It’s not what you invent, it’s how you share it

The UK’s focus on frontier innovation overlooks the critical need for a nationwide technology diffusion system enabling businesses adopt productivity-boosting technologies and revive economic growth

A key but often overlooked feature of Britain’s Industrial Revolution is the web of institutions, incentives and skills that turned invention into innovation. For every James Watt refining the steam engine, there was a Matthew Boulton with the capital, networks and entrepreneurial drive to turn new ideas into productive reality.  

The government should bear that historical lesson in mind as it wrestles with how to revive growth after a difficult Budget. It has rightly placed innovation at the heart of its growth mission, announcing further commitments to AI infrastructure and AI-driven research last week, making good on its AI Opportunities Plan. While the scale of investment in frontier innovation is laudable, however, there remains precious little on offer for the vast majority of companies, for whom adoption of productivity-boosting technology is often perceived as high risk and uncertain gain. 

Britain’s focus on the frontier misses a crucial point: our productivity challenge is as much about adoption and diffusion as it is about invention. In the latest Global Innovation Index, the UK ranks sixth overall but just 37th for “knowledge absorption” – a clear sign that ideas aren’t spreading. Other countries have understood this and built active diffusion systems. Singapore’s SMEs Go Digital programme and Germany’s  Mittelstand-Digital actively help firms adopt new technologies. Britain, by contrast, has halved its investment in the foundations of diffusion – workforce training, management quality and organisational development – since the financial crisis. 

Adopting new technology is not easy. Identifying, acquiring and integrating the right tools takes time, money and often a short-term hit to revenues before the investment pays off. A strong diffusion system should ease that burden – cutting the cost and complexity of adoption for firms. Yet British businesses face a fragmented and poorly targeted patchwork of support, which lacks the mechanisms to scale-up. The upshot is an emerging two-tier economy, where a few frontier firms pull ahead and a long tail struggling to catch up. 

Tech-diffusion

To close that gap, Britain must modernise its tech-diffusion ecosystem so that every business, not just the biggest, has end-to-end support in identifying, acquiring and integrating technology. That means making better use of what we already have, especially our world-class universities, while building the digital infrastructure to scale support nationwide. 

The UK’s universities should form the physical backbone of the nation’s diffusion infrastructure. They already anchor local economies and are equipped with the expertise and connections to thousands of firms. With the right mandate and funding, a national network of University Technology Adoption Centres could provide hands-on advice, training and peer learning – cutting the cost and complexity of adoption for smaller companies. And Britain’s universities are ready to lead, with both the Russell Group and Universities UK supportive of a stronger role in helping business take up new tech.  

Alongside that, Britain needs a digital “CTO-as-a-Service” system   providing a single entry point for firms seeking help with technology adoption. Modern technology can help deliver support that is personalised at a firm level but scalable at a system level. The technical building blocks are threefold: a digital CTO platform to join up support, a business digital ID to help target advice and outreach, and an AI assistant to expand the capacity of the ecosystem. Together, they would turn Britain’s patchwork of initiatives into a coherent, modern diffusion system. 

The prize is substantial. Upgrading the UK’s technology-diffusion system could add over £6 billion to GDP within this Parliament, according to Tony Blair Institute analysis – on a par with flagship government reforms like planning. It’s a reform that pays for itself, with higher growth driving higher tax revenue that offsets most of the cost.  

And beyond the numbers lies a broader benefit. By helping new technologies reach firms and regions that have been left behind, it offers a realistic path to more balanced, inclusive prosperity. A nationwide diffusion system would turn the government’s mission to kickstart growth into a shared national project. Britain’s future prosperity depends not only on what we invent, but on how widely we share it. 

Mathew Sim is senior economic advisor at Tony Blair Institute for Global Change 

Jose Mejia is economic advisor at Tony Blair Institute for Global Change