Having the right skills to spur innovation is essential for businesses to thrive in a technology-driven world. Advances in digital technologies and the quest for greener futures generate ever greater rewards to those moving with the technology frontier. But what do these right skills look like?
Bernards-Lee, Bell, Bezos, Brunel, Curie, Da Vinci, Dyson, Edison, Einstein, Franklin, Gates, Lovelace, Musk, Jobs, Wright brothers. Often people think of innovators as scientists, encyclopedic genius, technology geeks or people (and often mistakenly, men) who like to take risks.
What skills are needed?
Technical skills are undoubtedly in great demand – particularly in green and digital applications that can help take industry to the next level.
The green transition is already creating huge unmet demand for renewable energy, battery storage and clean mobility solutions. A recent report by the UK National Grid estimates a need to recruit for 400,000 energy jobs between now and 2050 to get to net zero.
Similar shifts are underway in the demand for digital skills. We expect to see substantial job growth in software design, cybersecurity and artificial intelligence (AI) over the coming years.
Yet technical skills can only take workers – and SMEs – so far. As Dale Carnegie noted in 1936, people and leadership skills are needed alongside technical skills to succeed. Recent employers’ surveys show that critical thinking and analysis, problem solving, and self-management skills are the most sought-after skills by industry.
Governments are working to support these skills. The UK’s Innovation Skills Framework, for instance, focuses on five transversal skills needed to underpin future innovation success. These range from conceptual skills to generate, process and engage with ideas to relational skills needed for interacting with staff, investors and customers.
The amplified SME skills challenge
Nearly 3/4 of scale-ups reported that access to talent is vital, or very important, to the continued scaling of their business with 1 in 4 ranking it as their top priority. Yet access to these skills is challenging for SMEs due to their limited resources and levers compared to larger firms, who can offer more competitive compensation packages, benefits, and professional growth opportunities.
Across OECD countries, in the manufacturing sector, wages are on average about 35% lower in micro and small firms compared to large firms. SMEs also often lose out on talent due to their limited capacity to develop staff and identify recruitment channels, as well as their weaker links to talent networks.
SMEs also face challenges in deploying existing skills given weaknesses in management practices. Unlike large firms, SMEs tend to perform ad hoc and informal human resources activities or have a small number of HRM staff tasked with a variety of functions, which would normally be performed by dedicated teams in a large company. Internal training systems are also less developed in SMEs. Less than 10% of small firms offer ICT training to their employees, against 40% to 80% of large firms, a gap that has continued to widen in recent years. Yet, studies show positive returns for SMEs that invest in formal HRM practices, such as training and performance-related pay.
Supporting SMEs in developing the right skills
Like a climbing frame there are many different routes to develop skills, rather than a single ladder for progression. SMEs need advice and support to navigate these different options. Business development services are increasingly deployed to help SMEs understand their skill needs, navigate the offer, and identify the solutions that best fit their needs. Such programmes are often delivered at the local level, where dense “skills ecosystems” – networks of firms, trainers, and institutions –can help reach and support SMEs. The Skills for Better Business programme, launched by Ireland’s government in 2022, offers a free, online assessment tool allowing SME owner-managers to identify the skills they need to develop to enhance their business growth performance. The tool then links SME owner-managers to a wide range of training support.
Higher-education systems are also being reformed to deliver more flexible solutions that fit the needs of SMEs. In the UK, Knowledge Transfer Partnerships (KTPs) provide short term academic placements to promote innovation, benefiting both the business and the academic, who get the opportunities to test their ideas in the marketplace. Temporary researcher mobility schemes and placements of PhD students are similarly important ways in which countries are working towards supporting SMEs to access frontier technology knowledge. Other schemes provide flexible part-time and work combinations, to enable “Earning and Learning” opportunities suitable for SMEs.
Taking the first step
Yet for SMEs, the first step is often the hardest. Policy makers need to find new ways of reaching SMEs and raising their appetite to innovate and invest in new skills and learning. More needs to be done to raise entrepreneurs’ awareness about the value of “skills bundles” and strengthening their links to the innovation and skills ecosystems. Once there is the will – as Governments around the world are finding – there is a way to upskill SMEs and help them turn the challenges they face into opportunities, and to thrive in a technology-driven world.
These topics were discussed at a workshop jointly organized by the OECD Working Party on Innovation and Technology Policy and the UK Department for Science, Innovation and Technology – GOV.UK (www.gov.uk) at the Digital Catapult in London.
Further information: OECD TIP Skills Workshop at UK Digital Catapult
OECD SME and Entrepreneurship Outlook 2023
OECD Platform for the Entrepreneurship Education Collaboration and Engagement Network – EECOLE
OECD STIP Compass: Knowledge Transfer and co-creation explorable policy guide
If you have suggestions or examples of the skills and talent you think are important to future proof SME innovation, please get in touch or leave a comment.
David is Regional Manager for London and South East England and works in the Strategy, Impact and Place Directorate in Innovate UK, within UKRI. He is responsible for strategic stakeholder engagement for innovation and collaboration. Prior to joining Innovate UK, David worked as a government economist at HM Treasury, Home Office, Defra and the Business department. He has an MBA from Henley Management College and MSc Oxford University.
Lucia Cusmano is Acting Head of the SMEs and Entrepreneurship Division and Head of the Unit on SME and Entrepreneurship Transformation at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE). She coordinates the development of the OECD SME and Entrepreneurship Strategy and leads work on SME digitalisation and green transition. She has authored OECD reports on SME financing, innovation and sustainability, and benchmarking of SME and entrepreneurship policy.
Ms. Cusmano has a PhD in Economics from the University of Pavia (Italy) and has completed a Master of Science in Economics at Warwick University (UK). She has published in international journals on SMEs, entrepreneurship, innovation, globalisation, structural change and economic development.
Caroline Paunov heads the Secretariat for the OECD Working Party on Innovation and Technology Policy (TIP) at the OECD's Directorate for Science, Technology, and Innovation. In this role, she oversees the TIP's activities, uniting 120 delegates and experts from the OECD and beyond to develop evidence-based advice on science, technology, and innovation policies.
The primary 2023-24 focus is "Making technology investments succeed: What should STI policies do for skills and capabilities? " This initiative examines how STI policies can support skills and ecosystem conditions to optimize massive technology investments for sustainable and resilient transitions.
Caroline's expertise in innovation, development and trade, along with applied econometrics methods is showcased through publications in academic journals. Her academic journey includes a B.A. and M.A. (Hons) from the University of Oxford, an M.Sc. from the University Pompeu Fabra, and a Ph.D. in Economics from the University of London.