Larry Elliott sidestepped the central point of our new study, which uncovers the "hidden innovation" in some of the most important sectors of the British economy (Cycle paths and other models of innovation, October 23).
His portrait of a nation dependent on manufacturing is far removed from the real economy of today, which is dominated by services. He seems unwilling to see that it is from the service sectors that Britain derives its competitive edge. He even goes as far as describing "the media, law, advertising, PR, merchant banking" as "bullshit" industries.
The reality is that areas such as financial services, retail, consultancy and the public sector together account for 94% of the economy. That is not to say that manufacturing is unimportant. But, given their potential for wealth creation, the performance of the service and public sectors are as important, if not more so, to the country's future.
Indeed, as globalisation drives down the costs of manufacture, it is in the industries where creativity and tacit knowledge are at a premium that the value-add for UK plc lies. That's why the government champions their importance: not because they are trendy, but because they are critical to our future competitive advantage.
What is more, innovation in these sectors brings improvements to our quality of life, not just an economic edge. So we would surely want to recognise the factors that have so far eluded traditional accounts of our innovative performance. In doing so, we could then begin to design the levers and the environment for further advancements. Can we really say that the innovation that has "resulted in new genetic tests", led to "improved social housing" and seen new products arising from "tax planning" is not worthy of attention?
If our economy is only 2.5% hi-tech manufacturing, we should build a framework that also considers innovation in the rest, where traditional research and development has only limited benefit. What matters here is new services, new processes and new business models: I would argue that the service innovation of NHS Direct, for example, has had more benefit to Britain than a new drug like Viagra.
This is not about adopting "a liberal enough definition" that we can "describe just about everything as innovation". Innovation is a broad concept. As I travel up and down the country and talk to industrialists and leading academics, I find that the debate over "what is innovation?" has died, to be replaced by a more urgent one: "How do we transform the UK's capacity for innovation?"
By highlighting Britain's hidden innovation, our report aims to move the debate beyond the concept of research and development that leads to the latest product. In a world where an idea created in London one day can be copied and on the shelves in China the next, we should worry less about one-off wins, and focus on innovation, not innovations.
· Jonathan Kestenbaum is chief executive of the National Endowment for Science, Technology and the Arts, whose report The Innovation Gap has just been published
jonathan@nesta.org.uk
