Paul Wallbank – Brilliant Communications

Category: government

  • Leadership in a connected world

    Leadership in a connected world

    Managing a business or government agency as information pours into organisations is one of the great challenges for modern executives.

    As part of the Australian Cisco Live event, a panel looked  at Public Sector Leadership in a Connected World, many of the issues discussed apply to private sector executives as they do to public sector managers.

    Cisco’s Director of Global Public Sector Practice, Martin Stewart-Weeks, kicked off the panel with the observation that “we now live in a world where information has become completely unmanageable.”

    Martin quoted from David Weinberg’s book Too Big To Know, Rethinking Knowledge Now That the Facts Aren’t the Facts, Experts Are Everywhere, and the Smartest Person in the Room Is the Room. The author has a good explanation of his book in this YouTube clip.

    Trusting the community seems to be the biggest problem facing politicians and the public service, policy consultant Rod Glover puts the general distrust towards governments on the failure of leaders to consult over changes and decision.

    Economist Nick Gruen and Australian Industry Group adviser Kate Pound echoed this problem in that a change of culture is needed among leaders towards the way information is controlled and managed.

    Nick sees that culture changing while Rod thinks there will need to be demonstrated successes before risk adverse public service leaders will be prepared to adopt new ways of managing.

    Kate’s view is that culture change will require a realignment of incentives which will make managers accountable for the delivery of services. She cites a situation where businesses are obligated to register online but the agency’s website doesn’t work.

    So the problem is as much gathering the right data along with processing the information inside an agency. Both are challenges for organisations with rigid hierarchies and  information flows.

    Information is no longer power — it’s how you use it. But the structures are still based around access and control of knowledge.

    The big culture shift for politicians, public servants and corporate executives is we can no longer hoard information.

    For managers in both the public and private sectors, the task is now to share information and trust the right people will use it well.

    Paul travelled to Cisco Live courtesy of Cisco Systems

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  • Now may not be a good time to buy Melbourne property

    Now may not be a good time to buy Melbourne property

    There’s plenty of indicators that can be used to predict the health of an economy

    While my favourite is the mini-skirt index, the most reliable is when rich folk start building huge skyscrapers.

    Whenever developers propose a hundred storey building it marks the top of the property cycle. Should they get to actually build the thing, you can be guaranteed a nasty economic downturn is about to hit.

    The Skyscraper Index’s historical record

    This track record was set with the very first megatower – the Empire State building was started just before the 1929 stock market crash and completed as the great depression tightened its hold on the United States.

    Forty years later New York’s ill-fated World Trade Center opened just in time to welcome the 1973 oil shock and subsequent recession.

    A more recent example is Dubai’s Burj Khalifa, the world’s tallest building which was topped out in time for the city’s property crash and economic rescue by neighbouring Abu Dhabi.

    In Australia, the most notable downfall was 1980s entrepreneur Alan Bond who planned to build a 140 storey tower on the World Square site opposite Sydney’s Town Hall.

    The site was excavated but Bond went broke before work started and the hole remained for over a decade until a more modest 40 storey tower was built on the site.

    Australia 108

    So the news that property developers want to build a 108 storey tower on Melbourne’s Southbank should worry the Victorian government and unsettle the state’s property owners.

    What’s always notable about these super skyscrapers is the garishness of the project. While Australia 108 won’t match the Burj for sheer Las Vegas gaudiness, it will feature the ‘Star burst’, a star-shaped Sky Lobby and hotel at the top of the tower.

    Why the Skyscraper index works

    The reason why 100 storey buildings are such a reliable economic indicator is because they illustrate there’s too much dumb money in the economy. It rarely makes sense to build such tall buildings.

    Designing and building high rise buildings is complex and expensive – the higher you go, the more construction challenges there are as this Popular Mechanics article describes.

    Skyscrapers are subject to the law of diminishing returns as the taller the building is, the more space that’s needed for services like elevators, air conditioning, water supplies and fire protection which reduces the landlord’s rentable floorspace on the lower levels.

    When a building reaches a hundred storeys, there’s little space available on the lower floors for paying tenants. So the economics don’t add up.

    Builders, property developers and financiers know this so when they start proposing projects that don’t make commercial sense it’s a fair indication the locals are gripped with irrational exuberance and Adam Smith’s invisible hand is going to deliver a short, sharp slap to the back of the economy’s head.

    Does it matter to Australia?

    And so it is in Melbourne, which is going to be interesting to watch as South East Queensland is the only Australian metropolitan area to suffer a prolonged property downturn in the last twenty years.

    Hopefully Melbourne’s woes won’t affect the rest of the Australian economy but given how much the nation has invested in property and the stratospheric debt levels to service that speculation, it may well be that the rest of the country will follow Victoria.

    Winning the next election might not be a good thing for Tony Abbot and his followers who genuinely believe a Liberal government will deliver a magic pudding to the home of every dinky-di Working Australian.

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  • New York celebrates its entrepreneurs with Made in NY

    New York celebrates its entrepreneurs with Made in NY

    Part of a thriving industrial hub is having the business and skills that support the sector. If you’ve got them, you need to tell the world you’re open for business.

    Somebody who is doing this well is New York City’s Office of Media and Entertainment which runs the Made In NY program.

    While much of the focus of the program is on attracting film production, Made in NY recently branched out into promoting the city’s tech community boasting successful businesses like video sharing site Vimeo, tutor matching service Tutorspree and stock photography supplier Shutterstock.

    Towards the end of the Shutterstock clip one of the staff mentions ‘drop bears’ – a little bit of Sydney argot creeps into the story.

    It’s the Sydney connection that makes the Made In NY campaign so bittersweet, I was involved in setting up the Digital Sydney project for the New South Wales government.

    While Sydney doesn’t have the size of New York’s or London’s tech industries it does share the advantage of being one of the most diverse cities in the world. The work of organisations like ICE in Parramatta is important in realising some of that potential.

    That potential is huge – having sizeable communities of East and South Asian language speakers gives Sydney a real opportunity in the Asian Century.

    Unfortunately most of those communities live in Sydney’s West and while lip service is given to the needs of that region most economic development work focuses on corporate welfare for established interests and supporting inner city stuff that white folks like.

    When I started at what was then the Department of State and Regional Development in 2009 I was told that many in the agency believed NSW stood for “North Sydney to Wooloomoolloo”, something that largely turned out to be true. The west of Sydney, like most of the state, took second place behind the wants of big business.

    This is what’s encouraging about the Made In New York campaign, it promotes smaller business – although they all seem based in lower Manhattan staffed largely by a middle class monoculture, which seems to be a problem when you buy into hipster chic.

    Hipster chic is one of New York’s strengths and that’s what every city and country needs to be doing in a global connected economy.

    If you can’t define and articulate what it is you add to the economy, then you’re locked into the low value, small margin commodity end of the marketplace and that is a tough place to be.

    The question for all of us, on a personal and a national basis, is do we want to be price taking commodity producers or do we want to develop the high value, growth business of the 21st Century.

    New York City has made its choice, we have to make ours.

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  • Going insane with government subsidies

    Going insane with government subsidies

    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

     

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  • Smelling digital garbage

    Smelling digital garbage

    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

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