Category Archives: industrial strategy

10 things I learnt at Oxford Energy Day on ‘Growing Economies’

Last week I was at the annual Oxford Energy Day, which focused on Energy in Growing Economies. Here are ten things I learnt (any errors are mine!).

  1. ’Growing economies’: new name for ‘emerging economies’
  2. Bilions lack access to affordable energy, and that hurts their lives
  3. Decarbonised, Decentralised and Digitalised will make for Democratised energy systems – which we’re not ready for.
  4. Energy is not just electricity, and best to focus on final energy use, not primary production
  5. China assumes it will decouple economic growth from environmental impact
  6. India: a new emphasis on markets and clean energy
  7. Africa: big projects face challenges; distributed more viable; charcoal as quick win
  8. Energy access: from a development problem of basic services to an untapped market opportunity of commercial users
  9. Reaching the ‘under-serviced’ will be highly context specific, and that’s a two-way challenge.
  10. What to do: systemic view crafted for local action, aware of incumbency power.

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QUICK TAKE @IPPR #EconomicJustice launch: great content; worry about impact

Earlier today IPPR launched the interim report of the Commission for Economic Justice. Here’s my quick take on the report and the discussion around the launch.

The basic description of the ‘British economic muddle’ is familiar

While there are no surprises, IPPR and Michael Jacobs have all done us a favour by articulating things so clearly. In a nutshell:

– The economy is no longer raising living standards for a majority of people.

– That poor performance arises from deep, long-term weaknesses, especially:

  • World-lagging productivity in many businesses.
  • Low investment rate compared to peers, even adjusting for our service bias and even with as a world-leading financial sector.
  • Largest percentage current account trade deficit in G7, despite a surplus in trading services.
  • Current activity fuelled by growing consumer debt, in part driven by government refusing to borrow even though interest rates are at all-time lows.
  • We want public services but we’re not willing to pay for them.

– We face profound challenges and opportunities:

  • Brexit – a momentous change in our governance and trading.
  • Globalisation – challenge those trade imbalances.
  • Older population – proportionately fewer workers to finance pensions and healthcare.
  • Technological change – will the gains from automation go to owners, to consumers, to workers?
  • Environmental degradation – including the impacts of climate change.

All of this is supported by many graphs and much discussion. Fantastic.

My further sense from the discussion was just how strong the system archetype of ‘success to the successful’ is in the UK. If you own your home (as I do) then your wealth has gone up, and the ladder to join in has been pulled away from the rest. If you’re a productive business then you get the profits to reinvest further – something the weaker companies don’t do. London enjoys the positive feedback loops of being a world-leader, as does Cambridge and Oxford. Rest of the country? Not so much. Well paid or got a cushion of wealth? Then you can take risks with your career by moving or starting your own business. Don’t have that, then you, relatively, fall further back.

 

Recommendations: too technocratic to be a policy sea change akin to 1940s and 1980s

The report is right that fundamental reforms of this scale have happened twice in the last century: the Attlee government bringing in the Welfare State in 1945; and the Thatcher government overcoming stagflation by pushing free markets and so on.

Both of those were political earthquakes which profoundly realigned what was considered orthodox for the following generation. The recommendations, as they stand, are all good technocratic things to do. But, do they ignite and demonstrate an utter shift in the political economy?

  1. Put economy on stronger institutional foundations, driving more investment through greater certainty.
  2. More competitive through industrial strategy, supporting entrepreneurs and shifting financial and corporate governance.
  3. Wiring the economy for justice, promoting ‘good jobs’, a reformed tax system and spreading wealth more fairly.

Imagine the chant:

“What do we want?”
“Stronger institutions!”
“What do we want?”
“A strategic approach to industry!”
“What do we want?”
“Justice for All (the weaker of the early Metallic albums)!”

Perhaps I’m being unfair on an interim report for a think tank, rather than the conference speech of the opposition leader. But if your lead-off recommendation is stronger institutions, you know you have an economist writing your report.

IPPR’s Director was very clear at the start that, if you don’t have a vision then change becomes directionless. One the first page of the summary there is a paragraph with a description of the economy we’re aiming for: dynamic, people flourish; better jobs; geographically balanced; economics rewards distributed fairly; decent house; within environmental limits; partnership between business, trade union and government sectors.

That’s quite a laundry list of Guardian-friendly desires. Who can say no to motherhood and apple pie? But also, who is compelled to act with a broad vision with such a technocratic way forward?

 

What alignment of social forces is realistically available to make this happen?

Which takes us to the substantive problem. I agree with the analysis. I imagine I will agree with the final recommendations. But, what will happen as a result?

I’ve no idea if Director of the Commission, Michael Jacobs, remembers but about a decade ago he gave a talk at the RSA on what made the reform of the 1940s possible (he was speaking about the need for something similar on climate change). His four preconditions:

  1. intellectual case (back then, Keynes)
  2. crisis (the aftermath of the WWII)
  3. public mandate (the Labour landslide)
  4. elite buy-in (apparently businesses liked the demand support of the Welfare State compared to the free market Great Depression)

Today, the IPPR report (and the work of the Resolution Foundation, plus Tim Jackson’s Prosperity Without Growth  and Kate Raworth’s Doughnut Economics) all make for the intellectual case. in the UK, Brexit will upend everything. That provides us with the crisis to take advantage of.

But the public mandate: Is the UK populace for economic justice, or do they want cultural security? It was striking that the two politicians on the stage couldn’t bring themselves to be pro-immigration. Even though more young workers makes us better off, many fear immigration. They blame it for lower wages and weaker public services (rather than, say, global labour markets for the former and austerity for the latter).

The opinion polls imply people are willing to take a financial hit to take back control of the borders. One thing is: we’ll see if that’s true when people take the hit (there’s often a survey gap in, say, willingness to pay extra for ethical products). Another thing: perhaps this is good news. It means n one can argue that economic cost-benefit is the true measure of a decision.

And on elite buy-in: are leading government and business figures One Nation Tories or do they wanting to complete Thatcher’s revolution? The General Election undermined the One Nation Tories on domestic economic policy. Many of the leading Brexiteers seem to want to use leaving the EU to deregulate and open up for more free trade. (The irony is that this reduces people’s control and will quite likely leave many people even further behind. But hey.)

Also, while there are many business people who are for economic regeneration and so on, how many are willing to voluntarily raise wages? Or give up the negotiating advantage of zero hours contracts? The rhetoric is strong but the business case – and evidence of business action – is weak.

Final thoughts

So, great content, worry about the theory of change. That worry is something I have with all sustainability and progressive activity – including my own. So, I’m far from having got all that solved. And I’d love to bring my insights on industrial strategy in, and to see if there are ways to move forward without relying on government buy-in.

Could some citizen activity or people-power initiatives start us off. So that, come the next election or the one after that, the social forces are aligned?

Let’s hope. And let’s hope by making that happen.

 

 

 

DRAFT CHAPTER: A path to sustainable 2050: positioned to thrive, and unprepared to struggle (a work-in-progress)

Below is the current draft of a chapter for Fast Future’s ’50:50 – Scenarios for the Next 50 Years’. They’ve given me permission to test my thinking so far. I’d love your thoughts – positive or negative – and connections to other, better thinking.

It is an attempt to imagine the world in 2050 as if what we do now matters. The speculative vision below will be wrong, but hopefully it will be useful. It is one path I can imagine to a sustainable footing. I don’t like all of it, and I don’t necessarily think it’s the most likely future. There’s so much more I’d like to add (links to culture or knowledge production, for instance) – but I’m already twice the word count! It applies some of the analysis from my work on industrial strategy, which you can watch here or see a rough cut here.

Please do let me know what reactions, comments below or via email!

Introduction

Here in 2050 we ask: given how uncertain the world looked in 2020, how is it that most people are thriving? How did we deliberately and rapidly reduce our impacts on the Earth so nature to thrive? (Gaffney and Steffen, 2017) And, how did that lead to us becoming a two-speed world?

The short answer: back in the 2020s one group of countries tried ‘good growth’ as an open and future-facing strategy – and were able to renew as crises happened. These countries are now the Primary World, where people are thriving in ways that work in synergy with nature. Another group wanted security by preserving the past – and, when the crises came, weren’t able to adapt. This Secondary World is not in sync with nature, but at a much reduced pace and scale that nature can cope with.

Now for the long answer.

  • Late 2010s: Many eras ending
  • Early 2020s: ‘Good Growth’ vs ‘Security For Us’
  • Late 2020s: ‘Renew For Climate Safety’ vs ‘Protect What We Have’
  • 2050: the thriving Primary World and the struggling Secondary World

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Rough cut: Qs for pro-sustainability industrial strategy and innovation policy

Earlier today I gave a short talk and Q&A on ‘Pro-sustainability industrial strategy and innovation policy’ at Transformations 2017, a leading academic conference on the transition to a sustainable future.

Now, I wish I could share all my thinking to date. But it’s just too rough to share. So, here is the top level thinking: the questions I think any decision-making should ask themselves when they are formulating an industrial strategy or innovation policy for a sustainable world.

Slide1

The idea is a decision-maker in any organisation (government, city, big business, foundation and so on) in any context can ask themselves these question to provide a bespoke approach to industrial strategy / innovation for a sustainable world that fits with their situation.

Basically, answering these questions will help you come up with your way of driving the economic component of the profound changes we need for a just and sustainable world. Well, that’s the idea.

Looking at Industrial Strategy and Innovation Policy has become a vechile for me to organise all my experiences and insights on economic transformation into one place. This explains why my more detailed version is too rough to share at the moment: there’s lots of are tools and other supports underneath each question! But this gives you a flavour, and the people who saw me speak at the conference now have the questions (as promised).

One thing that came up in the conference is about how linear this looks, while we know that transformation is not. Well, this is a deliberate design choice. This summary gives a clean and clear 4-step process to make it easy for a person to use. The tools for answering the questions bring in more complexity (using, for instance Embracing Complexity and Three Horizons) and other thinking. It is designed to be used in a linear way, at first, in order to open up the deeper transformations.

Here are the questions laid out:

A. Understanding the pre-conditions
1. What is your purpose and what are your beliefs on how an economy changes?
2. What is the political context you are operating in?
3. What approach and principles for formulating and implementing fits with your situation?

B. Understanding the context, global and specific
4. What does ‘a sustainable world’ mean here?
5. What are global trends do you need to consider?
6. What is your starting situation, and existing vision?
7. How can you use the formulation itself to make the policy successful (including obtaining long-term mandate)?

C. Formulating policies/strategies in priority areas
8. MISSIONS: which innovation missions should you set, and how will you run each?
9. HORIZONTALS: how will you craft the cross-cutting conditions that stimulate the appropriate investment and innovation?
10. VERTICALS: what direction(s) are viable for each major sector, and how support appropriately?
11. GEOGRAPHIES: How enhance specific clusters and enable resilience everywhere?

D. Implementing
12. How implement each part of the strategy with the required guiding principles (e.g. accountability)?
13. How can you keep adjusting to and replenishing the political mandate?
14. How can you evaluate, using that for improving and accountability?

Over the coming weeks I’ll be pulling this into a toolkit and testing it. Also, I’ll be explaining more about where each part comes from in depth. In the meantime, watch this for more detail.

The full slides I used are here (only 4 slides – more detail soon I promise!).

If you have any thoughts, comments (positive or negative) do put them below or get in touch.

 

 

Video: Industrial Strategy for a Sustainable World (April 2017)

Back in April I did a two hour session for London Futurists, a group for people who are interested in the future and maybe want to help shape it.  David Wood, the smartphone entrepreneur who runs the group, asked me to run a session.

For me it was a chance to try out my latest thoughts on industrial strategy for a sustainable world. I speak for about an hour, and then there’s another hour of questions.

In a nutshell, the talk gives a wireframe which I believe you can use to organise all of the economic elements of the transition to a sustainable world. You can look at the slides here.

Doubtless the talk is wrong about lots of stuff – my aim was to be wrong in useful ways!

I’ve had lots of feedback from the people at the talk, and others to whom I’ve given (shorter) versions. I’d love your thoughts too. Please comment below or get in touch in the normal way.

It’s clearly a work-in-progress but so far people have been finding it useful, especially to see how their work is a contribution to the wider change.

Even so, I know it is far from the finished article. I’ve had thoughts since on where to improve and where to pivot. These will have to wait for another post! In the meantime, enjoy the talk and thank you again to David Wood for giving me the chance.

 

Help please! Pro-sustainability industrial strategy

The world needs to shift to a sustainable footing, and I think industrial strategy is one of the levers to pull. I need your help to run a series of events, publish a paper and make some recommendations to the Green Party of Aotearoa New Zealand. What are the key design questions in formualting an industrial strategy for a sustainable society? What are the current best answers, in practice and in theory? Who knows about them, and how to engage them? What am I missing?

Below I give:
A. Background on why I’m looking at this topic
B. What I am doing
C. A draft framework to populate
D. How you can help

A. Background
A year ago, as I started my sabbatical, I started thinking about what a pro-sustainability innovation strategy would look like. It struck me then that it was a relatively unexplored lever for the shift to a sustainable footing. The reason was obvious: we’d spent decades convincing ourselves that businesses do innovation, and the best role for government was to get out of the way. A friend, James Shaw, asked me to pull something together for the Green Party of Aotearoa New Zealand. He is co-leader and wants to have an economic policy which brings included an innovation policy for sustainability.

I did a bunch of reading, had first thoughts on diagnosis, direction and design of an industrial strategy. As I went further, I realised that writing an innovation policy means working through lots of other stuff: what sort of society are you trying to generate, how do you think the world works and so how do you try to shift it. My sabbatical went down into these, taking time from the specifics of industrial strategy. I went back to Forum, and my time and headspace was taken up.

But now I’ve left Forum and have the time and headspace to come back to it. In the meantime a rather surprising thing happened: the UK voted to leave the EU, and a new Prime Minister created a new department which has ‘industrial strategy’ in the title.

Whatever direction the UK government’s industrial strategy goes, the fact they will have one is a signal of change – one which I want to amplify. For one thing I need to fulfil my promise to James. For another, working through what makes a pro-sustainability industrial strategy will force me to connect my head-in-the-clouds ideas to feet-on-the-ground substance. There’s a chance to contribute to real change happening around the world.

But what do I mean by pro-sustainability industrial strategy? Well, its easy to get in a tangle, with this OECD publication spending 4 pages comparing and contrasting. For now, I’m going to tweak the one they get to in two ways. First, I’m not just thinking of governments, but also cities, companies, civil society organisations and more. Second, I’m making the sustainability component explicit. So, here’s my working definition:

Any type of intervention or policy that attempts to improve the business environment or to alter the structure of economic activity toward sectors, technologies or tasks that are expected to offer better prospects for economic growth or societal welfare than would occur in the absence of such intervention which contributes to putting the world on a sustainable footing.

B. What I’m doing
Obviously, I’m a generalist and there are many people who have been thinking and acting in this area for a while. The part I can play is bringing lots of great stuff together, and making it useable for James and others (without having to get paid – I’m a free resource on this!). I’m doing this as an Associate Fellow of the Centre for Science and Policy (CSaP) in Cambridge – which means I can access that network of academics and policy people.

What I’m planning to do:

  1. Have a draft framework of overarching design questions for formulating a pro-sustainability industrial  strategy and innovation policy. (DONE – see section C. below).
  2. Test and populate that framework (now-April):
    • Interviews with key thinkers and practitioners
    • Desk research
    • Events where people can give their answers to ‘What are the key design questions in formulating a pro-sustainability industrial strategy?’. CSaP has already agreed to run some for their practitioner network in London. I’m exploring having other events with other bodies to reach out to different stakeholders.
    • If I get time, figure out the technology, and if there is demand, I will try to have an electronic way people can populate the framework, wiki-like.
  3. Apply the resulting populated framework to diferent contexts, at least New Zealand but I hope others too (April-May).
  4.  Publish a paper for CSaP on the key design questions in formulating a pro-sustainability industrial strategy (May).
  5. Provide recommendations to James on New Zealand (May).

Simples! Well, not quite. I’d love your help  on who to interview, what to read, whether the framework is robust, what should populate it and who else might want to run an event populating or applying the framework (more specific requests in section D. below).

Also, more fundamentally, there are a bunch of leap-of-faith hypotheses (an idea taken from Eric Ries’ Lean Start Up – review forthcoming):

  • Governments have realized they need an industrial strategy.
  • They are willing to tilt that industrial strategy to sustainable outcomes.
  • There are forms of industrial strategy and innovation policy which can deliver on sustainability goals.
  • There is existing best practice and best thinking to draw together.
  • The people with that best practice or thinking are willing and able to share those with others.
  • It is possible to come up with New Zealand recommendations in London.
  • It is possible to write a generic tool which allows people to locate themselves in their ecosystem, and so come up with context-specific recommendations. And that a framework of ‘key design questions’ can fulfil that need.
  • Looking further ahead, to diffusion, there is a next wave of adoptees, in New Zealand or elsewhere, who would be willing to apply a framework.
  • There are institutions, places and events where the next wave of adoptees  come together to share latest best practice.
  • It is possible to bring the findings to these places.
  • I have the competence, connections and time to bring this all together.

As per Lean Start-up, I will be testing these hypothese as I go. I’ll also have regular ‘Perserve or Pivot?’ moments, to give myself licence to do better things, not just do things better.

C. A draft framework to populate
Below is my first stab at the overarching framework that needs to be populated. I’m seeing it as big questions (e.g. what does sustainability mean in this context?) underneath which there will be a number of sub questions (e.g. which of the Sustainable Development Goals are most applicable?).

Screenshot 2017-01-11 11.50.32.png

D. How you can help
As I say, I see myself as a generalist pulling things together. If it’s already been done – wonderful! I can get on with something else! Please point me in that direction. If it hasn’t been done, then I need help on content and process.

Content

  • For you, what are the key design questions in formualting an industrial strategy for a sustainable society?
  • What are the current best answers, in practice and in theory?
  • How can I improve the framework to populate?

Process

  • Who should I interview?
  • What should I read?
  • Who else might want to run an event populating or applying the framework?
  • How can I test and improve my leap-of-hypotheses?
  • How might I need tp pivot, to do better things not just do things better?

If you thoughts on these, or anything else, just stick them in the comments or contact me via twitter, email or other channels.

Thank you in advance!