12th Christmas Piece- Industry

A final part of 12 Christmas blogs articles, that expand on the Innovation Map theme - industry and the part it plays in innovation. Given everything focuses on innovations being products and services to market industry is the real deliverer and all other organisations play a supporting role.

Looking at companies carrying out R&D there are three categories:-

1/ Mainstream manufacturing companies 

Where R&D is an enabling approach towards new innovation to market.

Often there is a focus on the large manufacturing companies that perform R&D such as Rolls Royce, GSK, and Jaguar Landrover. It is worth noting that in the UK if you look at companies that are active players in R&D there are a number of interesting factors. Firstly that foreign owned companies i.e. inward investors account for some 35% of R&D spend. Next R&D spend and innovation within SMEs accounts for about half of the total, looking at companies such as Intrinsiq & ARM. The critical issue to to make sure that the various public sector approaches eg through the TSB are focussed on high growth large opportunity markets. Weir pumps with its niche markets is a good example.

2/ Service Companies

Seen widely in areas such as engineering, construction delivery and consultancy eg Arup or in delivery innovations eg Babcock and SERCO, or in financial services, London Stock Exchange. The NESTA work on measuring service innovation has gone a long way towards a recognition that these very successful parts of the UK economy are constantly innovating business models and offerings making the UK a global leader in these areas. If we pick up on facts from my Innovation Map we see the Management Consulting industry worth upwards of £8 billion, second only to the US and more important on a per capita basis than any other country.

3/ Research & Technology Organisations

where the purpose of the company is to realise value from the process of R&D and innovation. There are a number of companies loosely connected through the main body AIRTO and other such as TTP and Cambridge Consultants. We also see a much wider range of boutique R&D companies in areas such as Chemicals, software, photonics and creative media.

This is a key area for the UK where inventiveness and a capability to reach outside the boundaries of sciences or sectors to develop unusual and cross cutting possibilities. The UK is renowned for this capability and it gives the lie to the statements that the UK has high level Academic excellence but fails to translate that into products on the market.

The other myth is that the UK has limited high technology mass manufacturing and fails to exploit ideas and early stage innovation. Given the value added is often at the R&D end, where the UK does well, tying into business and services innovation we can see why the UK has such a strong diverse economy. It is also worth looking into how manufacturing and services are defined as often services provided are critical parts of manufacturing processes and approaches.

If we look at the general picture certainly there are areas where the UK could do better :-

A) building medium sized companies as world leaders in niche areas

B) consistent support for mechanisms rather than 3-5 year cycles and constant re jigging of the landscape. The KTN model and the Knowledge Transfer Programme are examples of continuing very successful approaches that need substantial periods of time, say a decade, to settle and prove their worth whilst given steady consistent support.

C) Recognising and shouting about our success. As one of the strongest nations in innovation having improved dramatically in the last 30 years and sitting very comfortably as a flexible and successful economy.

The ability to work across boundaries is extremely important, and anything that industry or the public sector can do to improve cross working is worth pursuing. Not forgetting the major elements that inward investors and export led innovation deliver.

The UK as a principle trading nation benefits from a free market in goods and services and all of the elements that make up the UK Innovation ecosystem. That free flow of people ideas and capital needs to be maintained at all costs if we are to benefit from a more globalised world.