Strike! Innovation is on strike!
Many years back to sell newspapers, sensational headlines were conceived to get immediate attention so people would buy the paper. It went like this “Strike! Innovation is on strike! Read all about it” Today innovation is actually on strike! Just take a look at this:
A strike of declining investment, of a lack of confidence, of not sharing in the belief innovation offers a solution to our continued problems of wealth creation, of economic growth, of galvanizing society.
So for many, innovation is actually on strike, we are not investing as we should according to a series of reports and analysis, focusing specifically on the UK economy, sponsored by Nesta. Nesta is the UK’s innovation foundation and they help people and organizations bring great ideas to life. They do this by providing investments and grants and mobilizing research, networks and skills. They operate independently but are very central in shaping innovation thinking.
I offer a fairly extensive set of ‘extracts’ below, so read on:
Already a lost decade of innovation has occurred
According to Nesta “The UK economy has experienced a ‘lost decade’ of innovation, with new evidence showing that businesses had a crisis of confidence in the 2000s, prioritising cash and concrete over investment in innovation”.
* Nesta’s latest Innovation Index released back in 2012 showed that investment in innovation by British businesses has fallen (or collapsed) by £24bn since the recession began and has not recovered. This is five times the amount the Government spends each year on science and technology research.
* Recently a further view on innovation was expressed by Nesta in mid-March 2013 on how to use the Government’s purchasing power to boost Britain’s most innovative businesses, arguing there is a continued and urgent concern on how to get Britain’s businesses investing in innovation again.
The UK is seemingly in a period of innovation stagnation
I cannot provide proper justice to the extensive report but it seems to me the real underlying issues of why the UK, and many others, are in this period of innovation stagnation came from Nesta’s highly valued innovation index for the UK, in its third review
- Innovation investment fell by 7% or £7.4bn between 2008 and 2009, as the recession began
- A further fall of 14%, or £17bn, from 2009 to 2011, according to a survey of 1,200 businesses
- After rising steadily from 1990 to 2000, innovation stagnated from 2000-2008 at 12% of private sector output
- With a decline of £24bn, since the credit crunch in 2008, it is interesting that even in the period between 2000 to 2007 businesses investment in innovation had leveled off.
- Investments in fixed assets fell and became increasingly dominated by bricks and mortar at the price of technology.
- Companies accumulated cash and concrete in the 2000s, far from the age of innovation.
- There has been an increasing disconnect between the UK’s financial sector and investment in innovation and technology.
- The 2008 financial crisis has turned into the longest downturn in modern times.
The poor state of the UK innovation system needs rethinking
The interplay of resources, people, ideas and markets in which innovation happens — much isn’t working well according to the report. What can be improved?
There are three broad ways in which the innovative capacity of the UK can be improved:
- Investment: increasing how much the UK invests in innovation
- Systems: upgrading the system of innovation so that these investments go further, including greater demand
- People: changing the underlying cultures and skill sets to be more innovation– friendly
Making the innovation system work better
The second factor suggested, that holds back the UK’s ability to innovate, is the structure of their innovation system and is worth one additional comment — it is the combination of the involved organisations, their links and forms that determine how new ideas become reality. For over a hundred years, commentators have noticed a contrast in the UK between the world of ideas and the world of implementation– what a lovely observation that is!
Debating Plan A or Plan B means innovation loses more ground to others
We are seemingly caught between the two sides of an argument, Plan A for recovery based on austerity or Plan B based on stimulus within economies across Europe. We see the continued consequences of the hardening push for austerity in nearly all the Mediterranean Countries, let alone the severity of the austerity part has continued consequences in the UK and the USA . As we debate this two dimension view there are crucial ways everyone is losing ground, especially to the developing world and its significant focus on its innovation activities.
We are told our corporations are awash with cash; our governments are strapped for revenue generation activities. Plan A requires austerity, Plan B needs stimulus but their balance requires what a Plan I can offer, the one Nesta offers as a solution to this present stagnation. It provides some thoughts on how the UK can regain growth but at the same time manage what we have more wisely. They sensibly argue we need to balance all three.
Stop debating, we need action.
The endless public debates over responses to the economic crisis needs to change if we are to put in place a sustainable alternative to stagnation. We need business leaders who are willing to prioritise the case for innovation over other issues such as top rates of tax or regulation. We need to use critical moments of choice, we need to restore faith and trust, we need to unlock this huge cash pile sitting on many organizations balance sheets.
And we need political leaders with a deeper understanding of innovation (at present only a tiny fraction have direct experience), and an appetite to advocate it. Innovation needs political and public advocacy and argument if it’s to be widely supported.
The only issue is, we can’t just simply keep debating we need to act. Simply we need to get innovation back to work, break the strike by setting new conditions to bring us all back to productive innovation work that recaptures growth.
For part two of this series, see Innovation Drives Economic Growth – news from Nesta
image credits: nesta.org.uk; sierraexpressmedia
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