Tag: business

Managing the job shock

We’ve barely begun to contemplate there remains the question of what happens to the communities that depended upon old industries.

One of the mantras of technologists like myself when challenged about where jobs will come from after existing industries are automated or become redundant is “we don’t know where they will come from, but they will.”

Assuming that is true and the jobs will come in industries we’ve barely begun to contemplate there remains the question of what happens to the families and communities that depended upon the displaced industries.

Two stories this week from opposite sides of the world show how how poorly we’re answering that question; in Tasmania the Idiot Tax describes what happens to a region with no economic value while in the UK the ongoing Rotherham sex abuse scandal portrays a community debilitated by unemployment.

In both regions local industries collapsed through the 1970s and 80s and the local working classes became the welfare classes, stuck on benefits with at best poorly paid casual work available.

As the Idiot Tax describes in Tasmania’s Burnie, retired older workers reaped the benefits of a life of full time employment that town’s youngsters will never know.

History has no shortage of examples of cities that disintegrated when their economic reason for existing became no more — a process we’re seeing in Detroit today.

Now we’re seeing almost every industry being changed with far greater potential for job losses and fractured communities.

That we’ve dealt so poorly with the process over the last fifty years means we have to start thinking about how we as a society manage this adjustment.

Jobs will come to replace the ones lost, just as through the Twentieth Century new roles developed to replace those displaced from as nations like the US, France and Australia evolved from largely agricultural economies into industrial and then service industries.

But the human cost is real and there are no shortage of shrunken or abandoned towns that were once thriving market or railway hubs at the beginning of the Twentieth Century.

For technologists, this is an issue that has to be faced as we enter a period of economic and technological change far greater than the one we saw in the 1970s and 80s.

Car wreck photo courtesy of CBR1000 through sxc.hu

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Partying like it’s 1999 as investors pour into delivery services

The startup scene is back to the heyday of the late 1990s

At the peak of the dotcom mania in 1998 delivery services were all the go, those days are back reports Claire Cain Miller in the New York Times.

“We’re really well funded, so that is not something we’re as worried about,” Aditya Shah, Instacart’s general manager says. “Growth is the most important factor.”

This is the classic Silicon Valley Greater Fool model, where the aim is to get as many customers as possible to make the business attractive to a cashed up large corporation.

It might work, but the odds of being an Amazon or Salesforce – both companies have barely made a profit in the decade and a half they’ve been running – is unlikely.

One of the big problems is that delivery doesn’t scale, the ‘last mile’ problem of getting the goods to the customer remains the most complex and expensive part of the process.

Drones may solve the labour cost problem and sophisticated algorithms from companies like Uber may make the process more efficient but it’s unlikely an ad-hoc delivery service can ever scale to the degree these entrepreneurs project, unlike the post office and courier services where the system is built around predictable delivery routines.

Uber is the company that validated the model of today’s delivery startups, as Miller mentions;

“Meanwhile, venture capitalists joke that every other entrepreneur they meet pitches an “Uber for X,” bringing goods and services on demand: laundry (Washio), ice cream (Ice Cream Life), marijuana (Eaze) and so on.”

It’s hard to see how the current craze of delivery startups will end any better than the Webvans and dozens of other services that soared and crashed in the late 1990s, however business models are changing and it may be one of these will find the formula that works in the new economy.

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It’s time to educate our politicians

Last week showed the technological ignorance of Australian politicians. It’s time voters and business demanded better.

In mid 2003 I put an employment ad online for two computer technicians. I was expecting a healthy response as it was the depths of the computer industry’s depression following the tech wreck two years earlier.

A healthy response is what I got. Two thousand job applications came in; it took me a week to wade through them.

I was reminded of that story with the Federal government’s recent thought bubble requiring those on unemployment benefits to apply for forty jobs a months.

Like most of the business community I was appalled at the thought of being buried under hundreds of pointless job applications that served nothing but to fulfil a Liberal Party staffer’s ideological fantasies.

Within a week an Adelaide grandfather had come up with the idea of a jobseeker app that would automate the task which shows just how far out of touch both sides of politics have become with the modern world, particularly the digital economy.

The Australian political classes’ lack of understanding of technology has been on painful display over the last week with the Federal government’s fumbling over proposed data retention laws; one gets the impression George Brandis needs other people to use the toaster for him, let alone be trusted to use a computer without assistance.

This incomprehension of what’s driving the modern economy among our political leaders is no longer a joke – when the Prime Minister himself proudly states ‘I am not a geek’, it’s clear this nation is being led away from having any serious role in the 21st Century.

In fairness, this is not the fault of any single party or individual; it’s the result of Australians – particularly Australian businesses – voting like sheep for the blue team or the red team at every election.

As a consequence, Australian politics is now dominated by comfortable, arrogant and somewhat dim careerists who have little in skills beyond being able to float to the top of the shallow, fetid sewers that are the party political machines.

This is our fault and it is where Treasurer Joe Hockey is right in bemoaning how business won’t stand up and strongly lead the nation’s reform agenda.

Unfortunately for Joe, a true reform agenda is about making the nation more competitive in an era where the world’s economy is radically changing. The old ‘ship out resources and watch your property go up in price’ model that has sustained the Aussie economy is not a recipe for long term success.

If Australia is going to compete in the Twenty-First Century then we are going to have to invest in modern training, education and capital equipment while putting in the tax and social security systems that reward genuine entrepreneurs and job creators over property speculators and corporate ticket clippers.

Right now Joe, and his friends in both the Liberal and Labor parties, are doing exactly the opposite.

Joe’s right. We need to voice our concerns loudly. We also need to demand our politicians at least take the time to understand the basics of the technologies that are radically changing today’s world.

Next time you see a politician, of either colour, try to get five minutes of their time to explain how technology is changing your business. Hopefully it might make them pause before the next thought bubble.

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Reinventing management communications

Slack is part of the new wave of business communications that is challenging management

This blog has been particularly interested in how social media tools  are changing management.

Last year we had an interview with Yammer’s founder Pisoni on how fast communications are breaking down business silos.

Matt Honan has an interview in Wired magazine with the founder of Slack, Stewart Butterfield.

Slack is a corporate communications tool and Butterfield sees the company as being  the next Microsoft.

While that’s a big call, Butterfield shouldn’t be taken lightly having founded Flickr and following the company into its being absorbed by Yahoo!. Butterfield’s resignation letter after several years is an entertaining read.

Whether Slack becomes the next Microsoft or not, the changes to business communications with services like this are profound.

Dealing with the new ways of communicating within a business is going to be one of the greatest challenges to company managers over the next decade.

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Everyone is a critic on the internet

Business owners need to stop being so defensive about what their customers say on social media

“Everyone’s a critic” is the old saying. Today this is truer than ever as anyone can post a review online.

One of the notable things about business in the internet age is how sensitive people are to criticism.

A good example of this is a story going around the web this week of a Dallas chef, John Tesar, who had a magnificent breakdown over a review of his restaurant in the local newspaper.

This set off a chain of claims and counterclaims including some truly bizarre pieces on various blogs about ‘chefs winning the war against critics.’

Probably the strangest thing with this whole debacle is the review by Leslie Brenner in the Dallas Morning News is actually quite constructive and certainly no AA Gill style demolition of the establishment.

This silly little spat illustrates how business people, not just temperamental chefs, have glass jaws. Another story going around the web this week is of Union Street Guest House in Hudson, New York, that fines guests for bad reviews

Tesar’s response is pretty typical of many business owners – attack the critic instead of addressing the problems. Given Tesar threw the Twenty Rules of Social Media – which apply to businesses as much as social media – out the window, he was lucky not to find his reaction backfiring horribly on him.

What business owners have to understand is that you will get criticism, unfortunately most of it you will never know about as unhappy customers tell their friends and relatives.

If you get the opportunity to hear that criticism, then you have the opportunity to fix the problem.

This is something business owners need to understand about review sites and social media; it’s an opportunity to get some honest feedback about how things are going.

So start listening to what your customers are saying online and stop being so defensive.

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Rent doesn’t matter to startups

Rent doesn’t seem to matter for startups — for the moment

Following yesterday’s post about the factors behind cities like New York, London and San Francisco becoming startup hubs, a friend asked “let me gues — cheap rents?”

In truth it’s the opposite; none of the cities cited as startup centres are cheap places to live or work and London is usually towards the top of the most expensive places on the planet.

That rents aren’t a huge factor is possibly because the typical tech startup is a lean operation with a small team crammed into a crowded location.

One suspects though there are limits to how much a business conserving its cash will pay — you don’t see many startups based in A-grade locations alongside big law firms and banks — and this may be the weaknesses of these big cities.

Certainly in London’s Silicon Alley the complaint is the days of cheap rent are long gone and newer startups have to base themselves in other locations across the city.

Overall, rents are important but they aren’t the critical factor in developing a tech sector hub. Whether that remains the case depends upon how the industry develops.

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Why have cities like New York, London and San Francisco become tech hubs?

What are the ingredients that have driven today’s tech startup centres to prominence?

One of the recurring topics this site keeps returning to is how cities like San Francisco and London have seen an explosion of tech startups in recent years.

Probably the spectacular of all the cities that have shot to prominence is New York;  a decade ago tech startups in the city were a rare thing, today there are thousands.

Today I had the opportunity to visit AlleyNYC, one of New York’s biggest tech accelerators. It’s impressive how a venture two years old can be so successful.

A question I asked was ‘what has driven the change in New York?’ The consensus was the combination of the Great Depression and the success of high profile companies like Facebook.

The success of high profile startups has validated the business model in the eyes of both investors and founders, people who would have been reluctant to leave their jobs and start a business now see the opportunities while investors can see there are returns to be made.

What’s notable about cities like New York, London and San Francisco is the depth of industry expertise, capital, networks, education institutions and diversity. These are key factors in attracting tech startups.

For other cities aspiring to be ‘the next Silicon Valley’, it would be worthwhile considering where their strengths lie compared to these giants.

It’s not a given that any of today’s global leaders will be the future centres of industry, but other cities and regions will need to have a very strong reason for businesses to choose them over the incumbents.

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