12 Mar 2008   |   News

Innovation Nation: the UK sets out to move innovation policy to the demand side

A new government policy paper puts the emphasis on public procurement, lead markets and a more international approach.

Innovation minister John Denham: “harness the power of government”.

Innovation is changing, and government policy needs to be updated to reflect this says the UK government in a White Paper published this week, which promises to put public procurement at the centre of innovation policy for the first time.

This will have an international dimension, with the government pledging to align its policies with the European Commission’s lead markets initiative.

Launching the White Paper, John Denham, Secretary of State for Innovation, Universities and Skills, said the aim is to, “harness the power of government as the UK economy’s biggest customer to create new markets and demand.”

Each government department will be expected to draw up an Innovation Procurement Plan as part of its commercial strategy, to drive innovation through procurement and use innovative procurement practices.

There will be moves to tap into private sector skills, such as the secondment of private sector experts to mentor their public sector peers in innovation procurement.

To provide a helping hand a Public Services Innovation Laboratory will be established. And there is a promise that factors such as attitudes to risk, budgeting, audit, performance measurement and recruitment will be aligned to support innovation.

Following the leads

The EU’s lead market initiative has picked out electronic healthcare systems, protective textiles, sustainable buildings, recycling, bio-based products and renewable energy, as areas where Europe’s spending power can drive innovation. It plans to help by improving legislation, applying public procurement and developing standards.

Following on from the White Paper, the government plans to draw up an international innovation strategy, pulling existing policies across higher and further education, skills, research and innovation. There will be measures to boost the ability of UK business to compete for grants in EU Framework Programme 7.

A frequent complaint about previous attempts to use public sector procurement to drive innovation, heard both in the UK and elsewhere, is that large, competent companies get all the spoils. The government hopes to address this in an innovation vouchers scheme that will support and fund small and medium-sized businesses to work with a university or research organisation of their choice, to develop a new product or service. By 2011 1,000 vouchers per year will be on offer.

At the same time Anne Glover, Chief Executive of the investment firm Amadeus Capital Partners Ltd, has been asked to look into what barriers can be removed to allow SMEs to win more public sector business.

Small businesses will get access to more free advice on intellectual property protection also.

A new index

Other proposals include the creation of five new ‘innovation platforms’ over the next three year, to co-ordinate Government support and funding to firms and organisations developing new products and solutions to global challenges such as climate change and pandemic diseases. This builds on existing projects managed by the Technology Strategy Board (TSB) to coordinate support for the development of low carbon cars, for example.

The number of Knowledge Transfer Partnerships between businesses, universities and colleges will be doubled, and the White Paper promises a greater exchange of innovation expertise between the private sector and the government.

Another new programme, Partnerships for Innovation, will bring together venture capital with universities, business and other local partners to develop solutions to local and regional problems.

The effect of these policies will be tracked by a new Innovation Index to be set up next year by the National Endowment for Science, Technology and the Arts (NESTA) in partnership with the Office for National Statistics (ONS), and others.

Reinforcing this index there will be an Annual Innovation Review to assess progress in the public and private sectors. The first of these will be published this autumn.

NESTA will be involved also in setting a Innovation Research Centre in partnership with the Economic and Social Research Council and the TSB to carry out research in innovation policy and strategy.  

It was NESTA that prompted one of the key changes in the government view of what an innovation policy needs to address, with a research paper published last year pointing to the high level of “hidden innovation” in the UK services sector. http://bulletin.sciencebusiness.net/ebulletins/showissue.php3?page=/548…

Broadening the definition

So while traditionally the UK's innovation policy has been concentrated on high-tech manufacturing, the White Paper now argues that increasingly innovation applies to a wider range of products, services, business processes, models, marketing and enabling technologies.

This has led the UK government has ditched the simplistic view of innovation as a disengaged process of investment in fundamental research leading to commercialisation by industry. Now it recognises that innovation draws on a wide variety of sources and is driven as much by demand as by supply. The insights generated by basic science may be critical to long-term innovation performance but the path they follow from the laboratory to the marketplace is long, complex and uncertain.

At the same time innovation is becoming a more open process. Enabled and accelerated by new technologies, organisations are increasingly reaching outside their walls to find ideas, from universities, other companies, suppliers, and even competitors.

Switching the focus to the demand side will drive innovation by encouraging innovators to meet new, advanced needs. “Early users, whether they be individuals, businesses or government itself, shape innovations in their most important phase of development and provide critical early revenue,” says the White Paper.

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