Risk is Good

As one of our 2021 participants put it: “There are no rewards for getting it right, but plenty of criticism for getting it wrong”. Two years on, the issue of risk aversion in the public sector remains, but concern amongst our participants has deepened due to recent economic and geopolitical events. The need to unlock the barriers to innovation is greater than ever.

We can’t carry on as we are; to unlock carbon, inflation and people challenges, we need to take risks.”

MATT PALMER

EXECUTIVE DIRECTOR Lower Thames Crossing - National Highways

The Early-Stage Funding Paradox

The time leading up to planning consent is the optimal window in which to innovate, but projects lack the funding to do so at this stage. Put simply: there is time but no money. Conversely, once planning consent is granted, there is a race to sign contracts and start construction, after which any radical changes in approach become impractical and prohibitively expensive. There is money but no time.

Leaders are largely united in the need for earlier certainty in respect of infrastructure projects. While UK Government publishes its pipeline of infrastructure projects, the commercial reality is that a lack of binding commitment is a major barrier to private sector investment in the R&D needed to address the biggest challenges the sector faces. Private capital likes certainty, and UK infrastructure projects are not generally good at providing it.

Risk is the Currency of Progress

Leaders also maintain that to drive progress, UK Government must embrace calculated risk. Individual projects cannot do this alone, and certainly not under the current framework in which investment decisions are made.

This stance appears to be gaining traction in Whitehall, with George Freeman MP, Minister of State for Science, Research, Technology and Innovation, commenting that “risk is the price of successful innovation in ground-breaking science and technology”, making reference to a report by the Rt Hon. The Lord Hague of Richmond that highlights a need for a change in Whitehall attitudes to risk.1

Earlier in our report, we highlighted the issue of innovation siloes, with one contributor noting that good things are happening but within individual projects rather than collectively. They are not alone in this opinion, a report recently published by the Tony Blair Institute for Global Change calls for a series of reforms to enable Britain’s potential, including greater Government leadership for investment in R&D.2

There is much to be optimistic about, but the key is translating all of this into action, quickly. Disruptive change is required, not tinkering at the fringes.

We need to allow enough flexibility for greater creativity and risk taking to drive better performance.”

CLIVE BERRINGTON

GROUP COMMERCIAL & PROCUREMENT DIRECTOR Network Rail

Projects can sometimes be too risk averse in hiring, particularly in the early development stages, which can hinder the creation of truly learning organisations.”

SARAH JOHNSON

STRATEGIC ADVISER Major Programmes

Other countries are delivering better innovation to drive productivity and efficiency. The UK must take an approach that gives workforces the agency and ability to identify the real innovation that brings value to a project.”

AMBROSE MCGUIRE

EUROPE MANAGING DIRECTOR FOR PROGRAMME MANAGEMENT AECOM