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22INNOVATION UK High- tech manufacturing firms were the most " forward-looking", with 13% saying they would increase innovation expenditure in response to the economic downturn. But this segment was also - although marginally - the most likely to have cut their innovation budgets ( 24%). A recent report by the OECD, based on actual corporate results, suggests research and innovation are indeed being hit hard by the downturn, with R& D spending declining in many cases. US venture capital investments plunged 60% in the first quarter of 2009 and the same is true in Europe and in China. Patent applications are also down. Incentives to develop a greener economy have also been weakened by the crisis, the OECD says. This shift repeats the pattern seen in previous downturns when business R& D spending and patent filings also fell in line with GDP. Starting in October 2009, the OECD will publish a " Crisis Scoreboard" to track the impact of the crisis on innovation. It will include a series of monthly and quar-terly indicators and it will be updated regularly on the OECD website. Building for the future But the outlook is not all doom and gloom. Indeed, historically, economic crises have been times of indus-trial renewal. Faced with falling demand for their current products, certain entrepreneurs may seek to innovate more, while others may see opportunities emerging from " creative destruction" even as recession bites. Governments, too, are seeing the crisis as an opportunity to invest rather than retrench. Hence, innovation- related stimulus measures have been a key feature of many of the economic recovery packages announced by governments around the world, including in Europe. They aim to fol-low the examples of Finland in the early 1990s and Korea in the early 2000s, where governments increased invest-ment in R& D and came out with more competitive and innovative economies as a result. One of the areas targeted as helping to prepare the way for future growth is green technologies. In the EU, the Commission is banking on a " green recovery", with clean and renewable energy projects accounting for around 70% of Europe's 5bn Economic Recovery Plan. A total of 3.5bn is proposed for projects to improve energy security, create a greener energy infrastructure, and accelerate the shift to a low- carbon economy. High- speed communications networks fit for the 21st century are another priority. Broadband boosts produc-tivity across industry and commerce and enables social innovation too. It is crucial to " smart" energy- saving elec-tricity grids, smart buildings and smart transport systems that will underpin a greener economy. In Europe, the Commission is targeting 1bn to extend and upgrade communications networks, concentrating on rural areas that face particular difficulties linking up to broadband. The goal is to achieve a full 100% high- speed internet coverage by 2010. Towards total inovation Once the upturn does come, we're unlikely to see a return to business as usual. The crisis has changed attitudes, as well as budgets, and brought the realisation - both in companies and in government - that they have to invest their money wisely. Organisations will expect more from their innovation efforts in future. Innovation policy will increasingly need to be addressed at a societal level, for instance bringing about major change in how people live, work and shop ( mobility, housing, land use, etc). Indeed, a recent paper from NESTA sug-gests that the best response to the global challenges fac-ing EU economies is a " total innovation strategy". According to NESTA's Charlie Leadbeater: " The big-gest gains for society will be found in those sectors that both offer the most immediate growth potential, draw-ing on. existing strengths, and help meet long- term challenges: green energy, environmental services, biotech-nology, and services for an ageing society. These need to form part of an economic strategy able to set long-term goals, and with the political credibility to help deliver them." A total innovation strategy, as advocated by NESTA, needs to draw together public and private, social and commercial innovation, and entrepreneurship to search for new markets and opportunities. In this way, the global downturn and climate change could create a new platform for growth - one where business entre-preneurs emerge to take opportunities in new growth industries and social entrepreneurs address emerging social challenges. Europe is thinking along similar lines. Over recent years the Commission and national governments have sought to shift the focus in innovation policy from direct public funding of enterprises ( state aid) to demand-driven actions. These include partnerships of public and private stake-holders seeking to boost demand for innovation ( for example, pre- commercial public procurement, green public procurement, and so on) and promoting " lead markets" in emerging fields. Clearly, still more needs to be done to shift resources towards these new emerging opportunities and demand-driven policies that tackle " system failures" rather than short- term reactions to long- term structural shifts. If we can succeed here and come out with a more competitive and sustainable economy as a result, then the pain of the current downturn will not have been in vain. Challenge- Led Innovation inovating in the downturn

INNOVATION UK23 How the Knowledge Transfer Networks help businesses innovate Sharing knowledge for innovation Knowledge Transfer Networks - or KTNs - are funded by the Technology Strategy Board to help businesses innovate by providing them with networking and part-nering opportunities, and giving them up- to- date knowl-edge on markets, technologies and routes to funding. They put companies and innovators in contact with the knowledge that they need to bring new products and processes to market. Companies and individuals can use the KTNs' resources to find collaborative partners or new customers; to get access to the latest academic knowledge and skills; to help with sourcing funding for projects; or to under-stand the impact of new and emerging technologies on business models. KTNS cover the folowing areas: » » Photonics and Plastic Electronics » » Materials » » Energy Generation & Supply ( new) » » Nanotechnology » » Modern Built Environment » » Low Carbon » » Intelligent Transport Systems » » Industrial Mathematics » » HealthTech & Medicines » » Financial Services ( new) » » Environmental Sustainability » » Electronics » » Digital Communications » » Digital Business » » Creative Industries » » Chemistry Innovation » » Biosciences » » Aerospace & Defence » » Sensors & Instrumentation. With a membership of around 57,000, the KTNs can in fact be seen as a network of networks - each covers a specific area of technology, but increasingly links are also being made between KTNs. The principle of knowledge exchange holds true both within and between industry or technology areas, as ideas and information in one area can have unexpected relevance or application in another. More information on KTNs can be found via the Technology Strategy Board's website at: www. innovateuk. org. The benefits of KTNs: » » Networking - frequent opportunities to network with other businesses and academics through targeted events, meetings and special- interest groups organised by the KTN. » » Partnering - through their contacts and knowledge of industry, KTNs can help businesses find partners for new projects and wider opportunities. » » Funding opportunities - advice on Technology Strategy Board Collaborative R& D competitions, Knowledge Transfer Partnerships and other sources of funding for innovation such as Framework Programme 7, Eureka, or venture capital. » » Information and news - free access to online services such as market and technology reports, newsletters, webinars/ e- training, events diaries, e- conferencing and collaboration tools and general sector/ application specific information. » » Policy and regulation - a communications route between the KTNs community, government and EU, giving members the opportunity to influence policies and regulation in the UK and abroad. » » Strategy - KTNs are playing an increasingly important role in the development of the Technology Strategy Board's future direction. Challenge- Led Innovation knowledge transfer networks