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The Irregular Newsletter of Z/Yen Group Limited

Catch up with current projects, new ventures and see some very bad puns (Editor: bad metaphor) via Z/Yen's blog or the eagerly awaited newsletter.

To receive your copy electronically, email This email address is being protected from spambots. You need JavaScript enabled to view it.

From small acorns grow…

Z/Yen have been working with the Institute of Directors (IoD)and Cass Business School to launch a new Corporate Governance initiative which we hope will grow and flourish over time.  The objective was to develop and test different ways of measuring and reporting on corporate governance in UK listed companies.  From this we aim to encourage good governance amongst UK companies and also stimulate a public debate on the importance of corporate governance in rebuilding the reputation of the UK business community.

Our first challenge was to define corporate governance.  As the project chairman, Ken Olisa OBE, said about governance “It is hard to define because governance is all about behaviours; and behaviours, whether individual or collective – are hard to reduce to a coherent framework”.  We looked at a number of definitions, before choosing to use the UK Corporate Governance code as our definition.

We sought to measure corporate governance using different approaches.  We surveyed UK business professionals, including members of the IoD, ACCA and CISI, asking them to rate the governance of companies they were familiar with..  We also selected more than 50 instrumental factors, third party independent data points which the team assessed as having a relationship with corporate governance (the nature and direction of that relationship causing much debate).  Both these results are published in the report. 

Finally we built a predictive model using support vector machine regression to predict how survey respondents would have rated companies they were not familiar with.  This allowed us to build  a third set of results, combining the views of the survey respondents with the instrumental factors.    

Each approach gave different, yet reasonable results.  The predictive model approach shows that some companies suffer from a reputational disadvantage, i.e., their public reputation lowers their score from what the instrumental factors alone might suggest.  It is hard to measure the impact and appropriate scale of some instrumental factors – is it better to have two audit committee meetings or 22?  We need more understanding of how different factors, and different behaviours can be assessed. 

It seems clear that although all agree that developing a measure of governance would be valuable, there is no one simple approach we can use.  The report contains three different sets of results, grouping companies into tiers according to their results in the different approaches.  We are aware that more work needs to be done to build a shared understanding of how to measure governance.  Z/Yen and the IoD are looking forward to creating a meaningful and useful measurement approach.

Xueyi Jiang, our data lead on this project, chose a tree to illustrate the count of key words from the survey responses on the front page of the report.  It seems appropriate as an image for this complex project and the complex and growing organism that is corporate governance.  We are looking forward to continuing the debate and inviting your thoughts over the next few weeks and months.

The report is available for download hereIf you would like to contribute to the survey please go to  For more information please contact This email address is being protected from spambots. You need JavaScript enabled to view it..  




Associated Press

Long-time Z/Yen associate Robert Pay has written a new book, “Designing a Key Relationship Program: Building Strong Client Relationships” (Ark Group, 2015).  Robert has a wealth of experience in building client relationships from time in accounting, law, and financial exchanges.  We’ve been delighted to work with him over the years on projects ranging from trade publication and liquidity issues to building the Global Intellectual Property Index to improving law firm marketing and thought leadership.

Robert wrote this book because of the dearth of simple guidance on how to focus in business-to-business on client relationships.  He drew on some research conducted with us in 2013 and 2014 published in the Journal of Business Strategy, “Measuring The Value Of Online Communities”.  He also drew upon projects he has done with us such as our Reflective Repasts, Long Finance dinners, and Security Forward events.  Robert provides “a practical, step-by-step guide” that helps you to design a process to help to manage a portfolio of major client relationships on a firm-wide, regional, practice area, or industry basis; it also tells you how to mobilize client teams to focus on the best potential sources of growth.

Naturally we are delighted to be associated with our associate’s success!

Tricks of the Trading – ExtZy for Kids - April 2015

Tricks of the Trading – ExtZy for Kids
ExtZy is Z/Yen’s prediction market system.  Since 1999, we have used ExtZy in a variety of ways, as a tool for making crowd decisions (“the wisdom of crowds”), as a playpen for trading ideas (Avatars), and as a fun game for the Z/Yen CommunityZ.  Originally invented, and later patented, for a large media company as a market for music, sports, fashion, and other items of interest for young people, during the 2000’s the primary markets for CommunityZ members became countries-at-risk and technological-futures.   Our staff, mad about cricket, made cricket team news the dominant internal Z/Yen game.  We have provided deeper analysis of the market, including work by Xueyi as a UCL MSc student before she joined Z/Yen.

We have always been interested in exploring ways of using ExtZy with clients from creating a market in research & development projects to helping construction contractors work together on quality and timing for multiple projects.  Thus, we were delighted when some of the Chartered Institute for Securities & Investment (CISI) players approached us.  The CISI were looking for a stock market game which would provide a longer-term view for investing that would appeal to school students studying towards CISI qualifications.  Together we created “CISI Exchange”, aka CISIext, a bespoke version of ExtZy, for GCSE, AS, and A-level students.  The game offers players the chance to build up and manage a portfolio of shares, but with a difference.  Instead of buying and selling company stocks, players buy and sell shares in countries, Premier League football clubs, and a selection of up-and-coming music artists.  Each stock represents a relevant website or search term.   Dividends on the shares are calculated via unique visitor statistics for each site.  The higher the number of unique web hits, the higher the dividends paid out each week on an entity’s shares.  Apart from being a bit of fun, the game helps students to understand how markets work and illustrates the importance of popularity and perception on share prices.

The first CISIext game ran in autumn 2014 and was split into three game periods coinciding with school term times.  Over 100 students at five UK educational institutions regularly played the game, with CISI students in Sri Lanka also getting involved.  The countries market proved to be the most attractive for investors, with students quickly picking up on evolving problems in the Eurozone as shares in France and Germany became popular options for players.  Players also looked to Russia as tensions with the Ukraine escalated.  Even in the football market, players spotted that there was value to be had investing their hard earned points in West Ham, as the club had an unforeseen good run in the Premier League.

CISIext also had its own LIBOR/FX/spoofing/insider-trading scandal when two players were restricted from trading following a breach of market regulations.  Rather creatively, they had created duplicate accounts to cross-sell shares at overly inflated prices - good lessons for the students of the importance of clear rules backed by surveillance, regulation, integrity, and ethics.

The autumn 2014 winner was Danny Mcintyre, a student studying the Level 2 Award in Fundamentals of Financial Services at Victoria College in Jersey.  Danny achieved a net worth of 11,857 points, over 8,000 more than the second-placed student.  Danny was presented with an iPad for his efforts by Jersey Committee President Paul Clifford and the Committee’s Student Liaison Officer, Eliff Carr.  Danny felt that he had benefited from “staying one step ahead of the competition” by relentlessly searching the market for low value shares where other players had not spotted their potential.

The CISI Exchange has also been used as part of a three-day employer insight event for sixty students, organised by Investment 2020 and hosted by three firms in London.  Students used the game to develop their knowledge of basic investment strategies, culminating in groups presenting strategies they utilised while playing the game.  All-in-all, we are delighted to be supporting CISI’s fantastic outreach programme to students and together share our tricks of the trade to further financial literacy in a fun way.

Security Forward Workshop and Dinner – 23 April 2015

Security Forward Risk and Intelligence Forum’s Spring meeting was held at the Z/Yen Group offices at 90 Basinghall Street in the City of London. There was a record turnout of around twenty people and quite a few new faces around the table.  The meeting started with a presentation from our guest speaker Chris Smith, who is the Global Head of Contingency Risk for HSBC with responsibilities for business continuity planning and crisis management with oversight of physical security. Chris has spent twelve years with HSBC, latterly in Hong Kong, and his presentation was entitled ‘The impact of the pro-democracy movement’s demonstrations in Hong Kong and the impact on business’. He described crisis management as what happens when business continuity stops working properly. Chris described how the ‘occupy movement’, known as the ‘umbrella  revolution’ impacted upon HSBC. The Bank had certain inherent advantages, as it is the pre-eminent bank in Hong Kong and has a great deal of influence. It is known locally as the big elephant and just referred to as the Bank. It also has the advantage of multiple locations. However, nobody knew quite how the disturbances would play out. Luckily the ‘occupy central’ group were mainly students who were very active, but did not want trouble and were very polite most of the time. They were making the point for democracy and the bank was prepared for occupy Central, although not sure whether it would turn ugly. The occupation of Kowloon was much more confrontational and contained elements of society, including the Triads, who were willing to use violence as business was being interrupted and causing real hardship to small traders. Not only did the bank have a crisis to deal with, but some of their own people were involved with the demonstrations. It was at this point that it was realised that the Bank’s plans were not really adequate or as efficient as they should be. In particular, the trade business (documentary letters of Credit and the like) is still paper intensive, as all Bills of Lading and associated documents have to be checked. This created logistical problems and meant using alternative locations where desks were needed for the trade business. The Business Continuity Plan had to be invoked and there was a real commitment from the senior executives whose support was vital. Lessons were learnt and are now being applied and the trade business is now much more resilient. Chris described Crisis Management as really being resource management. Civil unrest is unusual in Hong Kong as it interrupts and interferes with business, but it may happen again due to the political situation with China. This was a fascinating presentation and the Q&A session was most informative.

After our usual round-robin to identify ‘in tray’ issues and concerns, our second speaker was our own ‘Speaker in Residence’, Lt Colonel Crispin Black, MBE, MPHIL. Crispin is an independent expert on terrorism, intelligence and security, as well as a novelist. Crispin’s presentation was entitled ‘Business Ethics-vital underpinning of capitalism or naïve contradiction in terms’. Crispin suggested that fewer people are willing to defend capitalism than would have been the case a generation ago. He described capitalism as representing ‘an absence of rules and lightly regulated’ and the ‘freedom to make money’. He pointed out that the City Of London has been responsible for an explosion of wealth, requiring imagination and intellectual skill as well as an entrepreneurial spirit. He said that there is now a disdain for money making institutions which seems to be shared by many in this country and a move against respect for money making. He suggested that left wing philosophy and anti-capitalist opinions are no longer challenged as they would have been and that there are fewer people willing to defend the City and the financial institutions. He drew upon the likes of ‘Philip Marlow’ to illustrate what we once aspired to emulate, a hero with an old fashioned Christian morality who always had a moral compass to influence all his actions. Crispin said that the corporate culture of an institution is set by those at the top and we have seen how one bad apple at the top can change the morality of an institution, resulting in a disdain for capitalism as a whole. The City of London is a great wealth creator and the over reliance of rules should not replace personal values and standards. There  was a lively discussion about the over reliance on rules and regulations and the unintended responses to them. This presentation was very well received and thought provoking as always.

Following the meeting, we dined in at The Aldermen’s dining Room at the Guildhall, which provided a fascinating venue for us, courtesy of Alderman Michael Mainelli. Our ‘dinner speaker’ was Brigadier Allan Mallinson, the distinguished military historian and novelist, who was encouraged to continue on from his presentation as the participants wanted to hear more from this very knowledgeable expert. After the dinner, copies of his latest book ‘Words of Command’ were presented to those who were there.

Our next meeting is planned for Thursday the 2nd July.

Security Forward Workshop and Dinner - 21 January 2015

Security Forward, Risk and Intelligence Forum’s October meeting was held at Z/Yen's offices in the City of London. To a full room, Martin Huddleston led with a talk on DSTL and APMG's Cyber Defence Capability Assessment Tool (CDCAT).  Martin Huddleston is a specialist technical leader at DSTL, headquartered in Salisbury, England.  His presentation led to a lively debate on the merits of various methodologies to cyber-risks.

Martin was followed by our ‘Speaker in Residence’, Lt Col Crispin Black, gave a presentation wittily entitled "The Hitchhiker’s Guide to Predicting the Future … Accurately".  Crispin attempted to grapple with a paradox that has become part of British life: how is it that members of our government and business elites seem incapable of swerving out of the way of seemingly obvious disasters?  The Western military defeat in Afghanistan at the hands of a few thousand men equipped with Kalashnikovs and flip-flops, and the debauching of the UK’s leading retailer, Tesco, were the two examples he chose to highlight.

He identified nine themes behind these and other disasters:

Facts: much more difficult to establish than you might think – even when no one involved is actively trying to obscure the truth. He cited the military historian, Colonel Archibald Gracie’s, experience as a survivor of Titanic – he needed months of detective work to pin down the exact details of survivors’ stories.

Language: even languages closely related to our own, produced by cultures similar to ours, can be a barrier to understanding. Increasingly, elites now speak a private form of of our own language, English, that is of little use in forecasting the future.

Self-hypnosis: a phenomenon identified by the Harvard historian, Barbara Tuchman, whereby a group of decision makers deny and distort reality to persuade themselves that a particular venture is going well rather than disastrously.

Face: often felt to be an Oriental or Asian vice but in fact alive and kicking in Western bureaucracies. Saving the face of political, military or business leaders has become a core activity of governance.

Audit: we seem to live in a fire and forget world where few like to have their decisions and their consequences examined forensically.

Deception: little awareness especially in government service that sometimes our opponents or enemies actively wish to seduce us into a course of action that will prove our undoing. What you see on the ground may not be reality but a giant ‘come hither’ sign.

Deformation Professionelle: many of our elites effectively live in mental ‘gated communities’ and cannot think beyond their own specialities.

The need for Diversity: used most often in Western public discourse in its racial or cultural sense. Rarely as a warning against closed thinking.

Macbeth Syndrome: The reluctance of decision makers to break off from an unfolding debacle – even when it has become obvious. As Macbeth famously put it to his charming consort: "I am in blood Stepp'd in so far that, should I wade no more, Returning were as tedious as go o'er."

After the presentations, the team moved to the Worshipful Company of Furniture Makers for the traditional cocktail before dinner.  Crispin chose a blue martini named a "Yale" as something that Professor Mainelli would have been unable to predict, nor order in the hallowed crimson halls of the Harvard Club, but could have as an Honorary Liveryman of the Furniture Makers.

Our dinner speaker, UCL Professor Adrian Furnham, gave a wonderfully incisive, yet easy-on-the-ear, and memorable talk around his new book with Ian MacRae, "High Potential: How to Spot, Manage and Develop Talented People at Work".  His psychological insights triggered a great discussion ranging from corruption to challenge in large organisations.

Our next meeting is planned for Thursday, 23 April 2015.