Quantum Matters – Quantum Culture

Not just another brick in the wall  

“You think you are the messiahs!” cries out Lily, the super-hero of BBC series Devs, to the bosses in charge of the secretive quantum unit.

That slur can just as easily be applied to the Big Tech chiefs, who started out with missions encapsulated in Google’s motto “Do no evil,” yet proceeded to abuse their monopolistic powers, promote addictive behaviours and allow hate speech to flourish.

Can a different culture be created in the newly emerging quantum ecosphere?

This matters to the world. The Quantum Computing market is forecast to be worth $50bn by 2030, only nine years away. The pace of funds into the sector has already accelerated. Data platform The Quantum Insider (TQI) notes that total disclosed capital flows into the sector were $1.9bn in the first half of 2021, compared to $1bn in all of 2020.

And quantum computing’s capacity to change the world for good can best be harnessed through a diverse workforce working in an inclusive culture that supports stakeholder capitalism.

The key challenge – a decent culture – also matters to quantum companies themselves for three reasons: innovation, recruitment and funding.

Innovation

Similar to all nascent sectors, innovation is key to the development of profitable companies producing jobs and goods.

More inclusive companies are 1.7 times more likely to be innovation leaders in their field, according to a Deloitte report. Gender-diverse companies are 15% more likely to outperform their peers, while ethnically diverse ones are 35% more likely, according to a McKinsey report.

Even without citing hosts of corroborating studies, common sense dictates that the wider the range of opinions, the more chances of new ideas arising. The most productive meetings for transformative ideas are often those where disagreements flourish. The flame of innovation is often created out of friction; group think is the result of bonhomie.

Given that human beings have around 188 cognitive biases, ranging from the self-explanatory Familiarity Bias to the Just World Hypothesis, recruiting in one’s own image is difficult to resist. It behoves quantum company CEOs and their colleagues to diversify the mix, adding to the mainly white and male university PhDs and tech executives in order to bolster innovation.

Recruitment

There is a global war for talent in many sectors. Goldman Sachs, an erstwhile golden destination, is seeing some problems in recruitment. And those it does recruit are now surprisingly vocal. Young bankers complained to senior management about their workload earlier this year, a story avidly picked up by the media.

The UK’s mission to attract the best global talent is not helped by its expensive, time-consuming new immigration regime. One well known quantum start-up was forced to set up two subsidiaries in Continental Europe due to Brexit. On the plus side, the company was pleasantly surprised by the response to a recruitment ad there. Unfortunately, this stood in sharp contrast to its UK job advertisement, which received far fewer responses.

Employees and future employees are empowered, and they are demanding workplace cultures that align with their values. Over 85% of Gen Z believe companies should stand for more than just making a profit. Note that at Apple there was a successful petition to dismiss a well-known new hire with a sexist reputation, as well as a public letter demanding flexible return-to-work policies.

And yet, basic prejudice persists. A female student working on her quantum PhD at an Oxbridge university was asked by her professor: “How do you expect to progress if you keep smiling all the time?!”

Oxford Quantum Circuits (OQC) is doing all the right things and reaping the fruits: over 40% of its job applicants are women. One of its latest ads used these phrases: “We aspire to thrive…thanks to your diversity of thoughts and background…We are building quantum computers to enable life changing discoveries.” The company, led by Ilana Wisby, anonymises all the CVs it receives, posts roles on diversity-focused job boards (LBGT+, black engineers and others) and celebrates its new arrivals with photos on social media that highlight its diverse workforce.

Although helpful, a female CEO is not essential to enable a wider recruitment strategy. Cambridge-based Riverlane, for instance, headed by Steve Brierley, lists its first two values as being “supportive” and “collaborative” and posts a friendly group image of its relatively diverse company.

Denise Ruffner and Andre König of Women in Quantum (WIQ) and OneQuantum are the two major protagonists of the move to shake up the look of the industry and widen access. Their fast-growing mentoring schemes, online recruitment fairs and the setting up of free-to-use country chapters – from Zimbabwe to Nepal to Argentina – are inspiring a new generation.

TQD has been highlighting the issue, while The City Quantum Summit in November will host a special panel on the subject.

To create an inclusive culture, the Good Finance Framework is a good place to start. Designed by The Inclusion Initiative’s Director, Associate Professor Grace Lordan at the London School of Economics*, its 10 steps will also help boost staff loyalty and enthusiasm. This is crucial when quantum companies are competing for the best talent against other industries, as well as between themselves.

What is relevant for talent, is just as relevant for funding.

Funding

Political guru Frank Lunz predicts that how you treat your employees will be the single most important issue for companies over the coming years – above sustainability and shareholder returns.

It is an issue institutional investors are grappling with as part of their Environmental, Social and Governance (ESG) criteria.  Regulation will drive it. The US Securities and Exchange Commission (SEC) this year approved a proposal from Nasdaq, the stock market for tech, requiring its listed companies to publish, comply or explain on board diversity. They must have “two diverse directors, one identifying as female and another as an underrepresented minority or LBGTQ+.”

The UK’s Financial Conduct Authority (FCA) has proposals out for consultation on how it can accelerate the pace of meaningful change on Diversity & Inclusion, noting that it is relevant for risk management, good conduct, healthy working cultures and innovation (my italics).

The writing is on the wall: whether public or private, investors are going to be leading a push for the right cultures. Getting ahead of the game is the best bet for any quantum company.

Build back better is a much over-used phrase. But it encapsulates the desire to avoid the mistakes of the past. In the case of the quantum ecosphere, steering clear of Big Tech’s grave errors to create a better world, both within quantum companies and through quantum computing, is key.

*To note, the author is Co-Director of LSE’s The Inclusion Initiative for the City.

The City Quantum Summit at the Mansion House on November 10th is hosted by the Lord Mayor of the City of London and Redcliffe Advisory, and supported by the National Quantum Computing Centre (NQCC) with TQD as media partner. Diversity and Inclusion is at its core. Register here

Speech at the Mansion House

Immigration is key to attract global talent

This is an abridged version of a speech given to a Mansion House packed to the rafters with 350 members of the International Bankers and their friends.

My year as Master (Chair) runs till October 2020. 

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Welcome all to the Annual Banquet of the WCIB and welcome to the Mansion House, the Heart of the City.

The Mansion House reminds me of the Villa Farnesina in Rome, built for Agostino Chigi, a banker who was treasurer to the Papal States in 1510 and a patron of great artists. He entertained his clients – Popes, Ambassadors, men of power – in such style that he was known as ‘the Magnificent’.  

I should hope we have entertained you in such style today, that you too will say the International Bankers are Magnificent!

At one banquet, in an extravagant gesture, the silver dishes were thrown into the Tiber River after use. I therefore ask you to pick up any silver left on your tables and we shall throw it into the Thames. Or perhaps not!

Rumour has it that il Magnifico’s servants had placed invisible nets in the river, and thus recovered the silver.

Banking, and financial services in general, is about covering your risk. As he did.

The City faces many risks. Today, I want to concentrate on one risk only. Arguably the most crucial one. The war for talent.

Mark Hoban, a former City Minister - who is present tonight - chairs the Financial Services Skills Taskforce, which published a damning report last month on the City’s talent recruitment and retention. I quote: “There is no doubt that the financial services sector is facing an existential skills crisis.”

The demand for talent already exceeds supply and this trend is set to become more acute. Additionally, “The lack of gender and ethnic diversity is both a social issue and a skills issue. Talent that the industry needs is not being utilised.”

This is the reason why Professor Grace Lordan from the London School of Economics – also here tonight - and I are co-founding The Inclusion Institute at the LSE. The Institute arose out of a report commissioned by the International Bankers. In partnership with City companies, the Institute will use behavioural science and data to lead to more diverse talent recruitment and retention, to dynamism and creativity, and to changing culture for future success.

Cognitive diversity is necessary to deliver better company returns in a transformed digital marketplace. How does this innovation happen? It is most likely to occur when you mix gender, generation, ethnicity, sexual orientation and nationality, on your boards and in your teams. And ensure they feel accepted, or included, and thus able to speak up.

The City is working hard on its D&I. Yet it is already a world leader in one form of diversity. Nationality. We have a wider mix and more nationalities in the City than in any other major financial centre. 40% - that is four zero – of City workers are foreign-born – and they are fully included.

What other country would have a Canadian leading its central bank, a Frenchman till recently leading its stock exchange, and an American woman, leading one of its main financial derivative companies, IG? Plus, at a much lower level, voting in another foreigner – me - as Master of the Worshipful Company of International Bankers. I am grateful!

But the City’s USP is under threat. The government’s recently announced, hard core policy on immigration is undermining the City’s search for talent. They should care, because we bring in over 10% of tax revenues.

We would not have the strongest Fintech sector in the world, without the Open Door, Open City policy of earlier governments. We wouldn’t be leaders in Green Finance without that Open Door, Open City policy. Note that the UK Green Bond market is already worth $44 billion. There is so much more that we in the City need to do to help finance the environmental transition for our planet’s survival.

For that, we need the best talent in the world.

There are at least three things wrong with the new system.

In the first place, an immigration policy that gives way too much importance to higher education, such as PhDs, cannot be right. Skills are of as much importance as a university degree in our disrupted world. The Russian founder of Revolut, a City-born start-up which was just given a valuation of $5.5 billion dollars, doesn’t have a PhD. Let alone the Richard Branson’s of this world. Or even the Mark Zuckerberg’s.

Secondly, an immigration policy that harks back to an era of central planning cannot be right. Five-year plans surely went out with Stalin?!. Yet a Tory government believes in the future it will be able to figure out where the skills shortages are in the economy and make short term changes to policy to fill them. That’s in a world where we don’t even know what many of the jobs of tomorrow will look like.

And finally, an immigration policy which will only allow large, well-capitalised firms to import foreign workers, is not right. The cost and bureaucracy of work permits is such that SMEs, start ups and the like won’t be able to afford them – and they are the accelerator in the economy.

Let my last quote be from Catherine McGuinness, the CEO of the City: “We need an immigration system that works for the whole of the financial services ecosystem. This includes those supporting industries which keep the City ticking and we look forward to engaging with the Government on this particular issue.”

I am not sure she meant that last line…

The City understands that this government has an obligation to those who voted it in, a number of whom believe that immigration – rather than globalisation and automation - is to blame for inequality and the precariousness of modern jobs. But Boris Johnson’s government has a duty to destroy myths about immigration and a duty to care for the City, let alone the whole economy. Our tax revenues and our inventiveness will help in financing a better future for all.

The City is a British jewel, a European jewel, and a world jewel – in fact, it is a public good and I would ask that you join with me, in any way you can, in pressing this government to change its policy, and return to an Open Door, Open City.  

Investor opportunities: Spain and China

The 686th Lord Mayor & Women in the City

If I were a man, I would spend my money on women and wine and wandering.

I am, however, most definitely a woman and one who had occasion to feel immensely proud of her sex last Saturday, as fifty City women marched in the Lord Mayor’s annual parade, amid the driving rain and horse poo left by a mounted regiment. (The attached photo has little to do with reality). Perhaps the circumstances were a metaphor for what it takes to succeed in the City as a woman. But that was all forgotten as we waved at the half a million people lining the route and then passed by the Mansion House to salute Fiona Woolf, the second woman in 800 years to be elected Lord Mayor of the City of London.

The historic role for Lord Mayor number 686 involves being the Ambassador for the City (in fact, the whole of the UK’s financial services sector), giving more than 100 speeches and travelling nearly 100 days to promote the City in over 25 countries in the year in office. For the current Lord Mayor, a partner at Cameron McKenna, this may well represent a diminution of her usual travel schedule, given that she is the head of the law firm’s global energy practice and a renowned expert on privatisation and the environment.

Unlike some other women at the top, she is willing to stand tall (literally, at 5 feet and 12 inches) and be counted on to push for more women to join the City and make it to board level. “The City’s diversity and openness is one of the keys to long-term success so it is vital we work hard to move to a new normal by freeing up the talent pipeline. Businesses need to capture the innovation and ideas that difference within the talent pool generate,” she says.

The Lord Mayor speaking next to Prime Minister David Cameron at the Lord Mayor’s Banquet

Our group was as diverse as could be in the Lord Mayor’s Show that Saturday, with women who were born in India, Sri Lanka, Rumania, the US, China and Latin America. No better proof exists of the global nature of the City. As we ate our sodden sandwiches during the lunch break, we inspected some of the 130 vehicles in the parade, including 20 carriages, a tank and 50 horses, while beaming with pride at being involved in a ceremony that dates back to 1215.

Only 6% of managing directors in the City are women, when at university graduate level the division can be almost equal between men and women. Conscious bias has become less of a problem; unconscious bias more of one, which is why the Lord Mayor’s Diversity Advisory Panel, to which I belong, has a 12-month programme (www.fionawoolf.com) to bolster the position of women in the City.

It was not just our faces and languages that evidenced the City’s global medley. So did the handbags we wore as we marched, courtesy of a Chinese retailer. In 1996 entrepreneur Shunyuan Guo bought Powerland an Italian brand, and took it to China. There are now more than 200 stores on the mainland, plus 2 in Hong Kong. The luxury handbags are designed by a former Chief Designer from Gucci. 

Chairman and Ceo Guo listed the shares in Frankfurt a few years ago, raising €95m to finance the continued expansion of the retail network. He is now exploring locations for a shop in London and Paris, albeit he is adamant that “the price and opportunity has to be right.”

Powerland AG may be a good investment. So is Spain. A few weeks ago Bill Gates took a punt by buying a 6% stake in construction company FCC, making him the second largest shareholder. He is not alone in seeing value in Spain and its battered sectors like banking and construction. The IBEX 35 main stock market index is up 25% in the year to date. The country came out of recession officially in the third quarter with a return to growth, albeit a measly 0.1% increase.

On a visit to Madrid last week you could smell the first whiff of optimism. You could also smell the rubbish strewn on the streets due to a rubbish collector strike. Private companies were planning to lay off up to 20% of all sweepers. After 12 days a compromise was agreed whereby there would be no redundancies, but workers agreed to take 6 weeks of unpaid leave every year through 2017.

This is indicative of the drop in internal wages that is making the country competitive again. It has recovered 65% of the competitiveness lost during the credit bubble, while its strength in world class infrastructure and a large and skilled labour force make it the 35th most competitive economy in the world, according to the World Economic Forum. Spain is held back mainly by the bureaucracy and corruption of its unimpressive governing class.

Additionally, the government has been ineffectual, if not inept, in marketing to investors its new fund of funds, FOND-ICO. Launched in March with €1.2bn, the state’s anchor investor will invest in foreign and national private funds over a four year period to help with the non-bank financing of existing and new SMEs.

Ramon Betolaza, a London-based financier who returned to Spain this year, is raising a €500m fund via Black Toro Capital and Trea Capital to leverage FOND-ICO funds and invest in medium sized companies alongside existing management. He notes that although some companies are facing strategic challenges, others are solely suffering from cash flow problems on the back of a country-wide liquidity squeeze.

If FOND-ICO doesn’t tempt you to Spain, gentle reader, then what might do so are revelations this week that sofrito, a special tomato sauce used as a base in Mediterranean cooking, is the secret to longevity and a healthy heart. The women and the wine aren’t bad either. Nor are the boys and the bullfights.

The Tyranny of Numbers

Criminal bankers, interest rate spikes & mythical holidays

I assume we will be seeing bankers in court, as UK Chancellor George Osborne is set to implement a reform suggested by the Parliamentary Commission on Banking Standards, namely introducing a new criminal offence: “reckless misconduct in the management of a bank”. Pandering to populism, it is aimed at capturing bank CEOs and directors.

But should not our new, state-of-the-art regulatory system be in the dock right now? The prosecuting lawyer would surely argue there was “reckless misconduct in the supervision of a bank” when the Co-operative Group’s bank was rescued last month. After all, there were plenty of warning signs when in 2012 the bank plunged to a £674m loss amidst almost £470m in write-downs due to commercial property loans acquired via a takeover in 2009.

And why restrict the accusation to financial services? I can envisage “reckless misconduct in the management of a nation’s health” which would apply to all junk food company CEOs.

The list of company directors accused of “reckless misconduct” could be as endless as it would be pointless.

Watching Quentin Tarantino’s classic Pulp Fiction the other night underlined how anaesthetised we have become to violence. Released in 1994, it was a byword for violence. Now, in 2013, it appears endearingly quaint when compared to the blood-spattered Call of Duty: Black Ops II and other ghastly video games played by teenagers.

In a similar fashion, we in the West have become inured to low interest rates and a negative return on savings. We are assuming a few years of them – witness the market panic when the Federal Reserve suggested mid-June it would soon taper off its stimulus programme of buying government securities.

New UK Governor Mark Carney is expected to give guidance next month to push UK rates lower. Interest rate markets currently estimate the first rate increase for 2015, not late 2016, which was their May forecast.

However, say the US economy accelerates faster than expected and the Fed eases off its quantitative easing in line with new circumstances. Sterling plummets. Might not Carney be forced to raise rates unexpectedly early in order to combat a sterling crisis?

Black Ops II would be nothing compared to the carnage unleashed then.

Leadership is about taking decisions without the evidence to back them up.

At a recent Pi Capital event, Lord John Browne, former Group Chief Executive of oil company BP, voiced concern about the current culture of “evidence-based decisions.” He noted that we live in an age of data overload, which leads to an unhealthy reliance – a decision appears to almost “make itself” based on the facts. Most great leaders have made judgements which appeared irrational at the time, with wartime hero Winston Churchill and steel magnate Andrew Carnegie among classic examples.

German philosopher Friedrich Nietzche was right to warn about the “continual falsification of the world by means of numbers.” His words two centuries ago are even more true today due to what Professor Christopher Coker calls “the unstoppable onwards march of mathematics.” Even when the limitation of numbers is shown up – viz risk systems and the financial crisis – the belief system continues.

Boardrooms are often populated by those who hold unconditional faith in numbers, a delusory substitute for religion, most of which at least admit that God’s plan is a mystery.

Two Prussian military commanders, Carl von Clausewitz and Helmut von Moltke, understood the self-contradictory absurdity of scheduling the movement of divisions and battalions in carefully calibrated master plans. The former admitted that the very nature of interaction is bound to make war unpredictable, while the latter put it in a rather more down to earth way by remarking that “no battle plan survives contact with the enemy”.*

The language of the Boardroom is increasingly financial. Yet the world does not operate according to a mathematical formula. In Non-Executive Searches too much emphasis is placed on all board members having deep financial skills, be this a career in finance or an accounting qualification. This is often at the expense of imaginative, creative thinkers, with careers that probably will not include the initials “CFO”. They are often women. There is no arguing that financial skills are crucial in a number of key roles, such as Chair of the Audit Committee; however a partner in a law firm in charge of Competition and Antitrust, or the head of marketing at a multinational may provide other relevant skills to the team.

Financiers formed the majority of the board of Royal Bank of Scotland in 2008. They were of little use in halting its downfall. Diversity is more than just a politically correct catchphrase.

Conventional wisdom in this country has it that southern Europeans are always on holiday. Discussing the topic recently with various Spanish and Italian compatriots who now live in London, we grasped that this was a myth.

In Spain, holidays consist of a week at Christmas, a week at Easter and a month in August, with a few days off in between for Saint’s days. In London – and even more so in the City – they consist of two weeks at Christmas, half term in February, three weeks at Easter, half term in May, half time over the month of June between all the social events like Glyndebourne, Wimbledon and Henley, a why-don’t- we-deal-with-this-in-September attitude in July followed by the month of August off, and capped by two weeks of half term in October.

Robinson Hambro, as an enterprising Anglo-Spanish boutique, is never on holiday.

*Warrior Geeks by Christopher Coker, a fascinating tour d’horizon on the changing face of war and its philosophical underpinnings.