Douglas Hansen-Luke was Parliamentary Candidate for Walsall North in 2015, and advises and consults with government sovereign funds on best practice asset allocation and impact investing. He sits on the Investment Advisory Committee of the recently launched British Innovation Fund to which his company acts as sub-advisor.
If there were an Olympics for innovation, Britain would rank first or second in the world. Just as success in Rio surprised the nation, many in the UK would be surprised by this fact. We top large-country global rankings for Nobel Prizes, universities and innovation tables.
Thirty years ago, STim Berners-Lee, invented the world wide web and today, with the likes of Demis Hassabis and Mustafa Süleyman, the founders of DeepMind, Brits are at the forefront of artificial intelligence. We’re a leading pioneer in terms of research on DNA, and our scientists developed many of the world’s best-selling drugs.
The Government is right to identify innovation as a source of competitive advantage. But do we value it sufficiently and will Philip Hammond’s new plans work? We have the money and the minds, but we need to change our mindset, recognise our success and value ourselves more highly.
In the Autumn Statement, the Chancellor committed £23 billion over the next five years to a National Innovation and Infrastructure Fund. That’s helpful, but should be seen in the context of Britain’s IT, scientific and education sectors which already generate over £300 billon per annum. The digital economy alone is now said to account for 12 per cent of national income.
The Government’s investment, large as it is, will not crowd out the private sector but will instead act as a catalyst to spur investment. The Government is seeding new venture funds with £400 million of capital, and expects the private sector to put in substantially more. This will work,since there is demand out there. Oxford Sciences Innovation is the world’s largest university fund and is fighting off interest from Silicon Valley’s finest and China’s largest technology names.
Britain has almost everything to be recognised as a high-value global centre of innovation. Jerry Engel, Professor of Entrepreneurship at UC Berkley, believes that centres of innovation need three things: Minds, Money and Mojo. We have the minds. Britain’s universities and researchers are indisputably world leading and attract the best minds on the planet. And, thanks to the Chancellor, and the global wave of institutional investors looking for innovation, there is no shortage of money.
But does Britain have the mojo, the cultural capacity, to be a true global centre of innovation? Can we be a nation that not only generates ideas, but which has the long-term vision to commercialise them and own that IP?
There are two distinct things that the Government can do in this area and, although cheap, both are badly needed.
Promote the entrepreneur, not just the inventor
The first is to promote success at commercialisation as much as we do the more obvious success of our pure research. Although number one amongst large countries in inventiveness, we lag others in commercialisation and the first step in this is patent filing. Britain ranks fifth in the world for outstanding patents. South Korea, the world leader, is nearly three times as effective as us on a per capita basis. We need to make heroes not just our inventors but the entrepreneurs who patent and develop their ideas.
The second target for the Government should be connecting British innovation to global markets to reflect their true value.
Google purchased Deepmind for £400 million in 2014. That may not be bad by British standards, but bear in mind that Google’s parent, Alphabet, is valued at £384 billion. Alphabet invested just a tenth of a per cent of its total value to snap up the world’s top company in artificial intelligence, a technology that will change our lives entirely. And now, courtesy of Deepmind, Google is also data-mining the world’s largest health library through the NHS.
And it’s not just Google. The world’s second largest company, Apple, has just moved to its new, British, Lord Foster- designed headquarters. It’s iPhones are powered by ARM, Britain’s top chip designer, and even the look and feel of Apple products is delivered by their Chief Design Officer, Sir Jony Ive.
British inventiveness plays a significant part in making a success of the world’s two biggest companies – companies that make life more productive and enjoyable for billions of people. Yet Britain captures just a fraction of this value and these are not isolated examples. Deepmind already had a relationship with the NHS. Could not a business model have been developed whereby the NHS could prove Deepmind’s value whilst at the same time making a significant difference to UK health and healthcare costs?
Why are American, Chinese or Japanese companies willing to pay more than ourselves? It is because these countries have vast domestic markets in which to sell their technology. In contrast, Britain houses less than one per cent of the world’s population. To fully value our ideas, we cannot just look at home, we need to think of global market potential. We also need a culture that looks further than the first bidder from abroad. This is the mind-set that the Government should encourage, both in promoting Britain in growing markets abroad and in challenging and motivating Britain’s entrepreneurs to hold out for longer and for more.
A Voice for British Innovation and an important contribution towards global growth
So has Britain go talent? Yes, absolutely! We have the minds, the ideas and the money. Now, abroad, the Government needs to act as global cheerleader for British innovation. At home, let it work in Britain’s innovation centres to accelerate and promote a vision that recognises our entrepreneurs and makes our country the owner as well as the manufacturer of intellectual property.
To maximise our success in the world, we also need others to feel a part, benefit and take pride in Britain’s innovative success. This is a role – of advocacy, of convening – that the Government can do well. We need our own people and those of other nations to see that we are applying our minds and investing to making the world a better place.
In short, we need to value ourselves more highly and create, capture and share that value with others. We are on the right path on what promises to be an exciting and worthwhile journey. The Government’s most effective contribution will not be money but providing the voice that communicates this excitement loudly, boldly and with confidence.