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Building our industrial strategy: A response to the Government’s Green Paper
Culture Consultancy, a practitioner-led consultancy group specialising in Culture Change, Leadership, Innovation, Employee Engagement and Diversity welcomes the Government’s Green Paper on building our industrial strategy. In a time of unprecedented change in which the UK’s relationship with the world is under review, the drive for a future-fit strategy is an imperative.
The proposed strategy is wide ranging and interconnected and we would not presume to comment on every area. However, there are two themes in particular which we consider are worthy not only of comment but also of further exploration.
The productivity gap
The first of these is the productivity gap. In the period since the UK emerged from recession the productivity puzzle has been a continuing challenge for economists. For example in 2014 Martin Weale, External member of the Monetary Policy Committee, delivered a wide ranging speech in which he explored a number of areas including labour hoarding, capital allocation, investment and educational attainment as potential contributors to the ongoing productivity gap. In the end his conclusion was that that whilst the depth of the financial crisis was still casting a long shadow there was still insufficient evidence to provide a clear explanation. 
Then in his 2016 budget the then Chancellor George Osborne commented in his opening remarks that “Productivity growth across the West is too low” adding that this gives cause for concern as “our nation’s productivity is no more and no less than the combined talents and efforts of the people of these islands.” 
We have followed the debate surrounding the productivity puzzle with keen interest and whilst a number of solutions have been proposed there is one contributing factor which we consider is not given sufficient weight when considering potential causes. That factor is employee engagement.
We believe that it is no coincidence that not only is low productivity exercising the finest business and economic minds, so too are the low levels of employee engagement which are regularly being reported across the globe. Quite simply, disengaged employees are less productive than engaged employees. Numerous studies have shown this to be the case and yet the link between employee engagement and productivity seems to be missed in all too many instances when the productivity puzzle is discussed.
The Green Paper makes the comment that “Improving productivity does not mean making people work harder. It means helping them to work smarter – producing more value for each hour of their time and thereby increasing their earning power.”(P13) We would comment that businesses and organisations which are serious about improving productivity need to pay far more attention to employee engagement; leveraging strong leadership allied to self managed engagement plans in order to help their people to take ownership of business success.
Engage for Success  which was set up following an earlier review (and for which one of our Directors Jo Geraghty is a Development Director) is going some way to address the engagement challenge but if the Government is serious about boosting productivity then further publicity and incentives to boost levels of engagement are required. We submit that his area requires further exploration and that solutions could include active input from the FRC. This body is already promoting corporate culture as a driver of corporate governance and investor dialogue; including employee engagement levels within the culture measure could help to promote engagement within all corporations.
Building a Culture of Innovation
The second area which is worthy of further exploration is that of innovation. Innovation is a theme which runs throughout the green paper and indeed the paper comments that “Innovation is not just about breakthrough technologies or scientific and engineering processes. Effective adoption of technology throughout businesses and improvements in management and workforce skills are just as important, as are new ways of providing services, from financial services and retail to professional advice.” (P25).
However, there is very little mention of innovation in the context of organisational culture. Indeed, culture was only mentioned twice in the green paper; neither time in connection with the fundamental way in which corporate culture underpins organisational success. A company’s culture is its DNA; it governs attitudes and expectations, outlook and the way in which the business operates. It is affected by every action and interaction and interweaves through leadership and governance, reputation and customer excellence.
If organisations truly want to deliver a game changing future then innovation cannot stand on its own, the future has to be delivered within the context of a culture of innovation. Far too many organisations still see innovation as simply inventing something new or acting in a new way. In our book Building a Culture of Innovation  we highlight the difference between invention and innovation. Invention looks for new ideas, new products, new things whilst innovation asks what can we do differently, what can we change, how can we improve, and more importantly how do we implement, how do we get our solution into the hands of those who need it.
Understanding the difference between invention and innovation is what drives competitive edge. In a homogenous world what I invent today can be copied tomorrow. By aligning that invention with a culture of innovation which looks to solve genuine problems, add real value to the customer and do so in a way that delivers customer excellence I can not only improve lives but also do so in a market leading way.
The green paper rightly promotes innovation as a key element of building a future fit, world leading industrial strategy. However we would argue that there should be a shift in emphasis towards cultures of innovation which run throughout organisations. Innovation isn’t the preserve of one business sector or even one department within an organisation. True innovation comes through a culture change which encompasses every individual and which seeks to collaborate widely not only within an organisation but also externally with customers and suppliers, with research institutions and competitors. And by drawing all employees into the innovation mix organisations have the added benefit of boosting employee engagement and productivity.
The UK is world renowned for invention, and yes for innovation too. If it is to keep that leading-edge on the world stage then the emphasis has to be towards delivering strong cultures of innovation across business and government.