Paul Wallbank | Paul Wallbank - Communications Professional

Killing credibility

One dumb campaign can hurt a brand

Microsoft’s Smoked by Windows Phone Challenge aims to show their mobile phones are the fastest on the market.

Unfortunately if you beat them, it appears you might not win the prize as Sahas Katta discovered.

Going back on a prize in a competition that already looks somewhat biased doesn’t just hurt Windows Phone’s credibility but it hurts the whole company’s – it looks cheap, lame and petty.

Realising the damage this does Microsoft’s brand, evangelist Ben Randolph offered Sahas a laptop and phone, although already the botched promotion has probably already hurt the product.

Windows Phone is a “must succeed” for Microsoft and that company would stage poorly thought out stunts with high chance of backfiring is disappointing given what is at stake for them.

Trust and reputation and the hardest things to earn and the easiest to squander, Microsoft’s management needs to be careful with this.

Hopefully Microsoft will show us some compelling reasons to buy an alternative to an iPhone or Android handset beyond dodgy marketing stunts.

Super connecting cities

How can cities re-invent themselves in the connected economy.

I’m chairing a panel this week in Newcastle for the New Lunaticks on How Cities can Become Super Connected where we’ll look at how a city can develop its broadband infrastructure and how the local economy can grow in a global, connected marketplace.

The challenge for a city like Newcastle is great as in many ways the city’s economy is a microcosm of Australia’s – a massive restructure of the local economy over the last forty years has left the region with a consumer driven suburban society and the massive coal resources of the region have made the city the biggest coal exporting port on the planet.

Much of the wealth flowing out of the port to India and China isn’t being distributed into the city and the Newcastle central business district is suffering from years of underinvestment and neglect by the business community and governments of all levels.

So the rollout of the National Broadband Network offers an opportunity for the city and the local economy to reposition itself. The question on the panel is how?

Waiting for Godot

The first aspect is that waiting for a government agency or telephone company to come to town is risky; recent history shows Newcastle gets no favours from state or Federal governments so expecting the region to be a priority for the National Broadband Network is unrealistic.

Indeed this has proved the case so far with no planned rollout locations for the NBN announced in the Hunter region to date.

At present higher speed Internet access comes through ADSL over the telephone lines and Telstra’s 4G mobile network in the downtown part of the city.

So it’s up to the community to create the conditions and demand for faster broadband.

Building the infrastructure

One way to make Newcastle more attractive to the providers of high speed internet is to make the supporting infrastructure easy to access. The local council can work on this by making streets, building and underground services like conduits accessible and available.

Part of encouraging investment in the local telecoms infrastructure includes an attitude from council that doesn’t put unnecessary barriers in the way of developments.

This isn’t to say local residents’ views should be over-ridden; if a city is going to be successful then it need the support of the residents.

Who funds the network?

While the city waits for the NBN or expanded 4G services to arrive, what happens in the interim? Should local and state governments build a temporary Wi-Fi network to cover the Central Business District?

If so, why just the CBD? Why not key industrial, commercial and shopping centres in the suburbs? Over the last forty years, Newcastle residents have shown they prefer to work and shop outside the city centre.

Of course the biggest question is who is going to pay for such an interim network. Putting the load on already stretched local governments guarantees the project will be strapped for capital.

Open data, open processes

An area where local governments can encourage growth is by being open and innovative themselves.

By making data available they encourage local developer communities and attract entrepreneurs who see a welcoming environment.

More importantly, having open procurement and recruitment processes that encourage local business to apply for government work and suggest innovative ways to work is one way industries in the region can be encouraged.

Connecting communities

Even with the best infrastructure you’re not going to build a vibrant economy without the community working together.

If we look at successful industry clusters such as Silicon Valley or the Pearl River Delta today, or historical successes like Birmingham in the 18th Century, we see industries built around a small core of determined entrepreneurs utilising local resources.

For Birmingham this was access to coal, iron ore, skilled labour and waterways to ship the products out. Silicon Valley’s role developed because of its access to high technology defense spending, good quality education facilities, a highly educated workforce and a free wheeling capital market.

Cities like Newcastle have to identify what the local economy’s strengths are and how these can built upon. It needs government, business and educational groups to be co-operating.

A liveable city

The key to all successful cities is making them attractive to entrepreneurial, skilled and younger workers. In some respects Newcastle has aspects that can attract these groups.

For Newcastle, and other centres, the challenge is to use their advantages to attract the human talent that will build the networks that matter.

You hold us harmless

How the terms of social media sites risk your assets and their business

Social media site Pinterest was recently caught in one of the ongoing quandaries of social media – the ownership of content.

The subject is tricky; social media sites rely on a vibrant community of users posting news and interesting things for their online friends.

Unfortunately many of things social media users post are someone else’s property, so almost every service has a boilerplate legal indemnity term like Pinterest’s.

You agree to defend, indemnify, and hold Cold Brew Labs, its officers, directors, employees and agents, harmless from and against any claims, liabilities, damages, losses, and expenses, including, without limitation, reasonable legal and accounting fees, arising out of or in any way connected with (i) your access to or use of the Site, Application, Services or Site Content, (ii) your Member Content, or (iii) your violation of these Terms.

Facebook have similar terms (clause 15.1) as do LinkedIn (clause 2.E) and Tumblr (clause 15). Interestingly, Google’s master terms of service only holds businesses liable for the company’s legal costs, not individuals.

Boilerplate terms like these are necessary to provide at least an illusion of legal protections for investors – those venture capital investors, greater fool buyers or punters jumping into the latest hot technology stock offering need a fig leaf that covers the real risk of being sued for copyright infringement by one of their users.

The risk in these terms shouldn’t be understated; by agreeing to them a user assumes the liability of any costs the service incurs from the user’s posts. Those costs don’t have to be a successful lawsuit against the service, it could be something as minor as responding to a lawyer’s nastygram or DMCA takedown notice.

Of course, none of the major social media platforms have any intention of using these indemnity terms; they know that the first time they go after a user all trust in the service will evaporate and their business collapse.

Somewhere among the thousands of social media services though there is going to be one that will pull this stunt. Strapped for cash and slapped with an outrageous claim for copyright damages, the company’s board will settle then send out their own demands to the users responsible.

Those “responsible” users – probably white, middle class folk sitting in somewhere in the US Midwest, South East England or North Island of New Zealand – will be baffled by the legal demand that requires them to file a defense somewhere obscure in California or Texas and will go to their lawyer friends.

When the lawyers tell them what it means their next step will be to their local news outlet.

The moment the story of a middle class person facing losing all their assets hits the wires is the moment the entire social media business model starts to wobble.

In many ways what the social media sites are trying to do is offset risk.

Risk though is like toothpaste. Squeeze the tube in one place and the pressure moves elsewhere.

By laying off a real risk by using legal terms the social media sites create new, even bigger risks elsewhere in their business.

The dumb thing is these terms really don’t protect the services anyway – it’s unlikely the typical social media user will have anything like the assets to cover the costs of a major copyright action by a rich, determined plaintiff.

It’s going to be interesting to see how many services still have these indemnity clauses in 12 months.

For the industry’s sake, the big players will need to have ditched these terms before that first dumb attempt to claim damages from users hits the wires.

A website can’t save a dying business

Online tools can’t fix an organisation’s structural problems

The last week has seen some interesting changes in the local online business community.

Embattled department store David Jones’ announced they are following Harvey Norman into an “omni channel strategy”.

Harvey Norman chief executive in turn appeared on national television to state the “internet drives no sales.”

In the political field, it was reported the Australian Labor Party are looking at using Blue State Digital tools to counter voter and member apathy.

Each one in it’s own way illustrates how organisations can be distracted by shiny new technology while ignoring much deeper problems.

In the case of David Jones, the department store ignored their core competencies and tried to ape their down market competitors in milking the financial services cow.

This worked fine while they could offer 24 and 36 month interest free deals and as soon as their partners American Express started charging a monthly “Administration Fee” that business evaporated.

One of DJ’s down market competitors is Harvey Norman, co-founder Gerry Harvey has spent his life building a fortune based upon providing cheap credit to consumers.

It was always going to be a mistake for DJs to compete with Harvey’s as Gerry is far better at the business than the well connected, genteel board of David Jones and their snappily dressed friends in the store’s executive suite.

Worse for DJs, the whole strategy alienated their core markets and while management focused on financial services customers went elsewhere to find the quality goods and services that the upmarket department store should be providing.

For both though, the financial services business model is now fading as the 20th Century debt supercycle comes to an end; consumers no longer want to load up on “buy now, pay later” schemes.

So all the talk of “omni-channel strategies” really doesn’t address the underlying weaknesses in both business.

This disconnect with reality is true in politics as well where the ALP is reported to be considering using the Red State Digital tools that Barak Obama used so well in his 2008 US Presidential campaign.

While the tools are impressive, they don’t address the problem that the electorate – and the member bases of the major political parties – have become rightly disillusioned and disconnected from the political processes that exclude everyone except an increasingly smaller circle of cronies and insiders.

The only good thing that will come of using US political communications tools in the spectacular eruption the first time one of the ALP’s factional warlords encounters a grass roots online campaign like The Great Schlep.

Heck, the resulting furore might even see some of the apparatchiks distracted from partying and whoring on their union credit cards for a day or two.

All the frivolity aside, the reality for the Australian Labor Party, David Jones and Harvey Norman is their problems are far deeper than a well designed website and impeccably executed social media strategy can fix. These organisations need major rethinks about how and why they exist.

It doesn’t matter how much money you throw at the web or how effective your social media strategy is – if the foundations of a business are shaky then a nice “omni-channel strategy” aren’t going to fix things.

For some of organisations, a failure to embrace the online world may be one of the causes for their problems, for many though there are far more basic issues they need to address.

Overstuffing the social media goose

Businesses are struggling with too many online services

“Small business has to get on Pinterest” urges the social media advisor.

“Oh no, not another of these social media thingummies” thinks the business owner or marketing manager.

Pinterest is just the latest of a dozen online services that businesses have been urged to join in recent years. An incomplete list would include the following;

Pinterest
Google Plus
Facebook
Facebook Timeline
Quora
Color
Yelp
Tumblr
Google Places
True Local
Blogging
LinkedIn
LinkedIn Groups
Twitter

The question for the time poor business owner or under resourced manager is “where do I find the hours for all this?”

It’s not just smaller businesses either – most corporations don’t have the resources to dedicate to all of these services, let alone provide the 24×7 coverage many are beginning to expect.

When it comes to online services and social media businesses owners and managers are like geese being stuffed for foie gras, they’ve had so much stuffed down their necks they can barely move.

Like the foie gras ducks, businesses have become glassy eyed – when someone tells them they have to sign up to another online service they just switch off.

We’ve reached the point where are too many networks for event the most underemployed social media expert to handle.

For those advocating social networking or other online services for business, it’s time to start acknowledging the time poor reality of most businesses and consider exactly which services are best suited for the organisation.

In businesss it’s not time to switch off, that could be the worst thing to do as so many new ways of talking with customers are developing.

Instead of feeling overwhelmed, it’s time to start carefully considering which services will work best with your markets, products and staff and choose carefully.

The days of just charging into the latest social media sensation are over, these services are growing up and they have to prove its worthwhile for businesses – or individuals – to invest their time.

Should we be subsidising industries?

Can we pick winners in a globalised world?

The 2012 UK “austerity” budget has one bright side with big tax breaks of the games and television industries.

Meanwhile down under, the Australian government is about to announce more massive subsidies to the local motor industry.

While protecting jobs and trying to help struggling industries is admirable, we should ask if the cost to the taxpayer and economy is worthwhile.

Squeaky wheels

“The industry has lobbied for such changes for several years” says the BBC report on the UK budget and this is one of the problems with industry specific support; that it’s the ones who complain the loudest who get the assistance.

Often the companies and industries lobbying for subsidies spend too much management time and resources duchessing ministers, public servants and key media “opinion makers” than actually listening to their customers.

The fact they have staff dedicated to lobbying efforts in itself shows where their investment priorities lie. It isn’t in building better products or delivering what their customers want.

Missing voices

It’s often lamented that the high growth and small business communities don’t receive support, this is because they are running and building their businesses rather than shmoozing journalists, public servants and politicians.

Industry support programs often end up helping established insiders or those with a talent for filling in government grant applications rather than those who genuinely need help.

The Australian film industry is a good example of this where talented film makers struggle to attract funding from government agencies while a generation of well connected, experienced form fillers keep churning out subsidised movies that no-one wants to see.

Behind the times

One of the problems with government picking industry winners is they are often well behind the times with support going to mature or fading industries; both the Australian and UK announcements illustrate this.

The UK games announcement is at least ten years behind the times; strategic investment in the games and TV industry a decade or two ago may have been a wise move, today it’s just supporting another mature sector that is struggling to adjust.

At least though the UK’s policies are somewhere near the 21st Century, the massive Australian support for the failed motor industry shows Canberra’s politicians are mired in an era somewhere Henry and Edsel Ford.

It’s worth noting one of the first moves of the incoming Australian Labor government in 2007 was to axe the Commercial Ready program that was designed to help commercialise new technologies and innovations yet motor industry support dwarf any savings from abandoning this scheme.

The investment problem

In most countries the real problem to building jobs and industries is investment. Both the UK and Australia illustrate this with their domestic investment being largely directed at the housing industries.

The two countries have taxation and social security policies that favour over-investment in property. In Australia the problem is exacerbated by a retirement saving scheme that directs domestic savings to index hugging fund managers.

Australia’s sinking of money into an industry that have been struggling for nearly forty years and currently suffering massive worldwide oversupply is one of many damning indictments on the country’s political classes squandering of the current resources boom.

Making things worse, massive subsidies to uncompetitive industries already distorts a twisted economy.

Real economic reform that encourages investment in research, development, training, innovation and entrepreneurs is tough and means losses for many in those vocal, dying industries.

For the average politician a feel good announcement giving a bucket of money to a noisy group is a much better short term investment.

The challenge, and opportunity, in the democratic world is to make the politicians aware that the economy has moved on from the times of John Major in Britain or Bob Menzies in Australia.

It may well be that industries do need, and deserve, government support although we need far more scrutiny and justification from our political leader of why certain groups get help while others do without.

ABC Nightlife: Going Viral

The March ABC Nightlife spot looks at the online viral world

Paul Wallbank joins Tony Delroy to discuss technology, change and the online world on Thursday, March 22 from 10pm on ABC Local Radio.

A podcast of the program can be downloaded from the ABC Nightlife page.

Do you know who Kony is? You probably know at least something about this Ugandan warlord thanks to a video about him that recently ‘went viral’.

Tony and Paul will look at how and why videos go viral on the net – how does it start, and why do some capture the world’s attention when most don’t?

Some of the questions we’ll look at include;

What is “going viral”?
How do videos go viral on the Internet?
Are these viral videos just marketing stunts?
Is it just videos that go viral on the internet?
Who sends these around the web?
How is the Stop Kony campaign different?
Is there a downside to going viral?

An excellent presentation on what makes a video go viral on the internet from YouTube’s Kevin Allocca describes some of the factors involved.

We’ll also be covering a number of other topics including;

On the topic of Online Scams, reader James Voster recommends the Victorian government’s Consumer Affairs Page.

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.

David Jones’ wasted decade

Poor decisions by unaccountable management are killing industry icons

In 2001 Australian retailer David Jones shut down their website.

Back then, the future was clear; profits were in financial services and certainly not in online sales or investing in improved stores and service.

Today the company released their strategic review that looks forward to financial years 2013 and beyond. You can downloaded it from David Jones’ investor website.

On Page 13, they show just how far David Jones has fallen behind their international competitors. Less that 1% of DJ’s sales are online compared to 4.5% of the UK’s House Of Fraser and 13% of John Lewis.

Australian executives claim they are in a global market for their talents which is why they deserve world standard remuneration. David Jones’ results show how hollow that mantra is.

The problems start with the board, five of the eight current David Jones directors were with the company when that decision was made in 2001.

None of them have been held to account.

David Jones illustrates the weakness in Australia’s business sector – largely unaccountable boards answering only to institutional investors who themselves have grown fat and lazy on clipping the compulsory superannuation ticket.

One hopes the some of the competitors who are displacing flaccid incumbents like David Jones are based in Australia or the locals may soon find that many of these sectors, not just in retail, will go offshore to better run companies.

Towards heterogeneous networks

Why HetNets are a great hope of the technology sectors

A new idea might cut the size of many phone bills, as usual though the devil is in the detail.

One of the hallmarks of the technology industry is the use of jargon; every few months a new buzzword or phrase comes along that captivates the industry and dominates the tech media.

A phrase that’s going to become common in the next few months is Heterogeneous Networks, the concept that mobile phones will be able to switch between phone systems and wireless networks without the user noticing.

Overnight the two major standards organisations agreed to work towards a common framework for phones to run these networks which also go by the name of HetNets.

For consumers the benefit with heterogeneous networks is they can reduce costs as phones automatically switch to cheaper, and usually faster, Wi-Fi hotspots.

The benefit for mobile phone network operators is that data demands are swamping their networks that were originally designed for voice communications. By offloading some of the load to private Wi-Fi systems they hope to manage their systems better.

Of course one should never underestimate a telco’s desire to make a buck and most telecommunications companies see the opportunity to make a few dollars out of offering the feature.

A major concern in putting together these systems is going to be security, using anybody’s Wi-Fi network requires a degree of trust and if a smart phone or tablet computer is accessing these without the owner knowing the risks are substantially higher.

These risks are even higher still if the banking and telco industries manage to convince people to use their mobile phones as an electronic wallet.

Seamlessly connecting to networks is one of the holy grails for mobile device manufacturers and software designers and it’s something that consumers will probably welcome when it becomes reliable.

For the moment we can expect to hear breathless articles about developments in the area and the promises from suppliers about the technology.

As usual the early adopters will leap in and suffer the usual disappointments and heartbreak that is life on the bleeding edge of technology.

Eventually though, long after the hype has settled down, these systems will become commonplace and expected by consumers.

Whether it makes more money for telcos though is another matter.

Insanely profitable

Apple change the game again with some major ramifications

Apple’s announcement that they will start paying dividends to shareholders changes a number of things in Apple’s business model and those of many other businesses.

The sheer size of Apple’s cash reserves also illustrate how profitable the outsourced manufacturing model is as well the contradictary nature of special pleading by affluent corporations.

Moving a cash mountain

Not only is Apple’s business insanely profitable, but sales are growing exponentially. In the company’s conference call, CEO Tim Cook reported that 37 million iPhones sold last quarter and 55 million iPads sold in the last two years.

Apple’s CFO Peter Oppenheimer pointed out the company’s cash reserves increased $31 billion in 2011 and 2012 is on track for a similar result in 2012, leaving them plenty of money for investment along with a “warchest for strategic opportunities”.

Paying a dividend

The reluctance to pay dividends has been a feature of the US corporate for the last few decades and Apple are certainly not alone in not distributing their profits to shareholders.

Companies like Microsoft, Google and Oracle -even Yahoo! once upon a time – have been just as profitable as Apple and their efforts to shrink their cash mountains has had some perverse effect.

Many of these companies have squandered suprpluses on poorly thoughtout and badly executed buyouts of smaller businesses, this urge to avoid returning money to owner has been one of the drivers of the Silicon Valley VC Greater Fool model.

Another result of fat profits is the rise of flabby, overstaffed management ranks at some of these companies. Although this certainly isn’t the case at Apple where Steve Jobs ran a very lean machine.

The retail model

Unlike their major tech competitors Apple is a manufacturing and retail business as well. In 2012, 40 new stores are planned around the world.

This vertical control of their markets, from the beginings of the supply chain to “owning” the end customer is anathema to modern MBA thinking and probably the area that gives them the greatest competitive advantage over their hardware competitors.

Justifying Mike Daisy

In some ways this announcement justfies Mike Dasy’s discredited criticisms about Apple’s Chinese suppliers.

The reason for manufacturing these goods in places like China, India or Vietnam is the vastly cheaper cost of doing business, not just in labour rates but in reduced environmental and safety standards.

Plenty of brand name clothing, footware and fashion accessory companies make similar massive profits to Apple with their ten, twenty and sometimes hundred fold markups on their products.

Repatriating profits

One of the big changes of Apple repatriating money is that is undercuts the special pleading by these extremely profitable companies that they should have a US tax holiday so they can repatriate their riches.

It’s now clear these companies can easily afford to pay the taxes of their home countries and it’s time they started to, along with returning dividends to their shareholders.

Once again Apple have changed the way others do business, how these changes affect the way we invest and governments treat companies is going to be one of the most interesting developments over the next decade.

Book review: Getting Results from Crowds

Ross Dawson and Steve Bynghall look at how crowdsourcing works

One of the consequences of the Internet becoming accessible to the most of the world’s population is the rise of crowdsourcing.

Crowdsourcing, the concept of tapping the wisdom or skills of large groups of people, changes the economics of many industries.

Getting Results From Crowds by Ross Dawson and Steve Bynghall look at how crowdsourcing works and the strategies for those who want to use crowdsourcing services and those providing them.

An important part of the book for those new to the concept to crowdsourcing are the comprehensive definitions of exactly what it is, the benefits, the ethics and situations where it may not work.

In examining the pitfalls, Dawson and Bynghall make Getting Results From Crowds a valuable guide that gives a realistic view for managers, business owners, entrepreneurs and activists to evaluate where crowdsourcing works best.

A refreshing point with the book is that it doesn’t fixate on price; much of what has been written about crowdsourcing has focused on “free” services where organisations call groups together to contribute their time.

While there have been some notable successes in this – Wikipedia and the Guardian newspaper’s corralling its readers to evaluate the UK Parliamentary expenses scandal are two – Ross and Steve point out in their Key Principles of outsourcing that cost should not be the driving factor;

The initial attraction to crowdsourcing for many businesspeople is the potential reduce costs. While this is a valid objective, minimizing fees paid rarely leads to optimal outcomes.

Where the guide does miss the mark is the sheer scope of what the authors try to cover and many of concepts discussed don’t sit under the crowdsourcing definition but are more akin to outsourcing, or as one of the new buzzwords calls it, cloudsourcing.

Many of the concepts discussed in the book are more about using crowds to tender for a project such as service marketplaces like O-Desk and Freelancer.

One of the problems with outsourcing is that many businesses and government organisations don’t have the skills required to specify, select and manage outsourced staff. Ross and Steve identify this and devote most of the book to the challenges of managed outsourced and crowsourced projects.

Getting Results from Crowds is an important book for those wanting harness the global workforce effectively for their organisation and business.

If you’re considering using crowdsourcing or outsourcing platforms, Getting Results From Crowds is a good starting place for understanding how to use these tools.

Media’s double edged sword

The sad events surrounding Invisible Children founder Jason Russell being detained by police for irrational behaviour is an example of just how powerful the media can be.

While using new media tools can get a video like Stop Kony in front of 70 million people is a great achievement, it also brings attention and responsibility on the creators.

That responsibility also brings stress and none of us are really prepared for what attention on a global scale can bring.

Regardless of one’s views of the Kony 2012 campaign, what’s happened to Jason Russell is a terrible thing.

One hopes Jason will overcome his demons and family come together in what must be a terrible time.