Economics writer and self-confessed Marxist Chris Dillow asks “do bosses contribute to company performance?” He then argues that it’s not clear that they add anything.

Take Terry Leahy, CEO of [UK retailer] Tesco. He’s probably the most respected FTSE 100 boss. So you’d expect Tesco’s performance to be much better than its competitors. Is it? Well, these figures show that in 2005-06, Waitrose [UK staff trust-owned retailer] made a profit of £11,830 per full-time equivalent worker. Figures here suggest Tesco’s profit per worker was £8350. Leahy’s allegedly superior management nous doesn’t translate into obvious out-performance of a worker-owned competitor.

However, I suspect Chris is guilty of letting his prejudices influence his analysis. [Although I must admit,] assuming it’s the right measure, a 42% edge in profit/worker sounds significant to me, Waitrose has a boss too, and most so-called partnerships still elect a leader.

Other factors can also come into play. A bad boss may be mitigated by a good business, good decisions by predecessors, favourable market conditions, or good luck; and a great boss may be struggling with a bad business, bad decisions by predecessors, bad market conditions or bad luck. Large listed companies often have some scale and momentum which mutes the impact of a single person. What about smaller listed firms and private companies?

Chris continues his argument by asserting that “the average company - by definition - has an average boss.”

Clearly, as a ‘boss’, I’m biased, but I think that the process of getting to be ‘boss’ is a Darwinian selection process, i.e. the average boss is a better boss (whatever that means) than the average person. Note I didn’t say a better person than the average person! That doesn’t mean all bosses are good, by any stretch of the imagination, but a) you’ve got to have some ability to get to be boss ahead of your rivals, and b) bad bosses rarely survive long, and mediocre ones not much longer (unless they own the business).

Anyone who’s worked for a great boss or a bad boss knows they make a difference - and it usually shows up in the results. Most boards and workers know empirically that a bad boss is bad for the company, and that a good boss is better than a bad boss. Bosses matter - for better or worse.

One of my not-so-secret pleasures is finding talented people in junior roles and putting them into bigger ones, where they’ll be stretched. Sometimes they’ll fail, but most times, they’ll blossom. It’s not just good people management, it’s good business. It’s also my way of repaying my debt to those managers early in my career who gave me huge responsibilities and trusted me to carry them out.

Kevin Roberts has written about “Getting a foot in the door” and what young job aspirants are after: responsibility, learning, recognition and joy. The words may have changed, but they’re not so different from what I was after when I started my career.

I’ve heard older managers complain that their younger staff aren’t experienced enough or aren’t ready for greater responsibility. For goodness’ sake, have they forgotten how they got their own start? Wake up, folks! There’s a global talent shortage and you need to grow more leaders and specialists. You won’t survive by simply poaching them from your competitor. It’s a nil sum game.

You’ve got to attract and develop young talent. Select them well, train them, coach them, support them, and let them show what they can do. Sure, one or two might not succeed, but more likely they will (succeed, that is), and they’ll thank you for giving them their chance to shine.

I first saw this ages ago, but every time I see it again, I’m impressed. To quote the website for the TED conference at which it was given:

You’ve never seen data presented like this. With the drama and urgency of a sportscaster, Hans Rosling debunks myths about the so-called “developing world” using extraordinary animation software developed by his Gapminder Foundation. The Trendalyzer software (recently acquired by Google) turns complex global trends into lively animations, making decades of data pop. Asian countries, as colorful bubbles, float across the grid — toward better national health and wealth. Animated bell curves representing national income distribution squish and flatten. In Rosling’s hands, global trends — life expectancy, child mortality, poverty rates — become clear, intuitive and even playful.

Click on the blurry box on the bottom right of the image below to start the presentation in full screen mode. Enjoy, and be inspired for your next presentation.

Before non-IT readers turn away, this isn’t an article on only Software-as-a-Service (SaaS) per se, but also general product portfolio strategy.

Packaged software vendors are often greeted with howls of derision (usually from SaaS proponents) when they announce that they are going to produce an online service version of their product. While some will undoubtedly botch the move, I wouldn’t be so quick to dismiss their intentions. There are an awful lot of well-managed, well-funded, successful package vendors with proven products getting ready to compete with poorly-funded, under-managed SaaS start-ups. Some in either camp won’t succeed, but some will produce winners, marketed and delivered superbly.

As with any product management strategy, you need to have a clear understanding of what you are trying to achieve when you introduce product variants. Sinclair Schuller (from SaaS platform vendor Apprenda) has written a thoughtful piece on SaaS strategy considerations for package software vendors (click here for a summary). It’s worth reading the whole article, but in a nutshell, he looks at four quite different strategic intents:

• full product replacement
• complementary offering
• “lite” version
• new product.

It’s important to know which strategy you’re pursuing and why, so you can manage the risks as well as the opportunities. Whether you’re in the software business, the hotel business or the wine business, your product strategy needs to have been put through a similar analysis, remembering that the implications of the options may be quite different in your industry.

Bruce asked me ” how to grow NZ companies into larger ones”. Actually this isn’t an NZ-only problem. Go to Australia, Britain, Canada or even states within the USA, and you’ll find people asking “How do we get get more of our companies growing?” I expect it’s asked in every economy in the world. And for some strange reason, everyone looks to “the government” to come up with the answer.

I don’t know what the answer is. Nor would I expect to. If there was a magic bullet, every government and every CEO would be shooting it. There are some factor conditions which can support business growth, but after that it’s all down to the individual business.

What are the factor conditions? I can suggest some:

• A good education system which produces a skilled talent pool.
• In particular a learning programme which helps entrepreneurs to acquire the skills they need to grow their business.
• A supportive investment environment which encourages growth (private equity, stock market, banks, and investors willing to participate in them).
• Good infrastructure, transport and communications both within a country and between countries.
• A supportive regulatory and tax regime.

Not exactly earth-shattering, is it? The ICT Industry task force (pdf file) - of which I was a member -  made similar suggestions to government on things it could do. Some significant insights we had were:

• There’s plenty of innovation - that’s not the problem. Most government initiatives were focused on this at the time.
• There’s plenty of money for good ideas and good teams (apart from a lack of expansion stage equity at the time, still a bit of an issue, but it can be overcome).
• Many of the people running small and medium companies lack the leadership, entrepreneurial and management skills to run bigger businesses. This led to the establishment of several very good education and support programmes targeted specifically at potential growth companies.

There are still some other issues to address - like infrastructure - but honestly I think they will only support, not create growth. The main impetus must come from the individuals who own and/or run potential growth businesses, and that’s essentially about self-confidence, success and the desire to keep growing. Governments can’t do anything about those.

To everyone trying to engage me in a technical debate on the Open XML standard: for the last time, I AM NOT AN EXPERT. The hat I got from Microsoft TechEd did not confer guru status on me.

A few months ago, En Avant awarded its Business Book Title Award to “Corporate Uniformity: Brand Enforcement by the Mongrel Mob“ (submitted by Bwooce). Well, would you believe it, I’ve just come across this, written by Bloggrrl:

Think Like A Gangster: 10 Tips for Success.

Here’s a sample:

The OG is the expert in his niche, be it Latin Kings, Gangster Disciples or Southside 13. He keeps it all together, and is the “go to” person. You should strive to become the same in your field. Leverage your experience and make yourself valuable.

Anyway, her 10 Gangster Tips are:

1. Show respect to your colleagues and the individuals you do business with.
2. You gotta represent.
3. Cultivate the ability to pick up on small nuances.
4. Develop a high level of organization.
5. Pay your bills on time.
6. Be the OG. (Original Gangster)
7. Take advantage of free training in your area.
8. Offer something that is difficult for people to obtain.
9. Brand yourself.
10. Watch your back.

Good consumer product marketers know that you change icon brands at extreme peril. I was therefore amazed to hear that the corporate owner of Glenmorangie (rhymes with orange-y) is jazzing up one of the world’s most revered malt whiskies. It’s not just the product, it’s the emotion that the brand evokes - in my case, a connection with my Scottish side and my grandfather who introduced me to the golden fluid in his local pub at Auchtermuchty.

LVMH is an expert in luxury brands, so one must assume that it knows what it’s doing. Just as long as it doesn’t muck around with what’s inside the bottle. Not that I drink much malt any more, but when I do, it’s usually Glenmorangie.

Don Christie has rightly chastised me for my remarks regarding yesterday’s Open XML meeting. I was only in the room for 10 minutes, had taken no part in the discussions beforehand, and had no basis for my comments on the conduct of the meeting, other than hearsay. I apologise unreservedly to the participants.

‘Fools rush in where angels fear to tread. ‘
- Alexander Pope

I received a pleading phone call at 2pm today from someone at our national standards body. The forum considering the proposed document format standard - Open XML - had descended (predictably) into the usual Opensource vs. Microsoft antipathy, with everyone talking past each other. My caller asked if I’d drop what I was doing to put in an urgent cameo appearance at the forum and put forward a business view. With some trepidation, I agreed to pop in for 15 minutes between other meetings.

Now, while I run an IT services business and we’re a Microsoft partner, we also do a lot of Opensource work. We specialise in business transaction systems rather than knowledge management, so we’re pretty neutral on the (technical merits of the) documents standard. But, reluctantly, I agreed to speak - not as a technical expert (which plainly I’m not), but as a CEO who’s run a product distribution business, an electricity utility, a hi-tech manufacturer, and as a director on a major government board.

My argument was essentially that the MS Office standard is the de facto standard, that we have billions of extant documents in this standard, and that any new standard must retain backwards compatibility. It is completely unreasonable to expect business, government and private individuals to translate all their historical documents, contracts, literature, etc. into some intellectually correct, but pragmatically inconvenient, new standard. It’ll never work. (And will the IT industry please learn this message).

The prevailing standard works, kind of, and Microsoft has agreed to make it an open standard, so let’s get on with it. It worked for Sun, Java, etc., and it can work for Microsoft too. Lose the zealotry, folks. We’ve got bigger fish to fry than non-value adding navel gazing technical debates.

Unfortunately it was clear, in the few minutes I was in the committee room, that neither side of the debate was prepared to compromise. I pity the standards bodies - they’ll lose this argument, whomsoever’s view succeeds. The debate on Rod Drury’s blog is typical.

Update: I have deleted the last sentence I wrote. It wasn’t fair to people in both camps who are doing their best and have good intentions.

Update 2: Don Christie has rightly chastised me for my remarks. I was only in the room for 10 minutes, had taken no part in the discussions beforehand, and had no basis for my comments on the conduct of the meeting, other than hearsay. I apologise unreservedly to the participants.

Update 3: Grant Thomas of SNZ has emailed that this article implies that “a Standards New Zealand staff member contacted you. I believe this is incorrect and I would appreciate it if you could update your blog accordingly. Standards New Zealand as the independent body that is assessing and representing NZ Inc’s view on this topic takes our role as an unbiased and neutral agency very seriously. Overwhelmingly feedback from workshop attendees has been that it was a very useful two days and we confident we now have a good basis for making a recommendation to our Council.”  Unfortunately I don’t recall who called me, but I assumed it was SNZ.  I’m happy to publish Grant’s comment.

There’s an old saying in retail. “You can tell how well the branch is run by the state of the stockroom”. The same goes for IT. Does your server room look like this? If so, get some help. Now.

Thanks to SysAdminDay for the photo.

According to Wil Schroter in “Investors know you’re not all golden“, there are only two types of start-ups:

Those that are practically broke, totally stressed out, and have no idea how they are going to make it through the next quarter.
Those that are lying about it.

Smart VCs know the the problems (and the ones who don’t aren’t likely to invest anyway):

It’s OK to be in a tough cash position. Don’t be afraid to explain that to your investors. That’s why you’re talking to them in the first place, right?

It’s OK to have problems with your product. You’re not a mature company, you’re a company that’s just getting off the ground, which means product issues are part and parcel with a new company. Investors (the good ones) understand that. They realize it will take time for your company and your product to mature.

All start-ups are in trouble. Don’t despair - you are not alone.

Cheers, Scott and Rowan.

The CFO of Telecom New Zealand, Marko Bogoievski, has resigned and leaves at the end of January. It’s not really surprising. As one of the acknowledged front-runners for the Telecom CEO spot after Theresa Gattung’s departure, he’ll have been disappointed not to have got it. Add to that the major shift in market stance imposed on Telecom by the government and, after seven years, it’s time to move on. No news as to to where, but I doubt he’ll lack for offers. By most accounts, he’s highly regarded and has been ready for a much bigger role for some time.

I’ve tracked my readership statistics for En Avant since it started in April. After an initial modest start, and subject to the vagaries of Google Analytics, a pattern has emerged.

My top 10 readership city conurbations:

1. Auckland
2. Wellington
3. London
4. San Francisco/Silicon Valley
5. Los Angeles
6. Sydney
7. New York
8. Perth
9. Melbourne
10. Toronto/Montreal (ok, they’re 540km apart, but they’re close on the Google map)

My top 10 readership countries:

1. New Zealand
2. USA
3. Britain
4. Australia
5. Canada (after this, it starts thinning very rapidly)
6. Germany
7. India
8. France
9. Croatia (Hi, Mihaela)
10. Singapore

As a CEO and a director, I work hard to maximise the value of my shareholders’ ownership in the businesses I lead. It’s a lot easier if you’ve got informed shareholders.

In a cafe recently, I overheard a woman loudly discussing the merits of the local share market:

‘I only buy shares in local companies listed on our share market. I don’t want my money going overseas. I want it used to grow local businesses.’

Putting aside the desire for local ownership (whether based on patriotism or a preference for businesses you can easily monitor), I think she’s confused owning shares with funding companies. The person who sold her those shares may use her money to repatriate funds offshore, or to invest in an offshore company, or maybe to reinvest locally. She has no way of knowing or influencing that.

Unless she buys shares in a new share offer, not one cent of her money will go to the company. The company got its money when it issued the shares to the person who bought them the first time. It gets nothing when someone else later buys those shares from the first or subsequent owners.

I mentioned this to my companion, who admitted that he thought of his investments in a similar way - ‘giving the company my money’ - when in reality he always bought shares in established listed companies, and so had given the company nothing.

Clearly, when you buy shares in a company, you buy a piece of the ownership of that company, and you rightly expect the company to look after your ownership stake. But unless you put in new money for new shares, all you’ve done is acquire someone else’s ownership stake - at whatever price you, not the company, decided - and you have not given the company any money to grow.

I’m not a big fan of the Lexus car marque. ‘Worthy but dull’ was my gut reaction to the Lexus concept when I first heard it at launch and nothing over the years has changed my mind. Toyota attacked the other luxury cars on price (which is a strange thing to do in a luxury good) and quality, but ignored emotion and excitement. They still haven’t really got the excitement thing, but their current ad campaign has certainly got emotion.

Even if you’re not tech-minded, have you ever wondered how Google does what it does? I’m talking about the helicopter view of their operation, not the detail of their clever algorithms. Portfolio.com has produced an easy-to-understand layman’s overview. Press the button ‘Start the Search’ to see the graphical explanation.

The infrastructure guys will probably argue that there’s a better way to build the system today. I’m decades past being qualified to venture an opinion, but I do like the inherent resilience and ‘lean thinking‘.

Something amusing for the weekend, madam? Try Fresh Inc.’s Marketing BS Generator. Some examples I’ve just generated:

• mesh world-class niches
• seize extensible e-markets
• utilize viral partnerships
• reintermediate leading-edge systems
• strategize cross-media deliverables

The sad thing is, you’ll see and hear such gobbledygook in real life too.

Ever wondered why restaurants get away with those big mark-ups on wine, and why we’re happy to pay, even though we can bring a bottle and just pay corkage? The Economist explains:

...wine markups are possible because diners wish to signal certain positive attributes to their dining partners - either knowledge about wine or deep pockets, for instance. That certainly seems reasonable. I would add that the price quoted on a wine list includes not just the wine, but also an expertise premium. In other words, diners are paying for wine, but also for the knowledge that the wine they select will be good.

Not to mention convenience, ambience, and occasionally, oh yes, very occasionally, wanting another bottle after you’ve finished the first.