The UK economy could get a £48 billion boost if companies made quick and easy changes to how bosses work with staff and use technology, new research has revealed.
The study by Goldsmiths, University of London in partnership with Microsoft, entitled Creating a Blueprint for UK Competitiveness, found that a failure to fully embrace technology is harming businesses.
The report revealed that 46% of UK organisations are “endangered”, meaning they are seeing turnover fall by up to 15% and appear financially vulnerable.
The findings heap pressure on an economy still recovering from a 19.8% contraction in the second quarter as Government measures to tackle the Coronavirus pandemic took their toll. During that period, the UK experienced in the largest recession since records began. GDP grew in July, August and September but has only made up half of the ground lost during the pandemic.
The research includes insights from leading British businesses such as Sainsbury’s and Admiral. To put that £48 billion figure into context, the cost of the Government’s entire furlough scheme up until mid-August was £35.4 billion. Just 10% of the Goldsmiths/Microsoft figure would create 128,920 full-time jobs paying the average annual adjusted salary rate of £37,428. This value is just a starting point based on minimal changes and investment by business leaders, and could grow considerably if organisations drive longer-term investment in competitiveness.
Clare Barclay, CEO of Microsoft UK, said: “UK organisations face a unique moment. Buffeted by the headwinds of pandemic and Brexit, the nation’s collective competitiveness is being put to the test like never before. But can they thrive? Today, we are ringing the alarm bell, as our research reveals that half of organisations will struggle to adapt.
“The tech intensity that was starting to gather pace before the pandemic struck has become turbocharged – to keep up, leaders must act decisively and quickly. Small changes in approach to investment, people and technology can quickly boost the UK’s competitiveness, giving our economy the best chance of success in the post-COVID and post-Brexit era.”
The research found that more than half (54%) of UK organisations have seen revenues fall this year, with more than one-in-five (22%) experiencing a drop greater than 15%. The same proportion (22%) were forced to scrap their existing business model within days of the lockdown in March.
To deal with the unprecedented challenges facing them, the research identified the emergence of two clear strategies: Hollow Growth and Sustainable Growth.
Firms pursuing a Hollow Growth strategy typically extract as much value as possible from people to reduce costs, offer little support to employees to adapt to new conditions, focus technology investments in siloed areas of the business to solve individual challenges, and benchmark future readiness by traditional productivity measures.
Organisations seeking Sustainable Growth strive to maintain resilience and have a capacity to adapt, adopt leadership defined by empathy and decisiveness, nurture a culture of trust, empowerment and inclusivity, and consider the impact of technology across their organisations as part of their wider strategic approach.
The research revealed that companies striving for Sustainable Growth (around 15% of firms) are faring much better. They are enjoying turnover growth of up to 15%. Companies exploring Hollow Growth are typically seeing turnover fall 15%.
The report, which recorded the views of 1,713 senior decision makers and 2,470 employees across the UK, highlights initial steps organisations can take to put themselves on the path to Sustainable Growth. These include addressing the gender pay gap and levels of diversity, paying particular attention to increasing the number of female STEM graduates; speeding up technology transition times by three months; migrating more workloads to the cloud to increase agility; and the creation of “innovation clusters” among technically-literate staff to drive low-cost research and development.
Roxanne Morison, Head of Digital Policy at the CBI, who contributed to the research, said: “The UK has a long tail of low-productivity firms, which face challenging times ahead without changing their business model to suit the digital age. If we got those companies confident in using cloud, digital marketing systems and data, the positive impact on UK productivity would be significant.
“But technology cannot be viewed in isolation. As the Microsoft research shows, it must be underpinned by progressive leadership, fair and inclusive talent development and adaptability for future change, in order to build a sustainable competitive advantage.”
In light of the research, Microsoft has an ambitious commitment to help address the widening digital talent gap in UK industry. Microsoft will work with organisations across industry to help 1.5 million people build careers in technology and help connect a further 300,000 to tech job opportunities by the end of 2025.
Click here to read the full report.