I’ve been sceptical about many of the frequent calls for “someone” to build a state-owned high speed broadband network throughout New Zealand. My argument, basically, is that if it was a viable proposition, someone would build it, and empirically, since no-one has, the economics don’t stack up. However, things have moved on since Rod Drury’s initial attempts to get fast broadband onto the national agenda. He’s got together with various smart people who understand something about networks and economics, and their proposals are now starting to take on an air of feasibility. At a function last week, Rod outlined some new perspectives (my comments are in italics):

• The business case for the public good of broadband has been made (public good: yes; business case: hmmm).
• There is not a corresponding business case for a business entity to build the network we desire. (at last some realism).
• International links are as important for economic transformation
• There is substantial economic risk to NZ due to lack of international diversity.
• New Zealand needs a strong and vibrant Telecom (the dominant player) + competition.
• Telecom is probably best qualified to run a NZ network. (agreed).
• The Internet is a user pays model.
• Consumers happy to pay up to an amount - but want service close to technical limits.
• There is demand for safe, long term investments.
• CAPEX to solve the problem spent each year as OPEX. (not sure of the validity of the distinction - it’s all cash; also sounds like part of possible solution rather than a fact, but never mind ).
• We want the market to deliver a solution, not government funding. (yes!!)

Rod’s revised goal: an open access, user pays network, linking major NZ towns and cities to the world. (This is an important and valuable restriction: not going everywhere, just the major centres, means the plan might be affordable)

Rod’s revised solution:

• Separate infrastructure from retail telecommunications services.
• Cost plus model to allow for uneconomic network build.
• Infrastructure funded on bond style basis.
• Includes new cable from NZ to major international POP (jargon for another big network entry point).
• Terminates at each local authority (major local government centre) with Peering Point.
• User pays, fair interconnect accounting part of platform.
• City wide network is local government issue (i.e. any high speed local fibre would be a local commercial or community-funded issue, another important clarification which means CBDs would be fast-fibred, but not every suburban street unless local communities decide somehow to fund it).
• Network company tenders for contract for NZ.net management
• Strong governance structure.
• Seeks open access relationships with other countries.
• ‘Don’t blink’ strategy (probably needs cross-party support)

There’s still a lot more refinement to do, but this is a marked improvement on earlier ‘pie in the sky’ proposals. However, putting aside the technical points, there are still some questions: what will it cost to build and operate, and will users pay the true costs, especially while it’s being built?

Most importantly, will Telecom and the Government want to do it this way? As we start to define the proposed restricted network and business case more clearly, and assuming that the network separation already underway works, why wouldn’t Telecom just build, own and operate the new network as normal, albeit under an appropriate regulatory environment?

Disclosure: I have financial interests in Telecom, but it’s not significant enough to influence my thinking.

Two conversations yesterday about how to drive change drew me to observe that any change agent often has to deal with and manage several constituencies:

• The early enthusiasts: eager proponents and advocates, but who want you to fire everyone else who doesn’t ‘get it’ straight away.
• The nervous approvers: They need selling on the rationale, and are nervous about the change, but consultation, communication, confidence, consistency, and constancy of purpose will bring them aboard. They get very anxious when others don’t ‘get it’, and expect massive efforts to keep everyone happy, especially those who have yet to ‘get it’.
• The passive acceptors: They bitch and moan like everyone else but, as the change gets embedded, just accept it and forget about it.
• The late zealots: They fight the change tooth and nail, but as they see things start to work, they become its most ardent enthusiasts, and stop worrying about those who have yet to see the light.
• The smart leavers: These don’t like the change, but often can understand its rationale. However, it’s not for them, and they move themselves on to new jobs (where they often adopt new ways anyhow). You remain on good terms with them.
• The persistent nay-sayers: These are the ones who hate the change, and constantly bemoan it. They’ll never be converted, yet they stay on, becoming increasingly bitter and twisted, undermining everything and everyone, and constantly demanding your attention to their grievance.

It’s important to figure out which constituency someone is in, and manage them accordingly. If you’ve got a persistent nay-sayer who can’t be turned into a late zealot, try to turn them into a smart leaver. Otherwise, put them out of their misery - get them out as fairly, humanely and quickly as possible. The success and well-being of the team, the change and the business is more important than wasting time and energy on a cause you can’t win. It’s like removing a sticking plaster - a quick rip in less painful in the end.

(Actually, the original analogy was waxing your bikini-line, but that might not get through some people’s reader filters.)

Wednesday’s editorial in The Independent Financial Review focused on my proposal to get rid of public holidays and replace them with additional annual leave. Unfortunately the editorial doesn’t seem to be online, but (update) thanks to DPF, I’ve reproduced the text of the editorial below. It largely reiterates my original article, with some additional supportive comment from editor Nick Stride and top blogger David Farrar.

The IFR finishes by wondering how the trade union movement will react to the idea, and coyly presumes that it “will embrace with open arms a concept that would deliver greater output and more freedom“.  Let’s see if any politicians will run with the idea.

IFR editorial:

Now, here’s a thought.

Jim Donovan, a blogger, proposes we do away with public holidays altogether.

There are 10 statutory holidays, and these 10 days would be added to worker’s annual leave entitlement - 20 days, in most cases.

At present, when employees want to take annual leave, it must be agreed in advance with their employer.

The new legislation would specify a certain number of days - Donovan suggests five - which the employee can nominate in advance, and which the employer is required to grant.

To prevent gaming behaviour, those days once nominated would have to be taken off, unless the employer agreed otherwise.

One advantage, says Donovan, is the economy, businesses and consumers would gain several trading days a year.

Another is employees would gain more days they could take off when it suited them, rather than when the calendar mandates they must. So families could organise reunions at a time when peak fares and holiday traffic were no hindrance.

Of course, there are issues.

Donovan points out there would have to be exemptions for essential services, but says he’d keep the list short.

In an economy made up of small businesses, some would have problems covering for key staff taking certain days off as by right.

Some might not be able to open at all. But there would be fewer of these days than are lost at present through mandatory closing.

And some will argue, as they do now, the spiritual significance of Easter and Christmas would be diminished if those days were simply trading days like any other.

But the force of this argument is dissipating as the population becomes more multicultural, and secular.

Those who celebrate Christmas as a religious day, or as a secular holiday, could simply specify it as one of their mandatory days off.

What’s more, as blogger David Farrar points out, Donovan’s regime would be far more friendly to adherents of religions other than Christianity. Muslims, Hindus, Buddhists, etc, would be able to specify their own religious holidays as mandatory days off.

It’ll be interesting to see how the Council of Trade Unions reacts to the idea. It presumably will embrace with open arms a concept that would deliver greater output and more freedom.

In my ongoing global search for daft business publication titles, I’ve found that someone at no less an institution than the Harvard Business School has published a ‘conversation starter‘ article drawing on Dolly Parton’s latest song about “‘livin’, givin’, forgivin’, and some lovin.’”

Apparently, “Better Get to Livin’”:

offers insights that every leader ought to keep at the ready….

Giving. Leaders give of themselves so others can succeed….

Forgiving. People make mistakes….

Loving. Apply this to your work…..

Most important, get to living….. Leaders who cannot let go of the “woulda, coulda, shoulda” are locked in a self-perpetuated cycle of negativity that hinders personal growth as well as alienates the very people the individual should be leading.

Ah well, at least it makes an attention-grabbing headline.

One or two people have asked me about the mobile phone designed for older members of society. It’s now available in NZ via the Hearing Association, who are selling it to ‘active seniors and the hearing-impaired‘ for NZ$485 plus p&p.

I’m afraid this video doesn’t help the cause. Also check out the Geeks are Sexy website.

I have to eat my hat. JP Morgan Chase has increased its offer for Bear Stearns from US$2 a share to $10. The board of Bear Stearns must have been totally overwhelmed by the liquidity situation to have agreed to the original offer. Anything they say from now on will have little credibility. Expect heads to roll.

Courtesy of Stephen Robertson:

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It’s Good Friday and, as in every year in recent memory, the perennial debate arises regarding shopping and other commercial activities on certain public holidays (assuming you’re in a part of the world where they are prohibited). The usual arguments are trotted out by the pro-restriction lobby: it’s one day families can all rely on to get together, it’s a mark of respect to our religious and cultural heritage, it’s one day that sporting and cultural festival organisers can rely on (attracting crowds they otherwise wouldn’t get). That’s fine for those people who want to put aside those particular days for the things they want to do; but why, ask the pro-liberalisation lobby - usually business groups wanting to trade on those days - should everyone else be captive to those special interest groups’ demands, especially when the vast majority actually take no part in the special events on those holidays? The pro-restriction lobby then trots out pieties against crass commercialism and abuse of workers’ rights.

I have a radical alternative which I reckon will appeal to nearly everyone (other than the would-be regulators of my life). Get rid of public holidays altogether, and in return increase annual leave entitlements by the same number of days. Say you currently get 20 days annual leave and 10 public holidays; instead you’d get 30 days annual leave, to take whenever you like.

To cater for the people who want to fix certain dates for religious or cultural activities, you could allow them to nominate up to, say, 5 days a year where they can definitely take time off (i.e. the employer has no choice). To avoid gaming, once nominated those days MUST be taken, unless the employer and employee otherwise both agree. Of course you’d have to allow for essential services, but I’d keep it a very short list.

Small firms would still implement mid-winter and mid-summer close-downs where everyone takes a break together. Most people would still take their primary religious festivals off. The economy, businesses and consumers would effectively gain several days trading a year. And here’s the greatest advantage - ordinary workers would be free to take more days off when they and their employer agree, not when someone else outside the relationship says they should. For example, families could organise get-togethers when it suited them - and avoid the peak fares and traffic jams of the most popular days.

Just think:

• 20 days annual leave plus the odd day when some bigwig says you must; or
• 30 days annual leave when you want.

I’d bet that most people and businesses would prefer the latter. And think of the administrative simplicity. Unfortunately, too many vested interests love the petty power, anti-competitiveness and big-noting associated with public holidays.

Update. This article’s certainly attracted some interest. Apart from the comments here, have a look at:

• David Farrar
• Owld Grumbleton
• The Hive
• The Independent Financial Review editorial
• I’ll add others as I find them.

Despite my feeble attempt to create a theme for this month’s Vista Group lunch, it somehow degenerated into a discussion of famous put-downs and how bad taste jokes seem to quickly follow any news of others’ misfortunes. I was reminded that the correct term for this is schadenfreude, not gesundheit. (No, I am not posting any links to Heather Mills joke pages.)

However, we did have one useful outcome - we met Natalie Ferguson, another Wellington-based entrepreneur and business blogger. Natalie’s web-design business, Decisive Flow, makes simplicity and usability hallmarks of the work she and her team do for for clients around the world.

One of our group, Lucire magazine publisher Jack Yan, is anally-retentive passionate about character fonts and was very complimentary about the design of Natalie’s blog site. The rest of us agreed it looked lovely, but also focused on the content. Natalie, who co-founded PlanHQ before focusing on her current business, writes about the day-to-day joys and frustrations of her business life, plus anything else that grabs her attention.

The other highlight of the lunch was the look on Mark Di Somma’s face when I told him the unexpected news that a company, at whose planning conference we are both presenting next week, has chosen to be technology-free for the day. No PowerPoint! Good - someone else has to completely rework their presentation and rely primarily on the power of the spoken word. Is there a word for enjoying the misfortune of others having to share in yours?

USA Today reports that CEOs would prefer to be tall and bald, rather than short and coiffed. I have no comment, other than to offer you the picture on this blog’s masthead, which must surely illustrate the standard to which these guys are aspiring. Alternatively, check out Steve Balmer from Microsoft.

On Monday, we heard the news that JP MorganChase (aided by the US Fed) has made Bear Stearns shareholders an offer they can’t refuse - to be taken over for just US$230 million in JP Morgan stock (versus recent capitalisation of over US$20 billion) and that includes their US$1 billion head office. The choice is stark - accept or go bust.

I’ve seen some of these rescue deals rejected by shareholders, who seem to prefer the company to go under. Why rejected? Because irrationality takes over, because of unwillingness to accept the drop in value, because of a misconstrued idea that somehow this is all unfair. The shareholders effectively say ‘We’d rather lose the lot than let you get something’.

There doesn’t seem to be any room to negotiate a better deal. Given Bear Stern’s board has recommended the deal (and US boards are very vigorous in maximising value in takeovers), the final offer is on the table. I’d be inclined to accept if I was a shareholder (I’m not). At least I’d be getting some JPM shares out of it.

I’ve held off commenting on the financial drama currently unfolding around the world, triggered by the US sub-prime mess. I just don’t have much to add by way of insight to the mountain of comment, good and bad, already out there. Instead, for a lighter look at the problem, I offer you Capital Chronicle’s take via Asterix the Gaul, and Linda Keenan on Huffington Post, who seems to be recommending a switch from Viagra to Cialis will solve the problem

Debt collectors are taking steps to ‘improve’ their public image, according to the New York Times. At the risk of sounding like a hard-hearted b******, I wonder if that’s a good idea. You want your own debtor management to be firm, but customer-friendly. However, when you give up on that long-overdue, recalcitrant debtor, do you want another friendly face to take over? I suspect most companies like to have the implied threat in their debtor management arsenal: ‘pay-up or I’ll put the debt collectors on to you’. So I don’t think they’ll be thrilled by the news that debt-collectors want to be more ‘friendly’. It rather defeats the purpose.

By the way, don’t confuse professional debt collectors with bully-boys. (Have I just countervailed my own argument?)

This will kill workplace productivity today: Accenture’s A-list test.

Too many people think of their brand is just a promotional gimmick. Wrong! Your business strategy defines your brand and your brand defines your business strategy. So it’s worth spending a lot of time thinking about your brand and making it real for you, your customers and your people.

I came across this list from Allen Adamson, whose book BrandSimple has attracted many 5-star reviews on Amazon:

1. Understand that brand and branding are different concepts. The “ing” makes a huge difference in meaning. A brand exists in your mind. It’s a collection of associations or feelings people have about a particular product, service, or an organization. Branding is the tangible process of creating the signals that generate these associations.
2. Establish a differentiated meaning for your brand that the consumers you want to reach care about – find relevant – before you try to begin branding. Differentiation and relevance – not awareness – make a brand strong and keep it strong. You can’t build awareness without having something to build it on. The most successful brands know this.
3. Know exactly who you want to talk to – that is, know your audience. Also, know exactly who you want to beat – who your competition is – and make sure the difference between you and the other guy is crystal clear.
4. To find a different and relevant brand idea, look for the obvious. The best answers are usually right under your nose. Good brand people never stop looking for insights, and they know to look in the most obvious places. They read letters from customers, go to call centers, speak to retailers, hang out in supermarket aisles. The key is to find something meaningful that no one has noticed before.
5. Make sure your brand idea aligns with your business strategy. What exactly are you selling? Is your brand idea in sync? You can deliver what your brand idea promises to deliver by validating the brand experience at optimal points of customer contact.
6. Capture the essence of your brand idea in a brand driver – a simple statement of what your brand stands for. Make sure it’s as succinct, as focused, and as compelling as possible. It has to be able to drive your branding signals, brand actions, and brand behavior – intuitively. It’s your brand recipe and it has to be simple to follow and remember by heart.
7. Draw a map of the customer’s journey with your brand. Take everyone in your organization on this journey to give them an understanding of the points of interaction that have the greatest potential to impact people’s perceptions of the brand. Doing so also allows them to see how their role in the organization influences customer perception through the branding signals they bring into being.
8. Pick your battles. After you’ve established which points of customer interaction have the greatest potential to drive consumer perception of your brand idea, invest your branding dollars in these interactions. These are your power branding signals.
9. Remember, only the paranoid survive. Make sure you keep your brand difference differentiated, and make sure it’s a difference people care about. Always pay attention to your core customers. Don’t lose the center.
10. Remember that brand building is a marathon event. Success is not a one-time thing. Make sure you have the nerve and the verve for the long haul. Good brands last and there’s a reason they do.

Yeah, yeah, all obvious stuff, you say. So why aren’t you doing it? Why are you compromising your brand (and your strategy) for short term opportunism? Why do you tolerate people in your team who don’t get it. Why are you trying to sell to customers who don’t want what your brand stands for? Building a great brand, like any aspect of good strategy, requires making choices and meaning it.

Do the test (thanks to Miramar Mike for spotting this).

Bloomberg reports today that global food giant Nestle is establishing a Swiss research centre to investigate premium chocolate. According to Bloomberg, rising cocoa and dairy prices are leading chocolate makers to focus on premium brands of chocolate, where margins are higher. Nestle, the world’s second largest chocolate maker, sells ~SF10 billion (~US$10 billion) of chocolate a year. Nestle says the luxury chocolate market expanded 8 percent annually in recent years, and is expected to grow even faster in future.

There are several young ladies and mature matrons of my acquaintance who no doubt are already checking their Swiss residency potential, in order to volunteer as human test animals.

I wonder how much Nestle spends on pasture research?

You’re probably familiar with the old Boston Consulting Group 4-quadrant grid of business extension strategies:

You can compare any two attributes of your business, e.g. products, technologies, geographies, customer segments, skills, operational processes, channels, etc. The message is usually the same - it’s easiest to deepen your current position, but if you are going to extend your business, the more dimensions you change, the bigger the challenge.

It doesn’t matter whether you’re extending organically (i.e. doing it yourself) or by acquisition. However, if you’ve got a sound reason to grow in one or more dimensions, then acquisition can be a faster and lower risk route than trying to do it all yourself, if you can plan well, buy well, and execute well.

Of course, you could acquire a businesss you don’t really want, in order to divest it and acquire other businesses that you do, but that’s a whole different area of the M&A game. I still shake my head when I think of how brick and crockery maker Ceramco was turned into bra and pants maker Bendon. That changed just about every dimension possible.

A while ago, I had to give someone some stern advice - to give up on their dream.

One of the toughest questions for an entrepreneur to handle is - is it still worth it? Is that dream that you’ve been pursuing worth putting in any more of your and your investors’ money, and, more importantly, any more of your time and energy? I’m not talking about a good plan let down by execution - that can be fixed. I’m talking about an idea that just isn’t going to fly because it’s wrong. Bad idea, no market, impossible to make the numbers add up - there is a myriad of reasons why some ideas won’t work. But sometimes people keep plugging on, refusing to face reality. Loss of face, loss of self-confidence, not wanting to let other people down - these are powerful disincentives to call it quits, along with the old problem of thinking sunk development costs must still have some value:

• ‘We’ve invested too much, we can’t throw it away now.’
• ‘It’s got to work, it has to. It just needs more time.’

To succeed in any big undertaking, you usually need drive, ambition, persistence, guts, and a certain pig-headedness. But some ideas just don’t work, If that’s the case, you need to be able to face it, accept it, and then take appropriate action. It’s called ‘cutting your losses’. It’s not just about money. Your personal energy, abilities and your time are finite resources - you don’t want to waste them flogging a dead horse. Put yourself to positive use on the next big idea.