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Move over Nesta: there’s a new kid in town

Hutton’s innovation centre given major role in growth strategy

Vince Cable’s stewardship of the Department for Business, Innovation and Skills is having at least one unintended consequence: the doors to the coalition government have swung open to thinkers from the left.

Among the first to be invited into BIS HQ on Victoria Street is Will Hutton, former editor of The Observer and author of the book The State We’re In, which helped define New Labour’s policy agenda in its early years. Now that the Lib Dems have the keys to BIS, Hutton is once again in demand and is, among other things, helping to shape the content of a BIS strategy document on economic growth due out by the end of the year.

The vehicle for ‘Huttonomics’ is a brand new think tank called the Big Innovation Centre, which he founded and which was launched in London on 8 September. Vince Cable gave not just the keynote speech but his department’s full backing. Bic’s relationship with BIS will be that of a critical friend: something akin to that between the Institute for Fiscal Studies and the Treasury.

So what exactly is Bic (at its launch Hutton kept on referring to it by the same name as a famous brand of ballpoint pen)? It is unusual in at least three respects.

First, it is the child of two unlikely parents: a university (Lancaster) and an existing think tank, (The Work Foundation). Universities in recent decades have been eclipsed by think tanks in policy influence. So in 2010 Lancaster went shopping for a top tank and bought the Work Foundation, which is based near Westminster in London and will provide Bic with a home, staff and shared resources.

Second, Bic appears to be secure financially, which is no mean feat. In addition to carrying out exciting research and having the ear of people in power, think-tank directors have only one other desire in life: that is to secure enough funding so that staff can concentrate on the work they do knowing that salaries will be paid. Many think tanks don’t have core funding, one reason why staff turnover tends to be high. Bic, it seems, will be different. Twenty per cent of its core funding will come from a public consortium comprising the Technology Strategy Board and universities from the Russell Group and Alliance networks. But the bulk, 80 per cent, will be met by a consortium of multinationals including Barclays, GlaxoSmithKline, the Guardian Media Group and Unilever.

This brings us to the third novel thing about Bic; its proposed research programmes. Think-tank directors have traditionally not had much commercial exposure. But Bic is being led by economist Birgitte Andersen an influential voice in music-industry economics. Andersen’s team will study how large companies absorb academic research from universities. Another project will look at why bank lending to high-growth businesses is sluggish.

Ordinarily both projects would be difficult to do because quality research that truly gets underneath the nature of business processes needs companies to release raw data into the public domain—which is rare. But Bic has an advantage here. The research on how companies absorb academic knowledge will be led by GlaxoSmithKline who will in the first instance study their own capacity for absorption and make their findings public. Likewise, the Bic team working on bank lending will have access to data from Experian, the credit-reference company.

Bic’s business donors are excited by their new baby and several spoke in almost evangelical tones at the launch. Because of their size and complexity, multinationals are not always willing learners, especially if it means absorbing knowledge from outside the organisation. There is no incentive to learn when times are good. In a downturn learning becomes more important. In a crisis, it becomes essential, which is what is happening now.

Bic in other ways though will work more like a conventional think tank. It will influence policy through its founder’s directory of mobile-phone numbers. Think tanks are only really effective if their top people are not only on first-name terms with top people in government and the media; but, like Hutton, also get to see their ideas taken seriously. In the short term this is what is likely to distinguish Bic from Nesta, a New Labour creation, whose star has been on the wane. Nesta recently appointed Geoff Mulgan as its CEO, a questionable move in today’s political climate given his years of service as Tony Blair’s policy chief.

Hutton said at the launch of Bic that there is space for many innovation centres. But he also spoke effusively of how “Vince” was one of the first to back his idea. Cable reciprocated to some amusement by telling the assembly that “Will” had sent him a long text on his first day at BIS outlining “the five things I had to do that very day to save the country from disaster.”

Five Bic ideas for growth

An enterprising state

We need to build a state that is able to co-create, with business and finance, the conditions in which innovation can flourish, looking to some of the strong examples in the Netherlands and Finland.

Innovative markets and networks

Innovation relies on networks and groups working together in open ways. ‘Tech City’ around Old Street in east London has developed as a digital start-up hot spot, with companies benefiting from the ideas, skills and services around them. We need to reconsider how policy and organisational strategy supports such innovation.

Innovation-friendly finance

Preliminary research suggests that lending is focused on large firms, even when they may be in decline, rather than businesses growing in output and jobs who demand further resources.

Academia-industry relations

Universities are increasingly focused on how to transfer S&T to the private sector. We need to improve intergration between industry and academia, especially for business users with a strong interest in academic research.

Skills for innovation

The UK is a major destination for international students. Yet we seem to have a shortage of individuals with both technical and softer communication skills and basic business skills. We need skills to support growth from the digital economy, the low-carbon economy and the life sciences.”