Why anyone can sell a ten-pound note for a fiver (but probably shouldn’t)

Imagine you decide to go into business, selling your expertise and specialist services to whomever needs them – probably other businesses. Let’s say, for argument’s sake, that your specialist service is material-failure analysis using high-resolution imaging (scanning electron microscopy). You hand in your notice and set out, shopping list in hand, to purchase everything your new start-up will need.

Kitting up

First off, you spend £50,000 on a suitable scanning electron microscope plus necessary ancillaries (you could spend way more on an SEM package, but a relatively small bench-top model will do just fine). You spend a few more thousand – let’s conservatively say £5k – on office equipment and furniture, general office supplies, a basic business website, and some design and branding consultancy. And you find a nice little workshop unit to rent, which will be well-located for your business customers and provide the space you need to accommodate your business activities (a lab area and somewhere to do the office-admin stuff).

Boom – you’re ready to open for business! So, what to charge?

Well, in your old job, working for a university, your gross annual salary was £60,000. You don’t really want to take a pay cut, so based on a 40-hour working week and 45 working weeks in the year you decide to charge £33 per hour (£33 x 40 x 45 = £59,400; not quite £60k, but you’ll pay less in tax and NI as a self-employed sole trader). Simple! And you’ll be super-competitive too – your market research indicates that your competitors are charging way more than this. Ahhh, self-employed life is going to be so good…

“I feel like a toucan (wherever I turn I just see a big bill)”

Wait up though. Not all of that £33 – or even the bit that’s left over after tax – is going to go into your pocket. It turns out there are quite a few other things it needs to cover. Your little premises is costing you £5,500 a year – a pretty good deal, but it still needs to be covered. Utilities – heat, light, telephone – add another four grand to that. Your accountant wants a grand, and your website hosting and maintenance package is another £500 (cheap!). You’re going to be spending about a thousand on office sundries and miscellaneous stuff each year too. And another thousand on business insurance.

Hmmm, that £60k-ish annual salary is starting to look like less than £50k.

It gets worse. The SEM equipment should last about 10 years, so you’ll need to put aside around £5k every year (ignoring inflation) to cover eventual replacement. In the meantime, the maintenance package and warranty costs £1,000 a year, and that needs to be covered too.

Now your salary’s less than £45k.

Let’s not ignore capital costs. When you started out you spent about £55k on equipment, mostly your SEM machine. If you borrowed that money, then you’ll be paying about £4,000 a year in interest. If you spent your own money then you’ll be missing out on about £2,000 or more in interest that it would have earned. More expense!

And there’s another cost on the horizon, this time a big one. You don’t want to be working every waking hour, but there’s other stuff to do besides looking at broken bits of metal in minute detail through a microscope. Lots of other stuff. The phone needs answering. Invoices need preparing. Overdue payments need chasing. Admin, admin, admin, it all takes time – your time! And actually you could do with a bit of help with the microscopy work too – specifically sample preparation and report writing. So you decide to take someone on part time to help you. The total annual cost of employing them, including on-costs like employer’s National Insurance, will be £30k. Good job they’re only part time!

Now there’s just over ten grand left in the pot to cover your salary. Let’s hope no other unexpected costs crop up, or you’ll soon be working for nothing! Wait – where’s that leak coming from??

Bear with me, there’s a point to all this.

Re-thinking those fees

It’s become abundantly clear that your approach to costing just isn’t viable. When you work everything out, it turns out that to protect your £60k-ish annual salary you’ll need to charge at least £62 per hour for your services – let’s say £65 to be on the safe side. Double what you first had in mind. Ahhh, that’s why your competitors all charge at least sixty quid an hour for the same service – they have to! And if you’re going to be charging £65 this year, then you’ll need to up that to over £67 next year just to keep pace with inflation, never mind anyone getting a promotion or performance-related pay rise. It turns out that balancing the books in a business is tough – you had no idea just how tough! That old job in the uni is starting to look quite appealing…

So what’s the take-home from this cutesy little parable? Well, it’s definitely not ‘don’t go into business’. But whether you decide to set up on your own or you play a part in delivering your university’s business activities, do it with a full understanding of what’s really involved cost-wise.

Why this matters in academia

Universities provide a wide range of specialist services to business, enabled and supported by their extensive and advanced research infrastructure. Business customers don’t commission these services just for the joy of finding stuff out, or because they like giving money to universities. They commission them because they need them. (Moreover, it’s worthy of note that they can get quite generous tax breaks for qualifying expenditure on R&D, including that which is carried out for them by researchers and students in universities.) And, because they operate in the world of business, they understand all that stuff about paying the rent, keeping the lights on and even fixing the roof from time to time – all the stuff we commonly refer to as overhead costs. They know only too well the true cost of being in business. If ACME Microscope Imaging Co provides a good service for £33 an hour then customers will be queuing out the door to use it, right up to the point when ACME goes bust. But if those customers need the service then they’ll pay a proper fee for it, because they operate in the real world and they know what things really cost. They won’t be frightened off by commercially-realistic prices for a good service that they require.

Why then, in academia, do we so often express the fear that charging a commercial rate – often referred to as ‘full economic cost’ – for research and consultancy services will instill such terror in our industry customers? Is it because we, unlike those customers, don’t operate in the real world?

When we see full economic costs broken down they can indeed look a bit crazy at first sight. “What, the overheads account for more than half of what we’re charging them!” But overheads are simply the costs of doing business, and if they’re not fully covered then something has to give. As we saw above, either salaries have to be cut or the business quickly fails. Every business knows this. In universities, the full economic costing model is worked out and monitored by finance professionals, along similar – if somewhat more complex – lines to the above. And, say what you like about finance professionals, one thing they tend to be good at is numbers…

Of course, there’s a key difference here between industry and academia. In industry, the selling is done by the guy with the bright smile and the slick-looking suit. They don’t say stuff like “well the true cost is £10k, but my bloody business insists on sticking another £10k on that to cover their overheads.” Instead, they explain why £20k is a good price for an excellent service, and then hand over to their colleagues in the lab, workshop or wherever to deliver that service. In academia though, it’s usually the individual academic who has to act as both sales-person and the person who delivers the work. And while delivering the work is generally well within our comfort zone, selling our services is often much less so.

And on a serious note

I write this at a time when the UK university sector is deep in a financial crisis that seems to have no obvious solution. The FTSE100 index, by contrast, is close to its all-time high. I don’t dispute that businesses face their own cost and financial challenges, but I reject the notion that sound businesses will not pay a fair price for a good service. And I’m completely sure they know what ‘fair’ looks like. If you have confidence in the service you provide – no doubt you do – then have confidence that it’s worth a fair price that covers the total cost of delivering it. We do ourselves a disservice (and worse) if we sell ten-quid notes for a fiver.

The views and opinions expressed in this blog are mine alone and are in no way endorsed by my employer. Factual information and guidance are provided on a 'best-endeavour' basis and may become out of date over time. Web-links were correct at time of writing but commonly go out of date. No responsibility can be taken for any action or inaction taken or not in respect of the content of this blog.

Let’s start at… the end?

Why putting together your proposal back to front can help make a really compelling case for funding

I don’t eat my Christmas pudding before I tuck into my turkey, and I’m betting you don’t either. I never put my shoes on before pulling on my socks – how would that even work? And beginning a conversation with the word ‘goodbye’ would, quite literally, be a non-starter. But Margaret Mitchell, author of the best-selling novel Gone with the Wind, famously wrote the story backwards. In describing her approach, she said: "I had every detail clear in my mind before I sat down to the typewriter*. I believe […] that is the best way to write a book, then your characters can’t get away from you and misbehave, and do things you didn’t intend them to do in the beginning."

When it comes to writing research proposals, I think we can learn a great deal from Ms Mitchell’s approach.

Spoiler alert?

Writing a grant application is, on one level at least, an exercise in form filling. The application form is often long and rather arduous, and if you’re anything like me the temptation is generally to start at the beginning, filling in the easiest bits first. You might then try to tackle the rest of the form more or less in the same order that the sections appear, perhaps skipping some of the toughest and least-appetising sections to be re-visited at a time when you’re feeling more enthusiastic (ha ha ha). But your proposal isn’t a tax return, it’s a story – the story of why your research project matters so much that it must be funded. To succeed, it will need to be a highly compelling story. And arguably, the most important part of that story is the ending. So I’ll try to make the case that, like Margaret Mitchell and some other prominent authors, you really should start at the end and work backwards.

I should make clear at this point that this isn’t really about filling in the application form. You should only ever do that when you’ve done all the hard work of thinking through, designing and planning the research, and you have a complete and well-formed story to tell (like Margaret Mitchell, you should have every detail clear in your mind before you sit down at your typewriter*). So this is about devising that story. Once you’ve identified a specific problem that your project will tackle and given some thought as to how, in broad terms, you’re going to tackle it, here’s a slightly unusual suggestion as to what your next step should be. Draft the post-project press release.

This is not as mad as it may sound. Sure, you haven’t done the research yet, and so of course you don’t have any project results. But what you should have is a very clear idea of what success would look like. What are the implications for the problem you’ve decided to address if the project goes to plan and yields positive results? Without a clear idea of this, you’d be unable to answer the question "what’s the point of doing this project?" If you can’t answer that, then you can be certain that your reviewers won’t answer it for you.

Consider the following (re-assembled and lightly edited) extract from a 2020 press release about the results of a clinical trial undertaken by researchers at the University of Cambridge:

'Pill on a string' test to transform oesophageal cancer diagnosis

A 'pill on a string' test can identify ten times more people with Barrett’s oesophagus than the usual GP route. Barrett’s oesophagus is a condition that can lead to oesophageal cancer. Around 9,200 people are diagnosed with oesophageal cancer in the UK each year and around 7,900 sadly die. Early diagnosis is crucial to patients’ survival.

The researchers studied 13,222 participants. Over the course of a year, the odds of detecting Barrett’s were ten times higher in those offered the test with 140 cases diagnosed compared to 13 in usual care. In addition, the test diagnosed five cases of early cancer (stage 1 and 2), whereas only one case of early cancer was detected in the usual-care group.

Compared with endoscopies performed in hospital, the test causes minimal discomfort and is quick and simple.

Alongside better detection, the test means cancer patients can benefit from less severe treatment options if their cancer is caught at a much earlier stage.

The test could be a game-changer in how we diagnose and ensure more people survive oesophageal cancer. 

Pretty much everything in that press release except the results of the trial could have been written speculatively before the project began, based simply on the goals and aspirations of the researchers. And, given that it had taken them almost ten years of work to get to this stage, it’s highly likely that their preliminary results could have enabled an educated guess as to what the results might have looked like. Most importantly, the researchers would have known from the very outset exactly what they ultimately wanted to achieve. They had identified a problem (late diagnosis leading to severe treatments and high mortality rates in oesophageal cancer; and the additional problem of unpleasant endoscopic diagnosis), and set out to do something about it with a very clear idea of what they wanted to do and how they wanted to do it. They would have understood clearly what project success would look like.

But research isn't all clinical trials

Ah, but! This was a clinical trial, and while it’s great that they were able to describe such concrete and near-term patient benefit, what about earlier-stage research that’s years away from any real-world impact? What about basic discovery research that’s not designed to achieve any specific impact in the real world?

In neither case do I see any difficulty.

When it comes to early-stage research, it’s widely accepted that single projects seldom lead on their own to substantial impact. Impact is a journey, that typically spans a fairly lengthy programme of research. But imagine setting out on a journey without any clear idea of your destination (gap-year Interrailing aside). Imagine how that in-car conversation might go: "Are we nearly there yet Dad?" "I have no idea, I don’t know where we’re going." There would be tears...

I don’t think that a press release for one of the earlier-stage projects in the pill-on-a-string research programme need have looked much different to the one above. I’m sure the research team had a clear vision, direction and goals from the very beginning. So the press release might simply have used some additional phrases like "This brings us a step closer to…"

Similarly, when it comes to discovery research, it’s vital to be able to articulate a clear understanding of why the work needs to be done. Here, the problem you aim to address could be a gap in scientific knowledge; but you should still have a clear vision for the downstream importance of filling that gap. What could other scientists, including those working in more impact-focused areas, do with that new knowledge? You’re not expected to anticipate every possible outcome, but I think it’s vital to at least be able to envisage some reasonably-plausible outcomes and indicate that these motivate your research. (I accept that theoretical mathematicians and physicists may feel this pressure somewhat less keenly; but I maintain that those working in the life sciences should be acutely aware of it - at least if they want to secure funding for their research.) Our hypothetical press release might allude to eventual impact potential by once again using phrases like "These new insights bring us a step closer to…".

Leave out the hype

You will, I hope, note that nowhere do I advocate resorting to the kind of unjustified hyperbole that some over-eager press officers are guilty of. It’s not uncommon for academics to complain that their university’s press office has over-simplified and twisted their results to make outlandish and overblown claims regarding importance and impact. This sort of thing has no more place in a serious press release than it does in a research proposal where, as I’ve noted before, reviewers quickly tire of over-used overclaims such as 'urgent', 'critically important' and 'transformative'. Important and impressive things, like the numbers in the Cambridge press release above, tend to speak for themselves (okay, I’ll let them have 'game-changer').

All in order

What I’m proposing then is a sequence of inter-related steps in planning and drafting a research proposal which, if followed, should result in a coherent and convincing story throughout which impact is firmly embedded (remember, UKRI research councils and most other funders, particularly medical-research charities, are strongly focused on impact). By starting with a problem, you’ll effectively be starting with impact, and working back from that to construct a strongly impact-driven project (or at least, if it’s basic science, a credibly impact-informed project):

1. Identify the specific (and hopefully important) problem that your project will address or build towards addressing. Your would-be research project now has a point to it.
2. At a high level, hatch a plan for using your team’s knowledge, skills and resources to tackle that problem. You now have the makings of a research project.
3. Identify the specific way/s in which you intend that your project will address (or at least build towards addressing) the problem. This will give your project a specific aim (the main advance that you want your project to achieve) and, if different, an overarching impact aim (the ultimate real-world goal of your wider research programme). It would also inform a hypothetical written-in-advance press release.
4. Identify the handful of concrete, measurable steps that you’ll need to complete during the course of the project to give you the best possible chance of achieving your aim. These are your research objectives.
5. In conjunction with Steps 3 and 4, formulate any specific research questions and hypotheses linked to your aim and objectives. This puts more flesh on the bones of your project, and adds measurable specificity to your project goals.
6. Figure out what work needs to be done to complete each of the objectives, how it will be done, what resources will be needed, who will do the work, and when. Your project now has some work packages.
7. Think about what might not go exactly to plan, and how you’ll mitigate this – now there’s a risk table and a credible Plan B.
8. Describe all of this, and any other details the funder asks for, in the application form. You now have a (hopefully winning) research proposal!

There’s a bit more needed of course. What makes you think your proposed approach is novel, credible and feasible? That’s where pilot work, preliminary data and an appreciation of the relevant literature comes in. What will the next steps towards impact be after this project? Describing these shows you have a good understanding of the impact journey and how the current project is positioned on that journey. How can we be sure that yours is the best team to do the project? There’s always an opportunity to explain and evidence this. All of these are the key components of a good 'why fund me?' story, and they coincide with the main points that a reviewer will be looking out for.  

The above steps are often recursive and iterative as you gradually refine your proposal. You might for example need to revisit your research objectives, with knock-on implications for the work programme and possibly even the scope of the project aim. But by starting with a problem, and making sure the whole project is built around addressing that problem in a specific way, you’ll have ensured that impact is embedded throughout rather than clumsily bolted on – and that no one will be in any doubt as to the point of doing the research you’re proposing.

(* Google it, Gen-Z'ers!)

The views and opinions expressed in this blog are mine alone and are in no way endorsed by my employer. Factual information and guidance are provided on a 'best-endeavour' basis and may become out of date over time. Web-links were correct at time of writing but commonly go out of date. No responsibility can be taken for any action or inaction taken or not in respect of the content of this blog.