People are the key to sustainable growth – who knew?
Scaling up: the investor perspective
by Adam Hoare
In a report “Scaling up: the investor perspective” released in November, InnovateUK reported on research undertaken, on their behalf, by Ebiquity. The goal of the research was to understand how innovators see the challenge of scaling up innovations in search of growth. This was compared with the view of investors from venture capital firms who are experienced in evaluating companies and their prospects for sustainable growth. The results show an interesting divergence in the value placed on the role of people in the business.
The importance of people in business
The results are based on qualitative and quantitative research with a total of 250 businesses and investors undertaken between June and September 2017. Four ‘perception gaps’ were identified as areas of divergence between investors and innovators. These are areas that represent deal-breakers for the investors.
- 84% of investors identified Communication as a reason to turn down investment whereas businesses rated this at 46%
- 87% of investors identified Adaptability and Resilience as a reason to turn down investment whereas businesses rated this at 58%
- 78% of investors identified Chemistry as a reason to turn down investment whereas businesses rated this at 53%
- 70% of investors identified Cultural Fit as a reason to turn down investment whereas businesses rated this at 50%
The research includes many other interesting outcomes related to products and services looking for sustainable growth. An underlying theme is captured in one quote from a UK investor:
“If you’ve got a company with poor market traction and not a great product but an amazing team, you’ll probably be OK but you won’t be OK with the converse.”
The Bayswater Institute
At the Bayswater Institute, we are interested in people. As an institute built on putting social science to work we know that every business context starts with the people. We spend some of our time evaluating workplace situations where technology is disrupting work practice. Here, we repeatedly witness that the tendency is to see the sale as a Technocentric Push. To sell a capital item and let the organisation manage the transformation enabled by the technology. This rarely works as it ignores the embedding of technology in work practice. A sociotechnical perspective requires that the social and technical system is developed as a whole.
People are at the centre of any change and approaches that ignore the four areas of divergence identified are poorly equipped to address the challenges that brings.
In our work with small and medium sized enterprises we often see companies bringing in consultancy around the technology or market access and completely ignoring the four areas of: communication, adaptability and resilience, chemistry and cultural fit. The institute adopted and developed an approach, many years ago, based on the “Double Task.” This is specifically aimed at separating out daily activity, or task 1, of an organisation from the task 2 underlying practices that are working in the background at a subconscious level.
Surfacing and addressing some of the task 2 assumptions and practices provides people with tools and techniques that directly address the four areas of divergence identified.
We are running our new Wisdom in Groups residential in April 2018. Here we will empower eighteen people to recognise and work on task 2 as part of their daily activity. In 2018, we will be announcing single day workshops to bring the double task approach into organisations to assist in identifying opportunities to improve their task 2 capabilities. We believe, as the report above indicates, that getting your management team investor ready is synonymous with your ability to be ready for growth and sustainability as an organisation.