The UK has traditionally been a cradle of innovations that have changed the world — from Ada Lovelace and James Watt, to Alexander Fleming and Tim Berners-Lee. However, the country’s recent innovation performance has not fully lived up to its tradition and potential, as the recent UK Innovation Strategy published by its own government concedes.
Winston Churchill is credited for the famous quip about “never letting a good crisis go to waste.” What, then, about the opportunities afforded by the three major crises the country faces today: the fallout from the pandemic, the ever-rising stakes in mitigating and adapting to climate change, and the economic challenges that have accompanied Brexit?
Addressing challenges with innovation
Confronting these challenges requires fresh thinking and solutions that can best be addressed by invoking the innovation mantra. Our recent research reveals three focal areas for UK enterprises to consider to master the work ahead.
- Accelerated digitization. COVID-19 has forced companies to embrace digitization at lightning speed. This is a one-way street — more than half (54%) of UK executives in our recent Work Ahead research series believe the pandemic will destroy traditional, non-digital businesses.
Take the case of the remote-work revolution enabled by digital technologies. Forty-eight percent of UK executives in our study expect their companies to streamline their real estate in the medium-term. Businesses such as fund manager Schroders, banks HSBC and Standard Chartered, as well as accounting giant PwC and newspaper publisher Reach recently said most of their staff will continue working totally or predominantly from home after the pandemic.
- Rethinking the future after Brexit. Post-Brexit, the UK finds itself tasked with thinking what kind of country it wants to be. Aspirations such as leveling up and establishing Global Britain will only materialize when the foundation for an interconnected, data-centric economy is established. Britain’s national data strategy is a big step in the direction of creating a safe and secure data ecosystem, along with a shared understanding about how data can be effectively used.
Our research shows that Brexit and the pandemic now place a premium on resilience, even at the expense of efficiency. Just under half of UK executives (49%) surveyed said their companies will have to redesign supply chains to increase resilience in the face of future disruption. Forty percent believe they must redesign operating models for tighter borders.
- The need to address climate change. As the world’s fifth largest economy, the UK has an important role to play in global efforts to tackle climate change and mitigate its impact. The government’s Ten Point Plan for a Green Industrial Revolution, which includes initiatives to advance offshore wind, boost hydrogen-based energy and even develop zero-emission aircraft, points to promising markets that could drive employment for decades to come. Many jobs with a direct, positive impact on climate change traditionally involve renewable energy, electric transport, energy efficiency or nature conservation — check out the £160m Build Back Greener investment scheme, which aims to create 2,000 new construction jobs in the manufacture of offshore wind turbines and upgrading to smart ports.
The UK enjoys solid strengths resulting from the structure of its economy and expertise developed over time. These areas of strength offer niches to be explored in the pursuit of world-beating innovation. Examples include:
- Insurance. The UK has, literally, centuries of experience with insurance, and the City of London occupies a central place in this industry’s global market. Throughout insurance history, policy costs and coverage have always depended on statistics-based estimates of the likelihood that buyers would have to be paid. Provided that important questions related to data privacy and non-discrimination of user groups are addressed, there will increasingly be enormous opportunities to use real-world, case-specific data updated in real time in at least parts of the insurance industry.
For instance, real-time transport data can be used to develop next-generation ”microinsurance” products covering last-mile journeys (say, using electric scooters).
- Public services. From facilitating tax payments and expediting document renewals, to improving the National Health Service and helping the unemployed find jobs, public services constitute an area ripe for innovation. Citizen experience must come front-and-center; a good public service is not only effective but also easy for all to understand and use. British marketing and design expertise and solid policy research in academia and think tanks are a powerful combination to excel in this area.
One example is the partnership between UK innovation foundation Nesta, the National Lottery Heritage Fund and the National Lottery Community Fund. This consortium is backing programs to use public parks’ land, water and wind resources to generate renewable energy.
- Retail. As we explore in “The Work Ahead in Retail: Redefining Shopping for a Post-pandemic World,” leading retailers are increasingly experimenting with ways to seamlessly blend the best of physical and online shopping. Innovative retailers are able to not only find new ways to serve customers better but also to discover new and more expansive business vistas.
Ocado’s journey from competent online grocer to innovation dynamo that offers a slick, end-to-end e-tailing platform to other retailers is an example of adding value through innovation to all aspects of retail operations, from managing supply to the final sale.
Get comfortable with uncertainty
Successful innovators work rigorously but also embrace uncertainty and serendipity. We recommend that UK business leaders do the following:
- Reframe innovation initiatives around data mastery. Since data-generated insights are invaluable innovation inputs, the trade-off between data privacy and innovation potential may be inevitable in many circumstances. Business leaders should engage in open conversations with citizen groups, academics and other stakeholders to help policymakers define where to strike the balance in each case.
- Boost collaboration with academia. The UK is a research powerhouse, home to world-class academic institutions in life sciences and aircraft engineering, as well as artificial intelligence and clean energy. Business leaders should consider a solid collaboration framework that ensures strong relationships with academia to make the most of insights developed in and around the country’s universities and to co-innovate with academic experts.
- Look beyond tech-based innovation. Beyond technology, truly innovative companies will also embrace the arts, humanities and social sciences. Disciplines such as sociology, philosophy, design and education play a fundamental role in innovation processes, from the development of new business models to the creation of attractive products. Senior leaders must make sure their innovation teams are multidisciplinary, and that non-tech innovation also receives adequate funding in their companies.
The answers to innovation’s many questions are always tentative and temporary. Importantly, they require business captains to table their existing assumptions around operating, business and technology models and make innovation central to all elements of the enterprise.
The following experts contributed insights to this blog: Alexandra Bolton, Executive Director, Centre for Digital Built Britain, University of Cambridge; Paul Clarke, Former Ocado Chief Technology Officer, member of numerous government and industry advisory boards; Roger Taylor, Chair, UK Chair at Centre for Data Ethics and Innovation; and Naomi Weir, Head of Innovation, Confederation of British Industry.
To learn more, read The Work Ahead in the UK.