INNOVATION IN BRITAIN

INNOVATION IN BRITAIN

The Potential for Global Leadership

By Phil Inje Chang

By objectively assessing its strengths and weaknesses, and further developing its best-of-breed approach, Britain could become the global leader in innovation. Leadership is perhaps difficult to measure, and clearly definitions of leadership will vary according to purpose and context. My definition is not purely economic; long-term cultural and social factors play a big role in quality of life. Success in innovation, after all, is nothing without a sense of personal and social satisfaction.

The key insights I can bring to this discussion are in both the business and social/cultural realms. My professional experience in the US has given me exceptional insight into the nature of business from the vantage point of global excellence in high tech. If innovation is purely about business and entrepreneurship, then the US has developed a winning formula. Below I present a scorecard rating the US and UK in the core components of innovation.

Perhaps less tangible, but equally valuable, are the insights I can bring to the cultural dimension of innovation. Britain is in the enviable position of having many of the basic ingredients for both business leadership and cultural excellence. I came to Britain because I realized America is sorely lacking in cultural fundamentals. In addition, my cross-cultural background spans both Eastern and Western views, while my upbringing in Philadelphia gave me a British-derived background. I would argue that in order for innovation to succeed long-term, the cultural dimension is critical. On the other hand, the biggest weaknesses in Britain’s business environment probably stem from cultural issues.

Core Ingredients of Business Innovation

At its core, innovation is really about excellence in developing new enterprise, or the ability to capture business value from new ideas. In theory, the net benefit to society from innovation is improved quality of life. However, as America is proving with increasing certainty, innovation without a strong cultural context can lead to a lower quality of life.

The ability to innovate can include three major areas, each made up of two components, as shown below. The rating system uses a scale of 1 to 10, with 10 as the highest possible competency, based loosely on global standards as I have observed them. What lies outside this definition are governmental, cultural and psychological issues.

Business Wisdom & Skills Creativity & Intuition Process & Productivity

US 8 7 7 6 8 8

UK 6 9 9 8 7 3

The areas in which Britain surpasses the US are in the less tangible areas supported by Britain’s strong culture, and in education and training, which are generally at a higher level. Britain’s single biggest weakness in its capability for innovation lies in productivity.

There are many dimensions to productivity, but for the purposes of this high-level overview we could define productivity as the ability to move efficiently through processes of production and delivery. In terms of innovation, productivity could be seen as the follow-through from or commercialization of new inventions and ideas. What’s interesting in the UK is that there is a widespread awareness of the importance of process, but relatively weak ability to use process efficiently. These are, of course, gross generalizations that do not apply evenly across all industries, professional areas, or levels of society, but it is a widely known phenomenon that creativity involves nonlinear mental activity whereas production and delivery can be highly structured and linear by comparison.

Clearly the regulatory environment will affect the ability of individuals to pursue new enterprise. Though it is widely perceived that the regulatory environment is stifling in the UK relative to the US, that difference may be exaggerated. Taxation levels are moderately higher in the UK, and paperwork requirements are generally higher. However, small business is a large component of the UK economy, whereas in the US it can be difficult for entrepreneurs to compete with the “big guns.” America’s market is so large that addressing it can be exceedingly expensive and risky. It remains true that more resources are available for new ideas, but it is also true that achieving any degree of large-scale success in America is quite an expensive proposition.

One could generalize that the UK places more importance on the value of individual judgment, whereas in the US the punitive legal system reins in excesses of behaviour. Because of this, individuals in Britain can be quite inventive in dealing with the “system,” and quite inventive overall. The problem with productivity – and the more general problem of apathy – in Britain can more likely be traced to cultural issues.

Britain: The Great Cultivator

I have addressed many facets of the contrast between the British and US cultures in numerous articles. Regarding how British culture relates to innovation, I present the following capsule overview.

Expansion and Absorption

As a small island nation, Britain has a long history of expanding its influence around the world. Perhaps because of its mixed roots, however, British culture proved to be quite permeable to foreign influences. As the empire faded, the absorptive quality of the culture has pulled the world into the island.

Interestingly, Japan may be the only other country that has actively undertaken a similar type of absorption. In both cases, an island nation integrated other cultures, almost voraciously, into its own. As an ethnic minority who lived in many parts of the US for 38 years, I can attest that America is not in the same league, an assertion that I am happy to defend.

For Britain, the obvious result is that it lies somewhere between Europe and America. European mores are part of its heritage, and yet the virus it planted in America has infected its parent. This was inevitable, because the British view of the world is inherently inclusive. America’s view of the world, for numerous reasons, is inherently exclusive.

The creative qualities of American culture are fully evident in Britain, if not more so. One could reasonably assume that the creative gene in America originates in Britain. In fact, I would rank Britain as one of the most, if not the most creative culture in the world. The difference in, and some would argue, advantage of America is that it started with a blank slate. Unfortunately, the commercial aspects of America’s culture have grown in a wild, unbalanced fashion, untethered by the deeper social values that have acted as communal glue in almost all other societies around the world.

It is undeniable that these deeper social values can inhibit innovation. But life without them can seem grim. In fact, life itself can easily be overshadowed by commercial concerns. The American productivity machine can steamroll over the human participants it is meant to serve.

Therefore, by adopting, and adapting, some aspects of productivity, Britain could have the best of both worlds. After all, the main benefit of productivity should be more time for the rest of life. At the same time, modifying the cultural factors that reduce the sense of open opportunity would serve to increase the general prosperity of the diverse British populace. Needless to say, the task of increasing the sense of opportunity is much more complex and difficult to achieve, while productivity is relatively simple to teach and learn.

The Economic Class System

Part of the cultural baggage weighing Britain down originates in the class system of old, which is certainly much less prevalent than it once was. Britain is unusual in its alignment of the business class with the social upper class, though it could be argued that the general trend in societies worldwide has been a rise in economic status for the majority and that those with more money achieve a higher degree of class. Nevertheless, unlike most European and Asian countries, Britain has not followed America’s model of a predominantly middle class society, in which the concept of class has become economic. Perhaps this is because the American model was derived from the British emphasis on industry in its social structure.

Casual observation reveals that at least half of the British population is below middle class in its earnings. By this I mean that compared to the US, working class and even some professional wages are quite low, and in addition there is a significant portion of the population that simply doesn’t work. The relatively small middle class in Britain, on the other hand, is generously endowed with significant earnings. This is perhaps the most notable evidence of the persistence of the old social class system. The most direct proof of this economic stratification is the simple distinction between the lower and higher tax rates.

I ardently believe that this economic stratification is a larger factor behind the apathy of people than the presence of a social welfare system. In essence, if a person cannot expect to make more than a paltry salary in his or her lifetime, why bother with a career in the first place? It is often argued that the presence of welfare encourages laziness. Clearly, in the statement above, welfare makes it easier to say, “why bother?” But the first part of the statement is the impetus for asking the question.

While America may lack the social values that come with a social class system, it does allow people to believe that any level of prosperity is achievable. A class boundary comes with the effect of a ceiling, or a limit to possibilities. A more even distribution of wealth is one of the biggest political challenges facing Britain, yet the answer could be additive, not subtractive. In other words, taxing the middle/upper class (as opposed to the upper-middle class) to provide welfare for the masses is a subtractive solution; whereas generating more wealth through innovation would help bring up the common class and allow welfare to be reduced over time.

As most government leaders know, this is easier said than done. The common tactic in America is simply to reduce taxes and provide incentives that encourage investment. If welfare makes less money available for investment, then the solution is to be extremely clever about providing incentives. In addition, government support of an infrastructure for innovation would be key, and Britain could achieve this in a way that America never could (this is a long discussion and I have some familiarity with current initiatives).

The Self-Critical Mind

The final point in this high-level overview is about personality and mindset, perhaps the least tangible of all cultural factors. An outsider like myself can determine sweeping characteristics from simple observation, and my two years here have been full of diverse interactions with a wide range of British society. While it is true that national characteristics defy generalizations (especially in a country that values individuality highly), it is also true that the more sweeping a characteristic is, the more it stands out.

The most obvious sweeping characteristic to an outsider is the highly intellectual nature of the average Briton. The culture here is steeped in words, information, literature, the arts and opinions, all wrapped in flowery rhetoric and colourful language, and disseminated in a surprisingly large number of newspapers, books, magazines, theatres, museums, galleries and marketing channels. This is a great strength of British culture, and has lead to a deep richness of learning and the arts. But the same strength has some negative effects as well.

The intellectual mindset has a marked tendency toward self-criticism and the inward reflection of the creative mind. This is part of an interesting paradox: the culture is outwardly oriented, but the individual members of the culture are inwardly oriented. I am guilty of the same intellectual mindset, which always made me feel out of place in America and now makes me feel at home in Britain. So I am quite familiar with the pitfalls of this mindset, especially from having lived within the practical mindset of a society driven by productivity.

The simplest way to describe the effect of an intellectual mindset is that it causes people to live more in their minds than in concrete reality. In other words, the life of the mind takes on a life of its own. The consequences of this are both positive and negative. On the positive side, people actively form judgments around important issues and engage in creative pursuits. On the negative side, people get lost in ideas, lose touch with manifestation, become intellectually arrogant, justify negative states of existence, and judge themselves and others too harshly. The worst consequence of all is being critical to the point of being cynical.

Any artist knows that one’s worst critic is oneself. It is not surprising then that the typical attitude among British people is that Britain is a bit of a rat-hole or becoming more crap by the day. When I tell people here I came from San Francisco, most of the time they are astounded. Contrast this with a Briton moving to San Francisco; no on there would assume San Francisco – or for that matter Britain – is an awful place (most people in San Francisco are immigrants in a sense and moved there for its liberal attitude). Perhaps the faded glory of the empire has inspired an inferiority complex, and certainly the tendency of the parent to follow in the footsteps of its offspring at the risk of losing important cultural values is starting to cause some decay in quality of life in Britain.

Nevertheless, it is not difficult to deduce that people here are highly critical, and that this tendency is a natural consequence of being trained to use one’s mind. Creative ideas are in abundance here; the ability to turn those ideas into reality can be elusive, and the desire to believe in good ideas can go against the grain. Or rather, overcoming a sense of apathy can be difficult. As noted above, providing a true sense of open opportunity, where effort is properly rewarded, could work wonders.

The good news is: a sense of discipline about manifesting ideas into reality and overcoming business challenges can be learned, whereas learning to use one’s mind is a much more difficult challenge. The relatively easier task facing Britain need not be pursued as a slavish mimicking of American ways. Leveraging Britain’s strengths and working on its weaknesses can result in a unique hybrid that could be a model for the world.