Future Focus London - Morning Presentations

Future Focus
London
June 4th 2009
2009 IBM Corporation

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Charles Bligh

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Dr James Bellini

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Twitter replyto:@futurefocus
London Or mention #futurefocus
www.futurefocusblog.com

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Richard Farleigh

Ned Kelly
Interest Rates
Taming The Lion
“A tour de force of
common sense
investing.”
Tom Stevenson
Daily Telegraph
Sir Alexander Fleming
The Nobel Prize in Physiology or Medicine 1945
Igloo Thermo-Logistics
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Future Realities
Focus

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Future Economic Realities
Stephen Radley
June 4th 2009

Overview
World economy has started to thaw...
...but recovery likely to be halting
Business environment will be more challenging...
... but create significant opportunities...
... with company fortunes becoming increasingly polarised
59 / x 2009 IBM Corporation

World economy has been in deep freeze…
% change in GDP quarter on quarter
% 2008q3 2008q4 2009q1
0.0
-0.4
-0.8
-1.2
-1.6
-2.0
-2.4
-2.8
-3.2
-3.6
-4.0
Japan UK Italy Germany EurozoneFrance Spain US
… but is starting to thaw
Manufacturing purchasing managers index 50= no
growth
US UK Eurozone
60
55
50
45
40
35
30
6
9
6
9
8
6
7
6
8
7
-0
-0
-0
-0
r-0
r-0
r-0
r-0
l-0
l-0
l-0
-0
-0
-0
n
n
ct
ct
ct
Ju
Ju
Ju
Ap
Ap
Ap
Ap
Ja
Ja
Ja
Ja
O
O
Recovery driven by
End to stock reduction cycle
Boost to disposable incomes from falling costs
Low interest rates
Massive fiscal intervention
Signs that support for bank lending is starting to work

But thawing out will leave a major mopping up exercise
Recessions associated with credit crises tend to be more severe with longer lasting effects
Large overhang of bank debt
Households need to rebuild balance sheets
Action needed to address ballooning public sector deficits
World trade system will take time to get functioning normally
Inflation likely to remain low for some time

Rebuilding Balance Sheets Likely to be Long Process
UK Personal Savings ratio
14
12
10
8
6
4
2
0
3
1
3
3
1
1
1
1
3
-2
92
6
1
7
85
89
94
97
86
88
0
1
0
9
0
19
20
20
20
20
20
19
19
19
19
19
19
19
19
19
20
Key questions
Can world economy return to past trend growth rates?
Where will growth in the world economy come from?
What will be the major growth markets?
How serious are the dangers to business from increased protectionism, growing regulation
and deglobalisation of finance?
What will business need to do to thrive in this changed environment?

Trend growth rates
Cutbacks in investment could weaken innovation and productivity growth
But recession creates opportunity and imperative to change practices
Working populations shrinking...
... but hit to wealth creates incentives to work longer
Increased government role in economy creates danger of misallocation of resources
Regulation likely to stifle financial innovation
Constraints on public infrastructure spending

Where will growth come from?
United States
- Company balance sheets in good shape pre-recession
- With vigorous cost cutting since then
- Major problems remain in banking system but some signs of confidence returning
- Significant fiscal boost in short-term
- With shift to bigger government likely to be lasting
- Major advatages from flexible economy and close trading links with Asian economies

Asia
- Increasingly confident and trading amongst itself
- Wide differences in performance both in short and long-term
- Lessons from late 80s mean financial system in good shape
- Shift towards domestic consumption supported by widening of welfare systems
- Partially conmpensating for weaker contributon from trade
- Many nations still in catch-up phase with significant infrastructure programmes in train
- Major environmental challenges

Europe
- Concerns over transparency of banks and ability to develop Europe-wide solutions
- Consumers and companies particularly dependent on bank lending
- Working populations shrinking
- Business still more regulated than in other parts of the world but growing evidence of
companies working round this
- Widely varied performance across Central and Eastern Europe but some nations face similar
issues to late 80s Asian Tigers

What will be the major growth markets
Climate and environment
- Low carbon energy, products and promoters of energy efficiency
- Growing importance of energy efficiency
- Significant winners and losers
- Opportunities in emerging economies but global agreement uncertain
- Resource efficiency a growing area
- Demographic change
- Strategic security

What are the dangers to business?
Regulation
- Some shift in sentiment away from free market approach
- Increased pressure for regulation
- Potential for voluntary approach in next Parliament
Global trade and finance flows
- Public statements positive but signs of creeping protectionism
- Potential significant impact on supply chains
- Recent major shift away from global finance
- But longer term finance will be drawn to highest returns though return to ``normal`` may be
slow

What does business need to do to thrive?
Systematic focus on innovation to differentiate from competition and combine high quality
with low cost
Corporate reputation and behaviour increasing critical to attracting and retaining key staff
and customers
Ambitious and coherent approach to exploiting opportunities in emerging markets
Agility in identifying and capitalising on new opportunities

Key messages
Worse could well be over
But major problems to address and high degree of uncertainty
Growth likely to be slower
But business can have major influence on business environment and outlook
Significant opportunities for companies who are alert and fast moving

Future Realities
Focus

Future Focus
In the Future We’ll All Be Older
Professor David James

Firms get out of shape in the good times
Recessions force us to get back into shape
Treat everyday as if you were in a recession

What‘s Your Core
Competence?
3.0bn
we‘re addressing a new
Breed
of customers

All businesses are liars....

the media revolution
we are talking to a new
Breed
of customer...

we are talking about
DIY MEDIA

garage influentials
Generation C(ontent)
Micro-Celebrities
curators of style
Who are the world’s
most trusted brands
?
you
&
me
Thank-You
david.james@henleymc.ac.uk
07710 754017

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Future Communications
Focus

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Euan Semple

Focus

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William Robins
Director, Keystone Law
Technology and the future of legal services

Welcome
 Introduction to Keystone law
 Keystone’s business model
 Our satellite offices
 Legal experts
 Central office
Overview
 Lessons learnt
 Future of legal services industry
 Market conditions
Trends in the legal services market 2000 to 2007
 Salaries up
 Profits per partner up
 Legal spend up
 Proportion of junior lawyers up
 Head count up
 Average spend up
 Smaller clients dropped

The legal services market today – staff
 Linklaters – 270 redundancies
 Allen and Overy – 250 redundancies
 Baker McKenzie – 125 redundancies
 DLA – 124 redundancies
 Collectively 4,000 redundancies
 Trainees not taken on

The legal services market today – renumeration
 Cuts across the board for associates
 Eversheds profits per partner – down 27%
 Latham and Watkin profits per partner – down 21%
 Cameron McKenna profits per partner – down 15%
 Most law firms still to report

How is Keystone doing?
 Turnover up 80%
 25 new lawyers
 Fastest growing law firm in the country

Trends in the legal market 2000 to 2007
 Salaries up
 Profits per partner up
 Legal spend up
 Proportion of junior lawyers up
 Head count up
 Average spend up
 Smaller clients dropped

Effects of these market trends
 SMEs priced out of the market
 Legal bills disproportionately high
 Work pushed down to juniors in the bid to increase profitability

Keystone‘s response to these market trends
 Keystone was set up to offer:
• Cost effective legal advice
• A joined up approach
• Personal lawyer/client relationships
Cost effective legal advice
Break down of typical fixed costs
 Staffing:  Non-staffing:
• Senior lawyers • Rent and office equipment
• Junior lawyers • Information technology
• Knowledge development lawyers • Consumables
• Secretaries
• Human resources
• IT support
• Back office
Cost effective legal advice
An assessment of the value of fixed costs to clients
Break down of costs

• Senior lawyers – highly valuable • Rent and office equipment – some value and
in part required
• Junior lawyers – valuable in part
• Information technology – key area
• KDLs – no direct value
• Consumables - required
• Secretaries – valuable in part
• Human resources – no value
• IT support – no direct value
• Back office – no direct value
Cost effective legal advice – Keystone‘s approach
Break down of costs

• Senior lawyers – a priority • Rent and office equipment – dispersed and
• Junior lawyers – replace with flexible solution
technology • Information technology – targeted spend
• KDL’s – outsource • Consumables - streamline
• Secretaries – replace with
technology
• Human resources – not needed
• IT support – outsource
• Back office – streamline
The results of being cost effective
 Cost savings passed on to clients
 Able to undercut the competition by 40 to 70%
 Fixed fees to align our business with our clients

What technology does Keystone use?
 The mobile office
 Online and offline functionality
 Some examples:
• Web access
• Maximiser
• Gotomeeting
• VOIP
• Desk to desk video conferencing
• Instant messenger
Keystone‘s key lessons
 Using technology:
• Don’t throw money at the problem
• Buy technologies based on problems and opportunities
• Buy what you need most, first
• Have an IT strategy
• Get real use out of any technology you buy
Focus

Future Focus
The Future of Work @IBM
Brendan Tutt

IBM’s transformation: An ongoing journey
1984 1992 2004 2005 2006

Knowledge Creation in the “old world”
Subject Matter Experts
Create Content for others to use

Access to “Experts” in the “Old World”

Changing Nature of Work Drives a Need to Connect Dispersed Workforces

Something Changed .............

“Experts” are everywhere
Knowledge

And they are networked
Instant Messaging
File Sharing
Social Bookmarking
Wiki's Activities
Blogs

....the world of work is changing
From Hierarchies
Exploration & Production
and Teams … to Networked Communities
O’Brien
Senior Vice President
Extended Community
Stock
Jones who leverage Cole’s
knowledge to do their
Explorations Drilling Production jobs
Williams Taylor Stock
Shapiro Paine
G&G Petrophysical Production Reservoir

Cohen Cross Sen O’Brien Shapiro
Smith Andrews Moore Paine Cohen Cole Jones
Hughes Miller
Kelly
Andrews
Ramirez Smith
Miller
Hughes Williams
Bell
Cross
Hussain
Cole
Taylor
Hussain
Moore Ramirez Bell Sen
Kelly
Social Network Analysis
IBM’s internal innovations
Connections
Persona Bluepages Beehive Profiles
Profiles
Connections
Communities
BlueGroups Community tools Community Map
Communities
Connections
BlogCentral Blogs
Blogs
Connections
Cattail Files
Files
Connections
Dogear Dogear
Dogear
Instant Activity Connections

Activities Collaboration Explorer UAM OpenActivities Activities
1998 2003 2009

IBM Lotus® Connections social software
Lotus Connections is
social software for business
that empowers you to be
more innovative and helps Home page
you execute
more quickly by using
dynamic networks of Profiles Communities
coworkers, partners and
customers.
Blogs Files Activities Wikis Dogear

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Future Focus

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

59 / x 2009 IBM Corporation

62 / x 2009 IBM Corporation

63 / x 2009 IBM Corporation

65 / x 2009 IBM Corporation

66 / x 2009 IBM Corporation

67 / x 2009 IBM Corporation

68 / x 2009 IBM Corporation

69 / x 2009 IBM Corporation

70 / x 2009 IBM Corporation

71 / x 2009 IBM Corporation

72 / x 2009 IBM Corporation

73 / x 2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

Recessions force us to get back into shape

Treat everyday as if you were in a recession

76 / x 2009 IBM Corporation

79 / x 2009 IBM Corporation

80 / x 2009 IBM Corporation

81 / x 2009 IBM Corporation

82 / x 2009 IBM Corporation

86 / x 2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

2009 IBM Corporation

 Keystone’s business model

 Our satellite offices

 Future of legal services industry

 Profits per partner up

 Proportion of junior lawyers up

 Smaller clients dropped

 Allen and Overy – 250 redundancies

 Baker McKenzie – 125 redundancies

 DLA – 124 redundancies

 Collectively 4,000 redundancies

 Trainees not taken on

 Eversheds profits per partner – down 27%

 Latham and Watkin profits per partner – down 21%

 Cameron McKenna profits per partner – down 15%

 Most law firms still to report

 Fastest growing law firm in the country

 Profits per partner up

 Proportion of junior lawyers up

 Smaller clients dropped

 Legal bills disproportionately high

 Work pushed down to juniors in the bid to increase profitability

Break down of costs

Break down of costs

 Cost savings passed on to clients

 Able to undercut the competition by 40 to 70%

 Fixed fees to align our business with our clients

 Online and offline functionality