Public procurement is the sleeping giant of EU innovation policy

I heard these words at a conference in Brussels in January 2016, spoken by Professor Kevin Morgan, Professor of Governance and Development at Cardiff University, and promptly collared him at lunch to talk further. The reason was that I had been inspired by David Connell’s 2014 paper, “Creating Markets for Things That Don’t Exist” (Centre for Business Research, University of Cambridge). This paper is a clarion call to government to unleash innovation capabilities in the private sector by using existing mechanisms more effectively, such as the Small Business Research Initiative, or SBRI, and I was developing a scheme to stealthily introduce innovation into Durham County Council’s procurement habits.

As it turned out, there was no stealth approach needed. Durham County Council has now launched its very own SBRI scheme (on top of its own venture capital scheme, Finance Durham) to buy things that don’t exist, to use procurement to stimulate innovation in the private sector. That’s the so-called “risk-averse” public sector for you. We believe we are the first local authority to do this (we haven’t been contradicted yet) so how did we do it?

Firstly, there was a realisation that if we linked what we were doing in terms of economic development activity (new jobs, better-paid jobs, more companies, etc.) to the very challenges that we face in County Durham (health inequalities, etc.), we might trigger a virtuous cycle of more economic activity and more prosperous, healthier communities.

Secondly, we were able to take our time in framing the problem correctly and go out to the market with the problem, rather than jumping to the solution: in this case, it was tackling the health causes and consequences of social isolation, recognising that loneliness and isolation underpinned many a vicious cycle of declining health and quality of life.

Thirdly, the people. From the point of starting this process, we have built up a network of nearly 500 organisations from all sectors who are keenly interested in this approach and I am profoundly grateful for their commitment and generosity.

Fourthly, the people (again). To make this happen, we needed the support of many many people across Durham County Council: legal, finance, procurement, public health, ICT, social care, economic development, the list could go on. And every single person has been open and enthusiastic about the possibilities of a new approach and how it might help.

Fifthly, the brand. We are very fortunate that we work for a Local Authority that understands the power of having a focused, business-facing brand. The Business Durham brand was established four years ago to bring structure to the Council’s activities in business engagement, innovation, inward investment, commercial property and enterprise and send out a strong message that the Council was absolutely committed to business. When asked recently what Business Durham needed to do, the Director of Regeneration and Local Services just smiled and said “Keep doing what you do, keep on having new ideas”.

Finally, never underestimate the power of a flag. Durham is more interested in talking about itself as a place where challenges can be solved, first locally, then scaled up, and in rallying people around that challenge, animating a wide-ranging ecosystem including citizens, academics, government, and businesses from all different sectors. The first challenge is tackling social isolation – if you’re interested in helping solve that problem, then Durham is where you come and play. The second challenge is how we use space technology and satellite data to create a safer world, whether that is protecting our food, water, infrastructure, or even our identities. If you’re interested in solving that problem, then Durham is where you can come and play.

The SBRI scheme, using our own existing budgets to procure innovation is a small but important part of an overall open innovation approach: Durham Smart County.

Author: Catherine Johns

Date: December 2016

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