Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • Farewell to the knowledge economy

    Farewell to the knowledge economy

    One of the mantras of the 1980s was the future of western nations lay in becoming ‘knowledge economies’, unfortunately things don’t look like they are turning out that way.

    As the developed economies moved their manufacturing offshore – first to Japan and Korea, then Mexico and finally China – the promise to displaced Western factory workers was the replacement jobs would be in vaguely knowledge based industries like call centres and backoffice computer work.

    From the 1990s on, those jobs also started to go overseas  to lower cost centres in India, the Phillipines and other countries.

    When the internet became ubiquitous in the developed world in the late 1990s, the creative industries – musicians, artists and writers – found income dried up as their work became commoditised by digital distribution channels.

    Now the professions are being affected by combination of offshoring, artificial intelligence and automated processes. Many of the jobs that were done by highly paid accountants and lawyers can now be done by computers or in places not dissimilar to those that took away the call centre jobs twenty years ago.

    So it turns out the knowledge economy isn’t the key to riches after all and the future turns out to be more complex than what we thought in the 1990s.

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  • Bernie Brookes’ Blues – the inability of managers to learn from failure

    Bernie Brookes’ Blues – the inability of managers to learn from failure

    One of the notable aspects of modern corporations is the inability of executives to identify failure.

    A good example of this is the Australian department store industry. Like most Aussie industries it’s dominated by two major players, Myer and David Jones,  both of whom have struggled with the realities of modern retailing.

    David Jones is notable for deciding the web was too much hard work in 2001 while Myer’s management whines about sales taxes despite struggling with antiquated point of sales systems and an inadequate online presence that still lags its international competitors.

    This week illustrates both companies’ state of executive denial, yesterday Myer’s CEO Bernie Brookes blamed falling profits and escalating costs on the GST and labour rates – the idea that management should take some of the blame for increased overheads didn’t seem to occur to Bernie.

    One telling comment of Brookes’ are his comments about productivity and global competitiveness.

    “The sector would benefit from reform to help drive productivity and become more competitive in an increasingly global marketplace,” said Brookes.

    Brookes’ comment illustrates just how the Australian corporate sector has flubbed the transition to operating in a high cost economy.

    At the same time Bernie Brooks was bemoaning the state of the world, David Jones CEO Paul Zahra was opening a new small format store and – like all champions of free enterprise – blamed the government for slow sales.

    David Jones’ new store is interesting in itself, notably this comment in the Sydney Morning Herald story;

    Mr Zahra said the store had been especially catered to the wealthy demographics of the Malvern area with a focus on high margin items.

    “Higher margin categories are what we have focused on and low margin categories are available in store but in the online system so we can get it shipped directly to people’s homes.

    “And we get a better gross profit per square metre as a result.”

    Welcome to the Twenty-First Century, Mr Zahra.

    Both Zahra and Brookes’ statements show they learn nothing from failure, indeed they don’t even seem to acknowledge they have failed.

    It’s understandable in modern corporate life not to acknowledge failure, in the alpha-male environment of the executive suite admitting failure is a form of professional suicide.

    However not learning from mistakes is a recipe for making more errors – “those who fail to learn from history are condemned to repeat it.”

    And that’s exactly what the hapless Myer and David Jones shareholders are condemned to, as are all the other businesses whose management doesn’t see its failures.

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  • Diffusing business risk on the cloud

    Diffusing business risk on the cloud

    Today I was at a media lunch hosted by IP telephony company Nexon to promote their new cloud based unified communications service.

    One aspect of the Nexon Absolute service is the company offers a Service Level Agreement (SLA) for customers, while I’m always suspicious of SLAs they are essential in making business clients comfortable with buying cloud services.

    For Nexon, those SLAs are huge risk as they are reselling other company’s products. If Microsoft and Telstra fail to deliver, then it’s Nexon who carries the can with their customers.

    While Nexon undoubtedly has their own SLAs with their suppliers, a major outage will see the company carrying the bulk of the refunds or rebates to their customers.

    Essentially Microsoft and Telstra have outsourced much of their business, continuity and even reputational risk to Nexon and their other resellers.

    For a reseller, even a substantial one like Nexon, that’s a risk they can’t control — what’s more, the finger pointing between suppliers in the event of a major outage could take years to resolve.

    All of this suits major suppliers fine as it shifts risk and work from their businesses.

    The IT and telco reseller game is not an easy one as margins fall and risks increase, one has to applaud the courage of the investors and entrepreneurs who want to play it.

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  • A trillion points of data

    A trillion points of data

    Last night, current Affairs program Four Corners had a look of the risks to families in the age of Big Data.

    Earlier in the day I had the opportunity to speak on ABC 702 Sydney with the program’s reporter, Geoff Thompson, to discuss some of the issues and take listeners’ calls about Big Data and security.

    What stood out from the audience’s comments is how most people don’t understand the extent of how data is being shared. The frightening thing is the Four Corners program itself understated the extent of how information is being distributed around the internet.

    Looking beyond social media

    Social media sites like Facebook are an obvious and legitimate area of concern with most people not understanding the ramifications of the terms and conditions of these services, however Big Data is a far more that what you share on LinkedIn or Instagram.

    A major point of the program was how the New South Wales police force’s Automatic Number Plate Recognition (ANPR) equipment stores photographs of car license plates.

    One of the applications of ANPR shown during the program was how an officer can be warned that a vehicle has owned by someone potentially dangerous or used in a suspicious situation, allowing them to be more cautious if they decide to pull a car over. Probably the greatest application is getting unregistered, uninsured or unlicensed drivers off the road.

    Those sorts of usage is the positive side of Big Data and its role in reducing the road toll, the example also illustrates how data points are coming together with the internet of machines as traffic lights, road signs and cars themselves are communicating with each other and those police databases.

    When that information is put together there’s a lot valuable intelligence and that’s why people are concerned that the NSW Police are storing millions of apparently useless images of car number plates with the time and location of the photographs.

    These technologies aren’t just being used in shopping centres; instore mobile phone tracking combined with the same numberplate recognition the police use watching who is entering the carparks makes it possible to predict buying patterns and target offers to shoppers.

    Couple that information with store loyalty cards and add in rapidly developing facial recognition, retailers have a very powerful way of monitoring how their customers behave.

    “What instore analytics does is it takes the same kind of capablities that e-commerce sites have had for more than a decade and apply them to brick and mortar stores,” says Retail Next’s Tim Callen. Using the store’s CCTV system the company applies facial recognition software to track shoppers’ behaviour.

    Securing the data feeds

    The immediate concern is the security of this data, we’ve covered the hackable baby monitor and the Four Corners program examined Troy Hunt’s exposure of security flaws in Westfield Shopping Centres’ Find My Car App. Similar security concerns surround government databases like the NSW Police’s numberplate store.

    As we’ve seen with the repeated data breaches of 2011, the management of big and small organisations like Sony or Stratfor don’t take security seriously. It’s hard to recall any senior public servant being held accountable for a security breach by their department.

    A billion points of data

    On their own, each of these data points means little but for a motivated marketer, tenacious police officer or determined stalker pulling those separate information sources together can pull together an accurate picture of a person’s private information, habits and beliefs.

    Almost all the collectors of this data claim this information is anonymised or isn’t personal information, unfortunately there’s mismatch between the definition of private data and reality as number plates and mobile phone MAC addresses are not considered private, however they provide enough insight for an individual to be identified.

    That aspect isn’t understood by most people, the final caller to the ABC Radio spot asked why she should be bothered worrying about privacy – it doesn’t matter.

    As French politician Cardinal Richelau said in the Seventeenth Century, If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him

    Today we each have six million points of data that can hang us, in a decade it could easily be a billion. We need to understand and manage the risks this presents while enjoying the benefits.

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  • Death of a typewriter repairer

    Death of a typewriter repairer

    Despite owing his longevity to cheap scotch and strong tobacco, the US’ oldest typewriter repairman passed away two weeks ago. The fate of his shop is one that many other small businesses will share.

    Manson Whitlock of New Haven, Connecticut had run his typewriter shop from the early 1930s until shortly before his death. Needless to say, he didn’t like computers.

    “I don’t even know what a computer is,” Mr. Whitlock told The Yale Daily News, the student paper, in 2010. “I’ve heard about them a lot, but I don’t own one, and I don’t want one to own me.”

    While Manson’s shop had six staff at its peak, in recent years he ran the operation on his own and the business died with him.

    Many Baby Boomer business owners face the same fate as Manson Whitlock as their businesses decline in the face of changing technology and shifting change.

    Some of the boomers will suffer because they are undercapitalised and, as the next generation of entrepreneurs can’t afford to buy these existing business, most of those will work way wall past the date they planned to retireme.

    A good example of this is a radio shop near my office which has been run by an old gentleman for many years. When I went into it in 1997 for something – I forget what – the proprietor was almost shocked to see a customer and he couldn’t help me.

    It wasn’t surprising as it was rare to see a customer and the none of the stock behind the cluttered counter seemed to date beyond 1980.

    The only reason the shop survived was because the proprietor owned the premises as there’s no way the place could have paid the modern rents with the non-existent turnover.

    A few weeks ago the shop closed. I don’t know whether the owner retired or passed away, but the business closed with him.

    Both the Neutral Bay electrical shop and the New Haven typewriter repairer show how businesses can be left behind by technology.

    While both stores had plenty of time to react during the rise of computers during the 1980s and 90s, their proprietors chose not to and by the 2000s it was too late.

    Today, technology and business is changing even faster and there’s many more big and small enterprises that risk being left behind by change.

    It’s not only the changing market place that risks the future of these business, the failure to invest in things as simple as modern Point of Sale systems or even a basic website will leave many exposed.

    The time to invest in new systems and products is now and if you can’t invest in the future, then it’s time to get out.

    neutral-bay-radio-shop

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