Employing and nurturing creative people is more important for business innovation than striving to come up with a bright idea, according to new research by Clydesdale and Yorkshire Banks.
In a survey of business leaders at more than 750 UK-based small and medium-sized enterprises (SMEs), around half of respondents (52%), said having the right people and skills is the single most important factor for a business to be innovative.
This is compared to fewer than one in four (24%) who believe having the right idea is most important.
Training and development are key
As a result, the research suggests SMEs have prioritised staff training and development over other investment opportunities in the past year, and intend to do so again in the next 12 months.
New equipment, technology and investment in premises, are also key, according to the survey.
The belief that people come first was underlined when respondents were asked whether the UK economy has the right skills, or the right environment, to foster creativity and innovation.
A fertile breeding ground
More than half (54%) feel the UK economy fosters innovation but this increases to two thirds (66%) who believe the economy has the right creative skills for growth.
However, it appears businesses could be selling themselves short when it comes to accessing the support available for innovation or research and development (R&D) activities.
According to the survey, less than one in three (31%) businesses has ever accessed Government incentives such as R&D tax credits or Patent Box, and only a third (34%) plans to do so in the future.
The approach to financing innovation and creativity is also mixed across the UK, with the same number of businesses not having a dedicated budget for research and development (42%), as those that do (42%).
When looking at different industries, two thirds of manufacturing businesses, and 58% of IT businesses, put money aside specifically for research and development.
A tectonic industrial shift
Paul Shephard, Director of Business and Private Banking at Clydesdale and Yorkshire Banks, said: “Innovation comes in many forms, not just cutting-edge technology or design. For many service-led industries this could mean being innovative and creative to meet customer demands, or approaching the market in a different way to competitors.
“What is important is that businesses continually review their performance and how they serve customers to ensure they are on top of their game.
“In today’s increasingly digital economy, where customer demands are higher than ever before, innovation is even more crucial. We’ve seen the make-up of our economy move from one of heavy industry to one of knowledge.
“This means growing businesses are often rich with intellectual property and intangible assets, rather than premises, plant or machinery.”