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Tacit tech: why the software tsunamis are so attractive to business

Everywhere, the talk is about cloud computing, mobile, social and big data. Their impact is so huge that they have been likened to tsunamis. But has anyone asked why these tsunamis have so much lifting power? Is it just that they are fashionable technologies? Or is it that they actually facilitate the most difficult interactions in business. Welcome to tacit tech.

What’s wrong with this picture?
Best retailer – Apple
Best bank – eBay (PayPal)
Best logistics – Amazon
Best data centre - Google

The enterprise companies who should be winning their segments are being disrupted by new players who are using technology in different ways to the incumbents.

That is certainly the perspective of Vinnie Mirchandani in his book, The New Technology Elite: “The more I analysed operations of Apple, Google, Facebook, Amazon, Twitter and eBay – their data centres, distribution centres, retail stores, application ecosystems, global supply chains – the more impressed I was with the industrialisation of their technology. They are considered “consumer” tech, but they have better technology on a greater scale than most enterprises.”

But the flip side also applies.

Six ways we are forcing the poor to remain poor

New data from the World Bank finds that poverty fell in every region of the world between 2005-08, the first time this has happened. Might this point to a future without poverty? I am afraid not. Here are six reasons why.

On February's leap day, the Economist had some good news to report: for the first time ever, poverty had fallen in every region of the world, according to World Bank data from 2005-08. Half of the decline is attributable to the economic engine that is China.  But the amazing story is that even Africa made a contribution: in 2008, for the first time ever, less than half of all Africans came in below the poverty line. 

Let's face it. The poverty line is marked out at $1.25 per day (in 2005 prices), so a very large number of people north of it are still in grinding poverty. But the numbers point to change, although the economic crisis and food price spike that followed 2008 might reverse the trend again. Hope not.

Still, with the number in poverty falling across all regions of the world, is it possible that we might one day banish poverty? It is with deep regret that I have to say No. It was none other than Jesus Christ who said that the poor will always be with us. So who am I to stand against that view?  But whether you put your trust in Jesus or the World Bank, there are six things that the global rich (if you can read this blog, you're included) are doing that will ensure the poor will always remain poor. 

The case for a new corporate reporting model

Company reports often fail to take into account the key issues that are now crucial for future business success, write Cary Krosinsky & Jyoti Banerjee.

Today's corporate reporting model is no longer fit for purpose. It is dominated by a compliance mindset, with an inordinate focus on technical matters rather than the strategy of the business. It is so separated from internal reporting that boards are unable to engage with it for their own work and the accompanying governance model is more about lists and tick-boxes, according to Paul Druckman, chief executive of the International Integrated Reporting Committee (IIRC), which is tasked with creating the integrated reporting framework.

At the same time, increasing numbers of investors are concerned about the risks to their portfolios from sustainability factors. These include environmental issues, starkly illustrated by the Gulf of Mexico oil leak’s impact on BP and the current woes of Tepco, operator of the earthquake and tsunami-hit Fukushima nuclear plant. Elsewhere, governance questions have had serious impacts on companies such as the now-defunct investment bank Bear Stearns and scandal-hit forestry group Sino Forest, while social risks have caused companies such as Apple to suddenly feel compelled to publish their complete lists of suppliers.

“Currently there is sole focus on the financial aspects of a business, both in reporting and in investment methods,” says the IIRC’s Druckman. “There is a lack of strategic focus in corporate reporting, even though boards and investors are strategic in their own thinking and activities – clearly, the current reporting model serves neither.” Investors plough on without information Yet despite being not fit for purpose, corporate reporting is not holding back investors. How could it when some 60 per cent of financial trades in the US are made by computers, according to Leon Kamhi, executive director of the fund manager Hermes. It seems unlikely that these trades are made with reference to what the annual reports of the companies involved are saying. This prompts Ralf Frank, head of DVFA, the society of investment professionals in Germany, to ask "Who reads financial reports in this day of Bloomberg terminals?"

A policy-maker's guide to mid-sized business

Mid-size business is going to be big news over the next few weeks, led by its (widely expected) coverage as a significant plank of Chancellor Osborne's November 29 Growth Review. I was asked (in my capacity as co-founder of M Institute) to present to an audience of policy-makers at the Department of Business, Innovation and Skills (BIS). Here's a note on my presentation.

My presentation focused on some basic truths about medium enterprises (or mid-sized businesses, or MSBs, as they are increasingly being referred to):

The mid-sized bandwagon rolls on as UK Growth Review focuses on medium enterprise

Medium enterprises are suddenly getting a lot of attention, here in the UK as well as in other parts of the world. M Institute co-founder Jyoti Banerjee lays out some home truths about midsized business that should not be forgotten as new players jump on to the medium enterprise bandwagon. 

I have taken part in more meetings about medium enterprises in the last two months than across the previous three years. These meetings cover government departments, membership organisations, academics, researchers, event organisers and business people.  

It looks like medium enterprise, the long-hidden secret of economic growth in western economies, is not going to be hidden any more. In fact, it is going to come leaping out into the open, particularly once the UK government announces its Growth Review in the autumn, which focuses on the opportunities in the medium business segment. 

Thanks in part to its inclusion in the Growth Review, medium enterprise is suddenly hot property among all the agencies that want to influence policy thinking in the UK. Who does not want to know best, and to be seen to know best, when the policy-makers ask for help.

But it is not just the UK where this is happening. In the next few weeks, M Institute will be announcing partnerships with international organisations that want to play roles in reaching medium enterprises, and enhancing their performance. One is based in Australia and the other one is global. 

So the medium enterprise contagion is spreading. And that is a good thing, from my perspective. In fact, as I reflect on all the newbies jumping on to what has essentially been our very own bandwagon, I can quote Mr James Brown directly and say, "I feel good." When we set up M Institute (my colleague Paul Druckman is co-founder), we did so because we felt that the power, stability and growth that medium enterprises bring to an economy are largely hidden because people failed to distinguish medium business from SMEs.  Now that everybody else is getting involved, we can feel vindicated. 

But, and there's a big but here, I would like to reiterate what we have learned over the last five years or so of delving into medium enterprise because we see some common errors being made in people's understanding of midsized business. Some of the home truths about medium enterprise are easily missed, especially to people coming in from the cold. So, for the benefit of all, here are some things that we recommend all the new players in medium business pay attention to.

Stern wants sterner action on climate change

Nicholas Stern, author of the Stern Review, says his views on climate change have intensifiedover the five years since the publication of his impactful study. In an interview with Technology Review, Stern lays out some key thoughts that every person concerned about the impact of climate change on business needs to take account of:

• It is unreasonable to overlay climate change models on growth scenarios. Climate change so changes the growth story it could radically reverse growth over the next 50-100 years. That would reverse development and potentially force the displacement of hundredsd of millions or even billions of people.
• Businesses are now all looking at a carbon-constrained world - this lowers their risk.
• Though carbon pricing has failed to get going in the US, it will get there in the end because there is no choice
• Although lo-carbon technology has moved faster than Stern anticipated, entrepreneurship will not be enough to deliver the result needed - we need smart policies too.
• The Stern Review has failed to convince people that there is a sense of urgency about acting now. IF we wait 5-10 years to act, it will be even more diffficult then.
• China has been remarkably proactive in its decision-making. China's leaders expect to invest about half a trillion dollars a year into each of three industries: renewables, energy efficiency and clean tech. This is because they see China as extremely vulnerable in climate change, but also because they see the growth stories in the future.
• The science of climate change looks more worrying than it did five years ago. There were some nasty feedback loops that got left out of the initial publication because they were difficult to model. However, some of these drivers seem to bigger and faster, and therefore more worrisome.

Plenty here for every risk manager, business strategist and policy-maker to devour.

Note: This article was first published on the Fronesys Facebook site: http://fb.me/CqsIeJF8.