Insights for long term growth revealed at Building a Sustainable Advantage Speakers Panel
27 February 2017
Real business insights into building a sustainable competitive advantage for long term growth were revealed at the recent Speakers’ Panel
Henley Centre for Entrepreneurship hosted its tenth event in the SME Leaders Speakers’ Panel series, titled ‘Building a Sustainable Competitive Advantage’, at Henley Business School on 20 February 2017. Sponsored and supported by James Cowper Kreston and Thames Valley Business Hub, the Speakers’ Panel raised a topic which challenges all SMEs and addressed the question ‘how do we succeed in the long term?’ by revealing what several ambitious SMEs are practicing.
Opening the presentations was Jurek Sikorski, Executive Director for the Henley Centre for Entrepreneurship. Jurek spoke about the three critical success factors that were needed to sustain a competitive advantage:
- Firstly, businesses need strong intellectual property such as patents, trade secrets, copyright, designs and trademarks which could not be easily copied.
- Secondly, companies must have superior organisational processes, capabilities and resources. Typically, processes would include the sales process, capabilities would include low cost commercial scale manufacturing, rapid product development, distribution and customer/technical support, and resources would include technology, skilled human resource and finance, which again could not be easily copied.
- Thirdly, businesses require an economically viable business model that ensures the business does not run out of cash. This means revenue is adequate both in terms of covering direct costs and capital investment, customer acquisition and retention costs and the time it will take to acquire a customer are viable. Subsequently, this ensures that the lifetime value (LTV) of a customer is substantially greater the customer acquisition cost (CAC) and the contribution (gross) margin is sufficient to cover the necessary fixed cost structure in particular staff, infrastructure costs and rent and administration where the operating cash is favourable. As such, an economically viable business model helps reduce the amount of cash tied up in inventory and fixed assets down to a minimum and focuses on getting customers to pay quickly, ideally up front (e.g. subscription, manufacture to order).
Citing the rapid growth of Fairsail, a cloud based HR management information system to mid-sized businesses across the world, Director of Professional Services Jon Harrison talked about the three things that have given Fairsail a competitive advantage. Jon described these three things as being People, an Innovative Product and an Amazing Customer Experience.
Jon highlighted how Fairsail is investing in the training and development of people and aligning the culture and values to that of the company, with details like the CEO meeting every prospective hire proving to be important. Jon added that there had been a transformational cultural change as the business has grown, with the business encouraging engagement from staff around the business on ideas and improvements. These staff can bring new ideas and concepts, which has contributed to the competitive advantage.
Jon went onto say that innovation was a key characteristic of product development, pointing to the history of the development of what he described as “the most comprehensive” on the Salesforce platform.
Recruitment and training of people and product development has been undertaken with one thing in mind: delivering an amazing customer experience. This training has resulted in an exceptional customer retention rate of over 98 percent.
Following Jon was Claire Hewitt, Managing Director of PCG System Solutions, who told the story of the company since it was started in 2003. Claire described how it grew in the early years through its focus on servicing central government, its re-focus on local government during the austerity years of the coalition government and how it was acquired in 2015, leading to an environment of significant changes working for a US based firm.
Claire described PCG’s sustainable competitive advantage to be a focus on people, markets and the business model, along with making brave choices and new product development and IP creation. Looking to the future, Claire said “we would do more of the same”, combining with new marketing initiatives.
The next speaker was the Founder and CEO of SoundOut, David Courtier-Dutton. SoundOut is a predictive analytics business, powered by the consumer and operating in the music, fashion, homewares and CE sectors.
David described his journey and how SoundOut has built a product that is unmatched in terms of speed, accuracy, scale and cost and went on to display the six pieces of SoundOut’s competitive advantage. These six competitive advantages are as follows:
- Technology, with SoundOut being a technology company heavily involved with market research
- Panel quality and speed, with SoundOut owning its own 2 million-strong panel
- Automation, with everything needing to be automated made so to improve efficiency
- A unified research platform
- A low cost and high margin
- A route to market, which includes white labelling and partnering
Last to speak was Dr Jamie Wilson. Jamie is the Founder and CEO of HomeTouch, UK’s leading on line home care service operator, and he told his story from the time he worked as a psychiatric registrar at Imperial College. It was there that he regularly encountered the growing problem of care for the elderly that would inspire him to launch HomeTouch.
Jamie started out in building a different solution that would enable families to find a trusted and life time carer for loved ones. Describing the problem most families will experience as one of the most stressful, Jamie built a new solution that was simple but innovative; an online marketplace connecting vetted carers with care seekers, bypassing the traditional home care agency which does little to address the need for trusted lifetime care.
Completing a recent acquisition of the UK’s largest database of carers, HomeTouch is now placed to change the provision of home care in the UK.
After Jamie had spoken, the floor was opened to offer the audience a chance to ask questions. The Q&A picked up a number of other factors important in building a sustainable competitive advantage, including ‘speed’ in execution as implied by all the presentations, rewarding people for their contribution in the form of share options as well as bonus payment, and awarding recognition and having ‘fun’.
Success in business, especially in building a business from scratch, is the holy grail and Henley Centre for Entrepreneurship is focused in bring news and insights from business to the wider community both inside and outside the business school.
The audience provided some positive feedback:
Alex Tatham, Managing Director of Westcoast Ltd: “Always fun, interesting and thought provoking.”
Peter Woolsey, CEO of Positive Concepts Ltd: “Well worth attending.”
Rhian Burrell, Founder and Head of Strategy for Osokey Ltd: “Excellent and varied speakers.”
The next Speakers’ Panel is on the topic of ‘Putting innovation at the heart of your business strategy’ which is scheduled on 22 May 2017.
The University of Reading is committed to work with the SME community in the Thames Valley Region for mutual benefit.
Contact and Notes:
Jurek Sikorski, Executive Director of Henley Centre for Entrepreneurship
Henley Centre for Entrepreneurship
Henley Centre for Entrepreneurship is part of Henley Business School at the University of Reading which provides a hub for teaching and research in the subject, inspiring students from across the University to embrace, develop and apply their entrepreneurial abilities.
Andy Cowie, Marketing and Business Development Director
James Cowper Kreston (JCK) is a leading firm of accountants and business advisers. James Cowper Kreston sets itself apart from the rest of the UK’s top accountants and business advisers through its unique approach of combining professionalism, flexibility and passion. It is a massive supporter of the SME ecosytem in the Thames Valley.
Susan Elliott, Director of Thames Valley Berkshire Business Growth Hub
Thames Valley Berkshire Business Growth Hub The Growth Hub offers a new way of working to Berkshire's high growth businesses. Backed by Government it provides a single gateway for ambitious businesses who are seeking the information, guidance, support, expertise, finance, knowledge and experience they need to scale up and grow, boost performance and find new ways of working.