What is the state of play when it comes to UK plc?

6 min read

How can the UK pay its way in the world? in the late 1970s, the UK was one of the most research-intensive economies in the world but has been overtaken by the US, Germany, Japan and France.

Today, manufacturing accounts for just 10% of national income and many critics argue that, over the past 30 years, Britain's manufacturing base has been dismantled, hollowed out, sold off and is now largely managed by other countries' multinational firms with the result being that the ability of the UK to innovate has been in decline.

"There is a severe skills gap, while the cost of developing and taking innovative products to market is now so high there is a real need for funding technology research and development support," suggests Steve Applegate, engineering director at Stadium Power.

But is this bleak picture accurate? It's probably the view that most people tend to have of UK manufacturing, but while we may not have the national champions associated with Germany or France, the UK remains a hub of innovation in technologies ranging from 'big data' to satellites, from life sciences to advanced materials, and from transport to regenerative medicine.

"I would argue that the UK is still an innovation economy," says Kevin Baughan, director of technology and innovation at Innovate UK. "Innovation is crucial in the environment in which we compete as an economy, to raising our productivity and in being able to enter and exploit new markets. It is crucial to the UK if we want to stay at the forefront of the global economy."

According to Henk Koopmans, chief marketing officer, Plextek Consulting: "The UK has a highly entrepreneurial culture and environment. Places like Cambridge, London and Oxford – but also elsewhere in the UK – are buzzing with ideas from bright people and these areas are among the most exciting places in the world to work on new technologies."

Koopmans concedes this level of creativity isn't the same as the UK being successful at innovation, where innovation is the process of commercialisation of a good idea.

"While the UK's highly entrepreneurial culture means that vast numbers of companies are set up each year, their survival rate and growth rate is poor. This is partly due to the investment environment, which has been tough especially in recent years, but also down to a very poor local supply chain in the various industries, making it difficult for small companies to grow.

"Several reports (notably NESTA 6 Vital Growth report) have shown how few start up (high growth) companies grow into a sustainable business; only 3.5% of those companies have more than 10 employees after 10 years in business. Of course, there are plenty of exciting exceptions hidden in this low percentage."

ARM tends to held up as an example of a successful UK business, with a history not dissimilar to some of its Silicon Valley competitors.

"But ARM is not alone," Koopmans suggests. "There are several other successful global companies that have started in the UK. However, on a macro-economic scale, it is very difficult to compete in a world where countries like China, the US and Germany have a massive home market combined with a strong supply chain."

A major tactical shift

In terms of research and development, there seems to have been a major tactical shift within the bigger companies over recent years.

"They are now looking to work with smaller, more agile, innovative companies that are specialists in particular fields, as opposed to having to do everything in house using their own resources," said Neill Rickett, CEO of materials specialist Versarian. "There are also a lot more collaborations being done with academic establishments to help fuel this.

"Schemes like Patent Box are proving useful, with companies displaying true inventiveness getting lower tax rates as a reward. The Enterprise Investment Scheme is helping small start-ups to attract investors, while allowing them to remain within a relatively low risk environment. Then there are the government Local Enterprise Partnerships that can support things at a grass roots level.

"Small, innovative business has the advice it needs and knows exactly what assistance is available and how it can be accessed."

UK companies need to be more aware of the level of investment they are going to need to make and what the return on that investment will be. They also need to explore all their options so they can identify which option is likely to be the most cost-effective way to do things.

While this may be true for all companies it is especially so for companies in the early phases of development, since the funds available to them will be limited.

Innovate UK, which looks to fund, support and connect innovative businesses and promote sustainable economic growth, plays a pivotal role within the UK in driving innovation and promoting greater collaboration.

The organisation has prioritised eight key areas where it will focus its efforts (these range from big data and energy harvesting to advanced materials and nanotechnology). By presenting companies with funding opportunities and offering cross department support, it can take projects through the feasibility and prototyping phases. UKTI can then step in and take this further by helping companies to promote and market new products, as well as to help accelerate potential export opportunities.

"Innovate focuses on four key questions when it looks at investing in new opportunities," explains Baughan. "What is the size of the global market associated with the opportunity; what are the strengths which will allow the UK to lead in this market; why is the timing right; and why does this particular project require public money?"

There are a number of global markets, whether energy or enabling technologies, healthcare or space, high value manufacturing or agriculture and food, that play to the UK's traditional strengths. According to Baughan, these include: "A world class research base; the ability to combine existing strengths in new ways; and our growing ability to reflect a shared ambition spanning research, industry and government, as with our programmes on low impact buildings."

"Innovation is out there," says Baughan, "and we are seeing it across all sectors and affecting all vertical markets. It's vibrant and critical to the future of the UK. At Innovate UK, we need to ensure that investments made through our programmes lead to economic growth in the UK."

Growing design activity

Baughan is not alone in suggesting that design activity currently being seen in the UK involves a wide variety of industry sectors.

"The IoT is proving itself to be more than just a buzzword," suggests George Acris, marketing director of Microlease. "The true potential of this technology is starting to be realised, with opportunities opening up in all manner of different areas. RF communication will be of great importance here, but it will also have value in the automotive sector – there is currently huge investment by UK companies into connected cars."

Microlease supplies test equipment to a broad cross section of different industries and, according to Acris, 'acts as a fairly accurate barometer of the current condition of the UK's tech economy'.

According to Acris: "There seems to be renewed confidence, with companies embarking on sizeable projects once again and start ups entering the market. However, companies need to be smarter in terms of how they go about things; finding new ways to maximise their available funds and then ensuring that those funds are used with greater efficiency. Nobody can afford to throw money at projects anymore; every penny needs to be put to good use."

Craig Wright, CEO of Wright Industries, believes that innovation is affecting a broad swathe of technologies.

"Demand for RF is increasing dramatically, as is demand for high temperature applications, optoelectronics and power management. Everyone is looking at mobility and that applies to most sectors.

"Investment and innovation is significantly higher than was the case five years ago, but if the UK wants to be successful, we will need to see greater collaboration between successful businesses – and there are a growing number of innovative engineering led businesses, whether small or micro businesses, out there doing exactly that."

According to Wright, the creation of a more extensive ecosystem will enable a greater level of technology exchange than was previously the case, and this will help to increase high value manufacturing in the UK.

Whilst greater collaboration is seen as an essential driver for innovation, access to the correct skills is another critical factor in successfully commercialising an idea.

"In some cases, start-ups have a really good idea, but they aren't going to succeed because of a lousy management team or poorly executed strategy," argues Rickett. "It's all about having the right people and the right support. Learning from others is important too and this is definitely something that UK industry needs to recognise."

Organisations like SetSquared have been able to provide start-ups with mentoring opportunities, enabling them to call on the experience of seasoned industry veterans so they are better prepared to deal with the challenges they face.

Dr Ebrahim Bushehri, CEO of Lime Microsystems and based at Surrey University in Guildford used SetSquared when establishing his company, now a leading supplier of field programmable RF transceivers for wireless broadband applications.

"In our first six months SetSquared really helped us to get up and running," he explains. "They provided us with facilities to work out of, put us in touch with experts with experience of establishing and running start-ups and crucially they helped us prepare for our first round of funding, running question and answer sessions with us before we met investors and secured the long-term investment we needed."

Creativity and innovation

A successful business requires creativity and innovation, but both require different skills and attitudes.

"There is a huge difference between creativity and innovation and the two should be treated very differently," said Koopmans. "To stimulate creativity, you need to encourage, stimulate and set challenges, whilst getting rid of rules and processes. The moment you are trying to develop a 'process for creativity', you've probably killed it.

"We have a very individualistic culture in the UK, so as a nation, we're very good at being creative, although it isn't always recognised in individual companies.

"When it comes to innovation, I do think we struggle a bit, partly because of the transition from free spirit thinking to more process orientated, organisational behaviour; it is very difficult for a designer to 'let go' of their design to a team whose focus is purely on 'taking it to market'."

The UK is home to a growing number of forward thinking innovative companies investing in new, disruptive ideas and although the prospects for mass volume production remain challenging, the outlook in research and development is far more positive.

No one can be complacent but the foundations for a more robust, high achieving tech industry are certainly in place here in the UK.