An article in the Times caught my eye: a league table of  national business climate from the University of Munich’s Ifo Institute for Economic Research, which ranks advanced economies based on  an analysis of governments’ impact on business activity and growth.  Led by Australia, the Anglo countries top the chart (noting the Netherlands in 3rd place), followed by the Nordics.  My New Zealand and Finnish readers will be pleased to see their countries receive special praise in the report.  We all moan about red tape, but on the whole, it’s not as bad as elsewhere.

Everywhere  I go, however, there is one universal gripe - planning controls.  Right now, there’s a parallel debate in Britain and New Zealand on reforming planning controls to enable nationally important infrastructure to be built.  In Britain, the debate goes further - the government wants to simplify all town planning to eliminate time-consuming and costly bureaucracy and vexatious challenges which, in the main, only slow down, not stop, development  Controls will still exist to protect certain aspects of the environment, and enable community consultation.  Needless to say, the debate is vociferous in both countries.

Anyway, for the league table junkies amongst you, here are the Ifo rankings:

1. Australia
2. US
3. Netherlands
4. Canada
5. Ireland
6. UK
7. New Zealand
8. Finland
9. Denmark
10. Germany
11. Switzerland
12. Norway
13. Sweden
14. Japan
15. Austria
16. Belgium
17. Spain
18. Portugal
19. France
20. Greece
21. South Korea
22. Italy
23. Mexico
24. Turkey

Congratulations to Rod Drury and the team at Xero for picking up the 2007 International Technium Challenge, a competition  organised by International Business Wales and Technium UK, which this year included 19  international contenders. 

I’ve been following US-based Apprenda for a while.  They’re developing an operating platform for software-as-a-service businesses, currently in private beta test. Apprenda founders Sinclair Schuller and Matt Ammerman also write a SaaS business blog, which is worth reading if you’re interested in taking up the SaaS model of business or competing against it. I particularly recommend the following posts:

• Build vs buy and economies of scale
• Explaining SaaS trust and SaaS platforms metaphorically (even if you’re not a SaaS fan, read this one anyway)
• The SaaS investment landscape
• SaaS 101: the benefits
• Running a SaaS business costs money?

I’ve been in London a week now, and the only way to describe the potential for IT services of all types is huge.  Here’s the gist of the talk I’ve heard round the board table and the pub table:

1. The first big offshoring movement to India and Eastern Europe has abated somewhat.  Offshoring legacy application replacement, maintenance and support, together with call centre and back-office processing, has largely happened.  There’s always more to go, but a lot of what’s driving offshoring now is IT product companies shifting product development and maintenance to cheaper centres.
2. Enterprises are increasingly looking at IT to enable new market offers, new business channels, and to deal with ever-changing regulatory requirements.  These new IT projects call for high-touch (i.e. close to the business, and not easily offshored) teams of consultants, analysts, architects, user interface specialists, and integrators, with business sector knowledge, local market knowledge, communication skills and facilitation skills. Generic technical expertise and code cutting is still important, but less so than in the past, except when it relates to the blending of new technologies with new business advantages. 
3. The developed world (especially the English-speaking countries,  Nordic countries and Japan) is increasingly worried about the greying and shrinking of its skilled workforce, and is looking to IT to solve the problem.  This is despite the influx of younger workers from Asia and the newly-liberalised eastern Europe, who often don’t have the language, business and technical skills need for point 2. 
4. However, the IT sector - both client side and vendor side - faces the same labour-force challenges, made worse by a major falloff in IT undergraduate intake post-Y2k and post-tech-wreck.  Industry faces a crisis when that undersized cohort is needed to fill its IT leadership and senior technical roles.

Who’s in the best position to win from all this.  Who can get the best leverage from scarce talent?  It’s the IT services industry, in all its forms, but especially professional services, managed services, and software-as-a-service.  Why?  We can attract the best talent,  drawn by the variety of working constantly with many clients, enjoying the pace of the vendor side, and wanting the career progression and personal development that comes with all that.

NB: At Fronde, we’re definitely geared up for point 2 projects and services, focusing on the way enterprises transact with the world, and agile teams working closely with our enterprise clients, supported by specialist managed services, and with good knowledge of both server-based solutions and software-as-a-service solutions.  So I’m smiling. 

I’m in the UK, visiting Fronde’s London office.  Apart from the historic sailing ship Cutty Sark catching fire early this morning (suspected arson), the big breaking news story in London right now is that Google and Salesforce are in alliance talks.  There’s lots of speculation as to what this means (mainly for Microsoft), but The Times Online speculates that Salesforce plans to get into heavyweight business applications beyond CRM and needs Google’s money to do it.  Does this explain Google’s huge investment in data centres?  Did anyone pick that they’d be interested in the Business space as well as the Consumer space?  I can see this one will really get the blogs going.

Once the Xero IPO was announced, I wrote that I’d probably take up the offer, once I’d had a chance to study it. Well, I’ve done so, and I have to say it’s very fully priced for what is essentially an early stage venture investment. Mark Clare at Valuecruncher has a similar view. On the other hand, look at the potential.

At $600 a year, and 10,000 customers, you’re onto a $6 million revenue stream. But that’s a very, very modest milestone. Firstly, the chartered accountants love the features designed for them, and will no doubt be pushing it to their small business clients. While the primary target is micro-businesses and small businesses (less than 20 people), if Xero adds true multi-account capability and some smart planning tools, then you’re looking at a very serious SME offering. I also know lots of people who are planning to use Xero for their private book-keeping, if the functionality grows to enable investments to be managed (as per MS Money or Quicken), with good links to debt, equity and FX pricing. Pricing is key - I get all that included with my current PC app at no extra charge - but Xero knows that.

Now don’t confuse Xero’s market offer with running your own copy of MYOB on your PC. Xero takes care of all the backend system management, your accountant can work online with you, and you can access the system anywhere (at home, in the office, at the bank, overseas, etc). It’s not for everyone (especially rabid DIY IT guys), but for your typical non-IT small business person, it’s very appealing.

How many customers can they get? Well the sky’s the limit. Think 100,000 in NZ at least - that’s $60m+ in annual revenues. But Rod Drury and his team are thinking global - English-speaking first, to keep things simple). The margins in this business should be stunning (even better than TradeMe), and there are other revenue opportunities from advertising and add-on services.

So I’m buying in. I’m not betting the house - it’s very pricey for an early stage deal. If the share price drops after the initial euphoria wanes (and it probably will), I’ll probably pick up some more. If it works, and I expect it will, I’ll do very nicely, thank you.

(I just wish I could have bought in at the start-up stage!)

Update 17 May: I’ve been on a plane since posting this, and on checking my emails in the lounge at Hong Kong, everyone’s asking where I got my 100k customer number from.  I plucked it out of the air.  I defy anyone to come up with an accurate estimate for an early stage company.  My point is that if - I repeat - if Xero is a winner, it could be huge.  Who would have picked TradeMe’s eventual customer base in NZ (yes I know Xero’s B2B for now, not B2C, but maybe it can morph into a B2C offer as well). Buying into Xero gives me a position in that potential upside, while keeping my maximum downside limited to my initial modest investment.  But you shouldn’t invest in  this if you can’t afford to write off that investment, and smile about it.  Again, I think it’s very fully priced for this stage of the game.

At last, the waiting is over. Over several bottles of Glenmorangie, and after intense, all-night cross-party meetings in smoke-filled rooms at Parliament — well, actually, it was just David Farrar and me, over two cups of coffee and Eggs Benedict at Vista on a sunny Wellington afternoon — the judges have reached their verdict.

From a dazzlingly clever (or just plain odd) field, the judges have highly commended the following entries:

• Accounting Secrets of the Quipu, by Rod Drury (Bwooce)
• Discipline in the Workplace, by Sue Bradford(Glenn)
• Rich Dad, Rich Dad, by D Myers (also Glenn)
• Successful Team Building, by Bill Ralston (David Schnellenberg)
• Guaranteed returns: A Guide to Property & Foreign Exchange Investment, by Doc Bollard (Jason)
• Brand Aid: Seven Secrets to Boosting Your Media Profile, by the Exclusive Brethren (also Jason)
• Doing Your Business in Public, by Jerry Collins (Andrew Bannister)
• Australian Expansion Secrets, by Stephen Tindall & Theresa Gattung (John, who deserves a special round of applause for the most entries).

And now, the moment everyone has been waiting for - the winner of the En Avant Best Kiwi Business Book Title Award for 2007 is (drumroll, please):

• Corporate Uniformity: Brand Enforcement, by the Mongrel Mob (submitted by Bwooce).

Bwooce wins the acclaim of the blogosphere, and a drink with me - chief judge Jim Donovan. My thanks to my co-judge David Farrar and to the Economist blog for the idea.

The secret isn’t secret any more. Xero has announced its IPO. The NZ Stock Exchange will be thrilled with this development - it will put some zing into the market, and offset some of the advances by its OTC rival Unlisted.

I expect the IPO will get a lot of uptake, particularly among young ICT people and fledgling ICT entrepreneurs. These are not your normal stock exchange investors. They’ll be attracted by CEO and founder Rod Drury’s reputation as a serial entrepreneur, his nice guy image, and his high profile participation in industry matters. IPO investment, especially hi-tech, is risky, which first-time investors don’t always appreciate, but Rod knows his hometown reputation is riding on this, and he’ll work hard to deliver for his new backers.

I’m sold on the Software as a Service model and I like the look of the product, the team, and Rod’s progress so far. So I’ll probably take up the offer, once I’ve had a chance to study it.

Good luck to Rod and the Xero team.

Today’s your last chance to enter my daft business book title competition. See if you can come up with something even crazier than ‘Management Secrets of the Carmelite Nuns‘ or ‘The Jerry Collins Guide to Ambush Marketing’. David Farrar and I will select the winner tomorrow.

The Wellington 2007 Gold Awards winners were announced last night. phil&ted’s baby buggy business took supreme honours. Roderick Deane received a special ‘Wellington business icon’ award. Alex Malahoff from GNS Science and Rod Drury (pictured) from Xero were named Wellington Creative Ambassadors. Congratulations to them and all the category winners. Don’t they make you proud?

Software as a Service (SaaS) is revolutionising the IT and business worlds. Why? What are the advantages for your organisation in adopting SaaS? How does SaaS fit with traditional inhouse operations?

Fronde is a major user of Software as a Service (SaaS) solutions in its own business, and we’re a preferred implementation partner for major vendors like Salesforce.com and Microsoft. The benefits we’ve already seen at Fronde include:

• Fixed cost reductions
• Scalability
• Low capital investment
• Easy integration
• Minimal internal management
• Ease of use
• Immediate deployment capability
• Continuous vendor servicing

A 1-day summit in Auckland on 21 May 2007 will unfold the hype that is SaaS and tell you why global businesses like AOL, Nokia and Vodafone are quickly adopting SaaS as the solution of choice for their businesses. Fronde is a Gold Sponsor of the conference. You’ll hear key speakers:

• Steve Rieger, VODAFONE
• Steve Buikhuizen, SALESFORCE.COM
• Brett Roberts, MICROSOFT
• Andrew Birch, MYOB ONDEMAND
• Steven Graham, FRONDE
• Ian Mitchell FNZCS, SOFTWAREASASERVICE.CO.NZ
• Alastair Grigg, XERO

Register now and secure your place at New Zealand’s first Software as a Service Summit.

Sitting at home (suffering from anti-flu jab reaction, would you believe), I have just found what I think is the daftest advice list for start-ups: 20 things not to do before starting a business. You’re trying to start a business, not a hobby. This list is for amateurs. I can only assume that the author is trying to stir up debate. My reactions are in italics:

1. Don’t quit your day job. It’s one thing to get your idea ready, but a whole different thing to take someone else’s money - and knowhow - and not live up to your obligations as an employee. Ex-bosses can be your greatest allies - treat them right, as you’d like to be treated by your own staff when you get them.
2. Don’t incorporate. So be a small trader. Personally, I want to look and act like a business that’s going places, and there are good legal and tax reasons to incorporate.
3. Don’t get a bank account. Rubbish - mixing personal and business money is seriously bad.
4. Don’t rent an office. Up to a point, but some businesses need one, so rent by the month - it can be done.
5. Don’t hire an attorney. You need advice on terms of trade, contracts, etc from day 1 - it needn’t cost much to have someone familiar with your business and that you trust.
6. Don’t hire an accountant. See above, especially regarding tax, funding and cashflow. But you should learn basic accounting; doing your own books is a good idea, perhaps courtesy of Xero, with your accountant reviewing.
7. Don’t get a loan. It depends on the business opportunity. If you’re scared of sensible debt, you shouldn’t be in business.
8. Don’t hire anyone. Don’t hire someone if you can do it yourself. For everything else, use contractors. Up to a point, but employment law is tricky, and you can end up with deemed employees, paying their tax bill too. And for goodness sake watch out for using options and shares as payments - it’s illegal except under special circumstances. Your accountant and lawyer can help.
9. Don’t get a business license. Not usually relevant, but if it is, you don’t want to be closed down.
10. Don’t try to patent anything. It might have serious value if you’ve got a genuinely unique idea. Document and date everything. If it’s worth patenting, an IP lawyer can tell you - they’re usually good people. You have a breathing period to sell your first 50 units, before filing.
11. Don’t design a logo. Cobblers - branding is a key part of a business, and it’s part of the fun of starting.
12. Don’t waste time picking a business name. See above, but remember your name/reputation may be the brand, and that could be your business name too.
13. Don’t advertise. It depends. Somehow you’ve got to get the word out, and there’s more than one way to do it - public speaking, innovative PR, whatever. A website is advertising and it’s cheap and easy to keep fresh.
    
14. Don’t buy office supplies. Are you going to steal them? It doesn’t cost much and it’s a legitimate expense.
15. Don’t buy any equipment. Outsource everything. Actually, I agree.
16. Don’t try to find a partner. A good team beats an individual, and anyway, you may not have all the skills. But they needs to be partners you absolutely trust and respect for the roles they’ll play in your business, and who share your business values. Old mates from school, neighbours and family are the most risky.
17. Don’t join the Chamber of Commerce. It helps to have friends as mentors and sounding boards andsomeone to cry into your beer with, who understand. It doesn’t have to be the Chamber - some mates in the same business space will do.
18. Don’t tell all of your friends about the business that you’re going to start someday soon. — everyone knows an “entrepreneur” that is all talk and no action. Up to a point. You need to build support from future investors, employees, partners, and customers - sometimes you have to paint the big picture.
19. Don’t write a business plan. You’re going to start a business without a plan? To get somewhere, you need to plan your journey, otherwise you’ll end up nowhere. It doesn’t have to complicated. A one page mind map and a simple budget will do at first.
20. Don’t get a business telephone number or mailing address. You can’t run a business without communications. A cellphone number (with voicemail) is quite acceptable these days. A PO box number is only $125 a year, your mail doesn’t get wet or stolen, and when you do move into that flash office or warehouse, it saves hassles changing stationery, and informing all those people you do business with.

Update 10 May 2007: I’ve received a very nice email from Dane Carlson, the US author of this list. His rationale is worth sharing:

‘I understand that all of the items on my list will need to be done at some point, but too many would-be entrepreneurs hold themselves back by attempting to complete all of these unnecessary actions BEFORE they actually find someone to buy something and determine whether or not they have a viable business.’

In other words, folks, En Avant! (Get Going!) Now that’s something I can agree on.

Another gem from that dinner conversation at the Boulcott St Bistro last night, from one of our great names of international trade:

‘People know we’re honest. Stick with it - the right people will want to do business with us.’

Just got back from a lovely meal at Boulcott St Bistro with some powerful Wellington CEOs. Apart from figuring that the Lions are due for a great season because the ‘Canes were so awful (hey, we got to the NPC finals last time), there were some superb conversations on a wide range of business topics - e.g. infrastructure economics, having the right government minister in your industry, the basic rightness of being honest business people in a world full of ratbags, and so on. Yes, hardly riveting to some people, but meat and drink for us boss-types. Sincere thanks to our hosts - you know who you are - for a great evening.

For me, the best conversation of the evening was prompted by a guest who challenged our host: (I paraphrase) ‘What do you do if you’re the challenger brand, now you’ve won?’ Our host had the perfect answer - ‘Redefine your target market.’

If your whole organisational ethos is based on beating the big fellah, your advertising strategy is based on being the cheeky upstart, your whole modus operandi is being fresh and new, and you end up with the largest market share - suddenly you become establishment, the tall poppy who needs to be cut down to size, the nasty ogre who has a devious agenda. Think about Microsoft - the great upstart of the PC era, sued for antitrust behaviour; think about Google - morphing into the boogie monster of the internet; think about TradeMe - the Kiwi internet battler darling now dominating the classified ads space.

Our host tonight had it right - if your whole ethos is about being the challenger and you succeed, you need to find a bigger fish to challenge, or you lose who you are and what made you a winner. Redefine your target - take on an even bigger challenge, set another impossible goal. Stir the blood!

Following my last post, I’ve decided to run a little competition for the best Kiwi business book title in the genre of Management secrets of the Carmelite Nuns and How to make a killing in business: Strategic secrets of America’s greatest serial killers.

Entries so far:

Me:

• The Jerry Collins guide to ambush marketing
• Building a global brand on a limited budget, by Nicole Beggs (Hang on, she’s just done that)

David Farrar

• How to build a business on belief, by Brian Tamaki
• Climbing to the Top in Business, by Ed Hillary
• The importance of working in unison, by the Ever-Swindells

Entries close Friday evening, 11 May, NZ time. This is a business blog, so nothing too offensive please. I am sole judge and arbiter (Update: no, I’m not - David Farrar ’s joining me) , I (we) can be suborned, and the prize is the acclamation of the blog-reading public. OK, I’ll buy you a drink if we’re in the same town soon.

Update: That’s Business book titles, folks, and please keep it fun - I’ve already unapproved some nasty suggestions.

I just discovered the Economist blog (thanks to David Farrar). In an post which muses on the talent (or lack of it) in CEOs and whether or not it makes a difference, I came upon this gem on business books :

Nothing is so stupid that it cannot be made into a framework for analysing your business; when I tried to freelance a parody piece on business book titles, I was stymied by the fact that the most outlandish ideas I could come up with—”Management secrets of the Carmelite Nuns”—had already actually been made into books by some optimistic editor. The only idea which had not already made it into print in some very similar form was “How to make a killing in business: Strategic secrets of America’s greatest serial killers”. No doubt it is forthcoming from Harcourt Brace this year.

The rest of the post Does talent tell? is worth reading, too.

Now I know that to some people this is crass, but if we’re honest, we all love league tables, especially if we’re at the top of them. The Top Ten in the 2007 research performance assessment round for the Tertiary Education Commission’s Performance-Based Research Fund are:

1. U of Otago 4.22
2. U of Auckland 4.19
3. U of Canterbury 4.10
4. Victoria U of Wellington 3.83
5. U of Waikato 3.73
6. Massey U 3.04
7. Lincoln U 2.96
8. Auckland UoT 1.86
9. Carey Baptist Colllege 1.67
10. Unitec (an Institute of Technology/Polytechnic) 0.96

While the top 5 are close, I have to acknowledge the improvement by Otago, who tipped Auckland out of the top spot. (Oh dear, I’m going to be in trouble when I next visit the City of Sails). Overall, the round reports a 41% lift in researchers with A rankings - which is great to see.

Now, who’s up for some international comparisons?

(This is a jocular dig at my friends in academia - TEC was injuncted by some of the universities to prevent TEC publishing a comparison with UK universities following the previous assessment round in 2003).

This is bragging, I know, but I’m really proud: Fronde Anywhere has been picked as a finalist in the 3G A-list awards, to be announced at the Convergence Oceania conference in Wellington next week. GO, TEAM!!

Thanks to Miramar Mike for putting me onto this post by Modern Mechanix, which came from Popular Science, issue 6, 1936. This guy was firmly in the second degree of delegation: ‘I decide what to do, I plan how to do it and tell you, you do it and tell me what you’ve done, I decide if that’s ok. I’m the master - you work.’

Yesterday, someone asked me why I insisted on approving certain decisions - didn’t I trust them? It was a good question, to which there are two related answers.

One answer is about degrees of delegation and the trust and confidence I have in your skills, abilities and commitment. I prefer to delegate as much as I can, having regard for people’s skills and abilities - noting that it’s better to over-stretch and over-trust than under-stretch and under-trust. Some people can’t do that, but I try to. Usually people rise to the challenge, with coaching and support; if not, I correct the situation appropriately.

The second answer is about tight and loose control. I only want tight control (with consultation and buy-in) in a few key areas that set the context for everyone to operate as freely as possible. Typically these few key areas are:

• Our business vision and business strategy - development, goal-setting and implementation;
• Our overarching market offer, our brand, and our high level messaging to current and potential clients, staff, investors, partners, suppliers and key influencers;
• Our organisation’s values, style, and modus operandi.
• The appointment, promotion (and termination) of key people, which signals the tone for the rest of the organisation.

Sometimes I tighten up on areas of concern and poor performance - it’s all about trust and confidence. Don’t expect delegated authority if you put up daft ideas or you don’t perform. Why would I delegate to you? If you deliver or you’ve got a good idea, then you’ll get the tick and you can feel empowered - you’re building trust and confidence, and I can loosen up.

I can’t remember where I learnt about the concept of degrees of delegation, and it’s probably got mangled over time, but here’s my version:

1. I decide what to do, I plan how to do it, I do it. You admire the master at work.
2. I decide what to do, I plan how to do it and tell you, you do it and tell me what you’ve done, I decide if that’s ok. I’m the master - you work.
3. We decide what to do, you plan how to do it, we decide if that’s ok, you do it and tell me what you’ve done, we decide if that’s ok. We’re a team.
4. You decide what to do, you plan how to do it, you do it, you decide if it’s ok, you tell me what you think I need to know. I admire you at work.