Are Two Heads Better Than One?

The controversy surrounding Sir Stuart Green's stewardship of Marks & Spenser by combining the Chief Executive and Chairman role has resurfaced once again with shareholders up in arms that so much power resides with one man. They are right to be agrieved that anyone, however good, believes they alone can be relied upon to deliver superior returns for shareholders.

Any good CEO needs a good chairman - the two roles are different and necessary. Even small SMEs can benefit from the perspective an external chairman or mentor can bring to the company. It is widely recognised that a CEO can perform even better with a sounding board for his or her ideas. I would be with Sir Stuart in resisting having an executive chairman on board. Anyone full time in the role is simply going to get in the way operationally and loses that all important external perspective.

Similarly, I am not a fan of joint roles and responsibilities, which just serves to be divisive and confusing to other staff. If you have functional heads accountable for the performance of the company in that area then that focus is beneficial and good. Everyone needs to be part of the team, but in the end someone needs to do something to move things forwards in specific areas. I do hope that Sir Stuart is a good delegator because doing the work of two people (as soon as you can afford not to) ain't a smart move in business, however good you are.

Taking The Plunge In A Recession

Some top tips if you are thinking of starting your own business:

1. Do not be put off by the downturn. Many companies will be reconsidering their cost base and you may be able to offer a more cost-effective solution. Adversity stimulates change.
   
2. Don't leave your job too soon. Develop your new project at weekends, in the evening or in your lunch break for as long as you can. You need to keep the cash coming in and when you make the leap, make sure you are not going to run out of it.


3. Do not take on overheads. Fancy offices and expense accounts can wait. Be ruthless about keeping fixed costs low.


4. Do not spend money on shotgun advertising. PR and targeted advertising is a much better bet for a young company.


5. Do not engage expensive professional advisers too soon. Learn the basics yourself and tap into free advice available from the likes of Business Link and Connect Yorkshire!


6. Do not rely on bank debt exclusively (chance would be a fine thing). You need a range of sources of finance. Equity, leasing, invoice discounting, customer discounts to pay upfront (or even before you can ship anything to them if you can).


7. Do not be too ambitious, too soon. By all means dream, but set achievable goals and realistic targets. You need to get to base camp before trying to reach the summit of your ambitions.


8. Know your customer. Every product needs tweeking once the first customers get their grubby hands on it - don't expect to get it right first time nomatter how hard you try.


9. Know your market sell into it well. No matter how good you think you are, you need to beat a path to the customers door and not the other way around.


10. Keep going. You have to be in the game to win it.
    

To find out more about getting fit for finance and developing your business idea, come to our upcoming Investment Readiness seminars.

Reflections On The Enterprise Show

Having spent a day at the Enterprise Show it reminds me of the need to have an alignment from encouraging entrepreneurs to providing the right start up advice, access to finance, and networks to inspire enterprise and growth ambition. The right business support made available at the right time, especially so at the early stage, is essential for innovation to flourish. Most importantly, innovation requires strong and effective business networks. The evidence is that building a successful business is a contact sport and partnerships, teamwork and community are essential.

Physical closeness is undoubtedly important. Silicon Valley and the Cambridge cluster, the rise of the high-tech community around Boston and San Diego all have things in common, not least the active involvement a dominant research-led university. Yorkshire is blessed with not one but at least five world class academic institutions which not surprisingly tend to vie with each other for superiority which with this catalysing focus in mind is not necessarily entirely a good thing. Good networks and geographic focus can help to foster commercialisation and growth.

The Enterprise show is a good example of a key element that fills one of the gaping holes in provision - which is help for the general public to get their business idea off the ground. This is also the space where Connect primarily operates. It will be interesting to see whether the new innovation voucher scheme leads to more engagement between the general public and the universities in pursuing enterprise and innovation. They have thirteen in the region to choose from...

Is Research Opinionated?

Coming from a scientific background, my idea of research is to have a question, then collect evidence to inform it. The opinion formed or conclusions is the real crux of any research project and the ability to analyse and organise information to further the understanding of a subject - by whatever small amount - is what really matters.

Is a bunch of statistics and facts however well laid out a sufficient body of work to be classed as research? A recent piece of market research for one of our companies consisted of over 100 pages of information primarily extracted from Mintel reports. Similarly, I recently read a commissioned report that purported to be a piece of research, but again was just a collection of pertinent facts relating to a particular market and geography.

While no doubt this information is highly relevant and informative to certain readers, I question whether this should be called research. Or am I just being too protective of the phrase?

Two Banks of a Technology Pond

The British persona tends to be self-deprecating and reserved when it comes to trumpeting our successes and rather backwards at coming forwards when it comes to converting innovation and research into commercial reality, particularly when compared to our US counterparts.

There is a tendency in the UK to wait until something is proven before investing in it, whereas the USA has more of an appetite for risk. Americans will try something new, if it works they embrace it and believe more, if it doesn't they purse another opportunity. This non-deterministic approach contracts sharply with our tendency in the UK to want to make managed stepwise progress that avoids the risk of failure. The fact of life is that no matter how carefully you plan, you can't avoid some false starts and the need to backtrack and admit making mistakes are all part of the journey.

Having lived and worked on both sides of the pond, my experience is that its the balance between three essential elements of tech success: IP, management and money. And the stigma attached to failure. In the USA there are more tech entrepreneurs prepared to back early stage ideas that VCs or bankers (right so!) wouldn't take even a first look at. This business angel involvement at proof of concept enables new ideas to get one foot out of the lab and onto the radar screen of serious funders with some management DNA already spliced in. Similarly American VCs employ (or are started up) by more tech-savvy people, rather than being top heavy with lawyers and accountants (not that these skills aren't important!). American VC tend then to step in an put serious money into fewer companies that are in better shape to progress than those in the UK enabling a more of a seamless transition from idea to commercialisation

So maybe we need a little more joined-up thinking that combines money, enterprise, innovation and management...

New Year Predictions

OK here goes:

Connect Yorkshire helps even more companies get investment ready and pitch for investment through its flagship investment forums, investment challenges and business plan competitions.

The rest of the UK increasingly embrace the Connect model and new initiatives are rolled out in London and the North East.

A UK wide online platform that brings together entrepreneurs with the resources to they need to succeed is launched that complements and extends our regionally focused 'on the ground' activities.

Yorkshire Forward announces a region-wide investment fund as a follow on for Partnership Investment Finance and the South Yorkshire Investment Fund that incorporates a much needed seedcorn element.

The Business Support Simplification agenda leads to more joined-up thinking with regard to investment readiness support and access to finance across the piste.

Connect promotes its flagship 'Springboard' initiative to help early-stage propositions get their business plans into shape - even if they are not necessarily wishing to raise external finance.

Cloud computing and Software-as-a-Service (SaaS) gains increasing traction in the market and we all start buying PCs with smaller hard disk drives.

One can but dream...Happy New Year!

It's Good To Be A Little Bad or Mad

Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great."

- Mark Twain

A lot of entrepreneurs worry about people stealing their bright ideas. In my experience, ideas are easy - its execution that's hard. And even if your idea is brilliant, the best ones aren't necessarily so. Any really good new idea will seem either bad or mad to most people; otherwise someone in China will already be doing it. Your idea needs to be almost good and it helps if the world around you helps turn your fad into a fashion. Look at all the money going into green energy - its even got its own name 'CleanTech'. Most funders are driven by consensus, not just within their firms, but within their community. Surely that's exactly how the credit bubble happened - everyone was doing it, so it must be a good idea. Not.

And being too clever ain't necessarily a good idea either. My claim to fame is that my Ph.D was part of a research project that won E.J. Corey his Nobel Prize. That research itself never generated anything that was directly commercial. However, the spin-offs that were successful were infinitely less ambitious in their goals, but solved real-world problems in an explainable way. It’s a great case study of how a small change of perspective and focus on an addressable market opened up a commercial opportunity – and why trying to be too smart is not always a good idea in the real world!

So when the next small-minded person tells you what you are trying to do is bad or mad, breath a sigh of relief that maybe you on the path to greatness! Someone right now is probably telling the next Google why what they are doing isn't such a bright idea. And he probably works for a bank!