FST JOURNAL

Summary:

• The UK’s new industrial strategy is a step forward in tackling the UK’s central issue of a low-investment economy. However, growth is the result of a well-structured mission-oriented industrial strategy, rather than a mission in itself
• Tackling some of our greatest challenges requires a genuinely cross-sectoral approach to industrial strategy. Instead of only focusing on winning sectors, mission-oriented industrial strategy focuses on bold, societal challenges that require innovation and investment across multiple sectors
• Bottom-up experimentation across various sectors is essential in addressing challenges, from tackling our climate, water, and biodiversity crises to making progress on health and digital inequities
• Public-private partnerships should be genuinely symbiotic–rather than parasitic, akin to a mutualistic relationship in nature, with clear conditionalities that share both risk and reward. 

My aim of founding the UCL Institute for Innovation and Public Purpose in 2018 was to bring public purpose back to the centre of our thinking about economic growth, which has not only a rate but a direction. At IIPP we seek to leverage our expertise across multiple areas—industrial strategy, innovation policy, and financial policy—to consider how they can be shaped to tackle significant societal problems. Addressing these problems requires an economy-wide, inter-sectoral approach that necessitates inter-ministerial coordination. 

In 2018, we collaborated with David Willetts on developing a mission-oriented industrial strategy for the UK, through the creation of the UCL Commission for Mission-Oriented Innovation and Industrial Strategy (MOIIS). The question was how to transform an already ambitious strategy, which RT Hon Greg Clark, had inherited from Vince Cable during David Cameron's coalition government, into something more effective and implementable. The request was to transform the prior vertical approach—which often involved a random list of sectors that lobbied their way to the top—into one focused on the specific problems that many sectors can collectively address. This meant moving away from a sector-based approach—where we could list sectors like aerospace, automotive, finance, the creative industry, and life sciences—to a challenge-based approach that requires innovation and investment across various sectors. This does not mean we ignored the sectors, but we used specific challenges to ensure investment in them was outcome-oriented and aligned to the overarching goal. 

The new Industrial Strategy has returned to a sectoral approach and has selected eight priority sectors rather than asking what we would need from each sector to achieve such goals. The Clean Energy sector plan in the UK’s new industrial strategy is a step towards this, as it is aligned with the Clean Energy Superpower mission and looks to embed net zero across the entirety of the Industrial Strategy. However, we still need the foundational building blocks like investment in basic research and development, centres like the Fraunhofer Institute, where science and industry can connect, a skilled workforce, a robust visa system, regulatory policies, and so on. 

The reason I wrote Mission Economy: a moonshot guide to changing capitalism was to illustrate how we achieved the moon landing. The challenge was the space race against the Soviet Union's Sputnik, but the ultimate mission was to land on the moon and return safely within a short timeframe. This required contributions from numerous sectors—not just aerospace. Considerations like how astronauts would eat, use the restroom, and what they would wear involved cross-sectoral innovation spanning nutrition, materials, electronics, and software. Interestingly, this also required a transformation in government operations. A vital step was changing procurement practices from a cost-plus model to challenge-oriented procurement, which incentivises innovation and investment. This bottom-up experimentation across various sectors is essential in addressing goals such as achieving Net-Zero emissions, tackling health-related challenges, and reducing the digital divide.  

Growth should not be the mission, but the result 

While it is commendable that Keir Starmer has reintegrated the idea of missions into our conversation, the fundamental point is that growth itself should not be a mission. Rather, growth is the result of an effective mission-oriented industrial strategy. This is because missions demand substantial cross-sectoral investment. Currently, the UK ranks 28th in the OECD for business investment and last among G7 countries for public investment. Had we invested even half as much as the average OECD country over the past two decades, we would have allocated an additional £500 billion. The Industrial Strategy recognises this, and the UK government has committed £115 billion to increase capital spending, and it is focused on increasing investment from both the public and private sectors. 

Business investment is absolutely critical, but relying on so-called business-friendly policies often leads only to tax incentives that boost profits without necessarily increasing actual investment. The current UK Industrial Strategy is focused on promoting the UK as a home for investment through a reduction in regulations and so-called ‘red tape’, rather than leveraging investment through clear mission-aligned policies that signal the priorities of the government and opening of market opportunities that align with this mission. Consequently, we miss opportunities for additionality—investments that wouldn't have occurred otherwise. The structural challenges we face, regarding productivity, stem from insufficient investment. So, how do we foster dynamic public-private partnerships? I often refer to them as symbiotic partnerships, drawing on biological terminology. For example, a partnership ecosystem can be predatory, parasitic, or symbiotic; our goal is to build genuine mutualistic partnerships akin to those that facilitated our journey to the moon. While I appreciate the push towards a mission-oriented approach, I urge us to move beyond mere slogans. Let us leverage this opportunity to transform our industrial strategy, ensuring that growth becomes the outcome. 

Rethinking the economy

We need to rethink our understanding of the economy and where value originates. If the state is to take on an entrepreneurial role, we must recognize that value is collectively created, shifting our focus from merely fixing markets to shaping them. A major challenge is that we can't achieve this if we continue outsourcing civil service functions to consulting firms like Deloitte. Spending £1 million a day on a test and trace system highlights the lack of investment in our digital governance—a critical area, especially during the COVID-19 pandemic. At IIPP, we aim to centre strategies like the Net Zero Mission within economic growth discussions. This requires rethinking procurement practices, distinguishing between outcomes-oriented and cost-plus methods, which can foster collaborative intelligence between public and private sectors. Additionally, we must reevaluate intellectual property rights, as the current system allows for overly broad patents that hinder innovation. These rights, granted by the state, should facilitate progress rather than create barriers.

Our work in Camden illustrates the power of participatory strategies, where local citizens engaged in developing a local mission-oriented procurement strategy. Rebuilding trust in the policy-making process is essential for addressing everyday challenges. Countries like the UK can turn significant issues like climate change and water scarcity into national priorities requiring innovation and investment, thereby turning their commitments to the Sustainable Development Goals (SDGs) into reality. 

The Apollo program serves as a model: beating the Russians was the challenge, while the mission of reaching the moon required collaboration and grassroots experimentation. By shifting from cost-plus procurement to mission-oriented contracts, NASA achieved remarkable innovations, emphasising the balance between strong direction and bottom-up experimentation vital for future success.

Interdisciplinary approaches

Addressing a big issue such as climate change requires an all-of-government approach, much like the multi-sector effort to reach the moon. This challenge is not the sole responsibility of the Department of Energy; rather, it demands an inter-ministerial, mission-oriented strategy. The German public bank KfW exemplifies this. Germany’s Energiewende Policy has created public funds that require companies in sectors like steel to meet innovation targets to receive loans. This approach has fostered the production of green steel by encouraging practices such as repurposing, reusing, and recycling throughout the production process. 

There is significant potential in these initiatives. In Sweden, the goal of creating a fossil-free welfare state extends to school meals, which must be healthy, tasty, and sustainable. This necessitates innovative collaboration between the Departments of Education and Health and the food supply chain. Moreover, we collaborated with Gina Raimondo, the former U.S. Secretary of Commerce, on the CHIPS and Science Act, exploring how grants and subsidies can effectively steer growth in the semiconductor industry. These efforts require us to normalise ambitious goals for societal betterment.

The CHIPS Act, which allocated nearly $400 billion for semiconductor companies, aimed to ensure better worker pay, as many employees were not earning a living wage, and required the use of energy-efficient supply chains. A key condition was that profits generated must be reinvested back into the businesses instead of being distributed as dividends or used for share buybacks. In fact, over $7 trillion has been spent by large U.S. corporations on buybacks, boosting stock prices and executive pay. The UK has some interesting examples of conditional public investment, particularly at the city level, with initiatives like Camden’s green agenda. Residents debated what "green" means for their community, leading to food banks being turned into cooperatives that empower individuals and promote dignity Public sector capabilities are essential for these initiatives to succeed, highlighting the importance of cross-ministerial coordination. NASA learned this after the Apollo 1 fire, realising that communication was vital for progress. They restructured to ensure constant communication among project teams. 

Overall, mission-oriented policies have many myths surrounding them. Our recent report on global insights reveals what works and what does not. While growth is not the main objective, it can result from substantial public and private investments focused on addressing significant societal challenges. The lessons from our journey to the moon remain as relevant today as they were fifty years ago: ambitious missions require both strong direction and bottom-up experimentation, symbiotic partnerships between public and private sectors, and the courage to embrace uncertainty in pursuit of transformational change. By applying these principles to today's greatest challenges – from the climate crisis to health inequities – we can build economies that work for people and planet alike.