Category: rants

Is Small Business Whingeing its way to irrelevance

Are small businesses worrying about the wrong issues?

“Is small business whingeing its way to irrelevance?” first appeared in Smart Company on August 16, 2012.

Last week, TripAdvisor announced the results of a worldwide hospitality survey. One of the things that leapt out of the survey was how large hotel chains are using social media while smaller Australian establishments are languishing.

Following on TripAdvisor’s survey was the release of accounting software company MYOB’s regular index that showed businesses are retreating from the online world with reduced usage rates of social media, eCommerce and online payments.

At an Australian Israel Chamber of Commerce lunch in Sydney on Tuesday, MYOB’s CEO Tim Reed and Google Australia’s Tim Leeder discussed small business and the web with their Getting Australian Business Online program missing its target of 50,000 sign ups since its launch in March last year.

The fact more than half of Australian businesses don’t have a website despite free services from Google, WordPress, Weebly and a host of others indicates a deeper apathy among small businesses towards a whole range of issues.

Earlier this year the New South Wales state government abolished the popular Small Business September program with barely a squeak from the SME sector, with some small business groups actually welcoming what was a dramatic cut to support programs.

Compare this to the Olympic athletes, not only do we see the AOC coming out swinging with demands for more funding but the yachting team are staging an effective campaign to reinstate NSW government programs to support their sport: The total opposite to the small business community.

Small business, on the other hand, rolls over and accepts cuts to programs, poorly thought out regulations and government procurement policies that favour multinationals over local companies which are capable of the job.

When small business is given a chance to have a voice, the community blows it with whingeing. At the NSW Small Business Commissioner’s roadshows earlier this year it was notable how much time was spent whingeing about group buying services, traffic clearways and council permits for coffee tables rather than sensible and achievable wins for the SME sector.

So it wasn’t a surprise that the result of that roadshow was the cutting of useful programs and little effective change.

The best example of this whingeing rather than action is the current campaign to increase the GST threshold and abolish penalty rates.

Instead of focusing on the real problems facing businesses such as high rents, profit gouging from distributors and poorly thought out state and federal regulations imposed by both sides of politics – the small business and retail sectors manage to demonise their staff and customers and increase the suspicions of consumers and workers that they’re being ripped off by big, bad employers.

In reality, the shopkeepers and other small businesses are struggling to adapt to a rapidly changing economy. They are feeling those changes earlier than the rest of the economy because they don’t have the cushions of fat margins, political connections or guaranteed incomes of the corporate, public or political sectors.

Those struggles will give the small business sector an advantage over the bigger and slower groups – having adapted to the changed economy, those smaller businesses will be stronger and fitter than their bigger competitors.

Chris Ridd, of cloud computing accounting service Xero, one of MYOB’s biggest competitors, puts this best.

“Technology is an enabler and can actually help small businesses gain efficiencies, reach new customers and generate new revenue streams. Why turn your back on the one thing that can turn your business around.”

It’s the proactive business people adopting new technologies who are going to thrive over the next decade. Whingeing about TripAdvisor, the GST or dumb government policies isn’t going to save an enterprise that’s become irrelevant.

So make sure your website’s up to date, check what customers are saying about you on social media or review sites and have a look at those cloud computing services that can improve your business’ profitability and efficiency.

The time to do it is now, before your business becomes irrelevant.

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Undoing the untrained workforce

The era of skimping on staff training is over

One of the notable things about the 1980s way of doing business was how front line workers weren’t valued for their skills and knowledge.

In call centres, shopping malls and government departments, those who dealt with customers were seen as an unnecessary expense who should be outsourced at the first opportunity or, if it wasn’t possible to hive them off, then encourage them to get more money out of the customer while providing less service.

An example of this was at electronic superstores where sales staff with little product knowledge were given rudimentary training and then encouraged to sell easy payment plans and expensive acccessories – the HDMI cable scam where connectors of dubious quality earned more profit and commission than the HiFi systems or plasma TVs they plugged into illustrated how lousy a deal this way of doing business for the customer.

Much of that mentality has been inherited by web2.0 companies that think customer service is an optional extra.

Some of those companies can’t even be bothered protecting their clients’ data properly, such is their unwillingness to provide service.

The stack ’em high, sell ’em cheap self service culture of the 1950s and 60s reached its limits in the 1980s and was only given a reprieve by the easy credit boom of the 1990s. With the end of the credit boom, electronic or household goods stores that simply sell cheap tat on interest free terms at a fat mark up without adding value now struggle.

Gerry Harvey is getting out of electronics partly for this reason – his business model is dead and it’s been difficult for a decade to make the fat profits on consumer computers or electricals without hooking the customers with interest free deals or expensive and pointless accessories or software.

One of the conceits of management through the last part of the Twentieth Century was the mantra “our greatest asset are our people”, today business have to start valuing the skills, knowledge and corporate memory of their workforces.

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Outsourcing the service economy

The forces that shrank our manufacturing economy are now affecting the service industries.

Through the 1970s and 80s we accepted manufacturing industries moving jobs offshore because those jobs were done by working class, blue collar workers and the future lay in white collar, middle class service industries.

As a consequence of moving manufacturing offshore, the US, British and Australian economies became more service based. The thought in the 1980s was that while goods could be made in Taiwan, the ‘knowledge industries’ couldn’t be.

Then the Internet came along.

A panel on The Future of Outsourcing convened by the Indian Institute of Technologies Association of Australia last night discussed some of these issues.

Now the service industries are being offshored, at first it was the low skilled service jobs like call centres but it didn’t take long for higher value work – such as paralegal, medical transcription and of course IT services – to follow.

The belief that white collar jobs couldn’t be taken over by cheaper foreign labour has been proved wrong.

It isn’t just those working in the call centres or IT departments of telcos and big banks that are being affected, those small businesses in support industries like secretarial services or design are finding their clients are moving offshore too.

What’s interesting with all of this is how long the executive classes can resist being outsourced. Indian and Chinese managers work for harder for less than their US, British or Australian colleagues and in many cases are better educated.

One can only wonder how long the partners of major consulting business can hold the line as well, these guys – the vast majority are men – have done very nicely charging first world rates while increasingly paying developing world rates.

Already Indian outsourcing companies, including at least two sitting on that Sydney panel, have set up their own consulting arms that cut out the expensive middle men. Without the overheads flashy offices and big packages for entitled partners, they’ll have a pretty competitive offering.

While we can cry for the high paid management consultants and executives who are increasingly threatened by these changes, the Anglo-Saxon economies have a real problem as service industries move offshore.

In Australia, the Bureau of Statistic’s 100 Years of Change in Australian Industry tracks how the nation’s industries have changed – in the 1950s Australian manufacturing peaked just shy of 30% of the workforce, by 2000 it had shrunk to 11% while service industries were doubled from around 25% to 50% of the economy.

While it’s unlikely we’d see the service sector workforce shrink by 2/3rd over the next fifty years, there’s a good chance incomes will fall in these industries unless we start to invest in education and skills which allow Australia to stake a place in the global economy.

One of the key takeaways from the Future of Outsourcing event was that this change is happening regardless of what we think is a fair wage for our work. It’s something our government and business leaders need to start considering.

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Is Microsoft’s Surface Tablet Vaporware?

Will we see the Microsoft Surface released this year?

In the early 1990s the term “vapourware” appeared, it was born out of big software vendors announcing mythical products with a whole new bunch of features which the opposition already had.

Usually that next great product never appeared; it was just a ploy to stop customers defecting to the competition’s superior product.

There were a number of ways to spot vapourware – the lack of a working prototype, vague release dates and no firm pricing being just three.

Earlier this week, Microsoft brought tears to the eyes of grizzled IT industry veterans who missed the days of regular vapourware announcements with the “launch” of their Surface tablet computer.

After springing the event at short notice on the tech media, forcing the poor petals to travel to Los Angeles rather than their usual haunts of Silicon Valley, Manhattan or Texas and then starting the event late, Microsoft added insult to injury by not even letting the journalists play with a working version of the Surface, let alone take one home to play with.

One of the impressive things about vapourware are the specifications and this is true with the Microsoft Surface. The specifications of the base model Windows RT are about the same as the base model iPad with the added benefit of a keyboard, USB and Micro SD ports.

Looking past the hype, it’s clear Microsoft are having trouble with their strategy of a unified operating system across smartphones, tablets and traditional PCs, which has forced them to announce two different versions of the Surface, running different operating systems on different chipsets.

Having potentially incompatible products makes it even more important for tech journos and early adopters to play with the new devices to see how well they work – that version one of any new product doesn’t work well is another lesson from the 1990s IT industry.

In the spirit of vapourware, Microsoft hasn’t mentioned what either version of the Surface will cost, which probably indicates they don’t know what the final sticker price will be either.

Despite being funny, there was a serious side to vapourware – in the 1990s businesses often held off purchasing decisions or upgrades as they waited for promised products or features to arrive.

While eager customers waited for products that never arrived, their productivity slipped and technologies that should have been adopted earlier ended up coming late to the office desktop.

For Microsoft investors, the nature of the Surface announcement should be disturbing as the vapourware business tactic only works for incumbents in a strong market position and the software giant is anything but strong in the tablet computer market.

While it would be good to see a credible competitor to the iPad, it’s going to be difficult to take Microsoft seriously until we see some working versions that we can play with.

The lessons from the 1990s computer industry are clear – don’t fall for vapourware and buy what works for your business today.

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Can Sydney become a smart city?

What are the challenges facing building a down under entrepreneurial culture?

How does a city become smart? That seems to be the question of the moment as countries and cities around the world try to figure out how to catch a little bit of Silicon Valley’s magic.

As part of the 2012 City Talks series, the City of Sydney hosted a discussion on how the city can become a smart city;

Sydney is bursting with talented, creative and forward-thinking people. How can we harness the energy of government, education, businesses, media, and creative thinkers to create space for innovation?

While it’s questionable that a “creative space for innovation” is a worthy objective – albeit laden with buzzwords – it’s certainly true that Sydney, along with other Australian cities, has the components to be a entrepreneurial centre, the question is how does the city harness the various talents across the different sector.

Working to advantages

Rather than aping Silicon Valley, New York or Ireland all cities should be exploiting their natural advantages. Fast Company Magazine recently looked at how Oklahoma City has advantages over its bigger cousins in New York and California.

For Sydney, and Melbourne, those strengths include an educated, multi-cultural workforce with first world legal systems in a similar time zone to the world’s major growth markets.

One of the tragedies in Australia’s marketing over the last twenty five years has been the failure to mention the ethnic diversity of the nation. This is huge competitive advantage that is barely being discussed.

What can governments do?

At the Sydney City Talks event, Lord Mayor Clover Moore said that creating a smart city requires “the same incentive to be given to innovators and creatives as is given to property investors and mining companies.”

That change requires state and Federal governments to change laws and businesses, particularly banks, to pick up on those price and policy signals.

Education too needs reform although this needs real consultation or we’ll end falling for short term fads or copying the damaging anti-teacher jihad that has infected the US.

A welcome change for many Australian innovators would be changes in government procurement policies as currently all levels of government prefer to deal with the local offices of large multinationals. As the Queensland Health Department debacle shows, these organisations are often less competent than local providers.

Making those changes though will require major reforms to policies and laws, something that neither major Australian political party at any level has the courage or vision to do.

That the NSW Digital Action Plan is now in its thirty-first draft speaks volumes about the inertia among the city’s, state’s and country’s political and business leaders.

Ditch the Silicon

Probably the first failure of imagination is the “silicon” tag – US entrepreneur Brad Feld skewers this nicely in his blog post on The Tragedy Of Calling Things Silicon.

Sydney has already has a group called “Silicon Beach” which has spread out to Melbourne and the Gold Coast and it’s interesting that both Google Australia’s CEO and Engineering head want to co-opt the name.

On of the suggestions was “Silicon Banana” a tag which brings to mind the phrase “kill me now please?” to anyone already uncomfortable with the ‘Silicon’ label.

The “Silicon Banana” idea comes from the curved shape of Sydney’s ‘digital heartland’ which curves from Darling Island to the west of the city and curves around the edge of the city centre through Surry Hills across to the film and television facilities at Fox Studios.

Describing Sydney’s centre of innovation as lying within the ‘banana’ illustrates the lack of thinking outside the current app and web mania. It also neglects the bulk of Sydney, particularly those parts of the Western Suburbs where languages such as Mandarin, Cantonese, Korean, Vietnamese, Arabic or Hindi are spoken.

Once again we neglect those assets because they aren’t white, Anglo or living in the prettier parts of the city.

Does it have to be Sydney?

We should keep in mind that the Silicon Valleys of the past haven’t been the biggest cities – Silicon Valley itself is barely a city and San Francisco is not one of the US’ biggest cities.

It’s quite possible that an Australian centre of innovation could be any one of dozens of smaller towns such as Geelong, Wagga or Cairns.

The problem in Australia is, once again, property prices. Compared to the US or Europe, housing and office rents aren’t substantially cheaper outside the big cities unless you’re prepared to move to seriously blighted parts of the country.

Spinning the wheels

Probably the most disappointing thing of the ‘smart city’ discussion is just how bogged down we’ve become – there was little in the City Talk that wasn’t being spoken about five, or even ten, years ago. Things have not moved on.

Creating a smart city isn’t about picking winners among industries, suburbs or groups. To really be smart we have to give the opportunities for clever people to succeed.

Simply jumping onto today’s technology fad or mindlessly aping Silicon Valley is to squander our advantages and not learn from the mistakes of others.

The real worry though is just how little progress is being made in seizing today’s opportunities. It doesn’t bode well for tomorrow’s.

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Feeling the currents

Customer service means listening to clients, we have the tools to do it.

Internet and marketing everyman Seth Godin makes an interesting point on his blog post Silencing The Bell Doesn’t Put Out The Fire.

Seth’s point is that satisfying vocal complainers doesn’t address underlying problems in the business and cites the Dell Hell saga of Jeff Jarvis as an example of where load complaints were a symptom of a much deeper issue within the business.

For Dell, this had been the choice to focus on the low value, high volume market segments. To compete there it meant cheap components and selling to comparatively uneducated, price sensitive consumers.

Compounding that decision was Dell’s decision to partly address the inevitable cost pressures they had put themselves under by outsourcing their support lines to truly dire, lowest price providers.

As a consequence of abandoning its service culture, Dell rapidly gained a reputation as being unreliable and unhelpful. One only has to look at the Dell Hell comments on Jeff’s original posts to see how damaged Dell’s name was.

I encountered Dell’s shocking support during that period first hand in PC Rescue, one customer asked me to troubleshoot her Dell PDA after their support line had reduced her to tears.

Very quickly I discovered why, the installation software supplied by Dell didn’t work properly – testing was obviously another victim of budget cuts – and the tech support people were working with an early version.

We managed to fix the problem without the “help” of Dell’s helpdesk and the client swore never again to buy Dell. She’s now a happy Apple customer who is a happy to pay a slightly higher sticker price for a better product and service.

The real concern was that during this period Dell’s management were oblivious to the problems they were suffering in the marketplace, they were meeting their KPIs and appeared to be growing sales while the business itself was about to go over a cliff.

Dell’s management could have recognised this had they chosen to, the company had plenty of market intelligence, customers surveys and their support logs to tell them they had a problem. It wasn’t in their interests to do so.

Today every business has those tools to monitor what customers are saying about them. Google Alerts, Facebook and – if you’re in hospitality – Tripadvisor, Yelp or Eatability.

With social media it’s easy for the bad message to get out; it’s also easy for management or owners to watch out for problems.

Dell only survived the Dell Hell experience because they were big and well capitalised, no smaller business could have survived similar damage done to their reputation.

Smaller businesses don’t have the luxury of ignoring their customers until the screams become too loud.

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Giving a damn

Our works are what we are judged by – not the trinkets we gather.

Twenty years ago a lady unexpectedly passed away leaving her estate to her infant daughter. Included in the estate was a modest apartment in Sydney’s inner western suburbs.

For years, the unit sat on a local real estate manager’s books quietly gathering rental income and growing in value during Sydney’s great property boom.

Eventually the owner of the real estate agency tracked down the infant, now grown up and living in Boston. He’d hired lawyers and private detectives to track her down.

Most of us would have taken the easy course and flicked the property to the public trustee where the property would have quietly languished for years in the tender care of the dusty, but expensive, bureaucrats.

A few criminally minded ones would have sold the property and pocketed the cash, confident that no-one would ever know or care.

But Chris Wilkins decided to do the right thing and found the owner, doing anything else would have been a “heartless alternative.”

Having a heart and giving a damn is what matters.

Whether its in our work, how we deal with other people or the change we make to our society. This is what matters – big bonuses, a flash car, a ministerial position or invites to “insider” conferences are just trinkets for the egos of vain little people.

In an era where shareholder value, triple A credit ratings, executive remuneration and personal entitlements seem to stand above everything else, it’s good to be reminded that most people are doing the right thing by others.

At the end of our lives, we’re judged by our actions. What will you be proud to be judged by?

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