Paul Wallbank | Paul Wallbank - Communications Professional

Stranded markets

Businesses with old, declining markets are going to slowly fade away

“Stranded assets” are an accounting term for property that’s worth more on the books than it is in the marketplace.

Often the valuation problem has come about because of market, legislative or physical changes – what was a valuable and useful asset becomes isolated from the rest of a business.

Customers are biggest asset we have in our business – so what happens if our customer base becomes a “stranded asset”?

This situation isn’t far-fetched in a time when technology changes a marketplace – a blacksmith providing services to stagecoach companies would have been in this situation a hundred years ago.

In response to Are Businesses Fleeing the Online Space?, Xero’s Australian CEO Chris Ridd made some points about the problems MYOB have in the accounting software marketplace.

We see that going online to the cloud is finally allowing many small businesses the opportunity to avoid the “walk into Harvey Norman and fork out hundreds of up-front dollars on on-premise software” experience and instead go straight to the simplicity and cost efficacy of the cloud.

This is evidenced in our numbers and the fact that 40% of new customers signing up to Xero are coming from no software. (I mentioned last week at the NBN Forum that it was 30%, but we doubled checked and were staggered to find it was actually a lot higher). So we are creating a new market and cloud is therefore increasing the addressable market for accounting software. The cloud changes the economics of doing IT and makes automation of the business accessible and attractive to a whole new category of SMEs.

Chris’ point is interesting – the new generation of businesses aren’t going to the computer superstore and buying box software. Which is a problem for those who sell box software such as MYOB and Harvey Norman.

What’s more, customers have moved away from those same superstores along with things like phone directories and classified ads, which is the problem companies like Sensis and Fairfax have to deal with.

A decade or so ago, MYOB, Sensis and Fairfax were dominant in their markets with a loyal band of customers. Today the remaining customers – many of whom have not changed their business plans for decades – are”stranded markets” made up of holdouts who won’t move to new technologies.

Those holdouts aren’t particularly profitable and they are slowly leaving their industries through retirement or, increasingly for these slow adopters, going broke.

Being dominant in a market that’s declining in both profits and sales is not the place to be for any business.

It’s difficult for the managers of these enterprises to move as their existing products are their core business, which is the classic innovators dilemma, but the alternative is to end up like Kodak or Sony.

One thing missed in the eulogies for Steve Jobs is how he overcame the innovator’s dilemma problem within Apple. When it became apparent the old Mac OS was a barrier to innovation, he killed it along with the floppy disk and Apple Device Bus.

Apple’s customers hated it as most of them had a substantial investment in the hardware which Jobs had made obsolete overnight. But almost all of them came back and became greater fans.

News Corporation are trying a different tack to Steve Jobs in splitting the operation into an “old” business and a “new’ business. That way the old business can find a way to make money or quietly fade away without affecting the newer, more dynamic entertainment and electronic arms of the organisation.

The challenge for MYOB – along with Harvey Norman, Fairfax and Sensis – is to move their customers to the new technologies, those who won’t go are the past and those stranded customers will isolate the business from the mainstream.

Beating the first mover advantage

Not being first to the market doesn’t mean your product is too late.

Twitter founders Biz Stone and Ev Williams can’t be accused of standing still, along with having founded the Blogger service that made creating websites easy which they sold to Google, their company Obvious Corporation has been working on various new projects.

Branch and Medium are their two latest releases.

At first glance Branch is similar to the Quora service where people ask questions and followers. While Quora is reasonably successful, it hasn’t gained traction outside of the tech community.

Medium is a new blogging service, which superficially appears similar to Tumblr or even the Blogger service Ev and Biz founded in 1999.

It’s tempting to dismiss both Branch and Medium as they aren’t doing things that are new. both are iterations of older services but that doesn’t mean they can’t succeed. When Facebook was launched there was plenty of competition in services like Friendster and MySpace, the upstart blew them both away.

The same is true of the iPod, Windows and Google – all entered markets that were already crowded and well catered for. All of them succeeded because they were better than what was on the market.

In the tech industry is that the first mover advantage is illusionary at best, unless you have a compelling position in the marketplace your product is vulnerable to a smarter, slicker upstart. This is particularly true if the existing services have serious flaws.

Should Branch avoid falling into Quora’s trap of silly policies and overzealous administrators – the same trap that doomed the open source directory DMOZ and threatens Wikipedia – then it may well succeed.

Medium could also disrupt the blogging industry, Blogger is being neglected by Google while WordPress is becoming increasingly complex and difficult to use. The success of services like Tumblr, Instagram and Posterous shows people want an easy way to publish their ideas or what they are doing onto the web.

While it’s too early to say if Branch or Medium will be a success remains to be seen, but writing them off as being unoriginal would be a mistake.

Are Aussie Businesses fleeing the online space?

Business confidence is dragging down online engagement according to a new survey.

Every quarter accounting company MYOB releases its Business Monitor surveying the SME sector’s confidence and how they are using technology along, usually these show more businesses moving into e-commerce, setting up websites and adopting social media.

The July 2012 monitor (PDF File) is unusual as it shows a decline in various online business activities, the main areas that slumped were the following;

Paying bills on suppliers’ websites: fell from 44% of respondents to 37%
Buying products/services online: fell from 37% to 24%
Using internet search engines to promote their business: fell from 31% to 24%
Conducting email marketing to potential or existing customers: fell from 26% to 24%
Accepting online payments from customers: fell from 25% to 19%
Using any form of social media for business purposes: fell from 21% to 16%

All of these are a bit odd, particularly the first three, and it may be an errant group in the 1,000 businesses surveyed.

Of the others, email marketing’s fall isn’t surprising as businesses have been finding returns in this field falling for sometime with customers unlikely to open messages unless there is a compelling reason.

Social media isn’t surprising as there’s a feeling of fatigue among business owners confronted with a new hot platform every few months – increasingly it’s getting harder to become enthusiastic about Pinterest or Google+ when existing experiments in Facebook or LinkedIn haven’t really shown results.

Accepting online payments from customers declining really does indicate a hiccup with the surveyed group, with more online payment services than ever available to small business, it doesn’t make sense that this service is declining.

MYOB’s CEO Tim Reed puts the decline down to economic uncertainty saying, “We also found more business operators are experiencing revenue falls than are experiencing rises, and the majority lack confidence in a short term economic recovery. I suspect this has seen many shy away from online activities as they focus on the health of their business.”

If that is the case, then the small business community is in bigger trouble than we thought. Hopefully MYOBs result is just an errant survey result. We’ll be watching to see what the next index shows.

Losing the hospitality battle

Are smaller hospitality businesses falling behind big hotel chains?

Travel review site Tripadvisor released its 2012 Industry Index examining the 25,000 responses from hotels around the world and 1,000 Australian hospitality businesses who took part in the survey.

The index covers a wide range of areas of how the hospitality industry is dealing with connected customers, the web and how hotels are dealing with the relative performances of markets in Europe, North America and Asia.

A disturbing part of the survey was how many smaller businesses are falling behind their bigger competitors with less than half of Australian Bed & Breakfasts agreeing the statement that an “ability to book via my property’s website on a mobile device is ‘very important,” while 70% of hotels agreed.

The failure of smaller properties to engage online is borne out anecdotally as well, at a recent business breakfast a B&B owner – whose main business was furniture retailing – moaned about the negative TripAdvisor reviews his place had.

When it was suggested he might want to engage with the unhappy customers, the proprietor threw his hands up and said “our solicitor told us that it was too expensive to sue.” He wouldn’t accept that the dissatisfied guests might have a legitimate complaint that should be addressed.

At the same time larger hotel chains have full time teams monitoring comments on Tripadvisor, Facebook and other online forums, fixing problems that are being mentioned and then telling the world they have resolved the issue.

There’s a good reason for this. Ask someone planning a major holiday and you’ll find almost all of them are reading reviews on sites like Tripadvisor, Fodors or Lonely Planet’s Thorn Tree before booking accommodation or flights.

While many of the hotel management responses are boilerplate – repeated replies like “Thank you for your review and we appreciate you taking the time to share with us your experience as we are always pleased to receive feedback from our valued guests” is not what social media or customer service is – at least there is a perception that senior management is listening.

At many establishments senior management really is listening, a country manager of one of the world’s biggest chains describes how his three person team sends him a report each day of any complaints being listed online. These are checked out and any systemic problems they find such as surly front of house staff, poor housekeeping or incorrect billings are addressed immediately.

Having a direct line to happy or dissatisfied customers is one of the major benefits social media offers businesses. That smaller hotels aren’t doing this while their multinational competitors indicates the independent sectors of the hospitality industry are falling behind the majors.

The furniture shop owner with a B&B investment illustrated the problem, not only was he not engaging with dissatisfied customers on TripAdvisor, he had no idea whether his businesses were listed on Google Places, Facebook or any other online listing service – “my wife does that” was his dismissive answer.

Possibly the most overused quote in modern business is ice hockey star Wayne Gretzky’s “skate to where the puck is going to be, not where it has been”. Those smaller hospitality businesses not taking the mobile web, review sites or social media seriously aren’t even in the skating rink in today’s game.

There’s a lot more interesting ideas in the TripAdvisor report that should have any hospitality thinking about how customer service and marketing are evolving in a connected society. It’s worth a read.

Good critic, bad artist?

Are critics simply failed artists or do they have a more important role?

With the passing of art critic Robert Hughes I’m re-reading a passage of his autobiography, Things I Didn’t Know.

In Hughes’ passage describing his leaving Australia he talks of attempts at painting and makes an observation about art criticism that is true of every field.

“You do not have to be a good painter to be a good art critic,” he said. “But there is, to me, something a little suspect about an art critic who has never painted and who cannot claim to grasp even the rudiments of intelligent drawing.”

The same could be said of any critic – knowing the technicalities, skills, difficulties and effort enables a critic to make informed judgement. That isn’t to say they are superior at their trade than those they criticise.

It’s been said that we are all two bad decisions from ruining our lives or careers. That’s true in the artistic or professional fields – many managers, entrepreneurs, politicians, artists or just men going through middle aged crises have come unstuck from making the wrong choice at the wrong time.

It’s why we always have to view the stories of great success with caution, as the winners’ tales are tinged with survivor bias and for every winner there a field of skilled, hard working people who didn’t succeed.

In some fields, like arts and sport, the winners have to have skills before they will even get a chance of winning. Although there are many who could have be successful but weren’t because they never had an opportunity to pick up a paintbrush, guitar or ball at a key moment in their lives.

That isn’t quite so true in more subjective fields like business, politics or journalism. In those callings it is possible for a suburban apparatchik, dour accountant or talentless hack to rise because of their mentors, rat cunning or just pure dumb luck.

One of a critic’s roles is to call out those talentless but lucky hacks and in doing so they do society a great favour.

In a world where spin and PR often trump good policy or ethical behaviour, we have to pay attention to the informed critics who help us filter out the misinformation and lies that is part of our information diet.

Undoing the untrained workforce

The era of skimping on staff training is over

One of the notable things about the 1980s way of doing business was how front line workers weren’t valued for their skills and knowledge.

In call centres, shopping malls and government departments, those who dealt with customers were seen as an unnecessary expense who should be outsourced at the first opportunity or, if it wasn’t possible to hive them off, then encourage them to get more money out of the customer while providing less service.

An example of this was at electronic superstores where sales staff with little product knowledge were given rudimentary training and then encouraged to sell easy payment plans and expensive acccessories – the HDMI cable scam where connectors of dubious quality earned more profit and commission than the HiFi systems or plasma TVs they plugged into illustrated how lousy a deal this way of doing business for the customer.

Much of that mentality has been inherited by web2.0 companies that think customer service is an optional extra.

Some of those companies can’t even be bothered protecting their clients’ data properly, such is their unwillingness to provide service.

The stack ’em high, sell ’em cheap self service culture of the 1950s and 60s reached its limits in the 1980s and was only given a reprieve by the easy credit boom of the 1990s. With the end of the credit boom, electronic or household goods stores that simply sell cheap tat on interest free terms at a fat mark up without adding value now struggle.

Gerry Harvey is getting out of electronics partly for this reason – his business model is dead and it’s been difficult for a decade to make the fat profits on consumer computers or electricals without hooking the customers with interest free deals or expensive and pointless accessories or software.

One of the conceits of management through the last part of the Twentieth Century was the mantra “our greatest asset are our people”, today business have to start valuing the skills, knowledge and corporate memory of their workforces.

Why would a plumber want a broadband connection?

A question that still bugs me from the Cloud + NBN forum this week is “why would a plumber want a broadband connection.”

It doesn’t seem so long ago that question was asked about mobile phones – in the early 1990s the question made sense as cellphones in those days were heavy bulky things that sat in cars. They were of little use to plumbers or anyone else except the executives and politicians who could afford them.

Today there are few plumbers who don’t have a mobile phone.

Why would plumbers want a broadband connection? Job scheduling, inventory management, stock ordering, quoting and invoicing are five tasks that spring to mind.

One of the big areas for all business is research and training. Keeping up with industry changes, particularly in fields where professional development is required to maintain your license or accreditation, is made far easier with online learning services.

For the plumber, being able to find out what’s new on the market and how to install or maintain the latest products keeps them in the marketplace.

Then there’s the necessity of being listed online – without a broadband connection the local plumber will struggle to keep up to date with the sites customers are using to find tradesmen.

Even asking the question “why should a plumber be online?” betrays just how many of us aren’t understanding how business is changing.

Extending the knowledge graph

Big data takes baby steps on our desktops

Google’s latest search changes – introduced by Search Senior Vice President Amit Singhal – are another development, or baby step as Amit would call it, in making data more useful for us.

The flood of data that’s washed over us since the web arrived has left most of us befuddled. Increasingly, a basic keyword search just hasn’t been enough to find the information we’re looking for and we’ve had to trawl through pages of irrelevant information.

One of the aims of Google’s new features is to make data more relevant to a user – so if someone in the US types “Kings” into Google, they will be given details of the Los Angeles Kings hockey team or the TV series “Kings”.

Those details will include snippets of information about the topic. It could be the teams venue or the cast of the TV show. For tourist locations it could be some basic facts or transport information.

Amit is particularly proud of integrating tourist information and flight details into search and Gmail which indicates Google is beginning to leverage its buyout of the ITA travel booking network last year.

Google’s treatment of data reflects what’s happening with other services. At the recent Australian Xero conference and in an interview with MYOB executives, it’s been emphasised how knowledge is being aggregated to give customers and users better, more useful results.

With Google’s knowledge graph we’re seeing the realisation of what big data can do, there’s many baby steps ahead but there’s a lot of potential.

Saving Fairfax

First we sack the managers, then we find some decent editors

“The writer and art critic was one of the great ex-patriots of Australia and he put our country on the map.”

One typo illustrates all that is wrong with Australia’s two oldest newspapers, The Age and The Sydney Morning, who are both part of the Fairfax stable.

It’s particularly disappointing that one of the leading newspapers in the city of Hughes’ birth could have such a dumb typo, but adding to the insult is the paper’s underwhelming and disappointing coverage as compared to the New York Times, the paper of his adopted home town.

Hughes was one of many in his generation left Australia because of the lack of opportunity. Fellow expatriate (note the spelling) Clive James said he could have never have developed his writing skills without the sharp editing his copy was subjected to at London’s newspapers. That is as true today as it was in 1960.

Poor editing lies at the core of Fairfax’s problems, not just in silly typos but also with inappropriate stories like leading with a shop assistant’s Facebook profile or the hysterical regurgitation of spin doctor’s talking points.

This isn’t to pick on Roy Masters and Asher Moses, both are capable of great work — Asher’s Digital Dreamers series profiling Australian technology expatriates (that word again) was excellent work and when Roy doesn’t get sucked into the petty ego wars that dominate Sydney’s Rugby League community his sports writing can match the world’s best.

Both Roy and Asher, along with every other journalist at Fairfax, are let down by poor editors who don’t have the balls to tell them when work isn’t up to standard, let alone pick up dumb typos.

If Fairfax is to survive, it requires strong and good editors that are prepared to hold their writers accountable and back them when the going gets tough. Right now Fairfax lacks those leaders.

That lack of leadership extends throughout the organisation’s management and board. Fairfax’s management lacks people committed to delivering a great product or capable of grappling with the challenges of making online journalism pay.

Making online journalism pay is more than just having one-way Twitter accounts, plastering your site with ads or irritating your users with auto playing video clips. Web strategist Jim Stewart dissects how these tactics aren’t working for Fairfax.

Whoever figures out how to make money from online journalism will be the Randolph Hearst of the 21st Century, currently it’s safe to say there are no budding Hearsts or Murdochs among the comfortable ranks of Fairfax’s management.

Chasing away the astroturfers

Recent court and industry regulator rulings are good news for honest businesses using social media.

Yesterday we heard the collective gnashing of teeth as social media experts, lawyers and business owners complained about the Australian Advertising Standards Board’s ruling that companies are responsible for comments on their Facebook pages.

The ASB ruling (PDF file) was a response to complaints that comments on Diageo’s Smirnoff Vodka page breached various industry codes of conducts and encouraged under age drinking.

While the board found the complaints weren’t justified – something that most of the hysterical commentators overlooked – the ruling contained one paragraph that upset the social media experts and delighted the lawyers.

The Board considered that the Facebook site of an advertiser is a marketing communication tool over which the advertiser has a reasonable degree of control and could be considered to draw the attention of a segment of the public to a product in a manner calculated to promote or oppose directly or indirectly that product. The Board determined that the provisions of the Code apply to an advertiser’s Facebook page. As a Facebook page can be used to engage with customers, the Board further considered that the Code applies to the content generated by the advertisers as well as material or comments posted by users or friends.

The key phrase in that paragraph is “over which the advertiser has a reasonable degree of control”. Obviously someone posting on Twitter, their blog or someone else’s website is beyond the control of the advertiser.

With Facebook comments, the onus is on businesses to make sure there is nothing illegal appearing on their streams and any misconceptions or false statements are answered.

In many ways, this is common sense. Do you, as a manager or business owner, want your brands tarnished by idiots posting offensive or illegal content? Sensible businesses have already been dealing with this by deleting the really obnoxious stuff and politely replying to the more outrageous claims by Facebook friends.

What’s more important with both the ASB ruling and the Allergy Pathways case the ruling relies upon make it clear that ‘astroturfing’ on social media sites won’t be tolerated.

Astroturfing is the PR practice of creating fake groups that appear to support a cause or product. A group paid for by an interested party appears to grow naturally out of community interest or concern – a fake grassroots group so to speak and hence the word ‘Astroturf’ which is a brand of artificial grass.

Organisations like property developers and mining companies have been setting up Facebook pages and websites that appear to be community groups supporting their projects and many smaller business have been inducing friends, relatives or contractors to post false testimonials. In the run up to major elections in 2012 and 13 we’re seeing many of these fake groups setup to push various political agendas.

For a few consulting groups, astroturfing has become a nice line of business and those of us on the fringe of the social media community have been watching the development of ‘online advocacy services’ with interest.

While no-one has claimed Allergy Pathways or Diageo were posting fake testimonials on their own Facebook pages, the rulings in both cases are a warning that the courts and regulators are prepared to deal with those getting clever with social media.

For honest businesses this ruling is a non-issue, it’s timely reminder though that web and social media site are not ‘set and forget’ but need to be regularly checked, valid customer comments replied to and inappropriate content removed.

The ASB ruling reaffirms what sensible social media experts have been advising all along, and that’s good news for them and their clients.

Reliving the Hong Kong Handover syndrome

Scaring customers away is rarely a good idea

After Margaret Thatcher 1984 agreement to hand Hong Kong over the People’s Republic of China, the hoteliers of the British Colony sent out the message “book now, or pay dearly for rooms at the time of the handover.”

It became perceived wisdom that the territory would be booked out for years in advance and any rooms available would cost a fortune. So people made other plans.

As a result, Hong Kong’s hotel occupancy rate during the handover was only 45%. The “buy now or you’ll miss out” message backfired as people decided they’d rather miss out.

In the second week of the London 2012 Olympics the same thing is happening – the regular tourist trade has been scared away and even the locals who haven’t left town are staying home to avoid the transport and other hassles.

For London, the Olympics have backfired.

This is what is always missed when cities or governments make bids for big events, they displace existing trade and the benefits, if any, are short lived.

At least the Olympics do attract millions of visitors and the eyes of the world are on the host city for two weeks.

Far worst are the pointless heads of government meetings that pop up with monotonous regularity, for a few days of fleeting notoriety a city is locked down and its citizen corralled as Presidents and Prime Ministers meet to discuss something that will be forgotten in weeks.

The Sydney APEC meeting of 2007 was case in point, nothing was achieved for the weeks of disruption to normal business except for the spectacle of the so called leaders of the Asia Pacific region scuttling between hotels like frightened cockroaches in their armour plated motorcades.

Governments around the world keep falling for the myth that these major events generate some sort of economic benefits when it’s clear to the population who aren’t invited to the VIP cocktails parties that their money isn’t being well spent.

For businesses, the lesson is not to make too many “buy now or miss out” claims. If customers take you at your word then you may find your shop is half empty, just as Hong Kong did in 1997.

Making business accessible

Making your business website easier to use helps everyone, particularly your customers.

Internet payments giant Paypal yesterday released a survey showing how businesses with a website grow faster than those without an online presence.

There’s surprise to anyone paying attention that a business website is essential, but what happens if a business’ site isn’t accessible to those with impaired eyesight or a disability?

We tend not to think about accessibility issues when building websites and that oversight might be hurting the effectiveness of our online marketing efforts.

Access iQ was launched two weeks about by Media Access Australia, a not for profit organisation that works to improve disabled access to the media which was formed out of the sale of the Australian Caption Centre in 2005.

Federal Disability Commissioner Graeme Innes pointed out at the Access iQ launch that accessibly makes life easier for everyone – making shopping centres and footpaths easier for wheelchairs to navigate also made those places more accessible for parents with prams, the elderly and able bodied people. Everybody, particularly the shopkeepers, won by making things easier for everybody.

What’s true in the physical world has even more effect online, as the features which accessibility programs use are the same ones the all important search engines use when ranking websites.

Titles, headings and metadata – the descriptions of the site, pages and images built into websites – are important as they let search engines and accessibility programs understand what a site is actually about.

Getting your metadata right is a basic part of Search Engine Optimization and it’s key to having an accessible website as well.

A good tool for checking how well metadata is being used on your website is the Australian diagnostic site BuiltWith, whose free service gives you a basic report on how a page is using SEO best practices.

While how well a site uses headings and metadata is important, its also important that the site works properly. Problems with a website’s design make it run slower and can affect how it works in some browsers. So minimising design errors on a page matters as well.

The best tool for checking a website’s underlying code is the W3C’s Markup Validation Service. This checks your site is complying with web standards and picks up an errors that might have crept into the design. Eliminating as many errors as possible means the site runs quicker while improving the SEO and accessiblity aspects.

For checking accessiblity issues, the Web Accessibility Evaluation tool (WAVE), shows you where problems might lie in your site and steps through each part of a page highlighting potential issues.

While a web site’s code isn’t something business managers and owners should spend a lot of time worrying about, the accessibility and SEO does matter so it’s good practice to use these tools to check how your site is performing.

Once you’ve run these tests, sit down with your website developer and see where you can improve. The more accessible a web site is, the more it will help your customers.