Digitisation could unlock the UK’s productivity potential

The UK can lay claim to international leadership in many areas: one of the world’s largest renewable energy markets, a tech start-up scene which is larger than the rest of Europe’s combined, and four of the world’s top ten universities.  

But there’s one aspect where the UK has lagged over the past decade: productivity.  An hour’s work in the UK generates less wealth than the G7 average. Over the past decade, productivity growth has barely shifted.  

The skills shortage compounds the problem. There are more job vacancies than people available to fill them.

If companies are to grow, it follows that they must find ways for their current workforce to achieve more during their working day, not by hiring more of them, or by cutting costs.  Instead, businesses must ask how they can empower their people to work smarter.

Digitisation – and a culture of digital enablement across the business – holds many of the answers.

Five digital capabilities, billions in added benefits

Working with Frontier Economics, we have found that investing in just five key digital capabilities could add a staggering £33bn to national output.  That equates to an increase in economic growth of 1.5 percentage points by 2030.  

These high-potential digital capabilities are:

1. High-performance processes: leading organisations mine process data and judiciously automate to ensure consistent performance

1. Intelligent operations Driving employee engagement and productivity through data-enabled, flexible operating models

1. Rapid innovation focuses on improving what businesses make, and how they do it

1. Customer-led design: emphasises improving the customer experience through technology platforms which combine human and AI-powered insights

1. Physical asset optimisation: increasing asset reliability, boosting profitability, and reducing risk through self-optimising operations

None of these require boards to make outsize bets on unproven technology. They are pragmatic options deeply rooted in the possibilities of today.  

What makes them so potent, however, is their human aspect.  The highest-performing businesses don’t only have great technology, they also mobilise their people as changemakers, empowered by technology.

Invest AND grow in a challenging environment

Leaders face a tough job convincing their boards and investors to support the investment they need.  Quite apart from anything else, the darkening economic outlook will be a call to caution for many.  

In fact, the reverse is true: boards should double-down on investing in tech and training for digitisation. Those that do could benefit more, and sooner, when things improve. Three themes should guide their thinking: ambition, milestones, and delivery.  

Ambition is all about appreciating the art of the possible. Leading organisations develop enterprise-wide digital transformation strategies, informed both by the value peers achieve with digital, and their approaches for doing so.

Clear milestones distinguish successful transformations from those that reach a dead end. No board should open its coffers unconditionally. We see successful organisations building ‘value roadmaps’ informed by real examples.

Finally, delivery. We see organisations tackling execution risk by looking not at what potential partners promise, but how they have achieved adoption and efficiency gains. We also see clients moving away from theoretical best-of-breed approaches; they increasingly recognise that when they fragment accountability, they are left carrying all the delivery risk.

Currently, just one in eight organisations meet their own expectations during digital transformation projects.  Getting delivery right is crucial to turning that proportion on its head.

UK PLC’s leaders must do things differently if they are to unlock growth in the current climate. The five capabilities we have identified will help leaders the UK’s productivity potential – benefiting employees, shareholders, and customers alike.