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Recognising the Real Problem?

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Regeneration aims to bring opportunity to areas that are in decline, and to empower people to take advantage of those opportunities. The decline of an area is often caused in the first instance by structural economic change and a reduction in employment. Parts of the UK have experienced substantial deindustrialisation and loss of jobs since the 1970s, particularly during deep recessions in the early 1980s and early 1990s. In some areas there has been a rapid turnaround in employment; in others a cycle of decline has been set off.

Unlocking the Talent of Communities – DCLG 2008

This is a fairly standard analysis of the reasons for decline.

When industries pulled out things went wrong.

I believe things went wrong when the big employers moved in.

Policy and practice focused on providing a largely compliant workforce that was fit for purpose.  Employer engagement ruled.  All parties were more or less happy with the deal.  At the time, and for many years after, it (arguably) worked reasonably well.

A bureaucratic mindset prevailed – characterised by patriarchal contracts between workers and employers which rewarded compliance.  Industrialists and managers came up with the plans.  Unions negotiated for pay and conditions and the majority just had to pick sides and choose leaders – on whom they felt they could depend.

A deep mindset of dependence set in. Dependence on employers, dependence on unions.  DEPENDENCE.  Generations learned how to successfully play the dependence game.  Many still play it.

Entrepreneurial qualities were lost.  Autonomy was devalued.

The genesis of the problem was not when the industries left, it was when they arrived.

For nearly 30 years now I think policy has largely neglected this deep change of identity, personality and self image that swept through many of these communities.

If we are serious about unlocking talent, then as well as providing skills training, CV clinics, classes in self employment, business planning and entrepreneurship we have also to tackle these issues of identity, personality and self image.  And this is best done through conversation – not classes.

Challenging, caring, compassionate but powerful conversations.  Conversations that accept, catalyse and confront.  Conversations that are characterised by high trust and strong relationships.  Conversations that are genuinely focused on helping to unlock potential and to enable potential to develop.  Conversations that start from where people are at – and follow them where they need to go.  Not the usual conversations that steer people towards opportunities predefined by the planners.

Instead we breeze into these communities and ask naive questions;

  • Have you got a great business idea?
  • Ever thought of starting a social enterprise?

Alinsky’s Rules for Radicals

Rule 2: Never go outside the experience of your people. The result is confusion, fear, and retreat.

Rule 3: Whenever possible, go outside the experience of an opponent. Here you want to cause confusion, fear, and retreat.

Wisdom from Thoreau

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Is it true that I must limit myself?

Is it true that I have a definite “ceiling of potential”?

Are some people’s ceilings built higher than others’?

There are indeed, mental ceilings built above people, limiting them; limiting their potential, limiting their resources, and eventually generating their finalities.

These structures are not physical formations. It would take a man many days to build such a powerful, sturdy structure in physicality.

Ceilings of potential, on the other hand, are created in one’s mind simply by personal decisions. When we choose to harbour limiting beliefs we build our own personal ceilings. Therefore, we are only limited by ourselves.

Chris Grayling ‘Army of Entrepreneurs’ Proposal

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Every business start-up has a cost, and if you’re on the dole you can’t easily afford to buy basic equipment. At the moment the only start-up cash available from the “new deal” for unemployed people trying to start a business is £400. We don’t think that’s nearly enough, so we’ll give the business start-up specialists the ability to fund costs of up to £2,500, and then reclaim the money from the benefits saved once the business is up and running.

Chris Grayling – How to Lift the EconomyWith an Army of Entrepreneurs

On the face of it this looks like a great idea.  The logic is both simple and compelling.  Startups cost money.  People don’t have it.  Let’s give them it, funded out of future benefits savings.

Several reasons why I think this might not work in practice:

  1. It will attract a lot of people to the £2500 who are not sufficiently committed to enterprise and self employment – enterprise professionals will spend hours of their time wading through the sharks to find the genuine latent entrepreneurs.
  2. It will encourage some people into enterprise for whom it is almost certainly not the best option – business failure rates are likely to increase with this type of soft start-up provision – damaging the enterprise culture in the medium term.  Only if we use robust investment criteria will this be avoided.  This means turning a proportion of applicants down – leading to bad word of mouth.
  3. If business ideas are viable they will find investment – the problem is still not lack of cash – it is lack of investment ready business plans.  Let’s spend our money here on providing inspirational coaching and good technical advice (NB there is already plenty of technical advice out there – labeit patchy in quality)
  4. Sources of funding and sources of advice need to be kept separate.  It is too easy to tell the funder what they need to to hear if they are to release the money.   You MUST be able to speak the unvarnished truth with your advisers.

There maybe ways to overcome most of this stuff.

However IF the only reason a business gets started is because of a £2500 gift from the government – offset against future benfits savings – then I for one would worry.  Unless there is real commitment, passion, talent and skill to invest in I can see lot of cash going down the tubes.

Your thoughts?

Dragons’ Den is a Bare Faced Lie About How Business is Done

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You can usually trust a good comedian to get down the truth of the matter, and David Mitchell has done just this with the Dragons’ Den format.

“Dragons’ Den is a bare-faced lie about how business is done,” he says. “The people who do that job are not rude because there’s no percentage for anyone in them being so.

“They don’t sanctimoniously tick people off nor do they spend 10 minutes thinking up a weak pun which combines their wish not to invest with the field of the invention in question – ‘A new type of cheese, I’d have to be crackers to invest’ as if they’re auditioning for the Beano.

“Dragons den not only misrepresents rudeness for straightforwardness, but also implies that this is how successful business people behave.”

Rudeness aside Dragons’ Den is responsible for other misconceptions that damage the perception of enterprise and entrepreneurship:

  1. Getting investment is a competition. The best entry wins whether it is good bad or indifferent. (Specifically this is what the enterprise professionals ‘teach’ when they try to piggy back on Dragon’s Den to get their engagement numbers up.  The dragons themselves would invest in any and every opportunity that meets their investment criteria.)
  2. Any business that does not meet the criterion for investment from a venture capitalist is not a good business. “It might make a decent business for you and your family – but there is not enough in it to interest me – I’m out“.  This echoes and reinforces the disdain that much of the public sector has for ‘lifestyle’ businesses.  They seem to forget that most entrepreneurs learn the ropes in life style businesses before some of them get bigger aspirations.  As I believe Peter Drucker said – ‘You can’t have the mountain top without the mountain.’
  3. You have to conform to venture capitalist norms and conventions if you are to succeed – everything from the way you dress, your hairstyle through to your knowledge of the numbers (you had better pretend WITH CONVICTION that your crystal ball is good for revenue forecasts at leas three years ahead.
  4. Investment readiness should be evaluated on a single pitch – there is a simple binary response – yes or no.  In fact most investments come as a result of a relationship between an investor and client.

So come on.  Let’s drop the Dragon’s Den emulations.  No more ‘Strictly Enterprise.’

Instead let’s get down to the hard work of having some informed conversations about enterprise and what it can do for our communities.

Economist’s Special Report on Global Entrepreneurship

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The Economist’s special report on entrepreneurship is well worth a read.  Some highlights:

  • entrepreneurialism needs to be rethought: in almost all instances it involves not creative destruction but creative creation
  • the report uses (entrepreneur)  to mean somebody who offers an innovative solution to a (frequently unrecognised) problem
  • its not all youthful techies – Harland Sanders started franchising Kentucky Fried Chicken when he was 65. Gary Burrell was 52 when he left Allied Signal to start Garmin
  • average entrepreneur was 39 when he or she started (their business) The number of founders over 50 was twice as large as that under 25.
  • why have so many once-celebrated entrepreneurs turned out to be crooks?
  • the entrepreneurial idea has gone mainstream, supported by political leaders on the left as well as on the right
  • the history of … start-ups reads like a roll-call of business partnerships: Steve Jobs and Steve Wozniak (Apple), Bill Gates and Paul Allen (Microsoft), Sergey Brin and Larry Page (Google), Mark Zuckerberg, Dustin Moskovitz and Chris Hughes (Facebook). Ben and Jerry’s was formed when two childhood friends, Ben Cohen and Jerry Greenfield, got together to start an ice-cream business (they wanted to go into the bagel business but could not raise the cash). Richard Branson (Virgin) relied heavily on his cousin, Simon Draper, as well as other partners.  [WHY DON’T WE TEACH THE IMPORTANCE OF BUILDING DIVERSE TEAMS?]

Read the full report here.