Solving the puzzle that closes the productivity gap is a key priority for the UK. A renewed vigour and focus on growth has taken shape in the past few months in the UK, with a ‘growth mission’ taking centre stage in government policy priorities.[1] Productivity is paramount to economic growth, yet UK businesses are less productive than other similar economies: the UK’s output per hour and per worker were below average among G7 nations in 2021[2] and productivity growth has been slowing over the past 15 years.[3]
UK small and medium sized enterprises (SME) make up around 60% of employment and half of turnover.[4] SMEs therefore have a key role to play in improving productivity, both for the UK as a whole and for the local areas where they operate. There has been substantial and widespread investment in interventions to increase SME productivity growth in an attempt to realise the substantial economic gains that could be unlocked.[5]
In this project, we proposed developing and testing whether a light-touch intervention can be effective in encouraging SME leaders to undertake higher value productivity activities, with the goal of building a productivity “habit.” This report details the methodologies and findings resulting from The Productivity Institute (TPI), Be the Business, and the Behavioural Insight Team (BIT)’s recent pilot. The pilot ran between January and September 2024 and tested a light-touch habit forming business support intervention on four cohorts.
The intervention selected was a gamified course focused on strategic thinking and planning delivered via an app or desktop. The course covered a variety of topics including the business model canvas (BMC), Porter’s 5 forces, and setting targets. The content was delivered in ten, 15 minute chunks over two weeks. The course also targeted two productivity enhancing behaviours: scheduling and running a quarterly strategy meeting, and spending an hour a week on strategic thinking and planning.
The results of the pilot demonstrated evidence of promise in engaging participants: participants completed the course as intended, had high satisfaction rates with the course, and likely updated their understanding of what a strategy involves and were motivated to spend time on strategy. In particular, we found promising movement on self-report intention to maintain the two productive behaviours the course was targeting:
In addition, we ran a randomised controlled trial (RCT) as part of recruitment for this pilot. This RCT added to the evidence base on the role of incentives and the effectiveness of email outreach in SME recruitment. We sent more than 27,000 emails to SME contacts using both a purchased email marketing list (DataBroker) and Be the Business’ SME newsletter the Bolt. We randomised whether participants were told they’d be entered into a draw for a £500 amazon voucher if they completed the course, or whether they received no incentive for completing the course. We found that email outreach was effective when it came from a trusted organisation (the Bolt newsletter), but not through a cold email (Databroker): of the 98 sign ups, 92 came from BtB’s Bolt newsletter, with only 6 coming from the Databroker email list, despite the Databroker list being more than twice as large. This demonstrated how email outreach can be a complement to wider SME recruitment methods if the email comes from a trusted organisation or source. We also found the role of incentives may be more nuanced than simply encouraging more SMEs to participate: the lottery incentive worked less well than no incentive in encouraging SMEs to open the email and sign up for the programme. Future research should consider further testing how incentives can be made more effective at encouraging SME recruitment.
We think this pilot is a promising first step in exploring whether lighter-touch interventions can unlock disproportionate behaviour change through habit formation. Time-intensive interventions involving weeks-long commitment from SMEs have been found to result in changes to SME behaviour.[6] However, these programmes require a large time commitment from SMEs, which might put many of them off applying in the first place. We think it will be particularly interesting for future research to explore the role of similar interventions in carving out a space as lighter touch than intensive face-to-face courses, yet more substantive than a static website with information.
Authors: Holly Midwinter, Adam Hardy, Louis Shaw, Lauren Leak-Smith and Eva Kolker
[1] Labour Party, (n.d.). Mission-driven government.
[2] Office for National Statistics, (2023). International comparisons of productivity, final estimates: 2021.
[3] The Productivity Institute, (2023). The UK’s productivity challenge: People, firms, and places.
[4] Federation of Small Businesses, (n.d.). UK small business statistics: Business Population Estimates for the UK and Regions in 2023.
[5] Confederation of British Industry (CBI), (2019). From ostrich to magpie: The role of business in the UK’s innovation ecosystem.
[6] See for example: Department for Business, Energy & Industrial Strategy, (2022). Evaluation of the Small Business Leadership Programme: Phase 2 report and Department for Business and Trade, (2023). Help to grow: Management end of year two evaluation report.
