Business strategy models have to adaptable to future disruptions and developments. In this TV show Keith Coats of TomorrowToday discusses strategic thinking for leaders.

Business strategy models in an unpredictable world

Leaders have to be future-focused. Levi right now have a great slogan, which says ‘the future has left, so go forth’. Jim Data is a retired futurist and he articulated that past thinking amongst futurists was something like this … I might have some of the percentages slightly wrong but the rough ratios is 80% of our tomorrows would be built on what futurists call continuations, so if you want to understand tomorrow, look at the DNA of today, 80%. 15% would be cycles – economic, political social cycles – and 5% would be novelties. Now, in the futurist language a novelty is the curve ball, the unexpected, the 9/11, the thing that very few people could foresee. I’ll preface that with past thinking. Current thinking amongst futurists has inverted that table, turned it on its head. They are telling us that up to 80% of our tomorrow is what they call novelty, we simply do not know. Now, even if they’re half correct I wouldn’t go to war over those percentages, it’s the trend here we’re looking at, that the bulk of our tomorrows is going to be a surprise, going to be the unexpected, the unpredictable. The question then becomes how do you build continuity in that? What does the organisation that learns how to build planes in the air, as it were, look like in that context? For one thing it renders redundant strategic planning, you cannot plan your way into that kind of uncertainty. We need companies today who understand the emphasis needs to be on strategic thinking and at all levels of the organisation, this is a leadership agenda.

Inside Finance is very interested in business strategy models and the future business world. Browse our video player for related content.

The attitude to risk form those in high risk environments is to exercise caution as Michael Pagliari explains in this TV show.

A cautious attitude to risk

I actually have a few clients that have done exactly that and I’ve actually found that there I’m on the more cautious of our clients.  So their business risk, if you like, is very high and they’re well aware of it and the last thing they want to do is suffer losses under their financial asset portfolio, so I’ve tended to find those people the most cautious of all the clients that I manage money for. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer.

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Digital technology is growing and growing. In this TV show Nigel Huddleston explains why the future of Google+ is exciting for business and pleasure.

Social digital technology

We’re really excited about Google Plus because as a social platform it’s not a standalone, we’re integrating it with search. But it’s really exciting because we’ve not only got more than 400 million unique users, but they’re using it in a really creative way that maybe they aren’t with other social platforms. The video content capability is great, showing photos of course is really, really important. But what we’re seeing from an advertiser’s angle as well is that they’re able to example, link to their Google Plus page in the advertising. We’re seeing a five to ten percent uplift in click through rates, to the link to the Google Plus page. So that’s really important, we call that social extensions. So there’s a meaningful impact from an advertiser’s side in terms of having that Google Plus social platform.

Keep an eye on Inside Finance if you are interested in social digital technology. There will be more TV shows from knowledgeable business insiders like Nigel Huddleston.

 

Evidence of financial impact must be shown in court to win a breach of contract case. Doug Hall of Smith & Williamson explains further in this TV show.

Good experts prove financial impact

The adage is something like a good expert may not win you the case but a bad expert can certainly lose you the case. So if you take the sort of work I do where there is some sort of contractual breach, there’s two hurdles broadly to get over before let’s say the claimant gets a good result, firstly it’s to demonstrate liability, that there’s a case to answer. And once you’ve cleared that hurdle it’s pretty pointless if you can’t actually demonstrate that you’ve suffered a loss from it and you can have that loss awarded by the court. So the second limb is quantum, which is what I do. So okay there’s been a breach, liability is established, what’s it worth and therefore what does the claimant get awarded, and similarly from the other side acting for defendants, obviously hopefully to bring down the level of damages that are awarded against them.

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The legal sector now has less resources to pursue action for business disputes, as Doug Hall discusses in this TV show.

Legal Sector changes

So basically this whole arena that the commercial world changed overnight caused tension and caused a whole range of drivers for more commercial disputes.  However in more difficult times, parties or potential parties to commercial disputes were wary about committing funds to pursuing them.  So that’s the irony, that there were more disputes but less resources to pursue them and what we saw for a number of years is that cases would start and be settled very early, they’d be front end loaded and it required a different sort of input from forensic accountants for example and for the lawyers, that they would do a much more high level exercise to establish damages for example early on and then go for an early settlement.  I had a few years where I went to more mediations than I went to trials and we had to produce a different sort of report for a mediation to what we produce for a trail, a different purpose.  One really gives a less balanced view, a report, a WP report for a mediation, an experts repot for a trial needs to be very balanced and because an expert has a duty to the court. So the symptom we saw was there was definitely an increase in those sort of disputes for those sorts of reasons, but less of them actually went through towards the trial, which is really to do with cash flow and to do with companies under pressure and litigation was not a priority.  And this is the sort of picture that we had from all the lawyers we know, because we spend quite a lot of time talking to litigators, they’re the people we work with.

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Analysing data to show profit and loss is more complicated than it may first seem, and will be done best by a forensic accountant. Doug Hall of Smith and Williamson says it’s about presenting the right information in court.

Analysing data forensically

Probably the best way of illustrating that is a lot of cases that we get involved in, we get involved at a later stage, so the case has been running for some time. Because parties to litigation tend to focus because they’re guided by the lawyers, firstly on liability and quantum is left as a second stage. And we’re often involved in cases where the quantum has been estimated by the in house accountant, it’s the first time they’ve done it and may seem simple to actually work out that you’ve lost this much in sales and this is the profit on it, but there’s all kinds of nuances and techniques that are used and really what a good forensic accountant should be doing is to anticipate how, if you’re acting for a claimant, to anticipate how it would be defended.  For example you may say that my sales have been growing at 5% a year, year on year out, and if you hadn’t caused by business to fail then I would have got another 5% in growth, but that doesn’t necessarily follow, you need to look behind the headline evidence and to look at it from every angle. There is no single right answer and the key thing in my practice is whatever opinion I come up with I need to be thinking ‘There is a counter argument to this’, because ultimately the decision by the court or the tribunal is based on the balance of probability. There’s been some sort of breach, so therefore the claimant wants to be put back in the position they would have been, but for that breach and of course that position didn’t happen, so it’s what might have been. So the short answer is there’s lots of different ways of analysing the data and there’s lots of different ways of presenting it, there’s no single right answer but an experienced forensic accountant knows what works with a court and what doesn’t. And of course there is various conceptual issues, that you can be technically wrong in how you calculate damages and we’ve seen that many times.

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Business assets in a service based economy are more about customers, staff and ideas. This can put directors at risk, as Doug Hall discusses in this TV show.

Legal action and business assets

The UK economy has changed as we all know, from largely a manufacturing based to a service based, therefore typically when a company goes into administration, it doesn’t have any assets, it doesn’t have assets that you can kick, plant and machinery, it has intellectual property, it has customer databases, it has customer relationships. Other than that there may be very little that can actually be realised for the benefit of creditors and other stakeholders. However what the company may have is a cause of action against it’s advisors, that may effectively be it’s only asset. We’ve seen actions against directors that we’ve acted on both for the claimant, so creditors who’ve lost out, and also defending actions against directors from companies that have gone into administration, for example where the Inland Revenue, HMRC, has taken action against the directors because they’ve lost out. And we’ve seen examples where the HMRC will actually fund those actions, they’ll provide funding to the liquidators to pursue directors. Again that requires a forensic accountant to look at all the evidence to establish first of all whether the directors are liable, if they have carried out actions before the administration which has caused that loss and secondly if they have what is the value of that loss, how much of the loss that for example the bank or HMRC has suffered has been caused by the actions of the directors. Those situations can be very complex, because in the lead up to an administration company records are not the best that they could be typically, bluntly they can be a mess, so there can be a lot of work to do to piece it all back together and trying to avoid the benefit of hindsight.

Inside Finance TV will continue to follow discussions about business assets and liabilities. Keep an eye out for more from Doug Hall.

Digital generation, digital natives and generation Y are all references to the young people who have grown up with technology. They are now reaching the age where they are entering industry. Graeme Codrington discusses the significance of this.

The digital generation born at the same time as the internet

Technology is obviously a huge driver of change in our world. Recent advances in computing power have really brought computers up to a level where they can now deliver on what our imaginations have been promising for a few decades, and it really just is in the last literally 18 - 24 months that computing power speed size and price have all come together to mean we can really do what we want to do with computers and now we are set up for the next decade of change, but in addition to the raw computing power, it's also the people, we have got a group of people we like to call digital natives who are entering the world of work, these are the young people that were born in that remarkable year of change 1989, the year communism died and the Berlin wall came and Tiananmen Square happened. But also 1989 was the year the internet as we know it was started. Tim Berners-Lee invented HTML and web pages where born, and young people who were born in 1989 were born in the same year that the internet was born and started working for you last year, and they've brought their computers with them, and so it's this combination of computing power and a new generation of digital natives arriving in the workplace at precisely the same time, its going to cause huge disruptive change.

Inside Finance TV will continue to follow the impact of the digital generation entering the world of work.

Using new technology may seem like a business risk but, as Martha Lane Fox discusses in this TV show, it is a risk not to.

Business risk - Getting left behind

It’s not that If you don’t get online or use the technologies immediately then ‘this’ will happen. I don’t think it’s quite like that, I think its a long term systemic problem. You will just be left behind because you will be operating in a world that’s just not as modern as other people. So you won’t be taking advantage, both of new cost space that you can have by using technology better, but also the new markets that you can reach. So I don’t necessarily think that you’ll fall of a cliff today or tomorrow. But over time I just don’t think you’ll be able to be competitive.   Keep an eye on Inside Finance TV if you are interesting in hearing more about business risk.  

Technology infrastructure is something all businesses should consider updating. In this TV show Nigel Huddleston explains that investment into digital technology isn't that expensive.

Technology infrastructure to fit a digital world

One of the key things is, is experiment. That’s one of the messages that I have to many players in the sector at the moment. It doesn’t cost a fortune to experiment with a YouTube channel or a Google Plus or indeed any social platform. It doesn’t cost a fortune to try out maybe new mobile devices, what the look and feel of your mobile site is, and invest in mobile optimised sites. These things are not massive in terms of the expenditure compared to say refurbishing a hotel. Yet there has historically been a reluctance on the side of many to invest in it. I would say given today’s consumer is incredibly connected, it’s really important to be very technologically aware and make sure that what the users are doing in terms of their behaviour is at the absolute heart of your strategy and your IT investment decisions. And if it’s not you’re probably going to fall behind.

If you enjoyed this video and want to hear more about investing in technology infrastructure, please browse more TV shows on Inside Finance.