Re-shaping support for SMEs

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Making the most out of young businesses Lessons are arriving from all sides about early-stage businesses (Village Capital, Nesta, Scaleup Institute, Growth Builder, IDEO). What do they tell us? Shouldn’t Innovate UK be taking a bigger role in the support of innovation practice?

 Most striking is the extent to which Accelerators – a fast growing phenomenon – have become the province of corporates. They force new businesses to focus not just on good ideas but on important (commercial) issues; they know their own field – its problems and opportunities; they provide invaluable support; and they are willing and capable investors (Wayra Lab, Cisco, John Lewis, and many others.)

However, this does leave great swathes of the population and of the economy untouched by support for innovation eg the public sector, several industries, large parts of the country and the everyday lives of most people. The Nesta report identifies some; and Geoff Mulgan, its Chief Executive, has focused on others, not least in the public sector.

The main sources of funding for Accelerators are now Corporates, the Public sector and Philanthropics. Venture Capital is a source for only 8% of Accelerators (and 2% of Incubators). The Nesta Report reveals that in the UK both Incubators and Accelerators rely heavily on public funds – from a variety of sources (in many areas and sectors for a substantial proportion of funding and in some, completely.)

It is now well recognised that the greatest opportunity for the development of entrepreneurial eco-systems is in ‘sectors that have a deep and local focus’; and the Scaleup Institute is busily working with LEPs to help them to do so.

However, innovation strategy and practice are evolving; and there is still little experienced management of proactive support.

Recent research by IDEO revealed something surprising: neither a more traditional approach to product development – coming up with three good options, analyzing them, and choosing one to move forward with, nor the lean startup approach – taking a best guess, piloting it, and then pivoting based on what works – is the most effective way to launch a new product. Instead, when teams iterate on five or more different solutions, they are 50% more likely to launch a product successfully.

‘Entrepreneurial support organisations are critical infrastructure for cities, communities and for corporates; and they too need clearly articulated support’ says Village Capital, a major US philanthropic business. The most common form of support is mentoring, but the promotion and management of mentoring (and of support in general) is a role that is extremely rare, but much needed, and rarer in Incubators than in Accelerators. Moreover a different format of support programme is also emerging – in the form of regular monthly meetings – especially of hi-growth businesses – based round collaborative learning.

There is at present no body that adequately encompasses Incubators and Accelerators – to help steer policy, identify best practice, and foster training and development in innovationeering. Innovate UK should take urgent steps to create an appropriate KTN.

John Whatmore, May 2017

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Workshops for helping to develop innovations

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A number of examples of Accelerators have shown that short, sharp development workshops can be valuable not just for developing new businesses, but also for developing SMEs, for developing commercialisable IP, and for developing new products and new businesses for corporates. The TSB should encourage the Knowledge Transfer Networks to run Bootcamps.

While intensive development programmes have been focusing most prominently on IT start-ups (eg ‘Accelerators’), others have run bootcamps for people before they started new businesses, or for selecting them for incubators (see http://wp.me/p3beJt-y). Yet others have used them for identifying commercialisable IP (http://wp.me/p3beJt-y). And some have focused on helping SMEs – with strategy, with their business model, with new concepts, new products and new customers and marketing.

Corporates have used them for scouting for new technologies, processes and procedures; and for working with their suppliers to help them to develop new products for their own use fields (see http://wp.me/p3beJt-19). One major corporate set has a department (‘Emerging Technologies’) to work on major projects that presaged new ways of working in particular industries. One (new) organisation has brought SMEs together to help them to develop new products for big corporates in a local cluster (see http://wp.me/p3beJt-65).

One of the roles for the Knowledge Transfer Networks is that of bringing together organisations in their field that can bring something of value to one another. They should be scouting for opportunities to use development workshops.