Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

Jun 122017
 

To say the motor industry is facing disruption on multiple fronts is an understatement.

A global glut of motor vehicles is depressing the world market, a range of emerging manufacturers from China and India are challenging incumbents and a new breed of electric, autonomous vehicles designed by tech companies are arriving on the market.

To cap it all off, today’s young adults in western markets aren’t too interested in buying cars reversing the consumer attitudes which had made the motor industry among the world’s most powerful.

Exacerbating the motor industry’s woes are its antiquated business models, particularly the dealership networks that lock both franchisees and manufacturers into expensive relationships that increase costs, reduce flexibility and do little to add value.

The tale of Australia’s General Motors Holden is a good example, as sales stagnate and the company winds up its Australian manufacturing operations its rationalising its national dealer network.

Unsurprisingly the dealers being axed are less than happy as Wheels Magazine reports.

What’s notable about the story is the level of control the manufacturers have over their franchisees.

Hoffman said Holden had even contacted him to say that once the contract expires, the car maker would send someone to take down $30,000 worth of signage. He will also lose the right to service Holden-badged cars under its capped-price servicing scheme – any cars he sells between now and the day the signs come down, he’s unlikely to see again when service time rolls around. Holden will also buy back any unsold new cars, parts and specialist tools.

That absolute model of franchising had value when the manufacturers’ brands were strong and consumers were born into a ‘Ford’, ‘General Motors’ or ‘Chrysler’ family. Today, the brands are largely interchangeable outside the premium or luxury markets and attempting to lock-in customers is increasingly difficult.

More telling is the inflexibility of pushing stock out to the dealers which may or may not get sold while centralising marketing. The resulting disconnect between consumers and supplier means increased costs and a slow response to changing market conditions.

The motor industry was one of the defining businesses of the Twentieth Century, affordable motor cars changed every society and transformed the cultures of affluent nations.

Now that influence is waning and it remains to be seen how today’s incumbent manufacturers will evolve, if they survive at all, in today’s very different society.

One thing is for sure – the existing dealership structure won’t be around for much longer.

Jun 112017
 
Avis and Zipcar seem a good fit for hire and share cars

Starting a new job makes keeping the website up to date difficult but it is possible to get some reading done. Some of this week’s highlights included the auto industry’s changing business model, inside Microsoft’s Vista mistake and Apple’s memorial to a modern pharaoh.

A monument to a modern pharaoh

Apple Park is an anachronism wrapped in glass, tucked into a neighborhood says Wired’s Adam Rodgers. However his main point is Apple’s new five billion dollar new headquarters is really just a memorial to Steve Jobs and his ego.

Dissecting a dying business model

The car industry is one sector in a perfect storm of disruption and Australia’s General Motors Holden is slashing its dealer network to deal with declining demand and technological change.

Notably in the story is what happens to the dealers when their contract with GMH is cut with the franchisees having to hand over tools, signage and manuals. It shows just how the corporation controlled its franchisees.

Where Vista went wrong

This blog has long maintained that Microsoft’s release of the Vista operating system was not only the biggest mistake the company ever made but also gave an opening for Apple, Google and Amazon to seize the computer market.

So a post from developer Terry Crowley a former Microsoft developer is an insight into how the process went wrong. His view on internal cultures for companies facing market disruption is telling.

“In fact, the more power you hold, the more accountable you need to be to open yourself to honest challenge on either facts or logic. This is even more critical in times of rapid change because the facts and consequential logic might change. Accountability and transparency means you are able to reassess your conclusions and react quickly.”

The Life and times of Jerry Brown

An excellent interview between US political commentator David Axelrod and California governor Jerry Brown ranges over topics from Ronald Reagan’s rise, today’s hostility to government and his Asian travels while in the political wilderness. It’s worth a listen.

Jun 022017
 

The New York Times yesterday announced they will be abolishing their Public Editor role while opening up more of their articles to readers’ comments, a big shift in trends over the past decade.

One of the internet’s broken promises was how allowing the audience to comment would usher in a new era of accountability and democracy.

Sadly, it became apparent giving readers carte blanche opened a sewer of abuse, misinformation and libel. Faced with a whole range of risks, not to mention the psychological damage faced by staff members trying to engage with the public, most media organisations chose to be selective about the articles they opened comments on.

Now the New York Times proposes to re-open most of their articles to readers’ comments.

We are dramatically expanding our commenting platform. Currently, we open only 10 percent of our articles to reader comments. Soon, we will open up most of our articles to reader comments. This expansion, made possible by a collaboration with Google, marks a sea change in our ability to serve our readers, to hear from them, and to respond to them.

That the NYT is teaming with Google to enable readers’ comments is interesting – will the search engine giant be applying AI to the moderation or is this another attempt to pump life into their failed social media and identity service? It remains to be seen.

Also what remains to be seen is if removing the Public Editor role affects journalism standards at the Times. The position at the newspaper was established in the wake of the Jayson Blair scandal to oversee the organisation’s output and hold editors and journalists accountable for oversights.

In the era of social media and an empowered readership, the New York Times’ publisher Arthur Sulzberger now believes the Public Editor role is redundant.

The public editor position, created in the aftermath of a grave journalistic scandal, played a crucial part in rebuilding our readers’ trusts by acting as our in-house watchdog. We welcomed that criticism, even when it stung. But today, our followers on social media and our readers across the internet have come together to collectively serve as a modern watchdog, more vigilant and forceful than one person could ever be. Our responsibility is to empower all of those watchdogs, and to listen to them, rather than to channel their voice through a single office.

So the comments section now becomes part of the editorial process, it will be an interesting experiment.

In some respects, the New York Times’ embrace of social media feedback is a reflection of what many other organisations have done in other industries with ‘social listening’.

The theory is paying attention to what customers say online gives management immediate feedback, however practice has shown most organisations lack the internal communications systems to take advantage of this. It also appears most executives care little about what the public thinks of them which negates the ‘people power’ aspect of social listening.

If the Times can get this right, it will make the media outlet more responsive and effective. However history isn’t on their side.

Jun 012017
 

As always Mary Meeker’s State of the Internet report hits us with mass of information, this year compressed onto a 355 slide Powerpoint presentation.

There’s a wealth of detail in the report but two big trends stood out – that global internet advertising spend will overtake TV ad revenues and music industry revenues have reversed a 16 year decline as subscription services gain market share.

Subscriptions becoming the main revenue source for music companies suggests ]new internet business models are slowly evolving although how that lessons can be applied to other industries remains to be seen.

In the world of advertising, that online is now attracting a greater spend than TV is a major milestone in the shifting marketplace. Although Facebook and Google’s dominance – Meeker estimates 85% of revenue growth is going to the two companies – will present challenge to advertisers and agencies.

Also notable is how mobile revenues and handset sales are slightly better than flat, indicating the biggest market of last decade is now mature.

There’s many other insights in this report so it’s worth spending a few hours on it to reflect on how some of these trends may affect your industry.

May 312017
 

With tech companies piling into the automotive industry – with varying results – it’s not surprising the established auto manufacturers are looking at making alliances with their potential Silicon Valley competitors.

Ford’s alliance with Google was one of the most promising in the sector, however it fell apart in a classic clash of cultures as Automotive News reports.

One of the key differences in the cultural crash was the priority of the two businesses – for Ford this is about the future of the company while for Google autonomous vehicles are just another moonshot.

Coupled with that, Ford are locked into their traditional products and have a sceptical Wall Street to keep happy as Automotive News describe when the two company’s CEO’s met.

In early December 2015, Fields came to Silicon Valley to discuss the deal with Google co-founder Sergey Brin. In a region where there are so many electric cars that office workers often argue over charging stations to plug in their Teslas and Nissan Leafs during the workday, Fields showed up at Google with an army of staffers in a fleet of Lincoln Navigators. Sources said Fields and his team were armed with a plan to make a big splash out of the partnership news, and much of the discussion centered around making an impression on Wall Street.

With Google being generally secretive about their ‘moonshot’ programs, it’s not surprising Sergey Brin and his team were perturbed by Ford planning to make a big announcement about the partnership. Had the auto maker done its due diligence, their delegation would have been a lot less ambitious and lot more circumspect.

Ford’s casting around for tech partners also illustrates the management didn’t understand the tech industry’s politics and dynamics, not only do they have a long standing agreement with Microsoft on their Sync product but they were also touting an alliance with Amazon to incorporate Alexa into their cars.

While there’s undoubtedly some revisionism in the Automotive News story – there’s always some airbrushing of history when a new CEO takes over – the tale does illustrate the difficulties facing business owners and managers when building alliances with others who don’t necessarily have the same objectives.

A clash of cultures is always tough to overcome and that’s often the biggest challenge facing industrial giants like Ford as they deal with a rapidly changing world.

May 262017
 
Waiting for other people to help our business

“These three brands have one thing in common – they’ve all been destroyed by digital disruption,” says one business commentator in a recent presentation.

He cited three names; Kodak, Nokia and Blockbuster.

It’s a nice, and often repeated meme, which is only really true of Blockbuster which failed to adapt to a changing market and could be a perfect example of a transition effect although some don’t buy the digital disruption reason for the company’s demise.

Giving lie to the idea the company was a victim of Netflix’s rise, a former Blockbuster executive puts the chain’s bankruptcy down to management not understanding the company’s role in the market, and that it was in decline long before the streaming service’s arrival.

A more fundamental problem with the statement is both Nokia and Kodak are still in business too, the latter having come out Chapter 11 financial in late 2013.

Finland’s Nokia is somewhat more complex than Kodak or Blockbuster, having been founded as a paper pulp mill in 1865.

The company became a global brand thanks to being a leader in mobile phones prior to the iPhone disrupting the market but the name faded as the Apple and a new breed of East Asian manufacturers came to dominate the market.

Despite fading as a consumer brand, the company is still a major player in telecommunications – being a major supplier of cellular base stations – along with a range of other technologies.

Both Kodak and Nokia are still very much alive, albeit no longer being recognised by the average consumer.

There are major lessons from both companies for those studying the effects of technological disruption on brands and businesses. Even Blockbuster’s mistakes in the face of a changing and declining market has many lessons.

Citing them as examples of ‘digital extinction’ though is untrue and almost certainly unhelpful in understanding what management can do to respond to new technology or societal shifts.

May 252017
 

“The future isn’t pre-determined, technology doesn’t come from some outside force. It’s created by us. Some people have more power than others in that system, such as the big tech entrepreneurs, but at the end it’s people and organisations that have the power.”

Nicholas Davis, the World Economic Forum’s Head of Society and Innovation, was discussing at the recent Sydney CeBIT conference how we can take control of the digital economy and where workers fit into an increasingly automated world.

Technology and online platforms aren’t neutral system, Davis observes. “It’s not just about how we use them, but the values that are designed into the systems, technology is not just a neutral thing. During a conversation like this if I put my iPhone between us, it’s proven that reduces our memory of that discussion and our sense of connection.”

Politics and addiction

“The purpose of the technology, the design of it, affects us in different ways.” Davis says, “if we design technologies for addiction, if we design business models that involve us being sucked into systems at the expense of other things in our lives, then that is a value choice that companies make and that we as users are trading off in our lives.”

“In understanding that technology is not neutral then the question is how we, as revolutionaries have that political discussion? I don’t mean political like ‘Left’ and ‘Right’ but these are value decisions that we need to engage with.”

“The difficulties about having discussions about technology is not getting sucked into a left-right divide and letting one group of people own innovation, but to say what do we want, How do we get there and how do we avoid the mistakes of previous industrial revolutions where the environment suffered, kids suffered and vulnerable populations suffered.”

A change in thinking

“One of the biggest problems is we don’t have regulatory or even democratic institutions where we can make collective decisions about technologies,” says Davis.

“The average AI researcher, at the top of their game anywhere in the world, would only understand a small percentage of the AI space. So how do you expect a politician or a voter, to come to grips with it.”

One of the key discussions missing in the public sphere is around automation and concepts like the Universal Basic Income, Davis believes. “We should have a serious chat about giving everyone the space to build up their skills.”

In the development policy, Davis sees growing inequality and applying last century’s thinking to today’s challenges as among the biggest risks facing governments and communities.

Rippling beyond business

For business, the imperative is to recognise the effects of decisions on the wider community.

“The big thing for business is understanding the technology decisions you make have a ripple effect beyond your company, you need to look forward to new ways of value adding.”

Davis warns we are seeing a backlash against innovation and technology with concerns about privacy and security growing.

“So much of the world is build on their use of data. Most companies and organisations don’t have good data hygiene or ontology to classify their information. People say data is their greatest assets – some say it’s the new oil – but it’s also their greatest liability. So understanding information security at the board level is critical.”

The power of individuals

For individuals, Davis believes the power lies with us in the choices we make as consumers.

“Don’t underestimate your own power, but also don’t underestimate that more and more products around us are designed to influence our behaviour in ways we need to be aware of.”

“In most cases, if the product is free then you and your data are the product, understand that and on what terms is important.”

Conscious choices

“Understand the externalities of these services as well. Appreciate the effects it has on your family, your mental health, on the ability to connect is important. Being able to make conscious choices about these things.”

“Supporting open data standards and competition – not just accepting Android or Apple for instance – rather than allowing politicians and big business to fight over these things.”

So in Davis’ view being an ‘industrial revolutionary’ in the digital era is a matter of being an informed, and empowered, consumer. Will that be enough?