1 thought on “How many light bulbs does it take to change the world?”

  1. Posted 04/12/2019 at 10:15 | Permalink

    Actually, competition among players in the private sector is the foremost driver of innovation, productivity growth and spreading of prosperity. Even the government has bought into this narrative of wealth creation and trickle-down effect.

    Consider for a moment, the market in defence equipment for which the government is the only customer.

    In its Defence Industrial Policy published in December 2017, the government has been pretty frank about the role of competition in the defence equipment market. It says (on page 23):

    “Competitive tension is the greatest driver for innovation, productivity and earning power in any economy. It is our policy to develop and foster competition, and to preserve strategic choice in the market, including over the longer term.”

    But, in the very next sentence, it goes on to admit that all is not well with defence procurement:

    “There are, nevertheless, particular challenges and constraints in doing this, causing various levels of market failure in defence procurement.”

    One of the most striking features of market failure in defence procurement is the total lack of a design & development capability on the premises of defence contractors in the UK today.

    This has come about because the last several decades has seen the wholesale transfer of people in the pay of the State to the private sector via the ‘revolving door’, in particular, defence equipment manufacturers’ organisations, largely due to the resounding success of the policy instituted by Defence Secretaries of all political persuasions – to encourage for-profit organisations in receipt of government defence contracts to take-on people who were previously in the pay of the State.

    Indeed, this mass migration would explain why the workforce, at every level of the hierarchy within defence contractors’ organisations (right across the full spectrum of defence engineering businesses, government outsourcing contractors and foreign-owned entities, large and small) is now made-up entirely of people who were previously in the pay of the State.

    The lack of a design & development capability is due to the fact those who have come across from the public sector, in their middle-age (armed with a full government pension), have no experience whatsoever of advancing the developmental status of the starting-point for a technical solution from its existing condition, to a point where it will satisfy the qualitative and quantitative requirements expressed in the technical specification requirement – not least, because they were never required to do so, during the first half of their career.

    Actually, such expertise is the sole preserve of people who were inducted into the private sector at an early age, where they honed their design & development skills within the crucible of a competitive market environment and a setting driven by the profit motive. It also required, as a minimum, an adequate understanding of what it takes (in terms of skill types, funding, tools, processes, materials, scheduled work plan, inter-business contractual agreements etc.) to advance an immature technical solution from its existing condition. As a consequence, these types of people are to be found exclusively in the non-defence, engineering sector of the UK economy today.

    The most important feature of any business that calls itself an engineering company is the existence of an in-house design, development, systems integration, prototyping and testing as a core capability. By employing only people who were previously in the pay of the State, indigenous defence contractors have inadvertently forsaken this capability – which has ironically, left them at risk of being usurped and displaced by real engineering companies from adjacent sectors or outside the UK, who have made it their foremost priority to invest in such a foundational capability. The complete absence of any patent applications, IP rights or new products put forward by these contractors is yet another indication of the paucity of such a capability.

    But the most obvious sign of this missing design & development capability is to be found in the products being peddled by these contractors – they were largely designed in the 1960’s and 1970’s, with none seeing their origins in the new millennium that can said to have any potential for export.

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