Thursday 4 August 2011

Chips off the old blocks?

So. Will they just rebuild the 9 big sandcastles that got kicked over as a series of smaller but similar sandcastles?

What am I on about?  Local Enterprise Partnerships (LEPS) of course - I shouldn't care about them, but I seem to.

The bee in my bonnet is the risk of un-thought-through obsession with so-called high growth companies.

Which comes first - the public-sector assistance or the growth?

The NESTA report  (read it here) provides figures about the often-quoted 'vital 6%' of businesses that give rise to 54% of the new jobs as providing evidence that we should be helping these companies more or less to the exclusion of all others.  I won't treat you to my broken record about how if all the silent majority of businesses with modest growth ambitions merely employed one or two extra people then it would have a massively greater uplift effect in GVA and employment than a few poster-boy projects that get in to the regional business press being photographed with some well-known local politician in the frame. I also won't rehearse the joke about the computer firm that was so successful it had to move to SMALLER premises. It was mildly amusing in the 70s when I first heard it,  the point that in the modern digital economy, growth often means a bigger server, not hiring  extra people.

Where is the research that shows the long-term prognosis for these high growth companies?  Well, here for a start ! Click to read  A Fast Track Decade

It's a short enough read for a dullard like me and makes its points succinctly. It makes the point that a sizeable number (one in five) of high growth companies aren't around a few years later - although where's the control statistic for non high growth companies over the same period? It also provides an interesting comparison between the  characteristics that make for high growth in good times (timing, strength of management) compared to what's correlated to high growth in difficult times which is differentiation through niches and innovation.

A number of other interesting points are made in the document but my real plea is that someone does some new thinking and maybe some research about whether the NESTA 6% figure still holds true, holds true across all  industry sectors and the longevity of the jobs apparently created.

In the meantime, I fear that the LEP boards may simply pick up the clothes left behind by the RDAs and cut them down to match the  new slim-line funding sources and end up doing a pale imitation of the perhaps imperfectly-targeted schemes that the RDAs were so fond of.

How about some new thinking and new research anyone?

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