How can we improve productivity?
Innovation is a crucial factor to increase productivity, growth and prosperity. That's the message laid out by Germany's innovation strategy. If innovation is key, and organisations are striving to maximise innovation in the workplace, then the space needs to suit the requirements of people and technology.
ISG's latest report, 'Space to innovate', reveals a link between built space and innovation, with our research showing that more appropriate space to innovate drives greater levels of innovation. Innovation which leads to more productivity, growth and nationwide prosperity. This is an area where construction and the built environment, in collaboration with forward-thinking partners, have a significant role to play – delivering innovative builds to support performance goals.
How space to innovate can drive GDP growth
There is a well-known correlation between innovation, turnover, and productivity, as demonstrated by the triennial KfW Innovation Report, which is published every three years, the Innovation Atlas from the Institute of German Economy (IW Köln), and the Innovation Study by the Association of German Engineers (VDI) – all of which were published last year in 2023. However, there is a gap in our thinking. Space – the importance of suitable facilities and location – is the missing link in our formula for prosperity. Suitable space can unlock the UK’s economic potential, delivering industries with more sustainable, more productive, more competitive outcomes; more prosperity.
Not only can appropriate space drive resource efficiency, but it can also improve labour productivity for an organisation. Furthermore, ISG’s research shows the positive economic effects if all organisations commit to refining or constructing appropriate spaces.
Only the innovative few are on the right track. Is there a gap in your approach?
We are adapting the research for Germany, showcasing the link between real estate and innovation strategy of international companies from various industries. We will discuss the results at local events with experts from the real estate sector.
EXPO REAL Business Breakfast by ISG & Archibus
At our breakfast with industry experts on 8 October 2024, you will get an exclusive insight into the results of our German report "Space innovate".Watch Daniel Ngai-Kocher, Managing Director Central Europe, discuss the findings of the report and explore how space could be the missing link in our formula for prosperity.
Let’s explore the five key takeaways from the UK report.
1. What is appropriate space worth?
According to our latest research, productivity in the UK is projected to increase by 32.7% if all British businesses have somewhat appropriate spaces for innovation. If this increase is applied to the OECD data, the results would increase GDP in Germany by 1.8 %. This corresponds to € 68 billion and would create around 1 million jobs. Germany would thus jump from 11th place in the OECD ranking to 3rd place behind Ireland and Luxembourg.
2. Organisations sufficiently invest in innovation, but not in appropriate space.
Our research reveals that nine in ten (90%) of surveyed organisations actively invest in innovation, allocating an average 7% of turnover to these efforts. However, investment in physical space needed to support and facilitate innovation lags significantly; only 22% of surveyed organisations prioritised investment in the provision of physical space necessary for innovation.
3. Most organisations do not have appropriate space for innovation.
Appropriateness: What organisations need from their ‘space to innovate’ lies at the core of this report. We understand that innovation space should be unique to support individual organisational goals and values; essentially, what performance means to an organisation.
4. Flexibility could be king.
With a majority of organisations encountering limited space as their greatest spatial challenge, closely followed by lack of flexibility and insufficient design and facilities there’s a key opportunity to create more flexible and adaptable spaces to maximise the potential of existing physical assets. With finite resources, flexible spaces could enable the 79% of organisations that find limited physical space a limiting factor, to enhance their innovation activity, by focusing on high quality, adaptable spaces.
5. Identifying your equation for innovation.
A formula for prosperity does not only concern space. We sought to identify the key factors involved in innovation activities. If organisations can bring the necessary components for innovation together, they may be able to drive greater levels of innovation and productivity.Labour productivity formula and a formula for prosperity – what’s the difference?
The labour productivity formula is a way for organisations to calculate their existing levels of productivity. It utilises measurements such as number of hours worked, volume of workers and job numbers to define the output per person in an organisation. Using the formula and understanding current labour productivity could be a useful exercise when evaluating space.
A formula for prosperity is a way for organisations to achieve their goals. The missing component: appropriate space to innovate, is at the core of this report. Improve production, be efficient, optimise resources, and make space more appropriate.
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