Brendan's Blog


iPhone 6 vs Nokia 106

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The Zombie Apocolypse has started. And the virus strain is known as Smartphonus-Obsessivus. While almost every man, woman, and their pet of choice is scrambling to get their hands on an iPhone 6, my wife and I have made the decision to go the other way.

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Stuff It, Just Do It

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Humanity appears to be more and more concerned with recording and analysing every part of their lives. As someone who has worked in large corporate environments for 15 years, it would seem that corporate governance and beauracracy has invaded personal lifestyles, and we are stifling our experience of life by too much planning, recording, and analysing.

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The False Economy Of Chinese Manufacturing

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In 2009 Pacific Brands, parent company to recognisable Australian brands such as Bonds, King Gee, Holeproof, Hard Yakka, and others, closed 10 local factories, made 1850 local jobs redundant, and moved manufacturing offshore to China.

Now, this isn't an out-and-out bashing of Chinese manufacturing, but there are some important lessons that can be learned from the 5 year period that Pacific Brands has utilised offshore manufacturing.

At the time Pacific Brands moved offshore in 2009, their gross profit margin utilising local manufacturing was 38.2%. In the FY 2010/11, after their local redundancies and offshore move, their gross profit margin was 39%. 0.8% hardly seems worthwhile considering the damage to the local economy, however keep in mind that it is 0.8% of a $1 billion business - and that is not an insignificant sum of money!

This is where things get interesting: since 2009, and in fact since earlier than 2009, manufacturing costs in China have risen year on year as the local Chinese economy grows in strength, and as East coast Chinese manufacturing facilities improve and east coast workers receive wage increases. This pushes companies like Pacific Brands west into the cheaper manufacturing districts, but it increases shipping costs.

These wage and manufacturing cost increases are not insignificant either - they have been in excess of 100% growth year on year. For example, Wenzhou 112%, Quanzhou 129%, Putian and Suzhou 129%, Huizhou 103%, and Dongguan 104%

It has been 5 years since Pacific Brands moved offshore. In that time they have continued to report losses. Their most recent loss as of the time of this article, noting that this was a 6 month result, not an annual result was $219 million. $219 million loss in 6 months! Pacific Brands chief executive John Pollaers commented that "the declining Australian dollar, which pushes up the cost of products produced overseas, would be the major headwind for the company over the next couple of years." As a result of that statement, Pacific Brands is looking to implement price rises of between 5 and 15% across their entire range.

Ok, $219 million lost isn't really spectacular when it comes to large corporate losses, and there could be a number of valid financial reasons for writing down that loss.

However - Chinese manufacturing costs continue to increase by up to 129% year on year. Chinese manufacturing is not going to get cheaper. The end result for companies like Pacific Brands is that they will have destroyed local manufacturing facilities, lost local manufacturing skills, and in the end they will be paying just as much, likely MORE, to manufacture their goods in China.

Meanwhile, consumers will be paying year on year price increases for the companies to cover their losses, and will be receiving inferior quality products to those that the company brand and reputation was built on.

Keep in mind that in this particular example, Bonds (the main brand under Pacific Brands) is (was) an iconic Australian brand. Australians were proud to buy Australian owned and Australian made underwear. They got a top quality product, and they supported Australian business. Now, they are paying more money for an inferior foreign product.

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Same, But Different

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There are very few new ideas. Chances of you coming up with a genuinely original idea are very slim. 99/100 successful businesses do the same thing as someone else, but they do it better. Either better tech, better customer service, better pricing... so don't let a lack of an original idea stop you. As long as you have an idea that you are passionate about, give it a go, regardless of whether there's someone else doing it.

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Executive Salaries - Are They For Everyone?

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CIO.com mentioned that "Brian Krzanich, the company's recently appointed CEO, was paid a base salary of US$887,500 in 2013. A year earlier Paul Otellini, the outgoing CEO, received $1.2 million." Percentage wise, this is a pretty substantial drop (26%), but all is not as it seems.

In this article I challenge the status quo of executive salaries, and look at some interesting examples.

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12 Benefits of Golang For Enterprise Systems

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The Go programming language (commonly known as Golang, and for the purposes of this article referring to version 1.2 or newer) was conceived by Google in late 2007, and released in November 2009. Go was created primarily as a systems programming language. That is to say that Go is not currently designed for creating desktop user interfaces.

In the world of programming languages, Go is relatively new. However, in the few short years it has been in the public domain, it has rapidly grown in popularity as organisations rediscover the benefits of a lightweight, highly performing, and fun programming language. As part of my day-to-day role I have been evaluating Golang as a potential replacement to some of our existing Microsoft stack applications.

These are the key benefits that Go provides in an enterprise environment...

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Getting Real Doesn't Get Old

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In 2006 I was working on a large corporate project with my good friend Dean (of Mavitra and Case Tracker fame).

37 Signals were gaining significant traction at the time, and we were inspired by their story. Dean purchased a copy of their book "Rework", and also got a couple of copies of their smaller book "Getting Real". Dean was kind enough to gift me a copy of "Getting Real", complete with personal transcript inside the front cover.

In 2014 "Getting Real" is as valid as ever. Not only that, 37 Signals are now giving the book away for free!

You can get your copy of Getting Real at http://gettingreal.37signals.com/ - and I highly recommend you do.

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Nothing Is Marginal About 1%

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Dave Brailsford, team manager of the successful Sky Cycling, and UK Olympic teams, has recently (and somewhat famously) said "We've got this saying, 'performance by the aggregation of marginal gains'. It means taking the 1% from everything you do; finding a 1% margin for improvement in everything you do."

In this age of setting goals, eating better, learning more, getting extra hours out of the day, Dave's approach can be quite refreshing.

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Golang Benchmarking

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Sometimes we take performance for granted, especially with the simple things.

Go, with its first class citizens unit testing and benchmarking, makes performance refactoring as simple as pie, and at Dot3, we love it when things are simple!

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Brendan Ingram is the owner of Dot3. He lives in Sydney, Australia. Check out Dot3 at Facebook, Twitter, or on Google+.