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Imperial College London

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Title: Imperial College London


1
Skills and InnovationResearch Reflections and
an Initiative
Professor Bruce Tether 17th November 2008
2
Overview
  • Part 1 Review of research on the Relationship
    between Skills and Innovation
  • Part 2 Design London A Multidisciplinary
    Initiative

3
Part 1 Literature Review - Questions Addressed
  • How does Innovation Impact on the Demand for
    Skills?
  • How does the Supply of Skills Impact on
    Innovation?
  • What is the nature of the two-way
    relationshipbetween Skills Innovation?
  • What are the Policy Considerations?
  • What are the Research Gaps?

4
Context UK Government - Five Drivers of
Productivity
Innovation
Productivity(i.e., Value of Output per hour
Worked)
Skills
Enterprise
Competition
Investment
5
Innovation the Demand for Skills
  • Different types of Innovation have Different
    Implications for Skills
  • Process Innovation (through Technical Change)
    Generally reduces jobs and skill requirements as
    tasks become automated and simpler ( more
    amenable to relocation).
  • Technical Change also interacts with Tradewith
    lower skilled jobs move to the Developing
    Worlde.g., Dyson Appliances Production to
    Malaysia, RD etc still in UK

6
Innovation the Demand for Skills
  • Optimisation of new technologies (such as new
    information technologies) typically requires
    Organisational Change
  • e.g., impact of computing played out through
    technological and organisational change
    (resolution of the Solow Paradox)
  • Skill Biased Technical and Organisational
    Change
  • in advanced open economies interactions between
    technical change, trade, organisational change
    and demand for skills has favoured those with
    higher and more adaptable skills, and disfavoured
    those with low, narrow and rigid skills

7
Innovation the Demand for Skills
  • Product Innovation typically creates jobs and
    requires higher skills, but the nature of these
    skills relates to type of industry, e.g.
  • Science Based Industries (e.g., Pharmaceuticals
    Biotech).Key skills are upstream elite
    Research Scientists in RD.
  • Engineering Product Based Industries (e.g.,
    Machinery) Key skills are Design and Engineering
    Problem Solving Skillsincluding strong Technical
    Skills amongst the Workforce
  • Mass Market Industries (e.g., Food
    Drink).Combination of Scientific Management
    and Marketing is key.
  • Consumer Services (e.g., Hotel and Leisure
    Services).Key skills are relational - Service
    Management, Soft Skills Emotional Labour

8
Innovation the Demand for Skills
  • Growth of Services including Service Innovation
    Strategies in manufacturing is associated with
    Job Polarisationi.e., jobs requiring high and
    low level skills McJobs and MacJobs
  • Innovation in Services is typically less
    dependent on RD elite skills in science and
    engineering More dependent on general
    workforce, organisational change supply chain
    co-operations.
  • Greater demand Relational Skills, incl.
    Emotional Laboure.g., Care Organisation
    Physical Labour Emotional LabourSoft Skills
    communications, customer handling, team-working,
    problem solving, etc. (Qualifications in these
    are more difficult)

9
Supply of Skills Innovation
  • Empirical Evidence shows Lack of Skilled Labour
    is an Important (but not the only) Barrier to
    Innovation
  • Including Different Types of Skills workforce
    skills, marketing sales skills, managerial
    skills
  • And Different Levels of Skill basic skills,
    technical and commercial skills, university
    graduates
  • But also a Lack of Motivation to engage with
    innovation
  • Overall, at firm-level, innovation performance is
    strongly associated with higher level
    skills(including both ST and non-ST graduates)

10
Supply of Skills Innovation
  • Supply of Different Types of Skills favours
    Different Types or Modes of Innovation ... for
    example ...
  • 1. Innovation based on Small Elitese.g.,
    Science Push model of innovation based on small
    scientific technological elites (in RD,
    etc.). Pharm. is the classic example. Also,
    specialist manufacturing (e.g., Formula 1) and
    KIBS (e.g., consulting). UK has tended to do
    well in these industries.
  • 2. Innovation through Scientific
    Managemente.g., US style mass production
    functional division of labour. more recent
    Japanese approaches to managing innovationBased
    on engineers with broad not highly specific
    knowledge basesExperience gained in production
    enhances continuous improvement interlinks
    between management and workforce. UK poor at
    this.

11
Supply of Skills Innovation
  • 3. Workforce Skills and Distributed (or Open)
    InnovationJapanese / German approaches encourage
    workforce participationSpecific skills built on
    strong education / vocational training
    systemse.g., superior ability of German textile
    workers with written instructions enables greater
    variety, small batch production, high value
    added. c.f. UK workers demonstrations ? high
    volumes ? compete on price.
  • Impacts of Weak Managerial Workforce Skills
    ...
  • 1. Firms tend to invest late in
    technologiesLeads to competition on cost, not
    quality.
  • 2. Make unattractive partners for Open
    Innovation
  • 3. Firms can get trapped in a low skill
    equilibrium / a.k.a. the low product
    specification trap ...

12
Interaction Innovation Skills
Low Skill Equilibrium / Low Product Specification
Trap
Low Production Skills
Firms Supply of Low Specification Products (for
Domestic Consumption)


Weak Management Skills
Firms Invest in Established (i.e., Mature)
Technologies
Competition on Price Costs


Demand for Low Specification Products
Firms have Little Demand for Higher Skills
Low Supply of Higher Skills
13
Systemic Interactions Innovation Skills
Supply of Science Technology( skilled ST
personnel)
Workforce Skills
Management Skills
INNOVATIONPERFORMANCE
Quality of CompetitionDomestic and International
Quality of DemandIntermediate Final
14
Policy Considerations
  • Need to Improve Workforce Skills, from the
    Bottom UpWorkers need to engage with and be
    adaptable to innovationAlso crucial is the
    ability to retrain in event of redundancy(UK has
    a high rate of inactivity amongst unskilled
    working age men)
  • Education Training for Generic, Adaptable
    SkillsBeware the Qualifications Trap of
    excessive early specialisationUnderstanding
    theory raises the ability to learn and
    adaptVocational training should incorporate
    theory (not be wholly practical)
  • Combination of on-the-job and off-the-job /
    college base training.Training should not be
    controlled by Employers (short-termist)
  • Also Need to Improve Management SkillsManagement
    plays crucial role in co-ordinating
    innovationImportant role in raising the quality
    of intermediate demand

15
Policy Considerations
  • Innovation is increasingly Open or
    DistributedWithin Firms growing importance of
    cross functional teams Between Firms less
    likely that firms can innovate alone, more
    likely that they need to collaborate for
    innovation
  • Do managers know with whom and how to
    collaborate for innovation?
  • Increasing importance of social or relational
    capital alongside hard scientific forms of
    knowledge
  • Consider the Orientation of the Science
    BaseUnder-utilisation of SB reflects weakness in
    industry (Lambert review)UK and European
    economies increasingly dominated by services
    but arguably low relevance of much hard science
    to serviceIBMs Services Science initiative is
    a call to arms

16
Part 2 Design London An Educational Innovation
Was established following the Cox Review We
focus on Recombinant Innovation Our Mission is
... to broaden the understanding and skills of
tomorrows business leaders, creative
specialists, engineers and technologists The
challenge is get business people, engineers,
technologists and designers to understand one
another Cox Review Creativity in Business
17
Part 3 Design London A Triangle for Innovation
The Royal College of Art (RCA)
Desirability
Commercial Viability
Technical Feasibility
Imperial CollegeFaculty of Engineering
Imperial CollegeBusiness School
18
Part 3 Design London Four Pillars
Research the role of design methods, tools and
practices on business value creation
Deliver interdisciplinary teaching to
post-graduate students and industry
Incubate new ventures and talent to demonstrate
the power of the new model
Pioneer technologies to enable high
performance innovation
19
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