Monday, October 31, 2011

STEVE JOBS

On October 5th 2011, one of greatest entrepreneurs that this World has ever seen passed away in his California home at the age of 56, leaving an enormous legacy of brilliance.

For those of us who study entrepreneurship, there are many who are put on pedestals as people who have changed the World around them. Josiah Wedgwood, Edwin Land, Henry Ford, Walt Disney, Richard Branson and Bill Gates are all individuals who made a difference to specific industry but is there anyone who, in such a comparatively short lifetime, did more than Steve Jobs to change the way we work, play and communicate with each other?

Let’s look at the evidence.

In the 1970s, he created the Apple II, the World’s first personal computer, with his best friend Steve Wosniak. He then went onto to develop the Macintosh, which began the home computer revolution and created the desktop publishing industry.

When he left Apple after a management dispute, he joined forces with John Lassiter at Pixar to create a whole new phenomenon of digital animation through films such as Toy Story, Monsters Inc. and Finding Nemo.

Then when he returned to Apple eleven years after his departure, he not only developed the new generation of computers, such as the iMac, but revolutionised the information and communications industry through a range of innovative products such as the iPhone, which turned mobile phone into music, photography, video, email and web devices; the iPod, which changed the way we listen to music; and the iPad, which created the first real platform for digital newspapers, magazines, books and videos.

He also established iTunes, which many have suggested rescued the music industry from what was then a spiral of decline. In promoting the development of applications for his devices, he created a whole new generation of content creating entrepreneurs.

 Most importantly, Apple itself became a byword for a new type of business, a company that was a trailblazer for the those that followed Jobs in the 21st century such as Google, Twitter and Facebook. The life of Steve Jobs is an amazing story, which is why I was delighted to buy the new biography of Jobs by Walter Isaacson earlier this week.

It is an incredible story, more so for the fact that Steve Jobs co-operated fully with the author up to a few weeks before his death and yet was not interested in reading the final version. The result is not only a detailed picture of an incredibly complex individual but a history of entire industries that spawned up around him and his business over the last thirty five years.

Whilst it is enjoyable to read about the triumphant return of Steve Jobs to Apple in 1996, the sections I appreciated the most are the early history of Apple and the challenges he faced in getting the business off the ground. For example, how he struggled to get finance from banks to develop the first Apple computer, eventually relying on a loan from his father to buy the parts to get the business off the ground.

Of course, as with the apocryphal tales of those record company executives who turned down the Beatles, there are also examples of experienced executives who refused to support the new company. One of these was Nolan Bushnell, founder of the games company Atari who first employed Jobs as a young engineer. According to the book, Steve Jobs asked the Atari chief whether he would put in $50,000 for a third of the company. As Bushnell is quoted “I was so smart, I said no. It’s kind of fun to think about that, when I am not crying”.

There are also instances where Steve Jobs goes against the wisdom of what was then conventional business thinking. For example, the adage of ‘never compromise’ when it came to the product, a philosophy that would make and nearly break Apple during the early years as his quest for perfection nearly ruined the business. Or on being asked back in 1982 whether he thought Apple should do some market research to see what customers wanted and answering no because “customers don’t know what they want until we’ve shown them’, as the consumer hysteria over both the iPad and the iPhone has shown in recent years. 

However, what the book emphasises time and time again is Jobs’ incredible ability to see beyond his own narrow sphere and the foresight, from the early days of Apple, in marrying the worlds of humanities and science to create products that were world class in both design and technology.

Steve Jobs’ life is a story that is worth reading and this book captures perfectly the life and soul of the unique individual. He could be a cruel and cold leader, often humiliating people publicly if he didn’t like their work, and admitting in his final interviews that he was harder on people in his company that he needed to be. Yet through sheer drive and willpower, he created a business where, as the book states, “imagination was nurtured, applied and executed in ways so creative that it became the most valuable company on the planet”.

In fact, the real lesson for entrepreneurs, according to Jobs, is that most are “unwilling to do the work it takes to build a real company, which is the hardest work in business. That’s how you make a contribution and add to the legacy of those who went before. You build a company that will still stand for something a generation or two from now.”

And how should Steve Jobs be remembered?

To me, it is Apple’s ‘Think Differently’ commercial in 1997, which had the strapline “that the people who are crazy enough to think they can change the World are the ones who do”.

That statement, more than any other, is a fitting epitaph for Steve Jobs - entrepreneur, genius and a man who changed our lives forever.

Friday, October 28, 2011

FAST GROWTH 50 AND THE FAST TRACK 100

Last month, we published the thirteenth edition of the Wales Fast Growth 50 (FG50) supplement, which is the only list of the fastest growing firms in Wales.

There is also a UK-based list - the Virgin Fast Track 100 - that is one year older and is published in the Sunday Times. However, it  rarely features Welsh-based companies, with the vast majority being found in the South East of England.

Funnily enough, having seen the Inc 500 list in the USA, I had thought of developing a national list for Ireland back in 1996 when I was working at the Michael Smurfit Graduate School of Business in Dublin but left before I got round to it.

After I had come back to Wales to take up a chair in entrepreneurship at the University of Glamorgan, Dr Hamish Stevenson had already established the Virgin Fast Track 100 as the UK equivalent in 1997. So, I decided to concentrate on developing a list to focus attention on the growing impact of entrepreneurial firms in Wales.

So is there a difference in the methodology used to identify growth companies in the Fast Growth 50 as compared to the Virgin Fast Track 100?

In both competitions, companies are:
  • identified either by research (through business information databases) or nomination (the latter is used because an increasing number of companies do not divulge their turnover in their annual accounts published in Companies House)
  • ranked by their compound annual growth rate (CAGR) and confirmed by their latest audited accounts
  • have year on year sales growth sales of at least £250,000 in the base year 
However, the Virgin 100:
  • ranks companies over three years – FG50 decided to do it over two years in 1999 to identify those that were growing quickly over a shorter period of time 
  • enables companies to have two base years – we stick to one base year
  • only lists companies with sales of at least £5m and ten or more employees in the latest year – in Wales, that would exclude a high number of growth firms with real potential 
  • excludes companies with sales of over £500m – FG50 did restrict the list to SMEs only for a decade but has opened it up to larger firms because of the potential impact they could have on the economy
  • only lists companies that are profit-making in the latest year – we do collect this data but do not make it a condition 
Of course, as with any lists with arbitrary definitions, there will be differences in the companies identified. Over the last few years, the tendency has been for the Wales Fast Growth 50 to identify more Welsh companies than the Fast Track 100, probably because of the localised research that we undertake with key stakeholders such as accountants, banks and law firms.

As mentioned earlier, the main similarity is that both lists are modelled on the Inc. 500 in the USA. More importantly, the focus is on giving attention to home-based entrepreneurs, something that the Fast Growth 50 and the Fast Track 100 have done successfully since the late 1990s.

The next Virgin Fast Track 100 is published on December 4th 2011 in the Sunday Times.



Thursday, October 27, 2011

CONNECTED - THE FILM

Earlier this year, I had honour of meeting Tiffany Schlain and her husband, Ken Goldberg, at their home in California.

Honoured by Newsweek as one of the “Women Shaping the 21st Century,” Tiffany is a filmmaker, artist, founder of The Webby Awards, co-founder of the International Academy of Digital Arts and Sciences and a Henry Crown Fellow of The Aspen Institute. Ken is Professor at Berkeley and, frankly, an incredible individual. Hopefully, we will be working with both soon.

In the meantime, have a look at a preview of  Tiffany's new film on the connected world we all live

"Have you ever faked a restroom trip to check your email? Slept with your laptop? Or become so overwhelmed that you just unplugged from it all?  In this funny, eye-opening, and inspiring film, director Tiffany Shlain takes audiences on an exhilarating rollercoaster ride to discover what it means to be connected in the 21st century. From founding The Webby Awards to being a passionate advocate for The National Day of Unplugging, Shlain’s love/hate relationship with technology serves as the springboard for a thrilling exploration of modern life…and our interconnected future. Equal parts documentary and memoir, the film unfolds during a year in which technology and science literally become a matter of life and death for the director. As Shlain’s father battles brain cancer and she confronts a high-risk pregnancy, her very understanding of connection is challenged. Using a brilliant mix of animation, archival footage, and home movies, Shlain reveals the surprising ties that link us not only to the people we love but also to the world at large. A personal film with universal relevance, Connected explores how, after centuries of declaring our independence, it may be time for us to declare our interdependence instead."

 

Wednesday, October 26, 2011

BREAKING THE TRAIN RECORD BETWEEN CARDIFF AND LONDON


As you read this,  I will be sitting on a non-stop train between Cardiff and Paddington which is attempting to break the record for the fastest time between our capital city and London.

The train left at 12.21pm and was expected to be in London before 2.00pm  - a time of around 90 minutes as compared to the normal time of over two hours. Of course, it would not be stopping at Newport, Bristol, Swindon and Reading,

The reason for the journey is to demonstrate what a new electrified line could bring to Wales as the time to be taken will be roughly the same.

However, I would hope that it may also give First Great Western pause for thought regarding the development of a capital express train service running both ways (one in the morning and one in the evening) which would make the journey (and communications) far easier between the two cities, given that electrification is some years away.




FAST GROWTH 50 FIRM CREATES 30 JOBS

One of this year's Fast Growth 50 firms, the Transport Broker Group, is set to create 30 new jobs at their brand new offices over the coming months, with positions available for customer service personnel, sales team members, and team leaders.

This comes a few weeks after the Transport Broker Group was named the 30th fastest growing Welsh business at the Fast Growth 50 business awards at a gala dinner in Cardiff’s Holland House Hotel.

Building on its impressive growth over the last few years, the company has purchased brand offices which is double the size of their previous premises and will allow the Transport Broker Group to further expand its workforce.

As a result, the Transport Broker Group is planning to double its number of employees over the course of the next 12 months, with staggered intakes of new workers over the course of the year. Fifteen new sales staff were signed up earlier this month, and another thirty vacancies have just been opened as the Transport Broker Group looks to add again to its growing workforce.

The Transport Broker Group is a conglomerate comprising of the UK’s leading limousine rental provider, Limo Broker, coach hire operator, Coach Broker, and the luxury transport brokerage, Cars for Stars. From the company’s Cardiff based call centre, the Transport Broker Group is able to coordinate transport hire services in all parts of the UK through their network of approved agents.

The Wales Fast Growth 50 is the definitive barometer of Welsh entrepreneurial firms and is published annually by the Western Mail.

Tuesday, October 25, 2011

NEW OPPORTUNITIES FROM AMERICA?

Finally back in Wales after four excellent days of hard graft at MIT and Harvard.

At this stage, I can't divulge exactly what we discussed as the University will want to make a major announcement in the near future.

However, the trailer below of a new film "Rescue" gives a taster of the sort of work that a new and exciting multi-university global centre could be working on in the very near future.

Watch this space.

 

Monday, October 24, 2011

AER LINGUS AND THE GATEWAY TO AMERICA

With the University of Wales concluding a significant research agreement with a number of US universities this week, I was invited over to Boston to discuss the next steps forward with partners from Harvard University and the Massachusetts Institute of Technology (MIT).

My previous visits to the USA have always been out of London Heathrow with Virgin Atlantic but this time, I decided to give Aer Lingus a go.

Why the Irish airline you may ask?

Well, the main reason is that, in conjunction with their regional partner Aer Arran, there is a service out of Cardiff that connects to the East Coast of the USA via Dublin.

There are a number of advantages to the flight, not least avoiding the three hour train journey to Heathrow followed by the two hour check in period. But it also means I can roll up at a relatively quiet Cardiff Airport around three quarters of an hour before departure, go quickly through security and start the journey relatively stress-free.

The Cardiff-Dublin flight took off at 1130am, landing 60 minutes later, giving me around an hour and a half before the connection to Boston.

Whilst I had looked forward to a smooth transition, there were a number of small problems. For example, there was was no-one at the transit desk at Terminal 1 to give me my ticket for the second leg of the journey as promised in Cardiff, so I decided to go over to the shining new Terminal 2 building at Dublin Airport and check in directly. Fortunately, my bags had already been checked through to Boston (or so I thought) so I could stroll through to my connecting flight.

Of course, one of the key advantages of flying through Dublin is that you go through US immigration in Ireland. And as anyone who has landed in any American airport will know, if you are unlucky, you could wait a further two hours to get through customs. In Dublin, it took around 15 minutes to do this, or would have done if my bags had turned up.

Apparently, US customs need to have a picture of your luggage before they can be put onto the plane as it is treated as US domestic flight. Unfortunately, the bags hadn't turned up so in the transit area so I had to wait, along with the other passengers travelling from Cardiff, in a holding area for about around half an hour.

About ten minutes before we were due to leave, a message came through that, thanks to a cock-up back in Wales, the luggage was still in Cardiff but would be sent through to us as soon as possible. That could have been the cue for a stream of complaints but the Aer Lingus staff were so apologetic that I felt guilty about asking when it would be arriving in Boston. And it has taught me to take carry on luggage the next time I go away for a four day visit.

However, on boarding the brand new Airbus 330-300, the staff couldn't do enough to help and the service was excellent and comfortable. More importantly, the cost was half of the normal price out of Heathrow. Landing seven hours later at Logan Airport in Boston, I walked straight out of the customs hall without going through immigration and I was in my hotel at 5pm local time. So the whole journey from my home in Cardiff to my hotel in Boston had taken 12 hours and I must admit was one of the more stress-free journeys I had taken to the USA, thanks to the relative efficiency of the connections and the excellent service on board.

Of course, it wasn't entirely trouble free given the loss of luggage but I have had that happen to me on numerous occasions previously on domestic flights. Also on booking the flight, Aer Lingus could have given better information on connections on arrival at Dublin but applying a bit of common sense solved any issues on that front. However, those are issues that can be easily managed in the future.

So does South Wales now have a proper link to the USA?

As readers of the business section of the Western Mail have no doubt noted, there has been some discussion on whether the Welsh Government should be subsidising a direct flight to America. Yet, as I discovered this week, there is a hidden jewel of a connecting route through Aer Lingus.

Certainly, if I were the managers at Cardiff airport, I would be promoting this option to businesspeople across South Wales and working with the airline to ensure a seamless service to the East Coast of America.

The Welsh Government, rather than paying millions of pounds to subsidise another airline to come to Cardiff, could also be promoting this route as a Gateway to Wales. In fact, why aren't the powers that be working with Aer Lingus to publicise this as the Celtic flight, linking both Dublin and Cardiff to major US cities including Boston, New York, Chicago and Orlando.

There can't be any harm in trying and I have certainly recommended this to our new academic partners in Massachusetts and Florida as the preferred route when visiting Wales in the future.

Thursday, October 20, 2011

HOW DO WE MAKE ENTREPRENEURS MORE SUCCESSFUL?

That's the subject of "Magic Sauce", the latest animated video from the Kauffman Foundation in the USA. 

Kauffman CEO Carl Schramm points out that nearly 700,000 new businesses start every year, but the failure rate is high and many of them are not creating jobs. Schramm asks, "How do we make those firms more successful at the outset?"

 Watch and enjoy.

 

Wednesday, October 19, 2011

FEMALE ENTREPRENEURSHIP - WHAT SHOULD WALES DO?

Yesterday, a campaign was launched to increase the number of women entrepreneurs by 100k over the next ten years.

Everywoman, the largest female business community in the UK has linked up with the Federation of Small Businesses (FSB)'s Real Life Entrepreneurs Campaign to help encourage more women to set up new ventures in the UK, arguing that 150,000 start-ups would be created per year if women started businesses at the same rate as men.

This is not surprising, as according to the last Global Entrepreneurship Monitor report for the UK, female early-stage entrepreneurial activity in the UK in 2010 was 4 per cent of the adult population as compared to 9 per cent for men i.e. the ratio of female to male early-stage entrepreneurial activity was 44 per cent.

There were also considerable variations amongst the four home nations (see below).
As well as a focus on encouraging more women, the FSB's campaign will also promote enterprise amongst young people, the over-50s, those with disabilities, ex-armed forces personnel and those who are currently living on benefits.

This strategy by the FSB sounds excellent but for those of us who have been involved in entrepreneurship in Wales, it has a sense of real deja vu, given that there was a particular focus on encouraging more starts-ups amongst women, minority ethnic groups, social enterprise and young people within the Entrepreneurship Action Plan for Wales a decade ago.

In fact, I remember that thanks to the promotional campaigns managed by the Welsh Development Agency and the various start-ups programmes targeted at women, female entrepreneurship in Wales in 2004 was at three quarters that of the male entrepreneurial activity, one of the best gender balances in entrepreneurship in the whole World.

Since the demise of the Entrepreneurship Action Plan, the targeting of enterprise support towards women has also died a death.

The question is whether Wales, which is in dire need of more entrepreneurial activity, will continue with its non-specific generalist approach to start-ups or again adopt a focus on key groups such as women?

Tuesday, October 18, 2011

EDUCATION IN WALES - LEARNING FROM THE FINNISH WAY

There is a great debate going on about the state of education in Wales not only at the university level, but also at primary and secondary levels as well.

As many have pointed out, there seems to be one particular country that Wales could learn from and that is Finland, the international trailblazer in the field of education.

As a regular visitor to Finland for the past 15 years, I have experienced, at first hand, the high quality of university student coming through the system. Yet, it is only recently that other nations have begun to sit up and take notice of what is going on.

One excellent point of reference for the so-called Finnish Way is the work of  Pasi Sahlberg. His writing and lectures on this subject are worth having a look at, such as this presentation on what a Canadian province can learn from Finland in the field of education.

Essentially, Sahlberg argues that the rest of the World is trailing Finland in five key areas of education, namely:


  • Teaching core subjects vs Broad and creative learning 
  • Standardisation vs Personalisation 
  • Test-based accountability vs Professional responsibility 
  • Market-based management vs Educational leadership 
  • Data and control vs Collaboration and trust 


As he said on his blog yesterday, "The Finnish education system has progressed steadily since the 1980s because we prepare teachers to improve their students’ learning as well as their own work in collaboration with their colleagues. We see teachers as knowledge workers, not technicians who implement instructions or standards mandated by someone else. The Finnish Way is unique also because it has been able to accomplish educational excellence and equity simultaneously".

The video below also demonstrates the state of education in Finland.

The question, of course, is whether the Welsh Government will even look at this proven model as a way forward in revolutionising the educational system in Wales over the next few years? Certainly, that is where Finland started, by learning from other countries. As Sahlberg himself points out "An important lesson from Finland is that its educational success is a result of deliberate and continuous learning from other education systems, their practitioners, policy-makers and researchers". Perhaps that is the most important lesson of all for Wales educationalists and policy-makers from the Finnish Way.

Monday, October 17, 2011

THE UNDERPERFORMANCE OF STRUCTURAL FUNDING?

Last week, the BBC’s Dragon’s Eye programme revealed that despite billions of pounds of European funding, West Wales and the Valleys have become poorer during the last decade.

According to the programme, the latest official figures show that GDP per head in the region has fallen from 66.8 per cent of the EU average in 2000 to 64.4 per cent in 2008, the latest year for which figures are available.

The only other parts of Europe to see a drop in their relative prosperity over this period are Malta, two regions of Portugal and four regions of southern Italy.

Every other region that has received the highest level of European funding, including those in Greece, Latvia, Slovakia and Spain, have become wealthier over the same period.

This is a shameful indictment of the use of this vital funding package to turn around the Welsh economy during the last decade.

Defenders of the policies of successive Assembly Governments trot out the line that the first round of funding, known as Objective 1, was not focused enough and spread around too many projects. They then say that the current round of so-called Convergence funding, which will have fewer strategic projects, will make a bigger difference.

However, the facts from the Welsh European Funding Office (WEFO) that administers and manages the funding for the Welsh Government paints a very different story.

According to their latest data, the main Structural Funding programme – known as the European Regional Development Fund – has so far paid out £213 million in grants to various organisations.

And what are the outputs from this funding?

Well, as of May 2011, 4,849 gross new jobs had been created, which equates to a cost per job of £44,000. Believe it or not, this is higher than the amount received by LG during the ill-fated inward investment project.

Worst still, WEFO had estimated that, at this stage of the funding round, 7,348 jobs should have been created, so less than two thirds of the new jobs expected have come to fruition.

And if we look at what has happened geographically, we see that the European fund has had little impact on some of the poorest areas in Wales during the last five years.

For example, in Anglesey, only 246 new jobs have been created as a result of European funding, with 255 jobs created in Blaenau Gwent and 178 in Merthyr Tydfil.

With unemployment in Wales recently rising by 16,000, surely there should be a greater impetus within the programme on job creation.

However, it is not only in terms of new jobs that the programme is behind its targets.

During a month when the Assembly Government has appointed six new entrepreneurship champions, the number of new businesses being created through European funding is also well behind target. Instead of 3,019 firms being set up by May 2011, only 1,105 had been established i.e. only 36 per cent of the expected target.

The other major programme for learning and training – the European Social Fund – has also underperformed in key areas. For example, there are 44,000 fewer participants on European funded training programmes than expected. Of those who are have benefitted from taking part in education and training opportunities, only 32% of those estimated to enter employment are doing so.

Worst of all, there are 12,500 fewer young people being trained through the European Social Fund, which should not be surprising given that WEFO has only paid out £14.2 million to project sponsors against a commitment of £95 million. This is at a time when we have record unemployment amongst young people in Wales.

If WEFO was a business and such targets were being reported to the board of directors, there would be alarm bells ringing throughout the organisation and heads would roll.

Yet if you read the monitoring reports produced for various committees by officials, there seems to be no urgency to address this worrying set of results. In fact, the impression is that those in charge of the funding are more focused on spending the money so as to avoid clawback rather than on generating outputs that can positively benefit the Welsh economy.

This is simply not good enough. It is shameful enough that Wales will have to apply for a third round of funding. However, the woeful underperformance of the current funding programme is, frankly, unacceptable when businesses need vital support to grow and create jobs.

So what is to be done?

The new Minister for Business has made her mark with the business community during the last three months and, given her straight-talking no-nonsense style that is focused on delivery, I would expect that she would be appalled at such complacency.

Certainly, if this continues and no action is taken, I would expect the opposition parties to call for a full investigation by the National Audit Office into the performance of WEFO and the failure to hit key programme targets.

At a time when we have this additional money available to make a difference to the economy, it simply isn’t good enough to perform so dismally in terms of job creation, enterprise development and training for young people.

Wales, and the Welsh economy, deserves better.

Western Mail column 15th October 2011.

Thursday, October 13, 2011

ENTREPRENEURSHIP IN DEPRIVED URBAN COMMUNITIES - THE CASE OF WALES

I am really pleased that a new article, "Entrepreneurship in Deprived Urban communities - the case of Wales "- has been accepted for publication in the Entrepreneurship Research Journal (ERJ) from the Berkeley Electronic Press.

ERJ is an an international journal committed to publishing the very best scholarly research. It encourages a scholarly exchange between experts from all fields which demonstrate the vital role that entrepreneurship plays in determining the quality of lives, societies, and economies. The scope of the journal is unique in that it seeks to disseminate both theoretical and empirical evidence research that will facilitate the development of entrepreneurship as a field of study today, and in the future. A scholarly forum for new ideas that have the impact on broadening the traditional business model, the journal recognizes experts and their contributions from all fields including economics, business, psychology, sociology, anthropology, political science, engineering, physical and life sciences.

The paper was co-written with Piers Thompson of UWIC and Caleb Kwong of Essex University.

As it is always difficult to get a paper into an American-based journal. I am doubly pleased at this positive news because ERJ is a new publication that aims to be the leader in its field over the next few years - one of the editors is Chandra Mishra, who transformed the Journal of Small Business Management between 2001 and 2010, and both Howard Aldrich and William Baumol are on the advisory board.

More importantly, the study examines Wales as its case study to determine the potential of entrepreneurial activity for rejuvenating deprived communities.

Utilising data from the Global Entrepreneurship Monitor (GEM) in conjunction with the Welsh Index of Multiple Deprivation (WIMD), the paper examines the relationship between early stage entrepreneurial activity, entrepreneurial attitudes and attributes, with the different domains of deprivation.

Whilst it found some evidence that those living in the most deprived communities were less likely to be involved in early stage entrepreneurship, most of this could be accounted for by the individual characteristics of those living in these areas.

Interestingly, the lack of existing businesses or public services appears to play little role in dissuading prospective entrepreneurs and it would appear from this that there is no need to establish a critical mass of businesses to encourage new business starts within the deprived areas of Wales, as the attraction of low competition appears to play a role in encouraging new business.

Controlling for the endogeneity of the choice of location does not alter the results relating to early stage entrepreneurship, but after separating the ‘choice’ of living in a deprived area and the presence of entrepreneurial attributes, it is found that entrepreneurial social capital and the perceived presence of start-up skills are negatively associated with a number of domains of deprivation as might be expected. The results relating to the perception of good opportunities is mixed with some positive and some negative influences, although this potentially relates to the fact that whilst demand will be suppressed as in a prosperity pull style effect, the absence of competition also provides opportunities.

The paper finds that areas do have an effect, but so do individual characteristics, and since it is these selfsame characteristics that result in many choosing to live in the deprived areas, as well as creating the low social capital, bridging ties, and adverse peer effects, the three components are intrinsically interwoven.

This means that policies to help under-represented groups within these communities may be more appropriate than general business advice and support to overcome help firms grow in weaker economic conditions, but pinning hopes on this alone rejuvenating the area is perhaps asking too much given the role that in and out migration play. Bearing in mind that migration may result in little long term benefit for a deprived area, this does not mean individuals may not benefit.

Therefore, the question is whether enterprise is the most cost effective method of helping this minority of beneficiaries, especially if aspiring entrepreneurs are held back by their environment? A lack of role models, due to a large extent by a lack of tradition of entrepreneurship, is a considerable problem. One method of overcoming this would be through the provision of forums for interaction between entrepreneurs and the public.

The negative area effect on the perception of opportunities would also be tackled by instigating such fora with individuals being made aware of the possibilities open to them rather than being dissuaded by the lack of economic activity present in the area. Training programmes to provide general enterprise skills would be beneficial to not only help develop entrepreneurs but ensure that a greater number of the population are provided with the broad range of entrepreneurial skills suitable for working in small firms.

It is unclear from this study the extent to which specific finance provision is required for deprived areas, as those with lower household incomes have a lower propensity to start businesses although no further significant influence is found for income deprivation. This would imply that policies to help those out of work or on low incomes to start businesses will be adequate although raising entrepreneurship artificially in this manner could impact on the quality of entrepreneurial activity in an area.

The paper will be published in 2012.

Wednesday, October 12, 2011

LEARNING FROM IRELAND - THE GLOBAL IRISH ECONOMIC FORUM

Whilst it seems, after Saturday's enthralling quarter final in the rugby World Cup, there is very little that Ireland can teach Wales in terms of modern rugby, the same is certainly not true in terms of how to get everyone working together to revitalise an economy.

On Saturday, I wrote about the sterling work of the Irish Technology Leaders Group (ITLG) and mentioned the upcoming Global Irish Economic Summit that was to take place over the weekend in Dublin Castle. 

Following this prestigious event, at which former US President Bill Clinton and a host of others spoke, there are a number of recommendations that have already been announced in the last couple of days. These include:
  • Private sector expertise - ITLG has offered to put together a group of Irish technology leaders to sit on the boards of semi-state companies without charge to help the country weather the current economic storm. They would initially offer to work for free to help run various state bodies until 2016. Once a list of 100 leaders has been completed, it will be made public and handed to the Government, which will be asked to match the executives to positions on the state bodies
  • International placements - 1,000 Irish business graduates are being offered placements with companies, business colleges and language schools in Asia - a number of global companies have now offered funding to sponsor this programme
  • The Gathering - a global Irish “homecoming” which has been billed as the biggest tourism initiative ever staged in Ireland, will be a year-long event in 2013 which aims to attract as many as 325,000 extra visitors into Ireland. This would add €220 million to the Irish economy.
In addition, President Clinton has agreed to play a key role in the fight-back by Irish business and host a New York Irish summit next year to kick start Ireland’s economic recovery with the aid of American investment. 

So, there is a lot of activity going on across the Irish Sea and, more importantly, there is a sense of optimism and hope that the Irish economy can be turned around if everyone works together.

Surely, there is no reason as to why business and government in Wales could not do the same to take advantage of the experience and expertise of the "Cymru ar Wasgar" - the Welsh diaspora.

If there are any doubts about how this can make a difference, then Welsh politicians and policymakers should listen to some of the views of Denis O' Brien, one of Ireland's most successful businesspeople, on how he believes a small economy can be developed in these difficult times.

Tuesday, October 11, 2011

THE IRISH DIASPORA - LESSONS FOR WALES


Last week, I was delighted to be invited to Dublin for the fourth Annual “Silicon Valley Comes to Ireland” conference, organised by the Irish Technology Leaders Group’s (ITLG).

This is a regular event in which senior executives from the world’s innovation hotspot come over to Ireland to engage with more than fifty Irish technology companies in a series of private investor workshops.

Earlier this summer, the University of Wales Global Academy opened an office in ITLG’s Irish Innovation Centre in San Jose, the capital city of Silicon Valley, to give Welsh firms access to the region’s investors and universities.

So this was a real opportunity to catch up with John Hartnett, the President of ITLG, and see the effect that his team is having on delivering a more innovative economy. As John suggested during the event, their aim is to help Ireland focus on enlarging its indigenous high-tech sector to drive economic recovery as there is significant opportunity for growth created by these firms.

And despite the previous gloom surrounding its economy, John believes that there has been a real sea change during the last few years in which there is a greater “go for it” attitude amongst new entrepreneurs in Ireland.

I certainly can understand what he was talking about, having attended a ‘Dragon’s Den’ style University Challenge organized by ITLG and sponsored by Cisco, in which three companies spinning out from the Irish higher education centre competed on stage at Dublin City University for a €100,000 prize.

To be honest, the three presentations, from Pilot Photonics (Dublin City University), ALR (University of Limerick) and InfiniLED (University College Cork), were far above the standard normally seen on the BBC programme and the usual panelists would have been falling over themselves to invest in these companies.

InfiniLED, the eventual winner, has developed a next generation Light Emitting Diode (LED) technology which produces light more efficiently than conventional LEDs and has the potential to make massive inroads into a market worth billions of over the next few years.

In the picture, from left, are John Harnett, president of ITLG; Joe O’Keeffe, InfiniLED and Richard Stokes of DCU.

As I wrote earlier this year, the link between Silicon Valley and Ireland is beginning to pay real dividends by bringing together experienced investors to Ireland to engage directly with emerging Irish technology companies and further ten young high technology firms will be showcased in Stanford University in 2012.  I can only hope that, through our office at the Irish Innovation Centre, we can also start introducing Welsh companies to the opportunities available.

Of course, the real advantage that Ireland has is the fact that all the senior executives in Silicon Valley visiting this week have Irish roots and want to come back to help their economy in its hour of the need. The ITLG itself has over 3,000 members with chapters in Wall Street, Silicon Valley and Hollywood to bring together the three critical worlds of money, entertainment and innovation.

The support that the diaspora can provide has clearly hit home with Irish politicians and policymakers who have organized a Global Irish Economic Forum, which is being held at Dublin Castle this weekend.

With 270 delegates from 40 countries attending, including former US President Bill Clinton, the event will see the world of business and government discuss practical initiatives that can help the economic recovery in Ireland, including ways of generating foreign direct investment, promoting culture as well as increasing export and tourism figures.

Some of the planned debate topics include "Ireland's image abroad: communicating the message" and "Making Ireland more competitive in new and emerging markets".

But this is not only a talking shop - the fifteen working groups at the forum have been asked to come up with two or three ideas which Irish embassies around the world will then be charged with implementing. In fact, the idea of the Irish Innovation Centre came from the first summit held back in 2009, an idea that has been put into practice with outstanding results.

Certainly, there is no reason why Wales could not do the same to bring together the outstanding talent that is out there all over the world. The Irish are happy to help and, more importantly, are enthusiastic about our chances of success.

As John Hartnett and I concluded over a pint of Guinness late on Wednesday night, imagine being in a room where you had Michael Moritz, Terry Matthews and Howard Stringer discussing how to get the Welsh economy back on track.

That would be very special and could be the very spark needed to create a new innovative Wales and the entrepreneurial and competitive economy we all hope we can achieve in the future.

Western Mail column, 8th October 2011

Sunday, October 9, 2011

WILL EUROPEAN REGULATIONS SCUPPER WELSH HIGHER EDUCATION POLICY?

Yesterday evening, I received a phonecall from a good friend asking me if I had read the Sunday Times that day.

I hadn't and so he directed me to a story which, if true, could have serious implications for one of the Welsh Government's flagship policies.

Unfortunately, due to the Sunday Times' web policy, I cannot provide the necessary link to the story (which may be why no-one seems to have picked up the article in the Welsh press).

Essentially, the story suggests that the Welsh Government will have to pay the difference in fees for thousands of EU students wishing to study at English.

According to the Sunday Times, "The loophole allows Europeans to exploit a decision by the Welsh government to pay any fees above £3,465 for students from Wales who attend courses in England from next year".

It would seem that under EU laws, Wales is not permitted to offer a better deal to its own students than it offers to those of any EU state outside Britain.

This potential problem had been picked up by the Scottish Government which, like Wales, had considered paying fees for its students to study at universities in England. However, as a source quoted in the newspaper noted:

“Our legal advice was that if we were to start paying for students from Scotland to study in England that would be considered a breach of EU law unless we paid for other EU students as well.”

The suggestion therefore is that tens of thousands of EU students could demand that the Welsh Government pays the difference in fees (around £5.5k per annum) for them to study at all English Universities. For example, this would give some EU students a £16k scholarship to study at institutions such as Oxford, Cambridge and Imperial, three of the top ten universities in the World.

It sounds an incredible turn of events and I cannot believe this could happen. Of course, one can only assume that the legal implications of the policy must have been throughly considered by Welsh Government officials and the Higher Education Funding Council for Wales over the last 12 months since its announcement. It is also worth finding out the view in Scotland and I will ask a few friends with links to the Scottish Government to try and discover more later today.

Nevertheless, the story does seem credible and with changes to fees being implemented in less than a year's time, clarification is needed quickly from the Welsh Government over this issue as Welsh students will already be considering where they will be studying, with a significant number already having chosen universities in England.



REBOOTING THE BLOG

The last six months have been exceptionally busy on the day job, which is why I haven't been blogging as often as I should have.

More relevantly, I never had any time in the evenings to look after the management of the blog itself, which is why I decided to stop accepting comments altogether in April as moderating them took so much time (and I just never got round to changing the settings back on blogger).

With Welsh political coverage on the BBC being reduced, could the death and influence of the blog have been exaggerated? Fortunately, I am pleased to note that the Welsh blogosphere remains a healthy place for political, economic and social commentary on vital matters of the day.

There is the Uber-blog known as WalesHome but also blogging veterans from across the political sphere such as Glyn Davies, Valleys Mam, BorthlasPeter Black and Blog Menai, all of which make a real contribution to debate and discourse. There are also newer ones who are as good as anything you find across the border, such as Syniadau, A Change of Personnel, Jac o' the North and the Druid of Anglesey.

God damn it, I even miss Welsh Ramblings!

So, I have decided to make one last effort at keeping this blog up and running. The look has changed slightly but the comments are now open.

The views are all mine, as usual, and if you don't like them....





Tuesday, October 4, 2011

GLYNDWR - AN INNOVATIVE UNIVERSITY?

Earlier this year, the Higher Education Funding Council for Wales (HEFCW) put forward the suggestion that Glyndwr University should work under an umbrella of higher education institutions led by Aberystwyth and Bangor Universities.

Recently, a group of MPs, led by the local Wrexham MP Ian Lucas, had objected to this proposal, suggesting that HEFCW had “displayed a woeful ignorance of the needs of north-east Wales and the importance of a university led from within our region”. 

They were supported last week by Flintshire County Council, which noted that the move could be potentially damaging for the region as the university has built strong links with the business community.

I am not surprised that there is growing sympathy for Glyndwr University’s current dilemma.

With Wrexham and Flintshire being very much one of powerhouse regions of the Welsh economy, one would have thought that the Welsh Government would have seen the development of Glyndwr University as a key part of the strategy for turning Wales into a “small clever country”.

Yet, some within higher education are finally realising that Glyndwr has actually had very little visible support from policymakers, especially compared to other universities. For example, whilst there are now an additional 1800 full time undergraduates at Bangor University as compared to a decade ago. Glyndwr has only been given an additional 690 in a market that is strongly controlled by the funding council.

Whilst money was recently granted for £5m centre for the creative industries at Glynd┼Ár University, questions are still being asked why HEFCW would then give Bangor £15 million for what seems to be an identical, and competitive, project?

And despite this alleged favouritism over the last decade, Glyndwr has, to its credit, simply got on with the business of developing its potential as a very different type of academic institution that the region’s economy needs.

Given recent evidence from one of the great management thinkers, its current approach could well turn out to be the one that the rest of academia may well follow in the future.

In his latest book, the Harvard guru Clayton Christensen (along with Henry Eyring) suggests that traditional universities are facing a major crisis. In the race to constantly make themselves bigger and better, they have steadily driven up costs and, as a result, are now overstretched, overcommitted and no longer responsive to the needs of learners.



In contrast, the innovative university that will form the new model for higher education will not focus on getting bigger, but on what they do best to educate the students they wish to serve, a sentiment that is at the core of Glyndwr University’s vision for the future.

Yet the ‘big is best’ approach through consolidation and economies of scale is the only one currently under review by the Welsh Government, even though a variety of different institutional strategies may be more relevant.

For example, Bangor and Aberystwyth Universities are two traditional institutions that are almost identical in their approach to higher education and a merger between these two bodies may well make sense in the long term. However, to bring in Glyndwr, which is different in so many ways, into such a group because of geographic expediency simply defies common logic.

Certainly, the great and good of the North East of Wales need to persuade the Welsh Government to support an entrepreneurial university which is based in one of the our nation’s industrial heartlands.

Frankly, it has nothing to lose in doing so and everything to gain.

And instead of treating the institution as an afterthought as compared to Bangor and Aberystwyth, those in charge of education policy should consider how this innovative university can make a real impact on its local economy and provide the resources necessary for it to grow and prosper.

Monday, October 3, 2011

GETTING THE ECONOMY GOING? A NEW INTERNATIONAL AIRPORT FOR SOUTH WALES?



WESTERN MAIL COLUMN 1ST OCTOBER 2011

Earlier this month, I was invited to a conference exploring the importance of Cardiff to the Welsh economy. Entitled ‘Serving Wales – Building a Capital and Prosperous Wales’ and organised by the Cardiff Business Partnership, the event included contributions from the First Minister and David Stevens, chief executive officer of Admiral PLC.

It was a timely conference, coming a week and a half before the announcement of the Welsh Government’s strategy for the next five years, a strategy dubbed as a roadmap for the Welsh economy by Carwyn Jones but as "meaningless" and too vague by Opposition leaders.

Certainly, there is little, beyond the Welsh Jobs Fund that employers can point to as being of any direct impact from the five year plan, and that will only create 4,000 six month long placements for young people rather than any meaningful long term employment.

Perhaps the main problem with the Government’s plan is that it lacks a clear vision for what can be done with the Welsh economy.

This was a point made by the CBI’s Rudi Plaut at the Cardiff conference, when he suggested that whilst various initiatives were worthy in themselves, they would not turn around the Welsh economy overnight. Instead, what was needed was some major infrastructure projects that would have a real impact and create tens of thousands of jobs.

With plans moving ahead quickly for a second nuclear power plant for Anglesey, it would seem that North Wales has its big hitting project.

But what about South Wales?

The Severn Barrage seems, for now, to have been put on hold for the foreseeable future but is there another major project which could make a real difference?

Exactly five years, I described the potential development of a new major international airport to the east of Newport that would serve the whole of the Wales and West England region.

Certainly, the evidence at the time was compelling – a previous white paper on the future of air transport had stated that by the year 2020, the number of passengers per annum in the UK would rise from 180 million to 501 million, despite the increasing worries about climate change.

Not surprisingly, any plans to cope with this increased traffic has focused solely on what can be done around the London complex of airports. Witness the plans to build a new runway at Heathrow and Boris Johnson’s call, earlier this year, a new international hub airport to be built in the South East of England.

Yet, apart from the fact that such an infrastructure project is not needed to boost employment within one of the more prosperous parts of the UK, there are concerns that increased concentration around London will increase air misses and have a considerable impact on the environment.

Yet as I noted back in 2006, a proposed Wales and West International Airport (WWIA) could cater for a catchment area of up to 30 million passengers per annum. Indeed, there would be little reason for individuals who live or have business in the Wales and West England region, and who require intercontinental facilities, to use one of the London airports and, in doing so, travel an average surface travel distance of 130 miles.

With the WWIA, this would be reduced to an average of 40 miles, thus creating an attractive option for many passengers. More importantly, with the M4 and the newly electrified Swansea-London railway line adjacent to the proposed airport, links into the UK road and rail network would be quick and easy.

The benefits for the South Wales economy could be enormous, especially for the Gwent Valleys region which is the second poorest area in the UK -  it is estimated that a new airport could create up to 45,000 direct job opportunities and generate at least £1.25 billion for the local economy.

It would also, as far as an airport can do, minimise the environmental impact of the growing air traffic over the next decade. For example, transferring Trans-Atlantic flights from London to the WWIA would save an estimated 6 million tonnes of air fuel every year.

In terms of construction, the landside operation of the WWIA could be built on brownfield land and no part of the sites of special scientific interest in the Severn estuary would be affected by the development. The airside operation would consist of an offshore runway in the Severn estuary and therefore no person would live under the flightpath or within the noise impact footprint.

Therefore, the proposal to develop a new modern green airport equivalent to that of Manchester or Gatwick for Wales seems very compelling, especially as it would bring all the economic benefits that the Mayor of London is so keen to retain for his city.

Five years ago, I urged the Welsh Government to have the courage and the vision to put together a feasibility study and present it to the UK Government for consideration. 

Now that we have gone through the worst recession in living memory, I would urge the First Minister to revisit this idea and address any unanswered questions about this development.

At the very least, it could assess the potential impact of a major infrastructure project that could become a magnet for international travellers, directly cut unemployment in Wales by over a third and finally get the economy moving.