Africa gets in your blood they used to say. I have been infected for more than a quarter of a century. So this is a bit of an emotional column for me. 6th March 2017 is the tenth anniversary of the launch of M Pesa. The original mobile money system improves the lives of millions every day. And has been the catalyst for the leading innovation ecosystem in Africa.
You may notice that this year is also the tenth anniversary of the launch of the iPhone. Over that decade, smartphones have been the defining technology in the developing world. Yet mobile money is more innovative and helps tackle a much bigger, tougher problem. We seem to have lost sight of this idea in the tech industry. UBI (universal basic income), taxing robots and so on are the ideas du jour. Many of our leaders seem to believe the priority should be advising Governments on how to solve the problems they expect the technology industry to create in the future. Where did that come from?
How did renaming and retreading the failed social and economic planning experiments of the 20th Century become a thing?
Why do we want to risk the consequences if (sorry when) these plans fail? The pain and suffering that will be inflicted on billions of the world’s poorest. How have otherwise smart people convinced themselves that the future can be foreseen, designed and planned for on a grand scale? Today’s sages will be in the position of Kipling’s dead statesman:
“Now all my lies are proved untrue
And I must face the men I slew.”
Let’s take a step back. AI, robots and the rest will transform the way many jobs are performed. Its hard to predict what will emerge from such a transformation. One things is certain.
The outcome will be to unleash a huge wave of human potential.
Over the next 20 years technology will be automating manual work, replacing routine clerical tasks and maybe rendering lawyers and tax accountants obsolete. No-one should shed any tears. Least of all the those who live by innovation and entrepreneurship.
Nor should we indulge in scaremongering and exaggeration. The machines are not about to take over the world. The brilliant philosopher Daniel Dennett summed it up in this week's Lunch with the FT.
"All we are going to see in our lifetimes are intelligent tools. Superintelligence is logically possible but it is a pernicious fantasy that is distracting us from far more pressing technological problems."
Tech has an opportunity and a responsibility.
Technology does not solve real world problems on its own. Coupled with innovation, it can. And we need to get on with it.
Nothing illustrates this better than the PR storm which surrounded the relaunch of Nokia’s iconic 3310 handset at MWC last week. This is retro chic in the West. Meanwhile in Africa, M Pesa and its imitators are still creating new value from the original technology. We are on the verge of a further revolution in information technology. There will be losers. People and communities will suffer when such a fundamental shift takes place. Governments should focus on dealing with that transition. The Chairman's View
The tech industry needs to remember how Vodafone, the UK Department for International Development (DFID), Safaricom CEOMichael Joseph and his team started out. They sought out the most disadvantaged and excluded in Kenya. And used the technology they had available to create a product that would make a real difference. They worked as a team. They observed how their customers used the initial product. And they were not afraid to think big when the opportunity emerged.
Yes, the leverage provided by M Pesa helped Safaricom build and maintain a dominant position in the mobile market. But the openness of the platform and the sheer utility and simplicity of the concept were the inspiration for so much more. A decade on, lets draw inspiration from that example. To learn more about M Pesa and the mobile money story:
Watch this brilliant 6 minute video featuring Michael Joseph The M Pesa Story
Be a scholar for an hour and read The Long Run Poverty and Gender Impacts of Mobile Money Keep learning and being inspired by the story at GSMA Mobile for Development Or get out to Africa and see for yourself....
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This post is a bit late because I am a big NFL fan. I spent Sunday night/ Monday morning enthralled by Super Bowl LI. The Patriots snatching the prize from the Falcons in one of the great comebacks in sporting history.
In business we love a sporting analogy. So no doubt the latest NFL Championship will offer rich pickings. The trouble with these comparisons is that they forget one thing. On Sunday the Patriots won and the Falcons lost. One up, one down, a classic zero sum sporting contest. Business is competitive but it is never a zero sum game. Looking at the faces and body language of the Falcons and their fans brought back bad memories. One special tough experience came to mind. Around 10 years ago [2006] my old firm was pitching for a huge opportunity with my most important client. At the same time I was struggling to get along with a new leader in my business unit. The whole situation was filled with stress, lack of trust and politics. Nasty for everyone. Perhaps no surprise then that we lost the pitch to one of our major rivals. The situation within the firm became critical. Each individual saw this as a zero sum game in which we were the loser. Blame, recriminations and attempts to get one over abounded. All in a poisonous atmosphere of broken personal and professional trust. I found this all pretty hard to take. So I ran away and hid in the only place available - with my client contacts. The pitch involved an audience of 22 senior people only 3 of whom we had met before. I followed up with most of the rest. Over the next two years, 5 people in that group provided business for my firm. Two of those because close friends. They remain amongst my strongest business relationships today. In my experience, this experience is representative of the business world. Much more typical than the simple sporting narrative of winners and losers. There are no zero sum games for three main reasons: Always adding value
Everyone and every business is trying to create value. This is not some new idea developed for startups. Others may be stumbling, fumbling and even failing. But that does not change the basic aim. On both sides of every deal, and among all those who miss out, there is a common motive. We call this the economy.
Dynamic but no equilibrium
This economy thing is great but it is a complex, dynamic system. It never stops, has no pauses and cannot be in equilibrium. Business sits within this environment and so cannot be stable either. Thus an even balance (or summing to zero) just can’t happen. On the rare occasions where things are not being added, they are being subtracted. Cancelling each other out is not possible.
Its the people stupid
Its all about people. People are built to look to the future. Time is the one thing we cannot control or change or relive. Couple this with an unstable system and an overwhelming desire to add value. There can only be one outcome. We go forward and we grow as we do it.
The Chairman's View
Business is not a zero sum game. The whole concept appeals to me. Its a simple way of conveying the right attitude of mind. The passion to generate value in everything your SaaS does. And the resilience to find the positive in every experience.
It cuts against a lot of insidious behaviour. Cut-throat sales tactics. Excessive pricing and aggressive terms. Exploitation of people and resources. Nothing built on the misfortune or weakness of others works with the no zero mindset. I don’t believe anyone starts a SaaS business without aiming to create value. Keep that positive purpose in the front of your mind and you will not go far wrong.
I am not a big fan of setting goals or targets at the best of times. They create two fundamental problems:
The New Year disease
So what to do at this time of resolutions and annual budgets? You could join the crowd and make a full blown plan. If you must, this short article from Fred Wilson on Planning for Next Year is a good guide to the principles.
And as Fred points out, if you want to develop a proper annual plan you would start in September. In other words planning is a complex process not just a way of capturing your post holiday guilt trip. The great military leaders have always understood this:
"No plan survives contact with the enemy."
Helmuth von Moltke the Elder "In preparing for battle, I have always found that plans are useless but planning is indispensable.” Dwight Eisenhower.
In other words, if you want to make plan establish a process. Set aside proper time for thinking, analysis and discussion. Develop a set of goals that are support by data and argument as well as passion.
This is not something that can be accomplished over a couple of days New Year holiday. So don't start 2017 with a blast of goal setting. I would like to offer a different approach. Think about this one question: What would you like to change?
Its not an original question. I first started thinking about back in 2007. That year the firm I worked for used it as the centrepiece of a marketing campaign. The beautiful challenge lay in the infinite variety of responses. Take two simple examples from that campaign:
At the time, we commissioned a series of essays in the FT on the topic. Then Deputy Editor Martin Dickson wrote a piece. In it he expressed a wish for the press to behave better and to be better regarded. He headed it with this quote:
“You cannot hope to bribe or twist, Thanks God! The British journalist. But seeing what the man will do unbribed, there’s ’s no occasion to.”
Humbert Wolfe
By contrast, each of us had to stick a poster on our office door stating our own answer to the simple question. Mine read:
“I would like the people of Scotland to go out into the world with confidence and ambition once again.”
Either of these responses would stand up well as an aspiration today. Yet both are also personal and just a little bit odd. Answering this question is a good time for your inner geek to show.
So these answers may not fit your circumstances or way of thinking about the world. No matter. The question is designed just to make you think. How could your business or life be different? And also how could you make a difference to others? Your answer may already be the guiding light for your life. Or a small change that requires only a bit of active willpower to deliver. Or a way of capturing the vision for your business and the difference it can make in the world. The Chairman's view
The purpose of this post is simple. Instead of setting goals or making resolutions, start the year with a little reflection. Think about hope, ambition and direction. That could lead to changes and plans. Or just help you draw you new energy and focus for the challenge ahead.
We all have it in our hands to make a difference in 2017. How will you use that power?
The value of the biggest B2B SaaS companies has been growing. But not at the epic rates experienced by B2C software. At the same time, the number of B2B SaaS startups also keeps rising. Is there enough potential revenue in the market to justify the level of SaaS investment?
Jason Lemkin wrote a fascinating piece on SaaStr a couple of weeks ago about the SaaS Decacorns we need by 2021. His conclusions were optimistic. He believes both that the market as a whole is big enough. And that there are companies there with the potential to become the mega leaders of the future. I am not going to comment on the latter. But I share his optimism about the overall market. We are only scratching the surface of the opportunity for B2B SaaS. Reaching this potential demands great products which solve real business problems. SaaS companies must also help customers execute change to realise the benefits. All in the face of strong resistance from multiple vested interests. It will not be enough just to wait for the market to come to you. B2B SaaS companies need to take the lead in finding strategies to overcome these challenges. The scale of the opportunity
The simple fact is that traditional on premise, licence based revenues still account for the bulk of the enterprise software market. You can fill your boots with various projections and analyses of this topic. For starters check out this Forbes collection.
However you look at the numbers this makes no sense. SaaS is an ideal platform for innovation and increases the speed of change. It offers much greater flexibility and agility. Integration allows for rapid adoption of best in class. And its cheaper. The question is not whether the market opportunity exists. What bugs me is why progress is so slow. Executing change
The one word answer is change.
SaaS does not bring any of the benefits listed above to business. It provides a tool or a platform to improve a business. To realise the gains, the business must change. Businesses of any size find it hard to execute change. An established business is different from a startup in two major ways:
Organised resistance
Your customers internal opponents are not the only losers. Growing SaaS by a factor more than 20x will do damage to the traditional software business.
The big enterprise vendors are the tip of a large iceberg. They are the visible part of an ecosystem that includes consultants, systems integrators, lawyers, training providers, independent software vendors, project managers, change leaders, corporate IT careerists and a raft of other specialists who have carved out a niche that is built on SAP, Oracle and the rest. The strident voices of direct competitors are easy to deal with. Corridor whispers by trusted advisors and “independent” experts are much more insidious. So be careful. Resistance is everywhere. The Chairman's View
I share Jason’s optimism about the scale of the SaaS opportunity. That’s one of the reasons I love working with B2B SaaS companies. The winners will have great products and fantastic teams led by brilliant leaders. They will also have an effective strategy to overcome the barriers to change.
Each market opportunity and in some cases each deal will need different specifics. The outlines of any successful approach will include:
And do it all with confidence. The market is moving toward B2B SaaS. Let's help it along.
I love to talk to people about their businesses. Thinking through strategy. Tackling challenges and opportunities. Helping leaders take tough decisions. That has been my working life and there is nothing I would rather do.
Every so often, I facilitate a group of SaaS entrepreneurs based here in Scotland. This means I get to talk business with a dozen or more startups at the same time. Heaven. The focus of the group is to share common challenges in SaaS. When we met on 4 October the discussion topic was selling to enterprise customers. This is a great sign. A number of companies in the group are now mature enough to be targeting deals with larger customers. (We also had some new joiners so the community is growing nicely.) Our discussion picked up some great ideas that would help anyone dealing with large companies. The main things in my mind are: Team/ hiring; target markets; patience and process; land and expand. Build the right team
Enterprise revenues are like every other aspect of your business. The biggest determinant of success if the quality of your team.
You need to find a way to sell your product to large and complex customers. A good SaaS pricing page and clever inbound marketing are not going to cut it. You will need to build a team. That means some combination of hiring and developing/ promoting your existing talent. People are the biggest decisions you make as CEO. So think through the type of person you want. Get a second pair of eyes and ears involved in the interview process. For example, an advisor, mentor or NED might be able to help. Design the right package for the best talent. And remember, at the end of a recruitment interview, maybe means No. Target the right customer
Making a sale to an enterprise customer is often a long process. Growing that initial deal into substantial revenue requires even more time. And there is no guarantee of success when you start. How can a startup or scale up with limited resources handle the demands?
Focus on the right target. It can be tempting to respond to every corporate enquiry. When a household name approaches your little SaaS it is flattering and exciting. There is nothing wrong with having an initial discussion. Use that time a bit of research to find out if this company is a genuine opportunity for your product.
Patience, Patience, Patience
Completing an enterprise sale takes a long time because the process is complex and slow moving. Large companies have whole departments just to buy stuff. Called procurement, purchasing, supply chain or whatever. These teams have systems, processes and standards that take time and effort to navigate. Often it feels like you are up against the deal prevention team.
And procurement is not the only challenge. You must convince and reconvince the business of the value in your product. You may also have to prove you are better than the competition. No wonder one of the companies in the SaaS group had planned for 9 months to complete its first enterprise sale. And is running behind schedule! Tactics and specifics for managing these matters is a big subject. The biggest risk is impatience. Push too hard. Appear desperate for a deal. Or just let your frustration show. And the prize will slip through your fingers. Hunt for thrills, farm to live
Winning deals with enterprise customers is worthless. The goal is revenues. Actual cash in the bank. Sustainable and underpinned by rapid growth.
For a SaaS company that means the long and painful sales effort is only the tip of the iceberg. The value is only delivered after the contract is signed. Persuading and supporting individuals, departments and divisions to adopt and use your product. All the moving parts inside your new minted enterprise customer. A bit of new language has grown up around this. Customer success, upsell, negative churn etc. These are all terms for an old fashioned business fundamental. Account relationship management. You should plan for your SaaS to have account management people, systems and resources. Think about the organisation you want after you win the deal. Develop budgets to reflect a realistic view of the way enterprise customer revenues develop. The Chairman's view
Moving from an SMB focus toward enterprises is not an easy road. From a board/ investor point of view I want to help the leaders of SaaS companies focus on the key decisions. Give entrepreneurs the best chance to realise the opportunity and manage the main risks. You should for an experienced head to help you with:
All are interdependent. Nothing happens in a neat sequence. You never have all the information you want. Welcome to leadership!
There has been a little to and fro in the startup blog world this past week about heroes. A tweet from Joe Fernandez criticised those who suggested that VCs wrote large cheques with a Homeric flourish. Fred Wilson responded that entrepreneurs were the true inheritors of the mantle of Achilles. Then Howard Lindzon weighed in. The more modest contributions of first up angel investors deserve the accolade. Or maybe the code itself is the hero?
Are heroes a helpful startup metaphor?
In spirit, I am inclined to Mr Wilson on this question. But I wonder if the language and the image are helpful. Conjuring up the bravest of warriors or the most noble of martyrs feels out of place. I am not sure the mantle sits well with the greatest icons of the entrepreneurial world. My guess is that Bill Gates, Mark Zuckerberg or Richard Branson would reject the description.
And these are rare individuals. Talents and characters that appear only a handful of times in each generation. They provide an inspiring example for the few. For the majority of founders and leaders, a more practical aspiration would be appropriate. Success takes more than a few unicorns
There will always be a place for the next big thing. Whatever follows Microsoft, Apple and Google to the summit will be a business that changes and enhances the lives of billions. But broad based economic prosperity, better health and education, bringing an end to global conflict and poverty will take much more than a few unicorns.
Aim for sustainable not superstar
The aim for almost every entrepreneur should be to build a sustainable business. First, something that will support that individual and his or her family for a lifetime. From time to time more successful companies go on to employ more people. They can provide those teams with a decent living. Some, but not all, such businesses will also offer a return to external investors. These will attract capital from a variety of sources.
A small number of these will outlast their founders. Gaining a longer life through external or by means of an inherited family business. A word of caution though. The overwhelming majority of businesses, have a lifespan less than half that of a human being. Around 40 years on average. This includes all but a handful of the most successful names. The only large technology companies today that existed when I was born are IBM and HP. Of course HP is in the process of being broken into its constituent parts. The traditional role model doesn't fit
Think about the tradition image of a hero. Someone who does extraordinary things in extraordinary circumstances. Building a good quality business today is neither of these things.
Digital technologies, the lowest trade barriers in human history and unprecedented access to investment capital mean the environment for starting up is the best we have ever experienced. Yet exceptional talent is not required for most endeavours. Good quality products, designed for users and supported by excellent service will do the job. A more modest aspiration
So let’s forget about being a hero and put aside the imagery of battle and sacrifice. Set out on the entrepreneurial journey with a different role model in mind. Some aspirations which sound more modest. Yet provide a real basis for sustainable, achievable value:
Being an entrepreneur can be tough. Then again, life is tough. Don’t worry about being special. Just focus on doing the right thing.
When it comes to hiring there is one absolute rule. Maybe means No.
Adding the right person to your team is the most important investment decision most founders and CEOs will ever make. Every SaaS investment is spent on 3 things
In a SaaS company all the investment money raised goes on 3 main things:
Hiring is make or break for a startup
These people will make or break your business.
No hiring decision is easy. In a startup there are so many roles to fill. So many gaps in the skills and experience of your team. Such intense pressure to show results to your investors. And even with the cash from a successful fundraise in the bank, capacity to hire and pay is so limited. A confusion of choices and compromises
On the surface each hire is a black and white decision. Yes or No. Yet as soon as you start reviewing CVs, you will find that one person seems to present an array of choices:
Over time the process starts to feel like a series of compromises. Remember you are looking for a person. Can you work with them? Will it be fun? Would you trust them? These questions are much more important than any specifics. It will never be easy. You need to be patient. Prepared to spend the time. The effort will be worth it in the long and short runs. Consult with other people. Listen to their views. Take up references. In the end it is your decision. So try not to compromise. Only hire someone who is a definite yes.
We are in the middle of the rolling centenary remembrance of World War 1. In Britain this summer has been marked by the anniversary of the Somme. And earlier in the year France remembered the millions lost at Verdun. For me honouring the sacrifice is only part of the process. I have also been taking time to reflect on the lessons of the conflict. The mistakes and the legacy that we live with to this day.
The history of the causes and conduct of the war make depressing reading. The catastrophic legacy of the peace is still unfolding across the Middle East. One thing stands out. Leadership. Or to be more accurate the lack of it. The egotism, lack of vision and shortage of talent amongst the upper reaches of politics and the military across the world. In stark contrast to the sacrifice of those on the front line. Living in Europe or the US today, who would disagree that our leaders today represent an uninspiring bunch. Every bit as limited as those grey and undistinguished men (and they were all men) from a century ago. Politics, business or the media. Everywhere you look dull, dispiriting and downright dangerous choices are on offer. Startups offer hope and inspiration
The startup world provides a refreshing contrast. I am lucky enough to work with entrepreneurs and great teams. And I see courage, tenacity and vision in action every day.
Yet I was not surprised to read Joe Lonsdale’s recent article. It highlights a deficit of leadership in Silicon Valley. He is talking about a higher and wider goal. Beyond simply driving and directing a successful business. His analysis resonates with my own observations. But I see this as an opportunity not a problem. The opportunity: Realising leadership potential
The entrepreneurs I see have limitless potential. And a lifelong journey of learning and development ahead of them to realise it. It is natural for many successful leaders to find and follow this path. But if that seems a bit scary, here are some things you can do to help along the way:
Our best chance
The most fun I have in this business is working with great startup leaders and founders. The energy and inspiration needed to build a business is amazing to witness first hand. I know this is replicated in cities and countries around the world. These are some of our best and brightest. People who have the potential to become leaders across our communities. If we want a better future, the entrepreneurs of today are our best opportunity.
A series of appalling terrorist attacks. The UK vote to leave the EU. And the ongoing pantomime of American politics. The summer quiet season has been slow arriving this year. That has not stopped a regular supply of reading lists to fill the holiday hours. This list from Y Combinator is but one recent example.
Reading is one of life’s great pleasures. The act of losing oneself in a good book is a joy unto itself. The benefits of broadening the mind and engaging the soul accrue long after the covers have closed. Books can be a great way to learn new skills. Or educate yourself about any number of business topics. But those that live longest in the memory? The works where the writing raises questions and opens the mind to boundless possibilities. So I offer a small selection of my own choices. It reflects my personal bias. More fact than fiction. A love of Africa. A fascination with the lessons of history. And a total absence of the 'how to' manual or the consultant led business theory. I hope you find something to enjoy.
Breathtaking simplicity. The most beautiful, advanced and complex ideas in science explained in 7 essays. Just 83 pages in total. Reading Rovelli’s book I felt as if the mysteries of space and time were within my grasp. General relativity, quantum mechanics and more. I wish I could describe and clarify any set of ideas in such elegant and concise prose.
And now I cheat. My second choice is two books. Heart of Darkness is the classic novel of the destruction evil wreaks on the mind and soul of man. Francis Ford Coppola adapted the idea for the brilliant movie Apocalypse now. In it he exposes the brutality of the Vietnam war using Conrad’s story and characters as the allegory.
I grew up with the idea of Vietnam as some sort of hell on earth. That example grossly underestimates the depths to which man’s inhumanity can sink. The true arena for Conrad was the Congo under the rule of the Belgian King Leopold. The business of extracting rubber from this vast, intractable jungle was a study in evil. The extreme point of colonialism, slavery and racism. The worst inflicted by Europeans on the African continent. King Leopold’s Ghost is an excoriating work of history. Detailing the circumstances and methods of this crime against humanity. Read either of these books. They are both brilliant and illuminating in their own right. Strange but each author’s exposition of evil leaves you with an uplifting view of the human spirit.
Of all my selections, this is the book found most on other lists this year. It is as ambitious as Seven Brief Lessons On Physics. Its aim is to cover nothing less than the entire history of the human species. In the case of this book, history means natural history. The author has taken a naturalist’s view of human behaviour and development. The result raises more questions and insights than any book I have read for a long time. How can you not be inspired to think differently by questions like: “Did man domesticate wheat or did the crop tame man?"
At the end, the book feels a little unfinished but I guess the end of this story has not yet been told. I would not read this book for message. But for education and enlightenment it is hard to beat.
We are in the middle of a long period of memorialising the centenary of the First World War. Remembering the sacrifice of those who died at the Somme, Verdun and the rest is a solemn duty. Yet we dishonour those millions of the mouthless dead if we forget the lessons from that traumatic conflict.
Nothing brings those learnings into sharper focus than the peace treaties. The multiple diplomatic documents that brought the Great War to a formal end. It is well known that the seeds of World War 2 were sown in the great hall at Versailles. But do you realise the extent to which the troubles of the Middle East today were designed in the treaties of Sevres and Lausanne? Make no mistake, this is a work of serious and heavyweight history. It recounts the politics and pressures of the peacemaking process in 1919. And illuminates many of the historic challenges the world has faced since. The author brings the characters of the conference and the important circumstances of the time to life in a brilliant and readable way. If you take the time and trouble, you will see the world in a different way by the end.
Despite the title this book is not really much to do with Africa. The Serengeti in the title is a bit of clickbait to draw the reader in. The purpose of the book is to explain the rules that govern the balance of ecosystems. Whether those be on the African plain or in a rockpool in the Pacific North West.
I have to make a further admission. This is not that well written. The prose is a bit tabloid journalist. The conclusions are drawn through lazy logic. Without proper explanation of the weaknesses in the propositions the author puts forward. Yet it does make you think. Since I read it early this year, I have been mulling over the application of these concepts to the world of business. Not everything works but that’s fine. It passes the test of raising interesting questions so worth a look.
My final choice, although little known outside of South Africa, is a genuine classic in my opinion. Through a series of stories, Rian Malan examines the character of the rainbow nation. He looks at the full spectrum of people and lives that make up the rainbow nation. The rational and explicable is in here. But much more is the unexplained. The way desperate circumstances, twisted traditions and the fragile working of human minds combine to create unexpected results.
Whether savage or tender, the author peers through multiple layers. The most successful war tribe in Africa. Intermingled with a huge nation of peaceful pastoralists. Together replacing an ancient hunter gatherer culture that reaches back to the earliest days of our race. All filtered through the experience of colonialism and apartheid. It is no wonder that the results defy the obvious. It takes a wonderful writer to bring such deep insights to life. And leave the reader wondering and wanting for more. Whatever you choose to read, listen, learn and keep questioning.
In the two posts I wrote before and straight after the UK EU referendum I offered the same advice to startups and established businesses alike. Focus on your strategy and priorities. Stay calm amid the turmoil and noise. This is in line with the Lean In view expressed by 58 of the UK’s top Tech entrepreneurs this week.
Since the result was announced there has been plenty of political and market confusion. Trade, investment, talent and foreign exchange are topics of heated debate. Yet the reality remains that leaving the EU will make a marginal difference to UK business. Your team, your customers and your suppliers. All count for much more than anything the UK Government or the EU choose to do. So I thought it would be worth sharing some perspectives. Grounding the key issues in reality. And cutting out alarmism and hype. Most of this is written from a startup point of view. But applies equally to any business. Instead of rushing headlong into change keep these points in mind. Strategy and leadership - Keep your focus and priorities
There is a predictable flood of commentary and analysis on the implications of the EU vote for business. I have seen some pieces that suggest now is the time to review your strategy. For example in an otherwise sensible article After the Referendum Steve Turner recommends a review and update of your strategy and objectives.
I can’t agree with this point of view. Too much is unknown. Gather information. Listen to different points of view. But don’t make any hard decisions you don’t have to make. A change in strategy now is as likely to be wrong as right. Be patient and don’t rush off in a new direction when the road is shrouded by fog in all directions. In opportunity the only constant is change
Change creates opportunity for business. Even the worst circumstances (war, revolution etc) are catalysts for the entrepreneurial spirit. The best way to seize the opportunities of change is innovation.
By their nature, startups are geared to this mode. The best course for an existing business is not to second guess existing strategy. It is to improve capacity for innovation. This means looking at culture. And assessing how you open up to new ideas. Don't let FX damage your international ambitions
The biggest shift so far has been in currency markets. The pound has hit a 30 year low against the US dollar. Many people are advising that now is the time to address FX exposure. Remember:
Trade deals, single markets and the real world
Politicians and the media here in the UK obsess over national and supra national trade deals. At a macro level this matters. For any individual business it is a marginal factor. Because:
Do not allow the noise about trade treaties that will continue for years to come to distract you. If anything for a UK based business now is the time to step up plans for international growth. The currency offers a price advantage in key markets. Win customers now in European markets. And aim to build loyalty that survives any trade barriers. And don’t forget the optimistic case for leaving the EU. Various leave campaigners presented a vision of the UK much more active in trade. Opening up to global markets in India, Africa and beyond. Left to our politicians this will remain a fantasy. Only positive business leadership can make this happen. Prvacy, competition and regulation
There is also a possibility that the EU will put itself at a competitive disadvantage in digital. The current commissioner for competition, Margrethe Vestager, is well known for pursuing cases against Google and others.
Without the UK as a counter balance EU action against tech giants could intensify. (Acceleration doesn’t really happen in Brussels). A similar protectionist outlook could affect data privacy. And other important areas of regulation. The UK’s days as the tech capital of Europe may not be over. The war for talent
I am not sure how war became a preferred metaphor in recruitment. Its an odd way to describe the challenge of finding and hiring the best people for your team. Nor does it help address the challenge that businesses in the UK may face. In particular if the country takes a strong anti immigration turn post leaving the EU.
I don’t have any simple answers. To combat this risk business leaders need to think as if throwing a welcome party not fighting a battle. So two thoughts:
But the EU gives startups a lot of money?
The financial mechanisms of the EU are opaque. The basic principle is that countries contribute amounts to the budget. Based on the size and success of their economies. This is then distributed through a number of funds and subsidies. At the end the richest countries redistribute money to the poorest. So Germany and the Uk are the biggest net payers.
But lots of people and businesses in the UK still benefit from the money that is distributed. Two areas are of significant interest to business. In particular startups and innovative companies. Business support provided through the European Regional Development Fund (ERDF) and R&D funding. Once the UK leaves the EU, it will be open to the UK Government to spend this money in any way it chooses. Including the exact same use as the present arrangements. In the short term this will be the default option. For lack of time to think up anything else as much as any other reason. Over time the UK is bound to diverge from the EU policy. This might be good, bad or indifferent to the various interests involved. If you run a business that uses public funds, such as investment from Scottish Investment Bank or various grants awarded by Scottish Enterprise, then you need to do 2 things. Understand if any of this money originates from ERDF funds. (Hint: Most Scottish Enterprise funding does). And keep a close watch so that you can react to any policy changes in good time. Plus ca change
We sit in the eye of the storm right now. When the tempest is at its fiercest good strategy, leadership and decisions matter. Not the ins and outs of resolving the EU situation.
The keys to success will be calm thinking and innovation. Make decisions based on the best opportunities for your business. Don’t wait for Government to open up new opportunities. But don’t rush to change for the sake of it either. |
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AuthorKenny Fraser is the Director of Sunstone Communication and a personal investor in startups. Archives
September 2020
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