Innovation in Services - Department for Business, Innovation and Skills

Introduction
At a generic level, the studies in this paper bring into focus several well known
areas of innovation policy:
● Skills: It is often argued that innovation management requires a broader mix
of skills than is provided by traditional, disciplinary based approaches (see
Tether and Howells (Chapter 2), Bessant and Davies (Chapter 3) and Cox
(2005) 40 ). Responses may be market driven, for example, IBM is supporting a
new curriculum initiative in services to prepare students for careers in
services sciences, engineering, and management.
● Focus on demand: This is stressed in much of the literature on innovation, but
particularly for services. Bessant and Davies (Chapter 3) stress that search for
and use of demand side knowledge is critical, particularly as many services
are simultaneously created and consumed at the same time so the skills of
working with users become important. The role of public procurement in
stimulating innovation is also noted.
● Diffusion: The importance and economic gains from diffusion are stressed in
much of the literature (eg. Howells and Tether (Chapter 2)). Similarly, Wölfl
(2005) 41 notes that service innovation does not necessarily result from internal
R&D, but from the use of knowledge and technologies that have been created
in other firms or industries.
● Measurement issues – the importance of adequately measuring innovation is
a key element of the literature on services innovation. Better capturing nontechnological
innovation would allow testing of arguments such as those
offered by Bessant and Davies (Chapter 3) to extend support for R&D to
include ‘the kind of ‘research’ activity which takes place in service innovation.’
Economy-wide innovation policies need to have an impact on service activities.
The Government as a whole, including central and local government and
regional agencies operate a range of programmes to support and stimulate
innovation. These programmes are generally sector neutral but some are
focused on innovation activities such as Research and Development that are
relatively concentrated in production sectors, although by no means confined to
them. There may be means of ensuring that economy-wide innovation policies
have greater influence on service activities. This needs further careful
consideration from a policy perspective, taking into account:
● Industry needs and modes of engagement: More research and analysis is
needed to consider (for example) the patterns of service sector engagement
with the knowledge base, especially their direct links with the research base
or the role of knowledge transfer intermediaries in some services industries.
● Interdependencies between firms and sectors in the economy. Even if certain
sectors have closer links to the knowledge infrastructure (e.g. some sectors
are more likely to use universities) firms throughout the economy can benefit
through spillovers from knowledge creation.
40 Cox, G. (2005) ‘Cox Review of Creativity in Business: Building on the UK’s Strengths’.
41 Op cit.
17