• Fraser Harper

Innovation is more than just R&D

There is a direct link between skills and innovation and, to be truly innovative, businesses need people with balanced sets of innovation-related skills.  The higher STEM-based skills, which tend to be the focus of ‘traditional’ Research and Development (R&D), are not enough.  Innovation is not just R&D, which is a point that many people – including those in the UK Government – seem to miss.  Many of the world’s innovations – from the smartphone to the PC to the railways, canals and pyramids – came about not from R&D but from social, commercial or existential drivers completely unrelated to the R&D itself.  The world – and, some might argue, the UK in particular – is littered with examples of inventions waiting for application.

In the UK, we have found that there is a clear ‘lack of skills’ for innovation.  But these skills gaps tend not to be in research itself.  The UK Government’s recent UK Research and Development Roadmap pledges high levels of support for what it consistently refers to as ‘Research and Innovation’.  But on closer examination, it is apparent there is a heavy bias towards university-led research, while the true skills gaps in the UK are related more to the ability of businesses to absorb and implement innovative products, processes and services.

Gatsby’s recent paper Manufacturing the Future Workforce describes a systematic response to workforce development if the UK is to leverage its public investment, in the form of a Skills Value Chain:

This is pretty basic stuff, but it’s surprising how often it gets missed, either because one or more of the steps are dropped, or the whole thing fizzles out due to policy change, reduction in funding or other loss of initiative.  In the UK, we see technologies like nanotechnology, automation and robotics, assistive manufacturing, composites, and plastic electronics being held back for lack of skilled personnel – not in research, but in their development and application.

In our comprehensive review of recent international benchmarking and other comparative studies, we have found that there is a clear imbalance of skills in the UK towards research-focused STEM skills and against skills like technicians who are critical to absorbing innovations into businesses.  We also see (still!) poor management and leadership skills with the ability to recognise, support and drive innovation.  This is confirmed by the bi-annual UK innovation survey, which shows that lack of innovation skills is a growing problem with 1 in 7 businesses reporting it as a barrier to their innovation activities.

At a sector level we see such technologies as nanotechnology, automation and robotics, assistive manufacturing, composites, and plastic electronics being held back for lack of skilled personnel for their development and application.  Other sectors, like pharmaceuticals, biotechnology and software development are better served, but this tends to be more due to fact that universities are more interested in these sectors and more prepared to find and deploy funding for research.

We also found evidence that the UK has many regional innovation clusters.  But few of these are performing well as regards skills development and having an effective approach to workforce development.  Evidence from clusters in the USA, Europe and elsewhere points to the need to further develop local clusters capabilities for sustained skills development.

In short, our review found much evidence of the direct relationship between skills and innovation, and where skill shortages have led to lost opportunities, lost employment, and lost productivity gains.

We found these key factors at play in the UK:

  1. Lack of innovation-related skills in the UK is a consistent and constant barrier to innovation, but rarely seen by innovating and non-innovating businesses alike as being the most significant barrier;

  2. It is a particular barrier in small and medium sized companies and is growing in significance

  3. It is also a clear barrier to absorbing and implementing new technology e.g. automation and robotics;

  4. While the UK has a strong university-led research and graduate talent pool and a high ability to attract non-UK students, for many STEM related skills it depends on skilled immigrant workers;

  5. The UK has poor management / leadership and problem-solving skills;

  6. Literacy and numeracy skills are mediocre;

  7. The broad UK STEM skills supply chain works well for a few sectors where there are relatively high similarities between university-researcher skills sets and those required in private businesses.

  8. Where there is a larger divergence between these two pools of research skills, new and emerging technology skill sets find it more difficult to be developed.

  9. Design skills do not drive innovation but are vital for new-to-market service innovations and incremental process innovations

  10. The bulk of the UK’s R&D effort occurs in a relatively few private businesses.  While many businesses do smaller amounts of innovation, the net result is that the UK has a critical mass of researchers in only a few sectors and locations;

  11. The predominant sectors where large businesses drive the innovation skills market and the associated supply chain are pharmaceuticals, aerospace, automotive, and information technology (software and hardware)

  12. There are a few skills supply chains operating in the UK at a national (STEM), regional cluster, sector, and occupational levels but these are not well developed and reflect relatively weak functioning cluster arrangements. Leveraging the drive and resources of anchor organisations proves critical.

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In UK businesses, innovation has fallen alarmingly in recent years.  So the publishing of the UK government’s new Research and Development (R&D) Roadmap seems to us to be falling into the old British