UK plc needs magpie-like tech strategy for £100bn uplift
Adopting five tried-and-tested technologies could add up to £100 billion to the UK economy and reduce the productivity gap with other European countries. In a pitch for knowledge transfer support by the Government in its soon-to-be-published Industrial Strategy, the CBI argues that it is time for businesses to catch-up through introducing digital technologies ranging from epurchasing and CRM to cloud computing and web sites.
Launching its report, “From ostrich to magpie,” director-general of the CBI, Carolyn Fairbairn, said: “Too many firms in the UK are too slow in adopting basic technologies. We want to see more firms behave like magpie and adopt technologies already being used by other firms, rather than like ostriches with their heads in the sand.”
A striking finding by the CBI, working with McKinsey Global Institute, puts the proportion of UK businesses with web sites, internet trading capabilities, CRM and ERP below levels achieved in Denmark in 2009. As well as boosting the economy, picking up on these low-risk, even commodity technologies could reduce income inequality by 5%.
The report identifies a paradox in UK innovation which sees a significant gap between leaders and laggards. “The UK has a higher proportion of high productivity firms compared to France and Germany, but they only employ 5% of the workforce,” said Tom Thackray, innovation director of the CBI. “But 69% of employees are in below-median productivity firms, compared to 65% in France and 60% in Germany. We need to address that long tail.”
What the report emphasises is that new-to-firm technology can have just as much impact as the new-to-world. Exposure to firms using innovative tech, especially those operating internationally, is an important driver of adoption, the CBI found. With the top 100 UK organisations accounting for 50% of all export value, this is one of the reasons why UK plc as a whole is a technology laggard. Another is the principle of “make-do and mend” which sees firms struggling on with their existing solutions.
CBI’s pitch is for Government to make innovation diffusion a central theme of the Industrial Strategy, supporting pilot schemes and funding Local Enterprise Partnerships. Alongside this, a campaign focused on “five technologies all companies could adopt” with a knowledge hub to support solution selection could bring about this uptick in adoption.
Launching the report at Digital Catapult Centre, which has established models for piloting new technologies within industry, its CEO Dr Jeremy Silver acknowledged the difficulties for SMEs in making this shift. “It is hard to change the fan belt when the engine is running - they need to keep the business on track while also making a digital transformation. So we need to address how to derisk that for them. But a collaboration between Government and industry, including suppliers, has the potential to see all boats rise.”
The recent CBI conference saw a strong focus on this idea of “the collaboration of the decade” to help overcome significant economic challenges, such as low technology adoption. A notable aspect of the report is the finding that followers who wait for technology to become mainstream before adopting risk being left far behind the current leading-edge innovations like chatbots, blockchain and AI in the next five years. If the tech-enabled data and analytics revolution is constrained to only a narrow slice of top firms, it creates a risk along the supply chain since most big organisations - and Government itself - trade extensively with SMEs.
The report comes as the Centre for Policy Studies also argued that Britain needs more robots. For every 10,000 employees in manufacturing, the UK has only 71 compared to 301 in Germany. Arguing against recent calls to tax robots, the CPS says increasing automation will actually increase net employment and drive up productivity.
Related article: Poor leadership holding back digital transformation - CBI