The big story about Tech Nation that wasn’t revealed in the media coverage

Screen Shot 2015-02-06 at 15.02.34Tech Nation, launched yesterday (5.2.15) by Prime Minister Cameron and Chancellor Osborne, was a seriously ambitious idea and was formidably difficult to bring to life.

Nothing of this complexity – naming and locating the UK’s digital companies, identifying clusters of digital expertise and drawing conclusions about the overall contribution of the UK’s digital companies – has been tried before. There have been good efforts to map sections of the digital economy and to estimate the economic significance of digital businesses, but Tech Nation is in a different league.

Having been closely involved in Tech Nation’s creation, I’d encourage people to dig beneath the headlines because this absorbing study reveals some new, subtle and important insights into Britain’s economy.

Probably the most challenging question in the whole project was the most fundamental one: what is a digital company?

Some companies are obviously “digital”: the UK divisions of Facebook, Google and Twitter were always going to make the cut, along with app developers, crowdfunding platforms and music streaming services.

You’d think that online retailers – Sofa.com, Amazon, NotOnTheHighStreet – would be shoo-ins, too, but this was where the tricky questions started: is it a “digital” company if most of its effort goes into shifting physical stuff like books; what if, as well as using digital channels to take orders, a company manufactures products and has physical outlets? Might it at some point stop being a digital company?

Similar questions could be asked in the opposite direction. Long-standing, pre-digital companies such as John Lewis have awesome digital architecture, but when do they stop being an offline company and become an online one? Is there a proportion of revenue, or costs, that must be attributed to digital stuff that qualifies a company to be digital? One of the oldest companies in Tech Nation, NCR Limited, started life in Dayton, Ohio, in 1895 as National Cash Register. Clearly it wasn’t a digital company back then, but evolved over time into a software corporate.

There were many hard questions: when does a valve-maker that uses digital-based technology to design its products stop being a sweaty manufacturer and start becoming a sleek digital pioneer? The HQ of McLaren in Woking is a temple of clean lines and data science (Cupertino in Commuter belt), but when does it tip from engineering into something different?

What’s so impressive about the data science behind Tech Nation is that it a) recognises companies that self-identify as “digital” through the Standard Industry Classification (SIC) system and b) has the sensitivity to detect companies as they evolve into a fuller digital infrastructure – digital-in-progress companies, if you like. In years to come, I suspect we’ll see supermarkets, banks and engineering companies starting to be absorbed into the “digital” economy and fall under the aegis of Tech Nation.

This of course is the big story behind Tech Nation. For “digital” isn’t really an industry sector at all; it’s a recoding of the way we do everything, particularly the way we do business.

Tech Nation brilliantly spotlights the 47,802 companies that already get what being digital means – the opportunity for hyper-flexible supply chains and employment models; digital channels as an instant route to a global customer base; pervasive automation and reductions in fixed costs – but these are just the trailblazers. In years to come, we’ll see millions more companies counted within Tech Nation and, as we do, a leaner, more competitive Britain will emerge.