Change comes rapidly to businesses, industries and people – and it seems to be accelerating as we accept that new technologies are here to help and refine what we do. But how do we manage that change? unLTD editor Richard Fidler hosted a roundtable, led by UK sustainability partner Ameresco, to discuss how six leading businesses are going about it...
Speakers
Karthik Suresh (Ameresco)
Ray Byrne (Whyy Change?)
Paul Reeves (Sheffield United)
Gemma Allchin (Forgemasters)
Gordon McCrae (Gripple)
Andy Whitworth (SCX)
Tell me about the changes in your industry and market
Karthik: Energy is in the middle of a huge transformation right now. The entire infrastructure for the industry is being renewed on a massive scale, there’s a lot happening and organisations are having to change the way in which they think about energy and sustainability.
Take energy markets, for example. They are more volatile than stock or FOREX markets – and the changes in prices, which can double or halve in any given year, affect the costs of every industry that uses energy to process raw materials.
People also understand now that managing their energy better is a crucial part of becoming sustainable. At the same time the technical things you need to do to change are the easiest to understand; we know the technology, we understand what we need to do, we know what options are there. It’s the organisational challenges that stop most people from taking action right now.
Gordon: The thing is, we’ve created our own industry, so actually we’ve made the space of our own and that’s the thing that’s different. So, we are generally perceived to be in a widget category and we’ve actually created a widget category in which we’re able to demand a premium price. To be able to demand a premium price we understand the benefits that our products give to our customers.
The environment is one of them, so we have 5% of embedded carbon compared to threaded rod. Basically, it is 20 times faster to install, which is money and health and safety. To some we have driven our own destiny, and not everybody’s in a position to do that, and to some extent that makes us unique.
Gemma: In the time that I have been at Forgemasters, I’ve seen different markets change in terms of demand. At one point in our business, gas was about 40% of our turnover, and that almost vanished overnight, so from a people perspective I then had to deal with the organisational changes from those type of changes in the industry and the repercussions that they can have on the employees.
Andy: I think we’ve tried to look at the market and where we could extract premium, so we still have our standard business. The market is very competitive – competition is fierce and competition abroad has probably doubled or trebled over the last 10 years. So, we’ve always tried to look at the skills that we possess throughout the organisation and put them in areas where it is niche.
We try to find how our markets have changed – for example, one of the areas we started looking at was theatres, as we thought engineering in theatres would be really hi-tech, but you’ll find that a hi-tech industry doesn’t give you the value or the returns.
Another is access equipment on buildings – often referred to as window cleaning machines – so we did the Gherkin building costing millions of pounds but we didn’t make much money, because the engineering is not valued particularly.
When you have something you’re trying to find, it’s quite easy to get a cross reference on pricing. It’s a case of going cost plus.
Karthik: I think the starting point is to put a framework in place to help you make better decisions. Again, looking at markets, in the last 15 years there were four times where you could buy energy cheaply for a long time. In 2007, just before the financial crisis, the energy price was really low. After the crisis, 2009 was also very low across all markets. If you were managing a portfolio, even though things looked really bad in 2009 it was also a rare opportunity to buy assets cheap.
It's not about timing the market but having a framework that tells you when things are cheap and when they've expensive so you can decide whether to buy or stay away. That's a proactive strategy and it's very different from a reactive one which tries to figure out what to do in the middle of events – that usually leads to panic buying at the highest price and panic selling at the lowest price and you end off worse off than if you'd just taken a random decision based on flipping a coin.
How about financial and revenue changes?
Andy: With the Tottenham Stadium retracting pitch, we fixed some of the prices – the elements we knew that we could control – and we knew we had a good specification in the first place. But other areas which were developing in the architectural process continued, and therefore we went on a cost plus basis.
It was a very unusual type of contract that we worked on – it took a little bit of negotiation, so it’s about being bold and understanding where the risk is to be able to get the right commercial contract.
Sometimes you may not be able to do that, we did do a fix priced contract but then there’s a lot of risk and there’s a case of who owns that risk.
These are things we’ve learnt over the years, we need to manage that business very carefully and let’s face it, lots of bespoke engineering businesses don’t hang around for very long, because they have that horror project that basically just busts them.
Now the Tottenham Stadium has elevated our profile in the industrial and stadia sector.
We’re currently working on, not the full retractable pitch feature, but an iteration of seat changes and so on.
There’s probably six or seven we’re looking at around the world. Up until about a year ago, we would have said that our market was predominantly UK-based, that’s where we decided we would focus, 98% off our sales have been from UK businesses – we’ve had offers from overseas but we’ve always rejected by way of lack of interest.
Richard: Paul, in terms of pricing – you can probably do similar things to what you used to do, three years ago but add a couple of noughts on now you’re in the Premier League. Has that been the biggest change or is it just the markets you’ve been operating in and the people that you’re dealing with?
Paul: The relationship with the football club is one that lasts forever and then is passed throughout generations, so of course aspects like the bread and butter ticket have remained consistent, but with a price increase of around 15%. This season, again to reward the loyalty, we are freezing prices, because ultimately, we are part of the entertainment industry. The challenge for stadia is, we are only open, certainly now in the Premier league – 20 times a season.
The biggest revenue change has been involved with sponsorship and advertising, so I have tried to keep a Sheffield-centric partnership base from an advertising perspective, the first one I did was John Holland Car Sales for £90,000, we then moved into the Championship, where Ramsdens Currency paid us £250,000 for the season and then we did the £7.2million deal with Union Standard Group in the Premier League.
The shirt is the same, the cost to print it is the same but the global advertising base, literally goes from a couple of hundred thousand who were watching us in League One, to touching a million in the Championship to a global audience of up to three billion within the Premier League. The strategy there is to look after the local customer base around ticketing, hospitality but obviously the advertising market drives the prices up.
Richard: Ray – working in an industry where you’re supporting people through change, are you seeing things differently or would you see yourself as a catalyst?
Ray: I don’t see myself as an industry. For us, we’re not a consultancy nor a training provider, we’re more of a niche provider. I’ve had to radically change what I do to deliver my passion, which is to get involved in change.
There is an awful lot of change happening, particularly with apprenticeships, and a lot of people are basically stuck in the mud. Sadly, I’m not surprised but you’d think in the modern age – we’ve lived through ten years of a recession – as a whole, we’d perhaps be a bit sharper about this.
Where you both speak about being in entertainment and football, we’re speaking about how we can use our experience to help others – perhaps that’s similar to entertainment – so for us, we’re constantly looking at providing good service, value creation and relationship development.
What are the best examples of your business taking what you do well to the next level to ward off competition?
Gordon: We have a KPI that’s much more important to us than the return on sales, it’s a percentage of turnover from products and things that we didn’t think about, say, four years ago. Our target is 25% and that’s probably what we focus on the most as our driver for business. Some years we hit it, some years we fall short, but the rationale behind it is that we’re trying to solve problems and deliver new stuff particularly in the construction industry or civil engineering or agriculture.
We involve our customers in our dialogues, we’ll bring them together and thrash out the issues, clarify them and solve them. In essence, that’s what drives us, and then we capture that in a vehicle called Glide House. What does Glide mean? Glide stands for growth-led – and if you don’t grow, you’re going to die.
Innovation driven and employees. Our employee strategy is different to almost everyone else and the starting point is that everyone is a shareholder, and everyone has to buy at least £1,000 worth of shares and that fundamental commitment, we believe makes a difference.
Gemma: From a HR perspective, around 18 months ago, we didn’t have specific values or behaviours as an organisation so we put them in place via employee focus groups – across a cross-section of our employees and they put together four core values to focus on.
We decided to look at what we do well as a company and what we don’t do so well – which then led to our annual appraisal process. In this, you have a set of positive and negative indicators for each value which neutralises the language.
This is new to our managers, as they have a framework for discussion when values aren’t displayed correctly as opposed to jumping straight to a disciplinary. What we found was that the structure change in the organisation does take a long time – there can be a cultural lag – it involves a mentality change, which is why we’re integrating these values into everything else we do. Instead of a performance conversation, we’re having a performance and behaviours conversation. It’s working, as people are now challenging behaviour they don’t see as appropriate in the workplace.
We’ve been working on this for 18 months however, to me, it’s still in its infancy, as it’s about changing hearts and minds and not just a case of changing a few processes.
What is the single most important element for you in your industry?
Andy: People – our biggest challenge is how we recruit, train and retain these personnel, and provide them with a good work/life balance and the impact of this on the business. The competition in Sheffield is key also – when students from university look for jobs they often head to places like McLaren, so we have to ask ourselves – how do we get the message across that we are just as interesting a business to work for in the industry? This is a constant consideration we’ll carry on for as long as possible.
Gordon: We see ourselves as innovators and we see the world as constantly changing. In our sector, the government is targeting the construction industry to become 50% faster, greener and more efficient – that’s the challenge.
If you look at the number of patents being accepted over the past five years, they’ve doubled and that really says to me that if you want to have a long term sustainable business you need to be innovative and finding new ways of doing things. What we’re focused on at Gripple to achieve this we know we’ll still be here, but working with products and things that will keep changing and maybe don’t even exist yet.
Gemma: Investment is key, as we need to invest in our people and skills, but also in technology and equipment. To remain competitive and to meet a customer’s schedule, we need hi-tech kit that allows us to keep up and to have quicker machine cycles that we can pass on.
All this investment will be fuelled on the business’ profitability, which means you’ve got to have engaged, productive employees – it’s a full cycle. I believe it covers a range of aspects across the business and will allow us to remain for the next 200 years.
Paul: Football is a business like no other – we can’t put in a five-year business plan as everything could crash in two years. What we are doing is trying to modernise the world’s oldest professional stadium, Bramall Lane, but we need to emulate what’s happening in the real world and our customer needs a hospitality environment and a concourse environment that they can access on the high street.
Then the bit on the pitch, we need to ensure we’re spending the money wisely as our biggest benefactor are the players. It’s an interesting business as which other industry could sustain our model?
Ray: I’d talk about brave leadership. It’s difficult being a leader as I’m sure we’ve all experienced in different ways – you don’t have to be a CEO to make a decision.
It’s easy to keep the status quo, it’s quite comfortable, but somebody has to have a vision. Agility in your approach is also necessary and you have to adapt, it’s not about a fixed state of mind.
Consistency of messaging – going back to leadership, how many times has Forgemasters, for example, been through change? Different approaches and different people sticking, and you’ve just got to find the right leader and set the right course, and that opens you up to solid problem-solving and innovation.
Karthik: What’s interesting in what we’re seeing is this idea of change in a system. Too many organisations focus on improving one area of the business and then wonder why overall performance doesn't improve. And that's because you need to make the whole system work better, not just one part - it's like buying an expensive steering wheel and wondering why your car still has the same top speed. If you want to create change then you need to develop a more systemic way of thinking. We’re seeing that there isn’t just one answer and the important thing is to understand how people think about a situation - to study their situation - and work out what kind of change will work for them.
Ameresco, Inc. is a leading independent provider of comprehensive energy efficiency and renewable energy solutions for facilities throughout North America and the United Kingdom, delivering long-term value through innovative systems, strategies and technologies. Ameresco’s solutions range from upgrades to facility’s energy infrastructure to the development, construction and operation of renewable energy plants combined with tailored financial solutions. We work with customers on both sides of the meter to reduce operating expenses, upgrade and maintain facilities, stabilise energy costs, improve occupancy comfort levels, increase energy reliability and enhance the environment.
The Company was founded in 2000 by George Sakellaris, a pioneer in the energy service business. To best serve its wide-ranging clientele, Ameresco has regional offices located throughout North America and the United Kingdom. With dedicated energy and business professionals with years of experience and strong commitment to customer satisfaction and service, Ameresco offers you the resources needed to successfully plan, execute and even finance the energy programme that will create real, sustained economic and operating benefits to fulfill your unique requirements.
