management | Paul Wallbank - Communications Professional

Planning a business succession

Dealing with management succession can be struggle for many companies

What happens when your Managing Director of five years standing announces he’s decided to move on?

This was something Xero’s senior management had to deal with when Chris Ridd, the company’s Managing Director for Australia, announced that after five years he had decided to move on.

In interviewing Chris and his successor, Trent Innes, last week for The Australian it was striking just how well the succession process had gone for Xero in dealing with the management change, “It has worked out well, it was our preference to go with an internal candidate,” the outgoing GM told me. “From my perspective it’s always good when you can do that but it doesn’t always work out that way.”

Much of this comes down to Chris putting together a cohesive management team, something he’s quite proud of, “Xero has a huge bench, we have a really talented leadership team. I feel really good about leaving now given that the business has gone from six staff to 295 people, three and a half thousand customers to 265,000.”

“I achieved way more than what I thought I’d be able to do in that role and after five years it seemed like the right time frame to go into something else,” he continued.

Part of his confidence in moving on was his confidence in his successor, “Trent and I go back twelve years at Microsoft,” he told me.

The other part of his confidence was that the company has a clearly defined strategy and business plan that neither he or Trent see changing.

Many companies struggle with changing their senior management and much of that is because the board and executives are in denial that people – even those at the top – will move on to new ventures.

A stable management team, a solid business plan and a realistic view about leadership succession are the keys to successfully managing a change at the top, so far it looks like Xero have managed to pull off a change that many other struggle with.

Thinking beyond the group

Varied sources of information are essential to avoid stale, group thinking

It’s nice and comfortable living in an echo chamber and we’re all guilty of it one way or another. An example of how insular echo chambers can be are two surveys done by UK company Apollo Research on who UK and US tech writers follow on social media.

The answer was each other, with most tech writers following a common core of twenty in the UK and thirty in the US. Basically the groups are talking to each other which explains how technology stories tend to gain momentum as variations on the same stories feed through the network.

While technology journalists are bad for this, it could be argued their political colleagues are far more guilty of this group think as their working in close quarters makes them even more insular and inward looking. That explains much of the political reporting we see today which often seems divorced from the real world concerns of voters or challenges facing governments.

For all of us, not just journalists, it’s easy to become trapped in our own little echo chambers and find it harder to think outside the pack as the web and platforms like Facebook deliver us the information we and our friends find confirms our own biases.

Clearly, thinking with the pack creates a lot of risks and for businesses also raises opportunities. At a time of fast moving technology and falling barriers to entry, thinking outside the prevailing group could even be a good survival strategy.

A good example of industry group think is the US motor industry of the 1970s where they dismissed Japanese competitors as being cheap and substandard – similar to how many think about China today – yet by the end of the decade Japan’s automakers had captured most of the world’s market.

On a national level, Australia is a good example of dangerous groupthink as up until three years ago the consensus among governments, public servants, economists and business leaders was the China resources boom would last indefinitely.

Today that consensus looks foolish, not that those within the echo chamber are admitting they made the wrong call, and now governments are struggling to find new revenue streams as the expected rivers of iron ore and coal royalties fail to arrive.

For Australian businesses, governments looking to raise revenues are another factor to plan for and getting one’s tax return and company paperwork in on time might be a good idea to avoid fines from overzealous public servants.

The bigger lesson for us all however is not to think like the group. While it may feel safe in the herd, we could well be galloping over a cliff.

One simple way to avoid groupthink, and that cliff, is not to copy the tech writers or the Australian economic experts who mis-called the China Boom. With the web and social media we can listen to what other voices are saying, most importantly those of our markets and customers.

A varied information diet is something we all need t0 understand what our markets, economies and communities are doing. It might be comfortable huddling down with the herd, but you’ll never stand out from the pack.

Zappos and the new management structure

Zappos’ experiment with a new way of management continues to show slow progress reports the New York Times.

While Halocracy’s introduction is proving problematic at Zappos, Tony Hsieh’s quest to reinvent management remains fascinating. In an October 2015 interview on This Week In Startups with Michael Arrington the Zappos CEO explained how the system works.

“The ultimate goal is for employees to find what they’re passionate about, what they’re good at and what’s going to move the company forward,” Hsieh explained.

Given such a change in management philosophy, it isn’t surprising a lot of staff and supervisors are struggling. Hsieh though should be credited with this experiment to move away from Twentieth Century management practices and we are some way off finding out whether it’s successful or not.

Waiting for an innovation miracle

For most organisations innovation is harder and more complex than it seems observes Autodesk CEO Carl Bass

Many companies are waiting for an innovation miracle said Autodesk CEO Carl Bass at the company’s final press and analyst conference at the Autodesk University conference in Las Vegas late last year.

“Change happens when new people enter the market or companies find new ways to do things or they are scared by competitors doing something they can’t do,” Bass said in an answer to a question from a Korean journalist about dealing with changing markets.

“The two things I hear over and over again from customers – you stand back and scream because they are all the same – most of our customers want to innovate,” Bass continued.

Building for sustainable change

“Generally they mean they want to build sustainable, competitive changes. They want to create products that have the ‘Apple Premium’ that someone wants to pay more for because it’s the best product in the category and they want to sustain that for as long as possible.

“The second thing that’s almost universal with our customers is when they have a good idea, they want to get that to market as quick as possible. To the extent we supply the tools to help them fulfil those two big needs of ‘how can I innovate and do something I wasn’t capable of doing?’ or ‘how can I shorten the time between when I think about this to when I can sell this?’ Those are things that will motive people.”

At this stage Autodesk CTO Brian Kowalski chimed in, “there is slightly depressing moment in the innovation conversation where the customer says ‘I really want to transform into an innovative company. Can you help me do that using exactly the same tools, people and mindset I currently have. They are hopeful our answer will be ‘yes, we can help you.”

For those organisations Kowalski had bad news pointing out that creating a corporate environment that embraces change requires all three of the ‘people, processes and technology’ triangle. Just adding a new product over the top of the existing culture won’t change the business.

Sympathy for the corporation

Bass though has a sympathetic view towards those large organisations seeking to change.

“Companies do believe there’s some miracle that happens and one of the things I’ve seen most clearly is this idea among startups and VC backed firms is that big companies are just dumb and unaware,” Bass stated. “There almost no large company anywhere in the world that doesn’t know what is going on the world, some of these companies have whole armies of people whose only job is to figure out what’s new and exciting and interesting.”

“People on the other side don’t understand this, they (big company managers) know what’s going on and what’s different, they may not have the wherewithal to change but the idea that car companies didn’t see changes coming – that they couldn’t see a Tesla – they knew but there were a bunch of reasons why they couldn’t make it to the other side.”

Skilling the next generation

Another aspect that troubles Bass are the skills of the next generation of managers, engineers and software developers.

“The second thing I wanted to say about tools is that I go to a lot of universities and I talk to academics about what’s coming next,” he says. “What depresses me a little bit is the faculties have all sorts of new ideas and methodologies but they are teaching using old software tools. No student I know would want a twenty year old cellphone but they sit dutifully and learn twenty year old software. I think that’s one area they have to change first.”

Bass and Kowalski make some important points about the challenges facing organisations seeking to adapt to changes markets, workforces and a rapidly evolving society – it’s not easy and the issues facing all businesses are complex.

Paul attended Autodesk University in Las Vegas as a guest of Autodesk.

Navigating the Internet of Things

The navigating the Internet of Things forum promised much, it didn’t really deliver

The Navigating the Internet of Things Forum held in Sydney earlier today promised how businesses can navigate the technologies that promise to change society and – more specifically how can Australian enterprises use the IoT – sadly it didn’t quite deliver.

On the panel, sponsored by Telstra and held in the telco’s Sydney Experience Centre were the Australian Computer Society’s CEO, Andrew Johnson; Uber’s Sydney’s city lead, Glenn O’Sullivan; ZappQ founder Naomi Henn and the man responsible for the entire Internet of Things label and creator of WeMo, Kevin Ashton.

To start with the panel was very much consumer focused with talk around connected fish tanks, spa baths and discussion around the now defunct home automation service Ninja Blocks. It wasn’t until Ashton mentioned the use of autonomous vehicles in Rio Tinto’s Australian mines that the discussion of industrial uses really came into play.

“The most powerful applications in the IoT are in manufacturing and logistics”, said Ashton who also noted during the privacy discussion how “government are conflicted when it comes to protecting our data.”

Ashton’s point was well made given the audience questions were also largely about the privacy and security aspects of the IoT, an important issue highlighted by a story today on how police wearable cameras are being shipped with known spyware installed.

One other key aspect was the skills shortage. Ashton noted that data scientists are going to be the profession most in demand in an age where almost every device is collecting information with the ACS’s Johnson flagged how it will be the consultants and IT support industry that will have the task of rolling out the IoT to the small business community.

Ultimately though the Navigating The Internet of Things forum didn’t really hit its mark. Any manager or company owner hoping to understand how the IoT would help their business would have left the room as uncertain how these technologies were going to affect them as how they would have started the day.

One of the things that’s missing at events like this are people actually using these services or supplying the products. During the introduction to the event, Telstra manager Mark Chapman described how Adelaide City Council is piloting the company’s Cumulocity platform using Libelium sensors.

Libelium is one of the good stories on how the IoT is changing cities and businesses, something that founder Alicia Asin described to Decoding the New Economy three years ago.

Describing how the Internet of Things will change businesses requires hearing more from people like Asin and those delivering the products and services driving the evolutions in today’s society.

Sadly, those voices were missing on today’s panel. If the opportunities presented by the internet of things are going to be realised, then the people finding real results with the technologies today need to be heard.

Killing the business of complexity

A simpler business environment means lower margins. If you profit from complexity you have a problem

“The cardinal sin of the computing industry is the creation of complexity,” is quote attributed to Oracle founder Larry Ellison and often repeated at the company’s Open World forum which I’m attending at the moment in San Francisco.

For the computer industry that complexity has been a very profitable profitable business with everything from the local computer shop through to the big technology vendors and integrators.

One of the biggest beneficiaries of that complexity were the salespeople, big complex enterprise deals meant big commissions.

With the shift to cloud services and apps, those fat margins and commissions have evaporated, leaving the lucrative old models of business stranded. IBM are probably the greatest victim of this while Microsoft are, once again, showing the company’s ability to evolve in the face of a fundamental market change.

For the salespeople the days of fat commissions are over, with thinner margins it’s not possible to pay big lump sums for winning contracts.

The simplification of the computer industry is changing the fortunes of many IT businesses, but that change isn’t limited to the tech sector or their salespeople as those fundamental changes are rippling into other sectors.

A constant claim by Internet of Things evangelists is that the IoT will squeeze inefficiencies out of businesses and this is exactly what we’re seeing with cloud and mobile based services like Uber and AirBnB.

If you’re in a business that profits from market inefficiencies then it might be time to figure out how to survive in a low margin environment. The challenge facing companies like Oracle is one whole industries are now having to face.

Eric Schmidt on managing Google

In an interview with LinkedIn founder Reid Hoffman, Google chairman Eric Schmidt describes how he managed the company’s high growth.

“In all my issues at Google, I knew I had no idea what to do, but I knew that I had the best team ever assembled to figure out what to do,” says Google – and now Alphabet – chairman Eric Schmidt in an interview with LinkedIn founder Reid Hoffman.

Schmidt’s interview is a great insight into managing fast growth companies,”almost all small companies are full of energy and no process”. While he reflects on his early days at stricken companies like Sun (“tumultuous and political”) and Novell (“the books were cooked, and people were frauds”).

Moving to Google he found all of his management skills exercised at a company with a unique culture and rapidly growing headcount.

One notable anecdote is how Larry Page kept a 100k cheque from an early investor in his pocket for a month before cashing it.

Compare and contrast that attitude with the current startup mania where by the end of that day a media release would be issued proclaiming the company to be a new unicorn on that valuation.

Schmidt’s view, like many others, is that the real key to success in the company is the people. This echoes the interview with Meltwater’s CEO earlier this week where Jørn Lyseggen described how the key to starting a venture in a new country was the first five people hired.

One great takeaway Schmidt has from his time at Google is how great companies are created through the Minimal Viable Product method, “the way you build great products is small teams with strong leaders who make tradeoffs and work all night to build a product that just barely works.Look at the iPod. Look at the iPhone. No apps. But now it’s 70% of the revenue of the world’s most valuable company.”

Ultimately though Schmidt’s advice is to make decisions quickly, “do things sooner and make fewer mistakes. The question is, what causes me not to make those decisions quickly.”

“Some people are quicker than others, and it’s not clear which actually need to be answered quickly. Hindsight is always that you make the important decisions more quickly.”

Rethinking business IT

How is business being reinvented in a world of cloud computing.

Last week at the AWS:Reinvent conference in Las Vegas, I had the opportunity to interview the company’s Global Head of Enterprise Strategy, Stephen Orban about where he and Amazon see the direction of the cloud computing market and how business practices are being reinvented.

Among the things we discussed was Orban’s seven best practices for a company’s journey to the cloud, gleaned from his own experiences in his AWS role of advising clients on adopting and his previous experiences as a technology officer at Dow Jones and Bloomberg.

Orban laid out what he thinks are the keys to success in a company heading to the cloud in his own blog post and during our conversation he expanded on his ideas which also very much reflect the changing role of the CIO or IT manager.

Supporting the C-suite

The first point is the IT department has to understand the business and align technology with the organisation’s objectives.

“Somebody who understands technology who can merge technology with the business needs” will be better able to win the confidence of management says Orban.

Doing that is the key to winning support from the executive suite Orban believes. Once CIOs have that trust from senior management it gives their teams the space to experiment with new ways of delivering value to their companies.

Education

“The second thing is to provide training and education,” Orban says. “People tend to get a bit anxious of what they don’t know, particularly when it affects their jobs.”

In Orban’s experience, having informed staff makes them more open to change within the business, “with the transformation I went through at Dow Jones, most of what we accomplished was because of the people who’d been there a long term. They had the institutional memory but they were very open minded.”

Foster a Culture of Experimentation

One of the great benefits of cloud computing is how it lowers the costs of experimentation and development, “gone are the days when it cost hundreds of thousands of dollars, even millions, to try something.” Orban says.

Learning what works and fails is essential, he believes. But as long as there is executive support then a tolerance towards unsuccessful experiments will develop in the organisation.

Working with partners

Outside parties are essential to most organisation’s IT systems and Orban believes partner ecosystems have changed with the advent of cloud computing. “There’s a whole new breed of partners that have been going through this,” he says in citing ‘born in the cloud’ software developers and systems integrators who are changing how projects are being delivered.

Build a Center of Excellence

“Creating a center of excellence is, I think, one of the key practices any organisation should invest in. You want a body of people who can institutionalise best practice within an organisation,” observes Orban.

As cloud services take away the complexity of computer systems it becomes an opportunity for organizations to rethink boundaries between the IT department and business operations.

Move to the cloud

Given Orban’s employer it’s not surprising he sees cloud computing as key to a company’s transformation however he admits that few organisations will make the jump straight into cloud services.

“Hybrid will be a part of every enterprise’s journey. Any company who’s been doing IT for any period of time will have existing investments,” he says. “Our view is that we will make it as easy as possible to create that bridge.”

“We do believe in the long run that enterprises will find they become so much more effective over here (in the cloud) they will move in that direction.

A Cloud-First Policy

Once an organisation has its cloud strategy and experimentation culture in place then having a ‘cloud first’ policy, “it reverses the burden of proof away from ‘why would you use the cloud?’ to ‘why wouldn’t you?'”

While Orban is emphasising the Amazon Web Services view of the world where ultimately all business computing will be done on the cloud – preferably their cloud – his views illustrates the change facing businesses as they implement online technologies.

For most, the availability of easily accessible cloud computing services is an opportunity to rethink their business processes and how organisations can deliver the best products quickly to their customers.

Rethinking customer service in the connected age

Businesses would be wise to stop telling people what they should want and let customers tell them what want says Shel Israel in his book Lethal Generosity.

Businesses would be wise to stop telling people what they should want and let customers tell them what want says Shel Israel in his latest book, Lethal Generosity.

In this book, Israel’s previous works include Naked Conversations and Age of Context which were both written in collaboration with Robert Scoble, he looks at the technological and social changes affecting business and how they can adapt to a rapidly evolving marketplace.

Key to that evolving marketplace is the explosion of data offering businesses deep insight into their customers. as Scoble describes in Lethal Generosity’s introduction in talking about social analytics service Vintank;

VinTank was acquired by a big PR agency that wants VinTank to do for all sorts of industries what it has done for the wine industry. Are you a restaurant or a winery ignoring that data? Go ahead and keep doing that for a decade. Your competition won’t.

Israel illustrates the need to watch the marketplace in citing a campaign where Canadian brewer Molsons completely wrong footed an oblivious competitor, something similar to how one bank discovered a rival’s successful marketing campaign through real time bank deposits data described at the recent Splunk conference.

Focusing on the customers

A customer centric outlook, not looking at competitors but focusing on what consumers want is key to success in the new economy, Israel believes. This is enhanced by technologies that allow both products and marketing to be personalised as shown in the chapter detailing how retailers and airports are using beacons and data analytics in their operations.

One good example is AirBnB, while Israel trots out the ‘biggest hotel chain’ in the world fallacy that’s pervasive among commentators, its effects on the established industry has been profound and have forced hospitality operators around the world to re-evaluate their business models.

Israel suggests the best response for businesses affected by the ‘Uberization’ of their industries is to adopt the social and analytic tools and strategies being used the upstart businesses and he provides a wealth of examples.

Seamless sales

Tapingo, the food ordering service for US college students, illustrates the seamless experience that consumers are increasingly demanding in their shopping, business and leisure activities. Israel cites how Tapingo’s merchant partners are seeing an in-store traffic boost of 7 percent and a gross profit rise of 11 percent as a result of using the service.

Shel also illustrates some of the failures in deploying new technologies, specifically London’s Regent Street Alliance that failed due to poor execution and a failure to engage the marketplace.

One of the weakness in the book – which Israel acknowledges – is its focus on US, and specifically Bay Area, case studies. While there are some non-North American examples such as Australia’s Telstra and China’s Alipay, most of the examples cited are of companies based in or around San Francisco and Silicon Valley.

Focus on Millennials

Another weakness of the book is the over-focus on Millennials or Digital Natives. While this group is important that obsession risks Israel’s message being pigeonholed amongst the noise of poorly thought out pop demographics and poor analysis that marks much of the discussion around changing tastes and habits between generations.

Israel’s point that the post 1982 generation will soon outnumber older cohorts in both the workforce and the marketplace in the near future though is an important aspect for businesses to keep in mind with the safe certainties and predictable customer behaviour of the baby boom era being long gone.

However the shift in consumer and workplace behaviour is just as pronounced among all the post World War II generations as technology and the economy evolves in the early 21st Century. Focusing on the younger groups risks missing similar shifts among older members of the community.

The value of customer service

Ultimately though, Israel’s message is about customer service. Shel himself flags this is not new, in describing the competition between hiking goods suppliers The North Face and Sierra Designs in 1970s Berkeley.

What is different between today’s businesses and those of forty years ago is technology now allows companies to deeply understand their customers and provide customised marketing, products and experiences to the connected consumer.

For the business owner, manager or entrepreneur, Lethal Generosity is a good starting point to understand the forces changing today’s marketplace. The case studies alone are worth considering for how an organisation can adapt to a rapidly evolving world with radically shifting customer behaviour.

Goodbye to the media buyers long lunch

Big data and analytics are changing roles in the media industry, managers in other sectors should worry about the changes.

Yesterday Decoding The New Economy posted an interview with Michael Rubenstein of AppNexus about the world of programmatic advertising and being part of a rapidly growing startup.

The whole concept of programmatic advertising is a good example of a business, and a set of jobs, being disrupted.

Media buying has been a cushy job for a generation of well fed advertising executives. David Sarnoff’s invention of the broadcast media model in the 1930s meant salespeople and brokers were needed to fill the constant supply of advertising spots.

Today the rise of the internet has disrupted the once safe world of broadcast media where incumbents were protected by government licenses and now the long lunching media buyers are finding their own jobs are being displaced by algorithms like those of AppNexus.

A thought worth dwelling on though is that media buyers are part of a wider group of white collar roles being disrupted by technology – the same Big Data algorithms driving AppNexus and other services is also being used to write and select news stories and increasingly we’ll see executive decisions being made by computers.

It’s highly likely the biggest casualties of the current data analytics driven wave won’t be truck drivers, shelf pickers or baristas but managers. The promise of a flat organisation may be coming sooner than many middle managers – and salespeople – think.

Twitter’s search for meaning

Twitter needs more relevant directors as it searches for a new CEO

New York Times writer Nick Bilton delves into Twitter’s search for a new CEO and comes up with a left of field conclusion – the company doesn’t actually know what it is.

Twitter has certainly been casting around to define itself, particularly after its stock market listing that saw it valued at over twenty billion dollars.

Bilton flags one reason why management is so uncertain about their company’s identity, that it’s directors don’t use the service themselves.

As I see it, the problems at Twitter come down to a lack of leadership and a micromanaging board.

And the churn is constant: many of its founders, chief executives, numerous product directors and other top brass have been fired or pushed out. Three of the eight positions on the current board belong to Mr. Dorsey and the former chief executives. About half of the board barely tweets.

The lack of social media credibility on the board raises another issue about how much direct industry expertise should a company’s directors have. While it’s almost certainly not desirable to have insiders dominate a board certainly some, if not the majority, of directors should have some experience in the industries the company operates in.

For Twitter though they desperately need to define the business and what its valuation really is. Even more pressing is to show how the platform differs from Facebook as the confusion of investors, users and advertisers isn’t helping.

Ultimately as Bilton suggests the direction of a business is determined by the board, it’s time Twitter found at least a few directors who at least use social media, if not have some understanding and experience in the business.