Our work in innovation policy

www.nesta.org.uk/innovation-policy/our-work-innovation-policy/
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Our Flying High programme worked with five UK cities to shape the future of drone technology in their communities.

Since Nesta’s inception, we have focused on transforming how innovation policy is made. We believe in the importance of supporting innovation that drives economic growth, but also of directing innovation to society’s most important problems, shaping the application of new ideas and technologies in a way that benefits as many people as possible.

Our focus

Between 2017 and 2020, our strategy focused on making innovation policy: 

  • Smarter
    In the way it uses evidence, experimentation and data.
  • More inclusive
    In the way it benefits, involves and listens to the public.
  • Fit for the future
    In the way it anticipates and exploits new global trends in technology and innovation.

Nesta’s story in innovation policy

Our work in innovation policy has helped support innovation for growth and for good. We’ve shaped innovation systems across the world by informing and guiding the decisions of governments and other decision makers. We have also championed innovation policy as not only a driver of economic growth, but also to improve the broader social impact of innovation. We have sought to cover the range between realistic short-term policy reform and longer-term seeding of new ideas.

Smarter

By ‘smarter’ policy, we mean more effective and better-targeted innovation policy interventions. We aimed to achieve these by improving the poor evidence base for what works, seeding a culture of rigorous policy experimentation and learning from around the world, and then applying what we learn to important policy challenges like stagnant productivity growth.

To formulate smarter policy, we have developed new data sources, methods and tools such as Arloesiadur, which maps innovation in Wales, to help policymakers navigate complex innovation systems. With these tools, policymakers can understand innovation with unprecedented levels of precision and timeliness.

Arloesiadur: Mapping innovation in Wales

Visit Arloesiadur, the innovation analytics platform we developed with the Welsh Government

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Explore one of the data visualisations we created for the Arloesiadur project above and find out more about the data pilots we conducted to explore potential data sources for the platform.

Much innovation policy relates to entrepreneurship, and we’ve sought to improve the environment for entrepreneurs by helping policymakers quantify the components of a supportive ecosystem. We’ve done this through projects such as the European Digital City Index, which examined 60 cities across Europe; by demonstrating the effectiveness and impact of startup support programmes with work on accelerators for the Department for Business, Energy and Industrial Strategy. We’ve also helped to shift policy focus from starting a company towards improving routes to scale, as with our multi-year partnerships with the Scaleup Institute and the European Commission.

In order to help build an evidence base for innovation policy, in 2015 we founded the Innovation Growth Lab - a global initiative that works to increase the impact of innovation and growth policy by ensuring that it is informed by new ideas and robust evidence. The Lab works at the intersection of research and policy, helping organisations become more experimental, test ideas, and learn from each other. The programme is funded by Nesta in collaboration with Innovate UK, the Department for Business, Energy and Industrial Strategy, and various international partner governments and foundations. To date, the Lab has worked with over 30 government agencies to help them become more experimental and has supported more than 70 trials in over 25 countries.

Case study: Business Basics Fund

In June 2018, in partnership with Nesta, the Department for Business, Energy, Industry and Strategy and Innovate UK launched the Business Basics Fund to rigorously test innovative ways of encouraging small and medium-sized enterprises to take up productivity-boosting ways of working and technology. In the first round, we supported the development and delivery of 15 experiments. We supported six projects in the second round and 12 trials in the third.

More inclusive 

We have sought to make innovation policy more inclusive by arguing that it should benefit more people and places, and allow more people to take part in innovative activities and to shape the direction of policy decisions. We achieved this by demonstrating that innovation policy has an important role to play in creating prosperity and wellbeing for everyone through a series of thought-provoking research. 

For example, we published The Biomedical Bubble in 2018, which challenged established thinking around the way the UK funds health policy. It called for a much greater emphasis on the social, environmental, digital and behavioural determinants of health, rather than a relatively narrow biomedical approach. Downloaded over 3,500 times, The Biomedical Bubble resulted in an invitation to present evidence to a parliamentary enquiry and significant press coverage, including the front cover of The Lancet.

The Biomedical Bubble: Why UK research and innovation needs a greater diversity of priorities, politics, places and people.

Read the report

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Our 2019 report Imagination Unleashed, which was co-authored by Roberto Unger of Harvard Law School, argued that to democratise the economy we must widen access to capital and productive opportunity, transform models of ownership, address new concentrations of power, and democratise the direction of innovation. Similarly, The Missing £4 Billion (2020) tackled the entrenched disparities in where innovation happens across the UK, arguing that most of the country has been missing out on funding and opportunities to grow a more equal economy.

We have argued for greater public involvement in decisions about how innovation policy is made. Our surveys on UK public perceptions of innovation, Innovation Population (2014) and Is the UK Getting Innovation Right? (2020) showed that most people are positive about innovation, but don’t believe that the benefits are felt by everyone. In 2018, we published principles for how the public should be involved in decisions about innovation, and gave grants of up to £15,000 to five organisations to help them experiment with ways to involve the voice of the public in their projects. We’ve also looked at notions of frugal and jugaad innovation as the opposite extreme to big-budget R&D.

Finally, we worked directly with innovation agencies and governments to make their innovation policies more inclusive, including publishing a framework for inclusive innovation which is now being used by governments across the world.

Illustration of public and social innovation labs - innovation methods

Fit for the future

Making innovation policy fit for the future means helping policymakers to understand, test and implement new approaches which better support emerging technologies and industries for economic and social benefit.

We helped policymakers understand future technologies and the opportunities or challenges that they bring. For example, the Flying High programme worked with five city-regions, public services and citizens to understand their demand for drones, and the hurdles to their use. We subsequently designed a Challenge Prize to fast-track the development of the technology, and published a report, Flying High: The future of drone technology in UK cities, which generated widespread media coverage. 

We developed the concept of anticipatory regulation, creating a regulatory environment which better anticipates and accommodates future innovation. Through a series of events, practical partnerships, and reports such as Innovation-enabling approaches to regulation and Renewing Regulation, we helped regulators experiment with and develop innovative approaches to regulation that can better enable innovation and deal with emerging disruptions. Our work led to the UK Government creating the £10 million Regulators’ Pioneer Fund and the Regulatory Horizons Council.

Our impact

Our new models and approaches have been adopted and replicated around the world. For example, our European Digital Cities Index was used by numerous city leaders across Europe to analyse their startup ecosystems and prioritise development. Several additional cities requested individual analysis, and the Pearcey Institute and University of Melbourne asked to replicate it in Australia. It also directly influenced the Joint Research Centre’s creation of a set of ‘European Entrepreneurship and Scale-Up Indices’, and has been cited by EU commissioners Günther Oettinger and Carlos Moedas, and former UK digital minister Matt Hancock.

Similarly, the World Bank and the Inter-American Development Bank have explicitly used the 2016 Nesta Innovation Agencies framework to shape their work, and we have evidence from key officials that it also influenced the development of the European Innovation Council. The Kuwaiti SME Fund used our accelerator work in their establishment of an accelerator programme for Kuwait, as have other governments.

Our work on inclusive innovation is helping to change government thinking; for example, one of the authors of the Missing £4 Billion report was invited by the Minister for Science, Research and Innovation to join the BEIS Place Advisory Group, specifically as a result of the report.

As a result of our work in the Innovation Growth Lab, at least 15 governments in 10 countries are running or actively considering policy experiments. Similarly, the European association of innovation agencies set up a two-year experimentation taskforce with their members, and the European Commission launched a funding call to support policy experiments by innovation agencies across Europe.

Our Compendium of Evidence on Innovation Policy has been accessed tens of thousands of times and was republished as an academic book in 2016. It is widely cited as a foundational reference. Similarly, our Compendium of Innovation Methods, which outlines a number of different tools and techniques, is among Nesta’s most-downloaded publications.

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A Global Innovation Policymaker Accelerator event in Chile

The Global Innovation Policy Accelerator has delivered many successful programmes throughout the world, and influenced a partnership between Mexico, Chile, Colombia and Peru. Meanwhile, our work on frugal innovation in Europe shaped a new €5 million prize on ‘affordable high-tech humanitarian aid’, launched as part of Horizon 2020.

Finally, following our proposals on anticipatory regulation, the UK Government launched a Regulators’ Pioneer Fund in July 2018 to test new approaches that can rapidly exploit the potential of new technologies while protecting the public interest.

Case Study: Next Generation Internet

Through the Next Generation Internet initiative, we built a community of expertise and created opportunities for debate and analysis. This project - part of a multi-year initiative funded by the European Commission - explores how the internet is evolving, and asks how Europe can develop new policies, regulations, infrastructure and business models to ensure that the future of the internet reflects values of openness, transparency and democracy.

Case Study: Global Innovation Policy Accelerator

We worked on building a more diverse community of innovators through the Global Innovation Policy Accelerator. This was a £4.5 million, four-year collaborative executive development programme for innovation policy leaders, funded by Innovate UK and the Newton Fund. Nesta led a consortium of the UK's policy development organisations to support more than 150 agency and ministry directors from 16 countries (including India, Brazil, Indonesia, Malaysia, Chile, Jordan and Kenya) to strengthen their innovation policy systems and their innovation connections with the UK.

What we learned

Innovation policy is closely aligned with industrial policy, which has waxed and waned over the years as successive governments have adopted more or less laissez-faire approaches. However, the publication in late 2017 of the Government’s major industrial strategy demonstrated that such policy was very much back in favour. The announcement of specific targets – such as bringing the UK’s total spend on R&D up to the OECD average of 2.4 per cent of GDP – has undoubtedly helped focus attention, including in some of our own work.

Within the field of innovation policy, there has also been a shift, over the past five years or so, in the use of innovation to achieve broader goals. There has, for example, been a greater acknowledgement of the role of innovation in achieving inclusive growth, as demonstrated not only by government policy but also by others in the field.

The UK’s persistently low productivity growth was an issue of interest to government and business groups throughout this period. It remains a persistent puzzle – yet is a hugely important one to try to solve, given that increased productivity is necessary for increased living standards.

Unsurprisingly, Brexit proved quite a distraction for many policymakers over the past few years, and some policy work was undoubtedly made more difficult by the Government’s rapidly-shifting priorities, and the secondment of numerous officials into the Department for Exiting the European Union. This underscored the fact that access matters: while policymaking may seem – and arguably should be – an impersonal activity, we’ve had the most success when we’ve built networks and contacts and invested time and resources in maintaining those connections.

[In the future] I hope we can be even more impactful, and become even better at shaping innovation policy than we already are. I want us to be known widely for changing the world for the better.

Christopher Haley, Head of New Technology & Startup Research, Nesta

We’ve found that we’ve been more effective when we’ve been able to focus on a single topic or issue, and spend a good amount of time getting to the bottom of it; rather than moving on to new areas too quickly, and we’ve also learnt that it’s important to stand behind evidence, instead of leaving it to speak for itself.

We have focused the majority of our efforts in recent years on how to improve the policy process, which may at times have narrowed the audience but has delivered undeniably strong results. We’ve also learnt that it’s important to get the balance right between ‘grand ideas’, which reshape how people think about a system but may not be implemented immediately, with detailed changes to policies, which may genuinely improve a system and stand a good chance of being actioned.

The future

Our hopes for the next few years are that innovation policy will develop in a way that is better guided by evidence and rigorous experimentation, is more effective in supporting innovation and innovative firms, and which ultimately delivers greater benefit from innovation for more people. 

Since innovation itself is constantly changing, with new tools and techniques emerging all the time, we need innovation policy that recognises this, which strives constantly to anticipate and embrace novel tools, technologies, and emerging industries. 

In order for this to happen, we need policymakers to be experimental and open-minded; to avoid listening only to incumbent firms and entrenched interests; to be alert to the possibilities of new data analyses and novel metrics; and to be nimble and adaptable. 

We also need to remember that innovation is not the preserve of research-intensive firms and universities, but can emerge from unexpected quarters. New sectors are often uncoordinated, inexperienced at working with government or regulators, and struggle to articulate their needs clearly. It is therefore important to ensure that policymaking processes are themselves open and accessible.