How do you keep up with the changing environment you live and work in? Technology is a moving target as are many other elements that shape our environment. There are so many facets to our industries that constantly change while you are trying to keep your business going the best way you know how.
There are a number of options. You can join business groups, buy industry magazines, search the Internet, follow social media and talk to others in your industry. So now you are working a 16 hour day and not necessarily making much more progress. Why? Because you are so focussed on doing Business As Usual and your view is based on your insider knowledge, bias and training.
What else can you do? One option is bring someone like me in as a consultant. As a Futurist I scan data using tools I have learned, my own experience in business and a wide focus on STEEP, whilst also having no skin in your business and therefore an objectivity that is hard to find when you have been making decisions that you are financially and emotionally attached to.
What is STEEP? It is about looking at the world and elements within it from the perspective of a wide range of elements and wild cards which make up the world. These key 5 elements are Society, Technology, Environment, Economics and Politics.
Take those 5 elements and apply them to your Business Plan. What is going on in your world right now in relation to STEEP? How might each element impact on your new product launch or sales plan? I would welcome your comments.
One of the elements of foresight is being able to find connections between seemingly irrelevant factoids or situations and understand what they mean. Then on top of that sometimes there are wild cards to be considered. What would happen if……..
When you look at information in isolation there are many risks. People form opinions based on snippets of information without seeing the full picture. They assume other people’s opinions, perhaps also based on bias or limited information. People often form opinions or carry them forward based on old data, often not even knowing that it is old data. For example, you may see a RT on Twitter and think it is current information, when in fact it has been retweeted by people for a week. Think about the disinformation that went around in Boston recently. Once it flies around it is very hard to know which information is current and correct.
Unleashing the Road Warrior
Currency of information is hard to find these days. When a book comes out, by the time it has been printed it is already out of date. When I published Unleashing The Road Warrior, which took me about 6 months to write, it had a currency of about 2 years. After that, all the technology I wrote about was out of date.
We are frequently bombarded with little pieces of information, parts of stories, brief nuggets of 10 ways to be better at something, or 5 ways to become a social media superstar and double your sales. If only it was that easy.
Is there a simple answer? No, there isn’t. However in today’s world, we are connected to many people who are experts in certain areas. There are also people who maintain they are, when they are not. Start by connecting to people who really do know what they are doing. Ask people you know and trust. Check out their credentials. LinkedIn is a good place to start from a business perspective. Are they well connected? Have they been endorsed or recommended? Do you know people that they are connected with that you can talk to?
There are 3 types of people in the world. Those that make things happen, those who watch things happen and those who wonder what happened. Don’t be in the last group if you want to go forward, but also be careful where you get your counsel from.
As a footnote, if you are in New Zealand, or somewhere else where similar things are happening. Fairfax is said to be closing down in both print and online Computerworld NZ, PC World and Reseller News. So where will you be looking for information on your next technology investment or foray? I welcome your comments.
I’ve just read an article by Hugo Garcia of Futures Lab in Portugal in the latest issue of The Futurist. He was outlining how younger people today are more mobile, more focussed on consuming goods, services and experiences, rather than being attached to things and places. One area that he was strong on was the fact that people are now so mobile and keen to explore the world and their environments.
Location becomes far more important because you are continuing moving around as opposed to tied to a fixed location in the world. He said that one example is the trend towards not owning a home, perhaps ever. I always hear talk about how hard it is to get into property, I don’t think it has ever been easy. When we bought our first home (to give ourselves and our children some long term security) we bought in a cheap neighbourhood and at one stage were paying in excess on 20% interest. For a couple of years in the beginning, we went without pretty much anything, just to pay the interest. Today many don’t want to restrict their lifestyle, making it a choice, their choice is to live for today.
The ‘office’ is for many people today, especially knowledge workers, not somewhere we need to be a lot of the time and the cost of maintaining an office, commuting, car parking (you could almost rent a room for the cost of my Auckland City car park). We go to the office when we need to, for meetings, teamwork etc, but otherwise I can be much more productive from my home office.
Hugo talks about shared mobility. This is not a new concept, but certainly one that is coming back with a vengeance. Back in the 1960’s the Provos introduced white bikes that anyone could use. The idea was that you grabbed a bike, rode it to where you wanted to go and left it there for the next person to use. Their concept, same as today was to reduce pollution and traffic congestion and promote community engagement. They were certainly engaged as very quickly the bikes were stolen and repainted, but the idea was very good.
Today carpooling continues to grow, Zipcars, recently purchased by Avis, which is currently being debated as to whether it was an anticompetitive manoeuvre, is an example of car sharing, which in principle makes a lot of sense. People share ownership in boats, holiday homes and other items and many people are travelling around the world using the services of portals like Airbnb. There are loads of companies sprouting up like Whipcar, which lets you rent out your own vehicle when you don’t need it.
Globalisation is also an area that is changing rapidly. I remember reading history books about the great depression and how people moved from town to town looking for work. Mobility today is something far more international and international borders are being crossed continually by people in search of work, whether it is because they can’t find it at home, want a better life, or simply enjoy the itinerant lifestyle. Over a million Kiwis are working and living overseas, while British and other nationalities are moving to New Zealand to work on projects such as the reconstruction of Christchurch.
Hugo points out there are pro’s and cons. “Unfortunately, some areas may become abandoned because they lack competitive advantages. The war for talent between countries will increase, but regions that offer good living conditions may gain an advantage.
I note again that knowledge workers, one of the biggest industry segments today can often work from anywhere and travel when required. I know many journalists and developers that live in small towns for the lifestyle, but can still perform on a global stage.
This mobile society opens up huge scope for innovation and disruption, particularly with location based services, applications for mobile use, which can support the new mobile lifestyle. Kiwi developers can and are developing applications used globally, despite those that say you can’t be successful unless you are in Silicon Valley, things are changing. The money may be there, but they don’t have a monopoly of good ideas.
If anyone knows about a mobile lifestyle its Kiwis, anywhere is a long way from New Zealand. We know how to travel, we absorb and learn and we love new technology. Where we need help is harnessing our smarts, to help our innovators and entrepreneurs to learn how to scale and think big. That’s a tough ask and I don’t think our Government is doing anywhere near enough to ensure that smart people are able to grow from small concepts to large global enterprises.
I was just asking myself how I suddenly got on my soap box, but then I’m not sure I ever get off it:)
What is peak oil? Wikipedia has an extended description, but in simple terms it is when the amount of oil being extracted is at the highest rate and from then on, the amount of oil becomes terminal. In other words, the amount of oil being extracted from the earth will be less than is being consumed, while demand, along with population, increases.
The Space Collaborative paints a scary picture of what the near future could look like without oil. Of course oil doesn’t just drive our cars, our ships, our planes, but it also helps to generate electricity.
Now of course for New Zealand it’s not a big deal because we have geothermal power and arrangements with countries like Japan to access oil, when it starts running out. Major gas guzzlers like the USA will gladly give us a share of their emergency stocks because we’re nice people. We shouldn’t forget that we have more vehicles in New Zealand than we have licensed drivers. Of course the price will sky rocket and you will need to be very wealthy to be able to run your car. Just as well we have natural gas.
It was interesting to read that Australia voted in November, not to put together a plan for peak oil, so we probably won’t find any help there. New Zealand has been working on plans for a number of years, because in 2003 we were dependant on oil for 48% of our energy production. This means that brown outs as predicted in the diagram above, within the next 20 years could become a reality. Yet besides emissions trading, the Kyoto Protocol, which as I have blogged about before will require that instead of spending money to protect our own infrastructure will have us sending money to other countries who have lots of trees.
I don’t think we’re talking about science fiction here, where it will be a problem for future generations, long after we have turned to dust. I think this will be a problem that anyone reading this blog will face. So what are you going to do when you can’t get petrol or diesel for your car and there isn’t enough oil to generate electricity or even make candles?
In my last blog post I wrote about the importance of agriculture to our economy. Then I started hearing stories that farm sales were down, especially dairy. Apparently of over 4,000 farms on the market, only around 200 sold last month.
Good news for some of the farmers who want out, because there are foreign investors who want to buy them. One company wants to spend $1.5 Billion dollars buying NZ farms. You would have to wonder if we can’t make a good living out of farming how can other countries do it? If we do sell them, where will the earnings from those farms go? Not into our pockets I would suggest.
China has a problem. They have a large dry land mass and not enough water to grow the crops they need and a huge and growing population. What are they doing about it? They and other countries such as Middle East are buying good arable land wherever they can get it for a good price. For example China is buying farming land in Mozambique, Angola, Malawi, Nigeria and even Zimbabwe. It’s not all bad, they are teaching local farmers better techniques in animal husbandry, improving crop yields etc.
I ask myself therefore, again, why can’t we produce high yield crops on our fertile soils and sell it to the countries that need it. Once those countries have bought our land, we won’t be getting it back and I wouldn’t expect us to gain much in GDP from the crops they grow.
As I said in my last blog, the ‘good old days’ were when we were largely an agrarian economy, we had plenty and we also had plenty to export. Now we have fantastic biotechnology and the ability to increase yields, quality and in many cases without using GM technologies.
I would hate to look into our future and see a country that can’t feed itself, that grows crops on farms owned by other countries, go straight offshore to feed them with minimal economic benefit to us. I would welcome someone to explain the logic of this.
We have expertise, maybe we should be assisting some of those countries who are unable to maximise the return on their land, help them thrive and clip the ticket. That would be a win win. While we do that, we also continue to research and improve product, the grasses and other food sources for animal feed etc. We do have some successes such as Fonterra, Livestock Improvements and many other thriving areas of research and results in biotechnology. We should stick with what we are good at and rather than give our farms to the Chinese, Arabs and others who want them, let the Government buy them. They could be run by unemployed people, who would get training on the job and perhaps even interest free loans to purchase some of those plots and use the skills they have obtained to build themselves a healthy asset and income, while increaseing our balance of payments. Is that silly? What’s wrong with my thinking?
In February this year there were around 168,000 people unemployed. Lets put them to work on those farms, teach them a trade, help them make something of themselves and help them earn the money to buy there way in with low interest loans and subsidies. What could we produce with 168,000 people working instead of paying them to do nothing. The single person benefit is around $160. That works out to a wasted loss of around $26,880,000 per annum. I say lets buy those farms and keep them in New Zealand hands.
Do what you do well, is advice that is often given. Get back to basics. So let’s think about this for a moment from a New Zealand perspective. At the moment our economy, like many economies is looking grim. We are borrowing lots of money to stay afloat. We look to electronics, bioengineering and other things that we are good at, but aside from a few exceptions we don’t seem to capitalise on it. We are great with ideas, but not so good at doing something about it.
We have some success stories sure, wine does ok, lamb was doing ok until they invented food miles and we are pretty successful at controlling segments of milk and fruit, particularly apples and kiwifruit. The legacy of people like Angus Tait (who I had the privilege of working for 7 years) continues, but without his innovative attitude. We have some success stories, but they are really far and few between.
Many years ago, when we all took it for granted, we were an agrarian economy and very successful at it. We’ve been successful food exporters, right back to when the Dunedin, the world’s first refrigerated ship left New Zealand full of frozen meat carcasses, back in 1882.
New Zealand fed many parts of the world for over a hundred years and life was good. Live sheep have been exported for over 100 years, although a number of incidents where thousands of sheep died have had a negative impact on this. My biggest argument, besides the inhumanity of keeping live animals penned up for so long, was that much of the stock was exported for breeding purposes, which of course reduced the demand for our own product.
But I digress. In today’s economy, we seem to have turned our backs on some opportunities, such as creating large call centres to look after communications needs of other English-speaking countries in other time zones, a market that South Africa has made a huge industry out of. We aren’t doing enough in areas such as science and medicine, possibly because the people with the smarts go offshore.
So lets look at what problems the world is going to face in the near future, in fact many parts of the world are facing right now, food! Scarce water resources, growing populations and growing tracts of land that are becoming so dry and depleted that nothing will grow on them. Then of course we also have oceanic dead zones, which are killing fish and other sea life.
Is this something we could look at with a different De Bono Hat on? Oceanic Dead Zones thrive through a combination of fertilisers and nutrients that leach into rivers and down to the sea, causing large algae blooms. These compound as the phytoplankton absorbs available oxygen and pretty much kills everything off.
Could this be another opportunity? When I need some extra energy before a run, I swallow a pile of Spirulina. Spirulina is actually algae. Of course the algal blooms often contain toxins, but there are many algae that can be used as a food source. Perhaps we could turn a bad situation into a good one.
In New Zealand, since we signed the Kyoto protocol, it has become relatively economic to grow forests (which while gobbling up Carbon Dioxide also use up a lot of water). We have lots of land, a good climate for agriculture and a need to find new sources of income. In fact I have heard that NZ can no longer feed its population without importing food. So why don’t we start looking at ways of growing bulk food?
If we want to do the right thing, we could look at product that has low cost to grow, that we can export for a profit and help countries that have problems at the same time. More than 1 billion people (1 in 6) suffer from food deprivation.
Food Science is something we are very good at. Most universities have food science and biotechnology majors and there is even a Food Science Institute. Many people have a problem with GE Food. I don’t personally know enough about it, but one way or another we either have to put production into overdrive or accept that hundreds of millions of people will die soon through malnutrition and starvation.We have a food crisis now. Grain is scarce and with oil running out a lot of people are now growing grain to fuel cars, creating even less food source.
Whilst human population growth is slowing, there were still 74 million new mouths to feed last year. A large chunk of these are in countries where soils are eroding, water tables falling and wells going dry.
Water politics is becoming a new issue and it could be that future wars are fought between countries that share water sources. This is especially likely where low lands are reliant on water coming from highlands. Think Europe, where many of our recent wars have begun. But again I digress.
So we are good at growing crops, but could we do more? I think so. First, we should be self sustainable. We can’t afford to rely on other markets, especially when things get to a crisis where 1st world countries start fighting over resources. Then we should look at how we can feed the world and get paid for it. As a country surrounded by sea, we do not face the extremes that occur with countries that have large land masses, including our neighbours Australia.
As to Food Miles, I’m all for sustainability, so lets look at this is an opportunity. This can mean focussing on closer markets such as Australia and Asia, but also on biotechnology to get more for less.
Sometimes I think we try to be too clever. Faster computers, cloud computing, cars, planes, rockets, 3D TV, all things I want to continue to enjoy, are meaningless to the ever rowing numbers of starving and malnourished people around the world. Because of our geographic isolation, we became very good at food. Let’s look for more and new ways to exploit this. Lets make sure that if everything turns to dung, we can still feed ourselves, then lets look at how we can help feed the world and pay off our national debt at the same time.
I’ll leave the last word to NASA who have remote sensing technology to monitor conditions affecting food resources and their management:
I’ve been trying to work on this post for ages, but never seem to get it finished. The more I think about it, the more tangents I head in, so here’s a start anyway. Maybe you can add a comment to the thread.
When we, Joe Citizen think of warfare, the common picture is either soldiers, tanks and planes, or more recently terrorist attacks. Information warfare is not a topic that we think of very often.
Of course using media such as radio, print and TV have been used for decades to provide disinformation, but now that we have the Internet, there is potential for a new front that could cripple economies and cause massive disruption to life as we know it.
Periodically there are major EFTPOS failures, which can happen at the worst possible times. For example in 2005 the EFTPOS network in New Zealand broke down for 2 hours on 23rd December. The estimate was that around half a million transactions were lost on one of the busiest days for retailers in the year. Millions of dollars in transactions were lost because people don’t really carry cash any more.
In November last year Brazil and some of Venezuela lost their power. Nine of Brazil’s states were out of power, representing millions of people. Whilst many complained they couldn’t watch their favorite soap opera, traffic lights were not working, trains weren’t running and parts of the country pretty much ground to a halt.
If a country or a terrorist organisation wanted to cause chaos or in some way to a country or city in the modern world, it would be incredibly easy. In Holland a guy called Max Cornelisse has created chaos and recorded it on YouTube to show how easy it is to disrupt services we take for granted. Amongst other things he has meddled with electronic signs on freeways, opened and closed bridges over canals from his PDA, sent people running from one platform to another by controlling automated PA messages at railway stations and in this YouTube Video he controlled the autoprompter at a Dutch TV station causing confusion to the newsreaders on live TV. Unfortunately it is in Dutch, but you’ll get the idea.
This is just a guy having a little fun, but what could you do if you seriously wanted to disrupt a country or city. What chaos would you create simply by shutting down the Internet. How would your business function without the Internet? How would your community function without the Internet? Imagine no email, no Voice over IP, no web browsing, no IM, no Facebook or Twitter? No online share trading. No banking, no EFTPOS, no ATM’s and who carries cash?
That’s just for starters. I wonder how long it would take for a major city, like New York, London or Amsterdam to fall into chaos? What would happen after a day, a week, even longer?
Last week there was a story on NPR about cyber terrorism. It quoted USA Director of National Intelligence, Dennis Blaire saying that “Every single day, Blair said, sensitive information is “stolen from both government and private sector networks” as criminals become increasingly more sophisticated.”
Interestingly on 16 February 2010 an event will take place in a simulated Whitehouse Situation Room which is scripted to emulate a cyber terrorist attack. Those taking part will include former Director of National Intelligence John Negroponter and former Homeland Security Advisor Fran Townsend, who will have to work out how to deal with it as it plays out.
This has happened shortly “after the House overwhelmingly passed The Cybersecurity Enhancement Act. Something that gives the Obama administration the power to switch off the Internet,” according to Techeye. For more on the Act, check here.
Just as a final thought for now. If you know how to defend against an attack, you also know how to initiate one. I’m not for a moment suggesting any Western power would do that, but given the right circumstances…….
I am very happy to be living in New Zealand in that respect. Although we have allowed ourselves to become very dependant on our friends and allies, not even able to fully feed ourselves if we bacame isolated.
I was talking with someone recently about the Waikato River water that provides some 10% of the drinking water in Auckland. This was approved despite much protest, on the basis that Metrowater would only use it in emergencies. I suspect that Mayor George Wood at the time knew that it would end up being turned on all the time, as part of his deal with his crony mayors.
The water was declared safe by WHO standards, however councillor Joel Cayford, who is now employed by ARC said that it was unsafe. I attended the public meeting where he explained that WHO standards listed a number of quality requirements, but excluded many ingredients such as dioxins, heavy metals, fertiliser and more. In my opinion the meeting wasn’t helped by constant interjections from rent a protester, which didn’t help the cause.
Not long after approval was given by the regional mayors, including the Mayor Bob Harvey of Waitakere who approved it on the condition that Waitakere water would only come from local dams in the rainforest, thus not having to take this water.
What has this got to do with dead zones in the ocean? Well here’s the thing. A lot of the objections against using Waikato river water were because it contains huge amounts of leached chemicals from farms including fertiliser, antibiotics and much more. It appears that these same types of chemicals are flowing from rivers around the world into the sea and several studies are suggesting that the rise in industrial food production is increasing the number of dead zones rapidly.
Oceanic dead zones are areas where the oxygen levels in the water are so low that they kill of almost all forms of marine life. There are now more than 400 oceanic dead zones around the world and they are growing fast.
According to experts, including NASA a major contributor to these dead zones is fertiliser that flows to the ocean from farms both in the form of chemicals leaching from farms and from the animal manure which still contains these chemicals. The nitrogen and phosphorous feeds the algae and phytoplankton, making these plants grow rapidly.
In New Zealand, we have become aware of algal bloom. This is occurring more commonly now both in coastal waters, such as our local Waiheke Island, and also in freshwater lakes, including many in the Waikato, where 10% of our drinking water is coming from.
So what does this mean? We know that fresh water is going to be on of the important issues in the future, both from climate change and from man-made intervention. We know that our oceans are becoming polluted, much of it from man-made waste. We know that the fish stocks are becoming depleted in many parts of the world, due to over fishing, to feed growing nations. But fish are also now seriously at risk from the oceanic dead zones, where oxygen levels are so low that fish and other marine life can’t survive.
We seem to be in danger of creating the ‘unrealistic and unbelievable’ wasted planet that is often depicted on science fiction movies.Am I exaggerating? Well check these examples out:
A dead zone the size of New Jersey of the coast of Oregon and Washington, may be irreversible.
The Mississippi Delta dead zone is one of the smaller ones in the world, only 3,000 square miles. The US Government is investing $320 million to try to slow it down, but as long as the chemicals keep flowing down and farm production is increased, we have a problem.
The Baltic sea apparently contains 7 of the 10 worst oceanic dead zones and it appears that the surrounding countries haven’t been doing much about them. The end result could be the loss of almost all marine life in the area. This map shows how bad it is in places, where the red areas represent areas where the water essentially contains no oxygen.
It appears that the man-made damage to the oceans and lakes in the world could present an even greater problem than global warming and of course one that is compounded by it. If so much water ends up unable to sustain life, how will we survive, especially the poorer areas on the planet, where water is already scarce. The sea’s health is not something we can take for granted, no matter how vast it appears. The attractive colours of algae bloom that we sea coming back each summer in bigger areas, is evidence that we need to change some of our ways, and quickly.
I’ll leave the last word to Joanne from Rocketboom who explains it far more succinctly than I:
So the story continues. It seems a long time ago (Monday of this week!) when I asked the question, Is the Swine Flu going to be a pandemic? Well on level 4 indicating a significant increased risk of a pandemic, a global outbreak of a serious disease. It isn’t yet a Pandemic, but it doesn’t show any signs of abating. As it appears that secondary transmission of human to human may now be occurring, a Reuters story says that they may soon raise to Level 5.
Another Reuters story also mentions that many countries have imposed a ban on US pork imports, this could lead to similar bans on pork exports from all countries where Swine Flu has been confirmed. This is despite WHO announcing that you can not catch A/N1H1 Swine Flu from eating pork, and in fact there is no evidence of pigs in Mexico or the USA being sick. There is conjecture that they may have captured the virus from Asian birds, possibly imported into Mexico, but the mystery is if the pigs aren’t sick, how is it that humans have caught it from them. It’s no wonder that conspiracy theories abound, while we have no real answers. A team of WHO specialists are now in Mexico trying to unravel this mystery.
On Tuesday I commented that Swine Flu is a bit close to home as New Zealand is one of the early significant areas where Swine Flu was strongly suspected to exist. This was confirmed yesterday and 360 odd passengers on Air New Zealand Flight 1 from Los Angeles were asked to quarantine themselves.
On Wednesday I blogged about how to get Swine Flu and within 24 hours most large corporates had emailed their staff with instructions about personal hygiene and how to minimise the risk of infection. Whether people are concerned or not is difficult to gauge and I suspect a lot of people are still thinking, this wil never happen to me. Despite this 2 hours ago the number of confirmed infected was increased to 14 and the suspect list includes an additional 56 people according to New Zealand’s TV3 News.
According to the Google Swine Flu Map the Kiwi’s affected are spread from Auckland in the North Island to Otago deep into the South Island. They of course had to use confined public transport to get there, so it is likely they may have spread the virus further.
One question I have is why have people died in Mexico but not in other countries. It also seems that the symptoms have been worse for people in Mexico. One theory is that it is attenuating as it spreads from one person to the other and weakening in the process. This could explain why the people in Mexico, including expats, have suffered far more than people in other countries, although this ios contraindicated by the fact that most if not all of those in New Zealand contracted the virus whilst personally in Mexico. There have been a very small number of people suspected to have Swine Flu who had not been to Mexico, but had been on flights together with people who have been confirmed as having Swine Flu. I have yet to hear of anyone who has been confirmed with the virus who were noton a flight with people who had been to Mexico or hadn’t been to Mexico themselves.
There are still some unsolved mysteries and it is the secondary nature of the spread of this virus that holds the greatest risk of a pandemic.
While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.
Yesterday evening agreement was reached between the NZ Prime Minster, John Key and the Australian Prime Minister Kevin Rudd, to create a common currency. In a joint statement they said that this had been on the table for many years and successive governments had decided to see how the Euro fared as a shared currency. Given this success they have announced that within one year of today, there will be a new shared currency between Australia and New Zealand called the ANZAC Dollar, or ZAC for short.
There will be a commemorative ZAC Dollar silver coin minted next month as a collectors item. Given the relationship between Australia and New Zealand, whose soldiers fought side by side in 2 World Wars, the commemorative coin will be minted on two sides. One side will feature Sir Charles Upham, possibly the most decorated Kiwi, with a Victoria Cross & Bar, Greek Medal of Honor and African Star. The other side features Australian War Hero, Alfred Shout, who earned many citations including the Victoria Cross, Memorial Scroll and Kings Message.
The existing currencies of each country will be phased out over a 2 year period and from 25 April 2010, the date of the ANZAC Day commemmoration, either currency will be accepted in both countries until the new currency is released.
“This will herald a new era of a close relationship that has existed for over 200 years”, said John Key from his Beehive Office in Wellington, where he quipped that he had of course not been around at that time. He went on to sayb that in these difficult economic times, a joint currency would have a stabilising effect on the local economy.
On Page 5 of this morning’s New Zealand Herald I read a story with the headline Stick to guns on fee, banks told. Now I’m the first to stand up and say I don’t understand the banking economy as well as the bankers and the politicians, the educators and maybe even Liam Dann, who says we are all behaving like whingers. No I have bumped into Liam many times over the years and the experiences have all been good, but in my mind something isn’t gelling for me. Maybe he or some others can explain where my thinking is going wrong.
First, we are in a global economic crisis and times are tough all over. I totally agree with Liam’s assertion that when I signed for a fixed rate, I signed a contract which is a legal document saying that I would pay the rate for the period on the contract and it would cost me to break it. The banks are saying that they can’t afford to subsidise the cost, but they quickly gobbled up the guarantees provided by the government to help move the economy.
Now I said at the start, that I don’t understand exactly how the banks work. I know that when I borrowed my $165,000 the National Bank didn’t rush out and borrow that sum, they would have signed contracts for millions at really good rates and my loan would have been part of a bundle which allowed them to hedge for a profit. Now I understand that the Official Cash Rate is a major influencer in mortgage and deposit rates, but a large part of the borrowing by the banks is in other countries where the rates are much lower than ours.
As to becoming whingers, I’d like to ask Liam if he thought (irrespective of the contract that was signed) we were also whingers when we saw the gap increasing between lowering oil prices and the retail price of petrol. It was public pressure that almost overnight reduced the retail price of petrol, people whinging that they thought the profits weren’t fair.
When I took out a new fixed loan of $165,000 I based my decision on the advice of bank staff, even though they were careful to say that I shouldn’t take their information as an official position by the bank, the decision had to be totally mine. But the thing is they did give me advice, and I do accept that no one saw the crash coming. On the other hand the banks also said after the problems in 1987 that they would tighten up their lending criteria, which they have obviously loosened as time went on.
So here’s the thing. While we were all struggling with how to afford our petrol, New York Times International Tribune told us that Shell Oil increase their profit by 33%! They said their profit rose to US$11.56 BILLION! Around the same time The Guardian reported that BP Oil increased their profit to 6.7 billion POUNDS. Liam did you whinge about the oil price?
Businesses have clout. In my world of business, contracts get broken when companies have the power to break them. They sign legal contracts all the time, but if they decide that their supplier is making too much profit, the implied threats come out, saying that they have a choice and even though they have a contract, often it is only as good as the money that a business wants to throw at it to defend it. This is something I do know about it. When you try to defend your contract, you use meet and discuss the situation explaining both parties points of view and try to find a common ground because you need that business relationship. This is called negotiation in my book, although some people might call it whinging.
Now I’m all for businesses making profit, it is essential for their survival and I want my bank to survive, but I want them to be fair too. The NZ Herald themselves reported that while ANZ – NATIONAL took a huge drop in profit, they still made almost $1 billion after tax. That means after all expenses were paid. The NZ Herald also reported TODAY that BNZ’s profit is up 15% on last year, so forgive me if I don’t stop and give them a minute’s silence in respect of their tough times.
So I’m trying to figure out why Liam has this perspective. Here are some things I have heard about or personally experienced about contracts in the last several years: before they
A company agrees to buy products manufactured in New Zealand at an agreed fee for a contracted period of time and a contracted price and volume. The buyer then discovers they can buy equivalent product from a Chinese manufacturer and despite the contract and the money the Kiwi manufacturer has invested in staff and plant, breaks the contract and says I can’t continue this deal because the prices were too dear. Never mind that they were already making an extremely healthy retail profit prior to breaking the contrct.
An overseas company buys a NZ company complete with its staff and operations and agrees to maintain all the contracts. They then go through the payroll on a spreadsheet and decree that all staff earning more than $X will be made redundant, but can reapply for new positions where the specification might be modified by 5% at a 3rd of what they used to do, irresepctive of their contribution. The good news for me is that they kept the people who weren’t contributing and areas where they made staff redundant and replaced them with people who were prepared to work for way less, reduced profit and revenue by in one case almost 80%. I think that strategy was illegal, but who wants to burn bridges or be seen as a trouble maker or a whinger.
I’m sure if you are reading this you know of similar situations where businesses break contracts with other businesses all the time. They get away with it because one business has more power than the other and the losing party either can’t afford the cost or the consequences of fighting for what is right. If you know of cases like this, or indeed if you think I am wrong, please comment on this blog. As long as it isn’t spam or blatant advertising, I will publish your comment.
So here’s the thing. Banks used to be community organisations. You used to be able to walk into the bank and talk to the Bank Manager. They would know you buy name. They would give you advice and show an interest in you. They introduced technology that people said would turn them into machines, and in many cases it did, but the machines were of benefit to the consumer and business, such as EFTPOS (which I helped in a tiny way to introduce), ATM’s, Internet Banking and more. These investments saved them and their customers in time and money, but particularly made the banks more profitable by reducing overheads and staff.
When I first wanted to borrow my current fixed loan from my bank, with whom I had banked for almost 25 years, I actually got a better deal through Mike Pero Mortgages than I could from the bank directly. How’s that for 25 years of loyalty? I had to get a broker to get me a reasonable deal from my own bank!
So I’ve had my whinge Liam. It seems it ‘s ok for businesses to break contracts with each other and to fight for them, but it’s whinging if a consumer, a customer for many years of a bank that is making big fat profits out of their dealings with them, and gets a helping hand from the government which in many cases is as a consequence of imprudent lending, which after 1987 they said they wouldn’t do to expect a little help as well, well I’ll accept the title of whinger.
Just as a footnote, my local grocer is going back to India to look after his elderly parents after running his store here for 24 years. For all of that time, he has shown a real personal interest in every customer, he knows most of them by name. He has helped many of them out if they needed something and didn’t have the cash on them. I won’t go through all the little things he did for local people, but here’s the thing. The supermarket is much cheaper and for many people closer, but they still buy from him and he is selling a highly profitable business. Profitable not because it is a Four Square, or because of his location, but because he cares, because he is a person doing business with people and we as his customers want to do business with him.
If the National Bank doesn’t look after me, perhaps go halves on the contract difference or something that shows that they care about my business, my family and my future business (because I intend not only to be around for a long while, if the creek don’t rise, I won’t be whinging, I will be moving with my feet.
Now I am not wealthy, I live in a very average neighbourhood, far from affluent. Having been made redundant twice and suffered badly as a consequence and having little faith in the government to give me any sort of lifestyle when I retire I am being prudent. I have a small savings account (which has helped my kids from time to time with studies, with medical costs, holidays and other interests), I have a modest term deposit, suffient to cover 2-3 months of income should I be so unfortunate as to be made redundant again as is happening to many people right now. I have a mortgage on my home and a mortgage on my rental property which breaks even without paying a cent off the capital (and of course in recent times means that it is worth less than the loan (but this is for the long haul and it will come right.
Sorry, if I’m rambling, but this post is personal. If the National Bank doesn’t come to the party, I will go back to Mike Pero Mortgages who have looked after me so well in past. I will ask them to find me a new bank that will take over my term deposit, my checking accounts, my 2 mortgages, my Internet Banking, my EFTPOS account, my credit cards and will tell everyone who will listen. Liam, mate, I’m not being a whinger in my book, I believe that people do business with people. We have a choice and I will be looking very closely to see if one of the banks realises that a short term sacrifice will amply pay great dividends in the long run. I suspect that the bank that does this and continues to recognise that their profit comes from their customers will grow and thrive while the others wonder what happened.
Liam, this is starting to sound like I am having a go at you. Frankly I was annoyed to read your column in the Herald today. Factually you are on solid ground, a contract is a legal and binding document. But consumers do have power and if they don’t use it, the corporates or anyone that can will walk right over them. Over recent years Kiwis became so PC (politically correct) that they let everyone walk over them. They thought people like Americans and Australians were rude if they complained about a dirty coffee cup in a cafe. The contract was for coffee, there was never discussion over the cleanliness of the cup.That made them whingers. Now more and more people are realising that it not just about the contract, it is about standing up for what is fair, ethical, moral and just. The laws of economics are changing and people have a choice.
If anyone is still reading this soap box and agree or don’t with me, please leave a comment and tell me what you think. I would also appreciate you telling other people about this blog if you think it is worthy. Let’s remind the banks and everyone else that those who recognise and respect their customers will in future grow and thrive, those that don’t might be sitting at home reading reading the situations vacant and wondering what happened and thinking how unfair life is.
While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.
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