Paul Wallbank | Paul Wallbank - Communications Professional

Digital maturity and the profitable business

How digitally mature is your business?

“The advantages of Digital Maturity”‘ a paper recently released by researchers at the MIT Sloan school of management looked at how different businesses adopted technology and the effect this had on the companies’ profits.

The authors of the paper, George Westerman, Didier Bonnet and Andrew McAfee, defined ‘digital maturity as a combination of a company’s level of technology investment and the management skills to implement that technology. From this they classify businesses into four categories – the beginners, conservatives, fashionistas and digirati.

Wallowing in the bottom right are the beginners, who have little idea of how to use technology and as a consequence don’t apply tech to their business. While they’ll use computers and will almost certainly use tools like ERPs and accounting software, they won’t implement them beyond their immediate needs.

This could describe thousands of big and small businesses who have learned just enough to do what they need but don’t really understand, or care, about what their IT systems can do for the way they work.

Above the beginners sit the fashionistas, the businesses who like shiny tech things but don’t really have a strategic understanding of technology or how to apply it effectively. As a consequence the digital tools are underused and fashionistas don’t use them much more effectively than the beginners.

More effective users of technology are the conservatives and digerati, the latter are like the fashionistas except their managements understand how to integrate technology into their business.

The conservatives are probably the most typical business, slow to adopt new technology but when they do, the management ensures it is used effectively.

Of the four groups, MIT’s researchers found that the digerati and conservative categories earned between 9 and 26% more profit than their peers.

The use of technology makes a difference as well with the fashionistas getting a 16% better return on assets than the conservatives which is something worth noting about the adoption of tech in a business.

What the researchers concluded was that businesses who aren’t adopting technology are falling further behind in skills as well as profit noting that attaining ‘digital maturity’ takes several years.

It’s worthwhile reflecting on how digitally mature your business is and reviewing exactly how you’re using technology in your organisation. With the tools available for today’s business, there’s no reason to be playing with the beginners.

Reinventing the connected bank

Financial institutions are evolving as technology changes their business

Yesterday the National Australia Bank had a media briefing to show how they, like their competitors, are revamping their entire business around new technologies.

The investments are substantial and the re-organisation of the business is too as the old model of branch based banking only available from 9am to 4.30pm is superseded by the always on model of Internet banking delivered through tablets and smartphones.

One of the notable points the NAB executives made was their move to authenticating customers through voice recognition. A trial had found the system reduced fraud and social engineering attempts dramatically.

The use of voice recognition makes sense as it reduces the reliance on users remembering passwords or having to give over personal information that can often be gleaned off social media sites.

Again we’re seeing data security evolving away from passwords.

On the social media front, NAB are also offering their small business customers Facebook selling tools in collaboration with social media sales platform Tiger Pistol.

While it’s questionable that businesses will get that much from a Facebook store, it’s a good attempt from the bank to add some value and encourage their commercial customers to move online.

The move online is essential as the bank noted that online sales through their merchant platforms are up 23% as opposed to an anaemic 2.5% in general sales.

Along with passwords dying, the NAB also found that the cash register is dying and being replaced with smartphone and tablet apps. The bank itself is moving its online platforms to being ‘device agnostic’ so as not to be locked into any one technology.

What the NAB, and its competitor the Commonwealth Bank, are showing is the importance of having modern systems which are flexible enough to evolve with changes in the marketplace.

Smaller businesses could learn from the banks on just how important this investment is. The organisations who aren’t making these changes are steadily being left behind.

Trapped in a walled garden

Can social media services like facebook stay relevant as they manage content?

Following up on last week’s criticism of Facebook, US entrepreneur Mark Cuban clarified his position about the social network.

Central to Mark’s criticism are three points about Facebook’s business model; that it is a time waster, it takes control away from users and it doesn’t succeed in connecting people to information and friends.

All of this is true, and these features are key to the walled garden model that all of the internet empires want to build.

Central to this strategy is the “time on site” metric and so far Facebook beats all comers, with a huge 400 minutes per month per user.

Users who spend a long time on a website are more valuable than those who don’t hang around and Facebook’s success has been in capturing the attention of their members and locking them into their platform.

The willingness of other websites, particularly media companies, to lock themselves into Facebook’s platform has puzzled many observers as they are giving their customers away to the social media service.

How willing internet users are in hanging around Facebook’s, or Amazon’s, Google’s and Apple’s, walled gardens remains to be seen; it depends upon how compelling the content and value is.

If Mark Cuban’s right, viewers’ eyeballs and advertising dollars may start moving away from Facebook when people realise they are missing out on relevant information.

The real value in media organisations, whether we talk about old media such as newspapers or new media like social platforms, is in presenting relevant information to visitors and readers. As the many news organisations are learning, when you stop being relevant then people stop paying attention.

Being relevant is the great challenge for Facebook, newspapers and all media organisations.

What is an Internet company?

Does having a website make a company an internet business?

Deloitte’s 2012 fast 50 list of Australia’s fastest growing technology companies announced last week is an impressive list of diverse businesses ranging from online retailers to technology support firms, but it raises the question of what exactly is a ‘technology’ or ‘internet’ company.

A quick look at the top twenty illustrates how broad the “internet” category is, with eleven coming under the classification;


.	1	brandsExclusive (Australia) Pty Ltd	1335.1%	Internet
.	2	Australian Renewable Fuels Ltd	1235.7%	Life Sciences
.	3	SolveIT Software Pty Ltd	678.9%	Software
.	4	Kogan Technologies Pty Ltd	515.6%	Internet
.	5	Neon Stingray Pty Ltd	467.7%	Internet
.	6	Infoready Pty Ltd	418.1%	Software
.	7	SMS Central Australia Pty Ltd	371.6%	Communications
.	8	Cohort Digital Pty Ltd	295.6%	Internet
.	9	Redbubble Pty Ltd	275%	Internet
.	10	astutepayroll.com	256.7%	Software
.	11	SurfStitch Pty Ltd	252.7%	Internet
.	12	BizCover Pty Ltd	249.9%	Internet
.	13	Appen Holdings Pty Ltd	225.5%	Communications
.	14	MyNetFone Pty Ltd	216.7%	Communications
.	15	Appliances Online	206.2%	Internet
.	16	Time Telecom Pty Ltd (Smart Business Telecom)	205.6%	Communications
.	17	BigAir Group Ltd	202.2%	Communications
.	18	Observatory Crest Australia Pty Ltd	198.1%	Software
.	19	Tom Waterhouse Pty Ltd	196%	Internet
.	20	Bulletproof Networks Pty Ltd	178.4%	Internet

Included among those eleven ‘internet’ companies is the winner, Brands Direct, along with Redbubble, Appliances Online and Tom Waterhouse.

Tom Waterhouse is an online bookmaker, Appliances Online is a whitegoods retailer, Red Bubble is a design marketplace and Brands Direct is a fashion retailer.

While the internet is the core distribution channel for all of these companies, they are not ‘internet’ companies – they are retailers, marketplaces and bookmakers. The web is important, but it isn’t their business.

Calling them “internet companies” in many ways misses the point of just how ubiquitous the net has become to business operations. It also risks double counting as Appliances Online’s staff are counted both as retail and internet employees – something government agencies are notorious for.

We’d understand a lot more about the web’s reach if we didn’t label these fast growth businesses with the somewhat meaningless term of “internet companies”.

None of this detracts from the achievements of these businesses, their managers and proprietors. These companies are on track to being the leaders of the future.

Ending the era of the computer password

Has the humble computer password reached the end of the line?

Earlier this year, Wired Magazine writer Mat Honan had his entire digital identity stolen from him when hackers cracked his email password and then systemically took over all of his cloud and social media accounts.

Matt writes of his experience on Wired and proposes it’s time to kill the password.

The problem with Mat’s proposal is that he doesn’t suggest an alternative.

The age of the password has come to an end; we just haven’t realized it yet. And no one has figured out what will take its place.

Every alternative authentication method to passwords has flaws just as serious, if not worse. Many are plainly impractical.

All of them, including passwords, have the common weakness that those holding the information can’t be trusted either – one of the greatest ways for passwords to get into the wild is when incompetents like Sony give them away.

Security is evolving, in the meantime we need to keep in mind some basic rules.

Use different passwords for different accounts
Only access accounts from trusted and up-to-date computers
Create strong passwords for accounts that matter, like online banking and email
Strong passwords are multiword phrases
Use two-factor authentication if its available
Don’t link unnecessary social media and cloud accounts together
Be very careful

We should also remember that a skilled, motivated hacker will probably break into your account regardless of your computer security. In this respect it’s no different to the physical world where a determined criminal will get you regardless of the locks and alarms on your house.

It’s also important to remember that security is more than just evil hackers; data can be damaged or given away by a whole range of means and people breaking into systems is only one risk of many.

Computer security is an evolving field and while it might be premature to declare the password dead, we’re going to see big changes as we try to lock down our valuable digital assets.

Silicon lemmings

How many investors blindly following Silicon Valley’s manias will lose their money?

Despite their self proclaimed belief in thinking different, many of today’s internet entrepreneurs tend to travel in flocks and follow the whichever business model is currently being hyped by Silicon Valley’s insiders.

From the original dot com boom in the late 1990s to today, web entrepreneurs and their investors jump onto the bandwagon of the day – it could be online shopping, photography applications, group buying services and taxi apps which are the flavour of the moment.

The latest taxi app is Click-a-Taxi, a European venture which has raised a stingy $1.5 million in second-round funding, which joins a legion of taxi and hire car apps following in the wake of market leader Uber.

Unfortunately for the investors in these taxi and hire car apps, these services are making some pretty powerful enemies.

Around the world gatekeepers such as taxi companies and booking services do their best to keep drivers in poverty while over charging passengers for a poor service.

The new apps disrupt that business model by offering a better service for customers and a better deal for drivers – most importantly it deprives the gatekeepers of their cut.

Predictably, the backlash is fierce with 15 US and Canadian cities proposing to tighten the rules on the use of GPS and smartphone apps.

These backlashes are going to prove expensive to the investors as Silicon Valley entrepreneurs have a habit of under-estimating the power of regulatory barriers. How the current crop of taxi apps deal with this will determine which lemmings go over the cliff* and which ones survive.

One group of Silicon Valley lemmings lying dazed at the bottom of a cliff face are those who invested in the group buying hype of the last two years.

Market leader Groupon is now reportedly moving away from daily deals to ‘always on’ deals, which kills the whole point of group buying sites. Most of the copycats are already dead.

Former Cudo CEO Billy Tucker predicts that in the Australian market – which was flooded by a wave of Groupon imitators in 2010 and 11 – will only have a dozen survivors out of the top 50 listed earlier this year.

Investors in these look-a-like services had a gamble that a greater fool would buy the operation, usually a big corporation run by executives with a fear of missing out. The ones who missed out quietly swallowed their losses and moved on to the next mania – which appears to be taxi apps.

For the taxi applications, the buyers of the apps will probably be the incumbent gatekeepers, who aren’t really fools at all.

It wouldn’t be surprising to find the smarter look-a-like operators are already talking to the taxi companies about an app which will, miraculously, comply with all the requirements of the local regulators.

As for the rest, they’ll do their dough.

What is going to be interesting though is the battle between Uber and the various taxi regulators around the world, particularly in countries where politicians jump to the whims of their business cronies.

*lemmings don’t really throw themselves off cliffs, that myth was invented by the Walt Disney Corporation. Sadly Australian, particularly NSW, politicians favouring ticket clippers and rent seekers is no myth.

Listener’s questions – ABC Nightlife computers

As a follow up to last night’s ABC Nightlife computers here are some of the promised answers to listener’s questions

As a follow up to last night’s ABC Nightlife computer spot where we looked at who owns our online data, there were a few questions which we’d get back to listeners on.

The entire show can be listened to online through the ABC Nightlife with Tony Delroy website and includes some of the issues we’d get back to listeners on, but first an apology.

Bruce Willis never sued Apple

One of the callers Mark mentioned the story of Bruce Willis suing Apple over ownership of iTunes tracks.

It turns out this never happened as Charles Arthur of the Guardian explains.

While Charles can be a cranky bugger, he’s right in this case that the media didn’t a very poor job in regurgitating an untrue story without ever checking its veracity. Luckily it’s not one that I cited in the program.

Protecting your Twitter Account

One of the topics we discussed was the threat of accounts being hijacked and Twitter is one service that is constantly being compromised because of poor policies. An important part of protecting a Twitter account from being taken over is to make sure an extra level of authentication is used by clicking the “Password Reset” option in the Twitter Account settings.

Recording online

Des asked about recording his own message for an audio Christmas card to his friends and relatives.

On Windows computers, Sound Recorder is the long standing built-in app while on the Mac, Garage Band is the built in application.

There is a free third party application available for both PCs and Macs called Audacity which also allows you to record and edit on your system.

US customer service

One interesting thing about the conversation was how many callers criticised the “US mentality” of providing lousy service. This probably isn’t true as most American businesses provide some of the best customer service in the world.

The lousy service from online companies is more a function of the computer engineering and venture capital background of the entrepreneurs setting up cloud computing and social media services, while the majority of these companies are from the US it wouldn’t be fair to brand this as being an American cultural issue.

Our next Nightlife spot is on December 13 at 10pm and we’ll be looking at Windows 8 and what type of computers should people be considering. Hope you can join us.

ABC Nightlife computers – who owns your data?

For November’s ABC Nighlife we look at how digital rights management can affect you.

Paul Wallbank joins Tony Delroy to discuss how technology affects your business and life. For the November segment we look at the perils of digital rights management.

If you missed the spot, the podcast is available from the ABC Nightlife website and the answers to listeners’ questions is available in the following post.

We all value our collections of CDs, books and photos, but what happens when we completely lose the digital equivalents? Tonight on the Nightlife we look at who really owns e-books and computer programs.

Last month a story appeared on the Internet where Linn, a Norwegian lady, lost her entire collection of eBooks from her Kindle reader when Amazon decided she had breached their conditions.

What happened to Linn and her ebook collection?
How did Amazon respond when she complained?
So who actually owns those ebooks?
Is this shutting down of accounts common?
At their big event a few weeks back Apple focused their iPads and iBooks on education, could this happen to schools?
It’s not just ebooks though, can this happen with other online services?
Is this a problem with cloud computing services?
What about the data you’ve saved, do you lose that if the account is shut down?
What about businesses and all the work they go to build a Facebook or Pinterest following, are those online friends the business’ property?

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.

Facebook starts driving away brands

Could Facebook be more like old media than we thought?

A few days ago we looked at how giving marketing and communications control to Facebook was a mistake for businesses.

It seems US entrepreneur Mark Cuban agrees and he’s moving his basketball team, the Dallas Mavericks, and the 70 businesses he’s invested in away from Facebook onto other social media channels like Tumblr or even MySpace.

The final straw for Cuban was Facebook wanting to charge $3,000 to reach a million of the Maverick’s online fans.

Facebook’s response that the sponsored post program is not just about the service’s revenue, but also to reduce noise and spam has merit

Last week tech uber-blogger Robert Scoble complained about the noise on social media and many users agree as they find their social media services and email inbox clogged with messages.

Reducing irrelevant noise is essential for any online service to succeed. No-one likes to spam or be spammed and many startup social media platforms have failed because they’ve killed their brand by spamming users and their contacts.

In this respect social media is like journalism – it has to be timely, relevant and useful to its users. If it isn’t the readers will leave and the advertisers will soon follow.

The worry for Facebook’s investors is that the service could be caught between making no money from its massive user base and getting a reputation for irrelevant spam.

Could it be that Facebook has more in common with newspapers and other “old media” than we thought?

Who do journalists serve?

Who is the audience that journalists are writing for?

In an excellent video explaining how to pitch the tech media Milo Yiannopoulos, Founder and Editor-in-Chief of The Kernel and public relations agent Colette Ballou discuss PR and startups at the Pioneers Festival in Vienna.

One thing that jumps out from the presentation is Milo’s confusion about who their market is – at no time in the spiel does he mention readers or advertisers.

At one stage he says “we’re here to serve you,” this is to a room of tech entrepreneurs.

Milo’s focus raises the question about where do journalists add value and who they serve?

Traditionally that focus has been on giving the readers or viewers useful and valuable information.

In order to do this, the businesses employing journalists have either raised funds through advertising, subscriptions or government subsidies.

That in itself created conflicts and it took strong courageous editors and managers to resist pressures from advertisers and governments.

With the web stealing advertising revenues, journalists and the organisations that employ them have a problem.

The question now for journalists is where can they add value in a form that people will pay.

Maybe it is shouting into social media echo chambers or spruiking the wares of the latest hot tech start up although it appears those channels are no more profitable than the old forms of journalism.

Another point Milo makes in that presentation is pertinent as well;

The arrogance of a journalist is inversely proportionate to their talent. So the tech bloggers are massively arrogant and have huge opinions of themselves.

Ne’er a truer word spoken.

The question remains though, who do those bloggers or journalists serve?

Desperate Ken and market realities

Adam Smith’s invisible hand of the market is giving some people a nasty slap over the head.

Ken Slamet has a problem, his in-laws are trying to sell the family house and no-one will give them the price they want.

The house at 228 Warrimoo Ave has been on the market through an agent for more than 100 days, pulling in ridiculously low offers, Mr Slamet said.

Depending on the deposit, Mr Slamet is seeking between $1.5 million and $1.6 million for the house his wife grew up in.

One would argue that those “ridiculously low offers” are actually Mr Market giving Ken and his in-laws a slap of reality. They are simply asking for too much money.

St Ives, a suburb on Sydney’s Upper North Shore, is going through demographic change. In 1960s and 70s St Ives was the suburb for successful stock brokers and bankers, however in the 1980s and 90s that demographic decided they wanted to live closer to the city and Harbour and suburbs like Mosman and Clontarf became their areas of choice.

For Ken’s in-laws and their neighbours, this is bad news as few other people can afford 1970s mansions on large blocks within 30km of Sydney. Those who do manage to sell often find the buyers are developers who sub-divide to build townhouses or apartment blocks, madness in a congested, car-dependent suburb with poor public transport links.

Adam Smith’s invisible hand of the market is giving those holding properties that were attractive to stockbrokers in 1972 a nasty slap over the head in 2012.

Ken though has a solution for his problem – he’s offering a rent to buy scheme at a mere snip of $2297 per week. An amount 70% higher than the average Sydneysider’s gross income and a whopping four and half times the city’s average rent of $500.

Good luck with that.

The real problem is that Ken’s in-laws are stuck with expectations higher than the market reality. Like many of us in the Western world, they believe their assets are worth more than they really are.

As the global economy deleverages there will be many more people like Ken’s family. For many the transition to a less wealthy lifestyle is going to be tough.

Incurious George and the cult of managerialism

The BBC’s scandals illustrate how management layers diffuse responsibility in modern organisations

“Do you not read papers?” Thundered the BBC’s John Humphrys to the corporation’s Director General during an interview over the broadcaster’s latest scandal.

That exchange was one of the final straws for the hapless George Entwhistle’s 54 day leadership of the British Broadcasting Corporation where the Jimmy Savile scandal had seen him labelled as ‘Incurious George’ for his failure to ask basic questions of his subordinates.

Humphry’s emphasised this when discussing the Newsnight program’s advance notice of the allegations they were going make;

You have a staff, but you have an enormous staff of people who are reporting into you on all sorts of things – they didn’t see this tweet that was going to set the world on fire?

A lack of staff certainly isn’t the BBC’s problem, the organisation’s chairman Chris Patten quipped after Entwhistle’s resignation that the broadcaster has more managers than the Chinese Communist Party.

George Entwhistle’s failure to ask his legion of managers and their failure to keep the boss informed is symptomatic of modern management where layers of bureaucracy are used to diffuse responsibility.

In every corporate scandal over the last two decades we find the people who were paid well to hold ‘responsible’ positions claimed they weren’t told about the nefarious deeds or negligence of their underlings.

Shareholders suffer massive losses, taxpayers bail out floundering businesses and yet senior executives and board members happily waddle along blissfully content as long as the money keeps rolling in.

If it were just private enterprise affected by this managerialism then it could be argued that the free market will fix the problem. Unfortunately the public sector is equally affected.

Managerialism infects the public service as we see with the BBC and it’s political masters and the results are hospital patients die, wards of the state abused, known swindlers rob old ladies and agencies continually fail to deliver the services they are charged to deliver.

Again the layers of management diffuse responsibility; the Minister, the Director-General and the ranks of Directors with claims to the executive toilet suite’s keys are insulated from the inconvenience of actually being responsible for doing the job they are paid to do.

Managerialism and incuriousity are fine bedfellows, in many ways Incurious George Entwhistle is the management icon of our times.