Beyond Ambition: A TOC-Based Response to the UK’s Modern Industrial Strategy
By Tonah, TOC Practitioner & Clear Thinking Advocate
On 23 June 2025, the UK Government unveiled its Modern Industrial Strategy — a bold 10-year roadmap to reshape the nation's economic future. The strategy articulates clarity of ambition: to catalyze business investment, scale frontier industries, and place the UK at the forefront of global innovation. It sets forth a vision of partnership between state and industry, aiming to break a cycle of underinvestment and stagnant productivity.
While this vision is commendable, the strategy risks falling into a familiar trap: attempting to fix everything, everywhere, all at once. From a Theory of Constraints (TOC) perspective, this is a recipe for mediocrity. Without identifying the system’s limiting factor — the real constraint to national productivity and prosperity — we risk diffusing energy across too many fronts, optimizing subsystems rather than elevating the performance of the whole.
Let us explore both the promise and the pitfalls of this strategy, and offer a clearer direction for UK policymakers and industries — particularly those outside the IS-8 — to move from ambition to transformation.
The Strengths: Direction, Investment, and Inclusivity
The strategy’s long-term horizon and multi-sector commitment are refreshing. It recognizes that business-as-usual won’t suffice in an era of AI disruption, geopolitical volatility, and climate urgency. The government is taking on a more “muscular” role — committing substantial public capital (£120+ billion), simplifying regulatory pathways, and directly addressing historic bottlenecks such as energy costs, planning delays, and skills mismatches.
The place-based approach, empowering regional clusters and foundational industries, is another welcome evolution. It signals a broader understanding that value is not only created in frontier labs but also in steelworks, ports, and ceramics plants.
The Limitations: Absence of a Clear Constraint and Focus
Despite its breadth, the strategy lacks a single, clearly identified systemic constraint — the core issue limiting UK productivity. In TOC, improvement begins with identifying this constraint and subordinating all decisions to its elevation. Without this, even large investments may fail to produce meaningful throughput.
Is the constraint:
The strategy flirts with each, but commits to none. Instead, it deploys a wide suite of interventions — useful in themselves — but risks solving symptoms, not root causes.
Furthermore, the heavy focus on investment rather than productivity is a conceptual misstep. Capital alone does not drive improvement. Flow, speed, and synchronization — cornerstones of TOC productivity thinking — are largely absent. We hear of how much the government will spend, but little on how fast constraints will be relieved or how work-in-process will be reduced across the economy.
The IS-8 Dilemma: Local Optima and the Forgotten Majority
The strategy centers around eight “high-growth” sectors (IS-8). While focusing on these sectors is justifiable, the risk is clear: optimizing these at the expense of the broader system. These sectors represent only a fraction of the UK’s employment base. Their success, if not connected systemically to foundational and peripheral industries, could become a local optimum — improving select nodes while the wider economy stagnates.
Non-IS-8 industries — from construction to logistics, education to retail — receive little strategic focus. Yet these sectors form the base of the economic pyramid, and often suffer the worst effects of regulatory burden, skills shortages, and slow innovation diffusion. Without a coherent plan to unblock constraints in these areas, the rising tide may fail to lift all boats.
The Way Forward: A TOC-Informed National Focus
To make the Industrial Strategy transformational, not just aspirational, the UK must take the following steps:
1. Identify the National Constraint
The government should commission a focused Current Reality Tree analysis to locate the single dominant constraint to UK productivity — whether it be regulatory lag, slow grid connectivity, or a cultural aversion to risk. Without this focal point, strategy becomes scattered.
2. Subordinate All Policy to Elevating the Constraint
Once identified, all policy — energy reform, planning reform, skills development, R&D funding — should align toward elevating the constraint. This ensures coherence and maximizes return on effort.
3. Focus on Productivity Over Investment
Investment is a means, not an end. The UK must embrace flow-based productivity measures: time-to-grid, time-to-hire, time-to-export. Faster throughput, fewer delays, and clearer pathways to market will do more for national productivity than billions in sunk capital.
4. Integrate the Non-IS-8 Economy
A second-tier strategic plan should be built for sectors not in the IS-8. This must identify their specific flow constraints (e.g., slow procurement cycles, fragmented training systems), and offer low-cost, high-leverage interventions — such as late payment regulation, public procurement access, or digital capability enablement.
5. Ensure Quality is Not Forgotten
Quality — not just of products, but of implementation — must be embedded across interventions. Otherwise, we risk rework, misalignment, and wasted effort. The strategy must emphasize right first time execution and fit-for-purpose regulatory design.
Conclusion: From Plan to Breakthrough
The UK’s Modern Industrial Strategy is an important step in the right direction. It signals seriousness, long-termism, and willingness to partner with business. But to achieve real transformation, it must go further — by becoming ruthlessly focused on the constraint that limits national productivity, and by aligning all interventions to elevate that constraint.
By applying the logic of the Theory of Constraints, the UK can move from general ambition to targeted breakthrough — not only growing the industries of the future, but unlocking the hidden potential in every corner of its economy.
Let’s not aim to do everything. Let’s focus on the one thing that will change everything.
Tonah is a Thinking Processes expert in the Theory of Constraints, helping governments, businesses, and individuals clarify complexity and accelerate transformation.
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