Employing and nurturing creative people is more important for business innovation than striving to come up with a bright idea, according to new research by Clydesdale and Yorkshire Banks. The new survey suggests small businesses are investing in creative skills in a bid to create growth.
In a survey of business leaders at more than 750 UK-based small and medium-sized enterprises (SMEs), around half of respondents (52%), said having the right people and skills is the single most important factor for a business to be innovative. This is compared to fewer than one in four (24%) who believe having the right idea is most important.
As a result, the research suggests SMEs have prioritised staff training and development over other investment opportunities in the past year, and intend to do so again in the next 12 months. New equipment, technology and investment in premises, are also key, according to the survey.
The belief that people come first is underlined when asked whether the UK economy has the right skills, or the right environment, to foster creativity and innovation. More than half (54%) of respondents feel the UK economy fosters innovation but this increases to two thirds (66%) who believe the economy has the right creative skills for growth.
However, it appears businesses could be selling themselves short when it comes to accessing the support available for innovation or research and development (R&D) activities. According to the survey, less than one in three (31%) businesses has ever accessed Government incentives such as R&D tax credits or Patent Box, and only a third (34%) plans to do so in the future.
The approach to financing innovation and creativity is also mixed across the UK, with the same number of businesses not having a dedicated budget for research and development (42%), as those that do (42%). When looking at different industries, two thirds of manufacturing businesses, and 58% of IT businesses, put money aside specifically for research and development.
Small and medium-sized business experts at Clydesdale and Yorkshire Banks believe the ability and opportunity to develop skills and access support for innovation is critical as the economy experiences a shift in industry.
In the last 50 years, the makeup of the UK economy has pivoted from being dominated by manufacturing to being service-led. As a result, many businesses have had to invest to give them a competitive edge. Since 1997, the share of the service sectors’ contribution to the UK economy has increased by 54% to 80%.
Encouragingly and according to the survey, it appears there is an increasing number of businesses which understand the value of their intangible assets – assets such as a company’s brand or intellectual property. More than half (52%) of all respondents said they had an accurate understanding of the value of their intangible assets. Six months ago only 42% were able to say the same when asked the identical question by the Banks.
Paul Shephard, Director of Business and Private Banking at Clydesdale and Yorkshire Banks, said that businesses need to consider creativity, in whatever form that takes, when planning for growth.
“Innovation comes in many forms, not just cutting-edge technology or design. For many service-led industries this could mean being innovative and creative to meet customer demands, or approaching the market in a different way to competitors. What is important is that businesses continually review their performance and how they serve customers to ensure they are on top of their game.
“In today’s increasingly digital economy, where customer demands are higher than ever before, innovation is even more crucial. We’ve seen the make-up of our economy move from one of heavy industry to one of knowledge. This means growing businesses are often rich with intellectual property and intangible assets, rather than premises, plant or machinery.”
This research is published as Clydesdale and Yorkshire Bank’s launch their fifth Business Week - their celebration of British business.
The theme for Clydesdale and Yorkshire Banks’ Business Week is ‘Growth through innovation’, a positive and forward thinking approach to inspire businesses across the UK. Over 200 events will take place across the country, from breakfast meetings to flagship events, with an impressive line-up of innovative speakers including Jo Fairley, co-founder of Green & Blacks, and Will Whitehorn, former president of Virgin Galactic.