This project is funded by

the European Union

Integrated Innovation Support Programme

Measuring Innovation: The UK Innovation Index

Dr Yannis Pierrakis, 18 Sep2012

This project is funded by

the European Union

A few firms create the majority of new jobs

Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database

2002-05 2005-08 2007-10

Firms New jobs

Job creation by existing UK businesses

Firms New jobs

Firms New jobs

This project is funded by

the European Union Definitions of innovation

- "The successful exploitation of new ideas" (UK Department for Business, Regulatory Reform)

- “Innovation activities are all scientific, technological, organisational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations.” (OECD)

This project is funded by

the European Union Linear model = linear measures

Knowledge creation

What: Basic science + R&D

Where: Universities, industry R&D labs

Knowledge transfer

What: Applied research, development

Where: Spinout companies, start-ups

What: Product manufacture

Where: Industry

Commercialised product Consumption

What: Use/ consumption

Where: Individual consumer

Patents producedR&D

investment

Spin-out companies

created

This project is funded by

the European Union Linear measures = linear policies

Knowledge creation

What: Basic science + R&D

Where: Universities, industry R&D labs

Policy response: R&D tax credit, science budget

Knowledge transfer

What: Applied research, development

Where: Spinout companies, start-ups

Policy response: Lambert agreements, TTOs, KTPs, KTNs

What: Product manufacture

Where: Industry

Policy response: None

Commercialised product Consumption

What: Use/ consumption

Where: Individual consumer

Policy response: None

This project is funded by

the European Union

The UK’s ‘poor performance’ in innovation

•Policy has focused on improving the UK’s ‘poor performance’•The UK lags behind its competitors on traditional indicators

Overall per capita expenditure on R&D Business expenditure on R&D Business levels of innovative activity Extent of patenting activity

This project is funded by

the European Union The ‘UK paradox’

- A poor innovation performance but a strong economic growth

- The structure of the UK economy has changed

- The nature of innovation has changed

- This might suggest that there is a gap between traditional indicators of innovation performance and how innovation really happens in the UK.

- This gulf between practice and measurement reveals that there is an innovation gap.

- Hidden innovation is the innovation that is not captured or recognised by traditional innovation indicators.

This project is funded by

the European Union

Types of hidden innovation

•Based on science and technology but excluded from traditional indicators•Innovation in processes, organisational forms or business models•Innovation from the novel combination of existing technologies and processes•Innovation that takes place ‘under the radar’ of many surveys

This project is funded by

the European Union User-centred innovation

•Traditional, Manufacturer-Centred Innovation Paradigm•Manufacturers identify user needs, develop products at private expense, and profit by protecting and selling what they have developed

•User-Centred Innovation Paradigm•‘Lead users’ innovate to solve their own needs at private expense and then freely reveal their innovations

This project is funded by

the European Union

A gap has opened up between the practice, the theory, the measurement (and subsequently policies) of innovation. This innovation gap can produce a misleading view of national innovation performance.

Nesta has developed expertise in measuring innovation, including a methodology called the innovation index that we are working with countries around the world to apply….

It breaks down what really drives innovation and productivity growth beyond investment in R&D.

New metrics innovation

This project is funded by

the European Union Audiences

Senior economic policymakers in Whitehall and the devolved administrations

Those responsible for the delivery of public services in Whitehall and the devolved administrations

Leaders of institutions who play a leading role in the UK’s ecology of innovation, notably university Vice-Chancellors, educators, business leaders, skills bodies, regulators and investors

Those responsible for regional economic development across the UK

Output must be credible with the private sector and the academic community

This project is funded by

the European Union Objectives

1. Contain clear insights for the main innovation actors in the UK

2. Account for ‘hidden innovation’, open innovation, user-led innovation, absorptive capacity and innovation in public services

3. As far as practicable, be comparable across similar sectors across different countries

4. Produce a series of outputs that are accessible to the media and policymakers

5. Form a framework for a systematic body of work on innovation measurement and recommendations for the improvement of underlying statistics

This project is funded by

the European Union

21.6

27.1

3.8

23.3

16.0

Total 137.4

15.0

30.7

Investment in innovation, ₤bn, 2008

Training & skills development

“Go-to-market”

Design

R&D

Other (copyright, etc)

Software development

Organisational innovation

13.8% of private sector

output

The Index also provides historical innovation investment data going back to 1990

Source: Nesta Innovation Index

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

Training

Org. Development

Design

Software

Go to Market

R&D

% of business output

Software

This project is funded by

the European Union

Investment in intangibles fell during the recession, but by less than tangible investment

This project is funded by

the European Union

Manufacturing, finance and personal services are the most intangible–intensive industries

This project is funded by

the European Union

Manufacturing accounts for more than three–quarters of total R&D investment

This project is funded by

the European Union

This project is funded by

the European Union

This project is funded by

the European Union

This project is funded by

the European Union Innovation Scoreboard