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Digital Ecosystems

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Financial Services

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Smart Cities and Transportation

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Articles tagged with: featured

Seeking an exit? Should you fly the coop or sit tight?

Written by Guy Rigby on Monday, 06 February 2017.

Many entrepreneurs start with a sale of their business in mind. Others will have founded and run their business for many years and have strong emotional ties.

Whatever the circumstances, many owners will seek to sell their business at some point and it will often be the most important financial transaction of their life. Last week, Nando’s hit the headlines with a, latterly, much denied rumour of a London listing. In reality, IPOs are a bit like the US presidential process – long, painful and difficult. They are also more often than not about funding for growth, rather than an exit end-game. So if you are considering selling your business, what are your other options?

Heading for the exit?

The Nando’s story perhaps underlines another theme – that the UK economy is in, perhaps, surprisingly good health. IPO’s, not least for expansive retail chains in a highly competitive arena, are not that common, especially in times of economic uncertainty.

This is reflected in the results of our latest Enterprise Index, which provides a view direct from SMEs and entrepreneurs (well, you) about your outlook for your businesses and the economy. Confidence amongst our respondents in their own business prospects grew in the quarter and for the coming year, but there was one area of concern that united them. Find out more below.

Despite concerns, there is cautious optimism for SMEs in 2017

If you’re not yet ready to sell, but want to prepare or scale your business for the future, come to our Business Growth Programme event, courtesy of Cranfield. For further information or to register click here

I don’t know about anyone else but I’m hungry (if nothing else the rumours may have fuelled Nando’s profile further in the short term!).

Until next time...

All change for smaller companies

Written by Guy Rigby on Thursday, 05 January 2017.

DIY is alive and well but, even with the amount of information available online these days, most business owners accept that they need expert help with issues relating to technical accounting and compliance.

With this in mind we’re breaking one of our unwritten rules for Enabling Entrepreneurs – to steer clear of technical issues – to talk about two very significant changes that have the potential to have a big impact on businesses of all shapes and sizes. In this particular case, it would be remiss of us not to mention them here.

The two issues we want to raise concern the introduction of a new accounting standard, FRS 102, which has the potential to significantly alter how your company’s financial position will look on paper, and the introduction of new, raised, audit thresholds.

Firstly, and it may sound a bit dry, FRS 102 for small entities is replacing the Financial Reporting Standard for Smaller Entities (FRSSE) and may affect your company’s accounting profit, tax position, existing financial covenants and distributable reserves. If you haven’t already, now is the time to understand the implications of FRS 102 for you and your stakeholders. To find out more about the new standard and how we can help, please click below.

Time to get serious about FRS 102

The second important change relates to the thresholds for audit for smaller companies. If you currently have an audit and turn over up to £10.2m, have total assets of up to £5.1m or have up to 50 employees, this may no longer be required.

However, some companies, even if they are below the threshold, have voluntary audits, perhaps because of management, funding or investor requirements. In the light of these changes, it may be time to consider an alternative that provides a review of certain key areas, without the expense of a full audit.

Our solution is ROBUST, a tailored Review of Balances, Underlying Statements and Transactions.

If you currently have an audit, but fall below the new threshold, talk to us about how we can design a tailored, cost effective review to provide the assurance that you or your stakeholders require.

An attractive alternative to audit

Talking about year-ends, 2016 was a memorable, if not tumultuous, year! I and my team at Smith & Williamson wish you a happy, healthy and prosperous New Year.

Economy 4.0: The Global Revolution and its Five Disruptive Forces (Part 7 of 7)

Written by Reinhold M. Karner on Sunday, 06 November 2016.


The old order of the economic and business environment will erode and be gone as we face massive disruption, change, trend break, exponential speed and challenges everywhere. A decision-horizon of a few years has expanded into an eternity, as we live in times of near-constant discontinuity.

Although there is a ‘big but’ as uncertainty and volatility increases, in my opinion, Economy 4.0 – this vast global revolution and trend break era which will bend the curve of human development and society even more vertically than it did in the first Industrial Revolution – offers us far more opportunities than risks.

Despite all the daily news about sad, worrying and ‘unpleasant’ events, I see the present as a time for great optimism. Why? As so many more people are expected to be lifted out of poverty and join the consuming class (see part 2), the world is getting richer – countries and their people are becoming less unequal – especially in emerging economies, prosperity and new technologies will help us to live healthier lives and hence we may expect significantly longer lifespans. Meanwhile, an ever-larger spectre of products and services is becoming available to consumers around the globe. Technology will provide evermore economic opportunities to hundreds of millions, even billions of people, empowering the next waves of entrepreneurs and start-ups and changing the building blocks of our societies, education and healthcare.

Of course, these times and the coming decades may redefine who runs and lead the world’s economy – from countries to companies and individuals.

Just think about a few of these new opening opportunities: following the shift of the world’s economic centre of gravity back to Asia, if you consider launching your products or services in just one or a few of the new, emerging mega-cities (see part 2) with millions of inhabitants, you could acquire new markets more easily – in that each city is the equivalent of some European states – but in a bounded area so that you can develop on your growth-strategy from there. You could also check whether you could tailor your services and products to the greying market (see part 5); or think about the gigantic business opportunities as the amount of vehicles double by 2035, giving rise to a desperate need for a solution and infrastructure to fight pollution, congestions and parking, or about the green energy sector (see part 4).

There is also the ‘new growth theory’ from American economist, policy entrepreneur and university professor Paul M Romer to consider. He argues: “Economic growth occurs whenever people take resources and rearrange them in ways that make them more valuable. Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new ideas were discovered. And every generation has underestimated the potential for finding new ideas. We consistently fail to grasp how many ideas remain to be discovered. Possibilities do not merely add up; they multiply.”

I fully agree with Prof. Romer’s theory, even more so when it comes to transforming analogue products, services and solutions into the digital world of business.

But think also about some of the key impacts: the world has made bewildering progress in the last 25 years, raising hundreds of millions of people out of poverty (see part 2). But this, the industrialisation and rapid urbanisation has triggered soaring demand for food, energy and natural resources. Since the new millennium, prices for commodities related to agriculture, metals and energy have almost doubled and hit the poor even harder, while the trend has recently reversed in relation to oil.

MGI expects that the following four major drivers of rising prices (none of which is likely to be temporary or short lived) will keep them volatile in the years ahead:

• Demand: the first factor is sharply rising demand from the world’s expanding number of middle-class consumers.
• Supply: rising demand wouldn’t be such a problem if supplies of commodities were increasing across the board at the same rate, however, accessing the supply of resources needed to meet soaring demand is increasingly challenging.
• Interlinking: the increase in resource prices isn’t restricted to food, and it doesn’t only affect households. As global interconnections rise, the world’s resource markets become ever more closely linked. In many instances, rising demand for one type of commodity can lead to serious stresses on supplies of other commodities. E. g. agriculture accounts for approximately 70 per cent of global water use and two per cent of global energy use.
• Environmental costs: for a century, the world essentially ignored the externalities and impacts of production. Now, governments around the world are taking the first steps to impose costs to compensate for environmental factors related to local resource production and for global issues such as increasingly frequent climate change events, ocean acidification and deforestation.

But MGI also questions whether we might see a farewell to increasingly cheaper capital, as there is every reason to think that the rate of investment will continue to rise, with industrialisation and urbanisation of emerging economies fuelling the boom. Or, as the world continues to age, household savings will decline, causing a de-accumulation of assets etc.

Of course there might still be the other side of the coin going on – as has been the case in recent years, the world’s central banks have shown an increasing willingness to take interest rates into uncharted territory and print money at an unprecedented rate. Between 2007 and 2012 alone, the governments of the United States, the United Kingdom and the Eurozone collectively saved nearly $1.4 trillion on lower interest payments on their debt. MGI recommends: as demand-supply dynamics change, business leaders need to be prepared to navigate both worlds.

But let’s come back to the latest upheavals, attacks and even the not at all amusing trouble spots and crises. As sad as many are, there is at least always also a positive flipside, as they challenge us all to rethink and cherish our core values and prosperity, like sovereignty, democracy, peace, freedom from hunger, safety, privacy, free speech and movements as well as travelling, the ability to communicate freely, transparency etc. which so many of us take for granted and forget to contribute to the legacy of those who went before. But of course we are faced with challenges of adjustments and improvements too, which could also lead us to a better world.

So here is one of my RMK-principles: be aware that there is a business behind the daily provided news! As ‘bad news is good (selling) news’ we don’t get the fantastic whole ‘picture’ of the massive amount of very good news out there, in your neighbourhood or on the globe!

Sure, pessimists – which some say are the better informed optimists, though I very much doubt that – still have their share these days, even more than they had in recent years or decades, that the world looks out of joint. But it’s essential to note that the long-term trend of so many indicators and parameters points just up and to the right, not down! This is the reason why I have great confidence and optimism as well as a strong belief in a very promising and bright 21st century!

So I’d recommend to everyone now more than ever to balance themselves and live with confidence and optimism in their thinking, feeling, speaking and behaviour, and even to let decisions and sentiments be formed and supported by them.

Now many might expect a check-list of golden rules to deal with these disruptions and its forces, whereby they just have to tick the boxes to stay on top of the future. But sorry, the addressed mega-transformations and trend breaks in this Economy 4.0 series are way too complex and on a magnitude not to be dealt with so simply.

It is a fundamental challenge with all predictions on such a scale as there are too many dependencies, an infinite complexity and number of indicators or parameters. This exponential trend break era and vast global revolution is too rapidly changing – excessively full of opportunities but also fraught with peril. This is why no one on the planet knows or would be able to predict the future precisely by looking into a crystal ball, it’s just impossible. The future’s development is free, open and thus unforeseeable!

The only thing one might be able to do is, if you invest a lot of time, armies and efforts in in-depth analysis, research and perspective, to assume and think about theory-tendencies, carry out ‘what-if’ analysis and models, and simulate assumptions. But most of us fail to comprehend their full scope and the omnipresent potential of side effects of the so-called second, third or even fourth order changes and their resulting impacts!

My first intention when writing this Economy 4.0 series was to put these mega disruptive challenges on your radar, particularly if you haven’t have a chance to attend one of my talks or read or learn about them otherwise via some of the mentioned sources. My second intention was to share some of my conclusions, thoughts and recommendations which might support you to take it on from there.

The important thing to understand is that these mega trend breaks will create significant and profound implications for all kinds of business-oriented or related organisations, be they companies, corporations, NGOs, governments, universities and so on.

Today’s global economy is in fact entering into an array of crucial economic, political, historical, technological but also social crossings and turning points. The upheavals we are going through can’t even be compared to the previous Industrial Revolutions, as in fact, they all pale in comparison to today’s convulsions, because the changes are happening much more rapidly everywhere, and are interlinked and on a much bigger scale than ever, beefing up one another. Thus, they challenge our minds as much as they do our skills, capabilities and talents.

So what is the challenge to ourselves – decision makers, entrepreneurs, leaders and policy makers – to deal with this kind of future in the right way?

We have to fundamentally rethink how, when and whether we should use our accumulated experience and education, familiar and comfortable mind-sets and decision patterns in the future, as a decision-horizon of a few years has expanded to an eternity. And the game will change ever-faster – “we have dared to reach in the unknown, where no man has gone before” (NASA and Star Trek reference). Decision-making based on using the rear-view mirror of experience and knowledge primarily might frequently be dead-wrong.

As MGI outlines:

• Speed, surprise, and sudden shifts in direction in huge global markets routinely impact the destinies of established companies and provide opportunities for new entrants.
• Ours is a world of near-constant discontinuity.
• Competitors can rise in almost complete stealth and burst upon the scene.
• Businesses that were protected by large and deep moats find that their defences are easily breached.
• Vast new markets are conjured seemingly from nothing.
• Many of the long-standing trends that made life so pleasant for investors and managers during the Great Moderation have broken decisively.
• In developed economies, parents generally assumed that their children, upon becoming adults, will be more prosperous than they were.
• Although inequality between countries continues to shrink, in many parts of the world, individuals – particularly those with low job skills – are at risk of growing up poorer than their parents.
• That’s just the beginning! That familiar world is no more. A radically different world is forming.

Many suffer from a surprising degree of inertia, especially when it comes to backing up strategy. That could become hazardous. As already quoted in part 3, the influential management thinker Don Tapscott states, “Those with vested interests fight the change. The shift demands such a different view of things that established leaders are often last to be won over, if at all.”

But we could learn from start-ups for example, as they don't think like established leaders. They don't think linearly in terms of growth, but rather, they think exponentially. Start-ups want to move with a speed that is not one or two times faster, but 10 to 20 times, including when it comes to innovations, which is key to their success. They don't think about the amount of resources they can throw at a problem, but run their organisation unbelievably lean, flexible and fast. How can they pare it down to the bone? They are willing to fail, learn and restart fast – again and again!

Another interesting lesson is one we can get from family businesses. As Josh Baron wrote about the “three generation rule” in his article, ‘Why the 21st Century Will Belong to Family Businesses’ in the Harvard Business Review:

“Everyone already knows that family businesses don’t last. He’s perfectly right. An oft-cited statistic is that only 30 per cent of family businesses make it through the second generation, 10-15 per cent through the third, and 3-5 per cent through the fourth. These are disheartening numbers. But let’s put them in perspective. How many companies of any kind are still around after the equivalent of three or four generations? A study of 25,000 publicly traded companies from 1950 to 2009 found that, on average, they lasted around 15 years, or not even through one generation. In this context, family businesses look pretty enduring.”

Family businesses have nowadays – and more so with each passing day – a lot of benefits. To highlight a few: in order to be successful globally, public companies are losing their clear advantage in the scale economy or in raising capital, as even SMEs can now become micro-multinationals easily, and as the investment priority has shifted from quantity to quality, they don’t need lots of money, apart from the fact that going digital globally today is cheap (see part 6).

Another advantage is their agility and potential to be more adaptive to increasingly intense competition, as the new tune is to shorten the distances between decision-makers and the forefront. And here, the majority of family business and their leaders are great at dealing with this requirement, as they have flatter and more efficient structures and business processes, fast and easy information flows, direct connections to their employees and customers, and can come out with decisions in less time.

But they also provide a higher calling for their recruitment and team with an immanent value which unleashes more of their potential, contribution, responsibility, talents and loyalty. Without any need to please external markets, they can take a long-term perspective and make decisions on the basis of sustainable economic value, thinking in terms of generations and usually caring a lot about their promises and reputation. And as the money at stake is their own, family businesses tend to be cautious on how to spend it, and the discipline that comes from this care is a remarkable upside when top line growth is tougher to achieve.

Decision-making in large public companies is largely done and executed by management which is rarely orchestrated of majority owners (the ‘principal-agent’ problem). At least by the end of the 20th century, if we think about the efforts to motivate managers to act like owners through stock options, it has been proven that this undertaking has not just failed, but backfired. In family businesses we see this ‘principal-agent’ problem far less because they foster ‘engaged ownership’ – and to bear also in mind the simple fact that fewer owners makes the oversight and making of decisions far easier and quicker.

And as it matches quite well with some remarks from part 6 regarding globalisation, the principle of the 21st century economy as professor Klaus Schwab, Executive Chairman of the World Economic Forum quotes it, is: “In the new world, it is not the big fish which eats the small fish, it’s the fast fish which eats the slow fish.” This should encourage SMEs and start-ups a lot!

To stay ahead in the future, entrepreneurs, chief execs, leaders, decision makers, policy makers and individuals need to seriously question their approach, thinking and decision patterns again and again and should courageously and fearless reset them if for the better, as what worked well in the past might not lead to success in the future!

In addition to all the above mentioned conclusions and recommendations, to master this necessary adoption to these challenges successful, leaders should first start with themselves – open up, get curious and optimistic, learn, and be prepared to venture new strategies and leadership models. The second requirement is checking whether leaders might be able to either turn around quickly or change their surrounding influencers accordingly, as they need to contribute strongly as change or even reset promoters.

Meanwhile, the third important focus point is resisting the old thinking and decision-patterns and the view of ‘half-empty-bottles’ and instead concentrating on the vast opportunities of the future and ‘half-full-bottles’. The good news is that we live in very exciting and the best of all times – in many ways we live in an age of recurring miracles! As history proves, development turns for the better in the long run.

A young researcher at Oxford University, Max Roser, with an impressive commitment to collect and aggregate special economic data, provides the webportal, an online publication of facts and developments that shows how living conditions around the world are changing. It’s almost therapy in optimism.

And at the close of this blog-series, I’d like to mention a few more of my favourite guidance notes.

According to ‘The 92 per cent of your concerns…’ - (by Dr Florian Langenscheidt, Entrepreneur of a privately held famous German publishing company in its fourth generation, specialising in language resource literature, dictionaries, investor and author):

“There is an incredibly interesting statistic which I remember five times a day:

• 92 per cent of all concerns that we face before a bold step – whether it’s changing a job or starting a company – turn out to be unfounded later.
• But other things will come up, problems and challenges you weren’t thinking of.
• Still – the 92 per cent will not occur!
• So, think about the 92 per cent and their opportunity costs and the meaningfulness in your current occupation or business.
• Get in the driver-seat of your life and start your own or new business roadmap now!”

And a few more of my RMK-principles:

• Always remember, neither the past nor the future was or will be just black or white, grey or colourful! Hence the most promising way to deal with our lives and businesses, is ‘carpe diem’ – seize and enjoy the day, today! As we human beings, we are only able to think, plan, act, live and make our life right now, today!
• It might be wiser to aim to grow better, different – not just bigger!
• What we all desperately need in the 21st century is a revival of trust, reliability and credibility!

I look forward to any questions or comments.

Reinhold Karner (aka RMK – Reinhold M. Karner)

The Entrepreneurial Spirit

Written by Farrukh Younus on Tuesday, 01 November 2016.

Amongst the definitions of an Entrepreneurial Spirit is a discomfort with the existing status quo. Sometimes from within an industry, sometimes from outside, the entrepreneur through their gut instinct has a passion to improve a situation, deliver better value, even solve a problem which we at times we did not know existed as we have become normalised to existing practice.

This isn’t about selling ice cubes to Eskimos, that is nothing more than a glorified ponzi scheme which once it’s participants are aware of, they become angry, upset, and suddenly the relationships that were build crumble. Nor is it about jumping onto the app-bandwagon, at the recent Tech Expo held in Bishopsgate I met a gentleman over lunch, Robert Fejer, whose DailyRoads Voyager app has had millions of downloads without making him rich.

It is however about leaving people with such a pleasant memory of an activity, an experience, an engagement, that they wish to return for more. This is no better illustrated by a new to market product, TasteTripper, launched by a friend, Jennifer Earle. Contrary to the desire to move fully digital, TasteTripper is a business proposition where you buy a pack on-line – currently for chocolate, coffee or beer – and receive a physical guide about the category in a given city, complete with vouchers with which to ‘taste’ a product, then go shopping.

Curious, a colleague and I took five vouchers out from a Chocolate TasteTripper packet and spent the day in London discovering the experience. As with any new offering we faced hurdles. At some venues we had to call for the manager and explain what our voucher entitled us to, at other venues the staff had to call in to head office to verify the vouchers were indeed legitimate, whereas elsewhere as soon as we presented the voucher the staff at the counter knew the product offering and obliged happily. With time and learning this process with become more smooth.

Jennifer is of course the Queen of chocolate in the UK. As the founder of Chocolate Ecstasy Tours where individuals book a guided trip around – currently – London or Brighton, discovering and tasting chocolate treats, it made natural business sense to develop a self-guided tour solution, particularly given that she has already business relationships in place with leading chocolatiers.

In the modern era with instant check-ins, instant on-line sales, instant everything, TasteTripper creates a non-digital experience. It is part of it’s appeal. We all have smartphones, but the packet comes with a physical map locating the various chocolate-coffee-beer spots that are involved in the program. All of the vouchers are physical, printed on card, and the tangible engagement, that element of touch beats any ‘haptic’ experience on a device, demonstrating that while digital is great, the physical world also has it's merit. No better demonstrated at the Tech Expo where Virtual Reality and Augmented Reality played an important part.

On the other side of the spectrum you have Great British Chefs. Run by their CEO, Oliver Lloyd, their mission is on-line, bringing together the best of British – and now Italian – chefs, creating on-line recipes and where possible engaging with social media influencers at specific events, such as cookery classes e.g. in partnership with Le Cordon Bleu school in London. More recently, they ran a Great British Cheese Awards where the CEO aptly pointed out that long gone are the days where cheese competitions would be held in tents as we stood within the glorifed chambers of The Gilbert Scott in St Pancras.

Do not misunderstand me, there is a certain love for festivals in tents in fields, one our nations leading shows, the Great British Bake Off has adopted this model. Indeed I have fond memories of driving to the grounds of Cardiff castle in Wales for a cheese festival many years ago.

But with both TasteTripper and Great British Chefs, we suddenly have offerings with their own unique USPs. The former is an idea that will grow because of the experience it delivers, and simply needs to scale to deliver a similar richness at cities around the globe. While the latter which has already secured it’s first significant round of funding and will eventually monetize its offering further along with its cache of relationships.

In a city full of chocolate shops, reviewers, and many ways to learn about chocolate, TasteTripper is offering which you didn’t know you needed, but as a lover of chocolate, once you know it is available, you crave. Yes, everything is there for us on Google, or on individual bloggers websites, but by re-packaging the information into a meaningful format, Jennifer has created a brand value and proposition, such that I look forward to similar offerings for Paris, Brussels, Berlin and so on. Yet no matter the product offering, she and her team will still need to initiative the relationships directly with chocolatiers to enable expansion.

We can see the impact of funding with Great British Chefs. The Cordon Blue school has always been around but it is through, for example, these unique cookery classes, where leading chefs and social influencers are brought together, that value is being build. In our own capacity at Implausibleblog we are regular invitees and you can catch a glimpse of the experience in a video here with Michelin starred Chef Pascal Aussignac of Club Gascon.

Forbes recently tweeted a link to an artilce on 25 tech companies on their way to a $ billion valuation. Sadly, following through, I was unable to read the text as their system detected my ad-blocker so forbade access. I do not know what is worse, that the ad-blocker stopped me from reading an article which someone at Forbes took the time to author, while another took the time to Tweet, or that if I disabled my ad-blocker I would be targeted with an irrelevant advert which while meaning that Forbes can pay their bills, means the advertiser is throwing away their money, promoting something I do not want to see.

Perhaps here is the next billion $ idea, rethinking the current digital advertising proposition where if money is not being wasted through click fraud (up to 1/3 according to some estimates), advertisers are more often than not delivering messages to people who neither want the intrusion, nor find their adverts, relevant.

In the meantime, both TasteTripper and Great British Chefs have demonstrated what it means to have an idea and pursue them with passion. What makes these and other entrepreneurs successful, particularly when they have a dream while solving a problem or adding a value, is, in the words of producer Jon Landau, ‘to never give up;’ the foundation of the entrepreneurial spirit.

Malta’s 2017 Budget is good news for digital entrepreneurs and investors

Written by EntrepreneurCountry Global on Monday, 31 October 2016.

3ee8fdfOn Monday 18 October Malta’s government announced its budget for 2017 and in short it was good news for digital entrepreneurs and investors according to Mikko Puhakka, Senior Advisor at Ariadne Capital:

- There is a €250,000 tax credit for investors in SME’s or funds registered on Alternative Trading Platform of Malta Stock Exchange.
- Malta aims to become the first wifi state with its continued rollout wifi hotspots.
- An international ‘accelerator’ will be brought to Malta in order to assist local start-ups.
- The Maltese government is studying the Malta-France submarine fibre optic cable project to further reduce dependency on current structures.
- There will be a €3.2 million allocated to a second fibre optic cable between Malta and Gozo to make Gozo more attractive for digital business.
- A 25% to 45% tax credit on research related initiatives by business.
- There will be a simplification of new business set-up and reporting.

In summary, there are a number of new incentives and improvements but no new burdens for entrepreneurs or investors.

Mikko was born in Finland but has lived in 4 continents (Europe, US, Africa and Asia) and has just relocated from Beijing, China back to Europe and to Malta after a more than a decade in China. While majority of his work during last 25 years has revolved around developing business models and strategy in software companies, the result oriented approach has led to ‘’all sides of the negotiation table’’ successfully helping companies raise money, investing in companies, selling companies and also buying companies in diverse cultural environments. Besides direct assignments to companies ranging from start-ups to listed companies, Mikko has been actively building ecosystems around companies via various initiatives internationally including incubators and accelerators and chambers of commerce’s’.

Economy 4.0: The Global Revolution and its Five Disruptive Forces (Part 6 of 7)

Written by Reinhold M. Karner on Sunday, 30 October 2016.


There is a significant structural shift to detect in globalisation – an impact which will overturn the old order, upscaling and changing our perception by rethinking what it means to do business globally. And this is – again – also triggered by digitisation and connections, a new era which is no longer dominated by large multinational corporations and which will even shorten their lifespan, as SMEs can instantly become micro-multinationals in their own right, and start-ups can be ‘born’ global.

Globalisation is mainly driven by the degree to which the world is more and more connected through trade, capital and finance, people and information (data and communication).

To demonstrate the immense dimensions, I quote various reports and literature dealing with global flows in a digital age and global trends of disruptions from 2014-2016 by the McKinsey Global Institute (MGI):

In the past 30 years’ world’s trade has increased tenfold;
$26 trillion flow of goods, services, and finance in 2012, equal to 36 per cent of global GDP;
up to $450 billion added to global GDP growth each year by flows – and 40 per cent more benefit for the most connected countries than the least connected;
18-fold increase in cross-border Internet traffic between 2005 and 2012;
38 per cent of total cross-border flows of goods, services, and finance from emerging economies in 2012, up from 14 per cent in 1990;
up to $85 trillion flow of goods, services, and finance by 2025, three times the value in 2012;
emerging economies now account for 40 per cent of all goods flows, and 60 per cent of those go to other emerging economies – known as south-south trade;
12 per cent of global goods trade from China in 2012 vs. two per cent in 1990;
growth in knowledge-intensive goods trade is growing 30 per cent faster than trade in labour-intensive goods;
between 1980 and 2012, the value of total goods trade grew at a seven per cent compounded annual growth rate, while the value of services traded rose at an eight per cent annual rate;
in the same period, thanks to rapidly expanding supply chains, goods flows increased nearly tenfold in value, from $1.8 trillion to $17.8 trillion, and amounted to 24 per cent of global GDP;
between 1980 and 2007, annual cross-border capital flows increased from $0.5 trillion to a peak of $12 trillion, a 23-fold increase. Such flows fell sharply in the aftermath of the 2008 financial crisis and then bounced back.
The world is more connected than ever. For the first time in history, emerging economies are counterparts on more than half of global trade flows, and South-South trade is the fastest-growing type of connection. (Refer to the shift of the world’s economic centre of gravity in part 2).

While flows of goods and finance have lost momentum, used cross-border bandwidth has grown 45 times larger since 2005. It is projected to grow by another nine times in the next five years as digital flows of commerce, information, searches, video, communication, and intracompany traffic continue to surge.

Digital platforms change the economics of doing business across borders, bringing down the cost of international interactions and transactions. They create markets and user communities with a global scale, providing businesses with a huge base of potential customers and effective ways to reach them.

Over a decade, global flows have raised world GDP by at least 10 per cent – this value totalled $7.8 trillion in 2014 alone. Data flows now account for a larger share of this impact than global trade in goods. Global flows generate economic growth primarily by raising productivity, and countries benefit from both inflows and outflows.

For decades, trade – the flow of goods, services, and finance – grew at twice the rate of the global economy. But since the financial crisis in 2008, the year 2016 is expected to be the fifth in a row in which trade has failed to grow at this historical rate.

According to the Financial Times, last year we saw the biggest collapse in the value of goods traded around the world since 2009. Major ports such as Hamburg and Singapore have also reported slowing growth and even declining volumes. A spectacular turnaround in the global economy is not on the horizon – a pattern not seen since the stagnations of the 1970s.

Much of this recent feeble performance is down to the economic slowdown in China and an ongoing weak recovery in Europe.

Others think the slowdown in global commerce could still be offset by another transition in China, which is already underway. China is reviving the historic Silk Road trade route that runs between its own borders and Europe. The idea is that two new trade corridors – one overland and the other by sea – will connect the country with its neighbours in the west: Central Asia, the Middle East and Europe. Beijing is, in many ways, emulating what Japan did following the 1980s Plaza Accord, when a dollar depreciation against the yen triggered a move by Japanese companies to send lower-value manufacturing overseas while keeping higher-value production at home. So, China still has a clear path forward – and is by 2030 expected to be the world’s largest economy once again, as China was the world’s largest economy in 1820, and is the second largest economy today.

China has already lifted more people out of poverty than any other country – it is developing middle class consumers. China is the world’s largest exporter and the second largest importer of merchandise goods. There is big transition by China’s attempt to rebalance from a manufacturing and export-led economy towards one focused on domestic consumption.

While these factors explain part of the weakness in global trade, some say there are even bigger factors at work. A growing number of economists argue that the slowdown is not simply cyclical, but a steady sign that the forces that have driven globalisation for decades are beginning to shift. They note that the plateau in worldwide trade in goods and capital has coincided with a surge in data flows — an indicator that the digital economy of the 21st century is starting to overturn the old order.

The growth of trade is a centuries-long drift that has accelerated with containerisation and higher productivity of transportation networks. But today a host of new technologies and networks are changing and shifting the trend in its characteristics.

The rise of consumers and businesses in emerging economies is remaking, intensifying, and deepening the process of globalisation. Supply chains are growing quite complex and have greater geographical reach.

Economists at the McKinsey Global Institute (MGI) point to increased automation and new manufacturing technologies, including 3D printing, to support the argument that the change is likely to accelerate – all of which bodes badly for the future of the global trade in goods.

“The image that many of us still have in our minds of globalisation is the picture of the huge cargo container ships taking boatloads of manufactured goods from factories in far-flung places and delivering them to markets around the world,” says Susan Lund, one of the authors of these McKinsey reports. “What we see in front of us is a globalisation that has morphed into a very different and more digital direction.”

Even as flows of finance, goods and services have slowed — falling from a peak of 53 per cent of global output in 2007 to 39 per cent in 2014 — the world has seen a surge in cross-border data. The flow of digital information around the world more than doubled between 2013 and 2015 alone, to an estimated 290 terabytes per second, McKinsey says. That figure will grow by a third again this year, meaning that by the end of 2016, companies and individuals around the world will send 20 times more data across borders than they did in 2008.

McKinsey argues there are already signs of the economic value of that new form of globalisation. By its calculations, cross-border flows of capital, goods, services and data added an extra $7.8tn to the global economy in 2014. The added value of data flows alone accounted for $2.8tn of that total, slightly more than the $2.7tn attributed to the global trade in goods.

The arrival of this digital economy has coincided with a shortening of global supply chains, a phenomenon that the International Monetary Fund and World Bank warned about in 2014.

McKinsey argues that those moves, replicated in the US and elsewhere, have had a global impact as carmakers and other companies have begun bringing production closer to home or concentrating it in bigger markets. This trend will, in my opinion and as mentioned in part 3, be fuelled even more with the new and next generations of robots, automation concepts like ‘Industry 4.0’ and the Internet of Things (IoT), since labour costs will play an ever-decreasingly minor role.

Trade between emerging economies is likely to continue to grow as a share of global trade as incomes in these countries increase, boosting the number of consumers with a ravenous appetite for goods of all kinds. So there should also be plenty of room for economies in Africa and Latin America and even India to take up China’s mantle and feed the next round of growth in global trade. Whether as sources of rising demand for overseas goods or as new export powers, all could contribute to another burst of globalisation, let alone when the next billions of people in emerging economies are lifted out of poverty within the next few decades (as mentioned in part 2) and add to the consuming class – which will lead also into massive consequences regarding demand and costs of commodities and capital.

In an important trend break, technology is shifting trade from the formerly exclusive province of large companies to an activity that all sorts of companies – even individuals—can participate in.

Small businesses worldwide are becoming “micro-multinationals” by using digital platforms such as eBay, Amazon, Facebook, and Alibaba to connect with customers and suppliers in other countries. Even the smallest enterprises can be born global today: 86 percent of tech-based start-ups MGI surveyed report some type of cross-border activity. The ability of small businesses to reach new markets supports economic growth everywhere. More than 90 per cent of eBay commercial sellers export to other countries, compared with less than 25 per cent of traditional small businesses – a new era of globalisation for ‘the little guy’, as MGI calls it.

Individuals are participating in globalisation directly, using digital platforms to learn, find work (even on a remote basis), showcase their talent and build personal networks. Over one billion people have international connections on social media, and approximately 400 million take part in cross-border e-commerce.

Even people themselves are increasingly interconnected globally. While the number of people travelling, working, and studying globally has increased steadily for centuries, the past few decades have seen an explosion in the volume of those movements. Once people move to cities and earn higher incomes (see part 2), it becomes much easier to move or travel to other countries. Hence the labour market is becoming truly global for the first time as well.

In Silicon Valley for example, more than half of business start-ups involved a foreign-born founder, scientist or engineer, and over 25 per cent even included an Indian or Chinese immigrant.

People are not just traveling more frequently for work. World tourism has also expanded exponentially. In 1950, just 25 million people travelled abroad. But in 2013, we have already seen more than one billion international tourists travelling around. Their impact is enormous, not just because of the money they spend, but for the invaluable exchange of knowledge and culture, as well as the set-up of many new personal relationships.

Students, too, are crossing borders in large numbers. Around 800,000 international college students study in the US today – about 250,000 more than in 2006. Approximately a quarter of these students are Chinese.

Perhaps the most dramatic change in recent years however has been the speed at which information is flashing around the world. More than two-thirds of humans have a mobile phone, and the proportion is rising rapidly. Today, there are more phones than people.

This level of tele-density means that people have become interconnected at a level never seen before in history. Over 40 per cent of the planet is online. At more than 1.65 billion, the community of Facebook users is already far beyond the population of the world’s largest nation, China.

These connections have already had an enormous impact and are poised to have an even greater one, especially in developing countries. Internet-related consumption and expenditure is now bigger than either global agriculture or the worldwide energy sector.

The MGI Connectedness Index – which scores the flow of goods, services, finance, people and data over the flow of value and intensity, offers a comprehensive look at how countries participate in inflows and outflows. Singapore tops the rankings in the latest report (No. 4 in 2014), followed by the Netherlands (previous No. 6), the United States (unchanged), and Germany (previous No. 1). China has surged from No. 25 to No. 7.

This matters! MGI explains why: the rise, diversification, and power of global flows are not just fascinating; they are of significant importance to businesses all over the world for several reasons. First, the more connected you are, the better off you are. Second, global interconnections are rewriting the rules of the game and are one of the major factors changing the basis of competition. The new landscape of global flows offers more entry points to a far broader range of players. Large companies from emerging markets are increasingly formidable competitors. Traditional sector boundaries are blurring. Small businesses and start-ups can be instantly global. Whereas in the past, developed-economy multinationals competed against each other, today’s competitors can be individuals and companies in all shapes and sizes – from anywhere in the world and from unexpected sectors. Put differently, if a business today has data and a platform that engage millions of people, few attractive business opportunities in just about any sector are ‘unthinkable’ for it.

Online marketplaces for the sale of goods and services, have been at the epicentre of changes in the global competitive landscape. Today, however, as technology continually allows for the creation of entirely new platforms, incumbents may not have any familiarity with the mechanics, business models, and competencies of their new competitors.

It’s no longer sufficient to regard large firms as potential competitors; start-ups with access to digital platforms can be born global, scale up in the blink of an eye, and disrupt long-standing rules of competition.

Technology is also shifting the balance of power from large, established incumbents to small businesses, start-ups, and entrepreneurs. In global markets, size has typically not only been an advantage – it has been a necessity. In the 1990s, it was virtually impossible for small enterprises to compete in markets around the world or scale up operations to a global level immediately. In the vast commercial ocean, the sharks would easily mow down the minnows. Today, however, minnows are increasingly chasing and getting the better of sharks, thanks in large part to the rise and power of new technological platforms.

In an important trend break, technology has allowed small, nimble attackers to compete with large, established companies. Start-ups today can plug into enormously powerful global platforms with the same ease as a large corporation and can expand to millions of customers in a matter of a few years, if not months.

New competitors can buy state-of-the-art systems off the shelf and install them in a matter of weeks. 3D printing allows start-ups and small companies to ‘print’ highly complicated prototypes, moulds, and products in a variety of materials with no tooling or setup costs. Cloud computing gives small enterprises IT capabilities and back-office services that were previously available only to larger firms – and cheaply, too. Indeed, large companies in almost every field are vulnerable, as start-ups become better equipped, more competitive, and able to reach customers and users everywhere.

The instantly plugged-in phenomenon isn’t confined to the technology and digital sectors. Even traditional industries such as manufacturing are increasingly seeing small businesses with multiple-country production sites and global operations – practices once reserved for established multinationals.

Third, global flows provide companies with new ways to put their assets to productive use.

Finally, a more interconnected world leads to some surprising new outcomes. But that has, in my opinion, two sides of the coin, as this provides not just a vast range of opportunities but makes our world more and more into a village, so that any unfortunate event somewhere may impact vulnerable others without any delay, as these days, news travels not just fast but almost in real-time.

So be prepared to see and deal with this significant structural shift to make the best out of it and master the challenges well.

In the next and final part of this series, Reinhold Karner will deal with conclusions and recommendations.

Economy 4.0: The Global Revolution and its Five Disruptive Forces (Part 5 of 7)

Written by Reinhold M. Karner on Wednesday, 26 October 2016.


The fertility rate is falling, and the world’s population is greying dramatically both in developed and emerging countries. A third of the global labour workforce will retire in the next 10 years, which will change the scenery as never before, as well as challenging public budgets. A generation of older people is about to change the global economy in many aspects, and will reshape the business landscape in rich countries as they become increasingly well-funded consumers.

In the last century, the planet’s population doubled twice. But in the 21st century, it will not even double once – birth rates in much of the world have declined sharply. But the number of 65+ people, which was a steady eight per cent of the total population during the last few decades, is set to nearly double within just 25 years, to more than 1.1 billion people by 2035 – that’s 13 per cent of the population.

According to the Economist, the “old-age dependency ratio” (the ratio of old people to those of working age) will grow even faster. In 2010, the world had 16 people aged 65 and over for every 100 adults between the ages of 25 and 64 – almost the same ratio it had in 1980. By 2035, the UN expects that number to have risen to 26.

The interesting thing about this, in my opinion, is that people used to be ‘quite old’ at 65 years of age some decades ago, but today – thanks to so many positive developments – this perception and description is probably true only rarely.

But, on the other side of the coin, global experience shows that as nations grow wealthier, their inhabitants become less fertile. 30 years ago, just a small share of the global population in a few countries had fertility rates that were significantly below the replacement rate (2.1 birth per woman in developed, 2.5 in emerging countries).

Based on broadly rising prosperity by 2014, however, already 60 per cent of the world’s population lived in countries with fertility rates far below the replacement rates. This includes the majority of the developed world like Germany (1.4), UK (1.96) plus some large emerging countries such as China (1.5), Russia (1.6), Brazil (1.8) and Vietnam (1.8), while it is still over an outstanding six in countries like Mali, Niger and Somalia.

While aging has been obvious in developed economies for quite some time, (Japan and Russia have seen their populations declining over the past few years), the demographic shortfall is now spreading to China and will soon be seen in Latin America too.

Thanks to improvements in medical science, health care and vaccinations, a declining infant mortality rate as well as the predominant peaceful times and fortunate absence of massively devastating world wars, an upright circle has been created. According to MGI, for the first time in human history, aging could mean that the planet’s population could plateau in most of the world in a few decades.

If we take a look at the EU, in nearly every of its member countries, the fertility rate is below the replacement rate – at the moment, the population is expected to increase by five per cent until 2040 for various reasons, but will then begin to shrink. In Germany, which is known for its weak population growth, the European Commission believes the population could shrink by 19 per cent by 2060. The country’s working-age population is expected to fall from 54 million in 2010 to 36 million in 2060. This may also partly explain the recent welcome message from Chancellor Merkel to refugees.

The exemption to this trend is the UK, which may – according to MGI and without considering the impact of the recent Brexit vote – overtake Germany as Europe’s most populous country by 2060 – thanks to the high birth rate among families whose ancestors were immigrants, especially from their colonies, to a relatively high immigration today.

But all in all, this is not just a European phenomenon. The peak days of global population growth are very likely behind every continent except Africa.

At the same time, life expectancy is rising. Around the world, life expectancy at birth rose from 47 years in in the mid-fifties to 69 today. A few decades from now, in 2045/2050, the average person may expect to live to an impressive 76 years.

The demographic tables have just turned upside down. In the beginning of the fifties, developed countries had twice as many children (aged 15 years and under) as older persons (aged 60+ years). But since 2013, older persons outstripped children by a margin of 21 per cent to 16 per cent of the populations in these countries. Based on current trends, by 2050, developed economies could have twice as many older persons as children.

Credit-rating agency Moody’s projected in 2014 that the number of “super-aged” countries, defined countries in which more than 20 per cent of the population is 65+, which are today just Germany, Italy and Japan, would rise from to 13 in 2020 to 34 in 2030 (including China)! By 2040, as just one of many consequences, China could have more dementia patients than the rest of the whole developed world.

Beyond pure demographics, technology is massively contributing to the trend of aging. It’s commonly expected to see significant increases in life expectancy over the next decades as new technologies – such as next-generation genomics (see part 4) and others that are able to modify organisms – help evermore people across the globe to live healthier and longer lives.

Falling fertility rates, slowing population growth and aging populations will all likely have a massive impact on the labour force of the future. New workers will enter at a slower rate, and older citizens may work for much longer than they do today. Indeed, the definition of the labour force itself may change from 20 to 64 year olds today, extending by 5, 7 or even 10 years to include older age groups.

As the Economist states, Warren Buffett, the icon of American capitalism, at over 80 epitomises a striking demographic trend: for highly skilled people to go on working well into what was once thought to be old age. Across the rich world, well-educated people increasingly work longer than the less-skilled. This gap is part of a deepening divide between the well-educated well-off and the unskilled poor that is slicing through all age groups. Rapid innovation has raised the incomes of the highly-skilled while squeezing those of the unskilled. Those at the top are working longer hours each year than those at the bottom. The consequences, for both individuals and society, are expected to be profound.

There is also the unpleasant aspect that longer life expectancy and lower investment returns will mean that many elderly people will be less able to afford to retire. And because of these adverse demographics with fewer people working and more people receiving benefits, we will see quite a challenge as this could put an immense burden on state budgets, forcing governments to boost retirement ages. This shows once more, in my opinion, that the idea of a basic income for everyone due to the rise of robots will just not be financially feasible, making little sense at all to create a ‘useless class’ of people.

Rich countries with lots of well-educated older people may find the burden of ageing easier to bear than places like China, where half of all 50-to-64-year-olds did not complete primary-school education.

Worldwide, the share of older workers (55+ years) in the workforce is expected (as per MGI) to increase from 14 per cent in 2010 to 22 per cent by 2030. The greying of the workforce will be felt most severely in advanced economies as well as in China – where the share of older workers will increase to 27 and 31 per cent of the workforce respectively, as well as being the biggest market for robots in the world.

The aging and shrinking of the workforce is a major disruption that will affect us all!

The number of likely retirees will grow more than twice as fast as the labour pool, leaving fewer workers to pay for the elderly. In addition to creating pressure on global pension funds and state budgets, these trends will force a lot of pressure against the world’s pool of savings and create an array of new fiscal stresses.

As an entrepreneur, leader or chief executive, you can’t afford to wait and watch as employees and customers age. Embracing this new reality will offer a lot of new business opportunities but will also require quite a few essential changes in the way most enterprises operate and manage customers, employees, and stakeholders over their life spans.

While older and experienced employees are often more expensive, they are frequently the first to be laid off, bought out or let go during restructurings. But in an evermore greying world, employers should think twice and far ahead and adapt their strategies. MGI is spot-on on this point and I quote: rather than seeing older employees as legacy costs, you must view them as assets and resources.

Companies have to become more comfortable dealing with shades of grey. There are already many positive examples like Toyota, who changed their employment policy completely, rehiring about half of its retiring employees and allowing the company to maintain their skills and experience in flexible part-time scenarios. But there are many more best-practice examples around in this regard, such as Axa in France, British Gas, the US drugstore giant CVS and many more.

This is also the point where reverse mentoring should play its role, as Gartner Inc. is recommending. First pioneered by GE and since adopted at scale by companies such as P&G, Johnson & Johnson and GM, it focuses on pairing mature senior employees with individuals entering the workplace for mutual benefit.

Millennials possessing the dexterity and knowledge required for digital business become great resources for educating more tenured staff members on new technologies. In return, younger staff benefit from knowledge and capabilities imparted by senior staff, such as business acumen, protocol and decision-making skills that often come with time and experience.

And we will see another welcoming trend growing in the future: many vital elderly people are not happy in the long run to not be ‘needed’ anymore. After enjoying the fifth world cruise and 10th wellness holiday and spending a lot of money, they will realise that working wasn’t and isn’t that bad. So a growing part of them will be looking for a flexible part-time job, mentorship or some form of charitable work.

Volunteer work will become a growing bearing financial factor that saves the state and the economy a lot of money. This will also be a concept that young people and families will happily embrace – to invite such vital grey people for support in and around their households. This will even lead to voluntary grandparent ships and elective affinities – without any cumbersome state involvement. This is, all in all, a very bright outlook and a win-win situation for every generation!

However, from a business opportunity point of view, the vast majority of companies have been relatively slow and have even failed, so far, to focus on this expanding, substantial and fast growing grey market. The majority of consumer-facing companies are still too obsessed with the 25 to 54 demographic.

But in a changing world, older consumers will make up a bigger share of the market and will also likely be active consumers for a longer time. If more grey people intend to be working longer, they are more likely to be able and willing to spend more of their income.

Older consumers are also the richest thanks to house-price inflation and generous pensions. The 60+ spend currently some $4 trillion p. a. and that number will only grow. At the other end of the social scale, however, manual work gets harder as people get older, and public pensions look rather attractive to those with low wages and the unemployed.

The Boston Consulting Group (BCG) calculated that less than 15 per cent of firms have developed a business strategy focused on the elderly. The Economist Intelligence Unit, a sister organisation to The Economist, found that only 31 per cent of firms it polled did take into account increased longevity when making plans for sales and marketing.

A key reason for this tentativeness could very likely be that more and more young people dominate the marketing departments, also because of a growing digital focus, and still think that the best place for the ‘old’ is out of sight and mind. Youth must be served, the saying goes. But so, increasingly, must the elderly.

On the other hand, the innovation driven by start-ups as well as global consumer players such as Nestlé, P&G and electronics makers has given birth to an explosive range of new products and business models for the grey market. In the private sector, retail, health-care, tech, financial, and leisure companies are among the forerunners and first movers in developing tailored services and products for the greying market.

According to MGI, elderly consumers face trade-offs that force a change in purchasing tactics. While non-retirees are more inclined to “shop smarter,” looking for bargains on brand-name products online, retirees prefer to seek value, by, for example, buying supermarkets’ private-label goods.

There is a second important trend in consuming patterns. Seniors typically reduce their spending on housing, food away from home, and apparel as they move to retirement, while they increase spending on food at home, medical services, and, surprisingly, electronics. Of particular importance is also their focus on health and wellness, addressing the need to remain mobile and independent, which is usually not on the radar of young marketers and business developers. Products and services that address these needs will have a fast-growing market to capture.

Companies gradually seem to be mastering the art of discretion – addressing older people subtly, given the fact that certain projects have failed because everyone wants to become old but not to be categorised as old. For example, some retailers are surreptitiously lowering shelves and putting in carpets to make it harder to slip, package-goods firms are printing larger typefaces, and Kimberley-Clark, for example, has overhauled its brand of adult nappies to make them more like regular underwear.

So it’s key that even advertising tactics to build product awareness will be adapted to new requirements!

Japan – with the highest share of grey people – is leading the way and one should learn from them. Just one impressive example: malls are mostly designed as attractions for the younger generations, but in Japan, Aeon, a retail-focused conglomerate, opened a mainly senior-focused chain of malls. There you’ll find escalators that move at a slower-than-usual speed and price tags in large type as well as medical check-up units. And for those who just want to meet new people, the mall even offers a highly adopted senior dating service.

In Singapore, projects such as City for All Ages and their future-oriented mass transit and housing policies are increasingly transforming communities to become more accommodating to the elderly. And even in India, real estate developers such as the Max India Group or Tata are working to build residential communities specifically for seniors.

In the next two parts of this series, Reinhold Karner will tackle the remaining last disruptive force, and conclusions and recommendations will follow.

1+1=3? The Synergy of Analog and Digital Banking

Written by Credit Suisse on Wednesday, 26 October 2016.

marco abele"Digital or analog?" is the wrong question in the financial sector. Thanks to new advancements in technology, bank advisors have more time for their clients and are able to provide them with better advice, says Marco Abele, Head of Digital Private Banking at Credit Suisse Switzerland.

David & Goliath Must Dance™ Lunch - Insurance Ecosystem

Written by EntrepreneurCountry Global on Monday, 24 October 2016.

1. What is a David & Goliath Must Dance event ?

David & Goliath Must Dance events are hosted by EntrepreneurCountry Global in order to explore the challenges and opportunities faced by an industry that is transforming in real-time, into an ecosystem. We see Ecosystems as facilitators of future marketplaces. Ecosystems are like nature. EntrepreneurCountry Global sees its role as helping to organize the raw assets, the climate, the inhabitants, the settlements, the needs and the offerings so that sustainable economics emerge and successful businesses prosper.

A history and a calendar of these events are listed here.

According to Insurance Europe, Europe’s insurance federation, the insurance sector is the largest institutional investor in the EU, with almost €9.8tn in assets under management invested in the economy in 2015. This is equivalent to 61% of the GDP of the EU. All industries are disrupted across the world and insurance could be no exception to the rule. Although venture capital funding seems to be slowing down globally, in 2015 funding to insurance tech companies hit $2.7bn, exhibiting significant growth compared to 2014, where funding was just over $740m.

2. Who

Adrian Huxley – Regional Sales Director at MapR Technologies
Chinmay Mehta – Senior Vice President, UK Operations & Technology at Xoriant
Dave Stubbs – Founder & Director at RightIndem
Fernand Lendoye – Managing Director at Aviva Ventures
Mahmood Aziz – Senior Vice President Business Development at Xoriant
Marco Matera – Co-Founder & Chief Commercial Officer at Gideon Smart Home
Matteo Colombo – Investment Director at Legal & General
Michele Galli – Co-Founder & Chief Executive Officer at Gideon Smart Home
Phil Steele – Founder & Chief Executive Officer at nCube
Seamus Creedon – Director at Renaissance Reinsurance
Sergej Tolz – UK Country Manager at Kasko
Waleed Sarwar – Founder & Chief Executive Officer at CoVi Analytics

Amit Pau – Managing Director at Ariadne Capital
Nikos Delitsikas – Investment Analyst at Ariadne Capital

Highlights from our lunch.

3. Key Quotes

We – at Ariadne Capital - entertained a vibrant and engaging set of discussions focused on business model innovation, the strategic value of data as well as the importance of building partnerships between Davids and Goliaths. These are the key quotes;

- “System infrastructure and culture are holding big corporates back. Goliaths in the insurance industry are struggling to adapt to new technologies and business models.”
- “System infrastructure is a real challenge. Big corporates will need to partner with start-ups in order to overcome this challenge.”
- “Reinsurance companies are adapting faster to new business models compared to traditional retail insurance companies. The on-going cultural change in insurance is fascinating.”
- “ Start-ups and big corporates have different culture in terms of adoption. One year can be a short period of time for a Goliath, but an eternity for a David. Currently, it seems that it is difficult for Davids to work with Goliaths.”
- “Goliaths don’t see Davids are disruptors, but as a solution to the problems they are facing.”
- “The Chinese are ahead in terms of smart home technology. For example, a local smart home player has already more than 5 million customers.”
- “Insurance companies need to find the areas where they can add real value to their customers.”
- “The winners will be the ones who will offer the best customer experience. Insurance companies want to enter the prevention space, which can provide them with higher customer engagement.”
- “Insurance companies are not consistent in terms of engaging with their customers. Some divisions are more engaged, others are significantly less engaged. Therefore, there needs to be some kind of emotional engagement with customers.”
- “Insurers are currently not using data to understand their customers. Big corporates are in the process of transforming their internal systems.”
- “Start-ups want to test their products/services, but the big corporates are not willing to test them and at the same time they are looking for commercial traction.”
- “If insurance companies leverage big data and get a fair amount of understanding with regards to their customers, it will be interesting to see who will insure the individuals who are very risky and thus expensive.”
- “Compliance is simple.”
- “There is a perception that insurance companies will exploit the data provided by individuals and turn against them. This will result in lower premiums. Insurers are seen as exploiters and this is why individuals might hesitate sharing personal data with them.”
- Waleed Sarwar: “Messaging is a key component for partnerships between start-ups and big corporates. Start-ups can bring efficiency to big corporates, but at the same time efficiency might imply job losses, something which Goliaths are struggling to deal with.”

- “Regulation brings discipline and framework. Regulation means that customers are treated fairly. However, regulation can be a barrier for new areas that are created.”
- “Compliance prevents companies from being exposed to changes.”

4. What were the key learnings

- Customer centricity and user experience is key for the winners of the industry.
- Leveraging data is fundamental as it can bring higher customer engagement and more efficient pricing for big corporates.
- The pace of adoption for new technologies and business models is entirely different between start-ups and big corporates. The latter unfortunately are very slow in terms of liaising with digital enablers and adopting / testing new business models.
- System infrastructure, IT legacy and regulation are holding back the Goliaths in terms of accelerating their pace of adopting new technologies and collaborating with innovative start-ups.

5. Ecosystem Economics®

An overview of Ecosystem Economics® can be found here.

The attendees of Insurance Ecosystem discussed how Digital Enablers and Goliaths could generate supra profits by incentivising individuals, creating digital revenues, and partnering with Natural Allies.

6. Digital Ecosystems

EntrepreneurCountry Global is building Europe’s largest Ecosystem focused on the Insurance sector with partners whose customers total in the billions. This ecosystem will grow further.

We would like to invite you to become a Partner to the Insurance Ecosystem. The Partnership will enable you to:

1. Understand how ecosystems are built by building one, and to develop your understanding of Ecosystem Economics® - the methodology for organising the economics of your ecosystem which has been adopted by leading firms, written about by leading academic institutions and presented to more than 500 Board rooms;
2. Identify and partner with Natural Allies - other Goliaths and Davids who are building leadership positions in the Insurance arena;
3. Build a profile as a leader in this sector;
4. Have an early radar and dashboard for trends and insights in the Insurance Ecosystem; and
5. Test Pilot Insurance applications across the Ecosystem, not just inside your firm.

We are building a live digital ecosystem in the Insurance; if you would like to be involved, please send an email to We will be sending you weekly updates to inform you of developments in this ecosystem. Video interviews from the event will be broadcasted next week on our dedicated channel ECTV and posted on our Facebook page, which you are welcome to join.

Sign up for our 16th EntrepreneurCountry Forum in February 2017 at 8 Northumberland Avenue in Central London.

David & Goliath Must Dance™ Lunch - Mobility & Transportation Ecosystem

Written by EntrepreneurCountry Global on Monday, 17 October 2016.

1. What is a David & Goliath Must Dance event ?

David & Goliath Must Dance events are hosted by EntrepreneurCountry Global in order to explore the challenges and opportunities faced by an industry that is transforming in real-time, into an ecosystem. We see Ecosystems as facilitators of future marketplaces. Ecosystems are like nature. EntrepreneurCountry Global sees its role as helping to organize the raw assets, the climate, the inhabitants, the settlements, the needs and the offerings so that sustainable economics emerge and successful businesses prosper. It is precisely because this ecosystem is a bit ambiguous that we are interested in it.

Plunkett Research believes that the global transportation sector brought in an impressive $4.6 trillion in revenues in 2015 and this market is set to grow further in the coming years as OEMs (Original Equipment Manufacturers) and digital start-ups try to make sense of the technological opportunities available to them. This market is expected to grow to reach nearly $150bn over the next four years especially with the advent of car and bike sharing platforms, connected cars and contactless travel.

A history and a calendar of these events are listed here.

2. Who

Alistair Crane – CEO of Hero™
Americo Lenza – Head of Global Consumer Innovation at Vodafone
Andrew Lee – Head of Market Intelligence and Analysis at Octo Telematics
Anthony Headlam – Chief Technology Officer at Jaguar Land Rover
Christian Varnholt – Head of App Factory at Volkswagen AG
Daniel Lai – Director for Global Engagement Platform at Nissan
Dr Geoff McGrath – Chief Innovation Officer at McLaren Applied Technologies
Johnaton Grech – Founder of Silex Group
Jonathan Raper – Co-Founder and CEO at TransportAPI
Mahmood Aziz – Senior Vice President Business Development at Xoriant
Mark Parsons – Chief Customer Officer at DHL Supply Chain, UK & Ireland
Neil Sunners – SVP Innovation & Chief Information Officer International at Avis Budget Group International
Nicolas Cary – Co-Founder & President at Blockchain
Paul Ostergaard – Founder of Norwood Systems
Sam Clark – Founder of Conjure
Tony Lynch – Co-Founder and CEO at Faxi Ltd
Amit Pau – Managing Director at Ariadne Capital
Ilona Simpson – CIO in Residence and Senior Advisor at Ariadne Capital

Highlights from our lunch featuring interviews.

 3. Key Quotes

We – at Ariadne Capital - entertained a vibrant and engaging set of discussions focused on business model innovation, the strategic value of data as well as the importance of building partnerships between Davids and Goliaths. These are the key quotes;

- “Subscription models work only if the product and/or service on offer is valuable.”
- “Subscription models have not materialised, there is a dichotomy between companies that have started with a subscription model such as Netflix for instance and those trying to enter this space.”
- “If you already know what is a good driver, then you can accelerate the development of autonomous vehicles.”
- “Customisation is key.”
- “New competition comes from software platforms as engineers become disintermediated”
- “Beyond connectivity, who owns the customer experience?”
- “We will probably move from contracts to micro payments in the future.”
- “There are endless possibilities with car functionalities, software can be tailored to the driver.”
- “The key in the mobility space is better integration and safer driving.”
- “Google and Apple are trying to commodify the mobility and transportation sector.”
- “There is no price comparison website for the mobility sector, that is what is missing.”
- “Digital natives and millenials have different expectations.”
- On the synergies between the transportation of goods and people “Freight does not need customer service.” – “There are three key elements in logistics: money, information and product – the first two are already digitised but the product is always the slowest part in the chain, it is key to remain flexible and adapt to the market evolutions.”
- “It would be great to get our hand our hands on the aggregated data our customers are sitting on.”
- “We cannot be wedded to a single OEM” – “Best stop arguing about who owns who, data sharing and partnerships are important to create a great user experience.”
- “Old companies can provide the infrastructure to the new business models.”
- “You do not want to commodify your assets.”
- “I believe digital identity will be one of the biggest trend in this next five years especially with the advancement of Blockchain technology. This will enable people to share their data with whoever they choose.”
- “Blockchain is a transactional platform that could solve traffic patterns amongst other things.” – “Connectivity and user experience is key.”
- “The app economy must be embraced but the Apples and Googles could supplant the OEMs in the future.”
- “It is essential to get people’s head around technological shifts such as autonomous vehicles, Uber, etc. because a number of them do not have a clue what is going on.” – “Hubs will be the places that people visit every day, the key will be how to utilise these hubs.”
- “Digital identity is relevant to multiple ecosystems.” – “Consumer trust is key.”
- “Collaboration is key but the challenge is the execution.”
- “We open our data to third parties and it is up to these companies to decide what to offer our customers, this would ensure that people remain loyal to our brand.”
- “Kodak made the first digital camera but did not know whether it will be commercially viable. We are looking into an abyss, five years ago we did not talk about customers, we dealt with dealerships but here we are so it would be fair to say that we do not know what change means.”
- “No one knows where the value is, Google and Apple are testing the waters just like the rest of us.”

4. What were the key learnings

- Business models are shifting because of connectivity thus referring back to core elements of Ecosystem Economics®, the need for business innovations and the importance of unit economics
- User experience is essential to ensure customer loyalty
- We are moving towards software-centric digital world
- It is not yet clear where the value is – all players are testing the waters focusing their effort on user experience
- Leveraging the strength of large partners while harnessing the innovative power of digital start-ups is important
- Collaboration and data harnessing could enable OEMs to enhance their value proposition
- Subscription as-a-service could a model worth exploring as car ownership is becoming a rarity

5. Ecosystem Economics®

An overview of Ecosystem Economics® can be found here.

The attendees of Mobility & Transportation Ecosystem discussed how Digital Enablers and Goliaths could generate supra profits by incentivising individuals, creating digital revenues, and partnering with Natural Allies.

6. Digital Ecosystems

EntrepreneurCountry Global is building Europe’s largest Ecosystem focused on the Mobility & Transportation sector with partners whose customers total in the billions. This ecosystem will grow further.

 We would like to invite you to become a Partner to the Mobility & Transportation Ecosystem. The Partnership will enable you to:

1. Understand how ecosystems are built by building one, and to develop your understanding of Ecosystem Economics® - the methodology for organising the economics of your ecosystem which has been adopted by leading firms, written about by leading academic institutions and presented to more than 500 Board rooms;
2. Identify and partner with Natural Allies - other Goliaths and Davids who are building leadership positions in the Mobility & Transportation arena;
3. Build a profile as a leader in this sector;
4. Have an early radar and dashboard for trends and insights in the Mobility & Transportation Ecosystem; and
5. Test Pilot Mobility & Transportation applications across the Ecosystem, not just inside your firm.

We are building a live digital ecosystem in the Mobility & Transportation; if you would like be involved, please send an email to We will be sending you weekly updates to inform you of developments in this ecosystem. Video interviews from the event will be broadcasted on our dedicated channel ECTV and posted on our Facebook page, which you are welcome to join.

Sign up for our 16th EntrepreneurCountry Forum in February 2017 at 8 Northumberland Avenue in Central London.

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