In this post-recession era, forward-thinking SMEs are achieving growth by embracing technology and seeking customers globally. But how do they keep a competitive edge, win further business and retain staff as they grow? Twelve directors from a range of sectors joined IoD director general Simon Walker and BSI marketing director Chris Wright to discuss…
Director general, IoD
Marketing director, BSI
Director of special projects and compliance, Exponential-e
Managing director, Reality HR
Chris Gorell Barnes
Founder and CEO, Adjust Your Set
Co-founder and CEO, BBOXX
Managing director, Leica UK
Founder and managing director, Foot Trails
Head of growth, GetTaxi
Founder and CEO, RateSetter
Managing director, LG Motion
Chief commercial officer, NetDespatch
Chief commercial officer, Personal Group
So I’m always interested to hear from directors who’ve found something that’s worked for them, whether it’s the fundamentals, cutting costs, winning customers, boosting revenues or launching a new product, building a brand, or disrupting their industry – and it sounds as if we’ve got a lot of that here today. Every business has its own blend of what works for them. I think one thing we’d say is that the most successful are those who see opportunities where other people see a challenge.
As a lot of your firms demonstrate, globalisation and technological change are the real trends which companies have been grappling with. Customers have never been able to access more information about products and services that they are buying and that power shift has put pressure on every business to demonstrate how it’s ensuring quality and following best practice right through the organisation and also through supply chains. Again, some people see this as a challenge, or lament the extra cost. But others see it as the opportunity for differentiation and growth – and I’m interested to hear your thoughts on that and your own success stories. Before that, let me hand over to our co-host – BSI’s marketing director, Chris Wright.
CHRIS WRIGHT Thank you, good morning everybody. Like the IoD, we’re over 100 years old, founded in 1901. We are BSI, the British Standards Institution, and we started our business helping industry come together to grow. It was the rail industry in 1901… a huge challenge it faced was agreeing the number of gauges of railway tracks. There were over 70 at the time for all the individual companies and engineering firms, and we helped that group and brought it down to seven, which made trains go further. That was all about helping businesses agree common best practice for how they can move forward and grow as an organisation.
Around the same time, we founded the BSI Kitemarktm – you see that on everything from manhole covers to mobile banking apps to windows in your homes. We’re incredibly excited to be here today with a breadth of small businesses… we read in the media that we’re now post-recession, and living standards are back to 2008. We’re led to believe by those who influence us that the market is buoyant, has survived and come through the challenges over the last seven years. What I’m interested to find out from you all is: what’s your take on the new challenges for growth? Are they new, or are they the same as they were before 2008? And what are the new opportunities for growth? I think this morning’s meeting is a great opportunity for us to listen and for you to share those experiences with each other. Hopefully, you’ll discover some ideas and techniques and some lightbulb moments about things that you can apply to your own businesses.
SIMON WALKER I was struck by the contrast between a business like Chris’s [GetTaxi], which is putting a scythe through existing models, and Leica, which has been going for over a century – producing something really expensive while all of us can take photographs with the thing in our pockets. The contrast between what works and is disrupting everything and what survives…
CHRIS LAMONTAGNE I would say there’s a contrast, but there’s also a synergy – in both, businesses technology is the driver. We’re a technology company that just happens to provide a taxi app… I think if we talk about growth now in a broader spectrum post-recession, it seems like technology has been the thing that has really kickstarted the economy again. [But] I think for the UK there’s still a long way to go. I know it’s improving with incubators, Tech City and these kinds of new initiative, but we’re still far behind. We’ve got a very large R&D department, but it’s in Israel. Because there’s a relative brain drain – of being able to get the international requirements we need based in the UK.
CHRIS GORELL BARNES I agree with you and I think that this government is lacking in vision, not only of how they’re helping with technology but also, more importantly, the infrastructure. Broadband was initiated as an absolute core driver. It’s as important as roads and they’re not investing enough in broadband infrastructure. If the UK is going to be a global, competitive country it needs to have the fastest broadband and the highest penetration of any other country – and I think it’s really lacking.
MANSOOR HAMAYUN [But] the opportunity that you can actually set up an office in Israel or you can look at resources globally as part of your local business here is an enormous benefit and something I think that’s really changed over the last decade. As a business, we just take talent where we find it, rather than trying to bring it here – because as globalisation is growing, all companies need to think global…As a business we are taking a great amount of advantage from that: engineering is here in the UK, but manufacturing and our subsidiary is in China, our customer support is in Kenya. That’s a real opportunity for a mindset change.
SIMON WALKER What’s really interesting to me is that you’re all SMEs. We’re not talking about Unilever or Jaguar Land Rover, we’re talking about relatively small companies seeking out that expertise internationally…
DAVID WALKER If you take those two things that you were talking about – globalisation and embracing new technology – a lot of SMEs still have a UK focus, and I think the second of the two points is the key one for me… The companies that are experiencing the fastest growth are the ones that are embracing technology. I mean that as a message – that all companies with an aspiration for growth don’t have to focus on globalisation. It’s an opportunity, it’s never been easier, but the platform for growth that I’ve seen, certainly for our organisation – we’ve been around for 30 years, and we’ve experienced more disruption in the last 18 months than we did in the previous 29 years – has been driven by technology.
ALISON HOWELL If I could come back to the point about broadband – we’re an SME and I began our company in quite a rural part of England. I took the decision personally and for my business to move into central Bath last summer and one of the reasons is because I was really struggling with broadband – I couldn’t even get a meg of broadband where we lived. Now we’re in Bath, we’re very cloud-based, we can use VoIP phones – there’s all sorts of things we’re able to do to help us reach out globally that we really struggled to do when we were in more rural areas.
LAURA DAVIS We’re very much UK based, and the last three years have been interesting because we’ve been doing a lot around systems and processes. But what we’re seeing now is that growth is coming through and I agree it’s all about how you manage it. It’s not perfect, but it’s enabled us to grow for the last three years, 20 per cent each year, and I attribute most of that to how we have carefully managed our growth on an ongoing basis.
SIMON WALKER Could I ask Gary – you sound as if you’ve got a pretty traditional business. Is it true of you too?
GARY LIVINGSTONE Some people think we’re less than traditional, which is why we get the business. The people we employ are creative thinkers and have to integrate numerous technologies. We have core engineering skills, so we’re milling, turning, grinding, fitting – all the skills associated with traditional engineering. But we look for people who are trying to solve problems differently. We are approached by companies who have got a problem and offload onto us to find an innovative solution.
SIMON WALKER It sounds like a lot of the businesses around the table are in exactly that position…
LIVINGSTONE Well, I believe that all the successful SMEs [succeed] because they are not traditional. They may appear traditional, but they don’t think traditional and they do continue to invest in the technology and the people – and that is why they differentiate themselves.
JASON HEWARD We’re 100 years old but, when it comes to technology, our most talked about cameras over the last three years have been a black and white camera, which is sort of taking a step back, a digital camera that has no screen on the back, and a purely mechanical camera. Now these are all things that used to happen years ago but no one has thought about doing that in the market for years, so it’s disruptive, but it’s taking a step in the opposite direction.
LIVINGSTONE I think where your company’s particularly bold is you’re not scared to fail. Traditional businesses are scared to fail, and probably most of the people round here aren’t scared of failure. They won’t accept it, but they’re not scared of it. That’s why you come up with such good ideas.
SIMON WALKER Have you all failed at some point on the way to success?
JITESH BAVISI You learn from your mistakes. That’s the most important thing and, as Gary said, if you’ve got smart people they will learn to adapt. At the same time, as a business you have to be agile, be flexible, to adapt to what the customer requirements are.
MATTHEW ROBERTSON It’s not so much that we have failed at any point, but more that some time ago allowed our interest in big corporates to distract us and reduce our flexibility and fleetness for a brief period. Their ability to respond through multiple layers of bureaucracy did not match our speed to respond and deliver. However, it was a very good learning point and since this time we have not allowed any distractions from our entrepreneurial outlook while driving significant growth.
DAVID WALKER I think [in] the companies now that are growing – failure is being analysed better. Growth can be accelerated by really good risk analysis and by companies looking at opportunities, investing in those and not being frightened. Sometimes to leap into the unknown, particularly when you’re investing into new technology, you may think it is the preserve of big companies – ‘I can’t engage with a really top-level agency because that’s what big companies do’. Well actually, agencies have become more accessible.
HOWELL An inevitable part of the process of innovation is that mistakes will be made and it’s such a shame that we shy away from talking about failure, because I think there are different types of failure. If there are major quality failings, I would feel that would be unacceptable in my business. But I want my team and I to be confident to try new things in the right sort of positive way, because I believe that’s what will make us grow further and be more successful.
SIMON WALKER In the post-recession UK we’re kind of into now – how are you getting more customers?
WRIGHT Could I ask Rhydian? Because his business didn’t exist 10 years ago…
RHYDIAN LEWIS That’s right. Peer-to-peer lending is an innovation of the last five years and I expect the recession was a precondition of its thriving – in the sense that it was against the background of banks collapsing, both financially but also in the minds of people who feel that they’ve lost trust in that institution and that system. So perversely the recession has helped our business [find customers]. I also think, more generally, recessions are quite a good time to start a business, because you can attract better staff than you can during boom times.
HAMAYUN The way to get customers is [that] a small business can be a lot smarter nowadays. I think one of the underlying reasons for that is access to data. If you look at how much data as a small company you can collect on your customers – from CRM, from ERP, to the interactions in different platforms – this is a wealth of information. And, as a small company, being able to realise what is actually working, what the type of customers are, you basically learn to fail quicker.
DAVIS We’ve spent a lot of time in the last two years identifying what our ideal client looks like. That sounds a bit arrogant and I don’t mean it to sound like that, but it’s important – especially when you’re in a people business like we are. People buy people, so you need to be able to work with those individuals. So that’s about being clever, identifying what their pain is and where you can help. The key thing we’ve done differently is go out and target those individuals through the use of technology and the CRM data.
HEWARD It seems to be about being authentic. Certainly for us authenticity has been the thing that’s kept us in our growth position.
SIMON WALKER How do your customers, especially in such a rapidly changing world, know that you’re any good?
GORELL BARNES It’s about good PR, making sure that people know what you’re doing, good thought leadership – especially within innovation – and then good case studies. Back to CRM and data, you can now prove that your marketing is effective because you know the conversion – you know how many people engaged, and you know how many people bought the product.
WRIGHT If trust and authenticity are so important in all of your different sectors, how do you demonstrate that as you grow?
HOWELL There’s a great need for honesty in business as well. You have to be honest with your customers, your staff, your suppliers about what you’re doing and why you’re doing it. That’s something that we’ve done and I think people always know when something isn’t real or isn’t quite right. As a business you have to be as open as you can in your communication.
HAMAYUN My customers are rural African and the way that we access our customer is very traditional – we open up shops. Having confidence, loyalty and transparency is a very important part of that user experience for our customers, who are sacrificing a large part of their disposable income while buying our products… One of the biggest challenges that we have had to get to scale is, not so much about getting customers outside, but internal training. One of the struggles [of growing] from 20 people to 40 people to 80 people to 100 people, is the layers of management, internal training – the stuff that, if you have never done it before you have no clue what is going to happen. So I think the quality of the training internally really boils down to the bottom line.
BAVISI At the moment we’re running our academy, and it’s mainly the sales area. We take on graduates or people who are unemployed and we’ll give them intensive training… From our academy we’ve got very successful sales managers now who are part of our company growth. It makes a massive difference [that] as a business we do great things and we know we do great things. How do we demonstrate [that] to our end customers? We’ve underpinned all our good work with ISOs – BSI are one of our auditors who come in externally – and we can demonstrate to our customers the good work we’re doing… We’ve got five [standards] in total at the moment, from quality standards to business continuity and security. And we still get more requests about environmental and energy efficiency, so we’ll add a couple more this year. That’s important – big-enterprise customers do expect it these days, and for us it makes it so easy to do business.
LEWIS It’s really interesting how many conversations start on technology and then basically just veer back to people. Technology is the enabler, but what drives business is obviously people. I’ve been surprised at the extent to which [in] our business, which has grown terrifically, how much of that growth I could contribute to face-to-face meetings, despite the fact that we have an online platform and are very modern like that.
HOWELL Standards are important in business. Each business has to decide what their standards are and going to be, but that says something to your customers about what you believe in, your staff, your suppliers. The standards that we have in responsible tourism have helped us differentiate ourselves in the market and grow.
GORELL BARNES In my industry the most important thing is the culture that you create as a CEO, the values that you have as your business and making sure that your staff understand them and believe in them. Because it gets incredibly competitive as the big corporations start looking for innovative, clever, staff and they’ve got bigger budgets and they can give bigger pensions and bigger awards. [So it’s important] you’ve created a brilliant culture, that your staff truly believe in what you’re doing, what you’re trying to change. That often needs to be beyond the product and the profit that you’re trying to make, but what you’re actually standing for as a business and what your purpose is. We are moving into a world where a corporation’s purpose beyond their profit is becoming more important. In the next five years I think we’ll see a phenomenal growth in companies that are standing for things much greater than profit.
Click here to read Wright’s reflection on the discussion and learn how applying standards can help growing small businesses continue to thrive