Leadership

Boosting leadership capacity in our scaling companies

Effective leadership, and the ability to boost leadership capacity to encompass growth, is fundamental to any scaleup journey. Scaleup businesses know this, and consistently highlight the value of peer-to-peer networks, high quality mentors and non-executive directors, and the importance of accessing these in a timely way within their local areas.

It is encouraging that, within this sphere, we have seen the clearest ecosystem solutions coming to the fore, and the most obvious impact upon the issues which scaleups face. In 2019 scaleups still say that there are gaps, particularly around peer to peer networks and non-executive director access. This will be a focus for the ScaleUp Institute in 2020.

Our Scaleup Business Survey 2019 shows that leadership remains a substantial issue and requires continued action. However, it is also important to recognise progress: as a barrier to growth, leadership development has been diminishing year on year, falling from 65% in 2017, to 55% in 2018, and this year to 47%. Scaleups still perceive areas of the country which remain under-served and there is also a perception that all support programmes are London-centric. It is important to address these and maintain a local focus to help unlock good practice and share learnings across different localities.

That is why we have undertaken three educational workshops on Driving Local Economic Growth through Scaleup Ecosystems programme (DEG) supported by Goldman Sachs 10,000 Small Businesses UK and Innovate UK¹. This has covered around 37 areas of the country generating 50 new scaleup initiatives directly serving over 2,500 businesses who would otherwise not have received tailored support.

It is also worth noting that since the ScaleUp Institute’s formation, as evidenced in our detailed map of the UK scaleup support ecosystem, the number of leadership-focused programmes substantially outweighs those focusing upon wider scaleup challenges. Of the over 200 programmes which we have mapped nationally, more than half (118) provide support for leadership development and capacity building, with 84 including access to peer-to-peer networks. This shows the impact that can be made when the UK ecosystem responds to a clear need identified by scaleup businesses. 

Whilst this is very encouraging – given the majority of these programmes did not exist three years ago – we need to also be mindful that quantity does not mean quality. Of these programmes we have to date only managed to assess approximately 100 programmes for impact. We will be making further assessments in 2020. Overall it will be most important to leverage what works and build on these.

We continue to also bring our DEG Alumni together as local areas progress on their individual journeys, and are convening a specific group of Higher Education Institutions, including business schools, to share knowledge of solutions which are making an impact. Importantly, this continued engagement is enabling us to provide stronger guidance on how impact can be tracked and evidenced.

Even though progress has been made, demand for scaleup focused leadership programmes remains high. In our 2019 survey, the most commonly cited supporting factors for growth are ‘Developing the leadership and management skills of the senior team’ (47%), ‘Access to a network of peers’ (43%) and ‘recruiting people with experience of growing a business’ (42%).

Importantly, scaleups see these as challenges that they want to be solved locally, and value the role of hubs and active account management.

From the different forms of public sector backed support which scaleups use, scaleups most want easier access to Growth Hubs and LEPs (48%), public sector funding for innovation and R&D (47%), general business support (40%) and Innovate UK (38%).

As we move into 2020, we continue to urge local areas to be aware of the different business communities and to segment their scaleup community effectively. As areas draw up Local Industrial Strategies and wider plans for local economic development it is important to provide within these a clear pillar for local scaleups that addresses their bespoke needs. To aid this we provide detailed local analysis per area in Annex 1 and Chapter 3. It is encouraging that many areas have already embedded scaleups into such plans and we look forward to the progression of others, which we will monitor across 2020.

PEER-TO-PEER NETWORKS, MENTORING AND NON-EXECUTIVE DIRECTORS

As we have repeatedly evidenced, scaleups are looking for effective peer networks. These should include support from people who know what it is like to grow a business, high quality mentoring relationships, and access to non-executive directors who are able to provide specific skill-sets to them as they look to grow.

Peer networks need to be driven by the scaleup business members and be built around genuine peer connections which have been well matched to build trust. Getting this right can have a self-reinforcing effect. There is also a growing demand to build peer to peer network capacity, not just for CEOs and founders but for the wider management executive team..

Whilst more scaleup peer-to-peer networks are evolving, there are still gaps because their very nature means they generally contain a relatively small cohort of participating firms and individuals. Building out peer-to-peer network capacity is essential. This will be a focus for the ScaleUp Institute in 2020 as we seek to close these gaps and leverage what works –  such as the exemplars of Supper Club and Vistage as well as developing local initiatives such as Inspire Elite.

It is worth noting here that the prior Government has also sought to address the leadership challenge, with the £20m provided by the Chancellor in the 2018 budget to boost local peer-to-peer networks and leadership. However, progress against this is still at an early stage, and it is critical that all programmes look to work effectively within local ecosystems – crowding in what works versus crowding out². These programmes should be specifically segmented to ensure that effective focus on scaleups is maintained.

THE IMPORTANCE OF  SEGMENTATION AND EFFECTIVE ACCOUNT MANAGEMENT 

The importance of locally rooted programmes, account management and hub structures is well evidenced³.

In 2017 and 2018 we highlighted the importance of account management which in 2019 scaleup CEOs reinforce as very valuable with seven in ten scaling businesses rating them as essential for navigating and cutting through through to solutions most relevant to them. As such it is positive that we are seeing new active account management models continuing to roll out. We continue to recommend that all local public sector-funded entities adopt this scaleup account manager /relationship approach as part of a wholly client-centric, client demand led service, with the needs of targeted business leaders at its centre. The development of such an approach should draw upon models that already operate in this way in both public and private sectors. To ensure consistency, this scaleup account management structure should be benchmarked to a national standard, incorporating standardised Key Performance Indicators (KPIs) and backed by a comprehensive Customer Relationship Management (CRM) system to professionally manage the relationships developed. Continued funding should be based upon success.

In addition, scaleups have highlighted the importance of an online tool to enable them to search for available scaleup focused programmes. This year we have built upon our mapping of programmes for scaleups in different areas of the UK to develop a ScaleUp Support Finder. We hope this will become a useful resource for our scaling business as well as for the ecosystem. We will continue to work with local areas and scaleups as we refine this tool over coming months.

SCALEUP CHAMPIONS, ENABLERS  AND THE ROLE OF MAYORS

The ScaleUp Institute is continuing to see strong results where scaleup ‘champions’ and ‘enablers’ are able to drive forward scaleup programmes, connect businesses to local solutions and build networks across broader demographics.

In 2017 and 2018 we recommended that all local communities appoint a scaleup champion to celebrate local scaleups and foster understanding of their needs and the connectivity of local solutions. We continue to encourage local communities to follow this approach, and are keen for City Mayors to take an even more active role in championing ‘scaling up’, and acting as a facilitator within city and regional ecosystems.

Exemplars of this approach continue in areas such as London, Greater Manchester, Liverpool, Bristol, and with Tech Nation, the British Business Bank’s Regional Network and Innovate UK’s regional managers. Bristol has established a Scaleup Enabler role working across the West of England and supported by the LEP, universities and the private sector and is now embarking on an ‘investor enabler’ role. We recommend others learn from and replicate a similar model.

The targeted impact that local leaders can have on specific scaleup challenges – by driving through programmes and convening different players – is becoming clear. The rising importance for scaleups of access to new markets, procurement and collaboration is an area where local champions can make a real difference. In particular, City Mayors are in a strong position to build a better understanding among the business community and local authority structures of how scaleups can become involved in local procurement. They can also work actively to convene scaleups with corporates and universities to break down barriers to collaboration.

These champions must also work actively to celebrate success, creating better visibility for local businesses that are doing well. Entrepreneurial growth is still often inspired by relatable examples, and it is important to boost the profile of local businesses and help create a clear path to growth by generating a halo effect in local areas across the UK. A conscious effort to ground all business support and inspiration in the stories of successful “growth heroes” is a vital plank of encouragement; it is why in 2019 the ScaleUp Institute has created a Wall of ScaleUps to showcase just some of the scaling businesses active across the UK and sectors.

EDUCATION HAS A CENTRAL ROLE

The growing number of endorsed case studies shows an increasing number of scaleup programmes which draw upon universities and business schools working in concert with the private sector and at a local level. Following our Driving Economic Growth course we have seen a number of local areas focus upon how universities can act as this nexus.

The ScaleUp Institute is also witnessing pre-existing management and leadership programmes looking to better encompass scaleup challenges, and seeking to become anchor institutions within local areas for wider scaleup activity. Building upon this, at a roundtable earlier this year, we convened 28 higher education institutions which have developed scaleup leadership programmes including Liverpool’s Scaleup MBA; Manchester’s Peer Group, the Aston Centre for Growth, Nottingham Trent’s Scaleup programme, The Henley Business School Angel Academy, Newcastle’s Scaleup Leaders’ Academy with Entrepreneurs’ Forum, Strathclyde’s GAP programme, and Cranfield’s Business Growth Programme – so that they could begin to learn from each other as they tackle scaleup challenges. While these are developed, it is also vital to ensure that the established models of London Stock Exchange ELITE and Goldman Sachs 10,000 Small Businesses UK are leveraged and built upon to create a true escalator of support for scaleups.

Highlands & Islands Enterprise (HIE) in Scotland has done this to good effect in regard to their rollout of the ELITE programme.

THE EUROPE EFFECT

One in three of all scaling focused programmes that we have mapped across the UK are supported – at least in part – by European Regional Development Fund money. To maintain the clear progress that is being made, it is essential for Government to ensure that this funding is replaced effectively or maintained, and that local programmes which are delivering to scaleups are not disrupted. We must ensure no gap in scaleup solutions emerge as a result of ongoing EU dynamics and that we continue to access – or replicate – the necessary funding and collaboration tools.

IN SUMMARY 

High quality, focused leadership programmes, peer groups and mentoring at a local level are consistent asks for scaleup businesses who see effective leadership as underpinning their future growth. Leadership is strongly linked to the ability of a company to address wider growth challenges such as talent, access to finance and entering new markets.

The focus from Government in recognising the value of bolstering leadership capacity is also positive in raising awareness. However, programmes must also be tailored at firm-level to ensure that scaleup businesses gain the support that they need. It is also essential to ensure that these programmes remain navigable and linked to a clear, active account management structure so that scaleup businesses can find those most suitable for them as they grow. This means that new programmes created must not crowd out those existing programmes that have evidenced impact. With one in three scaleup support programmes funded – at least in part – by ERDF, ensuring the continued funding for these scaleup programmes will be pivotal.

As we enter the next decade it is encouraging that the number of these programmes is substantially higher today than when the ScaleUp Institute was launched. However, there are still regional disparities that need to be addressed and quality is paramount.  With scaleups still recognising the vital role of leadership in maintaining their growth, it is important for the ecosystem to continue to develop robustly evidenced leadership programmes. Educators, the public and the private sector need to collaborate ever further, building upon what works, to meet scaleup needs and provide a foundation for future growth.

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