Category: business advice

A question of ethics

Uber’s missteps remind us that ethics matter in business

At this week’s Australian Gartner Symposium ethics was one of the key issues flagged for CIOs and IT workers; as technology becomes more pervasive and instrusive, managers are going to have to deal with a myriad of questions about what is the moral course of action.

So far the news isn’t good for the tech industry with many businesses failing to deal with the masses of data they are accumulating on users, suppliers and competitors.

A failure of transparency

One case in point is that of online ride service, Uber. One of Uber’s supposed strengths is its accountability and transparancy; the service can track passengers and drivers through their journey which should, in theory, make the trip safer for everybody.

In reality the tracking doesn’t do a great job of protecting riders and drivers, mainly because Uber has Silicon Valley’s Soviet attitude to customer service. That tracking also creates an ethical issue for the company’s management and one that isn’t being dealt with well.

Compounding Uber’s ethical problem is the attitude of its managers, when a Senior Vice President suggests smearing a journalist who writes critical stories then its clear the company has a problem and the question for users has to be ‘can we trust these people with our personal data?’

With Uber we may be seeing the first company where data management and misuse results in senior management, and possibly the founder, falling on their sword.

Journalists’ ethics

Another aspect of the latest Uber story is the question of journalistic ethics; indeed the apologists for Uber counter that because some journalists are corrupt that justifies underhand tactics from companies subject to critical articles.

That argument is deeply flawed with little merit and tells us more about the people making it than any journalist’s ethical compass, however there is a discussion to be had about the behaviour of many reporters.

As someone who regularly receives corporate largess — I attended the Gartner Symposium as a guest of BlackBerry and will be going to an Acer event tomorrow night — this is something I regularly grapple with; my answer (or rationalisation) is that I disclose that largess and let the reader make up their own mind.

However one thing is clear at these events; everything is on the record unless explicitly stated by the other party. This makes Michael Wolff’s criticism of Ben Smith’s original Uber story in Buzz Feed pretty hollow and gives us many pointers on Wolff’s own moral compass as he invites other writers to ‘privileged’ dinners where the default attitude is that everything is off the record.

Playing an insider game

Ultimately we’re seeing an insider game being played, where journalists like Wolff put their own egos above their job of telling their audience what is happening; Jay Rosen highlighted this problem with political coverage but in many respects it’s worse in tech, business and startup journalism.

It’s not surprising when a game is being played by insiders that they take offense at outsiders criticizing them.

Once the customers become outsiders though, the game is drawing to an end. That’s the fate Uber, and much of the tech industry, desperately want to avoid.

Uber in particular has many powerful enemies around the world and clumsy management mis-steps only play into the hands of those who see the company as a threat to their cosy cartels. It would be a shame if Uber’s disruption of the many dysfunctional taxi markets was derailed due to the company’s paranoia and arrogance.

Eventually ethics matter. It’s something that both the insular tech industry and those who write on it should remind themselves.

Developing digital leadership

Managers have two years to prepare for massive changes in their industries believes Gartner’s Peter Sondergaard

Technology and talent are the biggest worries for CEOs today says Peter Sondergaard, Gartner’s Senior Vice President for Global Research, however those challenges are part of a much greater shift in business.

In an interview at the Australian Gartner Symposium on Queensland’s Gold Coast, Sondergaard discussed how businesses and their senior management have limited time to adjust to a rapidly evolving marketplace.

Sondergaard believes that companies have 24 months to face the changes which academic and futurist Andrew McAfee forecasts is going to overwhelm businesses and society in the near future.

In this environment IT workers have a unique position in being responsible for implementing technologies within organisations, however according to Gartner’s research only 15% of CEOs see their tech teams as leading change within the organisation.

“The transformation that a lot of people are grappling with is ‘how do I translate this into action in leaders?'” Sondergaard suggests. “Organisations have leaders in financial backgrounds and people who understand people management, leadership and customer facing activities.”

“Businesses expect this in every senior leader hired in the organisation but somehow it’s okay to accept those people have their son or daughter do everything technology wise. In the future you can’t have that.”

“Digital leadership is at par with all other assumed skills in what is a fully rounded business leader.”

A generation change

Sondergaard sees a generational change happening in senior management as the new guard are more comfortable with technology, having had to deal with the 1990s PC boom as well as the internet during their working lives.

“The change generally happens when you switch CEO, it’s very funny to watch right now how new CEOs that come in, change the strategy completely and focus on digitalisation.”

For many companies, this is a dramatic change in business practices and one that doesn’t come without resistance within the organisation, although the marketplace may force these reforms as margins fall.

Changing focus as margins fall

A problem facing managers that Sondergaard sees is the falling margins faced by businesses as new competitors unencumbered by legacy systems enter the marketplace.

Most of these competitors bring the ‘startup ethos’ into their industries — with no fixed overheads the new entrants are far more flexible than the incumbent businesses.

Stock markets are also making the problem worse with older businesses being held to different benchmarks than the new players.

To illustrate this Sondergaard cites Amazon and IBM where are both staking their futures on cloud services that are barely profitable; for this IBM is punished by investors while Amazon continues to get stock market support.

Owning the ethical risks

Another challenge facing businesses in going digital are the ethical considerations, this is a complex and multifaceted area that is going to test managers throughout organisations as new technologies give rise to unforseen risks.

“What does your brand want to stand for in a digital world?” Sondergaard asks, “I think we will need people who articulate the brand, and what we do from a technology perspective.”

“Ethics in this is a very part of the user experience which becomes very complex very fast. If you don’t have someone who owns this from a co-ordination perspective I would say you get an element of risk that you don’t want.”

For managers across all industries the challenge is to deal with the disruption that is happening now and the greater changes that are looming, Sondergaard believes this requires a ‘bimodal’ way of doing business that balances the needs of existing markets with the demands of a much more complex fast moving developing digital marketplace.

This is a big task for managers and one that many will struggle with. Those who don’t succeed are going to struggle in a very turbulent business world.

Facebook goes places

Facebook Places gives the service an advantage over other local search platforms

The relaunch of local discovery service Facebook Places was low key and remained un-noted until picked up by a German blogger this week.

Facebook’s local service is, on first look, quite impressive with it pulling together various features and data sources to give a quick guide to what’s on and what’s attractive in a city based on a user’s history.

In that respect it’s a clear threat to Yelp!, Tripadvisor and Google; particularly given the convenience of using a single app and getting recommendations based on the service most people spend the bulk of their online time upon.

At this stage it doesn’t appear the service is doing too much with the local business feature but it’s only a matter of time before those details start being fed into the algorithm as well.

Once again it shows why listings are important for local businesses. It may also be that Facebook is cracking the largely untapped local business market.

When margins collapse

Giving away your once most profitable product is a sure sign your industry is in trouble

Two of the key indicators that your business model, and industry, is being threatened is declining sales and margins.

A good example of this is the story Microsoft are urging their Chinese resellers to use Office 365 as a loss leader to get their foot in the door with customers.

Not so long ago Microsoft Office was a huge cash generator for the business; now it’s a loss leader.

If anything this shows how the margins in the software business are being eroded by cloud computing. Businesses like Microsoft and its resellers that have grown fat on big margins now have to evolve to a very different marketplace.

This means a very different way of doing business, a different way of delivering products and much more streamlined operation that doesn’t need battalions of highly paid salespeople and managers. In fact those managers and salespeople become a very expensive legacy item in a cloud computing world.

Microsoft are by no means the only company to find themselves giving away once profitable products in order to maintain their market position but when that starts happening it’s clear the time has arrived to find a new line of business.

In Microsoft’s case that’s been a pivot to the cloud, however the company will never find things as lucrative as the good old days when software was sold in boxes or licensed out with impossible to read agreements.

Funnily, the same thing is happening in the telcommunications world. It’s an interesting time to be in business.

A lack of entrepreneurial imagination

Google founder Larry Page has some interesting ideas on what entrepreneurs should be doing.

A fascinating interview with Google founder Larry Page in the Financial Times raises the question of whether the current startup mania lacks imagination.

Certainly looking at the lists of many startup competitions, incubator admissions and accelerator programs, it’s hard not to be depressed at the number of ‘platform plays’ aimed at clipping the tickets of an established industry.

If anything, it’s encouraging the Google founder is looking at doing more interesting things than taking a few dollars clipping the tickets off industry. We can, and should, aspire to do better.

Old business and new tech

When old businesses embrace new tech they have to be thinking of their customers’ problems, not theirs.

The payments war has been well and truly on as companies like Stripe, Apple and PayPal battle it out to control the next generation of currency.

One of the more hapless bystanders in this has been the CurrentC consortium, a group of US retailers set up to take advantage of mobile technology and bypass merchant fees.

This weekend news leaked out that some of the consortium members have disabled Near Field Communications functions in their store Point of Sale systems to prevent Apple Pay and Google Wallet from working while they wait to roll out CurrentC.

In a deep dive review of CurrentC, Tech Crunch looks at how the service works and its limitations. One of the things that jumps out in Tech Crunch’s review is just how cumbersome the system is compared to its competitors.

Despite being founded in 2011 and having the backing of some of America’s biggest companies, CurrentC is two, or possibly three, iterations behind other services which illustrates the problem of incumbents trying to innovate their way out of problems.

No doubt the committee model of CurrentC hasn’t helped the development process along with the aim being addressing the consortium’s fixation with merchant fees rather than making things easier for customers.

It’s hard not to conclude that CurrentC is doomed and the actions of retailers in blocking competitor’s products is only staving off the inevitable. When old businesses embrace new tech they have to be thinking of their customers’ problems, not theirs.

On being a digital anthropologist — brian solis on technology disrupting buiness

Innovating within a business can be hard work says Brian Solis

“Technology is part of the solution, but it’s also part of the problem,” says Brian Solis, the

Brian Solis describes himself as a digital anthropologist who looks for how businesses are being disrupted. We talk about digital darwinism, how businesses can approach change and the role of individual changemakers within organisations.

“My primary responsibility is to study disruptive technology and its impacts on business,” says Solis. “I look at emerging technology and try to determine which one is going to become disruptive.”

To identify what technologies are likely to disrupt businesses it’s necessary to understand the human factors, Solis believes.

One of the problems Solis sees is the magnitude of change required within organisations and particularly the load this puts on individuals, citing the story of one pharmaceutical worker who tried to change her employer.

“Her mistake was thinking this was a short race, she thought everyone could see the opportunity inherent in innovation and change when in fact it was a marathon. She burned herself out”

“What that means is to bring about change you really have to dig yourself in because you’re ready to do your part. You can’t do it alone, you have to do change in small portions and win over the right people.”

How smart hiring paid off for the PayPal mafia

Companies miss out when they won’t hire former business owners as PayPal shows

One of the challenges facing people who’ve started their own businesses is re-entering the broader workforce. Many managers are reluctant to hire previously self employed workers; the PayPal experience shows that attitude could be hurting working

At the Dreamforce Conference in San Francisco yesterday three PayPal alumni, part of Silicon Valley’s infamous ‘PayPal Mafia’, discussed why the company was such a successful incubator of talent.

“The company was composed of a bunch of young folks who were very driven,” said founder of LinkedIn and early PayPal employee, Reed Hoffman. “Once they sold the business to eBay they weren’t the type to retire.”

Along with PayPal’s founders being driven, the company also tended to hire people who had run their own businesses but were finding the  going tough in the economy at the time; “Silicon Valley was collapsing under its own weight,” observed PayPal founder and fellow panellist Max Levchin.

“There was a lot of running for safety in the Valley,” Levchin remembers. “We were looking for people who were into risk taking and were excited to take a risk and this would be the last company they worked for because the next one would be their own. As a result we biased the selection towards entrepreneurs.”

Copying that hiring practice today is Stripe where co-founder John Collison told Decoding the New Economy last month that one of the keys to managing a fast growth business is to hire entrepreneurs and former self employed workers.

“They are self starters; they don’t need much supervision,” said Collison in describing how hiring people who’ve run their own businesses makes running a business that has gone from ten to 150 employees in three years.

it’s no coincidence that one of the investors in stripe is Peter Theil who along with Levchin founded PayPal and is probably the best known of the ‘PayPal mafia’.

PayPal and Stripe’s experience show the folly of overlooking workers who’ve run their own businesses; in a world where business is becoming more competitive, having entrepreneurial employees is an asset too good to miss out on.

Conglomerates fall out of fashion

It’s worth remembering that conglomerates come in and out of fashion in the business world, right now seems to be a bad time.

After the announcement earlier this week that HP will split into two, now Bloomberg reports Symantec is considering splitting, this comes after the news that PayPal is being carved off eBay and that Yum foods is looking at divesting some  of its Chinese assets.

It looks like we’re moving into a period where conglomorates are out of fashion; that’s good news for lawyers and consultants advising the companies however it will be worth watching to see what this means for customers, employees and shareholders.

That HP is reportedly shedding 55,000 jobs says some of these conglomerates were chronically overstaffed so it might be good news for the stockholders of the split companies.

Either way, it’s always worth remembering that conglomerates come in and out of fashion in the business world.

 

Adrift in the data lake

We’re awash with data and businesses have to figure out how not to drown in it

Last week Yahoo! closed down their directory pages ending one of the defining services of the 1990s internet and showing how the internet has changed since the first dot com boom.

The Yahoo! Directory was victim of a fundamental change in how we manage data as Google showed it wasn’t necessary to tag and label every piece of information before it could be used.

Yahoo!’s Directory was a classic case of applying old methods to new technologies – in this case carrying out a librarian’s function of cataloguing and categorising every web page.

One problem with that way of saving information is you need to know part of the answer before you can start searching; you need to have some idea of what category your query comes under or the name of the business or person you’re looking for.

That pan was exploited by the Yellow Pages where licensees around the world harvested a healthy cash flow from businesses forced to list under a dozen different categories to make sure prospective customers found them.

With the arrival of Google that way of structuring information came to an end as Sergey Brin and Larry Page’s smart algorithm showed it wasn’t necessary to pigeonhole information into highly structured databases.

Unstructured data

Rather than being structured, data is now becoming ‘unstructured’ and instead of employing an army of clerks to categorise information it’s now the job of computers to analyse that raw information and pick out what we need for our businesses and lives.

As information pours into companies from increasingly diverse sources, a flood that’s becoming so great it’s being referred to as the ‘data lake’, it’s become clear the battle to structure data is lost.

At the Splunk Conference in Las Vegas this week, the term ‘data lake’ is being used a lot as the company explains its technology for analysing business information.

Splunk, along with services like IBM’s Watson and Tableau Software, is one the companies capitalising on businesses’ need to manage unstructured data by giving customers the tools to analyse their information without having first to shoehorn it into a database.

“Thanks to Google we got to look at data a different way,” says Splunk’s CEO and Chairman Godfrey Sullivan. “You don’t have to know the question before you start the search.”

Diving into the data lake

It’s always dangerous applying simple labels to computing technologies but some terms, like ‘Cloud Computing’, don’t do a bad job of describing the principles involved and so it is with the ‘data lake’.

Rather than a nice, orderly world where everything can be pigeonholed, we know have a fluid environment where it wouldn’t be possible to label everything even if we wanted to. A lake is a good description of the mass of data pouring into our lives.

The web was an early example of having to manage that data lake and Google showed how it could be done. Now it’s the turn of other companies to apply the principles to business.

Google fatally damaged both Yahoo! and the Yellow Pages, other companies that are stuck in the age of structured data are going to find the future equally dismal. Don’t drown in that data lake.

Paul travelled to Las Vegas as a guest of Splunk

Breaking down old technology empires

HP and eBay splitting their businesses is part of a structural change in the technology industries

HP’s CEO Meg Whitman announced today that the company will be splitting in two with its Printer and PC division being carved away from its consulting services.

The two new companies will be Hewlett Packard Enterprises and HP, the latter being the old printer and PC division.

For HPs shareholders this split is a decade too late as the printer and PC division is in an industry where declining margins are the norm.

It’s not hard to think though that both businesses are ultimately doomed, it wouldn’t be surprising to see the smouldering ruins of both companies being picked up by companies like India’s Wipro or China’s Lenovo in the not too distant future.

That HP is divesting isn’t surprising as the trend is moving away from the big conglomerates model of the past decade; two weeks ago eBay announced it will be splitting its PayPal division and the float of Alibaba will almost certainly see Yahoo! begin to hive off businesses that have underperformed under their corporate umbrella.

An era where the key to growth in the technology industries doesn’t involve buying competitors and startups to build online empire will leave the Silicon Valley greater fool business model somewhat lost. It might be time for a few venture capital and seed funds to think about their pivot.

The tough determined business of building a business

It takes a special kind of grit and determination to succeed with a startup business says BlackLine founder and CEO Therese Tucker

In 2005, Therese Tucker’s company was down to its last three staff when a customer suggested a new line of business. Today BlackLine is valued at over 200 million dollars and about to list on the stock market.

A few week ago Therese described her journey from a struggling software startup to a hundred million dollar business on the Decoding the New Economy YouTube channel.

BlacklLine’s business automates financial processes  as Tucker explains, “we have the interesting job of providing software that helps companies automate all the things around accounting and the financial close that they currently do on spreadsheets.”

At the time of Tucker’s pivot, the business was supplying a wealth management system when that prescient customer asked her to develop an application to manage the ten thousand spreadsheets they were struggling with for accounts reconciliation.

BlackLine wasn’t Tucker’s first business having been involved in a series of ventures after working as an electrical engineer designing automation systems before moving into the IT industry.

“There’s a reason for the term ‘serial entrepreneur.” Tucker says, ” it’s a bug that once you catch it you really don’t want to rest until you’ve been successful at it.”

For aspiring entrepreneurs Tucker’s advice is blunt — “The best advice is ‘don’t do it’. Because if you listen to that advice you’ll never make it.”

“It’s the people that are crazy and are determined to work themselves to death and to fail and fail and fail until they don’t fail. It takes that kind of grit and determination.”

“If I tell you not to do it, then that’s great advice for you.”