London needs more investment to become a global innovation centre

London can join the ranks of Silicon Valley and Tokyo if we invest in our design and creativity, argues Christopher Clarke, co-founder, Epoch PR

Recently, I was talking to a client in London who was providing in-depth help for start-ups. He pointed out that in the past few years we have seen brands capture the imagination of millions of people across the global because of their focus on the user experience, simplicity and great functionality – in a word, design.

You can see this clearly with Apple, Facebook, Groupon and Twitter. And it is this focus on design that can make London a global innovation centre in the next decade.

London is already recognised worldwide as a global hub of design and creativity. But good design isn’t just about making things that look great. It is about:

• understanding how users interact with products and services;
• learning how processes can be altered to create different outcomes;
• coming up with innovative solutions to some of the big challenges facing our world, whether that is environmental, social or political.

London gets this. You only need to look at the Victorian sewage system, the tube network or penicillin to realise this.

Need to commercialise

But to become a global centre of innovation will require more than just excellent design credentials and an insatiable curiosity. It requires an ability to commercialise as well as create. This is where London has often failed in comparison to Silicon Valley, despite successfully marketing many inventions over the years.

There are several factors undermining our ability to successfully commercialise innovations.

• First, many of our academic institutions are too focused on outcome-led research rather than on real innovation. If you don’t innovate, you can’t commercialise it. And those institutions that are good at fostering ideas often don’t have the links to investors and the private sector expertise needed to exploit the innovation.
• Second, our investment community often does not provide businesses with sufficient funding to maximise the potential of great innovations. This is due to a lack of vision, frugality and a fear of failure.
• Third, there is something about our psyche that is more risk-averse and favours the status quo than other cities and nations.

But these issues are not reasons to be downbeat. There already appears to be developing in London a more vibrant angel and super-angel network that is taking a much bolder approach to investment, at times stepping in where venture capitals fear to tread.

Connecting entrepreneurs to great ideas

There is an increasing appetite among our academic institutions to support the commercialisation of ideas. Central Saint Martins Innovation centre is taking a lead in connecting students with entrepreneurial companies with the objective of identifying, fostering and commercialising innovation.

Their joint venture with design and innovation consultancy Method has resulted in the development of Method Design Lab, a private-sector-led business incubator, to take a design-centric, user-experience-driven approach to innovation.

Sluggish growth and a fragile economy may lead investors to stay safe, but my instinct is that the reverse will be the case. As investors seek better returns they may well find themselves looking for bolder investments that rely on real innovation not financial engineering. A move that many London businesses I know would welcome.

It is disappointing, that 29 per cent of companies in the cleantech sector interviewed for research by the Carbon Trust cited lack of finance as the main obstacle to expansion and one in five said they would consider moving their headquarters overseas mainly because they believed funding would be easier in other countries.

Government also has a role to play. Its consultation on R&D tax credits will hopefully result in greater incentives for companies that focus on innovation. If the role of government is to temporarily step-in when the market fails then now is the time to support the sectors key to economic growth such as cleantech, digital, geo-engineering and the creative industries.

Despite the challenges, I am optimistic about London as a global hub of innovation. The rapid growth in the number of companies operating around Silicon Roundabout (11 in 2008, more than 200 today) is cause for real optimism. In addition, there are multiple trends occurring to make the next decade one of real change:  

• An urgent appetite for growth focusing attention on the innovation agenda.
• A policy environment that will be more favourable to fostering new models of innovation.
• An investment environment looking for longer-term vehicles beyond the financial engineering of the past 20 years.
• A globally heralded design sector with recognised branded institutions at its core.
• An explosion of smaller, entrepreneurial businesses led by talented individuals who lost jobs in the wake of the global credit collapse.

For anyone committed to promoting business in London this is a time for real optimism. More than at any point in the past 10 years, London is poised to challenge the dominance of innovation centres such as Silicon Valley.

Christopher Clarke is a co-founder and managing director of Epoch PR. Before founding the agency in 2004, he was in-house at Orange, responsible for global issues management. He also worked at Hill and Knowlton in the corporate and information industries department. He started his career working on a trading floor at Merrill Lynch and working in the House of Commons as a parliamentary researcher.