Is Britain Becoming a Nation of Bureaucrats?

One of the biggest growth areas in the last 15 years has been the rise in the number of jobs in the Public Sector. In fact, the Office of the Deputy Prime Minister never existed before the last Government and now it is one of the largest departments in the firmament of 'Big Bureaucracy'.

It was fashionable to spend more money in those booms days on frivolous red tape and many argued that there was a salary gap between private and public sector that had to be closed. It didn't just close - the kinds of salaries earned in the Public Sector, and then add in fine pension schemes, are fast getting ahead of the Private Sector.

In fact, this morning's story that in Wales the Public Sector wages are now around 18% higher than in the Private Sector is shocking news. It means that the Private Sector is finding it hard to compete in terms of salaries which means that Wales is staring down the barrel of becoming a haven for bureaucrats while innovation, entrepreneurship and business creativity will be stifled because people cannot afford to take Private Sector jobs. It also means that if there is an austerity package meaning Public Sector jobs and pay decreases then the Welsh economy gets hit disproportionally harder.

It's a fast turnaround. Some years ago, thanks to the inbound stimulus of investment by the Welsh Development Agency, Wales was attracting far above its fair share of inward investment by Private business when compared to the rest of Europe. 

It's a sad state when good experienced business people take Public Sector jobs in the middle or end of their career to get high salaries and pension benefits rather than keep the innovation going in business - where the economy can really get stimulated. But that's the reality. If you want to be an Interim Manager/Practitioner, Public Sector pays far more on a daily rate than Private Sector (Oil business excepted). If you want to be an IT consultant, the Public Sector have plentiful openings at great rates as they waste more and more money on useless, never ending contracts.

At one point in the Blair/Brown years, 1 in 4 jobs in Britain were in the Public Sector plus plenty of 'temporary' jobs and many more indirectly in support functions. The Public Sector accounts for, some say, as many as one third of the jobs in great Britain.

It's little wonder that our economy is struggling under that burden of payments but more importantly, how many of the people employed in these 'more secure' jobs could be contributing vibrantly to the Private Sector to help stimulate real growth?

Today, MPs will vote to pass the new High Speed Rail link that first goes to Birmingham costing around £32billion. While the Construction Sector will get great benefits from this stimulus it doesn't seem to be the wisest way to spend money to spawn a massive new Public Sector monolith to cost, administer and manage the project which will inevitably over-run and cost far more than originally intended - you can already write the book on it. And is a rail link to Birmingham the highest priority on stimulating the economy? You get the feeling that investing even a 10th of that into technology and construction of schools would be far better for the long term.

But that isn't what the City wants. £32billion will be split nicely between the construction companies and the banks to make this happen while a big proportion will be to fund the red tape around it. Good business all round.

And one of the biggest issues of a more attractive Public Sector over a Private Sector is not only that the tax burden on funding the jobs goes up but also the long term accrual for the pension deals also rise. For every one job created in the Public Sector around two could be created in the Private Sector (I can't prove that but it wouldn't surprise me).

Public Sector employees work in the same jobs longer, stifling the future for our young and it will mean ultimately that Britain becomes less competitive as it becomes just a sprawling, unimaginative bureaucracy supporting the Finance Sector.

Maybe that's our future. We are so good at administration that we become the new Offshore Outsourcing Centre for all of Europe's Civil Services. Lord knows, we are good at it.

Pity we didn't put so much time, effort and investment in encouraging Private business and entrepreneurship.

When Is A Good Age To Work?

You spend your young days aching to be older to do more interesting things. Then you spend your days over 40 yearning to be young again now that you know all you know.

In my early career in the 80’s you often saw job adverts carrying the strap line of the ‘golden age’, generally recognised to be 25-35. This was considered the peak employment age range particularly for salespeople and sales managers. Anything older and the candidate was likely to be not energetic and hungry enough, anything younger and the candidate was unlikely to have the prerequisite 3 years experience in a similar job.

It is handy that new legislation has come in and stamped out ageism in the work place and such adverts are not seen anymore. But ageism still prevails. It is now unspoken or not so overt in the process of selection but in companies it is still one of the major barometers used in employing people.

You see, you can change the law but you cannot change the practice and the prejudice.

People still believe that a salesperson over 40 is less likely to be as hungry as one aged around 30. They still believe that an older person cannot learn new techniques, skills or methods – they believe older people have a problem with technology, applications or the internet. It’s not everybody but we all know what goes on in business. I have said recently, when someone asked me if I would consider a return to Hi Tech Distribution as I am so involved in Channels and I found myself answering, ‘Distribution is young person’s game.’

Even I think it about myself! Yet I have all that experience, I run my own company so there is no lacking in desire and enthusiasm. I have my own blog, I run my own accounts package, website, CRM, have mobile Windows on my PDA and regularly use the internet not just to search but to bank, buy travel, buy goods and even use eBay from time to time. I am the epitome of a modern worker in that sense. So why would I believe I am not cut out for a certain job that I have plenty of skills and experience to do?

Hidden Prejudices

It boils down to my own inner and hidden prejudices. Clearly this must have been the way I felt when I was in Distribution and running a business. Years later it is still in the back of my mind. ‘Distribution is for younger people,’ is what my minds says and that is function of my personal prejudice.

Yet in Business Week Magazine this week, the CEOs highlighted for the future are all but two out of the top 10 within a year or two of my age. When it comes to employing at the top of a company, age is seen as a very important plus point. It seems you have to be above 30 and below 55 to be a budding CEO (or at least in the US). In the UK, in order to be a non-executive Director or Chairman, you must be above 50 to stand a decent chance.

So if a 45-55 year old person is considered prime age range to run a big company, why on earth would they not be good at being a salesperson? You have to have hunger, desire, enthusiasm and endeavour to be a CEO at any age, yet these are fundamental attitudes required to be successful in sales or middle management.

So why is it that companies still consider older people to be less employable?

The Law And Reality

Implicitly, managers do not want to be threatened by people they employ or else they will soon be pressured out of their job. This may be a reason for hidden prejudices – it’s the ‘dog eat dog’ syndrome that an older manager will not employ people as experienced as themselves. I am talking generally here.

Despite the law and the penalties, many managers practice discrimination, often when they think they are not because of this inner prejudice or competitive streak. Recruiters contribute to this and they operate more overtly, as if carrying out the ‘unspoken desires’ of their clients.

Last year, at a slow point in my business, I saw a job that had my name written on it. It was starting up a European subsidiary of a US West Coast software company who required a Sales Director with hands on experience of doing this. Not to blow my own trumpet, a quick read of my website would indicate this is my business and I have several successes in the bag with superb references, having taken US software companies from zero to plenty sales - starting them off myself and building teams where necessary. I have the unique combination of knowing how to run companies, build them from scratch, manage people and interface with an HQ 6,000 miles away and 8 time zones and be trusted to represent the parent professionally and govern the company within the laws of Europe and the US. I duly sent my application and wasn’t even considered.

When I called the recruiter, who I vaguely knew, I was described as ‘Over qualified’. A euphemism for being too old.

In the same Business Week magazine this week, there is report on US unemployment. While unemployment has risen sharply in the US since the start of the recession, there are still over 3 million jobs currently advertised and yet to be filled. There are many reasons for this. Obviously, it is harder for US employees to up sticks and move as they cannot easily sell their houses right now and the nomadic nature of the US workforce has always been a key feature of the success of US business. But the biggest reasons are that there is mismatch between employers and available candidates.

As many low skilled labourers lose work, there are few similar jobs available. It is thought also that many ancillary or blue collar workers who lose their jobs may never see similar jobs again as more and more are outsourced. Then there are those who are skilled up for one job but the employers need different skills. So despite a raft of people on the job market, there are still frustrated employers who cannot get the staff they want.

Then you look at Germany – they have relatively high unemployment generally at about 8% before the recession but it has only risen to around 9% since. Part of the reason of why they have experienced less of a hit is that they approach the whole issue of re-skilling pragmatically. They disincentivise those who do not try to get a job by ratcheting benefits down, they offer retraining in different skills such as computer literacy and business English, they pay employers to try out new, less skilled workers by paying part of the first year’s salary and they practically help people to find out what skills they should be getting to be successful.

It means that age is taken out of the equation as skills become the key criteria for what employers really require.

Getting The Focus Right

If UK firms took a similar approach then we would get past this blind prejudice on age even if we think we don’t have it. The proportion of experienced, ready to work 40-somethings out there is high and they can do jobs with just a little re-learning. But what they come with is a raft of knowledge on business, commerce and how not avoid mistakes. They are hungry as all have mortgages to pay, families to feed and overdrafts to service. As in my case and my application over a year ago, there is a growing feeling that employers are fixated on inner grading systems, corporate fits and tickbox recruitment to look beyond the obvious grey hair and middle age spreads and see the potential of talent.

That will take a brave set of managers to overcome this natural instinct but if you don’t make the cut of the budding CEO, they too will be in the same bracket some day – and boy will they get frustrated. The UK has an issue with identifying talent over what the piece of paper and procedure says. But sometimes it takes talent to spot talent. I’m afraid that is something they don’t teach you on The Apprentice, in the City or in University. Some of the best entrepreneurs in Britain are unemployable and if they are employed, they are under valued.

Some day the talented 50 something CEOs will realise that people of the same age as they are also in their prime.

Catching A Dragon

TV's Dragons Den has announced the first failure of one of its investments. JPM EcoLogistics called in the administrators last week. Deborah Meaden and Theo Paphitis had put in £100,000 for a 40% stake and they put in a further £27,500 after an emergency cash call despite asking all the right questions.

No Guarantee of Success

While Duncan Bannatyne was swift to point out all his investments were doing fine, both he and James Caan supported Meaden's views that Investors tend to look at a portfolio of investments to spread their risk and increase chances of a success. Meaden is right in saying '....if you don't take risks you have no economy.'

Of course, this is cold comfort for the Directors of JPM, Jerry Mantalvanos and Paul Merker, who went on the show in 2007 to seek investment in their haulage firm which ran its fleet on bio-diesel. They must have thought, as many do, that having high-profile investors you have a greater chance of success. It is also a body blow to firms which Lord Mandelson has described as contributing to the longer term view of decreasing emissions which seems curious that he has not selectively moved to help save it. But I would have thought it was just another soundbite in the sea of them from the Government at the moment.

The Reality of Business

What JPM's demise shows is that programs like Dragons Den are for entertainment value only. The reality is that there is no substitute for investors who are going to pitch in and support you. Fair play to Ms. Meadon and Mr. Paphitis for responding to the emergency cash call but I suspect that the Directors probably rued the fact their choice of investors was more based around celebrity than hard business facts.

I have no formula of success to reveal here but sometimes in a business like that, it would be wiser to look for investors who are like-minded or in the business. Unless you have a patentable, new technology that is ground breaking, firms of that nature are just a new, green take on an existing model and success was highly likely to be dependent on a few factors - 1) the price of bio-diesel as compared to normal diesel, 2) the comparative cost of maintaining the vehicles as compared to traditional haulage vehicles, 3) the comparative fuel economy of the vehicles but most importantly 4) the response of the competition.

Assumptions are usually the things that conspire to kill a business and sometimes it is too easy for an entrepreneur to get seduced by their own subject or idea to see how the market may respond. The haulage business is very traditional and mature and in austere times when cargo rates have been dropping, it was not the time to introduce premium rates to help satisfy Corporate and individual consciences about the environment.

Cost is king at the moment and so it is not surprising that such noble thoughts fly out of the window.

Sympathetic Investors vs Practical

One way around such a problem of having a fresh approach to an old, established industry with no greater innovation than a green edge was to have sought a long term investment by another haulage or similar firm who may have a vested interest to start a more green business. The reasons for this may be several but the most obvious would be that the industry is going to be forced down that route at some point in the future by legislation, it may be possible to seek greater help from Government if an old-style firm is seen to be practically investing in the future even by shareholding, and finally, it may actually be a really good bet.

How this could have practically helped is by JPM having a more practical investor. For instance, more business might have been able to flow to JPM from its investor on a spill over basis or because it is premium or the investor might have been more amenable to running JPM as a loss making investment for longer for reasons of legislative moves as explained above and by supporting it through the profit of the main company. It also provides a ready 'exit strategy' for all parties.

The problem with Dragon style investors is that they are investing purely on the worth of the business opportunity as they see it and from portfolio of risk point of view. They are not looking at it from a long term compliment to their own business or portfolio of businesses which may have afforded better protection to JPM.

The Dragons have responded with James Caan suggesting in future Dragons will want a bigger stake for their investment and I think that is very indicative of why Dragons are not good investors for everyone, although Duncan Bannatyne has still said his decisions will be made on a case by case basis.

No Right Answer

From an entrepreneurs point of view, there is no real right answer. Investment money is investment money. But as a rule of thumb in my book, if you do not have a patentable idea just a new take on an existing business, then you are going to run at loggerheads with the existing market. For that reason you must, must, must get your assumptions right and test them to destruction before you start because the incumbents in the industry will see you as a threat and treat you accordingly. So your Value Proposition, marketing, service levels and cost base must be able to stand the test.

In JPM's case, clearly they became victim to the desperation within a tight haulage industry. The Value Proposition around green haulage depends on the buyer's belief in a greener future. Today, and very sadly, that is not a strong enough reason to prefer the service when every major firm is looking at its cost lines.

Together with that, and their choice of investors, JPM walked into a trap of their own making. If only they had a business centred around environmentally carrying bank executive bonuses or disposing of bail outs more effectively - that would be a good business to be in.

Britain Is Booming, Comrades!

If you may be alarmed that over 1 in 4 jobs are in the Public Sector, then you may be concerned to know that the Government's share in regional economies is over 60% in some areas of England and over 70% in other countries like Wales and Northern Ireland. The Private Sector is not actually the main contributor to wealth.

Lunatic Spending

In the last 10 years taxes have risen sharply but we didn't care because we were all too busy spending the proceeds of our increased equity to notice our disposable income diminishing. Now a report by the Centre for Economics and Business Research (CEBR) has found that Government spending has covered up a lack of stimulation in Private Enterprise (or at least that's what Opposition MPs read into this).

"Hello, Brother," remarked my source as I toured regional Britain looking into the facts. "I'm alright, Jack. With super annuated pension schemes I have no idea why people would work for the money-grabbing rich who are hell-bent on exploitation. Brother Gordon has created a new world of opportunity, comrade, and it's called 'Living off the Government'. The State is the biggest wealth creator in the country and all this rubbish about entrepreneurs and clever business people is rubbish - the real entrepreneurs are in Government."

I was a little mystified and he explained. "Look, in the North East of England the state will be over 66% of the economy this year, thanks to the spending increases announced by Brother Darling, up from a turgid 58% last time around. When the good Brothers in the New Labour Freedom Fighters came to power it was a mere 54%."

It appears the figures are true - across the whole of the UK, 49% of the economy will consist of state spending while in Wales the figure will be nearly 72% and in Northern Ireland it will be nearly 78%. Even the prosperous South east, Government share of spending in the economy is up from 33% to 36%.

Even Communists Spent Less

"Look, Brother," said my source. "The New Red Army means the state contributes more to the economy in certain parts of Britain than the Soviets did to satellite countries like Hungary and Slovakia in the 90s. This is a good thing. When Brother Tony came to power he created the Department of the Deputy Prime Minister, which many Capitalists claim was just to pander to a fat Politician who bridged the old Left to the new Right of the Party. No way, this superb, lean engine now sits above the planning and approvals at Local Government level and approves plans at a National level which was essential scrutiny of the scrutiny."

"Observe the superb new Government layers erected in Scotland and Wales. Lean, fast-decision making Political systems have been created in the Local Assemblies, assuaging the People's spirit and appetite for more layers of important Government and bringing fairness and clarity to bureaucracy. It also means that more Politicians can have access to large expense accounts, go on key 'Fact Finding' trips with their lovers, fund crackpot schemes to employ people for the sake of it and build fabulous new buildings to house themselves on derelict land thus bringing more employment to the area even when perfectly functional office space lies empty. Of course, such Assemblies have the power to change policy of a flock of gnats but no-one has told them that so they can meet, form committees, discuss key policy, vote and nothing happens but at least they have their say and they are a symbol of the new democracy that Brother Tony is famous. That's genius, Brother."

So Who's Paying For It?

"That, Brother," replied my source, "Is the REALLY clever part. We are. Yes the People have finally stood up as one and demanded that they pay more tax so that we can employ more people in State Machine to make it the Ferrari of states not the Cinquecento. Thanks to Brother Gordon, the filthy capitalist taxpayers will be punished forever to pay for the state employee pensions, benefits, flexible working, new offices, expense accounts, needless travel and pointless bureaucracy. And thanks to the recession and the late and revered Brother Keynes, the spending will go up. Soon, all taxpayers will themselves will be employed by the Government and the first wave will be our capitalist Brothers in the banks who have seen the error of the ways and embraced the New World Order that is working for the state. "

"Did you know, Brother," he continued, "In the North East, Nissan have laid off 1,500 oppressed and exploited workers? However, the good news is that many of those tortured wretches will be embraced by the state and they will have the privilege of having a real job working for the area's largest employer, the Department of Work and Pensions which will administer their new pension rights which of course will be far better than any capitalist one as the thieving capitalist taxpayer will pay for it. The beauty is that many of those displaced workers will get jobs in Jobcentres so they can help help oppressed Brothers to get jobs in Jobcentres."

Entrepreneurial Britain?

I asked my source about encouraging new businesses and entrepreneurship - would that not help fuel growth in our economy rather than spending on state jobs?

"Brother, get with the program," he replied. "Since Brother Gordon came to power more than 500,000 new jobs have been created in the Public Sector. Tell me how many new ones have been created by the filthy capitalists? See, you can't because they don't create new jobs just push people around from one company to the next as they exploit them systematically and steal their rights to lucrative pensions. There are more entrepreneurs in Government, believe me. Richard Branson and Alan Sugar have not created 500,000 new jobs. Brother Gordon has - that makes him the biggest entrepreneur in Britain, possibly the Universe, Brother. Under the New Red Army, power has been devolved to all Departments to increase revenues and create more wealth by using entrepreneurial flair. In London, Brother Ken introduced one of the best moneymaking schemes of all in the Congestion Charge, the Police are one of the most lucrative enterprises by levying speeding fines thanks to the entrepreneurial genius of deploying speed cameras that look for steady people who go 10% above the speed limit that previously had not sped and never had an accident while real offenders race around where there aren't cameras in stolen vehicles, burgle and kill people. Why? Because it takes entrepreneurial flare to work out law abiding people will pay any fine levied on them like £60 for over staying a parking time and habitual criminals can't be tracked or ignore them. First rule of entrepreneurship is to find your market and make sure they will pay - and the suckers will, Brother!"

"It's why Police forces spend more time, money and effort raising money than stopping or solving crimes - because there's no money in that," he added. "The state is the new enterprise, Brother. We have the legal right to put in new cameras to watch people parking as Terrorists watching does not allow us to fine them."

We should be proud. In these austere times, the Government committed to spend 6.68% more in the last pre-budget report and that's without bank bail outs factored in. Welcome back, Old Labour.

Are you swimming naked? Lack of Strategy in a Slowdown exposes your business

'It's only when the tide goes out that you learn who's been swimming naked,' so says a letter by a Chairman to his shareholders this year.

No it's not an Eric Cantona-ism and yes if a guy in the pub said this you might want to shuffle away muttering you want to be closer to the peanuts. However, you may be mildly surprised to know this was an extract from a letter to the Berkshire Hathaway shareholders from none other than the 'Sage of Omaha' himself, Warren Buffett.

Has Buffett Lost the Plot?

I picked this out of an article in this month's Director Magazine by Jane Simms entitled 'An absense of strategy'. The article rightly points out that around about now there will be a lot of questions being asked in Boardrooms as the slowdown in the economy bites, profits are squeezed and the awful spectres of cost-cutting and redundancies loom. The questions will relate to how on earth did they not see this coming and what are they going to do to get out of this mess?

Buffett's reference makes a little more sense in this context. As the good times recede, now you will find who has not planned properly within their business to be left exposed to the vagaries of the slowdown.

'It's the Global Economy, stupid'

So cries Alistair Darling and Gordon Brown. Right, that same economy you said Britain was resilient to because of our wonderous fiscal policies masterminded by you. And so in the Boardroom - blaming an economic slowdown isn't an excuse and it is hardly likely to help resolve the situation. The fact is, you should have seen this coming. In previous blogs I have argued that despite eminent opinions by gurus like Taleb and his Black Swans, the Credit Crunch was a foreseeable and avoidable situation and individual, corporate and government greed chose to ignore the obvious and allow it to develop into its inevitable collapse.

Many companies, as in previous times, just kept on believing that the boom years would continue and so plans were always looking for expansion and more of the same. No one really plans for a downturn, do they?

Setting aside the people who run banks who for the life of me I just don't understand why people still employ the idiots who behaved like slathering sheep, those companies who actually have a strategy for a downturn may not only survive this mess but actually be ready to ride the wave back up long before others have finished cutting costs, restructuring and re-focusing on core competencies and other management-speak for manning the pumps while someone looks for a plug.

93% of Statistics are Rubbish

In the Director article, Jane Simms quotes Cranfield research that 85% of Non Executive Directors (NEDs) lack a shared view of the vision and competitive advantage of the companies they are on the Board of.

Frankly, whoever paid for that research may as well have looked into the fact that ice melts 100% of the time when exposed to temperatures above 15 degrees C. Nobody for one minute believes that NEDs are anything more than just names to put on the Annual Report and possibly turn up once a quarter for a cursory meeting with well manicured pseudo Board resolutions based on glossy Powerpoints and then get their free lunch, early-doors shares and 'expenses'. Look at Tony Blair on the Board at Morgan Stanley advising about 'Globalisation' for an alleged £million fee - why?

Sadly, even small companies do it, packing their websites and prospecti with the names of successful entrepreneurs, politicians or peers. I have sat in on 'Board' meetings where we have had pre-Board meetings to 'sex-up' the figures and reality with Campbell-style skills to make sure the NED does not start questioning things.

When Enron went into meltdown, Lord Wakeham was not only on the Board but also on the remuneration committee. Nothing to do with the power station in the North of England which was installed when the Tories were last in power, I suppose, but he easily proved he had no knowledge of any of the wrong doings because no one did tell him anything. We have had the Blunkett saga and many more.

NEDs are a fiasco in the UK and it is only when the slowdown bites that people look are around the Boardroom and realise the chap eating all the biscuits saying, 'So things are going as well as the last Board Meeting, are they?' is about as useful to them as a bubble-blowing machine.

'Serial or Professional NEDs'

It isn't any surprise that Cranfield also noticed that one of the reasons NEDs are ineffective (academic speak for useless) is that they are so busy. That's because they have to juggle so many Board NED appointments while making enough time to supervise their portfolio of fees. Again, there are actual agencies who place NEDs almost like after-dinner speakers. You try getting your name on the list and you realise it's run by a person who is one of crowd of 'names' who crop up on multiple Boards. It's a closed shop unless you sell your business prominently and make millions - then you are awarded honorary membership.

The research shows it is not uncommon for NEDs to have as many as 7 to 10 NED appointments. I am no genius but what possible value can such an NED give to any of the Boards it is on while getting paid more than the average wage of the emplyees of that company to be in the Annual Report?

The code for appointing NEDs was supposedly updated but the reality is that little has changed. As Michael Grade quipped, the difference between a supermarket trolley and an NED is that the trolley at least has a mind of its own.

What Are NEDs Supposed to do?

Well take the Banks for instance. If they had NEDs on their Boards who a) turned up to Board meetings and b) actually asked about the strategy rather than what was for lunch, someone at say, Northern Rock, might have noticed the management had quite literally mortgaged the company and that they had a massive liquidity problem. All it needed was........... no that will never happen.

Time for Change

It really is time for companies to change and get in NEDs in who not only have some experience in their market place but can contribute actively in developing the strategy of the business, and have enough time on their hands to do so. That means someone who is prepared to educate themselves as to what the business is about, the value proposition, competitive advantage, the competition and how the market is developing. Then they can apply their experience to understand what are the pitfalls, pose potential issues, help develop more resilient plans and still have a free lunch once in a while.

And smaller companies should not fall into the same trap in getting big named, serial NEDs onto their Boards to make the letterhead look better. It really does not help your business while the investment community really are focusing on you as executives. It's a frivolous expense at best - much better you find individuals who have real management background that can help and there quite literally are thousands of well-qualified retired, semi-retired or even still employed managers who have a wealth of experience but no peerages who would love to help.

Personally, I believe that there should be a limit to the number of Boards any one individual sits on in any capacity, but what do I know.

Appointing an NED

The traditional way is an invite onto the Board. How daft is that? Surely, there should be an interview process which at least tests whether the person has the latitude to afford the time as well as possibly contribute. And their contribution has be worth those free shares, fat fee and free lunches.

After all, you really do not want to be caught swimming naked.

International or European Expansion - How do you go about it?

My ‘If Only’ Story

A long time ago, I was offered a job as the UK Sales Manager of a US Company entering into the European market. It had a natty name but they were simultaneously changing the name to the founder’s name and adopting an innovative ‘direct only’ sales model, almost unheard of in the industry at the time. Stock options, salary rise and all, my then employer persuaded me this would never catch on and I actually turned the job down.

The Company launched in the UK and changed its name to Dell. The rest, as they say, is history.

Some Companies are Different – Why?

Dell is joined by other Companies like Symantec, Autodesk, Microsoft, HP, Oracle, Apple, IBM, and SAP in that they all have very strong international businesses so much so that all of them have significantly more revenue coming from their combined international operations than from their domestic markets. And it isn’t a coincidence.

It’s a fact that rapidly growing, early-stage companies have to focus on domestic markets initially to build credibility with reference customers and that pleases the VC and banks they partner with no end. But to be a dominant force in future years, companies must also make plans for business development internationally, and in reality this should be undertaken as early as possible.

Some Companies Missed Their Opportunity

After the boom and bust of Web 1.0 where so much money was wasted on futile ideas, VCs and therefore fledgling Companies became very reticent about international expansion. In fact, US Companies began to view European trade as not cost effective because of the multitude of languages, cultural differences, business rules, accounting issues, potential duplication of resources and shear size that they adopted a ‘suck it and see’ approach. Local agents were appointed or persuasive Channel Companies given exclusives or single-man-in territories were set up as a ‘shoestring’ method was adopted to cultivate markets. Yet they knew full well that to be successful, they needed to extend their tried and tested domestic model to the international markets. It was doomed to fail and it did. I can’t remember how many Companies I spoke to post-web 1.0 who wanted to take that approach and failed.

We could all name one or two of those that failed to take advantage of their domestic leadership to become serious global companies but it is just history now. Web 2.0 and newer thinking in terms of VC money is helping drive a fresher approach.


It’s all in the Timing

The timing conundrum is a two question issue:

1. When should a Company start planning to expand internationally?

The first question is relatively easy to answer as those who haven’t had an inkling or a vision of international business expansion at the very outset are probably never going to succeed in being a global player or indeed they may be happy with a domestic market only. So the trick is to start planning as early as possible. Having this international expansion vision early sets the expectation early in management and cascades through the organisation from the start. This poses an interesting question of its own – ‘Do I have management who are sufficiently bought into international expansion?’

As a quick anecdote on this, when I first met the management at PlaceWare, the VP Marketing felt very strongly that Europeans and Brits in particular were not capable of working at the pace required to be in synch with the US parent – and he referred to working at ‘Internet speed’ (no doubt he had read some Bill Gates throwaway comment). Some months later, the VP Sales joined me on a sales tour. The first day started badly when I had him check out of the hotel he bad booked into for 3 days as I pointed out that the agenda I had sent mentioned visits outside of London – he was not amused having little idea of European geography. We visited a large Enterprise customer in London, travelled to West London to visit a major Telecoms Company and then got on a plane to Paris. The next day we visited several customers in Paris before flying to Nice and having a day visiting Companies in Sophia Antipolis. At one point he very nearly fired me because he had not had time to get his morning injection of coffee. He later regaled to the story to our annual Sales Conference in California highlighting to never, ever underestimate the work ethic of the Europeans.

But it was illustrative of a type of US management character that tree-hugged domestic sales even when talking a good game about international business. The VP of Marketing in question had a degree from Trinity College, Dublin and that might have explained a slight misconception about European work ethic!

Planning early is about being committed to grow internationally from the start and this means understanding the implications of decisions made on future international business early. Having that thought process in planning growth early is a vital part of building a platform for international success in the future, even if it is not to do something on an international basis immediately.

There are an awful lot of things to consider – have no doubt. Local accounting practices, tax, legal contracts, terms and conditions, pricing, cash collection, product development, languages etc but these really kick in on implementation.

2. When should the Company start implementing an international strategy?

In reality, while there are other key issues as I have mentioned above, to consider, implementation is mostly about sales and marketing and their execution. Classically, if the decision is made to implement international expansion too early, there may not be enough dollars to do the job properly.

When at PlaceWare, management foresight brought them to set up a European business very early. In doing so, I was able to build a small team and actually out-sell PlaceWare’s domestic nemesis, WebEx, and become the European market leader within a year. But PlaceWare had extended itself too far on US expansion and ploughed a lot of money into product development – not enough was left to drive sales and marketing in Europe. Consequently, a year later, WebEx made its move and set up in Amsterdam. It put a whole lot of funds in to drive marketing and sales. A year later, the status quo was achieved and WebEx became the worldwide market leader. PlaceWare got bought by Microsoft for a song; WebEx has been sold for billions to Cisco.
It was all about sales and marketing execution.

Taking the Right Approach

I have seen it so many times. The first move by a US Company is to either buy plane tickets or to believe in the smiling chap who has alighted on their offices and told them they are the most successful sales agent or Distributor in Europe. A year later either there has been some sporadic success in named customers or the Distributor won’t take your calls because they don’t have the time.

Getting the focus required to succeed isn’t easy and it comes from the planning.

The daft thing is that nobody would adopt the same approach in trying to extend their reach domestically, so what on earth possesses people to make such leaps of faith is mystifying.
My free advice and it’s worth every penny, is save yourself that airline ticket and save the cup of coffee for the grinning foreign Rep. Do some planning and research instead – there is no real substitute for this. It may cost a little time and even money but believe me it is small fry compared to the cost of plane trips to nowhere.

Ask Yourself Questions

It may seem obvious, but every Company needs to ask itself: ‘Why do I want or need to address international markets at all?’

As I mentioned earlier, some Companies may be happy that they can only be successful in their domestic market – and that’s actually a good strategy if it fits into their financial goals. You don’t have to be an international player to be a successful Company in many instances so don’t be afraid to answer the question in the negative.

If you have answered negatively but in your business plan to the VC you promised you had access to a global market worth $3 billion, don’t be surprised if there may be some repercussions!


It is fair to say that this would be unusual in the high-tech arena, in any case there are some questions which need to be answered:

Going back to the VC business plan -

• What are the overall goals of our various stakeholders, and does international market penetration feature as a requirement in those plans?


• What are the individual international market dynamics and requirements?


• What is the competition doing?


• Why are they doing it that way – is it being successful?


• Is international market entry more of a defensive measure because the competition is there or you have one or two customer subsidiaries who want product or is it for a genuine market leadership move?


• What are the costs involved?


• How do these costs compare with doing more of the same in domestic markets?

Get Expert Advice

It is important to get advice – and expert advice rather than barstool anecdotes. There is plentiful research available on the web about demographics, industry trends and they can be very targeted on the specific markets you wish to address.
And there are experts who have been there and done it before – who bear the scars and the success stories.

People like me have had experience of working with and for US Companies who want to get into Europe. Knowledge and know-how is vital but does cost money. It’s as well you know that up front but it’s worth it in avoiding issues and mistakes later, and getting traction and sales much, much earlier.

Also, commit internally and externally to the resources required early. In developing a plan for international expansion, have someone whose role and responsibility encompasses this and is not swamped by their day job. That or employ or contract to some one who can do just that.
More importantly, the company needs to be able to articulate the reason for international business development to the stakeholders, and to justify the resources necessary to make it a success.

The Differences You Can Expect

Once you have decided that international expansion is a strategic goal, and via a considered research and planning phase you have identified the key markets to attack by assessing the proposition and size of market opportunity, then you have to consider some of the nuances and complexities that, quite literally, go with the territory. I always describe Europe to any prospective client as being like the United States – a single large geography with individual state boundaries. Sadly, each speak a different language and have different cultures and ethics – unlike the USA which has 50 states adopting the same currency and language largely watching the same TV shows. So watch out for just a few of the issues:

• Language


• Culture and ethics


• Business methodology


• Finance and tax regulations


• Employment Law

Try not to second guess how people buy in each territory because chances are they are different.
Equally, things are changing – many EU countries have adopted a single currency and many of their contractual laws are similar. But it is fair to say that a different approach will be required in many territories and you need to assess the viability of each beforehand.

Obvious ideas on market entry are:

• To set up a wholly owned subsidiary


• Build a channel contracted distributors, sales agents, OEMs or resellers


• Have a local joint venture with an exclusive partner.

There are several ways of doing it but this is where the Expert Advice becomes invaluable as this is where the largest, long term error can be made.

Dragon or Pussycat?

'Entrepreneurs say they got burnt by investors' demands', shrieks the headlines in this week's Sunday Times.

'What a surprise' some may say in response. I listened to that nice James Caan's talk recently at the EREC in London when he described the Dragon's Den Show as terrifying at first as the Dragons had to make instant investment decisions without foreknowledge or due diligence. A 20 minute pitch and you make up your mind.

The article basically says that a few entrepreneurs have endured the nerve-wracking TV exposure and got their deals with a Dragon only to find that subsequently for one reason or another the deal falls foul.

TV Reality reflects Life

For once it seems a TV Reality show actually mimics reality. Gaining investment is not an easy process and inevitably it means that the two parties must ask deep questions about the veracity of the entrepreneur's claims, knowledge and ability to execute on the plans. If not then the Dragon may as well put their large sums on the 5.30 at Kempton Park with as much hope of a win.

In one instant, an Australian entrepreneur had an agreement in principle from two of the Dragons only to find 4 months later that it fell through. In a further instant, a chap who had a Foot Deodoriser had an agreement to invest but the deal fell through when it was found that he did not have a patent on the product although the entrepreneur claimed it was the Dragon who had put him under as much cosh as an employee.

How good is a deal anyway?

Some entrepreneurs have claimed the deals are not healthy. Lara Goodbody (surely an Ian Fleming name), the co-founder of YogaBugs, declined £200,000 for a 30% stake in her business and later got £250,000 for 15% in the business from another unrelated investor.

And here is the reality. Dragons Den is all about making good TV. Sure the Dragons have made a lot of money but they did not do it by chucking £100 or £200,000 down the pan on poor ideas. Likewise, people who give away 40-50% of their company for inward investment are effectively making themselves an employee at best and certainly the voracious ability to own your idea has been diluted greatly. Moreover, where is the equity left to hand out to diligent employees in the future when the share-grabbing Dragon has such a large stake.

Entrepreneurs switch off your TVs

The reality is that the Dragons Den model is not good for real investing. The Dragons are making multiple investments for small cash in their terms that would normally consume large portions of their time to make the business successful. The entrepreneurs meanwhile seem to want to desperately give away huge chunks of their equity for relatively small capital stakes in the vain hope that James Caan or Duncan Bannantyne knows someone that can get them a quick hit to make millions.

In practice, gaining inward investment needs a strong business idea, an even stronger business plan which has sound research and strategy and then people who can execute. Entrepreneurs come in all shapes, sizes and backgrounds yet it is rare that you get the combination of all those things. Most commonly missing in people who have great ideas is the ability to take the idea to market or sustain that market. These people may be great at selling the concept but seeing a deal through to fruition may be very different.

My advice to would-be entrepreneurs is to build a proof of concept first. This means building a prototype business with the minimum possible outlay and creating the first few sales to prove your idea has legs. The first thing you may realise is that the idea actually pays its way so the investment required is for expansion only rather than getting the product built. The second thing you may realise is where your deficiencies lie and so the investment may be to get the correct manufacturing contract to build or people to sell etc. Proof of concept pinpoints exactly where the money will be spent rather than the investor seeing only large salary cheques being paid with their money.

It also means the entrepreneur has the upper hand. It will not mean you have to give away large chunks of your company for comparatively small sums. What you have proved is that you can take a small share of a large market and so you can sell the end scenario rather than next year's - the idea that the £250,000 for 15% is not an investment in a company with a small market but one that can take 10% of a £multi-billion market. If the investor cannot see that then walk away.

Dragons are real

What the article shows is that the Dragons in the Den are real. They don't actually give away all that money without due diligence and there are plenty of caveats before the entrepreneurs get their cash that are not shown on camera. However, the reality is that unless the entrepreneur can see a distinct and real advantage of taking a Dragons' money other than for the money itself, then this is exactly not the way to get inward investment in a great idea.

New Employee Background Checks - Good Practice or Breach of Privacy?

'Criminal records on sale for just £37', was the headline on Page 7 of this week's Sunday Times.

The article referred to the growing practice by employers and corporate investigators (numbering 50 between them so far)buying access to files at the Criminal Records Bureau (CRB) to do background checks on new employees. The CRB was set up 6 years ago to carry out checks on prospective employees whose work would bring them into contact with children and vulnerable adults - i.e. to find out if the prospective employee was unsuitable for that kind of work.

However, certain recruiters and employers are now getting access to CRB files to check the background of employees who are applying for jobs which do not involve access to children or vulnerable adults.

These agencies are now offering these unlawful checks to cover potential business partners and staff ranging from clerical staff to web designers.

Is Enhanced Disclosure Good Practice or Unlawful Prying?

One firm mentioned in the article offered to carry out 'Enhanced Background Checks' of administrative staff for companies claiming they were justified, caveatting this with the employee's consent should be sought although the firm's director admitted that they had not 'thoroughly checked' whether such permissions were given.

Another firm specialising in the same practice operated out of Essex but was headquartered in New Zealand claiming its Essex office was 'registered' with the CRB to have access to such records, although it confirmed it was not 'accredited' by the CRB.

The question may be arising - is this such a bad thing? After all, it is very important to follow up references given by employees rigorously and I would always recommend employers do this diligently and, if possible, cross reference the information. In this I mean, if possible, test whether a claim in a candidate's CV is spurious or not such as attending Chairman's Club or winning a specific deal etc when asking the referee. Of course, the referee may exercise the right of no reply which should not be taken as a denial but most referees will usually corroborate true facts.

So would getting access to the CRB files be further good practice or diligence? To give an example of the downside, the article claims that one such background check found that a complaint made to the information commissioner revealed a CRB check on an individual had shown the person had stolen a packet of meat worth 99p in 1984 when the person was just 16.

Where Does The Law Stand?

The article cites the landmark case of a gardener who was fired from their job after an 'Enhanced Background Check' had revealed two spent offences. He claims the checks were unlawful and unwarranted. The information commissioner has supported his claim which goes to court seeking compensation.

The CRB helpline was found to aggravate the situation as when one complainant called the person was told it would be prudent to comply to have the check done or face not being employed.

The fact is that the law is cloudy rather than clear. Such checks are specifically designed to stop sex offenders having jobs which involve children or vulnerable adults. If there is no suggestion of either being involved, then such checks are not justified.

What Ifs?

So if an employer suggested that a gardener may come into contact with children whilst carrying out their duties, would that be justified even they 'stretched the truth'? And what if a sales manager were to be in contact with unmarried young ladies, would that be justified on the grounds that the employer might want to know if the prospective manager had a history of sex offences, and in doing such checks just happened to find out the person's misdemeanour 20 years ago involving persistent apple scrumping?

What the report did reveal is that detailed financial checks can be made for as little as £20, police files for about £40, driving for £20 and identity at around £20.

Where Do You Stand On This?

As a person making decisions on behalf of a company that will cost significant money in terms of recruiting fees, compensation but also opportunity cost for making a wrong decision would it not be good, if not, even best practice to do as thorough as possible background check to minimise risk?

I remember a famous incident of a quasi-government Agency (Note how vague I am being) who employed a Finance Director with apparent impeccable credentials and background. He subsequently allegedly hired a hotel room to 'interview candidates in bikinis' for the post of Assistant. The person subsequently flew to Chicago via Concorde to New York, checked into an expensive hotel and found that his meeting had not been confirmed and so flew back again. It was later revealed the person was bogus.

Closer to home, when I worked at a computer reseller, we employed a Scottish salesman who shared a name with a rather famous Spaceship Captain. He was larger than life in many respects including the fact it was not his real name and he had no fixed abode - we only found out when police popped by asking questions about him for various other reasons. There was also the recent case of the chap who passed himself off as a Forensic Scientist for many years and participated in many trials as an expert witness only to find he was just the local lad from a pub.

The fact of the matter is that employers should be able to mitigate risk as much as possible and protect themselves from potential 'rotten employees'. However, you have to also to temper this with the fact that a minor misdemeanour involving alcohol and some clumsily broken glasses in an Indian restaurant 23 years ago really was just a one off piece of high jinks that should have been settled with a cheque for a few quid, a dustpan and brush.

Information in the 'Information Era'

We do live in an era of unprecedented amounts of stored data. Much of this can be more easily accessible than we think even if we use the most sophisticated firewalls as more and more data is actively lawfully and not sold by agencies holding the data or even lost by daft employees getting their laptops or memory sticks stolen or even archive agencies flogging their old PCs on eBay. Our information is freely surrendered to all and sundry and can be accessed far too easily. And the embarrassing misdemeanours of the past can be more easily brought to light.

But is it fair for your employer to know you might have had a telly repossessed 15 years ago when times were hard or that you served a driving ban 10 years ago even though you don't have a company car in the job? Or is it sound information to have at hand when deciding on candidates to know one was arrested outside the House of Commons in a gay Rights march and the other was not?

I would be really be interested to hear your views.

What is the difference between cost and value?

When preaching to salespeople I often use an example holding up a small plastic trophy with a salesperson's name on it which is awarded on a regular basis to the most improved salesperson or for best performance. The actual cost of the item was a few pounds but I posed the question, 'What is the value of the object?'.

I argued, in the hands of a canny individual, such a prominent award could feature heavily in a CV, citing that as a result of outstanding performance, the recipient had risen above his/her peers and been awarded the most prestigious prize in the company. I further argued, that such an award, sold in that way to prospective employers, could add at minimum £5,000 onto their next job's salary. This would in turn compound in their earnings in years to come and thus be worth potentially tens if not hundreds of thousands of pounds. The value of the item, far exceeded the cost.

In a more spectacular example, was the explosion of the Space Shuttle Challenger in 1986 when the failure of a comparatively minor part called an O-ring caused a flare to ignite flammable gases just 73 seconds after lift off. The cost of this small item was minuscule compared to the cost of the shuttle itself and it caused the loss of 7 lives and billions of dollars. The tragedy was magnified after a 32 month investigation which highlighted that NASA managers had known since 1977 that the design had a catastrophic flaw and that flying in such cold weather was strongly advised against by its own engineers. The cost of the small item was virtually nothing compared to its value for safe flying.

Assessing Cost vs Value

In a modern era where business looks to drive down costs in purchasing we have seen innovations such as 'Reverse Auctions' and Outsourcing which have strangled out the ability for suppliers to show value. Tick box point scoring system sometimes augment the processes but in the main it is a lowest cost wins scenario, even when it involves high human content such as recruitment.

Each new recruit has an intrinsic value to the company that bears little relation to their cost. Listening to James Caan's recent talk at the Executive Recruitment Show in London he talked of the 'cost of bad recruitment' being far greater than the cost of the fee. He was talking of value. So as companies look to reverse auction the cost of their recruitment and/or outsource it, particularly to foreign countries, they are focusing on the cost rather than the value of new recruits to an organisation.

Summary

Recruiting is all about investing in the future. Each new recruit has to be part of that future and will have some contribution to the future value of the organisation which will affect its profits. Driving down the cost and pushing away the screening process to a third party who has zero skin the game other than the unit cost of the recruit, no real feel for the culture and no experience of the concept of working for their client will contribute no more value than its cost to the company.

I would support James Caan's view that the cost of the recruitment fee is nothing compared to the value of the right candidate and that should be the priority.

Dragon's Den or Dirty Den? TV Hero James Caan Shares His Secrets

'Observe the masses and do the opposite,' said James Caan as he opened this year's Executive Recruitment Conference at the Business Design Centre, Islington yesterday. This has been his personal recipe for success, but for those of us in the audience the burning question was why on earth did he invest in the dog-walking treadmill, 'Fur for life'?

The founder of recruitment firm Alexander Mann in 1985 which he eventually sold for, well put it this way, a lot, is now a household name but remains perhaps the most unassuming of the characters on TV's Dragon's Den and yesterday's talk reinforced it. He was relaxed, funny, engaging, answered all questions and stayed behind later to talk to a waiting throng but he just could not resist getting his gratuitous plug in for his new book, 'From Brick Lane to Dragon's Den'. Ah well, scratch the unassuming part and hence my reference to Dirty Den.

James Caan's 5 Tips For Business Success

For all in business, James' tips are worth knowing:

1) Vision - have vision which is transportable to a brand

2) Create a Partnership culture which allows people to share in success

3) Attract great people

4) Hire people better than yourself

5) Encourage Intrepreneurship rather than entrepreneurship to create depth and diversity in your company

It's worth exploring a few.

Creating vision requires clear leadership and good leadership provides a strong cause which allows people to buy in. He uses the example of Ronald Reagan touring a NASA facility and coming across a guy sweeping the floor he asked the rather redundant question of what did he do. The guy replied, 'I send people to the Moon.' That is a hugely powerful force in an organisation when such a lowly employee is joined into the common cause.

He also points out that over the years he has searched and recruited for many senior executives, most of which have joined big companies but few of which were given equity in the business - not just stock options. He asserts that sharing more of the fruits of success creates a far more vigorous company and develops creativity.

In attracting great people and recruiting better than yourself he gives the great example that having started Alexander Mann in 1985 he had built after 7 years a £15m a year revenue company. So he recruited a new CEO and went into business development himself. The new CEO took the company from boutique recruiter to mainstream and the first tranche of the business was later sold for £130m because James had realised he was not the person to have done this.

Intrepreneurship was for me the best tip. He gave the great example of a young girl in her twenties who had only been at Mann for 8 months, who had previously run a nanny business, came to him with the idea that major companies would outsource their recruiting. James initially could not see why companies would do that or how the model would work but they decided to give her a new legal vehicle, a small office, some equity in the new company and within a short period she had closed the deal with Vodafone. The Company was recently sold to Private Equity Firm Graphite for £93m. His assertion is that don't let people have to be entrepreneurs and start their own business to realise their ideas.

The State of Recruitment Industry

For many in the audience some of James' points were not welcome - I loved them. He bemoaned the state of the Recruitment business and that recent developments had brought 30% fees into sharp focus. Was a phone conversation and an hour's meeting to get a job brief all that was needed to recruit for a company? His maxim was that you needed to spend a minimum of 2 days with a Company to understand expectations, culture, management style and more before you could possibly be able to spot individuals who could do the job. Hurrah for someone in the industry and so prominent to argue in the face of 'Transaction Recruiting'. I will keep this independent but he also highlighted that 30% fees are justifiable when the process is executed with diligence because the cost of getting it wrong is not only lost recruitment fees, it is the rolled up cost of the executive's salary consumed before leaving and then the ramp time to find a replacement plus the missed opportunity cost - an equation I have replayed to many hiring executives and HR people who still simply choose the cheapest. When I posed that question to James that the industry is responding to the requirements of clients, he rightly was adamant not so - this was the recruitment industry conditioning business that it is all about quantity of CVs produced and getting a fast buck. Clients, if sold to properly, would always choose to pay 30% fees for proper diligence to avoid the cost of bad recruiting.

More Serious Matters

So why did James Caan invest in the dog treadmill, much to the derision of his fellow panellists? The story goes, James arrived for his first shooting of the TV series and did some rehearsing before they went live. A short way into the filming, a wave of panic came over him - where were the documents and business plans for the participants so he could read up before they came on? Fellow panellist Duncan Bannatyne put him right - the person gets 20 minutes to pitch an idea, you have your money and 20 minutes to decide based on what you have heard. This is television and reality show business. After 5 days of filming James had not made an investment, remembering they film the entire series in one hit, because his conservative approach could not allow him to make a decision based on the model. So as he got up for another day of filming his wife asked him how it was going and he replied that it wasn't going as planned - he couldn't make a decision. She reminded him he could not go an entire series without making an investment, he would hardly be invited back if he did that. So when James got on set that morning, he backed the first person who was filmed, Sammy French and 'Fit for Fur'. I like that story.

The roaring success was Peter Moule's Chocbox. This guy had been in business a while, had sold more than £1m of his invention, made £350k profit and had £250k in the bank. He wanted £150k for 10% of his business. The other panellists scoffed and wondered why the guy wanted an investor, he had a business. James Caan was intrigued. Amongst all the wannabes who came on the show with the merest slip of an idea, no sales or proof of concept, no track record of success, no money of their own and just a vain hope of success, here was a professional guy who had the product, sales, track record and cash of his own. It was a gift horse. Peter Moule, meanwhile, had a plan.

James beat him up to get 40% of the company for £150k and they horse-traded so that 1% of equity would be given back effectively if Peter sold £1m more. By any measure it was a good deal and having seen the episode myself, I thought Peter was daft. Not so. James Caan's connections brought in a huge wholesale electrical distributor who negotiated an exclusive deal on the product in return to buy 5m units each year for 5 years. Peter Moule was nobody's fool. Overnight for 40% equity he had transformed a bumbling, profitable business into a multimillion pound success and market leader.

The corollary to the story was this. Some months later, Peter Moule called James and bemoaned the fact his entire month's work was receiving a single order from the distributor for hundreds of thousands of units, forwarding the mail to the factory and then creating one invoice. Success had made his role redundant. Further he had not touched a penny of James' money so there was £400k plus interest in the company doing nothing. So James, who received thousands of hopeful business plans a week many with 'electrical' in the heading, decided to set up a joint venture investment vehicle with Peter, 60-40 in Peter's favour. James would forward 'electrical' business plans, Peter would investigate them and together they would decide to invest or not. Peter Moule, from 20 minutes of TV in which 4 out of the 5 panellists poo-poo'd him, had become a real life Dragon.

Summing Up

I like James Caan. He is not just a hard-nosed businessman; he has true, ethical values in an industry that has forgotten them. In the era of web-based recruitment, his deep belief that reducing the cost of recruiting will ultimately cost hiring companies millions in poor recruits being jettisoned and reloaded is right on the money. The figure at senior level is 40% of all executives will fail in the first 18 months. It really pays hiring Companies to choose recruiting partners who understand them and share their pain when it goes wrong.

You know, I even think his book will be a good read.