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• Making a Business out of Knowhow -
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MANGING KNOWHOWthe key people that it is often easy to trace each of a professional organisation's businesses back to the individual who first had the idea and then implemented it.
Many professional organisations have only one leader. An important part of his or her job is to look at all the ideas, which the organisation generates, to distinguish those that are mere professional day-dreams from those with real promise and then to arrange for their implementation by appointing 'project champions'.
A distinctive feature of business development in knowhow companies is that it is wholly dependent on the ability of a few individuals. These people must work on their projects themselves. They must immerse themselves in them utterly, doing everything in the early stages - researching, preparing proposals, writing reports, consulting with colleagues, negotiating for R&D resources and collecting together the knowhow that is to be exploited. Typical entrepreneurs relish the role of 'project champion'. It becomes a part of themselves. They will often wander around the office in a dream, like a pregnant woman totally pre- occupied with her baby. After a while the project becomes so large the champion needs the assistance of others. This is the birth; the point at which the project emerges from the womb to become a business in its own fight.
• State supported development companies
During the late 1970s and early 1980s national governments throughout Europe, notably in France, the UK, Sweden, Norway, West Germany and Italy, began to inject millions of pounds into development organisations in attempts to revive industrial activity, and more specifically employment, in their depressed regions.
An 'experienced' managing director was appointed to lead each agency sup- ported by a few assistants and secretaries. Today very few of these organisations survive and most of the money has been lost. It is the same all over Europe.
Most of the development agencies have incurred heavy losses and have had to be wound up.
Why have these programmes failed? Some blame the incompetence of the politicians but that is not a sufficient explanation. Many large multinational groups experienced the same problems when trying to start small companies in the new, high-tech industries. Oil giant Exxon's ill-fated venture into office equipment a few years ago is just one example of big business' inability to nur- ture small businesses in knowhow areas. Another is the failure of the attempt by the French, state-owned motor giant Renault to wrest leadership of Grand Prix motor racing from a highly innovative group of small, UK companies including Williams, McLaren, Brabham and Lotus.
The most important lesson to be learned from such failures is that business development cannot be administered from the outside through the injection of money by special purpose development organisations. This is true of all businesses but is particularly true of knowhow companies.
The leader of a knowhow company cannot simply give a senior professional
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money and tell him or her to go away and dream up a new business idea. Busi- ness development in the professional organisation and the ideas that inspire it are the spontaneous results of a creative environment which not only permits but actually encourages people to test themselves in projects of their own. The environment must encourage risk-taking, emphasise results-orientation and inculcate quality-consciousness and a sensitivity to the needs of clients. If the management succeeds in creating such an environment business development will occur automatically.
• The prime mover
Professional organisations depend for their business development on individuals - entrepreneurial leaders - who wish and are able to exploit their own knowhow and that of other professionals.
The professional organisation is incapable of starting a new venture, however tempting it might be and no matter how close to the core knowhow, if it lacks an entrepreneur. If it has an entrepreneur starting a new business is easy. It is simply a matter of appointing a project champion, giving him or her a budget, agreeing a framework within the existing culture and telling the entrepreneur to get on with it.
Entrepreneurial business development begins with the development of entrepreneurs, not businesses. This is one of the reasons why the pan-European experiment with regional development agencies and the Exxon and Renault ventures referred to earlier went so badly wrong. Viable new businesses, on which the creation of lasting jobs depends, cannot be conjured out of thin air by managers appointed by the owners of capital, whether from the public or private sector, and instructed to throw money around. These days money is a relatively plentiful commodity. The main constraint on the development of new businesses is a dire shortage of entrepreneurs enthused with sound and imaginative ideas.
• The case of publishing
Why do publishing company managers assume the only way to develop their businesses is to launch or acquire new titles?
The question seems trivial and the answer obvious. It is the result of the conventional wisdom within the industry. Such companies have acquired a cer- tain managerial knowhow about how to publish newspapers and magazines, find interesting authors or reach readers in a mass market. They expand their business by exploiting this knowhow. This might be called managerial business development.
But another publishing company, with a knowhow-orientated business idea, might adopt a very different approach to the development of its business. It might decide instead to build the business on the professional as opposed to the managerial knowhow within the organisation. Thus, a company publishing books or magazines about sailing may try to develop this knowhow into new
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MANGING KNOWHOWbusinesses like building yachts or running sail-training courses. A company pub- lishing cookery books might decide to open a restaurant or sell gourmet holidays.
It happens. The two British companies which publish The Economist maga- zine and the Jane's defence titles both offer specialist consultancy services based on their knowhow.
The specialist publishing company will often have a unique vantage point within its industry because of the broad spread of its interests and, more specifi- cally, its total overview of technical development. This valuable, generalised knowhow is locked up in the heads of a few of the company's senior journalists.
With proper management it can be developed into consulting, venture capital or new companies formed to exploit new technologies. But entrepreneurs are needed for this kind of business development and most publishing companies lack entrepreneurs. Without them it can be dangerous to adopt this kind of busi- ness development based on professional rather than managerial knowhow.
The new media - videotex, cable TV, satellites, computer networks and databases - offer publishing companies a cornucopia of new opportunities to exploit their professional knowhow in media other than the printed word. Some publishing companies have responded to these possibilities in one way or another, by venturing into databases and videotex for example. So far - largely because of a chronic lack of the entrepreneurial resource - the results of such diversifications have been indifferent.