Royal Hospital Kilmainham, 8th November 2007
Ladies and Gentlemen,
Over the past two days we’ve heard a remarkable variety of people discuss services innovation in all its aspects. There is no shortage of arguments to demonstrate the importance of services to the Irish, EU and, indeed, the global, economy. The disparate nature of services, from hedge funds to hairdressing, often makes generalising difficult. However, this shouldn’t and hasn’t stopped us examining the challenges and opportunities ahead for services innovation. As Minister with responsibility for Innovation, I recognise the crucial role innovation plays in a sector that employs nearly 70% of Ireland’s workforce and comprises one-third of our total exports.
Raising The Innovation Profile
As a member of this Government, I face many of the same challenges expressed by business leaders during this Conference. We have invested considerably in public sector services in recent years and we need to ensure that this investment translates into the delivery of first-class services. Experience has shown that many private service sector innovations can also be applied to the public service. At the same time the public sector continues to develop its own service innovations so people can get the quality services they deserve. Indeed, one of my primary aims is to raise the profile of innovation and support innovation across all Government policies. I want to create a national innovation agenda which combines an awareness of the depth and breadth of innovation activity already taking place and supported by our development agencies, with a determination to stimulate the demand for more innovative products and services. The public sector, for example, as a major purchaser of goods and services, is in a pivotal position to promote innovation through its public procurement policies and arrangements. In developing the profile of innovation we must however always acknowledge the needs of the citzen, as customer and consumer, of those services and who provide a critical role in driving innovation by placing demands for innovative products and services.
Policy Statement on Innovation
With this in mind, I will shortly be publishing a policy statement on innovation which identifies key policy areas which underpin my approach to innovation in support of the knowledge economy and enterprise. My intention is to chart the various components of our national innovation system, to create a greater awareness of and demand for innovation throughout the economy and in society, to look at obstacles to innovation and to promote the ideal framework conditions for raising the level of innovation and creativity overall.
Structural Change and Innovation
Global communications and the interface of technology with corporate value chains means there are very few sheltered markets. From the smallest start-up, to subsidiaries of the largest multinationals, technology is driving innovation in business practices at an unprecedented rate. At the same time technology is unleashing the power of individual creativity and entrepreneurship. It is empowering people to invent new and smarter ways of doing business, adding distinctive value to disaggregated supply chains and driving a phenomenal growth in new business activity.
For developed economies this structural change is most pronounced in services because that is where most economic activity now takes place. Services, therefore not only comprise a large part of our economies, but also represent the main engine for growth within advanced economies. The service sector innovates not merely through the use of acquired technologies. The sector is becoming an ever more important locus for innovative activity within the emerging knowledge economy. Knowledge Intensive Business Services such as those involved in market research, design, engineering and technical services are especially important and are becoming more proactive generators of innovation that are being taken up and implemented by manufacturing enterprises. Several of the speakers during this conference have highlighted the importance of design in services creation and delivery. Therefore, there is an important link between innovation in services and structural changes helping offset employment losses as manufacturing plants relocate from traditional industrial centres.
Building Skills and New Models for Innovation
Technology benefits are flowing strongest to those who innovate their business model and empower and train employees. Training and skill development is perhaps the greatest challenge which globalising markets present to the service sector. Building a successful services business and providing those services demands forging a special relationship with customers where the human factor is paramount.
Within the service sector there is the double challenge regarding skills. To innovate in services we need a different type of thinking – broad and lateral to imagine new markets that can be created by tweaking existing services. We need to develop the necessary skills for innovation management including the management of Intellectual Property, as was illustrated by our last speaker. To implement new concepts we also need the skills of committed employees. Delivering services innovation relies on employee know-how that is frequently tacit, resulting from intense interactions within the firm and with customers. Much of this is informal and acquired through empowerment of teams and giving employees new forms of autonomy. This means looking at how both the private sector and the public sector organise their business models. For its part, the Government has invited the OECD to review the Irish Public Service. This is the first time the OECD has been asked by a national government to undertake this type of investigation. It is just one indication of how important the provision of services and services innovation in a public sector context is being taken by the Government.
Disseminating the Message
I hope the messages delivered here are widely disseminated to those policy-makers and business leaders involved in the services sector, both in Ireland and elsewhere including the 21 countries that were represented at this international conference. Awareness plays a vital role in services innovation. So many enterprises are already practicing service innovation without realising it, while others, though open to the constant evolution required in a globalised marketplace, lack the framework, the know-how or the tools to innovate in their service enterprises. In Ireland, we are mapping the way forward through Forfás’ Service Strategy Group. According to a recent OECD Survey, 39% of total business R&D in Ireland is carried out by the service sector. Between 1995 and 2004, Irish R&D in the service sector has increased by over 20%, mainly driven by growth in computer services. These are encouraging signs, and we look forward to the Services Strategy Group building on these foundations. It is my hope that, at future Services Innovation conferences, speakers will be highlighting other numerous examples of Irish excellence in services innovation, citing Irish enterprises as best practices for others to follow.
Conclusion
As was so well articulated by our speakers from the OECD and the European Commission, only a few countries have begun to consider policies and programmes for promoting services innovation. This leaves a very fertile field in which to develop truly innovative policies not only in Ireland but throughout the EU and OECD countries.
Hosting this level of expertise here in Dublin was a privilege and a pleasure and it has certainly given us food for thought and continues the important work started under previous Conferences in Norway and Finland.
I would like, finally, to wish you a safe trip home and enjoy the rest of your time in Dublin.
