Presentation given by Robert Crawford at Coast to Capital's High Growth & Innovation Event, held on 21st June 2012

1. Innovation is an important source of growth
and prosperity
Innovation 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
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2. 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?
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Source: Business Growth and Innovation (NESTA, 2009).

3. 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
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Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database

4. 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
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Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database

5. …nor is it just about start-ups
High-growth firms by age group, %
1 2 3 4 5 or
Age of business (years) more
5
Source: Business Growth and Innovation (NESTA, 2009).

6. How should we think of the innovation system?
Knowledge Access to People & skills
creation & finance
technology
Clusters &
networks
Government
Regulation Customer
procurement
demand

7. Procurement for innovation – going beyond good
intentions
Key lessons
Procurement for innovation, E bns
• Don’t try to make all
procurement innovative – it
• SBIR shouldn’t be
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• 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
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8. 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 Growth
Cent (2009) and Innovation Business Growth (2010) (2011)
(2009) (2009)
…plus more to come in 2012
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