As a country, we can be proud of our creativity and our ability to innovate. However, when it comes to translating those significant strengths into economic growth, we underperform.
The Digital Economy report published on Monday highlights that the United Kingdom is one of the leading digital nations in the world, with the highest digital contribution to GDP of all European nations. Yet we have realised only 17 percent of the country’s digital potential (McKinsey, June 2016) – second only to the United States at 18 percent.
Two thirds of people in the UK are working for companies that are underachieving in their industries. The challenge, however, isn’t unique to business, we’re now hearing that for the first time, the next generation will earn less over a lifetime than their predecessors, which doesn’t paint a picture of a particularly competitive nation.
In April 2015, Sir Charlie Mayfield and Sir Richard Lambert bought some of Britain’s most senior business leaders together to discuss how businesses could solve the productivity problem. The Productivity Leadership Group (PLG) started work in earnest in September 2015. Since then, we have been working with government and industry to explore what practical action they can take to share learning and secure business improvements.
One thing has become very clear, digitisation is one of the biggest levers the UK has for improved productivity.
Only last week, Matt Hancock MP, the newly appointed Minister for Digital Policy and I addressed an audience in Westminster on this very topic. I’m sure that it’s no surprise, we were in firm agreement that now more than ever, we need to help “Britain reach our best future”. A future where the UK continues to compete with the biggest and the best, with UK businesses able to achieve their full potential.
This is not about how we transform digital industries; it’s how we make all industries more productive. In only a decade we’ve seen an unprecedented change in the way that we use technology. In 2005 we celebrated that we had half of the nation on broadband, we now have over 40 million people connected for a minimum of 20 hours a week. We’re very good at using the technology that’s in front of us, but we’re not very good at exploiting it in the way that we should.
The opportunity for the UK is tremendous; the Productivity Leadership Group equated that if we were able to improve productivity of our less productive companies by only 10 percent, we could achieve an extra £130 billion in gross value added (GVA) for the UK. That is the cost of 260 flagship hospitals or four times our current level of military spending. We are not going to get this type of improvement by focusing on driving efficiency from existing business models. Rather we need to embrace digitisation to create additional value for the economy from new products and services for a global market.
The Digital Economy report is not the first, and it certainly won’t be the last to reinforce the need for action and self-belief in the UK tech sector to help solve some of our greatest challenges. In the last few weeks alone we’ve seen rallying cries from some of the industry’s most influential – Baroness Martha Lane Fox called for us to “use the power of the Internet as a force not just for business growth, but social cohesion and growth”. Julian David, CEO of techUK emphasised that “The UK tech sector has been the outstanding success of the UK economy over the last decade and will be vital to the UK’s success in a post Brexit world. There is now a national imperative to put a plan in place that allows the UK tech sector to power the UK back to growth”. I couldn’t agree more, there has never been a better time.
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This subject along with the ideas and evidence presented is fascinating, I see the development of technology as being one side of the coin and its application as the other.
One area that interests me particularly is the application of technology in the UK National Health Service where efficiency and productivity are key, considering the funding or rather lack thereof available.
There is a lot in the future about which I’m hopeful and excited!