Power 100 Breakfast Meeting

EAST ANGLIA POWER 100 BREAKFAST MEETING Sponsored by the Eastern Daily Press

SPROWSTON MANOR, NORWICH June 25th 2008

Good morning everyone

I am delighted to have been invited to speak to the Power 100 this morning. I have been asked to share with you some thoughts on Leadership and Entrepreneurship – in particular what I feel goes into the make up of a successful entrepreneur - which I think you will admit is quite a challenge in a room full of successful entrepreneurs who could all be doing this talk themselves!

However I intend to present you with an outsiders view based on my involvement as a professional speaker over many years with some of the country’s top companies - from SME’s to multi nationals - and across a wide range of industries.

Speaking to you this morning though is actually not the greatest challenge I have faced. For although it’s great to be here (in this beautiful hotel), it’s not always a glamorous life as a corporate speaker. I recently spoke at the ...

(summarise... no notes: Sand&Gravel/Pre cast/ ... leading to N. Lanarks Council...)

But my biggest challenge was speaking earlier this year at the North Lanarkshire Roads Department Senior management Away Day at Airdrie Football Stadium at 9 a.m. on a February morning……. In particular because I had seen the feedback forms from the previous year where one delegate wrote what he would like from speakers at future conferences – he had written

“speakers who are relevant, current and practical – with no tired clichés, no corporate mumbo jumbo and flavour of the month management gobbledegook…..”

Which is perhaps the best advice possible for any speaker to have! So you can relax as I’ve always resisted the tag of “motivational speaker” so beloved of our American friends across the pond. They’re usually called something like “Hank” and say things like “I’m gonna modivate y’all today……” at which a British audience tends to sit - arms folded – and at the end say “yeah well done mate - but we won – we’re still demotivated…..”

Well I thought it would be appropriate to tell you first a little bit about myself before developing my theme this morning.

(summarise: no notes - early life – sport - teaching – children’s curiosity - psychology - RWC 2003....) leading to:

In fact it was Sir Clive Woodward who famously talked about his use of lateral thinking to bring home the Rugby World Cup, by changing the way he prepared the team and its management structure, despite opposition from the English Rugby union which had failed to move with the times.

As he put it “Inherited thinking is a curse”.

Which brings me to my own particular areas of interests, which are in the fields of Creativity and Innovation, and I am delighted to note that innovation is seen as one of the key criteria in determining membership of the P100. It is of course now commonplace for leaders to stress the critical importance of C & I to the future of their organisations. Doing the same things faster or cheaper is no longer sufficient for success in a rapidly changing business landscape, where “more of the same” is not the answer.

I have been lucky enough in recent years to have been involved with organisations both large and small who put Innovation at the top of their agendas. In particular a large Financial institution (who shall remain nameless as they are not represented here today!) who have identified the concept of “Restless Curiosity” as one of their key management competencies. In a nutshell, that is to encourage the entire workforce to adopt the mindset of the entrepreneur and constantly be on the look out for better ways to improve procedures and services, and to seek out and exploit new opportunities for growth. “Curiosity” is of course the quality that Leonardo da Vinci identified as his most important characteristic, and he has in fact been described as the most “relentlessly curious person who ever lived”. And was it not Albert Einstein who said, “I have no special talent – I am only Passionately Curious”?

Now, despite what I have said about children - the mind of a child is a wonderful thing – which is constantly curious about the world it lives in. The sad thing is - 0-5 “why”; 5-12 “why not”; 12-til we die “because”. In other words we tend to lose the desire to question and be curious, especially the older and more experienced we become.

To understand why, we can learn from Sir Ken Robinson who chaired the Government Think Tank on Creativity, and published his findings in a book called “Out of Our Minds”. He said the problem lies with our education system, which is largely based on a model that was drawn up during the Industrial Revolution, when 80% of the workforce was manual and 20% professional. These percentages are now almost reversed and yet our education system has been slow to reflect the change.

Edward de Bono, the great lateral Thinking guru, goes back even further, and lays the blame for our current outmoded thinking style at the doors of the Ancient Greek Philosophers Plato, Socrates and Aristotle. He argues that their vertical style of thinking, based on Logic and absolute truth has led to a sterile knowledge based approach to education, rather than one that places emphasis on creative thinking and the development of new ideas.

American author Daniel Pink in his book “A Whole New Mind” argues that Western Society up to now has been dominated by a form of thinking that is “deeply analytical” and “narrowly reductive” and largely the preserve of traditional, logical, Left brained thinkers. However as he puts it the “keys to the Kingdom are changing hands” as we move from the Information Age and the “Knowledge Economy” to what has been described as the “Conceptual Age”, where the need for more creative, artistic, Right brained thinkers who can see “the big picture” will be paramount. The problem up to now is that the creative thinker has been seen as a disruptive influence, and yet the true innovator has to rebellious in opposing conventional wisdom. Michael O’Leary, James Dyson, Stelios and Richard Branson were all seen as obstinate, angry rebels before they achieved the success that changed their status to visionaries.

And yes – to this list of rebels we could add Tony Blair – whose now slightly discredited concept of “New Labour” was indeed a highly creative, new concept at the time. Although the Tories would probably disagree that there was much new in what they claimed was a version of their own policies - but for a Labour government it was certainly a bold innovation.

Now I’d like to tell you a little bit about some of the organisations I have worked with, and how they meet the challenges of making use of the most important resource possessed by every organisation – that is the combined idea potential of the people who actually do the job.

It’s been said that harnessing and channelling the creativity of employees is a major untapped source of free consultancy for companies, which not only creates ownership and buy-in to corporate strategy, but also achieves genuine empowerment.

I was recently invited to speak at the massive IBM Customer service facility at Spango Valley near Glasgow which was in fact streamed live over the company intranet to over 3,000 employees. What was particularly interesting was to see how they have structured innovation into their day to day life with an awards based system consisting of regular weekly departmental meetings to brainstorm new ways to improve efficiency. These are led by 20 “innovation coaches”, with a formal process for registering and evaluating the ideas generated before implementing them. The ideas are rewarded with cash payments if they are implemented, with the best ones receiving Awards in five categories at an annual internal dinner.

I was also able to visit the Siemens Automation and Drives plant in Congleton in Cheshire last year, which has in place a system called “Ideas Unlimited”. Every employee at the plant from the shop floor upwards is asked to contribute at least 6 ideas for improving procedures. This was done using a dedicated intranet and resulted in 4,000 suggestions in it’s first year, 75% or which were implemented, resulting in savings of savings of ¾ million in its first year. Now the idea rate has been increased to 9 new suggestions.

Consider also the BMW VIA – or “Virtual Innovation Agency” which was set up to collect ideas not just from employees, but from customers – and indeed from anyone in the world using their website, and which generated over 4,000 ideas in its first week. In fact if you go to bmw.com and click on innovation you can make your own contribution to their “idea bank”…. Unless you are a competitor – of course!

So if Entrepreneurship and Innovation go hand in hand, what else goes into the make up of a successful entrepreneur?

I daresay if I asked you all to define Entrepreneurship we would end up with 100 different answers. If Shakespeare were alive today he may have said that “some people are born entrepreneurs – but some have entrepreneurship thrust upon them”…

It has been said that born entrepreneurs are easy to spot: for they are restless, animated, and always seeking out the next opportunity, and any list of their qualities would include words like drive, determination, energy, belief and a readiness to learn from mistakes and failures. However – one leading management guru offers this observation; “There is no list of descriptions that can help us identify potentially outstanding entrepreneurs. For some are eccentrics, some are conformists, some are worriers, some are relaxed …..Some drink quite heavily, while some are teetotal…. Some are people of great charm and warmth…. And some have no more personality of a frozen mackerel….”

Well whatever your view – and whichever of those categories you are in - I think it is fair to say that Entrepreneurship could be described as the “new rock n’ roll…. With the entrepreneur being described as “the lifeblood of the business world…the hero of capitalism, the object of envy and admiration, the mainspring of the private sector, and the stuff of commercial legend.”

Indeed many of modern society’s folk heroes are now entrepreneurs – including some current – and no doubt future ones here this morning……

Although programmes like Dragon’s Den have been described as being as relevant to business success as Pop Idol is to the Beatles….. their popularity cannot be denied. And yet, entrepreneurship is still treated as some kind of mystery. The business section of any bookshop is full of books aimed at managers claiming to improve their management ability – but very few claim to teach entrepreneurship.

Managers are now expected to behave like entrepreneurs, and are supposed to develop the drive and opportunism of the entrepreneur, while the entrepreneur is expected to learn the methodical disciplines of the manager. The pressures on both have become more intense as the economy has become more competitive, more entrepreneurial and more demanding.

But how real is the difference? The best study of Innovation and Entrepreneurship is by Peter Drucker, who writes - somewhat controversially - that “entrepreneurs are not capitalists, or investors, or employers”, although this is highly arguable, especially the last. He is on safer ground when he adds that a major part of entrepreneurship is knowing how to “raise, deploy and invest capital” – and that “everyone who can face up to decision making can learn to be an entrepreneur.”

If this is so – it may be asked why many managers have trouble adopting entrepreneurial behaviours. The general explanation being that perhaps the KEY element in an entrepreneur’s make-up involves taking RISKS.

Thus a classical definition of an entrepreneur might simply be “someone who shifts economic resources out of an area of lower and into an area of higher productivity and greater yield”. While that does not appear to be a risky proposition, the risk lies in a different definition offered by Drucker – that “the entrepreneur is someone who searches for change, responds to it, and exploits it as an opportunity”.

The crucial word here is CHANGE because change carries the risk that your second state will be worse than the first. The calculation is the same one that tilts the balance of decisions towards the “NO” rather than “GO”. Approval commits the approver to a new course of action whereas “No” preserves the status quo. The obvious answer is that a successful entrepreneur creates an atmosphere that encourages positive behaviour rather than the negative variety, which is not always easy to achieve.

I also note that the criteria for the Power 100 includes Velocity of Impact. So here’s a quiz: How long did it take for radio, television and the internet to reach 50 million consumers? The answers are 38 years, 13 years and 4 years. And with the pace of change increasing all the time, the less one can afford the loss of time in responding. “Wait and See” is no longer a viable strategy – as by the time we have finished waiting to see the future it may be too late to act. It was described to me by the CEO of a vehicle leasing firm I did some work recently as “Thinking beyond the Horizon” a phrase which he prefers to the now clichéd. “thinking outside the box” In other words, the ability to try and “see round corners” and predict future conditions and be proactive - rather than reactive - following the change. I wonder how many of you would agree with Edward de Bono’s criteria for establishing someone’s entrepreneurial credentials. He argues that all entrepreneurs will answer “Yes” to the following questions:

1) Are you an “Evangelist” about your company and its products and services – both internally and externally (as Kevin Thompson at SCP…. “infecting” staff – and customers with his enthusiasm) 2) Are you paranoid about competition and threats from new and old rivals? 3) Are you intensely focussed on the key business and strategy of the organisation? 4) Do you take decisions and act at a speed that’s near to instantaneous? 5) Do you like ambiguity and feel comfortable in unclear situations? 6) And finally - Is you judgement good? Clearly– few would deny that good judgement has always been a key element of the successful entrepreneur’s make-up. The difference being that given the pace of change the new model of entrepreneur exercises that judgement “on the run” as it were.

So what about leadership? The world of management has – according to FT journalist Richard Donkin “a fixation on leadership which borders on obsessive”.

It is probably the most written about quality in business today, with hundreds of thousands of articles and books in circulation, all offering different theories about the essential qualities of an effective leader.

It seems today’s leaders need to meet an ever-growing list of skills and characteristics in order to be considered effective. Inevitably it will include things like “vision”, “communication” “passion” and the elusive “charisma”. However as with entrepreneurship I do not think a successful leader can be defined by simply ticking boxes in a list. Of all the books I have read on the subject the more convinced I am that there is no single magical recipe for successful leadership. Instead I would suggest that the best leaders have a portfolio of styles and skills and the instinct to know when to use them.

Indeed many whom I have studied have little or no formal training, and do not rely on leadership theory or literature. They just do what they feel is right, and some even find it difficult to accept what they do as Leadership. Sebastian Coe who is heading up the London 2012 Olympic preparations says “I never, ever, think of myself as a leader. I just do what I do.”

Gail Roebuck of Random House modestly says that “she doesn’t do anything as a leader – and that her job is “only to think and act as a trouble shooter”.

This is a view echoed by Martin Johnson who captained England Rugby to great success for many years, not least in bringing home the World Cup, who said (with no hint of irony!) that “being Captain is like a Managing Director’s role – if the team is working well you don’t really need to do anything much….” a view which I am sure could be challenged by many MD’s here today!!

But you know, perhaps Jonno was right – and this is indeed the secret of good leadership. As Donald Stuart pointed out in his article in the P100 list last year –and it’s worth repeating - “a successful entrepreneur is one who will be aware that he or she cannot be good at everything and realises that getting the management team right is the key”. This is particularly true as the old “Command and Control” style of leadership is no longer relevant, being replaced as it is with a style based more on empathy and inclusion.

Charles Dunstone of Carphone Warehouse puts it succinctly in his blunt no-nonsense way when he said – and I’ve paraphrased it: “there is a lot of bullshit written about Leadership, but at it’s core is Integrity.

If people believe in you and what you are trying to do then they will follow you. If they don’t, they won’t”. (Which is probably as good a summary of 20% of all the management theory books out there that you could hope for!) There are however a couple of other aspects of Leadership I would like to share with you before I conclude, in connection with my earlier comments about creativity and innovation.

Paradoxically – it could be said that a good leader is one who “fears success and welcomes failure” in that success can be the enemy of innovation if it leads to complacency. Success can deter risk and entrepreneurial action and the innovative leader has to see current success as temporary – and a platform for greater things ahead.

As Ron Dennis put it “ The problem with continued success….. is continued success” - or to put it another way – success can imprison the entrepreneur in a mindset that ceases to be relevant in a changing marketplace.

An article in the Sunday Times a few weeks ago makes the point perfectly, and I hope the Norwich City supporters here will forgive me from mentioning Sir Alex Ferguson, who is now surely the most successful Football Manager of all time. Interviewed after completing the double this year he said – rather ominously for other clubs – that that “I am not intending to retire for there is much yet to be done – we have not yet achieved everything we set out to do….and we have no intention of resting on our laurels……”

Finally I’d also like to say a little about an aspect of entrepreneurship that may not seem relevant from a business point of view, but which I firmly believe is vitally important, and that is the need to have FUN along the way.

Mike Southon who writes in the FT as the “Beermat Entrepreneur” puts it like this: “

“The right motivation for entrepreneurship, should be: - the desire to have fun, - make a difference and - earn some money along the way, in that order. If your primary motivation is just to make money, you will fail. Either you will not make any money and be miserable, or you will make lots but never have quite enough and be even more miserable….. either way you lose” Futureologist Professor Richard Scrase is of the view that the companies that will be successful in the future are the ones that are “Fit, Fresh and Fun”….

- FIT in terms of having the right team, strategy, and systems in place; - FRESH in terms of their approach to creativity and Innovation; and – and finally FUN places to work.

Although “fun” can appear a frivolous concept, I believe it is still possible – indeed necessary - to be able to do a deadly serious job with a sense of fun. Interestingly a friend of mine who heads up a division of the Civil Aviation Authority told me recently that at staff survey their auditors said that they scored highly in all the metrics which would have put them into the list of the countries top 100 companies, but that they fell down on two of them: Leadership and Fun, which illustrates my point perfectly.

In conclusion then – we live in challenging times – whether you believe we are already in a recession or not. Inflation, the credit crunch, the knock on effects of the sub-prime crisis which are still being felt, not least in the slowdown in the property market, coupled with the rise in fuel prices, which one analyst said he expected to reach $200 a barrel by the end of this year…. are all evidence that we are moving from a decade of plenty into what has been described as the “New Reality”.

However it could be argued that difficult conditions place an even greater emphasis on the importance of innovation and creative thinking. As Bill Gates said recently “we are in an economic downturn but an innovation upturn”, and I hope you’ll agree that if the challenges are to be met that we need Leaders and Entrepreneurs who in Drucker’s words “embrace change, respond to it, and exploit it as an opportunity……….” I trust that those are the sort of people who are in this room this morning. And you know – after all the theorising, I suppose it’s best summed up by Deborah Meaden, who when asked what tips she would give aspiring entrepreneurs – she simply responded “Be Passionate - and Just Go for it”. Well we have covered a lot of ground this morning, from Einstein to Sir Alex Ferguson, from Leonardo da Vinci to Stelios, and from Socrates to Martin Johnson…… which is probably the first – and last times those names will ever be paired together!!

So I congratulate those of you who are a part of the Power 100, not only because of it’s endorsement of your entrepreneurial abilities, but also because of what being included in the List says about your contribution to the cultural and economic life of the region.

(Add/improvise: topical references to companies attending as sponsors - especially those who feature innovation/creativity in their programme summaries)

And to those of you who are involved in the Bank of Scotland’s two competitions to find the Entrepreneur of the year and the Property Entrepreneur of the Year, I can think of no better advice than the Bank’s slogan: “Look at Things Differently”.

I wish you all good luck and continued success.

John Simonett

Power 100 Business Breakfast Sprowston Manor, Norwich