Delays, data and desks
Delays In theory we leave the EU this Friday; however, all signs point in the opposite direction. Having failed to achieve progress in the course of Theresa May’s initial ‘short delay’, the question now revolves around the length of the further delay needed to reach a resolution. This evening she is seeking an extension until 30 June, although hoping to reach a resolution before 23 May, at which point the UK would need to take part in EU parliamentary elections. It is likely that the EU, encouraged by cross-party talks around a soft Brexit, will acquiesce to a delay. Emmanuel Macron, believed to be most likely to use his veto, appears to be won over. However, key figures are pushing for this to be longer than May proposes. Donald Tusk is suggesting a ‘flexible extension’ of up to a year, with the opportunity to conclude early if a deal is struck, and Angela Merkel is believed to countenance a delay until the end of the year. Brussels will be looking for reassurances around the extension, and potentially looking to bargain some of the UK’s existing privileges away. Meanwhile, at home, and despite the promise of progress, both the House of Commons and the general public remain entrenched. A ComRes poll this week states that 40% see revoking Article 50 as acceptable outcome, whereas a similar 38% feel the same about leaving with no deal. Reinforcing this, the vote share for the two main parties is down, whereas the Change UK and UKIP shares are both up.
Ahead of the curve If you thought that trading stocks still resembles the finale of ‘Trading Places’, think again. Over 70% of all trades are now carried out through algorithms. The benefits are in the ability to respond super quickly (and cheaply) to market events, leveraging large historic data sets without the inherent biases and failings of human heuristics. The challenge remains, however, that the bots themselves are increasingly reliant on news events created by the same flawed humans. A report by Reuters this week points to a failure of FX algorithms to keep up with the pace of events around Brexit, resulting in volatile currency pricing. In search of increased performance, algorithms have become more complex, and the information on which they rely has shifted from economic data to policy statements and now to key commentators, including politicians. The sheer volume of Brexit related news, combined with the greater number of people who have an influence on its outcome has, it seems, broken the models with some hedge funds pulling the plug. Whilst high frequency real estate trading is still some way off, real estate investment strategies are increasingly taking account of more complex data sets, which put humans in the back seat. Removing intuition in favour of science has an appeal; unless of course that science is in itself just speciously complicated intuition.
Curated content The shift in emphasis of shops from places to transact, to places to exhibit a brand has been building pace. It feels like a safe bet that this trend will continue. A showroom allows a brand to connect to its customers in ways that excite them and, the theory goes, encourage them to make a purchase at some point in the future. That is no mean feat. The customer acquisition cost, especially for new businesses, can be significant. In consumer goods this starts at around £20, and for higher value products (e.g. tech) this can top £300. Hence shops don’t need to deliver sales to justify their worth; they just need to create customers. A new 7,000 sq ft concept store ‘The Conservatory’ in Hudson Yards, NYC takes this a step further. Unlike almost all showrooms, it is not specific to a single brand; however, unlike most other shops, you can’t actually buy anything there. Their proposition to customers is that they curate the best lifestyle products from fashion to flowers. The proposition to brands who choose to exhibit is that The Conservatory creates customers and facilitates an online transaction directly with the brand. Thinking of retail in the traditional sense of having to achieve the full value chain of positioning, sales, fulfilment and aftersales is becoming old fashioned. By unbundling these elements, one allows different actors in the value chain to do what they do best.
DeskDog In previous issues of Futures /Cut, we’ve discussed the convergence of coffee shops and offices. Particularly as co-working has become mainstream, there is increasingly little to put between these concepts. Both involve a desk, coffee, and the ability to meet people. However, coffee shops are not the only formats looking to get into providing office space. Pub operator BrewDog has launched a new concept, ‘DeskDog’, posing the question: ‘Why work in a coffee shop when we have beer?’ Pub trade is notoriously spiky, with (unlike coffee shops) the large majority of trade done in a few hours in the evenings. This creates significant spare capacity during the times that people are typically at work, meaning that prices can be set accommodatingly to clear this capacity. This allows DeskDog to charge as little as £7 per day for: (a) a reservable desk, (b) a power socket (+access to a printer) (c) unlimited coffee, and (d) a pint! Speaking as a Yorkshireman, even I find this a great deal. Indeed, it is difficult to see what how traditional operators that don’t have this spare capacity could compete with this proposition from a customer value perspective. Could pubs be the new offices? There is a question here for the town planners as much as for the strategists. The blurring of uses is no longer hypothetical, and how we categorise these hybrid products going forward will be an important town planning consideration.
Sidewalk apps The constant battle for database managers is to make sure that the information that they hold is up to date; the tech is typically the easy bit. Centralised content management requires centralised resource, and typically that resource is not the source of the information, but acts as either a rule maker or a facilitator. This is why the best databases use decentralised or crowdsourced inputs, and why LinkedIn will always beat your CRM for being up to date. People power can also be used to crowdsource information on our cities, and in doing so provide planners with deeper insights (and free analytics) on how they work. Sidewalk Labs’ new app CommonSpace does just that. The app allows the public to survey and document how public space is used, and in turn provide an evidence base for policy, community initiatives and civic engagement. This has for instance been used to measure the impact of a new seating pilot in a public park, funded by a charity. The app facilitated fast, cheap documentation of spatial usage by non-specialists, in what would have otherwise been a laborious process. It employs visualisation and analysis tools to present information in a way that allows policy makers to spot trends. By reducing speed and cost, tools like this reduce the barriers to entry for public engagement in community projects, which in turn increase democracy and engagement.
Real estate reboot As real estate and technology become increasingly intertwined, so the list of things that could go wrong increases. This started many years ago with one of the first pieces of tech to be introduced into building design – the lift. In any year, workers in New York spend a cumulative 5.9 years stuck in elevators and 16.6 years waiting for them, according to IBM. As we moved into the digital age, things don’t seem to have improved: 22% of all conference calls fail, and we each waste 22 minutes per day trying to resolve IT issues. Do we really think we’re ready for the age of IoT? In a taste of the challenges to come with connected buildings, the BT tower in central London, famous for displaying positive messages across its colourful 360 degrees ‘Information Band’, this week crashed, instead displaying the Windows boot up error message. To add insult to injury it was the Windows 7 error message, (remember 2009?). The rumoured solution was to turn the building off and on again.