Goodbye from Watching the Connectives: hello from The Digital Watcher

Rob Bratby

To all my readers, thank you and goodbye. This blog is now an ex-blog. Continue reading

Governing development finance organisations: measuring development impact

Governance is important for both private and public sector organisations. For development finance organisations (such as IFC, CDC, Africa Development Bank and Asia Development Bank) which are publicly funded and invest in developing countries it is critical. A key part of governance is measuring the development impact that they have through setting goals and measuring the impact of their investments.

The objectives of development finance organisations are often framed at a very broad level of abstraction:

“[IFC’s] goals are to end extreme poverty by 2030 and boost shared prosperity in every developing country.”

“CDC’s mission is to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places.”

One of the governance challenges faced by these organisations is understanding how their day to day activities, and in particular their investments, contribute towards the achievement of these objectives. This is in part governed by the setting of goals and measurement of the impact of each investment.

By way of example, the IFC governs its development impact by:

  1. setting goals (IFC Development Goals);
  2. using its Development Outcome Tracking System (DOTS) to measure the development results of investment (and advisory) services, as shown below:

IFC DOTS

 

 

 

 

 

 

 

 

3.  the evaluation of outcomes and impact.

By contrast, CDC (focused on the growth of businesses and the creation of jobs) places appears to place more emphasis on assessing its ability to make development impact at the time of making each investment decision:

“We remain interested in achieving and measuring positive impact across a broader dimension, but the job creation focus ensures we direct capital thoughtfully and prioritise our limited resources behind a mission that inspires us.  We believe job creation is essential in both Africa and South Asia where two thirds of the those of working age are today without formal jobs and where demographic growth will greatly exacerbate this challenge over the next decade.  At an individual level, employment has a transformative effect on the life of an individual and his/her family and dependents.

We have therefore created an ex ante tool that turns theory into practice and ensures we invest our capital towards our objective of creating jobs, especially in the more challenging places. This new methodology, designed with the help of our shareholder and academics and economists, is embedded in our investment processes and we use it to assess every investment opportunity at Investment Committee for its potential to create the impact that we are seeking.”

Whilst in reality the approaches adopted by the various organisations are not so different, it would appear that the three stage governance process adopted by the IFC across the life-cycle of investments provides greater opportunity for scrutiny, reflection and learning at all stages of the investment process than that adopted by CDC.

 

 

 

 

 

 

Why bring your own device (BYOD) is not just an IT issue

I was fortunate this week to be both a speaker and a panellist at Questex Asia’s ‘BYOD and Mobile Security conference held in Singapore. It turned out I was the only lawyer in a room of 200 plus IT people, which was an interesting experience. Having made my presentation (Olswang_Asia_BYOD_presentation) my conversations with delegates brought home to me how hard it can be to effect change within an organisation.

Whilst speakers had run through the organisational benefits from BYOD, and it is clear from my experience that generation X and generation Z are increasingly demanding the ability to bring their smartphones and tablets to work, as any change requires the buy-in and collaboration between at least IT, legal HR and senior management many organisations were struggling to actually change in a structures where any stakeholder saying ‘no’ could stop implementation.

My message that the legal issues (whilst important and needing to be dealt with) shouldn’t stop BYOD deployment seemed to give comfort to some of the delegates I spoke to.

As is always the case with these things, two days after I had delivered the talk the UK Information Commissioner published their guidelines on BYOD. I was heartened to read that the guidance covers pretty the same ground as my talk, albeit (not unsurprisingly for regulatory guidance) with a somewhat more negative view.

The importance of understanding ‘face’ for doing business in Asia

Whilst the focus of this blog is the intersection of telecoms and technology with law and regulation, it does occasionally stray into ‘softer’ topics. With the first anniversary of our Singapore office coming up after the lunar new year, I was reflecting on what I had learnt in my time here.

Just after arrival I had blogged about the importance of face to face meetings, but with hindsight I was only scratching the surface of a much bigger issue in the high context cultures of SE Asia – that of ‘face’.

When arriving somewhere new, I try to ask those more experienced what is the most important thing they have learnt. Almost every conversation (and every conversation with those who were very successful) came back to the issue of ‘face’: building it, respecting it and, above all, making sure that your business partners do not lose face.

For individuals from low-context cultures such as Europe and the US, the whole concept can be baffling. Why on earth would you ‘waste valuable time’ on a short business trip to Asia, meeting, having dinner and talking about everything but the deal? Why don’t meetings start on time, and then briskly move through an agreed agenda in a smooth path to achieving the objective? If there is a problem, why not raise it clearly then argue out agreement through force of business logic? Surely the most efficient way to resolve things is to send an email with a numbered list of points for the other side to respond to?

The problem is that all of these things (that make sense in the context of a deal being negotiated in London, New York or Berlin) may not work as well in Asia. Success depends on building long term sincere relationships through building face for your Asian business partner and ensuring that you do not (even inadvertently) cause them to lose face. If your business partner loses face that may, sometimes entirely unexpectedly for the non-Asian party, jeopardise the deal for reasons which can appear inexplicable.

With thanks to @singarbitration, here are a few tips to make things run more smoothly:

  1. Business tends to be done based on long-standing personal relationships or the proper introductions and/or connections, so make sure you have the right introduction if you want to make contact with a new business partner.
  2. Many local businesses may be risk averse and cautious when it comes to doing business with a party for the first time, especially if there is no prior relationship and time hasn’t been spent building a relationship.
  3. The Confucian mindset still holds sway. Rank is always respected and age tends to correspond with seniority, both of which are revered. 
  4. Status and hierarchy are important in business culture where companies tend to have a top-down structure. Decisions are nearly always taken by the senior management and subordinates avoid questioning or criticising their superiors.
  5. Show respect to your business contact (especially if more senior than you in age or rank) by being polite, but avoid being too friendly.
  6. People are reluctant to do anything which may risk them losing face, e.g.  over-promising and subsequently under-delivering. One can “lose” face not just for himself, but also on behalf of the group that the person represents.
  7. Expats who have lived here for many years may think and act more like locals. Do not make the mistake of assuming that just because you’re dealing with an expat, he or she will be comfortable doing business on the same terms as, say, in Europe or the US.
  8. Many business people are soft-spoken and passive when it comes to verbal communication, preferring to listen more and to say less. This does not mean that they don’t have an opinion or an idea about something. You will just need to give them the space and opportunity to voice their views in a forum that they are comfortable with, e.g. informal one to one rather than large group meetings. Look out for non-verbal cues in particular.
  9. When in a discussion, do not interrupt. It is polite to take a slight pause before responding to a question because it indicates that you’ve given the question appropriate thought. Responding to a question too quickly can be translated as thoughtlessness and even rude behaviour.
  10. You will find that many business people do not like dealing with people who ‘talk big’ or act as though they know better. You are likely to make better progress if you tone down your sales pitch and show humility and respect.
  11. Communicate your message clearly, but avoid being too direct or blunt. That goes for comments or feedback as well.
  12. If you get a response like “I will try” or “I’ll see what I can do”, that is usually a polite way of saying ‘no’, or declining a request whilst at the same time allowing both parties to save face.
  13. Business negotiations happen at a slow pace and decisions are not made hastily. Local businesses and government take time to make decisions. Decisions are consensus driven which naturally takes time in larger organisations.
  14. As a foreign visitor, bear in mind that first visits do not usually result in business. You can mention a deal and see if the other side is interested, but don’t push too hard.
  15. Show that you are patient as this indicates that you are sincere about doing business, here for the long-term and not looking only for short-term gains.
  16. You generally need several face-to-face meetings with a contact before you can make any meaningful progress. Face-to-face contact is generally key to developing the necessary personal relationship and trust. It is not enough to just send regular emails, or phone them every now and then.
  17. Meetings typically start with handshakes and exchanging of business cards. You may wish to arrange the cards as you sit down in the general order of where people are sitting so that you remember the names of the people who you are speaking with.
  18. Use both hands when you exchange business cards. Do not give a tattered card. Study the business card as a show of courtesy and respect. It also gives a sense of where the person fits into the business hierarchy.
  19. When meeting a person for the first time, it is prudent to use the appropriate title and last name until told differently.
  20. Business meetings tend to start with informal chats. Talking about travel especially if you have been traveling in Asia recently is a good (and safe) ice breaker.

 (For those interested in the theory behind this, you can read a lot more here: Beyond Culture, Riding the Waves of Culture and Understanding Intercultural Communication.)

ADB’s Asia growth forecast highlights importance of services sector

When I opened my (electronic) Financial Times this morning, the headline ‘China slowdown hits Asian growth hopes’ seemed rather gloomy. As an expat European, I was bracing myself for bad news to follow, so was rather cheered to read the actual growth forecast for the region of 6.1%. Whilst that is a downward revision from the 6.9% forecast earlier in the year, compared to the continuing weakness across European economies it is still a very healthy rate of growth.

The article spurred me to check the underlying source – the Asian Development Bank’s Outlook 2012 Update report published today. The report’s summary contains a handy infographic summarising the importance of the services sector as a driver of Asia’s future growth:

 

The detailed report highlights the importance of high valued added subsectors including information, communications and technology (ICT) services, financial services and professional services as being both a growth sectors themselves and also providing spillover benefits to increase growth in other sectors.

How do you solve a premium rate number problem like Indonesia’s?

Although this blog started with something of a musical theme, todays post has got nothing to do with the Sound of Music. Instead, on my recent visit to Jakarta I discovered that the Indonesian telecoms industry has got a problem with premium rate telephone numbers – put simply, in the absence of any regulation the system has been abused to such an extent that regulators intervened to reset all subscriptions, whilst a number of individuals are under criminal investigation. This regulatory intervention has had a financial impact on the market players. To spare blushes, this is an anonymised extract from a recent US securities filing by one of the market players:

“[X] which operates our cellular phone services, derived substantial revenues from premium SMS services in previous years. These services include the delivery of music and ringtones, smartphone wallpapers and other graphics, voting in contests and polls and content including horoscopes, Qur’an quotes and news alerts. In 2011, the Indonesia Telecommunication Regulatory Body (ITRB) asked telecommunications companies to deactivate premium SMS services and give users a notice of the deactivations with the option to resubscribe. These companies were also asked to cease promoting premium SMS services until further notice, summarize premium SMS service charges for users and return amounts deducted from them for premium SMS services, and report weekly to ITRB regarding action taken. The ITRB based its action on complaints from consumers that they were charged for services for which they were not aware they had or inadvertently subscribed and from which they had substantial difficulty unsubscribing. Other consumers complained that charges were unclear and difficult to monitor, particularly consumers of prepaid services. The ITRB has clarified that it does not intend to prohibit premium SMS services but to effectively reset such services and give consumers the option to deregister from these. MoCI has expressed support for the ITRB’s action. The disruption to [X]’s premium SMS services due to the ITRB’s action has resulted in a substantial reduction of our revenues from these services. Similar action by the ITRB or MoCI in the future may likewise reduce or restrict the growth of [X]’s revenues from these services or other related or new products. The ITRB or MoCI may also take more aggressive action that may lead to disruptions in the delivery of [X]’s products or fines or other administrative sanctions. Any of these factors may materially and adversely affect our results of operations and financial condition.”

The operators have not been sitting on their hands and have been taking steps to increase customer trust, including the introduction of double opt-in, customer education and a regulator sponsored call centre to take complaints. However, based on my conversations (and recent financial statements), operators revenues from mobile value added services are still down, and continued uncertainty is inhibiting future growth.

Looking at this situation reminded me of the circumstances that led to the formation of the UK premium rate self-regulatory body – the Independent Committee for Standards in Telephone Information Services (or ICSTIS, now PhonePayPlus). Although PhonePayPlus now has a statutory basis it started off life as a private sector self-regulatory initiative that policed the premium rate industry through contract.

At the time it was set up, the players in the UK telecoms market – BT, Vodafone and Mercury realised two things:

  1. The premium rate business was great margin business for them; and
  2. It was a business which attracted smaller more entrepreneurial players with a more ‘relaxed’ attitude towards compliance than the network operators and was susceptible to scam and fraud.

The committee operated by very quickly investigating and ruling on end-user complaints and enforced sanctions by requiring the network operators to withhold payment (by way of fine) from service providers. Whilst the rules have become ever more complex over time, I do wonder whether a similar arrangement could help the operators in Indonesia put in place arrangements that will allow the regulator to remove its current draconian sanctions?

Continued growth in Asian technology, media and telecoms sectors in 2012 despite Eurozone troubles

With the launch party of Olswang Asia happening tonight, I have been musing on the economic outlook for Asia in 2012 and beyond. At a very micro-level I have been very pleasantly surprised by the (extraordinarily high) level of interest in our launch and it looks like the party tonight will be standing room only. I wondered if my personal experience was indicative of the wider economy so have been reviewing a number of commentaries on growth prospects for the region.

In particular,  I looked at reports from the Economist and Insight Bureau. Both commentators agreed that the outlook for Europe varied from bad to very bad, whilst the outlook for America was mildly positive.  Whilst China’s growth rate is expected to drop into single digits, caused by a slowdown in its export markets, the consensus view is that the Indian economy remains driven by domestic demand. Whilst India’s reliance on domestic demand has resulted in lower growth than China, it also means that India is less exposed to the Euro zone slowdown than China.

So aside from India and China, what are the prospects in ASEAN? Its is sometimes easy to forget that Indonesia has an economy five times the size of Greece (to pick a random comparator). Whilst it is still less than a third of the size of the German economy, it is expected to sustainably grow at around 5-6% a year for the forseeable future, whilst Germany will be lucky to not contract. Meanwhile, its ASEAN neighbours such as Malaysia, the Philippines, Thailand, Vietnam, as well as South Korea, continue to grow strongly.

So, the upshot of my limited research is that my personal experience seems to be in line with the market (much as I’d like to convince myself that we are bucking the trend). However, I think there are others factors at play that mean that the technology, media and telecoms markets across Asia are in fact growing more rapidly than the region generally.

First, the rise of average income levels resulting from GDP growth means that the middle class (for these purposes defined as those on an above subsistence wage) is doubling every few years. Members of that rapidly growing middle class all have mobile telephones, watch TV, own computers and go to the movies. 

Second, as consumers become more assertive and the market size increases they are increasingly wanting local content, services and applications. Markets with revenue growth and consumer demand are increasingly resulting in local suppliers competing, complementing or co-operating with the more established global players.

Mobile broadband at heart of Europe’s recently adopted Radio Spectrum Policy Programme as WRC 12 concludes in Geneva

The wheels of European legislation have slowly turned, and last week Europe adopted a five-year radio spectrum policy programme, at Parliament’s second reading under the co-decision procedure. Readers will recall that last summer two key issues remained outstanding between the Council of Ministers and Parliament – the date by which the 800 MHz band should be cleared and the minimum amount of spectrum to be made available for mobile broadband.

In the usual European fashion, Parliament prevailed on one issue (at least 1200 MHz to be available for mobile broadband by 2015) and the Council on the other (800 MHz band to be cleared by 2013). Somewhat unusually, this horse-trading has resulted in a very good outcome with spectrum being made available early and in sufficient quantity to place Europe in a strong position globally in the race to enable mobile broadband. Of course, implementation is in the hands of Member States, so it remains to be seen how this will play out in practice.

Meanwhile, over in Geneva, the four yearly world radio conference of the ITU finished on Friday. The provisional final acts are available here, and whilst I’ve not yet had time to review in detail, mobile broadband appeared to do well there as well with press reports that additional spectrum in the 700 MHz band may also be made available.

Perspective, distance and why business still requires face to face meetings

Having recently relocated to Singapore to set up my firm’s first office in Asia, I have been rather quiet on the blogging front recently. This post serves as something of a reboot – the blog will continue with its theme of the intersection of business, law and regulation in the telecoms and technology sectors but in addition to continued coverage of the UK and Europe will have an increasingly Asian focus.

It has been an interesting time to be in the region with President Obama spending far more time at the APEC  and ASEAN summits that I can ever recall him spending at European meetings and with the US administration signalling a ‘pivot towards Asia’ in their policy focus. With the current turmoil continuing in Europe (and the Eurozone in particular), whilst the mood here is not wildly optimistic, I perceive that there is a quiet confidence that global growth over the medium term will be driven from the region, both from the powerhouses of China and India, and also from countries in the ASEAN group such as Indonesia, Malaysia and Thailand.  Whilst some of the immediate press headlines highlight the fall in growth rates in the region, with Hong Kong fearing recession, from the perspective of a newly arrived European what is most noticeable is the can-do positive business outlook, which contrasts sharply with attitudes in Europe.

It is now 16 years since Frances Cairncross’ original economist 1995 article and subsequent 1997 book,  ‘The Death of Distance’. Whilst it is certainly true that developments in technology and communications infrastructure have vastly changed the  communications, broadcasting and media industries and that (as I can attest) people are far more mobile, it has also been striking that despite easy access to video-conferencing and other communications tools that people (or at least those who give lawyers work!) are still hard-wired to do business with people that they have met, know and trust. Whilst I continue to work with clients in the Europe, it seems that there is no substitute for getting out and meeting people face to face if you want to do business with them. The good news is that once you have established a relationship, all the various communications methods make it much easier to keep that relationship alive and to stay in touch.