Strategic Industrial Transformation: Unlocking the UK's Global Competitiveness Through Innovation and Collaborative Growth
The UK Government’s consultation for its new Industrial Strategy closed just before midnight on Sunday. It is a document that presents the Labour Party’s vision of what a successful UK should look like in the future.
The strategy outlines a vision designed around the focus of a ‘10-year plan to deliver the certainty and stability businesses need to invest in the high growth sectors that will drive our growth mission.’
Thinking strategically and ignoring the short-term noise, the vision is ambitious and taps into the innovation that the country excels at creating. Still, sadly and unlike competing nations, it has been able to turn the benefits into the broader economy and industries. That has been our failure - great at thinking but less so at turning that into jobs, productivity and growth. After all, we are ranked fifth out of 133 countries in the WIPO 2024 global innovation index but only 31st in knowledge absorption and 22nd in Business Sophistication. The potential is what we have and what we need to realise.
Looking through the Labour Party’s manifesto, the Industrial Strategy consultation document, and the associated questions that the government has asked for insight and opinions and what you see is a vision of what the future could look like in the medium to long-term if the strategy secures buy-in from a wide array of stakeholders.
And yes, there has been a lot of noise, especially following the recent Budget. While the Industrial Strategy has a ten-year focus, a change in public perception is needed well before the next general election in five years. You could argue that a change in the quality of life needs to be experienced within the next three years, a difficult task given the geo-political issues that the world is experiencing.
What I see from the consultation are three key take-outs and deliverables that are essential if the vision of a future Britain is to be delivered. There is a need to enhance collaboration across sectors and geography, improve investment in the identified growth sectors, and build economic security through innovation and sustainability.
Strategic National Vision: Positioning the UK as a Global Innovation Powerhouse
The proposed industrial strategy presents the UK with a pivotal opportunity for economic transformation that demands and requires unprecedented strategic vision, collaborative action, and culture.
Yet, to unlock and monetise the innovation that the country delivers, there’s a need to establish a culture of collaboration, something that the consultation questions identify and allow businesses and the public to comment on.
Questions 24 and 25 in the consultation paper ask:
24. How can international partnerships (government-to-government or government-to-business) support the Industrial Strategy?
25. Which international markets do you see as the greatest opportunity for the growth-driving sectors and how does it differ by sector?
These questions need to be examined using a local, regional, national and international lens. Growth can only be unlocked from our innovation by working in partnership. This requires action and alignment from businesses, investors, and global partners at a local, regional, national and international level.
Businesses and investors have never been passive in how they engage and try to influence government policy. The new industrial landscape created by new technologies and industries demands active engagement, strategic partnerships, and a proactive approach to national economic objectives. Companies must develop robust networks that transcend traditional boundaries, connecting with government agencies, trade associations, and international partners.
The government also needs to engage better with small and medium-sized companies that can scale, grow, and deliver jobs.
Collaboration is not just about how the government can better work with businesses or other governments, but how it can create an ecosystem where businesses can better work with and partner with other businesses so that they can unlock value from agile working and innovation that businesses invest in.
Geographical and sectoral clusters already provide fertile ground for sharing resources, expertise, and infrastructure.
Regions like the Oxford-Cambridge arc, the West Midlands Engine or The Northern Powerhouse demonstrate how strategic partnerships between universities, startups, and established firms can generate remarkable technological innovations and how businesses can adopt these to deliver value within their own companies and supply chains.
For example, in the south of the UK, SETsquared is an enterprise partnership and a dynamic collaboration between the six leading research-led UK universities of Bath, Bristol, Cardiff, Exeter, Southampton and Surrey. As an incubator, they ‘provide a wide range of highly acclaimed support programmes to help turn ideas into thriving businesses.’
The world is moving into an IP economy that is already experiencing significant growth, with IP assets becoming central to economic development and innovation.
For example, Arm Holdings, founded in Cambridge, uses a licensing employing a licensing-based business model to generate revenue. This model allows Arm to focus on designing advanced processor architectures and related technologies, which it licenses to other companies for manufacturing and integration into various products.
In the year to the end of March 2024, Arm Holdings generated revenue of $3.23bn, a 22% year-on-year increase, secured from licensing its designs to chip manufacturers and gaining a royalty from their sales. The success of Arm is only possible thanks to the innovation and collaborative approach that they have taken and which, as a British-founded company, is an example of a model that can generate revenue for other start-ups in the UK’s priority sector industries.
Having a strategic and non-siloed view will be critical if growth is going to be unlocked. Equally, an understanding of what businesses require to invest in opportunities that create growth and jobs.
Driving Economic Growth: A Comprehensive Roadmap for High-Impact Sectoral Development
The UK's industrial vision focuses on a powerful group of sectors that promise to drive national economic advancement.
Emerging technologies like artificial intelligence, biotechnology, renewable energy, quantum computing, space and advanced manufacturing stand at the forefront of this strategic approach. These sectors are not just theoretical prospects but tangible opportunities for substantial economic impact, especially when they are positioned as foundations for other national and international growth industries, for example, quantum computing and life sciences or Space and connectivity and energy.
Life sciences exemplify this potential, contributing over £36 billion annually to the national economy. Renewable energy demonstrates remarkable growth, with exports expanding by 30% year-on-year, reflecting global market demands for sustainable technological solutions.
Traditional foundational sectors such as aerospace, finance, and pharmaceuticals continue to serve as critical pillars of economic stability and innovation.
From Innovation to Implementation: Transforming Intellectual Potential into Economic Advantage
The UK's industrial strategy is fundamentally about perception as much as policy. A strong national reputation becomes a critical asset in attracting global investments, top-tier talent, and strategic partnerships. Businesses play a crucial role in reinforcing the narrative of the UK as an innovative, open, and forward-thinking market.
Call to Action: Your Strategic Imperative
Immediate Actions for Business Leaders:
Business executives and board members must recognise that the current industrial landscape demands more than passive observation. To unlock growth and secure a competitive advantage, there are some steps that they need to take, including:
1. Thoroughly evaluating your organisation's alignment with national industrial strategy
2. Developing comprehensive stakeholder engagement plans
3. Investing strategically in research, development, and innovative technologies, including the setting up of a corporate venture capital firm through which you can invest solely or in partnership with other investors.
4. Building robust international and domestic collaborative networks
5. Communicating your strategic contributions to enhance national economic objectives.
Pathways to Transformative Growth
The opportunity before UK businesses is unprecedented. Organisations can unlock extraordinary growth potential by embracing collaboration, investing in innovation, and aligning corporate strategies with national goals.
The UK Industrial Strategy is not merely a government document — it is an invitation to be part of a transformative national economic journey that can unlock growth opportunities for businesses.
New technologies are going to be disrupting the business landscape. Businesses need to be part of the first wave and have some form of ownership that can help them and their supply chain deliver growth.
Collaboration is going to be key. And this collaborative culture might require a whole new way of engaging and investing in growth that can better position businesses for the future.
