How to encourage innovation success

Innovation Nation? is a campaign to examine the role of innovation in the UK economy. Computing, in partnership with Intellect, the high-tech trade association, aims to identify the key steps to ensuring that the UK is able to innovatively exploit technology for social and economic gain.

This week, our panel of experts discusses corporate attitudes to innovation. They believe our success stories need to be recognised and given more support, and that the UK would benefit from thinking globally and improving collaboration between companies. The panel offers five recommendations for improving the business of our innovation nation.

Support success in business

Compared with some of its overseas competitors, the UK often has a poor attitude towards success. But exploiting innovation means that people or companies that succeed should be recognised, says the panel.

'It is important to understand the rewards of success; developing a culture where we respect business leaders and entrepreneurs who have been very successful,' says Peter Rowell, executive chairman of investment bank Regent Associates.

'We must move away from a situation where as soon as someone becomes successful we start to try and crucify them.'

Steve Smith, chief executive of regional development organisation Merseyside ICT, says talented individuals should be fast-tracked to the top.

'Instead of pushing the high-potential people - the risk-takers - as far as we can push them, we tend to try to get everybody to catch up,' he says.

'That's one of the problems. We're trying to get everybody along at the same rate rather than really pushing the fast guys as far ahead as they'll go.'

Philip Graf, chairman of the Broadband Stakeholder Group and former chief executive of Trinity Mirror, says the UK's communications sector is an example of an industry that has succeeded through innovation.

'In the BBC you see innovation driven by a culture and by an allocation of resource, and by leadership. It is developing through real leadership in this whole area, providing really innovative content and technology linked together,' he says.

'And you see Sky, an incredibly innovative organisation driven by profit, but also driven by customers and by competition.'

Smaller companies are held back by negative cultural attitudes towards selling.

'Small businesses need to have their salespeople respected for being good salespeople,' says David Jefferson, chairman of the Business Growth Forum (BGF).

'When we look at how small companies grow and where they get their money from, there's far too much emphasis on how they're going to get a grant, and not enough emphasis on how they could sell more product to more people.'

And Chris Yapp, head of public sector innovation at Microsoft, adds that the UK needs to be better at turning small businesses into medium-sized ones. 'We don't seem to grow the "S" in "SME" into "M" enough,' he says.

Collaboration is key

The panel says that innovation works better when companies of different sizes and from different industries work together.

'One of the key ways of financing innovation is through a collaboration between sectors,' says Ann Longley, managing director of startup consultancy Something New.

'That means collaboration between voluntary sectors and big business, small creative industries and large ones.'

The concept of business clustering - where companies that work in similar fields are located in one area - has often proved beneficial for supporting startup organisations, says Microsoft's Chris Yapp.

'If there are 50 companies doing something in this area it looks more attractive than if one lone inventor comes to a buyer and says: "I have got the best thing since sliced bread," because they don't know how to evaluate that, and it's just too risky,' he says.

'For example, there is a cluster of elearning companies in Brighton, and collections of games companies around Merseyside.'

Employees also benefit from clustering, says Yapp.

'Knowing you can walk out of a job from one company when it fails to go to the next one enables people to take risks,' he says.

A more direct means of collaboration is for companies and government to commit to buying from smaller businesses.

'One of the things that is really important is the allocation of a percentage of spend to small companies,' says Rod Perry, executive director of venture capital firm 3i.

'The UK's ability to innovate and to deliver is well-placed at the moment. If only we could all nudge it together, to push it in the direction that it's already started going in.'

But small businesses need more support from government and larger companies to protect their intellectual property (IP).

'Small businesses can't afford to legally protect IP, yet have great ideas,' says Longley.

Think global

Companies must realise they are competing in a global knowledge economy, and that thinking locally is not the basis for long-term success and innovation.

'When we in the UK talk about the knowledge economy, we talk about it as if we owned it. It isn't ours. It's the global economy,' says Business Growth Forum's David Jefferson.

'What we need to see is more innovation in our exploitation of technology on a global basis, and to understand how small businesses get global.'

David Telling, a senior industrialist at the DTI's innovation unit, says the UK has to respond to rivals in the Far East and the US.

'We have to move up into the higher value-added product services, processes and business models,' he says.

'We're all rushing into these new technologies - into these new marketplaces - competing with each other. And so the question we must ask is: "What is the UK's differentiation?"'

Regent's Peter Rowell says too many companies produce solutions looking for problems.

'Innovation is not just about product innovation. It really should be about market as well. And maybe the market should come first,' he says.

3i's Rod Perry believes that businesses must think globally - even focusing on Europe alone is too limiting.

'Global markets are changing dramatically in this industry and you have to stay on top of it,' he says. 'You can use the internet to do that: there's an awful lot of free information out there. It is possible for smaller businesses to start up and have a better view of the world than was possible 10 years ago.'

'At some point you have to get strategic. You can't just think about the UK.'

Boardrooms need innovative leaders

Innovative companies do not just have capable managers in the boardroom - they have leaders who understand the benefits of technology, say our experts.

'We are not exploiting technology for advantage - and the problem is at the top. It's a leadership problem,' says Intel UK managing director John Woodget.

'We need the leaders to be able to recognise that technology is a tool for transformation, regardless of the industry that you're in, and that tool needs to be used to the utmost extent.'

Intellect director general John Higgins argues that boardrooms with leaders who are innovative are more successful than those without.

'If there's something we can do to share the collective wisdom of how to build an innovative boardroom that would be a very valuable thing for us to do,' he says.

And the BGF's David Jefferson says too much time is spent in boardrooms looking back, not forward.

'One of the things, if we're looking at the past, is it never changes,' he says.

'A leader is a person who manages more by vision than by fact. We want to put more value on the visioning of the future, and less value about analysing what went wrong last week.'

Richard Excell, chairman of advisory firm Excell & Associates, says too many boardrooms fail to think long term.

'Your average Plc board just doesn't get it. It's the make-up of that board - it's the "short-termers" that they go for,' he says.

Encourage government to lead

The experts agree government has a vital role to play in enabling innovation, but industry also has a responsibility to advise and encourage it to take that lead.

'We have often said that government drives by looking in its rear-view mirror,' says Intellect's John Higgins.

'But we must try to get engaged, not just sit on the sidelines.'

The Broadband Stakeholder Group's Philip Graf says ministers and their advisers who understand the importance of innovation need more support.

'The industry can play a role by encouraging and supporting those people,' he says.

Intel's John Woodget says government should be a role model for innovative use of technology - but is hampered by fear of failure.

'If government can't be allowed to experiment and allow there to be failures, we're never going to move forward,' he says.

One of the keys to promoting innovation is to help government recognise its social benefits.

'Increasingly the big companies that get the government contracts are going to have to demonstrate social value or public value in what they do,' says Something New's Ann Longley.

And Woodget adds: 'We need IT available to every class of the public so that government can deliver services in a very simple, connected-up way.'

What the experts say

Peter Rowell, Executive chairman, Regent Associates

No organisation will innovate just for innovation's sake. They will innovate because there is gain.

Philip Graf, Chairman, Broadband Stakeholder Group

Until you build and sustain innovative cultures in boardrooms, until you build and sustain an innovative culture across the senior civil service, then I think the attempts to be global innovators will be limited.

Chris Yapp, Head of public sector innovation, Microsoft

I have one extra D to add to R&D - design. This is an area where the UK is a world leader. But the government's R&D tax credit specifically excluded design from the start. Design is an important part of the knowledge economy.

Ann Longley, Managing director, Something New

I would like to see more openness from large companies and investors to finding talent in unexpected places - like very small companies and the voluntary sector. There are lots of entrepreneurial people who are choosing to work in those kinds of environments because they offer different types of rewards.

Rod Perry, Executive director and head of venture capital, 3i

The US is reacting to what it sees as a huge threat from Asia. I think the UK needs to do this. It would be interesting to find out how many UK business leaders have visited China and India.

Graham Telling, Senior industrialist, DTI innovation unit

A lot of innovation that happens in this country is at an incremental level where there are small changes in product, small changes in service, small changes in process. The challenge is coming into the next level where we take our products and create new markets, or alter the dynamics of the market by the way we change the offering to the customer. The ultimate innovation is totally new business models such as the no-frills airlines.

John Woodget, Managing director, Intel UK

I've seen a history over the past three decades of fantastic innovation here in the UK losing the commercial benefit and value to other countries.