Digital Economy on the Critical List

Is it all over for the UK Digital Economy?

The UK Digital Economy.
It’s not all over until…Attribution – pirano Bob R (CC License) 

£63 billion in lost revenue and one in five High Street shops closing primarily because UK Business is still not engaging with the Digital Economy.

Despite the appointment of Gurus such as Mary Portas for the High Street and Martha Lane Fox as Digital Champion, the UK Government has consistently failed to show true leadership in the Digital Economic crisis.

The £100,000 Portas Pilot grants given to some of the worse hit High Streets in the UK, was never more than a token gesture and projects have become embroiled in in-fighting over the scraps from the Government’s table. Meanwhile more shops close, jobs are lost and livelihoods are ruined.

It is often said that much of the plight of the UK economy can be improved by better engagement with of use of Digital Technologies. Apps, Social Media, Digital Video and the Web have been cited as ways in which businesses could better engage with customers and find greater efficiencies in themselves. However, according the Martha Lane Fox led think tank Go On UK, £63 billion in revenue is currently hemorrhaging from the UK economy because Digital is still not on the agenda of 14% of businesses. Even for those flirting with digital, projects are often stalled, under-funded and mismanaged because of a lack of understanding about Digital Strategy and Marketing, in the UK’s executive clubs.

The Go On Digital solution is a voluntary programme where digital literate companies help other businesses, for free, to make the transition to the Digital Economy. Ah, anyone remember David Cameron’s Big Society programme and how effective that was?

3 Sheep is a Digital Champion and part of the Go On Digital programme. There is however a fundamental problem with the initiative. It is adding to the massive devaluation of the digital skill set in the UK Economy. Why? Simply because there is a lack of understanding of Digital Skills within the Executive classes of the UK. For a long-time Digital has been ‘sold’ as free or very low cost. This is a myth, it always has been. Sure there are lots of ways of doing things at low fiscal cost to start and that is great but scalability, measurability, applied understanding, that costs. With the current economic crisis and programmes, like Go On Digital though, the myth of free Digital is being expanded and it is destroying the Digital Economy.

Despite this scepticism 3 Sheep remains committed to Go On Digital programme because we know this battle is too valuable not to be fought.

I have met with several executives, who have told me that they do not want to get involved. Digital is a bridge too far for them. Logically they can see it’s value but emotionally it is just too much, they want to wind down to their safe gilded pensions. They know the businesses they guide are at risk but they also know that they have enough stored up to keep them safe until they are off watch and it is someone elses problem. By then of course it will be too late.

A significant part of the problem also lies within the Digital community. Too many are addicted to the start-up lifestyle and happy to meet with peers and discuss the latest gadget rather than growing their businesses. Sadly there also too many charlatans also selling snake oil solutions to unsuspecting naive businesses.

On the edges of the Digital start-up world is also an odious breed of Business Consultant, plying their previous failures as wisdom and grooming the new start-ups into their clutches with poor advice, keeping them locked in a spiral of economic decay.

So what can be done?

  1. We have to realise we are all in this together. Digital is not an enemy of established business, it is simply a tool kit that can be applied to create efficiency, improve marketing and increase sales and revenue.

  2. No more hubs. All over the country hubs and incubators have sprung up to nurture young businesses. The reality is though is that they shelter businesses far too long and prevent them really trading.

  3. Established business needs to understand the need for an effective Digital Strategy. This must be a senior management team responsibility and there must be an proper programme of experimentation, adoption and roll out for new technology that matches (or preferably exceeds) the current pace of change. Executives must also understand that if a return is expected on Digital then an investment must be made.

There is much more can be done but these 3 are a starting point. The UK Digital Economy is broken but it can be fixed and made better. This can’t be done with badly funded and poorly led initiatives. It needs vision, leadership and resources.

Stuart Smith Founder and Chief Shepherd 3 Sheep To find out more about how Digital could help your business, contact us online or call 3 Sheep’s Chief Shepherd, Stuart Smith on 0161 408 6626.

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Digital Economy on the Critical List

9 Responses

  1. You make a passionate argument.
    I believe that the case for using digital in business to automate processes and garner new clients through social media etc is already won in most businesses. There does however remain a reluctance to fully commit to digital because of lack of skills within smaller businesses and of available resources to fully implement the wide ranging changes necessiated by adopting a Digital strategy.
    How does UK PLC make the big break through? Infrastructure spend would help and training intiatives would have their place but it is a big debate that has to be undertaken in all boardrooms.

    Tony Reynolds May 29, 2013 at 8:40 pm #
  2. Thanks for the comments Tony.

    There are a number of businesses that have dabbled with Digital Marketing but as you say few have made the full commitment and therein lies the problem. The solution to which lies in two things:

    1. Investment. If a business wants anything to work it must invest in it. A big reason digital is failing is under investment and that comes from fear of change in many places more so that lack of fiscal resource.
    2. True Executive commitment. Without that any strategy is doomed to fail. Businesses will continue to be ripped off and see their incursions into digital fail until the CEO & FD accept that this is no longer an option but a necessity if they are to remain competitive.

    admin May 29, 2013 at 8:52 pm #
  3. Recognising the Government’s failed Portas PR stunt for what it was, you make some valid points and are clearly passionate about the subject.

    Ask most business owners / CEOs about their mobile strategy and they’ll probably talk to you Vodafone versus O2 or iphone versus blackberry or android. Most know how to play Angry Birds, check for the weather or a train, or watch something on the You Tube app. But few know how to embrace and use mobile apps that deliver real-time information to make better business decisions and thus secure their business future. Educating business leaders about what is already possible and will make you more profitable if you embrace it, is where the investment should go, not in yet more digital hubs.

    And for Mary Portas – it’s no more complicated than businesses actively asking and quickly listening to their customers about what they value when doing business with them – and then doing more of that! Apps have enabled businesses to get closer to their customers than they’ve ever been in modern history.

    lee May 30, 2013 at 9:44 am #
  4. Does it really matter? The debate about the High Street is active here in Macclesfield where Cheshire East Council is trying to foist a completely inappropriate retail scheme on the town.

    Larger retailers – those with a CEO, CFO etc. that do “Digital” well and make the required investment will survive and flourish; those that don’t will disappear – RIP. There is a tremendous opportunity to grow outside of the UK. John Lewis has started selling in Germany and it is exporting that represents the best opportunity for UK retailers.

    The UK High Street needs to be smaller and to be restructured. Bill Grimsey’s “Sold Out” is an interesting read. We have too many retailers. Many treat their customers badly (W H Smug, M&S) and I would be quite happy to see them disappear.

    Some small traders that can find a niche national or global audience can do well by creating an online presence (it can be done at a relatively low cost), others rely on their local reputation and loyal customer base. The local butcher, baker, hairdresser etc. does not need “digital”.

    However, I can sympathise with your frustration. Watching companies like EMI and Waterstones (not gone yet – soon) completely FU due to incompetent management lacking vision makes me want to cry. Any CEO that has not understood how much “digital” they need should be replaced.

    If it is any consolation, Germany (I spend a lot of time there) is well behind the UK in its adoption and their television advertisements are terrible – worse than ours.

    John Lewis May 30, 2013 at 10:29 am #
  5. John, thanks for the comments

    Yes, I’ve heard about Macclesfield’s retail debate. Certainly there does seem to be an attitude in the UK of “This is broken, let’s keep doing it anyway, it will probably fix itself.

    I’ve no major sympathy with businesses that go bust because they fail to change with the times, other than with the employees who are left without work and economic resource, it is not their fault they are so badly led.

    The post war UK retail model has leant heavily towards ‘stack it high, sell it cheap’ rather than a focus on value and now the race to the bottom is coming back to haunt us.

    I would strongly disagree with you on the idea that local traders do not need digital. Quick, example, one of our local hairdressers sends out text message reminders of appointments – result, they have far fewer missed appointments and they also use digital to send out special offers on quiet days. It is not a complex tactic but effective and entirely reliant on digital technology. Also, the web and mobile are becoming discovery points for shoppers who do go into town. Increasingly small traders with no digital presences will not be able to compete with those who do, who are making special offers and connecting with customers in new ways. So with respect I would challenge you to rethink that point.

    Digital can actually be the leveller for retail. The cost of entry is far smaller, with quicker access to results for small businesses than for larger ones, which gives them a chance they have not had before.

    I have to agree though on the point about Digitally illiterate CEOs, they need to gen up or get out.

    Not spent much time in Europe recently but I am aware their Digital in many respects is far behind us – but then compare us to the States or South Korea!

    admin May 30, 2013 at 12:24 pm #
  6. Hi John,

    some interesting comments and I agree with the fact that a lot of business has still failed to fully embrace the digital economy – and those self same businesses are now struggling.

    Blockbuster is a classic example of a company that failed to recognise the change of the times and is now under serious pressure and running to try and catch up.

    However for smaller companies and start ups I would suggest the reluctance to get involved is also down to the fact that there are so many cowboy ‘digital agencies’ out there that simply cannot backup their claims (in fact in many cases have no real idea themselves).

    SEO is a classic example of this – I know of so many companies that have used these 3rd party organisations who have charge a wide range of fees to create and run SEO campaigns, facebook/twitter marketing etc. And in a lot of cases the results have been little to nothing.

    I think a lot of companies also miss the point that they can’t just have a website or mobile app and expect to be able to compete with the big boys – they neglect their local customers rather than use an online presence to boost their existing customer base. The bigger companies are throwing millions into advertising and this makes it hard for smaller competitors to be seen amidst all the noise.

    I also believe that many companies view using ‘the internet’ as having a website and miss the many other opportunities.

    I recently heard of a taxi company near Leeds that asked customers to register their phones with them.
    They then kept customers up to date via text message (i.e. Taxi is outside the pub waiting for you!).
    They also allowed customers to define set locations so that bookings could be made via text – i.e. ‘Taxi from Rain Station to Home’ – the taxi company recognises the number and looked up the customers registered ‘train station’ and ‘home’ locations.

    This I found was a great example of using existing technology to provide something very different!

    Brett Hargreaves May 30, 2013 at 1:30 pm #
  7. John / Brett

    I agree with a lot of the points you both raise.

    As regards Macclesfield – has anyone making the decisions there actually stopped to ask the people of Macclesfield what they want their high street to look like in terms of the mix? The trendy thing is obviously artisan markets wheeled in and out on a temporary basis which is no good for sustainability of independent ‘artisan’ retailers.

    If understood properly by small business owners apps and hence the digital economy actually democratises the playing field for smaller businesses by making them more efficient. Those small businesses using apps will absolutely thrive on mobile apps whether its banking, social media or customer feedback-reward apps.

    While apps democratise the landscape for small and large companies alike, smaller companies tend to be closer to their customers anyway and are at an advantage in understanding what their customers really value and doing more of that?

    lee May 30, 2013 at 7:28 pm #
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