Enterprise Support – avoiding People Packing and Cargo Cult Economics

I feel we need to keep this debate really hot right now – in particular, we need to make it even more specific. There seems to be a general consensus within government circles that some form of ongoing State-sponsored enterprise support is appropriate and (I’m speaking for myself and my friends) growing businesses will always take what they can so long as it is accessible, relevant, and potentially value-adding.

My priority is to return the debate time and again onto what kind of support is going to be provided - and who is going to provide it. I am worried that as individual business builders, ours seem to be the least represented voices in all of this.

In structural terms, the emergent and new Local Enterprise Partnerships, to be created in the wake disbanded Regional Development Agencies and Business Link, are going to be sited more around existing capacity such as local authorities and chambers of commerce.

I am all for seeing chambers of commerce in particular playing a more prominent role – they have been excessively squeezed in recent years from a number of directions, including academic-led training, massively funded new enterprise agencies and competitor networking providers.

But we need to bear in mind that the organisational shape of this supposedly new era of leaner and more effective enterprise support is going to emerge primarily through political conflict through competing local and regional groups: that, as ever, is going to be more about struggles over control and power, than about quality of provision. It is not enough from my point of view - as a potential recipient of either poor or good support - that there is going to be radical change. It is the output of this change that concerns me.

Also, with a couple of notable exceptions, the politicians driving this process are not greatly steeped in rich enterprise experience. The civil servants advising them, moreover, occupy an entirely different world. I cannot at this moment see where the necessary quality control and end user consultation is coming from in sufficient breadth and volume.

Whilst I have strong affection for the chamber of commerce movement, it is primarily a membership movement, more versed in providing solidarity at a macro level and providing services such as trade insurance at the micro level, than it is in having a holistic capability of enterprise support provision.

Again, whilst I would welcome (with the doubts herein expressed properly addressed) seeing rejuvenated chambers of commerce at the forefront of vigorous local business leadership, it is no secret that many are struggling in terms of overall appeal and core financial performance. There must be no sense that an influx of business support responsibility and funding is any way flowing sideways within organisations to prop up structures that in other respects are struggling or even failing.

Likewise, I have even deeper doubts about the attractions of local authorities playing a major role.

Has anyone else ever visited the regeneration departments and economic development departments of councils? Has anyone else, like me, ever been struck by the vast amount of resources apparently devoted to functions which can only have, in reality, somewhat marginal effects on the natural flows of capital?

Whilst councils need to be business friendly and to have the odd savvy senior planner who knows how to accommodate commercial interests, the last 20 years or so have witnessed massive Canute-like exercises in throwing huge staffing budgets at forces which are mainly outside merely local influence.

This is where my term People Packing fully applies – the tendency to throw person after person at problems and for the burgeoning wage bill to absorb most, if not all, of any actual delivery budget. Some large charities have also unfortunately ended up like this, where ever greater funding needs are created by ever larger bureaucracies and precious little money filters through to frontline delivery.

With the focus specifically back on enterprise support, there are organisations in the North West, where I operate, which frankly beggar belief; floor upon floor of office space occupied by staff of multiple and overlapping public sector agencies charged with restoring the private sector wealth generating capacity of the region.

And when you politely ask how this is going to come to pass, this is where the People Packing slips over into Cargo Cult Economics.

Cargo cults are a real anthropological phenomenon, most usually identified across the Pacific region over the last two hundred years or so. Where there has been a sudden influx of overseas wealth driven by foreign trade and that wealth cycle has begun to disappear, some of the local people have tried to resurrect the flow of wealth by mimicking what they identify as its necessary conditions.

After WWII this included carving rough and ready airstrips through the jungle and the copying of the accompanying landing and communications equipment in rough and ready wooden representations.

This type of delusional activity, uninformed by knowledge and expertise, is what so many of the agencies have been guilty of: they create business-like structures, with talk of boards and directors; they trumpet their own business plans, they create missions and visions; they seek to validate themselves with big salaries, big budgets and big payrolls; they talk in terms of customers and outputs and enterprise.

And there is no connection and no economic rebirth..........but it will come, we are told, if we continue to enable the necessary conditions.

So, these are some of those conditions, for those who are listening:

1. Crystal clear grant structures, related to real spending on job creation, R&D and marketing support.

2. Great start-up spaces with affordable rents.

3. Fantastic mentoring from operators who been there, done that – and who want to give something back.

4. One-stop specialist advice on everything payroll, legal, contractural and export.

5. People who actually can access capital – or tell you exactly why you don't deserve it.

6. Networks that excite, inform and expand.

So, to conclude, let's be loud and clear in this period of great flux surrounding enterprise support: it is vital that People Packing and Cargo Cult Economics don't simply get packaged in new structures.

- And people who want to play a significant role in the new mix need first and foremost to show how they can bring some major parts of the above directly to the table.

Author Malcolm Evans is a corporate culture specialist with a passion for helping to nurture early stage enterprise.