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Propelling Business Through Disruption to Success #31

Propelling Business Through Disruption to Success – with Dan Simmons

There’s always been disruption in business. It must have been a hard time for scribes when Gutenberg invented the printing press around 600 years ago, and for carriage makers when Ford brought in the Model T. But everyone can agree that things have never been changing as fast as now.

Established business models are being torn up. The fundamental disruptor, directly or indirectly, is technology. Think – email has only been with us for 20 years, the smartphone for 10, social media for 5, and most of the (literally) hundreds of thousands of apps for just months. Nobody any longer expects the devices and apps that we’ve become reliant on to stay the same, even for a year. Change today is relentless.

The challenges for established businesses trying to re-invent themselves and win from this disruption are huge. A lot of famous names have gone to the wall or been forcibly downsized by failing to change. No CEO wants their company to be the next Kodak or Polaroid. But changing a business, a brand, thousands of employees and massive capital investments to do something different can be like turning the Titanic.

What makes the challenge more complex is that new technologies are disrupting businesses that never had to cope with them before; most managers don’t fully understand what’s happening now, let alone what’s likely to hit them next. For example, few CEOs today properly understand blockchain, and fewer still the relevance to the future of their business. Since no trusted source can advise them of the benefits of investing in such technology may be with any certainty, disruption compounds, and almost invariably delays future action.

There is little point in just reactively addressing changes that have already happened – what’s needed is to prepare and be ready for what comes next. But how to foresee the future? Crystal balls don’t work, R&D is often out of date the moment it’s completed and, in my experience, most soothsayers, aka management consultants, are little better.

So I was really impressed to be presented with a distinctly fresh approach, developed by Propelia, around a terrain they identify as the ‘Almost Now’. Essentially, it’s a form of structured consultancy, working with the executives of agencies, brands and organisations to redirect resources and adapt to be ready to lead and excel in the disruptors coming around the corner that affect the ‘Almost Now’ of their sector.

Propelia achieves this through a carefully curated four stage client engagement structure. This is driven by a small team of pioneers, trailblazers and innovators, specially selected for the project. Each one will be a unique thought leader in one or more of the critical disruptors in those sectors where the client, be it agency or company, are currently trying pitch for, retain or win business. They have a special and very suitable name for such people – ‘Propellers’.

So if, for example, a business is confronting an apparent need to adapt to Blockchain and Artificial Intelligence, the Almost Now Airspace process will be driven by Propellers expert in those fields. Importantly, they’re not academic consultants, but business people, young enough to be technologically savvy, but mature enough to understand the realities of commerce. They’re the ones already practically experimenting and exploring the Almost Now of their sector and with the hands-on experience to navigate disruption; engaged properly through this process, they bring clarity to the client’s dilemma.

The Disrupted Present often causes panic. The Uncertain Future is too vague and far off. But the Almost Now can be engaged with, and must be addressed, by those responsible for the future of their business.

Because the Almost Now can’t wait, Propelia’s process is designed to achieve results really quickly – within weeks rather than months. And instead of resulting in a ton of follow-up studies, it always delivers a tangible solution, already owned and bought into by the management team and ready for immediate implementation.

I’ve worked with good businesses that failed to change, so simply faded and failed. I’ve met consultants who charge top dollar, but only tell you what you already know, or – worse – leave you feeling that they know a deal less than you do. The Almost Now process is really different – and, as you’ve gathered, impressed me.

Dan’s approach to navigating business challenges can usefully be considered by every type of business that wants to survive and grow, regardless of their global ambitions. I’m sure you will find my conversation with Dan great food for thought.

 

LISTEN NOW

Contact details and Links

Websites: http://www.propelia.com and http://www.theairspace.co.uk/

LinkedIn: https://www.linkedin.com/in/dan-simmons-a40658122/

Transcript

OLIVER: Dan, welcome to the ‘Grow Through International Expansion’ podcast. Tell us about Propelia.

DAN: Well firstly it’s lovely to be here, thanks for the invitation. Propelia was set up in 2012 basically to be the first accelerator to help founders looking to disrupt a sector. At the time we were quick to develop their thought leadership, their thinking, and the IP within that thinking, based on their journey into a space, a market space that they could then use to leverage and become pivotal to a new market space. More and more founders are finding that their own personal journey, and their own patterns of curiosity around that journey, are becoming more and more important in their efforts to be authentic, have integrity but also the media in a disruptive space like FinTech. They look for someone like Tom at Monzo, perhaps to be almost the avatar for the whole space. If you can acquire the primary or secondary person that they look to as a founder in a disruptive space, that’s very valuable.
We decided to be the first accelerator at the time, and it was a response to a kind of “TED thinking”, people who are standing on stages and telling interesting personal stories. I think we forget how strange a thing TED was – it’s a very American idea to stand up on stage and give your own personal point of view based on your own journey. It’s now become normalised, but initially it was to help that level of thinking, develop the thinking further, and commercialise that thinking. Over the last six and a half years it’s now focused, being really distilled around helping founders of start-ups who want to disrupt their sector and be pivotal to that sector, use their journey to do so. Then more recently we’ve realised that if 90 percent of start-ups fail, which seems to be the case, then the 10 percent that don’t fail have done something really difficult. They have generally got themselves to a space where all stakeholders, the founders, people working there, the customers and the investors, need to scale up, but they don’t because that’s a whole different set of criteria and resources. So we’ve created a new product for those start-ups to get to that point so they can scale up.

OLIVER: You will probably hate me for using the phrase, but is this something like business psychiatry, where you are actually helping the founders find solutions for themselves, or are you actually effectively doing the research and coming up with the ideas yourself or with your team?

DAN: What we call “sessions”, when we engage with our process, is a really supportive sequence looking at different aspects of that founder. I have to qualify upfront that it’s not therapy and I’m not a therapist, because it can feel like that, and I want to put a disclaimer in. But no, there’s magic in the process that we’ve been using for 70 founders from Fintech to Proptech to Healthtech, to people in bio fashion to philosophers. It’s called Flightpath, because if you think of the flight path of a plane, you can see where it’s been and then extrapolate where it could go. It can’t go everywhere, but it can go in a number of permutations. What we’ve found is that no one was looking backwards, so everyone would come to a founder and just look forwards. The Flightpath process looks at all of the data and the journey, and how that correlates, the patterns and the risks and the consistent places that they orbited around, and also the mistakes.
We spend a lot of time on the mistakes and things that don’t work, because that tells you a lot. When you look back – we call it “navigation” – the aim is to show the founder that what they might have thought of over a five year to 10 year period, generally five years, has all these patterns in it. It can be quite emotional for them when they realise that, but they feel like they’re genuinely engaged in something with authority and integrity, and that, as I said, is becoming a real currency in start-ups. Start-ups that don’t have that, founders that don’t have that, are increasingly found out very quickly, because when it gets tough they get out of there, and they don’t have a story to tell. So it can feel emotional. I have what I’ve been told is called voodoo. A lot of strange terms have been used, because it is quite weird when it works, but it’s not really. I don’t research a space before I go into it, I just try to find the minimal amount so I broadly understand what I’m talking about, and then it’s all about what the founder brings. The experience is quite unusual, and once you found that, which we can generally do within two sessions of two hours, then you’ve got somewhere really rich to exploit and explore.

OLIVER: So essentially then you’re looking for using the lessons of the past to learn new ways forward that can help that business succeed in the future in this so-called disruptive space?

DAN: Yes. I don’t think all disruptors are created equal, I think you have to have you earn the right, you can obviously stimulate disruption in many things, but it’s different to really do it. I think more particularly millennial customers smell when there’s something there, they smell when there’s something real and they smell when it’s artificial. If you look at all the new brands that are replacing old brands, it’s because they have that feeling. I know there’s a lot of nonsense about millennials, but there’s a few things that aren’t nonsense and I think they genuinely relate. They have an empathy towards that kind of that kind of brand and you don’t get that without the founder or founders having that journey. So that’s why it’s become more interesting and more valuable.

OLIVER: Right, and we talk about disruption a lot here. You know the founders of start-up businesses are disruptors in their own right but they’re also facing disruption from others going on around them. So I guess it’s trying to navigate through there?

DAN: I think it is an overused word. My own orientation around disruption is that if you think of disruption as an event rather than an outcome it becomes very different. There is a diagram on the Propelia website about it. So if you’re a founder of a business, and if you assume that there will be a disruptive event at some time – you don’t know what that is yet, but you assume it will come, and you’re constantly vigilant – then you will also assume that you will have to respond to that event in some way, and that that the response probably isn’t linear, there are probably multiple options that you could explore. To me that’s a new type of leader, where you almost make disruption the servant of your business. You assume it’s going to happen, so you’re not suddenly scared of it and then can leverage it. It’s a quite unusual counterintuitive way to think. To welcome disruption, and encourage it as an event. It doesn’t then spit out A leads to B to C, but suddenly there are all these options that you could exploit. We call those people who can think like that “propellers”. That’s a particular kind of founder who is very comfortable in that kind of uncertainty, is making disruption servient to where they want to go. A founder who’s only doing it to exploit a potential upside of a certain market condition isn’t going to have that force. That’s what I look for. So I think a lot of disruption is noise but it’s definitely the term. There’s no doubt that’s the term its shifted from innovation. When Propelia started it was transformative innovation or game change, but the right founders are behaving differently around disruption and the wrong leadership as we see everywhere can’t handle that, they are paralysed by that way of thinking.

OLIVER: Yes. So bringing it back to this podcast, which is primarily about international expansion. Our listeners must be thinking we have gone off on a tangent here, but I don’t believe we really have. Businesses thinking of international expansion and looking at going to a new country, maybe to their first international country, maybe additional ones, every time that they do that it’s an international expansion event. That event is one of those disruptive game changing events, and it strikes me that that’s something that many founders struggle with planning, because they initially may start from the perspective of “oh, we will just continue our business as it is when we sell something to another country”. It’s never quite that simple.

DAN: I think that there’s another tag that links to that which you may have come across in the series, which is this idea of conscious capitalism, which links to it to the international expansion piece. That is more founders are starting to be aware that all money is not the same money, and they want to take the right money from the right people. These “propellers” are thinking in a different way, they’re thinking, “what is it fundamentally that I’m trying to achieve?”, and that links to a better question around expansion. If I’m trying to achieve a result, say on a health product to reduce malaria by 30 percent within 10 years, then I have to be thinking internationally, if I’m not then I’m doing the wrong thing to solve that problem. If I’m trying to solve a hyper-local problem around buses in London – and I do know someone who is doing that – then international expansion might be a distraction, but there is this moment where start-ups have to become scale ups. 90 percent of them won’t get there. The 10 percent have to start asking themselves different questions to scale up, and international expansion has to be one of those questions.

OLIVER: Right, and in my philosophy international expansion is not something you do because you want to go internationally. It’s grasping an opportunity to increase the value of your business, and that valuation increase might come from selling more product or service to another country but it might equally come from taking advantage of the resources available in another country. Whether that be labour, materials or manufacturing capability, it may enable you to do something you can’t otherwise do as long as you stay insular within a single place. So the end result is growing value, and businesses don’t always think that way. They just grasp the idea that they’re going to expand to the USA or Germany or to whichever country it might be, and they just look at it purely from the “we’re going to this country” perspective, without thinking why.

DAN: Yes, I think there at the moment there’s no subtlety, you’re right there. Generally start-ups would think about international expansion as becoming a unicorn. If you’re going to be a unicorn you have to be everywhere. But I think that’s a crude way of understanding it, when you hit this this inflection, this scale up moment, and you know the Board knows this and the investors know this. It has to be one of the things that propels scale up. It could be resources, it could be insight, it could be acquisition. Obviously lots of them could occur internationally, and the majority of founders that I’ve worked with or spoken to don’t know how to do that. I can’t think of a conversation over the last six and a half years where that question has been properly tabled and addressed, which is quite amazing when you think about it, particularly in the political climate we find ourselves in to not be thinking like that. It seems strange actually.

OLIVER: there’s another significant aspect of international expansion that I see has a game changing disruptive effect, and that is when businesses come in the reverse direction, especially applied to start-ups or relatively recent scale-ups. I’ve been working myself with start-ups in the fintech and health tech sectors, where businesses have been tempted to perfect their product in their own country, and whilst they’ve actually been doing that another business in another country has had a very similar idea. Maybe not identical, but addressing the same overall business need, and have created their own product and they aim to expand internationally sooner than the domestic product. For example, if we’re thinking of UK companies here, we find a company from the USA producing maybe a slightly inferior mousetrap but they come into the UK with lots of money behind them. The product looks like it addresses the same need, and the start-up company here suddenly finds their space and market invaded by a better funded company, that may be offering an inferior product but has more marketing. Could you see Propelia helping with that sort of thought disruption?

DAN: Definitely. I think that’s hugely interesting. The idea of where you’ve been beavering away for three or four years and something comes along that you haven’t got line of sight of, and that could eat you up for breakfast tomorrow, should worry a lot of people. I would think that’s an incredibly interesting area for start-ups. The new product that we’ve launched, called Airspace, is literally about what do you do when you’ve reached that inflection point, and it’s how to be able to rapidly and agilely look at all aspects of how you respond to scale up situations. What we’re trying to do is bring “propellers” around them, as experts, almost like a floating non exec team, that assembles to help them really work out what are the things that they should be doing in response. I mean, if you look on a macro scale, you can see Spotify as a real emblematic of that. That came out of Scandinavia, with no track record. There is no reason why Spotify should own a music business, but it does when the record labels invest in there and they have some leverage. That’s about to float for 30-40 billion, or something like that. It’s done very well. But there would probably have been Executives sitting in London and New York who would have not seen that coming, and should own that platform. But you’re talking on a smaller scale.

OLIVER: Not necessarily.

DAN: But it’s a good example, it’s bigger scale but the same concept. How do you get startups here to even think like that? They’re not thinking like that.

OLIVER: One of the problems I see with start-ups that I’ve seen a lot as an angel investor is that there are lots of start-up companies that certainly have brilliant ideas, but they become fixated on their original brilliant idea and it takes maybe a year to 18 months to two years to develop into a prototype, and they are blinkered, so they won’t stop to think that they might actually be wrong or they might actually have to change. They don’t necessarily have to throw away everything they’ve done, but things move so quickly. Very often what they’ve already started working on would have been a brilliant product had it been ready on the day they thought about it, but three years later is potentially going to be eclipsed by competition. I suspect that’s one reason why a lot of start-ups fail, a lot of those 90 percent simply fail because they don’t get the product to market first. or on a higher quality basis, or they’re not open to adapt or believe that they could ever be wrong.

DAN: I think VC’s have a lot of responsibility here. I go into a lot of these collaborative spaces that are everywhere and I was in with one of the companies working there. They had moved out of their baby incubator into a much bigger space and got another round of funding. They’re trying to rapidly expand. You walk through there, no one was in and it looked like a weird factory, millennial factory. I’m quite passionate about this. It’s a game. Really what you’re doing is as a VC is deploying capital very cheaply across these spaces, across these millennials who will sit there all day long thinking that they’re acquiring an asset or learning a skill. But what’s really going on is the VC’s are just spread betting and when something emerges, they don’t really know upfront, they don’t look in the same way as we do back into the into the journey of the person. So to answer your question, what I’m saying is that I think what you’re seeing in the market, and why people get dogmatic and myopic, is that a lot of these founders have never run a business, they’ve probably not been employed, they probably don’t have a lot of life experience. What they have done is go to a V.C. with a deck looking impressive, and the VC has thought that they’ve got a remit to chuck X million into into Y number of start-ups and then you just give them the money. So the people that you are in front of aren’t even groomed to think.

OLIVER: I get to meet quite a number of sort of twenty three year old “serial entrepreneurs”, which in itself is perhaps a bit of a joke. Well they’ve actually worked out the first time how to raise money and have gone away and raised more. That doesn’t mean they have ever produced anything. In fact they’ve learned that there is effectively a business in just creating business ideas, creating a deck, getting money for it, and moving on to the next one. Where I feel concerned, and where I see the value in a service like Propelia is for those businesses that are actually really serious about wanting to actually succeed. Wanting to make a difference.

DAN: Agreed, I think it’s like the sort of elephant in the room that most of these people aren’t that good. The interesting thing about the work that we do is I know they’re not that good within 60 minutes. Let’s say that generally, because if someone hasn’t got that that journey where they’re consistently been risking, they’d be curious, and you can see that what are they doing. All they’re doing is opportunistic, they’ve had an idea down the pub and they and they know somewhere they can raise some money, and there’s a lot of money out there for that for that kind of stuff. I do feel quite passionate – it’s a different conversation – that a lot of millennials are going to wake up at 30 and have nothing. There is another wave of bright young things behind filling those chairs and they have nothing, they have no assets, they have no real skills, nothing, and that’s why I think this is part of a broader conversation where a new kind of awareness needs to creep in, new kinds of skills, new kinds of outlooks, new kinds of approaches. Yes I’d like Propelia to be part of it, but let’s start with this new product Airspace, that we do 10 in the next 12 months. I can see how two or three where international expansion would be absolutely fundamental to consider and implement. Maybe 20/30 percent of start-ups that start to behave like scale-ups should be thinking in a much more intelligent way. There is a huge opportunity there because if you’re in that scale-up moment and you suddenly think “wow, we need this skill set” and someone can go “well, that skill set is waiting for you in Poland” (or wherever) and you can plug into that immediately. That has to be part of that mix, otherwise how are you going to survive. I really see that as me picking the phone up to you and saying look someone is really interested in this. How do we do that? And you’ll be one of those propellers sitting around a saying have you thought about this, have you thought about that, because that’s not in the mix. Even in this conversation it seems strange because I can’t think of a single conversation where it’s come up properly as an intelligent conversation, and that’s having worked which 70-odd start-ups and being at the coalface of these. I can’t think of a single time where someone’s turned around and said we need to strategically leverage this international opportunity for X to achieve X.

OLIVER: They should.

DAN: They definitely should at the right time.

OLIVER: Let’s talk a bit about Airspace because you mentioned it a few times and also Propellers, and that the Propellers in this case are the individuals who are bringing the ideas the concepts. Before I say the wrong thing, tell us about Propellers.

DAN: Well everyone talks about influencers. There’s loads of YouTube stars and influencers.

OLIVER: So you have the Kardashians down as your Propellers?

DAN: No. Well, the interesting thing is that in some instances yes, but a Propeller, you can’t say ‘I’m a Propeller’. However let’s just take yourself. If a start-up has a need to use your particular insight, and in that moment you are the most relevant person with that skill in the sector, you become that person’s Propeller. You may only be for a month. You may be it for longer, but it’s a different way of leveraging insight and intelligence. This Airspace product is basically saying if you’re in this position where you need to scale up for whatever reason, let’s really examine why. Initially, let’s really understand what are the kind of runways that are driving that. Once we understand that, we can assemble a team of propellers, let’s say 20 of them from all different skill sets. There is this whole thing about neurodiversity. Some probably in your space, but equally you want a diverse group. The client should select eight of them to get this kind of team, and then the final stage is to assemble that team, probably one to two days depending on budget, and surround the client with that. Imagine that like a propeller round and round with the client, and their team have them pitch back to the propellers all their assumptions, all their aspirations, what they think they have to look, and the propellers are really providing that kind of balance to say “that’s interesting”, “should green light that”, “that should be red stopped right away”. They are providing that intelligence in a very reactive way that the company wouldn’t necessarily have from within themselves. Ideally it would capture the problem you’re talking about, so if there was something outside you would find it because these guys would tell you about it, and rapidly you would know. The idea is that that assembles and then it dissipates, and then the client can continue to work with those propellers if they want to, but it’s offering that rapid solution.

OLIVER: Quick hits of surrounding yourself with mentors who are subject matter proactive experts?

DAN: Non-Exec Board – like mentors but supercharged. Propelia would find them, Propelia would engage them, Propelia would put them on a day rate. So you can’t have to worry about that, all you have to worry about is that you turn up and you pitch back to them, you really know what you want to test because it’s almost like a reverse TED where the client is standing in the middle or a Dragon’s Den, the propellers become almost like the Dragons around the client, and they have to then pitch back. If your ideas don’t hold water over a day or two days well there’s probably nothing there, but equally you might come out and have to move faster, or find “we weren’t aware of this” or “we need to acquire this” or “we need to grow the team” or “we to shrink the team”. All of those things are very hard to do with from within the company. The start-ups that make it and get to that point will have a real appetite for it. They can’t do that within themselves. The V.C. can’t do that, but everybody who is around that start-up at that point who wants it to scale out has a vested interest in finding that solution. That’s the bigger product.

OLIVER: Right and you said something that says this is a quick process. I guess everybody in business accepts the need that they need to change who wants to effect something very quickly. How involved and how long a process is it?

DAN: I would like to be able to offer it within a quarter. So they can go okay, if we invest in this then within a quarter we will have got that insight, that clarity, we will know what we want, how we want to go forward. I think we can do it quicker than that, within eight to 10 weeks. We price it as a percentage of the budget they are putting towards the scaling up. About 2 to 3 percent or something around that would be reasonable.

OLIVER: So it is going to be affordable but it is going to be a substantial amount.

DAN: Yes.

OLIVER: To get them as far as any real decision to go ahead was the first steps, presumably there’s a relatively low cost?

DAN: Yes, there’s a free kind of a check in just to see if they’re serious, and then the first stage would be one to two days or a couple of afternoons, just simply trying to nail what aspects, what dynamics of that scale are relevant. Is it international expansion, what does that mean? Is it growth of team, is it multiple revenue, is it percentage market share? What are all the things that are meaningful to everyone. That’s the first stage. Then the second stage is the identification of the Propellers going out. So are the propellers credible, have they lived in this space. When we go out and talk to them they recognise that we are essentially experts in this. So we go out and find those, that takes a couple of weeks. They would select eight that would assemble on site. Depending on budget, one to two days, and then we’re offering them a black box tool where all of the insights are captured as a final tool so they have actually got all the insight that they can take into meetings to inform their decisions.

OLIVER: This sounds really interesting. I’m guessing that this should appeal not only directly to founders who might actually take some convincing that they need to actually think of changes, but to big investors, VC’s, big Angel Investors, who might want to encourage the businesses that they’re investing in to look at these things from the viewpoint for them of protecting and growing their investment. I talked about how many failures there are.

DAN: I think that’s exactly right. If you’re an investor, you see when your winners start to emerge. I’m talking to someone tomorrow who’s involved in crowd Q. One of the key people who’s trying to make it their business to interface with angel networks. There is a group who are going to chuck in another 50k, but there’s potential that this could suddenly become a 10, 20, 30 billion business. It’s almost riskier not to do it, because you’ve spread your risk over all these things that aren’t going to work. That’s exactly where I see the funding for this coming from. The founder has to have a passion for that scale-up, and the people around it saying they should look at it, as they’d need to even if they decide to do nothing.

OLIVER: There must be a good opportunity also for founders looking for second round investments and so forth. To say “look, we’ve actually done this process”. The new deck is actually based on the changes, the improvements, the new direction we’re going to take as a result of going through this process.

DAN: Yes. And to that point, I met someone, I think you’d be interested in meeting. There’s this new company that’s valuing IP of start-ups, that are pre-revenue, so that they are able to value it and put on the balance sheet or go out in the investor deck. If you’ve done this the value of the IP should absolutely be higher, so it almost pays for itself. It has to be has to feel more secure and like a smart moveThe goal would be that that we’re actually that we want to work with this business because that is something really exciting there. I don’t want it just to be kind of like a due diligence exercise. I think it can be that initially, but I totally agree that it could be valuable for funding.

OLIVER: Dan, your passion for helping others find the directions they need for future business through Propelia shines through. People who want to get in touch with you as a result of listening to this can find your details actually on the web page on www.growexpansion.org where you’ll find supporting article and more information and links to enable you, anyone who is interested to find out more about Propelia. Thank you so much for joining me today.

DAN: You’re welcome. Thank you.

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