Tag: business

Are Small Businesses becoming Digital Roadkill?

We all agree that the internet is changing business, but how many smaller companies are prepared for the massive changes ahead?

Technology Spectator today discusses if fast broadband initiatives like the National Broadband Network will be good for all small businesses.

Andrew Twaites of Melbourne consultancy The Strategy Canvas posits that many businesses aren’t equipped to compete against  global competitors.

The additional competitive pressures that the NBN rollout is likely place on segments of the small business sector that have to date enjoyed a degree of natural protection as a result of their customers’ inability to access super-fast broadband.

Once that natural protection falls away, many small businesses will for the first time be exposed to competition from interstate and overseas businesses

This is a very good point; many small businesses are transaction based service providers who can be easily replaced by lower cost overseas companies, particularly now foreign suppliers are easily accessible through services like O-Desk and Freelancer.com.

Every time I see Freelancer.com’s CEO Matt Barrie talk to a small business audience, I’m surprised the room doesn’t lynch him as he’s describing how their businesses are threatened species and many are living on borrowed time.

One of the reasons why small businesses are threatened is because they are under-capitalised, many simply can’t invest in the technology or training they need to compete.

There’s also a reluctance to embrace technology, that half of all small businesses – in the US, the UK or Australia – don’t have even a basic website.

On a recent holiday in Northern NSW, I checked dozens of tourism businesses’ online presences. Few had a website and almost none had bothered filling in their Google Places profiles, let alone set up social media presences.

Yet almost all of their new customers are looking for them on the web, increasingly through mobile devices or social media services where they are invisible.

Not having a website, local listing or Facebook page are trivial things; but the fact that most businesses haven’t done the basics doesn’t bode well as the speed of commerce accelerates over the rest of this decade.

That many small businesses will be put out of business by today’s changes isn’t unprecedented – blacksmiths were out of job shortly after the motor car rolled out and whale oil manufacturers by gas and then electric lighting.

As Andrew points out, we assume ‘creative destruction’ just disrupts big incumbent corporation. In reality it’s the little guys who feel more pain than insulated executives of big business.

Many of us little guys are going to have to start thinking about adapting to very changed times, the risks of being digital roadkill are real.

Doll roadkill image courtesy of Pethrus through WikiMedia

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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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People like us – could poor hiring practices bring down Silicon Valley?

Are poor hiring practices putting Silicon Valley at risk?

A strange little story appeared in Business Insider a few weeks back, 9 Things Your Resume Needs if you want to be Hired by Apple or Google is a curious view into the mindset of Silicon Valley.

Purporting to be an extract from a book written by a former recruiter who claims to have worked for Apple, Google and Microsoft, the story exposes a weakness in Silicon Valley and the technological elite which may cause the very disruptions they have unleashed to work against them.

The nine items are fascinating for the elitist, US-centric view of the world they portray and each is worth investigating on their own.

If you graduated from an elite college, your chances of getting an interview vastly improve

Yes, where you went to school does matter to the tech giants. Of course there are exceptions, but McDowell says an Ivy League or other top university will get you noticed.

There’s not much more to add to this, except to note that the vast majority of students whose families can afford such an education are from the upper middle class.

The Googles and Apples like to see relevant internship experience.

If you waited tables when you were 19, that isn’t attractive.

If you are lucky enough to get into a an Ivy League school on a scholarship or manage to scrape together the money you may still not make the cut.

To the author, only those with sufficient wealth to participate in unpaid internships are going to get jobs at the top Silicon Valley companies.

Your major matters

Sorry liberal arts people or chemical engineers, you’ll need another way in to Google or Apple.

This is an interesting one, Silicon Valley boosters often talk about the creative process and how coders are artists however according to the recruiter that’s just lip service.

She encourages students to pick majors that are directly relevant to Google or Apple. Finance, accounting, marketing or computer science majors have the best shot of being noticed by a tech recruiter.  At the very least, minor in one of those fields.

A focus on finance, accounting and marketing is the same as any old corporation – you could be going for a job with AT&T, Goldman Sachs or the government with qualifications like that. So much for unique.

Dissing chemical engineering is particularly interesting as Chem Eng graduates have passed one of the toughest university degrees. Whats more, the demands of mobile computing devices means battery technology is one of the most pressing issues facing Silicon Valley at the moment. Chemical Engineers are the folk who will solve this problem.

Big tech companies like to see people giving back to their communities.

Volunteering can be a great way to buff up your resume. That said, McDowell warns: “don’t serve soup in a soup kitchen.”

Instead she suggests hunting for a sales or marketing position, or offering to help a charity with its website and design.

This is a really obnoxious statement – basically saying we want to you volunteer, but we don’t want you to help people.

Just how many sales and marketing people are needed by soup kitchens, volunteer fire brigades or community pantries is open to debate.

A bigger issue with this mentality is that it favours bureaucrats and paper shufflers rather than doers. Which again is something anathema to the public statements of Silicon Valley’s leaders.

They also like good spellers and speakers.

Writing and communications skills aren’t just necessary for media jobs. They’re important in any career you’ll have.

Well, duh.

If you are buddies with college professors, that’s a plus.

Professors aren’t just impressed by how you do in their classes.  McDowell suggests helping them with research projects, asking for help and attending office hours, or becoming a teaching assistant.

That doesn’t hurt, but it’s pretty basic vanilla advice and again it’s tough luck if you have to do a shift at the local fast food restaurant so you can feed yourself.

Show you understand multiple positions at Google or Apple

If you want to work at one of the top tech companies, it helps to have at least a basic understanding of multiple positions in the organization.  McDowell calls this being a Generalist.

On one hand this advice makes sense but on another many technical roles are not generalist positions.

Generally having a knowledge of the company’s structure and roles is going to look good to any interviewer, assuming you can get past the gatekeeper at the recruitment company.

Entrepreneurs have a better shot of being hired.

This is a funny one, if you’re a real entrepreneur then the thought of working in cubicle at Apple or Microsoft while answering to a middle manager straight out of a Dilbert cartoon ranks with getting hot pine needles thrust under  your toenails.
One of the conceits of modern corporate life is that they value entrepreneurs and the free-wheeling spirits – the truth is they don’t and the first true hint of entrepreneurialism among the ranks will be smothered quickly with a deluge of paperwork.
Funnily enough, being a successful tech entrepreneur is a path to getting a good job at a tech company although it’s more likely to happen as an acqui-hire than through a recruiter.

Good news: Your GPA doesn’t matter very much

Most people think tech companies, Google in particular, harp over candidates’ GPAs. McDowell says there is little truth to that rumor.

This is only good news if you’ve ticked most of the other boxes, which means you’ll be considered if you’re middling graduate from Stanford or Harvard but forget it if you went elsewhere, regardless of how good your marks are.

The danger of recruiters

What the Business Insider story really illustrates are the risks of relying on third party recruiters as gatekeepers to filter out new employees.

Regardless of how good the recruitment consultant is they are going to apply their own cultural filters and biases onto the selection process and as a result knock out most good candidates.

More importantly, a company risks developing a monoculture if the recruitment process is too effective at filtering out people who don’t fit a narrow stereotype.

A new breed of officemen?

Reading the Business Insider story leaves one with the feeling that many of these companies are beginning to look like IBM in the 1960s – monocultures more concerned about the colour of an employee’s tie and choice of shirts rather than the talents they bring to the organisation or the value they can add to customers.

This is probably the greatest risk of all to the tech industry, that they end up with an insular group of people with fixed mindsets.

Should that happen, then the wave of disruption Silicon Valley has unleashed on the world will end up being the industry’s undoing as smart kids working out of garages in Michigan or slums in Delhi will out innovate the staid, comfortable incumbents.

It’s also interesting to consider how many other industries are now suffering after several decades of similar recruiting practices where leading businesses are now dominated by insular, unworldly monocultures.

Image courtesy of Alexfurr on SXC.HU

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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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In it to win it – does overcompetitiveness hurt entrepreneurs?

Does the winning at all costs mentality actually hurt entrepreneurs when business isn’t a zero sum game?

I’ve written before about entrepreneur and venture capital investor Mark Suster and his writings about business are always worth reading.

His recent post pulling together writings on the DNA of an entrepreneur is interesting reading however one point jars – competitiveness.

In Steve’s view competitiveness is about winning at all costs and crushing the opposition.

That’s fine when competing for a customer, fighting over market share or pitching to the same VC investor, but business usually isn’t a zero-sum “if I win, you lose” equation.

Sometimes its about complimentary strengths. In the early days of PC Rescue I tried to partner with an old colleague who had set up a competing business.

Mark was actually a better computer tech than I was, my strengths lay more in sales and administration, had we teamed up we’d have been a good combination.

Unfortunately Mark took Suster’s view of ‘winning at all costs’ and when I foolishly referred customers to him because I was either busy or thought he could do a better job, I found he was stealing those customers.

Eventually I had to cut ties with him, and it cost him money and the chance to be part of something bigger. Mark was greedy but I’m sure he thinks he ‘won’ against me when there really wasn’t a contest.

Geeks are particularly poor at admitting they have weaknesses, in fact their lack of self understanding could be their greatest weakness of all. So drumming a ‘win at all costs’ message into their heads is almost certainly counter productive.

It may well be that this win at all costs view is damaging the mental health of many entrepreneurs, by viewing what others are doing through a prism of “I have to win” almost guarantees depression as often the life of an entrepreneur is more steps backwards than forwards.

As most reporting of startup and entrepreneurs is distorted by survivor bias, we often gloss over this latter point – in reality starting your own business, particularly one that’s under-capitalised, is hard and tough work with a high chance of failure.

That chance of failure means a ‘win at all costs’ mentality could result in a generation of mentally damaged former entrepreneurs.

Mark Suster’s views are really good on what drives the Silicon Valley model of business. We need to take care though we don’t take the wrong lessons which end up hurting our businesses, families and our own mental well-being.

Jackpot image from Henriette via SXC.HU.

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Can Yahoo! disrupt the disruptors?

Business partnerships require bringing something of value to the relationship, Yahoo first has to define its strengths before searching for partners.

Yahoo! CEO Marissa Mayer packed out the room for her interview at the World Economic Forum this week where she spoke about some of the challenges her and the company face.

One of the areas she sees for Yahoo! is in collaborating with other tech industry giants.

Mayer also is making a point of collaborating with companies such as Apple Inc., Google and Facebook, instead of competing.

“It ultimately means there’s really an opportunity for strong partnerships,” she said.

The problem for Yahoo! is that it doesn’t have a lot to offer companies like Apple, Google or Facebook – they are steaming along on their own and have moved ahead of the areas which Yahoo! dominated a decade ago.

Generally in the tech industry partnerships are more the result of the sector’s also-ran coming together in the hope that their combined might will overcome the leader’s advantages.

It’s the same philosophy that thinks tying the third and fourth placed runners legs together will make them faster than the winner.

A good example of this is Microsoft’s tie up with Nokia over the Windows Phone. If anything, the net effect has put Windows Phone and Nokia even further behind Apple and Google in the handset market.

Even when two tech companies have united to exploit their individual strengths, the results usually end in tears. Probably the best example of this was the IBM and Microsoft joint venture to develop the OS/2 operating system which eventually sank under IBM’s bureaucrat incompetence and Microsoft’s disingenuous management.

Those two examples show how partnerships only work when each party has something valuable to contribute and all sides are committed to the venture.

Marissa Mayer’s task is to find Yahoo!’s strengths and build on them, then she’ll be in a position to enter partnerships on an equal basis.

Whether its worth entering into partnerships with the big players though is another question. It may well be that Yahoo! has more to offer smaller businesses and disruptive startups.

Entering into a desperate alliance with Apple or Facebook could possibly be the worst thing Yahoo! could do, the company is no longer a leader and now needs to be a challenger or a disruptor.

Facebook’s locking competitors out of data feeds is an example of how complacent the big four internet giants are becoming, Yahoo! are in the position to upset that comfortable club.

The value of partnerships is that we all have weaknesses and strengths, a properly thought out venture builds on the various parties’ strengths and covers their weak spots. Right now Yahoo! has more weaknesses than strengths.

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Firing your customers

Getting bad clients out of your life can be very therapeutic, it’s something all business owners should do on a regular basis

Running your own business can be tough, but one of the therapeutic advantages of dealing with the stresses of self-employment is the ability to fire stroppy customers.

Steve Cody, the proprietor of marketing agency Peppercom, gives a list of five types of clients worth sacking in Inc Magazine.

It’s a good list although it misses the general “pain in the ass” client who demands a solid gold level of service for a pittance. These are particularly common if you pitch to the lowest end of the market.

Lists like Steve’s are good reminder of Pareto’s Law, or the 80/20 rule which is usually put in terms of 80% of business revenues come from 20% of customers.

The converse is also true, 80% of business hassles come from just 20% of customers and they are almost certainly not the most profitable ones.

Pandering too much to the bad customers can hurt your health as well – running your own business is stressful enough without dealing with troublesome clients.

So sacking bad clients is good, not only is it therapeutic but it also helps the bank account. It’s worthwhile doing whenever a customer drives you too far.

Go on, you know you want to.

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