How to design and run an innovation agency

Governments around the world are looking for new ways to nurture innovative businesses, in an effort to solve a range of pressing economic and societal challenges.

However, they face many challenges in designing organisations that can help to deliver these objectives.

For every big success story - such as the Taiwanese government’s concerted investment in the development of the technologies that helped the country’s semiconductor industry grow to produce 40% of the country’s exports - there are many more stories of failure.

And we still don’t know enough about what kinds of funding and other support are likely to be most effective in different circumstances.

So what practical lessons can governments in Asia, and elsewhere, learn from each other’s experiences? Over the last year, Nesta - the UK’s innovation charity - has been looking at these issues in detail.

By gathering stories and data about ten diverse government innovation agencies in Europe, Asia, the Middle East, North and South America, we aimed to investigate what best practice looks like in terms of designing and running an innovation agency and what mix of policies and programmes will be most effective in a given national context.

Five key lessons stand out. First, and perhaps unsurprisingly, our research found that there is no single model for a ‘successful’ innovation agency, and that attempts to directly replicate organisational models that operate in very different contexts are likely to fail.

This lesson is particularly pertinent in an Asian context, with Japan and China having both announced plans in the last few years to establish institutions that very closely resemble DARPA in the US - despite the fact that DARPA’s emergence and historical legacy is the product of very specific circumstances that would be extremely hard to replicate now in almost any other country.

Second, while there is no single ‘best’ approach, it is possible to identify a number of roles that an innovation agency might play.

From our case studies, we have identified a number of different approaches that an innovation agency might take, depending on the specific nature of a country’s innovation system, the priorities of policymakers, and available resources.

Third, we observed that effective innovation agencies need a clear mission, and an ability to adapt and experiment. Working towards many different objectives at once or constantly changing strategic direction can make it difficult for these bodies to develop coherent portfolios and deliver impactful innovation support for businesses.

However, a long-term vision of what success looks like should not prevent innovation agencies from experimenting with a range of approaches, and being able to respond to new needs and opportunities as they arise.

In the United Kingdom for example, Innovate UK has recently launched an ‘open’ funding competition that accepts innovative project proposals from any sector.

Fourth, we suggest that innovation agencies should be assessed both quantitatively and qualitatively. To date, evaluations have tended to focus on the financial returns generated by an innovation agency's portfolio.

Our research suggests that equal effort needs to be put into assessing the more qualitative aspects of their role, including the quality of their management, their ability to take (and learn from) strategic risks, and the skill with which they design and implement their programmes.

Finally, we would urge governments to be both ambitious and realistic about what they expect an innovation agency to achieve. An innovation agency’s role will inevitably be affected by shifts in government priorities.

Understanding how these organisations shape (and are shaped by) the broader political environment around innovation is a necessary part of ensuring that they are able to deliver on their potential.

For more details of our research and findings, Nesta’s new report, How Innovation Agencies Work, can be downloaded here.

The author Alex Glennie is Principal Researcher in International Innovation at UK innovation foundation Nesta. Image above by Nesta