The UK is in the midst of a productivity crisis. According to data released in July from the Office for National Statistics (ONS), productivity fell by 0.4 per cent from the final quarter of last year. The manufacturing sector in particular suffered, seeing a decline of 1.7 per cent from the fourth quarter of 2017. In a recent speech, Dave Ramsden, Deputy Governor for Markets and Banking at the Bank of England, acknowledged that ‘the weakness in total factor productivity growth has been concentrated in manufacturing’.
The British government, for its part, is trying to tackle the productivity gap by implementing a strategy to resuscitate UK manufacturing and improve industry output. These efforts are crucial if the UK wants to catch up with its international peers and climb higher in the G7 productivity rankings. As Professor Juergen Maier states in his forward to the Made Smarter Review, ‘We [the UK] haven’t reached our full potential and have left too many of the opportunities to other nations’.
The government’s vision
Part of the government’s strategy for tackling the productivity challenge head on is the implementation of a digital strategy, with improvements to digital infrastructure a core part of the solution. Digitisation - the process of converting information into a digital format - presents huge opportunity and includes the potential of next generation technologies like AI, robotics, machine learning and 5G.
How it impacts businesses
In order to make the government’s digital vision a tangible reality, we must ensure the right networks are in place to allow businesses to fully embrace the opportunity of digital to create useful productivity and connectivity.
The real work is yet to begin; we are just at the start of 5G potential. Industry has to now move to work alongside government, and network operators, to establish digital connectivity and transition to 5G. This is a challenge that will reconfigure businesses and enable them to take advantage of automation, strengthening their business offering and improving their bottom line.
The 5G opportunity
5G presents a huge opportunity for the UK to improve national output and revive British industry, as well as allowing us to position ourselves as a key player in the global market. When considering the impact it could have on the manufacturing sector, we can see how it will enable the connectivity of digital infrastructure and help streamline operations to make the manufacturing process faster, safer and more cost efficient.
Early predictions already point to as much as a 1 per cent increase in productivity. If we consider that in Q1 2018 manufacturing output in the UK stood at £44.6 billion, then a 1 per cent increase in output could equate to an additional £1.78 billion over the course of the year. This would have a significant impact on the UK economy, and come as welcome confirmation that, through the deployment of new technologies, productivity improvement is possible.
If we look at why 5G has the potential to transform British industry as it does, we get into the unparalleled benefits of the technology - unprecedented availability, instantaneous response times, huge amounts of bandwidth and secure connectivity through its focused ‘security by design’ approach. This model contrasts with the industry’s traditional approach, where security is usually only considered as a bolt-on at the end of a process. This ‘security by design’ approach is essential for uptake of 5G, as factories will be very reluctant to digitise unless they are confident about protection from cyber threats.
Other major advantages of 5G relate to its ability to offer URLLC (ultra reliable low latency connectivity), eMBB (enhanced Mobile Broadband) and mMTC (massive Machine Type Communications), all of which make it ideal for even the most demanding of use cases.
The call to arms for enterprise
In order to future proof business and be in the strongest possible starting position for when 5G is rolled out at scale, organisations need to undergo a period of digital transformation that will re-configure legacy systems to be in line with the evolving industry landscape.
This means upskilling the existing workforce, transforming the traditional engineer to the hybrid-engineer by equipping them with the skills needed to develop, deploy and monitor automated processes with confidence. It means building out fibre and cellular digital infrastructure to support increased connectivity across the business. It means having the necessary security measures in place so that data can be gathered, processed and stored in the safest way that does not leave it vulnerable to the threat of cyber criminals. If data is the currency of the digital age then we must protect it accordingly.
Role of other technologies
Other next generation technologies such as AI and machine learning are also being proposed as solutions that could help solve the UK’s productivity woes. The strategic application of these technologies could mean a more efficient working environment. Data produced from the machines is analysed and actioned to create a more dynamic production environment that is cost effective and able to guarantee a consistent level of productivity, operating at a dependably high quality in a safer working environment.
All of these new technologies require a new perspective, and a move towards a collaborative future. In their book Whiplash: How to Survive Our Faster Future, Joi Ito and Jeff Howe outline the nine guiding principles needed to survive in this new world, ranging from embracing risks to drawing innovative ideas from existing networks (‘pull over push’). The book proposes a model that businesses will have to wholeheartedly embrace, rethinking their approach to all facets of the organisation from how they engage with commercial operators, to the skillsets they adopt, to harnessing the new mindset. The biggest change they need to overcome is that the business model of the future has the customer in the driving seat.
National collaboration is the key to unlocking economic prosperity and achieving digital leadership.
While there can be no denying the potential of next generation technologies, the future success of digitisation and productivity enhancement will be determined by how we bring these technologies together. The industry needs the convergence of these technologies to happen in order to digitise UK plc and give the UK a leading edge globally.
The network side of revolutionary technologies like 5G is taking shape and now we need all parties to work together to drive through the productivity gains that are so almost within our reach.
The UK is well positioned to make the most of 5G technology. However, none of these benefits are assured. From society to government, business leaders to mobile operators, housing developers to technological leaders, we must continue to collaborate in order to achieve the connected, inclusive world that 5G can offer.
Brendan Lynch, CTO and Board Member, Worcestershire 5G Consortium
Image Credit: O2