Tag: business

Digital businesses’ lost tribe of managers

Business leaders are struggling to understand their digital strategies, Forrester reports.

Are senior executives lost when discussing their company’s digital strategy?

At the Huawei Connect conference this morning in Shanghai, Nigel Fenwick, a Vice President and principle analyst of Forrester Consulting, released his company’s study titled Business and Technology Leadership in a Post Digital Era.

Forrester surveyed 212 IT and business managers across selected markets in North America, Europe and the Asia-Pacific for the survey and found only four percent of business leaders were confident they understood their companies’ digital strategy.

Even more worryingly less than ten percent of business IT leaders claimed they understood their organisation’s digital strategies.

The reason for this, Fenwick believes, is the pace of change in the technology sector as managers struggle to put digital innovations into the context of the business.

Exacerbating this lack of understanding is how companies are ‘bolting on’ digital strategies to their existing business models rather than thinking about how their industries, products and markets are being transformed, Fenwick says.

There’s little new or surprising in Forrester’s report and the small and selective data set doesn’t inspire confidence in the survey’s results. It is however a good reminder of the challenges facing today’s boards and executives in understanding the consequences of a rapidly changing economy on their businesses.

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Uber’s grand experiment

Uber’s losses raise questions of how far the loss making business model pioneered by Amazon can be pushed

Yesterday reports emerged that the icon of the disruptive economy, ride sharing service Uber, lost 1.2 billion dollars in first six months of this year.

Those losses show disruption doesn’t come cheap, although settling the damaging and costly battle with China’s Didi Chuxing will help the company’s cash burn.

Despite on track to lose at least two billion dollars this year, the company still has a substantial war chest having raised $8.7 billion dollars in debt and equity raisings over the last eighteen months.

While impressive, that war chest will only last four year at current rates and, given Uber’s already sky high 60 billion dollar valuation and the increasingly hostile Silicon Valley fund raising environment, it will be a relief to investors that the China battle appears settled.

There remains though an ongoing weakness in Uber’s business however with the company reportedly spending hundreds of millions a year in subsidies to drivers in key markets. How sustainable their business is remains to be seen.

In many respects Uber is following the Amazon example of beating down competitors by selling products at deep losses thanks to its access to capital and investors’ tolerance for building marketshare.

As we’ve seen with Amazon, that tactic has been wonderfully effective both in retail and in providing cloud services. For customers and the economy though, the reduced choices in the marketplace may end up not being in their interests.

Uber is an interesting experiment in how far the Amazon model can be pushed, for cities and states dealing with a deeply disrupted taxi and city transport network the results of that experiment may be telling.

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Spreading the tech industry’s footprint

The spread of the US’s tech sector shows the country’s industrial depth and strength, it also shows how other factors affect the spread of technology businesses.

Just how broad is the US tech industry? It’s tempting to think that most of the American tech sector is concentrated in San Francisco Bay Area with some offshoots in Seattle and on the East Coast but as this New York Times piece describes, the country has a range of high-tech industry clusters.

Like Silicon Valley itself many of those clusters exist because of other industries, research facilities or companies – Seattle being home to Boeing, Microsoft and Amazon being an example.

Another example of how other industries have influenced the development of industry clusters is shown in the example of Philadelphia.

I hadn’t thought have Philadelphia as having a tech sector until I spoke with Australian tech company Nuix about one of their key North American offices being in the Philadelphia suburb of Conshohocken.

When I observed that Philadelphia wasn’t the obvious place to set up, Nuix’s managers pointed out how the city’s pharmaceutical, medical technology and telecommunications provide a deep talent pool for tech companies along with the city’s location between New York and Washington DC being an advantage as well.

Philadelphia’s civic leaders have contributed to it with their Startup Philly program that offers services and incentives ranging from networking events through to a seed investment program.

VeryApt CEO Ashrit Kamireddi, one of the recipients of a Startup PHL angel round, describes the pros and cons of the city investment program and points out it was the factor in setting up their business there.

Prior to raising a $270,000 angel round led by StartUp PHL, my two cofounders and I had just graduated from our respective grad programs and had placed 3rd in Wharton’s Business Plan Competition. We could have settled our company anywhere, with New York and San Francisco being the obvious choices. For a startup, the initial round of funding is where geography is most critical. Most angels don’t want to invest outside of their backyard, which explains the natural tendency for startups to relocate where there is the most capital.

Kamireddi’s point about capital is critical, for tech startups finding funding is probably the most important factor in where the company is based.

Funding though isn’t the only aspect and for established companies, particularly those in the Bay Area struggling with high costs which is what the New York Times article focuses on in its example of Phoenix, Arizona.

The spread of the US’s tech sector shows the country’s industrial depth and strength, it also shows how other factors affect the spread of technology businesses.

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P&G focusing on Facebook is bad news for media

Proctor and Gamble’s decision to focus on Facebook is bad news for media and smaller websites

Consumer goods giant Proctor and Gamble has announced they will be dialling back their targeted advertising on Facebook, as they discovered being too precise turns out to stifle sales.

It turns out that big companies need scale, not precision, so to grow sales they need to be engaging with more people and not restricting their message to niche groups.

Given the different natures of businesses it’s not surprising to see strategies that work for one group fail dismally for others, but it’s interesting how targeting turns out not to work so well for mass market products.

The losers though in the P&G story are smaller websites as Wall Street Journal quotes the company’s Chief Marketing Officer as saying they will focus more on the big sites and move away from niche players.

Mr. Pritchard said P&G won’t cut back on Facebook spending and will employ targeted ads where it makes sense, such as pitching diapers to expectant mothers. He said P&G has ramped up spending both on digital sites and traditional platforms. One category the company is scaling back: smaller websites that lack the reach of sites such as Facebook, Google and YouTube.

 

Again we’re seeing the early promise of the web failing as economic power continues to be concentrated with a few major platforms. This is also terrible news for media organisations as big advertisers – P&G are the world’s biggest spender – focus on a few sites and increasingly ignore local or niche news publications.

There’s also the quandary of where the content that Facebook’s users share will come from, with the advertising shifting away from media companies – new players such as Buzzfeed and Huffington Post as well as the old established mastheads – to Google and Facebook, there’s less funds to create interesting and shareable stories.

P&G’s move is very good for Facebook’s and Google’s shareholder but the future media models still seem a long way off.

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Creating alternatives to the NASDAQ

Is the NASDAQ still the place for tech companies to list? Nuix’s Eddie Sheehy doesn’t believe so.

Does it really matter what stock market a company lists on? In my interview with Nuix CEO, Eddie Sheehy for the Australian Financial Review, the question arose about where the company will list for its expected IPO next year.

Sheehy’s response was clear, “I suspect we’d get just as good a float out of Australia now as we would anywhere else. In fact better, because I think our shareholders are better known, respected and trusted, there’s nothing that I’ve seen in London or Nasdaq that makes me believe we’d get a better outing.”

Until recently most tech startups aspired to listing on the US NASDAQ exchange and the reasons were compelling as the bourse has a strong technology focus meaning deeper pools of funds, more liquidity along with a community of investors and analysts who had a strong understanding of technology stocks.

The case for other exchanges

Now other exchanges are making their case for tech companies listing with them. The London Stock Exchange making a strong argument for prospective IPOs. Singapore, Sydney and many others have similar pitches for the business.

The problem in those exchanges is the lack of depth in the marketplace. Having a small selection of tech companies listed means limited focus from investors and analysts, it also risks having one or two successful companies dominating the index, as has happened with Xero’s listing on the New Zealand Exchange.

Xero also illustrates another problem with a listing on an exchange not familiar with the peculiarities of tech stocks at the company’s Sydney AGM a few weeks ago where an investor asked ‘when are you guys going to make a profit?’

Rod Drury, Xero’s CEO, was able to deflect the question but it showed how companies listed on exchanges where the the high growth, low yield model of tech startups are unusual. On the Australian exchange, this problem is exacerbated by the investor base being dominated by big, dumb institutions.

Changing perspectives

Nuix, among Xero and a host of other tech companies, are slowly changing the perspectives of those investors but the focus on yield and safety from both retail and institutional investors will remain an obstacle for ventures launching in more conservative jurisdictions.

Other factors are the stability, legal and taxation consideration of those jurisdictions. If stockholders are facing barriers realising their investors or the the domicile puts companies at a disadvantage then that country’s stock market won’t be preferred.

Ultimately though a company’s listing is about access to capital and liquidity. If companies like Xero and Nuix can get both at a reasonable cost by listing on the Australian, Singaporean or London markets, then that’s a choice for their boards.

It’s hard though to see the NASDAQ being knocked off its perch for moment, although it the US tech bubble does pop things may change.

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Keynote speaking and presentations

Paul Wallbank speaks on how businesses, workplaces and communities are changing in the twenty first century

How is your business or community adapting to radically changing marketplaces and society?

Speaker, writer and broadcaster Paul Wallbank has been at the forefront of helping businesses and communities find opportunities in this rapidly changing era for twenty years.

Paul’s presentations are lively, interactive and designed to both entertain and challenge audiences looking at how their companies, industries and communities are going to prosper in the connected century.

Some of the areas Paul covers are the workplace of the future, employment in the age of robots, how the internet of machines is changing markets and what technologies like cloud computing, social media and Big Data mean to your business.

All keynotes, presentations and workshops can be customised to suit your unique needs. Topics include;

Future Proofing your business
Decoding the new economy
Leadership in a digital era
Tools for the new economy
Why Broadband Matters
The Future of Business

You can view many of Paul’s presentations at his Slideshare site.

Previous presentations have included;

The future office. What will the office of the future look like?
Web 4 Free. Doing business on the web with a shoestring budget.
The elder guru; exploding the myths of the digital divide.
The top ten solutions for getting the most from small business IT
What does it all mean? cutting through computer jargon.

All presentations are available as keynotes or workshops and Paul will tailor the content to suit your organisation’s or industry’s unique characteristics.

Paul connects the dots to show how your industry, business and family are being affected by changing trends in technology, economics and global demographics.

In explaining trends and technologies such as the internet of everything, cloud computing, social networking and broadband technologies, Paul deciphers the jargon and helps audiences identify opportunities and understand the risks in the new economy.

If you’d like to find how your business or community group can get more from their technology contact Paul for more information.

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Embracing business disruption

Pam Murphy, the Chief Operating Officer of software company Infor believes businesses have to embrace change in order to survive today’s period of disruption

“A lot of companies are trying to figure digital disruption out,” says the Chief Operating Office of Infor, Pam Murphy. “For many companies they are seeing all this stuff and thinking ‘oh my god, what on earth do I do?’. They know they need to evolve and they know they have to evolve.”

Murphy, who joined Infor in 2011 after over a decade at Oracle, has seen a lot of that change. Infor itself embraced the cloud and in the company’s has been on an acquisitions spree as it seeks to expand its product offerings.

Having dealt with so many acquisitions – eight since Murphy joined five years ago – the company has become adept at absorbing new businesses. “It does require a lot of thinking that you’re going to be respectful of that,” she says. “A lot of stuff is easy to standardise but culture is difficult.”

Another area that Murphy doesn’t see as being standardised is in developing talent. “You have to be open minded,” she says in answer to my question about encouraging women into senior roles and increasing the diversity of senior management.

Murphy’s main advice to business leaders is not to shy from the business world’s shifts, “embrace the change.” She says, “don’t think of it as being something that’s scary and threatening, get ahead of it. Embrace the fact we’re in a completely different era.”

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