Moving

Moving, or changing offices by and large, is usually not very much fun. In business it entails gathering up all your stuff, putting it into standard moving boxes, which are not much more than over-sized, glorified shoe boxes, and going somewhere else. It can be in the same building or across the country. You are essentially out of commission from the time you start putting your stuff into the boxes, until the time that you have taken it out and reconnected to the network. It adds stress to an already crowded calendar.

Long ago, when I first joined the corporate world, I read that on average you moved or changed offices every two to three years. I actually tried to look up this article to properly cite it, but, alas I couldn’t find it. Perhaps it has passed from fact, to just something that everyone knows.

You either changed roles, or business units, or assignments, or were promoted, or any number of other events that resulted in you having a new place to sit while doing your job. This was back in the days when you came into the office to work. Everybody came to the office to work. Working at home wasn’t so much of an option then.

The idea back then was to generate synergy in an organization by having groups of similarly focused individuals sit together and regularly interact in the expectation that they would be more efficient, creative and powerful as a group then they would be as discrete individuals. It seemed to work, at least back then.

I think a lot of this idea was based on the sports analogy where it was demonstrated that having all members of the same team, working together and running the same plays, were far more effective than if they all acted as just talented individuals and did what each thought was best. It was widely accepted that the best teams won, not necessarily those that just had the most talented athletes. However, I think it was Roy Williams, the basketball coach at the University of North Carolina, who said: “I can coach them to play better basketball. I can’t coach them to be seven feet tall.” So, talented athletes are still very desirable.

There were many positives and some negatives associated with this co-located and hence almost constant office moving phenomenon, for both the individual and the business. As I said earlier there is a disruption to your ability to execute your responsibilities while you are moving. This affects your, and those that are dependent on your productivity. At least for a while. This was and, in some instances, still is debatable based on some roles and activities that I have seen.

On the business side there is the cost. There are two basic costs associated with all this moving. The lost productivity that I have already noted, and the cost of the team and staff of resources that were constantly planning and executing these moves. Depending on the size of the business location, there had to be a small army of people available to bring boxes, and then move and transport boxes to the new location. There had to be a logistics team working with the Information technology team to make sure that connectivity and communications were available, at the appropriate time at the new office (or cube) location.

Moving was not cheap. Therefore, it was expected that the synergy that co-location generated had to be good enough to offset this cost. For the most part it seemed that it was.

Another good thing about moving was that it presented the opportunity to go through your stuff, take stock of what you needed and throw away all the rest. It was sort of a forced purging opportunity. As an aside, I have a friend who used to take pride in the thirty to forty boxes of stuff that he took with him whenever he moved. He is an engineer and believes that there will come a day when he will need some of the documents or calculations that he has created over the last decade plus for something else he may be working on.

It hasn’t happened yet, but I am sure he will be prepared. Like I said, engineer.

The periodic purging associated with a move was the opportunity to get rid of stuff, primarily paper-based communications and documentation, when it was no longer needed. I have hit the point that if I haven’t looked at something in the last year or two, then I don’t need it. I think this is probably a good rule of thumb for everyone. Also, with the increase in machine and cloud storage capabilities, a hard copy of just about anything can seem to be a little bit of overkill.

You don’t know how much it pains me to say that. But just as I have had to change with the times and move from the tactical joy reading of actual physical books to using an e-reader, I have gone to reading a screen instead of printing a document. And they said that dinosaurs couldn’t evolve.

Organizations have also done their part in trying to reduce the costs associated with moving. Initially they started limiting the number of boxes that you could have / they would move. Now as we continue to move toward more and more of an “open office” concept, where no one has a defined office, there is also the requisite limitation on the amount of stuff that you can have based on what has now become a limitation on the amount of physical storage that is available.

If you don’t have any place to put it or store it, then you are forced to get rid of it.

The result is that what used to happen every two to three years, and cost both the individual and the corporation a lot of money in employee discomfort and lost productivity, as well as the maintenance of a staff the size of a small army to assist in making these moves, are now both essentially gone. In the open office environment there is no defined office to move either from or to. Storage for the physical accoutrements of an office have been so minimized, and document retention has now been virtualized that there is no longer any significant amount that ever needs to be moved.

The office itself has also been virtualized. There are now both remote offices and home offices in addition to the open offices. It seems now that if you want to keep any “stuff” you will probably have to keep it in your home office. I tried this once. Then my wife complained about all my clutter. I told her it was what I needed to captain industry. She told me to get rid of it.

I personally think she was in cahoots with the corporate Workplace Resources group in this regard. Though, admittedly the home office does look cleaner.

But, I can’t help but wonder, if businesses saw such a value in the concept of having everybody actually physically work together, to the point that it outweighed the costs associated with making sure that they could work together, what happened to that value? Economics teaches us that there is no free lunch. The cost – benefit analysis of business is based on the same principles. There is a cost or investment for every benefit you get. 

Has someone, somewhere gone through the analysis associated with virtual / home / open offices and compared the hard, recognizable cost savings with the somewhat softer and much harder to quantify lost synergy values. In the past it was believed that the synergies outweighed the costs. Was everyone wrong for so long and now those ideas no longer hold true?

I think the answer lies in the “hard” cost and “soft” value equation that I mentioned earlier. It is easy to define how much is saved when most of the costs associated with moving offices are eliminated. It is a number. It exists in a budget. When it is reduced or cut, it can be tracked.

The same cannot be said for the values generated by having people work together in the same office as opposed to “virtually”. I think everyone believes there is a value associated with that type of working environment, but I is almost impossible to quantitatively put a hard number to that value.

You can estimate it, but that is never as good as a well-defined cost reduction. The result is that a definable cost has been reduced, and an undefinable value has also been reduced. But since the value was undefinable in the first place, the amount of reduction to it is also undefinable.

I really didn’t like moving offices all those times that I had to do it in the past. I think that we are going to dislike what we may have lost by not having to move anymore.

Conflicting Internal Forces

I have talked in the past about the three internal organizational resources required for business success, and their trade-offs and interrelationships: Time, People and Money. The idea that if you have less time than desired to achieve a goal, it will require the expenditure of more people and more money to achieve it. If you have fewer people for the goal it will require more time and money. And so on.

I am now going to talk about the driving internal functional forces that are acting upon desired organizational goals. There are again three of them and to put them at their simplest, they are Sales, Finance and Engineering. I think in order to be a little more accurate it would be better to look at the conflicting goals of each of these functions with respect to the desired goal of the organization, instead of just the function itself.

The goal of sales is to get orders. There may be additional sub-requirements placed on them, but it is almost always quota attainment, as it pertains to orders, that is the measuring stick for sales. Achieve your sales order goal as a salesperson, and you get money, fame, glory, respect and most importantly, you get to keep your job. Fail to achieve your sales order goal and you don’t get the money, fame, glory or respect. More importantly, perhaps the first time you fail you may get a pass on keeping your job, but probably not the second time.

Sales in general doesn’t really care about finance or engineering. This is primarily because they are not paid to care about them. They are paid (usually in the form of commissions) to get orders. Sales usually wants the highest quality and lowest price possible as this helps enable their sales. The greater profitability desired by finance usually means a higher price, which usually makes sales more difficult. Sales will usually align with engineering on generating the highest quality solution but diverge when the costs of such solutions are taken into account.

The goal of Finance is margin or profitability. Again, there may be other sub-requirements, but finance’s primary role is to make sure that the organization brings in more money than it spends. Finance keeps score. It’s not enough to just bring in more than you spend. Finance quantifies how much more money needs to be brought in than is spent so that the business’s ongoing and future success can be assured. Future investments and corporate overheads (as well as salespeople’s salaries and commissions, etc.) have to be paid for.

Finance is usually focused on what could be called the margin percentage versus margin value balancing act. It is desirable to have a high margin percentage and high profitability on each sale. However, having high margins with low volumes will not generate enough profit to drive the business forward. Just as a high volume of sales with low margins will not generate the desired margin value. There is a desired financial equilibrium where both margin percentages and values are maximized.

The goal of Engineering is to make sure that everything gets done right. Engineering makes sure that products and solutions are configured properly. They make sure that components and solutions are available in the desired time frames. They make sure that services are costed and allocated correctly. In short, they make sure that the organization can in fact do whatever the salespeople are trying to sell.

Engineers are also believe that they are the primary group responsible for doing the people, time, money, analysis. Engineers are not usually interested in the sales aspect, other than recognizing if there are no sales there is no need for engineers. And they are not particularly focused on finances, as margin and profitability again have little direct effect on them. They are usually focused on the accuracy of the solution and will include whatever they deem appropriate (the people, time, money resources) to that solution to make it ever more accurate.

Of the three functions, sales is probably the most difficult. Sales is competing with external entities for each order, in addition to trying to balance the internal goals associated with the financial and engineering functions. Finance and engineering are only associated with internal functions, including sales. There is no competing engineering or finance function claiming that their financial wizardry or engineering prowess is superior. When they are forced to deal with external forces, it usually only through sales.

When these internal functions, and their associated goals are in balance, an organization can operate at near its peak efficiency. Sales pushes for orders, finance makes sure the sale is profitable and engineering makes sure that the sold solution is done correctly. Life can be good.

It is when an organization gets out of balance that we start to see significant issues. When an organization becomes too sales focused, margins and profitability can begin to slip as the quickest way to increase sales is to reduce price (this is just baseline economic theory). We saw an example of this some time ago when some stocks started being valued based on the assumptions of future sales and sales growth instead of the more standard stock and organizational valuation criteria. These stocks eventually came crashing down when it was realized that they would in fact have to start making money if they wanted to stay in business, regardless of how much they sold.

When an organization becomes too financially focused, growth, expansion and development can slow, again causing issues for the organization. Strategic opportunities can be missed because they may be deemed to either represent too much risk, or not enough return (margin) to be pursued. Being too safe from a financial point of view can be just as deadly to an organization as being too risky and focused only on sales.

With the increased global awareness and focus on the “cost of non-quality”, or more accurately the cost of not doing things right, there seems to now be an organizational drift toward becoming more engineering focused, since they are the organizational force associated with doing things right. I also think that this approach potentially has the greatest capacity for generating corporate issues in the future.

When an organization becomes engineering focused it has a tendency to lose sight of both sales and finance. With decreased input and parameter focus from sales and finance, engineering will continue to focus on accuracy and reducing the risk of an incorrectly engineered solution, almost to the point of trying to generate perfection in its solutions.

The issue here is that perfection usually comes at a very high cost.

Finance will continue to try to demand specific margin levels, while sales will want lower prices to enable the generation of orders. This is the recipe for the perfect organizational storm. Engineering generated increasing costs, finance generated desired margin levels, and sales generated reduced pricing demands to meet the market competition.

The point here is that the market, more or less, sets the market price for the organization’s goods or services. There can be some variations, sometimes based on the quality of your sales team, sometimes based on the quality of your solution, and sometimes it is based on other factors (such as the regulatory exclusion of a competitor from the market, etc.). If you raise your prices too much in response to the engineered increase in costs, sales volumes and hence margin values will decline. If you reduce margin percentages, again margin values can decline. This can become a lose-lose situation.

The organization won’t make any mistakes, but it may not generate enough business, or margins to survive for very long.

In allowing an organization to become engineering focused, you start down the road to becoming a cost-up pricing organization. This is the least market responsive type of organization. Since engineering nominally has no focus or interest in sales or margin, when an organization becomes engineering focused, it becomes almost entirely internally focused.

It is usually the position of the market that an organization that loses its focus on the customer or the market, doesn’t get to enjoy the benefits of that customer or market for very long.

Engineering in an organization is about reducing the risk associated with achieving a goal. But like everything else, this risk avoidance comes with a cost. It is not enough to tell engineering to make sure that the solution is correct. This direction invariably leads to the inclusion of all kinds of failure avoidance constructs, and their costs to be included in the solution. And since engineering can be a complex function, there are few outside of the engineering function that can understand or question it.

In the long past world of “Five Nines” of reliability, this was once the recipe for success, but in today’s “short life-cycle” disposable product world, few can afford it, and even fewer are willing to pay for it.

I mentioned earlier that engineers see themselves as the group that is responsible for solving the Time, Money, People resource equation. It is obvious that when none of these parameters are set, the solution is much easier to obtain. And without limits to these parameters, the costs of the risk-adverse solution can grow quite large. Organizations need to understand that the Time, Money, People equation requires parameters to be set. Time frames and budgets need to always be set before being handed to engineers to configure a solution.

Engineering is a key component to any solution. The functional internal conflicts between sales, finance and engineering will always come into play, and must always be balanced out. As organizations seem to continue to drift into a little more of an engineering-centric approach to customers and solutions, it should be safe to assume that left unchecked, the commercial and financial aspects of these solutions will re-emerge in the customer decision making process.

It is safe to say that you do indeed get what you pay for, but it is also safe to say that sales will have difficulty selling, and customers are probably not going to be willing to pay for an over-engineered solution of any type that does not take into account their commercial needs.

The Territorial Imperative

“The Territorial Imperative”, or more correctly, “The Territorial Imperative: A Personal Inquiry Into the Animal Origins of Property and Nations”, was written in 1966 by Robert Ardrey. It along with the “The Naked Ape”, or again more correctly “The Naked Ape: A Zoologist’s Study of the Human Animal” which was written in 1967 by Desmond Morris, are probably the first two books I read that were not written by Theodor Geisel, more commonly known as Doctor Seuss.

I didn’t choose to read them at that time. They were assigned to me one summer. I was getting ready to enter the fifth grade and attend a new school. I was told that they were preparatory work that needed to be completed before I could go to the new school.

I personally thought this concept sucked at the time, as summers were supposed to be school free, and here I was being required to read a couple of books.

What is interesting to me is that now, all these years later, these books and the topics that they covered are now coming back to me in the business world.

Initially both of these books were considered somewhat ground breaking in that they sought to explain the source of some human behaviors. Till then man (man as homo-sapiens the species, not man as a gender, for those of you who might have been getting ready to go full scale gender bias ballistic on me) was viewed as primarily a cognitive creature. What these books examined was the idea that man was also driven by certain instincts which also affected its behavior.

This was pretty radical and somewhat heady stuff for that time period. I’m pretty sure that as a would-be fifth grader I didn’t fully grasp a great deal of what the authors were trying to get across. I knew that it made me feel somewhat funny though. That is funny-strange, not funny-haha.

For those of you who have not read The Territorial Imperative, the following is a quick synopsis:

“It describes the evolutionarily determined instinct among humans toward territoriality and the implications of this territoriality in human meta-phenomena such as property ownership and nation building. … Ardrey posited that man originated in Africa instead of Asia, that he is driven by inherited instincts to acquire land and defend territory, and that the development of weapons was a fundamental turning point in his evolution. The Territorial Imperative further explores these ideas with a special emphasis on man’s distinct preoccupation with the concept of territory. It goes on to elucidate the role that inherited evolutionary instinct, particularly the so-called “territorial imperative”, plays in modern human society in phenomena such as property ownership and nation building.”

https://en.wikipedia.org/wiki/The_Territorial_Imperative

More simply put Ardrey posited that one of man’s driving instincts is to own and defend territory.

With that idea in mind, now look back at every business organizational structure and office / cubicle arrangement and apply this thesis to it. It ought to be somewhat enlightening. It also ought to explain why, when we are hired on, we are given “our space”, be it a desk, or cubicle, or whatever. It is now our physical, as well as metaphorical territory. We instinctively know that we must “work” in order to defend it.

As we matriculated up through management we acquired larger physical territories (bigger cubes and eventually offices) as well as larger spans of control over others and their cubes and offices. These territories were then defended against both internal and external competitors.

But it seems that times are changing. At least when it comes to office space. Business organizations have started to move away from the concept of the business territorial imperative. Office size and location are seeming to be done away with as companies move to the “Open Office” concept.

In the open office structure, no one has any more territory that anyone else. In fact, there are no specific assigned locations of any kind. Instead of having “your” desk, cube, office, territory, it is first-come first-served in the seating arrangements. Desk, or more accurately table-space is shared. There is no distinction between levels and spaces. It is positioned as egalitarian and a better office structure for all those involved.

It seems to me that the more things change the more they stay the same. I was looking at some old pictures of office spaces in the 1950’s. It was some pretty interesting stuff. Below is one that caught my eye, primarily because it was in color. Most of the rest of them seem to be in black and white. For comparison’s sake, I didn’t want to try and compare a black and white photo to a color one. Take a look.

This is the modern office, circa 1958. That’s more than sixty years ago. It’s neat. It’s orderly. It’s “open”. What is not to like about it?

Now let’s fast forward a little more than sixty years to today. Here is a look at what is called a “Mezzanine Floor” open office design.

Except for a little better photography and perspective use, I’m not seeing a whole lot of difference, read “progress” here.

The difference is that in the 1950’s you had “your space”. You were assigned a desk. As small as it was, it was your territory. That is where you went to work. Now, you don’t. In the “open office” you can come in and sit anywhere. If you are promoted and given more responsibility, or assigned a new role, you still come in and the same rules apply. You come in and sit wherever you choose.

I don’t know how good or bad, this new (or in this case “old”) open office concept is going to be. I haven’t had the opportunity to try it out yet. But it appears that I will have this opportunity soon. I am going to be interested to see how this return to the past is going to work and how it will affect a workforce that has not been in this environment before.

Many people I know have said that they have in the past or are now currently working in such environments. I also notice that a very high percentage of them now “work at home” in a home office. This high correlation between open office environments and working at home is probably just a coincidence.

Really.

It is probably also a coincidence that “your” home office is a fixed location within “your” home.

The Territorial Imperative was a ground-breaking book. It submitted that man, while being a reasoning creature was also driven by certain instincts, one of which was to define its own territory. It was shown that the defining and defending of these territories was one of the basic drives, and a significant driving force in human growth and evolution.

Maybe I am reaching, but I find it interesting that the same principles could be applied, to a greater or lesser extent in organizational and office dynamics. I also find it interesting that we seem to be in the midst of a period where organizations appear to be actively removing this behavior driver.

In the past, the “trappings of office” were recognized as one of the driving forces that was a cause for people to input that extra amount of effort. You wanted the bigger office. It was a symbol of your success.

I guess on the other side of the coin, your bigger office might have been a symbol of someone else’s lack of success. In today’s age of participation trophies and ninth place ribbons, the desire may not be so much to remove the symbol of success, but to remove the symbol of the lack of success of others. I guess if everyone sits at the same sort of desk, with the same amount of space, with no predefined location, no one can feel bad, or good about their territory, or their apparent lack of it.

On the other hand, in today’s hyper-competitive business environment, reducing the office space allocated to each employee, regardless of relative organizational position, might be a pretty good way of reducing what was once thought to be a relatively expensive fixed cost.

It is interesting that the reintroduction of an office environment that was evolved away from, more than half a century ago is being viewed as a “new and improved” (to borrow from most new products advertising mantras) step forward. It will also be interesting to see how it changes office behaviors.

Will there be an increase in the flight from the office to the home office? Will there be a reduction in the commitment to the assignment and the company on a greater level since there will no longer be a defined territory associated with the office? Despite these and other potential questions, as well as the recent research that shows such open office environments are not particularly conducive to organizational productivity, (“The impact of the ‘open’ workspace on human collaboration”, Ethan S. Bernstein and Stephen Turban,  Published:02 July 2018 https://royalsocietypublishing.org/doi/10.1098/rstb.2017.0239 https://doi.org/10.1098/rstb.2017.0239) I think we are all going to get the chance to experience the open office for ourselves. We have seen that man is an adaptable species. He lives in igloos in the arctic and grass huts in the rain-forests, and just about everywhere in between. I guess he can try working in an open office as well.

The Choice Not Made

I do not know of any person that doesn’t make mistakes, with the possible exception of my mother. And my wife. And my kids. And maybe my dad, but not according to my mother. Maybe I ought to start over.

I know I make mistakes. I try not to make many of them, but according to both my mother and my wife, I am a guy and therefore I will not be able to help myself when it comes to making mistakes. I have witnessed many others throughout my career in business who have also made mistakes. Not all of them were guys. Go figure. Some to a lesser and some to a greater degree, but errors have been made. But that is okay. Usually, in order for an error to be made, someone first had to make a decision. And business is all about making decisions.

When a decision gets made there are pretty much just two choices that can then occur. You can have been right and made the right choice, take a bow and move on, or you can have been wrong and made the wrong choice, in which case you can either blame the decision on someone else, and / or take actions to rectify the situation.

It is only in politics where you can rename a wrong choice as the “alternative correct” correct decision, based on the then alternative facts, and keep moving along. In business you have to eventually fix things and clean up the messes that wrong choices create. There are always Finance people around keeping score.

In business two characteristics seem to be prized above all others. The first, and somewhat lesser of the prized traits, is the ability to make the right choices. The ability to make correct decisions. Management likes this capability, but they only seem to like this ability to only a certain extent. That extent is usually equal to their own ability to make the right choices and decisions. Being right has a tendency to cause others who may have been wrong, some discomfort. Nobody likes to worry that they made the wrong choice and having someone around who makes the consistently right choice can occasionally be problematic.

Being right sometimes can cause you to take an opposing view to what may be desired for the business, even by management. Being right means that by comparison, someone else was wrong. And as I said, very few people enjoy being wrong.

The second and absolutely most prized characteristic in business, is the ability to be able to quickly clean up and correct the situation after someone else has made the wrong choice. I have written about these types of people before. They are called “firefighters”. And like their real-life equivalent hero counterparts, they are viewed as corporate heroes. Having someone around who can come in and quickly right a wrong choice is a highly valued resource to have.

I have actually been in meetings and training sessions where designated corporate firefighters have come in and spoken about how to go about triaging, correcting and cleaning up a situation.

While I recognize and absolutely salute those heroes that put themselves in harm’s way when it comes to firefighting, I am also a big fan of Smokey The Bear, who uttered the immortal words:

“Only you can prevent forest fires”

Fire prevention, as it relates to business has always been my goal. It is far less glamorous than flying in and putting out the fire, but it is far better for the business to avoid the fire instead of having to put it out. Looking forward and anticipating needs and issues are the best way to avoid the flare up of a firefighting situation. This topic is worthy of much more analysis and discussion, but it is not the one I want to cover here.

To this point I have talked about making right decisions and choices, and the potential pitfalls associated with them, And I have talked about making wrong decisions and choices, and the teams and activities that can be inaugurated as a response in trying to correct them. Just about any wrong decision or choice can be rectified once it is identified. Once they are identified just about any wrong decision can be corrected.

It is the interval between the decision and the start of its corrective actions that usually determines the magnitude of the issue and the magnitude of the resources that will be required to fix it. The sooner the identification the cheaper the cost to fix. This by the way, is the essence of all this increased interest in Agile and DevOps project methodologies. I’ll probably write about this sometime in the future as well. Remember, just about any wrong decision can be fixed.

Just about.

The one decision that cannot be fixed is the choice not made.

As process and the fear associated with making the wrong choice has grown, the willingness to make those sometimes difficult choices seems to have atrophied as well. One need only look at our current political situation to see this phenomenon play out on a much grander scale. In politics making a decision or making a choice makes you somewhat vulnerable. Those that don’t agree with your choice can now take an opposing position. Since the results of a political decision, much like a business decision are not visible for some time, support for the choice can weaken and changes can be made.

As a result, it is becoming easier and more acceptable to defer these needed decisions and choices to a later time. They are then the choices that don’t get made. Instead of making the right choice and moving forward or making the wrong choice and then taking steps to correct it and then again moving forward, no choice is made and no movement, forward or backward occurs.

The result is then, that nothing gets done.

I included process in the list as one of the causes of choices not being made because process by its very design does not lend itself to making decisions. Process tells you what the decision should be. Process supposedly makes the choice for you. The safe path is to now always follow the process. If the situation may call for a change in process or a different decision, it will always be easier to not make that choice.

The risk of making a wrong decision that is outside of the defined process will almost always outweigh the benefit of making the right decision. Decisions are responsible for change. Change is what drives progress.

If you are not going to make the choice, you can’t fix the problem. The right choice fixes the issue. The wrong choice lets you know what the right choice should have been, and again allows you to fix the issue. The choice not made doesn’t fix anything.

Herein lies the conundrum. Almost every organization and business without exception will categorically state that want their people to make choices and take risks. They will then systematically implement processes that reduce the opportunity to make decisions and choices, and then provide a series of rewards and punishments that result in a deterrent to taking the risks, making the decisions and choices that organization says they want them to take.

Sun Tzu was a Chinese general, military strategist, writer and philosopher who lived in the Eastern Zhou period of ancient China. Sun Tzu is traditionally credited as the author of The Art of War, an influential work of military strategy that has affected Western and East Asian philosophy and military thinking. (https://en.wikipedia.org/wiki/Sun_Tzu)

I have talked about Sun Tzu in the past. His book “The Art of War” was written close to 2,500 years ago and is still taught in military academies around the world today. He is renowned for amongst other things, never losing a military engagement. If he felt he was not assured of a victory, he would not commit to the engagement. He would stall and feint and execute other tactics. If these actions did not result in a more favorable position for him he would either accept a stalemate / draw, or he would withdraw.

Much of what he discussed has also been applied to business in the past as well. The difference between Sun Tzu’s approach to not engaging, and a process-based approach to not engaging, is that Sun Tzu made an active decision. He made the choice not to engage. He chose to protect his men and resources and pick a different time and place to engage when the contributing factors were more to his favor and liking.

In business (as in politics) today the incentive appears to be to not engage, even if the correct choice is available. Because if someone is correct, invariably someone else is wrong. Even if success is probable, there will always be at least a small risk present for failure. The only way to assure that you are not wrong is to not make choices. And while the choice not made may appear to be the safest one for the individual, it is probably the worst one for the organization.

There are some really great quotes on choices out there. The one I think I will leave you with is from Jim Rohn, an entrepreneur and author. He said:

“It doesn’t matter which side of the fence you get off on sometimes. What matters most is getting off. You cannot make progress without making decisions.”

Esoteric Value

“Don’t sell the steak. Sell the sizzle.” is a sales canon that dates back to The New Yorker Magazine in 1938. Elmer Wheeler is the man credited with coining it. It seems Mr. Wheeler was one of the first pioneers in persuasive selling. He was one of the first to recognize the value in presenting a customer the choice in buying one thing or another thing (something and something) instead of the choice of buying or not buying (something and nothing). He was successful. Sales teams have been trying to emulate him, and his success since.

His approach works well when dealing with an end-user customer. The person buying the steak, or getting their oil checked, or buying a malted milk (these were actual examples in the 1938 article) can readily be replaced by those purchasing Mobile Phone packages, automobiles or Television / Internet packages for their homes. It is still about buying one thing or another, not about buying or not buying. These are consumers making discretionary purchase decisions.

For the most part these are all examples of Business-to-Consumer selling opportunities. The person buying is the person using the capability being sold. It is when you start looking at the idea of Business-to-Business selling that the concept of “sizzle” can become a little more esoteric. In business, there are very few discretionary purchase decisions that get made. It is usually decided that you can use it to make money or save money, or you don’t buy it.

Businesses for the most part are financially or profit driven. I say for the most part as there are several that purport to serve the greater good, and by their designation as a “Non-Profit” organization enjoy a different tax treatment. There are also those that are regulated as to how much they are actually allowed to charge and or make as a profit. Even so, these regulated firms are also somewhat profit driven.

What they are not is “sizzle” driven.

Yes, it is true that organizations are made up of people that can be influenced by something other than profitability, but the organization as a whole, through is management structure, its purchasing process and more importantly in many instances, its stock price will not be “sizzle” driven. Being fashionable or exciting or being a market or technology leader is interesting. It may have some ephemeral effect on the organization, or how the market perceives it, but in the end, it will be the financial performance of the company that dictates how it ultimately is perceived.

If you want to stay in business, profitability will be key. It is about making money, and about how those things that the organization purchases can be used to make more of it, this quarter, this month, today.

Steve Jobs is famous for many quotes. Part of one of his more famous quotes contains the following line:

“Our job is to figure out what they’re going to want before they do”

This is spoken like a true technology genius, especially when he is referring to a set of consumers and end-user customers that are not technology geniuses. Jobs was brilliant at anticipating consumer “wants” (as opposed to needs – no one “needs” an iPhone, or an iPod, etc.) and then putting together a product package that would then create a new market.

He identified what you would want and then created the package that you wanted it in. Like I said, he was a genius.

However, when you are working with businesses, it is somewhat different. The businesses normally require something called a “business case” (see what I did there? Business – business case? It’s important.) before they are going to spend money on anything, whether it is a new hire, an internal development, or an externally supplied product or service. It has to make business sense, or more simply put, it needs to generate more value for the business than it costs the business to do.

There is a myriad of ways to describe the generation value for a business, but I have found that they can usually be simplified down into one of two categories: Value can be created by enabling the customer to generate more revenue, or value can be generated by enabling the customer to reduce their costs. Both of which usually result in greater earnings and profits, which ultimately increases the value of the company (usually in the eyes of the shareholders or owners).

Many times, companies like to tout their future capabilities when selling to other companies. It is important to have a direction and strategy for the future when talking to customers. They too want to know where their suppliers are going and what they expect the market to need or want in the future. But there is a significant gap between the value of a business case for today, and the value of a business case for the future.

The business case of today involves products and services designed to meet defined requirements, solve existing issues and deliver present value in the form of increased sales or reduced costs. The needs exist. The products exist. And the relationship between them can be well defined. The amount spent, and the value received, either immediately or over the defined period of the business case can be calculated. It is truly the decision between buying one vendor’s solution and buying another vendor’s solution (again, the decision between buying something and buying something else).

It is when new products or capabilities are introduced ahead of or in anticipation of the business customer’s need, that the business case relationship can become somewhat esoteric.

When trying to anticipate the business customer’s future needs, the impetus is on convincing them that your specific view of the future is to correct one. They must then balance that out against their customers needs, wants and desires to see if that anticipation makes sense in the form of a business case.

Many times, there can be a general consensus among the supplier organizations about what the future state of an industry may look like, but unless that vision can be quickly converted into increased customer revenues, or reduced operating expenses, the future solution will have to wait. Most organizations can no longer afford to spend money in anticipation of what they think their customers will need or want. They would rather wait and make sure it is what they need or want.

Remember present value is always better than future value.

Part of the issue with “future” products is that they don’t necessarily translate to definable value. They are usually described as “platforms” for the future, or that they will enable “future applications”. In short, they don’t clearly define and quantify how the business customer is going to generate new revenues and how much those revenues might be, or how they are going to reduce their costs and how much those cost reductions might be. They have only half of a defined business case. The purchase or the cost half.

They do not have the benefit half of the business case defined.

Without the definition of those future applications or services or values or cost reductions it is difficult to make a case where an organization will feel comfortable spending today’s money on an undefined future value. In short, very few businesses will gamble today’s money on an undefined future value. It makes much more sense for them to actually wait on the future than to bet on the future.

As I said earlier, companies are in business primarily to bring value to their shareholders and their owners. The do this by generating earnings and profits. They do that generating greater value on products and projects that the money they spend executing them. They make more money than they spend on these ventures.

When a business is trying to sell a good or service that cannot clearly define the value that it will generate for the customer, either in the present or the future, it always makes more sense for the customer to wait on that particular buying decisions. This is the definition of deciding between buying something and not buying (buying nothing).

Regardless of the sizzle that a company may claim that accompanies their product or service, in the case of buying today based on predicted future needs and capabilities, the steak, and its relatively definable value will usually be of much more interest to the business customer. Especially when it comes time to review the value generated for the customer. And even more so when that sizzle is still just a future sizzle.

Customer Wants

Sometimes, events in the universe just conspire to align themselves in such a way that a topic to write about becomes painfully self-evident. Such is what has happened over the last little period of time for me. I was the recipient of several surveys asking me as a customer, what I wanted. I also had the opportunity to read several surveys that had asked other types of customers what they wanted. These current events brought back recollections of past events that had already conveyed this topic into such clarity some time ago for me. I am of course talking about talking to customers, and more specifically what customers want.

What customers want is usually viewed as the holy grail of business conduct. If you can figure out what they want, you can create a product or service that will satisfy their desire. You can become famous and respected as a scion of business. You can be somebody.

One of the most popular methods for finding out what customers want is through the afore mentioned surveys. Another is industry forums and workshops. Yet another is actually talking to them face to face and just asking them. As I mentioned, I have recently had the opportunity to both read about and to some extent participate in these types of customer interactions. People had gone out, identified the customers, and asked them what they wanted. And lo and behold, they told us.

We now knew what they wanted. We could design and build the future around these responses. We had the information. We had the answers. We were off and running.

Not so fast.

Long ago in a galaxy far, far away, I was once responsible for a business unit within a company. I had taken the adage to heart. I had created a users’ group so that I could talk directly to my customers and understand what they wanted as well as what was dissatisfying them. It worked great, for a while.

Most of the time the problems, issues and requests that we discussed were well known to both groups, the company as well as the users. We prioritized them, focused our abilities, and instead of trying to solve them all at once, we solved a few at a time and made measurable progress. As we took the major issues and dissatisfiers off the list, they were eventually replaced with more and more arcane topics. They were still dissatisfiers, but not on the same level as those that we had already dealt with. Soon we found ourselves starting to try and prioritize and work on the arcane as opposed to the well-defined issues.

We surveyed the customers to try and understand “what they wanted”. They were not shy. We hadn’t put any limitations on what their responses could be, so they told us what they wanted. They had gone through a prolonged period of getting many of the products and issue resolutions that they were looking for, so their expectations were high regarding what our responses would be.

The subtle change that had occurred was that we were now specifically discussing things that they wanted, where in the past we had been working on topics that needed to be worked or corrected. These were now “want” to haves, as opposed to “have” to have topics. There is a different commercial model when it comes to correcting issues or providing already committed functionalities, then there is when it comes to fulfilling customer wants and desires.

We started discussing the parameters for the commercial model associated with fulfilling their desires. We started to ask them for money in order for us to deliver what they wanted. What they wanted was so arcane, and technically complicated, they we started asking for a lot of money.

The next users group meeting came along, and naturally, this issue was a major topic of discussion. The customers were unhappy. They were dissatisfied. They were not getting what they wanted. It came time to have “the talk” with them individually, and as a user group in general.

We set up the session and cleared the agenda. We started off by making sure that we had in fact properly scoped and defined the specific desired capability that they said they wanted. We wanted to make sure that we were answering and addressing the proper topic. We had.

We then asked the question that hence forth has always accompanied any time in the future that that I have asked a customer what they wanted. We asked:

“Are you willing to pay for what you want?”

It is easy for anyone, customers included, to come up with a list of things that they want. The issue here is always two-fold: Are you willing to pay for it? And, do you have enough money to pay for it?

Usually when customers are surveyed about needs, wants, desires, there is little in the way of a perceived economic model accompanying these questions. Wants invariably well exceed available budgets and the ability to purchase these wants. The different relative costs associated with the various desires can have a significant effect on the priority with which the customer views them.

A good example would be a survey about cars. You can be asked what kind of car you would want. You may “want” an exotic super-car. They are nice cars. You may not have enough money on hand, nor the desire to re-mortgage your house in order to buy an exotic super-car. Even though you may want one, you may not be willing to pay what it costs to buy one.

Such is the issue we ran into way back when. We asked only about “wants”. Such is the issue that seems to continue to plague more recent industry survey and customer communications.

Getting back to my historical lesson, most of the customers agreed that they would be willing to pay something for their desired functionality. It is interesting to note here that I said “most”. There were some that were not. I think by now you know where I will be going with this.

I then shared what the order of magnitude estimate was for the company to develop the desired capability and explained that even though it might be contrary to common opinion, we were a “for profit” organization. The stockholders were funny that way, and sort of insisted on it. Based on the business case and the relative number of interested customers, we then shared an order of magnitude individual customer price for the desired capability, based on the assumption that all interested customers would purchase it at the estimated price.

The majority of the customers indicated that they were not interested in the capability at the estimated price. We then looked at the remaining customers and indicated that their price would go up in proportion to the number of customers that were no longer interested in purchasing the capability.

The result of the discussion was that we publicly addressed the dissatisfier and quantified to the customer what it would cost them to be satisfied, and then mutually decided that we would not develop and supply the customer desired functionality. We would instead work with them to see if there were work-arounds or other methods of addressing the desired functionality.

During the course of this interaction it became clear that what customers want is indeed an important aspect of the process of creating customer satisfaction. You have to know what they want. Many times, it is within your ability to provide it, and to provide in such a way or at such a price point that it makes sense for all involved. However, as technology has evolved, and as budgets continue to tighten, sometimes the usual economic model will not work.

In today’s business climate, any time that you are looking to have interactions with customers regarding “what they want” as a method of gaging which products to create or which strategic directions to pursue, it will probably be in everyone’s best interest to include questions regarding if  that customer would be willing to purchase that desired product or functionality, and what specifically (at lease to a rounded order of magnitude) what they would be willing to pay for it.

All customers have a list of wants and desires. If you only ask them about those wants and desires you may find yourself trying to design and build products, services and functionalities that customers may be unwilling to purchase, even though they may want them. I think the number of people that may want an exotic super-car is far greater than the number of people that are actually willing to pay what it costs to buy one. I’m pretty sure about this because as I drive around in my distinctly non-exotic super-car, I see so many others driving around in their non-exotic super-cars.

As an aside I can’t believe that so many other people actually wanted all those minivans that they are driving around in. Perhaps that will be something to analyze in a future edition.

I think that we all need to be aware of what customers want. I also think that unless we normalize these wants with information regarding which wants they are willing to pay for, and how much they might be willing to pay for each one, we can lead ourselves into some difficult business situations.

Good, Fast, Cheap and the Future

I was casting around for a topic to write about. I had several candidates. Whenever I get an idea I write down the basics of it in my notebook. This happens to be a real notebook, with paper pages and a bound cover. Not a computer. I very rarely type at a moment’s notice, but I sure can pick up a pen and scribble with the best of them.

In any event what finally tipped the scales toward this topic was the NCAA selection committee’s decisions on who gets to play in March Madness (who gets to go dancing as they say) and who doesn’t. It wasn’t so much the actual selections that got my attention, as it was all the hype and fury that goes into the prognostications associated with filling out the tournament brackets and predicting the winners, losers and future match-ups.

It seems that what comes next is of more than passing interest to some people.

Being in a technology-based industry, in an increasingly technology-based world, I have been doing some reading as to what comes next in technology as well. It may seem like a stretch to compare filling out your NCAA March Madness bracket to predicting what comes next in technology industries and business sectors, but there you have it.

I have read and seen many methods used for predicting the next steps in our technological future. Some are internally focused (business focused). Some are externally focused (customer focused). I saw some that were citing universal constants and the laws of physics as the driving factors. Anything that equates physics to business always intrigues me.

But as I thought through all of the hype and hoopla surrounding predicting the future, as I stared somewhat forlornly at my unfilled NCAA bracket, I realized that while I had absolutely no idea beyond what I saw on ESPN regarding who’s who in college basketball, I had been in business and the technology industry for a while, so maybe if I relied on that instead of what others said I should rely on, I might be able to make some sense of what was coming.

Despite every pundit’s proclivity to try and make things seem complicated, I have found business to come down to, and be reasonably explained by the holy trinity, as it were, of business: Good, Fast, Cheap. I think these are the factors that affect and in effect, can be used to predict the future.

Simply put, they are: Good, or quality. Fast or speed of acquisition or delivery. And Cheap, how much you are willing to pay.

Now I agree that there are other influences, such as governmental regulation, and social and environmental consciousness, and even marketing and advertising, but I think Good, Fast, Cheap dominate the decision and prediction landscape. I’ll look at a couple of disparate industries to see if these ideas hold true.

The auto industry is always one of my favorite industries to look at. It has changed from a labor intensive “we’ll tell you what kind of car you’re going to buy”, to an automated, highly competitive customer driven, “We’ll tell you what kind of car you’re going to make if you want our business” industry. That’s what makes it fun to look at.

It is well known that there are market segments within both the automotive industry and its customer base. These tiers are based on car size and pricing levels. Smaller economy cars, all the way up to larger, more luxurious cars. This is because not everyone has the same level of “Cheap” or price. However, there are various sub-markets that do seem to behave similarly based on this factor.

Fast, for the most part, is going to be a given for cars. Dealerships abound, and interestingly enough seem to occur in close proximity to each other. This means that you can go in, compare products relatively easily, and select and drive home with your purchase. You can’t get much faster than immediate gratification.

That leaves Good, or quality as to what I would expect the primary differentiator to be, at least for now within the automotive industry. This is where things can get interesting. If you can’t spend any more money than you can afford for a car, and you can’t get it any faster than now, the perceived quality of the car will be one of the major, if not deciding factor on what you buy.

Yes, I know design and style, etc. are going to come into play. Have you noticed how similar in appearance cars within the same market segment look. If you don’t think so, look again.

It is interesting (at least to me) that the New York Times noted that General Motors first offered a Three-Year bumper to bumper warranty in 1989. https://www.nytimes.com/1988/09/17/style/consumer-s-world-for-1989-new-cars-and-warranties-come-in-all-lengths.html

Now such warranties can extend to six-years and in some instances 10-years, and I would suggest that they are viewed as a competitive advantage / disadvantage capability.

Now Elon Musk and Tesla have created a very high quality, electric car, and they are challenging some of the status quo in the industry. And the industry is reacting, as all competitors work to bring out competitive electric models as quickly as possible. But again, I would position that the economics of quality will be the driving factor of what the future holds for the automotive industry.

Now I’d like to look at the technology industries. I’ll focus somewhat on communications and networking, but I think much of the topic will be applicable across most technology industries.

Good, or Quality used to be the driving force in communications. Reliability, redundancy, etc. were the required thresholds to cross. But they cost money and they took time. People learned that they could get “Good Enough” for a whole lot less than what they paid for Good. I have referred to this as the race to the bottom. How low a quality for how low a price was acceptable. It turns out in retrospect, pretty low.

It seems now that there are generations of people who have never known high quality communications, or anything other than disposable platforms and devices, so they have no baseline to compare to. To them Good Enough is all they have ever had, so it is acceptable. So that leaves Fast and / or Cheap as the driving forces for the networking future. Maybe.

I also think that Cheap has also run its course in communications. Who here remembers when communications providers would “give” you a mobile phone as part of your service agreement? They don’t do that anymore. In fact, it seems that they have now established an upper boundary for what people will pay for a phone, in addition to their service contract. That limit seems to have been explored by Apple and its iPhone X at around One Thousand Dollars. https://www.theverge.com/2018/8/21/17763322/iphone-x-galaxy-note-9-smartphone-pricing-2018

That brings us to Fast, or speed of availability. It has been approximately Ten years since the last generation of wireless capability (4G) went into trial and delivery to the market. https://en.wikipedia.org/wiki/4G 5G is now just hitting the market as well, but probably won’t see ubiquitous coverage for another year or two. The speed we are talking about here is measured in years, if not decades.

The last major evolution / revolution in non-wireless communications, be it the analog to digital, digital to Internet Protocol, or the advent of cable providers entering the non-TV communications market, has also been years if not decades in the past.

So where does that leave us? The Good (quality) of communications has already been taken down. Can it go lower? Maybe, maybe not. The Cheap of communications has already been taken down, hit the floor, and started to bounce back up. This is obviously in response to the communications providers desire to continue to make money and stay in business. The Fast of communications has never been that fast to begin with.

I think it is going to be a combination of “Good” and “Cheap”. Quality is already low. However, if we are to believe the new applications and uses of communications, quality will probably have to come back up. I don’t know about you, but I don’t think I want my self-driving car operating on the quality of networks that we have come to accept as “Good Enough”. Either that or the definition of Good Enough is going to have to be revised upwards, drastically.

Basically, this means that people will be expecting more, but probably will not be willing to pay more for it. The past technology iterations will have already taught them this behavior.

Cheap, as I said has already hit the bottom and seems to be coming back up. But not everyone will want or need the “luxury” service. Many will want, or only be able to afford the “Economy” service. I think you will see in far more granularity than is available now, a tiering, or set of communication strata put in place, very similar to what we see with the automotive industry: Luxury models to Economy models.

The issue will be that how do you create communications networks able to deliver Luxury to Economy levels, that are priced at levels that are already ingrained in the user’s market segment? That would mean that the capability to deliver Luxury would have to be built, but the ability to deliver Cheap, where desired or required would have to be available.

I think the technology to be able to deliver this type of capability is in development now. I don’t think the “Cheap” capability of the service providers being able to make money on that type of technology-based capability has quite been worked out yet. It will cost the providers a lot of money to build this capability. This will probably engender a price that their end user customers are probably not willing to spend. That and it will probably a fair amount of time before the technologies are truly available. I think we have an economically induced wait in order to see what’s next, at least in communications.

A Great Service Story

I got a call from Travis the other day. I didn’t know him, but he works for Godaddy, the domain registrar and web hosting company that I use for this Blog. Up to now I don’t think I have had much call or reason to interact with them. I have my site on automatic renew and electronic pay from the bank. About the only thing I see from them is an email notification when then automatically renew my site and get paid for doing that. As long as the site has stayed up, which it has, I have been content.

I thought we would both happier with this kind of arm’s length, long distance relationship.

Still, Travis called me. The calling line ID didn’t say “Travis”. It just displayed a number that I recognized as an Arizona, USA area code. I have later found out that Godaddy is headquartered in Scottsdale (just outside of Phoenix, for those of you who may not be familiar). I didn’t know it was Godaddy headquarters calling when I answered the phone. If it had instead said something like “Travis”, I probably wouldn’t have answered it.

It seems I get so many spam phone calls these days that I always expect that long silence when I answer the phone from an unknown number, while the robo-caller detects my voice and switches me over to a real person. But not Travis. He was right there and immediately introduced himself and who he worked for right away.

I was pleasantly surprised.

He said he knew I was a busy man, so he would get right to the point. He said that Godaddy was seeing a significant amount of activity at my web site and wondered if there was anything going on that they should be aware of, or that they could help with.

Now normally I don’t do much more with the site other than type out one of these articles (using MS Word), edit it to my liking, copy it and paste it in as a new post and hit “Publish”. The web site is just a vehicle for getting it out to the world.

Travis seemed like a good guy, so I responded to his question regarding increased activity by wondering out loud if I had actually won the Nobel Prize for blogging, or potentially the Presidential Medal of freedom I heard rumors that I was up for. Travis didn’t hesitate.

He said that Godaddy normally associates the amount of activity that they were seeing with events of such or similar magnitude, but that he had already Googled me and saw that I was not nominated for either award. It had to be something else.

I thought to myself: Travis Game Level = Mage

After a little more discussion, it seemed to be determined that we could not determine what was causing the increase in activity to my web site. I guess people were just coming from all over to read the stuff I was writing. This is where the Travis upped his game level when it came to service. He started looking over my site.

The first thing he saw was that I was that I had a significant amount of content on my site. I mentally blew on my fingernails and polished them on my chest. I told him that I had been doing this blogging thing for over ten years. He noted the amount of content again and then asked me if I had ever backed up the site and the amount of data that I had on it. That way if there was a catastrophic failure I wouldn’t lose anything.

Uh, no. Can’t say that I have.

He then said the magic words: here let me do that for you. And in the background, I heard the quantity of tapping of keys that reminded me of the speed and quantity of gun shots expended in the latest John Wick movie, only faster. He then said that having finished that, he had now also programed the system to automatically back itself up once a month.

I thought to myself: I didn’t ask him to call me. I didn’t ask for his help, and he has solved a problem that I didn’t know I had before it became a problem. I very much appreciate fire prevention in lieu of future firefighting.

 Travis’ Game Level now = War Mage

But he wasn’t done. He then noted that I was on a pretty old release level as far as the web site itself went. In all the time I have had it, I don’t think I have ever upgraded it. It worked great as it was. It never broke. It was fine. He noted that he believed the only other Godaddy customer on this web site release level were a couple by the name of Fred and Wilma Flintstone.

Well played Travis. Well played.

I said fine. Go for it. Knock yourself out. Again, the veritable buzz saw of key strikes and I then found myself on the latest web site release. He said there should be no problems and that this was a much more robust release.

This was going much better than any of the other spam phone calls I usually got. I was waiting for the other shoe to drop.

He then reviewed and saw that I was on a version of Word Press that was even older that the site release version. I said we’re in this deep. Let’s go big or go home. Update and upgrade that bugger too, if you don’t mind. He didn’t mind, so I them found myself on the latest release of Word Press as well.

I was now thinking Travis’ Game Level = Warlock

I did not know I was having excessive activity at my web site. I didn’t know that my content and web site were not backed up. I didn’t know that my web site and my publishing software releases were so far out of date before the call. Now I felt as if everything had been reviewed and updated. It sounded as though a very knowledgeable individual had gone through everything and reviewed for any potential issues.

I had not asked for all of this service. And, even better, I was not asked to pay for all of this service.

This is my idea of what great service is about. Reaching out proactively to a customer and going through their systems, programs and applications. Updating where necessary, and then thanking them for being a customer.

It is quite possible that Godaddy had put together a program where their service group would comb through their existing customer base looking for customers just like me who were so helplessly out of date that it was of benefit to both Godaddy and the customer to have Godaddy perform the requisite updates and upgrades. It would probably save them money, reduce customer issues and increase customer satisfaction. If I were them, I would probably do the same thing.

I didn’t care. They had reached out and performed a service for me without my asking. They had upgraded and updated my capability to continue to write and publish articles, such as this one.

They also increased my customer satisfaction and loyalty.

In the great scheme of things, I am just someone who has created a small, personal web site, and posts a blog using Godaddy. I am sure that they have many other, and many larger customers than me that they serve. The fact that I got individual attention. That I didn’t have to reach out and call them. That I didn’t have to fight my way through some sort of automated attendant answering system. That I talked to a knowledgeable individual who provided me with what I considered to be valuable service, was not lost on me.

I am not writing a homage to any specific company here. It may sound like it, but that was not the intent. I am merely using the company as an example and illustration.

What I am writing about here is how great service ultimately comes down to an individual, and a one to one interface. It is best done preemptively before there is an issue to resolve. How when each step in the service process is explained, customer buy in and satisfaction are gained. How attitude is important when dealing with customers. How being well trained and knowledgeable really counts.

Great service is doing a great job before you are even asked to do it.

Travis promised he would keep an eye on my blog, just in case the Nobel committee actually did start snooping around, because, you never know. Well done Travis.

Time Cards

Time cards have been a symbol of manufacturing productive efficiency for years. I think we have all seen images of production and manufacturing associates dutifully standing in line to “punch in” at their appointed shift on the time clock. It seemed to be a marvelous mechanism to maintain, measure and direct those resources associated with production, in the most efficient manner. It is where the phrase “on the clock” originated. You came in and they started paying you when you “clocked in” and they stopped paying you when you “clocked out”. It was efficient.

By the way, the “Time Clock” that has become so universal when talking about clocking in and clocking out, first made its appearance on the business scene in the late nineteenth century.

” An early and influential time clock, sometimes described as the first, was invented on November 20, 1888, by Willard Le Grand Bundy, a jeweler in Auburn, New York. His patent of 1890 speaks of mechanical time recorders for workers in terms that suggest that earlier recorders already existed, but Bundy’s had various improvements; for example, each worker had his own key. A year later his brother, Harlow Bundy, organized the Bundy Manufacturing Company, and began mass-producing time clocks.” https://en.wikipedia.org/wiki/Time_clock

There then arose the dichotomy in business where there were those that were “paid by the hour” (those on the clock), or waged employees, and those that were paid a set amount per period of time, or salaried employees. Waged employees were referred to as Non-Exempt and Salaried employees were referred to as Exempt. These definitions were laid down in 1938 by the Fair Labor Standards Act.  https://www.investopedia.com/terms/e/exempt-employee.asp

Below is a brief comparison of the differences between the two:

So, why am I talking about one hundred and thirty year old inventions (Time Clocks) and eighty year old employee definitions (Fair Labor Standards Act)?

The reason is pretty simple. As the production and standardization processes that have been used in manufacturing have found their ways into the other disciplines and aspects of business, so has the cost tracking and charging of those resources responsible for doing the manufacturing.

We are now asking our exempt employees to fill out time cards associated with the work they are doing. This in and of itself is probably not a bad thing, however it engenders a new and different behavior in the exempt employee. It is this new “Time Card” behavior in exempt employees that can a detrimental effect on the business.

For lack of a better definition, exempt employees are paid by the “job” as opposed to by the “hour”. If an exempt employee must work late hours and weekends to complete their assignment, they do not get paid any more. They do however get the satisfaction of knowing the completed their task, regardless of how long it took them.

The idea of having exempt / salaried employees track their time, was to better associate costs directly with specific projects or activities. This association gave rise to the exempt employees who could directly associate their activities with specific items or revenue producing functions, and those that could not associate their work with specific items. Those that could be directly associated with specific products, projects and functions were called “Direct” labor, and those that could not be directly associated were called “Indirect” labor.

“The essential difference between direct costs and indirect costs is that only direct costs can be traced to specific cost objects. A cost object is something for which a cost is compiled, such as a product, service, customer, project, or activity. These costs are usually only classified as direct or indirect costs if they are for production activities, not for administrative activities (which are considered period costs).

The concept is critical when determining the cost of a specific product or activity, since direct costs are always used to compile the cost of something, while indirect costs may not be assigned to such a cost analysis. It can be too difficult to derive a cost-effective methodology for the assignment of indirect costs; the result is that many of these costs are considered part of corporate overhead or production overhead, which will exist even if a specific product is not created or an activity does not occur.” https://www.accountingtools.com/articles/the-difference-between-direct-costs-and-indirect-costs.html

The following as a good way to think about this. I promise I will get to my point about Time Cards and why this is important soon.

So, all of this work associated with slicing and dicing the time that salaried employees spend on their various activities is being done to understand what portion of their work can be directly associated with a cost object (Direct) and what portion cannot (Indirect). Why is this important anyway? It’s pretty simple.

All businesses want to reduce, minimize and otherwise exit overhead or indirect costs from the business equation.

Every business has the objective of reducing indirect costs, otherwise known as “Overhead”. As noted, these are the costs that cannot be directly associated with revenue production.

So, when Exempt, salaried employees are asked to fill out time cards, and they have multiple options, both “Direct” and “Indirect” to associate their time with, which are they going to choose? Knowing the corporate desire to minimize, reduce and exit Indirect and overhead costs from the business, they will naturally migrate their time charging to “Direct” functions and charges.

On the surface this might seem like a wonderful way for companies to reduce overhead, and in some instances, it will work. However, if you have the financial responsibility for one of these cost objects, you will want to be able to closely monitor the number of people and the amount they can charge to your cost object. This monitoring, or policing activity and capability again creates an incremental overhead.

It is essentially a transference of the overhead responsibility from the labor pool owner (of salaried, exempt employees), to the Cost Object owner.

Labor pool owners are always going to try and minimize the amount of their labor that is not directly associated with a revenue producing cost object. They will want to show the preponderance of their time, as reported by time cards, as being directly associated with a revenue producing function. Engineering groups, development groups, support groups and just about every other group will begin to display this behavior once time cards are utilized in this fashion.

The fear for them is that if they show too much time spent on overhead functions, they will be subject to a cost reduction activity in an effort to reduce overhead.

The results of this “Time Card” behavior are manifold:

  • With the pressure to be associated with, and charge to only Direct costs, the direct costs associated with specific cost objects can become inflated by excessive charging. Since direct costs are “above the line” in accounting and margin terms, this could result in inflated and non-competitive prices.
  • There will now be a somewhat adversarial relationship in place between those groups wanting to charge directly to cost objects, and those groups that are responsible for maintaining those cost object budgets, and the corporate inefficiencies and friction that this creates. There is also the non-productive time that will be spent challenging, changing and rectifying those charges as they come in.
  • There is non-productive time, effort and cost for increasingly capable corporate tools to maintain, monitor and control this type of charging effort. How do you control who should and should not charge to a cost object?

Time cards, like process can be a good thing. But like process, they should not be viewed as a replacement for judgement. When you move costs associated with time cards from indirect labor to direct labor, it may solve a corporate desire to reduce perceived overhead and indirect labor expenses, but it also creates several new issues and expenses associated with monitoring and controlling those charges. Due to how costs are accounted for in direct versus overhead items, it can also change both the cost profiles, margins and ultimately pricing profiles in the market.

Time cards in the salaried or exempt employee environment can and will change behaviors. Labor resource groups will increase their focus on having cost objects to charge to as opposed to understanding that there is to be expected a certain amount of slack time that they will have. Instead of the labor resource pool manager managing this slack level, time cards in essence transfer this issue to the cost object owners to try and control and manage.

Time cards for salaried and exempt employees can provide a better level of visibility into how time is spent and what employees are working on. It does however carry with it what is known as “The Observer Effect”.

I always try to sneak a little physics into any discussion.

“Observer effect (physics) In physics, the observer effect is the theory that simply observing a situation or phenomenon necessarily changes that phenomenon. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner.”    https://en.wikipedia.org/wiki/Observer_effect_(physics)

As long as business is aware of how behaviors are changed, and what may need to be done to compensate for these changes, there can be value in them. However, without those considerations they can create an entire new set of issues for a business to deal with, and may result in little to no efficiency gains.

The Overton Window

I am going to bet that not many people have heard of the “Overton Window”. There can be many reasons for this. One is that it is a relatively new concept. Another may be that is usually used in conjunction with the prevailing political debate. Finally, it was generated in a “Think Tank” type environment and those types of terms do not usually migrate out into the greater population. Be that as it may, I think it is a very interesting term in that to me it is just as applicable to business (and probably many more environments that I have not considered) as it appears to be to politics.

First, a little history and definition as to what the Overton Window is and how I came about looking into it.

I first came across the term “Overton Window” while reading one of the plethora of political analyses purporting to explain what is currently occurring in American politics. It discussed how various individuals were responsible for shifting what was, and what wasn’t politically acceptable to discuss. As I wish to discuss business and not politics I won’t name any of the individuals but suffice it to say there are not as many people as you might think that are capable of or are shifting what is acceptable in the current political discourse. The majority of them are usually just credited with screaming about one thing or another, depending on which side of any given issue they happen to reside.

So, since the Overton Window was mentioned, and I didn’t know what it was, so I then went and searched the term on the web. The following is the simplest description that I could come up with:

“The Overton window is the range of ideas tolerated in public discourse, also known as the window of discourse. The term refers to Joseph P. Overton, who claimed that an idea’s political viability depends mainly on whether it falls within the window, rather than on politicians’ individual preferences. According to Overton’s description, his window includes a range of policies considered politically acceptable in the current climate of public opinion, which a politician can recommend without being considered too extreme to gain or keep public office.”
https://en.wikipedia.org/wiki/Overton_window

So, basically the Overton Window is the range of ideas that are “acceptable” to talk about at any given time. That doesn’t mean that they are the correct ideas. It only means that they are politically correct, or ideas that can be talked about without significant fear of a negative response.

We have all seen examples of what the possibly best solution to any specific problem may be, only to find out that the prevailing political climate renders this solution politically unacceptable. It also notes that this window can shift depending on a variety of factors. Ideas that may be in the window at one time, or for one administration, may not be in it at another time or for another administration.

“Overton described a spectrum from “more free” to “less free” with regard to government intervention, oriented vertically on an axis, to avoid comparison with the left-right political spectrum. As the spectrum moves or expands, an idea at a given location may become more or less politically acceptable. Political commentator Joshua Treviño postulated that the degrees of acceptance of public ideas are roughly:
• Unthinkable
• Radical
• Acceptable
• Sensible
• Popular
• Policy
https://en.wikipedia.org/wiki/Overton_window

The Overton Window (with Trevino’s degrees of acceptance) is usually depicted as follows:

https://en.wikipedia.org/wiki/Overton_window

As I have noted before, reading about something like this always gets me to thinking, which as I have also noted before can be a dangerous thing for me to do. It got me to thinking about why so many organizations talk so incessantly about the need for change, but then react with an immune system like resistance response to those proposals that can in fact generate real change.

It got me to thinking that the Overton Window is a limiting factor in that according to its precepts, only those changes that fall within the relatively modest window can or will be acceptable. True or significant change would probably place that policy outside of the Overton Window, which would mean that it is politically unacceptable for consideration.

This would explain why only minor or incremental types of changes seem to find their way into the corporate (or political) application. Too great a change, regardless of its potential necessity or benefit would find itself outside the range of acceptable change for the then business (or political) administration.

The only way to compensate for the smaller than necessary amplitude of change is to increase the frequency of change. I think that the idea of many, smaller changes being more acceptable than fewer, larger changes is what has given rise to the now industry standard vernacular of business such as:

“The rate of change is not going to slow down anytime soon. If anything, competition in most industries will probably speed up even more in the next few decades.” – John Kotter
http://www.ideachampions.com/weblogs/archives/2011/04/1_it_is_not_the.shtml

On the other hand, and probably a little less known or accepted we have:

“If you want to make enemies, try to change something.”
– Woodrow Wilson https://toprightpartners.com/insights/20-transformational-quotes-on-change-management/

I’ll let you guess who’s proposed changes were within the Overton Window and whose changes were probably outside of it.

I think what Overton recognized about politics is probably reasonably applicable to business as well. All organizations have a political aspect to them. This is the personal and interpersonal side of things. Stakeholders have committed to a then acceptable and approved course of action. Significant change or movement away from that direction could cause a perceived loss face or position.

So, how can this change limiting window be moved or enlarged?

In politics, the answer is relatively simple: Elect someone else. If those in office refuse to accept that a new direction is needed because of whatever commitments and ties they have to the current direction (or whichever special interest group), replace them with someone new who’s views more closely align with the new direction or change that is desired.

Okay, so what do you do in business to expand an organization’s ability to change, since you can’t readily elect new business leaders?

Therein lies the issue. Organizations are not elected. They are put in place from the top down. CEO’s are selected in a closed environment by Boards of Directors. The CEO’s then surround themselves with executives that will support and enable their programs. This type of directional change then cascades in one form or another throughout the organization. On the other end of the organizational spectrum, managers likewise look for team members who will also support and enable their objectives and assignments.

With this sort of top-down approach to organizational structures it would appear that in order to affect a desired or needed change of any significant magnitude, you would have to make a change at least one to two levels above the desired change location in order to affect the Overton Window that is limiting the desired change. Normally, as a matter of course, changes of this type, or at this level do not occur easily in a business organization, unless the entire system, and its performance are under a great deal of stress, and by then, many times it is too late.

I think the concept of the Overton Window does a very good job of explaining why organizations talk so much about the need for change but seem significantly limited as to the size, type and amount of change that they can actually affect. As long as the existent organizational team and structure remain in place, change of any real magnitude will be very difficult when the topics and paths lie outside the window of acceptable discourse for the existing team.

While it may be desirable and sought after that change be made from “the bottom up”, this type of change can only really occur when the bottom of the structure, or in the political sense, the voter makes the change by electing someone else, and the management structure (those elected) listens to and responds to the mandate. In a business organization the mandate comes down from the executives, not up from the employees.

Change in any environment is difficult. I think the concept of the Overton Window goes a long way toward explaining why so many organizations say they want to or need to change but fail to make any significant or meaningful changes. It is usually not until the situation reaches a point where it becomes incumbent to replace specific organizational or business leaders with others, who may have a different window as to what is now the new and acceptable discourse on what and how to change.