The IoD's Connected Business Report

The IoD’s

business report

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Contents 3 Introduction 4

Policy Spotlight: Connected economies, people & ideas

10 UK Business Landscape: A network of regional and national opportunities 12 Guidance: A brief employers’ guide to flexible work 14 In Focus: Cyber security 18 Factsheet: How to network better 2

CONNECTED BUSINESS

Introduction

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Edwin Morgan Interim Director General, IoD Connectivity is the essence of enterprise.

Whether this means tying together technological development and consumer demand, bringing the right expertise into the same room to engender new ideas, or realigning your organisation’s structure to tap into demographic change, business leaders are always seeking to join the dots.

The IoD has a crucial role to play helping to multiply the opportunities our members have to connect themselves and their business with new people, new markets, and new ideas. It’s with this final area in mind that we have compiled this pack, comprising recommendations for policy-makers, factsheets and guidance all engaging with the topic of connectivity in different ways.

In what is one of Europe’s least geographically-balanced economies, improving connections both between and within our regions and nations is vital for the UK. Too often our members highlight the disconnect between their business and political initiatives aimed at spurring regional growth, so we have outlined some ideas for bridging this divide to open this collection.

No discussion of connectivity in the business world can ignore the part played by new technology. In this light, we have included advice on taking advantage of enhanced digital connectivity through facilitating remote working in your organisation. Equally, while technological development can bring huge opportunity, it also creates risks, one of which we have touched upon in a briefing on cybersecurity.

Finally, it is often the connections you make with your fellow business leaders that play the most important role in boosting professional development and crosspollinating your organisation with new ideas. ‘Networking’ is a joy to some but a chore for others, so we’ve produced a concise guide to making the most out of it.

For aspiring leaders, the pursuit of new connections never ends, and we hope this collection puts you in touch with ideas that will help you and your organisation.

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POLICY SPOTLIGHT

Connected economies, people & ideas: A blue-print for local growth Tej Parikh

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POLICY SPOTLIGHT

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Policy Report

Disparate experiences of globalisation and technological change have meant the UK is one of the most geographically imbalanced economies in Europe.

Regional differences in wages, skills, business support, and employment opportunities are not only driving socio-political dislocation, but are also limiting the nation’s overall productive potential. Indeed, while the UK has one of the wealthiest regions on the continent in London, it also has among the most deprived.

T

his in part emanates from the UK’s disjointed approach to growth in the regions and devolved administrations – a product of the ebb and flow of political and economic commitments throughout the years. The 2017 Industrial Strategy1 offers some hope in addressing challenges in our towns and cities, but to be effective it must take a long-term and integrated approach – bringing together economies and ideas, by building networks across the country, to spread and spur growth.

Now, as the UK leaves the European Union (EU), is the opportune moment to deliver a new and interconnected regional development agenda, just as local strategies are drawn up and the Government enters its next Spending Review. Business leaders need to be at the front and centre, as the prime drivers of wage, employment and productivity growth.

Following surveys and discussions with members, the IoD’s Policy team have outlined below a blue-print for the local growth agenda, which will form the basis of a forthcoming research paper. >>

1 Gov.uk, Industrial Strategy: building a Britain fit for the future, November 2017 5

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POLICY SPOTLIGHT

Around

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IoD members said improvements to existing infrastructure in their region were a priority

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1 Prioritise physical and digital connectivity ahead of large-scale infrastructure projects Improving both physical and digital networks is essential in crowding in parts of the country that feel left behind. Road connectivity, in particular, is well below our peers, while broadband connectivity trails even developing nations. Around 1 in 2 IoD members said improvements in existing infrastructure were a priority for their local industrial strategy – well above the 18% who would prefer to focus on new, large-scale, projects.

Meanwhile over 1 in 3 members would prioritise the development of faster broadband infrastructure in their region. Improving this is essential in supporting speedier business, stronger networks, and flexible working.

POLICY SPOTLIGHT

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2 Support LEPs/Growth Hubs to become centres for local business support Over 40% of our members would prioritise support for small businesses and startups as part of their local industrial strategies. Local Enterprise Partnerships (LEPs) and Growth Hubs are currently the main vehicle for supporting local business growth, but their quality varies across the country and awareness of them is particularly low.

LEPs can be at the heart of driving local business productivity growth if they are better resourced and can connect into the array of regional education institutions, social enterprises, private organisations, and business groups which can be used as partners to assist local businesses for advice, training and networking.

42%

of IoD members would prioritise support for small businesses and start-ups in their local area

3 Ensure skills policy is more responsive to local labour market needs The difficulty in attracting workers with the right skills is a challenge for two-thirds of our members across all regions and devolved administrations, but there are a range of drivers underpinning this at a local level – which require specific targeted policies.

The brain drain of talent in Northern Ireland and the challenges of an ageing demography in South West England, for example, are greater concerns than elsewhere.

Supporting the improvement of communication and coordination between local authorities, businesses, training providers and educational institutions will be crucial in developing agile and long-term local skills strategies.

2in3

IoD members have difficulties attracting workers with the right skills in their region

4 Improve support for local areas to promote trade and investment in their region The ability to attract talent, trade, and investment is a boon for regional growth.

Unsurprisingly, this is a strength not evenly shared across the UK. Around 50% of FDI projects from 2012 to 2017 took place in London and the Southeast2 and 100,000 of 2016’s graduates left the region where they studied after six months – with around 30,000 ending up in London3.

While the shortcomings in local business environments need to be addressed via the Industrial Strategy, more effort must also go into helping regions to market and promote the economic advantages and business opportunities in their regions. >>

The ability to attract talent, trade and investment is widely uneven across the the UK

2 Department for International Trade, Foreign direct investment (FDI) projects by UK region (tax year 2012 to 2013 to tax year 2016 to 2017), August 2017 3 WPI Strategy group cited in The Guardian, Brain drain of graduates to London leaves cities facing skills shortage, March 2018 7

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POLICY SPOTLIGHT

While London has been an engine for UK’s overall growth, it has absorbed talent and capital from the rest of the UK

5 Provide business incentives to develop disadvantaged areas and support growth Incentivising productive business activities, such as exporting, R&D (Research and development), and investment, will be essential in driving up regional growth across the country. While the UK should avoid ‘picking-winners’ or adding more complexity to existing measures, there is a case for exploring how to use placebased business incentives more effectively to develop disadvantaged areas and support growth industries and regions dealing with change – such as the loss of a major employer.

6 Support growth sectors and knowledge-spillovers by empowering towns and cities While London has been an engine for the UK’s overall economic growth, it has also absorbed talent and capital from the rest of the country. Indeed, while London often leads economic performance tables of international capital cities, our second cities tend to be less competitive globally.

This also partly explains why regional productivity, and prosperity, in the rest of the UK lags behind the Southeast.

Considering further devolution to empower local areas, and supporting the development of high-skilled, knowledgedriven, and creative growth sectors outside London to develop post-industrial bases will be a vital next step.

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POLICY SPOTLIGHT

7 Improve coordination between national and local growth policies The UK’s regional development policy currently lacks coordination. The central responsibility for regional growth policy is fragmented between several departments, local strategies and funding allocations meanwhile have been differentially devolved. This risks driving inequality and incoherence in national agendas. As such, there need to be improvements in regional oversight, in particular to support remote areas, particularly towns or conglomerations, that may have a quieter voice in the existing devolution system, and areas at risk of significant jobs losses due to economic change.

Developing new long-term finance channels, and incentivising local areas to invest in their economies is crucial

Tej Parikh Senior Economist, IoD

8 Develop new funding channels and incentives to support long-term regional investment The Industrial Strategy needs ample financing if it is to be successful – yet there are a number of challenges on the horizon. The loss of European Structural and Investment Funds, following Brexit, will leave a gap in regional and programme funding. As for public finances, health, pensioner benefits, and long-term care will also eat into financing for the local growth agenda in the decades ahead. Replacing EU funding, developing new long-term finance channels, and incentivising local areas to invest in their economies is crucial.

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Tej holds a Bachelor’s degree in Economics from University College London, and a Master’s degree in International and Development Economics from Yale University.

Prior to joining the IoD, he worked as an economic analyst at the Bank of England in roles across monetary and financial policy. Subsequently, he moved to Cambodia where he was a journalist focusing on economic and private sector development for a national newspaper. He has since been a freelance political risk consultant and journalist, covering Europe and Asia in particular.

He has published for numerous international media outlets including Foreign Affairs, the Guardian, and The Diplomat, and is currently an active member of London’s Great Debaters Club.

@tejparikh90 9

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UK BUSINESS LANDSCAPE

A network of regional and national opportunities Scotland • Diverse industrial base: agriculture, oil & gas, engineering, renewables, tourism, financial services • Commitment to deliver 100% access to superfast broadband by end-2021 • £20M package will go toward enhancing support for business wishing to export • ‘Scotland is now’ campaign aims to raise the profile of the country to investors and talent

Northern Ireland • Growth industries: emerging as world’s top destination for fintech investment, a key filming location and base for engineering innovation • Building on expertise in transport, agri-food, and chemicals

Wales • Growth industries: tech, energy, advanced manufacturing • One of the fastest growing digital economies • Ambitious economic action plan and agenda to improve infrastructure

South West

• National digital exploitation centre in development

• Emerging strengths: aerospace, AI, tech, nuclear research

• National cyber security academy at Uni of S Wales

• Bristol quantum technology innovation centre planned • Major arm-based supercomputer cluster

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North

UK BUSINESS LANDSCAPE

• Growth industries: advanced manufacturing, energy, life sciences, digital

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• Major urban hubs; Hull, Liverpool, Leeds, Manchester, Newcastle, and Sheffield • Part of the ambitious ‘Northern Powerhouse’ project

East Midlands • Growth industries: engineering, biological science and built environment research

West Midlands

• Proposed East Midlands Development Corporation infrastructure projects

• Growth industries: digital, transport innovation, medicine and health, financial services

• Potential development surrounding site of the proposed HS2 station and East Midlands airport

• Testbed for ultra-fast 5g internet

• Growing number of science and innovation parks

• A major destination for FDI • Birmingham is one of the youngest cities in europe

East • Growth industries: tech, start-ups • Strong university base and science parks • Plans to establish region as “Enterprising East”

South • Diverse industrial base: aerospace, defence, engineering, healthcare, biotech, pharma, ICT

London • Growth industries: financial innovation: fin-tech, green finance, Islamic finance, offshore trading of chinese rmb

• Key entry point to Europe • Growing research capability: Uni of Surrey 5g innovation centre, Kent Science and Discovery parks

• Mayoral ‘London is open’ for business campaign promoting the capital’s diversity • International skillsets

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GUIDANCE

A brief employers’ guide to flexible work In this super-connected world, there is much talk around flexible working and how this can affect and benefit business. But what does the term ‘flexible working’ actually mean? And as a business leader, what do you need to know to support your organisation and employees?

• Individuals who have been working for the same UK employer continuously for at least 26 weeks are entitled to request flexible working arrangements.

Sign up to Policy Voice to take part in IoD member surveys: iod.com/policyvoice

IoD members are leading the way when it comes to flexible working*

• Employers must consider flexible working requests within 3 months.

• Employers must have a legitimate business reason for rejecting employee requests.

• Employees can only make one application for flexible working in any 12 month period.

73% offer flexible working to their employees

87% of those who offer flexible working have had staff take up flexible working arrangements

Visit gov.uk/flexible-working to find out more about your rights and obligations

Types of flexible working Job sharing Remote working

Top reasons why employers embrace flexible working:

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To improve staff work-life balance

70%

2

To help retain staff

60%

3

To attract a wider pool of talent

45%

Part-time Compressed hours Flexitime Annualised hours Staggered hours Phased retirement 12

* IoD Policy Voice survey, conducted between 12 October – 26 October 2018, 552 respondents

GUIDANCE

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How do entrepreneurs see remote working?*

88%

of IoD members who run start-ups offer remote working to their employees

98%

of entrepreneur members who offer remote working have had staff make use of such arrangements

Types of remote working arrangements that IoD start-up members have with their staff:

Remote working • Remote working is a type of flexible working.

• If the employee works remotely on a formal arrangement, it should be written in their contract or a written arrangement document is produced.

24%

• Informal and ad-hoc arrangements are not required to be written in the contract, but should be regularly reviewed.

53%

• Under the Management of Health and Safety at Work Regulations 1999, employers are responsible for carrying out a risk assessment of the employee’s working environment.

• If the employee works predominantly on a client’s site, the contract between the company and the client should include health and safety arrangements and responsibilities.

Read the IoD’s Report Managing Mental Health in Changing Business Models: Remote Working in SMEs

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Formal arrangements Informal arrangements A mix of both Don’t know

Why do entrepreneurs embrace remote working?

1

To improve staff work/life balance

72%

2

To help reduce costs, such as commercial rents

57%

3

To reduce the commuting burden

47%

IoD Policy Report May 2019

Managing Mental Health in Changing Business Models:

22%

Remote Working in SMEs

Knowledge Guidance Support #webackbusiness

Remote working report MAY19.indd 1

We Back Business Full Stop.

*IoD99 Survey, conducted between December 2018 – February 2019, 671 respondents 01/05/2019 12:25:57

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IN FOCUS

IoD member Anjola Adeniyi talks through his perspective on some high-profile incidents where organisations have encountered the pitfalls that arise in such an interconnected environment.

Cyber security

As all business leaders know, no opportunity comes entirely free of risk, and this holds true of the digital world.

While the internet and other technologies can open up businesses of all sizes to a world of new connections, they also open the door to new potential hazards.

Recognising this, firms are becoming increasingly alive to the issue of cybersecurity, and are aware that it’s not possible to dismiss the potential threats as science fiction.

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IN FOCUS

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“…there are only two types of organisations…

Oh, what a beautiful warning

The Oklahoma Securities Commission leaked government data of about 3 Terabytes (TB) containing FBI investigation details in December. It was left wide open on a server with no password, accessible to anyone with an internet connection. At the time Oklahoma Securities Commission did not have basic encryption protecting its website, so it isn’t shocking they missed the boat on basic Cyber Hygiene. This has a lot to say about its Cyber Security culture, and it’s needless to say that a government organisation with a regulatory role could and should have done better.

As the saying goes - “there are only 2 types of organisations: those who know have been hacked, and those who don’t know they’ve been hacked.” If the data was “accessible to anyone with an internet connection” chances are they have already been accessed by unintended parties.

Data breaches involving Personally Identifiable Information (PII) often lead to huge fines, reputation damage, loss of trust, employee dissatisfaction and attrition, and huge clean-up costs. Its impact to the individual is enormous from identity theft to financial compromise, and >> the list goes on.

…those who know they have been hacked…

…those who don’t know they have been hacked…”

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IN FOCUS Early bird catches the worm

It was reported in March that an international phishing campaign that delivers Ramnit Worm/Botnet malware targeting financial organisations in Asia has re-emerged, and could be heading for the UK. Once the fake email is opened by a member of staff, this executes on the victim’s machine and a malicious file is installed on the corporate network without even the knowledge of the employee who opened the fake email.

Financial institutions are investing in artificial intelligence/machine learning to identify phishing attempts and anomalies on their networks like beaconing to command and control servers as in this case. Those leading the way in educating staff on cyber risk will gain advantages for their brand, both financially and reputational.

Who guards the guards?

The Police Federation of England and Wales represents around 119,000 police officers across England and Wales, and in March it suffered what seemed like a typical ransomware strike, where data is encrypted and then held to ransom. The federation revealed that a number of databases and email systems were encrypted, and backup data was also deleted. There was no evidence that any data was extracted from their systems, but it couldn’t be discounted.

The attack on the Police Federation shows that anyone can become a victim of a ransomware attack. Based on available information, the Police Federation has isolated the malware, which is a good step in preventing it spreading deeper into the network.

To prevent these types of attacks, organisations should have a robust backup policy, practise good cyber hygiene, network segmentation, and enable their organisation to avert social engineering attacks.

Anjola Adeniyi Cyber Security Ambassador, IoD

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Anjola Adeniyi is an IoD member and cyber security expert. He is currently the IoD’s Cyber Security Ambassador on the IoD Central London Branch Committee. Anjola leads Securonix’s accounts across EMEA, as they invest in Artificial Intelligence/Machine Learning to rapidly detect cyber threats within their organisations.

Knowledge Guidance Support #webackbusiness

Booms. Busts.

Upturns. Downturns.

Growth. Crashes.

We have what business needs to thrive in times like these because whatever the circumstances, here at the IoD – We Back Business.

iod.com/we-back-business

We Back Business Full Stop.

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FACTSHEET

How to network better Networking helps you to form and maintain mutually beneficial relationships with others who are linked to your career, sector, market, region or specific interest.

Successful networking can help you to raise your profile, meet new customers, develop your knowledge or skills, explore new ideas, find investment, establish partnerships, build a presence in new markets and source new suppliers.

The benefits of successful networking speak for themselves, but not all business leaders are born networkers. It can be a daunting skill to master and – if done badly – an uncomfortable way to spend a few hours.

Golden rules for better networking Use your existing contacts Chances are you have been in touch with the event organiser before the day itself: use them! Introduce yourself to whoever is in charge and hopefully they will steer others in your direction and even make introductions for you.

Don’t wait for others to approach you The more proactive you are in making the first move, the better your chances of success. If you’re nervous, why not set yourself the aim of engaging the first person you make eye-contact with? That first conversation is always the hardest; after one, you’ll feel ready to work the room.

Plan ahead

IoD Members have access to a huge variety of business Factsheets through the Information Advisory Service. More information can be found at iod.com/ias For opportunities to try out the skills learned on this page, visit iod.com/events 18

If you are able to get eyes on the guest list ahead of time and identify key leads, this will be an enormous, time-saving advantage. If you can, try to avoid staring at attendees’ badges rather than their faces; introduce yourself in a confident way and you’ll soon discover their name. Don’t dismiss other attendees, as you never know where a conversation may lead.

Use your judgement when joining a group Try not to interrupt those involved in a deep conversation.

When appropriate, approach an individual or group, say hello and give a firm handshake. Smile and maintain good eye-contact.

FACTSHEET

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Ease the conversation towards your business Leaping head-first into a sales pitch is likely to estrange the most fervent networker! Move the conversation towards you and your business, remembering to answer any questions that might crop up. Never talk over another person. Show an interest in them, their business needs and aims.

Pick up on any interesting points they raise.

Gather as much information as possible; ask pertinent questions and don’t be embarrassed to make notes Make a plan to follow up and action it! Exchange contact details, thank them for their time and move on.

If you don’t think you can help each other – be polite You might be able to help each other at a later stage.

Say that you enjoyed meeting them, exchange business cards and wish them well.

As soon after the event as possible, establish contact, before time moves on and memories grow hazy Drop them an email, add them on LinkedIn; don’t be afraid to tell them why they are an important new contact for you and how you hope to collaborate.

Remind them of your own strengths and demonstrate that you were listening when they spoke to you.

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The IoD’s work on connected business Connectivity forms one of the key themes of the IoD’s flagship event series, the Open House roadshow. More broadly, connecting leaders is a central part of the IoD’s work. Our wide range of regional, national, and international events draw together directors from across the spectrum, enhancing networks and creating new opportunities. To find out about events happening near you, visit iod.com/events-community Our Professional Development courses ensure directors stay connected to the latest developments in business, while our Information and Advisory Service provides a range of support and guidance enabling leaders to capitalise on the improved connectivity enabled by new technology.

Our policy work in this area encompasses issues such as infrastructure and business support architecture. For more information, please visit iod.com

An Institute of Directors publication