Why getting your hands dirty is imperative for growth

“To grow you need to do something new or different,” observes Stylianos ‘Stelios’ Kavadias. As Margaret Thatcher Professor of Enterprise Studies in Innovation and Growth at the University of Cambridge, Judge Business School and as Director of the Entrepreneurship Centre – innovation and growth are the focus of his work.

Stelios is keen to nurture new and growing companies, which typically have something innovative to offer. As he explains, “upcoming companies rarely offer products or services that are exactly the same as existing businesses.

“One of the most common mistakes I see businesses make is trying to adopt a practice from another business. They assume a simple copycat process will drive competitiveness – but this is far from being the case.

“You shouldn’t assume you can take a wonderful practice from somebody else and apply it your business. What really makes companies successful is to offer something distinct from their competitors.

“Much of our work asks – how can we be more innovative? For innovation to happen, three types of activity are necessary. Firstly, businesses must have a way of creating new ideas, a mechanism by which they can continuously source or generate new ideas.

“Secondly, businesses need to prioritise which ideas to take forward. Ask, what mechanism do you have in place for selecting the right ideas? Businesses need to think through how they prioritise, then take forward innovative ideas over time.

“The third type of activity is executing these ideas. Ideas often don’t get through to this stage because of an underlying fear of what will happen if the project doesn’t work, but a fear of failure stifles innovation. Businesses need a culture in place that is conducive to taking forward more demanding or risky ideas.

“The business environment needs to be conducive to the incubation and development of ideas. All too often businesses don’t have the time or resources necessary to develop their initial ideas, but it is fruitless to first generate and then select ideas if you don’t have the capability to develop them.

“All three activities need to be in place to galvanise innovation – you can’t substitute one for another. We’re taking these activities to the classroom, working with businesses to see where they have a weakness. Senior executives need to be asking themselves – how am I doing trying out and supporting riskier ideas?

“The second set of activities – selecting ideas to develop – is often the most challenging. Companies may have a lot of ideas bubbling up – but the moment these are taken to a higher level in a bid for a development budget, you tend to see people leaning towards the most understood and familiar ideas.

“One of the issues is that much of the capital available to businesses is focused on short- term returns – which makes developing and funding new ideas over the long term more challenging.

“The least risky ideas are the ones with which people are most comfortable – but the unfortunate reality is that these are not usually the winning ideas. In business, there is no way you can avoid innovation; stall and the competition will catch up with you.

“In the UK, we’ve done well from an entrepreneurial standpoint – helping businesses to start up – but not so well from a growth standpoint. That middle ground when companies are no longer a start-up but not yet a huge business repeatedly proves a challenge.

“Not enough has been done to support this transition and as a result, a pattern has emerged of businesses being sold to larger firms – rather than being given the support to grow. Systems need to be in place that support companies in scaling up, moving beyond the early stages of growth and traversing this middle ground.

“Two factors are key, accessing the capital necessary for growth and developing the management capabilities essential for leading a company strategically – so it can become a larger business.

“There comes a time when businesses need professional management in place. There are instances where the founders of a company become the obstacle to growth – exerting control over their creation to an extent that it inhibits the company’s progression.

“Sometimes, in order to develop – the founder needs to let go and bring other people on board. Businesses need to ask themselves – what capability are we missing – where are we weakest? Then build that capability.

“Beyond professional management, businesses also need to look at moving into the international market. Support systems are emerging to help businesses make this progression, but these are a relatively recent phenomenon.

“Founders or owners of companies must have an honest discussion up against the mirror about whether they are ready to go through growth.

You can’t delegate growth – you can’t partner with another organisation and expect them to take care of it. There are many cases in which a business has lost control of its operations and then quickly lost market share.

“In reality, growth entails so much uncertainty and change, that you can’t be distant from it – you have to get your hands dirty. The commitment of the CEO is crucial in galvanising the rest of the team to move forward.

Where the CEO leads – people will be willing to follow. If you haven’t thought it through and are not committed – then everything else is meaningless.

“This is where the effort to grow is so difficult, you need to let go of certain things and bring in new partners, whilst at the same time exercise the right amount of control in the right areas.

It is a difficult balance to strike, knowing when to take a step back and when to muck in and get involved. We need to create experiences which allow people to figure out what the right balance is for them.

“At the Entrepreneurship Centre, we help businesses traverse this challenging middle ground. Our nine-month programme sees our academics engage deeply with each business, taking into account their specific circumstances.

Already, the Barclays Scale Up UK programme has mentored over 100 companies, with another 100 set to benefit in 2019 – equipping them for growth.

Asked about the regional economy, Stelios comments, “East Anglia has a diverse economy from agri-tech to fintech and biotech pharma companies, plus manufacturing and technological developments you don’t find anywhere else.

“This diversity has fuelled innovation, plus the tradition of manufacturing in the region, means businesses are well equipped to turn their knowledge into hardware as well as software – something with which Silicon Valley, for example, has struggled.

“A high tech hub has emerged at Silicon Fen which has been a great success. The next big hurdle for Silicon Fen is to drive more sustainable growth so that companies emerge on a par with those from Silicon Valley.

“I would be surprised if we don’t get there given the sheer numbers of companies emerging. The move of some of the tech giants to Cambridge including Samsung, Microsoft Research, Apple and Amazon is likely to galvanise this growth, facilitating a speedier evolution.

“Something unique will be created here in the UK. We have some phenomenal new companies fuelled mainly by technology and my hope is that the UK will become the most innovative economy in Europe.”

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