The importance of innovation for growth
Published Monday, January 18, 2010 - 20:30
On 7 January, the Government published its Going for Growth strategy in which Lord Mandelson set out what the Government is doing to support Britainâ??s return to economic growth and stability following one of the deepest recessions.
As well as examining the role of enterprise in economic recovery, our current infrastructure and Britain’s industrial strengths, Going for Growth reviewed the role of people at the heart of the knowledge economy and how a fresh look at knowledge, and in particular, innovation, can contribute to economic growth, thus maximising our potential for recovery.
The importance of innovation and the role it will play in helping Britain return to economic health cannot be emphasised enough. The Going for Growth strategy states that: “Government has a particular role to play in driving innovation and advances in knowledge to address the major challenges we face as a society”. While it is certainly the case that we will need Government support, the responsibility for embracing and encouraging innovative practices falls as much to the individual and the employer as to Westminster.
The good news is this message is now getting through. Our recent Innovation for Recovery research, conducted in partnership with NESTA (National Endowment for Science, Technology and the Arts), examined the proliferation of innovative working practices in the UK and revealed that managers are placing greater emphasis on innovation as a method of driving economic recovery.
The vast majority of managers (78 per cent) report that innovation is now very important to their organisation’s agenda in terms of products, processes or business models. This means that as well as taking bigger, bolder steps to foster a culture of innovation within their businesses, employers now also recognise the value of finding and developing individuals who can think and work innovatively.
This renewed emphasis on innovation is, in part, the result of the recent downturn. Innovation in itself isn’t a new concept, and has always been considered a major economic driver, but the economic dark times have resulted in a renewed determination, among managers, employers and individuals, to do things differently.
By approaching business more creatively and more collaboratively, we will strengthen our position and move away from a business environment whereby the responsibility for business success falls to a minority group of senior level people. Instead innovation requires input from a more diverse mix of people at all levels, and demands that knowledge is shared among many. Innovation in its purest form – change associated with newness – has the potential to transform the way we do business and minimise the likelihood that we repeat some of the mistakes that led to the economic meltdown.
Of course, it is easy for Government to stress the importance of innovation. At grass roots levels, the challenge that now faces many UK organisations is how to foster a culture in which innovation is encouraged and individuals feel uninhibited about suggesting ways to bring about change and improvements.
Support and openness to innovation among managers and senior staff is key. The Innovation for Recovery research reveals that four in 10 respondents point to the role of leaders in encouraging innovation, while almost a third highlight the importance of setting up the right team of people.
Encouragingly, only 18 per cent of those polled by CMI consider incentives or reward programmes and dedicated resources for the development of ideas as essential to innovative working. This reinforces the notion that innovation can occur as long as the right mix of people are in place and contradicts those who argue that the challenges of the current economic climate – such as a freeze on bonuses – make innovation difficult, if not, impossible.
Innovation is entirely dependent on people sharing ideas, coming up with solutions and drawing on their own knowledge and experience to find a way forward. As Lord Mandelson puts it: “People are the UK’s most important asset. People generate ideas and start businesses. The knowledge that people have, and the expression and application of that knowledge in the form of skills and innovation, define our comparative advantages and our economic potential.”
If innovation is about people, then it goes without saying that a significant challenge facing employers is to successfully attract and then manage the right people for the job. The most innovative individuals are those who are capable of open thinking and are receptive to ideas, good at problem solving and able to demonstrate initiative. An organisation that has a reputation for innovation will find it easier to recruit individuals who possess these kinds of qualities.
It is encouraging that the recession is having some positive effects on how people work together. Perhaps the economic crisis has made some people less selfish, less motivated by their own determination to succeed and more aware of the role they have to play with their organisation. Just over half (54 per cent) of respondents polled by CMI and NESTA claim that team members have become more co-operative and willing to combine their efforts and two-thirds (69 per cent) say they now benefit from a shared ‘we’re in it together’ attitude. A similar proportion (66 per cent) also say the general management style they increasingly see is participative and collaborative. These are all good signs that we are well on the way to creating a culture of innovation within our organisations.
The economic forecast for 2010 remains uncertain. We are on the brink of recovery but, while some experts believe that the recession officially ended before Christmas 2009, there continue to be warnings that the next 12 months will test our resilience and that many more organisations will be forced to take action, cutting both staff and budgets, to survive. The worst is over, but we have a long way to go before the storm subsides. If we can use the recession as a catalyst for innovation and harness the willingness of people to bring about change then we may find the road to recovery is smoother, and shorter, than we originally feared.
