Case 11.1: An Appetite for Creativity

Highlight: The tortilla chip made a name and a fortune for Roger McKechnie. It was just the first of a series of food ventures, writes Chris Tighe.

An offer of a job promotion in the 1980s was the moment when Roger McKechnie stepped off the corporate ladder. He turned down the role of marketing manager at Smiths Crisps because he did not want to leave his lifestyle and friends in his native North-East England for the South. However, faced with the bleak economic realities of his home region in the Thatcher era the North-East was totally decimated he realized that searching for another job was futile. So, he would have to be self-employed, and develop a career based on his creativity and people skills. Consultancy was instantly dismissed on the grounds that there were too many of those charlatans about. Instead, he decided to become an entrepreneur, convinced that his future lay in a new product line: tortilla chips. Now a staple of the supermarket shelves, they were then an unheard-of novelty in the UK.

Others might not have taken the leap. After all, the tortilla chips idea had emerged when he worked at Associated Biscuits and a product tasting panel rejected the potential new snack 90 per cent of the tasters gave it the thumbs-down. They didnt realize who the 10 per cent were, he chuckles. [They] turned out to be affluent home entertainers, drinkers who lived in the South-East and shopped at Waitrose. He followed his instincts. If you get a good idea, go for it and bash on, he says, speaking in the no-frills business unit that houses his current venture, Tanfield Food Company. Indeed, following his intuition has made him one of the most successful entrepreneurs in a region where historical dependence on big, heavy-industry workplaces and jobs for life created an employee mindset. The factory is built on former steelworks land and nearby stands Terris Novalis, a sculpture that marks the former importance of steelmaking to Consett.

Ultimately, tortilla chips made Mr McKechnies reputation and fortune. In 1982, he remortgaged the family home and invested 50,000 in Derwent Valley Foods, making snacks for adults. His wife did not mind, he says: I was so excited about doing it, I didnt consider failure. The McKechnies have also brought up nine children, six of their own and three relatives, following a bereavement. The tortilla chips, along with other exotic-sounding nibbles such as Mignons Morceaux, and their eye-catching packaging made quite an impact in the 1980s in a dreary crisps and Twiglets market. The brand was enhanced by memorable television advertisements based on Phileas Fogg, the character in Jules Vernes Around the World in Eighty Days, which Mr McKechnie had read as a boy. The idea of Phileas Fogg came to him in a pub, after days of unsuccessful group brainstorming.

The joke was that Phileas Foggs authentic exotic snacks emanated from DVFs base in unglamorous Medomsley Road, Consett. The private irony was that this around the world in 80 days promotion was devised by somebody whose career has been resolutely rooted in his home region. DVFs products and marketing set out, says Mr McKechnie, to break every rule in the book. The same may be said of him: at 69, having made the pursuit of creativity and enjoyment the centrepiece of his entrepreneurial career, he is immersed in a growing business at an age when many high-achievers have long since burnt out. And his career has been a financial success, although he insists: I dont think I set out to make a vast pile of money. I set out to do some things well and enjoy it.

His business philosophy is more fluid than many of his peers. He sets great store by serendipity the combination of chance events and opportunities and creativity, an elusive muse. You cant sit down and be creative, he says. These inspirations just come on you. He recalls how, while at Tudor Crisps, a personality profile conducted by the company described him perfectly as a highly creative thinker, good leader of people, lousy at administration, with an extraordinary skill at estimating the volume of the Atlantic, how many Jews live in China, the national reserve of Chad he grins. They said I should be a golf course designer.

Mr McKechnies latest venture, Tanfield Food, is about to complete an expansion that will triple its capacity and could provide a volume step-change for its small rural suppliers. On a table beside him are pouches marketed under Tanfields Look What We Found! brand, each containing an unchilled ready-meal with a one-year shelf life and emblazoned with the name and picture of the producer of the key ingredients. One pouch of home-reared beef in black velvet porter with potatoes, for example, features Tees Valley cattle farmer Robin Hirst. Just as Phileas Fogg chimed with 1980s yearnings for sophistication, Look What We Found! aims to satisfy the desire of todays consumer to know the foods provenance, to be environmentally aware and to rustle up a meal in a hurry. In five years, Tanfield has reached break-even with an annual turnover of about 12m ($18.8m, 14.5m euro), with 5m of investment, including 900,000 from Mr McKechnie, 100,000 from co-founder Keith Hill (also a DVF co-founder), 700,000 from mates in Newcastle and the balance from venture capital. In January, it secured 4m from Inventages Venture Capital for factory expansion and marketing. The business, now employing 100 people, supplies leading UK retail chains with branded and own-label goods; it also serves budget airlines and the online home-delivered diet sector. While it has taken time to gain market acceptance for ambient food in pouches, Mr McKechnie sees amazing parallels with DVFs development. We were an instant success after six years, he says, drily. It was six years of hard graft and investment.

Not all his business successes have brought him as much money as they might. When he and three co-founders sold DVF for 24m net to United Biscuits in 1993, he kept all the UB shares he was allocated while the others took some, or all, of the cash alternative. The shares sank; he ended up with about 4m, half the original share value. What a con! he laughs. Awarded an MBE in 1989 for services to the food industry, he has stuck largely to the food sector, but within that he has ranged widely as a North-East investor and mentor. Successes have included Pride Valley Foods, an ethnic breadmaker founded in the northeast by Iranian-born Hossain Rezaei, which was sold to Gruma in 2006 for 20m. Mr McKechnie believes that it is creativity combined with quality that makes his products stand out. Creativity is a totally underrated resource in this country boring accountants dont rate it at all, he says. Its a missing element in big opportunities for Britain.

Tips for Aspiring Entrepreneurs

Roger McKechnie has decades of experience in food companies. This is his advice for aspiring entrepreneurs:

1. Get experience of the wider business world. You have to have an understanding of what makes things tick. You have to know what cash flow is, balance sheets, margins. Thats the business school stuff.
2. Go into business with people you like and trust. Some people might have the best idea, but I wouldnt go near them [if I did not trust them]. I like people to be straight and open and enjoy work.
3. Put creativity at the heart of things. The creative part is the magic. Creativity encourages people to try you.
4. Connections are important. When Mr McKechnie was planning his latest venture, I rang my good mate Keith Hill [a DVF co-founder] and said, Come round and have a beer, and I gave him the numbers. He was always a good number-cruncher.

Questions

1. Do you see any creativity on Roger McKechnies part? Where? How did it arise?
2. What kind of cognitive factors and personality traits has he exhibited so far?
3. Put creativity at the heart of things. Evaluate this statement.