Thursday 13 September 2012

Timing and Capital - Early Bird or Second Mouse

Timing and Capital
Timing and Capital
This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

If you never leave home without a wrist watch and wallet, you already know the importance of timing and capital. In a competitive commercial context these two tools are of vital importance.

Service leavers can bring their skills to bear usefully at every stage in the life of a company and an industry, and this post aims to illustrate some of the timing and capital considerations that may help a service leaver to choose a market that best suits their skills and expectations.


As the market for any product or service develops, demand typically follows a predictable pattern. After development and launch, a small number of "early adopters" are gradually joined by a growing group of customers. The market grows to maturity and then eventually declines.

Understanding the importance of timing and capital is essential if you are to harvest the best results from the market you are in - or thinking of getting into.

Early stage - to the victor the spoils

If you join a market at a very early stage - or create it - timing is critical. Get it right and you can enjoy high profit margins and high growth as early adopters sing your praises and spread the word. Get it wrong and you may find that demand doesn't appear - or takes longer and costs more than you expected.

While many early stage markets don't require large quantities of capital to enter, unless you are sure of your timing it is essential to have sufficient resources to survive if demand takes longer to pick up than you expected - you may also need to refine what you are selling so that more people want to buy it.

Of course any given quantity of capital will last much longer if you have a tight grip of costs and keep the "burn rate" as low as you can.

Growth markets - more capital required and less timing risk

If you choose to join the market later in its development - perhaps as a "fast follower" improving the initial offerings of others (Apple and Virgin are great examples of companies that do this), you are less exposed to the timing risk - the danger that you will have launched something that is ahead of its time - but you will probably also need more capital in order to capture customers and gain attention.

Mature and declining markets - optimisation and big balance sheets

Once a market has matured, the profit margins typically reduce and competitive success turns on being able to run the leanest operations. The search for economies of scale lead to consolidation and the creation of larger and larger organisations - along with the need for larger and larger quantities of capital. Strategic timing becomes less of an issue - but tactical timing is essential working capital management in particular becomes a key determinant of success.

You choose - bird or mouse

Military experience can fit people for each of these stages. The early stage of the development of a market is typically characterised by uncertainty - one of the staples of a military career - while fast following involves learning quickly from the experiences of others and seeking to build on their insights.

"The early bird catches the worm, but it's the second mouse that gets the cheese"

Since the military in the UK could fairly be described as a mature and declining market, servicemen and women have plenty of practice in optimising systems and processes to try to find efficiencies - particularly in large supply chains and communications systems.

Capital - be sure of your budget and backup

Each of these options depends to some extent on the capital available. While (except in some industries like mining or pharmaceuticals) there is often little capital required in the early stages of a market, joining an established market can require massive scale and resources.

Beyond the resources and expectations that an entrepreneur can bring to bear personally, they may need to seek additional capital from other investors or lenders. Understanding the expectations and constraints of those investors - whether they be friends and family or formal investors like business angels and venture capitalists - is essential to ensuring that the entrepreneur has the resources to realise their vision.

So gaining a clear understanding of the investor perspective should be high up the list of tasks for any entrepreneurial service leaver.

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

Friday 13 July 2012

Financial Analysis and Marketing - Two Key Skills for Entrepreneurs

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

When I left the Royal Marines in 2000 I knew I had a lot to learn about civilian life (and I still do!). Two of the subject that were particularly alien to me, coming from an armed forces background, where finance and marketing.

I was fortunate enough to have a great introduction to each of these in the 2 years after I left the Corps. First I joined JP Morgan and was sent to Wall Street for their analyst training programme, and then during my MBA at Warwick Business School, I studied marketing and strategy under the legendary Professor Peter Doyle.

Financial Analysis

Financial analysis, an understanding of the way financial information is recorded, presented and interpreted, is essential to anyone who wants to understand how an enterprise works. The single most important piece of financial analysis is probably "can I sell this product or service for more than it costs me to make or buy?" if the answer to this first question is no, then it's time to go back to the drawing board. But this is only the beginning, and I would encourage any would-be entrepreneur - especially with an Armed Forces background - to spend some time learning how bookkeeping, accounting and financial modeling work.

While I was at JP Morgan I was analysing the financial statements of a major international energy company, when I noticed a $47 million discrepancy between two sets of reports. At first I thought I had uncovered some criminal activity, so I spoke to my boss who meticulously checked though the details, and after several hours pointed out the problem - on a billion dollar balance sheet, the $47m had disappeared as a rounding error!


While the Armed Forces are a monopoly provider of services to a single client - the British Government - most businesses are competing with a wide range of capable rivals, each vying to take away customers. In any market where supply exceeds demand, an entrepreneur has to find ways of ensuring that they can sell their products or services at a premium. This is the realm of marketing.

I recommend spending time on a sales and marketing course, or at the very least reading widely on the subject. Peter Doyle's
Marketing Management and Strategy is a great top level introduction.

While Doyle puts marketing into a strategic context (he trained as an economist before becoming a marketing guru), there are also simple tactical questions that every entrepreneur should keep a close eye on, such as:

  • do I know my customer as well as possible?
  • does my product fit my market as closely as possible?
  • what can I measure to improve the performance of my marketing activities?
For me marketing remains the most interesting of the disciplines involved in entrepreneurship - and also the most challenging!

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

Sunday 8 July 2012

The Royal Marines Toolkit - Determination and Adaptability

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

The Royal Marines often have to travel light and deal with a wide variety of challenges, so they have developed a toolkit which combines simplicity with effectiveness in almost any circumstance. The toolkit contains two items: a hammer and a roll of duct tape.

There aren't many problems that you cannot solve - or at least deal with for the time being - with a hammer and/or duct tape - which is known in the Royal Marines as "Maskers" or "Harry Black".

These tools have metaphorical importance too of course - the hammer is a symbol of determination, while the maskers stands for improvisation and adaptability. Time spent in the Armed Forces gives plenty of opportunity to develop these two characteristics, and my message to every serviceman and woman considering leaving the Forces is to remember that they have these tools in their pockets long after they take off their uniform.

One word of warning though - as Abraham Maslow, the father of modern management pointed out, "If the only tool you have is a hammer, every problem begins to resemble a nail." While determination and adaptability are the most important tools in the entrepreneurial toolkit, they should be the only ones...

This is one of a series of posts on useful tools for entrepreneurs leaving the Armed Forces. Here is the full list and links.

Friday 6 July 2012

Nine Tools for Entrepreneurs

On Tuesday I was asked to join speak on "Inspiring Entrepreneurs: From Battlefield to Business" at the British Library.

Following a keynote speech from Clare Perry, the MP for Devizes Matthew Rock from Real Business, who chaired the event, introduced me, Peter Fitchett of Absolute Rubbish, Sarah-Jane Hill of Bish Bosh Becca and Mark Palmer of Green & Black's.

You can see the full webcast of the event here. My presentation starts at 17:17.

I shared nine tools that I believe can help service leavers in their journey from the Forces to Entrepreneurship. The nine tools are:
  1. Determination
  2. Adaptability
  3. Financial Analysis
  4. Marketing
  5. Timing
  6. Capital
  7. LinkedIn
  8. Coffee
  9. Crowds
I'll explore each of these tools in more detail in following posts.

After the presentation we faced questions from the audience and also via twitter from the online viewers. I asked what tools other people would recommend and "Mentor" was a frequent suggestion - what additional tools would you suggest?

Thursday 7 June 2012

The Scottish Highlands - the Perfect Cure for Ennui

If you're experiencing a sense of ennui - "listlessness and dissatisfaction resulting from lack of interest", you might be inspired by John Macnab , a little gem of a book by John Buchan.

Set in the 1920s, the book follows 3 Londoners - a barrister, a banker and a cabinet minister - as they devise an entertainment to relieve their ennui - their frustration with their successful but unexciting lives.

They issue challenges to 3 Scottish landowners from whose estates they intend to poach stags and salmon. What follows is a masterpiece of storytelling and an evocative journey through the beautiful Scottish Highlands.

For the first time since 2000 I've returned to Sutherland, the rugged north western tip of Scotland for a week long holiday. Tomorrow I'm visiting a retired ghillie who lives nearby. He's a former paratrooper, a poet and a countryman who would have fitted right into Buchan's adventure. As I write the rain is pouring down outside and the wind is howling around the very comfortable Gull Cottage, where I'm staying. Darkness has only just fallen at 11pm and there is no traffic noise at all. There's no O2 here, though there's plenty of fresh air. It's a far cry from London and not a trace of ennui.

Wednesday 6 June 2012

How to Spend Fifty Weeks on Holiday Each Year

I'm on holiday in the North Western Highlands at the moment and as I jumped into the icy clear waters of the North Atlantic this morning I remembered some words of wisdom I heard 21 years ago from a Manchester paper magnate.

In 1991 I worked for John Ridgway. Each week or fortnight small groups of hardy individuals would arrive in Ardmore for sailing, kayaking, climbing and hill walking challenges. My role was to accompany the groups and keep them safe. Drying out after a particularly challenging 16 hours on a windy mountain, I asked one of the visitors why he returned to Ardmore every year to spend a fortnight being eaten by midges, soaked at sea and ashore and driven to physical exhaustion. His answer made a big impression on me:

"Everyone I know goes on holiday for 2 weeks each year and spends the other 50 wishing they were still on holiday. I spend a fortnight here each summer and 50 weeks thanking God I'm warm and dry somewhere else!"

This was from a man who had built a successful business empire from scratch. At 50 he was as fit as many people on the course who were half his age. Most of all I was struck by his enthusiasm for everything he did.

Not everyone will agree with his holiday prescription, but then if it's true that we assess our wellbeing by reference to relative rather than absolute comfort, health and wealth, perhaps it does make sense to take short sharp shocks from time to time.

Friday 11 May 2012

Feedback and Adaptable Teaching Boost Commando Performance

This is one of a series of articles on lessons from Commando training. Here is the full list.

Feedback and adaptable teaching styles are valuable performance enhancing tools even in the toughest environments.

I recently joined a group of former Royal Marines at an update briefing from the Commandant of the Commando Training Centre, Brigadier Ged Salzano, at the Royal United Services Institute in Whitehall. He shared some impressive statistics with us but also gave some great insights into how Commando training is adapting to incorporate lessons learned from educational psychology - and gamification.

At a time when all the armed forces are facing cuts, the Royal Marines have been building the case for investing in Commando forces, focusing on the quality and value that the Corps offers. This effort is extensive and detailed, but among the many figures that have been drawn together, I was particularly struck by a trio that demonstrate the improving quality both of the Commando training process, and of the raw material that goes through that process and emerges as a trained Royal Marine:

  1. 62% of all recruits entering training now pass out successfully, up from 53%.
  2. 80% of all recruits have at least 5 GCSEs at grade C or above.
  3. 40% of recruits are academically qualified to be commissioned officers.
Brigadier Salzano illustrated this last point by mentioning that his Marine driver had a degree in Economics and that they had spent the journey to London discussing economic policy.

The Nod Whisperer

One of the key contributions to the improving pass out rate comes from an educational psychologist on the staff at the Commando Training Centre. When individual recruits struggle with a stage of training the educational psychologist will take an interest and may suggest different ways of approaching the learning challenge that takes account of the particular disposition of the recruit.

Since Royal Marine recruits are known as "nods", the educational psychologist has become known as the Nod Whisperer.

Recently the Nod Whisperer suggested that 3 recruits who were struggling to master the 30 foot rope climb may have unacknowledged vertigo. The recruits denied fear of heights, but agreed to try climbing wearing blindfolds - and promptly completed the climb successfully. Having cracked it once blindfolded they were then able to complete it without their eyes being covered.

Britain's Got Talented Corporals

Another training innovation is a feedback system in which the recruits in each troop vote for the Corporal that they consider to be giving the best instruction. When the troop passes out and the Corporals are due for posting to different units, the most voted-for Corporals are given first choice and a letter is written to their new Commanding Officer commending them for their performance.

This simple piece of gamification both encourages and rewards ever-improving standards of instruction, and directly contributes to the improving pass out rate of the Commando Training Centre. I've written about how games and recognition can boost team performance - and the Commando Training Centre is providing more evidence.

While some believe that the armed forces are bound by rank, convention and deference, here is a demonstration that even in the toughest conditions the Royal Marines have realised that valuable lessons can come from teaching theorists and the pupils themselves, as well as the teachers. This insight is surely valuable far beyond the Commando Training Centre...

This is one of a series of articles on lessons from Commando training. Here is the full list.

Thursday 9 February 2012

A grizzly story of loyalty

Jan with Ted
This is one of a series of posts about boosting loyalty and engagement among customers, employees and investors.

Bear with me

Yesterday I visited
Tedworth House, the new Personnel Recovery Centre from Help for Heroes. I was there to see the CFO of H4H, and he showed me around the amazing facilities that they are building to look after recovering servicemen and women.

Jonathan brought me a cup of coffee at the canteen and paid using a card. He carries an impressive collection of loyalty cards, and as Jan behind the counter made the coffee he told me a story about loyalty which clearly shows why Help for Heroes has done such a great job of capturing the public loyalty in the last 4 years.

I asked about the roles played by contractors at Tedworth House. I had noticed that Jan was working for a separate organisation called
Blue Apple. Jonathan explained that engaging with contractors was a high priority at Help for Heroes, and that with so many different experts involved in the recovery process it was essential to help everyone feel fully involved. Then he told me about a recent crime.


The ransom note

The Tedworth House mascot is a large bear, naturally called Ted, and he lives behind the canteen. A few months ago, Ted disappeared. Shortly after his disappearance, a ransom note appeared, demanding that the canteen staff raise money for Help for Heroes to secure Ted's return. Further photos appeared showing a blindfolded Ted with menacing looking masked guards.

Jan and her colleague from Blue Apple set about collecting funds and quickly hit their fundraising target, but the kidnappers - or bearnappers as they became known - continued to demand more.

Eventually Ted was released, and when I visited he was seated in comfort in the canteen, where I photographed him with a relieved Jan.

Honey trap

Jan and her team mates are committed to the work of Help for Heroes and even though they are employed by a separate organisation they play a valuable part in the life and vibrancy of the recovery centre, which is a positive and optimistic place. As a visitor I was really impressed how Jan and her colleagues are an integral part of the Help for Heroes story. After all,
leadership is largely about storytelling - narrative gives a focus for loyalty. And of course praise for great suppliers is always important.
Jonathan told me another story of a leader in action building loyalty - and recognising the contributions of suppliers. Though Tedworth House is already a great facility, Help for Heroes has plans to make it even better, and much of the site is humming with builders and construction machinery. Bryn Parry, the founder of Help for Heroes, gathered the builders from Vinci, the building contractor, on the first day of a 26 week project, invited a couple of wounded soldiers to speak to them, presented each of them with a H4H Tshirt, and explained how important their work was. The Vinci team completed their 26 week project in 16 weeks, with builders volunteering to work 100 hour weeks to keep the project moving.

Help for Heroes is doing a great job looking after the wounded, but it is also a fine example of loyalty-building and leadership. And if you are looking for good examples in catering and construction, I can certainly recommend Blue Apple and Vinci!

Tuesday 7 February 2012

The Tattoo Test - Where Are You On The Loyalty Spectrum?

This is the first in a series of posts about boosting loyalty and engagement among customers, employees and investors.

In 2012 loyalty building expertise will be a key advantage for organisations from retail to financial services as austerity bites and consumer, employee and investor confidence is put to the test. In tough times a proactive approach will build bonds that embed loyalty for years to come. In coming posts I'll be exploring some of the tried and tested, and some of the emerging loyalty and engagement techniques, including
  • loyalty among suppliers
  • skin in the game
  • social marketing and word of mouth
  • points based loyalty schemes
  • employer loyalty
  • crowdfunding
But first let's establish where you are on the loyalty spectrum - it's time to take the Tattoo Test.

How passionate are you about your work? Or about the companies from whom you buy goods and services? Or about your favourite sports team? Would you consider getting a tattoo of their name or logo?

This is one of the most extreme tests of brand loyalty - would you permanently and painfully mark yourself to show your commitment? Here is a list of common tattoo choices:
  1. Mum & Dad
  2. Girlfriend / Boyfriend / Husband / Wife
  3. Sports Team
  4. Employer
  5. Favoured Brand
If you have any of these tattoos then you are demonstrating real commitment and loyalty - and if you are the mum, dad, bf, gf, husband, wife or brand owner involved then you have achieved a marketing milestone - you have embedded yourself indelibly. If you don't have a tattoo of your own, think of the tattooing choices of people you know and what they indicate about their personal and tribal loyalties.

Incidentally, the only more extreme test is the branding test - the origin of the term "brand" - in which your imprint is burned on with a hot iron!

After completing my Royal Marines training in 1996, I worked with and Army unit in Northern Ireland. 7 of my fellow subalterns (junior officers) decided to add a tattoo their regimental crest to their right buttocks. For years afterwards whenever they encountered each other a photograph was taken showing the tattoos. Now the tattoos are blue smudges and the regimental crest is hard to recognise, but the loyalty remains. They encouraged me to get a tattoo of the Globe and Laurel or a Commando Dagger tattooed on my bum too, but that's all behind me now...

Sunday 15 January 2012

What's In A Name?

There is an article in the current edition of The Economist (Baby Names, Thanks Mum) which explores the different rules around the world for baby names. For example, it is illegal to call your child "*" in New Zealand. Using names that suggest rank is also banned in NZ - so perhaps "My Name is Earl" is not broadcast there.

More interestingly, there is evidence that people called George are more likely to become Geologists, while a Dennis is more likely than most to become a Dentist.

Since many of our names derive from our real or hoped-for activities (surnames often reflect profession or trade) while given names are often encouragements to virtue or success - for example "Patience Potter".

I've long wondered the extent to which names are destiny - in other words whether causation flows from the name to the nature rather than the other way round. Are people called Patience really more patient? Would that which we call a Rose by any other name smell as sweet?

I think HR departments may have some explaining to do here. The British military spokesman in former Yugoslavia in the 1990s was a Colonel Coward. He was replaced by a Colonel Chicken - was this pure coincidence? I once visited a Royal Navy ship whose captain was called Commander Thicknesse. He was replaced by Commander Bone ("bone" is military slang for "stupid").

And do people with problematic surnames suffer in the marketplace - both professionally and personally? Is Miss Hoare more likely to marry hastily and Mr Snodgrass more likely to remain a batchelor? Is Master D'eath drawn irresistably towards medicine?

Do you have any experience of nominal determinism? If so please share!

Wednesday 4 January 2012

A Farmer's Prescription for Growth

I celebrated the start of 2012 staying with friends in the countryside. As I made coffee on new year's morning, I saw a tea-towel hanging above the stove. On it was written a testament to farmers, and I think it provides a compelling argument for growth and balanced budgets - the perfect prescription for what will for many be an austere year...

     Let the wealthy and great
     Roll in splendour and state.
     I envy them not, I declare it.
     I eat my own lamb,
     My own chickens and ham.
     I shear my own fleece and I wear it.
     I have lawns, I have bowers,
     I have fruits, I have flowers,
     The lark is my morning alarmer.
     So jolly boys now
     Here's God speed the plough
     Long life and success to the farmer.

I wish you long life and success for 2012!