Lost in Translation - why can't government and business speak the same language?

As Rishi Sunak said in his speech at Policy Exchange on Monday, we are facing unprecedented challenges as a nation and as a global community. In his words “More will change in the next five years than in the last thirty. I’m convinced that the next few years will be some of the most dangerous yet and the most transformational our country has ever known.”

Leaving aside the tactical scaremongering going on here, the overall point is correct. We stand at the fulcrum point of massive change and the challenges facing us are bigger, more complex, and more unpredictable than we have faced for at least a generation. We need to change our entire energy system. We need to implement AI with all the positives and negatives that brings. We need to trade in a world that just got less open. The list goes on.

If ever the world and the country needed unity, it is now. It’s a bad time to be fragmenting; or moving in different directions. The bigger the challenges, the less likely any one party can solve them. What we need is alignment. Alignment matters because without it we stand little chance of seizing the opportunity that comes with massive change.

Without collective vision and action we risk becoming smaller than the sum of our parts, not greater

So what is alignment? For us, it’s about the powerful forces in this country and beyond, namely government, business, community and society at large, being unified in what we are trying to achieve and, importantly, understanding the role each can and should play in moving us forward. ?

Andy Haldane, former Chief Economist at the Bank of England and current managing director of the Royal Society of Arts reflected this need for collective action on the Newscast Podcast on Thursday last week: “Looking for someone else to lead will mean that no one leads, and we remain stuck in the mud as we have been for the last 15 years. This needs to be broadly based, it needs to involve finance, it needs to involve our government in a national plan for growth and regeneration.”

In our view, alignment is a missing ingredient in how we think about responding to what’s ahead. So why are we misaligned? Why do government and business so rarely see eye to eye and what is the impact of those divergent viewpoints?

One of our core beliefs is that at its heart, this is cultural.

Misalignment is fundamentally about people. It goes to the core of why individuals choose to work in public service or in business and in the distinct incentives and motivations that exist in each system. Business and government are a bit like different planets – most people who work in either system have grown up ‘on that planet’ with little experience or understanding of what it’s like to grow up on the other one. There are some who cross the space between and go and inhabit the other planet, but they are few in number and quickly become integrated into the culture and customs of their new home when they do.

From people, comes culture and completely different views of risk and reward systems. Private companies incentivise and reward risk taking, recognising it as essential for innovation, progress and growth. Officials are incentivised heavily against risk taking, with the consequences for failure, or perceived failure, particularly when public, being significant. Similarly, the two value different things: the public sector builds public goods where the test of success is universal benefit and minimising losers. The private sector creates products and services for targeted populations and creates winners. It has no universality obligations or need to solve for losers. This makes the definition of words like ‘prioritisation’ in the two camps very different. These differing perspectives are deep seated, resulting in officials being suspicious that business representatives are self-serving in their requests of government, whilst business can feel that government officials are completely divorced from ‘the real world’ and create policies that are unworkable when put into practice. It's hard to see things from the perspective of someone who comes from a different planet, after all.

Government strategy and business strategy are developed in isolation. Companies come up with the strategy that they believe will deliver the greatest shareholder value, deliver their vision or mission as a company, or address challenges they are facing. This rarely involves an assessment of government strategy and policy, and the question of alignment simply doesn’t come up. In recent years business would tell you that there is a reason for this, and without stability and clarity of vision from government it is impossible to factor government thinking into your own strategy. Fair enough. This isn’t a one-sided task. Government needs to better articulate what it is trying to do, stick with a strategy and provide stability to allow others to align themselves with their direction of travel. It isn’t a controversial statement to say we haven’t been in that position in the UK for several years and we are seeing the consequences of that in stagnant growth and productivity.

Our mission as Growth Incorporated is to find alignment and support business and government to work together to achieve the big wins that will materialise over this period of turbulence. The interesting question will soon become not what we both disagree on, but what we agree on. We can argue about whether decarbonisation is a public or private good but if we don’t agree to make progress, it will all be too late anyway.

As for the Prime Minister's warning, it's misalignment that brings the danger. Alignment brings the transformation.