The myth of self-regulation

The concept of self regulation is a simple one. An industry polices itself to make sure that they comply to an agreed code of conduct. There is just a tiny problem to this plan – it’s rubbish. It reminds me of a line from the Pirates of the Caribbean when Barbossa was explaining the Pirate's Code : " The code is more what you'd call "guidelines" than actual rules."

Chances are, it would probably be in the best (short term) financial interests of the company to act against its own industry code and, because there is self-regulation, there is no need for management to weigh up the cost of contravening the code with the benefit to be obtained from ignoring it.

There is no leverage to ensure that the individual company adheres to its own code.

This was evident in the case of Hungry Jack’s in Australia contravening the industry code regarding marketing of children’s meals with too high a fat content. They weren’t supposed to, but they did it anyway.

They weighed up their commitment to self-regulation against another contractual obligation and the contractual obligation won. Why? If they didn’t, they would lose money. Unfortunately, impact to the bottom line is often the only language most corporates understand.

But consumers have the ability to influence customer behaviour. Unless we change the way we interact with companies, they will continue to heed the call for more shiny things that cost less as opposed to the call for sustainable business practices.

This is the kind of industry self-regulation that will work. If companies don’t behave in a responsible manner, stop buying from them. Immediately.

The leverage of money, spending it and withholding it, is an incredibly powerful leverage. As consumers we need to start using it.

Interesting reading and viewing :

Hannah’s rules : Rise of the ethical consumer

Building values into business

It's (still) good to be good

Change is inevitable

It has been such a long time since the last post but I have been busy. A new baby in the house makes every day living quite a challenge and what was the norm never will be again. I am also involved in the transformation/creation of the finance function in a very large Australian company.

These two events have one very distinct commonality – change. Most people fear change, it represents the unknown. But change is inevitable, it is going to keep happening and eventually – it’s going to happen to you.

Being caught in change is a bit like swimming in a river (pardon the very extended metaphor). You have some options :

1. Resist the change or swim against the stream. Chances are you may be able to stay exactly where you are, but you are just as likely to tire and be swept away.
2. Let change happen or go with the flow. You won’t get tired but at the same time you will have little control over where the change takes you.
3. Influence the change or ride the wave. By being involved in influencing the change process you immediately herald your intention to be a leader in your organisation (or perhaps even industry). You also get the opportunity to shape the change in your organisation and how it impacts your business, you personally and your tribe (read up on Seth Godin if tribes at work is a foreign concept to you.)

Personally, I am all for option 3. If you swim with the current you tend to swim a lot faster than if you swim against or do nothing at all.

Maybe this comes from a smug sense that my opinion is worth adding to the change discussion, but I strongly believe that if you feel strongly enough about something, that regularly equates to an opinion that should be considered.

Bottom line : get off the sidelines and get in the game.

Anti-trust is now a bust

Microsoft were dragged over hot coals for bundling Internet Explorer in their Windows suite of products. By doing this they supposedly stopped free competition for web browser companies like Netscape. Huge amount of bad publicity for Bill Gates and the team.

Google develop Google Chrome - a web browser which anyone can download for free! And they get high fives all round. Are they not stopping free competition by giving their product away?

There are a few business lessons to learn here :

Size and market presence may leave a sour taste in customer's mouths

People love an underdog! If you operate a small business, you are uniquely able to meet your customer's need in a very personal way. Provided your product is comparable quality and price, you should be able to target and pick off a big enough client base to keep your business profitable.

You may face your stiffest competition from someone who is not your competitor

The answering machine industry was rendered obsolete by mobile phones with answering services and fixed line operators now offering the same. Google are not in the web-browser business. Who is not in your market but may compete with you? Who could you compete with?

Perception is reality

Microsoft were perceived as being the "bad guy", so they got punished. What is the market perception of your company. How do you change that or preserve that.

Is the tail wagging the dog...

There was a great movie in 1997 called "Wag the dog" with De Niro and Hoffman. The tagline was "Why does a dog wag its tail? Because a dog is smarter than its tail. If the tail was smarter, the tail would wag the dog."

I was reminded of this the other day when I phoned Telstra/Foxtel to reconnect my Foxtel service. A simple exercise really :

1. You move (obviously)
2. You phone Telstra to advise of the move
3. They thank you for the call and send a technician over to complete the reconnection.

Part 1 and 2 were completed with relative ease, I then phoned to find out what needs to be done. 2 weeks, 7 call centre agents and many wasted hours later I still do not have Foxtel. Why? The system will not process something that needs to be processed. When I try to find out what the problem is - the inevitable answer is "the system"

Now the lesson here is simple. Your processes, procedures or systems should never (ever) interrupt business, cause undue customer agitation or prevent sales. If someone comes into your shop and wants to buy something and your //insert offending item// is down, make a plan. Better yet, already have a plan that can be whipped out, dusted off and used without hesitation.

If you are in a competitive business, that customer may never walk back in again!

I'll let you know if the system at Foxtel stops wagging their customer service and I get to watch rugby again before the Super 14 ends.

Are you sure about your insurance?

Walking home from the train station last week, I noticed a woman mowing the lawn. She was wearing very good gardening gloves - which is good, because she may be switching between gardening task and the gloves are good for protection. The problem is - she was wearing sandals on her feet.

She had more than adequate cover for her hands, they were not really at risk - but her feet were much closer to the business end of the mower and her protection there was extremely inadequate.

According to the Insurance Council of Australia (ICA), one in six small businesses in Australia – more than 270,000 businesses – are not insured. In South Africa - I would imagine the situation is similar or worse, because let's face it, insurance is at best a grudge purchase.

If you are over-insured, it's costing you. If you are under-insured...well you don't want to find that out at claim time. Money spent on a broker may well be worthwhile, just make sure you are speaking to someone who understands your business and you are not talking to a consultant who is simply reading through a checklist to assess your risk.

Small comapnies are different to big companies. Your risks are different, your needs are different. However, one thing that most big companies do - and you should also, is annually assess your cover and determine if it is correct and sufficient. Do you have business cover, not just household insurance? It seems like a simple question but a lot of small businesses do not have business interuption insurance, public liability or professional indemnity insurance. What happens if you become injured and can no longer generate revenue?

Do you have the correct insurance for your business? Or are you mowing the lawn in open-toe shoes?