Paul Wallbank – Brilliant Communications

Category: business advice

  • Surviving in business by executing a pivot

    Surviving in business by executing a pivot

    One of the key skills in running a business is knowing when to change direction, to ‘pivot’ in the language of Silicon Valley.

    Yesterday I had the privilege of interviewing Jonathan Barouch, founder of social analysis company Local Measure about the service’s pivot from Roamz.

    I’ll be writing that interview up in more detail in a few days, but Jonathon’s observations about pivoting businesses reflected my own business experiences.

    PC Rescue was born out of a pivot and its ultimate demise was due to the failure of the company’s management, and my own, to move decisively when it was clear the business wasn’t working as planned.

    The founding of PC Rescue happened out of a virtual assistant service my wife an I set up in 1995. We’d been victims of the curiously insular attitude of Australian managers towards employing expats and starting our own business seemed to be the right option.

    So Office Magic was born.

    Office Magic was a good business, but in talking to clients it became quickly apparent there was a bigger need for computer training and repairs. Most small businesses were struggling to find reliable techs to help them out with their IT services.

    So Office Magic pivoted into PC Rescue.

    For  the next ten years PC Rescue was a profitable business, the problem I had was the classic small business proprietor’s dilemma – I couldn’t get the right people.

    The staff and contractors I had were good computer techs but I couldn’t find one with the skills or motivation to take over the day to day supervisor role so I could work on growing the business. I was stuck in the trap described by Michael Gerber in his book the e-myth.

    Originally, PC Rescue’s business plan had been a five year strategy — two years validating, two years executing and one year exiting. The exit I particularly liked was creating a computer support franchise operation.

    This didn’t happen because the company lacked the human capital required;  my wife and I lacked the management resources to move PC Rescue to the next stage.

    When this became apparent we should have pivoted the business. We didn’t because I was too busy with the day to day stresses of keeping customers and staff happy.

    Eventually we achieved an exit of sorts, ten years later than intended and not in a satisfactory way. The business remained under capitalised and the new partners turned out not to have the expertise or drive required to grow the operation.

    Which make Jonathan’s pivot of Roamz so much more interesting. He listened to customers, looked at the direction of the industry and realised where the company’s strengths lay.

    Rather that doubling down on a model which was struggling, he took the business in a new direction.

    Having that flexibility is probably one of the greatest assets for small and startup businesses as larger corporations struggle with executing massive changes.

    As markets evolve and the rate of economic change accelerates, having the skills and mindset to execute successful pivots could be the difference between survival and failure for many big and small businesses.

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  • The sport of racing dinosaurs

    The sport of racing dinosaurs

    The admission from Bud Selig, the US Major League Baseball Commissioner, that he has never used email raised lots of eyebrows around the world.

    As Business Insider notes, Selig is 79 years old and there are plenty of other sports administrators challenged by technology so it’s understandable that the commissioner might not see the need to use a technology that became common twenty years ago.

    Bud Selig’s story illustrates a much more important issue facing the professional sports industry, that it’s run on an aging business model.

    The last fifty years has been very good for professional sport as television and Pay-TV networks bid sporting rights higher across the world.

    In most nations, the dominant sport did extremely well as broadcasters fought each other; the Olympics, Soccer leagues in most of the world along with baseball, American football and basketball in the US, Cricket in India, Aussie Rules in Australia, Rugby in South Africa and New Zealand all became incredibly rich.

    There weren’t many competitive pressures on the managements of those sport as the dominant sports rarely had any competition, it was a matter of just playing the TV executives off each other.

    As a consequence, many sports are run by people with a somewhat exaggerated sense of privilege – they believe it’s their talent, not Rupert Murdoch’s or NBC’s money, that is responsible for their game’s riches.

    Bud can dismiss the disbelieving gasps of people in the real economy because for most of his career the only competition he’s had to deal with was from his colleagues has he fought his way to the top job which he won in 1998.

    In the real economy, there’s no such luxury. In fact, email may be becoming yesterday’s technology as social media and collaborative tools take over. David Thodey at Telstra and Atos’ Thierry Breton are two leaders in this field.

    The danger for sporting organisations is that they are ripe for disruption, so far broadcast media rights have stood up well while revenues in other parts of the entertainment and publishing industries has collapsed. There’s no guarantee though that broadcast sports will remain immune from those changes.

    Should disruption come along, even just in the form of sporting rights stagnating, many professional codes will suddenly find inefficiencies like Bud Selig are an expensive luxury.

    While Bud’s story is amusing, in reality there’s little the rest of us can learn from how Major League Baseball’s senior executives run their offices.

    Image of Bud Selig courtesy of bkabak through Flickr.

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  • Politics, business and leadership

    Politics, business and leadership

    I’ve covered the New York Times’ interview with Google’s senior vice president of people operations, Laszlo Bock previously in describing what the business has learned from its scientific method of hiring people.

    One striking aspect of that story that deserves further discussion is Bock’s thoughts on leadership;

    We found that, for leaders, it’s important that people know you are consistent and fair in how you think about making decisions and that there’s an element of predictability. If a leader is consistent, people on their teams experience tremendous freedom, because then they know that within certain parameters, they can do whatever they want. If your manager is all over the place, you’re never going to know what you can do, and you’re going to experience it as very restrictive.

    This is something that applies in all walks of life — whether you’re coaching a kids’ football team, running a corporation or leading a nation.

    Sadly in many of these fields we’re lacking the consistent leadership Laszlo Bock describes. That could turn out to be one of the greatest challenges for the 21st Century.

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  • When Venture Capital meets its own disruption

    When Venture Capital meets its own disruption

    Tech industry veteran Paul Graham always offers challenging thoughts about the Silicon Valley business environment on his Y Combinator blog.

    Last month’s post looks at investment trends and how the venture capital industry itself is being disrupted as startups become cheaper to fund. He also touches on a profound change in the modern business environment.

    Graham’s point is Venture Capital firms are finding their equity stakes eroding as it becomes easier and cheaper for founders to fund their business, as a result VC terms are steadily becoming less demanding.

    An interesting observation from Graham is how the attitude of graduates towards starting up businesses has changed.

    When I graduated from college in 1986, there were essentially two options: get a job or go to grad school. Now there’s a third: start your own company. That’s a big change. In principle it was possible to start your own company in 1986 too, but it didn’t seem like a real possibility. It seemed possible to start a consulting company, or a niche product company, but it didn’t seem possible to start a company that would become big.

    That isn’t true – people like Michael Dell, Bill Gates and Steve Jobs were creating companies that were already successes by 1986 – the difference was that startup companies in the 1980s were founded by college dropouts, not graduates of Cornell or Harvard.

    In the current dot com mania, it’s now acceptable for graduates of mainstream universities to look at starting up business. For this we can probably thank Sergey Brin and Larry Page for showing how graduates can create a massive success with Google.

    One wonders though how long this will last, for many of the twenty and early thirty somethings taking a punt on some start ups the option of going back to work for a consulting firm is always there. Get in your late 30s or early 40s and suddenly options start running out if you haven’t hit that big home run and found a greater fool.

    There’s also the risk that the current startup mania will run out of steam, right now it’s sexy but stories like 25 million dollar investments in businesses that are barely past their concept phase do indicate the current dot com boom is approaching its peak, if it isn’t there already.

    Where Graham is spot on though is that the 19th and 20th Century methods of industrial organisation are evolving into something else as technology breaks down silos and conglomerates. This is something that current executives, and those at university hoping to be the next generation of managers, should keep in mind.

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  • Staging a sales blitzkreig to win the market battle

    Staging a sales blitzkreig to win the market battle

    Part of the Silicon Valley greater fool model requires ramping whatever metrics are necessary — page views, unique visitors, revenue or profit to attract prospective buyers to acquire the business.

    Elizabeth Knight in the Sydney Morning Herald looks at the cracks appearing in online retailer The Iconic where revenues of thirty million dollars were subsidised by forty-four million in losses in the e-commerce operator’s first year of trading.

    The Iconic has all the hallmarks of a classic ‘buy me’ Silicon Valley operation — big marketing spend, high customer acquisition costs and fat operating losses in an effort to build market share.

    Getting market share is one of the key aspects of the greater fool model, being the leader in a segment almost guarantees a buyer, usually the one of the shellshocked incumbents.

    Knight quotes emails from one of The Iconic’s founders, Oliver Samwar, on the importance of being number one in their sector.

    ‘‘The only thing is that the time of the Blitzkrieg must be chosen wisely so that each country tells me with blood when it is time. I am ready – anytime!’’ one said.

    ‘‘We must be number one latest in the last month of next season. Full month, not a discount sales month

    ‘‘Why? Because only number one can raise unbelievable money at unbelievable valuations. I cannot raise money for number 2 etc and I have seen it how easy (sic) it is for me in Brazil and how difficult in Russia because our team f….d up.’’

    As we’ve seen with companies like Groupon, being number one can impress gullible corporations but when that market position has been bought by investor’s money subsidising operations, the business is rarely sustainable.

    Whether investors are prepared to continue subsidising The Iconic’s losses or if the business can attract a buyer will depend upon the business maintaining momentum on its key metrics.

    Probably the most important thing for companies like The Iconic though is the availability of easy credit and accessible funds.

    As we saw in the original dot com boom, when that easy money evaporates so to do most of the businesses.

    For the incumbent businesses threatened by well funded upstarts, some might find the best hope for survival is to hope challengers run out of money.

    In the meantime though, they may have to survive a market blitzkrieg.

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