Innovation is crucial to the long-term success of any economy, and in the media and in Government policy it is often possible to see a stereotype of small, innovative companies moving quickly to exploit the opportunities that are missed by larger, slower firms.

But does this stereotype hold true? When it comes to innovation - that is, turning inventive ideas into commercial reality - does it always have to involve a small company?

Some of Oxfordshire's larger firms are finding new ways to rise to the challenge to be innovative.

One approach is to centralise innovation activity in one part of the organisation. For example, Oxford Instruments, winner of this year's Queen's Award for Innovation, has dedicated people working across the business, who have the explicit remit of identifying acquisition opportunities and developing ideas for new products which are then integrated into its operating divisions.

Corporate communications manager Lynn Shepherd said: "It is essential a business has people who live and breathe innovation.

"This helps in the development of internal and external ideas with commercial potential. Last year this led to a new product used in the development and manufacture of high brightness LEDs. These are a highly-energy efficient source of lighting, which will greatly reduce carbon emissions, once they are adopted on a commercial scale."

A further interesting feature of Oxford Instruments' approach is that innovation is described in terms of market opportunities rather than of technology needing customers - a dangerous pitfall for any attempt at innovation.

Ms Shepherd points out that this helps to expand the horizons of everyone in the company.

Other firms, most famously BT but also TTP near Cambridge, have taken this idea further and built physical corporate incubators'.

These are often geographically separate facilities which act like factories producing either new product lines, or entirely new businesses, sourcing their ideas from both within and outside the main firm.

A step further still is to outsource this incubation process to specialist companies, such as the Wantage-based New Business Factory, which can offer expertise and assistance.

A different tack has been taken by firms such as BMW and Unipart. Their view is that innovation is the responsibility for everyone in the organisation, and they use management tools such as suggestion boxes and internal competitions, with incentives offered to staff.

Regular feedback on quality and the so-called voice of the customer' help to keep innovation focused.

But although encouraging a culture of innovation - with people suggesting ideas and wanting to take them forward - may give a firm a competitive advantage, it may also present managerial challenges.

First, it may mean giving employees the time and space to try new things. For example, companies such as Oxford-based Purple Media allocate a certain proportion of work time for employees to pursue their own ideas.

Managing director Joe Kennard said: "We give employees the opportunity to use company equipment that would otherwise be idle, to make their own film and animation projects.

"This helps to keep staff motivated and has also helped develop new techniques we have used in our commercial work."

The organisational structures and management tools described above aren't necessarily appropriate for all kinds of businesses.

In particular, industries which rely heavily on partnerships or have long and/or risky development processes often take an open innovation' approach.

In bioscience, for example, large pharmaceutical companies tend to develop relationships with constellations of small, research-intensive firms which move promising ideas along the development chain and filter out the majority that do not have a commercial future.

This provides the larger firm with a product development pipeline, with ideas from outside the company being spun in' as they develop, and commercially viable but non-core activities developed in-house being spun out' to those better placed to exploit them.

To successfully exploit new ideas, the selection and deselection process is crucial.

Stefan Kukula, technical director of Abingdon-based Crowcon Detection Instruments said: "Discipline is needed not only in choosing which projects to implement, but perhaps more importantly, in deciding to halt underperforming projects.

"This can be hard, particularly as people get personally attached to projects, but necessary for the success of the company."

One further way in which Oxfordshire's larger firms support innovation is through the recruitment, training and development of skilled and entrepreneurial people.

It is interesting to discuss the career histories of some of the most recent of Oxfordshire's entrepreneurs, and find that many had spent formative years in the county's larger technology firms.

What this shows is that there are ways in which the county's larger firms support significant levels of innovation, both within and beyond their company boundaries.

o Contacts: www.oxford-instruments.com www.newbusinessfactory.co.uk www.purplemedia.co.uk www.crowcon.com o This page is compiled by the Oxford Trust: www.oxtrust.org.uk