Category: rants

The clique

Who is putting your interests first?

A Fortune story about the inner workings of social media service Facebook reportedly claims the business is increasingly dominated by friends of the Chief Operating Officer.

On Sheryl Sandberg and the circle of friends she has brought into the company: “There’s a term spoken quietly around Facebook to describe a cadre of elites who have assumed powerful positions under the leadership of Zuckerberg’s chief operating officer: They’re FOSS, or friends of Sheryl Sandberg.

Most tellingly is the quote, “‘You can’t really cross a FOSS,’ says one former senior manager.”

While this may not be true at Facebook – the reporters are quoting anonymous sources so their story can’t be taken as gospel – when a small, interconnected clique runs an organisation things usually don’t turn out well.

It’s bad enough when it’s a government agency like a police force or a not for profit like a charity, but in big and small business things are usually worse.

The main imperative of clique is to protect its members regardless of the damage they do to their organisation or even the global economy, as we saw in the banking crisis of 2008.

Inside the clique, you often have incompetence, corruption and almost always a strong thread of nepotism. None of this makes for an effective organisation or efficient business.

As investors, employees, suppliers, customers and taxpayers we have to be on guard against these cliques as they rarely act in the interests of those outside their circles.

It may not be the allegations at Facebook are true, but this is happening at other organisations right now. It’s probably happening in your government as well.

The over reach

Sometimes we take things too far

Sometimes we’re on a roll, all is going well, everything we touch is successful and those around us seem not to be able to win a thing.

Then we over-reach.

We get smart, we get cocky, we decide one more demand or humiliation will show the other guy just how good we are.

And everything starts to wrong, because we took things too far. We over-reached

The greatest asset all of us can have is a little humility and respect.

Rather than wanting everything, maybe leaving a little bit on the table for the other guy may turn out to be a wise business move.

Is the problem in the cockpit?

Who is in control anyway?

In the Daily Reckoning newsletter editor Callum Newman uses Malcolm Gladwell’s description of power relationships to draw a parallel between Korean pilots crashing planes into mountains and the economy, pointing out our politicians are like distracted, doomed aviators ignoring the obvious features they about to collide with.

Is that fair though? In a plane the passengers are strapped in their seats and have to take their the pilots in trust, in real life we have control — all of our actions affect the vehicle that is our economy.

Unlike a plane we can jump out and do our own thing, we can refuse to buy one good or service and we can set up a business for ourselves when we see a market that isn’t being serviced.

Where the analogy does work though is our politicians – and many business leaders – aren’t paying attention to major demographic and economic shifts.

The question is “why?” Most of these people aren’t stupid and they have access to better information than most of us, which is one of the reasons they are in power.

Perhaps it’s because we don’t want to hear the truth; that our assumptions about what the state will provide and how our economy is developing are flawed.

In many ways, particularly in a modern Western democracy, our politician are mirrors of ourselves. They tell is what they think we’d like to hear.

The problem isn’t in the cockpit, it’s back at the boarding gate where we’re more worried whether we’ll get a packet of nuts than whether we should agree to embark on a rough journey to a destination we don’t expect.

The New Soviets

For many companies, customer service owes more to the Soviet Union

US based investment writer Mike “Mish” Sherlock called Sony’s support line to get a repair for his recently purchased laptop computer.

What followed was something from the 1970s Soviet Union – a simple request turned into a twelve day, 34 step odyssey of structural incompetence on the part of Sony.

The tragic thing is Mike’s tale is all the result of mis-matched rewards in Sony’s organisation;

  • Sony’s management wanted to increase profits
  • Extended warranties were identified as a revenue generator
  • A senior manager decided cutting support costs would improve returns
  • The technical support is outsourced
  • Costs are saved by splitting contracts
  • Each outsourcer has a different IT platform
  • The outsourcing contracts have quotas and penalties
  • Individual staff are penalised for escalating problems
  • Support staff have tight performance criteria

At every level performance indicators were met, despite the whole process costing far more than fixing the problem efficiently would have had – not to mention the loss of Mike as a customer – something that Sony can ill afford.

Not surprisingly, the computer ended up being fixed by a local IT guy. Richard almost certainly earns a fraction of Sony’s Executive Vice President Group General Managers, or whatever the title they have to match their compensation packages is, yet he gets the job done.

In Sony we see the Soviet model of management at work – an unaccountable, out of touch cadre of apparatchiks meeting their requirements under The Five Year Plan and are rewarded accordingly.

Just like today’s Executive Vice President Group General Managers with their KPIs and bonuses.

As we all know, the Soviet Union failed in 1991. One wonders when we’ll say the same thing about Sony or the dozens of other large corporations that have lost their way.

I don’t think I’ll write that

When self-preservation becomes self-censorship

A media release popped into my inbox from an old client recently. It was, to put it nicely, a total load of corporate tosh from an organisation that has been captured by its time serving management.

Having dwelt on this for a while, I went to write something about how this company had blown wonderful opportunities competing against a stodgy incumbent which had been given the opportunity to re-invent itself partly because of a new generation of smart, dynamic managers.

Then a little voice said “no, they’ll never invite you back; the mark of epically incompetent management is holding permanent grudges for pointing out their failures.”

So I didn’t write it.

In one way it doesn’t matter; much of what ails the Western world’s business communities is how a culture of managerial incompetence has been allowed to develop.

Almost everyone knows individuals who waddle from corporate disaster to debacle yet, despite causing the destruction of great slabs of shareholder value, move onto to higher positions and better paid jobs.

Some even get invited back to companies they’ve previously trashed.

We know who those people are; boards and big shareholders know who they are, yet they’ll still get hired.

Which is why its best not to upset them too much. For the moment, history is on their side.

Creepy business

There’s a place and time for business networking

In Entrepreneur magazine, writer Alina Tugend suggests we forget networking and become connectors and gives the reader some ideas on how to build connections.

One of the suggestions is, quite reasonably, to eschew networking events and join organisations you have a real interests in, like a sporting club.

Alina quotes Keith Ferrazzi, author of Never Eat Alone, who says he has never been to an official networking event.

“I have a friend who is the executive vice president of a large bank in Charlotte,” he writes in his book. “His networking hotspot is, of all places, the YMCA. He tells me that at 5 and 6 in the morning, the place is buzzing with exercise fanatics like himself getting in a workout before they go to the office. He scouts the place for entrepreneurs, current customers and prospects.”

Prowl gym locker rooms for business prospects? Sounds a bit creepy and you may end up with not quite the connections you expected.

I guess we could call it the Village People model of business development.

Successful Sources Will Not Be Paid

The free myth is biting us in many ways

The whole world wants a freebie, and many of us are giving our ideas, intellectual capital and service away to online magazines in the hope of getting a link or a little bit of publicity.

Bringing the idea undone is the unfortunate reality that web is awash with free pointless material that adds little value. Your contribution, however valuable, gets lost in the static of PR driven articles and SEO optimised fluff.

This is why Google are trying to tie social recommendations into their search results, although it’s hard to see how your cousin’s LOLCat posts are going to add any more value than the generic garbage served from services like eHow.

Yet every day there’s more callouts for  free content – desperate journalists and publishers beg for our ideas or labor in return for some ‘exposure’.

And that ‘exposure’ floats away into the ocean of noise and irrelevance filled with the rest of the ‘free’ content.

Giving stuff away for free isn’t working well anymore and for those of us who are trying to build a business around that model, we’re struggling to get found or heard in the morass.

Along with the wasted time, the danger is we start giving away our best, most valuable work in order to get attention and then we have nothing left to sell.

Consumers are waking up to this and beginning to focus about what they read online. We should too.

The business of denial

Denying market realities is rarely a good business move

Denial is a powerful sedative, it allows us to trundle dozily along a well worn patch oblivious to the reality our comfortable world has changed.

Last week’s claim that youth is fed up with the iPhone by Nokia’s Niels Munksgaard – who has the wonderful title of Director of Portfolio, Product Marketing & Sales – is a great example of how far and how long denial can continue while there’s still money to pay executive bonuses.

Canada’s beleaguered Research In Motion, manufacturers of the Blackberry phone, showed the same delusions when they released their Playbook tablet computer with the declaration Amateur Hour Is Over.

The only amateur hour was in the hubristic minds of RIM’s marketing team.

While profits keep flowing big organisation can afford delusions – Google can indulge their social media fantasies while the Adwords rivers of gold continue to flow ever faster and Microsoft can continue to indulge their delusions while their Windows and Office products remain immensely profitable.

Microsoft’s “droidrage” campaign, designed to embarrass Google’s Android mobile phone platform, is part of that delusion; for Microsoft’s campaign to work they have to prove there is a widespread Android malware problem, show their system isn’t prone to the same flaws and – most importantly – have enough product on the market to sell to those disillusioned Google customers.

Such a negative campaign has many fallacies – it assumes there are widespread security problems in Android, that Microsoft will pick up disaffected Google customers and there are enough Microsoft based products to grab those sales.

Probably Microsoft’s biggest problem is the assumption that customers actually care about that stuff – for years Windows dominated its market despite being riddled with computer with security holes and malware.

Microsoft succeeded because their competition was delusional; the best example being WordPerfect claiming graphic systems like Windows were a fad at a time when an inferior Microsoft Word was gobbling up their markets.

By the time WordPerfect realised their error and released a truly dreadful WordPerfect for Windows it was all too late, like a stagecoach company realising the motorcar is here to stay.

The problem for businesses in denial is that reality eventually does bite; plenty of people in the newspaper industry believed their advertising based model was secure and profitable – indeed many of the cosseted managers in that sector still believe it is – which now leaves them struggling in a changed world they thought they could ignore.

Denial among incumbents is a great opportunity for newer, more flexible players; for years mobile phone and tablet computer manufacturers were in denial about the usuability of their product – Apple proved them wrong and now commands the most profitable chunks of those markets.

Being the village blacksmith or a buggy whip maker was a good business to be in at the beginning of the 20th Century. Thirty years later those block boys and saddlemakers who hadn’t made the jump found themselves out of work.

It’s going to be interesting to see will be this century’s buggy whip manufacturers.

Losing sight of what matters

Are we losing focus of what matters in our business?

Last Night Google’s chairman Eric Schmidt testified before a US Senate antitrust committee on the search engine company’s market power.

In opening his testimony, Schmidt alluded to Microsoft, saying “twenty years ago, a large technology firm was setting the world on fire. Its software was

on nearly every computer. Its name was synonymous with innovation.

“But that company lost sight of what mattered. Then Washington stepped in.

It’s an interesting and probably accurate perspective given how Microsoft has effectively lost its way for the last decade – although given Google’s urge to become an identity service and its buying a mobile phone manufacturer doesn’t auger well for their focus on the core search business.

Losing of focus of what matters is a problem for all business owners. We’re busy, it’s hard winning orders, getting paid and keeping customers happy so we lose track of the reason we went into business.

For most of us it was because we had a great business idea or a belief we could have a better life being our own bosses.

That latter objective is often the first one lost, usually we find ourselves working harder, taking fewer holidays and seeing the family less than if we’d stayed in a comparatively safe job with BigCorp.

Great ideas can also be our undoing – if you’re constantly having brainwaves, you find you have lots of ideas but no time to execute on any of them.

Similarly, one great idea that turns out to be dog can be bad news as well. Often, we’re loath to admit we’re wrong and hold onto a failing business idea long after it’s shown not to be viable.

Probably worst of all is when we violate our own values; many of us went into business because we didn’t like the values of the corporation we worked for.

Then one day we find we’re screwing subcontractors, that we’re leasing an expensive car the business can’t afford while cutting staff benefits and we’re tying up customers in legalistic contracts in attempt not to deliver the services we promised.

Just like the big company we swore we’d never become.

If you’re a big company with a lucrative business niche – like Google or Microsoft – you can get along quite nicely with the rivers of gold flowing subsidising your indulgences and distractions, most of though we don’t have that revenue buffer protecting our assets.

The cost of losing focus is a killer; even if it doesn’t kill our businesses, it will destroy our souls.

Are you keeping focus on why you went into business?

How Google’s identity obsession hurts

How the search engine giant is damaging business and its own reputation

Imagine giving a presentation at a conference where you fire up a live demonstration of a product you’ve been urging the audience to use and the audience start giggling.

You turn around to find a bright red message at the top of the screen stating your account has been suspended. It wasn’t there the night before and you certainly didn’t receive an email warning you this had happened.

Embarrassing or what?

That happened to me with Google Local earlier this and the many stories like it illustrates a serious management problem within the world’s biggest search engine company.

Local search – where businesses can be found online based on their location – is one of the main web battlefields with Google and Facebook, along with outliers like News Limited and Microsoft, are competing to get business of all sizes to sign up.

Recently though Google seems to be going out of its way to squander the massive opportunity they have in this sector despite the CEO, Larry Page, identifying local services as one of their priorities.

Despite Google’s intention to promote Places – as their, and Facebook’s, local search platforms are called – many businesses are finding the company’s arbitrary and often incorrect application of its own rules and Terms of Service difficult to understand and use.

“I have found that with the ‘moving target’ Google is presenting to businesses” said Bob, a commenter on one of my blogs, “is paralyzing them from doing exactly what Google wants, which is updating and providing fresh content on their listings pages.”

In many ways, this is a small front on the “nymwars” that has broken out since Google introduced their Plus social media service and started enforcing their “rules” on “real names”.

Unfortunately their real names “policy” – and I use inverted commas deliberately – is vague and arbitrary with users finding their accounts suspended despite signing up with “the name your friends, family or co-workers usually call you” as required by Google.

Account suspensions are wide and varied; some people, quite legally, have a name without a surname, others have a combination of languages such as Chinese or Arabic, while others have simply fallen foul of the computer and Google’s secretive bureaucratic culture.

This secretive bureaucracy would be funny if it wasn’t so downright hypocritical. Any correspondence with Google about account suspensions either on Places or Plus is signed off by an anonymous functionary from “no-reply” email address. So it appears real identities, and accountability, don’t extend to the company itself.

Last week at the Edinburgh International TV Festival, Google’s chairman Eric Schmidt, announced Plus is not a social media platform, but an “identity service”. Good luck with that, Eric as your staff’s arbitrary and often incorrect interpretation of the company’s own rules doesn’t engender confidence in any identity verified by Google.

That announcement by Google’s chairman should worry investors, as this is a company that is first and foremost an advertising company powered by the best web search technology.

Management distractions such as becoming an “identity service” or buying a handset manufacturer distract focus from the core business and result in the mess we’re seeing around business and private accounts.

For the moment, Google Places remains a service that businesses must list on given the visibility the results have when customers search the web for local services and products.

If you aren’t already on Google Places, do sign up but make sure you get your listing right first time as editing your profile once it’s up risks your account being suspended or cast into “pending” purgatory.

Should you have already an account, leave it alone as any change risks coming the attention of Google’s anonymous bureaucrats.

Hopefully, this madness will pass and Google will clarify their policies, ground them in the real world then enforce their terms fairly and consistently. Until then, you can’t afford to rely on your personal and business Google accounts.

Choices

In a time of change, hiding from the choices is not the best option.

“It’s too hard to keep up with all the choices. I can’t decide whether to use Facebook or Twitter, Microsoft or Google, Dell or Apple? Doing business today is just too complex…”

Maybe it’s true we have too many choices but yesterday’s business people had plenty of hard decisions to make.

Business people a hundred years ago had to choose between steam, gas or electrical power. If  they chose the latter, there was another decision between AC and DC electricity.

There was a further choice between keeping your horse drawn cart or buying one of those new fangled motor vehicles, which could either run on kerosine or steam.

So our great great grandparent’s weren’t easier and, unlike the relatively small investments we can make in technology today, their choices could easily bankrupt them if they made the wrong decision.

When we’re fretting over choices at least those on offer aren’t the simple alternative of whether we send our children down the mine or to the mill at the earliest possible age.

Instead of worrying about the choices, it’s time to get informed and understand what the alternatives mean. The time to worry is when our competitors, or the market, is leaving us behind because we didn’t care enough to find out what was happening around us.

Is there a need for digital literacy?

Are we teaching the wrong computer skills?

In preparing for tonight’s ABC Nightlife segment I was re-reading the Australian government’s National Digital Economy Strategy when I twigged what was bugging me in the first few pages; the talk of “digital literacy“.

As part of the plan, the Federal government intends to setup “digital hubs” in the each of the 40 communities that will first benefit from the NBN, these will “assist local residents to better understand how they can benefit from the NBN and to improve their digital literacy skills”.

The whole concept of digital literacy is worrying; it assumes there is something unique about using technology and that the concepts to use web services and devices are arcane and difficult to grasp.

Such a belief might have been true in the days of the command line interface where obscure commands and strange keystroke combinations controlled how you used a computer, but in the age of the touchscreen and intuitive systems the majority of people, regardless of age, can pick up the basic concepts with a few minute’s instructions.

A bigger issue is genuine literacy and numerical skills. Without these, we’re not able to understand or properly evaluate the data that is being presented to us.

Even more important are critical skills, the volume of information on the net demands we have the ability to filter fact from opinion and truth from misinformation if we don’t possess these talents we’re condemned to being unable to filter the gems from the dross that masquerades as fact on the net.

Clifford Stoll said “data is not information, information is not knowledge, knowledge is not understanding, understanding is not wisdom”. Without basic literacy we’re unable to process the data we see on the net, without the critical skills we cannot understand that information.

That’s the real challenge the connected society presents, how do we develop and nurture the critical skills that lets us identify the scammer, the knave and the ill-informed – all of whom thrive in an environment that gives their views equal weight with the wise, honest and knowledgeable.

Probably the best thing we can do for our children, and ourselves, is to work on developing those skills.