UK: POLITICAL MANAGERS - What competition means to you - The very words competitiveness agenda will mean ...

UK: POLITICAL MANAGERS - What competition means to you - The very words competitiveness agenda will mean ... - POLITICAL MANAGERS - What competition means to you - The very words competitiveness agenda will mean different things to different people But f

by MICHAEL HESELTINE.
Last Updated: 31 Aug 2010

POLITICAL MANAGERS - What competition means to you - The very words competitiveness agenda will mean different things to different people But for all of us training and skills development must be priorities.

Ask an economist, an industrialist and a politician to discuss the competitiveness of a company or country, and you will get three very different perspectives.

They will rapidly discover how differently each of them, from their varied but equally valid perspectives, view this most contentious subject.

The economist would tend to concentrate on matters like micro-economic flexibility and macro-economic stability. And most modern economists would echo the UK's experience over the past 20 years, stressing the role of competition policy and deregulation.

The politicians, ever mindful of the roles of government as regulator, purchaser, public service provider and collector of taxes, would make priorities of education, research and development and government investment in infrastructure.

The industrialist, ever close to the day-to-day commercial realities, would focus on the cost of and returns on money and other elements of themix of resources that affect the abilities of companies to increase shareholder value.

I would expect, however, all three to come up with a reasonably wide-ranging list of factors that influence long-run competitiveness. The relative importance they each attach to specific factors would reflect their particular experience as well, as the special circumstances of the subject they chose to analyse.

The subject tends to arouse greatest interest whenever a body of sufficient repute publishes its latest league table or index purporting to show how the nation's competitive position has worsened or improved. At this point, media-friendly economists, industrialists and politicians are placed in front of cameras to interpret and propose responses to the latest findings.

It was at the Department of Trade and Industry that it fell to me to express the government's view on UK competitiveness. When doing so, it appeared to me to be important to achieve at least three things. First, I thought it was time to move on from platitudes and get well below the surface of the subject (hence the practice of producing annual competitiveness white papers). Second, I thought it was vital to ensure that the subject was no longer seen as the sole province of the Treasury, with the DTI in minor supporting role. In my view, every part of government and of society has a part to play. Third, and perhaps most importantly, I wanted to shift the centre of gravity of this country's thinking about wealth more towards how to create it than how to distribute it.

To get things going, just like our hypothetical economist, industrialist and politician, I had to get my officials, supported by secondees from the private sector, to do the research necessary to determine what precisely are the competitive factors that affect UK performance. They then had to try to establish how important they were. Finally, they had to gauge how hard it would be to exert influence over them. On this basis, we would be in a position to express sensible views about public policy priorities.

Identifying the factors was reasonably easy, although each rapidly subdivides into a large number of second-order influences. And, as surprising as it seemed, there was not that much argument when we looked at individual countries, sectors or companies in regard to the relative rankings of the various factors.

The people factors were seen as absolutely essential: ability to change and innovate, quality of management, and quality of the education system.

Immediately below came a second stratum, containing the regulators and capital-related factors: the terms upon which labour is available, competition policy, procurement and skills policy, inward and outward investment policy, the terms upon which funds are available, and macro-economic stability.

In fact, as time passes, I would expect this group to continue to diminish in relative importance as the terms upon which money is available converge across frontiers, and as governments globally are forced by market pressures to devise enterprise-friendly regulatory regimes. With money so moveable, governments, too, must compete globally.

The least essential group was the quality of physical and non-physical infrastructure and it is perhaps the most contentious, especially in places like London where the cost of slow-moving city traffic is considerable. But remember, such costs are nothing compared with the welfare, law and order, health and other harder-to-quantify costs supporting a relatively uneducated and low-skilled workforce.

As competitiveness pressures intensify, the first priority for the government, and all of us as managers, is to improve the training and other development opportunities available to our people, to dismantle local barriers to change and innovation, to raise our sights and skills, and to find and keep people most able to make a positive difference to performance.

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