Putting early emphasis on the exit route

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Putting early emphasis on the exit route Trade sales make for good prices, but they take more work and more understanding of buyers’ businesses and their motives.

It may be no surprise that the prices paid by buyers of private businesses reflect what as buyers they can make out of the business rather than its book value.

Analysis of their work by BCMS, the largest seller in the UK of private businesses shows that by far the main reasons for acquiring a business is that it represents a new service, skill or technology, a new customer base, or a geographical expansion. Financial investment is very rarely the reason.

Moreover, buyers are rarely to be found among competitors and businesses in the same field; they tend to be from adjacent fields, and making unexpected synergies with the seller.

The nostrums that they offer are two: get competing buyers into the ring, and look at the value of your business in terms of what the buyer is likely to be able to make of it, rather than its historical value.

BCMS’s approach is to spend a substantial research effort in finding possible candidates – often up to a couple of hundred, and then sifting through them to arrive at a small number of serious contenders, before inviting bids. The lowest bids tend to be around a conventional multiple of profit, and the highest as much as two and a half times greater.

If these morsels of wisdom are applied to the field of early-stage businesses, you would be looking extensively and very early on in your business’s life at the fields in which your product or service can add value; and at how possible buyers in those fields have made use of such synergies in the past.

That means that you would be looking for a buyer who had some experience and understanding of the technology involved and the fields of its potential application rather than a financially based venture capital company. And you would be looking to meet several of them. And that probably means knowing the whole field.

Those who have the vision to see a new potential application for a young business’s product or service are those who will turn the price for it into an interesting multiple.

John Whatmore, June 2016

WeWork is sharing at work

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WeWork is sharing at work.

WeWork has launched a huge new co-working space in London: based on the fact that startups in communities learn mostly from each other, WeWork provides flexible work space that encourages the sharing of experience.

In WeWork’s concept, designs and operations, sharing experience is fundamental:

  •      it creates physical communities – of work spaces
  •      it creates social communities – of business developers
  •      it creates internet communities for them
  •      and it aspires to creating international communities.

Its latest work space in London – the largest co-working space in Europe – is designed to maximize encounters (‘70% of members make use of other businesses in the building’): it is in the shape of a cube, with an atrium in its centre; and almost all of its internal walls are glass.

With 3,100 work spaces across 7 floors, each floor has a wide variety of different size offices and well-equipped meeting rooms, with every office need catered for (copying, document handling, private phones etc). In any incubator, a large kitchen/diner is a great place for unexpected encounters; and small meeting groups a great place for problem-solving.

Here, each floor has a large communal meeting area where there is a café providing food and drink and a bar for beer. Opened in July 2015, it is already 80% full and expected to be completely full by March or April 2016.

With a buzz of intensity and enthusiasm, it feels like a market place of entrepreneurs, in which every encounter may have possibilities. There events for members every day – about such things as Yoga, marketing, Pilates or legals. And an Entrepreneur-in-residence has just been appointed, with whom you can book sessions. On the first floor, there is a games area, where there is darts and a Table Tennis table. And there are personal services on the premises, such as hairdressing; and a reception service for deliveries eg of online orders.

Membership – on a monthly basis – provides you with a key, a T-shirt and a password.

The latter gives you access to the WeWork App, on which you put up information about you and your business, and where there is a Wants Wall where you can post recommendations, news etc; and you can pin up your current needs, and expect someone to come back to you who will tell you about how they solved that problem – either from your own work space or another location.

Started by two entrepreneurs in New York in 2011, WeWork now has 42,000 desk spaces in 63 locations, many of them in the US but fast expanding elsewhere, though none yet in the UK outside London (where there are already 6,000 WeWork desk spaces). Membership also gives you access to WeWork facilities in other locations and even in other countries.

At around £425 a desk per month, it is well priced for its City location. While its pricing favours small companies, WeWork also has its larger ones: Skyscanner and Bla Bla Car among them (unsurprisingly both internet based.)

What distinguishes WeWork is its size and its focus on mutual connections. It is unlike Google Campus, the Hub and most other co-working spaces in that it is more of a co-development space. It is unlike the Tramperies in that it is not sector specific; and unlike Accelerators and mutual support groups in that mentoring is not part of the deal.

 We Work is unique – as about sharing at work.

John Whatmore, February 2016

See also: Co-working spaces are designed to promote change and action in Silicon Valley’s megaliths

Silicon Valley’s megaliths are passionate about change and about providing working environments that will echo their mission – to challenge the present and to develop the future. Nothing is exempt: projects, teams, spaces, furnishings, messages, are all designed to provide relentless pressure to try something new. http://wp.me/p3beJt-7P

 

 

 

 

How can we speed up the adoption of innovations?

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How can we speed up the adoption of innovations?
Big changes are difficult to bring about. So far the spur behind them has been semi-public but independent bodies with their ability to take radical approaches – like these nine examples. Is it time for institutions and associations to take the baton?

Rolling out innovations for new technologies and sociologies is often seen as the job for entrepreneurs, their champions and their supporters – in the expectation that their focus on early-adopters will then lead on to more wide-spread useage. But it is hard to locate where that should be taking place and how to foster it, not least in those areas that involve behaviour change such as education and healthcare.
The UK’s Cabinet Office has held three competitions inviting organisations to bid for funds to run Accelerators in social enterprise and in healthcare (short periods of intensive development for a dozen or so carefully selected small teams); and the winning organisations will now have helped with over a hundred such startups.

Nesta’s Innovation Lab works with individuals and organisations to generate, develop and test radical new ideas to address social problems; and links innovative projects to advocacy and policy change – to transform whole systems; exemplified by its work on shifting healthcare towards more peer-support, social prescribing and prevention. The Lab’s objectives are about:
*   creating solutions to solve specific challenges;
*   engaging citizens, non-profits and businesses to find new ideas;
*   transforming processes, skills and culture of government; and
*   achieving wider policy and systems change.
The UK Cabinet’s Behavioural insights Team (the so-called Nudge Unit) was launched in 2010 to see how behavioral science might contribute to the achievement of policy objectives. It’s successes have been very specific eg in changing the unwelcoming nature of Job Centres; with redesigning communications to non-payers of income tax and fines and non-renewers of their driving licences; with reshaping the offer of loft insulation to include loft clearance. Its approach has been to identify the factors that lay behind the behaviour and then to set up an experiment using a faster, more attractive, social and timely approach.

Mike Bloomberg as Mayor of New York used special teams to develop and deliver new approaches on issues ranging from climate change to poverty and education, and his work spread new models that local leaders can use to generate and implement bold ideas.

New York’s iZone is one example: it is a community of schools committed to personalising learning around the needs, motivations and strengths of each child – an incubation lab for the city’s education department. MONUM, the Mayor’s Office for New Urban Mechanics in Boston is another. It aims to enable busy City Hall staff to run innovation projects – often done in collaboration with external entrepreneurs and internal government policy experts.

Copenhagen’s MindLab was launched in 2002 by the Danish Ministry for Business Affairs as an internal incubator for invention and innovation, inspired by Skandia, the Swedish insurance company’s Future Center (of which there are now a number, mainly in continental Europe). It embraces human-centred design; and aims to stimulate dialogue on transforming the public sector and creating a different interplay between state and local level, and create more systematic change. It is now owned by three ministries and works across employment, education, business and growth, and government modernisation.

MIT’s Media Lab is running numerous experiments of all sorts, among them research to measure the social and spatial settings of innovation in districts across the US to identify the factors that promote and sustain innovation in cities. In collaboration with the Austrian Institute of Technology it is running a study of the key persuasive strategies that enable, motivate, and trigger users to shift from high-energy to low-energy modes of transport. And its project aimed at enhancing entrepreneurialism in specific regions of the world is now in its third year.

InnovateUK has taken a different approach: it has spun off several ‘Catapults’ whose objectives are to transform the UK’s capability for innovation. Among these, one has focused on understanding what will stimulate change (Cognicity – new cities); another on tackling public issues that obstruct change (the Digital Catapult); and a third on launching initiatives that will directly stimulate the creation of new products and services (the Space Catapult).

Work in units like these does not fit easily into existing organisations, but is it time for institutions and associations to follow in the lead of the Young Foundation, which has been active in promoting social enterprise for many years, and spur their fields into accelerating innovation?

See also:

iLabs. The teams and funds making innovation happen in governments around the world. Nesta, 2014. mailto:research@nesta.org.uk

Workshops for helping to develop innovations. Commercialising IP, developing startups and SMEs, and new products and new businesses for corporates. Oct 2013. http://wp.me/p3beJt-18

Government launches £10mn social incubator fund. A remarkable bet on the future of an unproven horse. http://wp.me/p3beJt-b5 Sept 2012

Accelerators for young businesses and the Young Foundation. Seeking to turn social SMEs into burgeoning businesses that change people’s live for the better. Jan 2013 http://wp.me/p3bejt-4
John Whatmore
January 2016

Five Ace Mentors – all of whom you may need: No 2

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Five Ace Mentors – all of whom you may need

If the benefits of mentoring are only really appreciated after the experience, the mentors in this series tell us about the special contributions they have made to their mentees.

No 1 Concept development: coming up with something for which there is a real need and that is achievable, marketable and fundable. Jackie Young – in Life Sciences

No2 Strategy and management: determining objectives; getting there; and making and managing the team. JMD – in Fintech.

No 3 Technical: designing, creating and delivering the product/service. Jo Rabin – in Technologies.

No 4 Marketing and sales: attracting users, buyers, customers. Andrew Grant – in modelling.

No 5 Finance: managing the funds.

 No 6 Mentor and support Manager –helping to identify issues and provide mentors; and running events – Thibaut Rouquette – Startupbootamp

 No 2 Regular reviews of strategy and management – from an independent viewpoint

An evident contributor, likeable and enthusiastic, he brought a life-time’s experience of businesses (he recently retired as a Director of a major UK bank), and an effervescent clarity to issues that interested him.

He would ensure that there was a regular review system; he encouraged ‘plan B’ thinking; he was always a ready sounding board; as he was a difficult tank to stop when he thought change was needed.

He picked four turning points to which he had (or in one case had not) recently contributed.

  • I eventually persuaded a team of 30-year old young Turks based in Shoreditch whose finance man aged 50 lived miles away and had other interests, to let him go. Though he had some special assets, cash was becoming an issue, and other needs were being met only tardily. I gained the support of other Directors, and the separation was done elegantly.
  • Missed key milestones was the signal for me to try and persuade one company that they needed to woo not just one major customer, but several others. I had to hammer away at the issue, and I had no emotional attachment to the first strategy.
  • It took me four months and the occurrence of a sharply relevant Court case in Japan for me to persuade ‘African Exchanges’ (not its real name) to change its name as the company found itself increasingly drawn into trading in other currencies.
  • At a first meeting with one company, none of my thoughts and ideas went deeper than to get a mild brush-off. Both parties are looking for an instant link – that will suggest a fertile union. Like many young companies, they seemed dead-set on their plans; and perhaps they did not understand what they might get out of a mentor.

‘As a Startup, this is the biggest thing they have ever done, and they are of course passionate and determined about it. So to lose clarity is unsurprising. Moreover, consensus in the team is a vital factor, so there is also a danger of Groupthink. When passion becomes rigidity, it is time for a dose of adaptability. ‘

‘At least two qualities are important for a good mentor: that ‘he/she has seen it before’, and therefore the more he/she has seen, the better the mentor. And secondly, he/she needs to be (and in status is) dispassionate.’

Confessions of an talented mentor

An evident contributor, likeable and enthusiastic, he brought a life-time’s experience of businesses (he recently retired as a Director of a major UK bank), and an effervescent clarity to issues that interested him. (http://wp.me/p3beJt/9P)

 

FIVE ACE MENTORS – ALL OF WHOM YOU MAY NEED

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Five Ace Mentors – all of whom you may need: No 1

If the benefits of mentoring are only really appreciated after the experience, the mentors in this series tell us about the special contributions they have made to their mentees.

No 1 Concept development: coming up with something for which there is a real need and that is achievable, marketable and fundable. Jackie Young – in Life Sciences

No 2 Strategy and management: determining objectives; getting there; and making and managing the team. JMD – in Fintech.

No 3 Technical: designing, creating and delivering the product/service. Jo Rabin – in IT.

No 4 Marketing and sales: attracting users, buyers, customers. Andrew Grant – in modelling.

No 5 Finance: managing the funds.

 

No 6 Mentor and support Manager –helping to identify issues and provide mentors; and running events – Thibaut Rouquette – Startupbootamp

 

No 1. A Concept Developer like no other

A Lab head who encouraged her students to tackle issues that could have commercial appeal as much as scientific appeal, and helped them to realise their commercial capabilities as well as produce great science.

Jackie Ying was eager to push her already productive lab at MIT into the life sciences. Todd Zion was first attracted to her lab because of her fanatical work ethic; and her business-minded approach appealed to his nascent interest in becoming an entrepreneur – she says that every graduate student should tackle a project not only of tremendous scientific interest, but also of great commercial potential.

He was asked by Ying to see if the same technology her lab had used to make a nano-emulsion to coat the turbines in jet engines could create a platform for delivering insulin to treat diabetes. He spent two years trying to find a material that prevented the insulin from leaking out before he realised that the secret lay in chemically modifying the insulin itself. The discovery led to SmartCells, a company he and Ying co-founded in 2003, which was later sold to Merck for an undisclosed sum.

His business savvy drew the attention of Lita Nelsen, the longtime director of MIT’s technology licensing office because of the way he had run the company as a tight operation, and he was soon back starting another company with his former colleagues.

Ying says that roughly a quarter of her MIT students have founded companies or gone to work for a startup, but she has chosen not to take that path. ‘What interests me’, she says ‘is bringing the technology to a certain level where you can spin it off and then playing an advisory role to make sure that things are running smoothly.’

Andrey Zarur, one of Ying’s first graduate students who developed the technology that Zion later modified to create SmartCells says Ying ‘would take me with her on visits to companies to get funding for the lab. And I would make the presentation. People thought she was taking advantage of me because she made me do three PhD projects, but this was preparing me for the life I want’.

Ying went on to become the founding director of the Institute for Bioengineering and Nanotechnology in Singapore – to spread the twin gospels of top-flight research and entrepreneurship that she had learned at MIT. Her record over the past 12 years suggests that she has done exactly that. IBN has generated more than 300 patents, 80 licences, and eight startup companies.

Sometimes, she suggests, faculty members need help in finding a project with commercial promise, and sometimes she needs to find partners in industry to help with a project. Overall she hopes to find a way for IBN to help nurture new companies without losing all the scientists who did the technology’s foundational work. ‘We will continue to help the firms with research’, Ying says, ‘and maybe they will give us not just royalties but some shares to the people involved.’

(Abstracted from ‘Science’, June 12, 2015)

Shorter, not longer, Accelerators

How do you come up with an idea for a business that meets a big need, will be desired by customers and is readily fundable. BT’s Hothouses, quicker though more complex and involving, suggest a counter-cultural model: do it as one problem, not as a series of problems. (http://wp.me/p3beJt-bf)

The Business Growth Service itself needs scaling up

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Undervalued and undersold, the Business Growth Service itself needs scaling up.

It has demonstrated the value of support for SMEs, but few make use of it; so why doesn’t the service concentrate in a big way on developing its market?

Innovate UK worked with the Business Growth Service to assess the value of offering to its grant winners access to this service free of charge. It showed that they benefitted substantially – in evolving their ideas and helping them in the marketing of their business, especially in filling gaps they did not know they had. The coaching, mentoring and training in entrepreneurial skills helped them to make better use of the grant, achieve higher growth and effect better communications (especially those from academia). However, it is not easy to induce young businesses to take up this offer, says Nigel Walker of Innovate UK; it is only afterwards that they appreciate just how valuable it is.

Accelerators (like Techstars, Seedcamp and Startupbootcamp), VCs (like Octopus Ventures) and the new Business Growth Fund have all highlighted the importance of mentors for early-stage businesses, providing ‘access to strategic support and advice – ideally from someone who had been there and done that and who carries the battle scars of business and has come out the other side. ’ Achieving a high rate of growth calls for support in many different areas, and those needs also evolve and change.

The bare bones of the scheme are these: the four organisations delivering this service:

  • seek out businesses with the potential for high growth
  • select those for whom this support is appropriate
  • provide an initial meeting with an adviser
  • offer from a database (not currently public) a choice of three coaches, advisers or consultants to fit the company’s specific needs
  • facilitate connection to local advisers and other local and central organisations.

The country-wide Business Growth Managers – the initial advisers (c.180) – are employed by the service, and are credible and experienced advisers, who have run their own businesses, and whose job is to reach a diagnosis about the opportunities for the business and the obstacles that it is facing – challenging thinking, identifying goals, and setting out a clear plan; and then to select three people who might work well with the company.

The coaches, advisers and consultants (c.5000) are independent, working specifically on client support and delivering the service. They provide new eyes, advice that is specific to the technical and/or industry context, introductions [eg to users, buyers, sellers etc], and strategic advice. And match-funding up to £2k is offered for leadership and management training for senior managers. One-to-one coaching and third party opinion are the aspects that are most highly valued; and a number of the beneficiaries go on to appoint non-executive directors.

The heart of the scheme is to be found in the help it has provided. Businesses that have used the service have been shown to have benefitted by notching up growth four times faster than the average SME. The highest proportion of barriers to growth are associated with Strategy and Management (53%), followed by Skills and Staff (39%) and Sales and Marketing (38%), and Finance (27%); and support has proved most effective where it has addressed strategy and sales and marketing.

The best sources of high growth SMEs must lie among those that are in Accelerators, Incubators, Science Parks, Innovation Centres and Tech Hubs, of which there are perhaps 15,000, and the service should be offered free of charge to these. In the two years to April 2014, ‘15,000 businesses engaged with the [Business Growth] service’, but the 6% of SMEs (repeatedly identified as the key source of growth in the UK) could number 300,000.

Moreover, we are seeing a geographical spreading of innovation Centres, Tech Hubs and co-working spaces, but their vital mentors, advisers and entrepreneurial communities are harder to catalyse. Coaches, advisers and consultants on the BGS’s database need to be made available online, and accessible either via Cisco’s National Virtual Incubator, or of course via Skype. What is needed is a national virtual network of business growth managers, which could be led by the BGS, to bring the service’s benefits to smaller clusters and local nodes of growth.

Is it time for Innovate UK to offer this service free of charge (or say for 1% of their equity) to all potentially hi-growth businesses?

The service needs to be run by a commercial board; it was set up by BIS and is ‘delivered’ by four organisations, but it has no commercial element to re-evaluate its strategy: when it comes to governance it lies in nomansland. What advice would it give itself?

See also:

Managing support for early-stage ventures – a fast emerging role

In Silicon Valley support is everywhere, and it is increasingly immanent in London’s entrepreneurial world, with some high profile examples – promoted by a new breed of support managers. But there are other areas where it is still a distant prospect.

(http://wp.me/p3beJt-ax)

 

Our research continues – into what makes for effective mentoring. It is clear that different issues call for different experience eg in strategy, management/team building, technical help (IT the most common), sales and marketing, finance etc. And matching personalities and learning styles is no easy task. We are currently working with about a dozen outstanding mentors and their mentees.

 

 

 

Reversing a topsy-turvy approach to a better world?

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Reversing a topsy-turvy approach to a better world

Focusing on major issues rather than relying on people with good ideas is likely to be a good source for the 6% of businesses with hi-growth potential (- and Unicorns)

 Next: the Business Growth Service’s coaches, mentors and advisers are having a real impact for SMEs; it must be exploited.

Following: Five Ace Mentors – you may need all of them

Most of the commercial supporters of hi-growth businesses depend on who turns up with a good idea – for which they search keenly; yet many of those ideas are often limited, ephemeral and even trivial, and many of their protoganists far from suited to the heavy sweat of growing a business. Few focus on issues of strategic, technical or sociological importance – like basic needs, lifestyles or communities.

Among those that have done so are:

Village Capital in New York – which seeks to identify large scale needs in any country throughout the world, and then to match them with experts and funds designed to find and implement solutions.

Syncona Partners, a subsidiary of the Wellcome Trust, which identifies potential solutions to major healthcare issues that are of technical or strategic importance and matches experts (or sets up the necessary management) and funds for delivering their benefits.

BioCity Nottingham which runs a programme whose starting point is identifying major issues of organisations in its area, and then finds experts who may be able to help solve those issues; and goes on to provide them with intensive support for the development of solutions.

The provision by Innovate UK’s for its grant winners of free access to The Business Growth Service is a welcome focus on technological opportunities that have been identified in competition, and thus a well-directed initiative for supporting young businesses that have the potential for high growth.

Innovate UK’s Business Growth Workshops bring these grant holders together and illustrate the analysis that the service’s Growth Development Managers put together, and which they use to offer a choice of three coaches, mentors or advisers to the business involved.

The success of this service must be exploited by making sure that it is adopted for example in clusters and in innovation centres everywhere.

John Whatmore

October 2015

Accelerators attacking bigger issues?

If Accelerators can support hi-growth SMEs as well as startups, can they also be adapted to focus on tough problems and emerging opportunities in all sorts of fields? (http://wp.me/p3beJt-9e)

A part-time Accelerator – generating the next leaders

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A part-time Accelerator – generating the next leaders
A charity has faced an excruciatingly difficult task in steadily scaling up its very part-time programme for helping young people to learn to be leaders

Next: nothing more while you are on holiday – till September 2, when I shall be writing about InnovateUK’s new mission statement and its implications.

‘Uprising’ was established in 2008 under the aegis of the Young Foundation and with government funding, with the aim of getting talented young people whose backgrounds make them under-represented in powerful places to take leadership roles in communities.

Undertaking the personal development of some 400 young people at a time, to help them in a role in which many people struggle, and which they might well not otherwise have sought, might be seen an overwhelming goal, not least for the limited resources and experience of a charity, itself a startup.

An award-winning leadership development programme with a role of Ambassadors that many charities would die for, it has 2,700 alumni, operates in seven cities, and has now reached the point where it manages without any government funding. Each cohort is of 45 young people; and there are currently nine cohorts running simultaneously. It generates in a very high proportion of its intake the confidence and belief that they have the power and skills to change issues that affect them and their local community.

The programme is designed to provide participants with the knowledge, networks, skills and confidence to take on leadership roles. Far from intensive, it is 9 months long and consists of a 3-hour meeting, once a week, with the first three months devoted to learning about leadership as such, and to enhancing leadership skills; and for the following 6 months participants work on a project [a format that is very similar to the Clore Programme for Leadership in the Arts] in small groups, often a social action campaign, for example to encourage young people to vote, to alleviate social exclusion caused by language barriers, or to support single parents.

In the first period, during which each participant will have a coach, they will hear from local councillors and MPs, and the likes of head teachers, police officers, social work leaders and business people – what they do and how to influence them; and sessions to help them develop their project management, fund-raising, communicating and networking skills – how to get to meet people and develop and retain relationships (‘all the stuff you don’t learn in school’!) After six weeks and for the duration of their project, each participant will have a mentor. Personal relationships are seen as of the essence in their journey.

Local managers now have the guidance of a manual to help them in running their programmes, which may nonetheless be adapted to local needs and local interests. With so many events and happenings to be organised and so many people involved, there is the constant worry that someone may not have been contacted, informed, booked or briefed; and the CEO feels that she is in constant ‘check-up’ mode, especially when there has been a high turn-over of staff. (And continuity of funding is an issue that is always with her.)

Connectivity is a current issue. Not only is it a part-time programme, but there are numerous occasional contributors, and semi-involved supporters – in all nearly 4,000 people – participants, mentors, coaches, speakers, alumni and staff, and most of them in different locations. A Customer Relations Management system is being installed that will include everyone, even suppliers, in order to facilitate communications – most of which must be by e-mail. And Twitter and Facebook constitute an important medium for maintaining a sense of coherence and the ethos of the organisation.

It is not just the alumni but what they then go on to achieve that is the full measure of this programme’s success.

John Whatmore
July 2015

See also below for three other examples of periodic programmes, two of them in social incubators/accelerators:

Innovators in education: The Young Foundation’s third education/incubation cohort
A programme of intensive learning sessions, the teams supported by staff, mentors and coaches and the Foundation’s network, with access to up to £150k of social investment – a model for non-residential Accelerators. May 2015 http://wp.me/p3beJt-aW

An Open Innovation Learning Network – for SMEs and others
I have just returned from a two-day workshop in Belgium called Plato, about mentoring small groups of senior managers in SMEs, who meet together regularly to draw on each other’s experience – a striking example of collaborative enterprise. May 2012. http://wp.me/p3beJt-H

A Social Enterprise Seed Camp
Bethnal Green Ventures [BGV] is a unique new venture of Social Innovation Camps, itself a commercial social enterprise started several years ago by two individuals, and now offering a variety of short accelerator-type programmes (of up to a week long) of social camps and in a number of different countries. BGV is now just starting a second round of 13-week accelerators – for technology-based social ventures in the UK. Feb
2012. http://wp.me/p3beJT-V

Shorter, not longer, Accelerators: BT’s Hothouses

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Shorter, not longer, Accelerators
How do you come up with an idea for a business that meets a big need, will be desired by customers and is readily fundable. BT’s Hothouses, quicker though more complex and involving, suggest a counter-cultural model: do it as one problem, not as a series of problems.

Next week: A major programme for new hi-flyers that includes an Accelerator – so why doesn’t UKTI do the same for the UK?

The problem: one of the dangers in the conceptualisation stage of a new business is that what meets a need may not be marketable; and what is marketable may not be fundable; and the process of meeting all three requirements may go backwards and forwards interminably.

BT recognised long ago that the danger of the waterfall approach exemplified in the three phases of the Accelerator (the project handed on down the line to its next stage – to the product managers or the marketers and thence to the accountants before eventually being signed off) is that unforeseen problems may arise late in the development process and can involve expensive iterations and missed opportunities. BT’s solution (‘tangible outcomes are essential’) was to bring together into the early stage of the process authoritative representatives of all the parties concerned.

BT’s solution – the Hothouse is perhaps better described as a small problem-solving conference (or even as a Hackathon) rather than a workshop. Between three and eight teams (each of 6-8 people – they can involve lots of people during the Hothouse itself, though less both before and after) compete for small but significant prizes in the presence of the problem owner, his boss (and often his boss) and other stakeholders.

Participants are chosen to fulfill a specific mix in a team and while fully briefed beforehand, they may or may not have had previous experience of Hothouses. Teams are composed through an electronic auction; the facilitator will regularly call very brief ‘stand-up’ meetings to ask about progress, obstacles, needs, and resources that might be made available; and the 3-day process is marked by presentations at the end of each day, and a carefully chosen panel of judges is on hand throughout the proceedings.

Each team’s space in the large communal break-out area has its plasma screen and white board; and Microsoft’s Sharepoint Online software is used for enabling each team to share material, with two other programs for sharing software in development.

Some 70 Hothouses a year are now run, each focused on a significant business problem or opportunity – identified by a Business Unit of BT, for which suites of rooms have been built in two locations. The ‘conference’ space is institutional and Spartan (no toys – what would their bosses think!); and the process is intensive and full of energy. There are no signs of any input – either of people or materials – from outside BT, (though that will apparently depend on the business problem, and customers will often form part of the process); and the technical members of the teams ensure that use is made of relevant existing BT platforms.

The main uses are currently for bringing new products and services to market, many of which are opportunities offered by new technology, where the objective is to overcome obstacles in the development process. Formalised methods more than experience or expertise in this type of activity distinguish BT’s Hothouses; and they are very process-driven.

The lesson: BT’s method suggests that a more comprehensive problem-solving approach might have a useful place in developing new businesses – intensive, shorter, but with more supporting resources.

See also: US non-profit ‘Village Capital’ has a different perspective on social enterprise: objectives first, resources next Oct 2013, http://wp.e/p3beJt-6K

John Whatmore
July 2015

Mentoring: a shortage of demand and of supply, but not of value!

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Mentoring: a shortage of demand and of supply, but not of value!
Mentoring is a fast-growing and vital element of support in the fast-growing entrepreneurial economy (and a major component of all Accelerator programmes.) However, it is hampered by:
• a widespread shortage of mentors,
• the difficulty of identifying hi-growth businesses,
• and a shortage of experience in managing mentoring.

Next week: What it takes to be a good mentee and what makes a successful relationship

In 2011 there were only a couple of dozen mentoring organisations on the Mentorsme website (the single registration body in the field), whereas to-day there are around 125 from which you can find a mentor; and through the Memtorsme initiative there are perhaps around 25,000 mentors (against a target of 45,000 – set maybe arbitrarily once by Vince Cable.)

Tim Rivett of the British Bankers Association, the inspiration behind this growth, says that every organisation in this field reports a shortage of mentors. (The BBA is exploring the role of online mentoring, but mentoring tends to be face-to-face, and thus locally arranged.)

He comments that the identification of hi-growth businesses has been a problem, and that their failure to engage with mentoring is significant, which suggests that it is under-valued.

Organisations like the Business Growth Fund and VCs like Octopus Ventures depend on their representatives to identify and marshal the help their ventures need to facilitate their growth (new markets/exports/new variants etc), as do the many startup programmes their programme managers. If some of our best prospective hi-growth ventures could be expected to be found in Incubators, Science Parks and Innovation Centres, (ie in local clusters), should the management of their mentoring be a priority?

Should the British Venture Capital Association and the UK Business Angels Association be encouraging the growth of mentoring? Is it time that Mentorsme or the Government’s Get Mentoring campaign became more active proponents of this invaluable contribution to our economy?

See also:
Managing support for early-stage ventures – a fast-emerging role
In Silicon Valley support is everywhere, and it is increasingly immanent in London’s entrepreneurial world, with some high profile examples – promoted by a new breed of support managers. But there are other areas where it is still a distant prospect. Join us
in exploring how best to manage support. (http://wp.me/p3beJt-ax)