HEALTH AND WELLBEING
BEST PRACTICE AND INNOVATION BOARD
AGENDA ITEM: 5
WELSH GOVERNMENT INNOVATION STRATEGY FOR WALES
Report of
Chair
Paper prepared by
Programme Director
Executive Summary
Recognising that future growth and economic
success in Wales will rely in part upon the ability to
continually improve what we do, the Welsh
Government is committed to developing an
Innovation Strategy for Wales.
A recent Call for Evidence has been undertaken,
and the responses analysed. The Welsh
Government has issued a Response to the
Evidence document, and has invited interested
parties to comment further, by 30th November. This
paper provides the Board with the background to
the Innovation Strategy development, shares the
Welsh Government response, and explores the
relationship between the WG Strategy and the work
of the Best Practice and Innovation Board.
Board members are asked to consider the
document, to allow discussion at the Board meeting.
Following discussion, a formal response from the
Board to Welsh Government will be drafted and
submitted.
Action/Decision
required
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Board members are asked to consider the attached
Report and the appended WG Response to the Call
For Evidence, in preparation for discussion at the
Board meeting.
Health and Wellbeing Best Practice and Innovation Board
23 November 2012
WELSH GOVERNMENT INNOVATION STRATEGY FOR WALES
INTRODUCTION and BACKGROUND
Innovation Union is one of the flagship initiatives of "Europe 2020", and places
innovation at the heart of emerging European strategy. It sets out a plan to ensure
innovative ideas are turned into products and services that create growth and jobs.
Reflecting this European initiative, Science for Wales, A strategic agenda for science
and innovation in Wales, was launched by the Welsh Government in March 2012. It
identified the lack of a current complementary innovation strategy to deal with the
commercial exploitation of R&D and the promotion of innovation across a range of
sectors.
Welsh Government has set out an expectation that organisations in Wales invest in
and are supported, via an Innovation Strategy, to carry out:
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research and Development (R&D);
adoption of new technologies;
development of new products and processes;
to protect and commercialise intellectual property;
to embrace innovative business models.
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GOVERNMENT SUPPORT FOR INNOVATION
Within the Welsh Government, innovation is supported through a combination of
direct support, facilitation and promotion. The Welsh Government currently facilitates
innovation by such means as:
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direct assistance to businesses and academic institutions through European
funded programmes such as Business Innovation and Academic Expertise for
Business (A4B);
the strategies and activities of the nine newly established sector teams as
identified in Economic Renewal: A New Direction financially supporting
projects with external sponsors through the Wales European Funding Office
(WEFO);
supporting clinical and social care innovation through the activities of the
National Institute for Social Care and Health Research (NISCHR);
the Digital Wales initiative.
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Assistance is also available from many external organisations such as:
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direct support from Higher and Further Education Institutions the Technology
Strategy Board (TSB);
the UK Research Councils (for HEI);
the National Endowment for Science Technology and the Arts (NESTA);
the EC FP R&D programmes;
independent research organisations;
business support organisations.
THE CALL FOR EVIDENCE
In April 2012, the Welsh Government issued Innovation Wales – Call for Evidence.
This encouraged organisations and individuals to contribute towards the
development of an Innovation Strategy for Wales, with responses invited over the
following three months.
A UK Innovation Survey undertaken in 2009 found that whilst there was evidence of
innovation having a positive impact upon the economy, Wales was not performing as
well as other UK regions. The latest published statistics (March 2012) by the Welsh
Government show total expenditure on R&D in Wales was the third lowest of all UK
regions at £527m, which equates to 2% of the UK total, when our population share is
closer to 5%.
Wales also performs particularly badly in regard to the level of business R&D – whilst
not directly comparable it can be extremely difficult to capture the impacts of
innovation, and R&D is therefore often used as a proxy for innovation.
The recently published Science for Wales policy identified the low rates of R&D in
Wales, as compared to other parts of the UK, as a lost opportunity and proposes
means to increase the level of funding won.
THE RESPONSE
Innovation Wales: A response to the call for evidence was published in October
2012. This document is appended to this paper at Appendix 1, and summarises the
responses and provides some initial proposals for consideration. Welsh Government
has offered a further opportunity for interested parties to comment upon these early
proposals before the final Strategy is launched. These responses are due by 30 th
November.
The full WG Response is at Appendix 1 to this paper. A short summary of the key
messages is set out below.
Over 130 responses from all sectors in Wales and beyond have been received and
analysed. The key themes drawn from the responses are summarised below:
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Improving collaboration across sectors, making the best use of emerging
technologies on a shared basis, seeking to exploit the creativity that can be
evident when sectors – even if diverse – interconnect.
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Encourage and support the teaching of the principles of innovation within
schools and higher education colleges, seeking to recognise the relationships
between
education, entrepreneurship and
innovation, and that
entrepreneurship is a skill that can be taught.
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The recognition of the economies of scale, and the opportunities that a
broader adoption of innovation could offer, along with the recognition that
there will be a relatively small number of world class opportunities, but that
these can and should be prioritised.
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Resourcing innovation remains problematic, particularly given the current
economic climate, yet innovation could also be the solution to this. Linked to
this is the need to ensure that innovative opportunities need to be exploited
quickly and that financial support needs to operate flexibly to accommodate
this.
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The unrealised potential of the public sector in driving and supporting
innovation. Within this context, NHS Wales has been described as “a sleeping
giant” in terms of its potential.
The analysis of the responses concludes that WG needs to be guided by two
principles:
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To promote, encourage and enable innovation across the whole economy,
private and public;
To use smart specialisation approaches to exploit significant opportunities.
The emerging proposals, drawn from the responses, and reflecting the key principles
include:
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The need to further build upon WG strategies in key sectors, and identify
those with genuine global strength.
The need to link innovation to economic solutions, and exploit external funding
streams, including EU funding which will be channelled towards R&D
activities.
To refocus the promotion of RD&I across Wales, and simplify processes.
To promote and market Wales as an ideal location to develop innovative
businesses.
To harness private and third sector partnerships.
To further develop financial support, and to make such support more agile and
flexible.
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Larger scale innovation actions will focus upon:
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The development of clusters of mixed sector services and organisations.
Ensuring innovation makes the best use of UK and EU funding streams.
Prioritising those opportunities that can commercialise and spread their
knowledge development.
The need for innovative Government.
IMPLICATIONS FOR THE BEST PRACTICE AND INNOVATION
BOARD
There are clear relationships and connections between the WG Innovation Strategy
and the work programme for the Best Practice and Innovation Board (“the Board”).
The recognition within the WG Response to the Call for Evidence that NHS Wales is
a “sleeping giant”, and that there needs to be more cross pollination and working
across sectors and services will be a familiar message from both Together for Health
and Sustainable Social Services. Both of these policy documents strongly feature the
need for integrated and shared services models and responses that make the best
use of emerging technological, clinical, and service delivery developments.
The Board will be interested to note the financial opportunities that may be
accessible to support the spread of innovation, and the recognition that sectors need
to work across boundaries in order to deliver the most effective opportunities.
CONCLUSION
The recent Call for Evidence to support the development of a Welsh Government
Innovation Strategy is appended to this paper and offers significant opportunities to
the Board in progressing the various workstreams and actions. The reference to NHS
Wales as a “sleeping giant” in terms of innovation, coupled with the current economic
position, provides some recognition of the requirements of the Board, and the sense
of urgency and expectation regarding its products and achievements in supporting
the public sector in Wales in progressing innovative opportunities.
RECOMMENDATION
The Board is asked to:
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Note the intention of Welsh Government to develop an Innovations Strategy,
and the responses received to a recent Call for Evidence.
Note the read across between the WG work and that set out in the PID for the
Board;
Consider the WG response appended in full to this paper,
Note the need for the Board to respond by 30th November, and be prepared to
discuss key issues for feedback to WG at the Board meeting.
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Appendix 1
A Welsh Government Response to the Call for
Evidence on an Innovation Strategy for Wales
1 Introduction
This document sets out the Welsh Government's response to the call for evidence on
a new innovation strategy for Wales. Our future economic success will be
determined, at least in part, by our ability continually to improve what we do. Our
businesses need to respond to new markets and competition by enhancing their
products and processes, developing new ideas and bringing them to market. Our
universities and colleges need not only to continue to break new ground but also to
collaborate with other actors to turn ideas and technology into economic benefit.
They must equip the next generation of learners with the skills to innovate.
Government and the wider public sector need to be innovative not just in the way we
support our partners, but in the way we deliver our services.
Innovation is often chaotic and non-linear. It is not possible to have a definitive
business plan for supporting innovation over a ten year period. However it is possible
to have a set of guiding principles by which we aim to enable innovation, however it
manifests itself in the coming years.
Innovation is not just research and development (R&D); it is the application of new
knowledge, processes and ways of working. R&D is critical for some sectors, but
pure R&D which is not commercialised or put into practice, delivers neither health,
wealth nor societal gain. In this sense, Innovation Wales will offer opportunities for a
“rebalancing” of policy between the two concepts. The Welsh Government set out its
priorities for science in Science for Wales, and expounds the three Grand
Challenges. So, looking forward, in terms of innovation, these are expected to form
the central themes for the Welsh Government’s activity and encouragement.
It therefore aims to set out the importance of innovation and encourages all economic
actors in Wales to become more innovative. We acknowledge that the role of
Government in driving innovation is limited but it is not powerless. We will set out
how we aim to support innovation across the economy, as well as some of the tools
we can use for this. In the few areas where large-scale intervention is justified and
likely to make a meaningful difference, we set out how we will prioritise this
investment, basing it on Wales’ strengths and opportunities.
Innovation Wales needs to be a living strategy which will be revisited and revised. It
will not provide all the answers. We intend the principles to be consistent and to
shape our future ways of working. We hope that this will enable our partners,
especially in higher education and business, to plan their innovative futures and
understand how the Welsh Government will support them.
The European Commission (EC) has made the development of Research and
Innovation Strategies for Smart Specialisation a pre-condition for certain themes of
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future structural funds programmes. It appears likely that a large proportion of
support for the new round of structural funding that will start in Wales in 2014 will
prioritise research and innovation.
Smart specialisation is about the policy process to select and prioritise fields where a
cluster of activities could be developed. The Welsh Government is adopting the
smart specialisation methodology in developing Innovation Wales.
A strategy to develop priorities in order to use our investment most effectively is
essential. However, a successful, long term strategy needs to be based on much
more than the immediate opportunity of funding. Structural funds are an important
source of support but may only be available in geographical areas which might not
necessarily map well with our existing strengths and capabilities. The strategy should
attempt to serve the whole of Wales and should extend beyond the direct role of the
Welsh Government.
2 Where we stand
Wales is typical of most western economies. Our manufacturing sector faces strong
and growing competition from lower cost locations, and our companies regularly
need to introduce new products and processes to compete successfully. Mature
products and technologies become commodities which are subject to replication
elsewhere. Continuous innovation is a precondition of economic sustainability for
most companies and the commercialisation of R&D can stimulate new product
development. Wales’ economy has a proportionately larger share of manufacturing
than the rest of the UK and globalisation makes innovation even more critical as a
result.
Despite the ongoing importance of manufacturing, the service sector is also now a
very significant part of Wales’ economy. This makes it of key importance to
encourage and enable Wales' service sector businesses to be more innovative,
productive and hence competitive. Innovation will improve their sustainability and
better enable them to tackle external markets.
We also need to consider the role of public services. Accounting for over a third of
Welsh GVA and jobs, there is a significant economic impact to be derived from a
more innovative and productive public sector. It can act as a real driver of innovation
and growth in the private sector. In common with all western economies, Wales faces
real societal challenges which will require more innovative approaches from the
public sector if the needs and aspirations of citizens are to be met.
The evidence for innovation in Wales is fragmented and inconclusive: it is notoriously
hard to measure. Such indicators as do exist suggest that we are better at innovation
than R&D, where our performance is underweight but where we have plans in place
to improve. Whatever our current performance in innovation, the one thing of which
we can be certain is that we cannot stand still. We must do better. We are more likely
to do better if we have a strategy which our stakeholders agree with, and have
confidence that it will be followed consistently.
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3 What we were told
We have undertaken an extensive call for evidence in the production of the strategy
and have received over 130 responses from all sectors of society in Wales and
farther afield. Overwhelmingly, people and organisations are convinced of the
importance of innovation, however they define it, and want to see Wales improve its
performance.
There were a number of key themes which recurred frequently in the evidence
received and which will underpin our approach to future innovation.
3.1 Improving Collaboration
Innovation is becoming a more open process as universities, companies and
individuals increasingly realise that they cannot fully exploit new ideas and
technologies on their own. R&D is becoming increasingly expensive and knowledge
is widely dispersed. There is a need to see better connections between all agents in
the innovation system within Wales, and between Wales and the outside world. An
extension of the collaborative principle is the “coffee shop phenomenon”; the
embodiment of the random and chaotic nature of innovation. It refers to the creativity
that occurs at the intersection of, sometimes very diverse, disciplines and the need to
find ways to stimulate networks that help this to happen.
3.2 Culture
We were reminded frequently of the strong connection between education,
entrepreneurship and innovation. Entrepreneurship can be taught. The need to
stimulate and teach the principles of innovation at school and college was highlighted
as was building innovation into higher education courses. Innovation is not just for
the entrepreneur but is needed across an organisation at all levels.
3.3 Prioritisation and Critical Mass
We need to broaden innovation across the nation and deepen it in everything we do.
Government has a role in spreading this message and helping to create an
environment that fosters this culture. We also need to be world class in some
disciplines, and these are likely to be very limited in number. We need to build
capacity and a critical mass of expertise in areas where Wales has existing strengths
and significant opportunity. Our current priorities were not clearly understood,
especially by those outside Wales, and all wanted a greater degree of focus.
3.4 Finance – Availability and Speed of Delivery
The problem of financing innovation was a consistent message: financing large scale
research, development and innovation (RD&I); bridging the “valley of death”;
accessing venture capital to successfully exploit market opportunities. These may
require different solutions and approaches but were a common theme and if we are
to make a step change in innovation they will need to be addressed.
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Allied to the availability of funding is the speed and flexibility with which it is delivered.
Slow innovation is not worth pursuing. The pace of innovation and exploitation is
accelerating, and the window for exploitation, before products and ideas reach the
commodity stage, is shrinking. So, any interventions to enable innovation need to be
quick, and this raises questions as to who is best placed to deliver them.
3.5 Procurement and the Environment for Innovation
The public sector has the potential to play a significant role in encouraging
innovation. This is true even in free markets such as the USA where e.g.
Government funded defence spending has been shown to have a major effect on the
development of innovative businesses. The role of the public sector should not be
prescriptive; schemes such as the Small Business Research Initiative (SBRI) have
been successful by identifying an issue or challenge and leaving the solution to the
open minds in the supply chain. The Welsh public sector should itself be innovative
when procuring.
But the role of Government is potentially far greater than what it spends. There are
areas of human activity where it has the opportunity to help or hinder the whole
environment, or culture of innovation. One of these, given the traditional British
system of healthcare, is the Welsh NHS, which may be something of a “sleeping
giant” in terms of its potential.
4 Opportunities for Wales
Many of the structures for enabling innovation in Wales are already in place:
• Welsh Government is developing strategies for key sectors including life
sciences and health, advanced manufacturing, energy and environmental
technologies, and creative and digital technology. Within some of these
sectors we have areas of genuine global strength.
• Science for Wales has been launched to increase Wales research
performance in the three grand challenge areas.
• In Finance Wales, we have a finance and venture capital house which is
dedicated to growing the Welsh economy.
• Wales is an ideal size to test public service innovations. With 3 million
citizens, and control of services such as health, education, waste and
transport, we are well placed to act as a test bed for new technologies and
delivery models. This approach can deliver benefits for citizens and enable our
businesses to produce innovative products & services that can be taken to
markets elsewhere.
• We have a size and scale which makes connecting the network of economic
actors (government, business, education) readily achievable.
There are also significant opportunities to work with external sources to increase our
innovation performance.
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Wales needs to make more strategic use of external funding streams, such as
structural funds, the Technology Strategy Board (TSB), research councils, European
Framework Programmes for R&D (FP7) and the forthcoming Horizon 2020
programme etc. We need to ensure that we produce high quality, successful bids.
An example here is the emerging network of Catapult Centres being created by the
TSB. We will ensure our businesses and universities take advantage of the
collaborative opportunities they will present over the coming years. We will look to
learn from good examples elsewhere and will devote the necessary resources to give
us the best chance of success.
4.1 EU Funding
A new round of structural funding is due to start in Wales in 2014. A large proportion
of this support will be channelled either directly towards RD&I activities or to other
activities where innovation is acknowledged as one of the critical drivers.
Also, 2014 will see the launch of Horizon 2020, which will offer access to
considerable support for RD&I activities. Unlike earlier framework programmes,
which were strongly focussed on research, this time the EC has identified innovation
and commercialisation as an essential strand running through the whole programme.
The Welsh Government should spend 2013 taking stock of the effectiveness of 2006
- 2013 ERDF projects, building on the current Guilford Review of EU funding. This
should include identifying and using better, more meaningful, metrics for innovation
which capture its real impacts and outcomes.
5 What we propose to do
The Call for Evidence demonstrated that innovation in its widest sense and across
the wider economy, is considered vital. Stakeholders also believe that too often in the
past, Wales has shied away from making the tough decisions on funding – spreading
the jam too thinly rather than a relentless focus on excellence. Both of these must be
addressed in our future approach.
From now on the Welsh Government intends to be guided by two principles. Firstly,
we will promote, encourage and enable innovation, broadly defined, across the whole
economy, private and public. Secondly; we will use the smart specialisation
approach, as developed in Science for Wales and Innovation Wales, to focus our
large scale interventions on creating real critical mass in the areas where we are
already strong and can see significant opportunities. This chapter sets out some of
the ways we propose to pursue this dual mission:
5.1 Promoting, encouraging and enabling innovation
Actions in this area will include those that fit with the following themes:
• Promotion. We will refocus resources for the promotion of RD&I across
Wales, and simplify our processes. Part of this will be to develop mentoring
models with business to spread knowledge and experience across the SME
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community. We will also increase awareness of funding streams and provide
practical assistance to companies in drawing down these funds.
• Celebration. We will work with external partners to promote Wales as an
ideal location to start and grow innovative businesses and projects. As well as
targeted marketing and promotion, we will introduce specifically themed
‘innovation challenges’, including the introduction of competitions, innovation
events, prizes and awards.
• Delivery. We will harness the potential for external partners in the private
and third sectors to deliver new innovation activities.
• Diversification. We need to broaden what we mean by innovation and the
areas of innovation which we support. We will develop new programmes to
promote design and service innovation.
• Funding. We will work with external partners to develop the sources of risk
finance available to Welsh businesses, and the investor readiness of these
companies to attract such funding. The funding mechanisms need to be faster
and more agile. Most importantly, they need to take a commercially informed
approach to risk – only by an acceptance of the possibility of failure can
investments in innovation deliver some successes.
5.2 Prioritising large scale interventions
Actions in this area will focus on the three grand challenge areas identified in the
Science Strategy:
• Life sciences and health
• Low carbon, energy and environment
• Advanced engineering and materials
Research for Science for Wales showed that we have recognisable and genuine
strengths within these broad sectors, both within academia and in our corporate
base. They are also predicted to offer opportunities for significant market innovation,
and potential for value-added improvements in public services. These are clearly
very broad areas, and we will need to focus within them on the key capabilities which
give Wales competitive advantage.
Given the fluid and unpredictable nature of the innovation landscape, we will respond
positively to any new areas of activity which meet the twin criteria of genuine worldclass expertise and where we see a significant large-scale opportunity for
exploitation. This will not dilute our commitment to focus and prioritise but will allow
us to react quickly to the unforeseen.
Actions in this area will fit with the following themes:
• Clusters. We will develop a select number of centres, in areas of
comparative strength for Wales, bringing together academia and business with
an explicit remit to commercialise knowledge. An example is the recently
announced Science and Innovation Campus at Swansea University. This will
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provide the facilities where world leading companies can engage with
academia in commercialisation projects at the very highest level.
• Openness. We will introduce means to encourage 'Open Innovation'
activities for businesses to collaborate with each other and with academia.
• Collaboration and Co-Funding. Wales needs to ensure that its priorities
are embedded in UK and European funding programmes. It can then make
more strategic use of external funding streams and other support for
innovation. We will explore the potential for co-funding initiatives with bodies
such as NESTA, the TSB and the research councils. For example, we will
ensure that our businesses and universities take advantage of the
collaborative opportunities which will emanate from the network of Catapult
Centres.
• Prioritisation. We will refocus our support for innovation in universities into
the grand challenge areas and onto projects which commercialise their
knowledge, promote collaboration with business, and bring products and
services to market. The knowledge transfer strand of the National Research
Networks will work alongside other forms of funding.
• Innovative Government. We will work with all departments in the wider
public sector in Wales to try innovative solutions in areas such as health,
transport etc, where Wales is of a suitable scale to act as a pilot for new ideas.
For example, the public sector in Wales should aim to increase the proportion
of procurement undertaken through SBRI type initiatives including
competitions for innovative solutions.
Annex One
Smart Specialisation
The EC has made the existence of Research and Innovation Strategies for Smart
Specialisation (RIS3) a pre-condition for the RD&I themes of future structural funds
programmes. It has also said that it expects such strategies to inform and guide
applications to the Horizon 2020 programme.
An RIS3 is an integrated, geographically defined, economic transformation agenda
that does five important things:
• Focuses policy support and investments on key priorities, challenges and
needs for knowledge-based developments, including ICT related measures
• Builds upon a region’s strengths, competitive advantages and potential for
excellence
• Supports technological as well as practical innovation and aims to stimulate
private sector investment
• Gets stakeholders fully involved and encourages innovation and
experimentation
• Is evidence-based and includes sound monitoring and evaluation systems.
More information can be found here: http://s3platform.jrc.ec.europa.eu/s3pguide.
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