31 Ocak 2016 Pazar

Civilisations Retrograde

Globe

There are just a few menacing yet fascinating places left on Earth.

These places are usually active conflict zones or rugged areas where rebel groups lurk, nations with unfriendly governments, or otherwise unstable locations where battle has recently ended.

They have terrible reputations.

But nevertheless, these places are intriguing, because they weren’t always in trouble. Once upon a time every place had its heyday. Did the outside world perceive these places differently during times of peace and prosperity?

Iraq, now a sad unrecognisable shadow of its former self. But once, long ago, Baghdad was one of the Islamic world’s most magnificent cities, where the heart of an Empire beat during the Golden Age of Islam. In those days, Baghdad was well-known for its scholars, its philosophers, and its innovators.

Somalia, whose capital city Mogadishu was once the pre-eminent city in the Horn of Africa, making a fortune from its role as a major trading port with the Arabian Peninsula and India. For a long time, Somali Muslims and Ethiopian Christians even lived peacefully side by side. Eventually wars broke out, but nothing that would drag the country down far enough to become the failed state it is today.

During the Middle Ages, Somalia became a prosperous trading nation where Islam flourished and became powerful.  During the 1940s, although Somalia was an Italian colony home to over 22,000 Italians, the standard of living was one of the highest in the region, with a well-developed manufacturing industry.

Somalia later passed into the hands of the British, and finally gained its independence in 1960. But a military coup by Mohammed Siad Barre in 1969 and his establishment of a communist state heralded the beginning of Somalia’s slow descent into chaos.

Most notable is Afghanistan: known in the 1950s and 60s as a modern and progressive nation, where innovation was encouraged, where women’s equality was enshrined and upheld in law, where young people went to university to pursue their dreams unhindered by religious and political fanaticism.

During the final years of the Afghanistan invasion, British Defence Secretary Liam Fox once called Afghanistan ‘a broken 13th century country.’ This view still reflects common perceptions of Afghanistan and its inhabitants, who are often believed to be ungovernable barbarians living in a chaotic land.

In 2010, Afghan-American university president Mohammad Qayoumi, who left Afghanistan in the 1960s, made it his mission to educate the world about the country he had known and loved.

He assembled a wonderful photo essay, ‘Once Upon a Time in Afghanistan’, showcasing amazing images of an unrecognisable nation. Released online last month, the photos of Bill Podlich support Qayoumi’s theme and show Afghanistan from the perspective of an American family living there in the 60s.

Examining both collections is an uplifting, thought-provoking, yet melancholy experience. The photographs show Kabul’s female university students wearing skirts with their heads uncovered, studying alongside young men in science class, socialising casually at cinemas and coffee shops, shopping at record shops selling the latest Afghan and international hits.

Podlich’s pictures show Americans interacting normally with Afghans on the street in a relaxed manner, even with Podlich’s wife wearing a sleeveless Western dress.

Even more importantly, according to Qayoumi there was an efficient and organised government, a vibrant economy, and a strong tradition of law and order. Even the national carrier, Ariana Afghan Airlines, was reliable and well regarded internationally.

The country had many of the ingredients for great success and people had every reason to hope for a bright future during Afghanistan’s halcyon days.

How tragic then, to see the state of these nations today after decades of war, communism, and religious extremism have taken their heavy toll. The aforementioned three factors have a great deal to answer for, as these are the major causes of civilisational retrograde.

There are no excuses, no justifications. The wasted potential is immense, both for the country and for its people. Innovation, freedom of speech, modernity, fair governance, justice, all summed up into a strong, clearly communicated nation image, are necessary for any civilisation that wishes to truly thrive in the 21st century globalised world.

Any force that tries to deny them that opportunity, no matter where the force originates, cannot be called good. Let us hope that one day these razed civilisations will rise up once more and begin to establish themselves on the playing field of a new century.

This article was first published on PlacesBrands – Reputation Management for Places

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The Babel fish is Becoming Reality

babel-fishIn Douglas Adams iconic science fiction saga from the 1970s, The Hitchhikers Guide to the Galaxy, one of the alien species is the Babel fish. To quote the book, “The Babel fish is small, yellow, leech-like, and probably the oddest thing in the universe. It feeds on brain wave energy, absorbing all unconscious frequencies and then excreting telepathically a matrix formed from the conscious frequencies and nerve signals picked up from the speech centres of the brain, the practical upshot of which is that if you stick one in your ear, you can instantly understand anything said to you in any form of language: the speech you hear decodes the brain wave matrix.”

Thus, the Babel fish is a universal translator that neatly crosses the language divide between any species. The book points out that the Babel fish could not possibly have developed naturally, and therefore it both proves and disproves the existence of God.

Then, this morning I read an article in The Wall Street Journal, that within 10 years, a small earpiece will whisper what is being said in your native language nearly simultaneously as a foreign language is being spoken. The lag time will be the speed of sound. The article is written by Alec Ross, the former senior adviser for innovation to the U.S. Secretary of State.

Technology innovation moves at a staggering speed. We have had Google Translate for quite some time now, and both Google and Microsoft apps for instantaneous translations are already available on on smart phones. Microsoft’s cloud based Translator service powers not only text but also speech  conversation translation in seven languages (Chinese Mandarin, English, French, German, Italian, Brazilian Portuguese, and Spanish) in Skype Translator and Skype for Windows Desktop, and the Microsoft Translator Apps for IOS and Android.  I tried it out the app for the Apple Watch this morning and it works really well, although with a lag to speak into the watch and then wait for the translation to show back in text.

Microsoft_Translator for Apple Watch

EarinAt the same time, Bluetooth ear buds are becoming very capable, designed mainstream products, albeit with short battery life. Two highly praised new products are the German Bragi Dash and the Swedish Earin. Both these devices represents new, radical innovation with a technology leap beyond other wireless earpieces of recent years.

Of the two, I find Bragi Dash to be the most interesting. Tech companies the world over are looking to crack the wearable technology market, especially in terms of fitness tracking. Not only does it have audio microphone and speaker, Bragi has also integrated a three-axis accelerometer, a thermometer, capacitive sensors and optical sensors. Together with a smart phone app, the Bragi Dash can track the user’s physical conditions such as heart rate, heart rate variability, oxygen saturation, body temperature, and calories burned.

Bragi Dash earbudsFor health coaching, the Bragi Dash can track performance measures such as steps, cadence, time, g-force, rotation, turns and more, which means users are not required to wear something additional while working out. Further, with GPS added via a smart phone, it can detect the distance travelled, speed, drop rate, and altitude. Not bad for a simple earbud. Clearly the ecosystem technology is there already for cloud based apps to integrate also simultaneous translations.

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30 Ocak 2016 Cumartesi

Whether you are a lion or a gazelle: when the sun comes up, you’d better be running

This is a quote first attributed to Dan Montano in the Economist, but was popularized by Thomas Friedman in The World is Flat.  Here is the full quotation here:

Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed.

Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death.

It doesn’t matter whether you are a lion or a gazelle: when the sun comes up, you’d better be running.

For libertarian-types like me, this quote pretty much sums up how we see the free markets. It’s a wild, open, competitive, and oddly democratic way to get the best out of people. Money is certainly not everything, but the market has a queer way of rewarding those – in the long run – who are good at what they do. Whether you are a lion or a gazelle, you had better be running.

Consultantsmind - Lion or Gazelle

The average S&P 500 company only lives 18 years. While humans live longer, companies don’t live as long as they used to. In 1935, the average company lived 90 years. Harvard Business Review calls this corporate endurance here. McKinsey argues here that you really have a choice of innovating or dying here.

90% of profits only go to the top 20% of companies. This is something Dominic Barton – global head of McKinsey – said recently in the press here. I am looking up the data on that, but he is no fool, so I am taking it as gospel. In short, winner takes all.

This echos the strategy that Jack Welch pursued in the 1980s and 1990s when he stated that General Electric would get out of any industry where it could not be #1 or #2. It is also consistent with the main thesis of my favorite industry strategy book called The Rule of Three – by Professor Jag Sheth which argues that all industries go towards oligopoly; as companies grow and merge to get scale, industries continue to consolidate until there are 3 major competitors, and a long list of niche or smaller players.

It doesn’t matter whether you are a lion or a gazelle: when the sun comes up, you’d better be running.

2015 was a record year for mergers and acquisitions. Not sure if your noticed, but last year was a monster year for investment bankers. There were $4.7 trillion of M&A deals, up 42% from 2014. The Atlantic magazine notes here that companies had a lot of cash, they are getting more confident after the recession, and they are looking to get economies of scale to squeeze out costs. Here are some of the 137 mega-deals (deals over $5 billion) from last year which accounted for more than 1/2 of the total deal value:

  • AB Inbev +  SABMiller ($120 billion)
  • Pfizer + Allergan  ($191 billion)
  • DuPont + Dow Chemical ($68 billion)
  • Charter + Time Warner ($78 billion)
  • Dell + EMC ($66 billion)
  • HJ Heinz + Kraft ($55 billion)
  • Anthem + Cigna ($48 billion)

VUCA. This is an acronym from the US military that stands for Volatile, Uncertain, Complex and Ambiguous. Situations are fluid. Multiple – unrelated things – can go wrong. Strategic flexibility is critical to having a good set of options. Even McKinsey says that 40% of the services they deliver to clients within 3 years time will be completely different from what they do now. Innovation, speed, and flexibility is the mantra of high-performing companies today.

  • What are you and your company doing to disrupt yourself?  
  • What are you doing to run faster? 

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28 Ocak 2016 Perşembe

McKinsey gets phase 2 on NY jail project for $7M

McKinsey & Company is a premiere management consulting firm with a long legacy of influential alumni, thought-provoking research, top-shelf billing rates, and legions of ivy-league smarties.They get called in to solve difficult problems – everything from corporate mergers to changing the organizational design at the CIA here. So, it is only with a bit of humor and amusement that I read this headline here:

Consultant Gets $7 Million More to Plan Reform at Rikers Jails

Apparently, McKinsey was hired in 2014 to put together a roadmap to help reform the NY prison system for $1.74M.  Apparently, they did a good enough job to win a phase 2 of work worth $7M. The goals of the project will be to:

  • Focus on measures to reduce violence
  • Follow up from the phase 1 interview of 9,000 uniformed correctional officers
  • Reduce the use of solitary confinement, and replace with an alternate method

Consultantsmind - McKinsey Prison

Although the executive sponsor (Mayor Bill di Blasio) liked the McKinsey work, one of the main stakeholders (Norman Seabrook, president of the correctional officers union) has been much more skeptical, almost antagonistic.  All big talk.

“I do not think McKinsey has done anything impressive enough to justify giving them another contract worth millions of taxpayer dollars. . .There has never been a dialogue between the union and McKinsey that resulted in better services being provided”   – Seabrook

Consultants solve problems. We work across industries and melt down the relevant data so that executives have options to choose from.  As Seth Godin often talks about – the simple problems have already been solved. The problems left are the perfect problems – the ones where the core assumptions and constraints need to be re-examined. Maybe solitary confinement is not the best way to punish trouble-makers and keep the other inmates safe.  Maybe the correction officer’s satisfaction and inmate satisfaction are positively correlated.  Maybe there is a win-win.

Don’t judge the situation or industry. Remember, difficult and good business problems come in all shapes and sizes. The head of McKinsey’s first project was counting pieces of chicken for KFC’s chicken nugget box after all.  Do great work and create great stories to share with the next generation of consultants.

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25 Ocak 2016 Pazartesi

Accounting 101: What is depreciation?

In my mind, depreciation has two meanings – the common sense definition most people know intuitively, and the financial accounting definition which dictates how costs of fixed assets are spread out over many years. Note – if you are CPA, feel free to call me out on things I describe incorrectly. All feedback welcome.

1) Common sense definition: Something goes down in value. No surprise – after all – it’s just the opposite of appreciation, right? Think about your car, computer, or roof. The older stuff gets, the more worn out it gets, and the less valuable it is.

Old stuff gets worn out and less useful; they say a new car depreciates in value about 20% the minute you drive it off the car dealer’s lot. Likewise, if you bought a home in Las Vegas in late 2006, you can see here that the average house fell from $298K to it’s current value of $194K. I wrote about rental properties here, explaining that it can provide good cash flow and a solid return on equity, but not to count on capital appreciation, because the graph below shows that values depreciate too.  If prices do go up, good for you – just don’t bet your retirement on it.

Consultantsmind - Zillow Las Vegas Depreciation

2) In accounting, depreciation means something different.  Here, it refers to the costs of a fixed asset (something that lasts many years) being allocated over several years. During MBA days we learn the “matching principle” which says to allocate revenues and costs to the the time period when they occur – that is why we have things like deferred liabilities, accrued expenses, and depreciation.

As an example of depreciation, if you buy a piece of equipment for $70K which will last for 10 years, you divide up the cost by 10. For your taxes, you can only deduct $7K of depreciation expense annually. Seems like a crappy deal, right?

In terms of cashflow, you spent $70K already (sad bank account), but your financial statements will only show a $7K depreciation expense in year one.  The only upside is that you get $7K in expense in years #2, #3, #4 . . . #10, until it is fully depreciated.

Non-cash expense.  Depreciation tends to understates profitability in the early years, and over-states it later on.  On the balance sheet, this also gives a more accurate (albeit, still flawed) estimate of the salvage value. So after year four, you have taken $28K in depreciation expense, and the remaining (salvage) value is $42K.

Depreciate over how many years? This is a good question. The US government has multiple schedules which tell you the “expected average life” of your asset. It’s approximate and actually imperfect, but at least it is consistent.

  • For rental properties here, the duration of assets can vary from 5 years (carpets, appliances) to 27.5years (roofs, buildings).
  • For agricultural assets here, the duration can vary from 3 years (hogs and tractors) to 15 years (drainage facilities) to 39 years (non-residential buildings)

Last year, I bought 2 air conditioning units for rental properties. They cost about $4K each and when i did my taxes, my CPA said the units had to be depreciated over 27.5 years. I was pissed. Trust me, those things do not last that long. My CPA made it clear – that is what the US government has on their schedule – ergo – that is how much I can expense.

  • I spent $8K (out of pocket)
  • I can only expense $291 of it in year one. That sucks.

Depreciate or Expense? As someone who has rental properties, I would rather expense costs than depreciate them – after all –  I have already spent the money.  Would I rather reduce by taxable income today or s.  l.  o.  w.  l.  y.  over time.  Hell ya, deduct now.

Looks like a few months ago, the IRS raised the minimum $ that you can deduct as an expense. . .from $500 up to $2,500. Nice. so if you buy a $2,400 car for your business – deduct it immediately. If you buy a $2,600 van, it is a depreciating asset and you only get to deduct 1/5 of the cost (5 year average life).  Remember kids, $2,500 is the threshold now.

Depreciation

What happens if I replace it early? My CPA explained that is the equipment goes bad before the 27.5 years, I can expense the remaining cost when I throw it away. Sheesh.

Accelerated depreciation. The government – in their increasing complexity – has different ways you can depreciate assets. There is straight-line depreciation that I mentioned earlier (simply dividing by the number of years). Then there is accelerated depreciation – where you can deduct more of the cost earlier. This is clearly more advantageous for the company, and some argue that this is the single biggest tax break for corporations here.

Watch out for EBITDA. This stands for earnings before interest, tax, depreciation and amortization.  Forbes makes the case here that it is this is a poor way to evaluate businesses because depreciation is not a cash outlay. You are looking in the rear-view mirror because the company has already spent the money, and just benefiting from the lingering depreciation years later. Remember, depreciation is a non-cash expense. The money has already been spent. It does not reflect cashflow.

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6 Tips to Create the Ultimate Consulting Landing Page

Your consulting website and landing pages shouldn’t just look good. They should be marketing assets. Research has revealed that 92%+ of website visitors will never come back to your site again. Which means that it’s more critical than ever that your website converts. In this infographic I’ve laid out 6 tips to creating the ultimate […]

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22 Ocak 2016 Cuma

Consultant, what are you doing to get retired?

I look forward to retirement. Who doesn’t? I recently went on a road trip to Key West and Sarasota Florida. Seriously, 80 degrees in December with a breeze? Walking on the beach watching while drinking mojitos? Debating whether to buy scallops or tuna at the fish market for dinner? Choosing between waffles and french toast for breakfast? Here is a sunset and a sunrise in Key West.  Retirement will be awesome.

Consultantsmind - Sunset sail

Consultantsmind - Sunrise

Question: What are you doing to get yourself retired?

Passive Income.  For me, I think consultants and other folks in the well-paid professional services bracket (yes, talking about you lawyers and accountants) need to more aggressively put their money to work. Right now, we are simply trading time for money. We bill out at $250-$500 an hour. If we don’t give the clients the hour, we don’t get the pay. Simple math and unfortunate math. We need passive income, not get-on-a-plane-on-Monday-morning-and-live-at-a-Marriott income.

Are we saving enough? At the end of the day, it’s the old-fashion strategy of spending less than you make (duh), and getting that money working for you. Remember that the average American saves less than 5% of their income. As Dave Ramsey – financial coach, radio host, and author – reminds us, average sucks.

How much of your income do you save?

What are you doing with your savings?

  • Buy assets. This sounds simple, right? Buy things that pay you. Buy things that get more valuable over time. Buy things that help you to buy things in the future. Dividend paying stocks, rental properties, cash-flowing businesses. All assets.
  • Don’t buy liabilities. Just the inverse. Don’t buy things that go down in value or depreciate over time. Don’t buy things that cost money to upkeep, and cause you to spend more money. Houses, boats, cars, electronics are all liabilities.

Return on Equity. We do all kinds of complicated business cases, and financial models for our clients, yet, when is the last time you applied that level of rigor to your finances? Are we eating our own dog food? Are we getting a good return on our equity?

Return on Time. As I get older, I think this is even more important. Time is the only thing you cannot get more of. Are we spending our professional and personal lives on things that give us meaning, move us in a forward direction, and make life good? Retirement is more than just having enough money to do nothing – it is NOT HAVING to work, and putting time to only the things you want to.  Amen.

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Kenyas Mega Projects

160114171247-mombasa-west-railway-station-super-169

Today CNN highlight Kenya´s mega projects in a visual presentation which is worth a look. Kenya is already an infrastructure powerhouse of East Africa, but it is just the start of development. The next few years may see a quantum leap forward with tens of billions of dollars to be spent on some of the worlds most spectacular transport, energy and technology projects, such as the new Mombasa railway station (above).

Last year we worked with one of these projects, the new CBD (Central Business District) to be built on unused railway land in central Nairobi. Some years ago we worked with plans related to Konza Technology City and I wrote this blog article about the power of country visions. Now three years later, Kenya is well on track to make their Vision 2030 a reality.

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Kenyas Mega Projects

160114171247-mombasa-west-railway-station-super-169

Today CNN highlight Kenya´s mega projects in a visual presentation which is worth a look. Kenya is already an infrastructure powerhouse of East Africa, but it is just the start of development. The next few years may see a quantum leap forward with tens of billions of dollars to be spent on some of the worlds most spectacular transport, energy and technology projects, such as the new Mombasa railway station (above).

Last year we worked with one of these projects, the new CBD (Central Business District) to be built on unused railway land in central Nairobi. Some years ago we worked with plans related to Konza Technology City and I wrote this blog article about the power of country visions. Now three years later, Kenya is well on track to make their Vision 2030 a reality.

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21 Ocak 2016 Perşembe

Consulting tip: Listen to Freakonomics Podcast

For those who know me, I am a huge fan of podcasts.  Great story-telling and content, delivered for free, wonderful use of your time. If you intellectually curious, travel a lot, and don’t listen to podcasts or audiobooks, uh, I don’t understand you.  Made a list of great planet money podcasts here.  Freakonomics – created by the same people of the eponymous book – have diligently been exposing economics oddities since 2010.

Consultantsmind - Freakonomics

Now the list of favorite Freakonomics podcasts:

I Consult, Therefore I Am (11/26/2012): Yes, a fabled podcast about the management consulting industry. Most this I would agree with.

How to Save $1 Billion Without Even Trying (9/11/2014): Why don’t people use private-label aspirin even though pharmacists do?  Good question.

Diamonds Are a Marriage Counselor’s Best Friend (4/6/2015): If you (or your spouse) likes diamonds, and the one person does not. . .this episode is for you.

Hacking the World Bank (2/19/2014): Interview with Jim Young Kim. Head of the World Bank, not a slacker.

Is It Okay for Restaurants to Racially Profile Their Employees? (6/24/2015): Damn good question. Just admit it. If you go into a high-end Japanese restaurant and you see people behind the sushi bar who don’t look like they are from Tokyo. . . you cannot help but feel like it lacks some authenticity?  Come on – just admit it.

Are You Ready for a Glorious Sunset? (8/27/2015): Discussion on end-of-life care, and our society’s aversion thinking about end of life, as an economist might.  I am listening to Atul Gawande’s book called BEING MORTAL, which is about end-of-life, palliative care, assisted living, and our overly medical-view of dying of old age.

The President of Harvard Will See You Now (9/3/2015): Interview with the President of Harvard – do you need more reason to listen than that? Check out this letter that she wrote to the President when she was. . . (wait for it). . . . 9 years old:

Consultantsmind - Freakonomics Letter to President

The True Story of the Gender Pay Gap (1/7/2016): Harvard economist does an incredible job of explaining the key drivers in the pay gap between men and women. Yes, it is definitely multi-factorial – there is not 1 smoking gun or answer (duh), but a lot of it has to do with women choosing professions, and firms (within an industry) which allow more flexibility. It’s a complex topic, but Freakonomics & their economist guest drive a lot of clarity.

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19 Ocak 2016 Salı

Cities Driving Development

To create a framework for sustainable development beyond 2015, the United Nations has announced a set of 17 Sustainable Development Goals, also known as the Global Goals. Broader in scope than the preceding set of Millennium Development Goals, the new goals identify a long list of targets that address the role of cities in human well-being.

As we wrote in The New Age of Cities on this blog two years ago, cities are increasingly important in driving development for the future. City Mayors can mobilise local support and take faster action than countries or federations of countries can. In this new age of speed this fast action can be more important than policy and legislation.

Panorama of Nice

To take one example close to where I live, the city of Nice in Provence Alpes Côte d’Azur (PACA) in France is positioning itself as a destination for well being. Nice is one of the most advanced regions in France in terms of research and innovations within the health and social care sectors.

Under the stewardship of Nice Mayor since 2008, Christian Estrosi, the ‘French Riviera’ metropolis has developed a vision focused on the wellbeing of its citizens and especially, around the older population for active and healthy ageing.

This strategy, which has enabled the development of a number of innovative projects, is supported by a cross-sector group of stakeholders including the University Hospital of Nice (CHU de Nice), the University of Nice, several world-renowned research centres, large companies, SMEs and start-ups, policy-makers and funders of the health and social care economy. The city is now developing European Union funded projects to position itself firmly as a health care and health technology destination, for people in need of health care and rehabilitation, and also for business companies and investors in the medtech sector.

Vice Mayor Olivier Guerin, regional lead on health policy, recently said “Our main objective here is to design new services, from health and social care to the Silver Economy, and bring them to the population, especially our older citizens. Our strategy is based on two complementary pillars, the Smart City programme and the European City for Health. A number of internationally renowned research and clinical teams as well as companies are based in Nice, and the nearby Science Park of Sophia Antipolis.”

OECD Trends Shaping Education 2016About the overall trend of cities leading development, citing a report by OECD on global trends shaping education, the BBC website published an interesting article today. The article is titled “Are Cities the New Countries?” and the author Sean Coughlan comments on the OECD report and asks if big cities have more in common with each other than with the rest of their own countries, when it comes to meeting challenges and shaping development for the future. He also asks if there are more meaningful comparisons between cities such as New York, London and Shanghai, rather than between nation states.

In the highly readable article, the author concludes that today the main challenges of nations are better addressed at the local level of cities.

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18 Ocak 2016 Pazartesi

Consulting tip: Use Waze

I am a huge fan of Waze. For those who have not used it, it’s a basic map app which tells you the most efficient route to your destination, which factors in traffic and construction. This simple 45 second video will give you a good taste for it here. For those who feel this is similar to Google Maps – it is. Google bought this Israeli company in 2013 for $1.1 billion. Indicative of the modern times, the information is completely crowd-sourced by users (a.k.a. drivers) as 50 million+ people roam the streets.

It works. On a recent road trip with my wife, we drove to Key West covering close to 1,900 miles during the week-long adventure. We guess it’s accuracy at about 50-60%. Police, objects in the road, cars broken down on the shoulder. It was all crowd-sourced, and all useful information for out-of-town people like us.

It’s fluid and approximate. The reason it is not perfectly accurate is that conditions change. As you can see in the screen shot below, there was definitely a policeman somewhere in our future.  People have them sighted at different places, but clearly there was policeman somewhere in the road ahead.

It’s a lot of fun. You can choose from more than 20 different voices and languages. You get points for reporting new incidents and accidents (6 points), and 1 point for confirming or cancelling an existing report. You can redeem points for new voices like Stephen Colbert, and Colonel Sanders (yes, the founder of Kentucky Fried Chicken). While I am not a real internet giver (don’t really do Yelp, Amazon, and TripAdvisor reviews), I am almost a compulsive Waze contributor. Oddly, I feel my traffic contribution matters. I have bought into the Waze game.

It’s kind of dangerous. Yes, it has voice commands, and hand-motion commands, but honestly, most people spend their time clicking their phone while driving. Smart?  No.

It’s a little bit controversial. A few police departments have sent letters to Google asking that Waze remove it’s police recognition function, implying that people who want to stalk or harm police officers can use it track police whereabouts. The Atlanta makes a half-dozen rebuttals against the police’s argument here.

It’s getting more attention and credibility. The City of Los Angeles announced a formal agreement here to share official transportation data with Waze – creating a new stream of enterprise data to merge with its crowd-sourced data feed. It’s also a way for city and infrastructure planner to think about the problems. In Washington DC, the city is using Waze to fix potholes here.

It is big data. No surprise this creates a lot of data points for data geeks to play with. See the data visualization of Paris traffic here, which shows how the streets of NYC wake up in the morning and basically keeps going. You only have to watch 20 seconds to get the point that all this data is being tracked.

Consultantsmind - Waze Paris

It can save you money.  I recently got an expensive speeding ticket in New York while on a project. Yes, it cost me the price of an iPad. Since then, I have been using Waze daily. This is great news for Google, Waze and potential advertisers.

Do you use Waze?

Related Posts:

 

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Marketing Consulting Services When You’re Too Busy with Client Work

Hi. It’s Michael Zipursky from ConsultingSuccess.com. Welcome back to the Consulting Corner, where consultants learn how to consistently attract their ideal clients significantly increase their fees. I received a question from a consultant recently asking me how they can create more time in their business to market their services, when they’re already so busy with […]

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15 Ocak 2016 Cuma

The Rise of the Robots in the Financial Industry

Isaac Asimov - I RobotIn financial markets, automated trading has been around for many years. Software such as the ORC Liquidator allows automated trading engines for derivatives. Trading firms and banks rely on ORC Liquidator and similar software to automate a wide variety of sophisticated trading strategies on trading venues globally. Algorithmic trading is designed to react extremely quickly to market changes, as the algorithms seek out and exploit small windows of trading opportunity, often measured in minute fractions of a second.

Michael Lewis book Flash Boys: A Wall Street Revolt, published in 2014,  is a non-fiction book by about the rise of high-frequency trading in dark pools on the US equity market. In the book, Lewis states that “The market is rigged” by high frequency traders who front run orders placed by investors, by using extreme automated software and hardware.

In 2015, the wizards of financial algorithmic trading technology talked about artificial intelligence as the next big thing for hedge funds seeking an edge. Last year more than 40% of new hedge funds were “systematic”, meaning they used computer models for the majority of their trades.

I have  noticed the increasing use of systematic algorithms when I participate to speak about innovation on financial industry conferences, and I came to think of how extreme the evolution is becoming when I read an article by Arjan van Os today. Os is head of the Innovation Centre at ABN Amro Bank and the article was published on the FinExtra website this morning. In the article, Os argues that the perfect storm in the crossroads of big data, standardised APIs (standardised programming interfaces which allows systems to interconnect) and computing power now allows financial models and patterns in real time that human minds could not create and cannot even comprehend.

Os writes that in FinTech the number of start-ups focusing on artificial intelligence is rapidly increasing. Engineers and big-data scientists create new companies to offer advanced machine learning solutions for investment banking, advanced family offices and cyber security solutions. Also in the field of Risk Management, the core safety mechanism function of every bank, predictive and prescriptive systems are introduced to produce more efficient algorithmic risk models than the current more descriptive models.

Value at RiskI think there are dangers with complex algorithmic models, just like the problems of VAR (Value-At-Risk) which was introduced in the 1990s to minimize losses in market volatility but which gave false confidence to traders and risk managers and opened up for systematic exploitation by arbitrage traders, and ultimately led to excessive risk-taking and leverage at financial institutions. When I was involved in development of financial trading and risk management software in the 1990s, I think we had a healthy scepticism to taking automation too far. Such reluctance seems to be rare today.

At increasing speed, financial firms are turning to machines to do the job humans have done for decades. The practice of investment bankers and traders shouting and using hand signals to buy and sell is now by far outdated. The work real people once did has been replaced by a much quieter competitor, the computer. But this means that even small faults can be costly. For example in 2012 the US market maker Knight Capital lost over $400m in 30 minutes because of a computer glitch. And last summer as the reader may recall, trading was halted at the New York Stock Exchange following a software problem.

Such costly events have raised doubts about the stability of computerised trading systems. Critics argue the systems makes markets more volatile, as I wrote about in The Consequences of Frequent Trading article here on this blog some years ago.

High Frequency Trading

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13 Ocak 2016 Çarşamba

Money Grows on Degrees

Then pen is mightier than the swordInformation graphics or infographics is becoming increasingly popular on the web. Infographics are graphic visual representations of information, data or knowledge intended to present information quickly and clearly. They can improve cognition by utilizing graphics to enhance the human visual system’s ability to see patterns and trends.

This week, Zac Jackson at Pearson Education sent us a link to the infographics below. The image is about income levels for different educations, and if you are considering getting your degree online but have not yet picked a specialization, it can be helpful to gain insight into what the future might hold. The statistics relate to salary expectations associated with online business degree options at UAB Collat School of Business in United States.

CS-UAB_Money-Grows_Degrees_D1_Feb4

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12 Ocak 2016 Salı

The Big Picture – Talking Nation Brand with Foreign Policy Group

Earth

The Foreign Policy Group talk nation brand, digital diplomacy, and the importance of the big picture

Foreign Policy Magazine has a long pedigree. Since its founding in 1970 the magazine has become well-known for reporting diplomatic and political developments from around the globe. So it seems a natural progression for the FP Group to branch out into nation branding. That’s where the Nation Brand Institute (NBI) comes into the picture. To be launched in the very near future, the Institute aims to provide a high-level research and knowledge sharing forum, bringing together insights from practitioners, academics and diplomats worldwide.

I travelled to Washington D.C. to speak with Amer Yaqub and Emily Simon, who are leading the NBI, in an exclusive interview about the Institute and its goals. The interview was first published on PlacesBrands.

Samantha North: Why did Foreign Policy decide to start a nation brand initiative?

Amer YaqubAmer Yaqub: Our clients told us that they needed it. The traditional partnerships that media companies have had with countries have normally been based on advertising. But countries now see the need for much more sophisticated strategic advice. The Nation Brand Institute (NBI) will focus on best practices around the world, on practitioners, on all of the academic knowledge that’s out there. It will apply all this to solve the challenges of our clients. So the quick answer is: there are a couple of different variations out there, but they have a very narrow mandate. Ours is going to look at the big picture.

Emily SimonEmily Simon: For example, with countries that are focusing on trade and investment, or on policy advocacy, or tourism, or on a particular issue, we can help them transmit their messages to various audiences. There’s a very academic debate going on about the differences between public diplomacy and nation branding, about whether or not it should be a part of diplomacy. We don’t get involved in that, as it’s a very competitive environment and so we think all countries should use the latest marketing tools to tell their stories. But we feel very strongly that use of these tools must be backed up with strong policy overall.

We’re excited about the launch of the NBI because there’s such a need for effective communication, to create a dialogue and a vocabulary that’s going to work for both government and practitioners. There’s also a need to get over the ‘hump’ about advertising and marketing being ‘bad words’ for countries to use. The truth is: these are just tools. Like any toolkit, it includes many other tools as well. We consider these tools essential for reaching the target audiences that matter to countries.

SN: Nation branding is plagued with misunderstanding. Many still believe that ‘branding ’a country is the same as advertising it. This has caused widespread negative reactions and has been a proven recipe for failure. What’s FP’s stance on this debate?

AY: Authenticity is at the heart of everything. The reason why this perennial debate comes up about advertising being viewed as the essence of nation branding is because advertising is the easiest thing for governments to look to as a comparison point. It’s easy because they see it every day. But the hard work, the research of finding a key analytical strategy, of having the right people in place with the right amount of time and expectations, that’s not so easily seen by governments. They just see an ad campaign and say ‘Ah, so that’s what you mean by nation brand’. The challenge is to educate them on the whole process.

ES: I think the intellectual capital on nation branding can be enhanced, and I see a gap in terms of research on this topic. I also think skills training and development is important. Today’s diplomats have to wear so many different hats, they are event planners, researchers, and marketers. On top of that, they’ve also got their more traditional diplomatic functions. There’s a need for them to become more comfortable with some of the more traditional marketing tools and understand what they can take from the private sector in order to do their jobs more effectively. There’s also the need for better understanding of how social media can be used in a more effective way. There’s a hunger for best practices on that and many countries are becoming increasingly sophisticated in this area. But it’s still very hard to know what’s working. These platforms are changing and evolving all the time, and so it’s key to give countries the tools they need to use social media effectively and keep up with the changes.

SN: What topics would you say are currently driving the broader conversation on nation branding?

AY: Social media, for one. There are a lot of diplomats around the world who are doing social media really well. The US ambassador, the previous one this fall, did a great job when he landed in Russia. He was viewed as an enemy at first, because of his background, but he used social media in a very compelling way to create a conversation with different groups of people in Russia.

The State Department has invested a lot of resources in that. We’re working with a government that we can’t name right now, but they have shared their whole strategic plan for social media and we’re very impressed with how sophisticated they are in understanding the realistic expectations of what social media can do. I often worry that people in government underestimate the problem and overestimate the ability of tools to solve the problem. One of the key aims of the NBI is to talk about ‘what’s realistic?’ for social media. It’s very sexy and it seems like everyone is doing it, but what can it realistically accomplish? There’s a host of countries, such as Israel, that have empowered their diplomats to tweet without having every tweet approved. Many layers of getting permissions from the top levels don’t chime well with the immediacy of social media and the news cycle.

ES: Social media is very personality-driven. For example, the French ambassador here in D.C. has a really powerful Twitter presence. He’s sophisticated, engaging, allows his voice to shine through, and doesn’t shy away from debate. I think it works best when you can get leaders in place who are comfortable with the tools, who know how the tools can be used, even if they’re not going to be using them on a daily basis. They should also have a great communications team as well, that is empowered and has support from the top levels.

SN: How will the NBI help countries to achieve better brands?

AY: That’s part of what the NBI is set up to do, which is separate from the FP editorial team. Our goals will be to share best practices and to find out what works. Our own experience with Foreign Policy has taught us a great deal. In terms of social media, we have knowledge that we can leverage from accumulating over one million social media followers. Although the needs of a media company are not necessarily the same as those of a sovereign client, the initial research we’ve seen out there demonstrates just how many models of social media use exist. Good social media use demands urgency, catching the news cycle; everything in short bursts, as opposed to long thought-out strategic plans.

ES: One of the keys in social media is figuring out who the right audience is. When a country adds people on Twitter they sometimes interact in an ad-hoc way. Many countries may lack the ability to map out their target audience, and that’s something that we’re going to help them with.

SN: How does FP plan to take a leading role in shaping this conversation?

AY: Various countries have been told they need a nation-brand plan, but they don’t even know where to start. They need a structured approach and methods are key in this. In the Internet world, Twitter quickly became the hottest thing for everyone to focus on, but really that’s only one way of measuring brand effectiveness. Part of it relies on members’ issues and questions, but we’re going to assume that the NBI will benefit a range of clients at whatever point they’re at in the cycle. If they’re very sophisticated we’ll make sure there are different levels of discussion and engagement for them. What’s important also are the big picture things, i.e. how to get started with a nation branding strategy, what do we need to accomplish, what are the tools we can use that are already available, how do we measure the success of the strategy, what is the time-frame, and so on.

There are a lot of things on the plate, but the basic model is to understand where countries are at in the process, create the structure for them to follow, and leverage the research that we’re doing in order to fill the gap with quantifiable science.

ES: There are two main elements that we think will be valuable for the NBI. Firstly, case studies, which we think bring a lot of value in learning by example. We want to make sure that members have access to examples of places that have been successful previously, and to discuss what made those projects work. The second is networking, so we do a lot of events here at FP, and often they are most useful afterwards when everyone starts talking, and sharing additional ideas beyond what was discussed on the programme. We want to create a dedicated forum where people who are passionate about these issues can come together and share their ideas and network, bounce things off one another and so on. It’s kind of happening ad hoc all the time, and people will come to us, but we want to create a forum where this can happen more vigorously.

AY: I’m struck by how there’s a certain element of ‘is it cool?’ to be on the nation branding side, when you’re working in these governments. I don’t think that in most places, people really dream of being the ‘person in charge of nation branding’. It’s similar to the perceptions of HR in many ways. Some companies ‘get it’, most famously Jack Welch at GE. They elevate HR to a role similar to the CEO, or very close. The countries that ‘get it’ are going to put their top talent on nation branding, and not view it as a detour to a more interesting career in traditional diplomacy. Another goal of the NBI is to help legitimise nation branding as a field worthy of serious investment, time and energy and also to help attract the best people. For the young generation joining the State Department, this is part of their jobs, they get it, and they know that social media can effect change in a way that public diplomacy from ten years ago couldn’t.

SN: How does FP Group, with Foreign Policy being an advertising-driven publication, plan to keep the Nation-Branding Institute unbiased and objective in its approach?

AY: We’re not going to work with clients and use examples from anything we’ve done publicly, because of confidentiality, but absolutely we’re going to be objective. There’s no need to hide from the fact that this is a challenging world and we’re all struggling to figure out the right mix. The goal isn’t to embarrass or humiliate anyone; but instead it should be a positive experience of learning both from mistakes and also from best practices. America makes mistakes all the time, but we need to learn from those. There will be cases made publicly available when you’re going to be able to say that what they’re doing is ‘wrong’, perhaps even ‘morally wrong’ and the NBI will absolutely showcase it.

SN: And finally, which country has the strongest brand these days?

ES: I really admire the nation brand of Britain. In particular, the recent ‘GREAT Britain’ campaign was a remarkable example of using a key milestone, the London Olympics, to gather the necessary political will to create an overarching brand function that can be tapped into by pretty much every agency across the government. The unity of message that exists in that campaign is really rare. One of the challenges that many other countries face is that every single agency uses different logos and different messages. But the GREAT Britain campaign overcame that issue by creating coordinated messaging that was valuable for trade and investment, for tourism, for education, for culture and the arts, you name it. Their creative arts section was beautiful, just really nice to look at. So I often find myself referring to that campaign when people ask me what I admire in terms of nation brand.

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11 Ocak 2016 Pazartesi

The Future of Cities Depends on Innovative Financing

Vancouver

Ever-more people move into cities, and as the urbanisation trend continues, it is projected that hundreds of trillions of dollars will be needed for investment in urban infrastructure in upcoming decades. Where will all the money come from? Well, as we have written about previously on this blog, in general the  lack  of  investable  projects  seems  to  be  the  main  issue preventing  sustainable  infrastructure  investment  at  scale,  rather than  the  lack  of  finance.

Today Harvard Business Review published an interesting article on financing models, written by John D. Macomber. The article is about innovative financing of cities and it is available to read on this link.

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How to Win More RFP Business: For Consultants

Video Transcript It’s Michael Zipursky from ConsultingSuccess.com. Welcome back to the Consulting Corner, where consultants learn how to consistently attract their ideal clients and significantly increase their fees. A consultant recently asked me how they could win more RFP (Request for Proposal) business? It’s a good question, however, my answer may not be the one […]

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9 Ocak 2016 Cumartesi

Disruptive Innovation in the Payment Industry

City of London panoramaOver recent years the financial sector has confronted a dramatic increase in innovation in technology, services, and platforms and to some degree in organisational structure. The need to innovate is broadly-based and not just a financial sector challenge.

Typically in financial services, as in all other sectors in todays world of increasing hyper competition, there is a strong focus on the start-up ecosystem as an engine for disruptive change. Agile startups can bring disruptive innovations at a pace the established and slow-moving banks and other large financial sector firms cannot, building on drivers like the impact of high-capacity global mobile telecommunications, the availability of high performance business platforms, new software development techniques, the disruptive power of open source development and utilisation of other business model ecosystems as platforms, like the IOS and Android smartphones.

imageAnother strong driver for change comes from regulatory reforms. Following the global financial crises of 2007/2008 and the great recession it caused, the on-going regulatory overhaul of global financial services regulation is radically reshaping financial markets.

The reforms are driven by G20, the Basel Committee on Banking Supervision, the EU and national governments and it is coordinated across national legislation. The main challenges today relate to just how much change is coming at the same time and the complex competitive/co-operative drive to address issues internationally.

In this new landscape, implementation demands are set to dominate the big banks, asset managers´ and payment providers’ product and service offerings and investment decisions for many years to come, and one sector which is going through regulatory reforms is the payment industry.

In Europe, the Payment Services Directive One (PSD1), adapted in 2007 and updated 2009, was an EU Directive, administered by the European Commission to regulate payment services and payment service providers throughout the European Union (EU) and European Economic Area (EEA). The Directive’s purpose was to increase pan-European competition and participation in the payments industry also from non-banks, and to provide for a level playing field by harmonizing consumer protection and the rights and obligations for payment providers and users. PSD1 brought us cross-Europe SEPA payments, for examples.

PSD2Since adaption of PSD1, the retail payments market has grown significantly, and new payment services have been developed. However, the payments market is still fragmented along national borders, some payment products and services are out of scope, and some parts of PSD1 became too ambiguous, too general and outdated. This has resulted in legal uncertainty, potential security risks in the payment chain and a lack of consumer protection in certain areas. It has also made it difficult for innovative and easy to use digital payment services to establish and take off.

The European Commission therefore proposed new rules to close the regulatory gaps and provide more legal clarity, a consistent application of the legislative framework across the Union, new means of payment and a high level of consumer protection in the new Payment Services Directive 2 (PSD2).

PSD2, was adapted by the European Parliament on October 8th 2015 and it replaces PSD1. One key new provision is opening the EU payment market for companies offering consumer or business-oriented payment services based on the access to information about the payment account, the so called “payment initiation services providers” (PISP) and “account information services providers”.

Driven by the possibility of new technologies and the regulatory reforms, payments startups have been seeing considerable momentum, and are on track for 3.8 billion dollars in funding this year. From point-of-sale solutions to money transfers and mobile payments, these startups are changing how electronic payments are made, accepted, and processed.

CB Insights, a a venture capital database and angel investment database company which provides daily real-time information about venture capital and angel  investments, has identified an interesting list of 109 private companies in payments and mapped them according to the nine main categories where they are operating. Several of these companies are so called “Unicorns”, i.e. a company whose valuation has exceeded the somewhat arbitrary value of $1 billion.

The 109 payments startups included are addressing general payments needs as well as a range of payments market niches, including bitcoin-powered payments, mobile commerce, and specialised consumer-focused payment markets. Below is a graph of the companies mapped in the nine categories.

Payment industry

The breakdown is as follows:

  • Online payment services: Startups including Stripe and WePay that help businesses move their payments-processing online and make it more available,  secure, and inexpensive.
  • Billing automation and streamlining: Zuora and Paymentus, among others, streamline invoicing and automate financial processes and billing.
  • Point-of-sale payments: iZettle, Revel Systems and  others offer point-of-sale products and services, including card readers, stands, and digital storefronts. These startups compete with now-public Square in some segments, although Square has put more of an emphasis on small business lending and financial services more recently.
  • Personal payment services: Companies like MobiKwik and Affirm focus on providing consumers with more convenient payment platforms. Some of these companies focus on particular consumer niches.
    Bitcoin payments: Companies like Coinbase and BitPay that use digital currency to make payments faster and more secure.
  • E-commerce payments: Klarna and other startups focus on the e-commerce market with payments solutions geared to the challenges seen by online merchants. Klarna, for example, extends instant credit for online purchases to consumers without them having to provide payment details, easing the friction involved in completing an online transaction.
  • Connected card payments: Companies like Coin and Stratos are betting that all-in-one connected credit cards will be a key link in the payments value chain.
  • Money transfer services: TransferWise and Remitly provide digital solutions for sending money across borders quickly and cheaply.

Head over to CBInsights home page, for a complete list of the companies and their investors.

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7 Ocak 2016 Perşembe

Consulting travel: Red eye home

This image tells a story.  Red eye.  Business class. The good with the bad. 

Welcome to consulting.  Strange life.   

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The Historic Link Between Cities and Innovation

Chicagos loop districtRichard Florida has written an interesting article on The Atlantic CITYLABs website, about The Historic Link Between Cities and Innovation, and we recommend it. As Florida points out, density spurs innovation by pushing people and ideas together, enabling them to combine and recombine in new ways.

As Joseph Schumpeter famously wrote, “Innovation is creative destruction, where entrepreneurs combine existing elements in new ways”.

Follow this link to take a look.

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4 Ocak 2016 Pazartesi

4 Tips to Transition from a Corporate Career to Becoming A Consultant

Hi. It’s Michael Zipursky from ConsultingSuccess.com. Welcome back to the Consulting Corner, where consultants learn how to consistently attract their ideal clients and significantly increase their fees. The first is to go all-in, where you resign from your current job and charge full steam ahead to work on growing your consulting business. I received an […]

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1 Ocak 2016 Cuma

Virtual Reality Comes Through

Virtual realityVirtual Reality has been around for 30 years, but  application have continuously flopped as the technology has not been mature for mainstream use. As with so many other new technologies, breakthrough is about the availability of cheap platforms, and we have this now with smart phones and low-cost computer helmet screens.

With the platform in place, only imagination sets the limit for what disruptive innovations can be launched. It is not virtual reality for games and similar applications which will be the main breakthrough. It will be the technology usage to solve everyday problems and challenges that will make the big impact.

Below is a video about the current state of virtual reality technology, and potential applications.

Virtual Reality Takeover

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