The executive job shop, otherwise known as the Labour Exchange, isn't the likeliest birthplace for a new business enterprise. But that's where, three years ago, the Harrogate Management Centre set out on its mission: to prove that every business needs a strategy, especially one whose business is strategy.
Physicians are notoriously bad at healing themselves, of course. Michael Johnston and Tim Hurren, the two unemployed executives who renewed their acquaintance at the job shop, made some costly blunders during the first, very slow months of trading: 'I was in despair', says Johnston.
So was Hurren, but they kept their anxieties from each other and soldiered on. That demonstrates one important strategic principle: stick with the strategy, so long as it's basically sound. Their idea was to establish a business that would 'bring more people into Harrogate': and management development particularly appealed to Johnston.
'Something of a course junkie' himself, he had kept note of the more impressive lecturers heard during his time with the International Wool Secretariat (his job fell victim to a catastrophic drop in the wool price). He wanted to challenge 'the perennial belief that you couldn't organise anything meaningful North of Watford - you couldn't get the audience.'
At first, the attempt to disprove this theory went swimmingly enough. The partners raised money initially from friends, one of whom suggested contacting Sir Thomas Ingilby, owner of Ripley Castle and the neighbouring Boar's Head Hotel. Ingilby promptly offered 'a purpose-built Georgian management centre' and contributed to the original £60,000 of equity.
The partners had learnt another strategic principle: focus. They would offer corporate clients courses for 'room-sized groups', which could really get to grips with strategy and strategic management. Outside advisers to whom Johnston wisely turned had identified this as the key area. Now all he needed was clients.
'Our biggest competitor was ignorance of our existence.' Enter the biggest blunder: 'we spent too much on publicity', using buckshot instead of aiming at specific targets. The cash drain was insupportable, and the partners (reinforced financially by doubling the original investment) were forced to learn the high value of direct contact.
Marketing strategy evolved into building up 'a very sound database of contacts.' Johnston has been called a 'ferret' for his tenacity in following up the contacts and 'giving a clear impression that we're passionately interested in working for and with potential clients. It's IT that enables us to do this. We're wholly dependent on our database software.'
Like most strategic plans, though, the Centre's contained an erroneous assumption about the marketplace. Open courses for managers from different firms were supposed to be the major product, with in-house seminars for companies as a useful second string. The in-house business proceeded to boom, and now accounts for two-thirds of turnover (£750,000 in the current year, and planned to double next).
Open courses form another line, along with seminars for public sector executives and 'master-classes', for which leading gurus like arch-strategist Igor Ansoff or another American, Richard Pascale, work with 45 or so people for two days. The cost of £1,000 to £1,200 per participant may look high - but only if you don't know the far greater rates charged elsewhere.
One in-house course, staged for bankers National Australia Group, is running for a full year and includes real-life strategic projects which, says, Johnston, add up to 'reinventing banking'. He's rightly a great believer in learning, not from academic case studies, but from confronting managers with 'real projects of strategic consequence for the business.'
'They learn and the company gets a return on its investment,' he says. Harrogate has naturally provided a real-life learning experience for the partners themselves: after the ugly first-year losses, they broke even in Year Two: the first return ('a very useful profit') arrived in Year Three. So their strategy has passed muster - 'extremely successful.'
Most of their 2,000-plus participants have come from big companies. Can small firms - like Harrogate itself - benefit from strategy? 'Wholly indispensable,' says Johnston. 'If you don't know where you're going, any direction will do. The small business that knows where it's going can compete with anybody.'
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