It Ain’t What You Do.

The best leaders focus, almost exclusively, on culture.

Culture is the way your business behaves. Especially when no one is looking.

Culture is the attitude with which your team comes to work, it is the generosity of spirit they do or don’t show to their coworkers; it is, as a whole, is the way you as a group of people think, act and interact.

It’s not what you say. It’s what you do.

And this matters, a great deal, because culture is how, as a leader, you actually get things done.

If you have a positive, can-do culture that is generous, permissive and creative then your vision for your business – your ‘Shining City On A Hill’ – is so much more likely to be realised.

Without it, your ideas – no matter how ‘good’ – will remain just that; ideas.

Because, as the song says, in the end, it ain’t what you do, it’s the way that you do it.

That’s what get results.

Monticello LLP

Love Will Tear Us Apart.

The Future of….Separation
– by Pip Wilson, Founder, amicable

You’re in your early 40’s, it’s June 2016 and your marriage is falling apart.

The pressure of work and kids and the passing have time have meant you have drifted apart and after months of pain you have both agreed it’s over.

You’re sad, you’re not thinking straight and the road ahead feels long and painful, where do you start? A friend introduces you to their lawyer, the first conversation is free, subsequently it’s £300+ an hour.

You’re facing a total cost of thousands, much more if you end up in court. Surely every penny counts when faced with the prospect of supporting two households?

The lawyer, your friends and family all say you need professional support.

Maybe you can do it yourself, there is countless information available, but it seems so impenetrable: where do you start? You try and talk to your partner but it turns into a row, waking your youngest child, who sobs inconsolably “Please stop shouting Mummy and Daddy.”

Now you have to determine who is at fault. The current law in England and Wales decrees one of you must take the blame for the break-up of your marriage, what’s that going to achieve?

Everyone seems set on turning it in to the biggest fight possible, how is that going to help you, you partner or your kids get on with their lives? Surely this is a broken system?

Why has technology added so much (whether you like it or not!) to some parts of life but barely influenced other events such as divorce and separation?

Partly there is a generational aspect, the mobile generation haven’t yet reached the “peak” divorce age, so haven’t demanded better solutions.

Then there is the legal industry promulgating the view that every divorce is unique and you need someone on your side. Acrimony and protecting an individual appear to be actively encouraged and the level of emotion clouds even the most rational person’s mindset.

What is in essence an emotional process is generally perceived as being a difficult legal process. The result is that historical approaches endure, with fear and misunderstanding preventing change.

So what could the future of separation look like?

At amicable we believe that as humans we need to be encouraged to recognise the difference between the emotional process and the practical one, to allow ourselves time to focus on the sadness and grieve what we have lost.

It is unnatural to expect someone in times of great stress to be able to make rational practical decisions on a given day because that’s when they happen to be seeing their lawyer!

It’s also fundamental that if someone needs help from a professional it’s the right person at the right time. If you are struggling with the emotional side of divorce see a counsellor or even a friend; not a lawyer.

Once these two journeys are recognised the potential of technology to help with the practical side becomes much clearer. The practical side is simply a series of decisions to be made, including where you children will live, what your house is worth, where you will spend Christmas.

The majority of those questions are the same for everyone. They may be difficult decisions but they can be turned into an easy-to-follow process that breaks down the communication barriers and moves people forward in a time frame that works for them.

Technology can help individuals communicate better, it can help shift through vast quantities of data to show you precedents, it can pre-fill agreements and it can facilitate negotiations.

Why not let it do all that and let humans focus on dealing with emotions?

– with thanks to the author, Pip Wilson, Founder of amicable

They’re Talking In A Language I Don’t Speak.

It’s boring. And it shouldn’t be boring.

We have been presented with a hugely important decision. The most significant for a generation.

Yet, despite initial enthusiasm and interest in the EU referendum debate, it’s been ruined. Ruined by the same people who have ruined so much else: professional politicians who have no idea how much they are loathed.

For their part, politicians bemoan our lack of ‘engagement’; as if it was somehow our fault.

This is absurd. Over the years, I have been privileged to hear some of the world’s most experienced and senior marketers talk about their business and brands, and how they take them to consumers. If, at any stage, they had sought to attribute any lack of engagement in their products and services as the fault of their prospective customers, they would, quite rightly, have been fired.

Go to any marketing conference today, and you can bet your bottom dollar that, amongst the myriad buzzwords, you’ll hear both ‘purpose’ and ‘authenticity’ repeated a lot. This isn’t by accident.

When did you last hear a politician talk with either purpose or authenticity, let alone both?

Instead, they continue to trot out the same pompous, top-down, duplicitous, jargon-laden, deeply patronising gobbledygook that no one in the real world would ever dream of trying to get away with. We are seeing this writ large with the referendum debate.

They treat us as if we were stupid, as if we have no interest in policy and decisions. They seek to pretend that there is only right and wrong, only black and white, as if we have no experience of the multiple greys that we know exist in the real world. They rattle off statistics and numbers and hollow soundbites that are mind-numbingly meaningless.

And then they blame us when we refuse to buy it.

It is simply not credible. If you have a message that you need to convey, it is your job to communicate that message in a style and format that will resonate with those to whom you are trying to speak. And in this respect, there is absolutely no difference between politics and business.

Except that business does it much, much better. It has to, because, in a free market, where brands jostle constantly for share of mind and share of wallet, there is no alternative.

If politicians were genuinely serious about engaging voters, they could do significantly worse than learn from the folk who are out there, every day, at the coal face, developing new products and services to cater for the changing needs of ever more choosy consumers, working hard in an increasingly noisy world to win hearts and minds, and doing so humbly.

The irony of the EU referendum debate is that in opining on the Brussels political establishment, our own has exposed its manifest and multiple deficits.

The British people deserve better.

Nick Jefferson is a partner with Monticello LLP, the advisory firm, and a curator of The Library of Progress.

Stand, And Deliver!

‘The thing about Tony’, drawled the President, ‘is that he does what he says he’s gonna do.’

When Tony Blair was in the final stages of his premiership – and not terribly popular at home – he embarked on what to all intents and purposes looked like a valedictory world tour.

Along the way, he was mobbed by adoring crowds of cheering foreigners waving Union Jacks in a way that Brits hadn’t since that first sunny morning in May 1997.

Obviously, The Big Stop was Washington DC.

There, in the Rose Garden, a reporter asked President George W. what he could say about the outgoing Prime Minister. And he answered as above.

Stop for a moment.

The ultimate accolade that a President could pay a Prime Minister was that he did what he said he was going to do.

This is hugely powerful, and terribly instructive. When you think about it’s what we all want, right – for people to do what they say they’re going to do? We want that from our friends, our colleagues, our boyfriends, girlfriends, husbands, wives….everybody.

Brands are no exception.

But for many, many years, they thought they were. A brand would say that they, or one of their products or services, would do one thing but the reality, as consumers on the ground experienced, was often very different.

It was about priorities. The money would go into marketing, tons of cash being pumped into hyping the message, selling ‘the dream’. And not into customer experience.

But the brands would ‘get away with it’ because disappointed consumers had little comeback. Some would complain, of course. But their complaints were as individuals, lowly Davids against corporate Goliaths, and thus – provided that the marketing machine kept up the propaganda – the reputation of the product or service would remain intact until the market had been saturated.

Not any more.

As every green, young graduate of a Marketing or Media Studies degree will enthusiastically tell you (regardless of whether you asked) social media changed everything.

The voice of consumers now has scale. Serious scale. And so the tables have turned. Shoddy, or simply underwhelming, products and services that just don’t match the hype are taken to task on twitter, Facebook and the rest – and seen and read by millions. Suddenly, consumers are Goliath and the brands are Davids.

Some brands have understood the truly Copernican nature of this shift with corporate dollars flowing away from marketing hype and towards genuine customer-centricity (often executed with all the elegance of a drunk elephant, but well-intentioned nonetheless).

But that is a minority.

Others, the majority, the rabbits-stock-still-in-front-of-the-oncoming-juggernaut, respond with more of the same: ‘Consumers are flighty? Let’s redouble our efforts to convince them it’s all ok. Quick! More marketing! More hype!’.

Consumers know this, and they hate it. Authenticity in marketing has long since become a cliché (which doesn’t mean it’s not true) but it goes much deeper than that.

We are, I think, talking about the need for a fundamental review of corporate structures, budgets and, most importantly, mindsets. We might need to, gulp, recognise that….

the high water mark of marketing may well have been reached.

That doesn’t mean that marketing isn’t important. It is, and it always will be. We all want to show the best side of our business, of our products. It’s just that, increasingly, it probably isn’t as important as ensuring satisfied consumers, who, after all, now have the ability to do our marketing for us.

I once knew an HR Director who suggested to the CEO that they close the entire HR department, make everyone, including herself, redundant and invest all the money instead in a fund to pay employment lawyers on an as-needed basis.

What if, just, what if, there was a CEO brave enough to think about doing the same with a bloated marketing department, investing all the savings not in lawyers, but in guaranteeing a world-class service to consumers each time, every time?

You might think it’s stupid.

But the world thought Dubya was stupid….

Nick Jefferson is a partner with advisory firm, Monticello LLP, and a curator of The Library of Progress.


Chain Reaction.

Uncle Jimmy needed a lot of a sausages.

So off he went to CostCo.

One look at Jimmy’s magic CostCo card, and the cash-and-carry greeted him like a long-lost friend.

Brilliant customer service. And exactly what Uncle Jimmy had come to expect from CostCo.

Except that he usually shops in their Canberra, Australia store. And this was Cardiff, Wales.

There are lots of ‘global brands’. We all see them, every time we travel: familiar neon logos beaming down at us, as if to say ‘that flight you just took halfway around the world? Well, that was kind of irrelevant’.

But not many of these global brands are genuinely global businesses. Not many of them can pull off what CostCo did for Uncle Jimmy.

Which is going to become a big problem for them. Borders, especially national ones, are increasingly seen as somewhat démodé by the world’s mobile elite.

There is a new tribe that glides effortlessly around the world. Its members move from London to Buenos Aires like their parents moved from Salford to Crewe. They’re the tribe that everyone wants to sell to.

And from the amount that brands spend on proudly demonstrating their ‘international presence’, you’d be forgiven for thinking that the tribe was more than catered for.

You’d think that these businesses would be bending over backwards to ensure seamlessness of approach, wherever valued ‘tribe members’ happened to tip up.

But they don’t. Ask anyone who has tried to set up an account in another country, with ‘their’ bank. Or deal with a utility company, with whom they thought they had some ‘good history’. Or a brand of car, or the insurers for that car. The list goes on.

There are, as ever, exceptions. But by and large, not only is the process of dealing with a supposedly familiar brand in an unfamiliar location tedious, sometimes a pre-existing relationship can prove an active hindrance.

Before the digital revolution, big brands got away with this. Largely because there was often no viable alternative for the consumer.

That simply isn’t the case anymore.

Industries are being disrupted left, right and centre. One key differentiator remains truly excellent customer service, (as the latest ‘Chief Customer Officer’ – ’Doh!’ – trend suggests).

Consistently brilliant customer service gives long-standing businesses an ongoing legitimacy in an otherwise topsy-turvy and, often, hostile world.

That’s why CostCo works hard to get it right. Others need to follow suit.

Because you don’t need to be buying a string of sausages to know that any chain is only ever as strong as its weakest link.

Monticello LLP

I Know What It Means To Work Hard On Machines.

The Future of….Technology
– by Carolina Vicente, Director of Digital Marketing, Google

It’s the crystal ball moment we all love, folks. What will be?

We are all in a relentless search for answers in our everyday lives and look to the future of technology with anticipation, hoping it will bring an elixir of eternal wealth and power where the possibilities are endless. In this new world (enabled by technology), the future looks sunglass bright, promising and full of possibilities.

Technology enables the creation of data at phenomenal scale and speed. Thinking about the fact that well over 90% of today’s data has been generated just over the last 2 years, the jaw-dropping dimension of it all starts to sink in.

It’s a little like the good ol’ chicken and egg scenario, where the generation of more data is also allowing new technology to be developed – think programmatic and the subsequent incessant rise of new algorithms, businesses and products, all promising to be the solution we are looking for when it comes to having one-to-one conversations at scale over the web – or finding the answer to the elusive 360 degree view of the customer.

But I digress. There are truly impressive uses of technology being discussed at large scale within several businesses today. From renewable energy to ‘humanised’ drones – the sky is (quite literally) the limit.

With renewable energy, wind energy is possibly one of the mainstream technologies that needs a complete overhaul. Only 3% of the world’s energy comes from wind, and incremental technologies are not cutting through this reality, with only about 15% of land around the world being suitable for the next turbine iteration – in other words, we need to start over.

While it may often seem like we have a long way to go when it comes to sustainable renewable energy generation, there are a few countries that show us this is entirely possible – Costa Rica has shown the world last year how it’s done by drawing 99% of its energy consumption from renewable sources. Pretty impressive.

Biotech is in my opinion, one of the most exciting areas where technology can shine and truly improve (if not completely transform) how we live today – and how long for. Looking at the human body as a series of separate systems and addressing longevity as you would address oiling a machine (system by system), means we could be living exponentially longer in the not too distant future.

The application of nanotechnology to medicine could mean diseases like cancer will be a thing of the past. Equally, could neurohacking mean our own brains could ultimately engineer the makeup of our bodies and by definition, determine how long we live for – and what quality of life we can have?

Today we can already see companies like Google & Novartis partnering to alleviate diabetes management through the use of a microscopic technology attached to a contact lens. The gadget measures insulin levels through tears, which is ironic, as constant, tearful stabbing of one’s finger to draw blood several times a day is now not longer necessary.

Robotics is yet another trend looming in the horizon. Images of human-like creatures spring to mind – much like Atlas Robotics’ drones. This area could improve the way logistics and elderly care are conducted in the future. In fact, many companies have already acquired licenses to use drones commercially, with France and the UK leading the way. Industries like oil & gas, transportation and even Insurance are all jumping on the robotics bandwagon, all hoping to be first to the future.

All of these technologies are generating more and more data. In fact, so much of it exists and is being captured, that companies today are struggling with what to do with it and where to start.

Thinking of the customer first might be a good starting point. This is where innovation comes in. How can we change what we do today (and how we do it), anticipating what people will want next? Innovation through technology then becomes a critical catalyst to change. Making use of today’s technology, we can create solutions that did not exist yesterday.

Think of the driverless car. A fundamental economic and sociological change in the making, that made use of existing technology to address several world problems. All of a sudden, those who are visually impaired can drive and be more autonomous going from A to B all on their own.

Addressing mortality on the roads (not only from a life preservation perspective, but also with an economical lens) is yet another issue driverless cars are trying to solve. According to a recent report, road accidents cost the global economy over $500 Billion annually. Wouldn’t it be great if technology could solve this… oh wait a minute…

Changes such as these will reshape economies profoundly. Thinking not only of the driverless car but also the sharing economy, who is the end customer? Will insurance companies insure the manufacturer, the vehicle, the driver or will the sharing economy mean we will need a hybrid insurance model?

It is important to constantly question ourselves and our businesses to determine if the road to obsolete is unavoidable, or if true technological transformation could act as an accelerator to positive change.

And then there is everyone else racing to the same finish line. Former GE CEO Jack Welch said there are only two sources of competitive advantage: Know more than your competitors and act faster than anyone else. I would add a layer to this and say we need to be able to generate more ideas and encourage creativity to use that knowledge to its true potential.

Disrupting yourself as a business is key to survival. If you are not disrupting your business, chances are you are being (or will soon be) disrupted – possibly irreparably, in a “close the front door” kind of way.

Startup incubator units are a great way to ensure disruption can accelerate within traditional businesses.

In a reality where technology is already enabling exponential economic growth (more investors, fractional comparative/like-for-like costs, more wealth and 100 times more power), looking ahead no longer seems like we are gazing into a crystal ball. The future really is here, and things are only going to get faster. Successful businesses will need to lead trends, not follow. By the time you have geared yourself to follow a trend, it will already be too late.

Get in the front line of the race or risk being left behind.

– with thanks to the author, Carolina Vicente, Director of Digital Marketing at Google. Please note that the author writes in a personal capacity and her views are not necessarily reflective of the views of Google. 

Not Afraid.

There are cowards everywhere, of course. In every industry.

You’d have perhaps thought there might be fewer in an industry that requires creative leadership.

But it turns out that this isn’t the case. Au contraire, in fact.

I once worked for a coward. He was a marketer, a ‘creative’ in fact, and he just couldn’t take decisions.

As a result, his agency became a festering pit of the juvenile politics of ego. A court, per Machiavelli’s Prince, but where everyone ends up playing the jester. This tedious situation was compounded by the fact that, disgracefully, it was all so obvious to both the agency’s junior staff and clients.

Not cool. But, more to the point, not necessary either.

Taking decisions as a leader, perhaps especially a marketing leader, is the job.

That’s it.

If you can’t take decisions then you are in the wrong job. This is doubly so if that job is in marketing where someone, ultimately, needs to back an idea and then rally the world, internal and external, around it.

A chap called Marcus Buckingham, in his book, The One Thing You Need To Know, argues that the number one priority of leaders should be to offer clarity. For him, leaders have a duty to set out beyond a shadow of a doubt where they stand, and what they will or will not tolerate.

This duty of clarity is so acute, says Buckingham, because it is what those being led want. They want this, he asserts, more than they want anything else at all – including liking or agreeing with whatever is being said.

In this thinking, he is in good company. Earlier this year, I read Boris’ brilliant biography of Churchill.

One of the (many) striking things about our wartime Prime Minister was the extent to which he was ready to make decisions; especially the hard ones.

The Mayor of London rates this characteristic very highly: I remember some years ago, in a wide-ranging interview he gave to the Evening Standard, he himself was quoted as saying:

“People don’t care what decision you make, they just bloody well want a decision”

Take a second to consider the most effective leader you can think of – business, political, even social. Is that person clear?

Indeed, would you go so far as to say that being clear – even when that clarity drives you crazy – is one of their defining characteristics?

In making and implementing clear decisions, one way or another, leaders set the agenda. Especially when it comes to marketing. It may not be an agenda that others like, but at least it gives them something to react to.

Even die-hard opponents of an idea ultimately tend to want a clear decision: it gives them something tangible to be “against”. Take a decision, good or bad, and one way or another you set the agenda.

Dither, and watch others set your agenda for you.

Fear is leadership’s sworn enemy.

And creativity’s kryptonite.

Monticello LLP

– this piece first published by The Marketing Society

I’ve Got Hurt Feelings.

I’m offended.

I’m offended by all the people who keep saying they’re offended.

Actually, I’m just bored of it. Really bored of it.

‘Outraged’ and ‘offended’ are the mots de nos jours.

Hypertense, strangulated tones surround us. It’s like everyone in the country is engaging in their own equivalent of being the nutter at the bar; coiled springs goading you into spilling their pint so they can feign ‘offence’ and have a swing at you.

Being offended is the opposite of being tolerant.

And tolerance is the goose that lays the creative golden egg.

Tolerance is a precondition to novation; the willingness to think that little bit differently, to accept new ideas from new places. It’s what produces genuinely fresh thinking.

Orwell’s Big Brother knew that if he stifled freedom of speech, he ultimately stifled freedom of thought, which in turn would mean no creativity – just what he wanted. ISIL are trying to pull the same stunt, albeit more clumsily, barbarously and murderously.

Thankfully, the history of the world is pretty clear that murderously intolerant regimes like ISIL, whilst brutal and hugely damaging, just do not last over the long term.

The same is true of corporations run on an overzealous ‘command-and-control’ model. They ultimately break down.

This is because humans need something different.

We need to feel that they can thrive. Together, for sure, but also as individuals.

Smart leaders, political, religious and corporate, know this. And they create structures and cultures that enable and underpin tolerance.

Ironically, perhaps, given ISIL’s desire to recreate the ‘Caliphate’, the ‘Golden Age of Islam’ was one of the most tolerant civilisations ever. And it was because of this that muslims were able to dominate, over centuries, an empire that stretched from what is now Iraq in the east to Southern Europe in the west.

The Caliphs of the Golden Age deliberately filled their jasmine-scented, fountain-adorned courts with astronomers, doctors, mathematicians, physicists, philosophers and thinkers of all kindsl

They tolerated other ideas, other religions – not pointlessly, but because they recognised that the resultant technologies and truths that would emerge from such tolerance could be leveraged to ever-strengthen power and dominance.  They saw that progress, development and growth were good: good for individuals, and so good for society overall, and so good for its leaders too.

Historically, at least, we Brits have also been famous for our tolerance. And there can be little doubt of the extent to which this fuelled the success of our own empire too.

We Brits don’t like the state-knows-best dirigisme earnestly pursued by some of our European neighbours. We prefer instead to put our faith in the eccentric ingenuity of our (often odd, and quirky) people.

Tolerance is the Magna Carta; tolerance is John Stuart Mill, the Non-Conformists, the Suffragettes, Alan Turing, Quentin Crisp, Sid Vicious and Vivienne Westwood.

Tolerance is the creation, lauding and awarding of a TV spot that would never even get thought of in the US, let alone commissioned.

Tolerance is Britain and Britain is tolerance.

Tolerance is what makes cultures – national, tribal, corporate – truly sustainable.

So let’s stop ‘being offended’ and start ‘being tolerant’; reclaim it as our own.

Apart from anything else, tolerance makes the world a kinder, more fun and inextricably more creative place.

Nick Jefferson is a partner with advisory firm, Monticello LLP, and a curator of The Library of Progress.


Why Do You Build Me Up, Buttercup?

‘What on earth do you think you’re doing?,’ snarled the imperious, plump little woman from behind her clipboard.

‘Hi’, my friend grinned. ‘Just taking a picture of the brilliant model’, he said, genuinely. For he wasn’t just anywhere. He was deep within his employer’s ‘Creativity Lab’.

(Let the record show that the ‘Creativity Lab’ is no ordinary corporate workspace. Oh no. No grey furniture, no drab pastels here. The ‘Creativity Lab’ is all brightly coloured bean bags, and squidgy balls; PostIt notes and trail-mix.)

And there, in the heart of what to the outside world might have looked like a regular corporate meeting room hurriedly filled with some hideously clichéd ‘creative’ accoutrements (because it was), was the offending model.

I’ve seen the picture. It was, indeed, brilliant: a searing tower of Meccano excellence. You could say it was the poster child (at least for this corporation) of what the ‘Creativity Lab’ was all about – the chance to break out, to explore a different way, to offer and experience a flash of colour (and perhaps even insight) in an otherwise dull world.

And yet the beady-eyed little woman was aghast.

‘Did you make that? No one is supposed to use the Meccano. It makes a real mess of the room. We can’t have that. You’ll need to dismantle it. Straightaway.’

Her brusque tone left no doubt in my pal’s mind. She definitely wasn’t joking.

But she should have been.

Making your corporate culture one that is more creative is not a luxury. It is business critical. In the 21st Century, success, in part, is defined by how differently you can think.

That mindset has to come from within. Each person in your business needs to live it, breathe it; nurture it. The fragile flower of creativity needs the light and warmth of tolerance, diversity and fun in order to grow. Not the suffocation of the Poujadiste, risk-averse, computer-says-no mentality of an idiot with a clipboard.

The whole idea of a ‘Creativity Lab’ is, for my money, absurd. Creativity does not have a ‘place’, for a start.

But if you are going to ram A. N. Other meeting room choc-a-bloc with things that you earnestly (if misguidedly) believe are going to make your people more ‘creative’, then, erm, shouldn’t you at least let them use them?

Nick Jefferson is a partner with Monticello LLP, the advisory firm working across Brand, Culture and Digital, and a curator of The Library of Progress.


Ice, Ice Baby.

London buses are big and red.

Sometimes they have adverts on.

Normally, you don’t notice the adverts (which says quite a lot about our profession).

But every now and again, you see a cracker: something that really ‘works’.

And so, hats off, Iceland.

Their new campaign goes something like this:

Q: ‘Crème Brulee made in Northern France? Sounds delicious, authentic and somehow terribly ‘smart’. Right up my street. But how can it possibly still be fresh by the time I buy it?’

A: The Power of Frozen.’

It’s genius.

This campaign doesn’t hide from the fact that Iceland sells frozen food. It celebrates it.

Because, you see, the freezing is what enables you (you terribly sophisticated foodie, you) to ‘savour the delicious flavours of wood-fired pizza from the foothills of the Dolomites, freshly caught salmon from the Norwegian fjords or sumptuous, soft gelato from Verona, all in the comfort of your own family kitchen.’

It’s a long way from the ‘prawn ring’, that’s for sure – and it all sounds a lot more John Kerry than Kerry Katona.

This unapologetic appeal to the ‘Lidl Classes’ is as brilliant in its execution as it is ambitious in its apparent aspiration – to put to rest, once and for all, the ‘Bejam’ zombie and to develop a wholly different brand position for Iceland.

Indeed, the German grocers who ripped up the (frankly, class-based) British supermarket hierarchy might just have watch their backs. There’s an old (but seriously reinvigorated) kid on the block.

The power of frozen?

That’s why (yummy) mum(mie)s go to Iceland.

– this piece first published by The Marketing Society

Monticello LLP

I’ve Got The Power!

The Future of….Energy
– by Guy Winter, Partner, Addleshaw Goddard

In 1974’s noir classic Chinatown– arguably Hollywood’s greatest-ever movie about the ‘Water-Energy-Food Nexus’- Jack Nicholson’s character, hard-boiled PI J.J. Gittes, says of supply from LA’s Water and Power corporation: “Before this- I turned on the faucet, it came out hot and cold, I didn’t think there was a thing to it.”

Now Jack- and his fellow Californians- know all about the value of water. Since the Western U.S. Energy Crisis of 2000 and 2001 and, more recently, prices at the pump that have already fluctuated by nearly a buck and a half per gallon in the last 12 months, they know all about power uncertainties too.

What is still less well-known is how intertwined their- and the world’s- water and energy futures truly are. To understand how the Water-Energy Nexus works, you only need to drive your 1937 Buick 85 miles down south from Chinatown.

When the Carlsbad Desalination Project opens in 2016, it will be the largest ocean desalination plant in the Western Hemisphere, purifying 50 million gallons of drinking water a day for thirsty San Diego County.

This is a conventional reverse osmosis plant that smashes 100 million gallons of seawater a day through state-of-the-art membrane filters. The salt and other nasties are left behind, leaving Greater San Diego with all that lovely freshwater- plus the bill for 38 megawatts of average continuous energy (let’s say, US$50 million per year).

To put that power demand in context, a modern, commercial-scale wind turbine- the type you may see in the British countryside, and cuss at if you’re Donald Trump- has a maximum generating capacity of 2.5-3MW. And- as Donald will doubtless tell you- only generates that intermittently.

So that’s the rub: you can have as much water as you have the power to desalinate (or to pump from somewhere else). Oh, and you can only have as much power as you have water to generate it with.

Here in the UK, the electricity generation sector is by far the largest licensed abstractor of water of all sectors of the economy, including public water supply. Meanwhile, our water industry uses up to three per cent of total energy used in the UK, treating and transporting water and wastewater.

And that’s in this watery isle- desert kingdom Saudi Arabia burns 1.5 million barrels of oil every day to desalinate water. Even at today’s oil price (which we’ll come onto), that’s a water bill of US$70.5 million per day- US$25,732,500,000 per year.

If their water consumption continues to grow at its current rate, by 2040, they will be burning all their oil just to satisfy domestic freshwater consumption. This is what brings empires to their knees; that changes the economic geography of the world.

Coal-fired generation supplies 70% of China’s electricity needs, much of it via old-fashioned water-cooled facilities. But since there’s no water in the arid, industrial north of the country where the energy is needed, China simply can’t build the new coal-fired capacity it needs to power projected growth in energy consumption of 60% by 2035 (Source: BP Energy Outlook 2035). In fact, BP projects that by 2035, China will become the world’s largest energy importer, overtaking even resource-constrained Europe.

All of this sets the scene for a future that will prize both water and energy (because they’re kind of the same thing) hugely more than at any time since the Industrial Revolution began to tap the world’s resources with unprecedented voracity and technical prowess.

2015 was the first year in which water crises took the top spot in the World Economic Forum’s Global Risk Report. Whilst in Africa, with its growing middle-class and a young population which will form 23% of global workforce by 2050, only 290 million out of 915 million have access to electricity- and the number without is actually GROWING.

I had the incongruous experience of sitting in the first world splendour of one of Lagos’ finest restaurants (unfair to name it, since this could have happened anywhere on the island), talking to excited Nigerians about their country’s boundless possibilities, only for the lights to cut out three times before our starters arrived.

And Nigeria has the ninth largest proven natural gas reserves in the world (US$2.5 billion dollars of which is literally burnt off as a waste-product from more lucrative crude oil production every year- because there aren’t the pipes to transport it or the power-stations to sell it to).

For now, Nigerians pride themselves on their expertise in tinkering with their (exorbitantly expensive) diesel back-up generators at home.

In the West, almost all economic activity over the last 250 years has been massively subsidised by cheap energy from fossil fuels and (since the Age of Steam may be over for the railroads, but it certainly isn’t for the power sector)- water. That game is up.

As I look at my screen this morning, the spot price for Brent crude is under US$50. In theory this represents a value transfer from net oil-producing states back to net oil-consumers (such as the UK).

The reality is that this is no longer a zero-sum game, but part of a long-term structural change that will see the costs of finding, producing and transporting Oil & Gas creep relentlessly upwards- until ultimately some of it is simply left in the ground.

There may currently be quirks of supply and (in China’s case) plummeting demand, but paradoxically the present glut of cheap oil is deferring final investment decisions on new Oil & Gas projects (estimated by O&G gurus Wood Mackenzie to be worth around US$1.5 trillion), storing up an investment shortfall that guarantees a volatile future for the medium-term market. So Oil & Gas won’t be subsidising anyone indefinitely.

US shale oil and gas is not necessarily cheap to produce- but it is developed by hugely flexible, innovative and incentivised operators, in exactly the right place to sell it into a vast and lucrative market.

That’s why the US shale producers are the new “swing producers”, replacing OPEC- which now seems to have let the supply-side genie out of the bottle forever. US shale is the bogeyman to OPEC (itself once dubbed ‘One Purely Evil Cartel’ in the land of the free) because it now represents an effective cap on the oil price.

Nimble (i.e. non State-controlled) oil companies can ramp up production in the Eagle Ford, Bakken or Marcellus Shales very quickly when prices for sweet, light crude pass the break-even for given fields, and consistently drive production costs down by squeezing the supply chain for greater efficiencies and innovation.

In the wider world, over 40% of global electricity is still produced from coal- but with the International Energy Agency warning this year that without further action on emissions from coal-fired power plants, nothing can reverse global warming beyond the 2 degree threshold for irreversible dangerous climate change and the G7 aiming to reduce fossil fuel emissions by up to 70 per cent by 2050, coal-fired generation capacity in Europe and North America is falling off a cliff.

What then does the future look like, without Old King Coal and JR Ewing to prop up the bar? As always, it is already partly with us:

1. All retail and consumer-focussed companies will be energy companies too: the need for predictably-priced, reliable energy and the financial and reputational cost of large residual waste footprints is already driving the sector to innovative, small-scale renewable energy and Energy-from-Waste projects (solar panels on the factory and car-park roof; wind turbines on the industrial estate; on-site anaerobic digestion, gasification and pyrolysis Energy-from-Waste treatment processes).

2. Existing assets will be sweated more: why not use the idle back-up diesel generator your hospital is required by law to maintain, to off-set intermittent renewable energy from nearby wind and solar generation?

3. Demand-side energy and water management and technology will slash consumption- that means smart meters, smart appliances (smart fridges!), electricity storage (maybe even via Tesla electric car batteries), efficient domestic boilers and telemetry systems to identify and help fix leaking pipes. On the idyllic western shore of Lake Como, our client Xylem Inc. helped the local pumping station to cut energy use by 30 per cent, with an intelligent control system that automatically adjusts the rotation speed of the pump impellers, to deal with the changing composition of the input water.

4. Big thermal power stations and their iconic, brutalist cooling tower stacks will continue to dwindle in number- the new Hinkley Point 3.2GW EPR nuclear power station in Somerset bucks that trend, but at a projected cost of £24.5 billion; almost certainly we will need a new generation of Combined Cycle Gas Turbine (CCGT) power stations before renewable energy is ready to keep the lights on; but unless vital, exciting but criminally-ignored Carbon Capture and Storage (CCS) technology is developed at scale to catch CO2 from fossil fuel-burning power stations and send it by pipeline for burial in depleted North Sea gasfields (or somewhere), the energy landscape will have to change dramatically if the UK is to hit ambitious G7 and EU emissions targets.

5. It looks like being another American Century- the US Shale Revolution is an incredible vindication of America’s innovation and the economic invigoration of freedom (as well, perhaps, as the precept that fortune favours the brave). We still don’t know the full extent of the economic boost American industry will receive from the chemical feedstock (especially ethane, for ethylene cracking) to be found in “wet” shale gas plays. China has huge shale gas reserves too (more, by volume, than the US), but not the rigs, technical data or water to exploit them. But necessity may yet be the mother of a Chinese 22nd Century, as China’s vast investment in renewable energy (and watch Germany too, with its extraordinary, trillion euro Energiewende blazing a remarkable renewable energy trail in Europe) could build a low-cost, reliable energy supply to power its manufacturing sector- just as America and the rest of the world finally hits the hydrocarbon wall.

6. It may or may not mean UK shale gas development, as a “transition fuel” into a truly renewable future. But that’s almost too close to call right now, with a huge glut of Liquefied Natural Gas (LNG) about to hit world energy markets, and pent-up, low-cost supply wreaking havoc with hydrocarbon prices for the foreseeable future. The great allure of UK shale is arguably not the prospect of Blackpool or Preston turning into the Dallas of the North, so much as security of supply in the event of political upheaval in Russia or the Middle East- and that chemical feedstock to keep the crackers at Grangemouth and Teesside running competitively.

7. Most likely of all is that if we can just go a bit easier on the world- put an end to slash-and-burn energy and water use, manage demand and use transition fuels such as natural gas and renewable energy more shrewdly- then technologies that we are only scratching the surface of now will save it. A friend of mine (and of the editor of this series) has recently been involved in the successful £22.7 million funding round by First Light Fusion, a spin-out from the University of Oxford, which has discovered new implosion processes that can achieve the high temperatures and compression necessary for nuclear fusion reactions. If they (or any of the rival and complementary technologies being developed in the UK and around the world) can get to commercial application- then that changes everything.

As Eddie Redmayne / Stephen Hawking says in The Theory of Everything (Hollywood’s greatest ever movie about the resilience of science?): “While there’s life, there is hope.” Water and energy are the essence of life, and there is definitely hope.

– with thanks to the author, Guy Winter, Partner at Addleshaw Goddard.