At times of uncertainty – how do you scale up your business?

It is hard to make decisions at times of uncertainty when data is limited and when we have a huge number of choices. This is a rather obvious statement. What does this mean for us?

Irrespective of the uncertainties we need some kind of hypothesis that we can work to so we can test, re-test and firm up actions that work to either reduce the risk of mistakes or optimize our decisions for success.

Management theorists and practitioners have developed a huge range of tools for shaping strategy and even for managing operations. Few of them connect in a coherent way.  One of the reasons for the incoherence is that most management theories emanate from Business Schools, which are arranged according to focused departments that, in-turn, align with academic journals. So the faculty that want to progress in their careers need to remain focused on their departmental affiliations.

As one entrepreneur said to me many years ago…..”You have Departments – we have problems to solve”.

Therefore a typical growth strategy does not necessarily connect to manufacturing, services, deployment of technology, the funding or the cash flow projections. Often we see budget projections of growth that reflect some kind of hockey stick sales line. But how does this connect to what we have to do to make it happen? Gross profit margins are derived from assumptions or recent data but not tied into something that is unseen in the general conversation – for example cost of customer acquisition, development of distributors’ programmes and so forth.

Actually what we need once a growth strategy has been formulated, taking into account the market spaces the firm operates in, its competition and the opportunities and threats they perceive is a framework to help keep in step with the chosen direction. This is described below.

Meanwhile here are three steps that we can take to scaling up our businesses.

The first is to recognize that there are possibly three very different timelines. One may be for the type of business you have in mind. Is it for a lifestyle, where your horizon is set for say 20+ years? Another is for capital gains using venture funding. In this case your horizon may be much closer – say 7 years.

But there is a third, which is rarely factored in and that is how long will it take for our venture to reach its own level of maturity, i.e. when we have reached the maximum potential of customer numbers.  This can vary hugely from about 5 – 7 years to 12 – 15 years depending on whether we are in light touch “tech” or in highly regulated and complex industrial projects. In summary – it is crucial to understand our customer acquisition journey time.

The second element is about gaining a deep understanding of our market space and the implications that has on our value proposition, distribution and sales channels and where we compete and with whom.  This is actually quite hard because of the challenges of securing a fine grain view of markets, customers’ needs and how the overall distribution system works.

One of the reasons for this difficulty is that markets are impacted by technology and there is a convergence and it is at the intersections of these sources of convergence that we find opportunity. Therefore the old fashioned ways of segmenting according to industry classifications and geographies are insufficient for the way markets are becoming spaces rather than remaining static.

It can be argued that because we are not able, fully, to understand our market spaces and the resultant actions with our external world, we tend to throw money at the problem by seeking venture funds, loans and grants.  The typical metrics in firms are sales, cash flow and these are managed through budgets as the core performance measurements. These are of course crucial but we default to them because we can rather than because they tell us what we need to know and use.

We do not, for example, measure the rate of customer acquisition against the total potential; we do not measure our deployment capability or review our IP position vis a vis competing technologies and solutions.  In order to properly deploy our scarce resources into the most lucrative market spaces we need to bring about a business and revenue model that ties together the journey; the nature of our offer and how best to harness our value proposition to the customer bases we have identified. It is the tying together of these rather operational sounding activities that gives us our scale up strategy.

Finally, sometimes, just sometimes, teams need a helping hand to pull all this together especially when times and scenarios are uncertain and there are so many make or break decisions to navigate. It is here we return to the idea of a framework that can help navigate all the various vectors of growth.  Understanding the outside world, deploying resources to harness the changing opportunities and trading off one set of resources against another to make the most of what we can through business and revenue models that link back to strategy.

To get you started with bringing coherence to your decisions in uncertain times please take a look at https://www.thetriplechasm.com/ for helpful blogs, tools and thoughtful articles.

 

 

 

Looking for jobs or creating jobs! We need the jungle cry of a new Tarzan!

There had been a perfect storm in the 1970s, just as the UK economy had started to recover in the post war era. The perfect storm included the oil crises of 1973 and 1979 when the price per barrel of oil shot up by 400%. The Coal miners went on strike and this led to a 3-day week. I can remember that quite vividly, as I started my working life during the cold winter months, working in the office with lanterns and coats on!  https://en.wikipedia.org/wiki/Three-Day_Week

This led to a sense of an urgent need for a new agenda and Mrs Thatcher came to power in 1979 on a strong right of centre agenda to reduce government’s role in industry and to take back control from the Trade Unions. Privatization followed and capitalism took root. There is another story to be told another time. The point here is that the decimation of the publicly owned dated industries in coal and  steel (in particular) meant that something had to be done to cope with the mass unemployment that resulted from the new policies.

With a strongly held philosophy of individual responsibility, the Government, together with big businesses began to establish support for start-ups. They also introduced subsidies for small established firms to assist them with marketing, training and various Awards were also born at this time to help create a positive atmosphere and help celebrate success (however it was defined).

At regional levels Agencies were created to direct the funding from Government towards all the various campaigns of activity (I can recall evaluating 22 of them), while social enterprises were created such as Business in the Community; Prince’s Youth Business Trust and Shell Livewire.

The Government’s iconic Dept of Trade and Industry was led by Michael Helestine who was very active in promoting a strong message. His demeanor and golden hair bobbing about in interviews earned him the nick name of Tarzan. There was no question – his drive and passion pushed along the free market agenda and support for SMEs, as did the energy of Lord Young and numerous others.

The point here is to learn from the lessons of history – and for Government which is being amazingly proactive in supporting firms to hold on to talent and families’ survival – might consider directing some of the unemployment benefits and regulations towards enabling individuals into self-employment or the creation of new businesses.

Owing to the effects of the period of austerity (by the Conservative Party) we have been left with Agencies that are dehydrated and lacking anything other than boxes they can tick. From national agencies that existed in the 1970s and 1980s, policies changed to go regional and have since been further localized with Local Enterprise Partnerships. So, we are now in a position when no one can take a big picture view of what to do. For local, I also read parochial and this is where the disconnects can arise between what we need now to recover from the shock of Covid 19 and what exists as infrastructure to help solve the problems.

Employment protection and shielding the economy from bankruptcies is crucial for now but I suspect we will all change the way we do things and so entrepreneurs need to be encouraged to come forward with creative and sustainable solutions.

Over the past few decades Universities had become hubs for new venture creation through investments in the Higher Education Innovation Fund and a variety of other resources being directed to them. But – the main source of funds have been international students and that is going to be very hard hit, compounded by narrow views on the issuing of student visas. This means that what would otherwise be strong regional institutions with the capacity and capabilities for stimulating new venture creation are vulnerable.

The Government, especially the Chancellor seems to be jumping from one policy tree to another on job retention but who is there are the senior policy level to put out the Tarzan like jungle call for job creation? Does the Government expect job creation to be from state and established enterprise. What will fuel their growth to create those jobs? We are back to the debates of the later 1980s when Business Growth became the focus on policies – in search of the magic 4% of firms that were so-called Gazelles. These were due to create the jobs, but in reality as policy makers abandoned the search for Gazelles and more recently for unicorns, private sector business angels, accelerators and incubators have been filing the void. And they too are now challenged by what has happened to financial markets and rental incomes.

Having checked with the Chairman of Enterprise Educators UK – Gareth Trainer – we agreed that it is time for a flagship business creation agency or campaign to go beyond enhanced career prospects. The reality of trying to find apprenticeships with companies struggling to survive just seems unrealistic if worthwhile.

As Gareth pointed out: “The Government has rightly identified that youth unemployment and career glass ceilings are going to apply. Why not stimulate youth entrepreneurship?  They commissioned the Prince’s Trust to review youth entrepreneurship policy ages ago and the Government still haven’t allowed their report to be fully published… what are they waiting for? Meanwhile Ofsted have removed from the inspectorate the role of national lead for business, economics and enterprise, leaving the remaining subject heads to “look out’ for enterprise in schools… I think without expert help that is likely to be challenging. I guess, in summary, there doesn't seem to be comparable levels of Government noise about self-employment and entrepreneurship as there was following previous economic crises." 

There is some good news on the horizon, in the sense that policies are going to be put in place for a Green agenda that is going to make a difference. We are also likely to see other measures for the enhancement of science and technology and perhaps various rescue packages for certain industries.

We clearly need new ideas and solutions at this time. This would be good news at macro levels together with any fiscal and economic policies to support the movement.

At meso levels we need regional and industry sectors to be strengthened to cope with what happens on the ground. Many of the agencies that exist – just exist. Austerity has affected them all and we need them to be empowered and skilled up as well as scaled up to cope with what is needed.

And at a micro level, COVID 19 has made us look both inside and outside for how we not only come out of the crisis, but how we recreate the future. At Universities(for example)  – can placement years in universities be converted to self-employed placement years; fewer businesses will have the funding or environment to support traditional placements so this seems like a fix that could have broader impact.

We need fresh insights in policy and a new discourse needs to be created from the Billions being put into the economy for job protection towards job creation, turbo charging the agenda through new venture creation and appropriate work experiences.

And, can we get a modern day cheer leader, a new Tarzan, whose word counts for something working with a community of people who know what they are talking about.

Business Angels and Investors need to step up, not run for the hills!!

Covid 19 is hitting all of us really hard. On many levels we are in a period of uncertainty. While we struggle with supermarket shopping or going for walks in our favourite locations, the (dare I say it) tsunami of distress is yet to come in countries that can barely afford regular health care. The projections from Imperial University of possible deaths in the region of 40 million on current trends and with no mechanisms to halt the spread of Covid 19 are scary to say the least.

Governments can do what they can do. In the end they are slowed by their procedures, political posturing and various bottlenecks.

So, is it time for investors and business angels, perhaps with philanthropic organisations and individuals to step up and provide the resources and inspiration to make a difference – at speed?

From what I have seen and heard recently; investors have run for the hills. They have discounted valuation on new investment opportunities because all they can see is risk. Fair enough – but they are not in as much trouble as the average homeless person. Come on, guys show us that empathy and a long view is possible and that at a time like this we can show some vision. Some VCs and Business Angels may well have stepped out on to the streets and clapped and cheered for the NHS. How about giving us a reason to clap and cheer for you?

I could make this a really long and reasoned blog (or rant) but let us stick to some basics for UK for now and make it wider for other countries.

How about – as part of fiscal reforms the HMRC looks at making SEIS and EIS even more attractive for Business Angels. Sharing risks a bit with them. Afterall for many it could be their pensions we are asking them to risk.

And how about Business Angel groups coming together to raise a single fund to address the needs of Covid 19. These could be with diagnostics, ventilators, social enterprises and physical infrastructure. And not just for UK needs – but look more widely at global requirements.

But here is the thing guys – let us set IRRs and terms and conditions that look more like grants than they do for mythical Unicorn returns.

How about setting a modest target of £100m to call for 10 – 15 potentially breakthrough innovations in cracking the Corona Virus.  There is an entire community of scientists and researchers who have potential solutions and nowhere to turn.

Let us see some leadership – not so much running for the hills as stepping up to the plate.

Unlocking the spirit of Enterprise: Lesson from Swami Vivekananda

This is a summary of a talk I gave on the occasion of celebrating 125^thyear of the Chicago address of Swami Vivekananda “The modern monk”.  The talk was arranged by the Vedanta Centre (Bourne End) and hosted at the Indian YMCA on 2^ndDecember 2018.

It is not often I get a chance to think about the deeper meaning and purpose of my work and how it affects the lives of others. I hope that in sharing this I can connect with one of the teachings of Swami Vivekananda and how his message may have been helpful to many lives.

In 1986 when I completed my PhD I had concluded, that one way for Management and Business Schools to be socially relevant would be for them to embrace entrepreneurship development as this would make a difference at the grass roots. It was all very well equipping young people for life in corporate but what was the bigger purpose?  

My parents, in particular my father had been feeding me on a diet of philosophies throughout my childhood and early twenties. In fact, one of the strong memories of his words was that of being a “Karma Yogi”. While he was light hearted in the way he described this character of himself – he was very serious in the way he lived his life.  And I can also recall various in the 1970s and 1980s when my parents hosted musical concerts. They did not need to do any of this. It was not their job. But they felt it was their work – to promote Carnatic music and culture at the highest levels. 

What do I mean by this? To get ready for today I recalled  my memories but also looked up the “Complete Works of Swami Vivekananda”, a wonderful legacy of my late father-in-law. Luckily for me I only needed chapter one of volume one!! 

Karma is defined by the notion of doing work, the notion of constant activity and the effects of those actions.  Of course Swami Vivekananda goes much deeper into the definition but I want to focus only one small part of it. 

In defining Karma – Swami Vivekananda says the main goal of mankind is knowledge, rather than seeking pleasure or avoiding pain, because as we find that inner knowledge so we find our goal. He argues that pain and pleasure are transient and although they can mould character they are not the goal.  He also argues that good and evil help to mould character and.  it is the light and shade moments of life that help to shape us and sometimes the harder times, the pain and the disappointments can be more powerful in making us who we are.

What is it that I have learned from the principles of Karma that has enabled me to educate, mentor or inspire the students into either stopping or taking action?

One of the most common starting points of a conversation with me from my students – and there have been several hundred each year for the past 20 years – is “Dr Shai I have an idea…” Many of these ideas just fizzle out and a few take shape into ventures – which are either profit making or social enterprises. What is our role in this?

One of the lessons in understanding Karma Yoga is that we may be driven by the nature of who we are and this in turn is thought to be built on three characteristics;– being Sattva; Rajas and Tamas. In simple terms these are the desire of equilibrium; the pursuit of activity and the pursuit of happiness which itself can lead to inactivity or darkness.

When I see students who are seeking Sattva – or equilibrium – I feel they will find their own way into entrepreneurship or other form of employment that enables them to achieve the balance they seek. Their priority is to have and seek balance. What a wonderful gift.

An amusing side story is that I was a Visiting Professor in Denmark at Aarhus University, I learnt about their philosophy of Hygge – which is to strive to be content. I do not wish to oversimplify Scandinavian culture or misrepresent it in any way but I did get the “vibe” that the desire to be contented was a powerful motive. There is a bigger question, but that is outside the scope of this talk.

What is an enterprise educator’s role in this? Is there a common set of ideals that can inform us in how we can act? Are we even relevant to a society that seeks contentment? How does one unlock the entrepreneurial spirit in such an environment? Do we touch on the right motives if we say that those who seek a life through Sattva are to be introduced to the material successes of entrepreneurship? Unlikely. It may be more effective to help them see other forms of contentment that can be derived from entrepreneurship.  Possibly those who seek the path of Sattva are driven more by altruistic or quasi altruistic motives and we need to find out what these are or how they can be linked together?

For me the challenge of this drive for Sattva – or Hygge is that it somewhat flies in the face of the entrepreneurial character, which is driven so much by restlessness and need for action.  Is there not a conflict between desire for action and desire for contentment. I am still puzzling over this. 

Those who are driven by activity – Rajas if you like - only need guidance on the small detail and practicalities of making their idea happen. The inner drive is there – and the work ethic that goes with it. They are curious, strive for the knowledge and only need a gentle steer to help them on their way. 

Sometimes they also need to think about the meaningfulness of their venture. Not all ideas are going to make meaning in society or touch humanity. Many ideas are just there because it has excited the founder, but if the idea did not exist no one would miss them. In other words, the idea has been driven either by the desire to get pleasure from bringing it to life – it could be a technological solution, it could be something aesthetic or it could be to make money believing that wealth will bring happiness. So the pursuit of happiness overtakes the desire for making meaning. 

Another aspect of being driven by Rajas is to overcome problems that we see on the planet. We are driven to, for example, deal with the UN -  Sustainable Development Goals – reduce poverty, provide clean water, care for human health and so forth.  These are more purposeful manifestations of Karma – when they are driven by some inner goals to make a difference.   Our work as educators and mentors would be to help find and define what these motives are that can make meaning.

Those whose nature is driven more by Tamas – is more of a challenge for us educators. It seems to us, that the entrepreneur is not motivated, nor takes the necessary set of actions. They seem not to dig deep into themselves nor to seek the knowledge they need to flourish. 

Beyond the lack of action, sometimes the Tamasik ideas, seem irrelevant to the needs of humanity.  For example, there is an average of over 6,000 Apps launched per day on the Android store!!  This is wonderful at some level as every so often there is an accidental gem that is launched but the vast majority is nothing more than ideas. They are, for me, a lazy form of enterprise creation. And if we look at the content of the App Stores, we have to ask ourselves,  in what way do they, if at all make a difference to humanity? Maybe they cause a sparkle of action among those who develop and launch the App and eventually the confidence and learnings results in more meaningful future directions.

The other element of Tamas, the darker side,  are clearly unethical. And it seems to take society a while to get a grip over them and to ensure that we do not just turn the other cheek and avoid conflict. The kind of conflict that will help erase them but cause upheaval on the way. I am referring here to betting websites, pay day loans, the uncontrolled spread of fake news and many other such businesses that prey on the weaker members of society.

How does the enterprise educator unlock ethical aspects of business ventures or encourage action from those whose motives are either Sattvik or Tamasik when our comfort zone is to attend to those who have a preference for action? This is a really big question and one tiny step towards answering this was provided to me at the top of a chapter in a book I saw in the library of the Ramakrishna Ashram in Bangalore in 1996.

There had been an issue of priorities that had been on my mind, so I was grateful to go to a quiet corner to reflect. And as chance would have it I found the answer in a short “soundbite”.

The statement is: When the mind is full of little things where is the space for the big ideas?

It is this message that caused me to ask myself and all the entrepreneurs I have met throughout my career; what is the big picture? What is the purpose? How does what you do help humanity? And what action will you take.

Not all at once, but these questions have informed me in ways to inspire and teach some 30,000 students and entrepreneurs about entrepreneurship 

I would like to thank Swami Vivekananda on behalf of all these people for having given me this knowledge and empowering their futures.

I came I studied I started a new business from my Cranfield MBA by Dan Bedi

Guest blog by Dan Bedi - MBA 2016-17

Dan came on the MBA at Cranfield to take a year out and develop his ideas. What Ihave learnt is how he has been single minded with his objective, drawn on all the resources and made friends along the way to enhance his chances! Go Dan.

Three years ago, I was sitting at my job feeling like I was not being challenged, I wanted more. I had always harboured ambitions of starting my own business and had several ideas I wanted to explore. I often used my commutes to work to watch TED talks, read articles and learn more about business and different industries. I wanted to engage with my entrepreneurial side properly and take time to learn as much as I could. I chose to complete a full-time MBA at Cranfield School of Management. By taking the year out and fully immersing myself in the MBA community I aimed to further develop and challenge myself. I knew I was taking a risk coming out of employment but at the same time was enthused by the opportunities ahead.

Here is what happened.

The more you put in the more you get out….so

This saying is one I apply to my life both personally and in the workplace. I knew that I wanted to explore my business ideas and learn as much as I could on the MBA.

Whilst on the MBA I launched an Entrepreneurship Club. Out of our cohort of 58 MBAs I knew there were a few with ambitions of launching their own ventures. Our cohort voted for various class rep roles and I felt it was important that there should be an entrepreneurial link. Once elected by the cohort I began running after class sessions where MBAs could come and discuss a business idea, pitch an existing business problem or discuss any entrepreneurial challenge they had come across in the news recently. This was an enjoyable outlet for the course from the volume of MBA work we faced. Soon the club extended across the entire School of Management involving, for example, students from the MSc in Management and Entrepreneurship. The spread of backgrounds, ages and gender between the courses led to a real positive safe environment where people could voice their business ideas and work them through with a wider audience.

Prior to applying to the MBA the VCIC (Venture Capital Investment Competition) had caught my attention due to mentions in my previous role. The competition asks teams of MBAs to act as VCs, reviewing businesses, choosing a business to invest in, pitching to an investment committee of external VC judges and then negotiating with the chosen entrepreneur.  The preparation for this competition is embedded into the timetable for the MBA to give students the best chance to compete.

Arriving at Cranfield I knew this was something that not only interested me but would provide a valuable learning experience considering the investment and funding route I wanted to take as an entrepreneur. During our first MBA week, I voiced ambitions of competing and winning the competition to some members of the cohort. Assembling a team of MBAs together in week one based on information from alumni we began training towards competing in the competition. Two members of the team including myself had some previous experience in this sector as well as negotiation training. We began training regularly throughout term one. Winning an internal competition and chosen to represent Cranfield at the competition the team flew to Barcelona to compete against other Business Schools, such as Insead, Oxford and LBS. Our Cranfield team managed to not only win the entire competition but also win the entrepreneurs choice award for the VC the entrepreneurs would most like to work with. After this success, the team travelled to the USA to compete for Europe against schools for the rest of the world. The entire experience was a fantastic journey and allowed some key learnings to be taken for application to my business venture.

The Bettany Centre for Entrepreneurship is another asset at Cranfield. The team at the Centre has helped enormously get my business venture off the ground and was a key reason for choosing Cranfield for my MBA. The focus on entrepreneurship helped through start-up weekends, investor days as well as introductions to key alumni who have provided valuable advice and support throughout the start-up experience. The equity free injection of £15,000 has helped in getting the demo ready to help secure further investment.

Currently having finished the MBA we have successfully launched the business. The Fan Area is a digital home for sports fans. We provide the latest news, views and games for sports fans based primarily on football (soccer). The Fan Area connects fans with fans, fans with content and fans with businesses. We have benefitted from free office space provided by the university in their incubation hub and have been accepted onto a competitive accelerator which has allowed us to propel the business forwards. Closing off our SEIS investment round currently there are exciting times ahead in discussions with several large organisations ahead of the 2018 World Cup in Russia.

Key lessons for  future MBAs with an interest in entrepreneurship 

I would advise future MBA candidates to carefully consider what they want to achieve from an MBA. There is so much opportunity on any MBA course it’s easy to forget what your goals are.

It is important to stay focused in business as life throws challenges at you from all angles. The MBA has equipped me to handle challenges not only in the workplace but also personally too and I can sincerely say that I have developed academically, socially and personally during my time on the Cranfield MBA. 

I knew that I wanted to launch my own business and learn as much as I could whilst on my MBA. I consciously threw myself into extra-curricular activities like the entrepreneurship club and the VCIC competition alongside my studies. Driving toward my predefined aims throughout my time on the course helped me form the relevant network and get the advice and support I needed to get my goals off the ground.

Any MBA or one at Cranfield?

“Build your own dreams or somebody else will hire you to build theirs” – Farrah Gray.

This quote resonates with me strongly. Pre-MBA I knew that I wanted to launch my own business. Cranfield’s links to entrepreneurship were apparent to me pre-MBA. Sarah Willingham and Nick Jenkins on Dragons Den TV Show as well as visiting the campus and seeing the Bettany Centre and focus on entrepreneurship showed me that Cranfield was a good place to develop the idea. The time was right for me as I wanted to take the risk associated with launching my own business early in my career and Cranfield provided the perfect opportunity to build my own dreams.

The breadth and depth of experiences of other students on the course means you will always find the right people with whom you can start a new venture. The physical facilities, access to equity free funding which you have to compete for and access to real business people who know how to build companies made it ideal from my point of view. Sure it is not in a city like London, Oxford or Cambridge but that too has its advantages – you get to focus on your intentions and get “time out”.