In this episode, Anna Jordan talks to Will Butler-Adams, managing director of Brompton Bikes.
We discuss taking over the company from its founder and the future of manufacturing.
You can also visit smallbusiness.co.uk for more on business succession and international trade.
Remember to like us on Facebook @SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lower case.
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Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.
Today we have Will Butler-Adams, managing director of Brompton Bikes.
He started at Brompton in 2002 as a project manager, moved up to engineer director and decided to take on the role of MD when a rival company was going to buy the company out in 2008. After making some changes, production sped up and Brompton now sells 55,000 bikes per year, with key markets in the UK and China. A UK-based Brompton bike hire scheme was launched in 2011.
Outside of the firm, Butler-Adams is a fellow at the Institute of Mechanical Engineers and the Royal Geographical Society as well as the City and Guilds of London Institute. He’s also a member of the British Manufacturing & Consumer Trade Advisory Group, consulting on post-Brexit trade deals outside the EU.
We’ll be discussing what it’s like to take over a business from its founder and how to maintain brand loyalty.
Anna: Hi Will.
Will: Anna, good morning.
Anna: How are you?
Will: Well, very lucky. In the current climate, as we are seeing, some really, really challenging times both emotionally and also commercially, for many people globally. It's a pretty unprecedented time and we are finding ourselves as a business, one of the few sectors that has benefited from the current crisis.
Anna: I understand you're in the factory right now.
Will: Yep, I'm in the factory. We've traded non-stop throughout from the very first lockdown. And that has come with all sorts of challenges. But funnily enough, and we'll talk about a little bit more no doubt, that bicycle is a very, very useful tool in a situation like this. And there has been this sort of global enlightenment, to the value of something so humble as a bicycle. So, you know, we've contributed in our own peculiar way to try and to help people through this crisis.
Well, I will start a little bit further back from here. When you when you bought the company, way back in 2008, you made a generous valuation estimate and you bought out the founder Andrew Ritchie's controlling stake in the company. Some might see that as a bold strategy. Why did you go for it at the time?
Will: I joined the company in 2002, there were about 30 of us. Initially, I just thought I was going to muck about with a mad inventor making what looked like a fun and interesting product, not much more than that. And then [after] two or three years I'd move on. I was pretty young at 28, but the bike got under my skin and it affected my life. I wasn't naturally an urban liver. And yet, it's such fun living in London with this bike because it gave me this freedom. And I saw it had a similar, quite profound effects on our customers. That's very alluring and, in some respects, addictive. I was consumed by the company, entirely consumed by it.
And Andrew, the inventor, is an absolute flipping genius. But he's not a builder of a business because he is much more of a sort of complete megalomaniac, detail, engineering right down in the nitty gritty. We're both engineers, but I'm more of a ‘vision, empowerment and grow’ engineer. And I wanted, by the time we got to 2008 – in fact, 2006 or 2007 – I wanted to commit my life to the product he'd invented, but I couldn't do it if he still had the control.
The reality is that, even if you've made me the MD back then I wouldn't have had the control that I needed to do what I needed to do because I knew I needed to do things that he wouldn't approve of. He had to let go of control. It didn't mean I was then taking control because I never did. I just took out his controlling stake. But it then meant I had authority and autonomy to do what I knew needed to happen to the business for it to fulfil its potential.
Were there signs that he [Ritchie] may have been getting to the point where he was more willing to give over some of the control? From what I've read, he was quite reluctant to delegate when he was in charge.
Anna: Life isn't black and white. It's full of moments in time, and people, and there's a certain amount of luck. And it's whether you see the opportunity or the luck floating by and whether you jump on to it. But in this particular case, I think it was a moment in time where Andrew was getting so caught up in the detail. And when a business gets to a certain size, if you're trying to control everything, you've become the eye of the needle, and everything has to go through you.
And you think that by recruiting people that you will find that then, you have less work to do. But if you are the person who is controlling everything, everything has to come through you. And by recruiting more people, you find you're even busier.
That's what happened to Andrew: he got busier and busier and busier. It was making him unhappy. Because he was putting himself under so much pressure, there was a sort of nosedive where he was not enjoying himself because the business was becoming so successful. Also, I was being more confident. In the early days, the company was owned by him and his friends. His friends weren't Andrews. They were entrepreneurial, independent businesspeople in their own right. They could see and bring perspective and support Andrew to make the decision because they could see there was no way he could continue, because it wasn't his forte. So, they encouraged him to let go.
It's worth saying that on many occasions, since then, he's vehemently regretted it because I've done things of course, which I knew I'd have to do that he didn't agree with.
Tell me – what kind of protestations did he have?
Will: It's about detail. Andrew is an inventor – in the absolute classic sense of the word. He spent 13 years, he hand-drew 1000s of drawings – technical drawings – not just for the bike, but how to make the bike and in insane detail. It’s something straight out of A Beautiful Mind.
It's unreal that one human being could do what he did against a sort of backlog of everyone telling him, ‘What are you doing, wasting your time? You've tried, you fail, you're still at it, why are you still at it?’ He wouldn't give up. But he would worry about training and worry about tolerances, worrying about the grammar and would pick up on some problem, you know, six pages deep in our website, and ask me, ‘How would I let this happen?’ It's wrong, but in the grand scheme of things, when you're running a business and trying to do this and open up markets in Japan and an office in London developing this, he assumed that I would know everything and check every piece of written word and that I'd signed off every detail, but it doesn't happen like that.
You have to find people better than you, you need to trust them, you need to allow them to make mistakes, just not mistakes that will take out the business. But his perception is that I was running the business – when it had 100 people, 200 people, 300 people, 400 people – in the same way that he ran the business when it had 40 people. That's just not possible. So that was the friction, and in some respects, still is a friction. In most cases, everything Andrew said was technically correct. It just wasn't the priority. And the problem is, when you're running a business and you're growing at some speed, you actually have to walk past things that are wrong. You're walking straight past something that is absolutely wrong. Unacceptable, not right. But you have to leave it because there's an even bigger wrong over there. You need to deal with the biggest [wrong].
It gives me huge pleasure that there are some things that I've been walking past for eight, nine, ten years. Finally, we've got the breadth and the capacity as a business to finally address some of these things that have been bugging me. But if you get distracted by every minutiae, as you're growing a business, you won't move the business forward because you'll never get to the most important thing that then allows you to move on to the lesser things and as you build down through the priority list.
I think especially when you're starting a business, you're so used to playing all the roles, so that can be difficult to let go of.
But interestingly, in Brompton’s case, when I joined, there were fewer than 30 people. I was the person running the machines. I rolled my sleeves up, spent three weeks running machines. The business was so small that that is what I did. That role has changed significantly. We now have offices around the world and we've got lots of people and I'm really doing nothing. That's a really tough call to design yourself out of a job, because there is no operational control in my role.
Speaking of internationally – and you probably saw this coming – but I'd like to talk a bit about Brexit. We’re a week and a half in now. It's been ‘chaotic’, in a word, especially for exporters. I think that as somebody who has worked to advise on trade deals, and who wants to grow their market in other parts of Europe, especially for small business exporters, what do you think the forecast is for them, say the next three to five years? Will things get better?
Will: What I would say – and this is not entirely directly answering your question, but indirectly does – when you're in business, you need to focus on things that you can control. You can control who you employ, you can control the culture of your organisation, how you present yourselves and what you do to inspire your team. What you can't control is FX (foreign exchange), what you can't control is Brexit.
So, what you need to do is put in place strategies to mitigate the things that you can't control to allow you to get back to focusing on the things you can control. What happened with Brexit was, it started four years ago, we took a decision four years ago, to plan for the worst-case scenario. It took us about three months, the worst-case scenario hasn't then changed in three-and-three-quarter years, it's still the worst-case scenario. So, for the last three-and-three-quarter years, we've focused on growing our business innovating, distribution, communication – and we've doubled the size of our business.
But what I saw over Brexit was many businesses got so caught up in worrying about something that they couldn't control, that they didn't do anything, they stagnated. They were worrying about the latest rumours – ‘I've heard it's that but maybe it's this or it could be this’. And I think in business, you need to not get distracted by things you can't control, focus on your core, focus on your added value, and manage the things you can't control by putting in place strategies to minimise the risk.
Small business owners are so accustomed to planning ahead but without a lot of concrete information that's been difficult to do.
Will: I'm not sure I agree. With a small business, you're more flexible than a bigger business, you're much more nimble. You have a tremendous advantage against some of the bigger players because you can adjust and you're smaller. I think it's not straightforward. It is possible to be able to try and mitigate those risks. And there aren't that many of them. Clearly Brexit is one, FX is another, trade tariffs is a third, but there aren't that many. And there's some good advice out there to support you.
I know that Brompton has been open about being against planned obsolescence. This is where a company will manufacture a product so that it is unusable after a couple of years [or a certain period time], which is long enough where somebody can develop a connection with the product, but not so short that they get disengaged from the company and never buy from them again, there's regular income for that company. Phones are especially notorious for this practice.
My question to you is that if a customer is only going to buy one Brompton bike for life, how do you maintain brand loyalty from customers?
Will: The way you can maintain brand loyalty from customers is to give them a product that they may need to buy once in their life.
Capitalism has done some amazing things – brought people out of poverty, it’s brought health, it’s brought education, but it has come at a cost to our planet. And certainly, in the last 50 years, increasingly. So, we have to rethink how we engage with consumerism and how we buy things and how we reuse things and don't just buy and chuck away and just, we're sucking value out of our planet, which our planet can't sustain.
Apart from the fact that the customer must prefer the product they've had for a long time. If you've got some pots and pans that came from your granny or your parents or an old jacket or anything that's had longevity, you cherish it because it's given so much to and if you can keep it working for as long as possible, that makes total sense to me.
Coming back to brand loyalty, there are things we can do to engage with our customers where they're having fun. We do races all round the world, not the last 12 months, but we do activities, we do events. And we want people to have fun, and this year with a fair wind we’ll make 70,000 bikes. I mean, they're like eight and a half billion people in the world of which nearly over 50 per cent live in cities. I mean, we haven't even started, the opportunities are immense. We want to create things, then actually what we want to do is when it's finished, which we're not out yet, we should be able to take the product back, recycle it and start all over again and have a full circular economy.
Anna: Is that something that you're planning to do in future?
Wil: Definitely. We need we need to do that, because there will come a point where the bikes that we were making 20 years ago, in some cases 15 years ago, have come to the end of their life, at which point for those bikes, we should be able to bring them back, take them apart for recycling, then round we go again.
I've read that your marketing budget isn't huge, either.
Will: I think the experience that a customer has with your product, too often, businesses are obsessed with selling you something. But that's not how you build a brand. A brand isn't what you feel when you bought it, you can buy anything. And the moment you buy and you have this sort of rush of, ‘Whoopee isn't this fantastic?’ The question is, go back to that same customer in two years’ time and say, you know that £100 you spent or that £300 you spent, was it worth it? And, sadly, in most cases against you might have never been used, or yeah, it was brilliant for about six months, and then it bust or something went wrong.
There aren’t many things that that we absolutely cherish and love. I think the scope for us to be delivering a useful product, it's not just about buying, it's about looking after the customer for the life of the product. Things need looking after, which is why we have put in a lot of energy.
If you like, our marketing budget goes into looking after the customers we already have – that's the most effective marketing budget. If the customers that you have really love their product, and when things go wrong, which they do, we look after them as best we can, then that's the best marketing you can get. So, spend your money on warranty or on customer service, customer support. And then when that's all perfect, you might have a little bit left over for doing some proactive marketing. But often people they forget about are the customer, they just want to go out and do this trend or get more new customers, forgetting about the ones they’ve already got.
To round off, I'd like to talk a little bit about manufacturing in the UK. For a long time now it's dwindled, but then others have said, ‘Well, the UK is so innovative and it's still a very strong player in the manufacturing industry.’ In your view, where do you see it going in the next few years?
Will: I think there is so much potential to manufacture in the UK, simply because the barriers to entry to doing efficient lean manufacturing are so much lower than they used to be. When I was at university, which is increasingly becoming quite a long time ago –
Anna: Oh, I know the feeling!
Will: Yeah! If you wanted to design something like a car, you needed a computer that filled up a room and they cost, in today's money, millions of pounds. So, the only companies that could afford the technology to allow you to design effectively were the Fords or the massive companies in the world.
But you can buy a computer and start doing 3D design, you can get things printed in 3D in metal. If anything, manufacture’s become entrepreneurial again, because if you come up with an idea, if you can design it, you can print it, you can prove it, you can go on to social media, and then you can raise the money to get started. There's so much potential.
The real sense of pride comes from, the reason that it's so satisfying with manufacture, is you see you’re creating something. It's that sense of creation, it's like growing plants – you're seeing something happen and come alive in front of you. You're creating something tangible – that's really, really satisfying. We've been encouraged and told that everything is on a computer and it's all noughts and ones. Actually, it’s the innate sense of pride about something tangible that's going out the door. I think actually the opportunities for it, not just in the UK but globally for manufacturing. Manufacturing doesn't need to be where there's cheap labour. Manufacturing is where there are the best ideas and robotics, semi automation, 3D printing, the cost of software and the ability to design, meaning the best ideas can sprout anywhere in the world, and you can manufacture locally, where the brains are.
Anna: It would be a bit like, since the rise of social media and blogging, we've seen content creation go more into the individual’s hands, you feel like manufacturing can go from larger companies to individuals.
Will: Definitely. It's a really positive thing because of disruption. I mean, if you look at things about flying taxis, people coming up, there are like 50,60,100 different companies around the world, all coming up with their different flying taxis. It was unthinkable 25 years ago, because it just wasn't possible for small businesses or small groups of individuals to try and come up with something so revolutionary, it would only be a LES four-digit or Nissan, or something – forget it. Yet, all these start-ups are doing it, because the whole engineering and manufacturing has been broken down and it makes it much more accessible. And if your idea is strong enough, if your passion burns bright enough, you can do it.
Anna: Well, on that rather inspirational note, I'll leave it there. Thank you ever so much for coming on the podcast, Will.
Will: Anna, it's my pleasure. Thank you for asking me.
You can find out more about Brompton Bikes at brompton.com. You can also visit smallbusiness.co.uk for articles on business succession and international trade. Remember to like us on Facebook at SmallBusinessExperts and follow us on Twitter @smallbusinessuk, all lowercase. Until next time, thank you for listening.
