24: Spinning Out 1

I estimate that once every two years for the last 20 or 30 years, there has been a report of an inquiry into the transfer of university research into the economy – for commercial or public benefits. The fact that the sequence continues demonstrates that this remains a challenge. One mechanism is the spinning out of companies from universities and this piece is in two parts – the first describing my own experience and the second seeking to draw some broader conclusions. Either part might offer some clues for budding entrepreneurs.

This is the story of GMAP Ltd. The idea was born, half-formed, at Wetherby Racecourse on Boxing Day 1984 and it was six years before the company was spun out. Of course, there is a back story. Through the 1970s, I worked on a variety of aspects of urban modelling supported by large research grants. All of this work was basic science but there was a clear route into application, particularly into town planning. By the early 80s, the research grants dried up – a combination of becoming unfashionable and perhaps it was ‘someone else’s turn’. I worked with a friend and colleague, Martin Clarke, and he and I always went to Wetherby races on Boxing Day. We discussed the falling away of research grants. As we watched – on TV in a bar – Wayward Lad win the King George at Kempton, we somehow decided that the commercial world would provide an alternative source of funding. We had models at our disposal – notably the retail model. Surely there was a substantial market for this expertise!

Our first thought was that the companies that had the resources to implement this idea were the big management consultants. In 1985, we began a tour. The idea was that they would work with our models on some kind of licence basis, Martin and I could be consultants, and they would find the clients. We were well received, usually given a good lunch; and then nothing happened. It became clear that DIY was the only way to make progress. We approached some companies whom we knew who we thought were possible targets but mostly our marketing was cold calling based on a weekly read of the Sunday Times job advertisements to identify companies seeking to fill marketing posts. Over two years, we had a number of small contracts, run through ULIS (University of Leeds Industrial Services). We learned our first lesson in this period: that to get contracts, we had to do what the companies actually wanted rather than what we thought they should have. We thought we could offer the Post Office a means of optimising their network; what they actually wanted was to know the average length of a garden path! That was our first contract, and that’s what we did. Another company (slightly later) said that all these models were very interesting, but their data was in 14 different information systems – could we sort that out? We did. The modelling came later.

Our turnover in Year 1 was around £20k and it slowly grew to around £100k. The big breakthroughs came in 1986 and 1987 when we won contracts with W H Smith and with Toyota. By then we had our first employee and GMAP became a formal division of ULIS. It wasn’t yet spun out, but we could run it like a small company with shadow accounts that looked like real accounts. There was then steady growth and in late 1989, we won a major contract with the Ford Motor Company. By 1990, our turnover reached £1M, we had a staff of around 20 and we crossed a threshold and we were allowed to spin out as GMAP Ltd. By this time, I was heavily involved in University management and so could only function as a non-executive director. The company’s development turned critically on Martin becoming the full-time Managing Director.

The 90s were years of rapid growth. We retained clients such as W H Smith, Toyota and Ford but added BP, Smith Klyne Beecham, the Halifax Building Society and many more. We were optimising retail, bank and dealership networks across the UK and, in the case of Ford, all over Europe. By 1997, our turnover was almost £6M and we were employing 110 staff. And then came a kind of ending. In 1997, the automotive part of GMAP was sold to R L Polk, an American company, and in 2001, the rest to the Skipton Building Society, to merge into a group of marketing companies that they were building.

What can we learn from this? It was very hard work, especially in the early days. DIY meant just that: Martin and I wrote the computer programmes, wrote and copied the reports, collected the data. We once stood outside Marks and Spencer in Leeds with clipboards asking people where they had travelled from – so we could get the data to calibrate a model. We were moved on by M and S staff for being a nuisance! We also had to be very professional. A project could not be treated like a research project. If there was a three-month deadline, it had to be met. We had to learn how to function in the commercial world very quickly. But it was exciting as well. We grew continuously. We didn’t need any initial capital – we funded ourselves out of contracts. We were always profitable. In one sense it was real research: we had incredible access to data from companies that would have been unavailable if we hadn’t been working for them. And many of them rather liked being referred to in papers published in academic journals.

Could it be done again? In this field, possibly, though this kind of analysis has become more routine and has been internalised by many – notably the big supermarket companies. However, there are many companies that could use this technology with (literally) profit, but don’t. And there are huge opportunities in the public sector – notably education and health. The companies we worked with, especially those with whom we had long-term relationships, recognised the value of what they were getting: it impacted on their bottom line. We did relatively little work in the public sector – not for want of trying – but it was difficult to convince senior management to see the value. However, it could certainly be done again on the back of new opportunities. Much is said about the potential value of ‘big data’ or of the ‘internet of things’ for example and many small companies are now in the business of seeking out new opportunities. But is anyone linking serious modelling with these fields? Now, there’s an opportunity!!

Alan Wilson

October 2015

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