Last month I attended the Institute of Directors Annual Convention at the Royal Albert Hall as a guest of Laurie Young. I had intended to blog about the Convention which I found rich in content and quite upbeat. However I later learnt that Laurie had died that night of a massive heart attack. (See my blog In Memoriam Laurie Young
September 2013) Last week I attended his funeral and in speaking to members of his family it seems likely that I was the last person to talk to him as we left the Royal Albert Hall. It was Chilean Independence Day and I was due to be a guest of the Ambassador at a music recital followed by a Vin d’honneur.
So this week I will turn to the subject addressed by the convention and do so with respect to Laurie’s highly original way of thinking. His new book Thought Leadership
came out this month and I commend it to you[i]
. The theme of the convention was nominally “Setting the business agenda” but the real theme that came through to me was the importance of entrepreneurship. Not that the politicians who spoke said much about it. George Osborne, Chancellor of the Exchequer, stayed true to his consistent position of cutting the deficit but showed very little understanding of what makes business tick, despite his own background in a family firm. Boris Johnson, Mayor of London, gave his typical knock-about performance but again was less than substantial on driving a business agenda. Rising star of the Labour party, Chuka Umunna, Shadow Secretary of State for Business, Innovation & Skills, demonstrated an attractive articulacy and sought to show his pro-business credentials by flashing his father’s IoD membership card. His father, a first generation Nigerian immigrant, had started a business in London, but Mr Umunna has followed a more conventional political career and also showed little understanding of what makes businesses grow.
But an attractive range of business leaders from the great Jack Welch to our own Sir Richard Branson and including a bunch of up and coming entrepreneurs made up for this paucity of thought by the politicians. Ana Botín, CEO of Santander UK plc, has both banking experience with JP Morgan in New York, Banco Santander in Latin America and as Executive Chairman in Banesto, recognised as the Best Bank in Spain for three consecutive years, but also is an entrepreneur who set up a private equity fund as well as an IT web consultancy firm which she grew and ultimately sold to Indra. She spoke passionately about entrepreneurship and has set up a team of Growth Champions in Santander UK who provide both growth capital and normal lending to SMEs. She clearly recognises that if there is no risk there is no growth. She also warned that the culture of enterprise is under attack in the UK.
Tidjane Thiam, Group Chief Executive, Prudential plc began his career as a politician in the Ivory Coast and held ministerial rank. He has worked in financial services in France and the UK and was appointed to his present position in 2009. He expounded on the opportunities in Asia. Back in the 1970s Asia’s share of global GDP was just 10% while now it has grown to 40% and is still growing. The Asian middle class now exceeds the total population of the European Union. There are several times more dollar millionaires in Asia than in the US. The demographics only indicate that these trends will continue as the median age in the EU is 41, 27 in South East Asia and only 18 in sub-Saharan Africa. For his own company Asia is now cash generative, it has 13 million customers and 400,000 agents, half of whom are women. ‘The Man from the Pru’ is just as likely to be a woman on a motorbike. And, as a last word, if the 21st
century will belong to Asia, the 22nd
will belong to Africa.
Joanna Shields has a background in Silicon Valley helping to build up brands like AOL, Facebook and Google. She is now the CEO of Tech City, the technology cluster in Shoreditch, East London known colloquially as Silicon Roundabout. She described the process of creative disruption contrasting Kodak which went into chapter 11 with 140,000 employees because it hung onto traditional film too long while the upstart Instagram, which recognised the desire for sharing photos on social media, was at the same time bought by Facebook for $1 billion when it had only 13 employees. Joanna had lots of advice to budding entrepreneurs but also to established businesses. She asked “imagine you’re a start-up. How would you solve a new market problem?” She thought we were entering a new era of entrepreneurship.
Dan Cobley is MD Google, UK & Ireland. I had heard him speak before back in 2008 when he was Marketing Director but he made more of an impression this time. This was no doubt partly because he wore the somewhat alarming Google Glass throughout his talk but more importantly because he hammered home the message about Google’s unrelenting focus on innovation. Its mission is “to organise the world’s information and make it universally accessible and useful.” To do this it hires engineers who are not just able to write code but are "curious innovators.” It looks for innovations that are 10 times better than current practice, not just 10% better. For example in Kansas City it is testing an internet that is 100 times more powerful. This prompted one tweet from someone who said “I’m leaving New York City to go to Kansas City because that’s where the future is being invented.” As someone who’s been to both cities I know which one I prefer but I can appreciate the sentiment.
Jack Welch is generally respected as one of the greatest business leaders of all time. He joined GE aged 24, worked his way up through many divisions and was named its CEO in 1981 at the age of 45. In his 21 years as CEO he transformed GE into the world’s most successful company with his innovative management techniques. Revenues grew five-fold from $25 billion to $130 billion, income grew ten-fold from $1.5 billion to $15 billion and the company’s market capitalisation had a 30-fold increase of more than $400 billion. Fortune Magazine voted him ‘Manager of the Century.’ Now 77 he is still bright as a button and answered a series of questions by video link to New York.
Graeme Leach, IoD Chief Economist, is clear that the impact of the state has been to reduce Britain’s competitiveness. As spending has increased our growth rate has declined from 2.75% in 2000 to 2.0% in 2010 and just 1% by 2020. At this rate the cost of borrowing will rise. As the state increases its interventions competition declines. Two of our most important sectors, children’s education and health services, are dominated by monopolistic public sector providers. And as for HS2 if you are willing to spend £50 billion to bring Birmingham 20 minutes closer to London why not knock Birmingham down and rebuild it 20 minutes closer?
Julie Meyer, Chief Executive of Investment and advisory firm, Ariadne Capital, is recognised as one of Britain’s most influential entrepreneurs. She warned that Big Tech, largely US based, would take over. Amazon has disrupted retailing, Apple music publishing, and Google is disrupting advertising. Technology is just a layer, innovation is not so much about technology as about economics. For example the Concorde was no doubt superior technology to the Jumbo Jet but the Jumbo triumphed. Julie then introduced us to young entrepreneurs who are disrupting established business models in banking, retail and fashion, but the common theme was the use of the internet as the means of disruption.
The final contributor was Sir Richard Branson, Britain’s most famous entrepreneur, who has started over 360 companies and has a net worth of £2.5 billion. Sir Richard is almost exactly the same age as me, I’m about a month older, and so I have followed his career with interest. He said that the point of a limited liability company is that it allows failure. The best way to learn about business is to do it. You can go to business school and learn something but eight out of ten business start-ups fail. Because he has dyslexia he learnt to be a good listener. You should speak in a language the public understand. You should be bold but don’t gamble. As an entrepreneur who had started a new business about every month for 40 years he sought to quickly get out of the way and find a manager to run it. He now spends 80% of his time on Not-for-Profit ventures such as The Elders which Virgin Unite finances and, with esteemed world figures like Kofi Annan and Jimmy Carter, they seek to resolve conflict issues. A similar group, the Oceanic Elders, seek to resolve the problems of fresh water. But he still has amazing business ambition. The Space Galactic initiative plans to bring space travel to ordinary, if rich, people. So far just 550 people have travelled into space. Virgin has already pre-sold 700 tickets for its first flights. But the technology is being developed in such a way that it will cut the journey from London to Sydney to 2 hours.
Overall an upbeat conference with some star names but what is the overall condition of British entrepreneurship? Well, I have some insights on that in some research by the Economist Intelligence Unit to which I am privy and I will share that in my next blog.
Copyright David C Pearson 2013 All rights reserved