Billionaire donates millions to Brexit, but may lose them more from the undecided vote

May 17, 2016

Marmite

Billionaire Peter Hargreaves is the leading donator to the Out of Europe , or Brexit campaign. But other supporters worry that his enthusiasm for creative destruction may cost them the election

I have tried to remain an impartial observer of events in the build-up to the EU referendum.  This week [May 9-15] it has been easy, as David Cameron for the In group, and Boris Johnson for Brexit have been equally strident and over-the-top in their main offerings.

Shooting Self in Foot Award

But my candidate for a shooting-self-in-foot award is Peter Hargreaves

Much admired for his entrepreneurial spirit, Mr Hargreaves was a student at Clithero Grammar School, an education which equipped him in life to find success from a financial start-up ‘in the spare bedroom of his Bristol flat’ in the early 1980s.

More recently he has backed the Brexit campaign through his substantial financial resources and high voyage energy which helped him accumulate his Moola.

Not a vote-winning message?

But his message, while likely to bring a resounding round of applause at an Institute of Directors meeting, may not swing as many votes as he is hoping for.

Voting for uncertainty and creative destruction may be counter-productive among a sizable proportion of older voters believed to be sympathetic for a Brexit . It could produce the well-known Marmite effect.

Mr Hargreaves could consider staying stum, but sponsoring Uber to ferry voters to the polling stations.

Oops. Have I suggested a better use of his millions?


The Divestment of Openreach from BT is not a simple case

February 8, 2016

It would perhaps be easy to jump on the band wagon and champion the case for freeing Openreach from its parent BT, which according to the press is a given. But in fairness, both Openreach and BT deserve credit in areas

BT is a truly world class business. It is a leader. It has delivered (mostly) on its promise to provide the UK with its Information Super Highway. But yet more change and progress is sought after.

Better apart?

The proposal to divest Openreach from BT may bring more challenges than we have today opposite speed of change and progress. More complexity. More governance and regularity issues. Investment may actually stall rather than speed up. There are no guarantees that Openreach and BT will perform better independently, or indeed that others (business customers, partners, consumers) will benefit from a split.

Openreach is already functionally separate within BT. The challenge is whether Openreach operates in the spirit of openness, or whether it favours the agenda of its parent. Would an independent Openreach really deliver improved competition or speed up investment? Would the perceived rate of change and progress – the perception of more innovation actually be delivered delivered if Openreach were no longer ‘restricted’ by BT’s agenda, governance and control? Both BT and Openreach’s customer service are questionable, but where would the real alternative appear from?

I know some {LWD subscribers] who believe that BT does trade on its monopolistic position. Ordinarily most would condemn the incumbent as the bullying type leveraging their position for self-interest. Perhaps part of this argument is true. Listening to a BT video link, I note that the speaker does acknowledge that the competition [Sky, talk talk, Vodafone?] consider the BT Openreach relationship as unfair.  Perhaps this is natural position for them to take. Of course they would. They are the competition after all.

Depending on an individual’s perspective

Depending on an individual’s perspective, BT are cumbersome, inefficient, and an abuser of their monopoly position. Or perhaps they could be seen as actually being efficient, well run, and a true global leader in a competitive market place.

IF the UK is to continue to benefit from the technology infrastructure that Openreach has built and delivers to us, then perhaps one of the most important questions Openreach needs to ask itself is whether it is investing enough cash fast enough to align to customer demands and expectations.

I believe BT does recognise and acknowledge the challenge. In the video, the speaker states that customer demands are very high. The customer asks that Super-fast broadband is always available, from anywhere, from any device. Realistic expectations? Or difficult expectations to deliver?

How quickly can BT deliver the services that the customer and the market place are demanding. Are BT and Openreach driving change and progress quicklyy enough? Maybe not, but the problem is tempered and made more complex by the fact that BT is a commercial organisation and no longer a nationalised industry. Therefore, it is right to treat each major investment decision with the correct level of due diligence and moderation before overcommitting spend and investment to services that may not be commercially viable in the short term.

Major Investment is still needed

That said, it is still of question when, not if the investment is needed. The speaker in the video talks about maximising the use of the existing infrastructure using innovative technology to deliver high speed broadband without replacing with expensive fiber. This sounds like an equitable and sensible compromise.

Fiber based superfast broadband for all may well be the next major step, and an end goal – but we need to be sensible with expectations around timescales. Some of that investment and infrastructure has already been made and is available to some lucky users. For others perhaps in rural areas, they need to wait. These are the folk most likely to argue BT needs to do more, and faster too.

With faster greater bandwidth comes downstream opportunities for all. The popularity of new services would grow faster than at current rates – for example: the move towards On-Demand content could happen quicker. Cloud is now a mega-trend. I remain convinced Cloud computing will be seen as a separate computing paradigm. Openreach and BT do deliver the services that underpin downstream Cloud provision.

BT is adapting too

We can also flip the argument around. BT themselves are now delivering content and challenging Sky with BT Sports. I do believe that TV as we have known it will continue to change and be disrupted. Openreach are in some ways influencing and controlling the rate of change because of the overall dependency on bandwidth and superfast broadband.

I’m sure there will be a shift towards faster lines and that eventually the demand will be there to justify the investment and provide the requisite return on investment. Eventually it’s just a case of getting the business model right.

Conclusions

I suppose my concluding thoughts are that investment represents a double-edged sword for Openreach. There is no guarantee that consumers or big business will take-up new more expensive services with immediate effect. This is very much a generic business statement though. No investment comes with guarantees. It’s about understanding the risk versus the reward.

Greater speeds and more bandwidth are nice to have, but in our cost conscious world I too often hear the phrase ‘is the provision “good enough”– often the reality is yes. What we have today is good enough and meets our needs.

So there is a dilemma here. What comes first, the chicken or the egg? Greater, faster investment from Openreach against the commercial reality and ‘guarantee’ of customer demand for new products.

If Openreach is split off from BT, and starts to either compete with rivals, or offer technologies that align with specific customer/partner needs then really we may just have new different challenges around agreed technology standards and regulation. These are the same issues that exist today, perhaps just in more complex forms.


With Twitter, at least the abuse is free

October 28, 2014

Twitter disappoints market expectations and its share price slumps. Somewhere in the fantasy world of finance, perhaps the firm’s stance to on-line abuse is being factored in

This week [28th October, 2014] Twitter shares slumped as promise continued to outpace financial performance. Dick Costolo, Twitter’s chief executive remained upbeat.

The weirdo tweeters

I wondered what effect increased levels of personal abuse in the tweets from weirdo tweeters might be having.

The poisoning of online debate

The thought occurred to me after reading Twitter and the poisoning of online debate by the BBC Technology Correspondent Rory Cellan-Jones.

For anyone who believed the internet and social media would foster a new era of free expression and open debate, this is a depressing time. It seems no area of discussion is free from mindless and often vicious exchanges between people who have different opinions.

And there is wider concern about the future of online debate. Where now are the places that reasonable people can go to find discussion that does not quickly descend into abuse and flame wars?

For a long while, Twitter was different, a place where people were who they said they were and were aware that a tweet was a public statement for which you could be called to account. Now though, a rash of spam and so-called sockpuppet accounts have started to poison this well too.

When Cellan-Jones asked twitter to respond to criticisms they replied:

“Our rules are designed to allow our users to create and share this wide variety content in an environment that is safe and secure for our users. When content is reported to us that violates our rules, which include a ban on targeted abuse, we suspend those accounts. We evaluate and refine our policies based on input from users, while working with outside organizations to ensure that we have industry best practices in place.”

There is no such thing as a free tweet

A second thought. As economists might put it, there is no such thing as a free tweet. By which I mean even the innovators who gave us Twitter still operate a business model that has to satisfy the expectations of the all-powerful gods of the market place.

The Dilemma

The dilemma for corporate twitter is how to preserve its brand image of an altruistic, neo-capitalist cuddly big brother to its zillions of users at the same time as placating the gods of the market place.


Wanted: New Theory in Strategic Management

September 3, 2014

The Strategic Management Journal calls for new theory in Strategic Management and outlines areas of particular importance

The request is for submissions for a special issue of the SMJ [Deadline: November 1, 2014] by the distinguished editorial team of Jay Barney, Richard Burton, Donald. Hambrick, Richard Makadok, and Edward Zajac:

As Strategic Management has continued to evolve and grow as a field, its research base has become predominantly empirical. Quantitative and qualitative empirical studies, which typically include deductive or inductive hypotheses, have grown in absolute and relative terms when compared with purely theoretical Contributions.
Often these hypotheses are derived from theories that were developed some time ago. While we continue to make progress in refining our understanding of these theories’ one wonders if there aren’t important questions in the field that are not well covered by existing theories. A few of many possible examples include:
(1)Every major change in a firm’s strategy involves significant organizational change, yet we have very little theory about how to effectively manage such change;
(2)although we now know that many concepts and processes in strategy such as firm strategy, environmental “fit” involve highly complex interdependencies we have made little progress adapting complexity-based concepts to strategic theory;
(3)We have relatively little theory that applies to strategy questions in the public sector (including public policy); to non-market strategy, and to the broader social consequences of strategic decisions; and (4) fifty years after the publication of A Behavioral Theory of the Firm, and with a wealth of new psychological theories appearing in the interim, behavioral theories of strategy remain underdeveloped.

Additionally, citation evidence indicates that the most widely cited (and award-winning) articles in the Strategic Management Journal are disproportionately theory articles. This suggests a substantial need for such papers relative to their supply.

A historical strength of the Strategic Management field has been its intellectual openness to theories rooted in related disciplines. The field of Strategic Management addresses phenomena that typically do not fit neatly within single disciplinary theories, allowing opportunities for interdisciplinary theory development and additional advances in core theories emanating from within Strategic Management.

We seek theory papers that have the potential to significantly advance overall development
of the field of Strategic Management. These papers may present new theories; reconciliation, synthesis or extension of existing theories; or other important theoretical advances in existing areas, which include (but are not limited to) behavioral strategy,evolutionary theory, dynamic capabilities, upper echelons theory, the resource-based view, contracting theory, and theories of cooperation and competition at the firm, industry, and network levels.

We do not seek minor refinements. While highlighting the shortcomings of existing theories may be important for motivating or justifying the purpose and contribution of submitted papers, we are nevertheless interested in papers that make their own original and constructive contributions to theory, rather than in papers that merely critique existing literature.

We are open to papers that approach theory using conceptual models, formulation of hypotheses, computational models, and various kinds of mathematical models, or combinations of these.
While we encourage the use of illuminating examples and illustrations, submitted papers should not rely substantially on original empirical data.

Submissions are due by November 1, 2014 and must be submitted using the SMJ Submission
process

Authors should indicate that they would like submission to be considered for the special
issue on “New Theory in Strategic Management.” Authors of papers invited to be revised
and resubmitted will be expected to work within a tight timeframe to meet the special issue’s
publication deadline.


Satya Nadella’s leadership dilemmas at Microsoft begin with Nokia

August 5, 2014

Paul Hinks

Satya Nadella

Satya Nadella

Satya Nadella became Microsoft’s third ever CEO in February 2014. He faces enormous challenges of change to an economic powerhouse

Since its inception 39 years ago, Microsoft has driven change. Its products have shaped and disrupted the IT landscape. Its desktop and server operating systems have become industry standards. Yet, relentless competition demands further changes. The new CEO recognizes the situation.

‘One Microsoft’

A few months into his appointment [10th July 2014], Nadella published an ‘internal memo ‘ in the public domain entitled: ‘One Microsoft’. The document provides insight into the strategic priorities at Microsoft – as well highlighting deeper leadership dilemmas. “The day I took on my new role I said that our industry does not respect tradition – it only respects innovation.” He wrote.

Changing landscapes and Microsoft’s previous success

Cloud Computing and Mobile technologies were focal points in the memo – repeated references to “a mobile-first and cloud-first world” emphasising where he feels Microsoft’s future lies.

A key dilemma and challenge for Nadella is that Microsoft no longer appears to be dominant in shaping the direction of the IT landscape. Microsoft’s desktop and server operating systems provide examples of different franchises that became de facto industry standards. Today we talk about firms such as Apple, Google and Amazon and how their products and services have momentum – the iPad, iPhone, Kindle, Android phones – as well various cloud services.

It isn’t that Microsoft hasn’t tried to succeed in these new marketplaces – it has. It’s just that Microsoft’s success doesn’t mirror the success of its competitors. Microsoft has attempted to break into the tablet market but Apple still leads the way. Windows mobile phones competes against Android phones and iPhones, but they do not enjoy the passionate following that their competition enjoys.

Microsoft Axes 18,000 jobs

The acquisition of Nokia in 2013 provides an example of Microsoft’s efforts. Nokia was itself a market leader in the mobile telecommunications market before suffering a number of setbacks which saw its products fall out of vogue. Some analyst at the time saw merit and synergy in Microsoft’s acquisition. However on Thursday [17th July 2014] the BBC reported that Microsoft was announcing a loss of 18,000 jobs globally – the bulk of the cuts to be at Nokia:

Microsoft pledged to cut $600m (£350.8m) per year in costs within 18 months of closing the acquisition – cuts that were much more severe than the 6,000 initially expected. Is this acknowledgement that the Nokia deal was ultimately a failure? Or is it an example of how knowledge, know-how and patented technology can be bought lieu of ethical leadership and employees’ livelihoods?

The Future direction of Microsoft?

Nadella and Microsoft appear to recognize the challenges ahead. Change is necessary. Cloud Computing infrastructures are maturing; mobile online access is now ubiquitous – Nedella’s memo acknowledges Microsoft’s need to adapt and respond – repeated references to “mobile-first and cloud-first world” provide a clear indication of where he sees Microsoft’s future. Will change at Microsoft result in the progress needed for Microsoft to remain a dominant force?

Bill Gates’ 1990 vision of ‘Information at your fingertips’, and then his keynote speech at Jan 1995 Comdex of ‘information at your fingertips ‘ provide evidence of how Microsoft’s first CEO led the way and helped shape an industry.

Nadella has one of the toughest jobs in the industry, made more challenging by an expectation that Microsoft can remain creative and innovate. Not an easy task.


Is Amazon under control or under the influence?

July 28, 2014

Bezos bullet train
Amazon announces disturbing financial figures. Its charismatic chairman Jeff Bezos will, as ever, be taking the long view

The mighty Amazon – the company not the river – may be in temporary trouble. Its second quarter sales reported on Thursday [24th July, 2014] showed powerful growth in revenues but unanticipated losses. The results worried the numbers people. Shares, already drifting downward, slumped around 10% on Wall Street the following day.

Taking the long view

Its founder and leader Jeff Bezos is famed for taking the long view. He is a business visionary who fitted the bill as a great leader for the near classic story he has helped bring about at Amazon. His leadership style is restless and remorseless.

He is noted for personal involvement and fermenting a culture of creative challenge. He also likes to ‘back-engineer’ strategy from a desired future to reach and deal with imminent decisions.

The immediate future

The immediate future suggests that his enthusiasm for innovation in the interests of that more distant future may have incurred costs for the present. The ideas at times have breath-taking simplicity. Sometimes there is an initial appearance of craziness that often accompanies great creativity. Think Steve Jobs, or Napoleon even.

This week, the craziness appears to be found in the diversity of effort which may suggest a lack of a cohesive plan. The results were timed to accompany the launch of the company’s new smartphone, the Fire Phone. Other recent plans have included grocery delivery, video streaming, and drone delivery of products.

Not to mention The Washington Post

Then there was the recent takeover of the Washington Post, with assurances from Bezos that under his ownership the newspaper will retain its independence, and certainly without influence brought to bear to advance Amazon’s interests.

Bezos is a fascinating business personality. He has created one of the Century’s most successful businesses with a simplicity of its core competence of rapid, safe product delivery at highly competitive prices. Perhaps its strategic trajectory constrains the creative impulses of its remarkable founder.

To be continued

SUBSCRIBE FREE FOR UPDATES ON THIS STORY


Nestlé buffs its image with its living wage policy

July 4, 2014

The global consumer goods giant Nestlé develops its living wage policy. Will the approach help it avoid further lapses in Corporate Social Responsibility?

In June 2014, Nestle announces an extension of its policy of paying the living wage to employees. From 2017, the company will pay contractors in a similar fashion to its own workers.
[For an explanation of the minimum wage concept see this BBC article]

The unrepentant chocolatier

In 2009, the Economist examined Nestlé’s history and current strategy in an article entitled The unrepentant chocolatier.

The potted history reveals how a little Swiss firm making chocolate products became the World’s largest manufacturer of food products by revenues, ahead of Kraft, an American multi-national.

The stated plan is to strengthen future growth through a move into ‘wellness products.’ The Economist notes the commercial logic of the plan, but identifies a dilemma for Nestlé

The Dilemma

The Dilemma is suggested in the title of the article. Nestlé is seeking to reposition itself as a thoroughly ethical company,. Yet it will persist as a purveyor of many products seen as unhealthily loaded with carbohydrates and fats. The Dilemma has some similarities to challenges that facing the giants in the soft drinks and the alcoholic beverages markets.

The dilemma is made tougher for Nestlé for its historical record of association with stories damaging to the company’ brand. These include the baby milk scandal in Africa, and more recently the bottled water product with chose affinity to branded tap water, and meat products of dubious origins.

The company hopes to promote a policy that preserves its hard-earned revenues from its indulgence brands and grows new brands associated with the ‘noble cause’ of functional foods and wellness products.