I spoke at the Institute for Small Business and Entrepreneurship conference earlier this week. The theme was entrepreneurial learning in organisations. It was an extremely thought provoking session, that brought together fantastic academic minds on the theme of entrepreneurship.
As a keen observer of entrepreneurial learning and improvement, my view is that the UK economy will grow faster if more effective leaders are created and nurtured. Enterprise policy makers must recognise the importance of bigger thinking and greater ambition – a key component of leadership. Academic enterprise research needs to investigate in greater depth the emotional needs of entrepreneurs – the spirit and mindset. Setting up and growing a business can be extremely demanding. For entrepreneurial leaders balancing personal and commercial risk can be a debilitating experience – we must look at developing practical coping strategies to help leaders overcome the fear often associated with the stages of growth.
From my discussions with participants I was encouraged to hear that softer issues do appear to be attracting more academic interest. Topics such as developing an entrepreneurial mindset, coping, resilience, mental toughness, personal branding and faith must get on the agenda. These are all essential ingredients for leadership success. Practical tools to help entrepreneurs address these areas would be well received within the community – when the going gets tough, the tough get going. Entrepreneurs are courageous individuals who cope well with the lonely rollercoaster existence, helping them to live with high pressure moments would be a well-received antidote for those wanting to make a difference. I am extremely excited about the work ISBE is undertaking.
The minute a gazelle starts to emerge from the UK, suddenly from nowhere it just seems to get eaten by a foreign gorilla. (42% of high growth companies in the Cambridge cluster were acquired between 1998 and 2008, half the acquirers were foreign) The recent acquisition of Autonomy by Hewlett-Packard of the US is a great example of an home-grown global star of the future getting swallowed up. Not only in IT but we also see this in other technology sectors e.g. bio sciences. When these rising stars put their head above the parapet they are swallowed up by overseas predators. This is great news for the investing VCs and founding teams and stakeholders as it gives them the opportunity to cash in their chips. However from a broader economic perspective do we lose opportunities from the IP ending up somewhere overseas? (as well as the jobs)
Is this stopping the UK from creating the next Twitter or Google? Lots of suggestions over the past few weeks suggesting UK plc needs to take a closer look at this issue.
165 University Avenue is a small rented office building on the main commercial street in the centre of Palo Alto, California – Silicon Valley. Also known as the “Lucky Building”, over the years it has incubated a number of “gorilla” businesses, names that include, Logitech, Google, PayPal, Danger, Inc, Milo.com, eye IO and Yummly. Silicon Valley cannot be replicated, its unique, however, I strongly feel that we can learn a lot from this vibrant world-class entrepreneurial region.
Through the High Growth Foundation I am particularly keen to work out what we need to do to create our own blockbuster businesses up North and throughout the rest of the UK. The Billion Dollar Club in the US acts as a forum for companies with a market capitalization of $1billion, no surprises that Silicon Valley companies are well represented in this list. In recent years most notable UK companies that would fall into this elite group would be the spin outs from Cambridge University, Autonomy and Biovex from UCL. How many of these have we created in the North West? I just can’t believe we have not got the talent, I think the environment is wrong.
We have some great incubator units in the Region, but would one in the heart of Manchester help to create a blockbuster as the West Coast of the States has repeatedly done. The external environment is crucial when you are trying to build a business, it supports creative thought and innovation – a place where there is a buzz, somewhere to go for a coffee, a pizza or a beer after work is so important. After all we are human beings and being stuck out on a limb in some Enterprise Zone I don’t think is the answer. Ambitious entrepreneurs want to be surrounded by like-minded high energy people with links to finance and capital. That happens in city centres.
We need a radical rethink about how we help the stars of tomorrow. The UK cities offer a great environment for breeding tomorrows superstars – but still we are keen to push new entrepreneurs out into the sticks where there is little energy and no spark. Maybe time for a rethink on where we encourage our beacons of tomorrow to set up. Do we have the equivalent of 165 University Avenue in Manchester? It’s not in the City Centre as it is in Palo Alto.
The answers to economic recovery over the past three years has centred significantly on the importance of gazelles – those high growth businesses that deliver sustained 20% growth over a three-year period. These are innovative firms with differentiated products and services that stand out from the crowd, they have strong leadership and clarity in relation to where they want to get to. They are entrepreneurial as well as disciplined in their approach to business.
My thinking has now moved on a little and I have started to create thinking time for another category of important economic contributors – Gorillas. These are very rare beasts defined as “high growth businesses less than 10 years old with a physical presence in at least 3 countries and employing over 500 people”. I think we can get too bogged down in definitions but companies such as JD Sports, Carphone Warehouse, Vodafone, Intel, Skype, Innocent Drinks, Daisy Communications, The Hut Group, Google and Amazon are all good examples of companies that have pursed strategies to achieve global scale – or put another way gorilla style growth.
The rapid evolution of ever improving technology combined with globalisation opens the doors for gazelles to explore the next level of growth. International opportunities such as those of the BRIC economies will see the rise in the number of UK businesses embracing gorilla strategies. With this mind we need to be ready to support these entrepreneurs with the management, legal, international, finance and operational expertise vital to make this happen. This is where the Business Growth Fund launched a couple of months ago has a serious role to play.
The High Growth Foundation is now planning its Companies of Scale Initiative to get this mindset in place. A series of practical measures will be rolled out to set the scene.
I heard on Radio 4 this morning details of the Business Growth Fund to support SMEs. Having spent time looking around the well put together web site – I then navigated to the application bit of the site and this is what it says:
Target companies that typically turnover £10m to £100m per annum and have been operating successfully for two or more years
Firstly, this rules out a massive amount of the SME population, I would guess over 70% and probably more. Secondly, successfully operating for two years or more???? how many companies do you know that have grown to £10M or £100M in two years? This is quite disappointing news for those SMEs who have built up say a sub £5M business over a number of years but have great potential. Achieving £10M in 10 years is a massive achievement – to be honest there are not many of these either.
Just flying off to the moon to get a brew…..Madness