IoD Scotland Director of the Year Doug Whyte talks to Direction’s Rob Beswick about the excitement of doing business in Asia, the challenges facing Scotland and why stretching your staff is the best motivational technique.
Doug Whyte was in fine form when he gave up some of his busy working day to talk to Direction about the Hydro Group, its success and his views on life as a director in general.
That good humour was in part down to his return the previous day from a business trip around Asia, a part of the world that always inspires him, he said “Asia is such an exciting, vibrant place. It can be difficult to do business, sure, but there is a can-do attitude that’s infectious. The whole business ethos is about growth, and the way Thailand, Vietnam and others are transforming their cities is incredible. There’s something new every time I go. Only problem is, on my return to the UK, I tend to find myself coming back down to earth with a bit of a dull thump!”
Blame the weather. But that negative thought is surely not connected to the Hydro Group, which has seen steady growth in turnover, profits, products and workforce since its launch. They’re all the hallmarks of a great business and the qualities that saw Doug named Director of the Year in the Large Company category at the recent IoD Scotland awards. Rather, the negativity stems from a frustration at aspects of the current business landscape – but more on that later. To begin, that Director of the Year award.
“It wasn’t something I set out to win,” he recalls. “I didn’t enter; I was nominated. I just gave the judging panel a straightforward account of the business’s growth and plans for the future.”
It must have been a convincing story, as the judges were unanimous in their decision to name Doug their winner. That straightforward, no-nonsense approach has stood Doug well over the years he has been at the helm of the Hydro Group.
Where did the firm start? “I founded the company in 1982 as Hydro Bond Engineering. There were just a handful of staff then, working on electrical engineering projects for sub-sea applications in the oil and gas sector.”
Doug’s background was in electrical engineering, and the challenge of solving complicated customer demands in what is a tough natural environment was something that has long appealed him – and still does to this day.
Today, the core work of the company remains as it was in 1982: designing and manufacturing cables, connectors and penetrators for underwater use. As well as the oil and gas sectors the Hydro Group also works in the defence and renewables sectors. To a layman, the equipment manufactured – and the challenging environment it which it has to operate – sound impossible to construct, but that challenge is what Doug and his team thrive on.
“One of the things we are very proud of at the Hydro Group is that we have a very low turnover of staff, and part of that I put down to the technical challenges we throw at our people all the time. There’s something to learn every day: we are forever testing and researching new materials, new concepts. A lot end up in the bin – and I can have finance tearing their hair out because we’ve just thrown away £30,000-worth of work. But I don’t look at it as a loss: every time you find out that something doesn’t work, you’ve learned something new. Life, and business, is all about learning.”
The business’s ability to adapt is helped by its flat management structure, which puts huge responsibility on individual employees’ shoulders. “In many ways each member of the team is like its own small business unit, working on their projects and using their skills, solving technical problems as they go.” That means that staff can never rest on their laurels. “We are forever being asked to solve new problems by our customers, or change a design to fulfil a new application. But while it sounds complicated it’s just a process like any other, one you can learn from.”
While the oil and gas sector was its principal market to begin with, Hydro Group has jumped at the chance to get involved with the defence and renewables sectors, too. “It’s been a hard time for oil and gas,” he admits. “There’s been lots of bad news and certainly I can see the oil price staying at the $50 a barrel mark for a while yet. When you hear that Keppel Offshore and Marine (the world’s biggest oil rig builder) is closing shipyards and laying off 18,000 people worldwide, you know the industry’s contraction isn’t going to end any time soon.”
That’s one of the reasons why the Hydro Group has diversified into new sectors – though entering new markets wasn’t all part of some grand master plan.
“We’ve never been into massive growth plans; all our growth has been incremental and very gradual. We’ve entered new markets when it has made sense to do so, and done it very steadily.”
The Director of the Year judges remarked on an ‘honest and straightforward assessment of the business’ ; more evidence of that here? “Yes, you could say that. Our growth has always been paid for out of our own pockets. We’ve never chased investment or finance. We always grew out of cash we could afford to invest in new projects and products.”
That slow, gradual approach is heartening to hear when so often we hear about companies falling flat after embarking on a helter-skelter race for growth they can’t sustain. It also breeds a patient attitude that stands it in good stead when bidding for new work – particularly in the defence sector.
“We are working with BAe on its new Dreadnought class of submarines but it has been a long process – it’s taken around 15 years to get ourselves in there. You’ve got to be patient!”
The huge rise in renewable energy schemes around the world has given Hydro Group another sector to target – though they are no newcomers to this particular party. “We first started working in what was known as ‘Wecs and Tecs’ (Wave energy convertors and Tidal energy convertors) in 1994. There is a huge political will to see this sector grow now, which perhaps there hasn’t been before.
“Early renewable projects weren’t always successful but they are large enough now for the big players to get involved; the economies-of-scale advantages are now huge. We’re seeing a lot of simpler, more reliable projects coming on line which we can get involved with.”
Being able to keep his workforce up to speed with new challenges such as those posed by this growing sector is one of Doug’s biggest challenges. “The skills gap is a major worry. We have been training our own apprentices since well before it was fashionable to do so, but one of the reasons for that is our skills needs are unique. We don’t expect our apprenticeships to deliver us a finished product, rather a well-rounded individual who has a good grounding in the basics. We need good team players with a thirst for knowledge, who are looking forward to the technical challenges ahead.”
That desire to rise to the technical challenge has clearly kept Doug hungry for a long time, but what other challenges does the business face? Brexit?
“You can adapt to most challenges in our field – you research, you test – but others, you just have to get on with it and stop moaning. Brexit’s one of them. Yes, I can see the challenges but let’s look at the advantages. In recent months the value of Sterling has fallen, which has made my products more cost-effective for overseas buyers. Export pricing is easier. That’s an advantage. My advice would be, don’t get bogged down with the negatives surrounding Brexit.”
I point out that perhaps, for a global player with big interests in every continent, the loss of EU markets might not be as acute as for some other businesses. “Yes, that’s true but Europe is important for us. However, we are protected a little.”
The fact that so many businesses don’t export is something that baffles Doug. “I heard someone say the other day that just four per cent of Scotland’s businesses export. Just four per cent! That’s incredible. We claim we want to compete with Germany – well, around 30 per cent of German businesses export. That’s a big difference.”
The landscape in which UK businesses operate needs a lot of looking at, says Doug. “Having just come back from Asia I wonder if the UK is still as attractive a place to invest in as it once was. Business rates are a scandal – they are a tax on jobs. I think councils just see businesses as awash with cash that can be tapped when they need it. Red tape is another problem that holds business back. The fact is, most small businesses are just ticking over, barely making a profit. You hear politicians talk about helping small businesses but in reality, what practical measure do they introduce to help? Over half the workforce works in SMEs but who is out there fighting for them? Politicians just create taxes, red tape, and let it wash over people who are struggling to cope. It is very frustrating.”
Looking to the future, where does he see himself and the business going? “Me? Retiring!” he says laughing. “Seriously, I’ve been looking at how to step out of the business for a while. We have taken succession planning very seriously and promoted good people to senior positions. I know the business won’t collapse without me around.”
So as he nears the end of his own business career, what advice would he give any aspiring directors at the start of theirs? “Have empathy. Understand the other’s point of view. Whether it is your colleagues around the boardroom table, your workforce or your suppliers. When you get to board level, you tend to be there because you are good at something - you’re a good engineer, for example. But you’ve got to sit there and listen to other people’s points of view, understand where they are coming from. That same attitude needs to translate into how you deal with customers. It will give you a better understanding of their needs. Be straight and honest with everyone you deal with. At Hydro Group we’ve had customers who can be difficult but we take the attitude, get them through the front door, ‘smother them in cream’, as the saying goes, be honest and straight with them and they’ll be the same with you in the end. I include suppliers in that: treat them like they are part of your team.”
So if he stood down from the business and got the job as First Minister/Prime Minister for a day, what would he prioritise? “I’d take the day off!,” he said. “No, if I had one thing I could do, or get politicians to do, it is to help them understand better how business works, what really matters to SMEs. There needs to be an emphasis on the impact Governments have on small businesses; too many are vulnerable at the moment.What worries me is, I’d be tempted to say to my children don’t be an entrepreneur, as there’s no support out there for you. “That’s sad, isn’t it?”