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Tue, 29 Nov 2011
Large Businesses Stifle British Innovation

Innovation in Britain is being stifled by an obstructive government and big businesses that are set in their ways.

Without serious action from the country's biggest firms and the public sector, Great Britain risks losing its competitive edge for good.

A group of businesspeople compared the country's prospects for growth to those of emerging markets in Africa and South America as they gathered at a round table event held by hosting firm UKFast. They agreed that the country is suffering at the hands of large corporates that take advantage of the country's inflexible approach to entrepreneurialism.

Steve Walsh, managing director of eZe-Talk - a Cheshire based telecoms firm listed in the Deloitte Technology Fast 500 EMEA - said Britain was on the brink of "losing its badge of innovation" because of the power that large corporates are allowed to wield.

"We also treat SMEs really poorly in this country. They can't get any funding, they are restricted by red tape, business regulations and health and safety, so any start-up will spend a third of the day worrying about what they can and can't do rather than driving the business forward. It's a shame because the ideas are there but there is no support so the huge businesses are allowed to dominate even though it's small businesses that have those great new ideas that could really change the landscape."

Stuart Hogg, director of Thoughtworks said: "We have potentially got too comfortable and lost our attitude to risk. The big telcos and mobile operators in the UK looked at the emerging markets in South America and thought it was too risky. South Africa's largest mobile operator got the business working in South Africa and decided it was no more risky trying to build the same structure elsewhere. They have been hugely successful. It's no coincidence that these areas are experiencing much more growth than in the UK."

Julian Tait - innovations manager at FutureEverything, echoed Hogg's views and described Britain as having an "incumbent infrastructure and a vested interest in keeping that infrastructure".

Chris Dabbs, managing director of Unlimited Potential said the public sector's potential to open up innovation is huge: "The UK Government is an enormous customer. And a lot is dictated by how they contract, how they commission and how they procure. The trend is to create bigger contracts because they're seen as more efficient but that means you can only have a go at winning them if you have £20 million in the bank.

"If they didn't start to design services themselves and instead just publicised the outcomes they wanted and opened it up to a wider pool they would prompt innovation by using their economic power. Potential entrepreneurs who don't have any capital behind them would stand a chance. Let alone what it does with policy, just in terms of what it does with its money, the public sector's potential is great."

Hogg agreed: "The government is looking for big framework agreements and the usual suspects win and they have to recoup their bid costs and the cycle goes on. It perpetuates this tiny number of solution providers who charge top dollar and have no incentive to come up with something agile, nimble and fleet of foot."

However, Paul Harris, marketing director for UKFast suggested that the growing popularity of cloud technology could allow SMEs to compete with their larger counterparts. He said: "Cloud is a technology that levels the playing field and allows SMEs access to a level of computing power and software that they wouldn't normally have access to so they can play with the big boys. Smaller companies are more nimble and they are quicker to adopt things like that."

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