Why aren’t we generating more innovation?

The affirmation that innovation is the key to success has become commonplace at this point. If we're all so aware of this, if we all agree, why aren't we devoting more effort and focus to it?

Sometimes it may seem that we have a tendency to “deify” the concept of innovation. But it’s not true. Innovation is vital to remain competitive in the medium term and the best innovation is that which is based on research and development (R&D), which also allows us to generate intangible assets, like knowledge itself or patents.

We also innovate when we incorporate new products into our offerings, new processes, new ways of organising ourselves, etc. If you stop to think about it, you’ll realise that all of the companies that are growing and surviving are innovating in one of these ways. What has to happen for an innovation-based model to take root in Spain? We need to look for comprehensive long-term strategies that make it possible to start seeing results early on. It’s not easy. I’d like to highlight four levers for achieving this goal:

1.- Promote policies that encourage innovation

According to the book “Why Nations Fail”, decision-making regarding long-term investment depends on the existence of institutions that guarantee key rights and regulations (industrial and intellectual property rights, tax breaks for innovation, stable regulation of sectors that drive technological innovation, evolution of public-private collaboration towards models that encourage entrepreneurship, etc.)

But we don’t have to look to the most advanced countries in Europe to observe best practices and success stories. Last January, I had the chance to spend two weeks in Chile supporting the creation of a new R&D centre for Telefónica. I had the opportunity to get to know first hand how institutions such as Corfo and Startup Chile work. Undoubtedly a good point of reference.

innovation2.- Generate the talent that the new work environment needs

It’s essential that our students have a sufficient level in mathematics and computer programming, oral and written expression, the capacity to understand and interpret the world around us that is progressing at a dizzying pace, and of course, an advanced level of English. The jobs that are going to take precedence will require people to dominate new technologies and manage a situation of volatility, uncertainty, and complexity.

3.- Take advantage of  the opportunities offered by the new information and communications technologies

Public financing is expected to be available to undertake these challenges, which is good news indeed. The European Union, through its Regional Intelligent Specialisation Strategies (RIS3), over the next six years, will allocate 10 billion euros to stimulate the Spanish economy as part of a new programme of ERDF funds, with an emphasis on innovation, as opposed to previous programmes that were mainly aimed at infrastructure development. Investment in ICT technology will be one of the key lines of action in this programme.

4.- Promote corporate R&D

This will help create new technological companies and, more importantly, help existing ones to grow.

According to the National Statistical Institute, R&D investment in Spain dropped to 1.3% of the GDP in 2012, falling back to levels equal to those in the year 2007. If this data is compared with that of the principal developed countries, we see that the fundamental difference lies in corporate R&D. In Spain, this is 52% compared to 63% for the EU, and 69% for countries in the OECD.

innovationIf we analyse what type of companies are investing in R&D in Spain, SMEs are responsible for half of the corporate R&D, as opposed to the average of 20% in OECD countries. Spain has fewer than 600 companies with more than 250 employees with R&D departments. The conclusion? Spain needs more large companies that systematically carry out research and development.

It’s not simple. Now that methodologies like the “Lean Startup” that help entrepreneurs have spread, we’re still missing some good manuals for what we could call “lean elephants”, or in other words, helping big companies to be more agile when “playing” the game of innovation. For example, we have to encourage Spanish companies to protect technological intangible assets through patents, which constitute the basis for exporting technology and increasing the value of the company itself.

How is Telefónica doing?

According to the European Commission, Telefónica is the telecommunications operator in Europe that invests the most in R&D, with 1.113 billion euros. It’s also the number two company in the world in this area. The activity in Spain represents 8% of the country’s business investment.

It also acts as a catalyst for the national R&D system through its “open innovation” policies, its venture capital funds (Amérigo and in collaboration with the CDTI, Innvierte), through Wayra, its business acceleration programme, which is already the largest of its kind in the world, and the OpenFuture programme to promote entrepreneurial activity.

Telefónica is also involved in the promotion of social actions, such as the education of children and the development of talent, through programmes like Proniño, Talentum, and Think Big.

To sum up, as we’ve said many times, we have been presented with the opportunity to change the economic model, and to do it, we have to move from words to actions. Achieving this will require close collaboration between administrations and companies. At Telefónica, we’ve taken up the challenge that has fallen to us, as one of the engines driving technological innovation in Spain. Let’s take advantage of this opportunity. Future generations will thank us for it.

Image Dwayne Baraka


David del Val en su conferencia sobre los primeros pasos de Open Gateway

Primeros pasos de Telefónica Open Gateway 

Tras la charla de apertura del Presidente de Telefónica y la GSMA, José María Álvarez-Pallete, en la que trató los aspectos más generales de...