As we say goodbye to 2019 and welcome a new decade, we reflect on some of our milestones. We would like to thank our Patron, Lord Sainsbury of Turville and his Gatsby Charitable Foundation, our Sainsbury Management Fellows, partners and associates, who have helped us achieve so much in the last 10 years.
2009/10: Published Re-engineering the Board to Manage Risk and Maximise Growth, promoting multi-skilled engineers as business leaders.
2011: The Sainsbury Management Fellowship becomes incorporated and a company limited by guarantee. The legal name becomes Engineers in Business Fellowship.
2012: Engineers in Business Fellowship becomes a registered charity.
2013: Executive Fundraising Committee is formed and plans to raise an initial target of £5 million.
2014: Launch of Engineers in Business Competition Prize Fund for university enterprise education.
2015: Published Engineering New Horizons, promoting the exciting careers of 25 Sainsbury Management Fellows.
2016: EIBF and the Royal Academy of Engineering launch promotions to increase the diversity of SMF applicants.
2017: EIBF President David Falzani receives the MBE for services to the engineering industry.
2017: SMF Fundraising campaign raises £2.1m to help sustain the MBA scholarship scheme.
2017: SMFs’ 30 Years Anniversary commemorated with the launch of Mentor30Engineers university competition.
2018: Our MBA scholarship is raised from £30,000 to £50,000 and applications extended to computer sciences and tech engineers.
2018: Engineers in Business Competition expands support for university enterprise education from four to 32 universities – £135,000 awarded already, with a £700,000 pot available.
2019: EIBF President David Falzani MBE appointed Professor of Practice in Sustainable Wealth Creation at the University Nottingham.
2019: Our Hard Hat Index reveals a dramatic 37% fall in the publication of hard hats in the engineering media.
2019: Over £9 million in Sainsbury Management Fellows MBA scholarships awarded to talented young engineers to study at the top international business schools
2019: Our first Engineers in Business Champion of Champions Grand final sees 10 university teams compete for £10,000 in prizes with innovations in surfing, prosthetics for children, medical cell counting services and personal safety devices coming out on top.
It’s been a very fruitful and rewarding 10 years – here’s to the next 10 years!
If you have any questions about Sainsbury Management Fellows scholarship, please get in touch.
The experience, network and friends I have gained through the Engineers in Business Fellowship have had an enormous impact on my career and personal development since I graduated from INSEAD in 2001, supported by a Sainsbury Management Fellows scholarship. But perhaps the most valuable aspect of this continuing relationship for me has been the opportunity to work with the Royal Academy of Engineering’s Engineering Leadership Scholarship (ELS) scheme.
Over the past 17 years, I have worked alongside other SMFs, Academy fellows and ELS alumni to help select new ELS awardees from each year’s engineering undergraduate applicants, and to help train and mentor each new cohort. These are some of the world’s brightest young engineers, intent on using engineering skills to tackle society’s toughest problems, and looking for support for their personal development plans that will see many of them become future engineering leaders.
I hope sharing some of my experience of the ELS scheme will tempt you to get in touch to find out how you can help the Royal Academy of Engineering develop this next generation.
About the Engineering Leadership Scholarship scheme
The ELS programme is an annual award scheme for undergraduates in engineering and related disciplines who have the potential to become engineering leaders, and in turn to act as role models for future engineers. All successful applicants receive £5,000 to be used over three years towards personal development activities. Award recipients also receive training and mentoring to help them fulfil their potential to move into engineering leadership positions in industry soon after graduation.
The trigger for me getting involved in the ELS programme came at an SMF Annual Dinner 17 years ago, from a chance conversation with Dr Peter Revell, then Undergraduate Programme Manager at the Royal Academy of Engineering. I discovered that the relationship between Sainsbury Management Fellowship and the Royal Academy of Engineering was broad and synergistic, with reciprocal involvement across the selection, training and mentoring activities of each organisation.
Not only was my interest piqued, I also felt that getting involved in the ELS programme could allowed me to start ‘paying forwards’ the generosity of the SMF scheme from which my own career and personal development has benefitted.
Helping on selection day
My involvement in the ELS scheme has grown over the years, and began with supporting the interview and selection event. Held in March each year, this annual event brings together selected engineering undergraduates from top-ranked higher education institutions all over the country to take part in an intense, fun-packed day of group exercises and networking, with individual interviews taking place in between these activities.
Although not a formal part of the selection process, the group exercises help candidates to relax and socialise, and conversations during breaks and lunch with other applicants, ELS alumni, SMFs and RAE fellows provide a flavour of the energy, diversity, and common purpose of this high calibre engineering community. At interview, candidates get to share their perspective on the role of engineering in society, their background, ambitions and career plans, as they try to secure one of the £5,000 scholarships awarded each year.
I first began my involvement with the interview and selection process gently, initially sitting alongside a Royal Academy of Engineering fellow who would lead the interview. More recently I have led interviews alongside other SMFs and ELS alumni who are now also involved in the selection process. Around seventy interviews take place throughout the day, typically with 10 interview panels assessing seven candidates in a series of half-hour interviews. The supporting interviewer sits with one lead interviewer in the morning and another in the afternoon, which helps provide another perspective and ensure consistency across each of the interview panels. After the interviews are complete, the selection process concludes with a structured review of candidate interview performance against the ELS award’s selection criteria, in which all interviewers share their findings. Supporting interviewers can summarise their assessment of a candidate’s strengths and weaknesses, often providing an important second opinion that helps balance or qualify the assessment of the person leading the interview.
The ELS training weekend – Saturday all day & Sunday Half Day: October 5 & 6 2019
I also take part in the annual ELS training event held at Aston University each year. These weekend events are in theory more relaxed than the selection days, though are larger events since all three current cohorts attend, and in practice share much of the same atmosphere, energy and pace. For the new awardees it’s an opportunity to meet others in their group, compare personal development plans, and learn about the impact of the award for several ELS alumni who have begun their engineering careers.
Participants arrive on Friday evening or Saturday morning, with the most recent cohort arriving first for a formal welcome and scene-setting talk. The weekend’s schedule is punctuated throughout with coffee and lunch breaks where all three cohorts mingle and meet with their fellow award holders, and with SMFs and RAE fellows.
Saturday kicks off with a series of break-out sessions with each cohort having its own tailored programme of group-based interactive activities covering a range of topics from personal development planning, communication, team working, negotiation, marketing, and MBA-style business games and role-playing activities. SMFs play a key role in preparing, running and supporting these exercises.
Before breaking for dinner, two to three recent graduates of the scheme give short presentations to the whole group about their current roles, and how they have used their financial award. Aside from the enthusiasm, confidence and charisma of the speakers, what is most striking in these alumni presentations is the breadth and quality of experience that the ELS scholarship has enabled – whether on a summer spent developing an energy access project in Africa, a study tour to visit high tech manufacturing businesses in China or an internship with a startup in Silicon Valley. This forum helps current award holders recalibrate their own personal development plans, and go on to test their ideas with other award holders who may be a year or two ahead of them, either through face to face discussion during the weekend or subsequently via LinkedIn and email contacts shared at the event.
Sunday morning sees each cohort group back at ‘work’ in another set of interactive group sessions followed by a career planning Q&A session with ELS alumni and SMFs before heading off shortly after lunch.
The level of volunteer time commitment required for the ELS scheme is entirely flexible. I started by supporting interview panels and then extended my involvement by supporting, and then delivering activities within the training weekend. I have mentored a number of ELS awardees and through my company Libertine FPE we have on one occasion provided an internship.
Although there is certainly value in having individual SMFs support any one aspect of the ELS scheme, I’ve found that participation in both the selection and training events has some synergistic benefit, with the training weekend highlighting the impact of scheme and the calibre of current and past award holders, and the selection event providing a first introduction to future award holders.
So, what do I perceive to be the benefits of the ELS scheme, and getting involved? The media often highlights the UK’s skills gap, but the ELS programme demonstrates that UK universities are producing some very high calibre graduates. Apart from the opportunity to share my MBA and career experience with ELS award holders (possibly future SMF scheme applicants – many ask about the right time to study for an MBA) – mixing with the brightest talent also brings new insights about my own career and engineering business.
It’s also helped me to understand the processes and influences through which undergraduates decide on their engineering path, their career aspirations, what impact they want to have on society and their decisions about taking a job with a blue-chip engineering firm or a start-up business.
Taking part in the ELS training weekend also provides time for reflection. I am very conscious that in my choice of career at Libertine, I have deliberately chosen to focus on building a company that could help address the global challenges of our generation at the intersection of population growth, resource consumption, energy and climate change.
It’s a finely balanced one because the world is facing unprecedented and urgent climate and resource crises that loom larger each day. Pessimistic media headlines can add to the impression that politics will be too slow to react, that national action will be too limited to be effective and that the challenge is likely to be insurmountable. The Royal Academy of Engineering ELS events are the perfect antidote to this sort of fatalism. Mixing with 300 or so of these stellar new engineers, all energised by the idea of bringing engineering solutions to bear these big challenges, and realising that this is not unique, that all over the world millions of scientists and engineers are graduating each year to join the fray, I get a renewed sense of shared purpose and technology optimism.
How you can help
James Raby has played an important role in supporting ELS selection process and delivering several of the group sessions in the ELS training events over many years. James has also helped build awareness of the ELS scheme and the essential supporting role of SMFs. His tragic death last year leaves a gap that must be filled.
My hope is that a handful of SMF volunteers can get involved in the Engineering Leadership Scholarship programme, helping the RAE to develop the next generation of engineering leaders. The most urgent priority is to provide continuity of SMF support to help define and deliver the October 2019 training weekend, and ensure that this is a success.
In future, I hope that SMFs will continue to play an important role in the ongoing development and delivery of the ELA scheme. It has been a great experience for me. If you would like to know more and join a meeting with the RAE in August to help plan the October 2019 training weekend, please email firstname.lastname@example.org.
New ideas are thrilling. So many of us are great at starting things; the genesis of an idea, the moment the lightning strikes, that flash of inspiration is pure joy. Taking your first steps into a start-up business are some of the most exciting steps. You are moving at break-neck speed to set up your platform for success.
But, as with all the greatest success stories, eventually, a wall is hit. Nothing worth having ever comes easy, and when it comes to start-up businesses, that struggle often comes in the form of early stagnation. The vision is in your head, the picture of the palace you are going to build is set firmly in your mind’s eye; now you have to go through the potential mundanity of building it brick by brick.
The unfortunate fact is, the majority of new businesses fail within their first year of trading. These failed start-ups are usually victims of common mistakes and misconceptions. Here we have some tips on how to ensure that your early-stage company becomes the success it deserves to be.
Track Your Metrics
On the face of it, this seems like an obvious thing to mention. However, new businesses, especially when low on cashflow, tend to focus mainly on profits and revenue. These are hugely important of course, but there are other data that you should be paying close attention to in order to get a rounded view of performance. Keeping an eye on the following will also ensure that you catch potential pitfalls before they happen…
Customer Acquisition Cost: How much does each new customer cost you? This can be easily assessed by dividing your total marketing and sales costs by the number of customers you have had within a specified time period. How do those figures look against your projections and business plan?
Customer Retention: Retained customers are vital for reputation and cashflow. How good are you at retaining business? Is there anything you could be doing to improve customer experience?
Return on Advertising Spending: Is the revenue you gain as a direct result of advertising sufficient for your investment? Advertising is not cheap and is always a gamble. Divide total sales by advertising spend in order to see what kind of return this investment generates.
Profit Margin: Profit is everything in the end. You must keep a very close eye on the bottom line.
Traction and Momentum
Getting things moving is widely regarded as one of the hardest things to do; getting noticed, getting talked about and getting a great reputation out there. It is a grind, but you have to keep the faith; keep pushing forward. You might have to take it one customer at a time, but, as Mother Teresa once said, “the ocean is made up of drops.” Keep pedalling and the breakthrough will come.
Momentum and passion are tough things to keep hold of on your own. Make sure you have other people around you who are happy for you to bounce ideas off them, and who will inspire fresh ideas and enthusiasm. When you are grafting away on your own, it is vital to have input from people who understand the difficulties of the process.
As your business develops, so will your workload. You need to recognise when this workload is too much for you on your own. There is no use in running yourself into the ground before your venture has even left it! To avoid this, take a look at the workings of your business and break them down into separate roles. This could be delegated to interns, or even employees if you are in a position to afford them.
Invest Effort in Talent
When a fresh venture is your baby it is really hard to take parts of it out of your hands and into the hands of others. But this transition must be made in good time. It is essential to invest real time and planning into hiring the right people. Do not wait until it is too late and get into a situation where you have to hire fast; this way you will most likely end up with employees that are the wrong fit for your company. Make hiring the right talent a priority well ahead of when they are required so that you can put the focus, but not stress, into the task.
Under Promise and Over Deliver
This is a good rule of business in general. This rule not only helps you to gain a great reputation but also takes a little pressure off. An example of this is always promising a later completion date on some work than you intend to deliver so that when you do deliver, earlier than quoted, the customer is happy. This also buys you time if the demands of a start-up slow down a project or task for some reason.
Don’t work in secret. Many new companies fail because they are too timid, self-deprecating or fear apparent over-confidence in their product or service. With social media being in its heyday, self-promotion is easier than ever, go for it! Also, if you are planning a publicity event or advertising campaign, don’t be afraid to ask for things. Perhaps you can get a free venue for your launch if you promise to promote the venue. The worst thing they can say is ‘no’!
The bottom line is ‘make some noise’. You might have invented the greatest thing known to man, but all you will hear is crickets if the only living thing that knows about it is your cat!
Don’t Overwork Yourself
This is so easy to do. You have to relax a little; tension has never benefitted anyone or anything. We are told from a young age that the harder you work, the bigger and better the results. This just isn’t the case. It is an attitude that will grind away at you over time, extinguishing the flame that once was your initial idea. Many studies over the past decade have proven that sleep, rest and a healthy work/life balance are essential to wellbeing and success. Take breaks, delegate, keep to sensible working hours, eat properly and keep fit.
In conclusion, perhaps the most important thing to do to keep your business on track is to look after yourself first. Keep that positive vision in your head by keeping yourself healthy, happy and inspired.
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.
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.
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.”
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.
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”.
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.
David Falzani, SMF President and honorary professor of entrepreneurship at Nottingham University Business School (NUBS) takes us through NUBS’ ingenuity process which is at the heart of its entrepreneurship module.
Ingenuity, inventiveness, originality – all these are at the heart of entrepreneurship. Entrepreneurs, after all, are fundamentally problem solvers that offer creative, innovative solutions and responses to problems – gaps – in organisational or market-oriented thinking.
However, creative solutions don’t just materialise out of thin air. They emerge from lateral thinking processes and problem-solving approaches which attempt to grapple with not just the problem itself, but the factors leading to the problem, the consequences of the various solutions potentially available to us, and the possibility of new, unique ideas which can be mobilised into a concrete plan of action. In other words, ingenuity is not innate. Whether we’re talking about products that fill a particular gap in the market or internal changes to a business, ingenuity is a problem-solving process that taps into a natural human capacity for creative solutions.
They say that quick decisions are not always the best decisions. That’s why the ingenuity process demands organisational time and respect to get the best results – that is, after all, why we talk about it as a ‘process’. It represents a progressive working-through of the obstacles and issues in question. So, what might this process look like?
Defining the problem
If you’re looking for creative solutions, you must already be aware that there is a problem or obstacle. The ingenuity process firstly seeks to understand the problem in its entirety by asking questions such as, but not limited to:
Whose problem is this?
How urgent is the problem?
How might we break the problem down into manageable parts?
In other words, ingenuity first requires a comprehensive, concrete analysis and explanation of the issue at hand—as this will form the basis of the next step, ie your strategy. Knowing the component parts of the problem should give you a clearer idea of the various objectives required to solve each element of the issue individually.
It will also allow you to test your potential strategy against the problem itself by making clear the various implications and impacts of your solution on the different factors leading to the problem in the first place. Defining the problem in this way may even solve the problem immediately by making clear the various blind spots in the organisation’s relationship with the issue thus far. To come up with an original, ingenious solution, however, requires you to document the problem – and your strategy – in its entirety. There is no single answer to a problem, and that’s why all possible avenues must be explored before action is taken.
Documenting the ingenuity process
Documentation is vital in any organisational context, as it will form the basis of any concrete, problem-solving proposal to your colleagues, shareholders, or fellow management team. It enables you to communicate the gravity of the problem and all its complexities in a way that creates a case for taking action and moving forward.
You’ve hopefully thought about the problem in depth, measuring its impacts, causes, and implications of your proposed strategy. You need to communicate this creative thinking in clear, concise terms – not only to justify your strategy but also to hit the nail on the head, so to speak. So, write a statement describing the predicament which addresses:
The processes involved
The facts as they are and why they demand action
The consequences of not solving the problem
This should form the basis of a concise justification as to why your strategy is not only a good potential course of action but an imperative one too. Supplementing this statement with a comprehensive analysis of root causes, a map of the different processes leading to and from the issue, and arranging different considerations according to priority, will provide a solid basis for moving forward and generating real solutions and ideas with your colleagues.
Discovering creative solutions
So, you’ve analysed the problem in its entirety, demonstrated the importance of solving the problem, and hopefully proposed a basic strategy for moving past the issue. Everyone agrees creative solutions are needed, and there are clear ideas about where the problems lie and where action needs to be taken.
If these steps represent an objective, concrete approach to a problem, one that attempts to quantify the issues at hand, then it is from here that real creativity comes into play. You need to designate a time and a place for non-judgmental idea generation.
Exercises such as looking for analogies in other markets or previous experience can be helpful in illustrating where other solutions have fallen short and what needs to be done differently. Take an example from another company, perhaps, and try to generate a set of hypothetical solutions for the problems they faced – it will give you a much-needed detached perspective while providing a focal point for new ideas. Get to the root of your current problem-solving processes. What organisational assumptions are underlying them? How might you change those assumptions to move beyond paradigmatic thinking?
Brainstorm, argue, debate, deconstruct – and ultimately, generate as many ideas as possible in response to the problem at hand. Many of these ideas might not solve the problem in its entirety, but they might solve it partially – and if not, the point is that they open up new space for alternative, lateral solutions. This is the most important element of creative idea generation – allowing yourself to be wrong, questioning your assumptions, and making the box small enough that thinking outside of it becomes second nature.
Determine your course of action
This is the hardest part of the ingenuity process, and the part most burdened with the kind of risks entrepreneurs must take on. Firstly, you need to step back from the idea generation stage. Getting sucked into individual ideas and potential responses can mean losing sight of the bigger picture. You now need to consider all your ideas in their entirety and as a collective whole, asking yourself:
What kind of underlying logic characterises the different groups of ideas generated?
What solution does this logic point towards? Does it sufficiently address the problem?
Have all derivative ideas or combinations of ideas been seriously considered?
It’s time to collate your ideas and think hard about the nature of the problems they’re speaking to. The ingenuity process is then not so much about idea generation as it is about critical self-reflection on the logic and norms governing ‘business as usual’. It’s only by questioning your assumptions and considering your ideas in relation to these assumptions that a truly original, creative solution can emerge. Here, the ingenuity process transforms: it is no longer just about thinking outside of the box; it is about questioning how you ended up inside it in the first place.
Despite all the commentary and hype surrounding startups, there’s a reason that many fail to develop into bigger companies. The lean and hungry startup is not only able but supposed to take risks that more established firms cannot do owing perhaps to both organisational inertia and inflexibility. While this often results in more ‘failures’ than it does long-standing successes, the risks startups take can be of enormous teaching value in terms of providing case studies to larger, more well-established companies about what went right or wrong.
Likewise, start-ups looking to transition to the next stage could learn an awful lot from larger companies — once startups themselves — about long-term development and consolidation of both the brand and internal culture. Startups lack the kinds of structure and procedures which characterise established firms, but these will need to be implemented if a startup wants to take it to the next level. There are a lot of opportunities for both sides to share good practice and learn from each other.
The exchange of ideas and good practice between big, established companies and startups is often derided as superficial ‘innovation theatre’. Adopting the ‘perks’ of startup culture, such as open-plan office layouts or staff canteens, corporations posture and make it appear as if they are ‘innovating’ while sales continue to stagnate and the firm fails to break into new markets. They’re still just as rigid as before, having failed to learn the real lessons from startups about problem-solving, risk-taking, and experimentation. Investors remain conservative and management less entrepreneurial.
While startups do often successfully seek efficiencies by shaking up work patterns or by cutting through red tape and bureaucracy normally faced by bigger companies, it’s “how startups attack problems and mobilise talent that makes them unique,” argues Zachary Johnson for Forbes. “It’s being able to focus single-mindedly on one problem that allowed Salesforce.com to become the king of CRM. It was a reputation for hiring brilliant people that made Google such a desirable place to work.” For him, startups bring discipline to ‘mistakes’ (ideas, trial, error, iteration) building a safe space to incubate new ideas.
Building a space for corporate experimentation must have a clear end goal or objective in place to maximise resources. Both startups and corporations must strike a balance when learning from one another – taking too many cues from startups is untenable and risky for a company with a stable portfolio while inheriting a rigid organisational approach from larger companies can strip startups of their edge that makes them successful.
Before any knowledge exchanges can take place or be put into action, there need to be clear boundaries and goals in place. What issues are you aiming to solve by adopting similar practices to companies of a comparatively different size and perhaps even industry to yours? “Startups by nature have to validate their ideas, so they value experimentation and exploration.” Any experimentation or knowledge exchange should likewise be clearly justified.
Intrapreneurship makes perfect sense in any market that is facing disruption or long-term stagnation, or for any firm that is failing to keep up with the pace of innovation in its industry. Most entrepreneurs of startups want to grow and expand into an empire. As they achieve this ambition, they too will need to implement more structures and controls to ensure the business grows in a particular direction. Intrapreneurship and the acquisition of new business disruptors will ensure that they remain the dynamic and flexible players they were at the start of their journey. Their future could depend on it.
Professionals, particularly engineers, are enthusiastic about the promise of the Internet of Things (IoT). Everybody talked about it when it wasn’t quite here. Now that it’s here, it’s growing exponentially.
Gartner predicted last 2014 that there would be 25 billion devices integrated into the IoT. Cisco says figures would be near 50 billion. Morgan Stanley believes it will reach around 75 billion.
This growth will get closer to reality as devices become smaller and sleeker and computing grows more powerful and becomes more streamlined.
The IoT is simply the interconnectivity of devices through the Internet. Great innovation at first sight, but it is not without consequences.
The connectivity that drives IoT is the same that could also cause dire consequences. For example, there have been reports of hacking of baby monitors and Wired ran a feature on the simulation of hackers taking over control of a jeep on the highway. Even power interruptions can cause serious problems.
As of now, there’s still no international standard for compatibility in IoT, particularly for tagging and monitoring devices. Of all challenges, this is the one that can be most easily solved. Companies just have to agree on a standard, which already happens in different products and services. The IoT won’t be any different.
Though standardisation is an easy matter to solve, technical issues will still exist. Even today, Bluetooth, a relatively old way of connecting, still has compatibility problems. Issues about compatibility can lead to customers buying from one company only, developing monopolies that can hurt the industry.
Complex systems offer more chances of failure. The Internet of Things can offer massive amounts of these chances.
An example of this failure is double purchasing. Let’s say a couple receives the same note from their refrigerator saying that they need to buy a loaf of bread. There’s a chance that they both buy one, leading to the purchase of two loaves instead of just one.
Software bugs can also send notes to an owner telling him to buy a new light bulb even when he just bought a new one.
The complexity of the IoT also gives way to more intensive management and maintenance. How will IoT companies make sure that billions of these devices are online and running? Can takeovers and interruptions be easily handled through billions of connections? Will the IoT require every device to be registered or will it only require a certain identified ‘residence’ to represent all devices within?
IoT will also handle massively growing amounts of data. How will companies make sure that they deliver the expected results and withstand a growing workload at the same time? How will consumers know if their devices are able to handle intense data flow?
Privacy and security
Since the IoT is founded on transmitted data, the risk of privacy breaches gets bigger. We are still not sure of how good data encryption will be. Sensitive information like medical prescriptions and financial status are exposed to bigger risk.
Extra security may demand higher prices, which will either attract only a few customers or none at all.
Looking at the bigger picture, we also do not know who will be controlling the IoT. One company controlling it can lead to a monopoly that will do consumers and other competitors no good. Multiple companies handling the system can expose private customer information to many groups, which will compromise the close relationship of the customer to a specific company he adheres to.
The fact that personal data will be exposed to the Internet once IoT gets implemented will render any consumer vulnerable to hacking, fraud, identity theft, and other crimes involving sensitive information.
The government itself, which is supposed to be the most secure entity in any state, can easily be hacked by hacker groups. The group Anonymous has already done this to the US government.
What if a hacker changes your preferences for medicine, food, and other products? Once your data is breached, this can happen. In the IoT, consumer safety depends on how good the system can verify real information that passes through automated processes.
The IoT is constantly growing, and even at its early stage, the whole system, as well as the dangers it faces, are already overwhelming. Data breach can affect huge sectors of the system like a disease.
At the very least, we need to easily spot where problems originate in the system. Monitoring must be optimum so Big Data tools must be able to alert authorities when security incidents happen. Threats must be taken care of in real time with little to no delays. As of now, we need to know what these systems would look like and how companies can make these systems real.
Mass unemployment of unskilled labour
The demand for unskilled workers will plummet to the point of irrelevance as automation will prove itself to be more efficient. This always happens whenever technology takes a leap and will require humans to level up its education.
This phenomenon can cause social chaos and maybe a change in how people see technology, as technology is supposed to make life easier for people, not harder. Unemployment will also decrease consumption, which will be bad for a growing IoT industry because any new industry will need a growing market.
Since human involvement in the delivery of products and services will be minimised, the consumer expectations will increase too. Failure to meet expectations may add fuel to an already spreading fire caused by unemployment.
Over reliance on technology
It is almost certain that IoT will make humans a lot more dependent on technology to the point that it will take control of our own lives. As of now, young generations are already attached and addicted to technology for every aspect of their lives. Do-it-yourself is now do-it-with-gadgets.
Today, information is easily searchable through Google. People who can help you can easily be reached through social networking sites. False news can easily be spread and disproved using search engines. Writing turned into typing and typing turned into taking pictures of texts.
Society must determine how much technology must run human life.
Sainsbury Management Fellowship champions the benefits of a combined business and engineering education to help improve the performance of the UK economy