At the CBI conference in October 2010, David Cameron personally acknowledged that “we’ve got to back the big businesses of tomorrow, not just the big businesses of today”. He also pledged to make the next decade the "most entrepreneurial and dynamic in our history". These are exciting goals if they can be achieved and could become a national focus for young and experienced alike in a society that appears to have become paralysed through over administration and protectionism, so how is this going to come about?
"Since the second world war, 95% of radical invention has come from companies employing less than 5 people” [1].
Those in power within the UK (government and financial institutions) no longer appear to understand that true innovation starts with individuals not corporations, people who are not only highly skilled, but also passionate about their field of expertise. It is that proficiency and passion that has the potential to deliver the building blocks sorely needed to create our big businesses of tomorrow.
The problem is that we have been turned into an 'administrated society' where administrators are choking the system; they are the antithesis of innovative individuals, optimising the extraction of capital and profits, but without investing any true or real value back into society. Successive Governments have lost their way in motivating 'inspirational people' in this country and have asphyxiated them with laws, rules and regulations, often implemented as a result of corporate bodies lobbying with civil servant support for 'hidden' monopoly style legislation which reinforces 'institutionalised culture' within this country.
One example of such asphyxiation is Government funding of many of the UK’s leading science initiatives which are not only long-term research programmes, but by their very nature support the commercial interests of corporate business, who alone have the resources to readily link in to these programmes and exploit the results. On the other hand very little support is given to engineering and in particular engineering product innovation, which is where more immediate commercial products and export success will be generated.
Innovation fails for at least one of three reasons:
- Because those in power are too set in their ways to spot good ideas or to imagine the possibilities of breakthrough innovations.
- Because those in power become obsessed with novelty, with no ability to judge and discriminate between valuable innovation versus trivia.
- Because those in power don’t have the energy and courage to push good ideas into the mainstream.
This too cosy relationship between Government, (politicians and civil servants) and corporate business is symptomatic of the level of misunderstanding of where major new business growth is going to come from. Government procurement and business support today is focused far too heavily in favour of corporate business, with decisions often devoid of a holistic understanding of true value with aversion to any form of perceived risk. Yet if a sensible and qualified risk assessment was applied during the decision making process, very different decisions would be taken. The truth is many of the world’s current largest technology-led corporations, whether they be Microsoft or JCB, all started from very small entrepreneurial business beginnings.
The UK’s professional engineers are viewed as a second rate profession compared with other UK professions such as lawyers, financiers/economists, doctors and scientists. The government also needs to separate engineering technicians from professional engineers to further improve their status as they do in mainland Europe.
If this country is going to rebalance its economy and provide a platform to redress our growing export deficit, we must find a way to sponsor new product development through our high-technology based innovation entrepreneurs. This country has the innovative ideas, has highly capable and experienced engineers & business people, but there is no funding for high-technology SME businesses to develop the big businesses of tomorrow, create the jobs of the future and export success.
The banks are no longer a source of funding for such capital, nor are VC’s, whilst Government (using the Technology Strategy Board as an example) demands both 50% matched funding as well as collaborative projects, which immediately kills off innovation from SME businesses. UK start-up high-technology businesses are being acquired by foreign investors, often ‘for a song’, with not only their IP upon which future growth hinges being lost overseas, but also the associated so important high-technology jobs of the future.
Where are this nation’s investors who have a broader focus and are not driven purely by profit at any price? How do we attract investors who have a passion to participate in the development of long-term sustainable businesses based here within the UK? Why do our investors and government refuse to support inward investment (fuelled by the belief that neither the engineering skills nor a sufficient profit margin exists on the home front), preferring to invest overseas (with the false belief that the returns are larger, can be achieved more quickly and at lower risk). Surely if we have learnt nothing else over the last couple of years, purely riding on the back of market trends by investing overseas, often without the ability for a robust risk assessment is a bubble just waiting to burst? When these investments fail so spectacularly, no one questions why inward UK investment decisions were not made in high-technology, engineering-led companies.
Now that our banking system has failed the country so spectacularly, we still seem impotent at re-evaluating and developing the foundations of building a successful and balanced UK economy, investing in indigenous skills and expertise that can create products that can be exported.
We need new forward thinking investment initiatives from government, competitive, of course, but with engineering right at the top of this country’s economic agenda. We have a great deal to learn from our neighbours such as France and Germany. German regional banks truly support local engineering led companies, many of them small, producing the seedlings for long-term economic growth. We must find or develop new financial models to invest for the longer-term in engineering based high-technology products with export potential to address the physical issues this world faces (global warming, sustainable energy, etc).
These initiatives must include a radical revamp of our patent system that truly protects our entrepreneurs and a funding source for the development of product demonstrators for our highly innovative SME businesses with a plan that our Prime Minister can sign up to!
[1] Enterprise Development Policies and Capacity-building in Science, Technology and Innovation (STI) Geneva, 20-22 January 2010
Ashley Bryant, Taplow, Bucks
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