British Innovation lives on … at least in the leisure sector

I was reading an article recently by a well-known economics commentator (who I won’t name) which tried to summarise why Britain’s productivity per worker is going down.

The conclusion was essentially that employment is going up and productivity in firms doesn’t always keep up with increased staff numbers.  If you get a team of 4 people who have been working like maniacs since all their colleagues were fired during the recession, they tend to relax a bit if an extra body is finally added to their team.  I guess this makes sense.

However, the commentator also listed a series of supposed shortcomings which are holding back UK productivity … and one of them was “as a nation we are lousy at innovation”.

I could see what the commentator was trying to say:  The likes of Germany are ahead of the UK in terms of innovating industrial products and systems.  However, it still grated a little.  Surely the country which established Parliamentary Democracy, started the Industrial Revolution and designed the World Wide Web need not berate itself for being “lousy at innovation”.

I therefore decided to find some great examples of UK innovation and, unsurprisingly, I needed to look no further than the Propel Newsletter which pointed to the UK leisure sector.

The first involved Greene King who are innovating beyond the sphere of Humankind.

Propel Newsletterreports that “Greene King have launched a menu for dogs across its pubs. To coincide with national pet month, the company has devised a menu featuring starters, mains and desserts that dogs can enjoy while their owners spend time at the local. The company said its food development team at Greene King head office in Bury St Edmunds, Suffolk has spent months working with a team of canine tasters to help put together a selection of tasty treats”

The second involves Costa in the UK.

Propel Newsletter reports that Costa are trialling a ‘power nap’ service called “Costa and a Kip”.  The newsletter reports “With sales figures highest between 3pm and 4pm, the time when people are most in need of a coffee “pick-me-up”, Costa is offering customers a chance to book a 15-minute snooze. Specially imported, Japanese-inspired “ostrich pillows” will turn tables into relaxation zones. Customers will be able to place their coffee order, let staff know what time to wake them using the specially designed table clocks and take a nap, before being gently nudged back into consciousness by a friendly barista with their drink”

As I was reading the newsletter I also saw an example of the dangers staying the same and relying on the market … which is sort of the opposite of innovating.  The example involved one of the biggest brands in the world.  McDonalds.

The Propel Newsletter reports that the US fast food sector as a whole grew by 12.8% during 2014.  Even the 500 largest restaurant chains in the US (i.e. those with the least room to grow) managed 4% growth.  So, as the Big Daddy of fast food this surely put McDonalds in a great position.

Actually not.

McDonald’s reported weak earnings in the fourth quarter of 2014, with revenue dropping 7.3% to $6.57 billion.  The fast food giant booked a profit of $1.1 billion compared to $1.4 billion in the same period a year earlier.  A key reason seems to be that consumers like to design their own food combinations rather than pick from set-menus.  This is difficult for McDonalds who have their processes and kitchens designed around the set-menu concept.

Rather than staying ahead of things like Greene King and Costa in the UK, it looks like the US-based McDonalds has been caught off guard.

They should have innovated.  British-style.

 

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