As the Premiership juggernaut rumbles back to centre stage, bringing with it the usual impassioned debate about footballing philosophies and the respective merits of “parking the bus” and possession, spare a thought for innovation policy. Innovation is often defined as the successful application of new ideas to create wealth. But innovation policy is itself in need of innovation – and a footballing analogy goes a long way to explaining why.
Route-one football is especially associated with the traditional English game. The ball is booted directly from defence straight to the forwards, who try to control it and mount an attack on goal. Although it can sometimes lead to exciting surprises, the tactic is not held in high regard. It is considered uninspired, limited and sometimes comical.
Contrast this with tiki-taka – the head-spinning passing game associated with Spanish football and, in particular, with FC Barcelona. Here an attack is made up of a long sequence of passes involving defenders, midfield players, wingers and forwards. Anyone and everyone may be involved. In contrast to route-one, it is highly inventive and offers myriad routes to goal.
Most innovation policies are in the route-one mould. Their rationale is based on the assumption that innovation and wealth creation are business-centred and that the activities of other sectors of society – science, arts, education and so on – can contribute only if they have an impact on business.
Activities that have no such impact may be culturally interesting, the argument goes, but do not contribute to innovation and wealth. Like route-one football, such a view is profoundly unimaginative – and yet it goes almost entirely unchallenged.
In truth, there are many innovative activities that happen outside business, and many of them contribute to the creation of wealth and well-being. I call these common innovation.
Common innovation is the work of ordinary people in everyday life – individuals, households, clubs, communities – with well-being, not profit or revenue or market share, as the principal goal. While business innovation revels in the swirl of Joseph Schumpeter’s “perennial gale of creative destruction”, common innovation represents a gentle and benign breeze. Rather than destroy what is already there, it creates where there is nothing.
Most innovation policies assume that innovation and wealth creation are business-centred and that the activities of other sectors of society – science, arts, education and so on – can contribute only if they have an impact on business.
Common innovation is much more akin to tiki-taka, because it involves numerous positive interactions – in this case between different sectors of society and the economy. For example, intelligent consumers can draw on education, arts and sciences to consume wisely; the public and third sectors might draw on science to transform an industrial wasteland into a nature reserve; online health forums routinely draw on the goodwill of contributors to create valuable resources; and so on.
These interactions may take place at some distance from business, but they can still play a part in creating wealth and well-being. They accumulate over time to create wealth from an economy in which different sectors are in harmony with each other.
Yet the route-one view dominates UK policy. While this clearly serves business very well, it is not necessarily best for society as a whole. And it seems that the UK government has become too business-centred to engage with alternative perspectives on innovation.
The route-one approach to innovation policy gives business an undue level of bargaining power. Business has not been slow to take advantage of this. Across the political spectrum there has been a sense of outrage that many of the largest and most profitable companies pay no corporation tax. And then there are the generous subsidies and grants given to companies – even some that pay no corporation tax at all.
The route-one approach can also be used to justify some very controversial policy proposals. Under its aegis, factors such as the natural environment, science, arts, education and health are deemed to create wealth only if they enhance business innovation and productivity.
From this perspective, parts of the country that are underperforming should fear for their future. A release of files in 2011 revealed that senior Conservative ministers sought to persuade Margaret Thatcher to “consider abandoning Liverpool to a fate of ‘managed decline’” after riots in 1981. They argued that spending public money on such “stony ground” would be like “trying to make water flow uphill”. Similar proposals have since been made for other cities, which show that a narrow conception of innovation and investment will only serve the interests of certain parts of the country and economy.
Another major downside of such a narrow view of innovation policy is that we lose sight of the things that common innovation can do and which business innovation does not. A striking recent example has been the transformation of derelict terraced housing in Stoke-on-Trent, where the city council introduced a policy of selling off properties for £1 each and providing loans to local buyers who could commit to restoring them and so make a positive contribution to the community.
William Morris described commerce as “once the servant and now the master of civilisation”. A route-one approach to innovation policy only reinforces this transition. As we face continuing austerity, an ever-more unequal distribution of wealth and grave concerns about sustainability, it is time to give serious consideration to an own-goal in the making.
- This blog post appeared originally in The Conversation.
- The post gives the views of the author, and not the position of LSE Business Review or the London School of Economics.
- Featured image credit: Alfonso Jimenez CC-BY-SA-2.0. Inside photo: Håkan Dahlström CC-BY-2.0