South West Regional Skills Enterprise and Employment Analysis 2007/2008
5.4 Innovation and Creativity
Innovation supports economic competitiveness, growth and regional prosperity by acting as the ‘transformational element’ in the economy. Key routes to innovation are the exploitation of an invention, adaptation of a technology or idea from another sector, reconfiguration of existing products and services or a completely new business approach.
It is both the stimulus to, as well as the consequence of, competition. The digital communications age has ensured that the competitive arena is now worldwide – global markets, global operations, and also global threats as well as opportunities. “Only those companies that constantly seek to improve and innovate will be in a position to grasp the major opportunities that increasing globalisation offers,” asserts the DTI’s Innovation Report (2003)(96). Global competition is a major driver of business innovation through new technologies, products, ways of doing business, and forms of organisation. Employee skills are the foundation stone of innovation, and are essential to the creation of competitive advantage.
A report for the DTI(97) asserts that innovation is defined as the development and commercial exploitation of a new idea for a product or process that contributes to wealth creation and profitability.
The barriers that detract from innovation success, or limit the ability to innovate, are significantly composed of skill-related factors. Skills that underpin innovation include:
A high value added, high performance work context which is conducive to innovation activity is characterised by:
The current Regional Innovation Strategy (RIS) was published in 2001 and evolved from an earlier Innovation and Technology Regional Framework for Action. These set out the region’s aims to increase quality, effectiveness and coherence in its work to promote innovation and improve the competitive position of South West England. The RIS is underpinned by a wide range of projects covering skills and business support. One of its objectives is to strengthen the skills and capabilities of businesses, especially within the priority sectors, to operate in an innovative manner.
The Cox Review(98), commissioned by the Chancellor of the Exchequer during the 2005 Budget, sought to address the question of how to exploit the nation’s creative skills more fully. The emphasis is on the use made of creative skills by smaller businesses, with particular concern for manufacturing.
The Review defined ‘Creativity’ as the generation of new ideas – either new ways of looking at existing problems, or of seeing new opportunities, perhaps by exploiting emerging technologies or changes in markets - and ‘Innovation’ as the successful exploitation of new ideas.
The review was triggered by concerns about how UK businesses can face up to the challenge of a more competitive world. Whilst various government initiatives have looked at related areas like technology and enterprise, it recognised that the connecting thread of creativity had not received the attention it warrants. Creativity, properly employed, and managed, is seen as a key to future business success. To take advantage of the opportunities afforded by globalisation and to create a viable future, UK companies and industries will need to produce innovative, high-quality, high value-added products and services, and bring them quickly and effectively to market. This applies to companies of every size, in every sector. It is particularly relevant to SMEs, which account for 50% of UK Gross Domestic Product (GDP) and provide much of its entrepreneurial base.
As well as being the path to new products and services, creativity is also the route to greater productivity. A parallel study by the Department of Trade and Industry (DTI), Economics Paper No.15, Creativity, Design and Business Performance(99), provides compelling evidence of the impact that creativity can have on business performance.
When asked about barriers to creativity in small firms, business leaders felt that one of the greater barriers was lack of skills in house and lack of access to design and creativity skills. The Review concluded that the issue needs to be tackled by a range of solutions but in terms of developing appropriate skills in support of creativity, it was important that HE broadens its understanding of the skills required of tomorrow’s business leaders, creative specialists, engineers and technologists .
The Review recommended that:
It is important that the ESP considers how its members might contribute more fully to this agenda. This might include:
The ESP should also consider how to advance the recommendations of the Cox Review.
(96) DTI, Innovation Report: competing in the global
economy: the innovation challenge, December 2003, www.dti.gov.uk/innovationreport/innovation-report-full.pdf
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