Ostrich-Like Mentalities 'Hold UK Business Back From Economic Boost Of Over £100 BN'

The failure by UK business to adopt technologies and management practices that are readily available is costing Britain dearly in economic opportunity and lost productivity, says a report just out by the Confederation of British Industry (CBI).

Many businesses show a tendency to behave like 'ostriches', stuck in their ways, as evidenced by striking productivity differences between them, it says. If, instead, the government were to build a tech ecosystem that would encourage greater investment, it could encourage businesses to behave more like 'magpies ', with the potential to add more than  £100 billion to the UK economy and support a 5% reduction in income inequality at the same time, it adds.

At the CBI conference exactly a week ago (covered by me here) Prime Minister Theresa May laid down a challenge to UK business: invest more in innovation.

In response, the CBI sets out what it sees as one of the single most effective routes to achieving just that - by prioritising the diffusion of technology, and ensuring that proven technologies like cloud, mobile tech, e-purchasing and cyber security are able to reach more businesses through the new Industrial Strategy. "It is for the Government to build the ecosystem that will encourage greater investment and for British businesses to act and make the most of those opportunities" says the CBI.

"While the eyes of the business world can often be on the 'next big thing' in cutting-edge technology, too many firms are missing out on what's right under their nose. Failing to adopt the nuts and bolts technologies of today is leaving a yawning gap in productivity and pay between businesses" said Carolyn Fairbairn, CBI Director-General.

"In too many areas of diffusion we struggle against our international competitors, with more workers being employed by less productive firms here than in France and Germany, while by some markers we are almost a decade behind the Danes" she added. The Prime Minister "rightly laid down the gauntlet" at the conference to get firms investing more, she said, adding: "but the environment must be right."

"The Government's role is to create the right backdrop for firms to invest and it's then up to businesses of all sizes to act boldly and take up the challenge" said Ms Fairbairn.

In what is possibly a first and certainly a very open public acknowledgement of the existence of mind-sets in British business that are limiting its progress, the CBI's new report, called 'From Ostrich to Magpie' argues that  the UK needs to encourage businesses to behave more like 'magpies' that pick the best tried and tested technologies on offer.

The 'ostrich' likeness to those UK businesses that refuse to 'get it' when it comes to the need to deal with technological transformation resonates. In October 2014 I write a piece on my page on Leadership for Forbes online  entitled Cyber Security And The Danger of Ostriches In The Boardroom.

Ostrich-lovers everywhere rest assured: it's not a joint vendetta on ostriches, it's most likely a coincidence. But the ostrich comes to mind as a useful image synonymous with those who refuse to see, by sticking their heads in the sand.

"The diffusion of technology and best practices has been a serial blind spot for the Government in its attempts to solve the UK's deep-seated productivity pains. And while there is no shortage of business support programmes from the Government, the problem for companies can be seeing the wood for the trees" said Ms Fairbairn.

When it comes to the 'productivity puzzle' UK business is far from uniform. The high-fliers are more competitive than those of many other countries, says the CBI - but these only employ 5% of the workforce. The UK has a greater share of firms at the lower end of the productivity scale (69%) than France (65%) and Germany (60%), employing over two-thirds of the workforce.

Strikingly, the proportion of UK firms adopting could computing in 2015 was nearly 30 percentage points below Europe's best performers. As for the proportion of businesses with e-purchasing, Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems in the UK today....this is still below levels seen in Denmark in 2009, according to the CBI.

As for income inequality, last week's CBI conference heard from Angel Gurria, Secretary-General of the Organisation for Economic Co-operation and Development (OECD). It recently released a damning report on the 'Brexit effect' on the UK economy. OECD analysis also indicates that where firms are more unequal in terms of productivity, people are more unequal in terms of pay, the CBI points out - leading to its argument for investment in a tech ecosystem that would boost productivity and also reduce inequality.

Among other things, the CBI would like to see a campaign on the 'Five technologies all companies should adopt' to move forward with a sense of urgency towards technological transformation of business, and the country as a whole.

"There is an emerging consensus amongst businesses, policy makers and academics that a key focus of the UK's industrial strategy needs to be on the digital technologies that will power the economy over the next decade. This report correctly points out that by prioritising tech diffusion we can boost productivity and support better wage growth" said Jurgen Maier, CEO of Siemens UK.

Another coincidence - either that, or I have a good nose for news. I will let you be the judge of that. Amusingly, my fast and furious tweeting at the CBI conference @dinamedland was a bid to capture what I found to be a vibrant environment. It won me a brief moment of fame in the pink paper, the Financial Times : can't resist putting it here.

But I digress.

I happened to come upon Mr Maier at the networking session after the CBI conference, and spent a very energising time listening to his thoughts on the future. I see now (by searching on the internet) that he has  a blog.

The latest entry is 'Why Britain must lead the fourth industrial revolution.' Don't be an ostrich. Read it.