Partners in profit

The UK tech sector is often held up as a shining example of innovative thinking which leads to commercial expansion and economic growth, says Julian David, director general of technology trade body Intellect


We see many bright new ideas being brought to market by the thriving start-ups in the tech community. We also see exciting developments from the more established tech companies, who are considered world leaders in innovation. So why is investment in R&D still as high a priority as in the early days of the digital revolution?

John McLean, IBM’s laboratory director at its Hursley research centre, says: “We believe innovation is more essential now than ever, as it has the potential to bring about greater prosperity for individuals, enterprises and economies, and provide answers to some of the profound challenges that face our planet.”

The UK has seen an evolution in the approach to R&D. In the 1990s, when technology was an emerging sector, we saw companies invest heavily in innovation, but this was sometimes detached from the main business objectives and companies’ growth strategies.

Smart thinking, technical understanding and creative breakthroughs were helping the sector take great leaps forward, but there were challenges around monetising these ideas and bringing them to market in a commercially viable and advantageous manner.

With greater economic pressures in recent years, there has been a renewed focus on the impact of R&D on a company’s bottom line to maintain and further develop the competitive edge of tech in the UK. The result of this focus is a more collaborative and connected approach to R&D.

While we still see exciting thinking and groundbreaking developments, there is a greater partnership working between R&D teams and the wider business strategists to guide and direct the creativity of their experts.

Interestingly, we are seeing an increase in companies adopting the approach of R&D through M&A [mergers and acquisitions] activity. Yahoo!’s recent spending spree is a high-profile international example of this model. Its “mobile first” strategy has been driven by R&D through acquisition with 11 companies bought in the last 12 months.

Tech is still one of the most exciting and pioneering sectors in the world, and the UK is a global leader in creativity. UK industry continues to be focused on R&D and is working with government to find ways to combine efforts to ensure a significant return on investment, following the example set by R&D investment in optical satellites 13 years ago. This programme was part-funded by the government and saw an investment of £7 million translate into export sales worth £210 million.

We should be proud of our brave and experimental companies who are continuing to develop products and services used across the world.

Julian David, director general of Intellect, was formerly director at Putney Services and UK IBM vice president.