Retrain to do what? The jobs of the future

the jobs of the futureA national government retraining scheme was proposed in July last year to help those workers whose jobs will become obsolete because of Artificial Intelligence (AI) and automation.

Whether it will materialise following the Brexit mayhem and subsequent election remains to be seen.

Research by Oxford Economics has found that 1.7 million manufacturing jobs have been lost to robots worldwide since 2000, including 400,000 in Europe, 260,000 in the US, and 550,000 in China and that a further 20 million manufacturing jobs will be obsolete by 2030 although most of these will be abroad.

There is no doubt that the future world of work, especially, but not only, in the manufacturing sector will look very different.

The drive towards aver more automation may conflict with concerns for the future of the planet and the environment but both will doubtless mean a radical rethink of economies, especially those that are dependent on consumer activity.

Demographics too will play their part as many of the populations of the developed world age and live longer and birth rates decline.

All this has led to an apocalyptic vision of the future by some, such as Aaron Benanav, a researcher in the social sciences at the University of Chicago, who argues that economies have, since the 1970s, been based largely on industrial production, expansion and exporting as their major economic growth engine and that such opportunities for growth are dwindling as more economies mature.

He argues that no other sector than manufacturing has been identified that can replace this out of date growth engine and that “restoring previously prevailing rates of economic growth will prove difficult if not impossible. Unless we find some way to share the work that remains, beggar-thy-neighbour politics really will tear our societies apart”.

Others, however, are more optimistic arguing that we have not even begun to imagine the jobs of the future.

Business Insider is one publication that has had a stab at imagining the jobs that will be needed in the future. Their list includes GPs, Dentists, Plumbers pipefitters & steamfitters, vocational nurses, construction managers, physician assistants, sales reps, secondary school teachers, tractor-trailer truck drivers, computer systems analysts, construction trades supervisors, service sales reps, software developers, and physical therapists to name just a few.

But these are all existing jobs in the world as it currently is. A global digital company, Cognizant, has gone even further and imagined jobs of the future that may be needed. A small sample from their suggestions includes:

Ethical Sourcing Officers for when corporations want to root their decisions on what is ethical and not what is profitable. The ESO will be in charge of production to ensure that every step of the process is in accordance with the ethical values of the shareholders.

Personal Data Brokers, who will make sure their customers are paid by those companies who use their data. This assumes that consumers will have full control over their personal data

Virtual Store Sherpas, will be the online equivalent of the in-store personal shopper, who will guide consumers through the process of selecting the most appropriate and affordable items and organise delivery.

Man-Machine Teaming Managers, whose job will be to “figure out and combine the strengths of man (cognition, judgment, empathy, versatility, etc.) and machine (accuracy, endurance, computation, speed, etc.) to create the most productive worker team possible”.

A brave new world or an apocalypse? Who knows? But there is no doubt that the future is out there!

 

Running a small business is a juggling act

businessj juggling actA YouGov study has found that small business owners identified most strongly with the analogy of a juggling act when asked about running their businesses.

The analogy was strongest in the North West, in Yorkshire and Humberside, where 63 percent in each region compared themselves to jugglers.

Bookkeeping was rated the biggest chore by 27% of the 1000 respondents, while 42 percent of respondents believed central government added to the hassle for small businesses.

As an analogy it makes sense where dropping one ball can cause a knock on effect such as the consequences of not having contingency plans or missed payments or failure to file Tax Returns.

Among the issues identified in an article in The Economist on the same subject is knowing the right time to take certain steps in a business.   In that sense, it argues, the juggling act is a permanent exercise in balancing a variety of trade-offs. Such as holding high stock levels can help avoid the consequences of being let down by suppliers but it ties up working capital.

Knowing the right time to expand is a major issue: “by expanding too fast, companies risk losing control of product quality and messing up their management structure”.

Another is the tension between centralisation and delegation. A hierarchical structure can lead to a rigid and inflexible business structure and a loss of agility, while delegation of roles can only work if staff are well trained and the business has a clearly-defined set of goals with which everyone is familiar and on which they act in harmony.

Another juggling act is created by the tension between sticking with the core products or services and how much you can diversify away from the core.

“Choosing the right time to expand and diversify, and the right organisational structure to do it, is a matter of judgment. That judgment, and the flexibility to change plans, is what makes a good manager.” is the Economist writer’s view.

So how can an effective CEO handle the juggling act?

Firstly, they should learn to delegate effectively. They should not be trying to do everything themselves. However, this means that those to whom tasks are delegated must be well-trained and know the company’s goals and be suitably motivated and trustworthy when left to carry them out.

The effective CEO will always be juggling priorities but there are ways of managing them although this involves being well organised.

It helps to see a business as a system of systems by breaking it down into discrete and manageable sub-systems or processes with delegation and clear lines of communication to keep track of all the various activities.

Planning and managing time have been covered in previous blogs and are essential to ensure balls are not dropped. It is easy to put off tasks which can turn out to bite you on the backside if ignored. Examples of activities that are often put off are: the collection in book debts, paying suppliers, VAT and PAYE, boring things like compliance, insurance, allocating time for staff reviews, and even speaking with customers; indeed there is much to oversee the trick is not to do it all but have systems and processes in place to ensure each necessary activity is done.

Check lists and using management systems can make juggling easier. This might mean having KPIs (Key Performance Indicators), check lists such as one listing all the month-end accounting tasks, a monthly management report that consolidates information from departments including management accounts, an order management system to track the fulfilment and invoicing orders, a way of monitoring sales & marketing activities and their results. There are myriad sub-systems and processes that can make the juggling easier but they all need to be optimised and integrated as part of the overall business.

It is possible to make the juggling act manageable and efficient in a way that frees up the time of the CEO so they can focus on the future of the business giving them time to develop strategy. To work on the business, rather than be bogged down in the business.

Keep it simple – and polite – if you want a response to your email

response to your emailIt can be frustrating trying to get a response to your email but employing some behavioural psychology can help.

Catching and holding the attention of busy people with perpetually flooded in-boxes can be tricky, so the secret if you want someone to both read and respond to your email is to make it easy for them to read and engage.

Firstly, the email should have an appealing, short and clear subject line that captures the imagination and makes the recipient want to find out more b reading it. Indeed, most of us harvest or scan our email inbox and often only check who the sender is and read the subject header.

Once opened the email itself should be short and above all concise in clear simple language. Beware of information overload, the recipient can always come back for more. While you may have several things you want to communicate, the objective is to get a response so you can expand in a follow-up call or email.

Giving something of value to the recipient can also trigger a response. Perhaps by offering an idea, or suggestion relevant to them or their company. Relevance is also key by demonstrating you’ve done some research as we can all spot the ‘bollocks’ of most marketing messages.

Courtesy is also crucial. Research has shown that polite emails with correct spelling generate a better response rate. The sign-off is also important, for example “Thanks in advance” has been found to generate a much higher response rate then “Best wishes”.

Keeping your message short and simple also signals courtesy, that you understand the recipient is a busy person.

Your last paragraph should make it clear what you are asking for and it may be that you can set up further communication even if your recipient doesn’t respond by using phrasing such as “If I don’t hear anything, I’ll assume you’re happy to ….”.

Finally, the time when you send an email may be crucial. If you schedule your email to land in their inbox at the start of the working day, for example, there is a greater likelihood of its being read and of your getting a response.

Using automated scheduling software can also help, so that if you don’t get a response to your email a reminder email a couple of days later can nudge the recipient’s memory.

To summarise, remember the acronym EAST (Easy, Attractive, Social and Timely) no matter if your recipient has the brain of an Einstein. In this context, another acronym also applies, KISS (Keep it Simple, Stupid).

What items are top of businesses’ post-election wish list?

post-election wish listInevitably many promises were made during pre-election campaigning but how many will be delivered and what items are top of businesses’ post-election wish list?

There is no question that there are many urgent domestic issues that need tackling and were “parked” during the on-going wrangling over Britain’s referendum to leave the EU.

However, now that the so-called “party of business” has been returned with a solid majority, perhaps businesses will see some action on the issues that have left them feeling that they were overburdened and struggling to carry a heavy weight with little support.

While many business groups have been calling for the closest possible trade alignment with the EU post-Brexit it will be a year – or more – before the shape of any deal is known.

In the meantime, there are plenty of items on the business post-election wish-list that can be progressed.

Perhaps the biggest and most pressing burden needing attention is a thorough reform of Business Rates.  Of course, the loudest cries for this have come from the retail sector, particularly from High Street retailers, but there is no question that the current levels, and the slow pace with which appeals are addressed, is a heavy burden for many SMEs.

However, the Federation for Small Businesses (FSB) leader Mike Cherry, has warned that it could take up to five years to complete a rates review and reform

Arguably of equal importance is the difficulty many businesses have in finding people with the appropriate skills and this has been impeding growth plans.

While the new Prime Minister has promised an overhaul of immigration policy, this will affect how and who firms can recruit. It remains to be seen how the proposed three-tier points-based system will work.

The idea is to fast track so-called Tier One entrants such as entrepreneurs, investors and people who have won awards in certain fields, and Tier Two people, skilled workers, such as doctors, nurses and other health professionals, who have a confirmed job offer leaving the need for less skilled, people such as for as agriculture and manufacturing as a problem. Essentially Tier Three employers will most likely have to show that they cannot recruit enough people from within the UK before other entrants are allowed into the country which may take some time and leave them with short and medium term staffing shortages.

Indeed business organisations such as the Confederation of British Industry (CBI) have said that the current immigration proposals are vague and impeding businesses’ ability to plan for growing staffing levels.

The final and most pressing issue, on which the Government has promised action and investment is the country’s neglected and in some cases crumbling infrastructure, particularly in areas like the North and Midlands.

Whether improving communications such as road and rail links, or broadband connectivity, it is going to require significant financial investment and given the lack of growth and current weak economy it remains to be seen how much money is in the Chancellor’s pot come the first budget in March.

 

If you want more effective meetings don’t use PowerPoint or bullet points

effective meetingsEffective meetings depend on discussion that is constructive and to the point, and on wasting as little time as possible.

It has been calculated that the average executive spends around 50 percent of his or her time in meetings of which at least a third are useless.

This was the finding of a 3M study carried out by Annenberg school of communications, University of Southern California, Los Angeles, in 1989.

Studying effective meetings has been ongoing for years and certainly since the 1960s and there has been a growing body of evidence to support the 1989 findings, which suggests that executive productivity could be much improved.

There is an assumption that using lists or PowerPoint presentations can result in more effective meetings, but in fact, this has proven to be incorrect, as Amazon CEO @Jeff Bezos and subsequently others have proved.

A couple of years ago Bezos banned the use of PowerPoint and bullet point slides in executive meetings requiring instead that everyone sits silently for about 30 minutes to read a six-page memo that’s narratively structured with real sentences, topic sentences, verbs, and nouns.

Once everyone has finished reading the meeting memo then the topic is discussed. It has proved to be so effective that is has since been adopted by other CEOs.

Why does a narrative structure produce more effective meetings that use of PowerPoint?

Storytelling has been a part of human culture since we first discovered the use of fire. Anthropologists and historians argue that fire encouraged people to congregate by sitting around the campfire swapping stories as a way of teaching, warning, and inspiring others in pre-literate societies.

But there is more to it than that.

To be persuasive, an argument has to appeal to logic and reason, and also to emotion, which neuroscientists have found is the fastest path to the brain.

Bezos is quoted as saying: “”I’m actually a big fan of anecdotes in business,” arguing that often there is greater insight to be gained from customer emails than from data.

Basically, the scientific evidence is that our brains do not respond well to, or retain, lists. Our brains respond much better to text and even more so when the text is accompanied by pictures.

So, it should be no surprise that effective meetings are more likely to result from getting everyone to read a well-constructed narrative memo at the start, which gives everyone attending the same, essential information before any discussion begins.

The result is a much more informed discussion in which more people feel able to participate, rather than those “usual suspects” with the loudest voices.

Not only this, but the narrative memo provides an essential historical record of background and context for those who are not attending the meeting.

Ultimately using narrative rather than bullet point lists and PowerPoint slides will cut down on the time it takes to reach collective decisions, thus saving executive time and improving efficiency.

We should restrict PowerPoint for use as a tool for making a sales pitch and recognise those who use it in a meeting as trying to sell an outcome rather than seek to discuss the topic.

Sector blog – The north of England and the future of the construction industry

construction industryThere is no doubt that the construction industry has been having a torrid time in the last couple of years, especially since the collapse of the contractor Carillion with debts of £1.5bn at the start of 2018.

The most recently published insolvency statistics, for the third quarter of 2019, showed a 55% increase in the number of companies falling into administration, continuing an upward trend that had been going on all year.

There is little doubt that the political uncertainty since the UK voted in June 2016 to leave the EU has been a contributory factor to the industry’s woes, which are compounded by a shortage of people with appropriate skills. The skills shortage in the construction industry and its reliance on labour, often as subcontractors, has for several years been mitigated by the use of EU labour, particularly from Poland, but this, too, has been disrupted in the aftermath of Brexit as attitudes to migrants have become less welcoming.

But there have also been knock-on effects from the collapse of Carillion, which are being attributed to the structure of the industry, where major contractors like Carillion were focused on winning projects and managing them, relying on subcontractors to carry not only the responsibility for doing the work but also for taking the financial risk based on exposure to fixed price contracts and poor payment terms.

Indeed, when they go bust there is little left for creditors which highlights the level of credit risk.

Is the situation for the construction industry about to change?

Now that the Election is over and that the Government has a solid majority, hopefully, it will focus on the many pressing domestic issues that had been overshadowed by Brexit, not least the economic imbalance between various UK regions and London.

Indeed, the Prime Minister has already been warned that unless more attention is paid to the North of England particularly, those voters who lent him their vote, they may well withdraw their support equally quickly if they don’t see tangible investment.

In late December and again this week there were some signs that the message had been received and understood.

The Prime Minister had already promised that their trust in his government would be repaid and both The Times and the BBC were reporting that there was the prospect of changes to Treasury rules coming that would allow more cash to be allocated to projects outside of London and the South East, notably on infrastructure, business development projects and schemes like free ports.

Then, on Tuesday, when March 11th was announced as the date for the Chancellor’s first budget, the predictions of Treasury changes were again emphasised:

“In the intervening two months, the Treasury will have to work up a new National Infrastructure strategy that delivers on the plan to rebalance regional inequalities, some of which stem from decisions made nationally on, for example, transport spending.”

While doubts have been raised about the viability of the proposed HS2 rail project to connect London to the North, said to be likely to cost almost three times more than predicted, should this radical rethinking of Treasury rules come to pass, hopefully it could open up opportunities for the construction industry to work on plenty of other big projects in the North and possibly also the Midlands.

The other area that is likely to benefit the industry is a massive house building initiative. While no policies have been announced, Dominic Cummings’ Alternative Civil Service may light a bonfire under planning restrictions that are often blamed as the impediment to achieving previous governments’ targets. I am also sure we shall see more financial stimulus aimed at new owners, again all initiatives that will benefit the industry irrespective of what happens to the economy.

Starting the day right helps effective leaders to stand out

starting the day Starting the day right can take as little as two minutes and will make a difference to the rest of your day.

Thought leader @Guy Kawasaki recently highlighted one approach on Facebook, the two-minute routine, based on writing down just three simple statements with which you identify:

 

  1. I will let go of ….
  2. I am grateful for ….
  3. I will focus on ….

The idea is that we all wake up with thoughts swimming round in our heads that crop up to distract us, even if they are only in the background, as the day progresses and that to function at our most effective we need to settle and let go of these thoughts.

There are always massive demands on the time of busy executives and so starting the day with a clear mind and focus is important as is scheduling the day and being able to stick to tasks without distraction.

This simple technique also allows you to acknowledge concerns that are on your mind by considering them and then put them in a box so you don’t obsess over them and they don’t intrude when dealing with other matters. This is also a great tactic for dealing with anxiety albeit the subject of previous blogs.

There is no one way to set up your day, it is simply a matter of finding a routine that prepares you for being productive. Indeed writer John Rampton advocates using productivity tips and creating and sticking to an efficient daily schedule. He says, it is more than just simply making lists. It starts with understanding your “Why”, setting priorities and estimating how long the tasks will take.

The result will be that you work smarter, not harder and ultimately accomplish much more.

Rampton quotes the example of Hal Elrod, author of The Miracle Morning, who argues ““How you wake up each day and your morning routine (or lack thereof) dramatically affects your levels of success in every single area of your life. Focused, productive, successful mornings generate focused, productive, successful days.”

For Elrod starting the day right meant waking at 5am each morning to spend time in silence, meditating, reading and exercising.

For others, as in the two-minute example above, the routine for starting the day may be different, but what they all have in common is that they are quiet times alone to focus and help to declutter the mind before the demands of the day begin.

When I was in the army we had something similar referred to as the 6Ps: Prior Preparation and Planning Prevents Piss Poor Performance. Yes it was still called the 6Ps.

 

Key Indicator – Stock Market behaviour predictable or not?

stock market predictionsAt the start of the new decade predicting stock market behaviour is anything but an easy task.

A year ago, the pundits variously predicted that the year-end valuation of the FTSE 100 would be anywhere between 7200 and 8400 points. In the end, at close of business on 31st December it was in the mid-7000s at 7542 below most predictions but it was still a stonking year.

Over the last year, stock market values, including the UK’s FTSE 100 and 250, have risen an astonishing amount to make 2019 one of the strongest years ever, despite a sluggish global and EU economy, US and China trade wars and Brexit uncertainty.

According to the business news two days ago the Dow Jones industrial average has seen  a rise of almost 25% having reached record highs day after day, the broader S&P500 is up 30% and the tech-heavy Nasdaq has grown 40% in value. The FTSE100 in London is also close to its record high, as is the Dax30 in Germany.

In so-called “normal” times the stock markets traditionally go down when the interest rates go up which may explain the stock market values given the unprecedented period of low interest rates set by Central Banks that have done everything they could to support their countries’ weakening economies in their attempt at stimulating growth or more accurately avoiding recession.

But what is “normal” given that some Central Banks including European Central Bank, Japan, Sweden, Denmark and Switzerland have set negative interest rates?

To make predictions more difficult, this has been going on now for more than 10 years, since the 2008 Financial Crisis, and growth/recovery is still pretty sluggish despite the stimulus.

Usually, over a 10-year period there is a natural economic cycle from “boom” to “bust”, but the “bust” has yet to come, and nor is it being predicted. More of the same seems to be the view of most economists.

However a few pundits, notably the economist Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business, argue that the stock markets are far too optimistic, while the business writer Rana Foroohar, author of Don’t Be Evil: The Case Against Big Tech and associate editor at the Financial Times, predicts that the next crash will be brought about by the concentration of power in the hands of big tech companies like Apple, which have built up huge amounts of debt in their quest for power. She says: “Rapid growth in debt levels is historically the best predictor of a crisis.”

So, why have stock market valuations continued to climb?

In my view, two things have driven the value of companies listed on the stock market.

Firstly, businesses have broadly maintained their profitability by reducing overheads through slimming down management and not reinvesting. This has hidden their decline in productivity because profitability has been maintained. I believe that the cutting out of swathes of management has made many businesses extremely lean but left them without scope for responding to growth, with little experience for investing in new technology and for implementing the changes necessary to remain competitive.

Secondly, the numbers of listed companies have declined leaving fewer in which to invest money. Given that investors want to invest in profitable businesses this has meant that the pool of investable companies has also shrunk driving up the value of those that should be part of an investment portfolio. This distortion is likely to encourage a shift from the growth investment strategy preferred by long-term investors to one of value investment preferred by those with a higher appetite for risk. Indeed, picking winners is difficult as those who backed Neil Woodford will attest.

You could argue that UK based companies exporting abroad with foreign investors have benefited from exchange rates problems due to Brexit to make more locally focussed companies more attractive but this should only be part of a value investment strategy and still leaves the long-term investors looking for fundamentally sound businesses.

It’s possible that once Brexit is under way after January 31, there will be a re-rating because the companies that import from abroad have suffered disproportionately.

It will only take the Central Banks raising interest rates to more normal levels for a major stock market crash to become inevitable.

 

The Good Business Charter may be the dawn of a new era

Good Business Charter for new decadeA new form of accreditation launched at the CBI conference in November, the Good Business Charter aims to promote a more responsible way forward for capitalism, business and the economy as the new decade begins.

Businesses can sign up to the new voluntary code, but they will have to provide evidence that they are following the ten principles enshrined in the Good Business Charter.

The Good Business Charter, which is supported by the Confederation of British Industry (CBI), the Trades Union Congress (TUC) and managed by an independent not for profit organisation, has been funded by Julian Richer, the founder of retail chain Richer Sounds.

Early last year Mr Richer handed over control of his company, Richer Sounds, to his employees, transferring 60% of his shares into a trust.

Launching the initiative at the CBI conference, the current Director General, Carolyn Fairbairn, said: “Without successful, responsible, passionate business, creating wealth and opportunity across the country and working in close partnership with government.

“… Business has always been about profit but it’s also been about so much more. It’s about making a difference. Creating jobs, services, products, ideas, opportunities.

“This is a time to talk about and even more importantly — demonstrate – that profit comes with purpose.”

To become accredited, participants in the Good Business Charter Scheme will have to undertake to pay employees the real living wage, give workers a voice in the boardroom, commit to prompt payment of suppliers, treat their customers fairly, agree not to engage in tax avoidance and show efforts to reduce their environmental impact including sourcing materials ethically.

The full list of ten principles can be found on the organisation’s website.

There has been mounting evidence for some time that both customers and investors, not to mention employees, want to see businesses behaving more ethically and in particular paying far greater attention to their environmental impact.

There is no better time for businesses to change their practices than the start of a new decade.

The Good Business Charter offers businesses a way of demonstrating their social responsibility and may be the dawn of a new era.

I wish you a happy new year and good fortune for the coming decade.