With the service sector accounting for 80% of UK economic activity, businesses are benefitting from the contributions human-focussed research disciplines are bringing to commercial innovation, particularly in how service industries can better meet customer needs.

Frontier’s expertise in understanding business innovation and the innovation policy landscape led the British Academy, the UK’s national academy for the humanities and social sciences, to commission a report that provides real-world evidence and case study examples of how world-leading service sector businesses in the UK innovate, and the role that SHAPE disciplines play. This is part of a series of studies and a synthesis report, published today by the Academy, exploring the role of SHAPE in R&D and innovation.

The Academy defines SHAPE as a “collective name for the social sciences, humanities and the arts – subjects which help us make sense of the human world, to value and express the complexity of life and culture, and to understand and solve global issues”. Examples of SHAPE disciplines range from languages and linguistics, history, psychology and cognitive sciences, to economics and business, geography, media and communication, and many more.

Up until now, the role that SHAPE insights play in the complex innovation process has not been fully recognised or illustrated. Our research, conducted in early 2022 and based on more than 20 interviews with innovation leaders across the service sector and four in-depth case studies from Tesco, Netflix, Accenture and Phoenix Group, addresses this gap.

Linking Innovation to the Customer

Across all our interviews, we heard how UK service sector businesses consider innovation highly important to their business – albeit one that is organised in very different ways in different companies. For the service sector in particular, innovation also goes beyond formal R&D, with significant time and resource often devoted to internal innovation teams that would not be captured in measures of R&D.

Our research highlights how the breadth of SHAPE insights reaches all areas of the innovation process. The focus on understanding customer needs in particular means these insights have become a vital component for developing customer-friendly solutions, such as the role of economists in optimising innovation investments, linguists and storytellers in developing successful chat bots, geographers in optimising physical retail outlet locations, media and communication experts in developing engaging apps and educational videos, and culture experts in shaping culturally diverse content.

Many businesses also emphasised the real risk in excluding the SHAPE perspective from technology’s impact on society, as the realities of how people engage with technology evolves along with the ever-changing landscape.

Bringing SHAPE to UK policy

With innovation being a key policy focus for the UK government, and almost certain to remain so, the insights from our report provide fresh policy recommendations:

• Better dialogue: between government and service sector businesses to enhance understanding of innovation and the role that SHAPE disciplines play, to ensure a broad appreciation in government where at present innovation is perceived to be equated with scientific R&D
• Improved incentives for academic researchers in SHAPE disciplines to support business innovation, building on successful examples already taking place in STEM disciplines
• Financial and soft support: to help service business navigate the policy and funding environment in order to facilitate collaboration with government and academia, and to support business investment particularly in data and systems that enable digital innovation
• Regulation: developing supportive regulatory environments for innovation balanced with consumer protection
• Educational policy: developing the right talent to support innovation in the services economy and the need to combine STEM and SHAPE expertise effectively.

Download the full report now at the British Academy website.

For more information, please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.