Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • David Jones’ wasted decade

    David Jones’ wasted decade

    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.

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  • Towards heterogeneous networks

    Towards heterogeneous networks

    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.

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  • Insanely profitable

    Insanely profitable

    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.

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  • Book review: Getting Results from Crowds

    Book review: Getting Results from Crowds

    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.

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  • Media’s double edged sword

    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.

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