Or is it?

If you posted the pictures to a social network like Facebook or e-mailed from an address like Gmail or Hotmail, then all your photographs are still in cyberspace, eternally circulating, awaiting recall at an embarrassingly inappropriate moment. And those e-mails? Well, don’t forget that Gmail and Hotmail have the right to read anything and everything you post on their services, keep it forever and use it as they see fit to ‘provide their service’. As things stand at the moment, you have no right to be forgotten and no right to have your foolish indiscretions forgotten either – even if you delete your accounts. If anyone shared your stuff, reposted or quoted it in an email then it remains out there forever.

In his groundbreaking paper, Digital Footprints: social networks and the right to delete, Alex Mather explores how this all came about and proposes that the law should be changed to allow ‘the right to delete’ our entire digital footprint and to be forgotten. There are, of course, those who disagree with Mather’s position, claiming that the public has a right to know, especially if you are public figure, but they singularly fail to justify why the public has a right to know about the average person for ever. These are the same people who claim a ‘public interest’ defense for journalistic intrusion and fail to differentiate between “that which is of public interest and that which is merely interesting to the public“. I find it particularly enlightening that Mark Zuckerberg of Facebook uses the ‘public interest’ defense and almost always inappropriately.

Of course, the social networks could very easily allow those who wish to delete all digital content that is linked to their profiles – even if shared by third parties – but they have a solid business reason for resisting this move. The social networks, the free web based email, and the search engines (such as Google) are not provided free as a social utility, or because the companies are altruistic, but because they can collect huge amounts of data about their users and when this data is parsed, sorted, codified and categorised, it forms a huge database of demographically selectable information that the company can sell to advertisors in the form of highly targeted advertising space (the life bloody of the advertising industry) – this is what makes Facebook worth the estimated $80 billion that stock market analysts are predicting.

Someone once remarked along the lines that as “this is the digital age, you have no privacy anyway”  and research suggests that the young digital natives who have grown up with the worldwide web (i.e born after the late 1980s) are relatively unconcerned about providing personal data to anonymous third parties and are only concerned about what those parties will do with it. Well, now they know: it is stored forever to be used to target them with advertising and to bring huge damage to their reputations when they least expect it.

Alex Mather, a former editor-in-chief of the Social Contract, the University of Western Ontario’s academic journal of political science, is the author of Lights, Camera, Communication: The Effects of Mass Media on Election Campaigns (2009) and has worked in finance in the entertainment industry. He received his Masters degree from the London School of Economics where his dissertation was on the impact of illegal file-sharing on music and film industry revenues. He now lives in Toronto, Canada.

Managing for Performance and The Performance Management Workshop had their origins in the later 1980s when neoliberalism and the economic beliefs of Milton Friedman held sway, when Reaganomics and Thatcherism ruled the Anglo-Saxon world and the communist blocs were crumbling. It was a time when Friedman, the 1976 Nobel Laureate for Economics, and his fellow economists of the ‘Chicago School’ had successfully proselytized the world into believing that free markets, the minimal intervention of governments, and the pursuit of personal good (for which one can read ‘wealth’) was a desirable objective in all circumstances.

It was the time when Gordon Gekko (played by Michael Douglas) in the 1987 film “Wall Street” famously declared: “Greed, for the lack of a better word, is good. Greed is right. Greed works.” And he was believed, admired and emulated by thousands of bankers, traders and entrepreneurs across the world and by the early 1990’s, when I came to write Managing for Performance, neoliberalism had become the dominant economic paradigm of the world – from the Anglo-American heartlands of capitalism to the former communist bloc and all the way to the developing states.

Today, of course, neoliberalism has been discredited as the global economy, built on its principles, has been shaken to it core by the worst financial crisis in a hundred years – a crisis that has been blamed not only on the asset bubbles that were created, not only on the greed, materialism and the obsessive credit-driven consumerism, but also on the culture created by “Gekko-ism” gone mad.

In many ways, Managing for Performance was an attempt to bring a more collective and collaborative approach to the management of people at a time when individualism ruled and it was passionately believed that money motivated everyone. The 2007 financial collapse, the analysis of the toxic cultures of the big banks (such as Lehman Brothers – the bank that started the domino collapse of the world’s banking system), and the continuing legacy of a theory that was pushed beyond a state of viability is still too close and many companies and their managers are still in the thrall of the “Gekko-ism”, the individualism, the profit-driven management styles and the toxic cultures of the last twenty years.

When I was approached with the idea of re-issuing Managing for Performance, the initial discussions focused on updating the book for the 21^st century. I soon realised that it would be far easier to write a completely new book on the subject but, upon reflection, I also realised that the ideas and techniques that had made Managing for Performance an international best-seller fifteen years ago were still absolutely valid today – only the context has changed.

The corporate and organizational cultures in which we work are now much better understood thanks to the work of people like Hofstede, Tromenaars, Deal and Kennedy, Bartlett et al, Schneider and Barsoux and many other researchers who have dissected, analysed, synthesised and generally exposed national and transnational organizations to examination and have offered theories and guidance as to how to manage within them. One thing is now very clear to all managers: organizations reflect their national culture as modified by the culture of the people who work there. This means they have to select and apply those management techniques that work best with the people they are managing.

But isn’t that exactly what all managers have to do at all times and in all circumstances? Of course it is, and that is why the performance management techniques in Managing for Performance are as applicable today as they were when the book was written.

Would I change anything if I were to update the book? Well, yes – I would want to expand some sections (such as motivation) to reflect the latest research in the field and I would want to include sections on collaborative working, virtual teams (and virtual organizations) and managing in a networked world as they all place new emphasis on developing new performance management skills. I would also want to explore the current obsession with the idea that performance management is a technology-based activity (it isn’t, of course, it is about managing people: technology-based performance management applications are for monitoring purposes only).

Managing for Performance presents a number of timeless management skills that have proven to drive performance in organizational environments as diverse as US banking, Japanese engineering, African mining, volunteer charities, Middle Eastern oil production, health care and European luxury goods – used wisely and with a strong focus on managing people, these techniques will ensure that performance will follow no matter where you work or in which sector.

This blog is closely based on the new introduction written for the ebook edition of Managing for Performance.

In the US market, Amazon is thought to have around 54% of the ebook market (Barnes & Noble are thought to have 26% and the others, Kobo, Apple, Smashwords and so on, are thought to have 20% between them) while in the UK it has perhaps 75% and in Europe at the moment (a small but growing market) it is the dominant player confronted really only by Apple and Kobo. Amazon is, there can be no doubt, a dominant market operator, a highly effective and efficiency business, and rapidly becoming ubiquitous.

The Amazon Kindle ebook reader, a first-to-market product with all the advantages that that brings, is now aging. It uses a file type called a ‘mobi’ and is now the only major e-reader to use this file – all the newer e-readers use the industry standard format of ‘ePub’ and they can all download a small application called a MobiPocket Reader that allows them to read mobi files. The Kindle has, therefore had its competitive advantage eroded. As a response to new entrants, Amazon decided to release the Kindle outside the US (having previously refused to make it available anywhere else) but they premium priced it at a significantly higher price than it sold for in the USA. In this, they were merely doing what Apple does with its products – there is a premium price to pay if the product is bought outside the US. This is effectively, a tax on consumers for wanting to use a US product!

The problem for Amazon, if they were to stay ahead and were to attract buyers for their Kindle machines, was that they needed to have content. Given the high profit margins on the e-reader itself and the very low profit margins on books in any format, Amazon needed people to buy the e-reader and so the provision of content had to be done free or as near as possible to free. The rationale being that if the content was free or nearly free, then the huge premium on the e-reader would be amortised more quickly. But there is a problem: the average reader buys and reads perhaps eight books a year and since the e-reader is obsolete in around three years, that means the reader will have read perhaps 24 ebooks. That makes the cost of each ebook extortionate since the cost of replacement of the reader was around $200 dollars so each book read cost the equivalent of $8.33 plus the cost of buying the book – and since the very price sensitive and competitive paperback market had caused many mass-market paperbacks to be priced at well under $9.99, this meant that the ebooks would have to be priced at under $1.66 if the reader was to receive value for money. Amazon, therefore, aimed to set their ebook price at around $1 (actually $0.99) to attract buyers. This issue is still basically the same now.

Fortunately, the publishers (the main suppliers to Amazon) made them realise that prices would have to be higher and so Amazon embarked on a vertical integration strategy and started to turn itself into a publisher. The offer they made to desperate ‘wannabe’ authors is that Amazon would take their word processed document, publish it for them, and sell it for $0.99 for the Kindle. Amazon would not offer any editorial input, nor layout and design input, they would simply be a production unit. The result was a huge upsurge in sub-standard, poorly written and even more poorly edited fiction.

Then, as discussed in my previous blog, Amazon and the publishers colluded to engage in price fixing via the ‘agency model’. This caused a change of tack and Amazon trumpeted that this new deal meant that authors and publishers would receive 70% of the sales price on every sale … only that was not quite the case!

Let’s see what the Kindle Direct publisher’s platform actually offers. The 70% option works only for sales to a limited number of countries around the world and although the list is growing, it is basically, the US, UK, Canada, Germany, Austria, Switzerland, Luxembourg and Liechtenstein. If an ebook is sold to a country not on the list, then Amazon will only pay 35%. Further more, if the ebook is sold to a person in the European Union, then 15% is withheld as VAT and Amazon then returns either 70% or 35% of the VAT-exclusive price.

But that is not all Amazon deducts – on a normal-sized ebook they also deduct $0.15, £0.10, or €0.12 (depending on which Amazon site you order from) as … wait for it … a delivery charge! So, in the end, Amazon actually pays 70% (or 35%) of the list price – delivery charge – VAT. Whichever way one looks at it, to say they are paying 70% of the sale price is being very economical with the truth!

There are other catches as well. To get a book accepted for the 70% band the price has to be set at between $2.99 and $9.99 if offered on Amazon.com, £1.49 and £6.99 inclusive of 15% VAT if offered in the UK and €2.60 and €8.69 inclusive of 15% VAT if offered on the German site. So, if you offer the book at €0.99, then your payment from Amazon will be in the 35% bracket. In addition, the price set must be NO HIGHER than the list price at non-Kindle ebook stores and no higher than 80% of the printed book price.

Finally, if world rights are offered, then the correct 70% bracket price has to be set for each site to ensure that Amazon doesn’t arbitrarily modify the price inline with whatever FX value they have chosen – something they are entitled to do without informing you. If this fate does befall you, they won’t even discuss it and will pay only in the 35% bracket.

And if you think the problems end there, then think again! No matter what price is actually set, this can appear radically different depending on where the buyer is in the world. For example, let’s take an ebook that is priced at $3.95 on the Amazon US site – this will appear as $3.95 to a US-based buyer, as $6.42 to a UK buyer, $6.84 to a European buyer and $5.95 to a Hong Kong buyer. On the other hand, the same book offered on the UK site at £3.98 and the German site at €4.99 appears at that price no matter where the buyer is based. And if a UK or European buyer has the temerity to try to buy from the US site they will be advised to return to the UK or German site while a US-based buyer trying to buy from the UK or German site will be actively blocked from doing so. And just in case you are wondering, the publisher/author will only receive 70% (or 35%) of the $3.95 even if the buyer ended up paying $5.95 or higher.

In the mean time, they are about to release the Kindle Fire, an ePub reader and tablet computer, using the same pricing approach as they used before in the hope that they can develop a significant market position in the computer market. Whichever way you look at it, Amazon is positioning itself as a vertically integrated electronic content provider and it is abandoning its current positioning as an online book retailer.

In reality, the Amazon operating and pricing model puts all the control in their hands, is generally disadvantageous to is suppliers (publishers and authors) but is generally supported by is customers – who have very little option since Amazon dominates the online book and ebook market. It would not surprise me to find Amazon’s position challenged by new entrants and for Amazon itself to be the subject of an anti-trust or competition investigation in the near future.

In this series of blogs on Amazon I have looked at the fact it is not really a bookstore, that it is operating an ‘agency model’ pricing model in a way that reflects its corporate and national culture but does nothing for its suppliers, and that its Kindle Direct publishing system is being presented inaccurately and operated arbitrarily. Indeed, Amazon may not be in the best interests of the book trade at all – now there’s a thought!