Google and the ripoff merchants

Google tries hard - perhaps too hard - to use its "smarts" (the fancy, arcane and secret algorithms it's famous for) to outwit the shonky operators who lure lots of clicks via cheap Adwords search terms, only to offer them pages of hi-return ads. And gets written up in Forbes. Another fascinating read, from any perspective.

Resources for business brains

My online strategy? Basically look at and subscribe to everything then slowly weed out the chaff. Let things percolate slowly. You may think YouTube a dud but 6 months later it's gained critical mass. It happens over and over again. Look at MySpace, or the fast growing virtual world at Second Life. Now one day someone will integrate all of these social networks and kaboom. In the business of online business it's keeping your eyes open to new ideas that matters. Audio remains big on the web and in real life, and tools like Pluggd and Talkr have got to have scope to grow.

And use the resources like MBA Depot. It was a great source of articles during my MBA study and remains very useful.

The Reserve Bank's virtual museum

Well it's an interesting diversion from working on spreadsheets. Check it out here. It's pretty cool in a central-bankish sort of way.

The description: "A virtual tour of the Reserve Bank of Australia's Museum of Australian Currency Notes is now available. The interactive features of the tour include zoomable images, 360° panoramas and streaming video."

Not sure this is a good idea but here it is...

I'm not sure that Forbes intends to bring anything remotely resembling positive attention to the evil and corrupted forces behind email scams, but they have made it mildly amusing:"making his Fictional 15 debut: spam entrepreneur Prince Abakaliki of Nigeria. Abakaliki is notable for being the only fictional character on our list who regularly e-mails real people, usually begging for assistance in recovering large sums of money. We estimate Abakaliki to be worth more than $2.8 billion."

The Forbes Fictional 15 here (includes oil billionaire Jed Clampett, by the way).

War between the formats hurts uptake

Well price hurts uptake too. Why don't you toss a coin and pick between Blu-ray and HD-DVD? (Wharton's excellent article here.)I suspect that the cashed up early adopters will buy both and the less affluent will go with what looks coolest, spec-wise. So we'll see sales of both for a while until content kicks in... since you can't as yet record to either format content will be king. Which looks like a Blu-ray win to me, at this stage. But is it so?

History tells us that the 'better' Beta lost to VHS because of content - but the proliferation of VHS machines played a part, too. The lower cost machine built up more content and it all snowballed. What will make Blu-ray snowball? Games consoles? Content? It's a maybe on both counts. What could stop Blu-ray domination? Well history also tells us that what was a mess of CD, CD-R, CD-RW and other combinations of plus and minus got sorted out - to a large extent - by machines able to cope with multiple formats. Maybe that will happen again?

It's fun to watch, anyway. The fight between formats, I mean, not necessarily the content ;-)

IBM on InnovationJam and Thinkplace

IBM recently showcased the top 10 ideas generated by its employee and client online "jam". In essence the company opened up a site that allowed access to its staff as well as clients in an effort to get a wide-ranging conversation - a brainstorming - happening on future needs and possible solutions. It's mostly worthy stuff as well as potentially profitable, if the research department can make it workable. I like the "jam" idea but it does get a bit hard to see what's happening when 150,000 people are simultaneously involved. Hey, I work for IBM and I participated - but these are my opinions and not necessarily those of the corporation. It was crowded in there.

Anyway, it's come up with some good ideas - check it out at InfoWorld.

GM, hydrogen and sustainability.

Read this (from Carsguide.com.au) and have a laugh. Firstly: "The eco-friendly cars hold the potential of zero emissions and a sustainable source of energy produced when hydrogen and oxygen are mixed." How can a car be eco-friendly? It takes energy and resources to make it, distribute it and service it. It takes energy to melt it down and recycle it. It requires roads, which tar over the soil that would otherwise support plants and animals. Need I go on? It's not 'eco' friendly at all. And what the heck is 'a sustainable source of energy when hydrogen and oxygen are mixed'? Where does this 'sustainable' energy come from? By using energy to break water into hydrogen and oxygen? Where did that energy come from? Thin air?

It gets better - or worse, if you like: "Car makers claim they need help from governments in developing the infrastructure for hydrogen fuelling, he (Rick Wagoner of GM) said. 'Developing new technologies is really a team sport that requires business and governments to work together,' he said. 'It's doable, it's not that expensive, but it's going to require some work.'

It's not enough that car companies can wreak havoc on the environment and expect communities to fork out billions for road infrastructure, they also expect a subsidy for being such nice people. Please, please - catch a train instead. I love cars but I don't expect them to subsidised to the hilt. If they are worth having - and they are - they should be priced to cover the real cost - the opportunity cost - of what we lose as well as gain. And they should bear the full cost of the infrastructure. Only then will we appreciate how much it really costs when we jump in the car to go a kilometre down the road to buy some bread or milk.

These market distortions - call them externals if you like - are hiding the real cost of what we are doing to this planet. Wake up. Get a bike instead!

Another view of powerhouse India

Another view of the problems and successes of powerhouse India, from Forbes mag. A good , balanced review of the outsourcing issue plus a few anecdotes and examples of rising fortunes in IT manufacturing and the price to be paid for success. The upshot? As India rises, so do the expectations. It'll level out in the end and jobs will change but - yes - there will still be jobs.

Potential dangers with "proximity" cards

Do you have a proximity access card for your secure building, or a credit/debit card with 'tap and go' or some other variety of proximity based radio transmission of your account info? How secure do you imagine those transmissions to be? Are they encrypted? Do the POS terminals decrypt the signal, then? Do they? Are you sure? Did you ask your bank?

Well at least these RFID-based things are convenient. They must be coupled with encryption in order to defeat 'eavesdroppers' who can use sensitive antennae to pick up the RFID signal and save the info for nefarious use. If you have multiple such cards then at least you have muddied the electronic waters a bit, but a single card is prey to short range transmission - and reception. Maybe that guy in the queue behind you is reading your card right now... read the full study here (from the University of Massachusetts).

Project management wiki

In case you blinked, there's a useful project management wiki inside Wikipedia.

Lean vs Six Sigma

I am assuming you have an MBA, are getting one or are thinking you may like to have one. You don't need one but it does make you feel slightly more justified when you speak or write about business topics. It's a generalist, not a specialist degree after all. Anyway, during my MBA studies I was taught about Toyota's lean manufacturing principles, as well as GE's love affair with Six-Sigma. In essence Toyota cuts out waste by eliminating duplication of effort and designing both the production line and the product to have the minimal number of parts, bottlenecks or possible problem areas. It minimises assembly times (fewer parts doing multiple jobs) and thus saves time and money whilst boosting production. It builds what the customer actually wants and nothing more. It's also based on incremental improvement from the shop floor as well as above (or below or sideways, whatever) and it's complementary with just-in-time assembly. You buy just enough parts to make just enough cars to meet immediate demand and avoid having bins, rows or yards full of parts or completed products. Makes sense, doesn't it?

Unless you want to save the planet, of course. What happens is that the production is refined to the nth degree but the product - although reliable and long-lived - is almost irrepairable in a traditional sense. What were once multiple, low-cost serviceable parts become 'modules' of high cost replaceable parts. You remember cars you could fix for a few dollars? Well complete cars are cheaper and better today but when you break a bit - like a gearbox - you are more than likely required to buy an entire gearbox to fix it! OK, that's an extreme - but increasingly that's where it leads. It suits the car makers - they make more stuff, cheaper, and sell more. But it's more energy used overall, more otherwise healthy parts rendered useless an dmelted down (at an energy cost). It's all about faster life-cycles, mass consumption and saving waste at the factory, and less about maximising serviceability, product life-times and re-use. So it has a downside.

And Six-Sigma. well again it's about minimising factory or production waste, in both effort and materials, and getting the greatest consistency of quality possible. Just imagine if you make no errors in production - or just 1 in a million - and your competitor makes 10 such faults in a million - what an advantage you have! You have less cost soaked up in in stopping production, replacing parts or re-making faulty product. And fewer returns.

So Six Sigma and Lean are both process improvement methodologies that focus on reducing waste associated with production processes. Six Sigma is particularly about eliminating defects in any process. The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy (can't manage what you can't measure!) that focuses on process improvement and variation reduction. Build with tight tolerances and don't go outside. GE has used it to great effect.

However Lean is more about speed and efficiency in the process. Lean is a systematic approach to identifying and eliminating waste, where waste is defined as anything that does not add value to the client (anything they don't think they want, or that doesn't register as useful. That 6th cupholder may be going too far, for example, in a 5 seater car). So whereas Six Sigma eliminates defects it does not address the question of optimising process flow. By adding Lean as well each approach can work in concert to result in dramatic improvement within an organization. They make a powerful combo.

So what are the Lean principles?

• Value: Keep asking what the customers value and want
• Value Stream: Map the flow of work and look for ways to speed it up by reducing waste and the amount of work in progress
• Flow: Do work so that it flows smoothly and without interruption; mistake-proof the process, and solve problems at their source to achieve higher quality and productivity
• Flexible Pull: Produce only what the customer requests, when they need it
• Continuous Improvement: Define, measure, analyze, improve, and control production.
  

By applying these principles organizations have used the Lean process approach to shorten delivery cycle times, increase quality and the value of their services, improving their competitiveness. As I say, however, they is a potential drawback for the world's energy and resource reserves. Whilst savings are made at the factory there may be no such savings in the overall scheme of things - until we start to value our environment a bit more! Do the math yourself and come back to me!

Vigilant vs operational leaders

Excellent Wharton article on Vigilant vs Operational
leaders... It touches on Ford vs Toyota (guess which type of leader is which) as well as
Coke vs Pepsi in India and the lighting manufacturers missing the switch to
LEDs. Essentially the article distinguishes between looking just at the
operational issues of lower cost production and matching the competitors
you know, vs looking outside at a broader range of influences and moving
earlier. Makes sense to me.

Another case study for you - the HDD turns 50

Want to see a product life cycle? Look at the humble hard disk drive. Invented 50 years ago by IBM, it has steadily dropped in size and price. A few years ago IBM sensed that the margin was gone and it sold out of the business. Nevertheless the market remains big with niches developing all the time. However it's hard to make money except by low-cost production and high volumes. HDDs also face competition from solid-state memory devices. Although HDDs are attractive in terms of price, performance and size, technologies such as Flash memory are robust, immune to the likely effects of shock and power loss and getting bigger, faster and cheaper by the day. Can you see a future for HDDs, or will they be overwhelmed by new technology? Sounds like a good essay subject to me.

Agility and competitive advantage

Competive advantage is taking your core competence and making from it some key feature that gives you an edge over your competitors. It could be a fast, flexible and low cost supply chain like Dell's; or Toyota's ability to rapidly develop multiple new car designs and to manufacture them almost faultlessly. But what happens when, inevitably, the others catch up? The answers are many, but they include sharpening that edge continually or looking for new ideas from left field. This BusinessWeek article explores a few of those ideas.

EFTPOS decision in Oz

The RBA has issued a press release on the subject of EFTPOS and capped fees. The fees will fall, reflecting the real cost of electronic transactions, to 5c or less (from around $0.20). Quite a fall. This is a reasonable thing... electronic transactions are meant to be frictionless, it is quite ridiculous to be promoting electronic banking on one hand and charging over the top for it on the other. Whilst normally competitive pressure would see it come down anyway, in fact a virtual cartel of banks has kept it high. You can guess their motives.

Apple's strategy defined - a little

Apple has finally moved to show its hand - a little. CNET reports new iPods, at last, push the boundaries a little but mostly play catch-up with the market. Bigger capacity, funkier colours. iTunes gets Disney movies. And iTV promises a method of streaming PC video wirelessly to TVs. It's a home-based play, sure - and in line with the iPod consumer strategy - that bridges the PC to the TV. Whilst it makes sense it hardly shatters our perceptions. There must be more, surely?

Telstra and strategy

What a case study... start with a huge public service monopoly (the Post Master General or PMG) and split it into 2: Australia Post and Telecom (roughly 1976 or so?). Start cutting staff... reorganise... reshuffle .... sell excess property... trim it down and increase the potential for a high ROI. Rebrand the sexy IT bit - Telecom - as Telstra and sell it off to investors large and small. OK, the first tranche went well, so sell off some more at a higher price. Now smart investors new that threats like DSL and VoIP were already here but that didn't stop the less informed paying that over-the-top price. Oooops. Since then it's been going down... lots of competition, share price falling... so bring in a US exec with a proven record and... well it's been quite a ride. Here's a Forbes interview with Sol Trujillo for that US perspective. Then get busy writing that essay!

Playing hardball on strategy

This one's from Ivey Business Journal via MBA Depot. We are used to sporting and military terminology in business strategy and Hardball is no exception. In summary, go easy on your competitors and you will lose. Instead, play hardball - fair, legal, ethical but hard - by focusing on your strengths and their weaknessness and by exploiting both.

Business Transformations 101

On Transformations and what must have happen to make them work, John Kotter noninates 8 stages. I'm not personally fond of the 'institutionalising new approaches' wording as it suggests entrenchment... but overall you can't argue too hard against the 8 dot points. Kotter explains all in his book, Leading Change.

It's probably a good idea to practice sensible Change Management as well. It never ends - I think that's the secret.

Google Trends - a useful service

Don't forget to use Google's Trends service... or use it now if you've only just realised it's there! Trends allows search term comparisons, as in "alfa" vs "alfa romeo". It plots it graphically and by geography. If you need to know what search terms are hot and where, this is how you find out.

Oh yeah, it's also fun.