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Two key qualities for business and investing – with Sean Sutcliffe

Asked what he looks for when building a team to succeed in his own field of space technology, our most recent podcast guest picked out two qualities we also value very highly, here on The Value Perspective

15/04/2020

Andrew Williams

Andrew Williams

Investment Specialist, Equity Value

Juan Torres Rodriguez

Juan Torres Rodriguez

Research Analyst, Equity Value

When we asked Oxford Space Systems CEO Sean Sutcliffe what he looks for when choosing people who are likely to succeed in his own field of space technology, we were intrigued that our most recent podcast guest picked out two qualities we also value very highly among team members, here on The Value Perspective – emotional resilience and diversity of thought.

For us, emotional resilience is a must because, when you invest in recovery-type situations, you need to accept the market can take time to catch up with your view that a business has what it takes to navigate its way out of its current problems – and thus its share price may still have further to fall. Diversity of thought is crucial, meanwhile, because we are always trying to bring fresh perspectives and thinking into our analysis.

Why, though, does Sutcliffe particularly value these two qualities? “I do think the advice around board diversity applies as much, if not more so, to management teams,” he replies. “And particularly in our area, where you have so much uncertainty and so much room for mistakes in terms of decision-making. You do not have got a cookbook to go by, in any sense.

Range of voices

“So having that diversity of experience, of outlooks, of the way you look at the world is important in this sort of business and I am certainly very keen to ensure we have a good range of voices heard around the management team. As for emotional resilience, well, you have to be able to put up with setbacks – get up the next day and just deal with it – because you are going to have a fair few of them in our business.

“And when a business doesn’t work, that is a very personal thing. Stopping is not just a business decision – it is an emotional hurt. I spent 10 years of my career building up an industrial biotech business, for example, and we eventually came to the conclusion it would take another two years and another $30m [£23.4m] – a significant amount in the context of this business – to test out the hypothesis.

“So, together with our major investors, we stopped that business. That hurt us all emotionally – as well as in terms of the jobs that were lost. Still, as a leader in those circumstances, you have to be able to step back from that emotion and be really resilient – to say, ‘OK, this is where we are and this is the decision we are making so let’s make it as quickly as we can’.

Out of the fire

“You do not dwell on things or squander whatever resources you have left – you see if you can pull something out of the fire. In this case, using the significant intellectual property we had built up, we shifted the business entirely – away from looking to make a product that sold for $1,000 a tonne to one that makes $1,000 per milligram.

“It is a good market, if much more difficult to make, and we have had to prune back the business – in this case to redirect the strategy towards an entirely different sector. And that is a difficult thing to do from an emotional point of view and it is a difficult thing to do from a timing point of view – because the whole business is so invested in your previous strategy – but if you do not do it, then you have got nothing.”

Author

Andrew Williams

Andrew Williams

Investment Specialist, Equity Value

I joined Schroders in 2010 as part of the Investment Communications team focusing on UK equities. In 2014 I moved across to the Value Investment team. Prior to joining Schroders I was an analyst at an independent capital markets research firm. 

Juan Torres Rodriguez

Juan Torres Rodriguez

Research Analyst, Equity Value

I joined Schroders in January 2017 as a member of the Global Value Investment team. Prior to joining Schroders I worked for the Global Emerging Markets value and income funds at Pictet Asset Management with responsibility over different sectors, among those Consumer, Telecoms and Utilities. Before joining Pictet I was a member of the Customs Solution Group at HOLT Credit Suisse.  

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