https://innovateuk.blog.gov.uk/2018/05/15/empowering-innovation/

Empowering Innovation

Innovate UK is a very privileged place to work. Where else can you enjoy the opportunity to contribute so extensively to the development of the UK’s frontier economy? It’s an exciting and demanding road ahead and as the baton passes to the new executive team at Innovate UK, it is an opportune moment for a more personal reflection on what empowers innovation.

Kevin Baughan stood down as Deputy Chief Executive of Innovate UK in May 2018

Strong foundations

When I arrived, I was fortunate to inherit some incredibly strong foundations to build upon. First amongst them: Innovate UK does not pick winners. Instead, it designs race courses - from which the winners emerge. Underpinning these race courses are often four key questions:

  1. What is the global market of the future being pursued?
  2. What are the strengths of the UK to lead that market?
  3. Is the timing right (are UK businesses ready to invest)?
  4. What is the additionality from investing public money?

Competitions based on these straightforward but demanding questions aim to: sort out the ideas which are transformational and disruptive; the leaders who will pioneer the markets of the future and the projects which will give the private-sector the confidence to invest.

Eddie Obeng’s world after midnight graph
Eddie Obeng’s world after midnight

A world after midnight

My good friend Eddie Obeng, envisaged in his TED talk a world after midnight, a world in which we had woken to discover that the speed of change around us was happening faster than our ability to learn and as a result we ran the risk of responding to a world which we thought we recognised and understood but which in fact was completely different.

The Nature of Technology

Brian Arthur, in his book on The Nature of Technology, postulated that technology evolves through the combination of existing technology building blocks in order to create new ones, which are further diversified by the discovery of completely novel building blocks through research.

Critically these new technology combinations become in turn, the building blocks for the next iteration of technology, forming an evolutionary positive feedback loop and an ever-faster speed of change as technology fuels itself in a world after midnight.

Brian Arthur’s Technology Evolution
Brian Arthur’s Technology Evolution

New collaborations

How do you thrive in such a world of continuous and accelerating change? Arthur suggests that businesses spend less time seeking to optimise their existing approaches, in favour of more time exploring solutions based on novel combinations and alliances.

It is no coincidence that the vast majority of the projects funded by Innovate UK are collaborative. Indeed, I strongly believe that one of the key advantages of direct public investments in collaborative R&D, versus indirect public investment (such as R&D tax credits), is that it drives businesses into new behaviours and partnerships rather than scaling their existing modes of operation.

The Entrepreneurial State

Soon after I arrived at Innovate UK, I read Mariana Mazzucato’s book The Entrepreneurial State which described how the longer-term investments made by the state often enable major commercial breakthroughs. It absolutely took the entrepreneurial skills of Steve Jobs and the design skills of Sir Jonathan Ive to create the outstanding success of the Apple iPhone, but Mariana argued it would have been of limited capability without the prior investment by the state in many of its technology components.

In an entrepreneurial state, government empowers innovation and crowds in private investors, rather than fixating on market failures.

Mariana Mazzucato’s Entrepreneurial State
Mariana Mazzucato’s Entrepreneurial State

Not only a rate but a direction

In the joint report of the IIPP and RSA on Mission-Oriented Innovation Policy: Challenges and Opportunities, Mariana builds on observations by Nelson and Stirling that economic growth not only has a rate but a direction. Capturing the opportunity for the entrepreneurial state to tilt the innovation playing field in the direction of desired policy goals, by directing public investment into the cross-cutting technology combinations and alliances which are needed to achieve them.

If the political ambition is to achieve industrial growth and not just societal benefit, it is important to also factor in the spirit of the four foundation tests discussed above and that is what I see coming together in the Industrial Strategy Challenge Fund programme.

Differentiation by integration

In particular, the UK’s world class research base gives us the opportunity to truly differentiate ourselves in the leadership of the markets of the future and in making the resulting economic growth more tightly integrated with the UK economy.

At Innovate UK, I saw this happening regularly at the project level, where collaborations which included research participation had a measurably higher economic impact. I saw it also in large-scale programmes, such as the one on Low Carbon Vehicles, where the activities of the Engineering & Physical Sciences Research Council, Innovate UK and the Advanced Propulsion Centre were brought together and centred on a common purpose through the leadership of the Automotive Sector Council.

The Automotive Council - Low Carbon Vehicle Innovation Platform
Working in partnership: The Automotive Council – EPSRC – Innovate UK Low Carbon Vehicle Innovation Platform – APC

Research, innovate and scale

The formation of UK Research and Innovation means that we can now tackle, for the very first time, the industrial challenges which will shape our future economy, with a strategic purpose which extends right across the multiple disciplines and sectors of our research and innovation landscape.

An initiative, which when seen in combination with the government’s associated and sizeable investment in the Industrial Strategy Challenge Fund, provides the UK with an unprecedented opportunity to punch above its weight in the markets of the future, through integrated, cross-disciplinary teams which can systematically research, innovate and scale.

Redefining needs and desires

Before joining Innovate UK, I worked for Virgin Media from its inception out of NTL and Telewest, through to its subsequent sale to Liberty Global. During that challenging journey we seized the opportunity to transform the UK telecoms market with superfast broadband (in 2008), connected TV (in 2010) and WiFi through the London Underground (in 2012).

Along the way, I learnt a critical lesson: technology improves performance, but it is often creativity which redefines a consumer’s needs and desires. Combine them and you transform markets.

The slogan coined by David Bowie to promote Heroes

From STEM to STEAM

We must be careful therefore not to constrain the UK’s economic future to just the synergies achieved from a closer integration of science and innovation. The UK has the remarkable good fortune to be the home not only to many of the world’s best scientists and innovators but also to many of the world’s best designers and creatives.

What an incredible advantage to have when faced with accelerating global competition in science and innovation. We need to ensure that we take full advantage and lead the world in a transition from STEM to STEAM. Who better to make that point than Professor Sir Mark Walport on his appointment to UKRI.

Convex competitions

Innovate UK’s responsive competitions (starting with SMART and evolving to OPEN), which are not focused on a specific challenge or directed toward a particular market opportunity have always impressed but it wasn’t until my final months at Innovate UK that I understood their recipe for success thanks to an article by Nassim Nicholas Taleb. In it he describes that the gains attributed to technology and empirical science cannot be down to chance.

So, it is not simply good fortune that many of Innovate UK’s impressive successes come from our responsive programmes. As Taleb noted understanding is a poor substitute for convexity.

Nassim Nicholas Taleb’s antifragility - based on more gain than pain from a random event
Nassim Nicholas Taleb’s antifragility - based on more gain than pain from a random event

Anti-fragility + volatility

If you design your responsive competitions to have an asymmetric performance that curves outward (i.e. looks convex), it means that your gains will on occasions be large but that your losses will be (relatively) small and bounded. What is even more important, is that convex payoffs benefit from uncertainty and disorder and therefore in the long term you benefit from volatility.

By basing responsive competitions on a large number of small investments, you create an anti-fragility which when exposed to the entrepreneurial talent of the UK will create exceptional gains (for example Swiftkey and Magic Pony) and very little harm. It is in many ways the ideal complement to a small number of large industrial challenges.

In closing

There are so many areas it would have been good to also discuss but this is a valedictory blog and not an essay. So, let me finish by remembering that I often found myself grateful for the successes which my predecessors had kindly started for me and I can only hope to have left my successors with a similar breathing space, as they seek to empower innovation.

Contact

You can find Kevin on LinkedIn 

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2 comments

  1. Comment by Eddie Obeng posted on

    So honoured to get to mention in @KevinBaughan 's valedictory blog.

    It has been an immensely pleasurable opportunity to tag alongside you on your journey of national, strategic impact

    THANK YOU

    Reply
    • Replies to Eddie Obeng>

      Comment by julieervine posted on

      Hi Eddie, thanks for the lovely comment on Kevin's blog which will be forwarded onto him.

      Reply

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