The leader of Germany’s start-up scene was quick to see the opportunity in Britain’s EU referendum. Before a single vote was cast, Christoph Gerlinger said Berlin would welcome British start-ups in the event of a vote to leave the European Union. Gerlinger had good reason to be bullish about Brexit.
Two years ago Berlin overtook London in terms of venture capital investment in start-ups. And a well-established public-private research scene in the German capital is supporting entrepreneurial businesses to develop new products and services. So what’s the right answer to the German pitch to British start-ups?
An Unlevel Playing Field Is Ripe For The Making
The challenge for Theresa May’s new Government is to come up with policies pre-Brexit that will support British innovation after-Brexit. How quickly can the new government rethink the incentives and aid programmes to support R&D post-Brexit: tax system, grants and subsidies? After all, if leaving the EU means a lifting of European rules against state aid, there will be new opportunities to give practical support to British businesses.
Not A Moment To Waste
Judging by the latest statistics on the innovation gap between industrial nations, it looks like Brexit Britain will need all the help it can get. Last year there were 218,000 applications from the around the world to protect ideas under the Patent Co-operation Treaty. Now some of those ideas may never leave the patent office. Some will go into production as incremental improvements to existing technology. A few may fundamentally change how we work, play and interact with technology in future.
According to the latest data from the World Intellectual Property Organization (WIPO), Britain ranked seventh in the 2015 league of countries that submitted applications. Ahead of Britain came the United States, Japan, China, South Korea, Germany and France. Britain’s position in the rankings was calculated on the basis of its submitting 5,313 applications last year. That doesn’t sound too bad but a different picture is painted when it’s compared to the 57,385 patents applied for in the US, Japan’s 44,235, or even South Korea’s 14,626. France, in sixth place, filed more than 8,000 applications.
Indeed, while other countries have seen the number of patents they file increase year-on-year, applications from the UK has plateaued since the year 2000. There were no British companies in the top 50 private sector patent applicants last year. You will find only two UK universities in the US-dominated higher education top 50: Oxford and Imperial College, London. Quite simply, Britain needs to generate more ideas.
There’s a parallel problem with British productivity. UK workers contribute roughly $10 dollars per hour less to the economy than their counterparts France or Germany – and closer to $15 dollars per hour less than US workers. But the solution doesn’t lie in 10 or 11 Downing Street.
While the new Government can create favourable conditions for research and development, it’s down to entrepreneurial individuals and businesses to come up with winning ideas and adopt new, more efficient ways of working. We tend to overlook what could be done better as long as what we’ve got seems to do the job. But what works is not necessarily the most effective nor most efficient solution.
Look to the world’s most productive countries and companies that are leading lights in innovation. They rethink everything in an attempt to find more effective and efficient solutions. Take one example: email. It works. But reading, responding or simply binning emails takes more than a quarter of most workers’ day.
We’re overloaded with junk to the point we lose sight of the important messages and email threads. Some companies in the US have banned it for internal communication and found staff starting fruitful collaborative conversations in other ways. Others have found better tools to do the job.
You’ll also find companies that are reinventing the traditional business cost structure by moving from an owned to shared operating model; whether co-working space or sharing transport. They compete where they need to; collaborate where they can.
So that’s the starting point for closing Britain’s innovation gap: more ideas, better ways of working. Now is the time for existing businesses to think hard about their own operations from shop-floor to top-floor. Now is the time we need more start-ups to breakthrough and shake things up.