Tuesday, October 30, 2012


Walking through many towns in Wales, one cannot help noticing the increasing number of shops that have closed as the economic recession and low consumer confidence has taken its toll.

And such perceptions are borne out by the latest statistics on occupancy rates within retail centres, with the proportion of vacant shops across Welsh high streets now rising to 18.5 per cent, one of the worse vacancy rates in the UK along with the North West of England and the Midlands.

Whilst the growth of out of town shopping centres and the massive expansion in online retailing has helped to fuel such decline, it is also clear that politicians and policymakers at a national and local level have largely ignored the high street as a key driver of economic prosperity.

Given such challenges, it was timely that the Welsh Conservatives launched a new policy review last week which examined how the fortunes of town centres across Wales could be revived.

Entitled “A Vision for the Welsh High Street”, its aim is to focus attention on how town centres can provide a stimulus to local economies whilst acting as a catalyst for community engagement. Welsh Conservative leader Andrew RT Davies discusses the report below.

As far as I am aware, this is the first time that a political party in Wales has focused on developing specific policies in this area, although it does follow on from a recent report by the National Assembly’s Enterprise and Business Committee into the regeneration of town centres. Of course, there was also the highly publicised Portas Review in 2011 which provided a real wake up call to the UK Government but, unfortunately, its recommendations have only been applied in England.

As such, such a policy document is long overdue in ensuring that we have a proper debate on how the High Street in Wales should be developed in the future.

One of the more radical recommendations from the review is the proposal for splitting the business rates regime in Wales into one that targets small and large businesses separately.

Currently, the multiplier which is used to calculate business rates is the same for all firms, regardless of their size. This is in contrast to both Scotland and England where a higher multiplier exists for bigger companies with the difference being paid used to support lower rates for small firms.

As a result, Wales has the most competitive business rates in the UK for major superstores, but the least competitive rates in the UK for small businesses.

And whilst the supermarket lobby will, no doubt, resist such a move, it is an issue that will hopefully be considered carefully by the Welsh Government within its ongoing review of business rates.

Another key proposal is ensuring that town centres are at the heart of successful engagement with local communities. This will be done through the formation of high street teams involving local businesses, Councils and residents that will act as a focus for engagement and drive participation on the high street.

On a higher political level, the Welsh Conservatives have also called for the Welsh Government to have one Minister or Deputy Minister with ‘named’ responsibility for the high street so as to improve coordination across different departments.

One of the key recommendations of the Portas Review was that local areas should implement free controlled parking schemes so that they can compete directly with out-of-town developments.

Building on this, the report suggests that high streets need to have a “flexible, well communicated parking offer”, using the example of Newport Council which, for the last two years, has operated a two hours free parking scheme within the city centre.

It also reflects the views of the Federation of Small Businesses, which recently noted that small market towns and their outlying rural communities are hit particularly hard by the imposition of parking charges and that in such car dependent communities, free access to the town centre is essential not only for the purposes of shopping but also for social interaction.

Therefore, the debate has started on the future of the High Street in Wales and whilst partisan politics may prevent some of these ideas from being taken forward by the Welsh Government, I would hope the paper will at least get politicians and policymakers talking. Certainly, it is time that the regeneration of our town centres should be seen as one of the key catalysts in reviving local economies and a catalyst in reviving the high street as a focus for the community across Wales.

Tuesday, October 23, 2012


One of the most important books on entrepreneurship written in the last two decades is “Start-Up Nation”, which describes the way that Israel transformed itself into an economic powerhouse through the development of a vibrant and entrepreneurial high technology sector.

According to the book’s authors, a key factor in the success of this innovation hotspot has been that, at the age of 18, Israelis must serve in their country’s defence forces for at least two years, with many young people therefore being directly exposed to utilising technologies at the cutting edge of areas such as telecommunications and information technology.

And with the nature of the Israeli Armed Forces valuing improvisation and, despite their military focus, having an anti-hierarchical structure, potential entrepreneurs emerge not only with skills in teamwork and leadership, but also with experience of technologies that are the base for many new innovative sectors of the economy.

However, the entrepreneurial potential of those who have served their country in the Armed Forces should not be surprising.

Recent research suggests that previous military service has one of the largest marginal effects on self-employment, with “veterans” being 45 per cent more likely to be self-employed than non-veterans.

One of the countries which values its veterans and their potential contribution to developing an entrepreneurial economy is perhaps unsurprisingly the United States of America, where it is estimated that there are over 2.4 million businesses owned by veterans, equivalent to around 9 per cent of the total business population.

Unlike many countries, the US Government provides specific and targeted support for military veterans to start and develop their own business. This is largely driven by its national enterprise agency, the Small Business Administration (SBA), which has established an Office of Veterans Business Development for this purpose. Its mission is to maximise the availability, applicability and usability of all existing small business programmes for veterans and reservists as well as their dependents or survivors.

These include Veterans Business Outreach Centres, which are organisations set up to specifically provide entrepreneurial development services for eligible veterans owning or considering starting a small business.

There are also training programmes, such as the “Boots to Business” initiative, that have been introduced by the Obama Administration to train service members who are moving from military life to business ownership through courses focused on creating a feasible business plan.

Most importantly, the SBA has a range of small business loan programmes that are specifically targeted towards supporting veterans who wish to start up their own business.  For example, the Patriot Express Loan Initiative for veterans and members of the military community wanting to establish or expand small businesses gives a decision on loan applications within thirty six hours and on the lowest interest rates available from the SBA.

Therefore these programmes, in addition to many others at state and local level, mean that those leaving military service are given the backing they need to set up their own businesses after serving their country.

But what about the UK? What support is provided to British veterans when they leave the Army, Navy or Air Force?

Last year, the UK Government published an Armed Forces Covenant that sets out the relationship between the Nation, the State and the Armed Forces.

Long overdue, the Covenant recognises that the whole nation has a moral obligation to members of the Armed Forces and their families and establishes how they should expect to be treated.

Yet, despite the introduction of actions such as improved council tax relief, the establishment of a veterans card for commercial discounts and a pupil premium for service children, there seems to be no specific support, as found in the USA, for those who leave the Armed Forces to set up their own business.

And with the Ministry of Defence aiming to cut 29,000 military and 25,000 civilian posts by 2015, it is critical that the UK Government, along with the devolved administrations, puts into place the relevant backing to help with training, education and business support for those UK veterans who wish to undertake the transition into self-employment.

The US model shows how this can be done and, more importantly, how veterans can be helped when they return to civilian life. Certainly, there is no reason why those who have served our nation bravely should not get all the backing needed to make a real and sustainable contribution to their local economy.

Thursday, October 18, 2012


Next month,the Global Entrepreneurship Week will take place in 125 countries between November 12th and November 18th.

What is it about?

Fortunately, the team at the Kauffman Foundation, who are organising the event, have made a short sketchbook to demonstrate why this event is happening.


Monday, October 15, 2012


A few years ago, I was asked by the then Vice Chancellor of Cardiff University to come up with a business plan for a new entrepreneurship centre.

Unfortunately, he decided not to invest in such a development at that time, which was a great shame given the latent entrepreneurial potential that exists within Wales’ best university and, more importantly, the impact it could have on the economy of the capital city.

Nevertheless, the exercise did give me the opportunity to undertake some detailed research into what was happening around the World in terms of enterprise development and benchmark Cardiff against the best globally.

Naturally, programmes at the Massachusetts Institute of Technology and Stanford University were identified as world class, along with the courses offered at the most entrepreneurial higher education institution in the USA, namely Babson College.

But the biggest surprise, at least at that time, was the growing reputation of the University of Colorado in Boulder as a driver of entrepreneurship.

Nestled at the foot of the Rocky Mountains, this town of just 100,000 people seems the most unlikely place for an entrepreneurial revolution and yet during the last few years, it has become recognised as one of the most enterprising places not only in the USA, but in the World.

And a major driver in supporting new start-ups was the university through initiatives such as the Cleantech New Venture Challenge, which offers a $100,000 prize annually for the most innovative green idea that can be turned into a successful businesses.

Indeed, the whole state of Colorado now sells the message that is it is “entrepreneurial by nature” and, as a result, has not only becoming one of the most popular centres for new businesses but is also, because of this reputation, attracting firms to relocate to the state. But how does a small city is the middle of America turn itself into a rival for established hotspots such as Silicon Valley?

Some of the possible answers to that question is explained within an excellent new book by Brad Feld, a start-up founder, blogger and venture capitalist from Boulder.

“Start-Up Communities” is the story of how entrepreneurs within his community have created a new type of ecosystem where they, and not large companies or government, are driving the local economic agenda through a whole range of projects.

And, as Feld explains in the wonderful sketchbook below from the Kauffman Institute, there are essentially four lessons to be learnt from Boulder’s experiences.

First of all, there are two types of people within entrepreneurial communities namely leaders (entrepreneurs) and feeders (people who support startups, such as government agencies, funders, service providers and universities). However, any new developments must be led by entrepreneurs and supported by the other actors within the local business community who feed into the system.

Secondly, a successful entrepreneurial community cannot be built overnight and there must be a long view and commitment to enabling this to happen over a period of at least twenty years embracing, over time, both success and failure.

Thirdly, there must be an environment of inclusivity where anyone with an interest in entrepreneurship is welcome to contribute to the process.

And finally, there must be various substantive activities that engage the entire business community to help start ups to develop. These include the Boulder Open Coffee Club, which brings together a group of people who are interested in entrepreneurship and technology to have coffee every other week before work and to discuss issues related to start-ups. And Startup Weekend, which started in Boulder to bring together a group of developers, business managers, start-up supporters, marketing gurus and graphic artists to create new companies and is now replicated in cities around the world.

Of course, another key driver in cementing the reputation of the city as a location for technology start-ups has been Techstars, co-founded by Feld. I would argue that it is probably the most successful start-up accelerator programme in the World, having funded eighty seven companies that have received $194 million of investment and created 841 jobs.

Clearly, this entrepreneurial ecosystem not only helps develop new businesses but, more importantly, is a key economic influencer on the economy of the whole city. Indeed, Feld’s description of an entrepreneur-led cluster of start-ups is in contrast to the many examples of top down government-managed programmes to support economic development found elsewhere.

In the book, he notes that whilst entrepreneurs work in a bottom-up networked world, governments remain ensconced in a command and control culture. Whilst governments take time to implement new ideas, entrepreneurs want immediate action.

And certainly, rather than waiting for government to act, entrepreneurs like Brad Feld have taken the initiative to turn this sleepy Rocky Mountains city into an entrepreneurial powerhouse that is the envy of much larger metropolitan areas around the World.

But to me, the most important statement from the book is about how the entrepreneurs of Boulder are proud of their achievements and see themselves as cheerleaders for the success of their businesses and the city.

As Feld notes “These cheerleaders are both the leaders and the feeders as everyone in the community should be proud of what they are doing and shout it from the rooftops. This cheerleading can be via a community website…or it can be regular, steady blogging, writing and talking that we have in Boulder by the individual leaders and feeders. Regardless – be proud of what you are doing in your community, and make noise about it to the world.”

That is certainly a key message for entrepreneurs in Wales and if cities like Cardiff and Swansea are to emulate the success of a small city like Boulder, then celebrating entrepreneurship wouldn’t be a bad place to start.

Monday, October 8, 2012


Last week, I attended a conference organised by the Massachusetts Institute of Technology (MIT) to examine the future of manufacturing.

It was a timely event, as I am currently undertaking research into the development of advanced manufacturing in Finland during the last thirty lessons and the lessons that other small economies can take from this experience.

We heard from a range of experts in the field, including Professor Martin Schmidt of MIT, who has been advising President Obama on a new emphasis on manufacturing within the US economy.

The report from his review is fascinating, mainly because of the differences in the philosophy regarding economic development as compared to most parts of Europe. In fact, the conclusions to the report to ensure American leadership in advanced manufacturing comprehensively rejected a picking winners policy, either in terms of individual companies or specific sectors. Instead, it proposed pursuing an innovation policy for advanced manufacturing that would provide the best environment in which to do business, ensure that the most powerful new technologies are developed in the USA and that technology-based enterprises have the infrastructure required to flourish.

Given the way that manufacturing in the USA and many other advanced countries has been ignored in the last decade as financial services became the favoured sector and there has been rush to move production to low cost countries such as China, this report is long overdue.

Yet, during the two days in Brussels discussing the future of advanced manufacturing, there seems to be little appreciation of an example within Europe that could also act as a model for developing more innovative and competitive economy.

During the last fifty years, Finland has changed itself from an economy that was based largely on primary production and an unskilled agrarian workforce to one that is recognized as one of the most competitive in the World, particularly in the field of high technology manufacturing within key sectors such as information communications and telecommunications (ICT).

Most of this change took place during the early 1990s when the Finnish economy endured a major economic recession that included a major banking crisis, unemployment rates of 15 percent and high levels of government debt.

In response to these issues, the Finnish Government took a bold long-term view to focus its strategy on innovation and promoting, in particular, facilitating the development of high technology sectors such as ICT. Since 1995, the Finnish economy has been one of the fastest growing in the developed world, with an average growth rate of 3.5 per cent. Unlike other rapidly growing economies, most of the growth within Finland has been generated by the development of domestic companies.

Therefore, through indigenous growth in a number of key sectors, Finland has become recognised as one of the most innovative and competitive nations in the World and the World Economic Forum’s Global Competitiveness Report 2012-2013, which assesses the competitiveness landscape of 144 economies, ranked Finland third in the World in terms of a range of different factors driving productivity and prosperity.

And one of the main driving forces behind this success has been a specific government body that has driven and developed innovation throughout the Finnish economy.

Established in 1983, TEKES is responsible for administering public support for private and public sector R&D and innovation in Finland. Its mission is to promote the development of industry and services by means of technology and innovations. Its impact has been tremendous, being responsible for supporting more than half of Finnish innovations during the last thirty years. The latest report on its impact on innovation is shown below.

Whilst its programmes have been focused very much on supporting technology within companies and public institutions, there have been additional positive effects such as increased networking between companies and R&D organisations in targeted clusters and increased collaboration between researchers across different disciplines. Simply put, the focus on the innovation policy that the US Government now recognises as being critical to its own manufacturing sector has been one of the key successes in turning a small peripheral nation into one of the most competitive economies in the World.

And there are certainly lessons for Wales from this experience.

Indeed, whilst there are those who still hanker for the return of the Welsh Development Agency, it is clear that during its existence, its focus on attracting large foreign direct investment did little to support the long-term innovation performance of our nation. Its subsequent integration into the Welsh Government has also had a minimal impact on ensuring that Wales becomes the “small clever nation” which politicians have been calling for since the advent of the National Assembly.

As the Minister for Business is currently examining the development of an innovation strategy for Wales, one option in creating a more competitive Welsh economy would be to consider establishing a Welsh TEKES that would be an arms length organisation that would focus on developing the innovative potential that exists within this nation.

If we were to get only a fraction of the success that the Finnish economy has enjoyed during the last three decades, then it would be one of the more astute policy decisions that the Welsh Government will have made in developing the economy.

Monday, October 1, 2012


Since the current UK Government assumed power in 2011, much of the effort of Whitehall departments has been on reducing public expenditure to deal with the financial deficit.

Yet, focusing simply on saving money in public services is alone not sufficient as it simply fails to take into account the overriding problem with much of the public sector in the UK, namely that it is not only inefficient but is generally unwilling to participate in any meaningful innovation. As a result, the public sector is caricatured as being risk-averse, unentrepreneurial and focused more on managing processes than outcomes.

And yet according to the Kennedy School of Government at Harvard University, there are plenty of examples of the public sector adopting a more enterprising approach to delivering services. Last week, its Ash Centre for Democratic Governance and Innovation recognised 111 innovative government initiatives under the Bright Ideas initiative.

Taking examples from all levels of government - from school districts to the US Government itself - it recognised public innovation in a wide range of areas including rural regeneration, environmental problems and, topically, the academic achievement of students.

In crime, a bright idea from Baltimore collects and analyses data to determine hot spots in high crime and traffic incidents to deploy high visibility officers in those areas and curb future crime. Similarly, Pennsylvania uses new technology to analyse data and identify non-custodial parents not likely to pay child support and offer them increased support. In dealing with the legacy of the economic downturn, several public bodies have developed new approaches that are making a real difference to the regeneration of their local areas.

In New Orleans, the Mayor’s office has developed a tool that measures and tracks the city’s performance towards reducing the number of decaying and abandoned properties whilst a Michigan initiative known as Project Green House recycles upwards of 95 percent of abandoned home building materials. The City of Newtown in North Carolina has developed a free, outdoor Wi-Fi network to attract more customers to the downtown business district, city facilities, and parks whilst the e2 Business Programme in Salt Lake City provides local businesses with the knowledge and support necessary to implement sustainable business models.

There are also several projects that focus on reinvigorating school curricula and encouraging interest in science and mathematics. For example, NASA’s Explorer Schools provides teachers with interactive lesson plans and classroom activities around mathematics, science, technology, and engineering. Ohio’s Science and Math Moving On program provides its seventeen school districts with the latest in 21st century, high-technology learning tools to invigorate traditional lesson plans and enhance learning among students.

With regard to environmental protection and conservation, the MassGrown and Fresher initiative in Massachusetts connects consumers to local agriculture, whilst Hawaii’s Maui Nui Seabird Colony Champions engages the local community in the protection of endangered seabird colonies.

And there are many more examples of how the public sector in America, through its ingenuity and inventiveness, is making a real difference to local communities. In fact, what really hits home when you read through the list of projects is the clear evidence that direct intervention from all levels of government does not require endless resources and large budgets.

Most important of all, the innovations recognised by the 2012 Bright Idea list demonstrates that there can be a reduction in the size of the public sector whilst serving citizens more efficiently and effectively. Surely, it is this philosophy that should be at the heart of government in Wales where nearly two thirds of the economic output of this nation is dependent on the public sector.

Rather than complaining that higher quality in health, education and economic development can no longer be afforded, those working in the public sector should take heart from the experiences of other bodies globally to ensure that there is greater innovation within their organisations to deliver services more efficiently and effectively.

This will, inevitable, require a more entrepreneurial approach that, even with the best will in the world, is anathema to many civil servants. That has to change and if we are going to deliver the best level of public services with a reduced budget, then the Welsh Government and other public bodies need to encourage and support their own employees to come up with their own bright ideas to ensure that we have can not only have the best public sector in the World, but also the most innovative and cost-efficient.