Busines s voice | the CBI magazine
Taking stock Asda’s Andy Clarke on how the supermarket giant is adapting to shifting market dynamics
August/ September 2014
B u s i n e s s vo i c e | t h e C B I m ag a z i n e
August /September 2014
14 Interview:
Andy Clarke Asda’s chief executive tells us about the radical strategies designed to help the supermarket giant adapt to changes in customer behaviour.
8 infographic:
Skills for the future
The education system needs to work harder for the UK. The latest CBI/Pearson education and skills survey shows businesses ready to play their part but more urgent action is needed.
18 feature:
24 building britain:
30 Member profile:
leading ladies
Birmingham New Street
Fleximize
Stories from the First Women Awards show how far business has come in terms of gender diversity but also highlight areas of concern that remain.
The UK’s second most populous city needs a station fit for current, let alone future, demands. A £650m project is giving it the overhaul required.
We talk to the firm providing a fresh model for SME funding – revenue-based financing, whereby the borrower pays a percentage of its revenue to the funder.
regulars 10 event focus:
Meeting the energy challenge
Energy security and affordability remain serious concerns for UK businesses. Both depend on investment in infrastructure and energy efficiency. But as delegates at the CBI’s latest Energy Conference are all too aware, exactly how the objectives can be achieved is still up for debate.
4 Cridland’s notebook:
The economy is at last picking up but, for a sustainable recovery, politicians need to make the longterm decisions that will create the right business environment. 28 international: Transatlantic links are already strong – the UK is the largest foreign investor in the US – but there is scope for further progress. 34 member news: Charting business growth across the UK. In this issue: Pinewood Studios, Remploy, Tyrrells Crisps, RSK, Ammeraal Beltech and e2v technologies.
6 guest columnist:
Our future depends on it
Our society is moving towards an “internet of things”. To research, develop and apply the algorithms involved we will require a workforce with highly specialised skills.
36 member clinic: What does it take to become an effective boss? David Sole, who founded the “School for CEOs” programme, highlights areas that candidates should focus on. 40 CBI diary: Events and photo gallery. In this issue: CBI Annual Conference priorities, leadership in education and action on cyber risk.
A return to form? Although risks remain, the economy is finally giving us plenty to feel positive about. As the CBI prepares for the party conference season and for its own annual conference, the focus is still on getting the environment right so that business can create prosperity for all.
“As confidence rises, the recovery is now on a much more sustainable footing�
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Busines s voice | august/september 2014
Cridland’s notebook
“”
Getting the right support in place for our exporters to crack emerging markets is the main goal More comfortable reading
and public policy choices over [the
main goal for a more sustainable
The latest official GDP figures show
next] nine months, we could kill the
boost to trade.
that the UK’s output grew by a solid
goose that lays the golden egg.”
0.8 per cent in the second quarter
The rise in sterling is also high on
The global economic environment is also uneasy from political volatility:
of this year. It’s undoubtedly a
the business risk register and our
from parts of the Middle East – Gaza
symbolic waypoint in our recovery,
survey data seems to suggest that
especially; and in the Ukraine, and
and the good news is supported by
this has weighed on manufacturing
the related market access sanctions
the CBI’s own evidence gathered
export orders recently. It can be
levied on Russia by the EU and the US.
from our growth indicator.
argued that the rise is a corollary of improving growth in our
Opportunities knock
has also recently upgraded its
economy and the expectations
However, these risks must always
forecast: its prediction of 3.2 per cent
of an earlier rise in interest rates.
be balanced by opportunities. As
growth for this year outstrips that for
However, I recognise that the
we move steadily through August,
every other major advanced economy.
stronger pound is being felt
my mind will be turning to the set
differently across sectors – while
pieces of the post-summer political
to the kind of economic growth
it’s benefitting firms more reliant on
calendar.
figures we were seeing pre-crisis;
imports, it’s hitting the translated
our output is greater than it was in
earnings that some businesses take
offers the CBI the chance to work
2008 and, with growth becoming
from global operations.
with all the major parties to secure
The International Monetary Fund
We’ve finally found our way back
more broad-based as business
Yet even taking into account
The party conference season
pro-enterprise manifestos ahead of
investment gets ever stronger and
recent appreciation, the level of
next year’s General Election, and
as confidence continue to rise, the
sterling against a basket of currency
our own conference in November is
recovery is now on a much more
actually remains competitive.
always one of the best opportunities
sustainable footing.
Following a sharp fall of 31 per cent
to celebrate business success.
There are, of course, risks – both
over 2007/8, it is still now around
And I’m looking forward to the
17 per cent below its pre-crisis peak.
launch in September of the CBI’s
And because of that sharp fall in
Great Business Debate: our flagship
Beyond rhetoric
2007/8, many UK exporters chose
campaign to help build public
Nine months out from the General
to boost margins over market
confidence in business. We will be
Election, foremost in my mind is
share and not pass on that fall to
firing the starting pistol on debates
rising political uncertainty. I want
their customers.
concerning the positive contribution
at home and abroad.
politicians to concentrate on giving
Some commentators are arguing
that business makes to the economy
us long-term solutions that set the
that those wider margins should
and to our society more widely.
right environment for businesses
therefore, in theory, provide more
We’ll be talking facts and combating
to create prosperity, not policies
room to absorb a strengthening
the myths, as well as encouraging
or rhetoric with only short-term
in the pound. But getting the right
the public to give us their views on
application. As I said recently in an
kind of support in place for our
what business means to them.
interview with the Financial Times:
exporters to crack those fast-
“If we make the wrong governmental
growing emerging markets is the
There’s a lot to feel positive about and a lot to look forward to. n
Busines s voice | august/september 2014
5
Our future depends on it Sir Mark Walport is chief scientific adviser to the government and head of the Government Office for Science.
“”
We are homing in on procurement, spectrum and networks, standards, skills, data, regulation and legislation, trust and coordination
A
re genetically modified organisms a good thing? What about synthetic biology or nanotechnology or 3D printing? Each of these is a ridiculous question. We have a horrible habit of trying to judge
technologies generically, rather than recognising that every technology brings new benefits and new risks. In the case of any new technology, the serious questions should be specific: what is the precise application? In the case of genetic modification, the questions are: what organism, with what gene and for what purpose? For 3D printing or additive manufacturing, are we talking about a gun from a design downloaded from the world wide web, or a spare part for a baby’s incubator? These are the types of question that confront a scientific adviser to government every day. Currently, I am focusing on a specific commission from the prime minister, to advise him on a fast-growing application of IT – the “internet of things”. What is this? Increasingly, the devices that we wear, carry and use at home, while we travel and at work, are controlled by microprocessors, are internetenabled, can communicate with each other, and can make our lives easier through the application of advanced algorithms. But the internet of things is as much about people as it is about the things in our lives – and some are starting to refer to the “internet of everything”.
Understanding and vision How should we in the Government Office for Science advise the prime minister on this important topic? The short answer is by finding the right experts, engaging widely to identify key opportunities and concerns, and – importantly
6
Busines s voice | august/september 2014
guest column: Sir Mark Walport
The internet of things will power modern society – but it will need a lot of skilled people to research, develop and apply the algorithms to make it work.
– developing an action plan that
enable services to be delivered
develop and apply algorithms for
will enable us to reap the benefits
more efficiently, and scarce resources
human benefit in areas across a
while avoiding potential harms.
to be used more effectively and
spectrum from health to wealth.
sparingly. We are homing in on
But £42m is only a beginning,
Many of the initial applications of the internet of things come from
eight areas for potential action:
and we need to catalyse a
the objects that we wear or carry
procurement, spectrum and
partnership – between our
with us – the devices that measure
networks, standards, skills, data,
universities and government, the
our exercise or our sleep, or that
regulation and legislation, trust and
philanthropic sector and industry –
tell us and others where we are.
co-ordination.
to reap the benefits of mathematics
The mobile phone is an astonishing
and computer science.
example of the power of the
Skills to succeed
internet of things. It signals to us
The subjects of skills and algorithms
of the government chief scientific
where we are, how to get to where
bring me to a letter that the Council
adviser. My job is to maximise the
we want to go, and what is there
for Science and Technology wrote
impact of science, technology,
when we arrive – and can send the
to the prime minister last year. It
engineering and social science on
same information to others.
was about the importance of
the things that government cares
algorithms for the running of
about – the health, wellbeing,
is anonymised, and warns us of
modern societies, and the need for
resilience and security of its citizens
traffic jams or locates potholes for
the UK to expand its skills and
and the economy. These, in turn,
road repairers. We are a bit choosier
research base in an area that will
depend on our infrastructure: both
when it gives away our personal
power our future economy and be
the human-engineered, built,
information and location. It may
important for maintaining our
manufactured and technological
suit us to provide this to individually
health, conserving resources and
type and the natural infrastructure
selected family members, friends
improving our transport systems.
– the physical systems of the planet
We like this when this information
or colleagues, but most of us would
An important outcome of that
This brings me back to the role
and the organisms that inhabit it.
prefer it if this information was not
letter was the announcement by
available to all-comers.
the chancellor of the exchequer in
and is underpinned by infrastructure,
the 2014 budget of £42m of
and this in turn is underpinned by
held a series of expert workshops,
government funding to create the
the sciences. So the work of CBI
and key themes are starting to
Alan Turing Institute. This will be a
members is critical to our future in
emerge. First and foremost, we
world-class centre that will bring
the UK – and you need a workforce
need a clear vision – along the lines
together the best mathematicians
skilled in science. Science matters. n
that the internet of things will
and computer scientists to research,
As part of our analysis, we have
The work of business underpins
Busines s voice | august/september 2014
7
Skills for the future The UK’s workforce needs young people who are rigorous, rounded and grounded. Business has realised it has its part to play and government is making the right noises about education reform. But the latest CBI/Pearson education and skills survey shows more urgent action is needed.
Students aren’t aware of the world of work
But businesses want
80% of businesses are forging some type o least one school or college.
77% of those with links offer work
52%
80% of firms are concerned that
of businesses believe
careers advice is simply not
schools’ top priority should
good enough.
be to develop a greater awareness of working life among 14-19 year olds.
experience placements.
67% offer careers advice and talks.
Overall 66% of firms are willing to take on a larger role in the
The emphasis on STEM skills continues
48%
39%
of employers say that
of firms that say they
they prefer graduates
need those with STEM
with qualifications in
skills currently have
STEM subjects.
difficulties recruiting staff.
And 53% expect problems to get worse in the next three years.
8
Busines s voice | august/september 2014
But i achi
infographic: Skills for the future
Basic challenges remain
85% of of firms want primary schools to focus on developing literacy and numeracy skills.
As 36.4% of school leavers are not
And more than 50% of businesses are worried
achieving a grade C or above in GCSE
that these continue to be weaknesses
English; 42.4% are not reaching this
in their employees.
standard in maths. (source: Joint Council for Qualifications, 2013)
t to help
of link with at
And there is scope to scale up employer involvement in apprenticeships
There were
510,300
apprenticeship starts in 2012/13, up by more than 230,000 since 2009/10. (source: House of Commons)
44% of firms said that more relevant qualification programmes would encourage them to get involved – as would a greater control over funding (34%) and a reduction in bureaucracy around them (31%). school careers system.
it’s not just about academic ievement
85% said attitudes to work was the most
“”
The challenge is to grasp the nettle so we bring employment and education opportunities together to meet the urgent social and economic need of creating a more highlyskilled workforce.
important factor when recruiting school and college leavers, followed by their general
Rod Bristow,
aptitudes (63%).
President of Pearson Core Markets
Only 38% made formal academic results a priority.
www.cbi.org.uk/skillsreport
Meeting the energy challenge The UK is under pressure to provide a secure, affordable and de-carbonised energy supply fit for the future – but the CBI’s latest Energy Conference showed that there is still plenty of debate over how this can best be achieved.
10
Busines s voice | august/september 2014
event focus: Energy security
A
lmost three-quarters of businesses rate security of supply as a crucial
energy objective for the UK, yet more than half believe that energy security here is worse than it was five years ago. That’s according to a new CBI poll, which set the context for its Energy Conference held, in association with Good Energy, in London on 17 July. The challenges laid out by speakers – who came from government, industry, regulators and pressure
“”
The market should be able to send out long-term signals to increase long-term capital-intensive investments
ahead, and we can’t get there in one leap – it will take a few decades, not a few years. So fossil fuels are still necessary, through North Sea oil and gas, as well as fracking. And we must address how we can use fossil fuels better.” He added that changing behaviour and usage patterns must also form a central part of any sustainable strategy. “Energy efficiency is one of the most cost-effective ways of running our energy policy,” he said.
“Over the period 2010-13, we have
groups – were clear. The UK needs
seen £45bn invested in electricity
Global context
to design and run a more efficient
generation and networks, plus more
However, the second keynote
energy market in the face of
investment in four years than in the
speaker, Fatih Birol, chief economist
“serious flux” in the global market;
previous 13 years,” he said.
at the International Energy Agency
it needs to de-carbonise; and it
Of that total, £16bn has been
(IEA), said: “No country is an energy
needs to balance government
invested in new distribution
island”. Energy is, perhaps more
support for long-term investment
networks and a further £3bn in gas
than any other commodity, an
with competition and innovation.
transmission, he said, adding that
international commodity. “Prices,
there had also been significant
innovation and surges in demand
of state Ed Davey told the audience
growth in capital expenditure in the
are all played out against global
that recent efforts and investment
North Sea.
backdrop, and no country can hope
Despite the poll results, secretary
had gone a long way to address
But more investment is needed,
to unilaterally run its energy policy
fears that the UK would suffer a
said Davey. “We cannot rest there.
without taking into account what’s
severe energy crunch beginning
To de-carbonise, we need more
happening elsewhere across the
around 2015.
renewable electricity in the decades
globe.”
Busines s voice | august/september 2014
11
Given this international commodity status, Birol said that
for this type of renewable being cut. Overall, though, the cost of
the global energy market – in
renewables can’t be ignored.
terms of who produces, who
Ann Robinson, director of
consumes, where shortages exist
consumer group uSwitch, argued
and surpluses are enjoyed – is in
that affordability had to be at the
serious flux. Trends that would
centre of modern thinking on energy
have previously been unheard of
policy. “We cannot afford some of
– Middle East countries importing
the more expensive renewable forms
oil and gas, for instance – are
of energy. We should be looking at
now commonplace. The need
talking the EU into ditching their
for European legislators and
targets on renewable energy.”
businesses to keep up and adapt to the new realities are clear, he said.
Birol also said that despite the extraordinary shift towards
“”
To de-carbonise, we need more renewable electricity, and we can’t get there in one leap – it will take a few decades, not a few years
renewables, Europe still needs
involved in a simple and easy way
formed a central part of those
to invest $2.2trn to replace ageing
– it wouldn’t be overregulated, as
efforts in Europe. Indeed, Birol
infrastructure between now
it is now. I want to see consumers
reported that 60 per cent of total
and 2035.
have much more control over their
Renewable energy has so far
energy use,” she said.
investment in energy in Europe over the past decade has gone on
Consumers in control
renewables.
So what does a good energy
renewables such as solar power
She pointed to the role of
market look like? The question
in focusing users’ minds on the
renewables in the UK had reached
continues to vex most observers.
amount of energy they use. And
£8bn in 2013. “Indeed, only China
All accept that a pure free market
she wanted more consumers to
and the US have invested more
model won’t work with such a vital
care about which companies they
finance in renewable assets in that
commodity, but fostering long-term
buy their energy from and where
period,” he said.
investment and competition into
it comes from – not least, to
the trade in energy is a tough nut
encourage competition.
Davey said that investment in
The UK now generates around 15 per cent of the total UK energy mix through renewables: five per cent
to crack. Juliet Davenport of Good Energy
Investment priorities
of its total electricity comes from
outlined several characteristics that
But injecting more competition
onshore wind, and solar power is
were necessary in a good market.
into the market can only go so
also doing well, despite subsidies
“It would allow new entrants to get
far. As one of the UK’s dominant
12
Busines s voice | august/september 2014
event focus: Energy security
energy players, EDF has a vital role
living standards. Little changes in
to play in ensuring not only that
behaviour – for example, when
the lights remain switched on, but
the Co-op fitted doors on its store
that consumers and businesses
fridges – can be cost-neutral and
have access to competitively
immediately reduce an energy
priced energy. The company’s
bill. In fact, the Co-op has saved
director of strategy, Paul Spence,
£50m on its bill by doing that.
told delegates that his view of
“Secondly, investment in low-
the perfect market was one that
carbon sources will be better, long-
combined innovation, dynamism
term, for consumers,” said Flint.
and competition.
“We have to tackle that as soon as
“And at the same time it should
possible, as we won’t reduce carbon
be able to send out long-term
footprint without a concerted effort.
signals to increase long-term
And lastly, fossil fuels aren’t going
capital-intensive investments.
away, so they need to be greened
The set of reforms we see coming
and carbon capture and storage
in are pragmatic and should help
(CCS) developed.”
investors and customers.” So what of the UK’s energy
more competition in the energy market is the best way to keep bills down.
Wrapping up the debate, deputy director-general of the CBI Katja
future? While Davey was proud of
Hall recognised the challenges of
the coalition’s efforts to channel
encouraging the necessary long-
both public and private investment
term investment and getting a
into UK energy infrastructure,
good deal for consumers. She
shadow energy secretary Caroline
also echoed Davey by referring to
Flint laid out the three strands of
efficiency as the “missing piece
Labour’s energy policy, should
of the puzzle”. But she argued the
this party win in next year’s
priority had to be on setting a clear
General Election.
policy that could attract consensus
“Firstly, we believe that to reduce
47% of business leaders believe
between politicians and industry.
demand is cheaper than increasing
“Our future competitiveness
supply,” she told the conference.
depends on it,” she said. n
38% of firms cited energy efficiency as the best solution to ensure energy costs remain affordable.
60% of businesses believe the low-carbon transition will lead to long-term economic opportunity.
“We could do this by one-third, and it wouldn’t mean lowering
Source: CBI
Busines s voice | august/september 2014
13
changes in store A transformation is under way at Asda, with further stores opening and more radical steps that will help the supermarket group adapt to changing consumer habits. Chief executive Andy Clarke explains the strategy. words Pip Brooking photography Peter Searle
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Busines s voice | august/september 2014
BIG interview: Andy Clarke
“S
truggling supermarkets”
The numbers involved are small
organisation, as we are refining the
is an all-too familiar
but, in a flat market, significant.
organisational structure in stores
alliteration for the
Clarke believes they reflect a “clear
to support the growth of our online
newspaper headlines, as month
change in form across the big four”
business.”
after month of Kantar figures have
and are a sign of Asda being
shown growth among the “big
“ahead of the curve” in its reaction
as announced by Asda’s US owner
four” at its lowest level in a decade.
to changing market dynamics,
Walmart in April, has the potential
The cause is simple enough:
compared with its competitors.
to create up to 12,000 jobs – news
changing consumer habits – driven
In fact, the new five-year strategy,
that was welcomed at the time by the
by the rise of online shopping and
The need for change
prime minister. “I am delighted that
the continued squeeze on income.
The current restructure at the
Asda is continuing to invest heavily
The solution is not so easy.
Leeds-based firm was put into
in the UK,” said David Cameron.
Pressure is mounting on those at
motion after a “rigorous strategic
The strategy will also see the
the top to deliver new strategies
review” 18 months ago, which was
company add 40 “superstores”
– particularly at Tesco and Morrisons,
followed by store trials last year to
(each spanning 25,000 square feet
where performance is hardest hit.
refine the organisational structure.
or more), 100 supermarkets
While recent press coverage of
Clarke calls it a “proactive piece of
(typically 5,000-12,000 sq ft), 150
Asda has focused on 1,360 job
change” that has been planned,
forecourt shops and 1,000 click-and-
losses among store management
trialled and communicated
collect points, and extend online
staff, the company’s chief executive,
transparently – the only way to try
penetration – it wants to triple the
Andy Clarke, seems to be weathering
to maintain morale among those
value of online business by 2018.
the storm rather better.
affected by redundancies around
Returning to the Kantar figures, you get an inkling of why. In the 12
them, he says. The whole executive board spent
Shape shifters So Clarke, unlike some
weeks to 20 July, Asda was only
time in the stores both before and
commentators, doesn’t think that
just behind Sainsbury’s with growth
after decisions were made, and it
the end of the superstore is nigh
of 0.9 per cent (versus 1.2 per cent).
chose not to delay a grassroots
– although he says that the
In the month prior to this, Asda was
survey that gave all employees an
company is “fortunate” in having
recorded with the largest growth
opportunity to share their thoughts.
fewer large-format stores than its
among its immediate competitors,
“We’ve been careful to ensure we
competitors. “We’re all conscious of
at 3.6 per cent against Sainsbury’s
continue to listen. Even though it’s
how we’re changing shape. What is
3 per cent. And in the period to 25
difficult, when we believe this is
happening is that what goes on
May, Asda was “the only large
right for our business, we have to
within the superstore is changing.”
grocer to grow share year-on-year”,
put ourself out there and be
with 2.4 per cent sales growth
prepared to take criticisms and
to trial reduces the space given to
leading to a market share of 17.1
challenges,” says Clarke.
the white goods and electrical
per cent. In each report, Tesco and
But he adds: “The big picture is
The new format that Asda is set
items that tend to sell well online,
Morrisons fell in terms of both
that the net effect of these changes
in favour of growth categories such
sales and share.
will be more people in the
as fresh food, homeware, health
Busines s voice | august/september 2014
15
and baby products. Space is
of the imperatives facing the
long-term price promise,
important for Asda’s clothing range
supermarket giants. Another area
guaranteeing that it will be 10 per
George, which continues to make
that has seen increasingly intense
cent cheaper than its rivals, rather
the chain the UK’s largest
competition is price – and Clarke
than offering to price-match.
children’s-wear retailer by volume.
believes Asda has a significant
But the growth of click-and-collect
advantage here.
trade also means that retailers have
All of the big four are fending off
“This isn’t a price war for us,” he says. “It’s simply about executing our strategy and delivering
extra flexibility on the stock they
the relentless rise of the
something that we’ve always been
choose to carry, says Clarke.
discounters, Aldi and Lidl, which
consistent about.”
Asda has also been looking at
have posted growth of 20-30 per
He adds that discounters “aren’t
how to share excess space with
cent in successive Kantar reports –
a new concept. They’ve been in our
local community groups. Getting
and Clarke agrees that it is
market for as long as I’ve been in
closer to communities is also
“probably untenable” for his
retail”. And, he says, “we have three
driving the company’s growth in
competitors to maintain their
strong divisions in food, general
supermarkets (as opposed to the
current price gaps. But he adds that
merchandise and fashion. That
larger superstores), says Clarke.
reducing them requires
gives us the breadth that you can’t
“significantly larger investment”
get at a discounter.”
Meanwhile, one of the ways Asda is planning on expanding in the
and will lead to a correspondingly
south – where its market share is
large impact on competitors’
economic trends behind the
closer to 12 per cent, presenting “a
profitability, as their business
pressure on price. For the past six
natural opportunity” for expansion – is new forecourt shops. Some of Clarke’s changes are
“”
But he also highlights the
years, Asda has run an incometracker survey, which has reflected
This isn’t a price war for us – it’s simply about executing our strategy and delivering something that we’ve always been consistent about
the squeeze on household incomes
Race to the bottom?
models haven’t traditionally been
emphasises Asda’s support for the
Adapting to consumers’ increasing
predicated on such a dynamic.
first “social supermarket”, which
tendency to shop online is just one
Asda, on the other hand, has had a
opened in Barnsley in December, to
more radical – and he argues that they need to be. “Click-and-collect is changing the face of retail,” he says. This trend has led Asda to launch “drive-thru” facilities – first trialled in York in spring last year and rolled into all stores by this summer. In addition, the company has also partnered with Transport for London to install collection lockers at various tube stations in the capital.
16
Busines s voice | august/september 2014
– and has predicted this squeeze will continue until at least 2018. And as with many business executives, Clarke raises the concern of youth unemployment. It’s an issue that is top of his agenda for his presidency of food and consumer goods industry charity IGD next year, and has been a key issue for Leeds & Partners – the inward investment body he chairs – as well as something he wants Asda to help tackle. He also
BIG interview: Andy Clarke
serve those close to food poverty. “I
and provide uniforms for 10,000
think more social supermarkets will
volunteers at Yorkshire’s Grand
emerge over the next three years,”
Départ for the Tour de France
he says, arguing that such initiatives
this summer.
can’t be about competition. “For
Meanwhile, although the UK
Asda, or any large or small business
grocery industry has its own hills to
around the country, being aware of
climb, Clarke argues that the sector
the communities you operate in
remains world-class, with
must be of great importance.”
international eyes watching how the
Such awareness has led to more
main players here respond to the
light-hearted opportunities for the
changing dynamics. He just wants
company. It helped to recruit, train
to lead the pack home. n
Mums, Asda and politicians
E
The Clarke CV 2010-present Chief executive, Asda.
2005-10 ighty per cent of the
Of course, Andy Clarke cares
18 million customers
what his shoppers think and,
who go through Asda’s
although he doesn’t want to be
Retail director, then chief operating officer, Asda.
doors each week are mums.
a political pollster, its in Asda’s
2004-05
In the run-up to next year’s
interest to help them get their
Managing director, Iceland.
election, the supermarket giant
voice heard. But asked what he
asked some of them about their
wanted from whichever party is
2002-04
everyday lives and what they
in power this time next year, his
thought that government should
thoughts turn to business rates
Chief operating officer, Matalan.
be doing to help.
and planning processes – although
In the resultant Mumdex
the latter is less of an issue than
report, 88 per cent thought that
it has been as the demand to
politicians aren’t good at
open new spaces has declined.
engaging with mums or the
1992-2002 Store manager, then regional manager, then trading and operations roles, Asda.
“We continue to stay close to
issues that matter to them, while
decision makers,” he adds, on
1982-92
two-thirds wanted to see more
topics including fuel duty and
women in power. Their top asks
alcohol and tobacco sales. And
Grocery manager, then store manager, Wm Morrison.
from government included
he highlights the continued need
imposing limits on energy
for government to focus on the
prices, raising personal tax
red tape challenge, where
allowance and improving rights
bureaucracy stands in the way
for working families.
of business growth. n
Busines s voice | august/september 2014
17
leading ladies Business has come a long way in terms of gender diversity, and the shortlist of the recent First Women Awards provides plenty of examples of strong pioneering females. However, some of their stories also highlight areas of concern that will have contributed to there still being fewer women at the top.
A
t the end of June, Glencore Xstrata appointed Patrice Merrin as non-executive director. The move means that no all-male boards remain in the FTSE 100.
But it’s taken time to get to this position, and in the FTSE 250 the challenge
persists. In addition, certain sectors – from mining to construction – have fewer women in the pipeline, so the scope for senior female appointments is limited. A recent CBI report, Building on Progress, emphasises that many women still face obstacles at various times through their careers, from choices at school to breaking into
“”
the boardroom. It highlights the fact that both businesses and government have more to do to
Some had lacked career guidance and had been inspired by family members or fallen into their careers by chance
create an environment in which more women can succeed. The report also moves the equal pay agenda up the list of priorities. Business Voice talked to shortlisted candidates and winners at this year’s First Women Awards – in the construction, manufacturing, engineering and science and technology sectors traditionally dominated by men – to find out more about their paths to the top. All were keen to tell their stories, to encourage more women to follow in their footsteps.
But common messages emerged. Some of those we talked to had lacked career guidance and had, instead, either been inspired by family members or fallen into their careers by chance. Many criticised their respective industries for not broadcasting the breadth of opportunities they offered. And most of them credited supportive managers for their progression.
18
Busines s voice | august/september 2014
feature: First Women
Carolyn Adams
Quality and continuous improvement manager for coffee, Mondelez In many ways, Carolyn Adams’s
“Especially within research and
are still very male – with only one
experience reflects the current drive
development, I broke through glass
female applicant out of 30 this year.
to promote more vocational routes
ceilings because (a) I didn’t have
into work. She learnt on the job,
the technical degrees the majority
in raising the profile of a career in
starting in a laboratory for General
of people had and (b) it was an
the food industry, the wide-ranging
Foods-owned instant coffee brand
organisation that was totally
opportunities it holds, and its
Maxwell House. She then progressed
male-dominated and women
potential for innovation – for both
to head all global coffee product
engineers, with degrees, had given
girls and boys. To this end, Mondelez
development for Kraft, and now has
up before me. They tended to go
is now going into schools to give
a leadership role in manufacturing
into teaching.”
talks. In addition, the company has
business development at what is now Mondelez. “I don’t think people are
She has also had children and
She argues that the challenge lies
invited representatives from the
says that as a result it’s probably
government and shadow government
taken her longer to get to where
to visit the site in Banbury, Oxfordshire
aware how fulfilling a career in
she is, but she adds “I haven’t got
– where Adams has been responsible
manufacturing or engineering can
frustrated with that time span”.
for attracting investment back into
be,” she says. Yet before her career
Adams credits supportive
the UK – to help raise the company’s
started, she herself was “totally
managers and the fact she grasped
profile and the importance it places
unaware of industry” as an option
opportunities – she even studied for
on training. n
– she applied for the position at
an HNC in business finance on day
Maxwell House as just a summer
release, funded by Kraft. She has
job before she went off to study
seen a change in the proportion of
physiotherapy.
women engineers around her,
But Adams never left, finding she
although she’s still used to being
had a knack for understanding
the only woman in senior meetings
science and the ability to apply it to
other than someone from HR.
the consumer side of the business.
However, she says apprenticeships
23% The proportion of the manufacturing workforce who are women
Vidhyalakshmi Karthikeyan Senior researcher, BT
Vidhyalakshmi Karthikeyan is the most prolific inventor
engineering, despite pressure from plenty of people
that BT has employed over the past decade. Over the
recommending other subjects “as more suitable for a
five years she has been there, she’s filed 16 patents.
woman”. But she had been inspired by her father – a
She’s only 26.
chemical engineer. She highlights the importance of
Karthikeyan grew up in India and Malaysia, and came to London as an international student to study electronic
encouraging children from an early age: “I was determined to do this, because I was sure from when I
Busines s voice | august/september 2014
19
was young. You couldn’t shake that out of me, as much
almost a year into a part-time PhD, in which she is
doubt as you might try to install.”
prototyping one of her patents.
Nevertheless she didn’t discover the idea of a career
Keen to inspire others, Karthikeyan has given guest
in telecommunications until she was at university. The
lectures at universities, and has been involved with
subject formed part of her electronic engineering course
recruitment and career advice activities since joining BT.
– where she was one of only a handful of females. Now
She was also one of the volunteers from BT in E-skills
she talks passionately about why she made that choice –
UK’s Girls Get Coding event in July.
and what could inspire others to do the same. She is a
“People are scared of programming – or they say
firm believer in the continued freedom and fairness of
they don’t want to do maths. You need to challenge their
access to the internet for all, arguing that it opened up
preconceptions,” she says, pointing again to the
opportunities for her she wouldn’t have had otherwise.
importance of technology in everyday life and the
“I knew nothing of London before I arrived, other than
excitement of being able to shape something that affects
what I found out over the internet.”
everybody. “You just need to encourage them that they
Karthikeyan is also driven by the speed of change in technology, and by the desire to improve it. “I love the fact that [technology] is rooted in something that we now think is indispensable,” she says. “The role of an engineer is to cocoon complexity into a system that everybody can get something out of.” Her patents are based on “machine learning”, as she helps BT move towards a long-term vision of creating an autonomous network that can work and repair itself as technology gets more and more complex. She’s now
can do it.” n
“”
People are scared of programming or say they don’t want to do maths – you need to challenge them
Louise Brooke-Smith Global president, RICS Louise Brooke-Smith was
A surveying career is incredibly
inaugurated as the first female
broad,” she says. “It’s unfortunate
president of the Royal Institution of
that there is this perception of
universities, she says she already
Chartered Surveyors in July – more
surveyors being predominantly
sees a different attitude coming
than 30 years after she joined the
male.”
through among the next generation.
organisation as a student member.
But only 14 per cent of chartered
want them to stay in the profession.” As a visiting lecturer to
She’s also experienced universities
But a career in surveying was her
surveyors are female – although
wooing her own daughter, who has
plan B, after she didn’t get the
that’s improved from the two per
expressed an interest in surveying.
grades to study engineering.
cent when Brooke-Smith started
“They know that the women who
“One of my ambitions is to get
out. “We’ve got a long way to go.
go through their courses get good
the message out there that while
The good news is that there are a
qualifications and do well in the
surveying is already a career choice
lot more women joining surveying
real world, in industry,” she says.
to some, it should be to far more.
courses. But once they qualify, we
20
Busines s voice | august/september 2014
These efforts are being mirrored
feature: First Women
“”
Role models are important too, she
Eventually she did set up on her
More women are joining surveying courses but once they qualify, we want them to stay in the profession
says. “It also helps to have visible
own – a process that involved both
women up and out there.”
faith in herself and back-up from
taken, to make it from the
president gives her the credibility
by initiatives in industry, at RICS
classroom all the way through to
to speak up about the importance
and among the big construction
the boardroom,” she says.
of diversity – and not just in terms
companies – and Brooke-Smith is
After putting a call out to its
others. “You need to have a bit of
members, RICS has been inundated
confidence to be able to do it, but I
with women just getting on with
had a lot of support,” she says. Her
the job, who want to shout about it.
consultancy has recently celebrated
“It is important to highlight some
its 20th anniversary.
of the decisions that everybody has
She now believes her role of
As for Brooke-Smith, she’s grabbed
of gender. “My emphasis is that I got
also keen to look to other sectors,
opportunities as they’ve come. She
there on merit, not because I was a
such as accountancy, to see how
decided early on that she wanted to
woman, and I was adamant about
large firms have attracted and
set up her own planning consultancy,
that through the election process.
retained the female population.
but didn’t want to do it too soon. So
A couple of years back, I stood up
She emphasises the importance
first, she worked for local
and said ‘if you’re voting for me
of careers advice. “Get more of
authorities, quangos, the UN, a big
because I’m wearing a skirt, I don’t
it, and better-quality,” she says.
developer and a big agency.
want your vote.” n
Rachel Morfill
Power systems manager, National Grid As with many others in engineering, Rachel Morfill was
Morfill took on the latter responsibility partly because
inspired by her family rather than through any careers
of her passion to encourage more women into the
guidance. In fact, “there was nothing on engineering in the
profession. The two biggest challenges she faced, she
careers files” at the all-girls school her parents sent her to in
says, were the assumption that she wouldn’t return to
the belief that it would encourage her scientific leanings.
work after having her first child, 16 years ago, and lacking
When she studied for an electrical engineering degree,
a female role model to look up to. As regards role models,
she was then the only female on the course. “I think that it’s easier now,” says Morfill. “But I was determined. I can remember leaving school and saying
she says: “It’s quite daunting that I’m one of those for other people now.” To that end, she has been involved in setting up a
that I was going to be a chartered engineer by the age
women’s network and a mentoring scheme so that
of 30 – and I achieved that. I battled through.”
women don’t feel isolated – especially when they work
She joined National Grid straight from university – and has enjoyed a progressive career path over the past 20 years, mostly in engineering roles, but also writing the organisation’s annual report one year, and heading the inclusion and diversity department another.
Just 6% of the UK engineering workforce are women Busines s voice | august/september 2014
21
in the field, where the workforce is more disparate so
she says. “The push needs to be on encouraging
the proportion of women is lower still.
engineering as a professional job with a wide range of
Morfill says the culture within National Grid has changed significantly during her career, but admits
opportunities.” But targeting women specifically, she emphasises that
engineering still faces the problem of being perceived as
the task of changing perceptions has a lot to do with
“oily rags and boiler suits.“
parental education – making parents understand it’s a
“That can put off the men as well as the females – and there’s the industry concern about a shortfall in skills,”
job they can be proud of their child going into. “I was lucky that I had that within my family,” she says. n
Annika Small
Chief executive, NominetTrust Annika Small is chief executive of
She adds: “This is actually the
Within schools, a change in the
NominetTrust, which supports and
arts and crafts of the 21st century in
national curriculum will introduce
invests in people who use
many ways, because it’s a creative
more coding in September, which
technology to address complex
area – but it’s not presented as such.”
again is a step in the right direction.
social challenges, from social
Some of the barriers come from
However, she references a recent
isolation among the elderly to
within the industry. When she
YouGov poll that suggests that
youth unemployment. For her, it
joined NominetTrust in 2010, Small
while 75 per cent of UK children
is the application of, and what can
remembers some people from the
aged 8-15 are interested in making
be achieved with, technology rather
technology press asking to speak to
their own projects online and 67
than the technology itself that have
her “number two” or to the head of
per cent would like to learn how to
the power to inspire and attract
research, “because a man must
programme or write code, only 3
more women into the sector.
know more than this girl who’s
per cent actually know how to do so.
“It’s my perspective on
running the thing”. Other people in
“Appetite is growing, but I don’t
engineering, science and
the industry enjoy the “anorakdom”,
think there’s enough being done in
technology in general that to
and they layer on complexity that
schools,” says Small. n
engage more women you need to
doesn’t need to be there, she says.
start in an area they’re interested in,
But she adds of such challenges:
and make it more relevant to what
“It hasn’t held me back, and I
they’re doing and what they aspire
haven’t seen many women who it
to do,” says Small. “At the moment
has held back.”
it still feels remote, and they’re
For young people, there are a
presented as technical subjects that
growing number of initiatives that
can be seen as ‘geeky’. I’ve worked
Small believes will help – ranging
a lot with teenage girls in this area
from Young Rewired State and
and you can see that they’re
Apps4Good to Code Club –
interested, but often peer pressure
although she’s worried that these
kicks in.”
aren’t accessible to large numbers.
22
Busines s voice | august/september 2014
“”
This is actually the arts and crafts of the 21st century in many ways – but it’s not presented as such
feature: First Women
helen lamb
Executive director, managed infrastructure services, Fujitsu Helen Lamb fell into ICT, as did most of her female
innovation that it can enable. It’s about bringing the
peers at Fujitsu, she says. After taking a mix of
relevance to the nerdy, technical aspect of it all.”
maths, English and economics at A-level, she got a
A big reason for Lamb’s success has been showing
degree in business studies. She didn’t know what
ambition, and two-and-a-half years ago, during a
she wanted to do. And she didn’t know what she’d
management restructure, she put herself forward
signed up for, either, when she took a role at what was
for a board role. She became executive director,
then ICL in her placement year and, at 21, was thrown
managing Fujitsu’s applications business. She has
into a relatively technical job supporting mainframes
since overseen a 13 per cent increase in revenues
in a team of men who were aged 40-plus.
and a 26 per cent rise in profit, and has moved
“Looking back, I can see the challenge I had at the time was that I struggled for role models,” she says. Nevertheless, Lamb enjoyed the placement and joined
over to run the managed infrastructure services. She says she’s blinkered to the fact she still works in a male-dominated environment, because
the company’s graduate training scheme, working
she’s so used to it. But she’s conscious that, in her
across different areas of the business: in finance, HR,
position, she needs to be a role model and support
designing solutions and implementing programs, as
others to be as successful as she has been, so she
well as in operational and general management.
sponsors the graduate and apprentice programme. So why aren’t there more women in ICT? In what
“”
is becoming a familiar story, Lamb thinks the gender
Sometimes I made side movements in my career, because I wanted to expand my experience “Throughout my career, I didn’t necessarily
progress upwards each time; sometimes it was side
imbalance arises because other professions have greater recognition. “Compared with medicine or law, ICT struggles with its ‘brand’. It’s too often seen as being technical, detailed engineering. That’s part of it, and it will appeal to some people, but it doesn’t really represent the roles and the opportunity that you have within it and the difference you’re able to make toward people and businesses on a regular basis.” But the process of attracting women into the sector
movements, because I wanted to expand my experience.
has to start earlier, she adds – schools need to make
By its nature it’s been a technical environment,
STEM subjects more accessible, relevant and exciting
but my interest is in both the technology and the
to everyone. n
Read the CBI report, Building on Progress at www.cbi.org.uk/championingdiversity The CBI has also called for action to make STEM careers more attractive. Read the report at www.cbi.org.uk/engineeringfuture
A grand central station First impressions count when attracting visitors and investment, and no one can deny that the old Birmingham New Street station – the main transport hub for the UK’s second city – was not particularly welcoming. But it’s undergoing £650m-worth of renovations, which will create a space 3.5 times larger than the old one, with far greater accessibility and better interchanges. Its shopping centre is getting a major facelift to boot.
37 seconds
3,200
The frequency with
The number
which a train leaves
of jobs the
Birmingham New
regeneration is
Street, making it the
expected to deliver
busiest station outside London, and the
140,000
to the city centre,
busiest interchange
The number of passengers
estimates putting
station in the UK.
with initial
who use New Street
the boost in jobs
every day, more than
for the region at
double the number it was
up to 10,000.
1,000 The number of workers
T
currently on site.
con
2
de
designed to accommodate.
&
co
app
35m The height of the new atrium on top of the station. Two holes cut out of the roof and floor of the existing shopping centre mean the station is lit by daylight for the first time in 40 years.
24
Busines s voice | august/september 2014
10,000
The numb
duration o
building britain: Birmingham New Street
7,500 tonnes The amount of concrete removed
100
from a disused car
The 100th apprentice,
park adjacent to
James Skyrme, was
the old station to
£35m
brought onto the
nstruction site in March
2014, working for local
emolition firm Coleman
The investment made by John Lewis
create the new concourse.
36 The number of new escalators. Together with 15 new lifts, they
in a new 250,000 sq ft shop, the
offer improved access
flagship store for the Grand Central
to every platform.
& Company. The main
retail development above the station.
ontractor, Mace, has 12
It will be one of the chain’s largest
prentices working on site.
stores outside London.
ber of lorries kept off the road over the
of the project by using the railway beneath.
60% The proportion of the rainwater harvested from the stainless steel facade to flush all the stations toilets.
Busines s voice | august/september 2014
25
John Lewis | Entrance
THEN
John Lewis | Store
650
1854 – the original New Street station – the in the country – opened to the public.
The number of new jobs created directly
NOW
by the retailer.
John Lewis | Atrium
40 The number of retail
September 2009 – preparatory work
stores that will sit
commenced on site.
alongside John Lewis, as well as 20 cafes and restaurants.
John Lewis | Bullring link bridge
April 2013 – the first half of the new concourse was opened and work switched over to transforming the existing station and develop Grand Central. 26
Busines s voice | august/september 2014
building britain: Birmingham New Street
e largest station
1967 – the first redevelopment took place giving New Street its familiar concrete facade.
Summer 2011 – work to clad the station in its reflective steel facade began.
Mick Miller, senior sponsor for the project from Network Rail, has said this scheme is "one of the most complex construction projects over a live railway in Europe". Platforms have been refurbished one at a time to minimise disruption to travellers. September 2015 – station to fully open.
As well as Mace and Coleman & Company, other firms involved in the project include Atkins, Cannock Group and NG Bailey. Busines s voice | august/september 2014
27
The British mean business in the US The UK is the largest foreign investor in the US, supporting jobs across every industry and state. However we want to build on that, not just settle for it. The sixth edition of the CBI’s Sterling Assets report analyses the current scale of the bilateral relationship and explores the potential of a comprehensive transatlantic trade and investment partnership.
28
Busines s voice | august/september 2014
International: The UK-US relationship
T
oday’s international economic environment
language, as well as similar legal systems and cultural
differs vastly from that facing the UK and the
norms, make it easy for Brits and Americans to
US 100 years ago at the start of the First World
work together.
War. But although much may have changed, one thing
UK businesses not only support jobs, but also pay
endures as a lasting legacy of the Great War: the
more on average than the US national norm. The wages
resounding partnership between our two nations.
and benefits of an American worker employed by a
This decade was supposed to mark the start of the
British firm averaged $74,500 in 2011 – significantly
US’s economic pivot towards the East. But as we move
higher than the average $58,000 the same year for US
towards the decade’s mid-point, once again Europe has
private sector workers.
– perhaps surprisingly – taken centre stage when it
And the UK is, of course, a major destination for US
comes to investment and exports. This shift can be seen
goods and services exports; today Britain ranks as the
clearly in the current negotiations for a transatlantic
US’s fifth largest export market for goods and services,
trade and investment partnership between the European
behind Canada, Mexico, China and Japan. It’s the second
Union and the US.
largest market for US exports of services specifically,
At the heart of these trade discussions lies the evervibrant bilateral economic and investment relationship between the UK and the US. Britain is already the largest
and the leading purchaser by far of services sold through US affiliates abroad. The figures in this year’s CBI Sterling Assets report
foreign investor in the US. As of year-end 2012, the UK
demonstrate that the relationship that exists between
had invested $487bn there, representing 18 per cent of
our two countries is already significant. But at a time
the $2.7trn of total foreign direct investment in the US,
when sustained global economic growth seems tangibly
and substantially higher than that of Japan, the
close, the US represents a growing opportunity for
Netherlands, Canada and France.
British businesses – an opportunity that we hope to work with you to realise over the coming year. n
Fostering innovation British companies are attracted to the US for several
Sarah Knaus is the CBI’s policy and government affairs
reasons. They appreciate the size of the market, a culture
manager in Washington. sarah.knaus@cbi.org.uk
that fosters innovation and risk-taking, the deep capital markets and the pool of talented workers. A common
www.cbi.org.uk/sterlingassets
“”
A common language, as well as similar legal systems and cultural norms, make it easy for Brits and Americans to work together Busines s voice | june/july 2014
29
Adding to the alternatives
30
Busines s voice | august/september 2014
member profile: Fleximize
Peer-to-peer lending and crowdfunding are well known as ways for SMEs to access alternative finance but now there’s another model, whereby the borrower pays a percentage of its revenue to the funder. We talk to revenue-based financing company Fleximize to find out how it works.
A
s bank lending to
transaction is made – although
successful, or it being a bad season,
SMEs continues to
his customers already come from
because you’ll pay at the speed
fall – dropping a further
a broader background than retail.
of your business [performance]. If
£700m in the first quarter of
In the entertainment sector, the
you sell this stuff four months later
this year – alternative finance
model is better known as royalty-
it’s still OK – we don’t topple your
providers are stepping in to fill
based financing. And in the past
business.”
the void. The headlines tend to be
it has also been used in the oil
dominated by peer-to-peer lending
and mining sectors, and for
finance as a third option sitting
and crowdfunding platforms, but
biotechnology and some medical
between equity and debt – offering
meanwhile other financial models
applications in the 2000s when
the flexibility of the first and lower
are breaking through.
venture capital dried up because of
risk than the fixed payments of the
the dot-com bust. “Then someone
second, without diluting ownership.
In January, former Citi banker Max Chmyshuk launched Fleximize,
in the US had the brilliant idea to
offering revenue-based financing
apply the model to small business
to small businesses. Its revenue
financing,” he says.
advance is similar to a loan, with
He adds that the model hasn’t
Chmyshuk sees revenue-based
Fleximize stats
a pre-agreed amount to repay. But
been popular historically because
instead of paying fixed instalments
it’s not the most straightforward
every month, the borrower pays
concept to grasp. But he tries to
January 2014
a percentage of its revenue –
make it simple: “Say, for example,
Employees:
with payments rising or falling
you’re in ecommerce and you want
depending on the company’s
to buy three months’ inventory
performance. Fleximize takes a
from China instead of one, in order
10-15, including developers
fixed percentage as a fee.
to get a discount. If you borrow
Customer base:
a revenue advance instead of a
100+ small businesses
Chmyshuk compares the system to a merchant cash advance,
loan, you’re not so worried about
where retailers repay the advance
the shipment being delayed by
directly through their card
a couple of weeks, or your initial
payment terminals each time a
marketing effort not being so
Founded:
Loan book:
Around £2m
Busines s voice | june/july 2014
31
And he believes it’s more suited to
at. Maybe we’ll never achieve 80
will move. “In the next 24 months,
online businesses, such as those
per cent alternative, but we could
there will probably be a lot of
in ecommerce, which don’t have
definitely grow that share quite
changes,” he says.
many assets to secure traditional
substantially,” he says.
Fleximize has a consumer credit
loans. “They have good cash flows
“There is a perfect storm for this
and good prospects; they just need
business right now. There’s a lot of
Fair Trading, in order to fund sole
that little boost to get them to the
political will to increase financing to
traders. In April, OFT’s regulatory
next level.”
small businesses but, at the same
power was transferred to the new
time, banks are either unwilling or
Financial Conduct Authority (FCA),
Fleximize had handed over funds
unable for whatever reason to fill
alongside that of the Financial
worth almost £2m – from Chmyshuk’s
those gaps.”
Services Authority (FSA), and
In its first six months of operating,
licence, granted by the Office of
lifetime savings as well as from
Nevertheless, the environment is
outside investors – to more than
a challenging one for financial start-
100 businesses. The average loan
ups. It took Chmyshuk six months
“But in my banking life, I was
has settled at between £15,000 and
to set up the platform and get the
an approved FSA individual. I was
£20,000, with the largest at £75,000.
necessary licences. He credits the
always regulated. So, for me, it’s
government’s GrowthAccelerator
nothing new,” he adds. “I see it as
Growth ambitions
programme, run by Grant Thornton,
a positive because there is a void
Although he says this year is about
for its support and its access
in this industry and people can
“taking it one step at a time” to
to mentors and other growing
come from anywhere to fill it. I’d
firmly establish the company and
businesses. And, as well as joining
rather that the industry has some
build the portfolio to around £5m,
the CBI, Fleximize is looking to
regulation to make sure those with
Chmyshuk would like his company
collaborate with others in the
similar offerings are compliant,
to be a £100m business in four or
alternative finance sector, through
ethical and so on.”
five years’ time. He believes this
organisations such as Alternative
goal is achievable, with the rise in
Business Funding and FinTech UK.
acceptance of alternative finance. “The UK banks still control about
“There is a growing [alternative
Chmyshuk believes the new body is likely to tighten up the regime.
New competitors will enter the space, adds Chmyshuk. However, he is not only adamant
finance] community,” he says. “And
that Fleximize will comply with
80 per cent of the market. In the
the government is taking steps
“whatever comes our way”, but also
US, it’s reversed – ‘new age finance’
to help us – it’s just a question of
he doesn’t think that the challenges
alternative lenders take around 80
execution. It takes time and effort,
will get in the way of rapid – and
per cent of the market. Obviously
but we hope we’ll all get there.”
perhaps international – growth.
the US is a slightly different beast,
But Chmyshuk is also all too
but it’s a good benchmark to look
32
Busines s voice | august/september 2014
aware that the regulatory goalposts
The company already offers successful applicants the choice
member profile: Fleximize
of taking out a standard “flexiloan”
bank, he says. “Such personal
instead of the revenue advance,
experience in a typical bank is
and Chmyshuk is now looking at
reserved for large corporate clients,
adding other products, including
whereas SMEs are forced to speak
merchant finance and commercial
to the bank via a call centre.”
cash advances.
With the company facing many of
He is also proud of the “relationship
the same challenges as the SMEs
lending” model that Fleximize uses,
it serves, Chmyshuk is enthusiastic
which gives the applicant a single
about supporting their growth. “Our
point of contact throughout the
aim is to find – and fund – as many
process. This makes the company
businesses with growth ambition as
very different from a conventional
possible,” he says. n
Market stats
80% of SME loans
44% of SMEs – up
£840m is
14% the decrease in
are the responsibility of
from 26% six months ago –
expected to be lent by
lending to non-financial
the 10 largest banks – but
are using savings
peer-to-peer lending and
corporate borrowers from
Bank of England figures
or borrowing from
crowdfunding platforms
its pre-crisis peak. (source: Bank of England)
show that bank lending to
friends or family to fund
between them in 2014.
businesses as a whole has
their firms. (source: Bibby
(source: Nesta)
fallen every year
Financial Services)
since 2009.
Busines s voice | june/july 2014
33
Charting business growth & investment around the UK Remploy Employment Services is going private. The government is set to launch a commercial process to create a joint venture between a partner or investor and Remploy, which by March next year is expected to have helped more than 100,000 disabled and disadvantaged people into work since 2010. Esther McVey, minister for employment said: “Remploy has already been successful in helping disabled people into jobs, and the opportunity for new investment will help take it to the next level.” Beth Carruthers,
Pinewood Studios
Remploy chief executive, added:
has been granted planning permission for a scheme that will double the
“The announcement provides us
existing site, adding 100,000 sq m of new facilities, including studios and
with an opportunity to expand and
stages, workshops and production offices. The £200m long-term scheme has
support many more disabled people.
been designed to address increasing global demand for production facilities
Moving out of the public sector
in the UK and deliver growth for the next 15 years. It is expected to create
will give us the freedom to raise
3,100 jobs, produce an additional £149m in gross value added, provide an
funding to operate in a much more
additional £36m a year to the Exchequer and generate an extra £37m in UK
competitive way.”
exports. Ivan Dunleavy, chief executive of Pinewood Shepperton, said: “Our project builds on the success of the government’s policy for the creative industries and addresses the shortage of stage space in the UK.”
34
Busines s voice | august/september 2014
cbi members: News in brief
Tyrrells Crisps and Brompton Bikes are just two of Britain’s fastest-growing private companies that made it onto the annual Sunday Times HSBC International Track 200 in July. This year, the 200 companies increased their overseas sales by an average of 36 per cent a year over the past two years, to a total of £8.5bn. Together, they employ more than 191,000 staff, having added more than 34,000 jobs during this time. There are 82 manufacturers on the list, 70 of which make products in the UK. A separate list, the Global Growth 50, by North West Business Insider magazine, included environmental consultancy RSK, which has posted an average of more than 18 per cent growth over the past three years. The company has also just opened an office near Southampton, from which its geosciences team can better service its increasing workload along the south coast in Dorset, Hampshire and Sussex.
Ammeraal Beltech
NG Bailey
has opened a manufacturing
has ranked alongside Jaguar Land Rover, Boots and Fujitsu as one of
facility in China. The plant will
the top employers in the country for its apprenticeship programme in
increase the belting manufacturer’s
AllAboutSchoolLeavers’ Top Employers for School & College Leavers
production capabilities and help
Awards for 2014-15. The awards are based on a survey in which apprentices
it to better serve markets in
rate their experience based on 12 criteria, including work-life balance,
Asia Pacific and the Americas.
opportunities for progression and training. Frank Clayton, group head of
The 20,000m facility is located
learning and development at the engineering, IT and facilities services
in the new Fenhu economic and
business, said: “This is a testament to our long-standing and high-quality
technical development zone, with
training, and to the support that the business offers to our apprentices.”
2
fast connections to Shanghai, Suzhou and Hangzhou. Provisions have been made to enable future
E2v technologies
enhancements so the factory
is set to acquire AnaFocus, a Spanish designer and developer of imaging
can support and drive growth
sensors and vision-systems for the industrial, professional, scientific,
for the Hertford-based firm.
medical and high-end surveillance markets, for up to €34.2m. The firm will
Ammeraal Beltech’s products are
be integrated with the e2v’s high-performance imaging division, which grew
used in industries including food
by 26 per cent last year. e2v technologies’ group chief executive, Steve Blair,
processing, automotive, textiles,
said: “AnaFocus strengthens our position in the market, bringing to e2v a
paper and print, airports, logistics,
successful management team with deep technology capabilities and close
wood and tobacco.
relationships with customers that complement e2v’s relationships.”
Let us know your news at edit@businessvoice.co.uk
Busines s voice | august/september 2014
35
Train for the top The “School for CEOs� programme was launched in 2012 to fill a perceived gap in the executive training market and prepare those destined for the role of chief executive. After running four training cycles and conducting research among established FTSE 100 leaders, founder David Sole tells us what it takes to be an effective boss.
36
Busines s voice | august/september 2014
Member clinic: How to be a CEO
“”
It’s one thing to manage shareholders; but these stakeholders all want a piece of you – they will form an opinion of you and will broadcast that opinion
Q. Some individuals are born leaders, but most are made. So what makes a good candidate for a chief executive?
A. Often, people think the most likely candidate to step into the CEO’s shoes is the chief financial officer. They have distinct advantages – in a listed business, they already have a relationship with the City. But they still need to have had experience of running a profit-and-loss centre, and our research shows there is no single route to the top. The CEOs we talked to were from diverse backgrounds. Some had MBAs, some didn’t. It’s about experience, intellect and, above all, leadership capability.
but these stakeholders all want a piece of you – they will form an opinion of you and will broadcast that opinion. You have to go out and manage them actively.
Q. Trust in business is obviously a massive issue at the moment. The CEO has, arguably, the most important role in terms of guiding the company culture and external relationships. How can a CEO prepare for that?
A. The CEO needs to have a clear sense of purpose.
Why are they there? Who are they there to serve? What is it that they’re trying to achieve? Ultimately, the shareholders will benefit if they get that right. The CEO’s
Q. What about personality traits? A. To become a CEO, you’ve really got to want the job.
sense of purpose needs to match that of the organisation,
Some of the people we’ve had on programmes – either thinking about making the move up or having been
Q. What do you think a new CEO should expect of
identified as potential CEO successors – have had a
their first six months in the role?
reality check and realised that the exposure they’d get is not for them.
Q. Another major source of applicants for CEOs is
and it needs to be communicated throughout the company. A lack of such clarity can have a destabilising effect, leaving a rocky road for the CEO to navigate.
A. The moment you park your car, people are going to
be making a judgement on you. They’ll pick up on where you park, the sort of car that you’re driving, what you’re
divisional directors. Why would the step be very
wearing. They will also expect some sort of change from
different for them?
a new leader.
that you have with the City is something you don’t have
too much time and you’re seen as being indecisive;
as a divisional CEO. My business partner, Patrick
jump to conclusions too early and you’re seen as being
Macdonald, came out of running a division at GE to
too impulsive. And how consensual is your decision-
become CEO of John Menzies. And he said that nothing
making? If you’re too collaborative, you can be seen as
– none of his experience at GE, or the knowledge he
prevaricating; if you’re too decisive, you can be seen as
gained with his MBA from [business school] INSEAD
being autocratic. CEOs have to exercise their judgement
– could have prepared him for that particular job.
and it’s fraught with many potential bear pits along
A. In a listed business, the kind of external interaction
The external landscape has also changed massively, in terms of interactions with government and regulators and the media. It’s one thing to manage shareholders;
So the question is: how quickly do you make it? Take
the way. They can also become consumed by the organisation and forget that actually, they are a mother, a father,
Busines s voice | august/september 2014
37
a husband or a wife. Getting that balance, and retaining a sense of perspective, is important. And if the CEO is going to go home and bath his children and read them a
Q. What do you think companies can be doing to better develop their future leadership?
bedtime story, it sends a positive message to the rest of
A. Many organisations invest a lot in leadership
the organisation as well.
development programmes – for those lower down in the
Q. How important is it to have a mentor, to whom you can talk about some of the decisions you’re making?
A. Lots of people we talked to have had coaching or
mentoring. Everybody also recognised the importance
organisation. When they get to a senior level – those sitting on the board, or just below it – there isn’t as much focus on their development. The organisation assumes that they’ve made it and learnt as much as they’re going to learn. But this isn’t the case. At this stage, the individual needs to drive their
of building a strong relationship with their chairman –
development, if they have that appetite to continually
they should be the first port of call in a crisis, or when
stretch themselves.
people are unsure about certain things. But equally, you have to appreciate that the chairman of the board can fire you, too. Building a strong relationship with the CFO is as important as building that sort of relationship with the chairman.
Q. Is there value in a CEO taking up a non-executive director position elsewhere?
A. Dealing with the board can be
frustrating for CEOs. Non-executive directors get a snapshot of the organisation roughly once every six weeks or so, and on these occasions they try to ask sensible, challenging or supportive questions. Meanwhile, the executives are living and breathing it day in and day out. They think they have everything under control, so they don’t understand why the NEDs are asking those questions. When CEOs go over to the other side of the fence as a NED, it makes them view their own boards through a completely different lens, because they appreciate how different – and, in some respects, how difficult – it is, to ask the sensible questions, when clearly you don’t know the detail. There is a huge amount to learn from being able to sit on both sides of the table, and around 75 per cent of the people that we interviewed had experience of being a NED.
38
Busines s voice | august/september 2014
Q. How do those who want to become CEO in the
future improve their chance of getting there?
A. It’s all about how you manage your career. A lot of senior people rely on the organisation operating on the basis of a meritocracy, promoting them if they do a good job. That works, up to a point. But there comes a time when you have to be more systematic about how you approach your career and the sort of jobs you want to do. You have to think about putting yourself in a different and challenging environment, so you can demonstrate you’ve got great learning agility, and can get up the performance curve quickly. International experience has become important –
particularly in environments, that are either linguistically or culturally challenging. If you’ve learnt how business works in somewhere you’re unfamiliar with, and you can be successful in those environments, it’s a good indicator that you’re capable of taking on the top job. And sometimes you have to accept that it’s OK to take a sideways step before taking the next step upwards – and that it’s always good to think about what job might follow your immediate move. n
www.schoolforceos.com
AnnuAl conference Grosvenor house, london 10 november 2014
Only business can drive the economic recovery, creating the growth, jobs and opportunities that will help deliver higher living standards for all. And we need politicians of all parties to help create the framework and set a tone which enables businesses to innovate and create the prosperity we all want to see. Join the debate with business peers and political leaders and ensure your business is on the inside track.
For booking information visit: cbi.org.uk/ac14
Upcoming events
Growth for all
Back to school
The UK’s economy has become more stable and recovery is advancing but with the general election less than a year away, political uncertainty must not jeopardise this process. This year’s CBI Annual Conference, to be held on Monday 10 November, will highlight how politicians of all parties need to ensure their policies enable businesses to innovate and create the shared prosperity that we all want to see. Leading business and political speakers will debate the UK’s most pressing challenges and share their ideas for future success, ensuring your business has the inside track.
The CBI’s conference on leadership in education will be held on Tuesday 9 September in London. Chaired by Greg Hurst, education editor at The Times, the morning event will look at what business and schools can learn from one another; discuss further reforms to the inspection and accountability frameworks that will foster great schools; and highlight innovative examples from major businesses on how engagement can support current and future leaders.
Sharing experiences About 15 per cent of the workforce in Northern Ireland is employed by medium-sized businesses (MSBs), which generate 30 per cent of private sector revenue. On 9-10 October, CBI Northern Ireland is hosting a 24-hour MSB Conference in partnership with the Bank of Ireland. Local chief executives and “rising stars” within the civil service will share their experiences, lessons and perspectives in a range of interactive sessions, focusing on the future economy, leadership and talent development, and growth strategies.
Manufacturing our future
Action on cyber security
Guest speakers from JCB, Toyota, Mondelez, Jaguar
Cyber security is an increasingly high-profile issue
Land Rover, Coventry University and AgustaWestland
and now, more than ever, a breach to your business not
will be taking to the stage at a manufacturing conference
only poses a major financial, intellectual property, and
held at JCB headquarters in Staffordshire. The event, to
data privacy risk but also affects your brand reputation
be held on 9 October and sponsored by BDO, will focus
and customer trust. While awareness is increasing,
on solutions for success. Topics include the importance
there is a continued disconnect between awareness and
of strengthening the UK supply chains; driving
action. CBI London is hosting a panel discussion and
innovation in manufacturing; and the skills shortage.
interactive question-and-answer session on this topic at its autumn lunch.
For more information, go to www.cbi.org.uk/events
40
Busines s voice | august/september 2014
cbi diary: August/September 2014 regional events
Yorkshire & Humber Annual dinner with television producer John Lloyd Date: Wednesday 8 October Venue: University of Leeds Contact: angela.gault@cbi.org.uk
scotland Westminster Parliamentary Reception Date: Tuesday 28 October Venue: Scotland Office, Whitehall, London Contact: colette.cunningham@cbi.org.uk
East of England Annual dinner with CBI president Sir Mike Rake Date: Wednesday 1 October Venue: Duxford AirSpace, Cambridge Contact: anne.cullom@cbi.org.uk
northern Ireland Global Role breakfast briefing with Northern Ireland’s new MEPs Date: Friday 5 September Venue: Belfast Met, Titanic Quarter Campus Senior executives networking dinner Date: Monday 15 September Venue: Ulster Bank headquarters, Belfast Annual lunch Date: Thursday 25 September Venue: Titanic Belfast 24hr MSB Conference in partnership with Bank of Ireland Date: Thursday 9 & Friday 10 October Venue: Slieve Donard Spa & Hotel, Newcastle, Co. Down Contact: anthea.savage@cbi.org.uk
north east
East Midlands Annual dinner Date: Thursday 16 October Venue: Athena, Leicester Contact: anne.cullom@cbi.org.uk
West Midlands What the new European Parliament means for business Date: Friday 5 September Venue: Warwickshire College, Leamington Spa Contact: julia.fox@cbi.org.uk Manufacturing our future – solutions for success Date: Thursday 9 October Venue: JCB, Rocester, Staffs Contact: anne.cullom@cbi.org.uk
thames valley
Annual dinner with Andy Palmer, Nissan Motor Corporation Date: Wednesday 1 October Venue: Hilton, Newcastle
Annual dinner with Vivian Hunt, McKinsey and Company, and MP for Beaconsfield Dominic Grieve Date: Thursday 2 October Venue: Hilton Hotel, Reading
Contact: angela.gault@cbi.org.uk
Contact: rebecca.clark@cbi.org.uk
Busines s voice | august/september 2014
41
CBI london autumn lunCh 7 October 2014
Central London
Join over 150 senior business professionals from the London region for an exclusive networking lunch. Make new contacts, entertain your clients and hear a topical panel discussion on cyber security – a key issue for London businesses.
More information or to book your place: www.cbi.org.uk/london-autumn-lunch
Strategic partner
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Editorial and production 020 7045 7585 edit@businessvoice.co.uk
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Contact the CBI 020 7379 7400 www.cbi.org.uk
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