Member Article

Professor James Hayton on North East innovation

Professor James Hayton is Newcastle University Business School’s David Goldman Professor of Innovation and Enterprise. Professor Hayton will be speaking at Newcastle Science City’s Science of Innovation event on January 24 at the Newcastle City Library as part of their Science of Success event series for decision makers, entrepreneurs and inventors in the North East.

1. Do you think innovation is high enough on the agenda for businesses in the North East?

There is survey evidence that the North East is not currently the hot bed for innovation that it was in previous years. We might infer that this is because it is not high enough on the agenda. However, it is likely that the explanation for this is quite obvious: innovation is costly in terms of time, resources and management attention.

Investments in innovation tend to take a long time to bear fruit, if they do at all – it is a very uncertain and risky activity. So in the current economic climate, with scarce resources and tough competition, it is not so surprising if businesses refocus on the core business rather than exploring new opportunities. Having said this, if businesses maintain exclusive focus on core activities for too long, without looking for the next big thing, then they risk being caught out by new entrants.

2. Do you think that innovation can be a successful route out of the economic downturn?

Innovation by existing businesses can help in a couple of ways. Innovation creates novel products, services, businesses and markets. When innovative activity is successful it therefore helps businesses to grow. Once a new product or service is developed, it will either cannibalize existing activities because it does things better, or it will bring new customers or give access to new markets. In any case, these innovations tend to bring a demand for more staff and hopefully draw in new revenue streams. These benefits contribute directly to economic growth.

Secondly, when we see major innovations occurring these are often geographically focused and create hubs of expertise. For example, with the Leaf, Nissan is contributing to the development of a geographic cluster of expertise in the electric vehicles sector. Innovation such as this helps regional growth through the spillover effects that it creates. Innovations by larger firms increase demand for suppliers to locate nearby. This has the further added benefit of attracting key talent such as scientists and engineers to the region.

3. How important is it for an already established company to continue to innovate as it grows?

This is what we call the challenge of ‘corporate entrepreneurship.’ It is the question of adaptation. All organisations face changing environments, some industries are changing faster than others, but change is ‘the only constant’ in our world. What we find is that over the medium and long run, it is the entrepreneurial firms – those that constantly innovate and adapt to new realities – which are the most successful. They grow faster and have more sales than more conservative firms. The advantages of being innovative are strongest for businesses in fast changing environments. Not surprisingly, we see more innovative firms in high technology sectors for example.

It is hard to survive in these hyper dynamic industries if you cannot innovate. What might be more surprising is that innovation also matters in traditional sectors such as traditional services (e.g. hotels, banks) and manufacturing. Even in industries not considered to be high technology, innovation drives higher levels of growth and sales.

4. Is it possible for a company to sustainably innovate its products or services without deterring from its core business goals?

It’s very clear that organisations must address both innovation and sustain their core activities, for example, it is the core business which provides the resources needed to undertake research and development activities - companies can hurt themselves focusing too much on either innovation or on the core business alone. The capability that is needed to focus on both of these is known as organisational ambidexterity, which means being able to both successfully execute the core business, including continually improving existing processes, products and services, and at the same time to keep an eye on new opportunities. Large corporations sometimes achieve this kind of ambidexterity structurally, by giving responsibility for looking for new businesses to a specialized ‘new venturing division’ or perhaps simply to the R&D lab. Small and medium enterprises do not have this luxury and have to build ambidexterity into the organisation in other ways. Our research shows that there are three main tools for this: your management practices (rewards and job design); your human resources; and your organizational culture.

5. Enterprise and entrepreneurship is growing in the region, is there enoughsupport available to continue to develop this? - Is there anything else we could be doing?

There is a great deal of support, in fact, it looks like some of the problem is not the amount of support available, but the extent to which the support is being used. Recently, the Government Department for Business Innovation and Skills showed that there are a significant number of potential entrepreneurs who are interested but are not taking up the support that is available.

As for what else can we do, I believe that a lot of potential entrepreneurial energy can be released by building an enterprising culture in which failure is not stigmatised - the extent to which people are allowed to fail and know how to learn from failure can be an important predictor of entrepreneurial activity. Most successful entrepreneurs will proudly tell of their failures, and what they learned that enabled them to ultimately succeed.

6. What can people expect from the Science of Innovation event you are speaking at this month?

I will be discussing what we know about what makes for an innovative company – including the issues raised above: what an enterprising culture looks like, what motivates innovative activity, how to organize for innovation, and what the impact of innovation is upon company performance.

7. You will be speaking alongside Trevor Baylis OBE, the inventor of theclockwork radio, are you looking forward to meeting him and will you have any questions for him yourself?

I am very much looking forward to meeting him. I am interested on his views on the relationship between innovation and entrepreneurship, and also whether he thinks that innovation is something that can be learned or whether it is something that is innate. I believe that we share a passion for the social value of innovation. What will be interesting is the extent to which the region’s universities can contribute to making the North East innovative and enterprising once more.

[http://www.bipcnewcastle.co.uk/2011/10/the-science-of-innovation/.](http://bdaily.co.uk/member/content/ask-the-expert/edit/dr-james-hayton-on-north-east-innovation/ http:/www.bipcnewcastle.co.uk/2011/10/the-science-of-innovation)

This was posted in Bdaily's Members' News section by James Hayton .