Wales academic’s innovation warning

Feb 27 2008 by Sion Barry, Western Mail

THE future prosperity of the Welsh economy depends on companies adopting “open innovation” strategies and effectively embracing collaboration to bring new products and services to market, the vice-chancellor of the University of Wales said yesterday.

Addressing a meeting of Cardiff Breakfast Club, academic and entrepreneur Professor Marc Clement said that while in terms of official research and development spending and patent registering figures Wales [and the rest of the UK] was behind competitors in Europe and the US, he stressed that a great deal of innovation was being undertaken in companies, but wasn’t being recognised as such.

He said, “Many of us of think of innovation as the exclusive domain of the white coat brigade, people who work in laboratories. But innovation is by no means the exclusive domain of science and engineering.

“All of us are engaged in the innovation agenda and not simply those in science and technology.”

Prof Clement’s numerous roles also include being the Welsh representative on the board of Nesta (the National Endowment for Science, Technology and the Arts).

He said, “We in the UK had until recently a very robust economy, and we believe that innovation has been a key to its success.

“But if you measure the performance of the UK against traditional metrics of innovation like expenditure on R&D (research and development), then it performs rather poorly in terms of its European competitors and the US.

“Another metric often quoted is the rate of patenting in the UK, where again we are performing quite badly and we in Wales a little worse than the UK.

“However, if we believe that innovation is critical to economic success then why is the UK economy doing well when we perform so badly in the vast majority of these innovation key performance indicators?

“The answer to that is there is a whole spectrum of innovation going on in businesses that we don’t recognise and measure as innovation.”

Prof Clement said the adoption of open innovation was critically important to efforts at creating a sustainable knowledge-based economy in Wales and the rest of the UK.

He said, “Traditionally businesses worked in closed innovation environments. What I mean by open innovation is that firms should and can use external ideas and paths to markets, as they look to grow in an increasingly international and competitive marketplace.

“If we want to enhance our innovation capability then we have to work in this multi- disciplinary and inter-disciplinary world with others. Even IBM, which has the largest R&D operation in the world, can’t any longer satisfy its thirst for innovation from within its own internal sources.

“Innovation is not simple, so we need to have innovation partners. Also it is not cheap so we need to have patient and informed finance partners, something which is critically important.

“Without routes to market the best ideas don’t succeed so we need to work with the distribution partners. Innovation also needs good customers. So we cannot develop innovation in isolation and in vacuums. We need to build networks to share ideas and innovate in an open environment.”

He said the Japanese-owned Sony electronics operation in Pencoed, which suffered mass redundancies in 2005, had reinvented itself by adopting an open innovation approach.

He described how local management at Sony approached executives in Tokyo to be given 12 months to find a new agenda to become sustainable – after being downsized to just 250 staff in 2005.

Prof Clement said, “I have checked the statistics with Sony executives and they have now built back up to 620 employees. They claim the reason for this success has been working in this open innovation way.

“In the financial year to March 2009 they will be manufacturing between 340,000 and 500,000 units of new product, sourced from entrepreneurs, innovators and small companies in Wales.”

As a small country, Prof Clement said, Wales was well placed to develop an open innovation culture with businesses, government and academia working in partnership to delivery on the agenda.

Prof Clement was one of the architects of the Welsh Assembly Government’s business incubator Technium network.

He said he hoped that it would be expanded beyond European convergence funding areas of Wales.

“I believe the initiative has differentiated Wales and gives us a unique selling point.

“I very much hope the plan to develop one or two techniums in South-East Wales materialises. However, what is also needed is a pan-Wales integrated strategy.”

Not all the techniums are fully occupied, but Professor Clement said that while there had been early successes, the project needed to be judged over a 25-year cycle.

On the higher and further education sectors he said Wales had some “wonderful centres of excellence.”

But he added, “There is much to be done. We [academia] need to build long-term relationships with business. We need to have a strategic approach to retaining the best talent and encouraging the best talent to return to Wales. In addition to that we need to attract the best international talent to Wales.

“I am told that all the engineering departments in Wales recruiting for this September collectively only had 600 candidates from Wales. This shows why we need to encourage our youngsters to stay here and demonstrate that there are good career paths.”

Cardiff Breakfast Club is sponsored by the Western Mail, The Bank of Scotland, Marsh UK and Morgan Cole. The next meeting of the club on March 25 will be addressed by chairman of Cardiff & Co, Bill Savage. For more details email dana@petersensone.com