Your core business isn’t doing very well, but you’ve uncovered a great opportunity for a new complementary product with low overheads, great margins and - best of all - recurring revenues. Wonderful! You’ve saved the company. Actually, no, you haven’t; not if your main business is still broken. All you’ve done is find some marginal new income which, more often than not, you’re hoping will disguise your poor performance elsewhere, hoping that a miracle will occur, hoping that the market for your old business will rebound, and hoping that your competitors won’t still eat your lunch.
Time and time again, I see firms - IT services, energy supply, retailing, telecommunications, consulting, manufacturing, etc, etc - chasing shiny new marginal revenue while avoiding the hard decisions in the core. Don’t kid yourself. New revenue might buy you time but, one way or another, you’ve still got to fix the broken old business; fix it or get out of it.
The global Toyota car recall has been extensively covered in the mainstream media. Product recalls are not a new phenomenon in the car industry; even the highest quality marques have them. So why has so much media commentary, particularly in the US, been full of delighted glee at Toyota’s misfortune? Simple - they’ve had 30 years of hearing and telling each other that US car makers (and by implication the US itself) are rubbish, having been resoundingly trounced by Toyota in market share, production methods, quality and general admiration. As Dave Segal wrote in the New York Times last week, “Life … is just high school writ large.” Finally the smart Japanese kid who has beaten you year after year has failed a test. Schadenfreude.
However, if past experience is anything to go by, Toyota can turn disaster into success. In the 1980s, Toyota suffered a massive and widespread quality failure in New Zealand. In a country where cars don’t rust much (for reasons I don’t fully understand), it seemed that the entire Toyota fleet was rotting away, and people referred to their most popular models - Corolla and Corona - as Toyota Corrodas. Branding hell. After a slow start, cash-rich Toyota did something very few other companies could have. It offered a free panel repair/replacement to every Toyota owner with a car less than 5 years old (and didn’t quibble if it was several years older). At the same time, Toyota developed and introduced a virtually rust-proof multi-layer galvanizing process to its body manufacturing, and announced a comprehensive long-term warranty on not just the body, but the entire vehicle. A carefully-conceived, long-term advertising campaign shifted the Toyota brand positioning away from technical promotion to emotional connection. The end-result - Toyota became more local than the locals and one of the most trusted brands in the country.
US automakers should watch out. Toyota may be a bit slow to respond at first, but it has huge resources, and when it sorts itself out, then beware. Toyota will be back, and better than ever.
Do you ever shout at the TV, radio or newspaper when a reporter or vested interest representative quotes some superficial statistics and draws completely wrong conclusions. With increasing age, I seem to be doing this more often! This problem isn’t confined to the media. Misinterpreting simplistic numbers because of poor qualitative knowledge is a common business mistake.
I’ve often warned people about this risk, but I often wished I had a simple example to illustrate the problem. Thanks to Tim Harford I’ve now got one. Britain’s Daily Mail shouted this headline:
Cracked it! Woman finds six double yolk eggs in one box beating trillion-to-one odds
The Daily Mail reported a woman’s astonishment at cracking six eggs to find them all double-yolked. If the odds of a hen laying an egg with a double yolk is 1 in 1000, the Mail argues, superficially correct, then the chance of two consecutive eggs being double-yolked is 1 in a thousand thousand, and so on, meaning the odds of all six eggs in the carton being double-yoked is 1 in 1 trillion in traditional British nomenclature (quintillion if you use the more prevalent American scale). The report sparked a flurry of paid media and social media comment on the phenomenon. Some people argued that the statistics must be wrong, because they’d also, and more than once, bought cartons full of double-yolk eggs. This kicked off speculation on a variety of causes, eg. flock genetics - extremely unlikely given the way the egg industry operates (high volume hatcheries are separate from production farms).
The answer is more prosaic. Egg industry workers can spot double-yolk eggs by handling, and put them aside for themselves. If, due to normal statistical variation, they collect too many, the excess eggs tend to be put back into the packing process together.
Good designers don’t just rely on statistics. They observe what really goes on. Toyota uses a technique called “standing in the circle” - literally drawing a circle on the ground and standing in it for hours, silently observing what goes on during a production process and then asking the workers why they did what they did. (That requires mutual trust and shared desire for knowledge and improvement). Before and after designing a new visitor experience, Click Suite’s interactive media designers watch what people do without comment, and then seek explanations.
Too many people use superficial statistics without knowledge of the underlying situation. They make business decisions based on false premises. As Alexander Pope once wrote in “An Essay on Criticism” (1709):
“A little learning is a dangerous thing; drink deep, or taste not the Pierian spring: there shallow draughts intoxicate the brain, and drinking largely sobers us again.”
But remember, in business as in life, you can’t make an omelette without cracking some eggs!
Having enjoyed a fabulous warm, sunny Christmas and New Year at the beach, I’m back in Wellington with a severe gale warning on the radio. 2010 will be like that - swinging between awful and fantastic.
On the awful side, I expect to still be involved in helping companies cope with the continuing economic downturn. Globally, things are definitely looking up, but the usual post-Christmas cashflow stress will have to be survived in 2010 without a 2009 cash cushion. While good companies have done well to survive 2009, some will struggle to make it through to the upturn, and I expect more company failures.
On the other hand, I’ve already seen several promising new businesses - too many to be involved in personally, but still great to see. And some existing businesses have survived in very good shape, ready to take full advantage of the upturn when it arrives.
What’s the difference between the failures, the strugglers and the fliers? Putting aside differences in market sector, scale, and life cycle stage, not a lot. The businesses I worked with in 2009 all typically have smart market offers, with good systems, people and leadership. But some will still fall by the wayside in 2010. While I usually say you make your own luck, sometimes you’re just in the wrong place at the wrong time. This recession is one such wrong time.
Tough times are an opportunity for buyers to get a good deal - I certainly expect to get some bargains this year. But you ultimately lose if you squeeze your key suppliers out of business, whether it be through overly-aggressive bargaining, slow payments, delayed decision-making or unthinking internal sloppiness. As a customer, you may want to be kinder to vendors this year. You’ll want good suppliers to survive this recession, to be ready to support you in the upturn.
So why not make 2010 the year that you look after your key suppliers? I don’t mean go soft, I mean get smart.
Postscript: My graphic seems to have caught people’s attention. In technology businesses, I often joke that the best way to get the sales team’s focus onto a product is to not release it for ages, and then immediately withdraw it!
How do you solicit customer feedback, how do you track it and manage it, and how do you respond to complaints? Probably, like most companies, it’s a Cinderella business process, conducted out of the spotlight. Some online trading sites (eg. Trade Me) have public buyer and seller ratings. But what if you’re a “real” business, dealing with hundreds or thousands of customers? I’m quite taken with how London shirt maker Charles Tyrwhitt does it. I normally buy shirts in-store when I’m in London, but I’ve started using their online shopping site. Once my order was shipped, I received an email linking me to a online customer feedback service run independently of CT by Feefo. I could rate each product and service, as well as post a comment. I could browse all the other (anonymous) customer feedback (overwhelmingly positive by the way), and see CT’s responses to complaints, which within 24 hours typically apologised for any dissatisfaction, explained what had happened, offered no question refunds if required, promised an immediate followup by email/phone to understand more, and so on.
Showing complaints and replies in public, balanced with all the positive feedback, credibly portrays Charles Tyrwhitt as a concerned and responsive company wanting to look after its customers, and making no bones about it. You can also see the other companies using Feefo, and I expect this has a community endorsement effect. I’ve certainly started looking at what those other Feefo clients have to offer.
It’s a rhetorical question. The system owner has the ultimate responsibility. Yesterday, Air New Zealand suffered a catastrophic failure of its core passenger handling systems. I understand that loss of the external electricity supply was followed by failure of the data centre’s back-up power generator. Chaos ensued. Air NZ was very quick to divert blame to its outsource IT service provider, IBM. I don’t know whether the criticism is fair, but I am not impressed with Air NZ’s actions. Rapidly heaping public blame onto a key supplier doesn’t help solve the problem. When it’s IBM, one of the most respected and experienced IT service businesses in the world and almost certainly more able at running data centres than a small (in global terms) airline, then I would be very cautious. Hold your breath, count to ten, and wait for the analysis.
Irrespective of what went wrong, however, let’s be clear about one thing. It is Air New Zealand’s responsibility to make sure its systems are robust and can cope with failure. Airlines should have hot load redistribution via multiple distributed load-sharing data centres. That hot fail-over needs to be regularly tested, not by easy planned tests, but by kicking out the power cables on the server side of the UPS (uninterruptible power supply, basically a big battery that provides smooth power and controlled power-down if external power fails for more than 15 minutes, say). IBM should have done whole-system failure testing, but more importantly so should have Air NZ - it is their system.
“There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.”Press briefing, former US Defence Secretary Donald Rumsfeld, 2002
Gobbledygook or profound insight? I’m inclined to the latter. Boards and managers tend to manage the risks they think they know, not the ones they don’t. The quality of your own business processes. The quality of input, processes, outputs, logistics, channels - upstream and downstream from your business. The degree to which your business and brand is isolated from other people’s actions.
Chances are, you try to manage those elements which have a known impact in your value process. You know a lot about them. But what about something completely beyond your knowledge and control? What about a key supplier or customer going bust as a consequence of someone else going bust? How about a subcontractor running hidden, unacceptable practices elsewhere in the world? Someone using your product in new unintended dangerous applications? Or a logistic provider’s people subverting your process to run a scam, smuggle drugs, launder money?
At least on this, Rumsfeld had it right; but there’s no easy answer. Just be wary of what you think you know and don’t know. Assumptions are very dangerous. What are the things you take for granted in your business? And, given that you don’t know what disasters may sideswipe your business, what’s your generic crisis management process? When the organic fertilizer is sucked into the air conditioning system, how will you cope?
Tom Forenski at ZDNet writes that “the internet devalues everything it touches“. He uses online business applications, outsourced call centres, and online shopping as examples of how costs have come down for vendors and their customers. To label that as “devaluation” is a strange way of describing what has happened. While in one economic meaning he may be right, ie. the unit price has come down, the value of a good or service to a customer (ie. its utility or benefits) doesn’t decrease when it is delivered via the internet. On the contrary, its value may well have increased, through greater convenience, speed, and so on. Or it may have become more affordable and accessible to new customers. Likewise for a supplier. I’ve never met someone in business who thought that increasing efficiency, effectiveness, customer utility or market reach for lower cost doesn’t enhance or at least maintain shareholder value. While unit revenue may come down, competitiveness may have been enhanced.
Lean manufacturing created much greater value for customers and shareholders (or at least those whose companies who adopted it). The lean business processes made possible by the internet do the same.
“… the problem is more often the sellers inability to convey the value they offer to the buyer. They don’t really understand the customer’s problem and why their product is a unique solution to it. People don’t want to buy an inferior solution, they just don’t want to pay extra for a solution that doesn’t look much different from the cheaper version”.
Let’s put that another way:
Do you understand the customer’s need? (That needn’t necessarily be what the customer originally said it was).
Does the customer agree with your perception of that need?
Does your proposition offer superior value for the customer’s need?
Can you clearly explain your superior value proposition?
Does your customer accept that proposition?
If the answer to that last question is no, it can mean one or more things:
You need to improve your prospecting, qualification and selling process.
The customer needs to improve their need definition/buying process.
Your market offer needs to be improved in some way so that it does represent superior value.
Your basis of superiority is irrelevant to this customer.
You’re in the wrong business.
Only one of these is a fault on the customer’s part. The rest are down to you. And remember, unless you are aiming to be a monopoly, you shouldn’t expect to win every opportunity. But you can choose customers in the same way that customers chose suppliers. Focus on customers for whom your market offer superiority is relevant, and avoid customers for whom it isn’t. It will save both sides a lot of wasted time, effort and angst.
Why do business buyers keep confusing cheapness with value? Time and again I’ve seen the best vendors lose on price because the buyer could “get it much cheaper elsewhere”. The classic example is professional services charged by the hour. Any good manager of people knows that you pay your better staff more because they are more than worth it to you. For example, a good IT designer/developer will work out many times cheaper in the long run. They understand the business need quicker, design quicker, design better, write code quicker, write better code with faster performance and fewer bugs, and their software is cheaper to maintain. That can equate to a 10-30 fold lifetime cost difference - the saving more than outweighing any hourly rate difference. And that’s before you factor in the risk of non-delivery - much lower with better suppliers.
But many business buyers persist in penny-wise, pound-foolish buying practices. I have interests in several firms who sell products and services to other businesses, and my attitude is clear. I put a lot of emphasis on getting the price/value/cost proposition right, but if I can’t persuade you of the value for our prices, I’ll walk away before discounting. I’m not in business to subsidise anyone else’s business.
I have also big interests these days as a board member. I often see proposals brought to me for approval by a buyer proudly telling me that they’ve got the lowest input costs. All too often, I send them away to redo the basis of purchase and decision. Get me the best price and the best people to deliver the outcome, not just the lowest cost of the inputs. If it has to be input-based, hire the best you can (while avoiding bloated suppliers and being sensible on price). It may cost more theoretically on paper, but I’ve rarely seen it cost more in actuality. On the contrary, the lowest input cost approach usually blows out on time, cost, reliability and efficacy.
Managers and buying teams - take note. Top management and boards much prefer certainty and effectiveness over cheapness.
People often think of contractual and business relationships lasting a few days or years, but rarely think about ones that might last decades and beyond. I’ve seen several organisations bitten by seemingly unimportant or just plain forgotten undertakings given in the dim and distant past.
One company received a letter from the city council announcing that the city would start charging the company for 10 up-til-now free CBD carparks that the city provided. No big deal; after all, who expects to get a free CBD carpark these days? But one of the company old-timers remembered that the city had traded the free CBD carparks some 15 years earlier for some company-owned carparks where the city wanted to build a motorway. Imagine the value of 10 car parks in the CBD close to the motorway exit - in perpetuity. A search of the city’s records (better than the company’s) produced the documentation. After some haggling, the city bought the car parks back - a very nice windfall for the company given CBD property inflation over that time. It was pure luck that someone remembered the original deal. Bad luck for the city; good luck for the company.
It’s not just property deals:
A letter offering a job to an overseas immigrant which promised repatriation if he was fired or made redundant - which he was, 20 years later. He had no intention of returning, but it paid for a nice visit home.
An enduring exclusivity clause in a services contract. After several years, the work tailed off. Some years later still, the contractor was invited in by another company - a possible rival The defunct client invoked the clause to stymie its competitor.
And so on.
Partly these problems are down to poor negotiating, poor contract drafting and poor record management. That’s not my point. In these cases, at least one of the parties had forgotten all about the original deal. In each case, someone remembered and was able to take advantage of the situation. It also makes you wonder how many times such deals have been forgotten by all concerned, and whether they won or lost as a result.
Ever wondered what colour you are? Rick Smith, author of career-planning book “The Leap“, has made an online personality testing tool available. It explores 3 facets of your persona - leadership, curiosity and execution - and plots them on a 3-sided chart with different shades of green, red and blue. You’re placed in a colour zone, which is “your primary colour”. There’s a further set of questions to test if your current role fits your personality.
I’m not convinced that the questions are discriminating enough to give accurate and consistent interpretations - I could have made equally valid different responses to several questions - but it seems harmless enough, and could be fun to do at home or with your mates. Before you ask, I was assessed as “blue velvet” (top line, centre right). Make what you will of that.
Regular readers will know that I’m an admirer of Toyota, in particular its lean thinking and unity of purpose. This is not unconditional admiration. Toyota can be bureaucratic; its brand marketing is usually uninspired me-too (the NZ emotive campaigns in the ’80s and ’90s being rare exceptions); and its designs are worthy rather than exciting. However, I’m quibbling; that worthiness has helped Toyota climb from humble beginnings to overhaul the once-mighty General Motors as the world’s No. 1 auto-maker.
Toyota is renowned for incredibly flexible and efficient manufacturing, with a ruthless attention to eliminating waste in all its forms (rework, shoddy materials, unnecessary movement, set-up time, inventory, and so on). But, according to a Bloomberg-sourced article appearing in major newspapers, as Toyota started to close on GM over the last decade, Toyota has been more driven by numbers. It started to build inflexible single-purpose manufacturing plants, not training its people properly, and operating these new plants in a very un-Toyota way. Toyota recently reported its first operating losses since 1950, and has suspended production in many plants. Blame can be partly ascribed to the global recession, but that just exaggerated these other problems.
I usually take such journalistic analyses of companies with a large pinch of salt, but this story passes my “gut feel” credibility test. It isn’t a story of a company being stuck in a mindset that no longer works. That’s the GM problem. No, this is a story, if true, of being blinded by success, of losing sight of what made Toyota great.
However, Toyota’s leadership is onto the problem. After the numbers went wrong, Toyota’s honorary chairman and founding family figurehead, Shoichiro Toyoda gave a stinging rebuke to the company’s top 400 executives. The company has a big job on its hands, although not as big as that facing Bill Ford 10 years ago when he took over the helm at the business founded by his great-grandfather. Unlike Chrysler and GM, Ford’s award-winning product range, operational methods and funding management have enabled it to avoid bankruptcy. That precedent did not go unheeded by Toyota’s board. New CEO Akio Toyoda, a car nut like Bill Ford, is the grandson of Kiichiro Toyoda, the founder of Toyota Motor Corporation. He is steeped in the Toyota credo. Expect a back-to-basics Toyota in future, although maybe with a little more excitement added to the mix.
Many years ago, I met the CEO of a mid-size meat company to discuss how he could improve his business - it had always struggled to make much money. Having had the guided tour and talked to the CEO, I had seen a very smart operation. The farmers who supplied the animals were specially selected, as were their breeds, to provide very high quality animals. The killing process was designed to avoid any animal distress (stress toughens the meat). The cutting and packing processes produced excellently presented chef-ready portions. Higher input costs were heightened by small volume; however, their gourmet products should attract premium prices from restaurants, hotels and independent supermarkets in wealthier suburbs. But for some reason, their sales and delivery drivers struggled to sell their product for any premium above the bigger players, who competed primarily on price. They had a good story, so why couldn’t they achieve that higher price?
By pure luck, the small management team - all men - were having dinner together that night, with their wives. I was staying in the small country town overnight, and I was invited to join them. As we got to the pudding course, one of the executives asked me what thoughts I’d had after my short initial visit. This got the attention of everyone round the table. I did the classic consultant trick, and asked them what they thought the problem was.
There was much grumbling about competitors who’d sell at “unfair” prices, “unreasonable” customers not appreciating the value of the product, and “poor” sales skills among the driver reps. After a few minutes of this, one of the women, who’d not said much so far, said very tentatively “The delivery trucks are dirty”. This got blank looks, and the sales director asked incredulously “What’s that got to do with it?” She explained. “The trucks are always filthy outside. You never wash them. You look cheap. Why would anyone pay you any more?” This got some nods. Then another of the women asked “How many of the reps know how to cook?” After some jokes about men and barbecues, she asked rhetorically ” How can you sell a gourmet meat if you don’t know what to do with it?”
You can see where this is going. One the ball was rolling, everyone started suggesting ideas to not only fix the problem but also increase real value to customers. Within a year, the business was transformed. A successful restaurateur joined the board of directors. A consultant chef developed a driver rep training programme, which became compulsory for everyone who worked in the business (their spouses could attend as well). He also developed new cuts and recipes. Customer training days were very popular and earned extra income. Achieved prices went up, as did market share. And the driver reps’ last job every day was to wash their trucks.
They had simplistically accepted their customers’ comments about being “too expensive” without probing deeper. The business was obsessed with product and production, but hadn’t thought to ensure that their sales process was consistent with and enhanced their market offer.
General Motors has announced its withdrawal from NUMMI, its joint venture with Toyota. NUMMI was an incredibly generous initiative by Toyota to educate its global rival about modern management and production techniques, while giving Toyota insight into operating in the US. Although the NUMMI plant was generally seen as a (qualified) success, and GM learnt about efficient plant layout and just-in-time inventory, it (GM) never really absorbed the “lean business” mindset that infuses every aspect of Toyota.
The NUMMI plant is now 25 years old, and probably long overdue for a major overhaul/replacement. Toyota doesn’t need it, with low demand and its own plants elsewhere in North America making similar models. Politically, Toyota might wait a while to close the only unionised shop in its portfolio, but GM’s reputation is so low, now is probably the least reputation-damaging time for Toyota to do so.
The report’s recommendations needed to be implemented, permanent senior management was needed to replace those in acting roles, the IT system needed an upgrade worth $117 million over four years and the entire process needed to be taken apart and looked at “from top to bottom”.
That snippet is from today’s Dominion Post, commenting on the need for a major overhaul of New Zealand’s Immigration Service. I’ve already heard much about the shambolic state of this government agency, so the need for a root and branch renewal is not surprising. What caught my eye was the size of the proposed IT upgrade.
I know that government IT projects suffer from very bureaucratic (and often ineffective) environments: unengaged and unempowered users, long-winded decision-making, overly complex legislative and procedural requirements, etc, etc.. Even if that isn’t always so, government IT will still usually be more expensive than commercial IT. Unique requirements (well, nationally idiosyncratic, anyway) tend to demand bespoke solutions, or at least customised implementations of standard case management and workflow systems. Allowing for that, $117 million still seems way too much. After all, this organisation only does a few core tasks:
receive applications, process them, and issue visas for tourists, students, temporary workers, and permanent residents.
weed out dodgy applicants (at least that’s the theory).
provide information on the process to potential applicants and employers.
Let’s look at the IT investment per process worker (a useful metric for process/people-centric operations). Assuming that the NZIS still employs approximately 750 people (the last number I could find) and that 2 out of 3 staff are engaged in the process (as distinct from support functions and executive staff), that’s $234k per person. That is ridiculously high. What complex business process does this organisation operate that requires such a high IT investment? If I was the Minister of Immigration or the Minister of Finance, I’d be demanding alternative proposals for the business process and supporting systems.
Curiously, that $117 million is a very specific precise number, given that “the entire process needed to be taken apart and looked at ‘from top to bottom’.” I’m smelling the pungent scent of of desperation - let’s throw lots of money at a big IT project to give the appearance of decisive action. More cynically, it buys 4 years of plausible excuses while the project is underway, and in 4 years time, everyone senior will have moved onto pastures new. Sadly, you’ll find similar stories in every government in every country.
One of the weakest excuses you’ll ever hear is “Sorry, it was a computer error.” My initial reaction is almost always derision. Computers very rarely make errors, whether in reading or writing to a file, or moving data around (internally and over communication links), or in processing. Computers have inbuilt self-checking so that errors are detected and overcome or at least alerted. None of these should be sufficient to actually cause the incorrect recording and processing of an organisation’s business with you. So let’s look at what really went wrong:
An error in understanding what systems and processes that the organisation needed to conduct its business with you.
An error in specifying that need.
An error in designing a computer system to meet that specification.
An error in building and implementing the system.
An error in testing the system.
An error in the business processes around the system.
An error in training people how to use the business processes and the system.
An error in entering information into the system.
An error in understanding what was said in your encounters with the organisation.
An error in understanding what was heard in your encounters with the organisation.
Errors 6-10 are almost always the cause of the problem, followed by error 1. All outside the computer system. And did you notice something else? Every single one of these 10 errors is a HUMAN error.
Making it easy for potential customers or business partners to contact you is usually a good idea, and in these days of call centres, email, and website contact pages, it is simple to do. But it’s a complete waste of time if no-one answers the message.
In the past few weeks, I’ve experienced appalling bad response from:
A French automotive technology company in which I was (note past tense) seriously interested, who did not reply to repeated multiple messages via their “potential partner” contact form, their “potential investor” contact form and even their “potential customer” contact form; they also don’t have a phone number on their website - it’s “unlisted” with the directory company as well; talk about being hard to reach!
A New Zealand beverage maker from whom I was attempting to buy their premium (subscriber-only) product, despite two requests via their contact form; having received no response, I phoned, only to hear the person who answered tell me to leave a message on the website.
A US computer maker who only connects to the outside world via global e-commerce pages, online contact forms, and off-shored call-centres, but failed to pass on any messages to its local subsidiary via any of these channels.
A UK exporter who lists an email contact for potential importers, but who failed to respond to multiple emails; I eventually got a response by repeatedly pestering one of their office staff to nag the export manager into replying.
For goodness, sake, why bother having modern contact channels if you can’t be bothered to use them properly? Such poor contact processes not only irritate me, they lose you my business, because now you are clearly both rude and incompetent.
It’s not hard to get these things right. Or is it? When did you (personally) last test your contact processes?
For my non-NZ readers, New Zealand’s two major mobile telecommunications operators have been involved in a PR and courtroom stoush over the alleged interference of Telecom’s new XT network with Vodafone’s network, with Vodafone seeking an a court injunction to stop Telecom launching its network because Vodafone’s customers are experiencing major service failures. Few commentators have been scrupulously neutral, assuming either that Telecom is incompetent and arrogant, or that Vodafone cunningly mounted its court action just days out from the network switch-on as a PR stunt to put Telecom in the wrong.
I used to run Deltec, a company which made filter and antenna systems for mobile telecommunication networks. We sold 95% of our production offshore in all the major telecommunications markets, especially in large urban centres with multiple operators in very adjacent frequencies using identical technology prototocols. The numbers of cellsites, operators and customers are usually 2 or 3 times that of the NZ situation. Signal interference is normal during the early days of a new cellsite (even more so for an entire new network) when there is already an incumbent in the area. The fault may lie with the newcomer, but it is just as likely to lie with the existing operator’s cellsite receiving or transmitting signals outside its allocated frequencies. The general practice is that each instance is taken on its merits, both sides’ engineers work it out, and take appropriate action quickly. All very low key, routine, professional and civilized.
Deltec was the dominant antenna supplier to both Telecom and Vodafone until we sold our business in 2001. What’s different about the NZ situation? Telecom has (at long last) joined the same technology family as Vodafone and much of the world. But for 20 years, we’ve only had two operators, operating in widely different frequency bands with completely different technology protocols. Vodafone and Telecom engineers and management are not used to having another major wireless network in such close technical proximity. Both are likely to have had sloppy frequency management (it wasn’t an issue), but rarely been pulled up on it before. More relevantly, neither company is used to dealing with the other on technical issues where collaboration rather than confrontation is the norm.
As for the court action being a stunt, who knows?
PS: Interestingly, whenever we hosted people from Telecom and Vodafone together in technical or social contexts, it was always very friendly, with both sides getting on well.
PPS: I forgot to mention that my family trust owns Telecom securities.
Regular readers will know that I’m an admirer of Toyota, in particular its lean thinking and unity of purpose. This is not unconditional admiration. Toyota can be bureaucratic; its brand marketing is usually uninspired me-too (the NZ emotive campaigns in the ’80s and ’90s being rare exceptions); and its designs are worthy rather than exciting. However, I’m quibbling; that worthiness has helped Toyota climb from humble beginnings to overhaul the once-mighty General Motors as the world’s No. 1 auto-maker.