This is the seventh in a series of blogs on the UK Industrial Strategy Green Paper published recently by the UK Government. In blog #6 we discussed how the UK government can help companies cross the translation gap through a more holistic approach and more rigorous measuring metrics.
The focus of this blog is to discuss a key blind spot of the Green Paper: that is the lack of an integrated green industrial strategy throughout the proposal. This is most clearly articulated by the lack of any questions which explicitly address any aspect of the green agenda, whether that be, energy, specific market spaces or other broader policy initiatives.
Furthermore, the paper appears to view a net-zero industrial strategy entirely through the lens of clean energy production and infrastructure. The reality is that sustainability must be considered across every market-sector to account for the required resource investment and policy focus. This, however, is currently limited by 2 key issues:
- An approach based on technological determinism (as we discussed in blog #4 in relation to the 8 Great Technologies) creating a narrow focus based on ‘fashionable’ technologies.
- The current perceptions of industry sectors (as discussed in blog #3), which do not account for their evolution (and revolution); such as we find in the life-sciences sector where stratified and personalised medicine are leading to dramatic changes in delivery pathways.
The Triple Chasm Model provides a structured basis to address the UK’s ideological stance based on the simple concept of defining ‘offsets’ from a ‘conventional’ approach (which does not explicitly account for any sustainability criteria).
All aspects of the UK’s ideological stance could benefit from greater investment and attention, but there are four key areas we have considerable strengths:
- I1: Technology Development & Contingent Deployment – The UK’s research output is one of the strongest in the world. With multiple world leading universities driving new innovations. However, our failure to appreciate the differences between pervasive, focused or hybrid technologies prevents us from effectively leveraging them in each market sector.
- I2: IP Management – The UK has a strong base in the regulation and management of IP. Demonstrated recently by the coup in hosting the AI Safety Summit last year.
- I5: Human Capital – The UK has a deep talent pool, but it remains underutilised. Encouragingly, the Green Paper has already highlighted the slow adoption of new technologies in the UK. More broadly however, addressing wage stagnation will be key to attracting international talent and retaining what we cultivate at home.
- E1: Market Spaces – It is clear the government is now paying more attention to the importance of cultivating select market spaces; however, it needs to better understand the differences between market spaces, technologies & value chains and how they are evolving.
However, there are five other vectors where the UK has a weaker position, and we should look closely at the efforts made by our international partners & competitors to fill them:
- I3: Product & Service Synthesis – The UK must drastically improve its understanding of the technology stack and how to cross Chasm II. Despite the UK’s strengths in innovation, investment must be made to support companies as they develop a fully-fledged product/service with a workable business model.
- I4: Manufacturing & Deployment – A deeper understanding of key value chains in each market space will allow the UK to far better develop its supply chains and deployment strategies.
- I6: Financial Capital – As discussed in Blog #5, there are many misperceptions that exist around funding in the UK, most critically around Chasm II.
- E2: Proposition Framing – The UK’s strategic positioning could be vastly improved. This will require a more developed understanding of the relationships between regulation & our strategic partners and competitors.
- E4: Distribution, Marketing & Sales – Through understanding our niches in the value chain, we can better identify opportunities for partnerships both domestically and internationally.
Using Triple Chasm Company research, comparable industrial policy initiatives like the IRA, and insights from a panel of experts on economic development, we can assess the UK's current ideological stance and suggest strategic priorities to strengthen the UK economy. The approach emphasizes integrating the green agenda - anchored by all 17 UN Sustainable Development Goals - into a broader framework for economic development. By addressing the gap with a more investment-friendly approach, the UK can ensure sustainable growth. Importantly, by accounting for all 12 vectors and their key components, this approach avoids overemphasizing funding and technology development at the expense of other critical factors necessary for progress.
Present and Proposed new Ideological Stance for the UK
Moving away from these limitations will facilitate the development of a fully integrated green strategy. Labour’s focus on ‘Securonomics’ and the sustainable growth agenda show that some thought has already been given to developing an integrated framework that will be channelled through every department, but considering these separately will lead to clashes in priorities down the line. Looking to our neighbours’ own initiatives like the USA’s Inflation Reduction Act or the EU’s Green Deal will provide valuable lessons in how we understand the trade-offs between Profits, People and Planet.
To understand how best to develop this initiative we need to understand the UK’s current overall positioning. To incorporate this, the Triple Chasm Model evaluates an ideological stance at the national level, based on aggregating our position across all 8 market spaces described in Blog #3. Every economy is built with a set of ingrained biases limiting how it can be reorganised and focused. Through understanding this can we counteract inherent weaknesses. The free-market reforms under Deng Xiaoping countered the limitations of the state-led development of the CCP and the IRA’s efforts to reign-in price gouging in the pharmaceutical industry & heavy state investment contrast heavily with much of the over-emphasis on venture capital and aversion to state intervention found in Silicon Valley. The UK can do something similar.
Key takeaway from this Blog
Sustainability should play a far larger role across UK industrial strategy than the current conception. Focusing solely on the Energy sector to deliver our targets will result in significant lost opportunities as we try to meet our targets. To address this an integrated approach must be developed, drawing lessons from similar initiatives around the world and identifying what gaps the UK must fill.