Innovation Survey Into the Cornish Marine Sector 2006 to 2008

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1 Innovation Survey Into the Cornish Marine Sector 2006 to 2008

2 Contents 1. Executive Summary 2. Introduction and Background 3. Results: About Activities that Support Innovation 4. Results: About New Products and Services Developed 5. Results: About Your Business s Processes 6. Results: About Barriers, Information and Collaboration 7. Conclusions and Recommendations Page 2 of 14

3 1. Executive Summary 106 Cornish marine businesses completed the survey into innovation within the Cornish marine sector, this represents approximately one fifth of estimated total market size. The survey formed part of the Nautisme Espace Atlantique 2 programme of activities designed to boost the watersports industry across EU regions bordering the Atlantic Ocean. The survey aimed to investigate the level and type of innovation occurring within the Cornish marine sector during the period: beginning of 2006 to the end of It also aimed to identify barriers to innovation, sources of information for innovation and potential collaborations for innovation. The survey was an online survey and subject areas were largely based on a 2007 UK wide survey into innovation so that useful comparisons could be made. Key headlines include: An innovation active sector: Cornish marine businesses displayed a higher than UK average level of activity, including equipment and marketing as top areas that had been invested in to support innovation. Steady growth in new products and services: just under half of the businesses reported that they had launched new products or services over the time period and the number of products or services launched per year was showing steady growth. In comparison to the UK percentage of businesses launching new products and services the Cornish marine sector was 7% greater. Collaborating with other businesses: Over half of the Cornish marine businesses that launched new products and services collaborated with another organisation: three quarters collaborated with another business and one quarter collaborated with another organisation such as a university - the latter equating to six businesses. Innovation to improve environmental responsibility: applying innovative methods to reduce environmental impact was one of the top categories when applying innovation across business processes. Quoted examples included: waste reduction programmes, recycling schemes and investing in cleaner engines to reduce emissions and increase fuel efficiency. Innovation to boost sales: In comparison to the UK average, Cornish marine businesses were using marketing innovatively to help grow their businesses. On average only 18% of UK businesses participated in innovative marketing, compare this to 60% of Cornish marine businesses. Innovative marketing mainly focused on the Internet and quoted examples included: search engine optimisation, web advertising campaigns and social media. Cost restricting innovation: Similar to the survey results for the UK, the cost of innovation was reported by the Cornish marine sector as the top barrier. Other factors rated highly included: availability of finance and the cost of finance. Customers and internal staff rated as top sources of information for innovation: Cornish marine businesses recognise that information from customers was key to successful product development and also highly rated information from internal staff. Least likely source of information was universities. Further comprehensive detail is noted in the Conclusions and Recommendations section of this report. Page 3 of 14

4 2. Introduction and Background This survey into innovation within Cornwall s marine sector forms part of the Nautisme Espace Atlantique 2 (NEA2) European programme of activities to boost the watersports industry in the Atlantic area. The NEA2 programme has 23 partner regions working across the European Union; all bordering with the Atlantic Ocean 1. The survey was implemented by Cornwall Marine Network a trade association supporting the Cornish marine sector with marketing and training initiatives 2. The survey s main aims were to investigate the level and type of innovation occurring within the Cornish marine business sector, plus to identify other factors that influence innovation activity. Results from the survey will aid development of future business support packages. Objectives To limit the boundaries of the research the following objectives were defined: 1. To identify businesses, and the types of business, that are behaving innovatively 2. To discover and record the ways in which innovation is occurring within these businesses 3. To understand and measure the impact innovation is having on business turnover 4. To explore issues that effect marine businesses ability to innovate 5. To report and share regional innovation to partners within the NEA2 project The survey was addressing innovation within the time period of the beginning of 2006 to the end of Research Methodology The survey was an online survey which collected mainly quantitative data 3 ; with some open questions to allow businesses to add more qualitative detail where required. The survey s subject areas were mainly based on the UK Innovation Survey so that useful comparisons could be made. The sample targeted all marine businesses of the Cornwall Marine Network trade association - approximately 300 marine businesses. Due to the niche size of the Cornish marine marketplace no sampling methods were employed (e.g. random or geographic) and telephone follow up improved response rates. A digital camcorder was offered as an incentive. To achieve the objectives the survey was split into four main sections: a. About activities that support innovation b. About new products and services developed c. About your business s processes d. About barriers, information and collaboration About activities that support innovation: This section of the survey was dedicated to identifying whether businesses were innovation active: for example: investing in equipment that supports innovation, or involved in training for innovation, or conducting marketing research or internal/external research and development. 1 See Appendix A NEA2 2 See Appendix B Cornwall Marine Network 3 See Appendix C The Innovation Survey / Results 4 Page 4 of 14

5 About new products and services developed: This section aimed to identify whether innovation activities were resulting in actual new products brought to businesses marketplaces. Equally important was to determine what kind of business was innovating with new products and services. About your business s processes: Innovation is not just about new products and services; companies can apply innovative strategies within any area of their business s processes; for example: within operations, or marketing, or logistics. About barriers, information and collaboration: This section was aimed at identifying issues that prevent Cornish marine businesses from behaving innovatively, where they sought information to support innovation and also who they d ideally collaborate with to develop new products and services. Page 5 of 14

6 3. Results: About Activities that Support Innovation Summary: Initial findings show that the Cornish marine sector is innovation-active: with a higher than national average level of participation in activities that support innovation. Most popular activities that were invested in were equipment and marketing that support innovation. Least popular were external research and development and marketing research this is almost identical to the UK findings declared in a 2007 innovation survey. Most businesses invested less than 10% of turnover on innovative activities; UK businesses declared that the cost of innovation was a high barrier and this is reflected in low financial investment by Cornish marine businesses. Key Findings o 93% of businesses surveyed were active in some form of activity that supports innovation over the period 2006 to o Categories included investing in equipment, marketing, internal research and development, training, marketing research, design and external research and development full results can be seen in fig. 1. o The most popular activity was investing in equipment (machinery, computer software or hardware) that supports innovation: over 80% of businesses declared activity here. o The next most popular activity was for marketing that supports innovation with 66% of businesses. o The least popular activities were participating in external research and development (only 28% of respondents), design (36%) and marketing research (42%). o 22 businesses declared activity in more than one activity category. Four businesses were identified as highly innovation-active: with activity in four categories. These latter businesses included three service businesses and one manufacturer two have turnovers greater than one million pounds. o When it comes to budget allocated to innovation then the majority of businesses invest less than 10% of turnover full results can be seen in fig. 2. o Three small-medium-enterprises invested more than 25% of turnover: a start-up, a science and technology specialist and a watersports provider. No. Respondents Equipment Marketing Int R & D Innovation Active Training Marketing Research Budget Allocated to Innovation 2008 Less than 10% Turnover Between 11% and 25% Turnover Greater than 25% Turnover Figure 2 Page 6 of 14 Design Ext R & D No Yes Figure 1 Cornwall results in comparison to United Kingdom A UK innovation survey took place in 2007 and comments that 64% of businesses surveyed were classed as innovation active (i.e. participating in activities that support innovation). In comparison with this study, it appears that Cornish marine businesses are more innovation-active than the UK average. Similar to the Cornish marine sector, more UK businesses invested in equipment versus investing in external research and development and less than 20% invested in marketing research.

7 4. Results: About New Products and Services Developed Summary: During the time period just under half of the survey had created and launched new products and services, one third of these businesses launched new products/services that were new to the marketplace. Further, the survey has identified steady growth in the number of new products launched to the marketplace. In comparison to the UK, Cornwall s marine sector is ahead with 7% more businesses launching products/services. Cornish marine businesses collaborated with other businesses rather than universities, less than 10% of the new product launchers worked with universities or other similar organisations. Key Findings o 47% of businesses that responded had launched new products and services during the period 2006 to 2008 just over one third of these businesses launched products that were new to the marketplace (i.e. were not offered by their competitors). See figure 1. o Of the 47%, 67% had turnovers of less than 300,000 and employed fewer than 10 fulltime employees; reflecting the smallmedium-enterprise nature of the region s economy. o Of the 47%, most were linked to the service side of the marine sector; only 17% were manufacturers again, reflecting the nature of Cornwall s economy. o Over the time period 2006 to 2008 there has been a rise in the number of new products launched per year: in products were launched on average across the 47 businesses, rising to 2.76 in 2007 and 4.13 in o Two manufacturing businesses (marine clothing and fiberglass) launched a large number of new products over the time period which slightly skewed the above figures, but even with these outliers removed the figures show a steady increase in the number of new products launched. o Businesses tended to develop products internally or in collaboration with another business, very few, less than 10% had collaborated with another type of organization, for example: universities or government agencies. o Only five businesses had received grant aid to support their innovation of new products. o 57% of the businesses that launched new products reported increases in revenue of more than 10% due to the new products. Number of Businesses Number of Businesses Launching New Products Time Period Figure 1 Cornwall results in comparison to United Kingdom The UK-wide 2007 innovation survey reports that 22% of businesses had launched new or improved products or services; in comparison with Cornwall which averaged 29% per year over the period. 30% of UK businesses had collaborated with universities to support their new products in Cornwall this drops to less than 10% indicating that Cornwall s relatively new university has not yet had an impact on the marine leisure sector. Page 7 of 14

8 5. Results: About Your Business s Processes Summary: Cornish marine businesses are also applying innovation to their main business processes. More than half of the businesses surveyed had introduced new processes in either of the following categories: marketing, environment, management, operations or logistics. The most popular area to innovate was marketing, where 60% of businesses had introduced innovative marketing campaigns. In comparison to the UK, only 18% of businesses had introduced new innovative marketing campaigns results in Cornwall could be skewed by the European Union investment via the Objective One programme. Key Findings o More than half (55%) of the businesses had implemented innovative new business processes over 2006, 2007, o The most popular was marketing - 60% of businesses had engaged in an innovative marketing activity. See figure 1. o Interestingly, environment processes was the next most popular area where businesses turned their attention. o Least popular were logistical and operational processes which could reflect the mainly service oriented nature of the region s economy. o Examples of innovative marketing mainly focused on web, including: campaigns, search engine optimisation, pay per click advertising campaigns and social media. Outside of web, innovative event marketing was also employed. o Examples of innovative environment processes included: fuel efficient engines, recycling, waste management and using more environmentally friendly materials. Percentage Percentage of Businesses Introducing New Processes to their Business Marketing Environment Management Operations Logistics Process Type Figure 1 Cornwall results in comparison to United Kingdom The UK wide innovation study did not cover all the same business processes as this survey. However, the UK study did report on innovation within marketing; 18% of UK businesses had implemented innovative marketing techniques, this is much lower than the results from our Cornish survey, where 60% of businesses reported introducing innovative marketing processes. This could be explained by the impact of the Objective One programme that invested more than 300,000 in marine businesses marketing from 2005 to It could also reflect the need to be more innovative in a remote region away from the main centres of UK commerce. Page 8 of 14

9 6. Results: About Barriers, Information and Collaboration Summary: Cornish marine businesses closely follow the UK average when it comes to barriers, sources of information and partners to collaborate with for innovation. The top barriers to innovation are all related to the cost of innovating; other high barriers include uncertain demand in the marketplace and too many regulations. In terms of information, businesses looked to customers first then to people within their organisation. Universities and scientific journals were the least favourite source of information for innovation. Finally businesses would rather collaborate with customers and other businesses within their sector. Key Findings Barriers: o Between 40 and 50% of businesses reported that the main barriers to innovation were related to finance with the cost of innovation rated as the highest barrier, closely followed by availability of finance and the cost of finance. See figure 1. o Other top barriers to innovation included uncertain demand (33%), regulations (30%) and market dominated by competition (25%). o Low barriers included: lack of market information (21%) and lack of technology information (9%). Information: o Overwhelmingly, businesses preferred to source information for innovation from customers (97%) and people within their business (93%). See figure 2. o Also rated as highly important sources of information was from suppliers (62%) and competitors (60%). o Few businesses looked to journals and universities for information about developing products and services for their business. Collaboration: o Cornish marine businesses would prefer to collaborate with customers (91%), then other businesses within the marine sector. o They least wanted to collaborate with consultants, government institutes and universities. Barriers to Innovation Cornwall results in comparison to United Kingdom The 2007 UK-wide study revealed similar results to this study with UK businesses identifying that cost was the highest barrier to innovation, including the direct resource costs of innovation activities, their perceived economic risk and the cost of acquiring finance. Equally the nation-wide study also reported that UK businesses would prefer information from customers and people within the business. Again, higher education and journals were one of the least favourite sources of information. In terms of collaboration, UK businesses would prefer to collaborate with suppliers and customers, least popular collaborators included government institutes and universities again, similar to the results from this survey. Percentage Percentage Cost of Innovation Availability of Finance Cost of Finance Customers People within Business Suppliers Uncertain Demand UK Govt. Regulations EU Regulations Lack of Personnel Market Dominated Barriers Perceived Risk Importance of Information from... Competitors Industry Standards Professional Associations Consultants Lack of Market Information Lack of Technology Information Exhibitions and Fairs Government Institutes Sources of Information Universities Scientific Journals and Public... Figure 1 Figure 2 Page 9 of 14

10 7. Conclusions and Recommendations More than one third of Cornwall Marine Network s businesses completed the survey (approx one fifth of estimated total market size) this was considered a good response rate and therefore it can be concluded that results are a valid representation of the level and state of innovation within the Cornish marine sector during the time period 2006 to An innovation-active sector Cornish marine businesses that completed the survey displayed a higher than UK average level of activity that related to innovation. The most popular activities were investing in equipment and marketing that supports innovation. The least popular were external research and development and marketing research. These least popular aspects of innovation activity can mean significant investment in terms of cash. However, the innovation barriers section of the survey reported that uncertain demand was considered a high barrier (as-well-as finance). Clearly this uncertainty barrier would be reduced if businesses conducted marketing research in the early stages of new product development. It is recommended that businesses receive support on best-practice marketing research; for example: how to implement marketing research in house or how to brief a marketing research agency cost-effectively. Steady growth in new products A healthy volume of Cornish marine businesses had launched new products or services over the time period; just under half. Additionally the average number of new products launched per year was displaying steady growth. When compared with the average percentage of businesses launching new products across the UK, then the Cornish marine sector was more vibrant with 7% more businesses launching products and services. Of those that launched new products 40% reported a less than 10% increase in turnover associated with the new product or service. A high number of this 40% are small medium enterprises with an assumed low volume of total products/services available, thus, this could suggest that some businesses are experiencing a failure rate with their new products and services. Again, marketing research prior to product development would a) quantify demand b) qualify specific customer needs, which should result in improved sales. It could also suggest that new product developments are not being communicated to target audiences effectively and therefore resulting in low impact on sales. It is recommended that these aspects are further qualified and support provided in the areas of marketing research and cost-effective marketing communication. Collaborating with other businesses Over half of the Cornish marine businesses that launched new products and services collaborated with another organisation during the process. Of this percentage, most had collaborated with another business and only one quarter had collaborated with another type of organisation such as a university (equating to six businesses). It is not clear why this percentage is low until the collaboration preferences section of the survey is examined. Here, respondents highlight that government agencies and universities are the least wanted organisations that businesses would like to collaborate with. This is not a localised issue but reported in the 2007 nationwide innovation survey also. This is an issue, as the region s economic strategists are encouraging businesses to link with the region s University to encourage knowledge transfer. There could be one or two problems to address: a) the university is not offering the right products to meet business needs or b) the university is not communicating their product sufficiently to the marine sector. It is recommended to further qualify this point. Page 10 of 14

11 Innovation to improve environmental responsibility Innovation is not only applied to the area of new product and service development; it can be applied throughout the organisation. Over half of the businesses who participated in the survey were applying innovation to areas throughout their business s that included: marketing, environment, management, operations and logistics. Applying innovation to environmental processes was one of the most popular categories with businesses investing in management of waste, recycling and cleaner engines in order to reduce their impact on the environment. It is recommended that greater exposure is given to businesses developing their green credentials to encourage other marine businesses to participate. Innovation to boost sales Cornish marine businesses were also applying innovation to support their marketing efforts: 60% of businesses had introduced innovative marketing campaigns, a much larger percentage than the UK average of 18% of businesses. Innovative marketing campaigns in the Cornish marine sector mainly focused on the Internet, with , search engine optimisation, web advertising campaigns and social media being used to boost sales some businesses were also applying innovation to events. It is noted that the Objective One investment (2005 to 2007) via Cornwall Marine Network in marketing may have skewed these results. Finance restricting innovation As reported across the UK, financial constraints were the top barrier for innovating within Cornwall s marine sector. These include: the cost of innovation, availability of finance and the cost of finance. It is recommended that these results are shared with the region s economic strategists in order to make available support during the latter phases of the European Union Convergence programme; one particular programme could include the Knowledge Transfer Connect initiative. Additional recommendations include: coaching on raising finance and presenting to potential investors. Other top factors that limited innovation were: uncertain demand (as discussed above) and government and EU regulations. Customers and internal staff top source of information Although marketing research was not a top investment area for innovation, most likely due to its cost, Cornish marine businesses recognise that information from customers hold the secret to successful innovation. In addition to customers, feedback from staff was also rated highly. Universities were noted as the least likely source of information (congruent with UK results), again reaffirming the two issues highlighted above: are universities providing the right kind of products/services for engaging with businesses or are they not communicating efficiently? Next Steps It is recommended that the key results from this survey are reported to the economic strategists guiding Cornwall s EU Convergence development fund in order to support policy for the remaining years of funding and that the survey is repeated for the next two years to report changes as a result of the changing economic environment. Page 11 of 14

12 Appendix A: Nautisme Espace Atlantique 2 (NEA2) Project The NEA II Project aims for the sustainable development of the marine leisure and watersports industry in the Atlantic Area. 23 partners from the Atlantic Area (including Cornwall Council) are working together and within their own regions to: appraise the current socio-economic situation in the marine leisure industry extract and share best practice support sustainable innovation in the industry support participation at marine leisure/watersports industry events, exchanges and conferences work with marine leisure businesses and service providers to improve their environmental/energy/social equity status assess skills needs of businesses in the sector and develop and deliver training and market the sector to the world Cornwall Development Company is responsible for delivering strategic, sustainable economic development projects for Cornwall Council and is delivering the NEA2 project on its behalf. In addition to the core team, most of the Cornwall actions on the project are delivered by local contractors (CMN and COAST) who are already central to the delivery of business advice, training and environmental research in the leisure marine and tourism industry. They are well-placed to ensure sustainability of the actions beyond this project. The NEA2 project runs for three years until December Enquiries: Alexandra Lake Project Manager (01209) Nolwenn Baot Project Assistant (01209) The Interreg IVb Atlantic Area Programme is a transnational European-funded programme which funds 65% of the NEA2 Project. This Programme is designed to prevent physical borders being an obstacle to growth, to encourage cooperation and sustainable development between regions within the Atlantic Area. Page 12 of 14

13 Appendix B: Cornwall Marine Network Cornwall Marine Network (CMN) is a membership owned not-for-profit organisation: created by a small group of Cornish marine businesses in CMN s main aims are: to improve and grow the prosperity of the Cornish marine sector, to maintain and increase marine job opportunities, to improve the skills of the workforce, to attract young people into the sector and to encourage networking between our members. Our aims are reached with focused activities including: o Training programmes and grants for developing skills o Business directories and websites for creating awareness o Events that encourage networking opportunities o Business advice that supports profitable growth o Sourcing funding to help businesses develop Our recent key achievements include: o Delivering best practice marketing workshops to CMN members using the Chartered Institute of Marketing o Developing new nationally approved qualifications for the leisure marine sector o Developing a young apprenticeship scheme with schools to ensure young people are better prepared for marine careers o Expanding our work-based training support (for which CMN received a UK Skills National Training Award) o Supporting an ever increasing number of member employees with skills initiatives that respond to the needs of the business Membership Membership of CMN is split into two categories: o Full membership (for marine businesses VAT per year) o Associate membership (for businesses who work with the marine sector 50 + VAT per year) Page 13 of 14

14 Appendix C: Innovation Survey / Results Please follow the link below to access the actual survey data: Page 14 of 14

15 The NEA2 project is funded by the European Regional Development Fund under the Interreg IVb Atlantic Area Programme, Cornwall Council, Cornwall Marine Network and CoaST. It is managed in Cornwall by Cornwall Development Company.

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