Tag: business

Trapped in our own expertise

We need to think outside the boundaries of our expertise warns investor and entrepreneur Paul Graham

It’s becoming harder to be an expert warns Entrepreneur and investor Paul Graham.

What’s worse, Graham suggests being locked in the way things currently are is the biggest risk for today’s experts as change accelerates across society.

This climate of change makes it tough for investors like Graham to identify the next big things for them to stake money on; when the experts are often wrong it’s hard to figure out whose right in picking what business or technology will be successful in a few years time.

Graham suggests betting on people, particularly the “earnest, energetic, and independent-minded” is a better way of finding the next wave of successful businesses and his views are a useful reminder that   ultimately its people who find ways to implement and profit from technology.

The paradox with the changes we’re facing is that the technology is the easy part, it’s the human and social consequences which will surprise us.

Which is why Paul Graham is right about our having to think outside the boundaries of our own expertise.

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An age of falling margins

business in 2015 will be a lot more competitive as technology drives prices down

One forecast about 2015 that’s very easy to make is businesses with high costs are in for a tough time.

As competition steps up, global forces puts pressure on prices and technological change allows new competitors into marketplaces, the companies that aren’t flexible and keeping an eye on where they are spending money are going to find 2015 will not be a happy year.

For the tech industry the predictions for next year are easy – there will be more security beaches, governments will want more powers to access our data while proving they can’t be trusted with what they already have, a new hot social media network will appear, well known brands will collapse, the net will get faster, more devices will be connected to Internet of Things and prices will continue to fall.

It’s the falling prices that will be what defines business in 2015 as we enter deflationary times; not the economists’ nightmare of prices falling in the face of collapsed demand – although that’s not out of the question – but in the more positive sense of business inputs being cheaper.

Things are going to get cheaper

A few weeks ago I wrote of futurist and academic Andrew McAfee speaking about the accelerated rate of change in business at the Gartner Gold Coast Conference. One of the immediate effects of that changing world McAfee describes is that a lot of thing are going to get cheaper.

Part of this is driven by newer cheaper sources of energy and labour, other driving factors are increased automation in fields where wages have historically been the biggest cost and  manufacturing processes are putting pressure on prices for most goods. The commodities prices collapse may also be a key factor in 2015.

For some industries, such as the IT industry, falling prices aren’t a new concept. Any computer superstore or local PC repairer who holds inventory gets a nasty reminder of the sector’s economics every time they do a stocktake. However many businesses operate on the assumption prices will always rise overtime, a not unfair assumption given the inflation we’ve seen over the last fifty years.

Getting costs down

With falling prices, it means businesses have to be more aggressive in cutting costs; whether it’s telephone or power bills through to professional services or banking fees, the onus is now on managers to squeeze as much value for the dollar as they can.

In the technology field the targets are obvious; are your old computer preventing you from using new software? Do cloud services offer a better deal than your old server based systems? Are your service providers charging too much?

For the wider business looking at how newer technologies affect your workflow could well prove rewarding, it may well there’s whole range of areas your company can become more efficient through adopting new systems.

A good candidate for slashing costs and improving flexibility is transport where too many companies are still paying Cabcharge’s overpriced fees when apps like Ingogo or Uber are cheaper and better. Why have company vehicles when car sharing services like GoGet can offer more value. Do you still need an expensive Yellow Pages listing when a free Google My Business entry will get you in front of more potential customers, particularly on the all important mobile platforms?

Then there’s the whole outsourcing question where it’s becoming easier to hire knowledge workers on an as needed basis through the various online platforms like O-Desk and Freelancer.

Over the break, it’s worthwhile reviewing your operations and seeing where you can use technology to cut costs and become more flexible in face of a rapidly changing marketplace. One prediction is certain; those with bloated costs and inflexible management are in for a tough 2015.

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At the mercy of machines

Automation and algorithms are changing business but they are not without risks

Automation is the greatest change we’re going to see in business over the next decade as companies increasingly rely upon computers to make day to day decisions.

Giving control to algorithms however comes with a set of risks which managers and business owners have to prepare for.

Earlier this week the risks in relying on algorithms were shown when car service Uber’s management was slow to react to a situation where its formulas risked a PR disaster.

Uber’s misstep in Sydney shows the weaknesses in the automated business model as its algorithm detected people clamouring for rides out of the city and applied ‘surge pricing’.

Surge pricing is applied when Uber’s system sees high demand – typically around events like New Year’s Eve – although the company has previously been criticised for alleged profiteering during emergencies like Hurricane Sandy in New York.

In the light of previous criticism, it’s surprising that Uber stumbled in Sydney during the hostage crisis. Shortly after criticism of the surge pricing arose on the internet, the company’s Sydney social media manager sent out a standard defence of surge pricing.

That message was consistent with both Uber’s business model and how the algorithm that determines the company’s fares works; however it was a potential disaster for the business’ already battered reputation.

An hour later the company’s management had realised their mistake and announced that rides out of Sydney’s Central Business District would be free.

User’s mistake is a classic example of the dangers of relying solely on an algorithm to determine business decisions; while things will work fine during the normal course of business, there will always be edge cases that create perverse results.

While machines are efficient; they lack context, judgement and compassion which exposes those who rely solely upon them to unforeseen risks.

As the Internet of Things rolls out, systems will be deployed where responses will be based upon the rules of predetermined formulas.

Businesses with overly strict rules and no provision for management intervention in extreme circumstances will find themselves, like Uber, at the mercy of their machines. Staking everything on those machines could turn out to be the riskiest strategy of all.

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Will Sony ever learn its security lessons?

Once again Sony remind us of the importance of IT security.

For the last week the gossip and tech industry websites have been full of revelations gleaned from a massive hack into the network of entertainment company Sony.

Sadly it isn’t surprising that Sony that targeted in that hack, 2011 was described by this site as the ‘year of the hack’ and at the time I wondered when corporate managers would start taking IT security seriously.

As the most recent security breach shows, Sony’s managers certainly weren’t taking their information security seriously as alleged North Korean hackers gleefully disabled systems and downloaded confidential documents.

While Sony’s woes are deeply damaging to the company, not least for the executives caught out gossiping about movie stars, the stakes are far higher for other companies.

In Turkey its alleged a 2008 oil pipeline explosion was caused by Russian hackers while in the US, Palestinian sympathisers are accused of causing massive damage to the IT systems of the Sands Casino group.

Sony may be one of the most digitally incompetent business in history – at least in respect to IT security – but it’s important for every business to making sure their information systems and critical business systems are hardened against attacks.

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Market share isn’t everything

Market share is important, but it isn’t always the ultimate measure of a business’ successes

Recode’s Walt Mossberg looks at the mobile phone industry with the observation that while Google’s Android system is dominating the market, all is not what it seems.

While Android’s market share is impressive, Apple still has the profitable high end of the market and Google’s is increasingly finding that low end smartphone manufacturers are prepared to run with the slimmed down Android Open system rather than submit to Google’s licensing requirements.

Just as Apple can be fairly relaxed about Google’s position in the smartphone market, Twitter’s Ev Williams dismissed concerns around his service after the news Instagram had passed the 300 million user mark.

Fortune’s Erin Griffith reported Williams’ feisty response: “If you think about the impact Twitter has on the world versus Instagram, it’s pretty significant. It’s at least apples to oranges. Twitter is what we wanted it to be. It’s this realtime information network where everything in the world that happens on Twitter—important stuff breaks on Twitter and world leaders have conversations on Twitter. If that’s happening, I frankly don’t give a shit if Instagram has more people looking at pretty pictures.”

As Griffith observes Wall Street doesn’t share Williams’ view and that’s an increasing problem for the company, but both Apple’s and Twitter’s view to their market position illustrates how sheer numbers don’t necessarily matter.

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Painting a target on the competition

Blackberry Enterprise President John Sims has a strong message for his competition

“We’re coming for our competitors” is the warning BlackBerry’s President of Global Enterprise Services, John Sims has for the marketplace in an interview last month.

Sims laid out how BlackBerry’s future lies in managing big data, providing collaboration tools and securing the internet of things. In the short term however, the company needs emerging markets to keep its mobile handset market going.

In an interview last month on Australia’s Gold Coast at the Gartner Symposium, Sims laid out some of BlackBerry’s vision of the company’s future.

Securing the endpoints

The key product is the BlackBerry Enterprise Services which Sims sees as providing the endpoint security for corporate mobile devices and for the internet of things, something that ties into the company’s QNX investment.

For the moment though its handsets are a key part of the company’s immediate future and Sims sees the latent demand from lapsed BlackBerry as essential to success, “there are tens of millions of BlackBerry users who are still sitting on their old handsets.”

“The classic, when it comes along is targeted at that market. We know people are waiting.”

“When we went from the Gold to the Q10, too much changed. You had to go from the BBOS to the BlackBerry 10 and that’s a big change, we changed the keyboard, we took away shortcuts and we changed too much at the same time. With the Classic we’re almost doing a retrofit.”

With the recently released Passport smartphone, Sims says the company is struggling to keep up with demand,  “The Passport has done well,” he said. “The problem with it is us, not demand. It’s a supply issue not a demand issue.”

A week after that interview, BlackBerry announced the company would give Canadian buyers of the Passport subsidies of $600. How that ties into the narrative of a popular device isn’t quite clear.

Sims hopes the release of the Classic won’t suffer from supply problems, “we think is going to be more popular so we can be sure when it comes out we’ll be able to get that into the market in sufficient quantities to meet demand.

Discovering emerging markets

The other hope for BlackBerry’s handset business lies in developing markets, “Latin America is very important,” Sims says. “India’s very important and then there are number of important South East Asian markets.”

Part of that emerging market strategy is tied into selling mid priced smartphones into the market, Sims says. “People will say ‘the Z3 is a low end device’, if you go visit Indonesia the Z3 is not a low end device. It’s a middle market device.”

“Xiaomi is doing the low end devices at less than a hundred bucks and we’re doing a device at around $170. So we’re focused on the middle market, people who are professionals or aspiring professionals.”

“With those people in those markets we want to establish the BlackBerry brand as something they are comfortable with,” says Sims in outlining how he sees getting the handsets into business people as being the driver for the company’s other services and products.

Struggling with China

China remains an enigma for BlackBerry however, “in the last couple of years we haven’t focused on China, it’s a huge market and it’s hard for external parties to be successful on their own. Local partnerships are important.”

“John Chen (BlackBerry’s CEO) was recently in China and met with some of the local partners to talk about the possibilities of the future. It’s very preliminary and there’s nothing of any substance there yet but it is on our horizon that we’ve got to have something in the China Market.”

We’re coming for you

Despite the struggles BlackBerry has with its handset business, Sims is defiant about the company’s position in the endpoint security market.

“Ultimately it becomes a question of scale, we’ve got scale because we have a global network. None of the other EMM vendors – Good, Mobile Iron or Airwatch – none of them have the Big Data requirements that we have.”

“A year ago BlackBerry was defensive. We’re not defensive any more. People like Airwatch, Mobile Iron or Good should thank us that we were asleep at the wheel a few years ago and that allowed them to build their companies. That party’s over.”

“We’re coming after them. We have targets painted on each of those companies and as we execute our enterprise strategy we’re coming after them. If I was them I’d be feeling the breathing on the back of the neck.”

For BlackBerry the future lies in security services and the internet of things, though for the short term the company’s cash flow and market position depends upon sales of its handsets.

As the interview with John Sims shows, the company’s success depends upon a few key assumptions coming true; that’s a high risk market.

Paul travelled to the 2014 Australian Gartner Symposium on the Gold Coast as a guest of BlackBerry.

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Protecting the world’s soil

How we protect the world’s soil could be the clue to our future prosperity argues National Geographic’s Jim Richardson

One of the speakers at the recent Economist World in 2015 event in Sydney was National Geographic photographer Jim Richardson who described the challenges facing the world’s agriculture industry.

Much of Richardson’s presentation was taken from his series of photographs featuring farmers with their soil and National Geographic’s Feeding Nine Billion People feature.

A striking comment Richardson made in his presentation was how a poor rice farmer in South Asia is actually able to feed from people from their small landholding than a US broadacre farmer. This speaks volumes about how we’ve organised our food supply chains and raises questions on how sustainable our practices are.

In Agriculture, as in many other fields of our life today, we’re looking at major changes to the way we organise production and distribute goods. Richardson’s presentations are well worth considering in how the western world maintains it’s own standards of living while the rest of the planet looks at how it improves their’s.

Despite being essential to our very lives, the quality and availability of arable soil is one of the most neglected aspects of our global development. Jim Richardson’s photos remind us of its importance.

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