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Archive for the ‘Management (English)’ Category

Certainly we are living in interesting times. My first “serious” job was as Administrator of the Computing Centre at the Complutense University of Madrid. The centre was equipped with an IBM 360 which had a main memory smaller than my actual smart phone. So here we are, equipped with a powerful hand held instrument that, most of us, use for calling/texting friends and acquaintances, listening to music or watching TV shows. What a waste!

So, people around the world are trying to introduce us to the wonders of apps: smart little pieces of programming that are intended to make life easier for us. From advising us when the next bus is coming to how to navigate those streets we are not familiar with.

But there is another use that is being explored and promoted but still is not part of our lives. I am talking about those apps that are intended to change our lives. According to a recent report (mHealth App Economics 2017 http://www.research2guidance.com) there are some 350.000 health apps on the market. I have not found a similar study for other sectors, for example managing disasters, but a Google search for it gives 262 results, so it is not a fringe issue either.

Anyhow, the fact is that be it 350.000 or 262, the spread of those apps is meaningless. Do you know anybody in your circle using one app for a practical use in health or in security? I do not and I am closely involved with the socio-health sector, and have some connection with security issues.

The only possible conclusion is that the business model on which those apps rely are faulty. Most of them are built thinking of the future, a user that does not exist, either because the app is too complicated or because it is too simple. We are simply forgetting about user-centered co-design. We design things for the user but not with the user. Let´s try in 2018 to change our design mainframe and put the user in the centre of our efforts. That will make our times even more interesting.

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The life of an AAL project, and for that matter of any R&D project, is very similar to the life of a human being. Let´s take a look at the process.

A human life starts even before inception, it is an act of love, the decisive moment when people start thinking about creating a new life. Similarly, a project is born from an idea; an idea created by business, end-user, and academia who think that what they have in mind will make a difference to themselves and to humanity. Isn´t that what we all think about our future offspring?

Then comes the inception, oh sorry the call! This is the moment in which the partners –business, end user, and academia; kind of a “ménage a trois”- decide to go ahead with the idea and make it a proposal. The proposal needs to be fed by all parties involved, taking care not to overdo it in any aspect,-neither technical, nor scholarly nor completely end user driven- but with just the right mix of all the ingredients. If we have been careful, the proposal will be accepted and a newborn project will come to life.

Now starts a difficult period. The partners have to come to terms with each other, adapt to each other’s idiosyncrasies, accept that things have to be decided in common while preserving everybody’s interests. Just like those first moments of having a toddler at home. Let´s assume that the kid is well bred, behaves at school and its teachers are happy with it.  It gets good marks at the interim reviews and obtains a good grade after obligatory schooling, meaning that the final evaluation is really good.

Would you send that kid into the world alone to earn its living? Do you think that because its grades at the end of obligatory schooling were excellent, your obligations towards the child are finished? Well, this is what many organizations involved in R&D are doing. And that’s why most projects don´t pass the stage of pilots; you could say that they don’t even reach puberty. The road to abandonment is, sometimes, a fight over the result. The path is similar to a divorce with unresolved issues about a child’s custody, or in our case disputes about joint ownership of the foreground. The result is, again, another pilot.

What is needed is a lifetime commitment, a commitment to be together “in sickness and in health”, to abide by the principles that, when the idea was born and the partners decided to work together to make it real, they would stick together till the child is not a child anymore  and can have a fruitful and independent life. That is, till the result of the R&D project has materialized into an industrialized product or service that can be launched into the market.

But reaching that stage means investing in the industrialization of the product or service; kind of putting the child through university or vocational training. And there is not a vast array of grants for that, at least, not at the level of the grants for R&D. So we have found our first culprit: The European Commission. The EC must provide financing for the industrialization stage! Is that so? Is it the case that European entrepreneurs have to rely heavily on public finance and support? Maybe so and maybe that’s why the USA is leading the way.

Yes, the problem is finding means for the industrialization and marketing of the R&D result. And the problem is also that the consortium is made up of organizations with very different financial structures; most probably it is a mix of public organizations and NGOs, SMEs and big companies. Their problems are very different. Public organizations and NGOs have very specific problems of their own, that I will not address since in every one of the 28 European countries the problem is different. As for SMEs, access to finance could be a problem and we know it is in short supply, more so if the SME is based in one of the southern European countries.  So here we have the next culprits: banks. They should be obliged to finance good projects like ours! Don’t they understand our business!

Maybe the big company is willing to take over the industrialization phase, but what about our part. What? With so many resources they are not willing to cover our part? Don’t they see that they will certainly recover their contribution once the product is in the market making millions? Well, apparently not and here we start the next phase of blaming each other, leading us back to square one: a pilot!

So even if all the members of the consortium decide to go forward with the industrialization and commercialization phase, there are problems ahead that have to be confronted. And the principal one is how to organize the industrialization and commercialization phase.

If the consortium had a legal status, with a clear coordinating, management and research structure, it would be a lot easier. I am not advocating the creation of a brand new company each time a R&D project pops out. A traditional legal company is burdensome and costly. But some kind of arrangement has to be found for the kid to get through university.

There is a system at hand since 1989: the European Economic Interest Grouping. The EEIG is an instrument for those wishing to internationalize their activities while giving them a European dimension.

An EEIG can be set up by at least two legal entities registered in two different European Economic Area countries, those of the European Union plus Iceland, Liechtenstein, and Norway. Legal entities refer to any kind of company, large, medium, and small; institutions such as universities, scientific research centres, local authorities, and chambers of commerce; and also individuals. The only condition for them all is to have an economic activity of some kind prior to entering the EEIG.

Its purpose is to facilitate the economic activities of its members by pooling resources, activities and/or skills, exactly as we have done during the development phase. It can carry on the job and keep the partners focused on the project results. Why is it not used more? I don’t know, you tell me.

I am not going to go into any profound explanation  on how to form an EEIG, that is for lawyers and, thank goodness I am not one. I have enough with being a member of another disgraced group: the Economist. In any case, just Google European Economic Interest Grouping and you will find more information than you care to know. Nevertheless I recommend that those who may have some interest in EEIG go to the link

http://ec.europa.eu/employment_social/equal/products/sup/pro-122-hb.pdf

and download the document. It is outdated in certain parts, but the main body is a very good introduction to EEIG. All you need to know before talking to your lawyer is there, and to some extent what follows comes from that document.

There are some good reasons for choosing an EEIG structure for continuing our endeavours:

First of all, it is governed under European business law, all members are on an equal footing, something that would not happen if another form of business structure is adopted, since in this latter case the governing law would be exclusively that of the country in which the company is registered.

The second reason is that, being able to draw from all quarters of economic life, from industry to academia, from public bodies to individuals, it is able to create an ideal playground for synergies to flourish.

Council Regulation nº 2137/85 of 25 July 1985 regulating EEIGs constitutes a very limited set of norms, allowing the members of the EEIG complete freedom for organizing its structure. Flexibility is then the third reason.

But at the same time, and this is the fourth reason, an EEIG is a stable organizational figure. It is an autonomous legal structure with powers for representation, negotiation, contracting and all the other features of an independent legal economic entity.

Fifth and finally, an EEIG is different from its members. The main difference is its ancillary nature, meaning that its purpose is to facilitate the activity of its members, but not to replace them.

I said before that the Council Regulation governing EEIGs leaves a lot of leeway to the members. Effectively, article 5 detailing what the Contract must have includes only:

1) the name of the grouping, including EEIG

2) the official address of the grouping,

3) the object of the grouping,

4) details of all the members of the grouping,

5) the duration of the grouping, in case this is limited.

And it is advisable to keep it like that, since any change to the information contained in the Contract has to be unanimously approved and registered in the national registry of the country in which the EEIG is resident.

To complement the Contract the members are recommended to draw up a document, this time as complete as possible, of the Internal Regulations governing the EEIG. This document has the advantage over the Contract of being able to be modified as the members so decide and it is not necessary to register it or its amendments. It could include, for instance:

1) the way in which the grouping is to be financed,

2) the way in which members are to share in the grouping’s profits and losses,

3) the conditions for admission, resignation, withdrawal, or expulsion of members,

4) the rules for the general meeting of members,

5) the appointment, dismissal, and powers of managers,

6) and the resolution of disputes among members.

Once this is agreed upon, the next step is to register the Contract in the registry of the country of residence and its publication in the corresponding national gazette and in the Official Journal of the European Communities.

An important factor to have in mind is the financial side of the EEIG. Since there is no requirement for capital, the members are free to regulate the way the EEIG will be financed. Contributions can be in kind, in cash, by provision of skills, etc. Financing can also be obtained through loans from financial institutions but not directly from the public. In real life the majority of EEIGs finance their activities on the basis of annual membership fees.

Another important factor to consider is that “… the members of a grouping shall have unlimited joint and several liability for its debts.  ….” In plain English what it means is that anybody having recourse against the EEIG, if not satisfied in a reasonable time, can go against any of its members to recoup its outstanding debt. It is up to that member to go against the other members in order to recoup the debt. Is this a problem? At first it looks like it is, but let’s look at it closer. The EEIG is stronger than its individual members, just because it is the sum of all of them. So the most likely outcome is that it will get better conditions than any of the individual parts.

Another factor to consider is that the access to European Commission R&D project financing will be easier. An EEIG is already a multinational entity, at least from two different EAA countries. It shows the evaluators a commitment to working together and one structure already in place. Consider that most support programmes include conditions about the transnational nature of the grouping, with independent operators and demonstrating a strong synergy among its members, all features ingrained characteristics of an EEIG.

Summing up, tract C is asking: Have SMEs which are partners in the consortia the financial power to establish an AAL solution on the market? If not, who will drive the solution? My answer is that the consortia -research institutions, end user groups and SMEs- should keep together, and that it is only up to them and is their sole responsibility to take the necessary steps to make it possible for the final R&D result to make it to the market. And the best available legal instrument to bind those organizations together is the European Economic Interest Grouping.

Paraphrasing a former USA President: “My fellow Europeans, ask not what the European Commission can do for you, ask what you can do for Europe.”

Given at:

AAL FORUM

Norrköping, 25th September 2013

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I have borrowed the title of this post from an article in the leading Spanish paper El País[1]. It reflects something I have been asking myself since the beginning of the actual crisis and, till now, I haven’t found an answer. Why? Of course there is always the excuse that we have the leaders that society deserves, but that answer is too sad to make it part of my outlook on life.

The challenges facing Europe, and (for that matter) a good part of the developed world, are well known. The most relevant is the demographic change that will make Europe, according to some apocalyptic analysis, a kind of geriatric ward. Following that analysis, the working population will not be able to sustain the increasing mass of retirees. Since older people are the main drivers of care costs, the only solution is to reduce entitlements linked to retirement as well as care benefits.

A clear and easy solution:  let´s cut costs by rationing the expense linked to those pillars of the welfare society that was built, precisely, to overcome the ills of a rapidly changing society in the aftermath of the II War World.

Looking back, Europe was able to manage a similar demographic change when, in the 60’s, the working mass was able to pay for the health and education of an outpouring of new born kids –the baby boomers-. Maybe it was because the extra hands needed for paying for that were allowed to migrate, so that Europe could take advantage of the surplus labor of other countries; just the opposite that certain populist leaders are suggesting these days.

But of course, those were different economic times. Europe was devastated and the needs of the reconstruction created a demand and subsequently an economic bonanza. Today there is no bonanza; as a matter of fact our very non-intelligent leaders have been able to create not one, but two economic crisis in a row. That was quite predictable. If the main “customer” – that is, the State – responsible for 49.4%[2] of the national demand drastically reduces its level of expenditure, what could the result be other than a recession?

And why? Because in their narrow mindedness there is only one mantra: ration. They think, and are proud of saying out loud, that they are like a “good housewife”; they spend only what they have. But I don´t want a “good housewife” leading my country, or any other country! A country is by far more complex than my house, than any house! Leading Europe in such simplistic terms is what has brought us to this sorry state. We need leaders capable of transforming our society, not a bunch of nerds in a position of command, blaming “Brussels” for all ills, hiding the fact that “Brussels” is them.  What comes out of Brussels is their collective will: if you put rubbish in, rubbish comes out.

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I am reading a lot about ageing in the work place. It is such a hot issue that they have come out with a name for those people: “goldenworkers”. It seems like no matter how you look at it, society needs older people to be more productive. From a demographic perspective, the ageing of the population implies that a bigger number of older people will be living alone.  From the economic point of view, the working population will have to support a continuously growing number of retired pensioners, at the same time as non-communicable diseases are on the rise as the population becomes older; both issues straining the national budgets. As for the labour market, we will be faced with the paradox of a short supply of skilled workers, as these retire, coupled with unemployment among those entering the labour market without the necessary qualifications. And finally, but by no means less important, there is a lack of appropriate flexibility in the legal labour framework. Could the situation be bleaker?

Fortunately, so-called reforms are taking place in Europe prompted by the economic crisis. However, is it really a reform when something is based solely on forcing later retirement together with a smaller pension scheme? I dare say it is a less sanguine boutade than the one from the Japanese Minister recommending that older people die quickly, but a boutade nevertheless.

For my instruction I am reading a 40-year-old book by E. F. Schumacher, “Small Is Beautiful”.  At the very beginning of the book (page 9) it states that “people [should] have a chance to enjoy themselves while they are working, instead of working solely for their pay packet.” That, I believe, would be the basis for a real labour reform but is that what we are aiming for?

If we were, our policy makers would be interested in people’s well being and not only in balancing the budget come hell or high water. If well-being were their objective, they would focus on reforming the labour market so that “enjoyment” could be included in every worker´s life. Is this a naive objective? I don´t think so. Policy makers should pay more attention to promoting more flexible working conditions, thus making the working environment more enjoyable. By flexibility I mean promoting part-time jobs, tele-working, flexible retirement age, re-training, etc. In short, putting people at the centre of the labour reform.

I don´t consider those changes farfetched and impossible to carry out. They are not revolutionary but rather structural changes. They would mean that working conditions could be adapted to fit the needs of the worker and the employer. This would make work more enjoyable, distancing it from the admonition that “By the sweat of your brow you will eat your food” (Genesis 3:19). The objective of policies directed at supporting occupation for everybody in general, and older adults in particular, should be the promotion of a more pleasant working environment. Only then will people be willing to remain socially productive as long as their health allows.

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The new philosopher’s stone of our times is a balanced budget. Apparently, if our Governments reach that goal, all our problems will be solved: full employment will be reached; social and health services for all will be at hand; the education system will make our children achieve high marks in the famous PISA test; and, above all, our retirement will be assured.

Accordingly, European governments have gone into a frenzy of budget cuts meant to make it easier to achieve social nirvana. According to oxforddictionaries.com, “cut” means to reduce the amount or quantity of. This activity is geared at making state participation in the overall GDP of the country smaller.  This is not a bad thing. There could only be a problem if, parallel to the budget cuts in the public sector, the economy shrinks, so that the tax base shrinks too. If that happens, the economy falls into a vicious circle where the more the government cuts its budget, the more the GDP shrinks and the smaller the tax base is. I don’t want to sound pessimistic, but the present situation in Europe looks very much like this.

Governments have taken the easy way. It is easier and requires less thinking (not the main characteristic of most European politicians) to cut a budget than to come up with alternative saving plans. Saving means having a vision, designing a plan and implementing it. This is a process that requires building for the future rather than concentrating on short term results. In the worst case scenario, results could be achieved after the next elections, anathema for the non-leaders of today.

It is about saving, not cutting. Saving means reforming the process by which our welfare state continues providing the services that have made European countries the envy of the world. It is about integrating services while avoiding duplications, for instance bringing together social and health care services that could lead to reinforcing each other, instead of working back to back. It is about integrating all educational levels, from kindergarten to vocational training to university. And so forth and so on.

All of which means having a vision that, unfortunately, our so-called leaders lack completely.

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It looks like we are in the dark ages of economics. A kind of tsunami has wiped  all economic thinking from the face of the earth, just as  the fall of the Roman Empire prompted the obliteration of Greek and Roman knowledge for centuries, sending Western thinking into the Dark Ages.

The  other day I was having my customary morning coffee in my usual place. As usual,  I was alone with the waiter. We started talking about everyday life and ended up conversing about financial facilities and the economy in general. His bank recently sent him a form that will allow him to acquire the  handsome sum of 4.000,00 € with just a simple signature and a not-so-simple annual interest rate of 15%! He was clever enough not to jump at the offer. But one thing led to another and we ended up wondering if anything would  prompt his employer to hire another waiter. He looked around and came to the conclusion that what his employer needed were more customers coming through the door, not more waiters attending one customer.

If the diagnosis is faulty, the cure will be useless in the best of cases and fatal in the worst case scenario. So, are we in a supply deficit scenario like most of our world leaders think? Or are we in a demand-deficit scenario as my waiter thinks? Sorry to say but I tend to think that what is lacking is demand and all and each of the measures that European Governments are taking are killing the little demand we have.

Let´s hope that sound economic thinking has not disappeared from the face of the earth and, just as in  the Dark Ages there  were niches of knowledge, today somewhere there are people with the knowledge to bring us back to economic health.

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In this context “social” means the whole social spectrum: education, health care, social care, police, etc., in short, all those areas that we in Europe have come to believe are citizens’ rights that should be guaranteed by the State.

Cutting social expenses is how most governments are reacting today to the budget deficit problem. And to be honest, this provides quick results. These cuts have another advantage: although they may affect a certain number of voters, why should we care?  Most of those affected are public workers anyway, and we all know that they are not exactly the most cost-effective workers on earth, don´t we? So, the logic follows, the effect on the rest of the population/voters will be minimal or even positive.

But maybe we should consider the medium and long term effect of those cuts. If social care processes remain unchanged, the logic says that, by reducing inputs, the output will be negatively affected. This is true unless, miraculously, the till now inefficient public worker suddenly becomes efficient and maintains the previous output. As I do not believe in miracles of that kind, this reaffirms my conviction:  there will be a reduction of the output.

A reduction of the output is immediately felt in some of those services. Probably that is the reason why we have seldom heard of cutting the police force. But there are other services in the social menu in which the reduction in output will be felt mostly in the medium or long term.  But since we won’t have to worry about that until the next election, who cares?

If we stand by today’s care processes while cutting inputs, the health of the population will be affected in the long run; there will be fewer resources for prevention because acute problems will absorb the remaining resources. The same goes for education; teachers will dedicate their efforts to the brightest of the class, leaving behind those less naturally gifted, thus reducing the average level of
education in the population as a whole. And so forth and so on.

If our leaders could for a moment think about their constituency and not about getting re-elected, then maybe they would realize the obvious: there are no shortcuts. The only way of reducing cost while maintaining the quantity and the quality of the output is by re-engineering the processes in which social services are provided. But then that requires leadership and time!

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