Whole Solution for Small Businesses

InfoWorld writes about how small businesses in the U.K. are being offered a one-stop shop for software and broadband through a new joint offering from Britiesh Telecom and Microsoft.

BT Connected and Complete has been put together to give small companies broadband access, e-mail, Office software and support and maintenance on a per-user basis, the companies said. For about £50 ($89) a month per user, depending on the size of the company, a local BT channel partner will install and set up the broadband connection, with firewall and antivirus software, and provide Microsoft's Solution for Hosted Exchange 2003, Version 2.0, for e-mail, contacts and calendar access, plus Microsoft Office Small Business Edition 2003.

Companies will also be offered a domain name and simple Web design software to help them create their first Web site, Microsoft's Scottish Regional Manager Raymond O'Hare said.

BT's channel partners will provide support and will visit each customer every six months to perform an "IT health check up" on the company to assess its infrastructure and future needs.

This is exactly what is needed in India, but at a much lower price point.

From a News.com report:

The growing optimism in the small-business market will see more money being spent on hardware, security software and information management software, Forrester predicted. New security investments are likely for 75 percent of small and midsize companies. About 74 percent are planning to purchase new servers, while 65 percent plan to buy new storage gear. Nearly 70 percent are looking to buy additional Internet connectivity and bandwidth, with 85 percent of these also likely to shop for networking hardware.

Forrester said that 61 percent of small businesses have upgraded at least one PC to Microsoft's Windows XP operating system, and 95 percent are planning to replace an average of one in four of their PCs.

The companies surveyed said they plan to buy directly from vendors, bypassing the middleman. Among the suppliers preferred by companies in the survey are Dell--which was the choice of 79 percent of the respondents--Microsoft, Cisco Systems and Symantec.

Walter Mossberg on Gmail

WSJ's Mossberg advises Google to drop ads in Gmail and instead offer the service for a small annual fee:

Google's initial success was built on its breakthrough search technology, which produced more useful search results, much more quickly, than anyone else. Some analysts believe that edge is waning or is gone. I still think Google is the best, but in any case, there's another secret to Google's success: honesty.

Of all the major search engines, Google is the only one that's truly, scrupulously honest. It's the only one that doesn't rig its search results in some manner to make money.

Google is risking its reputation for honesty, and for putting the user first, with a new e-mail service it is currently developing, called Gmail. The Gmail service, which I've been testing, offers users free e-mail with a massive storage limit of one gigabyte, far more than any competitor provides.

There's a catch, however. Google intends to run ads down the side of the e-mail messages in Gmail, just like it does in its search results. And, just as on the search pages, the Gmail ads will be triggered by key words in the body of the text -- in this case, the text of your e-mail. So if I get an e-mail that refers to, say, a kind of product, I might get an ad for a store that sells that product.

The problem here isn't confusion between ads and editorial content. It's that Google is scanning your private e-mail to locate the key words that generate the ads. This seems like an invasion of privacy. Google notes its scanning will be done by computers, and that these machines can't understand the e-mails and are just looking for specific terms. And the company notes that nearly every e-mail anybody receives is already scanned by computers looking for spam or viruses.

These are logical points, but the proposed system is still a little creepy, and it has the potential for big problems if the content scanning were ever misused by Google. Google might also be forced to use such content scanning in the service of government subpoenas or court orders that might apply to years' worth of its customers' e-mails.

So I'm calling on Google to preserve its sterling reputation for honesty and customer focus by offering an alternative form of the new Gmail service. The company should offer Gmail accounts without the ads, and without the scanning, for a modest annual fee. That would put the choice where Google has always placed it: in the hands of its users.

What Mossberg says has tremendous clout in the world of technology. His technology columns are great reading. Wired has a profile of him:

In 1990, when Mossberg's sons were 8 and 12, he conceived of a new gig that would enable him to wield influence from home: a tech column. He had been captivated by computers and gadgetry for 20 years. As PC sales skyrocketed in the early '90s, he sensed a historic shift: "I believed that the tech market was about to broaden and democratize, and the column could catch the wave."

From its launch, Mossberg knew exactly what he wanted. "Personal Technology" would be utterly different from the reviews already out there: "They were by geeks for geeks, filled with jargon, condescending to nontechies, and reverential about the computer and the computer industry," he says. "I wanted to write for the nontech user and be critical of the industry."

When it debuted on October 17, 1991, "Personal Technology" was an immediate hit. Mossberg's voice, amplified by the power of the Journal, resonated like no other.

In addition to writing "Personal Technology" and "Mossberg's Mailbox," a Q&A feature, he launched "The Mossberg Solution" and, last year, the D conference.

India's Jobs Paradox

WSJ suggests that "despite the economic surge, many workers still lack steady pay."

For many Indians, the economy's resurgence isn't translating into the one thing they want most -- a steady paycheck. In fact, India has seen a marked decline in the number of jobs at companies with more than 10 employees in recent years.

[There are] hundreds of millions who work in the so-called unorganized sector, which accounts for 92% of India's jobs. They are farmers, street vendors, truck drivers, traders or migrant laborers. All have little or no job security.

With nearly 10 million people entering the work force each year, India desperately needs to rev up its creation of jobs beyond high-profile industries like software. The good news is that India has one of the world's youngest populations, and, by and large, students are staying in school longer. Some experts fear, however, that there will be too few jobs awaiting them.

Officially, India's unemployment rate is about 8%. But economists note that figure doesn't accurately reflect the reality of working lives in a country where the poverty rate exceeds 20% and many people are chronically underemployed.

"Employment is being generated in a few small pockets," says R. Nagaraj, an economist at the Indira Gandhi Institute for Development Research in Bombay. "In Bangalore and Gurgaon, you really feel it. These cities are throbbing. But that doesn't define India -- just go a hundred miles away and nothing's happening."

In order to reverse the current trend of increasing unemployment, India needs to register growth rates of 8% or more on a consistent basis, according to the government's own projections. While India will hit that target for the financial year that ended in March, economic growth is unlikely to exceed 6.5% in the current financial year.

Job creation has been India's weak spot ever since the country began opening its economy in 1991. Since then, the situation at private and public companies with more than 10 employees -- the "organized" sector -- has been "practically jobless," says S.P. Gupta, a senior official at India's Planning Commission who focuses on employment. That is because those companies are shedding workers and increasing productivity in the face of new competition, he says.

The article also summarises where Indians work:
• Agriculture: 191 million
• Manufacturing: 41 million
• Trade, Hotels and Restaurants: 38 million
• Community and Personal Services: 31 million
• Construction: 15 million
• Transport and Communication: 14 million
• Finance, Real Estate and Business Services: 5 million
• Mining: 2 million
• Utilities: 1 million

China's Cellphone Market

An article in the McKinsey Quarterly reinforces a point made in the Economist recently about the growing importance of ODMs (original design manufacturers):

The world’s biggest and best-known sellers of mobile telephones face cutthroat competition in China. The market share of local vendors, such as TCL and Ningbo Bird, has jumped from 5 percent of all units in 1999 to nearly 40 percent in 2003, with upward of 50 percent growth in 2003 alone (exhibit). These gains have come largely at the expense of multinational corporations. To slow the penetration of local players, a McKinsey study suggests, global branded handset makers should consider outsourcing the design of some products to original-design manufacturers (ODMs) in Taiwan and South Korea. In this way, foreign manufacturers could cut their costs, increase their revenues, and more quickly market the models that Chinese consumers really want.

In addition to designing products for other companies, ODMs frequently manufacture goods for customers that then affix their own brand names. This one-stop offering distinguishes such ODMs from electronics-manufacturing service companies such as Solectron and Flextronics, which either don’t undertake design or have only started to build these capabilities. Global mobile-phone makers currently avail themselves of both kinds of outsourcers to varying degrees. While the use of ODMs may be relatively new for the mobile-handset industry, these companies currently manufacture more than half of all notebook computers in the world.

Many foreign handset manufacturers, relying largely on models they sell in other markets, have limited R&D staffs in China. This one-size-fits-all approach increasingly puts such companies at a disadvantage to local ones, which have their own R&D talent and can quickly design phones tailored to specific customer segments. In China, 60 percent of all handsets are "clamshell" units, for example, but many foreign producers don’t offer this type of mobile phone, which isn’t as popular in their home markets. Local manufacturers also have the specialized skills to design phones capable of entering thousands of different Chinese characters in text messages, even on small handsets. We found that ODMs can help global giants take on their local competitors—and improve their time to market—because ODMs are more familiar with the language and tastes of Chinese consumers and have the requisite engineering talent.

Although ODMs offer their clients marketing and cost advantages, they have their limitations. The mobile-handset industry uses several operating systems and central processing units. Since ODMs have to spread their design resources across a range of technologies, they can’t be on the cutting edge in every facet of production. Furthermore, ODMs routinely serve competing global players, so ideas developed for one customer could be applied to the products of another. Thus foreign handset companies must choose carefully which parts of their Chinese product lines to outsource. They could benefit by continuing to design in-house the small but rapidly growing and profitable high-end segment, with models offering features such as video and electronic-payment systems.

The Power of Productivity

The McKinsey Quarterly has an excerpt from the book "The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability", by William Lewis:

At the McKinsey Global Institute (MGI) we have had, since 1990, the luxury of studying the dynamics and evolution of a representative group of industries in 13 countries: Australia, Brazil, France, Germany, India, Japan, the Netherlands, Poland, Russia, South Korea, Sweden, the United Kingdom, and the United States. In each, we analyzed the performance of 6 to 13 industries and compared it with the performance of the same industries in a handful of other countries. Our work is thus based on detailed studies of individual businesses, from state-of-the-art auto plants to black-market street vendors. It builds an understanding of the economy from the ground up, not the top down—a grassroots rather than a bird’s-eye view.

This research has produced a new and unexpected understanding of the persistence of income disparities among nations. Economic progress depends on increasing productivity, which depends on undistorted competition. When government policies limit competition, even unintentionally, more efficient companies can’t replace less efficient ones. Economic growth slows and nations remain poor.

GDP per capita is widely regarded as the best single measure of economic well-being. That measure is simply labor productivity (how many goods and services a given number of workers can produce) multiplied by the proportion of the population that works. This proportion varies around the world—though, interestingly, not by much.

Productivity, however, varies enormously and explains virtually all of the differences in GDP per capita. Thus, to understand what makes countries rich or poor, you must understand what causes productivity to be higher or lower. This understanding is best achieved by evaluating the performance of individual industries, since a country’s productivity is the average of productivity in each industry, weighted by its size. Such a micro approach reveals the important fact that the productivity of industries also varies widely from country to country.

This approach yields two crucial insights. First, to understand why some countries are mired in poverty, it is necessary to look beyond broad macroeconomic policies, such as interest rates and budget deficits, and also consider the myriad zoning laws, investment regulations, tariffs, and tax codes that hold back the productivity of industries and thus a nation’s prosperity. Of course, macroeconomic stability is necessary. MGI’s studies of Brazil, India, and Russia show that without it companies concentrate on making money by exploiting the instability rather than by raising their productivity. Yet a stable economy alone isn’t enough to make countries prosper and grow: Japan has had a stable economy for decades but has suffered from ten years of stagnation.

The second insight is the realization that the income level of a country is determined, above all, by the productivity of its largest industries. High productivity in the unglamorous "old-economy" sectors—retailing, wholesaling, construction—is most important, since more people work in them. The fabled high-tech enclaves and financial markets are less so. MGI’s study of rapid US productivity growth in the 1990s found that it was caused by just six industries, including retailing and wholesaling, not by the vaunted "new economy." IT investments played a modest role. In India, the fast-growing IT industry has yet to raise the living standards of more than a minuscule part of the population.

Differences in labor and capital markets don’t matter, [so] what does? In each of 13 country studies, MGI found that the primary answer was the nature of competition in product markets.

Competition is the mechanism that helps more productive and efficient companies expand and take market share from less productive ones, which then go out of business or become more efficient. Either way, consumers benefit as companies offer better goods at lower prices, and this may in turn unleash a burst of new demand.

How can countries muster the political will to do all these things? The answer lies in focusing on consumers, not producers. Many people think that production itself creates economic value—an idea that sometimes makes governments protect businesses regardless of their performance. This approach is mistaken. Such people and governments fail to understand the link between production and consumption. Goods have value only if consumers want them. Otherwise sheer production does little to raise standards of living.

Most poor countries are far from having a consumption mind-set. Their governments and leaders, like those of the former Soviet Union, focus instead on output. A consumption mind-set requires some notion of individual rights, including the right to buy what you want from anybody who wishes to sell it to you. Consumers want to patronize companies that offer better products and services or lower prices. Those are the companies that survive if competition is equal. Thus, consumer interests are served when competition isn’t distorted.

If policy makers in poor countries—and the many development experts who advise them—can accept this overlooked fact, those countries could unleash rapid growth. Only then will the shape of the global economic landscape begin to change for the better.

CSS, XML and XHTML

Dave Shea has a nice tutorial on the web standards:

It’s like this: your text is content. Content is nice, but without any hints about the content’s structure (which includes things like spaces and headers and lists) you end up with a jumbled mess of text. Completely unusable. Structure is an extra layer which breaks down that messy text into logical groupings and organizes them in a way that conveys extra information about individual elements in that document. How that information looks may be implied by the structure (for example, you’ll most often find that a primary page heading will be larger than the body text) but it doesn’t dictate it any further.

That’s where presentation comes in. Presentation is the formatting cue that tells the primary page header to be red, italicized, and 150% of the body copy’s size. Presentation is an extra layer of information on top of a document’s structure, that builds up the (non-visual) structure into something far more appealing to the eye. CSS is the presentational layer, and it can take a very simpy marked up document, and turn it into something amazing.

TECH TALK: The Company: Arie de Geus

Arie de Geus worked at Royal Dutch Shell for 38 years and is widely credited with originating the concept of the learning organization. His book, The Living Company: Habits for Survival in a Trublent Business Environment, considers the Company as a living entity and tries to address the issue of longevity in companies.. From the book description: “Most companies do not survive the upheavals of change and competition over the long haul. But there are a few remarkable firms that have withstood the test of several centuries. What hidden lessons do they hold for the rest of us? Arie de Geus reveals the key to managing for a long and prosperous organizational life.”

Arie de Geus writes:

In the world of institutions, commercial corporations are newcomers. Their history comprises only 500 years of activity in the Western world, a tiny fraction of the time span of human civilization. In that time, as producers of material wealth, they have had immense success. They have been the major vehicle for sustaining the exploding world population with goods and services that make civilized life possible. In the years ahead, as developing countries expand their standards of living, corporations will be more needed than ever…Yet…the average life expectancy of a multinational corporation – Fortune 500 or its equivalent – is between 40 and 50 years. Human beings have learned to survive, on average, for 75 years or more, but there are very few companies that are that old and flourishing.

But there are some companies which do last long – Royal Dutch Shell being one example. Arie de Gues was part of a team which studied the question of corporate longevity and what factors were common to the survivors. He takes up the story:

We found four key actors in common: Long-lived companies were sensitive to their environment. They were cohesive, with a strong sense of identity. They were tolerant. They were conservative in financing.

It did not take us long to notice the factors that did not appear on the list. The ability to return investment to shareholders seemed to have nothing do with longevity. The profitability of a company was a symptom of corporate health, but not a predictor or determinant of corporate health…Nor did longevity seem to have anything to do with a company’s material assets, its particular industry or product line, or its country of origin.

I now see the for components [common to long-lived companies] this way:

1. Sensitivity to the environment represents a company’s ability to learn and adapt.
2. Cohesion and identity, it is now clear, are aspects of a company’s innate ability to build a community and a persona for itself.
3. Tolerance and its corollary, decentralization, are both symptoms of a company’s awareness of ecology: its ability to build constructive relationships with other entities, within and outside itself.
4. And I now think of conservative financing as one element in a very critical corporate attribute: the ability to govern its own growth and evolution effectively.

Like all organisms, the living company exists primarily for its own survival and improvement: to fulfill its potential and to become as great as it can be.

Everything the company does is rooted in the two main hypotheses of this book: the company is a living being, and the decisions for action made by this living being result from a learning process.

Peter Senge adds in the Foreword to the book: “Seeing a company as a living being implies that it creates its own processes, just as the human body manufactures its own seels, which in turn compose its own organs and bodily systems. Is this not exactly how the informal organization of any large company comes into being? The networks of relationships and communication channels essential to anyone doing any job are indeed created by the people themselves.”

Once we recognise that the Company is indeed a living being, our perspective, we will see an emergence at work, where the whole is much greater than the sum of its parts (people and processes).

Tomorrow: Peter Drucker

Related Entries:  [All]
TECH TALK: The Company: Peter Drucker [May 7, 2004]
TECH TALK: The Company: Amar Bhide [May 5, 2004]
TECH TALK: The Company: John Micklethwait and Adrian Wooldridge [May 4, 2004]
TECH TALK: The Company: A Personal View [May 3, 2004]