Much of British industry is still caught between an old era and a new era and it needs to decide pretty fast what it wants to do Professor Michael Porter

Those are the conclusions of a Harvard business school professor appointed by the government to find out where the country's managers are going wrong.

Michael Porter's report will be published next month.

But he told the BBC's Newsnight programme that although there was good leadership in the UK's world class companies, it was a different matter when it came to managers of smaller businesses - what he called Britain's heartland.

He said many of those bosses lacked "management sophistication".

"British business is unclear about what it stands for.

"Much of British industry is still caught between an old era and a new era and it needs to decide pretty fast what it wants to do."

'Sort out the road system'

He said that for too long the UK had been content to reap the benefits of the Thatcher era but had shown a reluctance to invest.

Mr Porter said that the country had been successful for the past 10 to 15 years as a low-cost place to do business, particularly with Europe.

But he believed it needed to move on to become what he called a high value business location.

He was scathing about the state of the country's transport infrastructure, particularly the roads, which he said hindered business.

He said that far too little had been invested in skills and in education at all levels.

And he said that more money needed to be spent on research & development and product innovation if the UK wanted to make sure it was not left behind.