THE GROWTH PROCESS

  AEA Technology plans to become a £500 million turnover business, doubling its size at the time of privatisation. This demands growth through both acquisition and organic means. In the months immediately following privatisation, a new process was developed and introduced to the company targeted at stimulating organic growth: The Growth Process. It was developed with McKinseys to achieve two key goals:

—  stimulate innovation: taking technology to market; and

—  transform company culture: from mission led (technology support to the nuclear industry) to market led (recognising and exploiting commercial opportunities).

  At the heart of the Growth Process is the recognition that science and engineering companies like AEA Technology have a valuable set of capabilities (eg skills and technical abilities), assets (eg patents, know-how, facilities) and relationships (eg with partners, suppliers, customers) ie what the company can do exceptionally well. Realising their value means finding a match between such capabilities assets and relationships and market opportunities, often caused by sudden change. An example might be new environmental legislation, opening up an opportunity for pollution control technology.

  The process itself has three main stages: idea generation, business planning and selection, and implementation.

Idea Generation

  New ideas for business development can be generated from a number of sources eg:

—  Our own technical and sales staff;

—  Innovation +: a specific initiative through which AEA Technology actively seeks to support other individuals with innovative ideas through the provision of business acumen, facilities, advice and technical assistance;

—  Partners through industry links and venture capital providers; and

—  Universities through targeted support of university research and the development of centres within selected universities.

  New ideas are captured on a single page proforma which seeks to quantify at first level the key characteristics of the opportunity ie value to the customer, market size and growth, time to market, potential value to the company, necessary capabilities assets and relationships etc.

Selection and Business Planning

  Each new venture idea then faces a series of decision gates through which it will either proceed, or be dropped, depending on its merit as judged against 10 key commercialisation questions. These questions form the basis for a business plan which is developed progressively as the idea passes through the gates. Investment funding is released initially to enable business plan development. Substantial investment if required, for example to fund technical development, is only released at gate three once sufficient confidence has been gained in the likely future returns.

Implementation

  The final decision gate requires a clear implementation plan to be approved. This will identify what steps need to be taken in order to launch the new venture idea on the market, and may include setting up a new start-up business unit. AEA Technology has adopted a "New Ventures Board" approach for such ideas, whereby start-ups with potential for significant value generation are given special management attention within a unit which is deliberately separated from the main stream business. This provides the best possible environment for the particular needs of a start-up business, minimising the burden of corporate requirements which more mature business units carry.

  AEA Technology ran the Growth Process at a corporate level for the first year. Since then, it has been installed in each of the 11 business units which comprise the AEA Technology Group, and continues to run at corporate level as well. Overall, more than 300 ideas have been assessed, of which 14 have been launched.

15 December 1998