More power to the mind - Bridgepoint
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Intelligent Investing from Bridgepoint
March 2022 | Issue 40
More power to the mind
Keeping it green A potent force The rules of engagement
How to be smart about PharmaZell CEO on growth, Staying ahead as the
carbon reduction agility and patient welfare workplace changes
02 24
• Ins & outs • The interview
Bridgepoint news The right chemistry
Dr Sylke Hassel as been chief
05 executive of PharmaZell for less than
a year. But the Bridgepoint-backed
• Analysis business has already been
Brain waves transformed under her stewardship
Imagine being able to perform an
action simply by thinking about it. That
is what brain computer interfaces can 30
do. And they are fast becoming a • Viewpoint
reality, with immense repercussions for Smart reduction
businesses and individuals As businesses come under growing
pressure to curb greenhouse gas
10 emissions, the most forward-thinking
are managing to reduce their
• In focus environmental impact and
Channel hopping simultaneously drive growth
The growth in e-commerce has been
phenomenal, but there is much more to
retail success than a slick website and a 36
strong social media presence • Last word
Is it art?
15 Non-fungible tokens have taken the
digital world by storm. But are they
• Business for real? Rhymer Rigby investigates
Labour force
The workplace is undergoing a period
of rapid transformation. The Point looks
in depth at how businesses can use this
time to generate positive change
What workers want
Employees are looking for more
than ever before. Creative managers
are pre-empting their demands
Fresh perspectives
The Great Resignation has left many
companies worried, but staff
departures can actually give firms a
new lease of life
•Foreword
Change your mind
Most of us would like to be smarter, faster and more insightful than we are. But
would we be prepared to have microchips inserted into our brains to become
superhuman? Some people have already gone under the knife and, according to
the most gung-ho supporters of ‘brain computer interfaces’, it is only a matter of
time before everyone will want one. In ‘Brain waves’ (page 5), we explore this
technology and consider whether and how it can transform people’s lives.
Millions of workers are taking a grittier In July, we became a public company,
approach to life transformation – they are listing on the London Stock Exchange, to
demanding more from their employers, further our growth as a global alternative
or quitting their jobs entirely. ‘Labour asset manager.
force’ (page 15) considers changes in the We have completed multiple
workplace from the perspective of the investments and exits since then. As we
employer and employee, and questions highlight in ‘Ins & outs’ (page 2), we
how companies can use this time to their have made some exciting acquisitions,
best advantage. such as PTV Group, which specialises in
Businesses face challenges from an tech-enabled traffic management
ecological perspective, too, as regulators, products; Achilles, which uses
investors, customers and yes, employees, technology expertise to facilitate supply
all demand that companies reduce their chain management; and Fenergo, a
carbon footprints and become more leading provider of software solutions
sustainable. Some business leaders are for the financial services industry. We
embracing this trend; others worry about have also achieved several significant
how it might affect their bottom line. In divestments, including Element
‘Smart reduction’ (page 30), we assess Material Technology and Miller Homes,
how firms can improve their environ- among others.
mental credentials and drive growth at And finally, for anyone who has been
March 2022
Issue 40
the same time. tempted to invest in a non-fungible
Published by The retail industry has been forced token, on page 36 we unpick this red-hot
Bladonmore
Editor to think particularly hard about growth, market in ‘Is it art ?’
Joanne Hart
amid rapid shifts in consumer habits that We hope you enjoy this edition.
Design
Bagshawe Associates have reshaped the sector. But even Please do send us your feedback at
Reproduction, copying
or extracting by any
means of the whole or
though many predicted the pandemic thepoint@bridgepoint.eu •
part of this publication would spell the end for physical stores,
must not be undertaken
without the written the truth is far more multilayered, as
permission of the
publishers. The Point discusses in ‘Channel hopping’
The views expressed in
The Point are not
(page 10). William Jackson
necessarily those of
Bridgepoint.
Bridgepoint has been busier than ever is chairman
www.bridgepoint.eu since the previous edition of The Point. of Bridgepoint
01
• Ins&outs | Bridgepoint news
Bridgepoint buys into
transport solutions
group PTV
Bridgepoint has acquired a majority stake in PTV
Group, a cutting-edge software and consultancy
firm specialising in traffic management and
transport solutions.
Based in Karlsruhe, south-west Germany, PTV is
a leader in its field, with more than 40 years’
experience in mobility and logistics. The company
works with around 2,500 cities and municipalities,
offering traffic simulation and modelling
products, real-time traffic management, and
analysis and advice on route optimisation.
Bridgepoint exits testing Bridgepoint partner and head of DACH, Carsten
Kratz explains: “With PTV, we are gaining a global
specialist Element leader for our portfolio that enables cities, munic-
ipalities and other organisations to meet the
social, environmental and economic demands of
Element Material Technology has been sold by our time. The company also represents the ideal
Bridgepoint, following a period of exceptional growth platform to pursue further acquisitions in the
field of intelligent mobility ecosystems.”
Element is a global leader in strong global environmental, social PTV was previously owned by Porsche
testing, inspection and certifi- and governance tailwinds, with Automobil Holding, and the German carmaker will
cation (TIC) services, operating in more than 60 per cent of its work retain a significant minority stake. Lutz Meschke,
technically demanding and directly supporting clients as they deputy chairman at Porsche and chairman of the
highly regulated sectors around strive to become more sustainable. PTV supervisory board, says: “The market for
the globe. Bridgepoint
Generating annual partner Chris Busby
revenues of around says: “Element has
$1 billion, the London- been bold in its
based company has grown by more ambition, expanding its expertise
20 per cent a year for the past to serve more than 50,000
decade and today operates a customers worldwide. It is now an
network of more than 200 undisputed heavyweight in TIC.”
laboratories in 30 countries. Element CEO Jo Wetz says:
With a team of around 7,000 “Bridgepoint has been an
scientists, engineers and technolo- exceptional partner, helping to intelligent mobility and logistics offers enormous
gists, Element supports businesses support a 10-fold increase in our growth potential due to the decarbonisation and
from the early R&D stage, through turnover over the past decade.” urbanisation megatrends. In Bridgepoint, with
complex regulatory approvals and Element has been acquired their buy-and-build expertise, we found the right
into production. by Singaporean investment partner for the management team to lead PTV
The group also benefits from group Temasek • •
into a very successful future.”
Risk management firm FCG sold after doubling in size
Bridgepoint Development employees in the Nordic region has been impressive. The group
Capital (BDC) is selling FCG and Germany. The group has more than doubled in size,
Group, a Nordic specialist in provides advisory, outsourcing, expanded its service offering,
governance, risk technology and fund added tech capabilities and
management and administration services to software solutions, and has
compliance services to the customers ranging from fast- grown internationally. The team
financial industry. growing fintech start-ups to is now well placed to continue
Founded in 2008 in large banks. its growth ambitions and
Stockholm, Sweden, FCG has “FCG has a talented and highly development under new
become a leading player in its committed team and its ownership,” says BDC partner
field, with more than 270 progress during our ownership Johan Dahlfors •
02
Miller Homes moves on BDC buys supply
after sales volumes soar chain expert Achilles
Achilles, a global authority on supply chain risk
and performance management, has been
acquired by Bridgepoint Development Capital.
With more than 30 years’ experience and
sector-leading technology, Achilles helps
businesses to make supply chains more
sustainable, efficient and ethical, thereby
mitigating risk and
driving growth.
Bridgepoint’s
investment will enable
Achilles to expand both organically and through
acquisition, delivering new capabilities in areas
Premier regional housebuilder Miller Homes has such as diversity and inclusion, health and safety,
been sold by Bridgepoint supply chain mapping and environmental, social
and governance oversight.
The company is one of the UK’s Jamie Wyatt, partner and BDC director Matt Legg says: “Supply chains
most established housebuilders, co-head of UK investment at around the world are under increased pressure
known for building high-quality, Bridgepoint, says: “We are and scrutiny, creating opportunities for
sustainable developments on the delighted to have supported companies that are able to provide data-driven
edge of towns and suburbs. Miller Homes and its management solutions to ensure more sustainable and ethical
The firm has grown substan- in growing the business. Under services. Achilles, with its global platform,
tially since being our period of breadth of risk coverage, in-house audit capabil-
acquired by ownership, the number ities, and depth of data validation, provides a
Bridgepoint in 2017, of houses sold rose compelling proposition to its customers.” •
expanding into new areas, annually to around 4,000,
completing two strategic acquisi- revenues exceeded £1 billion for
tions and increasing annual house the first time and profits
PharmaReview wins
sales by more than 30 per cent. increased by almost 50%.” • support for expansion
Bridgepoint Growth scientific sense and
has partnered with that all claims are
Fast-growing PharmaReview, a
specialist supplier to
backed up with
references to
games firm the life sciences
sector, to accelerate
accurate and up-to-
date sources.
backed by BDC future expansion and
development.
Ralph Carter,
co-founder and
Founded in director of
Bridgepoint Development Capital 2011, the PharmaReview,
is investing in Plug In Digital, a top company works explains: “We
distributor and publisher of with some of the are a successful and
popular video games. world’s largest growing business, and
Based in Montpellier, successes including The pharmaceutical we need help with
France, the company has Forgotten City, centred companies, ensuring that growth.”Fellow
grown by more than 50 on ancient Rome. that promotional co-founder and
per cent annually over BDC partner Olivier materials are director Tessa Pugh
the past five years, helping Nemsguern says: “Plug In Digital is medically accurate adds: “Bridgepoint
studios and publishers to well positioned in a really exciting and comply with brings depth of
distribute their games worldwide market and has built a great brand ethical, legal and experience in
and publishing its own titles in the indie publishing space. We regulatory require- expansion and will
across a range of platforms. look forward to working with the ments. The group also work with us to help
The group’s portfolio spans a ensures that us realise our
company during its next chapter
variety of top genres, with recent of development.” •
documents make potential.”•
03
• Ins&outs | Bridgepoint news
Bridgepoint acquires Exit for biopolymer
software group Fenergo manufacturer HTL
role of compliance and digitali- Fast-growing biotech and industrial firm HTL
sation throughout the financial Biotechnology has been sold by Bridgepoint.
services industry. Founded in 1992, HTL provides
Bridgepoint partner David customised, pharmaceutical-grade
Nicault comments: “Continued biopolymer solutions, used in areas such as
pressure on financial institutions ophthalmology, rheumatology, urology,
to improve their compliance dermatology, and medical aesthetics.
work, while at the same time A supplier to leading pharmaceutical and
managing margins and increased
regulation, has created the need
Fenergo, a leading for integrated digital
provider of software solutions that help
services for financial to reduce operating
institutions, has been costs, improve
acquired by Bridgepoint. capital allocation and ensure
Established in 2009, Fenergo compliance with regulations. We
has developed an award-winning look forward to working closely
platform, delivering know-your- with the management team at medical device companies worldwide, HTL
customer and client lifecycle Fenergo as they build on their was the first company to industrialise the
management software success to date and realise their bioproduction of hyaluronic acid, a natural
solutions to some of the world’s full growth potential.” lubricant that is found in eyes and joints.
largest banks. Bridgepoint is investing in Bridgepoint partner Vincent-Gaël Baudet
Bridgepoint’s support will Fenergo alongside French private says: “We’re delighted to have worked with
accelerate investment in the equity firm Astorg. Fenergo the HTL management team, driving the
firm’s software-as-a-service founder and CEO Marc Murphy company’s transition as it became a
strategy and product line says: “Both Astorg and biotechnology platform of scale, and a
development. Fenergo Bridgepoint have enormous leading R&D partner to pharmaceutical
generated revenues of experience and credibility in companies around the world. We wish the
$107 million in the year to March our sector – something I am management team every success as they
2021 and further robust growth keen to leverage over the embark on the next exciting chapter of
is expected, given the increasing coming years.” • their development.” •
Sustainability specialist ACT Food brand itsu
wins investment backing poised for growth
Bridgepoint is investing in ACT, like Bridgepoint, we can create Asian-inspired food brand itsu has established a
which helps companies and new economic opportunities in strategic partnership with Bridgepoint. The deal
organisations around the world local communities around the will support the restaurant group’s growth
to reduce their carbon footprints. world, while ensuring today’s ambitions, including the creation of 100 new
Founded in 2009, ACT operates leading organisations can meet outlets and 2,000 jobs in the UK alone over the
from offices in Amsterdam, even the most ambitious sustain- next five years.
New York, Shanghai and Paris, ability targets.” itsu has grown rapidly in
offering more than Bridgepoint partner recent times, with total
70 sustainability Olivier van Riet Paap
sales for 2022 forecast to
products worldwide. adds: “The market in
be well in excess of
The company also which ACT operates is
£170 million. The
supports high-impact forecast to grow
company operates in the UK, France and
climate projects that deliver rapidly. We have an exciting
renewable certificates and opportunity to back a true Belgium and its grocery business – supplying
carbon credits, helping local ESG-led innovator and leader in supermarkets and health food stores – is
communities to generate revenue its field, and to help it to expand growing at around 70 per cent annually.
while conserving their essential market share and pursue interna- Bridgepoint partner Benoît Alteirac explains:
ecosystems. tional growth in its core markets.” “We see a global opportunity for itsu. The
ACT co-founder and CEO Bram Bridgepoint has taken a company combines affordable and convenient
Bastiaansen says: “With a partner minority investment in ACT • food with an outstanding operational model,
coupled with deep-rooted brand values .” •
04
•Analysis
Brain
waves
Science fiction has long played with the idea
of devices that enable people to perform an
action simply by thinking about it. Brain
computer interfaces are turning that vision
into a reality – and the potential is vast.
05
• Analysis | Brain waves
ast April, a monkey biggest funders of its foundational
played a video game research. A technology that can
simply by using its restore quality of life and function
mind. Not long before for soldiers who come back from
that, researchers at the war paralysed is a high priority.
Battelle Memorial And now a series of breakthroughs
Institute restored the has stoked excitement that a new
sense of touch to a paralysed man era is upon us, where a technology
by implanting a microchip in his that starts out allowing paralysed
brain. And Meta CEO Mark people to regain certain abilities
Zuckerberg has predicted that evolves into a generation of
people will one day be able to type consumer products that become as
with their mind thanks to “brain- ubiquitous as the Apple Watch.
reading” devices that the company
is developing. Robotic procedure
Welcome to a mini-industry that Musk’s optimism apart, inserting
is having a moment: brain electronics safely inside people’s
computer interfaces, or BCIs. The heads remains a massive hurdle.
concept is much as it sounds: Neuralink is developing a robot
technology that melds computers that can perform the whole
with the most complex machine of procedure, drilling tiny holes into
all, the brain. the skull and sewing into the brain
tissue thousands of almost
Restoring quality of life invisible polymer threads that are
The possibilities are almost hooked up to a chip that is smaller
limitless. Tesla CEO Elon Musk, than a fingernail. Yet even brain
whose start-up Neuralink was micro-surgery brings with it huge
behind the video game risk.
The electrodes will not demonstration, has predicted that Dr Mary Lou Jepsen – who was
restore movement. BCIs will enable us to become one once named by Time magazine as
Instead, they will read with artificial intelligence (AI), one of the 100 most influential
brain signals, which will be allowing us to plug in directly to people in the world – is the founder
sent via Bluetooth to a the entirety of the web to access of Openwater, a San Francisco-
smartphone-sized device whatever we want instantly. The based start-up that is working on a
that interprets and technology, he says, will “secure non-invasive headset to instantly
converts them into actions the future of humanity relative detect strokes using near-infrared
to AI”. light and sonic data. She warns
There is just one catch: inserting that the Neuralink robot could
Neuralink’s chip inside your head cause swelling of the blood vessels
requires open brain surgery, a that lead to mini-strokes. Jepsen,
considerable barrier to entry, even who had brain surgery in her
in Silicon Valley. twenties, knows better than most of
Nonetheless, the concept of her rivals the trauma of such a
BCIs or “neuroprosthetics” has procedure.
been kicked around for decades,
with the Pentagon one of the Going for the jugular
06
Analysis | Brain waves
•
But drilling is not the only option. surgeons in the US who do open actions on a computer,
New York-based Synchron has just brain surgery. More than 10,000 smartphone or other device.
begun a first-of-its-kind clinical do these types of blood vessel “People who are paralyzed lose the
trial, implanting electrodes via an procedures.” The trial will start ability to control Microsoft, Google
incision in the jugular vein in the with up to 20 paralysed people. or Apple. Once you give that back,
neck and guiding them into the The goal, Oxley says, is to “digitise you give them back those powerful
brain. The outpatient procedure intention”. The electrodes will not systems. That makes a huge
draws on the well-established restore movement. Instead, they impact on their lives,” he says.
technique of finding a major vein will read brain signals, which will
elsewhere in the body and then be sent via Bluetooth to a Speech prediction
using blood vessels to insert, say, a smartphone-sized device that The work builds on technology
pacemaker in the heart or a stent in interprets and converts them into that stretches back to 2006. A
the brain. team at Brown University
implanted 96 electrodes into a
Brain signals via Bluetooth quadriplegic man’s motor
“This is why we’re moving If someone cortex. The result was that he
faster than anyone else,” says spends 100 hours in a could move a cursor with
Dr Tom Oxley, Synchron’s functional magnetic resonance his thoughts. Around the
founder. “There’s an entire imaging (MRI) machine, a computer same time, researchers
industry that already can make an ‘atlas’ of how their brain at Stanford University
exists around delivering reacts and draw on that data to produced similar
technology through predict what they are results in a non-
blood vessels into the going to say paralysed monkey.
brain. There are 300 In more recent
07
• Analysis | Brain waves
Ganzer’s team was able to
interpret faint signals
related to the sense of touch.
Burkhart, despite severe
paralysis, could feel as well
as move his hand
stimulation sleeve that activated
the necessary muscles to complete
the action.
Trade-offs
Last year, Ganzer, now at the
University of Miami’s Project to
Cure Paralysis, went further. His
team was able to interpret faint
signals related to the sense of
touch, which the injury had
effectively blocked. These signals
were boosted by the implant and
years, researchers at the University when BCIs will impart sent to a haptic device on
of California, Berkeley have shown superhuman powers, be it Burkhart’s hand. Despite severe
that if someone spends 100 hours telepathy or merging with AI. paralysis, he could then feel as
in a functional magnetic Industry pioneers remain well as move his hand.
resonance imaging (MRI) sceptical, however. Dr Patrick Remarkable as these advances
machine – in effect, the video Ganzer led the team at the Battelle appear, Ganzer explains that it is
version of MRI – and watches films Memorial Institute – a non-profit difficult to persuade even severely
or other stimuli, a computer can applied science company – which disabled people to agree to go
make an “atlas” of how their brain made headlines in 2016 when they under the knife. Convincing
reacts, based on its use of oxygen. “reanimated” Ian Burkhart, a man healthy people? That is a bridge
It can then draw on that data to who had been paralysed in a 2010 the industry is far from crossing.
predict accurately what they are diving accident. “It was really hard to recruit
going to say. Ganzer and his
colleagues inserted an
Superhuman powers implant that
Everything around you is going to
Today, much of the sector’s efforts, interpreted signals
include neural measurement: the shows
from Synchron to Neuralink, are from Burkhart’s motor
you watch, the news you read, the stuff
focused on those most in need – cortex, which controls
you write, the friends you have, all of it
patients who are paralysed or have movement.
suffered a severe brain injury. But An intention to, say,
enthusiasts are already making grab a cup, was sent
breathless predictions of a time to an electrical
08Analysis | Brain waves
•
platforms upon which entire
industries have been built, Kernel
will catalyse a universe of new
services and products centred on
neural measurement.
“Within 10 years it might be
seen as difficult to comprehend
why you wouldn’t have brain
measurement as a normal routine
in your life.
We’re bringing this to the
mainstream,” Johnson says.
Quantifying experiences
To those who are already worried
about what social media may be
Today, efforts are focused on patients who doing to them, this might seem a
dystopian vision – a device that
are paralysed or have suffered a severe brain
measures which parts of your brain
injury. But enthusiasts are already making
light up when you scroll through
breathless predictions of a time when BCIs
just-so images of your friends’
will impart superhuman powers
fabulous lives.
For Johnson, however, it is only a
patients, even for people that have stimuli. The company has begun matter of time before we will be
that desire and need to move their selling the gadget, a bulky series able to quantify virtually any
hands again,” Ganzer says. “When of grey plates packed with chips, experience, matching our feelings
it comes to making the sensors and lasers, to researchers. to hard data.
superhuman versus helping Johnson believes the helmet will “Everything around you is going
patients that have an injury, I really soon become a consumer device, to include neural measurement:
don’t think that the field knows yet especially as it shrinks in size. As the shows you watch, the news you
how to do the healthy human he explains: “The first cell phones read, the stuff you write, the friends
augmentation. It’s hard, and there were big, too. We are in the direct you have, all of it,” he says. “It may
are all these difficult trade-offs.” current of global consumer sound wacky to us today, but we
electronic trends, so we will know, for example, that we
Prototype helmets benefit from all the enhancements become the people around us.
That does not stop people from by being in this technology stack.” What if that was measured? What
trying. Bryan Johnson made a if you could actually look at the
fortune when he sold his payments Catalyst for services effect that your closest associates,
company, Braintree, to PayPal for The question is, why would the friends and family have on you?”
$800 million in 2013. Over the average consumer buy it? Johnson Such a device could add a
past five years, he has ploughed believes the answer is relatively whole new dimension to
more than $100 million into simple: because they can – and Christmas dinner with the family.
Kernel, a Los Angeles-based there is almost nothing else like Fortunately perhaps, it is not clear
company that last summer began it today. how far off that reality is, if indeed
shipping prototypes of a helmet- His vision is that, just as the •
it ever arrives
like device that measures brain iPhone or Facebook became
09•In focus 10 10
Online shopping has come into its own through
the coronavirus pandemic, but not all digital
offers succeed and not every physical store is a
waste of space. Savvy retailers are mixing and
matching to derive maximum benefit as their
industry undergoes rapid change.
Channel hopping
etail revolutions only more often. Such trends have
come around every created opportunities for
once in a while. Back both established retailers and
in the 1950s and new entrants.
1960s, consumer
buying habits Access to infrastructure
changed dramati- Italian spirits maker Campari, for
cally as shopping centres sprouted example, is best known as a
up across suburbia. We are in the wholesale brand. But the group
throes of a similar upheaval today, has tapped into a rise in online
as shoppers increasingly choose to alcohol sales by investing in
make their purchases without Tannico, an online wine and
bothering to leave home. spirits retailer founded in 2013,
Online retail sales in the UK which saw revenue grow by 82 per
recorded five years’ worth of cent in 2020. Campari underlined
growth in 2020, accelerating the its commitment to the company by
shift away from physical stores that funding its purchase of French
had begun a decade earlier. wine retailer ventealapropriete.com
Surveys and sales data suggest last May.
that shopping habits have Some established retailers have
changed capitalised on increased demand
Some of the largest and best-known permanently. for e-commerce by offering less
retailers have capitalised on increased A survey of more mature brands access to their
demand for e-commerce by offering less than 16,000 digital infrastructure.
consumers from
mature brands access to their digital
21 countries by Minding the Gap
infrastructure
consultancy EY UK-based fashion retailer Next is a
found that 45 per cent were case in point. Having launched a
visiting shops less frequently, home-shopping catalogue in the
37 per cent were shopping online 1980s, the group has used its
for products previously bought in multi-decade expertise in the field
stores, and 26 per cent expected to to launch its “Total Platform”. This
shop online and pick up in store offers everything a brand needs to
11• In focus | Channel hopping
sell online, from warehousing and Genius move chain acquired a 25 per cent stake
data management to customer Marks & Spencer is also using its in the women’s clothing group in
support staff and translations for online platform to serve other November.
overseas websites. brands, such as lifestyle retailers As Kien Tan, director of retail
US fashion retailer Gap, which Joules and White Stuff, as well as strategy at consultancy PwC in the
announced plans to close all its responsible fashion group UK, explains: “Notwithstanding
UK stores last year, has signed up Nobody’s Child. M&S chief current logistic pressures, the fact
for the Total Platform through a executive Steve Rowe believes that it all comes to one delivery
joint-venture deal that is set to go these deals have clear potential. that you can ‘click and collect’
live this year. Other clients include Well-chosen third-party brands from a Next or M&S store means
children’s outfitter Childsplay “enhance the overall offer in areas these businesses are using their
Clothing and fashion retailer where we don’t have expertise”, he infrastructure to serve their own
Reiss, and Next is hopeful that says. Nobody’s Child, for instance, customers better. To me, that’s a
many more retailers in the UK and has become M&S’s most popular genius way of monetising the
overseas will follow suit. guest brand online, and the retail infrastructure they have put in
place for deliveries.”
Exciting time
Smart thinking is in evidence in
multiple jurisdictions. In
Germany, online fashion retailer
About You increased its revenues
by 57 per cent to €1.17 billion in the
year to February 2021, even as a
decline in socialising led
consumers to spend less on
clothes. The Hamburg-based
group used the pandemic as an
opportunity to launch in 15
countries from Ireland to Estonia,
Many of the most
and it is now developing a
successful operators business product that allows third-
believe that a physical party brands to use its technology
presence complements and run their own online shops.
their online offering Silvia Rindone, a partner for
consumer products and retail at
accountancy giant EY, believes it
is an exciting time for retailers to
drive online sales growth, as
multiple operators show they are
prepared to collaborate with
companies seeking to try out new
strategies. “Organisations that are
really clear on their value
proposition and are really under
the skin of the target consumer
12In focus | Channel hopping
•
According to Rindone, retail in forgiving. If you get the tone
China is “a different planet. We wrong, if you don’t get the
did some deep consumer surveys influencer right, you’re gone,
there about three or four years ago. you’re out,” Rindone believes.
Chinese consumers are different Get it right, however, and the
because they are not worried about rewards can be considerable for
sharing data at all, so they actually retailers and their influencers. Fans
adopt certain behaviours faster of fast-fashion brand Nasty Gal are
than people would in the West.” lapping up photos of Amy Joseph,
a Chicago-based influencer with
Know your customer 82,000 followers on Instagram.
Rindone suggests, however, that Joseph’s fan base is small
marketing has becoming signifi- compared with those of “mega
cantly more sophisticated among influencers” – people with a
million or more followers – but
analysis of this world suggests that
Nasty Gal has developed an affiliate “micro influencers” often have
programme offering people with an online greater traction when it comes to
following the chance to earn a seven per persuading consumers to buy.
cent commission for sales generated Armed with this knowledge, Nasty
Gal has developed an affiliate
programme offering people with
move with the times – they don’t Western consumer goods an online following the chance to
see change as a threat,” she says. companies as they have started to earn a seven per cent commission
Rindone recommends that employ new, younger teams. for sales generated.
online retailers give themselves “Digital natives are now old
time to experiment and be enough to work and they influence Money to spend
courageous. “Be honest and say the way that social media is used Attracting visitors and converting
when you didn’t get it right, and to drive marketing activities,” those visits to sales has always
consumers will go on the journey she explains. been critical, but it is likely to
with you,” she suggests. The use of social media become even more critical, as the
influencers is definitely pandemic eventually becomes less
A different planet increasing, but retailers are virulent, restrictions ease and
Forward-thinking European advised to proceed with caution. consumers have more choice
retailers are looking to China for “You really need to know your about where and how to shop.
inspiration. There, social media customer base. Younger “Generation Z women do shop
influencers can rapidly make consumers in particular are not online – they love Depop and all of
products go viral. Li Jiaqi, a 29-
year-old livestream salesman, is
known as the “lipstick brother”
because he once shifted 15,000 Li Jiaqi, a 29-year-old livestream salesman, is
lipsticks in five minutes. In known as the ‘lipstick brother’ because he once
October, he sold goods worth shifted 15,000 lipsticks in five minutes. In
$1.9 billion on the first day of an October, sold goods $1.9 billion on the first day
annual shopping festival run by of an annual shopping festival
Chinese online giant Alibaba.
13• In focus | Channel hopping
The two big segments that really like shopping online are
younger, techie people, often male, and busy people,
particularly parents. The good thing about these cohorts
is they generally have a lot of money to spend
these kinds of retailers. But if you got to be there to keep up with from sofas and lampshades to
ask them their preference, they them and because you need to be meatballs.
actually prefer stores,” says Tan. in the same comparison shop,” With online specialists getting
“The two big segments that really Tan suggests. physical and out-of-town retailers
like shopping online are younger, gaining a foothold in city centres,
techie people, often male, and Physical presence it seems that well-located sites still
busy people, particularly parents. Footfall in cities and shopping have a role to play in 2020s retail,
The good thing about these centres is still well below 2019 even if the larger store groups are
cohorts is they generally have a levels in many places, with a reducing their estates. Many of the
lot of money to spend, so if you number of larger cities particularly most successful operators believe
want to serve them, you have to hard hit as more people work from that a physical presence
be online.” home, fewer tourists come to visit, complements their online offering,
Online retail also becomes a and public transport continues to enabling them to offer click-and-
prerequisite for brands whose be viewed with caution. collect services, convenience
competitors are online. “You’ve However, even online-focused purchases, easier returns and an
retailers are attracted to an element experience that cannot be
of physical space. Amazon spent recreated online.
nearly two decades as an online-
only retailer, but launched its first Shared space
store in Seattle in 2015 and has “Some stores are turning into mini
since opened hundreds more, distribution centres. Retailers that
acquiring the Whole Foods Market have had a physical footprint over
chain along the way. the pandemic have had an
More recently, online fashion advantage in terms of being able to
retailer Boohoo acquired fulfil and ramp up their capability
department store chain quite quickly.
Debenhams out of administration Conversely, some pure online
in early 2021. Boohoo said at the players that have been looking for
time that it would keep the a footprint in big
Debenhams website but close all metropolitan areas have really
of its stores. It subsequently spoke struggled to secure access to store
of opening one small Debenhams space,” says Rindone. She predicts
store to help secure deals with more sharing of store space
leading beauty brands and market between retailers in the future.
the website. E-commerce clearly predates
the coronavirus pandemic, but
Complementary role online shopping was given a once-
Established out-of-town retailers in-a-generation uplift through
can also see the allure of high- successive lockdowns and Covid-
profile space. In October, Swedish inspired restrictions. Adaptations
furniture retailer Ikea took have been fast and furious, but
advantage of tough high-street many believe we are still in the
conditions to acquire a flagship foothills of change. The retail
store on London’s Oxford Street revolution almost certainly has a
that will sell products ranging long way to go •
14•Business
Labour
force
The workplace is in the throes of rapid change.
Employees are quitting in droves and, among those who
stay, expectations are shifting and demands are
increasing. For many firms, this is a source of
consternation, but the new trends can prove beneficial
for company output, productivity and morale.
Here, The Point explores the changing world of work
from the perspective of both employee and employer.
First, in What workers want, we assess the incentives
most likely to attract, retain and motivate staff.
Second, in Fresh perspectives, we consider why so many
workers are leaving their roles and how companies can
use the Great Resignation to their advantage.
15flexibility?
What workers
team?
want
office?
money?
Companies once thought they were treating staff well by offering them an extra day off
at Christmas. Then free drinks, wellness rooms and time-out space became de rigueur in
certain sectors. Today, employee benefits have entered a new phase.
utting-edge pressure from multiple sources, Eager for autonomy
companies have companies of every hue are being The focus on wellbeing has
frequently forced to think more deeply about become more acute since the
managed to grab how best to attract talent. “In this pandemic began, but change was
the headlines by environment, businesses need to in the air even before then. Younger
offering cool or consider what employees really workers in particular were looking
quirky incentives want, rather than what just sounds for a more flexible approach to
to employees – from table tennis, cool,” says Zofia Bajorek, senior working – including the potential
pool tables and beer kegs to perks research fellow at the Institute for to work from home or even from
of a more personal nature. Some Employment Studies. abroad, on occasion. “A generation
years ago, Apple, Facebook and “You can offer as much free fruit, of digital natives was already eager
Google added egg-freezing to their yoga and Indian head massages as for more autonomy regarding
corporate benefits as part of an you like. If you then throw people where and when they did their
effort to attract and retain high- back into the lion’s den – with a work,” says Renée de Boo, partner
flying female staff. The tech giants, bullying manager, no
which have traditionally suffered autonomy and an
from a dearth of senior women, excessive workload – Some firms are actively helping
may have meant well, but the don’t be surprised if these staff to set up ergonomic home
benefits still attracted accusations initiatives fail to improve offices – providing free or subsidised
of cynicism and even sexism. employee wellbeing and office furniture
Today, as the workplace faces staff decide to leave.”
16Business | Labour force
•
for people and change at crammed into the smallest amount from the building’s main entrance
accountancy giant KPMG in the of space”. spirals upwards from street level,
Netherlands. “But while the A beautiful office, by contrast, giving employees easy access to
technology was already there to can help both to attract and retain bike storage on their way in. This
permit this, a lot of companies were workers, argues Catherine van der makes both a symbolic and
worried that giving this kind of Heide, a principal at architecture practical commitment to
freedom would lower productivity. and design firm Hassell. “If the encouraging employee health and
The pandemic has proved that this workplace isn’t somewhere you wellbeing,” she says.
is not the case.” have to be, it must be somewhere Office designs can include a
The pandemic also appears to you want to be,” she says. “But a range of costlier options too, such
have made many workers less beautiful office won’t succeed on as gyms, swimming pools,
prepared to tolerate unsatisfying or its own.” wellness suites and free day care
restrictive jobs. “A bit of distance The office can also act as an for children. However, research
from the office has given many embodiment of a company’s values suggests that these might not
people a new perspective. The – such as openness, sustainability always represent an efficient use of
most talented employees are or a commitment to employee resources. In 2020, Hassell
demanding more from their health. One of Hassell’s recent surveyed 2,300 workers around the
employer across a range of clients, a health insurer, aimed to world, asking them to pick the five
dimensions and beyond pay – create a workplace that would amenities that they would value
whether in terms of working enable workers to leave healthier most from a long list of features,
environment or flexibility,” says than when they arrive. ranging from dog day care to more
Ashley Whipman, director at “The office was hardwired for green space. “One of the most
interim executive firm Oakwood health,” says van striking features of the results was
Resources. der Heide. “In
addition to a
A place for collaboration wide variety of Consultation is key to find out what is
This can start, he says, with a work settings, important to people. This gives companies
rebellion against “the battery-farm outdoor sports a clear and evolving idea of what really
approach to offices, in which as courts and edible matters to their staff
many cubicles as possible are gardens, a ramp
17• Business | Labour force
You can offer as much free
fruit, yoga and Indian head
massages as you like. If you
then throw people back
into the lion’s den – with a
bullying manager, no
autonomy and an excessive
workload – don’t be
surprised if these
initiatives fail to improve
employee wellbeing
that a lot of the high-end, nice- Demand for flexibility home. “Particularly with travel
to-have amenities were the least Employee surveys reveal time and becoming more challenging
popular,” says van der Heide. Many again that workers increasingly during the pandemic, we have
of the pricier perks – even conve- aspire to a high degree of seen more companies investing in
niences such as a personal flexibility. Most want the virtual augmented reality or drones
concierge and on-site childcare – opportunity to work from home if instead of sending executives to
tended to rank poorly. they choose to and a growing distant factories or other facilities,”
“The two most wanted perks number are also calling for flexible says Gerard Osei-Bonsu, a
were free lunch and a shorter hours and even four-day weeks. managing partner and integrated
commute,” she says. “Right behind This shift in attitudes has a mobility leader at professional
them were a host of practical profound effect on how the services firm EY in Switzerland.
considerations, with people workplace itself is viewed. In Royal Dutch Shell, for example,
selecting options such as more response, more progressive has generated online three-
space to focus, more space to companies have gone beyond dimensional simulations of oil
collaborate, and better meeting seeing the office as somewhere that platforms, making it possible for
facilities.” employees conduct functional engineers to inspect facilities from
tasks, instead regarding it as a home. And David Prinselaar, the
Consultation is key place for collaboration and head of manufacturing at paint
This goes to the heart of what many creativity. maker Akzo Nobel, has inspected
experts consider best practice “The proportion of office space more than 100 plants since the
when it comes to corporate perks of used for individual work used to be start of the pandemic by using
all kinds – companies need to talk 60 per cent on average, with the high-definition augmented
to their employees about what they remaining per cent dedicated to reality headgear.
want. “Consultation is key to find collaborative work,” says van der “This kind of technology
out what is important to people,” Heide. “We’ve now seen this flip wouldn’t be considered a perk, per
says Bajorek. “This gives entirely to the opposite se, but it certainly helps with work-
companies a clear and evolving proportions. We won’t come to the life balance for executives who are
idea of what really matters to their office just to collaborate, but the often jet-lagged. Plus, it cuts down
staff. Questions can include asking proportion has shifted.” on the cost of business travel and
how often they would ideally like to carbon emissions for the firm,”
come into the office. Are they Virtual inspections says Osei-Bonsu.
comfortable with hot-desking? With choice at the forefront of
And would they use a corporate employees’ minds, offices are
gym if it were offered?” Failure to increasingly likely to feature state- If the workplace isn’t somewhere
consult, Bajorek argues, means of-the-art audiovisual equipment, you have to be, it must be
that companies can waste money enabling seamless virtual collabo- somewhere you want to be
on pointless perks. ration with those working from
18Business | Labour force
•
Change in culture
On a more basic level, companies Now companies need a new variety of
have been reconceptualising the leader, more willing to trust and motivate
office, he says. Instead of being a teams that are not always in the office
space where workers were
supervised while they conducted
their tasks – much like a factory
with staff clocking-in – the office is
increasingly viewed as place to
spark creativity. “More forward-
looking firms have become more
flexible about exactly where and
when functional tasks are
completed,” Osei-Bonsu adds.
The demand for such flexible
working is forcing many
companies to rethink their
corporate culture, management
and leadership, says de Boo.
“Many old-school managers had a
strong desire to see their staff
present in the office and were 2016, with founder Chris Hall members of staff, typically the
sceptical that they would be explaining that the perk reflected younger ones, took far less than
productive unless they were the firm’s commitment to “giving their entitlement, and ended up
carefully supervised. Now our people more freedom when it compensating for those who were
companies need a new variety of comes to a better work-life bolder in taking holiday time.
leader, more willing to trust and balance”. After the policy was
motivate teams that are not always introduced, the number of days of Bigger reforms
in the office. This kind of change leave taken rose by 11 per cent – but The pool and table tennis tables
really has to come from the top of productivity increased as well. that became commonplace in the
an organisation,” she says. offices of tech innovators are now
Some firms are making the Increased anxiety more difficult to find. But
commitment to hybrid working Since the pandemic began, the experiments such as unlimited
more concrete, says Maarten radical notion of unlimited leave time off suggest that companies are
Slokker, senior manager in de has become a more popular talking willing to contemplate far bigger
Boo’s team. They are actively point in human resources circles. workplace reforms.
helping staff to set up ergonomic But, as utopian as unlimited “More extreme options such as
home offices – providing free or holidays might sound, such unlimited holidays might go the
subsidised office furniture. concepts could test the limits of the way of the office pool table,” argues
new ethos of worker flexibility. UK- Whipman. “In most cases, such
Unlimited holiday based human resources software perks look a bit like gimmicks that
Perhaps the final frontier of such firm Charlie HR also instituted this may not really help get the best out
experiments in flexibility is the policy, but it ended up returning to of your talent. Instead, cutting-
unlimited holiday allowance. This a more traditional 25-day holiday edge firms are looking for more
concept was made famous in allocation. The company’s human balanced ways to create a
human resources circles by Netflix, resources chief, Amy Cowpe, workplace that attracts and retains
which started the experiment long recounts that while the policy top employees.” However, the
before the advent of Covid-19. aimed to empower staff fully, it flexibility to work from home,
Bynder, a Dutch cloud-based ended up heightening anxiety, once a rare perk, looks likely to
platform for digital marketing, with employees becoming unsure become mainstream in the post-
adopted unlimited paid leave in of what was acceptable. Some pandemic world •
19• Business | Labour force
Employees have been leaving their jobs at unprecedented rates in recent months. But,
while mass departures may fill businesses with dismay, there are genuine advantages to
be gained from staff churn – provided the process is managed effectively.
he Great workers are walking. According to workers. Nor is there much
Resignation is research by management indication that the trend is slowing
viewed in some consultancy McKinsey, 19 million down – McKinsey found that
circles as a US employees left their jobs 40 per cent of employees in its
collective between April and September global sample were at least
Damascene last year, leading to widespread somewhat likely to leave their jobs
moment. After talent shortages. within the next six months.
months of pandemic-induced The UK reported 1.2 million job
soul-searching, the scales fell from vacancies last October, up from Productivity drain
workers’ eyes and they suddenly 400,000 before the pandemic, Such antipathy can cause serious
understood the most important while in Germany, two-thirds of disruption for employers, particu-
things in life: their jobs and the company decision makers say they larly those who need to scale up
daily commute not being among are struggling to find skilled operations quickly as the economy
them. More mundane explanations
include pent-up demand – 2020’s
resignations simply happened in
Consultation is key to find out what is important
2021 – and continued uncertainty
pushing people out of sectors such
to people. This gives companies a clear and
as travel and hospitality. evolving idea of what really matters to their staff
Whatever the explanation,
20Business | Labour force
•
year for knowledge workers.
“Below that, you definitely lose the
fresh perspectives, while above it
you start to see engagement and
client experience suffer as
knowledge is lost.
And a greater burden is placed
on longer-tenured staff while their
new colleagues get up to speed.”
Important though the turnover
rate is, retention is more than just a
numbers game. Quitting can be
good for the business, or it can be
bad – it depends on who is leaving,
The average cost of hiring and training why they are leaving and what
someone new is $4,000, but it is harder to put a happens next.
price on the productivity drain that often
Lack of objectivity
accompanies a settled employee leaving, or
It is tempting to see this primarily
the impact of existing team members taking
in terms of which employees quit –
the slack while a position is unfilled
clearly, it is better to retain top
performers. However, Phipps
cautions against companies
rebounds. The average cost of could revitalise an organisation making performance management
hiring and training someone new is where staff turnover has been low part of their retention strategy.
$4,000, but it is harder to put a and complacency has set in. “There’s this idea that you can
price on the productivity drain that Research shows numerous build a clear view of who are your
often accompanies a settled benefits of introducing fresh blood most talented people and who has
employee leaving, or the impact of in different contexts. One study in a lesser impact, and that from there
existing team members taking the the journal Science examined you can reward and promote the
slack while a position is unfilled. In almost 20 million academic best and ‘manage out’ the poor
some cases – for example, losing articles and two million patents, performers,” he says.
someone with vital specialist skills finding that teams with the most “There are many problems with
or customer relationships to a citations and patents were this approach. The measures lack
competitor – the challenge can generally cross-functional and objectivity, managers are not very
threaten a company’s very viability. involved newcomers. Another good at rating and the focus tends
With employee retention a pillar paper, in the American Journal of to be on the individual, not the
of most organisations’ talent Sociology, showed that leading team”, Phipps says.
strategies, it’s easy to see why the theatrical writers and directors had In other words, employees don’t
Great Resignation is making a lot their best results when they exist in a vacuum. If they seem to
of people nervous. But for collaborated with new talent, be treading water, they may have
businesses with a more considered rather than working with the same been stifled by a dysfunctional line
approach, this mass exodus could old team year after year. manager or culture.
present an opportunity. It’s imperative to diagnose and
Knowledge lost fix those kinds of issues before
Fruits of collaboration The optimum level of employee assuming that an individual is
After all, for most people who quit, turnover can vary widely, too. Jeff automatically at fault.
replacements are eventually hired. Phipps, senior vice president at
They might be more motivated, multinational software company Focus on reasons
skilled and creative, generating ADP, aims for a churn rate of A wiser approach may be to focus
new ideas and perspectives that between eight and 12 per cent a less on who leaves, and more on
21• Business | Labour force
For businesses with a more
considered approach, this
mass exodus could present
an opportunity
why they are leaving – and the concluded, companies should
flipside, why they stay. In a classic strengthen “good” reasons to stay,
1973 article in Harvard Business such as job satisfaction, and reduce
Review, authors Vincent Flowers “bad” reasons, such as inertia.
and Charles Hughes zeroed in on
the distinction between people Paying staff to leave
who stay in organisations because The paper may have been written
they want to and those who stay nearly 50 years ago, but its
because they feel they have to – findings hold good to this day.
because the company pension Take Amazon, which has been
scheme is particularly generous, running a “pay to quit” scheme for
because they have children in local more than a decade. Under the
schools or even because they don’t programme, employees are offered
believe they could get an between $2,000 and $5,000 to
equivalent job elsewhere. leave – the only proviso being that
“Many a company works for low they can never work for the
turnover because it thinks a low rate company again. “We want people
implies that its employees are working at Amazon who want to be
pleased with their jobs – and, a here. In the long term, staying
fortiori, productive. This is not somewhere you don’t want to be
necessarily true,” they wrote. To isn’t healthy for our employees or
ensure that employees are staying for the company,” the e-commerce
for the right reasons, the study giant explains.
There are less dramatic
solutions, such as pitching pay
One study in the journal Science examined 20 million levels at a rate that is good enough
academic articles and two million patents, finding that to attract talent but not so good that
teams with the most citations and patents were generally people join – and stay – for the
cross-functional and involved newcomers. Another paper, wrong reasons.
in the American Journal of Sociology, showed that leading
theatrical writers and directors had their best results Gaining new skills
when they collaborated with new talent, rather than Octopus Energy exemplifies the
working with the same old team year after year point. One of Europe’s leading
unicorn companies, its valuation
increased from $2 billion to
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