More enterprising communities are stronger, wealthier, happier and sustainable.
The advantages are obvious.
So how come, when we’ve explained the benefits of enterprise so carefully, and offered all the help and support any budding entrepreneur could possibly need, we’re still not mowed down in the rush as enthused and energised communities respond to the call?
DCLG has sparked a renewed interest in enterprise in deprived communities with its investment in Local Enterprise Growth Initiative. The focus on enterprise is in danger of being overwhelmed by the much larger and wider investments going into the worklessness agenda (with more of a focus on routes into employment rather than creating your own work). It must be quite strange from the residents point of view. One week someone from the ‘Government’ is urging them to get ‘a great business idea’ or ‘start a social enterprise’ and the next week someone else is telling them to ‘brush up their CV’, ‘join a job club’ and ‘seek work’. I suppose we should not be surprised that these appear to be competing initiatives at the neighbourhood level – fighting to engage the same people in their respective ‘customer journeys’. But I would like to think that more could be done to help individual residents to see these as two possible options on their journey.
I think it is interesting to meet the range of service providers involved in the local enterprise work. Some come from a very ‘public service/third sector’ orientation while others have a much more ‘follow the money’ mentality looking to deliver the outputs (often very poorly specified) at lowest cost. This latter group usually have more experience of the way that public money is spent and understand that at some point they will be held to account for what they done. From day one they count and record what they think will interest the funders. The worrying thing for me is that both sides of this divide need a little bit of what the other side has to offer. Both risk failure for different reasons.
It is also clear to me the LEGI investments are not an end in themselves but rather provide an opportunity to play a part in a much monger term, potentially lucrative and worthwhile game. The cities and regions that can show that they can take public sector funding and provide a return on that investment in terms of reduced benefit budgets, improved health and psychological well being, reductions in crime and grime, increased tax takes and NI contributions and a whole range of other social and economic benefits will surely position themselves well for future investment.
Those that deliver a range of occasionally interesting, but ultimately unproven projects, are unlikely to see further funding once the LEGI money runs out. My worry is that some do not seem to be aware of the possibility of this larger game and are happy to settle for the effective project management of what they already have resigned to the fact that it will all be wound up in a few short years when the money has all been spent.
So the challenge is to create significant value from the current investments and to demonstrate that value in hard cash terms to funders.
Tom Peters encourages managers to obsess on R.O.I.R – the Return on Investment in Relationships.
ROIR through 121s comes in many forms:
- increased staff retention
- improved productivity
- recognition and acknowledgement of progress
- appreciation of those who are performing well
- identification of under performance and early resolution
- promotion of behaviours that reinforce strategic goals and values
- increased tempo of coaching to develop potential and performance
- deeper professional relationships
- increased trust
- increased influence
- increased responsiveness
- better support of team members in their work
- conduit for ideas from the front line to be heard and acted upon
- management support for every member of the team – every week
- improved communication and focus on what matters
- progress made and recognised on a weekly basis
- increased sense of urgency in the team
- encourage individuals to think through their contribution to team or organisational objectives
- increased initiative and enterprise
- planning remains flexible and dynamic
- documentation makes performance reviews simpler and less contentious
- barriers to high performance are removed
- factors contributing to poor performance are identified and resolved
- formal opportunities for delegation
- feedback – both given and received
- increased employee engagement
- improved knowledge management and knowledge sharing
- better talent management and development
- increased creativity
- more responsibility taken voluntarily by more people
- reduced absenteeism
- more diversity as 121s recognise that ‘one size fits one’
Most people are looking (consciously or not) for a number of things from their work. These include:
- self determination – the freedom to decide what they should do, when they should do it
- control over their own future
- to be able to plan, act and succeed
- to improve things – to make them better
- to expect success
- to enjoy responsibility – to enjoy it – to seek it
- to be active rather than passive – to have an orientation towards action – rather than reaction – to the instructions and orders of others
- to be a person rather than a human resource – a cog in a machine
- to be creative and autonomous
- to be acknowledged, recognised and valued by others.
In this situation managers can use 121s to establish dynamic relationships with team members that helps them to look for and find these things in the workplace. People develop, talent flourishes, relationships improve and performance excels. This group of people usually respond very well to the introduction of 121s as they offer a vehicle for accelerating progress.
However some people are not looking for any of this. They do not want freedom, or responsibility. They want instructions, structure and clarity. They want other people to do the thinking and the creativity. They want to be the foot soldiers – doing an honest days work for an honest days pay. They do not see work as a vehicle either for their own self development or creative expression. They are not looking for self-actualisation but security and control. This group can be very resistant to 121s, seeing them as an intrusion. They are likely to resist development in their roles and accept delegation and change grudgingly, if at all.
There are several things to consider here:
- the first type of response is ‘healthy’ – both for the organisation and the individual. In these circumstances it is likely that the organisation – and the people in it will thrive. The relationship between the individual and the organisation will be synergistic – what is good for the individual is likely to be good for the organisation and vice versa.
- the second type of response is not ‘healthy’. It is a defensive mechanism. It leads to staleness, frustration and at best mediocrity. It is characterised by a loss of synergy – the perception being that what is good for the organisation will not be good for the individual and vice versa.
- the type of response that we find in the workplace depends, in large part, on our management style. Some of it may be driven by personality or by experiences from the past or from outside the work context – but in most cases the response we get tells us much about our own management.
Go to the people
Live with them
Learn from them
Start with what they know
Build with what they have
But with the best leaders
When the work is done
The task accomplished
The people will say
“We have done this ourselves.”
Lao Tsu (700 BC)
“It is not the brains that matter most, but that which guides them – the character, the heart, generous qualities, progressive ideas.”
This is a great quote that reminds us that management, especially progressive management, is not so much about techniques and tools but about our basic stance in relation to those we manage.
Certainly in sports management the role of the manager is to help each individual to perform to the maximum of their potential. In business I think it is a minority of managers who see this as their job. Instead they see it as about keeping people working in boxes on organisation charts – sometimes supressing their development order to retain them.
In my first post in Understanding your Organisation I presented a really simple image that helps to understand the relationship between strategy (concerned with future well-being), operations (concerned with the delivery of service/product to current customers) and management as the function that integrates strategy and operations. Scarily simple – but I have found it to be a powerful framework for understanding organisations of all sorts – and for quickly spotting the root cause of under-performance.
I have found several different types of problem using this simple model. Firstly we have what I call the ‘Destruction of Management’. This is caused by the different priorities and drives of operations and strategy. The Ops folks are focused on systems and processes that are designed to service current customers efficiently and effectively. They are fiercely ‘customer facing’ and push management for time and other resources to improve current operations to meet customer needs. All well and good. Just as it should be. Their perspective can be described as predominantly looking ‘inward’ (how do we improve what we have got) and down – towards the front-line.
Now the strategy folks have a different set of interests. They are interested in the art of possibility.
- Who could we be serving?
- What could we be making?
Their eyes are set on the technology and markets of the future. They are fiercely ‘future’ and ‘change’ oriented. Their perspective can be described as outward (what is happening ‘out there’ – technology, market demographics, prices etc) and forward looking (how do we get what we need in terms of knowledge, technology and processes to compete in the future?). They pressure management to dedicate resources to bringing this new future a step closer.
So management is caught between operations pulling ‘inward and down’ and strategy pulling ‘forward and out’.
Most management finds it difficult to resolve these tensions between strategy and operations.
In some organisations the strategy folks win (they usually have more positional power in the organisation) and the ops teams become jaded and cynical as they are asked to engage with strategic initiative after strategic initiative – continually engaging in change that rarely seems to make things better in the ‘here and now’ – and often pulls them away from doing good work at the front-line. They start to seriously doubt whether anyone in the boardroom really knows what the business is about.
In other organisations the strategy side is very weak and the organisation becomes myopically focused on the ‘here and now’.
In other organisations (and in my experience this is the most common situation) both strategy and operations are relatively powerful forces in the organisation and management is just not strong enough to hold the forces together. Neither great operational improvements nor insightful strategy gets executed as ‘weak’ management uses the opposing forces to negotiate a mediocre status quo.
- How do these strains play out in your organisation?
- What steps can you take to ensure that progress is made both operationally and strategically?
It is true that we don’t see with our eyes as much as with our brain. Sure the eyes capture the photons – but it is in the brain that we actually do the seeing – largely based on what we are looking for.
If you need proof, try this. NB you will need to hear the soundtrack!
Our ‘findings really do follow our seekings’, and our brain only lets us see what makes sense in the context.
This is especially important when we start to form opinions about people or projects. If we believe that they are good – then all we will see is the good stuff (as our subconscious filters aout what does not fit in with our pre-conceived ideas). If on the other hand we think that people are bad or lazy then all we wil tend to see is the behaviour that serves to confirm our beliefs.
Learning to observe and feedback on a range of work behaviours in a non judgemental, non-evaluative way is a key skill for the effective manager. BTW there is some evidence that women in general tend to be more open to ‘peripheral’ stuff, to pick up on the background and make more sense of it than men. I wonder if there are gender differences in spotting the dancing bear!
The Ewing Marion Kauffman Foundation in the US is one of the world’s top organisations for research and development into the SME sector. Although care has to be taken in translating their work (largely research based in the US) to the UK, I always find their publications to be worth a read.
They have just published a report following a longitudinal study of some 5000 small firms that were founded in 2004, tracking their development through the early years. I think that the report should provide useful insights for policy makers here in the UK and national and local levels as well as for anyone in the game of small business development supporting entrepreneurs.
Here are some soundbites from the report – and the questions that they provoke for me:
- Nearly 60 percent of the businesses had no employees in their first year. Just under three-quarters of businesses had one employee or less, while about one-quarter of businesses had two or more employees. Very few businesses (less than 4 percent) had more than 10 employees.
- How do the stats on our start-up work compare with this? Is number of employees in year 1 linked in to entrepreneurial success? Does a ‘slow’ start lead to a ‘slow’ future?
- More than a third of businesses (37 percent) had no revenue in their first year of operation. About 45 percent of businesses experienced a profit during their first year, while about 55 percent of businesses that experienced a loss. About 17 percent of businesses had profits in excess of $100,000.
- How realistic are our entrepreneurs forecasts on profit and turnover?
- How good a job do we do in helping them to develop realistic forecasts?
- What can we do to help entrepreneurs recognise that profit may only accrue after a long period of working at the business?
- Nearly 44 percent of new businesses had no debt financing during their first year of operation. Many businesses were started with very little debt financing: 17 percent of businesses started with $5,000 or less; nearly 11 percent started with $100,000 or more.
- What percentage of businesses that we support are adequately financed at the outset? How can we help entrepreneurs to consider their financial structures and approach re-structuring as an opportunity if necessary?
- About 80 percent of businesses had some positive equity investment in their business in the first year. Nearly 10 percent invested $100,000 of equity into their business, while another 33 percent invested between $10,001 and $100,000. About one-quarter of businesses invested some amount less than $5,000.
- How does equity finance work in poorer communities?
- What alternatives to equity finance exist?
- The vast majority of equity invested came from the business owners themselves. Just 10 percent of the businesses used external equity sources in their first year. Parents were the most common source of external equity (3.4 percent), while spouses provided equity to 1.6 percent of businesses. Non-family informal investors and venture capitalists were used very infrequently (2.7 percent and 0.6 percent, respectively).
- Nearly 70 percent of businesses in the Kauffman data were owned by men and just over 30 percent were owned by women. Whites owned more than 81 percent of the businesses, while blacks owned 9 percent, Asians owned 4 percent, and the remaining 5 percent were owned by individuals of other racial groups. About 6.6 percent of the businesses were owned by Hispanics.
- How effective are we at engaging the full spectrum of race, gender, sexuality and faith in feeding their enterprising soul?
- Just under 9 percent of firms closed in calendar year 2005, and the survival rates vary by owner demographics. For example, 88 percent of black-owned businesses survived, compared with 92 percent of white-owned businesses and 91 percent of Asian-owned businesses. Women-owned businesses had a survival rate of 89 percent, about three percentage points lower than businesses owned by men.
- What are we doing to track survival rates and understand patterns in them that may point to problems in the quality or accessibility of our services?
- Starting a business is (relatively) easy. Starting a successful business that provides a vehicle for personal and professional development and allows us to develop as happy human beings is a whole different ball game. How are we tracking the ‘happiness’ of the entrepreneurs we work with?
- Are business survival, jobs created and profitability the only important metrics? or should we looking at other aspects of the entrepreneurs satisfaction and well-being?
- If we succeed in increasing business birth rates, should we also accept an inevitable increase in business failure rates?
- Do we understand the full cost of business failure – economic, emotional, mental etc?
Each year the Kauffman Foundation produces an excellent ‘Thoughtbook’ that summarises it research findings and showcases some of the excellent work that the Foundation funds to support a wide range of entrepreneurs. You can request a copy here.
Which websites and organisations do you use to access information and support?
So David Cameron wants to double the number of Health Visitors. Those tackling the worklessness agenda want to use caseworkers to get people off of benefits and back into work. On the Enterprise agenda we have community motivators, enterprise champions, enablers and streetwalkers – all working in communities to encourage individuals to consider self-employment and starting a business.
- Service providers on the supply side compete with each other to attract individuals onto their programmes so that they can count them in their outputs. Some can threaten to remove benefits unless individuals from target groups take up their services. Others spend lots of cash on marketing and sales, saturating the marketplace with messages about how their services will transform individuals and communities;
- There is little or no demand for their services in the target communities. There is no demand side. People are cynical, feeling manipulated, threatened, belittled and demonised. Their communities are saturated with outreach workers from the supply side looking to sign them up to their programmes. They are subject to advertising campaigns, leaflet drops, door knocking and telesales.
Perhaps what is required is a much more client centred (rather than policy led) engagement on the (distinct lack of) demand side – helping individuals to decide for themselves what might constitute progress for them (rather than for the policy makers) – and then helping them to access service providers that can help. Community workers who are not looking to sell policy objectives but just to respond effectively and with commitment to individuals who want to try to make things better for themselves and their families. Workers who are trained to leave people alone unless they ask to be helped. Outreach workers with nothing to sell – just the skills to help and extensive networks into the expertise and infrastructure that has already been developed on the supply side.
This would be a very different model of engagement and one that might just work.
The case workers might just start to help people move forward on agendas that matter to them. To become more enterprising in improving their own circumstances and ability. To start again exploring and developing their own potential
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Last week I attended my first ever Performance Hub event at the National Council for Voluntary Organisations in London. The event was jointly run by NCVO and the New Economics Foundation and played to a full house.
In essence the message was:
- the third sector doesn’t understand ‘added value’
- ‘added value’ is therefore a concept that is passed it ‘sell by’ date
- luckily we have developed a concept that can take its place – called ‘full value’
- even more luckily we have managed to reduce this to a 2×2 matrix that can be explained easily.
Now the origins of ‘added value’ are pretty old and extremely well respected. Like any models or concepts they have their uses and their limitations – but this concept has done much to drive economic development, competitiveness and strategy over the last 3 decades. Michael Porter, Harvard Professor and father of the ‘value chain’ has just celebrated 30 years of world leading consulting developing the competitiveness agenda using the concepts of value added, the value chain and the 5 forces model.
No doubt he will be devastated at the judgements passed down on his work by the NCVO.
While I admire the nerve of the Third Sector to challenge the business orthodoxy I can’t help but think that sometimes it shoots itself in the foot. Surely if the idea is still good enough for the Institute for Strategy and Leadership at Harvard Business School we should not be too quick to dismiss it out of hand and replace it with a dinky 2×2 matrix?
Perhaps we just need to work a little harder to help our client group understand the concept and reflect on how it maybe used to add value to our work in making our communities better places to live and work.
My bet is that Michael Porters ideas might just outlive the neat little 2×2 that NCVO suggest should be used to replace it. I will certainly be a little more circumspect before I hop on a train to London to receive the wisdom of NCVO.
Not that the day was bad!
I met some wonderful people. We were all reminded of the importance of the unforeseen benefits of our work as well as the hard outcomes that we were paid to achieve.