Double guessing the boss

What do the BBC, the Chinese government and Australian banks have in common?

Two interesting articles, one from English media writer Nick Cohen and the other from American journalist Eveline Chao, show how effective fear is for driving self censorship.

Eveline’s story, Me and My Censor, tells of her relationship with the Chinese Government censor appointed to monitor the publication she worked for in Beijing.

As well as having to avoid the 3Ts – Taiwan, Tibet, and Tiananmen – there were also a range of other delicate issues an active writer could find themselves being censored for as she relates in this conversation with her censor Snow;

We couldn’t use the cover image I had picked out for a feature on the rise of chain restaurants, because it was of an empty bowl, and, Snow told me, it would make people think of being hungry and remind them of the Great Famine (a period from 1958 to 1961 when tens of millions of Chinese starved to death, discussion of which is still suppressed). Even our Chinese designers began to roll their eyes when I related this change to them, and set them to work looking for images of bowls overflowing with meat.

Snow had learned the hard way about the power of imagery to upset the party functionaries. Snow explained why when she urged Eveline didn’t illustrate a story with a graphic showing stars;

I once published, in a newspaper, a picture of a book put out by the German embassy, introducing China and Germany’s investment cooperation. The book’s cover had a big stream on it, half of it the colors of the German flag, half of it red with yellow stars. I decided since it wasn’t a flag it was okay, and sent it to print. Our newspaper office was slapped with a fine of 180,000 yuan [today, around $28,000] and I had to write a self-criticism and take a big salary cut.

Self criticism and big salary cut – the things that middle managers fears regardless of whether they work in the Chinese Communist Party, the BBC or a bank.

The same fear of upsetting those in power is discussed in Nick Cohen’s article on the BBC’s disastrous and scandalous decision to pull a documentary exposing Jimmy Savile as a child abuser. Cohen quotes an interview where George Entwhistle, the executive responsible for pulling the program, was interviewed on the matter.

When Entwistle implied that the editor of Newsnight had no need to worry about his bosses circling over him like glassy-eyed crows, Evan Davis did what any sensible person would have done and burst out laughing.

Nick Cohen’s point was emphasised to me during the week when a former bank worker mentioned an executive had been disciplined for letting slip the bank was running several instances of a cloud computing service. Apparently the press and regulators could have been in the room where he discussed this.

Another example is a big organisation I’ve been regularly writing on where staff members regularly say “this is not a place where you question management.” An acquaintance that recently started there had to agree that they wouldn’t mention anything about the organisation, ever.

The problem with this self-censorship is that it quickly becomes destructive. In the United Airlines dead dog case, staff  subject to arbitrary whims and discipline of management  avoid taking decisions which often escalates situations where common sense would quickly find a simple solution.

It also means people jump to conclusions. Eviline relates the story of the tourist story;

One month, we ran a short news brief with figures on the number of mainland Chinese tourists that had visited the United States in 2007, and Snow flagged the number for deletion. We wondered what dirt we had unwittingly stumbled upon. Which government bureau oversaw tourism figures? What were they hiding? Finally, I called Snow, and learned that the numbers we had cited were for the number of Chinese tourists worldwide, not just in the United States.

So much for the would-be plot. Chagrined, I had to announce to my colleagues that we’d made a mistake.

A culture of secrecy also creates an atmosphere of distrust with every decision being analysed by staff, customers and outsiders for what nefarious motives lie behind even the most innocuous management decision.

Eventually those organisations become insular and inward looking with only those perceived as being ‘safe’ allowed to move into responsible positions which further entrenches the culture of secrecy and blame.

This is not healthy, but it’s where many of our government departments, political parties, sporting organisations and business are today including the BBC, Chinese media organisations and Australian banks.

For the disrupters, this is another competitive advantage.

Heroes of Capitalism

When did it become acceptable for airlines to humiliate passengers and customers on national television?

The few times I watch television these days is either when the footy’s on or the rare occasions that I surface from my interweb connected man cave and stumble into a room where someone has a TV running.

And so it was tonight when I happened to wander out to witness a terrible airport “reality” show – this one being an unoriginal, third rate Australian effort where Tiger Airlines shows how it stuffs around and humiliates its passengers. In Australia, Channel Seven considers this to be prime-time TV “entertainment”.

What was striking about the show was how Tiger Airlines’ check in staff humiliated a pensioner and her young son who hadn’t printed out their boarding passes.

The “fee” for not carrying out a basic task which reasonable people would expect would be part of an airline’s service is $25 a head at Tiger Airlines – one could ask what the Australian Competition and Consumer Commission’s position is on excessive fees being used to pad airlines’, or banks’, profits but that would be asking too much of Canberra’s worlds best practice doughnut munchers.

As result the poor lady was expected to front up with another $50 – money she didn’t have. So Tiger Airlines’ check in staff wouldn’t let her board and Channel Seven’s camera crew gleefully filmed her desperate tears and shocked son.

Eventually a bystander took pity on her and gave her $60. At least someone in the terminal had some decency and compassion, qualities neither the Tiger Airlines staff or Channel Seven camera crew have in the tiniest way.

No doubt somewhere in an anonymous glass tower some arsehole has a job as a manager at Tiger Airlines and has a KPI that includes how many poor mothers they can reduce to tears.

When the arsehole Tiger Airlines manager gets its annual bonus for making the required number of victims passengers weep, it no doubt goes to lunch with the Channel Seven executives – another bunch of arseholes – to slap each others’ backs and tell themselves what great heroes of capitalism they are.

The question that bugs me is when did it become acceptable to humiliate your customers? No doubt Tiger Airlines think it’s good publicity and Channel Seven think it is good entertainment.

We live in interesting times when our business leaders think it isn’t good enough just to take customers’ money but that it’s also necessary to humiliate them as the managements of both Channel Seven and Tiger Airlines seem to be rewarded for doing.

Fortunately in these corporatist days we still can vote with our wallets and turn off the muck we find offensive – that’s why decent people shouldn’t choose to fly Tiger Airlines or watch Channel Seven.

Ominious days for the omni-channel

The omni-channel retail buzzword bites the dust, and a good thing too.

At the beginning of the year we heard much about Omni Channel strategies as it dawned on retailers like Harvey Norman, David Jones and Myer that this Internet thingummy they’d heard about wasn’t going away.

When asked at the time what a ‘omni channel’ strategy was, Gerry Harvey admitted he’d had no idea what it was a week before it was announced while Myer CEO Bernie Brooks said late last years it was something about having electronic kiosks and free delivery.

So it was interesting to hear the CEO of US cloud computing service Netsuite, Zack Nelson, talk about his company’s ‘omni channel strategy’ this week at a lunch in Sydney.

On being asked what exactly Netsuite’s omni channel strategy was Zack let the cat out of the bag about the holy grail of the omni channel.

“There are so many channels, there are no channels,” said Zack. “Omni-channel was the only word we could find.”

So we can safely put the omni-channel myth to rest – the idea businesses can focus on one, two or three channels such as bricks and mortar, the web, iPhone apps or tablet computers was always flawed and risked locking companies into one or two technology platforms at a time when things are changing quickly and in unexpected ways.

Netsuite’s response is to adopt ‘responsive design’ principles where sites adapt to the device being used rather than spend lots of money building apps for devices that might be redundant in the near future.

This is true of business in general – we often forget the core role of our businesses, like the retailer’s mission is to get goods into the hands of eager consumers and TV stations or newspapers are ways of delivering advertising. Instead we fixate on the type of delivery vans we use, the background colour of our websites or which apps we are going to develop.

For retailers there’s a far more fundamental problem which Micheal Hills of CoCo Republic described at the same lunch, “people boast about buying designer labels online at discount prices but still want to go to bricks and mortar stores.”

That paradox is the sort of problem many businesses have to deal with which aren’t going to fixed by trendy buzzwords.

In Netsuite’s defense their use of the word ‘omni-channel’ is about offering multiple currencies and languages in the one package rather than selling to customers on different platforms. They aren’t using it as a cover for failing to notice their markets have changed in the last decade.

The main change in the market place is the good old fashion imperative of getting back to the basics of service and delivering value for money. The days of making money from finance packages or vendor rebates instead of looking after the customer are over.
Some managers are yet to understand this and their companies won’t have the luxury of indulging in buzzwords over the next decade.

Every business is a cloud business

Cloud computing can present an unexpected set of problems for a business.

Every business is a cloud business claims Zach Nelson, the CEO of cloud Enterprise Resource Planning service Netsuite.

In Zach’s view every business should be using cloud computing services and at a lunch in Sydney he illustrated this with companies ranging from agribusiness Elders through to furniture and design store CoCo Republic.

A buzzword used by Zach and Netsuite is ‘omni-channel’ and this is something we’ve heard from local retailers in the past.

Interestingly Netsuite’s definition of omni-channel is more as a catch-all phrase than a definition. “There are so many channels, there are really no channels,” says Zach. “Omni-channel was the only word we could find.”

This doesn’t bode well for older retailers struggling with the idea of a website as part of their “omni-channel’ strategy, let alone tablets, smartphones or 85” smart TVs.

The problem also faces businesses adopting cloud computing platforms with the related trend of Bring Your Own Device being in itself is an “omni-channel” medium where an employee could be using anything from a smartphone with a 7″ touchscreen through to a fully equipped PC workstation with a 27″ cinema display.

How Netsuite deals with the plethora of channels is through responsive design strategy where their sites adapt to the various screen sizes their customers use. This is the opposite to the philosophy of building specific apps for each platform.

We’re seeing other cloud companies struggle with this problem as well, Mark Zuckerberg recently described focusing on the open HTML 5 standard over dedicated iOS and Android apps as one of Facebook’s biggest mistakes while Salesforce founder Marc Benioff used the recent Dreamforce conference to confirm his company’s commitment to the web despite releasing an iOS application.

Zach Nelson’s notion that every business is a cloud business is interesting and true, whenever business owners or managers say “no” asked it they use cloud computing they are genuinely shocked when its pointed out to them that almost every external internet service they use runs on the cloud.

Slowly we’re seeing this being accepted by the business community as show by diverse companies adopting services like Netsuite, Salesforce and Xero.

The big challenge for managers is in taking advantage of the processing power businesses find that cloud computing gives them.

Shifting to a better return

Will rewarding passionate workers solve American business’ poor return on assets.

As part of Deloitte’s Building the Lucky Country series, the consulting firm had a briefing last week from John Hagel, co-chairman of Deloitte’s Silicon Valley Centre for the Edge, to discuss how industries are responding to shifts in the workplace and their markets.

John’s thesis is that businesses can be broadly split into into three groups; infrastructure, product innovation and customer relationship business which he covers in his Shift Index that looks at how industries are being affected by digital technologies.

Infrastructure businesses are high volume, transactional services like call centres, logistics and utilities companies.

The product innovators are those who develop new products, get them to market quickly and accelerating adoption of those goods.

Customer relationship businesses focus on understanding their clients and using that knowledge to add value.

Each of these business models require different mindsets and because most large companies try to do all three, they manage to do none well.

One of the results of this is a lousy Return On Assets, which Hagel says have fallen in the United States to one-third of the levels of 1965 and he doesn’t see this improving as the ‘competitive intensity’ of US markets increases.

A big feature of this decline in overall ROA is how the best performers have travelled compared to the laggards with the ‘winners’ barely maintaining their returns while the ‘losers’ are seeing their results declining dramatically.

How Hagel sees the solution to this poor performance is through rewarding creative and passionate workers better.

Firms have untapped opportunities to reverse their declining performance by embracing pull. To accomplish this, firms must develop and encourage passionate workers at every level of the organization.

Additionally, companies must tap into knowledge flows and expand the use of powerful tools, such as social software to solve operational/product problems more efficiently and effectively as well as to discover emerging opportunities.

If Hagel is right, it’s the businesses who want to micro-manage their workers while stifling innovation, initiative and creativity in their businesses who will be the great losers in this next decade as we move to the next phase of the ‘Big Shift’ where knowledge flows improve business performance.

Starting the process of dealing with these shifts involves understand what the DNA of your business really is; if it is a transactional infrastructure business then management needs to acknowledge this and not kid itself about being in customer relationships.

There are weakness in John Hagel’s proposition – one being that businesses can be easily pigeonholed into three categories.

Apple is a good example of this where a company that is clearly product focused has also shown it can be customer orientated with the success of the Apple Stores.

There’s also the question of why are there only three categories? In the breakdown the immediate thought is that there are businesses that don’t fit in any of these boxes. Legacy airlines or struggling motor manufacturers are good examples.

Despite the criticism, John and the Center For The Edge have some good points about the future of business and it’s something we’ll explore more over the next few weeks.

Management by fear

Dictatorial managers are killing organisations in an era which rewards openness.

The sad story of the passing of Bea, the Golden Retriever who died while in the care of United Airlines portrays a fundamental problem in many organisations’ managements – the rule of fear by middle managers.

A telling part of Bea’s sad tale is how her owner Maggie Rizer was treated when she went to collect her two dogs from United,

When we arrived in San Francisco to pick up our dogs we drove to the dark cargo terminal and on arrival in the hanger were told simply, “one of them is dead” by the emotionless worker who seemed more interested in his text messages.  It took thirty minutes for a supervisor to come to tell us, “it was the two year old.”  Subsequently we requested that our dog be returned to us and were told that she had been delivered to a local vet for an autopsy. Whatever thread of trust remained between us and United broke and we then insisted that she be returned to us for our own autopsy by our trusted veterinarian, Shann Ikezawa, DVM from Bishop Ranch Veterinary Center. Over the next two hours the supervisor’s lie unraveled as it became clear that Bea was right behind a closed door the whole time and he had been discussing how to handle the potential liability with his boss who had left and sticking to the divert and stall tactic that they had been taught. Eventually Bea was returned and we drove her to the vet at midnight.

The ‘divert and stall’ tactic took over two hours for Maggie and her partner to get around.

When I recently flew United I saw a similar attitude from the cabin crew, their lack of initiative and beaten attitude was noticeable. As I said in the post;

Overall the cabin crew seem tired and beaten, while they aren’t rude or unpleasant one wonders if they have all received too many stern memos from management about being friendly to customers.

Those stern memos have a corrosive effect on a business where every employee worries more about being sanctioned for breaking a rule or directive rather than helping customers.

Eventually the entire organisation becomes risk adverse and focused on protecting staff, or management’s, interests rather than looking after those of customers, shareholders or taxpayers.

Too many organisations are like this, where the staff are motivated by staying out of trouble rather than helping and adding value to their customers.

Making staff fear you is one way to run a company, or a nation, but ultimately those who are scared of the leaders lose all initiative and the empire collapses because every decision has to be sent to head office as the minions are scared to do anything that will be bring the Imperial Displeasure down upon their hapless heads.

From ancient Rome to the Soviet Union empires have fallen because of this, in today’s private sector companies that run on fear are ultimately doomed, including the ones who can tap into government subsidies to kick the can down the road. Even public sector agencies where this attitude reigns will change when the chill winds of austerity blow through their corridors.

One staff member taking a little bit of initiative probably would have saved Bea the golden retriever. One supervisor taking responsibility and helping Maggie Rizer would have avoided the PR disaster United now have.

In an economy that’s radically changing, inflexibility and slow decision making are possibly the worst possible traits an organisation can have. It’s time for dictatorial managers, along with control freak politicians and their public service directors, to let the reigns go on their staff.

Legacy people

Virgin America shows how quickly legacy operations are falling behind their younger competitors

“The problem with legacy businesses is legacy people” said David Cush, the CEO of Virgin America at the Dreamforce conference.

For many organisations this is indeed the problem; that managements, workforces and shareholders are locked into a way of doing business that has worked for them in the past, so when change arrives they are ill-equipped to deal with it.

One of the key take aways from the Dreamforce conference is that the rate of business change is accelerating as technologies like cloud computing and the Internet mature.

For the legacy businesses locked into old ways this means they are going backwards faster than they could imagine.

A good example of this is when Virgin America showed their vision of how customer service works in a connected, social world.

The problem for companies like United and the other legacy carriers with their older aircraft and lumbering IT systems is they simply don’t have the infrastructure to provide these services if they wanted to.

One of the characteristics of 1980s management thinking is under-investing in equipment. ‘working your assets’ by flogging them way past their replacement dates is a handy way to increase profits and management bonuses, but it leaves a business exposed when newer technologies come along.

That’s the problem the legacy businesses, whether they are airlines, banks, telcos or in any other sector. Those who are nimble and those who have invested in new systems can take advantage of the change.

For some of these businesses even if they had the wits, and cash, to make those investments it’s dubious whether they could make the tools work properly.

‘Getting it’ is more than just understanding how to turn on an iPhone or send a tweet, it’s about how these tools can be used in a business.

If you don’t know how to use these tools, or understand the consequences of using them, then the investment is wasted.

For those organisations who are falling behind, they have to start moving quickly or their legacy is the only trace there will be of their existence.

I’m not paid to have doubts

What do you do when the CEO has no doubts?

The Seattle Times has an interesting interview with Microsoft CEO Steve Ballmer this weekend where he discusses what has been one of the biggest years ever for his company.

Midway through the Seattle Times story there’s a telling exchange.

Q: What is Microsoft’s plan if Windows 8 doesn’t take off?

A: You know, Windows 8 is going to do great.

Q: No doubt at all?

A: I’m not paid to have doubts. (Laughs.) I don’t have any. It’s a fantastic product. …

There is no plan B – Windows Phone is running late and their hardware partner Nokia is looking more foolish every day. Last week not only did they flub the launch of their latest phone, but they also managed to alienate the world’s tech media at the event.

It’s nice not to have doubts, but from outside the comfortable corporate headquarters Microsoft looks like they are struggling in this space.

Steve Ballmer might be more credible if he did admit to doubts and at least hint there is a plan B in their smartphone strategy.

Companies need leaders with doubts – doubts about their strategy, about their managers, about the economy and – most importantly – about their own infallibility.

One of the worst aspects of 1980s management ideology was the myth of the CEO superstar. Too many good businesses have been destroyed, and too much damage done to the global economy, by senior executives who have believed in their own infallibility.

Some doubts might help a business, particularly when that company is struggling with some serious threats.

This is what happens when you rush things

Nokia’s Lumia 920 debacle shows why artificial deadlines don’t work

Nokia are going to release a smartphone with the best camera seen so far on a mobile phone.

Desperate for good news and positive coverage, Nokia decided to announce the Lumia 920 prematurely and their marketing people are forced to fake the videos and sample photos.

Then they get caught.

And instead of having the media fawning over the impressive features of the Lumia 920, Nokia are scorned. A particularly damaging thing in a fortnight where Amazon and Apple have major announcements.

The problem is giving yourself artificial milestones that can’t be met. People take shortcuts to meet those deadlines and debacles like Nokia’s are the result.

Artificial “drop dead dates” are the mark of panic by poor management. One wonders how long this can continue at Nokia.

Owning the customer

Is it possible to own the customer?

During the tech boom of the late 1990s the early wave of web developers had a business model that required locking customers into a relationship.

Having spent thousands of dollars for designing and building a website, a business then found they would have to spend hundreds of dollars every time they wanted to make even a minor change.

While that model didn’t work out for web designers as new tools appeared that made it easy for customers to look after their own sites, it’s still the ambition of many businesses to ‘own’ as much of the customer as possible.

Department store credit cards, supermarket petrol cards and airline frequent flier programs are all examples of how big businesses try to lock their customers into their ecosystem.

Possibly the dumbest, and most counterproductive all, are the media companies with policies of not linking outside their own websites. The idea is to keep readers on their sites but in reality it damages their own credibility and betrays their lack of understanding how the web works.

The airlines too have discovered the risks in trying to ‘own’ their customers as their devaluing frequent flier programs has irritated and disillusioned their most loyal clients.

Many businesses, particularly banks and telcos, try to tie you up into knots of contractual obligations with reams of terms and conditions. All of this is an attempt to make the customer a slave to their business.

Outside of having a legally protected monopoly, you can’t ‘own’ a customer – the customer has to grant the favour of doing business with them.

They’ll only do business with you if they trust that you’ll do the right thing by your promises; whether it’s delivering the cheapest product, the best service or quickest delivery. The moment their trust begins to slip, you risk losing their business.

Executives who talk of the concept of owning the customer are either working in organisations with little competition or those steeped in 1980s management practices. If you hear them talking like that, it might be best to take your business, and investments, elsewhere.

Owning customers didn’t work for the web designers of the early 2000s and it won’t work for businesses in other sectors. The only way to ensure most of your clients keep coming back is to deliver on what you’ve promised them.

Creating a service mindset

How tough is it for a business to change it’s customer service focus?

In the Foreign Correspondent report that inspired yesterday’s post about the start up community angel Investor Raval Navikant said  “you don’t need customer service anymore, you have Twitter.”

While it’s refreshing to hear that Twitter is now rightly seen as a customer service channel rather than a marketing tool, it’s worrying that startup businesses still have such a low opinion of supporting their users.

This is the mindset for the web2.0, social and cloud computing communities – that user support can be done though Frequently Asked Questions (FAQs), user forums or an anonymous email address that might get read once in a while. It’s the self-help model of helping your users and it’s the biggest weakness of online services.

A worry for these businesses is that big organisations now beginning to remember the importance of customers. What has traditionally been small business’ advantage is  being eroded.

At an Australian Computer Society Foundation lunch in Sydney yesterday Testra Corporation’s diector of Products and IT Enablement, Jenny Woods described how her company is moving to a more service centric culture.

While this isn’t simple in a company the size of Telstra, a task made harder by the telco industry’s customer hostility, it’s certainly a process that’s underway.

There’s a long way to go for Telstra. Along with that traditional telco antipathy towards their customers, they are big company with plenty of silos and aligning management KPIs so the temptation isn’t simply to gouge customers for short term profit is a big change.

Changing that ‘soak the customer’ mindset is the biggest challenge in making companies like Telstra service centric and that means management at all levels have to buy into the process.

Without that senior and middle management commitment, customer support will just be seen as the poor relation to other divisions and will be outsourced to the lowest cost provider at the first opportunity.

Part of that change to a service mindset is in trusting your staff. Jenny described how Telstra abandoned scripts for their home Internet customers and told the support agents they could use their initiative – as a result customer satisfaction went up, problems were solved faster and the number of modem returns slumped.

“The people who do the work, know how to do the work” says Jenny and it’s good that Telstra’s management is recognising the skills in their workforce.

Much of that anti-service culture we see in large organisations is because management don’t respect the skills, experience and knowledge of their workers. Instead they’re treated as naughty children who can be slapped into line with a stern memo.

Today’s economy doesn’t favour businesses and managements who think like that, the organisations that will do well this Century those who are flexible, value their staffs’ skills and have managers who see their role as more than micro-managing their silos.

It also means delivering a product you’re proud to support. If you won’t support your products, then your customers will go to a competitor who looks after their clients.

We fell into a trap into thinking customer service didn’t matter during the late Twentieth Century, it was always a myth and now we have to deliver.

Undoing the untrained workforce

The era of skimping on staff training is over

One of the notable things about the 1980s way of doing business was how front line workers weren’t valued for their skills and knowledge.

In call centres, shopping malls and government departments, those who dealt with customers were seen as an unnecessary expense who should be outsourced at the first opportunity or, if it wasn’t possible to hive them off, then encourage them to get more money out of the customer while providing less service.

An example of this was at electronic superstores where sales staff with little product knowledge were given rudimentary training and then encouraged to sell easy payment plans and expensive acccessories – the HDMI cable scam where connectors of dubious quality earned more profit and commission than the HiFi systems or plasma TVs they plugged into illustrated how lousy a deal this way of doing business for the customer.

Much of that mentality has been inherited by web2.0 companies that think customer service is an optional extra.

Some of those companies can’t even be bothered protecting their clients’ data properly, such is their unwillingness to provide service.

The stack ’em high, sell ’em cheap self service culture of the 1950s and 60s reached its limits in the 1980s and was only given a reprieve by the easy credit boom of the 1990s. With the end of the credit boom, electronic or household goods stores that simply sell cheap tat on interest free terms at a fat mark up without adding value now struggle.

Gerry Harvey is getting out of electronics partly for this reason – his business model is dead and it’s been difficult for a decade to make the fat profits on consumer computers or electricals without hooking the customers with interest free deals or expensive and pointless accessories or software.

One of the conceits of management through the last part of the Twentieth Century was the mantra “our greatest asset are our people”, today business have to start valuing the skills, knowledge and corporate memory of their workforces.