BlackRock – industry Goliath facing a Blockchain David?

BlackRock may be the industry ‘Goliath’ about to be hit by a stone from a ‘David’ competitor.

The advent of a combination of Blockchain (click here for brief explanation of Blockchain), ‘Smart Contracts’ and IBORs (Investment Book of Record) enable Asset Management firms to eliminate up to 50-95% of their operating costs across people, process, IT and infrastructure.

This facilitates a potential and immediate 50-60% cut in pricing for Asset Management-related services and product fees.

There is an assumption among many industry experts that new operating models for the Asset Management industry are perhaps five-10 years away.

They are wrong.

Major technology businesses, such as Microsoft and IBM, are funding major Blockchain initiatives.

Combine these with existing Workflow technologies and new operating models in the Asset Management industry may be only six-12 months away from market deployment.

Surely not Blackrock?

One reason to be sceptical about the Blockchain threat to asset management Goliaths is that naturally conservative institutional customers are unlikely to flock to a challenger startup. They are more comfortable in doing business with a $60bn market cap business in Blackrock and its peers.

The scepticism is misplaced.

At Close Quarter, we have good reasons to think that an existing player in the industry may launch a service at a much lower price of, say, 50% below existing charges, and with superior service.

The more aggressive pricing could be in place as early as the first quarter of 2017 whilst they transition fully to a new operating model facilitated by Blockchain technologies over the following 12 months.

History shows disruption kills faster

Goliath was not complacent but he was too large to move at speed.

History shows that disruptive innovation kills incumbents faster than ever.

It took 38 years from the invention of Kodak’s Digital camera before Kodak filed for Chapter 11 bankruptcy in 2013.

Newspaper and magazine businesses that thought they were at the bleeding edge of connecting with audiences proved to be grossly ill-equipped to deliver scale and technology.

Those who owned easy-to-use hardware and software – Nokia, Blackberry – were brought low within a decade of the launch of the iPhone.

There is no reason to think that in a low- or zero-interest world facing weak growth that the complex, multi-layered fee and commission structures enriching fund managers at the expense of their clients is immune to disruption.

At Close Quarter we speak with innovators, developers, CEOs and technologists and our view is clear – disruption in the Asset Management industry is coming fast. And we love it.

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John Corr – Managing Director (Close Quarter)
@johnpcorr 

Leave the entrails in the kitchen: 6 steps to plan for future success


“The future belongs to those who prepare for it” 
– Malcolm X.

How unexpected is the unexpected?

In the last week, one of the UK’s leading fashion retailers Republic went unexpectedly into administration putting 2,500 jobs at risk. It was only in 2010 that the business was bought for £300 million by private equity firm TPG and appeared to have a bright future at the time. The immediate issue appeared to be poor trading over the key Christmas/ January trading period, the unusual poor weather and snowfalls hit store sales badly across many market sectors. Whilst it’s always difficult to predict the future, this blog covers a useful technique to help you manage the worst the unexpected can throw at you.

How can you better manage unpredictable events?

In ancient Rome, an augur interpreted the will of the gods by examining animal behaviour and their entrails. Today, few of us would base our predictions for the future on the pecking behaviour of sacred chickens, or the liver of a sacrified sheep.

In fact, many of us would say you cannot predict future events. We may be able to envisage likely outcomes, or have a global notion of what is to come, but improbable events occur without warning, and catch many of us off guard.

But whilst we cannot know for certain what will happen in the future, we can plan for it. And what’s more, we can plan for future success.

To do this, we must shift our focus from the general to the local, because it is in the detail that we sink or swim. Have you thought about specific situations that might arise in the future with regard to your business? Have you planned a strategy to react to them?

In order to avoid being paralysed by indecision when faced with the unexpected, and take measures to ensure future success, we need to home in on the specifics of a situation. When we break this situation down into its component parts, we can identify and develop strategies for what needs to be done. How to do this is outlined below.

Six Steps to Plan for the Future

There are two parts to the process, identification and development. The four initial steps form the identification part, starting by pinpointing the initial problem and leading to building the possible scenarios which derive from the specified problem. Once these are established, the final two steps are the development part of the process, in which the scenarios are explored and business opportunities are predicted and analysed.

1. Identification: problem

Find and specify a particular problem or potentially challenging situation for your business. It is useful to state this as a question. Though the problem can be phrased generally (in terms of concepts rather than specific business facts), it is best to keep it as simple as possible to minimise variables.

2. Identification: decision

Isolate a decision which arises from the problem situation that will need to be taken. You should only select one decision, as your problem should be specific enough to only allow for one variable you can control by a decision-making process. If there is more than one variable beyond your control, refine your problem identification to its simplest form.

3. Identification: forces

Pinpoint the principal forces which will have an impact on your decision. These forces could be economic, technological, environmental, or otherwise associated with your business or your competition, and should relate back to the subject of your decision.

4. Identification: scenarios

Based on the principal forces you have identified, you can now build scenarios which could potentially arise given the forces at play. Of course, the possibilities are infinite, but it is best to restrict your scenarios to four or five plausible future situations. Remember to factor in both probable and improbable scenarios, and don’t forget that a valid scenario may be ‘nothing changes’ (i.e. all factors remain the same in the future as today).

5. Development: scenarios

At the development stage, you need to explore what could happen in the scenarios you have identified, and you do this by varying the forces (identified at stage 3) that affect your decision. By changing the forces and combining the changes produced, you create patterns which illustrate the possible consequences of your decision. These ‘narratives’ allow you to track the possible outcomes of a decision needing to be made based on the outside factors which influence it. A sensible projection for your narrative’s timeline is five years (i.e. what impact will your decision have over the next five years?).

6. Development: actions

You have now plotted out a step-by-step, multi-outcome forecast for your business over the next five years, with the key scenarios identified and explored. The final stage is to analyse these developed scenarios and search for business opportunities within each possible future situation. On establishing the scenarios, some actions to be taken will be immediately obvious. However, it is worth taking the time to explore the narratives you have developed to find potential commercial opportunities and areas for innovation.

Is there a bright future now for the Republic business?

The Republic business has some great brands, a decent website and some high performing store. I remain hopeful that the new owners can reshape the business to save as many of the 2,500 jobs at risk and satisfy its loyal core of happy fashion customers in the next few weeks.

When does a business transformation programme become necessary?

business transformation

business transformation

Going ahead with a business transformation programme isn’t always a matter choice, arrived at coolly as a result of calm reflection. More often than not, organisations are jolted into action by the pressure from altering circumstances. These may be happy ones, typical examples being the company’s launch of a significant innovation, such as Amazon’s Kindle Fire; or it may be that an upturn in price performance leads to a surge in sales volumes as happened with budget airline Easyjet.

Alternatively, a business sector, whether it be the residential property market or car manufacturing by long-established car corporations such as Ford and General Motors, undergoing a downturn can be faced with no choice. To address the collapse in business volume, they simply have to implement a full-scale business transformation.

Business Transformation Performance

Business Transformation Performance

The issue comes down to survival, that terrifying-sounding but utterly fundamental necessity.

It isn’t easy to foresee when the time to put change in train will occur.  The arrival on the scene of new competition, a big drop in market share, a shift in the public’s buying habits, among other factors, can provoke a re-think.  Another way of gauging when to institute a business transformation is when you have two thirds or more of the company’s senior managers backing change. Resistance at that point may be life threatening.
Even household names risk extinction if they remain in the old groove. A case in point is McDonalds. Its sector of the market has seen a significant collapse of late, yet the company has succeeded in reversing what seemed a terminal decline. With a newly revamped customer proposition both in terms of menu and the interior fittings of their premises, the monolithic chain is managing to generate growth against the trend. A large-scale business transformation, unwieldy as it may seem, is sometimes vital.

 

 

The Three Most Deadly Decision Making Mistakes

So how good is your decision making?

Stephen Elop

Stephen Elop

Making decisions is a constant challenge whether at home or at work. Whether you are Steve Elop as the incoming CEO of Nokia choosing which operating system to bet your business on, or choosing the perfect present for someone you love, when the stakes are high making the right decision is never easy.

In fact the more important the decision is the harder it is, then the greater the danger that you might fall into one of the three most deadly decision making traps.  So here’s the top 3 deadly mistakes and some advice to help you make great decisions no matter how high the stakes.

  • Confirming Evidence – While it is natural to gather evidence that supports your point of view, it can also cause problems in the decision making process. Talk to a friend or colleague to find out what their perspective is, hopefully it will shed more light onto the subject. You also want to avoid just seeking advice from working with people who always agree with you, if they always agree with you who is going to play devil’s advocate?
  • Status Quo â€“ Nobody likes dealing with change, but change is often necessary in order to grow. It is always easier to make decisions that allow things to remain the same, but those are not always the right decisions. Avoiding this mistake is as simple as asking yourself if the old way is best for your goals, you must downplay your desire to keep things the same though. Get out of that comfort zone!
  • Anchoring – Accepting the first information you find is normal, but can leads to some dreadful decisions. While it is OK to be incorporate this information, you must also remain open minded for additional perspectives. Even if the information is screaming at you that it is right, never settle on that information without first checking other sources. Gather as much information as needed and you can rest assured that you will always make the right decision!

Some books that you might find helpful

Decision making

Decision making can be tough

If you want to improve your decision making skills you might want to get yourself a copy of some of the following classic texts on decision making:

So will things work out for Stephen Elsop and Nokia?

Nokia Lumia 800

Nokia Lumia 800

Nokia announced their new range of Windows powered smartphones today. So we’ll find out soon if Stephen Elop (ex-Microsoft senior insider) was guilty of the ‘Confirming evidence’ trap when choosing to bet the farm at Nokia on going with Microsoft, rather than the Android, smartphone operating system. Take a look at the first reviews of their new Lumia 800 and Lumia 700 phones at Engadget and see what you think?

Gnip – listening to the world’s conversation

Will Gnip make you go mad?

The scream

The scream

Imagine being able to hear everyone’s conversation, all the time. The voices in your head would drive you insane.

However there is now a constant stream of chatter available through the web. Using an interesting new technology service, Gnip, it’s possible at low-cost for you to monitor the explosion of social media usage of hundreds of thousands of peoples’ conversations in real time.

What would you listen to, given the choice?

The explosive growth of Twitter

Twitter

Twitter

The  mini blogging’ social media site Twitter now has over 200 million users with 200 million ‘tweets’ per day and over 1.6 billion searches per day (see Twitter blog for more facts on usage). Users post 140-character updates (‘tweets’) of what they are doing, reading, watching etc. It is much like status updating on Facebook. Think: Eating toast, doesn’t Eammon Holmes’ hair look funny today’.

Twitter has its uses when other communication mechanisms fail

Social Media sites

Social Media sites

But not all uses have been so trivial. During the Japanese earthquake earlier this year people on the island communicated via Twitter as mobile networks went down. And elsewhere worried relatives used social media to get in touch and emergency help was set up. The same thing happened during the more recent US earthquake. And in the case of the Arab Spring, Twitter was a powerful communications channel for the masses even in the most repressive of regimes.

Gnip – tapping into the world’s conversations

Gnip

Gnip

Enter Gnip, a Boulder, Colorado-based company that has bought the rights to sell data from Twitter, Facebook, YouTube, Flickr and many other social media sites.

Gnip deals in the very serious business of helping companies see what people are saying about them.

Airline JetBlue has taken Twitter seriously for years, using it for such diverse activities as ticket giveaways to seat planning help and it now uses Gnip through its customer experience management partner Attensity.

They can hear you

They can hear you

Can Gnip help you see into the future?

The obvious, direct uses of social media to see what people are saying about you now seem old hat. What is trending can almost be used to forecast the future: to see how people react to news, product launches, sporting and stock market events. You could imagine tracking Twitter comments as a mean of potentially forward predicting movements of betting odds on Betfair or prices on financial markets.

The world may now be having conversations online. But if it’s you Tweeting or posting on Facebook, just be aware that more people than you might think are listening to you.

Hello Kindle Fire, bye bye Waterstone’s?

Amazon launched Kindle Fire last week, a tablet competitor to the iPad. Poor old Waterstone’s: is this the last nail in its coffin?

Kindle Fire

Kindle Fire

Kindle’s technology means that books can be bought instantly, many of them for 99p and £1.99 instead of the £20 you might pay for a hardback in Waterstone’s. And the fact that the new $199 Kindle is in colour means that users can browse magazines and picture books, giving booksellers yet another reason to worry.

Waterstone’s, the UK’s largest chain of book shops, has experienced similar woes to the US’ Barnes and Noble, losing out to online sellers and supermarkets. New Waterstone’s boss James Daunt acknowledges that Amazon is tough competition but asks: Why wouldn’t you want to spend half an hour in a really nice bookshop?” His plan is to turn the 300-strong fleet of stores into a collection of friendly, local venues in which readers can comfortably browse and buy.

Waterstone's

Waterstone's

The idea has merit. Of course people don’t want to go to another identikit Waterstone’s in Leeds or Birmingham or Manchester. Foyles had the idea of the destination event’ bookshop long ago and its overhaul saw it win bookseller of the year for 2010, among other gongs.

But can chummy staff and a frapuccino work for such a large chain? The job to pull Waterstones’ stores up to standard is a big one in itself, but to do it in so many locations with such tough competition is mammoth. And even those who love browsing through bookshops have to admit that it is much simpler to ping a request through cyberspace to get the latest read sent to them for a fraction of the cost.

Recent reports from UK publishers suggest digital book sales now account for around 9-10% of their overall book sales compared to 4-5% last year. That still leaves 90% of the book market sold as actual books.

There are takers out there for the ‘book buying’ experience. Daunt has to find a way of get them through his doors, and fast.

Entrepreneur – What does it take to start up and run a great business?

This expert interview is designed for you if you want to be a successful entrepreneur who wants to create a great and valuable business.

Luke Johnson

Luke Johnson

John Corr interviews Luke Johnson,  a leading UK entrepreneur, and author of the book ‘Start it Up. Why Running Your Own Business is Easier Than You Think.’
Luke’s background includes:
– Chairman of the Royal Society of Arts and former Chairman of Channel 4
– Weekly column in the Financial Times
– One of the UK’s leading entrepreneurs having grown famous businesses such as Pizza Express
– Chairman of Risk Capital Partners with investments in some great businesses such as Giraffe Restaurants, Patisserie Valerie and Gails Artisan Bakery

Why this interview will be invaluable to you

In this interview  you’ll learn:

– What’s the biggest mistake a hopeful entrepreneur can make and how can you avoid it?
– What’s the one thing you should do first when it comes to evaluating a business idea?
– What you should do differently from other investors that can result in tremendous success?
– 5 quick tips for an entrepreneur on growing their business
– What’s the easiest thing you can do right now to see results to build profitable growth?

To download the interview (in MP3 format) CLICK HERE. I can guarantee that your investment of 25 minutes of your time will enable you to lean and apply invaluable lessons to starting up and growing a great business.

You can also download a transcript (in PDF format) by CLICKING HERE for report format download.

John Corr

John Corr

John Corr is the Managing Director of Close Quarter, a firm specialising in helping ambitious leaders transform the value of their businesses by helping them accelerate delivery of what matters most to their customers, profits and growth.

John is the current global President of BPGroup.org, a leading global community of professionals interested in sharing best practice in performance improvement, turnarounds and process management.

You can listen to the interview podcast now by clicking on the link below

Business transformation – learn why most programmes fail and how you can succeed

Business Transformation – Please click the start button to watch the video.

What makes the difference between success and the majority of programmes that fail?

Business Transformation

Business Transformation

This expert interview is designed for the leaders of businesses who have an urgent necessity to address serious profitability and cash flow issues in their business. The interview covers how successful business transformation programmes can deliver a significant turnaround in your business performance.

A transformation programme is a high risk endeavour with a failure rate estimated to be in the range of 65-85%  according to the Working Council of CFOs. Clearly if your business is under severe stress then the odds are stacked against you and you may feel you have limited room for manoeuvre and constrained by your cash and other resources in the alternatives that you can pursue.

 

In this interview with John Corr sharing his personal experiences and those from his role as the global President of the BpGroup.org) by Charles Bennett you’ll learn:

  • What’s the biggest risk that leaders of businesses under severe stress face and how can you avoid it?
  • What’s the one thing you should be doing now (that perhaps you’re not)?
  • What should you do differently to many businesses that fail to deliver business transformation programmes?
  • 5 quick tips on what you can do to turnaround your business situation
  • What’s the easiest thing you can do right now to improve your situation?

To download the interview (in MP3 format), just CLICK HERE. Invest 15 minutes of your time to learn invaluable lessons from some remarkable business turnarounds. You can download a written transcript by CLICKING HERE.

How can you shape your business transformation programme to turnaround business performance?

You can learn additional lessons, insights and advice on how to turnaround your business performance by viewing this interview of John Corr in his role as global President of the BP Group.org community. CLICK HERE to learn how to turnaround performance through business transformation

What can you learn from how other business leaders have succeeded in their business transformation?

John Corr

John Corr

To learn more about how we have helped other businesses turnaround their performance significantly please then CLICK HERE to listen to personal interviews with leading international CEOs and our CASE STUDIES.

If your situation is more urgent and you feel you would benefit from expert independent advice, then please do ring John Corr (on +44 20 3637 5501) to explore your specific situation in more depth.

 

Does the 21st century really belong to China?

The 19th century belonged to England, the 20th century belonged to the U.S., and the 21st century belongs to China. Invest accordingly.

— Warren Buffett

How could someone so smart be so wrong?

China is a great country that is thriving and re-establishing its place at the top table of the largest economies. However the USA still has an unbounded ability to innovate and create the products and services of the the future.

It’s no accident that the iPhone, Google and Facebook all originate from the USA. Americans have an incredible ability to renew themselves every day with passion, energy and enthusiasm. Combine this with the ‘rule of law’, liberty, democracy and unbounded optimism. It’s forever morning in America.

For all these great reasons of both heart and mind, the 21st century will be America’s century.

Is CEO pay too high?

Larry Ellison

Larry Ellison

Is CEO pay too high?]

The Wall Street Journal reported that Larry Ellison is the world’s highest paid CEO having earned over $1.8 billion in the previous decade.  This example and of other high paid CEOs has led to a barrage of criticism and comparisons between what a CEO earns and that of an average employee. These comparisons however miss the point.

The key question is ‘is the high pay of a CEO worth it?’

I would argue that the answer is YES. The CEO is accountable for the 3 most important value creating activities within an organisation, namely:

  • Setting the strategy and focus for the organisation
  • Selecting and managing the ‘Top Team’
  • Focusing the Top Team and organisation on the execution of the strategy


What’s the impact of a successful CEO?

Getting these three activities right is at the heart of the difference between successful and unsuccessful organisations and ultimately driving customer and shareholder value creation in the best companies. To take the example of Larry Ellison, under his stewardship company the company nearly has tripled in value (from $36 billion to $98 billion in the 10 years to 31 May 2009 (with  realised gains on options accounted for 97% of Mr. Ellison’s total compensation).

Is every CEO worth the money?

Clearly there are examples of CEOs who have taken large rewards personally and disappointed their shareholders with losses. However according to Prof. Stephen Kaplan  at the University of Chicago’s Booth School of Business, in general, “the guys who got the big payoffs deliver”

So to paraphase L’Oreal’s famous slogan, the simple reason why CEOs are paid so well is ‘because you are worth it’

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