Archive | September 2014

Companies with at least one woman on their boards outperform: correlation, or causality?

Performance of Companies with WoB

Credit Suisse Research issued a report last week that shows that companies with at least one woman on the board of directors outperform companies with zero women on their boards.  What do they mean by ‘outperform?’ Better stock market performance, higher returns on equity, higher valuations and higher payout ratios (aka bigger dividends.) Sounds great. But various critics have pointed out that correlation does not imply causality. Let’s take a look at that in more detail.

First, are these results meaningful or just random chance? CS looked at the performance of 3,000 companies over an eight year period (2006-2014.) Their sample is more than large enough to produce statistically valid results, and the time period is very good, spanning a market peak, collapse and subsequent recovery that was global in scope. It would be nice to have an even longer time frame, but as you go back in time, there get to be fewer and fewer companies with even one woman on their boards (WoB.) 30 year data would interesting, but almost certainly not meaningful due to the low sample size of WoB companies in 1984. I would conclude that the results are highly likely (99%+) to be valid, and not due to chance.

Maybe it is a sector thing? That is a legitimate question: some industries are much more like to have zero women board member than others. As you can see from Table 4 below, over 40% of companies in the Energy, Material and Technology (shame, shame: tech should be a leader in this trend!) sectors have no women on their boards, while less than 30% of companies in the Financials, Utilities, Healthcare and Consumer Staples sector have no female board members. Point One: the CS Research folks show sector-neutral returns in all their charts, so they are adjusting for that. Point Two: even if there is a flaw in how they are adjusting for sector, we now have an eight year track record, and have been through enough sector rotations that sector is not likely to be a significant factor.

Table 4 Industry

Now that the “straw women” arguments are out of the way, let’s move to the heart of the matter. Credit Suisse Research puts it very well:

 “While our statistical findings suggest that diversity does coincide with better corporate financial performance and higher stock market valuations, we acknowledge that we are not able to answer the causality question and this is an important caveat to the observations below in the report. Do better companies hire more women, do women choose to work for more successful companies, or do women themselves help improve companies’ performance? The most likely answer is a combination of the three.”

I don’t have a definitive answer, but I have some reasons to believe that the first two factors are material but not more than 50% of the effect; meaning that the women on boards are – in and of themselves – leading to better decision making and better performance.

The problem with the idea that women are choosing to work for “more successful” companies is that it requires women joining boards to have some sort of ability to figure out which companies will have better stock market performance IN THE FUTURE. Years of robust data show that individuals are not capable of doing that, whether female or male. Women have been joining boards for a variety of reasons, but there is no reason to think they are any better than average at joining because their stocks will go up!

Next, are “better” companies more likely to pick at least one woman to sit on their board? If anything, the reverse is likely to be true. Companies where everything is going well tend to have very stable board memberships. Meanwhile, troubled companies frequently appoint new board members in an attempt to turn things around. Therefore, over the period studied (when we moved from fewer companies having at least one WoB to a period when more companies have female board members) troubled companies should be over-represented in the “at least one woman on board” category due to turnover and recruiting.

Which leads me to suspect that a significant part (perhaps more than 50%) of the effect is due to the additional diversity having a woman on the board provides. There is copious academic research on the dangers of groupthink and the benefits of diverse voices, ranging from Irving L Janis’ pioneering work to a lovely 2011 study from Ilan Yaniv.

Diversity doesn’t end at just having one woman on your board, of course. But it’s a start!

Just as one more note, there are some significant differences among countries. The chart below shows the percentage of women on boards around the world. Those in the UK or Israel might gloat at having around 18% female representation versus Canada at 16% and the USA at 14%. And kudos to you. But we are all WAY behind Belgium at 23%, Denmark at 25%, with France and Sweden at 30%.

Country list

Final note: the full report can be downloaded by clicking on the link here: CSRI_CS Gender 3000 – Women in Senior Management_final

CSR Report on Gender

Netflix is Coming, Netflix is Coming


That’s the title of my article that was just published in Television 2014 – International Key Facts. This highly respected annual publication asked me to try to predict what would happen when Netflix launches in Germany, Austria, France, Belgium, Switzerland and Luxembourg this fall.

Obviously, the question everyone wants to know is how successful the OTT offering will be in these new countries: how many paying subscribers will they get in the first year? Given my role at Deloitte, I can’t answer that question. But I realised that if I took all the publicly available information about Netflix and put it together in some new ways, I could make six predictions that are likely to apply to the six new countries! Click on this link to download a PDF of the full article: TVKF 2014_Article Duncan Stewart

But if you want a quick summary:

  1. Within countries, adoption will vary by language and by region.
  2. Adoption will likely vary by gender, age and education.
  3. Even if Netflix is highly successful, it will likely have little impact on traditional TV.
  4. Or on traditional Pay TV services.
  5. But for one part of the population, Netflix IS likely to change traditional TV viewing.
  6. Netflix, and other forms of OTT video, are likely to have long-term effects on telecom infrastructure and regulatory policy.

Please read the full article to understand the deeper implications of these six findings. And if you want to download the full document, you need to go to this link and register:

Bigger phones will save 3,500 lives per year by 2016


I am predicting that new smartphones like the iPhone 6 Plus will save lives. Not because of rocket science technology, like a sensor that tells you when you’re having a heart attack, but simply because the phones are getting bigger. Bigger phones are harder to use one-handed, and that means that fewer people will be able to do the one-hand-on-the-wheel-and-one-hand-texting-thing, which means fewer deaths from distracted driving.

This is not a Deloitte prediction, but my own forecast is that widespread global adoption of larger smartphones (aka phablets, with screens greater than 5.0”) will save 3,500 lives per year worldwide; avoid 420,000 moderate-to-critical injuries annually, and avert nearly 2 million instances of property damage.

No wonder people call them super phones. 🙂


As most readers know, I have been predicting that these larger phones will become the new normal, with over 25% of all smartphones sold in 2014. Given the launch of the iPhone 6 Plus (at 5.5”) and strong initial demand, that means I will likely be too low for this year: 30-35% looks like a better number, or over 400 million devices. And by 2016 nearly half of all smartphones may be over 5”.

By that point, no one will remember that people once believed that any phone over five inches was too big. Even smart people: Steve Jobs said in a Q&A session about a phone with a screen bigger than 3.5”: “you can’t get your hand around it” and “no one’s going to buy that.”

Some of the critiques of larger phones are dead wrong: holding a 5” device up to your head is not difficult; it just looks a bit odd compared to the smaller phones from our recent past. Some are only partially true: bigger phones might not fit in your jeans pocket, but 1) it depends what kind of pants you wear, and 2) not everyone carries their phone in their jeans all the time.

But there is one criticism that is 100% correct: even people with fairly big hands can’t easily use them one handed. If that is really important to a user, then this will be a deal breaker. One columnist wrote that he loved every single feature of the 6+: the bigger screen for video, better battery life, but the inability to type one handed was such a big problem that he thinks he may even return his new phone!

As it happens, I have an even bigger phone: the Galaxy Mega 6.3”. I used to have phones that I typed on one handed, and the criticism of bigger phones is utterly undebatable: I can read on the screen one handed, or even take pictures, but anything that requires more interaction requires two hands.

Which got me to thinking. “What did I used to do with all my one handed smartphone usage?” Keep your minds out of the gutter please. 🙂

The columnist who is thinking about returning his phone suggests common one-handed use cases: “It’s not a device you can use to quickly scan your email while carrying a grocery bag or hanging onto a subway pole.” And it’s true, I DO see lots of people carrying something with one hand and typing with the other. And folks who can’t get a seat at rush hour are called ‘strap hangers’ for a reason: more one handed smartphone activity there. But I also see a lot of people typing one handed…while driving their cars. (Also while riding bikes, which boggles the mind.) They shouldn’t do it, it has been well researched to be dangerous, and it is against the law most places.

I knew all that, and I tried to never text and drive. I was once at fault in an accident as I typed on my phone, and I knew I was fooling myself if I believed it didn’t have a negative effect on my driving. But sometimes an urgent message came in, and I kept one hand on the wheel and typed as short a message as possible with the other. Despite the risks of a fine, despite the risks to my own safety and everyone else’s.

But since I got my big new phone, I have not texted even once. Not because I am a better person, or smarter. But because the new large phones make texting and driving physically impossible.

The best study out there (Harvard Center for Risk Analysis) on texting and driving estimates that “that the use of cell phones by drivers may result in approximately 2,600 deaths, 330,000 moderate to critical injuries, 240,000 minor injuries, and 1.5 million instances of property damage in America per year.”

The US is about 1/4 the total number of the 1 billion cars in the world. There are more phones than cars worldwide, so we can assume that virtually every car driver also owns a phone, and is in danger of distracted driving due to texting. Multiplying the Harvard number by four (which may be conservative: US roads are by and large safer than the global average) and we get about 10,000 deaths per year, 1.2 million serious injuries, a million minor injuries, and 6 million occasions of property damage.

If I am right, and bigger phones are half the smartphone market by 2016, we will see about 750 million phablets sold in that year. Add in the 2014 and 2015 sales, and there will be nearly 1.5 billion big screen phones as part of the installed base. I am sure some people will have more than one phone and text and drive with their smaller device. And there will still be feature phones. But a 35% reduction in the harm caused by texting and driving seems plausible.

[Edited to add. There are various estimates of deaths due to distracted driving. I picked the Harvard study because 1) they were at the low end; 2) they focused on texting and driving only, not all distracted driving deaths; 3) I liked their methodology; and 4) because Harvard! But they are the first to admit that they don’t have enough data to model the exact risk, that their error range is wide, and that the actual annual deaths are likely between 800 and 8,000 per year. That’s a big range, but even at the low end bigger phones are likely to save nearly a thousand lives per year worldwide.]

Please join my focus group on media habits of 16-34 year olds!



Please join me, in partnership with the Canadian Media Fund, as we explore the media habits of urban young Canadians, both French and English, in a series of focus groups this summer and fall. We are looking for participants between 16 and 34 years old who consider themselves “digital only” (or perhaps close to being digital only)  media consumers (in other words, those young Canadians who consume media on NONE, or almost none, of the traditional platforms in the average week). Participants will be invited to a 1-hour focus group, during which they will answer written questions as well as participate in verbal discussions. No compensation will be provided – except juice and cookies!

There will be sessions in Montreal (Sep 24 & 25) and Toronto (week of Sept 29 – October 3.) I will be running the Toronto sessions, and am flexible on exact dates, times and locations. Let me know what works best for you, and I will try to make it happen!

Email me if you are interested at; or message me on social media.

Gabrielle Madé is running the effort in Montreal, with Catalina Briceño and Danielle Desjardins.

Apologies for the fact that there are no sessions elsewhere in Canada. It’s a big country, and I have a small ($0.00) budget. 😦

And here is a picture of how I see the focus group working:


Is the iPhone 6 Plus Too Big?

Hp35 ad

Any time a headline asks a question that way, the answer is no. 🙂

5.5” phones are not too large for human hands or pockets, and they only seem that way because so many people have become used to smaller phones. Ignore the stupid headlines that “women should not buy the iPhone 6 plus” and understand that “give it a few minutes, perhaps a couple of days, and you’ll find yourself strangely attracted to its huge-seeming screen.”

The iPhone 6+ is about the same size as the HP35 calculator from 1972: both are exactly 6.22” tall, the Apple device is 3.1” wide compared to the Hewlett Packard’s 3.2”, and the new phone is ¼ of an inch think, versus the calculator’s nearly ¾ of an inch depth. In fact, the slimmer iPhone is just over 5 cubic inches in volume, while the HP35 was 170% larger at just over 14 inches3.

Mechanical calculators were common in the 1960s: huge desk based machines, they weighed kilograms. These were followed by electronic desktop machines, which were about the size of an iPad by 1968, but nearly three inches thick and still over a pound!

The HP35 was hailed as a triumph of miniaturization, offered more than just the basic adding machine functions…and was designed to fit in one of Bill Hewlett’s shirt pockets. That’s why it was called a POCKET calculator. People loved it, and although it cost over $2,200 in today’s dollars, it sold hundreds of thousands of units.

It seemed TINY compared to previous calculators, not too large.

Neither our hands nor our pockets have really changed all that much since 1972. This might be overstating the phablet case, but here’s one view from a guy who’s used the device for a full week: “when Apple irons out some of the software kinks, 5.5 inches might be the future of the iPhone, full stop.”

In fact, I am willing to make a prediction: the word ‘phablet’ is about to go away. People will get used to smartphones being over 5”, and that will be the new normal.

We won’t call them phablets, we will just call them phones.


[Edited to add. I had to post the advertisement above from 1968. Click the picture to enlarge, but notice the selling features: “It’s light and compact. You can tuck it under your arm, carry it from desk to desk, or take it home with you.”

Oh yeah. Nothin’ I love more than carrying my Electronic Calculator home with me. 🙂 ]

Crowdsourced Apple Watch Estimates for 2015


Apple Watch will be out in early 2015. Sales of smartwatches from other makers have been much lower than expectations so far in 2014, and everyone is wondering if Apple can transform the wearables category in the same way they did tablets. Prior to 2010, there were dozens of tablet computers, which in aggregate sold fewer than a million units per year. The iPad came along, and sold over 12 million units in its first nine months. So what is my prediction for sales of the Apple Watch?

Although this is my personal blog, I will NOT be making my own forecast. As you all know by now, my role at Deloitte means that while I can talk units or dollars about CATEGORIES (such as smart watches or head mounted wearables) I will never make precise forecasts on specific products like Google Glass or Apple Watch. I will discuss product features and so on, but never anything that might be market moving.

But that doesn’t mean I can’t tap into the wisdom of the crowd. I have nearly 1,500 friends and followers on Facebook, so I asked them for their predictions: it produced a thread of over 87 comments, debate, and Apple Watch sales forecasts! Take a look – lots of good rationales for the various estimates. Although we don’t know all the specs of the watch yet (including all the price points, and battery life will be a key factor in success) we had 13 people brave enough (or foolhardy enough) to make a point estimate for unit sales in calendar 2015.

As prizes, I am offering a shiny gold star to whoever is closest, plus a home cooked meal at my house if they are ever in Toronto. It may be difficult to determine a winner: companies are sometimes great about disclosing product sales, and sometimes opaque. As an example, Apple discloses precise iPad sales every quarter as part of their financials, but Apple TV sales are discussed only in fairly vague terms (“few hundred thousand”) and only when the company feels like it.

Some observations on the results:

It was a big range for only 13 estimates. The high was 200 million units, and the low was 1.1 million. The mean was 30.5 million. The adjusted mean (taking out the highest and the lowest figures) was 17.8 million, and the median was 8 million. There are too few data points for mode to be meaningful, but there were two guesses at 3 million.

Although there were some obvious sceptics and equally obvious Apple zealots, I thought the debate on the thread was well conducted, thoughtful and respectful. A very important fact was that there wasn’t any obvious shift over time towards the middle of the range. That happens to forecasters frequently: as the number of estimates increases, the subsequent numbers begin to “cluster around the middle.” That kind of groupthink is sometimes appropriate for mature markets, but a terrible idea for new products. One Facebook commenter put up some of the Wall Street estimates for watch sales: the participants wisely ignored the “experts” and kept making their own forecasts that were widely different. Well done!

Apple Watch Estimates

I wanted to depict the range graphically. The first chart above looks almost meaningless, and conveys no “story.” But forecasters (including me!) tend to think in terms of orders of magnitude, which better suits a log scale. We think of devices that sell millions of units as different in kind than those that sell tens of millions, which are in turn different than those that sell hundreds of millions or even billions. For example, computer game consoles will sell around 35 million units this year, tablets, TV sets and PCs will all be in the 200-300 million range, and smartphones will be 1.2 billion units.

Apple Watch Estimates - Log Scale

I think the log scale chart above tells the best story, and I even added a green trend line. Estimates well below that line or well above it can more quickly be visualised as the outliers they may be.

Finally, although I said I won’t provide my own prediction, the data on the chart does make me wonder about 12 million as a number. There is a gap in our forecasts right in the middle: we have an estimate for 8 million, and one for 16 million, but nothing in between. That isn’t my forecast, but the graph makes that look like the number I would pick if I was trying to “game” the other estimates to win the contest. Which I am not: I get to eat my own cooking any time I want!

Here’s the list, from high to low. I use their initials only in the charts above.

Mike Klein: 200 million

Alice Leung: 65 million

Mark Bornais: 40 million

David Barrett: 26 million

Trevor Doerksen: 16.4 million

Stephen Nickerson: 16 million

Jeff Rankine: 8 million

Kevin Michael Smith: 7.5 million

Ben Pashkoff: 6.5 million

Denise Gontard Cartwright: 4 million

Shira Abel: 3 million

Guinevere Orvis: 3 million

James Sapara: 1.1 million

#Dunstewart: iPhone 7+ for next September with 6.3″ screen

Apple Screen Size

This is not an official Prediction from Deloitte, just me playing around with Excel. If you take a look at Apple’s current portable computing lineup on the chart above, each device screen is between 15-23% larger than the next smallest device.

Except for the gap between the iPhone 6+ and the iPad Mini, which is 44%!

If I imagine filling that hole in the product line-up with a 6.3” iPhone 7+, it would be 15% larger than the iPhone 6+, and the iPad Mini would be 25% larger than my hypothetical smartphone.

Why am I so confident in this prediction?

First, gases expand to fill the space available, life forms fill ecological niches, and consumer product form factors abhor a vacuum too. That gap in the Apple product line up reminds me of those “holes” in the Periodic Table of elements. Back in the 1870s, scientists might not have isolated certain elements yet, but they knew they were there!

Second, all those people who might say that Apple would never make such a ridiculously large device are EXACTLY as wrong as all the people who said Apple would never make a bigger iPhone or a smaller iPad. Folks: there is no perfect size for an internet-connected device in a world of 7 billion people. Some will want small devices, and some will want bigger…and across the planet, every single size bracket will be designed and manufactured by tech companies, including Apple. And bought and used by tens of millions of consumers.

Finally, I currently own a 6.3” device. (Samsung Galaxy Mega 6.3) It fits in my pockets, I can hold it up to my head to make calls easily, it takes great photos and videos, and it is fantastic for typing, social media, pictures and watching video. I love it so much, that I would never buy another phone that wasn’t roughly that big. If Apple wants me to buy their phone (I already have two iPads), they are going to have to meet my needs.


[Minor point, but the chart at top blends two devices in one column. The largest MacBook Air and the smallest MacBook Pro both have 13.3″ screens. For legibility of the chart, I have combined the two in a single bar, and called the larger MacBook Air the +, which is something Apple hasn’t done. Yet. 🙂 ]


Have you ever looked at your eyes?

Neurology of eye movement

Fun conversation at my local Starbucks this morning: my big coffee in my hand, I was walking back home when I noticed a 20-something on the patio reading a book. I could see the cover: The Neurology of Eye Movement.

Many people don’t know this, but although our brain perceives our vision stream as a continuous moving and scanning process, which is NOT what happens at the physical level. Most of the time our eyes move in little jerks, called ‘saccades.’ And between our eyes, our optic nerve and our brain, some amazing and wondrous things occur to give the impression of continuous movement. There are phenomenon such as saccadic masking, spatial updating and trans-saccadic perception that are 1) very interesting in themselves; 2) sometimes go wrong from a medical perspective; and 3) almost certainly have important lessons for technology companies working on machine vision.

It may turn out that robot vision is nothing like human vision, and there’s no overlap. Or there may (just as the Wright brothers designed their airplane wings to mimic observed aspects of biological flight of birds) be ways in which we can base our technological solutions for vision on tricks that evolution has already figured out! Next, when we develop technologies for human blindness (think Geordi’s visor on Star Trek: TNG), we will need to make sure that the chips produce outputs that can be processed by a visual cortex that is designed to work with saccade-like inputs, rather than the continuous scan that current digital cameras provide!


[I asked the guy on the patio if he was reading for medical purposes or technological. As it happened, he is a PhD student working on his dissertation, and he is looking at it from the brain damage perspective. We had a great chat about saccades and technology. Who knew getting a coffee could be so educational?!?!]


My view on why John Ruffolo was named Canada’s Businessperson of the Year


I loved hearing how John Ruffolo of OMERS VC, my former boss at Deloitte, was named Canada’s Most Powerful Business person by Canadian Business magazine. I agree, and an article from Cantech Letter does a partial job (in my view) of answering the question: “Why would CB pick John Ruffolo, who manages a $200 million fund, over Mark Wiseman of Canada Pension Plan, who manages over $200 BILLION, and was in the #1 spot last year?”

Cantech Letter says that “What the Canadian Business designation signals is a shift in momentum from one sector of the Canadian economy to another, from the historically larger and more significant mining and resource sectors to the technology sector…”

There is certainly some truth to that, and tech has been on an upswing of late, and resources have not. However, I was a tech manager in the 1990s, when a similar sector rotation was underway. For a while, tech was more important than ‘rocks and trees’ and it was great, and it felt like we were seeing a permanent ascendancy of technology over resources for the Canadian economy. As you can see from the picture below, they even put me in Canadian Business! (I know – I look better with less hair.)

Duncan (2) Cdn Business

But after the bubble collapsed in 2000/2001, the pendulum swung the other way, and resources were back to their usual dominance, while technology fell to under 5% of Canadian market cap. Put not your faith in sector rotations being durable! That’s why they are called ‘rotations’…

But there is another reason why John’s role at OMERS may justify a #1 ranking. If you are selling a multi-billion dollar private equity deal in a global auction, CPP and Mark are definitely on your list of who to call! They are even high on the list. But it is a big list, with probably over a thousand potential buyers of what you want to sell. And (by and large) Mark’s money isn’t all that different than anyone else’s.

On the other hand, if you are a Canadian tech company, with huge potential and already establishing a big user base (HootSuite would be a great example) then John and OMERS are almost the only game in town. There are other Canadian VCs, but they have been significantly less aggressive, usually had less money to invest, and often didn’t want to play in the spaces that John is targeting.

Let me be more explicit about how OMERS is acting differently.

Historically (20 years ago, and in both US and Canada) VCs had a very basic game plan. I will exaggerate a bit for comic effect, but their model was roughly as follows:

“We will give you as little money as possible. In return, we want as much of your company as possible, along with some onerous Terms and Conditions. We want you to go public as soon as possible, so we can claim a success and raise our next fund. Even if you are not ready to be public. And we will sell our shares as soon as we legally can after the IPO, because that is how we get paid on our 2 and 20 compensation.” Not surprisingly, a lot of early stage tech companies said that VC stood for Vulture Capital! Most VCs aren’t exactly like that these days, but there are some structural reasons why my description still has elements of truth to it.

As I understand it, the OMERS VC model is trying as hard as possible to be the opposite.

“We want to give you more money than you want, or even know how to spend. Since we are forcing you to take that much, we can’t be as pushy on price, valuation or Ts and Cs. Next, we not only are not asking you to go public, but we are advising you not to go public until you pretty much have to. We don’t really need to raise a next round, so exits are much less important for us.”

We don’t really know how they will act after IPOs, but I guess we will find out fairly soon.

But the very different model has dovetailed very well with the current feelings (on both sides of the border) about too many tech companies being in the public market too soon.

Not to put too fine a point on it, but John has already transformed the Canadian tech VC ecosystem by being a unique source of capital for certain kinds of companies. And therefore likely deserves that #1 ranking.

Looking forward, if his investments end up producing fantastic returns, other investors and VCs will adopt the OMERS style and the OMERS scale. That’s how the capital markets work and John will no longer be the only game in town. And since I know him to be first and foremost a booster of Canadian innovation and technology, I am sure that nothing would make him happier.