Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • Building aroung the blockages

    Building aroung the blockages

    “We have to wait for the baby boomers to get out of the way,” said the Gen Y girl after unsuccessfully trying to change a business culture.

    The problem is the boomers aren’t going to get out the way; they are fit, healthy and able to work for at least another decade.

    For most boomers, the promised golden age of retirement simply isn’t affordable as property prices stagnate and investment underperform.

    The smart ones also know governments can’t deliver the promises of ever increasing aged care services and middle class welfare.

    Waiting the boomers to get out of the way also assumes their younger replacements will be any better; the sad reality is many have the same views and 1960s or 80s ideologies of their mentors. Old heads on young shoulders.

    For those waiting for older generations to get out of the way so they can start changing institutions or business, it might be time to start building ones to replace stale and increasingly irrelevant incumbents.

    There’s been few times in history when circumstances have favored challenging incumbents as technology, economic conditions and social change give us the tools and opportunities to build new businesses and political parties.

    It’s hard work, but it’s a lot less frustrating than waiting for the boomers to die off.

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  • Why VCs hate Amazon

    Why VCs hate Amazon

    “Venture capital investors hate us” said Dr Werner Vogels, CTO of Amazon.com at the April Sydney FED, “once you needed five million dollars to launch a new technology business, today you need $50,000 and a big box of ramen.”

    Dr Vogels was talking about the Amazon Web Services (AWS) platform that underpins many of the cloud computing and social media sites which are redefining how we use computers and the web.

    What’s really interesting with the doctor’s comment is it’s only part of the story; for businesses outside the tech sectors –say retailers or service companies – they get cheap or even free access to the cloud computing services running on AWS or its cloud competitors like Windows Azure.

    For those businesses, it’s possible to start an idea for nothing but the founder’s time; rather than putting fliers up at the local bus stop or shopping mall an entrepreneur starting an online store or neighbourhood computer repair business now can create a website and all the local search profiles without spending a cent.

    Being able to start up a business with little, if any, capital means we’re seeing a new breed of innovators and entrepreneurs entering markets.

    At the corporate level, or in the $50 million dollar VC investment field, the opportunities for exploring Big Data without buying big supercomputers is another benefit of the cloud computing services.

    Services like ClimateCorp which insures farmers against extreme weather couldn’t have existed a few years ago as the processing power to analyse historical rain and drought data was only available to those with insanely expensive super computers.

    Today, the combined power of millions of low powered cheap computers – the definition of cloud computing – delivers the processing grunt of a supercomputer at a fraction of the cost.

    Access to cheap computing power means innovations can be bought to market quickly and at a fraction of the cost that was normal a decade ago.

    We’re in early days with what the effects of super cheap computing means to most industries, but it is changing industries as diverse as agriculture, banking, logistics and retail quickly.

    Cloud computing is giving big business the tools to understand their markets better and small business the ability to grab customers from bigger competitors who are too slow or don’t want to face what their clients really think.

    These are the forces that are changing the way business is being done; if you’re in business it’s time to start paying attention.

    In reality, Dr Vogels is pulling our legs – the smart VCs aren’t hating Amazon, they are rubbing their hands at the profits that are going to be made in disrupting cosy industries.

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  • Common interests

    Common interests

    KFC is booming in the world’s emerging markets. From Shanghai, China to Accra, Ghana, crowds are lining up to eat and the fast food chain is opening new outlets across the world.

    Yet in KFC’s home market, the United States, the chain is shutting outlets and infuriating franchisees.

    A Bloomberg BusinessWeek profile looks at the success of Yum! foods, KFC’s parent company, and the contradiction of overseas success while their domestic business fades.

    One thing is absolutely clear, Yum Food’s vainglorious Chief Executive David Novak and his board have made a clear decision to focus on expanding the core business of deep fried chicken in emerging markets while making little effort to adapt to changes in their domestic operations.

    At least Yum are keeping their US based KFC operations, many of their other brands are being sold off as the company responds to changes US tastes and economic circumstances.

    For the US KFC franchisees, this is a difficult process as their interests are not the same as those of Yum’s management.

    At the heart of every business agreement are people acting in their own interests. The most successful partnerships are those where everybody’s interests are recognised and respected.

    In their US operations, the big question is how long Yum can neglect their US franchisees and markets without affecting their international operations.

    For Yum’s international operations it’s going to be fascinating to see how the partnerships and joint ventures underpinning their expansion in emerging market evolve.

    Yum will probably find in some of these markets that their local partners don’t share their interests. Then they may find themselves in the same position of their US franchisees.

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  • Consumer surplus?

    Consumer surplus?

    Last week I came across the term “consumer surplus”, the Boston Consulting Group claimed the gap between the cost of producing media content and what customers are prepared to pay creates a “consumer surplus”.

    That consumers of media want it but aren’t prepared to pay for it is a basic truth; the 20th Century media model is based upon advertising subsiding journalism and entertainment.

    For all forms of media this was true; from TV and radio stations being fully funded by advertising to newspapers and magazines’ cover prices barely covering distribution costs.

    Take out advertising and all these models are dead. The only alternative is government funding.

    Losing the advertising rivers of gold to web services is what’s killing the established business model. It appears that TV and radio will hang on, for now, but newspapers and magazines are in serious difficulties.

    Simply put, there has rarely been a market for journalism; readers and viewers aren’t prepared to pay. Journalism’s golden years of the 20th Century were based upon having a relatively captive market for advertisers; now advertisers can go elsewhere, they have.

    Putting a sophisticated  label on a basic concept is something consulting companies are very good at and Boston Consulting Group has done an excellent job with this report.

    The fundamental truth is that it doesn’t matter how good your product is, if you can’t find a way to make someone pay you for it then you don’t have a market or a business.

    Which is what the real challenge is for online content creators, finding the model that pays. The first person to do that becomes the 21st Century’s Randolph Hearst.

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  • We come here to work

    We come here to work

    “We come here to work and not to play” is the quote from a Chinese production line worker in Reuter’s article on Foxconn factory workers.

    That quote could have come from a hundred years ago in Western societies as young workers fled agricultural communities to make better money and find greater opportunities in the factories and cities of North America, Europe and Australia.

    In their report on Chinese labour conditions commissioned by Apple and its supplier Foxconn, the US Fair Labor Association confirmed the quotes from the Reuters article.

    48% thought that their working hours were reasonable, and another 33.8% stated that they would like to work more hours and make more money.

    These workers have an average 56 hour working week and over a third are putting in 70 hours each week.

    Like our great grandparents they are focused on bettering themselves and deeply conservative; they know their immediate livelihoods and future prospects depend upon the work they can get.

    They also understand the government owes them nothing and their expectations on what the authorities will do for them are low.

    It often said the Communist Party of China is the most effective capitalistic organisation on the planet today. In reality it’s the workers on the assembly lines who personify what we know as the free market.

    As the leaders of Western nations continue to indulge in corporate and middle class welfare while believing in magic pudding economics where massive mis allocations of resources have no cost and tax cuts pay for themselves, it might be worthwhile thinking of the businesses those 23 year old factory workers in Shenzhen or Chengdu might be running in thirty years.

    Just as our great-grandparents built modern economies and industrial empires out of their hard work, which most of us still reap the benefit from, those young Chinese workers are doing the same thing.

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