At 4.30 pm today, the Minister of Tertiary Education announced that yours truly has been appointed as the interim non-executive chair of the Tertiary Education Commission, which spends several billion dollars of your hard-earned tax dollars on all government funded post-school education, and a fair chunk on research too.

Note: I’m only in the chair until they find someone better qualified than me - 3 months tops! Actually, the Commission’s board is strictly ‘governance’ - TEC’s CEO Janice Shiner is one of the best public sector leaders I’ve ever encountered. She and her team are doing an incredible job driving a major programme of tertiary education policy and funding reform, while at the same time they’ve successfully devised and implemented one of the biggest government agency restructurings in many years.

PS: Have you noticed that the public sector always uses ‘chair’ while the private sector generally uses ‘chairman’, irrespective of gender? Rosanne Meo very firmly claimed the chairman title when she chaired Baycorp in its glory days.

How many times have you heard some new business boast that they’re going to ‘kill’ their big gorilla market competitor?

My Google Reader’s been doing some strange things lately. Today, for some arcane reason, it brought up a 6 week old post from Wil Schroter. I liked it, so here it is in its entirety:

Ten years from now when we reminisce about the 00’s and laugh about Web 2.0 companies, one of the lamest company pitches we are going to remember is this:

• Our Company is the - Killer
• Netscape will launch the Digg-Killer
• Socializr is the Evite-Killer
• AnythingYouCanName.com is the MySpace-Killer

I’m so flipping tired of hearing companies describing themselves as the one product that is going to take down some behemoth.

When does this actually happen? How often does a company really “kill” a behemoth?

Maybe .00001% of the time it’s predicted?

Probably less.

Just because you have released a product that may have a feature that’s better than a big competitor out there, it doesn’t mean their fate is sealed and you have a victory.

A new feature does not kill a company. The execution behind that feature is what kills a company. And execution is something judged on historical proof, not by some optimistic forecasts.

Here is what makes you a AnythingYouCanName.com-killer:

You make more money - Sure, your product is cool. But until it translates into more revenue than Microsoft, you’re not Microsoft (Google, are you listening?)

You have more members - MySpace has an estimated 100+ million members and has grown more quickly than just about any user base in history. You signed up 1,000 users in your first week. You’re not MySpace.

They know who you are - I can’t tell you how many pitches I’ve heard from startups that are going to eat the lunches of the big contenders. Except for the fact that those big contenders don’t even know who the startups are. If you are doing so much damage how is it that you’re not even on their radar?

We all want to create big startups that conquer the world. But before we start claiming ourselves the next Heavyweight Champion we actually need to step in the ring and win a fight.

Just so you know, I have a vested interest in the topic I’m discussing here - see advertorial at the end.

Herald tech journalist Peter Griffin has reported on the Australian banking association saying it won’t lobby its government to shift responsibility for online transaction losses onto customers, and praised his bank for providing him with one-time transaction codes via text mesaging (albeit at a cost). Meanwhile Bank of America is promoting online banking as safer than conventional paper channels.

While customers need to take responsibility for their own online security, that’s hard for many people. Unless you’re tech-smart, most people wouldn’t know where to start with firewalls, updating subscriptions, etc. . Well-meaning exhortations to customers to install and maintain secuity measures on home computers run the risk of scaring people off what should be low-cost, private, convenient and easy-to-use online services and products.

Peace of mind is an essential ingredient to any brand associated with people’s money. Online transactions can and should be your safest business channel. Banks and online merchants who make life easy, not scary, for their online customers are rewarded with lower channel costs and greater opportunities to interact with their customers. The tools to do this are available. It’s a great brand-building opportunity.

And now - a word from our sponsors: Fronde has smart solutions for interactive banking and identity verification on that ubiquitous device, the mobile phone. Fronde Anywhere’s TwoSecure 2-factor authentication software avoids the cost of text messages, avoids the logistical and administrative costs of cards and dongles, and is easy to manage. Fronde Synergy will take care of the business and technical implementation for you, and Fronde Always can host and/or manage the operational system.

Following my earlier post on BurgerFuel, have a look at Lance Wiggs’s analysis on comparative fastfood businesses.

Hot on the heels of Xero’s IPO comes another from fastfood franchisor BurgerFuel. Also seeking $15 million in capital, this is, however, a very different proposition.

One of my university student sons had already done the analysis when he came to visit last weekend. His view (and mine when I took a look) was that the rampup is just too big. What’s different, you might ask? Doesn’t start-up Xero need to achieve a big ramp-up to justify its IPO price?

The difference is in the operational and market realities of the two businesses. Attracting, vetting and training many hundreds of franchisees in store operations, establishing all those stores (clarification - even though the franchisees pay for the store setup, a point I didn’t make clear earlier), ramping and running the supply chain, running a high spend perpetual ad campaign, and supporting the franchisees once up and running - that’s a very different operational issue from running a Software-as-a-Service business. They’ll need a lot more than $15 million to do that, even with franchise start fees. And more importantly, the fastfood business is very crowded and fiercely competitive, with some well-established players. Remember the pizza wars? No-one won, except Hell’s founders, who got out before the business got too big (and who I pick will do the same thing again now they’ve taken the idea to the UK).

I’m not saying that BF can’t do what they say they will. However, I am extremely sceptical of the likelihood of them doing so, and I won’t be investing. I’m not the only one. Have a look at Mark Clare’s analysis.

Neer Korn, an Australian market researcher, propounds that businesses shouldn’t hire Gen-Y because they are untrustworthy, disloyal, cynical, blah, blah, blah. Is he serious? Since he seems to run a serious business, more likely it’s just a headline-grabbing stunt, but according to an AAP report in the Herald:

In case any of the executives listening thought he was joking, Korn reiterated his warning: They’d get a better return on investment by hiring older people.

I think Korn really means ‘don’t hire very young people’, because he thinks they’re OK by their late 20s. Ian McKinnon, legendary former headmaster of Scots College and current Pro-chancellor of Victoria University, has often made the observation, based on a lifetime of teaching, that (and I paraphrase) - yes, society changes, but in every year of every generation:

• 4th formers (Year 10) are often stroppy,
• university freshers often get drunk (and do other things they might regret later),
• many new entrants to the workforce are unsure of what they want and struggle with adjusting to becoming working adults,
• and most people evolve over time into something remarkably similar to their parents at the same age (adjusted for societal changes, education, life experiences and personality differences).

When I graduated in 1975, it was normal for young people in IT to move jobs every 3 years or so (as now). What’s new? I’ve never had a problem hiring young people (or older ones for that matter). It’s all about hiring people with the desired mix of skills, experience, potential, passion and principles, and providing them with good leadership, learning, development and job satisfaction.

As business leaders, we each need to keep renewing our industry talent pool, not only for the work young people can do today, but also to ensure that we’ll have experts and leaders in the future. To not do so is to freeload on the rest of industry.

So no, Ben Kepes, Korn’s idea gives me no comfort - I think it’s utter rubbish!

Disclosure: I have two sons in their early 20s, and they are both smart, personable, and decent blokes too. But I would say that, wouldn’t I?

Leon Gettler blogs in Management Line - from The Age newspaper in Australia - about a report from Deutsche Bank on ‘The Happy Variety of Capitalism‘. Seriously.

According to the report, the top 10 characteristics of a happy economy are:

1. High degree of trust in fellow citizens.
2. Low amount of corruption.
3. Low unemployment.
4. High level of education.
5. High income.
6. High employment rate of older people.
7. Small shadow economy.
8. Extensive economic freedom.
9. Low employment protection.
10. High birth rate. (relatively - all countries studied were below replacement rates)

So who came where? In no particular order:

• The Happy Capitalists: Australia, Switzerland, Canada, Britain, Ireland, USA, Denmark, Sweden, Norway, Netherlands, and to a lesser extent, Finland and New Zealand.
• The Less Happy Capitalists: Germany, Spain, France, Belgium, and Austria.
• The Unhappy Capitalists: Portugal, Italy, and Greece
• The Far Eastern Capitalists: Japan and Korea (they are just different).

I find it hard to take this too seriously. It all looks a bit shallow to me. No real analysis about cause and effect, but suggestions that the Nordics, Spain and Ireland have become happier through adopting new policies. And by implication, that Germany should as well?

In a follow-up to a post where I expressed surprise that I got most feedback by email or phone rather than in blog comments, Peter Crow from Quarry Group sent me this (by email), which he’s kindly agreed that I can share with you:

Per the comment you posted yesterday about feedback, I’m not surprised that most people provided blog feedback by phone or email. This behaviour matches my experience with mid- and senior-level business people as well. Over the past six months I’ve been conducting an informal poll to try to work out why “collaboration” and some of these newer Internet technologies are not taking off as I expected they would. Lots of talk but very little action outside tech-minded people. The feedback I’ve received suggests that despite all the talk about “collaboration” on the Internet, most people still find talking and listening (as in an interactive voice exchange) as the best channel to share ideas (emphasis on interaction rather than one-way communications). The absence of tone and immediacy, compromises the effectiveness of many newer attempts.

My very basic summary from what I’ve learnt to date:

• Blog is great for outbound information sharing.
• Email is great for simple (maybe one exchange each way) communications.
• Phone, video-link or face-to-face remains best for interactive work.

I posted a while ago that ‘Good strategy is making choices and meaning it‘. As a CEO, I only do 4 things:

• Lead the development and execution of our strategy.
• Sell, communicate and report on the strategy and its progress.
• Build and lead the team to implement the strategy.
• Invest in the processes to execute the strategy.

Everything else is an outcome of those four tasks, whether it’s raising capital. developing and delivering a product, building a brand, reaching and serving customers, anything. The communication, the team and the processes must be consistent internally and externally with the strategy and whatever it is you offer the market.

Your strategy will define not only what products you will offer to which customers, but also how and why you do things and, importantly, how and why you won’t do things. You need a clear vision of your desired organisational ethos, values, modus operandi and style.

Sometimes that means changing an organisation in very drastic ways, sometimes it means changing one or two key individuals. Sometimes you do things quickly, sometimes gradually, but if change is needed, you’d better be doing it. And when you make a mistake in your people choices, fix it - decently, fairly and having done what you can to help.

For new businesses, of course, you have the luxury of starting as you mean to go on. Rod Drury told me that when he first started to think about his next venture, he knew exactly what kind of team and organisational culture he wanted. After all, he’d plenty of past experience to learn from. He’ll undoubtedly still make some mistakes - we all do - but hopefully those will be correctable through small rather than massive change.

On Monday I attended a farewell dinner for Russell Marshall, the retiring chairman of the NZ Tertiary Education Commission, of which I am a non-executive board member. Russell is one of life’s gentlemen, politically connected ( as you’d expect from an ex-priest now atheist, ex-MP, ex-Cabinet minister, ex-High Commissioner to Britain) , a great chairman, and all-round nice bloke, even if he still has delusions, at his age, of being a great scrum-half. Forget that old chestnut ‘I could’ve been a contender’ - Russell’s is ‘I could’ve been an All-Black’. Actually, Russell never said that, but he’d like to have - I jest.

I’ve had the privilege of working with Russell, and he’s been fantastic to work alongside. We’re on opposite sides of the political spectrum, but actually we agree on an awful lot of stuff. He says he’s not going to take on new roles, but I know him. Someone will ask him to help out, and he’ll not be able to say no, even if it’s just as an advisor/mentor.

Good on ya, mate!

I subscribe to Techcrunch, a weblog on what’s new in tech businesses and products. On a whim, I followed the links to IMEEM, a free (and now legal) music site. Very cool - tapped into some modern classic blues, courtesy of a site search on ‘blues’ which led me to a playlist by someone called Pitviper. Which I’m listening to right now, as I type this. And which I can share with my friends.

What’s this got to do with business? Prompted by a post from Mike Riversdale (just one of the many seriously smart folk at Fronde), it struck me too that most of this potentially very appealing entertainment/social stuff on the internet is hidden behind a snarky, tech-cool, in-crowd mystique.

Here’s a hint for the budding Web 2.0 entrepreneur. To quote ex-uberbanker Jonathan Sibley (now a university lecturer in Oz), the boomers are the richest generation the world has ever seen and they outnumber everyone else big-time. Now I reckon that most of them haven’t got beyond email and search. Find a way for them to access all this great Web 2.0 stuff, make them feel welcomed, and don’t scare them off before you start. You’ll also reach that younger mass market that won’t admit that it’s not really tech-confident. Do all that, and you’ll make a bundle of dough.

On 8th June, I asked for reader feedback on this blog. Surprisingly, most people chose to do that via email or phone, rather than post their comments on the blog. I’m not sure why - more private, I suppose. Anyway, the overall feedback (including the emails and phone calls) was very positive. In essence, you said ‘Keep doing what you’re doing’. Thank you - I’m thrilled you like it, even when you don’t always agree with what I write.

Some specific feedback is already in effect:

• Increasing the international focus, but without losing ‘home-market’ interest. It seems to have lifted readership at home and internationally.
• Posting about issues, people and topics that I encounter because ‘you move in circles we don’t’. You’ll understand that, as such a player, I need to maintain confidentiality and avoid espousing strong views on issues where I’m expected to be objective. But you knew that already.

Another piece of feedback was that I should blog a little more about Fronde - not as advertorial, but because you’re interested in what we’re doing as a company, and why. That’s going to need some care - this isn’t meant to be a Fronde blog - but I’m happy to explain some of the stuff we’re doing, in context and where I think it has more general interest. Besides, we have a cunning plan for increasing Fronde’s profile with our target audiences.

Many young businesses have blogs on their websites, but official blogging by established, larger companies is still rare. Here’s one example: Beehive from insurance company Scottish Life. Named last week in the Times Top 50 Business Blogs, it’s written in an informal style by Steve Bee, head of pensions. From its content, I assume his target audience is insurance industry participants (staff, agents, analysts, regulators and commentators) rather than customers. It looks like a smart way to keep that audience up to date with industry developments, positions Bee and Scottish Life in leadership roles, and has provided an effective channel for Scottish Life to get its views out on the issues of the day.

I won’t be subscribing - it’s outside my zone of interest. But still, well worth a look.

The Wellington Cable Car Challenge business planning competition opens tonight. The prize is $50,000, including $30,000 of seed capital for your business. Serious moolah for getting something started. Finalists have 4.5 mins going up in the cable car to do their final pitch. The return 4.5 minutes on the way down is for judges’ Q&A. Good practice, and a nice leg-up if you win.

Sorry, but it’s only open to Wellington businesses, so my readers in Auckland, Sydney, Uppsala, London, New York, San Jose and points in between miss out. Or you could move to Wellington fast.

Update: forgot to thank Rod and Michael for both alerting me.

NZ Reserve Bank Governor Alan Bollard prompted predictable reactions to the idea of taxing capital gains from investment property, ranging from vigorous head-nodding by CEOs of ‘real’ businesses and sharemarket players through to naysaying by politicians anxious to avoid a voter turn-off.

My first instinct was to nod vigorously too; but then I thought - hang on - it’s still a business. You invest in an asset, you provide a service - housing - for which people are prepared to pay, and then you sell that asset. Why is it different from any business investment? One could argue that it’s the only business where the asset keeps its value, there’s a limited supply (due to lack of land with proximity to everything), and rising demand. You could make the same argument about other capital intensive, resource-constrained businesses - and indeed the government sometimes steps in to regulate returns and prices if they get out of whack. But what government is going to regulate returns and pricing in property? It’s an impossible task, because the product is the most variegated imaginable, with hundreds of thousands of small business owners, who can vote you out of office.

Interest rate control has its uses, but heavily penalises the so-called productive sector, through overvalued exchange rates. The government could intervene by making more land available, but that won’t solve the complexity of matching homes with jobs, industries, services, shops, transport and all the other things that evolve over time in symbiosis. Even in countries with plenty of development land, property has been through a boom (including those with capital gains tax, by the way).

The global property boom can be attributed to:

• The fixed quantity of land and property in desirable locations (nothwithstanding apartment conversions and infill).
• The growing huge disposable wealth of the baby-boomers (and the new rich and middle class in the developing economies.) They all understand property (or think they do) , and regard it as a ’safe’ investment, which they can relate to. So they put their disposable savings into a property and let the miracles of time and compound interest build them an asset. The demand exceeds supply and up go the prices.
• The prevalence of double income households, all chasing housing, and paying more for the same asset. (I don’t like government assistance for first-home buyers either - it has the same inflationary effect).
• As the banks know, most people will forego most other things in life rather than fall behind on their mortgage payments. And they usually won’t sell a property for less than they paid for it, preferring to let time take care of any ‘real’ losses in a market downturn.

The property market is unique. Try as I might, I can’t think of anything other than a capital gains tax to offset the bubble effect of too much money chasing a scarce asset. Don’t kid yourselves - it won’t remove the attractions of property. Look at the UK with capital gains tax and a rental investment boom. But at least it might restore a little balance.

5% excess of demand over supply- boom; 5% excess of supply over demand - crash. I think the property market will crash once the boomers start cashing up for retirement. By the way, I currently rent where I live (although I’m not averse to buying a place for pleasure). I do not own any investment property, but I do have some listed property investments.

Here’s Rod Drury’s take on the issue and David Farrar in March.

I ‘ve just enjoyed watching US VC/blogger/speaker/author Guy Kawasaki speak on the Art of Innovation - a slightly deceptive title for an entertaining, wide-ranging address that should appeal to everyone from the corporate CEO to the new start-up founder. It’s quite long, but worth it. (For the techies, it’s also an interesting demo of Zentation, a combined video and slide show tool.)

I’ve been Googling hard to find good UK and Australian business blogs, and I have to say it’s been very disappointing so far. They’re either journalist blogs focusing on FTSE/ASX gossip, or blatant consultant and author self-promotion blogs. Any suggestions?

The US on the other hand is inundated with business blogs. I just came across Wil Schroter’s blog, and my first impression was positive. Here are a few of his recent posts to whet your appetite:

• Start a company when you’re young
• What your start-up boss really wants from you
• What Silicon Valley could learn from Columbus, Ohio

There are several more - all good reads. To the undoubted chagrin of those who bemoan the BBB syndrome (bach/boat/beamer) he makes a positive case for the not-so-modest ambition of only making $1 million a year.

Update:

1. For the uninitiated, a bach is a beachhouse, lake lodge, or holiday cottage - although these days, some would pass muster in the most expensive suburbs).
2. I’ve seen the Times Top 50 list, and found a couple that I like - but American, not British, again.
   

I referred in an earlier post to Chatham House Rules. Over a glass of wine last night, Michael Gregg politely reminded me that there is only one CH Rule.

This prompted me to visit the Chatham House website, and so, for the edification of all, and quoting from Chatham House itself, here is the world-famous Chatham House Rule:

“When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed”.

Chatham House in London is one of the world’s leading organizations for the analysis of international issues. It is membership-based and aims ‘to help individuals and organizations to be at the forefront of developments in an ever-changing and increasingly complex world’. Its world-famous Rule provides anonymity to speakers to encourage openness and the sharing of information. It is now used throughout the world as an aid to free discussion. Meetings, events and discussions held at Chatham House are normally conducted ‘on the record’ with the Rule occasionally invoked at the speaker’s request. In cases where the Rule is not considered sufficiently strict, an event may be held ‘off the record’.

Cool. Fronde’s Kiwibank mobile banking project is a finalist in the Computerworld Awards. This project led us to establishing Fronde Anywhere, taking the Smart Banking product to the world, along wth the 2Secure 2-factor authentication product.

Two great meals today. Lunch was courtesy of the Quiggs law firm, and featured Michael Cullen, NZ’s deputy PM, finance minister, leader of the house, and minister of tertiary education. While I don’t always agree with his party’s policy initiatives, I’ve found, as a Tertiary Education Commission board member under his mandate, that he’s a very effective minister. He’s also an informative, candid and witty speaker.  The Chatham House Rule s prevent me repeating the conversation, but if you get the chance to meet Cullen in a small group setting, seize it.

Tonight I’ve been at the Eastern Institute of Technology in Hawke’s Bay. I can recommend the Hospitality School’s training restaurant. The food was quality - tasty, good looking, and accompanied by a beautiful Hawkes Bay Syrah. The student waiters were a little nervous, but hey, it’s the cheapest fine dining in town.

After dinner, I gave a speech to an EIT IT faculty student/employer evening, talking about some of the big changes the Tertiary Education Commission is implementing on behalf of the NZ Government. But my main theme was the role that we in the IT industry should play in attracting school students (with the support of their parents) into our industry. I’ve blogged about this before.

It was a fun evening, and I was thrilled to see that EIT arranges student internships with local IT organisations as part of its programmes. (I’m a former sandwich student myself, to use the UK jargon). The poster-size synopses of their internships and projects were an object lesson in good communication. The off-the-record Q&A session was great, with the audience really engaged with the issues. The Hawkes Bay Merlot afterwards was pretty good too.