Feb 272017
 
government subsidies for film industry hurt the sector

With the movie industry’s Academy Awards taking place last night, albeit not without mishaps, it’s worth reflecting on how Hollywood has defended itself against a range of disruptions over the last century.

From when the first movie was shown by the Lumiere brothers in Paris just after Christmas 1895, cinema has been both a disruptive force and one that’s been subject to its own challenges.

The immediate effect of the new technology was an explosion of new businesses, trades and techniques not dissimilar to the first dot com boom of the early days of the web as the traditional theatre industry was displaced by movie theatres.

As the  technology evolved, the movie industry itself was subject to disruption as sound was developed – ending the careers of many silent film stars – followed by colour both of which allowed new techniques and markets to developed.

Then came television and, it would have seemed, the end of the movie industry. Although that didn’t happen and it’s instructive how the industry reacted to the challenge.

In a 2007 paper, academics Barak Orbach and Liran Einav showed the movie industry’s evolution starting just after the introduction of talkies in 1927.

The shift to sound drove the movie industry to its all time heights prior to the Great Depression, however the economic downturn hit the film business hard – something to consider when people talk about the ‘lipstick effect’ -however steady growth returned through the 1930s and until the end of World War II.

Following the war, economic change and the arrival of television were tough for the movie business as attendances fell dramatically until stabilising in the late 1960s. Interestingly, the price of movie tickets went up dramatically shortly before the decline tapered off.

The graph finishes at 2002, at the end of the first internet boom and it’s notable the early days of the web, or the rise of Pay-TV in the 1970s and the Video Cassette Recorder in the 1980s had little effect on the industry’s attendance figures.

Despite those new technologies, the movie industry managed to attract audiences despite the plethora of entertainment options on offer at home.

Much of this was due to technological change with advances in computer generated graphics and recording techniques giving film makers far more creative scope while the roll out of multiplex cinema complexes allowed patrons far greater choice in movies.

Fifteen years later the effects of technology are still telling. In 2002, the average American was buying five movie tickets a year, according to the 2016 Motion Picture Association of America’s annual report this had fallen to 3.8, no doubt partly due to the success of Netflix.

However the film industry has still remained lucrative, partly through developing alternative streams of income like product licensing and international sales – China is by far the US industry’s biggest market and non-North American sales are growing by 21%. At the consumer level, movie houses increasingly make their money from concession sales and add-ons like premium seating.

So the answers to the movie industry’s success in staying profitable in the face of disruptive technologies seems to be in adopting new tech, diversifying income streams and globalising their product – although a bit of legislative protection in extending copyright probably helps.

The lessons though from a century of disruption though are clear, how well the movie industry responds to continuing disruption from the likes of streaming services like Amazon Prime, Netflix and their Chinese equivalents remains to be seen.

May 042016
 
not listening to your market or industry is a big management risk

One of the big technology industry stories currently is the merger of Dell and data storage giant EMC, which at seventy billion dollars will be the biggest merger in the tech industry’s history.

With fifty thousand employees managing such a change presents a challenge for EMC’s managers and something noticeable attending the company’s EMC World conference in Las Vegas this week is how upbeat almost all the staffers about the impending merger.

In an interview with David Goulden, the CEO of EMC’s Infrastructure division, which is the company’s core business, I asked him how they were keeping staff morale up in the face of changes that will almost certainly cost jobs.

“Change creates uncertainty,” says Goulden. “One thing I’ve learned from this is you cannot over-communicate and that’s true internally and it’s true with our customers. We’ve put an incredible amount of effort in communications so our teams are engaged to go and speak to their customers.”

As change is now a constant in all industries Goulden’s lesson should be noted by all managers and business leaders – clear, honest and open communications with employees and customers is essential in keeping the trust of the markets and workforce.

The old model of restricting information and hoping no-one finds out is increasingly harder to sustain and from a business point of view unprofitable in the medium term as well.

Paul travelled to Las Vegas as a guest of EMC and Netsuite.

Sep 282015
 

“No business or brand has a divine right to succeed,” said McDonald’s CEO Steve Easterbrook last May.

As McDonalds’ management desperately try to adapt to a changed marketplace, Bloomberg Business spoke to some of those bearing the greatest risks – the fast food chain’s franchisees.

The expansion of menu items and the shift to more custom produced burgers is creating problems for franchisees and store managers as equipment and procedures designed for simpler times struggles with varying demands.

McDonalds is in a terrible bind as the company faces a society-wide shift in consumption that leaves its business model stranded at the same time that the market is wanting more customised products.

The latter is an aspect that many businesses whose success and profitability is based on mass production are now facing as customised products become easier and cheaper to produce.

While McDonalds isn’t likely to go out of business soon, the broader trends aren’t running in its favour. That’s bad news for both the company and its franchisees.

Apr 082015
 

I’m putting together a story on what the Australian tech community can learn from the Ellen Pao story where an upcoming female associate at iconic Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers sued the firm for sexual discrimination.

Although Pao lost the case it rightly caused much debate within the US tech community about the lack of gender diversity, particularly given the number of women in the American venture capital industry has collapsed from 10% in 1999 to 6% in 2014

The reason for this seems to be simple, as Lauren Helper pointed out in the Silicon Valley Business Journal back in 2013 the industry is intensely tribal quoting one industry participant, Mark Taguchi, ‘“people operate in tribes,” he said. “They have groups of people that they learn to trust, that they work with, that they like.”’

In some respects this is a strength for the Silicon Valley industry as it means new entrants have to be vouched for by trusted figures but it also risks the sector being insular and dominated by narrow groups based on background, ethnicity or gender.

Once an industry defines its leaders and innovators by their friendships, schools or workplaces it risks becoming irrelevant to the outside world and it’s inevitable an inward focus will blind the group to new trends and developing technologies.

The warning from Pao’s case is Silicon Valley may be becoming too insular, it’s a handy wakeup to remind participants there is a big, diverse world outside the Bay Area.

However the US tech sector might survive without diversifying given its size and access to capital. Forother countries’ developing industries – like Australia’s – it’s a hindering factor few can afford.

In most ecosystems diversity is strength, it’s hard to see how that’s any different for the tech sector. Boys Clubs are relic of last century and have little place in this one; for regions looking at copying Silicon Valley, this is one trait not to pick up.

Jan 172015
 
The Australian wine industry has problems

Mind games, wine growers and the Naples mafia are among today’s links along with last person in Britain who lived under Queen Victoria passing away and a touching series of portraits showing the end of the film photography industry.

Cutting out the middle man

Reka Haros is a wine maker in Italy’s Venuto region. Like many small producers her winery struggles with distribution and sales in a crowded market. Reba’s solution of going direct to the customer is one that many businesses should be considering in a noisy world.

Life in protection

I don’t fear death, I fear being discredited. The story of Italian journalist Roberto Saviano and his eight years in protection after writing about the Naples mafia.

Picturing the decline of film photography

Canadian photographer Robert Burley travelled the world with his 4×5 field camera to document the end of analogue photography. It’s a poignant portrayal of how an entire industry comes to and with one technological change.

Last of the Victorians

Ethel Lang, the last surviving Briton to live under the reign of Queen Victoria, died last week at the age 114.

Manufacturing false memories

A frightening physiological experiment shows a cunning interviewer can convince most of us  we committed crimes which we are totally innocent of. This truly is a disturbing story.

Dec 252014
 
How business should prepare for christmas

In 1968 Terry Gilliam was some years off his Monty Python fame and eking out a living as a struggling American artist in London.

Midway through the year he was commissioned by the producers of Do Not Adjust Your Set, the British TV comedy show that led to Monty Python’s Flying Circus, to contribute to their 1968 Christmas special.

The results are marvellous as the Open Culture website describes.

We ordinary people should be thankful we don’t have Terry Gilliam in our family.

Dec 052014
 

Having just raised $1.2 billion in funding, Uber’s CEO Travis Kalanick has written of the company’s next steps.

Kalanick flags the Asia Pacific as being the focus for the company with the latest fund raising which values the business as currently being worth over forty billion dollars.

That valuation is a massive achievement for a five year old business, with the growth pains involved being one highlighted in Kalanick’s post.

This kind of growth has also come with significant growing pains. The events of the recent weeks have shown us that we also need to invest in internal growth and change. Acknowledging mistakes and learning from them are the first steps. We are collaborating across the company and seeking counsel from those who have gone through similar challenges to allow us to refine and change where needed.

One of the big challenges for a high growth business is managing that growth; systems that work well for a ten person organisation with a few hundred clients fall over when you have a hundred staff, thousands of contractors and millions of customers.

Probably the biggest challenge for businesses like Uber is privacy; what’s clear is the ‘God View’ that allowed the company’s staff to monitor customers and drivers has been abused and is too easily accessed by employees. Tightening data security is going to be one of the major tasks for business.

Fortunately, taking swift action is where Uber shines, and we will be making changes in the months ahead. Done right, it will lead to a smarter and more humble company that sets new standards in data privacy, gives back more to the cities we serve and defines and refines our company culture effectively.

‘Giving more back to cities’ flags what could be a new strategy for growth in places where regulators and governments have been hostile to Uber. One of the reasons for Uber’s success in Sydney for example has been the utter disgust the general population and business community has for the local taxi companies, showing Uber as a good corporate citizen could help in more hostile European markets.

While Kalanick identifies the Asia Pacific as being the big growth market he doesn’t identify in what fields; it’s hard not to think Uber’s software has more potential in logistics than hire car dispatch and this is an area where the company could find more  opportunities to expand the company’s services.

Regardless of the direction Kalanick decides to take Uber, the company is cashed up and ready to expand. As long as management keeps the confidence of investors, the business’ fate is in it’s own hands.

Uber is probably the most fascinating and complex of this generation of tech startups, Kalanick’s post shows it’s story has a long way to play out.