Business analysis: "We must accelerate the transition to an idea-driven economy"

The coming years are going to be as tough for business as for individuals with the new Government seeking to deal with the huge national debt it has inherited. If that were not bad enough, there is a growing belief that we are not in the grip of the usual cyclical downturn but are in the middle of a “great reset”, to use a term that is suddenly becoming more common. If – as the author Richard Florida and others contend – we are in the middle of the sort of change that followed the Long Depression, which lasted from the early 1870s until the mid-1890s, and the Great Depression of the 1930s, then the usual measures to deal with economic downturns are unlikely to work.

Indeed, Florida, who has previously explored how a “creative class” has grown up in certain locations around the world, writes in his new book, The Great Reset (Random House Canada), that in circumstances such as those at present, government can “patch up some holes to keep the economy afloat for a short time [but it lacks] both the means and the resources to generate the enormous level of demand needed to power sustained growth”. In other words, we are going through a huge structural change and policymakers need to beware of any attempts to return things to how they were before the crisis struck in 2008.

Rather, we must seek to build the economy of the future. “Instead of infusing scarce capital into the very banks and financial system that brought us to the brink in the first place, or trying to reinvigorate the housing and mortgage markets that pushed us over the edge, and instead of bailing out mismanaged old-economy companies, we must use whatever resources are available to accelerate the transition to an idea-driven economy, while improving the jobs that have survived or are now being created.”

The good news is many in the business world – particularly in small and growing companies – are already moving in this direction. For example, the Basingstoke company 2 Save Energy has grown from almost nothing to a turnover of £5m by supplying the monitors that enable householders and other energy users to check instantly on the amount of power they are using. Under the leadership of the brand developer Belinda Gooding, the company has seen its original OWL monitor become commonplace in homes and businesses and has developed a range of related products including a USB that enables information to be transmitted from an OWL monitor to a PC, so that accurate computer records of energy use can be kept.

Avoiding waste is also behind the development of WhipCar. The founders, Tom Wright and Vinay Gupta, saw the opportunity to make use of the cars that typically spend more time parked outside their owners’ homes than being used. Building on the idea of the car pool and shared- ride schemes, they are using the internet to link car owners with would-be renters. They do all the administration and have agreed a deal with a major insurer. The business was launched in the same week that Zipcar of the US acquired its UK equivalent Streetcar. With lower overheads than these companies through not having to operate a fleet, Wright and Gupta are confident they can expand rapidly.

The fact there are different approaches – and that big carmakers are experimenting with the mobile phone-type pay-as-you-go model – offers hope that entrepreneurial vision will help find solutions in other areas. All the Government needs to do is create a benign environment.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
News
people
News
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want it for the fitness tech, or for the style
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace