THE POINT Doing the right thing Own goals Stuart Rose on trust, Making the best of the cooperation and corporate bucket list commercial success Old head, young shoulders Reaping the benefits of Issue 26 | November 2014 youth and experience Piling on the pressure Can cost-cutting go too far?

bridgepoint.eu CONTENTS

2 INS & OUTS Bridgepoint investments and exits across Europe

4 BUSINESS TRENDS How low can you go? Low-cost enterprises are making hay, but do consumers really put price above everything?

10 24 TALKING POINT FACE TO FACE Generation game The quiet revolutionary Can businesses benefit from combining Foncia’s François Davy gives power the experience of age and the to the people – and it works enthusiasm of youth? 16 28 IN MY OPINION MANAGEMENT FOCUS Good works Beyond the pail Stuart Rose suggests that ethical How to make the best of the behaviour can and should deliver CEO bucket list commercial advantage 20 32 MARKET INSIGHT SECTOR ANALYSIS Neighbourhood watch Exporting knowledge Big data and local knowledge: How European businesses are natural enemies or ideal partners? sending their know-how overseas

36 LAST WORD Game over Infantile, ridiculous and oddly compelling: Katie Roiphe explores social network “challenges” FOREWORD

Service makes a comeback

At a time when all we seem to hear about is the constant pressure on businesses to drive prices even lower, service is making a comeback. Why? Because customers want a mix of price and service; often, they will not countenance bad service at all and will pay a higher price to be treated well. It is not just consumers who are changing their purchasing patterns; business buyers are also heading in a new direction. Read “How low can you go?” on page 4 to find out how price, traditionally a key factor driving decisions in the B2B sector, is being eclipsed by “customer experience”. “Si jeunesse savait, si vieillesse pouvait,” goes the French expression, and the debate continues about the supposed lack of experience of the young and energy of the old. In “Generation game” on page 10, we find out why it’s unwise for companies to ignore employees at either end of the age spectrum. Big data’s promise of hidden knowledge and customer insight is seductive, but, as “Neighbourhood watch” on page 20 explains, local knowledge is also valuable. Knowing how to combine data technology and local knowledge can be a powerful tool for any business. After all, in an increasingly joined-up business world, individuals want to feel connected. Are commercial success and doing good mutually exclusive? Not according to leading retailer Stuart Rose, who is a member of Bridgepoint’s advisory board. He sums it up neatly: “The ‘business of business is business’ just doesn’t hold true any more.” On page 16, find out what he thinks businesses need to be doing – and why doing the right thing is not only morally better but commercially advantageous, too. The so-called “bucket list” phenomenon is increasingly popular in the corporate world, where it is used to inspire CEOs and employees alike. “Beyond the pail” on page 28 examines why a bucket list forces you to think about where you are and where you need to go, and why CEOs are applying the bucket list to their businesses. Elsewhere, we report on the latest investments and divestments in Bridgepoint’s portfolio of businesses and profile the CEO of one of these – François Davy of Foncia (page 24). THE POINT Since our last issue we have acquired foreign exchange specialist Moneycorp and Phlexglobal, a software and support services business in the global clinical research market.

November 2014 We have also had notable success in realising investments: private wealth manager Issue 26 Quilter Cheviot, with assets of £16 billion under management, was sold to Old Mutual plc Published by Bladonmore (Europe) Ltd in a £585 million transaction; and SPTS Technologies was sold to Nasdaq-listed Orbotech Editor in a $365 million transaction. Our smaller buyout fund, Bridgepoint Development Capital, Joanne Hart has had three important realisations: Pulsant, the IT services provider to the UK SME market Design Bagshawe Associates UK LLP to Oak Hill Partners; Energy Solutions Group to SSE plc; and Hallmark Hotels to Topland. Reproduction, copying or extracting by any means of I hope that you enjoy this issue. We always welcome feedback n the whole or part of this publication must not be undertaken without the written permission of the publishers. The views expressed in The Point are not necessarily those of Bridgepoint. William Jackson www.bridgepoint.eu is managing partner of Bridgepoint

1 INS &OUTS BRIDGEPOINT news across Europe Follow the money Foreign exchange specialist Moneycorp has been acquired by Bridgepoint in a deal valuing the business at £212 million. Moneycorp is one of the currency trades, gross largest players in its field. income rose almost 50 Active in the foreign per cent to £97.2 million exchange (FX) markets and it acquired Thomas since 1979, the group Cook’s corporate FX operates a substantial business. bureau de change Bridgepoint partner business, with 10 shops Stephen Green says: “The and 61 airport sites, FX market for SMEs is including a strong changing and offers much presence at Heathrow to go for. Moneycorp is an and Gatwick. However, it exciting opportunity to also has a fully integrated back a talented manage- online payments and ment team with a fast- telephone platform, growing UK business and serving small businesses significant international

and high-net-worth development potential.”n individuals. This sector is growing A mutually beneficial exit for Quilter Cheviot fast. The UK international payments market is Bridgepoint has sold UK discretionary investment has generated significant expected to grow by 11 private wealth manager firm Cheviot for £95 inflows of new business.” per cent per annum as Quilter Cheviot to financial million and more than Quilter Cheviot chief services group Old Mutual doubling assets under executive Martin Baines customers switch away in a transaction totalling management from £7.6 agrees, commenting: from banks and turn £585 million. billion to £16 billion. “Our business flourished increasingly to specialist The deal achieved a Bridgepoint partner under Bridgepoint providers. money multiple of 3.1x and Michael Black says: “The ownership and we were Moneycorp is primarily an IRR of 55 per cent. step change in scale over able to pursue our growth based in the UK, but it is Originally acquired in the past three years has strategy and also starting to expand 2011, Quilter expanded more than doubled build strength, internationally. In 2013, it significantly under Bridge- profitability and assets depth and handled over £10 billion of point’s ownership, buying under management and scale.” n Nasdaq firm buys SPTS Technologies Group SPTS Technologies Group, a leading to deposit and remove materials circuit-board efficiency. The group is manufacturer of specialised from semiconducting wafers. With also involved in the manufacture of equipment for the microelectronic manufacturing facilities in Wales and ultra-small mechanical sensors industry, has been sold to Nasdaq- California, the group operates in 19 (MEMS) used in smartphones, tablet listed Orbotech Ltd for $365 million. countries worldwide. computers and games consoles. The sale comes three Under Bridgepoint’s ownership, Over the past three years, SPTS years after Bridgepoint SPTS has become a leading has also secured more than 50 new acquired SPTS, supplier in the fast-growing customers, and this year is expected which produces Advanced Packaging to generate revenues of approxi- equipment used sector, which improves mately $180 million n

2 Bridgepoint buys into £700 million clinical research market

Phlexglobal, a support- services specialist in the global clinical research market, has been acquired by Bridgepoint Development Capital (BDC) for £42 million. The company is a specialist in Trial Master File (TMF) software and services, working with pharmaceutical, biotech and clinical research organisations across the world. Required by law, a TMF is a “An increasing proportion of the well placed to benefit,” says BDC collection of all the essential industry is expected to be partner Alan Payne n documents created during a outsourced, and Phlexglobal is clinical trial. Phlexglobal caters for all TMF requirements, from fully outsourced technology- enabled solutions to a range of Topland snaps up Hallmark Hotels ancillary services. Regional UK hotel group Hallmark hotels.Today, the group has a The addressable market is Hotels has been sold by Bridgepoint portfolio of eight four-star hotels worth an estimated £700 million Development Capital to real estate around the UK, with 600 staff annually and is forecast to grow group Topland. and more than 700 rooms. by five per cent per annum over Hallmark was established in 2007 In 2013, it delivered a turnover the next five years. to buy underperforming of £20.2 million n

Smart sale for energy group Pulsant sold Bridgepoint Development Capital electrical equipment so that the Bridgepoint Development (BDC) has sold smart-energy site is both comfortable and Capital (BDC) has exited Pulsant, business Energy Solutions Group energy-efficient. ESG also which provides IT services to SMEs (ESG) to UK-listed SSE for £66 specialises in remote energy in the UK. million, with the potential for a monitoring, metering, energy Pulsant was created in October further £6 million payment if analytics and bespoke software 2010 when BDC acquired Lumison, agreed targets are achieved. solutions. introduced a new CEO and ESG is a UK leader in the The company was acquired in embarked on a strategy to create a support and implementation of December 2010 at an enterprise “one-stop shop” IT services supplier intelligent Building Energy value of £36 million, since when it for the UK SME market. Rebranded Management Systems has become the largest Pulsant, the company made three (BEMS), a computer- privately owned player in further acquisi- based system that the BEMS market, with tions and now controls a building’s revenues in the past year offers a wide mechanical and of more than £50 million n range of IT services n

3 Business trends

4 How low can you go?

Businesses are under constant pressure to drive prices ever lower. But is there a risk of alienating customers by focusing on cost at the expense of service?

5 n the golden age of aviation, when It’s the same story throughout glamorous Pan Am stewardesses the consumer industry, from “fast were the supermodels of their fashion” and discount grocery day, there was just one class of stores to pound and euro shops travel: expensive. and cut-price travel websites. Fifty years ago, flying was only for the very wealthy. A long-haul March of the discounters trip might cost more than some In hotels, the French group Accor, people earned in a year but, for with its budget brand Ibis, is now those who could afford it, jetting Europe’s largest hotels group. Sir around the world was an elegant Stelios Haji-Ioannou, one of the and luxurious experience. pioneers of budget airlines, has Our new, egalitarian age of air also entered the market, hoping to travel – made possible by the replicate his easyJet success with introduction of package holidays a no-frills hotel brand, easyHotel. and the arrival of budget airlines – The internet has revolutionised has opened up the skies to all. But the way that we shop; with a few as the cost has fallen, so the old taps on a smartphone, shoppers allure has faded. The business can compare the prices of model of budget airlines is based anything – from holidays to cars, on packing planes as full as TVs to T-shirts. Competition possible and stripping service has further intensified with the down to the most basic levels. rise of Amazon, which started There is precious little glamour as an online bookshop but now associated with flying these sells everything from music and days but passengers have flocked films to electronics, furniture and to low-cost carriers such as even food. Ryanair, Wizz Air and easyJet in Some of the fiercest price- their millions. cutting has been seen in the grocery sector. The so-called “hard discounters” – Aldi and Lidl – have long dominated their With‘‘ a few taps on a domestic German market, smartphone, shoppers can where they have a combined share of more than compare the prices of 40 per cent. Now they are anything – from holidays to exporting their cars, TVs to T-shirts”

6 no-frills format to the UK and the rest of Europe, where they have been making significant inroads. In the UK, for example, Aldi’s sales have been surging at the rate of more than 30 per cent and, by the Bargain‘‘ stores are increasingly attracting end of the summer, its market better-off consumers. Poundland says that share had reached a record 4.8 per cent – just a whisker away from more than one-fifth of its shoppers are now Waitrose’s 4.9 per cent. in the higher-earning In the fashion industry, one of the runaway success stories in AB demographic” recent years has been Primark, the retail chain that offers fast fashion at rock-bottom prices. Primark’s low-cost approach has propelled it to the forefront of the high street, where it has snatched market share from established retailers such as Marks & Spencer. With annual sales now topping £4 billion, Primark is an increas- ingly powerful force in the fashion world and it aims to repeat its UK success in the rest of Europe. It already has 35 stores in Spain and in the past few years has moved into France, Germany,

7 Portugual, the Netherlands, believes Kamel Mellahi, professor Belgium and Austria. of strategic management at The ultimate price-cutters are Warwick Business School. perhaps the pound and euro “Discounters such as Aldi and shops, which are modelled on the Lidl have reached a point where dollar stores of the United States. they can’t cut prices any further,” Like the grocery discounters, their he says. Indeed, the discounters numbers have soared in recent are now adding premium lines to years, led by TEDi in Germany, cater for the wealthier shopper, as which has more than 1,400 shops well as for those who simply care throughout Europe, and about price. Poundland in the UK, which was Intriguingly, research from the valued at £750 million when it UK Institute of Customer Service floated on the London stock puts the proportion of those market earlier this year. influenced by price alone, even if Offering a limited range of it means compromising on quality products, all priced at £1 or €1, and service, at just 15 per cent. these bargain stores are increas- The majority of customers – ingly attracting better-off 60 per cent – want a mix of price consumers – a trend also seen at and service, while 24 per cent Aldi and Lidl. Poundland, for say that service is their prime example, says that more than one- concern and that they are willing to pay a premium for it. Research‘‘ from the UK Institute of Customer The success of low-cost operators may seem to belie this Service puts the proportion of those influenced research; but it may be that by price alone at just 15 per cent. The majority people are prepared to put up with discomfort some of the time, of customers – 60 per cent – want a mix of price as long as they do not have to and service, while 24 per cent say that service suffer in every consumer experi- is their prime concern” ence. And some people will not countenance bad service under any circumstances. fifth of its shoppers are now in the higher-earning AB demographic. Differing priorities But even pound shops can be “In the case of Ryanair, Aldi and undercut in the endless quest for other discounters, there may well ever-lower prices. Last summer, be some disgruntled customers residents of the seaside town of who do not accept the inconven- Torquay in Devon watched with ience or basic service and quality,” astonishment as the local says Mellahi. “Most cost-conscious Poundland waged war with the customers will tolerate these to rival 99p store, pushing prices obtain the goods at the prices down to 97p, then 93p, 92p and, they can more comfortably finally 90p. afford, but consumers are not a homogeneous group – we all want Rock bottom different things.” So how low can prices go? In some Nonetheless, it is clear that the sectors, such as grocery, they’ve price transparency of the internet already reached the bottom, has brought about dramatic

8 changes in buying Price, which is traditionally a key factor behaviour. And the web is not just changing driving decisions in the B2B sector, is consumers’ purchasing now being eclipsed by the ‘customer patterns, but those of business buyers, too. experience’. Buyers are willing to pay up to According to Global 30 per cent more for a superior experience” Survey, B2B is the New B2C – research from the business technology and ‘‘ services firm Avanade – the B2B buying process is following budget airlines, notably Ryanair. Both Starbucks and Amazon patterns first seen in B2C, with Run by the combative Michael have suffered sales slowdowns in buyers now mimicking consumers’ O’Leary, the Irish low-cost carrier their UK operations in the past shopping behaviour. has become notorious for its couple of years amid calls for Gone are the days when a B2B cavalier attitude towards boycotts of their products in buyer would be working largely in customer service, and for protest at how little tax they pay. the dark, with dusty pricing O’Leary’s offensive tirades against And Ryanair’s relentless pursuit directories and phone calls to the airline’s own passengers. of low costs and minimal customer potential suppliers as their sole Ryanair’s fares are low, but service has finally taken its toll, source of information. “Business competing on price alone is not with the airline suffering its first buyers are shopping at work like enough, according to Richard fall in profits in five years over the they do at home,” according to Lloyd, executive director of 12 months to March 2014. Avanade. “They are proactively Which?. Ryanair was voted the After a stormy shareholder informing themselves about worst company for customer meeting, at which investors told of enterprise products and services service in the organisation’s verbal attacks at dinner parties in wide-ranging marketplaces of 2013 survey of 100 companies, over their involvement with the peer customers, industry experts and nearly nine in 10 of those airline, the abrasive O’Leary and, of course, salespeople.” polled – 86 per cent – said that promised that the airline would they would leave a brand that change its ways. Faced by Customer experience treated them poorly. competition from its arch rival However, the survey also found “Some companies clearly need easyJet, Ryanair has introduced that price, which is traditionally a to do more to retain their allocated seating, simplified its key factor driving decisions in the customers than by competing on website, allowed passengers to B2B sector, is now being eclipsed brand awareness or price alone, carry a second small piece of hand by the “customer experience”. even if they are cheaper than their luggage and even launched a Indeed, the survey reports buyers competition,” says Lloyd. “It is in Business Plus service. willing to pay up to 30 per cent every company’s best interests to In the end, of course, we do tend more for a superior experience. provide good customer service to get what we pay for. Everyone More than half of those surveyed and place consumers at the heart likes a bargain and consumers are – 56 per cent – said that they had of their business.” generally happy to lower their paid more for a product in the last In the digital era, consumers expectations along with the price. six months because the customer are increasingly using social However, we are also prepared to experience was better than other, media to go public with their splash out on luxuries, as long as less expensive options. complaints. Online petitions and we get the premium quality and While the discount supermar- calls for the boycotting of service to go with them. kets and pound shops continue to companies are now common on What consumers hate most of gain market share, there have Twitter and Facebook, and all, whether they are shopping at recently been significant signs of businesses are being forced to Primark or Prada, is the idea that a consumer backlash against pay attention. they are being ripped off n

9 10 Talking point

Generation game

It is often said that the young lack experience and older people lack energy. But does this opinion still hold true in today’s workplace, or is it time to think again?

11 ompanies around the workers lack experience while world have typically older employees run out of energy applied a “Goldilocks” and drive. As a result, both have principle to hiring: often had a harder time finding or the perfect member of holding on to jobs.” Cstaff is neither too old nor too But economists point to young, but somewhere right in encouraging signs that such the middle. ageist prejudices are starting to “A human resources cliché holds change. So far, it appears to be that people on the extremes of the greying workers who are demographic spectrum come with benefiting most. Over the past two significant drawbacks,” says Gary years, there has been a 25 per cent Burtless, a labour economist at US surge in the number of managers think tank the Brookings Institu- working into their sixties, tion. “The concern is that young according to recent data from the UK Office for National Statistics. What’s more, instead of being short-changed by employers, this age cohort received larger pay rises than its younger peers – with salaries rising by six per cent between 2011 and 2013 compared with an average of 3.8 per cent for the workforce as a whole. The picture is mirrored in the US and Europe. “The traditional German notion was that workers should be put out to pasture as young as 55, with generous pensions,” says Eric Thode, a senior expert at the Bertelsmann Stiftung Foundation. “The idea was that they should make way for the next generation, so they were offered generous pensions to retire.”

Coming to maturity The opportunity to With skills shortages and an ageing population, however, that mentor new recruits has been changing. The latest ‘‘ research from EU agency can help maintain the Eurofound revealed that around enthusiasm of older workers for 10 per cent of people aged 65 to 69 their jobs. They are also less likely remain in the European workforce, up from 8.7 per cent in 2007. to view each other as rivals, so Across the Atlantic, too, you don’t tend to see as much companies are coming to appreciate the appeal of more destructive conflict” mature workers. Men between 60 Stephen Sweet, professor, Ithaca College and 74 now earn a fifth more than

12 the average worker, a study by the typically rewards individual Brookings Institution showed. efforts,” says Sweet. “After “That alone provides some 30 years operating in companies, evidence that more senior people become accustomed to employees are more productive operating well in groups and also and valued,” says Burtless. “The leading them.” notion that a greying workforce Then there is the simple fact of means lower efficiency has not reliability. “Surveys do seem to been supported by the evidence.” show that older workers have In particular, companies appear higher attendance rates and eager to hold on to workers with punctuality,” says Burtless. “That doctorates and professional can be vital for the smooth degrees. In the US, around running of a company.” two-thirds of men and 50 per cent Traditional notions that of women with such higher this comes at the cost of qualifications continue to work creativity are also misguided, through their sixties. says Phil Lenowitz, a senior By contrast, those with lower advisor on human resources for levels of education are more the US’s National Institutes of likely to drop out of the workforce. Health (NIH), a government Just 30 per cent of students research laboratory. whose education ended with “The scientists we employ high school are still economically to cure diseases very often active after 62. achieve their biggest breakthroughs later in life after A lifetime’s experience decades of work,” he argues. One So what value are these elite, notable example, he says, is Dr professional workers bringing to Neal Young, who continues to their employers? Stephen Sweet, a produce pioneering work on professor at Ithaca College, New aplastic anaemia, a disease that York believes that even if older shuts down the bone marrow’s workers sometimes lack the ability to make blood cells. ambition and drive of fresh “Despite graduating 47 years graduates, their lifetime of experi- ago, Dr Young has lost none of his ence more than compensates. imagination or verve,” says “After so many years in a Lenowitz. “Almost half of our company or industry, these scientists are over 50 years old, Almost half of our employees typically bring and a tenth have passed their scientists are over enormous institutional knowledge 65th birthday,” he says. “It is ‘‘ to bear,” he says. “They will often simply not true that people lose 50 years old and a have a large number of contacts their ability to think outside the tenth have passed and will know whom to call and box as they age.” who will be responsive. They will Related to this, older workers their 65th birthday. It know what has been tried before bring a wealth of accumulated is simply not true that and failed. That means far less knowledge about their industry or wasteful duplication.” subject matter. “Many companies people lose their Another big advantage of grey- in Germany are waking up to the ability to think outside haired staff is that they are far idea that it is extremely wasteful more likely to have been socialised to lose the library of information the box as they age” to work well in teams. “If you think stored in the heads of the longest- Phil Lenowitz, senior HR advisor, about the education process, it serving staff,” says Thode. “This National Institutes of Health

13 can be a massive asset for those 26? 59? companies that ensure that experienced workers are fully appreciated and used.” All of these “soft” and intellec- tual skills are at a premium in a modern economy, says Burtless. “The value of pure brawn has been declining,” he says. “Fewer high- end jobs demand the kind of physical strength that only the young can bring. The abilities that older people can bring are ever more important.”

Youth woes The rising fortunes of the old can the Organisation for Economic of university is sacrificed when be contrasted with the problems Co-operation and Development times get tough. faced by many younger workers. (OECD). Even taking into account “Youngsters are often at the The youth unemployment rate in the number of young people sharp and pointy end of ageism,” rich nations was 16 per cent in choosing to remain longer in says Thode. “There is a sense 2012 – about twice the rate of education or training, the rate of that hiring the young is more of a joblessness in the entire popula- involuntary economic inactivity long-term investment than a tion – according to figures from was about 13 per cent. In Spain, short-term productivity boost.” the youth unemployment rate is a There is more than a grain massive 40 per cent. of truth to some of the worries “Of course, in some industries about younger workers. Many such as banking or technology, can be flighty, often attempting new graduates can be at a distinct several jobs before settling on a advantage,” says Mark Calabria, a definite career path. That can financial services expert at the mean that employers end up Cato Institute in Washington DC. wasting resources on training “Investment banks such as and supervision. Goldman Sachs can afford to wait years for employees to reach peak Energy boost productivity, really understand the Nevertheless, unless a company business and foster contacts. They is in dire financial straits, want bright new things that they shunning the younger generation can mould.” But in many other can be short-sighted. A recent sectors, hiring staff straight out survey by the UK Commission for Employment and Skills found that employers prized the ease with which young people could be moulded, their enthusiasm and Many companies in Germany are waking their willingness to learn. And UK up to the idea that it is extremely wasteful employers are far from alone in ‘‘ feeling this way. to lose the library of information stored in “What you get from the young is a big burst of energy,” says the heads of the longest-serving staff” Lenowitz at the NIH. “The Eric Thode, senior expert, Bertelsmann Stiftung enthusiasm that our new

14 58? 64? 29? 22? 66? 53? 40? 33?

graduates bring permeates the that younger workers are well- Germany less experienced whole institution and has an placed to fill in the gaps, since workers are still more likely to be impact on our work far beyond they tend to be more willing to jobless than older peers. what these researchers actually work long or irregular hours. Hiring managers are likely to produce themselves.” The infusion Of course, there are also continue to prefer the perceived of curiosity has a reinvigorating variations in the employability of stability offered by middle-aged effect on more senior workers too, young people around the world. workers – who are thought to Lenowitz adds. The high levels of employment combine many of the best traits of among the under-24s in Germany, young and older workers, with Multigenerational teams Austria and Switzerland suggest fewer of the deficiencies. There are considerable advantages that young citizens of these Still, academics and economists to multigenerational teams. “In countries are more appealing to seem to be demonstrating that some ways, old and young workers companies than their peers bosses would be unwise to can work with each other elsewhere in the world. neglect the merits of workers extremely well, complementing In Germany, for example, the at either extreme of the each other nicely,” says Sweet. level of joblessness among the demographic spectrum. “The opportunity to mentor new young actually fell after the 2008 The degree of ageist discrimina- recruits can help to maintain the financial crisis – from 10.4 per cent tion directed against more senior enthusiasm of older workers for in 2008 to 8.1 per cent in 2012, just workers appears to be on the their jobs. They are also less likely half the OECD average. wane, judging by statistics to view each other as rivals, so you showing higher participation rates don’t tend to see as much destruc- The apprentices and rising pay. Recent graduates tive conflict.” “The common link here is that all and school-leavers are far more In terms of scheduling, too, of these countries have very likely to suffer from the negative employing staff in different age strong apprenticeship traditions,” stereotype of callow youth. categories can make life much says Stefano Scarpetta, head of The evidence increasingly easier. “We often notice that employment analysis at the OECD. suggests that the healthiest workers start to want a different “By the time they have finished and most productive workforce kind of work-life balance after formal studies, these young people is one that brings together all around 50,” says Sweet. have quite a lot of experience in a age groups. “They lose interest in jobs that work environment. That also The French saying “If youth require 50 hours a week and run equips them with more of the only knew, if age only could” is one throughout the year. Instead, older team skills that young people that human resources managers workers often prefer positions that in other nations often lack.” should almost certainly consign are more flexible.” And he adds Despite these variations, even in to the scrapheap n

15 In my opinion

16 Good works Commercial success and doing good used to be seen as mutually exclusive. Stuart Rose suggests that this should no longer be the case, arguing that doing the right thing is not only morally better but also commercially advantageous.

n 2006, I was in an airport Leaders’ obligations 30 per cent more water. It’s looking for a book. Without Some company management described as the “perfect storm”, Imuch thought, I picked up An teams may find that surprising. but I believe that businesses can Inconvenient Truth by Al Gore. It Some may think that they couldn’t and must help to alleviate it. We contained some shocking and follow suit. But I think that have to cooperate with govern- incontrovertible facts. business leaders have a moral, ments, NGOs and even with each Back then, as CEO of Marks & financial and commercial other to tackle some of the Spencer, I felt that these facts obligation to make sustainability problems that the world is facing. could not be ignored. So I rented part of their day jobs. That probably sounds like the film based on Gore’s book and They need to understand that anathema to most CEOs. We have showed it to my 100 most senior pursuing a sustainable agenda can been trained to compete ruthlessly members of staff. Their response make a difference to them person- with one another – particularly in was so overwhelming that, less ally, to their businesses and to retail. But some issues are just too than a year later, we crafted their commercial success. big to take on alone. And no single “Plan A”, designed to reduce the In other words, this is not company or business leader has company’s carbon footprint, something to ponder idly the intellectual firepower, the source responsibly, reduce waste on a Saturday afternoon. It needs financial firepower or the general and help staff and customers to to be an integral part of the wherewithal to do all the jobs that live healthier lifestyles. working week. Yes, in the old days, need to be done. So we do need to It was a bold move – not least the mantra was always “The because I said we would invest business of business is £200 million in it over five years, business”. But that without passing a penny on to the simply does not hold consumer. Many stakeholders true any more. were unimpressed at first. But we Even if we take In the old days, the mantra were confident that Plan A would climate change out of not just make us a more sustain- the equation, it is almost ‘‘was always ‘The business of able business, it would make us universally accepted that business is business’. But more profitable, too. there will be more than that simply does not hold And so it proved. Within three eight billion people on years, an Ernst & Young audit this planet by 2030. true any more” showed that Plan A had added As such, scientists £50 million to our bottom line. predict that we will need We were winning with investors, 50 per cent more food, customers and suppliers. 50 per cent more energy and

17 work together – not in everything, obviously, but in certain key areas. If two of our biggest supermarket chains cooperated on food recycling, for example, who would lose out? Nobody. The companies themselves would benefit; investors would approve of it; and customers would be agnostic at worst, delighted at best. There are so many predefined prejudices that threaten progress, but it is time to break down those barriers and recognise that the world has changed.

Trust and cooperation These days, there are two words that business really must heed: trust and cooperation. That may sound woolly but I truly believe it. And I am confident that if businesses work together on the issues that are too big to solve alone, and gain their SUSTAINABILITY stakeholders’ trust along the way, they will not only be better We want the world to be a better place, but we companies, but also more commercially successful. don’t want it to cost us money and we don’t want Trust is in short supply today. to be disadvantaged” Most people were brought up to trust people in authority. But in ‘‘And the point is that a lot of a bra supplier in Sri Lanka was recent years, that trust has been people get it. They understand recycling water using a particu- eroded. Business is caught up in that we need to think more larly clever method that he was that net. Ever since the financial creatively about how we buy stuff, going to adopt. crisis, it has been demonised in how we sell stuff and how we use He would never have found out certain circles. Clearly, this is not a the world’s natural resources. about it without the open-access good position to be in. But now When Marks & Spencer began supplier website. This sort of there is an opportunity to change the Plan A initiative, we wanted information exchange involves behaviour, change the manage- our suppliers to buy into the trust and cooperation, but it is ment mindset, create a more concept. But they were so diverse, easy to do, costs little and produces sustainable environment and both in terms of sector and tangible commercial benefits. improve the bottom line along geography, that it was quite a I think we need more of that the way. challenge to communicate with kind of thinking, more innovation, Out of the top 100 financial them all. So we started an open more creativity and more accept- institutions in the world, 60 are website, where suppliers could see ance of what is really happening in companies not countries, so what others were doing, exchange the world and what will happen if business is uniquely positioned to information and learn from their we carry on as normal. drive change – it does not have to peers. Within a few weeks, one of It is not hard to understand. be painful. In fact, it should be our biggest chicken suppliers in Kids are taught about sustain- exciting, challenging and even fun. Norfolk said that he had seen that ability at school, so the need to

18 use less water, switch off the about 10 per cent since the lights and recycle is almost recession – not because people ingrained in them. Older people are eating less, but because they can inform themselves on the are buying better. internet, and every day there is Wastage could be reduced something new – be it 300,000 a lot more and supermarkets people marching on New York can play a part by cutting back ahead of the UN Climate Summit, on the number of two-for-one or François Hollande pledging offers, which often just encourage $1 billion to a climate-change fund people to buy more than they for poor countries. need. In clothing, recycling In China, too, people are waking needs to be encouraged. Everyone up to the danger of denial. Young likes new clothes, but giving people in China care. When they back the old ones could have look out of the window and see a significant impact on overall smog, it’s a pretty graphic usage of materials. reminder of what’s happening to Innovation is essential, too. their country. And they don’t want New methods are coming in to dye to leave a legacy of destruction for clothes using minimal amounts of their children. So they are water. Some of the best minds in agitating for change – and the the world are looking at ways to government is responding. be smarter about sustainability – and I am optimistic that their work Rampant consumerism will bear fruit. Clearly, this is not an easy But business has to take a situation. We live in a rampantly lead, and those CEOs who don’t consumerist society. Consumers care about peer pressure, don’t want to buy more; businesses listen to consumers calling for Some of the best want to sell more. Everyone wants change and don’t bother to inform more than they have and more themselves about what is going minds in the world than they need. on do not, frankly, deserve to be are looking at ways We want the world to be a chief executives. to be smarter about better place, but we don’t want it Their companies may do well for ‘‘ sustainability. to cost us money and we don’t a while, but in the long term they want to be disadvantaged. will be exposed. Even Walmart, But business has to People want to wear cotton which is corporate America take a lead, and T-shirts, even though cotton is incarnate, has completely those CEOs who one of the dirtiest crops in the converted to the benefits of world. They want their clothes to sustainability, and it has three don’t care about be dyed pretty colours, even million employees and suppliers all peer pressure, though dyeing is a hugely water- over the world. If that giant of don’t listen to intensive process. They want to consumerism can get with the eat whatever they can afford. programme, there is no excuse for consumers calling We shouldn’t stop them. But we the rest of the business world. for change and can educate people – consumers, So I believe that businesses don’t bother to producers, retailers and investors. have a huge opportunity here – an inform themselves Communication is vital. It has opportunity to be in the vanguard already had a major impact but of change, gain stakeholders’ trust, about what is going there is so much more that can differentiate themselves from the on do not, frankly, and should be done. pack, drive profitable growth – deserve to be chief On the food front, wastage and make the world a better place. executives” in the UK has gone down by It’s time to get started n

19 •••••••••••••••

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

••••••••••• ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••

••••••••••••••••••••••••••••••••••••••••••••••••••••••••

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

• • • • • • • • • • • • • •

••••••••••••••• •••••••••••••••••••••••••••••••••••••••••••••••••••••••

••••••••••••••••••••••••

••••••••••••

••••••••••••••••• •••••••••••••••••••••••••• •••••••••••••••••••••••••••••••••••••••

•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• ••••••••••••••••••••••••••

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

20

•••••••••••••••••••••••••• ••••••••••••••••••••••••••••••••••••••• Market insight Neighbourhood watch

• • • • • • • • • • • • • • • • • • • • • Local knowledge can be extremely valuable, and small businesses have thrived on it for years. Now, large companies are trying to replicate the personal touch • • • • • • • • • • • • •using • • • • • • • • • • • • • • • • • • •data • • • • • • • • • • • • • • •analytics. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

he siren song of Big Data, Big Data is projected to reach business-intelligence platform

with its promise of unprece- $30 billion this year, and to more known as Atlas to target local •••••• dented knowledge and than double – to $76 billion – by promotions. customer understanding, is 2020, according to consulting firm In the southern US, Starbucks T •••••••••••••••••••••••••••••••••••• seductive. It is unsurprising that Signals and Systems Telecom. But uses demographic information businesses – from corner shops to simply using data is not enough; it about the number of local multinationals – are falling for this needs to be exploited. •••••••••••••••••••••••••••••••••••••••••smartphone owners in order to new beast’s charms, eager to target its app-based discounts. In exploit the latest technology in •••••••••••••••••••••••••••••••••••Exploiting Big Data Memphis, Tennessee, for example, their quest for growth. Supermarket chain Tesco, one of it has used weather forecasts to But it remains unclear•••••••••••••••••••••••••••• whether the earliest to pioneer Big Data, predict when temperatures would

•••••••••••••••••••••••••••••the explosion in IT capability began collecting customer data via surge, and timed a local promotion delivers unprecedented success or its loyalty programme, Clubcard, as of its icy blended Frappuccino •••••••••••••••••••• simply engulfs companies in a sea early as the 1990s. Now, this card beverages to• • • •coincide • • • • • • • • • • • • • • • • • • • • • •with • • • • • • • • • • • • •a • • • • • • • • • • • • • • of meaningless figures and provides details on two-thirds of heatwave in the area. formulae. To sceptics, algorithms all shopping baskets at Tesco. The company is also taking and software that crunch reams of However, the food retailer had advantage of data on local numbers can seem abstract and to draw on the resources of patterns to implement its impersonal. Enthusiasts, however, customer-science specialist Starbucks Evenings programme, say that IT can help to create an Dunnhumby to maximise the which adds beer and wine to individually tailored experience for benefits of this knowledge. menus in certain stores after 4pm. specific audiences. Together, they broke customers To establish the best stores in Dr Olly Downs, chief technology down into different groups, which to pioneer the initiative, officer at analytics firm Globys, tailoring mailshots and vouchers Starbucks looked for areas with believes that any type of business to each group. At that point, Tesco high local spending patterns and can benefit from using data saw its coupon redemption rate large numbers of people who drink science. “There’s a place for data skyrocket from three per cent to wine away from home. in any business that wants to 70 per cent. The group also used Online businesses also use data grow, expand and be successful,” the data it collected to launch new to help customers on a local basis. he says. “Technology has come a product lines, such as Tesco PetrolPrices.com collects data on long way and data can now be Healthy Living for health- fuel prices throughout the UK via used by all types of businesses, big conscious customers and Tesco fuel-card users, registering what and small. Their competitors are Value for the price-sensitive. type of fuel has been purchased doing it, so companies that aren’t Coffee giant Starbucks also and how much it cost with every put themselves at a disadvantage.” tries to engage more productively transaction. The site uses this The numbers speak volumes. with customers through data. It information to update its database The worldwide market for uses an in-house mapping and of 10,961 petrol stations, providing

• • • • • • • • • • • • • • • • • • • • • • • 21 professor of economics at West Point and president of Islay Consulting LLC. “If you speak to the importance of connectivity in real time, in a much more textured way, that’s something that I would never underestimate. In other words, there’s no substitute for buzz. Whether that’s hearing about a new restaurant at work, at your gym, or at a dinner party, Fromagerie Céneri in Cannes people want to be where the ‘‘ noticed that there was a local action is.” hankering for more traditional French Creating buzz cheese, and attributes its success to In a world where consumers increasingly tweet, Instagram and providing for local palates and Facebook their daily lives, social feelings of cultural pride” media is a major conduit for buzz and offers a way for businesses to engage personally with consumers a staggering 8,000 updates every which import cheap milk in bulk. when a face-to-face exchange day. Users can then input their Ninety-eight per cent of the might not be feasible. postcode or town to find the cheeses stocked by owner Hervé “People want to feel known; lowest petrol price in their area. Céneri are made with raw milk, they want to feel connected,” Even IT’s most avid supporters and many are sourced from nearby says Downs. “They want to think acknowledge that, used in producers such as Sébastien Paire, that a company cares about isolation, advanced technology is who cultivates sheep’s milk cheese them personally.” an insufficient substitute for local in the hills overlooking Nice. Gary Crocker, owner of Mr H’s knowledge. Starbucks used Atlas Céneri noticed that there was a Tea Shop in Hitchin, Hertford- to determine where to open local hankering for more shire, personally responds to every branches in China, but that would traditional French cheese, and review of his shop on TripAdvisor, not have worked without informa- attributes his success to providing thanking customers for visiting tion provided by local partners for local palates and feelings of and encouraging them to return. on the ground. cultural pride. The shop is ranked first among 120 In Spain, luxury brand Loewe restaurants in Hitchin on the site, Local heroes established a training facility for which serves as a place for One way that businesses can leather technicians in Getafe, near potential customers to check in forge connections with local Madrid. The site employs 430 with the collective word of mouth consumers is to source unique people and Loewe hires a number and add their own views. local products. They can also of the artisans once they have Greenfinch Graduations in attract custom simply by investing been trained. While some luxury Liverpool, a graduation-planning in local communities. companies have outsourced their service for the families of interna- Fromagerie Céneri in Cannes, labour overseas, Loewe has tional students, uses Pinterest to France, is one of only two cheese- integrated itself into the local share local knowledge about mongers left in the resort town. It community both physically and hotels and activities with clients. faces an uphill battle in a country economically. The move has been The company uses the site to where EU regulations have well-received locally and more share graduation tips with families reduced the prevalence of raw- widely across Spain. – transportation, for example. In milk cheeses and facilitated the “Geography is not dead,” says Dr this way, founders Julie Truman ascent of large manufacturers Terry Babcock-Lumish, assistant and Rebecca Mortby can use their

22 local knowledge and interact believes that collecting basic data seem to be,” says Dr Cathy O’Neil, directly with clients despite the is easier and less costly than many data scientist and director of the geographical distance. businesses think. Lede Program in Data Practices at While the personal touch is “Too many companies don’t Columbia University. “One of the invariably beneficial for collect data that’s easy to collect,” biggest difficulties is that if you companies’ bottom lines, Downs he says. “Most point-of-sale don’t actually know how to judge cautions that it can be a double- systems have options built into the quality of your algorithms – edged sword when Big Data is them to track data, so often especially if you are ignorant of involved. “I think the goal is to be companies just need to take what you’re really doing – how are able to achieve that intimate advantage of those tools.” you going to judge whether what feeling without being creepy,” Such tools can provide you’ve done is a success?” he suggests. small businesses with O’Neil says that small Indeed, “creepy” was the access to lots of informa- businesses new to data analytics adjective used by some to tion, but reams of data can benefit from data tools by describe an instance of person- and oversimplified determining which metrics are alised marketing by American algorithms are of very most important to the company’s retailer Target. In 2011, a little use without a success and monitoring those Minnesota man complained at his metrics in real time. Again, local store because his teenage however, some in-house daughter was sent coupons for expertise is required. baby clothing and nursery furniture despite only being at high school. Target’s data analytics had determined that the girl might be pregnant based on her recent toiletries purchases. (When the store manager called the man to apologise a few days later, he was contrite: it turned out that his daughter was indeed pregnant, and had not yet shared the news with her father.) Starbucks used weather forecasts to Excessive intrusion is always a worry with data analytics, but predict when temperatures would companies can try to allay ‘‘ surge, and timed a local promotion of its consumer privacy concerns by icy blended Frappuccino beverages offering benefits in exchange for data. This allows consumers to feel with a heatwave in the area” informed and in control and as if they are getting something in solid understanding of data More broadly, both data return for sharing. science. And more complex technology and local knowledge software functions such as can help businesses to succeed Small benefits algorithm options can be useless and connect with consumers. In For smaller companies, too, data or even counterproductive in both cases, however, genuine technology can prove beneficial – untrained hands. understanding is crucial. providing they know how to use it. “You can have a lot of data, but As O’Neil points out: “People Steve King, partner at Emergent if it’s not the right data and if either tend to over-hype Big Research and co-author of The you’re not asking the right Data or under-hype it, and I New Data Democracy: How Big questions, it probably won’t get think that both are mistakes. I’m Data Will Revolutionize the Lives of you very far. The data-science just hoping we can get to a Small Businesses and Consumers, tools are not easy, even if they reasonable place.” n

23 Face to face

The quiet revolutionary

François Davy started out selling cheese in rural France. Now he is leading the consolidation of the French property services sector at Bridgepoint-backed French property firm Foncia.

24 anagement is all about Highly decentralised, the group Chevalier de la Légion d’Honneur, ambiguity,” says François is effectively composed of around the highest decoration in France. MDavy, 58, chief executive 150 mini-companies, each with “I found out afterwards that I had of Foncia. “Nothing is black and its own CEO and management been recommended by Antoine white; there are always some team. Customers are primarily Veil, the husband of Simone Veil, shades of grey.” individuals, rather than corporate one of our most respected politi- Davy has strong views on this clients, and they are spread far cians and a champion of women’s topic, particularly with regard to and wide. rights,” he says. companies such as Foncia. “We “One of my favourite sayings is, “I was surprised and proud. have 7,500 employees and more ‘There is a big difference between I received it because of work I than 500 sites,” he says. “If I simply a map and the territory on the had done to boost employment manage by enforcing my will, ground,’” says Davy. “So you have among young, unqualified French we will create a very rigid and to allow local managers to manage. kids. But I told my children that controlling organisation, increase You can, and should, help them to they should never do something complexity and create a demotiv- make decisions, but you should because of the return that they ated workforce. not decide on their behalf.” might get from it but because “So it is essential that we have of the return they might provide the right people at all levels of the Boosting morale for others.” business, and that those people Davy was appointed chief Concern for the wellbeing of have a degree of freedom and executive of Foncia in January others is a constant theme in flexibility. In other words, we need 2012, just a few months after the Davy’s management philosophy, to empower people – within a company was acquired by Bridge- both because he believes it is framework – but they need to be point. “It was founded by a right and because he believes it able to make independent charismatic entrepreneur and, delivers the best results. decisions. Because if you have the after he left, the business rather As part of this approach, right people motivated and lost its way. Staff felt very Davy ensures that he spends empowered at the lowest level of demoralised and had no appetite one day a week visiting Foncia’s the organisation, then you win.” for growth,” says Davy. many offices. Foncia has two principal He swiftly set about trying to “The most important person is divisions: it manages properties on boost morale. “One of the first the host at the entrance. They are behalf of individual landlords – things I did was tell managers: ‘No the ones who first make contact lease management; and it manages one is perfect. I am not from your with the customers and they can the common parts of tenanted sector and I guess you are very really make a difference. I have buildings – property management. sceptical about me; but I believe given all the hosts business cards, The business is primarily based in we can do great things together.’” and their job title is ‘Responsible France, where it is a market leader, At the time, Davy was fresh for First Impressions’. They receive but it also has a presence in from a leadership role at the proper training and I have told Belgium and Germany. human resources group Adecco. their managers to make sure they Regional head of are treated with respect,” he says. the company, in The traditional business mantra charge of France, holds that the customer is a Money is never India, Switzerland, company’s most important sufficient motivation, at Africa and the stakeholder. But Davy has other Middle East, he views. “We have 1.3 million least not for the longer somehow found customers and pleasing them is term. You need to time to write a our mission, but when I first joined book on employee Foncia I said that we would not be motivate people in other relations, Une a customer-oriented company. ways, make them feel Société heureuse au “People were surprised, but I travail. He was also explained that first we must that they matter” awarded the become an employee-oriented

25 company – because the only way internet to source property One important initiative centres to please your customers is to management services, too. on the consolidation of sites in make sure that your employees Some older companies view this larger towns. “We have 20 are pleased, especially in a evolution with fear. Davy takes a strategic areas, which are the decentralised organisation and different view. largest cities in France, and here especially when you have such a “The impact of the internet on we are merging several sites into large customer base,” he says. our sector is a challenge, naturally, one because this drives efficiency, Building on this theme, Davy but it is also an opportunity. At harmonises business practice and initiated an employee satisfaction Foncia, we really believe that the raises the quality of our survey earlier this year. internet can advance our business. operations. Outside these areas, “One of the things that I We recently bought two start-ups, we are keeping our sites am really pleased about is that for example, and we are going to unchanged,” explains Davy. levels of employee satisfaction are keep them independent. In that Foncia is also on the acquisition high – at 85 per cent, compared way, we can learn what they do trail, completing 10 transactions with an average of around 65 per better than us and, crucially, what last year, including a reasonably cent in France. we do better than them. substantial one, and on course “Also, levels of pride in the “If we can take the power of to add another 20 in 2014, with organisation are high – at about the internet while providing a similar number planned for 80 per cent. I want to take both what it can’t replace, then we next year. scores higher, of course, and we should have the best of both “We have always been an are also paying attention to key worlds. So we need to make sure acquisitive business but the deals elements of the survey. that we are as simple and fast as we are doing now are bolt-on “People asked for more training, the internet-based companies acquisitions of small, independent so we are putting that in motion; with that little extra they don’t entities. In each case, though, the and they asked for better have: people,” he says. most important point is the quality communication about job Davy’s time at Foncia has of the management team, so once opportunities, so we are doing coincided with a period of we make an acquisition, we need that too,” he explains. stagnant economic growth in to keep the people. And that’s France. Nonetheless, he has another reason why employee Opportunity online delivered against the business satisfaction is so important at In property management, as with plan devised when he arrived and Foncia,” says Davy. many other sectors, the internet he expects to continue expanding “Money is never sufficient has wrought dramatic changes the group both organically and motivation, at least not for the over recent years. People invari- through acquisition. longer term. You need to motivate ably look for rental properties “Our job is to take advantage of people in other ways, make them online and they will use the difficult conditions and widen the feel that they matter,” he adds. gap between Having trained as a food our competi- engineer, Davy’s career has We have 1.3 million customers tors and us. We spanned many different and pleasing them is our mission, but are reinforcing companies, including Danone, when I first joined Foncia I said that the rigour and Motorola and the French mail robustness of service Le Groupe La Poste. we would not be a customer-oriented our operations “My first job was selling cheese company. People were surprised but and increasing for the company Bel. I had just our efficiency qualified as an engineer and I was I explained that first we must become without very arrogant. I was also pretty an employee-oriented company – reducing the bad at selling. But that job taught because the only way to please your number of me the importance of training and customer- motivation,” he says. customers is to make sure that your facing staff,” He remains highly motivated to employees are pleased” says Davy. this day. Foncia may be the leading

26 I’m not impressed by people who say something is impossible. I would point them to the Chinese proverb which says, ‘It is not because it is difficult that we don’t dare; it is because we don’t dare that it is difficult’” property management group in France, but it has a market share of just 13 per cent, so there is plenty of potential for growth. Davy is also keen to expand in Germany, where the rental model is quite similar to France.

German expansion “We want to grow the German business and it’s largely about getting bigger in the cities where we already have a presence, rather than casting our net across the whole country,” he says. Back home, Davy has wide-

Name: François Davy Family: Married twice, Biggest achievement: Ambition: I’d like to Age: 58 with six children aged I’ve cracked the code on leave Foncia in a better one to 34 various occasions place than when I Education: Nantes, during my career arrived France Car: Dark blue BMW Series 5 Biggest regret: That I First job: Selling cheese am unable to play a in rural France Interests: Family, cycling and opera musical instrument ranging ideas about expansion the kids of working parents on the which says, ‘It is not because it is possibilities. “My vision is to fifth floor. Or the young woman on difficult that we don’t dare; it is increase the number of services the second floor could offer IT because we don’t dare that it is we provide to customers. At the assistance to the older residents in difficult.’” moment, property management is the block. In other words, our role Davy is a humble man; quietly about managing the common could evolve from property spoken, thoughtful, but not afraid parts of a building. But it could be management to community to challenge accepted wisdom, he extended to insurance, security management,” he suggests. has brought about significant and the creation of communities This may sound whimsical to change at Foncia. within blocks of flats. hard-nosed observers but Davy “Hopefully in the right way,” he “We know most of the residents has this response: “I’m not says. “People tell me the style is in a building so we can, for impressed by people who say new, but they like it. They feel example, say that a retired person something is impossible. I would respected and the results are on the third floor could look after point them to the Chinese proverb coming through.” n

27 Management focus Bey

28 ond the pail

Increasingly popular in the corporate world, the “bucket list” can take many forms. Compiled poorly, it can be worse than useless; properly thought out, however, it can become an inspirational tool for chief executives and company stakeholders.

he term “bucket list”, American manufacturing, spread meaning a list of things to the message that its jobs could do before you die, joined the lead to high-quality careers and T business lexicon quite employ more veterans. This was recently, but it derives from the widely praised at the time – and much older phrase “kick the with good reason. It was a short bucket”. A slang term for passing list that was easy for anyone to away, this almost certainly grasp, and the items on it either originates from a medieval addressed problems that the hanging method where the company had or were laudable condemned, a noose around their long-term aspirations. Moreover, neck, stood on a bucket that was the goals are easy to quantify. then kicked away. Now, the Specialists suggest that one bucket-list concept has expanded way to compile a bucket list of to include a set of goals that need executive goals is to start with a to be accomplished within a more traditional “to-do” list. US certain time period. consultant Jay Niblick advocates a So what should a CEO have on practical approach, using not one his or her bucket list? Of course, but three imaginary buckets. in some senses it is highly “Rather than simply writing company-specific. It is unlikely, for down a list of stuff you need to get example, that the medium- to done, you should start by writing long-term goals of Apple CEO Tim down your greatest strengths and Cook are the same as those of Bob weaknesses, and your job title,” he Dudley, the CEO of BP. Yet there says. “You then write down all the are common threads that run tasks that you think need doing, through the goals of CEOs, which no matter how trivial. You put can translate quite easily between these in one bucket. You then sectors and organisations. label another bucket ‘me’ and a In 2013, a number of US CEOs third bucket ‘not me’ and imagine revealed their goals to Forbes which tasks you should put in magazine. Probably the most which, based on your talents and notable list belonged to Walmart the fact that you are the CEO. CEO Bill Simon, who said that the When you’re finished, you have company wanted to reinvest in your bucket list.”

29 Niblick also advises removing as for others without Most people struggle to focus on much as you possibly can from adapting them to your list to avoid the “do- their own organisa- more than three goals. Moreover, everything trap”. tion. It would, for ‘‘many will struggle even to instance, be better to Keep it simple say: “We want to remember more than three goals” Many management consultants dominate our agree, pointing out that chief segment of the consumer device taged areas, including Detroit. executives should normally try to market,” than: “We want to launch This goal plays perfectly to the spend as little time on details as the next version of the iPad.” company’s ethically engaged possible. Instead, they need to It is also essential to think customers and employees. So it is look at the big picture and focus about where you and your organi- an easy sell – and headline- on things that are either vital to sation are, where you want to go friendly, too. It also strikes the the company mission or that no and how you might get there. right balance between being one else can do. But this is only The goals have to be compatible inspirational and being achievable. half of the story. Bill Simon’s to-do with your business, because you Again, this is important: aim too list, for example, was not so much will need to take people along high and you set yourself up to a list of things that needed doing – with you. fail; aim too low, and you’re seen as it was more a list of goals with a Whole Foods CEO Walter Robb, plodding and prosaic. strong aspirational element. for example, says that he wanted This summer, AstraZeneca CEO Moreover, it was very short. to look at holistic growth and that Pascal Soriot announced a sales The reason why brevity is this means opening in disadvan- target, much of which would come so important is simple: most people struggle to focus on more than three goals. Moreover, many Goals to consider: will struggle even to remember more than three goals. So bucket A bucket-list pick and mix lists should be as short as possible – especially if they are being used as a call to arms for staff or other stakeholders. If you are going to have only Something inspirational You want a goal that sits three goals, however, they need *above and beyond to count. business-as-usual, in order “You might talk to partners, Something that solves to give staff and other stakeholders something to colleagues, a mentor or a * What’s holding you back? shoot for. coach,” says time-manage- Rolling up your sleeves and tackling a genuine *Ensure that, while it ment and productivity business problem head- might be a stretch, it is coach Clare Evans. “Your on can be tremendously achievable: unrealistic motivating. goals are pointless and goals need to be realistic, demoralising. both in terms of what you can achieve and the time available. “It is also important to align your goals with your corporate cultural values,” she adds. “This may sound obvious, but if you find yourself working against those values it can be very difficult.” This is one reason why executives should be wary of using the goals that have worked

30 from drugs that were still in the in practical terms, Goals should not just be pipeline. Some analysts were both meaningless unimpressed, describing it as and unachievable. measurable as absolutes. a “wish list”, rather than a Goals should not ‘‘Rather, you should be able credible target. just be measurable as absolutes, either, says to chart your progress Measurable goals Evans. Rather, you towards them” Nonetheless, Soriot’s goal (in should be able to common with all financial goals) chart your progress towards them. might be better to have a private had a couple of desirable charac- “They need to be measurable in an accountability partner. teristics – it could be measured incremental way and you should Either way, the psychological and it had a timeframe. “We want review them regularly,” she importance of making a list, to increase our market share by explains. “This ties in to what you whether it’s a bucket list, a to-do 20 per cent by 2015” or “We want are doing and can be a great list or a list of any other kind, is to expand into Asian markets this motivator for both you and those undeniable. In his book The year” may not be the most you lead, as it gives the feeling of Profitable Consultant, Niblick exciting goals in the world, but progress towards a goal.” suggests that a good bucket list is they are better than the vague, Executives also need to think “not what you need to before you “inspirational” bromides many carefully about the positives and die, but what you need to do organisations trade in, such as: negatives of announcing a list of before you kill yourself”. “We want to make the best goals publicly. This effectively In many ways, a bucket list clothing in the world.” These are, makes the public your accounta- forces you to think about where bility partner. While in theory this you are, where you need to go, the makes you more likely to deliver, it effort involved, what is optional also means that if you don’t deliver and what is not. It makes you – perhaps through no fault of your consider the right balance own – you are liable to be blamed between inspiration and realism by the public. So for some goals it and whom you answer to – whether it’s the public, your board Something idealistic or one other person. Business is not only about the In fact, it doesn’t even need to *bottom line. What are your goals in terms of corporate be anyone. Just knowing that the social responsibility? bucket list is there – and feeling *What can you give back? Something prosaic answerable to the list itself – What causes should you be You are running a makes it more likely to get done n *supporting, and how can you *company, not a dream be a better part of the factory. communities in which So have a business-like you operate? *goal that’s rooted in hard, measurable metrics and appeals to your investors. Something personal It’s not just about the *business. *What about you? Where do you want to *be in three years’ time? How do your own *goals align with (or diverge from) your organisation’s?

31 Sector analysis

Exporting knowledge The business services sector is growing faster than almost any other in Europe, and many firms have developed unique intellectual property. This expertise is fuelling demand not just at home but across the world.

32 hich is better: an smartphone lies in its design and economy based on engineering, rather than its services or one based components and manufacture. Won nuts-and-bolts A separate study by the manufacturing? The merits of McKinsey Global Institute each have been hotly debated for estimates the value of decades. Now, however, a third “knowledge-intensive” trade at way is beginning to emerge. more than $12 trillion – close to Manufacturing has certainly half the total value of trade in picked up in recent years, but the goods, services and finance. majority of Europe’s growth no Growth in recent years has also longer comes from physical assets been powered by the appetite for – machines, buildings and manual outsourcing IT and business labour – but from ideas, processes. “Changing competitive- knowledge and people’s skills. ness conditions are leading to an Today, professional and increased emphasis on the business services are leading the capacity of firms to innovate and recovery in many European take advantage of core competen- economies. These knowledge- cies and knowledge, resulting in a intensive sectors are not only growing trend of firms outsourcing experiencing strong growth at business services,” explains home; they are also leveraging Professor Robert Huggins, chair of their know-how to expand into economic geography at Cardiff global markets. University and founder of the European Competitiveness Index. From stuff to fluff Outsourcing is a key pillar of The growth in business services growth, but this is underpinned by is part of the trend that a growing need for innovative, economists define as the “demater- service-based technology and ialisation” of economic activity, business solutions. “There is where consumers – whether increasing evidence that, corporate, government or individ- alongside the technology and uals – shift from buying “stuff” to business solutions possessed or buying “fluff”. created by firms internally, the A report published last year by knowledge accessed from external the Peterson Institute for Interna- services firms is a key factor For the past 15 ‘‘years, tional Economics shows that, underpinning innovation measured in gross terms, physical, processes and heightening business services have tangible goods shipments demand,” says Huggins. been growing more than dominate trade as much as ever, In Europe, business services accounting for 80 per cent of account for almost 12 per cent of twice as fast as the world exports. But, measured in GDP, and according to the average of all other EU value-added terms, the European Commission one in sectors. European importance of goods trade has eight jobs is in business services. fallen from 71 per cent of world For the past 15 years, business business services firms exports in 1980 to around 57 per services have been growing more are now leveraging cent today, thanks to the growing than twice as fast as the average significance of knowledge- of all other EU sectors. Within this their knowledge into intensive business services. So, for universe, opportunities are now international markets” example, much of the value of a presenting themselves for

33 European business services firms intellectual property to leverage their knowledge into has to be protected. international markets. “The main “There are numerous opportu- challenges are nities in emerging markets for threefold,” says those European business services Jones. “Foremost is firms that are able to adapt their market access – services and get a foothold as knowing the market these economies become more and gaining the knowledge-intensive,” says social networks on Professor Andrew Jones of City the ground in European‘‘ companies cannot rely University. “There are also another economy, solely on their reputations and opportunities in Japan, as the where it is often history; they need to invest and economy debates the need to be down to key people more outward-looking in its and personal innovate to maintain their competi- approach to business processes, relationships. This tive advantage – whether that means internationalisation and manage- is hard for many ment strategy. The same is true business services moving further into digital delivery, in many of the emerging firms, and becoming more efficient or investing economies and in some older but recruiting the right in their people” less open economies such as kind of staff is key. Brazil and Colombia.” “Secondly, there Christopher Brackmann, director, Bridgepoint is growing domestic No guarantees capacity in some of the fastest- blocks of their business services. But Europe’s position as a world growing economies, for example “European companies cannot rely leader in business services is not China, which will erode more solely on their reputations and guaranteed. The global knowledge routine business services. Foreign history,” he argues. “They need to economy is becoming ever more firms are at a disadvantage given invest and innovate to maintain competitive, with countries the social nature of delivering their competitive advantage – around the world investing in their business services in different whether that means moving knowledge bases and education national contexts. further into digital delivery, systems on an unprecedented scale. “Finally, there is the need for becoming more efficient or There are practical challenges, local staff or, even better, intercul- investing in their people.” too, ranging from cultural and turally able staff in overseas One of the business services linguistic barriers to more general markets who can both understand companies in the Bridgepoint international trade barriers. the domestic context but also portfolio is Cambridge Education Although overall trade in business articulate the values and strengths Group (CEG), which, with more services has increased over the of the European firms’ services. than 4,000 students in the UK, the past decade, many countries “I think the winners will be US and the Netherlands, has still impose restrictions on those firms that can adapt, tailor grown to become one of the European exporters. their products to local market largest international schools Logistically, business services needs and make use of locally groups in Europe. The company are not as easily exported as other knowledgeable staff to do that.” operates from both its own assets, as they tend to involve schools and from “Foundation complex movements of people, Develop and invest on Campus” courses, which are knowledge and information. Staff According to Christopher based on their partner universi- may need to be located overseas; Brackmann, director at Bridge- ties’ campuses. adequate transport and communi- point, the key to success for “CEG is an attractive platform cations links are required between European firms is developing and in the space, with a scalable Europe and target countries; and investing in each of the building business model to source,

34 Far from ceutical and bio- service and IP idea generation complacent agriculture industries. portfolio. The group through the online Headquartered in develops up to 1,000 i-know portal and Another Bridgepoint London and new reference science clusters,” portfolio company employing more than standards per year, says Bridgepoint’s that is innovating to 2,100 staff, including has launched the Christopher maintain competitive 200 PhDs, LGC fourth generation of Brackmann. “It has advantage in serves more than its proprietary also been investing in business services is 20,000 customers in genotyping its salesforce and LGC. An international over 150 countries. technology and has e-commerce platform life science measure- The group has a developed a portable to capture opportuni- ment and testing global sales network on-site DNA-testing ties around the world company, it provides and operates from device. “It has as global health-and- analytical testing laboratories in 22 invested in state-of- safety standards products and countries, including the-art infrastructure, continue to increase.” services to a range of the US, India, China opening the largest end-users, including and Brazil. genotyping lab in many firms in the LGC is far from Europe and investing pharma- complacent, investing in knowledge heavily in its product, management and

administer and educate students explains Brackmann. “Two existing and aid their progression to schools in the UK are being higher-education institutions in expanded; the company is contin- the West,” explains Brackmann. uing to build partnerships – for “The group is well-diversified, example, with the State University with its students recruited from of New York – as the US pathway around 100 countries via a global market is opening up; and it is sourcing network of agents. It continuing to attract the best There are numerous‘‘ focuses almost exclusively on teachers and academics.” international students, which is a There are, of course, macroeco- opportunities in emerging double-digit growth market.” nomic factors that lie outside markets for those Since Bridgepoint’s acquisition, individual firms’ control. The latest European business the strategic focus at CEG has attempts by the World Trade been to accelerate growth, Organization (WTO) to liberalise services firms that are especially in the US. Examples of trade further have been thwarted able to adapt their how CEG is innovating to by more protectionist countries, maintain competitiveness include and intellectual property is one of services and get a building a brand new campus in the nettles that the WTO has yet foothold as these Boston, which will be an interna- to grasp. But the European economies become more tional student-only boarding business services firms that are school to prepare applicants for now focusing on becoming more knowledge-intensive” the US education system. innovative, agile and efficient will Professor Andrew Jones, “It is also expanding its existing be those which benefit when the City University proposition and building scale,” trade barriers finally fall n

35 Last word Game over Children frequently dream up challenges or dares for their friends – and foes. But why are grown adults now doing the same? Katie Roiphe, professor of journalism at New York University, tries to solve the mystery. t has been a little surprising to see fully grown, them humiliated? These are exquisite new otherwise dignified adults succumb to the etiquette questions that must emerge from all this Iseductions of a glorified social-media chain letter. tagging and nominating. In recent months, Facebook has been cluttered with “It’s kind of sad,” one of my graduate students told busy professionals taking the “ice-bucket challenge” me, referring to the spectacle of these “old” people or responding to the call to list “10 books that tagging their friends in challenges on Facebook. changed your life”, and nominating their equally busy “They are kind of proving to themselves that they professional friends to do the same. still have friends.” Ostensibly, the purpose behind “Do we really care whether Ah, the cruelty of the young… the ice-bucket challenge was to someone is grateful for a hot and yet, well, it does seem like raise money for research into latte in the morning?” tagging and nominating others for amyotrophic lateral sclerosis (ALS), challenges is a way of recreating the also known as motor neurone disease, but the craze feeling of the school dining hall and the sense of a seems to go beyond simply writing a cheque for broader vibrant community, of humming camaraderie, charity. Very respectable people seemed unusually when really most of the time you are just working eager to get wet and publicly challenge other people into the night, communing with your smartphone or to do the same. Former president George W Bush texting your partner about what to buy for dinner. stated: “I do not think it’s presidential for me to be “I have friends,” you are saying to the universe. splashed with iced water, so I am simply going to “I have friends!” write you a cheque,” just before his wife, Laura, There are, hearteningly, people fighting back. doused his head. Afterwards, he nominated: “My When nominated, actor Patrick Stewart silently wrote friend Bill Clinton.” a cheque, took an ice bucket, stared at it for a One sees partners in law firms, famous writers and moment, slid a glass next to it, removed a few ice top financiers standing fully clothed and having water cubes with tongs, poured whisky into the glass and poured over their heads – or tagging people to list 10 silently toasted his viewer; he tagged and nominated books that have changed their life. no one. Ice-bucket challenge, RIP. I understand why 10-year-olds go in for this type of And then all of sudden the “gratitude challenge” thing: the thrill of being “nominated”; the frisson of crops up, where for three days in a row you name power in nominating others; the drama of not being three things you are grateful for and then tag other nominated by someone you would like to be people to perform the same inane exercise. Stripped nominated by; the sheer ritualistic, childish celebra- of the ostensible charitable justification of the ice- tion of even having friends at all. But why do bucket challenge, and the intellectual frisson of the grown-ups want to tag and nominate their friends? It “10 books” challenge, this one is just about playing the is as if you have turned a corner in the city and, group game. It has a slight self-help nuance of suddenly, men in suits and women in heels are improvement and mental health, but is really playing hopscotch on the street. just an empty performance of yet more How do you choose who to childish narcissism. nominate? If you nominate one Do we really care whether someone is friend and not another, does that grateful for a hot latte in the morning? mean you like one more than No doubt when this one dies down the other? Or if you are there will be another excuse to tag and nominating them to pour a nominate – another game or list or dare bucket of ice on their head does to indulge in yourself and inflict on that mean you actively dislike others. I suppose EM Forster them and subtly want to see would say, “Only connect.” n

36