Tag: business

Freeing business investment

Funding the businesses of the future will be critical to addressing the automation driven shifts in employment, how we fund them is one of today’s challenges.

What would happen if the world’s richest people invested in startup businesses? Bloomberg Business ran an interesting, if flawed, thought experiment looking at how many nascent companies each country’s richest individuals could invest in.

It’s surprising how low those numbers are and, if anything, the result underscore how the 1980s and 90s banking sector ‘reforms’ caused the world’s financial system to pivot from its historical purpose of funding commercial enterprises into speculation, rent seeking and manipulating markets.

Apart from a smattering of venture capital not much has replaced the banks in funding the SME and entrepreneurial sectors, if anything it has been those ultra high net wealth individuals who have been financing the investment funds providing capital to entrepreneurs.

How the finance industry evolves in the face of the fintech boom and a world that’s slowly becoming less indulgent of the industry’s greed will be one of the defining things of next decade’s business environment. For the small business and startup sectors getting the funding right will also be a key factor.

The biggest question though is job creation, being able to fund new and innovative investments will be one a critical concern for societies dealing with the effects of an increasingly automated economy.

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The future is NOW – trends in the modern workplace

Flying Solo’s future is now presentation looks at the technology and industry trends affecting small business

What is changing the modern business? In Flying Solo’s upcoming free webinar, The Future is now – Trends in the Modern Workplace, I’ll be exploring some of the technology trends changing the way we work.

A few of these trends are already here, like the mobile workplace but others such as artificial intelligence, the internet of thing and augmented reality are on the five year horizon and we can expect those technologies to have a major impact on the business in the medium term.

One of the industries we’ll be looking at is the automobile industry that’s facing massive changes as electric vehicles, driverless cars and smartcities change the way we use cars and get goods delivered. This sector is looking at both the immediate effects and the longer term effects of the technological change on their industry.

In preparing the presentation it’s striking how similar todays discussions about AI and and AR are with how we talked about the World Wide Web twenty years ago. At the time we didn’t see how companies like Google and Amazon were going to change they way we work and the way our customers buy from us.

Equally ten years ago we didn’t see how the mobile internet or social media was going to change the ways we did business or how our customers would buy. Today they are important factors.

Mobile has changed business

The recent announcement of the iPhone 7 underscores just how the smartphone has become part of lives. No device has been adopted quicker by the marketplace and its effects on business have been profound and continue to be felt.

In the nine years since the iPhone was released, the mobile internet has boomed. Now almost all our customers are looking for our services through mobile devices – be they smartphones or table computers.

One of the things that ‘s worrying however is how few small operators have mobile friendly websites. This year’s Sensis e-business report found sixty percent of small businesses have websites but only forty percent of those were mobile friendly meaning less than a quarter were suitable for smartphones and tablets.

But it’s not just marketing – the mobile internet, smartphones and cloud computing is changing how workplaces operate. It’s becoming easier for employees to work remotely and for companies to be genuinely distributed and we’re seeing more businesses made up of workers scattered around the world, a good example being the company that created WordPress, Automattic, who are showing how a modern workplace can operate.

Automattic’s experience shows how companies can use the mobile and web based tools to manage a modern workforce. For solo businesses, being able to harness outside skills and participate in larger projects, is one of the great opportunities presented by the mobile world.

Everything is connected is connected

Key to business automation is how things are being networked. Increasingly things are being connected to the internet, whether it’s bees, kettles or tractors. If we can put a chip in something and connect it to the net, then we will.

Also, as anyone who deals with the supermarkets knows, large customers increasingly want suppliers to be connected into their data exchange platforms. That integration into supply chains is only going to increase.

This has a number of issues for organisations, first we need the technology to allow us to connect and the systems to efficiently exchange data with our business partners. We also need to know what is being collected by our devices.

Swimming in data

‘Data is the new oil’ is one of the mantras we hear, however that overlooks that dealing with oil is a complex, often dirty and frequently dangerous business.

While having lots of data is an opportunity to get more understanding of our businesses and the markets they operate in, all of this information also has a number of hazards. Not least in securing it and making sure company’s, its employees and its clients’ data is safe.

The big challenge for businesses, big or small, is managing the data that threatens to overwhelm everyone. Being able to get value from the information flowing into the organisation while protecting the underlying data is going to be one of the big issues facing businesses of all sizes.

Automation and robotics

Much of the work in managing all this data will be done by computers – artificial intelligence, machine learning and automation are all going to be standard features in business.

For service providers, increasingly ‘bread and butter’ tasks are going to be taken over by robots that deprive them of business and cash flow. Other businesses however will see this shift as an opportunity to reduce costs and improve productivity.

Accounting service Xero is a good example where founder and CEO Rod Drury sees these technologies as changing the way we work, “Automation and machine learning are improving traditional services by streamlining compliance processes and creating new business opportunities, many of which are either no-touch or limited-touch.”

Increasingly we’re going to see these technologies built into the software programs we use, not just in accounting packages but also in areas like CRM platforms, email and even word processing,

Visualising the data

One of the most exciting technologies of the moment are Augmented Reality (AR), Virtual Reality (VR) and, a combination of the both, Mixed Reality. While games like Pokemon Go! are leading the way it’s actually in industries like logistics, resources and public safety that are leading the applications of these technologies.

For smaller businesses technologies like AR and VR promise to help us visualise the data we have to deal with along with opening up a range of applications ranging from virtual meetings to prototyping. Coupled with technologies like 3D printing, VR and AR may open up a whole range of new industries.

Cultural change

This range of new industries means we’re going to need a whole new set of attitudes and business faces a cultural change as technology changes the workplace. Coupled with major skill shortages in most areas, corporations are going to need to find a new pool of diverse, qualified labour. This is great news for solo businesses.

Like everything there is also a catch, and small businesses are also going to have to embrace that diversity in looking for commercial partners, suppliers and customers. Increasingly, thinking outside the box to find people who can effectively use new technology is going to be important.

The good news is that mobile and cloud services coupled with most of the world becoming connected makes it easier for solo operators to find the skills they need. The real barrier lies in ourselves ditching old prejudices and assumptions

A new business environment

In conclusion, we’re about to enter the next phase of the computer revolution. We’ve been through the PC period, we’re now in the middle of the smartphone era and the artificial intelligence age is about to begin.

The ultimate trend though is that business is going to get faster and solo business proprietors are going to face the same challenges as managers and executives in large corporations as a wave of data floods over us all.

One of the advantages for small businesses is we’re not saddled with legacy systems in the way large organisations and with the tools of the new era being affordable, means solo entrepreneurs can grasp opportunities far quicker than their bigger competitors.

The opportunities are there for us to take, we just have to seize them when when they appear.

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Innovation lessons from the Concorde

The fate of the Concorde, the world’s only commercial supersonic airliner, is a lesson about innovation and business.

Why did the Concorde fail? Website Vox has a nice mini-documentary on the iconic supersonic airliner of the 1970s which looks at why the aircraft never became popular.

Fuel costs, opposition to supersonic flights and the aircraft’s limited passenger capacity are all factors cited in the story.

Passenger capacity turned out to be the main reasons why the project wasn’t a commercial success as the economics of the airline industry changed over the decade it took to develop the aircraft.

Wide bodied jets such as the DC-10, the L-1011 and, most importantly the Boeing 747, offered much better profits and reliability for airlines while the 1978 US airline industry deregulation act democratised air travel in the world’s biggest market. The 1973 oil shock which saw fuel prices was .

As a high priced luxury, the Concorde couldn’t compete in that market. It was only the British and French governments absorbing development costs that allowed Air France and BA to fly it for as long as they did.

Interestingly, we’re seeing a similar shift affecting the Airbus A380 which has been affected by the airline industry shifting from four engine long distance jets to cheaper two engine planes and consumers show their preference for ‘point to point’ networks rather than ‘hub and spoke’ operations – the biggest customer for the A380 is Emirates Airlines which routes almost all of its global operations through Dubai.

The Concorde was one of several brave experiments of the 1960s but its demise shows that despite how impressive the technology was, it was no match for economic reality. That is something we need to keep in mind as we marvel at today’s advances.

Concorde image from Airliners.net

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The limits of how governments can help startup businesses

The City of Sydney elections illustrate how limited governments are in promoting a region’s startup sector.

Over this week I’ve been posting a series of interviews with the candidates for this week’s Sydney Lord Mayoral election. All of the teams have interesting schemes and ideas on how they can improve the city’s profile as a global tech centre.

While each team’s plans are worthy, it’s worth asking exactly what governments can do to make their communities more attractive to businesses and whether short term subsidies and incentives can help.

There is some evidence they can, prior to San Francisco changing its tax rules the city took second place to Silicon Valley in the southern Bay Area. In the last ten years, the city has become the focal point for the tech industry.

However there is a counter argument that San Francisco benefited on a generational shift of lifestyle preferences away from the leafy suburban lifestyles of Palo Alto and San Jose to the grungy but walkable communities of the Mission and SOMA.

The Bay Area though is a special case, Silicon Valley’s success as a tech hub is based upon massive Cold War tech spending that drove the region’s industry and its that high level support that probably tells us more about government support.

In the case of London and Singapore, the successes have been due to the national governments putting in broader economic reforms and incentives. Also their proximity to Europe and East Asia respectively has made both cities attractive.

On balance it’s those broader economic factors that make regions attractive as industries clusters – local incentives count little compared to access to factors like markets, capital and skilled labour. Taxation is, at best, a secondary issue.

The biggest challenge for Sydney, and most Australian cities, is the the crippling cost of property. In 2013, staff.com released a survey showing Sydney to be second only to Zurich in the cost of establishing a startup.

In many respects, the cost of property doesn’t really matter to prosperous industry hubs – San Francisco, London, Singapore and New York are all eye wateringly expensive and yet they still thrive – however all of those cities have better access to capital and markets, if not labour, than Sydney.

Addressing Sydney’s chronic shortage of affordable accomodation is firmly in the state and Federal governments’ remit and beyond giving property developers a green light to build high rise apartments neither level of government has shown any interest in addressing it.

Similarly, the tax structures which penalise Australian employees of high growth businesses and dissuade investment in early stage ventures are totally the responsibility of the Federal government and it’s hard to see that changing in the term of the current dysfunctional administration.

The relative powerlessness of local governments leaves initiatives by the City of Sydney limited in scope and schemes to promote the city or offer incubator space are peripheral to the factors that encourage the development of a global industrial centre.

Ultimately though, the question has to be how much any government can do to create a Silicon Valley, factors such as labour availability and access to capital come down as much to the community’s attitudes and business’ risk tolerances.

So perhaps we focus on what governments can do for business. Maybe just providing a level playing field can be the best we can hope for.

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Risks in the disruption machine

Joining forces with the tech disrupters can be risky as governments doing deals with Uber over public transit are learning

At last year’s Dreamforce, Uber founder Travis Kalanick sat down with Marc Benioff to discuss the ride sharing service’s history and its aspirations to reinvent public transit.

Those aspirations are coming to fruition reports The Verge as local governments across the US sign agreements with Uber to supplement their public transport networks.

In entering those arrangements local officials are finding a number of problems, not least the service’s obsession with secrecy that falls foul of US public data practices and legislation.

That clash between the Silicon Valley obsession with hoarding intellectual property and US open government beliefs is one that will become more common as agencies attempt to ‘Uber-ize’ their services.

However the Uber model isn’t working well in some markets as the fate of Washio shows.

A month ago Mic Magazine wrote about how Washio was a symptom of the ‘disruption’ being wreaked on communities by the tech industry as high priced services displaced undercapitalised smaller business.

Washio’s success, like Uber and most of the tech startups following the Silicon Valley greater fool model, required capturing enough of the market to have a dominant position in the marketplace making it hard for new competitors to enter while driving out existing players who can’t afford to make losses indefinitely. This is path followed by Amazon, Microsoft and even IBM.

However this strategy is risky if there’s not enough capital, which Washio has now found with the service entering bankruptcy this week.

The sad thing is Washio’s unprofitable and unsustainable business model let them kill other companies whose owners, managers or investors were unable or unwilling to compete with a loss making enterprise.

For small businesses in particular the effects of a well funded megalith intent on driving them out of business is particularly cruel – as we saw with booksellers and Amazon.

Local governments need to be particularly aware of the risk of making Uber the only provider of neighbourhood public transport, leaving them the sole player that owns all their data could well prove particularly costly, one only wonders what could happen had a local hospital done a laundry deal with Washio.

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Automating the back office

Walmart’s streamlining of back office processes is a warning to middle managers everywhere

US retail giant is to slash 7,000 back office jobs reports The Wall Street Journal as the company looks to focus on customer service. The process that’s seeing those jobs lost are part of a bigger shift in management.

The automation of office jobs isn’t new – functions like accounts payable have been steadily computerised since the early days of computers – but now we’re seeing an acceleration of white collar and middle management roles.

As increasingly sophisticated automation and artificial intelligence increasingly affects middle management roles, we can expect further changes to organisations’ management structures.

The opportunity to streamline and flatten management will be something company boards will have to focus on if they want to keep their enterprises competitive and responsive in rapidly changes markets.

For managers, there’s a lot more disruption to come for their roles. Those stuck in 1980s or 90s ways of doing things are very much at risk.

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Huawei’s attempt to shape the cloud

For the last two days Chinese network equipment vendor Huawei has been holding its first Huawei connect conference in Shanghai.

There’s alway plenty to announce at these conferences and Huawei had consultancy partnerships with both Accenture and Infosys, their IoT strategy and their big push into cloud computing.

Ken Hu, the company’s current CEO, even had a new word – cloudification – to describe how business processes are going onto the cloud. Although during the segment on their relationship with SAP, the Huawei executives were at pains to emphasise that in their view most enterprises are a long way from going to a public cloud and will be hosting their own services for some time yet.

Despite the clumsy buzzwords, Huawei does have an interesting selling point in the market with its tie up with telcos giving it both a strong sales channel and a unique selling point. How well they execute with telecommunications companies that are notoriously poor at selling these services remains to be seen.

Huawei’s internet of things services are a similar proposition. Being close to the carriers means the company is well positioned to compete in the market, particularly in M2M applications, but again that closeness to telcos could be a hindrance.

The big message from Huawei Connect is that Chinese companies are genuine competitors to European and North American companies like Ericsson and Cisco, something illustrated on Tuesday when Tencent previewed their new head office in Shenzhen that will act as a live R&D lab for their IoT offerings.

Overall Huawei Connect was a good example of the Chinese government’s efforts to shift the nation’s economy up the value chain.

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