July 9, 2013
Here are the highlights of the report:
- The ability to turn ideas into useful new products, services and ways of doing things is the wellspring of prosperity for any developed country
- The companies that invest most in innovation tend to grow faster than ones that don’t; and the countries that invest most in innovation do as well
- Nor is it a coincidence that many of the nation’s doing best today in innovation have articulated a clear vision of where they think their future wealth and jobs will come from
- Countries as diverse as Korea, Finland, Israel and Singapore have sustained a mood of optimism and possibility through the crisis, and given business a sense of the future gains that make investment today worthwhile.
A self-preservation attitude still prevails in the UK
- Unfortunately the current economic debate in the UK has pushed innovation and questions of long–term growth to the margins
- But if we want to take advantage of the opportunities on offer in the next decade from new technologies, new markets, and new ways of doing things, we have to face up to the gaps, the failings and the many ways in which institutions and markets aren’t well designed to make the most of new ideas. They stay stuck in the past.
- It is hard to calculate precisely the size of the gap, but some of the analysis that follows suggests that in the UK, they may be under–investing in innovation to the tune of £38 billion a year.
- Transformation from industrial decay shows that change for the better can happen relatively quickly where there is the will. Currently, we leave to many as “walking dead” and badly under support those in finance and resources required that show the way forward to ‘regenerate’.
Designing an innovation policy
Nesta’s reports suggest four design principles for effective policy development.
- Experimentation. Innovation is a risky business. Breakthroughs only come from a willingness to push at boundaries, to take risks, and, sometimes, to fail. What matters is not backing winning projects every time, but backing a good portfolio of projects. Experimentation is not easy, especially in an adversarial political system that is often very risk adverse due in large part to this inherent nature. Risks need to be taken in the face of huge challenges like ageing or climate change, as well as in making the most of great new opportunities like the Internet of things or synthetic biology.
- Entrepreneurship. Entrepreneurs are essential to an innovative economy: they don’t usually come up with ideas, but they do work out how to put ideas into practice. Entrepreneurship is also important to good innovation policy-making. The flip–side of an experimental innovation policy is the need for entrepreneurial leadership and challenge within the system. Entrepreneurial leadership within the system can be valuable. These kinds of entrepreneurial figures provide a valuable antidote to consensual policy that works primarily with incumbents.
- Openness. Good innovation policy cannot be made by government alone and certainly cannot be delivered solely through state bodies. Innovation flourishes when businesses, research organizations, and intermediaries such as standards bodies and trade bodies come together to identify and address major challenges. What is important though is government cannot rely simply on assembling interested groups – this risks capture by incumbents and vested interests, it needs very open platforms where all can participate, working towards their goals but recognizing the essential need of all the diverse participates on the platforms.
- Ambition. Finally, innovation policy needs ambition, with the right mix of challenge and focus. Government’s power as a leader, as a customer and as a regulator matters as much as its narrow role of a supporter of research and development. Finland, Korea and Israel are all countries that have managed to make this a reality. In all cases, leadership has come from the top but been broadly based.
Social innovations can offer great potential. The wastefulness, in both human and financial terms, of the way we run our healthcare systems, the way we care for old people, and the way we treat the most excluded in society, offers such potential to resolve through the appropriate innovation applications.
The right social innovations could unlock as much value as many great social innovations did in the nineteenth century. During past periods of rapid change, like the mid–to–late nineteenth century, radical social innovation and reform proved huge growth potential. They can once more; we need to move from self-preservation through constant commercialization into community engagement and building sustaining values back into our lives.
Innovation Policy Proposals:
The process of making innovation policy must be future–focused. The value of foresight exercises are recommended which are not great at predicting the future but better at making those who undertake them recognize the future when it manifests itself
Policy also needs to be aligned. A frequent complaint made by foreign businesses looking to make major R&D investments in the UK is that government policy is poorly aligned: helping to orchestrate such things as land, planning, training, supply chain development, and links to universities
It seems UK innovation policy lags behind that of Germany and Japan for example, both of which use grand challenges as a way of organizing and focusing innovative activity.
You can order the full report from their site.
Several recommendations can be applied to other countries such as Canada.
Editor, Infocom Analysis