Business Voice August/September 2014

August/ September

2014

Taking stockAsda’s Andy Clarke on how the supermarket giant is adapting to shifting market dynamics

Business voice | the cBi magazine

Business voice | the cBi magazine

August /September 2014

8 infographic:

SkillS for the futureThe education system needs to work harder for the UK. The latest CBI/Pearson education and skills survey shows businesses ready to play their part but more urgent action is needed.

Asda’s chief executive tells us about

the radical strategies designed to help

the supermarket giant adapt

to changes in customer behaviour.

14 interview:

Andy Clarke

4 CridlAnd’S notebook:The economy is at last picking up but, for a sustainable recovery, politicians need to make the long-term decisions that will create the right business environment.

28 internAtionAl:Transatlantic links are already strong – the UK is the largest foreign investor in the US – but there is scope for further progress.

34 member newS:Charting business growth across the UK. In this issue: Pinewood Studios, Remploy, Tyrrells Crisps, RSK, Ammeraal Beltech and e2v technologies.

36 member CliniC: What does it take to become an effective boss? David Sole, who founded the “School for CEOs” programme, highlights areas that candidates should focus on.

40 Cbi diAry:Events and photo gallery. In this issue: CBI Annual Conference priorities, leadership in education and action on cyber risk.

regulars

30 MeMber profile:

fleximizeWe talk to the firm providing a fresh model for SME funding – revenue-based financing, whereby the borrower pays a percentage of its revenue to the funder.

18 feature:

leAding lAdieSStories from the First Women Awards show how far business has come in terms of gender diversity but also highlight areas of concern that remain.

10 event focus:

meeting the energy ChAllengeEnergy security and affordability remain serious concerns for UK businesses. Both depend on investment in infrastructure and energy efficiency. But as delegates at the CBI’s latest Energy Conference are all too aware, exactly how the objectives can be achieved is still up for debate.

24 building britain:

birminghAm new Street The UK’s second most populous city needs a station fit for current, let alone future, demands. A £650m project is giving it the overhaul required.

6 guest coluMnist:

our future dependS on itOur society is moving towards an “internet of things”. To research, develop and apply the algorithms involved we will require a workforce with highly specialised skills.

A return to form?

Although risks remain, the economy is finally giving us

plenty to feel positive about. As the CBI prepares for the party

conference season and for its own annual conference, the focus is

still on getting the environment right so that business can create

prosperity for all.

“As confidence rises, the recovery is now on a much more sustainable footing”

4 Business voice | august/septemBer 2014

More comfortable reading The latest official GDP figures show

that the UK’s output grew by a solid

0.8 per cent in the second quarter

of this year. It’s undoubtedly a

symbolic waypoint in our recovery,

and the good news is supported by

the CBI’s own evidence gathered

from our growth indicator.

The International Monetary Fund

has also recently upgraded its

forecast: its prediction of 3.2 per cent

growth for this year outstrips that for

every other major advanced economy.

We’ve finally found our way back

to the kind of economic growth

figures we were seeing pre-crisis;

our output is greater than it was in

2008 and, with growth becoming

more broad-based as business

investment gets ever stronger and

as confidence continue to rise, the

recovery is now on a much more

sustainable footing.

There are, of course, risks – both

at home and abroad.

Beyond rhetoricNine months out from the General

Election, foremost in my mind is

rising political uncertainty. I want

politicians to concentrate on giving

us long-term solutions that set the

right environment for businesses

to create prosperity, not policies

or rhetoric with only short-term

application. As I said recently in an

interview with the Financial Times:

“If we make the wrong governmental

and public policy choices over [the

next] nine months, we could kill the

goose that lays the golden egg.”

The rise in sterling is also high on

the business risk register and our

survey data seems to suggest that

this has weighed on manufacturing

export orders recently. It can be

argued that the rise is a corollary

of improving growth in our

economy and the expectations

of an earlier rise in interest rates.

However, I recognise that the

stronger pound is being felt

differently across sectors – while

it’s benefitting firms more reliant on

imports, it’s hitting the translated

earnings that some businesses take

from global operations.

Yet even taking into account

recent appreciation, the level of

sterling against a basket of currency

actually remains competitive.

Following a sharp fall of 31 per cent

over 2007/8, it is still now around

17 per cent below its pre-crisis peak.

And because of that sharp fall in

2007/8, many UK exporters chose

to boost margins over market

share and not pass on that fall to

their customers.

Some commentators are arguing

that those wider margins should

therefore, in theory, provide more

room to absorb a strengthening

in the pound. But getting the right

kind of support in place for our

exporters to crack those fast-

growing emerging markets is the

main goal for a more sustainable

boost to trade.

The global economic environment

is also uneasy from political volatility:

from parts of the Middle East – Gaza

especially; and in the Ukraine, and

the related market access sanctions

levied on Russia by the EU and the US.

Opportunities knockHowever, these risks must always

be balanced by opportunities. As

we move steadily through August,

my mind will be turning to the set

pieces of the post-summer political

calendar.

The party conference season

offers the CBI the chance to work

with all the major parties to secure

pro-enterprise manifestos ahead of

next year’s General Election, and

our own conference in November is

always one of the best opportunities

to celebrate business success.

And I’m looking forward to the

launch in September of the CBI’s

Great Business Debate: our flagship

campaign to help build public

confidence in business. We will be

firing the starting pistol on debates

concerning the positive contribution

that business makes to the economy

and to our society more widely.

We’ll be talking facts and combating

the myths, as well as encouraging

the public to give us their views on

what business means to them.

There’s a lot to feel positive about

and a lot to look forward to. n

Getting the right support in place for our exporters to crack emerging markets is the main goal“”

Business voice | august/septemBer 2014 5

CridlAnd’S notebook

Sir Mark Walport is chief scientific adviser

to the government and head of the

Government Office for Science.

A re genetically modified organisms a good thing? What about

synthetic biology or nanotechnology or 3D printing? Each of these

is a ridiculous question. We have a horrible habit of trying to judge

technologies generically, rather than recognising that every technology brings

new benefits and new risks.

In the case of any new technology, the serious questions should be specific:

what is the precise application? In the case of genetic modification, the questions

are: what organism, with what gene and for what purpose? For 3D printing

or additive manufacturing, are we talking about a gun from a design

downloaded from the world wide web, or a spare part for a baby’s incubator?

These are the types of question that confront a scientific adviser to

government every day. Currently, I am focusing on a specific commission from

the prime minister, to advise him on a fast-growing application of IT – the

“internet of things”.

What is this? Increasingly, the devices that we wear, carry and use at home,

while we travel and at work, are controlled by microprocessors, are internet-

enabled, can communicate with each other, and can make our lives easier

through the application of advanced algorithms. But the internet of things is as

much about people as it is about the things in our lives – and some are starting

to refer to the “internet of everything”.

Understanding and visionHow should we in the Government Office for Science advise the prime minister

on this important topic? The short answer is by finding the right experts,

engaging widely to identify key opportunities and concerns, and – importantly

Our future depends on it

We are homing in on procurement, spectrum and networks, standards, skills, data, regulation and legislation, trust and co-ordination

“”


The internet of things will power modern society – but it will need a lot of skilled people to research, develop and apply the algorithms to make it work.

– developing an action plan that

will enable us to reap the benefits

while avoiding potential harms.

Many of the initial applications of

the internet of things come from

the objects that we wear or carry

with us – the devices that measure

our exercise or our sleep, or that

tell us and others where we are.

The mobile phone is an astonishing

example of the power of the

internet of things. It signals to us

where we are, how to get to where

we want to go, and what is there

when we arrive – and can send the

same information to others.

We like this when this information

is anonymised, and warns us of

traffic jams or locates potholes for

road repairers. We are a bit choosier

when it gives away our personal

information and location. It may

suit us to provide this to individually

selected family members, friends

or colleagues, but most of us would

prefer it if this information was not

available to all-comers.

As part of our analysis, we have

held a series of expert workshops,

and key themes are starting to

emerge. First and foremost, we

need a clear vision – along the lines

that the internet of things will

enable services to be delivered

more efficiently, and scarce resources

to be used more effectively and

sparingly. We are homing in on

eight areas for potential action:

procurement, spectrum and

networks, standards, skills, data,

regulation and legislation, trust and

co-ordination.

Skills to succeedThe subjects of skills and algorithms

bring me to a letter that the Council

for Science and Technology wrote

to the prime minister last year. It

was about the importance of

algorithms for the running of

modern societies, and the need for

the UK to expand its skills and

research base in an area that will

power our future economy and be

important for maintaining our

health, conserving resources and

improving our transport systems.

An important outcome of that

letter was the announcement by

the chancellor of the exchequer in

the 2014 budget of £42m of

government funding to create the

Alan Turing Institute. This will be a

world-class centre that will bring

together the best mathematicians

and computer scientists to research,

develop and apply algorithms for

human benefit in areas across a

spectrum from health to wealth.

But £42m is only a beginning,

and we need to catalyse a

partnership – between our

universities and government, the

philanthropic sector and industry –

to reap the benefits of mathematics

and computer science.

This brings me back to the role

of the government chief scientific

adviser. My job is to maximise the

impact of science, technology,

engineering and social science on

the things that government cares

about – the health, wellbeing,

resilience and security of its citizens

and the economy. These, in turn,

depend on our infrastructure: both

the human-engineered, built,

manufactured and technological

type and the natural infrastructure

– the physical systems of the planet

and the organisms that inhabit it.

The work of business underpins

and is underpinned by infrastructure,

and this in turn is underpinned by

the sciences. So the work of CBI

members is critical to our future in

the UK – and you need a workforce

skilled in science. Science matters. n


gueSt Column: Sir Mark Walport

StudentS aren’t aware of the world of work

80% of firms are concerned that

careers advice is simply not

good enough.

52% of businesses believe

schools’ top priority should

be to develop a greater

awareness of working life

among 14-19 year olds.

But BuSineSSeS want to help

80% of businesses are forging some type of link with at

least one school or college.

77% of those with links offer work

experience placements.

67% offer careers advice and talks.

overall 66% of firms are willing to take on a larger role in the school careers system.

SkillS for the futureThe UK’s workforce needs young people who are rigorous, rounded and grounded. Business has realised it has its part to play and government is making the right noises about education reform. But the latest CBI/Pearson education and skills survey shows more urgent action is needed.

the emphaSiS on Stem SkillS continueS

48% of employers say that

they prefer graduates

with qualifications in

STEM subjects.

39% of firms that say they

need those with STEM

skills currently have

difficulties recruiting staff.

And 53% expect problems to

get worse in the next

three years.

But it’S not juSt aBout academic achievement


But BuSineSSeS want to help

80% of businesses are forging some type of link with at

least one school or college.

overall 66% of firms are willing to take on a larger role in the school careers system.

and there iS Scope to Scale up employer involvement in apprenticeShipS

44% of firms said that more relevant

qualification programmes would encourage them

to get involved – as would a greater control over

funding (34%) and a reduction in bureaucracy

around them (31%).

there were

apprenticeship starts in 2012/13, up by more than

230,000 since 2009/10. (source: House of Commons)

510,300

85%of of firms want primary

schools to focus on developing

literacy and numeracy skills.

And more than 50% of businesses are worried

that these continue to be weaknesses

in their employees.

As 36.4% of school leavers are not

achieving a grade C or above in GCSE

English; 42.4% are not reaching this

standard in maths. (source: Joint Council

for Qualifications, 2013)

BaSic challengeS remain

85% said attitudes to work was the most

important factor when recruiting school and

college leavers, followed by their general

aptitudes (63%).

But it’S not juSt aBout academic achievement

Rod Bristow,

President of Pearson Core Markets

The challenge is to grasp the nettle so we bring employment and education opportunities together to meet the urgent social and economic need of creating a more highly-skilled workforce.

“ ”

www.cbi.org.uk/skillsreport only 38%

made formal academic results a priority.

infogrAphiC: Skills for the future

The UK is under pressure to provide a secure, affordable and de-carbonised energy supply fit for the future – but the CBI’s latest Energy Conference showed that there is still plenty of debate over how this can best be achieved.

meeting the energy ChAllenge


A lmost three-quarters of

businesses rate security

of supply as a crucial

energy objective for the UK, yet

more than half believe that energy

security here is worse than it was

five years ago.

That’s according to a new CBI poll,

which set the context for its Energy

Conference held, in association with

Good Energy, in London on 17 July.

The challenges laid out by speakers

– who came from government,

industry, regulators and pressure

groups – were clear. The UK needs

to design and run a more efficient

energy market in the face of

“serious flux” in the global market;

it needs to de-carbonise; and it

needs to balance government

support for long-term investment

with competition and innovation.

Despite the poll results, secretary

of state Ed Davey told the audience

that recent efforts and investment

had gone a long way to address

fears that the UK would suffer a

severe energy crunch beginning

around 2015.

“Over the period 2010-13, we have

seen £45bn invested in electricity

generation and networks, plus more

investment in four years than in the

previous 13 years,” he said.

Of that total, £16bn has been

invested in new distribution

networks and a further £3bn in gas

transmission, he said, adding that

there had also been significant

growth in capital expenditure in the

North Sea.

But more investment is needed,

said Davey. “We cannot rest there.

To de-carbonise, we need more

renewable electricity in the decades

ahead, and we can’t get there in one

leap – it will take a few decades, not

a few years. So fossil fuels are still

necessary, through North Sea oil

and gas, as well as fracking. And we

must address how we can use fossil

fuels better.”

He added that changing behaviour

and usage patterns must also form

a central part of any sustainable

strategy. “Energy efficiency is one

of the most cost-effective ways of

running our energy policy,” he said.

Global contextHowever, the second keynote

speaker, Fatih Birol, chief economist

at the International Energy Agency

(IEA), said: “No country is an energy

island”. Energy is, perhaps more

than any other commodity, an

international commodity. “Prices,

innovation and surges in demand

are all played out against global

backdrop, and no country can hope

to unilaterally run its energy policy

without taking into account what’s

happening elsewhere across the

globe.”

The market should be able to send out long-term signals to increase long-term capital-intensive investments

“”


event foCuS: Energy security

Given this international

commodity status, Birol said that

the global energy market – in

terms of who produces, who

consumes, where shortages exist

and surpluses are enjoyed – is in

serious flux. Trends that would

have previously been unheard of

– Middle East countries importing

oil and gas, for instance – are

now commonplace. The need

for European legislators and

businesses to keep up and adapt to

the new realities are clear, he said.

Renewable energy has so far

formed a central part of those

efforts in Europe. Indeed, Birol

reported that 60 per cent of total

investment in energy in Europe

over the past decade has gone on

renewables.

Davey said that investment in

renewables in the UK had reached

£8bn in 2013. “Indeed, only China

and the US have invested more

finance in renewable assets in that

period,” he said.

The UK now generates around 15

per cent of the total UK energy mix

through renewables: five per cent

of its total electricity comes from

onshore wind, and solar power is

also doing well, despite subsidies

for this type of renewable being cut.

Overall, though, the cost of

renewables can’t be ignored.

Ann Robinson, director of

consumer group uSwitch, argued

that affordability had to be at the

centre of modern thinking on energy

policy. “We cannot afford some of

the more expensive renewable forms

of energy. We should be looking at

talking the EU into ditching their

targets on renewable energy.”

Birol also said that despite the

extraordinary shift towards

renewables, Europe still needs

to invest $2.2trn to replace ageing

infrastructure between now

and 2035.

Consumers in controlSo what does a good energy

market look like? The question

continues to vex most observers.

All accept that a pure free market

model won’t work with such a vital

commodity, but fostering long-term

investment and competition into

the trade in energy is a tough nut

to crack.

Juliet Davenport of Good Energy

outlined several characteristics that

were necessary in a good market.

“It would allow new entrants to get

involved in a simple and easy way

– it wouldn’t be overregulated, as

it is now. I want to see consumers

have much more control over their

energy use,” she said.

She pointed to the role of

renewables such as solar power

in focusing users’ minds on the

amount of energy they use. And

she wanted more consumers to

care about which companies they

buy their energy from and where

it comes from – not least, to

encourage competition.

Investment prioritiesBut injecting more competition

into the market can only go so

far. As one of the UK’s dominant

To de-carbonise, we need more renewable electricity, and we can’t get there in one leap – it will take a few decades, not a few years

“”


47%of business leaders believe

more competition in the energy

market is the best way to keep

bills down.

38%of firms cited energy

efficiency as the best solution

to ensure energy costs

remain affordable.

60%

of businesses believe the

low-carbon transition

will lead to long-term economic

opportunity.

Source: CBI

energy players, EDF has a vital role

to play in ensuring not only that

the lights remain switched on, but

that consumers and businesses

have access to competitively

priced energy. The company’s

director of strategy, Paul Spence,

told delegates that his view of

the perfect market was one that

combined innovation, dynamism

and competition.

“And at the same time it should

be able to send out long-term

signals to increase long-term

capital-intensive investments.

The set of reforms we see coming

in are pragmatic and should help

investors and customers.”

So what of the UK’s energy

future? While Davey was proud of

the coalition’s efforts to channel

both public and private investment

into UK energy infrastructure,

shadow energy secretary Caroline

Flint laid out the three strands of

Labour’s energy policy, should

this party win in next year’s

General Election.

“Firstly, we believe that to reduce

demand is cheaper than increasing

supply,” she told the conference.

“We could do this by one-third,

and it wouldn’t mean lowering

living standards. Little changes in

behaviour – for example, when

the Co-op fitted doors on its store

fridges – can be cost-neutral and

immediately reduce an energy

bill. In fact, the Co-op has saved

£50m on its bill by doing that.

“Secondly, investment in low-

carbon sources will be better, long-

term, for consumers,” said Flint.

“We have to tackle that as soon as

possible, as we won’t reduce carbon

footprint without a concerted effort.

And lastly, fossil fuels aren’t going

away, so they need to be greened

and carbon capture and storage

(CCS) developed.”

Wrapping up the debate, deputy

director-general of the CBI Katja

Hall recognised the challenges of

encouraging the necessary long-

term investment and getting a

good deal for consumers. She

also echoed Davey by referring to

efficiency as the “missing piece

of the puzzle”. But she argued the

priority had to be on setting a clear

policy that could attract consensus

between politicians and industry.

“Our future competitiveness

depends on it,” she said. n


event foCuS: Energy security

A transformation is under way at Asda, with further stores opening and more radical steps that will help the supermarket group adapt to changing consumer habits. Chief executive Andy Clarke explains the strategy.

changes in store

words PIP BROOKINGphotography PETER SEARLE


“S truggling supermarkets”

is an all-too familiar

alliteration for the

newspaper headlines, as month

after month of Kantar figures have

shown growth among the “big

four” at its lowest level in a decade.

The cause is simple enough:

changing consumer habits – driven

by the rise of online shopping and

the continued squeeze on income.

The solution is not so easy.

Pressure is mounting on those at

the top to deliver new strategies

– particularly at Tesco and Morrisons,

where performance is hardest hit.

While recent press coverage of

Asda has focused on 1,360 job

losses among store management

staff, the company’s chief executive,

Andy Clarke, seems to be weathering

the storm rather better.

Returning to the Kantar figures,

you get an inkling of why. In the 12

weeks to 20 July, Asda was only

just behind Sainsbury’s with growth

of 0.9 per cent (versus 1.2 per cent).

In the month prior to this, Asda was

recorded with the largest growth

among its immediate competitors,

at 3.6 per cent against Sainsbury’s

3 per cent. And in the period to 25

May, Asda was “the only large

grocer to grow share year-on-year”,

with 2.4 per cent sales growth

leading to a market share of 17.1

per cent. In each report, Tesco and

Morrisons fell in terms of both

sales and share.

The numbers involved are small

but, in a flat market, significant.

Clarke believes they reflect a “clear

change in form across the big four”

and are a sign of Asda being

“ahead of the curve” in its reaction

to changing market dynamics,

compared with its competitors.

The need for changeThe current restructure at the

Leeds-based firm was put into

motion after a “rigorous strategic

review” 18 months ago, which was

followed by store trials last year to

refine the organisational structure.

Clarke calls it a “proactive piece of

change” that has been planned,

trialled and communicated

transparently – the only way to try

to maintain morale among those

affected by redundancies around

them, he says.

The whole executive board spent

time in the stores both before and

after decisions were made, and it

chose not to delay a grassroots

survey that gave all employees an

opportunity to share their thoughts.

“We’ve been careful to ensure we

continue to listen. Even though it’s

difficult, when we believe this is

right for our business, we have to

put ourself out there and be

prepared to take criticisms and

challenges,” says Clarke.

But he adds: “The big picture is

that the net effect of these changes

will be more people in the

organisation, as we are refining the

organisational structure in stores

to support the growth of our online

business.”

In fact, the new five-year strategy,

as announced by Asda’s US owner

Walmart in April, has the potential

to create up to 12,000 jobs – news

that was welcomed at the time by the

prime minister. “I am delighted that

Asda is continuing to invest heavily

in the UK,” said David Cameron.

The strategy will also see the

company add 40 “superstores”

(each spanning 25,000 square feet

or more), 100 supermarkets

(typically 5,000-12,000 sq ft), 150

forecourt shops and 1,000 click-and-

collect points, and extend online

penetration – it wants to triple the

value of online business by 2018.

Shape shiftersSo Clarke, unlike some

commentators, doesn’t think that

the end of the superstore is nigh

– although he says that the

company is “fortunate” in having

fewer large-format stores than its

competitors. “We’re all conscious of

how we’re changing shape. What is

happening is that what goes on

within the superstore is changing.”

The new format that Asda is set

to trial reduces the space given to

the white goods and electrical

items that tend to sell well online,

in favour of growth categories such

as fresh food, homeware, health


big interview: Andy Clarke

and baby products. Space is

important for Asda’s clothing range

George, which continues to make

the chain the UK’s largest

children’s-wear retailer by volume.

But the growth of click-and-collect

trade also means that retailers have

extra flexibility on the stock they

choose to carry, says Clarke.

Asda has also been looking at

how to share excess space with

local community groups. Getting

closer to communities is also

driving the company’s growth in

supermarkets (as opposed to the

larger superstores), says Clarke.

Meanwhile, one of the ways Asda

is planning on expanding in the

south – where its market share is

closer to 12 per cent, presenting “a

natural opportunity” for expansion

– is new forecourt shops.

Some of Clarke’s changes are

more radical – and he argues that

they need to be. “Click-and-collect

is changing the face of retail,” he

says. This trend has led Asda to

launch “drive-thru” facilities – first

trialled in York in spring last year

and rolled into all stores by this

summer. In addition, the company

has also partnered with Transport

for London to install collection

lockers at various tube stations in

the capital.

Race to the bottom?Adapting to consumers’ increasing

tendency to shop online is just one

of the imperatives facing the

supermarket giants. Another area

that has seen increasingly intense

competition is price – and Clarke

believes Asda has a significant

advantage here.

All of the big four are fending off

the relentless rise of the

discounters, Aldi and Lidl, which

have posted growth of 20-30 per

cent in successive Kantar reports –

and Clarke agrees that it is

“probably untenable” for his

competitors to maintain their

current price gaps. But he adds that

reducing them requires

“significantly larger investment”

and will lead to a correspondingly

large impact on competitors’

profitability, as their business

models haven’t traditionally been

predicated on such a dynamic.

Asda, on the other hand, has had a

long-term price promise,

guaranteeing that it will be 10 per

cent cheaper than its rivals, rather

than offering to price-match.

“This isn’t a price war for us,” he

says. “It’s simply about executing

our strategy and delivering

something that we’ve always been

consistent about.”

He adds that discounters “aren’t

a new concept. They’ve been in our

market for as long as I’ve been in

retail”. And, he says, “we have three

strong divisions in food, general

merchandise and fashion. That

gives us the breadth that you can’t

get at a discounter.”

But he also highlights the

economic trends behind the

pressure on price. For the past six

years, Asda has run an income-

tracker survey, which has reflected

the squeeze on household incomes

– and has predicted this squeeze

will continue until at least 2018.

And as with many business

executives, Clarke raises the

concern of youth unemployment.

It’s an issue that is top of his

agenda for his presidency of food

and consumer goods industry

charity IGD next year, and has been

a key issue for Leeds & Partners

– the inward investment body he

chairs – as well as something he

wants Asda to help tackle. He also

emphasises Asda’s support for the

first “social supermarket”, which

opened in Barnsley in December, to

This isn’t a price war for us – it’s simply about executing our strategy and delivering something that we’ve always been consistent about

“”


Mums, Asda and politicians

E ighty per cent of the

18 million customers

who go through Asda’s

doors each week are mums.

In the run-up to next year’s

election, the supermarket giant

asked some of them about their

everyday lives and what they

thought that government should

be doing to help.

In the resultant Mumdex

report, 88 per cent thought that

politicians aren’t good at

engaging with mums or the

issues that matter to them, while

two-thirds wanted to see more

women in power. Their top asks

from government included

imposing limits on energy

prices, raising personal tax

allowance and improving rights

for working families.

Of course, Andy Clarke cares

what his shoppers think and,

although he doesn’t want to be

a political pollster, its in Asda’s

interest to help them get their

voice heard. But asked what he

wanted from whichever party is

in power this time next year, his

thoughts turn to business rates

and planning processes – although

the latter is less of an issue than

it has been as the demand to

open new spaces has declined.

“We continue to stay close to

decision makers,” he adds, on

topics including fuel duty and

alcohol and tobacco sales. And

he highlights the continued need

for government to focus on the

red tape challenge, where

bureaucracy stands in the way

of business growth. n

The Clarke CV

2010-presentChief executive, Asda.

2005-10Retail director, then chief operating officer, Asda.

2004-05Managing director, Iceland.

2002-04Chief operating officer, Matalan.

1992-2002Store manager, then regional manager, then trading and operations roles, Asda.

1982-92Grocery manager, then store manager, Wm Morrison.

serve those close to food poverty. “I

think more social supermarkets will

emerge over the next three years,”

he says, arguing that such initiatives

can’t be about competition. “For

Asda, or any large or small business

around the country, being aware of

the communities you operate in

must be of great importance.”

Such awareness has led to more

light-hearted opportunities for the

company. It helped to recruit, train

and provide uniforms for 10,000

volunteers at Yorkshire’s Grand

Départ for the Tour de France

this summer.

Meanwhile, although the UK

grocery industry has its own hills to

climb, Clarke argues that the sector

remains world-class, with

international eyes watching how the

main players here respond to the

changing dynamics. He just wants

to lead the pack home. n


big interview: Andy Clarke

A t the end of June, Glencore Xstrata appointed Patrice Merrin as non-executive

director. The move means that no all-male boards remain in the FTSE 100.

But it’s taken time to get to this position, and in the FTSE 250 the challenge

persists. In addition, certain sectors – from mining to construction – have fewer

women in the pipeline, so the scope for senior female appointments is limited.

A recent CBI report, Building on Progress, emphasises that

many women still face obstacles at various times through

their careers, from choices at school to breaking into

the boardroom. It highlights the fact that both

businesses and government have more to do to

create an environment in which more women

can succeed. The report also moves the equal

pay agenda up the list of priorities.

Business Voice talked to shortlisted

candidates and winners at this year’s First

Women Awards – in the construction,

manufacturing, engineering and science and

technology sectors traditionally dominated by

men – to find out more about their paths to the

top. All were keen to tell their stories, to encourage

more women to follow in their footsteps.

But common messages emerged. Some of those we

talked to had lacked career guidance and had, instead, either

been inspired by family members or fallen into their careers by chance. Many criticised

their respective industries for not broadcasting the breadth of opportunities they

offered. And most of them credited supportive managers for their progression.

Business has come a long way in terms of gender diversity, and the shortlist of the recent First Women Awards provides plenty of examples of strong pioneering females. However, some of their stories also highlight areas of concern that will have contributed to there still being fewer women at the top.

leading ladies

Some had lacked career guidance and had been inspired by family members or

fallen into their careers by chance

“”


carolyn adamsQuality and continuous improvement manager for coffee, Mondelez

Vidhyalakshmi karthikeyanSenior researcher, BT

In many ways, Carolyn Adams’s

experience reflects the current drive

to promote more vocational routes

into work. She learnt on the job,

starting in a laboratory for General

Foods-owned instant coffee brand

Maxwell House. She then progressed

to head all global coffee product

development for Kraft, and now has

a leadership role in manufacturing

business development at what is

now Mondelez.

“I don’t think people are

aware how fulfilling a career in

manufacturing or engineering can

be,” she says. Yet before her career

started, she herself was “totally

unaware of industry” as an option

– she applied for the position at

Maxwell House as just a summer

job before she went off to study

physiotherapy.

But Adams never left, finding she

had a knack for understanding

science and the ability to apply it to

the consumer side of the business.

“Especially within research and

development, I broke through glass

ceilings because (a) I didn’t have

the technical degrees the majority

of people had and (b) it was an

organisation that was totally

male-dominated and women

engineers, with degrees, had given

up before me. They tended to go

into teaching.”

She has also had children and

says that as a result it’s probably

taken her longer to get to where

she is, but she adds “I haven’t got

frustrated with that time span”.

Adams credits supportive

managers and the fact she grasped

opportunities – she even studied for

an HNC in business finance on day

release, funded by Kraft. She has

seen a change in the proportion of

women engineers around her,

although she’s still used to being

the only woman in senior meetings

other than someone from HR.

However, she says apprenticeships

are still very male – with only one

female applicant out of 30 this year.

She argues that the challenge lies

in raising the profile of a career in

the food industry, the wide-ranging

opportunities it holds, and its

potential for innovation – for both

girls and boys. To this end, Mondelez

is now going into schools to give

talks. In addition, the company has

invited representatives from the

government and shadow government

to visit the site in Banbury, Oxfordshire

– where Adams has been responsible

for attracting investment back into

the UK – to help raise the company’s

profile and the importance it places

on training. n

23% The proportion of the manufacturing workforce who are women

Vidhyalakshmi Karthikeyan is the most prolific inventor

that BT has employed over the past decade. Over the

five years she has been there, she’s filed 16 patents.

She’s only 26.

Karthikeyan grew up in India and Malaysia, and came

to London as an international student to study electronic

engineering, despite pressure from plenty of people

recommending other subjects “as more suitable for a

woman”. But she had been inspired by her father – a

chemical engineer. She highlights the importance of

encouraging children from an early age: “I was

determined to do this, because I was sure from when I


feAture: First Women

was young. You couldn’t shake that out of me, as much

doubt as you might try to install.”

Nevertheless she didn’t discover the idea of a career

in telecommunications until she was at university. The

subject formed part of her electronic engineering course

– where she was one of only a handful of females. Now

she talks passionately about why she made that choice –

and what could inspire others to do the same. She is a

firm believer in the continued freedom and fairness of

access to the internet for all, arguing that it opened up

opportunities for her she wouldn’t have had otherwise.

“I knew nothing of London before I arrived, other than

what I found out over the internet.”

Karthikeyan is also driven by the speed of change in

technology, and by the desire to improve it. “I love the

fact that [technology] is rooted in something that we

now think is indispensable,” she says. “The role of an

engineer is to cocoon complexity into a system that

everybody can get something out of.”

Her patents are based on “machine learning”, as she

helps BT move towards a long-term vision of creating an

autonomous network that can work and repair itself as

technology gets more and more complex. She’s now

almost a year into a part-time PhD, in which she is

prototyping one of her patents.

Keen to inspire others, Karthikeyan has given guest

lectures at universities, and has been involved with

recruitment and career advice activities since joining BT.

She was also one of the volunteers from BT in E-skills

UK’s Girls Get Coding event in July.

“People are scared of programming – or they say

they don’t want to do maths. You need to challenge their

preconceptions,” she says, pointing again to the

importance of technology in everyday life and the

excitement of being able to shape something that affects

everybody. “You just need to encourage them that they

can do it.” n

Louise Brooke-Smith was

inaugurated as the first female

president of the Royal Institution of

Chartered Surveyors in July – more

than 30 years after she joined the

organisation as a student member.

But a career in surveying was her

plan B, after she didn’t get the

grades to study engineering.

“One of my ambitions is to get

the message out there that while

surveying is already a career choice

to some, it should be to far more.

A surveying career is incredibly

broad,” she says. “It’s unfortunate

that there is this perception of

surveyors being predominantly

male.”

But only 14 per cent of chartered

surveyors are female – although

that’s improved from the two per

cent when Brooke-Smith started

out. “We’ve got a long way to go.

The good news is that there are a

lot more women joining surveying

courses. But once they qualify, we

want them to stay in the profession.”

As a visiting lecturer to

universities, she says she already

sees a different attitude coming

through among the next generation.

She’s also experienced universities

wooing her own daughter, who has

expressed an interest in surveying.

“They know that the women who

go through their courses get good

qualifications and do well in the

real world, in industry,” she says.

These efforts are being mirrored

People are scared of programming or say they don’t want to do maths – you need to challenge them

“”

louise Brooke-smithGlobal president, RICS


As with many others in engineering, Rachel Morfill was

inspired by her family rather than through any careers

guidance. In fact, “there was nothing on engineering in the

careers files” at the all-girls school her parents sent her to in

the belief that it would encourage her scientific leanings.

When she studied for an electrical engineering degree,

she was then the only female on the course.

“I think that it’s easier now,” says Morfill. “But I was

determined. I can remember leaving school and saying

that I was going to be a chartered engineer by the age

of 30 – and I achieved that. I battled through.”

She joined National Grid straight from university –

and has enjoyed a progressive career path over the past

20 years, mostly in engineering roles, but also writing

the organisation’s annual report one year, and heading

the inclusion and diversity department another.

Morfill took on the latter responsibility partly because

of her passion to encourage more women into the

profession. The two biggest challenges she faced, she

says, were the assumption that she wouldn’t return to

work after having her first child, 16 years ago, and lacking

a female role model to look up to. As regards role models,

she says: “It’s quite daunting that I’m one of those for

other people now.”

To that end, she has been involved in setting up a

women’s network and a mentoring scheme so that

women don’t feel isolated – especially when they work

rachel morfillPower systems manager, National Grid

by initiatives in industry, at RICS

and among the big construction

companies – and Brooke-Smith is

also keen to look to other sectors,

such as accountancy, to see how

large firms have attracted and

retained the female population.

She emphasises the importance

of careers advice. “Get more of

it, and better-quality,” she says.

Role models are important too, she

says. “It also helps to have visible

women up and out there.”

After putting a call out to its

members, RICS has been inundated

with women just getting on with

the job, who want to shout about it.

“It is important to highlight some

of the decisions that everybody has

taken, to make it from the

classroom all the way through to

the boardroom,” she says.

As for Brooke-Smith, she’s grabbed

opportunities as they’ve come. She

decided early on that she wanted to

set up her own planning consultancy,

but didn’t want to do it too soon. So

first, she worked for local

authorities, quangos, the UN, a big

developer and a big agency.

Eventually she did set up on her

own – a process that involved both

faith in herself and back-up from

others. “You need to have a bit of

confidence to be able to do it, but I

had a lot of support,” she says. Her

consultancy has recently celebrated

its 20th anniversary.

She now believes her role of

president gives her the credibility

to speak up about the importance

of diversity – and not just in terms

of gender. “My emphasis is that I got

there on merit, not because I was a

woman, and I was adamant about

that through the election process.

A couple of years back, I stood up

and said ‘if you’re voting for me

because I’m wearing a skirt, I don’t

want your vote.” n

Just 6% of the UK engineering workforce are women

More women are joining surveying courses but once they qualify, we want them to stay in the profession

“”



in the field, where the workforce is more disparate so

the proportion of women is lower still.

Morfill says the culture within National Grid has

changed significantly during her career, but admits

engineering still faces the problem of being perceived as

“oily rags and boiler suits.“

“That can put off the men as well as the females – and

there’s the industry concern about a shortfall in skills,”

she says. “The push needs to be on encouraging

engineering as a professional job with a wide range of

opportunities.”

But targeting women specifically, she emphasises that

the task of changing perceptions has a lot to do with

parental education – making parents understand it’s a

job they can be proud of their child going into. “I was

lucky that I had that within my family,” she says. n

Annika Small is chief executive of

NominetTrust, which supports and

invests in people who use

technology to address complex

social challenges, from social

isolation among the elderly to

youth unemployment. For her, it

is the application of, and what can

be achieved with, technology rather

than the technology itself that have

the power to inspire and attract

more women into the sector.

“It’s my perspective on

engineering, science and

technology in general that to

engage more women you need to

start in an area they’re interested in,

and make it more relevant to what

they’re doing and what they aspire

to do,” says Small. “At the moment

it still feels remote, and they’re

presented as technical subjects that

can be seen as ‘geeky’. I’ve worked

a lot with teenage girls in this area

and you can see that they’re

interested, but often peer pressure

kicks in.”

She adds: “This is actually the

arts and crafts of the 21st century in

many ways, because it’s a creative

area – but it’s not presented as such.”

Some of the barriers come from

within the industry. When she

joined NominetTrust in 2010, Small

remembers some people from the

technology press asking to speak to

her “number two” or to the head of

research, “because a man must

know more than this girl who’s

running the thing”. Other people in

the industry enjoy the “anorakdom”,

and they layer on complexity that

doesn’t need to be there, she says.

But she adds of such challenges:

“It hasn’t held me back, and I

haven’t seen many women who it

has held back.”

For young people, there are a

growing number of initiatives that

Small believes will help – ranging

from Young Rewired State and

Apps4Good to Code Club –

although she’s worried that these

aren’t accessible to large numbers.

Within schools, a change in the

national curriculum will introduce

more coding in September, which

again is a step in the right direction.

However, she references a recent

YouGov poll that suggests that

while 75 per cent of UK children

aged 8-15 are interested in making

their own projects online and 67

per cent would like to learn how to

programme or write code, only 3

per cent actually know how to do so.

“Appetite is growing, but I don’t

think there’s enough being done in

schools,” says Small. n

“”This is actually the arts and crafts of the 21st century in many ways – but it’s not presented as such

annika smallChief executive, NominetTrust


Helen Lamb fell into ICT, as did most of her female

peers at Fujitsu, she says. After taking a mix of

maths, English and economics at A-level, she got a

degree in business studies. She didn’t know what

she wanted to do. And she didn’t know what she’d

signed up for, either, when she took a role at what was

then ICL in her placement year and, at 21, was thrown

into a relatively technical job supporting mainframes

in a team of men who were aged 40-plus.

“Looking back, I can see the challenge I had at the

time was that I struggled for role models,” she says.

Nevertheless, Lamb enjoyed the placement and joined

the company’s graduate training scheme, working

across different areas of the business: in finance, HR,

designing solutions and implementing programs, as

well as in operational and general management.

“Throughout my career, I didn’t necessarily

progress upwards each time; sometimes it was side

movements, because I wanted to expand my experience.

By its nature it’s been a technical environment,

but my interest is in both the technology and the

innovation that it can enable. It’s about bringing the

relevance to the nerdy, technical aspect of it all.”

A big reason for Lamb’s success has been showing

ambition, and two-and-a-half years ago, during a

management restructure, she put herself forward

for a board role. She became executive director,

managing Fujitsu’s applications business. She has

since overseen a 13 per cent increase in revenues

and a 26 per cent rise in profit, and has moved

over to run the managed infrastructure services.

She says she’s blinkered to the fact she still

works in a male-dominated environment, because

she’s so used to it. But she’s conscious that, in her

position, she needs to be a role model and support

others to be as successful as she has been, so she

sponsors the graduate and apprentice programme.

So why aren’t there more women in ICT? In what

is becoming a familiar story, Lamb thinks the gender

imbalance arises because other professions have

greater recognition. “Compared with medicine or

law, ICT struggles with its ‘brand’. It’s too often seen

as being technical, detailed engineering. That’s part

of it, and it will appeal to some people, but it doesn’t

really represent the roles and the opportunity that you

have within it and the difference you’re able to make

toward people and businesses on a regular basis.”

But the process of attracting women into the sector

has to start earlier, she adds – schools need to make

STEM subjects more accessible, relevant and exciting

to everyone. n

“”Sometimes I made side movements in my career, because I wanted to expand my experience

helen lamBExecutive director, managed infrastructure services, Fujitsu

The CBI has also called for action to make STEM careers more attractive. Read the report at www.cbi.org.uk/engineeringfuture

Read the CBI report, Building on Progress at www.cbi.org.uk/championingdiversity


A grAnd CentrAl StAtionFirst impressions count when attracting visitors and investment, and no one can deny that the old Birmingham New Street station – the main transport hub for the UK’s second city – was not particularly welcoming. But it’s undergoing £650m-worth of renovations, which will create a space 3.5 times larger than the old one, with far greater accessibility and better interchanges. Its shopping centre is getting a major facelift to boot.

3,200 The number

of jobs the

regeneration is

expected to deliver

to the city centre,

with initial

estimates putting

the boost in jobs

for the region at

up to 10,000.

1,000 The number of workers

currently on site.

100 The 100th apprentice,

James Skyrme, was

brought onto the

construction site in March

2014, working for local

demolition firm Coleman

& Company. The main

contractor, Mace, has 12

apprentices working on site.

35m The height of the new atrium on top of the station.

Two holes cut out of the roof and floor of the

existing shopping centre mean the station is lit by

daylight for the first time in 40 years.

The number of lorries kept off the road over the

duration of the project by using the railway beneath.10,000

37 secondsThe frequency with

which a train leaves

Birmingham New

Street, making it the

busiest station outside

London, and the

busiest interchange

station in the UK.

140,000 The number of passengers

who use New Street

every day, more than

double the number it was

designed to accommodate.


100 The 100th apprentice,

James Skyrme, was

brought onto the

construction site in March

2014, working for local

demolition firm Coleman

& Company. The main

contractor, Mace, has 12

apprentices working on site.

£35m The investment made by John Lewis

in a new 250,000 sq ft shop, the

flagship store for the Grand Central

retail development above the station.

It will be one of the chain’s largest

stores outside London.

7,500 tonnesThe amount of

concrete removed

from a disused car

park adjacent to

the old station to

create the

new concourse.

36 The number of new

escalators. Together

with 15 new lifts, they

offer improved access

to every platform.

The number of lorries kept off the road over the

duration of the project by using the railway beneath.

60% The proportion of the rainwater harvested

from the stainless steel facade to flush all the

stations toilets.


building britAin: Birmingham New Street

April 2013 – the first half of the

new concourse was opened

and work switched over to

transforming the existing station

and develop Grand Central.

September 2009 – preparatory work

commenced on site.

NOW

1854 – the original New Street station – the largest station

in the country – opened to the public.

THEN

John Lewis | Bullring link bridge

John Lewis | Atrium

The number of retail

stores that will sit

alongside John Lewis,

as well as 20 cafes

and restaurants.

40

John Lewis | Store

John Lewis | Entrance

The number of new

jobs created directly

by the retailer.

650


Mick Miller, senior sponsor for the project from Network Rail, has said this scheme is

"one of the most complex construction projects over a live railway in Europe". Platforms have

been refurbished one at a time to minimise disruption to travellers.

As well as Mace and Coleman & Company, other firms involved in the project include

Atkins, Cannock Group and NG Bailey.

September 2015 – station to

fully open.

Summer 2011 – work to clad

the station in its reflective steel

facade began.

1967 – the first redevelopment took place giving New

Street its familiar concrete facade.

1854 – the original New Street station – the largest station

in the country – opened to the public.


building britAin: Birmingham New Street

The British mean business in the USThe UK is the largest foreign investor in the US, supporting jobs across every industry and state. However we want to build on that, not just settle for it. The sixth edition of the CBI’s Sterling Assets report analyses the current scale of the bilateral relationship and explores the potential of a comprehensive transatlantic trade and investment partnership.


T oday’s international economic environment

differs vastly from that facing the UK and the

US 100 years ago at the start of the First World

War. But although much may have changed, one thing

endures as a lasting legacy of the Great War: the

resounding partnership between our two nations.

This decade was supposed to mark the start of the

US’s economic pivot towards the East. But as we move

towards the decade’s mid-point, once again Europe has

– perhaps surprisingly – taken centre stage when it

comes to investment and exports. This shift can be seen

clearly in the current negotiations for a transatlantic

trade and investment partnership between the European

Union and the US.

At the heart of these trade discussions lies the ever-

vibrant bilateral economic and investment relationship

between the UK and the US. Britain is already the largest

foreign investor in the US. As of year-end 2012, the UK

had invested $487bn there, representing 18 per cent of

the $2.7trn of total foreign direct investment in the US,

and substantially higher than that of Japan, the

Netherlands, Canada and France.

Fostering innovationBritish companies are attracted to the US for several

reasons. They appreciate the size of the market, a culture

that fosters innovation and risk-taking, the deep capital

markets and the pool of talented workers. A common

language, as well as similar legal systems and cultural

norms, make it easy for Brits and Americans to

work together.

UK businesses not only support jobs, but also pay

more on average than the US national norm. The wages

and benefits of an American worker employed by a

British firm averaged $74,500 in 2011 – significantly

higher than the average $58,000 the same year for US

private sector workers.

And the UK is, of course, a major destination for US

goods and services exports; today Britain ranks as the

US’s fifth largest export market for goods and services,

behind Canada, Mexico, China and Japan. It’s the second

largest market for US exports of services specifically,

and the leading purchaser by far of services sold through

US affiliates abroad.

The figures in this year’s CBI Sterling Assets report

demonstrate that the relationship that exists between

our two countries is already significant. But at a time

when sustained global economic growth seems tangibly

close, the US represents a growing opportunity for

British businesses – an opportunity that we hope to work

with you to realise over the coming year. n

Sarah Knaus is the CBI’s policy and government affairs

manager in Washington. [email protected]

www.cbi.org.uk/sterlingassets

A common language, as well as similar legal systems and cultural norms, make it easy for Brits and Americans to work together

“”

internAtionAl: The UK-US relationship

Business voice | june/july 2014 29

Adding to the alternatives


Peer-to-peer lending and crowdfunding are well known as ways for SMEs to access alternative finance but now there’s another model, whereby the borrower pays a percentage of its revenue to the funder. We talk to revenue-based financing company Fleximize to find out

how it works.

A s bank lending to

SMEs continues to

fall – dropping a further

£700m in the first quarter of

this year – alternative finance

providers are stepping in to fill

the void. The headlines tend to be

dominated by peer-to-peer lending

and crowdfunding platforms, but

meanwhile other financial models

are breaking through.

In January, former Citi banker

Max Chmyshuk launched Fleximize,

offering revenue-based financing

to small businesses. Its revenue

advance is similar to a loan, with

a pre-agreed amount to repay. But

instead of paying fixed instalments

every month, the borrower pays

a percentage of its revenue –

with payments rising or falling

depending on the company’s

performance. Fleximize takes a

fixed percentage as a fee.

Chmyshuk compares the system

to a merchant cash advance,

where retailers repay the advance

directly through their card

payment terminals each time a

transaction is made – although

his customers already come from

a broader background than retail.

In the entertainment sector, the

model is better known as royalty-

based financing. And in the past

it has also been used in the oil

and mining sectors, and for

biotechnology and some medical

applications in the 2000s when

venture capital dried up because of

the dot-com bust. “Then someone

in the US had the brilliant idea to

apply the model to small business

financing,” he says.

He adds that the model hasn’t

been popular historically because

it’s not the most straightforward

concept to grasp. But he tries to

make it simple: “Say, for example,

you’re in ecommerce and you want

to buy three months’ inventory

from China instead of one, in order

to get a discount. If you borrow

a revenue advance instead of a

loan, you’re not so worried about

the shipment being delayed by

a couple of weeks, or your initial

marketing effort not being so

successful, or it being a bad season,

because you’ll pay at the speed

of your business [performance]. If

you sell this stuff four months later

it’s still OK – we don’t topple your

business.”

Chmyshuk sees revenue-based

finance as a third option sitting

between equity and debt – offering

the flexibility of the first and lower

risk than the fixed payments of the

second, without diluting ownership.

Fleximize statsFounded:

January 2014

Employees:

10-15, including developers

Customer base:

100+ small businesses

Loan book:

Around £2m


member profile: Fleximize

And he believes it’s more suited to

online businesses, such as those

in ecommerce, which don’t have

many assets to secure traditional

loans. “They have good cash flows

and good prospects; they just need

that little boost to get them to the

next level.”

In its first six months of operating,

Fleximize had handed over funds

worth almost £2m – from Chmyshuk’s

lifetime savings as well as from

outside investors – to more than

100 businesses. The average loan

has settled at between £15,000 and

£20,000, with the largest at £75,000.

Growth ambitionsAlthough he says this year is about

“taking it one step at a time” to

firmly establish the company and

build the portfolio to around £5m,

Chmyshuk would like his company

to be a £100m business in four or

five years’ time. He believes this

goal is achievable, with the rise in

acceptance of alternative finance.

“The UK banks still control about

80 per cent of the market. In the

US, it’s reversed – ‘new age finance’

alternative lenders take around 80

per cent of the market. Obviously

the US is a slightly different beast,

but it’s a good benchmark to look

at. Maybe we’ll never achieve 80

per cent alternative, but we could

definitely grow that share quite

substantially,” he says.

“There is a perfect storm for this

business right now. There’s a lot of

political will to increase financing to

small businesses but, at the same

time, banks are either unwilling or

unable for whatever reason to fill

those gaps.”

Nevertheless, the environment is

a challenging one for financial start-

ups. It took Chmyshuk six months

to set up the platform and get the

necessary licences. He credits the

government’s GrowthAccelerator

programme, run by Grant Thornton,

for its support and its access

to mentors and other growing

businesses. And, as well as joining

the CBI, Fleximize is looking to

collaborate with others in the

alternative finance sector, through

organisations such as Alternative

Business Funding and FinTech UK.

“There is a growing [alternative

finance] community,” he says. “And

the government is taking steps

to help us – it’s just a question of

execution. It takes time and effort,

but we hope we’ll all get there.”

But Chmyshuk is also all too

aware that the regulatory goalposts

will move. “In the next 24 months,

there will probably be a lot of

changes,” he says.

Fleximize has a consumer credit

licence, granted by the Office of

Fair Trading, in order to fund sole

traders. In April, OFT’s regulatory

power was transferred to the new

Financial Conduct Authority (FCA),

alongside that of the Financial

Services Authority (FSA), and

Chmyshuk believes the new body is

likely to tighten up the regime.

“But in my banking life, I was

an approved FSA individual. I was

always regulated. So, for me, it’s

nothing new,” he adds. “I see it as

a positive because there is a void

in this industry and people can

come from anywhere to fill it. I’d

rather that the industry has some

regulation to make sure those with

similar offerings are compliant,

ethical and so on.”

New competitors will enter

the space, adds Chmyshuk.

However, he is not only adamant

that Fleximize will comply with

“whatever comes our way”, but also

he doesn’t think that the challenges

will get in the way of rapid – and

perhaps international – growth.

The company already offers

successful applicants the choice


Market stats

£840m is

expected to be lent by

peer-to-peer lending and

crowdfunding platforms

between them in 2014.

(source: Nesta)

14% the decrease in

lending to non-financial

corporate borrowers from

its pre-crisis peak. (source:

Bank of England)

80% of SME loans

are the responsibility of

the 10 largest banks – but

Bank of England figures

show that bank lending to

businesses as a whole has

fallen every year

since 2009.

44% of SMEs – up

from 26% six months ago –

are using savings

or borrowing from

friends or family to fund

their firms. (source: Bibby

Financial Services)

of taking out a standard “flexiloan”

instead of the revenue advance,

and Chmyshuk is now looking at

adding other products, including

merchant finance and commercial

cash advances.

He is also proud of the “relationship

lending” model that Fleximize uses,

which gives the applicant a single

point of contact throughout the

process. This makes the company

very different from a conventional

bank, he says. “Such personal

experience in a typical bank is

reserved for large corporate clients,

whereas SMEs are forced to speak

to the bank via a call centre.”

With the company facing many of

the same challenges as the SMEs

it serves, Chmyshuk is enthusiastic

about supporting their growth. “Our

aim is to find – and fund – as many

businesses with growth ambition as

possible,” he says. n


member profile: Fleximize

Pinewood Studios has been granted planning permission for a scheme that will double the

existing site, adding 100,000 sq m of new facilities, including studios and

stages, workshops and production offices. The £200m long-term scheme has

been designed to address increasing global demand for production facilities

in the UK and deliver growth for the next 15 years. It is expected to create

3,100 jobs, produce an additional £149m in gross value added, provide an

additional £36m a year to the Exchequer and generate an extra £37m in UK

exports. Ivan Dunleavy, chief executive of Pinewood Shepperton, said: “Our

project builds on the success of the government’s policy for the creative

industries and addresses the shortage of stage space in the UK.”

Remploy Employment Services is going private. The government is

set to launch a commercial process

to create a joint venture between

a partner or investor and Remploy,

which by March next year is

expected to have helped more than

100,000 disabled and disadvantaged

people into work since 2010. Esther

McVey, minister for employment

said: “Remploy has already been

successful in helping disabled people

into jobs, and the opportunity for

new investment will help take it

to the next level.” Beth Carruthers,

Remploy chief executive, added:

“The announcement provides us

with an opportunity to expand and

support many more disabled people.

Moving out of the public sector

will give us the freedom to raise

funding to operate in a much more

competitive way.”

Charting business growth & investment around the UK


E2v technologies is set to acquire AnaFocus, a Spanish designer and developer of imaging

sensors and vision-systems for the industrial, professional, scientific,

medical and high-end surveillance markets, for up to €34.2m. The firm will

be integrated with the e2v’s high-performance imaging division, which grew

by 26 per cent last year. e2v technologies’ group chief executive, Steve Blair,

said: “AnaFocus strengthens our position in the market, bringing to e2v a

successful management team with deep technology capabilities and close

relationships with customers that complement e2v’s relationships.”

NG Bailey has ranked alongside Jaguar Land Rover, Boots and Fujitsu as one of

the top employers in the country for its apprenticeship programme in

AllAboutSchoolLeavers’ Top Employers for School & College Leavers

Awards for 2014-15. The awards are based on a survey in which apprentices

rate their experience based on 12 criteria, including work-life balance,

opportunities for progression and training. Frank Clayton, group head of

learning and development at the engineering, IT and facilities services

business, said: “This is a testament to our long-standing and high-quality

training, and to the support that the business offers to our apprentices.”

Tyrrells Crisps and Brompton Bikes are just two of Britain’s fastest-growing private companies that made it

onto the annual Sunday Times HSBC International Track 200 in July. This

year, the 200 companies increased their overseas sales by an average of

36 per cent a year over the past two years, to a total of £8.5bn. Together,

they employ more than 191,000 staff, having added more than 34,000 jobs

during this time. There are 82 manufacturers on the list, 70 of which make

products in the UK. A separate list, the Global Growth 50, by North West

Business Insider magazine, included environmental consultancy RSK, which

has posted an average of more than 18 per cent growth over the past three

years. The company has also just opened an office near Southampton, from

which its geosciences team can better service its increasing workload along

the south coast in Dorset, Hampshire and Sussex.

Ammeraal Beltech has opened a manufacturing

facility in China. The plant will

increase the belting manufacturer’s

production capabilities and help

it to better serve markets in

Asia Pacific and the Americas.

The 20,000m2 facility is located

in the new Fenhu economic and

technical development zone, with

fast connections to Shanghai,

Suzhou and Hangzhou. Provisions

have been made to enable future

enhancements so the factory

can support and drive growth

for the Hertford-based firm.

Ammeraal Beltech’s products are

used in industries including food

processing, automotive, textiles,

paper and print, airports, logistics,

wood and tobacco.

Let us know your news at [email protected]


Cbi memberS: News in brief

The “School for CEOs” programme was launched in 2012 to fill a perceived gap in the executive training market and prepare those destined for the role of chief executive. After running four training cycles and conducting research among established FTSE 100 leaders, founder David Sole tells us what it takes to be an effective boss.

Train for the top


Q. Some individuals are born leaders, but most

are made. So what makes a good candidate for a

chief executive?

a. Often, people think the most likely candidate to step

into the CEO’s shoes is the chief financial officer. They

have distinct advantages – in a listed business, they

already have a relationship with the City. But they still

need to have had experience of running a profit-and-loss

centre, and our research shows there is no single route to

the top. The CEOs we talked to were from diverse

backgrounds. Some had MBAs, some didn’t. It’s about

experience, intellect and, above all, leadership capability.

Q. What about personality traits?

a. To become a CEO, you’ve really got to want the job.

Some of the people we’ve had on programmes – either

thinking about making the move up or having been

identified as potential CEO successors – have had a

reality check and realised that the exposure they’d get is

not for them.

Q. Another major source of applicants for CEOs is

divisional directors. Why would the step be very

different for them?

a. In a listed business, the kind of external interaction

that you have with the City is something you don’t have

as a divisional CEO. My business partner, Patrick

Macdonald, came out of running a division at GE to

become CEO of John Menzies. And he said that nothing

– none of his experience at GE, or the knowledge he

gained with his MBA from [business school] INSEAD

– could have prepared him for that particular job.

The external landscape has also changed massively,

in terms of interactions with government and regulators

and the media. It’s one thing to manage shareholders;

but these stakeholders all want a piece of you – they will

form an opinion of you and will broadcast that opinion.

You have to go out and manage them actively.

Q. Trust in business is obviously a massive issue at

the moment. The CEO has, arguably, the most

important role in terms of guiding the company

culture and external relationships. How can a CEO

prepare for that?

a. The CEO needs to have a clear sense of purpose.

Why are they there? Who are they there to serve? What is

it that they’re trying to achieve? Ultimately, the

shareholders will benefit if they get that right. The CEO’s

sense of purpose needs to match that of the organisation,

and it needs to be communicated throughout the

company. A lack of such clarity can have a destabilising

effect, leaving a rocky road for the CEO to navigate.

Q. What do you think a new CEO should expect of

their first six months in the role?

a. The moment you park your car, people are going to

be making a judgement on you. They’ll pick up on where

you park, the sort of car that you’re driving, what you’re

wearing. They will also expect some sort of change from

a new leader.

So the question is: how quickly do you make it? Take

too much time and you’re seen as being indecisive;

jump to conclusions too early and you’re seen as being

too impulsive. And how consensual is your decision-

making? If you’re too collaborative, you can be seen as

prevaricating; if you’re too decisive, you can be seen as

being autocratic. CEOs have to exercise their judgement

and it’s fraught with many potential bear pits along

the way.

They can also become consumed by the organisation

and forget that actually, they are a mother, a father,

It’s one thing to manage shareholders; but these stakeholders all want a piece of you – they will form an opinion of you and will broadcast that opinion

“”


member CliniC: How to be a CEO

a husband or a wife. Getting that balance, and retaining a

sense of perspective, is important. And if the CEO is

going to go home and bath his children and read them a

bedtime story, it sends a positive message to the rest of

the organisation as well.

Q. How important is it to have a mentor, to whom

you can talk about some of the decisions you’re

making?

a. Lots of people we talked to have had coaching or

mentoring. Everybody also recognised the importance

of building a strong relationship with their chairman –

they should be the first port of call in a crisis, or when

people are unsure about certain things. But equally, you

have to appreciate that the chairman of the board can fire

you, too. Building a strong relationship with the CFO is

as important as building that sort of relationship with

the chairman.

Q. Is there value in a CEO taking up a

non-executive director position elsewhere?

a. Dealing with the board can be

frustrating for CEOs. Non-executive

directors get a snapshot of the

organisation roughly once every six weeks

or so, and on these occasions they try to ask

sensible, challenging or supportive questions.

Meanwhile, the executives are living and breathing

it day in and day out. They think they have everything

under control, so they don’t understand why the NEDs

are asking those questions.

When CEOs go over to the other side of the fence as a

NED, it makes them view their own boards through a

completely different lens, because they appreciate how

different – and, in some respects, how difficult – it is, to

ask the sensible questions, when clearly you don’t know

the detail. There is a huge amount to learn from being

able to sit on both sides of the table, and around 75 per

cent of the people that we interviewed had experience of

being a NED.

Q. What do you think companies can be doing to

better develop their future leadership?

a. Many organisations invest a lot in leadership

development programmes – for those lower down in the

organisation. When they get to a senior level – those

sitting on the board, or just below it – there isn’t as much

focus on their development. The organisation assumes

that they’ve made it and learnt as much as they’re going

to learn. But this isn’t the case.

At this stage, the individual needs to drive their

development, if they have that appetite to continually

stretch themselves.

Q. How do those who want to become CEO in the

future improve their chance of getting there?

a. It’s all about how you manage your career. A lot of

senior people rely on the organisation operating on the

basis of a meritocracy, promoting them if they

do a good job. That works, up to a point. But

there comes a time when you have to be

more systematic about how you approach

your career and the sort of jobs you want

to do. You have to think about putting

yourself in a different and challenging

environment, so you can demonstrate

you’ve got great learning agility, and can get up

the performance curve quickly.

International experience has become important –

particularly in environments, that are either linguistically

or culturally challenging. If you’ve learnt how business

works in somewhere you’re unfamiliar with, and you can

be successful in those environments, it’s a good indicator

that you’re capable of taking on the top job.

And sometimes you have to accept that it’s OK to take

a sideways step before taking the next step upwards –

and that it’s always good to think about what job might

follow your immediate move. n

www.schoolforceos.com


AnnuAl conferenceGrosvenor house, london10 november 2014

Only business can drive the economic recovery, creating the growth, jobs and opportunities that will help deliver higher living standards for all.

And we need politicians of all parties to help create the framework and set a tone which enables businesses to innovate and create the prosperity we all want to see.

Join the debate with business peers and political leaders and ensure your business is on the

inside track.

For booking information visit:

cbi.org.uk/ac14

Manufacturing our futureGuest speakers from JCB, Toyota, Mondelez, Jaguar

Land Rover, Coventry University and AgustaWestland

will be taking to the stage at a manufacturing conference

held at JCB headquarters in Staffordshire. The event, to

be held on 9 October and sponsored by BDO, will focus

on solutions for success. Topics include the importance

of strengthening the UK supply chains; driving

innovation in manufacturing; and the skills shortage.

Action on cyber securityCyber security is an increasingly high-profile issue

and now, more than ever, a breach to your business not

only poses a major financial, intellectual property, and

data privacy risk but also affects your brand reputation

and customer trust. While awareness is increasing,

there is a continued disconnect between awareness and

action. CBI London is hosting a panel discussion and

interactive question-and-answer session on this topic at

its autumn lunch.

for More inforMation, go to www.cbi.org.uk/events

upComing eventS

Sharing experiencesAbout 15 per cent of the workforce in Northern Ireland is employed by medium-sized businesses (MSBs), which

generate 30 per cent of private sector revenue. On 9-10 October, CBI Northern Ireland is hosting a 24-hour MSB

Conference in partnership with the Bank of Ireland. Local chief executives and “rising stars” within the civil

service will share their experiences, lessons and perspectives in a range of interactive sessions, focusing on

the future economy, leadership and talent development, and growth strategies.

Growth for all The UK’s economy has become more stable and recovery is advancing but with the general election less than a year away, political uncertainty must not jeopardise this process. This year’s CBI Annual Conference, to be held on Monday 10 November, will highlight how politicians of all parties need to ensure their policies enable businesses to innovate and create the shared prosperity that we all want to see. Leading business and political speakers will debate the UK’s most pressing challenges and share their ideas for future success, ensuring your business has the inside track.

Back to schoolThe CBI’s conference on leadership in education will

be held on Tuesday 9 September in London. Chaired

by Greg Hurst, education editor at The Times, the

morning event will look at what business and schools

can learn from one another; discuss further reforms to

the inspection and accountability frameworks that will

foster great schools; and highlight innovative examples

from major businesses on how engagement can support

current and future leaders.


yorkShire & humberAnnual dinner with television producer John Lloyd Date: Wednesday 8 October Venue: University of Leeds

Contact: [email protected]

SCotlAndWestminster Parliamentary Reception Date: Tuesday 28 October Venue: Scotland Office, Whitehall, London


eASt of englAndAnnual dinner with CBI president Sir Mike Rake Date: Wednesday 1 October Venue: Duxford AirSpace, Cambridge


northern irelAndGlobal Role breakfast briefing with Northern Ireland’s new MEPs Date: Friday 5 September Venue: Belfast Met, Titanic Quarter Campus

Senior executives networking dinner Date: Monday 15 September Venue: Ulster Bank headquarters, Belfast

Annual lunch Date: Thursday 25 September Venue: Titanic Belfast

24hr MSB Conference in partnership with Bank of Ireland Date: Thursday 9 & Friday 10 October Venue: Slieve Donard Spa & Hotel, Newcastle, Co. Down


north eAStAnnual dinner with Andy Palmer, Nissan Motor Corporation Date: Wednesday 1 October Venue: Hilton, Newcastle


eASt midlAndSAnnual dinner Date: Thursday 16 October Venue: Athena, Leicester


weSt midlAndSWhat the new European Parliament means for business Date: Friday 5 September Venue: Warwickshire College, Leamington Spa


Manufacturing our future – solutions for success Date: Thursday 9 October Venue: JCB, Rocester, Staffs


thAmeS vAlleyAnnual dinner with Vivian Hunt, McKinsey and Company, and MP for Beaconsfield Dominic Grieve Date: Thursday 2 October Venue: Hilton Hotel, Reading


regionAl eventS


Cbi diAry: August/September 2014

CBI london autumn lunCh

Join over 150 senior business professionals from the London region for an exclusive networking lunch.

Make new contacts, entertain your clients and hear a topical panel discussion on cyber security – a key issue for London businesses.

More information or to book your place: www.cbi.org.uk/london-autumn-lunch

7 October 2014 Central London

Strategic partner

Bv

Published by Caspian Media for the CBI www.caspianmedia.com

Editorial and production 020 7045 7585

[email protected]

Editor Pip Brooking

Digital design Silvia Lopes

Creative director Nick Dixon

Publishing director Ian Gerrard

Contact the CBI 020 7379 7400

www.cbi.org.uk

Tell us what you think [email protected]

Opinions expressed do not necessarily reflect the policies of the CBI.

Caspian Media Ltd and the CBI accept no responsibility for the views expressed by contributors.

Business Voice August/September 2014

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Transcript of Business Voice August/September 2014