Wednesday, 22 October 2008

Entrepreneurial Motivation by Dr Paul Webster and Prof Andy Hopper

Professor Andy Hopper FRS and Dr Paul Webster of Ubisense gave an audience of 400+ at Cambridge University (21st October) a canter through why they started their company and what has kept them going through the roller coaster ride of a new venture.
Paul was introduced to Andy via a common connection and found himself in an environment which was open, flexible and encouraging of enterprise. So he referred to this as motivation through mentoring. The basic idea of the lab in Cambridge was to take an idea, deploy it around the lab and if it worked try to commercialise it. This approach resulted in several companies, the biggest of which was probably Virata.
Other motivations included what we might call “Motivation through motoring” – in other words having an aspiration to be less poor and to buy a nice car! But this came later when the lab that was sponsored by AT+T was suddenly closed and the choices were between taking another job and starting a company with an emerging technology in 3 dimensional location systems (GPS for indoor applications). Paul did not fancy the 9 to 5 routines so he got together with some others in the new venture.
A fortunate meeting took place, through which the team was able to arrange for an internship with a venture capital firm where they did their market research and started to build confidence in the idea, however there were some tough business questions. Was this a GPS system or an RFID system? And who else was doing something like this? So it was difficult to value the company and raise money. They then met Richard Green who had founded Ten Sails as an incubator for ideas in “space and time”. The results of the market research and finding a CEO restored their confidence and motivation to stay the course.
Other forms of motivation included the quality of team that had started to join the company. The Board, the management team and the business angel investors are all described as world class and aligned with the objectives of the .
Ubisense and the team there are part of the wider Cambridge ecosystem – a whole group of companies in wireless, GPS, telecoms etc., So they can measure their own progress and see IPO and trade exits from time to time. They are in good company and this reassures the team. They also compete with firms that are much better funded and have evolved technology that is far superior and this too makes them feel good. There is a sense of urgency to stay ahead of the game. The links with the University and a continous source of talent makes it all the more exciting.
For Paul then – his motivations were varied and included the desire/need to earn; but as can be seen it was not just about “toys” and “technology” but included a desire for affiliation with top people, a desire to be recognized and to achieve success.
Andy Hopper has been an academic researcher for many years and has supervised over 50 PhDs, earned a Fellowship of the Royal Society for his research and the high levels of citation of his work. So he is a hard core academic. Why does he get involved with business?
For Andy – while the University provides that pillar of security he where he has caught the bug for intellectual stimulation – whether nourished by the need for citations or personal ego – it is none the less a compelling pull to continue in academia. The University environment also provides for being kept up to date on international work, new ideas and one of the benefits of this in business is that it reduces surprises of anything that may be going on in a similar field.
As Andy said – In business you can’t get any real insights due to the need to sign Non-Disclosure Agreements and follow tight protocols. But in academia it is possible to learn about new developments due to a very different culture (and you only have to deal with egos!)of publications, peer review and conferences.
There are further debates that rage between academics and entrepreneurs about whether the knowledge is to be exploited for universal gain, national gain or personal gain and if as an academic you want to step into business you need to be comfortable with the arguments.
One of the motivations as an academic engaging in business is that you get to see the practical or tangible output of your research, but if you are at the leading edge and dealing with disruptive technology with uncertain outcomes and timescales it is really hard to raise money. You need to learn about how to do this and what motivates venture capitalists and how they work. You also need to figure out how not to lose your shirt! Without these insights if you do try and embark into business you will soon lose your motivations.
Andy is also motivated by having people around him that he regards as trusted parties, people with whom he can recombine from time to time to start companies, have and share new ideas and who can share in the pain and the pleasure of the roller coaster ride of new ventures. His own labs in Cambridge have become a hive of activity in cutting edge research and from which many postdocs/faculty and staff have moved into business or combined it with academia. He has tried to create an open, flexible and an aspirational climate so that people can thrive.
In the current climate Andy’s advice is to keep doors open and maintain contacts because when the economic conditions change it will be easier to get going sooner. And by way of example Andy highlighted how his lab at Cambridge is changing direction to a different big question:
What can technology do to address the big problems of going green? What will be good for the planet and what will regulators ask technology to deliver in the future? By seeking answers to these questions it may result in commercial opportunities as well.
In a few final words – If you want to mix academia with business remember – it is possible; but if you were focused only on academia or only on business – you might go further in each case. In other words although you can have your cake and eat it – the experience can be a tough one.

(These are notes derived from the lecture rather than notes of the lecture)

Monday, 20 October 2008

Surviving the economic downturn

A couple of weeks ago I was asked to give a talk at a Masterclass to a conference for the Association of British Travel Agents (ABTA). The timing of this conference was quite something. The news all round us at the conference was basically about the meltdown in the financial markets and the panel discussions of the CEOs of the big travel companies were a mixture of “the sky is falling” and “it will be all right on the night”. The graphs shown to conference by the economist were quite gloomy. Although they were shaped like hockey sticks and the only uncertainties being the speed of decline and the depth of the death valley curve! As always a useful economist left us not a lot wiser – but did give us something to talk about!
ABTA had asked for a talk on surviving the downturn and thinking back – this was a really wise move in the briefing I had been given, some months ago – long before the financial meltdown began. What it meant was that the Masterclass session was packed. Here are the key messages from the presentation and the discussions that followed:
In the first instance to survive a recession companies need to look at cost drivers – both external and internal. This must be done alongside a basic sales and marketing plan that ensures revenues. The rest of this note covers all three elements.
In the travel industry the external cost drivers are:
Fuel, exchange rate fluctuations, increased costs faced by suppliers (such as hoteliers, restaurants etc.,), cost of borrowing (overdraft charges etc.,) assuming credit is even available, cost of utilities and credit card charges going up for consumers.
There is little one can do about such external costs, but it is important to understand these and make an assessment about how this will impact on customers, suppliers and our own businesses.
The internal cost drivers also need to be fully understood. What are the main costs in the business? Is it staff, floor space, transaction costs? Often these costs are hidden away. So, now is a good time for a spring clean. Take a look at your bad habits in the business – the costs that are either the cause of sloppy management or lack of planning. For example not sending out the right information; pricing errors; not firming up bookings; missed telephone numbers; printing errors, and miscalculation of inventory. Beware of mistakes and of routines which are held in place by statements such as “we have always done it like that”! If the costs being incurred do not add value to the customers ask your self – should we continue to do this?
Once you have taken a good hard look at the cost drivers and try to bring them down faster than the sales curve in the forthcoming months you have a good chance to withstand the pressures that the recession might impose on you.
One of the hardest decisions that firms will have to make is about lay-offs. I am not a fan of this strategy because with lay-offs goes the knowledge in the company and I think owners of businesses must look at everything else first. I draw inspiration from the story of Southwest airlines that were faced with tough times and where all the staff came together in a kind of “Dunkirk spirit” took pay cuts and worked hard to come out a stronger business. In the end the ground realities will determine these decisions, but for me it is always a final choice, not a first one.
One of the keys to survival is not to make the M+S error – which is to miss the trends in the market place and to go into denial for so long that you rely on loyalty for survival rather than your own commercial and competitive competence!
Generating income
There are two fundamental actions. First and foremost take a look at your portfolio of existing customers. Surely they will continue to buy travel, even if at a reduced level. Are you in touch with them? Can you retain your share of their spend on travel? Don’t just mail shot a bland bit of brochure or information at them. Try to find ways to engage them in a form of dialogue. Find out about their future plans, think about how to adjust what you do and what you offer.
Get into a “research mode” to find out what is happening out there. After all if your staff is not very busy “taking bookings” – why not redirect their efforts towards finding out about the market place and perhaps generating bookings. Try and shift the mentality from order takers to order makers.
The second and slightly longer plan is to get more creative, with implications to re-organising the nature of the business you engage in. Try and get your staff and perhaps even the staff of some of the companies in your supply chain to brainstorm opportunities. Especially those who are customer facing. They often hear things from customers that get lost in the noise or are dropped because the company does not provide the particular solution. And for more senior colleagues – ask yourself – where are the customers right now and what are they doing? On a global level the numbers of people travelling has grown significantly – but not in Europe! So – how about looking further afield and bringing your expertise and experience to new markets (like Russia, China, India and elsewhere?)