This article first appeared on The Entrepreneurship Centre – University of Cambridge Judge Business School, 21 October 2016
Right now on the hour, every hour, eighty new companies come to life in Britain. And, with them, comes a new bet on the future of the nation’s wealth.
Our economy has pivoted, with more and more people wanting to create jobs as entrepreneurs, rather than take jobs as employees. Last year was already a record year that saw 608,110 start-ups come to life. It’s a record that is now set to be easily surpassed once again.
This entrepreneurial health was hard won and is relatively recent news. In 2011, I was one of the founders of StartUp Britain, the national campaign for entrepreneurs, by entrepreneurs. Then, as the immediate impacts of the 2008 financial crash took full effect, business formation was approaching a cliff edge. The campaign set out to contribute to the enterprise culture: encouraging more people to have a go and to see starting a business as an attainable aspiration.
It’s fair to say, when I left university, the brightest talent headed straight to the lobbies of large corporations around the world. But today the battle for talent is more hard won. Research shows that Millennials demand more in the way of purpose from their place of work. By 2025, 75 per cent of the world’s workforce will be Millennials and, I would suggest, it will be those organisations that answer a quest for meaning that will win out.
Why the big cultural change? In a word, agency. Globally aware and socially conscious, for many the answers have come from being more demanding employees or from starting their own business, which gives them the freedom to shape a world that is innovative, creative and full of opportunity to make a difference.
Now the question is how the UK can reap the fruits of its entrepreneurial harvest. Can the nation’s start-up story open a new scale-up chapter? Can enough of these new firms grow?
If the start-up surge has injected new economic dynamism into our economy, the lasting value will come from the firms that hit a growth trajectory. Research shared by Sherry Coutu of the ScaleUp Insitute shows that 40 per cent of US GDP is dependent on companies that did not exist 15 years ago.
In the UK, Nesta coined the phrase, “the vital six per cent” to describe these high achievers. This six per cent create 54 per cent of net new jobs in the UK economy and they are characterised as young, high growth scale-ups.
I am working on a nationwide agenda with Grant Thornton on the conditions necessary to create a vibrant economy. Research from the firm shows that if economic output per UK worker matched the G7 average, the UK economy would see a £479bn boost to GVA by 2025. It has established an independent Vibrant Economy Commission to look at ideas to address it.
The great hope for our economy is that a great deal of that productivity gap can be bridged by the successful seeding of a scale-up culture and that means founders believing that they can do it, and believing that they can continue to break new ground.
At the moment, the figures show an ambition challenge whereby start-ups make up 20 per cent of the business population, yet only three per cent grow to ten employees within three years. Bridging that gap will be an essential part of the next phase of UK growth.
It is particularly important, in the current political context, that our eye stays on the ball. Where the last Government put its shoulder to the wheel of supporting young firms, this administration’s attention will inevitably be monopolised by Brexit and all that comes with it.
Yet while the economic debate is dominated by talk of Article 50, trade negotiation and immigration caps, there cannot be any let-up in the desire to proactively champion Britain’s new and growing businesses as economic champions.
Through StartUp Britain I was able to see at first hand the galvanising effect that the right Government interventions can have. That helped shape a message and a culture around the importance of entrepreneurship that has endured over a number of years.
Now it is time for a new message and a new focus: scale-ups. These are the companies that the UK will need to provide the compass points for post-Brexit prosperity.
They cannot be forgotten in the weeds of trade negotiations; rather they should be front-and-centre of a new optimistic vision for UK growth.
Government has a role to play in leading the way, and so too do business schools in providing the support, advice and access to talent that ambitious companies need to grow.
I have seen first-hand what an essential adrenaline shot business schools can provide, and there is the opportunity to do so much more in bringing them to the heart of the new growth story.
Building on this, Sacha Romanovitch, in a recent column for the Telegraph, made the point that “It is increasingly clear to all that most value is created when we share ideas and resources to deliver progress” and that “only through collaboration can we set about driving a vibrant economy.”
Brexit brings enormous risk and let me be the first to say that I cast my ballot to remain and not go it alone.
But, to quote Bob Dylan, ‘times they are a changin’. And perhaps with this change comes a once in a generation opportunity to reimagine the national economy.
The guiding goal should be to establish the UK as a scale-up nation, and one of the guiding lights on that journey can and should be our business schools.