Innovation is the bedrock of the UK economy: Our place in the global marketplace depends on it

This summer, the Government will publish an Innovation Strategy setting out a vision for high-growth sectors and technologies. Digital Catapult CEO, Jeremy Silver suggests a three point plan on how to boost our technology innovation activities.

Who are the top five technology companies in the world? Despite the mixed reputation some of them may be struggling with, Alphabet (Google), Apple, Amazon, Facebook and Microsoft are among the most valuable businesses on the planet. Why?

Because they innovate faster, harder and better than everyone else.

They retain a culture of rapid change and recognise that innovation is often sourced outside, not within, their enterprise – engaging with the brightest talent and expertise and acquiring smart new businesses at a faster rate than the rest of the market.

As we power past the one-year mark since the UK’s first Covid case – navigating a record economic slump – nourishing such hunger for disruption and innovation will be imperative. Our country is home to some of the brightest pioneers in the world, who (whether they know it or not) will be firmly at the centre of plans to build back better, greener and level up.

It’s a long road ahead, with the Chancellor predicting in the Spring budget that Covid-19 would leave the economy 3% smaller in five years time than it would have been otherwise – but when it comes to kickstarting economic growth, it starts with innovation.

Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwateng, has highlighted innovation as an absolute essential for building back better. It figures as one of three key strands too in the newly published Plan for Growth.

So to respond to all that, what Industry needs is an action plan for innovation over the next 5 years comprising three key objectives: increasing the culture of innovation in UK businesses, ensuring that innovation leads to implementation of large-scale change in industrial sectors, and developing global expertise in selected areas of specialism.

Here’s how we get there:

1. Incentivise private investment in Innovation.

We must incentivise Boards and the C-Suite of British Industry to recognise innovation as the biggest driver of growth and job creation in their businesses – and invest accordingly.

The Chancellor’s proposal for a Super-deduction tax relief scheme to incentivise organisations to invest in plant and machinery assets is certainly a step in the right direction. But as the promise of Industry 4.0 calls, we have to ensure that investment in industrial technology is matched with innovation skills to help businesses create business advantage from equipment. How many will use the additional 30% of value the Chancellor’s super deduction offers to develop these skills?

And it’s not just corporates, but the wider innovation ecosystem not giving industrial solutions their due. Venture capital investment in industrial technology is nearly double in Germany (£962m vs £513m according to Dealroom) thanks to a national target of 3.5% of GDP going on R&D, creating many more investable companies. Creating more industrial accelerators is one way the UK can increase its own pipeline.

2. Drive collaboration to create better balance between research and innovation

Entrepreneurship and academic excellence are a great match but they need to deepen and improve their relationship. Startups, traditional industry and academia all work at different speeds and speak different languages – we have to get better at translation. Startups and scaleups need bigger clients and corporates need nimble new ideas.

To ensure we can take more ideas from seed to shelf, we need improved linkage and collaboration between UK universities and startups and traditional industry. Re-designed, translational research vehicles could take knowledge and expertise from universities into application in industry – rapidly and commercially – in specific regions across the UK. The Catapult Network could be instrumental in making this happen.

We must focus on transforming the interface between start ups and scale ups, and industrial players, right across supply chains. Encouraging collaboration between the UK’s top innovators and large corporates will lead to a culture of openness to new ideas coming from new entrants. Places where companies can meet talented experts with insights and solutions will be a catalyst for new opportunities. Now, we need to see more of this in action, ensuring benefits are felt across the length and breadth of the UK – and not just within the Golden Triangle.

3. Raise Innovation up the agenda with a new Innovation Champion

At the heart of government, a well-resourced Chief Innovation Office – headed up by a Chief Innovation Officer with a relentless focus on innovation – could play a hugely important role in championing innovation across the government departments and industry sectors ultimately across the globe.

The Chief Innovation Officer could take the lead in encouraging UK businesses to adopt this innovation mindset, explore what new technologies might do for them, get their hands dirty trying them out – and work with new collaborators in the process.

Invention v. Innovation

There is a huge amount of untapped potential on our shores; innovation that could be unlocked by defining the right approach now.

The difference between pure invention and innovation is the difference between dreaming of a model that could one day work and building something that actually works. It’s the difference between dreaming of a Tesla and putting one on the road.

And it’s the difference between us bouncing back stronger, fitter and quicker – or not.