Making Innovation Flourish

The failure of market failure: Towards a 21st century Keynesianism

This morning saw the launch of a new NESTA provocation by Will Hutton and Philippe Schneider on The Failure of Market Failure: Towards a 21st century Keynesianism.  The provocation updates the age-old debate about the efficacy of state intervention versus laissez faire, and in so doing is fiercely critical of economic frameworks used to inform policymaking in the UK. The primacy of the concept of market failure in policymaking - the view that state intervention can only be justified when it can be demonstrated that free markets cannot do better - comes in for particular criticism.
 
The provocation updates the debate in two ways: first, by reference to developments in institutional economics, psychology and behavioural economics which the authors see as jarring with the behavioural and motivational assumptions traditionally made by policymakers; and second, by interpreting the current financial crisis as prima facie evidence that markets need government ('markets fail more often than they do not'). If the UK is to successfully innovate, the authors argue, policymakers must recognise the importance of the government and the private sector working together, not falsely pitch them at opposite sides.
 
At this morning's policy breakfast to launch the Provocation, Will Hutton argued that a number of crucial policy interventions in the UK have been sacrificed at the alter of market failures. For those working on policies to support future innovation and creativity, where well-defined market failures are by their nature difficult to anticipate and evidence, this is a sobering thought. Will finished his comments with a call to the British academic economics profession among others to respond to the thesis set out in his Provocation. Going ahead NESTA looks forward to playing its role in facilitating the debate.

Making innovative places (part one)

Over the next few days I will be reflecting on the first NESTA Summit: Making Innovative Places. It was quite a day. Stephen Timms, Sir Richard Leese and AnnaLee Saxenian delivered keynote addresses and we launched three final reports, one interim report and one policy briefing. 

That all sounds very impressive but I said it then and I’ll say it again: the 90 delegates were collectively as impressive as the ‘big names’ and I hope that much of the value will live on in the connections made as much as the evidence heard and opinions formed.

‘Yesterday’ actually started on Tuesday. The Daily Telegraph picked up on a pre-publication copy of ‘Rural Innovation’ and extensively quoted Dr. Sami Mahroum, the NESTA Senior Policy Analyst who has driven our ‘place’ agenda.  In a significant article, Richard Tyler talked of a ‘new industrial revolution’ that was going ignored by central innovation policymaking. He wasn’t wrong.

 

Five ways universities drive innovation

Our latest Policy Briefing focuses on the five ways that universities drive innovation.  Universities have traditionally had three main missions: undertaking research; teaching; and transferring knowledge. The UK’s increasing need to innovate to meet the economic and social challenges of the 21st century will place further pressure on these roles, but importantly will also introduce two more – universities’ international and regional missions.

Universities increasingly provide important national and regional links into the global knowledge economy. They exchange knowledge, gather intelligence and facilitate international flows of highly-skilled people who, in turn, create and attract high value-added businesses. As powerful institutions with well-connected and highly-educated leaders, they are also important actors in regional networks, and help lead the design and delivery of economic development strategies.

However, few universities can excel in all five roles. Each must choose where to concentrate its efforts depending on its strengths and regional requirements. Government should encourage greater interaction between universities and the wider economy and society, and ensure that research funding encourages innovation.

As ever, I'd welcome any comments on this publication....

From lightbulbs to 3D TV

Please note : This post has moved

Last week I was fortunate to spend a day at the High Tech Campus in Eindhoven in the Netherlands. The site itself is very impressive and hosts around 5000 engineers working on new technologies with ‘Open Innovation’ as their motto. And yet as recently as 2003, the site used to host just one big company, Philips.

Philips made a very deliberate decision to open up the way they operate, and the way they innovate. A clear indication of how things hare changed in a short space of time is the fact that there are now hosts over 40 businesses academic research institute and network called MiPlaza where companies share equipment and services such as cleanrooms. As a symbolic move, in 2005 they even removed the Philips sign at the entrance to the site, despite the major historical connections with the site.

We were fortunate to hear their Chief Technology Officer talk about their approach to open innovation. They now realise that it is much easier to sell successful businesses than it is to sell new technologies, and so they active spin out companies or technologies in the same was as many Universities.

I always find it fascinated to see how organisations re-invent themselves but this was made blatantly clear when we saw how Philips has moved on from starting out in lighting, progressing into Consumer Electronics, and now with a major focus is on Healthcare. The best ‘I want one of those’ moments came when they showcased a pretty spectacular 3D TV – like 3D cinema but without the cardboard red and green specs.

I am struck by the desire and ambition of companies like Philips to engage with ‘the outside world’ in a proactive way, and the opportunities for smaller companies, universities or individuals are significant, though it’s not always easy. Therefore, the theme of corporate open innovation is one of the three core themes that we will investigate through NESTA Connect launching in 2 weeks tomorrow and we’ll post again on this subject over the coming months.