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Get out of your social media bubble, easily

popping-the-bubble

As a former teacher said to me once – There are those who do, and those who watch. I remember when social media burst upon the scene, well, not so much burst, as crept into our lives, only to now (almost) take over, there were those who scorned the Twitter, the LinkedIN, the Facebook and all those that have come since. And there were those who jumped in early, while others became hooked later on.

Those who decided to watch, chose not to start accounts, not to spend countless hours thumb-flicking through the ever lengthening news feeds, nor posting sunsets, their lunch or a selfie. And they felt strangely superior, in a strangely superior kinda way. They probably were ‘of a certain age’, or disposition or just felt busy enough as they were. Perhaps they were a bit conservative and a bit tech-unsavvy. Either way, they hung back.

The rest of us slowly warmed up to social media, and found new friends, re-engaged with former colleagues and school mates, and became amazed at the information that could be shared, instantly, within almost anyone, anytime. We were never bored again!

Slowly more and more of us were on it, for an hour here, and hour there, and then increasingly most of our spare waking moments. We found ways to use it in business, and we settled on an equilibrium of our favourite social media platforms, and ways of using it. We became annoyed at the self-promoting wannabees, who would clutter our newsfeed with their humble bragging or pushy salesy ways. Some of this would make us unfriend them or leave a group they were in.

All along, these social media sites were learning more and more about us: not only who our friends were, but what we clicked on, liked, commented on and pages we visited. Slowly, it began to give us information it had learned we liked. They knew how to drag us back, keep us engaged, clicking and liking. They sold this information to advertisers who could target us individually, and as a group.

In the meantime, something happened to our feed. It got personal. We all have a feed specific to us, specific to what we had done before. We were (literally) fed what we know we liked – be it news, sports, entertainment, whatever.

About 17% of your total feed is fed to you. The rest is invisible, unless you do something quite simple – tell your newsfeed to give you the ‘Most Recent’ news, not just what Facebook believes are the ‘Top Stories’. Remember, your feed is what you see, not what anyone else sees. You are (actually) in control.

fb-feedUnless you like this Facebook-decided feed bubble, switch to the ‘most recent’ news feed. At the top left of your Facebook HOME page (or news feed) is a simple pull down, ‘News Feed’. Click the pull down option triangle thing to the right and choose ‘Most Recent’. You’ll now get all the latest news from your friends and pages you’ve liked, not just what Facebook has decided. It will make your news feed look ‘more full’ as it will include everything in chronological order (which is what it originally was designed to do, and did.)

As you can see from the graphic above, there is also a little wheel graphic to the left. Click this and then ‘Edit your Preferences’ and you can tailor exactly what you see in your feed. You can decide to see only what your friends post (not friends of friends, or even the pages you’ve liked), unfollow friends who will still remain connected to you but you won’t see all their stuff in the feed, you can reconnect with people you’ve unfollowed and find some pages that might interest you.

Furthermore, go up to your privacy settings (top blue bar, the icon which looks like a padlock) and there is a whole array of things you can lock down or open up. Have you ever looked in this area?

Most people have no clue on how to tweak these settings, and are left with the default. Or they may have made a change years ago and forgotten it.

So what, I hear you scream?

Well, as Google started giving us customised search results years ago, and Facebook is also giving you a sample of your information, and both are eating the internet (swallowing up the lion’s share of viewing time and ad dollars), so we are being given a version of the world these 2 companies believe we want to see.

We’re actually living in our own bubble. We are discovering less and less new information. We are learning less. We are being (quite literally) dumbed down. Surprising new information is less common.

An excellent BBC ‘Seriously’ podcast analysed this recently (it’s well worth a listen). Is it partially to blame for the tribal politics we now live in? No one listens to the other side anymore, there is no debate, only point scoring and name calling. Even if the facts are on your side, we get Brexit and Trump. We are gathering facts we are already programmed to agree with. We don’t think beyond the headline. We are post facts. It’s all about feelings.

So, let’s break away from the same old same old. Update your newsfeed to ‘most recent’. Secure the privacy settings you want, not that which is given. Go out of your way to understand alternative view points. Become more rounded, not a greyed out facsimile of your good self.

With social media now becoming part of the traditional media landscape (it’s where most people get their news), then this is more important than ever. The role of the traditional media is to reach out and explain the issues, and delve into detail. Mobile and social media can be platform to distribute the more rounded view, to keep a sense of perspective, to pique intellectual curiosity, and to protect the citizens from making uncivilised decisions. Or is it too late?

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Angels, 5 reasons you should invest in tech startups

Send me an angel right now
When we set up our tech startup back in 1999, we looked to angel investment to get our business off the ground.
Some new business ideas just need to be tried in the marketplace in order to see if they will work, and they cannot be launched without some financial support. Often the idea is so new and disruptive that it will take time to educate a new market in new ways, and allow the fledgling business to take hold.
It is about the riskiest investment you can make as an investor. It is not for your nest egg, and the most likely outcome is you will never see that money again. In fact, the odds are (even if you carefully sift through your potential investments, saying no to far more than you say yes to) that 7 or 8 out of every 10 will fail, 1 or 2 you may see your money back, and 1 in 10 may return a lot.
That’s the deal.
I remember telling our angel investors (high net worth individuals and others who had a punt on us) that they would most likely not see a return at all. We wrote a chapter in our business plan outlining all the things that could go wrong, and how they would not see their money again. We wanted them to be awake to this reality, and not treat us like a bank. They could not ring us up in a few months and ask for the money back. The money, by then, was gone. It was used to set up the website, database, consultants, software, computers, the office, pay rent and the first few months of staff costs.
By the time we’d launched 65% of our money raised was already spent. We had barely 5 months of money left to last. We had to immediately raise still more, which is what we did. It took 7 years before those initial investors received an option to sell.
This is the reality of the tech startup. If you are interested in being an angel investor, then you need to understand that this is possibly the riskiest investment you can make. It is only a part of your portfolio of investments, a small part, perhaps 2-5%.
Say you are quite well off and have $1 million to invest. You might put some in blue chip shares, more in a property syndicate, high return deposit or a managed fund. Perhaps $20,000 to $50,000 in a tech startup. If you have a few million, then you could afford to do a $20,000 to $50,000 investment every year for a few years. You might look at several opportunities before deciding to have a punt.
If this is you, then I have 5 reasons why you might be persuaded to have a go. I have no idea which startups will make money – if I did, I would be out farming cupcakes from unicorns.
However, as someone who’s been there and done it in startupland, may I be so bold as to venture the following:
  1. Low rate of funding, startups need you

Tech startups in Australia are woefully underfunded. Far more is bet on the Melbourne Cup every year, per capita, than is bet on tech startups. Report after report bemoans the low level of funding, and the exodus of great Aussie ideas to Singapore and Silicon Valley demonstrate the lost opportunities. These types of business have scaleable business models, and could be $10m or $100m businesses in a few years. This kind of rapid wealth creation was simply not possible in earlier generations. Now is the time.

   2. The Economy needs you, because of digital disruption

25% of the GDP of Australia, and 40% of jobs, are under threat from digital disruption over the next 10 years. What kind of an economy will be left for our children and grandchildren? Where are the Aussie tech disruptors? Most of them hail from one country, pay little tax here, employ few people, yet are eating away at our economy.

   3. You have a lot to share and give 

You’ve made your money, are relatively well off, some might say wealthy. You have $1 million or more in various investments. How about carving out 2-5% of this for the tech startup scene? Take a a direct investment, and help seed a new business or three. Create jobs immediately, get involved and share some of your hard won advice gained over your own career in business. Pay it forward. Pass it on. Add value to this businesses, open doors. Have skin in the game.

   4. You get a tax rebate, and are capital gains tax exempt

Even better, from this financial year onward, investments in eligible tech startups attract a 20% tax rebate (yes, money back) from the ATO. Plus, you get a 10 year capital gains exemption, with no ceiling. Meaning – if you make a million or even a billion on the shares, it is tax free. The government is actively encouraging you, and rewarding you, for having a go. What’s stopping you?

  5. You’ll enjoy it 

Why not have some fun? You never know, you might learn something, have some awesome dinner party conversation, and can enjoy the ride. Why can’t business be fun? In fact, it should be.

So, if these 5 reasons have inspired you to find yourself a tech startup to invest in, then get yourself down to Spacecubed, listen to this podcast, or peruse these 140 WA startups.

Imagine if 1,000 angels decided to invest between $20,000 and $50,000 in some tech startups every year for a few years. That would pump in $20 million to $50 million a year to get 1,000 startups going. Among them could be a hundred $10m businesses employing tens of thousands, and maybe the odd billion dollar unicorn. Then we’d see some action, and maybe we’d even save our economy in the process.

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Clinton won 2 million more votes

Clinton

For those you left numb and disbelieving over the recent election of a President Trump, consider that Hillary Clinton won the 2nd most number of votes ever in a Presidential election and 2 million more than her opponent.

Of course that did not get her elected, due to the quirks of the electoral college system. It’s actually a system I admire in that it forces nominees to travel around the country (or at least the dozen or so swing States) rather than just rack up votes in their most populous areas.

Unfortunately for Clinton, she racked up some amazing votes in States she was always going to win, and others she was bound to lose, mainly around the coast. She won California by 3 million votes, which would not have meant any difference to the electoral college outcome compared to winning it by just solitary vote. She lost Texas and Arizona, but scored far better there than Obama did 4 or 8 years earlier. It did not matter, she still did not get one solitary electoral college vote from these places. Nor did Obama.

A week on, we can see a clearer picture. Trump’s narrow path to victory lay in flipping Clinton’s so called ‘blue wall’ of Pennsylvania, Michigan and Wisconsin, where he collectively won the combined 3 States by only 107,000 (less than 0.1% of the total votes case). They are worth 46 electoral college votes. Add that 46 to Clinton’s likely 232 votes and she sails over the 270 winning post, and is President.

She lost Michigan by less than 12,000 votes. The fact that Clinton won 2 million more overall does not matter one jot. Trump threaded the needle by the slimmest of margins where it mattered.  He was very fortunate, a few tens of thousands of votes the other way and we’d be analysing things very differently.

I say ‘fortunate’ because the electoral college map was always stacked against him, and he was pandering to a diminishing number of the electorate – whites. They represent 72% of the population, and falling. The majority of babies born in the US today are non white. In the 1980s, whites made up 84% of the population. Trump had to win a huge proportion of this vote to win, and he had to win them in the right places, which is what he (just) did. You might call it a brilliant strategy, maybe it was. It did not make for a pretty campaign, but it worked. It all had to come off for him, and it did.

Consider the maths for Obama in 2012. He lost the white vote 39% to 59% to Mitt Romney, but he won the non white vote by a whopping 60 points. That adds up to 50.2% of the total vote, and 47.8% for Romney. Plus Obama won them in the right places – Iowa, Ohio, Florida, Pennsylvania, Michigan and Wisconsin,  … the blue wall. Clinton already knew (weeks out) she was well behind in the first two and Florida was on a knife edge, but she did not realise she was behind in the other 3, until it was too late. She never even visited Wisconsin. Trump won all 6 and shot to more than 300 electoral college votes.

So it was wafer thin. Yet Trump won fair and square, that’s the system.

So, we are left with two very large amorphous groups of the electorate – one, so annoyed at their lot, GFC, their changing country (they don’t like change, hence ‘Make America Great Again’ appealed)  and everything else that they would cast a vote for someone they may not like, but who was telling them he would blow up the system (#draintheswamp), throw the whole lot out and only he could fix it because he was the ultimate outsider. They were more likely to be white, non college educated and rural. And then there’s another large group, which is larger, who did not vote this way, a coalition of college educated, city dwelling whites and non-whites who appreciated Obamacare and wanted more affordable college education. Both these two policies only appealed to a minority on Clinton’s side, and did not interest the others.

After 8 years of Obama, they wanted change, and Clinton could not run on change. Trump could, and did. Boy, did he. After 8 years of W Bush, the country wanted change, and Obama personified it. Brilliantly. After 8 years of Bill Clinton, and the scandals that ended it, the country wanted change, and Bush was change. 8 years earlier Bill had represented a cool, younger change to the old and crusty Bush senior. Reagan was change from the washed up Jimmy Carter, who in turn had been change from the Watergate-plagued 1970s Republicans…

So the wheel has turned. It has not resolved the issues, nor the divisions. But the other side will have their turn for now. I wish Hillary all the best in her retirement. As Donald himself says, she deserves a vote of thanks for her 30 years of service. I hope Trump ends up being better than we fear, because the world could do with a little less fear and uncertainty right now.

We’ll see. I reckon it will be fascinating watching, no matter what. Get the popcorn ready.

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If Trump wins New Hampshire, he’ll be President

It's all about new Hampshire

I’ve been watching this crazy, relentless US Presidential campaign over many months, open-mouthed at how low it has sunk. A reality TV celebrity kingpin real estate billionnaire (who, I learned this morning, is an anagram of ‘Tan Dump Lord‘) is extremely close to winning the Presidency against probably one of the most qualified, deserving and divisive of candidates, and its first woman (not before time).

How close? It all comes down to the little north eastern state of New Hampshire, the ‘granite State’.

The state that almost started the whole dang voting process back in January (Iowa snuck in first with its caucus), with only 4 electoral college votes and 1.3 million population, would provide the GOP nominee with sufficient to get him to 269.

By my calculation, at this moment, he is more likely than not to get to 265 electoral college votes, 5 short of an overall win. New Hampshire can push him up to 269 and a tie with Clinton. Now, wouldn’t that be entertaining?

According to the combined polls-only model at FiveThirtyEight.com States where he is more than 60% chance to winning gets him to 215 votes. Add in the 3 toss up states of Florida, Nevada and North Carolina (worth 50 votes combined) where he is currently more than 50-50 in favour of winning each gets him to 265. (See calculation below.)

If he wins New Hampshire’s 4 electoral votes, where he currently is favoured 38% of a chance (so not impossible by any means), he gets to 269, and a tie. Clinton would also be a 269.

If that happens, the House of Reps votes on the President, and the Republican leaning House would vote their man in. In a wonderful twist, the Senate would vote for VP, and if that goes Democrat, we might have Tim Paine as Donald’s VP. Or would the current Senate (which is Republican) get to vote?

It would be poetic beauty in many ways, and was predicted by the storyline in the wonderful comedy Veep, where the erstwhile Julia Louis-Dreyfus character is forever VP and never, quite, makes it to the top job.

FiveThirtyEight has Donald at 35% chance of becoming President, about the same as his chances of winning New Hampshire. It’s more than a 1 in 3 chance, and a far better chance than the Chicago Cubs had in winning last week’s world series (especially after coming from 3-1 down and not having won in 108 years). Yet that happened.

In the polarised world, most of the other States will vote as they will, with a certainty factor of 75% or more. Tuesday’s election will come down to 4 States, and Trump has to win them all to fall over the line by the slimmest of margins. Clinton needs just one of these to block his route.

So, if you want him in (or, like me, don’t) watch Florida, Nevada, North Carolina and New Hampshire. 3 of them are east coast states so will be called earlier than others, probably around 10am here in Western Australia.

~~

Here’s how I got to a 269-269 tie:

States that Clinton has a lock on give her 201 votes
– she’ll probably (more than 68% chance) also win Colorado, Michigan, Pennsylvania, Virginia & Wisconsin, which add 68, bringing her to 269

States Trump has a lock on gives him 164 votes
– he’ll probably also win (>68% chance) Arizona, Georgia, Iowa & Ohio, which add 51, bringing him to 215.
– add the toss up states (where is just ahead, between 50-53% chance) of Florida, Nevada and North Carolina, which give him another 50, and he’s at 265.
– New Hampshire is currently 61% (and falling) chance of going to Clinton. If Trump flips that, he gets their 4 votes, and he’s at 269.

Trump’s case is much more solid if he can win any of Clinton’s states (Colorado, Penn., Michigan, etc) but he has to hold all his. If he fails to do this and Clinton wins just one of the States (or new Hampshire), she’s won.

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Predicting the Future, the US Election and other distractions

FiveThirtyEight

I must confess I am a bit of an addict when it comes to the US Election. As such, I am a frequent visitor to two of the best websites that try to make sense of what is going on, FiveThirtyEight and Politico.

The US Presidential election is an incredibly long examination process for what is probably the most important elected position on the planet. As we have seen this cycle, pretty much anything that can come out, will, including past video indiscretions or stacks and stacks of embarrassing emails. Lies have been told, and doubled down on, and trebled. News, in itself, has splintered into factions, meaning anyone can gather the ‘truth’ they want, about each candidate or the other.

The presidential decision gets cast over a relatively long term period (about 18 months), and as you can see from the chart above, the US has pretty much made up its mind, that, like her or not (and I quite like her, to be honest), the US will elect it’s first lady President in its 240 year history as it’s 45th President. 70 or more other countries have already had female head of states before the US, but it looks like the US will cross that bridge come November the 8th this year.

The probability of this occurring is now approaching 87% confidence levels according to FiveThirtyEight’s model (which takes all scientific published polls in all states and nationally and runs tens of thousands of ‘mock’ election outcomes to see what % of those outcomes yield a victory for one side or another, updating in real time). 538 predicted the last two presidential elections and margins of victory almost perfectly, and indeed predicted the winner in each of the 50 states as well.

The chart above shows that when the US public ‘has been watching’ (notably during the 2 conventions in July and then the first two debates in September and October), Hillary Clinton has pulled away from Donald Trump. Only for a brief period after the Republican convention did Trump pull to a tie with Clinton, and for most of the time he’s been less then 25% chance of winning. He’s now sitting at a tad over a 13% chance, 3 weeks out. It’s all over, red rover.

This gap is quite astonishing in many respects. Firstly, because Hillary is such a divisive figure in the US, one of the most unpopular and derided candidates ever to hold office. Her unfavourability rating tops 55%, but of course that is only topped by The Donald himself who has plunged the heights (if that’s the right expression) of 65% unfavourability. (‘Anything you can do, I can do better’.)

So it’s the battle of the least worst candidates. And it’s a race to the bottom, as we’ve seen. Any reasonable Republican candidate might have given Hillary a good run for her money this year (and she has raised a ton of money, more than anyone previously). But Trump’s blustering, unpredictable style, which got him enough attention and support during the Republican primaries, has been a disaster in the general election (where a more sensible, calm, dare I say, Presidential, Trump may have been more attractive to the undecideds and ‘swing’ voters).

Instead, the Donald has pandered to his base, especially after the 2005 Access Hollywood tapes came out, which showed him bragging about his sexual assault on women (‘I can do anything, they let me…’ etc). He has spiralled out of control ever since, throwing blame around everywhere – at the media, Hillary, the FBI and even at his own party. The very people he needs to win to bridge the gap (female suburban voters, Latinos, African Americans and moderates) are precisely the groups he has antagonised with his ‘Mexicans are rapists’, ‘the Blacks live in poverty’, attacks on the Gold Star family, a Latino former Miss Universe and other such riffs.

Come election day, it looks like Clinton will garner  49% of the vote with Trump back on 42%. Given that either major party is pretty much guaranteed 40% of the vote, you can see that Donald J Trump has not managed to grab that all important middle ground, while Clinton has.

Some of Trump’s party are shaking their head in bewilderment and can’t wish November the 9th come soon enough. Many have given up on the Presidential race altogether and are now battening down the hatches trying to prevent the Senate from tipping Democrat (which 538 now estimates will happen with 74% certainty, as they only need to win a net 5 seats) or possibly even the House as well (where Democrats need to win a historic 30 seats to put the 76 year old Nancy Pelosi back as Speaker).

The most likely outcome is a comfortable Hillary win as President (probably 340 electoral college votes, with Trump back below 200), a Senate majority for the Democrats but the House will remain Republican. For many in business, this is a workable outcome, as it might dampen down some of the anti-business things Clinton has been talking about, yet allow her to govern. Although divisive, she may be more experienced at getting things done than Obama, who took up to 6 years to get much of his agenda passed (barring Obamacare, which was pushed through in his first 2 years when he had majorities in both houses.)

Barring an incredible turn of events (and we’ve seen pretty much everything thus far), we will be hailing Madam President come Jan 20th 2017, with former President Bill Clinton back in the White House as ‘First Gentleman’. Historic times indeed.

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Facebook and Google are eating the internet

Facebook and Google

Here’s an amazing statistic – last year (2015) Facebook and Google, combined, took an extra $1 billion in advertising revenue from the Australian market.

An extra billion. Not a billion in total, an extra billion, than the year before.

The thing is, the total ad market in Australia only grew by $300 million in 2015, which means every other advertising medium – print, TV, radio cinema, outdoor, online… – collectively took $700 million LESS combined.

This meant that every TV station, radio, cinema, newspaper, magazine and website was competing for a shrinking market, $700 million less than it was the year previously.

Ouch. No wonder we see redundancies in newspaper organisations, TV and radio stations the country over. And of course, this is not a phenomenon unique to Australia. If anything, we’ve been protected from it for a few years, but the impact is now in full force.

If you thought the ad model was a tough one, no stat makes starker reading than this one for Australian media organisations. Imagine a startup trying to make a go of it with an ad revenue model.

This trend of ad dollars to the 2 Silicon Valley organisations is only speeding up.

Recent predictions have Facebook and Google eating up 90% of all digital advertising by the year 2020. This means that as non digital ads continue to decline in size, there is no respite in digital ads, because the 2 internet mega-goths are gobbling that up too.

Now I have nothing against Facebook or Google. Like you, I use them all the time. I rely on Google to get me all the answers to the questions I pose during my day, as well as entertain and inform me on what’s going on. I flick through my FB feed once or twice a day, and it’s entertaining stuff. I deploy FB page at work. In business, most of my promotional budget goes on the 2 of them through Adwords or customised FB posts, and I’m not alone (as the stats above prove).

The question I have is: what kind of world are we hurtling towards, if these trends continue?

I am also a big fan of Uber, Airbnb, Netflix, Twitter, Apple, LinkedIN and the like. All of these are collectively eating away at our industrial and digital base, and employ very few Aussies by comparison to organisations of similar revenue. Very little of the income they earn in our country attracts any tax that remains in our country. They are all US-headquartered yet through various organisational structures manage to conduct their affairs via satellite organisations based in Ireland or Singapore. Although they take huge amounts of Aussie dollars from selling services to Aussies in Australia, they are not contributing as much as similar sized organisations that hold sway over large markets. They are not paying for the roads, schools, hospitals and defence that the government needs to provide. Meanwhile they are attacking up to 25% of our GDP, over the next decade.

I wonder if and when Australia (and other countries) will wake up to this? The answer is not to put bans on them (as the taxis tried to do over Uber), or ignore them (as the newspaper industry did for years until it was too late). The answer is surely to develop our own home-grown digital companies that will compete with them here and perhaps abroad. Companies like Atlassian, Canva and Freelancer. (How many successful Aussie tech companies can you name? Here’s a link to the top 50.)

I am amazed at the local tech talent here, and if we could release more funding, I reckon we’d throw enough darts at the dartboard to see if we can create some bulls eyes. It’s fast becoming a necessity now, not a ‘nice thing to have’. What economy are we going to leave behind for our kids if we don’t?

More reading:

How Facebook is slowly eating the world‘, Washington Post, April 2016

20 Ways Facebook is eating the internet‘, Techcrunch

Mobile ate the world, and Facebook and Google are eating mobile‘, Salesforce, June 2016

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The intolerance of difference

celebrate difference

In a recent post, I argued there was one proven way (borne from research) that dealt with bullying, but it was not easy to do. You had to deal with all 4 sides of bullying behaviour: the bully, the victim, the bully’s acolytes and the majority who carry on with their lives.

I’d now like to step back and discuss what causes bullying behaviour in the first place. What explains persistent and aggressive behaviour against a weaker group by another larger, stronger group?

It’s intolerance of difference, pure and simple.

Bullies play on the herd mentality, that bond that makes people stick together in a group of sameness. This group pours scorn and blame on a smaller group ‘that looks different’. Perhaps these victims dress different, pray different, eat different, speak different, act different. Some things, or many things, are different about them. And it’s this intrinsic ‘different-ness’ that becomes the reason to pick on them.

We are naturally scared of things we don’t understand. It’s an understandable, human response. Ever since our cave-dwelling days, we have been wired to distrust anyone that comes into our area that is not from our tribe. Safer to assume they will attack us, take our food, our jobs, destroy our neighbourhoods. You tended to live longer that way. Survival of the fittest.

Whether it’s the red-haired chubby 9 year old being picked on by taller, slimmer jocks, or whether it’s Hanson’s ‘Asian invasion’ of the late 90s (or her ‘Muslim invasion’ of the mid 2010s), what is common to all this behaviour is a majority privileged group putting down a smaller ‘different’ group, and blaming them for all their own ills.

What is also common is a complete falsehood with the facts. Asians did not invade Australia, nor are we being swamped by Muslims (less than 2% of the population). And anyway, what is actually wrong with having a nice variety of people and cultures on our country? What a boring, staid place it would be if it were all the same. How insular and sad that country would be. We’d all be missing out on some amazing experiences, many of which we take for granted today, that only came about through immigration and ties between countries (such as open trade).

Of course the two-faced nature of the ‘anti immigration’ debate is that those proposing it are indeed immigrants themselves, in their own generation or not many generations before. They should be more honest in their arguments (but of course they are not) by declaring: ‘I got here first, I like it, and I don’t want anyone else coming in and getting what I enjoy.’

If we only ‘stopped the boats’ (full of fleeing refugees, by their very nature the most downtrodden, weakest people on the planet), or ‘reduced immigration’ or ‘banned head scarves’ then somehow everything would be back to how it was. The implication is that it is too easy to get to our country, and we’re being overrun. A country of 24 million, with a land mass of 7.7 million sq kms, one of the largest countries on the planet.

Quickly you see the same four groups forming – the bullies shout from their safe positions as shock jocks, Alt Right politicians, Senate seats, news opinion pulpits or press columns, while their supporters jeer from the stands (‘Trump tells it like it is!’). Half a million voted in the recent election for Hanson’s party. Suddenly all your issues can be blamed on them, those that look and act different to us, those same people fleeing the horrors of Syria or African war lords. Meanwhile the victims line up for scorn, and have little recourse to a fair hearing. At the same time, the majority sit by, possibly disagreeing but not intervening.

One wonders why we don’t celebrate difference, rather than have a preconditioned aversion or suspicion to it. Multiculturalism brings the world together, creates better understanding and forms ties between peoples. You are less suspicious of people you have met and interacted with. 20,000 Syrian refugees are not going to ruin Australia (or the US for that matter) any more than the Vietnamese boat people did in the 1970s. In fact, many went on to form businesses, not for profits and councils and do great work in our communities. It makes a society richer, more understanding and inclusive. Ultimately, this makes us and the country safer. What puts a country at risk is tribalism, with people bleetingly following their one eyed herd.

In the 1990s I taught at the United World College of SE Asia in Singapore. There were students from 60 different nationalities in the school, over 1500 in all. Over 8 years, I saw no bullying behaviour. Instead, I saw celebration of difference, proudly proclaimed on ‘UN Nights’ and every day with kids just getting on with each other, forming friendships and understanding each other’s cultures. In fact, it was not even an issue. Put different cultures together at an early, formative age and they will have peace, argued Kurt Hahn, the founder of the United World Colleges. They were set up in the 1960s, a few years after the horrors of the Second World War, precisely for this reason. There are now 16 such colleges around the world. None (sadly) in Australia.

I am looking for the politician or leader to celebrate difference.

To plot a different path. To talk about what unites us, rather than play on what naturally can scare us and rub salt on divisions. To talk to our better angels, not our worse demons.

This is not for some trendy tree-hugging bohemian reasons, this is actually for our own (and everyone’s) betterment. A safer future, a surer world, confident in itself, able to stand up to bullies.

Perhaps Canada’s new prime minister, Justin Trudeau, is the best example of this in practice. He personally welcomed the first group of Syrian refugees. When he was asked about the risk of letting in Syrians, he corrected the interviewer, saying ‘They are Canadians, and we will protect them, as we do all Canadians.’

Let’s use the power of the people to make this happen. Let’s call out those who pander to the lowest common denominators. Love trumps hate.

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How to deal with bullying

BULLY

The repeated aggressive actions designed to belittle, humiliate or exclude is the act of bullying. Whether it’s in the school playground, online, at work or in the board room, there are four groups involved in bullying. They are present in all cases, and if the bullying behaviour is to stop, you have to deal with all four.

Before I get onto them, let me clearly explain what bullying is, and is not. One off acts of aggression are not necessarily acts of bullying. Bullying is the repeated picking on someone, or some group of people, over time. Nasty, incessant and continual. It is done to put down the victim, who the bully (and their acolytes) are there to dominate. It is usually for some totally unfair reason, be it someone who is slightly ‘overweight’ or has red hair, something the victim cannot control. At the root of the bullying behaviour is a power play, with the distinct desire of the bully being to put the victim down, and to make the bully (feel) superior. It is highly likely the bully is themselves acting out an insecurity issue, or has been the subject of repeated violence before. It is learned behaviour.

Anyone who has been bullied knows the horrible sinking feeling in the pit of their stomach whenever the bully or their supporters are around. React, lash out or cry and the victim is laughed at, punched, pushed over, physically or verbally. Complain to the powers that be, and retribution can follow. It can involve exclusion, it can be online (sending photos around social media, mocking someone on Instagram.)

I came across bullying at school, both as a student and as a teacher. When I was on teacher training I researched this area, and found some great work from Denmark which clearly laid out how to deal with bullying instances. Before I get to this, let me outline what does not work.

What does not work

  1. Ignore it – “they just want a reaction” ~ understandably the victim might be to ignore what is going on, in the hope it simply goes away. The bully and their mates laugh, and see the victim as an easy target. It usually continues.
  2. Fight back – “Man up!” ~ Not only does this ignore the fact that 70% of school bullies are female, fighting back can get you into trouble, and lowers the victim to the bully’s level. Settling things through violence is precisely NOT the way to deal with this. In any case, if the bully thought you’d beat them in a fight, they would not have picked on you to start with.
  3. Punish the bully (only) ~ complaining to the teacher or an adult is the first thing a victim must do, but if that authority figure then simply metes out retribution to the bully only (thinking this will solve it), the bully could turn on the victim and worsen the situation. If it’s one word against another, with parents involved, what is the teacher to do? Detentions might be a badge of honour for the bully and their mates.
  4. Laugh it off ~ can work in some cases, if you are strong enough to laugh in the face of the bully and their supporters and get away with it. Chances are, this will not work, unless you can really sustain some very good scripting (see below).

The Four Groups 

Bullying needs 4 things:

  1. A bully
  2. A victim
  3. A group of bully supporters (the acolytes)
  4. Everyone else does nothing (the silent majority)

To adequately deal with a break out of bullying behaviour, you need do counsel all four.

The bully needs to be isolated and talked to – why are they doing this? What is the problem? How do they think the victim feels? Is it right or wrong? Are they big enough to stop it? They might be acting out an insecurity. They may be suffering at home. They may have modelled this behaviour from others. Can they learn from this?

The victim also needs counselling. What signals are they giving off to the bully and their supporters? What can they do about the situation? What friends/assistance do they have? They may be submissive individuals. If you provide some ‘strengthening’ advice for the victim, they might be able to grow. “You’ve got a large nose”. “True, it is a bit big isn’t it?!”. “You’re an idiot.” “You think so – why’s that?”

The other (often ignored) group are those that egg on the bully. They are secretly glad the bully is not picking on them, and are usually scared of the bully themselves. They might not like the aggression, but fall into line through weakness. The bully, being manipulative, might end up getting them into trouble as well. This group needs talking with. Why are they doing this? Do they want it to end? This group can be the quickest to defeat bullying. Take away the crowd the bully is acting up to, and the major benefit for the bully evaporates.

The final group is also often forgotten in all this. Bad things happen only because good people allow them to continue. Everyone knows what is going on. While this group are not the bullies’ mates and not actively encouraging the behaviour, their silence and inaction allows it to continue. In fact, it’s a necessary precondition. If this group confronted the bully and their supporters, the bullying would cease. If they befriended the victim, they would out number the bully. The power balance would shift.

I witnessed some bad cases of bullying in schools. For each case, I tried to isolate the four groups and spoke with each of them. It took time. I engaged each group in finding a solution. They all knew I knew what was going on. After a week or so, the behaviour had completely gone. The victim had some good friends who looked out for him. He grew as a person. The victim was not that successful at school, and needed some better outlets. The acolytes felt a bit sheepish, as did the silent majority (where most of the victim’s new friends came from).

What sickens me about bullying is the total unfairness of it, and the deep hurt it can cause. It is every person’s basic human right NOT to be bullied, and to be able to go about their business without this kind of sickening antagonism. Some become so isolated, so hurt and unhappy they feel they do not want to go on. Youth suicide is a real issue. It’s dreadful. It is preventable.

Moving out into the world we see grown ups who act as bullies. They shout and stamp and think this is going to get them through. They may have large physical presences, and use this to get their way in business and in life. One even uses classic bully techniques to run for President. What is common to all bullies is a deep-seated insecurity. They are cowards. If the majority rise up and call them on it, they lash out, but in the end they are trumped.

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Company Directors Course – 5. Board effectiveness

CDC - board effectiveness

The final day of the company directors course focussed on board effectiveness –  what is it? how can it be managed? what’s best practice? what are some of the traps? The first half involved long time board recruiter Mike Horabin sharing his vast knowledge and decades of hard won experience. The second half involved us being put into a live case study, where we each in turn acted out as a presenter to the board, an observer of the board, and being a director on the board on a separate agenda item. It was the high point of the week, and a strong conclusion to the proceedings. 

There are so many takeaways from this course, so here are just a few more to add to those already posted about the board’s responsibilities and decision-making, duties and the law, risk and strategy and accounts, solvency and finances

  1. Boards are charged with coming to sound conclusions, concentrating on the proper items in front of them, with concise, well prepared information. They need a good mix of people and skills, have leadership from within (Chair) and provide leadership to the company. Overall, they are there to add value.
  2. Good boards provide calm decisions in times of crisis, are not rushed or panicked.
  3. They are a pool of wisdom, and are there to guide, mentor and assist management.
  4. Individual characteristics of good board members include: integrity and honesty, relevant experience, strategic thinking, good communication skills, wise and battle scarred, inclusive, good team player, adaptable, willing to change their views, courageous enough to ask difficult questions, are independent, decisive and have good instincts.
  5. High performance boards can have tough conversations but still reach decisions and be productive; they respect each other, trust and share in an open environment.
  6. The ‘magnificent 7‘ things a board needs to do are: lead with the right culture, develop the best strategy & pick the best CEO (then these others become easier ->), manage risk, monitor performance, ensure compliance & maintain good shareholder relations.
  7. The chair’s role is crucial – they are elected by the board, their relationship with CEO is pivotal, and they can only continue if they have the backing of the board.
  8. The Board should manage their own secession; most of the time they should try to get a new member on board before the other departs, and then have their position ratified at an AGM; they can come on as casual for a few months beforehand.
  9. Board committees must have clear terms of reference, time frame, its own Chair (good training ground for future chairs) and make recommendations to the main board.
  10. If you don’t agree with the way decisions are going in the main board meeting, by all means meet other board members, but make your points and do a paper to the next meeting if needs be. Talk to the chair; don’t thump tables, and if the decision goes against you, abide by it. Don’t form factions.
  11. Develop a “Matters reserve list” which shows which matters require sign off from Board, with the implication that all else can be handled by the CEO and management. Review this regularly.
  12. A board calendar should outline what needs to be dealt with throughout the year – monthly, quarterly, six-monthly and annually. Board meetings should last 2-3 hours, but can be half days, and in some indigenous organisations might last 2 days.
  13. Culture is crucial and central; it’s not fluffy, it’s hard nosed, but a good corporate culture can lead to so many good outcomes. “Culture is how people in the organisation behave when no one’s watching.”
  14. If Chairs disagree on the direction of the discussion, or how consensus is forming, ask a question. Monitor how bad news gets to the board – is it disguised? embellished? hidden? slow? Ultimately, boards need the bad news quickly.
  15. Papers to the boards are legal documents, as are your notes on them if they are kept and a legal case starts. After that you cannot destroy them, they are evidence. Minutes should be published within 48 hours of each meeting.
  16. Finally, take time to reflect as a board and as individuals, with each other – what can we do better? how did the meetings go? how good were the papers? were our decisions correct/best? have we added enough value? what can be improved?

Overall, the company directors course was a high value 5 days, and brought home the complexity and skill in group decision-making around the board table, how to search for answers, the importance of asking the right/tough questions. It’s made me reflect on how challenging it can be, but how vital it is to do well. It’s made me realise that this is something I want to do, in time, and something where I think I can contribute.

Over the next 3-5 years and beyond organisations are going to be challenged like never before with the rapid changes in technology, cyber security, digital disruption, the sharing economy, robotics, driverless cars, connected devices, the Internet of Things and much more besides. Who knows what jobs will exist for our children in 10 or 20 years time? Probably they have not even been thought of yet. Whole industries will disappear, and new ones will be created. Businesses that cannot stay relevant will fade away. Others will start up.

I would like to be the ‘digital guy’ who sits on various Boards, thinks strategically, and assists organisations make the transition from old way of doing things to the new. It’s exciting, and challenging, and something where I can probably add value. What can you add value on? Are boards something you might be interested in? If so, I highly recommend the AICD company directors course.

… and now I have to do my exams and pass this thing!

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Company Directors Course – 4. Finances and Solvency

CDC - accounts

The 4th day of the company directors course was all about “the books”, and what directors need to know about them, what they need to ask, and why. For many this was the day they dreaded, but I’ve never found accounting all that bad, in that the principles (once learnt) are fairly straightforward and much of the rest is plain logic. It’s a bit of detective work, sifting through the evidence to uncover what the real story is, where the concerns are. It can be fun when you discover the truth, like solving a puzzle. OK, I sound a bit geeky, but it is made all the easier when you have an expert and calm trainer (as we did today), who is well experienced and could build up everything from first principles, so you could see how it all hangs together. I learned a lot, and I felt it filled in some gaps I did not know I had.

Directors need to be aware that they bear the ultimate responsibility for the financial performance and position of the company, so they should be asking questions if they suspect anything is not completely understood, right and proper.

Again, this is not an exhaustive list, but from memory, here are some important matters to consider as a director in regards to an organisation’s accounts & finances …

  1. The Accounts are an indicator only, like a light on your car dashboard. Some lights will not be flickering, some may never become a concern, but at times as you drive along they may indicate something. It’s very easy in hindsight to spot problems in a mangled heap of law suits and company implosion, but even in these cases a sensible director might have been querying things many years before the problems became endemic, and in some cases, ruinous.
  2. The 3 main account documents are: the Profit and Loss (P+L), the Balance Sheet, and the Statement of Cash Flows.
  3. The P+L shows you how they organisation has performed in $ terms over a past period (year, quarter or month). It looks backwards. It starts with a statement of income from sales to customers (Revenue) and deducts the direct cost of those sales (cost of good sold, COGS, such as direct labour and raw materials) to calculate Gross Profit.
  4. For a retail store, COGS would be calculated as Opening Stock of Goods plus Purchases (= available for sale) minus Closing Stock (stock still left over).
  5. Your Gross Profit divided by Sales is your ‘margin‘, and in most trading entities, it would be expected this would be positive and worth about 30% of sales or more. The higher the gross profit margin (GPM) the more margin you have, and the more profitable you are.
  6. After Gross Profit is deducted expenses, to get an Earnings Before Interest and Tax (EBIT). Often EBIT is used to compare organisations as it is not affected by how a company funds its operations (payment of interest on loans) or by specific tax rules.
  7. Various other deductions are then made, such as depreciation (to make sure you are accounting for your plant and machinery losing value over time), tax and interest, and you’ll end up with Net Profit after Tax (NPAT), the bottom line. Net Profit, if positive, can be used to pay dividends and/or plough back into the company (as reserves, a source of future funds).
  8. The Balance Sheet will give directors a statement of the financial position of the company at one moment in time (the date on the balance sheet). Notice the difference here – the P+L is over a period of time, and the balance sheet is a snapshot at one point in time. It’s as if everything in the business is frozen and added up, including all the assets the business owns (Assets: such as property, cash, receivables, equipment), all the debt it owes (Liabilities, such as bank loans, payables, overdraft, employee provisions/leave) and the amount of money in the business that is left over (Equity). Assets = Liabilities + Equity, or Assets – Liabilities = Equity.
  9. Equity can be made up of the initial share capital invested, plus any subsequent share raisings, plus any accumulated reserves and retained profits earned over time, less dividends paid.
  10. Various ratios can help you decipher what is going on, although you’d want to know why the ratios are changing, not only that they are changing. For example, ‘return on assets’ may be rising because you are generating more profit from your assets (Good!) but it might also be because you had to write off some useless assets (Bad!).
  11. The third important document is the Statement of Cash Flows, and from various cases today it was clear that the P+L might look great, so too the Balance Sheet position, but once you look at where the business is actually earning its cash from, and where it is spending it, a very different picture may emerge. All 3 documents are required for a better overall understanding.
  12. One classic case here was a WA-based winery (which later went insolvent, had to be broken up and sold off). The P+L looked fine for the 5 years presented, but digging deeper it was clear that by the 5th year in question the only reason it made a positive NPAT at all was due to some revaluation of the vine trees (upwards), which had been done (perfectly legally as per accounting standards) over the previous two years. This had come on to the books as ‘other revenue’. Meanwhile the balance sheet looked OK, albeit with some higher debt levels and some share issuing, but otherwise things looked ‘not great’, but ‘under control’. However, looking at the statement of cash flows, it was clear they were not earning positive cash inflows from their actual business at all, and that a combination of more borrowing (debt), share issuing (diluting shareholders) and asset sales (flogging off what was seemingly not bolted down) were the main reason they still had cash in the bank at all. All major ratios were trending down, and in fact the liquidity ratio (ability to pay immediate debts) had been well below acceptable levels 3 years earlier, and continued to be thus.
  13. There were certainly warning signs up to 6 years before the business eventually went into administration. This brings up one of the most sober points for directors – trading while insolvent, or trading close to insolvency. Solvency is “being able to pay debts when they fall due” and so has a timing element to it. As long as the business can pay debts as they fall due, then you are OK.
  14. How would a director know if the business might be sailing close to the wind on insolvency or not? Early warning signs may include – a reduction in cash balances, an increase in creditors (the business may be trying to buy time with suppliers), a low liquidity ratio (below 0.75 is generally a worry), net cash receipts from customers is less than cash paid to staff and suppliers, cash income from sales is less than reported book sales, an overdraft being used and rising over time, various other devices are being used to keep cash up (asset sales, share issuing, increases in debt) and dividend payments being funded from borrowing or anything other than operating cash profits. All the directors have to do is raise some questions about all this, and in the case of the winery above, questions could have been asked many years before the business failed.
  15. The insolvency issue is fundamental, as directors must not allow the business to continue trading if they suspect the business cannot pay its debts as they fall due. If the business continues to trade, the directors could be held personally liable for any more debts incurred. This is illegal! ‘Hoping things will turn around’ and ‘we’ll trade out of it’ are not valid excuses. You fail in your fiduciary duty as a director to the company if you allow the business to trade while insolvent. Pure and simple. If you suspect this, you have to have this recorded (e.g. minuted), and stop trading. But well before then, you should have picked up the warning signs and asked important questions, such as ‘why are we paying a dividend while making a trading loss?‘ or ‘how are we paying for ongoing business expansion when our receipts from customers are less than what we pay our suppliers and staff?‘ or ‘our liquidity ratio is at 0.4, and an acceptable level is 0.75 or higher, how are we going to revert back to an acceptable level?’…
  16. There are far more issues to do with accounts than these few points above – for example, there are many more accounts than the 3 main ones above, and dozens of ratios. Last point – beware the fine print. Read the notes to the accounts – there should be explanations for any asset impairment, or revaluation or anything like this that can have a material impact on results. Remember, if you’re not sure, ASK!