Interview of Allan Mayo, Head of the UK’s Dept for Business Services Policy Unit, BIS, the leader of EPISIS Work Package 5

Name: Allan Mayo

Short presentation

Allan is Head of the UK’s Dept for Business Services Policy Unit. His team was responsible for the publication of the Government report on “Supporting Innovation in Services” in 2008 and, most recently in March 2010, for an interim report on “Professional and Business Services: A 2020 Vision for Growth”. In addition to EPISIS, he has also been invited to Chair a Panel of Experts to advise DG Enterprise on how services and service innovation can contribute to fulfilling the EU 2020 Strategy for smarter, sustainable and inclusive growth. It expects to report by the end of the year.

Department for Business, Innovation and Skills

The Department has a wide ranging policy remit – from skills and higher education to innovation and science to business and trade – areas which can all help to drive growth. The Department is committed to fostering competitive markets through the right business law framework, enabling companies to compete freely and giving consumers choice and value; it is also responsible for consumer and employment law. BIS leads on the innovation agenda and we are committed to helping British industry increase its productivity and develop world-class competitiveness, as well as strengthening the enterprise environment for small businesses, not least by leading reform across government to reduce the administrative burden on business, and enabling more people and communities to set up in business. In addition, BIS helps UK firms to trade with other countries.

The Department is committed to fostering world-class higher education to provide the nation with the high level skills needed for economic success, while ensuring excellence in teaching and research. It is also creating a high quality and responsive further education sector that equips workers with the skills demanded in a modern globalised economy.

Service innovation in general

Service innovation is steadily getting the position it deserves in Europe. What you consider to be the major challenges in changing the mind-set to recognise service businesses and service innovation as a powerful economic force in the EU? What would you like to recommend in overcoming these challenges?  

There are two major, but related, challenges to the development of service innovation in Europe:

- the first is to recognize that, while individual firms can offer new services or change their processes, service innovation is often part of, or dependent upon, a much wider transformation of a complex service system. The environment to promote such innovation or transformation is not simply about the development of a particular technology or, indeed, an individual firm’s new offering but about creating a new energy system, new intelligent transport services, new approaches to healthcare, new online services or entertainment: in many cases, it requires a step change in the infrastructure to deliver innovative approaches and a networked/holistic approach which brings all actors in the market into play – regulators, policy makers, private sector and, where appropriate, public procurers. This means that test beds and large scale demonstrators are important policy tools to provide all stakeholders with a better understanding of the impact of new approaches and customer reactions to new delivery mechanisms or service offerings, and the scope for developing new business models. In many areas it also requires the development of EU and global standards to facilitate new modes of delivery and to enable customers to assess competing offerings.

- the second is that service innovation, like product innovation, is inherently risky and the larger the market opportunity, the greater the reward for innovators and entrepreneurs. The Services Directive is a good starting point for opening the market to EU firms but I believe we need to take further steps to overcome significant cultural barriers and reduce the cost of sale within what is currently a very fragmented market. Otherwise, the most innovative firms in Europe will follow their forebears and seek their fortunes in a larger market which is open to new ideas, namely the USA - and the benefits of innovation will flow to American firms and consumers rather than Europe. We need to develop mechanisms which, like R&D grants, reduce the cost of marketing innovative services across the EU.

Service Innovation in the UK

Please describe briefly the significance of service innovations and public supporting programmes/mechanism related to them in the UK? Why the UK is a forerunner in boosting service innovation?

What has been the role of the public sector and especially the Department of Business, Innovation and Skills (BIS) in the context of service innovations?

What are the lessons to be learnt from the British example (e.g. best practices, tools, instruments)? )? What are major obstacles?

London and the SE of England has an ecosystem of tradable professional and business services which is second to none, including legal services, accounting, IT services, consultancy, HR and training, advertising/marketing, corporate communications, architectural and engineering services. It works closely with the HQs and European HQs of a wide range of companies in all sectors, it has access to financial services – both funding and insurance – and benefits from its proximity to creative industries, including film, music, theatre and dance, as well as universities with the highest research ratings and global transport hubs.

Service innovation has developed on the back of a demanding private sector customer base, including foreign direct investment with their own challenges and demands, and a public sector which, over the past 10-20 years, has sought to reform the delivery of public services through partnership with the private sector. This has generated a scale and a vibrancy which has attracted new firms and an influx of highly skilled people. However, while this network of networks grew on the back of financial services, large scale inward investment and public service reform, it has also developed an export capability on a par with the USA.

In a fast moving market, the role of Government has been to create a dynamic and competitive environment, which is attractive to both domestic and foreign owned firms that, in turn, generates demand for this wide range of professional and business services. With public service industries accounting for 6% of GDP, Government itself has contributed to service innovation by changing its own business model and presenting new challenges to service firms.

The Coalition Government has indicated its commitment to further reform of public services and more transparent mechanisms for assessing performance, to promoting smarter, sustainable and inclusive growth, and reducing further the regulatory barriers which inhibit enterprise and the ability of SMEs to offer innovative solutions. BIS is at the forefront of policy to develop a more dynamic market framework, to improving graduate skills and ensuring UK based firms have access to creative, highly skilled people, and working with counterparts in the EU and further afield to open up market opportunities for innovative service firms.

EPISIS

Why BIS decided to join EPISIS? 

BIS joined EPISIS to understand better the developments in other countries and to share experience with like minded policy makers with an interest in the development of service innovation and the service economy.

What is the role of BIS in EPISIS?

Because of the UK’s focus on holistic approaches to service innovation and our interest in roadmapping as a tool for developing a shared perspective on the nature of the European challenge, our role has been to lead within WG5, the development of holistic policy approaches in four key service areas: logistics, assisted living, digital content industries and environmental services – all areas with significant innovative and growth potential. Our target is to develop a dynamic roadmapping approach to policy development and share it with, not only the core Group, but also the Think Tank and wider stakeholder community. In addition, and with our strong interest in the internationalization of innovative service firms, we shall lead the Task Force on that subject with a view to identifying the scope for improving the opportunities for firms, particularly SMEs, to exploit their capability within the European market and beyond. But we are also keen to participate in the other work programmes and Task Forces with the resources at our disposal.

What the EPISIS project has to offer for Europe?

The main thing that the EPISIS project has to offer Europe is the combined efforts of policy makers from member states, with a strong interest in service innovation, to focus on the policy tools and environment which we believe will promote that innovation. It also provides a bottom up mechanism for identifying how best the EU can add value and support member states’ efforts in this domain. Finally, by participating in the wider activities organized under the Pro-INNO banner, EPISIS partners can share experience with an even wider community and promote the role of service innovation in the European economy.