13 January 2013

Why is it that when things get bigger, they get more complicated?

It was my first question to Richard Branson on my very first day on Necker. “How do we maintain the passion and enthusiasm we have now as we approach and grow beyond 100 staff?” It was clearly a concern even back then, and sadly I didn’t fully take his advice until very recently.

Was he right? What do you think? Of course he was. His advice was to follow what he did with Virgin Records and all its subsidiaries. When the business gets to 100 strong, split it in half. Take all the managers and make them the directors of the next business. Then get both sides competing with each other.

So, why is it that things work better when they are smaller?

I believe it’s to do with time. Small businesses are often driven by the founder, the entrepreneur who keeps that spirit alive. As the business grows, that originator of the creativity and passion may leave or be neutralised by other more pressing commitments. As turnover increases, so do the responsibilities, and the pressure and excitement of getting a business off the ground can become daunting when replaced by the need to keep something afloat.

I know this feeling as I struggled with it at the beginning of last year. Funnily enough, it was Branson who came to my rescue once again, insisting that I put in a managing director. After discussing who was on the UKFast board of directors, Richard said, “Jonathan is your man.”

It’s easy when you know how! From my perspective, he’s a great person to listen to and emulate because he is one of the few entrepreneurs who manage to maintain that spirit, even after breaking in to the World’s Top Brands.

In a discussion with Dan Cobley, managing director of Google UK, I was surprised to learn that Google keeps a close eye on the smaller businesses that are growing at a fast rate, pushing the boundaries. Dan explained that these are the people to emulate. They are closer to their customers and they are more innovative than larger businesses.

Ironically, a lot of small businesses copy big businesses, assuming that this is a quick fix to rapid success.

There is increasing evidence to demonstrate that innovation comes from smaller businesses and gets replicated by larger firms later down the line.

Is it that there is more pressure to succeed and a greater fear of failure when you are starting out?

When you are small, you have time to experiment and you are nimble enough to back track if you do something wrong so mistakes often go unnoticed. When big businesses make mistakes, they are front page news and now, with social media, there is no place to hide. I think this is why smaller businesses get to evolve quicker and become more creative.

An example of small businesses being creative and taking advantage of social media to promote themselves is BigJigToys and their bid for the West Coast Main Line franchise. The managing director wrote to the Transport Minister, Patrick McLoughlin, to see if there was any mileage in them bidding for the West Coast Main Line. They sent one of their toy trains and some track.

Pure Genius, as the old 1980’s Guinness advert stated.

And it’s a great example of why everyone needs to engage in a social media strategy or activity. The link to the story is a Virgin url. (http://virg.in/jig ) I picked up the story from Richard Branson’s tweets and I am, in turn, promoting the story and now both businesses. I also showed Gail, my wife, the Toy Shop that they have online, and she is very keen to use it.

You never know where your next piece of business is coming from. Marketing is changing and has, most certainly, changed in the last 2 years more than I can remember in my life time.

Social media isn’t about when you start it, it’s about when you stop.

Another good example is Chard, a leading coin and bullion dealer with a strong online presence. They use competitions to generate interest in their brand; simple but engaging ideas that encourage you to interact with them. The proprietor was good enough to give me some feedback on my business after he recently visited UKFast, and his response to my blog engaged me and helped me to make a few small changes in our business which will have a massive effect over a longer time frame.

It’s businesses who don’t want to listen and who know best that are falling foul of the market place. As my friend Scott Fletcher, from successful Cloud provider ANS, said to me this week, “there is no recession.” I am inclined to agree with him. There are businesses taking advantage of the market place and there are businesses ignoring common sense who are too stuck in their ways to evolve.

Jessops is a great example of what all business owners fear. Receivership! But I was in their store last week and the week before trying to get some camera equipment. My friend and expert retailer, James Timpson of Timpsons, would have had a merry fit if his staff behaved in a similar manner to a Jessops member of staff.

Eventually, when I finally got the prices and the spec for the camera and lens that I wanted, I thought it best to check online and compare. Jessop’s online shop was over £500 out on just the camera alone.

If they were offering a Harrods style of service, which I can assure you they weren’t, then maybe, just maybe, you might justify paying slightly more. But they are not and as a result they have suffered the greatest penalty. Game over. It’s desperately sad for everyone who worked there as it was once a great small British business.

How do businesses that come from these roots stay ahead of the curve in such a demanding market place?

What can happen, when small businesses expand rapidly, is that we stop acknowledging the simple things that we do well and start to take them for granted. One day, we just stop doing them. We call it the “Doctor Who effect”(*). All too often, we change a winning formula to one that’s not quite as effective, without even knowing it. Keeping your finger on the pulse as you grow is so important. It must be the single biggest concern for every growing entrepreneur.

The answer though, is to keep your eyes open for businesses who are doing well, who are on the up. Track the likes of Branson. He is like Madonna and David Bowie who reinvent themselves each decade. What works for one generation can become quickly outdated. The Virgin brands are continuously evolving and pushing best practices. Also, track the cool brands; they become cool for a reason. All the time, I am continually learning from the businesses and people I come into contact with.

Most of all, keep the creativity flowing in your own life and don’t get too caught up in the board room. I know I’ve said it before but the best ideas really do come when you are moving or, for me, when I am completely away from the business in the mountains.

Have fun growing. Small may be beautiful, but growing is fun.

Best of British

LJ

*(Name coined by Darren Taylor, R & D Director at UKFast, for all the things that we used to do, that suddenly stop or get changed for no apparent reason other than, “oh, we don’t do it like that anymore!”)

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