Theresa May has said that she wants the UK to be a world leader in free trade after Brexit. But what will we trade? The answer is new products and services - some of which do not exist today. Leaders innovate and in a world outside the EU the UK needs to be more innovative than ever before.
Despite the uncertainty of Brexit we start from a good place. The 2016 Global Innovation Index compiled by Cornell University, INSEAD and the UN based World Intellectual Property Organization rates the top ten best countries for innovation as:
(France is #18 and China #25.) The report compares five input metrics of the national economy that enable innovative activities: (1) Institutions, (2) Human capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. Two output metrics compare actual evidence of innovation outputs: (6) Knowledge and technology outputs and (7) Creative outputs.
There is much that the government can do to improve the innovation climate. I would rate the most important priorities as:
1. Make it as easy as possible to start a new business. Most radical innovations come from start-ups and we need a lot more of them. It is already reasonably easy to start a new business in the USA or UK. However, we could further reduce administration and tax on new businesses e.g. no corporation tax for the first two years trading.
2. Increase the availability of loans for small and medium sized enterprises (SMEs). At the moment many smaller enterprises cannot raise the finance they need to expand. Banks are keen to rebuild their balance sheets and are unwilling to make loans. We need to encourage venture capital funds, business angels and banks to invest in or lend to start-ups and smaller enterprises. This is risky so the government can help lay-off some of the risk.
3. Tilt higher education towards Science. Somehow our country has lost faith in Science. The media is cynical about Science in general. It is no longer seen as something that can solve problems and make life better. We need to rediscover the belief in Science and Engineering displayed by our predecessors. Many valuable high-tech start-ups come out of PhD studies or University research departments. We should encourage more bright students to take degrees and further degrees in Science based subjects. We should say that a degree in Physics is more valuable than a degree in History. One way to tilt the playing field would be to make tuition fees lower in science and engineering courses and higher in arts subjects.
4. Invest in Infrastructure not consumption. Much government spending is wasteful or goes into welfare or consumption. This leads to immense pressure to cut government spending but increased spending on infrastructure would be an investment for the future and could spur high-tech developments in the private sector. We need better transport systems, highways and railroads, cleaner energy supplies and better communications networks. These can all be prompted in full or in part by government and they can generate business for small and large companies.
5. Buy more from small companies. Public sector spending is huge but relatively little goes to very small companies because the procurement processes are so long and convoluted. If government allocated a proportion of its spending for SMEs and start-ups then that would channel some much needed business to this sector and help it to grow.
6. Establish free trade zones for goods and services. We must negotiate hard - in particular to remove non-tariff barriers for services.
Meanwhile there is a big obligation on business leaders to develop the vision, culture and practices which will foster innovation and new product development. Here is where they can learn powerful lessons from great innovators such as Jeff Bezos of Amazon, Travis Kalanick of Uber, Anita Roddick of the Body Shop and James Dyson. We need to see more of their dynamic approaches to creating and building enterprises.
Paul Sloane is the author of Think like an Innovator - 76 inspiring lessons from the world's greatest thinkers and innovators.