robotics and AI.
Everybody we spoke to would like to work more closely with this country. Now, I'm not saying that’s going to be simple, they’re not just sitting there waiting for us to phone up, but they do want to work with us.
It’s not a hardware game, it’s a service game
In 2012, the Chancellor of the Exchequer announced £600 million of investment to acceleration the commercialisation of ‘Eight Great Technologies’ - £200 million of which would be directed towards RAI by 2020. Also, under the government’s Industrial Strategy, new sector deals have been announced for AI, which includes £300 million of government funding, matched with £700 million from industry and academia.
Put simply, the British government sees a huge opportunity for the economy coming from RAI technologies. And as Larcey notes above, the UK has punched above its weight in this field, developing high growth AI companies and pockets of RAI communities in places such as London and Cambridge. A number of robotics hubs have also been established, which you can find more information about here.
However, despite this, one of the key learnings from the cohort’s investment mission was that US companies and organisations appear to be thinking differently about applied RAI. In other words, the focus is less on the technology itself - or should I say, more specifically, the hardware - and more on how these organisations can ‘servitize’ the industry.
It perhaps shouldn’t be surprising that this is the case, given that many other industries are heading this way - particularly entertainment (streaming), manufacturing and auto - however, it did seem to take the cohort by surprise. Whilst UK companies appear to be focusing on building the robotics and the accompanying software, US companies are focused on automation to achieve a desired service outcome.
Jamil Kanfoud from Brunel University said that what he noticed on the trip to the US, which was unexpected, was that 70% of the investment happening was in software, with the remaining 30% going towards hardware. He commented that this used to be the other way around and this is largely due to the changing nature of RAI business models.
Nick Tudor, director at D-Risq, a UK company that focuses on control system software, also noted:
The first thing we learnt about was business models - the way we are going to deliver this in the future, isn’t necessarily the way in which the Americans are thinking about doing it in this new world of Uberization.
You’ve really got to think about how you're going to deliver what it is that you're developing into a service that somebody would actually like to buy in some way.
An example was provided about a US start-up called Houston Mechatronics, which was founded by former NASA roboticists that are applying Uber-style business models to marine robotics. It has developed a self-contained AUV that is capable of travelling underwater and then transforms into remotely operated underwater vehicle that can carry out maintenance operations, via actuated arms that unfold from the machine. As the KTN report notes, it is “selling the ability to turn an undersea valve, rather than focusing on selling the robot itself”.
Equally, Ken Wahren, CEO of Autonomous Devices, described visiting a company called Brain Corp in the US, which he says essentially sells “shiny floors”. What he meant by that is that Brain Corp doesn’t build machines, but it builds autonomous systems that manage machines that clean floors in buildings (supermarkets, etc) - so what they’re effectively selling is the outcome, or the service, of ‘shiny floors’. This is how American companies are thinking about RAI business models. Wahren said:
At the back end, what they do is, they then charge the customer on a subscription basis. And it's really about the performance of the system. And the benefit that achieves in terms of clean floors.
Sell like an American
Another observation that was made by many of the attendees on the mission, was that the American culture of selling and entrepreneurship is vastly different to that of the UK - and that perhaps RAI organisations in the UK could learn a thing or two about USA-style marketing.
Many attendees at the event this week agreed that whilst the USA has economic advantages - such as vast amounts of VC funding and a much larger economy - there also appears to be a less tangible quality that the US RAI organisations all have...a very ‘American’ confidence and approach to their products and services.
One delegate said that he “despairs” at the attitude towards entrepreneurship in the UK and that the government should work to make entrepreneurship ‘cool’ in order to drive success.
Robert Webb from Forth Engineering, which specialises in ultra high precision milling of machine tool type components, said that on the excursion to NASA, his attention was not drawn to the organisation’s unique technological capabilities. He said:
What I saw as I walked around NASA was that there was very little difference technologically. It's nothing clever, in the grand scheme of things. What they do have that is different, is attitude. The UK needs to change their attitude, and it's an ego thing. [Americans] just go and do it. And that’s all we need to change, because we’ve got it all. We've got all the all the tools in the toolbox.
Equally, Nick Tudor noted:
We heard a lot about the make it and break, move fast bit. And that's absolutely what Americans do. In America you get entrepreneurs who fail and fail and fail, then go and do it. We don't tend to do that in the UK.
Fitting into the supply chain
One other piece of advice attendees on the mission had for RAI companies in the UK was that they shouldn’t just be focused on supplying the likes of NASA with a fully formed end solution, but instead should be thinking about how they could fit into an American organisation’s business model and supply chain. For instance, Nick Tudor said:
You don't necessarily have to go to the end user, you don't have to go to Chevron or NASA, you have to go somewhere into that supply chain and say: “This is going to bring value to that person at the end of the day”.
[You have to show them] that you as an individual, or as an SME, can stitch that supply chain together, to get into those kind of bigger organisations, and then show them that you can stand up on your own two feet.
KTN mission lead, Paul Larcey, highlighted Jacobs Engineering as an opportunity in particular for UK companies, as it has signed a Space Act Agreement with NASA to be a supplier to advance space missions. In other words, companies in the UK could work with Jacobs Engineering, rather than NASA directly. He explained:
NASA can't do this by themselves. They are looking for partnerships, especially in software, testing, control systems, communication networks, and so forth. Now, you can go on to the NASA system, and you can register you're interested in this.
But there is another way through and that is through someone like Jacobs Engineering. They are working very closely with NASA in partnership. And they are an opportunity because they've already signed the Space Act Agreement, but they are looking for collaborators.
So you guys wouldn't have to do that, you wouldn't have to go through the regulatory hurdles and barriers and get lawyers involved. And so you could work very closely with Jacobs. They were very keen to speak to people from the UK, in the sector, and we can provide you with the contact information to see if there's an opportunity for your company. And it's across the full spectrum of disciplines.
The event this week provided an incredibly interesting insight into how the British government can facilitate inward investment into the UK, in an area such as RAI. As noted above, the report released this week is worth reading in full, as it provides a much deeper dive into the opportunities.
Given that the UK is heading towards a Brexit deadline of the end of October, we need to be thinking about innovative ways to export areas of expertise into markets such as the US. And in terms of further government involvement, the Minister of State for Universities, Science, Research and Innovation, Chris Skidmore, announced at the event that the government would be adding an extra £3m in funding to its Remote Applications in Challenging Environments facility to help expand its workforce by more than 50% and increase collaboration with academic and industry partners. In addition to this, he has established a new robotics leadership group - the Robotics Growth Partnership - which is going to be spearheaded by Paul Clarke, CTO at Ocado, and Professor David Lane, from the Edinburgh Centre for Robotics.
However, as one delegate from Innovate UK told me, there’s only so much the government can do - it cannot hand business to UK companies on a platter. These companies need to build their networks, understand market needs, and pursue them with an American brashness that may not come naturally to a British-born company. That being said, there’s clearly opportunity and RAI could well be a huge economic driver for the UK going forward.