Promoting and encouraging innovation is as important as ever in the current economic climate. Chief Executive Jonathan Kestenbaum explains NESTA's active role in stimulating the economy
2009 has been a challenging year for the UK. The recession is the most serious in 70 years and new ideas and new approaches are needed to deal with the scale of the challenge ? after all, it is how we respond to crises that determines their outcome.
Previous downturns have been a catalyst for positive change and a time of opportunity. Hard times can encourage entrepreneurship and business creation. Half of the top 50 US companies in the Fortune 500 were incorporated during recessions.
Over the past year, the National Endowment for Science, Technology and the Arts (NESTA) has been leading work around how best to stimulate an economy overdependent on financial services and increasing property prices, so that the UK is able to emerge from the recession in a position of strength. At the heart of our work has been a relentless focus on growth, and how to turn the UK economy into an innovation economy. An innovation economy is one which is ahead of the curve in terms of its high-growth industries, has the right supporting infrastructure and efficient public services, and is complemented by people with the right skills and attitudes.
What became very clear early in the recession is that the UK needed to look for new sources of growth. This is not a question of picking winners, but of supporting businesses and entrepreneurs to take advantage of new technologies and market trends. This will build on the UK?s core strengths in innovative fields such as the creative industries, life sciences and services.
To remain competitive, early stage businesses (particularly SMEs) need to be able to embrace innovation and take advantage of new technologies and opportunities. It is these businesses, and the entrepreneurs who create them, that are particularly suited to taking advantage of emerging technologies, new business models, processes and markets. They make a significant contribution to growth, employment and wealth-creation.
Innovative businesses will only thrive where the right financial architecture is in place. UK start-ups and early stage companies have had great difficulty obtaining finance in the past few years. Venture capital funding has declined by 70% over the past year and this lack of investment is damaging because it restricts the future flow of new businesses and talent into the economy. As the largest source of pre-institutional seed finance in the UK, we worked closely with other venture capital funders urging the government to set up a publicly backed venture capital investment fund.
The creation of a £150m Innovation Investment Fund is a welcome sign of commitment by the government. It will provide a shot in the arm for the venture capital market, stimulating future avenues of growth. Equally, Britain should accelerate the roll-out of the nextgeneration broadband so that we can embrace and lead on the opportunities of the digital era both to help revive the economy and improve public services. In this vein, we are helping small companies to devise business models to take advantage of digital platforms so that they are competitive and profitable.
An innovation economy also requires more efficient public services: that use modern technology, user involvement and effective design to do more for less. NESTA?s Big Green Challenge is demonstrating how bottom?up community-led innovation can respond to meet the big social challenges we face, offering insights for a new wave of people-powered public services. The Public Services Innovation Lab is working across public services, supporting frontline staff and users to create more innovative services that can provide more for less.
Across all this activity, we know that increasing the UK?s capacity for innovation in the future means engaging today with the innovators of tomorrow. An important strand of NESTA?s work focuses on developing from an early age the innovative skills and attitudes that underpin successful innovation. NESTA is particularly interested in how best to equip young people with the demands of a fast-changing economy, so that they can be fully involved members of tomorrow?s workforce, capable of leading change and the instigators of innovation.
Above all else, we know that innovation comes from diversity and difference. NESTA?s remit, as an independent endowment, is to test new ways of doing things, pushing forward the frontiers of innovation. That?s why we are creating a body of evidence that, if proven on a small scale, will be scaled up across the UK. That?s where the great potential for the UK lies. With high-tech competition from across the world, our future as a global economic player depends on creating the best conditions for innovation. Anything less would be a missed opportunity to build the road for recovery out of recession.
For more information, visit: Website: www.nesta.org.uk
Added the 03 October 2009 in category Innovation UK Vol5-2