1 Government’s Role in Service Science and Innovation in Services Allan Mayo BERR Services Policy...

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Government’s Role in Service Science and Innovation in Services

Allan Mayo

BERR Services Policy Unit

22nd Service Conference and Workshop

7 November 2008

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Presentation will cover:

1. Size and importance of services to the economy

2. Drivers of change

3. Impact of the Public Sector

4. Focus of business innovation

5. Skills to promote service innovation and business performance

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Importance of Services Sector to the UK Economy since 1945

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Sector GVA as a proportion of UK economy in 2006

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UK trade in services 1996-2006

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UK services sector exports 1996-2006Exports of Services 1996-2006

0

5

10

15

20

25

30

35

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

£b

n

Other Business

Travel

Transport

Financial

Royalties and License Fee

Insurance

Government

Computer and Information

Communications

Personal,Cultural and Recreational

Construction

7

Exports of business services

Exports of UK business services 2996-2006

0

2

4

6

8

10

12

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

£b

n

OBS

Consultancy

R&D

Engineering

Legal

Advertising

Surveying

Accounting

Architecture

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UK/US productivity gap

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Coverage: a focus on five services sectors

• Retail • Logistics• Construction • Environmental services• Internet delivered content services

= 25% of UK output by GVA, reflect diversity of service sectors

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Methodology and coverage

Four questions examined:

• Drivers of change

• Way services sector innovation has changed and how it might be measured

• The barriers to innovation

• The scope for effective government intervention

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What are the drivers of service sector innovation?

• Increasing power of consumers

• ICT is the key technological driver and enabler of change.

• Globalisation/competition

• Sustainability

• Impact of the public sector

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Increasing power of consumers

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ICT is key technological driver

Drivers of innovation and growth in services

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ICT Innovation comes in waves

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Globalisation: Quarterly Trade in Services (current prices, not

seasonally adjusted)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1990 Q1 1992 Q1 1994 Q1 1996 Q1 1998 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008 Q1

£ m

illio

n

Exports of services

Imports of services

Balance

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Sustainability

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Impact of the public sector

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19


20

Impact of public sector

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Impact of public sector

22


23


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Elements of service innovation

• Capture and use information:

– anticipate customer needs

– market and competitor trends

– analyse own performance• Management, people skills

– respond to opportunities, threats

– exceed customer expectations

• Quality framework:

– Standards

– Business planning, processes

Process

Business model

Delivery

Offering

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Management of change• Analysis suggests high level

management skills are not widespread in UK business…

• Action needed to strengthen business engagement with learning opportunities and leading practice

• Develop focus on transformative application of ICT to business processes; and scope to promote this via a network of expertise

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Business Challenges: Financial Times 2/09/08 •S Korea’s KDB confirms talks with Lehman

Foreig

n

insu

rers

face

barrie

rs to

enter C

hina

Mantua maverick climbs aboard at Alitalia

Babcock in deal

to train engineers

Chrome outsh

ines

rivals

to beco

me

fastest

browse

r

Potential buyers circle for slice of Dresdner

Nokia plans mobile

music service in the UK

Sainsbury to

push own-

brand goods

FerrovialIt rode the construction boom at home and diversified abroad - especially into the UK, with airport operator BAA, and into the Americas, with toll roads…..

Vivendi says GE

will not sell stake

in NBCU

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Transforming Public Services

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Promoting learning in Government

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Improving public sector procurement

• clear joint objectives

• mutual understanding

• developing ongoing relationship

• appropriate risk sharing

• opportunities for innovation

• flexibility

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Service science is not enough

Commitment and capability require a framework of:

• Ethics

• Learning

• Networks

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What should we aim to deliver?

• UK succeeds as hub for high growth, knowledge intensive services, attracting the leading global players to locate here

• UK closes productivity gap with US in services

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Report URL: http://www.berr.gov.uk/files/file47440.pdf

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BERR Services Policy Unit

[email protected]

[email protected]

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