Zeitgeist - issue 2

zeitgeist

HALCROW ZEITGEIST MAGAZINE ISSUE TWO

zeitgeist

the spirit of the time

contents 2

Floor-to-ceiling glass buildings will be considered second rate as climate change takes centre stage, according to Ken Shuttleworth, founder of Make.

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Edward Atkin is one of the most successful UK entrepreneurs of recent years. He talks about the Damascene conversion that forced him to admit his company had got its products wrong.

october 2006

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Indra Nooyi’s appointment as chief executive of PepsiCo is the ultimate fulfilment of her predecessor’s belief that inclusion is the most effective way to unleash innovation and economic growth.

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HDTV is the biggest change in TV since the move from black and white to colour, writes Paul Taylor of the Financial Times. But a technology war may divert consumers to online download services.

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Hospitals and other health institutions around the world have begun testing the theory embraced by our ancestors centuries ago that music can help heal the body.

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Introducing electronic management systems to MotoGP has not diminished the skill of riders such as Valentino Rossi. The industry is ready for a shift in technology to 800cc bikes in 2007.

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An estimated US$1.6 trillion is required in the next five years just to maintain US infrastructure in its current condition.

Angela Jameson of The Times of London explores how the US and other countries are adopting UK-style public private partnerships to fund development.

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Robert Goldberg, founder of venture capital company Ridgelift, explains his criteria for deciding whether to provide funding for ideas. He believes that a combination of intuition, market research and ensuring the right people are on board allowed him to spawn some successful internet ventures, including the likes of Overture, Snap and CarsDirect.

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Innovation and imagination at work zeitgeist is published by Halcrow, Vineyard House 44 Brook Green, London W6 7BY, United Kingdom tel: +44 (0) 207 602 7282 fax: +44 (0) 207 603 0095 email zeitgeist@halcrow.com halcrow.com Cover photograph: Adam Hinton Photography: Luke Tchalenko Mark Wernham Mark Draughn Michael Morton Illustrations: Piotr Lezniak Darren Hopes Brian Grimwood Tracy Newman Editorial and production: Editor: Dawn Hayes Graphics: Tracy Newman, Emilie Dadswell Design: Frank Sully & Partners Contributors: Paul Taylor, Financial Times Angela Jameson, The Times Bambi Francisco, Marketwatch Edward Atkin, CA Assoicates

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We take on some controversial topics in Zeitgeist 2 as part of our continuing focus on innovation and imagination. Designing for climate change is one of them, expounded by Ken Shuttleworth, founder of Make and a director at Foster and Partners until 2003.

He has some hard-hitting views on the responsibility he believes architects and their clients have in reducing the carbon emissions pumped out by buildings with floor-to-ceiling glazing.

Meanwhile, Indra Nooyi’s appointment as chief executive of PepsiCo sets a precedent in executive circles. We explore signs that companies outside the US are becoming more aware of the benefits of building diversity into their ranks.

The US is among a number of countries turning to the UK for inspiration as they grapple with the problem of maintaining and developing public infrastructure. Not everyone believes public private partnerships are the most economically effective route to funding essential services, such as hospitals and schools. But while the debate in the UK continues, a market worth as much as US$1.6 trillion is opening up in the US alone.

In Pushing the Envelope and Soap Box, respectively, venture capitalist Robert Goldberg and entrepreneur Edward Atkin give their views on how to determine whether ideas are worth backing.

Some take a few turns of the crank before becoming workable business models. Others need the input of real-life experience to take off.

We hope you enjoy the ideas articulated by our interviewees as much as we do at Halcrow. We would love to hear your feedback.

Dawn Hayes, editor

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The oor-to-ceiling glass buildings of the 20th century will be considered second rate as climate change takes centre stage, according to the man behind Make

LUKE TCHALENKO

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Ken Shuttleworth laughs incredulously as he shows me a quote from Building Design magazine. A female reporter has asked a property agent whether a new fully-glazed building in London meets environmental regulations. “I’m about as interested in (that) as you probably are in football,” Shuttleworth reads out loud and laughs again.

Ignorance and disinterest in the toll that buildings are taking on the environment is the fundamental issue facing 21st-century architecture, in Shuttleworth’s view. Somehow, the fact that the property agent is unaware that a third of people watching the latest World Cup football tournament were women seems to be part of the same problem.

Buildings are responsible for more than half of all carbon emissions and the problem is compounded when they are entirely glass-

clad, offering almost no insulation. “Climate change is the fundamental issue of our time – we build it into every project we take on,” said Shuttleworth. “If, as architects, we don’t address it, then who will?”

This softly spoken, understated man was until 2003 one of four directors working for Lord Norman Foster. That makes him responsible for many of the iconic buildings of the 20th century designed by Foster and Partners, including London’s Gherkin, Hong Kong airport and the Valencia Congress Centre. Many of them stand in stark conflict with his philosophy at Make, the business he founded in 2004.

Between Ludwig Mies van der Rohe’s sketch of the first glass skyscraper in 1921 and the construction of the Seagram Building in 1958, the world fell in love with glass buildings as the epitome of modernity. Plans for the glass shard at London Bridge and Hearst’s brand new headquarters in New York are the ripple effects of that movement.

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But for Shuttleworth, these fully glazed buildings are the equivalent of the sirens of the silver screen of the early 20th century. Like Lauren Bacall emerging from a cloud of smoke, cigarette poised elegantly between her fingers, they are beautiful, evocative anachronisms in a world slowly waking up to the climactic problems it has created.

“The energy performance of buildings will get rated in future, and floor-to-ceiling glass-clad

The glass industry is expected to respond with new technologies, such as vacuum-sealed panels and better coatings. But for Shuttleworth, this is a point of opportunity for innovation.

buildings will be viewed as second class,” said Shuttleworth. “At Make we design structures that work harder and perform better, in the drive to be as energy efficient as possible. As part of that, we’re campaigning for the death of the glass box.”

we can for the time we’re living in.”

Foster and Partners is among the stars of the 20thcentury design firmament and Shuttleworth is now setting a bold course into the future through design that reduces the energy consumption of buildings,

“Innovation is always seen as a bright new idea, but, actually, it’s more a process of adapting and moving things on from what we already know,” he said. “Mostly, it’s about learning from history. We’re going to design the best buildings

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using beefed-up insulation and reduced glazing.

However, this is a difficult point of transition, one that requires persuasion on his part. Carbon emissions rarely hit the boardroom agenda because energy costs make up less than 1 per cent of big companies’ costs, on average. Still, there are signs that this is beginning to change, albeit slowly.

“Not many clients come to us and say they’re worried about climate change and few want to

Corporate responsibility has risen up the business agenda because, without it, companies will find it harder to attract the right talent.

spend more on reducing carbon emissions,” said Shuttleworth. “But we persuade them that it won’t cost more money. Beyond that, there is now a real groundswell of kids coming through school who want to do something to save the planet.”

electric hybrid cars as the first step in a commitment to reducing its greenhouse gas output. Chief executive James Murdoch, son of media owner Rupert Murdoch, has begun talking publicly about companies’ responsibility in setting an example.

The response has begun as companies realise that taking action to curb their environmental impact can also give them competitive edge.

BSkyB, the UK satellite broadcaster majority-owned

by Rupert Murdoch’s News Corporation, has switched its taxi account to a company that uses

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Meanwhile, telecommunications operator BT decided to derive all its electricity from renewable energy sources in 2004 and is considering becoming carbon neutral. Others, including HSBC, hedge fund Man Group, advertising agency Euro RSCG, supermarket chain Tesco, and BP have also made commitments to cut their impact on the environment.

Efforts in Germany are ahead of the UK but few non-European companies have taken the environmental initiative so far.

There are easy wins: switching off lights and computers at night, turning down air-conditioning and using ‘green’ transport make a small but painless contribution.

Companies have begun offsetting the emissions they make by investing in projects that reduce emissions, like planting trees, which absorb CO2, or funding wind farms, solar power or hydroelectric dams.

But building design is a tougher nut to crack and corporate responsibility needs to be ‘joined up’.

Shuttleworth is focused on root-and-branch change in the way companies think about the buildings they commission, not just small measures they can take to compensate for their carbon emissions.

So what will the new environmentally conscious structures of the 21st century look like? Are we destined to live in dark boxes?

“Not at all,” said Shuttleworth.

“The more difficult the challenge is, the more we like it. It’s about putting glass where it can be most effective in a building – at the top of the walls of a room.”

Make’s first completed project carries all the hallmarks of its highly insulated, sparsely glazed approach to design.

The Dojo in Dartford, south-east England, is a judo club that has spawned a number of Olympic champions. Make redesigned the facility as two adjacent buildings, which combine a world-class sports facility and community centre in a simple,

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highly insulated pavilion. Mirroring the philosophy behind judo, which is to achieve maximum effect with the minimum effort, it is a model of energy efficiency and economic design. Only 7 per cent of its surface area is glazed, yet Shuttleworth says it offers a normal amount of daylight in the interior.

“Glass has only a tenth of the insulation of the Rockwool that we use,” said Shuttleworth. “But the Dojo isn’t dark, because the windows are placed at

the top of each room where most of the light comes in.” The building is naturally ventilated, using trickle vents, and catches rainwater for flushing toilets.

Glass is not forbidden at Make. Its design for the final phase of Birmingham’s Mailbox mixeduse residential, office and retail development, called the Cube, incorporates a geometric metal and glass cladding system into its lower levels and upper floors of accommodation. This dissolves into a fretwork

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screen, where the façade wraps around the atrium at the upper levels, shown on page eight.

The modular cladding system plays a key role in the building’s environmental strategy by offering flexibility to position the glazing of each façade for potential solar gain.

The design also includes other energy-efficient measures, including transferring heat from offices to people’s homes, natural ventilation, canal cooling and a combined heat and power generator.

THE EVOLUTION OF GLASS AS A STRUCTURAL MATERIAL

“There will be increasing pressure not to build on greenfield sites and greater intensity of building in cities on brownfield sites. Even Ikea has begun building in cities instead of out of town as it used to.

“The biggest problem is that agents need to be convinced that it is not necessary to fully glaze office buildings any more,” he added.

“They haven’t yet caught up with the fact that most tenants are much more energyconscious than they were in the past.” Or, indeed, that a significant number of women enjoy watching football.

ROM AN VIÑOLY

“Energy has been so cheap until now, but climate change has become the single biggest issue of our time,” said Shuttleworth.

Walk into Apple Computer’s flagship stores in London and New York and you find yourself in a temple of glass, designed to echo the company’s ultra-modern brand. Glass has a history spanning thousands of years, yet it is seen as a high-tech, modern material with an ethereal beauty that combines fragility and endurance, softness and utility, density and transparency.

For the same reasons that prompted Apple’s association with it, glass has become a material of choice for cultural venues in search of prime destination status. The planned extension to Tate Modern, London’s hugely popular contemporary art gallery, will have the appearance of a collapsing pyramid of glass boxes – a 21st-century take on the glass pyramid unveiled as the main entrance to the Louvre in Paris in 1981. Surveys show this is now the museum’s most popular attraction after the Mona Lisa portrait and Venus de Milo statue.

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“The market for tourist dollars is highly competitive and glass has become part of the ammunition in creating a wow factor,” said John Kooymans, senior associate at Halcrow Yolles, which has specialist glass expertise within its structural engineering business. He is responsible for designing a one-off, self-supporting glass staircase in Toronto’s new opera house, shown on page 13, another example of structural development in glass.

While some architects are promoting reduced glazing for buildings to cut carbon emissions, demand for the material has grown, as its ability to perform as a structural material has developed in the last 20 years. “Glass has a beguiling combination of weight and lightness,” said Jonathan Sakula, technical director at Halcrow Yolles. “The key to using it successfully is to understand its properties, particularly methods of making connections to it.” Peter Rice, an Irish engineer who died in 1992, is credited with starting this process by developing fixings as bolted elements, which are now standard.

It was when Pilkington invented the float glass technique in 1959, which allowed highquality glass to be produced in volume, that architecture’s love affair with glass began in earnest. This technique creates glass by producing a continuous floating stream of molten glass onto a bath of molten tin. The molten glass spreads onto the surface of the metal and produces a high-quality, consistently level sheet of glass with no distortion. This is then polished. Some 90 per cent of all glass is now produced using this method.

The previous year, Mies van der Rohe designed and built the Seagram Building, the world’s first glass skyscraper, using plate glass and metal. And so the quest for the perfectly transparent façade began. Pilkington’s coup opened the floodgates to exploration, and in 1975 Willis Faber Dumas in Norwich commissioned a building with a suspended glass curtain wall, an early example of glass fins supporting glazing.

Eleven years later, a glass wall was constructed for a science facility in the Parc de la Villette in Paris, which bolted together glazing for the first time. Rafael Viñoly pushed the boundaries further when he designed a flexible glass curtain wall for the Kimmel Centre in Philadelphia in 2001, which accommodates an unprecedented 800mm of movement. This became “the ultimate expression of the curtain wall,” according to Sakula, who worked on the project, which concluded in 2001. The challenge was in ensuring the complex analysis of the structure as well as rigorous attention to detail at each joint to ensure that glass did not touch glass or steel.

It was the development in façades, which inspired confidence to use glass as a structural material. A conservatory built on a home in London’s Hampstead district in 1992 is one of the first examples, where horizontal beams supporting the glass roof were made of glass. Still, no-one really believed in glass as a structural material until Dewhurst Macfarlane designed its Yurakucho canopy over a subway station in Tokyo in 1996. This was significant because it used highly stressed bolted connections to transfer shear loads between glass panes. The result was a large cantilevered beam formed out of smaller components (see page opposite).

Then a glass cube was built as a reading room in Riyadh, Saudi Arabia, in 1998, which took the use of glass beams further by splicing them together with steel plates to make longer beams. This was achieved by finding a way to join glass beams with friction connectors. In 2006,

RAFAEL VIÑOLY ARCHITECTS

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Halcrow Yolles unveiled a self-supporting glass staircase for Toronto’s new opera house, which builds on this technique. Floating ethereally in mid-air through the centre of the building, the staircase is supported only by its glass balustrade, which acts as a long-span beam.

Measuring 14m in span, it is divided into four pieces of glass 1.6m long and spliced together with steel friction connectors. “The stability of the stair is in the glass risers and in the treads being tied to the balustrade, which creates a U-shaped structure that is stable,” said Kooymans.

“We tested it by putting 3,000lbs of material on the tread and, on a 2.1m span, it sagged to 125mm but didn’t break. Glass has better uniformity now – we know more about how it behaves and, ultimately, what you can do with it comes down to quality control.”

He added,“we’ll carry on pushing for longer spans, fewer connections Milestones in the evolution of glass and more innovative solutions. I fully 1959 Pilkington invented the float glass technique expect someone to develop glass into a less brittle material so that it can take 1975 Willis Faber Dumas building, Ipswich higher stress levels.”

1986 Parc de la Villette, Paris Whatever the future holds, those who commission buildings are 1992 Hampstead conservatory becoming increasingly demanding as 1993 Kempinsky hotel, Munich they see the potential to create ever 1996 Yurakucho canopy, Tokyo more sophisticated structures in glass.

While climate change is expected to 1998 The AUDI cube, Riyadh put use of glass for exterior walls 2001 Kimmel Centre, Philadelphia under greater pressure, it seems unlikely the love affair is over just yet.

2006 Opera house staircase, Toronto

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THE GLASS STAIRCASE IN TORONTO’S OPERA HOUSE FLOATS ETHEREALLY IN MID AIR

TIM GRIFFITH

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Soap box

Innovation is not about inventing things for the sake of creating something new. It’s about finding an unmet need and fulfilling it.

Edward Atkin is the architect of the Cannon Avent baby feeding business, which he sold to a private equity company in 2005 for £300 million.

Atkin turned the company into the world leader in its field after first acknowledging that it had got its products wrong.

It was in extremis back in 1982, when I found myself trying to feed my newborn son with a bottle at 3 o’clock in the morning, that I realised our company’s products were wrong. It was nothing short of a Damascene conversion.

In 1972, when I took over the business my father founded in a shed in Tottenham, North London, I believe we made and sold the best baby feeding products on the market. We had developed our own technology, which gave us a real competitive advantage. Our products were made to the highest standards and we won international awards regularly.

From experience, I can hold my hand up and say the guy at the top of any organisation has to understand all the reasons that make a product or service better than those of competitors.

Microsoft and Apple are good examples of companies whose leaders understand every aspect of the world they created. The person at the top must also have an enormous stake in making it work. That is more often than not provided by the ego of the owner in private companies.

Gillette, Ford, Bloomberg and Dyson are all examples of companies whose founders put their names where their money was.

Innovation is not about inventing things for the sake of creating something new. It’s about finding an unmet need and fulfilling it. It’s what Peter Drucker meant when he said “innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service”.

Internet betting is a good example of this.

Irrespective of whether it’s a good or a bad thing, the reason it is a runaway success is because it makes betting easier and quicker to do than finding a betting shop. And that’s the reason why Avent became the world leader in its field.

We always focused on the welfare of both the mother and baby, rather than any commercial return. The benefits we received came 20 years after putting the mother and baby first and doing this with great success.

Fatherhood brought me many wonderful things, including an insight into what was wrong with our products. I discovered that the accepted wisdom on baby-feeding products and

the standards everyone adhered to back in 1982 were plain wrong. Starting again meant writing off production machinery, swimming against the tide and undermining not only our own business but that of all our competitors.

And it wasn’t just our competitors who were unhappy about it. Our sales people fought the change, as did our distributors, especially our Australian one. And understandably so: nearly 80 per cent of his business came from our old Babysafe product. We sold both product lines alongside each other for a while but, when it comes to mothers, only the best is good enough. So we decided that offering two product lines was like selling with a forked tongue.

Which brings me to another key part of any successful operation: focus.

At first, we tried to cover all bases to keep everyone happy, but that doesn’t “Fatherhood brought me many wonderful things, including an insight work. It was crucial for us to into what was wrong with our products.” focus, as it is for any business and, for us, that meant agreeing on a single product superseded by the digital revolution. line. Once we established the principle that everything The other inevitability for any successful business that had gone before was wrong, nothing could stop is the need to constantly improve. Avent products us. A new spirit of innovation took root in our culture look the same today as they did 24 years ago but in and Avent took off in earnest. In fact, we hadn’t fact there have been scores of upgrades to both the really expected to appeal to more than a minority of products and the production processes behind them. the most concerned and informed mothers and we I believe it is possible to turn almost anything certainly never expected to become the world’s bestinto a success or a failure. Every business is 90 per selling baby-feeding-products business. cent a function of its people and less than 10 per Change is inevitable, even for the most established cent a function of its products or services. The most and ubiquitous products and services. Take those successful companies identify an unmet need and yellow rolls of Kodak film you could find anywhere then meet it with drive, obsessiveness and insecurity, in the world until about five years ago. They’ve been especially among its most senior echelons. E N D

PIOTR LEZNIAK

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SHIFTING UP A GEAR ELECTRONIC MANAGEMENT SYSTEMS PLAY AN INCREASINGLY CRUCIAL ROLE IN THE MOTOGP CHAMPIONSHIP BUT HUMAN SKILL IS AT LEAST EQUAL

MA RK WERNHAM

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If anyone doubted the power of marketing, there is no better illustration of its potential than the story behind the Japanese domination of motorbike manufacturing. Soichiro Honda began attaching engines to bicycles in 1948 and, a decade later, he decided to put his invention to the test at the world famous TT race on the Isle of Man − and won.

If the arrival of the Honda team took the motorbike racing world by surprise, this was nothing compared to the shock in store for Mr Honda when he returned back home to Japan.

Orders for his ‘motorcycle’ had gone through the roof and the rest is history. Honda is now one of the top 50 companies in the world and dominates motorbike manufacturing, along with its Japanese compatriats Kawasaki, Suzuki and Yamaha.

The legacy of Honda’s founder lives on in the high-octane world of grand prix motorbike racing, known as MotoGP, which remains the promotional arm of the manufacturing giants. It’s an adventure playground where prototypes are tested before technological developments are integrated into road bikes for the consumer market.

In technological terms, motorcycling has fallen behind Formula One car racing, which introduced electronic management systems some time ago for safety reasons. However, one side effect of that development is that the importance of the driver’s ability is diminishing, while MotoGP arguably retains an edgier feel because it is more dependent on human skill.

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Until five years ago, MotoGP bikes used a simple cable throttle. But when the industry moved to higherpower 990cc engines in 2002, this system proved to be a safety hazard. Too much power driven through the throttle would send the bike out of control, often throwing the rider off in the process. Electronic management systems were introduced to control the level of sensitivity available to the rider through the throttle, depending on a range of different parameters.

On accelerating out of a corner, where a rider can make most headway, the electronic management system controls the engine’s power no matter how hard the rider draws on the bike’s throttle.

The photograph above shows the effects of this through marks left by the tyres on the race track.

The variable thickness of the line shows where the engine reduces power (thin lines) and where it increases it (thick lines).

“There’s so much more involved in riding a bike than driving a car,” said Ian Wheeler, communications manager at Kawasaki’s racing team in the UK. “The bodyweight of the rider and the way he moves it around on the bike makes a huge difference to the lap time achieved. That is not something you can learn very easily.” Most of the sport’s top riders began the speed game as young children.

If there is more focus on human skill in MotoGP racing, there are few individuals attracting more attention at the moment than Valentino Rossi, pictured above. Grown men go dewy-eyed at the mention of this 27-year-old Italian wunderkind. Perhaps that is why Formula One car driver Jenson Button described him as the dominant force in motor sport. Rossi has taken the world of prototype motorbike racing by storm in the last five years, proving in flamboyant style that human skill is at least equal to the effect of electronics technology in this particular sport.

GROWN MEN GO DEWY-EYED AT THE MENTION OF VALENTIN0 ROSSI

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“You can have all the technology in the world, but for someone like Rossi, who likes the bike set up to give him a comfortable feeling, he can do anything with it,” said Chris Herring, sporting manager for Honda Racing Corp in Europe.

Rossi switched from riding for Honda to Yamaha in 2004 and won the world MotoGP championship on what any aficionado will tell you was an inferior bike compared with Honda’s. And he remains the rider that everyone wants to beat on the racetrack.

This season, with wrist and ankle injuries and a series of other setbacks, he stormed from tenth position on the starting block to first place at Sachsenring in Germany after achieving 2nd place from 12th position at Castle Donington in June. And despite his bike’s engine blowing up in the US leg of the championship in July, he is still a contender to clinch his sixth MotoGP title in October. But this year is close-run.

Unlike Formula One, where performance rides on four wheels, MotoGP’s power is driven through one tiny contact patch on a single tyre against the surface of the track. Tyre technology is a two-horse race between Michelin and Bridgestone and plays a crucial role in a championship where fractions of a second make the difference between winning and losing the title. Lap times have improved by a minimum of one second in each of the last five years as tyre technology has advanced, according to Hiroshi Yamada, manager of Bridgestone’s motorcycle racing sales department in the UK. “Tyres will always be black and round but the technology has improved dramatically in these last few years,” said Yamada. “MotoGP is very challenging. In order to raise performance you need to increase the size of the contact patch with the ground, which means that tyres are going to get bigger and the construction of them is changing alongside that.”

In 2002, prototype motorbike technology experienced a shift in engineering when the industry decided to move to four-stroke engines. In 2007, there will be another major shift – supposedly in the interests of safety – to 800cc engines, away from the 990cc engines used at the moment.

LAP TIMES WILL GET QUICKER, WHICH MEANS MORE CORNERING SPEED WILL BE NEEDED

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“When the 800cc bikes come in we can expect 10 per cent to 20 per cent less power compared with the current machines,” he said. “But the lap time won’t decrease. They will just get quicker, which means more cornering speed or quicker handling. That is likely to make edge-grip on tyres considerably more important than it is now.”

Pressure is also growing on the industry to come up with more environmentally sound technology. While motorbike carbon emissions have halved since four-stroke engines were introduced, emissions are still as much as five times higher than those of cars.

“With the introduction of the 800cc machines, we will probably bring in new fuels and lubricants,” said Carlo Alberto del Mastro, Shell Advance global marketing and sponsorship manager. “A percentage of the fuel should from now on be based on elements that are environmentally friendly to produce, like ethanol. Shell is developing some technologies that we plan to try first in racing cars and bikes. There’s no standing still in this game.”

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MICHA EL MOR TO N

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America’s infrastructure is creaking at the seams. is emerging for construction companies, engineers Investment totalling US$1.6 trillion is required and financiers, which have cut their teeth on 14 over the next five years just to maintain its current years of UK transactions. They are riding a shift in condition, according to the American Society of Civil the way public infrastructure is being funded, where Engineers (ASCE). And it rates that as “poor”. Roads, government is offloading risk onto the private sector. rail networks, bridges, water systems and other public The US is among those turning to the UK for infrastructure, much of it built during the post-war inspiration, where the government has discovered that era, is crumbling under the ravages of time, poor hire purchase can be used on a grand scale to stretch maintenance and an ever-expanding population. the nation’s housekeeping budget. It began as the A number of other countries are grappling with private finance initiative in 1992 under John Major’s similar problems, including Australia, Germany, government and became known as public private Ireland and South Africa. Competing partnerships (PPP) when Tony Blair requirements on government funds took over in 1997. But the principles TRANSPORTATION have left infrastructure neglected. are essentially the same.

AND, IN “In Texas, we have identified The idea is to control the publican US$86 billion shortfall in sector deficit by offering private PARTICULAR, ROAD transportation funding over the companies an incentive to take the BUILDING, IS THE course of the next 25 years,” said problem on. They compete to build PRIMARY TARGET Phillip Russell, director of the Texas a capital project, like a school, and FOR P3 DEALS IN Department of Transport’s turnpike the winning bidder takes on the risk THE US authority division. “So we wake up in of providing that facility. Crucially, the morning and go to bed at night that includes all the costs of running thinking about how to alleviate the problem.” it over a 25 to 30-year lifetime for a unit cost that is The assessment by the ASCE, an industry calculated on an annual basis. body, is reflected in a rising tide of multi-billion For governments and local authorities it is the dollar deals from companies including Macquarie perfect solution to a thorny and ongoing problem.

Bank and Depfa Bank, which see an opportunity in The private-sector consortium – which typically funding a solution to the problem. includes a construction company, a facilities ASCE research claims there has been a 75 per cent management company and a financier – pays up front increase in the number of vehicle miles travelled on for the project and is also responsible for the efficient US roads in the last 20 years but only a 4 per cent working of the finished product. Hence it has an increase in new lane miles. Poor road conditions cost incentive to build a school on time and to budget and American motorists US$54 billion per year in repairs to a standard that will endure. and operating costs and they spend 3.5 billion hours According to a UK Treasury report published a year stuck in traffic at a cost of US$63.2 billion to earlier this year, PPP has now delivered over 500 the economy. Annual spending of US$59.4 billion operational projects in the UK, including 185 new or annually is woefully inadequate, compared to the refurbished health facilities, 230 new or refurbished US$96 billion the ASCE claims is required. schools and 43 transport projects. In September 2005, As governments around the world face up to the the capital value of PPP projects was calculated by same problem, so a valuable new export opportunity the Treasury to be £46.1 billion.

Research carried out

by UK local authorities claims that 80 per cent of all users of PPP projects are always or almost always satisfied with the service being provided. It says performance under PPP contracts has been consistently high over time with approximately 90 per cent of projects performing satisfactorily or better in every year since 1998. According to the UK’s National Audit Office, savings achieved so far, mainly through lower running costs, are around £770 million, enough to fund several new hospitals.

Costs for PPP projects are generally running at around 5 per cent below comparable THE IDEA IS TO public-sector contracts.

CONTROL PUBLIC The numbers sound good, but they have SECTOR DEFICIT also drawn scepticism.

BY INCENTIVISING Unions and many PRIVATE health professionals see COMPANIES TO PPP as a financial ruse TAKE ON to keep the real cost THE PROBLEM of assets off the public books. Others believe that, in the long term, it will turn out to be a more expensive method of procuring infrastructure. One problem is that, in the

M ICHAEL MORTON

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UK, it has locked clients into higher-than-necessary interest rates for up to 30 years at a time.

As evidence, opponents cite examples of early deals, where the private sector profited royally at taxpayers’ expense. A parliamentary committee recently described a contract with the Norfolk and Norwich Hospital as “the unacceptable face of capitalism”, concluding that hospital staff managing the project “were not up to the rough and tumble of negotiating refinancing proposals with the private sector…This was a poor deal.”

Some of the biggest names in PPP – including financiers Innisfree, 3i and Barclays Infrastructure

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A VALUABLE NEW OPPORTUNITY IS EMERGING

– were accused of taking unacceptable gains after their rate of return jumped from 19 per cent to 60 per cent, when they decided to borrow more funds to take an early cash return.

Despite these criticisms, PPP is attracting a great deal of interest in Ireland, Germany and

South Africa, among other countries. The biggest opportunity, however, is likely to be the US. Tim Stone, international chairman of PPP advisory services at consultancy firm KPMG, is advising the Department of Transportation in Texas (TexDoT) as it plunges into what is known in the US as P3.

Halcrow is also advising TexDoT and has opened an office in Austin to support the work.

MARK DRAU GHN

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Texas needs to renew all its major highways and build new roads to cope with a rapidly increasing population. Stone says that the Texas contracts alone are worth US$187 billion, and that it is likely to have a domino effect across the other 51 states.

“Historically, the US had the money to create assets but nothing for maintaining them,” said Stone.

“When you build a road or a school you generate

obligations that need to be taken care of. For the first time, P3 in the US recognises this and makes sure there is adequate funding for maintenance throughout the entire life of the asset.”

Transportation and, in particular, road building, is the primary target for P3 deals in the US. But wastewater, schools and other capital projects are expected to follow. It’s a huge opportunity for UK

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construction companies and engineering design consultancies, including Halcrow.

However, Anthony Rabin, finance director of Balfour Beatty, believes there could eventually be as many different P3 markets as there are states and federal agencies.

“The thing to remember about the US is that it isn’t just one market. It’s a series of markets and all are going to develop at different rates, with slightly different priorities and rules,” said Rabin. “That makes it very unlikely that one company will want to be in every single market over there.”

The US interest in P3 has already developed two distinct flavours: deals where existing infrastructure assets are transferred to private-sector investors – like the billiondollar sale of the Chicago Skyway toll road to Macquarie Bank and Cintra; and MACQUARIE’S the construction of new assets LANDMARK on greenfield CHICAGO SKYWAY sites, including TOLL ROAD the Highway 161 DEAL RAISED road contract, AN ASTONISHING which will be US$1.8 BILLION let in late 2006.

“Traditionally, here in the US, we’ve utilised gas tax funding or pay-as-yougo funding and the tax-exempt debt market,” said Russell. “Europeans have been more involved in concessions where companies have put their own equity at risk in the project.”

Goldman Sachs, Merrill Lynch and Morgan Stanley are among investment banks that are following Macquarie’s early lead in seeking out the first type of P3 deals. Rabin said European construction companies generally have stronger

balance sheets than the largely regional US construction groups, so will opt for the second type.

“However, the big-name financiers are likely to get involved at a much earlier stage in the new-build market [than they did in the UK],” Rabin said. For these financiers, long-term asset ownership – with 25 to 30 years of cash returns – is ideal for funding longdated liabilities, such as pension funds.

Macquarie’s landmark Chicago Skyway deal, an existing toll road that was leased to the private sector

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to operate for 99 years, raised an astonishing US$1.82 billion. Since winning that project the Macquarie/Cintra partnership has stolen a march on other players with a US$3.85 billion bid to operate a 75-year concession of the Indiana Toll Road. And it intends to invest billions more in the US, despite the relative immaturity of the market and the sticky issue of getting politicians on side.

Traditional funding options of gas taxes or payas-you-go remain available in the US, although they

can be considerably more difficult to pull off in a market where oil prices are high and rising.

Whatever happens in the US, its emerging P3 market is likely to seek out European support for some time to come. But P3 practitioners should avoid the temptation to ditch smaller-scale deals at home in favour of this big-ticket market. Despite ongoing controversy, the UK Treasury is still planning to do a lot of deals at home which, through familiarity, are likely to carry less onerous risk.

DAR REN HO PES

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PALE, MALE AND STALE COMPANIES RISK LOSING TOUCH WITH THEIR CUSTOMERS IF THEY DON’T ADDRESS DIVERSITY Indra Nooyi joins a select club as the new chief executive of PepsiCo. Not only is she one of only 11 female CEOs in the Fortune 500 list of the top US companies, she is also the only one who is not white. Her appointment is no surprise to anyone who knows PepsiCo and its former chief executive and ongoing executive chairman, Steve Reinemund. Diversity became the hallmark of his reign at the US$33 billion drinks and snacks company and was a major contributing factor to PepsiCo’s dramatic turnaround in overtaking Coca Cola for the first time in a century. PepsiCo’s profit has doubled in the last five years, more than twice the growth of its rival, and margins have climbed from 16 per cent to 23 per cent. And that’s at a time when healthy eating and child obesity have never been higher on the agenda.

It is a compelling story, one made possible, at least in part, by PepsiCo’s emphasis on building diversity into its employee and management base to reflect the ethnic and cultural mix of its customers. The company claims this has helped spawn successful new product ranges from people with first-hand understanding of customer tastes. Yet Reinemund is a rare voice in a sea of board rooms that are recognisable for the homogeneity of their culture, age and gender.

The typical non-executive director is a 58-year-old white male with a background in finance, according to research carried out by the Financial Times newspaper. Some 30 years after sex discrimination laws came into force in the UK and the US, only 10.5 per cent of executive and non-executive directors in the UK’s top 100 companies are women, according to the UK’s Equal Opportunities Commission. In the US, the figure is 14.3 per cent.

Meanwhile, ethnic minorities make up only 2.3 per cent of UK company boards, according to research carried out by the UK’s Cranfield School of Management in 2005. That is despite the fact that 2001 census information shows 56 per cent of them go on to higher education, compared with the UK general average of 40 per cent.

While some US companies have begun to acknowledge the diversity of their customers and employees and the commercial potential of adjusting their commercial strategies to reach them,

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few outside the US have caught up. But this is not just a social and moral issue. In a market where brands are spending millions of dollars each year on advertising for an extra fraction of market share, many are missing some significant changes in buying patterns.

PepsiCo believes it gets closer to its customers by investing in a wider pool of knowledge and experience in its employee and management base. This makes it smarter and, ultimately, wealthier. It claims that one percentage point of its 8 per cent growth in 2004, worth US$250 million, came from introducing diversity-related products and policies.

“London has the most ethnically diverse population of any European city, yet most companies are complacent about reflecting that in their operations,” said Zena Martin, an American who made London her home eight years ago. After spending most of her career in advertising and PR in the US – and seeing at first hand the shift in corporate attitude towards diversity – she has set up a company, called Acknowledge Communications.

Hill & Knowlton, the global PR agency where she was a managing director until 2005, began receiving a growing number of calls from UK clients asking for advice and that is when she decided to set up her own specialist business.

I’VE SEEN THE FUTURE BECAUSE I’VE LIVED IT IN THE PAST IN THE US “I know this is coming to the UK and elsewhere,” said Martin. “I’ve seen the future because I’ve lived it in the past in the US. But I come across board-level directors here who say, ‘I don’t need to look at this because my bottom line is fine – why mess with the status quo?’ What many of them don’t see is that if they continue in this vein, they will lose touch with customers and employees when they could be ensuring sustainable revenues over the longer term.”

Attitudes from senior figures within her own industry are revealing. Lionel Zetter began his presidency of the UK Chartered Institute of Public Relations with the immortal words, “While I’m president, we won’t be focusing on esoteric issues such as diversity, but issues important to the PR industry.” PepsiCo seems to have done remarkably well out of such an esoteric issue. In the US, many of the Fortune 500 companies that sell products and services to consumers now employ diversity directors. Their remits cover everything from ensuring the company recruits a mixed employee base to understanding and monitoring the demographics of its customer base.

But PepsiCo says it goes beyond that. In its 2005 financial statement, it states: “We must also create an inclusive environment where everyone – regardless of race, gender, physical ability or sexual orientation – feels valued, engaged, and wants to be part of our growth. It is only through inclusion that we will fully unleash innovation and growth for our business.”

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Even US companies that are addressing the issue in their domestic market are behind the curve elsewhere. Take an aspirational product like Mattel’s black Barbie dolls, for example.

Trying to buy one in the UK is like searching for a needle in a haystack. Yet between 35 per cent and 40 per cent of Londoners are from ethnic minorities, compared with 9 per cent in the UK as a whole. Black British women spend six times more on average than their white counterparts on hair care, according to a report from market researcher Mintel. And overall the ‘brown pound’ spent a total of £32 billion on goods and services in the UK in 2005.

BLACK BRITISH WOMEN SPEND SIX TIMES MORE ON THEIR HAIR THAN THEIR WHITE COUNTERPARTS Pride magazine, targeted at black British women, is a shadow of its American cousin, called Essence. While the latter is full of advertising from big brands like l’Oreal, which recently launched a new line of products for ethnic minorities, called HIP (high intensity pigments), Pride’s advertising is mainly government messages and little-known product names.

The UK government estimates that gay and lesbian people make up 6 per cent of the adult population and between them they earned £70 billion in 2005, according to research from Out Now Consulting for Gay Times and Diva magazine. Virgin is one company that has proved it can inspire brand loyalty from the gay community, provided its products are affordable, by sponsoring Gay Pride events in the UK. Leisure travel is a significant part of gay and lesbian spending patterns, with more than £3 billion spent on tourism in 2005. Spending from people aged over 50 was even higher, contributing some £280 billion to the UK economy.

There are signs of change. Global advertising group JWT recently set up a division called Diversity and, despite Mr Zetter’s words, PR agencies Weber Shandwick and Fleishman Hillard have followed suit. The UK has seen a proliferation of radio stations as a result of introducing digital technology and this has forced the broadcasting establishment to adjust its thinking as listeners adjust their radio receivers. Club Asia and Sunrise, two new stations that are more in tune with their 18-to-30-aged listenership, have attracted huge numbers of listeners and advertisers, leaving the incumbent BBC’s Asianet trailing in audience ratings. As a result, the BBC has been forced to recast its content to more closely match its listeners’ tastes.

“In the UK, the attitude I see all the time is ‘let’s wait and see if someone else does something first’ or ‘let’s have a cup of tea’,” said Martin. But there is a big opportunity here that they are missing. When you’re part of a group of people that has been ignored and or persecuted and you start experiencing the opposite, boy are you going to give a whole lot of love back.” zena@acknowledgecommunications.com

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HDTV: COMING TO A SCREEN NEAR YOU It is touted as the biggest change in television since the move from black and white to colour.

But the transition now underway to high-definition television, or HDTV, is in many ways much more complex and far-reaching. It touches every part of the television industry, from the way films, games and TV programmes are produced, to the distribution networks used to screen them in our homes and the electronics devices we buy to receive them.

Content creators, in particular, are being forced to change the way they make TV programmes and documentaries. Over the next few years they will spend millions of dollars updating their systems to support HDTV, as will broadcasters and other content distributors.

And it is not just a matter of buying new equipment.

Already, TV and film studios in the US have had to adapt to the realities of HDTV. Because of the life-like detail of HDTV images, ‘soap’ producers can no longer fool the public by painting the view through a window on a studio backdrop. On an HDTV screen it looks just like a window painted on a backdrop. HDTV has also raised the stakes for actors and news anchors, who can no longer cover up minor blemishes or their age with a touch of makeup. As a consequence, some celebrities have reportedly refused to go on the popular US TV chat show, ‘The Tonight Show,’ shot in high-definition, unless they are offered special makeup. But it is this life-like detail that makes HDTV so appealing to film buffs, sports enthusiasts and ‘techies’ alike.

The US and Japan took the lead by introducing HDTV in the 1990s. “Consumer demand to see the World Cup football tournament in HD served as a catalyst for HDTV in several European countries in 2006,” said Mike Paxton, an analyst at market researcher In-Stat.

HDTV promises a kind of TV nirvana – superior resolution or picture detail, digital surround sound and the ability to view films in their original widescreen format. It always comes with 5.1 surround sound (five normal speakers and a bass driver) and is big enough to show ‘true’ widescreen, without the black bars above and below the picture. This is called the ‘aspect ratio’, which is 16:9 on HDTV, 4:3 on a traditional TV. The standard-definition programming most of us watch today has, at most, 576 visible lines of detail, whereas HDTV has as many as 1,080 lines. As a result, HDTV broadcasting looks sharper and clearer than regular TV by a wide margin, especially on the big-screen televisions

ADVERTISEMENT FOR THE SO NY BRAVIA TELEVIS IO N

PAUL TAYLOR, PERSONAL TECHNOLOGY CORRESPONDENT WITH THE FINANCIAL TIMES, LOOKS AT THE LATEST TV TURF WAR

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that are increasingly popular. At the very least, an HDTV set produces an image at least four times more detailed than a conventional standard TV. Already the inevitable war over technology standards, reminiscent of the VHS Betamax videotape wars of the 1980s, is underway. Companies backing two competing high-definition DVD standards are lining up for battle: HD DVD backed by Toshiba, Microsoft and Hewlett Packard; and Blu-ray backed by Sony and most of the major Hollywood studios.

HDTV HAS RAISED THE STAKES FOR NEWS ANCHORS, WHO CAN NO LONGER COVER UP MINOR BLEMISHES OR THEIR AGE Sony’s upcoming PlayStation 3 video games machine will play Blu-ray discs (Sony also owns one of the big Hollywood film studios) and Microsoft plans to add a separate HD DVD player to its rival Xbox 360 games machine. Both are positioning their consoles as trojan horses to establish their HDTV technology as the dominant high-definition DVD standard in the living room.

So why the move to HDTV and how does it work? The technology actually comes in 18 different flavours, based on the number of lines (720 or 1080) making up the picture and how the image is formed. But all versions of HDTV share common core attributes. Most importantly, HDTV is a digital standard that addresses and solves many of the problems associated with traditional TV broadcasting and its three incompatible analogue formats: PAL, used mostly in Europe; NTSC in North America; and the SECAM standard THE THREE MAIN ADVANTAGES OF HDTV developed in Japan, which has been in use for over half a century.

Among the problems associated with analogue TV are visible picture * HD is digital, so you either see an flicker and ‘ghosting’, particularly when the broadcast signal is weak. Digital excellent picture or no picture at all.

TVs overcome these and other problems while enabling broadcasters to cram Digital TV does away with annoyances more information into the signal, so it gives a better-quality image at a higher like snowy or washed-out images, resolution. That means the image can be ‘blown up’ without losing its quality, which are caused by a weak signal or producing a good-looking picture even on a big screen. signal interference.

But not all digital TVs are high definition. Think of HDTV as the top standard * Most HD programming and films of digital TV, the highest resolution that will be broadcast by TV stations or will be presented in their native available on next-generation high-definition DVDs. Digital content, like DVDs and digital TV programmes delivered over the air, over a cable or beamed down from 16:9 widescreen format. In addition, a satellite, can look better than analogue content even on a normal TV with very ‘legacy’ TV content that was shot and good reception. But it should look much better on an HD model. preserved on 35mm film can be viewed Europe has adopted slightly different standards to the US and Japan, which at nearly the same resolution as the define technical details like the number of lines that make up an HDTV image, original photography. how the image is ‘assembled’ on screen, aspect ratios and even the connectors * The colors will generally look more between the screen and the picture source. realistic, because HD content is The hardware industry, dominated by Japanese and Asian vendors, has more detailed and the gaps between begun producing HDTV sets, mostly flat-panel displays, which meet these scanning lines are much smaller. specifications. Meanwhile, TV broadcasters are working on specially produced

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HDTV programming, which they run typically alongside their traditional channels.

Most European countries, including Belgium, France, Germany and Spain, have announced plans to launch commercial HDTV broadcasts. In the UK, the first HDTV service began in December 2005 and the BBC, fresh from launching its Freeview digital service, is testing HD broadcasting and plans to produce all its programmes in HD by 2010. It has begun creating content in high definition, like its recent series “The Grid”, a co-production with TNT in the US. It was filmed in a high-definition format and aired in HD in the US. “The UK is the largest display market in Europe,” according to John Binks, director of GfK, which monitors global consumer markets. Regulation is pushing the market to make the transition to digital TV sooner rather than later. By 2010, Binks expects 20 per cent of UK homes will have some sort of TV set or display that can show HD in its full glory.

Elsewhere, consumers are not waiting for the switch. Spurred on by tumbling flat-panel prices and special events like the recent World Cup football tournament, which have been partially broadcast in HD, sales of HDTVs and ‘HDTV-ready’ panels are surging.

Today, a 42-inch plasma flat-panel TV capable of displaying HD content can be bought for about US$2,000. Two years ago a similar set would have cost US$5,000.

As Sir Howard Stringer, Sony’s Welsh-born chief executive, noted during a recent speech: “For years in the US we wondered how HD would evolve. Which would come first, the programming or the devices, the chicken or the egg, so to speak. And what impact regulation would have on the process. We are now seeing an explosion, as the consumer – recognising the enormous appeal of HDTV – votes with his wallet and his time.”

Digital flat-panel screens – many of them HDTV-ready – are one of the hottest-selling consumer electronic products in markets like Japan and the US. Sales of TV displays, mostly plasma and LCD (liquid crystal display) flat panels in the US are set to jump this year to US$22bn up from US$19bn last year, said the Washington-based Consumer Electronics Association (CEA).

“Replacement and upgrade purchases continue to drive the display market while prices continue to fall,” said Sean Wargo, the CEA’s director of industry analysis. “As consumers prepare for the transition to digital television, we will see more of the shipment volumes move to digital displays as analogue sets’ days are increasingly numbered.”

Most of the biggest-selling digital flat-panel displays are manufactured in Asia and come in two varieties: plasma screens, which tend to be the biggest and brightest but have a finite

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lifespan of about eight years; and LCD panels, which use the same technology as portable notebook computers and flat-panel PC displays and tend to be smaller and more pricey than plasma displays. Among the leading manufacturers are Phillips in Europe, Samsung and LG of Korea and Panasonic, Pioneer, Toshiba and Sony in Japan. Sony, in particular, has captured a significant slice of the market with its Bravia brand of LCD TVs – now the best-selling brand in the US. Sony and its Japanese rival, Toshiba, are also locked in a battle over next-generation DVD players and the discs that will play on them.

In the US and Japan, the first HD DVD and Blu-ray players have already begun to appear on store shelves, along with the first movies based on the new formats. But many in the consumer electronics industry fear that the existence of two rival formats could be as damaging as the VHS-Betamax wars. Ultimately this led to the demise of Sony’s Betamax format, despite the fact that it was generally considered technically superior.

AN HDTV SET PRODUCES AN IMAGE AT LEAST FOUR TIMES MORE DETAILED THAN A CONVENTIONAL STANDARD TV US retailers, in particular, fear that confusion over the two standards could lead consumers to hold off buying into either system, as happened with VHS and Betamax. “It makes it impossible to get behind one format and introduces so many problems,” said Brad Anderson, chief executive of Best Buy, the leading US electronics retailer.

Others suggest a prolonged high-definition DVD format war may simply divert consumers to online download services that enable them to buy or ‘rent’ HD films and store them on a PC or DVR (digital video recorder) hard drive rather than on a physical disc. What is certain is that the number of households watching HDTV programming continues to rise, albeit from a small base.

According to In-Stat, the number of households with an HDTV set receiving and watching HD programming will grow from a total of 15m in mid 2006 to 20.3m at the end of 2006.

In mid 2006, the US and Japan accounted for 91 per cent of all worldwide HDTV households.

Other countries with significant numbers of HDTV households included Canada, Australia and South Korea. But that number is expected to spike over the next few years as new markets for HD services, particularly in Europe, open up. By the end of 2009, In-Stat is projecting that the number of HDTV households worldwide will exceed 55m. The next TV revolution has begun.

BR ITIS H MUSEUM

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The happy hormone Research shows that music has the power to heal the body “Music hath charms to soothe the savage breast,” wrote the 17th-century poet William Congreve, while Shakespeare described it as ‘the food of love’. Now medical studies have proved the accuracy of both these claims – and a host of others.

Ongoing research shows that music affects the balance of our hormones and creates physical changes in us. That is why it is commonplace in Japan for companies to pipe music into their offices. Just as this is reported to have a positive effect on productivity at work, research also shows it has the power to help heal the body, which has prompted hospitals, including London’s Chelsea and Westminster Hospital, to stage regular concerts for its patients. The effects were measured by the hospital’s Dr Rosalia Staricoff, who says growing scientific evidence proves music’s power to heal the body.

“The physiological benefits have been measured,” she said. “Music reduces blood pressure, the heart rate and hormones related to stress.”

Professor Paul Robertson, who plays violin at the concerts and is among those trying to bring music into mainstream medicine, goes further: “We’re approaching the point where a doctor could legitimately be considered negligent not to recommend music as a therapeutic intervention.”

Such comments are likely to draw scepticism. But as long ago as 1995, research by neurophysiologist Walter Freeman, professor at Berkeley University, California, proved that oxytocin, a hormone that enables mothers to breast feed, is also released

when we listen to music. Already dubbed the ‘love hormone’, following the discovery that people who claim to be falling in love release it, oxytocin is responsible for that intense feeling that encourages bonding to take place between people.

When we listen to music, the increase in oxytocin is accompanied by a drop in levels of cortisol, the hormone associated with stress, and testosterone, which is linked to aggression. This is what prompts the ‘feel-good’ response people often have when listening to music. And the effects are cumulative.

Over a period of time, there can be a lasting increase in their levels of oxytocin.

The world’s largest medical charity, The Wellcome Trust, weighed in to the debate in July, when it brought together academics and artists to explore the possibility of putting music therapy on a more scientific footing. Following the conference, Robertson began co-ordinating a series of clinical trials with scientists to build up a body of evidence enabling the medical establishment to prescribe music with clinical confidence. They include studies on the effects of music on chronic fatigue syndrome, pain and mental illness. Results will be available in 2007.

Robertson, an internationally acclaimed musician and founder member of the Medici String Quartet, has spent over two decades working alongside leading scientists exploring the neurological and scientific basis of music. He also acts as advisor to university research groups worldwide and will become a Fellow of the Royal Society of Medicine in October 2006.

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Thanks to a recent TV series in the UK, Robertson’s work is now reaching a wider audience.

So what’s the big deal? Many of us have tried curing a bad mood by listening to music, without thinking about exactly how it is affecting us. The difference is that this feel-good factor is now beginning to be understood at a physiological level. As a result, musicians

and scientists are arguing that music should be used systematically as a therapeutic alternative to drugs, at least for some conditions.

“While claims for music’s ability to transform us are not new, the identification of the neurological processes that cause these transformations in us is,” explained Robertson.

The feel-good factor is something that was observed and valued by our ancestors.

The Turkic scholar Abu Nasr al-Farabi (873-950AD) in his Great Book About Music noted that: “Music promotes good mood, moral education, emotional steadiness.

When the soul is not healthy, the body is also ill. Good music, which cures the soul, restores the body to good health.”

Al-Farabi wasn’t alone. The Egyptians used music to prevent evil spirits from attacking them with disease and the Romans believed music could cure everything from snake-bite to love sickness, as did the Indians and Persians. In Greece, Democritus – the man who posited the existence of atoms – described how music played on the flute could heal the sick. And Pythagoras showed his students how a particular sequence of chords and melodies could change behaviour patterns and accelerate the healing process.

Robertson thinks it’s time we took a leaf out of our ancestors’ books. “The idea that happiness is vital to health was obvious to our ancestors, but somewhere along the

THE FR EER GALLER Y OF ART, WASHINGTON

“MUSIC HATH CHARMS TO SOOTHE THE SAVAGE BREAST,” WROTE THE 17TH-CENTURY POET WILLIAM CONGREVE

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way this link was broken,” he said.

A good example of the overlap between the emotional response that music can produce and its other effects is the so-called Mozart effect whereby mathematical and spatial reasoning improves after listening to Mozart, as opposed to white noise or music by the minimalist composer Philip Glass.

The original research was carried out in 1995 by Frances Rauscher, a psychologist at the University of Wisconsin, and has since been replicated a number of times in other trials.

This research questions whether the mental improvement reported is because the same parts of the brain involved in spatial reasoning are also activated by listening to complex music, or because the state of ‘happiness’ (raised levels of oxytocin, decreased levels of cortisol) produced by it generally promote better concentration. It is likely that both these points are true, as well as other factors that have yet to be identified. Either way, there is little doubt that music can have a positive and quantifiable effect on the way our brains function.

Another study quantifying the link between health and music was published in America in 2000

by Dr Frederick Tims of Michigan State University.

This showed that patients with Alzheimer’s who underwent four weeks of music therapy showed significant increases in their level of melatonin, a hormone linked with sleep regulation and believed to influence the immune system.

But why does music therapy work? It seems clear that listening to music elicits very specific physiological and psychological responses in us. But why should the brain favour an activity, which, on

initial observation, seems to provide us with little more than a pleasant way of passing the time?

The brain tends to reward and encourage activities that increase our chances of survival by releasing hormones like endorphins and oxytocin, which make us feel good. The results of studies showing music’s health benefits are making more plausible the theory that our ability to create and enjoy music is actually hard-wired into our brains.

Professor of Music at Ohio State University David Huron argues that if the ability to create and appreciate music had no value beyond being merely pleasurable it would not have lasted as long as it has. (For example, some people find taking heroin a pleasurable activity but their survival rates are inversely proportional to the amount of heroin they consume.)

Man’s need to create music goes back a long way – the oldest musical instrument found is a flute dating back as many as 82,000 years. Huron believes music gave us the ability to communicate before we were able to use language, as well as for bonding. Singing, for example, is an excellent way of preparing a group to act in unison and has been used to this end in military and other activities through the ages. University of California research has shown that Immunoglobulin A, an antibody that helps the body fight disease, increases after people sing.

It seems safe to conclude that communication has helped ensure the survival of the human race. Babies’ development seems to bear this out. Their auditory system develops long before their ability to see and is already very sophisticated by the time they are born.

Music is pre-verbal, which means we are able to create, recognise and respond to sounds, pitch

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and rhythm before we can use language. Studies show babies recognise all the sounds that make up a language. After about six months, however, they start to filter out all but those in their own language.

These theories give us valuable insight into why music might have such a powerful effect on us.

Further to Dr Tims’ work, they also have significant implications for people who suffer from either dementia or Alzheimer’s disease.

Dr Oliver Sacks, the psychiatrist and author of best-sellers such as Awakenings and The Man Who Mistook his Wife for a Hat, has shown that patients with dementia and Alzheimer’s who have trouble remembering their own name, have no problem recognising music and singing along to melodies they know. This not only allows them to connect to the world for a brief moment, but can also be used as a mnemonic to remind them of the order in which they need to perform certain tasks, for example.

Robertson believes it is the fact that music has the ability to express feelings beyond the scope of words that has made it so successful in treating both emotional and mental health conditions.

“Music is the underlying structure of communication,” said Robertson. “Neurological research shows it is not memory that is lost, but access to it, so music may offer another route in, providing a kind of short-cut.”

If there is abundant evidence supporting the power of music, the question of who will fund music therapy remains a stumbling block. Robertson suggests insurance companies may step in. Motor insurance companies already fund research into mitigating risk on the roads, so health insurers

may decide to fund research into music therapy, particularly regarding stress. Work-related stress is on the rise and some businesses already fund treatments such as massage and counselling for their employees.

Getting financial data to prove the costeffectiveness of music therapy is a priority, believes Robertson. “If we can prove that we can keep a dementia sufferer out of care for one week, we could fund any number of studies off the back of that research,” he said.

Such data is still in short supply but a study carried out in 1998 at Piedmont Hospital in Atlanta in the US showed that the use of music therapy could decrease the amount of time premature babies needed to spend in the neo-natal clinic by more than three days, saving between US$2,000 and US$9,000 for every baby.

In the meantime, however, the market has already responded. A company called the Medical Resonance Therapy Music prepares different types of music to suit a variety of conditions, such as paediatrics and mental health, and sells them in CD format.

While there is still not enough evidence for doctors to routinely prescribe music therapy, these alternative programmes remain popular. “There are 165 music therapists working in the NHS throughout the UK, including Greenwich Teaching Primary Care Trust, Charing Cross Hospital, Derby Hospital and Oxford’s John Radcliffe Hospital,” said Louise Karena, a spokesperson for the Association of Professional Music Therapists.

One thing is certain: music can be called a universal language, eliciting the same neurological responses in people, whatever their native language or location. It may be time to follow Japan’s lead in using it to drive productivity in the work place.

IT IS MUSIC’S ABILITY TO EXPRESS FEELINGS THAT ARE BEYOND THE SCOPE OF WORDS THAT MAKES IT SO SUCCESSFUL IN TREATING HEALTH CONDITIONS

THE FOGG MUS EUM OF ART, HA RVARD UNIV ERS ITY

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Pushing the envelope

The early-stage funding market is recovering in line with the world financial markets.

But how do venture capitalists decide which ideas to back?

Bambi Francisco, a correspondent at online financial news provider Dow Jones Marketwatch, talked to Robert Goldberg, former managing director of ideaslab!, an incubator fund for internet start-ups, as he gets Ridgelift off the ground.

His new venture is managing US$200m of investors’ money in internet software and IT infrastucture start-ups.

Q.What is your definition of a good idea?

A. There are good ideas and there are good

investments. A good idea is an insight into demand or an observation about where a market can develop.

Linux, the open-source computer operating system, is a good example of this concept. Against all odds, it was developed in a collaborative cross-industry effort to tap into a market need for information technology managers to support their investment in

software more cost-effectively. It’s a good idea that nevertheless took a few turns of the crank before it became a workable business model.

Q. How do you go about deciding whether to back an idea or not?

A. An idea is one thing, a company is another.

If intuition tells us we like the idea, and market research shows that it has a chance of becoming a

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company, we are willing to spend a small amount.

But overall, investors are looking for venture-class returns, which should be roughly ten times the original investment over a period of three to seven years. And again, you’re looking for an idea that has a large enough market to get there, a team that can execute as well as defensible technology.

Q. Do you use a generic checklist for the ideas you evaluate?

A. We do not have a generic checklist. We have a

methodology and a very specific way of looking at investments in three different phases: 1) proof of concept, 2) proof of market, 3) go to market.

By looking at investments in this way, we can evaluate whether the market, people and technology are good enough. Basically, you have to work out whether a market exists or can be formed around it.

Q. What is required to get financial backing?

A. We think of it in the three phases with risks and

key pivot points around them. After that, you think about your likely exit strategy if you successfully execute. A lot of investors think about the exit value, which determines return. But it’s also important to think about the probability of reaching the milestones that take you to that exit.

Q. How do you evaluate ideas that require a degree of technical knowledge to understand them?

A. In our firm, we employ many engineers and we

have complementary technical skills. If there is a skill set we don’t have, we will tap into our advisoryboard relationships with experts outside.

Q. Has the venture capital market changed since the dotcom years? If so what has changed?

A. A couple of things have changed. Because the

world financial markets collapsed in 2000, along with most exits, the venture capital industry started

to look to later and later-stage deals, where much of the risk had dissipated. It’s left a gap for early-stage funding that’s been filled by angel investors and emerging venture firms like Ridgelift.

Q. Are failures inevitable for any business?

A. If you’re not failing, you’re not trying hard

enough. In early-stage businesses, the most important thing is to have a point of view and execute on it. You also need to recognise when things fail, then change and modify your plan.

Linux would never have got off the ground without a lot of effort in the face of huge industry resistence.

Neither would Overture, the company we backed at ideaslab!, which invented sponsored search listings and is now the most popular way of advertising on the worldwide web.

Q. Does the above apply to individuals trying to develop within bigger companies as well?

A. Yes, but large companies have considerations that

make some of it less relevant. Whereas innovation is the oxygen of a startup, the pace of innovation in big companies is, by necessity, slightly slower. In a larger company, you need to maximize returns for existing products so you innovate enough to continue the momentum. Obviously, it’s not in your interest to innovate so fast that you destroy your own business.

Q. What are the most common mistakes that entrepreneurs make?

A. There’s a careful balance to be achieved between

having a strong point of view and executing on it at a time when other people are opposing it. In my experience, entrepreneurs can often have a difficult time in getting that balance right. You have to be passionate about what you’re doing and, at the same time, you have to pay attention to other people’s opinions. It’s not an easy thing to achieve. n Blog: www.robertgoldberg.typepad.com

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