How To Be Ingenious

I have a friend who frequently tells me of a new and exciting idea he's had that can make money. My usual response is to say that I think it's a great idea and that he should do something with it. This in turn tends to produce a look of disappointment which he explains is because what he wants is someone to take his brilliant idea and make money with it. And then, if successful, they'll reward his brilliance with a nice meal or a house depending on how great the realisation of his idea has been. I suspect we all know people like this and will ourselves indulge in the game of 'creative thinking' from time to time. But my friend kept coming to mind as I read How to be Ingenious by Jamie Young of the RSA recently.

The central tenant of the paper is that creativity and creative problem solving are all well and good but that things don't really get going in a meaningful way until one gets ingenious. And that real ingenuity involves a 'frugal elegance' which thrives in an environment of mild deprivation, as it is only then that we are forced to look at what we have in a different light. Young and his colleagues go on to define the ideal environments in which ingenuity can be fostered.

This seems largely to consist of being mindful of the human instinct to resent being deprived and to foster team work and a sense of collective endeavour so that any potential resentment is swept aside in the tide of battling-the-odds. Having endless resources at your disposal, they suggest, leads to lazier thinking as one is not forced to adapt to the challenge.

There seems to be much work still to do, this paper is just the start of project run by the RSA's Design Team, to try and work out how to enable more ingenuity. A resource that could make a meaningful difference in the current climate as an alternative to 'doing less as there's less money' is worthy of further study. I for one will watch their progress with interest.

Also, what I really liked about it was that I could read the paper in one short sitting, get loads of helpful examples and have to option, as an RSA Fellow, of engaging in the learning process.

However for my ideas-rich friend I can see little cause for optimism. For what these guys are really saying is what any experienced business person knows only too well. Working stuff out is hard, you never have enough resource and there ain't no short cuts.

BEYOND THE CRUNCH - A VERSION OF THE BIG SOCIETY?

Am taking part in a seminar on this topic at the RSA tomorrow. This is what I'll be saying.

If we peer into the corporate future to a time when the Osborne demolition ball has stopped swinging through the current landscape of public funded bodies, what will we see? Assuming the private sector has continued its slow recovery, will the plc, the limited company and the sole trader be all that co-exist with government, local and national, rising above the debris of broken regional development bodies and the like?

Or will there be room for an upstart already claiming a place to bridge the gap between private and public sectors in the new business panorama beyond the crunch - the Business Improvement District (the BID).

The BID is a hybrid venture idea imported from across the Atlantic about seven years ago. Already we have more than 100 in the UK, 25 of them in London.

Essentially a BID is the inspiration of a group of local businessmen and/or local authority officials who perceive that there are flaws in the current social or commercial landscape.

It is funded by a levy on local businesses equivalent to 1% of all business rates in the BID’s defined area, coupled in some areas by match-funding from the local authority. The funding businesses vote in a board and a chairman and appoint a CEO for a fixed period, usually five years

If the BID proves successful it can win a mandate to serve again. If not it goes the way of all failed ventures. The outcome lies with local business and with the imagination, ingenuity and energy of the BID and its leadership. A partnership with the local authority and local residents groups as well as with the police and local media is essential.

The ambition is a lean delivery-focused body that will tackle problems from street clean-ups and eradicating drug dealing to more ambitious projects like incentivising new businesses and developing new streetscape plans for the town centre.

BIDs can engage in commercial activities to subsidise their income or provide joint procurement initiatives, for instance, to reduce energy costs for their membership.

My experience as CEO of Camden Town United, the North London based BID, has taught me that this model of local service, harnessing enlightened self-interest and in return delivering a service that people really need, may be the way forward for the austere times ahead - and beyond.

Our approach is pragmatic. Responding to people’s fears and businesses’ frustration at street drug dealing, we hired private security patrols to drive the dealers off the streets. Seeing how successful uniformed enforcement could be the local council and police were encouraged to massively increase patrols. Our role was to identify the problem, offer a temporary solution and then provide arm-twisting persuasion and communications to make sure it happened long term.

It makes sense that BIDs, funded by business, become just as interested in local social reform as they may be in street cleaning or commercial enterprise. Once a board of directors sees what can be achieved enthusiasm and commitment come easier.

Camden Town Unlimited is currently occupying a warehouse space while the owner waits for times to improve. We’ve filled it with start-up creative businesses to help them take their early commercial steps with some support. The local authority (Camden Council) has provided financial help as part of its recession work but, to its great credit, recognises that the BID can manage the space and the people in it far better than a large bureaucracy ever could.

We have developed plans for the wide area to improve the physical environment and challenge current thinking on planning and licensing. Yet a pure business head might ask what has all this got to do with my profit margins and why isn’t the council doing it?

The truth is that it has never been easy for local authorities to manage this sort incentive nor have they had the know-how when it comes to engaging businesses. And until now, no business has had a vote of any kind.

Inevitably, as we pick our way through the crunch and eventually emerge from the debris, we will see Local Government doing less, concentrating on core services. In place of generous funding settlements, central government needs to give direction to local authorities, to use the power offered by the BID model to fill the gaps that will open up.

Local government must learn to be flexible in their thinking. They must resist the temptation to control and instead learn better to facilitate the changing landscape and those still in it.

If the idea of the "Big society" means anything, it surely is a partnership responding to local demands. What we need now from local authorities is imagination, boldness and a will to seize the opportunity BIDs represent.

Lessons from New York. In the US BIDs have moved beyond the basic sanitation and security remits familiar to most UK BIDs and are increasingly being used as an economic development tool. The Furman Centre at New York University recently published the first study into the impacts of BIDs on the communities they serve. The key findings were that:

· BIDs typically increase commercial property values within the BID area by around 15%

· BIDs don't seem to have any 'spillover' impacts in surrounding neighbourhood areas - so solving crime within the BID doesn't seem to push it elsewhere locally.

· BIDs do not appear to have any long lasting impact on residential property values.

Still in recession or turning in Jan?

So things are worse than clever people thought (BBC). And the recent figures from my business support this as I wrote earlier about worrying signs. However a BT survey published this week says that 75% of SMEs think things are going to turn up in Jan next year! If I was writing this earlier in the week I might have taken some comfort from the BT report findings. But today, as Britain is confirmed into the worst recession since records began in 1955, I find it hard to be optimistic. October is always a low month for my biz but if this month finishes as it started I have to go back to Oct 07 to find worse monthly figures. At this rate all the growth we've managed to maintain in 2009 will be all but wiped out and whether this year finishes up or down on 2008 will be entirely dependant on the Christmas period. Like us, I'm sure that the SMEs participating in the BT survey have been investing in both technology and staff in the hope of being well placed for the expected recovery. And I quite agree with Digby Jones when he says that embedding technology in the heart of a business is vital to both future growth and current survival but unlike the BT SMEs, my worry is increasing not decreasing. We're lucky to have zero debt, a healthy market position, apparently weakening competition, good technology and great staff. But if October's figures are the start of a second dip, our recent investment could come to look rash. I hope I'm wrong.

October Blues

Amidst all the talk of green shoots and coming out of recession, my worst fears might be coming to bear. Our figures have an unnerving habit of being a very good indicator of things to come. Last October we saw a sudden drop in what, for two years up the then, had been a pretty steady growth rate. Since then things have been growing again, slowly but pretty steadily. Last month (Sept) would have taken a mini dive had it not been for one large export order and now Oct is starting very sluggishly indeed. In fact I'm currently predicting to sell less this Oct than last by about 40%! That's never happened to us and the old 'double dip' is starting to make a lot more sense to me now.

Steve Ballmer, CEO, Microsoft

I got to ask Steve a question this morning. Not everyday you get to speak to the CEO of Microsoft. In fairness I was one of many in a room in a posh hotel in London who paid to hear him speak. But still. His theme seemed to me to boil down to 'every thing's about innovation and hard work.' He implied that the 'automation of the everyday' was less that five years away and that it wouldn't be long before we would be designing a cars on massive touch screens that understood our needs and made the whole interface with technology transparent.

My question was how did he split himself between this sort of ambassadorial role and the day to day management of the corporation. He said he was only about 5% ambassador and that hands on work took up most of his time. I have to say I thought that figure might be a little low and may have been the answer his employees in the room wanted to hear. In fact I'd be quite disappointed if it were true. Surely the role of a modern CEO is to be out there most of the time, leaving a competent crew at home to innovate and work at the business, bringing back useful nuggets and thoughts as appropriate. Steve gave everyone his personal email so I might challenge him on his answer away from public gaze.

Radio Show

Am doing some preparation for an appearance on Business Matters in LBC 97.3 at 5pm today. The thing about phone in shows is that you never know quite where the audience (or the presenter!) are going to take you. But as I scan this weeks business pages there seems to be distinctly conflicting signals for SMEs.

Banks are clearly starting to get caught between the Chancellor putting pressure on them to re-start lending to SMEs from the huge pots of public cash that have been thrown at them and the spectre of bad debt on mortgage lending that seems to be coming over the hill. So guess what? The banks are sitting on the cash just in case. So SMEs, don't expect much in the way of ease of access to funds in the near future. We'll see if today's pressure on the Bank of England to keep the cash taps flowing makes in difference.

Meanwhile, unemployment seems set to rise sharply and it's going to hit the under 25s hardest. For an SME like mine that may not be the end of the world as it suggests the main breadwinners will still be OK and hence able to buy things like table tennis tables. Looking from the perspective of my day job however, Camden Town is very reliant on young people. Then again youth culture tends to thrive on youth unemployment, so who knows how that will play out. Either way I wouldn't want to be coming out of Uni with big debts at this point in time unless I was one of the few who already had a good entrepreneurial zeal ready to take advantage of the undoubted opportunities out there if you know how to exploit them. This weeks announcement of a £1bn fund to help young people find work shows how worried the government are.

If previous experience is anything to go by, none of this will come up during the show today and I'll be making up answers on the hoof. Which of course is half the fun!

June saves the year

It's been a while since I posted. The main reason being that things with the business have been down. Whilst the first quarter of 2009 was up 10%, April & May were way down and it looked like the recession was finally catching up with us. Then came June! Turns out June's been way up on last year and we're now back on track for a small level of growth for the first half of the year. Result! Plus we've taken a few biggish decisions in terms of re-allocating staff and changing our commission structure which we hope will bear fruit in the next half of the year. I promised by biz partner I'd buy him a case of wine if we made £1.5m turnover this year. That would need around 40% growth in the next six months. Not impossible and I'm more worried about loosing the bet now than I've been in last three months. Will keep you posted.

Old school v new world

One of our main suppliers told me today that we're the No1 online outlet for their goods in the UK.  So they sell more of their product through us than anyone else.  Gratifying to say the least.  What he also told me was that our competition couldn't work out how we'd done it.  Which I have to say shocked me a little.  To my mind all we've done is sell competitively priced goods via a well laid out, easy to use, web site and provided good customer service by employing good people to answer the phones.  Any problems we have we try to be fare and we try and automate as much as possible.  This is not rocket science.  Yet it apparently mystifies some of our competitors.  Is that because they can't use technology to help themselves or employ good people?  Or are they just too old school and penny pinching to notice the world has changed?

Our figures may just be beginning to show signs of slow down

As April draws to a close I suspect that for the first time in 2009 we'll be down on this time last year.  The good news is we're out of the first quarter, during which we were up 10%, which means that the least profitable quarter is over and we're still here.  So baring major catastrophe we're not going to lose money this year. But I feel a degree of concern as I study the current figures and compare them to last year.  Is this the beginning of the start of our pain?

The Bank of Essex

This could be interesting.  A local council setting up it's own bank to help SMEs.  I can't help but think they'll find the hoops they have to jump through, in order to actually start lending, too difficult in the end.  But credit where it's due to Essex Council for being prepared to try.  And allocating money where it's mouth is.