Is Vivarail True Disruptive Innovation?
Disruptive innovation is defined like this in Wikipedia.
A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.
I’ve always been a great believer in this sort of innovation.
When we started Metier Management Systems and created Artemis, project management was worthy, time-consuming and if a computer was used it was an expensive mainframe. So we took a small but powerful industrial computer put it in a desk, added a VDU and a printer to do the same PERT and financial calculations much faster and often much physically closer to where the answers were needed. I have heard argued that one of our reasons for great success in the early days of North Sea Oil, was that you could find space for an Artemis system in Aberdeen, but not for a mainframe. The city was crawling with dozens of our systems.
After Artemis, project management was never the same again!
If we look at the building of trains, it is supposed to be an expensive business, with large manufacturers like Alstom, Bombardier, Hitachi and Siemens make expensive complicated trains, that are virtually computers on wheels. But at a price and to a time-scale that is such, that say a train company needs perhaps some extra four coach diesel multiple units to support say a Rugby World Cup or Open Golf venue, there is nothing that can be delivered in a short time.
Over the last few years, disruptive innovation has been alive and well in the train building industry. In the 1970s and 1980s, we built a large number of trains and electric and diesel multiple units based on the legendary Mark 3 coach. Wikipedia says this about the coach.
The Mark 3 and its derivatives are widely recognised as a safe and reliable design, and most of the surviving fleet is still in revenue service on the British railway network in 2015.
It is truly one of the great British designs. My personal view is that the ride in a Mark 3 coach, is unsurpassed for quality by any other train, I’ve ever ridden, in the UK or Europe.
A Mark 3-based multiple unit also survived the incident at Oxshott, where a 24-tonne cement mixer lorry fell on top of the train. There were injuries, but no-one was killed.
So what has the Mark 3 coach got to do with disruptive innovation?
They are like a well-built house, that constantly gets remodelled and improved by successive owners.
The structure and running gear of a Mark 3 coach is such that it is often more affordable to rebuild and improve Mark 3-based trains, rather than order new ones.
If Terry Miller and his team in Derby, had not designed the Mark 3 coach and the related InterCity 125 in the 1960s, I suspect that UK railways would be in a truly terrible state today.
These trains still remain the benchmark against which all other trains are judged. Two journeys sum up the class of a Mark 3 coach.
- Travel in First and enjoy Pullman Dining on a First Great Western service between London and Wales or the West. Is there any better rail journey available without a special ticket in the world?
- Travel in Standard on Chiltern to Birmingham and enjoy the ride and the views from the large windows, in the style that the designers envisaged for all passengers.
But the Mark 3 coach has created this industry in the UK, that can take well-built old trains and turn them into modern trains, that are often the equal of shiny new ones from the factory.
So where do Vivarail fit in all this?
London Underground has always specified the best for its railways and expected the trains to last a long time. In some ways it had to, as when it depended on Government favours for new trains, it could not predict if the replacements would ever be forthcoming.
Until the 1980s, most trains were built by Metro-Cammell in Birmingham and regularly fleets have lasted for forty or fifty years, as they were built to handle the heavy use in London, where journeys can be over an hour of full-speed running with frequent stops and often with far more passengers than the trains were designed. Take a Piccadilly Line train from say Kings Cross to Heathrow in the rush hour, if you want to see the sort of punishment that London Underground trains are built to take. The last of these Piccadilly Line trains were built in 1977 and under current plans, they will have to stay in service to 2025.
The oldest London Underground trains still in regularly passenger service, are the Class 483 trains used on the Isle of Wight. Admittedly, they are running a service in a less-stressful environment after fifty years service in London, but the trains were originally delivered to London Underground in 1939 or 1940.
The London Underground D78 Stock, that has been purchased by Vivarail for conversion into the D-train, were first delivered in 1980, so they have only taken about thirty-five years of London’s punishment.
The trains were also extensively refurbished in the mid-2000s.
It also has to be born in mind, that although London works its Underground trains very hard, they also get first class servicing.
Several factors have all come together to create an opportunity for Vivarail.
- There is a desperate shortage of diesel multiple units all over the UK. Partly, this is because of a need to replace the ageing Pacers, but mainly because of the growth in passenger numbers and the reluctant of Government in the 2000s to invest in much-needed new diesel trains.
- Network Rail’s well-publicised problems with electrification, only makes the need for more diesel trains more important.
- A lot of trains will have to be taken out of service as they don’t meet the disability regulations.
- The UK’s world-class train refurbishment business, which has honed its skills on creating new trains from old for forty years, is ready for a new project.
- There is now a supply of well-maintained, corrosion-free D78 Stock, that may not be sexy, but are as tough as teak, that are surplus to requirements.
It should also be said, that train operators and passengers want more flexible and better specified train services on difficult lines that are unlikely to be electrified in the near future and are difficult lines on which to provid a decent reliable train service.
Read any of the serious literature about the D-Train and it shows that the engineers are taking the project very seriously and are thinking very much outside the box.
- Power units are based on Ford Duratorq diesel engines mounted on rafts under the train, with two to each power car.
- These rafts can be changed using a fork lift at a remote location.
- Flexibility of interior layout to suit the route.
- Extensive use of LED lighting, Wi-fi and other modern technology.
- The crash test has been released as a video. How often do you see that?
But perhaps this article from Rail Magazine entitled Catering for VivaRail’s rebuilt D-Stock, illustrates their innovative thinking better than ever.
The more I read about the D-train, the more I think it will surprise everybody.
It is true world class disruptive technology. And British technology too!
Metier’s Buildings In Ipswich
These were Metier’s buildings in the Fore Street area of Ipswich.
Note that the major building we did up, has now been converted to apartments.
An Investigation Into The Stability Of Peer-To-Peer Lending Systems
For some time, I’ve thought that peer-to-peer lending systems, and Zopa which I know best, in particular, are a very interesting proposition mathematically. I did muse on this question some time ago in Stability in Financial Systems.
My education is at Liverpool University, where I got a B. Eng degree in Electronics in 1968. I had specialised in Control Engineering and my undergraduate thesis was all about mathematical modelling.
Most of my career since has been about large business, monetary and planning computing.
But one thing that must be born in mind, is that after I sold Metier in 1985, I formed a finance company in partnership with a friend. We still talk so it must be a good relationship.
In the years I had a stake in that company, I modelled the cash flows for obvious reasons of watching risk, just as I do with my funds invested in Zopa now.
The company taught me a lot about the finance industry and it was partly for that reason, that I invested my savings in Zopa nearly six years ago. And I’ve not regretted it one bit!
As I said in Stability in Financial Systems last year, I have a feeling that Zopa is a stable system. I also think they have used this stability to their own advantage, to create their Safeguard offers.
Obviously, a full investigation would be of value to see how, if Zopa my proposition concerning the system is correct.
You would just right down the various cash flows and see how the various scenarios will affect the company.
The Star That Is ARM
I am linking to this article, which has the full speech of ARM’s CEO’s statement giving the Q4 2012 Financial Results. It is a full nine pages long, so it won’t be an easy read. This statement from the first page is very telling.
So let’s start off with the highlights for Q4. Well, Q4 was a fantastic finish to 2012. We saw our continued momentum in licensing and sold 36 licenses in the last quarter. That’s another year of over 100 licenses in the full year.
As someone, who used to put his own intellectual property on someone else’s hardware designs, this number of licences is a significant number, as obviously, the more licences the company signs, the more money it will earn.
I don’t know anything about the technicalities of what ARM does, but judging by the company’s success, it must be pretty damn good. But to me, just as it was for Metier Management Systems with Artemis, when we owned the company, the managers have got the marketing and revenue model right.
In fact, I might argue, that getting that right is more important than getting the product to a hundred percent of your design aims. As obviously, if you are generating lots of money, it is easier to close that last gap in your designs.
So often, I’ve seen wonderful ideas fail, because their revenue model wasn’t designed well enough and doesn’t feed itself back strong enough into product development.
There is another thing that ARM and Metier had in common. ARM is and Metier was considered a almost a crusade or political movement by those that started the companies and those that worked there. The companies that I’ve dealt with or know of, that have had that zeal are hard to come by. My short list would include Apple, Dyson, Rolls-Royce and Zopa. Although, there are one or two architectural or construction companies, that in a few years time, might join them. And don’t underestimate other companies in all sorts of high-tech fields, using an ARM-style of cash-flow model, based on a group of individuals having a unique idea and the determination to see it through.
I can also think of several companies that had everything and then blew it! You could say we did that with Metier by selling out and a lot of other high-tech companies have done the same. And then there’s some that have just lost their way like IBM and Automony.
Disruptive Innovation
I’ve not heard the term before, but read this article. It starts with this question and answer.
Question: what do these companies have in common?
Skype, Spotify, Marks and Spencer, Whipcar, Zopa, Zilok, Kiva, Patagonia, Kickstarter, Café Direct, Taskrabbit, Buzzcar and InterfaceFLOR.
Two of my favourite innovators; Zopa and Kiva are mentioned in the same breath as quite a few companies like, Skype, Spotify and M&S.
If the article has a fault, it’s that it misses out a couple of well known names, who the writer would call disruptive innovators.
I would have thought ARM Holdings and Dyson should be on the list. And I would think that a certain company called Metier Management Systems was one of the first! So we were only a shark in a small pond, but we completely rebuilt the pond.
A Life Hanging Around Banking
I first worked for a bank in about 1971, as a consultant programmer on a system that worked out how much various actions cost them to do. It was a rather clever system, that took all of the bank’s costs and numbers like the number of cheques cashed and worked out for each branch how much things actually cost. The system had been designed by Bob, the bank’s Chief Management Accountant, a man with an encyclopedic knowledge of accountancy and banking, and with whom I became firm friends over the next few years. Over the time, we consumed several bottles of good wine, notably in a restaurant called Mother Bunches near St. Paul’s. Sadly, in about 1978, Bob died and I lost a good friend.I was a scruffy man in those days and one memory stands out. I was painting the flat in the Barbican and Bob phoned and asked me to run the software to calculate costs for the last quarter. It was only because his assistant was on holiday. So I cycled to Time Sharing in Gt. Portland Street and did the run. Bob then phoned me at Time Sharing and asked that I bring the results to the bank and give it to the usher at the door. But when I got to the bank it was closed and on ringing the bell, the massive bronze door opened and the usher in full morning suit and top hat, asked if I had comuter output for Bob. I said yes and he replied that Bob had asked to see me. I protested because of my appearance and I was firmly ushered inside and told to go to the fourth floor. When I met Bob for the first time in his office, I apologised for my appearance and he just smiled, took the computer output and started checking the answers. Before I returned to the Barbican, we had more than a few good glasses of wine.
Before I leave Bob and the system I programmed, I’ll put in a few observations.
- Bob always reckoned bankers were likely to be called John. A boring name for someone expected to be boring at work. Perhaps with all the banks’ problems, these days, they could improve their profile by hiring a few more Johns.
- I didn’t have any access to the banks main computer system, as I didn’t need to, but I got the impression, that they had hardly changed the design since the system had been first-written and only had a limited number of places to store information on customers. So consequently, their summary statistics on their customers wasn’t very good at all. I’d love to know, whether they are any better now.
- A lot of fundamental pieces of information on the bank’s costs were almost impossible to find. Bob had come from a major FTSE 500 company and put it down to the fact that they were a bank therefore cost control wasn’t a problem.
- A very dominant factor in the costs of a branch was property and who in particular owned the building. The bank actually owned most of the branches themselves, but where they rented a branch building costs were a lot higher.
- But the most important factor in the costs, was inevitably hanky-panky, where a manager was giving loans for sexual favours. I suppose that these days, where you never meet your bank manager has cured that problem, even if it has introduced a lot more.
- One of the design rules, Bob put into the system, actually ended up in Artemis. If say you split a sum of money into several fields in a database, then just to round the figures to the neatest penny wasn’t good enough, as although it might be correct, the pence column might not add to the original value. So any error was lost in the largest value, just as it was in Artemis. The reason was because bankers in those days, always checked the answers by adding them up and woe betide if they didn’t agree.
- It must have been a good system, as it was still running fifteen years later. Although by that time Time Sharing had long since gone, so they ran it on one of the last PDP-10s somewhere in the United States.
At the time, I was banking with Barclays and wasn’t very pleased with them. So I asked the people, who I worked with to set me up with a new branch. After all, if I was doing business with a bank, it might not be a bad idea to bank with them.
I don’t know whether it was chance or whether I was setup by the people I worked with. A few days later, I turned up in the branch of the bank by the Barbican and met David for the first time. I’d actually been working late on the bank’s cost accountancy system and I was rather surprised, that David knew about it. He did disclose that he’d been on the committee that had decided that Bob should develop the system. I remember that day, that David and I were scheduled to meet at ten and I finally got back to the flat at one.
It was the start of a life-long friendship, that only stopped on David’s death within a few days of that of my wife in 2007.
I can remember a lunch in an expensive City restaurant, where at four after a long lunch, his second-in-command came in, saying that the branch needed to be signed off. In some versions of this tale, I say that he said to his number two to forge his signature, but I suspect it was more that he should have had the right to sign-off the branch. If it was the latter, that would fit David’s character, as I know from other things he said, that he believed very much in delegation.
He also introduced me to some of his customers, who had got the Miss World-that-wasn’t, Helen Morgan to open their new shop. David kept a signed photograph of the Welsh model on his desk for many years. David never did anything inappropriate concerning the ladies during his banking career.
David got further into my business life, when we started Metier. The company needed a good bank manager and I introduced David to one of my partners. I remember we all met over lunch in the Honourable Artillery Company.
soon after, David was promoted to a bigger branch in the West End. It wasn’t a planned promotion, but one that was necessitated by an early retirement of the manager there. To say it was a mess, would be a very large understatement. But David was the sort of person, who rose to challenges using any legal method.
One thing that illustrated his competence, was when we presented him with one of the first computerised spreadsheets, the bank had ever received, he immediately passed it to his area manager on his Area Manager’s first day in the job. Many would have ducked that challenge. They used it to educate themselves, and we got the funding we needed. In fact, David told me some years later, that he reckoned we weren’t asking for enough and got the clearance for more on that very first spreadsheet.
Computer Disasters Inc.
Some years ago, I was discussing, what we might do with someone in Metier, if the whole venture had gone bust. I suggested an idea, which keeps coming back to me called Computer Disasters Inc.
NatWorst now is in need of such a company, which I envisaged as the Red Adair of the computer industry. NatWorst will certainly be paying out fees on a scale Red Adair would have thought reasonable.
Am I Lucky Or Does The Devil Look After Me?
Throughout my life, I’ve often been described as lucky and several times, positive things seem to happen to me by chance.
For instance, I met my late wife at Liverpool University, when I manipulated a scheme for students to get partners for one of the guild balls.
I ended up in Metier, after a chance meeting outside an opticians on Great Portland Street.
I’ve also been mentored well, by a lot of friends, who would never be described as conventional. Some sadly are no longer with us.
and I could give lots more examples.
Even on Monday, when I had the tooth exorcised from my body, I did the right thing, as it needed three hours and three dentists.
So is it luck or do some quickly weigh up the chances and make the right decision? I do know that my late wife would never describe me as boring and is that because I never throw any possibly useful information away from my brain. Since the stroke, I have lost some memory, like knowledge of who did this or that. But there is always Wikipedia!
As I don’t believe in any religion and believe organised religion is just another way to screw wealth out of the poor, then I can’t think that a devil exists either. Although after my last few years, it is more likely there is a devil, than a loving and peaceful god.
But then I’m a London mongrel! And they have more fight than a wagon-load of pit-bulls.
Computer Disasters Incorporated
When we were writing Artemis, and afterwards, some people asked what we would have done if it had all gone wrong.
We didn’t officially have a Plan B, but then we had organised the company, so that if we had to close it, we’d all come out with something. I can remember having a chat with the company accountant and he explained, how our system of leasing systems, meant there would always be a useful cash flow from a sale for some time.
I do remember though talking about a company called Computer Disasters Inc. Basically, it would have been a no-fix no-fee rescue company for computer systems that had gone awry. After all we had the people to sell such services and the experience to fix them.
I suspect it’s a concept that has been used successfully by others.
The Anonymous Widower 