If we are so inventive, why are we not richer?

The UK has a strong and inventive science base. Economic analysis shows that innovation is the key driver of productivity and therefore wealth creation. Since science and technology are central to innovation, why does the UK not score higher in wealth creation? Dean Palmer sought the answers from a recent seminar Speaking at a recent seminar, Sir John Chisholm, chief executive officer ??????? at Qinetiq, posed the difficult question to his audience: "If the UK is so good at innovation and inventing things, why are we not a richer nation?" There is no easy answer to this, although Chisholm did put forward various theories. First, he said, the UK can be proud of its science heritage considering the modest science budget it was given by the Government. But a glance at the current financial stock markets made less pleasing reading. "If you look at the FTSE 100 index, there are perhaps only eight companies that can be classed as world leaders in their field." He cited Rolls-Royce, Diageo, GSK, Astra Zeneca, BP, Shell, HSBC and Vodafone. "There is very little in terms of industries that have emerged over the last 30 years or so. IT, software and electronics - the three really big leaps forward in terms of technology over this period - just do not figure enough in the list," he complained. The event, entitled 'The short circuit: from bright idea to real value', was organised by the Institute of Electrical Engineers (IEE) and Qinetiq and included guest speakers from Dyson, Snell & Willcox, Sony Europe and Cambridge-based company, 1 Ltd. Chisholm continued by saying that the current Government, while not perfect and perhaps even lacking some technical expertise, is wholly committed for the first time to innovation in the UK. He explained that the macroeconomics in the UK is now stable (low inflation, low interest rates, etc.) and that the Government was "committed to innovation driven by a strong science and technology base". He also suggested that the Government's understanding of clusters and architectures was sound and that the regional development agencies were doing a "sound job" in these areas. "So why is the UK not able to turn its world class science base into excellent economic performance?" Chisholm asked. His answer revolved around four key areas. First, venture capital, he said, was lacking but was necessary to "connect" the market needs with what technology can achieve this. Second, he argued that public procurement was important for a successful, innovative economy, and provides a source of early adopters. He then focused on large companies. "You need big companies such as Rolls-Royce who have the capital to develop and commercialise good ideas". The fourth area was RTOs, or research and development organisations such as Qinetiq, who specialise in developing new technologies for specific industries, connecting the needs of that sector with new advances in materials, technology, engineering, etc. But Chisholm said that the cost of developing and maturing a new technology, compared to the cost of inventing a technology was astronomical. He argued: "Pulling a technology through is expensive and takes longer than you could ever imagine. So, for example, you could be active in many technologies but when you want to take one of these technologies to market seriously, you need to be prepared to spend a lot of money." He suggested that perhaps the UK was less successful than the US in commercializing technologies because it "tended to focus what little capital it had on the front end of this process [the invention end] rather than on the technology maturisation stage of the process". Chisholm ended by saying that "discovery seldom captures the real value in itself" and that it is not until something or somebody 'connects' that idea or new technology with the market's real need that value is then released. "Profound innovation usually requires an overwhelming need and is most often chaotic and unpredictable," he concluded.