Selling time or selling outcomes?

September 19th, 2015

We say: “The agency model of maximising billings is fundamentally misaligned with client objectives and over time will fail. Defining outcomes and incentivising teams to make them real is the only way forward.”

In the traditional agency model, the agency hires talent and bills it out to the client. Crudely, they buy time from their workers and sell it on at a margin. The more brilliant the talent, the bigger the price tag. The more time they sell, the more they gross.

Put simply the business model goes like this:
REVENUE (Bodies billed x day rates x days)
-[MINUS] (Cost of bodies x day rates x days)
-[MINUS] (Cost of overheads)

So the fundamental raison d’etre of an agency is to sell more time. Its doesn’t take a genius to see how this leads to direct conflict with the client’s aim.

Any client with half a brain wants the problem solved in the shortest possible time at the lowest possible cost. The agency wants to sell as much time as possible.

We believe there is another model.

In this age, consultants, advisors and agencies must be 100% aligned with client’s needs. So here’s our approach.

1. Uncover Problems. Find out what the real needs are – chances are they are rarely those we are called in to deal with.

2. Define Outcomes. Working together to help clients express their desired outcome is the next step. It’s this, not the number of bodies or man hours, which delivers value.

3. Incentivise Success. We agree to be incentivised on the successful achievement of those outcomes. Crucially, this might be achieving a specific goal within a specific time. If you win, we win.

Moving from deliverables to outcomes requires belief, faith, and the will to face down procurement teams. But ultimately, we believe this “skin in the game” approach is the most effective way to of delivering lasting, tangible value.

HealthTech meet Fintech – Jawbone Up4 with Amex Payments

July 8th, 2015

When two already disrupted industries meet:

Jawbone’s Up4 comes with built in payments from American Express

NOW it gets interesting. Is #HealthTech disrupting #Fintech here?NewImage

Falling Cats, Black Swans and The Perils of Believing Your Own Hype

June 26th, 2015

We say:

“Our brains are trained to ignore the evidence we can not see. This bias has huge implications for your business.”

This post is adapted from a keynote presentation made by Dominic Pride to D:Health’s Partnering and Opportunity in Digital Health Conference June 9. The Slideshare is here

As I move deeper into life sciences and consulting to health organisations, I’m often challenged on how my experience in music and digital services qualifies me to talk about anything to do with patients.

This onslaught usually gets a double-barrelled response. Firstly, my colleagues and I bring the digital service expertise, not the medical knowledge. Secondly, working with music has allowed me to witness first hand what happens to the canary in the coal mine of digital disruption.

And while every medic has a horror story from their early days in A&E, we’ve seen some very different kinds of casualties along the way. Here ‘s a picture of the place where I came from – the music business. And you don’t have to be a domain expert to tell just how well this particular patient is doing from the chart.

This graph shows US recorded music sales around the turn of the century. It was a story pretty much repeated worldwide and as you can see, this patient has been in terminal decline since Napster arrived on the scene in 1999.
150609 TheSoundHorizon DHealth 03Flat 007
Peer-to-peer file sharing was the single biggest shock to the system that this business had seen in the 100 years since Edison invented the phonograph. It was more disruptive than any other technology which had been used by the business. Today, many executives are still in denial about what happened to their product-based business when digital turned up.

150609 TheSoundHorizon DHealth 03Flat 008The arrival of this disruptive technology was unexpected and catastrophic. It was in fact a classic black swan event.

150609 TheSoundHorizon DHealth 03Flat 009It was the Scottish thinker David Hume who first addressed the challenge of the Black Swan. You can see his exact words are in the illustration here, but to paraphrase his 18th century English, “just because all swans you’ve seen are white, that doesn’t mean that black swans don’t exist.”

This idea of the random, unseen, rare yet possible occurrence was developed and popularised more recently by Nasim Nicholas Taleb in his 2008 book The Black Swan. Taleb looked at the impact of these events on global financial markets and how most were blind to the possibility of

150609 TheSoundHorizon DHealth 03Flat 010We can summarise his conclusions as “just because rare events haven’t happened yet, that doesn’t mean they’re not possible.”

150609 TheSoundHorizon DHealth 03Flat 011Taleb lays out quite clearly why Black Swan events have such a catastrophic impact. It ‘s not the frequency of these events which is important. It’s the magnitude of the outcome.

Yet as humans we heavily discount the possibility of a black swan existing because we have not yet seen one.

Our minds are biased towards what we know and experience, and we discount what we have not experienced.

The effect of these biases features heavily in Taleb’s second book, Fooled by Randomness.

In this,he argues that the stock market traders who remain in position are not necessarily successful because of skill or judgement. They are as lucky as the single ape from the infinite pool of typing monkeys who just happens to clatter out an exact replica of Homer’s Ilead.

150609 TheSoundHorizon DHealth 03Flat 012They are, he argues, Acute Lucky Randomness Fools. These people have survived simply because their trading style happens to have fitted the bent of the market, not through any superior skill or judgment.

In fact, their continued presence in the market represents no more than survivorship bias in action.

What do we mean by survivorship bias, , it’s the the logical error of concentrating on the people or things that “survived” and overlooking those that didn’t because they are no longer visible.

Let me explain the concept with an example. If you’re a cat lover, skip a couple of paragraphs.

150609 TheSoundHorizon DHealth 03Flat 013A study in 1987 found that cats who fall from less than six stories, and are still alive, have greater injuries than cats who fall from higher than six stories. The theory is that cats reach terminal velocity after righting themselves at about five stories, and after this point they relax.

So the higher falling cats have less severe injuries. On the basis of evidene in front of us, it’s simple.

Yet this is a classic case of survivorship bias in action. The cats surveyed are the ones who sustained injuries and survived. Cats which die in falls are unlikely to turn up in a vet’s surgery, so the cats killed in falls from even higher buildings didn’t even show up in the study.

Let’s think about that for a minute. The fact that a cat, or a trader, or a digital health startup makes it through to the statistics means that they’ve survived to be counted and noticed. The ones who didn’t make it aren’t seen or counted.

This is a clear and evident cognitive bias in the way we see things. Our minds are trained to deal with only the information in front of us, and not what we don’t see.

So why is this blindness dangerous ?

Firstly, survivorship bias can lead to over-optimism because we ignore the failure which we can not see.

Worse still, it can also lead to the false belief that the successes in a particular group can be assigned to some special property rather than just good fortune like our lucky chimp in the typing pool who happened to bang out a classic.

This leads us to look for patterns and traits – maybe an upbringing, an exercise regime or process – which we believe can be extracted and used to our benefit.

150609 TheSoundHorizon DHealth 03Flat 014In doing so we make the common mistake of confusing causation and correlation.

But being neither stock market traders or leaping cats, what does all this mean for everyone in digital health, or in any business today?

It means first of all that when looking at success – whether your own or someone else’s – be aware that there’s an inherent bias present in the way you are looking at the evidence. Like the cats that didn’t survive the fall, the traders who blew up and are now insurance salesmen, the digital health companies who didn’t make it are, by default, not present in the market.

Secondly, the fact that you have been successful so far does not equip you to be successful in the future. Dominant market share and powerful distribution did not equip the leading record companies to deal with Napster.

In digital health we have no excuse. What’s happening to health provision is less random and more predictable than a run on the currency or Napster turning up.

With 16 years of hindsight, we can predict with certainty that digital disruption, which appeared as a black swan event in the music business is going to directly impact health. Quite how, remains to be seen, but it is no longer unexpected.

150609 TheSoundHorizon DHealth 03Flat 015Better still, we can learn from other industries which believed that their success was assured by their ownership of some unique asset such as content, real estate or banking licences. Music was disrupted by Napster then transformed by iTunes and then Spotify. Taxi drivers worldwide are up in arms about Uber, while AirBnB disrupts the accommodation industry. Peer to Peer Lending is disrupting anyone with a banking license. Healthcare will be no different.

So being around in one year or five years time might be less to do with what’s made us successful so far, and more to do with how we are planning to address the uncertainty of the future.

Taleb has some good news for people like us; “The things that come with little help from luck are more resistant to randomness.”

As an organisation you can make your own luck, and set yourself up to be resilient to so called unforeseen events by introducing some behavioural paradigms:
150609 TheSoundHorizon DHealth 03Flat 016

*First of all as we’re doing today partnering, learning and sharing success and failure

*Experience failure by encouraging it internally. Find a sandboxed way to get your own failure in house, acknowledge, confront and learn from it.

*Crucially, above all, don’t ever be prone to the cognitive bias and assume your past performance will guarantee your future success.

In short, we’re all out there pitching and selling. But don’t for one second believe the power of your own hype.

Innovation Hub or a Glimpse of Banking’s Future?

May 21st, 2015

We say:

“For innovation to flourish in a corporate, it requires a delicate combination of access, protection and empowerment. Barclays is setting the right conditions.”

How Barclays London Accelerator is plugging FinTech startups into its mainstream business

What is there to link these three diverse business challenges?

*authenticating diamonds
*sharing virtual construction plans
*anticipating quantum computing-powered fraud

On the face of it, not much.

Yet when you take startups who are working away at these problems, co-locate them with seven other entrepreneurs who are finding and exploiting particular niches, add a global banking player, and throw in a leading accelerator ecosystem to the mix, it becomes a lot clearer.

Blocktrace, Basestone and Postquantum are three of the ten startups on the current Barclays London Accelerator programme who are addressing those challenges. The programme is housed in Mile End, east London, somewhere between the throng of Tech City and Barclays HQ in Canary Wharf. It’s co-manged by Techstars, who provide both VC-backed funding and mentorship from VCs as well as retail and finch entrepreneurs, design and product experts.

Beyond Banking

The diversity of the problems the startups are solving is striking – as is the ambition behind the companies being accelerated.

And once you put these ten together, they begin to build a picture of what the future of a bank might look like in the future.
Ten FinTech Startups find a home for 13 weeks
Rather than a monolithic institution, you get a glimpse of a bank becoming a platform, enabling access to customers and transactions with third parties empowered to provide innovative B2B and B2C services via APIs and marketing collaboration. The bank’s divisions span retail personal and corporate banking, wealth management, card services and investment, enabling a wide range of use cases to be enabled.

Barclays is certainly not playing it safe with its choice of startups. “Our aim is to attract most disruptive and innovative services” says Baljit Bamrah, Director of Partnerships for Barclays. “We want them to change the game with us.” It’s impressive that three out of the current out of 10 are using Bitcoin and Blockchain, which many traditional banks and exchanges are regarding as a potential threat to their existence.

Access, Story and Traction

The accelerator may be housed at a reassuring distance from the corporate mothership, but the startups get access to relevant teams at Barclays, including C-Suite and domain experts. As well as people, the startups have preferential access to a suite of Barclays APIs, enabling them to build on key banking and trading functions. Greg Rogers, Managing Director of TechStars, says this is a vital component of the mix: “They get mentorship from Barclays and also other successful FinTech company CEOs. They get traction with Barclays which is a huge differentiator. And they get the story, which means telling it in a succinct fashion.”

Startups are accelerated for a 13-week period, and this is the second cohort. Previous alumni include financial wellbeing service Squirrel , credit scoring service Aire and predictive analytics platform Market IQ. The London Accelerator takes startups from anywhere – the current crop includes homegrown startups as well as entrants from Stockholm, San Francisco and New York. Competition is fierce and the number applying speaks volumes about the number of FinTech startups. No less than 550 startups applied in cohort, which was whittled down to 60 and then the final 10.

Plugging into the HQ

It would be easy to dismiss programmes such as the Accelerator as a CSR box-ticking exercise. However, it’s clear that the degree of access the startups appear to be getting and the evident synergies can add clear value to Barclays divisions. Basestone, for example is drastically reducing risk in the construction arena and has a clear value to the insurance and real estate sectors.

At a recent showcase co-hosted by the Mobile Ecosystem Forum, nine out of the 10 startups were present to be able to tell their story in a snappy way and clearly articulate the problem being solved.

Below are the full 10 and a little about the solutions to problems they’ve uncovered. You can read more at the MEF Minute.

Basestone Tablet and web-based collaboration tool for the construction industry. Its founders come from the drawing review industry and were approached by HS2, the UK’s High Speed Rail link being built, and have now moved onto London’s east / west link Crossrail.

Everledger Everledger aims to bring trust & transparently to the worldwide diamond industry where certificates are open to forgery. The platform writes to Blockchain to provide an immutable ledger for diamond identification and transaction verification.

Godesic The founders of Godesic were frustrated by the limitations of delivering large scale projects such as the UK launch of 4G mobile with desktop tools. The company provides project management software for minute-by-minute tracking of transition into operations for large IT programmes, something which has a direct value for Barclays.

LiquidLandscape addresses the challenge of traders being deluged with data and overloaded at the time that critical decisions are made. This company provides “instant replay” for trading, and data visualization engine for creating linked, immersive data exploration environments with live time series data – in 2D, 3D, and VR.

With Origin, Barclays is truly looking to disrupt itself – the founders want to disrupt investment banking by transforming the banks’ involvement in the bond issue process. Origin is a “Lending Club” for large corporations and institutional investors, using technology to facilitate corporate debt issuance.

PQSolutions. The advent of quantum computing to banking operations will create a step change in processing. It will also open up new horizons in fraud. Founder Anderson Cheng is anticipating this world, and Post-Quantum provides cyber security solutions using innovative encryption and authentication techniques to counter quantum computer attacks.

CEO Martin Sweeney and two other of the founders of Ravelin worked at taxi upstart app Hailo and were able to identify the potential for fraud using stolen credit card data. Their solution combines data science and machine learning with a merchant’s fraud profile to deliver pin-point accurate online fraud detection.

Safello The ambition of this startup aims to bridge the 2.2 billion worldwide who hold bank accounts with the 2.7billion unbanked via Bitcoin. The solution is a Europe-focused Bitcoin exchange with plans to expand into Bitcoin payments.

Stockfuse addresses a key recruitment challenge for banks and is aiming to bypass or augment the process of using resumés / cvs. With this gaming platform which uses live stock data, users and potential trading candidates can demonstrate their actual ability to trade the markets.

See also: MEF Minute: The startups of tomorrow.

10 Things you need to know about Barclays Accelerator

For startups and innovators, time can never be money

May 6th, 2015

“Hurry up. Time is money!” We hear the phrase so often in business that we believe it must be true. 

It’s been accepted as true since the industrial revolution transformed work. Until then, in the agrarian economy, work was done when the field was ploughed or the corn was gathered.  Working time was recognised and transacted, but also was bound up with societal and communal obligations.

Does not equal

From the 18th Century, thanks to clockmaker John Harrison, we could effectively measure time, so in the 19th century, industrialists could then pay workers by the hours that they were now able to accurately measure and control. So time became money.

Fast forward to the 21st century and if you’re paying – or being paid – by the hour, then time still equates money. We only have to look at the predictable headlines in the wake of every snowstorm or flood,  bemoaning the loss of productivity measured in millions or billions of pounds or dollars. Lost time equals lost money.

We are in the Connection Economy

Yet if we believe marketing guru Seth Godin, we are now moving into the connection economy, a post-industrial era when thanks to the internet and the economics of abundance, success is determined by creating  unique offerings and connecting with as many people as possible. Being first to create the new thing is of paramount importance, whether it’s Humans of New York or Uber. 
If you’re a startup, an innovator or entrepreneur you’re in that connection economy. You’re in the business of creating something new and connecting. For you, time is not and never can be money – it’s something much more precious.

In his book The Lean Startup, Eric Ries describes a startup as “an organization dedicated to creating something new under conditions of extreme uncertainty.”  The goal for a startup (whether inside a FTSE 100 company or a garage) is to validate that the market exists for a particular service, and the objective is to gain as much validated learning as quickly as possible.

You can’t buy lost opportunity like overtime

So for startups, every hour is a race against time to define and own their niche, and to uncover more about customer needs which are not yet known. Coming second can be catastrophic, and the cost of lost time and delay is far greater than the man hours spent on the team going in the wrong direction. Time lost can never be recovered or made up by buying overtime.

Money is a convenient method of measuring the worth of goods and services. Money flows two ways – a credit here will always equals a debit there.  Transfers of funds go into and out of accounts, lost money can be borrowed and an empty account filled again with funds begged, borrowed or even stolen.

By contrast, time only ever flows one way.  Once the hour, day or month is spent it’s gone forever and can’t be recharged in the same way that a bank account or a mobile top-up can.

Lose the industrial mindset

For entrepreneurs and startups it’s imperative to lose the industrial mindset and ditch the time=money equation.  The goal of a production line is to produce high-quality products at scale. The goal of a startup is to establish product / market fit and do it in the shortest possible time.

Yes, time is valuable and yes, people cost money. But lost time means lost opportunity cost, something which can never be bought back. So if innovation is your business, time can never be money. It’s far more valuable that that.

Image: © Stepan Popov |