Throughout my business life and particularly when I transitioned from engineering design and development to business leadership and management, productivity has become a well-used word in my vocabulary. In my mid-career years, I was obsessed with it, driven by it and tried to excite others with the opportunities to improve it. It was only when I started to look back on those years, which was a time when I thought I knew it all (!), I now realise what little impact business leaders and government policy makers can have on solving the productivity conundrum.
So what's the conundrum? From the UK's perspective, the puzzle is to understand why the national productivity is lower than many other global players, including Germany, France, US and Italy. Also, within the UK, it is equally puzzling to explain why London and the south east of England are the only two regions in the UK where the productivity is higher than the national average. The danger is that when politicians get there teeth into issues and data like this, which they have done in every government that I can remember, they come up with 'solutions' to the problem, which regrettably subsequently become tomorrow's (bigger!) problems.
The fallacious argument in its simplest form, is that improving regional productivity, outside London and the south east of England, will improve national productivity....conundrum solved!....if only it was that simple!! High profile projects aimed at boosting regional economic growth, like the Northern Powerhouse, are, in my opinion, a political ruse, which may benefit some individuals and companies (notably financial institutions and property developers) but are unlikely to address the productivity problem....if, indeed, it is a problem.
So is regional productivity really a problem or is it merely an issue to keep governments and civil servants busy whilst formulating and enacting policies aimed at improving the wealth of the nation. I have lived and worked in the North West, South West, South East and London regions of England in the UK. Productivity became a part of my parlance in all my business management roles but tended to dominate my thinking after leading a management buy-out of a medium-sized engineering company - part of a category of businesses generically known as SMEs (Small and Medium-sized Enterprises) - in the South West of England. It was (and still is!) a great company in North Devon but was not performing as well as it could or should. Having a financial interest in a company certainly focusses the mind on productivity!
Managing a business in a remote corner of the UK can be a very lonely affair because professional and business networking is more difficult compared with metropolitan environments, particularly those with 'clusters' of synergistic companies, for example the software companies in the Thames Valley and the financial services companies in the City of London. I made the effort to engage with other businesses in the region through different organisations to help the development of the company. This proved to be a delicate balancing act between the tangible benefits that the regional network brought to the business and the negative effect of the diversion of my time away from day-to-day management of the company. One thing that soon became apparent to me was the region did have a distinctive 'culture' that had a strong and direct impact on business strategy. In the words of Peter Drucker: "Culture eats strategy for breakfast." It's almost impossible to change the culture of a company, let alone an entire region!
During my quest for business support, I sampled many of the offerings to SMEs and the purpose of this blog post is not to provide a comparative assessment but rather to focus on what I learnt from experience. Regional industrial strategies, whether or not they are supported by government, will not affect the underlying culture of a region. Many regions, like the South West of England, feel insecure because of their remoteness from London. Many companies, like the one I ran in North Devon, also have a culture of insecurity because they operate as 'islands of enterprise' without the benefits of like-minded neighbours. A hi-tec SME in a provincial market town, draws little or no benefit from being part of a local business community dominated by shops, hairdressers, estate agents, agricultural suppliers and hotels. The downsides are manifested in many ways but particularly in career development. A young engineer working in the SME will soon run out of in-house career advancement options and will be forced to move from the town, and probably from the region, if he or she wants to progress. The same feeling of entrapment would not be felt by an employee of a company in closer proximity to the capital.
So I soon learnt that even government investment does not change regional identity. Regional productivity is just one characteristic of a complex social and business cultural mix, but that doesn't stop governments wading in and creating organisations to administer the investment of public money in regional economic development programmes. The organisations include the former Training & Enterprise Councils, the former Business Links, the former Learning & Skills Councils, the former Regional Development Agencies and the current Local Enterprise Partnerships....to name but a few! The proliferation of "former" is because every time there is a change of government, the previous government's organisations are axed and a new brand comes in, often with the same people.
There are some good committed people working hard and trying to make their regions more productive but in my opinion, in many cases it's like shovelling water uphill because culture, like gravity, is something we have to live with and exploit the positives rather than try to change the unchangeable negatives. The positive side of any social culture is that there are people who genuinely want to make a difference and if they can be helped, rather that hindered, by the support of regional government-funded agencies, they can bring tangible benefits to businesses. I recall two excellent examples of groups spawned in the early years of the new millennium in the South West of England.
The South West Manufacturing Advisory Service (SWMAS) provided specialist support to SMEs particularly through the introduction of lean manufacturing. Despite being severely threatened by the closure of the regional MAS organisations by the current government, it has carried on regardless and continues to offer an excellent service.
Beacon South West brought together companies from a diverse range of industries, and with a proven track record of success, to promote good practice, share ideas and exchange experience. Sadly Beacon South West did not survive the wielding of the axe by the current government.
Although regional productivity was implicit in the raison d'êtra for both SWMAS and Beacon, it was not the driving force per se. The companies they supported were generally looking for 'best practice', which could improve individual company productivity but not necessarily that of the region. Two 'lifestyle' businesses might sit happily alongside each other servicing the needs of a small town but if one suddenly becomes more productive, driving costs and prices down, it could force the other one out of business!
So my message on regional productivity is simple....it's not simple! Regions are not independent, they are interdependent, just like nations are interdependent. Yes Britain does depend on Europe and Europe depends on the rest of the world....despite what the Brexiteers might tell you! Let's accept the fact that productivity is not a sensible guide to the economic 'health' of any region and focus instead on helping businesses to achieve their goals, whilst giving them confidence in the longevity of regional support.
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