What R&D Costs Can I Claim For?

Are you in the process of completing a company tax return? Then you may be looking to determine which R&D costs you may be able to claim for to receive a helpful corporation tax reduction.

Whether the company you are responsible for is currently conducting research and development activities or has carried out development work in the past two years, a basic understanding of eligible R&D costs can help you to gauge the amount that you might receive back for R&D tax relief.

So, whichever industry you operate in, if the company has conducted development projects, you can’t afford to miss out on recouping eligible costs through the R&D tax credit incentive.

Eligible Costs for R&D Tax Claims

If a recent development project conducted contributes directly to seeking the advance in science or technology according to the supporting guidelines and legislation1, then you will be able to claim tax relief on expenditure as listed below. If you’re unsure if a project or previous activities qualify, then you can find out by contacting our specialist R&D tax expert here.

R&D costs that can be claimed for include:

Direct labour costs for those undertaking R&D work

The costs associated with directly employing someone to undertake R&D activities can be included in your R&D tax claim. This includes salaries, employers NI, pension contributions and bonuses. If an employee’s time was split between their normal role and R&D activities, then only the proportion spent on R&D can be claimed.

External staff hire to work on R&D activities

If individual externally provided workers (not companies) are hired to work on the R&D project, then a proportion of salary expenditure can be claimed. This is less than for permanent staff as HMRC assume that the payments to EPWs include a profit element. This profit element must be excluded.

Subcontracted costs for employing an agency or freelancers

If eligible activities on the project have been carried out by a subcontractor or an external agency, then again, it may be possible to claim relief on a proportion of the eligible costs for these sub-contracts.

The eligible costs allowable for subcontracted work is dependent upon the size of your organisation, the kind of subcontractor used and the nature of the contract between the parties. Special rules apply, so in this instance it’s essential to consult a professional R&D tax advisor.

Consumable or transformable materials used for R&D projects

 As the R&D project progresses, materials are consumed within the testing process and prototype development. The cost of these materials may be claimed, particularly if the prototypes are scrapped and not sold. Materials embodied in a finished product, or production tooling, following R&D activities cannot be included in the R&D tax claim.

There are also additional transformable material costs that can be included in R&D claims, including heat, light and power.

Costs for necessary supporting business functions

In addition to the main categories for eligible R&D costs, there are a number of other costs that can be claimed for essential support functions to the R&D project. These include HR, finance, IT and certain software licensing costs and development of special tooling. However, due to the unique nature of each project it’s important to speak to R&D tax specialists to identify all the costs accurately.

How to Make Accurate R&D Tax Claims

Of course, the amount that can be claimed from each of the categories above is entirely dependent upon the nature of the work and the extent to which activities can be considered eligible R&D (under current legislation and supporting guidelines).

That’s why many businesses utilise the expertise of R&D tax specialists who are trained in evaluating R&D projects to extract the optimum value of eligible costs for a business. Relief on these costs is then repaid either as a reduction in corporation tax or a direct payment from HMRC dependent on a number of factors such as the size of the business and whether it is profit or loss making.

Either way, it’s safe to say that relief on the costs for development work conducted will improve the financial standing of a business and help to encourage innovation which drives productivity and performance; making it worth your time to explore what R&D costs you can claim for.

To speak with R&D tax specialists on eligible costs for R&D projects, call R&D Tax North West on 01827 338118 or send an email today.

 

 

Improved UK Manufacturing Processes Lead to Tax Relief

With fiercely strong competition in the manufacturing industry, businesses are now realising that cost cutting isn’t always the answer to gain and retain customers.

For that all important edge over competitors, manufacturing companies realise now more than ever, that meeting customer need is vital. How these needs are met however, is another matter entirely.

On occasion, customer requirements can seem impossible to meet, especially within the manufacturing industry where physical boundaries are set on what can actually be achieved.

However, before dismissing customer requests as just too difficult, many UK manufacturing businesses are turning to a new way of working made possible by a UK Government incentive. By using R&D Tax Credits, manufacturing companies are able to meet customer needs for product improvement without the negative financial impact on company resources.

Are you one of them?

Identifying Alternative Manufacturing Processes

Making enhancements to existing products or processes requires consideration of the financial implications for research, modifications and quality testing.

R&D Tax Credits support UK manufacturing businesses to pursue alternative processes by providing financial incentives that allow them to research and develop products to meet customer need.

The following example highlights how a manufacturing company explored new processes and conducted R&D activities in order to meet a specific request; the business not only succeeded at meeting a new customer demand but also received a significant tax break for their efforts.

Example of R&D for Improved Manufacturing Processes

Customer requirement: A request was made to a manufacturing company for the production of a hose assembly to meet a particular need. The hose needed to be made with a welded joint between the hose and the end connection.

Product enhancement: The manufacturing business did not use welded joints for their hydraulic hoses as they had found welded joints to be unreliable. With apprehension over product performance and no recognised industry solution available, it seemed that there was no choice but to decline working to meet this particular customer need.

Exploring options: After further consideration of the matter, the manufacturing company decided that although they couldn’t use a welded joint, it may still be possible to meet the needs of the customer.

Rather than providing a welded joint for the hose assembly, the company looked into the possibility that the assembly could be manufactured as a single machined component.

Overcoming challenges: The decision to research and develop this new joint was not without issue. The newly machined component would need to achieve all existing functionality of the original component including internal surface roughness, dimensional accuracy and behaviour under stress. Therefore, a number of manufacturing processes to achieve the desired outcome had to be developed and trialled before a candidate process could be identified.

R&D outcome: For this manufacturing business, meeting the needs of their customers did not have an obvious solution. It required dedicated effort to research new processes and develop a suitable and reliable solution that met the needs of both the customer, and the company.

Thankfully, the manufacturing business received advice from an R&D tax specialist that a number of costs incurred from the investigation of alternative approaches could be relieved through R&D Tax Credits. In addition to this, the R&D tax specialist also identified how the business could receive a reduction in their corporation tax as they continued to further develop the manufacturing process in order to deliver a reliable and repeatable component.

Improving Your Manufacturing Processes with R&D Tax Credits   

The R&D activities carried out by the manufacturing company in the above example resulted not only in a new manufacturing process that met customer need, but a valuable long term product. To support the work that had been carried out, R&D tax payment savings also provided financial support by allowing the company to receive tax relief on the costs incurred from R&D activities.

At this point, you may be considering the benefits of R&D tax credits for your UK manufacturing business. Not only is R&D tax relief an incentive to research and improve your products and processes, but it’s also useful for helping to gain that edge over your competitors and retain customers.

Unfortunately, the process for claiming R&D can be complex and requires professional analysis in order to claim the maximum entitled amount. Using an expert in R&D tax that specialises in supporting the manufacturing industry is the most reliable way to achieve your tax relief from the HMRC.

So, to find out if any previous research or development activities in the past 2 years are eligible for R&D tax credits, simply contact our R&D tax credit specialist for the manufacturing industry, Nick on 01827 338 118 or visit our FAQ section for more details.

 

Embracing Innovation for Metal Fabrication with R&D

Changes in economic and operational climates are regular occurrences for the UK metal fabrication industry.

Since 2008, business owners of metal fabrication companies have had to deal with and adjust to supply chain issues; outdated equipment; fluctuating client demands and a need to maximise efficiency without compromising on quality.

Despite the challenges, many metal fabrication businesses have stood the test of time and improved their business prospects. One way that they have achieved growth is by taking advantage of a government incentive; one that is designed to encourage growth and innovation.

Research and Development Tax Relief for Metal Fabrication

In order for many metal fabrication companies to succeed, additional efforts and problem solving is needed to meet the technological advances required by their clients within the construction sector, renewable energy and automotive industry.

This of course calls for metal fabrication companies to spend time researching new techniques, improving manufacturing processes or developing and testing prototypes; all of which are classed as research and development, or R&D.

Unfortunately, many manufacturing businesses assume that R&D is synonymous with laboratories and therefore miss out on the opportunity to make R&D tax claims; failing to realise that activities conducted to support the needs of their clients could be classed as research and development.

Claiming R&D in the Metal Manufacturing Sector

With the description for R&D tax relief as an advance in overall knowledge or capability in a field of science or technology, it can be tricky to determine what constitutes R&D within the metal fabrication or manufacturing industry.

However, metallurgy and fabrication technology falls nicely into the bracket for R&D. Therefore, if a metal fabrication business knows is using time and resources to improve manufacturing processes or reduce failure rates, the expenditure on those activities could be qualify for R&D relief.

For example, one such steel fabrication company came across an issue when manufacturing screw conveyors for high temperature applications.  They experienced an unusually high failure rate in specific welds along the shaft.

With no known solution available to this particular issue, the company needed to investigate why the failures were happening and to develop a solution. Eventually they were able to develop a modified process which reduced the failure rate but didn’t solve the problem completely.

As the company had taken a risk by using their time and resources to improve their understanding of the failures, they were successful in achieving a substantial R&D tax relief claim that helped sustain their business and provided them with the funds to make continue to investigate the problem and make further improvements.

Benefiting from R&D Tax Claims in the Metal Fabrication Industry

Could your metal fabrication business be conducting R&D without realising?

Typical activities within your sector for R&D could include:

  • Developing new welding procedures
  • Processes designed to improve metal characteristics
  • Investigation of dimensional stability issues, such as planar anisotrophy
  • The development of speciality tools or jigs
  • Research into sheet metal thickness, tension and stretching
  • Modifying process or procedures to meet unique client specifications
  • Designing and testing prototypes
  • The use and investigation of alternative metals and chemical compounds to improve end products

Being aware that activities within your metal fabrication business can constitute R&D, will allow you the additional freedom to develop and test new methods and products that could set you apart from your competitors.

However, you no longer need to guess if a planned or past activity can be used to claim R&D Tax Credits. With our help, you can maximise the chances of knowing what activities are R&D, as well as increasing the likelihood that HMRC will agree your claim and provide valuable tax relief.

All that is required is saving this number or email into your contacts, and any queries or plans you have that you feel could qualify for R&D can be clarified and applied for professionally.

For further details on how to claim visit our frequently asked questions page.

 

Clarifying Technological Advances for R&D Tax Claims

Can I claim R&D tax credits if existing technology was used?

Do we need to invent something completely unique to claim R&D tax credits?

What if our R&D project failed or is unsuccessful?

At R&D Tax North West we are often asked questions from businesses seeking to clarify whether their R&D activities could be eligible for a helpful reduction in their company tax bill.

Understandably, there are a number of misconceptions over which projects qualify for R&D claims. The R&D tax guidance states that activities which directly contribute to achieving an advance in science or technology……..are R&D’.  Certain qualifying indirect activities are also R&D. This leaves many businesses making the assumption that their projects do not qualify.

This is especially true of businesses that use existing technology in an attempt to solve a problem. Does using and adapting existing technology disqualify them from R&D tax claims?

Consider this example:

Illustrative Example for R&D Tax Claim Project

At R&D Tax North West, we have used our experience in R&D claim support to devise a hypothetical situation that illustrates how a project may qualify as R&D. Therefore, it’s important to note that whilst the following illustration draws on our experience it does not represent any specific claims. Indeed, the solution may already have been developed and available in the public domain.

Facing a New Issue or Potential Solution:

Let’s say a business had devised and installed a particular piece of electronic equipment at a remote location.  However, this business now required engineers to locate the equipment as well as access its controls remotely.

The problem now exists where there is a need for reliable location tracking and data communication link technology. However, the communications and power infrastructure where the equipment is located is under-developed, or possibly non-existent.

This raises a number of issues including a need to address key functional characteristics including; low power consumption; long transmitter range and small overall package size.

To address these issues, the company examines potential solutions. Could they use conventional telemetry with a dedicated power source? Perhaps solar, wind or RFID (radio frequency identification). As none of these options provide a clear path to success, each must be considered as to suitability, including reliability, cost effectiveness, repeatability etc.

Although these options may all be technically feasible, they may not be the best solution based on the key performance criteria. Therefore, continuing to develop an improved, advanced solution is still considered as R&D.

Discovering a scientific or technological uncertainty for R&D:

The company now appreciates that the solution to the problem is uncertain. There is technology that exists that meets some criteria, but nothing that provides an overall solution to the issue.

Could they then adapt existing technology to remotely access equipment in a location with a limited communications or power infrastructure?

The company would need to consider technological uncertainties that might include:

  1. The level of device miniaturisation that can meet requirements but is still able to deliver effective transmitter range or battery life.
  1. The size of data stream that can be sustained.
  1. Sampling rates and data granularity – will an RFID or GPRS connection be able to make remote changes? Is available data sufficient for maintenance analysis?

 

Attempting to Solve Technological Uncertainties with R&D

To devise a solution, the company first developed a short-range prototype and associated HMI (human machine interface) software.

The underlying principles used to develop the short-range device could then be applied to an extended-range prototype device.

Extensive trials were carried out to demonstrate reliability before the final product could be completed. This took 5 iterations of development, during which 3 prototypes were manufactured and developed.

In parallel to the hardware development, the software was also developed for use with the HMI and multiple operating platforms. There were a number of beta releases before the final stable version was achieved.

Activities that Qualify for an R&D Claim: 

At the start of the project, there were a number of uncertainties for which the company did not have solutions for, nor that existed in the public domain. This required the adaptation of existing technology to achieve functional performance.

To achieve a resolution to the uncertainties raised, the company expended time in direct engineering and project management; which of course qualified as R&D.

The time used in the project included research, design time, prototype manufacture and testing activities. The cost of this time spent would then form the basis of an eligible R&D claim and includes salaries, Employers NI and pension costs. There are also other related costs that can be included (such as material costs associated with manufacture of prototypes). However, these should only be included if identified as qualifying by a professional R&D tax service,1 such as R&D Tax North West Ltd.

Making an R&D Tax Claim for Technological Advances 

As you can see from the above hypothetical R&D tax claim example, existing technology was used to solve a problem.

The R&D tax claim would have been successful because the solution to the issue was not certain, no off-the-shelf product existed to meet company needs and it required some risk for the business to pursue the solution. This would have been the same even if the project was ultimately unsuccessful. It is the attempt rather than the outcome that is important.

However, despite many companies carrying out eligible R&D work, misunderstandings regarding qualifying R&D activities and costs can cause businesses to under claim or, worse, fail to recognise that they could be eligible for relief.

That’s why here at R&D Tax North West, we are more than happy to support your business in getting the most from your R&D tax claims, by helping you understand whether the work you do could be eligible and then to assess your qualifying costs prior to submitting a successful claim.

So, if you’ve recently used existing technology to solve a problem, we’d love to hear about it and help you achieve a substantial reduction for your company tax bill – call Nick on 01827 338118 or fill out this quick reply form.

Links

1: https://www.rd-tax-expert.co.uk/tax-credits-process/

2: https://www.rd-tax-expert.co.uk/contact-us/

 

Does Your Company Qualify for R&D Tax Credits?

Company Tax Credits?  Surely if there’s a tax credit to be claimed you’d know about it wouldn’t you?  Not necessarily.

The relief on Research and Development (R&D) has been considerably widened over the last decade.  With many companies not realising that they could be benefiting from a tax reduction or even a cash payment.

What are R&D Tax Credits?

R&D stands for Research and Development.  If your company is liable for corporation tax you may also qualify for R&D tax credits or R&D tax relief under the umbrella of research and development.

The Government wants companies to invest in research and development because innovation creates wealth which in turn grows the economy.  By introducing R&D tax credits the UK Government are aiming to incentivise companies to invest more of their business expenditure into the R&D field.

The scheme may change slightly each year but whether you’re a small-to-medium business enterprise (SME) able to claim R&D tax credits or tax relief, or a large company claiming Research and Development Expenditure Credit (RDEC), there are generous allowances to be had.

Who Qualifies for R&D Tax Credits?

You may think that the R&D stipulation is somewhat restrictive.  After all, how many research companies are there?  However, research and development isn’t limited to scientific discoveries or inventions.  If your organisation develops something new – a new process for example, or even a new service; if you develop a better way of doing something you already do or if your company needed to find a working solution to a problem the answer isn’t in the public domain, these are all areas where R&D tax credits could be awarded to your business.

All kinds of companies are actually undertaking R&D without even realising it.

Think You May Have an R&D Tax Claim?

If you are unsure whether you have a R&D tax credit claim there are specialists on hand to advise you.  The process for claiming R&D tax credits will require evidence and documentation.  At R&D Tax North West Ltd we are experts in the preparation and submission of R&D tax credit claims.

Rather than taking up the precious time of your employees in form filling why not first contact us for an assessment?  In order to investigate a potential claim, we use our previous experience to quickly establish whether your organisation has a realistic R&D tax credit claim.

You can view our case studies for examples of businesses we have successfully helped make an R&D tax credit claim.

After a brief discussion we will assess your situation, identify opportunities to make a claim and establish the anticipated level of benefit that would result.

We then prepare and submit the R&D Tax Credit claim on your behalf (under the relevant scheme) and liaise with you and HMRC throughout the duration of the process.

When an R&D Tax Credit Claim Is Identified

How long the claim will take and how much your company can expect to benefit financially will depend upon many factors.  Take a look at our FAQ page for more detailed information.

The big question is; can you afford not to investigate whether your company could be due R&D tax credit?  Don’t delay in finding out – take advantage of the tax allowances available now.

If you have any questions get in touch with R&D Tax North West Ltd on: 01827 338 118 or fill out the contact form.

Links:

R&D Tax Credit Case Studies

 

Claiming R&D Tax Credits as a Web Developer

In the web development industry where survival is tough and every pound is strategically spent, it’s more important than ever to know your tax entitlements for your business to advance.

Yet many web developers are failing to claim substantial amounts of research and tax credits each year, believing instead that they are not eligible to claim.

However, the ever-evolving digital age in which web developers operate frequently offer opportunities to claim R&D tax credits, and with good reason – because research and development into digital processes shouldn’t be stifled; it should be explored.

Mobile devices, applications, e-commerce processes, content management systems and unique client requests are pushing web developers to research and attempt new and innovative ways of working – all of which fall into the R&D tax bracket.

So the question is, can you as a web developer claim R&D tax credits?

Am I Eligible to Claim R&D Tax Credits as a Web Developer?

In order to claim R&D tax credits as a web developer, you must have attempted or succeeded in making an advance (or appreciable improvement) in science or technology.

For a web developer, this could include new software, data processing, algorithms, reducing system overheads, integrating legacy apps or even new processes behind existing developments. If you’re attempting to create a new system or process that is complex and takes a considerable amount of effort to achieve, then there’s a good chance you can claim R&D tax credits for this work.

And of course, why not claim – the purpose of R&D tax claims is to provide an incentive for companies to explore new advancements with technology and digital processes, not just for their own business, but to benefit the whole industry and attract interest from overseas investors into the UK economy.

An Example of a Web Developers R&D Tax Claim

To appreciate what is involved in claiming R&D tax, here is a summarised example of a genuine, successful claim, made by a web developer through R&D Tax North West Ltd:

Background: A request had been made to a web developer for a custom built e-Commerce system that had the ability for customers to design products both online and offline using a mobile device and with the same functionality on a standalone touch-screen kiosk. The client did not want a separate app for customers to download, but did require that any designs made should be saved and sent as a layered print ready PDF document.

Development: At the beginning of the development there existed no ‘off-the-shelf’ program that had the capabilities to provide a user-friendly design experience on a mobile device that had the ability to convert saved designs into a layered PDF. Therefore, a new eCommerce platform would need to be developed that could work with mobile devices, desktops and a standalone kiosk.

Troubleshooting: Extensive testing was required to support development of seamless image rescaling that required a bespoke scaling algorithm and the conversion of the saved design into a layered PDF; something that web browsers are unable to achieve.

Research was then conducted into developing the right code which could accurately identify, place and order layers of an image in an appropriate standard for a sublimation print process.

Further research and testing was needed to implement this on the standalone kiosk that experienced a variety of issues, depending on which internet browser was used. This required the development of a hybrid bespoke browser and modifications to the computer operating system.

Result: Performance monitoring and review of the new eCommerce system is being conducted for understanding of how to improve and enhance the user experience. Further research will be conducted on the effects of network behaviour, data transfer and upscaling algorithms for optimum image quality and speed.

As you can see by the web developer R&D tax claim, extensive research and testing was conducted for the implementation of an eCommerce system not yet available.

The original tax claim includes further details and an in-depth explanation of the tasks and research conducted at the time and expense of the business. The result was a successful claim for R&D tax credit relief through a corporation tax refund.

How to Claim R&D Tax Credits as a Web Developer

If you’ve had a similar experience researching, testing and attempting to improve processes or systems for web development within the past two years, you could qualify for R&D tax credits, even if you didn’t meet with complete success.

For a straightforward way to learn if any projects you have been involved in as a web developer are eligible for R&D tax credits, all you need to do is contact R&D Tax North West who hold a strong track record for supporting web developers to claim R&D tax credits.

To contact R&D Tax North West, simply call 01827 338118 or complete a brief contact form today.

 

Renewable Energy and Research and Development Tax

R&D Tax Credits

The UK is facing the prospect of an energy crisis within a decade. With energy consumption expected to rise and coal power set to be phased out, there’s a very real possibility that demand could soon outstrip supply. According to a recent report from the Institute of Mechanical Engineers, blackouts might be commonplace by 2025.

Rather than see the lights go out across the United Kingdom, the government would have to choose between two less than appealing options.

The government might opt to extend the operational life of Britain’s aging coal power stations. But this would be a short term fix at best, and it would have serious implications for the UK’s legally binding commitment to tackle climate change.

A second option would be to import additional energy from abroad. This raises issues of energy security, particularly since many of the regions most abundant in fossil fuels are amongst the least politically stable.

A Bright Future for Renewable Energy

If a crisis is to be averted and the UK is to be able to meet her own energy needs, then renewable energy will have to play a key role.

The UK has already made some substantial progress in this area. As recently as 2010 only 6.5 percent of Britain’s electricity was generated by renewable energy; in the last quarter of 2015 that figure rose to 25.3%. This was the first time that renewables generated more electricity than coal.

Despite this much-improved performance, many companies in the renewable energy sector are concerned at the mixed messages coming from the government. A post-Brexit commitment to reduce carbon emissions by 57% by 2030 was welcomed, but the decision to cut certain subsidies is seen by many as an indication that the government’s commitment to renewable energy is not as robust as it could be.

However, while renewable energy might be facing a moment of uncertainty in the UK, the overall health of the sector remains robust.

Some established renewable energy technologies have now matured to the point where they can compete head-to-head with fossil fuels on price. For example, the price of photovoltaic solar panels has been reduced by 99% over the past forty years, and the cost of generating a watt of electricity through solar power has fallen from an eye-watering £1350 in 1958 to just £0.55 today.

Wind, tidal and wave power have all followed a similar trajectory with costs falling and efficiency soaring.

Huge advances in renewable energy technology mean that it’s now become economically viable for some countries to go a long way towards eliminating their need for fossil fuels altogether. At the time of writing, Costa Rica’s electricity grid has been powered entirely by renewables for more than four months.

With Costa Rica leading the pack and several other countries close behind, authorities such as Bloomberg are predicting phenomenal growth in the renewable energy sector. Despite the recent slump in the cost of fossil fuels, 2015 was a record year for investment in renewable energy.

Could the UK run on entirely renewable energy?

If Costa Rica can be run on renewable energy, then could any amount of tax credits and subsidies help the UK do the same?

Brian Mackay, a Cambridge University professor and former advisor to the Department of Energy and Climate Change, has crunched the numbers and the answer is theoretically yes, but it wouldn’t be easy.

In order to power an advanced industrialised nation like the United Kingdom with renewable energy, vast swathes of the countryside and shoreline would have to be given over to capturing or producing that energy.

Mackay calculated that even if the entirety of the United Kingdom was given over to producing biofuel, it still wouldn’t be enough to match current energy consumption. Wind farms produce around twice as much energy per square metre as energy crops but would still require half the UK’s landmass to meet current energy requirements.

Other sources of renewable energy

Even allowing for substantial future improvements in technology, it’s unlikely that solar, wind, wave and tidal energy alone will entirely replace fossil fuels in the United Kingdom in the foreseeable future. However, there is a great deal of work being done looking into innovative ways of producing and storing renewable energy.

From converting algae into biofuel to harnessing the power of solar winds, scientists and innovators are searching for unexpected ways to compliment the more traditional forms of renewable energy.

Renewable energy and research and development tax credits

Renewable energy is attracting record investment and becoming profitable, but cuts to subsidies will hurt many companies operating in the United Kingdom.

If your company is undertaking innovative work in the renewable energy sector, it’s worth making sure you are claiming for everything you are entitled to.

The UK Government runs a scheme which allows businesses to claim back tax credits against money invested in research and development projects. The most recent statistics show that more than twenty-thousand companies shared a combined total of £1.75 billion in R&D tax credits in 2013/14 alone.

If you haven’t yet made a claim or you’re not sure whether your company would qualify, contact us and we can help guide you through the process.

 

How Team GB’s Olympic Success was Powered by Innovation

Innovation at the Olympics

The Rio Olympics of 2016 have drawn to a close, and the results have confirmed Great Britain’s status as a sporting superpower.

Great Britain has several peers, nations such as France, Germany, and Japan which boast a similar GDP and broadly comparable population. To best these formidable competitors on the international sporting stage would be impressive enough, but Great Britain even succeeded in climbing into second place in the medals table ahead of China, an economic behemoth able to call on the skills and abilities of some 1.3 billion people.

In the battle between the giant Chinese Goliath versus the tiny David of Great Britain, it was the Great British David that defied the odds to come out on top in the final medal tally.

Success, of course, is by no means an entirely alien concept to Britain’s Olympic athletes. Team GB landed an impressive haul of 65 medals in the London Olympic Games of 2012, landing third place in the overall medal table as a result.

As good as this was, it seemed as though things were very unlikely to get better. Team GB’s impressive Olympic performance in 2012 could be largely attributed to a combination of home advantage and a healthy dose of luck. It was an extraordinary performance, but a performance that might be a once-in-a-lifetime occurrence.

Very few pundits, if any at all, predicted that Great Britain would be able to repeat their London success, or even surpass it, in future Olympics. Events in Rio 20161, however, took a remarkable turn.

That Team GB found a way to transcend even their achievements in London, and then in another hemisphere entirely, took the world by surprise.

Such success did show, however, that factors beyond mere good fortune or geographical location were very much at play.

Failing fast

Great Britain had not always been terribly successful at the Olympic Games, in fact quite the opposite is true.

The 1992 Barcelona Olympics saw the British team return home with just five gold medals. In 1996 the team failed to clear even this very low bar when they claimed just one solitary gold in Atlanta, finishing well down in the medal table behind even sporting and economic minnows such as North Korea.

Whilst Atlanta was little short of a national humiliation, it spurred on the government and Team GB to launch an ambitious programme to revitalise British Olympic sport.

Innovating for success

The first ingredient which would help to transform Team GB’s fortunes was investment. However, funding is only useful in so far as it is used wisely, and Team GB would begin to benefit enormously from a relentless focus on innovation.

Nowhere was innovation pursued with quite such determination than in the cycling events, and Team GB would dominate the cycling in Beijing, London, and Rio to such an extent that the velodrome came to be informally known as Britain’s medal factory.

Central to the strategy that would pay off so handsomely was the creation of a research and development facility. Initially known as the Secret Squirrel Club, and now referred to somewhat mysteriously as Room X2, this facility examined every imaginable aspect of the British cyclists’ strategy, equipment, and performance.

The changes implemented by Britain’s cycling bosses ranged from expensive and difficult through to the cheap and sometimes incredibly simple.

At the expensive end of the scale was the introduction of wind tunnels, which allowed experts to conduct detailed analysis of the aerodynamic qualities of athlete and equipment alike.

Less high-tech was the decision to ensure athletes properly washed their hands using anti-bacterial gels. This simple practice cut down on infections and illness and helped reduce the number of valuable training days lost due to poor health.

There was no one single improvement which would instantly transform Britain’s fortunes. The effect of each individual innovation3 might only be minimal, but the cumulative impact of such a large number of marginal gains would be immense.

Why Team GB’s Methods Matters for your Business

The Olympics might be an amateur sporting event, albeit one on the grandest scale imaginable, but Team GB’s formula for success will sound familiar to most successful businesses.

Investment is important, and investing in innovation can deliver impressive results. A single innovation might not necessarily be a game changer, but any business that is able to consistently and successfully innovate will have the edge over the competition.

 

1 – https://www.rio2016.com/en/medal-count-country

2 – http://www.espn.co.uk/olympics/story/_/id/17319527/revealed-secrets-team-gb-olympic-track-cycling-success

3 – http://www.bbc.co.uk/sport/olympics/19089259

 

 

 

 

 

 

 

 

 

The Internet of Things is coming and it could Change Everything)

1969 was one of the most important years in living history. Mankind finally set foot on the moon, an event that had for so long seemed to be an impossible dream. While this feat dominated the newspaper headlines, just weeks later another event which would profoundly change the world passed by almost unnoticed.

On 2 September 1969 a computer at the University of California transmitted a message to a second computer located at the Stanford Research Institute some 400 miles away. This message, which was supposed to read “login” but only got as far as “lo” before it crashed the system, was the first transmission ever made on the network that would eventually become the internet.

The first human footsteps on the moon sent shockwaves around the world, but confident predictions of permanent human settlements on our lunar neighbour have so far proved well wide of the mark. However, the internet, from such humble beginnings, has had an impact that is difficult to overstate.

Any account of the most important innovations of the twentieth century would have to place the internet well towards the top of the list, but the internet is evolving and the twenty-first century looks set to be dominated by the Internet of Things.

What is the Internet of Things?

In 2015 more than 3 billion people from across the globe accessed the internet, but in the same year there were around 5 billion devices connected. The internet doesn’t just allow humans to share information with other humans, it’s becoming increasingly important as a platform to enable billions of physical objects (or things) to communicate with each other, and with us.

When the University of California transmitted the first message ever to be sent across the internet (or the ARPANET as it was then known) in 1969, computers were enormously expensive and big enough to fill an entire room. As computing power has become progressively cheaper and vastly more powerful, it has now become both possible and economically viable to connect almost anything to the internet.

Any object (or thing) fitted with a sensor to transmit data to the internet is part of this growing Internet of Things. The most obvious examples are mobile phones, but the Internet of Things is a diverse place and the things in question can include fridges, cars, toasters, buildings, animals, and a good deal else besides.

Virtually any physical object can now be fitted with sensors and added to the network. Even such unlikely additions as smart cement can be included on the list. This innovation enables sensors to be embedded in the concrete itself during the pouring process. They then become part of the permanent structure, with the capability to alert construction experts to any potential defects or weaknesses.

The Internet of Things Today

While the excitement around the possibilities of the Internet of Things has been growing in recent years, it’s fair to say the idea isn’t entirely new. The first ATMs were connected to the internet in 1974, one lonely toaster went online in 1990, and in 1994 Steve Mann developed the first wearable wireless webcam.

However, these were merely the first baby steps in the history of the Internet of Things, and it is just now beginning to become a ubiquitous presence in everyday life.

In 2008 there were, for the first time, more objects connected to the internet than there were people. Smart phones allow us to draw on an almost infinite quantity of information at the touch of a screen from virtually anywhere in the world, boilers can learn their owner’s schedule and adjust the heating accordingly, fridges that monitor their own supply of milk and automatically order fresh supplies are no longer entirely the preserve of science fiction, and Google’s driverless cars have already clocked up more than 1.5 million miles on the road.

In San Diego the entire city’s streetlight system has been equipped with sensors and hooked up to the internet. This innovative system allows the lights to sense pedestrians and motorists and dim or illuminate accordingly, delivering annual savings in the region of $250,000.

Several other cities around the world are already experimenting with connecting trashcans to the internet. This innovation, sometimes dubbed the Internet of Bins, promises to deliver considerable savings. Data collected from the bins themselves, transmitted to the internet, and then automatically analysed by specialised applications, allows waste to be collected economically and efficiently.

Smart cities will be homes to smart industries, and Harley Davidson are one of the first companies to embrace the new possibilities. With thousands of sensors now monitoring almost every aspect of the production process, Harley Davidson have the ability to immediately identify and rectify and problems or bottlenecks on their factory floor. The results speak for themselves with the company producing 25% more motorcycles whilst simultaneously cutting costs.

The Internet of Things Tomorrow

With the price of some individual sensors now coming in at well below a pound, and the cost of keeping each of these sensors connected to the internet about equivalent to one text message a month, the Internet of Things is already growing exponentially.

The 5 billion or so things connected today are predicted to become as many as 50 billion by 2020. In 2015 IBM announced their intention to invest $3 billion over four years into their Internet of Things division. Samsung, Hitachi and many other such giants are making similar commitments of their own.

That so many innovative tech companies are making aggressive moves to stake their claim to a share of the market comes as no surprise given the potential rewards at stake. John Chambers, the Chief Executive Officer of Cisco System, has predicted that the global Internet of Things market could soon be worth as much as $19 trillion – that’s about equivalent to the annual GDP of Japan, Germany, the United Kingdom, France and India combined.

Whether the Internet of Things can truly deliver results on such a grand scale remains to be seen, but given the figures involved innovators would be well advised to sit up and take notice. We may well be seeing the beginnings of a new industrial revolution with the Internet of Things at its beating heart, or perhaps more accurately as the central nervous system that connects the entire planet.

The next few years and decades will see almost everything in the world linked to almost everything else. Governments and businesses will have access to a near infinite amount of data, and almost every aspect of society and industry look set to be transformed. In some instances the changes will be of incremental improvement, but elsewhere the impact is likely to be more dramatic with new sectors and markets emerging and others being swept away in a tidal wave of innovation and disruption.

The possibilities, and the dangers, have only just begun to be explored, but the Internet of Things could be set to change everything.

 

Is the Age of Innovation Coming to an End?

Innovation is the engine that drives the world’s economy forwards. For the vast majority of human history there was effectively no such thing as economic growth. Lives were often brutal and short, but they were played out against a backdrop that scarcely changed from generation to generation. It was only with the advent of the Industrial Revolution and a wave of world-changing innovations that economic growth suddenly and dramatically took off.

After several hundred years of extraordinary innovation and technological gains, we have come to see rapid progress and substantial economic growth as the norm. The march of technology hardly seems to be even close to having played itself out. Anybody with just a few hundred pounds to spare can purchase a laptop that packs more computing punch than even a military supercomputer from the early 1990s. The rise of quantum computing1 offers the tantalising prospect of yet greater gains in the future.

The future of innovation and progress seems assured, and yet there are several experts who have recently begun to question this assumption.

Could we really be witnessing the end of innovation?

Economic growth in the United Kingdom, and in virtually the whole of the Western world, has slowed dramatically over the last ten years. Is this the result of a temporary downturn, or is it indicative of a far deeper and more intractable problem? If innovation is the prime driver of economic growth2 and prosperity, then has something gone horribly wrong with our innovation engine?

Jonathan Huebner3, a prominent physicist working with the Pentagon, has suggested that humanity is entering a new dark age of technological innovation. In Huebner’s view we are already approaching the limits of what is technologically possible, with the constraints of human brainpower and economic reality slamming on the brakes. Whilst it might be humanly possible to dig a canal across North America and link the Pacific and Atlantic Oceans, or even to establish a permanent colony on the moon, it’s not economically viable to do so.

Having plotted the number of important inventions and scientific breakthroughs over the last few hundred years, Huebner has come to some startling conclusions. When offset against population growth, the rate of innovation peaked as far back as the mid-1800s and has been in a state of general decline ever since. By 2024, according to Huebner, the rate of important technological developments per year per billion people will have fallen to a level not seen since the 1600s.

Huebner’s argument is not so much that innovation itself is dead, but rather that the big gains have already been made and cannot and will not be repeated. If this view is correct, then we will no longer be able to count on invention and innovation to drive the economy forward. The collapse in growth might not be just a temporary problem, but a crisis that could threaten the very fabric of society.

A history of pessimism

Huebner is not alone in being pessimistic about the future, but very similar concerns have been raised before only to be proved unfounded.

In 1798 Thomas Robert Malthus predicted the unprecedented boom in population would soon far outstrip4 the growth in agricultural production, with dire consequences for humanity. Innovations in chemical fertilizers, irrigation, and mechanization have since seen the human population expand eightfold. Whilst there must be a limit to the number of people our planet can support, innovation has so far more than kept pace with the increases and the chief problem today is one of finding an equitable means of distribution of food rather than of production.

At the end of the nineteenth century is was widely believed that science had already accomplished almost everything that could be accomplished. All of the important breakthroughs in physics5, and in almost everything else, had already been made. There was little left to do but consolidate the gains. Fortunately, the likes of Albert Einstein and many other remained unconvinced, and the following years revolutionised our understanding of the universe and our place in it.

Predicting the future isn’t easy, but even Huebner’s analysis of the history of innovation has been called into question. In Huebner’s study it was Huebner himself who decided what did and did not qualify as an important innovation. This hardly constitutes an objective approach, and the results deserve to be viewed with a healthy dose of scepticism.

The case for optimism

While Huebner claims the age of innovation is drawing to a close, neither he nor anybody else can know what surprises might lie just around the corner.

Innovation is an inherently unpredictable beast. To innovate is to come up with an idea, solve a problem, or find a new way of doing things that has never been conceived of before. The very nature of innovation makes it impossible to know with any certainty where it will lead.

Some of the possible innovations of the future are at least within the realms of our imagination. Cold fusion, for instance, holds out the tantalising prospect of an effectively unlimited supply of clean energy. If the puzzle of cold fusion can be unlocked, and companies such as Lockheed Martin are currently investing in attempting to find the key, then it would be arguably the most important innovation since the invention of the wheel.

While cold fusion remains on the fringes of scientific possibility, at least for the time being, the exponential increase in technology and computing power are very real and will continue to open up exciting new possibilities.

Computers are now beginning to become very good at the things they used to struggle with. Artificial intelligence can drive cars, beat the best human players6 at games such as chess and Go, recognise faces, and even dream.

With such a powerful tool at our disposal we are no longer limited to the power of the human mind alone, and the twenty-first century will see a wave of innovation with human intelligence and artificial intelligence working in concert.

Links:

1 – http://www.techradar.com/news/computing/the-mind-blowing-possibilities-of-quantum-computing-663261

2 – http://www.innovationfiles.org/fueling-innovation-the-role-of-rd-in-economic-growth/

3 – http://accelerating.org/articles/InnovationHuebnerTFSC2005.pdf

4 – http://www.economicsdiscussion.net/articles/malthusian-theory-of-population-explained-with-its-criticism/1521

5 – http://www.nobelprize.org/nobel_prizes/themes/physics/karlsson/

6 – http://www.independent.co.uk/life-style/gadgets-and-tech/news/google-deepmind-computer-beats-go-champion-lee-se-dol-in-shock-4-1-victory-a6931876.html