UKs small firms are innovating to pivot their way to recovery in lockdown


More than a quarter of small companies are branching into new areas or growing as the pandemic leads to a wave of innovation that could fix Britain’s productivity problem, according to research.

While official figures show that about a quarter of businesses have closed due to the lockdown, a fifth are innovating with new product and service lines and one in 20 is thriving.

The findings were made by Be the Business, an industry-led productivity leadership group, from discussions with its network of 250,000 people and a survey of 500 small firms.

It suggested that 21 per cent of companies were “pivoters” launching new products and 6 per cent were “thrivers” that are increasing production. In addition, many companies that are closed are using the time for strategic planning. “Necessity is the mother of invention for these businesses [and] there is a huge business model innovation opportunity,” Be the Business said in its report.

Brian Crowther, who employs 25 people in his food production company Flower and White, lost sales initially but switched into home baking kits, sales of which have soared.

However, Be the Business warned of a “productivity paradox” when lockdown ends and the recovery picks up, as companies struggle to find the money for investment. Just one in ten is planning to invest.

Productivity has barely grown in the past decade and it takes a UK worker five days to produce what a German, French or American would deliver in four.