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“How innovative is government innovation policy? Don’t ask.”

Ahead of anticipated driverless car and drone announcements to be made in the Queen’s Speech, Albert Bravo-Biosca, economist and head of the Innovation Growth Lab at Nesta, looks at the tools used by government to drive innovation policy

You would think that given how quickly the world is changing, policymakers would be continuously experimenting with new ways to support innovators and entrepreneurs.

The irony, however, is that despite the rapid and continuous emergence of new technologies and business models – from sharing economy apps to crowdfunding investment platforms – the tools that governments use to support them have evolved very little.

While governments around the world call for firms to invest more heavily in research and development (R&D), it’s surprising how little R&D is done by governments themselves to make sure that their innovation support programmes are having the greatest impact.

On this, governments are certainly guilty of failing to practise what they preach.

No hard evidence

The embarrassing truth is that surprisingly little innovation policy is backed by hard evidence. How do we best support startups? How should we help SMEs to export? Is it better to offer R&D tax credits or R&D grants? The honest answer to these questions is that we just don’t know.

Policymakers around the world have for many years worked on the basis of theory and anecdotes and have poured hundreds of millions of pounds into untested initiatives. The UK government alone devotes £10 billion a year to supporting business innovation and growth, but we have very little idea about what effect this spending actually has.

There are surely more effective ways to use this kind of funding. We just need to be willing to try different approaches and find out whether they are working (rather than assuming that they will work). Governments should be open to new ideas, but whenever feasible they should test them at a small scale before rolling the most successful programmes out at local and national levels.

The good news is that policymakers are starting to take notice. The UK, for example, has been among the early adopters of experimental approaches to test the impact of some of its business support programmes, but much more needs to be done.

Lab testing

With this challenge in mind, leading policymakers and researchers from governments around the world recently came together to launch the Innovation Growth Lab (IGL) – a new global laboratory that develops and tests new approaches to increase innovation, support high-growth entrepreneurship and accelerate business growth.

We currently have over twenty trials running, examining a range ideas, such as how the design of research labs impacts collaboration, how entrepreneurship training should be structured, the effect of tech incubators on startups and how companies can incentivise their employees to contribute new ideas.

At next week’s IGL Global Conference Making Innovation and Growth Policy Work, we will showcase some of the latest ideas in innovation and entrepreneurship policy, and explore how governments can put them into practice.

In a climate where governments are forced to make difficult decisions around spending, the temptation would be to play it safe and allocate business support funding in the same old way, but we think this would be the wrong decision.

Innovation policy is about encouraging new thinking and experimentation. It’s about time governments started following their own advice.