Fixing the “UK’s Innovation Deficit”

For anyone working at the interface of science and business Richard Jone’s recent paper “The UK’s Innovation Deficit & How to Repair it” makes interesting reading. Rather than being yet another missive from an academic demanding more cash for R&D this is a well argued and evidenced paper looking at why the UK under performs and making some suggestions about what can be done about it.

In general the solution seems to involve negotiating a way around the endemic short termism via government backed big projects such as creating low carbon energy, which then provide fertile ground for entrepreneurs to feed off. While it may well be the case that to develop any value from fundamental discoveries such as graphene the government needs to prime the pump, there are plenty of other technologies underpinning the modern innovation ecosystem that were developed entirely by the private sector, microprocessors and mobile telephony for example. Furthermore there is ample evidence, as presented in the paper, that governments don’t have the ability to pick winners, relying as they often do on ‘experts’ who may have little competance outside their own narrow domain.

The conclusion seems to be that governments should get the ball rolling and then quickly get out of the way rather than micromanaging something they have little expertise in and even less control over. Let the scientists do the science and the entrepreneurs do the entrepreneuring, or as Richard puts it more eloquently

It is the Government’s responsibility to create the conditions for technological innovation. This responsibility has positive aspects that are not controversial; a policy consensus has emphasized the need to maintain the basic science base and ensure a supply of skilled manpower. Government has recognized its role as a broker, making connections and creating forums in which innovative practice can be shared across industry sectors. What governments have not yet recognized enough is that it is not enough to create conditions to encourage technological innovation; those conditions that discourage technological innovation need to be actively suppressed, or at least not positively favoured. The persistent problems which make it difficult to finance investment, research and development need to be addressed; subsidies, whether explicit or hidden, to activities like real estate and financial services make these problems worse.

One point I may have missed in the paper but which I think is relevant is the willingness of the government to act as an early customer for technological innovations. That does happen to some extent through funding organisations such as Innovate UK, but any entrepreneur would rather have a purchase order in his or her hand than a term sheet. Perhaps one way the government could stimulate innovation would be through acting as an early adopter, providing both the revenue that start ups need and the equally valuable real world customer feedback.

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