Retiring this year, Leonard Sim of queuing system innovator Accesso (TVBMA winner Best Use of Technology) contributed a wealth of experience. “The winning formula has changed. Today you need to be ready to react and adapt to change, be prepared to ride ‘horses for courses’. We have certainly been three different companies down the years.”
He mentioned the determination to ‘hang on’ post 9/11 and during the 2008 recession, plus brave boardroom decision-making, and the innovative use of lease financing and a profit-sharing business model within his theme park supporting business.
Satbir Dhillon of facilities management (FM) procurement specialist FISco (TVBMA SME of the Year) admitted to ‘adapting to the customers requirements and learning on the job’ and avoiding cashflow concerns to keep the business alive in FISco’s early days. Having the right management team during troubled times for the FM sector, enabled FISco to deliver what it promised, “enabled us to shine, put in new system technologies, and then cope with our growth of £5-6 million turnover every year.
“It is about being agile, able to adapt to change, utilising best practice, developing our software technology, and importantly bringing talent into an industry that doesn’t have an established career path, then showing them how to work in our business.”
Scott Witchalls of Peter Brett Associates (TVBMA finalist Business of the Year) explained how PBA had grown and diversified its structural engineering and design services over its 50-plus years to meet client demand. It now provides a full service offering from site acquisition planning and due diligence to full design delivery of finished building or infrastructure.
PBA has around 800 staff but competes with global corporates of 20,000 -30,000 employees, said Witchalls. “Whereas bigger companies tend to have a silo approach, we make sure our teams understand the process from beginning to end, which allows us to offer added-value through de-risking the whole delivery process.”
John Wilcox of Thames Valley Air Ambulance (TVBMA Charity of the Year): “We are a charity, but effectively a £6m-ish turnover business with trustees as our directors. Good management practise works in any organisation and we are no different. We have to generate income, deliver results and pay our bills.
“A successful business needs a clear business approach; knowing what you do and why you do it, but with the ability to flex. No-one foresaw 9/11, yet businesses had to react to it, be nimble to do so – an area where SMEs have an advantage.”
Rob Pickering from ActionCOACH felt that far less threatening events than 9/11 could disrupt some businesses – especially those with little cohesion. “There needs to be an inspirational vision among all staff and stakeholders, so that they are all pulling in the same direction. And the vision needs to be relevant and genuinely motivational – platitudes become a joke and work negatively within a business.”
Businesses succeed through quality people and management who have the flexibility to adapt, stated Robin Barnes of NatWest, while advising growing businesses to ensure they always have some slack in cashflow to deal with the unexpected.”
Wilcox agreed, adding that “making things easy for our supporters to do business with us” was important for his charity operations.
Embrace opportunity, but don’t become a busy fool
Pitman’s John Hutchinson advised: “There are also lots of business opportunities in this region and one thing we all find hard is being ruthless about the things we are not going to do – a lesson that young growing companies have to learn. You have to maximise your talent for work you can achieve.”
Alan Poole of James Cowper Kreston agreed: “Resourcing the opportunities is a concern, because of the risk of becoming a busy fool, fire-fighting the issues in front of you, and trying to balance what you have to do today to maintain customer satisfaction and your reputation, while needing to recruit and grow to service the newly generated work of tomorrow.”
Being small enough to treat every client as a valued individual, while big enough to deliver on all eventualities, was the ideal.
Adequate resourcing of customer requirements mattered Hutchinson concurred: “If you can’t deliver a service really well, then don’t do it, or your reputation will fall over.
“You need champions in your business who really want to deliver, but also the resources to support them, and other challenges that might be coming down the track.” Such factors were integral when considering which work and business areas to take on.
The competitive challenge of winning new work ...
David Murray queried where all the work opportunities were coming from.
Poole highlighted the many new and fast-growing businesses nowadays moving up into different levels of their market and accordingly requiring different professional services. But, he accepted that competition for work was often among known players.
Owen George of Grundon noted the need for competitive differentiation. During the recession his market became a price-war but now customers were looking at other factors than price. “Like everyone says, it’s all about flexibility and entrepreneurial spirit – that’s something Grundon has in spades. We employ 700 people but the Grundon family are still involved every day, encouraging employees to be innovative and proactive about developing our future business. We’re always looking to add value to our service proposition, whether it be through the adoption of our certified CarbonNeutral fleet or offering our customers access to industry-leading treatment facilities. That way we nip at competitors’ heels, out-manoeuvre them and win more business.”
Alex Tatham said Westcoast (TVBMA Business of the Year), currently with 1,200 people, was constantly seeking to recruit. “Our £1.6 billion turnover company – the largest tech distributor in the region – is growing nicely, but the key thing we look for from people coming into our business is a winning attitude. Frankly, we recruit raw talent from anywhere.”
Westcoast had a “lively and energetic” entrepreneurial spirit allied to its winning objective, he explained. This enabled efficient processing with flexibility, leading to rapid delivery solutions – a key differentiator to its much larger global competitors.
Alex Smith said during recruitment interviews ‘the right fit’ was crucial. Being “plugged in to providing customer solutions” and “being prepared to go the extra mile” was as much part of Redwood’s culture as its technical expertise – and integral in forming its customer-facing competitive edge. “Now as we grow and scale up, retaining that quality, agility, customer service delivery and winning culture is our challenge.
“We are achieving that by providing more defined processes for our people while retaining good communication and flexibility – maintaining our SME-like culture and extending it across a much larger customerbase.”
Poole stressed the ‘mission critical’ need to employ the right people in the professional services sector where client-adviser relationships are so important. To meet a growing workbook his firm had successfully added “well over 20% increased headcount in the past 4-5 years”, but gaining enough talented recruits remained a growth-limiting factor.
. . . and the challenge of creating a winning culture?
“The biggest constraint most Thames Valley businesses face is getting the right people, and keeping them motivated,” stated Hutchinson.
Money was not always enough, Pickering agreed. “There are more jobs than good people to fill them nowadays, and above a certain level money is no longer the biggest motivator.” Building a common culture, a clear supported corporate vision, creating the right environment and purpose for everyone involved was key to attracting and retaining people.
Poole: “And, while hoping that your culture, brand-strength and work engagement will retain talented people, being brave enough to train them knowing that they might be offered larger salaries by competitors.”
Recruitment specialist Sarah Stevenson of Hays highlighted the need for retention. “It’s no good getting talented people through the door if you cannot keep them, and today it’s often about appealing to different generations – older workers and young millennials. You need a culture with entrepreneurial drive in which all individuals can contribute.”
Pickering suggested a shared culture and company vision should ideally be established by the business founders through top-down involvement. Creating a fresh culture within an existing business or following M&A was a greater challenge. “If you say this is the type of business we want to be, and these are the people we need, a percentage of your staff may not be your type of person. The transition needs to be managed very carefully, and achieving it will differ company to company.”
Retaining staff by sharing the rewards of performance
FISco has set aside 10% equity for staff ownership, said Dhillon. “By contributing to our performance, they share in our rewards, and our good people don’t want to leave.”
Pickering’s franchise division has a profit share scheme, and he often advised clients to do the same. With the millennial mindset keen to support social and charitable causes, astute businesses were now also sharing their financial success within caring community projects proposed by their staff.
PBA operates a profit-related salary scheme, Witchalls revealed, as a staff motivation. “We are open about the business and its numbers, have weekly and monthly team talks, and discuss our progress. We make sure the staff know what our business is about and the direction it is going.
“As an LLP we have a limited number of people who own the business, but we are looking at ways of providing equity for staff.” While PBA has the private-ownership advantages of quick decision-making and flexibility, it also ensures staff have wide skillsets, broad sector discipline understanding, potential career paths, and is broadening its customerbase to de-risk its future growth.
Education and business: close the gap
While the region arguably hosts the finest UK value-add per head of population, upgrading its talent is its ongoing major challenge, said Barnes. More relevant education, simpler things like communication and preparing young people for work were “... key areas that the business sector has to participate in far more than we do at present. If we all did, we would have the talent that we need to succeed.”
He urged greater engagement through apprenticeship and work familiarisation schemes. “Young people are not daft, they just don’t understand what they need to be good at.”
Pickering agreed: “We need to close the huge gap between businesses complaining about the lack of appropriate education and the educationalists saying ‘Work with us’ – there is no interaction.” Where are the work experience schemes, the in-school talks from business representatives, the business-school collaborations of days past, he queried. “Kids today have only one career route – university. They have no idea of what working in a business is like.”
Witchalls remarked that PBA is a founding sponsor of UTC Reading, and helps set its curriculum and project work. “When we need resource at school-leaver level we are massively over-subscribed for every job or apprenticeship. For the past five years we have been investing in educational links, and it’s been very successful.”
Dhillon highlighted the lack of a career path into his facilities management sector, despite it being a £220b UK industry.
Hutchinson: “Challenges such as building bespoke career paths are all going to increase, particularly with the type of talent pool coming through today that doesn’t want a traditional career.”
Growth: Is organic best?
Smith said Redwood Technologies, had become successful very largely through having created a core team of “very driven, like-minded individuals”.
Witchalls: “We have grown organically by investing every year in our teams, bringing in graduates, apprentices and new staff.” More recently, PBA has used acquisition to enhance its planning, economic, engineering and environmental capabilities, and provide geographic market growth. “Key to our purchases is to fully understand that business, its abilities, work and partnership ethos, to ensure we can work with them.”
Sim: “Growth used to be about doing things quicker and cheaper, but innovative ideas and company changes can be scary for the big institutional investors behind the bigger companies.” They prefer a steady growth mindset.
Poole queried: “But, don’t a lot of the really big tech companies have a key focus on encouraging their people to do new exciting things?”
Sim: “Yes, but The Apples and Googles of this world can do that because they are bigger than their investors. While we are a tech company, and we do have exciting things happening, our theme park customers still operate very much within a people industry, and within a space they understand.”
Tatham pointed out that Westcoast had grown from a £600m turnover in 2008 to £1.6b today, with just three acquisitions and largely through organic growth.
“Growth is absolutely the key mission of our business, and we certainly take up innovative ideas from all around the business. Being privately owned definitely allows you to be more flexible.” Westcoast also works closely with customers to develop mutually beneficial creative improvements.
Dhillon agreed that private owner-management enabled organic growth through flexible, creative and long-term customer-focused thinking. “Customers need to feel they are getting the right attention.
“We shy away from acquisitions and listing because it creates different pressures for our company.” A focus on profit, short-term achievement and successful exit usually accompanied external investment.
FISco had successfully grown organically. “For us it’s about sustainable internal investment and long-term relationships with our clients.”
Transparency in a competitive and comparative world
Dhillon: “We actually declare our margins, because we don’t want our clients to think ‘How much they saved, and what are they making?’
“We don’t have a business development team, because if you deliver what you promise, then inevitably you get renewals and referrals. Today we have work worth £20m in the pipeline and our growth pattern is set for the next two years.”
Tatham: “Life is a constant negotiation, and for us a single digit profit margin is OK, but absolutely we are open with our customers and tell them what we make and what our costs are.”
Murray highlighted that professional services tended not to be as transparent on price as other sectors.
Hutchinson: “Culturally you are right, and clients today do want to know exactly what benefits they are getting for a tendered price. I think it (more transparency) is something that will probably come.”
Poole suggested professional service providers offered a different sort of transparency – clearly showing the scope and nature of their work, often with a fixed price or financial cap on specific areas.
Hutchinson pointed out that ongoing service costs for a long-term client were easier to assess and might become more transparent, but transactional work costs were very difficult to estimate.
Dhillon: “In mature industries benchmarking is available, procurement teams are very thorough.” If people want to set different profit margins than competitors, they have to be operating in dynamic sectors and offering innovative, in-demand products or services, he added.
Poole: “As long as you are offering a better deal than anyone else, you have a commercial right to your margin.” While professional services had become commoditised to a certain degree, all the providers had something different to offer, he noted.
And the quality of client-provider relationship, the expertise of people supplying the service, was often that difference, added Stevenson.
Tatham: “We don’t sell many of the IT products; we sell our service around them.”
‘The gorilla’ ... and other challenges to our region
Barnes, also a director of Thames Valley Berkshire Local Enterprise Partnership, highlighted “continuing to drive the growth of this very successful region.”
Maintaining momentum, improving infrastructure, honing the Thames Valley competitive edge, was crucial with “an 800-lb gorilla called London on our doorstep”. While an extended Heathrow would benefit everyone, he felt direct competition with ‘the gorilla’ was not the answer. Learning to work alongside the opportunities and strengths offered by London’s close relationship, while ensuring the Thames Valley remained a great place to work and live, was the goal.
Witchalls urged businesses to support the LEP’s championing of progress towards an extended Heathrow, Western Rail Link, and the M4 smart motorway.
People and infrastructure were the key challenges, stated Pickering. And, the fundamental change in the way people worked today – anywhere, anytime and more flexibly – meant good connectivity was now essential.
But, connectivity was still not resolved throughout the Thames Valley, Wilcox noted.
And today’s connectivity won’t be good enough, Tatham explained, since businesses would want to move to cloud-connected operations in future.
Pickering said his office already operated without a server. The BYOD trend with staff using 4G cloud-connectivity might actually “see the push to fibre ending up as a crazy joke.”
Murray flagged up the lack of affordable housing for incoming talent.
Barnes highlighted that Thames Valley accommodation was still much cheaper than London. Crossrail was already attracting residential and business relocation to the region from London, and startups were being assisted through local LEP accelerator funding schemes.
Crossrail and the new Science Park in Reading were both confidence-boosting developments for the future Thames Valley, Witchalls agreed. However, other major strategic regional needs were largely shackled by the lethargic decision-making and inadequate support of central government.
“We need to market the region as a great place to locate businesses, and uncertainty about planning, housing and infrastructure makes an impact. Businesses can do everything to provide the right ethos and lifestyle in their workplaces, but there is a need to lobby government for the important strategic things that will keep the Thames Valley as the second biggest economy in the country.
“We need to talk ourselves into growth, and on the back of that make sure it is all delivered.”
What will your business look like in five years?
Sim: “More of the same but internationally, and probably acquisitions in our leisure space. We will need to be as professional managing an international business as we are now in Europe and USA.”
Tatham: “We have a plan to double our revenue every four years, and approach £4b within five years. The thing is where are we investing today for our tomorrow?” He mentioned cloud infrastructure support and 3D-printing.
Grundon had just announced international ventures in the emerging markets of the Middle East and Africa, revealed George. Nearer home, he anticipated geographic acquisitions to expand its UK portfolio, plus differentiating Grundon from the competition through “more robust processes, innovation and providing additional services for our clients.” He mentioned maximising what can be recycled, and Grundon’s recent purchase of an aerosol recycling plant – “driving value from every element of a product that would typically have gone for disposal at landfill.”
Dhillon: “Technology will continue to play a big part in our industry, plus the emphasis on ‘green’ environmental services.” Consultancy work would help FISco’s growth, as would M&A activities. “Our key challenges will be to maintain our quality of delivery and to bring the right people into our business.”
What advice have you got for aspiring ‘winners’?
Sim: “Ensure senior management doesn’t make itself aloof from the organisation. Keep involved in the ‘deep and dirty’ day-to-day business.”
Wilcox: “Keep focus, be single-minded, have a clear plan. Don’t get distracted by fire-fighting.”
Dhillon: “Invest in technology, the world is changing rapidly.”
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