Brexit and Innovation

This article first appeared on DevopsOnline.

In their epic book, Creating a Learning Society, Stiglitz and Greenwald note that it serves companies well to maintain secrecy. This gives them competitive advantage. However, from society’s viewpoint, they say, “it is desirable that knowledge, once created, be transmitted as broadly and efficiently as possible.”

We need only to look to the open source and open knowledge movements to see how this openness works; Wikipedia has single-handedly improved the way children in both the developed and the developing world learn.

Governments and policymakers know that there is a tension between what’s good for society and what’s good for the firm. For example, last year in the Netherlands, new legislation was created that stopped companies putting non-compete clauses into employment contracts; the policy makers prioritised societal learning over corporate desires for secrecy.

Policies that allow the free movement of people disincentivise some companies from investing in innovation. Less neurotic organisations, however, realise that what they lose will be offset by what they gain. But whatever the macro fortunes of firms, providing they don’t go bankrupt, society wins when people move around. Ideas travel with people. And it is ideas that help to spread best practices which in turn let societies do more with less. As Stiglitz and Greenwald point out, the best societies are not the ones who focus on capital accumulation, but those who can advance their technologies.

What really does disincentivise people and companies is uncertainty. In uncertain times, people and companies discount future-oriented activities. And recently, there’s been a lot of uncertainty.

At Container Solutions, we observe the effects of all this uncertainty in a few places. Firstly, new hires that come to us from other companies are sometimes two or three years behind our own engineers. This is a reflection of how little other firms invest in training and development. We also feel the caution in individuals; not many people are moving around right now. Finally, we notice this in market behaviour; 2016 has been about short-term, tactical improvements. The optimism of 2015 is now just a memory. The market seems to have pressed the pause button in the hope that 2017 will be better.

All this fear has a stranglehold on innovation and therefore society; our client’s ‘productivity boundaries’ are not moving forward as industry best practices get stuck in just a handful of places.

Meso innovation: an emerging model for start-ups

So what’s going on? Claude Debussy said that “music is the space between the notes”. We could just as easily say that innovation occurs in the space between firms. It is in this space that meso level innovation takes place. Meso innovation is neither macro, coming from governments, or micro, coming from someone tinkering in a garage. We typically fight for macro level innovation, “we need more money”. Or, we fight for micro level innovation, “we need to support small businesses”. We shout a bit less about supporting the network, despite the fact that meso level innovation is crucial to both firms and society. If you look at why innovation has stalled right now, it’s not because of a lack of tinkering or huge projects, it’s because the network is frozen.

The caution of the last few years limited the movement of skilled migrants. The Brexit vote has compounded this anxiety. Even if it only appears that the shutters are going up here in England, that is enough to put people off. We recently hired three people from overseas. When asked, ‘which office do you want to work in?’, they all said, ‘Amsterdam’. In fact, Amsterdam was recently touted as the ‘new London’ as people in the UK looked for a different place to live.

If the borders do actually go up then the EU and the UK will both suffer. Collective intelligence is a consequence of interaction. Kill the former and you will kill the latter. The divorced and the divorcee suffer alike.

Isolationism is a luxury we cannot afford

The allied codebreakers in WW2 were able to keep ahead of the Germans because they were made up of an eclectic bunch of women and men of whatever sexuality, immigrants, Jews, atheists and tinkerers. The eccentricity of this group was how Bletchley Park, the centre of British codebreaking, was kept a secret; the government convinced the locals there that it was a lunatic asylum! This was easy to accept since the ‘patients’ at Bletchley would talk to each other in gibberish (ancient Greek) and one of them (Alan Turing) would ride his bike around the village with his gas mask on. (Unbeknownst to the villagers, Turing suffered from hay fever and the mask helped with that.)

My company is made up of people from Poland, the Netherlands, Israel, England, Scotland and Slovakia. We have a Colombian and even a Canadian. What we lose in cultural similarity we make up for in diverse thinking. Our group has contributed to open source projects and created a not-for-profit software conference to share what we’ve learnt. We have contributed research and paid taxes in all the countries we operate in. My non-EU colleagues came to me via the network of businesses in Europe who hired and sponsored them. We returned the favour by sponsoring people who then leave our company to join our neighbours. This is how meso level innovation works in conjunction with migration.

The superficial problem with Brexit is that it seems to be the final, although not fatal, kick in the head for the ‘feel good factor’. This creates anxiety which limits the future oriented thinking that is vital for innovation.

A deeper problem is that Brexit might actually lead to laws that restrict the movement of people and therefore ideas. This will kill innovation. Brexit would no longer be a British drama. It would instead be a global crisis.

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Jamie Dobson

Jamie specializes in innovation and technical strategy. As the CEO of Container Solutions, he is primarily responsible for the direction of the company and the well being of the team. He occasionally works with clients on tricky strategic problems, teaching executives how to ‘win’ with technology.

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