Category Archives: Blog

The Pitfalls of Peer-to-Peer Lending

According to Bloomberg, the Financial Times and a handful of other newspapers, peer-to-peer lending could be headed for a collapse. What began as a new, innovative way of lending capital may have become a ticking time bomb.

The Chief Executive of Bibby Financial Services, David Postings, notes that the signs are negative:  “We are seeing signs of overheating in the small and medium-sized business lending market. Credit terms are stretched and pricing is down. It has all the hallmarks of what happened to personal credit pre-2007. There will be a crash sooner or later. Peer-to-peer is unproven through a credit cycle. The platforms are not at risk but the people who put the cash in could lose everything. If you put your money in a bank the shareholders take the hit – they are the ones taking the risk.”

At its core, this form of lending is a more individual form of finance. It allows interested investors to loan money to inventors, business owners and entrepreneurs, based on a pitch.  Interest on the loan is set by the investor, but an attractive project or opportunity will likely receive several different loan offers, forcing potential investors to compete with each other.

As Postings has argued, interest rates may already have become too low, hinting a crash may be imminent.

For several years, however, peer-to-peer lending has gone from strength to strength.  In 2015, the market peaked at $12 billion in loans. In the majority of cases, these were unsecured loans. Another problem is that investors in many instances knew little about the businesses they were loaning money to, and no understanding of the risks they were facing.  There is also the question of the time and knowledge it takes to read the information provided by a company, and the ability to exert shareholder control. Listed equities are governed by extensive disclosure rules and rights that protect minority investors.  Peer lending does not offer these kinds of controls.

It is common for banks to face criticism that they are reckless with their risks, or even abusive to customers. However, banks have the benefit of experience. They’ve seen many financial cycles, as well as weathered frauds and catastrophes. Although a big enough crash could bring them down, they’re generally diversified enough to prevent it. Peer to peer does not offer this kind of security.

There are several peer-to-peer lending platforms. The UK’s leading platform is Zopa, which has facilitated the lending of almost £3 billion since 2005. According to their website, 60,000 investors have lent an average of £13,000 to businesses and startups.

The Case of Rebus
Rebus was a company that primarily dealt with clients who had been mis-sold financial products. Through Crowdcube, a peer-to-peer lending platform, Rebus was able to raise over £800,000 from small investors. Over a hundred people had lent money to Rebus, with amounts ranging from £5,000 to £135,000, with the promise of gains between 6.4 and 10.6 times their investment.

The fall of Rebus would be the largest equity crowdfunding failure in the UK. Investors lost their money.

Julia Groves, of the UKCFA noted: “We should be in no doubt that there will be failures like Rebus [but]…the question is whether people understand the risks they are taking.”

The case of Rebus should be a reminder that all investments can fail, all investments can result in losses. The key difference between small-time lenders that use peer-to-peer platforms and larger scale investors is a diversity of portfolio. It is vitally important for prudent investors to manage risk by spreading investments – something that amateurs will not be aware of, or be able to afford. It has made peer-to-peer appear more and more like gambling, rather than as a needed source of finance to spur innovation and small businesses.

It’s likely that peer-to-peer lending in its current form does not have long left before a crash. However, the concept of lending to small businesses will continue. Large financial institutions are starting to see the benefit, and they can protect themselves much more effectively than small-time lenders.

Is it Possible to Repair Reputational Damage?

According to Aon’s 2017 Global Risk Assessment Survey, reputational damage features in the top five risks for almost every industry.  Product recalls unethical behaviour, supply chain failures, business interruption and cybercrime are all precursors to reputational damage.  It warrants heightened vigilance from businesses, especially since reputational damage can subsequently lead to legal challenges, increased competition and even share price fluctuation.

It is clear that businesses should take this risk extremely seriously, and incorporate it into business risk analysis. If reputational damage has already occurred, the question is not about prevention, but about repair and the response to the issue/crisis will influence how the company is perceived, its reputation and long-term survival.

McDonald’s Response to Supersize Me
In 2004, filmmaker Morgan Spurlock released his now famous documentary about McDonald’s, Supersize Me.  It followed Spurlock as he attempted to spend a month eating nothing but McDonald’s food, with emphasis drawn to the ‘supersize’ option offered to customers at the time. The film became very popular and McDonald’s suffered reputational damage as a result, particularly due to the health problems endured by Spurlock as a result of his experiment.

The fast-food chain responded in a variety of ways, its strategy often depending on the country in which it was deployed.  In several countries, McDonald’s paid for advertising time in the trailers shown before Supersize Me at cinemas.  As a Campaign article noted in 2004:

“The calm, rationed approach contrasts strongly with McDonald’s response to the movie in the US.  While the UK advert describes the film as “slick” and “well-made”, McDonald’s in the US called it “a gross-out movie” and responded with an aggressive PR campaign.”

Although McDonald’s tried to respond to the film, ultimately it helped to push the fast food industry in a healthier direction. The ‘supersize’ option was phased out, even as spokespeople insisted the film and connected health concerns played no part in the decision.  It made little difference. The damage to the reputation of McDonald’s and the wider fast-food industry invited a wave of competitors to join the fray.  Even as recently as 2015, the chain was arguably still suffering as a result.

Uber Loses CEO
The ride-sharing app has come under increased scrutiny in recent months, with several aspects of its business suffering reputational damage.  From sexual harassment scandals and the revelations of a toxic workplace culture to public concerns about unethical business practices and exploitation, we have seen Uber’s brand tainted.  And, like McDonald’s, the reputational damage has opened the door to competitors to take market share. In this particular instance, rival business Lyft has raised half a billion dollars to capitalise on Uber’s pain.

Uber responded by opening an anonymous tip line for employees, as well as holding ‘listening sessions’ with its workforce.  However, such is the scale of the issues facing the company that CEO Travis Kalanick had no choice but to resign.  Unlike the previous combative nature of Uber to negative press, the new CEO Dara Khosrowshahi had these words for employees:

“While the impulse may be to say that this is unfair, one of the lessons I’ve learned over time is that change comes from self-reflection.  So it’s worth examining how we got here. The truth is there is a high cost to a bad reputation.”

It remains to be seen whether an ‘attitude reset’ will actually be able to turn around serious reputational damage, considering the number of issues currently facing the company.

The Knock on Effects
As we’ve seen from these two cases, the knock-on effect of reputational damage can be painful in the short-term.  However, it is the long-term effects that can make recovery and repair much more difficult.  Reputational damage makes the job of positive PR an uphill battle, and once public trust is lost, it can be elusive to regain.

We can’t always predict where the next crisis will come from. However, with a strong ethical direction that maintains the balance between shareholders, staff and customers, it makes it easier to survive reputational damage intact.  If the wider public has faith in your business, they will be more inclined to forgive a mistake – so long as the resolutions to the crisis situation is sincere and robust.

MBA Scholarship Awardees Share their Experiences

£300,000 of SMF Scholarship Awards Help 10 Talented Engineers Attend Top Business Schools

Wharton, INSEAD, Kellogg, Stanford and LBS are welcoming 10 awardees of the Sainsbury Management Fellows MBA scholarship.

The awardees each received £30,000 towards their study costs.  They are Kofoworola Agbaje who chose Wharton; Nicholas Asselin-Miller, Qiang Fu and Andrew Glykys are attending INSEAD; Mukunth Kovaichelvan is studying at Kellogg; Imogen Rye is at Stanford, and the other four awardees – Benjamin Banks, James Diaz-Sokoloff, Matthew Dixon and David MacGeehan – all chose to study at London Business School.

The SMF Scholarship scheme is run by Engineers in Business Fellowship (EIBF) which helps young engineers fulfil their aspirations to become business leaders by supporting them financially in gaining business skills including leadership, strategic thinking, marketing, economics and finance.

The value of Sainsbury Management Fellows awarded now totals £9 million.  During this time the scholarship has helped over 300 engineers forge outstanding careers in diverse areas including the corporate sector, social enterprise, charity, healthcare and education.

The success of the scholarship scheme is measured not only in terms of the career achievements of the SMFs but in their contribution to society.  For example, 153 SMFs have founded or co-founded businesses valued at £4.6 billion, creating 18,000 jobs; 265 SMFs support and mentor young engineers, helping them with career or entrepreneurial goals and 122 SMFs are actively involved with charitable organisations.  Several SMFs teach business and innovation as visiting professors at universities, including the EIBF President, David Falzani.

After graduation, the scholarship awardees become Sainsbury Management Fellows and become SMF Alumni.  Many say that the Alumni is, perhaps, the most rewarding part of winning a scholarship, because of the lifelong support. The Fellows benefit from ongoing career and entrepreneurship mentoring which can often lead to important collaborations and high-level networking via SMF, the Royal Academy of Engineering and other leading institutions.

Commenting on the purpose of the SMF Scholarship David Falzani said, “The world is changing at an unprecedented rate, creating new challenges for UK businesses, these include globalisation, cross-culturalism, the rise of the Asian markets and flux in international politics, the economy, technology and environmentalism.  The need for multi-skilled engineers is actually increasing.  The SMF scholarship expands the pool of business-minded engineers available to employers.  The more SMFs we nurture, the more they can help boards make sound strategic decisions and deal with the challenges arising from new paradigm shifts.”

New Applications Invited
The SMF scholarship is open to engineers with the potential to gain leadership roles early in their careers, who have a clear vision for their MBA study and career aspirations.  Candidates submit a written application and shortlisted candidates undergo a panel interview with members of the Royal Academy of Engineering and Sainsbury Management Fellows.    Find out more about making an application.

To learn directly from 8 of the successful awardees, click the grey panels on the right and read their Q&As.

Risky business: why you need risk analysis for your business

Even if you have been running a successful and secure business for years, problems might still arise unexpectedly that put the operation in jeopardy.  Companies are at risk of all types of potential threats, from force majeure to cybercrime to whistleblowing on an internal problem. Knowing about your company’s exposure to problems is vital, therefore risk analysis should be an integral part of your corporate governance.

Attention to detail
Risk analysis can be a complex task as it requires information on a variety of topics right across the business. Project plans, security protocols, financial data and marketing forecasts can all be used to build a picture of the challenges a business faces. The first step is to identify threats through a detailed analysis of the risks faced by the business. This work will highlight potential threats and their implications, and enable the board to identify and rectify any weaknesses and, at the same time, develop crisis contingency plans to manage any emerging crisis if a risk becomes a reality.

A threat might be a human one – for example, illness, injury or the loss of a key employee might cause significant damage to a business. ‘Key man insurance’ is an example of one strategy to address the financial implications of this particular risk.

Other threats can be classified as operational, reputational, procedural, political and structural. These example categories help you to define where the major risks to your business are and why your business is vulnerable.

External threats
It is also important to think about potential external shocks that could cause disruption to the business. Although an extreme case, you may recall that in 2013, a helicopter collided with a crane on a construction site in London – it left two dead, twelve people injured, caused damage to nearby local businesses, stopped London traffic and led to round-the-clock media coverage. External incidents can harm infrastructure, data and bring day-to-day business to a halt.  As part of the risk analysis process, it is important to consider external factors that could disrupt the business and how it would continue to operate in such an eventuality. Companies need plans to protect transactions and their reputation from unforeseen crises.

Prepare to communicate in a crisis
It is imperative that there is consensus on crisis contingency plans. All managers should be fully apprised of the plans and know their roles and responsibilities in advance.   Also, a communications plan needs to dovetail with the crisis and business continuity plans – If an incident occurs, staff, clients and the wider public will need to be informed, reassured and kept updated.

With this in mind, it is advisable to set up and test in advance, an information gathering system so that nominated staff can easily gather and collate data and share it with the relevant people.  Finally, the likelihood is that some staff will need training on the response plans and their individual roles. It is up to senior management to identify those who can carry out tasks and provide the necessary training. The faster, more coordinated and effective the response (both to the incident and communications), the less damaging the impact will be on day-to-day business and the long-term reputation of the business.

Sometimes a problem will not be a visible one. If there is a persistent issue that management has failed to act upon and is of relevance to the general public, employees may resort to whistleblowing.  The government protects corporate whistleblowers, and any gag order or non-disclosure agreement will not apply if the case is deemed to be of interest to the public at large. A whistleblower is completely protected when reporting on health and safety dangers, damage to the environment, and miscarriage of justice – when a company is breaking the law or if someone has attempted to cover up wrongdoing.

A problem that the board fails to uncover in its governance, or the risk analysis process, that is later revealed to the public by a whistleblower can be hugely damaging to the business. In terms of reputational damage, it may be a very expensive mistake to repair, if indeed it can be repaired. If the whistleblower reveals criminal activity, it might also lead to an investigation.

However, whistleblowing should not be feared as destructive in of itself. Companies that have the right system in place to deal with concerns and complaints should actually benefit from them, as it gives management the opportunity to put things right.

Employees should be made aware of a company’s whistleblowing policy and what they can expect in terms of actions and results when a complaint is made.  Once the system is in place, however, it must be allowed to run without the interference of management.  A recent case of an attempt to identify a whistleblower has shown that companies require a culture that encourages employees to speak their minds when they have a concern and that attempts to remove anonymity can badly taint that culture of openness.  Employees who know their welfare matters will be more willing to come forward. The ideal scenario is for employees to feel assured enough in their standing that they can submit complaints without anonymity and without fear of censure.

Risk analysis is an essential part of strategic business management and should be a top priority for the board.  If the issue is constantly moving down the agenda in your company, RiskNet’s article on the Top 10 operational risks for 2017 might galvanise you into action!

NGOs and healthcare sector least prepared for cyber attacks

photo: Solarseven

Non-governmental organisations (NGOs) and the healthcare sector are the ‘least prepared’ and most at risk of cyber attacks according to a new poll by the Sainsbury Management Fellows (SMF) business research panel – 25% percent of respondents named NGOs while just over 22% identified the healthcare sector.  The next highest at-risk sector named was agriculture/agribusiness with 16%.

It is perhaps not surprising that healthcare ranked highly given that just a few months ago the NHS was given a dose of vicious ransomware sent via its email systems. This fooled some staff into opening attachments which spread a virus across some parts of the network.  This attack raised a heated debate about the robustness or otherwise of NHS computer systems, though a government spokesperson said that 97% of the NHS was unaffected.

If the SMF panel’s view that the agriculture/agribusiness is a high-risk sector, it doesn’t bear thinking about the consequences of a breakdown in the food chain.  An attack on the complex and interwoven food production processes, from growers to production and retail, could lead to food shortages in just a few days, impacting consumers directly as well as major institutions, such as schools and hospitals, which feed children and patients respectively.

Many organisations don’t feel the need for greater security
The majority of the SMF panel agreed that many organisations don’t feel the need for greater cybersecurity because they believe they have bigger problems to worry about, or that they are too small, too large or too important to be affected.

If the panel’s perception is accurate, these organisations need to be mindful of the findings of a leading security report which recently warned that ‘financially motivated criminals continued to innovate in 2017.’  The Flashpoint ‘Business Intelligence Report’ 2017 mid-year update identifies heightened threats from cybercriminals as well as ‘severe’ and potentially ‘catastrophic threats’ from China, North Korea, Iran, Russia and Jihadist Hackers. The report defines a catastrophic attack as:

‘Having the potential to cause complete paralysis and/or destruction of critical systems and infrastructure. Under such circumstances, regular business operations and/or government functions cease and data confidentiality, integrity, and availability is completely compromised for extended periods.’

According to Flashpoint, a notable trend in 2016 was cybercriminals targeting of healthcare organisations as a means of obtaining sensitive and exploitable personally identifiable information. Business email compromise is an area of rapid growth, with newly-released statistics finding that the various iterations of the scheme have led to some $5.3 billion dollars in losses globally. Overall, cybercriminals have continued to evolve in order to circumvent additional protections and new technologies designed to reduce fraud, such as EMV chips in payment cards.

Best Prepared Sectors
Perhaps unsurprisingly, the poll identified the military/defence and computer/technology sectors as the best prepared to deal with potential cyber attacks.  Over half (56%) chose the military, with 16% of the votes going to computer/tech and 13% opting for the financial services sector.  No other sector scored more than 4% of the total vote.  Almost one-third (31%) said that they felt that organisations in these three sectors recognise that cybersecurity is important and are ready to deal with such challenges because they believe that lives depend on it.

Value of Organisation/Corporate Data  
Almost two-thirds (66%) of those polled believe that most organisations don’t understand the value of the data they hold, making them vulnerable to serious attack and consequential future loss for their business.


SMF Panel Commentary 
These comments highlight concerns:

  • “Most companies don’t organise their data well and therefore fail to see its value, especially to others who do.”
  • “Companies that don’t monetise the data they hold don’t understand the value. Some may hold a lot of data but don’t exploit it for commercial gain so are not aware of its potential value.”
  • “The value depends on how the data is used. A lot of data that is not seen as valuable by companies could be very valuable to a malevolent party, for example, personnel records.”
  • “The data one company holds might have a lot of value when combined with another company’s data.“
  • “Data-mining can make mass data useful as opposed to individual or the data one company holds might have a lot of value when combined with another’s [data].”

Panel member David Bell from Rolls Royce points out that as cybercrime is a relatively new phenomenon, it is taking some time before organisations act to tighten up their data security.  He said, “Awareness of cybercrime is on the rise; many organisations are yet to fall victim of an attack, targeted or otherwise, and so are under-prepared and vulnerable. Shareholder pressure can cause organisations to focus more on revenue-generating activities and less on cybersecurity as, until more recently, there has been little cause for concern. Many organisations are only coming to understand the value of their data if it were to be subject to a ransomware attack.”

One panellist who felt that organisations do understand the value of their data still highlighted problems of preparedness: “Most companies do understand the value of their data, and in the last couple of years have realised they are potential targets for attack. However, it is not only the technical defences but also employee awareness and education that need to be put in place.  These take many years to develop and build in large organisations and require regular and systemic support and understanding.  The technical proficiency of many UK leaders/boards is quite low so they have been very slow in reacting and developing policies around this area.”

SMF James Raby agrees on the latter points: “There is indeed a learning curve for most organisations but the increasing number of high-profile and debilitating attacks across a diversity of organisations, from telecoms companies to the NHS, means that all organisations must make cybercrime a top priority.  This requires senior management commitment together with technical experts who can develop appropriate and evolving anti-cybercrime strategies.”

Another panellist said, “The cyber landscape is rapidly evolving and bringing with it new data technologies, risks and opportunities.  In this context of complexity, the value of organisational data is often not well understood. This has significant implications for cyber attacks – companies are often failing to protect their most valuable data or leverage data that can support cyber defence. In order to understand the value and take appropriate action companies need to invest in a cyber ambition, strategy, roadmap and culture that builds appropriate data ownership, capabilities and processes.”

The overriding perception from the SMF business research panel is that most organisations are simply not doing enough to protect their operations from cybercrime at the moment and are in danger of ‘closing the stable door after the horse has bolted’.  One panellist summed it up nicely saying, “Information is the lifeblood of a profitable business; like the air we breathe, one takes it for granted until it’s gone.”

If you would like to join the SMF Business Research Panel, please email the SMF Office with your details. 


AI: A threat or opportunity for UK businesses?

SMF President, David Falzani,  explores the challenge AI poses to business and wider society.

The hypothetical outcomes of AI for business have ranged from utopian to hysterical among commentators, with many focusing in particular on the implications of AI and automation for work – and the risk of redundancies. The Bank of England estimates that 48% of human workers will eventually be replaced by robotics and software automation.  ArkInvest meanwhile predicts that 76 million US jobs will disappear in the next two decades.

Daniel J. Arbess, writing for Fortune magazine, goes as far as to argue that “the accelerating penetration of job-displacing software presents maybe the most serious (and still underappreciated) socio-economic challenge to market economies in generations, both in our own country and abroad.” Jobs, it seems, are the biggest worry. “Applied software technology reduces costs and prices, taking fewer consumption dollars a longer way. We’re starting to hear a lot about this, because entrepreneurs, investors and shareholders of companies will be enjoying epic financial rewards from the AI economy–but what about everyone else?  People still need jobs.”

Meanwhile, Professor Stephen Hawking raised the stakes somewhat in 2014 saying “The development of full artificial intelligence could spell the end of the human race.” whilst Elon Musk warned that AI is “our biggest existential threat”.

AI is, then, conveyed as a threat to business, employment, and even existence, sometimes by people who don’t understand how the technology is currently being used, sometimes by the science and technology community. At the same time, it’s floated as the basis for a universal basic income and the new Industrial Revolution, as well as massively increased efficiencies across all industries. So is AI a threat or an opportunity for UK businesses?

Blake Irving, the CEO of GoDaddy, a global web hosting company, explains that “the AI that’s real today is known as ‘Narrow AI’.” Rather than worrying about super intelligent Skynets wiping humanity off the face of the earth, Blake argues we should instead focus on narrow AI as “what’s actually changing everything.” Citing Rand Hindi, who defines narrow AI as “the ability for a machine to reproduce a specific human behaviour, without consciousness… a powerful tool to automate narrow tasks, like an algorithm would”, Irving argues that narrow AI will replace or transform any job where information gathering and pattern recognition drive a volume business. “That’s not just labourers. That’s accountants, traders, estate agents, lawyers, software developers, and on and on.”

A good example of this ‘narrow AI’ can be seen in eBay’s introduction of personalised homepages and a ‘ShopBot’ for its users. “Using structured data – a transformative step to drive discoverability of our vast inventory, insights into supply and demand, pricing trends, among other things – and artificial intelligence, we’re creating a shopping experience that is tailored to each eBay user’s interests, passions and shopping history,” CEO Devin Weing explains. “With more than one billion items … we’re making shopping on eBay all about you, instead of a one-size-fits-all approach.” This is massively increasing sales conversions for the company and its traders.

Irving goes on to examine three categories of ‘AI insulated jobs’: those which require meaningful creative interactions with other people; those that won’t be replaced due to the limitations of robotics but will be transformed side-by-side with Narrow AI tools; finally, entrepreneurial roles, which can encompass such a diversity of work as to be difficult to automate. Irving uses these categories to argue that the ‘end result’ of AI displacing jobs will be the need for a population better educated to manage or interface with AI. It will, in other words, incentivise skills-based specialist technology education and ultimately spur a demand for creative thinking and skills, the things that narrow AI cannot provide.

The structuring of data that narrow AI affords us isn’t so much abolishing old skills and roles, then, as it is creating a demand for integrating new capabilities into the modern business plan. If anything, it is actually increasing the demand for creative entrepreneurs, whose skill sets are more valuable than ever while productivity and efficiency shoots up across the board thanks to AI. A similar increase in productivity was seen in the 1990s due to the implementation of MRP and MRP2 that saw skilled and semi skilled roles replaced with algorithms.

It might be worth considering that every threat is an opportunity because it forces change. The exploding volume of literature on the so-called AI revolution suggests that these technological developments may offer massive efficiency improvements, and radical changes to how businesses get things done. Are you able and willing to turn AI into an opportunity to radically overhaul skill sets and workplace practices to keep ahead of the curve, or are you not in a position to invest in this fledgling technology yet, and at risk of falling behind? The answer depends largely on the kind of organisation you run, to what extent it has information gathering and pattern recognition centred tasks, and how open it is to change, as well as how well you grapple with the reality of AI technology as it currently stands.

What sectors can we expect AI to transform?

Perhaps one of the biggest transformations unleashed by the AI revolution is that of customer insights. James McCormick, writing for Forrester, predicts that AI will be “rapidly assimilated into analytics practices” by the end of the year, offering businesses “unprecedented access” to powerful, contextual, data-driven insights. Up until now, unstructured and undifferentiated ‘big data’ has been difficult to navigate, much less tie to a customer base. AI is becoming more and more relevant to every sector.

With investment in AI predicted to triple across sectors, as well as the emergence of cognitive computing solutions better able to unpick and integrate data into analytics, this will provoke a sea change in how business is conducted in many sectors. In a 2015 survey, 80% of business leaders stated they believe AI will create more jobs and increase productivity. Let’s take a look at some of the sectors already feeling its impacts.

AI’s ‘smart’ grasp on data is already having big impacts on the insurance sector, as one story earlier this year demonstrated. Fukoku Mutual Life Insurance, a firm based in Japan, made the headlines when over 30 of its employees were made redundant and replaced with an AI system. Capable of analysing and interpreting any data, IBM’s Watson Explorer calculates insurance payouts to policyholders at such an accelerated rate that the firm predicts it will increase productivity by 30%, saving the firm about £1 million per annum. It’s a good example of how AI in its current form is drastically increasing efficiencies while altering the structure, size, and skill set of different organisations.

Education is already being transformed by VR and AI technologies, among other things. The rise of MOOCs (Massive Open Online Courses), such as those run by Udemy, are a prime example of how large ‘classes’ can be run online with hundreds of students. AI is set to make these courses more and more effective. We are already seeing specially-trained AI programmes (an ‘e-rater’) mark and grade exam papers, as well as virtual teaching assistants being deployed throughout universities and schools to help answer student questions about the course. With the global market in education-based applications of AI set to grow exponentially over the next four years, it’s clear that AI is not only getting better at learning but teaching too.

Medicine and healthcare
AI has seen a lot of investment partially thanks to its huge potential number of applications for medical research and front-line healthcare. AI chatbots, such as WoeBot, are now being offered as a way of augmenting mental health treatment. Meanwhile, the analytical power of AI is being used to help make cancer diagnoses earlier and more accurately, with Vinod Khosla, cofounder of Sun Microsystems, even predicting that human oncologists will become obsolete in the face of much more data-competent AI systems. “I can’t imagine why a human oncologist would add value, given the amount of data in oncology,” he told an audience at MIT this month. IBM’s Watson is likewise being introduced to the doctor’s office.

From processing deeds to identifying relevant documents, the traditional work of lawyers is slow and painstaking. Law firms are now using AI technology (often a version of IBM’s Watson) to augment their legal research functions, empowering lawyers towards more comprehensive and efficient analyses of legal precedents, contracts, and cases. The first ‘top five’ law firm to sign a deal with an AI service provider was Linklaters, early in 2016, with other firms quickly following suit. Some of the systems in use can reduce tasks that usually take three hours down to three minutes, which could lead to cheaper access to legal services and even redundancies of paralegals, as one legal consultant predicts – although some are more sceptical. Robert Morley notes that training contract numbers have increased, so lawyers are not becoming redundant – AI is, rather, a “remarkable tool”.

What next for the sharing economy? – SMF President, David Falzani

While conventional markets and brands were under financial siege by the recession, the concurrent development of a global, data-driven, mobile infrastructure provided an answer to the strife: the sharing economy. Billed as a radical new, ‘alternative’ socio-economic system based on the values of ‘sharing’ and ‘collaboration’, the sharing economy seemed like a fluid, big-picture response – one which some commentators have described in utopian terms since.

Benita Matofska, of The People Who Share, defines the sharing economy as, “A socio-economic ecosystem built around the sharing of human, physical, and intellectual resources. It includes the shared creation, production, distribution, trade, and consumption of goods and services by different people and organisations.” It is, in other words, a new, ‘alternative’ market which “Embeds sharing and collaboration at its heart” – a ‘hybrid economy’ enabling different forms of value exchange using shared physical or human assets. Matofska points to the ‘gig economy’, social media, peer-to-peer (P2P) trade and exchange, upcycling and recycling, as examples of economic sharing in action.

At the core of the sharing economy is the principle of people renting things they need from each other, The Economist argues, “The big change is the availability of more data, which allows physical assets to be disaggregated and consumed as services.” Apps and data, therefore, act as conduits for people to get in touch with one another and share what they need within this economy. Technology has reduced transaction costs, making the sharing of assets cheaper and easier than ever – or so the story goes.

The Economist is right in noting the significant disruptive effects of the sharing economy, which seem only to be increasing as these P2P markets develop. The consumer peer-to-peer rental market alone is worth around $26 billion. However, in their bid to market the sharing economy as a collaborative, user-first way of delivering services and products, the major players that make the sharing economy possible, and by claiming to be merely middlemen for ‘independent contractors’, large corporations like AirBnB and Uber understate their own involvement and responsibility for the sustainable development of the sharing economy.

This has impacts not just on ‘conventional’ rental markets but gives way to a whole host of regulatory and workers’ rights issues. Bike couriers for Deliveroo, said to be paid a mere £4 per delivery, receive no hourly rate from the company. This has led to spontaneous strikes and collective action from their drivers, followed by an aggressive response by the corporation. The adverse effects of AirBnB on local rental markets is well-documented, particularly in small cities such as Reykjavík, Iceland, which, in the context of a massive tourism boom, has seen a huge increase in rents and property values as a result of the sharing economy and has reportedly led to a major housing shortage in the capital.

As we get swept up in the excitement of this new means of meeting demand, we are arguably losing sight of the important question that must be asked of the sharing economy: what is being shared, and for whose benefit? Uber and AirBnB may claim to be middlemen for ‘independent contractors’, but they take huge amounts of commission from their contractors and have even been described as, “Giant corporations pursuing monopoly power.” They have not just disrupted the markets and the profit margins of their competitors, but it could be said that their desertion of responsibility has, in some ways, led to the disruption of the lives of the people who work with them by escaping regulation and giving them only precarious ‘access’ to work, rather than solid, reliable jobs. As the sharing economy develops and brands consolidate their grip on markets, its once seemingly-liberatory potential seems to be surpassed by many of the problems facing the ‘old’ ways of doing things. As the casual workers that make the sharing economy possible become increasingly organised, the sharing economy must reckon with its responsibilities and duty of care to contractors and consumers. The regulatory battles they already face with cities such as New York and Los Angeles will set the stage for what’s to come in this regard.

This is not to say that the sharing economy requires more regulation. It is the lack of broad state regulation which has generated many of its advances and entrepreneurial development, after all. What the major players in the sharing economy must do is to put their money where their mouth is and open up their brands as well as their services. That means sharing not just some more of the wealth (revenue at AirBnB increased by 80% during 2016), but the infrastructure and technology that makes the sharing economy possible.

Some have argued this should take the form of open brand APIs. The sea change in the relationship between producers, marketer, and consumers has turned brands into ‘platforms’, ‘ecosystems’, and the collaborative nature of this relationship and the role of consumer participation makes the possibilities for scaling different aspects of the sharing economy endless. For the sharing economy to prosper and grow, it requires the active participation and input of the people doing the sharing. By making their processes and insights open-source in a genuinely transparent developmental dialogue, a true sharing economy might finally emerge. By placing the locus of organisational power in the hands of a few small, closed-off and increasingly powerful companies, the sharing economy risks lapsing into the same old patterns that made conventional corporate culture no longer able to compete or meet the demands of consumers as efficiently.

The battles around regulation and consumer and worker rights are not mere teething problems –they will determine the shape of what’s to come. The cooperative nature of the sharing economy comes from the technology, and it is the technology which must change to be more inclusive and open to innovation in order to meet the sharing economy’s increasingly unstable demands on local economies and workers.

How to make the most of your alumni network

The SMF alumni annual networking dinner 2017

Whether you’ve done an MBA or a regular degree programme, your qualification is not the only valuable asset of your course. Your alumni network is an invaluable resource and can have as much, if not more, bearing on your future than the degree itself – if you take full advantage of it, that is. Building relationships with other alumni will give you a chance to discuss your options, find courses and other information, locate business partners, and crucially, to pursue job and business leads.

So how do you make the most of your alumni network? How can you get involved and nurture these vital relationships – and why do they matter?

Keeping in the loop
There are a variety of ways to keep in the loop with the activities of your alumni network. The most obvious are, of course, the alumni newsletter, which you will hopefully already be subscribed to – if not, you can contact the alumni office of your alma mater to sign up.

The alumni offices are a valuable resource for both current and former students.  They represent the views of members; maintain a database of members’ contacts by industry and location (making it easy for you to be connected with other members), and develops activities for the alumni community which creates fantastic networking opportunities.  It’s worth checking in every few months to see if there are any events that could benefit your career ambitions whilst enjoying the company of like-minded people.

Building relationships
It’s important to not just build contacts, but relationships. At the end of the day, it’s real people you’re interacting with, so the personal relationships you cultivate with them will ground any opportunities that emerge.

Pay attention to what a fellow alumnus talks about. Keep a mental record of their interests and look out for relevant ideas, reading, and events that you can share with them. This doesn’t just demonstrate an interest in their lives – ongoing conversations form the basis of a collaborative relationship, and people are much more likely to give you a tip or introduce you to the right contact if they feel a strong connection with you. Approaching someone through name-dropping, anecdotes, and reminiscing is an easy way in and keeps things informal, but cultivating professional relationships based on genuine interest will be better in the long-term. Start a conversation, not an interview – give something back before you start asking about jobs!

There is no substitute for face to face contact.  If you want to get the most out of your alumni network and build relationships, make sure that you attend at least one event every year.  This way you will be able to cultivate acquaintances beyond your year group.

Looking for jobs
Whilst it’s important to use good judgment when asking about jobs through the alumni, of course, you should use your alumni network to look for jobs. Your alumni network, whether on Linkedin or through your former institution, should allow you to see where your former classmates are working. Actively mentioning that you’re looking for new opportunities in conversations with other alumni is a plus – even if they don’t have anything for you themselves, they almost certainly will know someone who does.

Reaching out early
Whether you’ve just graduated from your programme, or you still have two years to go, it’s never too early to reach out and get involved in your alumni network. Organising conference events, informal socials, breakfast meetings or even a Facebook group are all steps you can take to maximising the power of your alumni network. You might even be surprised at the level of feedback and interest you receive – an alumni network is mutually beneficial to all of its members, and people are more than willing to welcome you into it.

What to avoid on your graduate job hunt

Get set and go footprints intrapreneurship January 2017 Coloured text With more people going to university than ever before, the graduate job market is incredibly competitive. It’s pushing firms to demand that candidates arrive at a job interview not only with a degree under their belts, but internships and references to boot. As a result, so-called entry-level graduate positions now seem to be anything but.

Graduates now need to beat the odds in order for their first job searches to prove fruitful. Whether you’re looking for a graduate leadership programme or an entry-level junior management role, these odds can be stacked in your favour if you avoid a few common pitfalls and mistakes. So what should you avoid doing during the hunt for that first full-time role?

Don’t start by only looking for your dream job
Say, for example, that your dream is to become a senior consultant for a ‘Big Four’ firm or an editor at a well-established newspaper like The Times or The Guardian. You might be tempted to look at only one role within your dream organisation, and ignore other openings as a result.

This is a huge mistake. One of the things that major employers are looking for in their graduates is transferable skills, a breadth of experience and adaptability. Narrowing your job search to your perfect role and neglecting other jobs that could provide you with those necessary transferable skills could hurt your prospects in the long-term. The path you take to your dream role is often not straightforward. It helps to instead ‘go sideways’: look for roles at different levels in a range of industries and gain some necessary skills and experience first.

Don’t get the dress code wrong
One of the easiest ways to ensure you don’t get the job is turning up to an interview in the wrong attire,  not looking the part for the job.  There are many instances of promising candidates who are turned away because they attend an interview in casual wear or are inappropriately dressed for a particular company. Find out the dress code in advance of the interview – employers should inform you about this when they offer the interview, but if not, ask.  Failing that, do some research, for example, look at the interviewing organisation’s website, brochures and social media. Even for more creative environments, it’s probably wise to err on the side of caution and wear a smart suit.

 Don’t neglect your digital CV or portfolio
These days, a lot of recruitment takes place online and you may have already put a lot of time and effort into designing a great LinkedIn profile or personal website portfolio. The purpose of having a digital CV is that it makes networking and applying for jobs extremely streamlined – but if you don’t do anything with it, you might as well have not spent the time creating it. LinkedIn is a great way of networking with recruiters and potential employers, so get involved in discussions, promote your achievements, build your connections, and add testimonials. The more detail and engagement you put in, the greater chance there is of your digital CV making an impact. Don’t neglect your existing contacts either – the more people relevant to your job search that you connect and engage with, the more potential opportunities.

Don’t lose confidence
Here’s a fact: most successful people have been rejected countless times in their lives. You will, one day, be rejected or ignored after you apply for a job – even after spending hours or days on the application. Rejection is inevitable. It’s what you choose to do with rejection that counts.

Even if you’ve applied for many jobs and not secured a post, don’t give up. Ensure you get feedback from your interviewers, after all, you’ve invested your time, it’s only reasonable to get feedback. Find out if anything specific went wrong, use each interview as a learning experience and figure out how you can improve for the next one. Employers often receive hundreds of applications for a position and only one candidate can be successful. So what are you going to do differently next time you send an application or attend an interview?

Don’t ignore internships
You might be gearing up for a full-time job, but ignore internships at your peril. Most employers expect you to have some level of work experience, to the point where internships are quickly becoming the new ‘entry-level’.  Not all internships are unpaid, and three months of working full-time will definitely boost your chances in the long-term.  Some salaried entry-level jobs are even listed as ‘internships’, so, again, it’s worth looking further afield for your first role.

Preparation is key for successful job searches and interviews – you might find our blog, boosting your job search with social media, helpful.