When it comes to UK innovation, ideas are often the easier part. The bigger challenge is how to get them out there. As The Economist recently put it: “Britain is a great place to start a company, but a bad one to scale it up”. We need to fix this – and local authorities have a key role to play. Scaling up is fundamental to the UK Government's 'levelling up' agenda, especially if the ambition Is to increase productivity and create (rather than just re-distribute) growth. If the UK gets this right, it opens the door to more growth and prosperity for all.
So, what’s the answer? We’ve been working with the UK Department of Business, Energy, Innovation and Science (BEIS) to find out. We reviewed over 150 pieces of research, interviewed almost 100 innovation experts, and surveyed more than 500 innovation leaders to understand how the UK can get better at making even more of our superior research and entrepreneurial capability. The results will be published in full next month, but we're able to share some key highlights here.
In 2021, the UK ranked fourth highest among the 132 countries featured in the Global Innovation Index. It's also one of the easiest places in the world to start a new business, reaching a record high of over 770,000 new businesses in 2020.
But our research review also found that the UK suffers from a 'productivity puzzle', and often fails to make the most of innovation – leading to innovations failing to take off or moving overseas and benefitting other countries instead. The 'chasm' of adoption is where innovation often fails, as it fails to bridge the gap between early adopters and the early majority.
Here’s a tale of two hypothetical entrepreneurs to show how innovation can thrive at the local level (or not). Andrew is an entrepreneur with a great idea for a breakthrough innovation – a fundamentally new approach to a product, service, and/or way to deliver a product or service. He was able to get seed funding to launch his new product. But two years later, he’s stuck. He’s worn out his university and research network, struggling to find an anchor customer, and receiving little support from the local council. The chances are that Andrew will join a big US corporate and the local area will miss out.
Next, let’s consider Tasha, another entrepreneur. Her idea is aligned to a strategic focus in a local place where the local authority has made a long-term commitment to be a leader in the market. Thanks to that, Tasha met colleagues with a deep interest in her area, finding businesses who wanted to work with her company as well as new investors. The local council helped her get through regulatory hurdles to scale up her product. Two years on, she’s in Series B funding and lining up for an international launch. She’s coaching others who have come to the area with their business ideas and skills. And she’s established a local apprenticeship scheme with Further Education colleges, helping her to find new talent.
The difference between Andrew and Tasha's worlds is simple. Too often, government looks to invest in a particular tech and push that into the market. That’s fine for early research but quickly stumbles at the point you need to scale. We call this ‘left to right’ thinking. If you flip that around, you find yourselves starting with an inspirational, inclusive challenge to solve, which creates a wider collective view on the priority for growth. From there, you can align a whole ecosystem – the behavioural, economic, social and technological incentives – to drive growth.
It’s this ‘right to left’ thinking that place-based organisations are ideally positioned to lead. Think, for instance, of how the grand challenge of developing and administering COVID-19 vaccines sparked the inspiration, inclusion and iteration needed for innovation to happen at pace nationally. We also saw similar Innovation happen locally, such as when Hampshire County Council used automated call technology during the pandemic to make 70,000 calls to 26,000 vulnerable residents to check they had the right support.
To make progress, local authorities should be thinking of their role in the national innovation supply chain. Consider your core purpose and USP. It could be agri-tech or coastal energy, for example. Then, consider how best to leverage diverse, local talent - ensuring that entrepreneurs are supported and that ideas can cross-fertilise. As well as encouraging co-creation, local networks help build engagement, trust and support. Crucially, local authorities should be prepared to continually iterate, rather than seeking perfection. Innovation is a messy, complex environment - and very rarely linear. This calls for expectations to be reset - and judgements to be postponed.
A few years ago, Plymouth County Council wanted to develop disused Ministry of Defence land to bring together marine-based businesses. Their goal was to create a world-class hub for marine industries, with opportunities for research, innovation, education and production in a collaborative environment. Today, Oceansgate in Plymouth Sound is the first maritime enterprise zone in the UK, bringing together universities, businesses and government bodies. And the Council is playing a leading role, including working with Government to unblock barriers to maritime innovation – advocating on behalf of innovators who might not otherwise be heard.
Innovation is too important to be left to chance. Local authorities can play their part by starting with the overall outcome they’re seeking to achieve, and bringing people together around an inspirational goal, helping to create the solid foundations for successful scaling. It can be done.