Callum Bentley recently had the chance to sit down with Innovate UK’s new CEO, Dr Ruth McKernan, where the two spoke about the potential to grow the small, micro and medium-sized UK businesses to become the next economic powerhouse for Britain.
Trying to lock down enough time to have a worthwhile conversation with Innovate UK’s new leader since she took the reins in May this year has not been an easy feat.
She has had to hit the ground not running, but sprinting in order to keep up with the enormous workload that comes with the position.
After all, Innovate UK is still relatively young, and it still has a lot to prove.
I have however, managed to grab a brief audience with her as she comes off stage during the Innovate 2015 conference in Central London.
It’s a huge event with more than 3,000 attendees over the two days and a literal hive of activity with every nook of the Old Billingsgate venue teaming with some of the best innovative businesses and start-ups showcasing their wares. As far as conferences go, it is truly impressive.
The reason I’ve been so keen to interview McKernan is to talk small and medium businesses – or more so – how Innovate UK intends on helping grow these businesses to become the economic drivers of the future under her tenure.
It just so happens she has just been sharing the stage with serial entrepreneur Sherry Coutu, where the pair were discussing the importance of “scale-up” companies.
Coutu was discussing her scale-up report, in which she explained these companies could create 1 million new jobs and an additional £1 trillion to UK economic growth by 2034.
But McKernan, while acknowledging their potential, is realistic when considering the monumental amount of work which has to happen to achieve these figures.
“If you’re a manufacturing company, just to make a product – to prototype, test and understand it, especially in sectors like bio-medicine and energy, that can be eight, nine or maybe even 10 years.
“We have to help companies through that and they are generally going to be small at that stage, then they hopefully accelerate and can get investment from other places. Then they can scale and we don’t have to worry about them quite as much.
“The medium size business are where the economic growth comes from. But in order for those businesses to get where we need them to be, where they can really start to grow, is Innovate UK’s job. Nobody starts as a medium-sized business, they have to grow to get there.
“Innovate UK needs to encourage small businesses by pulling the technologies out, understanding what the future opportunities are for the UK and putting some air and cash under their wings, that is our job.”
Innovate UK – or the Technology Strategy Board as it was known when it was first established under the former Department of Trade and Industry in 2004, before becoming an independent body in 2007 – has become central to the Government’s technology and innovation policy over the past five years.
Speaking immediately after McKernan at the conference was Business Minister Sajid Javid who proudly made the statement that “innovation was at the core of UK economic growth”.
It’s positive to see Innovate UK funding has been mostly left alone following Chancellor George Osbourne’s Comprehensive Spending Review. How the move from grants to loans pans out is yet to be seen.
That’s not to say McKernan wasn’t prepared for the worst. When I ask her what her plan is if her organisation’s funding was to find itself on Osbourne’s butcher’s block, she simply assures me that herself and her team “are planning for multiple scenarios” of which the information she would not divulge, saying they would “do the best we can with what we have, when we get it.”
And fair enough. But what about the state of play at Innovate UK since McKernan took over? Is it in the best state to help small, scale-up businesses do what their name says?
Innovate UK’s strength to achieve this comes from its breadth of coverage. Whatever the sector in which your business lies, the necessity of funding innovation for growth is not unique, whether that be in high value manufacturing or cell therapy development.
“Innovate UK has created a very strong base of businesses with new projects to start,” she says.
“The next phase over the next few years is to focus on getting value from the companies we’ve already invested in. Obviously we’ll want to keep offering competitions and grants to micro and small companies, but our focus needs to be to pull those up to be medium-sized.
“The economic growth of the UK is not going to be coming from an awful lot of small business, it’s going to come from a few medium size businesses and an even fewer number of large ones. If we can create some more medium-sized business in the UK that would be a success for us.”
But how to measure this success? Well, it turns out that with McKernan, it’s a case of “once a scientist, always a scientist”. “I came in with a big desire to help business grow in the UK – that’s why I took the job” she says.
“I’m a data driven person so I will be collecting information about what happens to the businesses that get Innovate UK support and I will feel I’ve done a good job if by the end of my tenure, I have data to show that we’ve grown scale ups, we’ve employed people and we’ve really done something for economic growth.
I won’t put numbers on that today, but at some point I will because that’s what we do and that’s what we’re all about – productivity and economic growth.”
But there is and always will be only so much it can do for small and medium-sized businesses in the UK. So where will these businesses pick up the slack?
For McKernan, it’s all about confidence and visibility. “When I look around for our leaders; who is growing and starting our next businesses, I’m so impressed by so many of them.
“These are people with ambition, with enthusiasm, they’re not scared to stand up and get on with it. We need more of those people.
“Ambitious, young people who just need to believe they can start and grow a business and employ people, they can contribute to economic growth. They can help the UK be exactly where it needs to be. That’s what I would like to see in the next decade – more high quality leaders.
“The work that Sherry [Coutu] was talking about was her own scale up report where it came out clearly, and I was quite surprised, that businesses actually felt that just having visibility would help them grow.
“Innovate UK is a kind of scholarly organisation. We do a lot of data analysis and we work with a lot of the research councils. We are a scientific organisation, but sometimes I do wonder if we miss the obvious.
“Advertising, visibility and making people aware of what you can do is really important. We’ve run a lot of programmes such as venture fests and we’ve got investor breakfasts where we try to link up investors with some of the micro and small business that we’ve funded.
“I’m wondering whether that is nearly enough. It looks at part of the problem with a focused effort on a company and an investor, but actually, sometimes just publicity and awareness of the really good quality, growing businesses in the UK is an end in itself. That’s something I have to think about.”