Doing social media right

May 022013
 
salesforce-marketing-control-cloud

After last week’s Associated Press hack and the stock exchange fallout, regulators are struggling with implications of social media and informed markets.

In a speech delivered last week the Australian Securities and Investments Commission’s Deputy Chair Belinda Gibson and Commissioner John Price gave some refreshing commonsense views on how businesses should handle public information.

The continuous disclosure advice given by Price and Gibson is aimed at meeting the requirements of Australian corporate law, but it’s actually good social media advice.

  • Having delegations in place for who has authority to speak on behalf of the company – whether in response to an ASX ‘price query’ or ‘aware’ letter, or when they become aware of information that needs to be released to the market, perhaps in response to speculation.
  • Ensuring that there is a designated contact person to liaise with the ASX, who has the requisite organisational knowledge and is contactable by ASX.
  • Have a clear rapid response plan and ensure all board members and senior executives are fully appraised of it. Give it a practice run every so often – a stress test of sorts.
  • Have a plan for when you will consider a trading halt appropriate.
  • Have a ‘Request for trading halt’ letter template ready for use.
  • Have guidelines for determining what is ‘material’ information for disclosure, tailored to your company.
  • Prepare a draft announcement where you are doing a deal that will
  • likely require an announcement at some time, and a stop-gap one in case of a leak

Having a nominated contact person with requisite organisational knowledge is possibly the most important point for any organisation.

Even if you think social media is just people posting what they had for lunch or sharing cute cat pictures, it isn’t going away and those Twitter feeds and Facebook pages are now considered official communications channels.

The intern running your social media is now your company’s official spokesperson. Are you comfortable with this?

A good example of where this can go wrong is the Australian Prime Minister’s Press Office where an immature staff member has been put in charge of posting messages. The results aren’t pretty.

prime-ministers-office-twitter-feed

The funny thing is the Prime Minister’s office would never dream of some dill getting up and saying this sort of thing on her behalf, yet allows an inexperienced, loose cannon put this sort of material in writing on the public internet.

Here’s Twenty Rules for Politicians using the Internet.

On a more mature level, the ASIC executives also have some good advice on writing for social media.

Don’t assume that the reader is sophisticated or leave readers to read between the lines. Companies need to highlight key information and tell it plainly.
While the ASIC speech is aimed at the specific problems of complying with company law and listing requirements, it’s a worthwhile guide for any organisation needing to manage its online presence.
Don’t be like the Prime Minister’s office, understand that an organisation’s social media presence is an official channel and treat it with the respect it deserves.

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Why Australia needs foreign ownership

Apr 182013
 
sold-australian-property-and-foreign-real-estate

Such are the vagaries of radio that I’ve been asked to comment on ABC Radio South Australia about foreign ownership based on an article that was picked up by The Drum 14 months ago.

That article was written shortly after Dick Smith came out grumbling about the prospect of Woolworths selling the electronics store chain named after him to foreign interests.

My point at the time was that foreign owners would be preferable to some poorly managed, undercapitalised local buyer as the Australian retail industry – even in a declining market like consumer electronics – needs more innovation and original thinking.

As it turned out, Dick Smith Electronics was sold to Anchorage Capital, a private equity turn around fund with an interesting portfolio of businesses.

In the meantime, the argument about foreign ownership of property and businesses, particularly farms, has ratcheted up as opportunistic politicians and the shock jock peanut gallery that sets much of Australia’s media agenda have found a cheap, jingoistic issue to score points from.

So why is foreign ownership of businesses like farms, mines and factories important for Australia?

A fair price for hard work

The main reason for supporting foreign buyers for Aussie businesses is it gives entrepreneurs a chance to get a fair price for their hard work.

A farmer or factory owner who builds their business shouldn’t have to accept a lower price because Australians don’t want to pay for the asset.

It’s not a matter of being able to pay Australians as have plenty of money to invest – a trillion dollars in superannuation funds and three billion dollars claimed for negative losses in 2009-10 show there’s plenty of money around – it’s just that Aussies don’t want to invest in farming, mining or other productive sectors.

We’re already seeing this play out in the small business sector as baby boomer proprietors find they aren’t going to sell their ventures for what they need to fund their retirement.

Access to capital

Should the protectionists get their way then the businesses and farms will eventually be sold to undercapitalised Australian investors at knock down prices.

This is the worse possible thing that could happen as not only do the entrepreneurs miss out, but also the factories and farms decline as they are starved of capital investment.

Cubby Station

A good example of both the lack of capital affecting investment and finding a fair price for ventures is Queensland’s Cubby Station.

While I personally think Cubby Station is an example of the economic bastardry and environmental vandalism that are the hallmarks of the droolingly incompetent National Party and its corrupt cronies, the venture itself is a good example of why the agriculture sector needs foreign investment.

Having been converted from cattle to cotton in the 1970s, Cubbie grew as successive owners acquired water licenses from surrounding properties.

Eventually the company collapsed under the weight of its debts in 2009 and the property was allowed to run down by the administrators until it was bought by Chinese backed interests at the beginning of 2013.

At the time of the acquisition, the company’s former chairman told The Australian,  “on reflection, I would go into those things with an even stronger balance sheet — in other words, with less gearing.”

In other words, the company was under-capitalised.

Competition concerns

Another reason for encouraging foreign ownership is that Australia has become the Noah’s Ark of business with duopolies dominating most key sectors.

Bringing in foreign owners at least offers the prospect of having alternatives to the comfortable two horse races that dominate most industries.

The property market

An aspect that has excited the peanut shock jocks has been the prospect of Chinese buyers purchasing all the country’s property.

For those of us with memories longer than goldfish, today’s Chinese mania is almost identical to the Japanese buying frenzy of the late 1980s.

Much of what we read about the Chinese buying homes is self serving tosh from property developers and real estate agents and what mania there is will peter out in a similar way to how the Japanese slowly withdrew.

This isn’t to say there shouldn’t be concerns about foreign ownership – tax avoidance, loss of sovereignty and Australia’s small domestic market are all valid questions that should be raised about overseas buyers, but overall much of the hysteria about foreign ownership is misplaced.

What Australians should be asking is why the locals aren’t investing in productive industries or buying mining and farming assets.

The answer almost certainly is that we’d rather stick with the ‘safety’ of the ASX 200 or the residential property market.

We’ve made our choices and we shouldn’t complain when Johnny Foreigner sees opportunities that beyond negative geared investment units or an tax advantaged superannuation fund.

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Driving a horse and cart in a digital economy

Apr 152013
 
Stagecoaches were dominant in the 19th Century but failed when technology changed

“There’s no point in building a highway if no-one can drive” Tasmanian business leader Jane Bennett said about the Australian National Broadband Network during an interview last week.

Jane was touching on an important point about the digital economy – that most businesses aren’t equipped to deal with it.

That half of businesses in the US, UK or Australia don’t have a website illustrates that in itself. What’s really worrying is setting up a website is the easy part and has been standard for a decade.

In many respects this isn’t new, a similar thing happened when mains electricity or the motor car arrived. Many businesses clung desperately to their oil filled lamps and horse drawn carts way past the time these were superseded.

Well into the 1970s there were hold outs who continued to ply their carts despite the costs of keeping horses on the road being far greater than buying a truck.

That failure to learn about and invest in new technologies saw all those businesses die, many of them with the owner who’d eked out a living as a milko or rag and bone man for decades.

On a bigger level, the struggles of the local milkman with his Clydesdale is a worrying reflection of business underinvestment. These folk are stuck with old equipment because they didn’t have the funds to spend on bringing their equipment up to Twentieth Century standards.

In the 1980s I saw this first hand in some of Australia’s factories. A foreman at a valve manufacturer in Western Sydney boasted to me how he had done his apprenticeship on a particular lathe fifty years earlier.

That machine still had the belt and pulley assembly from the days when the factory was powered by a steam engine at one end of the plant. It had an electric motor bolted onto it some time in the 1960s but was largely unaltered since.

It was understandable many Australian factory owners wouldn’t invest after World War II – many industries were protected and property speculation offered, and still does, better returns.

Another reason for not investing was the sheer cost of buying new equipment, major capital expenditures are risky and for most businesses it wasn’t work taking those risks.

Today there’s a big difference, hardware and software are far cheaper than they were in the 1960s or 70s with the big investment being in understanding and implementing the new technologies.

Few businesses don’t have computers or the internet but most of the things we do online are just variations on how our great grandparents worked with documents, filing cabinets and the penny post. We have to rethink how we use technology in business.

It would be a shame if we find ourselves stuck on the side of the highway wondering what the hell happened in the early years of the 21st Century.

Stage coach image courtesy of Velda Christensen at http://www.novapages.com/

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Fire and be dammed, the poor management at tech companies

Apr 122013
 
Image by ulrik http://www.sxc.hu/photo/235683

Microsoft manager Adam Orth has joined the ranks of those fired after some poorly thought out comments found their way onto the Reddit discussion boards. The firing of Orth illustrates a weakness in the management of tech firms.

Orth’s firing follows the “forked dongle” affair where two developers lost their jobs over sexist comments at an industry conference.

What’s notable in all these firings is how Playhaven, SendGrid and Microsoft’s management all summarily fired their employees for what at worse could be described as a ‘lapse of judgement’.

One of the conceits of modern management is that risk can be eliminated, the mark of a poor manager is to act quickly to get rid of anything that could potentially be a risk.

These tech companies are good illustrations of this – neither Adam Orth, Adria Richards or the Playhaven developer deserved to lose their jobs over this, all it required was an apology and commitment to be more careful about what they post on the public internet in future.

All of us, including the sensitive and incompetent firing managers, have something on the internet that could embarrass us or our employers. In an era where people are quick to take offense, it’s easy for something taken out of context to spin out of control.

That’s a risk beyond the control of middle managers at software companies.

Hiding from risks or attempting to purge them is not the way to run an organisation. Strong, good managers can do better than that.

Management manual image by Ulrik through SXC.hu

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They do it different over here

Apr 102013
 
apple-store-shanghai

Among expats in Thailand the saying was “the locals can ignore the law, but multinationals can’t.”

Thailand has some pretty strict laws on employee wages, workplace safety and council permits. Pretty well every business ignores them except the multinationals.

Generally Thais don’t complain about businesses not complying with the rules and the authorities are reluctant to take action.

Unless you’re a multinational, in which case the slightest irregularity in pay risks a visit from the police.

A few days in the Bangkok Immigration Gaol while the misunderstanding is sorted out is a good lesson for any sloppy farang country manager who hasn’t been ticking all the boxes.

The recent protests in China against Apple and now Microsoft over warranties illustrate a similar situation in the PRC.

What’s fascinating though is how the complaints against Microsoft and Apple are part of the rising Chinese consumer movement.

It’s a tough life being a consumer advocate in China, leading protests against well connected local companies or their government cronies could be a career limiting move, or much worse.

On the other hand it’s safe to criticise an American corporation and its much more likely to get results.

So managers of foreign companies in China have to be far more responsive to complaints than their local counterparts as Apple and Microsoft have learned.

For multinationals there is an upside to this, foreign companies tend to get better staff as they don’t mess people around with pay and their products are seen as being better because they do honor warranties.

It ends up being swings and roundabouts, but it does emphasise the traps for inexperienced expat managers who can unwittingly get themselves in trouble.

Apple and Microsoft have learned their lesson about customer service in China, you wonder how many others are still to do so.

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