Today I speak in an afternoon panel debate entitled 'Investment and Policy Options' at the Tech City 2014 conference. When I was originally sent the proposed agenda a few months ago the session was simply labelled 'Investment'. Since one of my other incarnations is to consult with an investment committee for a small (£300m) investment fund (see the recommendations on my LinkedIn page) and consequently attend a lot of informative, big institutional, events in The City listening about 'investments' I pushed back to the organisers and suggested that they add the 'Policy Options' bit. Fortunately, they agreed and I present something here which simply encapsulates my current thinking on UK digital policy.

Over the past couple of years I have been fortunate enough to have worked on projects related to the Government's Digital By Default initiative - see HERE - and also witnessed the effects of Broadband Delivery UK's (BDUK) £100m Connection Voucher Scheme (CVS) - See HERE. Putting these experiences together with those I have as an Internet entrepreneur results in this "Policy Pentagon – The Five Forces That Create a Successful ‘Tech City’". As denoted in the centre of the pentagon, the target of UK digital policy should be to: promote jobs, enterprise growth and economic prosperity. Successfully harnessing the forces operating in these five areas will deliver these things. Here is a brief outline of my presentation notes and my assessed scores out of 10 for how well the UK is doing right now in national policy terms:

Force No 1: Digital is a 'Hygiene' Factor
This event is called the ‘Tech City Summit 2014’. But all too often high profile policies on ‘Tech Cities’ substitute for UK Digital Policy. It’s almost as if the sexy bits of digital, i.e. the (very few) young people who make their millions from digital start-ups, are proffered as a sign post for the UK’s digital success. In fact, practically all aspects of the UK economy will be impacted by digital technologies. Over the next decade hi-speed broadband connections will be as essential for business success in all sectors of our economy as having a safe place to work. Two mega trends are the reason for this: The Internet of Things – where more and more inanimate objects are reporting back to the Cloud on how well they are performing the task that humans have set for them; and, the ‘sharing’ or ‘collaborative’ economy, where digital connections make it easy to share the value of human and physical assets. Money Week Editor, Merryn Somerset Webb, writing in the FT (26/4/14) estimates the value of the ‘sharing economy’ to UK consumers in 2013 at £4.6B through the use of such sites as Parkatmyhouse, mondaytofriday, zopa, Uber and Airbnb (the latest fundraising rounds for the last two valued the web properties at $18.5B and $10B respectively).

Score 7/10: Digital By Default is the government’s transformation of public facing transactional systems. The Coalition has rightly recognised hi-speed Internet as an economic priority for Britain. But the structure of the broadband market with a powerful BT at its Open Reach centre is bad for Britain and is slowing the roll out of fast internet to business.

Force No 2: VC Money Backs People and Propositions
In the digital space, venture capital money backs people and propositions (rather than mere technology) who ride the latest digital themes. Right now these are: mobile, location, social, health and productivity. In many cases technological advantages are short term and ephemeral. Whereas the combination of a good proposition and competent people can pivot towards success as they roll out their business and face the reality of market forces where rubber hits the road.

Score 8/10: The UK is blessed with great financing options for all types and sizes of business from traditional bank support (yes it's still out there), VC and crowd funding to an AIM listing and City restructuring. Several government schemes are also good for start-ups. But the Technology Strategy Board still backs technology-led bids with its millions in government funding. This is sub-optimal and must change.

Force No 3: Policy Accentuates Scale and Managing on the Margin
One of the most important lessons of business management is that success is a result of making good marginal decisions. (see also: “It’s the NUMBER of decisions Stupid!” HERE). These are the everyday judgement decisions that from an analytical point of view are not clear cut – they could go either way. Often they deal with boosting relationships and cash flow. Together with a business’ ability to scale getting more of these decisions right is a recipe for great success. A national digital policy that helps support its business people with coaching, mentoring and training in these areas will reap big rewards.

Score 5/10: This is an under-appreciated aspect of UK national digital policy and the government has it only half right. Too much emphasis is placed on finance and 'hard' factors like office space rather than the softer but critical support aspects of growing a business. Some of the major tech firms in world started in their founder's garages. At the critical time when they were formulating their initial propositions they didn't need an 'office' - they needed any space where they could think and collaborate. The number of companies newly registered at Companies House may well be at record levels but the percentage of these that register for VAT is lamentably small which indicates turnovers don't meet the VAT threshold and are either dormant or one person operations. To reach an enterprise growth tipping point, UK start-ups must scale.

Force No 4: Avoids Form over Substance
By its very nature crafting a UK digital policy is a political process. Vested interests have to be assuaged and coalitions formed. Yet this should not mean that form triumphs over substance. Neither, because the digital universe tends to be governed by short form communication (140 characters the norm?), does good public relations act as a substitute for well thoughtout policy. The Labour Party's decision to support London Black cabs against the sharing economy Uber App is a case in point. Suppose this world changing Internet start-up was started in Britain as a result of UK digital policy. Would the Labour Party still feel the same way? One of the best ways that digital policy can help start-ups scale is to offer them operational gateways to resources that can achieve this. Linking up with low cost 'coding locations' in other countries (Hyderabad? Belarus?) can help UK start-ups follow well-trodden paths to turn their intentions into reality.

[NB: At present, England's schools lag in the teaching of maths thought to be an essential basis for good coding but rank highly for international 'problem solving'. The Indian state of Andhra Pradesh (now with Telegana) produces 250,000 engineers coder graduates a year! Has the UK lost its international competitive advantage in this area?  The UK often leads the way in coming up with creative solutions and ideas which other countries capitalise on commercially. UK Digital Policy should not allow our Internet entrepreneurs to fall into the same trap.]

Score 5/10: Current digital policy for start ups is focused too much on the ‘Tech City’ concept in east London. The whole of Britain needs to be included in national policy if we are not to perpetuate the north-south divide.

Force No 5: Localism is the Political Currency
Even if any future government is to extend the Tech City concept nationally, geography matters since global capital follows local policy. The number of multinational companies returning to UK shores as a result of corporate tax changes evidences this. In formulating national digital policy ‘localism’, taking political decisions at the level closest to the communities affected, matters. In the UK, most digital policy decisions are best made at unitary local authority level. One important aspect missing from current central government initiatives is getting local councillors involved in creating the relationships with towns and cities in foreign jurisdictions that can help UK businesses scale. Traditional ‘twinning’ schemes between UK and overseas local authorities may have had a bad rap. But similar arrangements that help build markets and structures that encourage UK entrepreneurs to build profitable relationships should be part of national policy. In fact local twinning schemes and active participation from knowledgeable local politicians can help build the operational infrastructures and markets that local entrepreneurs can capitalise on. 

Score 4/10: Far too much of the UK’s current digital policy is run from central government departments or through quangos (quasi non-government organisations). Local councillors in many parts of the country have their finger of the pulse of local business (many are in business themselves) and should play a bigger role in developing their local economies. The Prime Minister should take local councillor delegations and entrepreneurs with him to India when he visits newly elected Prime Minister Mohdi.

Download a PDF copy of the Policy Pentagon here

Just over a year ago the UK Government's Digital Service (GDS) published its digital strategy. This strategy has become known as "Digital by Default” (DbD) and for several reasons looks like being one of the most transformational government programmes since the publication of the Northcote-Trevelyan Report and the creation of UK Civil Service in 1850.

For a start, the strategy paper defining this programme is remarkably well written. It has seven key components, such as: Increasing the number of people who use digital services; Broadening the range of those tendering to supply digital services including more small and medium sized enterprises (SMEs); Removing unnecessary legislative barriers; Basing service decisions on accurate and timely management information; and Improving the way that the government makes policy and communicates with people.

Eleven 'Principles' like: Developing digital capability throughout the civil service; 
Redesigning transactional services to meet a new digital by default service standard; and, increasing the number of people who use digital services. These principles provide an important foundation on which to translate policy and intention in this area.

It also sets out a very real, practical checklist of fourteen specific 'Actions' that central government initially (and local government in time) will follow to bring the Digital By Default strategy to life.

What's more, in the past year, the GDS has managed to convince Cabinet ministers to put Digital By Default at the heart of public service provision in their departments. This means that digital services that are so straightforward and convenient that all those who can use them will choose to do so, whilst those who can’t are not excluded. The GDS estimates that this strategy of moving services offline to digital channels will save the UK taxpayer between £1.7 - £1.8 billion a year and plans to move 650 transactional services that the government provides to online mode. 

All of this means, that DbD will impact every citizen who uses public services. Just as people increasingly use digital devices (PCs, Tablets, smartphones) to organise their lives, shop and seek information government services will be delivered in this way too.

On an almost daily basis, the GDS publishes blog updates on how it is doing in meeting the principles and actions outlined in the DbD strategy paper. This in of itself is a startling departure to the ways that government has worked in the past. More significantly perhaps is that these updates are written by people close to ground in implementing the tactical measures that bring DbD to life across government. It is noticeable that the images that accompany these blog posts are mainly of younger people fully engaged in the process of rolling out DbD, dressed more informally that you might expect from historic dealings that more experienced people might have had when they interacted with representatives of the Civil Service. What comes across is a 'collegiate atmosphere' where everyone's view is listened to, if they take the trouble to coherently think about how they can add value to the success of DbD. 

In April 2013, the GDS published its Government Service Design Manual for digital services. This is the implementation standard that government departments must adhere to when they digitise the Big Data transactional services that they offer to the general public (immigration processing, issuing driving licenses etc). This document lays down Twenty-four 'criteria' for the DbD Service standard.  

Arguably, the 'DbD Service Standard' will be the component that has the greatest impact on transforming Britain. Just like the formation of a 'modern' and dedicated cadre of 'professional administrators' dedicated to public service, widespread implementation of the DbD Service Standard will have a massive effect on everything that the government does.  To have set out the strategy, principles for implementation, tactical plan and already have had some serious success in rolling out DbD must be recognised as a big achievement for the GDS in its first year or so. 

DbD Areas For Improvement
However, the true impact of DbD is yet to be felt at both the front line of public service delivery and also in making improvements in the way that government makes policy and communicates with people. To be successful here the GDS needs to alter its approach in two areas and speed up its plans to remove 'legislative barriers' that restrict DbD helping policymakers deploy even more effective online public sector services. 

Open Source. The first area for 'revisitation' is the GDS policy of pushing 'open source' software as part of it's 'open standards' agenda (confusion between the two in government circles is rife). Open source software may have a major role to play in the success of DbD but the message to those who have to implement digital projects in the public sector is too skewed towards this type of software as opposed to the propietary software vendors (SAP, Microsoft, Oracle etc) who have traditionally served the UK Government. The irony here is that the UK public sector is crucially dependent on these vendors (try installing Open Office in your department and see how far you get). Asking project managers to have to justify using these vendors as opposed to open source is a wasteful exercise that may not get best value for money for the taxpayer. Lessons should be learned from the fact the US Affordable Healthcare ('Obamacare') website is a recent example of where there was an emphasis on government using Open Source over proprietary software. 

SMEs. Second, as a part of government procurement, SME participation is being pushed very heavily. This is rightly a noble aim but should not clog up senior management time and become a politicised issue for constituency MPs trying to curry favour with small firms in their marginal constituencies (see the video example below).

Data Sharing. Lastly and most significantly, the issue of data privacy restrictions on decision makers analysing data for policymaking purposes needs to be addressed. At present, it seems that many departments, councils and agencies across government are wary of even using and sharing anonymised aggregated data. Such sharing would transform the ability of the public sector to provide really targeted and useful services. Legislative restrictions on how data can be used and shared between UK government departments, local authorities and agencies, which are in turn often misinterpreted by data security officers on the ground, are one of the biggest issues that the UK faces in getting close to the ‘joined up thinking’ that the GDS in its DbD initiative is trying to encourage and support. 
 
The Digital By Default strategy alludes to this in some way when it says the Government Digital Service will : "Remove unnecessary legislative barriers.
The Cabinet Office will work with departments to amend legislation that unnecessarily prevents us from developing straightforward, convenient digital services.”

The GDS needs to outline exactly how they are going to tackle this given a busy legislative timetable for the Coalition. Does Cabinet Office Minister, Francis Maude, have the political ‘pull’ to be able to table a bill that brings the whole government into line, from a data protection point of view, with what is required to make UK public sector digital services truly fit for purpose, cost effective and highly targeted? Or will we see a sub-optimal, piecemeal legislative effort where such changes are hacked onto bills that only affect individual departments and functions? 

When the GDS can tell us this it will mean that they have truly recognised that Digital By Default is a lot more than data standards, procurement changes, technological innovation and User testing. It’s really about transforming how individuals perceive the return they get on sharing the marks of their digital footprints.

It starts with the MP for Daventry trying to find out why a small business in his constituency called 'Mapsite' can't win a contract with the police. The response from the officials is priceless and we get to see the pressure that DbD (Digital Services Framework) and Civil Service Reform is having on our Mandarins. The days of 'Yes MInister' are long gone!