Embracing the unpredictable: Bdaily chairman Dr Roy Stanley on the events that elevate scaling businesses

Groundsix and Bdaily chairman Dr Roy Stanley is a man who undoubtedly knows business.

Having established, owned and sold a number of companies throughout his working life, he has experience of growing and developing businesses at each stage of their life cycle.

With an MBA from Newcastle University and a DBA from Newcastle Business School, he is passionate about supporting and empowering businesses to thrive, particularly in his home region of the North East.

Most recently, he has secured his place as an expert in his field within business academia, with his research doctorate focusing on scaleups.

Roy took some time to chat to me about why he is so passionate about scaleup, what he feels the region offers to growing businesses and where the challenges lie.

Hi Roy, thanks for taking the time to speak with me. What is it about ’scaleup’ that made you choose it as the topic for your research doctorate?

“Living in the North East, I have an interest in the prosperity and wellbeing of the region. For decades, the North East of England has been classed, economically, as a slow growth region.

“It has suffered the social and commercial impact of the consequential deprivation that this economic position has led to, particularly, relatively high unemployment and low productivity.

“The growth prospects of the North East could, in some part, be addressed by increasing the number of profitable scaleups. With an emphasis on the word profitable.”

Do you feel scaleups are adequately supported to grow in the right way? If so, what does this support look like? If not, why do you think this is?

“Trying to increase the number of startups has been the traditional policy response to addressing regional disparities, but research indicates that although intentions are good and worthy implementation of policy has been misguided.

“It is now known that scaleups have a much more significant economic impact. The general approach to policies supporting scaleups has been adapted from the more traditional startup approach and is not specific to scaleups.

“Why is this? Simplistically, because it is an easy approach to take - it is a generalised approach rather than specific to scaleups.

“This is why it is important to more fully understand the process of small firm high growth.

“Since the work of Birch (1979), it has been widely recognised that small firms in terms of employment have a greater impact on an economy than large firms (Birch, 1979).

“More recent studies now suggest that the narrower category of scaleups can have an even greater economic impact than SMEs¹ .”

Are there any variables that feed into scaleup success that you feel are overlooked or misunderstood?

“Scaleups can come from any industrial sector. The majority - over 60 per cent - come from the service sector.

“The technology sector represents under 10 per cent of scaleups but is disproportionately supported.

“On average, scaleups are over 10-years-old, but a great deal of support goes into early stage firms.

“Rapid growth in firms is idiosyncratic it does not follow a linear path but a great deal of policy is erroneously based on predictable stages of growth.”

In your research, you talk about ’Black Swan Trigger Events’. What does this mean, and can you give any examples?

“The integration of the two concepts of Black Swan Events and Trigger Points leads to the framing of the term Black Swan Trigger Events (BSTEs).

“In the context of the growing firm, a BSTE is a significant unpredictable event that has a major positive impact on the growth dynamics of a small firm.

“The justification for considering BSTEs in the context of scaleups is that it is becoming of increasing interest to consider random or unpredictable events as a way of accounting for the growth spurts of firms².

“There are a large number of examples explained in the research, they tend to fall into categories related to people, systems and sales.

“BSTEs are essentially random and unpredictable business opportunities that are recognised by the entrepreneurs involved in scaleups. The issue is how firms are able to respond and act positively on these occurrences.

“The most fundamental aspect to a firm’s rapid growth is the growth mindset of the entrepreneurs involved.”

There’s a perception that London gets more scaleup support, has the largest impact and therefore the most focus. What is your opinion on this?

“I think the whole UK economy is too London-centric. The UK has the largest regional disparities of any of the OECD countries.

“I am not sure if London purposely receives more support, it is just a wealthier area which sucks in great amounts of finance and is the centre for UK investment.

“There are very few policies for spreading wealth and support throughout the whole country.”

Being based in the North East yourself, do you feel that the region does scaleup well? If so, how? If not, how could it improve?

“I think people, organisations and institutions are trying their best. The policies are essentially well meaning but they are not data driven.

“There is a requirement for much more research in the regions on scaleups and understanding the process of firm growth so that policies can be based upon fact and data not on intuition.

“There are some simple things that could be done to more directly impact firm growth and, more importantly, move static firms that are holding back productivity and innovation in the regions into the category of scaleups.

“The research indicates that we could also adopt some relatively simple approaches to do more to identify nascent scaleups. We need to encourage higher levels of aspiration and encourage and learn to foster people with a growth mindset.”

As an entrepreneur who has scaled several businesses, do you personally have a stand-out Black Swan Trigger Event that you could share with us?

“It was slightly more complex than this but I once received a phone call, out of the blue, from someone offering to sell a manufacturing business at a very competitive price. It led to growth in my business of over £40m in profitable turnover.

“I have a number of examples like this - as I am sure most business founders have.

“My research covered five local rapidly growing businesses based in the North East. There was strong evidence, in all five firms, of the impact of Black Swan Trigger Events both on profitable sales and sustainable employment.

“These firms were open and responsive to unpredictable events that triggered growth opportunities and developed tactics and strategies for taking advantage of them.”

Why do you think it’s important for Bdaily to shine a light on scaleup with the Scaleup Focus Week?

“Bdaily shining a light on this topic establishes the importance for the region of addressing the issues of relatively high unemployment, lower than average productivity and incomes.

“By communicating to its wide audience, Bdaily will encourage a broader debate and emphasis around the subject of scaleups.

“The more scaleups we have, the better the economic prospects of the North East region.”

¹ Haltiwanger, Jarmin & Miranda, 2013; Hart. & Anyadike-Danes., 2014; Pesämaa, 2017.

² Moreno & Coad, 2015.

What are your thoughts? Let us know - join the conversation on Twitter with @Bdaily and #ScaleupFocusWeek.

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