Catalysing innovation through performance-based public services
A supersonic concept aircraft (Boeing)
There was an encouraging piece in the news last month. The Federal Aviation Administration (FAA) in the U.S. has been working to streamline the application procedure for new supersonic civil transport aircraft. Many companies, led by Boom, Aerion and Spike Aerospace amongst others, are utilising new design and construction techniques to explore cost-effective, sustainable models for supersonic passenger transport. The new regulation is focused on making things easier by improving the process, even whilst the stringency of the tests is maintained.
[ed: the FAA have batted off any concerns about reducing environmental barriers - noise and emissions - by claiming that this rulemaking has sole regard for the process. A cynical person might observe that if enough momentum can be gained in the process over time, it may make dealing with the upcoming divergence in views a little easier. That being said, it is not beyond technological innovation to solve the noise and emissions issues, leaving the public debate potentially focused on “perceptions” of impact rather than reality validated through data.]
It’s a great example of end-to-end thinking across all partners, seeking to remove unnecessary barriers to innovation and industrialisation. These barriers aren’t just about complexity. They also serve to delay the point at which the new venture can earn a return, and increase the risk of running out of money prior to sustainability… which itself leads to lower investment prospects and possibly less engagement from potential backers.
As we build back following the pandemic, and particularly for the UK as it works out what to do with some new strategic freedoms post-Brexit, the ability to reduce the cost of entrepreneurship is vital to the medium-long term economic success. Entrepreneurship creates jobs, IPR, solves economic problems and instills a dynamism in the region and country.
The public and private sector must work together. Industrialisation of well-proven concepts is a key focus. As an example, this could be achieved through the concept of a public reference, or anchor, customer. It can work as follows: the government procures a key service or technology for its purposes, recognising that it also acts as a key reference for the company or sector to be able to export successfully. This may impact the level of risk the government as purchaser is willing to bear, as it takes into account the potential benefits in scaling the business as part of its procurement approach. The current green paper consultation on Transforming Public Procurement notes that a change in awarding on solely financial criteria (value for money) could be possible, shifting from “Most Economic Advantageous Tender” to an award criteria of “Most Advantageous Tender”, with the criteria and impact carefully listed in line with broader policy aims.
As an example, the technique is referred to in the UK Space Growth Partnership strategy as a possible option to catalyse the UK space industry, adjusting to life outside the EU (and Galileo and EGNOS). The United States uses the concept well, applying agency funding to private enterprises, enabling them to flourish and become world-leaders.
Recognising the Firstfruits strategic interest in large and small business, we could ask how effective similar concepts are for social (or other impact) entrepreneurship? Could incubators identify and connect anchor customers for collectives within a sector, enabling them to turbo-charge their business development? Get in touch if you’d like to discuss more, or comment below.