Confessions of a healthtech entrepreneur 2020

Patient

Thank god we have left 2020. I thought it was never going end. On and bloody on.

So what was it like as a healthtech entrepreneur?

Having written a book 10 years ago called “Confessions of an entrepreneur”, I thought that I would now start confessing what it’s like to be a healthtech entrepreneur today. I am the founder of digital health company, Living With, and we are right in the think of this Covid pandemic

I am going keep it short and sweet. So to kick us off, here’s my top 3 loves and 3 hates of digital health in 2020.

2020 Top 3 loves

  1. Finally remote monitoring became an everyday occurrence not an aspiration. Patients get treated when they need to be. Clinicians save time and cost on how they manage their patients. 2020 has kicked the healthtech industry into the future. It’s like the dotcom boom of the late 90’s. Anything is possible.
  2. Everyone can see that rapid innovation is critical. Yes everything still needs to be evidence based for widespread adoption. But we’re all working together to implement solutions that will make a difference. Patients and clinicians have reframed their view of healthcare. This has enabled us at LivingWith to get new digital health products to market faster. And we can see the immediate positive impact that they can have on patients’s lives. My 2020 highlight is our Living With Covid Recovery product which is helping patients treat and improve their Long Covid symptoms. #livingwithcovidrecovery
  3. The healthcare system has some truly amazing human beings working in it. The difference that they are making to the world and to patients through their clinical magic is awe inspiring. It makes most industries and most people in those industries look parochial and money grabbing.

2020 Top 3 hates

  1. The deep bureaucracy that exists within the healthcare system. It makes it so damn hard for companies like ours to get digital products into use. We see this most frequently through Information Governance. We spend days every month trying to navigate the same Information Governance (IG) questions at every NHS Trust and private company we talk to. However hard we try, it doesn’t seem to get any easier.
  2. Corporate decision making remains slow and tortured. Covid has made it much worse, even in areas where they want to implement something
  3. Everyone expects a free trial for everything in healthtech. It doesn’t matter how much or how little the investment required. It has to start free until each new prospect feels the evidence works for them.

It’s going to be another rollercoaster of a year but it will be an exciting one for healthtech. Bring it on.

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.

helius-300x136

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.

Why?

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

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