“Speed is of the essence.”
The British public, sick of being trapped in the longest economic downturn for a century and dizzy from the constant euro bickering, is waiting for the Prime Minister or European leaders in Brussels to swoop in, Superman-style, and “fix” the problems. Consider how many times you hear someone say: “What should the Government do?”
Sorry folks, it’s not going to happen. Waiting for our politicians to kick-start growth, to create jobs, to stem the euro rupture is like waiting for Greece to announce that it has paid off its debt. The game is up. Government has been found wanting in its role as leader of our financial assets and of civic society.
Trust the people instead.
Youth unemployment? Eminently solvable. There are 4.8 million small and medium-sized enterprises (SMEs) in the country and one million young people out of work: that means that only 20 per cent of SMEs need to hire one of these young people to fix that “problem”. Can we not come up with an incentive of lower tax or local award or benefit to encourage 20 per cent of the most durable firms in the country to take on a young person? People in their twenties are digital natives and therefore have a natural advantage in business. They instinctively understand the future because of how they engage with the world through their smartphones, social networks and digital games.
These SMEs subsidise big business today. Yes, you read that correctly: SMEs fund the big boys. SMEs are forced to pay on time. Routinely big business will give its suppliers 90 to 120-day payment terms. And it was reported earlier this year that Vodafone and Goldman Sachs did “special deals” with HMRC to reduce their tax. No SME can do that.
They pay tax where they operate; they can’t “arrange” their affairs to lower tax or channel it through another jurisdiction.
Why aren’t UK plcs — which are sitting on £64 billion of excess working capital — being given the incentive to invest in the country’s SMEs? Why aren’t there more innovative partnerships, such as British Gas and AlertMe, Visa and Monitise, or Yell and TrustedPlaces? If the “Goliaths” don’t embrace the “Davids”, they will be run over by them and then slowly drift into insignificance. Just look at what happened to Polaroid, a pioneer of photography, which had two near-death experiences over the past decade because it failed to embrace digital. Or Kodak, the 133-year-old inventor of the hand-held camera, which struggled to keep up with competitors who were quicker to adapt to the digital era, and filed for bankruptcy protection earlier this year. How different things could have been if either company had beaten Facebook to the punch and invited Instagram, a social photo-sharing application with huge momentum, to hop on its back. Instagram was in the same markets as Kodak and Polaroid, and yet there wasn’t any dialogue, much less a partnership. One of the chief assets that large businesses have is their distribution, and yet many don’t leverage that asset for the young digital businesses coming through who need precisely that: reach and scale.
As I argue in my new book, Welcome to Entrepreneur Country, David and Goliath must dance. The establishment and the challengers need each other to catapult new technologies into the heart of existing industry. That is how high-growth business will re-emerge to drive the economic engine.
Society is undergoing a structural change akin to the shift from horses to cars. Entrepreneurs are building the cars, but they need the corporate highways to gain speed. Those who get to the other side first are the winners. Throughout history, those who embrace change reap the benefits.