Be swift, be nimble
"Sprinters reach their highest speed right out of the blocks ... The earliest phase is usually the most productive."
SOME two weeks ago, Rhodri Morgan (remember him? Thin bloke – used to run the country. Jack of all trades and master of, well, many of them) gave a speech to the 2009 Wales CBI dinner where he outlined what he believed the successful Welsh businesses of the future will look like.
He identified the five key characteristics, saying “they must be hi-tech, niche, lean, green and global”. So it is worth looking at all five of these traits.
In the past, Wales was home to a number of companies that looked hi-tech. These included the television manufacturers Sony, Hitachi, and Panasonic. However, in the end, there was less than two decades between the first and last TV rolling off Welsh production lines. With hindsight, these products were merely the entertainment equivalent of Hoover, with some electronics replacing the vacuum pump. Electric and electronic products are market leaders only until newer technology passes them by. The modern television has a fraction of the components of those once manufactured here, increasingly consisting of little more than a plasma or LED display along with soft software run on a small electronics base.
Hi-tech is now a relative term. And the half-life for technology is becoming ever shorter. The future hi-tech products will take new scientific developments and rapidly apply them, reaching the market in every shortening time frames. That’s why those who take part in this race to the future look to scientific breakthroughs to give them a real lead.
My local, empty Woolworths on Cowbridge Road in West Cardiff still occupies the largest shopfront on the street. Woolworths was anything but niche. Wikipedia reports here that “On 26 November 2008, the trading of shares in Woolworths Group plc was suspended and the Woolworths and Entertainment UK subsidiaries entered administration. The administrators Deloitte & Touche closed all 807 Woolworths stores between 27 December 2008 and 6 January 2009 resulting in 27,000 job losses.”
Losing 807 large, well-positioned high street stores was correctly reported as a body-blow to retailers, but every CD, toy and bag of pick-and-mix that was not bought in the local Woolies was bought somewhere else. And that is probably why the retail sales of stores that survived the downturn which did for Wollies have seen some increases recently. In the words of the peerless John Mauldin: “Not very good for the total employment, but it does help the profitability of the survivors.” That summarises the danger of competition – Wollies lost business to dozens of cheaper, faster and better competition, including Amazon, Toys-R-Us and, most importantly, Tesco.
Lean is a term used regularly in manufacturing to describe an efficient production process where repetition is removed and there is a focus on only core, essential processes. But increasingly lean now applies to the service industry as well. Amazon can be described as a lean organisation, because its processes are efficient and effective, requiring the minimum human intervention. But lean also means pace – working fast and being responsive. At the time of writing (at 8:30am on Saturday), the knock on the door is a delivery from Amazon placed at 4pm the day before.
Cynics might say that Green is the new Dot Com. It’s a label that every business wants to stick on its business plan when it seeks funding, to catch the wave of environmental concern. But increasingly companies are viewed as green because of how they do things, not just because of what they do.
Take two Welsh businesses in which I have an interest. Econotherm is based in Bridgend, and makes industrial heat pipes. Operating at very high levels of efficiency, its products can save energy by transferring waste heat with technology that is 1,000 times as conductive as copper. ORS is based in St Asaph and makes laser-based monitoring equipment used in the production of (among other things) LED for street lighting. The ORS products increase the efficiency and reduce the cost of a production process which addresses one of the greatest uses of electricity on the planet.
Welsh businesses cannot limit themselves to selling only to other Welsh businesses or consumers. Our English neighbour is the first target market for many Welsh businesses. But very soon after they need to look towards Europe, the USA and the Far East. The demands of trading internationally include 24-hour help desks, language and local cultural alignment and a willingness to spend too many weekends away from the family, taking advantage of cheap international flights based on a Saturday night stay.
The traditional approach is to develop a strong UK-based business before venturing overseas – but the pace of business development is such that waiting until you are ready often means that you are too late. One good example of this is the tiny Cardiff-based business Evelyn Products, which began to run before it could walk, by exporting to USA before it sought a high-street presence in Cardiff.
The joint threat from and opportunity of the Far East has been discussed many times on this site before, and it’s more comfortable for businesses to export to countries like less ambitious countries such as Ireland and France, but big global growth is not to be found in Europe. Wales must look to tiny countries like Singapore (population five million) and Israel (population 7.5 million) that are forced by geography to export far from their border and which have achieved huge success in doing so.
So these five characteristics that mark out successful future business represent a challenge to much of the current employers in Wales.
But here’s one last thought. Jessica Livingstone’s book, Founders at Work – Stories of Start-ups’ Early Days, recounts how companies including Yahoo, flickr, PayPal and Tripadvisor grew from their very first days. Her introduction says: “That’s when they have the really big ideas. Imagine what Apple was like when 100% of its employees were either Steve Jobs or Steve Wozniak.”
So perhaps in a years’ time when Carwyn Jones speaks at the 2010 CBI Wales annual dinner one further characteristic may be added to Rhodri’s five – that of pace.
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Just shows how much Rhodri understood about business. Business strategy and business support is not a one fits all package.Thats why support needs to be flexible and not tied up in a big red tape ribbon.
The biggest factors for business
a market ,delivering what the client /consulmer etc wants and needs
an enterprising leader
good market intelligence
cash flow
committed workforce
Oh and add to that less recessions
Currently the Welsh economy is in decline, and to attain RM’s objectives, the question that must be answered by Cardiff Bay is,” Does Wales (and even the rest of the UK) have the right infrastructure in place to attract, nourish and grow these dreamed of high-tech, green, niche, fast growing and with a global market businesses?”
The simple answer is No!. Why should the owners or developers of such businesses wish to site that business in Wales? Currently, it would appear that WAG may have a vision, but has nor been able to verbalise how that may be achieved and the costs and timescales involved.
As one who is helping one of those new hig-tec, niche, fast expanding, global businesses to grow, the owners are thinking of moving this business away from Wales due to its poor infrastructure and also lack of vision. from Cardiff Bay.
Compared with many other countries, Wales has an antiquated infrastructure regarding roads, rail, air and internet – none of which are suitable for the 21st century, or for rapid communications with the rest of the world.
It also has high business taxes, taxes on job creation (employer’s NI) and is over-regulated. To readers of its press and blogs, there would appear to be more priority and debate at WAG regarding legislation around the Welsh language than on achieving economic development.
As a high-tec company we require our prospective employees to have an excellent all-round education, be fluent in written and spoken English and have at least one other international language, have very good degrees with a post graduate specialism – hence our last two recruits have been from Morocco and Hong Kong. In the last two years we have established branches in the Middle East and Texas and just this morning received an invitation for a jv in India.
We are not able to compete with the public sector on holidays and do not pay overtime for hours worked outside of normal office hours. We also expect employees to travel in their own time.(except long haul flights).We are competing in an international marketplace, something that the public sector has yet to realise.
When the Welsh public sector adopts the economies, ethos and culture of a competitive private sector and leads by example, then perhaps Wales will start to attract private sector investment.
I agree with financier on the whole (wish these guys would drop the assumption of anonymity, unless Wales has become that intimidating). It’s the economy stupid, well actually it is the politicians and their assorted bureaucrats who are responsible for the poor state of the Welsh economy. That is the reality. I also agree with our preoccupation with the Welsh language, as evidenced both in the medja and the blogs..
The Welsh language is not in danger of extinction and has more good will from English speakers than it has for years. So why upset English speakers with more pointless regulations (like expecting Tesco in Cardiff to have Welsh on their self checkouts, a complaint made by a Welsh speaker who uses English socially!). Wales needs to get its business fixed then work on the language . Maybe we should develop a Swiss approach to the language.
The challenge is to build long term capacity by reconfiguring the education curriculum so that more emphasis is placed on design and innovation and making entrepreneurship something which children aspire to.
For example, when a new extension is being proposed for a school, let the students come up with proposals which would include making the unit low or negative carbon and enabling it to generate its own electricity.
And how about allowing pupils to run businesses at school and use Fairtrade products so that they can learn by doing, co-operate with each other and appreciate the ethics of good business.
We need scores of scientists, engineers and project managers for a major energy project on Anglesey in North Wales which in total will span the best part of the next 100 years, from planning through construction, operation and decommissioning. And that’s just for one project!
Crucially, as mentioned above there has to be a change in culture which sees Wales having to compete in the world, which means more focus on how people can make life better for their communities across Wales by giving them the tools and skills to strengthen the economy.
While we have more water than we know what to do with, it’s still the people who are the best asset in Wales, so give them the goal and let them go for it.
This is what really matters for future success rather being bogged down by the narrow, esoteric, constitutional matters as some seem to want to do, to the detriment of the serious policy issues.
It’s such a distraction…..come on, Wales.
Let’s see, perhaps we could build a Welsh equivalent of Masdar City (or perhaps a town!), where all power and transport is carbon neutral, and we have international collaboration with the likes of MIT.
Michael Cridland.
My apologies for not revealing my identity, but as I am currently advising several fast growing Welsh SMEs, I wish to separate my personal views from the policies of those businesses and their owners. I have been living in Wales, helping those SMEs, for the last four years and so speak as an outsider looking in.
My background is that I am a scientist and engineer who became an international businessman. For most of my life I have developed or acquired, restructured and managed hi-tech businesses for multinational companies in countries ranging from Mexico, to South Africa, from Saudi Arabia to Australia. Also a consultant to the World Bank advising governments of developing countries on capacity building, competence and corporate governance and experienced in international procurement and trade finance.
Wales, like much of the UK, will soon have to experience budgets like those recently imposed by Ireland and Greece, with or without a change of government at Westminster. However, it is how Wales manages and uses the monies that it receives from HMG and EU that may determine its economic future. As devolution expands that this capability will have increasing importance.
Its public sector (local and national) has to review its priorities and to discard all non-essential employment and luxuries in order for Wales to start to become competitive internationally. I have been amazed that when faced with budget cuts that the first public comment by local government is often a reduction of services and not a cut in its own staff. There seems to be an assumption that salaries and bills will be paid and salary rises will be made notwithstanding the state of the bank balance. I have yet to see mention of staff working longer hours for the same or even reduced pay. – something that the much of private sector has already experienced, where if money is not in the bank at the end of the month, then salaries are not paid.
How about some radical and controversial thinking? S4C apparently costs about £100 million a year to run for an average audience of 40,000 to 70,000 with over 100,00 when rugby is broadcast. Why not make it a subscription only channel – that would measure its true level of support.
Any other radical ideas for economic competence in Wales?
“How about some radical and controversial thinking? S4C apparently costs about £100 million a year to run for an average audience of 40,000 to 70,000 with over 100,00 when rugby is broadcast. Why not make it a subscription only channel – that would measure its true level of support.”
It is an interesting idea, but is S4C’s presence more about Welsh speakers having fair access to public broadcasting like english speakers do?
Thank you Financier for the clarification, I was not taking a pop at anons. I am just a humble member of the general public who has the advantage of living both in Wales and the US , working in retailing and observing the difference in management techniques in both countries (the UK seems to to be top heavy with management). I am married to a special needs teacher who has taught in both countries (Wales and the US). Her father was assistant Superintendant of the LAUSD with reponsibilty for Watts in the 1960s. He was one of those responsible for framing California’s class reduction mandate in the 1970s. His view was populism destroyed the Californian school system in the 1970s.
I think it is a shame that the Welsh language has only one TV outlet and it suprises me that its viewer figures (even at the high end) is low even for Welsh speakers. Why is that? It does not seemed to be better for English speakers either.