With a new UK National Innovation Plan on the horizon, the third PolicyLab event in a series hosted by the UK national Academies, sought to consider what a coherent, long-term plan for innovation should look like in the UK. The event took place on 4 May and brought together individuals with a varied and rich experience of both policy and innovation.
Ian Shott CBE FREng chaired the panel, which included Kevin Baughan, Chief Development Officer at Innovate UK, Elspeth Finch, CEO & Founder of Indigo&, Hermann Hauser KBE FRS FREng, co-founder of Amadeus Capital Partners and co-chair of the Royal Society’s Science,
Industry, and Translation Committee and Professor Paul Nightingale, Deputy Director of the Science Policy Research Unit at the University of Sussex.
Ian opened with an overview of recent changes to innovation support. These include plans to convert a proportion of Innovate UK’s grants to new-finance products, to increase funding for Catapult centres and to integrate Innovate UK into Research UK, as well as the recent protection of some knowledge exchange funding, in the Higher Education Innovation Fund (HEIF). Kevin called for discussion to focus on what the future of UK innovation should look like with a number of key questions: How should innovation be funded? Who is best placed to realise the commercialisation of research? And what should be the purpose and scope of Innovate UK?
Changes at Innovate UK
Kevin Baughan welcomed the protection of funding for Innovate UK and highlighted the regional spread of Innovate UK grants; in the previous year Scotland had received the same density of grants as London.
At the 2015 Spending Review, the Chancellor announced his plans to protect the cash support for Innovate UK, but to change the funding structure by offering £165 million worth of loans in place of grants. Ian pointed out that this new method of funding was yet to be fully understood and could result in an overall decrease in the amount of money innovators receive.
Paul Nightingale echoed this, suggesting that government should be less concerned with offering loans and grants and should instead focus on being a good customer to start-ups and SMEs. Offering long contracts with stable finance options can facilitate innovation, scale-up and growth over the long term, and Hermann Hauser agreed, saying ’I would take an order over a grant any day.’
Crowdfunding was generally accepted to be an exciting new option for innovation funding but Hermann Hauser was quick to point out that these streams would lack thorough due diligence assessment, potentially resulting in a high failure rate and a waste of resources.
Where is best placed for innovation?
The success of the Catapult centres was recognised by a number of panellists, however their place in the future of innovation support was a subject of debate. The panel were divided on whether they should foster closer ties with industry or universities. In a spirited plea, Paul called for government to focus less on funding spin outs from universities and instead encouraged them to focus on funding for innovation within established firms. His advice involved a call to move away from university-business collaborations, at odds with Hermann Hauser’s recommendation for closer ties between business and academia through extension of the Catapult network.
The greater value of human capital over intellectual property (IP) rights owned by universities was mentioned several times. Hermann Hauser was keen to point out that universities main aim should be to provide skilled, talented people and cited graduates’ salaries as being annually around 100 times more lucrative than IP rights.
Others noted that universities do encourage innovation, with the Cambridge Cluster mentioned as a success story. Hermann also pointed out what he saw as one of the downfalls of the Catapults, which were developed on his recommendations from a 2010 report: they don’t have academics as their directors.
What does an innovative business need?
The government have recently released a call for ideas for the National Innovation Plan, and the discussion turned to what innovation policy should look like from a business perspective. Ian asked Elspeth Finch what she valued most when setting up a new business. She pointed to mentoring and good strategic advice as important, if not more so, than access to finance for small businesses.
She stressed the need for innovators and entrepreneurs to understand markets, for the new service or product they are developing, but also more broadly. She noted that researchers sometimes miss the importance of market research when it comes to commercialisation of technology, and that this might go some way to explaining the high failure rate of university spin outs.
Elspeth quoted a recent CB Insights investigation, which found the number one reason for start-up failure was a lack of a market need for the product (42% of cases). Elspeth also pointed to the flourishing creative industries of the UK, calling for their greater inclusion in the design of policy and tools to support innovation and commercialisation of scientific research.
Many different recommendations were made during this discussion, with the panel often disagreeing about what innovation policy should look like; whether it should be more focussed on academia or industry was a recurring point of contention.
However, the varied debate culminated in agreement that successful innovation can come from diverse places from individuals to university-business collaborations or within established industries. Wherever innovation originates, a few key areas of support are usually important for successful commercialisation of technology: above all, market demand, sustained access to finance and good business direction.
Ian closed the event by pointing to the success the UK has already achieved in innovation in a relatively short time frame, reminding the audience that more developed innovation economies such as the USA had around a 50-year head-start in innovation policies.
This was the third in a series of four PolicyLab events hosted by the UK national Academies. The next and final event, UK research and innovation: visions for 2030, will take place on Monday 13 June at the Royal Academy of Engineering.