David Jacobson's External Insights

Cash cow or a growing business? Designing a business model

James Hong's post Reinventing Hotornot gives an insight into the choices a business owner has to make and the reasons.

In Hong's case, the need to retain talented staff and a change in the online advertising environment has pressured HotorNot to move from a subscription-based innovation-free "cash cow" to an advertising based model which is taking some risks.

Should you tamper with something that is successful (if it works, don't fix it!) or do you improve it and respond to changed circumstances?

If you are going to try something risky should you experiment separately from the main business first and then integrate later?

(link via Rob Hyndman)

About Australia: 2006 census data released

Every business needs to know about its customers, so the first release of 2006 census data is of great interest.

The statisticians are having a wonderful time: there are tables of Census data, available on a range of topics, for a chosen location as well as thematic maps.

What do we know? Australia is ageing but growing (the population clock will hit 21 million in the next day).

More data will be released later this year.

Are you customer-focussed?

A lot of business owners would argue that they are customer-focussed, but when you look at the way they operate they have set up their business systems to suit themselves, not their customers.

For example, is your account format designed to suit you or your customer?

Financial institutions traditionally were account or product-based so that a customer could not easily find out information about their accounts in the one place, they had to look up each of their accounts.

This The Bankwatch article describes the problem banks now have moving from being ‘product centric’ to being ‘ customer centric’.

Fail fast, fail cheap

One of the lessons fom the fast-moving technology sector for new businesses or new projects is "fail fast, fail cheap".

This does not mean that you start a business with the intention of failing, but that you must have pre-determined measures of success and failure. By observing these you control your costs, and the losses you suffer if you fail. This is one of the hardest things to do for a project you are passionate about.

The BBC expresses this as "Fall forward, fast: make many small bets, iterate wildly, back successes, kill failures, fast."

(from The BBC's Fifteen web principles)

What if your customers were talking to each other about you?: sharing information about financial services

I previously discussed "social lenders" Zopa and Prosper here (also called peer-to-peer lenders, where persons who want to lend money are introduced to people who want to borrow) . Now Circle Lending has been established to help document private loans between relatives and friends.

It may be that individuals lending direct to each other without the intervention of a bank is not of concern to the banking industry but what if bank customers started sharing information on the internet about their financial institution experiences?

Wesabe is doing just that:

You can manage your finances anywhere, online, for free and by allowing it to aggregate transaction data anonymously it can compare your behavior to others like you. Do you spend more or less than most others in your community for telecommunications ?

It can give you information about the suppliers you use every day. Are fees more at one bank than another? The information available at Wesabe is extensive.

How do others feel about service providers in your area? It turns out that many people are willing to say how they feel about the places they spend their money. Would it help you to know that of the three dry cleaners in your neighborhood, one had a 100% satisfaction rate?

Do you find the information you get on your credit card statements unhelpful? If most people categorize expenses in certain ways, the service provider can usefully suggest categories, and auto-fill entries to help you.

The ability to import other data into the database makes it possible for you to automatically compare your spending against a personal goal.

But if you simply want an online financial management system try Buxfer . Geezeo also offers discussion groups. Zecco offers similar services for share trading.

Wall Street Journal recently ran an article on Facebook's move into financial services. Its Lending Club is apparently off to a solid start.

Will your business be a part of a community or outside it?

Report to my readers

After 406 posts (individual entries) on this blog (the first was on 14 July 2004), I have decided to do a redesign.

The first change you will see is that External Insights will no longer be the default page for my domain name www.djacobson.com. That honour will now go to Australian Regulatory Compliance Review which has overtaken this blog in reader interest. But External Insight's URL will remain at http://www.djacobson.com/external_insights/ (go there and bookmark it now, in case this is what you came to read!). The RSS feed will not change.

Archives will continue to be available (by search or by Category).

Thank you for reading (and tell your friends and associates).

Protecting your business reputation against defamation: the Coco Roco restaurant review

In John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28 14 June 2007, the High Court of Australia rejected an appeal by the publishers of the Sydney Morning Herald against a finding by the NSW Court of Appeal that a review of the Coco Roco restaurant was defamatory by imputing that the restaurant sells unpalatable food  and that the restaurant provides some bad service. The original trial jury decided the review was not defamatory.

Paragraph 161 of the judgment sets out the review  in full (headed Crash and Burn: When dining on the view is the only recommendation).

After the review the restaurant closed and the owners suffered significant losses.

The point of this note is not that restaurant reviewers can be successfully sued but that defamation offers a source of redress for business owners (although an admittedly expensive one).

To quote Gleeson CJ And Crennan J:

The case concerns that form of defamation which involves injury to business reputation, that is, the publication of imputations that have a tendency to injure a person in his or her business, trade, or profession. That the law of defamation affords such protection is not surprising. Suppose someone says: "X is a thoroughly decent person, but he is showing signs of age; his eyesight is poor, and his hands tremble". That would not be a reflection on X's character. It would be likely to evoke sympathy rather than hatred, ridicule or contempt. If, however, X were a surgeon, the statement could be damaging. To say that someone is a good person, but a dangerously incompetent surgeon, is clearly likely to injure the person's professional reputation. That is an established form of defamation, and it was not called in question by the parties to the present appeal. 

What if you googled a job applicant and found out something?

What if you found out something about a job applicant (or even a current employee) on the internet? How would you use that information?

Harvard Business Review has published its first-ever HBR Interactive Case Study. The case, which is fictional, deals with what a company CEO should do when he discovers (via his HR manager's Google search) that his preferred candidate for managing his first China branch, was convicted 8 years ago for protesting over China's treatment of a dissident journalist .

HBR will publish the best submissions online after the case “closes” on June 15, 2007. But you can see a selection here. What would you do?

June 2007 Podcast

As my June podcast coincides with the end of the financial year and the annual reporting season, I discuss issues which might require a constitution change or are relevant to shareholder communication and meetings. I discuss the proposed change to the method of distributing annual reports and directors' indemnities.

The podcast goes for 11 mins and is 10mb.

Disclaimer

Click to listen now or download for later

As my June podcast coincides with the end of the financial year and the annual reporting season, I discuss issues which might require a constitution change or are relevant to shareholder communication and meetings. I discuss the proposed change to the method of distributing annual reports and directors' indemnities.

The podcast goes for 11 mins and is 10mb.

Disclaimer

Click to listen now or download for later