The design and delivery of a new industrial strategy is a key priority for UK policymakers
Share articleWhile there are many definitions, industrial policy is about maximising economic growth
Share articleAdaptability should be a key priority going forward, both for companies and the workforce
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All political leaders have to deal with a myriad of priorities and objectives. The opportunity to make a difference and achieve a positive impact is why they seek out political office in the first place.
Among this raft of ambitions is likely to be the design and implementation of an audacious yet deliverable industrial strategy - one that reflects their country's strengths and can help deliver the economic growth and prosperity which are the targets of any administration, regardless of political stripe or place in the world. Certainly for Theresa May, British prime minister since July last year, it quickly emerged as a key ambition.
The importance of industrial policy to May's government soon became apparent. Upon coming to power last year, she sought to make her mark on Whitehall not only by reshuffling her ministerial team but also by repackaging government itself, including rebranding the business department as the Department for Business, Energy & Industrial Strategy. By explicitly embedding the words "industrial strategy" into the ministerial masthead, she left no one in any doubt about her priorities.
The trouble was, it also prompted the question, "what does 'industrial strategy' actually mean?" Answers came there many but, unfortunately, there was no single, definitive response. For some it means skills and lifelong learning. Others cite government investment in boosting small business and innovation, or the public and private sectors working hand-in-hand to foster and enable economic growth. I should hasten to add that none of these examples are wrong. They are all clearly things that government could and should be doing. But it also underlines the sheer scale of the tapestry which May and her ministers are seeking to weave.
While it is clear that "industrial strategy" means different things to different people, Dani Rodrik of Harvard's Kennedy School believes that industrial policy comes down to maximising its potential to contribute to economic growth while minimising the risks of generating waste. "The right model for industrial policy is not that of an autonomous government applying Pigovian taxes or subsidies. It should be one of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuring lie, and what type of interventions are most likely to remove them."
Drawing on his work, The Boston Consulting Group has been developing a perspective on what we think the UK's industrial strategy should be. For this, we asked ourselves three key questions. Firstly, what is the UK's starting point, including relative strengths and weaknesses in terms of global competitiveness? Secondly, what can we learn from what others have done? And thirdly, what can we learn from what makes businesses successful?
To understand the current British context, we should start by analysing its strengths, such as its record as Europe's leading destination for inward investment, as well as its weaknesses, such as its long-standing failure to translate leadership in global research into commercial outcomes. Only then does the UK's competitive position become apparent.
A second priority should be to look at what other governments have done and are doing in this field. After all, the UK is hardly unique in seeking to boost its economic performance, increase jobs, and strengthen nationwide prosperity. Clearly what works in some jurisdictions will not automatically work elsewhere - context and local nuance are crucial. But that said, it is equally evident that there are important lessons to learn about what to do, as well as what not to do, in this ever-evolving field.
And thirdly, the wide array of policies and programmes which are pulled into the "industrial strategy" vortex should not distract us from the overall aim - which is helping companies thrive and grow, and this is vital. It's not about what government can do, it's aidentifying what businesses need - and working back from there.
The government took its first steps on this journey a few weeks ago with the publication of a green paper, which is currently out for consultation. Some 130 pages long, it certainly maps in some detail the challenges and opportunities currently before us.
One issue that perhaps merits greater attention, however, is in the area of adaptability. With increasing levels of global volatility, companies and the workforce will need to be adaptable. Companies need to be able to take advantage of new technologies and stay relevant, while the workforce needs to be flexible and embrace lifelong learning - the idea of one job for life is long gone.
No doubt the consultation will prompt an extensive assortment of responses - I certainly hope so. This pivotal moment in British history demands a diverse set of perspectives, opinions and insights at the decision-making table. That means multinationals, it means researchers and small businesses, it means academics and scientists, engineers and entrepreneurs - the list goes on.
Together, these voices will help set Britain's course. Together, they can help the government design and implement an industrial strategy capable of underpinning and sustaining the thriving, bustling economy that all of us desire for our future.
*This will be an ongoing conversation. We will shortly be convening a series of discussions with key stakeholders from Whitehall and beyond to explore these issues in greater detail. We look forward to reporting back on our findings later this year.*
