±«Óătv

Chairman's speech to the Institute of Directors

Date: 25.11.2015     Last updated: 25.11.2015 at 21.31
Speech by Rona Fairhead, ±«Óătv Trust Chairman, to the Institute of Directors, London

On the wall of my office at the Trust there’s a very large ±«Óătv publicity photograph. It shows David Attenborough: eyeballing an iguana.

Or perhaps the iguana – and it’s quite a sizeable beast - is eyeballing David Attenborough, who knows? 

You’re really not sure what’s likely to happen next, which is the predator and which the prey.

I'll leave the ecology of natural history to Attenborough. Instead, I want to talk tonight about the ecology of business. 

This all starts with the obvious truth that, just as no animal or plant can exist in a vacuum completely cut off from the world around it, so no business can exist in a vacuum.

This isn’t just because every business needs suppliers and competes for customers. It’s something else.

It’s the way that a particular kind of interaction between businesses creates something that David Attenborough would recognise – an ecosystem. An ecosystem that, when it functions well, is significantly greater than the sum of its parts.

In an effective business ecosystem - and I promise this is my last Attenborough allusion - competition fuels evolution. Businesses compete and, as they compete, they evolve.

And the process affects not just one business but all of them – what we see are whole sectors actually co-evolving.

And through this process of co-evolution, the entire business ecosystem becomes more resilient, more productive, more competitive and better able to serve its customers.

The clearest example of this is the City.

I got to know the City pretty well during my time at HSBC and the FT. It’s a formidable, world-beating cluster of businesses – banks, law firms, accountants, trading floors, insurance companies and so on – as well as all the smaller specialist business that supply them. I don't just mean things like specialist IT, but the equally essential high-end coffee-shops and the rather less obvious businesses like the tailors near the Inns of Court turning out wigs and gowns for the local population of barristers. Altogether, more than 15,000 businesses, employing nearly 400,000 people.

Competition in the ecosystem of the Square Mile is fierce. But there’s also a high degree of collaboration. You fight hard to win the mandate. But then you collaborate to deliver it, drawing on the rich resources of the ecosystem around you.

And because of this, and because it’s done at scale, and because the City has been doing this for centuries, and because of all that agglomeration and sector clustering and the benefits they bring, the City’s ecosystem thrives and is an international magnet for trade and financial services.

It brings in customers from around the globe – customers attracted to that potent City mix of capital and innovation and highly-specialised expertise. And that mix itself grows more potent though the classic clustering effect of new entrants coming to the City looking to benefit from its exceptional pool of skills and talent.

This is what makes it a world beater, producing some £45bn in economic output - a figure that’s expected to rise significantly in coming years.

That’s the power of a successful business ecosystem.

Look at another sector – the health cluster. An ecosystem that I started to explore some years ago. Why? Because I – like so many others before me - was diagnosed with cancer.

The thing about cancer is that you don’t just need one specialist; you need a whole team of specialists. You need a surgeon. You need an oncologist. You need a radio-therapist.

You want the people offering these services to be the best there are – and you want them close to you and close to one another so that you don’t have to trek round the country stitching together the network you need.

And in London, that’s what you find – an amazing cluster of world class specialists based in and around Harley St and in the big London NHS teaching hospitals. Together, they are supported by world-ranking research through institutions such as the Crick and the Marsden – as well as the Pharmaceutical industry which cuts a swathe from Cambridge through to London.

There on Harley St, for example, you go to number 149 for surgery, number 95 for oncology, and just round the corner there’s the radiotherapist. And if you need a blood test, it’s there at number 92 – or at one of the big hospitals. Being a patient in need of multiple specialisms will never be easy, but an effective ecosystem makes it - for the lucky ones like me – survivable. And because these businesses, both public and private, work effectively together they all succeed.

The American economist James F Moore was one of the first people to use the ecosystem metaphor to describe how businesses work. And one of his key insights was that a viable business ecosystem needs what he calls ‘central ecological contributors’. So this is the point at which, as the most perceptive of you may have guessed, I want to talk about the ±«Óătv.

Moore said that a central ecological contributor provides: ‘a compelling vision for the future that encourages suppliers and customers to work together to continue improving the complete offer.’

That, I would submit, is exactly what the ±«Óătv does. And the example I’d use to illustrate my submission is the UK music industry.

It’s a continuing source of wonder that the UK – a relatively small country in population terms, plays such a huge role in the global music business.

The UK music industry employs well over a hundred thousand people, and it’s estimated that its overall GVA reached £3.8bn in 2013, with 60% of that - well over £2bn - coming from exports.

That GVA figure is also growing astonishingly fast. Between 2012 and 2013, it rose by 9%.

This is a great high-growth British business.

And the ‘central ecological contributor’ to that great British business is - the ±«Óătv.

Now you might think, I would say that wouldn’t I? But it’s not just me.

There’s an organisation called UK Music. It represents the whole music industry from musicians to record labels to music licensing organisations and the live music business.

According to UK Music, and I quote: ‘±«Óătv output supports the entire UK music ecosystem.’

And when you look at the ±«Óătv’s musical output in the round you can see the evidence.

  • Its orchestras – based in Glasgow, Cardiff, Salford and London
  • Its wide range of music stations – Radio 1, 1Xtra, Radio 2, Radio 3, 6Music, The Asian Network
  • Its talent initiatives like the ±«Óătv Cardiff Singer of the Year, or Radio 2’s Young Chorister, or the ±«Óătv Young Musician and Young Musician Jazz Awards
  • The ±«Óătv music events – among them Radio 1’s Big Weekend, Radio 2’s Live in Hyde Park and, of course, the world’s biggest classical musical festival, the Proms
  • Its coverage of other great UK music festivals – including Glastonbury, T in the Park, Leeds and Reading
  • And then its own music shows – from Friday Night is Music Night, to Later with Jools Holland to Gareth Malone’s inspiring choir programmes.

One of the key ways the ±«Óătv uses this amazing array of music services is to spot new talent and actively nurture it.

We hear a lot about Silicon Roundabout and the start-up businesses taking root there, nurtured by early-stage investors. That’s exactly the role the ±«Óătv plays with Britain’s young musicians.

For example, the ±«Óătv Introducing website allows any UK musician to upload their material. The best gets airtime on ±«Óătv local radio and the best of the best are invited to play live on ±«Óătv Introducing stages at major festivals. That’s how Jake Bugg and Ed Sheeran got their big breaks.

Or there’s Sam Smith. Not so long ago, no-one had heard of Sam Smith. Now he’s an international star – a British international star.

Three years ago, still an unknown, his first single, Latch, was spotted by Radio 1 - the first station to play and to support the record. After that, all Sam Smith’s first plays were with Radio 1.

Last year he won the ±«Óătv ‘Sound of…’ competition – it’s an influential annual ±«Óătv poll of music critics and industry figures to find the most promising new talent.

As well as the exposure through ±«Óătv Radio DJs, Sam Smith appeared on Later with Jools Holland; performed at the ±«Óătv Future Festival at Maida Vale; played at the ±«Óătv’s Big Weekend in Glasgow; sang on the Graham Norton Show; performed in Radio 1’s Live Lounge and appeared on Radio 2’s In Concert.

Spotting the unknown Sam Smith, investing ±«Óătv airtime, showcasing his talent over a period of years - that’s what the ±«Óătv did.

According to his record label: ‘The platform, and the exposure, and the ±«Óătv, was unbelievably important for this. We can’t advocate the ±«Óătv enough.’

I used the analogy of Silicon Roundabout before. But there’s one big difference. The venture capitalists backing new hi-tech start-ups are doing it because they expect a healthy financial return.

But that’s not why the ±«Óătv supports great talent like Sam Smith or Jake Bugg or Ed Sheeran. The ±«Óătv does it simply because they are great talents.

The ±«Óătv is not driven by financial interest here. Its aim is simply to bring the best creative talents the UK has to offer to the widest audiences, and to support the UK’s creative industries by doing so.

Just because one system works, it does not mean others cannot. Look across the pond to the United States, which has modest  investment in public service broadcasting by European standards but self-evidently has a thriving creative industries sector.

That doesn’t mean, however, it can be replicated with ease over here – not least because of the economies of scale that can be enjoyed with a population of 300 million.

As a result, the United States is something of an outlier by international standards. As a 2013 report by Dr Jonathan Simon concluded, countries with well-resourced public service broadcasters tend also to have desirable market outcomes – a virtuous circle in which competition between public and private leads to a race to the top.

This is not just true in the UK, it happens across the Nordic nations as well. Whereas countries where the public service broadcaster is weaker; also have weaker creative economies overall – as is the case in Italy and Portugal.

That’s why the ±«Óătv’s role in supporting economic growth is so important - creating ecosystems supporting highly specialist creative talent and projecting the outcome on the national - and often the global – stage.

Think of the Natural History Unit in Bristol, adding cutting-edge technology and high-end production skills to make programmes that sell around the world.

Or think of children’s television. Without the ±«Óătv there would be no British-made children’s television to speak of. No CBeebies. No C±«Óătv.

Or think of the way the ±«Óătv develops talent for the wider UK broadcasting industry - in the latest figures, 49% of ITV's on-screen talent roster across factual, lifestyle, entertainment and comedy began their career at the ±«Óătv.

Or think of the way the ±«Óătv injected £2.2bn into the UK’s creative industries in 2013/14, though investment in intellectual property, purchases from 2,700 creative suppliers, and spending on employment and skills.

Or the way the ±«Óătv's difficult decision to move several thousand staff to Salford gave Media City its first citizens, paving the way for thousands more who followed.

A decade ago, it was a derelict canal-side post-industrial wasteland. Today it’s a thriving digital media hub, a base not just for ±«Óătv North, but now for ITV as well. Indeed, if you step across the canal from the ±«Óătv in Salford you find yourself - quite literally - in Coronation Street.

6,500 people are now employed on the Salford site – most of them working not for the ±«Óătv but for the other businesses drawn to Salford because the ±«Óătv went there first.

In the past four months, we have had an unprecedented response to our public consultations - tens of thousands of people taking the trouble to tell us what they want of the ±«Óătv.

They show a truly humbling degree of trust in what the ±«Óătv tells them. They recognise that it's a unique institution. They show it enjoys extraordinary levels of support and that they are willing to pay for it. Most of all, they express the highest expectations of the standards they expect ±«Óătv to deliver.

Our job at the Trust, and the job of any future ±«Óătv regulator, is - as Tony Hall said this week - to hold the ±«Óătv’s feet to the fire to make sure it delivers on the many different things the public wants and expects.

I'm not here tonight to defend everything the ±«Óătv has done in the past, nor everything it will do in the future. It is not perfect and changes will need to be made and we must be clear about where those changes need to be made. For example, the ±«Óătv must become ever more efficient and agile to ensure the best possible value for money; and it needs to have a simpler, more accountable governance structure.

The ±«Óătv plays a central, critical and unrivalled role in one of the big business success stories of the 21st Century - the UK’s creative industries. It's a shared success story, but the ±«Óătv is its beating heart. But that doesn’t mean the ±«Óătv cannot do more. The ±«Óătv can and should.  It needs to be a better partner for the rest of the creative and cultural sector.

One way of doing that, as the ±«Óătv Trust has proposed, is to include a sharper, more distinctive remit for the ±«Óătv set out in the Charter to explicitly describe what the ±«Óătv exists to achieve. We believe one of those ‘public purposes’ should be 'contributing to the UK's creative economy.'

And these 'public purposes' shouldn't just be warm words, they should be accompanied by proper measurements, so we can really hold Tony Hall’s feet to the fire when it comes to judging the ±«Óătv’s role in the wider creative economy.

But, our overall goal should be one of evolution, rather than revolution. There is next-to-no public appetite for radical change in the ±«Óătv. People want the ±«Óătv to be nurtured, rather than subject to root and branch reform.

Changes should be specific and targeted, rather than sweeping and grand. The global achievements of the UK’s creative industries are a Darwinian success story in which the ±«Óătv has made a pivotal contribution. We should continue to help that success story evolve, not change the whole environment it has thrived in.

That is the case I will be making both in public and to the Government over this Charter Review period. The public’s support is clear and I very much hope it is one that business voices, particularly in the creative industries, will join me in because I believe it is of benefit to us all in the UK, not just to the ±«Óătv. Thank you.