Lancashire report lowres by DesignWrite

ET INNOVATION

AN AUDIT OF THE INNOVATION AND

INNOVATION SKILLS CAPABILITIES AND REQUIREMENTS WITHIN LANCASHIRE WITH RECOMMENDATIONS FOR FUTURE DEVELOPMENTS

CONTENTS Executive Summary

Preface: â&#x20AC;&#x153;Gettingâ&#x20AC;? Innovation

Innovation: Background and context 8 Previous studies, results and findings 11 Innovation in Lancashire 17 Scope and Structure of the Study 23 Results and Findings 25 Final Recommendations 36 Acknowledgements 38 References 39

EXECUTIVE SUMMARY Introduction, Rationale and Scope Inovaris firmly believe that investment in the appropriate skills to support innovation would present Lancashire companies with growth that has not been achieved in any other part of the UK. Embedding this culture within our key companies and supply chains would present a strong case for inward investment to Lancashire. This would help contribute to the establishment of Lancashire as the UK Capital for innovation, and present a commercial model which would provide significant exploitation potential through supply chains within the UK and with export potential. Following discussion with Lancashire County Council and Boost Business Lancashire, Inovaris were asked to produce an innovation and innovation skills capacity study, with the aim of identifying why companies are falling short of their innovation potential, and what can be done to address this. The most common misconception is that innovation is only about invention and creativity. There are many definitions to “innovation” which capture the true meaning of the word, with the most accurate being “to gain benefit by doing something different”. Lancashire’s regional strategy includes aspects on innovation, but purely in the context of the development of technical centres. This is not wrong - but equally, nor is it sufficiently comprehensive. This report intends to identify what additional impact is achievable through supporting the skills base. Based on a strategy of balanced risk, this is the low risk investment that produces a much higher percentage success rate. It is suggested that with better decision making and direction, we can increase the overall return on investment in innovation. The study and subsequent analysis comprised an Innovation Audit to determine the extent to which Lancashire companies are innovation active, and an Innovation Skills Needs Analysis to addresses the skills, knowledge and competencies required to support an organisational innovation strategy. During the study 60 companies of greater then 20 people and 10 stakeholder organisations with a track record in delivering innovation projects were questioned, with the results analysed to present recommendations and opportunities.

Study Recommendations An analysis of the statistical and supporting findings from the interviews with the companies led to the following recommendations:

1. Improved knowledge of the wider innovation process and benefits Different forms of innovation must be used in conjunction with each other to optimise the respective

the interviews with the stakeholders led to the following corresponding recommendations:

1. Improved internal knowledge and drive Companies need specialist skills which result in a better internal culture of innovation. A driver for this is assigning â&#x20AC;&#x153;ownershipâ&#x20AC;? and having a designated point of contact to lead the strategy.

benefits within both business models and value

2. Increased Collaboration

propositions.

Companies need to understand the importance of

2. Better support for the core innovation resources The most important resources in the innovation process

increasing capacity through partnering with the relevant organisations. Knowledge Transfer is a driver for innovation.

are in-house capabilities and the immediate supply chain.

3. Support Rationalisation

To maximise the commercial gains from innovation,

Better co-ordination will help companies access the

more focus should be placed on these resources.

right type of support, which may come from outside

3. Promotion and alignment of academic programmes as a support mechanism

Lancashire.

4. Increased Internationalisation

While the benefits of academic support are clear to see,

International business is seen as a key component in high

either (a) engagement with larger companies is still an

innovation firms; more activity and support in this area

issue, or (b) the offering is still mis-aligned with the needs

would be highly recommended.

of larger companies.

4. Provision of tailored support in specific areas

An analysis of the statistical and supporting findings from

5. More for the Medium and Large companies There should be a greater focus on the development of

Companies have indicated a clear intent to invest more

interactions and services with small, medium and large

in innovation and innovation support / training if the

sized companies as opposed to micro companies (i.e.

potential benefits were clearly presented.

those with less than 10 employees).

“

Lancashire companies need to develop a better understanding of the complete innovation process to develop stronger value propositions and business models.

“

Final Recommendations and Opportunities The findings from the Innovation and Skills audits revealed that while Lancashire based organisations believe that they are highly competent in innovation,

whereas the survey has suggested the actual commercial vision and agenda is somewhat different. Academia and technology do play a crucial part in the innovation agenda, but primarily as supporting cast and not always the driving factor.

their definition and full understanding of what innovation

The major opportunities suggested as a result of this

comprises is incomplete. However, most companies tend

report include:

to be performing well in one specific field of innovation, demonstrating that they have the foundations to expand their innovation activities accordingly. To Innovate better, Lancashire companies need to develop a better understanding of the complete innovation process and the areas in which the various sub-factors interact to develop stronger value propositions and business models. This requires close co-ordination and involvement with their supply chain and the wider private sector (including academia). This is also supported by a knowledge of what other support, capabilities and research findings exist. What is also apparent, is the corporate interpretation of innovation does not align to the LEP’s definition of innovation and the activates proposed within the current regional strategy. The primary reason for this is the

Refocusing Innovation Support based on the specific skills requirement ● Refocus from the LEP to include additional innovation

support activities focusing on wider support based on organisational need. This should include support for skills to develop a greater understanding of innovation and the associated benefits. ● Additional support in the identification and training

at a managerial and organisational level should be available to any company, to better understand the breadth of innovation, the impact, and how the different aspects contribute to a stronger value proposition and business model.

common misunderstanding in the public sector that innovation is driven solely by technology and academia,

Refocusing the Innovation agenda around commercial activity ● A drive from the LEP to work more closely with com-

mercial partners and academic projects to ensure a closer cohesion between publicly funded activities / proposed academic projects and the target audience and impact particularly with respect to the forthcoming ERDF 2015

provision to an international marketplace has been demonstrated as a key component in growth in highly innovative organisations. Support programmes to help local companies access international marketplaces would be highly recommended, with the Lancaster China Catalyst programme serving as a strong example. The UKTI North West team should also be a key driver within this suggestion.

calls. The drive should be commercial, not academic. ● All projects in receipt of public funding should

undertake a non-optional innovation support / project exploitation support service. This will either help the companies embed a stronger innovation skills base

Greater support and engagement for medium and large companies ● The majority of the current support mechanisms tend

and culture and skill set within their business, or offer a

to attract a high percentage of “micro” companies, limiting

specific service to help them maximise the commercial

the wider scale economic and impact. Development of

impact of their support from funded projects. This will

a better understanding of the needs of the medium and

maximise the impact of public funding while increasing

large companies in order to increase their innovation

in-house capabilities.

impact will (a) create opportunities for other companies in their respective supply chains, and (b) present the

A need for non-geographic support rationalisation ● Provision of support to companies regarding the

various options for wider engagement within their innovation activities, not limited to the immediate geographic boundaries. While public sector support has sufficed in the past, schemes tend to change with every change in government, and often “run out” towards the end of their funding – causing disruption to the potential client base. A comprehensive, privately managed, capability would help bridge these gaps. This would include a mechanism to engage more fully with academic institutes. ● Where relevant (primarily product based businesses),

potential for greater involvement with academic institutes resulting in greater commercial benefit.

PREFACE: “GETTING” INNOVATION Inovaris’ directors, Richard Harrison and Linda Merrills

approximately 30% of corporate value propositions

have been involved in growth through Innovation for a

and even less of the business model requirements,

combined total of 40 years, with experience covering roles

basing any regional innovation strategy solely around

at large corporate organisations, public sector innovation

“new technology” only releases around 15-20% of the

support agencies (including a regional development

wider innovation potential. We do need to continue

agency) and have supported in the region of 1000

to drive Innovation through technology, but this alone is

companies through their respective growth programmes.

not enough. It’s a piece in a much bigger jigsaw - albeit a

Following discussion with Lancashire County Council and

very important piece. If we take what is achieved through

Boost Business Lancashire (Lancashire’s primary business

“new technology” and “new to the world” innovation, and

support mechanism), Inovaris were tasked with producing

appreciate that we can achieve 6-7 times the impact with

an innovation and innovation skills capacity study, with the

minimal change and investment, only then can we begin to

aim of identifying why companies are falling short of their

truly visualise the full potential of Innovation.

innovation potential, and what can be done to address

Bearing these points in mind, this report is more than

this. The rational for this study, along with Inovaris’ pre-

a basic innovation audit and analysis of the need for

study perspective is as follows.

innovation support skills. This document will contribute

Inovaris firmly believe that investment in the appropriate

towards the development of strategic drivers which

skills to support Innovation would present Lancashire

shape the future of Innovation support within Lancashire.

companies with growth that has not been achieved in

Finally, many thanks to those who have assisted Inovaris

any other part of the UK. What is most important, is that

in the development of this document. We fully recognise

innovation is contagious. Embedding this culture within

that Lancashire is committed to change through

our key companies and supply chains, and showcasing

innovation, and wholeheartedly support this philosophy.

these examples, would present a strong case for inward

Consistent with this approach, this document contains

investment to Lancashire. This would help contribute

sections taken directly from various regional, national

to the establishment of Lancashire as the UK Capital for

and international strategy documents, which have not

Innovation, and present a commercial model which would

been amended in any form in order to retain their

provide significant exploitation potential through supply

original context.

chains within the UK and with export potential.

To get innovating, you first need to “get” innovation.

Innovation is about so much more than “technology”.

Thank you for your time in reading this report - we would

It’s about application, opportunity, driving real

welcome any feedback you have.

demand-led issues. The key to growth isn’t often a new product - it’s making what you’ve got and what you do, better. If we assume that “new technology” drives

Richard Harrison / Linda Merrills Inovaris’ Directors

INNOVATION: BACKGROUND AND CONTEXT Innovation Background Innovation is an extremely powerful word – when used in the right context. However, it is also one of the most over and misused words, with the majority of people misunderstanding it’s true meaning, and using it in an incorrect context. The most common misconception is that Innovation is about invention and creativity. While this is part of innovation, it is not sufficiently descriptive nor robust. There are many definitions to “Innovation” which capture the true meaning of the word:

terms. For this reason, it should be noted that the first two definitions are quite generic in their composition, whereas the final definition (turning ideas into invoices) has an obvious tongue-in-cheek element to it – but captures the key business rationale behind why a company would want to engage in innovation. This is extremely important as our focus is on Business Innovation as opposed to the wider everyday context.

“Innovation” in a commercial context When Innovation started to become one of the

● To gain benefit by doing something different

most important business phrases at the turn of the

● Innovation = idea + exploitation

millennium, the true meaning of the word became

● Turning ideas into invoices

lost due to two primary reasons. The first is that, most likely due to a misunderstanding of the true meaning of innovation, the term became synonymous with

What is clear from the above definition is that there are

technical progress and advancements. “Innovation” was

two parts to innovation – (i) an idea, something new or

directly discussed in conjunction with high-tech science

something different and (ii) some form of action leading

and technology, which led to the second reason. This

to benefit.

is that universities and research institutes also became

As the use of the phrase has become more commonplace

synonymous with the use of the term innovation – and

in modern language, it’s meaning has also evolved.

also became highly involved in contribution to regional

Considering the three cited definitions, we can see that the

and national strategy.

modern definition is often used to describe a product or

We must consider innovation in a context that is

process which introduces completely new functionality. The

wider than products alone. In the business context,

second component of the definition is the most important

Innovation can address a product or service, a business

– if it doesn’t add benefit, then it’s not innovation.

process, a marketplace (or method of addressing a

This latter aspect of the definitions is primarily a result

marketplace), or the organisational models which

of “innovation” being used extensively by the business

shape and drive an organisation. However, it must be

community, and requiring a tangible rationale to ensure

reiterated that Innovation is only actually achieved

that innovation leads to something the business can

through the realisation of these cases, and the receipt

profit from – in financial, productivity or other general

of the stated benefits.

“

Innovation is about managing a portfolio of low, medium and high risks which can potentially return corresponding low, medium and high rewards.

“

The terms “business support” and “Innovation” are

to the wider corporate goals, which were presented in

frequently confused and mis-used in place of each other.

various locations around the working place. Further

Ultimately, the difference comes down to the element

investigation revealed that the view was that technology

of uniqueness or “newness” in the idea – but this itself

wasn’t a driver for the business (even though it was a

contains blurred boundaries. It could be suggested that

technical company) – it was a “given”. In technical terms,

Innovation is a subset of Business Development – as

they knew what they developed could be achieved – the

both seek to achieve the same end goal, i.e. benefit to

knowledge of the marketplace, the experience of the

the company. However, whereas Business Development

workforce, and the joint corporate sense of ownership

will typically include improvement processes such as

and involvement was what drove their success. This

identifying what to eliminate, reduce and increase within

was a model which was being repeated across many

your current sphere of operation, Innovation is more

successful companies across the States.

specifically about what you create and introduce that

In addition, our work with the former Regional

adds value to your business.

Development Agency allowed us to witness how small

This is where we need to introduce the concept of

cultural changes in single organisations often contributed

“newness”. Innovation isn’t just about creating “new to

more to the economy than £multi-million “innovation”

the world” knowledge that was previously unheard of.

and technology development programmes based at

In fact, it has been stated in other reports that around

academic institutes.

70% of innovation actually comes from knowledge and

This leads to a common problem. Lancashire’s regional

technology transfer – i.e. the sharing of best practice,

strategy includes aspects on Innovation, but purely in

process and technology.

the context of the development of technical centres.

The true power of Innovation was first seen by Inovaris

This is aligned with national strategy, which focuses

when dealing with a series of American companies on a

on technology – it’s not a co-incidence that the UK’s

technology transfer project. It was seen that there was

Innovation Agency (Innovate UK) used to be called the

a high energy workplace, where everyone seemed to be

Technology Strategy Board (TSB). The issues of national

enjoying themselves, working in unison and contributing

strategy are not limited to the UK – the US strategy

similarly focuses on technical development, although it

strategy. However, the primary contributor to business

does discuss Innovation is a slightly wider context.

growth is the process and impact from what most

This is by no means dismissive of our academic

companies already possess. Facilitated processes are

institutes and capabilities – actually, it’s far from it. The

required on an ongoing basis, along with the collaboration

regional facilities at UCLan and University of Lancaster

and belief of a significantly high percentage (if not all) of

offer fantastic capabilities and have much to contribute

the workforce. This drives the culture of innovation, and

to the innovation landscape. However there is an

leads to a philosophy of continual growth.

infatuation with connecting innovation with products,

It is not inaccurate to connect technical and scientific

technologies and academia – but it’s about so much

progress with the phrase Innovation. However, it must

more. It’s about developing a culture in which your

be appreciated that innovation is about much more that

business continually improves and thrives. Innovation in

technology and academia. Ultimately, Innovation is about

the future should be seen as essential to a business; as

managing a portfolio of low, medium and high risks

important as financial management.

which can potentially return corresponding low, medium

Are we maximising our potential?

and high rewards. It’s about bringing in people from

Studies revealed that companies’ successes were being determined by basic processes which empowered the staff into contributing ideas to drive their respective businesses forward. Negativity was eliminated, collaboration and transparency encouraged, and dynamic workplaces with dedicated development areas drove considerable progress. The philosophy of “not having time” was removed – it was recognised that time is made by assigning priority, and Innovation was instilled as a corporate value, driver and strategic objective in many successful organisations. The majority of the impact could also be delivered in-house, without the support of organisations who didn’t know nor understand the companies’ core business and processes. The collective knowledge and ideas of the workforce – when managed in a facilitated manner – is what drove the majority of the growth. Technology will continue to be the driver for governmental

other teams, departments or companies to introduce fresh ideas – and returning the favour. It’s about trust, transparency and involvement. Through this study we aim to demonstrate that the majority of the business community see innovation as a technical development or product which will fundamentally change the world for the inventor. This is apparent in Lancashire’s regional growth strategy, which itself is driven by the corresponding national strategies, primarily linking innovation to academic institutions and the output from “innovation centres” specialising in the development and demonstration of specific technological aspects. This isn’t wrong at all – but equally, it’s not sufficiently comprehensive. This report is intended to identify a fantastic opportunity which is achievable through skills support. Following the standard 80/20 ideology, investing 20% of the given “innovation” budget in skills support can return 80% of the impact. Based on a strategy of balanced risk, this is the low risk investment that provides a much higher percentage success rate.

PREVIOUS STUDIES, RESULTS AND FINDINGS Previous audits and research “Technology and Innovation”, “Research and Innovation”, and “Science and Innovation” are all phrases which are often used together. In this context, it is no coincidence that the use of the word “innovation” always appears second, and is meant to portray our ability to commercialise technology, research and science correspondingly. Innovation is rarely seen as a discipline in it’s own right. Even the parliamentary report “Bridging the valley of death: improving the commercialisation of research” suggests that “While our academic research is the jewel in the crown of UK innovation activity, we have some concerns about how universities interact with the commercialisation of research”. This in itself is quite concerning – if the research is not being commercialised, it remains as research and falls short of being classed as “innovation”. This is another example of the UK classing research as innovation – not the benefits which must first be drawn from the R&D activities. The contact of the document (better commercialisation of research) is actually extremely interesting – it’s the focus on what the

commercial exploitation of a new invention”. This addresses what is commonly termed “new to the world” innovation, but discounts innovation through knowledge transfer, which due to other reports can account for some 70% of all innovation – which may described as “new to the market” or “new to the company” innovation, depending on the respective scale. The second point is that the primary input to measure innovation activity was R&D spend, with a share of sales captured as the primary output with no assessment of productivity or bottom line profit. Interestingly, though, the findings are somewhat consistent with what one would expect from a study which captures internal investment in innovation activities (process improvements, etc) against the corresponding benefits. What is crucial is that the report considers the importance of the variety of the benefits that can be drawn from innovation, and the use of wider sources such as suppliers and customers. We must remember that with the scope of innovation activities, it is not always possible to capture all aspects of the input, process and output in a measurable manner.

authors term as “innovation” and “the jewel in the crown”

The findings suggested that while younger and smaller

which is wrong.

firms are likely to be highly innovative, their effect is

The 2014 BIS UK Innovation Survey (Innovative Firms and Growth) presents some extremely interesting findings. There are two major limitations within the report, which should be considered when studying the findings.

relatively small. High innovation companies also tend to be more internationally orientated than low innovation firms, which tend to operate more in local and regional marketplaces.

Firstly, it must be recognised that the definition of the

Other findings may be flawed by the limitations on

term Innovation within this report is somewhat limiting

the process. For example, the report states that high

– the report defines innovation as “the first successful

innovation firms tended to have a significantly higher

share of STEM graduates than low innovation firms,

supply chains or geographical clusters”.

as science and engineering graduates were associated

The central elements of this new approach will include

with R&D, more new to market products, more external

encouraging increased business investment in all forms

collaborations and better use of external information.

of innovation, particularly by SMEs, including technology

However be that is most likely a product of the limitations

development, but also in intangible assets such as

placed on the research criteria. For example, the

design, the development of new business models and

measures were not set to capture innovation in, for

skills. One specific actions focuses on working with the

example, professional service based businesses – which

Sector Skills Councils to improve skill levels including

would naturally rate lower in R&D, R&D spend, have no

management and leadership skills.

“new products” and hence score lower in the report’s definition of Innovation.

The NESTA UK Innovation Index 2014 takes a much more rounded view on the subject of Innovation, considering “investment in knowledge / intangibles” and the relationship with economic growth. The context

Most new ideas do not come as a flash of

for the report is also more encompassing, it considers

inspiration to a lone genius investor; they

(a) investment in intangible assets to approximate

come from how people create, combine and

knowledge stock; (b) improvements in knowledge held by

share their ideas.

workers thanks largely to qualifications and experience; and (c) freely available knowledge. An “innovation index” is defined as the growth in output – i.e. the value added by new products and services, processes, and ways of

BIS’ “Innovation and Research Strategy for Growth”

working over and above the contributions of physical

follows a similar vein, focusing the UK’s ability to

capital and labour input.

compete in the global innovation economy with the ability to accelerate the commercialisation of emerging technologies. However, there are several paragraphs within the document which do suggest that the Skills agenda is present. The report suggests that the government aims to help business to make the most of how skills can promote enterprise, innovation, productivity and growth. It states “We want to encourage employers to bring forward new ideas that will contribute to driving economic growth and could include additional investment in apprenticeships, addressing leadership and management skills or investing in skills to support

The report suggests that in the last 3 years, investment in innovation has increased by 44%. Most interestingly, R&D only accounts for around 13% of the total intangible investment, with 20% investment in training and organisation capital. In addition, the most intangible–intensive industry is the information and communications industry, investing 19% of total valueadd on intangibles. The second most intangible intensive industry remains to be manufacturing. We must return to the Innovation Nation paper of 2008 commissioned by the Department for Innovation, Universities & Skills to remember the commitment to

“

Innovation is not just the responsibility of researchers; workers at all levels can contribute to the development of innovation by finding new, different or better ways of working.

“

“make Britain the best country in the world to run an innovative business or public service, by investing in people and knowledge, unlocking talent at all levels, by investing in research and in the exploitation of knowledge and by using regulation, public procurement and public services to shape the market for innovative solutions”. The most relevant section of the paper in the context of this study addresses “Innovative People”, stating “Most new ideas do not come as a flash of inspiration to a lone genius investor; they come from how people create, combine and share their ideas. The UK’s capacity to unlock and harness the talent, energy and imagination of all individuals is crucial to making innovation stronger and more sustainable. The effects of innovative people are self-reinforcing: innovative businesses are attracted to highly skilled and creative workforces and, in turn, innovative people are drawn towards exciting and challenging career opportunities. Furthermore, innovative people generate new ideas that require skilled people to implement and exploit them”. This is followed by a commitment to maximise the innovative capacity of the UK’s people by driving implementation of the Leitch Review of Skills to raise the nations; skill levels and enhance opportunities for innovation.

Other National Models for Innovation Looking beyond the UK, a specific model has been implemented in Australia, with an approach that has already been adopted in Australian Government’s Department of Education, Employment and Workplace Relations. Their definition of Innovation is also independent of technology, suggesting “Innovation is consciously exploiting new ideas, or new uses for old ideas, to add social or economic value”. In their 2009 report “Developing Innovation Skills”, the Industry Skills Council and Innovation & Business Skills Australia explained “The Australian economy relies on the innovation of its workforce: new thinking will foster growth, and contribute to our competitiveness. Innovation is not just the responsibility of researchers; workers at all levels can contribute to the development of innovation by finding new, different or better ways of working. Vocational education has a key role in this process. Trainers can help foster innovation in the workforce through their professional practice”. The workforce needs new, or newly emphasised, skills and capabilities to support an innovation economy. Innovation is not a skill or capability in its own right; it is

the application in a specific context of a combination of

As shown in the 2012 Australian Innovation System

skills, knowledge and attributes. As the nature of work is

report, innovation almost doubles the likelihood of

constantly changing it is important to develop capacity

productivity growth in Australian businesses. Compared

for innovation to keep up with workplace change.

to businesses that don’t innovate, innovative Australian

This is supported by the Australian Innovation System

businesses are 78% more likely to report increases in

Report 2013, published by the Australian Government

productivity over the previous year.

Department of Industry. The report explains that the two factors fundamental to successful engagement

Innovate UK Innovation Data

include innovation capacity and knowledge of the

Innovate UK (formerly known as the Technology Strategy

relevant markets, with competition increasingly driven by

Board) have been kindly provided data collated during

innovation as businesses and customers become more

one of their innovation support schemes. Innovation

sophisticated. The interesting section differentiates “new-

Vouchers are each worth a maximum of £5k and do not

to-the-world innovation” from knowledge and technology

require matched investment. While the amount available

transfer activities, but most importantly, includes service-

and associated calls will naturally pre-determine a high

based innovation within this category.

percentage of the applicant profiles, it is suggested

The report explains that improved business culture and management capacity will enable innovative solutions for customers and supply chains. Part of the challenge is to increase collaboration and productive linkages that will allow businesses to compete based on innovation. “

that the data recorded within the application process is certainly worthy of further study. The data was kindly provided by Innovate UK in a raw format; for the purpose of this report, a relative scoring mechanism has been developed, ranking each response on a “percentage usage” or “percentage satisfaction” scale.

“A high-performing innovation system should ensure that actors within the system are connected and able to effectively collaborate, thereby maximising the flow and exchange of resources and ideas”

It should be noted that no definitive meaning should be drawn from these figures – they have purely been derived for comparative purposes. In addition, little cross referencing of results has been performed with this data, although that would help draw more useful trends from the collated data.

Acquiring external knowledge Comparing the options in a like-for-like manner, the highest scoring resources were end users / customers / clients (scoring a mark of 80% on percentage usage), closely followed by networking with suppliers of equipment / materials / software (70%). Online

â&#x20AC;&#x153;

86%

demonstrated intent to introduce new/improved products over the next 12 months

technology, brokerage and Social Media scored 62%; the use of academic resources (HEIs, RTOs and Technical Consultancies) scored 58%, comparative with Design Advisors and Trade Associations each scoring 57%. The least used resources were chambers of commerce (40%) and knowledge brokers / consultants (48%).

â&#x20AC;&#x153;

Are Innovation needs are being met internally. The relative mark for this answer was low, with 49% disagreeing, 29% neutral and 22% agreeing that they had the ability to meet their innovation needs internally. This is not surprising, considering the vast sources of knowledge

The most interesting finding was that the majority of the

and competencies required to deliver innovation projects â&#x20AC;&#x201C;

companies drew more external knowledge from their

what is most important is whether these companies have

supply chain than other sources. It is likely that Chambers

access to the external knowledge they require (or whether

of Commerce and Knowledge Brokers scored low on

internal capacity is being captured to the optimal level).

the scale as they tend to be conduits to the knowledge the target audience requires, as opposed to the actual providers of end-user information.

Formal relationship in innovation activities

Investment in innovation in the last 12 months 45% suggested there had been no change, 6% reported a decrease, and 48 %reported an increase in investment in innovation. The breakdown of Innovation investment differed slightly, with the highest

Over the last year and last 3 years (two separate

increases in product / service innovation (ranking 74% on

questions) only 34% of the applicants had a relationship

the index scale), followed by process innovation (70%) and

with HEIs, RTOs and technical consultancies, c. 50% who

then equally by Marketing and Organisational Innovation

had relationships with suppliers and end users. Suppliers

(each 68%). The figures are shown simply to demonstrate

of specific information including intellectual property,

that there was not a significant difference between the

design and trade associations all reported usage scores

investment in the various types of innovation.

around the 30% mark.

There were slightly greater differences when the applicants were asked how they rated their innovation capabilities within their industry. In general, 64% thought

80% of applicants involved end users

Sales resulting from new and improved products and processes

and customers in the acquisition of

The range of the figure differed from 0% to 85%, with the

external knowledge. 70% also used their

average at 37%.

wider supply chain.

Again, it should be reiterated that cross-referencing these results would lead to some interesting findings â&#x20AC;&#x201C; however, the specific interrogation of this data is a little outside the scope of this report.

their capability in all innovation was above average or leading. This scored particularly highly for product innovation (69%), but less so for Process Innovation (45%), Marketing Innovation (34%) and organisational innovation (31%). There was a clear increase in the number of companies who have introduced new (or significantly improved) products, services and processes or entered new markets in the last year (compared to the previous two years). The increase in each category ranging between 7 and 15%, with 53% of companies reporting new/ improved products, and 40â&#x20AC;&#x201C;42% reporting new/improved processes, services and market entries. However, even this is low compared to the ambition presented by the applicants; 86% demonstrated intent to introduce new/improved products over the next 12 months, 83% intended to enter new markets, 72% plan to introduce new/improved processes and 69% aim to introduce new/improved services.

INNOVATION IN LANCASHIRE

“

£23

Billion in Gross Value Added (GVA) and supporting nearly 620,000 jobs

Lancashire in context Lancashire is one of the largest local economies in the North of England, currently generating over £23 Billion

“

business start-ups and create 1,100 new jobs. The Hub will provide local companies with access to over £30M worth of business support services.

in Gross Value Added (GVA) and supporting nearly

Inovaris’ experience managing and delivering business

620,000 jobs. Many world class businesses are located

support across the North West of England has shown

in Lancashire alongside an increasing number of high

that over the last 3 years, Lancashire has become the

performing SMEs established in the area, which is home

most highly supported area for business support, R&D

to 45,000 businesses in total.

and Innovation. However, “innovation support” still

Although Lancashire has experienced sustained growth over the last decade or more, the area has lost ground when compared to national economic benchmarks and neighbouring competitor locations, especially

focuses primarily on the technical aspects of Innovation, supporting the development of technical projects and their subsequent exploitation.

opportunities and competitive advantages, Lancashire

The Local Enterprise Partnership (LEP)

can reclaim its position as a national economic leader.

The growth and development strategy in the region is

Manchester. By focusing on key economic strengths,

The Lancashire Growth Plan states that the Growth Hub service (Boost Business Lancashire) will provide local high growth companies with improved access to mainstream business support services. The Hub will integrate existing business support and local finance provision and help ensure it is focused on meeting the needs of growing local SMEs. The Growth Hub service went fully live in May, 2013 and is expected to work with up to 1,300 established businesses in Lancashire, generate 400 new

driven by the LEP Lancashire Growth Plan 2013/14 and the corresponding Strategic Economic Plan. Innovation is mentioned strongly in these documents, although this does focus on the technical and scientific aspects. However, this is coupled with a strong skills development drive and strategy, which if combined with the Innovation aspects in a co-ordinated manner, would have considerable effect. The report complements the LEP’s governance structure, stating it “commands the support of all key public and

private sector partners, with a clear and targeted focus on

with the recent Witty Review”.

interventions where the greatest economic opportunities

The Whitty review is specifically aimed at identifying

can be delivered. This provides Government and local

the role universities can play in supporting growth. It

partners with the confidence required to take forward

addresses the technical components to drive innovation

bold strategic initiatives which will position Lancashire as a

through invention, but again, we must appreciate that

key contributor to national growth”.

innovation (a) demands corresponding exploitation

Lancashire has a global reputation and track record of

activity, and (b) addresses the development of processes,

innovation and industrial excellence, but until recently the

new markets and organisational restructure. In addition,

area has collectively failed to promote a coherent sense of

other reports have estimated around 70% of innovation

purpose. Lancashire’s continuing focus on strengthening

came from knowledge and technology transfer – aspects

its industrial base by targeting the innovation, skills and

which are not required in “new to the world inventions”.

supply chain solutions required to ensure Lancashire

Taking the wider findings from the Whitty review, the

remains globally competitive.

highest impact statements included:

Through focussed resources and activity on a finite number of priorities, the LEP will develop a skills infrastructure aligned to the demands and needs of local businesses and communities providing a workforce capable of realising Lancashire’s growth opportunities. Co-ordinating this activity with a core understanding of the potential for innovation and the associated skills gap will have a significant impact on business growth within Lancashire.

The strongest basis for regional economic growth is activity rooted in a sound understanding of a locality’s comparative economic advantage. This means that the task of Local Enterprise Partnerships (LEPs) and other bodies seeking local growth is to understand where comparative economic

While some skills issues have been addressed, the focus

advantage lies, and to focus on how best to

on delivering innovation purely through technology – and

land the benefits of associated economic

academic bodies – still remains an issue. Bearing this in

activity for their locality.

mind, this section should be read in context, considering that the studies and findings from the various documents and strategies have been driven by the current viewpoint

Lancashire has previously been referred to as the

of Innovation, which we believe to be flawed.

administrative capital of the North West, with a large

The Lancashire Growth Plan states that “Lancashire

number of service-based businesses, and an emerging

will establish a local Innovation Strategy anchored

strong digital presence. While the Whitty review raises

by Lancaster University and UCLan focused on their

some very good points, we must ask whether the

competitive strengths and complementarities to support

translation of the recommendations into local policy

the growth of Lancashire; an approach fully consistent

has been taken too literally. bearing in mind the report’s academic context.

“

£177

million which will be invested in 4 technical innovation projects

“

The LEP Strategy references innovation based

comprehensive innovation needs of the breadth of

developments in Preston (UCLAN), Lancaster (Science

Lancashire’s businesses.

Park) and Burnley (Aircelle / Michelin Site). It suggests that Lancashire can maximise the economic value and

The Academic scenario

benefits of an emerging “arc of innovation” across the

In order to understand the context of this document,

county, which links world class clusters of industry,

we must consider two key factors: 1) What drives

technological development and research excellence. The

innovation, and 2) what is require to support innovation.

Arc of Innovation will specifically support the growth

The academic projects surrounding innovation generally

plans of Lancaster University and UCLAN (and Edge

fall into four categories: research projects; access to

Hill University), especially their innovation-focused and

knowledge and facilities; leadership and management

industry spin– out/spin-in developments in Lancashire.

support; and student projects.

The major challenge here, is that historically, academic

Research projects, by definition, are not innovative in

projects have not delivered an acceptable return

themselves. The commercialisation of research projects

on investment. The Innovation strategy’s focus on

makes the entire process innovation, but inherently

Innovation Excellence discusses some £177M which will

involves a commercialisation partner. Therefore, we

be invested in 4 technical innovation projects (Lancaster

must not confuse investing in innovation with investing

Health Innovation Park;

in research and development (R&D). Investing in

UCLAN Engineering Innovation Centre; Centre for

R&D may well lead to innovation, depending on the

Quantum Technology Innovation; and Cyber Security

exploitable outputs.

Innovation Centre) with no focus on the significant

These outputs usually arise in two areas – knowledge

service based needs in the region.

which is exploited through access to knowledge and

The Australian model of Innovation demonstrates that

facilities, or on rare occasions, research may lead to

the RoI from investment in skills may be significantly

the development of a disruptive technology which has

greater than that from investment in technology alone

significant commercial potential. These are few and far

– this is an approach which is essential to support the

between, and usually have a long development cycle with

the need for further investment for commercialisation.

This is not to suggest, in any size shape or form, that

Access to knowledge and experience is an essential

Academic Institutes do not have a part to play in the

factor in Innovation, providing companies with resources

Innovation landscape. Quite the opposite – the regional

and know-how developed within the University that

Universities have demonstrated in many instances how

they would not otherwise be able to access. While there

their capabilities are essential to support innovation.

is often an overlap between what is provided in the

However, the emphasis here is on the word “support”. The

knowledge base and what is available in the wider private

majority of academic programmes are set up to do just this

sector, the market failure and hence business justification

– act in a supporting role, not as the lead driver.

comes from the point that the client companies would

While more companies collaborate with each other than

not pay market rate for access to this knowledge within

they do with research institutes, an important aspect to

early stage high risk projects.

back the suggestion that academic research still holds

Many Universities now offer strong leadership and

an important position, is the Australian statistic that

management courses, which encourage the client

demonstrates that collaborative innovation with research

companies to share practice, encouraging the adoption

organisations triples the likelihood of business productivity

of continual change. These generally tend to be positive –

growth. However, this cannot be compared directly to the

although can differ on a course by course and institute by

UK system without an understanding of how the Australian

institute basis. There is a particularly positive presence in

academic and research base collaborates with their

Lancaster’s Business Management School, which is highly

respective commercial clients, and the services provides.

rated and respected.

for a student to gain industrial experience and for a

The Government support scenario

company to gain support with certain activities, but

The major innovation support offering in England is

expectations must be set at the start. Students are

the Innovation strand of the government’s Growth

unlikely to have the commercial acumen to deliver

Accelerator programme. Delivered by Pera Consulting,

signifiant results, and again, are best used in a supporting

Growth Accelerator enables a client to gain support

role. However, their energy, enthusiasm and knowledge

through a “Growth coach” who helps the company

of new technology combined with their drive can be

growth through addressing certain pre-defined

beneficial if harnessed in the optimal manner.

challenges. While this is an effective scheme to provide

Finally, student projects can be an excellent mechanism

Bearing these factors in mind, Universities tend to support innovation rather than drive it, except in the rare cases of research and development leading to disruptive innovation. In these cases, it must be recognised that the financial value of the commercial output is usually disproportionally high.

a degree of support, the average coaching time of 5–7 days tends to be used to address specific problems. It is challenging to help implement an embedded culture of innovation within this relatively short intervention time, especially when the majority of the clients are seeking specific support with specific problems. Nevertheless,

“

There are various schemes supporting businesses in innovation and growth, co-ordinated through Boost Business Lancashire.

“

the reported impact from the implementation of the

Innovation Clinic which provides support on a specific

coaching assignments has been positive.

company project.

There are a number of other instances of ERDF and

Private sector support

RGF programmes that assist the innovation process by providing access to equipment, knowledge and resources which are either too difficult or relatively too expensive (considering aspects such as application risk) to access in the private sector. It is essential that these capabilities are continued where possible and relevant – although they should be developed in close conjunction with the LEP to ensure the majority of the services on offer provide the maximum return on investment by providing services which are best suited to the respective commercial demands and requirements. There are various schemes supporting businesses in financing of innovation and growth, co-ordinated through the Boost Business Lancashire service, co-ordinated by Lancashire County Council with the delivery support of various bodies. While the 2013 roll-out of this scheme has been highly beneficial to a significant number of clients seeking innovation support and funding, some of the financial support schemes have spent their total funding,

Private sector support in this area is sparse, a point which was captured in the Innovate UK questionnaire. The main reason for this, is that the formalisation of processes surrounding Innovation are relatively new, and the concept of innovation as a “bought service” is still deemed high risk by the majority of companies. This is compounded by the large number of “innovation advisors” who actually offer little more than standardised business growth advise and support. While this support is an essential factor in the growth of the local economy, innovation support is a separate discipline which demands it’s own structured approach in order to maximise results. As with the academic situation, the majority of the useful private sector support falls into the area of supporting innovation as opposed to driving it. These include the various capability and knowledge providers who provide capacity and support on an “as required” basis.

leaving further clients with no means of financial support, at least until the next financial year. The innovationrelated services available through Boost include UCLan’s

RoI against company size An additional challenge with the services offered by Universities and publicly funded support offering is that they tend to attract the attention of smaller companies and in many cases, pre- and early-start organisations. While access to these facilities can be an attractive, cost effective and highly beneficial opportunity to the client, they don’t tend to lead to the higher levels of GVA and job creation that that could be expected of larger, more established companies with stronger commercialisation potential. It could be suggested that the sum of benefits resulting from investment and support provided to start ventures and emerging companies may be comparable to that from the larger organisations (i.e. those greater than 10 people). However, it can also not be ignored that these investments carry greater risk – they have a higher failure rate with regard to the financial return on investment and the longevity of the jobs created.

“Too many of our funded projects attract smaller companies, who naturally don’t contribute high GVA and job creation figures to our targets”

GVA and commercial value of the output from the majority of these clients tends to be relatively low against the corresponding public sector investment. They certainly serve a role – but if co-ordinate with a structured innovation programme, the commercial benefits resulting from many of the academic projects (and hence the RoI against the public spend) could be significantly greater.

In addition, there are many cases of large projects (particularly between the public sector and HEIs) that do not break even when comparing the investment made against the commercial financial return. Many of these are multi-million pound projects from the public purse. While these are balanced by the high number of positive projects, with better decision making, we can increase the overall return on investment within these projects.

SCOPE AND STRUCTURE OF THE STUDY Scope of the study (objectives and format)

2. An Innovation Skills Needs Analysis

The study was designed to consist of several sections:

required to support an organisational Innovation

This addressed the skills, knowledge and competencies

strategy. It questioned the companiesâ&#x20AC;&#x2122; attitude to

1. An Innovation Audit

various aspects of Innovation, and investigates the skills required to deliver the appropriate strategy.

This investigated the extent to which Lancashire companies

The skills analysis builds on the understanding that

are innovation active. The first section of the Innovation

there are two complementary sets of skills required

Audit collated information which is designed for direct

to deliver a comprehensive innovation strategy â&#x20AC;&#x201C; a

comparison with the data collated by Innovate UK.

core understanding of how to innovate, and a wider

The second section of the Innovation Audit addressed

understanding of how to develop a culture to support

a wider set of innovation dependent characteristics in

corporate innovation.

order to consider aspects such as the organisational

Ultimately, the overall aim was to determine whether

position, attitude to risk, corporate involvement and

companies are innovating, to what extent, and gain

potential to support strategic innovation.

an impression of the impact. If it, as expected, the commercial concept of innovation is somewhat limited, identifying the corresponding skills shortage is the first step to rectifying this problem, and enabling stronger growth through innovation in itâ&#x20AC;&#x2122;s true form.

The Questionnaire In order to gain as much information as possible, two different questionnaires were distributed. The first is the â&#x20AC;&#x153;company questionnaireâ&#x20AC;? which was distributed to 60 companies who could potentially have a significant effect Innovation in Lancashire, and would benefit from upskilling their workforce with specific Innovation based coaching and training. With this reason in mind, companies of less than 20 people were not included in the study. The company questionnaire was designed and presented in four core sections: Innovation Basics; Innovation Impact; Implementing Innovation Projects; and Corporate Innovation. The majority of the questions were based around a simple metric system marking questions from 1 to 5 with a consistent scaling. The second questionnaire was focused at Innovation Stakeholders â&#x20AC;&#x201C; 15 organisations and individuals who have delivered Innovation Support projects in Lancashire, and have a wide view of the success points, areas for improvement and other underlying factors were asked to take part in the survey. These were specifically selected as individuals who are known to understand the wider innovation support landscape, objectives and rationale. The stakeholder questionnaire was much more generic, understanding that it may be difficult to answer specific questions when reporting knowledge from a range of clients and sectors with differing innovation activities and requirements. What was most important for the stakeholder questionnaire was not the numerical answers, but the knowledge and recommendations behind them.

Both questionnaires were developed as a result of a study of: (i) similar national innovation audits and skills needs analyses; (ii) a review of the Innovate UK / Technology Strategy Board questions asked during applications of Innovation Vouchers; and (iii) experience in the development of other regional innovation projects and diagnostic systems.

RESULTS AND FINDINGS The Company Audit 60 companies were interviewed from a range of sectors including advanced engineering and manufacturing (AEM - including construction), financial services and

organisation, and demonstrated clear understanding of some aspect of innovation. To demonstrate the diversity of responses, the most interesting examples of the descriptions provided included:

travel. The majority (68%) of the respondents were from the AEM sector. The results were extremely positive, although they don’t necessarily present the full and

“Bringing new ideas and ways of working

accurate position; while the companies are all achieving

to the benefit of the company, its staff and

positive effect, many didn’t understand the full scope of

customers”

what Innovation actually is, and how much it can actually benefit their business and were only benefitting from a small percentage of their true potential

1. Innovation basics The first and most fundamental question asked the

“finding means, that are perhaps novel or inventive, to undertake a project in some advantageous way for our client” “Any development that will further protect the companies future”

subjects how they defined innovation. 26% of the subjects

“Innovation is all about pushing boundaries

defined Innovation in an accurate manner (i.e. including

and predicting future needs. All too often we

references to novelty, benefit and not limiting the scope).

get tied up in the here and now and what we

One of the key factors that is usually overlooked within

know rather than embracing technology and

innovation was apparent, with only 68% of the subjects

exploring new ideas”

mentioning “benefit” in some form, and 63% mentioning novelty or “newness”. 42% of the subjects limited Innovation to a smaller sphere and mentioned products as a key component, whereas 47% specifically mentioned processes. Only 11% specifically mentioned market innovation, and a mere 5% suggested that development of their organisation was a component of innovation. While there were no clear and obvious trends, AEM businesses were more likely to specifically mention products and engineering process, whereas sector based businesses tended to focus on other processes and business innovation, including “Internal efficiencies”. While some of the descriptions were limited in their completeness, they clearly delivered benefit to the given

responses would be further interrogated and tested as 100

100 the questionnaire proceeded.

2. Innovation Impact 89% of the subjects either agreed or strongly agreed 75

75 that they assigned resources to finding opportunities for Companies introducing new products / services

innovation within their business. However, it must be appreciated that this most likely reflects the seeking to opportunities for their respective definition of innovation, 50

50 which may differ somewhat from the vast range of benefits

available from all forms of innovation - e.g. they assigned

areas, such as â&#x20AC;&#x153;products and service innovationâ&#x20AC;?.

Market

Process

Organisational

Product / Service

companies had reduced their product/service innovation investment in the last year. 11% remained static, while 0

This understanding and appreciation of the benefits 100

with 100% of the subjects agreeing that there is scope

agreed they were involved in process innovation, 63% in 75

market innovation and 53% in organisational innovation.

and/or capacity to deliver process innovation, and

Neutral

Turning research into ideas

Medium Risk / Reward

Low Risk / Reward

least one of the forms of innovation. With the extremely positive figures regarding investment

Neutral

produce or service in the 12 last months; all (100%) had introduced a new process; 53% had entered new

of their business. Target figures for the next 12 months

of confidence with 25 regard to product /service innovation and process innovation, with a few doubts with regard

were fairly consistent with the previous 12 months other than the figure for market innovation, with 84% of

Dislike

Neutral

to marketing and organisational innovation. These Dislike

Performing market research

suggested that they would increase their investment in at

markets; and 68% had changed the shape of structure

This demonstrated that there was clearly a high degree

Across the board, between 84% and 95% of all subjects

in innovation, 89% of subjects had introduced a new

11% didnâ&#x20AC;&#x2122;t think they had the knowledge / capacity or

innovation or organisational innovation.

innovation saw a 6% reduction, 17% remain static and

5% reduction, 11% remain static and a 84% increase.

they were currently involved in product innovation. 89%

to the other innovation areas, 16% remained static for

77% increase, and organisational innovation saw a

for innovation in their industry. All subjects agreed that

were unsure as to whether they could deliver market

the remaining 89% increased investment. With regard

process innovation with a 84% increase, marketing

delivered by innovation was captured in the first section,

5% were unsure as to whether they had the knowledge

A review of innovation investment revealed that no

High Risk / Reward

Involving customers & suppliers

Companies selling new products / services

Appoint an Innovation Champion

resource but most likely only in a sub-set of the innovation

companies seeking to enter new marketplaces.

Linking the introduction of products with profit

commercial benefit. There is a fundamental flaw in the

introduced some disparity. Despite 89% of the

process if the products and services are not generating

subjects introducing new products and services,

capital or other benefit.

only 47% claimed an increase in sales from new or

In addition to these figures, only 63% of subjects

improved products or services.

expected any of the next 12 monthsâ&#x20AC;&#x2122; turnover to be generated by improved products, services or processes, despite 89% intending to introduce new products /

100

services in the same timeframe. This raises further question as to whether companies are truly innovating, or actually inventing - and whether better market innovation to support the proceed / service innovation

Organisational

across all companies was 18%, while the average for this reporting a positive (non-zero) figure was 47%. With regard to innovation levels as a whole, this question is not conclusive in itself, as the study did not capture the number of companies wanting to achieve other innovation-relate benefits such as increased profitability through process improvement or organisational innovation.

This figure ranged between 2% and 70% of total company sales; the average increase in sales across all companies was 11%, while the average increase across the companies only reporting a positive figure (i.e. not zero) was 23%. This leads to one of three assumptions: either the products / services have been introduced and are Like

not yet generating sales,; they had not been introduced to the right marketplace; or they were not successful. In each of these cases, it is arguable whether they can

h Risk / Reward

dium Risk / Reward

Neutral

be classed as â&#x20AC;&#x153;innovationâ&#x20AC;? if they have not yet led to

utral

Risk / Reward

Market

percentage of sales figures for the next 12 months

Companies selling new products / services

Companies introducing new products / services

would help increase these figures. The target of total

100

100 75

The most common resource used on innovation projects

questioning the strong technical and academic focus

was in-house capabilities, rating at 84%. Interestingly, this

within the regional and national strategies. This either

should focus more attention towards supporting

the support of end users and customers, and an identical

innovation and intangible resources within the (non-

figure was recorded for information from suppliers. 74%

academic) private sector through in-company and supply

50 reported using private sector support, 58% used public 50 25 1

50 to deliver chain support, (ii) academic projects should aim

100

to take presented a balanced scenario, there was a strong 0

preference towards medium risk/reward projects. Market

Increase investment

the subjects did not intend to use academic support.

An assessment of the risk that organisations are prepared

resources, up to 58%. Again, this still suggests that 42% of 0

Appoint departmental managers

both of the previous points.

12 months was an increase in intent to use academic 25

more support as required by larger organisations, or (iii)

Process

Invest in group In-house training

The only major change in intended usage over the next

Product / Service Increase investment

Public sector

Private sector Appoint departmental managers Supplier input

Customer input

sector programmes, and 42% utilised academic resources.

Organisational Appoint an Innovation Champion

their innovation activities. 79% claimed that they used

Invest in group training

75 suggests that the (i) regional and national strategies

Academic support Appoint an Innovation Champion

75 still suggests that 16% of the applicants outsource all of 75 50 2

Overall, 84% of companies were satisfied that their

innovation 100 needs were being met, although only 63% 0

Process

100

thought that they could deliver this completely in-house.

100

resources 0 was consistent with the findings from the Innovate UK data, and helps support the case

Neutral

Performing market research

Turning research into ideas High Risk / Reward

The particularly low figure on the use of academic

Like Involving customers & suppliers Medium Risk / Reward

Neutral

Maximising staff creativity

Dislike

Academic support Turning research into ideas

Private sector Performing market research

Supplier input Involving customers & suppliers

In-house Ranking / prioritising ideas

Academic support

Customer Maximising staff creativityinput

Low Risk / Reward

50 25

Neutral Ranking / prioritising ideas Like

Dislike

Companies selling new

100

Product /new Service Companies introducing products / services

100

3. Implementing Innovation Projects

With regard to the creative development process, 68% of the subjects suggested they knew how to manage

high, although did present some areas for further

know how to use a variety of creative problem solving

development and investigation.

tools and techniques. 84% of companies were confident

Across all forms of innovation, between 84% and 89% of organisations suggested that there were assigned

with their ability to investigate and develop low risk ideas, 50

individuals within the organisation to manage aspects of

innovation. All companies suggested they had the ability to

to better the business. 95% of the subjects suggested they

creatively to maximise idea generation. 85% were also

market research into creative solutions.

Market

but only 63% suggested they knew how to perform market research, and only 53% stated they knew how to turn

suggested they knew how to encourage staff to think Organisational

Process

Appoint an Innovation Champion

in the overall innovation process, and 90% of companies

Appoint departmental managers

generate creative solutions and proactively seek solutions

Invest in group training

Staff development was deemed an essential component

knew how to capitalise customer and supplier feedback

investigate and develop high risk ideas.

develop a strategic vision, align innovation opportunities, Increase investment

although only 69% were confident with their 50 ability to

Product / Service

75 creative development sessions, while 79% claimed to

confident with their ability to develop â&#x20AC;&#x153;wilder ideasâ&#x20AC;? into tangible projects. All companies suggesting they knew

Companies selling new

The figures reported within this section were generally 75

100

Companies introducing new products / services

100

how to identify the best creative roles for their staff to maximise output, and how to utilise cross-departmental teams to maximise the development process. 84%

100

suggested they knew how to involve suppliers and customers in innovation projects, suggesting some scope for developmental support. Project 75 management and realisation statistics were also

particularly high, with 95% of subjects knowing how to Like

rank and prioritise ideas, 100% confident in their ability to turn an idea into tangible benefits, 84% knowing how50 to manage and monitor creative projects, and 89%

Neutral

Medium Risk / Reward

Finally, within this section, all companies agreed that their High Risk / Reward

Low Risk / Reward

senior management team encouraged involvement and Like

supported innovation. Only 5% of applicants suggested

Neutral

their SMT was not open minded to change. Dislike

This suggests that the majority of the subjects have the Dislike

Turning research into ideas

understanding how to balance a risk-reward portfolio. Performing market research

Involving customers & suppliers

Maximising staff creativity

Ranking / prioritising ideas

Academic support

basic skills required in the innovation process. However, 0

considering that most of these (barring specific processes and creative problem solving techniques) are deviations

of basic project management skills, this is not completely

Despite the high levels of innovation, knowledge and

surprising. It does, however, demonstrate that the core

confidence, 69% of the companies interviewed suggested

foundations to develop advanced innovation capabilities

that they would adjust their strategy to invest further

are already well founded.

in all forms of innovation if they saw clear benefits. This figure increased to 84% for investment in a single,

4. Corporate Innovation

specific form of innovation.

While every company thought that innovation should be mentioned in their values and strategy, only 73% 4

actually mention it in either. 69% of subjects suggested

100

that their innovation strategy was known and understood throughout their organisation, while 89% suggested all levels of staff were encouraged to become involved in 3

innovation programmes. 95% of subjects involved their sales team in the innovation development process, and a similar number sought to involve the entire workforce. However, of this figure, only 79% had an actual scheme 2

which encouraged staff involvement, and 16% had

organisation, or how to adapt their workplace to support the creative development process. Equally, 16% stated they 0

Product / Service

Public sector

Supplier input

Private sector

In-house

development questions and opportunities though the

Appoint an Innovation Champion

entire workforce, 16% were unaware of how to share

Increase investment

Academic support

Customer input

Although 95% of companies attempted to involve their

Invest in group training

beyond their normal role.

Appoint departmental managers

no way of rewarding staff for developmental support

were unaware of how to develop a culture of continuous improvement through innovation within their organisation. What appears to100 be quite apparent here is that companies

With regard to the 100appointment of specific individual

are certainly performing particular well within their own

and group training, 34% would not support a corporate

sphere of what they understand Innovation to be. This

innovation champion, 33% were neutral and 33% would

is extremely positive as theyâ&#x20AC;&#x2122;re grasping what they think

support the appointment. In addition, 39% would not

they need to, but 75 the challenge is that they may not fully

support departmental innovation managers, 27% were 75

appreciate what else can be achieved outside their current

neutral and 34% would support departmental managerial

level of activity. The drive and capabilities certainly seems

capacity. Finally, 14% would not invest in group training,

to be there - the question is how to unlock it.

14% were neutral and 72% would.

research into ideas

ing market research

customers & suppliers

ing staff creativity

c support

ector

input

r input

/ prioritising ideas

30 25

A summary of the major recommendations based on the above findings would be as follows:

1. Improved knowledge of the wider Innovation process and benefits

The challenge is that companies may not fully appreciate what else can be achieved outside their current level of activity.

Companies would benefit from better knowledge of the wider benefits of innovation, focusing on marketing and organisational innovation. Business models are typically driven by a combination of organisational innovation and process innovation, whereas the value proposition tends to be driven by a combination of product/service innovation and market innovation. Different forms of innovation must be used in conjunction with each other to optimise the respective benefits.

4. Provision of tailored support in specific areas Companies have indicated a clear intent to invest more in innovation and innovation support / training if the potential benefits were clearly presented. This reinforces the need for further specialist support to build on the strong existing foundations in the regionâ&#x20AC;&#x2122;s project

2. Better support for the core innovation resources

management capabilities. Areas which require further

The most important resources in the innovation

creative problem solving capabilities - i.e. taking ideas

process are in-house capabilities and the immediate

and turning them into tangible solutions. This also

supply chain. To maximise the commercial gains from

reinforces the statistic suggesting new products and

innovation, more focus should be placed on non-

services do not always lead to commercial benefit - there

academic private sector support programmes.

is often misalignment between the market research and

3. Promotion and alignment of academic programmes as a support mechanism

development typically include the market research and

product / service development processes.

The Stakeholders Audit

Academic support is under-utilised; while the benefits

Responses were received from 9 of the 15 people

of academic support are clear to see, this suggests that

targeted. Organisations collaborating within the interview

either (a) engagement with larger companies is still an

included representatives from Regenerate Pennine

issue, or (b) the offering is still mis-aligned with the needs

Lancashire, various innovation focused projects within

of larger companies. The LEP should be driving this, with

UCLan and the University of Lancaster, East Lancashire

a process driven by industrial need which aligns with

Chamber of Commerce, Pera Consulting, and private

academic specialism, as opposed to vice-versa.

sector advisors. Due to the nature of the questioning, not every question was answered in the direct manner asked, but was often answered with a description rather than a metric, or with a description to justify the metric. This was extremely valuable to the survey in gaining a

degree of richer knowledge behind the raw data.

on the business type, maturity, sector and position in the

The main findings from the study were as follows.

supply chain. For completeness in reporting the findings,

Where a scaled answer is provided, the scale ran from

it was suggested that the average percentage of turnover

1 (not important) to 5 (extremely important) unless

gained from innovation projects each year should be in

otherwise stated:

the region of 16.75%. The spread of the reported figures

The subject’s general definition of Innovation was relatively consistent. All subjects asked mentioned the subject of novelty or newness, although only three

was between 10% and 25%, although some subjects stated that in some cases (such as new starts) it would be as high as 100%.

mentioned the concept of developing the idea for

The following section addressed the importance of

“benefit or commercial outcome”. However, on the given

specific internal and external resources to the innovation

scale of 1 to 5, the average mark for the question “how

process, and returned to the original scaling. The most

important is innovation in growth” registered at 4.75.

valuable resource was deemed to be clients input

The scale for this question was slightly different and worked on a positional basis (1 being top and 4 being bottom). With regard to the importance of the various types of Innovation, Product / Service Innovation was marked as the most important in delivering benefit with

(averaging 4.4), closely followed by in-house resources (4.1). Interestingly, private sector support (3.3) ranked higher than academic support (3.1). Suppliers input was also ranked at 3.1, followed finally by public sector support 4

100

an average position of 1.7. Process Innovation (average position 2.3) was deemed slightly more beneficial than Market Innovation (2.6), and Organisational Innovation was clearly deemed the least beneficial, with a average position of 3.9. What is more interesting here, is a further analysis of these figures. While each of the academic subjects ranked Product / Service innovation as the most beneficial, there was a relatively even split between the public and

metric responses, as the answers are clearly dependent

25 Public sector

The following questions brought more discussion than

Academic support

ranking 2.2 and Process Innovation ranking 2.4.

Supplier input

ranking an average of position 2.0, Market Innovation

Private sector

In-house

considerably closer, with Product / Service Innovation

Customer input

were removed from the analysis, the scoring becomes

Increase investment

private sector subjects. In fact, if the academic scores

100

“

Lancashire has many pockets of strength, although in many cases companies don’t realise what they’ve actually got.

“

(3.0). Encouragingly none of the sources were deemed

high risk Innovation projects, and progress through

“not important” (i.e. scoring less than 3 on average) on

a series of low and medium risk projects, increasing

average suggesting they all play an important role in the

the success potential but reducing the corresponding

innovation process. There were no distinctly different

impact accordingly. It is also questionable whether the

trends between the answers provided by interviewees

majority of smaller companies have the resource to

from the public, academic and commercial sectors.

commercialise the output from high impact innovation,

While the scoring difference between private sector

further supporting these scores.

and academic support was close, it was suggested that

In general, the subjects suggested that they were neutral

the private sector support scored slightly higher due to

as to whether the innovation needs of Lancashire’s

the greater commercialisation potential within non-

companies were being met, with a score of 2.5. The range

academic partners, and the ability to generally deliver

was between 2 and 4, with no maximum nor minimum

results which are in a more mature market state.

scores. the comments were most important here, with

With regard to risk, it was suggested by almost all

suggestions that the county had a lot of “pockets” of

subjects that a balanced investment, committed in

strengths, although in many cases didn’t realise it.

conjunction with the organisation’s (a) need and (b) the

Product development and engineering was mentioned

resources they have to invest in innovation, dictate the

the most times, followed closely by development and

composition and balance of the portfolio. In general,

implementation of services and processes.

medium risk-reward projects were deemed to be the

The comments regarding areas where Lancashire

most important (scoring 3.5), followed closely by low

needs to improve were much more diverse, although

risk-reward projects (3.3). High risk-reward projects

interestingly, provided a few areas of commonality. The

marked significantly lower on the scale (2.5).

most prominent points were as follows:

Reasons for this may include the point that the majority of the companies who the interviewees had worked with

● Reduced corporate ability to strategise and implement

were smaller companies, typically less than 20 people.

innovation projects - comments included companies

In most of these cases the organisation cannot afford

being “too traditional in leadership”, “not adjoined” and

“

The comparison of importance of partners was consistent with in-house resources, customer input and the supply chain being the highest priority.

“

“needing better internal communication, more thinking

The results to this question were significantly high, with

and improved strategising”.

support for organisational training scoring 4.6, and the need for a corporate “driver” scoring 4.9.

● Reduced cross-county working and the ability to

increase business (a) outside Lancashire and (b) globally, with the impression that the reduction in “North West” initiatives and a movement towards county-based leadership was a negative factor, leading to degradation of cross-county innovation and commercial activities.

● The lack of ability for companies to firmly understand

customer need and recognise corresponding opportunity. Too much innovation was technology led rather than demand led, leading to challenges in the ability to implement solutions.

● A better need to understand technology development

projects and capabilities, and how they can deliver benefit to your business (increased focus on benefits, not features). The final questions addressed whether the subjects thought that corporate innovation training and the appointment of a single point of contact in each company to drive the innovation agenda would be beneficial.

This led to the following specific recommendations and support requirements from the subjects:

4. More for the Medium and Large companies: There should be a greater focus on the development of

1. Improved internal knowledge and drive:

interactions and services with small, medium and large

Companies need better training to understand their own

sized companies as opposed to micro companies (i.e.

business, drivers and requirements and develop and

less than 10 people). Our observation on this final point

implement an innovation strategy. This does require

is that most schemes are developed for the full range of

specialist skills which result in a better internal culture of

SMEs but tend to attract the micro companies as they’re

innovation. A driver for this is assigning “ownership” and

the organisations with the least resource and highest

having a designated point of contact to lead the strategy

need. The negative point to this, is that this limits impact designing a scheme to support larger organisations should

2. Increased Collaboration: Companies need to understand the importance of increasing capacity through partnering with the relevant organisations. Knowledge Transfer is a driver for innovation, and helps make companies aware of the benefits of all aspects of other people’s knowledge, from identifying how a research project can benefit your business through to implementing an idea in the business. This includes closer collaboration with customers to provide a greater market drive.

correspondingly have greater impact on the economy.

Cross-Analysis of results Combining the findings from the company and stakeholder studies and analyses presented a conclusion that Lancashire has a sound foundation and sufficient knowledge / capabilities to become a leading force in Innovation in the UK, although changes would assist this target. The sound base for innovation and management support is clearly present in regional organisations; the desire to invest to increase

3. Support Rationalisation: Since the demise of Business Link, there was no known comprehensive source of access to public and private

capabilities has been stated; and the range of private sector and academic activities is sufficiently inclusive to support many organisational requirements.

(including academic) support and the landscape had

What organisations aiming to increase their innovation

become disjointed. Better co-ordination will help

activity need, is a better understanding of how the core

companies access the right type of support, which

components of innovation fit together, and how they

may come from outside Lancashire. It was noted that

work to benefit each other. The lack of knowledge in the

Boost covers services available in Lancashire, whereas

overall innovation relationship is one of the major factors

Business Link covered the North West (which itself was

limiting growth in such companies - for example, while a

still a minor limitation).

company has a focus on product and service innovation, it may be the core components of market innovation that are requires to help them achieve their goals.

FINAL RECOMMENDATIONS Overview The findings from the Innovation and Skills audits revealed that while Lancashire based organisations believe that they are highly competent in Innovation, their definition and full understanding of what Innovation comprises is incomplete. However, most companies tend to be reframing well in one specific field of innovation, demonstrating that they have the foundations to expand their innovation activities accordingly. In order to Innovate better, Lancashire companies need to develop a greater understanding of the complete innovation process and the areas in which the various sub-factors interact to develop stronger value propositions and business models. This requires involvement thought the organisations, and with their supply chain, and the wider private sector (including academia). The driving factor here is the co-ordination and management of the in-house capabilities, understanding the traditional “make vs buy” decisions and knowing where additional expertise is required. This is also highly supported by a knowledge of what support, capabilities and research findings (including technologies, processes, market requirements, international opportunities, etc) exist. The re-active vs proactive decision making and research capabilities of the various organisations are also important. What is also highly apparent, is that the innovation activities that companies are performing do not align to the LEP’s definition of innovation, and the activates proposed within the current regional strategy. The primary reason for this is the misunderstanding that Innovation is driven by technology and academia, whereas the survey has suggested the situation is the contrary. Academia and technology do play a crucial part in the Innovation agenda, but primarily as supporting cast and not the driving factor. In addition, medium and large companies need better alignment and engagement with academic institutes and projects. Lancashire clearly has the ability to significantly increase it’s innovation capacity and impact, given the right direction and support.

Opportunities The major opportunities suggested as a result of this report include:

Increasing Innovation Support based on skills requirements ● Refocus from the LEP to include additional innovation support activities focusing on wider support based on

organisational need. This should include support for skills to develop a greater understanding of innovation and the associated benefits. ● Additional support in the identification and training at a managerial and organisational level should be available to

any company, to better understand the breadth of innovation, the impact, and how the different aspects contribute to a stronger value proposition and business model

Refocusing the Innovation agenda around commercial activity ● A drive from the LEP to work more closely with commercial partners and academic projects to ensure a closer

cohesion between publicly funded activities / proposed academic projects and the target audience and impact particularly with respect to the forthcoming ERDF 2015 calls. The drive should be commercial, not academic. ● All projects in receipt of public funding should undertake a non-optional innovation support / project exploitation

support service. This will either help the companies embed a stronger innovation skills base and culture and skill set within their business, or offer a specific service to help them maximise the commercial impact of their support from the funded project. This will maximise the impact of public funding while increasing in-house capabilities.

A need for non-geographic support rationalisation ● Provision of support to companies regarding the various options for wider engagement within their innovation

activities, not limited to the immediate geographic boundaries. While public sector support has sufficed in the past, schemes tend to change with every change in government, and often “run out” towards the end of their funding causing disruption to the potential client base. A comprehensive, privately managed, capability would help bridge these gaps. This would include a mechanism to engage more fully with academic institutes. ● Where relevant (primarily within product based businesses), provision to an international marketplace has been

demonstrated as a key growth component in highly innovative organisations. Support programmes to help local companies access international marketplaces would be highly recommended, with the Lancaster China Catalyst programme serving as a strong example. The UKTI North West team should also be a driver within the development and implementation.

Greater support and engagement for medium and large companies ● The majority of the current support mechanisms tend to attract micro companies, limiting the wider scale economic

and impact. Development of a better understanding of the needs of the medium and large companies in order to increase their innovation impact will (a) create opportunities for other companies in their respective supply chains, and (b) present the potential for their greater involvement with academic institutes.

Priorities As a result of this study, Inovaris will continue discussions with the regional council and LEP in order to determine which of the opportunities are achievable with our support. We are committed to driving change in Lancashire to help the county become the UK’s capital of Innovation. With the new strand of ERDF projects beginning in 2015, there are numerous opportunities to develop schemes and initiatives to add to the current services on offer, aligning the needs of medium and large companies with potential innovation providers, support organisations and other stakeholders.

Acknowledgements This report was completed by Inovaris Ltd for Lancashire County Council. The information contained is the intellectual property of Inovaris Ltd.

Inovaris would like to extend their gratitude to the following organisations in their support in the provision of information, support, and other services required to complete this report: ● Innovate UK ● Lancashire County Council ● Lancashire County Developments Limited ● University of Central Lancashire ● Lancaster University ● Pera Consultancy ● Pera Training ● Regenerate Pennine Lancashire ● Reach Communications ● The companies and stakeholders who contributed to

the survey process

References Bridging the valley of death: improving the commercialisation of research House of Commons Science and Technology Committee March 2013 UK Innovation Survey (Innovative Firms and Growth) Department for Business, Innovation & Skills (BIS) March 2014 Innovation and Research Strategy for Growth Department for Business, Innovation & Skills (BIS) December 2011 UK Innovation Index 2014 NESTA August 2014 Innovation Nation

Australian Innovation System Report 2012 Australian Government Department of Industry: Innovation, Science, Research and Tertiary Education September 2012 Lancashire Growth Plan 2013/14 Lancashire Economic Partnership April 2013 Lancashire Strategic Economic Plan - A Growth Deal for the Arc of Prosperity Lancashire Economic Partnership March 2014 Encouraging a British Invention Revolution: Sir Andrew Wittyâ&#x20AC;&#x2122;s Review of Universities and Growth Sir Andrew Whitty October 2013

Department for Innovation, Universities & Skills March 2008 Prosperity for all in the global economy - world class skills Leitch Review of Skills December 2006 Developing Innovation Skills: A guide for trainers and assessors to foster the innovation skills of learners through professional practice Australian Government Department of Education, Employment and Workplace Relations / Innovation & Business Skills Australia November 2009 Australian Innovation System Report 2013 Australian Government Department of Industry: Innovation, Science, Research and Tertiary Education September 2013

Should you have any questions regarding the content of this report, please contact: Richard Harrison Inovaris Ltd. richard@inovaris.co.uk