Time for a UK Sovereign Fund in new technologies

Investments going up

People have been talking about setting up a UK Sovereign Fund for years. However, there is still relatively little clamour to support this initiative and make it real.

Of course this is an old idea. Norway set up its Sovereign Wealth Fund back in 1969, with the aim of managing Norway’s oil resources over the long-term. Over the last ten years, the fund has delivered a return of 8.3%, or 36.5% in real terms after annual management charges and inflation. Source Forbes.

Much more recently in 2006, Australia set up a Future Fund which is performing well and is investing in a number of different areas including disability care, medical research and nation building.

The UK could very easily start a Sovereign Wealth Fund and it would be applauded by the majority of people in the country as long as its core principles were right and it was totally apolitical. It’s time we did. We are a small but highly inventive people. We shall become an increasingly small part of the future world and yet there is no reason for our creativity, originality and inspiration not to be captured, supported and indeed amplified through such a fund

We should set up our own “Future technology Fund”. It should invest in technologies that benefit large numbers of the future population. This should include the following:

  • Health
  • Energy
  • Agriculture, landscape and environment
  • Housing

Some of the amazing break throughs that are happening in health technology should be supported and ultimately be part of this Fund. There is too much incredible work that originates here in the UK but that is allowed to be commercialised elsewhere in the world. We need to ensure that the Fund can provide a commercially owned structure which ensures that value goes into future generations living in the UK.

The Fund should be controlled on the basis that no funds can be withdrawn for 10 years minimum and then only a maximum of 2.5% of the value of the fund in any one government as long as the total fund is still always higher than previously. It should be independently managed and separately monitored.

We should incentivise entrepreneurs to bequeath their companies and the assets of these companies to the state. We should do this by providing them with entrepreneurial tax relief on their output as long as at least 25% of the assets ultimately end up in the Fund. This would continue to build on the “innovation and entrepreneur friendly” tax structure that now exists in the UK and which is much envied across Europe.

We desperately need to rethink how we fund our future. This would be an important first step in that direction.

Should we tag all prescription drugs and pills now?

The scale of increase in medication usage across the world is frightening.

There are numerous disturbing facts that accompany this spread:

  1. The NHS drug bill rose by 8 per cent to £16.8 billion in 2016, up from £13 billion in 2011. 4 treatments now cost more than £1 billion per annum. Source Dec 2016 Times
  2. Half of women and 43% of men in England are now regularly taking prescription drugs. Source NHS 2014
  3. It is estimated that £300 million of NHS prescribed medicines are wasted each year
  4. Diabetes accounts for over 10% of the annual drug bill
  5. One in five do not take all their medicine according to a survey of 2,048 people carried out for an Omnicell report by ComRes in 2016
  6. The U.S. is 4.6% of the world’s population, yet consumes 80% of opioid painkillers
  7. Global spending on medicines is forecast to reach $1.4 trillion by 2020, an increase of between 29 percent and 32 percent from 2015, according to IMS Health

The increase itself is fairly well understood by people. The less well known problem is that the misuse of antibiotics can enable bacteria to develop resistance to them. A lot of antibiotic-resistant strains are popping out. If antibiotics stop working, we have no other defence against bacterial infections. When you take antibiotics, you are putting a tremendous selective pressure on the bacterial population. Randomly, a few bacteria of the billions you have, will be slightly more resistant to the antibiotic than others. This means they are more likely to survive your antibiotic doses, and in turn they could evolve in more and more resistant strains, until the antibiotic has no effect on them anymore.

The trick is poisoning these bacteria with the antibiotic faster and stronger than their efficiency of evolving resistance and replicating. That is, if a bacteria narrowly escapes death by antibiotic, and you give it a break so it has time to replicate, you end up having a growing infection with a quite resistant strain of bacteria. If you instead take your pill at the right time, you give it another chemical punch that will hopefully kill it before it managed to replicate significantly.

So given these facts, why are we not finding other ways to reduce the problems. One of these could be by throwing more energy at tagging prescription medicines to enable:

  1. better understanding of whether patients are following the courses and therefore protecting our long-term antibiotic resistance?
  2. healthcare providers to ensure that patients don’t waste or sell their drugs?
  3. more patients to take the drugs that reduce further healthcare costs?

As long ago as 2004 the FDA backed RFID tagging of prescription medicine to track drug products through the supply chain. Now there has been considerable progress made around drug packaging protection with RFID tags aimed at reducing counterfeiting and wastage. In 2015 The University of Vermont Medical Center in Burlington, Vt., announced that five million medications had been tracked using radio frequency identification technology. This allows a hospital to track reliably from ordering through dispensing through administration at the bedside, and so enhance patient safety.

This has been followed more recently with approval in the UK and US for prescription pills that contain RFID chips – in other words ingestible RFID microchip medicine. This came out of Proteus Digital Health’s Ingestion Event Marker (IEM). This can be embedded in a pill, and ingested to monitor the patient and their bodily health. The device will collect measurements such as heart rate, body position and activity. The IEM sends a signal to your smartphone; which then transmits the data to the doctor.


It is still very early days for this technology, but given the scale of the problems outlined above, we need to adopt this quickly. First and foremost this should be about tracking drug usage. Once this is done then we can begin to explore the sunny uplands of prevention and bodily health checks.

10 principles for a 21st Century UK government

It’s no surprise that the 2017 UK General Election is dominated by Brexit and the associated debate. But the danger is that too much of the rhetoric is based on 20th Century thinking; on a country with an established place in the world and the recent history that defined it. Intolerance in all forms is increasing within society, and this also acts as a catalyst to use existing or outdated modes of thinking. It is exactly at a time like this when political leaders need to consider the future more holistically and cast aside some of their old fashioned assumptions about how the country should be governed. Accordingly now is a good time to lay down some core principles for a new government, for a government that is resetting the agenda for the 21st Century and not living by 20th Century rules.

My top 10 principles for future UK governments are as follows:

  1. Free trade. Now that the UK’s relationship with Europe is changing, it must look to establish comprehensive free trade principles across all parts of the world. The UK cannot afford to be half in and half out of Europe; to be neither fish nor fowl. If it is leaving then it needs to set out a new trade philosophy for the world and stick to it. Whatever the result, the UK should be fighting for minimal trade barriers and pushing to reduce the subsidies that artificially inflate prices for consumers.
  2. Freedom of civil rights. It is easy to forget that over the last few centuries many people gave up their lives to win civil liberties for future generations. This was hard fought. We must remain vigilant at keeping these. Although terrorist threats are real and frightening, we should not sacrifice these freedoms in the face of terrorist threats. After all we have faced worse before, without giving in. This means that we should not give away online civil liberties too easily just because we can.
  3. Technology leadership. Technology is at the heart of every aspect of society. We now need to be the masters of own technology destiny. We need to invest in every aspect of technology across industries and in educating all our citizens. We should aim to be at the forefront of technology innovation and see it as a source of future wealth and prosperity rather than as a threat.
  4. Personal responsibility. There is a growing tension between those people who believe that the state should guarantee ever more benefits to its people, without expecting them to take on more personal responsibility, and those who think that society cannot extend its arms ever further. We need to enable and expect people to take on more individual responsibility and be happy to support the minority that cannot, but that minority cannot become the majority. We need to push personal responsibility onto people, as part of our evolving society.
  5. Reinvention. We should be prepared to challenge existing assumptions around every aspect of government. The pace of change continues to increase and societies cannot survive unless they evolve with that change. We must be prepared to reinvent aspects of society and government more frequently. This includes challenging assumptions around healthcare, education, finance, housing and defence. For example  why should the richest members of society have endless access to free healthcare, when the system is struggling to provide free care for the poorest?
  6. Cradle to grave entrepreneurship. We need to help people at every age to work and be self-employed, and not be dependent on an ever smaller group of large employers and the state. This should not be just focused on teaching the youth to code. It is important to help people create new enterprises though into old age – in other words cradle to grave entrepreneurship.
  7. Lifetime education. The most enlightened and richest employers are encouraging their employees to live in an endless cycle of re-education. Given the pace of change, we need to ensure that all society can live in this way. We need to ensure that there is educational capacity to do this across people’s entire lives.
  8. Financial planning. We need to think much more creatively about how we can afford all the aspects of our society. This includes thinking about how we pay for education for children and care for the elderly. We need to facilitate different ways for people’s work to pay for the choices that they want in their life, whether homes, or pensions or care.
  9. Global integration. Whether everyone likes it or not, our world is getting ever more interconnected. We need to debate and define a system that will work for the next 100 years and not just for today. We need to ensure that we engage with other countries and with the most skilled workers that we need, whilst being able to protect our own citizens. At the moment every government of the last 10 years has failed to debate, define or implement anything sustainable. The people do not believe anything that any government tells them about migration.
  10. Sovereign Fund. We need to build our own sovereign fund to enable the country to take a more long-term strategic view on investments.

These principles need to be woven into any future government’s plans. It is likely that this 2017 Election will be unusually short of policy commitments outside of Brexit, but we cannot allow our governments to just focus on the here and now, and not to take key strategic decisions for our future.

Why entrepreneurs should stop underestimating the importance of “people” in their startup

Most research on why startups fail highlights a variety of reasons other than people ones.

CB insights did some research on start-up post mortems which was summarised in this Fortune article. It suggested that the 2 biggest issues were “insufficient market need” and “cash problems”. The team came 3rd.

A different study by Quartz media found that “people” was only just in the top 10 reasons why startups fail!! Here is their list:

  1. the business model wasn’t viable
  2. ran out of cash
  3. not enough traction
  4. lacked financing
  5. technical / product issues
  6. no market need
  7. outcompeted
  8. customer development issues
  9. lack of focus
  10. disharmony on team / investors

I could share with you numerous other articles where the team / leadership and people issues were consistently not at the top of the list. And yet the No 1 determinant of success in start-ups is people. It’s what VC’s say and experienced entrepreneurs know, but it is consistently underestimated by everyone including VC’s. People and people problems kill more businesses than poor products or business models.

Here are 10 reasons why people matter more than anything else in a startup

  1. If the founding team don’t have a shared vision you won’t end up with a good product. You will have a lack of focus and that will slow down or break your business.
  2. If the founders and employees don’t share values, you won’t be fighting for the same things. If everyone is fighting for different things, you will be going too slowly to survive.
  3. If you don’t agree on who the boss is, then you won’t agree on what to do. Either someone has to leave or someone has to accept that they aren’t the leader.
  4. If you don’t ruthlessly get rid of mediocre people and people who don’t share the vision and values, your team will fall apart and your culture will wither and die.
  5. If you don’t deal with people issues, then they fester and cause conflict and that wastes time.
  6. If you don’t put much time into hiring and nurturing people, then they won’t nurture your company.
  7. If you don’t learn to delegate effectively then you won’t and can’t scale.
  8. If the founding team don’t prepare for conflict between each other, than they will run into a wall later, as it always happens.
  9. If the company doesn’t have clear and open communication channels, then it will struggle to scale.
  10. If the company can’t survive without a founder, then the people issues never got solved!

If you don’t care about the people, your startup won’t last

Why don’t Corporates value entrepreneurs?

Corporates talk about wanting to be innovative, agile and entrepreneurial. They use the latest start-up jargon. They run incubators, accelerators and competitions for entrepreneurs, but in the end they don’t value entrepreneurs. They want their reflected glory. but hate the idea of employing them.

Why is that?

Corporate leaders always claim that entrepreneurs don’t fit in. They don’t want a boss. They don’t want to worth within the constraints of a big company. It all moves too slowly for them. They will get frustrated.

But is their argument based on fact or just their own assumptions?

After all in today’s world, many entrepreneurs are highly flexible and adept at working with different types of people. And entrepreneurs always have a boss. This could be an investor, the bank, the Chairman or even their critical customers.

Earlier in 2016 I was at an London Business School event, where the Chairman of Diageo, Franz Hamer, was being interviewed. He said that Corporates needed to become more entrepreneurial, but when i asked him, why then, Corporates didn’t hire entrepreneurs, he was unable to give a convincing answer. He said that they don’t fit in. They want to be elsewhere. But he also admitted that they didn’t actually hire entrepreneurs, so it was an unsubstantiated assumption.

If Corporates really want to innovate, they need to use the classic innovation technique of breaking assumptions. They need to challenge themselves to think differently about who they hire and how to create an environment where entrepreneurs are welcome.


There are 3 reasons why the Corporate could benefit from a change of heart:

  1. Organic growth is often the best way to drive long-term shareholder value. Corporates know this and run innovation pipelines to deliver these. But they use the same employees to do this. Even the supposed “Intrapreneurs” are generally standard Corporate employees. They often lack the brutal and necessary pragmatism, energy and lateral thinking of the entrepreneur. If Corporates want better percentages for their innovation, they have to change the people they use to drive their growth.
  2. Start-ups within Corporates and small and medium sized acquisitions by Corporates tend not to add the value that they were supposed to or merely allow the value to dissipate externally. Unless Corporates are prepared to parallel track younger businesses with entrepreneurs, over a longer period of time, they will miss out on this classic route to value creation.
  3. Corporates spend a fortune on hiring expensive external consultants to solve problems that entrepreneurs could solve for them at a fraction of the cost.

Corporates need to re-examine their outdated assumptions about entrepreneurs.

Challenger banks – overhyped and under-delivering


Challenger Banks receive a ton of positive publicity. It would appear as if they are re-inventing the banking sector. But is it justified?

The reality seems very different. They offer relatively little that is new and nothing so far that is game changing.

As Tandem founder Ricky Knox said: “A really cool mobile app is great, but it’s not what is going to drive mass customer uptake.” He promises that they are looking for a new business model which brings new economics to the market in a way that the customer can really perceive.

Well if that is true then we haven’t seen it yet from MetroTandem, Monzo, Atom, Starling, Aldemore or B

To be fair to him, Tandem hasn’t launched his products yet, so maybe he will surprise us. And his criticism of the existing retail banking business model is fair – its more punishment and inertia than anything else.

What we have seen from all of the Challengers is slick marketing, crowdfunding and nice clean user interfaces.

But many of the core banks have fairly reasonable banking apps so that’s not enough.

The problem seems to be threefold:

  1. In spite of the apparent customer focus, too many of these challenger banks have got overexcited about their technology and apps. The fact that Atom bank is excited about using the Unity gaming platform as their underlying software is not helping deliver a better product. There is much talk about hyper personalisation and predictive analytics, but it might be better to show it rather than tell it!
  2. Secondly, although Millenials may apparently like it, who cares about receiving your own logo, and being able to name your bank whatever you want to, as Atom bank does. This feels like a different set of personalised gimmicks to entice me in rather than anything fundamental.
  3. Thirdly in many cases they are just fiddling with the current account and how you can spend and record your money on an everyday basis.

We need a more fundamental look at how banking should be delivered and not just like a fitness app

Still there are 2 reasons to like Challengers even now:

  1. They consistently offer better saving rates than the more established banks. In a world of low inflation, this is helpful. How long they can maintain this across a wider set of products is yet to be seen.
  2. They are definitely trying to provide better access to their customers. Metro Bank’s accessibility is way better than the other established banks

So let’s enjoy the benefits but tone down the hype until they can really demonstrate it!

Why are all the innovative “ageing” companies about mitigating pain, rather than delivering pleasure?

Ageing is exciting!

Its just as exciting as adolescence

I know that sounds bloody weird. After all, adolescence sounds like sex, drugs and rock n’roll, whereas for most people, ageing conjures up loneliness, loss of health, loss of friends and often loss of wealth.

Getting old is seen as being a complete turn off.

But actually the business of ageing is very exciting for a number of reasons:

  1. Firstly an older workforce is good for the world.
    1. It boosts national wealth: A UK government study released in 2011 found that increasing time in the workforce by just one year per person would boost the level of real GDP by approximately 1.9%
    2. Productivity rises with age. This has been confirmed by multiple studies from companies including Mercedes Benz, McDonalds and JD Weatherspoon
  2. Secondly older people have more money and spend more and that’s good for everyone – At £320bn a year, the over-50s now account for around 47% of all UK consumer spending, up from 41% in 2003, according to research from Saga and the Centre for Economic and Business Research
  3. Thirdly a huge number of businesses are now investing in making old age more bearable, in areas like in home care, volunteer care, medical devices, healthcare technology platforms, health supplements, DNA sequencing, cloud based medication and behavioural tracking, personalised medicine for chronic conditions and financial services to aid spending controls

I mean look at these amazing companies. What’s not to like? Here’s my list of top 10 innovative healthcare companies who are working to make a difference to people later in life

  1. https://www.counsyl.com DNA screening for the most important moments in your life – helping people understand and navigate their inherited diseases
  2. http://www.babylonhealth.com/ your personal health service
  3. http://www.elysiumhealth.com/ a cellular health support mechanism in the form of a daily pill
  4. https://www.liftware.com/ – Liftware is designed to help people with hand tremor eat more easily
  5. https://www.neurotrack.com/ Developing cognitive health assessment tools to enable early detection of cognitive diseases like Alzheimer’s
  6. http://www.ibm.com/smarterplanet/us/en/ibmwatson/watson-oncology.html IBM Watson uses natural language processing and machine learning to interpete large amounts of data. For example Watson Oncology analyzes a patient’s medical information against a vast array of data and expertise to provide evidence-based treatment options.
  7. http://www.proteus.com/ Proteus Discover helps patients with long-term chronic conditions who are having challenges managing their medications. It enables patients to take their medication with an ingestible sensor which communicates with a patch and so enables physicians to provide data driven advice.
  8. https://www.caresolver.com/ making the world of carers simple and better
  9. http://www.oxfordpm.com/ a manufacturer of medical devices, which is producing 3D printed orthopedic and neurological implants.
  10. http://www.medtronic.com/ which strives to alleviate pain, restore health, and extend life for example with an Insertable Cardiac Monitoring System to detect abnormal heart rhythms.

And this is just scratching the surface! And doesn’t cover the other big guys like Apple, Philips, Samsung, Intel, Microsoft and Google with its new Calico Labs

So why is the ageing industry expanding so rapidly?

Well obviously its because we are all getting so much older. For example in Japan, more than 30 percent of the population is already aged 60 or over. And by 2050 India’s population of 1.6 billion will have superseded China’s, with an associated increase from 100 million aged 60+ to over 323 million

So obviously the costs of keeping us all healthy and alive are increasing exponentially.

But actually its also because the top 5 needs of old people are all about losses, whether of physical agility or mental competence or not having enough money. They are not about having more fun.

The Nielsen Global Survey About Aging conducted in 2013, which polled more than 30,000 consumers in 60 countries found that the top 5 biggest worries for the ageing population were:

  1. not having the self-reliance it takes to care for their basic needs in old age (58%)
  2. losing their physical agility (57%)
  3. losing their mental competence (51%)
  4. being a burden on family member or friends (49%)
  5. having enough money to live comfortably (44%)

In the study the social desires were much less important, for example enjoying active social lives and staying connected with family and friends.

But I am excited as an entepreneur and innovator, because i believe that in future people will take having better health for granted and will expect to continue to have fun, even if in different ways to when they were 20,30 or even 40 years old. I think less imagination has been applied to leisure. Noone is dreaming up Moshi Monsters and Kidzania for people over 60. And of course older people don’t want to be treated like old people, which is why so few brands have successfully targeted them with specific leisure services.

I don’t know what the answer is yet, but i am interested in working one out..

Why are entrepreneurs failing to disrupt the Professional Services industries?

There is continuous disruption in almost every industry today. So it’s amazing that the professions (lawyers, accountants, auditors, architects etc.) have escaped so unscathed.

Ok so every week we hear about attempts to disrupt one or other professional service. And yes the names on the top of the doors have changed around a bit, yes it’s much more competitive, and yes there have been some tweaks to the operating model, but relatively speaking they march on relentlessly, without any worries. Certainly for most customers, whether consumers, small businesses or Corporates, little has improved.

So what has changed?
The legal industry has seen some important changes, even if most of the effects haven’t been felt widely. These include the following:

1.      The legal industry has deregulated. By 2014, 3 years after this event, there were over 300 applications for Alternative Business structures to run legal services, Including Saga, DLG and PWC.

2.      There are new companies trying out different business models like Riverview Law, which offers a fixed-rate contract, rather than billing by the hour. Riverview Law charges clients an annual fee for all their legal needs up to the point of litigation.

3.      Technology is being used to reduce costs whether this be legal templates like Rocket lawyer, Epoq, or simply-docs or paid Q&A like Just Answer or online compliance checking like Cerico set up by Pinsent Masons. But legal comparison services remain in their infancy and the consumer has yet to engage fully

4.      Private equity has moved in to try to aggregate high street firms into consumer brands like Quality Solicitors.

The truth is that in spite of all of this activity, for most individuals or businesses outside of Legal Aid, access to legal services remains remarkably expensive. Even fairly average solicitors demand a minimum day rate of £1600. It is far easier to get a high quality engineer for less money than a relatively junior solicitor. Frankly it’s a scandal that entrepreneurs haven’t had a greater impact on the professional services. And I can say this as an entrepreneur who raised external investment to disrupt the legal industry, but hasn’t cracked it yet.

Why is this?

Well the main topics of discussion in the legal industry are whether the Partnership structure should survive and whether law firm profitability should be calculated before partner costs as they are currently or whether they should be treated as a cost of sales as in a traditional P&L. This was a core part of the discussion at the Business Leadership Summit organised by The Lawyer in London in September 2015. This is as good as it gets!

The conversation isn’t about what the customer wants and why trust in the profession is in rapid decline. The Legal Services Consumer Panel and YouGov found that only 42% of consumers trust lawyers to tell the truth in 2014, down from 47% in 2011. The decline is mirrored in other professions, the research acknowledges. Lawyers remain more trusted than accountants, bankers and estate agents, but less trusted than teachers and doctors. This is an industry unlike many others, that continues to get away with ignoring the voice of the customer.

In Management consulting, some things have changed in a similar way. There is pressure to reduce costs, there is much more competition and some of the names on the doors are different, but the core principles wouldn’t look out of place in 1980.  So what has changed?

1.      The classic strategy consulting giants have all moved downstream into more executional or implementation work. For example in 2007 Mckinsey launched Mckinsey solutions. This was based on software and technology-based analytics and tools rather than the traditional human capital business model.

2.      As Clayton Christiansen stated in Harvard Business Review in 2013; “the share of work that is classic strategy is now about 20%—down from 60% to 70% some 30 years ago.”

3.      There are more agile competitors like Eden McCallum and Business Talent Group

But in some ways there has been more consolidation and less choice amongst the big consulting groups. The old “Big 8” has been reduced to the Big 4 including PWC, Deloitte, EY and KPMG. This means that an increasing number of companies are having to use these giants for services from audit, assurance, tax, consulting, advisory, actuarial, and corporate finance to legal services.

Fundamentally it remains extremely hard to buy any form of consulting that is based on value generated or results achieved. The industry remains stuck on outdated day rates and continuous selling cycles that actually reduce value for clients.


What hasn’t changed?
In spite of all the razzmatazz, the key principles are undisturbed:

  • Most professional services remain as partnerships
  • Most believe that the day rate model should not be changed and have no intention of changing
  • A majority of lawyers and accountants believe that they should charge for every minute from the time they pick up the phone to a customer.
  • There is no sense of customer service.
  • Many of these professional services are so bound up with the establishment that they believe it is their divine right to be paid a high salary. This is particularly true of organisations like the Law Society.


Why hasn’t more changed?
Professional services are critical to the success of the UK economy, representing 15% of UK GDP, 14% of employment and 14% of exports source PWC. So it is no surprise and indeed in many ways a good thing, that it is highly respected and that much effort is expended in defending all aspects of the sector. Since 1979 Nuffield election studies show that no less than one in ten MPs from the three main parties have been barristers or solicitors. So although legal services only account for 1.7% of the UK GDP, it has considerable support at the heart of government. This ensures that the industry is well protected.

In the same way that business people used to say “you don’t get fired for choosing IBM”, you now don’t get criticised for selecting Clifford Chance, PWC, Spencer Stuart or McKinsey. And no Non-Executive Director will argue with you on that. This in turn creates a guaranteed market for the traditional professional service firms and little impetus to innovate more than is required.

The Professional services continue to claim that every argument, every problem, is different and requires an unique answer. The reality is that this is no longer true, if it ever was. Technology, outsourcing and business model change can transform the way that challenges are met and answers are given.


What should change?
As You Gov polled in 2014, “British people want fewer lawyers and more doctors, scientists and factory workers in Parliament. The professional services are over-represented in all aspects of government. And in spite of the well intentioned deregulation in legal services and other area of professional services, the end customer has not reaped any rewards yet, either in better service or lower costs.

The professional services will only change fundamentally when the following principles are ripped apart:

  • A dependence on hourly and daily rates. This should be replaced by value-based pricing
  • A belief that partnership structures benefit the customer. Firms should become proper corporate structures with standard financial accounting.
  • Traditional Corporate dependence on the big audit firms. This should be opened up to the wider market.
  • An unpreparedness to be judged on results.

The artificially high costs of most professional services keep them out of reach for most SME’s and consumers. This remains an incredible business opportunity for an entrepreneur. In addition very few professional services firms understand the power of the brand to engage the customer and disrupt an industry. It’s only a matter of time before someone builds a professional services brand that rapidly gains trust and takes market share, by improving the service it provides and changing the business model that drives it. Let’s hope that more entrepreneurs take up the challenge


The Uber of something…

In the last week, three different people have pitched me the line, “we are going to be the Uber of x,y or z..”

In each case they have waited expectantly for me to respond enthusiastically about their elevator pitch.

I don’t want to be a killjoy, but please spare me this “boil in a bag” entrepreneurship. As someone who has made their fair share of elevator pitches, I do really understand the need for clarity and brevity. I recognise how powerful an analogy from another market sector can be, particularly when it is a multi-billion dollar success story. But if everyone is using the same unicorn references to bolster their own story then it becomes meaningless.

The problem is that the media is feeding everyone the hype that one can become a billionaire overnight by reading the right textbooks and going to the right “tech meet ups” and saying the right things, but the reality is that this happens to a tiny percentage of people. For the rest there is no shortcut. As an entrepreneur or any business person today, you have to work harder than ever to create an individual story for your brand. The story needs to be authentic and passionate, a beacon of light for customers who have the problem or the need that you are solving.

I know personally how difficult it is to find, synthesize and articulate that simple powerful story. I have done it for some businesses but not every time. Equally i know how valuable it is when you get it right. And that is never the result of short-handing or plagiarising other brands’s stories.

So let’s avoid being the “AirBNB of a,b or c”!

flock, crowd

It’s not about the idea, it’s about how you scale.

Everybody’s obsessed with the idea. It’s not just Start-ups, it’s also Corporates. There is just too much noise about how easy it is to launch a new business idea, the whole notion of “lean start-up” and getting to market cheaply. There is far too little focus on whether and how an idea can scale. We live in a world where every idea has 10 competitors, where technology and innovation can come from anywhere. Today it is rarely the idea that is the defining factor in the sustainable growth of a business.

It’s a truism, but no less important for being one, that there has been a fundamental shift in the way business is done, since the turn of the 21st century. The well-established concept of 1st mover advantage may have something to do with this. “1st mover advantage” was initially critiqued in 1981 by Michael Spence and then popularised further by Stanford Business School professor, David Montgomery, and his co-author, Marvin Lieberman. It remains a business school obsession, in spite of various attempts by different people to challenge it, including The Harvard Business Review. Too many people focus on “breakthrough ideas” in the belief that this will guarantee success. The reality is much more nuanced. There are many different examples including Netscape, Overture, My Space where 1st mover advantage did not lead to category leadership. Perhaps more importantly in today’s world, many successful ideas and technologies can be replicated very fast, so the barriers to entry for competitors tend to arrive later, once a company has significant market penetration and not once its idea is in the market. This is all about scale.

In my own experience there is no rhyme or reason for why being the first mover works sometimes and sometimes it doesn’t. For example in the online market research industry, Survey Monkey, was the early player and has established a significant market share on the back of this. Other competitors have followed but none so far have made a dent on its market dominance. Whereas in consumer legal services, a number of early entrants have come into the UK market on the back of the deregulation of the industry, but none of them has established themselves successfully, including Quality Solicitors, which is heavily PE backed. In fact many companies have failed.

The other obsession both in start-ups and in Corporate innovation departments is with finding “a niche”. Obviously having a very clear view of your target market is critical to success, and a scatter gun approach normally fails. However, too often now, business managers are driven to identify micro niches or segments that are “clear market spaces”, but that will never be large enough to establish a scaled business or even get through most corporate innovation pipeline processes. It is critical today to find solutions that work across niches and therefore will scale, because otherwise the business or entrepreneur will flog their guts out and burn resource without sustainable success. After all anywhere between 50% (source RSA 2014) and 90% (CB Insights 2015) of start-ups fail depending on whose research you believe.

So today any ideator or innovator should focus early on about scale. There are 10 questions that you really need to answer convincingly, if you want to scale an idea.

  1. Have you got a product that enough people really want to pay for?

As most business people know, the sooner you put your idea down in front of people the better. Every idea needs a lot of constructive criticism to shape and improve it. But too often this means that the business focuses on the idea or product at the expense of understanding the pricing dynamics. It can be all too easy to create a product that people want to use if it’s free, but don’t want to pay for when you start charging. In other words there appears to be a market for the product but it may not be a sustainable market opportunity. You have to understand why successive customers want to use your product and continue using it, above other competitors. You also have to be sure that there are enough of them, before you can really begin to scale the idea or business. This is a triangulation of product, price and market size that can only be guaranteed once you have been in the real market for long enough.

  1. Have you got a great team that covers all the roles that you need to scale?

New ideas and new businesses rarely can afford many people. So they start with the minimum number of people to launch the minimum viable product. This is sensible and understandable. But as soon as the company starts to taste success and growth, it needs to change. This change needs to happen not just once but many times, as the idea gets used and bought by its first and subsequent customers. When we started eSubstance (later Ink Publishing) in 2000, unusually we had too many of the wrong people on the back of £10m of 3i funding (and others). After a shakeout and 3 years of losing money, we acquired Ink and got the right team and established the right product. We then began to grow at pace and scale the business, but it wasn’t for another 3 or 4 years after that, that we successfully identified the other roles that would allow us to scale properly internationally. The challenge of many young businesses is to find the key people who will really scale the business, as this may or may not be the Founders.

  1. Have you started generating long-term interest in your idea and not just immediate sales?

It’s never easy to generate demand for any new idea, product or business. Often this is because the idea or product isn’t quite right. This puts enormous pressure on the business to make one or two early sales. It’s only once the business has sales that they can start to see which elements of their product are more or less interesting to customers. The problem is that it’s all too easy for a business to get into a routine where it needs more sales to keep going and the only way it can do that, is to sell more of what it has sold already. This hamster wheel can prevent a company from being able to explore where the opportunities really lie and have the time to change the product mix to meet these.

When I took over as CEO of the well-known innovation consultancy, Edengene, which was losing money, the existing management couldn’t see that the corporate venturing market was disappearing. Instead corporates now wanted internal innovation. Just looking for sales opportunities in venturing was not the answer, the business had to reposition and create new demand in a different aspect of innovation.

If a business wants to grow, then it has to find the wider market opportunity and the resources to invest in generating long term customer demand, and not just focus on immediate sales. This is a subtle but critical difference. Every business needs to tease this demand out, but if you invest too early in demand creation then you may not have the product that the market wants and if you invest too late then you may not have the cash and energy to do it

  1. Have you identified and set up the systems and processes that you need to scale?

It’s often difficult to identify the problems that are going to come your way in advance of them happening, but this is what the best entrepreneurs and innovators do. You need not only to identify them but to define and establish the processes and systems that can overcome them so that you are not dependent on manual resolution.

Key issues that require scalable processes include customer service, quality control and financial reporting systems. When you have one or two customers, then customer service is easy to do as you are falling over yourselves to keep them happy, but as soon as you have a sizeable number to deal with, then the systems need to be scalable and automated. Manual won’t cut it any longer. The same is true of quality control. It’s not a problem when you have a handful of customers to manage, but it rapidly becomes a problem, as you seek to scale. Without a clear process to deal with the issues, the business simply cannot scale.

The same issue is true of financial systems. They always start simple, but rarely can accommodate great change in the business model. With the international expansion of Ink, the business became incredibly complicated with 1000’s of small advertisers paying money in different currencies and several different P&L’s. This meant that our financial systems which were fine with a turnover of £10m just couldn’t cope well enough or quickly enough once it was £30m. Soon it could take 6 weeks to get a decent set of management accounts together. This was just too slow and became a massive hindrance to decision making. Then we had to make a huge systemic change which took time and money. We would have done better to have recognised the issues earlier and taken smaller hits along the way to upgrade and scale the systems in line with our rapid growth.

  1. Have you got the finance ready for when you need it but not when you don’t?

Most early stage businesses lack sufficient finance to do everything they want. Hence the ever increasing pressure or encouragement from the business press to go and raise funding of some sort. Often this peer pressure is unhelpful. Raising external finance of any sort is a hugely distracting task and starting too early is generally a mistake. The critical issue is to understand the market and your business well enough to anticipate when you will need funding and focus accordingly. If you don’t have the proof that you have a scalable idea and opportunity, then getting finance will be hard. You are better to keep working at understanding where the real opportunity lies and where you can have a competitive point of difference. Once that becomes clear then raising finance can be a good idea.

I raised £750k for a business, Law in Order, as a joint venture with Kennedy Cater. Our proposition was a white label one stop shop for legal services for large organisations to sell to their customers. It was and is a good idea, but we were too early into the market and couldn’t secure a deal, so we sat on the money. Ironically having the money early, didn’t guarantee success.

Conversely as a larger growing business, you can find that the banks and many other types of investor are crying out to lend you money. Again this can be unhelpful. The question then becomes why do you need the additional investment and / or when might you need it. It is entirely possible that having some funding is a good idea, for example to allow you to acquire a complementary company, but when you have less money to play with, you think more laterally about how to overcome a problem or seize an opportunity.

The answer is to think through how you see the business scaling and when finance will become critical. When you need the finance, then you must be pre-prepared and you must dedicate resource to make it happen.

  1. Have you got a plan for how to scale geographically?

Most ambitious business owners want to grow internationally but if they haven’t done it before they often don’t recognise the difficulties involved. The obvious suggestion is get someone on board who has, but that is not enough. The clue to international scale is how easily your business model can be packaged up and replicated in another country. If the product you sell, the price you charge and the way you sell it, all needs to be very different, then expect it to fail. You have to be able to roll out a similar model to make it work

When we expanded our digital agency syzygy into Germany with limited resources, we had German revenues and customers, but we hadn’t worked out how to get a stable business unit in place. It took a lot of effort and a merger with a German agency before we were able to embed the solution properly.

With Ink, we tried twice to penetrate the Chinese market profitably, the first time without a Chinese partner and the second time with one, but in both cases, we struggled to establish the business, because the model wasn’t close enough to what we did in other parts of the world.

Expanding to your second market requires the diligence of a start-up. You need to know how and where the second market differs from what has worked in the home market and pinpoint every aspect of your model that is different. Only then can you be sure you have a decent chance of addressing the differences and making it work

  1. Are you clear on what your next revenue stream will be?

Some businesses are lucky and can scale past £100m in revenue without having to consider more than one revenue stream, but they are still fairly rare. For the majority, scaling the company will require more than one revenue stream or certainly significant adaptations to the original one.

At Ink, once we had worked out the scalable proposition and business model, namely that we would produce the customer’s inflight magazine for free in return for taking the advertising revenues, we went a long way without needing another revenue stream. It was only when revenues got to £30m and the market got tougher with reducing margins that we really saw the need to focus on alternative revenue streams. This was very lucky because it meant that we were able to scale internationally off one core business model. It also meant that we were able to take time to explore the second revenue stream which became advertising on boarding passes and e-tickets.

Too often businesses that need more sales start looking for alternative products to generate additional revenues, when they should just be focusing on getting the core product positioned correctly for a scalable market. Whatever the business situation is there is a fine line between investing too early in the “new shiny idea” and being over dependent on the established revenue stream. The management need to find a mechanism for continually evaluating this question without destabilising the day to day business.

  1. Are you aware that you will need to review all aspects of your operational model once you start scaling?

It’s all too easy when you start growing at pace to just keep doing more of the same thing based on more revenues and more people. That can work for a while but will come under pressure sooner than you think. It’s easy to believe that if you have achieved good margins in the past, and they weaken, that you can pump them up again, as opposed to recognising that the market may have changed. Self-confidence can be a great thing, but it can also lead to complacency when it comes to changing the operating model.

Those businesses that have made a virtue out of getting rid of the bottom 10% of performers each year do not suit everyone. However, they do ensure that the lifeblood of a successful business keeps looking to outperform others. So it is with the operating model. You have to keep brutally challenging assumptions and looking to replace them with better alternatives.

You also need to cut costs on a regular basis. Every business takes on too much cost in different areas as they grow. Some of this resource becomes ineffective or inefficient. It needs to be cut back. You have to put pressure on people to rethink how tasks are executed and to instil the importance of creating repeatable processes as opposed to slow manual interventions. Once you have a business that is generating £millions of revenues, then you need to recognise that if you haven’t cut some costs in the last 12 months then you need to. You need to be in a perpetual cycle of improving how you spend your money as you grow revenues and costs.

  1. Have you thought of what areas you will need middle management in and how to keep your people productive?

The lack of middle management is a perennial scaling challenge for successful businesses. Too often senior management do not see the need to bring in people who are at least as good as them and ideally better than them, to drive the business forward. It is far too easy to nickel and dime on key staff, but if you hire the wrong people it takes twice as long to resolve the mess you create. It’s a well-known fact that successful start-ups hire great people. What is less well known is that medium sized companies often start to make hiring mistakes and bring on less and less superstars. This is often the result of letting a lack of time dictate how recruitment is done. But successful large companies still maintain rigorous and comprehensive hiring processes. These mitigate against the hiring of weaker people. This is a lesson that every scaling business should remember.

Similarly it’s easy as you grow staff numbers in the 100’s to forget that people perform best in smaller teams. So if you want to continue to have depth in great people, then make sure you rethink how they work with each other. Look to break groups of people into smaller teams. Look to simplify decision making processes that may have become extended and inefficient. Keep the small team ethos alive and make sure that individuals can see how they contribute to the growth of the whole enterprise.

  1. Have you identified and found your partners?

Last but by no means least, successful companies scale by engaging with the wider ecosystem around them. They look to partner with complementary companies and people who can add value to their business. Frequently the real benefit from this approach is that you attract new opinions and thinking into the business. You find new ways to operate and achieve things by learning from other industries and companies.

Partners can and should mean everything from an Advisory Board to a partner network to joint ventures to virtual staff. You may not always see who these partners should or could be, but others often will, so make it easy to collect and listen to external inputs and act on them.


Every successful business must be based on a solid idea, born out of unsatisfied customer needs and a competitive opportunity, but you don’t need to be original or a first mover to do this. You certainly don’t need a different idea to build a big business, although it can be. It’s more critical that you understand how to be better on key dimensions and then surround yourself with a great team and a well thought through plan. It sounds so obvious but often it’s very easy to forget these truisms in the white heat of innovation and entrepreneurialism!