Economic Upturn – Planning for Fact or Fantasy?

Planning for the future in uncertain Times…

Whether you are a multinational or a private citizen, what planning direction to go in after nearly a decade of economic and financial turmoil is a real challenge! The narrowing of wealth distribution tops the list of macro economic maladies affecting corporations and the working man alike. Unfortunately, this sets the stage for future economic crises that will carry our current problems forward should the pattern of behaviours at all levels not change.

The main considerations of anybody planning should be the direction of future activity that is beneficial to the individual and/or the organisation. It is not possible to get all things right but in general terms, the following should be borne in mind for strategising on future spending and direction:

Economy - understand economic growth that correlates to real world metrics separating statistical inconsistencies that skew the picture of growth on the ground from more accurate metrics showing the state of the economy. For example, Ireland on the ground is experiencing growth of about 3-4% GDP whereas the central statistics office reported 26% GDP over the same period. Tax Inversion has effectively distorted Ireland’s growth trajectory, which if taken at face value can lead to a dangerously positive outlook on big decisions. Economic upturn in fact can transform into fantasy. GDP against GNP, % of Sales Tax/VAT to overall tax, jobs created to unemployed registers are all good metrics. They provide a broader macro economic view of the economy where one can reasonably assess future expectations.

Politics - how stable and engaged are government in the management of the economy and its infrastructure? Also, how committed are they at stimulating growth? Is there any help for a direction you may take and how will government react if it all goes wrong for you?

Currency - will currency remain stable to positive and will capital markets pose any risk to your plans directly or indirectly via wider economy impact of currency and/or trade movements? Will the basics in life become dearer, cheaper or remain relatively stable? If in exports as a business, how will currency movements affect trade and what exposures are present in goods transit and/or associated costs? If a multinational, what capital controls are likely in territories where you have assets in the form of cash and/or manufacturing centres, etc. Are you locked in?

Risk - do you know the strengths and weaknesses of your plans? Are your risks both positive and negative cataloged by their likelihood to happen along with the impact of it actually happening?

Support - do you have what you essentially need to achieve your plans bearing the above environmental factors in mind. E.g. Are finance, logistical, educational and technical supports in place? Do you have a plan b, c and so on if unforeseen problems block your progress?

It’s not easy in our complex and sometimes volatile world to be ready for all eventualities but our chances of success only get better with understanding of the world around us through engaging with it and developing a thorough approach to planning. In times of calm, it allows us to sail better than our unplanned and unprepared peers. In adversity, it allows us to be more focused, flexible and successful in the game of life.

Sources/Credits:

Pics;

https://stocksnap.io/photo/PXTYJ9NX25

https://stocksnap.io/photo/TVUSUD00B6

Credits;

http://www.investopedia.com/terms/c/corporateinversion.asp

InterConnection - why Brexit business needs to look forward

Leaving the EU is a mistake for Great Britain yet could become a mistake for European business if not handled with utmost care

In the UK, Brexit was essentially a manipulative political campaign by fringe parties and an arrogant laissez faire approach by the establishment, which has left Europe with Europeans questioning the EU’s real worth? Combine this with poor planning for refugees/immigration at an EU level along with an unconsidered reaction to the new reality of a Middle East in crisis, the plight of the lucky European becomes a very real issue for so many. The material focus of the pubic is often a result of national politics trying to redirect attention to these issues at the cost of other more local issues.

In the UK, there was a stagnant and disenfranchised north (England) ignored and made suffer in some areas whilst others in the south (England) accessed services, opportunities and wealth with much greater ease. Where there is inequity and narrowing of wealth distribution, social tension always rises. Add a dolip of dirty politics in this case from the UKIP, terrorism from a handful of delusional ISIS terrorists and manipulation at a national level et voila!!... the UK south falls asleep and the north succumbs to cruel manipulation by far right whack jobs looking to take us all back to the 17^th century, where they of course are fiefdom Kings and Queens.

It’s my opinion that great British resolve was replaced by bitterness and anger in the north at the south’s apparent affluence, whilst they suffered economic recession. Business encapsulated in the south’s bubble of affluence never imagined a Brexit win. Arrogance took over whilst the fringe elements of UKIP struck chords with the disenfranchised members of British society yet was still discounted as brinksmanship that could not sway any right thinking voter. The rest is a matter of history, which brings markets and economies all over Europe to a state of anxiety as EU member states head once again into unchartered territory.

The majority of (multinational) Corporate America and AsiaPac corporates are being build upon a cost effective centralisation model in a preferably English speaking country that is talent rich, tax friendly and pro business. This trio of likes has seen UK gain a huge share of centralised Multinational trade, which combined with the enormous Financial Services hub in London accounts for a substantial chunk of the UK’s economic machine. With Brexit, the trade side of their international business seems to now be in peril regarding Europe so why stay in Britain at all? Are they locked in? What will it cost to stay and what to leave?

They are all good questions which cannot be answered until UK triggers article 50 of the EU treaty to leave the EU. The detailed guidelines make it non legal for Britain to make trade deals with anyone until they have left the EU and are legally recognised as a “third country”. In this context, the UK is at a manifest disadvantage as are every multinational goods company that has international operations in the UK. So, as a way forward, the best thing to do is to risk assess in a logical manner the situation bearing the following in mind.

Bilateral Negotiations - Britain is looking for latitude to make bilateral negotiations in principle whilst they exit the EU. If Europe cooperates, the profile of UK trade access internationally will be significantly enhanced from the disastrous isolation it is effectively asking for under article 50 of the EU treaty. Bear in mind some of the bellied rascals like Boris Johnson who weighed in behind UKIP lies and innuendo on Brexit are now in key positions. It’s a point not lost on Brussels.

Tariffs - Britain will no longer be a member of the EU, so the risks of transborder trade, including tariffs, capital FX controls and taxes such as retention tax will be elevated as a risk consideration.

Skilled R&D - Access to European countries for trade and assets such as R&D and labour are not clear thus should be considered as an elevated risk element to be quantified when the level of concessions Europe gives the UK on exit are known.

Costs - Cost of doing business Internationally in UK will rise despite the tax concessions promised by the UK Treasury department.

Labour - Labour movements will become more restrictive for Britains and Europeans. How restrictive this is depends on the deal to be struck with the EU. This is another part of the risk assessment that should be carefully considered.

FX /Markets – They should be closely monitored for capital flights, trading shocks and of course any new regulatory rules on capital and FX controls that affect international trade vehicles like FX, company stock trading and access to debt finance. 

The misadventure in the UK has shown the potential downside even in favoured approaches in international business. That said, for every problem, there is a solution and he who does not panic gets a head start on he who does. Maybe clear vision will change the landscape when deals are finally made making haste the highest of risk elements to be avoided at all costs.

Sources/Credits:

Pics;

www.thesun.co.uk

www.mirror.co.uk

Chris Lawton at https://unsplash.com/photos/QPOaQ2Kp80c

Credits:

Getting Started - Creating Value in a Tech Startup

Turning ideas into companies, tips on making it happen…

The startup scene in Dublin is vibrant yet many have poured their hearts and minds into their startups, with little to no success to date. Over 90% of startups fail, which by the numbers alone are turning out newly seasoned and committed entrepreneurs who are more learned, more agile and capable of achieving success with a start up then was probable before. With the climate in Dublin and elsewhere nurturing start ups with grants, tax breaks and mentorship, there is never been a better time to start up a new business. As the world slowly recovers from a horrendous recession, we see the buds of new business in cases such as India’s announcement of a $1.5 billion fund for startups just a few weeks ago.

From my own start up experience and observations, here are some points you may consider as central to increasing a startup's chances of success:

• Start like you mean to finish. Plot out what you want to become in success with a start up. Is it the next multi billion dollar company or a business to support you and your family with no wish to expand the business beyond a “mom and pop store”?
• If successful, will you sell your business? If so, when will this be? Plot a company size in revenue, employees and asset size (value of assets to turnover of business) when you will start considering offers to be bought out.
• Embrace modern Risk Management. Risk mapping, risk registers, risk assessments, 3rd party country risk, financial risk reports are all useful and are a good way to see your mapped future unfold as you build your business. If done from the start, you build into your structure a culture of risk management and thus information awareness.
• Scaling Systems. If you want to be the next billion dollar enterprise, you need to think about how IT infrastructure, systems design and development will fit into this vision. Will it be costly or seamless to scale your IT resources to fit business needs? Bootstrapped startups have great opportunities to develop low cost scalable systems using cloud and hosting providers. How it’s designed and built however will determine its true worth in availability, stability and scalability.
• Your digital brand. Market yourself for credibility, expertise and leadership as a Founder. Build your social media profile and creds with consistent high quality posts, blog articles and actions online that reinforce your digital brand message. If you approach a VC for funding, they will investigate you thoroughly including social media because in a startup, it’s the people, not the products that make the bew business successful.
• Network Network Network. You need to find co-founders, business partners and indeed potential customers in the marketplace. Meetup.com is a great start in your networking efforts that you should approach strategically.
• Community. Make sure you build bridges with your marketplace but also with the startup community. The access to people and shared experience is incredibly useful especially to a newly minted entrepreneur.
• Marketing. Build your marketing efforts based on tested Marketing models such as the 4P (Product, Price, Place, Promotion) and seek inputs on how you can develop a marketing strategy and a marketing mix that fits your startup
• Finance. If you are not funded, be sure to bootstrap everything you do, make sure your efforts are within a projected finance curve (ie. within budget) to where your business will start earning money for itself or you can reasonably expect to get VC capital on board so you can develop your business into a self sustaining entity.
• Create Value, then create Customers. Make sure your market research and everything you see from that point on is consistent with your products and services creating value for the customer. Qualitative approaches to service quality influence pricing and also create repeat customers. If you cannot create value in your customer's eyes, you will not have any customers.
• Stay Flexible. Start ups often start with a great plan and product. When the marketplace interacts with the start up, it often turns into something very different. Be sure your startup is structured flexibly so you “touch base” with your customers in a manner that creates value for them in what you do.
• Disrupting a market? If your product revolutionises a market place by its disrupter effect, then be ready to capitalise upon it. Have base plans for this type of dynamism in place so you don’t waste time wondering about what approach to take to capitalise upon it. Large companies act fast in protecting their market share from disrupters, so be sure to have a plan.

The need for flexibility, dynamism and intelligence is never more relevant than it is today even with a support structure in place. As the information era moves onwards, more and more opportunities will appear for aspiring Entrepreneurs. Taking that opportunity and turning it into something meaningful is often a hard learnt lesson through business failure. Once the budding Entrepreneur does not give up, their time will come and the days, months and years of trying will be rewarded by success.

Sources/Credits

Pics;

www.entrepreneur.com

www.stacksocial.com

www.picjumbo.com

Credits;

Strategic Decision Making - Cognitive Bias V Data Driven Decision Making

What gives cognitive bias a competitive edge today.. and why data driven decision making prevents it from being a liability in tomorrow’s world

As we head into 2016, it’s natural to think of the future, what it holds and how we will fair out when it arrives! Shall our children enjoy an uninterrupted run of good luck and will our lives only get better with the success we have worked so hard for?? All very natural questions to think about in the new year yet we rarely think of the strategic decisions made by others that can impact events creating missed opportunities and/or unseen dark clouds on the horizon of our life’s path.

Thinking about this strategic review of our lives, how many of us have thought strategically about the future assuming patterns of future success based on a summation of our past experiences? How many have done so without any real interrogation of the past to see if it is feasible to repeat into the future? This oversight of thought is known as cognitive bias (aka intuitive bias), which by Webster’s definition is “Common tendency to acquire and process information by filtering it through one's own likes, dislikes, and experiences.”

Cognitive bias has its origins in evolution. We created a mental filtering system to manage the large volumes of data we receive every day and through a learning process of experience, education and observation, we developed a short cut list of actions to speed up our reaction times, which to date increase our chances of survival. Whether it’s steering clear of an angry Lion on the Savanna or under pressure in the office where we “skim” through a 200 page report by reading the 2 page bullet point summary; our ability to maintain performance under pressure relies on our ability to make lightning fast decisions that rely on prediction based on past experiences. In essence, the decision we made “successfully” in a 100 near-similar cases to date will gain favour with us over a perfect match solution someone else told us about just the other day.

So, sounds like all is well? I would agree if the decision was based on 2 minutes before work to get a Mocha Latte or an Americano coffee. However, what is the case when you have a major decision to make on strategy that affects many people along with large amounts of resources in an organisation?? After all, if you have the right man in the driving seat, then trust his gut, it’s worked this far… right?? 

My considered answer is this. The “gut call” is fine to a point but our world is changing even faster than ever. We cannot rely on even successful past experiences to solely guide our future strategic decision making. We need to embrace data driven decision making by creating a process pipeline for it; where we can evaluate a data rich and clearly presented issue(s) before reaching any swift conclusions based on our experiences, likes and dislikes (aka cognitive bias, the “gut call”). Companies who embrace data driven decision making will increasingly build a competitive edge over those who don’t for the following reasons:

• Dynamic Markets - they change and trend even faster with the onset of the information era and if you don’t understand your customers wants and needs nearly at an individual, real-time level based on their behaviour, then you will lose out to the competitor who can
• Impact Awareness - the age of industrialist capitalism is coming to a clear impasse where the impact of strategic decisions on staff, internal productivity, performance, regulatory compliance and social responsibility all matter as much as the impact on revenue, which in times past (and present for some companies) was the sole consideration. The need for transparency and accurate insights by mapping the impact of strategic decisions is increasingly more important than ever
• The Disrupter Effect - the information age has levelled the playing field to a great extent for new tech start ups who have proven to be vibrant, savvy and able to disrupt pre-existing non tech industries. Apple’s disruption of the music industry is a classic example of this. Microfinance based start ups like Grid Finance shows great disruption potential to the retail arms of banks and lower level investment companies providing a direct investor - beneficiary platform at a fraction of the cost a bank or investment company would take in fees and/or equity
• Faster to Market - the onset of the information era and web 2.0 technologies (cloud) has made it possible to develop and bring to market new products in a fraction of the time to times past. The effect of this in the marketplace is felt by shortening the cycle of new product generation, which in turn is making product life-cycles shorter and more prone to disruption

Staying ahead of the information game is becoming increasingly more dynamic, harder to predict especially if the decision maker has no access to data when making the decision.That said, as the onset of technology has driven the information era and the rise of disruption. It also drives the data driven decision making approach, which companies can now use to their competitive advantage. Companies wanting to embrace it are well advised to consider the following:

• Risk Management - develop risk management structures for enterprise that cover your risks in the main areas of business, finance (including FX) and operations. Use tools like risk registers, risk mapping, scenario planning and risk assessments in all major strategy decisions.
• Data Management - a data management platform should be built and structured so as you know how to get to your data in a highly available state, retrieving what you want, when you want.
• Process Management - process management structures should be easily maintained, executed, highly effective and auditable via control points in the process flow that feeds into metrics for the business. This should be automated to the extent that it is feasible based on company size and data quality. If the control points don’t enforce data quality, then they need to be revised until they do.
• Predictive Analytics - transactional data feeding analytical data sets is one of the biggest tools one can get in the modern era. That said, if a robust process management structure does not guarantee good quality data sets, then predictive analytics will produce no qualitative analysis. The need to get the quality and structure of your data sets right from input to analysis cannot be overstressed. It’s the basis of a value creating “data pipeline.” 

Technology is marching ahead at strength in all areas above, which is why a business considering how they make their senior level decisions should be considering the above points plus more to create an infrastructure of awareness that will make the enterprise more able to meet dynamic markets and act and/or react in time to build upon prior success into an ever uncertain future. The future is here, do you use a data driven approach to decision making? Do leave a comment with your thoughts...

Sources/Credits:

Pics;

www.forbes.com

www.etlsolutions.com

www.reviewpro.com

https://stocksnap.io/photo/EC50CC8658

Credits;

Cognitive Bias: http://www.businessdictionary.com/definition/cognitive-bias.html

https://www.grid.finance/