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Total Innovation Management

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Andrew Cowan

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Total Innovation Management

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Innovation is vital to your company’s survival and prosperity. In fact, it is vital for the country’s economic prosperity that we all push the boundaries of innovation and Research & Development (R&D).

Massive and rapid changes in digital communications, combined with the 4th Industrial Revolution mean that opportunities exist like never before for Northern Ireland businesses.

Effectively harnessing innovation and realising the benefits of R&D activities is crucial to the UK and Northern Ireland retaining its innovation edge and being taken seriously in this exciting new world that we are finding ourselves in.

It is important to recognise that innovation and R&D, whilst closely linked, are not the same thing. In the modern world, it is generally accepted that the term innovation encompasses the wider process of coming up with novel and creative solutions, whereas R&D is an early-stage component of the innovation life-cycle focused on scientific and/or technical development. That is to say, R&D is more about the knowledge, innovation can be thought of as the application of this knowledge into the creation new ideas, devices or methodologies.

Innovation and R&D might best be described as ‘partners’ when it comes to solving a problem or challenge. By way of example, in 1867 a young vet by the name of John Boyd Dunlop came to Belfast where he noticed his son struggling to ride a trike over the cobble streets. Taking inspiration from an earlier French idea, Dunlop worked to develop the design of pneumatic tyre into something that could work in the real world, and subsequently spawned the global Dunlop tyre company.

These days my job entails helping companies embrace the concept of innovation, and importantly obtaining credit for their R&D activities. More and more I find myself working within the UK Government definitions of R&D – taking the tyre example above, this feels very much like what the government guidelines would term “making an appreciable improvement to a product or device”. In other words, the pneumatic tyre idea wasn’t actually thought up by Dunlop, but it was systematically developed by him in such a way as to make it feasible to manufacture and bring into use.

In essence, a company may be eligible for R&D Credits even if it is not developing something entirely new. Equally, we often find that companies are actively partaking in what was once described by Nesta as “hidden innovation”. What this means is that companies, particularly those with a silo structure, may well be spending time and money on innovative work that senior management do not appreciate has a value beyond the fact that a problem is being solved.

Companies need to think wide and think deep when it comes to the management of innovation and R&D.

Total Innovation Management is about understanding that Intangible Assets (IA) have both a cost and a value. The process of identifying your IA and giving it a value is not a straightforward one. However, the reward in terms of credit available through both the UK Government’s R&D Tax Credits initiative and Patent Box regime can be significant.

These initiatives are not industry or sector specific and apply to both profit-making and loss-making companies. The R&D credit available can be used to offset Corporation Tax or exchanged for an actual cash payment.

Dealing with SMEs on a daily basis, we see that business owners treat R&D credit with a level of genuine gratitude, using the funds to re-invest in the company through new equipment or growing their team of R&D staff.

We are increasingly hearing businesses saying that their R&D credit is allowing them to “be more aggressive” with their R&D - exactly the type of mindset that the initiative set out to create, and one that we as professionals in this area need to nurture, to ensure that Northern Ireland and the UK remain at the forefront of science and technology no matter what environmental or political matters may prevail.

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