business | Paul Wallbank - Communications Professional

Building business communities

Businesses have the opportunity to build global brands and dominate their industries with the online tools we have available.

Industrial designers and engineers are probably the last thing most of us think of when discussing online communities.

Last week two very different events illustrated just how successful businesses benefit from building communities around their products and services.

Over lunch at a nice restaurant overlooking Sydney Harbour Dassault Systemes launched their their latest Solidworks 3D design software where they described the two million members of their global user community as being key competitive advantage in the industrial design market.

In the business sector, having that ecosystem of users is the key success as shown by businesses ranging from AutoCAD to Photoshop. Almost every industry has some software package that dominates the sector because ‘everyone uses it’.

Building social media communities

At the other end of the scale earlier in the day PayPal Australia launched their latest Driving Business Online campaign showcasing online commerce tools for the small to medium business sector.

One of the companies they profiled was Brisbane fashion company Black Milk Clothing, a Brisbane based business that has grown from a startup to employing 150 staff in four years entirely through its 560,000 strong Facebook community and 655,000 Instagram followers.

While there’s risks with relying on social media platforms as a primary marketing channel, Black Milk is a good example of what a retail business can do with building an online community.

Older examples

None of this is really new, Apple are probably the best example of a tech community with millions of adoring fans prepared to queue around the block for the latest iPhone.

Microsoft’s continued profitability despite being in a declining market comes from its army of developers, system admins and IT support services who are deeply committed to the company’s products.

At it’s most basic, every business needs a core of dedicated customers, committed staff and enthusiastic evangelists — with today’s tools companies like Black Milk are able to build a global brand.

Not every business can build a global brand out of their communities of enthusiastic customers and dedicated employees but the goodwill in those groups are quite possibly the biggest asset any organisation has.

With today’s online collaborative tools and social media services there’s no excuse for a business not be nurturing and growing their communities.

Venture capital investors as mentors

Early investors bring more than money to a young business

LinkedIn founder Reid Hoffman has a wonderful post on his blog detailing what he wished he knew when he first pitched his business to investors.

His seven myths of pitching are well worth reading whether you’re seeking capital from Silicon Valley venture capital firms, a sceptical bank manager or your mum and dad.

The first point is the most pertinent — a successful financing process results in a partnership that delivers benefits beyond just money.

Raising investor funds is only a step in the journey of creating a successful business, it is by no means the end point.

Hoffman’s point is something every business founder needs to keep in mind, those early investors are important mentors and their advice could prove to be more valuable than the money they bring to a venture.

Building a business culture

Culture matters in an organisation. While a positive culture doesn’t guarantee success, it does make it more likely a company will survive its founders.

“How can you create a great organisation of people and be that mean a person?” Asks funds manager Julian Robertson about Apple founder Steve Jobs.

Robertson, who based the decision to sell his Apple shares on the details in Walter Isaacson’s biography of Steve Jobs, was largely ridiculed for his decision but the veteran investor has a very good point.

A company’s culture develops from the top – if the senior management are paranoid, rogues or thieves then those attributes will eventually percolate through the company.

The Tyco Lesson

During the 1990s I had the unfortunate experience of working for Tyco International at the time it was led by Dennis Kozlowski, a man listed by Time Magazine as one of the ten most crooked CEOs of all time, senior management’s attitude of treating the company’s funds as their own piggy bank was copied throughout the organisation.

Tyco suffered badly during that period and subsequent management has had to work hard to undo the influence of Kozlowski and his cronies’ poor leadership.

One organisation I’ve watched closely over the last few years has been Australia’s NBNCo, the state owned company set up to build the nation’s National Broadband Network.

In under four years of operation the company has developed a dysfunctional management culture that saw the project miss its targets by over 70%.

For the NBN, a hands off attitude by senior management allowed bureaucratic silos to develop in a relatively small and young organisation. Those silos then started perpetuating bad habits as managers hired their friends and ignored good management processes. A lack of process and management accountability have been the main reasons the company has failed to meet its targets.

Apple’s challenge

In Apple’s case, Jobs created a culture of fear and secrecy with the company going as far as creating its own secret police designed to intimidate staff. The entire company was beholden to, and evolved around, one man’s vision, ego and quirks.

While Jobs was ahead of the game, all was good for Apple shareholders but the risk was always that Jobs would make a major mistake or leave the company. It turned out to be the latter when Jobs passed away.

As with any company built in the image of its founder, Apple now struggles to adapting to life without Steve Jobs and his successors have to reinvent the company’s culture around a more collegiate management structure than an often not-so-benign dictatorship.

Microsoft are facing a similar transition as Steve Ballmer leaves the company. Like Apple, Microsoft is an immensely profitable facing a changing market at the very time they are transitioning to a new generation of leaders.

Leaders such as Steve Cook at Apple and Ballmer’s successors at Microsoft have a massive task in changing their company’s culture as they try to undo a generation of management habits and this is why Robertson’s reasoning about selling his stake makes sense.

Culture matters in an organisation. While a positive culture doesn’t guarantee success, it does make it more likely a company will survive its founders.

Microsoft’s continued evolution

Microsoft are evolving to a changed market, but can they evolve quickly enough to beat their competitors?

Today’s investor briefing by software giant Microsoft shows the company’s evolution as their markets shift.

Microsoft Chief Operating Officer Kevin Turner broke out the key numbers for the company’s revenues which illustrate just how the company’s business model is changing.

Over half of Microsoft’s revenues are coming from enterprise customers and of the product lines, Office unit makes up just under a third, Server and Tools slightly more than a quarter while Windows has fallen to 25 percent.

Despite the decline in Widows’ revenues, there’s no doubt about Microsoft’s determination to drive the PC upgrade cycle through the retirement of Windows XP as Turner explained.

We have a giant XP install base. But guess what? We’ve made so much progress on that XP install base. It’s down to 21 percent worldwide, and we have plans to get that number to 13 percent by April when the end-of-life of XP happens.

A big part of the change is the shift to the cloud with Turner claiming two hundred percent growth in Microsoft’s Azure services.

Despite the change in Microsoft’s focus, the threats remain with Apple releasing both iOS7 and their new range of iPhones along with Google making their QuickOffice mobile app free to iOS and Android users.

While Microsoft are steering their ship around, the incumbents in other sectors are protecting their positions. In an evolving world, survival is not guaranteed.

Navigating the future of accounting and business with the cloud

Cloud computing is changing the accounting profession and many other businesses with it says Steph Hinds of Growthwise accounting

Steph Hinds of Newcastle accounting firm Growthwise is one of the new breed of business advisers using cloud and mobile technologies to change her profession.

At the recent Sydney Xero Conference I had the opportunity to speak to her about some of the ways her business is changing.

The interview with Steph as part of the Decoding the New Economy YouTube channel covers how the accounting profession is changing, what industries are being the most affected and where she sees the growth opportunities for her businesses.

Like many other professional services industries, the big change Steph sees is how accounting is moving from being based upon client transactions to requiring much deeper relationships with clients.

“The transactional model has been commodified completely,” says Steph. ” I started as a trainee accountant and we had those big ledger books and I was coding things and I’d go through cheque butts to enter them into the system.”

“Now all of that work is done for you.”

Like Xero founder and CEO Rod Drury, Steph doesn’t see this change as being generation based with older accountants adopting technologies as quickly as their younger counterparts.

However legacy systems do hobble existing businesses with both Xero and Growthwise finding 40% of their clients are new, startup businesses.

“We’re finding a lot of new businesses are starting up now,” says Steph. “it is so easy to setup in business, we’ve advised a lot of accountants that rather than spending five hundred thousand dollars to buy into a practice, you can spend ten thousand dollars on licenses and a laptop and all of a sudden you’re really in business.”

Changing the building industry

Steph sees the opportunities being in retail, hospitality and trades where being are struggling with paperwork and need fast responses in a customer driven market. The building trades are one of the big areas Steph sees for growth.

“Guys not having to drive to the office to get their instructions and their things for the day, not having to drop off timesheets, getting paid on the spot and billing on the spot.”

“We see traditionally see trades, particularly in the building industry as having cashflow issues and people go bust,” says Steph. “I think this is a huge opportunity to change things.”

Having information is at managers’ and proprietors’ fingertips is one of the benefits of cloud services and Steph also sees the app ecosystem, providing plugins like mobile job management are very powerful.

“The big data angle, for benchmarking – we have real time access to our clients’ data and how they are doing against industry benchmarks and being able to help clients,” says Steph.

Steph Hinds and Growthwise are examples of how the business world undergoing a dramatic change as the information and systems that were once only available to big business can now be accessed by anyone.

The real digital divide lies between the business who are prepared to grab the opportunities and those who are happy doing things the way they’re done today.

Diffusing business risk on the cloud

Shifting risk is the name of the reseller game.

Today I was at a media lunch hosted by IP telephony company Nexon to promote their new cloud based unified communications service.

One aspect of the Nexon Absolute service is the company offers a Service Level Agreement (SLA) for customers, while I’m always suspicious of SLAs they are essential in making business clients comfortable with buying cloud services.

For Nexon, those SLAs are huge risk as they are reselling other company’s products. If Microsoft and Telstra fail to deliver, then it’s Nexon who carries the can with their customers.

While Nexon undoubtedly has their own SLAs with their suppliers, a major outage will see the company carrying the bulk of the refunds or rebates to their customers.

Essentially Microsoft and Telstra have outsourced much of their business, continuity and even reputational risk to Nexon and their other resellers.

For a reseller, even a substantial one like Nexon, that’s a risk they can’t control — what’s more, the finger pointing between suppliers in the event of a major outage could take years to resolve.

All of this suits major suppliers fine as it shifts risk and work from their businesses.

The IT and telco reseller game is not an easy one as margins fall and risks increase, one has to applaud the courage of the investors and entrepreneurs who want to play it.

Death of a typewriter repairer

The tale of two shops shows how change threatens to overwhelm many small businesses.

Despite owing his longevity to cheap scotch and strong tobacco, the US’ oldest typewriter repairman passed away two weeks ago. The fate of his shop is one that many other small businesses will share.

Manson Whitlock of New Haven, Connecticut had run his typewriter shop from the early 1930s until shortly before his death. Needless to say, he didn’t like computers.

“I don’t even know what a computer is,” Mr. Whitlock told The Yale Daily News, the student paper, in 2010. “I’ve heard about them a lot, but I don’t own one, and I don’t want one to own me.”

While Manson’s shop had six staff at its peak, in recent years he ran the operation on his own and the business died with him.

Many Baby Boomer business owners face the same fate as Manson Whitlock as their businesses decline in the face of changing technology and shifting change.

Some of the boomers will suffer because they are undercapitalised and, as the next generation of entrepreneurs can’t afford to buy these existing business, most of those will work way wall past the date they planned to retireme.

A good example of this is a radio shop near my office which has been run by an old gentleman for many years. When I went into it in 1997 for something – I forget what – the proprietor was almost shocked to see a customer and he couldn’t help me.

It wasn’t surprising as it was rare to see a customer and the none of the stock behind the cluttered counter seemed to date beyond 1980.

The only reason the shop survived was because the proprietor owned the premises as there’s no way the place could have paid the modern rents with the non-existent turnover.

A few weeks ago the shop closed. I don’t know whether the owner retired or passed away, but the business closed with him.

Both the Neutral Bay electrical shop and the New Haven typewriter repairer show how businesses can be left behind by technology.

While both stores had plenty of time to react during the rise of computers during the 1980s and 90s, their proprietors chose not to and by the 2000s it was too late.

Today, technology and business is changing even faster and there’s many more big and small enterprises that risk being left behind by change.

It’s not only the changing market place that risks the future of these business, the failure to invest in things as simple as modern Point of Sale systems or even a basic website will leave many exposed.

The time to invest in new systems and products is now and if you can’t invest in the future, then it’s time to get out.

Why do executives see romance in the startup culture?

Many managers think startups are romantic – could it be because of the corporate lives they lead?

One of the fascinating phenomenons of the modern era is how corporate managers have appropriated the startup culture.

At the announcement of the Australian Centre for Broadband Innovation’s Apps For Broadband prizes, Foxtel’s CIO Robyn Elliot described her experience of working in a startup.

“Foxtel was once in the category of startup itself,” said Elliot at the start of her speech.

Apples and Oranges

Comparing Foxtel to a scrabbling startup in the modern sense is bizarre given the company was a well funded joint venture between News Limited and Telstra – the company being a good example of modern Australian crony corporatism rather than a risky undertaking by daring entrepreneurs.

This conceit about startups isn’t unusual among corporate executives, in the early days of Australia’s National Broadband Network it was quite common to hear NBNCo managers talk about their startup ethos – this from a company backed by around 30 billion dollars of government funding.

At one stage I interviewed for a job at NBNCo and I struggled not to start giggling when the “startup ethos of the organisation” was earnestly emphasised to me several times during the meeting.

Not surprisingly the job went to an ex-telco staffer, as did most of the team’s roles. No doubt their corporate experience was far more suited to the company’s ‘startup ethos’ than that of actually having worked in four startups. Giggling in the interview probably didn’t help either.

The romantic dreams of executives

Given most corporate staffers would curl into the fetal position and weep after two weeks of working in a real startup, why do executives indulge in the conceit that their business is ‘just like a startup’?

The answer could lie in “The Consequences to the Banks of the Collapse in Money Values” written by John Maynard Keynes in 1931.

A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him. It is necessarily part of the business of a banker to maintain appearances, and to confess a conventional respectability, which is more than human. Life-long practices of this kind make them the most romantic and the least realistic of men.

So it is for the modern corporate executive who has spent their working lives fighting for the corner office having met their KPIs and spending years cultivating their network of like minded managers.

After two decades spent writing stern memos on the use of paper clips and climbing the corporate ladder, it must be tempting for a middle aged executive to look at those funky youngsters getting billion dollar payouts after a couple of years grabbing three hours sleep a night among the pizza boxes under the desk and get pangs of what might have been…..

A harmless startup fantasy

In some many ways the executive startup fantasy is touching and largely harmless, even if it does attract sniggers and giggles from the unwashed and underpaid who’ve actually been there.

The real risk is when a senior executive tries to shoehorn a Silicon Valley startup culture into an organisation.

While most large companies could do with some of the hunger and flexibility found in smaller businesses, there’s many ways that could go terribly wrong – particularly when driven by a starry eyed romantic manager.

For most executives though, the dreams of being in a startup will remain a fantasy – and that’s probably best for everybody.

A startup’s journey – what businesses can and can’t learn from Silicon Valley

There’s a lot small business can learn from the tales of Silicon Valley startups, but not every lesson applies.

Tech Crunch has a fascinating story on the journey of failed startup, Los Angeles based Flowtab that hoped to create an bar tab smartphone app.

In many ways Flowtab is a story of our bubble economy times – a cheap, easily built service that addresses what is, at best, a minor first world problem.

Flowtab failed when it turned out solving that problem was a lot harder than just writing an app, which is something often overlooked in the current startup hype.

However had the timing of Flowtab’s founders been a bit luckier they could have hit the jackpot.

Dave Winer describes the herd mentality of venture capital investors and had the hot trend of the time been bar ordering apps then the Flowtab team could have been one of the beneficiaries of the Silicon Valley business model.

Along with being a historical insight into today’s investment mania, Flowtab’s story is an illustration of how a new business needs to pivot when the original idea turns out not to be as compelling as the founders first thought.

Even when a business does a pivot, it’s not guaranteed the company will survive, but that’s part of the risks in starting a new enterprise, particularly when it’s undercapitalised as Flowtab was.

There’s many lessons from Flowtab’s failure, but not all of them apply to every business.

Coffee machines, the Big Blue W and the barriers to new technology

All new technologies involve a learning curve and sometimes people don’t have time to gain that knowledge.

Last week my wife bought a new coffee maker, an impressive, all singing and dancing device that’s a vast improvement on the decade old machine it replaces.

Despite drinking three or four cups of coffee a day, for three days after the new machine arrived I didn’t make one long black or cappuccino. The reason was I didn’t have time to figure out how to use it or the high tech coffee grinder that it came it.

Being time poor is one of the greatest barriers in adopting new technologies as business owners, managers and staff often don’t have the time to learn another way of doing things.

The coffee machine reminded me of something I learned with a business I was involved in the early 2000s. We were trying to sell Linux systems into small and medium businesses.

We had some success selling into small service businesses like real estate agents and event managers where the owners could see the benefits of open source software and, in many cases, had a deep suspicion or resentment towards Microsoft’s almost monopoly on small business software.

Despite the success in selling the systems, the business though came undone because many of the clients’ staff members refused to use the Linux machines, as one lady put it to our frustrated tech “I want to click on the Big Blue W when I want to type a letter.”

That Big Blue W was Microsoft Word and no amount of cajoling could convince the lady to use any of the open source alternatives — she knew what worked in Word and she had neither the time or inclination to learn any thing different.

Eventually that customer gave up trying to convince their staff to use non-Microsoft systems and the computers were reformatted with Windows, Office and all the other standard small business applications installed.

This happened at almost every customer’s office and eventually the business folded.

For those of us involved in the business the lesson was clear, that time poor users who are content with their existing way of working need a compelling reason to switch to a new service.

In many ways this is the problem for legacy businesses — the sunk costs of software are more than just the purchase price, there’s the time and effort in migrating away from existing products and training staff.

When we’re selling new technologies, be it cloud computing services, linux desktops or fancy new coffee machines, we have to understand those costs and the fears of users or customers who’ve become accustomed to an established way of doing things.

In the eyes of many workers new ways of doing business are scary, challenging and often turn out to be more complex and expensive than the salesperson promised. In an age where marketers tend to over promise, that’s an understandable view.

For those selling the new products, the key is to make them as easy to use and migrate across to. The less friction when making a change means the easier it is to adopt a new technology.

On running late

Is chronic lateness a trait shared by the entire tech industry?

Business Insider’s unathorised biography of Yahoo CEO Marissa Mayer is both enlightening and scary while giving some insight into the psyche of the tech industry.

Nicholas Carlson’s story tells the warts and all tale to date of a gifted, focused and difficult to work with lady who’s been given the opportunity to lead one of the Dot Com era’s great successes back into relevance. It’s a very good read.

Two things jump out in the story; Mayer’s desire to surround herself with talented people and her chronic lateness.

When asked why she decided to work at a scrappy startup called Google, which see saw as only having a two percent chance of success, Mayer tells her ‘Laura Beckman story’ of her school friend who chose to spend a season on the bench of her school varsity volleyball team rather than play in the juniors.

Just as Laura became a better volleyball player by training with the best team, Mayer figured she’d learn so much more from the smart folk at Google. It was a bet that paid off spectacularly.

Chronic lateness is something else Mayer picked up from Google. Anyone whose dealt with the company is used to spending time sitting around their funky reception areas or meeting rooms waiting for a way behind schedule Googler.

To be fair to Google, chronic lateness is a trait common in the tech industry – it’s a sector that struggles with the concept of sticking to a schedule.

One of the worst examples I came across was at IBM where I arrived quarter of an hour before a conference was due to start. There was no-one there.

At the appointed time, a couple of people wandered in. Twenty minutes later I was about to leave when the organiser showed up, “no problem – a few people are running late,” he said.

The conference kicked off 45 minutes late to a full room. As people casually strolled in I realised that starting nearly an hour late was normal.

It would drive me nuts. Which is one reason among many that I’ll never get a job working with Marissa Mayer, Google or IBM.

A few weeks ago, I had to explain the chronic lateness of techies to an event organiser who was planning on using a technical speaker for closing keynote.

“Don’t do it,” I begged and went on to describe how they were likely to take 45 minutes to deliver a twenty minute locknote – assuming they showed up on time.

The event organiser decided to look for a motivational speaker instead.

Recently I had exactly this situation with a telco executive who managed to blow through their alloted twenty minutes, a ten minute Q&A and the closing thanks.

After two days the audience was gasping for a beer and keeping them from the bar for nearly an hour past the scheduled finish time on a Friday afternoon was a cruel and unusual punishment.

This was by no means the first time I’d encountered a telco executive running chronically over time having even seen one dragged from the stage by an MC when it became apparent their 15 minute presentation was going to take at least an hour.

It’s something I personally can’t understand as time is our greatest, and most precious, asset and wasting other people’s is a sign of arrogance and disrespect.

Whether Marissa Mayer can deliver returns to Yahoo!’s long suffering investors and board members remains to be seen, one hopes they haven’t set a timetable for those results.

Whose priorities do IT departments really care about?

A survey of IT managers shows that business risk and customer security are not their greatest concerns

Earlier this week mobile security company Imation showed off their latest range of Ironkey encrypted USB sticks and portable hard drives.

Accompanying the launch was a presentation from Stollznow Research on how Australian companies are managing data with a comparison against similar surveys carried out in the UK, US, Canada and Germany.

Of the 207 senior decision makers in Australian medium to large businesses surveyed, there were some interesting results on the attitudes of the nation’s IT departments and CIOs.

In the field of confidence about the security of their networks, Australian IT managers came out a lot more paranoid than their foreign counterparts with only 38% of Aussies confident their office data is protected from loss or theft against 73% overseas.

That result is encouraging as the internet and the world of IT security has a habit of severely punishing those with a false sense of security.

What was particularly notable though with the Imation research was what IT managers considered to be the consequences of a security breach.

Around the world, IT managers see the headache of cleaning up the mess and bad media coverage as being the biggest consequences of a data breach. Customers come fourth in priority and even then the only concern is losing clients rather than the effects it could have on those people’s lives.

One of the tragedies of the continued Sony data breaches in 2011 was the leaking of credit card details. Many of those customers on pre-paid cards were young or low-paid workers who quite possibly lost all the money in their compromised accounts – debit cards don’t have the same protections against fraud as credit cards.

Even more terrible are the effects on those who become victims of identity fraud as consequence of a data breach. Letting that sort of information out is a fundamental betrayal of trust by organisations with sloppy security.

Interestingly over a third of respondents feared losing their jobs as a result of data being breached, in a perfect world it would be higher although we don’t live in a period where those accountable take responsibility for their actions.

What’s more likely in many smaller businesses is that a data breach could be the entire organisation to fold, something that should worry anyone running a startup or small business.

It may be true that many CIOs and IT managers aren’t too worried about the business effects of a data breach or system outage which shows that security – both physical and digital – are the job of everyone in an organisation, not just one department or executive.