Paul Wallbank – Brilliant Communications

Category: Investment

  • Reskilling the workforce

    Reskilling the workforce

    One of the core objectives 1980s management philosophy is to shift costs and risks onto others. Staff training is one area that caught the brunt of the drive to slash expenses for short term gain, as a consequence we have a skills crisis with offers opportunities for savvy entrerpreneurs.

    In Why Good People Can’t Get Jobs: Chasing After the ‘Purple Squirrel Wharton management professor Peter Cappelli discusses his recent book that looks at this problem.

    Cappelli’s argument is that companies aren’t offering enough for the skills they desire, they often ask too much of candidates and they won’t train staff.

    In Cappelli’s book, he claims that staff training has plummeted;

    One of your chapters in the book is called “A Training Gap, Not a Skills Gap.” You have some figures showing that in 1979, young workers received an average of two and a half weeks of training per year. By 1991, only 17% of young employees reported getting any training during the previous year, and by last year, only 21% said they received training during the previous five years.

    The predictable consequence of neglecting training for the last thirty years is we now face skills shortages and those responsible – the managers and business owners who refuse to train workers – are now demanding governments do something about it.

    In many ways today’s skills shortages epitomise the short termism of 1980s thinking and how we now find society, and business, is struggling with the long term effects and costs.

    Wherever there’s a problem there is opportunity and there’s a breed of businesses, training companies and workers who will be taking advantage of the failures of the previous generation of managers.

    For those stuck in the 1980s mindset that training, like most staff expenses, is a cost and not an investment they are going to struggle in a world where adding value is more profitable than being the lowest cost provider.

     

    The photo THE BEAD MAKER — Apprentice Watches the Master — A Rosary Shop in Old Meiji-Era Japan was posted to Flickr by Okinawa Soba.

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  • Australia’s high cost quandary

    Australia’s high cost quandary

    “Around the world our towncars are usually 30% more expensive than taxis, in Sydney it’s 20% as the cabs are pretty expensive,” said Travis Kalanick on launching the Sydney version of Uber’s hire care booking service.

    It’s not just hire cars which are expensive in Sydney – the soaring cost of living in Australia is bourne out by Expatistan, a web site that crowdsources the cost of living in various cities.

    Expatisan’s comparisons find Sydney up with Tokyo and London as the most expensive towns on earth.

    That conclusion means Australian businesses, governments and policy makers have some important decisions ahead of them.

    Cholesterol in the veins

    High property prices have been the norm for two decades in Australia, the middle class welfare state that both political parties support gives tax and social security concessions to property owners while the banking system requires most business lending to be secured by property.

    As a consequence, generations of Australians see property as the only path to financial success. If Bill Gates, or any of today’s entrepreneurial wizz-kids, had been born in Australia, they’d be encouraged to get a safe job and buy property than to take the risk of starting a new business.

    The property obsession has another perverse effect in that it creates a short term outlook for Aussie business owners who have to consider getting,  and paying off, a mortgage quickly to secure their financial foundations.

    A few weeks ago a business owner was profiled in the Sydney Morning Herald, which some call the Sydney Morning Property Spruiker, who paid 1.1 million Aussie dollars (a million US) for a property in Redfern – which is Sydney’s Bronx.

    That poor guy not only has a fat mortgage to pay off, but he has to pass those costs onto his customers. Just to pay the bank is a fat chunk out of his business before he pays his staff, landlord and the various other expenses before he can take his profits.

    Having to pay the bank for living costs is the main reason why Aussie businesses don’t invest in capital equipment, which in turn makes  them less competitive than overseas competitors.

    One of the myths in Australian business is that competitiveness is solely due to labor costs, what the ideologues preaching this miss is that even if Aussie workers were paid a bowl of rice a day, Chinese and Mexican factories would still be more productive due to the investment in modern equipment.

    For the sake the argument, we won’t even discuss German, Japanese or Swiss manufacturers who are still competitive despite Australian level cost structures.

    This last point is what’s missed in much of the discussion about Australia’s economic future – apologists for Reserve Bank governor Glenn Stevens and the self congratulatory Canberra monoculture say that the high Aussie dollar is here to stay and mining will be driving the economy.

    Should the mining sector stall, which currently seems to be the case, then housing development will pick up the slack according to the policy-makers’ groupthink.

    That housing development is going to come at a high price, with Australian land and homes already among the world’s highest. Given Australia’s private sector debt is among the highest in the world already, it’s hard to see where the money will come from to fuel further property speculation.

    Right now Australia has a serious problem in determining what the future will be for the country.

    If the future is a high cost economy underpinned by massive property property prices, then the future has to lie in high value added sectors.

    The question is ‘what sectors’? Australian business, governments and society in general seem to think that property speculation is the future.

    Property speculation turned out not to be the future for Spain and it looks like China’s speculative boom is meeting its obvious end.

    Australians are going to have to hope that it really is different down under and that young people and immigrants are prepared to spend huge amounts of money to keep the economy afloat.

    If the policy makers are wrong, then the worry is that there is no Plan B.

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  • Instagram’s blues and the question of trust

    Instagram’s blues and the question of trust

    “I’m opting out” is one of the milder reactions to Instagram’s changes to their terms and conditions.

    Since the photo app was bought by Facebook for a billion dollars – and marking the high water point for Silicon Valley’s greater fool model of investment – observers have been waiting to see how Mark Zuckerberg’s team would integrate the service and get a return on their substantial investment.

    Now we know. Under the new terms, Instagram will inject sponsored posts and advertising into users’ information feeds.

    There’s nothing really unusual in this, almost every ‘free’ online service has something like this in order to make money. The Atlantic’s Alex Madigral makes the point that companies will continue to sell and use our information for as long as we won’t pay for software.

    What’s really interesting about this is the angry reaction to the changes, showing how people are losing trust in Facebook and, more worryingly for all social media services, how people are beginning to value their private information.

    Once people understand the value of their personal data, and the time they spend creating content for these services, the economics of social media services starts to change which in turns hurts the business models of Facebook and others social media sites.

    We’re still in the early days of social media and the business models that underpin them are evolving quickly. Instagram’s current problems are another lesson for users, advertisers and entrepreneurs.

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  • Connecting the household to the internet of everything

    Connecting the household to the internet of everything

    The development of intelligent household appliances like lights is changing our lives in subtle ways, Australian startup Moore’s Cloud is a good example of how cheap computing, accessible internet and open applications are coming together.

    One of the frontiers of technology right now is the internet of things, where machines connect directly to each other, cutting out the requirement for people to monitor them.

    Good examples of these devices is the internet connected fridge – which was the poster child for pointless connectivity during tech wreck in the early 2000s but is now standard equipment in hotels, restaurants and hospitals where monitoring stock levels has become wholly automated.

    Cheap hardware has driven this trend, as processor prices have tumbled it’s become cost effective to incorporate intelligent systems into almost every household device. Everything from the kettle to the washing machine now has some sort of CPU in it.

    Moore’s Cloud is a good example of how the internet of machines is coming together. A simple cube shaped device has the electronic smarts to connect with other lights and be controlled by software apps.

    Being able to create is important as the software interfaces – the APIs – are open which people to write programs that take advantage of the light’s features. A video from the Moore’s Cloud builders showcases twelve of the apps which have been developed so far which include weather forecasting, night lights and changing moods.

    Having an ‘ecosystem’ of apps is now driving innovation in consumer electronics. The iPhone started the app revolution and now everything from stereo systems to lights are being controlled by them. Devices that don’t have open APIs are at risk of being left behind.

    With systems being open to interested designers, anybody can create their own way of controlling device which opens the way for some innovative, left of field ideas.

    In many respects, Moore’s Cloud is one of the early wave of smart features we’re going to see in the next generation of household appliances that will change how we use these tools.

    The team behind Moore’s Cloud is still raising money for the project through Kickstarter, their campaign finishes this Friday. Hopefully they’ll meet their targets and take the project further.

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  • Transferring risk to the customer

    Transferring risk to the customer

    AirBnB is one of the poster children for the “collaborative consumption” model of internet businesses where people can put their spare resources, in this case rooms, out into the marketplace.

    Like most web based businesses though the customer service is poor and the proprietors try to push responsibility for the platform’s use back onto the site’s users.

    A good example of this is an article this week in the New York Times where AirBnB hosts risk fines and eviction for breaching their leases or local accommodation laws.

    When Nigel Warren rented out his New York apartment while he was out of town, he returned to find he was facing eviction and up to $40,000 in fines. Fortunately he avoided both but AirBnB did little to help him except to point him in the direction of the terms and conditions which required him to obey all local laws.

    The New York Times asked AirBnB for comment and received corporate platitudes about how their service helps struggling home owners but no real response to the risks of falling foul to local government, landlords, building owners or insurance problems by sub-letting their residences.

    Failing the customer service test is not just AirBnB’s problem, Vlad Gurovich was scammed by a buyer on eBay and now he finds PayPal is chasing him for outstanding money.

    This is a pretty typical problem for PayPal and eBay customers – as Vlad has found, the various seller protections often prove to be useless when dispute resolution favours scammersand PayPal’s philosophy of shutting down accounts unilaterally and without appeal exposes sellers to substantial risks.

    Interestingly, PayPal’s president David Marcus claimed earlier this year that he was trying to change this culture within the company. It seems that’s not going well.

    PayPal, eBay and AirBnB are alone in this of Soviet customer support model – Amazon, Google and most web2.0 businesses have this culture.

    In many ways it’s understandable as dealing with customers is hard. In the view of the modern business world, cutting deals is glamorous while looking after customers is a grubby, low level task that should be outsourced whenever possible.

    Pushing the risks onto users also makes sense from a business perspective, that makes the billion dollar valuations of these services look even better.

    For the founders of these services, none of this is a problem. By the time the true costs and risks are understood, the founders have made their exit and the greater fools who bought the businesses have to deal with the mess.

    While the greater fools can afford to carry the costs, the real concern is for users who may found themselves out of money and out of a place to live.

    That’s why the founders of these businesses need to be called to account for their ethical lapses.

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