Building an Innovation Economy

1. Building an Innovation Economy David Bott 14th March 2011

2. Why is Innovation a good thing? "Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services. "Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace."

3. We hold these truths…. • Most countries seek to use innovation to drive economic growth • Many global companies select locations for new activities based on availability of skilled people, potential supplier companies and government support for innovation • SMEs are often highly innovative and need support to become globally competitive

4. What’s the problem? • Business investment is often lower and later than desirable from an economic perspective • Constrained by technical and financial risks and the time for return • Innovation disrupts value chains and business models • New partnerships are required to build new supply chains • Investment and innovation is required at multiple points • Longer term Trends not visible to all players • Impact and opportunities from emerging technologies & policies • Innovation infrastructure complex and inefficient • Fragmented and difficult to navigate • Government does not make best use of its levers • Standardisation, regulation, procurement, fiscal incentives

5. Considering the variables • Markets can be at different stages of development • Pre-commercial, early stage, mature… • Companies can have different capabilities and risk appetites • Large companies might have capacity but see the risk, small companies may have a real need and no option! • Projects can have different types of risk • Technical, commercial, regulatory…

6. So what do we need to do? • Create a more effective innovation environment in the UK • Encourage business innovation by reducing financial and technical risk • Enable business to exploit emerging markets and disruptive change • Enable business to access, collaborate with and exploit the knowledge base • Help government to use its available levers to drive innovation

7. What is the Technology Strategy Board? • We are a national body set up in 2007 to invest in business innovation • We work across business, universities and government • We mostly come from business • 130 people with over 1700 years of business experience • We were responsible for investing £250m a year over our first 3 years

8. We support the full range of business • We help strengthen the global competitive position of our leading businesses • We identify and grow sectors and businesses with the capacity to become the best in the world • We nurture the businesses that can succeed in the growth sectors of tomorrow

9. And we make choices • We don’t pick winners. • We do pick areas of activity where UK businesses can thrive and support innovative companies in them • We consider • the size of potential markets, • the capability of the UK to address them, • the timing • …and the difference our support would make

10. Focus areas • Technology Innovation • We build capability in the underpinning areas that enable a sure and effective response to market needs • Competency Innovation • We build capability in those areas which span technologies and markets, and where technology developments can lead to disruptions of the markets • Challenge-led Innovation • We aim to understand the needs of the markets and support the most innovative and competitive responses • Innovation Platforms • We work with Government as they address societal challenges to give business the future market definition they need to be competitive

11. Delivery mechanisms - Competitions • Consortium Investment • “normal” 2-stage • “fast track” 1-stage • feasibility first stage • 2-stage with consortium building workshop/Grand Challenge • sandpit first stage • Single Company Investment • Knowledge Transfer Partnership • Grant for Research and Development • Feasibility studies leading to Collaboration Nation • LaunchPad • SBRI

12. Delivery mechanisms - Activities • Knowledge Transfer Networks • Networks within communities with similar skills or goals, where knowledge about needs and capabilities can be exchanged • Missions • Opportunities for fast-growing technology companies in the UK to explore opportunities for growth with key investors, potential partners and customers, media and other overseas stakeholders • Centres • Provide a single point of access to world leading research capability • a critical mass of knowledge and skilled personnel • access to expensive or fast evolving capital equipment

13. Government Levers • Standards • Give lead to market specifications • Regulation • Forces market specifications • Taxes • Changes the cost/benefit balance of the market • Procurement • Sets market specifications and builds market • SBRI • Forward Procurement Specification

14. LAGGING LEADING Economic Growth Market Projections COUNTRY COMPANY Competition Specification BUSINESS DEGREE OF AGGREGATION Impact Assessment PROGRAMME Project Performance PROJECT +10 -10 -5 0 +5 NOW FUTURE PAST YEARS TO FIRST PRODUCT SALE

15. What next? • We have: • used the lever of challenge-led innovation • proved the value of innovation platforms • shown the potential of new products and services, and • started to mobilise procurement to create innovation • It is now vital to join up the UK innovation system if we are to realise strong economic growth • Centres are an important addition to our toolkit • Convergence offers new markets and opportunities; we are linking our programmes to realise this potential

16. A word from our sponsor! “This is why we are making the Technology Strategy Board a key channel through which we will incentivise business-led innovation in those sectors of the UK economy which present the greatest opportunity to boost UK growth.” Blueprint for Technology

17. http://www.innovateuk.orge: david.bott@tsb.gov.ukm: +44 7802 788435tw: david_bottbl: http://www.innovateuk.org/newsevents/blog.ashxsl: innovato charmansk: davidbott3