Young firms (<5 years) more likely to be high growth (8.5% compared to 5.1% for older firms). Young HGF account for a fifth of all jobs created by HGF.
Prosperity and Innovation
Innovation is an important source of growthand prosperityInnovation is the main source Whether you opt for “Plan A”of growth in rich countries or “Plan B”, you need “Plan I”UK GVA growth, 2000-2007 “Supply side policies that support(NESTA Innovation Index) Labour innovation and investment relative quality to consumption are needed” – Bill Martin, Cambridge “It is good to remember that there are far bigger economic stories than the failure of finance or the appeal • 2.7% annual of austerity” – Martin Wolf, FT economic growth • 1.8% due to innovation 1
Innovative businesses grow faster Average annual employment growth rate (2004-07) 6% Product Process Wider Innovation Innovation Innovation 5% 4% 3% 2% 1% 0% Yes No Yes No Yes No Did innovation take place 2002 – 2004? 2Source: Business Growth and Innovation (NESTA, 2009).
And fast-growing businesses generate most new jobs Job creation by existing UK businesses Firms New jobs Firms New jobs Firms New jobs 2002-05 2005-08 2007-10 3Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database
This isn’t about “growth sectors”… Proportion of high-growth firms by sector, % Manu Const- Retail & Hotels & Transport Fin Business fact- ruction whole- Restaura & svcs services & Real uring sale nts comms estate 4Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database
…nor is it just about start-ups High-growth firms by age group, % 1 2 3 4 5 or Age of business (years) more 5Source: Business Growth and Innovation (NESTA, 2009).
How should we think of the innovation system? Knowledge Access to People & skills creation & finance technology Clusters & networks Government Regulation Customer procurement demand
Procurement for innovation – going beyond goodintentions Key lessons Procurement for innovation, E bns • Don’t try to make all procurement innovative – it • SBIR shouldn’t be 14 • DARPA • Don’t try to change the behaviour of all officials There is a long- responsible for procurement – 2 standing it won’t work aspiration to • Ring-fence a proportion of imitate the US’s procurement to be carried out use of innovatively by specialists <0.2 procurement to encourage • DARPA and the TSB’s SBRI innovation – but it capability offer models of how rarely happens this can be organised 7
NESTA’s research on high-growth businesses Three-year research programme looking at all businesses in UK and 11 other countries in the last decade (2002-05, 2005-08, 2007-10)The Vital Six Per Business Growth Measuring Growth Dynamics Vital GrowthCent (2009) and Innovation Business Growth (2010) (2011) (2009) (2009) …plus more to come in 2012 8