STRATEGIC PLAN TIME TO INNOVATE HELPING LOCAL BUSINESSES TO GROW THROUGH INNOVATION

Transcription

1 STRATEGIC PLAN HELPING LOCAL BUSINESSES TO GROW THROUGH INNOVATION OCTOBER 2014

2 FOREWORD Innovation is in the DNA of Derbyshire and Nottinghamshire. From the first fully-mechanised factory in the world in Derby s Silk Mill some 300 years ago, to ground-breaking achievements in drug discovery and Magnetic Resonance Imaging (MRI) in Nottingham towards the end of the 20 th century, the D2N2 area has been at the forefront of developing innovative products and processes. It is increasingly recognised that today s competitive advantage in advanced economies will stem primarily from Innovation. So now it is even more important that we harness the creativity and know-how found in the D2N2 area. Helpfully, we have a strong foundation on which to build, with world-leading capability in areas such as advanced manufacturing, bioscience and design that is located in our local business base - and also in our three Universities. The D2N2 Strategic Economic Plan highlights Innovation as one of four strategic priorities that will deliver the goal of 55,000 jobs by This action plan is a blueprint for delivering an Innovation ecosystem that will spearhead and accelerate economic growth in the D2N2 area helping local businesses across all sectors to exploit their potential for Innovation and growth. The three Universities have played a leading role in drawing up the plan, working with our partners in business and in local government. Responding to a review of Universities and Growth by Sir Andrew Witty, the Government has recently made a long-term commitment to supporting universities in a third mission (alongside teaching and research) to contribute to economic growth. While Universities already do make an important contribution to the UK economy, there is scope for doing much more to channel their extensive knowledge and expertise for the benefit of businesses, thus helping to fuel growth. We are committed to playing our full part in helping to deliver the plan. Time to Innovate Now is the time for D2N2 businesses to innovate. We believe that this action plan puts in place a framework of support that will give businesses the confidence that setting aside time for Innovation will pay dividends. Sir David Greenaway Vice-Chancellor University of Nottingham Professor John Coyne Vice- Chancellor University of Derby Professor Edward Peck Vice-Chancellor Nottingham Trent University Peter Richardson Chairman D2N2 2

3 CONTENTS 1. Introduction 4 2. Executive Summary 7 3. What is Innovation? Innovation Baseline Innovation Performance Drivers and Barriers Innovation Assets Innovation objectives Actions for Innovation 25 A. Business Support for Innovation 28 A1. Innovation-led start-ups 28 A2. Skills and Talent for Innovation 31 A3. Technology for Innovation 35 A4. Finance for Innovation 38 B. Infrastructure for Innovation 43 B1. Physical Infrastructure 43 B2. Innovation Networks and Intelligence 47 C. Exploiting the Knowledge Base 50 C1. Specialisms 50 C2. Collaboration on R&D and Supply Chains Resourcing the Plan Measuring Success 58 Appendices 1. D2N2 Universities Full list of actions in the plan 64 3

4 1. INTRODUCTION This plan sets out the action needed to deliver an Innovation ecosystem that will spearhead and accelerate economic growth in the D2N2 area, helping local businesses to exploit their potential for Innovation and growth. It also provides a framework for determining D2N2 s and local partners future priorities for supporting Innovation, for example through the use of D2N2 s EU Structural Funds Programme The plan covers: Definition: describes Innovation and explains why it is important to the delivery of D2N2 s Strategic Economic Plan Baseline: explains where we are now and highlights businesses key needs for innovation support Objectives: articulates D2N2 s strategic priorities for Innovation Action: identifies the steps to be taken to develop a fit-for-purpose innovation ecosystem Resourcing: indicates the levels of resources required to deliver the plan Success: establishes the basis for measuring progress against the plan 4

5 The diagram above shows how Innovation fits within D2N2 s strategic priorities. There is a strong link between Innovation and the other strategic priorities: Infrastructure for Economic Growth: having a suitable portfolio of sites and serviced premises for the growth of existing businesses and the attraction of new inward investment, and having ready access to superfast broadband to enable innovative businesses to operate effectively in global markets. Employment and Skills: having a highly-skilled and innovative workforce in place is a vital ingredient of the innovation ecosystem, requiring appropriate investment in skills training through further and higher education, including making the most of our graduates and developing leadership and management skills within our businesses to increase capacity for innovation. Business Support and Access to Finance: It is important that Innovation support to businesses complements other generic provision for encouraging enterprise and improving business skills. Innovative businesses rely on having access to equity and working capital to finance their growth. Having a strong Innovation ecosystem will help attract higher-value inward investment with better quality jobs. 5

6 The following principles have been applied in developing the plan. It should: put the needs of businesses first, with support designed to meet demand, and all eligible businesses in the area able to access the D2N2 support products maximise existing Innovation assets in and around the area and fill gaps to meet business demand identify and disseminate good practice to be encouraged across the D2N2 area where appropriate, specify which actions should be targeted towards specific sectors recognise the principles of localism distinguishing between actions that should be delivered at local level or at D2N2 level and those that are made to complement national-level investment not compete with commercially-available sources of support, where public-support is proposed and complement and not duplicate nationally-available Government support The development of the plan has been led by the three D2N2 Universities the University of Nottingham, the University of Derby and Nottingham Trent University, working in consultation with partner organisations within the D2N2 network. It has also been informed by research and consultation undertaken by the universities and D2N2 in the first half of 2014, involving: a baseline study on the scale and nature of innovation in the D2N2 area an Innovation Summit organised at the University of Derby in January, involving businesses and agencies feedback from participants in D2N2 Business Breakfasts in January and February a workshop for businesses in April a workshop with priority sector groups in May online consultation on a draft plan during June 6

7 2. EXECUTIVE SUMMARY Introduction The plan sets out the action needed to deliver an Innovation ecosystem that will spearhead and accelerate economic growth in the D2N2 area, helping local businesses to exploit their potential for Innovation and growth. It also provides a framework for determining D2N2 s future priorities for supporting Innovation, primarily through the use of the EU Structural & Investment Funds Programme The development of the plan has been led by the three D2N2 Universities - the University of Nottingham, the University of Derby and Nottingham Trent University - working in consultation with partner organisations within the D2N2 network in the first half of It has also been informed by a baseline study led by Nottingham Trent University; and by consultation on a draft of the plan during June 2014, which involved workshops with businesses and with D2N2 s priority sector groups. The full version of the plan goes into more detail on the baseline position, on the rationale for actions in the plan and on sector targeting. It also includes a number of case studies of successful innovation. The full plan is available at Innovation Innovation - the commercial exploitation of new ideas in the form of new products and processes, new organisational techniques, new markets and new sources of supply - can be new to the firm, new to the market or new to the world. Most innovation does not stem from a scientific or technological discovery; it will often be about improving the way a business operates and thinks or how a product or service is offered to the market. It is often a collaborative activity, with some two-thirds of product innovators and two fifths of process innovators engaged in collaborations. Importance of Innovation Innovation: accounts for two-thirds of growth in developed economies is a key characteristic of high-growth businesses, driving more than half of private sector labour productivity growth in the UK is one of the primary drivers of competitiveness in supply chains delivers business competitiveness it may not lead to jobs immediately, but without it businesses will fail Drivers of Innovation The primary drivers of Innovation include the desire to introduce new and better quality goods and services and to enter new markets or increase market share. Businesses often look to suppliers or customers for new knowledge to support innovation, with companies in supply chains having to respond to the demands of companies higher up the chain. 7

8 Barriers to Innovation Lack of time, skills and finance - alongside degree of risk - are often quoted by businesses, particularly smaller companies, as the main barriers to innovation. Another key factor is that many businesses will be unaware of the support that is available to them to help them innovate and, even if they are, the routes for accessing knowledge and expertise are currently not easy for them to navigate. Baseline Position The D2N2 area has many businesses that have started and grown through innovation, but there are many more whose innovation potential has yet to be fully exploited. The area has more innovation-active businesses (39%) than the UK average, but only 32% of smaller firms (10-49 employees) are innovation-active. The area has performed below the national average in introducing new products and services to market, and has punched below its weight in accessing Government and European Innovation programmes. The D2N2 area has a strong foundation on which to build a successful innovation ecosystem: Its business base has a number of large, well-established technology-based companies, with significant supply chains in the locality, particularly in Transport Equipment Manufacturing; it has growing clusters of commercial activity in sectors that are developing new technologies, such as Life Sciences, Low Carbon and Creative Industries; and it has other sectors whose competitiveness depends on finding innovative solutions, such as Food & Drink Manufacturing, Construction, Logistics and Visitor Economy. There is a strong base of knowledge in the area, in its businesses and in its three universities, which already work closely with businesses large and small. The universities have differential and complementary expertise in a range of fields, some of it leading the way nationally or internationally. There are active sector and technology based networks in the area and a number of examples of successful centres of innovation, which provide a focal point for businesses and associated business support. Innovation Partners There is a range of partner organisations that have an important role to play in helping to deliver the plan, including: 8

9 Larger businesses in the upper tiers of supply chains D2N2 s priority sector groups the full plan includes the innovation priorities for each sector. Business representative organisations, such as the Chamber of Commerce and sectorbased organisations Commercial providers of innovation accommodation and support The three D2N2 Universities, working in collaboration with neighbouring universities Further Education Colleges Local authorities in the D2N2 area Technology Strategy Board and other national providers of the Government s innovation support for business Innovation Objectives D2N2 S overall aim for Innovation is: To support a step change in innovation levels amongst D2N2 companies - particularly highgrowth SMEs in priority sectors - ensuring that businesses can find out about and access innovation support through their preferred route It will achieve this through a programme of action under the following three objectives: A. Business Support for Innovation Provide flexible and tailored support for innovation-led start-ups and existing businesses in the D2N2 area, particularly SMEs with the potential for high-growth, to commercialise ideas for new products, services and processes, through: Skills for Innovation, including via access to talent in the knowledge base Opportunities in the knowledge base to exploit research expertise and technologies - including through the commercialisation of Intellectual Property better to support business-led innovation. Access to finance for Innovation to help businesses exploit their ideas, invest in necessary R&D and find a route to market B. Infrastructure for Innovation Invest in physical and communications infrastructure that fosters and nurtures Innovation ensuring that sites, facilities and equipment act as a platform, catalyst and host for 9

10 Innovation and innovative relationships and encouraging informed networks that celebrate and share good practice, enabling businesses to connect quickly and easily to sources of inspiration and support C. Exploiting the Knowledge Base Maximise the potential of the knowledge base in and around the D2N2 area as a source of inspiration for Innovation - building on local specialisms in technologies of national importance, linked to D2N2 s priority sectors - and encouraging collaborations between businesses, universities and other institutions to exploit related expertise and enable adoption of new technologies, and to develop supply chains in these sectors The diagram below illustrates the role of the Time to Innovate plan in helping to turn ideas into commercial return: 10

11 Action The Time to Innovate action plan seeks to help businesses to overcome the barriers to innovation, with the three universities continuing to act is a facilitating role with D2N2 partners. It builds on successful innovation support programmes and assets already in place and addresses gaps in provision to meet businesses needs. The main features of the plan are as follows: A. Business Support for Innovation Create a Time to Innovate toolkit, offering businesses - particularly SMEs - access to local and national support from the following range of options to help them to innovate: o o o o o o Start to Innovate: support to innovation-led start-up and early-stage businesses, e.g. through incubation facilities Skills to Innovate: providing businesses with the skills and knowledge they need to deliver successful innovation, including through training, coaching and graduate placements Technology to Innovate: offering specialist support to access technological expertise and facilities Finance to Innovate: helping access finance for introducing an innovation and finding a route to market, including equity investment, loans or grants Place to Innovate: providing access to specialist accommodation, facilities and equipment Network to Innovate: tapping into peer support through the contacts and expertise in business-led sector, technology and supply-chain based networks Provide easy access to the Time to Innovate toolkit through D2N2 s emerging Growth Hub - which will offer businesses visible, clear and simple online routes to information and adviser support - and create an integrated D2N2 network of innovation support providers underpinning the Hub. Explore the scope for creating an online space for connecting commercial innovators to opportunities in the knowledge base, using an existing channel such as the Innovation Commons. Work up models for introducing the following cross-d2n2 financial support programmes for SMEs: o an Innovation Voucher that helps SMEs to buy in innovation support from the provider of their choice, building on the models operating in the inets and in the D2N2 universities and linking to national SME voucher programmes o an innovation coaching and development support programme for leaders of highgrowth SMEs in the D2N2 area, linked to and levering in national funding for business growth, which could involve Pera and the universities Business Schools 11

12 o a technology-based innovation support package, linked to and levering in national funding from the Technology Strategy Board o early-stage financing for innovation-led start-ups Explore the scope for making existing successful innovation programmes accessible by all eligible businesses in the D2N2 area Develop plans for a D2N2 Knowledge Economy Skills Scholarship programme, and support the expansion of Higher Apprenticeships to increase businesses capacity to innovate. Continue to work with the providers of the Manufacturing Advisory Service and the Growth Accelerator to ensure that national funding earmarked for the D2N2 area is targeted effectively on the needs of local businesses; and work in partnership with the Technology Strategy Board to ensure that the area maximises its potential for drawing on its programmes of support. B. Innovation Infrastructure Develop the potential of the area s flagship innovation parks and centres for example BioCity/MediCity in Nottingham, University of Nottingham Innovation Park 1 (UNIP), other developments within Nottingham Enterprise Zone, and the proposed Infinity Park in Derby as magnets for high-value inward investment, and as centres for incubating new innovation-led businesses. Facilitate networking by the innovation and incubation centres across the area, enhancing their potential as places where businesses can learn from each other and access outreach support from providers in the knowledge base, and increasing incubation capacity (particularly in priority sectors). Explore options for improving the visibility of and business access to technology prototyping, testing and proving facilities, linked to the Technology Strategy Board s Catapult centres nationally. Support the development of successful business-led networks that offer specialist innovation support to businesses in Life Sciences and Food & Drink; consider the need for 1 There is an application to Government pending for UNIP to be designated a University Enterprise Zone from June 2014, supported by D2N2. 12

13 specialist support in and across the other priority sectors, drawing on the lessons of inets; and encourage business collaboration across sectors to stimulate innovation. Hold an annual Venturefest event, in collaboration with partners in Leicestershire and the Technology Strategy Board, celebrating innovation in the wider region and providing opportunities for high-growth businesses to engage with potential investors. Explore the scope for establishing an innovation intelligence function as part of D2N2 s wider economic and business research capacity: to build our understanding of the local innovation ecosystem; to monitor and benchmark the area s performance on innovation; to identify and showcase successes and best practice; to inform the development of the action plan; to evaluate D2N2 s innovation programme; and to identify future opportunities for competitive advantage. C. Exploiting the Knowledge Base Continue to develop specialisms in the local business and knowledge base, aligned to national technology and sector priorities: i.e. sectors Transport Equipment Manufacturing, Life Sciences, Low Carbon goods & services, Food & Drink Manufacturing, Construction, Visitor Economy and Creative Industries, Transport & Logistics and; technologies Advanced Manufacturing (including Advanced Materials), Bioscience (including Synthetic Biology and Regenerative Medicine), Digital Economy (including Satellite Applications), Energy (including Energy Storage) and Agri-Science. Continue to develop world-class clusters in Transport Equipment Manufacturing and in Life Sciences, encouraging more intensive support interventions in these clusters Work across LEP areas in collaboration with other LEPs/businesses/universities to develop these local specialisms and clusters, including Transport Equipment Manufacturing (for example with Loughborough University, Birmingham University and the Manufacturing Technology Centre) and Life Sciences (with Loughborough University and Charnwood Medical Campus). Work in collaboration with large employers such as Rolls-Royce, Toyota, Bombardier, Alliance Boots and the NHS to strengthen the innovation capabilities of their supply chains in the D2N2 area. 13

14 Resources Delivery of the plan will be funded primarily through D2N2 s European Union Structural and Investment Funds programme, which has provision of 20m for Innovation, and scope for funding other innovation-related activities from other priority themes, e.g. Low Carbon, Skills and SME Competitiveness. With an intervention rate of 50%, the total funding for the Innovation theme would be 40m, with the match-funding coming from a variety of sources, including universities, research-intensive NHS Trusts, national growth and innovation support programmes, and SMEs direct contributions. Success Measures Success will be measured against the following key indicators: Outputs Number of businesses that are supported to introduce new products and processes to the market Number of businesses that are supported to collaborate with the knowledge base Growth in the supported businesses, as measured by additional jobs Outcomes Growth in the proportion of D2N2 businesses that are innovation-active Leveraged national and European funding for innovation Growth in expenditure on R&D in the D2N2 area 14

15 3. WHAT IS INNOVATION? Innovation means different things to different people. For the purposes of this action plan, Innovation is defined 2 as: the commercial exploitation of new ideas in the form of new products and processes, new organisational techniques, new markets and new sources of supply In other words, innovation is about turning ideas into a commercial return. It can also be about achieving wider societal or environmental benefits e.g. for organisations such as social enterprises that are driven by social objectives rather than profit. A distinction is commonly made between radical or disruptive innovation and incremental innovation, where the former represents a completely new product or process and the latter an improvement to an existing product or process. Innovation can be new to the firm, new to the market or new to the world. Most innovation does not stem from a scientific or technological discovery; it will often be about improving the way a business operates and thinks or how a product or service is offered to the market. Innovation is by nature unpredictable and can be driven by a number of factors; it is therefore important that the ecosystem supporting innovation is flexible and adaptable. Innovation requires an investment of resources at a number of stages, from idea generation, through the development of prototypes and testing products, to design and marketing. Invention, creativity, originality, design marketing are all important ingredients of successful innovation. Innovation requires some kind of stimulus, which will often involve exposure to different environments. Typically this will be business-to business stimulation (usually customers, suppliers, or companies in the same group), or technological stimulation (e.g. business-to-business, or from businesses working with universities). It is often a collaborative activity, with some two-thirds of product innovators and two fifths of process innovators engaged in collaborations. Innovation performance depends not only on how specific actors (e.g. businesses and universities) perform, but on how they interact with one another in an innovation system. SMEs have a key role, often acting as a seed-bed for innovation. 3 2 Innovation Policy Position Paper for East Midlands Development Agency, Oughton and Frenz SMEs: the Key Enablers of Business Success and the Economic Rationale for Government Intervention, BIS Analytical Paper Number 2, Dec 13 15

16 Case Study - innovation stimulated by technology Sutton-in-Ashfield company Lindhurst, founded to provide engineering solutions in the mining industry, had diversified into new areas such as hydraulic motion systems, and was on the look-out for new market opportunities. Having identified an opportunity in the farming industry for converting waste products into energy, the MD contacted the University of Nottingham to help develop his ideas. A university post-doctoral graduate was employed through a Knowledge Transfer Partnership to work with the company on the development of a new microbial fuel cell that could convert farm effluent and dairy by-products into bio-gas and electricity. The project involved testing a production-scale fuel cell using waste products from the University s dairy farm at Sutton Bonington as fuel. The University s Environmental Technology Centre was also able to partner the company with dairy producer Arla Foods to investigate how best to exploit the technology. More recently the anaerobic digestion business Clearfleau has also come on board. The University s support has been invaluable. They came up with the design for the commercial plant and have also developed a working industrial scale prototype. The results are very promising and we anticipate that within 18 months we will have a product that we can offer to the market. My experience of working with the University on this and other projects over the years has been extremely positive. Lindhurst Case Study growth through innovation 16

17 Co-Formulate is a contract product development business in the pharmaceuticals/healthcare sector. The company had achieved steady success in their first 5 years though solutions developed in response to clients problems, but they saw that a more structured and strategic approach could have greater potential. In particular they wanted to understand if they should continue to outsource some services and how they might extend their reach. For 10 months, the company s leaders worked with a coach from Growth Accelerator, with a background in life sciences, to introduce innovation throughout the business s operations. The company has undergone significant change as a result. For example, it now offers a comprehensive range of in-house services and is targeting adjacent markets such as cosmetic, food supplement and veterinary industries. It has developed a 3-year growth strategy which has helped increase turnover by 26% in the last 12 months, and raise profitability, enabling investment in new equipment and people. Its innovative extended offering, including analytical services, has helped secure a major contract from its first US client. The company has also moved into MediCity, Nottingham s health, beauty and wellness innovation hub, to support its wider range of services and its goals for growth. Growth Accelerator helped us do more than just share our ideas in snatched moments during busy days, but invest time in bringing them out. Having someone look at the business with a fresh pair of eyes and bring their experience of working with other companies helped us crystallise our thoughts and ambitions. It also gave us the confidence and ability to move forward in way that takes us to the next level, while retaining the flexibility and responsiveness that has served us well. Co-Formulate 17

18 Why is Innovation important? Innovation is recognised internationally as a vital ingredient in economic growth. Two thirds of growth from developed countries comes from innovation 4. In advanced economies, innovation in products, services, processes and systems is the primary source of competitive advantage; and continuous innovation is key to the maintenance of competitive advantage in increasingly dynamic markets. Innovative activity can result in new entrants displacing incumbents, acting as a spur to competition. This process of churn is part of the way in which the market allocates resources towards more efficient firms and is a feature of high-performing local economies. Innovation systems that are successful in enabling their participants to secure a differentiated competitive advantage flourish as drivers of indigenous growth and attractors of inward investment. Innovation is a primary characteristic of high-growth firms. It helps firms create new products and services, improves product quality, allows companies to differentiate themselves in market places and improves their performance through new business processes. Nationally, innovation accounts for more than half of private sector labour productivity growth 5 ; and on average compared to noninnovating firms in the same sector, innovating firms grow have four times the sales growth, have better value-added per employee and more exports 6, and are less likely to fail. Innovation is a key driver of competitiveness in supply chains. In the area s Transport Equipment Manufacturing sector, for example, there has been growing pressure from the large companies in recent years for companies in their supply chains to become more innovative, faced with intense global pressure to improve productivity. This requires a concerted approach by large companies (Original Equipment Manufacturers and Tier 1 suppliers) working with their supply chains, supported by partners in the knowledge base. The introduction of innovation in businesses will not necessarily lead to a large number of new jobs in the short term; indeed an innovation may enable a business to do more with less. But in the longer term innovation will improve businesses competitiveness, providing a stronger base for growth. The rationale for intervention centres on failures of coordination and information that typically stifle the development of productive relationships through value chains: particularly those between businesses, and between businesses and universities. According to BIS (2011) Business benefits from partnering with universities. They are more likely to improve the quality of their goods and services, improve their labour productivity, increase the range of goods and services, and more than twice as likely to open new markets or increase their market share to those businesses that don t interact with universities. 4 Innovation Strategy, OECD SMEs: the Key Enablers of Business Success and the Economic Rationale for Government Intervention, BIS Analytical Paper Number 2, Dec 13 6 Measuring Sectoral Innovation Capability in Nine Areas of the UK Economy, NESTA

19 4. INNOVATION BASELINE To inform this plan, the three universities are carrying out an initial baseline study, supplemented by a survey of local businesses to create a baseline for tracking progress over time, in the D2N2 area, comprising: an analysis of how the area performs on Innovation, in the context of the UK overall a mapping exercise to identify existing Innovation assets and support in the area, including centres of excellence in research and technologies, locations offering innovation support (such as incubation and innovation centres), and supporting networks 4.1 Innovation Performance The nature of innovation is such that there is no single catch-all indicator that captures the level of performance of a locality. The Innovation process has inputs (e.g. skills and investment), outputs (e.g. products, services, patents) and outcomes (e.g. labour productivity); and only by analysing the whole picture is it possible to build up an understanding of a locality s performance. A further complication is that not all of the relevant data are available at D2N2 level. The key findings are as follows: In 2012 there were almost 66,300 businesses in the D2N2 area, down from the pre-recession peak of around 68,500 in 2008; this is contrast to the position in the UK as a whole, with the business stock having recovered from the low point of the recession 7. High-growth companies (i.e. those that experienced growth of 20% per annum over a 3-year period) in the area s main centres of population accounted for 6.3% of companies that survived during The proportion of innovation-active businesses in the East Midlands was a little higher than the UK average over the period (38.9% compared to 36.8%) 9. The proportion of businesses with employees was around seven percentage points lower than for other businesses. Of the innovation-active businesses, the proportion of product innovators in the region is above the UK average %, compared to 18.9% - in England only the South-East has a higher proportion 10. Eight companies in D2N2 are in the top 1,000 UK companies by the size of their investment in R&D 11. Rolls-Royce is the only company in the region that is ranked among the top 1,000 companies globally in terms of R&D spend. 7 Business Demography 2012, Office of National Statistics NESTA UK Innovation Survey UK Innovation Survey R&D Scoreboard, BIS 2010 although technically this does not include Rolls-Royce as the figures are attributed by location of HQs and theirs is in London 19

20 The East Midlands has a much larger proportion of innovation expenditure on the acquisition of capital and investment in training for innovative activities than the UK average, but the proportion of expenditure devoted to R&D is the lowest of any English region 12. Goods and services that are new to market account for 6.5% of turnover in the East Midlands, compared to 7.3% for the UK as a whole the second lowest of the English regions 13. A lower than average proportion of the working age population is qualified to NVQ level 4 plus (38%) compared to 43% nationally. The area does not punch its weight in accessing Government and European Innovation programmes. 4.2 Innovation Drivers and Barriers 14 The primary drivers of Innovation include the desire to introduce new and better quality goods and services and to enter new markets or increase market share. Businesses often look to suppliers or customers for new knowledge to support innovation, with companies in supply chains having to respond to the demands of companies at the top of the chain. There are signs from the Chamber of Commerce s quarterly surveys of business confidence that, as economic conditions improve, businesses are becoming more likely to invest in innovation and more receptive to collaboration with the knowledge base. The main barriers to Innovation include: A large proportion of SMEs are unaware of the opportunities in and support available through the universities and the wider knowledge base. It is believed that the majority of D2N2 businesses with innovation potential will never have engaged with the knowledge base, suggesting that there is a huge untapped market for innovation support to unlock that potential. Future growth will come largely from fast-growing SMEs, where innovation performance is generally weak. Key barriers for SMEs are: risk; cost; availability of finance (working capital from banks, and equity for early-start ventures); lack of absorptive capacity for innovation (i.e. the capacity and skills to take in and apply new knowledge); lack of visionary leadership; a lack of exemplars; and a lack of clear and simple routes to expertise, funding and facilities on the transfer and exploitation of knowledge. SMEs lack awareness of how to and where to collaborate and therefore miss out on externally-generated ideas. There is a relative shortage of highly-skilled workers in the area and SMEs lack staff with the know-how to translate ideas into commercial return. 12 UK Innovation Survey UK Innovation Survey Based on literature review and anecdotal feedback from businesses 20

21 Not enough is being done to: promote innovation within the learning infrastructure, capturing the interest of young people early on at school and subsequently in colleges and universities; to stimulate higher levels of graduate employment in the area; and to build on existing research strengths. It is recognised that the drivers of and barriers to innovation will vary from sector to sector, according to the markets within which they operate - see section 6 below. 4.3 Innovation Assets The D2N2 area has a solid foundation on which to build, including: The area s business base has a number of large, well-established technology-based companies, with significant supply chains in the locality, particularly in Advanced Manufacturing; it has growing clusters of commercial activity in sectors that are developing new technologies, such as Bioscience & Medicine, Digital Content and Low Carbon; and it has other sectors whose competitiveness depends on finding innovative solutions, such as Food & Drink, Construction, Logistics and Visitor Economy Nationally important clusters including in Transport Equipment Manufacturing centred on Rolls-Royce, Toyota and Bombardier in and around Derby, and in Life Sciences centred on BioCity, MediCity and Alliance Boots in Nottingham. Several inward investors with strong research capability, e.g. Chinese company Changan in Nottingham Many good examples of fast-growing SMEs, whose growth has been driven by innovation, e.g. Sygnature Discovery in Nottingham, Garrandale in Derby and EPM Technology in Draycott Well-established business-led sector and technology-based networks in the area, including Medilink and Food & Drink Forum, and associated inets Strong centres of knowledge and expertise in the three universities. Home to 80,000 students. Mature university relationships with major employers, e.g. GlaxoSmithKline, Ford, Rolls-Royce, Bombardier, Toyota. In 2011/12, the universities interactions with business and the wider community had a value of 92m 15. Good fit between universities research/technology capabilities and D2N2 s priority sectors. Close relationships to national centres for R&D and Innovation, including Catapults and national trade associations. The 15 University of Nottingham m, Nottingham Trent University m, University of Derby - 5.7m. Main components of the total: Collaborative Research income (30%), Contract Research (25%), Courses (18%), Consultancy Contracts (10%). 21

22 three universities have differential and complementary strengths see Appendix 1 for more detail. New University Technical Colleges in Nottingham and Derby in partnership with FE colleges and leading businesses. Strong relationship between graduate talent developed in the region and the D2N2 labour market, for instance 41% of the University of Derby s full-time graduates in employment are working in the D2N2 area. Also home to two national research institutions in the area British Geological Survey in Keyworth, and the Health & Safety Laboratory near Buxton Significant, diverse and growing incubation offer across the area, including BioCity in Nottingham and an established network of innovation centres across the D2N2 area in most of the main centres of population, including Mansfield, Chesterfield and Newark Other sources of expertise on Innovation across LEP boundaries e.g. universities in Loughborough, Sheffield, Birmingham, Leicester, and Pera in Melton Mowbray with some common areas of sector and technology specialism. The action plan needs to focus on how best to address these issues of relative under-performance and to overcome the barriers to innovation, in order to design and deliver an ecosystem that can create the conditions within which Innovation can flourish, building on the strong existing asset base. Case Study High-Growth SME EPM Technology is a high-performance engineering company based in Draycott, making carbonfibre composite components and assemblies for Formula 1, aerospace and defence. The company currently employs around 75 people and has plans to grow. They will soon be moving to a purposebuilt HQ in Derby and expect to double the size of the workforce and turnover. 22

23 5. INNOVATION OBJECTIVES The overall aim for Innovation in D2N2 s Strategic Economic Plan is: Objectives: To support a step change in innovation levels amongst D2N2 companies - particularly highgrowth SMEs in priority sectors - ensuring that businesses can find out about and access innovation support through their preferred route The following objectives are drawn from the headings identified in the Strategic Economic Plan under the Innovation strategic priority. They also reflect the three strategic areas under the Innovation priority within the D2N2 s EU Structural and Investment Funds Strategy , which is expected to be the main source of additional funding for Innovation support over the next few years. Actions are grouped by these objectives in the next section of the plan. C. Business Support for Innovation Provide flexible and tailored support for innovation-led start-ups and existing businesses in the D2N2 area, particularly SMEs with the potential for high-growth, to commercialise ideas for new products, services and processes, through: Skills for Innovation, including via access to talent in the knowledge base Opportunities in the knowledge base to exploit research expertise and technologies - including through the commercialisation of Intellectual Property to better support business-led innovation. Access to finance for Innovation to help businesses exploit their ideas, invest in necessary R&D and find a route to market D. Infrastructure for Innovation Invest in physical and communications infrastructure that fosters and nurtures Innovation ensuring that sites, facilities and equipment act as a platform, catalyst and host for Innovation and innovative relationships and encouraging informed networks that celebrate and share good practice, enabling businesses to connect quickly and easily to sources of inspiration and support D. Exploiting the Knowledge Base Maximise the potential of the knowledge base in and around the D2N2 area as a source of inspiration for Innovation - building on local specialisms in technologies of national importance, linked to D2N2 s priority sectors - and encouraging collaborations between businesses, universities and other institutions to exploit related expertise and enable adoption of new technologies, and to develop supply chains in these sectors 23

24 The diagram below illustrates the role of the Time to Innovate plan in helping to turn ideas into commercial return: 24

25 6. ACTION FOR INNOVATION Under each of the three objectives above, this section sets out the activities that will be encouraged/supported by D2N2, identifying: The rationale for intervention What currently exists and should continue, be scaled up or made more cohesive What additional action needs to be taken to fill gaps in provision All the actions in the plan are listed in Appendix 2. Innovation Partners There is a range of partner organisations that have an important role to play in helping to deliver the plan, including: Larger businesses in the upper tiers of supply chains D2N2 s priority sector groups the full plan includes the innovation priorities for each sector. Business representative organisations, such as the Chamber of Commerce and sector-based organisations Commercial providers of innovation accommodation and support The three D2N2 Universities, working in collaboration with neighbouring universities Further Education Colleges Local authorities in the D2N2 area Technology Strategy Board, Catapult Centres and other national providers of the Government s innovation support for business Priority Sectors It is important to recognise there are different drivers of and barriers to innovation across D2N2 s priority sectors. Plans being drawn up by groups representing these sectors identify a number of priority needs and actions for innovation. This section summarises some of the early outcomes from this work that is relevant to Innovation, including: Life Sciences Need for long-term support offer because of time lag from concept to product launch Foresight Fund to enable SMEs to work up innovative ideas and take them to market Proof of concept funding and investment readiness training Funding to help bring innovation into the NHS or drive commercialisation into other markets 25

26 Incentives for collaborative research Food & Drink Support to reduce waste and improve efficiency and environmental sustainability, e.g. through best practice knowledge transfer Improve access to knowledge transfer for agri-food producers and manufacturers Innovation support for micro-breweries Build on inet s specialist support Access to market intelligence Low Carbon Major local procurers provide suppliers with long-term procurement cycle information Support businesses to be more energy efficient and to embrace low carbon technologies Give businesses access to technology demonstration facilities Support for low carbon vehicle technologies Pool expertise in data management in the Clean-tech sector Proof of concept funding Construction Prospectus mapping innovation support for the sector Develop green construction sector through innovative products and processes Bridge gap between academia and industry in the fields of smart construction and digital engineering Smooth route to accessing funding for innovation Ensure that learning from successful innovation is captured and shared Transport Equipment Innovation mentors for SMEs Support programme to encourage wider SME access to Catapults Continue direct innovation support to SMEs, including links to universities, to reduce risk of investing in unproven technologies Encourage support for long-term relationships between SMEs and universities 26

27 Support local provision for centre of excellence that can help SMEs to develop new products and processes, e.g. Low Carbon Transport Technology Centre Explore developing programmes with other LEPs to create economies of scale and impact Time to Innovate The plan introduces the concept of establishing a unifying D2N2 brand, Time to Innovate, using a term originally coined by the University of Derby. It will be a common theme around which providers of Innovation support to businesses can coalesce. It will also in due course, with effective marketing, become recognisable to local businesses as a reliable source of advice and support on how to grow through Innovation. In time this could involve the adoption of common standards for Innovation support and facilities in the D2N2 area. There will be six extensions of the overall brand: Start to Innovate: support to innovation-led start-up businesses, e.g. through incubation facilities and SME first-contact points Skills to Innovate: providing businesses with the skills and knowledge they need to deliver successful innovation Technology to Innovate: offering specialist support to access technological expertise, primarily in the universities Finance to Innovate: helping access finance for introducing an innovation, including equity investment, loans or grants Place to Innovate: providing access to specialist accommodation and facilities Network to Innovate: tapping into the contacts and expertise in business-led sector, technology and supply-chain based networks 27

28 A. Business Support for Innovation Objective: Provide flexible and tailored support for innovation-led start-ups and existing businesses in the D2N2 area, particularly SMEs with the potential for high-growth, to commercialise ideas for new products, services and processes, through: Skills for Innovation, including through access to talent in the knowledge base Opportunities to exploit research and technologies, including through the commercialisation of Intellectual Property Access to finance for Innovation to help businesses exploit their ideas and find a route to market Rationale The importance of encouraging innovation in SMEs has been covered in some depth earlier in the document. It is clear that the relative lack of engagement by SMEs with the knowledge base is a market failure and needs to be addressed. There may be a number of reasons for this, including a general lack of experience of collaboration, and a perception that universities are not businessfriendly or do not move at the pace of businesses (issues that universities also need to address), but primarily it is probably because most SMEs will simply be unaware of how the universities and other partners in the knowledge base can add value to their business. The priority, therefore, is to make more visible the support available for businesses to understand how to innovate, to make it easier for businesses quickly to find the right help for their needs, and to deliver successful innovation. This will often be to find the right connections with other businesses and learn from the experiences of their peers. The Government sees university Business Schools becoming anchor institutions in the provision of support to SMEs, given their expertise in business education. It is important to recognise that all businesses can innovate and that the D2N2 innovation ecosystem needs to be capable of responding accordingly. Many businesses will not need to access university research or technologies to address their requirements for innovation. In many cases the routes for innovation support will lie in other directions, such as business-to-business networks and learning from peers, or national support programmes. But the D2N2 universities, playing a pivotal role in the local innovation ecosystem, have an important part to play in helping point businesses in the right direction as part of D2N2 s Growth Hub, whatever their innovation needs, as well as providing direct support where that is appropriate to their needs. It should be recognised that in some parts of the area, it may be more convenient because of their location for businesses to work with universities outside the D2N2 area. One of the main ways in which universities can help businesses is by encouraging placing students or graduates into business, exposing them to fresh ideas and providing access to university research. This improves the prospect of graduate retention in the area, helping to meet another of D2N2 s objectives. 28

29 Activity A1: Innovation-led start-ups Existing Assets and Activities This covers innovation-led start-ups and early stage-growth businesses, companies that begin their business to exploit an innovation, including graduate enterprises it is not about enterprise in general, which comes under D2N2 s Business Support priority. Such start-ups can access a range of national and local generic support programmes. In addition, there is a range of specific local measures in place to support innovation-led start-ups, including: Nottingham Next Business Generation, a structured programme of specialist support and mentoring for start-ups in Digital, Clean Technology and Life Sciences, delivered by BioCity Start-up support from the University of Derby (through Evolve@Derby) and Nottingham Trent University (through the Hive) Support for academic spin-outs commercialising university research, currently available in all three universities University student/graduate enterprise programmes, such as Enterprise Inc, that provide enterprise education, support in establishing the viability of a business idea, and mentoring/coaching once the business is up and running as well as connections to the university s wider knowledge/technology base. In Nottingham Inspired in Nottingham, a City Council initiative in partnership with the universities and FE colleges, finds student/graduate entrepreneurs a mentor from the business community. In addition to the incubation facilities at BioCity, there are several existing Innovation Centres across the D2N2 area offering space for new businesses to set up (and for existing businesses to grow) in a supported environment, some managed by universities, some by local authorities and there are plans underway to create new, complementary incubation facilities in existing and proposed innovation parks in the area. This covered in more detail on page 31. Examples of Start-up Support Programmes Funded by Nottingham City Council and the Department for Business, Industry and Skills (BIS), Next Business Generation (NbG) is a business support programme that aims radically to change how start-ups are created and supported in Nottingham City s three priority sectors. The NbG is a pilot programme designed to create more better-quality start-ups in Nottingham in the Life Sciences, Digital Content and Clean Technology sectors. NbG provides intensive support to develop the next generation of Nottingham entrepreneurs. It is run by BioCity and strategic partners, the Nottingham Clean Tech Centre and Accelerace. Assisting entrepreneurs through their Spark, Develop and Launch programmes, NbG helps start-ups develop from the very first sparks of a business idea, right through to the completion of detailed business plans and funding bids. Events and networking events are also run. NbG aims to interact with ideas across multiple sectors, at a much earlier stage in their formation and to provide them with a graduated source of support within a flexible time frame. Enterprise Inc is a project that aims to improve enterprise skills of final-year University students and recent graduates across the East Midlands. Funded 60% by seven East Midlands partner universities and 40% by ERDF, the scheme supports the start-up and growth of graduate businesses and attracts 29

30 proposals from a broad range of final-year students and recent graduates who have ideas for new business development. Successful graduate applicants receive a 2,500 cash bursary upon the successful completion of key milestones, along with 3,000 worth of generic and tailored business support from their University to help the business succeed (advice, guidance, mentoring, coaching, or training). The scheme runs for 6 to 12 months, depending on individual development needs. Focussing on the graduate and graduating population of the D2N2 area, this scheme increases graduate opportunities and employment, making significant local economic development impact through business, job creation and increased GVA. The current project runs until the end of 2014 and will have worked with 445 target beneficiaries over the 3 years of its operation. Case Study university spin-out Molecular Profiles was established in 1997 by an academic group at the University of Nottingham s School of Pharmacy, who had identified an opportunity to deliver analytical and development solutions for the pharmaceutical industry. A winner of two Queen s Awards, the company now provides pharmaceutical development, clinical trial manufacturing, advanced analysis and consulting services for the pharmaceutical industry worldwide. Its clients range from large multinational pharmaceutical companies to specialised drug-delivery firms and biotechs. Their consulting services business has provided detailed investigation services for more than half of the world s biggest blockbuster drugs. The company has now been purchased by Columbia Laboratories of Boston for 16m. Action A1.1 As part of the Time to Innovate toolkit (see page 21), create a coherent cross-d2n2 programme of 30

31 support for innovation-led start-up and early-stage growth businesses, Start to Innovate, with the following features: Facilitated by the D2N2 universities as part of D2N2 s Growth Hub, working closely with other providers across the D2N2 area and nationally Easily accessible to businesses through the Growth Hub Closely linked to generic start-up programmes offered by other providers at national and local levels, including national mentoring programmes Rolling out successful approaches across the D2N2 area, e.g. exploring the scope for widening access to Inspired in Nottingham Includes access to incubation facilities for new starts, including businesses established by students and graduates (including overseas graduates), spin-out enterprises set up to commercialise university IP and other new local companies in priority sectors enabling the development of business ideas in a supported environment. Can involve mentoring/coaching, growth surgeries, events, access to equipment and facilities. Encouraging students and graduates to start up innovative new business through enterprise boot-camps or summer schools A1.2 Ensure that new and expanded innovation parks, and other relevant university capital developments, include provision for incubating innovation-led start-ups in D2N2 technology and sector specialisms. See B1.4 for further related action on incubation facilities. A1.3 Secure Charter Mark status for the universities Business Schools, enabling them to access national small firm growth support programmes under the Small Business Charter, which will recognise excellence in Business Schools offer to small businesses, making them easily identifiable as places where students and staff are keen and able to work with small firms on the specialist areas that drive their growth. Activity A2: Skills and Talent for Innovation Existing Assets and Activities This covers support for companies to ensure that they have the skills to lead, introduce, manage and successfully implement innovations in their business. In particular, it encompasses higher-level technical skills to build capacity to adopt new technologies; higher-level personal and professional skills to build capacity for new ways of thinking and working, including in sectors where there are skills shortages, staff retention concerns and large-scale changes in business practices. It does not include generic business skills, which come under D2N2 Business Support priority. As well as the specialist technology support covered at A3 below, there is a range of local and national services and support to businesses to improve their capacity to innovate and grow, including: 31

32 Specific training and development of individuals and groups of individuals within businesses, e.g. through coaching, Continuous Professional Development (CPD), workshops and short courses, tailored to a business s innovation needs. Examples include: o o o o National support programmes Growth Accelerator and Manufacturing Advisory Service, whose advisors work with leaders of SMEs to identify the steps required to achieve growth in their business Programmes of activity delivered by the universities, for example University of Derby Corporate provides innovative, tailor-made work based learning solutions for businesses, with customised programmes delivering higher-level skills; University of Derby Online provides flexible access to skills development in the workplace; and support for management and leadership skills through the universities Business Schools. Specific skills-based projects including Enscite, currently based at and collaborating with University of Derby, providing supply chain solutions in the engineering sector, in collaboration with Cranfield / Aston Universities and Derby City Council; and Growth 100 delivered by Nottingham University Business School, a Nottingham City Council initiative to develop a cohort of business leaders in the city. Provision in the private sector, e.g. Medilink provides CPD certified specialist training solutions in the Life Sciences sector covering a wide range of topics such as regulatory requirements, health service provision and reforms, new technology development and market access. Placing university talent - undergraduates, graduates and postgraduates - into businesses to help implement innovation. All three universities have programmes of undergraduate and postgraduate placements, and assist graduates in finding temporary and permanent employment. Knowledge Transfer Partnerships (KTPs), a nationally-available scheme part funded by the Technology Strategy Board, enable businesses to take on recent graduates for a period of 6 months to 3 years to help them deliver an innovation project, although some businesses prefer KTPs to run for shorter periods, a model operating in some parts of the country. Some local authorities also help encourage graduate retention, e.g. Mansfield and Ashfield have a project that helps students returning home to find temporary work during holiday periods. Further Education Colleges also play and important role in providing innovation skills to the workforce of the future. New University Technical Colleges in Nottingham (Nottingham Science and Technology Academy, involving Central College) and Derby (specialising in Manufacturing, involving Derby College) are due to open over the next year. They will offer year olds the opportunity to take a technically-oriented course of study. They are sponsored by a university and offer clear progression routes into higher education or further learning in work. Access to a highly-skilled workforce is critical to the local economy s future growth, capacity for innovation and resilience. This will include both the supply of new talent and also, in the context of an ageing workforce, supporting the current workforce to up-skill or re-train. Ability to adapt to a changing workplace, to adopt new technologies and processes and to use more innovative and integrated approaches to solve existing and emergent business issues will be critically important skills in a 32

33 knowledge economy. D2N2 is working with its Sector Groups and the universities to ensure that appropriate skills-based interventions are designed to underpin the ambitions of the LEP s Growth Strategy and Action Plans around innovation, low carbon and business growth. This covers the following priority areas, some of which are included in this plan: The supply of work-ready graduates (graduate talent) The supply of good quality graduate jobs in the D2N2 SME base to retain graduate talent Provision of appropriate advanced CPD / skills updating / retraining opportunities for the current workforce (L4+). Provision of skills development opportunities that encourage companies to collaborate, working and learning together to achieve greater regional impact (including supply chain approaches to higher-level skills development). Executive management and leadership development including for high-growth SMEs New business gestation for student and graduate entrepreneurs Development of new employer-led Higher Apprenticeship pathways where an industry standard is identified Knowledge Economy Skills collaborative industry/he Masters and PhD places to stimulate a research and innovation culture in SMEs Supply of higher-level STEM skills (including female talent) Technical skills underpinning innovation Case Studies Skills for Innovation Rail company Signalling Solutions chose University of Derby Corporate (UDC) to provide innovative development programmes tailored to the specific culture and operating procedures of the company. UDC are developing a bespoke graduate development programme leading to a Masters degree in management and leadership for recent graduates at Signalling Solutions, viewed as future leaders of the business. The programme covers the latest management and leadership concepts as well as technically-specific modules that relate to Signalling Solutions practices. The part-time work based programme is being delivered through a combination of face-to-face sessions and online study through UDC s e-learning portal. With an increase in our graduate intake we wanted a bespoke programme for our graduates. UDC was able to support this with a programme that worked for us and promoted the growth of our company. The outcome is to provide professional development with leadership, strategic thinking, relationship building and lots more to enhance the development journey within the company. Signalling Solutions Growth 100, a Nottingham City Council initiative being delivered by the Nottingham University Business School, has been designed to help businesses develop the skills and knowledge of owners and directors of businesses with growth potential. The businesses come from a range of sectors, including construction, digital content, food and healthcare. Each company undertakes a detailed business needs analysis to determine the kind of support they need. The programme covers key business areas such as leadership skills, finance, human resources, marketing, innovation, with the content tailored to the needs of each business and business leader through the mentoring and peerlearning process. Although the course is free, participants need to commit to 12 days of training over the course of the year. A key outcome of the programme is that each business develops a Business 33

34 Growth Plan. This will articulate the strategy and expansion plans of the business, which can in turn be used as a basis of a presentation for potential future investors. The main thing I want to get out of Growth 100 is expansion. The programme will hopefully provide me with key ideas on how to achieve this without my business burning out financially. Legion Express Parcels The University of Derby and XAD Communications are working together through a Knowledge Transfer Partnership (KTP) to develop the next generation of electronic surveillance systems, which will handle images and analyse information more quickly than anything on the market. XAD, whose clients include government, public organisations and large businesses, is working with the university s Computing experts on the two-year project. The system will match size and shape to achieve its aim and should even be able to keep up with a person if they try to change their clothing or conceal their face while moving. Once the project is completed, the prototype will be tested on road camera networks, before being adapted for other uses. Actions A2.1 As part of the Time to Innovate toolkit, create a coherent cross-d2n2 programme of support to provide businesses with the skills and knowledge they need to deliver successful innovation, Skills to Innovate, with the following features: Facilitated by the D2N2 universities as part of the D2N2 Growth Hub, working closely with other providers and networks across the D2N2 area and nationally, including Growth Accelerator Easily accessible to businesses through the Growth Hub Creating an accessible and joined-up student and graduate internship and placement programme to increase the numbers of SMEs in the D2N2 area that use graduate talent Engaging SMEs in innovation using ESF-supported skills interventions e.g. short courses, work-based learning, and supply chain/cluster based skills development Including a leadership programme to enable SMEs to absorb innovation Exploring the scope for introducing a cross-d2n2 non-technology based innovation coaching support programme for leaders of SMEs in the D2N2 area, linked to and levering in national funding for business growth, potentially involving Pera and the universities Business Schools A2.2 Work up plans for the introduction of a cross-d2n2 innovation coaching and development support programme for leaders of high-growth SMEs in the D2N2 area, linked to and levering in national funding for business growth, which could involve Pera and the universities Business Schools A2.3 Develop plans for a D2N2 Knowledge Economy Skills Scholarship programme A2.4 Support the expansion of Higher Apprenticeships to increase capacity to innovate A2.5 Explore the introduction of a cross-d2n2 initiative to enable companies to bring in a recent graduate on a short-term project to help identify an innovation in the business 34

35 Activity A3: Technology for Innovation Existing Assets and Activities The Technology Strategy Board (TSB) is the main channel through which the UK Government supports innovation, with its focus on technological innovation. The TSB s key schemes include: Knowledge Transfer Partnerships offer businesses the opportunity to work with academic institutions to gain access to new knowledge Knowledge Transfer Networks enabling the UK s innovation communities to connect, collaborate and discover new opportunities Collaborative Research & Development help businesses and researchers to work together on science, engineering and technology innovation Smart offers funding to SMEs for R&D projects in science, engineering and technology. Feasibility Studies help for businesses to test how feasible an innovative idea or technology is for development for market Launchpads support innovative projects by high-tech companies that are clustered around specific themes or geographical locations. Catalyst Funds in target sectors, helping SMEs to develop early-stage innovations the latest fund is in the Energy sector, building on the model used for Biomedical and AgrTech sectors. Catapult Centres, the TSB s national network of physical Centres supporting business innovation in key areas, for example Satellite Applications and Transport Systems. There is a range of local support available to SMEs to access research and technologies in specialist centres, through showcase events and one-to-one engagement, accessing specialist skills, knowledge, expertise and facilities such as technology demonstrators: Through business-led sector organisations, including Medilink, the Food & Drink Forum and the Cleantech Network. In the universities, through a range of specialisms in research and technological expertise, and in their many centres of excellence see page 45 and Appendix 1. By NHS England, through Academic Health Science Networks (AHSN), working to exploit innovations that will have national and international significance; the D2N2 area benefits from proximity to four AHSNs. NHS Trusts and Clinical Commissioning Groups in the area are also working closely with partner organisations to drive innovation and provide routes to market for innovation. The universities have active programmes of commercialising intellectual property (IP) generated by research, through either spin-out companies (see A1 above), joint ventures or by licensing the use of IP to existing companies. They have a significant portfolio of spin-out companies, some of whom have grown into strong economic contributors, such as Molecular Profiles in Nottingham (see case study on page 37) 35

36 Case Studies commercialising research The University of Nottingham s Satellite Applications Business Innovation Programme helps to overcome the challenges of taking innovative academic research from university laboratories to the marketplace. The programme also connects local businesses to work taking place at the national Satellite Applications Catapult, based in Harwell in Oxfordshire, which focuses on the development and commercial exploitation of space and satellite-based products, services and applications. The global space sector is predicted to grow to 400bn by 2030, with the Government driving the UK s huge ambition to increase its share of that from the current 7 billion to 40 billion. The programme aims to ensure that the local economy can benefit from this by engaging with local businesses to enable knowledge transfer and collaborative working, with the goal of creating new business ventures and space-related technologies for the marketplace. Alkane Energy, the UK's leading coal mine methane producer, approached Nottingham Trent University s Future Factory for assistance with research and practical development of a new viable revenue stream utilising ground source heat pumps and water in abandoned mines. The company received free support in a number of ways including academic research into mine water flow, temperature, and heat output and use of renewable technologies as a power source; and initial design and development of a ground source heat pump which continues to run efficiently when contaminants are present in the mine water including the development of an accurate monitoring programme. As a result the company was able to commercialise the ground source heat pump, allowing for a significant proportion of UK heat to be produced sustainably in schemes such as district heating. The company has now secured a Knowledge Transfer Partnership to undertake further collaborative research with NTU to investigate how energy can be harnessed from disused flooded coal mines, providing a renewable heat source that can help society and industry by reducing carbon emissions. 36

37 Derby contract electronics manufacturers Tioga have developed, for use in the mining industry, a technology that was being researched by the University of Nottingham to monitor the heartbeat of new-born babies. A chance conversation between the MD and the professor leading the research, led to the company exploring whether Heart Light, which involves attaching a small sensor to the baby s head, could be developed to monitor the wellbeing of miners while working underground. To examine the idea further, Tioga signed a licence agreement with the University for the development of an optical head mounted heart rate sensor to monitor workers in high risk industrial environments, which was designed and patented by the Applied Optics Research Group at The University of Nottingham. The University then set up a Knowledge Transfer Partnership (KTP) 16 with the company to undertake the research work required to design a product suitable for the mining industry. The researcher s work involves the evolution of the initial Heart Light concept into a pennysized sensor in a miner s helmet. The solution, which is known as the Mining Industry Mobile Sensor (MiMoS), is able to detect a range of essential features for miners, including details about their heart rate, temperature, activity and respiration. The system will also reduce the risk of injury to individual miners by checking for dangerous gases, which are currently monitored on an ad hoc basis. Tioga have already undertaken successful initial trials of MiMoS in mining conditions and following final development work on the product, they are aiming to launch the product in The relationship with the University of Nottingham has been extremely beneficial for us. The KTP is enabling us to cost-effectively access the skills of a top quality researcher and many leading experts at the University. They have helped us to develop a unique product, which aims to improve the wellbeing of miners and potentially save lives. Tioga Action A3.1 As part of the Time to Innovate toolkit, create a coherent cross-d2n2 programme of support to help businesses exploit research and technologies, Technology to Innovate, with the following features: Facilitated by the D2N2 universities as part of D2N2 s Growth Hub, working closely with other providers and networks across the D2N2 area and nationally Easily accessible to businesses through the Growth Hub Exploring the scope for creating an online space for connecting commercial innovators to opportunities in the knowledge base, using an existing channel such as the Innovation Commons. 16 A KTP is a relationship between a company and an academic institution which enables the transfer of knowledge, technology and skills funded by the Technology Strategy Board 37

38 Providing access to specialist expertise in local sector technology centres, and opportunities for commercialising IP in the knowledge base Offering SMEs in all sectors a financial incentive to engage with universities, e.g. through an innovation voucher helping the business to develop new or existing products, services or processes Offering SMEs support to engage and collaborate with each other, enabling the transfer of technology from sector to sector and driving innovation by exploiting synergies between technologies Facilitating access to national programmes, including those delivered by the Technology Strategy Board and exploring the scope for introducing a cross-d2n2 technology-based innovation support package, linked to and levering in national funding from the Technology Strategy Board Activity A4: Finance for Innovation Existing Assets and Activities This covers the routes for businesses to access finance for introducing an innovation. This can be at any point during a business s life-cycle. The diagram below shows the escalator of finance for highgrowth potential SMEs, from early-stage ventures seeking equity investment, to more established companies. There is a range of local and national support available to businesses to stimulate innovation. 38

39 FINANCE ESCALATOR FOR HIGH-GROWTH POTENTIAL SMEs Source: NESTA (2009) Reshaping the UK Economy Most of the available funding is targeted at later stages in the escalator. Exceptions are the Mobius investment fund, supported by BioCity, which targets early stage Life Sciences businesses, and funding currently available through the sector-focused inets (see page 60) provides support to all stages of development for innovation projects, from early ideas generation within SMEs, universities and NHS Trusts, either collaboratively or independently, through to pre-production prototype and final evaluation. The inets collaboration grants pump-prime projects with potential to go on to deliver future economic benefit, whilst their innovation funds enable SMEs to bring innovations to market more rapidly and with more commercial impact. Other support for the later stages in the escalator of business finance is available primarily through local authorities with funding from central government: D2N2 s 7m Unlocking Investment for Growth programme to support job creation through capital investment by businesses in the priority sectors; the 40m Foresight Nottingham Investment Fund, which provides up to 2m equity investment in high-growth companies and businesses looking to locate in the city or county; the Nottingham Technology Grant Fund (N Tech), a 10m grant-funding programme designed to support the development of businesses operating within Nottingham's three priority growth sectors, Life Sciences, Digital Content and Clean Technologies; the 20m Derby Enterprise Growth Fund, which offers grants and loans to assist the development, application and adoption of innovation in supply 39

40 chains from businesses primarily, but not exclusively, in the aerospace, rail and automotive sectors; and Global Derbyshire Small Business Support programme, delivered by Derbyshire Economic partnership, offering grant funding for Derbyshire SMEs seeking to grow, collaborate, innovate and export. All of these could potentially finance innovation in the area s businesses. The main source of national funding for business innovation is the Technology Strategy Board, whose products include grant support to SMEs for R&D projects in science, engineering and technology (see page 31). Other national Government programmes - Growth Accelerator, the Manufacturing Advisory Service, and support for exporting through UK Trade & Investment - offer businesses support to help their business to grow, including through innovation. D2N2 are working with these programmes to ensure that delivery meets the needs of businesses in the locality. The EU s new Research and Innovation programme Horizon 2020 is another important source of support for SMEs. The University of Derby has recently been awarded a major Regional Growth Fund grant by Government to deliver a new Invest2innovate business grants and loans scheme to fuel business expansion and create or safeguard jobs. Typically the three universities have in the past been involved in early-stage seed funding to support the exploitation of research, through the Lachesis Fund that has been operating in all three universities. The universities also make available financial support to SMEs as part of their support offer, e.g. through innovation vouchers or credits to help meet the cost of accessing their services. 40

41 Case Studies finance for innovation FC Laser of Ilkeston provides laser-cut components to a range of sectors, including aerospace, rail and motorsport. The latest technology enables the company to offer faster cutting while using less power. Through investment in the new technology, the fast-growing company has been able to create new jobs, with the help of 66,000 grant from D2N2 s Unlocking Investment for Growth programme, which is supported by the Government s Regional Growth Fund programme. The company purchased a new cutting machine, creating 4 new jobs, increasing the workforce from 12 to 16, and with the prospect of a further 4 jobs within the next 3 years. Langley Mill based business Prometheus Developments is a family firm that offers consultancy on fire-protective materials. The company plans to increase its workforce from 5 to 12 as it switches from research and consultation into the production of its own fire-retardant products. This has been made possible with a 160,000 loan from D2N2 s Growing Places Fund. Examples of local programmes financing innovation N Tech is a 10 million programme, funded by the Regional Growth Fund, offering grants to help businesses in Nottingham to grow and create jobs in the city. The programme is open to applications from businesses within the Nottingham Core City area and working in one of the city s key growth areas (Digital Content, Life Sciences or Clean Technologies). Grant money can be used by businesses towards the commercialisation of Intellectual Property (IP), the development of new technologies, or capital investment in infrastructure. Businesses can receive grants between 20,000 and 1m. So far, the fund has had 60 successful applications, awarded grants to the value 7m, and created and safeguarded over 1,500 jobs. N Tech is part of the 50m Nottingham prospectus, a package designed to attract investment to boost Nottingham s economy, which forms a key part of the Nottingham Growth Plan. The scheme is open to applications to the end of September Grants to Support Business Innovation are available to SMEs in Ashfield and Mansfield to improve their productivity. The scheme provides a grant of up to 50% of the cost of undertaking projects that 41

42 lead to improvements in products or services, processes, technology and business practices. Supported activity can include research & development, preservation of intellectual property rights, technology transfer, tailored market research, change management, and process & resource efficiency. The grants, which range from 1,000 to 5,000, can support revenue and capital expenditure. Action A4.1 As part of the Time to Innovate toolkit, create a coherent cross-d2n2 programme of support to help businesses identify suitable sources of financing for innovation, Finance to Innovate, with the following features: Facilitated by the D2N2 universities as part of D2N2 s Growth Hub, working closely with other providers across the D2N2 area Easily accessible to businesses through the Growth Hub Providing access to early-stage seed funding to support the exploitation of research in the knowledge base Investment readiness training and support to help businesses secure equity investment Facilitating access to local, national and European funding programmes the form of equity investment, loans or grants - including those delivered by local authorities, the Technology Strategy Board, Growth Accelerator, the Manufacturing Advisory Service, and UK Trade & Investment, Regional Growth Fund and Horizon A4.2 Continue to work with the providers of the Manufacturing Advisory Service and the Growth Accelerator to ensure that national funding earmarked for the D2N2 area is targeted effectively on the needs of local businesses; and work with the Technology Strategy Board to ensure that the area maximises its potential for drawing on its programmes of support. A4.3 Explore the options for creating a D2N2 fund to support early-stage funding of innovation-led start-ups A4.4 Develop plans for introducing a cross-d2n2 Innovation Voucher that helps SMEs to buy in innovation support from the provider of their choice, building on the models operating in the inets and in the D2N2 universities and linking to national SME voucher programmes 42

43 B. Infrastructure for Innovation Objective: Invest in physical and communications infrastructure that fosters and nurtures Innovation ensuring that sites, facilities and equipment act as a platform, catalyst and host for Innovation and innovative relationships and building informed networks that celebrate and share good practice, enabling businesses to connect quickly and easily to sources of inspiration and support Rationale Although virtual communications are becoming more common-place, innovation generally happens when people interact face-to-face. There is a need for a physical focal point for new technology startups, SME growth, and emerging cluster activity - physical centres of excellence where expertise can coalesce, technologies can be demonstrated and innovation communities can thrive. Giving SMEs exposure to the latest technologies in a risk-free environment is critically important, e.g. 3D printing, new materials, laser technologies, emulation allowing new ways of visualisation and providing design freedom. For the purpose of this plan, an Innovation Centre is a physical facility where businesses can get direct access to support for innovation, as defined earlier in the plan. Incubation Centres offer more intensive support across the range of their innovation needs, usually aimed at start-ups and earlystage SMEs. Effective networks are also a vital part of successful innovation. As noted under Objective A above, most businesses are unaware of the bhx4zways in which partners in the knowledge base can help them to innovate there is a need to provide a more visible and joined-up offer, with easy access for business, maximising the use of existing networks and better connecting them together to facilitate communication and peer support, and building a much more robust Innovation ecosystem as a result. Other aspects of D2N2 s Infrastructure plan will also help create the conditions for innovation, for instance ready access to superfast broadband. Activity B1: Physical Infrastructure The D2N2 has a very strong base of physical innovation assets, thanks to substantial capital investment by Government, Universities and local authorities over the past decade. This includes: Existing and emerging Innovation and Science Parks, including University of Nottingham Innovation Park - which houses the area s most advanced facilities for research translation and exploitation by sector and following a national competition has been approved as one of the first University Enterprise Zones nationwide and the City Council s Nottingham Science Park. Infinity Park business and technology park in Derby, supported by Rolls-Royce, the Regional Growth Fund, Derby City Council and local developers, which will open in spring It will have at its heart an innovation centre established by the University of Derby and Derby City Council, focusing on support for the transport engineering sector and the base location for Enscite, supporting innovation through and across the transport engineering supply chains. 43

44 Innovation and Incubation Centres for new start and growing SMEs across the D2N2 araea, including: o o o o o BioCity, one of the largest life sciences incubators in Europe, and the recentlylaunched Medicity, a collaboration between Alliance Boots and BioCity, providing incubation space for innovators in consumer healthcare, medical technology, diagnostics and beauty products. A thriving business incubation eco-system in Derby in which the University of Derby (which has the largest number of university incubation/innovation units in the East Midlands) offers both generic and sector-specific support and facilities including the Innovation Zone at the Enterprise Centre (Business Services), Banks Mill (Creative Industries), the ID Centre (rail, electrical and digital) and Network House (ICT). This is complemented by Connect Derby, Derby City Council s investment in incubation facilities across the City which includes Friar Gate Studios, Kings Chambers, the new Sadler Bridge Studios, Shot Tower and the former Magistrates Court. A number of innovation centres offering business support and incubation space outside the two cities, including Dunston and Tapton Innovation Centres in Chesterfield (see case study below), and the network of innovation centres in North and East Nottinghamshire managed by Oxford Innovation -Mansfield i-centre,newark Beacon and Worksop Turbine. Other facilities targeting the priority sectors include Nottingham Cleantech Centre, Southglade Food park in Nottingham, Antenna Business centre in Nottingham s Creative Quarter, Markham Vale Environment Centre in Derbyshire, and a proposed 2.3m Centre for Innovation and Enterprise in Sustainable Construction at New College Nottingham. The University of Derby s proposed new University Centre in Chesterfield bringing a physical knowledge base to NE Derbyshire. Specially designated status for development zones, including Enterprise Zones in Nottingham and in Markham Vale near Chesterfield, and the Creative Quarter in Nottingham. Existing centres of research excellence in the three universities see Appendix 1. At Nottingham, centres for Advanced Manufacturing, Aerospace Technologies, Additive Manufacturing, Power Electronics, Regenerative Medicine, Digestive Diseases, Hearing, Synthetic Biology, Sustainable Chemistry, Digital Economy, Satellite Applications, Energy, Environmental Technologies, and Food & Biofuel. At Derby, Sustainable Engineering and Computing. At NTU, Advanced Design & Manufacturing, Advanced Materials, Cell Therapy, Cancer research, Environmental Sustainability, and the Creative Economy. Further Education College centres of excellence, in D2N2 priority sectors, including New College Nottingham s Construction Innovation and Enterprise Centre, and the Engine, West Nottinghamshire College s high performance engineering centre, which includes a virtual factory and manufacturing facility. 44

45 Case Studies Innovation Parks and Centres Infinity Park in Derby will establish a new 250-acre manufacturing and technology park adjacent to the world headquarters of Rolls-Royce Civil Aerospace. The site will provide 1,500,000 sq ft of space to accommodate 8,000 jobs focussed on hi-tech and knowledge intensive industries. The landmark development on the site will be an 11.5m Innovation Centre offering space to advanced manufacturing companies and start-up businesses. This is a collaborative venture involving Derby City Council and the University of Derby, partnership with Cranfield and Aston Universities. We are keen to see UK advanced engineering and manufacturing SMEs grow and become more competitive and more capable suppliers for OEMs such as ourselves. Infinity Park Derby is going to be an attractive location in which these developing companies can grow and cluster. Rolls-Royce BioCity is the UK s leading bioscience incubator, sustaining more than 80 fast-growing businesses. Providing accommodation, facilities, expertise and access to finance, BioCity has become an international centre for new thinking in bioscience business. Established in 2002, following a donation of 120,000 sq ft of offices and highly-equipped laboratories to Nottingham Trent University by chemical company BASF (one of the largest ever corporate donations to a university), the vacant site was transformed into the first BioCity incubator through a partnership of support from the East Midlands Development Agency, Nottingham Trent University, and the University of Nottingham. Today, with locations in Nottingham, Scotland, Cheshire and now MediCity on the Boots site in Nottingham, the BioCity phenomenon continues to grow and provides the ideal conditions for biotech, pharmaceutical and healthcare start-ups. From its initial roots in Nottingham, BioCity is now an established community of people who share the goal of turning new ideas into commercial success across the UK. As part of its Growth Deal with Government, the City Council is helping finance the construction of another building on land adjacent to BioCity to create grow-on space for life science companies. The Dunston and Tapton Innovation Centres in Chesterfield are the focal point for a package of support for local SMEs that want to innovate and grow. The package, which is supported by Chesterfield Borough Council and ERDF, has three elements: Direct Business Support: The Borough s Council s Innovation Project Manager meets with owners to undertake a review of their business, looking at issues and needs and helping them to identify solutions. These may be simple signposting or a more personal introduction to other providers of Business Support. The Project Manager also provides ongoing support to the businesses. Event and Seminars: There are six networking master-class events each year, held at the Innovation Centres. The topics covered have included Cloud Computing, Google Plus, and Business Support Workshops. 45

46 Specialist Advisors: If the Project Manager identifies a need within the businesses, the project will fund a specialist innovation advisor to work with the business for up two days. This support could include access to finance, advice on bringing product to market, advice on more effective use of IT, advice of team development and growth. 71 local SMEs have enrolled in the project and 13 of them have had support from the specialist advisors. The project has also signposted clients other business support including the Manufacturing Advisory Service and D2N2 Unlocking Investment for Growth. The Creative and Virtual Technology Lab at Nottingham Trent University is a digital art and design led research environment where architects, artists, designers, engineers, computer scientists collaborate to explore the potential of new visualisation techniques and digital design models and processes to enhance the quality of our products in a sustainable way, meeting user expectations. The Laboratory provides access to tools supporting augmented reality, 3D modelling and animation, fabrication technology, game technology, ubiquitous computing and tangible interfaces. Action B1.1 As part of the Time to Innovate toolkit, create a coherent cross-d2n2 programme to provide access to specialist accommodation and facilities, Place to Innovate, with the following features: Facilitated by the D2N2 universities as part of D2N2 s Growth Hub, working closely with other providers across the D2N2 area Easily accessible to businesses through the Growth & Innovation Hub Strengthened network of facilities offering innovation space and support to businesses: that shares good practice and expertise; facilitates knowledge exchange among occupants, users and managers; and enables local outreach from the knowledge base 46

47 Consider introducing accreditation in order to use the Place to Innovate brand and to secure any associated funding B1.2 Develop the potential of the area s flagship innovation parks and centres for example BioCity/MediCity in Nottingham, University of Nottingham Innovation Park (UNIP), other developments within Nottingham Enterprise Zone, and Infinity Park in Derby as magnets for high-value inward investment, and as centres for incubating new innovation-led businesses. B1.3 Capitalise on the conferred status of University Enterprise Zone for the University of Nottingham Innovation Park and the associated new capital build development, which will double space for business accommodation and introduce new support for technology entrepreneurship. B1.4 Facilitate networking by the innovation and incubation centres across the area, enhancing their potential as places where businesses can learn from each other and access outreach support from providers in the knowledge base, and increasing incubation capacity (particularly in priority sectors). B1.5 Explore options for improving the visibility of and access to technology prototyping, testing and proving facilities in the universities, linked to the Technology Strategy Board s Catapult centres nationally. B1.6 Create Good Laboratory Practice and Good Manufacturing Practice facilities to bridge the gap between the research laboratory, the clinic and other markets B1.7 Be responsive to the opportunities for supporting nationally-significant capital investment projects in D2N2 s key technology and sector specialisms Activity B2: Innovation Networks and Intelligence Existing Assets and Activities There are some strong existing business-led networks underpinning the local innovation ecosystem, including sector-based networks, such as: Medilink in the Life Sciences sector and the Food & Drink Forum (both with associated inets); the Cleantech network in Nottingham; the Derby and Derbyshire Rail Forum, whose members form part of the largest rail cluster in Europe; and multidisciplinary networks associated with GameCity, Nottingham s international festival of games culture. There is also a number of technology-based networks, such as the Chemistry-using Network in Nottingham and Medilink s East Midlands Infectious Disease Network. The inets are partnerships between businesses and universities, providing innovation support that is tailored to the needs of businesses in the sector. This includes grant funding to support innovation projects, particularly at the early stage of development, as well as networking and training events to enable businesses, academics and other researchers to engage and collaborate. As well as enabling SMEs to connect with relevant innovation support opportunities, the inet advisers act as a bridge or translator between universities and business, able to understand the drivers and speak the language of businesses in the sector, and able to interact effectively with academics in the universities. It seems that the inets that have been most successful are those that were based on an existing, active 47

48 business-led membership organisation or network, with access to a physical focal point i.e. Healthcare & Bioscience inet (via Medilink, based at BioCity) and Food & Drink (via the Food & Drink Forum, based at Southglade Food Park). The universities currently have their own (virtual) single front doors when it comes to engagement with SMEs. At Nottingham through the Ingenuity programme, at NTU through Working with You and at Derby though University of Derby Corporate. The broad offer to businesses is similar, all involving a programme of open-access networking events for SMEs in the network and beyond. Some local authorities also have programmes in place offering events and other business support for innovation, e.g. in Mansfield & Ashfield and in Chesterfield. Another important part of the infrastructure underpinning the innovation ecosystem is intelligence, i.e. having ready access to information that informs the development of the ecosystem. There is plenty of capability in the universities to fulfil this function but no structured arrangement to deliver this at present. Case Studies Networks for Innovation The Food and Drink inet (innovation network), established in 2008, coordinates specialist support and provides funding to stimulate innovation in the food and drink industry. Working at the heart of the industry, the inet draws on an extensive network of businesses and academic specialists to bring together businesses ideas and academic expertise to drive innovation. In its first three years, the Food and Drink inet supported more than 80 SMEs with grants for innovation project and delivered over 1,000 instances of one-to-one tailored business advice and guidance. Part-funded by the European Regional Development Fund (ERDF), the Food and Drink inet is managed by a consortium, led by the Food and Drink Forum and including Nottingham Trent University, the University of Lincoln and the University of Nottingham. It is based on Southglade Food Park, Nottingham, with advisors covering the East Midlands region. A new business network has been launched to help give Nottingham s manufacturing companies a competitive advantage. The Nottingham Manufacturing Network comprises local manufacturing businesses in a range of industries, who will share ideas and solutions in subjects such as production planning, procurement and quality assurance. Each month, businesses in the network will have the opportunity to visit other factories, where they can exchange business know-how and best practice through question and answer sessions. The network members will also be able to develop connections with Nottingham City Council and the University of Nottingham, which will help them to access grants, loans and academic expertise. Sharing best practice is really important in manufacturing, because if you can do things slightly better and more efficiently, it can make a massive difference to your business and for your customers. Lots of manufacturers in our region are doing outstanding work, and I believe we can all learn something valuable from each other. I m looking forward to being a part of the Nottingham Manufacturing Network and I hope that other Nottingham manufacturers also sign up to take part in it. I think that by working together, we really can improve the quality of local manufacturing, and help to put Nottingham back on the global manufacturing map. SMS Electronics 48

49 Action B2.1 As part the Time to Innovate toolkit, promote open-access innovation awareness-raising and networking opportunities to businesses, Network to Innovate, tapping into the contacts and expertise in business-led sector, technology and supply-chain based networks, and encouraging peer-to-peer learning B2.2 Ensure that the D2N2 Growth Hub network and website provide easily-accessible information and support to local businesses, with associated marketing B2.3 Establish a Time to Innovate network of providers within the knowledge base and innovation ecosystem, facilitated by the universities as part of the D2N2 Growth Hub and involving other providers, with constantly refreshed training and awareness on innovation support for access points within the innovation network and the wider Growth Hub network, and with clear referral mechanisms B2.4 Support the development of successful business-led networks that offer specialist innovation support to businesses in Life Sciences and Food & Drink, and consider the need for specialist support in and across the other priority sectors, drawing on the lessons of inets. B2.5 Encourage the development of business-led technology exploitation networks, linked to the national Knowledge Transfer Network B2.6 Explore innovative business-to-business networking approaches to the stimulation of innovation e.g. through Open Data, SMEs in supply chains collaborating to win orders, and cross-fertilisation by networking across sectors B2.7 Celebrate successful innovation, raise the profile of innovation in the area, and spread good practice: e.g. by holding an annual Venturefest event, in collaboration with partners in Leicestershire and the Technology Strategy Board, celebrating innovation in the wider region and providing opportunities for high-growth businesses to engage with potential investors. B2.8 Develop and disseminate portfolio of 20 Growth through Innovation local exemplar company case studies, to showcase to D2N2 businesses the innovation process and its value. B2.9 Explore the scope for establishing an innovation intelligence function as part of D2N2 s wider economic and business research capacity: to build our understanding of the local innovation ecosystem; to monitor and benchmark the area s performance on innovation; to identify and showcase successes and best practice; to inform the development of the action plan; to evaluate D2N2 s innovation programme; and to identify future opportunities for competitive advantage. 49

50 C. Exploiting the Knowledge Base Objective: Maximise the potential of the knowledge base in and around the D2N2 area as a source of inspiration for Innovation - building on local specialisms in technologies of national importance, linked to D2N2 s priority sectors - and encouraging collaborations between businesses, universities and other institutions to exploit related expertise and enable adoption of new technologies, and to develop supply chains in these sectors Rationale Local universities, have internationally-recognised research capabilities and expertise in a number of areas of technology that can be a key source of innovation for D2N2 s priority sectors. While there are many good examples of university collaboration on R&D, particularly with larger companies, much more needs to be done to make D2N2 s business community aware of the excellent capabilities and connections in the local knowledge base, and of how collaboration with the universities can unlock economic growth and help develop supply chains. While businesses may see the value of working with universities on their doorstep, it needs to be recognised that they will not be confined geographically when it comes to tapping into expertise and opportunities, so it is important that the area s innovation ecosystem is connected across LEP boundaries, and to national and international networks. This objective supports key aspects of the Government s Industrial Strategy notably the themes of support for sectors and the Great Eight 17 and Key Enabling 18 technologies. Of the 11 sectors identified in the Government s strategy, six are of particular relevance to D2N2 - life sciences, aerospace, automotive, construction, agri-science and information economy. Activity C1: Specialisms Existing Assets and Activities There is a strong knowledge base in and around the D2N2 area - centred in the three universities but also in other institutions such as the British Geological Survey, Further Education colleges, universities in neighbouring LEP areas, and the universities links to national Catapults in High Value Manufacturing and Satellite Applications. This provides the fulcrum for the area s Innovation ecosystem, complementing the knowledge in the area s businesses. 17 The Great Eight are: Big Data, Space, Robotics and Autonomous Systems, Synthetic Biology, Regenerative Medicine, Agri-Science, Advanced Materials, and Energy. See: Eight Great Technologies The report predicts business opportunities for these technologies 18 The Key Enabling Technologies are: Advanced Materials, Biosciences, Electronics, Sensors and Photonics, and Information and Communication Technology (ICT). See: TSB Enabling Technologies Strategy. a3ed-4b6c29f2582a 50

51 The research base in the universities is massive; the portfolio of live research projects in the University of Nottingham alone has a value of some 0.5bn. The knowledge base contains a number of specialisms in research, technology and other expertise that complement and support the area s priority sectors. These include: Strong capabilities in Advanced Manufacturing: at University of Nottingham - two Rolls- Royce University Technology Centres, partner in the Manufacturing Technology Centre at Ansty (part of the national High Value Manufacturing Catapult), the national hub for Power Electronics technologies, the Aerospace Technology Centre, the EPSRC Centre for Additive Manufacturing; at NTU ismart specialising in Advanced Materials, and the Advanced Manufacturing & Design Centre; and at the University of Derby - the Institute for Innovation in Sustainable Engineering (IISE) providing cutting-edge solutions for advanced manufacturing and product design and development, and Enscite supporting supply chain development. In Nottingham, a number of centres of excellence in technologies that support the Life Sciences sector: at NTU - the national Anthony Nolan Cell Therapy Centre, the John Van Geest Cancer Research Facility, the Research Centre in Design for Healthcare, and the AXIS X Ray Research Centre; and at University of Nottingham, the UK Synthetic Biology Research Centre, the EPSRC Centre for Innovative Manufacturing in Regenerative Medicine, the GlaxoSmithKline Carbon Neutral Laboratory for Sustainable Chemistry (under construction), National Institute of Health Research Biomedical Research Units in Digestive Diseases and Hearing, and the Medical School. A range of facilities and expertise that support the Digital and Creative Economies: at University of Nottingham, the Horizon Digital Research Institute and Doctoral Training Centre; the centre of excellence of the national Satellite Applications Catapult (in partnership with the British Geological Survey at Keyworth), and the Grace Technology Centre specialising in Satellite Navigation; at NTU, the national-leading School of Art & Design, the Centre for Creative and Virtual Technologies, and the Advanced Manufacturing & Design Centre; and at the University of Derby expertise in Distributed Computing and Smart Environments. Advanced capabilities in Energy technologies: at NTU, the Future Factory specialising in environmental sustainability; at the University of Nottingham, the UK focal point for postgraduate training in Fossil Energy and Carbon Capture & Storage, the Energy Technology Building and Creative Energy Homes demonstrators, and the Environmental Technology Centre; and at the University of Derby, the Institute for Innovation in Sustainable Engineering, with a focus on energy efficiency in new components and products. Leading expertise in Food & Drink Manufacturing technologies at the University of Nottingham s national centre for Innovative Manufacturing in Food, and its Food and Biofuel Innovation Centre. Expertise in Logistics at the University of Derby s Centre for Supply Chain Improvement One of the UK s leading providers of Online Higher-level Learning through University of Derby Online. The universities are also part of other collaborations with universities in nearby LEP areas, for example the Manufacturing Technology Centre (MTC) near Coventry was initiated by the Universities 51

52 of Nottingham, Birmingham and Loughborough, working with large manufacturing companies including Rolls-Royce. It is now part of the Advanced Manufacturing Catapult. The Universities of Nottingham and Leicester, in partnership with the British Geological Survey, are form a centre of excellence for the Satellite Applications Catapult. The University of Nottingham is also part of a university collaboration in the EPSRC Centre for Innovative Manufacturing in Regenerative Medicine, led by Loughborough and also involving Keele. It will be important to intensify such collaborations across LEP boundaries in technologies and sectors of common interest: e.g. in Advanced Manufacturing and Low Carbon Vehicles south towards Loughborough and Birmingham; and in Food & Drink north to Yorkshire - working with neighbouring LEPs and connecting to national centres and networks. D2N2 s priority sectors are well-placed to exploit these research and technology strengths in the knowledge base, given that they will have many applications in the sectors production processes and systems. Two of the priority sectors stand out in a national and international context, i.e. Advanced Transport Manufacturing (Plans, Trains and Automobiles) and Medicine/Bio-science, with the presence of major transport multinationals such as Rolls-Royce, Toyota and Bombardier in the area and growth of 24% during in the health and bioscience sector. Some innovation support will be available to all sectors (see under Objective A above), but more intensive specialist/technological support should be targeted at developing world-class clusters in these two sectors, and at other priority sectors where a case can be made. Exploring technology connections across the sectors should also be encouraged. Case Studies Specialisms in the Knowledge Base Additive manufacturing or 3D printing uses digital data to print multiple thin layers of material such as polymer or metal, usually in powder form, which are then fused by lasers to form solid objects. The technology allows levels of flexibility and customisation beyond traditional industrial methods and is revolutionising approaches to design and manufacturing. The Additive Manufacturing and 3D Printing Research Group (3DPRG) at The University of Nottingham is recognised as the world s leading research centre in the field. The University is currently leading research into the next phase of Additive Manufacturing: the 3D printing of mixed materials in multifunctional devices. An example would be that rather than print a case for a mobile phone, the whole phone would be made through 3D printing. Another world-leading development is new research into the direct 3D printing of metal. The University is working with an industrial partner to develop a system that jets metal; at present it is only possible to jet nano flakes of metal in a polymer ink. 52

53 The Design for Health and Wellbeing research group at Nottingham Trent University is one of the first in the UK to focuses its research within the Design field on Health and Wellbeing. It brings together expertise of product and industrial design with that of clinicians and practitioners in the health service to develop solutions to healthcare problems. The group seeks to address the changing needs of medical research and society, including medical device development and additive manufacturing processes; and biomaterials - including dental, cardiovascular, ophthalmics and orthopaedics. Current projects include the development of responsive ocular prosthetics, patient stroke rehabilitation systems, cricothyroidotomy devices, additive manufacturing for orthopaedic implants, the manufacture of artificial muscles and personal physical activity. Actions C1.1 Continue to develop specialisms in the local business and knowledge, aligned to national technology and sector priorities: i.e. sectors Transport Equipment Manufacturing, Life Sciences, Low Carbon, Food & Drink, Construction, Creative Industries, Logistics and Visitor Economy; and technologies Advanced Manufacturing (including Advanced Materials), Life Sciences (including Synthetic Biology and Regenerative Medicine), Digital Economy (including Satellite Applications), Energy (including Energy Storage) and Agri-Science. C1.2 Continue to develop world-class clusters in Advanced Transport Manufacturing and in Medicine/Bioscience - encouraging more intensive support interventions in these clusters and develop other growing clusters in niche sectors such as composites and low-carbon vehicles. C1.3 Work across LEP areas in collaboration with other LEPs/universities to develop these local specialisms and clusters, including Advanced Manufacturing (for example with Loughborough, Birmingham, Aston and Cranfield Universities, and the Manufacturing Technology Centre) and Bioscience (with Loughborough University and Charnwood Medical Campus). C1.4 Increase demand for Low Carbon goods and services and the number of local businesses actively involved in their development, including power generation, retrofit and building 53

54 construction, low carbon vehicles and fuels and energy technologies including carbon capture and storage. C1.5 Build on the universities international and national leading research base in specialist areas, working with the priority sectors to identify commercial opportunities C1.6 Further develop the capacity to transform research excellence into commercial products and services, through the universities multi-disciplinary expertise in areas such as design, marketing and business C1.7 Increase D2N2 businesses uptake of national and European funding for R&D and knowledge exchange, for example through the EU Horizon 2020 programme, TSB, and EUSIF (with high-level skills development funded through ESF and other Innovation-related activities supported through ERDF). C1.8 Begin campaign for attracting research-intensive inward investment, building on the universities international commercial connections, and linked to the area s sector and technology specialisms including national research centres of excellence Activity C2: Collaboration on R&D and Supply Chains Existing Assets and Activities The value of existing collaborative research involving the universities is currently some 30m per annum 19. The D2N2 universities have relationships with businesses across the UK and internationally 20 - these national and global connections and relationships can be an important source of opportunity for new inward investment and for local supply chains. The universities see their relationships with local businesses as equally important it is a fundamental part of their mission to engage with SMEs locally and to deliver impact in the local economy, and has been highlighted in the Government s recent response to the Witty review of Universities and Growth. Case Study R&D Collaboration In the past decade, researchers at the University of Nottingham have developed ways to recycle carbon fibre composites. They have been working with Boeing since 2006 and in 2011 signed a strategic research collaboration involving investment of $1m a year, a partnership in which Boeing will collaborate with the University in all its composites recycling activities. Boeing and Oracle Team USA, winner of the 34th America s Cup, are currently working with the University and a US-based carbon fibre recycling company to recycle 7,000 pounds of carbon fibre of USA-71, a yacht built for the America s Cup campaign in The hull and mast of the racing yacht will be processed and repurposed, a first-of-its-kind effort for what will likely be the largest carbon structure ever recycled. 19 HEBCIS Notably Nottingham with its campuses in China and Malaysia 54

55 With more than 700 companies in the supply chain, Derby is at the heart of one of the largest clusters of aerospace companies in Europe. D2N2 partners are working with senior figures from Rolls-Royce using RGF and other funding 21 to help make the nation's aerospace supply chain more competitive globally, creating or supporting some 5,000 jobs over four years. The Universities also work closely with other large manufacturers in the area to support the development of their supply chains, e.g. University of Derby working with Bombardier in Derby, who recently secured the 1bn order to supply Crossrail. Derby has one of the largest clusters of rail engineering companies in Europe. Targeted support for SMEs in these supply chains is covered under Objective A above. Action C2.1 Maximise access to existing key technology strengths in the local knowledge base, through collaborative R&D with companies of all sizes, also strengthening the connections between the three universities C2.2 Exploit the universities international connections to identify opportunities for high-value inward investment (particularly from China) and for business collaboration C2.3 Work in collaboration with large employers such as Rolls-Royce, Toyota, Bombardier, Alliance Boots and the NHS to strengthen the innovation capabilities of their supply chains in the D2N2 area C2.4 Encourage inward investment and business growth in priority sector clusters and supply chains in key innovation sites, e.g. Infinity Park Derby, University of Nottingham Innovation Park, BioCity / MediCity, the proposed University Centre in Chesterfield, and Nottingham s Creative Quarter and associated incubation and specialist supply chain innovation facilities 21 The 110 million budget consists of 50 million from the Government's Regional Growth Fund, 10 million from Rolls- Royce and 50 million from the businesses selected to take part in the programme. 55

56 7. RESOURCING THE PLAN Over the past decade, funding from the EU and Government, has helped create a strong base for access to research, facilities, academic expertise and graduate talent, and this will be built upon during the period of the new funding programmes. The previous ERDF programme ( ), which covered the whole of the East Midlands, included 97m for Innovation. Taking into account all potential sources of finance, it is estimated in D2N2 s Strategic Economic Plan that 74.4m will be invested in Innovation over the next six years. Funding to support the implementation of the plan is expected to come largely from the new EU Structural and Investment Funds (EUSIF) programme The overall provision proposed for Innovation EUSIF funding over the course of the programme is 20m. With an intervention rate of 50%, the total funding would be 40m the proposed programme assumes that the match funding will come from 12m UK public funding sources and 9.4m private sources. This is expected to include: SME direct contributions Universities, through their HEIF allocations, and also leveraging Research Council and TSB funding FE colleges Local authorities Some direct TSB UK Government growth support programmes such as the Regional Growth Fund In addition there is provision for 23m EUSIF funding proposed for Low Carbon Innovation over the course of the programme, to fund activities relating to low carbon markets and technologies; and energy / business resource efficiency. This is covered in D2N2 s Low Carbon action plan. Innovation-related activities will also be supported from the Skills and SME Competitiveness themes within the EUSIF programme, which have proposed total budgets of 109.6m and 37.4m respectively. The latter includes 11.7m of co-investment with national programmes (Growth Accelerator, Manufacturing Advisory Service, and UK Trade & Investment) to target delivery in the D2N2 area. The indications are that in the new programme the Department of Communities and Local Government will favour a smaller number of larger, cohesive projects and collaborative projects across LEP boundaries are being encouraged. Before commissioning or inviting bids for projects under the new programme, a quick stock-take of existing ERDF-funded programmes will be carried out to identify key findings from any evaluation and to examine outputs delivered against funding, in order to identify successful models and those delivering best returns. The following principles will apply in commissioning EUSIF-funded Innovation activities: Funding can come from a number of the theme allocations (or a mix), depending on the nature of the activities - including Innovation and Low Carbon, SME Competitiveness and Skills. Ways of achieving economies of scale should be explored, e.g. by combining activities across the D2N2 area. 56

57 Collaboration across LEP boundaries should be encouraged, where it adds value. Every effort should be made to lever in funding from national sources, for example the area has punched below its weight in accessing support from the Technology Strategy Board. It should be a requirement of funding local provision for Innovation that there is demonstrable synergy with knowledge base provision, e.g. through outreach arrangements. Funding for Innovation activities within the knowledge base should demonstrate clear arrangements for outreach to businesses, e.g. through local physical centres and through networks for innovation. 57

58 8. MEASURING SUCCESS Progress on the actions and associated output targets will be tracked on an ongoing basis by D2N2 and we propose that an update report should be published annually. The area s wider Innovation performance will also be tracked by the proposed Innovation Observatory against the baseline review, through a biennial business survey, where possible aligned to the UK Innovation Survey to enable benchmarking. The key outcome indicator will be the proportion of innovation-active businesses in the area, which has a baseline of 39% 22. The target will be to improve performance incrementally in each survey. The survey will include questions designed to assess progress in achieving the three headline objectives in the plan. The area s performance in leveraging national and European funding for innovation will also be tracked, as will the level of expenditure on R&D. The proposed Observatory will evaluate D2N2 s Innovation programme and will keep under the review the strategic direction of the plan. It will recommend changes as appropriate, informed by programme evaluation, and by new intelligence on innovation performance and market opportunities. D2N2 s EUSIF strategy includes the following output targets for the Innovation theme over the course of the programme: Indicator Target Number of enterprises supported 412 Number of enterprises cooperating with research entities 200 Number of enterprises supported to introduce new-to-the-market products to the 20 market Number of enterprises supported to introduce new-to-the firm products to the 40 market Private investment matching public support to enterprises 9.4m Employment increase in supported enterprises 199 These will be the main output indicators for D2N2 support for Innovation, along with the number of graduate placements into SMEs. The figures in the table above relate only to the Innovation theme within the EUSIF strategy and, as noted in section 7 above, many innovation-related activities are also likely to be funded from other strategic themes, with associated outputs. The figures from the previous ERDF Funding programme indicate that for some of the outputs the aggregate numbers for Innovation are likely to be significantly higher, i.e. by a factor of between two and five. 22 UK Innovation Survey

59 Appendix 1 D2N2 S UNIVERSITIES The areas three universities Nottingham Trent University, the University of Derby and the University of Nottingham have distinct and complementary strengths and offers to business. The following pen pictures describe the universities as they see themselves. Nottingham Trent University Nottingham Trent University (NTU) is a leading professional university with nearly 28,000 students. For over 170 years NTU has supported business, commerce and the professions, beginning as the Nottingham Government School of Design in Nowadays, over 9% of NTU students are non- UK, attracted to the university from over 90 countries. Less than 34% of NTU students are from the East Midlands, which illustrates the economic importance of NTU in attracting students to Nottingham. NTU generates over 320m expenditure and almost 4,130 full-time equivalent jobs for the East Midlands economy every year. NTU covers almost every academic discipline and there is a strong focus on meeting students academic needs and helping them achieve professional success. 93% of NTU graduates are employed or engaged in further study six months after graduation. NTU is in the top six UK universities for the number of students on year-long placements. In 2013/14, 955 NTU undergraduates are undertaking a year-long placement in addition to the many students who are undertaking statutory work placements as an obligatory requirement of their professional course. The Research Assessment Exercise (RAE) of 2008 demonstrated the outstanding quality of NTU s research, with 74% of activity achieving international status and 8% classed as world-leading. The RAE highlighted that NTU s world-leading research includes Allied Health Professions (Biosciences/Biomedical Sciences); General Engineering (Applied Sciences/Technology); Social Work and Social Policy & Administration; and Communication, Culture and Media Studies. Examples of NTU s world-leading research include the John van Geest Cancer Research Centre and The Imaging Science Group, which includes the world leaders in airport multi-view X-ray imaging. Testimony to the world-leading status of such research is the fact that NTU attracts research funding from organisations such as the US Department of Homeland Security; the US Federal Aviation Administration; the US Air Force; and the US Science and Technology Directorate. Such agencies naturally prefer to invest in the US but are prepared to invest overseas where the United States does not have the world-leading researchers in that particular field. The Advanced Textiles Research 59

60 Group is also attracting very significant attention nationally and internationally for the military and medical applications of its research. NTU currently has six active spin out companies. For example, CompanDX Ltd which has received a Technology Strategy Board (TSB) contract in excess of 1m to identify and develop biomarkers for the detection of Bovine TB; in addition, the company is the lead partner in a 3m project to identify and develop markers for latent TB in the Chinese population. The Hive was one of the first purpose-built student and graduate enterprise centres in the UK. Over the past ten years, The Hive has supported over 300 new start businesses, with a survival rate of over 70% and a collective turnover of approximately 8m per annum. NTU works proactively with business to secure funding to support research and innovation, and the total value of external research grants held for 2012/13 was 25.9m. The university s Grant Capture Team supports businesses to access funding from the EU 2020 programme and the TSB in order to take forward research and development projects. In addition, NTU has thirty years experience of working with businesses to develop successful Knowledge Transfer Partnerships (KTPs). The university has a dedicated business enquiry team (The Business Development Office ) which works with companies to understand their business needs and to signpost sources of support across the university. NTU s current ( ) programme of ERDF support to SMEs in the East Midlands is just under 5m. Our key SME growth and innovation projects supported by the ERDF - Working with You, Future Factory and ismart - will assist over 300 businesses and provide over 400 postgraduate placement opportunities. University of Derby The University s mission is clear: Inspire, Innovate, Impact Our Students: We are a significant regional supplier of graduate talent. Over 23,000 students are currently enrolled at the University of Derby (incorporating undergraduate, postgraduate and international). 47% of our students come from the East Midlands. 29% of our students are aged over 30 years old. We are 9 th in England for employability % of our graduates are employed or undertaking further study 6 months after graduation. 41% of our graduates are employed in the D2N2 area. We are the only university in Derbyshire and have campuses in Derby, Buxton and Chesterfield. We are one of only 20 universities selected to participate in a national scheme to stimulate postgraduate study through our work with the engineering sector. We collaborate with industry in many ways including through the Knowledge Transfer Partnerships scheme. 60

61 Our Specialisms: Institute for Innovation in Sustainable Engineering IISE is our latest investment to support advanced manufacturing in the region. It will work with industrial partners to achieve cutting edge solutions to challenges and will focus on innovation, creativity, research & development and knowledge transfer. Specialist facilities include: advanced manufacturing; rapid product development; reverse engineering lab; innovation lab; control and instrumentation facilities; specialist measurement, materials analysis and testing. University of Derby Corporate University of Derby Corporate provides innovative, tailor made work-based leaning solutions for businesses. Customised programmes are designed to provide businesses with the higher level skills needed to address a skills gap or a specific business problem giving an immediate return on investment. University of Derby On-Line University of Derby On-Line (UDOL) was launched in 2011 and is the fastest growing part of the University. This is due to the way in which this pioneering on-line offer makes higher education more accessible particularly for those seeking to develop their careers. UDOL has been identified in an independent research report as a global key player in the distance learning market. Our applied research expertise also includes supply chain improvement; radio frequency identification; big data; distributed computing and smart environments. We work particularly closely with the following sectors: Rail, Aerospace, Automotive, Built Environment including Quarrying & Mining; Logistics; Retail, Creative Industries, Health, Education; Sports, Visitor Economy. We have a significant business incubation portfolio and also support business start-up and growth as a member of the Enterprise Inc. consortium. We have recently been awarded a major Regional Growth Fund grant to deliver our new invest2innovate business grants and loans scheme to fuel business expansion and create or safeguard jobs. 61

62 The new Institute for Innovation in Sustainable Engineering at the University of Derby University of Nottingham The University of Nottingham is in the top 1% of all universities worldwide 23 and is one of the UK s leading research universities 24. Its portfolio of live research projects has a value of some 0.5bn; and