Category: business advice

Was telecommuting another broken technology promise?

Is telecommuting another broken technology promise?

Telecommuting promised, or still promises, to free caged office workers from their cubicles, relieve the sardine-tin conditions on our peak hour trains and reduce traffic congestion on clogged roads. But has that promise been lost like so many other predictions of the technology age?

Banning remote workers is the latest edict from Marissa Meyer as she continues her daunting task of turning around Yahoo!.

Meyer’s move follows Google’s Chief Financial Officer Patrick Pichette claiming telecommuting is counterproductive and discouraged at his company.

One of the great promises of the computer age – almost up there with the paperless office – is the ability to work from home as if you were sitting in an office.

So promising is telecommuting it’s one of the main selling points for Australia’s National Broadband Network.

Having two of Silicon Valley’s biggest companies come out against remote working, particularly Google with its reputation for innovation and creativity, seems to damn the practice.

This isn’t helped by Australia’s nanny state deciding that companies are liable for remote workers who manage to fall over in their own home – twice.

Risk is the real barrier to adopting telecommuting, the risk of a compensation claim for a remote working employee falling over while rummaging in their kitchen fridge is one aspect but a more a bigger risk in the mind of a bureaucrat is that a subordinate is not under their control.

Control is almost certainly what focuses Pichette’s mind. While Google is portrayed as a company full of original thinking, non-conformist geeks in reality only half the staff, at best, fit the stereotype while the rest are the same corporate bureaucrats you’ll find at an insurance company or a quantity surveyor’s office.

In the case of Yahoo! a decade of mismanagement has left the company unsure of who exactly works for them, Meyer’s solution is to order everyone into the office so she can count heads.

The fact that some Yahoo! staff will quit, others won’t be able to get to an office and some will turn out to have been long dead (with relatives gleefully cashing Yahoo!’s cheques) is a bonus for Meyer as she looks at reducing staff costs.

In reality remote working is growing, partly because so much of the white collar workforce has been contracted out and few freelancers are interested in hanging around clients’ offices if they can avoid it.

A bigger factor is that workplaces themselves are changing as fewer organisations need to have huge office blocks. While the cubicles themselves might not go away, they are going to be clustered where the customers and workforces are rather than locked away in modern ivory towers.

That has some major consequences for our workforces and cities which the bureaucrats – both in the private and public sectors – have barely started to get their heads around.

Photo of commuters at Liverpool Street Station courtesy of Genkaku aka James Farmer through SXC.hu

People like us – could poor hiring practices bring down Silicon Valley?

Are poor hiring practices putting Silicon Valley at risk?

A strange little story appeared in Business Insider a few weeks back, 9 Things Your Resume Needs if you want to be Hired by Apple or Google is a curious view into the mindset of Silicon Valley.

Purporting to be an extract from a book written by a former recruiter who claims to have worked for Apple, Google and Microsoft, the story exposes a weakness in Silicon Valley and the technological elite which may cause the very disruptions they have unleashed to work against them.

The nine items are fascinating for the elitist, US-centric view of the world they portray and each is worth investigating on their own.

If you graduated from an elite college, your chances of getting an interview vastly improve

Yes, where you went to school does matter to the tech giants. Of course there are exceptions, but McDowell says an Ivy League or other top university will get you noticed.

There’s not much more to add to this, except to note that the vast majority of students whose families can afford such an education are from the upper middle class.

The Googles and Apples like to see relevant internship experience.

If you waited tables when you were 19, that isn’t attractive.

If you are lucky enough to get into a an Ivy League school on a scholarship or manage to scrape together the money you may still not make the cut.

To the author, only those with sufficient wealth to participate in unpaid internships are going to get jobs at the top Silicon Valley companies.

Your major matters

Sorry liberal arts people or chemical engineers, you’ll need another way in to Google or Apple.

This is an interesting one, Silicon Valley boosters often talk about the creative process and how coders are artists however according to the recruiter that’s just lip service.

She encourages students to pick majors that are directly relevant to Google or Apple. Finance, accounting, marketing or computer science majors have the best shot of being noticed by a tech recruiter.  At the very least, minor in one of those fields.

A focus on finance, accounting and marketing is the same as any old corporation – you could be going for a job with AT&T, Goldman Sachs or the government with qualifications like that. So much for unique.

Dissing chemical engineering is particularly interesting as Chem Eng graduates have passed one of the toughest university degrees. Whats more, the demands of mobile computing devices means battery technology is one of the most pressing issues facing Silicon Valley at the moment. Chemical Engineers are the folk who will solve this problem.

Big tech companies like to see people giving back to their communities.

Volunteering can be a great way to buff up your resume. That said, McDowell warns: “don’t serve soup in a soup kitchen.”

Instead she suggests hunting for a sales or marketing position, or offering to help a charity with its website and design.

This is a really obnoxious statement – basically saying we want to you volunteer, but we don’t want you to help people.

Just how many sales and marketing people are needed by soup kitchens, volunteer fire brigades or community pantries is open to debate.

A bigger issue with this mentality is that it favours bureaucrats and paper shufflers rather than doers. Which again is something anathema to the public statements of Silicon Valley’s leaders.

They also like good spellers and speakers.

Writing and communications skills aren’t just necessary for media jobs. They’re important in any career you’ll have.

Well, duh.

If you are buddies with college professors, that’s a plus.

Professors aren’t just impressed by how you do in their classes.  McDowell suggests helping them with research projects, asking for help and attending office hours, or becoming a teaching assistant.

That doesn’t hurt, but it’s pretty basic vanilla advice and again it’s tough luck if you have to do a shift at the local fast food restaurant so you can feed yourself.

Show you understand multiple positions at Google or Apple

If you want to work at one of the top tech companies, it helps to have at least a basic understanding of multiple positions in the organization.  McDowell calls this being a Generalist.

On one hand this advice makes sense but on another many technical roles are not generalist positions.

Generally having a knowledge of the company’s structure and roles is going to look good to any interviewer, assuming you can get past the gatekeeper at the recruitment company.

Entrepreneurs have a better shot of being hired.

This is a funny one, if you’re a real entrepreneur then the thought of working in cubicle at Apple or Microsoft while answering to a middle manager straight out of a Dilbert cartoon ranks with getting hot pine needles thrust under  your toenails.
One of the conceits of modern corporate life is that they value entrepreneurs and the free-wheeling spirits – the truth is they don’t and the first true hint of entrepreneurialism among the ranks will be smothered quickly with a deluge of paperwork.
Funnily enough, being a successful tech entrepreneur is a path to getting a good job at a tech company although it’s more likely to happen as an acqui-hire than through a recruiter.

Good news: Your GPA doesn’t matter very much

Most people think tech companies, Google in particular, harp over candidates’ GPAs. McDowell says there is little truth to that rumor.

This is only good news if you’ve ticked most of the other boxes, which means you’ll be considered if you’re middling graduate from Stanford or Harvard but forget it if you went elsewhere, regardless of how good your marks are.

The danger of recruiters

What the Business Insider story really illustrates are the risks of relying on third party recruiters as gatekeepers to filter out new employees.

Regardless of how good the recruitment consultant is they are going to apply their own cultural filters and biases onto the selection process and as a result knock out most good candidates.

More importantly, a company risks developing a monoculture if the recruitment process is too effective at filtering out people who don’t fit a narrow stereotype.

A new breed of officemen?

Reading the Business Insider story leaves one with the feeling that many of these companies are beginning to look like IBM in the 1960s – monocultures more concerned about the colour of an employee’s tie and choice of shirts rather than the talents they bring to the organisation or the value they can add to customers.

This is probably the greatest risk of all to the tech industry, that they end up with an insular group of people with fixed mindsets.

Should that happen, then the wave of disruption Silicon Valley has unleashed on the world will end up being the industry’s undoing as smart kids working out of garages in Michigan or slums in Delhi will out innovate the staid, comfortable incumbents.

It’s also interesting to consider how many other industries are now suffering after several decades of similar recruiting practices where leading businesses are now dominated by insular, unworldly monocultures.

Image courtesy of Alexfurr on SXC.HU

It’s too late, baby – when digital reality bites

Sensis decide to move on from a print based model to digital advertising – a decade too late.

Yesterday Sensis announced it would restructure for digital growth by sacking staff, offshoring and “accelerate its transition to a digital media business”.

The directory division of Telstra has been in decline for years, a process that wasn’t helped by then CEO Sol Trujillo embarking on his expensive “Google Schmoogle” diversion.

A decade later, Managing Director John Allen has announced another 650 jobs to go from the remaining 3,500 workforce.

John’s comments are worth noting.

Until now we have been operating with an outdated print-based model – this is no longer sustainable for us. As we have made clear in the past, we will continue to produce Yellow and White Pages books to meet the needs of customers and advertisers who rely on the printed directories, but our future is online and mobile where the vast majority of search and directory business takes place.

Carol King put it best – it’s too late, Baby. These are words that should have been said a decade ago.

Have we come to the end of the middle class era?

Was the middle classes’ growth during the Twentieth Century an aberration?

Technology has transformed workplaces over the last century, drove huge income growth and moved many into the middle classes. Are we now seeing computers and robots displacing those middle class jobs?

At Tech Crunch Jon Evans warns Get Ready To Lose Your Job  as “this time it’s different” – unlike earlier periods of industrialisation where jobs shifted to the new technologies such coach builders became car makers – robots and computers are making humans redundant.

So I see no mystical Singularity on the horizon. Instead I see decades of drastic nonlinear changes, upheaval, transformation, and mass unemployment. Which, remember, is ultimately a good thing. But not in the short term.

In The Observer John Naughton, professor of the public understanding of technology at the Open University, says Digital Capitalism Produces Few Winners.

Professor Naughton’s view is that high volume, low margin businesses like Amazon mean there’s fewer well paid jobs available and many of the lower positions will be soon replaced by robots.

At the other end of the digital marketplace, the high margin businesses like Apple, Google and Salesforce don’t need many staff to generate their profits, so wealth is concentrated among a small group of managers and owners.

While the low paid and manufacturing workers have been squeezed for decades in the West, it’s now the turn of the middle classes to feel the pain of automation, outsourcing and restructuring.

There’s two ways we can look at these changes, the optimistic is that our economy is going through a transition to a different structure; those out of work coachbuilders a hundred years ago didn’t immediately get jobs building cars and the same adjustments are happening again.

A more pessimistic view is that the Twentieth Century was an aberration.

It may be that Western world’s steady climb into middle class prosperity was itself a transition effect and we’re returning to the economic structures of the pre-industrialised age where the vast majority of people have a precarious income and only the fortunate few can afford middle class luxuries.

The next decade will give us some clues, but the portents aren’t good for the optimistic case, the Pew Research Centre shows America’s middle classes has been shrinking for forty years.

For those Americans still in the middle class, the Pew research shows their incomes have been falling for a decade.

Regardless of which scenario is true, the dislocation is with us. As individuals we have to be prepared for changes to our jobs, however safe they look today. As a society we have to accept we are going through a period of economic and social upheaval with uncertain long term consequences.

What’s particularly notable is how today’s political and business leaders seem oblivious to these changes and are locked in the ‘old normal’ of thirty or fifty years ago.

One wonders what it will take to wake them up to the changes happening around them and what will happen when reality does bite them.

Picture of a nice, middle class house by Strev via sxc.hu

Going insane with government subsidies

Governments and taxpayers keep repeating the same failed strategies in attracting new industries.

Albert Einstein is said to have defined insanity as doing the same thing over and over again while expecting different results.

When it comes to funding the film industry it’s hard not to think that governments, and those who want a strong local film making communities, have all gone insane.

As discussed previously, the global producer incentive industry is a scam perpetuated by the major movie studios on gormless governments desperate for the glitz and glamour of having a Hollywood star or two come to town.

In Australia, governments are scratching around to raise change to attract a high profile Hollywood production once again – unsurprisingly to subsidise another remake of a fifty year old hit.

This is dressed up in the guise of helping build or maintain the local skill base or infrastructure. The water tank that’s expected to be used should the Aussies win the bid was built by the Queensland government in 2007 to attract aquatic themed movies, as the minister at the time said;

“As a result of having the water tank facility, the Government’s Pacific Film and Television Commission and Warner Roadshow Studios are currently in negotiations with a number of major studios requiring water tank facilities for their next major films.

“These projects under negotiation have an estimated value of $US370 million.”

Little of that money made it down under and the Gold Coast water tank stands largely unused as the Queensland and Federal governments failed to interest subsidy hungry movie producers.

When governments win those subsidised productions the local industry has brief sugar rush as providers struggle to find caterers, crew and extras required to film Superman XVIII or the fourth remake of Herbie The Love Bug. After a few months, the big producer folds their tent and moves on to the next city that spent millions attracting the studios’ favours.

Those involved in the big Hollywood production sadly go back to their day jobs and dreams of building careers in a vibrant local industry which has no chance of developing under the boom and bust cycle of major production attraction.

And so the cycle goes. At least today’s Sydney accountants can tell their kids how they once stood next to Keanu Reeves as an extra on The Matrix.

While Hollywood is the best organised at milking gullible governments, it isn’t just the film industry that pulls this scam off on taxpayers. If anything, the automobile manufacturers are probably the biggest beneficiary of government largess and produce more unloved bombs than the movie industry.

What’s particularly notable when governments announce huge licks of money for multinational corporations is just how small support is for the local industry in comparison.

A good example of this are the New South Wales film industry subsidies. The state’s Emerging Filmmakers Fund dispensed a grand $90,000 to local producers in 2012. This compares to the $6.6 million dollars spent by the state on attracting foreign productions.

Even that $6.6 million number has to be treated with caution as major productions can be subsidised from the state’s Investment Attraction Scheme – a $77 million slush fund put aside for attracting ‘footloose’ multinational business operations.

Generally payments from the IAS are ‘Commercial in Confidence’, or ‘Crooks in Collusion’ as some more cynical might put it, so it’s almost impossible for taxpayers to know how much has been lavished on attracting foreign businesses.

What is clear though is the government subsidies for foreign operators, not just in the film industry, dwarf the support given to local businesses.

During my short period working for the NSW Department of Trade and Investment more than one businessman asked me “why is your minister giving a slab of money to my overseas competitors rather than encouraging local businesses?”

It’s difficult to find a diplomatic answer that doesn’t imply that political and public service leaders are blinding the glamour and prestige of being associated with rich multinational corporations.

The real support local industries need is steady work producing products that play to their advantages, the sugar rushes of major movie productions or subsidised manufacturing only distort the market and may even damage the smaller local production companies as the wrong skillsets and infrastructure is built.

Done strategically as part of a broader, long term plan targeted subsidies to global industry leaders can work, but unfortunately few of the movie industry incentives or investment attraction schemes have that sort of thinking underlying them.

As budgets tighten with the deleveraging global economy, it’s going to be interesting to see how long governments can continue this sort of corporate welfare.

Film clapper image courtesy of Chrisgr through SXC.hu

 

Can hyperlocal media work

One of the promises of the web and a hoped for future of publishing was the rise of hyperlocal websites that report news on individual suburbs, or even blocks. It appears though the hyperlocal concept isn’t working.

One of the hoped for futures of publishing was cheap, hyperlocal websites that report news on individual suburbs or neighbourhoods and get advertising from local businesses.

Last week US TV network NBC abruptly closed down its Everyblock online service, leaving loyal users angry and bemused. Right now it appears though the hyperlocal concept isn’t working.

The failure of Everyblock

Founded five years ago, Everyblock had an interesting model of mashing up local data like Flickr pictures and government information with news so residents and visitors would have an accurate up-to-date picture of what was happening in their neighbourhood.

Everyblock’s failure follows AOL’s struggle to get their hyperlocal play Patch working, although AOL reported in 2012 that Patch’s revenues have doubled.

Whether that doubling is enough to save Patch remains to be seen, it’s quite clear that some question the sustainability of AOL’s growth in revenues and page views.

All of this raises the question of why hyperlocal isn’t working.

A game for amateurs

The main reason is that there’s not enough money it –anybody who is going to run a hyperlocal site is going to be doing it for love or because there’s a dumb corporation burning shareholders’ equity on the venture.

In most communities there simply aren’t enough advertisers interested to pay the bills and you can forget any paywalling.

Most critically for local publishing ventures, the local advertising market has been suffocated by the web. Twenty years ago, the local plumber or cafe would hit most of their market by spending $2,000 on their Yellow Pages listing and probably double that with a weekly ad in the classified section of the local newspaper.

Today, a web site with sufficient SEO smarts to come up on their first page of searches for their suburbs is enough, many can get away with a free Facebook or Google Plus for Business page, despite the dangers of using other people’s services to promote your business.

For the telephone directories this change has been catastrophic while local newspapers only survive thanks to their less than healthy relationship with real estate agents.

Local market failure

The interesting thing with the evolving local media market is just how poorly the web giants have performed.

Two years ago, Google appeared to have the sector sown up with the Google Places service but a combination of poor service, restrictive rules and an obsession with Google Plus have seen the company squander their advantage, leaving their local search service underused and irrelevant.

Similarly, Facebook looked like they could take that market off Google but they too haven’t executed well.

Which leaves local businesses reliant on their own websites and a hodge-potch of services like Yelp!, Tripadvisor and Urbanspoon.

This doesn’t serve the business or the customer well.

Where to for local news?

A bigger question though is where do people go to find local news?

Increasingly it looks like social media sites like Facebook and Twitter are the place as people see what their friends and neighbours post. It’s not great, but it’s better than the local newspapers increasingly stuffed with syndicated content with a few local stories from an overworked part-timer.

It’s not clear that hyperlocal news has failed, but right now it’s not looking good. Perhaps it needs somebody with a truly disruptive model to find what works in our communities.

image courtesy of davidlat on sxc.hu

To save the community, we had to destroy it.

Can online communities like Lonely Planet’s Thorn Tree survive in managerial organisations like the BBC?

When the BBC bought a 75% of travel guide publisher Lonely Planet in 2007, many people were puzzled at what the travel guide added to the publicly owned broadcaster’s mandate.

In 2011 the BBC bought out the rest of the founders’ stakes and just over a year later management mistakes threaten to destroy the brand.

Lonely Planet is one of the most powerful internet media properties in the English speaking world having become the dominant travel guide in the 1980s and then successfully making the jump into the online world with its website and mobile apps.

In 2012, the site boasted of four million visitors a month with most under 35 years old.

Key to Lonely Planet’s online success has been its community. The Thorn Tree forum provided the bulk of the site’s traffic as thousands of members discussed exotic destinations and asked or answered travel questions.

The Thorn Tree also turns out to be the BBC’s undoing as management struggled to control members’ comments.

At the end of 2012, inappropriate content was bought to management’s attention, with the Jimmy Savile scandal still reverberating around the corridors of the BBC, the organisation’s management panicked and announced a temporary closure of the Thorn Tree.

Two months later, the site is back up again with strict pre-moderation of posts which has left many long time users upset and going elsewhere, if they didn’t already do so during the closure.

Online communities are a strong assets but they are surprisingly fragile, as many popular sites have found in the past.

For Lonely Planet users, there’s no shortage of other travel sites online and it’s going to be challenging for the site to recover.

The Thorn Tree saga raises the question of whether risk adverse, public sector organisations like the BBC have the risk appetite to run online forums and build communities.

By definition successful online communities are diverse and sometimes skate close to the boundaries of good taste for a careerist executive in a managerial organisation like the BBC, such risks are intolerable and have to be eliminated.

If this means shutting down the Thorn Tree forums or neutering them, then that will be done. Management careers come before the good of the organisation.

Time will tell whether Lonely Planet will continue to thrive under the BBC and its management, but the portents aren’t good.

Smelling digital garbage

Excel spreadsheets lie at the core of business computing, but what happens when they go wrong?

Excel spreadsheets lie at the core of business computing, but what happens when they go wrong?

James Kwak writing in the Baseline Scenario blog describes how Excel spreadsheets have an important role in the banking industry and their key role in one of the industry’s most embarrassing recent scandals.

In the early days of the personal computer spreadsheets; it was company accountants and bookkeeping clerks who bought the early PCs into offices to help them do their jobs in the late 1980s .

From the accounts department, desktop computers spread through the businesses world and the PC industry took off.

Over time, Microsoft Excel displaced competitors like Excel 1-2-3 and the earliest spreadsheet of all, VisiCalc, and became the industry standard.

With the widespread adoption of Excel and millions of people creating spreadsheets to help do their jobs came a new set of unique business risks.

The weakness with Excel isn’t with the program itself, it’s that the formulas in many spreadsheets aren’t properly tested and often incorrect data is put into the wrong fields.

In his story Kwak cites the JP Morgan spreadsheets that miscalculated the firms Value-At-Risk (VAR) calculations for synthetic derivatives. The result was the London Whale debacle where traders were allowed to take positions – some would call them bets – exposing the bank to huge potential losses.

It turns out that faulty spreadsheets had a key role as traders cut and paste data between various spreadsheets and the formulas that made the calculations had basic errors.

That a bank would have such slapdash procedures is surprising but not shocking, almost every organisation has a similar setup and it gets worse as a project becomes more complex and bigger numbers become involved. The construction industry is particularly bad for this.

Often, a spreadsheet will show out a bunch of numbers which simply aren’t correct. Someone made a mistake entering some data or one of the formulas has an error.

The business risk lies in not picking up those errors, JP Morgan fell for this and probably every business has, thankfully to less disastrous results.

My own personal experience was with a major construction project in Thailand. One sheet of calculations had been missed and the entire budget for lights – not a trivial amount in a 35 storey five star hotel – hadn’t been included in the contractor’s price.

This confirmed in my mind that most competitive construction tenders are won by the contractor who made the most costly errors in calculating their price. Little has convinced me otherwise since.

In the computer industry there’s a saying that “garbage in equals garbage out” which is true. However if the computer program itself is flawed, then good data becomes garbage.

Excel’s real flaw is that it can make impressive looking garbage that appears credible if it isn’t checked and treated with suspicion. The responsibility lies with us to notice the smell when the computer spits out bad figures.

Spreadsheet image courtesy of mmagallan through sxc.hu

15 years of radio and technology

Some reflections on 15 years of talking technology on ABC Radio

I used to be a cranky radio listener.

One morning in early 1998 I was listening to my local ABC station, then 2BL, when stand in breakfast host Bob Hughes was interviewing a “Y2K expert” who had the standard spiel designed to scare people into buying expensive consulting services.

Irritated by the expert’s shoddy advice, I dashed off a quick “with respect” fax to the radio station – the ABC didn’t have publicly facing email addresses at that time – and expected it would be ignored.

A few weeks later Bob Hughes invited me on his regular Sunday spot to talk about Y2K and computers in general. He didn’t mention we’d spend most of the time taking listeners’ calls.

After a few minutes of ‘umming’ and ‘aaahing’ with lots of bluffing, Bob finished with “we’ll see you next month Paul.”

So it began.

Over time the segments moved from 702 Weekend on Sunday mornings to regional spots and the national Tony Delroy nightlife segment

Looking at the sadly neglected PC Rescue website, the programs have ranged from the mundane to the mad, bad and ugly.

At the ugly side, the Windows virus epidemic of the early 2000s looms large. At one stage almost every caller had a virus problem, the only ones that were didn’t were Mac users calling in to crow about their not having this problem.

We enjoyed the various platform wars as Microsoft consolidated its strength and then saw it ebb away as first Firefox started chipping away at its browser dominance, Google at its Internet strategy and then Apple came roaring back into relevance.

The radio shows track the rise of the web as we started talking about the various online services that were changing computing.

One of the critical things, which still hasn’t changed, was billing problems.

Through the early 2000s Australian telcos had shocking charges for data and mobile services. Calls from listeners distressed at big bills was common and the TIOs contact details would be among our most frequent answer.

It was Telstra’s decision to stop stunting Australian internet growth and offer reasonably priced plans, albeit with criminally tiny data allowances, that kick started consumer adoption of broadband plans.

Today the questions revolve around social media, online security and the merits of Android versus Apple smartphones and tablets, it’s quite notable at how Microsoft has moved from dominating the program to being almost irrelevant.

How the next 15 years will pan out are anyone’s  guess, although one suspects pervasive computing, the cloud and the internet of machines will be among the trends we’ll see.

Last week Tim Berners-Lee said that innovation is only just beginning, it’s going to be an interesting, wild ride.

I’m still a cranky radio listener, but these days I have a lot more sympathy for producers and announcers.

Will going private save Dell?

Can Dell going private reverse the personal computer manufacturer’s decline?

Now Michael Dell and a team of private equity investors are going ahead with taking the company he founded private, the question is will this make any difference to the technology company.

Turning around Dell is going to be a massive task as the company has lost the advantages that made it the world’s biggest PC manufacturer. At the same time, the industry itself is shrinking as corporate and consumer customers move from personal computers and servers to tablets and cloud services.

The triumph of logistics

Dell’s real success lay in logistics. In the early 1990s the company – along with its competitor Gateway – developed a global just-in-time assembly network which took advantage of cheap Asian suppliers, efficient air courier networks and call centres.

Bringing these together meant Dell and Gateway could deliver a custom made computer to a customer in just over a week without the hassle of holding warehouses of stock, employing sales staff or renting stores.

Price was the ultimate advantage and these companies could undercut competitors with their efficient networks, lack of inventory and no retail overheads.

Losing an advantage

Unfortunately for Dell, competitors caught up and by the early 2000s most PC manufacturers were using similar manufacturing methods and were able to match their price points.

By 2006, HP overtook Dell as the world’s biggest PC manufacturer.

Worse yet, Apple adapted Dell’s logistic systems to corner the high end of the PC market and then expand into consumer devices.

Dell’s reaction was to compete solely on price and to do so they cut component costs and outsourced support to lowest cost providers.

This backfired horribly and the poor quality products coupled with execrable after sales support deeply damaged Dell’s brand with the Dell Hell debacle being the public face of widespread customer unhappiness.

Dell in the post PC world

Making matters worse for Dell is that the market has shifted away from personal computers.

Dell has a tragic track record of diversifying out of the PC markets, all of its attempts to move into consumer electronics with PDAs, smartphones, tablet computers and entertainment devices have been, at best, embarrassing.

Enterprise computing has been more successful but even here Dell has shown little innovation and most of their entries into the corporate markets has been through acquiring specialist companies rather than doing anything different.

Part of this to failure to diversify has been because of Dell’s relationship with Microsoft. The various versions of Windows intended to be used on PDAs and tablet computers turned out to be wholly unsatisfactory and left the market open to Apple with the iPhone and iPad.

Going private

That Microsoft is going to have a financial interest in the privatised Dell is not encouraging for the company’s prospects.

Neither is the continued presence of Michael Dell. His return as the company’s CEO in 2007 has not solved the company’s problems.

It’s difficult to see where the problem was being a public company, Dell’s woes were not because of troublesome board members or activist shareholders.

Going private might allow Michael Dell and his team to experiment without the accountability of quarterly reporting, but that barely seems worth 26 billion dollars.

Dell could surprise us all by reinventing its business and claiming a role in the post-PC world, but right now its hard to see how.

Who will build the next Barnes and Noble?

The rise and fall of US bookseller Barnes & Noble shows describes the changes in our society and the urge to join online and real world communities.

As US bookseller Barnes and Noble shrinks its store network, Mark Athitakis has a tribute to the once ubiquitous chain in The New Republic.

Barnes and Noble was never popular among US independent booksellers because of the perception, probably true, that the chain drove locally owned stores out of business.

What it offered though was a safe, comfortable place for booklovers to gather in suburban shopping malls. As Mark points out, it created a community.

Its stores were designed to keep people parked for a while, for children’s story time, for coffee klatches, for sitting around and browsing. That was a business decision—more time spent in the store, more money spent when you left it—but it had a cultural effect. It brought literary culture to pockets of the country that lacked them.

In recent years that community moved to coffee shops, in the United States B&N’s role was taken by Starbucks, at the same time our reading habits changed and the business of selling books and magazines became tougher.

Now that community is changing again, as the online societies like blogs, Facebook and Twitter become important, the coffee shops have responded with free wi-fi which is a perfect example of how the online and offline world come together.

That need to create communities, either physically or online, is a driving human urge.

Online that role is being catered to with social media platforms and sites like food, mommy or tech blogs where like minded people can gather.

Down at the mall, Barnes and Noble catered for that need in the 1980s and Starbucks in the 1990s. What will follow them may be the next big success in the retail or hospitality industry.

Image courtesy of Brenda76 on SXC

In it to win it – does overcompetitiveness hurt entrepreneurs?

Does the winning at all costs mentality actually hurt entrepreneurs when business isn’t a zero sum game?

I’ve written before about entrepreneur and venture capital investor Mark Suster and his writings about business are always worth reading.

His recent post pulling together writings on the DNA of an entrepreneur is interesting reading however one point jars – competitiveness.

In Steve’s view competitiveness is about winning at all costs and crushing the opposition.

That’s fine when competing for a customer, fighting over market share or pitching to the same VC investor, but business usually isn’t a zero-sum “if I win, you lose” equation.

Sometimes its about complimentary strengths. In the early days of PC Rescue I tried to partner with an old colleague who had set up a competing business.

Mark was actually a better computer tech than I was, my strengths lay more in sales and administration, had we teamed up we’d have been a good combination.

Unfortunately Mark took Suster’s view of ‘winning at all costs’ and when I foolishly referred customers to him because I was either busy or thought he could do a better job, I found he was stealing those customers.

Eventually I had to cut ties with him, and it cost him money and the chance to be part of something bigger. Mark was greedy but I’m sure he thinks he ‘won’ against me when there really wasn’t a contest.

Geeks are particularly poor at admitting they have weaknesses, in fact their lack of self understanding could be their greatest weakness of all. So drumming a ‘win at all costs’ message into their heads is almost certainly counter productive.

It may well be that this win at all costs view is damaging the mental health of many entrepreneurs, by viewing what others are doing through a prism of “I have to win” almost guarantees depression as often the life of an entrepreneur is more steps backwards than forwards.

As most reporting of startup and entrepreneurs is distorted by survivor bias, we often gloss over this latter point – in reality starting your own business, particularly one that’s under-capitalised, is hard and tough work with a high chance of failure.

That chance of failure means a ‘win at all costs’ mentality could result in a generation of mentally damaged former entrepreneurs.

Mark Suster’s views are really good on what drives the Silicon Valley model of business. We need to take care though we don’t take the wrong lessons which end up hurting our businesses, families and our own mental well-being.

Jackpot image from Henriette via SXC.HU.