Small training steps can have big impact on economic recovery

Goldsmiths College and Microsoft have reported that 46% of UK organisations have experienced a decline in turnover of up to 15% because of a lack of investment in skills, digital technologies and research and development.

The research, published in Microsoft’s report Creating a blueprint for UK competitiveness, found that more than half (54%) of UK organisations surveyed have seen a fall in revenue this year compared with last year, and more than one in five (22%) experienced a drop of more than 15%.

The same proportion (22%) had to scrap an existing business model within days of entering the UK’s first lockdown, and 45% of the leaders surveyed expect their current business model to cease to exist in five years’ time – an increase of 12% over the past year.

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Based on a survey of 1,713 UK senior decision-makers and 2,470 UK employees, the Microsoft report, conducted in partnership with YouGov, found that over half of UK organisations put less than 5% of revenue into research and development (R&D). The survey also reported that only one-third of UK employees said their organisations are adopting technology quickly enough.

Commenting on the study, Hugh Milward, general manager, corporate, external, legal at Microsoft, said: “Over half of businesses are seeing a decrease in revenue. More than half had to scrap their business model just days into the lockdown.”

The study reported that businesses where as much value as possible is extracted from people to reduce costs and little support is offered to employees to adapt to new conditions, are unlikely to survive the economic impact of Covid-19 and Brexit.

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Economists within the research team, led by Chris Brauer at Goldsmiths, University of London, estimate that the UK would see an immediate boost to the economy of more than £48.25bn if every leader took even basic, low-investment steps to move towards sustainable growth practices. In the longer term, that figure could rise considerably as business leaders drive further investment towards a sustainable growth model.

Brauer said the businesses that would struggle had a “hollow growth” strategy in which talent is regarded as expendable labour, and there is a constant drive to reduce cost relative to human capital. He said such organisations take an “extractive approach to IT”, with optimisation set as the end goal of technology.

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In the report, Microsoft and Goldsmiths College suggest the UK could see a huge economic boost if organisations and the government invest in developing a science, technology, engineering and maths (STEM) workforce. Brauer said: “If they just invested 5% of revenue, it would create 130,000 jobs with a salary of £38,000 a year.”

He said the government and companies should not replace jobs with “expendable” jobs. Although there is demand for highly skilled data scientists, for Brauer, the real opportunity in reskilling is to train people to use tools for  data analytics and operating digital systems in the cloud.

He predicted that new job functions will emerge, in which people operating in business roles are augmented by technology. According to Brauer, this will result in growth in project management, insight work and forecasting roles involving data modelling. 

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Roxanne Morison, head of digital policy at the CBI, 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, confident in using digital marketing systems, confident in using data, the positive impact on our productivity would be significant.”

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