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1
Government’s Role in Service Science and Innovation in Services
Allan Mayo
BERR Services Policy Unit
22nd Service Conference and Workshop
7 November 2008
2
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
3
Importance of Services Sector to the UK Economy since 1945
4
Sector GVA as a proportion of UK economy in 2006
5
UK trade in services 1996-2006
6
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
8
UK/US productivity gap
9
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
10
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
11
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
12
Increasing power of consumers
13
ICT is key technological driver
Drivers of innovation and growth in services
14
ICT Innovation comes in waves
15
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
16
Sustainability
17
Impact of the public sector
18
Impact of the public sector
19
Impact of the public sector
20
Impact of public sector
21
Impact of public sector
22
Impact of the public sector
23
Impact of the public sector
24
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
25
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
26
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
27
Transforming Public Services
28
Promoting learning in Government
29
Improving public sector procurement
• clear joint objectives
• mutual understanding
• developing ongoing relationship
• appropriate risk sharing
• opportunities for innovation
• flexibility
30
Service science is not enough
Commitment and capability require a framework of:
• Ethics
• Learning
• Networks
31
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
32
Report URL: http://www.berr.gov.uk/files/file47440.pdf