Microsoft and Apple discover the downside of being multinationals in China
Among expats in Thailand the saying was “the locals can ignore the law, but multinationals can’t.”
Thailand has some pretty strict laws on employee wages, workplace safety and council permits. Pretty well every business ignores them except the multinationals.
Generally Thais don’t complain about businesses not complying with the rules and the authorities are reluctant to take action.
Unless you’re a multinational, in which case the slightest irregularity in pay risks a visit from the police.
A few days in the Bangkok Immigration Gaol while the misunderstanding is sorted out is a good lesson for any sloppy farang country manager who hasn’t been ticking all the boxes.
What’s fascinating though is how the complaints against Microsoft and Apple are part of the rising Chinese consumer movement.
It’s a tough life being a consumer advocate in China, leading protests against well connected local companies or their government cronies could be a career limiting move, or much worse.
On the other hand it’s safe to criticise an American corporation and its much more likely to get results.
So managers of foreign companies in China have to be far more responsive to complaints than their local counterparts as Apple and Microsoft have learned.
For multinationals there is an upside to this, foreign companies tend to get better staff as they don’t mess people around with pay and their products are seen as being better because they do honor warranties.
It ends up being swings and roundabouts, but it does emphasise the traps for inexperienced expat managers who can unwittingly get themselves in trouble.
Apple and Microsoft have learned their lesson about customer service in China, you wonder how many others are still to do so.
How a cloud computing service wants to radically change customer service and business
“Nobody got girls on the helpdesk” says Mikkel Svane, founder of online customer service company Zendesk.
Mikkel hopes to make customer service sexy again as businesses find they have to focus on keeping clients happy.
This is a reversal of management thinking of the 1980s where, as Mikkel says, “customer service is a cost centre, outsource it, don’t spend any time on it and don’t let customers steal any of your time.”
Now the internet gives customers to tell the world about a company’s service, the days of outsourcing or disregarding support are over.
Mikkel Svane and Michael Hansen of Zendesk
Cloud technologies are changing how software is used in business, as Mikkel found when he and his partners started Zendesk.
It became very obvious that building something that was easy to adopt, web based and integrated with email, websites. Something easy to use that didn’t clutter the customer service experience.
Something that moved from managing the customer service experience to focusing on customer service.
We built it, put it out there and customers starting coming.
A lot of these companies thought they could never implement a customer service platform. Suddenly small companies found they could compete with bigger competitors.
The appeal to investors
Having customers signing up proved to be a big advantage in Silicon Valley, no-one knew anything about a Danish company, but with local customers starting coming on board US Venture Capital firms understood what the company does.
That customer base proved powerful as Zendesk has to date raised $84 million dollars over four rounds of VC funding and is looking at a stock market float with an IPO in the next few years.
“Silicon Valley has a great tradition of building businesses.” Says Mikkel, “coming to Silicon Valley was such a big step for Zendesk, in taking it from being some little startup to being a real company that could scale very quickly.”
A question of scale
Groupon is a good example, when Mikkel and his team first met the Groupon team the group buying service was a team of four guys in Detroit. Groupon founder Andrew Mason personally signed off on the initial Zendesk subscription.
“What the hell is this company, we don’t get it.” Mikkel said at the time.
Three years later Groupon was the fastest growing company in history with thousands of support agents on their systems supporting hundreds of thousands of products.
Despite Groupon’s recent problems, Svane is proud of how Zendesk helped the group buying service with growth that no business had seen before.
“With Zendesk they got not only a beautiful, elegant system they also got the scale and the trajectory. Imagine if they’d tried to do that with an Oracle database? You’d have never been able to grow so quickly.”
On being a good internet citizen
In the past we talked about platforms – the Oracle platform, the Microsoft plaftorm – today the Internet is the platform.
“We are a good citizen on the Internet platform,” says Mikkel. “Shopify is a good citizen of the internet platform, these type of tools are easy to integrate. We are all good citizens of the Internet platform.”
Having these open system is the great power of the cloud services, they way they integrate and work together adds value to customers and doesn’t lock them into one company’s way of doing things.
The threat to incumbents
Vendor lock in has been a curse for businesses buying software. The fortunes of companies like Oracle, Microsoft and IBM have been built holding customers captive as the costs of moving to a competitor were too great.
Cloud services like Zendesk, Shopify and Xero turn this business model around which is one of the attractions to customers and it’s why huge amounts of money are moving from legacy solutions to cloud based services.
Another reason for the drift to cloud services is the reduction in complexity, the incumbent software vendors made money from the training and consulting services required to use their products.
Having simple, intuitive systems makes it easier for companies to adopt and use the new breed of cloud services.
Focusing on the business
Mikkel’s aim is to help businesses focus on their customers and products rather than worry about IT and infrastructure. In the long term it’s about helping organisations establish long term relations with their clients.
“Companies today realise that it doesn’t matter how much it matters how much I can sell to you right now, it pales into in comparison of how much I can sell you over the lifetime of our relationship. This ties into the subscription economy. It’s much more important for companies to nurture the long term lifetime relationship.”
Having a long term relationship with customers is going to be one of the keys for business success in today’s economy.
The days of transaction based businesses making easy profits from skimming a few percent off each sale are over and companies have to work on building long term relationship with customers.
Services like Zendesk, Xero and Salesforce are those helping new, fast growth companies grab these opportunities. For incumbent businesses, it’s not a time to be assuming markets are safe.
Can Dell going private reverse the personal computer manufacturer’s decline?
Now Michael Dell and a team of private equity investors are going ahead with taking the company he founded private, the question is will this make any difference to the technology company.
Turning around Dell is going to be a massive task as the company has lost the advantages that made it the world’s biggest PC manufacturer. At the same time, the industry itself is shrinking as corporate and consumer customers move from personal computers and servers to tablets and cloud services.
The triumph of logistics
Dell’s real success lay in logistics. In the early 1990s the company – along with its competitor Gateway – developed a global just-in-time assembly network which took advantage of cheap Asian suppliers, efficient air courier networks and call centres.
Bringing these together meant Dell and Gateway could deliver a custom made computer to a customer in just over a week without the hassle of holding warehouses of stock, employing sales staff or renting stores.
Price was the ultimate advantage and these companies could undercut competitors with their efficient networks, lack of inventory and no retail overheads.
Losing an advantage
Unfortunately for Dell, competitors caught up and by the early 2000s most PC manufacturers were using similar manufacturing methods and were able to match their price points.
By 2006, HP overtook Dell as the world’s biggest PC manufacturer.
Worse yet, Apple adapted Dell’s logistic systems to corner the high end of the PC market and then expand into consumer devices.
Dell’s reaction was to compete solely on price and to do so they cut component costs and outsourced support to lowest cost providers.
This backfired horribly and the poor quality products coupled with execrable after sales support deeply damaged Dell’s brand with the Dell Hell debacle being the public face of widespread customer unhappiness.
Dell in the post PC world
Making matters worse for Dell is that the market has shifted away from personal computers.
Dell has a tragic track record of diversifying out of the PC markets, all of its attempts to move into consumer electronics with PDAs, smartphones, tablet computers and entertainment devices have been, at best, embarrassing.
Enterprise computing has been more successful but even here Dell has shown little innovation and most of their entries into the corporate markets has been through acquiring specialist companies rather than doing anything different.
Part of this to failure to diversify has been because of Dell’s relationship with Microsoft. The various versions of Windows intended to be used on PDAs and tablet computers turned out to be wholly unsatisfactory and left the market open to Apple with the iPhone and iPad.
Going private
That Microsoft is going to have a financial interest in the privatised Dell is not encouraging for the company’s prospects.
Neither is the continued presence of Michael Dell. His return as the company’s CEO in 2007 has not solved the company’s problems.
It’s difficult to see where the problem was being a public company, Dell’s woes were not because of troublesome board members or activist shareholders.
Going private might allow Michael Dell and his team to experiment without the accountability of quarterly reporting, but that barely seems worth 26 billion dollars.
Dell could surprise us all by reinventing its business and claiming a role in the post-PC world, but right now its hard to see how.
Just as Silicon Valley’s new businesses has challenged a whole range of incumbent operators, they too are at risk from upstarts who value their customers. This is something PayPal’s management has to face.
Our intention has always been to protect our customers. Not to mess around with our merchants.
I want to share two things with all of you:
#1 — there’s a massive culture change happening at PayPal right now. If we suck at something, we now face it, and we do something about it.
#2 — you have my commitment to make this company GREAT again. We’re reinventing how we work, our products, our platforms, our APIs, and our policies. This WILL change, and we won’t rest until you all see it. The first installments are due very soon. So stay tuned…
Screwing around merchants and buyers has become synonymous with PayPal and their parent company eBay who together are the poster children for the Silicon Valley Soviet Customer Service Model.
Reader comments to the CNN article cited at the beginning of this post give a taste of just how bad the problem is at PayPal.
Once your business attracts the attention of PayPal’s algorithms, you’re locked into a Kafkaesque maze of dead ends and arbitrary, made up rules.
To be fair to PayPal and eBay this problem isn’t just theirs, it’s shared by Google, Amazon and almost every major online company. Their view of customer service is to shoot first and ask no questions, they certainly won’t answer anything from their victim beyond a trite passive-aggressive corporate statement.
Part of the current Silicon Valley mania around web and app based services is that, along with providing free content, users will provide support for each other and that customer service is an unnecessary overhead which should be kept to a minimum.
In this respect, many of these new businesses are little different from the legacy airlines, telcos and declining department stores who have spent the last thirty years stripping away customer service with the result of locking them into shrinking commodity markets.
That failure to value customer service is the biggest weakness for companies like eBay, Amazon and Google. The very forces that favour them, the reduction of the entry barriers, also makes it easier for more customer orientated businesses to grab market share.
Just as Silicon Valley’s new businesses has challenged a whole range of incumbent operators, they too are at risk from upstarts who value their customers. This is something PayPal’s management can’t afford to forget.
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.
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.
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.
The business model of many web startups transfers unacceptable risks to their users.
AirBnB is one of the poster children for the “collaborative consumption” model of internet businesses where people can put their spare resources, in this case rooms, out into the marketplace.
A good example of this is an article this week in the New York Times where AirBnB hosts risk fines and eviction for breaching their leases or local accommodation laws.
When Nigel Warren rented out his New York apartment while he was out of town, he returned to find he was facing eviction and up to $40,000 in fines. Fortunately he avoided both but AirBnB did little to help him except to point him in the direction of the terms and conditions which required him to obey all local laws.
The New York Times asked AirBnB for comment and received corporate platitudes about how their service helps struggling home owners but no real response to the risks of falling foul to local government, landlords, building owners or insurance problems by sub-letting their residences.
This is a pretty typical problem for PayPal and eBay customers – as Vlad has found, the various seller protections often prove to be useless when dispute resolution favours scammersand PayPal’s philosophy of shutting down accounts unilaterally and without appeal exposes sellers to substantial risks.
PayPal, eBay and AirBnB are alone in this of Soviet customer support model – Amazon, Google and most web2.0 businesses have this culture.
In many ways it’s understandable as dealing with customers is hard. In the view of the modern business world, cutting deals is glamorous while looking after customers is a grubby, low level task that should be outsourced whenever possible.
Pushing the risks onto users also makes sense from a business perspective, that makes the billion dollar valuations of these services look even better.
For the founders of these services, none of this is a problem. By the time the true costs and risks are understood, the founders have made their exit and the greater fools who bought the businesses have to deal with the mess.
While the greater fools can afford to carry the costs, the real concern is for users who may found themselves out of money and out of a place to live.
That’s why the founders of these businesses need to be called to account for their ethical lapses.
Financial institutions are evolving as technology changes their business
Yesterday the National Australia Bank had a media briefing to show how they, like their competitors, are revamping their entire business around new technologies.
The investments are substantial and the re-organisation of the business is too as the old model of branch based banking only available from 9am to 4.30pm is superseded by the always on model of Internet banking delivered through tablets and smartphones.
One of the notable points the NAB executives made was their move to authenticating customers through voice recognition. A trial had found the system reduced fraud and social engineering attempts dramatically.
The use of voice recognition makes sense as it reduces the reliance on users remembering passwords or having to give over personal information that can often be gleaned off social media sites.
On the social media front, NAB are also offering their small business customers Facebook selling tools in collaboration with social media sales platform Tiger Pistol.
While it’s questionable that businesses will get that much from a Facebook store, it’s a good attempt from the bank to add some value and encourage their commercial customers to move online.
The move online is essential as the bank noted that online sales through their merchant platforms are up 23% as opposed to an anaemic 2.5% in general sales.
Along with passwords dying, the NAB also found that the cash register is dying and being replaced with smartphone and tablet apps. The bank itself is moving its online platforms to being ‘device agnostic’ so as not to be locked into any one technology.
What the NAB, and its competitor the Commonwealth Bank, are showing is the importance of having modern systems which are flexible enough to evolve with changes in the marketplace.
Smaller businesses could learn from the banks on just how important this investment is. The organisations who aren’t making these changes are steadily being left behind.
Trolls are as likely to hide in a business’ accounts receivable file as they are on a Facebook page
“A psychopath will enter everyone’s lives at one time. When yours arrives, your job is to get them out of your life as quickly as possible.”
That little gem was handed down to me before the internet gave everyone a global megaphone to entertain themselves with. Today it’s likely a dozen psychopaths a week could enter your life through the web or social media.
One of the manifestations of this ability for anyone to post to the web regardless of merit or sanity has given rise to the phenomenon of “trolling”, of which there has been much recent media attention.
At its most basic, trolling is about getting attention. The troll hopes to get a reaction from something outrageous they’ve said or done. In that respect they aren’t too different to radio talk back hosts or SmartCompany editors.
Business has its own types of trolls: the ‘squeaky wheel’ who hopes that by making a complete pain of themselves you’ll succumb to their unreasonable demands; the perennial tyre kicker who wastes your sales staff’s time; or the late payer who enjoys toying with you and your accounts people but has no intention of ever paying the bill.
The effects of these business trolls can be just as debilitating as an online troll, with the added bonus that they distract you and your employees from getting work done.
Sometimes the business owner makes the mistake of taking things personally. This often happens when a bad debtor upsets us so much we make it our life mission to get what we deserve to be paid.
Hundreds of hours and thousands of dollars later we surrender and accept we were never really going to get that relatively trivial sum.
The worst of all the business trolls is the recreational debtor. These business psychopaths take delight in ringing up debts they have no intention of paying and then treating your attempts to get the money back as a type of game where they will thoroughly mess with your mind.
These are the people to get out of your life as quickly as possible. It could be writing off the debt, giving them the refund or just kicking them out of the store.
So beware of the business trolls, they are as likely to appear in your outstandings file as on your Facebook page.
As the computer power at our fingertips gets more powerful, the tools to help customers are getting smarter and better.
One of weaknesses in most organisations is getting customer service right, good support takes time which costs money and leads many big and small companies to scrimp on support to save a few costs.
In a conversation with BMC Software’s Suhas Kelkar about customer support – Remedy, one of the biggest helpdesk software packages is a BMC product – the discussion turned to how the process has changed in recent years.
Not too long ago we reached for manuals, but those vanished as CDs and then downloads became common. Then we’d call the manufacturer’s helpline or our unfortunate store who sold us the item.
Today we Google a problem to see if we can find a quick solution and if that fails we reach out to our social networks by posting the question on Twitter or Facebook. We may even post the problem to a support forum to see if anyone has an answer.
Only if can’t find the solution anywhere else do we call the support line, for most of us it is the last resort.
In some ways this is a success for corporate cost cutting as most of us call a “helpline” only in desperation as we’ve trained to expect long waits, confusing menus and poorly trained operators.
That model developed in the 1980s – in order to pay rockstar salaries to executives it was necessary to cut staff wages and training costs with after sales support often being the first business area to suffer cuts.
Eventually this started to backfire and the Dell Hell saga as one of the leading examples where the computer manufacturer’s lousy support became industry legend. It’s fair to argue that Dell has never quite recovered from the damage the period of poorly outsourced support did to their brand.
To repair the damage to their brand, Dell adopted a crowdsourced support model where company forums were available for customers to ask about problems with the hope other customers could answer before expensive staff became involved. Eventually other companies adopted this system.
Social media has created a doubled-edged sword for businesses, it’s easier for people to ask their friends for help but it also increases the risk of brand damage if online posts aren’t monitored and responded to.
All of this is forcing a rethink of how customer support works. For businesses big and small, social media and crowdsourcing tools are changing the way we talk to customers and how they can talk about us.
The big data push is also changing customer support as businesses now have the computing power available to mine knowledge bases, issue registers and call logs to identify market trends and weaknesses in their products or sales teams.
For business owners and managers stuck in the 1980s ways of customer support, they are in for a wretched time over the next few years.
When did it become acceptable for airlines to humiliate passengers and customers on national television?
The few times I watch television these days is either when the footy’s on or the rare occasions that I surface from my interweb connected man cave and stumble into a room where someone has a TV running.
And so it was tonight when I happened to wander out to witness a terrible airport “reality” show – this one being an unoriginal, third rate Australian effort where Tiger Airlines shows how it stuffs around and humiliates its passengers. In Australia, Channel Seven considers this to be prime-time TV “entertainment”.
What was striking about the show was how Tiger Airlines’ check in staff humiliated a pensioner and her young son who hadn’t printed out their boarding passes.
The “fee” for not carrying out a basic task which reasonable people would expect would be part of an airline’s service is $25 a head at Tiger Airlines – one could ask what the Australian Competition and Consumer Commission’s position is on excessive fees being used to pad airlines’, or banks’, profits but that would be asking too much of Canberra’s worlds best practice doughnut munchers.
As result the poor lady was expected to front up with another $50 – money she didn’t have. So Tiger Airlines’ check in staff wouldn’t let her board and Channel Seven’s camera crew gleefully filmed her desperate tears and shocked son.
Eventually a bystander took pity on her and gave her $60. At least someone in the terminal had some decency and compassion, qualities neither the Tiger Airlines staff or Channel Seven camera crew have in the tiniest way.
No doubt somewhere in an anonymous glass tower some arsehole has a job as a manager at Tiger Airlines and has a KPI that includes how many poor mothers they can reduce to tears.
When the arsehole Tiger Airlines manager gets its annual bonus for making the required number of victims passengers weep, it no doubt goes to lunch with the Channel Seven executives – another bunch of arseholes – to slap each others’ backs and tell themselves what great heroes of capitalism they are.
The question that bugs me is when did it become acceptable to humiliate your customers? No doubt Tiger Airlines think it’s good publicity and Channel Seven think it is good entertainment.
We live in interesting times when our business leaders think it isn’t good enough just to take customers’ money but that it’s also necessary to humiliate them as the managements of both Channel Seven and Tiger Airlines seem to be rewarded for doing.
Fortunately in these corporatist days we still can vote with our wallets and turn off the muck we find offensive – that’s why decent people shouldn’t choose to fly Tiger Airlines or watch Channel Seven.
A little understood part of the cloud computing and app world is that you, the customer or user – which isn’t necessarily the same thing – don’t really own anything. The money you spend on ebooks, mobile apps or web storage are for licenses to use the services, not the products themselves.
Should the supplier decide they no longer want to provide you with their service, then you lose your account and everything with it.
This is what happened to Linn when Amazon’s algorithm decided her account was in some way breaching their terms and conditions.
We have found your account is directly related to another which has been previously closed for abuse of our policies. As such, your Amazon.co.uk account has been closed and any open orders have been cancelled.
Per our Conditions of Use which state in part: Amazon.co.uk and its affiliates reserve the right to refuse service, terminate accounts, remove or edit content, or cancel orders at their sole discretion.
“At their sole discretion” is the key point here. This is a standard term in most online contracts and reflects the legal realities of the physical world where a shopping mall manager or bar owner can ask you to leave their property without having to tell you why.
When you use a virtual service, which includes e-books and cloud computing software, you are on someone’s virtual property and they can ask you to leave any time they feel.
Of course those rights are subject to any contract you might have with that e-book seller, cloud computing service or shopping centre but you have to be in a position to enforce them – not an easy task when you’re in Norway and their lawyers are in Connecticut.
Even if you want to enforce the agreement you believe these services have entered into, the grossly biased contracts attempt to put all obligations on users or customers while freeing the vendor of the distraction of being responsible for anything.
The real problem though is the lack of notice and fairness – this blog’s previously looked at how PayPal, Facebook and Google will shut down business sites without any warning or due process.
It’s one thing to get thrown out of a shopping mall but it’s another matter when your car and week’s groceries are still in there.
Even more worrying in Linn’s case is how ebooks and music purchased with Digital Rights Management (DRM) controls can be erased by companies like Amazon. Which is like walking home from the shopping mall you’ve been banned from to find the manager has called by to confiscate the toaster and TV you bought last week.
What’s particularly notable in all of these stories though is the Soviet customer service model, the Amazon”Executive Customer Relations” representative Linn dealt with refused to tell her what she’d done wrong or what rules she broke.
The only thing “Michael Murphy” would tell her was she was effectively banned for being linked to a blocked account and stated;
“Please know that any attempt to open a new account will meet with the same action.”
No notice, no appeal, no rights. The computer says no and the bureaucrat cannot help you further.
Trust lies at the core of all business and this is even more true when buying services like e-books and cloud computing products. If you can’t trust a vendor to provide a service, or to act openly and honest with you when a problem occurs, then it’s unlikely you’ll use that service.
For individuals and businesses it’s important to understand that those e-book, cloud storage or social media services may appear to be a bargain, but there are risks lurking in the fine print.
The new Soviets might be doing well at the moment, but their days are numbered just as the USSR’s were.
Some businesses aren’t worth worrying about as customers.
“Those companies are not going to be winners in the long term. We’re very happy to work with the fastest growing companies in the world; the companies who understand that people are core to who they are,” says Daniel Debow, Vice President of Salesforce’s Work.com at the recent Dreamforce conference.
Debow was talking about companies that aren’t interested in social software, or those who don’t have the infrastructure or management culture to implement changes which reflect the modern workplace.
When writing about social and cloud services one thing that jumps out is just how unprepared many businesses, big and small, are for changes that are happening in both the workplace and the market.
The story of Work.com reflects those changes – the idea behind Rypple and Work.com, which was born out of Salesforce’s 2011 acquisiton of Rypple, is that workplaces are inherently social.
“We spend as much more time with the people we work than with our families. It matters to us what our workmates think” says Daniel so Work.com gathers the social intelligence within the business to give people real time feedback on their performance.
The Rypple idea lies in the inadequacy of existing HR software and management practices. Daniel says, “today this model we have it’s totally not reflective of the reality of how people work; people are more connected, they’re collaborative, more realtime.”
This collaborative and realtime way of doing business challenges the structures in many businesses and the methods of a lot of managers. Many are ill-equipped to deal with a more open and transparent way of managing their teams.
In fact, software like work.com and its competitor Workday make some of those older style managers redundant, particularly those whose roles involve little more than box ticking and following the strictures of the company’s procedure manual as this can be done better by a computer program.
The problem for many organisations, both private and public, is they have become more focused on cossetting and protecting the box ticking bureaucrats of middle and upper management rather than delivering service to their customers and supporting their staff responsible for keeping clients happy.
Something that jumps out when you talk to entrepreneurs like Daniel Debow and others building new social and cloud companies is their lack of interest in selling to those organisations, their view is the old school companies are dinosaurs on the path to extinction.
Dinosaurs though lasted a lot longer than we often think and the same is true of the current generation of zombie companies being kept alive by government or investors too scared to book the losses which the failure of these enterprises would entail.
While those dinosaurs are going to be a drag on our economies for the next decade or two, the real opportunities – and rewarding work – is with those businesses who want to change and aren’t run for the administrative convenience of their managers.
The question for many business owners and managers is whether companies like Rypple or Workday could be bothered selling to you. If you’re not, it’s time to consider your exit strategy – or lobby your local politician for some subsidies.
Paul travelled to Dreamforce courtesy of Salesforce.com
