This report outlines how innovation relies on supply and demand. 

Key findings:

• Demand for innovations will give us a tool to tackle one of the UK’s most pressing problems – how to increase the productivity and effectiveness of our public services

• Outside of the defence sector, the public sector has lagged behind consumer and industrial sectors in innovation, and yet they have the potential through their purchasing power and the regulatory powers of government to transform the markets for innovations.

• Unless the benefits of an innovation are communicated to potential purchasers in other markets, transfer will not occur. 

Innovations are the product of the creative interaction of supply and demand. However, in focussing on how to increase the supply of innovative businesses, policymakers have lost sight of the importance of demand.

We should not throw away the benefits of the support we give to innovation through grants, incentives and advice, but complement it with efforts to create 'lead markets' - demanding consumers (including the public sector) who give innovators an early customer base from which to develop their products or services and diffuse them ahead of global competition.

Author:
Luke Georghiou