MAKING THE PRIVATE SECTOR WORK FOR WALES

Western Mail column 28th May 2011

Last week, the Welsh Conservatives released data which seemed to imply that the Welsh Government has used the current round of European funding to subsidise its own programmes rather than supporting projects developed by the business community.

According to a press release from Shadow Minister for Business, Andrew RT Davies that landed in my in-tray last week, £665 million of European Funded Convergence grants has gone to fund 68 projects sponsored by the Welsh Assembly Government. This represents 48 per cent of all the funding awarded since 2007.

Other recipients of European grants funding include the local authorities (£320 million), university sector (£207 million), the voluntary sector (£121million), government sponsored bodies (£51 million) and further education (£13 million). In contrast, private sector sponsors have received only £7 million of grants for six projects.

To many working within the private sector, this is extremely disappointing news, especially as this performance is even worse than the previous major funding programme - known as Objective 1 - when only 13 per cent of the £1.3 billion programme earmarked for the poorest parts of Wales went to private sector projects between 2000 and 2006.

During the election campaign, we heard a lot from politicians about how we should grow the private sector in Wales and I am sure it will be pointed out that a considerable of the funding awarded to public sector bodies via European funding will then be targeted to support private sector companies.

That may well be true but I have heard many complaints from businesses that they have been actively discouraged from the labyrinthine processes for applying for funding directly. More relevantly, they argue that many of the programmes being developed have little relevance to the real needs of Welsh business.

Indeed, many have expressed the opinion that the Welsh Government remains reluctant to make the most of business expertise and experience in the development and delivery of regeneration programmes such as those provided through £2 billion of European funding.

Rather than working with, and listening to, the private sector, it has been suggested to me by leading businesspeople in Wales that there has been an air of entropy that is content to continue with the status quo that has resulted in the poor performance of our economy during the last decade.

Of course, we now have a new Minister in the department responsible for the promoting business and the economy and one can only hope that she will take a very different approach to her predecessors in bringing in business expertise to support the army of civil servants at her disposal.

However, it is not only in relation to economic development that business can help and we all know that the private sector has much to offer the Welsh Government, from advice on key issues across departments to supporting the supply of vital public services.

For example, there is growing evidence that the private sector can make a real contribution to
ensuring that the Welsh budget is fully realised for the nation, especially at a time when the funding from the Treasury to Wales is reducing.

According to the CBI and other business representative groups, there is enormous potential for Public-Private Partnerships (PPP) in improving services by delivering efficiency savings. These can provide value for money for taxpayers, increase government transparency and financial accountability and encourage long-term collaboration through genuine partnering, resulting in enormous savings could be made for investment in front-line services.

In addition, there could be the leveraging of significant private sector investment for new projects and the opportunity to access private sector technical, management, and financial resources and expertise. Public sector managers could then focus on delivering their key services, rather than managing projects which take them away from their core business.

Since the National Assembly for Wales was created, there has been a moratorium by the Welsh Government on private sector involvement in areas such as the NHS. However, this has not stopped other parts of the public sector from working with businesses. For example, the Welsh Local Government Association has agreed that private companies should have greater involvement in delivering council services, which could result in projects such as new schools being built through money provided from private funding.

If our economy is to recover, then the new Welsh Government must ensure that, where appropriate, the private sector is fully engaged in delivering its strategies and opportunities should be created for Welsh businesses to work more closely with the public sector.

Certainly, if we are to drag ourselves from the bottom of the prosperity league table for the UK, the private sector must be fully engaged by politicians and civil servants as a key partner in helping government to improve public services and, more importantly, to create wealth and employment in the economy.

IN TUNISIA

Have just arrived in Tunisia to undertake a couple of days of interesting work with the OECD, which has been tasked with examining entrepreneurship within the university sector.

More specifically, the Ministry of Education and Research has asked the OECD to review five Higher Education Institutions – one virtual university, three full universities and one vocational education provider. This includes a questionnaire-based survey of all higher education institutions in Tunisia., followed by a country-level assessment of graduate entrepreneurship support.

It will be an intensive couple of days in a hotel in Hammamet before leaving on Saturday morning for a nine hour journey home via Lyon and Amsterdam! At least I have the cricket to look forward to on Sunday (assuming the weather in Cardiff is similar to what we have in Hammamet!)

The two days will consist of detailed workshops with the rectors of the Universities, business start-up providers and representatives from two ministries. Having undertaken research in this area in Europe and the USA, this is the first time I have worked in North Africa, and it will be fascinating to compare what is going in Tunisia with the European and American experience.

THE DECLINE OF FARMING IN WALES

Daily Post column May 23rd 2011

Last week, the First Minister noted that farming was an important part of Welsh life despite eliminating the need for a Minister sitting around the Cabinet table with responsibility for the industry.

In defending the fact that, for the first time ever, there would be no Ministerial responsibility for rural Wales, Carwyn Jones stated that he has made sure there is instead a deputy minister for agriculture who will be responsible for representing farming, fisheries and food development.
Certainly, the fact that agriculture is now firmly embedded within the new department of Business, Enterprise and Technology is to be welcomed.

And given that food and drink is an important exporter for Wales, it was surprising that Ieuan Wyn Jones had excluded it from his list of six key sectors for the Welsh economy during his tenure as Economic Development Minister. Yet, many believe that farmers and those working in rural Wales have a right to be worried.

As I pointed out a fortnight ago in this column, Labour no longer hold any seats within rural Wales although they do have representation on the regional list in Mid and West Wales. As a result, those living and working in farming will be looking back at the record of Labour led governments since 1999 with some trepidation, since their tenure in charge of Welsh agriculture has led to a performance of decline unsurpassed in any other part of the UK.

For example, the government’s own statistics show that the contribution of agriculture to the Welsh economy has fallen by 69% during 1999-2008, the worst performance of any UK region. This is at a time when the rest of the Welsh economy grew by 32%. Whilst some may suggest that this follows a general trend of decline within British farming, this simply isn’t true as agriculture across the UK grew by 8% over the same period.

Indeed, the relative decline can be best demonstrated by the fact that in 1999, agriculture accounted for 1.7% of the Welsh economy, a higher level than the 1.1% for the UK economy. By 2008, this had declined to 0.4% as compared to 0.8% for the UK. In fact, the importance of Welsh agriculture has continued to fall relative to the rest of the UK under successive Labour-led administrations. For example, whilst Wales accounted for 6% of the value of the UK’s agricultural sector in 1999, ten years later this had dropped to 1.7%.

In 1999, agriculture was producing £534 million for the Welsh economy, but this had gone down to £168 million by 2008. If the relative contribution of agriculture to the Welsh economy had been the same in 2008 as it had been in 1999, then the sector would have been generating £785 million for the Welsh economy that year alone.

Of course, critics may point to events such as foot and mouth disease as having an impact on the sector, but direct effect from the outbreak in 2001 was far less than expected. Indeed, the main decline in agriculture during the last decade actually happened during the period 2005-2007 when Welsh farming lost most of its value. Therefore, given the steep decline in the Welsh agricultural economy since 1999, the new Assembly Government finally needs to start delivering, especially in boosting the food and drink sector across Wales.

Perhaps having a ministerial voice at the table is not as important as the integration of agriculture as a key industrial sector into the new business and economy department under Edwina Hart. However, actions have to speak louder than words and, given the previous record, rural Wales will expect needs to be a dramatic change in the policies towards agriculture and its link into food manufacturing if it is to become an important part of Welsh economy again.

THE ROAD TO SILICON VALLEY

Western Mail column May 21st 2011

Last week, I was over in California as a guest speaker at the British American Business Council (BABC) event in San Francisco.

It was an impressive event focusing on innovation and I was fortunate enough to share the platform with luminaries such as Mike Moritz of Sequoia Capital, one of Wales’ most successful business exports; Peter Moore, President of gaming company EA Sports (and a former teacher at Ysgol Dinas Bran, Llangollen!); and Penarth-born Lieutenant General Sir Robert Fry.

Of course, there is nowhere better than Northern California to hold a symposium on innovation, given that the World’s greatest concentration of high technology companies is to be found in an area down the road from San Francisco that has now become famous as Silicon Valley.

The term Silicon Valley comes from the fact that, back in the 1950s and 1960s, there was a cluster of companies involved in the semiconductor industry within the region although the real success of Silicon Valley has emerged in the last 25 years with the rapid development of companies such as Apple, E-Bay and Google, businesses that have revolutionised the way we live and work.

In fact, even Facebook, whilst originating at Harvard University, only achieved its dazzling success only after relocating to California.

During the conference, Cardiff-born venture capitalist Mike Moritz was asked what was the defining factor in the success of Silicon Valley. He responded by saying that it was education, and investment into research and development into world-class institutions such as Stanford University that had really made the difference.

It was also argued that high quality research alone was not sufficient to enable the development of innovation in vast quantities. Indeed, it was suggested in a later session that the one of the real catalysts in ensuring the future development of Silicon Valley was the creation of the Stanford Industrial Park in the 1950s on land owned by Stanford University. This enabled a centre of high technology industry to be created close to a proactive university.

More relevantly, future tenants were limited to those high technology companies that might be beneficial to the university. Given this, many will be wondering why Wales has yet to establish a science park near to any of its two main research universities?

The other key factor is the finance that was available across the region. Whilst venture capital in the USA originated in the North East of the country around Boston and New York, it found its feet in the West coast of America, where opportunities were quickly emerging from world-class engineering departments and companies such as Hewlett Packard with a strong commercial track record.

Indeed, during the 1980s, the number of venture capital firms increased from just a few dozen firms to over 650 firms by the end of the decade, with over $31 million of funds available.

Whilst the bursting of the dot-com bubble at the beginning of the Century had the biggest impact amongst Silicon Valley companies and investors, it didn’t take long for the funding opportunities to re-emerge with the growth of new internet opportunities such as social networking through companies such as Facebook, Twitter and YouTube, all of which did not exist prior to 2005.

Many would say that, despite the emergence of the new economies of China and India, Silicon Valley has undergone a renaissance in recent years as a result of this new sector. In fact, in the first quarter of 2011, 65 per cent of all venture capital deals within the USA were undertaken in California and new fast growing companies are emerging all the time. For example, Zynga, the social network game developer responsible for Facebook-based games such as Farmville, was recently valued at $10 billion despite only starting in July 2007.

For policymakers, the key question is whether you can recreate Silicon Valley elsewhere i.e could we create a “Cwm Silicon” here in Wales?

The answer is probably no, at least given the short-term election cycles that most politicians in Wales adhere to when developing economic policy. Of course, Israel is held up as one location that, through a unique set of circumstances, to replicate the success of the Valley in a short time but that is the exception rather than the rule.

However, that is not to say that new clusters cannot be developed given the right combination of talent, opportunity and timing. Indeed, Gordon Moore, one of the founders of computer giant Intel, argued a decade ago that whilst Silicon Valley is very hard to clone, there are important elements for success that can be developed elsewhere. These include the existence of a technology-anchored tenant in the area with many exploitable niches; lots of well-trained engineers; entrepreneurs with no fear of failure; available capital to back ventures; and accommodating government policies.

Certainly, one could argue that in Wales, such factors have yet to be put into place for even a mini-Silicon valley to be developed but a quick and detailed review of whether we can develop such factors quickly in Wales could be an early win for the new Business Minister.

On the other hand, perhaps the best way to start is by trying to learn directly from the last sixty years of success enjoyed by Silicon Valley and at the very least, Welsh businesses should be looking to create greater links with one of the real high technology hotspots of the World.

If we can’t exactly replicate its success of the most innovative region in the World, we should at least try to connect directly with the innovation ecosystem in Northern California i.e. rather than bringing Silicon Valley to Wales, we take our best companies out to Silicon Valley to look for new opportunities and, more importantly, venture capital funding.

Can Wales do that? Watch this space!

ANOTHER GREAT VIDEO ON SOCIAL MEDIA

As someone who still uses Interflora, I didn't get this at first!

A simple but effective way of demonstrating how social media affects all aspects of our lives.

CREATING JOBS IN WALES

Daily Post Column May 16th 2011


In an interview with the BBC’s Andrew Marr last year, the First Minister suggested that we do not have enough businesses in Wales and that “we have to do more to unleash the entrepreneurial spirit".

Indeed, in other media interviews, he again emphasised this point stating, for example, that “it’s sometimes said that the public sector in Wales is too large. I disagree; the public sector appears large because the private sector is too small.”

Given that there is now a focus on delivery of new private sector jobs, this begs the question over exactly what has happened to employment within the private and public sectors during the term of the last Assembly Government?

Official statistics shows that during the first three years of the last Labour-led administration, private sector employment in Wales reduced by 34,000, a fall of 4% as compared to June 2007. The biggest decreases in business employment were to be found in Blaenau Gwent (-19%), Torfaen (-14%) and Conwy (-11%), all local authorities within the poorest areas of Wales.

By contrast, public sector employment increased during the same period by 11,000 (or 3 per cent). Indeed, nearly a third of all those employed in Wales are currently to be found in the public sector, far higher than most other regions of the UK. The counties with the highest proportion of public sector workers are Ceredigion (36%), Isle of Anglesey (36%) and Cardiff (35%)

So what we find is that the Welsh public sector has continued to grow under the last Assembly Government whilst the Welsh private sector has declined. This is not an isolated trend and if we look at the statistics available for the period 2001-2010, then we see that the private sector in Wales has been declining in relative importance, at least in terms of employment, since the First Assembly Government.

In fact, during the last decade, the actual number of those employed in the public sector in Wales has increased by 67,000. In contrast, the number employed in the private sector has declined by 12,400.

The First Minister may be correct in saying that the private sector in Wales is too small but, as the statistics above show, there has been little success by successive Labour-led governments in Wales in addressing this issue, despite having billions of pounds of European funding available to support the business community.

From the statements made during the last few weeks of campaigning, we can only assume that Labour politicians in Wales do not want to cut any public sector jobs. However, in order to achieve the balance of private to public sector employment last seen in 2001 (i.e. ensuring that our private sector is not "too small"), then an additional 170,000 private sector jobs would need to be created over the term of the next Assembly to achieve this.

The question, of course, whether the new Labour Administration in Wales will go any way towards this target. Certainly, their manifesto argued that “much of the economic base of Wales is founded on large companies and they are vital to many parts of Wales”.

Yet, the evidence clearly shows that large firms created less than a third of all new private sector jobs during the last decade, with the vast majority of created by small businesses.

Certainly, if the Labour Party does not change its focus away from supporting large companies to backing small firms and, to quote Carwyn Jones, “unleashing the entrepreneurial spirit”, then the fourth Assembly Government will fail to make any serious inroads into creating new jobs in the private sector and ensuring Wales becomes a more prosperous nation.

A VIDEO THAT EVERY BUSINESS IN WALES SHOULD WATCH

This video was shown before the BABC conference session on social media.

It blew the mind of everyone in the room that hadn't seen it before (including my good self) and is a warning to any business that wishes to develop its customer base over the next few years.

IS WALES MISSING OUT ON GLOBAL OPPORTUNITIES?

Western Mail column May 14th

Last Friday, I gave a presentation to a group of Welsh businesspeople at Hays Recruitment's Cardiff offices on the subject "Is Wales missing out on Global Opportunities?".

I started by examining the relative performance of Wales in terms of exports during the last year. Unfortunately, it showed that whilst the total value of UK exports increased by 16.2 per cent during the period December 2009-2010, exports from Wales fell by 0.1 per cent to £9 billion over the same period.

Therefore, whilst the Welsh economy is not going backwards in terms of international activity, we are certainly not taking advantage of the recent trends in growing exports across the rest of the UK.

The official data also shows a concentration in the areas in which we export, with three sectors - energy, metals and chemicals - accounting for two thirds of trade from Welsh businesses. As these are also sectors that are predominantly driven by larger firms, there is a question as to whether any policymaking here in Wales can positively affect these industries. Perhaps the focus should be on those sectors that are growing quickly in this area.

For example, in terms of export growth during the last four years, the three sectors that have shown the largest expansion have been creative industries (306% growth), food and drink (124% growth) and clothing (80% growth) and it is clear that, with the right support, these sectors could grow further, especially a they currently account for only 2% of Welsh exports. The biggest decline in exporting over the same period has come from oil and gas (-80%), telecommunications (-49%) and engineering (-37%).

The panel then discussed the reasons for firms to pursue internationalisation, especially as there was sentiment expressed that businesses could develop through predominantly exploiting their home market, although a recent study from the European Commission has shown that internationalisation is positively correlated with business performance. For example, more than 50% of SMEs (Small to Medium-sized enterprises) that invest abroad have increased their turnover whereas for all SMEs this is about 35%.

Similarly, SMEs that are internationally active generally report higher employment growth than those that are non-active. Innovation is also higher within exporting firms with 26% of internationally active SMEs introducing products or services that were new for their sector in their country as compared to 8% of other. These internationally active SMEs are also more active with process innovations that are new for their sector in their country.

The same report also made a number of recommendations as to how internationalisation can be encouraged. For example, given that the results showed a strong link between activities on international markets and different forms of innovation, policymakers should design and present policy support measures aimed at stimulating innovation and internationalisation in conjunction.

It also suggested that as e-commerce activity is positively correlated with being active in export markets, then it should be encouraged and supported. Indeed, the internet has already made it easier for SMEs of all sizes to overcome some of the barriers to internationalisation and actions by policy makers to facilitate a continuing growth of e-commerce may further strengthen this effect. Given this, it is a great loss to the development of Welsh businesses that Opportunity Wales, championed by BT, failed to get any support from the Welsh Assembly Government. Certainly, ensuring that businesses develop their capability and capacity on the world wide web is as important as funding superfast broadband across the country.

Finally, it suggested that there a lack of information is a crucial barrier for doing international business. More specifically, it stated that SMEs need support in gathering and organising the collection and analysis of information on areas such as market developments and the legal environment in foreign markets. Ironically, this was one of the key roles played by the now defunct International Business Wales and, as yet, this vacuum in the provision of vital intelligence on foreign markets has yet to be filled by any other organisation.

Indeed, various research studies have shown that one of the biggest barriers to getting small firms to initiate exporting is information – many small business owners have said they couldn't tap foreign markets because they simply weren't sure where to start. Given this, it is not surprising that only around 2000 Welsh companies are actively involved in exporting.

Internationalisation has become the focus for many economies wishing to emerge strongly out of recession. In the USA, President Obama’s goal is to double his nation’s exports to $3 trillion within five years and his administration have already admitted that it will be small firms that will be the focus of much of their efforts in achieving this. In Wales, we cannot be left behind as the rest of the World develops its international trade.

Certainly, Welsh businesses face many challenges over the next five years but if the economy is to grow and develop, then firms must increasingly look outside our borders for trading opportunities. If not, then the Welsh economy will continue to fall further behind not only other UK regions, but other nations across the World.

INNOVATION IN 2011

As the BABC conference in San Francisco begins today and UK and US businesspeople come together to discuss the future of innovation, I thought it would be worth reflecting on a recent post that was sent to me regarding the 100 Things to Watch in 2011. Five months later, I wonder how many of these have actually begun to happen?

REFLECTIONS ON THE ASSEMBLY ELECTION RESULT

Daily Post Article 10th May 2011.

As I write this column in California, last week’s Welsh Assembly elections seem a long way away.

With Labour hinting that, despite winning 30 seats, they would be considering agreements with other parties to secure a working majority, being on the other side of the World may be the best place to be when the political horse-trading commences!

It has been a fascinating election for a number of reasons.

First of all, I am sure, that despite smiling faces on Friday, the Welsh Labour Party will be bitterly disappointed at not securing a majority.

Given that they fought the election arguing that this was an opportunity for voters to pass judgement on the UK Coalition Government, there must be disenchantment amongst Labour ranks that they failed to pick up enough constituencies to give them a secure majority in Cardiff Bay.

After all, if you had listened to Labour’s statements during the campaign, then you would think that David Cameron’s government is the most unpopular in recent political history.

Yet, not only did the Welsh Conservative Party hold their own during the election, but increased their popular vote to 25% in the constituency vote and even gained two further seats in North and Mid Wales.

Certainly, congratulations are due to Janet Finch Saunders for beating both Plaid and Labour to take Aberconwy and Russell George in emulating Glyn Davies in Montgomery. It also gives the party the opportunity, as the official opposition, the opportunity to build a real alternative to what is expected to be a more left wing Labour Party than in the past.

So whilst Labour and the Conservatives both have their own reasons to be cheerful, the other two political parties in Wales have much to ponder.

The Liberal Democrats can consider themselves lucky to have only lost one seat, given that their vote largely collapsed across most of Wales. In fact, most of Labour’s increase in votes was largely at the expense of the Liberal Democrats in nearly every seat in Wales.

Yet, given the talk around Cardiff Bay over the weekend, the real losers in the election may yet end up as part of the next Welsh Assembly Government.Before doing so, perhaps Kirsty Williams should have a word with Ieuan Wyn Jones as he and Plaid Cymru certainly expected to at least hold their ground  within this election as a result of their four years in government.

Yet, in losing four seats, the party has gone backwards in advancing its cause within Wales.
Some has said that the collective responsibility of coalition government made it very difficult for Plaid to directly attack Labour. Indeed, how could Ieuan and his colleagues condemn low educational standards, poor economic performance and a failing health service when these very subjects were discussed with Labour colleagues every week around the Cabinet table?

As to Plaid’s future, some members are already suggesting that it should reject any overtures from Labour for a further coalition and return to the backbenches to consider their next move. Given the briefings over the weekend (both official and unofficial), there seem to be those within Plaid who still rue the day four years ago when they chose Labour over a rainbow coalition, enabling Wales’ largest party to continue its hegemonic control over the Welsh Assembly and, more importantly, to relegate Plaid Cymru to minority partners, a situation that clearly contributed to their electoral failings this time round.

Of course, the former Presiding Officer is one member that does not this view, although he seems to have ignored the most relevant outcome of last week’s election (and one that has yet to be picked up by the commentariat) which is that, for the first time, Wales’ electoral map has been neatly split into two as shown in the figure above.

There is rural Wales, where the seats are held by the Conservatives, Plaid Cymru and the Lib-Dems, and the old industrial heartlands of North East and South Wales, which are exclusively Labour. Indeed, if Labour do decide to govern alone, who will take up the brief for Rural Affairs or will the department be changed again and given to an urban-based AM?

Given this, it is critical that those Assembly members in rural areas ensure that all parts of Wales, and not those that are represented by Labour, benefit equally from the policies of the next Welsh government. That is the main challenge if our nation is to progress as one over the next five years.

THE IMPACT OF INNOVATION

This week, I am in California speaking at the 18th annual British American Business Council Transatlantic Conference in San Francisco.

I am honoured to be sharing the stage with luminaries such as Mike Moritz (Sequoia Capital), Peter Moore (President of EA Sports), George Whitesides (CEO of Virgin Galactic) and Lord Green (Minister of State for Trade and Investment).

I am looking forward immensely to this important event which should help to put the innovation agenda firmly on the map in terms of developing greater links between the USA and the UK. During the week, I will also be ensuring that the University of Wales will also be contributing to developing greater links between Wales and Silicon Valley, but more of that next week.

In the meantime, here is a great video representing a recent academic paper, "Innovation as a Learning Process: Embedding Design Thinking", authored by two Californian academics, Sara L. Beckman of Berkeley and Michael Barry of Stanford. It demonstrates the type of advanced thinking on innovation that we need to embed in organisations here in Wales if we are to make the type of step change necessary to drive forward the economy.


Innovation as a Learning Process from Roger Shealy on Vimeo.

QUOTE OF THE DAY

Wyn Grant on the short-termism endemic in British industrial policy:

"(There is) a profound uncertainty, which has never been resolved, about what Government’s relationship to industry should be (which is compounded by) the separation of industrial and bureaucratic careers, and by the character of a civil service in which stability, smoothness of operation and avoiding embarrassment for ministers often seems to be the first priority of government."

Nothing much seems to have changed there!

REFERENCE - W. Grant, ‘Government and manufacturing industry since 1900’ in G. Jones and M. W. Kirby (eds.), Competitiveness and the State: Government and business in twentieth-century Britain (Manchester, 1991), 116.

SEARCH BEGINS FOR WALES FAST GROWTH 50 2011

Today, the Western Mail, in association with the University of Wales, begins its annual search for the fastest growing Welsh companies.

Established in 1999, the Wales Fast Growth 50 aims to identify the fifty fastest growing firms in Wales. Now in its thirteenth year, it has become firmly established as one of the main barometers of entrepreneurship in the Welsh economy and the list of business success that companies across Wales aspire to.

Last year, the 50 fastest growing firms in Wales created 1,400 new jobs and increased their sales by an incredible £305m in the middle of the worse recession since the 1920s .

The 2010 fastest growing firm in Wales was recruitment company Smart Solutions, which achieved an incredible growth rate of 3400 per cent between 2007 and 2009. Operating in a highly competitive marketplace, the company became successful by investing heavily in its infrastructure, always putting its staff first, and developing innovative ideas and strategy in a stale market.

Led by its chief executive Nathan Bowles, Smart Solutions is continuing to grow its share in its niche market whilst increasing its presence outside of Wales. On receiving the award last year, he praised the company’s staff for driving the company’s rapid expansion. "It was great for us to get the award and it was a great achievement for the staff after all their hard work and dedication," he said.

The 2011 list of the fastest growing firms in Wales will appear in a special supplement, which will be published by the Western Mail on Wednesday 21st September, in association with the University of Wales.

There will also be a special gala dinner, which will take place at the Holland House Hotel in Cardiff on Friday September 16th 2011. This exclusive event, sponsored by Capital Law, Santander Bank, Hays Recruitment, Venture Wales, Media Wales and Logicalis, has become one of the most prestigious in the Welsh business calendar and, yet again, promises to be a showcase of the best of Welsh enterprise for all attending.

HOW TO GET ONTO THE 2011 FAST GROWTH 50.

To qualify for the Fast Growth 50 2011 competition, firms should:

- Be independent and privately held (not a subsidiary or branch plant of another company)
- Had sales of at least £250,000 in 2008
- Be based in Wales

Rankings will be based on percentage growth of revenues from 2008 to 2010

The closing date for entries is June 17th 2011.

An entry form for this year's competition can be requested by contacting fastgrowth50@wales.ac.uk or by visiting the website http://www.fastgrowth50.com/

PROACT AND ITS LIMITED EFFECT IN NORTH WEST WALES

Daily Post column, May 2nd 2011

During this election campaign, we have had the unedifying row between Labour and Plaid Cymru over which party was responsible for developing the Pro-Act scheme.

As you may recall, this Welsh Assembly Government programme was put into place to help companies during the recession by encouraging them to avoid redundancies through supporting workers to train instead.  It was available to businesses that had introduced short time working and faced the threat of redundancies.  It offered £2000 per individual towards training costs and a further wage subsidy of £2000 per worker whilst this training was being undertaken.

Across Wales, it can be argued that the scheme did its job, safeguarding 10,635 jobs in 250 firms at a cost of £27 million, although there has been some dispute as to how many of the jobs were actually under threat of redundancy at the time. Yet, whilst the political wrangling has gone on between the two parties that made up the last Assembly Government as to who was responsible for its development, no-one seems to have asked whether the every part of Wales has benefited fairly and equally from the funding made available through the Pro-Act scheme.

Well, according to a report written by Assembly Members’ Research Service, it would seem that funding has been geographically concentrated.

Not surprisingly, two thirds of the Pro-Act funding has gone to businesses based in South Wales, with only 15 per cent going to firms located in North Wales. The county that received the largest amount of funding was Neath Port Talbot, with £3.2 million going to 18 companies, safeguarding around 1700 jobs, although it is to be noted that Tata Steel received a third of this funding to support a thousand employees at its main Welsh plant. This contrasts with Ceredigion, where one firm received £31,680 to support eight of its workers.

In fact, it would seem that rural areas such as North West Wales have again lost out when it comes to receiving support from major Assembly initiatives. In Conwy, Anglesey and Gwynedd, only sixteen companies were supported by Pro-Act and the amount they received came to only 2 per cent of the total funding given out by the Welsh Assembly Government under this initiative. Contrast that with individual counties such as Rhondda Cynon Taff, which received 10 per cent of the Pro-Act budget and Swansea, which received 8 per cent.

I cannot believe that businesses across North West Wales, which were facing the same difficult economic conditions as those in South Wales, would not have applied for financial support from this programme. Why has so little been done to support businesses in these three counties, especially compared to other parts of Wales?

With Anglesey being the poorest county in the whole of the UK, you would have thought that it would have been an economic imperative for the Welsh Assembly Government to ensure that businesses across the island were made aware of the financial support available through Pro-Act. Yet only five businesses were supported on Anglesey during the worst recession for generations.

During the last two years, Labour and Plaid Cymru have constantly described the Pro-Act scheme as being their solution for the economic recession that hit many Welsh businesses. Yet, these statistics show that it has had little effect on some parts of our economy. Certainly, the next Assembly Government needs to ensure that any large scale business support programme needs to be focused not only on those old industrial areas in South Wales but also on the more rural areas such as North West Wales where businesses face many similar challenges.

WELSH ELECTION MANIFESTOS - THE SMALL FIRM SECTOR

Western Mail column 30th April 2011

With only five days to go until polling day, I have been ploughing through the four Welsh political parties’ economic manifestos for the Assembly elections to examine what each is specifically promising the small firm sector in Wales if elected.

Let’s first look at what Wales’ largest party has to offer.

The opening line in Labour’s manifesto on the economy states that “Wales faces significant economic challenges and the next Assembly term will be a critical period for the Welsh economy”. Not many could argue with that statement, especially as Wales remains the poorest region of the UK.

Yet, the rest of the manifesto on the economy, especially for the small firm sector, remains a major disappointment.

To me, the biggest regret is that the Welsh Labour Party ignores the overwhelming evidence that it is SMEs (small to medium sized enterprises) that create jobs in the economy. Instead, they argue that “much of the economic base of Wales is founded on large companies”.

This is despite Welsh Assembly Government statistics showing that, during the period 2003-2010, 70 per cent of all employment growth in Wales (68,000 jobs) came from SMEs.

Instead of helping SMEs, Welsh Labour has promised to focus their economic policy on large firms and “to build strong links with our anchor companies and develop strategic, mutually supportive relationships with these key companies”.

The only sop to the critically vital SME sector is that they will “review what entrepreneurial support is needed by start-up and small firms, with real potential to thrive and grow, and how we can embed an entrepreneurial culture in Wales”.

Anyone involved in business will groan inwardly at this, given that every Assembly Government since 1999 has undertaken some sort of expensive ‘review’ of business support for smaller firms. Indeed, the last Assembly Government, through its consultation for the Economic Renewal Programme, spent a small fortune on a review of small business support.

Given that Labour has promised, if elected, to put delivery before anything else for the next five years, is it really suggesting that Welsh SMEs need another review that will no doubt take many months to complete and come up with yet another useless strategic document?

Let’s move onto Plaid Cymru.

The biggest surprise in its manifesto for the economy is that the word “entrepreneur” does not feature once in what is otherwise a well-written document. However, there are some new ideas that do merit praise and could help the small firm sector considerably.

With small firms struggling to get access to capital, a new £90m loan scheme is promised, although the manifesto fails to indicate how this differs from the current £150m Jeremie scheme managed by Finance Wales.

In addition, Plaid addresses the issue of public procurement directly and will aim increase the amount of goods and services purchased from Welsh-based suppliers from 50% to 75%. This is long overdue within the Welsh public sector and if they achieve that aim and focus on introducing procurement models that will benefit more small firms, then an additional £1billion of funding will reach Welsh business every year.

However, it is the omission of a particular policy that caught my eye.

At the last election, Plaid Cymru’s economic policy promised to take 50,000 businesses out of paying business rates altogether. Four years later, this has merely been reduced to maintaining the existing level of business-rate relief for businesses in Wales, which suggests that the Party of Wales’ previous zeal for reducing taxes for small firms has been diluted considerably.

For the Liberal Democrats, the main economic policy manifesto promise seems to be the creation of a “Jobs and Growth Innovation Programme” which will include increasing the number of patents, establishing business mentoring schemes and upgrading old manufacturing sites for new jobs, although there is little detail on how this will specifically support the SME sector.

What is to be welcomed though is their commitment to establishing a Welsh Stock Exchange to give businesses greater access to capital. This has long been championed by the Liberal Democrats as a way for growth SMEs in Wales to access capital and is an idea that is worth considering by the next Assembly Government.

What is most striking about the Welsh Conservative manifesto, given the party’s previous ambivalence to devolution, is the commitment to use the Assembly’s new powers to develop a new Enterprise Wales bill.

This will abolish business rates for small businesses; reform procurement to make more contracts SME friendly; provide incentives for enterprise such as scholarships, greater scientific and technical training, R & D support and Enterprise Zones; and will compel WAG to publish a five yearly Enterprise and Entrepreneurship Strategy.

Whilst a number of the ideas in the manifesto are not new, they have yet to be implemented properly in Wales by successive governments. Certainly, a revival of a new Entrepreneurship Action Plan, as suggested, could hail a renaissance in entrepreneurial activity within the Welsh economy if implemented properly.

So there we have it.

Three of the manifestos are committed to developing detailed policies to revitalise the small firm sector in Wales whilst one, contrary to all the evidence, commits to predominantly supporting large companies to drive forward the Welsh economy.

My biggest disappointment in all the party’s manifestos is that there is no real “big idea” to transform the fortunes of the Welsh economy. For example, I had expected at least one of the parties to put forward a radical policy, such as making the case to reduce corporation tax for Welsh businesses as is currently being considered in Northern Ireland.

Certainly, given that Wales has remained at the bottom of the UK prosperity league table since devolution began in 1999, we need the fourth Assembly Government to be radical and innovative and, regardless of its political colours, to pull out all the stops to ensure that our economy gets back on track.

After twelve years of a declining economy, Welsh business expects no less.

ENTREPRENEURS CAN CHANGE THE WORLD

Having just finished teaching my entrepreneurship course in Turku, it was fantastic to get messages from  a number of my students that they will now be starting businesses when they finish their studies. Makes the journey all worthwhile!

This is a short video that was sent to me by one of the students. It gives a simple but direct message on the importance of entrepreneurship and is worth watching.