THE POINT bridgepoint.eu

Intelligent investing in Europe from Bridgepoint Issue 30 | November 2016 Beyond the city Exploring a post-urban landscape

Get smart To boldly go Let’s get clinical New tools to boost Taking the best from Bringing drugs to productivity business founders market faster Contents

INS & OUTS 2 Bridgepoint investments and exits across Europe

VIEWPOINT 4 Urban myth City populations have been rising for decades but the trend may now be on the turn

TECHNOLOGY MANAGEMENT 9 Tech a break 19 Founding fathers Smart technology can work wonders. Successful business founders share But it needs to be handled with care to certain characteristics. Careful analysis of deliver real productivity gains what they do differently can help companies to flourish THE INTERVIEW 14 All smiles HEALTHCARE Justin Ash, chief executive of Oasis 24 Delivering the drugs Dental Care, on dentists, politics and Pharmaceutical firms have traditionally the truth about British oral hygiene tested drugs in-house. But outsourcing the process is faster and more cost-effective

MARKETS 28 Trust low down Trust in business has plummeted, yet companies that buck the trend derive better outcomes with all stakeholders. How do they do it?

CONSUMER 32 Future perfect Trend forecasting is a thriving industry. But how do forecasters operate and do they actually work?

LAST WORD 36 The blog fightback BBC presenter Justin Webb speaks out in favour of blogs – and how to sort the good from the bad and the downright ugly FOREWORD

Rural renaissance

he dominant global trend of the last century is that of increasing urbanisation. TYet today, something is happening that might halt its inexorable march: technology. Advances in technology make it easier to thrive beyond the metro- polis, potentially reinvigorating smaller population centres and encouraging people to consider not only new ways of life but new ways of doing business. To find out what could lie ahead and affect how we work and live, read “Urban myth” (page 4). Of course, technology can be both friend and foe. “Tech a break” (page 9) raises the perhaps unthinkable prospect that nomophobia – the fear of being out of mobile phone contact – is passé. It suggests that technology can be a time thief rather than a time manager and productivity may benefit from some technological downtime. It’s something we do continually, but have you ever considered the extent to which an owner or founder’s mindset determines the success of a business? What, for example, are the characteristics that keep a company on track and how do you priori- tise company values to instil a sense of ownership in a business? “Founding fathers” (page 19) attempts to find out what’s at stake and what needs to be done. Turning our sector focus to the pharmaceutical industry, it is sometimes criticised for its controlling attitude to business. In reality however, the sector can teach other industries a lesson, especially in relation to outsourcing. “Delivering the drugs” (page 24) explains how intelligent specialist outsourcing is bringing drugs to market faster and more effectively, transforming healthcare delivery and accelerating life-saving breakthroughs. Is there a trust deficit emerging not just between companies and their peers but more generally with customers? If so, does it matter and how can it be fixed? In “Trust low down” (page 28), The Point explores some of these issues and offers suggestions THE about how business trustworthiness can be earned and perhaps even improved. POINT In our regular “Ins & Outs” pages, we outline news of acquisitions in the UK and Turkey, as well as successful exits, such as the €1.8 billion sale of Foncia, the French November 2016 Issue 30 real estate management business. Published by We also profile the Oasis Dental Care chief executive, Justin Ash, and find out Bladonmore (Europe) Ltd Editor how he has built this Bridgepoint portfolio company into the UK’s first national Joanne Hart dental chain. Design Bagshawe Associates UK LLP We always enjoy reading your feedback, so please Reproduction, copying or extracting by any means continue to let us know what you think of The Point via of the whole or part of this publication must not be [email protected]. undertaken without the written permission of Enjoy this edition n 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 Moving on Bridgepoint has exited from Foncia, in a deal valuing the group at an enterprise value of 1.8 billion. € Bridgepoint invested in Foncia in 2011, when it was the number one group in French property manage- ment services. Today Foncia has become the European leader in residential real estate and property management services, renowned for service quality, client satisfaction and innovation. Over the past five years, the group has made around 60 acquisitions in France and abroad, strengthening its business in France, building leading positions in Switzerland and Belgium and enhancing its service offering for retail and institutional investors. success was led by François average annual revenue grew The group also developed Davy, CEO of Foncia, and his by 4.4 per cent, while EBITDA organically, acquiring new clients team. In addition to increased by 53 per cent over and investing heavily in its digital improving its service quality the four-year period, from €86 platform. and sales offering, Foncia million to €132 million on a pro Bridgepoint partner Frédéric has expanded its client forma basis. The results Pescatori says: “We are proud to portfolio and developed new underline Foncia’s strong perform- have supported the transformation services, particularly in the ance despite adverse changes to of a French group into the European digital sector.” French real estate law and a slowing leader in real estate services. Its Between 2011 and 2015, Foncia’s real estate cycle n Inspired acquisition Inspiring Learning, a which provides non- next five years. In its most UK-based specialist in residential courses for recent financial year, residential activity working parents in Inspiring Learning had centres and educational London. Equity provides revenues of £69.7 million. trips for schoolchildren, is curriculum-linked Robin Lawson, director to be acquired by Bridge- educational tours, ski trips of Bridgepoint Develop- point Development and sports tours. ment Capital, says: Capital. The UK market for “Inspiring Learning is a The company operates private providers of national operator in a two divisions, Kingswood residential activity sector experi- encing and Equity. Kingswood centres is worth £130 solid growth that is runs 10 residential activity million a year and is capable of building further centres, as well as Camp forecast to grow at 8 to 10 market share organically

Beaumont Day Camps, per cent annually for the and by acquisition.”n

2 Bridgepoint bites into a CRUISE Turkish snack control shifts Peyman, a leading player in the Turkish snacks market, has been Online UK cruise specialist acquired by Bridgepoint. CRUISE.co.uk has been Turkey is one of the world’s largest acquired by Bridgepoint producers and consumers of dried Development Capital in fruit, nuts and seeds, with a market a transaction totalling worth more than 2 billion a year. € £52 million. Peyman is a major producer in the CRUISE.co.uk is the leading sector, with a strong brand-focused online player in its sector, business and a heritage stretching based on a strongly differenti- back several decades. The company has a well-established presence in independent convenience stores, Turkey’s traditional retail channel, and a growing presence in supermarket chains. It also exports ated proposition, a to more than 30 countries, primarily content-driven website and in the Middle East, highly personal customer the Balkans and service. It also has a market- central Asia. leading social media presence Bridgepoint partner and online cruise review forum Martin Dunn says: with more than 110,000 “Peyman is a rapidly members and 17 million web growing market leader visits per annum. capable of transforming The company has delivered into a larger and broader The dried fruit, nuts compound annual sales growth snack brand.” and seeds sector is the of 23 per cent over the past Turkey is one of the highest-growth part of three years and enjoys most attractive fast- the Turkish snacks market industry-leading repeat rates moving consumer goods and Peyman operates of business. (FMCG) markets in the world, five key brands, including Dorleo Looking ahead, the UK ocean benefiting from steady economic and Nutzz. cruise market is forecast to growth, a growing population, a rising Bridgepoint acquired Peyman grow from £2.5 billion in 2015 to middle class and a commensurate directly from its founders and local £3 billion in 2019, second in size increase in disposable income. firm Esas Holding n only to the US n

Beck & Pollitzer re-engineered for growth Bridgepoint Development ance services for leader in its niche. BDC, says: “The changes Capital (BDC) has sold industrial plant and BDC invested in Beck & introduced under BDC global engineering services machinery. The company Pollitzer in 2009 and ownership revitalised the business Beck & Pollitzer. serves a range of blue-chip implemented a new company and returned the Based in Dartford, UK, multinational manufac- strategic plan and a range business to growth. Today, Beck & Pollitzer provides turing clients from 26 of operational improvement Beck & Pollitzer is well specialist installation, offices in 14 countries and initiatives. positioned for continued relocation and mainten - is the European market Mark Stroud, partner of expansion.”n

3 VIEWPOINT mythUrban

Urbanisation has been a dominant global trend for decades.But now the pattern may be shifting. Living in a big city is increasingly challenging, while technological advances make it easier than ever to thrive beyond the metropolis.

4 he advance of big cities broader array of films and music space trade-off. Today, there are seems unstoppable. Nearly a online than ever before,” says tentative signs that the large cities million people are being Solomon Greene, a senior fellow at – though in many cases expanding T added to the world’s major the Urban Institute in their populations – are declining conurbations every week, an Washington, and former adviser to in relative size. In 2000, 49.5 per influx that the United Nations the US Department of Housing cent of the US population lived expects to continue until 2050. By and Urban Development. within 10 miles of a city centre. By then, demographers believe that Meanwhile, the cost of living in 2010 that had fallen to 47.5 per close to 70 per cent of the global large urban centres has increased cent. This may seem like a small population will live in urban sharply, with rapid house price shift but it represents six million centres, up from just over half appreciation pushing ownership fewer people living in urban at present. beyond the means of many centres. In Western Europe, the Cities not only gobble up a middle-class families. rate of growth for suburbs and growing share of the world’s In the UK, for example, the commuter towns was almost twice population; they are also the main difference between drivers of economic growth, the average property Advances in technology have principal centres of innovation and prices in London the potential to reinvigorate home to most of the world’s and the rest of the smaller population centres largest companies. country was less But cities’ increasing dominance than £75,000 in and encourage people to may not be the foregone conclu- 2001. Today, it is ‘‘ consider different ways of life” sion that so many forecasters £275,000, the assume. Advances in technology widest gap in recorded history, that of the core cities between have the potential to reinvigorate according to mortgage lender 2001 and 2007. London lost smaller population centres and Nationwide. In percentage terms, nearly 100,000 residents, while encourage people to consider London property commands a 152 the greenbelt outside the city different ways of life. per cent premium; before 1995, the added 300,000. gap was consistently less than Karen Harris, managing director Push and pull factors 40 per cent. of Bain’s Macro Trends group in “If you think about why cities are A similar trend has been evident New York, believes this could be attractive places to live, it is a in megacities around the just the start of a bigger trend. combination of superior career developed world, with property “People value variety in retail and opportunities and a more vibrant prices pulling away from eating but technology should range of stores, entertainment and surrounding areas. The determina- make the high streets of smaller restaurants,” says Monty Hamilton, tion of some less affluent residents towns and even villages more chief executive of Rural Sourcing, to remain in urban centres has varied,” she says. “Robotics and a company that aims to bring resulted in the emergence of micro automation will enable prominent greater professional opportunities apartments – diminutive dwellings retail chains and restaurants to to more modestly-sized towns. for those who prioritise location significantly reduce costs, making “Technological advances should above space. One developer, them profitable in less densely help narrow the gap between Pocket, has been producing 38- populated locations.” megacities and smaller clusters.” square-metre flats in central Harris suggests that an Apple In rich nations, technology has London for nurses, teachers and IT store that currently needs a already started to chip away at the workers on incomes of between catchment area of two million advantages of living in a megacity. £30,000 and £71,000. New York “On a very basic level, it has and Stockholm have been consid- become far easier for consumers ering similar developments. to order a vast range of goods over the internet and get them City exodus delivered to more locations. You But not all middle-to-low earners can also gain access to a far are willing to make this kind of

5 could flourish in a population In Western centre of just 200,000 by using Europe, the rate service robots. And casual dining of growth for restaurants that currently require a staff of 25 will be able to cut suburbs and back to as few as seven or eight. ‘‘ commuter towns Technology is enabling was almost twice companies to scale down in other that of the core ways too. 3-D printing should cities between allow companies to have miniature manufacturing centres closer to 2001 and 2007” smaller communities. Meanwhile, drones have the potential to further reduce the cost of transporting goods to consumers in less populous areas. “With a richer and more diverse offering, it would become more attractive to live in smaller towns or villages,” Harris argues. “This could become self-reinforcing.” The result could be a bifurca- tion of population centres. “For knowledge-based fields, geographical clustering will remain highly important – whether this is Silicon Valley for

Operating from smaller towns enables physical footprint, stores based on us to charge companies 50 per cent this model could run at low cost and in small towns. less than they might otherwise pay In Japan, the Henn-na hotel staff in cities like New York or Chicago” chain is also trying to reduce its ‘‘ reliance on costly human staff. technology or the City in London Rise of the robot The hotel uses robots as for finance. But for those outside The kind of technology that could receptionists, porters and these highly focused professions, make this vision a reality is now concierge – enabling it to offer and a little lower down the income no longer science fiction. Take $80 a-night accommodation. scale, it will become ever more Hointer, a highly automated If such technology was widely convenient to live outside ultra- apparel retail store founded in adopted, and improved, it could pricey big cities. Megacities like Seattle by a former Amazon dramatically increase the range New York could become the executive. Only one size of every of facilities on offer in second- preserve of the top one per cent, item of clothing is on display, and tier towns. as well as empty nesters and anything a customer selects is Cities may also lose their near- young singles,” she says. delivered to the fitting room in the monopoly on high-end Under this scenario, the correct size by robots. Instead of employment too. Jacob Morgan, suburbs would be the biggest paying at a checkout, customers author of The Future of Work, losers, since they offer neither the simply scan the item on their believes that workers are gaining thrills and excitement of the big phone, eliminating the need for greater discretion over where they city nor the bucolic charm of more cashiers. With such lean staffing are based. rural commuter towns. levels and a relatively small “Telecommuting can be a win-

6 At life insurance firm Aetna, 43 per cent of its 48,000 staff now telecommute in one form or another. This has resulted in a 15 to ‘‘ 25 per cent reduction in real estate costs”

win for companies and employees. all making companies more willing otherwise pay staff in cities like Companies can cut back on to place employees outside central New York or Chicago,” says Rural expensive office space, equipment locations,” Morgan says. “Artificial Sourcing’s Hamilton. and amenities. Workers waste less intelligence will also make it easier “And our employees can enjoy a time commuting and can, if they to forge relationships within large far higher standard of living than choose, live in places that offer a organisations without being would be possible in a top-tier city. better quality of life,” he argues. physically present, giving We have drawn back many people At life insurance firm Aetna, 43 employees guidance on who they who were previously based in New per cent of its 48,000 staff now should be collaborating with and York or Washington DC, feel they telecommute in one form or why.” have checked that box and now another. This has resulted in a 15 Atlanta-based Rural Sourcing want something different.” to 25 per cent reduction in real was established to exploit The firm has offices in Augusta estate costs and, in 2014 alone, precisely this confluence of (Georgia), Albuquerque (New trimmed the number of miles interests. The firm’s roughly 300 Mexico) and Jonesboro employees drove to work by 127 software developers operate from (Arkansas), while its newly million. Xerox and Dell have also towns of between 500,000 and established office in Mobile been making large-scale use of 900,000 but in population work on (Alabama) was converted from a remote working. projects for a range of Fortune former Buick car dealership that 1,000 companies, including the had been vacant for a decade. Tech transformation likes of Coca-Cola. “We’ve created an environment “Increasing internet speeds, global “Operating from smaller towns with a similar feel to working in connectivity, video conferencing, enables us to charge companies 50 Silicon Valley – with 20-foot the faster downloading of files, are per cent less than they might ceilings, exposed rafters, and

7 Megacities like ‘‘New York could become the preserve of the top one per cent, as well as empty nesters and young singles”

football tables – where 120 citizens’ mobile phones to ensure electric cables and the reach of technology geeks who all get that potholes are fixed rapidly; sewer systems all fall by about 15 excited about the next Star Wars smart devices identify jolts when per cent per capita. “Cities can movie can work together,” people are driving via an applica- work like biological organisms – if Hamilton says. “That spurs tion called Street Bump. The app you double the size of an development. We have seen new then automatically reports the organism, you only need 75 per apartment blocks and shops going offending pothole to the local cent of the energy to run it. Pound up partly in response to our authorities. New York has been for pound, larger animals are more investment.” winning praise by developing more efficient than smaller ones. pedestrian zones and popular “It is possible that technology Faint signs meeting places – such as the will advance to the stage where So far, the revival of smaller towns Highline urban garden and walkway. the cities will matter less and and villages is at an early stage, And a drift away from cities, if it humans will be able to accomplish and urban experts warn that such were to happen, could be an just as much by collaborating a transition has been forecast ecological backward step, electronically,” he says. “But we do before and never fully materialised. according to Professor Geoffrey not appear to be there yet.” “The death of distance was a very West of the Santa Fe Institute, a Even so, the development of popular idea in the 1990s,” says former physicist who has turned robotics, artificial intelligence and Greene, at the Urban Institute. “It to studying cities. “Cities are quite 3-D printing can be expected to may still happen. But the signs are ecologically efficient. New York have a profound impact on human very faint; if anything, rich-nation has the lowest carbon footprint society. While top cities will big cities are getting smarter at per capita in the US,” he observes. probably continue to flourish, a offsetting the downsides of urban West’s research suggests that as a renaissance could well be on living.” city doubles in size, the size of the the way for smaller towns Boston, for example, uses its road network, the length of and villages n

8 TECHNOLOGY Tech a break

A connected world should, in theory, be a productive world. But that does not seem to be the case, particularly in Europe. Now companies are exploring new and different ways of boosting productivity and keeping the workforce motivated.

9 ccording to the old same technology that enables us an instant. The Ofcom survey English proverb, “Time to work faster and more fluidly can found that 51 per cent of respon- and tide wait for no man.” also make us feel boxed in and dents sleep with their phones an A Now, in the always-on unable to escape. Ofcom’s latest arm’s reach away, and 27 per cent 21st century we can add another Communications Market Reports admitted to checking them in the “T” – technology. For the internet survey highlights the issue. small hours if they woke during – that great enabler of friction-free “Half of those surveyed said the night. “It’s very easy to go global communication and that connectivity enabled greater online to do one thing, then get commerce – can have a dark side. flexibility at work, but 20 per cent distracted and find that the hours It never stops, and nor, unless we also said that it made them feel slip away. The advantages are are very careful, do we. that they were always at work,” clear – improved communications A recent report found that the says Rumble. and more information – but there average person in the UK spends is a tension,” says Rumble. up to 36 days a year answering Master or servant? The creeping realisation that emails. That’s nearly 15 per cent of The smartphone is largely to we might be allowing our tech the standard working life glued to blame: small, nimble and online in servant to become the master has an inbox. Except that for many people the task extends well beyond office hours – another piece of research suggests that up to 80 per cent of British workers are busy online from before breakfast until well into the evening. Checking email first thing in the morning and last thing at night has become as much of a habit as washing and putting the cat out.

Stubbornly low Despite all this activity, however, productivity levels in the UK and many European economies remain stubbornly low. One exception is Germany, which recently topped an OECD ranking of global produc- tivity per hour worked. But elsewhere, people young and old seem stuck on a treadmill that only ever goes faster, forced to run harder just to stay where they are. Continuous, low-grade, time- stealing “busyness” is in danger of crowding out real, value-adding work. According to Jane Rumble, director of market intelligence for There are rarely any meetings to UK telecoms regulator Ofcom, it all points to a fundamental go to and there’s not that much paradox at the heart of the email. Instead things are done modern connected world – the ‘‘ more fluidly”

10 Volkswagen has experimented with banning out-of- hours email ‘‘ completely. And in France, President François Hollande is floating the idea of a new legal ‘right to disconnect’ outside office hours”

Everything has its place Like many other businesses today, Prezi could not exist without modern communications, so rather than attaching blanket blame to technology, it might be more beneficial to analyse individual tools and assess whether they are appropriate to the task in hand. Email, for example, is the most popular form of digital communi- cation but usage has plateaued especially among the young. led to some fairly drastic responses. smartphone/internet double act Today, many believe that, as a one- In highly productive Germany, is vital to the way we live and size-fits-all medium, its days are Volkswagen has experimented work now. numbered. with banning out-of-hours email As Hungarian artist-turned- “No one likes to do email. It completely. And in France, entrepreneur Ádám Somlai-Fischer takes away from creative time. I President François Hollande is explains: “I am not keen on this know some people who have trying to buy favour with working idea of banning digital deleted their entire inboxes – you voters by floating the idea of a communication. If you love your get to 100,000 unread messages new legal “right to disconnect” job, you want to know what is and you just can’t do it any more,” outside office hours. happening.” says Somlai-Fischer. And, while most doctors Somlai-Fischer is co-founder of Instead there is a trend towards acknowledge that smartphone online presentations business using new tools, such as the web addiction is not a medical condition, Prezi, a fast-growing tech business developers’ favourites Slack (for there is even a medical-sounding with 250 staff working out of messaging) and Trello (a kind of word for being welded to your offices in Budapest, Silicon Valley slick online to-do list for project handset – nomophobia, or the and Mexico City. Working across managers). Both are simple, cloud fear of being out of mobile multiple time zones, early starts based and fast, designed specific - phone contact. and late finishes are the norm. ally to facilitate collaboration But, addicted or not, the truth “We offer flexible working, so between virtual teams whose is that Canute-like attempts to you can set your own schedule – members may be on different keep work in its place are doomed if you want to work evenings and continents but who all have to to failure, because like the weekends at home, that’s fine,” deliver to the same spec and aeroplane or automobile, the Somlai-Fischer says. deadlines. Slack, in particular, is

11 Years ago we all had to learn how to weeks. Those who did reported write beautiful business letters. Then that they felt more productive and focused as a result. And the trend we had to learn email etiquette like is expected to become increas- not using capitals and when to bcc. ingly prevalent. ‘‘ Now we are doing the same with “Now that young people are so these new tools” much more likely to have a device in their hands the whole time, I think we will go through a bit of a popular among tech-savvy new tools. The biggest barrier to backlash. They will realise that workers because it has group learning is not the buttons, it’s actually talking to people can be messaging capabilities and works the mindset. I am turning 40 and quite useful too,” says Nina Bhatia, seamlessly across multiple devices. I think experience makes you managing director for commercial Learning to use these new tools better at learning,” says and connected homes at Centrica’s does require a certain amount of Somlai-Fischer. British Gas. time and effort but users say the Bhatia is responsible for the boost to productivity and Digital detox Hive Connected Home business, increased thinking time more than But clever new tools are not the which provides smartphone- repay the initial investment. only way to maximise productivity. enabled heating and lighting “Years ago we all had to learn For many, at least part of the services. She does not believe that how to write beautiful business answer is to take a break from employers should dictate when letters. Then we had to learn technology altogether. Last year, their employees are online or email etiquette like not using around 15 million Britons decided offline but she does advocate that capitals and when to bcc. Now we to disconnect – mostly for a day or business leaders have a responsi- are doing the same with these two but some for as long as several bility to set a good example.

12 “The same rules about ask for regular meetings once a respecting people’s availability month. The reaction from my apply in this new connected world Chinese colleagues is, ‘Well, why as in the old one. So I am not don’t we wait to set up a meeting sending emails late at night unless when we have something to talk I absolutely have to. If you send an about?’ It’s such a clash of email at the weekend you may not cultures,” Chande explains. expect a reply but you can’t always It may appear haphazard explain that, so I have to self- compared to conventional censor a bit too,” she says. processes, but it is part of the relentlessly streamlined, can-do Time wasters approach which has helped But technology is not the only Alibaba attract 350 million time thief in the working day: long customers and become the world’s and unproductive meetings are largest global e-commerce also renowned for wasting hours platform. and sapping motivation. “At first I thought it was rude – “Previous companies I have if clients ask for a monthly meeting worked for have had an emails and they should get one – but now I meetings based culture. But think it is so much healthier. Alibaba has neither,” says Amee Sometimes you need an hour and Chande, alumna of McKinsey, a half, and you need it tonight, and Walmart, supply chain giant other times you don’t need it at Staples and Tesco. Now a all,” says Chande. managing director at Alibaba, she The increasing ease with which runs the Chinese auction giant’s businesses can connect with each European hub in London. other and with colleagues has “There are rarely any meetings encouraged an always-on culture. to go to and there’s not that much But there is a growing recognition email. Instead things are done that productivity and long hours more fluidly. We have an internal app called Ding There is a growing recognition which is like that productivity and long social media for work. If I have a hours do not always make the question I Ding best bedfellows” you, you reply and ‘‘ we’re done. If I need to confer- do not always make the best ence in more people I just add bedfellows. them to my Ding group and finish “Whether you’re talking about the conversation. It’s a lot more a BlackBerry or a smartphone or real time and so I don’t have any even a conventional phone with email to do when I go home at a wire, it’s about maintaining night,” she explains. people’s effectiveness at work. The approach may sound And they are not going to be as appealing but the no-meetings effective if they are on 24 hours orthodoxy in particular can take a day. As with anything else, some getting used to. self-discipline is important,” “Our European partners tend to says Bhatia n

13 THE INTERVIEW All smiles Justin Ash is chief executive of Bridgepoint-backed Oasis Dental Care, the UK’s first national dental chain. Taking a novel approach to oral health, Ash aims to make consumers feel as good as they possibly can about visiting the dentist.

ntil he was 21, Justin Ash a reputation for having precious little interest in fitness had one, dominant transformed dentistry. That’s my until he turned 40, since when he ambition: to run the long-term ambition and I’m going has become a cycling and triathlon Ucountry. to stick at it until I get there,” he enthusiast, who cycled 205 miles “Up until the time I finished maintains. between Kent and Somerset on a studying politics, I was relatively “Shorter term, I want to cycle single day last year – a ride known determined to become Prime from Geneva to Nice on the Route as the Chase the Sun challenge. Minister,” he says. des Grandes Alpes. It’s only about “My one regret is that I wish I’d A stretch working in Westmin- 600 miles but it’s apparently like got into fitness when I was 10. ster in the UK and Congress in the climbing Everest in five days. And These days, when I go on long US put Ash off a political career: I’m doing it next year.” trips, I do finish but I’d like to “It was all about people, not about finish somewhere near the front answers,” he says. Steely determination and I didn’t start training early Nearly three decades later, Ash’s The two ambitions, while very enough for that,” he says. aspirations, while stretching, are different, share certain features. He has no such regrets on the slightly less lofty than they were Both are tough, both reflect Ash’s professional front. Having left back then. steely determination and both politics behind as a student, Ash “I want to build Oasis to 1,000 would have been far from his mind joined management consultancy sites and make it a truly famous ten years ago. firm Bain & Company and then brand with a great proposition and Now approaching 50, Ash had moved into consumer goods. He ran KFC’s UK and Ireland business I want to build Oasis to 1,000 sites from 1999 to 2004, became and make it a truly famous brand with managing director at chemist chain Lloyds Pharmacy a great proposition and a reputation subsequently and joined Oasis as ‘‘ for having transformed dentistry” chief executive in 2008.

14 At the time, the group had 100 tearing dentists may be wishing sites and the concept of branded they had kept their counsel. Today, Patient books grow, dentistry barely existed. Oasis has a national presence the practices get across the UK and the Republic of bigger, the feedback Convincing the dentists Ireland and 70 per cent of the is good and typically, “When I joined, I knew that I British population can access an ‘‘ within a year, wanted to build a dental brand. Oasis practice within 20 minutes But the idea of branding was alien of leaving home. dentists are making to dentistry back then. The first In the last three years alone, more money than time that I put a branded poster since Bridgepoint invested in the they did before they on a practice wall, the dentists group, site numbers have almost sold to us” tore it down and told me that doubled, from 200 to 380, and branding would never work in there are three million people on dentistry because it was all about the Oasis database, two-thirds of having a local name and a local whom have regular check-ups. presence,” says Ash. Feedback is exceptional too. Eight years later, those poster- More than 95 per cent of

15 customers say they would out what people actually wanted tion but means that we follow recommend Oasis to a friend and, from their dentist. Their top hospital standards,” he says. when it comes to employee priority was high-quality Practices tend to be open from engagement, the group scores treatment with no pain but they 8 to 7 five days a week and at least even higher than UK department also wanted consistency of two Saturdays a month, with some store John Lewis, traditionally a treatment, more flexible opening open on Sundays too. Prices are bellwether for good staff relations. hours, transparent pricing and fixed and clearly visible within “It’s been quite a journey,” online booking.” practices and on the Oasis says Ash. Having found out what people website. And considerable invest- The approach however, is valued from their dentist, Ash and ment goes into making the dental relatively straightforward. his team set out to deliver it. practices look good. “The basic principle is that we “We have a strong clinical “We make sure that the are bringing a branded consumer backbone and our approach to dentistry. Eight years dentists are monitored We make sure that the ago, dentistry was very inconsis- by an internal audit tent, there was no real marketing team, which is itself reception area is and no one really knew how to composed of dentists. welcoming and you can’t choose a dentist. They were open Cleanliness and hear the sound of drilling or 9 to 5 if you were lucky and modernity are two ‘‘ smell that waft of antiseptic pricing was completely opaque. It other consumer priori- which reminds you that you was basically a service that suited ties so all our practices the dentists, not the consumer,” have a decontamina- are at the dentist. We want Ash explains. tion room, which is to avoid triggering those “We did a lot of research to find not required by legisla- nervous sensations”

16 reception area is welcoming and where we can grow, so they need them,” says Ash. you can’t hear the sound of drilling the right socioeconomic profile. “In essence, it becomes a or smell that waft of antiseptic We also tend to like larger virtuous circle. Dentists can focus which reminds you that you are at practices, with a minimum of four on their work while we focus on the dentist. We want to avoid dentists, as you can offer a wider running their business, making triggering those nervous range of services in bigger sure they are compliant with the sensations that some people, sites. And we very particularly older consumers, rarely buy practices The first time that I put a associate with going to the whose owners want branded poster on a dentist,” says Ash. to sell up and leave,” practice wall, the dentists says Ash. Selective growth Initially, dentists were tore it down and told me ‘‘ that branding would The strategy is working. EBITDA reluctant to sacrifice has tripled since 2013 and Oasis their independence and never work in dentistry” has become the first branded become part of a dental chain in the UK. Like-for- branded chain. Now, Oasis finds latest regulations and investing in like growth has been consistently that the dental community is their practices so they have state- strong and the group has also much more enthusiastic. of-the-art equipment and systems. made a number of acquisitions. “We often find dentists saying Patient books grow, the practices “We see hundreds of businesses to us: ‘It’s amazing. We put up get bigger, the feedback is good a year but we are very selective so the Oasis branding and more and typically, within a year, we only choose 40 to 50. We have people come in.’ I tell them: dentists are making more money strict criteria about where we buy ‘That’s why we do it!’ But they than they did before they sold to because we want to be in places really get it once it happens to us. They often go on to recommend us to other dentists,” he adds. Profile Name Ash and his team work hard to Justin Ash make sure that new practices feel Nationality part of the wider group, spending British up to a year integrating acquisi- tions and helping staff to feel Education confident and comfortable. A comprehensive school in Southend and an MA from “It can take a while for people to Leeds University get used to the way we work but we organise conferences and Interests awards ceremonies and suchlike Cycling and triathlon and we do have a nice big Family community culture,” Ash explains. Wife and two grown-up sons – When meeting new dentists, all cyclists Ash has his own way of putting Home them at ease, while conveying the A flat in London and a house in essence of the Oasis approach. Somerset, near Cheddar (good “We have rolling inductions and for cycling) I try to go along to all of them. Car When I meet new dentists, I tell A modest, royal blue BMW Greatest achievement An absolutely tremendous and delightful family

17 dentist brand; when the ones who’ve been here a while say how far we’ve come and how we’ve built a proposition that they didn’t think was possible, that gives me real pleasure. They are all really positive about the business and, frankly, delightful with patients and that gives me a great feeling,” says Ash. He attributes the group’s success not just to the team around him but also to Bridge- point, which invested in the business three years ago. “Of course, success can be attributed to building a consumer- facing brand proposition but the investor and board environment is key to allowing that to happen. them: ‘You’re in good hands. Your year, in a slightly British way, You need to have a backer who CEO used to run Kentucky Fried people are more concerned about looks three to five years ahead Chicken!’ At first, they tend to looking after their teeth and their and is prepared to take a long- laugh nervously but then they get gums. They are also more term view. Bridgepoint has been the link – both businesses are interested in the about quality, consistency and aesthetics of The British are famous for not having good service,” he says. dentistry so the fastest-growing pearly-white straight teeth like Data focus areas for us are Hollywood stars but every year, in a The company makes widespread implants, slightly British way, people are more use of data to ensure that service orthodontic work ‘‘ concerned about looking after their levels remain ahead of the pack. and aesthetic teeth and their gums” “At any one time, I can see how treatments to many new patients we have improve your compared to existing patients; I smile and have a healthy mouth. very good at asking us what our can see how many patient And people are going to the world will look like and how we bookings we have going forward hygienist a lot more than they can make sure we’re winning in and whether we need to increase used to,” Ash reveals. five years’ time. It’s a very dental hours. I can even see how Ash himself has a check-up motivating way to run a business,” long people had to wait in every nine months to a year and says Ash. reception. We use this information goes to the hygienist every six Having built the business to a to drive the business forward, a bit months. However, he is constantly 380-site chain, Ash believes that like a retail company,” says Ash. out and about, visiting practices Oasis still has huge potential. The Oasis data also shows that to see what they are doing and “Our growth is accelerating and the British, traditionally renowned how they are faring. enthusiasm for the concept is for having bad teeth, are “It’s a really energising and building so we believe that we can becoming more aware of the exciting environment to work in. I really develop the brand from here. importance of oral health. know it’s the dentist and that may There is so much more to go for. “The British are famous for not sound strange but when I meet True, I didn’t set out to be the CEO having pearly-white straight teeth our people and they completely of a dental chain – but it was a like Hollywood stars but every buy into our vision to be the go-to good move,” he says n

18 MANAGEMENT Founding fathers

Almost every business aims to deliver strong, sustainable growth but many stumble along the way. Worldwide analysis suggests that certain key characteristics, centred on the founder’s mindset, can keep companies on the right track and reinvigorate them if they fall by the wayside.

19 very company has two study of businesses across 40 stories. The first is well countries, they discovered that 90 known to the public and per cent of business failures are Etold through quantifiable due to internal factors and that, metrics: quarterly earnings, while every expanding business shareholder returns, projected faces inevitable growing pains, the growth. The second story may be companies that are best able to less immediately clear. It is the weather these challenges share internal plot of how a company certain basic philosophies. develops its core values from the These centre on “the founder’s start, and how those founding mentality,” described by Zook and values are maintained and Allen as: “A common set of nurtured as a company grows. motivating attitudes and At a time when only one behaviours that can usually be company in nine is able to traced back to a bold, ambitious maintain minimal levels of founder who got it right the first Chief executives profitable growth over a decade, time around.” A survey of 325 inheriting poorly- the first story is the one through executives also reveals that, no ‘‘ which success or failure is most matter what industry, businesses performing often judged. But for major that adopt and maintain specific companies who made international companies – earning values are more likely to adapt to four or more strategic above $5 billion a year – another market changes in optimal ways moves in the first two perspective emerges. When these and flourish in the long run. years achieved, on businesses experience growing Assessing their findings in The pains, more than 90 per cent of Founder’s Mentality, Zook and Allen average, annual total their CEOs cite internal factors as track three basic issues that can shareholder return the cause. And with founder- arise as a company develops: growth 3.6 driven, internal culture “overload” (a young company percentage points increasingly trumping strategy as begins to struggle under the ahead of peers” the new predictor of business weight of growth); “stall-out” success, companies and investors (growth leads to reliance on a are homing in on the values series of increasingly complex adopted by successful founders internal systems, which effectively and their successors. dilute internal culture); and “freefall” (a company stops Follow the founder growing altogether and its According to management original business model no longer consultants Chris Zook and James seems viable.) Allen, this makes sound commer- Against these challenges, there cial sense. After a decade-long are three key values for success:

20 There are three key values for success: an ‘‘“insurgent mindset”; constant attention to the front line; and an ‘owner’s mindset’”

shall cost $50 can only be done by the very best.” Even after over 70 years, during which the company has expanded to more than 300 stores worldwide, IKEA has remained focused on its founding principles, largely due to Kamprad’s continuous leadership and uncompromising dedication to his original, insurgent vision. IKEA’s an “insurgent mindset” (the respect ive industry, and how low price points and commitment willingness to break with conven- strongly will a CEO insist on to accessibility remain the soul of tion and disrupt accepted sticking to the founding mission, the company. As a result, the practices, as necessary); constant even if that means going against group still stands out from the rest attention to the frontline (keeping market trends? Zook and Allen of the market, enjoying more than attuned to the small experiences refer to this as an “insurgent 1.9 billion visits from customers of everyday customers); and mindset.” Birshan calls it an last year. developing an “owner’s mindset” “outsider’s mindset.” Of course, most companies do (empowering each employee with While many companies are not have the same founder at the a sense that their decisions founded on radical ideas that helm for decades. They have to directly affect the company, and challenge the status quo, the manage the transition to new that they can operate as a line of paradox of growth is that as leadership. In cases where this mini-CEOs.) companies evolve, they tend to leads to corporate drift, Birshan These points are echoed by drift away from the original recommends a bold re-engineering business strategists and data mission and eventually slide into of the company, or ‘refounding’ studies around the world. Michael freefall. from the ground up by the Birshan, London-based partner at One company that started with current CEO. McKinsey, recently analysed the a radical mindset, and has success- major moves that nearly 600 CEOs fully managed to keep it over time, Hungry for risk took during their first two years in is Swedish furniture giant IKEA. Based on his research of under- office, to assess how their choices Ingvar Kamprad started IKEA as a performing companies that have influence a company’s returns. furniture retailer in 1948, with a lost their original sense of mission, simple mission: to make furniture Birshan advises that new leader- The formula for CEO success that anyone in his small town ship take risks, as if the company Birshan found that there is a could afford. Kamprad is famous is being started all over again. A science to CEO success, which for saying, “To design a desk which new CEO must be willing to re- includes an intrinsically bold may cost $1,000 is easy for a examine the company from the approach to business. How furniture designer but to design a ground up or, as Birshan puts it: willing is a company to disrupt its functional and good desk which “pull multiple levers at once.” He

21 explains: “If you’re in an underper- efficiency in the past 30 years. forming situation, use the whole With outside grants and equity playbook, throw the kitchen sink investment, Hutchings was able to at it. The data shows that chief grow his team from one in 2012 to executives inheriting poorly- nine today. Now he’s looking performing companies who made towards a goal of 15 employees four or more strategic moves in over the next 12 months and, the first two years achieved, on ultimately, 55 employees. As average, annual total shareholder Picasolar grows, Hutchings says return growth 3.6 percentage that it’s important to hire points ahead of peers. But their employees who share the less bold counterparts who used insurgent mentality that inspired one or two or three moves were him to innovate in the first place. only 0.4 per cent ahead. So there’s “Starting out, we’ve had mostly a real difference if you’re behind in technical hires,” says Hutchings. going bold and going hard.” “It’s important to have the right When Arkansas-based US technical skills, but we also believe engineer Douglas Hutchings that the right skills come with the started his company Picasolar in right attitude. As CEO, it’s in a way 2012, he was a team of one, my duty to keep the company working to develop a new type of focused on the mission through solar lighting panel that is three open dialogue and transparency.” times more conductive than Harvard Business School anything else on the market. It is professor, Noam Wasserman, an extraordinarily ambitious author of The Founder’s project – one that promises to be Dilemmas, believes that the largest step towards signifi- the ability to make cantly upping solar power changes

The paradox of growth is that as ‘‘companies evolve, they tend to drift away from the original mission and eventually slide into freefall”

22 quickly and efficiently is another Prioritising company values key component of successful Reserve, a hospitality tech growth. company based in New York, As he explains: “Oftentimes the believes it is imperative founder-CEO may be attached to that all employees his or her original idea for the understand the basic start-up, while the start-up itself company values. has reached the point at which Reserve connects the original idea may have to be customers with adjusted.” restaurants, allowing diners to Frontline focus discover new Frequently, these moves need to restaurants, make be made at the front line, where reservations and When you deliver good the company interacts with its pay the bill service you get good customers. through one ‘‘ feedback and good Bridgepoint-backed BigHand, a seamless platform. feedback is something UK-based software company that The company even creates digital dictation, provides restau- that energises everyone document creation and workflow rants with a way of who works here” tools, exemplifies this approach. tracking customer “We’re deeply engaged with our preferences, such clients and we’ve become a as food allergies or preferred and Allen suggest that many later- trusted partner,” says CEO Ian tables. stage founder-led companies can Churchill. “We believe it’s a As Reserve has expanded benefit from taking on private process of consistently reaching across seven cities, the founders investment. By bringing in a new out to your clients, hearing their have made it a priority to codify mix of investors, they say, there is feedback and tweaking the front company values and instil each an opportunity for a company that line to make sure they are new employee with a sense of has lost its core mission to satisfied.” ownership. reorganise like a new start-up. This focus on the front line has Head of operations and strategy The strategy worked for the added benefit of improving Anneke Jong explains that computer company Dell, which internal culture, and imbuing Reserve’s core company values are suffered a 74 per cent loss in employees with a sense of 10 simple company ideals, which market value from 1999 to 2013. purpose and ownership. “When hang on a poster at the New York The following year it took on you deliver good service you get headquarters. These include “Start private investors and essentially good feedback and good feedback with why,” challenging employees “refounded” itself, focusing on a is something that energises to question accepted ideas and bold, start-up mentality and everyone who works here,” says processes, and “Roll up your empowering employees. As Zook Churchill. sleeves,” designed to promote an and Allen explain, this encouraged Customer service also depends egalitarian culture. “a bias to speed of decision, a on hiring the right employees and “At Reserve, the best employees deeper sense of accountability and making sure they understand and aren’t too proud to take out the a focus on cash flow.” engage with the company culture. trash, literally or metaphorically. Ultimately, complacency and According to Wasserman, 65 per There’s no room at a start-up for a convention can be hard to avoid cent of the problems he sees in ‘not-my-job-not-my-problem’. once a company reaches a certain companies are “people problems” Everyone is accountable for the stage, but keeping in mind the – tension between the founding success of the entire business,” founder’s original mission and team and new recruits, who may says Jong. mindset can help a company to not appreciate what the company Start-ups are clearly at an early stay energised, enthused and is trying to do or why. stage in their evolution. But Zook focused on growth n

23 HEALTHCARE

Delivering the drugs Pharmaceutical companies used to control every step of a drug’s development. Today, however, there is a growing trend to outsource certain key stages to smaller, independent specialists.

24 n recent years, the pharmaceu- Then the scales tipped growth, both pharma companies tical industry has undergone a The shift can be attributed largely and biotech groups are keen to Iseries of radical changes. to cost. In 2000, pharmaceutical shorten the clinical trials process Previously, major pharmaceutical companies spent an average of and make it more effective. The companies such as AstraZeneca, $800 million bringing a drug to less time that is spent on trials, the Pfizer and Novartis jealously market. Today, that same process more time a drug can be sold guarded every aspect of the can cost up to $2.5 billion. under patent. And the more delivery process for the next At the same time, the opportu- effective the process becomes, the blockbuster drug. From pre-clinical nity for pharma companies to greater the chance that there is a tests to clinical trials and from recoup their expenses and product to sell at the end of it. manufacturing to distribution – generate value is limited – patents Big Pharma did it all. Only a small last for around 24 years and the Outsourcing solution handful of contract research first eight of those years are often This drive for efficiency lies organisations (CROs) existed. spent simply making the drug in behind a growing trend across the These were firms to which certain question. Once the patent ends, industry to outsource parts of the parts of the drug development generic companies can begin to clinical trial process to CROs. process could be outsourced. But make the same drug at a vastly The shift makes sound financial they were few in number and their reduced cost because they have sense. CROs carry out trials for a use was not widespread. not had the expense of wide range of clients, whereas developing it. pharmaceutical and biotech firms Not only are financial pressures perform such tests on a smaller, rising, but the ability to find new less frequent scale. As a result, blockbusters has been falling too. CRO fees are invariably cheaper In 2000, pharmaceutical “The success rate from phase 1 than in-house costs. But there are companies spent an to launching the drug has been further advantages too. average of $800 million going down over time,” says Jamie “A lot of CROs have specialisms bringing a drug to Wyatt, head of healthcare at in certain areas, so they can add ‘‘ market. Today, that Bridgepoint. value back to the pharma With the industry squeezed on companies – they can say ‘We’ve same process can cost cost, pressurised on patents and seen this before and it’s generally a up to $2.5 billion” facing concerns about future warning sign’ or ‘Here’s an

25 opportunity’. This helps combat Specialised skill-sets that growing drug-trial failure Quotient Clinical, a former rate,” says Wyatt. Bridgepoint portfolio Figures show just how much company that was the CRO industry is benefiting successfully exited last from drug developers’ interest in year, also provides outsourcing. According to a report highly specialised by investment bank Harris CRO services. Williams & Co., the global CRO Unlike its peers, the market is expected to grow from group both develops $27 billion in 2014 to $32.7 billion and trials drugs. by 2017, an increase of more than “The industry is new 20 per cent. to research and The sector is also becoming development more diverse. Companies such as outsourcing but unless Quintiles, PPD and Covance are the service sector starts large multinationals in their own changing, it’s going to right, with a sizeable share of the deliver the same results as market. Quintiles, for example, pharma and look at was valued at around $9 billion the malaise that when it recently merged with IMS caused,” says Peter Health. At the other end of the Scholes, Quotient’s spectrum, a growing number of chief scientific officer. Some CRO-related IT businesses boutique firms have specific “Our model means have been growing at a rate of 20 niches or specialisms. we can get new drug per cent plus. Clearly, this is very Sarah Cannon Research molecules into attractive, because the clinical Institute is one example of this humans faster because ‘‘ trials market is enormous and if breed: with a few sites in the US we can test products and one in the UK, it specialises in soon after manufac- CROs suddenly adopt a cancer drugs and has a particular turing them. We don’t technology solution, that can be focus on phase 1 and phase 2 trials. need to get bogged very material” “In terms of early drug develop- down generating ment, we recruit around 1,000 excessive stability patients a year, which is probably data to verify a product’s shelf life. impossible to adjust drug formulae the largest network globally for We can just test it,” he adds. as the dosing progresses. phase I,” says Dr Hendrik-Tobias Moreover, drug development is Quotient’s approach – known as Arkenau, medical director at the done in real time just before trials “translational pharmaceutics” – Sarah Cannon Research Institute begin. “That means that during a delivers increased precision UK. According to Arkenau: “You clinical study, as clinical data during the dosing phase, reducing need specialist teams to carry out emerges, we can use that waste and speeding up the entire and manage early drug develop- knowledge to change the testing process. ment because trials are not just products we make and dose,” Synexus is another CRO with a about making sure a drug is safe explains Scholes. unique skill-set. Unlike many any more, they’re about looking In normal circumstances, the competitors, the group owns and for biomarkers that predict a phase 1 or “dose escalation” stage, operates 28 permanent research response to a treatment or not. takes place several weeks or centres in Europe, South Africa So it’s getting very complex – months after development and the US, typically in urban you can’t just open two or because one company takes locations. This allows it to recruit three chairs in a hospital unit charge of developing a drug and clinical trial patients very quickly and say you are doing early another tests different doses on – a highly attractive proposition drug development.” patients. This makes it almost for pharmaceutical firms, where

26 biggest users of medical drugs. That suggests there is an ongoing and increasing need for sophisti- cated drugs to combat age-related illness. A more efficient clinical- trials process can play a central role in bringing these medicines to market more quickly and at an affordable price. There is a growing vogue for personalised medicine too, that is, medication tailored to the individual. CROs are expected to be heavily involved in this development as well. A more efficient clinical both unwieldy and time- “The more we move to person- trials process can play a consuming. Bringing in profes- alised medicines, the more central role in bringing sional disciplines and data devices effective they will be at an is really speeding up analytics.” individual level. But the potential these medicines to Bridgepoint-backed IT specialist for losing economies of scale in ‘‘ market more quickly and Phlexglobal is a classic example of areas such as manufacturing is at an affordable price” the breed. The company uses large and will increase cost state-of-the-art technology to pressures for pharma firms,” provide software and services that says Wyatt. support crucial administrative and Clearly, making 100 variants of a time management is absolutely operational aspects of the clinical single drug is complex and costly. critical. Earlier this year, the UK- trial process. However, CROs can help to reduce based company was snapped up “Some CRO-related IT associated costs, driving growth in by US multinational Pharmaceu- businesses have been growing at a the personalised medicines market tical Product Development (PPD) rate of 20% plus. Clearly, this is and opening up better healthcare for £178 million. very attractive, because the to more people. But CROs are not the only clinical trials market is enormous Across the industry, the growth businesses focused on shortening and if CROs suddenly adopt a of the CRO sector has been the clinical trial process. Tech technology solution, that can be remarkable, not least because Big firms play an integral role as well, very material,” says Wyatt. Pharma spent so many decades providing essential software to taking charge of the entire drug CROs so they can assess and The age curse development process. The shift in deliver results faster and more At a practical level, all these attitude confers multiple benefits, effectively. In essence, as Big changes are contributing towards speeding up drug trials, cutting Pharma is developing a reliance on the transformation of healthcare costs and delivering treatments CROs, CROs desperately need for the consumer, which is particu- faster and more cheaply to the companies that can provide them larly useful as global demographics end consumer. with the requisite technological change. Research from Joseph And the trend is expected to know-how. Chamie, former head demographer continue and accelerate. Over the As Wyatt explains: “We’ve at the United Nations, revealed next few years, forecasters predict looked at how clinical trial data is that by 2030, 56 countries will that CROs will play an increasing captured and brought through, have more people aged 65 and role in the pharmaceutical space, ultimately to the regulator, and over than children under 15. accelerating medical there were a lot of old-world While children and young adults breakthroughs and encouraging practices. Basically, a lot of paper are susceptible to disease, there is positive developments across the was being used, which can be no denying that the elderly are the healthcare sector n

27 MARKETS Trust low down

Trust was always ccording to Oliver Parry, (IBE), set up 30 years ago to head of corporate encourage high standards of viewed as a governance at the UK’s international business prerequisite for A Institute of Directors: “If behaviour, echoes this corporate success. the EU referendum showed us view. A recent anything, it was that people in survey of attitudes In recent years, Britain are sceptical of business.” towards business however, a growing The facts speak for themselves. ethics showed scepticism has Thousands of businesses were in that almost 40 emerged not just favour of Britain staying in the EU per cent of and said so publicly, yet a majority the public between of voters rejected their arguments. still companies and Parry suggests this provides consumers but also graphic evidence of the poor regard in which the corporate between world is held. businesses and “Trust in business is at their peers. How an all-time low and, serious is this issue and how can it be rectified? believe UK companies are behaving unethically. for many Global problem people, Failing trust between business and business the consumer is not a uniquely is seen British problem. It confronts as being business leaders and politicians detached from from Europe to China and the US. the real world and Edelman, the global communi- part of the ‘London metropolitan cations marketing firm, conducts elite’,” he says. an annual Trust Barometer. Its The Institute of Business Ethics 2016 report shows that trust in

28

People are significantly more ‘‘likely to trust peers, friends, family and ‘regular employees’ than a chief executive or a government official”

Across the globe, scandals Business trustworthiness involving large corporates has three main underline the financial and ‘‘ reputational damage that a characteristics: the ability dramatic loss of trust can cause. to perform a task reliably; Nestlé, a company that learned demonstration of benign institutions the hard way about the motives; and integrity is below 50 per importance of trust after its baby cent in more than half milk scandal of the 1970s, was last underpinned by a code of of the 28 countries it year embroiled in a media storm, ethical principles” covers. this time over alleged safety issues “Trust has barely moved since in India. The Swiss company was the world – and this would have the global financial crisis. And the pitted against India's safety been a real problem. The rest is ‘trust deficit’ is particularly acute regulator over whether its Maggi just annoyance.” in the US, UK, France, India and noodles, which hold a dominant Loss of trust affects not just a Brazil,” says Edelman chief market share in the Asian country, company’s interactions with executive Richard Edelman. had unsafe levels of lead. Despite a consumers but its relationships “Worldwide, people are signifi- host of independent bodies ruling with business stakeholders too. cantly more likely to trust peers, that they were completely safe, Tesco, Britain’s largest friends, family and ‘regular Nestlé was forced to destroy 400 supermarket group, was plunged employees’ than a chief executive million packets of noodles and into chaos in 2014 when an or a government official.” temporarily halt production. The accounting black hole uncovered a Unless this global trust deficit is noodles were taken off the shelves severe breakdown in its relation- addressed soon, say experts, there for five months and the product ship with suppliers. Its could be long-term consequences recall cost more than $65 million. heavy-handed treatment of for business. Distrust damages Nestlé chairman Peter Brabeck- smaller producers, in particular, led relationships with suppliers, Letmathe said at the time that the to Tesco being branded a bully. investors and customers; it affects group had had to take dramatic The management team was staff relations, and it can add to action to stem the unfounded overhauled and the company has the cost of finance and trade. food-scare crisis, even though it since introduced virtually a clean So a business that faces a trust hurt full-year performance. “If we sweep of policies and payment deficit is not only at a competitive had lost the trust of the terms for large and small suppliers. disadvantage to rivals but consumers…we would not have BP’s Gulf of Mexico oil spill also potentially faces serious financial lost the trust only in India, we revealed the damaging fallout from harm. would have lost it everywhere in a sudden breakdown in trust

29 The issues that cause most concern public sector. among consumers are corporate tax “Companies have the best avoidance, executive pay, opportunity to bridge the trust chasm because they are still more exploitative labour, whistle-blower trusted than most governments, ‘‘ protection and discrimination” and even some non-governmental organisations,” she says. between companies, with the oil giant and Transocean, its drilling On the up supplier, both blaming each other Encouragingly too, Edelman’s 2016 for the disaster that cost 11 people Trust Barometer found that, their lives. although trust in business is at a low ebb, sentiment is improving. Course of action Globally, trust improved by five Conversely, companies that inspire percentage points to 53 per cent, or regain trust can reap consider- the largest annual gain in years. able benefits. So what should Family-owned businesses remain business do to overcome the the most trusted companies, pervasive trust deficit? followed by public and then state- The IBE says companies and owned companies. Enterprises their leaders must first understand headquartered in Canada, Sweden, the main causes of distrust. The Switzerland and Germany are non-profit organisation among the most trusted reveals that the business worldwide and even trust in issues that cause most financial services is growing again, concern among as the sector recovers from the consumers are recession. corporate tax The late Dr Graham Dietz, a avoidance, senior lecturer at Durham executive pay, Business School, co-authored a exploitative report on building and restoring labour, whistle- organisational trust. He said that blower business trustworthiness has protection and three main characteristics: the discrimination. ability to perform a task reliably; Opinion is also demonstration of benign motives; influenced by and integrity underpinned by a companies’ environ- code of ethical principles based on mental responsibility, fairness and honesty. their advertising and marketing “Display these three attributes practices, the reliability of consistently and credibly, and you products and services and their will be trusted by all but the most responsiveness in a moment of paranoid. Get any of them wrong disaster or crisis. and your reputation will suffer. “Business is moving into a new Trust is remade – strengthened or era where the mantra ‘trust me to undermined – in every encounter,” do the right thing’ has given way said Dietz. to the ‘prove it to me’ era,” says Hosts of companies exemplify director Philippa Foster Back. how to do this effectively. In the But there are ways of UK, department store John Lewis overcoming the current scepticism owes its success in no small part felt towards both the private and to consumer trust. Customers

30 believe that if they buy something crisis. When US Enterprises headquartered in from John Lewis it will not only be toy company Canada, Sweden, Switzerland of good quality but will also have Mattel faced a and Germany are among the most been produced ethically. massive product Bridgepoint-backed Pret a recall in 2007 over trusted worldwide and even trust Manger has also gained a strong concerns of lead ‘‘ in financial services is growing reputation among its customers. paint levels, chief again as the sector recovers” They trust the food retail chain to executive Bob provide consistent quality, while Eckert moved so treating staff fairly, sourcing quickly to restore trust among executive of Unilever, for example, ethically and responding suppliers, customers and Mattel’s has gained widespread inter - effectively to changing tastes – own staff that the crisis has national respect for his extremely from providing porridge at become a case study in many vocal views on issues relating to breakfast to opening meat-free business schools. the environment, while Howard outlets. Eckert took immediate respon- Schultz of Starbucks and Cyrus Further afield, Tupperware sibility, publicly apologised and Mistry of Tata in India have been Brands has won a large following quickly identified the source of equally outspoken on youth for the quality of its products, its the contamination to a factory in employment and education, financial performance and its China. Suppliers that had failed to respectively. Alongside using chief reputation for improving maintain standards were named executives as role models, economic and social conditions in and shamed, new suppliers were companies can also use internal the communities in which it brought on board and closer policies and procedures and strict operates. Today Tupperware has a collaborative partnerships were compliance functions to ensure global sales force of almost 3.1 fostered between the toy maker that an ethical code infiltrates million women in countries and its suppliers, involving far every part of their business. including China, India, Indonesia more stringent testing of toy Fundamentally, there is no quick and South Africa, helping to drive safety. Mattel’s subsequent fix, particularly in a world where sales revenue for the company internal surveys show that 75 per news, good or bad, can spread like while earning much-needed cent of the public believe it did a wildfire on social media. As income from selling the products. good job addressing the problem Edelman explains: “Trust in and today the toy manufacturer institutions is no longer automatic - Valuing goodwill continues to score highly as a ally granted on the basis of Foster Back suggests that trustworthy company. hierarchy or title. In today’s world companies have to deliver quality Kathryn Beiser, global chair of that trust must be earned. And of service consistently to build a Edelman’s corporate practice, says that means companies cannot rapport with stakeholders. that trust ultimately depends on a take their eye off the ball when it “This means that even when a business culture that strives for comes to building and maintaining business has a bad day, which is longer-term value creation. public confidence. Constant inevitable, there will be so much “Business leaders can no longer vigilance is the guiding goodwill built up that they will be just focus on short-term goals. principle.” n forgiven. However, if that well of The new-model chief executives trust is empty, there is nothing to are taking action by addressing draw on, and that is when the issues of our time, and taking customers will walk away. You may a personal interest in the success have your corporate and ethical of society. Stakeholders expect values plastered all over your business to have a solid and walls, but how stakeholders steady focus on financial returns, respond to you will come down to but also on actions around key whether they feel they have been issues such as education, treated honestly and with healthcare and the environ- respect,” she says. ment,” she says. This is particularly true in a Paul Polman, chief

31 CONSUMER

32 Future perfect

Predicting consumer attitudes and behaviours that the weekend and binge-watching offers marketing opportunities.” To the latest Netflix series or living in behaviour can lead identify a new trend, he says, “we an armoured community, will to phenomenal need to look for any signs of continue to be one of the big business success – change among consumers, in trends, she believes. either behaviour or attitude.” Popcorn, who was Faith Plotkin so an entire industry The first futurologists in the before she got into the trend has grown up around 1950s and ’60s were completely forecasting game, has had several the ability to spot intuition-led. notable successes. In 2008, for Now, however, vast amounts of example, she predicted the rise of trends effectively. information are sifted through in food truck chefs. “Part psycholo- But does forecasting the quest to tap into the future, gist, past sociologist, these really work? with armies of researchers poring individuals will emerge as part of over academic papers, company the solution in the struggle to accounts, analysts’ notes, public control obesity,” she says. The he digital revolution has records and academic and explanation may sound fanciful transformed trend business publications. They but sure enough, food trucks have forecasting. In the past, monitor lifestyle and specialist become a growing feature of the T trends used to be dictated magazines, websites and social urban landscape. by small, secretive groups of media and keep on top of the The Futures Company takes a designers who would consult their latest books, films and television rather different approach to creative muses for inspiration shows. forecasting. Its trendspotting tools before deciding what everyone include a network of “culturally would be wearing, doing or buying Power of instinct connected individuals,” who next season. It’s not all about numbers, though: gather and distil local intelligence. Designers still wield enormous “It’s also about power but, in the age of the having an instinct internet, influence is shifting that something is When Airbnb was created in 2008, towards bloggers, social media and going on there,” says its founders had no idea it would street fashion. Now there’s not just Andrew Curry of become a global phenomenon – one trend, but scores, all available The Futures they were simply roommates in San to anyone with a Facebook, Company. ‘‘ Francisco renting out airbeds in their Twitter or Instagram account. American So how can a business tell trendspotter Faith apartment to help pay the rent” whether the social media buzz Popcorn exemplifies around the next big thing will die the power of This network extends to 140 cities away in a few days or change the instinct. Dubbed the Nostradamus in more than 50 countries around way we live forever? of Marketing by Fortune magazine, the world and is made up of some Author William Higham, in his she claims credit for having 300 on-the-ground cultural book The Next Big Thing: Spotting invented the notion of cocooning trendspotters – a diverse mix of and Forecasting Consumer Trends in 1981. The desire to escape academics, screenwriters, for Profit, defines a trend as “a reality by retreating into a fantasy bloggers, journalists and freelance long-term change in consumer world, whether it be holing up for marketing professionals.

33 Stumbling across a trend technical advances and the more sober-minded peers are less Understanding and exploiting probable need for refresher GP than convinced. shifts in consumer behaviour are training every five to 10 years. “He comes up with exciting behind the phenomenal success of The more information we have, forecasts. But would you use one Airbnb. Trends in the hospitality the more detailed forecasting to make a business decision?” business had already been shifting becomes, says Flatters. “Increas- asks Curry. for decades. But, with the ingly, we’re breaking the emergence of the sharing population down from segments to economy in the early 2000s, and fragments.” the desire of travellers to “live like According to style bible Vogue, a local,” the time was ripe for an for example, one of the hot looks online holiday home rental site. for winter 2016 will be the humble Yet when Airbnb was created in cagoule. It dubs the rainwear 2008, its founders had no idea it normally sported by mountain would become a global phenom- walkers the It Anorak. “Forget the enon – they were simply military bomber jacket,” Vogue roommates in San Francisco says, “the only jacket to be seen in renting out airbeds in their is the hooded, high-tech anorak, apartment (hence the name) to worn slightly oversized in a help pay the rent. touristy bright shade.” Cagoules As co-founder Brian Chesky will doubtless be explains: “People signed up to rent seen in stores and According to style bible Vogue, the airbeds and we cooked them on catwalks breakfast every morning and acted across Europe. for example, one of the hot looks for like tour guides. We didn’t mean to But only a few winter 2016 will be the humble start a business. It just sort of wearers will be cagoule. It dubs the rainwear happened. There was no flash of able to carry off ‘‘ normally sported by mountain genius. In the beginning, we didn’t the latest look walkers the It Anorak” realise this would be the big idea. with aplomb. It was the thing that would pay the rent until we thought of the Outlandish predictions Curry suggests that companies big idea. Gradually, it became Some forecasters are more have to make sure they use obvious that this was the big idea.” outlandish than others. At the futurology correctly when they are Paul Flatters, head of the showbiz end of the industry, doing trend work. consumer futures consultancy futurologists produce a steady “It’s to produce a business Trajectory, says there is no one- stream of headline-grabbing outcome. There’s no point having size-fits-all approach to predictions – recent pronounce- this foresight if you don’t use it to forecasting and, the longer the ments include human immortality help your business. Some time frame, the harder it is to by 2029 from Google’s chief companies turn to trend produce accurate predictions. futurist, Ray Kurzweil, and forecasting because the business Most commercial clients tend to human-on-robot sex overtaking is under pressure and by then it is look three to five years ahead, human-on-human sex by 2050, by too late.” although the public sector often Ian Pearson. In other words, it is important takes a longer-term view. One high-profile media star in to be aware of what’s going on in The General Medical Council, the futurologist firmament is AOL’s the present before turning to the for example, asked Trajectory to in-house expert David Shing, future. Yet even current trends can look at demand for doctors by known as Shingy, an eccentric and be hard to spot. 2040. This involved assessing controversial figure whose job title Frustrated at the lack of hard everything from increased at the media group is digital data in her industry, fashion longevity to the possibility of a prophet. AOL clearly rates designer Julia Fowler joined forces pandemic, as well as likely Shingy’s services but some of his with data analyst Geoff Watts in

34 Its trendspotting tools include a network of ‘culturally ‘‘connected 2009 to set up EDITD (since and design sectors. individuals’, who ive business and is renamed EDITED), a technology The project could gather and distil wary of the business that takes a big data ultimately be extended local intelli- industry’s approach to fashion trends, to other areas, showmen. “A star providing real-time information to including interior gence. This forecaster gets up retailers such as ASOS, Topshop, design, architecture, network extends on 1 January and Target and Gap. footwear and the to 140 cities in decides from his Fowler believes that automotive industry. more than 50 gut – and understanding fashion trends countries around admittedly, it’s an should be less about intuition and No assumptions advanced and more about actual numbers. One of the pitfalls of the world” experienced gut – EDITED crawls the web in the trend forecasting, that there will be same way that Google does, however, is the six big trends this collecting vast amounts of data on temptation to come up with a year. Researchers will then go and what’s selling in real time. hypothesis first, and then set out seek those trends, many of which The firm does not just track to prove it. might be valid. But it’s not the hard sales; it takes in the “buzz” “It’s a common approach to whole picture,” she says. too, trawling blogs and social instruct researchers what to look Like other trend forecasters, media to identify and quantify the for, but we actually go out there GDR trawls vast amounts of latest trends, which it packages for and see what’s happening, with no information in its quest to see into clients into accessible charts, preconceived ideas,” says Kate the future, layering on its own graphs and dashboards. Ancketill, head of GDR Creative insight and analysis. But The services of trend Intelligence, a retail insight and sometimes clients baulk at forecasters and analytical trend consultancy. following advice and won’t take companies do not come cheap but “It’s a much more precarious the risk until a trend becomes they are considered increasingly approach – sometimes we get more mainstream. useful for companies and business towards the end of the quarter and “Some clients are more willing leaders. So much so that the think, ‘There’s nothing out there! to take a leap of faith. Others want European Commission is funding a What will we tell the clients?’ The to see the beans first; they want to project, Somatch, designed to upside is we’re not making it up.” count them,” she says. provide data support to smaller Ancketill accepts that By then, however, it may be companies in the textile, clothing forecasting can be a very subject - too late n

35 LAST WORD

The blog fightback In a world where any Tom, Dick or Harriet can write a blog and post it online, it can seem almost impossible to discern what to read and what to avoid. But BBC Radio 4 presenter Justin Webb believes it is worth persevering. Here he explains how and why.

“ rite a blog,” they said. “You can and lumpen or thoughtful and engaging? say anything you like.” Nowhere is this more evident than W The year was 2006 – I in the debate about Britain’s role in was the BBC’s North America Europe and the future of the EU. editor and the corporation was The quality of on-air debate on keen to see its on-air people this subject has been patchy at getting online as well. This best. Ditto Twitter. But blogs, was a chance to jump from by think tanks, universities, ruth lessly impartial pieces for economists and lawyers, make the News at Ten into the deep a real contribution to the end. Opinion. Argument. debate. You could call it the Controversy. fightback of the experts. Of course, it was doomed Of course, there is a wheat and from the start. My proudest blog chaff problem here. Plenty of entry was a one-word response to verbiage is best avoided. So what is a John McCain’s choice of Sarah Palin as blog reader to do? First, don’t bother his presidential running mate. “Eagleton,” with corporate blogs written by junior it read. And if you clicked on the link, it went to the people to please senior people in the same company. Wikipedia entry for Thomas Eagleton, a disastrous, And don’t allow your inbox to be filled with junk from unstable and short-lived choice of running mate for dullards pushing a party line. George McGovern back in 1972. Take it slowly. Build from one blogger to another that Ah, what a piece of fun. You couldn’t have said that he or she recommends. It’s a voyage of discovery, but on the Today programme. But it was never going to last. like the best voyages it should not be rushed. My own BBC bosses soon began to row back from the “say approach was to start with university blogs, such as the anything you like” approach to something safer and London School of Economics’, and move on from there. more objective. And the blog had to be overseen by a The truth is that communication in sensible grown-up, which was wise but killed the creative juices. paragraphs is far from dead: in fact it is more necessary So my blog is no more. For BBC folk, tweeting is the than ever. John Major used to tell a story about chatting thing now. And I have heard it argued that the world of to Boris Yeltsin. He asked the then Russian president: instant messaging has made the humble blog look as “In a word, what is the state of your country?” ponderous and archaic as a quill pen and papyrus. “Good,” said Yeltsin. But, in an age where blogging could have gone the Major knew this was false. So he tried again: way of Betamax, it still exists and fulfils a need. And I “What is the longer version of that, Boris?” believe it’s here to stay. Yeltsin, as quick as a flash, replied: “Not good!” In the best blogs, logical argument can be set out and In other words, the reduction of argument and tested. Thoughts can be explored. The blogger has conversation to sound bites and the written equivalent room to breathe, cajole, persuade, inform, charm, even is damaging to our real understanding of the world. seduce. This is what good writing has always done. And Bloggers – at least the best of them – are part of our this is why everyone from CEOs to schoolkids can collective fightback against the blather of single-line benefit from blogging. It reveals you. Can you really messages. Let’s write them, read them, enjoy them and employ convincing arguments? Are you a narcissist share them. Good blogging, like any form of good nitwit or a pellucid truth-seeker? Is your tone hectoring communication, works n

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