21 March 2019
Thank you very much, Gordon. What a great start to the conference that was – it’s such a pleasure for me to be here with the Advanced family of partners and customers. We at the CBI are hugely proud of our own partnership with Advanced. We have come to know you well over the past three years as an organisation that stands for remarkable values, exceptional performance, and of course, great innovation. Thank you for inviting me to join you here today.
And what better place to be talking about the combination of innovation and business than here, in Birmingham. The home of the industrial steam engine, the modern chemical industry, and even the windscreen wiper. And even the very site we’re on today, before it became the ICC, was home to an innovation of its own. The first ever recording of a political speech – on an early gramophone. The speech lasted 2 hours. You’ll be pleased that mine will be a little shorter.
And I mention these early innovations for a reason. Because today – in the 21st century – we, too, are surrounded by great innovations. As Gordon mentioned – everything from blockchain, to the Internet of Things, to machine learning. Each presents their own set of opportunities. But we also face our fair share of challenges. Yes, there’s Brexit, but that’s not the biggest. There are the much broader changes. Globalisation, climate change, concerns over inequality in many parts of the world, and – more generally – uncertainty about the economy and what it means for business.
So this morning, I’d like to make a simple case. And one that I’m sure many of you in this room are already making in your own firms. It’s that innovation – the act of being bold, willing to disrupt, to take a chance on a new idea – will be how we overcome many of these challenges and turn them into opportunities.
In particular, I’d like to talk about 3 things we need to get right. First, harnessing the potential of existing technologies. Second, redefining potential itself – through the creation of new technologies. And third, I want to talk about leadership, perhaps the most important subject of all.
10 days to Brexit
But before I get to that, I’m afraid I must briefly talk about Brexit. We’re 10 days away from leaving the European Union. As we speak, this is still written into the law of the land. Our position as a business community is clear. We urgently need certainty. No-deal is not a good outcome, not at the end of March, not at the end of June either. It’s an economic wrecking ball, just at a time when we need it least.
So as the CBI, where we represent nearly 200,000 businesses across the UK, we will be continuing to urge politicians to put country above party. Either agree the Prime Minister’s deal or come together and find something they do agree on.
And get through this storm – because there is so much to be positive about. These can be golden years for the UK. And at the B20 in Tokyo last week, where global business meets ahead of the G20 summit this June, I said exactly that. Last year the UK had record exports, record employment levels, four British universities have just been named in the top ten globally, we have rising participation of women in the workforce, and according to a survey of young people by Barclays, 82% want to start their own companies. How fantastic is that. So just imagine what the UK will achieve when Brexit uncertainty is resolved.
Starting from a good place
And if I may say so, it is your sector that is going to be one of the most important to the UK’s future. You embody the idea of innovation. Take our hosts today. Advanced’s pioneering work has long been making a real difference to people’s lives. In healthcare, for example. Where its technology is allowing the NHS to cut delays, helping ensure people get the medical care they need as quickly as possible. And we’re delighted that Jon Wrennall at Advanced sits on the CBI’s own Innovation Council – bringing the experience you have at a company level to the wider UK landscape.
The past decade has seen UK businesses breaking new ground in areas from renewable energy, to stem cell research, to IT systems controlled by voice, face, and gesture. And if we are to create a true step-change for our economy, and our productivity, the innovation we choose to do in this moment will be crucial.
So last year, the CBI surveyed hundreds of business leaders and industry experts about innovation. And we published a landmark report. We called it ‘From Ostrich to Magpie’ – for reasons I will explain. And it contained two recommendations that I want to touch on today.
Adopting existing technologies
First, the UK needs to become a faster adopter of existing technology. We are just too slow. In our work we found there are two broad types of firm. First, those reluctant to take up what’s on offer. They are, if you like, the ostriches, with heads in sand. And there are firms who are more like magpies. They might not have huge research budgets or labs of their own. But they are quick to pick up proven ideas. Anything from cloud computing to automated machinery. My guess is that we have room mostly full of magpies here today – that’s why you are here. But we don’t have enough. Overall, UK firms are slower at adopting existing tried and trusted technologies than other countries. And I really am talking about the basics: Customer Relationship Management, Enterprise Resource Planning software, or even just having a website. It’s low risk, low cost, but actually a big idea. We believe raising basic tech take-up is one missing link in the UK’s productivity challenge. Get it right, and we could add £100bn to the UK economy. Do get in touch if you’d like to know more.
Discovering new technologies
But at the same time, we need to up our game in ground-breaking new technology. My visit to Asia last week reminded how tough global competition is. The UK has a great track record here – universities and businesses that pioneer, dream, discover, invent. Benjamin Franklin once said that ‘an investment in knowledge pays the best interest’. And he’s right. Again there is an opportunity for the UK, right now, in this crucial moment for our economy. At the CBI, we have long campaigned to raise core R&D investment in the UK, which is currently well below the G7 average. And it will take a strong partnership – between business and government – to catch up.
One example is how the UK ensures it is a winner in the new global car industry, currently going through its biggest upheaval in a century. Electrification, driverless, carbon free. Some recent announcements are painful for the UK. Like the announced closure of Honda’s Swindon plant. There may be a Brexit dimension, but the global forces are even bigger. So the question we need to ask is – what is Britain’s role in this new global automotive supply chain? In our view, the UK has a huge opportunity to excel in the high valued added, high tech end of this reshaped industry – batteries, AI, use of data, renewable technology – bringing thousands of great jobs to the UK.
But this will only happen if we invest in the R&D, a partnership between business and government. It is a fantastic opportunity, and we need to grab it with both hands – including in the upcoming spending review.
But let me end with an even bigger call to action. And step beyond the tech world into the broader picture. I want to end by talking about leadership.
We are in an age that feels, in the words from the opening of Dickens’ Tale of Two cities, like ‘the best of times and the worst of times’. We are on the threshold of technology advances that could change millions of lives for the better. Poverty is falling in almost all parts of the world. But we are also living in an age of uncertainty, anger and fear. Concerns over rising inequality and injustice. Rising protectionism and tariff wars. Fears about the impact of technology on jobs. As one person put it to me – in vivid terms – it’s the Terminator problem. People’s fear of the unknown turning against them, the future intruding into today, harming their present. This is a time for leadership – yes from our politicians, but also – and perhaps even more crucially - from our businesses. This is what unites, this is what overcomes fear.
And the role of business leadership has never been more important. Edelman’s trust survey this year contains two vital findings. First, in a world of declining trust, including governments and media, the strongest relationship of all, the one that is most trusted and showing rising trust, is between employer and their employees. We should be proud of this, and use it to engage, include, inspire and bring confidence to the people who work in our firms. And in the UK, that is a staggering 27 million people.
And the second finding is that people want business to take a leadership role in the biggest issues of our day – and this view is on the rise. And so we should. If I had to pick the top 3 issues, they would be these.
First, tackling the sense of unfairness that pervades our society. Business has a vital role reaching communities that feel shut out, and offering training, employment, opportunity. We must get involved in schools, where so many of our problems begin. If a young person has 4 or more meaningful encounters with business, they are 80% less likely to be unemployed. We must also do more to create inclusive and diverse workplaces – on all dimensions that make us different as people, from gender and ethnicity to social background and sexuality. And it’s great to see such a diverse audience here today.
Second, business can and must address the sense of fear and real harm from the next technology transition. Most estimates say that between 10 and 30% of jobs will be affected by automation. But that’s beginning to look like a wild underestimate. Last month, the CEO of IBM, Ginni Rometty, said that it won’t be 10 or 30%. But 100%. Every job will be – is being – affected by automation in one way or another. And the solution will take the partnership of the century – between business and government – working with Philip Hammond and the TUC on the National Retraining Partnership. But we can take the lead ourselves too. Training our people, helping prepare them for the jobs of tomorrow. And we must also as business respond to the real concerns around social harm of new technology. Welcoming the right kind of evidence-based regulation – but at the same time telling the great stories of the good technology can bring, so in evidence here today.
And finally, climate change. The UK has a great story to tell: carbon emissions in the UK have been cut by 60% since 1990 through shared government and business action. But there is now so much more to do. And we can start with making common cause with businesses and governments around the world – and work to meet the terms of the Paris Agreement.
I’d like to finish if I may with a few words from one of the greatest political innovators of all time – Benjamin Disraeli. He said: ‘we are not creatures of circumstance – we are creators of circumstance’. And nowhere is this truer than in this present era of uncertainty. Businesses are creators – able not only to adopt the best innovations we know of – but also to discover the ones not yet imagined.
And right now, we as a business community have an extraordinary opportunity, I would even say responsibility, to show leadership in solving the biggest challenges of our day. People believe in us to do it. Now all it takes is for us to believe in ourselves. We can change the world.
Thank you and I hope you enjoy the rest of the conference.