Paul Wallbank | Paul Wallbank - Communications Professional

Bubble values

What Facebook tells us about the new tech bubble in Silicon Valley

The argument continues about Facebook’s purchase of photo sharing site Instagram.

One side claims a billion dollars for a business with barely any revenue and 13 employees is clear evidence of a bubble while the other side say its a strategic purchase that is only 1% of Facebook’s estimated $100 billion market value.

The latter argument is deeply flawed, comparing the purchase price against the value of other assets is always risky – particularly in a market where those underlying assets are being valued at the same inflated rates.

We could think of it in terms of a Dutch farmer in early 1637 claiming that paying a thousand Florins for a tulip is fine when he has a warehouse containing hundreds of them.

In reality, that farmer during the Dutch Tulip mania of the 17th Century held contracts for delivery; just as modern day investors held Collateral Debt Obligations.

Measuring value against other inflated assets is always dangerous and only fuels a bubble.

A much more concerning way of judging the wisdom of Facebook’s investment is against profit and revenue.

If we compare the purchase of Instagram against Facebook’s revenue, then the investment has cost them three months income.

Should we compare the acquisition against profit, Instagram has cost Facebook five years of profit at current rates.

Both of those numbers are very high and it indicates how big a gamble the Instagram acquisition is for Facebook.

It can be argued there is a lot of blue sky ahead for Facebook and that future profits and revenues will justify the Instagram purchase.

There’s also a very compelling argument that Facebook has to get into mobile services and Instagram does that.

Whether Instagram is worth three months income or five years profit to Facebook remains to be seen, but we should have no doubt it indicates we are well into Tech Boom 2.0.

Sport’s big problem

Can sports organisations survive a deleveraging economy?

One of the great successes of the Twentieth Century was professional sport.

As television – first free to air TV then subscription pay networks – developed through the 1960s to 90s, the owners and executives found professional sport delivered viewers and advertisers.

Having a sports portfolio was essential for a successful TV network, the leagues knew this and rights fees ratcheted up with every new contract.

The process reached its peak in the 1990s as Rupert Murdoch built his pay TV empires in North America, Europe and Australia.

During the 1980s and 90s we saw News Corporation buy up rights across the world, even founding new competitions like Premier League Soccer in the UK, Super Rugby League in Australia and the UK along with the multinational Super Rugby that allowed Rugby Union to become an openly professional sport.

Any organisation that finds itself sitting on a cash mountain sees its costs accelerate and the sports organisations are no different. The cost of fielding of professional sports teams has soared with huge player salaries supported by armies of assistant coaches, middle managers and specialist assistants.

Broadcasting rights were supplemented by corporate hospitality and sponsorship arrangements, all of which increased exponentially over the last thirty years.

The big problem for professional sport sector is all of these revenue streams are affected by the deleveraging economy. Even more concerning for them is the precarious financial position of many of the media companies who bidded rights up during the 1990s.

News Corporation’s mission of dominating TV markets by buying up sport rights is largely accomplished and the empire is fading along with its founder.

When Rupert Murdoch goes, so too will the world’s biggest driver of sports broadcasting rights. There doesn’t seem to many other broadcasters with the ability to pay the extravagant bills of professional sports teams.

There’s no doubt broadcast rights for sports will remain lucrative, albeit no longer growing, so clubs and competitions with business plans based on big increases of rights payments are going to struggle.

As a consequence, sports organisations are going to become more aggressive in finding revenue streams and we can expect to see them bullying photographers, monstering people uploading clips to YouTube and ejecting those with the temerity to bring their own sandwiches into the few cheap seats remaining.

The problem for sports is their value lies in their engagement with mass culture. If they isolate themselves from the people and society then they’ll find themselves becoming irrelevant.

Like many of the media companies that are now struggling.

Despite the pleas of sports administrators and their tame journalist friends, this doesn’t mean junior sport or the codes themselves will die. Grass roots sport will survive without a layer of obscenely paid professional players and managers suffocating the games.

As business rules are re-written in the 21^st Century, all industries are going to have to adapt. Professional sport is no different.

Is the Paperless Office promise about to come true?

For twenty years abolishing paper has been promised. Is the promise about to be delivered?

For as long as personal computers have been around the paperless office one of the holy grails of the IT industry.

Paper is messy, difficult to file or store and cruel to the environment. So being able to move and save information electronically made sense.

Despite the promises of the last twenty years, the quest for the paperless office seemed lost.

While the networked PC gave us the ability to get rid of paper, its advanced word processing functions and graphic capabilities along with the data explosion of email tempted us into generating more paper.

To compound the problem, over the last thirty years paper manufacturers found cheaper ways to make their product which meant the price of paper dropped dramatically just as we found more ways to use it.

So rather than delivering on the promise of eliminating paper, computers generated more than ever before.

Just as it seemed all was lost in IT’s War On Paper, the tablet computer came along. Coupled with cloud computing services and accessible fast wireless Internet, suddenly it appears we might just be on the verge on delivering on those promises of the last twenty years.

At a suburban football game I saw this first hand as I watched the ground officials electronically filing match information with their league.

“This used to be a pile of paperwork that used to take until Tuesday to be filed and collated” the ground manager told me, “today it’s done within half an hour of the game ending with almost no paper involved.”

For amateur sports clubs, money isn’t so much the problem as time. There simply are never enough volunteers to meet the workload of getting a team on field.

This is true with almost any community based organisation – from volunteer firefighters to community kindergartens organisers struggle with rosters and finding helpers.

In business the same resource constraints exist except we know we can fix these problems by paying a worker to do it. The problem there is few businesses have unlimited funds to employ filing clerks and form fillers to handle the paperwork.

By killing paper in the office, we’re making business and the economy more efficient. We’re about to deliver on that promise.

Bill Gates once wrote that in the short term we overpromise what technology can deliver while in the long term we underestimate its effects.

This is true of the paperless office – now that promise is being delivered the effects on business and government will be profound.

Is your business prepared for these changes?

Flunking the Local Search Market

Are we repeating the mistakes of the tech wreck?

At a breakfast last week a business owner told me about his struggle to counter negative reviews about his B&B on Tripadvisor.

There’s little doubt that sites like Tripadvisor and Urban Spoon are important to the hospitality industry, as customers check out reviews of establishments before they make a booking or set off for an evening’s entertainment.

Over the last two years most of us in the industry thought Facebook and Google’s Local Search services – both confusing called “Places” – would dominate the market for these services.

Google seemed to have the biggest advantage as the integration of local search and user reviews seemed to be a no-brainer for the search engine giant.

A combination of poor implementation and anal retentive policies left Google Places stranded. The distraction of trying to slap a “social layer” onto the search platform can’t have helped.

Facebook haven’t fared any better. Much of the problem for the dominant social network has been that users aren’t particularly interested in engaging with businesses unless there’s an incentive like a freebie or prize.

Just last week a US based social media expert was recommending local businesses offer incentives such as “a slice of apple pie” in return for favourable Facebook reviews and likes.

Business owners themselves are finding it too difficult with the demands of too many social networks overwhelming them. This isn’t helped by the services offering confusing products, arcane policies and requiring information being duplicated.

Most importantly though is customers just aren’t using these services. Increasingly it’s clear we want to use custom applications, particularly if we’re using smartphones where it’s difficult to navigate through a social media service’s multiple options.

It could well be that we don’t want to use all in one “portals” – this was the web model that companies like Yahoo! and MSN tried to impose upon us when it became clear that the walled gardens of AOL and The Microsoft Network didn’t work on the Internet.

One of the factors driving the tech wreck of the early 2000s was the failure of those portals as highly valued web real estate proved to be based on faulty assumptions and shaky maths.

The failure of specialised search engines and social networks to expand into mobile and local services indicates many of our assumptions today are flawed.

Could it be that the next popping of a tech bubble is a repeat of the mistaken assumptions we should have understood over a decade ago?

Television rights and clouds

The challenge technology brings to information hoarders.

The Australian Federal Court today handed down their appeal decision in the latest twist in the Optus TV Now copyright case where the National Rugby League claimed the telco’s online recording service breaches the sporting body’s copyright.

Reversing their colleagues earlier decision, the judges found the TV Now service does breach the League’s copyright.

The Court’s reasoning is because the service plays a part in creating a recording the copies cannot be considered an individual’s personal copy to be watched at a later time – therefore they aren’t protected under the personal use provisions of the Copyright Act.

It’s going to be interesting to see where the line is drawn that a computer program or cloud service is infringing copyright.

Could be that copying a video of a football game to Dropbox, Google Drive or Evernote is a copyright breach by those services?

Perhaps online back up services like Carbonite or iCloud could infringe copyright as they automate the copying process?

Even if Optus doesn’t appeal the case to the Australian High Court, the decision will almost eventually tested there by someone else.

Many of the spokespeople – along with and their apologists in the sports and business media – have argued this is about the law falling behind technology.

The court covered this in paragraphs 18 to 25 of the judgement linked above and the judges are quite clear the law was written to be technology neutral.

Calls now to “reform” copyright law in light of the TV Now and AFACT – iiNet cases to “bring the law up to technology” are disingenuous.

While there’s no doubt legislation could be tweaked, there’s the real threat any “reforms” driven by the pleading of the copyright industries and their tame journalist friends will result in more restrictions and damage the take up of modern technologies.

One can’t blame the rights holders for trying to maximise their income, they have to feed the remorseless hungry beast that is modern professional sport – although one wishes they didn’t keep bleating “think of the children” to justify their actions.

We’ve previously seen how sports organisations have felt threatened by every new technology and the profits these new tools have delivered them.

The latest wave of change is no different, although the glory days of sports rights may be another symptom of a changing economy and 1980s thinking.

Hopefully the sports organisations and rights holders won’t be allowed to kill the potential of the these technologies before new business models are allowed to evolve.

Cargo cults and your business

Do you think the government, China or big business is going to save you?

“We need an interest rate cut” thunders the business media.

“Give us GST relief” plea the big retailers.

“China will boom forever” assert the government economists.

“Big corporations will buy us out for a billion dollars” pray the hot new start ups.

“I’ll win the lottery this week” thinks the overworked cleaner.

We’re all waiting for the big saviour that’s going to rescue us, our business or the economy.

It could be a big win, a big client or a big government spending program to rescue us.

Sadly, should we lucky enough for that saviour to arrive, it may not turn out to be all we expected.

There’s many lottery winners who curse their win while many disaffected founders who watch their startup baby fade away neglectful new owners.

For a lumbering department store, tax changes will do little to save them from market changes their managements are incapable of comprehending.

Interest rate cuts are great for business when customers are prepared to take on more debt but in a period where consumers are deleveraging a rates cut will do little to stimulate demand.

The clamour for interest rate cuts are a classic case of 1980s thinking; what worked in 1982, 1992 or 2002 isn’t going to work the same way in 2012.

What’s more, the Zero Interest Rate Policies – ZIRP – of the United States and Japan are a vain attempt to recapitalise zombie banks saddled with overvalued assets rather than an effort to help the wider economy.

China is more complex and there’s no doubt the country and its people are becoming wealthier and there are great opportunities.

The worry is most of what we read today could have been the wishful thinking written about Japan thirty years ago. Lazily selling commodities to the Chinese while they create the real value is not a path to long term prosperity.

In business we have a choice, we can pray for luck or we can make our own luck.

Some choose to join the cargo cult and pray, or demand, that someone else does something. Others get out and do it.

John Frum gravesite image by Tim Ross through Wikimedia Commons

Undermining the cloud

Google’s broad claim on users’ data risks the viability of their services

Whenever I do a presentation on cloud computing and social media for business, I focus on one important area – The Terms Of Service.

Google’s relaunch of their Cloud Drive product has reminded us of the risks that hide in these terms, particularly with the one clause;

When you upload or otherwise submit content to our Services, you give Google (and those we work with) a worldwide license to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content. The rights you grant in this license are for the limited purpose of operating, promoting, and improving our Services, and to develop new ones. This license continues even if you stop using our Services (for example, for a business listing you have added to Google Maps). Some Services may offer you ways to access and remove content that has been provided to that Service. Also, in some of our Services, there are terms or settings that narrow the scope of our use of the content submitted in those Services. Make sure you have the necessary rights to grant us this license for any content that you submit to our Services.

This is an almost identical clause to that introduced – and quickly dropped by file sharing Dropbox – last year. It’s also pretty well standard in the social media services including Facebook.

Basically it means that while you retain ownership of anything you post to Google Drive, or most of other Google’s services including Google Docs you’re giving the corporation the rights to use the data in any way they choose.

While the offending clause does go onto say this term is “for the limited purpose of operating, promoting, and improving our Services, and to develop new ones” there is no definition of what operating, promoting or improving their services actually means.

Not that it matters anyway, as one of the later terms says they reserve the right to change any clause at any time they choose. So if Google decided that selling your client spreadsheets to the highest bidder will improve the service for their shareholders, then so be it.

If you’re a photographer then the pictures you upload to Facebook or Google+ now are licensed to these organisations as are all the documents stored on Cloud Drive.

To be fair this is not just a Google issue, Facebook has similar terms as do many others. Surprisingly just as many premium, paid for services have these conditions as free ones.

Because these Terms Of Service are about establishing a power relationship, there’s usually an over-reach by large companies with these terms.

While an over-reach is understandable, its not healthy where the customer has to trust that the big corporation will do the right thing.

Right now, if you’re using a cloud or social media service for important business information you may want to check that service doesn’t have terms that grant them a license to your intellectual property.

ANZAC Day

Remembering the the real bravery on a day of remembrance.

It’s ANZAC Day in Australia where the anniversary of the World War One landings in Gallipoli marks the first national action of the then new nation.

At its heart, ANZAC Day remembers sacrifice and bravery. The men and women who volunteered for the Great War and all those that have followed over the last hundred years were prepared to sacrifice relationships, safe careers and their lives to protect the King or Country from the threats of the Kaiser, Hitler, Japan, Communism or Terrorism.

We should remember though that those politicians saying fine words today and posing for photo opportunities at the landing beaches are the much the same people who started an unnecessary war in 1914 and many of those wars since.

Compare the words of Billy Hughes supporting Australian conscription in 1915 and the words of John Howard or Julia Gillard.

Stripped of spin doctors’ dressing and the words of today’s politicians are the same. Only the empire has changed.

Today’s politicians know of concepts like sacrifice, patriotism and bravery, exploiting them can prove handy at election time.

Luckily for most of them their political and business careers rarely call for such qualities.

Hopefully our children won’t find themselves in the trenches – or fall out shelters – to meet the short term gains of an Obama, Cameron or Gillard and their corporate friends.

The real lesson of ANZAC Day, Veterans Day and all the other national days of remembrance around the world for those every nation has lost in battle is that war is the final act and represents a failure by the Kings, Presidents and Prime Ministers who choose to lead us.

They shall not grow old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning,
We will remember them.

Lest We Forget

Locking in the mobile market

Where are the next challenges for a phone industry that’s re-invented itself?

Mobile phone carrier Vodafone yesterday announced its purchase of Cable and Wireless, the company that rolled out the telegraph and phone networks that connected Britain’s empire.

Vodafone’s purchase is one of the final phases of the telco industry’s long term restructure where customers – both home and business users – have switched from land lines to mobile devices.

It’s long been acknowledged the profit in this market lies in devices and data usage which is why Cable and Wireless steadily declined over the past quarter century.

While there’s good money to be made in running undersea cables, which is what C & W did, the big profit is in delivering the data over the “last mile” to the customer.

For most customers, that last mile is the radius around a cellphone base station.

In Australia, this is best illustrated by Telstra’s undisguised glee at being able to offload their legacy copper network and backbone services to the government owned National Broadband Network allowing the former land line monopoly to focus on the mobile, data customer.

That data aspect is important too, one of the big changes in telecommunications over the last 25 years has been the rise of data.

A quarter century ago, voice communications were the main traffic of these networks. For companies like Cable and Wireless, data was a profitable sideline with services like Telex and ISDN being lucrative business niches.

Those rivers of gold distracted incumbent telcos in the early years of the public Internet as they tried to protect those expensive data plans and discouraged customers from using the net.

Over time, a new breed of Internet Service Providers rose who could supply those data services customers wanted.

Ironically, the same thing has happened with mobile phone manufacturers and the rise of the smartphone. Unlike the incumbent telcos, they haven’t adapted.

The incumbents phone manufacturers like Nokia and Motorola missed the rise of data communications and the mobile web as the iPhone and Android devices delivered the portable utility that “dumb phones” couldn’t deliver.

For Nokia, that miss appears fatal with the company rapidly running out of cash as their smartphone devices fail in the marketplace and margins collapse in the sectors they still dominate.

Research In Motion – the manufacturers of the Blackberry phone – are in the same trap. While their devices were data orientated they were more akin to corporate “feature phones” where they did one or two things well but couldn’t deliver the full features mobile phone users increasingly wanted.

The rise of the iPhone threatened Blackberry’s market and the arrival of the iPad with applications like Evernote killed most of the product’s demand.

Blackberry and Nokia’s decline while companies like Telstra and Vodafone survive – not to mention massive profits of companies like Mexico’s Telefonica – illustrate the value of government licenses to telcos and the breathing space it gives the management of these licensees.

We shouldn’t underestimate though the risks to all these businesses if they don’t adapt.

Distorted priorities

How government subsidies distort industries like film, aviation and motor manufacturing

Every year the bureaucrats of the world’s movie production industry make their way to the Locations Show where governments compete to attract movie producers to their states with fat subsidies.

This year, the preparations for the Locations Show conference are overshadowed by the US government’s struggling with continued subsidies to the Export Import Bank, an organisation going by the wonderfully Soviet name of the ExIm Bank.

While ExIm and screen subisidies aren’t directly linked in the US – the bank being a Federally funded body that finances American manufacturing sales to foreign market while state governments compete for productions – both though illustrate the zero sum game of corporate welfare that leaves citizens poorer in the process.

Delta Airline’s law suit over Exim subsidies to Boeing gives us a real life illustration of how business loses in these battles for government largess.

When Delta Airlines goes to buy or lease a Boeing 777, they have to find funds at a commercial rate of interest. Air India on the other hand gets a subsidised rate courtesy of ExIm bank.

However if Delta chooses to buy an Airbus A330, European governments will offer similar subsidies to the American carrier.

So the subsidy system actually encourages American carriers to buys European jets rather than the US products. Nice work.

This distortion is something we see too in film subsidies, as government funds are siphoned off to support large corporate movie productions.

Nowhere is this truer than in Louisiana where the state embarked in 2009 to capture the so-called “runaway production” market of footloose movie projects that shop around the world for the most lucrative subsidies.

This has worked, with Louisiana based movie production expected to total 1.4 billion dollars in 2011 on the back of $180 million in subsidies.

One of the productions Louisiana grabbed in 2010 was The Green Lantern which came as a surprise to the government of the Australian state of New South Wales who thought Sydney had secured the project.

The Green Lantern loss was the nadir for the Australian film industry that ten years earlier had been overwhelmed with productions like The Matrix Trilogy.

At the time of the Green Lantern loss the industry appeared to be in its death throes, crippled by a high Australian dollar and disadvantaged by relatively lower government subsidies.

You’d have thought that riches to rags story had taught Australian politicians that dumb subsidies don’t work and may have actually damaged the local film industry more than it helped.

Unfortunately not.

Last week the Australian Federal government announced $13 million in support for production of Wolverine. The Prime Minister’s office gushed;

To attract The Wolverine to Australia, the Gillard Government granted the producers a one-off payment of $12.8 million which will result in over $80 million of investment in Australia and create more than 2000 jobs.

The payment effectively provided The Wolverine a one-off investment package equivalent to an increase in the existing Location Offset to 30 per cent.

Without this effective tax offset incentive, the producers of The Wolverine would not have chosen Australia as the location.

In the 1950s, it made sense to invest in the industries of the future such as aviation, movie and car manufacturing industries.

Unfortunately for our politicians in Washington, Canberra, Sydney and Baton Rouge, we don’t live in the 1950s.

Reading the global tea leaves

What can we learn about the global economy from the world’s biggest corporation.

Where is the world economy heading? An interesting exercise by the website Business Insider looks at the earnings reports and announcements by some of the world’s biggest corporations to get an idea of the the direction of the global business world.

The results of Business Insider’s article are interesting and worthwhile of a closer look as we can see some real trends along with some risky bets by management who seem reluctant to acknowledge we’ve moved out of the 1980s.

China’s western water shortage

This is an interesting curve ball; one of the central planks of the China Cargo Cult that believes unfettered Chines growth will drive the world economy indefinitely is that the country’s inland provinces will grow in a similar pattern to that of the coastal provinces.

Anyone who has travelled in those provinces, particularly in the poorer Northern regions like Gansu, has seen first hand the serious erosion, desertification and water problems these areas face.

It shows the China story is not as simple as many of the cargo cultists believe.

Europe is not dead

Even in the darkest days there are opportunities for innovative organisations and regardless of what we think of McDonald’s products, they aren’t afraid to experiment and take risks.

McDonald’s move to “value meals” in Europe replicates what worked in the United States in both the 2001 and 2008 economic downturns. This appears to be working in Europe just as it did in North America.

We should also keep in mind that Europe is a diverse collection of cultures and economies so despair in Athens doesn’t necessarily mean pessimism in Arnhem.

The bottom of the US housing market

In his investor briefing, JP Morgan Chase CEO Jamie Dimon indicated the bank thought the US housing market is at the bottom subject to the American economy not going back into recession.

While it’s possible that the US housing market has bottomed, it’s highly unlikely we’re going to see the US housing market roar back to 2005 levels even if there is a US recovery so we shouldn’t be expecting hockey stick style growth in the US domestic sector driving the world economy as it did through the early 2000s.

Louis Vuitton confirms that the global market for ultra luxury goods is healthy

The entire luxury goods boom is a side effect of the massive amount of money pumped into to the world economy to deal with the 2008 economic crisis.

Like Macao casinos and Silicon Valley venture capital bubbles, this is transitory and at best a marginal influence on overall growth and employment.

It’s interesting how many presentations I’ve seen recently citing the luxury goods markets as evidence all is good in the world economy. This shows the desperation of those whose businesses rely on mindless consumerism.

China’s middle class will save us all

If you were searching for a corporate example of the economic cargo cult surrounding China, then Yum Foods would be one of the best.

The idea that China’s “consuming classes” will number half the nation’s population is some sort of economic Lake Wobegon, where everybody is above average.

Even if Yum’s prediction proves to be true, the nature of China’s economy and the nation’s stage of growth means consumption patterns of the country’s middle – or “consuming” – classes are going to more like those of Americans in 1912 rather than 2002 which undermines any business model based upon the late 20th Century’s profligate spending.

Businesses are once again investing in IT

Microsoft suprised us all last week with their profit results. Earnings from Windows, servers and office suites were all up on improved personal computer sales.

That businesses are investing in IT makes sense as one of the things that is cut early by organisations looking for savings is IT. That happened in 2009 in response to the economic crisis.

Even before the 2009 financial shock, businesses had been under-investing in IT partly because of Microsoft’s failure with the Vista operating system.

Now many businesses have decade old desktop computing systems and the pressures to upgrade are becoming intense.

The worry for Microsoft is Apple’s domination of mobile devices and the rise of cloud computing means that its not necessarily Microsoft will benefit from most of the IT investment.

Electricity prices will rise and low natural gas prices are unsustainable

Energy prices are a riddle within an enigma, however there’s certainly some distorting effects in these markets. CSX’s views on natural gas markets illustrate this.

We can expect more convulsions in energy prices as demand hinges on China, the US and European economic growth coupled with the threat of more conflict in Iran and Iraq.

Should China deliver the growth that the cargo cultists believe then energy prices will continue to climb, which may happen anyway.

The end of the telephone

Again Business Insider’s headline is a little misleading, as Verizon see the decline of the POTS – Plain Old Telephone System – networks that were designed around voice data and a switch to data based networks that don’t treat all traffic as information packets.

Data matters more than voice and we don’t want to be tied to a phone line.

That the telcos see mobile data as their main revenue drivers shouldn’t be a surprise as this has been the trend for two decades.

Consumers are borrowing again

This claim is a worry as it indicates some consumers – along with many lenders – are falling into the habits that nearly bought them unstuck in 2008.

A superficial view of the Amex announcement actually raises more questions than it answers and there’s a suspicion that the credit card provider is driving growth through special offers or reforming their excessive merchant charges.

Like JP Morgan, much of Amex’s optimism is based upon the US economy moving out of recession and American consumers resuming their credit binge. The latter may prove to be a bridge too far.

Winning in diverse European markets

Like McDonald’s, IBM sees plenty of opportunity in Europe and makes the point that, like Asia, the European markets are diverse.

IBM may turn out to be a more of a beneficiary of the increased IT spending that Microsoft is relying upon as Big Blue’s consulting services and cloud technologies are more attuned with where the enterprise computing market is going.

Also in an era of government austerity, IBM may be able to offer process savings to cash strapped agencies and authorities.

Asian consumers save the cigarette industry

There’s no doubt East Asian societies like a smoke so the idea that international tobacco brands see great opportunities in markets like South Korea, the Philippines and Indonesia shouldn’t be a surprise.

Interestingly China doesn’t feature in these projections as their market is largely closed to foreign manufacturers.

While the short term looks good for tobacco companies in East Asia, it’s difficult not to see that rising affluence starts to see public health and anti smoking campaigns similar to those in the West developing over the longer term.

Yahoo parties like it’s 1999

Web surfers want relevant content according to Yahoo’s management. Next month we’ll see these business giants claim social networks and cloud computing are the next big thing.

You can’t help but thing Yahoo’s management are very well qualified to tell us when horses have bolted and vanished over the horizon.

The problem for Yahoo is that customised content is expensive unless you’re going to “crowdsource” it with a social layer as Facebook does and Google is trying to do.

If Yahoo can pull something like this off – and there is no indication they can – then the business has a chance of surviving. Right now the smart money would be betting on the being broken up in the near future.

So where is the world economy going?

One unsurprising thing from these corporate projection is that some businesses are better prepared than others for the changes that are happening.

IBM and McDonald’s stand out as those prepared to innovate and change their business models to suit the prevailing situations.

Companies that believe the 1980s are just around the corner again seem to be the ones most vulnerable – its not surprising that its finance organisations like JP Morgan and Amex are betting the farm on continued massive growth in consumer debt.

The China Cargo Cultist are also vulnerable. If it turns out that Chinese growth – like US consumer spending in the 1980s – can’t go on forever then companies like Yum Foods are going to struggle with growth rates far lower than they expect.

One thing is clear, that there are a lot more nuances in the world’s economy that what you’d pick up from media headlines. The key for big and small entrepreneurs is figure out where these nuances present a business opportunity.

Black tea image courtesy of Zsuzsanna Kilian and SXC storck photos.

Inflating titles, inflated apirations

How job title inflation can affect an organisation

This story first appeared in Smart Company on 19 April 2012.

“She listed her job on LinkedIn as my ghostwriter,” reflected the journalist about his publishing business’ Gen-Y staff member.

The journalist’s lament reflects an unexpected corporate risk in social media; that of employees giving themselves grandiose and sometimes damaging job profiles.

Over the last 20 years, title inflation has been rife in the business world as corporations and government agencies doled out grandiose titles to soothe the egos of fragile management egos.

So it isn’t surprising that many of us succumb to the temptation to give ourselves a grand title online.

In the journo’s case a young graduate working as an editor in his publishing business listed herself as his ghostwriter, risking a huge dent to his credibility among other the lizards at the pub or the Quill Awards.

That business journalist is not alone, in the connected economy what would have been a quaint title on a business card or nameplate is now being advertised to the world.

Making matters worse, we now have tools like LinkedIn and other social media sites to check out a business’ background and who are the key contacts in an organisation.

So what your staff call themselves is now important. It can confuse customers, cause internal staff problems (“how come he’s an Executive Group General Manager?”), damage business reputations and quite often put an unexpected workload on a relatively junior employee.

In your social media policy – which is now essential in any business that employs staff – you need to clarify what titles your people can bestow upon themselves.

As well as making this clear to new staff, a regular web search on your business that includes all of the popular social media sites should be a regular task.

Just as economic inflation can hurt your business, so too can uncontrolled title inflation. Watch it isn’t affecting your operations.