Private, public and third sector recognise innovation as key to success

14 December 2009

Organisations making innovation a priority to meet the demands of an increasingly competitive marketplace

A new report published today by the National Endowment for Science, Technology and the Arts (NESTA) shows that the recession has prompted organisations to make innovation a priority to meet the demands of an increasingly competitive marketplace and return them on a path to growth.

The report, 'Everyday Innovation' includes results from a survey carried out for NESTA by the Chartered Management Institute (CMI) on 850 managers in private, public and third sector organisations. It found that 78 per cent of organisations considered innovation important in terms of improving their products and services and 70 per cent said that their focus on innovation has been reinforced.

Over half (58 per cent) of all respondents said that the importance of innovation has increased over the past twelve months as a result of the recession with innovation found to be one of the few proactive strategies that would help them to fight the downturn. Asked about their own activities, 80 per cent also suggested that 'innovation is an important part of my role'.

However, a third of respondents said that whilst they recognised the importance of innovation, the reality in terms of implementing innovation strategies is different. For them, the recession means that resources and facilities for testing new ideas were not available and instead, their focus was on making more effective use of the scarce resources that they have.

Commenting on the report, NESTA's Chief Executive Jonathan Kestenbaum says: 'Many of the great 20th century businesses and organisations were born out of a recession and in many ways recessions provide an important opportunity to improve systems, products and output. But it requires a total commitment and focus and can't be done in half measures.'

The report found surprisingly high levels of optimism regarding the future; 77% of respondents report being 'optimistic' about the future of their organisation. Despite some interviewees viewing the current economic climate as a strong incentive to innovate in all aspects of their business, others report the need to focus on certain types of innovation like incremental innovation in business processes, which typically require fewer resources than more radical forms of innovation.

CMI's chief executive, Ruth Spellman, says: "Right now the ability to innovate is not just critical to success. It is simply a requisite for survival. But the nature of innovation is changing. It is less about 'eureka moments' or silver bullet breakthroughs than about responding quickly to challenges, adopting new ideas and moving fast to seize opportunities."

The report also showed that whilst aspirations for innovation exist, many working practices that promote innovation are not being readily adopted. This is particularly so in public sector organisations which were less focused on promoting innovative working compared to the private and not for profit sectors. 29 per cent of public sector managers reported that innovative thinking is stifled compared to 20 per cent in the private sector and only 13 per cent of public sector employees considered innovation as a key performance goal compared with 28 per cent in the private sector.

Similarly, whilst the employee characteristics and behaviours that enhance innovative working (such as motivation for change, openness to ideas and problem solving) can be clearly identified and measured, there is limited evidence that organisations from across the sectors are actively integrating the research evidence into corporate HR policy and practice.

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