Blog post originally shared on Small Business Expert, 28.11.17.
With the Office for Budget Responsibility predicting gloomier than ever growth forecasts over the next 5 years, the UK’s productivity problem unresolved and the WTO-rules ‘no-deal’ Brexit trading environment under serious consideration, you would wonder whether even an optimist could find something positive to say about business prospects.
Well, I’ll have a go: the good news is that the UK is a more positive environment for technology-led startups than ever before and the sheer energy, ingenuity, enthusiasm and determination of startups can benefit us all.
The term ‘startup’ is typically applied to young, innovative firms with growth ambition, often operating under conditions of significant uncertainty such as an unproven technology or a new business model. It’s this growth and the promise of tech-enabled productivity that the country needs. But as this definition highlights, startups are surrounded by significant uncertainty in their early years. They really do require a very different leadership style and approach to risk from other small businesses and it is support for this practice that is increasingly available.
The government’s excellent 2017 ‘Business Incubators and Accelerators: The National Picture’ research paper surveyed the UK landscape and found that there were roughly 400 incubators and accelerators active, supporting roughly 3500 new businesses per year. Both accelerators and incubators aim to support young firms through the early and fragile stages of growth – in theory, helping them avoid the mistakes of others, saving time and money and increasing survival rates.
Many incubators and accelerators focus on a specific area of innovation, from Financial Technology or ‘FinTech’ to Cyber-security and Artificial Intelligence. At the Central Research Laboratory (CRL), based in west London, we are proud to support what we term ‘hardware’. By that we mean tech-led businesses that involve a physical, manufactured component. With digital technology becoming ever more ubiquitous, it needs to be embedded in the world around us. Software remains the most potent force for change, but without the ability to give it physical form – hardware – we believe the UK will not remain Europe’s leading tech startup hub.
But the fact that the CRL exists suggests that there is a problem to be overcome: the lack of manufacturing knowledge in the UK. Yes, we remain the 8th biggest manufacturer in the world, with a resurgent automotive industry, world-class pharmaceuticals and more, but the knowledge with which to make electronic products is actually very scarce for startups.
The good news is that we can access this knowledge from elsewhere. I write this from Shenzhen, China’s premier manufacturing city of 12 million people, which boasts the most sophisticated consumer electronics manufacturing in the world. This week we are taking 8 ventures to meet with manufacturers and intermediaries so that they can build the partnerships required. Every time we bring entrepreneurs to Shenzhen they are struck by how welcoming Chinese manufacturers are. The manufacturers recognise the creative talent of our UK-based entrepreneurs and, while supporting small and fragile businesses is always difficult commercially, they recognise the longer-term potential and value. As we head towards the end of our week here, every one of our startup founders leaves with renewed energy and positivity around their business and how they will make it real.
But that’s not the end of my good news story. On our return, we will reintegrate with a wider community of designers, engineers, entrepreneurs and others: the Central Research Laboratory is developing a model where co-working and startup incubation are supported under the same roof – we are home to consultancies, as much as product startups. All of the knowledge, connections and of course the renewed sense of energy will be shared widely, as though we were all part of the same company – even though we are not.
For me, that is a powerful enabler of change. If the world around us becomes ever fast-moving, complex, challenging and even fear-inducing then what we need is to surround ourselves with capable and energetic people. And if you can’t hire them, just sit next to them. We believe that more small businesses will start to recognise the power of this sort of informal collaborative practice, give up their existing single offices and re-locate to innovation hubs such as ours.
If it is true that some people are fountains and others are drains, then my advice in these parched times is go sit next to a fountain.