Paul Wallbank | Paul Wallbank - Communications Professional

Technology’s magic pills

How a social media or cloud computing ointment won’t solve your business problems

As railways rolled out across the US in the mid 19^th Century, the snake oil merchants selling dubious medicines weren’t far behind.

Communities that had never before seen things that were taken for granted in the big cities were easily fooled by miracle treatments that would fix all their ills. By the time the locals discovered the scam, the snake oil salesman and his shills would be well out of town.

Technological change always brings out hype and over the last few decades we’ve seen a similar thing happen with the tech industries, as products and services were sold on the back of claims that could be described as ambitious, if not outrageous.

The Y2K bug was a good example of this as planes were going to fall from the sky and dams collapse if we didn’t hire an expensive consulting firm or buy a widget that would remind our computers they were now in the 21^st Century.

A similar thing is at work with Internet names, where the current push to sell Top Level Domains – a bargain with their $385,000 application fee – is being touted as the fix to everything that is wrong with web addresses.

With digital snake oil it’s interesting how often big organisations sometimes act like 19^th Century American sharecroppers – all too often we seen ministers and CEOs announce an outsourcing deal that will save taxpayers or shareholders millions only to later find the only winner was the consulting firm that sold the idea.

A similar trend is at work in the PR industry, Sky News presenter John Kerrison has an entertaining look on his personal website on how social media is being sold as an easy fix for a business with far more fundamental problems.

The sad thing is that there are real benefits behind the grandiose claims; Y2K was a real problem, money can be saved through intelligent outsourcing and social media is a great PR tool.

Eventually hype backfires, consumers are rightly dubious about anything that has the slightest hint of PR spin while the IT sector is viewed with well-earned suspicion by business proprietors, executives and managers.

A good example of this was last week’s Digital Readiness report from Optus that found businesses aren’t particularly interested in cloud services. This mirrors similar studies by Sensis, MYOB and MelbourneIT which all find organisations aren’t too fussed about the online world in general.

The danger with this is there is fundamental shift happening in society and technologies like websites, social media and cloud computing – just like the railroads in the 19^th Century – are part of those changes which businesses need to understand.

In an era where snake oil is a commodity there are two challenges for business people; the first is not to be perceived as one of the charlatans and the second is to see the miracle cures for what they are.

Probably the best tool for dealing with the digital snake oil merchants is turn on your own, old-fashioned bullshit detector and treat the shills with the suspicion they deserve.

Using free services

What traps are there when using free online services

The lure of free is attractive – free web hosting, free software or the free lunch always grabs our attention.

Deep down though we know there’s really no such thing as a free lunch and the same is true with all the other free deals, there’s always a cost of some sort.

Often the definition of free can be a problem; there’s the social media model of free that harvests your personal data, the Silicon Valley version that hopes a big company will buy the service, the earnest work of volunteers and the freemium marketing model.

Most computer users have used the freemium model, this is where the business gives away a basic free version in the hope of encouraging enough customers to the paid premium version that has support and additional features. Common examples are AVG Free Antivirus, Google Apps and Mailchimp’s Forever Free plan.

All of the freemium services come with a catch, AVG’s free software is only licensed for home use – so no using the free version on your office computer – while Google Apps only supports ten unpaid users and if you have more than 2,000 people on your mailing list then Mailchimp is no longer free.

Developing a free product to raise your profile is a common way for entrepreneurs to enter markets and establish a reputation. This is particularly common in the software and web design industries where coders and designers offer free applications or templates to build their portfolios.

These products developed by entrepreneurial designers and programmers are often great, but as there is the risk the developer will lose interest as their business evolves. The WordPress Guy, Tony Constantino, warns “when a free theme stops being supported in 6months you will get left behind”

By far the most lucrative free model to date has been the advertising supported business. This is nothing new as commercial radio and television stations have had this model for nearly a century, but Google have taken this online with their advertising platform that funds their search tools and many other free services.

A variation on the advertising supported model is the data mining carried out by social media sites like Facebook and LinkedIn. This isn’t as transparent and may be a problem for business users who don’t want to share their client details with an internet service.

Increasingly the free services are based around the Silicon Valley model of a deep pocketed venture capital company funding a business with the aim of building the customer base through offering freebies services with the aim of selling to a trade buyer.

The danger with the Silicon Valley VC model is its instability as most companies shut down without finding a buyer. Even when they do find someone to buy the venture the service often doesn’t last as we saw when the once popular free hosting service Geocities was shut down by Yahoo! in 2009.

Despite the traps free can be good for your business but you should understand the terms, conditions and hidden costs that come with the products. Often you’ll find paying for a product delivers a much more functional and better service that requires less of your time.

One service that might help businesses choose the right free or trial online services is Cheapstart, that compares the various services available for entrepreneurs starting out.

Why small businesses aren’t using cloud computing

The IT industry needs to understand cloud services and small business

As part of their push into online applications, telecommunications company Optus yesterday released their Digital Ready report examining Australian small business’ use of cloud computing services.

One of the notable results is that only four percent of small business proprietors claim to use cloud computing services and 59% are unsure of what exactly cloud computing is.

Those results are surprisingly poor and indicate businesses don’t see the benefit or value in cloud computing services. There seems to be a number of factors driving this.

Misunderstanding cloud computing

That over 90% of small business owners claim not to be using cloud computing indicates many simply don’t know what these services are. If asked most would admit to using Facebook, web mail or some other online or social media platform that runs on cloud computing.

That’s an education issue and if anything is a criticism of those of us – including myself – who are trying to explain the concept. We can do better as an industry.

Security

Many businesses, big and small, misunderstand technology security risks and have an inflated view of how secure their own desktop, networks and servers are. In many ways the security of cloud services is better than most small business IT systems.

Where the security argument falls down is in the hyperbole of many IT security vendors – every month we hear breathless reports, repeated by gullible technology journalists, of how smartphones, social media or Apple Macs are going to be struck down by a new wave of viruses and each time the “threat” quietly fades away into obscurity.

As long as hysterical fear stories about the security of smartphones and cloud services circulate in the media, it’s understandable that small business owners will be wary of trusting technologies they don’t fully understand.

Sunk costs

Many established businesses have sunk costs in existing software and hardware. For proprietors or managers to justify moving a new service, whether it’s on the cloud or not, there has to be a clear financial benefit in doing so.

Terms of Service risk

Cloud services – whether free or paid – come with a set of terms and conditions. Online Payment, social media and other cloud computing services have shown themselves to be quick in shutting down business accounts without warning, any due process or an accesible way to resolve disputes.

Quite rightly, many business owners are wary of risking key processes or data to services that might cut them off without notice and who often lack a customer service culture.

The reluctant advisors

Business IT consultants struggle with cloud services. Cloud services are a threat to those used to making money from selling servers, software and desktop computers.

For the more far sighted consultants, the thin margins offered by cloud services mean they have to rely on fees for service. If something goes wrong, the client’s first call will be to the trusted advisor and not to the service providers’ helpdesks.

This is a headache too far for many consultants as they know they’ll probably not get paid for the time spent sifting the truth in a blizzard of vendor finger pointing. It’s far less risk and more profitable to recommend a server and desktop solution.

Is cloud computing important?

For businesses, the economics of cloud computing is changing industry dynamics. With lower capital costs, it makes enterprises more flexible and responsive to changing markets.

Cloud services are critical to businesses – for established companies they’ll find themselves losing out if they don’t at least consider the advantages and choose the right online tools.

The onus right now though is on cloud computing vendors to tell their stories better and demonstrate why they can be trusted with key business processes and valuable data.

ABC Nightlife: The next wave of smartphones

Paul Wallbank joined Rod Quinn to look at where mobile phones are going.

The world of mobile phones is getting busy again as a whole new range of smartphones appear. Paul Wallbank joined Rod Quinn for ABC Nightlife on October 20 to discuss what the new smartphone wars mean for home and business users.

We’ll be going to air from 10pm, Eastern Australian time across Australia on ABC Local Radio’s Nightlife to look at the following questions;

Why were people disappointed with Apple’s iPhone 4S that was released a few weeks ago?
The big competition are the Google Android phones, what are they doing?
What’s happened to Nokia? They seemed to have lost their domination.
Microsoft were the other big player, what are they doing?
How are the smartphones changing business?
Shopping centres seem to be jumping on board with various social media checkins. What are those?
There’s been a push to online payments, how are the smartphones affecting this?
Are smartphones going to be the big buy for Christmas?
What are the best plans for consumers and business?
How do people deal with telco disputes?

The podcast from the program is available from at Nightlife website, and some of the information we mentioned can be found here;

Dealing with Telco complaints

We’ll be adding more resources in the next few days, the next ABC Nightlife spot is on 23 November and our events page will have more details. If you have any suggestions for future programs or comments on the last show, please let us know as we love your feedback.

Does revenue solve all problems?

Do profitable businesses have no problems?

According to Eric Schmit, Google’s Executive Chairman, “Revenue solves all problems.” Is that really so?

The truth is it doesn’t. Revenue can solve some problems, while creating others and having plenty of cash coming in may even cover over existing issues that can be ignored while times are good.

Plenty of governments have found themselves unsuck after rich revenues allowed them to ignore problems in their own society, the Dutch Disease – where a country’s income rises rapidly because one industry booms and crowds the others out – is one example of revenue causing problems. Local Chinese governments are currently dealing with problems bought around by their massive income from selling land.

In business, owners and managers sometimes find themselves in trouble because they can’t manage the demand that comes with the revenue a growing enterprise attracts.

Sometimes, the revenue’s fine but there’s no profit. I can earn a lot of money selling bottles of beer for ten cents when everyone else is charging two dollars, but the fact the wholesale price is one dollar means I’m going to grow broke quickly unless I can impress a dumb corporation with my massive customer growth and get them to buy me out.

The group buying model tends to combine two of the above problems – participating businesses struggle with the demand they generate while the discounts they are giving almost certainly guarantees they are not making a profit on the deal.

So revenue doesn’t solve all problems, even the most profitable business – legal or not – has its own unique set of problems.

Life’s easier when your business is profitable, but problems will never go away. Even the good life has problems; deal with it.

The agents of change

It’s tempting to think social media and other web tools are driving change, but much deeper things are changing.

It’s understandable technologists see technology as driving change. Often it’s true – technologies do build or destroy businesses, alter economies and collapse empires.

Sometimes though there’s more to change than a new technology changing the economy and while it’s tempting to credit innovations like the web, social media and cloud computing with many of the changes we’re seeing in the world, we have to consider some other factors at work.

The end of the 40 year credit boom

In the 1960s, the United States started creating credit to pay for the Vietnam war; they never stopped and after the 2001 recession and terrorist attacks the money supply was kept particularly loose.

The worldwide credit boom allowed all of us –Greek hairdressers, Irish home borrowers, Australian electronics salesmen, US bankers and pretty well everyone else in the Western world – to live beyond our means.

In 2008, the start of the Great Recession saw the end of that period and now the economy is deleveraging. Consumers are reluctant to borrow and businesses struggle to find funds to borrow even if they want to.

Any business plans built on the idea of almost unlimited spending growth are doomed. The era of massive consumer spending growth driven by easy credit is over and the days of expecting a plasma TV in every room are gone.

The aging population

An even bigger challenge is that our societies are getting older, the assumption we have an endless supply of cheap labour is being challenged as a global race for talent develops.

The lazy assumption that economic growth can be driven by building houses and infrastructure to meet increased demands will be found wanting as the Western world’s populations fail to grow at the rates required to power the construction industries.

Our societies are maturing and increased economic growth and wealth is going to have to come from clever use of our resources.

Innovations in computers and the Internet – along with other technologies like biotech, clean energy and materials engineering – will help us meet those challenges but they are tools to cope with our transforming societies, not the agents of change themselves.

Had tools like social media come along in the 1970s or 80s they probably would have been massive drivers for change, just like the motor car and television were earlier in the 20th Century. In the early 21st Century they have been overtaken by history.

Smart businesses, along with clever governments and communities, will use tools like social media, local search and cloud computing with the demographic and economic changes, but we shouldn’t think for a minute the underlying challenges will be business as usual.

A clear, guiding vision

In a bland corporate world, knowing what you stand for is a competitive advantage

Two weeks ago the Melbourne fashion store Gasp caused outrage over their attitude to customers and the business’ owners might have been relieved the story was finally pushed off the news pages by Steve Jobs’ passing.

In a strange way, there’s a similarity between the Gasp stores and Steve Job’s Apple – a vision for their product and low tolerance for those who don’t share their ideals.

Steve Jobs was notorious for dismissing those who didn’t ‘get’ Apple, famously saying “they have no taste” when asked about his biggest competitor Microsoft and stating “we don’t ship junk” when questioned by a journalist about Apple’s perceived premium status.

Regardless of your opinion of Apple’s products, philosophy, labour practices or community relations, there was no doubt where they stood in the marketplace.

A similar thing can be said of the Gasp store, while there’s no question the Gasp folk could have handled their customer relations better, they certainly can’t be accused of not having a clear vision of where their brand sits in the marketplace.

In a world of bland mission statements where corporations and governments seem intent to paint the world a mediocre beige, having a strong statement on what your business stands for is a genuine competitive advantage.

What do you stand for?

Do you really want help from the government?

Should a business spend time looking for government money?

Pity the public servant who stands up in front of a room and asks a bunch of business owners, executives or managers what they want from government.

While there will be plenty of comments about improved procurement, less red tape and reduced fees you can be sure there’ll be plenty of demands that the government ought to subsidise something – anything – that business does.

It’s notable how free enterprise, small government and low taxation loving business people will drop their copies of Atlas Shrugged and barge their way to the feeding trough and the slightest scent of taxpayer money wafting in their direction.

But is government money really good for a business? In many cases it isn’t.

You run a business, not work in a government department

“Who pays the piper, calls the tune.” The whole idea of running a business is that you are the boss, so why do you want to answer to a government department?

If you’re self employed or just opened a startup, one of the main reasons for doing so is because you decided you no longer want to work for the man. A government grant may well open up a whole new world of paperwork that leaves you wondering why you ever left the cubicle.

The dependency culture

One of the dangers of government funding is if you are successful, you’ll find yourself hooked on it. Quickly you become better at filling in funding applications than delivering products your customers want. The Aussie film industry is a good example of this.

Governments are behind the innovation curve

Public servants are not employed to take risks, this is a good thing as it’s our money they are handling.

Because governments are risk adverse they’ll only recognise an industry – or a problem – long after it has become established.

If you find you are on the government’s help list, it might be time to consider an exit from a troubled industry.

Do you really have a business?

Many new business owners expect the government should do something to assist them in their start up phase. This is a common complaint from under capitalised proprietors.

Given the massive subsidises given out to the banks and other big corporations since the start of the great recession, this attitude can almost be excused but we can already see how well that strategy works.

If you really need a subsidy to run your business, then it’s time to consider whether you should be in business at all.

This isn’t to say all government funding is bad; well thought out programs help viable businesses with things like export assistance, skills development and employing young or disabled workers. There are many of these although the process of identifying what a viable business is usually eliminates the newest and smallest enterprises.

What is notable with the successful government programs is they address a specific need, they don’t have onerous paperwork and they are no substitute for a healthy, living cashflow and profit.

Overall though, if you really want government money then take a job with the public service. It’s a lot easier than scrabbling for grants.

The reverse ambush

Ambush marketing isn’t always a good idea

As the Apple faithful starting queuing outside stores to buy the latest version of the iPhone, in Sydney electronics manufacturer Samsung set up an outlet a few doors up the street and offering $2 Samsung Galaxy phones.

Some in the press portrayed this as “ambush marketing” by Samsung, claiming that the Korean company has stolen coverage from Apple.

In reality, all the stunt has done is emphasise the different market positions of the companies; Samsung have people camping out for $2 phones while a few doors up the street there’s a bigger line for an $800 Apple product.

The message is clear; Apple’s products are more desirable than Samsung’s at even 400 times the price.

Whatever Steve Jobs was reincarnated as – a Bogong Moth or the next Dalai Lama – he’s laughing right now.

The next of wave of smartphones

Our next ABC Nightlife program looks at the next generation of mobile phones

The world of mobile phones is getting busy again as a whole new range of smartphones appear. Paul Wallbank joins Tony Delroy to discuss what the new smartphone wars mean for home and business users.

We’ll be going to air from 10pm, Eastern Australian time across Australia on ABC Local Radio’s Nightlife to look at the following questions;

Why were people disappointed with Apple’s iPhone 4S that was released a few weeks ago?
The big competition are the Google Android phones, what are they doing?
What’s happened to Nokia? They seemed to have lost their domination.
Microsoft were the other big player, what are they doing?
How are the smartphones changing business?
Shopping centres seem to be jumping on board with various social media checkins. What are those?
There’s been a push to online payments, how are the smartphones affecting this?
Are smartphones going to be the big buy for Christmas?

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.

Survivor Bias – the danger of learning the wrong lessons

How the wrong lessons can be learned from listening to the winners

A recent blog post by Chris Guillebeau on his terrrific Art of Non-Conformity site looked at the value of qualifications.

Chris’ post is a great read and it’s obviously worked for him, though we always should keep in mind with these stories that we’re reading about someone who has managed to make it work.

We all have a lot to learn from Chris and other success stories however the winners’ tales are only half the story; that for every success who dropped out, started a business or travelled the world and did well there are many more who – for whatever reason – didn’t.

That’s part of the equation of risk, that for every success there are failures. For risking failure, the successes are rewarded – despite the best efforts of our political and corporate leaders to engineer away the risks and leave only the rewards for those best connected or placed to take them.

For every winner, it’s also worthwhile listening to those who didn’t quite succeed. The lessons from “failure” are probably stronger and just as enlightening.

Taking a jump, quitting your job, starting a business, becoming a freelancer or travelling the world isn’t for everybody. Many of us are happy staying in the cubicle or the workshop or the village and leading a comfortable, secure and safe life.

Societies need a balance of the risk taking adventurers and the anchors of solid, secure working people. Neither is wrong, neither is bad and a balance of the two is essential for a healthy, prosperous and sustainable society.

It’s not to say we shouldn’t take risks, just understand the dangers are there and your appetite for living with uncertainty before making a big step into business, travel or whatever it is where you see the opportunity.