Clawing back a little ground from the market leader or improving efficiency by a few percentage points is often the limit of executive ambition. It can be reassuring to operate within the bounds of industry convention. But great business ideas respect no such barriers and come from many different sources, raising uncomfortable questions about the implicit assumptions of any strategy.
‘Strategy formulation needs to consider both a company’s traditional market, as well as all alternative markets,’ says John Riker of the Value Innovation Network. ‘It should be visual and intuitive as much as numeric and analytical.’
Abandoning the ritual of traditional strategy development requires leadership and courage, but given the unrelenting pressure of competition, the introduction of unconventional thinking is becoming an imperative for all companies seeking to create successful growth strategies.
Creating a whoosh
Innovator: David Montieth
Sector: Computer software/audio technology
When you are next playing a motor racing game on your computer, you might notice a ‘whoosh’ from behind as you are overtaken. Or you might jump when you hear a monster leap out from behind you in a castle game.
These sounds appear to be all around you, but are in fact coming from the speakers in your console using a technique developed by David Montieth and three colleagues at the EMI Research Laboratory in Hayes. Based on a medical understanding of how we hear, they developed a series of algorithms and filters to create the illusion of sound in three dimensions.
‘Because it is the artist, not recording technology, that sells records, our first commercial application was in computer games,’ says Montieth. He and his three colleagues were spun out into Sensora, a company that was sold to Creative Labs.
Frustrated by a lack of investment to explore the possibility of using their techniques in mobile phones, Montieth set up Sonaptic with £1 million in backing from Pen Tec Ventures. After overcoming the challenge of creating 3D sound on devices with speakers an inch apart, Sonaptic concentrated mainly on the Japanese market, which is the world’s heaviest downloader of music and games.‘ We have licensed our IP to DoCoMo and are now running on Fujitsu, Mitsubishi and NEC phones,’ he says.
Sonaptic is launching in Europe this month and Montieth has just changed his job title from managing director to CEO in preparation for an assault on the US. All being well, he is hoping to start making a profit at the beginning of next year.
On current projections, Montieth expects to break even at the beginning of next year.
The trucker’s defence
Innovator: Debbie Jones
Tighter rules on protecting freight from terrorist attacks have had a nasty side effect. Drivers asleep in their cabs are becoming even more vulnerable to attack, says Debbie Jones at Protekdor, which specialises in cab security.
‘Without the driver, the load goes nowhere,’ she says. ‘Employers are missing a commercial trick by not ensuring their safety. The cab has become a vehicle’s Achilles heel.’
Attacks on HGV drivers have been on the increase across Europe with hotspots in Belgium, France, Italy and Spain. After her own husband was twice gassed on the way to Iraq, they set up a company to produce a steel device to protect doors and windows from break-ins.
They are now offering protection for light commercial vehicles in the UK. ‘They frequently carry valuable goods and documents, but are invariably left unattended at some point. This makes them an extremely attractive target for the opportunistic thief who, with even minimal skills, can breach standard door lock barrels in a matter of seconds.’
Up in the hills
Company: Hill Station
Sector: Food and drink
Innovators: Charles and Gina Hill
If Britain has such a wonderful dairy industry with great creams and cheeses then why has it so tamely given up the market for premium ice creams to imports? It was a question that bugged Charles and Gina Hill, an American couple, who were working in this country in finance.
When offered transfers to Singapore, they decided instead to produce their own version of how they felt British ice cream should taste. They moved out of London and set up a factory close to Wiltshire’s dairy herds.
Their intention was to break with the usual image of seafront or farmgate for British ice cream. ‘We wanted to produce flavours that evoke exotic trips and experiences, rather than just mixing everything up with sugar,’ says Charles. ‘We were told that no Briton would consider anything with less than 18 per cent sugar. We’ve gone for 12 per cent. With less sugar, you have more flavour.’
Branding themselves as Hill Station to evoke a sense of tropical adventure with a British twist, the couple launched with flavours such as nutmeg and cinnamon. They began with three delicatessens as customers, but seven years later they are stocked by Tesco, Waitrose and Somerfield with sales of £2 million. They have just launched their latest flavour: passionfruit and white chocolate.
After four rounds of finance among family and friends, Hill Station launched on AIM in October, raising a total of £1.9 million to invest in marketing and build a new factory. ‘So far we’ve spent about £75,000 a year on marketing,’ says Charles, ‘which is nothing if you want to build yourself into a consumer brand.’
Innovator: Simon Harrop
Sector: Support services
If you can sample the smell of a shampoo or a perfume then you are 35 per cent more likely to buy it, says Simon Harrop at Aromaco. ‘What’s more, you are likely to stay loyal to the brand for longer than if you choose the product on rational grounds such as price or efficiency. Smell is an emotional response.’
Today, his company, Aromaco, has sales of £1 million with ten staff at its base in the Oxfordshire countryside. Twelve years ago Harrop was a behavioural consultant working on a project looking at the effect of the senses on brands. He realised that no-one was marketing through smell. Not being a corporate type, he threw in his job to exploit the niche.
‘The theory might have been good,’ he says. ‘In practice, I had to spend six years getting up at five in the morning and going to bed at one in order to develop a suite of products.’
As well as samples at the point of sale, he has now patented techniques for incorporating smells into packaging for products like cereal and soft drinks. ‘We even put some lemon into the plastic cap of a bottle of mineral water to give the sensation of drinking lemonade, but with zero calories.’
Sales have doubled each year for the last three years with particular interest in creating signature aromas for brands. For instance, after its merger, Lloyds TSB used Aromaco to introduce a grassy, oceany fragrance to its chequebooks, branches and literature. And for BA’s business lounge, Harrop created a smell of green meadows for passengers who had just stepped off a long-haul flight.
One of his more surprising assignments was for Network Q, which sells used Vauxhall cars. ‘We found that potential buyers liked the smell of a new car and what worked best was the smell of plastic.’
Aromaco now has sales in 30 different countries and Harrop is a regular member of teams creating new brand architectures for corporates. It is a long way from the days when the only use marketing had for smells was scratch and sniff.
A great reception
Company: Alan Campbell Group
Innovator: Alan Campbell
Sector: Telecoms support
Erecting masts and laying cables for mobile operators has pushed sales at the Alan Campbell Group up from £2 million to £20 million in the last six years. From being a specialist in sorting out telecoms in awkward buildings, Alan Campbell now reckons he offers a full spectrum of services in building the infrastructure for a mobile network. And he has another ace to play.
‘In the last six months we have seen more activity in the 3G market than in the previous two years and we can expect a big investment push by the operators over the next three years.’
Alan Campbell’s first priority has been to guarantee coverage in central London. When Campbell and his team first got up on the rooftops to rig up antennae, they found that feeder cables were already at full capacity. Instead of applying to landlords to lay extra lines, Campbell has developed a way of piggybacking 3G cable onto the existing network, saving 20 per cent for operators, as well as avoiding any delays.
He has patented the brackets and is now offering them to other installers. He has also found an easier way of running cables across the roof and developed an easily assembled step-over for trip wires. All told, these three products have sales of no more than £180,000 at present. ‘It is a market waiting to explode,’ Campbell firmly believes. ‘I just have to find the right salesman.’
Out of the forest
Company: Rally GB
Innovator: Andrew Coe
Sector: Motor racing
After 70 years of skidding through forests at top speed, the World Rally Championship is coming indoors for the first time in September. The pitch at the Millennium Stadium in Cardiff is being dug up and a special course is being constructed for the opening stage of the Welsh Rally GB. In the middle of September, the roof will close and 70,000 people will have the chance to see drivers like Colin McRae for as little as £10 for a family ticket.
‘The World Rally Championship is second only to Formula 1 in motor sport, yet the only fans who see it are those happy to stand in the middle of a forest in November,’ says Andrew Coe, chief executive of Welsh Rally GB. ‘We want to reach a completely different audience and hopefully attract live TV.’
He also happily admits to an ulterior motive. The event is sponsored by the Welsh Assembly, who actively want to create jobs in motor sports in South Wales. ‘Most of the 90 rally cars that will compete in the event will have been built in Britain,’ says Coe. ‘It is a strength on which we all want to build.’
Sales on the move
Company: Impact Applications
Innovator: Martin Taylor
Northern Gas has set itself up as a rival to British Gas in installing central heating. The Wolverhampton company has made itself competitive on price and is spending £20,000 a month on promotions, but its underlying fear was whether it could handle a surge in sales.
What would happen if they suddenly had 500 calls? All orders were paper-based and the main office was pandemonium. There were price lists for different regions and appointments were faxed to the sales team at their homes. After completing a sale, forms had to be completed in triplicate and faxed back to the office.
Processing a perfect order was fraught enough. If a customer changed their mind about whether they wanted a bigger radiator or not, then the process could descend into chaos.
Northern Gas realised they had to change, but did not want to land themselves with a large IT infrastructure, so they asked Martin Taylor at Impact Applications to dispense with all their paper, bar the final contract, and create a ‘zero client’ solution. For a capital cost of £60,000 he created a web architecture on a standard file server with a decent firewall.
‘The whole interface is a web browser, so you don’t need to install any client software. It was out of the box and worked on the company intranet across multiple sites. If anyone needed to access it from home, they could do so without any special software or any extra security. And if you are out on the road you can access the site by putting a GPRS/3G card into the side of your laptop and connecting through the mobile phone network. All of the data processing happens on the server, none of it on the local device. If it breaks down or it is lost, you don’t have to worry. It is also real time, giving them the ability to beat British Gas on customer service.’
Since installing the system, Northern Gas has been able to continue doubling its sales. There are other benefits as well, says Taylor. ‘Customer satisfaction is through the roof and the profitability of each sale is up five per cent. There is just far less scope for making mistakes.’
Mixing it up
Innovator: Katherine Edwards
This autumn Tesco will open a 20,000 sq ft store in the centre of Gerrards Cross on land that that was not previously there.
‘There was a clear retail case for a store,’ says Katherine Edwards, Tesco’s property communications manager, ‘but no site on which to put it. So we joined two railway bridges together with a connecting tunnel, which we have earthed over and put a store on top. It joins together the two sides of the high street, which makes it more likely that locals will shop in Gerrards Cross, using all the facilities, not just us.
‘Planning is now all about re-affirming the vitality and viability of town centres,’ she says. ‘You cannot stick superstores out on a green field anymore. You have to look at regenerating brownfield sites, creating sustainable communities with a mix of retail, offices and houses. Our bottom line is that we want a store, but it suits us to work in this way. All the uses should complement each other.’
Tesco’s most ambitious multi-use project so far is being planned in Streatham, south London, where the old ice rink is being replaced with a building that includes a 45,000 sq ft superstore, a swimming pool, a leisure centre and 250 affordable flats, as well as an Olympic standard ice rink.
‘It is the first time such a complex mix has been attempted all on one site,’ says Edwards. ‘In London you have to be creative about your use of land. There are just no big empty spaces. Lambeth had ambitions for a master plan in the area and we were able to come up with a scheme to realise their aspirations.’
Taking care of the walk in the country
Company: Pin Point Golf
Innovators: Simon Roper and Stephen Mair
Sector: GPRS systems
Golfers spend their lives in two minds. Which club do they actually need to reach the green? Simon Roper is hoping to resolve their doubts. With his partner, Stephen Mair, he has created a device to tell them where the hole is within 25 centimetres.
Each morning at clubs like Wentworth and Brockett Hall, greenkeepers go out with a handheld GPS and take a reading of where each new hole is cut. These pin positions are then super-imposed on an arial photo of each green and given to golfers as they tee off.
After launching last autumn with backing of £250,000, including an injection from the accelerator fund of the local regional development agency (SEEDA), Roper has sold his system, Pin Point Golf, to 20 different clubs and it was used at the HSBC World Match Play won by Ernie Els.
His ultimate aim is to become market leader in golf for GPS mapping and has set himself a target of breaking even in 2006. With patents pending, he also has five other products in the pipeline, including one to help manage golf courses identify exactly where hazards and water courses are located.
Most of Roper’s friends think he is in the business for fun. ‘I might be working with some of the most prestigious courses in the UK,’ he tells them, ‘but I have yet to play any of them.’