Innovation Wales Printed on recycled paper

Print ISBN 978 1 4734 0917 0 Digital ISBN 978 1 4734 0915 6 © Crown copyright 2014 WG18875 Innovation Wales Contents

Foreword by Minister for Economy, Science and Transport 2 1 Introduction 4 1.1 What is innovation? 5 1.2 Why do we need to innovate? 7 1.3 What path should we take? – Smart specialisation 7 1.4 A framework of opportunity 8 2 Research and innovation in Wales 9 2.1 Innovation 10 2.2 Research and development 10 3 Foundations for the future 12 3.1 Overriding principle 13 3.2 Building on strengths and opportunities in Wales 13 3.2.1 Life sciences and health 14 3.2.2 Low carbon, energy and environment 15 3.2.3 Advanced engineering and materials 16 3.2.4 ICT and the digital economy 16 4 Five key themes for innovation 18 4.1 Improving collaboration 19 4.1.1 Collaborating inside and outside of Wales 19 4.1.2 Knowledge exchange and commercialisation 20 4.2 Promoting a culture of innovation 21 4.2.1 Adopt a broad definition of innovation 21 4.2.2 Education and skills 22 4.2.3 Post graduate training 23 4.2.4 Promotion and celebration of innovation 23 4.3 Providing flexible support for innovation 24 4.3.1 Finance 24 4.3.2 Welsh R&D funding for business 25 4.3.3 Innovation support and delivery 26 4.3.4 Intellectual property 27 4.3.5 Open innovation 28 4.4 Innovation in government 28 4.4.1 Procurement 28 4.4.2 Partnership approach 29 4.5 Prioritising and creating critical mass 30 5 Appendices 33

Innovation Wales 1 Foreword

There can be no doubting the importance of innovation to our task of delivering jobs and growth for the Welsh economy. People, businesses, academic institutions, hospitals, schools, the public sector and the Welsh Government itself, all need to be more innovative to thrive in our competitive world. Last year, our strategy for science, Science for Wales, laid out a plan for a step-change in Wales’ academic performance across the sciences. This in itself will have significant direct economic benefits for Wales. But it also stated that if the step-change is to be translated into widespread, real, and tangible improvements for the Welsh people, then we need to commercialise more of our ideas, discoveries and intellectual property into new or better products and services. To this end, it recommended a new, forward-looking innovation strategy for Wales; one which researched and explored the relevance of much of the new thinking and concepts being developed around the nature of innovation and how best to encourage it. The strategy should also take account of recent innovation-related initiatives at the UK and European level. A Call for Evidence last summer yielded an extremely wide-ranging and constructive set of thoughtful responses from stakeholders. In distilling this thinking into a strategy we were advised by a task and finish group of experienced representatives from a range of organisations, including small and large businesses, universities and UK innovation organisations.

2 Innovation Wales The result is Innovation Wales, which To succeed, this strategy must be introduces some important departures in owned by more than just the Welsh the way the Welsh Government and its Government. The public sector can help partners in innovation will address the create the right conditions for innovation issue going forward. to flourish but it is our people, our academics and our businesses that will be We will move away from a traditional, the agents for real change. technology-based definition of innovation by recognising that innovation can be achieved everywhere and anywhere and by anyone. We have identified one overriding principle; whilst we need to promote, encourage and enable innovation across the whole economy, our key, large-scale interventions will be made on the basis of clear strategic priorities, built on Wales’ acknowledged strengths. These are detailed here and in Science for Wales. In encouraging innovation, we will be less prescriptive and more outcome- focussed. This means more competitions and prizes that are open to all, more imaginative public procurement across government departments, and more Mrs Edwina Hart MBE CStJ AM collaboration between businesses, Minister for Economy, Science academia and others who access UK and and Transport EU funding streams. The strategy embraces the European Commission’s ‘Smart Specialisation’ approach. Peer review of Innovation Wales by other European regions has already begun, and the process will help Wales unlock EU and UK national funds up to 2020. These will be still more strongly linked to the need to address the innovation agenda.

Innovation Wales 3 1. Introduction

Creating Capacity for Innovative Thinking and Creativity Broadening young people’s thinking and encouraging them to be more creative is a key component in driving a culture of innovation. Through a wide range of initiatives, programmes and partners, the Welsh Government aims to encourage young people and equip them with the skills for the future.

4 Innovation Wales Wales, in common with much of Europe Government and the wider public sector and the rest of the world, faces many must be innovative not just in the way economic, social and environmental that we support our partners, but in the challenges. The current economic way we deliver our services. This will circumstances with rising costs and need the full commitment of all the key increasing competition highlight actors within Wales. the importance of developing new Sometimes the Welsh Government will employment opportunities and be in the best position to initiate action enhancing business competitiveness. in a certain areas, but it will require a Meanwhile, our public services face collective and collaborative effort from increasing challenges and calls for new all stakeholders in Wales to create real delivery solutions, as demands on them change. Wales’ future economic success rise and budgets are squeezed. Resource will be determined, at least in part, by and energy security are becoming the ability of each of us to continually recognised as growing issues across the improve what we do. We also need to world. look outside of Wales, to Europe and Innovation is one of the means beyond, to collaborate with the widest businesses use to develop new products range of partners and make sure we and services and bring them to work with the best. market1. Greater levels of innovation Innovation Wales follows an extensive can allow the public sector to deliver period of public consultation. It attempts more effective and efficient services2. to recognise and understand the role of Innovation can also offer solutions to innovation in the Welsh economy and the environmental challenges we face. sets out the conditions which will lead The Welsh Government is unique in that to greater wealth and wellbeing for the it has adopted sustainable development people of Wales. It complements and as a central organising principle in all builds on existing strategies and policy that it does, and innovation is one of the approaches in Wales, such as Science for best tools to help us to deliver a more Wales4. sustainable Wales3. At the heart of Innovation Wales lies a Our universities and colleges need not desire to re-examine our approach to only to continue to break new ground innovation, in business, in government through original research but also to and in society. collaborate productively with others to turn ideas and technology into economic gain. Our educators must equip the next 1.1 What is innovation? generation of learners with the right Innovation is the successful exploitation skills to innovate. of new ideas. It can happen in many ways and in any sector. Sometimes it is 1 Department for Business Innovation & Skills the result of the application of brand – Innovation and Research Strategy for Growth, December 2011 new knowledge, but more often it is 2 Nesta – State of Innovation Welsh Public the result of incremental changes, or Services and the Challenge of Change, May new combinations of existing ideas 2013 3 Welsh Assembly Government – One Wales: One Planet: The sustainable development 4 Welsh Government – Science for Wales: A scheme of the Welsh Assembly Government, May strategic agenda for science and innovation in 2009 Wales, March 2012

Innovation Wales 5 and experience. It can involve the and public services in Wales suggests development of new or improved that they are likely to be one of the products, of different or better processes major drivers for job creation in the for producing goods or services, or the future. Moreover, manufacturers are introduction of entirely new services. changing the way they do business, with And these do not have to be for sale; companies seeking to increase revenue they might also be the way public and add value by linking specialist services are offered or delivered. services to their traditional products. Innovation can also reduce the amount Therefore innovation in services as well and type of material used in production as in manufacturing needs to be a high and address whole-lifecycle issues such priority. We need to encourage our as reuse and re-manufacture. These service businesses to build innovation developments often incorporate the into their thinking. There are already principles and concepts of eco-innovation strong examples of this, such as the and eco-design. cluster of price comparison website businesses in Wales, but more can be Eco-innovation targets the reduction in done. the use of natural resources in a process, whilst eco-design considers the full Ideas, which are the start of innovation, lifecycle impacts of products, processes are increasingly being sourced from and packaging. An eco-design approach new locations. Large companies may lead to an eco-innovative solution. increasingly look outside their own Both contribute to business resilience structures, to universities and to their and economic growth. supply chains, for new ideas to exploit. ‘Open innovation’, business-to-business Innovation includes new developments networking and the development of new in science and research and development opportunities close to a company’s core (R&D), but is much wider than this. business, so-called market adjacencies, Recent work by National Endowment are increasingly important. This provides for Science, Technology and the Arts both opportunities and challenges for (Nesta) has shown that ‘traditional’ R&D, firms in Wales. usually accepted as the best measure of innovation, is actually only a small part of The role of social innovation has not the overall process. The exploitation and been much recognised in the past. This commercialisation phases of innovation is the harnessing of the talent and ideas are as important, and are very often the of our people, for society’s benefit. It longest and most difficult parts. has the potential, for example, to allow people to continue to make useful Our understanding of how the process of contributions to society as they live innovation actually works is evolving and longer. Similarly, the intersection of this is a theme in Innovation Wales. digital technologies and education could Manufacturing has been the primary enable new ways of learning5. area of support for innovation from This demonstrates that we need to the Welsh Government in the past. It think in the widest possible terms about will remain one of the largest sectors innovation. in the Welsh economy, and continue to be a comparative strength for us in the 5 Nesta – Decoding Learning, November future. However the growth in private 2012

6 Innovation Wales 1.2 Why do we need to innovate? 1.3 What path should we take? – Wales needs a step-change in our level Smart specialisation of wealth generation; many different Wales is a small country; we cannot things need to coincide for this to be good at everything. We need to happen, not all of which are entirely recognise where our strengths are within our control. However we do know and exploit them more. This means that innovation contributes directly developing distinct and genuine areas to productivity growth and creates of excellence, and not slavishly imitating sustainable, high-value jobs and we can the successes of other regions. choose to take steps to help us become a more innovative region. The EC has invited each region across Europe to develop a Research Apart from the economic impact, there and Innovation Strategy for Smart is also a social dimension to innovation. Specialisation6. This will identify a region’s The European Commission (EC) and the particular strengths and opportunities, and Technology Strategy Board have pointed increase the impact of EC interventions, to a series of emerging challenges, such so allowing Europe to compete more as ageing populations and the growing effectively with the established and scarcity of natural resources which emerging economies of the world. are faced by virtually all developed societies. It is essential for us to find It seeks to identify and prioritise fields solutions to these challenges, and not or areas where a cluster of activities only for the wellbeing of our citizens. could be developed. It is not a planning These issues also present huge potential doctrine that forces a region to specialise future costs for governments and the in a particular set of industries. It is solutions to these challenges will provide an approach to policy which considers commensurate opportunities for our those activities that are already strong businesses. or showing promise within a region and can benefit from more research and The answers to these problems may well innovation. be found where different sectors overlap. For example in healthcare, where ICT The Welsh Government has adopted looks likely to have an increased impact the smart specialisation methodology to on personalised medicine, or in energy develop Innovation Wales, which, like and the environment where innovative Science for Wales, will recognise our materials engineering may lead to the strengths and define our future research development of stronger and lighter and innovation priorities. wind turbine composite blades for The smart specialisation concept is renewable energy generation. a relatively new approach to policy Innovation can address these challenges development. It recognises previous by developing new goods and finding initiatives to support innovation, but in more efficient service delivery. We need the future it seeks to be more inclusive to understand where we can play a in the development of strategy and meaningful part in developing solutions delivery, involving vital stakeholders in a to these challenges, on our own or region such as business and universities. in collaboration with the best from 6 European Commission – Research and elsewhere. We must be broad-minded Innovation Strategies for Smart Specialisation, and multi-disciplinary in our thinking. May 2012

Innovation Wales 7 1.4 A framework of opportunity in wealth generation. One obvious and Innovation Wales sets out a direction of sustainable way to use structural funds is travel for Wales and its institutions. It is to build the capacity in Wales to compete not a detailed delivery plan; instead it more successfully for competitive UK and identifies priorities for intervention by European academic research funding a range of actors. It builds on existing than we have in the past. We need to strategies, recognises the importance challenge our best minds in business and of innovation to their successful academia to develop creative ideas for implementation, and sets a framework how this is to be achieved. for future funding programmes. Previous These funding opportunities will not European programmes have been always be available. Our successful, long used effectively in Wales to help build term strategy cannot be based on the research and innovation capacity in immediate prospect of public funding. priority areas. Now there is an important We need to identify and support our best window of opportunity as two major opportunities in Wales wherever they new European funding programmes are might emerge. developed for the period 2014-2020. The year 2014 will see the launch of Horizon 20207. This will give organisations in Wales the opportunity to compete for considerable European funding for R&D. Unlike earlier European R&D programmes the EC has identified innovation and the exploitation of research as an essential strand running through the whole Horizon 2020 programme. A new round of European structural funding is also due to start in West Wales and the Valleys in 2014. Over time Welsh structural funds programmes have placed an increasing emphasis on research and innovation, with major investments in building capacity and centres of excellence. The principles of smart specialisation will determine an even greater emphasis on research and innovation activity during the 2014-2020 round of Structural Funds. Wales must identify and exploit synergies between these two funding sources, if we are to leverage the forces of innovation to make that step change

7 http://wefo.wales.gov.uk/programmes/other/ fp7/?lang=en

8 Innovation Wales 2. Research and innovation in Wales

Transforming Wales – University Drives Innovation in Industry Swansea University’s Proposed Bay Campus will incorporate a major engineering complex for Wales including an innovation hub building and an engineering manufacturing centre. It will be an exemplar of how universities can work with industry to enable the development and commercialisation of world leading research driving economic regeneration and creating exciting employment opportunities for its graduates. It is a transformational project involving global companies including Rolls Royce, Tata and BP.

Innovation Wales 9 Measures of innovation in Wales give a category11. It may be that where we are mixed message. In some respects Wales innovating this is largely in terms of fares well, in others less so. Traditional incremental changes to existing products measures, such as indicators of R&D and processes rather than developing activity are particularly troublesome. new market opportunities and added Whilst Innovation Wales sees R&D as value. only one of several facets of innovation, We need a much better understanding we should not overlook this aspect of of what we do well, and what more we activity. can do. Where gaps have been identified in Wales, they appear to be related to 2.1 Innovation the lack of private finance, and the lack In the 2012 Global Innovation Index of speed of response from government- report8 the UK was rated 5th out of 141 backed schemes. In Finance Wales we nations. Wales enjoys many of the same have a valuable asset but more needs positive underpinning characteristics for to be done to ensure risk and equity innovation, such as a business friendly finance is available in the responsive way environment and access to a first class that businesses need it and in ways that research base, as the rest of the UK. This adopt a commercial attitude to risk12. is a positive foundation on which to build. Yet, this is unlikely to be the whole story. Although our businesses and Within Wales, our businesses report a universities seem to perform relatively relatively high involvement in innovative well by UK and world measures, Wales activities, compared to other parts of does not appear to enjoy the expected the UK9. Similarly, the higher education economic benefits. We need to consider sector performs relatively well on the the reasons why this is so, and why innovation specific measures in the our policies may not have delivered annual UK HEBCIS survey10. However, the outcomes we hoped for. Could our evidence from other studies suggests relative lack of corporate head offices that some of this innovation may not or research facilities be part of the be particularly groundbreaking. Wales answer? It may be that our historical is characterised as an ‘innovation industrial structure means we are under- follower’, the second rank of innovation represented in sectors where R&D and performance, but, in a finer-grained innovation are prevalent. We need analysis, our performance is identified to identify where the weaknesses are as being in the lower spectrum of this and modify our existing approaches accordingly.

8 Insead and the World Intellectual Property 2.2 Research and development Organisation – The Global Innovation Index 2012: Stronger innovation linkages for global growth, Levels of R&D in Wales are nowhere near 2012 as high as we would like, and we do not 9 Department for Business Innovation and Skills win a large enough share of available – First Findings from the UK Innovation Survey 2011: Science and innovation analysis, May 2012 11 European Commission – Regional Innovation 10 Higher Education Funding Council for Scoreboard 2012, 2012 England – Higher Education – Business and 12 http://wales.gov.uk/topics/ Community Interaction Survey 2010 – 11, July businessandeconomy/publications/ 2012 accesstofinance/?lang=en

10 Innovation Wales competitive funding13. We have strengths research active businesses. Our existing in our academic base and there are many researchers should be the starting large global companies with a presence point for a trajectory of growth, both here, but business R&D is particularly in university and business, and should low compared to other parts of the UK reflect the full range of Wales’ expertise. and well below that of other developed Recognising that innovative solutions are nations. likely to be generated where disciplines overlap, our strengths in humanities In the modern, interconnected world, research and in social sciences could be knowledge can be sourced from a valuable asset for government and almost anywhere. The amount of businesses engaged in service delivery R&D performed in an economy is innovation. important because as well as creating new knowledge, R&D generates Although we have to recognise that valuable economic activity in its own there are significant challenges for R&D right. It provides a base for commercial in Wales, we should at least be optimistic exploitation, and can help attract skilled in that we have access to many of the workers and businesses into a region. basic ingredients necessary to help us develop a more innovative and successful Science for Wales has already proposed Wales in the future. ways to increase the level of competitive funding won by Welsh universities by introducing schemes such as Ser Cymru14 and the National Research Networks15. These initiatives will strengthen Wales’ research performance by targeting investment, supporting infrastructure and attracting world-class research talent to Wales. This is intended to foster collaboration between institutions and build critical mass in our academic research effort. This provides an important foundation for Innovation Wales. Research levels in business also need to increase. We should try to attract research-intensive companies to Wales; help those already here to research more and connect with the knowledge base; and support the start up of new,

13 http://wales.gov.uk/topics/ educationandskills/publications/reports/ researchreviewplan/?lang=en 14 Welsh Government – Science for Wales: A strategic agenda for science and innovation in Wales, March 2012 15 Welsh Government – Science for Wales: A strategic agenda for science and innovation in Wales, March 2012

Innovation Wales 11 3. Foundations for the future

Innovative project is transforming buildings into power stations The SPECIFIC Innovation and Knowledge Centre (IKC) is an international collaboration led by Swansea University with Tata Steel and a consortium of global industrial and academic partners. The project aims to commercialise technologies which will allow buildings to become power stations and generate their own energy.

12 Innovation Wales 3.1 Overriding Principle 3.2 Building on strengths and In developing Innovation Wales we are opportunities in Wales building on our existing strengths, whilst Wales’ strengths in the fields of R&D encouraging the development of new and innovation have been set out in a opportunities and future development number of previous policy documents, paths. This has led us to adopt a focused including Science for Wales and approach leading to a single overriding Economic Renewal: a new direction16. principle. We have some internationally renowned industries and some excellent research The principle is that whilst we need capability within our universities. to promote, encourage and enable innovation across the whole economy, Based on robust data, Science for Wales our key investments should be made on identified a number of areas in which the basis of clear strategic priorities, built Wales has existing strengths; where on Wales’ strengths. strong economic opportunities exist, and where there is potential to combine our The first part of this principle is assets across a range of industrial and important: By promoting, encouraging research sectors. and enabling innovation across the whole economy; private and public It provided the following four grand sectors, services and manufacturing, challenge areas, where we expect and working with partners, the Welsh priority investment in innovation Government can foster a culture and capacity to occur: an environment for innovation which is one of the five key themes of Innovation • Life sciences and health Wales. A key imperative here is the • Low carbon energy and environment ability to bring about the emergence • Advanced engineering and materials of new combinations of ideas through • ICT and the digital economy creating spaces for what has been termed ‘entrepreneurial discovery’. The areas can also furnish the cross- sector, overlapping opportunities which Within this culture, we will prioritise our increasingly hold out the promise of efforts on the small number of areas creative applications and innovations. where we are truly able to compete They encourage the development of and make an impact on a global stage. key enabling technologies, such as The Welsh Government will concentrate photonics, and emerging fields, such as key investments in a more targeted cyber-security. We urge our businesses, way than has been done in the past. universities and other actors to look to Too often, Wales has shied away from how strengths in one domain can be making tough decisions on funding – combined with strengths in another to spreading the jam too thinly rather than give rise to greater opportunities. a relentless focus on excellence. We will use the smart specialisation approach Innovation Wales builds on these to make large-scale interventions which foundations, and will target investments create real critical mass in the areas that will build a culture of continuous where Wales already has capability and innovation, adding value to existing can see significant opportunities. 16 Welsh Government – Economic Renewal: a New Direction, July 2010

Innovation Wales 13 capability within Wales and realise the The Institute of Life Science (ILS) at economic potential which innovation can Swansea University has encouraged the deliver. development of a life science cluster of more than 30 affiliate members, We cannot second-guess the future. comprising companies and individuals, Our relative strengths in these areas nearly all of whom are involved in will inevitably change over time and research and innovation activity. the body of data demonstrating historic performance in Wales lacks satisfactory Aberystwyth University hosts the detail. Therefore the evidence base Biotechnology and Biological Sciences for some of these areas will need Research Council (BBSRC)17 – supported to be continually updated through Institute for Biological, Environmental independent studies to allow the priority and Rural Sciences (IBERS), which, as areas to be tested and reassessed over a recent independent report showed, time to take account of emerging produces almost £60 million for the technologies. economy and supports almost 700 jobs, both directly and indirectly18. There are Some of the opportunities for Wales, over 300 scientists and support staff in and an evaluation of some of our current the Institute, the largest collection of potential strengths within each of these expertise of its kind in the UK. IBERS has grand challenge areas are presented here. well-established links with a number of major businesses in such fields as 3.2.1 Life sciences and health industrial biotechnology and food The life sciences and health sector is security. distinctive in that business growth also Collaboration between the NHS, a delivers big social and economic benefits. sleeping giant in Wales social care For government and for public sector providers, industry and universities is services, this offers a dual benefit. imperative for innovation in health and Demographic changes are creating social care. National Institute for Social demand through an increase in the Care and Health Research (NISCHR)19 has incidence of age- and lifestyle-related developed an Academic Health Sciences conditions like diabetes, dementia and Collaboration and a new industry policy obesity. This drives innovation, the global which will provide the framework to market is large and growing quickly as bolster activities in this area. people become wealthier, especially The NHS in Wales is developing new in emerging economies with large policy approaches and interventions populations. to encourage innovation in health and Wales has particular strengths in social care, including a new Health wound healing, e-health, neuroscience, Technology & Telehealth Fund which medical devices and some aspects of will support investment in the latest drug discovery and development. Welsh technology delivering advances in universities possess key capabilities in healthcare. these areas. The availability of usable electronic patient data records in Wales is also a clear, differentiated opportunity. 17 http://www.bbsrc.ac.uk We should look to support and exploit 18 http://www.aber.ac.uk/en/ibers/about-us 19 http://wales.gov.uk/topics/health/nhswales/ these areas of advantage. nischr/?lang=en

14 Innovation Wales NISCHR is also increasing activities and glass products on a pilot scale. which provide support for innovations These are integrated into the fabric in the NHS and social care, such as of roofs, walls and ceilings of new proof of concept funding, access to UK and existing buildings. It builds on innovation schemes such as Invention for local industrial strengths in the steel Innovation, and industry engagement industry and academic expertise in with the NHS for clinical trials which will coating technologies. In addition, the deliver new medicines for patients and Sustainable Building Envelope Centre also raise present levels of care provision (SBEC)22 is a further collaborative project through innovative practices. involving Tata and the Low Carbon Research Institute (LCRI)23. 3.2.2 Low carbon energy and In our universities we have many environment strengths including the multi-disciplinary Specifically, there are many opportunities LCRI and the Climate Change Consortium for Wales in the field of energy where for Wales (C3W) which is just, one of priorities in smart living, energy resource- the interdisciplinary institutes supported efficiency and large scale electricity by Higher Education Funding Council generation have been identified. The for Wales (HEFCW). Bangor University opportunity to procure social housing is home to a part of the Natural to the highest low-carbon standards Environment Research Council’s (NERC) is just one of many opportunities to Centre for Ecology and Hydrology (CEH) commercialise R&D and increase our which is the UK’s centre of excellence international resource efficiency and low for integrated research in terrestrial carbon energy credentials. and freshwater ecosystems and their interaction with the atmosphere. This Meeting the challenges of climate is complemented by expertise in water change mitigation and adaptation resources and management in Cardiff including the development of new and Swansea Universities. Marrying these products which smarten our use of initiatives and other energy related energy, turn our buildings into mini- activities further could create a critical power stations, enable local energy mass in Wales of a world class standard. micro-grids and the use of low-carbon vehicles are areas where Wales can lead. The Anglesey Energy Island™24 programme is a collective effort between The SPECIFIC Innovation and Knowledge the public and private sector to put Centre20 is a collaboration led by Anglesey at the forefront of energy Swansea University with Tata Steel and research development, production and a consortium of industrial partners, servicing. It represents an opportunity drawing funding from the Technology for Wales to develop low carbon Strategy Board and Engineering and energy solutions, partnering with major Physical Sciences Research Council international businesses such as Hitachi, (EPSRC)21, amongst others. It aims to who are investing in new nuclear commercialise technologies by which generation on the island. buildings generate their own energy using functional, conductive steel 22 http://www.sbec.eu.com/en 20 http://www.specific.eu.com 23 http://www.lcri.org.uk/ 21 http://www.epsrc.ac.uk/Pages/default. 24 http://www.anglesey.gov.uk/business/energy- aspx island

Innovation Wales 15 The Wales Low/Zero Carbon Hub25 is represented, including expertise in the working towards the target of all new development of speciality semiconductor buildings in Wales achieving a zero materials like Gallium Nitride. carbon standard. The Building Research The research and technology Establishment26 also have a Welsh base, organisation, TWI, has a Welsh and Wales can legitimately claim to be presence and is involved in a number leading in areas related to low-energy of Framework Programme 7 projects buildings. based around their expertise in non- destructive testing of structures and 3.2.3 Advanced engineering and components. There is potential to attract materials greater activity to Wales based around As competition grows from emerging, their specialised facilities and expertise, low wage economies, opportunities are especially in composite structures. presented for manufacturing higher The Morgan-Botti Laboratory30 in Cardiff value-added products and services. Three University, is one of only two facilities new sector specific Enterprise Zones have in the UK that can test the effects of been established at Deeside, St Athan lightning strikes on large composite and Ebbw Vale to add further support structures such as aeroplane wings or manufacturing industry. wind turbine blades. Wales has a particularly strong presence Wales also has particular academic in the aerospace and automotive expertise in alternative fuels, including industries, including key anchor27 hydrogen, low carbon powertrains, and companies such as Ford, Toyota, Airbus, in finite element modelling. Capability in GE and BA, as well as process industries advanced manufacturing techniques such giants Tata and Dow Corning and as additive layer manufacturing is also significant numbers of tier one suppliers. developing within Wales. Over 20% of all the UK’s aerospace Wales has further strengths in ‘eco maintenance repair and overhaul activity innovation’ and ‘eco design’ through takes place in Wales28. We also have the Ecodesign Centre31 at Cardiff strengths in one of the key enabling Metropolitan University, which is technologies identified by the EC, active in a number of EC networks photonics. Companies in this area employ and Framework Programme projects. around 5,000 people in Wales, and Ecodesign supports businesses save have an annual turnover of over £1bn29. money by reducing waste and becoming Many key photonics technologies are more resource-efficient. This results in better designed products using less 25 http://wales.gov.uk/sustainabledevelopment/ material, creating minimal waste, and design/zerocarbonhub/ which are easily reused, remanufactured, 26 http://www.bre.co.uk/page.jsp?id=659 27 http://wales.gov.uk/topics/ recycled or recovered. businessandeconomy/sectors/ anchor/?lang=en 3.2.4 ICT and the digital economy 28 http://www.wales.com/en/content/cms/ English/Business/Business_Sectors/Advanced_ The public sector in Wales has significant Materials/Advanced_Materials.aspx 29 http://www.wof.org.uk/resource/WOF%20 30 http://www.cardiff.ac.uk/news/articles/ Photonics%20Enabled%20Innovation%20 lightning-research-advances-7430.html Strategy%20for%20Wales.pdf 31 http://www.edcw.org

16 Innovation Wales ICT network assets, including the Public Sector Broadband Aggregation (PSBA) Network, the Joint Academic Network, JANET and the Fibrespeed Network which, when considered with the EU- supported Superfast Cymru32 project, form a high quality infrastructure. The Welsh Government has led on ICT ‘Trust & Security’ and e-Crime prevention since 2005 and has built up a significant reputation and capability in its work with businesses, law enforcement and academia. South Wales is home to a growing and dynamic ‘Trust & Security’ cluster of SMEs, academic expertise and global companies such as EADS Cassidian and General Dynamics UK. Other assets include Welsh Government- supported projects such as the £25M investment in High Performance Computing Wales (HPCW), EADS Foundation Wales and other emerging private sector clusters of software businesses. The Welsh Government has a dedicated team, Digital Wales33, to help support opportunities, such as the Digital Powys34 project, which includes, among its aims, the provision of more efficient public services with joined-up delivery of health and social care as a potential model for highly rural areas. Focusing on exploiting the existing investment in the PSBA network and the Superfast Cymru project, Digital Wales works with other sectors, across government, the broader public sector, the third sector and the private sector.

32 http://www.superfast-wales.com/home 33 http://wales.gov.uk/topics/ businessandeconomy/digitalwales/?lang=en 34 http://wales.gov.uk/newsroom/healthandsocia lcare/2012/121217dp/;jsessionid=3A5335C30ABD2 1B989BB537435B54E9A?lang=en

Innovation Wales 17 4. Five key themes for innovation

EDGE UK®: Helping SMEs break through barriers to the defence and security market One business that recognises the value of SMEs in the innovation challenge is General Dynamics UK Ltd. Operating in South Wales, the company has created the EDGE UK, a state of the art environment where SMEs can use facilities, expertise and contacts to help them develop their potential.

18 Innovation Wales Resulting from the consultation process, represented in the various Knowledge Innovation Wales identifies a number Transfer Networks (KTN) run by the of key themes where Wales needs to Technology Strategy Board, which improve its performance. help to influence the content of future funding calls. All parties concerned These key themes are: in Wales need to up our game in this • Improving collaboration regard. We need to participate in as • Promoting a culture of innovation many groups as possible, especially those concerned with mapping future • Providing flexible support and technology areas. finance for innovation • Innovation in government We will work with Welsh businesses and • Prioritising and creating critical mass universities to help them collaborate and engage with the newly established This section recommends a number of network of Catapult Centres35. We actions to address these themes. To will also help them take advantage of clarify how these might be delivered, the other opportunities presented by we have identified a number of lead challenge-led and collaborative R&D organisations together with other competitions run by the Technology essential partners. Often the Welsh Strategy Board. Government is identified as one of the prime movers, but in many cases this Understanding and accessing external is only to initiate activity and identify funding opportunities is difficult delivery partners. The Welsh Government for many SMEs. Wales will provide will only deliver solutions itself when it is systematic, professional help and in the best position to do so. brokerage services to enable SMEs to gain critical mass and application expertise. We will also help anchor 4.1 Improving Collaboration companies and other non-SMEs to build 4.1.1 Collaborating inside and strategic bids, to increase Wales’ success rate with these funds. outside of Wales To be successful Wales needs to help set We should make better use of the wider the agenda with funding bodies from UK Innovation ‘ecosystem’ including outside of Wales and to play a major higher education institutions outside of role in the wider UK and European Wales and organisations with a UK-wide innovation system. Our interaction and remit. For example the BSI can make sure influence with external bodies such as the role of standards in new products the Technology Strategy Board and the and process development is properly Research Councils has not always been considered, the Intellectual Property as effective as it might be. Our success in Office (IPO) has a major presence in winning funding in competition with the Newport and the specialist R&D facilities rest of the UK and other EC regions has at Harwell and Daresbury are only a been disappointing. short distance from our borders and within easy reach of our businesses. We Science for Wales highlighted our under- also need to consider how we participate representation in the various research council committees. Our businesses 35 https://www.innovateuk.org/web/corporate1/ and academics are similarly under- programme-display-page/-/asset_publisher/ b61wJfKPbeu8/content/catapult-centres

Innovation Wales 19 in the newly established European Innovation Partnerships36. 1.4 The Welsh Government will bring together parties such as Technology The new National Research Networks Strategy Board and Research currently being established following Councils with Welsh companies and recommendations in Science for Wales universities to develop high quality will be a potentially very practical means projects. We will encourage and to build critical mass and present a enable Welsh organisations to form common voice across academia in Wales. productive relationships with e.g. the The networks will enable our interests new network of Catapult Centres. to be more strongly and coherently represented in UK bodies and ensure Actions by: HE, Business and Welsh our priorities are embedded in UK and Government European funding programmes. We need Partners: Technology Strategy Board, to find means to ensure the voice of Research Councils business is also heard. 4.1.2 Knowledge exchange and Action Area 1: Wales needs to commercialisation collaborate and engage more We must redouble our combined efforts productively with external bodies. to ensure that knowledge in universities Actions: and colleges is used to underpin innovation in business and so increases 1.1 Senior representatives from economic activity. Government, academia Welsh businesses and academia will and business will work to identify be encouraged to work with and mechanisms to make this happen influence external bodies to make and overcome barriers to successful sure Wales’ needs are recognised exploitation. when setting funding priorities. Support will be firmly focused on 1.2 The Welsh Government will projects which commercialise knowledge, explore the potential for joint promote collaboration and produce investments with funding bodies economic or social impact. Existing in areas of strategic importance to programmes such as Academic Excellence Wales. for Business (A4B) will be independently 1.3 The Welsh Government will assist evaluated and modified or discontinued organisations to access external if not fit for purpose. funding by maintaining strategic Future programmes will be market- relationships with key funding bodies driven, based on the need and ability and promoting and disseminating of businesses to exploit knowledge. opportunities within Wales. For example many innovation voucher schemes in the UK and Europe operate by offering funding to the academic institution to market its services to local businesses. Wales has adopted a demand-led model where the vouchers are awarded directly to businesses to 36 http://ec.europa.eu/research/innovation- spend on the expertise they deem most union/index_en.cfm?pg=eip

20 Innovation Wales appropriate, whether from academic On a macro level, part of the rationale or non- academic sources. In future the for our city region approach is that by presumption for new schemes should be concentrating economic activity we will that they be demand-led. increase collaboration and knowledge transfer. The Knowledge Transfer Partnership (KTP) scheme managed by the Action Area 2: Knowledge exchange Technology Strategy Board is another and commercialisation of R&D will be good example of collaborative projects given a high priority in Wales and will based on clearly defined business needs. favour a demand led approach. Wales has a very strong track record in supporting KTP projects, including Actions: innovative new approaches such as the 2.1 Higher and Further Education shorter KTP projects, the involvement of institutions will be required to confirm the FE sector, and pioneering the new and reinforce the role of knowledge Enhanced KTP37. transfer and commercialisation in This offers the opportunity for the first their core strategies, providing a long time to incorporate an international term commitment to these activities element to the KTP projects we support. as a condition of Welsh Government Working initially with our anchor support. companies, this will provide businesses 2.2 The effectiveness of current with a mechanism to form links, and knowledge exchange programmes undertake R&D projects with their own funded by Welsh Government will overseas operations, so enhancing Wales’ be evaluated and changed where reputation for high value R&D activities necessary. among influential, global businesses. The first projects were approved in 2013. Actions by: HE, FE, Welsh Government, HEFCW Working with business and maximising the impact of their activities is a Partners: Welsh Government fundamental role for the HE and FE sectors in Wales. Funding streams are emphasising this as a priority. These 4.2 Promoting a culture of interactions lead to a two-way exchange innovation of knowledge, beneficial to both partners and contribute towards the new 4.2.1 Adopt a broad definition of Research Evaluation Framework (REF) innovation used by the UK Government to rank A strong research base is a common academic research performance. Future feature of all highly performing, funding from Welsh Government should innovative regions. However innovation be based on a long term commitment does not only exist in the fields of science from institutions towards impact and and technology but can be applied to commercialisation. all disciplines and should be recognised as part of every business process. The economic and social value of other forms of innovation such as design, for 37 https://connect.innovateuk.org/web/espktn/ example, or marketing needs to be more articles/-/blogs/welsh-government-funds- enhanced-ktp-projects widely identified and celebrated.

Innovation Wales 21 In a recent series of reports Nesta can be used to promote an innovation have emphasised that the amount culture is the Innovations Awards of activity in the ‘innovation system’ Scheme for students studying Design is often underestimated. The Welsh and Technology at A level and GCSE in Government and other stakeholders Welsh schools and colleges. It is run by need to introduce more flexibility into the Welsh Joint Education Committee our understanding of what is innovative. (WJEC) with support from both the IPO We will recognise and promote the and Welsh Government. contribution of design and the creative The scheme encourages young people industries to the innovation process. to be technologically innovative and to The Welsh Government will examine appreciate the importance of design the operation of current programmes and technology. Whilst the actual and ensure they promote innovation in competition is important, the aim of this wider sense. We will also work with the event is to develop teachers’ and outside bodies such as Nesta and the students’ understanding and competence european innovation partnerships to in the field of design, technology and help deliver this commitment. innovation. Another good example of the Action Area 3: The value of all types promotion of entrepreneurship in of innovation should be recognised, Wales is the Alacrity Foundation UK38. not only those which are technology Alacrity provides an intensive training led. environment with mentors and industry partners to prepare graduates for Actions: entrepreneurship in the technology 3.1 The Welsh Government will sector. It is a registered charity founded actively encourage people and by Sir Terry Matthews based on a proven organisations to bring forward ideas methodology first demonstrated in for promoting innovation across Canada. the whole economy, establishing links between government, There are also a number of UK initiatives 39 health, universities and industry in such as STEMNET and others supported 40 prioritised areas and supporting by the National Science Academy social innovation and e.g. the creative promoting the uptake of science and industries. technology to young people and others. Action by: Welsh Government The education system needs to give priority to the future employment Partners: NHS, Local Authorities, HE, prospects of students and include an others appreciation of commercial matters in the curriculum. For example, skills likely 4.2.2 Education and skills to be vital to all, such as the ability There are already many good examples to pitch and present ideas, should of how enterprise, entrepreneurship and be practised. Business also has a key innovation are encouraged through the education system in Wales. 38 http://alacrityfoundation.co.uk 39 http://www.stemnet.org.uk/regions/1527 One example of the way education 40 http://wales.gov.uk/topics/ businessandeconomy/csaw/nsa/?lang=en

22 Innovation Wales role here to work with HE and FE to Funds to support post graduate higher communicate their future needs and level training and research. Projects such providing placement opportunities. as Steel Training Research Innovation Partnership (STRIP) and Knowledge The natural enthusiasm and appetite Economy Skills Scholarships (KESS) for innovation, present in many Welsh were highlighted positively in the Call companies, needs to be formalised for Evidence. The proposed Doctoral into a greater ambition for adopting Training Schools linked to the National high performance working practices. Research Networks will also support Total innovation can only happen when significant numbers of PhD students investment is made in both corporate in areas linked to the grand challenge leadership and management skills as areas. well as R&D41. Because innovation is a process, not an end, these skills need The KTP scheme, discussed earlier, is also to be renewed through continuing strong in Wales. professional development, if workers are Such projects provide a means to to exploit next generation discoveries maintain support for post graduate and innovations. education in Wales when it appears likely that financial pressures on UK providers Action Area 4: Innovation, may put strains on funding in the future. entrepreneurship and enterprise should be given a prominent position Action Area 5: Wales must look to in the curriculum and should feature use all means to ensure that post strongly in the education of young graduate training continues to be people from an early stage. supported in the key strategic areas. Actions: Actions: 4.1 We will continue to work with all 5.1 Wales will build on successful educational institutions to identify post graduate support programmes ways of building innovation and supported in the last round of entrepreneurship into their delivery structural funding, particularly of curricula for all ages. schemes that encourage collaboration 4.2 We will encourage Welsh with business and operate in the organisations to adopt high ‘grand challenge’ areas. performance working practices. Action by: HE, Business, HEFCW Action by: FE, HE, Schools, Business, Partners: Welsh Government, HEFCW Research Councils Partners: Welsh Government, Local Authorities 4.2.4 Promotion and celebration of innovation 4.2.3 Post graduate training To strengthen and diversify our economy Wales has a good track record of finding it is important to promote Wales as innovative means of using Structural an attractive place to locate and grow innovative businesses. Our international 41 Wales Employment and Skills Board – High marketing and publicity should Performance Working, July 2011

Innovation Wales 23 emphasise this. We should also promote The Welsh Government will use novel events and initiatives which reinforce approaches such as crowd sourcing to this image of Wales as a country that identify solutions to challenges and recognises and values innovation, and ensure that innovative companies are showcase Welsh achievements and good encouraged to come and stay in Wales. practice. There are already a number of Action Area 6: Wales must present organisations in Wales running events, itself to the world as an attractive competitions and lists recognising place to locate and grow innovative achievements in innovation. The Welsh businesses and to attract mobile Government will work with these bodies, research and innovation projects. wherever appropriate, to support these Actions: initiatives. 6.1 The Welsh Government will There is a growing interest in the introduce a headline challenge prize use of ‘Challenge Prizes’ to stimulate competition on a strategic issue and innovation and bring forward ideas, but opportunity for Wales. the concept is far from new. One of the most famous examples was the reward 6.2 Events showcasing and offered by the British Government in highlighting innovation success in 1714 for a simple and practical method Wales will be encouraged. for the precise determination of a ship’s Action by: Business Support longitude. Challenge Prizes can create an Organisations, Welsh Government open market for the solution of defined problems without presuming any given Partners: Business, HE, FE methodology42. 4.3 Providing flexible support and Recent UK challenge competitions have included prizes for innovations which finance for innovation reduce social isolation, and one for 4.3.1 Finance cheaper, more portable and efficient renewable energy technology for Private sector finance is critically displaced people. In a deeper sense, important in driving innovation and competition and the profit motive are as delivering growth. We recognise sources essential to innovation as collaboration of risk finance are problematic and that is. the demands of risk capital providers can be difficult for early stage businesses to The Welsh Government will introduce a meet. We will seek ways to remove the headline Challenge Prize. We will work barriers to private sector financing in with organisations within Wales to Wales and we will help our businesses identify a major issue which also presents develop their investment readiness. an opportunity to develop an innovative solution. Of potentially significant There is also a role for the public sector intrinsic value in itself, the process will to bridge gaps in financial availability. also help portray Wales as a dynamic and The provision of financial products innovative country. and the delivery model for innovation- related funding must become more user- 42 http://www.nesta.org.uk/areas_of_work/ friendly, less bureaucratic, less restrictive challengeprizes and, most of all, more risk-aware rather

24 Innovation Wales than risk-averse. For example the Life Sciences Investment Fund has now Action Area 7: We will work to started to make investments. This fund develop financing products to bridge is managed on a commercial basis by a the gap between research and the very experienced team of investment deployment of new products and professionals and sector experts will ideas. invest in life sciences companies within Actions: Wales. 7.1 The Welsh Government will Funding mechanisms need to be faster work with external partners such and more agile. Most importantly, they as Finance Wales and venture need to take a commercially informed capital organisations to develop approach to risk – only by an acceptance the sources of finance available to of the possibility of a certain number of Welsh businesses and infrastructure failures can investments in innovative developments, and the investor projects deliver some successes. readiness of companies to attract this funding. With Wales’ small size, the availability of prioritised funding and our ability to act Action by: Finance Wales, Welsh independently in given areas as a result Government of newly devolved status, all present Partners: Private sector business opportunities for Wales to respond support sector, accountants, legal quickly to developing opportunities. sector Finance Wales continues to address the need for ‘fit for purpose’ funds to 4.3.2 Welsh R&D funding for support the best fast growth, Intellectual Property (IP) rich, technology businesses business in Wales. In the four year period up There is a need to increase the levels until 2013 their dedicated technology of research and innovation within Ventures team has invested £21m of businesses in Wales. We need to attract JEREMIE funded risk capital in 30 early businesses active in research to Wales, stage businesses. A number of their help the ones here to research more and leading portfolio companies include to link with the knowledge base, and businesses that have relocated to we need to support the start up of new Wales to take advantage of favourable research intensive businesses. ‘venture’ infrastructure that has There are many sources of funding developed in recent years. A number of from outside Wales which support Finance Wales portfolio companies have business R&D and we will encourage our benefited from external co-investment businesses to compete vigorously for from private and institutional, sector- these. However many of these are not focussed investors. always suitable for smaller businesses Subject to successful fundraising in the or those who do not wish at this stage future, Finance Wales will continue to to enter in complicated collaborative drive technology venture investments arrangements. across Wales. Also, these sources of funding are often specific in their scope of activities or are released on a periodic ‘call and compete’

Innovation Wales 25 basis. This means that businesses have We will direct our support towards the to wait for a suitable call to open before most important parts of the innovation they can bid for support, which often process, being proactive rather than does not meet their need to act quickly. reactive, and stimulating demand for innovation activity, especially by Locally available more flexible forms of underpinning design, research and R&D funding support can help smaller commercial exploitation. We should Welsh businesses take their first steps target support into priority areas which into formal R&D but can also assist much produce the greatest impact, doing larger multi-national companies to fewer things more strategically and at attract mobile R&D projects into Wales. scale.

Action Area 8: Local sources of Mentors and other forms of expert R&D funding support in Wales are advice are needed in the areas of necessary to complement UK-wide finance, start-ups, IP, patents, and schemes and be ready to respond legal advice, but also to indicate how rapidly and flexibly to meet the companies can work together for their requirements of business. mutual benefit, reducing risks and prospering from the exploitation. Actions: The Welsh Government will work with 8.1 The Welsh Government will business to spread knowledge and provide a wide range of interventions experience across the SME community. designed to increase levels of R&D This will also increase awareness of within businesses located in Wales. funding streams and provide practical This will involve support for all assistance to companies in drawing down aspects of the Innovation and R&D these funds. Any approach will be based process. on making best use of existing support Action by: Welsh Government, rather than reinventing it. Business Effective networks are a powerful way of Partners: HE, FE engaging business with the knowledge base, stimulating interaction and the cross-fertilisation of ideas. We need 4.3.3 Innovation support and to find ways to bring people together delivery and facilitate the ‘coffee shop’ effect. The call for evidence revealed a level of One example is the Life Sciences ‘hub’, confusion about the innovation support which will act as a focus for the sector, that is already available in Wales and providing a platform for access to private over the respective roles of Welsh, UK and public funding, and collaboration and European bodies. across academic, business and clinical sectors. It appears that much of this confusion has been caused by a proliferation of This hub concept is one which could programmes with similar aims. Care potentially be replicated within different must be taken in the future to avoid priority areas. The hubs will create duplication and integrate activities in a a supportive habitat for innovation more targeted way. and also benefit from similar sectors in close proximity. It could also create

26 Innovation Wales the backdrop for partnership projects be taken to evaluate and improve between global leaders and local our approach. A proactive, value-add networks of businesses which set up in approach to IP is required. Value can be Wales. non-commercial such as to patients in the NHS and social care, or commercial, for These developments should be less example to business growth and jobs. It about property and more about IP. is important that realistic values are put Iconic buildings have their place, can on publically funded IP and that IP does be greatly beneficial to an area’s image not develop into a barrier that prevents and perception and can also be a spur to collaboration. wider regeneration. But the success of future projects should be based soundly Wales has an important asset in the on business development objectives. IPO43 which is based in Newport. There are clear opportunities to increase the Action Area 9: Support for research understanding and knowledge of IP and innovation needs to be delivered issues by organisations in Wales by, for in a clear, flexible and business example, using staff secondments or friendly manner. making greater use of the expertise and advice available at the IPO. Actions: 9.1 The Welsh Government will work Action Area 10: Universities and with external partners in the private the NHS should identify the most and third sectors to deliver new appropriate ownership vehicles for innovation activities in a flexible and the IP that they generate, with a fast acting manner through means view to maximising the economic and such as the proposed Life Sciences social impact of their investments. Hub. Actions: Action by: Welsh Government 10.1 The Welsh Government will Partners: Business, Third Sector, HE, continue to support the current LA reviews of IP commercialisation strategies in HE and the NHS, supporting the outcomes as 4.3.4 Intellectual property appropriate. In supporting the adoption of intellectual property (IP), one size does 10.2 Organisations in Wales should not fit all. The requirements of the ensure full use is made of the different sectors of the economy vary expertise and advice available from widely when it comes to the importance the IPO. of IP. Large companies handle IP Action by: HEFCW, HE, NHS commercialisation very differently from the typical SME. Partners: IPO, Welsh Government The marketplace for IP does not seem to function at an optimum level in Wales, with knowledge holders and knowledge exploiters often arriving at very different valuations of the same IP. Steps should 43 http://www.ipo.gov.uk

Innovation Wales 27 4.3.5 Open innovation 4.4 Innovation in government The culture of open innovation has gained widespread interest. It is based 4.4.1 Procurement on the realisation by large companies The public sector has the potential to that they cannot find the solutions to play a significant role in encouraging all of their problems in-house and that innovation through the targeted use of there might be relevant ideas in other procurement. Studies in the USA have businesses or universities. Similarly, shown that government funded defence there may be ideas they have developed spending has a major effect on the themselves but do not wish to progress development of innovative businesses. that may have value to others. The public sector should not be prescriptive; schemes such as the Small Networks that allow potential Business Research Initiative (SBRI)44 have collaborators to come into contact with been successful by identifying an issue or each other and develop new ideas is challenge and inviting new approaches essential to the creation of this culture. and innovative solutions from individuals Open innovation benefits larger and businesses. companies but creates significant As with open innovation, SBRI represents opportunities for SMEs to work with a huge opportunity for smaller those larger companies and find new businesses to innovate. Even micro routes to market. There are already businesses have the opportunity, if they successful examples within Wales run have the right ideas, to compete with by some of our anchor companies, such global companies. as EADS and General Dynamics. We will continue to support these initiatives but Whilst the Welsh public sector looks will also pilot other business-to-business for more opportunities to use SBRI models. mechanisms for procurement, we should also ensure Welsh businesses Action Area 11: Wales should seek to are fully able to exploit the resulting develop a culture of open innovation. opportunities, as well as those arising from SBRI competitions in other parts of Actions: the UK. 11.1 The Welsh Government will The whole of the public sector in Wales ask our anchor businesses to should look to allow the market to bring forward ideas to encourage provide solutions and innovation by collaboration with other businesses procurement practices through outcome- and universities, and develop a based specifications. culture of open innovation within Wales. Taking a lead from the Wales Procurement Policy Statement, the Action by: Business, Welsh Welsh Government, and its procurement Government, HE arm Value Wales, will work with the Partners: Business support public sector to improve supplier organisations, SMEs engagement. Our Business Wales

44 https://www.innovateuk.org/web/corporate1/ programme-display-page/-/asset_publisher/ b61wJfKPbeu8/content/sbri

28 Innovation Wales operation will support the supply-side in innovation agenda. The ambitions set promoting these proposals, identifying out in Energy Wales: A Low Carbon opportunities for businesses to introduce Transition46 are heavily dependent on innovative solutions. successful exploitation and investment in research and innovation. Action Area 12: The public sector The health and social care sectors have in Wales should be encouraged long been recognised as a significant to support innovative methods of catalyst in Wales’s innovation system. procurement. Now, there is increased emphasis Actions: on more accurate diagnosis, earlier detection and more targeted treatments, 12.1 The Welsh Government will and on reducing the cost of care, collaborate with the Technology including by providing much more care Strategy Board, work to identify and in the community. support opportunities within Wales to facilitate SBRI competitions. We believe that there is great untapped potential for innovation in public service 12.2 Value Wales will raise Welsh delivery, and that Wales can act as a public sector awareness of the scope test bed for innovative public services. to use innovative procurement to Work is already ongoing in this area, via improve outcomes. the Welsh Government’s Public Service Action by: Welsh Public Sector Leadership Group (PSLG). Together the PSLG and the Partnership Council for Partners: Technology Strategy Board, Wales provide national leadership for Business, particularly SMEs public service reform and collaboration, and drive the pace of improvement in 4.4.2 Partnership Approach the development and delivery of public The public sector including local services within Wales. authorities, the NHS, the Welsh The work of the Group focuses around Government and universities need to four national work programmes, each work together to encourage innovation. led by a senior public service leader to We believe that there is great untapped help drive forward this agenda: potential for innovation in public service delivery and that Wales can act as a test • Asset management bed for innovative public services. Work This aims to make more effective is already underway in this area in, for and efficient use of the multi-billion example Wales Public Services 202545, pound public service estate. which includes input from Nesta and • Procurement Cardiff Business School. This aims to transform the way public Wales’ sustainable development services procure and commission organising principle, supervised by a its goods and services. This spend sustainable development commissioner, is currently worth £4.3 billion per should provide opportunities for annum. innovation to accelerate the eco-

45 http://www.walespublicservices2025.org.uk/ 46 Welsh Government – Energy Wales: A low about-us carbon transition, March 2012

Innovation Wales 29 • Organisational development and simpson implementation Action Area 13: Public sector organisations in Wales should trial This is taking forward the innovative solutions in areas such as recommendations from the Simpson health, digital education, transport Review and developing approaches etc., where Wales is of a suitable scale to support change and broader to act as a pilot to demonstrate new organisational development across ideas. the Welsh public service. • Effective services for vulnerable Actions: groups 13.1 Welsh Government will work This is promoting the mainstreaming with other parts of the public sector, of successful innovation and good businesses, the third sector and other practice to make a much greater funding bodies to identify practical impact and encourage further opportunities to trial new ideas with innovation, particularly in joining up commercial potential for Wales. services around vulnerable people Action by: Welsh Public Sector, and groups, especially those with Business complex needs. The programme also explores ways in which people can Partners: HE, Technology Strategy help to design and deliver services Board, Nesta and shift interventions from cure to prevention. 4.5 Prioritising and creating critical The PSLG encourages innovative mass collaboration rather than competition So, the public sector can play a role to deliver effective and efficient public in helping to stimulate innovation by services in Wales. The work of the PSLG better procurement, education curricula, will help to stimulate an innovative availability of risk finance, and so on. culture within the public sector, recognising the value of all types of It can also make large strategic innovation and adopting best practice. interventions in capacity building. The effective services for vulnerable Specialisation and a focus on Wales’ group’s national programme, for strengths and existing assets are example, is supported by a KTP as part essential. The financial sustainability of of its work for promoting independent these centres and the level of long term living and wellbeing for older people. commitment from those involved should Under its national procurement be a prime consideration for support. programme, the PSLG will help identify opportunities to use established Wales needs to develop a UK and global mechanisms such as the SBRI. reputation by building on those areas of research and innovation facilities that are genuinely world-class, and target resources at them. This will inform decisions as available funding becomes more limited. Together with our universities and the supplier base, we should develop a compelling ‘offer’

30 Innovation Wales which will be undeniable to the large from the series of major societal multi-national enterprises and specialist challenges identified by the EC. players alike, in these chosen fields. • Possesses full commitment from Wales will make targeted, prioritised delivery partners to support activities investments in research capability, after initial establishment funding facilities and people based on the is exhausted i.e. have a plan for criteria set out in Science for Wales. It financial sustainability that would will build on the strengths highlighted ultimately satisfy commercial criteria in section 3.2 of this document. This for investment. will allow Welsh researchers the ability There may be a greater number of to compete more successfully in the smaller, worthwhile projects which do future for a range of competitive and not yet meet all of the criteria above but commercial R&D funding and increase in which capability can be developed. the attractiveness of Wales for inward We should ensure we have a fast-acting investment from research intensive and means of support for these worthwhile innovative companies. projects to enable early pilot and The proposed Swansea Bay Campus47, demonstration work to be started quickly which builds on the university’s existing and build the case for more significant research strengths and relationships with investment while capability is developed. major companies, is one example of such There may also be opportunities within a project. Wales to work with the Technology 48 All future innovation support of Strategy Board to utilise the Launchpad significant scale will be conditional on approach, for example. First used to an evidence-based rationale, tested support a cluster of hi-tech digital wherever appropriate by expert peer companies in Shoreditch in East London, review. Launchpads provide funding for business innovation that aims to support the The Welsh Government cannot specify development and strengthening of now those projects it will support clusters of high-tech companies in and those it will not in the rapidly specific theme areas and geographical transforming sectors described in Section locations. Opportunities in Wales exist 3. But we can lay down the criteria that through existing clusters in the areas of will guide us in the future. medical technologies, photonics, cyber security etc. Any activity qualifying for prioritised investment should: • Be based on existing or emerging capability in business and/or academia that is competitive on an international stage and is capable of attracting investment from bodies outside of Wales. • Address major emerging market opportunities e.g. those emerging

47 http://www.swan.ac.uk/campus-development/ 48 http://www.innovateuk.org/ science-and-innovation-campus deliveringinnovation/launchpad.ashx

Innovation Wales 31 Action Area 14: Wales needs to identify opportunities for a small number of major investments designed to have a transformational effect of Wales’ research and innovation capabilities. Actions: 14.1 We will support our universities and businesses to develop a small number of centres of excellence, in areas of well evidenced comparative strength and market opportunity, with an explicit remit to exploit and commercialise knowledge and create wealth. 14.2 The Welsh Government will work with the Technology Strategy Board to identify opportunities to support cluster development activities e.g. through a Launchpad competition in Wales. Action by: HE, Business Partners: Welsh Government

32 Innovation Wales 5. Appendices

Innovative Procurement Provides Win-Win Opportunities A collaboration between Welsh Government, Technology Strategy Board and Ordnance Survey, the Wales Coast Path Geovation Challenge is an example of how innovative procurement practices are extending opportunities for small and medium- sized businesses, as well as enabling the public sector to tap into this highly innovative resource.

Innovation Wales 33 Appendix 1 – Glossary of Acronyms A4B Academia for Business ATM Access to Masters BBSRC Biotechnology and Biological Sciences Research Council BRE Buildings Research Establishment BSI British Standards Institution CEH Centre for Ecology and Hydrology EC European Commission EIP European Innovation Partnerships EPSRC Engineering and Physical Sciences Research Council ESRC Economic and Social Research Centre HEBCIS Higher Education Business, Community and Innovation Survey HEFCW Higher Education Funding Council for Wales HPCW High Performance Computing Wales IBERS Institute for Biological Environmental and Rural Sciences ILS Institute of Life Sciences IPO Intellectual Property Office KESS Knowledge Economy Skills Scholarships KTN Knowledge Transfer Networks KTP Knowledge Transfer Partnerships LCRI Low Carbon Research Institute MRO Maintenance, Repair and Overhaul NERC Natural Environment Research Council Nesta National Endowment for Science, Technology and the Arts NISCHR National Institute for Social Care and Health Research NSA National Science Academy REF Research Evaluation Framework SBEC Sustainable Building Envelope Centre SBRI Small Business Research Initiative SPECIFIC Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings STRIP Steel Training Research Innovation Partnership WEFO W ales European Funding Office WJEC Welsh Joint Education Committee

34 Innovation Wales Appendix 2 – Task and Finish Group Professor Kevin Morgan – Cardiff University (Chair) Dr Adrian Healy – Cardiff University (Chair) Professor Robin Williams – HEFCW Council Professor Simon Bradley – EADS Dr Roy Bichan – North Wales Economic Forum Ron Jones – Creative Industries Sector Panel, Tinopolis Professor Colin Whitehouse – ex Deputy CEO STFC Dr Grahame Guilford – Life Sciences Sector Panel Frank Holmes – Gambit Finance Professor Chris McGuigan – Cardiff University, Life Sciences Sector Panel Brian McCarthy – Technology Strategy Board Janet Jones – Federation of Small Businesses Simon Gibson – Wesley Clover Geoff Mulgan – Nesta Philip Colligan – Nesta For an electronic version of the document, including supplementary case studies, please visit http://wales.gov.uk/topics/ businessandeconomy/publications/ innovation/?lang=en

Innovation Wales 35