Innovating for the economy
Stephen McCarthy, Royal Society of Chemistry
"Economists disagree on many things. But there is clear consensus that, in mature economies, all long-term economic growth processes depend on innovation: that is, applying new technologies in an economically productive way. There is science. There is invention. Combining and applying them is what innovation is about."
These were Secretary of State for Business, Innovation and Skills Vince Cable’s words in his first major speech on science since his appointment to the Cabinet. This early statement underpinned much of the UK Government’s policy for growth after the 2010 election: the UK’s economic recovery would be founded on innovation derived from cutting-edge research.
It is perhaps not surprising, then, that the innovation ecosystem in the UK has come under intense scrutiny in recent years.
Innovation brings success
There is no doubt that innovative companies are more successful: a report by the innovation charity Nesta in 2009 showed that innovative firms grew twice as quickly, both in terms of revenue and employment, as firms that failed to innovate. The study also showed that companies that grow as a result of innovation are likely to become yet more innovative, leading to a snowball effect that dramatically increases the growth of these companies. This effect is so pronounced that just 6% of firms, namely the high-growth, innovative ones, create half of all new jobs at existing businesses in the UK.
And interestingly, the stereotypical image of a high-growth company – young, technology-based and operating out of a cool office in East London – couldn’t be further from the truth. These high-growth firms are, in fact, spread fairly evenly across all sectors and across all the regions of the UK. And they have usually been in business for several years.
The UK landscape
While Nesta’s scrutiny has busted a few myths, it has also revealed that the UK’s innovation performance could be much better. Compared with many international competitors the UK has a far lower proportion of innovative businesses, and the emerging economies of China, India and Brazil are rapidly catching up with more established nations. The UK is often said to suffer from a ‘valley of death’ in the innovation landscape, where a lack of support for small companies after the initial research but before full commercialisation causes many promising businesses to fail, leaving the full economic and societal benefit of the research unrealised.
It’s not all bad news, however. The UK’s higher education sector is widely regarded as world-leading, and it is a powerhouse for innovation. UK universities invest strongly in research, and this research is much more likely to be cited numerous times and to have been conducted with international collaborators than comparable research from almost any other country.
The UK is also home to many of the industrial giants, which keep the innovation ecosystem moving. Large companies such as Unilever, GlaxoSmithKline or BP are major customers for smaller companies’ products and are, in many cases, vital for the success of these businesses. Large corporations also often acquire smaller companies outright, which makes it possible for the innovative products developed by smaller companies to reach the global market.
Vital for our sector
But what about chemistry and the chemical industries? Compared with businesses as a whole, the chemical industry values innovation more highly. In a PricewaterhouseCoopers report published in 2013, 98% of respondents from the chemicals industry said that innovation was ‘important’ or ‘very important’ for the success of their business in five years’ time. This was 15% more than businesses in all sectors. And the chemical industries are the biggest investors in R&D in the UK, accounting for a third of all spending by businesses on research. The pharmaceutical industry alone invests more in R&D than all service industries combined.
It is clear that the chemical industry is vital for the UK’s economic recovery. This is why we sustain innovation in the chemical industries through a variety of different programmes and activities. For example, EnterprisePlus, our new scheme for small businesses, and our Emerging Technologies competition support and promote technologies in the chemical sciences through the early stages of development, which is their most vulnerable stage.
A lot of work is needed to place the UK among the top rank of innovative countries worldwide. But legislators, businesses and the public can be assured that the chemical industry will be leading the way.
How we support innovation in the chemical sciences
EnterprisePlus
EnterprisePlus is our dedicated service for micro, small and medium companies in the chemical sciences sector. Recognising that small companies are most vulnerable to failure, we set up EnterprisePlus to support them through the challenges they face. The service offers access to vital information, expertise and funding opportunities to help these businesses develop and grow.
Emerging Technologies competition
Our Emerging Technologies competition supports cutting-edge technologies at the early stage of their development to realise their commercial potential. The winners receive mentoring from leading companies such as GlaxoSmithKline, Procter and Gamble, Catalent and Croda) and a cash prize of up to £10,000.
The competition final took place on 25 June 2014 at Burlington House in London.
