By René Carayol, 9 April 2003 10:51
COMMENT Rene Carayol has been noticing a distinct climate of conservatism in boardrooms up and down the UK. But are we really wrong to be reining in our ambitions right now?
I've written before about the attitude to risk in UK business. But these days, as I travel around and meet with boards across the country, my major concern is that we're becoming more risk averse and cautious than before.
The late 1990s, with the dot-com boom and other possibilities thrown up by widespread use of the internet, saw an unprecedented rise in the number of new companies being set up. We still looked to Silicon Valley and the US in general but it seemed we were learning, and certainly leading the way in Europe.
Now, in the current climate, there has been a pulling back. The irony is that now is the time the brave companies are doing something new. Ryanair, for example, has chosen the downturn to buy 50 more planes, open more routes and acquire Buzz, another budget airline. Remember, that is in an industry that is in turmoil.
Other companies, however, are being far more cautious. The attitude of UK Plc tends to be batten down the hatches. We are witnessing a siege mentality.
Meanwhile the technology industry's response is to use scare tactics. It should be selling us something tangible, something value-adding - not snake oil.
Recently I tried to do some research to get to the bottom of the UK's approach to risk. I found out the number of individuals in certain countries who have started their own businesses. In the US, the figure is one in 10; in Australia it's one in 12; in the UK, one in 34.
And if I drill down into those figures further, I can see that the rates for Scotland and Wales respectively are in the 40s and 50s.
Why are we this way? There are two sides. When individuals fail, they are stigmatised in the UK. Returning to the airline industry, take Freddie Laker. Some of you will remember that in the 1970s he took on BA and others with cut price fares. Although paving the way for dozens of other low cost airlines, his legacy tends to be one of failure, because his business sank. He should have been feted. Instead he was left dead in the water.
Take a look at the heads of businesses at the top of the Fortune 1000 companies in the US. The majority have failed in their careers at least once. It's a badge of honour. And good VCs will only be interested in those entrepreneurs and potential CEOs who have this under their belt.
Institutionally, in the UK we have plenty of former national monopolies who see it as their god-given right to dominate a sector. That is a legacy some other economies don't have, at least not to the same extent.
And when businesses do struggle, over here we're so quick to call in the administrators. How many airlines and others in the US actually want to file for Chapter 11? (And note how many Europeans refer to it as 'bankruptcy' as opposed to 'bankruptcy protection'.) These companies see it as a sugar-coated pill for recovery. We could do with the same approach.
But perhaps the fundamental difference between the two cultures is that in the UK we all too often don't want to lose. In the US, they want to win.
We must learn to be risk-ready, to treat failure as necessary - to realise that if we really want to win we must be prepared to fail first.
Somehow I know that if Ryanair or EasyJet (to stick with airlines) were to fail, their driving forces, Michael O'Leary and Stelios Haji-Ioannou, would start all over again and do well. But after leaving the top jobs at BA and BT where are Robert Ayling and Peter Bonfield?
Now may be a hard time for most of our businesses but it's not the time to forget how to take risks.
(And as a final note, do you know why Tim Henman will never win Wimbledon? It's because he's comfortable being a gallant failure. He who would have the fruit must first climb the tree.)
Rene Carayol is a former IT director and board member of IPC Media. He is now the CEO of consultancy Voodoo and co-author of the best-selling Corporate Voodoo and My Voodoo. He can be contacted at rene@carayol.com.
