3rd May 2012
Peter Gradwell, founder and managing director of internet telephony provider, Gradwell, reviews the seventh episode in this series of The Apprentice.
In last night’s attempt to please the ‘nation’s toughest investor’, the teams went back to Lord Sugar’s roots with £150, a cash and carry and 24 hours in Essex to make as much money as possible. The name of the game was to find the fast moving products and “smell what sells”.
Last week, in ‘Street Food’ we learned that customers will pay a premium for good quality, and that approach narrowly won the day. Again, this time round, Sterling sold fake tan for £10 having bought it for £2 and benefited hugely from the high levels of gross margin.
This series, Lord Sugar is not looking for an employee but a business partner into who he will invest. These tasks need to flush out those candidates who can’t cope with the multitude of pressures that come from running a business.
Jade Nash stepped into the limelight as project manager for Phoenix, but had a haphazard approach to getting the team together, identifying the locations and choosing the products. As team mate Azhar kept repeating, almost to the point of exhaustion – she had no strategy. What she did have though was a secret weapon in the form of Tom Gearing who kept his eye on sales prices and costs and in the word of Sugar’s sidekick, Karren Brady, “thank God someone is thinking about the money”.
Nick Holzherr was Sterling’s project manager. He seemed a little calmer and organised and got praise from aide, Nick Hewer early on. I particularly liked his style, working with the team, not against it. Sterling focused their product selection on household and beauty products and drove margin.
Both teams were fairly successful from a commercial point of view – taking the initial money and turning it into a good profit – but the episode identified some interesting tensions in running a business. The most entertaining was, of course, Azhar’s constant pestering of Jade, trying to get her to spell out her strategy for the business. Later in the board room Karren Brady observed that “people don’t listen to Azar because he huffs and puffs his way through a task” – and as entrepreneurs, we often really struggle with this sort of character.
Azhar’s viewpoint was easily taken by Jade to be negative and obstructive – but actually, he highlighted a number of important but subtle issues – such as ensuring that the site further away had sufficient stock. As business leaders, we need to learn the benefits of having a diversely skilled team and put the ‘negative’ people to good use – perhaps in quality, operations, or checking that we’ve not skimmed over the ‘minor details’. Our job, and that of Jade’s on the night, was to listen rather than brush over, and I certainly think she should have made an effort to listen, help people explain themselves and use that information to make informed decisions.
Although they won, Sterling was not without its problems and they made a spectacular error with the supply chain. Having brilliantly identified that fake tan sells well in Essex – and they drove a price point that ensured great margins – they ran out of stock and sent two good sales people on a long winded errand to get further supplies. This highlights the second great lesson in business – that it is all about delivery and having products on the shelves and the team lost extremely valuable selling time waiting for new stock to arrive.
Karen reported that Phoenix had: £ 422.61 cash, stock £ 415.60 and so total assets of £ 838.21. Nick reported that Sterling had £ 681.30 cash, stock £ 273.90, and total assets of £ 955.20
Not a bad return on £150 and a van for the day. Perhaps we should all try it!
In the end, it is Lord Sugar’s boardroom and Lord Sugar’s money – and he fired Azhar. I don’t think this was the right choice, because he got rid of a good strategic thinker and kept a flitting butterfly that couldn’t focus. Key to getting a successful business off the ground, particularly with outside investors, is about knowing your story inside and out, understanding where you want to go and why you’ll be successful and most importantly, having a strong and credible grasp of both the strategy and the detail.
Azhar had the skills, but Sugar doesn’t like people who he perceives as moaners: “Who wants to go into business with someone that no one wants to listen to”? I think that the really successful people are part of a team, and one of the roles the team plays is to tell the boss what he doesn’t want to hear.