Service firms should continue to innovate even when economic times are difficult and demanding, the CBI has argued.
A new report from the employers’ organisation has found that creative innovation and the willingness to pursue new ideas have given many service sector firms an important competitive edge.
The study revealed that a positive attitude to creativity and risk is vital, and that firms that are the most willing to learn are those most likely to succeed.
The success stories in the report centre on businesses that were prepared to invest for the long-term, whether in the matter of staff training or buying new technologies. This enabled them to transform short-term setbacks into part of the learning process.
Richard Lambert, the CBI’s director general, said: “When times get tough, firms may want to stick to what they know best rather than try out new ideas. But the services sector contributes three-quarters of the UK’s economic activity, so its continued dynamism is a matter of vital importance.
“[S]uccessful innovation comes down to people, not just processes, and trusting your customers and giving your ideas time to develop is vital. When you act, you must move fast and learn from your failures, but don’t beat yourself - or others - up when things go wrong.”
However, the study also highlighted the barriers faced by service firms wishing to innovate. These include access to finance, recruiting employees with the right skills and frequently changing business regulations.
To help more firms develop new ideas, the CBI put forward a series of recommendations.
The tax system, the CBI said, should be used as a tool to encourage innovation by making it more forgiving and flexible. The proportion of the government’s annual purchasing budget that goes on innovative services should be increased.
There should be improved financial support for companies wishing to take risks with new services. And firms should be encouraged to work with universities and others in order to share data for service sector research.
Date:4 July 2008
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