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July 28, 2005
Why doesn't tech business succeed in Britain?
Tom Coates at the Plastic Bag has an article entitled “Where are all the UK start-ups?” about the lack of technological innovation and entrepreneurship in Britain. He is writing from London, but his observations are significant for Scotland as well:
“[Britain] has 50% take-up of broadband, some huge telecommunications companies and thousands of people working on and around the internet. But still our industry seems dominated by a few moribund and clumsy giants leading a culture that’s inarticulate, unadventurous and profoundly constrained.”
” … is it a lack of money or a poverty of ambition? The UK has some of the world’s best and most creative film directors - but they don’t make films in the UK, they make adverts… . The same seems true online. The web industry over here is dominated by advertising and marketing because London is dominated by advertising and marketing.”
“what is it that stops us making great things, starting start-ups and building for money? I contend that in part it’s shame… . The businessman and the creative technologist seem to be forced into two camps so repulsed by one another (betrayed by dot.com?) that they just circle at a distance, each almost refusing to admit the other exists.”
“What is it about this place that there is so little energy … are we so hamstrung by geography or history or culture that we cannot innovate, build and then commercialise?
There have been a lot of interesting responses on the Plastic Bag as well as an entry by Ryan Carson of ‘By Designers For Designers’ (BD4D):
“The largest hurdle in the UK for entrepreneurs … is the British class system. … The castes are still very defined in this fine country. Anyone who wants to leave their 9-to-5 and launch out on their own will receive an unbelievable amount of flack from everyone, from their family, to the bank. It’s almost as if everyone … here seems to think “Isn’t your job good enough for you? Why do you need to rise above your station in life?”
I agree with Carson/BD4D that the class system is partly to blame. Tech has been seen as white coat /lower middle class, ancillary rather than a core activity. It hasn’t been a proper concern of those in powerful positions. This is still evident from the perverse pride that many political and business leaders, and indeed employees of large organizations generally, have in their lack of modern communication skills. The London attitude is “Oh, that’s done by our IT man. He’ll be in on Wednesday.” whereas in Tokyo it would be “I’ll ask my colleagues and we’ll get back to you this afternoon”.
However there’s another aspect to this that nobody has raised so far. Following from the industrial revolution and for most of the last century, Britain was still seen as a ‘hardware nation’. Looking back to the 1970s, we can see Britain as ideally placed - because of the universality of the English language, the sophistication of the arts, the huge publishing industry in London etc. - to be a leading ‘software nation’. However it never happened, instead the country followed its destiny - of being a failed hardware producer.
Perhaps it is too late to reverse this now. The government have told everybody that we have a successful economy and a hard working labour force etc., so few people are motivated to find out about alternative styles of economic behaviour based on practices in other countries (involving higher productivity etc.).
The bottom line here is surely that Britain, or more properly England, is conservative. All the more reason for Scotland to look to Scandanavian, Irish, Dutch etc. models rather than continuing to drag along as a poor performing section of the UK economy!
www.plasticbag.org/archives/2005/07/wherearealltheuk_startups.shtml
www.bd4d.com/blog/2005/07/26/how-to-build-a-successful-web-startup-in-the-uk-part-i/
Posted by Simon Holledge at July 28, 2005 07:50 PM
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Comments
Interesting point, Simon.
I agree - there's no point in lamenting the fact too long. It's better to just get on with doing what you need to do!
Posted by: Ryan Carson at July 29, 2005 10:03 AM
Taxation, of course. The left wing agenda implicit in "oh, its the class system of course" does not hold up considering this country has historically had no problem with finding venture capital and throwing it at working class techie geniuses. Just look at the 19th century, a much more class-ridden era than our own. It pretty much destroys the class argument.
It is just because Britain has such enormous taxation and regulation. I certainly would not consider starting a business in Scotland. If I were so inclined, I'd hop on the next flight to a low tax regime and do it there. If I did do it here, I'd just be attacked by swathes of people with big chips on their shoulder and taxed and regulated into oblivion. Taxed and regulated into uncompetitiveness (lots of businesses, techncial and otherwise, are started in scotland and the UK. But few survive for long against global competition from much more free countries than our own).
Posted by: bc at July 29, 2005 07:47 PM
Thanks for your comments 'bc'.
Tax and the other factors relating to business performance and profitability are obviously significant, but what we are trying to do here is dig a bit deeper and look at why certain types of business are unsuccessful when the general business climate is not unfavorable.
I wonder if you have ever lived abroad? I think that might give you a different perspective on the class system in Britain and how it affects economic behaviour.
Britain (Scotland AND England) would certainly be a difficult place to start a tech business, something that almost everybody in this discussion has recognized, but it's not just because of tax. There are a lot of other factors.
After living half my life in East Asia, it is clear to me that people don't work so hard here, life is slower and there is less communication. There is a defensive mind-set. People look to protect their jobs/property etc. whereas in East Asia they are more positive, outward-going and ambitious, and more willing to take risks.
Posted by: Simon Holledge at July 31, 2005 01:45 AM
No I'm sorry, but BC is right.
Remember that 53% of our (Scottish) economy is in the public sector. This has a terrible, corrosive effect on peoples's attitude to real wealth-creating business. Why put yourself out and take all those risks, when a cushy job with the cooncil can be yours for life, with a guaranteed final-salary pension (paid for by other people) to look forward to at retirement - a retirement which will probably arrive when you're just over 50?
Why indeed. It's a pretty simple motivational equation.
This factor, plus high taxation/regulation, and the "Ah kent his faither" attitude, which regards all success except lotteries and football with hostile suspicion, goes most of the way to explain Scotland's anti-business culture.
Posted by: Andrew Duffin at August 11, 2005 02:01 PM
Welcome Andrew and no apologies necessary!
I don't deny the truth of your comments or bc's, however it would be helpful to distinguish between symptoms of the disease and its underlying causes. The things you mention are really symptoms in my view.
Posted by: Simon Holledge at August 11, 2005 03:34 PM