Productivity in the UK is a concern because it is generally lower than its main international competitors and the gap has widened. New technology is generally seen as a mechanism for improving productivity but anticipated outcomes have not been fully realised.
The main aim of the project is to support West Midlands Combined Authority (WMCA) in identifying how it can assist businesses to maximise productivity gains from new technologies. WMCA, through its devolved responsibility for adult skills investments and business support, can help support managers acquire the knowledge and skills to successfully manage the implementation of new technology. The project’s research aims were developed in consultation with WMCA who supported the researcher’s grant application. Senior officers from WMCA formed the project’s steering group and were involved in refining the methodological approach, identifying case study respondents, and providing comments on project reports.
The ability of firms to manage the introduction of new technology rests in large part on management competencies, which include technological, strategic and HR skills. However, these skills are often lacking in the UK because of low levels of management training.
A review of training provision across the West Midlands was undertaken to identify any programmes providing training in the management of new technology, and what skills they imparted. This encompassed provision at all 73 contracted WMCA training providers plus all regional higher education institutions (HEIs) and the Open University.
The review identified very few education and training courses concerning the management of new technology. Only 48 courses were available that included both management and digital technology elements. Most of these courses were business or management HEI courses with technology modules within them or digital/technology-oriented management/business courses. These 48 courses tended to be degree level, full-time courses delivered by HEIs i.e. formal management degrees. There were only a handful of short courses which were directly targeted at businesses i.e. short-term and flexibly delivered.
WMCA contracted providers were also sent a self-assessment checklist, asking for more details of their provision and the management and technology competencies it covered. This identified few courses in the West Midlands with scant coverage of managing technology skills.
Interviews were also undertaken with WMCA Growth Hub representatives. These identified several publicly funded business support programmes. Most of these are for manufacturing businesses only, and several have only lasted a few years. Growth Hub staff identified amongst firms a technology first approach rather than business-focused, and a reliance on suppliers for support in selecting and implementing new technology.
In-depth interviews were undertaken with 11 businesses based in the West Midlands. Businesses ranged from very large global service companies to small, regionally based manufacturers. All businesses had previously received business support.
Organisations were selected in partnership with WMCA and Growth Hub staff, and covered WMCA’s Plan for Growth clusters.
New technology investments, for most firms, were an inherent part of their business strategy. But for a minority, technological investments were ad hoc, arising when a business need or opportunity arose.
For most businesses, management skills development was regular and ongoing. Management skills development was systematic and derived from the business strategy. For a minority of organisations management skills development was ad hoc, informal and reactive. For these management skills development was often ‘learning by doing’.
Few companies provided technology training to managers. Rather managers are observant of trends in their sectors and have a range of informal networks through which they identify future priorities. For those companies which did provide training, most covered the technological aspects only, and not requisite core management skills.
All businesses had recently invested in new technology, investing between 0.5% to 3% of their turnover. For the regional manufacturers this investment was often facilitated by their contact with Growth Hubs and being signposted to Made Smarter and similar programmes.
Productivity was the main driver for these investments, and was much more important than profit. Productivity was defined in terms of making the business more efficient, reducing costs and ‘doing more for less’. Cyber security was the second most significant driver. Some organisations had suffered cyber-attacks which had seriously impacted the business, whilst others wanted to upgrade to more secure technologies. Production drivers included improving production control and quality, replacing older machines, and addressing skill shortages. Innovation was also mentioned in terms of future proofing the business or being seen to be an innovation leader.
For the regional manufacturing businesses, working with Growth Hubs and/or the Made Smarter programme helped them identify the potential utility of new technology. The large service companies had dedicated internal functions to undertake these tasks for them.
For SMEs with an ad hoc approach to new technology investments and management skills development, contact with external business support was associated with quantum leaps when the business leader realised that fundamental changes needed to be made. In these cases, investments tend to be made as transformative changes. Whereas for those with a more strategic approach investments were made incrementally.
As part of the analysis, the 11 organisations were divided into four clusters depending on whether they had a strategic approach to new technology investments and management skills development:
Management skills are critical to the effective investment and implementation in new technology. From case study interviews evidence indicates that firms who took a strategic and integrated approach to both new technologies and management skill development had a more straightforward implementation. In short, the case study interviews confirmed what the literature suggests: realizing productivity gains from new technology investments requires suitable management skills. Larger firms had the internal capacity and resources to undertake ongoing strategic reviews of management training and a dedicated business function focused on identifying the potential of technology to achieve business aims. Smaller and less resourced firms rely on business support programmes to accomplish these strategic tasks. For the SMEs in the study, business support had been instrumental in driving their recent technology investments providing advice, support, access to grant funding, help in identifying suppliers, and a structured process to implement their new investments. What some SMEs lacked were the socio-technological management skills to do this smoothly and effectively.
How then can managing technology skills become more widespread across the West Midlands? The review of provision showed that there was little management training or business support available to firms in the subregion. The business focused and appropriate support that is available is through Made Smarter and similar programmes, accessed via Growth Hubs. Few SMEs take-up this support, and it is often only available to manufacturing businesses. The firms in the sample relied very much on other sources of support to identify and implement new technology. This included competitors, customers, suppliers, trade shows and, importantly, technology suppliers. The role of technology suppliers seems especially important in providing informal managing technology skills development and support. They are trusted and able to provide support when businesses need it. Publicly funded programmes (no matter how close or trusted the provider) may not be able to offer relevant training or support when required. The SMEs in the study also relied on HEIs and the catapults as a means of keeping abreast of technological developments.
The review of provision also suggests that there is a distinction between management skills development as training on the one hand and, business support on the other. This distinction is not new, and having such a dividing line cannot be helpful to meeting business needs.
These findings suggest a number of key recommendations to deliver the management skills needed to successfully implement new technology and thereby realise its productivity benefits for the West Midlands. Whilst the WMCA is the primary focus for these recommendations, there are other organisations that are involved in and/or effect these policy areas. These recommendations are therefore relevant to a range of organisations including: the UK Government, local authorities, HEIs, business representative organisations, business support providers, employers, and employer representatives.
1: More and better provision of new technology implementation management skills. There is currently little education and training provision in the West Midlands delivering these skills. It is mostly available through the business support route which tends to be separate from management education and training. However, much of the business support provision is focused on manufacturing SMEs. Service sector SMEs should also be provided for.
2: Delivery of such management skills needs to be demand responsive, tailored to firm’s needs. Firms are at varying starting points in their management of technology investments, and provision needs to reflect this. A pipeline of provision could be created that incorporates entry level and progression opportunities., for example, from taster days to more intensive skills development programmes. These opportunities would help firms engage at a number of different entry points relative to their needs and provide opportunities to progress their managing technology skills further. Informal support could also be levered alongside formal provision as part of this progression pathway.
3: Consider WMCA’s adult skills investments as a source of funding to develop provision. Through its management of both adult skills investments and Growth Hubs, and links to HEIs and FE providers, and employers, the WMCA is in a unique position to stimulate and finance the development of a coherent pipeline of managing technology skills.
4: Encourage firms to adopt a business, not technology, approach. A key reason why productivity gains have not been achieved is that the focus is primarily on the technology rather than how it functions within the context of the business. A business first strategic approach to both new technology investments and management skills development is required. This message should be central to education and training, and support.
5: Make available, and encourage, business support programmes to disseminate findings on the benefits of training to manage technologies. The findings of this study, along with the wider evidence, should be summarised so that business support practitioners have an available evidence resource to present to employers to encourage them to invest in management training as a mechanism for boosting survival and growth prospects.
6: Consider developing a regional ecosystem approach to the management skills for implementing new technology. Gaps and weaknesses in the uptake of provision currently exist in part because greater coherence is needed, in particular between education and training, and business support. The WMCA should adopt an enabling role in establishing such an ecosystem because of its relationships with all of the key stakeholders.
These recommendations offer the WMCA the opportunity to co-develop interventions with firms as well education and training, and business support providers. The aim has to be to equip managers with the skills to successfully implement new technology in order to realise its potential productivity benefits. In doing so, there is an opportunity to improve the provision of education and training for managers in the West Midlands, improve the quality of management in the region and future proof the performance of the region’s firms, particularly SMEs, in an era of significant technological change.
