In the FT today, Peter Marsh reports that the government's ‘rebalancing agenda' has been criticised for being incoherent. This may be true. The term 'rebalancing' does seem to be used with a degree of abandon to refer alternately to regional, industrial or public/private balance, depending on which is most convenient at the time. While there is, in fact, rationale behind each of these uses we would point to two key elements of rebalancing.
As David Willets noted in a speech last year:
“Future growth has to be driven by business investment;it needs to be export led”
In this speech Willets mentions the importance of innovation to drive both of these things.
But what exactly is innovation?
David Willets notes that:
Innovation covers “a broad range of activities” and is “more than research and development, vital though that is. Knowledge transfer, design, branding and customer insight all matter”
He is right. Innovation is broad. But it is also targeted. Companies innovate as a response to competitive pressure. Innovation is commercially driven. And this is why it is so broad, competitive pressures do not just apply to products. Developing new processes or marketing techniques is equally innovative, and equally important to maintaining a competitive edge.
So innovation is commercially-targeted development of any or all elements of a business. And Willets is right, it's crucial for growth. Or, for that matter, rebalancing.