Category: management

Using big data to find the cupboard is bare

Yahoo! Chief Executive Marissa Mayer is an example of how modern managers are diving into big data to figure out what is going on in their company

Last week this blog discussed whether telecommuting was dead in light of Marissa Mayer’s banning of the practice at Yahoo.

While I don’t think telecommuting is dead, Marissa Mayer has a big problem figuring out exactly who is doing what at the company and abolishing remote working is one short term way of addressing the issue.

If Business Insider is to be believed, Yahoo!’s absent staff problem is bad.

After spending months frustrated at how empty Yahoo parking lots were, Mayer consulted Yahoo’s VPN logs to see if remote employees were checking in enough.

Mayer discovered they were not — and her decision was made.

Business Insider’s contention is that Mayer makes her decisions based on data analysis. At Google she drove designers mad by insisting on reviewing user reactions to different layouts and deciding based on the most popular results.
If this is true, then Marissa Mayer is the prototype of tomorrow’s top executives – the leaders in business by the end of this decade will be the ones who manage data well and can sift what matters out of the information deluge.
For all of us this is going to be a challenge with the probably the biggest task of all being able to identify which signals are worth paying attention to and which should be ignored.
Of course, all this assumes the data is good quality in the first place.
An assumption we’ve all made when talking about Big Data is that it’s about marketing – we made the same assumption about social media.
While Big Data is a good marketing tool, it’s just as useful in areas like manufacturing, logistics, credit evaluations and human resources. The latter is what Yahoo!’s staff are finding out.
In age of Big Data it may not pay to a slacker, but it’s going to be handy if you want to know what’s going on your business.

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Employment’s changing face

Is it management’s and white collar workers’ turn to deal with the change of contracting and business process outsourcing?

Last Thursday recruitment company Talent2 launched its 2013 Market Pulse Survey looking at the employment trends across the Asia Pacific.

According to the survey, things are looking good with 61% of businesses across the Asia Pacific forecasting growth and 45% expecting to hire more staff.

However there’s an interesting underlying theme to the good news, employment is changing in large organisations.

One of the give-aways is the fact that while nearly two-thirds of businesses expect to grow in 2013, less than half intend to increase staff. Businesses are doing more with less.

Part of this is because of increased automation. Despite the headlines, productivity is increasing in workplaces – particularly offices – as technology automates many business functions in fields like logistics and workforce management.

Another aspect driving the lack of employment is outsourcing, Talent2 say the proportion of Australians working as full time employees dipped below 75% in 2012 with a four percentage point drop over the year.

With more businesses contracting work out, one could expect the number of sole proprietors to be increasing. However this seems not to be the case.

The number of non-employing Australian businesses

According to the Australian Bureau of Statistics, the number of sole traders is barely moving – between 2006 and 2011 the number of “non-employing Australian businesses” only increased 5% while the population grew over 8%.

This implies the proportion of contractors in the workforce is actually shrinking.

Much of this is probably due to the work going offshore, particularly to Business Process Outsourcers (BPOs) in countries like the Philippines, Malaysia and Sri Lanka.

Saturday’s Australian Financial Review looked at what the BPOs are doing in the Philippines and they aren’t carrying out the call centre and basic clerical work that’s made up most of the outsourcing over the last twenty years. Now it’s management roles that are going offshore.

The bigger issue confronting Australians, however, is not call centre workers being relocated to the Philippines. It’s low- to mid-level professional jobs, being moved out of companies, accounting firms and law offices.

Legal outsourcing has been growing for a decade as large law firms have moved many of their para-legal and routine tasks offshore to countries where legal graduates are plentiful but work at lower rates than their western colleagues.

An interesting aspect in legal offshoring is that much of the work that was done by young lawyers has now gone to overseas contractors, which probably means there’s going to be a shortage of experienced legal practioners in the medium term. This is going to have profound consequences for law firms and their partners.

It’s also going to mean law and associated degrees are going to be less popular with school leavers as career prospects dwindle.

The biggest impact though is for managers – we’ve grown used to the assumption that management jobs stay at head office while the lower level jobs go to the lowest cost provider.

Now is those lowest cost providers are offering good quality management staff along with support desk and call centre staff.

During the restructurings of the 1980s and 90s, it was blue collar workers who were the most affected by change. Now it’s the turn of the office workers and managers.

It will be interesting to see how many of the people who thought they were secure in their roles deal with the uncertainty they now have. For some it’s going to be a tough decade.

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Will the top level domain milk cow save Melbourne IT?

The new global top level domains promise to be a rich cash cow, but is it enough to save Melbourne IT?

Beleaguered domain registration company Melbourne IT hopes the new breed of global top level domains will be its salvation after a decade of indifferent returns and a wallowing shareprice.

When the top level domains – known by their geeky acronym of gTLDs – were proposed five years ago they smelled like a revenue grab and so it has turned out.

To date 1930 organisations have applied for one of the top level domains, with a $135,000 evaluation fee that’s a juicy 260 million dollar pot to be shared between ICANN and the various domain registrars. No wonder Melbourne IT’s management is drooling.

One of the assurances of ICANN when the top level domains were announced was that trademark ownership would be part of the expensive evaluation process. That Melbourne IT is now spruiking gTLDs as a defensive intellectual property tactic is a notable backflip from ICANN’s earlier position.

The trading names aspect of the new global TLDs is going to be problematic for the registers and ICANN, a quick look at the applicant list for the new names sees domains like Tennis, Fail and Compare being applied for.

Good luck with defending those names in court – although having a spurious claim on the global use of the word ‘tennis’ will no doubt keep an army of Tennis Australia’s well paid lawyers occupied for years.

Even more delicious is Telstra’s claim to the domain name ‘yellowpages’. Despite being a declining business the Yellow Pages trademark is fiercely defended by various incumbent phone and directory companies around the world so it’s hard to see how that application will get passed without strong objections.

The real tragedy in the Melbourne IT story is how the company has gone nowhere for over decade after being the darling of the stock market when it was floated in 1998.

Melbourne IT shareprice

When Melbourne IT floated, it attracted controversy with it’s shares being priced at 2.20 and opening at $8.80. A stag gain of 300% for the insiders who got shares.

Despite the beliefs of those brainwashed by government privatisation campaigns in the 1990s, a staggering stag (pardon the pun) is money straight of the pocket of the listed company’s existing shareholders – Melbourne University in this case – and is evidence of either gross incompetence or malfeasance by the board and its advisors.

Given the Victorian government’s Auditor-General cleared the Melbourne IT board of any wrongdoing, the only explanation for the company’s botched float is gross incompetence.

The company’s share price since is clear evidence that gross incompetence remains a problem within the organisation’s leadership.

Whether the strong demand for global Top Level Domains can drag Melbourne IT out of it’s long term mediocrity remains to be seen but with the management’s track record it’s difficult to be optimistic.

Disclaimer: I was a director of a company that was a Melbourne IT reseller. There’s a long blog post in the poor, 1995 IT systems used by MelbourneIT and those might be related to the company’s poor performance over the last decade.

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It’s too late, baby – when digital reality bites

Sensis decide to move on from a print based model to digital advertising – a decade too late.

Yesterday Sensis announced it would restructure for digital growth by sacking staff, offshoring and “accelerate its transition to a digital media business”.

The directory division of Telstra has been in decline for years, a process that wasn’t helped by then CEO Sol Trujillo embarking on his expensive “Google Schmoogle” diversion.

A decade later, Managing Director John Allen has announced another 650 jobs to go from the remaining 3,500 workforce.

John’s comments are worth noting.

Until now we have been operating with an outdated print-based model – this is no longer sustainable for us. As we have made clear in the past, we will continue to produce Yellow and White Pages books to meet the needs of customers and advertisers who rely on the printed directories, but our future is online and mobile where the vast majority of search and directory business takes place.

Carol King put it best – it’s too late, Baby. These are words that should have been said a decade ago.

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To save the community, we had to destroy it.

Can online communities like Lonely Planet’s Thorn Tree survive in managerial organisations like the BBC?

When the BBC bought a 75% of travel guide publisher Lonely Planet in 2007, many people were puzzled at what the travel guide added to the publicly owned broadcaster’s mandate.

In 2011 the BBC bought out the rest of the founders’ stakes and just over a year later management mistakes threaten to destroy the brand.

Lonely Planet is one of the most powerful internet media properties in the English speaking world having become the dominant travel guide in the 1980s and then successfully making the jump into the online world with its website and mobile apps.

In 2012, the site boasted of four million visitors a month with most under 35 years old.

Key to Lonely Planet’s online success has been its community. The Thorn Tree forum provided the bulk of the site’s traffic as thousands of members discussed exotic destinations and asked or answered travel questions.

The Thorn Tree also turns out to be the BBC’s undoing as management struggled to control members’ comments.

At the end of 2012, inappropriate content was bought to management’s attention, with the Jimmy Savile scandal still reverberating around the corridors of the BBC, the organisation’s management panicked and announced a temporary closure of the Thorn Tree.

Two months later, the site is back up again with strict pre-moderation of posts which has left many long time users upset and going elsewhere, if they didn’t already do so during the closure.

Online communities are a strong assets but they are surprisingly fragile, as many popular sites have found in the past.

For Lonely Planet users, there’s no shortage of other travel sites online and it’s going to be challenging for the site to recover.

The Thorn Tree saga raises the question of whether risk adverse, public sector organisations like the BBC have the risk appetite to run online forums and build communities.

By definition successful online communities are diverse and sometimes skate close to the boundaries of good taste for a careerist executive in a managerial organisation like the BBC, such risks are intolerable and have to be eliminated.

If this means shutting down the Thorn Tree forums or neutering them, then that will be done. Management careers come before the good of the organisation.

Time will tell whether Lonely Planet will continue to thrive under the BBC and its management, but the portents aren’t good.

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Necessity, innovation and the birth of the web

The world wide web was born out of necessity. It’s inventor, Tim Berners-Lee, says the innovation has barely begun.

The man who invented the world wide web, Tim Berners-Lee spoke at the launch of the CSIRO’s Digital Productivity and Services Flagship in Sydney yesterday.

In telling about how the idea the idea of web, or Hyper Text Markup Language (HTML), came about Berners-Lee touched on some fundamental truths about innovation in big organisations.

In the 1990s the European Laboratory for Particle Physics (CERN) in Geneva had thousands of researchers bringing their own computers, it was an early version of what we now call the Bring Your Own Device (BYOD) policy.

“When they used their computers, they used their favourite computer running their favourite operating system. If they didn’t like what was available they wrote the software themselves,” said Tim. “Of course, none of these talked to each other.”

As a result sharing data was a nightmare as each scientist created documents using their own programs which often didn’t work on their colleagues’ computers.

Tim had the idea of standard language that would allow researchers to share information easily, although getting projects like this running in large bureaucratic organisations like CERN isn’t easy.

For getting HTML and the web running in CERN Tim gives credit to his boss, Mike Sendall, who supported him and his idea.

“If you’re wondering why innovation happens, one of the things is great bosses who let you do things on the side, Mike found an excuse to get a NeXT computer,” remembers Tim. “‘Why don’t you test it with your hypertext program?’ Mike said with a wink.”

There’s much talk about innovation in organisations, but without management support those ideas go nowhere, the story of the web is possibly the best example of what can happen when executives don’t just expect their workers to clock in, shut up and watch the clock.

One key point Tim made in his presentation was that it was twenty years after the Internet was invented before the web came along and another five years until the online world really took off.

We’re at that stage of development with the web now and with the development of the new HTML5 standard we’re going to see far more communication between machines.

Berners-Lee says “instead of having 1011 web pages communicating, we start to have 1011 computers talking to each other.”

These connections mean online innovation is only just beginning, we haven’t seen anything yet.

If you want your staff to stay quiet and watch the clock, that’s fine. But your clock might be figuring out how to do your job better than you can.

Tim Berners-Lee image courtesy of Tanaka on Flickr

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Throwing your problems over the fence

Outsourcing, subcontracting and securitisation often shift costs and risk from those responsible. Usually the bill ends up with the taxpayer or shareholder.

I first heard the term “throwing the problem over the fence” from a telco project manager a few years ago, it describes how modern organisations shift risk to others.

Throwing the problem over the fence usually involves contracting out a task, the philosophy is once the contract is signed delivery is no longer management’s problem, it’s now the responsibility of the contractor. Once the job is over the fence it’s out of sight and out of mind.

Governments, financial institutions and most corporations have become very good at throwing their problems over the fence.

Contracting away your worries

A core tenet of 1980s management thinking is contracting out; freeing executives from the tedious task of actually doing their jobs lets them focus on the important things in life, like securing performance bonuses.

Of course you can’t contract out risk – risk is like toothpaste, squeeze it in one place and it oozes out somewhere else.

Unlike toothpaste, risks have a habit of growing if they are ignored. Which becomes a problem for whoever is unwittingly on the other side of the fence.

Railways and risk

In “The Crash That Stopped Britain” author Ian Jack looked at the causes of the October 2000 Hatfield train accident which threw the nation’s railway network into chaos.

Jack correctly predicted that no-one would be found responsible as the tangle of rail operators, maintenance companies, financiers, labour hire firms and regulators made it almost impossible to determine exactly where responsibility for a fatal failure lay.

Diffusing responsibility is partly by design although originally the idea was to save costs, the theory being that tendering work previously done in house to the lowest cost provider would save money.

Instead its caused an escalation in costs as contracting out meant an increase in middlemen as financiers, lawyers, project managers, contract administrators – of which I was once one – and many others are drafted in to manage the outsourced contracts.

Throughout the Anglosphere – the US, UK, Canada, Australia and New Zealand – the results of embracing this mentality has meant skyrocketing costs and delays in public work projects, a good example being the Southern Sydney Freight Line which was three years late and 250% over budget.

Naturally no-one is held responsible for the delays, cost over-runs or lousy initial planning and estimating on that project, which is a happy result for everyone except the taxpayer who foots the bill.

The Global Financial Crisis

While the cost of building railways, schools and motorways is a chronic problem, a far more bigger issue is the role of “throwing problems over the fence” in the financial industry.

Securitisation was seen as a magic bullet for the banking industry in the 1990s, the Basel Accords allowed banks to bundle up their entire home loan portfolios and throw them over the fence to fund managers and their unwitting investors.

When the inevitable happened with the Global Financial Crisis in 2008, it was difficult to attribute exactly who held the mortgages, let alone who was responsible for the losses among the mass of brokers, ratings agencies, fund managers and bankers who’d profited so well from the boom.

The only thing we could be sure of was that it was the taxpayer – you, your children and grand-children – who ended up holding the problem when the GFC’s bills were hurled over the last fence.

On the other side of the fence

Risk isn’t something that can be thrown over a fence, eventually it comes back in a bigger and nastier way. The question is who ends up dealing with it.

The genius of political and business leaders in the last 30 years has been in how they’ve thrown their responsibilities over the fence while retaining the perks and privilege of holding responsible positions.

Generally it’s taxpayers and shareholders sitting on the other side of the fence who have to deal with the costs and they aren’t getting cheaper.

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