I see Telecom’s suggestion for a network separation as meaningful - it (ubiquitous, open access, very high speed, very high volume, national and international network infrastructure) will all cost a lot more than everyone thinks, and Telecom (and its shareholders) are not prepared to pick up that tab.

Rod Drury has posted an interesting estimate of what it would cost to upgrade NZ broadband, as part of his case for a telecom infrastructure SOE. I just wish we could get some solid facts so that the debate was based on sound information. I think Rod’s estimates are somewhat underdone, but it would be nice for someone to prove me wrong.

Disclosure: I have an investment interest in all major NZ telcos, and they are all customers and/or suppliers to Fronde.

Came across Guy Kawasaki’s blog last night. He’s a US business author and a VC who seems to have a large following in the US. I particularly like his Top 3 posts, which offer good advice for those seeking VC money.

• The 10/20/30 Rule of PowerPoint

• The Top Ten Lies of Entrepreneurs

• The Top Ten Lies of Venture Capitalists

I’m sharing this with Dean Johnson, who heads our Fronde Anywhere business. He’s got a lot of capital to find, and we’ve both slipped into some of these pitfalls.

I’m amazed that Fisher&Paykel Appliances has waited so long to shift its NZ laundry appliance factory to Thailand. But although it’s sad to see NZ jobs lost, remember that this is in the context of F&PA having become a real global company. It is NZ-owned and its design and development capability, finance, strategy, supply chain and distribution channels are still managed out of NZ. We need more F&PA’s building global businesses headquartered here.

Here’s an OpEd piece I wrote on the subject several years ago for the DominionPost’s Infotech:

Exports are not enough
13 August 2001

“Export or die!” We have heard that message so often - and for many companies, it is the right message. Getting the world to buy a New Zealand product or service is an important milestone for a developing business. Lots of successful exporters are needed for a healthy economy - but they are not enough. The world’s most successful companies do not just export globally - they operate globally. That means having sales, service, logistics, production and development operating around the world. Look at the world’s greatest companies. How many do things only at home to ship out to the rest of the world? I can only think of one - Boeing. The others made the leap from exporting to international operations. Our own Dairy Board/GlobalCo (Ed. that’s Fonterra) has substantial and growing offshore development, procurement, manufacturing and logistics. More Kiwi companies need to recognise when to make that change.

Why? To minimise the cost of distance - freight, duties, foreign exchange risk and in-transit inventory; to reduce production costs, through greater volumes, lower material costs and lower manufacturing wages (an unpleasant reality); to get closer to customers for more efficient service and faster reaction to changing needs; to build critical mass for future investment; and to build credibility with large global customers.

I speak from personal experience. Deltec developed an advanced antenna technology for mobile phone networks - Teletilt - that enables network operators to adjust their cell coverage remotely and with improved signal quality. We began in New Zealand and Australia, explored SE Asia, and then expanded sales rapidly in China. Our products were key components of large infrastructure projects. We were the world leader in our niche. But as we grew and started to explore Europe and the Americas, our larger customers demanded the cost and service benefits of in-market operations. By mid-2000, we were getting a consistent message from global customers like Motorola and Nokia: “Set up full-scale sales, service, manufacturing and logistics in North America, Europe, China and Brazil. Do it now. Or don’t expect to get our business in future.”

The time had come to switch from a Kiwi exporter to a global business.

The capital requirements and the risks were large. Then the tech sector went into meltdown, and technology investors took fright. So we decided to sell. Andrew Corporation, a global competitor with complementary products and a similar vision for the future, recognised the value of Teletilt and our expertise. Our Wellington development facility will become their worldwide centre for developing advanced antenna systems. New Zealand will continue to play a key role in the technology. It won’t save the mainstream manufacturing, which would have gone to China eventually anyway, but we can reinvest in new opportunities.

My point is that New Zealand should not wistfully expect its companies to export everything from home. Global companies like Nokia, Vodafone, and Nestlé operate in many countries. The interesting thing is that large numbers of their high-value jobs are still at home- in development, marketing, and corporate administration. They are surrounded at home by a plethora of supporting organisations- in banking, IT, law, accounting, advertising, travel, short-run early-stage manufacturing, research, education, etc. Together, they bring home huge revenue and profit streams.

If New Zealand wants a high-value economy, it needs more than just exporters. It needs global businesses that operate offshore in all facets of their business. New Zealand should encourage its businesses to invest offshore, not deride them for it. Without global operations, we won’t get a Kiwi Nokia or Vodafone. With global operations, we look like getting a Kiwi Nestlé. We could sure do with some more.

PS. At the HiTech2000 Awards, Deltec won the High Growth Company of the Year Award, the Investing in People Award and the Supreme Award. When the tech-wreck got even worse, in late 2002, Andrew’s NZ R&D centre went too, but that could happen under any owner, and only validates my argument that we need our own global players based here. The home R&D is usually the last to go.

Lukas Svoboda ( a principal consultant at Fronde) had this to say in a recent post on his technical blog:

The 5 guiding principles of Enterprise Architecture - This is right on the money from my experiences of doing Enterprise Architecture:

• No Strategic Vision, No EA: If you know where you are, but you don’t know where to go. Don’t plan a journey.
• Good is Good Enough: An Enterprise Architect knows he has achieved the perfect solution not when there is nothing left to add, but when there is nothing left to take away.
• The Only Constant is Dynamics: Dynamics is the only constant while adaptiveness is the natural variable, so plan for this constant.
• Pure Logic is the ruin of the Spirit: Pure logic is the ruin of the spirit and creativity delivers unexpected opportunities, so use your creativity.
• Be Enterprising: If you want to create an Enterprise Architecture, don’t drum up the architects to collect information and don’t assign them tasks and work, but rather teach them to long for the endless value creating possibilities of the enterprise.

I reckon that these principles (or variations of them) have wide application in many areas - e.g. business strategy.

Thank you to the many kind friends and readers who sent me the latest Dilbert cartoon strip on corporate bloggers.  I can no doubt expect more in the same vein.

It’s actually 0045 on the day after Anzac Day, but no matter. I’ve just watched Tolga Ornek’s documentary on Gallipoli. Powerful stuff. Deeply moving and speaking to the heart of national belonging - not in a jingoistic way, but creating a deep and defining sense of national character, history, identity and (despite occasional disagreements) respect for the 3 nations of Turkey, New Zealand, and Australia. Short-term political differences and show-boating seem rather trivial. Also astonishing is how defeat and disaster can become the definitive moment of a nation. Ask the Greeks about Thermopylae, the Scots about Culloden.

Even though I’m an immmigrant to this country, since 1977, I realised at a close-fought 1979 England-All Blacks test at Twickenham (NZ 10 E 9) that I’d shifted my allegiance to the Land of the Long White Cloud. Tonight’s viewing helped to remind me why.

NZ writer and publisher Vicent Heeringa ( in Unlimited and now Idealog) has been one of the loudest cheerleaders for NZ entrepreneurs and companies. But in a recent article - On the Road to Nowhere - he takes a very different stance, castigating successive governments and the business community for a marked failure to deliver on our potential. He blames us all:

By far the biggest culprits in this decline are me and you. We just don’t notice that we are getting poorer. There is no widespread electorate pain driving calls for change that a government is forced to listen to. Perhaps if we had a common land border with one of the richer nations we’d be more aware that their roads are better, their schools better equipped, their houses flasher and their inhabitants healthier and more prosperous.

At Idealog, we see a steady stream of creative Kiwis with passion and clever ideas. They’re inspiring but they’re small in number. And a bit like the wine industry, no matter how sexy, clever and successful, it’s small beans in economic terms. Our national economic performance requires a national ambition.

It’s time for a coherent, united and urgent response. I don’t want my children to grow up in a poor country. Do you?

As usual for Vincent, this is not so much a criticism as a call-to-arms. Let’s not waste too much time and energy looking at what failures we’ve been, and instead get on the right road by identifying and building what we need to do to get back up in the OECD upper quartile (top-half just doesn’t do it for me). I don’t for a minute think governments can do anything other than provide a platform on which entrepreneurs, companies and people can build the future, but we haven’t got the platform yet. That needs big, bold leadership of a shared vision by industry, both sides of Parliament, our public service, our local bodies, our education system and our media. That vision can incorporate all those things that make us distinctively who we are (or want to be). A growth agenda can include our social and environmental aspirations too.

We need to get excited about the future and committed to making it happen. I’m willing to sign up. What about the rest of you?

I heard an interesting interview on Chris Laidlaw’s Sunday Morning Programme, with David Coats talking about the public service. Coats is Associate Policy Director with UK think-tank The Work Foundation.

In an earlier post on telecommunications, I pleaded against state-imposed complexity and state institutions running telecommunications, on the grounds of cost and inflexibility. Coats argues for pragmatism in deciding when it’s appropriate to go to state or market solutions, which is fine if the decision makers are genuinely neutral. His context for such an approach is the re-empowerment (my word) of a strong and genuine public service ethos, which lets public servants concentrate on what they are there to do - serving the public. He uses the example of a librarian who, instead of kicking out the latch-key kids who’ve invaded her library after school, sets up a programme for them.

My own experience of the NZ Public Service tells me that most public servants are very keen to do a good job. However, they are Hide-bound (I use the word deliberately - Rodney Hide inadvertently caused a lot of this) by excessive compliance and political backside-covering, way way beyond anything the private sector would tolerate.

Let me give you a small but illustrative example. As the chair of TEC’s audit committee, I get a detailed report every month on how much we spend on various kinds of ‘politically-sensitive’ expenditure. Do we have a problem with inappropriate spending? Is the cost of preparing the report appropriate for the scale and risk of the expenditure? Do we make any decisions having received the information as a result? No, no, and no. Why do we do this? Because the SSC and Auditor-General want it, just in case someone asks a tricky question in Parliament. Our public service is grossly over-burdened with box-ticking, which says to everyone that box-ticking must the the way to do things, so the problem compounds over time.

An organisation’s true attitude to its purpose, obligations, processes (and the use of money) is driven not by compliance but by the culture and learned behaviours of the people who work there. They learn it from the demonstrated behaviours of their leaders (managerial and/or political). While I still have my concerns about public institutions sliding into bureaucracy for its own sake (again leadership is the answer), I do agree about the need to reinvigorate the public service ethos and to cut out the box-ticking.

Andy Lark just put the wind up me for a second:

Technology Is Like Oxygen
… It’s everywhere and we can’t live without it. Imagine what happened this week when Blackberry service was interupted here in the US (thank god I was on a plane from Melbourne to San Francisco at the time!). As Dean points out, this wasn’t the only service interuption of late:

Millions of BlackBerry users lost access to their messages early Wednesday. People filing their taxes electronically at the last minute overloaded Intuit’s servers Monday and Tuesday.

We see technology breakdowns in a lot of places. The security communications system wasn’t fast enough at Virginia Tech. The White House has lost some e-mails relating to the firings of federal prosecutors. In February, a glitch at Dow Jones made some jittery traders wonder if the stock market was crashing. Even Intel, the tech giant, has had trouble locating the e-mails of top executives for an antitrust trial.

So, if you don’t have a back-up plan, you’d better get one…

My i-mate Jam is everything - my phone, contact book, schedule, email, camera and internet device. It’s the only technology I take with me on trips - even overseas. If I forget it, I literally don’t know what I’m supposed to be doing next.

Then I remembered it’s all synched with our systems back at Fronde, so nothing should be lost, and I can also access our servers there from anywhere with internet access (and we’ve got two ways of doing that). It’s a belt and braces approach, but as Murphy says, ‘What can go wrong will go wrong’. Phew!

Mind you, it still relies on the mobile networks and internet being up, but that’s a whole other story.

Mark Clare used his Valuecruncher tool on Microsoft. Answer: his valuation isn’t much different from the current share price:

A recent essay by Paul Graham suggested Microsoft is dead or at least not the feared monster it once was. This essay sparked a wide range of responses and is clearly an emotional issue for a number of people. While Valuecruncher is passionate about valuation we try not to be emotive so we decided to see what Microsoft was worth now that it was dead. Valuecruncher valued Microsoft at $29.03 per share slightly higher than the current share price of $28.69. This equates to an EV-EBIT multiple of approximately 15 which is below comparable compnies SAP (21.7), Oracle (17) and Computer Associates (20). Although Microsoft is no longer feared it still has revenues of over $40 billion and an enterprise value of over $250 billion.

You’ll all be aware of the strange phenomenon in recent times of “the national skills shortage”. While immigration might be part of the solution, it’s a problem across the developed world, driven partly by demographics and partly by high economic activity. Industries across the spectrum are finding it difficult to attract staff, and frequently the call is for ‘the government‘ to restrict entry into popular or so-called ’soft’ courses, and to increase the number of engineering or ICT graduates, plumbing apprenticeships or whatever.

While governments can and have restricted funding to basic community and lifestyle educational programmes, it would take a very brave government to start directing who should do what courses, at what level. Who’s going to force your son or daughter to do a course that they don’t want to enter? Last time I checked, we don’t live in a dictatorship. And in any case, government workforce planning never works, except in very small and specific short term situations.

Demographics and population aside, the real problem is that we employers haven’t done enough at an early stage in the education process to get kids excited about working in our industries. ICT and engineering have done little to attract our brightest and best. (The Telecom Xtra-ordinaries haven’t helped either). Parental and academic snobbery made learning a trade something to be seen as second-best. So we ended up with few young tradespeople, while frustrated teenagers made teachers’ lives hell, instead of leaving school at 16 to learn a trade, drive a truck or even sweep the roads.

Our tertiary education system is generally very responsive to market demand. If the kids start turning up demanding more places in a trade or technical programme, we’ll figure out a way to satisfy that demand. Right now, that demand isn’t there, and it’s up to the employers and industries of this country to stimulate it. Singapore didn’t tell its kids to do engineering - government and industry together got them excited about the opportunities and provided the places for them to learn.

Kids aren’t stupid - they just need information. It’s simple - tell people (parents , students and teachers) about your industry. Do it early (at the start of secondary school, not the end) so they don’t give up on maths and science, if you want those skills. Tell them how much a plumber makes by the time they’re 30. Tell them about the opportunities for truckies (who need a clean licence, so keep out of trouble). Tell them about the vast array of jobs you can do, places you can go and money you can earn in the IT industry. Tell them that the easiest way to get rich (boat/bach/Beamer) is to build your own business and to do that you need to learn about making/growing/designing/delivering/managing stuff, and the easiest way to do that is to start by working for a successful business. Tell them about Peter Maire, Rod Drury, Sam Morgan. Get them excited - tell them.

Here’s a recent Infotech article I wrote in a similar vein, published on 9th April 2007.

Disclosure: I’m a non-executive member of the NZ Tertiary Education Commission.

It didn’t take long for the wags at Fronde to come up with a new version of my blog title En Avant, which translates as ‘Get going!’

We have a lot of talented people, and sometimes they are poached by other companies, which is both a challenge and a mark of success. Richard Syers, one of our client business managers, is off to head SAP’s NZ sales team, a fantastic opportunity for him. Richard’s appearance could be seen (through a very distorted set of glasses) as very, very slightly similar to me - tall, bald and grey beard. At his leaving presentation, the suggestion was made that he should also start a blog, to be titled En Avanti or ‘On yer bike!’

Some people have no respect.

Richard, you have my best wishes for every success in your new role.

Click on this link for essential viewing at the lunch break round the board table. What does this mean for your business? Ask the question. Even I got this. Thanks to Michael Gregg.

This is the coolest presentation and has really got me thinking about a whole new way of displaying information. And it makes a very good point.

David Farrar wrote a short, but thoughtful post on Telecom’s suggested structural separation:

…. I may be misreading the proposal, and it is light on details. In my InternetNZ role I’m meeting with three Telecom officials tomorrow, where they’ll be explaining to us their proposal in more detail. I’m definitely looking forward to that, and may be able to blog in some more detail once I understand it better.

I would love for there to be a separate network company, so Telecom can get on with its business with less regulation. Whether this proposal will adequately achieve that I don’t yet know. But it is great that Telecom have taken the initiative in proposing it.

I am very reluctant to enter the debate, because I see a lot of ill-informed rant and anti-telco bias (in blogs and some print media), devoid of any understanding of the true technicalities and economics of building, selling, servicing and operating infrastructure in a long, skinny, underpopulated market a long way from anyone else. I’m not happy with the level or price of service here, but I do have a simplistic question - if everyone is being price-gouged and under-serviced , where’s the competitor who should be rushing in?

• Realistic answer - there isn’t one, because it’s too hard to make a buck in telecomms here, irrespective of competitor barriers.

• Simplistic answer - let the government (i.e you and me) subsidise it, because no-one else will.

Rod Drury (a guy for whom I have huge admiration - just see how often he crops up in my blog - and I want some of his business) has kicked off heated debate here, and he may be onto something, but intuitively his solution just feels wrong to me. Didn’t we stop subsidising farmers? But maybe he’s right and we need a circuit-breaker. By the way, that’s no excuse for anti-competitive behaviour  - and it just gives free ammunition to the statists.  (Ed. I toned this down a bit on rereading it this morning)

In my humble opinion, if the state must get involved, the answer should be simple and reversible - eg. buy it from the market on term contract. Complexity and permanent state-run institutions cost too much and are too hard to change and adapt.

Disclosure: all major NZ telcos are clients of and/or suppliers to Fronde, and I have beneficial investment interests in them too.

Fronde had the pleasure of Rod’s company at an in-house breakfast session in Wellington this morning. In the course of a fascinating informal dialogue that spanned a wide range of topics like corporate intrapreneurship, individual responsibility within a company, and how Xero shares information, he made the following observation about the relationships between professional services providers and their clients. It’s one which I think every CxO and company director should think about.

‘You guys have probably outlived just about every CIO in your clients.’

There’s something very profound here. I used to be a partner in Ernst & Young - they had some clients over 100 years! Leading law firms told me the same story. As the IT Services industry matures, we can see the same trend (ideally) happening here, if we want it. What does that mean for both client and vendor?

• The idea of in-house institutional knowledge is a myth unless you build systems, processes and organisations to preserve and use it; likewise client knowledge in service providers. An increasingly transient workforce only exacerbates the problem.
• For professional services providers, technical specialists brought together and dispersed as projects start and finish do nothing for long-term client relationships - you’re no better than short-term independent contractors.
• For clients treating your PS providers as short-term contractors, you get what you deserve - bodies with no added value and no long term strategic capability to support your business.
• Building institutional knowledge adds value. but it costs. If the client won’t pay for it, no-one else will, unless they’re stupid, and stupid vendors go out of business.

Now clearly I’m biased, but having worked both sides of the fence, I know what works.

I’ve been asked (offline) who’s really writing this blog and, as a CEO of a reasonably significant business, why I’m doing this.

Let’s be clear - it’s me. This blog is separate from my activities at Fronde, TEC, etc, but obviously they are significant parts of who/what I am, and they may feature in what I say, given this is a business-oriented blog. Yes, I did get help to set the blog up, but although I get PR and marketing advice in my capacity as CEO of Fronde, including whether or not this blog was a good idea, there is no army of PR and ad guys looking over my shoulder here. I compose and enter all my own stuff here, and manage the blog myself. 

I’m trying to reach a general business leadership audience, as well as techbiz people, business commentators and other influencers.  Why would you be interested?  I flatter myself that I have some good ideas to share and that I can offer some useful insights, and that you’ll find some interesting dialogue.  Why am I doing this?  It’s called networking. It may lead to more business for the companies I am involved with, it may increase my influence, it may get me involved in some interesting new projects. Who knows? But at heart, I just love talking about this stuff. At the very least, I might do some good, learn something, and do little harm.

Disclosure: Fronde paid the modest cost of getting this blog up and running. 

I’m often asked to talk to groups and lead workshops for new entrepreneurs on strategic thinking. (I even get paid for it occasionally). In a nutshell, here’s what I say:

Clearly define your offer and how to fulfil it

• For the customer, investor, supplier and employee
• What, why, when, how, where, who?
• What not, why not, when not, how not, where not, who not?

Keep it simple

• Consistent, understandable, doable, communicable
• Simpler is easier, less risky, concentrates resources for maximum impact

Do it!

• Do the stuff you decided to do
• Cut out the stuff you decided not to do
• Fix problems before clearing backlogs
• Build the processes, organisation and style
• Put in place the people, resources and priorities
• Dedicate people to make change happen
• Measure, report and communicate progress on the strategy (up and down)

Think & act for greatness!

Simple, really. Any questions?

Unlimited’s March 2007 issue included an  interview with me by Fiona Rotherham at the time of the Fronde name change.  (Also the source of Matt Grace’s photo of me, which appears on my blog banner).  Regarding the name change, I’ve been interviewed and blogged several times and I think I’ve explained it enough now, but in case you missed it:

• We changed our name because we needed something that worked internationally.  Synergy did not - there are hundreds of them out there.
• We did it carefully knowing what we were giving up with the old name.
• One of our staff suggested Fronde (rhymes with blonde), one of several hundred names we considered.  We liked the historical and modern meanings, we liked the possible allusion to the fern frond, we got the .com and the trademark, and it doesn’t sound like a cure for haemorrhoids.
• Yes, we know - the revolutionary connotation of fronde is from the 17th century, not the 18th. 

So discussion on our name change is now officially over.  If you don’t like it, that’s your problem a shame, but it’s time to move on. (ED: Modified after an hour’s reflection)

What isn’t in the web version of the interview is a side bar in the printed version on ‘Strategic Thinking’- a highly encapsulated summary of a talk/workshop I am often asked to give.  See my next post for more on that. 

I met Eusebio Scornavacca for the first time today.  An Italian Brazilian, he’s a senior lecturer in Victoria University’s School of Information Management.  Eusebio’s interested in the business aspects of mobile and wireless technologies, particularly mobility, user acceptance, strategy, quality and organizational impact of wireless and mobile systems - which makes him someone I need to know, given Fronde’s strong presence in the mobile space. 

It’s great when you meet someone who “get’s it” - i.e. agrees with me!  Just two of his observations over a cup of coffee:

• Deploying mobile technology in your business isn’t about the technology - it’s about your end-customer’s experience with your business. So it’s a customer-focused business development, not a technology development.
• Think of mobility as extending the time and place boundaries within which you interact with your customer.  Mobile is just another channel extension that should be familiar in branding, look, feel and outcome - a natural development from your other channel interactions with your customer.  If you make it too whizzy (i.e. unfamiliar), it isn’t an extension to how you do business; instead it becomes a major barrier to adoption.

This is someone with whom I’m going to keep in touch.

Frank Stephenson is dead. Frank was the CEO of Datacom, New Zealand’s largest NZ-owned IT services company. He led the team that took Datacom from the mid tier to the top - whether you count revenue, market share, employment or profitability. Frank and his team developed a very efficient and effective business model for IT and business services which has made Datacom a formidable competitor.

Classic strategic thinking says that you don’t attack your competitor head-on, where it has strength in capability, execution and reputation. You have to define your own strategy - playing to your own distinctive strengths, and winning on your terms, not your competitor’s. Although Fronde does compete with Datacom, our market offer is very different to theirs. We don’t try to take them on where we think they are strong. We take them on where we think we are stronger. Otherwise we don’t take them on.

We don’t want to be like Datacom, but we do respect them. And in doing so, we especially respect Frank Stephenson. Everyone I know who worked with him had nothing but the highest praise and admiration for Frank. He was a great and worthy competitor who built a great business. The IT industry will miss him.