Friday, 30 September 2016

Preparing for and achieving Supergrowth

Over the past 20 or so years academics and practitioners have looked at a number of different ways of seeking out growth companies. We have labels like “scaleups”; Gazelles; Fasttrack100; Fast50; Champions and of course Unicorns!
In the end, these are the high octane companies that grow at over 20% per year for at least three years or more. And some of the more tightly defined supergrowth companies are those with profits.
But, defining them is not going to create more of them! We need to understand why and how they grow faster than their competition, how they sustain the entrepreneurial spirit as they grow and what their longer term sustainability looks like. In reality we do not have enough of a rich insight into these companies as they are mostly outliers and case based research is expensive and difficult. However,  we do need deeper insights.
Here are some key lessons that might inspire entrepreneurs and create an agenda for teaching and research in the field of rapid growth sustainable businesses.
The lessons are drawn from two keynote speeches and a deep dive on a panel discussion during VentureDay 2016
The inspirational keynotes were:
Jozsef Varadi, CEO and founder of Wizzair a low cost airline that has been growing since it started in 2004 to a stage where it is now flying some 21million passengers per year and becoming a dominant player.
Jon Thornes of Coolmilk a UK businesses that transformed itself from a flat lined dairy business into a rapid growth venture providing a platform whereby regional diaries can charge for and manage the logistics of school milk to over 1 million children per day.
A fabulous panel included
In addition there was a panel chaired by Guy Rigby of Smith and Williamson that comprised Robert Wright, a serial aviation entrepreneur and founder non-exec of Wizzair; Karim Sekkat a corporate finance expert now running Oxford Engineering; Tim Jones Chair and shareholder of Treatt PLC a food ingredients company and Debra Charles of Novocroft which provides the backend to numerous rail companies to manage smartcards..
Hitting a wall
Curiously the resolve to go for supergrowth came from one of two places, an early vision to become a global player or after hitting a wall and having the entrepreneur reconsider their future direction. With Novocroft, Debra Charles said her vision was to define the end point and make that the beginning. There were many echoes of approval for this point of view from other members of the panel.
In the case of Wizzair for example the wall came in three layers in 2010; the Ash cloud over Europe; a Polish airline crashing in Russia and floods in Central Europe, all of which affected the ability to fly and the desire of passengers to fly. This triggered a realisation that there was over reliance on the Polish market and the Central European segments. So, Wizzair ensured a much wider route base, hired over 40 nationalities into its operational team and has 6 nationalities at the CXO level from a top team of 7. The ability of the staff and the top team means that it is in a much better place to continue sustained growth
In the case of Karim Sekkat at Oxford Engineering, his early realisation that they only really had one customer. He has since taken action to broaden the customer base, with some vigour.  The same applies to Treatt PLC, where they saw flat lined sales and decided that the breakout would come by addressing underserved markets with more clearly defined customer needs in several geographies.
All the speakers and panel members agree on the following points. That to achieve supergrowth you need a really talented team at the top with aligned vision and values.
The step before that is about how to prepare for supergrowth and here the tips from the panel were to focus on three major elements; to really look at the environment and understand how and where the business will fit into it. Entrepreneurs need to try and foresee the future of their environment as best they can. Secondly to ensure they have a scalable venture with the internal capabilities to grow and harness the opportunities. The third key aspect is about being able to secure the right resources at the right time and place, especially as the firm grows across sectors and geographic boundaries.
How can established and flat lined businesses get into supergrowth
·         Look at under-served markets and focus energy on entering those markets
·         Clearly identify what your customers are looking for
·         Then get the right team in place to enter those markets and meet the needs of customers
·         Need to make the growth potential exciting to engage your team, have the confidence in your ability to make a difference
·         Start with your “end point” and work backwards
Ignore the pundits

In 2004, Jozsef was invited to a CNN interview to talk about the launch of Wizzair and the interviewer at the end of the conversation said he would be unlikely to come back as he expected in this tough economic climate that the airline would be bankrupt in less than 12 months! This is a difference between a pundit and an entrepreneur with self-belief and talent.

Saturday, 30 January 2016

Entrepreneurship education for the next wave. Are we fit for purpose?

During the last 12 months I have made a dramatic change to me career. having spent 14 wonderful years at the Cambridge Judge Business School where I had the opportunity to establish the Centre for Entrepreneurial Learning we defined our core purpose as "spreading the spirit of enterprise". The change is that I have moved to Cranfield  University, my alma mater where I was also previously in the enterprise group. My core purpose remains unchanged, but the vision is to unlock the entrepreneurial potential at Cranfield.

The vision at Cambridge was relevant at the turn of the century in Europe and, possibly, on a worldwide basis. Cultures needed changing to be in favour of entrepreneurs. We needed to de-criminalize entrepreneurship. Actually in some countries and institutions we still need to work towards giving people freedom to operate.

The good news is that entrepreneurship has really taken off. From being a social movement that was starting a few years ago, it is all the rage. From a personal point of view this has taken me to Colombia, Belgium, Austria, India, Finland just this year. And the environment in UK has become ever more exciting.

The driver for entrepreneurship has come, not from Universities, government initiatives and so forth, but from the open source nature of the Internet. Mobile phones, apps and the Internet has turbocharged new venture creation and as a side effect it has also created new jobs and new types of jobs. So a new vision was needed and this is about unlocking potential rather than spreading the spirit and hence the change as I returned to Cranfield.

What does all this mean to education for entrepreneurs?

To start with I am not sure that the books, papers, curricula are fit for purpose. The educator profession still uses tools developed by Porter, consider writing business plans, teaching the marketing mix and old style team building techniques including using psychometric tools such as Belbin team roles.

While Universities draw on standard texts, consultants have developed tools like the business model canvas which focuses on markets and resources, along with ideas of lean startups as a mindset. Are these toolsets appropriate for all types of new ventures? Probably not.

Business Schools have been around for a century now and have provided a huge alumni base, people with knowledge and know-how for building and managing businesses. Some of what they have learnt may be dated, but none the less the alumni of Business Schools are a talent source. Meanwhile, as the new wave of entrepreneurs have developed into wealthy investors in the shape of business angles, they bring with them tacit knowledge, networks, motivation, wisdom and hands-on skills.

What this means is that entrepreneurship educators need to find a way to draw on this breadth and depth of knowledge and create portfolios of tool sets that meet the needs of individuals.

In the same way that healthcare is seeking personalized medicine, educators need to find ways of drawing on the plethora of tools, sources, resources, networks to provide personalized education, coaching and access to resources for nascent entrepreneurs. This is certainly not easy, but is going to be essential if we want diversity of new ventures.

We will also need to question the purpose and efficacy of incubators and accelerators that are focused on narrow technologies, such as games, Cleantech and so forth. On the one hand they provide domain expertise and each domain has sufficient breadth to enable entrepreneurs to build on the diversity. On the other hand it may cause parochialism in each cohort of entrepreneurs and the social capital of the leaders of the incubators may also narrow down too quickly to be helpful.

New venture creation is largely at the fuzzy front end of business development and we need to think about how to nurture new ventures on as broad a basis as possible, avoiding the temptation of narrowing entrepreneurs down too quickly with the use of narrowing tool sets.

This blog has out the challenges and not necessarily the solutions! I would like to invite my fellow educators to think about the challenges and put forward their ideas and solutions so we can develop education that is fit for the next wave of millennial entrepreneurs.