Derek Bishop


Innovation – the answer to the productivity gap

Date added: 25th Nov 2016
Category: Innovation Culture

You won't get higher productivity unless organisations develop genuine cultures of innovation in which all stakeholders are engaged in driving change

If you were writing an annual report on the level of productivity in your organisation what would be your overall summary? If your report reads outstanding or well ahead of your peer group then congratulations, you’re obviously doing something right. Unfortunately, for far too many businesses in the UK, the comment is more likely to be along the lines of “could do better”.

That was certainly the conclusion of the Chancellor Philip Hammond when he highlighted the ongoing problem of the UK productivity gap in his autumn statement. It has to be said that concerns over the productivity gap aren’t new. First put down as a legacy effect of the recession, the Bank of England and others have been discussing potential causes for ongoing low productivity rates for a number of years. But the gap was put in stark contrast in the autumn statement when the Chancellor highlighted the fact that it takes UK workers five days to produce something which German workers can do in four.

Investing in innovation

To the casual observer, this may make little sense.  After all, in the recent INSEAD/WIPO Innovation Index, the UK was ranked as the 2nd most innovative country on the planet.  We came in comfortably above France, Germany, the United States and Italy, all of whom the Chancellor revealed are more productive than us.  So what gives?  Why is this innovative support structure not leading to higher productivity?

The answer, as with so many things, lies in the detail.  You see, the INSEAD report looks at the innovation ecosystem.  It looks at things like the legal infrastructure to support intellectual property, and the ease with which companies can be created.  It considers the higher education landscape and the financing that can support new ventures.  In other words, it looks very much at systemic things.  The very systemic things the Chancellor announced more support for in his £23 billion productivity investment fund, which he pledged will support R&D, housing and transport.

All of this is great, but it focuses very much on activities outside of the company, and without an accompanying drive to improve the internal mechanics and culture of our companies it will be hard to convert all of this great raw material into new innovations.

We need our organisations to look hard at their internal processes to see whether they truly have a culture of innovation that will generate real solutions for customers, and therefore drive real changes to productivity levels.

We can use real intelligence to understand what the problems actually are and how we can best provide solutions for our customers. We can collaborate not just internally but also with other organisations and our customers in order to devise better ways of working and better products which add real value and drive growth. And we can do so adaptively, bringing solutions to market in a timely manner and being proactive rather than reactive.

Whilst the investment by the Chancellor is undoubtedly welcome, and will no doubt help the UK remain high in the Innovation Index league table, this won’t translate into higher productivity unless our organisations develop genuine cultures of innovation in which all stakeholders are engaged in driving change.  The change really does start with you.


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