“We’re in the Middle of an Innovation Strike”

Not my words but NESTA’s though I have used very similar words many times over the last few years.

One of the most depressing reports that I have read for a while is “UK Innovation Index: Productivity and Growth in UK Industries” by Peter Goodridge, Jonathan Haskel and Gavin Wallis (Nesta Working Paper No. 12/09). It shows that there has been a £24bn collapse in innovation investment over the last 3 years. This trend has accelerated with the economic downturn but it began in the good times. There has been a crisis of confidence in the course of this decade with businesses prioritizing cash and concrete over investment in innovation. NESTA describes it aptly as a “lost decade of innovation”.

“Now why should that matter?” some may ask. Well the answer is that innovation accounted for 63% of economic growth between 2000 and 2008. If the British economy is to recover – and there have been some slumps in history from which a country has never recovered – we have to reverse this trend. Otherwise it will be we who will join the third world just as countries like China, India, Brazil and even parts of Sub-Saharan Africa emerge from poverty. The danger is articulated very clearly by NESTA’s Chief Executive Geoff Mulgan:

“Other countries are making investment in innovation a top priority and the UK cannot afford not to do the same. Our data shows that British business prioritised cash and concrete over investment in future technologies and services, a potentially disastrous decision that now needs to be put right.”

The tragedy is that our country does not need to be in this position. The Global Innovation Index 2012 published by INSEAD and the WIPO lists the UK as the 5th most favourable country for innovation, behind Switzerland, Sweden, Singapore and Finland (page xviii). We are ahead of the USA (No. 10), Germany (No. 15), France (No 24) and Japan (No. 25). According to our country profile on page 315 we score well on market sophistication, investment, regulatory sophistication, online creativity and ICT access. It is human capital and knowledge absorption where we do less well.

NESTA has started a campaign for a “Plan I” which Mr. Mulgan calls “a plan for innovation-led growth – as an alternative to the increasingly sterile debate between Plan A and Plan B.” Restoring investment in innovation should be are number one concern. Everything else – the Olympics, Diamond Jubilee and even the shenanigans of bankers and newspaper proprietors are mere sideshows in comparison.


About Jane Lambert

I am a barrister specializing in intellectual property, technology, media and entertainment and competition law. I specialize in helping SME (small and medium enterprises) protect and exploit their investment in brands, design, technology and the arts. SME require intellectual property (legal protection for their intellectual assets) at least as much as big business but their limited means restrict the way they can use it. Looking after such clients wisely requires skills and knowledge which have taken me years to learn.
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One Response to “We’re in the Middle of an Innovation Strike”

  1. This seems to be a dangerous extension of the mistaken and naive “statist” belief that the more you invest in innovation, the more you get out. If only it were so simple. It’s similar to Labour’s NHS strategy “the more you spend on health – the healthier the country gets”; or the 1941 Bomber Command strategy of “the more you bomb Germany, the closer you get to winning the war”: more is not necessarily better. But bearing in mind the dead hand of NESTA’s narrative, this is predictable. The reality is that the most successful companies and nations have entrepreneurs who have great ideas (Creator-Translators) who buy the technologies they need, and then apply them to create wealth. Have a look at Richard Lambert’s 2008 speech to the Oxford Innovation Society referring to relative investment in R&D to the effect that “of the world’s most innovative companies.. very few of them are research-intensive. Many of them make their mark by taking other people’s ideas, and using their own design and marketing flair to create entirely new business models”.

    There is a very strong argument that the most powerful source of innovation is where front-line practitioners in real businesses see an opportunity and modify current technologies to deliver value in new ways [look at Terence Kealey’s “Sex, Science & Profits”. I worked in a global R&D operation that spent (some say invested) $7B per annum and still failed because it built a political career structure around preserving an R&D investment model that couldn’t face the fact that it had died. A lot of academic science is like that. The reality of innovation that creates new market value, is more about people and their ability to put ideas into context more than its about input. As I learnt in that global R&D business, the bigger we got, the more dangerous the self-serving careerist model of innovation investment became. We need to invest in D, more than we invest in R. And if we are serious about innovation, then we need to take a more DARPA view (which TSB has absorbed to some extent) by asking better questions that pull innovation instead of attempting to invest in pushing everything.

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