Roads to Resilience

supported by peer review. As TTP have many projects running in parallel, senior management monitors the overall risks the company is exposed to by combining the delegation of responsibility, together with an open door management policy and a culture which encourages a rapid response to recognising and fixing problems rather than allocating blame. “ A simple definition of risk supposes that the magnitude of potential loss, and the probability of that loss occurring can be forecast with some confidence. We believe that speed of response to the unexpected is more important than the predictions of a soothsayer ” (Chairman).

Strategy, tactics and operations

TTP’s business is: “ Operating at the frontier of new products and new technologies … whether it is sensing the risks or whether it is sensing opportunities, for us it is the same, for survival and growth ” (Managing Director). It may be thought that, due to the level of technological risks that the company faces in its many projects, TTP is risk-averse when it comes to business investments. “ In a typical year TTP invests about 20% of revenue in new technologies, products, markets and services. We do not see this as evidence of a risk adverse approach to business investment ” (Chairman). Investment risks Cash flow is a primary consideration for TTP and management, “ We have a pretty conservative approach to cash. Profit and loss are an accounting construct, cash is what pays the salaries and the grocery bill ” (Chairman). Any new opportunities that are identified internally and not directly funded by a client contract are treated with a great deal of caution. The company takes the attitude that “ if this all goes wrong, can we afford it? From a cautionary perspective … we expect to write off every project ” (Chairman). So although the highly creative and motivated TTP employees will often propose ideas for new products or services outside of their contract work, “ if somebody says let’s have a three-man team for six months to do this thing … there’s a good chance they’ll get a ‘no’ … because, actually, if it is good enough, somebody out there will pay for it ” (Managing Director). Scientists and engineers are given some freedom to pursue their own projects, but the key is that TTP is primarily a service company providing contract R&D, rather than a product company seeking to invest in its own new products. This approach serves to reduce the exposure to risk: “ If you remember that the basic model is fees for time, then in a sense it doesn’t particularly matter whether you’re doing something that’s never been done before ” (Finance Director). Since TTP generally runs technology development projects “ as a service for somebody, for their benefit and they probably will get IP out of it, then essentially they take the risk ” (Chairman). The technology projects which TTP runs on behalf of clients are frequently operated in stages, so client investment can increase as confidence increases. This model, alongside the credibility and track record of TTP, helps clients maintain a level of confidence, even though they are still responsible for the project risks. Where the business case for new technology is strong, the TTP Group will invest in developing future capabilities. For example, TTP Ventures is an incubator for young engineering companies. One recent project is the Carbon Trust Incubator, started with funding from the Carbon Trust as a vehicle for “ finding companies on their behalf that could be groomed to attract more investment ” (Managing

141

Roads to Resilience: Building dynamic approaches to risk to achieve future success