On 22 July 2009, the Science Policy Centre of the Royal Society launched the "Hidden Wealth" report on the contribution of science to service sector innovation.

The Hidden Wealth report is the culmination of a year-long study by a Royal Society Working Group, under the chairmanship of Prof David Rhind, into where Science, Technology, Engineering and Mathematics (STEM) have already delivered service sector innovation and how new policies might enhance the situation.

The services sector includes finance, business support, communications, healthcare, retail, the creative industries, education, transport and logistics. It accounts for about 75% of UK Gross Value Added (GVA) and over 80% of jobs in the economy. The report observes that, despite this importance, the UK lacks a structured policy approach to the promotion of innovation in services. As a result, the ability of UK firms to develop and maintain competitive position in global markets is under threat, at a time when technological advances are driving many services to a more personalised and interconnected delivery.

The full report and further background information is available on the Royal Society website. Its recommendations are grouped into themes, including the following recommendations that are of particular relevance and interest to the KTN:

• Build research agendas and communities. Research Councils and the Technology Strategy Board should expand their portfolios to encompass new service-related Grand Challenges. In doing so they should examine whether new approaches (other than cross-Council themes and Innovation Platforms) are more appropriate to meet these challenges and, if so, develop options for alternative approaches (Recommendation 15). It is essential that Grand Challenges include provision to develop cross-cutting theoretical and intellectual competences in areas such as managing uncertainty in modelling and simulation, service design, quantitative data analysis, data security, standardisation or validation of data sets and dynamics in human-systems interaction. Options would include the physical co-location of resources and expertise in centres of excellence or the establishment of virtual centres or networks, perhaps using the Knowledge Transfer Network model (Recommendation 17).
• Develop multidisciplinary capabilities. The report draws attention to criticism from the services sector of the "silo mentality" in UK universities, and the need to create teams of "T-shaped" people, who combine deep knowledge of particular STEM subjects with abilities in disciplines such as economics, social sciences, management or law. It is particularly important to take account of the human dimension in complex systems, for example through developing people who have the mathematical tools to model complex systems involving millions of users, but who also have knowledge of social sciences and human behaviour.
• Increase the scale of knowledge exchange. The Technology Strategy Board and Research Councils should evaluate the applicability of their knowledge exchange schemes to the services sector and develop and publish strategies for their active promotion to these sectors (Recommendation 21). In particular the Technology Strategy Board should review the Knowledge Transfer Partnership programme for its accessibility to services and to KTP Associates with STEM backgrounds (Recommendation 22). In developing and structuring the KTNs, the Technology Strategy Board should emphasize cross-cutting technical and theoretical competences which are required and valued across sectors (Recommendation 23).
• Improve understanding of service innovation models and the role of STEM. The report argues that an effective innovation policy for services requires an improved understanding of distributed and open innovation processes, and of the relationships between service organisations, users, customers and the STEM supply chain. Research funders must develop the body of academic work concerning services innovation. The recently established Innovation Research Centre, together with the Economic and Social Research Council, should take the lead in the development of knowledge of service innovation models (Recommendation 10).

Finally, the report makes four recommendations concerned specifically with the role of STEM in ensuring the future stability of financial systems:

• Creating world-leading, independent centres of modelling and risk assessment, engaged with financial services institutions.
• Engaging the Research Councils at high level with the Bank of England and the Financial Services Authority (FSA), to explore ways in which the research base can contribute to more effective modelling of systemic risk in financial services.
• Instituting and mandating competency levels for managers, in the understanding of mathematical modelling and risk in complex systems.
• Reviewing the contents of financial engineering courses, to ensure the provision of curriculum elements in considerations of risk, safety tolerances, testing, adherence to published standards, economic contexts and ethical considerations.