The mis-measure of uncertainty

A couple of pieces in the Financial Times today and yesterday offer some food for thought about the problems of commercialising scientific research. Yesterday’s piece – Drug research needs serendipity (free registration may be required) – concentrates on the pharmaceutical sector, but its observations are more widely applicable. Musing on the current problems of big pharma, with their dwindling pipelines of new drugs, David Shaywitz and Nassim Taleb (author of The Black Swan), identify the problem as a failure to deal with uncertainty; “academic researchers underestimated the fragility of their scientific knowledge while pharmaceuticals executives overestimated their ability to domesticate scientific research.”

They identify two types of uncertainty; there’s the negative uncertainty of all the things that can go wrong as one tries to move from medical research to treatments. Underlying this is the simple fact that we know much less about human biology, in all its complexity, than one might think from all the positive headlines and press releases. It’s in response to this negative uncertainty that managers have attempted to impose more structure and focus to make the outcome of research more predictable. But why this is generally in vain? “Answer: spreadsheets are easy; science is hard.” According to Shaywitz and Taleb, this approach isn’t just doomed to fail on its on terms, it’s positively counterproductive. This is because it doesn’t leave any room for another type of uncertainty: the positive uncertainty of unexpected discoveries and happy accidents.

Their solution is to embrace the trend we’re already seeing, for big Pharma to outsource more and more of its functions, lowering the barriers to entry and leaving room for “a lean, agile organisation able to capture, consider and rapidly develop the best scientific ideas in a wide range of disease areas and aggressively guide these towards the clinic.”

But how are things for the small and agile companies that are going to be driving innovation in this new environment? Not great, says Jonathan Guthrie in today’s FT, but nonetheless “There is hope yet for science park toilers”. The article considers, from a UK perspective, the problems small technology companies are having raising money from venture capitalists. It starts from the position that the problem isn’t shortage of money but shortage of good ideas; perhaps not the end of the age of innovation, but a temporary lull after the excitement of personal computers, the internet and mobile phones. And, for the part of the problem that lies with venture capitalists, misreading this cycle has contributed to their difficulties. In the wake of the technology bubble, venture capital returns aren’t a good advertisement for would-be investors at the moment – “funds set up after 1996 have typically lost 1.4 per cent a year over five years and 1.8 per cent over 10 years, says the British Private Equity and Venture Capital Association.” All is not lost, Guthrie thinks – as the memory of the dotbomb debacles fade the spectacular returns enjoyed by the most successful technology start-ups will attract money back into the sector. Where will the advances take place? Not in nanotechnology, at least in the form of the nanomaterials sector as it has been understood up to now: “materials scientists have engineered a UK nanotechnology sector so tiny it is virtually invisible.” Instead Guthrie points to renewable energy and power saving systems.