Making Innovation Flourish

On Evidence-Based Policymaking

We take it for granted that a solid evidence base is a key requirement for government interventions. The Department for Business Enterprise & Regulatory Reform’s (BERR) five principles of good regulation state that any regulation should be “transparent, accountable, proportionate, consistent and targeted”.

Yet the European Commission – in its proposed Term Extension Directive – is calling for an extension of the European copyright term for sound recordings from 50 to 95 years, which all the independent evidence suggests would be bad news for emerging talent and for consumers.

The theoretical trade-offs are well-known: an extended term of protection, it is argued, provides incentives for musicians to create new recordings, but it also prevents artists from innovating on the back of published music and diminishes the choice of music available on the market. Which effect dominates, and the case for term extension – should rest on a careful consideration of the empirical analysis.

Happily, an international group of 50 leading academics has done just that in the Bournemouth University statement submitted last month to the European Commission.  The academics have carefully reviewed the available independent evidence and have shown overwhelmingly that the proposed term extension would be bad for Europe’s creativity (though good for a relatively small number of long-living performers and their estates).

The academics wrote to The Times earlier this week to call on policymakers to examine the case in light of the evidence.  Three cheers for the academics!

DIUS White Paper: Towards an Innovation Nation

Last summer, the Department for Innovation, Universities and Skills (DIUS) faced a significant challenge: it was a new department, charged with a wholly new responsibility, much of which depended on exerting influence across Whitehall.

The Innovation Nation White Paper demonstrates intellectual leadership, presents an ambitious new direction for UK innovation policy and lays out how the UK will keep track of its performance against this new framework. Carrying through the implications of its analysis to their full extent will be challenging for DIUS if it remains traditionally structured, and constant effort will be required to remain at the cutting edge of innovation policy.

As always, I’m keen to hear the thoughts of the NESTA community.

Promoting world class science and innovation

We have put together a commentary on the Pre-Budget Report and Comprehensive Spending Review 2007. It examines the issues of most interest to the innovation agenda and focuses on the PSA target which looks at promoting world class science and innovation.

Lord Sainsbury's Review of the Government's Science & Innovation Policies

On Friday morning, I had the honour of attending the Prime Minister’s launch, at No 10, of Lord Sainsbury's Review of the Government's Science & Innovation Policies.  He responded favourably on behalf of the Government.  Of course, firm commitments will only become clear when the Comprehensive Spending Review is released tomorrow. However, he did make four specific statements of support:

1. Bringing together funding from the TSB, RDAs and Research Councils to deploy £1bn in support of innovation over the next three years.  He said that this would be ‘written into’ this week’s public spending announcements.
2. Doubling the number of Knowledge Transfer Partnerships.
3. Launching a ‘major campaign’ to support STEM skills, building on the recommendations in the Review.
4. Forcing government departments to allocate a share of their research spend to early-stage high-tech businesses. He further confirmed that this would be recorded.

Our education system needs to change - a Provocation

I'd like to draw your attention to our latest Provocation - a thought piece on the subject of creativity, innovation and education.  These are free to download from the NESTA website and include extended essays by key thought leaders working in innovation. They aim to foster debate and new ideas, and showcase thought-provoking work on innovation.

Beginning at the Beginning: The Creativity Gap was written for NESTA by Anthony Sargent, General Director and Katherine Zeserson, Director of Learning and Participation at The Sage Gateshead.  The essay argues that to unleash the innovative capacity of the UK in the 21st century, our education system needs to nurture the natural creative innovator in all children and ensure it is protected, nourished and stimulated into adult life.  It critiques many aspects of our current approach to education, and outlines a vision of a creative education system that operates as a whole community process.  This essay was launched in Gateshead last week and was also the subject of our latest policy breakfast in London last Friday.

I welcome your comments.

Innovation policy needs to be more like innovation

The innovation that matters most differs between sectors. Obvious really, but it’s easier to recognise than it is to design policy for.

NESTA’s new research report, Hidden Innovation, examines six sectors that, at least according to traditional measures like R&D, have low rates of innovation. But sectors such as oil production and construction do innovate, just in different ways. In oil production, innovation is the development and application of technologies in the field. In construction, it’s more about the adoption of new working methods and materials. Neither form of innovation is based primarily on university or corporate lab research which is then applied and commercialised – the so-called linear model of innovation.

The new policy agenda for innovation – developing approaches that stimulate and support the different forms of innovation that matter in different sectors – will need a new approach to policy development. In effect, in the past we have relied on a linear model for policy development: do some research (privately); analyse the results; develop and launch a pilot programme; evaluate the impact before deciding whether to roll-out as a full ‘product’.

Much innovation in industry no longer works in this way. It’s collaborative, interactive, incremental, experimental, open. Not words usually associated with policy development, let alone politics.

At the event to launch the NESTA research, Alistair Darling, Secretary of State for Trade and Industry (and possibly the next Chancellor of the Exchequer) announced the intention to form ‘sector innovation groups’ with industry partners (and NESTA) to discuss and develop new policies to support innovation in service sectors of the economy. [You can watch his speech here] Does this approach – potentially innovative in itself - represent the future of policy development for innovation?

Reaching out from the creative silo

Our latest policy briefing (Reaching out from the creative silo: the arts, creativity and innovation) calls for an updated policy debate on the creative industries. As a mature sector, these industries must face up to the challenges of their low productivity growth and of ensuring that the benefits reach out from the creative silo and influence wider creative contributions in the UK's economy and society.

Research in this area must treat the arts and creative industries with the same degree of rigour as traditional industries. By applying existing models of innovation that are known to work in more traditional sectors, policymakers can develop a richer set of interventions than public funding alone. In our view, supporting creative enterprises as they identify and adopt new technologies, helping them think through the IP implications and supporting collaborative networks are high priorities.

We'd welcome your thoughts...

• NESTA Policy Briefings
• NESTA Creative Pioneer Programme

Corporation tax

Northern Ireland's proposal to the Treasury that it should have the ability to reduce corporation tax is an audacious move.  If awarded (or even considered seriously) it begins a new phase in the development of regional innovation strategies, and one that may not be healthy.

Patents are not innovation

The report from the World Intellectual Property Organisation (Times, 21 February) stating that the UK is falling behind its global competitors, with regard to innovation, certainly makes for an alarming headline. But it doesn’t tell the full story: patents are not innovation.

Measuring innovation solely by traditional metrics, like patents or R&D spend, leads to a strong bias on scientific and technological invention. It completely fails to recognise innovation that is occurring in other areas of the economy like financial services, software, construction or oil and gas exploration.

NESTA’s recent report, ‘The Innovation Gap’, shows that when traditional innovation metrics are adjusted to reflect the make-up of our economy, the gap between the UK and other leading countries closes by as much as 80%. Worryingly, where innovation is not measured, little effort is put into encouraging it.

This is particularly concerning in service industries which make up around 74% of the UK’s economy and hold the key to our economic future in the face of increasing global competition.

We need to build on the Government’s commitment to innovation in science and technology and develop a tailor-made national policy to support innovation across the whole economy and wider society.

EC proposals: an example of how regulation can drive innovation

The European Commission has proposed forcing carmakers to cut the CO2 emissions from new cars by 18%, by 2012. It says it is planning legislation to ensure that all new cars emit no more than 130g of CO2 per kilometre, compared with an average of 162g/km for cars sold in 2005. This has led to predictable uproar: car-makers say that the limit is “arbitrary” and will hurt their business; environmentalists say that it doesn’t go far enough. Both are missing the point.

Better emissions standards are of course better for the environment.  They will also cause short-term disruption to the lives of those in the automotive industry (although they must have known that they were coming), but from the point of view of innovation, this is a great example of intelligent regulation that could position Europe’s car industry for explosive growth when the rest of the world catches up with the Commission’s proposals.

As Luke Georghiou makes clear in Demanding Innovation, performance-based regulations like this can force the EU’s industries to develop world-leading technologies that can position them for rapid dominance when those technologies become more widely demanded. Correctly implemented, this move could prove a living case study of the impact of intelligent regulation on stimulating innovation.