On new capitalism

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I just read Robert Peston’s paper on new capitalism. I agree with him that we are seeing the birth of the 21st century version, it looks scary now but we’ll be far better off at the end of it.

The end of banking as we know it

In the long run the chastening of the Banks is no bad thing. Banking is and should be a conservative industry. Far too many of the best and brightest science and maths graduates were being sucked into the arid pursuit of creating new financial instruments because of the pay on offer. As the economy re-balances away from financial services those people can be attracted back into productive industry – imagine how much poorer we would be if Brunel had worked for a bank. It means no more big profits and no more big bonuses.

The answer lies in getting a much closer connection between lender and borrower and the model will be Rabobank, which as a decentralised federation of small banks weathered the storm much better than most, or even Kiva which shows how new technology can combine a broad reach and a direct connection between borrower and lender.

The beginning of new management

The only way for the West to preserve its living standards is massively increased productivity but it is possible simply because our current forms of management are so terrible. Almost every organisation is incredibly bad about making the most of its staff with huge amounts of time wasted on unproductive projects. The problem is far too much strain is put on the people at the ‘top’ with far too little responsibility for everyone else in the organisation.

The crisis will force companies to look for more productive management systems such as the flat lattice used at WL Gore & Associates.Gore’s management system is almost unique in the degree of autonomy it gives each associate but the corollary is much greater productivity and worker satisfaction. The widespread adoptions of these measures could only happen in times like these because in ordinary circumstances there is no pressure on unproductive companies to look for radical alternatives and executives are unwilling to give up their offices. From now the executive should be the person with the best idea, it’s the only option.

On Yahoo coming apart

We are entering the endgame for Yahoo. The company will start to come apart and I think that is the right thing to happen. In a sense Yang’s leadership has been the best thing, if not for the company than for the broader tech industry. Yahoo always struck me as incoherent. Its Asian business is doing well independently of the US and would probably be much better off set free.

The US business has accumulated a lot of different sites which would perform better as tighter, more focused independent units. Delicious is one obvious example I have written about many times in the past. Flickr was another I initially dismissed as ‘money losing fluff’ but I now admit I was wrong. I saw the light when I started to use it and when the did the Getty deal. At the moment these and others are trapped inside Yahoo’s bureaucracy and being dragged down by it.

People talk about the benefits of size but all these really boil down to is common accounting, payroll and other back office functions. I have been reading a lot about organisation and the one I find most appealing is WL Gore. No unit in the company can exceed 250 people as that is the limit for an effective organisation. When the limit is reached a plant is split in two. It seems to me that this is the only way to run large organisations – as a federation of smaller ones all of which have maximum autonomy. Yahoo’s main problem at the moment is that its best companies are being crushed by its own size. It is the corporate equivalent of the Soviet Union and we all know how that ended.

Pic: Chen Yang

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On the death of Office

Google Apps is starting to turn from a sideshow into a proper business. Google seems to be using revenue from its search business to undermine paid for software of a competitor, Microsoft. Ironically this is how Microsoft killed Netscape and unfortunately for MS it is a very effective tactic. There are far too many advanced features in MS Office which means it is vulnerable to a stripped down competitor like Apps. Google charges comparatively nothing ($50 per year for the premium service) and hosts everything itself.

This approach is not without weaknesses if Google wants to get out of the SME market. As they grow some enterprises may want to take all their applications in house, not host them on Google’s servers. At the moment Google only offers its enterprise apps stuck to its own servers. Cloud computing is very attractive but any large organisation will want to control its own cloud.

Theory Y

Ultimately what I really want is the capability to hack together different suites into one service. So for example we could use Gmail for mail, SocialText for wikis, Sonar Dashboard for networking and Connectbeam for tagging and search. New services should be easy to trial and add to enable quick decision making when someone finds a new app they want to try. At the moment getting a new application added to a corporate environment is a very time consuming process with the result that the applications being used are miles behind what is available.

Software alone is not the solution though, these tools can only support good management. I am currently reading the Human Side of Enterprise. It was first published in 1960 but is fresh as the day it was written. The approach to management it espouses is maximum freedom and maximum responsibility for employees. Most organisations are not run this way and still cling to the idea that people are naturally lazy/incompetent and need to be constantly corralled by a management class. The alternative view is that people are naturally enterprising and will respond positively to a challenge so long as they aren’t constantly interfered with. Organisations like WL Gore & Associates and Semco have succeeded taking this approach long before collaborative software became a reality. And to really get the best out of collaborative software, management will have to change too.

Read more:
On balance
On Gmail
On trampolines

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On Glassdoor

I don’t review many startups but every once in a while there is one like Trampoline Systems or Myka which knocks me off my chair. Glassdoor is one. There is no doubt in my mind this company will be a success. Props to Benchmark for investing in them, if I were a VC I would be fighting to stuff money into their pockets.

It is a great idea, they got to market first so they will have all the traction and the information they carry is extraordinarily valuable in a very lucrative market. Companies may feel a little bruised by some of the reviews but if they take the criticism on board they will be the better for it. Google is described as “something akin to what the Brady Bunch would be like if they lived in communist Russia.” Ouch.

Although to be fair to the big G they get pretty much stellar reviews otherwise and some of the criticisms – ‘I’m not told what to do’ and ‘flat management structure’ – say more about the individual who wrote them rather than the company. Bottom line is that some people don’t fit in some companies and instead of grinding away they would be better off just leaving. I was fired from my first job by Arthur Andersen. I hated it and I needed to go but it led me to my best ever job at Orange.

To me this is bringing the open culture of the best companies – WL Gore, Semco – to everyone whether they like it or not. That is truly disruptive and has the potential to put the wind up bad employment practices and silly management ideas. Some of the best critiques of corporate policy I have seen have been posted anonymously by junior employees online in forums and the like. Glassdoor brings all that disparate, valuable information together and they have a hit on their hands.

On breaking up Microsoft

I’m always interested in the psyche of a company, it’s like a rhythm the company moves to and runs subconsciously through everything they do. I think it’s why some people do brilliantly at one company and disastrously at another. One of the reasons I want to work in my own start-up is to have a corporate culture which suits me well. I have experienced this when I was at Orange and I did my best work there.

There is something deeply embedded in Microsoft that seems unable to keep things simple. So even when they have a good idea like the Xbox they can’t resist putting out four different versions of it. Apple has parodied this trait in its commercials, some have speculated how a MS iPod would have turned out and others have pointed out its muddled branding. MS has recently hired marketing guru Alex Bogusky to help them turn things around but I think the problem lies deeper than simply changing the marketing.

Vista is so heavy that users are baulking at the basic requirements needed to run it and sticking with XP. I’ve said before I think the future lies in much lighter operating systems. MS really needs to forget about building an even bulkier Windows 7, throw out the entire code base which is giving it such problems and set off an internal competition to build a new OS. Pick five of the most creative programmers give them all their own company, a stack of cash and let them get on with it. No rules – let them build it on top of Linux if they want to – and see who wins. Let Windows and Office lumber on if they like but get some fresh air into the company.

WL Gore and Associates is a uniquely well run company. One of the principles it employs is to break up any business unit once it gets bigger than 250 people. It does this to maintain a start-up atmosphere and to avoid stifling creativity. This is the road Microsoft needs to take – ironically this is to impose the anti-trust ruling on itself. Microsoft itself could become the holding company and take its history of muddled brands into the past. In its place Xbox, Live Search, (ahem) Zune, and what ever other brands it decides to develop would then be separate companies with only a parent in common. It is no coincidence that its only post-Windows success, the Xbox, is run as autonomous unit. Ballmer is apparently moving in this direction by trying to develop more internal autonomy. He should go the whole hog and break the company up.