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Posted by Tom Cheesewright on

Outsourcing: why it works

Why do companies choose to outsource? Or more importantly, when? What’s the motivation for outsourcing? The trigger?

The usual answer, it seems, is cost. Company leaders believe they can achieve the same ends for less money. In an ideal world, they test this belief before the decision is made. Then the relationship between supplier and customer is codified in a contract. ‘We will get X for Y by Z’.

Now imagine having that contractual relationship in place for every function of your business. Not as a step to outsourcing. But as a means to better understand your business. You don’t need to spend millions on lawyers and contracts. You don’t even need to spend thousands on consultants. Just spend some time understanding the inputs, outputs, and expectations for every function of your business.

In my experience, very few organisations go through this exercise with any frequency. The worst offenders are profitable companies with happy, long-serving staff. They sound like great places to work. But in these places, people rarely ask difficult questions.

This lack of clarity has three effects.

1. Poor value measurement

If you don’t know the inputs and outputs of each function, it’s hard to understand how value flows through your business. For example, properly matching sale prices to input costs. This is particularly challenging in service businesses, or businesses with a blended product/service model.

2. Misalignment of goals

I don’t believe that everyone in even a medium-sized company can be aligned with the same goals. Without the constant reinforcement of day-to-day reality, goals are just words. Each business function needs to operate to a goal that is coherent with the organisation’s goal. And each function’s goal needs relevant metrics in place against which its success can be measured.

3. Lack of agility

Changing a function you don’t understand is hard. Understand your business functions and their interactions, and you can reorganise them more quickly as your business changes. Or, if it makes sense, outsource.

Outsourcing works, even when it doesn’t ultimately deliver value, because there is clarity in the relationship. Because inputs and outputs are understood. Because metrics are defined.

There are a lot of costs involved in outsourcing. A lot of friction in the contractual relationship between supplier and customer. Before you consider outsourcing, before you even start looking at your costs and seeking savings, consider how well you understand the interfaces between the functions of your business.


Posted by Tom Cheesewright on

The best strategy? Not either, but all

Alphabet (the business formerly known as Google) has become infamous for its project culls. Shiny programmes that look from outside like enviably serious businesses, either stripped back or canned altogether. Its drone programme, Project Wing, seems to be the latest (Bloomberg via Benedict Evans’s newsletter). Evans suggests that following a spread of bets across potential game-changers, Google knows now that machine learning is the future and so it can double down on that*.

But that doesn’t mean that the other bets Google made, and has pulled back from, couldn’t be serious businesses in their own right. Someone is going to make a lot of money selling (or perhaps leasing and operating) delivery drones. As the Motorola Moto Z I’m currently testing ably demonstrates, modular smartphones may be viable, despite the death of Project Ara.

Google may have selected the best opportunities. But the others are still opportunities.

Second Place is Great

I’m doing a little piece on local radio this morning about the death — or otherwise of the DVD. A well-loved film store in Kent is apparently closing because of lack of demand. It’s no great surprise: sales of video discs have halved in the UK since 2008 according to IHS. That’s a tough market in which to sustain a small business when you’re likely being undercut by the nearest supermarkets, and outsold by the internet.

But I’ll be arguing that the DVD won’t go away. Not for a long time at least. It will be diminished: digital streaming will take the lion’s share of film sales. But there will be a hard core clinging on, for whatever reason. Like the US prisons, highlighted recently by 99% Invisible, that still use cassette tapes.

In our globally connected, diverse market, even the smallest opportunities can be significant.

This or That? Both

This reality doesn’t offer the sort of certainties people like.

“Is the answer A or B?”

“Well it’s about 40% A, 25% B and have you considered C and D?”

But in all spheres of our life we are going to be experiencing, and taking, more choices.

That includes our working environments, something I’ve been looking at again recently due to some engagements in the property sector. Thanks to the Workfit-T from Ergotron I’m currently testing for The Loadout, I now spend some of my day standing, and some of it sat. Like most people my days are also divided between working in the office (less) and working remotely (more). A mixture of my kitchen island, coffee shops, conference centres, hotels, railways, airports and other people’s offices. There are not going to be office workers and remote workers — especially since the office-bound jobs are the most likely to be automated. We will all be on the move.

Hedging Bets

The best strategy in this diverse and complex environment is to embrace as many good options as your resources allow. This doesn’t mean chasing every avenue. It means selecting the best opportunities early, experimenting, and learning to cull when you’ve learned what you need to learn. It means adapting when new opportunities you hadn’t considered become available, even if the idea wasn’t yours. And it means learning to be comfortable with complexity and some level of disorder. This is not easy for us as a species: we like to put things in boxes and draw dividing lines: this OR that, not this, that and the other.

In business we can only afford to support this complexity if the interfaces between us and our many choices are low-friction. Small opportunities can be made unviable if the cost of addressing them is too high.

Inside a company this is often about measurement and decision-making: so much energy is expended in making decisions that there is too little left for the practical experiments that might inform them.

At the borders of the business, friction is often the difference between being able to pursue lots of opportunities and having to make a few big bets.

Lower your friction and your business can be much more secure.

*This would be consistent with Google’s continued investment in human computer interaction technologies that can increase the bandwidth of the input and output of data from these learning systems.

Posted by Tom Cheesewright on

Engaging tomorrow’s influencers

Like many industries, print media was slow to adapt to the realities of the internet age. Even now many of the giants of the media world are wrestling with fundamental issues about how to remain profitable and competitive: income streams, distribution channels, reader relationships, content quality, and volume.

There are success stories. New firms who have understood what the new world means and built a business on it. But even they, lean, multi-channel, and socially-distributed, feel like interim steps. Iterations of what went before, not fully realised examples of what will be.

Exploding the media business

Imagine a magazine or newspaper business fully exploded into its component parts: information gathering, verification, content synthesis, quality control, curation, and distribution. Plus of course, the vital function of income generation. Now consider, each of those functions as a standalone function:

  • Information gathering: The internet brings us text, video, audio and documents from almost every corner of the earth.
  • Verification: Imagine an algorithm that could parse information and assess its validity based on the history of that source and corroboration. Imagine every meme that hits your inbox with a trust rating.
  • Synthesis: Every human being in the developed world now has the tools to produce content, and if they lack the skills, they can access endless education materials to improve them.
  • Quality control: Tools like Grammarly are getting ever smarter about telling us how to write well
  • Curation: Tools like Feedly and Flipboard have been allowing us to curate our own newspapers for a while now. Tools like Buffer streamline and even automate the curation of our own news feeds.
  • Distribution: solved by open publishing platforms, search, and social engines
  • Income: programmatic advertising and paywalls with ever-lower friction

The super-influencer

Now consider how many people might be required to build a media empire in a semi-automated future leveraging these tools. We already have super-powered YouTubers, most of whom leverage other channels. Take them to the next level: multi-channel media moguls with the clout to spur sales and shape markets.

Today the YouTubers typically parlay their success into engagement with more traditional media and brands hungry for the association. But it’s easy to foresee a time when these influencers are the media. When newspaper brands are just aggregations of the best bloggers on a shared political platform. When the radio-to-podcast path is fully reversed and radio just becomes the curation of podcasts.

Engaging tomorrow’s media

This has huge implications for an industry I’m looking at now for a potential project: PR. Most PR agencies also missed the digital transition. Many are still reliant on their relationships with the traditional media for their income. Few know how to value non-traditional influencers, let alone engage with them. I know this because, on a small scale, I am one. Take, for example, the rash of emails I received on Monday offering me comment off the back of a BBC Breakfast story about ransomware. None of them seemed to notice (and they certainly didn’t reference) that I was the expert interviewed for the story, despite the BBC sharing video of me across social channels alongside the TV appearance.

As our diversity principle* suggests, the future of the media is not only these super-influencers: it will be an increasingly diverse space. But that only complicates the picture for both the brands trying to survive today and the businesses trying to engage with them tomorrow.

Now is the time to start thinking.

*Read the Applied Futurist’s Manifesto to understand our Five Vectors of Change

Posted by Tom Cheesewright on

The coming of the post-screen age

Screens are a seriously limited form of interaction between us and our digital worlds. Communicating via a screen is like a novice eating with chopsticks: not very efficient.There is just a very small number of pixels with which to communicate, either capturing your touch or returning information via the image. Compare this to the majesty of the physical environment and its 360 degree canvas of sounds, smells, and sensations on your skin. This is why I have long been a believer* that the screen has a limited lifespan as the primary component in our digital interactions. The post-screen age is coming.

We hear a lot about ‘big data’. And about the increasing speeds with which data can be delivered to our devices: ‘superfast broadband’, 4G, fibre. We hear little about the speed with which we can consume and process data. Part of the answer to this comes in improvements in the device’s capabilities, and part of it comes from improvements in the user interface design. But fundamentally we will always be limited if we stick to the screen as the primary means of consuming and interacting with data.

In a post-screen world we use a rich array of sensors combined with machine learning to accurately interpret what they are saying, and foretell what it is we might want before we even ask for it. Control input and feedback comes from a new range of touch technologies, combined with sound, voice and more visually integrated design features. Examples: the Lechal Pods that I’ve been testing that give satnav directions by vibrating under your left or right foot at appropriate moments. Or the Withings Activité Pop that displays your steps walked with a simple dial rather than a flashy digital screen.

Google and others have long been working on mid-air touch technologies, using radar to expand the canvas of the touch screen and give us new interaction opportunities. Wired reported a few days ago on a UK company looking to return information using directed sound waves to create the sensation of touch on the fingers.

*See ‘Emerging from the Colossal Cave’ and ‘Through the Looking Glass: Tomorrow’s Office in the Post-Screen Age

Posted by Tom Cheesewright on

What do you want to be when you grow up?

What do you want to be when you grow up? Fifty years ago the answer to that question may have been singular. Astronaut. Doctor. Ballet dancer. Footballer. Train driver. One, lifelong ambition and career.

My eldest wants to be a scientist, a children’s book author and prime minister. She is on the right lines.

We have known for some time that the 40-year, single-employer career was dead. That’s just not the way the world works anymore. But it’s increasingly clear that the model that replaced it, bouncing every two or three years between employers to climb the corporate ladder, is equally dead. For a number of reasons.

The reality for today’s school leavers is that whatever career they enter first simply may not exist in just five years time. Train drivers? What are they, my grandchildren will ask. My great grandchildren may be equally baffled by doctors, lawyers, accountants, bankers.

If you want to keep working, you’re going to have to learn to do something else and learn often.

For employers too the world is changing. The increasingly short, cyclical nature of success means that the need for people, even of the highest calibre, is likewise cyclical. Margins and risk may not allow the maintenance of their employment while the business adapts and finds a new role for employees. So they may be released and re-hired when the time is right.

What do people do when this happens? They do something else. Perhaps for themselves.

The future career will likely not just be a series of increasingly short hops between employers. It will be a dizzying blend of concurrent engagements with an array of employers seeking your skills at the appropriate point in their life cycle. It will be overlaid with owned micro-enterprises: content creation and curation and promotion. Hyper-local services. It might be supplemented with participation in community mutual schemes for care, crop growing and local maintenance.

The downside is that none of this will be easy.

The upside: you no longer have to choose between scientist, author and prime minister. Maybe you can be all three.

Maybe you will need to be.

Posted by Tom Cheesewright on

Only co-operation secures the future

The chancellor announced a £1.9bn investment in internet security measures yesterday. Or at least announced how that allocation was to be spent. It looks to be pretty thinly spread across a range of measures: securing critical infrastructure, funding innovation, recruiting new criminal investigators.

Put simply, it’s not enough. But then, could it ever be?

The big challenge in cybersecurity is balancing the risk/reward ratio closer to somewhere like the physical world. Imagine trying to commit some of the most famous internet attacks and crimes in person and you are instantly into Hollywood territory. Conning people into giving up their savings in order to secure millions in reward? Do that face to face and it’s Ocean’s 14. Breaking into global corporations to steal high value data? Mission Impossible. Disabling a country’s nuclear programme? Bond.

But to do these things remotely? Yes, sometimes complex, sometimes expensive. But it appears the chances of detection are relatively low and the risks of capture even lower. I don’t think long sentences are a particular deterrent (and the evidence supports this), but even so it’s hard to equate someone hacking a bank from their bedroom with walking into a branch wielding a shotgun.

The problem is the range of possible crimes we are trying to address at once. Spam emailing millions on the hope that one or two may not be aware of the African prince scams (or African astronaut as a recent twist incorporated) is very different from a state actor disabling the energy grid. Or from a hacking group flexing its digital muscles by taking down a key piece of internet infrastructure. The skills and tools to address these different crimes are wildly different and responsibility for them owned by different pieces of government — or other, more international bodies entirely. These are often international crimes that pay no attention to borders, albeit they may be targeted at a specific nation — as with the rash of robodialler attempts to convince people they are in arrears with HMRC.

We spend around £35bn a year on defence and around £15bn on law enforcement. As a proportion of this, £1.9bn is pretty significant. But put into the context of a global cybercrime, terror and espionage threat, it seems like small change.

The impact of that investment can only be amplified through co-operation.

Firstly, improved security comes with the co-operation of the general public. A willingness and openness to learning basic lessons to improve their own security. Over time we will, as we have done in the physical world, become more security conscious, eliminating the opportunist threats through better systems and better behaviour. The digital equivalent of window locks and mortice bolts, and the awareness of risk that stops us clicking on things that we shouldn’t.

Secondly, we need the co-operation of the makers of hardware and software. The big software vendors have learned to better engineer security into their systems, and this week’s story about Google and Microsoft notwithstanding, better at patching holes as they find them. But hardware makers have a lot of catching up to do. The increasing range of internet-connected devices from cars to cameras, kettles to cookers, seem to have incredibly poor security standards. Every one of these is not just a threat to its owner but a weapon to be wielded at others, as part of a botnet. Governments should sanction those failing to implement appropriate security standards. Perhaps even enforce them with ‘nematode’ software that breaks into insecure devices and upgrades their protection.

Thirdly, we need the co-operation of international partners. This may be counter to the prevailing political rhetoric, an idea that we are somehow made more secure by throwing up bigger borders between our island and the rest of the world. This idea was out of date when the vikings arrived, let alone in an age when the marauders can arrive through any one of huge array of glass tunnels just a millimetre across.

The internet is a global state. Our future security within its borders is the responsibility of all digital citizens.


Tom Cheesewright