David Jacobson's External Insights

Effective execution of strategies

The Secrets to Successful Strategy Execution from Harvard Business Review points out that implementation depends largely on 2 factors:

• Clarifying decision rights— for instance, specifying who “owns” each decision and who must provide input
• Ensuring information flows where it’s needed— such as promoting managers laterally so they build networks needed for the cross-unit collaboration critical to a new strategy

Booz has also published an interesting Organization Effectiveness Simulator.

Is your business still in 1999?

Australia 2020

The Australia 2020 summit has issued its initial report.

Although there is doubt about whether the delegates were representative and whether they were the "best and brightest" the report contains a snapshot of contemporary Australian views which the Government will consider.

UPDATE: David Marr comments on the process.

UPDATE: Final Report

Statistical Yearbook for Asia and the Pacific

The Statistical Yearbook for Asia and the Pacific is produced by the UN Economic and Social Commission for Asia and the Pacific (ESCAP), to provide a detailed picture of the major economic, social and environmental trends in Asia and the Pacific. Findings in this year’s edition include increased urban poverty, that energy consumption grew at a pace unequalled elsewhere and increased motorization is improving mobility.

Building a company culture

This interview with Google's engineering director gives some insight into how the company maintains its creative culture and innovative operations.

Australia 2020 summit: scenario planning on a national scale?

The Rudd Government is convening an Australia 2020 Summit at Parliament House on 19 and 20 April to help shape a long term strategy for the nation’s future.

The Summit will debate and develop long-term options for the nation across 10 critical areas. It is not clear whether the summit will actually do scenario planning.

The objectives are described as:

• To harness the best ideas across the nation
• To apply those ideas to the 10 core challenges that the Government has identified for Australia – to secure our long-term future through to 2020
• To provide a forum for free and open public debate in which there are no predetermined right or wrong answers
• For each of the Summit’s 10 areas to produce following the Summit options for consideration by government
• For the Government to produce a public response to these options papers by the end of 2008 with a view to shaping the nation’s long-term direction from 2009 and beyond.

Bank-customer communication and blogs

Whilst I have been aware of Savings & Loans credit union's blog for some time, the Better Banking Blog has drawn my attention to RaboPlus's Executive Blog and its demonstration of the value of interactive communication with customers.

In the comments section on a post about Westpac's online banking downtime, RaboPlus's Head of Financial Services for  Australia and New Zealand receives comments both about his site's own downtime and design and responds to both quickly receiving praise from the commenters.

There's no point in being defensive: if you're open about problems and show that you'll respond to  comments you'll attract a favourable response.

Reviewing your CEO

Venture capital investors are reputed to be hard-nosed, so I found this framework for reviewing a CEO to be of interest.

It assesses the CEO in the following areas:

• Vision
• Leadership
• Operating Management
• Values and Integrity
• Shareholder/Investor/Financial Community
• Strategic Partners
• Human Resources
• Public Relations
• Board Relations
• Financial Results
• Key Challenges in the Year Ahead

Message to a new lawyer: don't be arrogant

Each year at Yom Kippur (Jewish Day of Atonement) I say a prayer asking for forgiveness for (amongst other things) being arrogant. I did not always think that this applied to me.

I recall responding, when I was a young lawyer, to a client's observation that lawyers were privileged with a sharp retort that, on the contrary, lawyers had huge obligations and responsibilities.  But the truth is that lawyers are indeed privileged and failure by many lawyers to recognise that privilege does lead to arrogance.

What privilege am I talking about? The privilege of working in a profession that is respected for its ethical standards and commitment to justice and the rule of law. The privilege of being able to earn a good income. Yes, these privileges come with obligations but the benefits must not be underestimated or abused.

How can a young lawyer (or indeed any professional of any age) combat arrogance?

The simplest way is to put clients first.

Here are some everyday rules:

• remember that it's the client's matter;
• never make promises you can't keep;
• obtain full instructions (don't jump to conclusions);
• anticipate problems;
• clients are people: know and understand them;
• listen hard;
• discuss fees;
• don't send rude letters (draft them, but don't send them);
• give your clients understandable advice;
• be practical.
  

Don't go into partnership with any person unless they are like-minded and hold the same values.

This post has been inspired by Blawg Review #142

When your product becomes a commodity: how to respond

You need to be different to make your product stand out in the marketplace and maintain profit margins.

But if you can't differentiate, how do you survive if you find yourself in a commoditizing industry characterized by me-too products, overcapacity, and frequent price cuts? How can you make money?

Read this HBS Working Knowledge article

Storytelling in Business: Made to Stick

Made to Stick: Why Some Ideas Survive and Others Die by Chip Heath and Dan Heath is a great story about what makes a great story. Why is that important? In business, great stories are very effective tools.

Using examples from urban myths and Hollywood pitches through to public interest campaigns and product marketing, the authors emphasise getting to the core of your message by using high-concepts and schemas and getting people's attention (Didn't see that coming?).

Here's an excerpt. Worth reading.

Designing law practice management systems

Designing a law practice management system is not as simple as documenting your office management procedures or your risk management systems (see here).

A comprehensive system will consider the matters identified by ISO 9000: 2000 as interpreted by Law 9000.

The system should deal with:

• Customer focus and customer satisfaction;
• Leadership;
• People;
• Process management;
• Continual improvement;
• Decision making; and
• Supplier relationships.

Connecting all of these issues is the Plan, Do, Check, Act model which deals with

• Interaction of processes;
• Analysing data;
• Outsourcing controls;
• Including support services as part of client services;
• Ensuring the processes are effective;
• Ensuring the availability of resources;
• Continual improvement.

It also discusses:

• document controls;
• record controls (client instructions, meeting notes, reports, professional negligence, notifications, storage and backups);
• management commitment;
• customer focus;
• quality review, file audits and reviews;
• purchasing;
• looking after client property.

Personality models

I first heard Chris Golis talking about personality models in the context of his assessing managers of businesses in which his venture capital funds invested. He would only invest in a business if he was satisfied with its management.

He has now retired from venture capital but has continued his interest in personality models.

He has written the Humm Handbook about the Humm Wandsworth personality model.

The model identifies seven primary emotions which together drive personalities: movers, double-checkers, artists, politicians, engineers, hustlers and normals.

First Australian social (peer to peer) lender: iGrin

I previously discussed social lenders here and here.

iGrin has launched in Australia: its principal offering is a borrower-lender matching service (up to a maximum $25,000,00 per loan) whereby a borrower nominates the amount it wants to borrower and the preferred rate and iGrin co-ordinates the lenders' bids until sufficient funds at the right rate are recived. The lenders do not know who the borrower is.

iGrin charges borrowers an establishment fee (once the loan is funded) of 1-2% (depending on the credit rating) of the amount borrowed or $90, whichever is greater.

It charges lenders a monthly servicing fee of 0.5%-1.5% of the current outstanding loan principal.

There is also a Member Direct service where a lender lends to a specific borrower and iGrin arranges the loan documents and funding.

Strategic planning case study: the future of the legal profession

Every business needs to regularly review its future focus:  what are its strengths, opportunities, weaknesses, threats?

What is its business model? What resources are needed? What is its competitive advantage?

The legal profession, like others, has been affected by technology and competition. The Times Online is running a series of 6 draft extracts from Richard Susskind's new book The End of Lawyers? under the heading, Will Lawyers exist in 100 years?. Here's the first extract.

31 October Part 2: A decade on: much changed, much still to unfold

3 November Part 3: How the traditional role of lawyers will change

12 November Part 4: Outside investors will demand a very different type of law firm

19 November Part 5: No one has a vision for the next generation of lawyers

28 November Part 6: Only a foolhardy lawyer will fail to embrace change

Index

Scenario planning

One of the hardest things for businesses is to predict the success of their product.

If you're going to brainstorm the future then the Extinction Timeline (pdf) will be a useful tool.

Designed by Richard Watson, author of Future Files, the timeline looks out to 2050 and forecasts the end of:
2009: Mending things
2014: Getting lost
2016: Retirement
2020: Copyright
2022: Spelling
2030: Keys
2033: Coins
2036: Petrol engined vehicles
2037: Glaciers
2038: Peace & Quiet
2049: Physical newspapers, Google
Beyond 2050: Uglyness, Nation States, Death

Where does your business stand? Do you need to look for a new business?

Via Ross Dawson

Does your business have a personality?

One of the first questions asked by brand advisers is "how would you describe your firm if it was an animal...or a car...or a person?" Is it a camel or a hippo or a tiger? A porsche or a volvo?

They try and express the character of your business graphically or through design.

Most often we see this on websites. Is your website modern and efficient? Or clunky and conservative? Does it have personality?

Community First Credit Union have tried to express their personality on their website through an online greeter (a concierge?) called Lisa. Is she fun, innovative or a failure?

Type "dance" into the question field and decide whether she's appropriate for a financial institution.

Demonstrating your expertise to potential customers

In the Corporate and Business Blogging session at the recent Australian Blogging Conference, 2 of the reasons given for a business to blog were to demonstrate your expertise and to show thought leadership.

During the discussion we talked about blogging policies and I said that I self-edit: I do not discuss confidential client matters and I do not talk about proprietary business methods I have developed.

The discussion moved on but I want to go back and discuss the importance of sharing information with (even educating ) potential customers.

It's long been my view that businesses (including doctors and lawyers) benefit by talking about what they do and by giving free information, whether it's building a cupboard, making cakes, medical information or administering an estate.

With information, potential customers are able to make some basic decisions: do they need your service/product or not?  How do your services/product compare with others? Can they do it themselves? Do they need an expert?

I also believe in the value of collaboration with other like-minded people (see my wiki).

I believe that the best businesses are those who are willing to share information. Because by doing so they demonstrate that what they do is work with you from a common base and add more value to your relationship than if you did not have that shared knowledge.

Who would you rather work with? Someone who is willing to provide you with information and evidence of their expertise or someone who isn't prepared to communicate at all?

What do your employees think?

It's often said that a business's best marketers are its employees (and conversely unhappy employees result in bad service).

In a time when we have technological social networking tools are you giving your staff the opportunity and encouragement to publicly talk about your business? Are you monitoring what's being said about your business online?

Here's what happened when an employee of Lloyds TSB (a UK bank) read critical reviews of her employer:  she posted a write-up about the trials and tribulations of being a bank cashier and ended with this:

Why do I stay - I enjoy the job, the staff and regular customers are lovely. The bank are very flexible regarding part-time work,maternity arrangements and are understanding regarding kids being ill swapping days around etc. I suppose they need to keep the dedicated workforce happy,as at lower levels it mainly consists of part-time women...

I'm not sure how long there will be traditional large banking organisations. With the increase of internet banks, telephone banks and supermarket banking. I believe their only chance of survival is to provide outstanding customer service. So far they haven't been getting it right. My impression is they have now recognised the need to change and hopefully things will improve for the better.

This clearly shows an employee acting as advocate and the importance of not undervaluing your frontline staff. (via Bankwatch)

If you want to know what's being said about you online, sign up for Google Alerts.

If leadership can turnaround a business, can a failure of leadership lead to its destruction?

In Psychology, Pathology, and the CEO  Rosabeth Moss Kanter discussed the role of CEO's in turning failing businesses around.

In Driven to [Self-] Destruction Joanna Pachner discusses the role of a law firm's leaders leading up to its dissolution, particularly the loss of its distinguishing culture which gave the firm its competitive advantage.

She tells a compelling story of the collapse of a firm when it failed to act in accordance with its mission statement (that their business was to be conducted "only within an atmosphere of caring, collegiality, mutual respect, trust and confidence, which recognizes a commitment to the firm as a whole.")

via Gerry Riskin

Blawg Review #126: business and the law

Blawg Review #126 features some great posts for both businesses and their lawyers under the folowing headings:

• Business opportunities and the legal implications – explore the legal pitfalls and benefits of growing your business
• Lawyers and the clients who hire them – insights into better relationships between lawyers and business people, including their fee arrangements
• Employers and employment legal issues – all too often the relations between employers-employees have legal implications
• Technology and management practices — for lawyers and businesspeople who want to manage their law firms and businesses better
• Marketing — for lawyers and with lessons for businesspeople too.

Developing law practice management systems

It's ironic: my consulting practice involves me advising clients on compliance and risk management frameworks and now I have to assess my own!

As an incorporated legal practice I must demonstrate to the Legal Services Commissioner that I have an appropriate management system which must include, as a minimum standard, policies, procedures and practices which are designed to ensure:

• competent work  practices to avoid negligence;
• effective, timely and courteous communication;
• the timely delivery, review and follow up of legal services to avoid delay;
• acceptable processes for liens and file transfers;
• a shared understanding and appropriate documentation from commencement through to termination of retainer covering costs disclosure, billing practices and termination of retainer;
• timely identification and resolution of conflicts of interest;
• safe and secure records management;
• timely compliance with undertakings, orders and rulings;
• the effective supervision of the practice and its staff; and
• avoidance of any failure to account for trust monies.

These ten requirements have become known as the ’10 commandments’.

When I left my former practice 3 years ago and set up a consulting company, legal practice rules did not permit Queensland solicitors to incorporate; they either practised individually or in partnership. So my consulting work was done through a company and my legal advice was done personally. But from 1 July 2007 the laws changed and my consulting company is now an incorporated legal practice.

The rules for incorporated legal practices require them to have "appropriate management systems" but partnerships do not have that requirement (yet).

In the 90's, in my previous firm (then 9 partners, 140 staff) I saw the need for quality practice management and through QIL we were certified under their program and I was active in spreading the word about the benefits of practice management for lawyers.

And I'd like to think that I've incorporated similar good practice management in my solo practice.

The QIL Code has now been replaced by LAW 9000 – Legal Best Practice as a standard which uses the internationally recognised ISO 9001 as its foundation.

The 10 commandments requirement is not a quality certification system. It does not appear to me to cover everything that a legal best practice system would cover.

But it is now argued that the quality management systems were weak on risk management.

I remember that my previous quality certification program was document intensive.

So I've decided to use this blog to chart my progress over the next 3 months as I map my current procedures against the 10 commandments and document any opportunities for improvement that I find as I go along.

I know there will be at least one issue I won't have to deal with: last time my criminal law partner did not like my suggestion that a client's blood sample should not be stored in an office fridge!

It's a matter of trust

The best business relationships are those where mutual benefit has been enhanced by "trust".

If there is trust, then the relationship can survive unexpected glitches.

If there is trust, the relationship will be more productive.

How do you develop trust?

This week's Blawg Review hosts The Carnival of Trust with examples of trust in different settings:  leadership and management, sales and marketing,  strategy and advising.

Business articles

I've been away so here's a collection of interesting articles that caught my eye while catching up:

• Is the project really 90 Percent Done? Eliminate the 90 Percent Done Game
• Message in a Bottle: the story behind bottled water. Did you know that Fiji Water has now taken over sugar as Fiji's number one export?
• Pew Research Report on China's online population explosion (via beSpacific): The Pew Internet & American Life Project has released a new report on China's internet user population. There are now an estimated 137 million internet users in China, second in number only to the United States.
• Letter to a new manager
• Ten Questions with Jeffrey Pfeffer (author of What were they thinking?)

Low-cost startups: No Plan, No Capital, No Model

There is a recent meme that new technologies are allowing start-ups to commence at a much lower cost than previously, allowing them to stay private and independent and without the need for venture capital until much later in the growth cycle (eg Guy Kawasaki, Marc Andreessen).

In Cash cow or a growing business? Designing a business model I referred to James Hong's post on his business model. Markus Frind commented on Hong's post in an interesting response.

Now, Guy Kawasaki has posted a video of a panel discussion he recently hosted featuring Hong, Frind and 3 others on the topic of No Plan, No Capital, No Model...No Problem. Watch it to find what the next generation of entrepreneurs are doing.

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’.

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?

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

Creating successful business relationships with lawyers

Most lawyers today understand they need to provide value to their business clients.

Blawg Review #108 is dedicated to the theme of creating successful business relationships in the law.

Ranging from a study finding that Law Firm Clients Prefer Smiles to The 12 Rules of Client Service you're sure to find something that will help your business get better value from your lawyer!

Online case study: social lenders disrupt financial services

Since the 90's when mortgage brokers  targeted borrowers with better service and new loan products, traditional banks have been under attack from innovative competitors.

Now "social lenders" (such as Zopa, originally from the UK and soon launching in the USA, and Prosper in the USA) are looking to match lenders (who want a better rate on their deposits than banks offer) and borrowers (who want loan rates cheaper than banks offer) online without the bank infrastructure and marketing costs in the middle.

Zopa matches people according to rate, loan term and type of borrower (ie level of risk) (in a direct model called "peer-to-peer lending"). Prosper is an auction model.

What does Zopa do? See this BBC News story. Its website recently won a Webby Award.

Zopa assesses the credit of the borrower applicants but to reduce risk, splits individual loans among a number of borrowers. It also handles collections.

Zopa charges borrowers a fee (0.5% of their loan amount and   lenders a 0.5% annual service fee). According to their website, depositors get higher rates and lenders lower rates than anywhere else.

Zopa does not have the prudential supervision or depositor protection of regulated financial institutions but the Zopa CEO says the delinquency rate is only 0.2 percent in the United Kingdom. It offers lender insurance and pays interest to lenders as borrowers pay down their balances. It has no branches or other bank products such as cheque accounts or credit cards.

This Red Herring article also discusses  Kiva which allows people to lend direct online to a specific entrepreneur in the developing world and raisecapital.com which matches business startups and angel investors.

Could this model be used in your industry?

Government responds to Cole Inquiry AWB Report

The Commonwealth Government has issued its response to the Cole Inquiry Report tabled on 27 November 2006.

The Government has accepted the Cole Report’s recommendations and in response will introduce legislation:

• requiring applicants for licences to import or export under United Nations sanctions to provide information to the Government; criminal penalties will apply for giving false or misleading information;
• creating a new offence for breaching UN sanctions;
• giving Government agencies the power to obtain evidence about suspected evasion of sanctions so they can be referred to law enforcement agencies;
• strengthening laws aimed at bribery of foreign officials; and
• making tax laws consistent with foreign bribery laws.

The penalty for a breach will be up to three times the value of the offending transaction and up to 10 years’ jail for individuals.

On 30 November 2006 the Australian Government announced an inquiry by the Australian Law Reform Commission (ALRC) into legal professional privilege as it relates to the activities of Commonwealth investigatory agencies.

On 12 January 2007, the Australian Government announced the appointment of a Wheat Export Marketing Consultation Committee to undertake extensive consultation with the Australian wheat industry, particularly growers, about their wheat export marketing needs.

A Taskforce led by senior former Australian Federal Police officer Peter Donaldson is working on possible prosecutions arising from the Cole Inquiry.

UPDATE 15 June 2007: International Trade Integrity Bill introduced

Do Not Call Register opens for consumer registration

In anticipation of a 31 May 2007 start date, the Do Not Call Register has started accepting consumer registrations.

Individuals will be able to register their numbers either online at https://www.donotcall.gov.au/or by post. Telephone registrations will be available soon.

More

Our networked world

One of 2007's key technology trends is collaboration and communities.

We are able to work on a project online with colleagues  and meet friends online.

We multitask a range of devices.

Forbes magazine's latest issue features Networks.

Sonme of the articles worth reading include:

• Seth Godin Your product, your customer (marketing in a networked world)

• John Chambers Guts and Glory (the technology revolution)

• Sherry Turkle Can you hear me now?  (what sort of people does technology turn us into)

Do you have a consigliere in your top management team?

In Blue Ocean Strategy the authors argue that it is important to include a consigliere in your top management team as well as executives with functional skills such as marketing, operations and finance.

Your consigliere (or general counsel) will not be as actively involved in the business as the Godfather's Tom Hagen , but should have a good understanding of the business, the ability to identify risks for your business and recommend (and argue objectively) a strategy to manage them.

It is dangerous to tack on general counsel, company secretary and compliance type work to a CFO position. If you can't afford a full-time general counsel, think about a part-time position or coming to an arrangement with your external lawyer.

Planning for essential services

Water, power and transport have moved from being the unspoken assumed essential city services to services which are showing signs of stress.

And it's a worldwide issue: In Lights!Water!Motion! in Strategy+Business the authors argue that over the next 25 years, modernizing and expanding the water, electricity, and transportation systems of the cities of the world will require approximately $40 trillion. 

Where do we start? Read the article.

Doing business in India

India is the fourth largest economy in terms of purchase power parity and the tenth most industrialized country in the world. The World Bank has described India as an "Asian giant" which had risen from 12th to 10th in dollar terms between 2003 and 2004 with the GDP of India overtaking Korea and Mexico.

Issues Relevant for Foreign Companies Doing Business in India (pdf), an article by Shishir Sharma, highlights some of the key legal issues in foreign investment, competition, taxation, employment and intellectual property protection that would be of concern to a foreign investor looking to invest into India.

While barriers to foreign investment have been reduced, "there are still industries where foreign investment is either prohibited (e.g. multi-brand retail) or the quantum of permissible foreign investment is regulated (e.g. telecom)." 

Australia and climate change

The Intergovernmental Panel on Climate Change Working Group II has released its Report " Climate Change 2007: Climate Change Impacts, Adaptation and Vulnerability " (pdf).

YouTube video of press conference. Australian political reaction (ABC News)

What is the forecast for Australia?

"As a result of reduced precipitation and increased evaporation, water security problems are projected to intensify by 2030 in southern and eastern Australia ...

Significant loss of biodiversity is projected to occur by 2020 in some ecologically-rich sites including the Great Barrier Reef and Queensland Wet Tropics. Other sites at risk include Kakadu wetlands, south-west Australia...

Ongoing coastal development and population growth in areas such as Cairns and Southeast Queensland (Australia) ...are projected to exacerbate risks from sea-level rise and increases in the severity and frequency of storms and coastal flooding by 2050.

Production from agriculture and forestry by 2030 is projected to decline over much of southern and eastern Australia... due to increased drought and fire.

The region has substantial adaptive capacity due to well-developed economies and scientific and technical capabilities, but there are considerable constraints to implementation and major challenges from changes in extreme events. Natural systems have limited adaptive capacity. '' (page 11)

Working Group III Report on "Mitigation of climate change" will be released on 4 May. It will analyse mitigation options for the main sectors in the near term, addressing also cross sectorial matters such as synergies, co-benefits, trade-offs, and links with other policy objectives. It will also provide information on long term mitigation strategies, for various stabilization levels, paying special attention to implications of different short-term strategies for achieving long-term goals.

Online business models: banking case study

The internet has changed the way businesses communicate with customers and the way customers talk with each other about businesses they deal with.

The internet has been described as "disruptive": new business models cut out the traditional "middleman".  Businesses have to find out what customers want and how to deliver it.

In a recent presentation at the LIFT Conference in Geneva, Colin Henderson spoke about how banks are changing. He begins the presentation with an excellent overview of the issues affecting all businesses attempting to cope with the new technologies and then gives examples of how some banks and credit unions have responded to the challenge of  "open source banking". 

View it here.

Business hygiene

There are some things that you should do in your business that you know will make it easier for you and make you feel better but sometimes forget to do.

Things like preparing meeting agendas, minutes of meetings, keeping records and cleaning out your in-tray and emails don't seem critical but if you forget to do them it can lead to inefficiency and cost you lots of time later.

These things don't earn money but they're good business "hygiene". They are the basics that allow you to get on with implementing strategies. Some are basic legal obligations. They allow you to focus on the important things.

If you're constantly worrying about how you can manage all the things you have to do, sit down with a coffee and listen to this interview with David Allen, author of Getting Things Done.

Are sportsmen effective business speakers?

I attended an industry conference yesterday at which Steven Bradbury was a "warm up" introductory speaker.

He offered his story as the "last man standing" (and Gold Medal winner) in the 2002 Salt Lake City Olympic 1000 metre ice speed skating race (in which his 4 other competitors crashed) as something in which businessmen might find some benefit.

Whilst his story was interesting and made clear that his "overnight success" reflected many years of hard training, planning and overcoming severe injuries I wonder whether sportsmen as speakers offer anything other than an insight into "how a winner did it" rather than business learnings.

Certainly sportspersons and coaches can offer excellent motivation and inspiration (I particularly recall a rousing speech by Lawrie Lawrence) but I wonder whether "last man standing" tactics  is a strategy which businesses can follow. I doubt most business plans would include a tactic to sit at the back of the pack and hope that their competitors will crash.

The importance of relationships in negotiations

I attended a refresher on Negotiation Skills today by John Swinson.

John emphasised that negotiation is mainly about communication and discussed a negotiation framework based on principles and shared interests.

In particular he reminded me that it is important to maintain the people relationships during negotiations: you may need the counterparty's help to resolve future differences and to work together during the life of the agreement (and on other deals).

His summary: be soft on people, hard on issues.

Negotiating contracts

Most books about negotiating focus on dispute resolution.

3-D Negotiation (Lax and Sebenius, Harvard Business School Press) concentrates on contract negotiation as well as giving examples of dispute resolution (both political and commercial). 

And it is the guidelines for contract negotiation that makes it valuable: it starts with the face-to-face issues, adds comments on the negotiation planning aspects (are the parties at the table the only interested parties?), looks at how to revive stalled negotiastions and then discusses how to understand what drives the parties in order to add further dimensions and options to the negotiations.

The book is full of practical examples of commercial contract negotiations: both cases where the negotiation failed and examples of lateral thinking (which exemplify the 3 dimensions technique) which made the negotiations a success. Many examples are from the authors' own experience.

It's not always about seeing who gets the biggest piece of cake, sometimes we can make a bigger or different cake together.

I liked the example of two sisters fighting over an orange.  The dispute was resolved by understanding what they each wanted: one was hungry and the other just wanted the zest to flavour a cake.

Developing and managing contracts

The ANAO has released a "Better Practice Guide" on Developing and Managing Contracts (136 pages, PDF). Whilst it is designed for the public sector there is much useful general information.

Topics covered include:

• Part 1 – Contracting in the public sector (Summarises the legislation and related policies relevant to public sector contracting.)
• Part 2 – Developing the contract (Outlines issues and considerations involved in the development of a contract.)
• Part 3 – Formalising the contract (Outlines the issues and considerations that should be addressed in finalising a contract.)
• Part 4 – Entity arrangements for managing contracts (Discusses issues and considerations relating to the general management of contracts by entities.)
• Part 5 – Managing individual contracts (Discusses a range of issues and considerations relating to the effective management of individual contracts.)
• Part 6 – Ending the contract  (Outlines issues and options available for bringing a contract to a close.)

ANAO reports on Customs' Integrated Cargo System implementation

When Customs' Integrated Cargo System (ICS) Imports module was implemented on 12 October 2005 it resulted in severe short-term consequences for the movement of Australia's sea cargo. In the first days after implementation, a large proportion of containers were held by Customs on the docks, resulting in delays in imports in the lead-up to Christmas.

Booz Allen Hamilton carried out a review for Customs and Customs has been negotiating compensation for the importing industry.

Now the Australian National Audit Office  (ANAO) has released its review of Customs’ management of the project.

The Customs' Cargo Re-engineering Project Audit Report concludes that  :

The management framework that Customs had in place to support this project lacked many of the basic fundamentals necessary to successfully implement a large ICT project. The outcomes to be achieved and the expected benefits from the project were never clearly defined. There was no overall CMR project plan, financial management plan, project budget or proper assessment of the risks facing the project.There was also a lack of supporting documentation surrounding contractual arrangements. Delays in the early  years of the project had major repercussions for the latter stages of the project.  Project teams were continually under pressure to meet tight deadlines, which  were not achieved. Delays with the project necessitated three amendments to  the legislated implementation date.

Claims are still outstanding.

Carnival of articles about business and economics

The internet has a huge resource of interesting discussions on business-related topics. How do you find articles of reasonable quality? Look for a respected writer who has done the hard work and reviewed recent blogs.

David Maister hosts this week's edition of Carnival of the Capitalists — a collection of blog articles about business and economics.

I usually see articles I have already read and enjoyed (Australian Anecdote's post on story telling and knowledge) as well as writers new to me  (Australian actuary Penguin unearthed, who discusses the different approaches taken in different countries to major catastrophe insurance).

I also keep in touch with law-related articles through Blawg Review. This week's Blawg Review # 92 has productivity articles (yes, lawyers are concerned about productivity!) as well as 15 Rules for clients.

Most likely you will find some writers that you wish to read regularly.

What can you be best at? Using a Venn diagram (3 circles)

Since Good to Great by Jim Collins was published in 2001 it has become one of the most popular business management books. I'm re-reading it and finding lots of things to think about.

One of the characteristics of sustainable great companies identified by Collins is their ability to identify what they can be best at and to focus on that goal. He calls it the Hedgehog Concept expressed in 3 circles. It identifies what you should put your resources into as well as identifying what you should stop doing.

The 3 circles (called a Venn diagram) is a useful tool to identifies linkages and relationships between different groups of things.

You can create your own 3 circles using this interactive tool.

If you're observant you'll have noticed that I adopted the 3 circles as my logo in 2004.  I did not have Collins' example in mind when I did so as I had seen it used in many other contexts.

For example, Stephen Covey in The 8th Habit uses 3 circles entitled knowledge, skill and attitude: where they intersect is labelled "habit".

It's a powerful tool and Collins' arguments are persuasive.

UPDATE: A wonderful video Le Grand Content using 3 circles (via Presentation Zen)
 

Understanding Enron

Whilst  I have read a lot about the Enron collapse and the subsequent litigation, I have just seen the movie Enron: The Smartest Guys in the Room.

The movie makes much of Enron's mark-to-market accounting system and the internal structures which enabled Enron to show large artificial profits. I did not know about (or had forgotten) their creation of a market for trading broadband surplus. The movie emphasises Lay and Skilling's arrogance and Lay's ties to the Bush family.

The movie was made before Andersen Consulting's successful appeal against their conviction and Chair Ken Lay's death after being convicted, before his appeal was heard.

In an article in the January 2007 New Yorker, Malcolm Gladwell argues that Enron did not hide anything but that financial analysts took too long to understand the mass of information disclosed by Enron.

His interesting article poses the problem that regulators face: if consumers can't understand the information disclosed, is the disclosure adequate? Are long disclosure documents used to obfuscate investors? Is for example a 10 page disclosure document more helpful than a 100 page document? But what is left out in simplifying information for consumers?

New Year Reflections: learning from experience

Ideally you should regularly reflect on your experiences and the lessons you have learned. But if you do not have a process for this, our calendar provides one in the form of the New Year.

In business, waiting for the New Year (or your annual holiday) may be sufficient to "recharge your batteries" but your learning and improvement cycle needs to be much shorter: you need to learn from each project or encounter with a customer.

There are different techniques for this including:

• The ADRI model used in the Australian Business Excellence Framework: It evaluates how key criteria are achieved by "exploring how the organisation puts its plans and structures into place; deploys those plans and structures; measures and analyses the outcomes; and learns from its experience. These are known as the “Assessment Dimensions” of Approach, Deployment, Results and Improvement (ADRI)."
• Action learning: Action learning can be defined as a process in which a group of people come together more or less regularly to help each other to learn from their experience.
• After Action Review , developed by the US Army. It essentially asks four questions: What did we expect to happen? What actually happened? Why was there a difference? How could we do it better next time?

The common element in these techniques is that you have to look back and learn before you can improve in the future.

Designing an effective non-competition clause: when is a wrap a sandwich?

I once acted for a fruit and vegetable shop owner who agreed to take a lease at a shopping centre on the basis that the landlord would not lease premises  to another fruit and vegetable vendor. All was well until the supermarket decided to expand into fruit and vegetables. The dispute between the shopkeeper and his landlord was ultimately resolved but the