Innovation: something to smile about

UK businesses have plenty to smile about. The economy is growing, employment is up, and certain government reliefs and incentives have improved multiple times in the last six or seven years. But is this enough?

We still linger embarrassingly at the bottom of the G8 when it comes to spending on research and development. The 0.5% of GDP we allocate towards funding innovation pales in comparison to the US’s 2.7% or Germany’s target of 3%.

What’s more, many of the UK grants and European funding that are made available are too often poorly publicised – you know of Nesta and Innovate UK, but what about Horizon 2020?

It’s partly for this reason that so many SMEs fail to even consider applying for grant funding or R&D tax credits and allowances. Another reason is the fault of the applications themselves; they can be overly complex, heavy with jargon, and require volumes of information via seemingly endless questions.

But these barriers can be overcome with relative ease.

Overcoming barriers

Independent reports like the one you’re reading now outline the funding landscape in succinct, straightforward terms. While experienced specialists like Alma Consulting Group help businesses of all sizes and sectors make successful applications for grants and tax credits (to date, we’ve claimed more than £100 million of R&D tax benefits for our clients).

The other barriers are harder to pull down.

Too many businesses fail to see how their products and services are innovative, and miss out on significant funding as a result. In some respects, it’s a simple case of not seeing the wood for the trees; businesspeople take the pioneering work their business does for granted. This is why a great deal of our work involves researching different sectors to single out the trailblazers and originators – whether that’s a micro business manufacturing toys made from magnets or a global insurance firm.

Is Innovation worth the risk?

The greatest barrier of all, however, is inspiring innovation itself. The financial crash of 2007-8 left many businesses feeling fragile and insecure. Bringing a new product or service to market – or even overhauling an existing one – feels too risky, for only now are they safely out of the woods.

And yet, not innovating is even riskier. Businesses must innovate or stagnate.

In a report published last year by Frontier Economics and the Department for Business, Innovation and Skills, it was calculated that the private rates of return on R&D investment averaged 30%. That’s a considerable return. While overall, the importance of innovation to the UK economy was estimated at £7.6bn in gross value for 2012/2013.

Innovation, therefore, plays a critical part in the UK’s recovery. And it infiltrates all sectors. As you’ll see from some of the articles outlined in this report, innovation isn’t just reserved for the manufacturing sector. From food technology to telescopes, it can apply to everything and anything. Now surely that’s something to smile about?