Innovation, Productivity, and Why AI Won’t Save Us
The Spring Statement highlights a familiar problem to the UK. Here's my two cents of what businesses must to improve productivity. And no, it's not AI.
The UK government’s Spring Statement 2025 delivered a clear message: we’re not growing fast enough, and it is true if we compare the UK to other economies including the US. Productivity growth remains sluggish, and despite headline-grabbing announcements (from tax cuts to investment zones), it is clear that long-term growth depends on boosting business investment and innovation.
The government is calling on both the public and private sectors to raise their productivity game. There’s talk of supporting high-growth sectors like life sciences and advanced manufacturing. But what struck me most was the unspoken assumption floating around boardrooms, panels, and policy papers:
That AI will somehow fix everything.
AI is no doubt a powerful tool but it’s not a productivity panacea. In fact, without the right systems, leadership mindsets, and incentive structures in place, AI can actually amplify inefficiencies.
If you feed broken processes into a smarter machine, you don’t get transformation, you just get automated mediocrity.
So what’s really holding companies back?
Why most companies struggle with innovation?
For years now, I’ve worked with scale-ups and legacy businesses trying to grow. When companies (especially large ones) hit a growth wall, the root cause usually isn’t lack of ideas or budget.
It’s how those ideas are treated.
Leadership is too focused on “getting things right.”
When you’re running a public company, the pressure to avoid mistakes outweighs the appetite for experimentation. This kills bold ideas before they start.They apply outdated delivery models to new ventures.
Innovation projects get trapped in Gantt charts, heavy approval processes, and old tools that weren’t built for uncertainty.Incentives aren’t aligned.
Employees aren’t rewarded for taking calculated risks, but they’re punished if things go wrong. So the best ideas stay in desk drawers.
This isn’t just a people problem, it’s a system problem. And without changing the way we approach innovation, we’ll continue to fall short no matter how good the tech is.
It’s time to think like a VC
The best way to unlock innovation inside large companies? Put on a venture capitalist hat. Here's what that looks like in practice:
Create an internal start up.
Treat innovation like a company within your company. Give it a separate team, its own budget, and its own measures of success. The team should have different KPIs (e.g. speed of learning, not just ROI), and should report to senior leadership directly. Let them use different tools, run on different timelines, and most importantly, have the psychological safety to experiment without fear of failure. Innovation isn’t part of the core business. It’s a parallel system, built for speed and uncertainty.Fund like a VC - start small, scale fast
Use a staged model: fund initial discovery with a small “seed round,” then unlock more as the team hits learning or customer traction milestones. This forces focus and discourages bloated teams or projects with no market pull. It also helps leadership avoid sunk-cost fallacy. If the data says kill it, kill it. If the data says go, double down.Make customer access frictionless
Innovators need to be able to test directly with users fast. That means giving them access to customer lists, sales teams, distributors, and digital channels without a six-month legal review. At Adobe, innovators could talk to customers without needing a case study, an NPS report, or an intermediary. They were told: go validate it yourself. That level of trust speeds everything up and it shows employees you’re serious.Build fast decision loops (OODA)
Use the OODA cycle (Observe, Orient, Decide, Act) to move faster than traditional business units ever could. Train teams to work in weekly cycles. Give them frameworks to quickly evaluate evidence and change direction. Remove long planning phases, and instead, prioritise rapid feedback. Innovation is messy, your decision-making model should embrace that.Hire builders for the present, not necessarily the ‘stars’
The right hire for early-stage innovation isn’t the person with the best resume. It’s the one who knows how to operate in ambiguity. These people may not scale your Series D but they’ll get you to the first “yes.”. Avoid putting top performers from the core business into innovation roles, unless they’re truly comfortable in experimental environments. Consider external hires or partnerships with start up operators, accelerators, or even VCs to inject fresh thinking.
🧪 Case Study: Adobe’s Kickbox
Take Adobe, for example. In the early 2010s, the company recognised that its traditional innovation process was too slow and too centralised. New ideas required endless approvals, and employees were hesitant to put forward risky concepts.
So they launched Adobe Kickbox, an internal innovation toolkit that flipped the process on its head. Every employee, regardless of title or department, could request a red cardboard box. Inside was:
A $1,000 prepaid credit card
A simple, step-by-step innovation framework
Guidance on customer testing, validation, and pitching
A mandate: no permission required, just go try something
No layers of hierarchy. No gatekeepers. No 50-slide decks.
As a result, more than 1,000 new ideas were tested by people who would never have had access to traditional innovation budgets. Some ideas became features or products; others fizzled, but Adobe didn’t care. The true return was cultural because innovation became everyone’s job.
Kickbox became so successful that Adobe open-sourced it, and companies like Cisco, MasterCard, and even governments started adopting the model.
This is what it looks like when a big company creates the conditions for innovation.
Final thoughts
The Chancellor’s call to action is valid. The UK (and probably many other countries) need more innovation, more growth, and more productive businesses. But that won’t come from tax cuts alone or even shiny tech investments.
It will come from businesses rethinking how they work.
If you're a founder, leader, or operator reading this, ask yourself:
Are we creating the conditions for innovation to thrive or are we suffocating it with good intentions and old habits?
The future belongs to those willing to break the script.
💬 Seen innovation done right or painfully wrong? I’d love to hear your story. Drop a comment or reply, and I’ll include a few in a follow-up piece.