A continuing refrain in this country for many years has been the call for increased innovation in all walks of life and in industry in particular. It has almost become accepted wisdom that we don’t invest enough in it to do it particularly well and that we have a long we to go before we catch up on our neighbours.
But this is far from the truth according to KPMG head of private Irish business Colin O'Brien who believes we are actually doing rather well when it comes to innovation. "We are a small open economy and indigenous Irish companies have to compete with the very best in the world on both domestic and export markets if they are to succeed," he contends. "They wouldn't survive if they weren't constantly innovating to remain competitive."
He cites the success of Ireland’s food and drink exports in recent years as evidence of this. “Indigenous exports generally have been a great success story over the past number of years and food and drink exports have done particularly well. They reached €10.5 billion in 2014 – that’s an increase of 45 per cent since 2009.
You don't get that sort of performance without a lot of innovation whether it's in product, distribution, packaging or any other area of the business." O'Brien is quick to point out innovation isn't the sole preserve of major international concerns like Kerry or Glanbia. "It's not some big black science only done by big corporations, it has to be done by small companies as well. They wouldn't survive otherwise."
Gourmet jelly beans
One small company he points to as an example of innovation in action is the
Jelly Bean Factory
. “This was founded by father and son Peter and
Richard Cullen
to manufacture gourmet jelly beans,” he explains.
“They innovated and innovated and developed a fantastic product and became hugely successful. But they are natural innovators. Peter is an amazingly restless person who is constantly looking for ways to improve, improve, improve. That can be in packaging, customer service, new flavours, production processes, marketing, anything. And for improve, improve, improve you can read innovate, innovate, innovate.
“One of the great things about the business is the culture of innovation that Peter and Richard have engendered in it. The guys in production, delivery and every other department all feel free to come up with ideas to improve the business. This applies to businesses in every part of the country. There are very few sheltered areas of the economy anymore and hotels, retailers and other businesses are all having to innovate to survive.”
While innovation is certainly alive and well in Ireland O'Brien notes that we can never have enough of it. "Of course, no country can say it has enough innovation. The day you get complacent is the day you stop being competitive. Companies need to keep innovating and we need more innovators and entrepreneurs. The million dollar question is how you achieve that."
Interestingly, he believes the Government is doing a good job when it comes to encouraging and supporting innovation. “I think this government has done a very good job of getting the message across that governments don’t create growth or jobs, all they can do is help create the right environment and conditions for growth to take place. The same applies to innovation. It is a question of putting the conditions in place and the right type of encouragement.”
He also believes the Government deserves a lot of credit for the research and development (R&D) tax credit regime. “The best thing that has happened in terms of innovation in the past 15 years came in the last budget when the base year of 2003 for the calculation of eligible R&D expenditure was removed.
"That means that every company engaged in R&D can now qualify for a tax credit. I don't think people appreciate just how good that incentive is. The European Commission has just published a report on R&D tax incentives around the world and Ireland ranks sixth, ahead of the UK, the US, Japan, and Germany among others."
But O’Brien believes more incentives from the State are not the answer. “Tax and grants are not a trigger for anything. We have a good set of supports for innovation as it stands and the Local Enterprise Offices are doing a good job in support SMEs. We are doing a lot better than many European countries when it comes to innovation and we are doing a lot right.
Celebrate our heroes
This may point to one way of encouraging more innovation and entrepreneurship. “We need to highlight our success stories and celebrate our heroes more,” he says. “We need to have the role models for the next generation of innovators and entrepreneurs to follow. We need to be telling the success stories which will encourage the 15, 20 and even 25 year olds to do something entrepreneurial. This will help fan the flames of innovation within them, but the fire has to be there to begin with.”
It’s not just about encouragement though, the Government can also play a very practical role. “The reality is that Irish entrepreneurs face a very penal tax regime when compared with their UK counterparts. The Government deserves a lot of praise for the R&D tax credit but it needs to address the disincentives for entrepreneurs which exist in the tax system.
“There is a danger that potential entrepreneurs will either start up their businesses elsewhere or not start them up at all because of this.”
