Innovation typically involves three phases: a design phase, where a variety of new seeds are sown; a testing phase, which acts as a ‘fitness mechanism’, weeding out the weaker varieties; and a scaling phase that amplifies the best ideas and supports them to adapt, thrive and scale. Unfortunately, we often find barriers at every stage.

• Design - First, we see challenges in the seeding of new ideas. While practitioners in education, social care and health are constantly improvising and improving what they do, they often lack the time, resources and capacity to systematically analyse the context, draw on evidence of what works, or prototype new solutions. Consulting organisations may be brought in to solve problems or generate solutions, but the funding available is often not enough to allow them to conduct the exploratory research, and trial and error, needed to generate more radical solutions. While support for start-ups to pursue new ideas has grown, the degree of risk involved and a lack of support or patient capital at key moments can deter budding entrepreneurs from building new, impactful products and services.
  
• Test - Second, there is often a weak selection mechanism to identify the most promising solutions. Rigorous evaluation - where experimental or quasi-experimental methods are used to identify whether a solution has led to the desired impact - is still in its infancy in many fields. Such approaches may not be accessible to voluntary or private organisations working with a small client group or with limited funding, while academic partners may conduct small-scale studies but be less incentivised to take on larger-scale field trials, without which attempts to scale may fall flat.
  
• Scale - Third, many promising solutions struggle to move beyond limited deployment and piloting. Even when rigorous evidence for a new approach has been developed and communicated, it may not be widely adopted by practitioners in their daily habits and routines. Procurement and regulatory barriers may impede the ability of new ventures to scale and displace incumbents. The crucial combination of bottom-up momentum from a coalition of early adopters, alongside top-down support from government and regulators, may be absent.

To overcome these barriers, Nesta will take on three complementary roles: working as an innovation partner, a venture builder and a system shaper. These roles will be the focus of our work, and represent a significant shift in how we operate.

As an innovation partner, Nesta will work closely with frontline organisations across the UK – such as local authorities, chains of schools and GP networks – to design, test and scale new solutions. This includes long-term sustained collaborations as well as shorter-term partnerships on specific shared goals.

In these partnerships we will deploy multidisciplinary teams – including designers, behavioural scientists and data scientists – to immerse themselves in the relevant contexts and work hand in hand with our partners to generate solutions with the potential to change lives at scale. We will apply a range of research and experimental methods, drawing upon proven solutions in comparable situations, and engage closely at all stages with the lived realities of practitioners and people affected by the problems we are trying to solve.

Our partnerships will help us to ensure the ideas that are seeded are contextually grounded, relevant and the product of multiple perspectives and disciplines. Together with our partners, we will then test those ideas rigorously and weed out those with insufficient potential. We will design for scale from the start, forming partnerships with a view to replication and diffusion. We will look to spread proven solutions across each delivery partner’s network, with support from early adopters. In parallel, we will work with policymakers and regulators to enable and support the scaling-up of what works, building both ‘bottom-up’ and ‘top-down’ momentum for change.

Sometimes innovation requires a more radical departure from existing practice than is likely to be possible within large institutions. New and early-stage ventures have significant freedom to innovate, drawing on cutting-edge developments in different sectors. The rigours of the commercial market then act as a fitness mechanism, forcing ventures to iterate towards products and services for which there is significant demand from users or practitioners. Those that pass this test can then take an accelerated path to scale as revenue generated is reinvested in growth, and ventures are incentivised to move quickly to new markets.

Building successful, impactful ventures in pursuit of our missions means both creating new ventures from scratch and helping existing early-stage ventures to succeed.

Nesta’s Venture Studio will create new ventures with the potential to generate long-term impact and value for users, communities and shareholders. Drawing on our work as an innovation partner and system shaper we will use our research to generate ideas, provide access to early users to refine solutions, and create unique ‘sandbox’ environments to smooth the way to market. Nesta Impact Investments will continue to invest in established early-stage ventures, building on a long history of successful impact investing. We will provide patient capital and support investees to achieve their impact objectives and potentially shift key markets, including through targeted partnerships that draw on Nesta’s and investees’ combined insights and expertise to achieve shared goals.

There are different barriers to innovation in each of the fields we work in. A lack of risk capital can prevent good ideas from being seeded. Tough regulatory barriers and unhelpful public sector procurement practices can limit early adoption. Sometimes, innovations struggle to scale due to fragmented systems, a lack of funding for implementation and poor environments for peer networks or community-led initiatives. In some cases, all of these factors apply.

As well as contributing directly to new innovations in our mission areas, Nesta is therefore seeking to create an environment where innovation and learning are continually emerging – that is, helping to ‘shape’ those innovation systems. This may involve working with regulators to create sandboxes that allow for experimentation; generating evidence to define new fields and inform policy and resourcing (as we have done for the creative industries); incubating new institutions where there are key gaps (as we have done through What Works Centres); enabling data sharing and improving data infrastructure; and supporting practitioners and citizens with mechanisms that improve transparency, choice and voice in the systems in which we work.

Success as a system shaper will help to magnify the impact of our efforts by removing the usual barriers to scaling that we encounter in our work as both an innovation partner and venture builder. It will also help to improve the environment for innovation in our mission areas independently of any Nesta intervention.

As we focus our activity on our innovation missions, three enterprises that Nesta has incubated will continue to support and shape the innovation ecosystem in the UK and beyond.