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Innovation 2012, the report by UK.GOV on the state of UK business innovation did not make for comfortable reading.

On the back of the financial crisis companies where holding back investment in new products, services and ways of doing business.

In 2011 only 31% of UK firms from SMEs to large companies were “Active Innovators.” Those that did understand the importance of innovation to the long-term economic health of a company were the usual suspects: technologically-based product and process innovators.

Things seem to have improved for UK business.

Innovation 2015 highlights growth in those Active Innovators from 31% to 51% of companies surveyed.

And both the scale and scope of innovation activities in companies have increased. Scale, in terms of spending and Scope in the types of innovation that companies are doing.

The business case for innovation

The message that innovation is more than only “men in white coats” seems to be landing in more boardrooms.

Research and Development is clearly a vital part of the innovation process, representing 50% of innovation spend across industry, and for lots of firms and manufacturing businesses lead the pack with 71% involved in significant levels of innovation.

But services have also become more Innovator Active. Beyond R&D, the 10 types of Innovation can give service businesses a creative boost. Service innovation, network innovation and consumer networks can be the strategy for growth from doing new things.

And the results of taking an active and strategic approach to innovation means more exports, greater reputation for employing highly qualified staff and be more competitive and productive.

The Usual Suspects – SMEs step up

There’s a myth in innovation that runs something like this.

Large companies are no good at innovation because they get stuck in operational matters and can’t be entrepreneurial.

Well, it depends.

Innovation 2015 suggests that large companies are still holding their own, with 61% active. Large companies enjoy networks and resources that can be a distinct advantage.

SMEs, in general, are lagging their larger cousins when it comes to innovation activity.

With so many SMEs by number, there’s a continuing opportunity to play the message to business teams that innovation is not only vital, but can the effectively organized, managed and led.

When SMEs get organized to make innovation a normal part of business, they will be able to enjoy new and more radical growth prospects.

The demise of the Business Growth Service in the autumn statement was less than helpful in closing the UK’s persistent and pernicious productivity gap and innovation has a major part to play in closing that gap.

Still too much NIH?

We live in an era of Open Innovation, characterized by collaborating with partners outside the strict boundaries of the business.

Or are we?

According to this report, it seems that an overwhelming amount of R&D is still done inside the company.

The Not Invented Here syndrome may still be with us. The opportunity to do things faster, better and cheaper may still be untapped potential.

What can business do to become more innovative?

One can read the whole report, and many others that are produced, and see that there remains a lot of work to be done.

Businesses can benefit significantly from taking a strategic view to innovation.

The results are they win financially, make gains against peers in the sector and create a better, more energetic place for staff to work in.

The main action is that companies need to take one first step.

And that is to choose to be better.

Many years ago, manufacturing companies got the operational excellence bug and set about programme of improvement which delivered many gains for them. Think Toyota.

Why not choose Innovation Excellence?

Set about building and refining our innovation engines and we can deal with combating low productivity, responding to competitive challenge, any time anywhere and realise the full potential for UK business.

About the Author

Rob Munro is founder at The Growth Engine, the innovation management consultancy based in Manchester. His message is that innovation is the best way for companies to grow and become more competitive and resilient. He works with business leadership teams to build more capable innovators and achieve growth.

Rob Munro

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