early a third of British companies (31.4%) spend absolutely nothing on searching for new ideas, services and products. That is the shocking finding of a new survey conducted by leading IT consultancy, Portal. The survey of 500 companies up and down the country found that only a fifth of companies spend more than five per cent of their revenues on research and development (R&D), despite the fact that nearly 52 per cent (51.8%) recognise that innovation is critical to maintaining, or growing, market share.

1. Innovation:
the first casualty of a downturn
A whitepaper from Portal

2. Britain’s innovation history
For centuries, Britain has had an enviable GDP on research and development, less than
reputation for innovation. Charles Babbage, Belgium and France in Europe and substantially
Alexander Graham Bell, and John Logie Baird are less than the US and Korea while Israel leads the
just a few of the names known worldwide and in world, spending 4.86 per cent of its GDP.
more recent times, James Dyson and Tim Berners
Lee have continued to cement the UK’s reputation These figures are supported by research recently
as a centre for innovation, helping the country conducted by Portal which found that nearly 57
achieve its position as one of the leading global per cent of companies spend less than two per
economies. cent of their revenue on innovating while nearly
a third (31.4%) spend absolutely nothing on the
In his seminal book “Innovation and search for new ideas, services and products.
Entrepreneurship” Peter Drucker laid out the
,
key elements of innovation. Famously, he said This lack of focus on innovation is one of the
“entrepreneurs innovate. Innovation is the specific reasons why the UK is ranked just 18th in the
instrument of entrepreneurship. It is the act that world’s innovation league .
endows resources with a new capacity to create
wealth.” Twenty-five years after publication, it is So how has a country with innovation at the
still a valid comment on the absolute need for very heart of its success over hundreds of years
innovation as a source of wealth creation. become so lackadaisical? And more importantly,
in a climate where innovation is often the first
Recently, however, British businesses seem unable casualty of an economic downturn, what can be
or unwilling to invest in the innovation process. done to maximise corporate innovation?
Currently, UK companies spend 1.88 per cent of
As a percentage of your revenue, how much do you spend on innovation to
identify and bring to market new products or services?
32% 25%
15% 21%
7%
Five to ten More than ten None One to two Two to five percent
percent percent percent
¹ http://www.oecd-ilibrary.org/sites/factbook-2010-en/07/01/01/index.html?contentType=&itemId=/content/
chapter/factbook-2010-54-en&containerItemId=/content/serial/18147364&accessItemIds=&mimeType=text/html
² http://www.worksmanagement.co.uk/article/18102/China-climbs-up-global-innovation-league-.aspx
2 Innovation: the first casualty of a downturn

3. Has this figure changed since the start of the economic downturn?
61%
18% 14%
2% 5%
Yes - We’ve Yes - We’ve cut No - It’s the same Yes - We’ve Yes - We’ve cut our
increased it back a little increased it a little R&D enormously
dramatically
It’s the economy, stupid
There is no doubting the effect which the of business – investment more often than not
extended economic slump has had on British brings long-term positive outcomes. Take Nokia
businesses’ desire to invest in innovation. as an example. While its current travails are well
The recent Portal survey found that nearly a documented, its history of innovation delivers
third (32.2%) of businesses had cut their R&D over $1bn a year in revenue as companies, most
expenditure since the start of the economic notably Apple, pay the company for use of its
downturn. Even more startlingly, only 16.8 many patents. Companies that fail to pay heed
per cent of companies plan to increase their to this example and have drastically reduced the
expenditure over the next five years. It does not resources they allocate to innovation are storing
bode well for British business, particularly if, as up trouble for themselves in the long term.
Steve Jobs recently said “innovation distinguishes
between a leader and a follower.” But cost alone is not the only reason for
companies failing to invest enough in innovation.
The lack of investment by British businesses Perceived difficulty of the innovation process is
translates into a real paucity of time given over to deterring some from applying sufficient resources
innovation. The Portal survey found that 82 per to the process. For a large number of respondents
cent of respondents spend less than ten hours a in the Portal survey, there were three major
month on the innovation process. Annualising process challenges:
this, and even with the most generous of
assumptions, companies are spending just half of 1. Creating a collaborative environment –
one per cent of their time innovating. innovation does not just happen; it requires an
environment in which it can flourish. Creating
This approach to investing in innovation, where this environment is one of the major obstacles
companies feel they can invest only if the future to building an innovation process robust
is rosy, is overly simplistic and denies a basic tenet enough to survive in the long term;
3 Innovation: the first casualty of a downturn

4. 2. Finding the right people – for many companies, organisations understanding who knows what is a
particularly those with multiple sites, knowing major challenge.
what skills the workforce has, whether they are Technology can play a real part here, allowing
part of current job descriptions or not, is an employees not only to ‘advertise’ their work skills
almost impossible job. The result is that skills but also skills they may have acquired outside
that could easily be applied to the innovation of their professional careers. It means that if,
process are simply not harnessed; for example, you need someone with Welsh
language skills – not something that might be
3. Keeping the team collaborating – we all know readily apparent from a CV or job description –
how our ‘day jobs’ get in the way of special the technology offers the opportunity for you to
projects so keeping everyone focused and find that person if they exist in your organisation.
collaborating on the innovation process
is a major challenge for many companies, Once the right team members have been found,
particularly when teams come from a keeping them collaborating is another major
multitude of backgrounds. headache and one which technology can help
solve:
Taken with the constant scrutiny of costs, these
three challenges have led companies to cut back Social business tools are a really effective way
their innovation in the belief that it is too difficult for team members to collaborate quickly and
and too expensive, at least for the time being. easily;
The consequence of these decisions, though,
is likely to be dramatic with over 50 per cent of Keeping team members in touch with each
respondents to the survey recognising that there other irrespective of time zones is a role for
is likely to be an impact on their market share as unified communications technologies;
result. Collaborating on documents or multiple
documents can be done via Wikis;
What can be done to help Teams can relay their expertise internally
via blogs and keep others updated on
companies that want to
their progress;
innovate?
Technology can be used to collect and share
While time may be the only way for companies individual and team tasks, helping keep work
to feel more optimistic about the economy, there on track;
are steps they can take to overcome the process
challenges many experience. Prime among these While basic, file sharing is another vitally
is to consider whether technology can play a part important aspect of effective collaboration.
in helping to manage the innovation process.
Taken together, these tools can really help
Right at the heart of simplifying the innovation companies collaborate and deliver effective
process is to facilitate the process of finding the business outcomes in a way that is almost
right people. Fifty years ago, knowing who had impossible without their use.
the right skills was a relatively easy matter but in
today’s complex, diversified and multi-centred
4 Innovation: the first casualty of a downturn

5. 3. When you look at your R&D process, what is the biggest pain?
38% 35%
12% 15%
Creating enough Keeping people The process of Understanding what
time outside of our focused on the task getting everyone to skills and knowledge
‘day’ jobs for R&D to in hand collaborate is way we have inside our
be effective too difficult company
Innovation through collaboration – Element Six
One company that has taken a creative and It also recognised that it needed a technology
dynamic approach to driving innovation is partner who not only understood the technology
Element Six. With sites worldwide, Element Six is complexities but the challenges of implementing
the world’s leading manufacturer and supplier a ‘social business’ solution in a company that was
of synthetic diamond supermaterials and its not used to working together collaboratively.
core business aim is to find high value, extreme Element Six chose Portal because of its deep
performance solutions which exploit the unique ties with IBM and its outstanding track record of
properties of synthetic diamonds. developing complex social business solutions
where, according to Gartner, the failure rate can
Delivering on its aim requires the company to be as high as 70 per cent.
take an innovative approach to collaboration
and one of its key goals was to make sure its While still in the early stages of the project,
multi-discipline teams, which often include Element Six is already reaping significant rewards.
representatives from sales and marketing, legal It has been able to use the new collaboration
and production as well as R&D, could easily and processes to set up a Group Innovation
effectively work together. Community and build an Information Centre
to help researchers find out about new and
Recognising the role technology could play, existing resources which enables it to better
Element Six chose IBM Connections, social manage its innovation projects. Through its new
software for business, since it most closely collaboration processes it is better able to bring
matched its needs while also fitting into the new solutions more quickly to market, helping
company’s existing IT infrastructure. maintain its global market leadership.
5 Innovation: the first casualty of a downturn

6. Conclusion
Whether your company is involved in the allowing employees to collaborate easily and
manufacture of synthetic diamond supermaterials effectively. But for the tools to truly take hold
or is involved in something a little more mundane, and support the innovation process, it requires
innovation is critical to creating a thriving the support and expertise of an implementation
business both in the short and long–term. Failure partner, one who understands that a ‘one size fits
to invest properly in research and development all approach’ will stifle rather than encourage.
may the first step along a path to business failure.
With its track record, Portal is well-positioned to
But innovation does not simply happen; it needs help its clients rediscover the power of innovation,
the right environment in which to flourish. and with it help set them on the road to joining
Technology, and particularly IBM Connections, can some of the great British innovators.
provide the tools to create that right environment,
About Portal
Portal helps some of the world’s best known
brands transform the service they provide
to their customers. With over 50 technically
accredited consultants and partnerships
with major technology companies such as
IBM, Microsoft and Amazon Webservices, it
builds solutions that help its clients to deliver
improved customer acquisition, customer
retention, increased customer satisfaction
and long-term customer loyalty. Portal’s
experience spans all industry sectors but it has
particular expertise in Public Sector, Banking
and Financial Services, and Manufacturing/
Industrial/Transport sectors. Portal is privately
owned and based in Bracknell, Berkshire.
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www.linkedin.com/company/portal
For additional information visit
www.chooseportal.com