Devolution is all the rage in Whitehall at the moment, with areas outside London encouraged to band together, elect a mayor and take more control over their finances and future. The aim is to counterbalance the economic power of London – or if you want to be cynical to woo wavering Labour/LibDem voters over to the Tory party.
The first of these projects, the Northern Powerhouse, was trumpeted by George Osborne two years ago, and has seen powers over health spending devolved, plans for elected mayors take shape, and funding announced for transport improvements, although many remain sceptical until things actually happen.
In his last budget, the Chancellor spread devolution even wider, announcing plans for an Eastern Powerhouse, covering Norfolk, Suffolk and Cambridgeshire. Except it isn’t all of Cambridgeshire since Cambridge City Council has said from the outset that it doesn’t want to be part of the agreement. And it turns out that it may not be any of the county at all as Cambridgeshire County Council rejected the deal offered by the Government at a meeting on 25th March, calling for the terms to be renegotiated.
In fact, Cambridgeshire was never part of the original plans, which were for an authority to cover Norfolk and Suffolk. But the Government deemed this not large enough, so pushed to add Cambridgeshire to the mix. The fraught negotiations, which involve 22 separate county and borough councils, demonstrate the difficulty of getting any agreement across such a wide area.
As someone who lives in Suffolk and spends a lot of time working in Cambridge I can see the Chancellor’s original idea behind the Eastern Powerhouse – use the energy and buzzing economies of Cambridge and Norwich to revitalise the rest of the East. But as a PR person I’m deeply sceptical of initiatives that are strong on bluster but short on details. I remember the Cambridge 2 Ipswich High Tech Corridor of 2000 which signally failed to generate much entrepreneurship between the two places. For the Eastern Powerhouse to work it has to be more than a paper tiger and, I believe, have the following attributes:
1. Proper investment in communications
The Northern Powerhouse has been criticised for slow progress on improving transport links, but at least there are motorways linking Leeds and Manchester. Roads in Suffolk and Norfolk are simply not up to scratch, and there is no spare capacity – if the A14 is blocked then forget trying to get from East to West in a hurry. Trains are lackadaisical when it comes to speed – you can get from York to London in about the same time as London to Norwich, despite it being almost twice as far away.
The other thing that the region lacks is 21st century (or even 20th century) telecommunications. Cities in the region may have 3G, or occasionally 4G, but in rural areas you are lucky to get any coverage at all. What brought this home to me was when I was in the middle of the Yorkshire moors, miles from anywhere – and I had a 4G signal. At home 2G is the norm. And you can forget Fibre to the Home connections – many villages in Suffolk have yet to receive any fibre connectivity at all. This is all despite BT’s main research labs being located in the county.
So, if an Eastern Powerhouse is to flourish it needs serious investment in transport and communications – potentially billions of pounds. And this isn’t just moving existing spending commitments to a new pot. This is going to have to come from central government and intoday’s straitened times I simply can’t see this happening.
2. Investment in skills
Both Suffolk and Norfolk languish near the bottom of league tables for school achievement, with inspections by Ofsted heavily criticising both county councils. Again, this comes down to investment – government policies have focused money on underachieving inner city schools but have neglected rural and coastal areas. Suffolk only got a university within the last decade, while Peterborough has been promised one as part of the Powerhouse proposals.
3. Change in leadership
Since I moved to Suffolk the County Council has shut my son’s school, tried to build a waste incinerator in an area that failed to meet its own environmental criteria and had to cope with a chief executive who received a six figure payoff after being accused (and cleared of) bullying that led to the suicide of another official. I’ve seen the damage cuts have done to its own education department and the slow speed at which vital decisions are made. Suffice to say I have an incredibly low view of its utility or the calibre of its elected officers. Yet, when there is talk of an elected mayor, it is widely believed it will come from one of the county councils. I therefore heartily agree with entrepreneur Peter Dawe, who says he will stand for the post of elected mayor of the region, criticising local councillors for “their myopic, parochial interests based on the past, and on keeping what powers they have, whilst carping about lack of money.” However I can see party machines mobilising to shut out an independent that threatens their candidates.
4. Change in attitudes
This is probably the hardest thing to change, but people need to be encouraged to realise their potential – and high achievers need to be encouraged to return to the county. More young people need to go to university or college, and more should be done to support innovative new businesses that deliver jobs to the region. This doesn’t just require investment, but a cultural change that opens up opportunities to everyone – however it does rely on the communications, skills and leadership change mentioned above if it is going to happen.
If the Eastern Powerhouse is to achieve anything it needs to address these four areas – otherwise it risks being a solely cosmetic extra and costly layer of government that will fail to improve the aspirations, careers, and lives of those within the region.
Despite all the talk of innovation, there are plenty of things that people continue to do, even though they are no longer the optimal way to achieve something.
Take typing for example. The QWERTY keyboard dates back to the first, manual typewriters, where the typist hit a key manually pushing the inked letter onto a sheet of paper. The problem with the first typewriter designs was that people could hit the keys faster than the machine would cope with, leading to jams as multiple keys became intertwined. Hence adopting what was essentially a sub-optimal system in terms of speed, in order to make typewriters more efficient overall. Now, in the digital age jamming is no longer a problem, yet everyone still uses a QWERTY keyboard, as that is the de facto standard, irrespective of the fact that it can give you carpal tunnel and repetitive strain injuries.
Driving is another area where tradition dictates what we do. The reason that in England we drive on the left dates back to the days when people rode horses – as the majority of the population was right handed you could hold your reins with your left hand, leaving the other free for your sword. As part of the French Revolution this was reversed in France, and then imposed by Napoleon on the countries he conquered. This means that the majority of countries in the world now drive on the right, despite the fact that accident rates are lower amongst left hand drivers, perhaps due to right eye dominance.
These two examples demonstrate two things:
- The most logical, sensible solution can’t necessarily overcome the status quo, particularly if it means people have to completely relearn how they operate.
- People continue to choose a particular course of action, even if the reasons for it are lost in the mists of time. Tradition rules.
Why is this important? I meet a lot of technology startups, and many of them enthusiastically talk about how their invention will completely change a market or sector. Build it and they will come seems to be the mantra. All it takes is for people to see how outmoded and inefficient the current technology is, and switch to their new, unproven, but potentially much better solution. And normally relearn how they operate. And pay a bit more. Often, they then wonder why they fail to get market traction or growth.
Essentially people weren’t sufficiently convinced of the advantages to change what they did. They preferred to be inefficient rather than invest the time to solve a problem. We’ve all done this, spending an extra minute or so doing something on our PC because that’s how we were taught 20 years ago, rather than spending 15 minutes reading the manual and upgrading our knowledge.
This isn’t to say that innovation can’t happen. Look at the Dyson vacuum cleaner – the advantages of changing (no bag, better performance), outweighed the higher cost and learning how it worked. But in that case the benefits were extremely clear, and, most importantly, marketed very well.
So, the lessons for every business, whether a startup or not, are clear. The vast majority of the population generally doesn’t like change, and therefore the benefits of something new have to dramatically outweigh the disadvantages of how things have always been done. Innovation has to be clearly marketed if it is going to take root with the majority, as opposed to early adopters – it won’t just sell itself. It has to fit inside the ecosystem of what people are comfortable with, and provide them with the best overall experience. That’s why VHS beat the technologically superior Betamax technology – it had the content from Hollywood studios and was easier to operate. Often it can be easier to sell a better mousetrap than a completely new method of rodent killing device. Therefore talk to your audience, understand their pain points and make sure you provide a simple, powerful solution – otherwise you are likely to join the ranks of technically superior, but unused products, and all your innovation will be wasted.
This month marks several major anniversaries in my life. I’ll have been married for 15 years and July 1st was the beginning of my sixth year of running my own business. Leaving aside everything I’ve learnt from my marriage, here are the top five things I’ve learnt after setting up on my own:
1. Network, network, network
It doesn’t really matter what type of business you are, the easiest way to bring in new revenues is to be recommended by someone else. That only happens if you both do a good job for existing clients, and more importantly network with the community around you. Trekking out after work to meet new people can seem a bit like going to the gym – you know it is good for you, but you can invent 1001 excuses why you should just stay at home. Just like physical exercise, you need to overrule the little voice in your head and spend time networking. At the very least it’ll get you out and talking to people with potentially similar interests, or who offer complementary services – and it will also increase your public presence and ensure companies know who you are. And networking doesn’t stop there – connect with people on LinkedIn, follow them on Twitter and make sure you make the effort stay in touch.
2. What goes around comes around
This may sound a little Zen, but I’m a firm believer that being nice to people, and helping them, stores up good luck that could help you in the future. Give people that can’t afford to hire you advice, connect them to people that can help them and be supportive of the community around you. Even if it doesn’t bring you direct business you’ll feel better about the world around you and know that you’ve made a bit of a difference.
3. Learn to let go
If you are in a business that revolves around selling your time and expertise, there’s a natural ceiling on how much work you can do. There are only 24 hours in a day, and working on all of them isn’t a long term business strategy. So be ruthless and look through your workload. Hire people to help – whether experts such as an accountant to look after your book-keeping or someone to assist with admin, they will free you up to focus on what clients are actually paying you for. And you’ll (hopefully) get your evenings back too.
4. Keep doing new stuff
I know a lot of people that have built successful businesses, get to year six and decide on a complete change of tack, such as creating their own start-up. While I couldn’t do this myself, it shows the need to keep challenging yourself and doing new stuff. On a less dramatic note it could mean offering new services, taking on clients in a completely different sector or investing in new skills and qualifications. The world is changing fast and failing to change with it will not only leave you bored, but you’ll gradually lose clients as they move to businesses that offer new services that meet their new needs.
5. Build up an ecosystem
No business is an island, and you can’t survive on your own. As well as networking, make sure you plug into people with complementary skills who can help you, whether with advice, mentoring or just providing you with a sympathetic ear from time to time. I know I’d not have built my business without the support of a whole range of people, which is another reason to spend time networking in both the real and virtual worlds.
Don’t get me wrong, the last five years has been a lot of hard work, a few tantrums and occasional worries about where the next job would come from. However it has also been tremendous fun, bringing me into contact with a wide range of interesting, innovative and sometimes quirky people. I’ve learnt a lot, enjoyed being my own boss and been able to (sort of) balance work and life. Here’s to the next five years!
Mankind has always had a fascination for mythical beasts, and none more so than the unicorn. Despite allegedly dying out in the flood after failing to board Noah’s Ark in time, they are still all around us in popular culture, from Harry Potter to children’s toys. I even found an exhibit in a Vienna museum labelled matter of factly as a “unicorn horn” – it was actually from a narwhal.
The horned horses are back in the news, in the world of tech at least, with any startup valued at over $1 billion by venture capitalists now dubbed a unicorn. However with more than 100 companies now achieving unicorn status there’s a growing worry that startups are trading short term valuations for longer term success. True, unicorn status helps attract skilled staff, but down the line it requires either a trade buyer that is willing to pay big money or an IPO to translate mythical (paper) valuations into hard cash. There have also been a raft of stories on how investors have structured their unicorn funding in ways that protect their cash (rather than the shares of others, such as founding teams) if the company should lose its value.
A focus on unicorns also favours certain sectors and types of company. A browse through Fortune’s latest unicorn list reveals a large number of consumer electronics (Xiaomi, Jawbone), retail (FlipKart, Snapdeal) and sharing economy (Uber, Airbnb) companies. In many ways this is what you expect – company valuations are based on what the addressable market is, so the biggest investment goes into those startups that can make most money.
However, it does potentially limit where investors put their money. There are lots of startups that will never be a Facebook or an Uber, but have the potential to be extremely successful niche players that could well grow into billion dollar valued companies. Look at ARM – when it began as a spin-off from Acorn Computers with a completely new business model, very few would have predicted its current success.
There’s also a definite geographic bias where unicorn investors are putting their money – Silicon Valley, China and India. Out of the latest Fortune list just three are in Europe, one in Australia and one in Israel. This doesn’t reflect the energy, ideas and potential in any of these places, particularly in emerging sectors. The danger is that if investors spend their time chasing unicorns they’ll miss out on the startups that could do with their help to build long term businesses that can make a difference to many markets.
So I think we need to add another category alongside unicorns. Keeping the mythical theme I’d go for centaurs. Sturdier than a unicorn, probably better in a fight and with a bit more intelligence (and opposable thumbs). They may not have the beauty or the (frankly over the top) horn of their flashier cousins but they are built for the long term, rather than mythical valuations that don’t necessarily deliver. Given the potential returns they can produce, it is time for investors to move away from the fascination with unicorns to more realistic startups that may be uglier, but have just as much potential.
According to a new report, more and more of us are working in digital technology companies. Research led by Tech Nation has found that 1.46 million people (or 7% of the workforce) are employed by more than 47,000 digital companies across the UK – and of these just 250,000 are working in inner London. 74% of digital companies are located outside London.
To put that in perspective, according to other government figures, agriculture employs 535,000 workers, construction 2.2 million and manufacturing 2.6 million. So nearly three times as many people tend computers instead of animals. Heartening stuff, and a welcome antidote to some of the more extreme London-oriented digital stories seen in the media.
The highest density clusters in the report are Brighton & Hove, Inner London, Berkshire (including Reading), Edinburgh and Cambridge, while the highest rates of digital employment are in London, Bristol and Bath, Greater Manchester, Berkshire and Leeds.
It is easy to be cynical about the timing of the government-backed report, with an election coming up fast. I’d also query the definition of ‘digital’ – my PR business makes it in, which seems to show a wide classification range (not that I’m complaining). The headline findings that certain sectors have more digital companies than the national average (Brighton 3.3x, Cambridge 1.5x, for example), is interesting, but needs to be put into context. Brighton employs 7,458 people in digital, out of a population of 155,000 – under 5% compared to other clusters that potentially have a greater proportion of digital workers.
But what is more interesting is how the research reinforces the importance of clusters. Statistics include:
- 77% of respondents have a network of entrepreneurs with whom they share experiences and ideas. This rises to 90% in Cambridge.
- 54% believe their clusters help attract talent (65% in Cambridge).
- 40% believe their cluster gets them access to affordable property (such as science parks or co-working spaces).
- 33% believe their cluster helps attract inward investment
- For Cambridge, access to advice and mentorship was seen as twice as important to growth than nationally (scoring +100%), and the positive perception of the Cambridge brand (+62%), was also a key driver for expansion.
- Issues highlighted in Cambridge include poor transport infrastructure (scoring -111% compared to the UK average) and lack of available property (-31%).
This clearly demonstrates that to succeed and grow, tech businesses need to be part of an ecosystem that provides support, the right conditions to start (and grow) and that more and more of these are springing up across the UK. Nurturing a cluster takes time, so everyone involved, from local government to academia and investors have to think long term if they want to develop a tech ecosystem in their area.
What I’d like to see is companies and regions use this report as a starting point to build closer ties. Firstly, any businesses that feel they’ve missed out need to get on board and be given the chance to be added to the report. This is vital to keep it as a living, interactive document that maps changes over time.
Secondly, local government and organisations need to take a look and make sure that they are reaching the companies in their area, and providing them with the conditions for growth. At the very least local networks (or in their absence, local councils) should be making digital companies aware of their existence, and what they can do to help them. That way more sub clusters will form and grow, strengthening the overall picture.
I don’t think we’re yet the full Tech Nation that the report and research promises, but we’re definitely on the way – we therefore need continued focus and investment if we’re going to move forward, across the country.
Countries and cities across the world are busily trying to build tech clusters. Partly this is due to the sexiness of tech (expect the UK election to feature plenty of photo opportunities of candidates with startups), partly down to the fact that it seems easy to do, and a lot to do with the benefits it delivers to a local economy. In an era where technology is radically changing how we work, play and live, high value tech companies are always going to be prized.
But how do you build a tech cluster? It may seem easy to do on the outside – set up some co-working spaces, provide some money and sit back and wait for the ideas to flourish, but it is actually incredibly difficult. This is demonstrated by the diverging fortunes of the locations of England’s oldest universities – Oxford and Cambridge. As a recent piece in The Economist explains, over the last few years Cambridge has added more well-paid jobs, highly educated residents and workers in general than its rival. This prompted a visit last October to the city from an Oxford delegation, with the leader of Oxford City Council admitting that “Cambridge is at least 20 years ahead of us.”
Given the longstanding competition between the two cities, it is easy for people in Cambridge to sit back smugly, pat each other on the back and congratulate themselves on a job well done. However, a better course of action is to take a look at what is behind Cambridge’s success, and see what can be done to improve things. After all, there are startup and tech clusters around the world – competition is global – so there’s nothing to stop entrepreneurs setting up in Silicon Valley, Munich, Paris or London rather than Cambridge.
I see five factors underpinning the success of any tech cluster:
1. Ideas and skills
The first thing you need to build any business is obviously a good idea. Universities, particularly those involved in scientific research such as Oxford and Cambridge have plenty of these. But you need a specific type of person to be involved with the research – with a mindset that goes beyond academia and understands how a breakthrough idea can be turned into a viable business. You then need to be able to access the right skills to develop the idea technically, whether through commercial research or programming.
2. Support infrastructure
This is where Cambridge scores highly in being able to commercialise discoveries, through a long-established support infrastructure. The Cambridge Science Park opened in the 1970s, while the University has put in place teams to help researchers turn their ideas into businesses. Research-led consultancies, such as Cambridge Consultants, provide another outlet to develop ideas, as well as helping to keep bright graduates in the city. There is also a full range of experienced lawyers, PR people, accountants and other key support businesses to help companies form and grow.
Obviously without money no idea is going to make it off the drawing board. Cambridge has attracted investment from local and international venture capital, and has a thriving group of angel investors, who can share their experiences as well as their funding. Due to the length of time Silicon Fen has been operating, investment has been recycled, with successful exits fuelling new startups that then have the opportunity to grow.
4. Space to expand
Cambridge is a small city, and the combination of its green belt, lack of post-industrial brownfield sites and an historic centre owned by colleges, puts a huge pressure on housing stocks. As anyone that lives in Cambridge knows, house prices are not far shy of London – but spare a thought for Oxford residents. In 2014 an Oxford home costs 11.3 times average local earnings, nearly double the British norm of 5.8 times. Additionally, as The Economist points out, there is space outside the Cambridge greenbelt for people to build on, with South Cambridgeshire Council, which surrounds the city, understanding the importance of helping the local economy. In contrast, Oxford has four different district councils, and a powerful lobby of wealthy residents who want to keep their countryside pristine, hampering housing development. That’s not to say that Cambridge is perfect, far from it. More can be done to improve transport links to reduce commuting time and to spread the benefits of Cambridge’s economic success.
Ultimately tech clusters are judged by the success of the companies they produce. And Cambridge, partly due to the longevity of the cluster, has created multiple billion dollar businesses, from ARM to Cambridge Silicon Radio. This not only puts the area on the map for investors, but attracts entrepreneurs who want to tap into talent and spawns new businesses as staff move on and set up on their own. You therefore see sub-clusters in particular areas of tech develop as specialists use their knowledge to solve different problems. This then further strengthens the ecosystem.
Tech clusters are slow to build and can’t be simply willed into existence by governments opening their wallets. They need patience, a full range of skills and co-operation across the ecosystem if they are to grow and flourish – as the relative fortunes of Cambridge and Oxford show.
Forget city-based startup clusters, as, according to new government figures, the countryside is now the place to launch your business. The Department of Environment, Food and Rural Affairs (DEFRA) report points out that the rural population will grow by 6% over the next decade, with more people moving from cities to the countryside than vice versa. More businesses are starting in the countryside than in cities, and rural productivity is growing for the first time since the industrial revolution.
All very positive, leading to Environment Secretary Liz Truss to talk up the innovation within rural areas and point out that people will no longer have to commute to cities, but can work from home using newly deployed superfast broadband.
This all sounds incredibly positive, but as someone who lives (and works) in the countryside I can see four big issues that are holding back rural growth.
1 Networking in a field
While there are more businesses being started outside urban areas, London is still the dominant place for startups, reflecting its position as the centre of the economy. One of the advantages that London and other cities/towns have, is a concentration of people and companies in a small space. This means that it is easy to network, partner and find suppliers to help you grow. Things are much more scattered in rural areas and it is more difficult to identify other companies. I only know about the two people in my village of 3,000 people running complementary businesses to my own because of chance meetings in the school playground. So, there needs to be more done to link rural businesses together in order to help them network.
2 Intermittent infrastructure
A lot has been made about the rollout of rural superfast broadband, and that is improving. But I still don’t have a 3G signal or decent mobile reception in my office, making it more difficult to work. Getting all communications channels right is vital if companies are going to set up and thrive in rural areas. The government has talked about addressing rural mobile “notspots” and this has to be a priority to help everyone in the countryside (not just businesses).
3 Transport by tractor
I’m obviously speaking personally about where I live but rail transport links to London are rickety and slow, while roads can be congested and prone to traffic jams. This means getting anywhere takes time – more time than it should. And, given that for a lot of businesses, including mine, you still need to get to London relatively regularly, this is a cost to doing business in the countryside.
4 Finding skills
Locating staff with the right skills to help your business grow is hard, wherever you are based. But it is much more difficult in rural areas due to the lack of networking and also that a lot of the best talent disappears off to cities and universities straight after school. That is perfectly understandable – but it does mean people don’t tend to return to the countryside until they are settling down and starting a family. This leaves a gap in the market when looking for bright, ambitious staff with some experience who are willing to learn. A lack of affordable housing doesn’t help persuade people to stay in the countryside either.
Don’t get me wrong, I love working in the countryside and contributing to a thriving rural economy. However, government needs to do more if it is to create sustainable, knowledge-based companies and that starts with investment in infrastructure, networking and skills.