“Do you want fries with that?” innovation in the service industries

A new report from NESTA Taking Services Seriously sets out a few ideas on why (some) service industries innovate and most don’t. As we are a service economy (75% of the UK GDP) the concentration on manufacturing R&D has always slightly concerned me – yes we need to develop high value leading edge physical products but where is the future economy going to be built in added value terms?

The exec summary is pretty clear about why this report is needed now:

“Policy could have an important role in stimulating innovation in services. However, policymakers have lacked robust evidence showing how these sectors innovate. Drawing on a survey of more than 16,000 firms, this research reveals the high levels of ‘hidden innovation’ in some services sectors, especially in how they develop new business models and exploit technology. But the research also reveals that innovation is confined to a minority of service firms, and that many lack the skilled personnel or intelligence on markets and technology that would enable them to become more innovative.

Because of their dominance in the economy, improved performance by the UK’s services sectors is necessary if we are to significantly close the productivity gap between the UK and other leading nations. However, if we are to take innovation in services seriously, we must recognise that they innovate differently from advanced manufacturing. We need policies to support increased training and development, and the effective dissemination and exploitation of technology.

At the risk of sounding like a cheerleader, thank god someone is saying this so we can point to it and internally lobby, cajole and encourage real support for innovation through better processes and sharper thinking.

 

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