Decoding the new economy

Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

ABC Nightlife Computers: The politicians on your homepage

May 162012

radio programs for techonology, web, social media, cloud computing and computer advice

Politicians around the world have discovered social media and the web. Australia’s political parties are gearing up to copy Barak Obama’s 2008 online campaigns.

What does it mean when politicians want to get on your Facebook page? From 10pm on Thursday, May 17 Paul Wallbank joins Tony Delroy to look at how politicians want to get on your computer’s home page.

Australian politicians don’t seem to have used the web very well. Why is that?
What are the ways overseas politicians using social media?
How do these integrate with the political parties’ existing databases?
Does this fit into the term Big Data we’re hearing about businesses?
Doesn’t this all create opportunities for false identities and campaigns?
Can you keep the parties off your computer?

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Are the Olympics a curse for the host city?

May 162012

With just over two months until the start of the London Olympics, the inevitable cold feet about the wisdom of the project have started. Vanity Fair details the convoluted bidding process while Business Insider gives the 32 reasons why they think the 2012 Olympics will be a disaster.

Conventional wisdom is the Olympics leaves the host city – and often the nation – in a collective emotional, if not economic, depression.

In the case of Athens it may even be an economic depression, although it would be drawing a long bow to suggest the 2004 Olympics are responsible for the economic predicament Greece finds itself in today.

But is true that the Olympics are “cursed”? Or is the truth more complex than that?

For cities hosting the Olympics, the core problem is the size of the event with the 2012 games expecting 10,000 athletes from 182 countries in over 300 competitions. The Olympics are several orders of magnitude bigger than any other comparable sporting event such as the FIFA World Cup.

Given the size, it’s not surprising host cities suffer an Olympic hangover – there is no way any country, even China, can sustain the frantic hyperactivity a host city goes through in the years of preparation.

China is a good example of an economy that didn’t suffer after the Olympics and the event was more a proclamation that the country had arrived as a global power.

This is common with successful Olympics – Spain in 1992, South Korea in 1988, Japan in 1960 and arguably Australia in 1956 – were all turning points for those countries and the games announced their new position in the world.

Australia though is an interesting case with the two Olymipcs they have hosted,while the 1956 Olympics did change Melbourne, and Australia’s, self image the story is different for the 2000 Sydney event.

In the run up to the 2000 Olympics Sydneysiders, like myself, were sceptical. The city couldn’t run a decent railway for crying out loud, so how could we expect to run a decent Olympic games?

All the scepticism vanished on the weekend of 20th August, 2000 when the blue line marking the marathon route appeared across the city. It was as if a switch had been flipped; the few remaining doubters skipped town and everyone else had a party.

The optimism in Sydney and Australia at the end of the games was clear; the country could pull off the world’s biggest event and the opportunities were boundless.

But Sydney and Australia squibbed it – rather than building on the Olympic success and the preceding decade of reform, the nation looked inwards, decided to invest in new kitchens and today the country is more dependent on mineral exports than any time since the 1850s gold rush.

Much of the blame for this can be put on Australia’s political establishment, specifically two men – Prime Minister John Howard and NSW Premier Bob Carr.

Both men were, or are, very effective tactical politicians who were good at winning elections but were by no means visionaries or nation builders was not their thing. So the opportunities presented to Australia in the early 2000s were squandered on Carr’s short term opportunism and Howard building his middle class welfare state.

There’s no reason why there should be an Olympic curse, for some cities it’s a timing issue. For Athens the economic cycle was against them while politics damaged the Olympics of the 1970s and 80s.

On the other hand for cities like Seoul, Tokyo and Barcelona the Olympics were a coming of age for a growing country.

The challenge for Boris Johnson and David Cameron is to translate London’s Olympics into building Britain’s confidence. While the economic tide seems to be against them, much of their political legacy will be judged against on how well they do.

Links of the day 15 May 2012

May 152012

Today’s links are another diverse bunch ranging from how Nokia can save itself, the compelling story of a US execution and how a Unicorn harpooned a whale.

Russia Today’s Capital Account on JP Morgan’s “Unicorn Hedge” Fairytale Harpoons the London Whale.

A powerful story from Al-Jazeera – An Anatomy of an American Execution.

Giga Om looks at a cute way some online services are arbitraging how Facebook acts as a gatekeeper in displaying news. Only read this if you’re a serious search or social media geek.

You know an online sensation is well past its peak when big business starts piling in – Amex sets up a Groupon competitor.

Nokia’s Last Stand. Wired UK looks at how the former mobile phone giant can fight its way back to market leadership.

Ad Age on why YouTube is deliberately reducing web page views.

Canon Australia to stop publishing Recommended Retail Prices on their products. Is this an admission of an open market, or an effort to further muddy the retail waters?

Twitter starts sending out summary emails of friends’ postings. Will this work to drive engagement and create much needed revenue for the sharing platform?

Tomorrow, the blog will look at whether the London Olympics will really be a disaster and whether British business can capitalise on the event.

Going Greek

May 152012

Business Spectator’s Robert Gottliebsen today describes how Australia has caught the Greek disease of low productivity and an overvalued currency.

This is interesting as just last week Robert was bleating on behalf of Australia’s middle class welfare state.

Australia’s productivity has stagnated over the last 15 years, but unlike Greece the ten years before that was a period of massive reform to both employment practices and government spending.

The structure of the Australian economy is very different, not least in its openness, to that of Greece.

What’s more Australia has a floating currency which will eventually correct itself unlike the Euro that Greece finds itself trapped in.

That’s not to say Australians won’t be hurt when that currency correction happens. The failure of the nation’s political, business and media elites in failing to recognise and plan for this is an indictment on all of them – including Robert Gottliebsen.

Australia’s real similarity with Greece is the entitlement culture that both nations have developed.

Over those last 15 years of poor productivity growth, Australia has seen a massive explosion of middle class welfare under the Howard Liberal government which has been institutionalised by the subsequent Rudd and Gillard Labor governments.

Today middle class Australians believe they have a right to generous government benefits subsidising their superannuation, school fees and self funded retirements.

For all the sneering of Australian triumphalists about Greek hairdressers getting lavish government benefits, Australia isn’t far behind Greece in believing these entitlements are a birthright.

A middle class entitlement culture is the real similarity between Australia and Greece. It’s unsustainable in every country that harbours these illusions.

Unlike Greece, Australia doesn’t have sugar daddies in Brussels, Paris and Berlin desperate to prop up the illusion of the European Union. Australia is own its own when the consequences of magic pudding economics become apparent.

Australia’s day of reckoning may arrive much quicker than that of Greece. Then we’ll see the test of how Australians and their politicians are different from our Greek friends.

Links of the day 14 May 2012

May 142012

Some great links over the weekend ranging from the future of media and big box stores to a great, quirky clip promoting Scandanavia as a place to do business.

22 Michaels on an amazing presentation on why you should do business in Stockholm. It’s a shame more government agencies can’t do shows like this.

MIT’s Center for Civic Media writes up a discussion by the boss of Google News. I give this more of a write up in Grappling with Online Media.

Scamworld. Not only is The Verge’s expose of the online get rich quick community a great read, it’s also shows one of the future media models.

Business Insider has the real story why the tale of LinkedIn buying employment site Monster was made up. This is great example of how merchant banks try to create a market for flogging client assets. The managers of Football players do exactly the same thing.

Is there money in Big Data? MIT’s Technology Review doesn’t seem to think so.

Ending the era of the megastore. The Fiscal Times on how Wal-Mart is re-inventing itself.

Tomorrow’s blog looks at phishing scams and how social media is helping the more targeted “spear phishing”.

Grappling with the online news beast

May 142012

The head of Google News, Richard Gingras, last week discussed how the news industry is evolving at Harvard University’s Nieman Foundation.

Much of Richard’s discussion centred around disruption – the newspaper industry was disrupted in the 1950s by television and by the 1980s most print markets had seen several mastheads reduced to one or two.

The remaining outlets were able to book fat profits from their monopoly or duopoly position in display and classified advertising.

By 2000, the web had killed that business model and the newspaper industry was in a decline that continues today as aggregator sites like Huffington Post steal page views and Google News further changes the distribution model.

One of the problems for the news industry is how different the online mediums are from print, radio or television broadcast. The struggles of media startup The Global Mail is a good example of this.

In the middle of last year news started trickling out that one of the Australian Broadcasting Corporations’s top journalists, Monica Attard, had left the broadcaster to set up The Global Mail, an online news site funded by Wotif founder Graeme Wood.

The site launched on schedule in February 2012 and underwhelmed readers with pedestrian content and a confusing layout. By May, Monica Attard announced she was leaving the organisation she’d founded.

Tim Burrowes of the media site Mumbrella examined why the Global Mail is struggling, his Nine problems stopping The Global Mail from getting an audience details how the site doesn’t use online media effectively.

At heart is a fundamental mismatch between the methods of journalists raised in the “glory days” of print and broadcast journalism against those of the online world, not least the much harsher financial imperatives of those publishing on the web.

One key problem it the TL;DR factor – Too Long; Didn’t Read. Where online readers tend to leave stories after around four hundred words.

Richard Gringas is quoted as encountering this problem when he worked at online magazine, Salon.

At Salon, articles were paginated, but only 27% of readers made it to the end of the four-page articles. Compared to competitors, Richard was told, this was a good benchmark. But with fresh eyes, he was astounded that a product was being produced with the knowledge that the vast majority of the audience would not consume the entire piece. Richard loves the long form, but if the objective is to convey information, we need to think about the right form for the right medium at the right time.

So “long form” journalism has to be written the right way and it has to be backed up with good visual components and have “short form” versions suited to the more impatient readers who make up the bulk of the web audience.

The New York Times made a step in this direction with their iEconomy series on how the US middle classes have been displaced with manufacturing’s move to China.

An even better example of journalists using the web well is The Verge’s Scamworld where an online expose of Internet get rich quick schemes and the conmen behind them.

Scamworld shows us what skilled journalists can do online. The amazing thing is the site’s new steam is tiny compared to those of established outlets like the New York Times, Guardian, Fairfax or those of News Corporation.

This failure to execute by incumbent news organisations isn’t because they are lacking talent – every young, and not so young, journalist has been required to have multimedia skills and the ability to file stories in multiple formats for at least a decade.

Old Media’s problems lies in the mindsets of senior journalists, editors and their managements who are locked into a 1950s way of thinking where fat advertising revenues funded the adventures and expense accounts of roving reporters who tough as nails editors occasionally bullied into filing stories.

That model started to die in the 1980s and the Internet gave it the last rites.

Richard Gringas’ discussion at Harvard shows news and journalism isn’t dead, but it is evolving. Just like many other disrupted industries, the news media has to adapt to a changed world.

Digital roadkill

May 132012

Digital Roadkill first appeared in Smart Company on 10 May 2012

Just over thirteen years a group of Silicon Valley technologists wrote The Cluetrain Manifesto detailing what they saw as being the new rules of business in a connected world.

Cluetrain was mandatory reading when terms like “information superhighway” were fashionable and Yahoo! was the dominant web portal. It’s somewhat fallen out of fashion today.

Like most manifestos Cluetrain was partially unreadable and heavy on dramatics but it did lay down the principles that are now largely accepted in both the online and mainstream business worlds.

I was reminded of the Cluetrain Manifesto earlier this week at a suburban marketing event run by one of the country’s biggest media organisations. The lessons of the last thirteen years seemed to have passed by almost every business in the room.

Most of these businesses were operating they way they did in the 1990s. While some of them had a website and a couple had Facebook pages, their businesses had barely changed in the last twenty years.

These businesses are digital roadkill. Many of them have no idea what’s about to hit them as they sit paralysed wondering what the bright lights baring down on them are.

In this respect they aren’t dissimilar to the big department stores or electrical chains that are working to a model that’s ticked along nicely for decades and don’t realise how the fundamentals of the economy have shifted in the last five years.

Many of these small traders are still taking orders by fax and some of them still keep their cheque book ready to pay their suppliers bills. It’s that bad.

The idea of selling over the net is completely beyond them, only big overseas companies dodging GST do that sort of thing.

Even in the marketing field, these businesses have ignored the obvious for years with many still advertising in their local Yellow Pages and freebie community newspaper, despite barely making a sale from either in five years. But these channels worked for them once.

Few of them have up to date websites, are doing the bare minimum search engine or mobile optimisation and almost every single one hasn’t bothered to claim their local business listings.

To be fair to the little guys the host organisation was no better, this large media organisation has a good online product – they even own one of the major online local business listing services – but their sales people on the night didn’t mention it as they are too locked into selling their traditional local newspaper advertising products.

At least that company is wealthy and has other profitable arms that can prop up its dying local newspaper arms which can at least appear profitable while there are costs to be stripped from the operation.

Unlike those big media companies and retailers, the small local business doesn’t have big cash reserves or deep pocketed investors allowing them to survive for years in a declining market.

These small businesses are just going to drag their owners into poverty.

Not only have the old rules of business gone, but the value of businesses which choose to live in the past has evaporated. Few people are going to buy a business with an old, declining customer base.

“Roadkill” is an apt term for a business that probably won’t be around in two years.

Today the Cluetrain is big lumbering road train carrying ecommerce goods down the fast lane of the information superhighway with a driver that has no intention of stopping.

Make sure your business isn’t the cute fluffy rodent sitting in its path.

Security and cloud computing

May 122012

Stilgherrian's recommendations on securing computers

Last Friday cloud accounting service Saasu ran their Cloud Conference looking at the business benefits of online computing and business automation.

Among the topics discussed was the security of cloud computing with Stilgherrian giving an excellent overview of the state of information security.

Stil’s message is clear; online security is everyone’s problem – if the bad guys want to target you for whatever reason they will.

As a business owner, it’s essential to take basic precautions. This is something I’ve covered before and something Stil raises in his presentation by pointing out that Australia’s Defence Signals Directorate lists 35 mitigation strategies based on the security breaches they examined in 2010.

Of those thirty-five, the top five would prevent 85% of security breaches. The top one – keeping your applications up to date – would avoid almost every PC malware attack along with Apple Mac’s Flashback worm.

In answering my question about how Saasu and other cloud computing users can protect their system, Stil also raised a good point about using virtual machines for web browsing and even purchasing a computer just for business accounting and banking use so the services can’t be compromised.

Related to this topic is an ongoing discussion on the Reddit forums between posters claiming to be malware writers and botnet operators.

While it’s risky to trust everything you read on Reddit, the tips are worthwhile, particularly the advice to “disable addons in your browser and only activate the ones you need.”

By reducing the number of programs running on your computer or the add ons in your web browser, you lessen the risk of being infected. Again this would have protected the victims of the Flashback worm.

The security of our systems is our own responsibility, just like our home and office security.

Cloud computing is no different to other computing – the basics of information security, or #infosec, are the same regardless of whether you’re using software on your computer or the cloud.

Used responsibly, cloud computing is no less or more secure than any other computer or smartphone use. We shouldn’t underestimate the risks, or get hysterical about the threats.

Bringing your own device and business change

May 112012

Two years ago I realised that the management trend of staff bringing their own computers to work – BYOD – was more than a fad when I noticed executives were bringing the then new iPads to meetings.

Most of these executives worked in organisations where IT departments had waged war on employees connecting their own equipment to the corporate network, so this was a serious development in the computing world.

In many ways employees had been bringing their own technology devices to work for years. It was, and still is, quite common to see public servants and those working for other bureaucratic organisations arriving at meetings with an underfeatured work supplied handset and their own smartphone.

IT managers hated this as they saw those private devices as a security risk and another headache for their overworked staff to deal with.

When the iPod was enthusiastically adopted by the executive suite, the game was over for those IT managers. Suddenly they had to deal with these devices and the issues involved.

At a seminar run by systems integrator Logicalis earlier this week looked at some of the issues around BYOD for companies. What was striking in their presentations were the need for HR and legal departments to be part of the process for adopting this philosophy.

The BYOD philosophy is a big jump for organisations as it means relaxing controls on employees and for many managers that is the biggest challenge.

Part of that challenge is controlling the organisation’s data on devices that could be going anywhere and doing anything.

While companies like Logicalis and Citrix address this with remote desktop applications that create a virtual Windows desktop on the employee’s device, networking giant Cisco offer their ISE devices to run “identity services” that set up rules controlling what staff can access and where they can access it from.

Cisco Australia’s Chief Technology Officer Kevin Bloch gave a good round earlier this week up of where they see BYOD driving business. To Cisco, the move to mobile devices is irresistible as shown in their Global Mobile Data Traffic Update.

Interesting both Kevin and the Logicalis speakers see BYOD as being part of the recruitment process. Increasingly younger workers expect they will be able to use their own devices rather than relying upon employer issued workstations and mobile phones.

According to Kevin, Cisco’s research is finding many employees would trade salary for the right to bring their own device which is something that should grab the attention of budget constrained managers.

This also ties into other employer trends such as Activity Based Workplaces where companies provide hot desks and staff are expected to store their items away at the end of each workday.

Ross Miller of the GPT Group described how this is another trend driving the paperless office as staff using hot desks find packing away files and paperwork each day is an unnecessary hassle.

What we’re seeing with businesses adopting BYOD policies is a big change in the way places operate and this has consequences for all divisions of an organisation from HR and legal through to marketing and corporate affairs. It’s a genuine game changer.

How the BYOD philosophy is changing business is good example of technology driving our habits and work practices in ways we don’t always anticipate.

One thing is for sure, the workplace of the future is far more autonomous and diverse than those we’ve been used to for the last hundred years, the businesses who don’t adapt are those being left behind.

No exit

May 102012

with cloud computing and social media business is always open

The men’s hairdresser down the road from me has hung up his scissors after twenty-four years.

The sign on his shop window apologizes and the shop itself is up for lease. Shortly there won’t be any evidence a long standing local business was once there.

Roy had no exit from his business and he sell the operation as a going concern.

For Roy his retirement will be funded solely out of his savings. If he’s lucky he’ll have saved enough of his income from the business for a comfortable retirement – unfortunately many small business owners they’ll eke out the rest of their lives on the pension.

Even for those who have planned for an exit, many of their plans have fallen over in the aftermath of the 2008 financial crisis.

It’s always been questionable whether Gen X and Y entrepreneurs could afford to pay the sums for the affluent retirement of Baby Boomer business owners but now the post 2008 contraction in lending means it’s even less likely retiring business owners like Roy will find someone to buy their businesses.

While the focus is on twenty something app developers selling their businesses for a billion dollars, the truth is that wealth for most business owners lies in the local newsagent, hairdresser or coffee shop owner being able to sell their operation for a reasonable return.

For many baby boomer business owners it’s going to mean working more years than they intended and sharply reduced retirement expectations.

Property values too are difficult. Many boomer businesses had the sensible model of buying the property their business occupies as a retirement nest egg.

Again those properties are too expensive for the new generation and the deleveraging economy means the outlook for property values isn’t good.

On every level, things are going to be tough for those wanting to sell businesses over the next decade.

Those who do get good prices for their businesses are going to be those doing something exceptional to gain attention with income and profits that make them stand out from the cloud.

Just being the best hairdresser in the neighbourhood or having a popular cafe isn’t going to be enough.

Hopefully Roy The Barber managed to stash away enough for a well deserved comfortable retirement.

Decoding the new economy

Paul Wallbank

Are the Olympics a curse for the host city?

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Going Greek

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