How to Bring Industrial Scale to Growing Factories with Tim McLean

Tim started working with lean in the 80’s. After 18 years working in manufacturing helping improve efficiency and profitability in a wide range of factories he started TXM, to help growing small & medium sized businesses reach their full potential.

http://www.tightship.io/wp-admin/post.php?post=1051&action=editI talked to Tim about the challenges that growing factories face and some of the companies he has worked with.

During the interview we also talked about his new book Grow Your Factory, Grow Your Profits: Lean for Small and Medium-Sized Manufacturing Enterprises, which serves as a great starting point for anyone who wants to scale and is facing growing pains.

Interview

Audio only
[podcast]http://www.tightship.io/wp-content/uploads/2015/02/Emi_Gal_Interview_Final.mp3[/podcast]

Tim McLean

timmclean
Tim is principal at TXM a leading lean consultancy in AsiaPac that works with small and medium sized manufacturing campanies.
TXM has since grown to be one of the leaders in Lean in Asia and the Pacific, operating from offices in Australia and China and carrying out projects with small, medium, and large manufacturers throughout the region. In line with Tim’s experience and values, TXM has developed a reputation for delivering practical outcomes for manufacturers, especially SMEs

 

Transcript

Duncan: Welcome to the TightShip podcast where we’re in the pursuit of operational excellence. My name is Duncan Malcolm.Let me ask you this, do you feel that you’re company has traditional roots and that changing things from how they’ve always done would go against what you stand for?

Or do you think your employees would emphatically against any attempts to improve things

Todays guest is Tim McLean and he been practicing lean methodology since the 80’s.

He is an absolute master at helping small and growing traditional businesses really revolutionise how they work to increase quality and efficiency.

.while still holding true to their values…

Today he’s here to talk about some of the projects he’s been involved with and his new book ‘Grow your factory, grow your profits: Lean for Small and Medium-Sized Manufacturing Enterprises’.

I hope you enjoy the interview and would love to hear your feedback.

Duncan: Okay Tim thank you for taking your time to talk to us today. Could you give us a little bit of description of your background and what you’ve been working at the moment?

Tim: Okay, I’m a chemical engineer and I ran factories for about sixteen years in the plastics, chemicals, packaging and coaching industry. Mainly process industries. And during that time I had a series of mentors who introduced me to lean concepts and my knowledge grew by trying to apply lean thinking and operation excellence techniques to try and improve the performance of the factories I was managing. About 10 years ago I decided to have a change of career and set up this business because as an operations manager I was always looking at wanting to make change but realizing that I didn’t have the time and the resources to do everything that I wanted to do. And in many cases also the knowledge. The idea was the business was to extend capabilities of businesses to make change beyond what they can do with their own team.

Duncan: That makes sense and what sort of factories were you working in?

Tim: I started out in plastics raw materials making what’s called master batch. And I moved downstream into a packaging factory where we were blow molding plastic bottles and injection molding caps. And then I made a segue across packaging into the printing industry and ran a printing business making and folding cartons for a couple of years. And finally went back to my roots and ran a industrial coatings plant for PPG for a couple of years, making automotive paint and paint for industrial applications.

Duncan: And how big were these factories? Are we talking industrial scale or multiple warehouses or what sort of scale?

Tim: The first factory I started out in–I got diploma in plant management when I was just 24 and the plant had 14 people. They were working on shift, I then got the opportunity, got promoted to run three plants of around that size. And then moved to run the blow molding plant which was about a hundred people. And then the printing packaging plant was actually three factories and they range in size of around 40 people up to a 100 people. In total 250 people. And then finally the PPG was around 200 people. So they were large companies but they were medium sized businesses and since I set up TXM 17 years ago, we started out the business focusing on small and medium sized companies Melbourne. That was our initial target market. And we really grew from that, that built our skills and we built our a consulting team working with small and medium sized businesses in Melbourne and the State of Victoria. We now work a lot with large companies, but I would say the majority of our customers by number is still SMEs and we work with SMEs across Australia, New Zealand, and also now in the region in China and South East Asia.

Duncan: Your initial experience in factories is in quite a good range. You’ve worked from quite small operations to quite serious larger operations.

Tim: Yeah, and I think that we often find what we are doing is bringing sort of the rigor and the discipline that you learn working in a large corporation to small corporations that haven’t had the history to develop that. You know they haven’t got the corporate memory of how things have been done in the past to build on because the owner has started the business out of scratch and the knowledge is what’s been accumulated in the business in the five, ten, twenty years that the business has been running.

Duncan: So let’s get started into lean. A lot of people will know lean from software development in terms of lead project management and building software. But in terms of in a small/medium business, what is lean in your world?

Tim: I would say lean software development probably developed from lean in manufacturing. I know lean start up, the idea of that came from manufacturing and the term lean is being calling just as a term to describe the Toyota production system. Around the early 90s a couple of academics from MIT and one from, I think Imperial college. Guys called Dan Jones from the UK and Jim [inaudible 00:06:28] from US and a couple of other guys, took a lot of research into the automotive industry to find out why the Japanese were doing so well. And at the end of that research they concluded that one company was doing things significantly better in the way they were running the business than the other European or US automotive companies and that was Toyota. And they thought about how they would describe what Toyota was doing so Toyota called it production system but they felt that they would give a name other than that to make it clear that it wasn’t something just unique to Toyota, it was something that could be applied more broadly. They described it as lean, meaning an absence of waste. And they defined waste or Toyota waste was defined as: anything that doesn’t add value to the customer. If you’re adding value to the customer, that’s value the customer is going to pay for it’s value. But if the customer is not paying for it, then it’s waste. Obviously there’s an awful lot of waste in organizations because an awful lot of what we do and what happens in organizations does not directly add value to the customer. The idea of lean was getting rid of that waste.

Duncan: I remember from reading through your book there’s a lot of different categorizations of what is waste in terms of motion, and the other areas in terms of losing time, waiting time and all the different other categories in there. In terms of lean, why is it important to a small medium business. I think it’s something everyone–I don’t think everyone, but people aware of things like Six Sigma which are largely enterprise approach to look at at lean. Why is it important to an SMB or a small medium business?

Tim: I think that, what happens when you start a business is that you have an idea. So you either have a product, you back your own product. And you find a market for that product, often to see that inventors or sales guys or marketing guys that start off manufacturing businesses. They invented something, they built a bit of mouse trap and they found a distributor and they found a way of getting it into the market. The case study in my book, Mike Walsh from Branach invented a better ladder, he put a lot of work into finding a market for that ladder and commercializing that ladder. Then the ladder started to sell in volume. People are buying his ladders, they’re finding you out, he’s got his distribution network working. And suddenly he’s got a problem in that, this guy, who is a brilliant engineer, who’s skill is at inventing things, is spending his day trying to satisfy customer orders, trying to get them out the door, trying to work out why we’ve run out of materials, trying to work out, how do I get my people to perform properly. And what happens is that these guys start out focusing on the direction of the business. At a period of time and it usually happens, in my experience, around the 3 to 5 million turnover mark, with around twenty employees that they find themselves completely focused on the day to day. They’re working in the business, not on the business. The reason that happens is that they don’t have a system of management. They got expertise in product, they got expertise in marketing but most of them have never run a factory before. They don’t have a system to run a factory that covers things like, your organizational structure, your production planning, your management and materials. They just have to figure these things out and often the solutions that come to hand are not the ones–the ones that come to hand most readily, often things like software are not the best and easiest way to solve the problem.

Duncan: That’s something I noticed–Sorry for jumping in–that’s something I noticed in terms of things we’re not. Don’t start by buying really expensive software, don’t start by documenting how you do things today. You’re looking at what’s required in a larger picture.

Tim: Yeah, so this is the idea of a future state. One of the core tools of lean, one of the first tools that any business would use is called a value stream map. Value stream map–I don’t know, it may be slightly misinterpreted from what I’ve written but– you do map how you do things today. So you map the flow of the products from raw materials to finished goods and you identify the value and the waste along that stream from receiving the whole materials to shipping the finished goods. Then you develop a future state map, you develop using lean thinking a concept of how your business could work, at a lower point with waste and you then develop an action plan to as to how to achieve that future state map. For a small or medium sized business you’ve immediately got a plan for how your business can operate, how it can fill those customer needs in a more efficient and leaner way. In my experience the other critical thing that it does, we are going to push a lot of that day-to-day decision making about what gets done and when, down to as close to the shop floor as possible, so people that are constantly waiting for supervisors and managers to tell them what to do, the work is presented in front of them. It’s clear what they have to do.

Duncan: That makes sense. I think people always think that they have to be the front line of whatever they are doing. I interviewed someone else recently and one of the things that they said was that the core skill that started up within a business, whatever that skill might be, that engineering or marketing or sales typically ends up being one of the weakest things within the business because that person doesn’t let go of it and doesn’t bring in to do it, it sounds like that is similar in terms of production, whereby people can get stuck in–stuck as you say, for filling the orders. You must have had a lot of experience helping a lot of businesses move from an old situation to a better situation. What are the improvements in terms of numbers that a business can achieve by pushing through this sort of process.

Tim: Some of them quite dramatic. If you look at some of the examples on the book, if you look at Branach Manufacturing which is the case study I highlight to start and end the book. Mike was able to setup what’s now an absolutely first class production system. You can have a look on our website at a video interview that I do with Mike and you’ll see lots of shots of this factory and it looks fantastic. And he’s been able to double his revenue and at the same time increase his productivity by around 50%. Typically we would see customers increase their productivity by around 30%, but the biggest thing–and you know inventory reductions up to 15%–often the biggest change is lead time. A critical thing many small or medium sized manufacturers make customized products so they might create products to a specific customer need. In that context lead time is critical. And also from point of view when you’re facing offshore low cost competition, often the only way you can beat that competition is by being faster. And yet a lot of small and medium sized businesses are actually quite slower delivery. They take weeks to deliver an order. If you look at what lean does it goes–what we are doing is to reduce that non-value added time with the aim of eliminating waste but we also greatly reduce lead time. In the case of Branach we reduced the lead time to get a custom made ladder manufactured from around four to six weeks, down to around four days. You can order a custom made extension letter to your specification and have it within four days. And the row boat case study that I have in the book, Sykes Racing they had a six month backlog that was really killing their business, because people had to wait six months to get their boat. We got that down to six weeks, which then puts them in a position where they’re ahead of the market and putting the Chinese competitors under a lot of pressure. To the point where the Chinese competitor rang us up [laughter] and asked if we could help him.

Duncan: That case study really stuck out for me. I used to row when I was younger at school. I do remember whenever a new boat was bought it wasn’t a case of it would pitch up a few days or a few weeks later. It was something that would come a few terms later or a good three, four, five months later. The thing that I noticed most about that case study was the change in terms of their production process. They moved from one person working on a boat, putting the whole boat together to doing effectively a production line for boats. How realistic is it for an organization to do that, how far can they get and what are the things that are going to stop them from getting there?

Tim: You would never ever do what Sykes did without outside help. You’d either to have to hire a whole team of people who worked in the automotive industry or worked in the electronics industry or some industry where this type of production is common and they make the transformation, but even they would probably need outside help. Because the issue is that when you’re trying to make change, the customers don’t stop ordering, the problems don’t stop happening. The problems just keep on going. If you’re 100% loaded running a factory as an operations manager or a general manager or the owner of the business, if you’re going to make change that’s going to add to your workload. A huge change like Sykes went through is quite difficult to pull off and requires a lot of encouragement and knowledge and a lot of planning. I’d strongly recommend that you got external help to do something as big as that.

Duncan: Yeah, because that wasn’t evolutionary, that was a revolutionary change, from how they moved from a single man to a whole different layout. What sort of challenges do businesses face when they’re doing this? Because obviously the challenge of coming up with new processes, is there a lot of resistance within people, how does that sort of thing work?

Tim: There’s a massive of cultural challenge because particularly when you’re building something that’s a premium product, it’s a product that they prided themselves on the quality of the product. So this idea of the craftsman building the boat from start-to-finish, and then the master boat builder inspecting the boat and making sure it is right and correcting the defects, that went into the core of thinking about how do you achieve quality. And that was instilled in everybody. When you move to a production line, there was a view that that would be lost. In fact the quality has improved, and I’ll explain in a minute. But there was enormous resistance. At one point, one of the guys who was involved with the team who was a very senior boat builder, a guy in his 50s and had been with Sykes for a long time. At the end of one of our sessions, he went down to the shop floor and went in the lunchroom and said to the guys, “This is going to be a disaster. They are going to turn us all into battery hands on a production line.” Was the term he used and upset everybody. He then went home in disgust. Went home sick, said he was sick. Which is a great Australian tradition. [laughter] Check out sick when you’re not happy. Had upset everybody, the owner Jeff Lawrence went down and explained to everybody that the change was going to be done with them and it wouldn’t be that they would have a say, they weren’t going to be like battery hands. That it would be not like working on a production line in a car plant. And as it turned out, Jeff was right, and the guys were fully involved in the redesign on the way things were done. That guy who marched out and took a sickie, after upsetting everybody, he’s now one of the most passionate supporters of the new system. Because at the core of the new system is this idea of standard work and that we standardize things in terms of timing, content, sequence and outcome. Every task has an agreed way that we are going to do it. And he would say that standardized work means, that every way he does things the right way.

Duncan: Yeah. [laughter]

Tim: That nobody takes shortcuts, that if there’s a shortcut found then the whole team has a discussion about it and says, “Is this really a better way of doing things? Can we get the quality outcome by taking the shortcut?” And if you can get the same outcome by taking the shortcut then, sure, we’ll do it. One good example of that at Sykes was that, as a rower you know that the bow of every rowing boat was a little ball.

Duncan: Yeah.

Tim: That is right at the port of the bow and they had about ten row builders who were involved in fitting out the boat. And all of them took a different length of time to fit that ball on the bow. The slowest guy took more than an hour to put the ball on the end of the bow. They never measured it, they never even knew how long it took to put it on, but when we started working with them to develop standard work, they measured how long it took to put the ball on. The longest guy took an hour, and the fastest guy took 15 minutes. When they looked at it they both got an identical outcome, the outcome was equal in terms of quality. The trick was then understanding what the fastest guy was doing, documenting that, training everybody else to do it that way, and making that the standard work so that everybody could put the ball at the end of the bow in 15 minutes.

Duncan: So just to clarify, what is standard work, and can you go into a little bit of detail about what it is and why it’s important?

Tim: So standard work is at the core of lean and the Toyota production system. And that is the idea that the tasks that we do in a [inaudible 00:22:02] environment and routine tasks in an office. I standardized. And how we standardize in terms of content, each time we do the job we do the same steps. So if there’s ten steps in a job, we always do the same ten steps when we do the job. We standardize in terms of sequence. So we always do those ten steps in the same order, so we don’t start with step 7 and then jump to step 2, and then go back to step 1 and then do step 5. We always do them one-to-ten and we’ve all agreed that’s the best sequence to do them in. We do the tasks in approximately the same time. If we all do the same steps in the same way, and in the same sequence, it should take us about the same time. In terms of knowing how long a the task could take, whoever does it will get about the same outcome in terms of time. And will also give the same outcome in terms of quality. Standardizing for timing, sequence, outcome and content. [laughter]

Duncan: That makes sense. I’ve read a few studies and I can’t remember, I can’t name any maybe you might be able to but then inclusion of standard work processes versus not having standard work, there’s a huge difference in terms of outcome, productivity and just variants of quality.

Tim: Well I think the thing is, the Japanese would put it very simply. They would say, “If you don’t have a standard, how can you improve?” If you don’t actually know how a task is done now or how it should be done now, how can you improve? You’ve got ten people doing a job, all different ways. Then how could you improve that job if you don’t know the best way that it should be done now? Standardization is like putting a peg in the ground and saying, “This is how it should be done, this is the way we all agree that it should be done.” I think a critical difference within critical work to what is the Frederick Taylor of scientific management approach is that, standard work is developed by the team. In the standard scientific management approach he had this guy called industrial engineer who comes down with his stopwatch and his clipboard and observes the task and he records the time on the task. Then he goes back and he looks at a whole heap of standards and he redesigns the task. And then he comes back and tells the operator, “Well, you know, if you took two steps here instead of three and if you turned to the left here instead of to the right, and if I moved your toolbox half a meter closer then altogether we’d save 10 seconds from your task and you’d be more efficient.” And the problem with that industrial engineering approach is that, who likes to be told how to do their job by someone in a white coat? [laughter].

Particularly in places like the UK and Australia are provided the fertile ground for the development militant trade unionism in the manufacturing industry in the early 19th century. Work has become alienated in that kind of environment. In a standardized work environment we still have the industrial engineering type of analysis but the difference is that the team is looking at their own task and the industrial engineer–if he’s there and many companies won’t have an industrial engineer–he’s advising and helping the team but the team is deciding how the work will be done and what the standard work should be. The industrial engineer–as I say, if you have one–is only a resource to the team. In the case of Sykes, when Jeff set them a task to try and take time out of the Four, because the Four was their top selling boat and one where they thought they had a lot of excess labor, then the team got together, they all went through the standardized work together. They all decided where potential improvements could be made and then they trialed the new standardized work so they actually built boats using the new methods to make sure whether they could build a quality motor-boat. And that the new methods were reproducible and they could do it again and again. The result of that is they reduced their labor hours to build a Four by more than 50%. So they more than halved the amount of labor and labor is the biggest cost in building a boat. They more than halved the labor in building their top selling boat.

Duncan: That’s impressive and not only in just the time in building the boat but also the time those materials are sitting on the shop floor, the time that the customers aren’t going to have the boat, the whole piece.

Tim: The other impressive thing is that the workers in that factory did it for themselves. Often people worry about how do I increase productivity, how do I make the guys work harder? Well how did that happen? We’ve got a group of guys who actually worked out how to make the boat twice as fast. Well, in fact they’re not working harder, they are just taking a whole heap of waste out of the process and walking and waiting and all the other wastes. The great thing about small or medium sized businesses is they’re focused on growth. Usually getting good people is difficult so they’re not focusing on trying to downsize, put people out of work. So if they create capacity by, for instance halving the number of working hours, then that just becomes a challenge for the sales people and usually allows the business to sell more product. It then occupies the guys and because the savings in time have come through eliminating the waste, often the guys actually feel like they’re not working as hard, because walking around and carrying things and [laughter] all that type of thing is quite tiring and if you eliminate that the actual job becomes easier and not harder.

Duncan: And so in terms of post transformation to the people in your experience do people work in environments are they happier with what they’re doing, are they happier that things are going faster they feel more productive at the end of the process?

Tim: Again I would point you to the video on my website on the interview with Jeff Lawrence where I’ve got a number of shots of what Sykes was like before the change and what Sykes was like after the change. I think that would answer your question. [laughter] It’s a much, much better work environment and involving people in a much more systematic way. One thing I noticed when I go there is that the faces that I see when I walk through the shop floor in sights are pretty much the same faces that I saw when I first worked with them five or six years ago. The people have stayed with the business and have committed to the business and feel free to engage with the business.

Duncan: Let’s talk about the book, How To Grow Your Factory And Grow Your Profits.

Tim: Sorry, you broke up there, Duncan.

Duncan: I’m sorry, so let’s talk about the book, How To Grow Your Factory And Grow Your Profits. Who’s this aimed at? Who are the people that should be thinking about this book, what outcomes should they be able to get from reading it and applying it? I mean we’ve talked about the advantages about lean in general but what’s the end goal, is this sort of a primer for someone who has these issues, to make them aware of what’s to come for them or one of the roots to solve their issues?

Tim: Yeah, I think that’s a group description, Duncan. I think the kind of person this book is aimed at is someone who’s the owner, the manager, the manufacturer manager, production manager, of a small or medium sized manufacturing enterprise. By small or medium size I mean, typically turning over under a hundred million dollars. I think I used two hundred million dollars in the book, it’s pretty arbitrary. Less than a couple hundreds of people in a factory. Right down to people who might only have five people in the factory or three people in the factory. Really they’re people, who are–if you’re very small, it’s a good book to read to know a bit about how things might develop as your business grows. If you’re very small your primary focus is going to be on getting bigger. [laughter] That’s probably where you should put your effort. When you’ve only got three people or four people, problems in the factory are probably not going to be your front line problems. The book will give you some ideas at that stage of your business, your primary focus is going to be on the business. But once you get up on that three-to-five million stage and when you get bigger, you know we work with businesses in the 10, 20, 30, 50 million $ turnover stage. And the book provides a good primer to help you understand what might be going on with your business and understand what lean is and understand why you need a management system like lean to try and enable your business to handle its growth and be able to grow to the next stage.

One of the classic problems I describe in the book is what I call a “Diseconomy of scales”. Economic theory says that as you increase sales revenue, you will fix [inaudible 00:32:032] fixing your variable cost grow with revenue, so that your margins, not only does your profit grow in absolute terms it also grows in terms of your % margin. Because your fixed costs are fixed. What I constantly see with small or medium sized businesses is the opposite happens. So that as they grow, they become less closely connected to the shop floor. The number of issues to manage and problems becomes more than what the management can actually cope with. So the business starts tolerating the stakes and defects and the workers–there’s less direct connection between the management and the front line employees because there’s simply more people. And as a result the productivity goes down. There’s a tendency then to try and employ more managers and more supervisors and supervisors supervising supervisors [laughter]. So your overhead goes up. Also because the management of working capital and production flow is often quite poor, you end up with a bigger factory than you need, because the factory is now filled with work in progress and inventory. So again that adds to overheads and actually the end result is that as the sales go up, the profit goes down. Both in percentage terms and in absolute terms. And so these businesses as they grow often end up–I’ve talked to many a business associate, we made more money when we were half the size. And businesses often get to a situation where they actually go from being profitable to being a loss-maker, even as their sales increase which seems counter-intuitive, but the business should in fact increase its profits as it increases in sales. But in the majority of cases the opposite happens. And this gives them a dire problem because, as their sales are growing, the need for cash to fund that working capital on their business grows. Because they’re very inefficient for working capital, the problem of needing more cash to fund working capital is compounded. And because their profit is declining, their availability for cash is actually very limited. And so these businesses get into cash flow difficulty, as they’re trying to grow, and some cases go broke, go bankrupt.

And so, when you think about what lean does, what we are doing is we are creating a management system that enables us to manage and empower shop floor teams and manage things a lot more effectively at a lower level of organization. So when I got a much better control over productivity of our people. So that’s addressing problem number one. Problem number two is we’ve got a system that, if we set it up well it’s very visual. What people need to do is present it in front of them so they don’t have to go and ask the supervisor, we’ve created a system for solving everyday problems that we get solved close to the shop floor as well, so again that all these problems don’t get fed up the line to the boss for him to try and solve. And so that addresses to some extent our issue with overheads. We improve our production flow and we reduce our lead time, which means we reduce our working capital in our industry. Which means we need less space and we want this space because we want less transportation waste, less movement waste, so we actually reduce our factory footprint. So we are going to reduce our working capital and also reduce our overheads with rent. We immediately address all of these, the lean approach goes to the core of all of these problems that occur, when a small or medium sized manufacturing business grows.

Duncan: I was going to say–sorry, go.

Tim: This is the pattern we’ve seen over and over and over again with SMEs.

Duncan: It makes sense and it’s an interesting–this is also quite an interesting time for those sort of medium sized businesses, as you say three or five million dollars and upwards. And they’re now being coined, I don’t know if you know the phrase of scale ups, being coined.

Tim: That’s a good term, that’s a good term. [laughter] That’s exactly what my books’ about. One of the points I make in my book is that every big corporation was once a small business. You know, Apple was two guys in a garage. [laughter]

Duncan: That’s hard to make sense of but the concept of scale ups seems to have reoccurred quite a lot recently, in conversations and in big things. There’s a big report in the UK around scale ups and how that’s going to be the driving force of the economy and how the focus needs to move off start ups. I also spoke to another person who’s working in that same space helping businesses, less on the manufacturing side but move from that thee-to-five million dollar point. It seems to be something that people get caught up on a lot. And it trips up a lot of businesses, it sort of almost feels unfair because once they’ve built the foundations of something great and then they start dealing with some serious growing pains. And I think entrepreneurs are aware it’s a constant battle that you just have to keep fighting each day if that makes sense. If people want to get in touch with you, how should they get in touch? What’s the best way? They call you, email you, Twitter?

Tim: I’m all over social media, I’m not big on Twitter, I’m pretty active on LinkedIn, there’s also a TXM Facebook page and we have a pretty comprehensive website, txm.com.au that has a lot of content and you can also put a submission form there. You can subscribe to our newsletter and the newsletter is just our latest thinking and videos on lean topics. But I really like that point you’re making about focus on scale-ups because again I think economically and I think the UK’s a bit ahead of Australia in this in that you’ve been actually doing quite a lot of work for developing your small or medium sized manufacturers, particularly in industries like Aerospace. And the future of manufacturing in countries like the UK and Australia lies with entrepreneurs and small or medium sized manufacturers in getting them to scale up. And you’re exactly right. It’s a lot of money and if it’s put into start ups, but in fact a lot of those start ups that those brilliant ideas are wasted because the businesses then get to a size and because of the lack of management skills and lack of a management system, they ultimately fail. And so all that effort and investment getting them started has been lost. Even if the idea is brilliant, they usually don’t fail because of the idea being good. The product and the concept is usually really good, they fail because of their inability to manage the growth.

Duncan: You’re right, it is a shame, it’s one of those things that, it’s like you’ve got the perfect formula on start, you’ve got off the start line, you’re in the lead, and then you start getting engine difficulties halfway around the circle. Halfway through the race. All the factors are there for you, it should out, and it’s–I think as more and more government and people become focused and aware that that’s something that needs to be focused on that we’ll see more businesses becoming successful. I can’t remember the exact statistics in terms of employment but it was something like in the UK something like 30% of the workforce is employed by 1% of the companies and the goal is to get that to 3 or 4%, which is more like the US who are obviously you’re doing a bit better in that respect. To get more of those people who were just within grasp of success, getting there would be great.

Tim: I think that’s exactly it. I think that Australia is a bit the same in that the big companies dominate employment and I think some of the European countries are probably a bit better like Germany as being good at creating micro multinationals that own a small market niche globally. And I’ve spent a lot of time in China, I’ve seen a awful lot of Germans there installing German machinery in Chinese factories. [laughter] And they’re generally medium sized companies and not giant companies. Of course you do see the Thyssens and Manrels and people like that but there’s a lot of medium sized European companies that are carving out global niches.

Duncan: Okay Tim, thank you very much for your time. It’s been really insightful.

Tim: Okay, have we covered everything that you wanted to cover up Duncan?

Duncan: Absolutely. Awesome.