UK businesses overestimate their innovation without selling new services

UK businesses believe they are twice as innovative with technology as they actually are. Research from PA Consulting suggests that less than one in four businesses have successfully sold even one technology as part of their products or services.

While confidence around the broader economic picture has plummeted, UK businesses still retain heightened levels of self-belief in their own operations. In recent years, a growing part of that divorce has been the hype around artificial intelligence – as there does not seem to be an issue facing British corporates, which they do not feel could be remedied with more investment in AI.

With the long-discussed potential of AI driving huge valuations in ‘AI-centred’ businesses, it is easy to see why they might have been swept up in the excitement – but the fact remains that three years since the public release of ChatGPT, investors are starting to expect results. And not everyone is positioned to deliver or demonstrate them. A recent study Wavestone found that while the majority of leaders insisted that AI was saving them time, two-in-five admitted their firm had no metrics in place to prove their returns on investment in AI and technology.

Now, a new paper from PA Consulting has revealed that, for all the talk, a large number of UK businesses have precious little to show for their ‘innovative’ internal cultures. Analysing the results of a surveying of 4,595 businesses commissioned by the UK’s Department for Science, Innovation and Technology, the consultancy found that the perception of business innovation in Britain seldom matched the reality.

A 47% chunk ranked themselves between seven and 10 on an ‘innovation scale’, in spite of having failed to adopt any of 20 critical technologies PA ranked as critical for the future. Similarly, 25% of businesses think they are more innovative than their competitors, despite adopting fewer technologies than their sector average.

At the same time, while 81% of businesses across all sectors said they are actively seeking to increase their uptake of innovative technologies, just 24% of businesses were able to say that they had sold at least one technology as part of their products or services. Meanwhile, even if they had managed that, 97% of UK patents fail to generate commercial returns.

When asked why they thought they were failing to walk the talk on innovation, many businesses reflexively blamed regulation – cited as a top barrier for adoption for 19 out of 20 technologies. But PA’s study suggested this would be too simplistic – and named three key recommendations for firms to chart a course ahead, regardless.

The paper suggests businesses should work to ensure innovation is more rooted in “real-world outcomes and national or local growth priorities”, and “focusing on tangible missions” – such as achieving net zero by 2050, improving public services, or boosting national security. At the same time, the public sector must act as the connective tissue across the UK’s innovation ecosystem – not just through government R&D spend – but non-financially, including access to testbeds to smarter government procurement. And firms should try to look at the bigger picture: rather than betting on individual technologies, policymakers should focus on where technology adoption is happening to support high-growth areas

Conrad Thompson, innovation adoption expert at PA Consulting, said, “The UK has no shortage of world-class ideas and technologies, but unless we scale them, we won’t see the productivity and growth gains we urgently need. Done well, innovation has huge potential to unlock productivity, boost economic growth, and raise the UK’s competitiveness. Yet success depends not just on invention, but on widespread adoption – and that doesn’t happen by accident. It needs the right infrastructure in place.”