Sony’s e-paper to revolutionise fashion

Posted on 12/02/201405/15/2017 by Charlotte Gill

Sony has announced exciting plans to develop electronic paper products. The tech giant raised funds to develop the products through its crowdfunding sites

The Japanese tech giant has announced it is working on a project – named “Fashion Entertainment” (FES) – to develop the electronic paper used in e-books for use as a fabric. Among the products is a smartwatch whose battery would last several weeks, thanks to the e-paper.

Sony has raised 3.5m yen (£188,000) from its crowdfunding site in the space of three weeks, getting over 150 backers on board and beating the 2m yen (£108,000) initially predicted. With the aim of using the crowdfunding platform to gauge interest without bias, the company did not originally reveal its identity to supporters. “We hid Sony’s name because we wanted to test the real value of the product, whether there will be demand for our concept,” somebody involved in the project told the Wall Street Journal.

The e-paper, used on both the face and the strap, enables wearers to manually switch between 24 different designs

Although the product doesn’t connect to the internet like the wearable tech of Sony rivals Apple and Samsung, the watch is ‘smart’ in the sense that it uses new technology to improve performance.

The e-paper, used on both the face and the strap, enables wearers to manually switch between 24 different designs, with the intention of creating a more stylish look than rival smartwatches.

It hasn’t yet been announced when the product will launch, but crowdfunders were informed they could get their hands on one some time from May 2015.

Engineers working on the FES project – led by Hivoki Totoki, who is responsible for the company’s smartphone sector and has worked on other innovative projects including launching Sony Bank – are looking at electronic paper as a potential fabric that could be used in fashion. Bow ties and hat accessories using e-ink, for example, are currently under development.

The FES work marks part of a wider endeavour to foster innovation at Sony to compensate for its losses and falling demand for cameras, TVs and PCs; CEO Kazu Hirai forecasted a $1.1bn loss for the year to March 31 2015, according to a Bloomberg report earlier in the year. The company has pledged to financially back new design or business ideas thought up by employees, while introducing other initiatives such as Sony Real Estate, which launched in April 2014.

Retail industry uses in-store analytics to spy on shoppers

Posted on 11/28/201405/15/2017 by Charlotte Gill

Walk into any high street store of your choosing, but be warned: you are being watched.

As consumers have grown increasingly choosy about how they spend their time and money, retailers can ill afford to offer a shopping experience short of ideal. Bricks-and-mortar retailers have for years been tweaking and re-tweaking their shop layouts in a bid to better understand, attract and retain customers. Although the process has not halted the high street slide at a time when e-commerce has been gaining (up 16.9 percent in the US last year alone), the emergence of in-store analytics has relieved the pressure somewhat.

ShopperTrak statistics show US retail foot traffic in the 2013-14 Winter holidays was near enough half of what it was three years ago, and, across the globe, high streets are finding themselves populated by shuttered up shop fronts and empty properties. Nevertheless, bricks-and-mortar sales still account for the vast majority of the retail market, and will continue to do so for years to come, leaving those struggling in the field with a very clear missed opportunity.

Consumers don’t think in terms of ‘channels’, ‘multichannels’ and ‘omnichannel’. They think in terms of ‘shopping’

In-store analytics
As part of the industry-wide attempt to stop the rot in traditional retail, leading names are taking a leaf out of e-commerce’s book and turning to data analytics as a means of optimising shop floor space and better understanding customer behaviour. “In-store data analytics are certainly a key, if not the key,” says Chitra Balasubramanian, Head of Business Analytics at RetailNext. “Good data informs better decision-making, regardless of the business or the function within it. It allows retailers to better understand shoppers and their behaviours, and with that understanding they are better equipped to make strategic and tactical decisions on everything from store design and layout to merchandising and displays, from marketing programmes to attract shoppers, to staffing allocation to better serve them.”

Whereas online retailers have been able to access complex – sometimes bafflingly so – statistics about customer behaviours since the mid-1990s, this advantage has not been so easily afforded to those in physical retail. Analytics capabilities have progressed to such an extent that it has become routine for shoppers to be faced with recommendations, related items and expert product walkthroughs when browsing online. In bricks-and-mortar retail, however, these same conclusions about individual shoppers’ wants are not so easily drawn, and many retailers have settled instead for simple in-store observations of what works and what doesn’t when attempting to optimise performance.

“Observing shoppers and garnering a better understanding of them has been around since the first merchant opened a store,” says Balasubramanian. “The problem was the observation process – literally watching shoppers in the store – was a very time-intensive, manual process, and conclusions often fell prey to anecdotal evidence and observational bias. About the only real, objective, quantifiable data retailers had was point-of-sale data, and the biggest challenge in that was that it told the end result, but none of the story of what happened getting to that result.”

This basic approach looks set to change; 71 percent of respondents surveyed by Brickstream, as part of a study entitled Retail Analytics: What’s in Store?, said they planned to bring people-counting technology in-store in the next year. In addition, 68 percent of that same sample claimed they were looking to introduce in-store Wi-Fi and loyalty systems by 2015.

In-store analytics are far from restricted to such simple processes, however, and extend to all manner of complex capabilities. For example, the latest advances allow the retailer industry to differentiate between male and female shoppers, identify and track employees, map preferred customer routes, and even look at what they’re browsing online while in-store.

“Technology advances now empower retailers to gather data from a wide array of data streams automatically, and relatively inexpensive computing power can quickly crunch that data into an aggregate,” says Balasubramanian. “The outputs are specific data insights that tell a more complete story of shoppers’ purchasing journeys, and retailers can use those insights to decide what levers to push and pull to better customer experience and store performance.”

How we used to shop
The continued adoption of in-store analytics is part of a much broader trend in the industry, as retailers turn, increasingly, to technology in an effort to reverse the decline in high street sales. “Technology is providing bricks and mortar retailers with innovative ways to seize strategic opportunities,” according to one report by KPMG entitled What’s in Store: How Technology is Transforming the Retail Industry.

Although many commentators have been quick to announce the death of physical stores, leading industry names have found different ways of capitalising on what remains a huge market.

“Bricks-and-mortar, as a whole, will continue to see a flat to moderate decline in traffic, but plenty of opportunities exist for retailers,” says Balasubramanian. “It’s important to remember that well over 90 percent of retail business is transacted in-store. The retailers that cater to their customers’ preferences are the ones that will ascend to the status of ‘retailer of choice’.”

Given e-commerce has grown to the extent it has, it’s unrealistic to assume bricks and mortar sales will regain the heights of years passed, but the introduction of complex in-store analytics may help manage the decline. “Retail is rapidly moving to an integrated shopping experience for consumers,” says Balasubramanian. “In the industry, retailers like to talk about channels, and ‘omnichannel’ is perhaps the biggest buzzword of them all. But consumers don’t think in terms of ‘channels’, ‘multichannels’ and ‘omnichannel’. They think in terms of ‘shopping’. To them, it’s a single, integrated experience. Successful retailers are learning they need to have a presence in both the online and offline worlds, and that the experience in those two arenas are consistent and on brand.”

Looking at the changing nature of bricks-and-mortar retail, the sector is set to optimise the customer experience in much the same way e-commerce has done. Although the prospect of being tracked will unnerve some consumers, there’s no question the technology will play a huge part in improving the bricks and mortar retail experience, and reviving what business has been lost to e-commerce.

The dos and don’ts of project management

Posted on 11/24/201405/15/2017 by Charlotte Gill

Project-management-2 — Challenging the status quo, maintaining contact with stakeholders and delegating appropriately are just some of the ‘dos’ for a project manager. ‘Don’ts’ include relying solely on email to communicate and trying to please everyone

Dos:

Maintain contact with all stakeholders
Even those you believe to be on the periphery. Trying to cut corners by not informing the people you do not believe to be of immediate importance can be a fundamental error. Keeping people in the loop ensures they remain focused and motivated, acts as an audit trail and proves your accountability, as well as encouraging others to do the same.

Host a formal project ‘kick-off’
Each project will only have one beginning, and this is a rare opportunity to start on a positive note and motivate all parties involved. A project launch event is also the time to ensure that every staff member has a comprehensive understanding of what is expected, when, and exactly how it will be done.

Think carefully about delegation
Teamwork is integral to the success of a project. Therefore it’s incredibly important to think carefully about who will be working on the project, identifying the skills each team member possesses, and delegating tasks and responsibilities accordingly. Resist the urge to pass tasks to whoever’s there at the time – harnessing team members’ strengths will maximise efficiency.

Challenge the status quo
In the current climate, it’s no longer enough to turn up at nine, leave at five, and consider it a job done. Keep a finger on the pulse by looking out for new techniques, practices and technology to maximise productivity, and take every opportunity to deliver extra benefits that might set you apart from competitors. Consider joining a group of project managers, such as the UK’s PMI, to remain in the loop.

Don’ts:

Rely solely on email to communicate
Email is increasingly becoming the favoured method of communication among project managers, and for short, simple messages or uploading information, it’s great. But there are times when it simply cannot be used to replace face-to-face conversations. Tone can easily be misinterpreted, and people say things they wouldn’t say in person when hiding behind their keyboard. Get to know when email is appropriate, and when nothing but in-person communication will do.

Underestimate the project by only looking at the positives
As tempting as it may be, try not to be overly optimistic about what can be achieved. It’s essential to always plan for a worst-case scenario, so ensure that damage control is in place by producing a risk management plan before the project goes ahead. Remember that not all issues can be foreseen, however, and making mistakes is central to learning.

Be afraid to ask for feedback
Especially if it’s your first project. Asking people for feedback can be uncomfortable, but can benefit even the most experienced project manager. Since so much of an individual’s aptitude to project management depends on their personality, it doesn’t have to be a co-worker – ask your friends and family, who will probably be more honest, too.

Try to please everyone
While it’s important to allow others to weigh in on major decisions, remember that ultimately, the project manager has been appointed for a reason. Even if it’s not the most popular choice, it’s unrealistic for any project manager – or anyone at all, for that matter – to expect everyone to agree.

Solar Impulse 2 aims to prove the future of flight is photovoltaic

Posted on 11/24/201405/15/2017 by Charlotte Gill

On June 2, 2014, a unique-looking aircraft took off from an airfield in Payerne, Switzerland. With a wingspan of over 72m – the same as a Boeing 747 – it was powered by four small engines that together produced roughly the same power as a motorbike. The sole occupant was test pilot Markus Scherdel, housed in a tiny cockpit at the very front of the main fuselage. Wind whistling over the wings, the aircraft took to the air without fuss, lifted nimbly into a clear sky and, travelling at a maximum speed of 48 knots, rose to an altitude of 8,000ft before returning to terra firma and a relieved welcoming committee.

The maiden flight of Solar Impulse 2 had proved what the backers of the project had always believed in the face of general scepticism: namely, it is possible for an aircraft weighing 2.3 tonnes – roughly the same as an average-sized car and 100 times lighter than an Airbus 340 – to fly like a bird without consuming a single drop of fuel. The four engines are powered by nothing more than the sun. And, in an important breakthrough in the pursuit of sustainable transport, they are able to function at night because Solar Impulse 2 can store the solar power that has been captured during the day.

It is possible for an aircraft weighing 2.3 tonnes to fly like a bird without consuming a single drop of fuel

Thus the flight confirmed that the vision of the project’s founders – famed balloonist Bertrand Piccard and former Swiss Air Force pilot and engineer André Borschberg – is not just a pipe dream. Next May, Solar Impulse 2 is scheduled to embark on the first solar-powered, round-the-world flight – a 35,000km journey into history. Taking off from the Gulf, the aircraft will fly over the Arabian Sea to India and then to Burma, into China, across the Pacific, coast-to-coast over the mainland US, across the Atlantic to southern Europe – or, depending on conditions, to North Africa – before landing back in the Gulf.

Although there have been other solar-powered flights, this one crashes through all the barriers of renewable air power in terms of its length, green credentials and the quality of its science. With just the pilot aboard, Solar Impulse 2 is designed to fly for five consecutive, continent-hopping days and nights, ploughing through the skies without leaving a trace of effluent in its wake. In fact, the aircraft must be capable of staying aloft for five days because that’s how long it requires to cross just the Atlantic. That’s approximately three and a half times longer than Charles Lindbergh took in the Spirit of St Louis in 1927.

Unlimited endurance
But, apart from the cleverness of the science (and the courage of the pilot), what exactly will the flight of Solar Impulse 2 prove? After all, we already have solar-powered flight. As the many (mainly Swiss) companies that are backing the project point out, this is all about producing an aircraft with almost unlimited endurance but that takes nothing from the planet. More deeply, they see it as a project that will, in time, enhance the average person’s quality of life. “This partnership pushes the boundaries of technology and innovation to achieve a better world,” argues Ulrich Spiesshofer, Chief Executive of ABB, the Swiss power generation giant. “We believe in Bertrand’s vision, and we are convinced that, by pioneering innovative technologies, we will be able to decouple economic growth from energy consumption and environmental impact.”

Another major backer is Alfred Schindler, founder and Chairman of elevator-manufacturer Schindler Group. Like Spiesshofer, he sees the project as a game-changer for people and planet alike. “It’s not only about saving and conserving energy, it’s all about working smarter instead of harder,” he says. “While staying in the air – day after day – Solar Impulse moves us beyond the idea of conventional belt-tightening. It proves convincingly that one can tap into a virtually unlimited supply of solar energy. Solar Impulse is a unique platform where creativity meets audacity and where action converts a dream into reality.”

35,000km

Length of Solar Impulse 2’s planned round-the-world flight

17,000

Solar cells on the plane’s wing

In a nutshell, in an energy Utopia, the world’s industries and homes – not to mention its aircraft – could be powered without whole populations suffering in the form of polluted oceans, disfigured landscapes, contaminated waterways and an ozone-depleted atmosphere.

The Solar Impulse 2 project started a decade ago when Piccard, who comes from a family of explorers, joined up with Borschberg. A psychiatrist by training, Piccard and Englishman Brian Jones co-piloted the first balloon, Breitling Orbiter 3, to sail non-stop around the globe – in fact, a balloon with a habitable pod attached. It was a remarkable feat but nothing special for the Piccard family: grandfather Auguste was a pioneering balloonist and father Jacques an undersea explorer, while Bertrand had always mixed a fascination with flight with his other activities. Now 56, he was a pioneer of hang-gliders and microlights, the latter being highly accident-prone in their developmental years.

Sustainable flight
The project encompasses Bertrand’s commitment to a future of sustainable transport. A friend of Richard Branson, he’s a fan of the British businessman’s space project, Virgin Galactic, and a believer in sub-orbital air transport. “Will commercial aviation soon be able to transport passengers on solar power only?” he asks. “I would be crazy to answer ‘yes’ and stupid to answer ‘no’. The technology for it doesn’t exist today but remember it was also impossible to transport passengers with fuel when the Wright brothers did their first flight in 1903.”

Piccard cannot be accused of being limited by his imagination. On sub-orbital flight, he says: “Can you imagine a take-off in Europe with clean energy, a climb to 100km high, followed by a parabolic flight to Australia and a landing after one hour? And you get a zero gravity experience for the same flight. This is what I see as the future of commercial air transport.”

Although he’s an adventurer by nature, this third-generation Piccard is painstakingly methodical and scientific in his approach. The maiden flight of Solar Impulse 2 was the result of a decade of research conducted by a team of 80 physicists, materials scientists and aerospace experts. After the initial scepticism wore off, a host of companies have thrown their considerable resources behind the project. They include watch and instrument maker Omega, materials group Solvay, Schindler, ABB, Bayer Material Science, telecommunications giant Swisscom, Toyota (which has contributed hybrid technology), photovoltaic cell manufacturer SunPower and French aerospace group Dassault. Even the European Space Agency has lent a scientific hand. Combined, they add up to a veritable Who’s Who of materials and aerospace sciences.

Piccard believes in walking before running – or flying. Solar Impulse 2 is the second-generation version and was developed to prove the whole concept was viable. With Piccard and Borschberg aboard, the original Solar Impulse made its first, crucial night flight on July 8, 2010. “We can finally prove what is possible without fuel”, declared Piccard once he’d landed.

Thereafter the founders advanced the project in increments. In 2011, they made a flight to Le Bourget airfield in Paris. A year later, they achieved the first intercontinental flight from Morocco to Switzerland – that is, across the Mediterranean. And last year, they flew across the US, from California to JFK Airport in New York City, with several stops en route.

The science
Rather like his father and grandfather with their highly original projects, Piccard ran into outright disbelief at first. The concept of flying a solar-powered aircraft at night and over such vast distances was dismissed as impossible by a number of experts in their field. How could mere solar power support such a large wingspan? Was it possible to develop materials so light that Solar Impulse 2 could stay aloft for five days and nights? And above all, how solar could energy be stored so it could be released at night? In short, the main issue was how to build – and fly – an aircraft that was so big and yet so light.

The engine of Solar Impulse 2 is in fact the solar cells. No less than 17,000 of them are built into the giant wing – and that’s one reason the wingspan is so big. They provide the ‘fuel’ for the four 10-horsepower electric motors. And, in a major breakthrough, by day the cells recharge the 400kg lithium batteries that keep the aircraft in the air at night.

Piccard certainly earns marks for thoroughness. Everything has been tested to death before being installed in the aircraft. The solar panels, for example, were put through their paces on what became the world’s loftiest solar power plant, right on top of the Jungfraujoch in Switzerland at a height of 3,466m above sea level – or roughly as high as the aircraft will fly.

Into The Sun

Solar Impulse 2 is not the only solar-powered aircraft. Among others, a German company called Solar Flight has produced the adaptable Sunseeker Duo, an aircraft that resembles a sailplane – or glider – but has enough solar panels on its 22-metre wings and tail to enable it to maintain a steady climb with two aboard.

An earlier version of the Sunseeker achieved the considerable feat of flying over the Swiss Alps. However, even the latest model can only stay aloft for a maximum of 12 hours.

This is an aircraft for enthusiasts. Once on the ground, the folding-wing Duo can be packed away into a small hangar, or even dismantled and packed into a special trailer.

Even before the aircraft takes off on its circumnavigation of the globe, the science is already trickling down into other applications. A team of researchers at Bayer, whose main responsibility is designing and building the entire one-man cockpit shell, had to develop a new kind of insulating material before the project could be considered viable. It’s a rigid polyurethane foam that makes the cockpit a bearable space for a human. With outside temperatures plummeting to -40 °C at night, the inside temperature of the cockpit can fall to minus 20. But during the day the reverse can happen, with the pilot enduring plus 40°C. The foam both blocks out the cold and lets out the heat.

The human element of the project cannot be underestimated. The cockpit cannot be pressurised or heated because that would rob the batteries of precious engine power, so the pilot sits in an oven by day and a refrigerator by night. “We need to make sure the pilot is as sustainable as his aircraft,” explains Borschberg. “This is why the round-the-world flight will be as much a human as a technological feat.”

In the meantime, consumers are already reaping some of the benefits from Solar Impulse 2. “The same products fall into the automotive and refrigeration industries,” points out Bayer executive Richard Northcote. Similarly ABB, which is focusing on clean energy, has applied what it has learnt while working on the aircraft into electric car technology and cleaner energy generation. ABB is already the world’s second-biggest supplier of solar inverters.

Brussels-based Solvay, a specialist in materials, has been involved from day one. Researchers in Belgium, Brazil, France, Germany, Italy and the US have been busy developing bespoke solutions since 2004. As a result, Solar Impulse 2 is practically festooned with Solvay products: some 6,000 in total and many of them entirely original. Among other applications, they waterproof the aircraft – including the precious solar panels and batteries – by means of an ultra-thin polymer film. And because the honeycomb-structured wings flex in the air currents, Solvar has invented an adhesive that moves with the solar cells without gaps opening. The Brussels firm has even applied its science to the pilot’s underwear: it’s made of a special polyamide yarn that it is claimed will “interact with the body, stimulating micro-circulation and helping muscle performance”. Cramped as the pilot will be, he’ll need all the circulation and muscle performance he can get. The Solvay products developed for the project are filtering down into a number of promising new markets, including protection of solar panels against the elements, batteries for computers and mobile phones, and baggage compartments on aircraft.

The cockpit cannot be pressurised or heated, so the pilot sits in an oven by day and a refrigerator by night

The outstanding scientific feat, though, is arguably the wings. Essentially, they’re made of paper, but of a rather special kind. Polymer-impregnated, the paper forms the basis of the honeycomb on which the structure is based. As the wings twist, flex and vibrate, the paper maintains the integrity of the entire 72m of span.

The aircraft is a flying laboratory. Even its insurance cover is a breakthrough: considered uninsurable because of the high risk and priceless value of the technology it incorporates, the first aircraft spent much of its development time on the ground without any form of protection. A fire or other disaster might have stopped the project dead. However, Swiss Re came to the rescue. In 2012, its corporate solutions division became the sole insurer of the prototype aircraft after a lot of head-scratching and creative risk-assessment. But the paperwork arrived in the nick of time for Solar Impulse 2 – the document was presented at its unveiling ceremony in early 2014. “As of today the plane is officially insured – you’re clear for take-off,” announced Agostino Galvagni, Chief Executive of the corporate solutions division.

Success or failure
What are the odds of this feat of scientific and physical derring-do coming to a successful conclusion? A few short months out from the culmination of a decade of work, the odds are 50:50. The preliminary flights have proved promising and, as far as outsiders know, Solar Impulse 2 has met its targets. However, it remains a flying experiment. Above all, nobody has sat at the controls of the aircraft for five days and nights, struggling to stay awake as they pilot Solar Impulse 2 across continents and oceans.

Piccard himself seems sanguine about prospects for success. And anybody who has seen the wind-powered Breitling Orbiter 3 – perhaps the most unlikely-looking form of round-the-world transport – would certainly give its sun-driven successor a better chance of making it. But even if Solar Impulse 2 breaks down and is grounded somewhere en route, it has already produced measurable benefits for mankind.

Adult adoption a key ingredient to success in Japanese business

Posted on 11/21/201410/06/2014 by Charlotte Gill

Very few investors are likely to be found queuing up to venture into a centuries-old family firm. After all, in most competitive economies, family control is unsustainable without any private benefits. Generally speaking, family heirs only partially inherit intelligence and business knowledge, while the burden of title birthright appears to do little more than deaden would-be talent and chase away ambitious managers. With those inherent disadvantages in mind, it’s little wonder family-run firms are a dying breed in most developed economies.

Yet, as always, Japan is bucking the trend. Not only are a third of Japanese corporations still family-run, but those family firms are outperforming professionally managed companies in virtually every way. Family firms in Japan boast higher profitability and market valuation, as well as higher growth in sales and employee numbers, than their rival companies. Upon closer inspection, it’s not hard to see why: Japanese powerhouses like Suzuki, Toyota and Matsui Securities have helped cultivate the nation’s corporate landscape by utilising the stability and longevity of their own names, which can effectively be used to sway investors and perpetuate sustainable growth. Against all odds, Japanese family firms are flourishing – and that is because family empires have been cheating fate by refusing to play the cards they have been dealt.

718 The year Japan’s oldest family business was founded

46 The number of generations who have passed the business down

Branching out
Every year, 80,000 adoptions take place across Japan. Yet, oddly enough, some 98 percent of the individuals adopted are highly intelligent men in their 20s and 30s. An age-old relic of Japanese primogeniture, the tradition of electing a mukoyoshi (or ‘adopted son-in-law’) sees highly-placed, business-owning families legally adopting a well-educated young man into the clan with a view to him inheriting the business later in life. Prior to the Second World War, civil code in Japan decreed family wealth could only be passed down through male lines. Tradition also dictated it must go to the eldest son. In households that boasted no male heir, this risk of losing one’s family assets fuelled a demand for adopted sons that could carry on the family name and business. The practice is no longer legally prescribed: however, in many parts of western Japan, it seems old habits die hard.

The practice often involves an arranged marriage if the family has a single daughter. In fact, such business marriages are so common it’s even a tradition in Edo and Osaka to celebrate the space that has been created for an adopted son-in-law upon the birth of a daughter. There’s an entire online dating industry in the country based upon finding a mukoyoshi, and each prospective son is highly scrutinised. Yet when a patriarch is able to locate a suitable candidate, the net benefits for his family business can be staggering: according to analysts at the National Economic Bureau of Research, incorporating fresh blood into a family firm can easily mitigate the typical pitfalls experienced by stagnating western family firms. Adopting highly qualified adults to head family businesses has the triple effect of displacing untalented blood heirs, eliciting better performance from managers who stand to be placed on a fast-track to ownership by becoming an adopted son, and encouraging proactivity among blood heirs who live under constant threat of being replaced by a ‘superior’ adopted son. These internal pressures to excel translate into serious investment dollars.

Fresh blood, fresh ideas
When asset managers are looking to invest in listed companies in Japan, corporate governance and issues of succession weigh heavily on a firm’s potential longevity. Yet evidence suggests that finding a mukoyoshi provides a feasible way for companies to bypass problems of weak shareholder rights in order to make decisive progression. Motor powerhouse Suzuki proves an apt example: in 1958, 28-year-old Osamu Matsuda made a decision to marry into the Suzuki clan. Osamu was simultaneously adopted by the family’s patriarch, took on the Suzuki name and joined the company’s board. Before long, Osamu Suzuki was appointed his new father’s successor – the fourth in an unbroken line of adopted heirs to serve as the CEO of Suzuki Motors. He had big ideas for the company: over the course of his tenure, the adopted Suzuki transformed the business into the top carmaker in the globe’s emerging markets. Since then, Suzuki has grown by leaps and bounds. Last year, the firm hit a milestone after reaching JPY1trn in domestic sales for the first time ever, helping rally investors behind major infrastructural investments in Indonesia and India, where it now owns thriving subsidiaries. In line with Suzuki tradition, Osamu even snubbed his own biological son by adopting a son-in-law and anointing him heir to the company’s top job – though the premature death of Suzuki’s new son shortly after he took control of the company forced Osamu to come back out of retirement.

Michio Matsui of Matsui Securities was also a mukoyoshi. Although hesitant to shed his family name in favour of that of his new patriarch, Matsui took the helm at his father-in-law’s brokerage business in 1990 and proved that all it takes to kick start an ailing family firm is a little fresh blood. Joining the family right as Japan’s economic bubble burst, the adopted Matsui quickly found himself up to his eyeballs in stiff international competition. In order to stand out, Matsui made the gutsy decision to focus all the company’s efforts on the then-experimental realm of online trading. By the time the Japanese Government realised the potential of online securities and chose to deregulate the market, Matsui’s business had already become a behemoth. Today, it is one of the world’s leading online brokerage firms. Matsui’s desire for the company to be constantly churning out innovative new products has meant the family firm always appears to be swimming against the tide: since last year, Matsui Securities has nearly doubled its revenues from JPY14.1bn to 27.4bn. Matsui’s bottom line has nearly tripled since 2013.

From Canon and Toyota to Kikkoman Soy Sauce, nearly every internationally recognised Japanese firm has traded hands at one point or another by way of adult adoption, and while some Western critics continue to scoff at the practice, its merits are difficult to ignore. The typical aptitude deficiencies that plague most family firms are virtually non-existent in Japan. If anything, the nation’s archaic tradition has helped build a better mousetrap. By injecting fresh blood into a centuries-old company, Japanese patriarchs are able to bypass the issue of knowledge gaps and can motivate managers with the prospect of fast-track success.

More importantly, the prospect of adoption serves to discourage blood relatives involved in a company’s day-to-day operations becoming complacent. Directors have been proven to invest more in human capital and pursue aggressive expansion routes that lead to higher investment and bigger dividends. That’s not to say the tradition is a fool-proof method for success: after all, the complex dating site algorithms and fantastic first impressions that lead to patriarchs adopting a new son can hardly protect a company from unforeseen external risks. Yet for all its peculiarities, there’s quite clearly a reason the tradition is still alive and well in Japan.

Sharing is caring: how big data could revolutionise healthcare

Posted on 11/10/201405/15/2017 by Charlotte Gill

Healthcare graphic — Healthcare is an incredibly data-rich industry. The opening up of information by a traditionally secretive sector is a huge step that could see significant gains both clinically and in terms of care quality as data is shared and analysed communally

Tech firms taking the leap into healthcare:

Apple

Apple is jumping on the healthcare technology bandwagon with its new ‘Health’ app, an integral part of iOS 8. Health will create a personalised health display for the user.

The comprehensive, individualised data set will measure vital signs, weight, activity and diet. There are also plans for a developer toolkit called HealthKit, in which Health app users will be allowed to share their statistics with other health app makers.

By sharing the data between apps, Apple will be able to improve the performance of the apps themselves, and also provide personalised advice for users, ranging from tips for a better workout to automatic calls to a physician if there are signs of danger in a user’s vital signs and data.

Epic Systems

The US-based software company has a sophisticated platform for healthcare providers to archive medical records digitally. Because it services some of the biggest healthcare players in the US (including the Cleveland Clinic, the Dartmouth-Hitchcock Medical Centre, and several Kaiser Permanente health plans), it has been one of the biggest beneficiaries of a federal programme that reimburses healthcare providers for adopting a digital record-keeping system.

Its new patient mobile tool, MyChart, will link up with Apple’s Health app, and enable users to view test results, schedule appointments, pay bills, and send messages to healthcare providers.

Google

It might not come as a surprise that Google has its fingers in the healthcare pie, as the company tends to cast its net wide when it comes to innovation. Google Fit, its open specialised platform for fitness-tracking apps, was launched in June, and unifies and collates the data collected by sensors on wearable gadgets.

Supported hardware includes Google’s new Android Wear OS (designed specifically for wearable tech) and Android phones, but also items from other manufacturers.

This is not Google’s first attempt to break into healthcare; in 2012 it discontinued its digital health record service, Google Health (launched in 2008), as it “didn’t catch on the way we would have hoped”.

Merck Global Health Innovation Fund

The international drug giant Merck has been a pioneer in investing in digital healthcare start-ups through its venture capital arm. So far the company has focused its efforts on remote monitoring, data analysis and personalised medicine.

Some of Merck’s most notable investments include: GenomeDx, a company developing genomic tests for prostate and urological cancers; Preventice, the company behind a patient monitoring system that can track biometric indicators such as heart rate through wearable sensors; and ElectroCore, which has developed technology to treat headaches with electrical signals.

Microsoft

Microsoft has been tentatively getting involved with health records since 2007, when it launched its HealthVault software. The web-based platform allowed individuals and healthcare professionals to digitally manage medical records.

The software has since been adapted for mobile drives, and can connect to a variety of third-party apps to manage prescription information or track fitness data.

Microsoft has declined to share how many people use HealthVault, a free service, though it is still not a major focus of its business. However, other healthcare companies are using the software to collect data digitally, especially things such as answers to electronic clinical questionnaires.

The healthcare sector, perhaps more than any other industry in the world, is extremely data-rich. Every hospital admission, every drug trial and every new treatment is carefully researched, logged and documented; after all, when it comes to healthcare, the tiniest bit of information can be a matter of life and death. But as data management systems have evolved, the healthcare industry has been largely reluctant to invest in big data facilities – until now.

According to researchers at McKinsey & Company, over the past 10 years pharmaceutical companies and healthcare providers have been aggregating the vast amounts of data they gathered over the decades into medical databases; pharma companies have made their research available, while payers and providers have digitalised patient records. Meanwhile, the US federal government has also opened up its healthcare data and knowledge resources: a vast treasure trove of clinical trial data, and patient information from public insurance programmes. This is seriously big data and it is almost as if the term (used to describe a data set so large and complex it cannot be stored or analysed using conventional databases and management tools) was coined specifically to describe healthcare data. With the tools and technology now available to store, analyse and provide insights into big data, the possibilities – and opportunities – are endless.

“[Even] at the best institutions, doctors and nurses are going room to room each day to mark down which patients meet which quality metrics and whether they’re addressed,” wrote Dan Riskin, a US doctor, in Forbes. “The result is a manually-entered, cumbersome flow chart that can, at best, address a handful of the hundreds of known quality measures and use limited data to address these. With a condition like deep-vein thrombosis, for example, hospital staff rely on manual calculations to assess the risk of a patient. The problem is, if not treated properly, mortality rates rise. The real tragedy is that the information needed to properly assess the patient’s risk and determine treatment is… in the clinician’s notes, but without the proper tools, the knowledge remains unavailable and hence unused.”

Final frontier
The opening up of information is a huge step for an industry known for its secrecy. Due to the huge investments pharmaceutical companies make to develop new drugs and treatments, until now there has been very little incentive for them to share their findings. But as analytics technology has evolved, the value of the insights that can be gleaned from a cross-sectional look into the industry is suddenly worth more than pharma’s closely guarded secret.

GlaxoSmithKline opened up its books to outside researchers in 2012. At the time, the pharmaceutical community was taken aback at the company’s forwardness and willingness to share its insights. Glaxo’s insights, in particular, are worth a lot: $65bn in research and development a year, and $43.6bn in sales in 2013. Since then, the pharma giant and six of its pals have uploaded the results of over 900 clinical trials onto Glaxo’s ClinicalStudyDataRequest.com, an initiative that has sprouted another dozen research projects using the data.

Nicolaus Henke, Director of McKinsey & Company, thinks there are three reasons for the trend to invest in big data in healthcare: “Availability – we have so much more captured machinery to build data available today, whereas we only had providers five or 10 years ago. The second reason is it’s much easier and cheaper to link this data; today, we can simply link data sets from multiple formats and sources, and make sense of them in a high quality way. And this is a relatively low cost computational effort. The third reason is the big imperative to understand population health better. The minute we understand everybody’s health better, that is when we will understand chronic disease better and predict who is going to get sick. This is very, very important for healthcare outcomes and economic reasons.”

Fiscal benefits
However, it is mainly fiscal benefits that are driving this revolution in medical research and analysis. Healthcare expenses now represent 17.6 percent of US GDP, and, according to McKinsey, $600bn more than the originally expected benchmark for a nation of that size. Insurance companies are eager to reduce payouts and have been turning to new models, such as entering into accords with doctors and pharmaceutical companies where positive outcomes from treatments are rewarded, and reimbursement is based on a drug or treatment’s ability to improve patient health. It has therefore become vital that information be shared between healthcare providers, clinicians and pharmaceutical companies.

According to McKinsey’s figures, the effective use of big data tools by the US healthcare industry could be worth in excess of $300bn each year, and potentially as much as $450bn. This would come primarily from reduced healthcare expenditure, “or 12 to 17 percent of the $2.6trn baseline in US healthcare costs”. Though these figures are applicable only if the widespread use of big data technology is adopted, McKinsey suggests even simple interventions can have a significant impact, too. “For instance, we estimate that aspirin use by those at risk of coronary heart disease, combined with early cholesterol screening and smoking cessation, could reduce the total cost of their care by more than $30bn,” wrote Basel Kayyali, David Knott, and Steve Van Kuiken in the report. “While these actions have been encouraged for some time, big data now enables faster identification of high-risk patients, more effective interventions, and closer monitoring.”

Clinically and in terms of care quality, there are significant gains to be made by sharing and analysing data communally. “Data-driven healthcare has become increasingly well-defined and understood over recent years,” says Riskin. “It is the concept that large record sets can assure that best treatment algorithms are applied and that treatment algorithms are customised for individual patients. It means that, although modern medicine treats the 83-year-old diabetic patient with hypertension similarly to the 45-year-old athlete with hypertension, based on them being grouped together in the same clinical trial, in the future, care will be personalised based on what worked best for millions of similar patients previously. This level of customised care offers the promise of better and more applicable care.”

Better patient outcomes
Though the benefits of investing in a more data-driven healthcare system in the US are many and varied, there are some caveats. Primarily, there is the issue of privacy and doctor-patient confidentiality. “Although new computer programs can readily remove names and other personal information from records being transported into large databases, stakeholders across the industry must be vigilant and watch for potential problems as more information becomes public,” explain Kayyali, Knott and Kuiken. Privacy is a key issue, not only for patient’s peace of mind, but also commercially: even though databases may be accessible to those within the healthcare industry, they will probably not be open to the public, and private medical records undeniably have great commercial value outside the industry. “Current federal law does not fully address the use of new technologies, despite the fact that social media, web tracking, and mobile devices allow for faster, cheaper and more detailed data collection and sharing among resellers and private-sector entities,” says the Health Insurance Portability and Accountability Act. But it remains unclear how data-driven healthcare services might fit into these directives.

For the big data revolution to have a positive effect on healthcare, the industry will need to look beyond itself and into other sectors that have already taken the data-leap. “All too often, players have taken advantage of data transparency by pursuing objectives that create value only for themselves, and this could also occur in the healthcare sector,” say the McKinsey experts. But overall, the potential health and care quality benefits are far too great, and the industry must band together to ensure they reverberate throughout the sector.

Arthur one and Arthur the other: Market Basket’s example of employee power

Posted on 11/07/201405/15/2017 by Charlotte Gill

Employees and customers hold a rally in support of Arthur T. Demoulas after he was ousted from his role at Market Basket by a board controlled by his cousin, Arthur S. Demoulas — A rally in support of Arthur T. Demoulas after he was ousted from his role at Market Basket by a board controlled by his cousin. Arthur T. was reinstated as CEO after striking a deal to buy a 50.5% stake from rival family members

The media couldn’t get enough of the confrontation between employees of the New England supermarket chain, Market Basket and its management. On the surface it has all the hallmarks of a classic tale of good vs. evil. The beloved Arthur T. Demoulas, with the support of his staff able to summon the strength necessary to return as their leader after being ousted by his cousin and rival, Arthur S.

But there is a more compelling message to be gleaned from the Market Basket story. It acts as an allegory, offering insights into tackling the issue of US workers feeling increasingly marginalised in a country where the minimum wage debate is reaching fever pitch. In this context, the story offers solutions that must be acknowledged by government officials and business leaders alike, because if something is not done to tackle the widening inequality gap, the US might see the American dream become nothing more than a distant memory, leaving huge swathes of its population feeling forgotten and disillusioned.

It acts as an allegory, offering insights into tackling the issue of US workers feeling increasingly marginalised

Market Basket CEO, Arthur T. Demoulas, said in an interview with the Boston Globe: “If everyone in the workplace is equal and treated with dignity, they work with a little extra passion, a little extra dedication.” This sentence really sums up why Arthur T. was successful in maintaining his position at the top and why his employees were willing to put their jobs on the line to help put him there. Market Basket’s success is owed to its ability to breed a coherent company culture that resonates with its workers, and Arthur T. embodies that ethos.

Louis Gerstner, former chairman and CEO at IBM famously remarked that strategy was unimportant, but culture is everything, and he may be right. In the retail industry culture is king and the ‘Tale of the Two Arthurs’ is a reminder of that fact. “We have gotten a little sloppy in the US, in that for a number of years there was relatively high-unemployment, so it seemed like it was pretty easy to replace people if you wanted to, but people overlook how much skill is involved in retailing,” explains John Rand, Senior Vice President at Kantar Retail. “It is a skill. It takes time to learn it and if you want to do it well you have to hold onto those people.”

Arthur T. knew this and it is why he is a strong advocate of profit sharing plans. Other leaders should be too, as statistically companies that incorporate such incentives into their culture grow faster, do better and outperform those that don’t. “If you feel like you have ownership in the company then you do a better job,” adds Rand. “That means that as a stockholder, Arthur T. was willing to give up some small percentage of his revenue and give it back to employees; creating a strong culture of performance in the process.”

The US is a country whose conservative values have blocked it from taking pragmatic action, but with rising inequality threatening the stability of its economy, the time for change is now. Hilary Clinton recently said that trickle-down economics had “failed rather spectacularly”. The US desperately needs a means of propping up its ailing middle-class, but so far proposed solutions have been marred, being labelled as socialist. Hopefully the Market Basket story can provide answers to the country’s problems, without offending its conservative sensibilities.

Virtual reality set to enhance just about every industry

Posted on 11/07/201411/20/2014 by Charlotte Gill

Virtual reality is synonymous with gaming. When most people think about it, their mind conjures up a YouTube clip where someone with an Oculus Rift strapped tightly against their face oohs and aahs as they are blown away by the visual feast on display in games such as Skyrim – but there is much more to it than that. There have been significant developments in its technology, and the excitement that surrounds it should not be limited to gaming enthusiasts. Professionals in education, healthcare, architecture and engineering are all benefiting from the ‘VR’ renaissance, and we should all be taking an interest in the direction this technology is taking.

Two thirds of the human brain is dedicated to visual processing, which means our ability to learn is greatly improved when we are able to see and interact with the subject we are studying. With VR, users are able to explore a wide array of virtual environments, allowing them to view and interact with objects – and even other people – within a three-dimensional space. As the technology develops it’s going to become an increasingly immersive experience, changing the way we think, learn, work and play.

Gaming may be the driving force behind VR, but innovation in that sector is going to push development forwards
in others

Beyond video games
If you have ever seen someone play a video game, you may have been frightened by the zombie-like expression on their face – but it is simply the look of someone exhibiting complete focus. While teachers can struggle to keep students engaged, VR technology gives both children and adults the opportunity to participate in subjects ranging from history to the sciences in a truly visual way. The Giza Project makes this possible: the software it has developed allows users to explore the pyramids of Egypt in immense detail and, with Palmer Lucky (founder and co-inventor of the Oculus Rift) considering giving free Rifts to educational institutions, students could soon explore everything from virtual solar systems to ancient Rome from the safety of their classrooms. While people may laugh at the idea of incorporating VR into schools, this kind of innovation is just what the education system needs: today’s schoolchildren have grown up with technology and they love it, so why limit their learning to whiteboards and textbooks?

Education isn’t the only sector set to benefit from VR: many businesses are already reaping the rewards. Computer Assisted Virtual Environments – in which individuals are surrounded by projectors aimed at several walls to create fully rendered 360-degree computer-generated worlds – are a great tool for companies in the engineering sector. Car manufacturers use them as part of the design process as they allow products to be tested in real world environments without the need for physical prototypes. The opportunity to walk through a fully 3D-rendered plan of a building is a real advantage for not just builders and architects, but prospective investors too. VR systems are such a powerful tool for businesses due to the way they bring data to life: Microsoft PowerPoint presentations, no matter how well they are put together, are never going to represent information in the tangible, physical way VR can.

Virtual salve for real wounds
While businesses have seen the advantages of the technology, the biggest adopter of VR is healthcare. It uses it in a wide range of applications, including surgery simulators, skills training, and even treatment of post-traumatic stress disorder (PTSD). Surgeons use the technology to train without a cadaver, and it is particularly useful in practicing keyhole surgery. VR’s ability to render realism is its key strength: it is why the ‘Virtual Iraq’ system, which is used by soldiers suffering from PTSD, is so effective. The system surrounds soldiers with familiar sights, sounds and even smells to let them confront their fears in a controlled environment, allowing symptoms of their disorder to lessen over time.

Gaming may be the driving force behind VR, but innovation in that sector is going to push development forwards in others, helping to make the technology cheaper and accessible to a wider audience. Assertions that this is just another fad, similar to the one experienced in the 90s are wrong. The video games industry is investing a lot in VR, convinced that it is here for the long haul and that its wider applications are going to continue to benefit our world.

The cyber-crime threat: are you the problem? | Video

Posted on 11/03/201402/16/2018 by Charlotte Gill

Companies at all levels face being the victims of cyber-crime, with the social online activities of staff and outsourcing being major areas of vulnerability. The New Economy speaks to Dave King, an online reputation management expert, about what action firms need to take.

The New Economy: Dave, let’s look at the example of Wal-Mart. Of course they’ve got a limitless pool of resources, but Wal-Mart has been victimised by cyber-crime. Tell me, how do you protect a company when you’ve got resources like that, but, clearly money is not the solution.

Dave King: You’re absolutely right: businesses are spending a fortune on combatting the obvious cyber-threat. And yet, perpetrators who come in using social engineering, or come from outside that ringed wall, if you like, can still pose a very credible threat.

Companies don’t necessarily understand that 84 percent of cyber threats today start with social engineering. And regardless of the amount you’ve invested in protecting your network, if I’m clever from the outside looking in, and I can use your employees or your third-party suppliers and the data they have out there, I can probably find a route in.

84 percent of cyber threats today start with social engineering

The New Economy: So you’re saying that human vulnerability starts from the top and trickles all the way down – but what I really want to understand is how an employee poses a risk to their own company through these various social media platforms that exist.

Dave King: Actually, most of the time we’re not talking about employees who have deliberately put their company at risk. In fact, what we’re talking about is, as you know, we all create an increasing online trail of information these days. And that information might include my interests, my likes, my travel arrangements. It might include other, more sensitive data. And what cyber attackers – certainly dedicated, bespoke attackers – are getting better and better at, is mining that information.

Now I might mine it for you specifically, but I’ll probably mine it for all of the people in the organisation to start to understand where the weaknesses are; where the vulnerabilities are. And that might include me posing as somebody else online to gain more information, and exploiting that vulnerability.

So often the employee or the third-party supplier is completely unaware – a, of the vulnerability, and b, of the attempt made by an outsider to exploit that vulnerability – until it’s too late.

The New Economy: Companies are going to be confronted by this issue at all levels. It doesn’t matter how large or small, because people are going to outsource various aspects of their work, and when that happens, as you said, there’s going to be a vulnerability created.

Tomorrow, if you were going to advise a mid-tier company, pulling in $500,000 to $1m – still a very small company – how would they then protect themselves? They may not necessarily have the resources of, for example, Target, to go out and get a whole flank of people.

Dave King: Well that’s absolutely right, and I think ultimately it boils down to prioritisation. And I go back to that analogy that I always describe, which is protecting your house from crime. You ponder what the threat is: what area do you live in, and so on and so forth, and you react accordingly. And I think the same is true for a small or mid-sized business.

And those small and mid-sized businesses might not be holding consumer data, for example. The danger is today, they possibly think they’re not susceptible to cyber-threat. They may well be. And that cyber-threat may come from abroad. It may come from state-sponsored or other corporate espionage.

And I think the challenge for boards has to be a, understanding some of this area; but b, working out where are our crown jewels? So as an organisation, what is it that we have, that is most valuable to an attacker? Whether that attacker be state-sponsored, or a hacktivist, or a schoolboy in his bedroom who wants to create mischief.

[w]e should be thinking about what is it we’re trying to protect, and whom does that need to include from around the table?

And it might be that it includes reinforcing our network. But first and foremost we should be thinking about what is it we’re trying to protect, and whom does that need to include from around the table?

The New Economy: Okay, now we have FTSE companies that are ponying up to that sort of advice, and realising that they need to be cyber-crime specialists at the executive level, bringing in this information. Is that a reassuring sign, for you?

Dave King: I think it’s a very reassuring sign, but I think it’s the minority, not the majority. It’s probably those businesses that are most analogous to the businesses where we’ve seen the biggest purported attacks.

So, retailers are waking up to – let’s not forget that a business like Target, which was attacked in the US – had made massive investment into cyber. It might be argued that they missed out a piece of the puzzle. But it’s very reassuring to see FTSE firms waking up to the threat. I think it’s important that that’s more widely applied.

The New Economy: Sobering advice there, thank you so much Dave.

Dave King: Thank you.

Why non-profits are flocking to crowdfunding platforms

Posted on 11/03/201405/15/2017 by Charlotte Gill

Kickstarter co-Founder Yancey Strickler. Organisations in the non-profit sector have found crowdfunding platforms such as Kickstarter an efficient means to gain the capital they require

Having realised its monetary potential, non-profits are quickly becoming aware of crowdfunding as a more accessible and efficient method of fundraising. Through Kickstarter and other crowdfunder platforms, organisations in the non-profit sector are increasingly attracting new donors, raising awareness and improving social media marketing. But the initiative is still finding its feet in the sector.

The idea of crowdfunding dates back to 1885 when a New York newspaper started a campaign to help fund The Statue of Liberty’s pedestal, according to the BBC. More than 160,000 donors, including young children, businessmen, street cleaners and politicians chipped in and in just five months the world raised $101,091 – enough to complete the pedestal. Today, websites such as Zopa, Funding Circle and Kickstarter are being used as platforms for similar efforts to fund projects and causes. In a Nesta report entitled Crowding In, principal innovation charity researchers Peter Baeck, Liam Collins and Stian Westlake found the US crowdfunding market had raised $1.5bn in 2011, financing more than one million projects ranging from start-ups to video game development and scientific research. Looking primarily at how the UK’s businesses, charities and government can also make the most of crowdfunding, Baeck, Collins and Westlake found crowdfunding harnesses people’s goodwill towards particular meaningful, ethical or interesting ventures – meaning they are likely to invest.

[I]t is no wonder crowdfunding is becoming the ‘darling’ of non-profits

Crowdfunding has a number of marketing campaign advantages in contrast to traditional forms of funding, which means organisations can fundraise more quickly and successfully. With a lack of money and time, this efficiency proves advantageous for non-profits. According to online fundraising platform Kimbia, many non-profits are developing creative peer-to-peer campaigns online to quickly engage supporters who may not have traditionally given to an organisation. A quick configuration on the web allows participants to fundraise in minutes, enabling non-profits to gain tangible ground with their projects through a fast build-up of networks. 180 Degrees Consulting’s Patrick O’Reilly says the ability to move fundraising onto an online platform provides non-profit organisations with opportunities for cost streamlining. He says instead of relying on large-scale marketing campaigns, crowdfunding can be inexpensively directed at those who would be most interested in donating for causes worthwhile to them.

O’Reilly says 2012 saw the rise of a number of platforms set up to provide quick crowdfunding support for community projects such as the international GlobalGiving site, which connects non-profit organisations with sponsors. Another example is Giving Days which are 24-hour online fundraising competitions that combine gamification and deep social interaction to bring communities together for local causes. In November 2012, the giving day platform Razoo partnered with GiveMN – an organisation that aims to grow online giving in Minnesota – to break a world record by raising $16.3m for Minnesota charities in just 24 hours.

In the same year, Christian pastor and World Vision Australia advisor Jarrod McKenna sought funding for a charitable mortgage through rapid social media campaigning. McKenna and his wife Teresa Lee came up with the idea to transform a former methamphetamine drug lab into medium-term accommodation at below-market rates for refugees transitioning to Australia. The family sought a loan of $600,000 to buy the property in Perth, Western Australia, but 14 institutions knocked back the loan request. “When our last hope declined us, we almost gave up,” McKenna says.

“But then a friend said they had AU$40,000 saved for their own house that they would like to lend to us. That’s when we got thinking, maybe the banks won’t lend us money, but the community will be our bank instead.” Lee and McKenna then created a social media and ‘crowdmortgaging’ campaign that sought similar loans from family, friends and the extended community using their own peer-to-peer website platform. It took just 13 days to raise the money with the last amount coming in just five minutes before their deadline and the couple are now repaying their social media lenders.

It takes thoughtful planning and smart execution to support a crowdfunding campaign such as the aforementioned. Author, blogger and non-profit fundraising trainer Beth Kanter believes organisations need to inspire people and give them a sense of ownership over the success of the campaign. Kanter blogs on how non-profits leverage networks and data for social change, building up an online and offline community, creating great projects, and then asking the community to fund them through donations. This helps non-profits tap into new donors because the people that support these campaigns tap into their personal networks. No matter how big or small, these can help with sustainability and act as a means of recruiting new donors. It also poses a simple way of marketing an organisation’s stance or primary cause. The marketing is left up to donors, supporters and influencers in the media with similar interests as they work to share the cause and subsequently create a momentum to raise funds.

Kanter asserts that social media-infused fundraising has goals beyond the dollars raised. Her point relates to the retention and interaction with the same network of people who helped to fundraise for a certain project or cause. For example, Jarrod McKenna and Teresa Lee keep past donors and lenders updated on the progress of The First Home Project and how the families are getting along. Ultimately, this is important for engagement. It allows organisations or individuals to interact with donors over messaging or update services, which means people are continually informed on the progress of the project, making it possible for potential donors to be kept updated on future initiatives proposed by certain organisations. This then creates a perfect circle, allowing for non-profit organisations to continue the social media momentum for the issues and causes they feel passionate about.

Posing a more efficient yet different avenue of securing finance, it is no wonder crowdfunding is becoming the ‘darling’ of non-profits. The simple method of crowdfunding on a peer-to-peer campaigning platform proves important for non-profits who are searching for fast but long-lasting engagement, networking and marketing of a meaningful cause or project.

Crowdfunding changes the face of small business financing

Posted on 10/31/201410/01/2014 by Charlotte Gill

It’s been over half a decade since the financial crisis and still more than half of all small businesses are turned away from banks empty handed, their request for a loan rejected and their prospects short of what they were on entering the building. Without the necessary quality of earnings, cash flow or collateral requirements, those grinding the gears in the world economy’s engine room are more often than not starved of the financing they so desperately need.

Statistics show 21 million of the US’s 27 million businesses have zero employees, and 4.6 million of the remaining 5.9 million have fewer than 10. Here we begin to gain an understanding of just how big a part small businesses and entrepreneurs play in job creation, and an insight into what repercussions a lack of funding could have on the wider economy. Credit approval ratings still linger at desperately low levels, and new regulatory requirements ask that banks be near enough guaranteed a repayment before they invest in small businesses.

Unwillingness on the part of lenders to back small businesses has, however, given rise to alternative lending solutions, not least in the crowdfunding market. “Crowdfunding can be an attractive alternative because it is faster, more cost-effective and in many cases connects businesses with their consumers, who are then more inclined to stay as customers when they have a financial interest in the business’s success,” says Julia Groves, Chair of the UK Crowdfunding Association.

Crowdfunding is forecast to create a further 270,000 jobs in 2014 and boost the global economy by some $65bn

The rise of crowdfunding
Five years on from the establishment of Kickstarter, crowdfunding has cemented its status as a proven investment alternative for all manner of popular initiatives and enterprises. “More than money, Kickstarter helps people build a community of support around an idea,” said one company spokesperson. “Creators get to develop closer connections with their audiences, and backers enjoy a behind the scenes look at the creative process along the way.”

Built on the so-called wisdom of crowds, crowdfunding platforms have emerged as a surprisingly sophisticated means of democratising access to capital and partnering causes with appropriate backers. Beginning as a means of funding social projects, crowdfunding has become a destination for small businesses and entrepreneurs seeking financial support.

One recent success story of note is the Oculus Rift project, which started out with a target of $250,000 but quickly attracted over 9,000 backers and $2.4m in funding. Less than two years on from the campaign’s success, the virtual reality start-up was acquired in full by Facebook for $2bn; proof, if ever it were needed, that crowdfunding can sometimes determine a sound investment ahead of its more conventional banking counterparts.

With an expected annual growth rate of 92 percent in 2014, the crowdfunding industry is on track to rack up impressive gains far ahead of traditional banking – although the fact remains that the industry is largely undeveloped. Crowdfunding is split into four categories (donation, reward, equity and debt) and each represents an alternative avenue of financing, with its own advantages and complications. Of the four, equity-based crowdfunding is the standout sector, and also the one bound by the most stringent regulatory ties as backers and businesses struggle to arrive upon a framework whereby both sides of the bargain are upheld.

Regardless of the complications, crowdfunding is forecast by Fundable to create a further 270,000 jobs in 2014 and boost the global economy by some $65bn. While the $5.1bn raised through crowdfunding platforms last year pales in comparison to the amount loaned by banks, the industry’s expansion (over 1,000 percent in the last five years) is certainly enough to rattle the cages of traditional lenders.

A threat to banking
Having heard the stories of crowdfunding’s rise and the effect it has had on so many small businesses, commentators have been quick to pre-empt its potentially disruptive influence on the banking sector. “Crowdfunding is not just about raising funds,” says Jessica Ratty, Brand Communications Manager at Crowdfunder. “The whole process teaches entrepreneurial behaviour alongside marketing, PR and social media skills. By reaching out to your community to raise funds, you heighten awareness, gather supporters and future customers, and create a fan-base of people who really want your idea to be a success.” Crucially, crowdfunding platforms are exempt from many of the regulatory restraints that have inhibited lenders when it comes to backing small businesses.

27m

Businesses in the US

21m

have zero employees

If not an alternative to traditional banking, crowdfunding platforms at the very least act as an intermediary between unsuccessful start-ups and investors that may otherwise be priced out of the market. Many platforms allow backers to participate in campaigns for as little as $5 apiece; a far cry from the financial exclusivity of more traditional investment platforms. This difference has given rise to many more philanthropic enterprises.

“Crowdfunding is based on the principle of ‘democratic finance’, which means that it offers relatively low minimum investment amounts when compared to conventional investments,” says Bruce Davis, co-founder and joint MD of Abundance Generation and former co-founder of Zopa. “This means that individuals have access to a greater range of choices in how to invest their money and can avoid the problem of concentrating their eggs in a single ‘asset basket’.”

“People can lend or invest as little as £20 and actually see where their money is going and what difference it is making. This transparency is what we think has been lacking in financial services to date,” says Groves. “Crowdfunding is simple and direct and has the potential to re-engage people with their money, because they can choose for themselves where it goes and make more of the return than if they invested through funds and other intermediaries.”

Arguably the most important lesson for traditional lenders is that transparency and community have been the two most influential facets in breeding success in the crowdfunding industry. Without either, the platform would be unable to attract the investment and create the network of trust it has done so far. The question shouldn’t be whether crowdfunding will replace traditional lending, but whether banks will incorporate similar facilities into their operations and expand the loan opportunities available to small businesses.

Goodbye financiers, hello geeks: the start-up that’s shaking up the hedge fund industry

Posted on 10/30/201405/15/2017 by Charlotte Gill

Quantopian's online network has given rise to a more meritocratic process of recruitment in the hedge fund industry. Talented traders are able to demonstrate their skills online, before employers take them on — Quantopian’s online network has given rise to a more meritocratic process of recruitment in the hedge fund industry. Talented traders are able to demonstrate their skills online, before employers take them on

Beginning life as a tech start-up, Quantopian has come a long way in its two short years of existence. The original model was a ‘quant community’: a place where quantitative financial specialists could come together and build algorithms for trading, allowing anyone with a financial mind to trade like a hedge fund manager. Fast forward to today, and the open online network has raised $15m in a round of Series B financing from Bessemer Venture Partners, Khosla Ventures, Spark Capital and Wicklow Capital, and intends to use the resources to start its own hedge fund.

Quantopian differs from a traditional fund in many ways, but perhaps most significant is the approach it takes to recruitment. First of all, taking its recruitment process online means that Quantopian is instantly casting a wider net, and by allowing users to build and trade with their own algorithms, objective data is generated about each individual and the results can speak for themselves. A frequent obstacle for the industry as a whole is finding quantitative analysts who have a real, genuine passion for the field, and Quantopian’s online platform automatically screens for that – its users are choosing to spend their spare time building algorithms for trading stocks; they probably enjoy doing it.

Typically, hiring at hedge funds is characterised by a battle over the top students from the top universities, resulting in a fairly homogeneous applicant pool and often allowing hoards of talent to slip through the cracks. More often than not, successful candidates will have put in at least a few years at an investment bank, and references are considered imperative to the hiring process – more so at hedge funds than other financial firms.

“We don’t hire people from Wall Street. We hire people who have done good science”

Not so at Quantopian, where regardless of the university they attended or their previous experience, the highest performing quants within its user-base will be given the chance to invest capital through the fund, Quantopian Managers Programme. CEO and founder John Fawcett’s aim is to bypass the bias of Wall Street where employers are notoriously selective based on a candidate’s credentials, and to create a more transparent alternative to the secretive world of quantitative financial analysis.

Another firm crowd sourcing solutions is Upgrade Capital, which allows undergraduate and MBA students to manage virtual portfolios and share trade ideas among the community. Initiatives such as this benefit both parties: candidates are able to hone their practical skills and receive guidance, and firms gain access to a wealth of relevant data on potential hires. Businesses in other industries have been looking beyond applicants’ credentials and experimenting with recruitment processes for some time now, and financial firms are finally starting to catch on. Data-driven hiring in particular is building momentum as companies recognise the efficiency and precision it brings to the process, not to mention the time and money saved on labour.

Unsurprisingly, there’s considerable method behind what may have initially sounded like madness. “The holy grail of it all is finding a set of strategies that are not correlated to one another, or to the market,” said Fawcett. “I think diversity in the background of the people developing these strategies increases the probability that we’ll find uncorrelated ones. That’s the essence of the benefit to our customers and to investors in the fund: that we will have a much wider variety of quants, and therefore a much wider variety of strategies.”

Fawcett and his team could be onto something. Renaissance Technologies, one of the most successful hedge funds in the world with its signature fund, Medallion, earning a 2,478.6 percent return in its first ten years, takes a similar approach to hiring. Its founder, mathematician Jim Simons, insists that his secret to success is steering well clear of financial experts. Of its 200 staff, a third hold PhDs in physics, mathematics and statistics – but very few in finance. Simons told Institutional Investor in 2000: “I have one guy who has a Ph.D. in finance. We don’t hire people from Wall Street. We hire people who have done good science.”

If there ever was a time to deviate from traditional approaches to investing, there’s none like the present. Children of the digital age coming into wealth for the first time are more likely to be seeking out investment options that correlate with their digital lives, but fundamentally, funds that offer their customers transparency above all are universally appealing.