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19 October 2017 Interview

Octopus Group: "a role model business"

The co-founders of the Octopus Group have been jointly named EY’s UK Entrepreneur of the Year. But what did the judging panel mean when they described the company as “a role model business of our time”

Chris Hulatt and Simon Rogerson were named as joint EY UK Entrepreneurs of the Year in October. They took the crown thanks to the way they have transformed their asset-management business – founded in 2000, when they were both in their mid-twenties – into a conglomerate which is now active in sectors ranging from healthcare and energy to property and venture capital.

Business Voice spoke to the pair to discuss how they had managed to expand so successfully, the importance of their company’s culture and ownership structure, and their vision for the group in the coming years.

You started as asset managers but are now active in areas such as renewable energy, energy supply and care-home provision. How do you decide which sectors to enter?
Simon Rogerson: When you think about what matters to people in the UK, they will talk about money matters, their health and possibly about the planet. We focus on areas that are really important to people and ask: which ones are broken from a customer’s perspective?

Chris Hulatt: We have been good at spotting opportunities in markets that are large, and are either going through change or dysfunctional in some way. Take healthcare, for example: we have an enormous demographic time bomb that is driving demand for care homes. Largely we have moved into sectors where the opportunity was as clear and distinct as it was in financial services 17 years ago.

One of the issues many company founders have when expanding into new areas relates to control and being able to delegate to people they can rely on. How have you addressed this issue?
SR: This is a challenge we’ve had since we set the business up: identifying what world-class talent looks like and then working out how to hire it. But it’s not just about identifying people who are functionally amazing at their jobs – it’s their behaviour and the way they go about things.

A mistake we made a few times in the early days is that we hired people who were really functionally capable, but who didn’t necessarily share our values. The risk there is you end up with people pushing in different directions because you haven’t built a shared ethos or culture – so it’s not surprising when the customer gets an experience that does not feel genuine.

Now I probably spend 30-40 per cent of every single week meeting and interviewing people and making sure they share our values: for us, there are three – be bold, be straightforward, and be helpful.

How has Octopus managed to retain its entrepreneurial spirit and agile approach while growing to more than 500 employees?
CH: Rather than thinking about Octopus as a business run by two entrepreneurs, it is more like a business of 500 entrepreneurs: we are always trying to encourage people to come up with new ideas, to play their part in improving what we do.

Many of the best things we have done have come about because of people here suggesting things. For example, we entered the renewables market in 2010 because one of our fund managers started talking about the opportunity to build solar farms in the UK when no one else was doing so.

He has now built that team to about 60 people and we have made about £2.5bn in renewable investment in the UK. Our role as leaders is to spot the really good ideas and to move resources behind them to bring them into reality.

SR: About two years ago, we moved to a group structure with six businesses, each with its own chief executive. So they all have the same employer brand, the same values, and the same expectations from their customers. But the chief executives have the autonomy to run those businesses entrepreneurially and at a speed they want to build them.

Octopus is still privately owned. Have you ever considered taking the company public?
SR
: Chris and I have always had the view that we will never sell the company and we will never float it. When you become a quoted company, you become beholden to shareholders and fund managers, and you end up being quite short-termist in your decisions.

We want to make decisions that are for the long-term value of the business and we want to be able to put the customer ahead of everyone. And that is a difficult thing to do when you are running a quoted business.

CH: Having raised a couple of million pounds to kick-start the business all those years ago, now we can fulfil our aims in areas like healthcare and energy out of the profitability of other parts of the group without having to do what other entrepreneurs do to raise money.

Where do you hope the company will be in five years’ time?
SR: Most of our growth is going to come from the energy business, which is expanding so quickly: it has gone from nothing to 120,000 customers in 16 months.

Other than that, we will just go deeper into the sectors we currently have a presence in – you won’t see us appearing in lots of new sectors in the next five years.

To see who else won at this year's EY Entrepreneur Of The Year UK awards visit www.ey.com

 

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