I’m not actually a fan of Dragons’ Den myself and this seems something of a heresy these days for someone as interested as I am in business growth. mongst other issues, I believe there is a fear of fostering a sense of an overly aggressive dynamic between investors and investees. This is how expectations of rank corporate culture foster rank corporate cultures.
I also worry for the better projects in that they often seem to risk exposing their IP horribly to all and sundry, particularly as many of the ideas area services based.
That said, the programme’s hugely popular at the moment, so I’m going to seek to fill in what I see as some of the gaps. I worked in equity finance brokerage for over ten years and developed, almost subliminally, assessment criteria which I could later articulate clearly as:
Proximity: increasingly we are in a services environment. The old industrial procession of raw material through to distribution of manufactured goods does not apply. But there are few theoretical models through which to look at the coherence and viability of service models – hence I developed Proximity.
Simply, how many steps are there in the chain, how far (where Proximity originates) from the locus of control does the founding entrepreneur sit at the furthest point?
Let me give you an example. I once experienced a proposal for a bespoke curtain design franchise. This involved an Irish based operation, which relied on an English based manufacturer, recruiting and training franchisees in the remoter towns of Ireland. In practice, a quickly trained employee of some household goods shop in semi-rural Ireland would measure the curtains, the order would be processed by the owner of that shop, it would be collated by the central Irish franchisor, it would be manufactured by the UK operation, which bought-in its own materials from material suppliers – and the finished curtains would be fitted by some unspecified other party. That’s up to six Removals (stages of Promixity) in the services chain. Six “and/ifs”; stages of potential disaster.
Yet you see it all the time in proposals – long, long chains of assumptions and loss of control. Business struggles to operate efficiently with this degree of complexity. You need a couple of Removals to create some value-add beyond a basic supply process but you can’t have long daisy chains – you know how hard those are to assemble and how easily they fall apart.
The next and related issue is that of Innovation:
Innovation: Well, obviously, the more innovation the better, yeah? Not necessarily……
As an investment proposition it may often be more attractive to meet with moderate innovation in a large market, than with high innovation in a small, unclear or emerging market.
It may even be frequently more attractive to meet with moderate innovation than high innovation in a large market.
It’s all about the possible market size, the need to educate or re-educate customers and the risk of execution if things are absolutely radical (phased innovation into growing market share within a large market space is a very good thing).
It’s a balancing act and a fine one at that.
The only certainty is that no innovation = no major business. This last point is illustrated many thousands of times over by the ambitious small businesses which strive to scale – but it is as if there are invisible boundaries which allow a gate manufacturer every 5 miles, a print shop every 3 miles and a plumber every 2 miles: there are very rare and notable exceptions but the people who scale commonplace projects beyond their immediate locality are one in a million.
Shiny People: Beyond the business process and strategy basics, there is the person. After a while you get to notice the really good ones – they almost literally shine. I’ll give you a couple of examples from amongst the dozens of great entrepreneurs I am privileged to know.
Steve Ireland is a young (ish) web designer who you just know is going to the top of his profession. Still with plenty of time left in his 20s, he is already combining exceptional client work – there is ergonomic and style innovation here – with building-up pedagogical material and experience as a great trainer of other web designers. People are turning to him as an authority on web design and online market positioning when their existing web strategies begin to flounder.
Another shiny person I know is Richard Francis, who has rejected fast track corporate success and has gone out on his own as an online property services specialist, beginning as a letting agent. His processes and strategy are just that little bit innovative enough to make his success guaranteed, given his phenomenal dedication and execution stamina.
I have chosen these two examples as the core sectors are not rocket science. They are things that people need and want in great quantities – and the combination of moderate innovation, exceptional quality and star quality people is a winning mix.
Also, although partners are involved, there is not a sprawling chain of Removals robbing the quality out of the enterprise and diluting the vital, early stage, owner impact.
My co-founder Madeleine Jarvis and I are developing the same kind of play, in analysis and implementation. We know our market – it is big – and we know our innovation (it is substantial but it is also carefully phased – we have this phrase that we use to check potential market place acceptance….when one of us has a bright idea, the other tends to ask “Does it quack like a duck?”).
Whether you like Dragons’ Den or not, bear in mind your own Proximity, Innovation and Shininess at all times. Don’t blame others if you are creating daisy chains, coming from Mars and you are personally limp. And whatever you do, don’t go near the Den if you haven’t got these things worked out first.
Promixity & related concepts are proprietory terminology of The Cultureship Practice, http://www.cultureship.com
