A generation has now passed since Margaret Thatcher swept into power and the term enterprise culture entered the British business vocabulary. As Britain entered a radical phase of economic restructuring and huge redundancies ensued during the 1980s, the need for small businesses to plug the gap as an alternative source of employment became critical. There was also a need to replace the declining manufacturing companies with new technologically innovative firms that thrived in a small business environment.

Under New Labour the enterprise culture was developed further with enterprise now appearing in the curricula of British schools (Young Enterprise) and universities. Popular TV programmes such as Dragons Den and the Apprentice have portrayed enterprise as being sexy and kids leaving school can now choose to be entrepreneurs instead of climbing the traditional corporate ladder.

Gordon Brown, the current Prime Minister, recently endorsed the launch of a national enterprise academy plus the unveiling of an enterprise white paper designed to encourage more women entrepreneurs, cut red tape and allow easier access to finance. In January 2001, Chancellor Brown also announced:

In the budget, our aim is to create the stronger enterprise culture that America enjoys.

Over the years, Britain has shown that it is good at fostering start-up companies in high technology but none of them have grown to become an Apple, Microsoft, Intel, Amazon, Google or Cisco (to name just a few). In fact, few British companies that have been started since 1945 have matched the growth rates of their US counterparts. For example, after the birth of the PC industry in the mid 1970s several British companies entered the market (Acorn, Sinclair and Apricot) before being outmanoeuvred by their US rivals. The painful lesson that these British entrepreneurs learnt from their failures was that competing head-on against powerful competitors was an unwise strategy. The need to provide complementary products or services has since been the recommended approach.

ARM executed this complementary strategy very successfully by entering the microprocessor market for mobile phones but despite the explosive growth of this market ARM has still remained a relatively small operator. Racal, however, were an exception to the rule. Not only was Racal a major player in its own field, it also demerged a world-beating company called Vodafone in 1991 – a truly British-owned “big-gorilla”.

So taking stock of the enterprise culture which spans four prime ministers and nearly four decades of economic growth, why can’t other entrepreneurs repeat the success of Racal/Vodafone (or SAP and Nokia in mainland Europe)? Is British management flawed; do British entrepreneurs lack the capability to run large businesses; is the short-termism of investors to blame; is it a problem of serial entrepreneurialism where the owner-manager “cashes-out” early or are we too soft and risk-averse or do we simply lack ambition?  

SMEs and entrepreneurs have plugged the gap in terms of providing employment to large numbers of displaced employees during the downsizing era of the 1980s and early 1990s. However, their inability to grow into “big-gorillas” is something that should not be taken lightly. Big companies (despite their bad press) are important to an economy because they enhance national productivity and standards of living. The also play a vital role in terms of investment, training and R&D.

In November 2006, Gordon Brown claimed:

Across the country, we are seeing the beginning of an enterprise renaissance.

This statement is undoubtedly true and UK Plc has significantly narrowed the enterprise gap with the US. However, if this is the case how long will we need to wait before we see some UK “big gorillas” competing in global business markets and are these really necessary?

About the author

Nigel Walton is an associate lecturer for the Open University and the University of Worcester, specialising in strategy, entrepreneurship and international marketing. He previously worked as a management consultant, primarily advising medium-sized companies with growth problems.

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Recent years have seen the emergence of a new term in the dictionary of financial markets jargon - ‘boiler rooms’.

The term relates to the aggressive selling of worthless investments to private investors by unauthorised overseas firms – mainly based in Spain, the United States or Switzerland.

Although the exact nature of the investments being sold varies from scheme to scheme it usually involves illiquid and valueless shares in obscure overseas companies. Aggressive selling encourages the targeted investors to buy these shares on promises that their price will rise sharply. Some schemes have also involved false share deals to make the investments appear valuable. Once the boiler room has secured money from investors it may disappear and then later reappear under a different name. As for the shares they’ve sold - their price then plummets and the hapless investors can only watch helplessly as the losses mount. In fact with no ready market for the shares, they’re left holding their investments that may become completely worthless.

"hapless investors can only watch as losses mount"

A recent tactic used by boiler rooms has involved conning both investors and small businesses out of their money. A typical scheme involves a boiler room approaching a company and offering to raise capital by selling the company’s shares to investors. These shares are then sold to private investors at anything up to 100% above the price agreed with the company. Once the shares are sold the boiler room takes a fee from the company for organising the share sale – sometimes as much as 90% of the money raised - and then disappears. The company is then left with the prospect that the investors will then demand from it a refund through the repurchase of the shares issued - even though the company only received a percentage of the funds actually raised.

The typical investors targeted by boiler room selling are middle-aged professional men, many with considerable investment experience – a profile deemed to maximize the chances of extracting money via investment scams. A recent Financial Services Authority (FSA) survey found that 81% of boiler room victims were men and 64% of victims were aged over 50. Members of this socio-economic group are more likely than others to have funds available for investment and, perhaps, a belief in their investment prowess and an appetite for the riskier shares that apparently offer the prospect of high returns. Victims of the scams lose on average £20,000 - although losses of over £100,000 have been reported.

The FSA - which regulates the selling of investments within the UK - has detected well over 100 unauthorised investment firms selling into this country. The problem for the FSA is that the companies involved in these boiler room sales are based overseas and are therefore outside the FSA’s jurisdiction. However the FSA has had some success in tackling some UK companies that have been involved in supporting boiler rooms by, for example, approving the promotion of their schemes.

Guidance has been provided by the FSA on the survey above, and certainly if you’re a potential investor you should check to confirm that the companies you are dealing with are authorised by the FSA.

But the key point to note is that if you’re phoned ‘out of the blue’ from overseas by a boiler room, do not to be drawn into any transaction.

If you’re contacted about an investment opportunity, consider the following:

• Is the company authorised by the FSA?
• Is the company calling from the UK?
• Have you solicited the enquiry?

If the answer to these questions is ‘no’ then you may well be dealing with a boiler room.

Remember if an investment sounds like it is too good to be true, it probably is too unsafe to be purchased!

Weblinks

• Your and your money - don't let your money be the boss of you, get help from our interactive
• The psychology of deception - how can rational people fall for scams?
• Join the discussion - should victims of boiler room scams know better?
• Moneymadeclear  - guides and advice from the Financial Services Authority

Course

• You and your money: personal finance in context

About the author

Martin Upton is lecturer in finance at the OU Business School. Previously he spent 20 years in treasury management, including 12 years as Treasurer of Nationwide Building Society. Martin's particular interests are financial services, the housing market, financial markets and risk management.

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Biofuels had been hailed as the great hope of sustainable energy, particularly for cutting CO₂ emissions from transport. But they have suddenly shifted from hero to villain. They’re seen as an environmental threat, accelerating rain forest clearance for palm oil production and pushing people into starvation as lucrative biofuel plantations replace much needed food crops.

The problem isn’t so much with biofuels themselves, but more about politicians desperately seeking an easy, quick solution to the climate change problem. Biofuels seem to offer such a quick, easy win: within two years, the UK government intends biofuels to make up 5% of petrol and diesel used, and the EU announced last month plans for 10% of all Europe’s energy to come from plants by 2020.

There are some biofuel quick wins. In a number of cities, waste cooking oil is collected from restaurants and processed into fuel. That’s great, but quantities are relatively small. Some biofuels have been around for a long time (e.g. Brazil has produced ethanol from sugar cane for decades). But there are good and bad biofuels. Researchers have known for years that there are energy efficient ways to produce biofuels and other ways that are awful. Biofuel from maize uses as much energy in growing and processing as comes out at the end. The USA’s use of ethanol from maize is more an excuse to subsidise farmers than anything about the environment.

The sort of biofuels around now that can provide big volumes of fuel tend to be the less efficient ones, or use tropical nuts, leading to issues of rainforest clearance and food crop displacement. Diesel from rapeseed comes out quite well, but it is the so-called ‘second generation’ biofuels that use the whole plant which are most energy efficient. These include plants like grasses and wood, but such technologies are only just coming on stream.

For the UK, biofuel from wood offers a real win-win. We have put a lot of land into set-aside and are planting it with trees. Using such areas to produce coppiced wood for biofuel would not take land from food production or impact on developing nations. But this is a medium-long term response and will only build up production slowly. The Energy Research Centre’s 2007 report on carbon abatement in transport summed this up:

“Biofuels can occupy a segment of the UK fuel market but care must be taken not to expand demand too quickly, before crop breakthroughs and robust environmental safeguards are in place.”

Biofuels can be an energy hero, but not if the politicians blunder in and develop them inappropriately, trying to find a quick and easy way out of their climate change indecisiveness. Biofuels can play a role, but we need other tough environmental policies as well. Using biofuels as a smokescreen was bound to backfire. The real danger is that we’ll reject biofuels entirely because of such ineptitudes.

Weblinks

• How green is your journey?
• Calling companies to account
• Watch the trailer
• Join the discussion
• An Introduction to Sustainable Energy
• An Agricultural Crime Against Humanity
• UK Energy Research Centre
• Quick Guide to biofuels

Courses

• Energy for a Sustainable Future
• Working with our environment: technology for a sustainable future

About the author

Stephen Potter is Professor of Transport Strategy at the Open University. His research includes work on the diffusion of cleaner transport technologies and the development of sustainable transport policies.

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After using email for 15 years, in 1990 Donald Knuth, the eminent computational scientist, gave up reading and replying to email. His reason - he needed more uninterrupted time for his work. By all accounts this is a common feeling about email. Knuth’s solution, however, was not as draconian as it might appear. He wrote,

“I have a wonderful secretary who looks at the incoming mail and separates out anything that she knows I've been looking forward to seeing urgently. Everything else goes into a buffer storage area, which I empty periodically.”

Knuth’s solution to the ‘problem’ of email – to delegate it – isn’t available to most of us in such a complete solution. In her Four D's for Decision Making model, productivity expert Sally McGhee finds three more Ds to accompany delegate. She adds:

• Do it (in less than two minutes)
• Defer it
• Delete it

In practice everyone uses her Four D’s model for email management in one shape or form – but McGhee’s message is that efficiency benefits do accrue from such systematic, daily practices. Her claim is that 50% of email can be deleted or filed, 30% delegated or completed in less than two minutes and 20% deferred for later completion. 

Systematic strategies do help significantly in managing the email ‘problem’, but I also think that this example of fitting the person to the technology - rounding the square peg - is a tad short-sighted. Of course, if someone is having severe problems with email they should be encouraged to think about whether their aptitudes and skills match the demands of the work. Is the email problem just a symptom of a larger problem? In most cases, however, instead of blaming the individual it’s necessary to look at the role that the technology plays in creating individual problems. I’m not suggesting a luddite solution – there’s no going back from the obvious benefits of email – not even for one day a week. Rather, what is it about the implementation of email systems that creates the problems that users experience? 

While spam is an irritation, the major issue within sizeable organisations is the carbon copy (CC) facility that, by all accounts, is heavily abused. Most complaints I’ve heard about email relate to the sheer volume of CC’d mail – and specifically to the practices of some people continually advertising their existence by broadcasting their thoughts more widely than the message requires. 

While intelligent spam filters can minimise the external spam problem, there are more interesting ways of dealing with internal ‘spam’. One is to get the IT department to disable the CC facility – perhaps more easily said than done. More exciting is to engage in ‘guerrilla war’ with the CC- spammers. It’s easy to set up an automatic task that identifies the sender of a CC’d message and generates a standard reply – similar to the ‘Out of Office’ reply facility. One rather pompous automated reply that has produced results goes along the lines:

“Thank you for your CC’d message. In the interest of efficiency all my CC’d mail is diverted to a holding folder. If by the end of the day I have time to read your message I’ll do so. Otherwise the entire folder is deleted. If you think it’s important that I read your message, please send it to me directly. Thank you.” 

Such guerrilla activities are more effective if done collectively by CC-spam sufferers. 

Another approach is to ask what role CC-spammers think their communications play. Apart from attempts at self-aggrandisement, there are usually genuine attempts to involve others to facilitate collaboration. But, for collaborative working, is email the appropriate tool? Email works well for the individual and for mainly one-to-one communication. Communications such as “when will you have it done?” or “what do you think about X?” are well supported. But when you need to obtain and organise the contributions of several people, email is not the best choice. 

For around twenty years, software which supports collaborative work through messaging has been available – all the while growing in usefulness and ease-of-use. The original system – Lotus Notes – dating back to 1984 is still available (now under the auspices of IBM). Microsoft has its Sharepoint system, which is designed to add a collaborative dimension to their Office suite. Some years ago, the Open Source Moodle system began to take a hold in Universities – an approach to collaboration that was giving ‘street cred’ by its adoption by the Open University. But, perhaps the most interesting approach is the recent offering from the ubiquitous Google called Google Sites. The feature of interest in Google Sites is it doesn’t require users to run their own servers to host the system - in contrast to the IBM, Microsoft and Moodle systems. Google Sites is accessed from the desktop using a web browser – with all the collaboration tools provided through the browser.

Solutions to the problems of email are many. If a goal is to make your life less frustrating, then there are many sources of advice on efficient email management strategies available on the worldwide web – and you can strike a personal blow for freedom from CC-spam by engaging in ‘guerrilla tactics’. If however, you are more interested in more effective working practices – using round pegs to fit in round holes - then using software specifically designed for supporting collaborative working is worth investigating.

Links

• Video extras: email - the experts explain why email is both a blessing and a curse
• 4 Ways to Take Control of Your E-mail Inbox – Sally McGhee on using your email more efficiently
• Managing knowledge - you’ve got the data, but how do you make the best use of it?
• Email is ruining my life! - one-third of workers are suffering from email stress
• Click On: Five ways to… - our quick guides to technology teach you what you need to know
• Join the discussion - do you have any advice for keeping control of email?

Courses

• Networked living: exploring information and communication technologies
• Professional communication skills for business studies

About the author

Before retiring, Dr Geoffrey Einon was lecturer in Telematics in the Technology Faculty at the Open University.

Like football, innovation in the public services is a bit of a game of two halves. The first half is concerned with improving efficiency; the second half is about improving effectiveness. Public healthcare services and in particular the NHS is currently engaging in its own innovation game. The first half is concerned with improving efficiency of services through a process of continuous innovation. Plenty of national, regional and local level initiatives have attempted to encourage efficiency improvement through cost reduction, process improvement and lean thinking. The second half is concerned with effectiveness and is concerned with producing better services, in new ways. Lord Darzi’s report last year is the most recent indicator of this part of the game. It suggests the need to innovate services within a vision of an NHS that is fair, personalized, effective and safe.

Unfortunately, again as in football, joining the two halves together is not always easy. But at this point the comparison with football starts to break down. Football managers get a break between the two halves, they can reprimand, inspire or empathise with their players and then hope the second half goes well. In the NHS’s innovation game, the two halves are actually happening simultaneously. What is more, the two halves are tightly interrelated, involving and impacting on the same staff, resources and operations. It is a bit like getting footballers to play in two games simultaneously on pitches lying parallel to each other. It is for this reason the decisions about innovation faced by NHS managers, are far more complex than those faced by their more highly paid equivalents in the football industry.

The inter-relationship is well illustrated by one of the NHS’s recent reform, the implementation of Payment by Results (PbR). This was introduced in 2003 and aimed to improve the fairness and transparency of hospital payments and to stimulate provider activity and efficiency. The main impact was that healthcare providers would be paid for the number and type of patients treated, using a national set of rules and a national tariff. At face value this was an initiative very much concerned with the efficiency half of the innovation game. It sought to get NHS trusts to trim the waste in their provision and ensure that their costs did not exceed the national average. But what was the impact on the other half of the game, effectiveness of NHS provision?

My interest in PbR was raised in a conversation with a friend who works at the Nuffield Orthopaedic Centre (NOC) in Oxford. He drew my attention to the plight of the NOC, caused by the PbR initiative. The NOC, through continuous innovation of its services, provides both routine and specialized orthopaedic services. It is common for patients to be referred from a wide area because it is able to carry out the difficult or more specialised procedures. The NOC is one of five centres of excellence in the UK for othopeadic service. The impact of PbR has however meant that the payments the hospital receives for treatment do not take into account the added complexity of treatment. The result has been that a hospital that provides high quality services and is innovative in its approach to delivering care, has struggled to remain viable in the long term. This is where the inter-relationship between innovation aimed at efficiency and effectiveness has resulted in unintended consequences.

In February this year the Audit Commission reported on PbR and have made some recommendations. The report makes some interesting reading. It concludes that there have been some positive outcomes. Since introduction of PbR the number of day cases has increased allowing more elective activity to take place. This is certainly an improvement in efficiency – treating more patients with the same resources. Encouragingly, the Commission concluded that quality of day case treatment had been maintained and was not adversely affected by PbR.

But what of improved effectiveness? Well the report is less positive about PbR in these terms. It concludes that the emphasis placed on rewarding efficiency and volume of work has lead to some less desirable effects. The first of these is in relation to the advice provided by the National Institute for Clinical Excellence (NICE). PbR only in limited cases adjusts tariffs in response to new NICE guidelines; to the point where in many cases PbR rewards NHS Trusts for ignoring guidelines and even penalizes them for applying them. Second, PbR is institution focused and does not take into account co-ordination across boundaries. This is very limiting as to provide personalized care it is imperative that a patient’s journey crosses smoothly between different NHS organizations. A tariff system that does not reward the inter-organisational co-ordination of services will have limited impact on personalized care delivered nearer the community, as advocated by the Darzi report. Finally, the commission concludes that PbR does not directly reward high quality care. One of the key recommendations of the report suggests that the granularity of detail handled by the tariff system needs to be improved, allowing indicators of complexity and quality to be truly reflected in the tariff paid.

Given that innovation is a game of two halves, PbR seems to provide a contribution to the first half, but has had negative impact on the second half. The Darzi report may well contribute to the second half, but the ultimate challenge for the NHS is to bring the two halves together. Unfortunately, illustrated by the difficulties experience by the NOC, reliance on levers of change like PbR will always have unintended, though not always unforeseen, consequences.

My concern is that the wider agenda for an innovative NHS will continue to be blocked by the unintended consequences of performance management initiatives. There are already several examples in our public sector services of where poorly conceived performance indicators skewed attempts at improvement and innovation. For many public services, including health, policing and education, initiatives such as payment by results risk taking managers’ eyes off the innovation ball in both halves of the game.

About the author

Clive Savory is a Senior Lecturer in Technology Management at the Open University. He is currently researching user-led innovation of healthcare technologies in the NHS.