Business Basics

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UK government experimental policy program testing evidence-based interventions encouraging SME adoption of existing technologies and management practices through rigorous randomised controlled trials and proof-of-concept projects.
What are the main aims and objectives?

The aims of the Business Basics Programme are:

1. Raise the productivity of small to medium-sized enterprises (SMEs) by:

  • identifying and testing the most effective, scalable interventions which encourage SMEs to adopt productivity boosting existing technology and modern business practices
  • testing which interventions have the most impact on SME productivity

2.  Drive innovation by:

  • sourcing new ideas from traditional and non-traditional sources
  • taking a dynamic, experimental approach in order to learn and develop as the project develops supporting new initiatives and leaving a legacy of quality data and evaluation to inform future research

3. Enable better investment decisions at a local and national level by:

  • providing a new, robust evidence base for those interventions which are the most effective in raising productivity
  • taking an inclusive approach such as by involving SMEs from different areas and different sectors, and focusing on the transferability and scalability of interventions
How does the program work?

The Business Basics Programme operates through a test-and-learn approach, funding multiple experimental projects implemented by diverse organizations with systematic evaluation designed to generate robust evidence about intervention effectiveness.

Program Structure:

The program comprises three key elements: the Business Basics Fund (main pillar), Partnership Projects (targeted projects in specific places or sectors using specific techniques), and an Evaluation Framework ensuring all projects are evaluated rigorously and comparably.

Business Basics Fund:

The Fund operates through open competitive rounds (three rounds conducted: Rounds 1, 2, and 3) with funding available in each round, each making approximately £2 million available to successful applicants. Bidders can apply for two project types: Proof of Concepts (early-stage projects testing feasibility with funding up to £60,000) and Trials (evaluation projects assessing impact with larger funding amounts).

Experimental Design and Evaluation:

A total of 32 projects were funded across three rounds, comprising 17 randomised controlled trials (RCTs) and 15 proof-of-concept projects. RCTs were designed to generate robust evidence by comparing intervention groups with control groups, with differences attributable to the intervention itself rather than external factors. This methodological rigor enabled evidence-based assessment of intervention effectiveness rather than reliance on participant testimonials or perceived benefits.

Project Selection and Implementation:

Projects were selected through competitive peer-review processes managed by Innovate UK, with applications evaluated on innovation, feasibility, and potential for generating robust evidence. Selected projects operated for 6-12 months (proof of concepts) or longer (trials), involving more than 3,500 SMEs across multiple delivery partners. Projects tested diverse interventions including technology adoption nudges, peer-to-peer advice provision, best practice visits to world-class companies, management training, and digital adoption support.

Focus Areas Evolution:

Rounds 1 and 2 tested diverse interventions encouraging technology and management practice adoption. Round 3 (opened October 2019) incorporated lessons from earlier rounds, including more focused objectives with late payments identified as priority area, and requirement that all projects include element of technology adoption (e.g., payment technology, accountancy software, e-commerce platforms, HR systems).

Partnership Projects:

Beyond the Fund, Department for Business, Energy and Industrial Strategy (BEIS) worked with partners delivering targeted projects in specific places, sectors, or using specific techniques (nudge, peer-to-peer advice), complementing the "bottom-up" approach of the Fund and providing flexibility to act on early findings.

What is the overall cost?

The Business Basics Programme had a total budget of £9.2 million spanning the four-year period (2018-2022).

How was it implemented?

The Business Basics Programme emerged from UK government commitment to address documented productivity challenges in the UK economy. In 2017, the Confederation of British Industry (CBI) published research ("From Ostrich to Magpie") estimating that better uptake of existing technology could unlock £100 billion of untapped UK economic potential and reduce income inequality by 5%. CBI research indicated that UK business technology adoption levels were close to EU average but far behind front-runners like Denmark, with lagging adoption of "nuts and bolts technologies."

In June 2018, Small Business Minister Andrew Griffiths announced the Business Basics Programme as part of the Government's modern Industrial Strategy, addressing productivity challenges at firm level. The announcement unveiled an initial £8 million fund (subsequently revised to £9.2 million total budget over four years). The program was designed as experimental policy framework in partnership with Innovate UK and the Innovation Growth Lab (Nesta) to test innovative ways of encouraging SME adoption of existing technologies and management practices. The deliberate choice of experimental, evidence-driven approach reflected recognition that while productive technologies and practices were well-known, understanding remained limited regarding how to effectively encourage their adoption by SMEs.

The Business Basics Fund Round 1 was launched on 26 June 2018 at the CBI's Mid-sized Business Conference, attracting over 140 applications competing for £2 million funding. This high application volume demonstrated strong stakeholder interest in business support innovation.

Coinciding with fund launch, BEIS worked with Nesta's Innovation Growth Lab to develop comprehensive Evaluation Framework ensuring all projects would be evaluated according to robust methodologies, with particular emphasis on randomised controlled trials enabling comparison of intervention effects against control groups.

Round 2 opened in 2018-2019, with funding allocated similarly to Round 1. Round 3 opened in October 2019, incorporating lessons from earlier rounds with more focused objectives and enhanced evaluation rigor. The program concluded in 2022, followed by comprehensive final reporting in February 2024.

What impact has been measured?

The program successfully generated rigorous evidence about SME adoption of technologies and management practices through 17 randomised controlled trials and 15 proof-of-concept projects involving over 3,500 SMEs. This represented substantial advancement in evidence base quality for business support policy, moving beyond assumptions about effectiveness to empirically-tested results.

According to the Final Report, five of the programmes subjected to rigorous RCT testing produced evidence of positive impacts on SMEs, with several others showing significant promise in piloting. Specific positive findings included strong evidence of impact on adoption of modern management tools and positive impacts on business vision and strategy for some interventions.

The program demonstrated that delivering interventions and encouraging adoption proved harder than anticipated, with learning indicating that positive impact often depends as much on seemingly small details of design and implementation as on overarching program design. This insight was itself valuable—suggesting that successful business support requires meticulous attention to implementation quality and participant engagement strategies.

The program identified "support fatigue" among participants previously exposed to other business support initiatives, indicating that business support recipient saturation can limit effectiveness of new initiatives and suggesting need for coordinated, non-duplicative support strategies.

Specific projects demonstrated successful technology adoption stimulation. For example, intervention testing "best practice visits" to world-class financial technology companies showed more promise in encouraging SME digital payment technology adoption than simply providing best practice information in digital format.

The program generated comprehensive, peer-reviewed evidence informing future business support policy design at local and national levels, representing substantial improvement in evidence base quality compared to prior assumption-based policy approaches.

What lessons can be learned?
  • Experimental, evidence-driven policy generates valuable knowledge: The Business Basics Programme's deliberate choice to run practical experiments with rigorous RCT evaluation rather than assuming what should work produced actionable evidence about intervention effectiveness, demonstrating that experimental policy approaches can generate more reliable guidance than traditional grant-based programs.
  • Small-scale experimentation enables risk-taking and innovation: The relatively small scale of 32 projects allowed BEIS and project teams to take risks with novel ideas, quickly identify promising interventions, and test improvements iteratively without betting program credibility on single untested approach, suggesting that experimental design enables innovation more effectively than scaled-up program commitment to predetermined interventions.
  • Implementation details matter as much as concept design: Positive impact often depends as much on seemingly small details of design and implementation as on overarching program design, indicating that business support effectiveness requires meticulous attention to how interventions are delivered, not just what is offered.
  • Support fatigue constrains effectiveness: Identification of "support fatigue" among SMEs previously participating in business support initiatives suggests that unsustainable support environment can limit new initiative effectiveness, indicating need for coordinated, non-duplicative support ecosystem and potential benefit of integrated delivery models.
  • Adoption barriers more complex than assumed: The finding that delivering interventions and encouraging adoption proved harder than expected suggests that barriers to technology/practice adoption among SMEs are more complex than simple lack of awareness, potentially including organizational inertia, change management challenges, or perceived costs exceeding perceived benefits.
  • Best practice visits outperform information provision alone: Specific project finding that "best practice visits" to world-class companies more effectively encourage technology adoption than digital information provision suggests that visceral, experiential exposure to success exemplars may be more persuasive than abstract information, with implications for business support design.
  • RCT evaluation advancement in business support policy: The Business Basics Programme advanced understanding and capacity in applying rigorous RCT methodology to business support evaluation, building skills among diverse organizations and promoting lasting change in evidence quality informing business support policy.
  • Focused sectoral/challenge targeting improves applicant quality: Round 3's more focused call (identifying late payments as priority area) compared to earlier rounds' broader scope resulted in more targeted project proposals with clearer relevance to identified challenges, suggesting that clearly-articulated policy challenges attract more strategically-aligned interventions than open-ended calls.
  • Limited long-term outcome tracking constrains assessment: While the program generated valuable short-term intervention impact evidence, comprehensive tracking of employment creation, business survival rates, or sustained revenue/productivity improvements beyond immediate intervention periods was not systematically documented, constraining assessment of long-term business outcomes and cost-benefit analysis.
  • Policy experimentation requires integration into permanent government structures: The program demonstrates value of integrating experimental policy approaches into mainstream government administration, establishing lasting change in evidence culture and evaluation capacity rather than treating experimentation as one-time exercise.
Notes + Additional Context

*About the Innovation Growth Lab

Despite the importance of innovation and high-growth entrepreneurship for economic growth, there is still too little evidence on how best to support them. In response, the Innovation Growth Lab (IGL) is enabling a more experimental approach to innovation and growth policy, trialling new instruments but also evaluating them more rigorously. This involves making much more use of randomized controlled trials to find out what works and what doesn’t (and when), learning from the successful experience in other fields, such as development economics, health or education.

As such, IGL is a new global collaboration that aims to enable, support, undertake and disseminate high impact research that uses randomized controlled trials to improve the design of the programs and institutions that help make our economies more innovative and entrepreneurial.

IGL goals are:

  • To improve the evidence base on the impact of different interventions, creating actionable insights for decision makers in public and private organizations.
  • To encourage the development of new interventions, whether testing different designs of existing programs or experimenting with radically novel types of schemes.
  • To push forward the knowledge frontier on the drivers and barriers to innovation, high-growth entrepreneurship and business growth.

Find out more at innovationgrowthlab.org.

CURATED BY

Albert Bravo-Biosca

Director
Innovation Growth Lab
United Kingdom