National Productivity Week 27th January 2025 | Visit Website

A diverse community of leading experts, policymakers and practitioners

The Institute’s key research themes are led by ten academic partners spread across the UK.

We’re a UK-wide research organisation exploring what productivity means for business

Businesses are crucial to solving the UK’s productivity problems.

Using quantum technologies to innovate business models

Chander Velu

Chander Velu

This blog is written by Chander Velu, a Co-Investigator at The Productivity Institute and Professor of Innovation and Economics at partner Cambridge University. He is co-author of a white paper which examines how the UK should prepare to adopt technologies that are emerging from research in science and engineering but are only likely to be adopted in the future.

Recently the Institute for Manufacturing at the Cambridge University Engineering Department and the Quantum Computing and Simulation (QCS) Hub conducted a joint study on Quantum Technologies and Business Model Innovation. The study is motivated by the prevalent productivity paradox describing the conundrum of the productivity slowdown in major economies (including the UK), despite the prevalence of digital technologies.

Our hypothesis is that we need to innovate business models to achieve productivity and economic growth. Hence, preparing UK firms and the economy early for the adoption of quantum technologies would be crucial in enabling such economic growth. The study is based on 60 interviews with stakeholders (start-ups, incumbent firms, academics, policymakers, investors and consultants) and three roundtables (with 40 participants). We examine how firms and policymakers need to prepare for the development and commercialisation of quantum technologies (with a focus on quantum computers) to identify value to society and contribute to economic growth.

What is quantum computing?

Quantum computing takes advantage of the laws of quantum mechanics to provide fundamentally new ways of processing information. The two properties of quantum mechanics (superposition and entanglement) may allow quantum computers to solve problems that are deemed intractable with today’s digital/classical computers. While a classical computer uses binary bits that can only depict either a “0” or “1”, quantum computers use qubits that can depict a “0”, “1”, or any combination thereof (superposition). Hence, quantum computers can solve complex computational problems exponentially faster than classical computers, but are in a relatively early stage of development. There are many applications where a quantum computer can surpass the capabilities of classical computing, including factoring large numbers, optimising complex systems, simulating nature (e.g. molecules and fluids) and pattern analysis. These problems are at the heart of many business and commercial operations.

UK strengths in quantum computing

The paper finds that the UK has important strengths in quantum technologies (QT), which can be harnessed to help economic growth and productivity to recover. These strengths include being leaders in science and engineering of QT, the effectiveness of Innovate UK funding to diffuse new technologies more rapidly, the potential to build a skilled workforce with frontier QT knowledge, significant funding from venture capital and angel investors, and a vibrant start up community.

But challenges to adoption and commercialisation of quantum technology remain. The study identifies and analyses these issues, and recommends how best to pursue QT adoption, benefitting both the economy and society in the UK.

These recommendations include:

  • Mission-driven funding calls to solve industry-wide issues (e.g. more efficient fraud detection in the financial services industry) or societal challenges (e.g. an ageing society, climate change and inequality)
  • Forming a forum of systems integrators in the UK
  • Introducing strategic initiatives that bring together quantum computing and quantum communications
  • Developing intellectual property policies that encourage commercialisation as well as accessibility
  • Preparing scale-up capabilities in technology and manufacturing
  • Creating training programmes with shorter timescales that increase quantum literacy and skills.

Firms and policymakers need to prepare to adopt quantum technologies that are emerging from research in science and engineering, but which are only likely to be adopted in the future. Our study aims to better understand the enablers and barriers of business model innovation in order to accelerate quantum technology adoption. The findings and recommendations should help to develop the framework needed to ensure that we get the timely benefits of quantum technologies through productivity improvement and economic growth.