01/10/10

By Alex Evans, Editorial Director, National Business Awards

As part of its ongoing campaign to identify the UK’s most resilient and outstanding businesses, the National Business Awards teamed up with Grant Thornton, sponsor of the Mid Cap Business of the Year Award, to gather some of the best business leaders in the Midlands to talk about how they have achieved growth during the recession.

Bringing together top executives from a range of industry sectors to comment on their respective business models, the panel included: Brian Stein, Group Chief Executive of chilled food specialist Samworth Brothers; Denys Shortt, Chairman & CEO of DCS Europe, a major distributor of health and beauty products; Bill Rumble, Commercial Director of energy efficiency specialist Mark Group; Peter Salt, Managing Director of Salts Healthcare, one of the oldest family owned companies in the UK; Ian Ailles, Managing Director of European Rentals at leisure real estate company Wyndham Exchange & Rentals; and Stewart Towe CBE, Group Chairman & Managing Director of Hadley Group plc, a specialist in cold roll formed steel components.

Co-chaired by David White, Audit Partner at Grant Thornton, and Alex Evans, Editorial Director of the National Business Awards, the roundtable highlighted some fascinating insights into how the region’s most successful businesses had adapted to the downturn.

“Too many businesses are only focusing on cost management and neglecting growth,” said White. “We are advising businesses who are prudently managing cost and shedding peripheral activity to focus on core deliverables, optimising their expertise and differentiating themselves from competitors. These are the businesses that will survive and prosper.”

Inviting each panellist to explain how they had bucked the downturn, Stewart Towe began by saying that the bottom of the recession came sooner for some industries than others. “We have looked for growth opportunities wherever they can be found,” said Towe, who was recently appointed chairman of Business in the Community in the West Midlands. “We’re looking at the Olympics, for example, where there is potential from seating, etc. We’re also looking at opportunities from solar panels and light rail — particularly in the Middle and Far East. But we are being careful to align with this international business while maintaining our core UK operations.”

Ian Ailles was less upbeat about the recovery, pointing out that we’re yet to feel the impact of 600,000 people taken out of work. However, a trend toward staycationing in the recession had created opportunities for Wyndham Exchange & Rentals (WER), a finalist for the Grant Thornton Mid-Cap Business of the Year Award which acquired Hoseasons in February. “There has been a flight to brands in the consumer market,” he said. “We operate in the UK and Europe, and if you can consolidate brands as the unknowns drop out of the market then you will win.”

Consolidated gains
As talk turned to opportunities for acquisition in the recession, White asked the panel whether there was a risk of taking on other people’s problems.

“The market is definitely moving towards more consolidated brands,” said Denys Shortt, whose company, DCS Europe, is a finalist for the 3i Private Business of the Year. “An example was Procter and Gamble buying Gillette and more recently Sara Lee has been bought by a big player."

“But there is a danger of brands becoming surrogate brands, or just price fighting brands,” said Brian Stein of Samworth Brothers, a finalist for 3i Private Business of the Year in 2009.

Shortt countered this by saying that he had grown his business by focussing on the round pound sales initiatives. “We recently launched a new £15m campaign on pound products and our total Poundzone business is now seeing sales of £40m per year. This initiative does hit margin but we win on volume; and that helps to cut our transport costs.”

However, with the big players leveraging the value of their own brands through own label products, quality and differentiation are more important than ever said Stein. “The major supermarkets are filling their shelves with own brand products to compete on cost, so we are building brand value by constantly refreshing our products,” he explained. “We change our food every six months to try and maintain our margins and discount to drive volume; but too much promotional activity means consumers only buy promotions.”

Creating a growth culture
Steering the conversation toward business operations, and what had been done to create an organisational culture for growth, White asked the panel what they were doing to drive innovation.

“Technology in manufacturing is helping us to adopt guerrilla tactics in a market filled with big corporate competitors,” said Peter Salt. “We have invested in R&D to create market leading healthcare products because we know that our customers tend to stick with what they’re fitted with, so there is huge potential for repeat business. We are also encouraging a young and creative management team to have ideas and act on them.”

Picking up on this latter point, Ailles said: “There is a premium on good management teams but also employees. If you empower them, make them accountable, and have good channels of communication, they will make it happen. “

Bill Rumble, commercial director of energy efficiency specialist Mark Group, combined existing technologies in an innovative way to create the HeatSeeker scheme — which helped to grow the business substantially. “We help make over 6,000 homes more energy efficient every week, from our 14 regional locations,” he explained. “Last year, we launched an initiative whereby we worked with local authorities throughout the country, to help homeowners save money on their heating bills. We surveyed residential streets using branded vehicles, fitted with thermal imaging cameras. Then, by identifying homes which were poorly insulated, we could contact the homeowners direct.

This freedom to act quickly becomes more difficult as companies get bigger, observed Stein. “Size dictates how entrepreneurial you are, because the bigger it is the more bureaucratic it is,” he explained. “To keep our business efficient as it has grown, we have created managing directors for each part of it. You can’t watch margin from the centre all the time, and this way the MD becomes the entrepreneur.”

As MD of a European division of Wyndham Worldwide, Ailles could relate to this. “I’m constantly watching the percentages and balancing cost against creativity. We have some extremely innovative people in the team who sometimes need reining in, but they have grown the business. A culture of empowering people and recognising achievement encourages people to come up with good ideas. Making them responsible and accountable for them helps to ensure they are commercially sound.”

Award-winning attitudes
Closing the debate with a final thought on the tangible value of recognition, the panel was asked how important accolades were to their businesses.

“Awards certainly help when we tender for new business, but it needs to be fresh recognition not old awards,” said Salt.

“The process of entering awards is laborious but valuable because it makes you review the company’s achievements and look at how the strategy was delivered,” added Shortt.

This point was echoed by Rumble, who concluded the debate by saying: “The process of entering is worthwhile but only for the credible awards that are hard to win because it means more — to the business and those outside it.”