October 2010 – Another Black October?

Posted on 5 September 10 | 7 Comments
a tale of two lottos
Image by jordi.martorell via Flickr

There’s an interesting phenomenon surrounding October as regards the stock market – it’s probably the single most feared month of the year, with the three biggest crashes all occurring (or starting) in October. Will October 2010 be another bad month?

The Great Depression was triggered by the sharp slides which happened in October 1929 (and kept going), although the biggest one day drop was that of 19th October, 1987, when the Dow lost nearly 23% in one day, and then kept dropping for some weeks until finding a new bottom, with losses of somewhere around $1 trillion. Most recently, October 2010 was seen as the worst month for the stock markets after the banking crisis came to light – and the economic repercussions are still being felt strongly in most parts of the world.

Although there was hope that economic recovery would continue throughout this year, there are growing concerns about whether this will happen, or if we will see a further drop – the infamous double-dip recession. Behind this are the questions of whether governments put too much money into trying to boost recovery too soon, or whether they haven’t put enough in for it to be effective; how and when countries are going to be able to afford to pay for the economic stimulation so far given, and how they can pay for any more if this is needed; and whether the idea of such government intervention has been effective at all, or whether the market needs to sort itself out.

I’m certainly not qualified to answer these questions. To be honest, I’m not sure that anyone really has the answers, especially given that we’ve seen fairly convincing proof that markets are far from rational as they had previously be held to be. Watching the daily rise and fall of the main indices like the Dow Jones it seems to me that the smallest piece of news is magnified in terms of its impact on the market overall, with billions of dollars being added to, or taken from, the value of companies on the strength of relatively insignificant items.

If this is the case and we go into the last quarter of the year without some strong positive news, will the markets over-react once more and lead us back into a “Black October.”  What do you think?

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Whither the Welfare State?

Posted on 24 August 10 | 3 Comments
Sea wall and railway
Image via Wikipedia

Or should that be “wither” as it’s clearly time to change the model dramatically – a model which was developed after the last war, in a very different world?

As Dr Adrian Rogers quite famously put it, “You cannot legislate the poor into freedom by legislating the industrious out of it. You don’t multiply wealth by dividing it. Government cannot give anything to anybody that it doesn’t first take from somebody else. Whenever somebody receives something without working for it, somebody else has to work for it without receiving. The worst thing that can happen to a nation is for half of the people to get the idea they don’t have to work because somebody else will work for them, and the other half to get the idea that it does no good to work because they don’t get to enjoy the fruits of their labour.”

Having only moved to England a few weeks ago, I find it’s interesting to listen to what people here are saying about the “welfare state” issues, particularly at the moment when it’s clear that the new government has no chance but to make some dramatic changes to the way things have been done in the past 13 years of Labour Party rule.

But it seems that it’s not just the country that Labour has brought to the edge of bankruptcy: former Deputy Prime Minister under Tony Blair, John Prescott, has told us that the Labour Party itself is in danger of bankruptcy, with debts of some £20M ($30M) through a combination of over-spending and poor accounting: ironically making the announcement on the day that Tony Blair’s new investment bank was being registered… At least the party was consistent with its approach to finance, even if the former Prime Minister seems to have profited most handsomely from his time in office.

However, I digress. The basic issue, as Dr Rogers so succinctly put it, is that Governments can’t just create money magically, but can only redistribute money from one part of society to another, and the more that people want to take, the more that others are forced to give.

Few people doubt that societies should help those within them that are unable to fend for themselves – this compassion, after all, is what is supposed to make us human – but the question today is how much help should be given and to whom. I find it astonishing, for example, that there are families in England who have not worked at all for three generations, and simply live off benefits. Others, who receive free housing, believe it should be their right to pass these houses onto other family members. Girls find that being a single parent is a profitable enterprise, and start to have babies at a very young age, then turn to the state for housing and benefits, and are able to live comfortably without working. The list of abuses to the system is endless…

Clearly this is wrong. We should protect those unable to work for reasons of frailty, but those who are healthy should have a defined maximum period – say 6 months – on “free” benefits and then should start “earning their keep.” If they can’t find a paying job within that period, the welfare authorities should have them working for the society that is housing and feeding them – there is so much that needs to be done, from infrastructure development and maintenance to helping the elderly and the sick (hospital porters, for example), and would provide benefits in return for such work. This would not only help motivate them to find more steady (and, perhaps, comfortable) work, but reduce the costs of running local authorities as much of the work could be done by those on benefits.

What do you think – should benefits be given without restriction, or should recipients who are able to do so be obliged to “earn” their benefits, and help the society that is providing them in return?

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Posted in Economy, Europe, Welfare State

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Not Really a Global Economy

Posted on 16 August 10 | 4 Comments
My Pocket Contents
Image by William Hook via Flickr

The news continues to be full of stories around the Global Economy and how companies increasingly operate independent of national boundaries – so that one could be forgiven for believing that we really do live in a global economy.

However, as my current experience of relocating to a “First World” country – England – shows, where one would expect that things do operate in this way, the reality is very different and the Global Economy seems a long way off.

Certainly, some things work well – one can move money between bank accounts across multiple geographies easily (provided, of course, your accounts are all with one bank, otherwise it’s far more complicated). Mobile telephones also operate well across boundaries, although you pay handsomely for making and receiving calls when away from the country where your phone is registered – profiteering, perhaps?

However, the rather large holes in this Global Economy story (myth?)  have really been exposed when trying to establish myself with the basics here.

  • Renting a home – this is far from simple. You have to get credit reference agencies involved and they require enormous amounts of information. Simply giving them details of your bank/s and relationship managers isn’t enough: you have to do all the leg work yourself.
  • Insurance – amazingly, motor insurance companies apparently don’t give credit for a no-claims driving record in countries like Dubai (an extremely challenging environment as anyone who has driven there will attest), although they are happy to do so for comparatively tame driving countries like New Zealand, so no more no-claims bonus on motor insurance…
  • Telephones – it took me a week to establish that I COULD get Blackberry Services on a Pay As You Go basis (I was told by some mobile operators and some phone shops that this was impossible for the first week, but kept researching until I found it could be done).

In fact, for most general things (even using your new bank account’s debit card) the over-riding requirement is for a local Post Code (you’re asked for this the whole time), so if you’re still trying to set things up and don’t yet have a fixed abode, you end up having to borrow a post code and address from a willing friend or relative for even simple transactions.

Why is it, that with a 30+ year history of banking, credit, insurance, telephone, etc., etc., usage in countries like South Africa and Dubai (countries that have “First World” standards of traceability on such things) I have to start over? One would think this information would be available to the relevant companies and authorities in other countries, but it seems to be only the case for adverse information and anyone else is “guilty until they prove themselves innocent.”

So much for the Global Economy – or is it just a case of laziness and profiteering?

———-

P.S. This relocation process is, of course, the reason for my lack of blogs recently – I hope to be back to regular blogging in September.

Regular readers will notice the banner picture change to reflect my new home…

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Posted in Business - General, Customer Service, Economy

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Service – the Quick Way to Kill a Brand

Posted on 20 June 10 | 15 Comments

I took my car for a service this morning – an experience that once again underscored just how easy it is to chase customers away and kill your brand.

Some background – I currently live in Dubai in the UAE, where the climate and conditions are not particularly vehicle-friendly, so that 4 wheel-drive vehicles such as mine need to be serviced every 5000 kilometres (3000 miles). Because the car is still under warranty this necessitates taking it to the dealership from where I bought it.

This particular vehicle, a Mitsubishi Pajero (also known as a Shogun in some markets) is extremely popular in the UAE – providing a well laid-out, spacious interior, good quality and reliability which is what one needs, especially when the temperature outside is somewhere over 45C. We greatly enjoy the vehicle. What I don’t enjoy is the regular service experience – and come the end of the lease period, I’d switch brands for this reason alone.

And this in a market where new car sales were some 82.5% down last year against 2008 according to ArabianBusiness.com. So you think the dealerships would be delivering exceptional service to maximise what few sales there are. Yet the Mitsubishi agents here seem to be oblivious to this simple approach, as today showed.

Yet, a pre-booked service that should take 30 minutes and be done while you wait, means being without a car for 11 hours – I take that car in at 7:30am and can only pick it up again around 6:30pm in spite of asking for it earlier (bigger services take 2-3 days with these people)!

What amazes me is that they seem to live in perpetual chaos. You book vehicles in advance, turn up at the specified time/day and they still seem to be unable to do the job quickly and painlessly because they’ve always got an unexpectedly full workshop. This sort of approach is, incidentally, quite commonplace here – service lets so many brands down (I have another still-unresolved issue with Bose).

What companies really have to recognise is that the after-sales service experience is one of the quickest ways to kill a brand. Customers are not – or should not – be a one-transaction experience. Lifetime value is what  companies need to focus on, as that’s where the real profits lie – repeat customers that become brand advocates. When are they going to understand this simple concept?

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A Failure of Leadership

Posted on 5 June 10 | 11 Comments
A beach after an oil spill.
Image via Wikipedia

The BP oil disaster in the Gulf of Mexico has highlighted many problems – problems with the technology for drilling at depths where the water pressure is around a ton per square inch; problems with BP not being transparent from the outset as to the extent of the spill; problems with oil companies putting short-term profits ahead of ensuring that these issues cannot happen; problems with the US Regulators who seemingly have been extremely lax in applying the regulations and have been granting waivers freely to the oil industry; problems with our ability to clean up oil spills even 21 years after Exxon Valdez (what’s happened to Kevin Costner’s centrifuge-based cleaner?)…

But for me, one of the most surprising things to emerge from this has been the failure of leadership. BP’s leadership issues are, to an extent, understandable – although not excusable – in that they have been focused on protecting shareholder value by trying to downplay the size, scope and likely cost of the problem. This doesn’t excuse the behaviour, as I’ve said, but one can understand it, so it’s not too surprising.

No, the leadership failure I’m referring to has been that of President Obama.

I realise that this statement might cause something of a firestorm from some readers of this blog, but bear with me on this for there are lessons to be learnt and actions to be taken – so it’s not (yet) too late.

We need to recognise that when running for office, then-Senator Barack Obama focused on the need for change – a need that the US population clearly believed in, given the fact that it propelled a largely-unknown junior Senator to the office of President. Central to this theme was his strong belief that things could best be accomplished by working together on the issues with all concerned parties – no matter on which side of the fence they stood.

This, of course, has not been a great success in the Congress and Senate as the divisions have, in many cases, simply been too deep to facilitate working together. The oil spill, though, is a different matter – for there is no question that everyone has a common goal: to stop the leak and clean up the mess as quickly as possible and with as little damage to the environment as is possible.

However, apart from being slow off the mark in terms of visiting the Gulf Coast, President Obama has spent most of his time publicly berating BP rather than being seen to work with them to address the issue in the most comprehensive way. Perhaps he was trying to cover up the shortcomings in his own administration – those regulatory bodies that were not doing their job properly – given the looming mid-term elections, or perhaps his anger simply clouded his judgement. Either way, instead of seeking to work shoulder-to-shoulder with BP and for them to jointly marshal the considerable forces that could be at their disposal if they, and other oil companies, worked together, the situation has become one of adversity. And an adversarial relationship never produces the best overall result.

It’s time for President Obama to put personal feelings and party politics aside on this problem; to work with all stakeholders – oil companies, state and local government (of all political persuasions), and anyone else that can play a positive role. He needs to remember his campaign promise to change the way things are done in Washington, and to work for the best result regardless of personal feelings, of politics and of attribution of blame. There’s plenty of time for all that after the mess is cleaned up.

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Posted in Business - General, Earth Sciences, Leadership, Oil

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The End of Cash?

Posted on 27 May 10 | 5 Comments
Image representing iPhone as depicted in Crunc...
Image via CrunchBase

It’s interesting to see the number of recently introduced products coming to market which are designed to, in effect, remove the need for cash.

One that has garnered particular attention recently is, of course, Square. This comprises a small application that resides on your iPhone (or iPad, iPod Touch) or Android phone, together with a little reader that plugs straight into the audio input jack of the phone and turns it into a personal credit card payment machine that will allow the user to accept credit card payments from anyone for a small fee (typically 2.75% + 15c). With no costs for set-up, application or card reader this is sure to change the game for those tens of millions of small businesses, traders and professionals that have, until now, fallen outside the electronic payment net because they are too small for the card companies to serve cost-effectively.

But Square is not alone – Obopay allows anyone with a  mobile phone to set up an Obopay account and, for just 25-50c (plus 1.5% if you’re using a credit card to fund your account) send money – in other words, make a payment – to anyone else with a mobile phone, whether or not that person already has an Obopay account. Again, there are no setup costs.

And then there’s Intuit with its GoPayment service that also enables credit card payments from a mobile phone – this time with a Bluetooth reader – at a cost of 1.7% + 30c per transaction, although this service does have a monthly service cost of $12.95 attached to it (I wonder for how long, though, given the competition above).

Doubtless there are many others, too, either in stealth mode at present or on the drawing board.

What’s more, these systems allow you to build purchase histories by customers, offer loyalty programs and great levels of service more simply than the straightforward cash systems did – so even the smallest businesses can step up their marketing at little or no cost.

At present, all these products only work for you if you’re a US-resident/business, but it’s only a (hopefully short) matter of time before they go global and the way of transferring value changes forever from cash to electrons. No more looking for change, worrying about how the currency in a new country you’re visiting works, being concerned whether anybody’s watching as you withdraw a large amount of cash from an auto-teller…. And, of course, if you’re a small business, no more concerns about having the right change for those large notes that auto-tellers like to give, about the value sitting in your till, or being worried when taking your cash to deposit it.

It’s going to be interesting to see how society changes over the next generation as we move from cash altogether. Will the nationalistic bonds to a currency (and the resulting issues of payments from/to different countries and with travel) be removed, and could we find a common global currency?

And, of course, we’re seeing the continued drive for the mobile phone to be less a telephone and more a personal digital assistant in every way – clock, alarm, calendar, address book, diary, music player, radio, newspaper, camera, voice recorder and now, wallet. As an aside, it’s interesting to see how many of the Generation Ys don’t wear watches – their phones tell them the time. Has the watch industry got an answer to this, its potentially biggest threat?

We’re at a very interesting point in the 5000 year evolution of money as we know it. Will it disappear completely as a physical object in the next 20 years?

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Living Your Brand – do companies really care about their Brand?

Posted on 2 May 10 | 3 Comments
Goldman Sachs Tower in Jersey City
Image via Wikipedia

2010 certainly seems to be going down as the year when the proverbial corporate skeletons are coming out of the cupboard:

  • Toyota – which had built its brand on reliable, safe vehicles – recalls many millions of cars all around the world in an apparently ongoing saga, with new recalls being announced almost monthly;
  • Goldman Sachs – viewed by many as the pre-eminent merchant bank – being sued for fraud by the SEC and now under investigation by the UK regulators, too;
  • Many airlines – especially those using words like “Favourite” and “5 Star” in their advertising – simply refusing to abide by their legal obligations, in terms of Regulation 261/2004, to provide accommodation and refreshments for their stranded passengers during the volcanic eruption in Iceland.

And this is just a sample of the more recent headline-grabbing issues.

Are they really “Too big to fail” – or just too big to care?

I suspect they believe the latter, not recognising the truth in the old adage that “Pride comes before a fall.” Remember, almost none of the largest and then most successful companies in, say, 1900, are still in any position of strength today – in fact most have disappeared altogether.

These corporates need to get back to basics, to remember that it is their customers that pay their salaries and to start treating their customers as the company’s most precious resource, rather than as a necessary irritant. Simply repeating a marketing mantra branding themselves as the pre-eminent company in their field doesn’t make it true…

The fact is that branding is a lot more than just a logo with a catchy by-line – a company’s brand is everything to do with that company, and the logo is just something to recognise it by as we’re visual creatures. Branding is about customer service, branding is about the way customers interact with the company in all ways, branding’s about staff training, branding includes corporate governance and social responsibility, branding is about all the materials that company produces – from marketing through packaging to the products themselves – in fact, branding is about everything to do with a company.

And this is where so many companies are falling down: they’ve lost sight of everything but the short-term pursuit of the bottom line. And I use “short-term” advisedly – as without attention to all aspects of their corporate brand, those companies will lose customers and start to fail.

Just look at the consumer backlash against many banks that they perceive to have been complicit in the economic downturn. Imagine how consumers who have been poorly treated will feel about giving more of their hard-earned money to those airlines that left them high and dry. Will former Toyota buyers be as happy to buy another Toyota?

Companies need to start refocusing on their entire brand, they need to recognise the power of instant communication for their customers and embrace it to make a positive difference, and they need to once again really put their customers first instead of just saying they do.

What do you think – do companies no longer care about their brand in pursuit of profits? Have you joined the growing ranks of disgruntled consumers and, if so, which are the brands you love to hate?

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Posted in Advertising, Airlines, Banking, Business - General, Customer Service, Lifetime Value, Marketing, Recession, Social Media, technology, Uncategorized

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