Category: society

Distribution is not the problem

If your business relies upon distribution problems, then you may be in trouble.

The web is too efficient at information distribution, which is the problem for newspapers whose business model was built out of the difficulty the working man and woman had in finding out what was happening in the world around them.

In today’s society, there’s no excuse for not knowing what is going on. If you only choose to keep up to date with what the Kardashians are wearing, the weight of Olympic swimmers or who won last night’s reality TV extravaganza then you only have yourself to blame.

The web’s efficiency means there’s no shortage of ‘stuff’ pouring into our lives – music writer Bob Lefetz puts it well when he says “Kids don’t have a short attention span, anybody who says that is completely ignorant. They’ve got an incredible shit detector”.

Distribution is not the challenge, that bit is insanely easy. It’s delivering quality and getting the message about our products heard above the Internet’s constant buzz.

As consumers, and more importantly as citizens, it’s up to us to filter that noise and not accept dross any more.

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.

On being a hater

A cheap slur hides real problems with online communities and anonymous comments.

The phenomenon of the “Internet hater” has been one of the unfortunate developments of the web.

Just as entry barriers for new businesses are low, so too are the restraints on clueless and anonymous idiots posting comments like “drop ded you faggot” or “hope you get canser bitch” onto web forums and social media pages.

English comedian Isabel Fay has a great rebuttal to the haters with a clip that co-opts some of Britain’s top comics with their experiences.

These haters are sad little people as the BBCs Panorama program found when it tracked down one individual who had posted offensive comments.

We knew Darren Burton of Cardiff, aka Nimrod Severen, would be a pathetic individual. Those who post anonymous, hateful comments are rarely anyone who has anything useful to contribute to society.

Online “haters” are a real problem and cause distress to people who encounter the foul comments these creatures post. However the “haters” tag is increasingly being misused to shut down fair comment and criticism.

Legitimate critics or dissenters from the groupthink and shallow advertorials that increasingly dominate parts of the web will quickly earn the tag “hater” as well.

Every multi level marketing spiv or con merchant with a few followers will quickly throw the term out at anyone who dares criticise their behaviour in the hope of rallying their followers to shout down the dissenters. Usually it works.

If you’re prepared to think outside the group and genuinely challenge those selling old rope as new ideas, let alone expose the hypocrisy of those who claim to open and transparent while hiding their real intentions, then be prepared to wear the tag “hater”.

The only reply is to stand on your beliefs and be prepared to use your real name. The real trolls are scared, frightened creatures – just like many of the useful idiots co-opted by the spin merchants and Internet spivs.

At least “hater” is just a cheap insult and they aren’t coming for dissenters with pitchforks. Yet.

Falling Dominos, Fading Businesses

The effects of business failure can be great and personal.

“When the tide goes out, we find out who’s naked” goes the saying – nowhere is this more true than in the engineering and construction industries.

One of the hallmarks of an economy that has passed its peak is the systemic failure of contracting companies.

During a boom, or a steady growth phase of an economy, contracting companies see cashflows increase as more projects come online.

That growth affects contractors in a number of ways – they start getting used to fatter margins and management starts to believe in their own invulnerability.

Blue sky seems to stretch on forever and massive growth rates seem guaranteed far into the future.

As the market matures the sky starts to turn grey as more contractors start fighting for lucrative jobs seeing cost estimates being fudged and dodgy deals done to win jobs.

Those dodgy contracts eventually come in at a loss and management starts desperately winning more projects to cover the losses on earlier work.

And so a spiral begins.

To make matters worse, the more aggressive contractors start buying out smaller competitors.

Often those competitors have similar bad projects on their books and their impressive growth rates are based upon winning jobs they should never have tendered for.

Eventually the spiral ends when the market stalls and there aren’t enough new projects available for the loss making contractors to cover the accumulated losses. Then the failures begin.

Collapses of the Hasties Group, Reed, St Hilliers and other construction and engineering contractors are classic examples of this cycle.

While shareholders and management carry some of the burden, the real pain of failure is felt by the armies of sub-contractors – largely small, family owned businesses – these companies employ.

Most of these subcontractors will not get paid for their outstanding invoices, forcing all of them to cut back their own employment and spending. For some, they will be forced into liquidation as they can’t pay their own bills.

For the families that own those small businesses the financial and emotional pain is real and immediate. Spending stops, debts go unpaid and relationships fail.

In some cases that small bankrupt plumber, bricklayer or concreter finds the stresses of failure too great and a family loses their breadwinner.

This multiplier effect of business failures and redundancies is one of the reasons the real economy is in a much tighter position than Australia’s political, business and media elites can bear to admit.

Another saying is “a recession is when your neighbour loses their job, a depression is when you lose yours.” For most families, the economy has been in recession for three years as they’ve seen friends and relatives accept reduced hours or have contracts terminated.

Much of the commentary about Australians being irrationally pessimistic misses this aspect of our economy. It’s amusing when the smug comments come from financial and economic journalists who don’t seem to have noticed the difficulties their own industry going through.

There’s a lot of naked people treading water at the moment and the tide is heading out. The question for all of is where the deep water is and where the hell did we leave our speedos.

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?

Bubble values

What Facebook tells us about the new tech bubble in Silicon Valley

The argument continues about Facebook’s purchase of photo sharing site Instagram.

One side claims a billion dollars for a business with barely any revenue and 13 employees is clear evidence of a bubble while the other side say its a strategic purchase that is only 1% of Facebook’s estimated $100 billion market value.

The latter argument is deeply flawed, comparing the purchase price against the value of other assets is always risky – particularly in a market where those underlying assets are being valued at the same inflated rates.

We could think of it in terms of a Dutch farmer in early 1637 claiming that paying a thousand Florins for a tulip is fine when he has a warehouse containing hundreds of them.

In reality, that farmer during the Dutch Tulip mania of the 17th Century held contracts for delivery; just as modern day investors held Collateral Debt Obligations.

Measuring value against other inflated assets is always dangerous and only fuels a bubble.

A much more concerning way of judging the wisdom of Facebook’s investment is against profit and revenue.

If we compare the purchase of Instagram against Facebook’s revenue, then the investment has cost them three months income.

Should we compare the acquisition against profit, Instagram has cost Facebook five years of profit at current rates.

Both of those numbers are very high and it indicates how big a gamble the Instagram acquisition is for Facebook.

It can be argued there is a lot of blue sky ahead for Facebook and that future profits and revenues will justify the Instagram purchase.

There’s also a very compelling argument that Facebook has to get into mobile services and Instagram does that.

Whether Instagram is worth three months income or five years profit to Facebook remains to be seen, but we should have no doubt it indicates we are well into Tech Boom 2.0.

ANZAC Day

Remembering the the real bravery on a day of remembrance.

It’s ANZAC Day in Australia where the anniversary of the World War One landings in Gallipoli marks the first national action of the then new nation.

At its heart, ANZAC Day remembers sacrifice and bravery. The men and women who volunteered for the Great War and all those that have followed over the last hundred years were prepared to sacrifice relationships, safe careers and their lives to protect the King or Country from the threats of the Kaiser, Hitler, Japan, Communism or Terrorism.

We should remember though that those politicians saying fine words today and posing for photo opportunities at the landing beaches are the much the same people who started an unnecessary war in 1914 and many of those wars since.

Compare the words of Billy Hughes supporting Australian conscription in 1915 and the words of John Howard or Julia Gillard.

Stripped of spin doctors’ dressing and the words of today’s politicians are the same.  Only the empire has changed.

Today’s politicians know of concepts like sacrifice, patriotism and bravery, exploiting them can prove handy at election time.

Luckily for most of them their political and business careers rarely call for such qualities.

Hopefully our children won’t find themselves in the trenches  – or fall out shelters – to meet the short term gains of an Obama, Cameron or Gillard and their corporate friends.

The real lesson of ANZAC Day, Veterans Day and all the other national days of remembrance around the world for those every nation has lost in battle is that war is the final act and represents a failure by the Kings, Presidents and Prime Ministers who choose to lead us.

They shall not grow old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning,
We will remember them.

Lest We Forget

Culture beats strategy

What does the executive car park tell us about a business’ management culture?

Writer and business consultant Joseph Michelli says”Culture beats strategy, in fact it eats it for breakfast and lunch”.

This was one of the key points in a recent webinar about online retailer Zappos and its customer service culture.

Joseph’s right, the culture of an organisation is the ultimate key to its success, if managers and staff work “according to the book” and declaring “it’s not my job” then you end up with a siloed organisation where management are more interesting in protecting and growing their empires over helping customers.

With Zappos it’s interesting how it appears easy the integration into Amazon’s ownership has gone and this is probably because both have service centric cultures.

Both companies seem to have avoided employing Bozos as Guy Kawasaki famously put it a few years ago.

Your parking lot’s “biorhythm” looks like this:

  • 8:00 am – 10:00 am–Japanese cars exceed German cars
  • 10:00 am – 5:00 pm–German cars exceed Japanese cars
  • 5:00 pm – 10:00 pm–Japanese cars exceed German cars

Guy’s German car observation is spot on. When I was running a service business, one measure I used for a potentially troublesome client was how many expensive German cars were in the executive parking spaces, it was usually a good indicator that an organisation’s leaders are more interested in management perks than maintaining their technology.

Another useful measure was where those cars are parked, a good indicator of management’s sense of entitlement is when executive parking spots are conveniently next to the building entrance or lift lobby while customers expected to find a spot anywhere within ten blocks.

It all comes down to culture and when management are more concerned about parking spots and staff about free lunches, you know you’re dealing with an organisation where the customer – or the shareholder – isn’t the priority.

Taking care of our own

Our governments can’t fix every problem or address our every need. We need to take matters into our own hands.

“The council ought to do something” growled a friend who’d been stuck in a peak hour traffic jam.

That innocuous comment illustrates the fundamental challenge facing the developed world’s politicians – that we expect our governments to fix every problem we encounter.

In the case of the local traffic jam, the cars creating gridlock are parents driving their children to two nearby large private schools.

Despite the problem being caused by the choices of individuals – those decisions to send their kids to those schools and to drive them there – our modern mindset is “the government aught to do something” rather than suggesting people should be making other choices.

Socialising the costs of our private decisions is one of the core beliefs of the 1980s mindset.

Eventually though the money had to run out as we started to expect governments to solve every problem.

We’re seeing the effects of this in the United States where local governments are now having pull up black top roads, close schools and renege on retirement funds as those costs become too great.

As a society we have to accept there are limits to what governments can do for us.

Increasingly as the world economy deleverages, tax revenues fall and the truth that a benign government can’t fulfill our every need starts to dawn on the populace, we’ll realise that expecting politicians and public servants to save us is a vain hope as they simply don’t have the resources.

Bruce Springsteen puts this well in his song “We Take Care Of Our Own.”

The truth today is the cargo cult mentality of waiting for governments or cashed up foreigners to come and save us is over.

We’re going to have to rely more on our own businesses, families and communities to support us in times of need.

The existing institutions of the corporate welfare state are beginning to collapse under the weight of their own contradictions.

Joe Hockey knows this, but as a paid-up agent of the establishment he doesn’t dare nominate the massive cuts to middle class welfare and big business subsidies that are necessary to reform those institutions.

Waiting for the council to fix the local roundabout is nice but it doesn’t address the bigger problems.

It’s up to us to build the new institutions around our local communities and families. This is not a bad thing.

Are we prepraed to embrace risk?

The world is a dangerous place, can governments protect us?

It’s safe to say the Transport Security Administration – the  TSA – is one of America’s most reviled organisations.

So it’s notable when a former TSA director publicly describes the system the agency administers as “broken” as Kip Hawley did in the Wall Street Journal on the weekend.

 More than a decade after 9/11, it is a national embarrassment that our airport security system remains so hopelessly bureaucratic and disconnected from the people whom it is meant to protect. Preventing terrorist attacks on air travel demands flexibility and the constant reassessment of threats. It also demands strong public support, which the current system has plainly failed to achieve.

The underlying question in Kip’s article is “are Americans prepared to accept risk?” The indications are that they aren’t.

One of the conceits of the late twentieth Century was we could engineer risk out of our society; insurance, collateral debt obligations, regulations and technology would ensure we and our assets were safe and comfortable from the world’s ravages.

If everything else failed, help was just an emergency phone call away. Usually that help was government funded.

An overriding lessons from the events of September 11, 2001 and subsequent terrorist attacks in London and Bali is that these risks are real and evolving.

The creation of the TSA, along with the millions of new laws and billions of security related spending in the US and the rest of the world – much of it one suspect misguided – was to create the myth that the government is eliminating the risk of terrorist attacks.

It’s understandable that governments would do this – the modern media loves blame so it’s a no win situation that politicians and public servant find themselves in.

Should a terrorist smuggle plastic explosive onto a plane disguised as baby food then the government will be vilified and careers destroyed.

Yet we’re indignant that mothers with babies are harassed about the harmless supplies they are carrying with them.

It’s a no-win.

This is not an American problem, in Australia we see the same thing with the public vilification of a group of dam engineers blamed for not holding back the massive floods that inundated Brisbane at the end of 2010.

While we should be critical of governments in the post 9/11 era as almost every administration – regardless of their claimed ideology – saw it as an opportunity to extend their powers and spending, we are really the problem.

Today’s society refuses to accept risk; the risk that bad people will do bad things to us, the risk that storms will batter our homes or the risk that will we do our dough on what we were told was a safe investment.

So we demand “the gummint orta do summint”. And the government does.

The sad thing is the risk doesn’t go away. Risk is like toothpaste, squeeze the tube in one place and it oozes out somewhere else.

While Kip Hawley is right in that we need to change how we evaluate and respond to risk, it assumes that we are prepared to accept that Bad Things Happen regardless of what governments do. It’s dubious that we’re prepared to do that.

Reinventing activism

The ghosts of Graham Greene and Vietnam resonate in the Stop Kony campaign

In the late 1960’s the Biafran War appeared on the front pages of the world’s media partly due to a well co-ordinated advertising campaign using the relatively new broadcast marketing techniques.

During the mid 1980s the Ethopian famine was bought to prominence by Live Aid and Bob Geldof using music videos and live television made possible by huge leaps in broadcasting technology.

Nearly thirty years later we see an African tragedy – this time the Lord’s Resistance Army in Central Africa – again bought to the West’s attention through new media and advances in video technology.

Each time there’s been an outpouring of outrage and determination by those of us in the West to ‘fix’ Africa’s problems. We demand our leaders do something so we march, we donate and these days we retweet or like an online video.

In many ways  we’re like Alden Pyle, the idealistic and well meaning anti-hero of Graham Greene’s The Quiet American who believed a ‘third force’ can fix the problems of Vietnam in the 1950s.

At the time Graham Green wrote The Quiet American in the late 1950s, the Eisenhower Administration had several hundred US military advisers in Vietnam, sent by President Truman at the beginning of the decade.

Today, at the time of the Stop Kony campaign in 2012, the Obama Administration has ‘about’ a hundred advisors in Central Africa.

Sometimes we don’t reinvent anything; we just use modern tools to repeat our grandparents’ mistakes.

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.