Paul Wallbank – Brilliant Communications

Category: Innovation

  • Booking a disruption

    Booking a disruption

    Last night, US based booking service Eventbrite launched their Australian service, which promises to disrupt some cozy local incumbents.

    The Australian ticket booking industry – like most of the nation’s business sectors – is dominated by two large players; Ticketmaster and Ticketek, with the latter dominating most ticket sales for big events.

    Like most Australian duopolies, both Ticketmaster and Ticketek have a comfortable existence. With almost every ticket for major sporting, entertainment and cultural fixtures sold through their services, they’ve been allowed to neglect investing in new platforms while reaping monopoly profits from both attendees and organisers.

    The development of online ticketing platforms like Eventbrite and Australian equivalents like Sticky Tickets are part of the disruption coming to this sector.

    All of a sudden, event organisers don’t have to rely upon the grace and favours of major incumbents and ticket buyers aren’t getting slugged with outrageous “administrative fees” by the agencies.

    The ticketing sector is one of these areas where decades of business practices have allowed middle men to develop, now a whole breed of new intermediaries are using technology to challenge the incumbents.

    Integrating other technologies like reporting services, mailing lists and social media platforms along with hardware like iPad, iPhone and Android based management platforms for those on the door makes these services even more compelling to event organisers.

    Right now the big incumbents probably aren’t taking these services too seriously as their cashflows, and management bonuses, seem safe and unassailable. Like all challenged industries, it might take them some time to figure out there is a real threat to their positions.

    It will be interesting when a big events organiser or sports venue decides to move across to one of the newer ticketing companies, then we’ll see how the big incumbents deal with the threat to their businesses.

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  • The importance of transparency

    The importance of transparency

    The US Federal Reserve has announced they will release more details from the information they use on determining official interest rates. On the same day the social networking site Twitter is embarrassed when its opaque verified account policy fails.

    Being open and honest is the key component in trust and in turn trust is the bedrock of society. If you can’t trust your neighbour, the local cop or the grocer at the shops then society quickly starts breaking down.

    Many big businesses, particularly those in markets where they are one of a small group of incumbents get away with abusing your trust; they tell an illegal surcharge can’t be waived because “that’s their policy, you can’t change an account because of the “terms and conditions” and that the call centre’s operators name is Janet even though it’s Rajiv and you know that when you call back asking for “Janet” you’ll be told”there’s 35 Janets working in the department right now”.

    All of this we’ve come to expect from big bureaucratic organisations like the phone company, the bank and the tax office. The interesting thing is how many new businesses that are adopting this anti-customer model of operating.

    Rules and policies are fine – as long as everyone knows them, they aren’t too onerous and they are applied fairly and consistently.

    The challenge for all businesses – particularly those taking on incumbents – is they have to show they are more trustworthy than the existing operators. If you can’t show that, then maybe it’s time to think about how you operate.

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  • It’s you, not them

    It’s you, not them

    An article in Bloomberg on The Three Types of People To Fire Immediately is a classic example of mistaking symptoms for the cause of an organisation’s problems.

    G. Michael Maddock and Raphael Louis Vitón write that the biggest blockers to innovation in a business are the employees who can be roughly divided into four groups; the ones who welcome innovation and the three groups who block it – “the victims”, “the non-believers” and “the know it alls.”

    Vitón’s and Maddock’s advice is to sack those in the three groups of blockers.

    If anything sacking the “know it alls” means you will lose valuable corporate memory, the “non-believers” maybe the dissenters who are critical in keeping visions in contact with reality and the “victims” may actually be the most passionate people in your organisation.

    Those “victims” are often the people who’ve tried to make a difference early in their careers, their attempts failed and they found themselves sidelined and embittered within the organisation.

    I came across many of these when I was working with the state government, they’d had good ideas and continuously found themselves belittled when they’d tried to implement them.

    To add insult to injury, many of those ideas would be adopted some years later to great fanfare with credit given to the same managers who’d stifled the earlier suggestio

    Rather than giving those “victims” a pink slip, it might be worthwhile talking to those staff and finding why they are negative and where the system can be improved.

    If you have a workplace full of negativity then the blame for a dysfunctional culture usually lies in the management suite.

    Perhaps it’s the managers who need to be fired for creating a nay-sayer business culture of victims and non-believers.

    My concern with Vitón’s and Maddock’s advice is that it seems to play to the conceit of executives who think they, and their organisations, are something they are not. That’s nice for management consultants stoking corporate egos but a lousy deal for shareholders, staff and customers.

    Sometimes it’s better to understand what your business is and where the organisation’s strengths lie  – both in management in and staff – before jumping on the innovation bandwagon.

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  • Channel Conflict

    Channel Conflict

    I first became aware of the term “Channel Conflict” in the late 1990s when running an IT business that was a Microsoft reseller.

    A channel conflict is where a supplier starts competing with the merchants they supply, or promoting one group of their customers against another. A good example is Google’s Travel Search that is upsetting many of Google’s own advertising customers.

    As a local IT support business my channel conflict came from Microsoft advertising their own direct sales and consulting services as well as promoting their premium “gold” partners.

    Conflict with such a big channel partner was frustrating and unavoidable given Microsoft’s position in the market. We couldn’t do anything about it except work towards Gold Partner status and differentiate ourselves from the competitors who had the advantages of Microsoft’s marketing.

    The web – in particular online commerce – is increasing these channel conflicts as the Internet sweeps away existing middlemen and allows others to develop.

    A good example of how e-commerce is changing things was a tweet from Australian business broadcaster Brooke Corte where she found a swimsuits retailer’s prices were 40% cheaper through her shopping mall’s website.

    Essentially the swimsuit retailer is being undercut by their own landlord’s e-commerce service – an incredibly difficult channel conflict.

    For the retailer, they are up against Westfield; a big, multinational player with substantial market share and deep pockets who also happens to be their landlord in many high traffic locations.

    It isn’t all bad news for the small retailer facing a channel conflict; Seth Godin has a good perspective of what happens when the big boys decide to play in your sandpit.

    Seth’s situation was in 2008 Google launched a competitor – Knol – to his Squidoo businesses. This appeared to be the death knell, or Knol, for Squidoo.

    Three years later, Google killed Knol.

    In many cases channel conflict turns out not to be such a problem for the specialist retailer – big companies like Google, Microsoft and Westfield are good at what they do and dealing with the minutiae of retailing is not necessarily one of them.

    Small businesses also have an advantage in the very online tools that are disrupting retail and other fields. TechCrunch recently looked at some of the mobile and price comparison tools and how local retailers can use them to compete with Amazon.

    Coupling technology with service and focus – two factors that large companies usually struggle with – can define the battlefield for smaller businesses struggling with channel conflict.

    As declining margins and new technologies tempt big suppliers into dabbling in areas they previously avoided channel conflict is only going to increase, though for the creative and confident businesses it isn’t the threat it first seems to be.

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  • Why governments fail in building Silicon Valleys

    Why governments fail in building Silicon Valleys

    Don’t Give the Arnon Kohavis Your Money warns Sarah Lacy in her cautionary tale of what happens when an economic messiah comes to town promising to create the next Silicon Valley.

    “Hopefully this story finds a way to circulate out to the wider audience of government officials and old money elites who have good intentions of wanting to make their city a beacon for entrepreneurship.” Writes Sarah. “Hopefully it reaches them before they get bamboozled into giving the wrong people money to make it happen.”

    Bamboozled Bureaucrats

    For 19 months I was one of those government officials and saw those good intentions up close while developing what became the Digital Sydney project, that bamboozlement is real and a lot of money does go to the wrong people.

    Sarah’s points are well made, Silicon Valley wasn’t built quickly with its roots based in the 1930s electronic industry and the 1960s developments in semiconductors – all underpinned by massive US defence spending from World War II onwards.

    In many ways Silicon Valley was a happy and prosperous accident where various economic, political and technological forces came together without any planning. Neither the Californian or US Governments decreed they would make the region an entrepreneurial hotbed and sent out legions of public servants armed with subsidies and incentives to build a global business centre.

    This is the mistake governments – and a lot of entrepreneurs or business leaders – make when they talk about “building the next Silicon Valley”; they assume that tax free zones, incentive schemes and subsidies are going to attract the investors and inventors necessary to build the next entrepreneurial hotspot.

    For governments, the results are discouraging; usually ending in failed incubators and accelerator programs all conceived by public servants who, with the best will in the world, don’t have the skills, incentives or decades long timelines to make these schemes work.

    New England’s failure

    At worst, we end up with the corporate welfare model that sees governments and communities exploited like the tragic story of New London, Connecticut, where the local government spent $160 million and cleared an entire suburb for drug company Pfizer to establish their research headquarters, which they closed a few years later and left a waste dump behind.

    While the New London story is one of the worst examples, this sort of corporate welfare is the standard role for most government economic agencies. The department I worked for gave subsidies to supermarket chains to open distribution centres and stores that they were going to build anyway.

    One of the notable things with development agencies and the provincial politicians who oversee them is how they are easy victims for the economic messiah – it could be a pharmaceutical giant like in New London, a property developer promising Sydney will become a financial hub or a US venture capital guru flying in and promising Santiago will be the next San Francisco.

    The truth is there are no short cuts; building a technology centre like Silicon Valley, a financial hub like London or a manufacturing cluster like Italy’s Leather Triangle take decades, some luck and little intervention by government agencies or outside messiahs.

    Silicon Valley and most other successful industry centres are the result of a happy intersection of economics and history. The best governments can do is create the stable financial, tax and legal frameworks that let inventors, innovators and entrepreneurs build new industries.

    All government support isn’t bad as well thought out, long term programs that help new businesses and technologies grow being the very effective – we should keep in mind though taht Silicon Valley couldn’t have happened without massive US military and space program spending.

    Like a parent with a baby, the best governments can do is create the right environment and hope for the best. Interfering rarely works well.

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