Investing in the future

NESTA Chief Executive Geoff Mulgan wants governments and the private sector to focus on the long-term future despite the multitude of current economic problems. He shares his perspective on innovation with Peter Cheney.

Ministers and business leaders need to use the current economic crisis to think strategically about Northern Ireland’s long-term future, rather than protecting the present.

That’s the key message for the province from Geoff Mulgan, the Chief Executive of UK innovation think tank NESTA. Mulgan was the first head of the Downing Street Strategy Unit (2002-2004) and has held his current post since 2011.

“In theory, necessity is the mother of invention and there’s quite a lot of necessity around with slow growth [and] declining public spending,” he tells agendaNi, while visiting Belfast for a NESTA roadshow. “The real problem is that the instinct is to hunker down in times like this and for your horizons to shrink in.”

Instead, Mulgan believes that “it’s exactly at those moments that you have to ‘up’ your investment in the future.” This, he says, is true for medium-sized companies and government agencies alike: “It’s really hard but that is ultimate test, for me, of political, official and business leadership in this era.”

In his view, there is no success factor for delivering innovation but he does see three aspects that play an important role: money, culture and institutions.

“There has to be a willingness essentially to put money into the future relative to the present and that’s also the most basic test for a country,” Mulgan comments, adding that a mix of public and private funding is needed.

An innovative culture is one that is “at ease” with risk and experiment. A lot of innovation also depends on key “driving institutions” which can be universities, large companies or even public bodies.

The BBC played a major role in improving innovation in the UK’s creative economy. Nearly 50 per cent of R&D investment in Silicon Valley has come from the US Government.

An interventionist state, though, needs to make sure that it leaves “space for entrepreneurship, for radicalism, for challenge.” Mulgan advocates a form of “permanent revolution” with public sector bodies constantly looking at whether new innovators are able to get into the system through their innovation programmes.

The organisation has a team in Dundee, which runs Scotland-only programmes and adapts national programmes to Scottish needs. Mulgan is keen to build up NESTA in Wales and Northern Ireland, although this work will be in a different format than that used in Scotland.

Different regions “can experiment more or they had freedoms or pressures or ideas which you don’t get at a national level”. NESTA is working through what its Northern Ireland presence will involve in practice but intends to significantly increase its activity in the second half of this year.

A strategic state

The Downing Street Strategy Unit was wound up by the Coalition Government in 2010 and its workload was dispersed across the Cabinet Office. However, Mulgan expects that it will be resurrected in some form over the next three years.

“It often happens that newly elected parties at first don’t think they need strategy,” he reflects. “They think political instinct is enough and then usually it’s towards the end of their first term, beginning of the second term, they then realise: ‘My God, political instincts weren’t enough to help us work our way through elder care or environmental management: all these difficult things.’”

Strategy units, he says, fulfil two roles in government.

Culturally, they make it easier for government “to take a longer term horizon” over 10-15 years and give politicians the tools to think strategically.

They also act as problem-solvers. The Downing Street unit generally set “realistic goals and plans which broadly achieved their objectives” but also saw some suggestions rejected for political reasons. The recommendations of the alcohol harm reduction strategy (March 2004) were shelved after industry opposition. Mulgan regrets that the UK has not experienced the same reduction in alcohol-related deaths that has occurred in other major European countries over the last 10 years.

“Around the world, I’ve found a steadily rising interest in governments in doing strategy well,” he comments. Singapore, South Korea and the Scandinavian countries are “much more strategic” and have performed better than others during the economic crisis.

On a worrying note, the world’s most influential government has a very short-term focus which leads Mulgan to rank it alongside the weaker members of the euro zone.

“The US is almost the extreme example,” Mulgan continues. “There’s almost no domestic strategy capacity. Everything is ‘hand-to-mouth’ and indeed, in Southern Europe, you can see the price you pay if you don’t have a built-in long-term capacity in government.”

Innovation successes:

Mulgan’s top five

• Israel: excellent start-up and growth for innovative firms after 20 years of intense investment

• Singapore: strong ethos and high confidence for innovation in the public sector

• Start-up Chile: programme to attract world-class early stage entrepreneurs, now copied in the USA: www.startupchile.org

• Sitra: Finland’s innovation fund, recognised for its focus on health care, ageing and the environment: www.sitra.fi

• MaRS Discovery District: physical space in Toronto (co-owned by a university, city council and hospital) to incubate firms and host events for entrepreneurs: www.marsdd.com