Mid-market companies will be the backbone of ‘Global Britain’

Much has happened since the UK launched its Industrial Strategy in 2017, but in the recent Budget the Government gave the clearest indication yet of its vision and plans to support economic growth and innovation. The Budget included some impressive commitments such as confirmation of the new Advanced Research & Invention Agency (ARIA), and there was a fair amount of focus on the major contributors to GDP growth, such as start-up communities, who will now benefit from the Future Fund: Breakthrough. This will see the Government commit £375 million to investing in high-growth, innovative start-ups. All perfectly understandable and right, but I would argue that mid-size companies make up most of the businesses and entities in the UK, and therefore it is critical they receive significant attention. The Help to Grow scheme is very welcome, but as Andy Haldane and Vivian Hunt for the (now defunct) Industrial Strategy Council explained:

“Almost 70% of people employed in the UK work in low-productivity businesses, while the same figure for Germany and France is 60% and 65%, respectively. The majority of these companies are SMEs that lack the resources and capacity to adopt technology at scale.”

Driving innovation in the mid-market

It is surprising that the ‘Build Back Better’ strategy document was pushed out on Budget Day without too much fanfare, as long term it will have so much impact on our future business success. A couple of weeks before the Industrial Strategy Council was replaced with the ‘Build Back Better’ Council, but thankfully, a lot more time and effort has been spent on the detail of the plan than on the naming strategies!

With innovation being one of the strategy’s key pillars and the ‘Help to Grow’ programme designed to support SMEs with modernisation, there is a clear acknowledgement that mid-sized organisations are a priority for the UK. They are the engine room of our economy, and the ambition should be for them to become a similar source of growth to the Mittelstand in Germany. Nothing would be better testimony for the ‘Global Britain’ vision if our mid-market businesses were competing more regularly on the world stage.

We need more detail around how the ‘Help to Grow: Digital’ programme will work, because the mid-market needs more support than simply being introduced to innovative technologies. What will ‘Build Back Better’ do to help mid-market companies understand the business process, cultural and operational change required to make innovation a success?

We have seen many mid-sized organisations approach transformation through the adoption of technology such as automation tools, overlaying them on existing legacy systems. This can provide some level of incremental improvement, but experience shows that successful implementation of innovation requires a strategy that embraces the business process and the organisational change needed.

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Developing leadership skills is crucial to innovation

The opportunity for UK businesses offered by the pandemic is a chance to wipe the slate clean and redesign their business models and operations from the ground up. With flexible working now integral to business models, senior executives must explore how to utilise innovative technologies to address a range of business challenges. These include enabling greater collaboration between virtual teams, engaging customers via multi-channel strategies and making supply-chain operations more efficient using real-time data analytics.

It is important that ‘Build Back Better’ inspires leadership teams within mid-market organisations. It is excellent that ‘Help to Grow: Management’ recognises the importance of skills. To deliver successful innovation projects requires brave or even maverick leadership. If we want the UK mid-market to be competitive and productive on the global stage, adopting innovation requires organisational leadership and cultural change that will be highly disruptive to most businesses.

A question for ‘Help to Grow: Management’: will it look at change management and leadership education for those implementing innovation? David De Cremer, founder and director of the Centre on AI Technology for Humankind underlines what is needed in terms of helping leaders to understand the value and benefit of innovation:

“We are not doing a good job training our business leaders to think like this. Rather than making them think that they should become coders themselves, they should focus on becoming a bit more tech savvy so they can pursue their business strategy — in line with their values — in an environment where technology is part of the business process.”

‘Build Back Better’ places skills at the heart of its efforts. However, if the Government wants to fulfil its levelling up and long-term vision “for every region and nation to have at least one internationally competitive city”, there must be even greater emphasis on mid-sized companies which have been the bedrock of these regions. This strategy is a good start, but the proof will be in the execution of these well-intentioned plans.

Written by Chris Richards, regional president UK&I at Unit4

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