Francis Hemingway on Business Innovation

Measurement Camp

Thu, 22 Jul 2010 16:40:57 +0100

There were some really interesting insights to be found at Measurement Camp yesterday: I would recommend keeping an eye on the events for the the next one.

Capturing Business Processes

Fri, 12 Feb 2010 00:00:00 +0000

A few weeks ago, I was lucky enough to attend an excellent lecture by Sir Terry Leahy, the CEO of Tesco, at the Saïd Business School. Amoung his many observations, the one that particularly struck me is the assertion that there are two reasons that Tesco have been able to maintain high profit margins compared to its competitors. These are Moore’s law and though a drive to increase productivity by simpliflying business processes because, he proposed, companies can only make their services better and cheaper by making them simpler.

Inspired by this, I’ve been thinking about how I can take this lesson and apply it to my own work. One things I’ve tried is sketching flow diagrams to capture different aspects of my job, which has been a real revelation. I found that even tasks which should be simple had many steps associated with them and so as I’ve recorded what I’ve done in the past, I’ve immediately been able to spot potential productivity improvements and shortcuts.

There are a few obvious ways forward from my current position, all of which I intend to follow through with: I can share the processes that I have captured with colleagues to turn my experience from being individual to institutional knowledge. Secondly, I can start to automate some of the tasks, either by producing standard forms and templates which I can handle more easily or by writing little programmes to do some of the more tedious actions automatically. However, before I make this investment in time in writing these programmes, seeing the whole process in front of me will allow me to pick off low hanging fruit before deciding whether to tackle the harder parts. In the past, I’ve often found that it’s easy to add some automation but very difficult to make something completely automatic.

On a final note, Sir Terry said that it was a failure to capture processes in this matter that was a major cause of the NHS’s problems with IT. As someone who likes to dive into the technology, the reminder to think strategically was a timely one.

Video

Sun, 11 Oct 2009 17:49:44 +0100

What Richard Arkwright can teach us about Business Today

Sat, 29 Aug 2009 15:01:55 +0100

Last week, I was lucky enough to visit Cromford Mill, which is the site of a cotton mill that is considered by many to be the first example of a factory. The site, which unfortunately doesn’t contain any of the original machinery and only half of the original buildings, was brought alive by an excellent guided tour which included a very interesting (and detailed) description of the technological breakthroughs that Richard Arkwright made (and his legal battles to protect and extend his patents), his early life and his career as a businessman. We then went outside to see the buildings: I was very pleased to hear that some of the money for the ongoing restoration of the mill is coming from renting some of the buildings, which were originally designed with lots of windows in order to control the temperature, to local small businesses.
What struck me most about the talk was the fact that, while clearly possessing business acumen by the boat-load (or should that be barge-load as canals were the main way of transporting goods in the 1770’s), Arkwright’s honesty, integrity and concern for the welfare of his workers. Few specific examples of first two were given, but that’s not that surprising given that these two traits are ones that need to be present all the time. More details were given to Arkwright’s kindness to his workers, although very few of the measures he put in place were completely altruistic. For example, if a worker sent word that he or she was ill, then a doctor would be sent, not only to prescribe a cure but also to ensure that the illness was genuine: workers were given half pay when they were sick, not only because that’s “the right thing to do” but also that many of Arkwrights staff were trained in the use of the machinery and it cost money and time to find replacement workers if the ill didn’t return to work. Apart from providing jobs for the local population in the mill at higher rates-of-pay than a typical labourer would get, he also planted many tree and embarked on building programs (many for his own workers) to further create jobs locally. These measures, along with many other such as savings accounts which were introduced by his son, helped to ensure loyalty in an industry in which industrial sabotage was a huge problem, a commodity that still holds it’s value today.

"Many managers have leading roles both in a function and on a council or board [internal committees],..."

Fri, 28 Aug 2009 11:35:00 +0100

“Many managers have leading roles both in a function and on a council or board [internal committees], which fosters co-operation. How well managers do in teams determines 30% of their bonuses. There have been casualties: whereas those who work well with others have been promoted, lone fighters have been pushed out. As a result, a fifth of Cisco’s leadership has left the company.”

- The Economist’s briefing “Reshaping Cisco”.

I haven’t done any web analytics for a little while, so I...

Thu, 16 Jul 2009 16:11:05 +0100

I haven’t done any web analytics for a little while, so I thought I’d ease myself into my research by watching Avinash Kaushik’s video. The author of “Web Analytics: An hour a day” gives a really nice general introduction to web analytics here (see my identi.ca stream for my notes as I went along). I’m not going to do an introductory post on web analytics here: for that the best place seems to be Avinash’s blog. Often when I go to talks and lectures, the most interesting part is the questions, and this again proved to be the case here. The four questions I noted down were (see the video for the answers):

Can you use internal site search to find out what people want?

What tools can you use to analyse open ended responses?

How do you segment customers in demographics groups?

Do you have any advice for doing web analytics on customer support websites?

Creating great-looking musical scores

Sun, 28 Dec 2008 18:35:00 +0000

In my spare time, I enjoying singing in my two choirs Schola Cantorum of Oxford and Wadham College Chapel Choir. Because buying music for a whole choir is very expensive as even if each score is one or two pounds the cost gets multiplied by twenty or thirty, I often find myself singing free scores of out-of-copyright works, mainly from the Choral Public Domain Library. Although better than nothing, the quality is variable, in terms of the accuracy and typography. I have been aware of a program called Lilypond for a while, which outputs, typographically, very good scores so I thought I’d give it a go. Although a little difficult at first, I think the final result was pretty good. What do you think?

"Any company can generate simple descriptive statistics about aspects of its business–average revenue..."

Mon, 08 Dec 2008 14:56:56 +0000

“Any company can generate simple descriptive statistics about aspects of its business–average revenue per employee, for example, or average order size. But analytics competitors look well beyond basic statistics. These companies use predictive modeling to identify the most profitable customers – plus those with the greatest profit potential and the ones most likely to cancel their accounts. They pool data generated in-house and data acquired from outside sources (which they analyze more deeply than do their less statistically savvy competitors) for a comprehensive understanding of their customers. They optimize their supply chains and can thus determine the impact of an unexpected constraint, simulate alternatives, and route shipments around problems. They establish prices in real time to get the highest yield possible from each of their customer transactions. They create complex models of how their operational costs relate to their financial performance.”

- Competing on Analytics by Thomas H. Davenport, January 2006 edition of the Harvard Business Review.

Raising Capital, Doing Deals: Building a Business Lecture 4

Tue, 25 Nov 2008 20:30:00 +0000

Today, I attended a Building a Business lecture by Paul Fisher of Advent Ventures (who blogs at www.thecoffeeshopsofmayfair.com) on raising capital, which was the last Building a Business lecture before the Christmas break. As always, here are the lecturer’s slides:

VC is good for some firms and bad for others
- success e.g. Skype
  - highly disruptive business.
  - binary proposition
  - rising market
- not a success if
  - not the right type of business
  - not the correct risk appetite
  - you don’t want dilution
- the cost of raising money for business are, in order of cost,
  - cash flow
  - debt
  - equity
    - and the most expensive type of equity is VC
- by accepting VC, you are committing yourself to the VC’s risk profile – i.e. high risk.
- more and more VC are seeing the attractions of “growth capital” - principally being driven by the recession.
- VC’s look for
  - 10x return
  - scalable business model
  - an exit within 5 years
  - a great team
  - a potential market which is large and high growth
  - an unfair advantage
    - a commercial lead
    - a cracking product
    - a robust IPR
  - confidence – in what you want, knowledge of the business.
- Business plans aren’t important – back of the envelope will do.
- NEVER cold call or cold mail!
- Run investor conversations in parallel not in series

Negotiating Skills: Building a Business Lecture 3

Tue, 18 Nov 2008 20:30:00 +0000

Tonight I attended the third lecture of the Building a Business Series, this time on negotiating skills given by Owen Darbishire, the Rhodes Trust University Lecturer in Management Studies at the Saïd Business School, University of Oxford. I’ve typed up my notes and posted them here, which you can use in addition to the lecturer’s slides:

Bidding

Escalation of commitment: people are committed to decision in the past, even if objectively it was a bad one
Auctions: winner’s curse
- e.g. 3G auctions.
- 70-75% of acquiring companies loose money in M & A activity.

Definition of Negotiation

“Process of potentially opportunistic interaction by which two or more parties, with some apparent conflict, seek to do better through jointly decided action than they could otherwise.”

Negotiating Well

first think about the “best alternative to negotiated agreement”.
recognise that sometimes an agreement is not possible.
the more information you acquire, the more options you will have and so you will get better results.
think about what your interests are versus a particular position.
use creative solutions: contingent contracts can increase expected value for both parties.
a mythical fixed pie often exists where it need not.

Anchoring

People negotiate around a number – set it to your advantage.

Framing

presentation of situation (price labels in used car salesrooms)
Neuro-linguistic programming?

Taking the First Steps, Company Basics: Building a Business Lecture 1

Tue, 04 Nov 2008 20:30:00 +0000

Today, I attended the first of the “Building a Business” lecture course at the Said Business School, which was given by Tom Hockaday, the managing director of Isis Innovation Ltd. His talk was titled “Taking the First Steps, Company Basic”. These are my notes (the lecturer’s slides are here):

A Company

Legal Entity
- Defines things like liability,
- Has a set of documents called the Memorandum and Articles: these define the purpose and rules concerning the running of the company.
- A Company Secretary handles bureaucratic aspects of the companies legal status.
Minimum Requirements for a Company
- A name
- A share
- A director
- An address
- Insurance
the Companies Act 2006 covers company law at the moment. It covers, among a lot of other things, directors’ duties: there are good resources online for this. Companies must keep accounts and not trade insolvently. Directors are personally liable for what a company does if it gets into trouble.
Tax
- boring but important. There are corporation and personal tax issues to address: the Enterprise Investment Scheme and the Enterprise Management Scheme help investors and managers small companies save money.
- There are lots of grants and free advice and expertise available.

People

If relationships get strained, it’s important to stop trading and fix the problems.
Deal honestly and decently with people in your company and the relationships will be more effective.
The MD plays a crucial roles
- Supports everyone else
- Ideally should be someone who has done it before
  - if you can’t afford one, seek advice from friends.
- Being an MD of a startup is harder than doing the same role in an established company because there is no momentum.
Advisors: it’s important to work out who’s paying – take free advice, and get it early.
- Lawyers
- Accountants
- Bankers
- Human Resources
- Public Relations
- Business support networks

The Idea

Not a business plan but a value proposition – “the elevator pitch”.
(1) Do something – product/service
(2) Sell it to someone – customer
- FOR MORE MONEY THAN IT COSTS YOU
A lot of startup companies will have predominantly intellectual property – make sure you protect your rights.

The Money

Companies need to make money. Most companies need some initial investment.
“Money changes people and never for the better. [Founders] usually start out as mates, but if one of them is getting much more money than the rest can lead to jealousy and resentment”.
“Cash is King”

Today I went for a walk along the Oxford canal neer Thrupp, and...

Fri, 24 Oct 2008 11:43:00 +0100

Today I went for a walk along the Oxford canal neer Thrupp, and chanced upon this boat: a great combination of old and new technologies!

Internet Shopping and the Environment

Thu, 09 Oct 2008 21:52:00 +0100

There are many reasons why you should shop for your groceries online. It is true that it is convenient, and that you save time by not having to traipse around the store collecting items, and that there’s a certain thrill to be gained from shopping at Tesco at 4am for the first time in the comfort of your pyjamas, but all of these reasons have been covered many time before. Having glided through the virtual aisles for the first time this month, it struck me that there was a strong environmental case for forgoing a trip to your local supermarket. For most people, the weekly shop involves getting in their car and driving, which seems to me the lowest hanging piece of fruit on this particular tree. Obviously, the delivery vehicle is probably burning fossil fuels too, but a sensibly planned “milk-round” delivery service covers less miles than a “hub-and-spoke” model for the same number of houses, and will reduce congestion at the store itself.

There are several other ways that this type of shopping can benefit the environment too: in my experience, less packaging is used, as either the food is put in boxes which are carried into your kitchen and then taken away, or the food is brought in strong plastic bags that can be reused again and again. Those that have researched Internet shopping will know that there are broadly two ways for the food to come to your door: the first is direct from the warehouse and the second is when someone walks around the shop for you collecting your goods as a regular shopper would. The former is by far the more environmentally friendly: the warehouses can be more tightly packed, so less heating is needed, you save the added trip of taking the food from the warehouse to the store and lastly there’s no need to have open refrigerators, which seem to me the most wasteful piece of equipment in modern retailing as you’re simultaneously heating and cooling the same air.

Stephen Fry on the need for the BBC to stay in its current form....

Sat, 20 Sep 2008 20:57:00 +0100

Stephen Fry on the need for the BBC to stay in its current form. As eloquent a proponent for the need for a public service broadcaster to provide content that is not strictly public service as I’ve heard.

James Rubin on China and Russia

Thu, 11 Sep 2008 12:19:00 +0100

Tonight I was lucky enough to go to a question and answer session with James Rubin, Democrat and foreign policy expert, ably hosted by the chief economist of HSBC Stephen King. The questions were very diverse, and of a high quality as one would expect from an audience of fund managers; they compared well with those at the Oxford Union, which tend to show the audience’s comparative (and understandable) unfamiliarity with the topics, and with those at the Reform Club, which tend to lack focus on the questioning aspect and sometimes sound awfully like statements.

One subject of discussion that I found particularly fascinating was Russia. Rubin compared Russia with China, styling the former as a country with a need to be a global power, in contrast to the latter which he described as a regional political power, with geopolitical concern only for Taiwan and recognition in Asia, which restricted it’s global policy decision making solely to economic concerns. He cited the Russians renewed muscle flexing around the former Soviet Union, for example in Eastern Europe and most recently Georgia. Continuing this theme of a global outlook, Rubin predicted that the Kremlin would use Russia’s vast quantities of oil and gas for political purposes.

Of course, in the context of the wider debate, we heard his thoughts on the difference in approach that the two presidential candidates would take: McCain, he said, would be more willing to use force, presumably not directly against Russia, and not worry about bringing the United States’ allies in Europe and elsewhere along with him. Obama, on the other hand, was predicted to be more focused on dialogue, considering force as a last resort. It was also interesting to hear that he thought Joe Biden, who he used to work for would be well suited to a role drumming up support for US actions among its allies.

I don’t want to add too many of my own thought: I broadly agree with Rubin and I would say that it is a brave man who bets against Putin, who has sucessfully held onto power even after his move from being President to Prime Minister. Russia never really went away and they are certainly here now with memories of the humiliation they suffered in the 1990’s on their minds.

Video

Sat, 06 Sep 2008 22:28:53 +0100

Has it ever struck you the similarities between playing Championship Manager (circa late...

Thu, 04 Sep 2008 19:41:00 +0100

Has it ever struck you the similarities between playing Championship Manager (circa late 1990’s) and asset management? Today, I noticed how alike the two activities are: first of all in the modus operandi: essentially, you take large amounts of data, both in the form of written news reports and analysts’ reports (or advice from coaches and scouts) as well as large arrays of numbers, which include the basics of the income statement and the balance sheet (in addition to the almost infinite number of ratios and metrics that people have devised) on the financial side and the players’ attributes (both shown and hidden), form and average rating on the football side.

And what about the purpose of the exercise: in asset management you pick a portfolio of stocks and then you adjust that portfolio over a given investment horizon: in Championship Manager, you assemble a squad of player, and then change your starting lineup as the season progresses. The two fields even share some terminology: rotation, for example, can be applied to football (as in squad rotation: changing your team to ensure that the players don’t get overly tired) and sector rotation (where some sectors increase in value relative to others).

So, are there any lessons to be learnt by one side from the other. Well, I would certainly not be surprised to find out that many of today’s fund managers first learnt the numerical skills that they use in their job embarking on a cup run or wining the league and I certainly think the makers of the Bloomberg terminal could learn a thing or two from the game designers. And what about the other direction? Well, maybe you might say that the gamers should take on some of the fund managers’ seriousness, but rest assured, if you’ve ever played one of these games, you’ll know that after a few virtual weeks you’ll be taking it quite seriously enough!

One of my favourite programs to watch on the television is Dragons’ Den, in which...

Wed, 03 Sep 2008 19:40:00 +0100

One of my favourite programs to watch on the television is Dragons’ Den, in which entrepreneurs pitch their companies to a panel of five “dragons” for investment. Although primarily a form of entertainment, I think there are some important lessons to be learnt about business from the show.

The first is the art of pitching, whether you are pitching your company, your product or yourself. The television show is a rather unusual pitch to make: although you’re pitching to the dragons for investment, most companies are also pitching their product to the TV cameras: even if they don’t any funding, I’m sure that an appearance on the show is massively beneficial to all but the most crazy products, given you are getting national exposure to a large audience, a large proportion of which fall into demographic categories that advertisers swoon over.

If you watch the show regularly, as I have over the last month, you will quickly see a pattern in the questions that are asked by the dragons. They are

What is your product: This can either be implicit, or if the pitch went badly or the product is complicated, explicitly,
What are your projected earnings: this usually involves some combination of market size, ASP (average selling price) and projected market share.
What is the margin on the product: there is no point in selling a product if you’re not going to make any money out of?
Are there any significant competitors in the market place, or are the barriers to entry to the marketplace so low as to mean that there?

Finally, there are usually some questions about the valuation of the business, usually involving the assets and liabilities of the company: I’m sure a lot more of this is done in the due diligence stage once the television cameras are turned off and the real work is done (the dragons are allowed to back out of any deal that make).

So, the key take away from this is that if you are planning on investing in a company, or starting one for yourself (which clearly involves an investment of time and money), then you should ask these questions about your company, and you don’t get the right answers, then have another think as to how you can make it a more attractive business proposition.

Notes from a Small Cubicle

Mon, 01 Sep 2008 18:44:00 +0100

Last week I started to do an internship at a city investment management firm, in the US equities team: now I’ve been doing it for a week, now seems like a good idea to jot down some thoughts. I don’t really want to get into investment philosophy – the team I work with seems to spend most of its time looking at charts and then trying to find a catalyst for change in the company, which causes its share price to go up. It seems to work reasonably well, although I’d be interested to find out the rate of return (after tax and fees) of this fund compared to, say, a bank account or gilts.

What I do want to talk about is how I’ve worked, and what I’ve picked up from others. One things I’ve noticed is that everyone – even me – has two or more 15” monitors, which are suspended so that when sat at the desks you don’t need to bend your neck at all. This must ergonomically be the best way to work at a computer – there’s also an exercise ball which people sit on, which I’m yet to try but I imagine this too is very good for your posture. Most senior people have four (not, I imagine because of their seniority, but simply they’ve been around long enough to acquire more. The sales people have eight, as is normal in that job. I read somewhere that more screen real estate increases your productivity, and given my experience this week I would say that is true, but clearly there is a diminishing rate of return. I would definitely consider such a setup were I to have a home office, I expect you can buy this size screen very cheaply on Ebay. While I’m on this subject, I would definitely consider getting a good keyboard – I’ve been using a Bloomberg keyboard and it’s rubbish!

The chosen ones

Sun, 31 Aug 2008 18:42:28 +0100

The chosen ones:

Benjamin Markovits meets the GB handball team being trained from scratch.

Francis Hemingway on Business Innovation

Measurement Camp

Capturing Business Processes

Video

What Richard Arkwright can teach us about Business Today

"Many managers have leading roles both in a function and on a council or board [internal committees],..."

I haven’t done any web analytics for a little while, so I...

Creating great-looking musical scores

"Any company can generate simple descriptive statistics about aspects of its business–average revenue..."

Raising Capital, Doing Deals: Building a Business Lecture 4

Negotiating Skills: Building a Business Lecture 3

Bidding

Definition of Negotiation

Negotiating Well

Anchoring

Framing

Further Reading

Taking the First Steps, Company Basics: Building a Business Lecture 1

A Company

People

The Idea

The Money

Today I went for a walk along the Oxford canal neer Thrupp, and...

Internet Shopping and the Environment

Stephen Fry on the need for the BBC to stay in its current form....

James Rubin on China and Russia

Video

Has it ever struck you the similarities between playing Championship Manager (circa late...

One of my favourite programs to watch on the television is Dragons’ Den, in which...

Notes from a Small Cubicle

The chosen ones