The End of Maintenance

Service used to be a distinguishing characteristic for a company. You wanted to be known as a great service company. If you were good at it, service was also a pretty profitable way to augment both the top and bottom lines. But that was before customers figured out that they could make do with lower levels of service. Excellent service is now too expensive, and barely acceptable service has become good enough. There are many forces at work in the market, and I think they all point toward the end of maintenance as a viable service or business.

Almost all products come with some sort of maintenance agreement to start. It is normally referred to as the manufacturer’s warranty. This is the period of time after the purchase of the product that the manufacturer guarantees that the product will work. The length of this guarantee can vary and depends on several things.

The age of the technology involved, the stability of the market, the relative dominance of the consumer or the vendor in the market, and the speed with which new technologies or substitutable products are introduced, can all be factors effecting the length of the product guarantee.

Automobiles are a baseline technology that has been around for more than one hundred years. They may be becoming more complex, but their basic components still include engines, seats, wheels and the other basics. One manufacturer’s automobile is readily substitutable for another. Warranties on cars can now extend up to ten years. Manufacturers are now guaranteeing car operation for a decade. Research shows that few people actually own a specific car that long but the guarantee is there.

On the other end of the spectrum telephone companies used to require a twenty-year support guaranty from its suppliers for the products they purchased. It wasn’t initially expected that technology would change at the rate it has evolved to. High reliability and long product life cycles were the norm. Now the carriers can no longer pass along the cost of that type of product and its support to the consumers, so now much shorter product support guarantees are acceptable.

Apple has decided that the warranty on the iPhone will be one year. They have also decided that it is a limited warranty, meaning only certain service repairs will be covered, and that they may repair or replace a broken iPhone with potentially refurbished model or parts. They are Apple. If you want one of their iPhones this is what you get.

So, if the article is about maintenance, why am I spending so much time talking about warranty?

The answer is simple. Once your product comes off warranty you have basically two options for service: You can get a maintenance or extended warranty type contract, or you can hope that your product won’t break, and if it does break you can hope there will be someone out there that can fix it.

Or the third alternative will be that you can go out and buy another, or the next generation of product and then make use of the new product warranty.

I think it is safe to say that business used to be all about the best service possible. It then modified that perception and position by saying it was all about the best service at a reasonable price. It seems it is now more along the lines of the cheapest price for the lowest minimally acceptable service.

Products were engineered to the highest levels of reliability. They were not expected to break. When the product came off warranty customers were expected to purchase post warranty maintenance contracts, just in case something ever did go wrong, they would get the best support possible. Since the products were engineered so well, they didn’t break very often. Maintenance contracts were very profitable for most manufacturers.

It seems that something strange started to affect both ends of this arrangement. Manufacturers could not afford to make such reliable products in the new market. They didn’t have the time required to create them. And if they did, customers were not really interested in paying for them versus slightly less reliable, but much less expensive competitors.

There is a wireless carrier that has recognized this shift in preferences. They have a tag line that asks: “Our network reliability is within one percent of our competitor’s. Why would you pay them twice as much for only a one percent difference in reliability?”

On the other side of the relationship, customers decided that maybe reliability, while nice, wasn’t worth the premium they were paying for it. They started to examine their costs. One that obviously pops up is the high cost of maintenance. The drive started to reduce this cost.

Customers started looking a competitively provided maintenance solutions. Competitors realized that if products were reliable, they could sell maintenance cheaper than the manufacturer with relatively little risk, and still make money. In turn customers demanded that if the manufacturer was going to provide maintenance they would need to match or even better these competitive maintenance price levels.

The race to the bottom was now on.

The speed with which new products were introduced was increased. It would seem that the life cycle of products became ever shorter. Products were developed, introduced and then superseded by the next newer and improved version at an accelerated rate.

The reliability of new products diminished in accordance with the lower prices. As the life cycle, and more importantly the life expectancy of products reduced, they were no longer engineered to last a long time. It seems that they are now engineered to last only slightly longer than their warranty periods. After that, all bets are off.

Customers were more willing to accept reduced maintenance capabilities if they came at commensurately lower prices. It has often been said that we have evolved into a disposable society. What was once retained and repaired is now discarded and replaced. After all, with the new and improved version either already out, or on the cusp of availability, why would you want to repair the old one, when you can get the new one for close to, or possibly only slightly more than the repair price?

Why would you want to repair the old one, when you can get a new and improved one?

When a car comes off warranty it is six to ten years old. At this point in time it will be significantly depreciated in value. Chances are if it needs a repair it will be a significant investment verses the actual residual value of the older car. Probably better to get a new one.

When you buy your iPhone you get a year maintenance. Hopefully it will last just a little longer than that, but it doesn’t matter. The iPhone was released in 2007. There has been a new iteration of the iPhone released every year since then. And people line up every year in advance of the release to get some of the first new ones. Why would you want to fix your old iPhone when the cost of the repair represents a significant portion of the cost of just getting the next generational model?

This same approach is now finding its way into business as well. The demand for reduced maintenance costs by customers and the shorter product life cycles driven by competition are combining to eventually squeeze maintenance out of existence as a viable business for manufacturers.

It will probably become what would be called a “break – fix” type of environment. Customers will look for a warranty on a new product that is commensurate with its expected life cycle. They will probably have an extra one or two around as spares. If one breaks they will implement a spare and then do the cost benefit analysis of either getting the broken one repaired, or just buying a new one from the next generation of products.

It may take time for this apocalyptic vision of maintenance to come to pass, but I do think it is coming. The economics on both the vendor and consumer sides of the value equation are pushing it in this direction. Vendors won’t be able to afford the multiple generations of maintenance staff required by rapid product development and introduction. And customers will not be will to pay the costs of even reduced maintenance contracts if newer and more capable replacement products are rapidly and relatively inexpensively available.

I think we are heading to the point where the warranty and the life expectancy of a product are going to be very close to the same length. Any incremental life that can be squeezed out of any product beyond the warranty period will be looked at as an incremental unexpected benefit. Once the warranty expires, the break-watch will begin. If and when the product should happen to break (remember products will no longer be over engineered to last significant periods) the fix – replace decision will be made.

If it makes sense to repair it, it will be repaired. If it doesn’t make sense to repair it, it will be replaced. I just don’t think that we will see products continue to be under maintenance contracts in the future. Business probably needs to start planning for that eventuality now.

Future Jobs

This is a tough topic to tackle without sounding too trite or stale. But I now have children entering the job market and I have been continuing to do some networking with several people who are in a job search mode so it is on my mind. As usual I got to thinking about where to go and how to position for the jobs of the future. With the continual drive for cost reductions and all the talk about bringing certain jobs back on shore (as others continue to go off-shore), is there truly a way to future proof what you do for a living? I don’t know for sure, but as usual I do have a few thoughts on the topic.

It must be acknowledged and accepted that the rules of the game are changing. We must adapt or it probably will not end well. There will be those who will stubbornly hold out the hope for a return to the days when this country could manufacture and build its own products, and people could earn a living doing it. This was an ideal and golden time, but as we have all seen, there may be scattered exceptions, but by and large that economic structure has gone.

I think this was only the start. Almost every role that can be defined within an organization, can be subject to the same risk of off-shoring, out-sourcing, or whatever description you may choose to use for being moved to a cheaper labor oriented area. Production was moved off-shore because the labor was cheaper. The quality may not have been as good initially, but that can be and for the most part has been rectified. We all wanted the cheapest products possible, because they were good for the bottom line.

We have already seen instances where financial and accounting functions are being out-sourced and off-shored in the name of reducing costs. These are largely looked at as internal functions. They are usually associated with the overhead costs and functions, and as we know, everyone wants to reduce overhead. There are many people across the globe who are trained in the financial and accounting disciplines that perform these functions cheaper than they can be performed here.

We have already seen many instances where Research and Development, what was once a cornerstone of our growth engine, have been moved off-shore to lower cost countries. It seems that there are also many places with smart people who can write code and create products, with many of them working for significantly lower costs than here.

We have also seen the relocation and / or reduction of some of the Human Resource functions to other locations. Many of the repetitive steps associated with the simple recruiting and support functions can be and have been moved to lower cost countries. There has also been an explosive growth in the utilization of self-help and web portals as replacements for actual people.

Service and support is also similarly questionable. It is possible that this trend specifically associated with service may be reversing, but it is still highly probable that when you call for help or support on many products, your call is directed to an off-shore, low cost call center somewhere else in the world. People who predominantly talk on the phone as a function of their job, can have a phone to talk on in just about any low-cost country.

So, against this type of cost cutting and low cost country focus, what do we do for a living going forward?

I think for starters focus on one word: Customers.

The majority of business functions and disciplines that are at risk in being moved to low cost countries do not interface with customers.

Yes, I know that call centers and service have moved off shore and they deal with customers. And again, by and large customers don’t like it. It has been surveyed and noted as a major customer dissatisfier when it comes to support from vendors. And if given a choice almost every customer would prefer to deal with someone in their own time zone and their own country when it comes to support.

As I said, companies are recognizing what their customers want and this trend may be slowing, if not reversing as some of these service related positions return on-shore.

One of the inviolate axioms of business to business commerce is that “People buy from People”. It used to be the same for business to consumer commerce, but the internet seems to be changing that for commodity type transactions. I’ll get to that part a little bit later.

Selling will always be a function that requires direct customer interface. It will also invariably require face to face exchanges between the seller and the customer. In short, it cannot be off-shored easily, if at all.

As we continue to evolve to a service oriented economy, and as products continue to become more and more complex as well as more commoditized and interchangeable, having people who have the ability communicate specific value propositions, and more importantly be able to sell those value propositions in the new economy will be at a premium.

On the reverse side of the selling to customers, will be the implementation of the complex products and services that have been sold. It doesn’t matter if it is a good or service that has been sold. This brings us to the operations team. The reality is that most customers will not accept a “Do It Yourself” approach to the implementation of the good or service that they have purchased. They are usually going to want the company that sells it, to also be the one that puts it in.

Again, the direct customer interface from the operations team on the implementation of the customer’s purchase will be a key to that customer’s satisfaction, and potential future purchases. It can’t be off-shored and it can’t be minimized in its importance. The best product in the world can be sold, but if it is not implemented well, the customer will not be satisfied. This will be the case with both product and service implementations. Having good customer interfacing operations teams will also be a non-negotiable requirement for the future.

I have looked at specific individual customer interfacing roles up to this point, but what about broader multiple customer roles, such as Marketing?

For the most part in the past I have considered marketing an overhead function with a two-drink minimum. This is said with just a little tongue in cheek. However, if we note that individual customer interfaces are important then it is not too far a leap to expect that individual markets are important as well. Even though there is much written about the “global” economy, I don’t think that goods and services can be positioned and marketed the same way in Canada as they are in Brazil.

No one in Brazil will know what a Tuque is, and I have met very few in Canada who understand the importance of a good Caipirinha. Expecting one marketing approach to work in both regions will probably not be a good recipe for success. I do not think there will be a good or reasonable substitute for local market knowledge, cultural awareness, presence and positioning.

I suppose that the same could be said about lawyers and the specific legal requirements of each market. However, the less said about lawyers, the happier I find myself to be.

So where does that leave the organizational and business jobs of the future?

I think that it will be those outward facing, and customer interfacing roles that will be the jobs of the future. I don’t believe that customers will stand for the out-sourcing and off-shoring of them. It is the personal relationships and the trust that is built by direct customer interface that is the basis of a successful business relationship. There may come a time where that changes, but that may be in the “next” generation of business.

That means that the internal facing business and organizational roles are at risk as a function the eternal drive for lower costs. Accounting, Finance, HR (some of the functions), Research and Development and Production / Manufacturing, all to one level of success or another can be and have been sent to lower cost countries.

What is also interesting to me is that historically a little more than forty percent of CEOs that are hired come out of the finance discipline. In good times this number percentage goes down as growth is a focus and in tougher times it goes up as the bottom line takes on even greater importance. Many others come from the accounting and engineering functions as well. My point is, as many of these internal accounting, finance and engineering functions get out-sourced, where will the future leaders come from?

If these entry level (and other) types of roles and positions are sent elsewhere, where will the future leaders get their starts. It is in these roles that we learn and gain experience. If the roles aren’t there to provide the experience and jumping off points, are companies also off-shoring the development structures that the future leaders have used to get started?

This could mean that in due time, future leaders would predominantly come from those countries that the jobs were off-shored to.

The Illusion of Choice

I find it rather interesting that I read a many different articles and books from many different sources, that become the genesis of many of my own articles. This fact isn’t really that interesting, unless you consider it interesting that I read things that consist of more than one hundred and forty characters, require a certain amount grammar and literacy capability, and don’t use emojis to convey how the author feels about the topic they are covering. What is probably a little more interesting is that I like to write about business, sales and leadership, and that I rarely find the inspiration for my articles in literary sources that are purporting to be specifically about business, sales and leadership. I seem to find my thought applications from other sources that resonate at a little more elemental and hopefully timeless level.

Such is the case today.

By and large I have found most business articles to be somewhat bland and derivative of other previously written sources. They are also somewhat ephemeral and short lived. There was “The One Minute Manager” and then “The Fifty-Nine Second Employee”. Really. They all seem to be related to the idea of “get rich” or “get successful” quick sort of scheme. After all, if someone actually wrote the definitive text for how to successfully run a business or organization and get rich and successful quick, what would all the other authors have to write about?

Some of my preferred sources can go back hundreds or even thousands of years. I think I have mentioned “The Art of War” by Sun Tzu, “The Prince” by Machiavelli, “The Book of Five Rings” by Musashi and the “The Art of Worldly Wisdom” by Gracion on multiple occasions. Fortunately, my inspiration today was not from these sources, although, come to think of it some of what Sun Tzu said could apply…. I’ll leave it to those that have read both sources to comment.

Today my ideas sprung from a few words by the man who was the coach of the team that lost, yes lost, the last national collegiate championship game for American football this year. For those of you that missed it, it was on TV. I bet you can find it on YouTube. Clemson scored on the last play of the game to defeat Alabama. (I make sure to define it as American football, as I do have friends in the rest of the world where “football” is something entirely different. It is what we in the states would call “soccer”. I don’t know why.)

You would think that there would be far more to learn from the Clemson coach, the winner of the championship, than from the Alabama coach, the man whose team lost it. After all, it was an upset. Alabama was favored and was supposed to win, and it fact, almost did. There may be much to learn from the Clemson coach, but those lessons may not apply to business, sales and leadership as well as what the leader of the Alabama team had to say. At least for me in this instance.

Coach Nick Saban, of the University of Alabama has enjoyed sustained success in his field, the likes of which has probably not been seen in decades. He is successful. He has already won a total of five national championships (across 2 different schools) and is annually expected to be a contender for the next championship playoff. He is the example and standard of what every other coach, school and leader wants to be and do.

But he still lost, last year.

When he was asked what he is going to change, and how much he was going to do different next year in order to win the championship, he responded with what can best be described as an old school response.

He said that he understood all the new offenses, defenses, systems and processes that are out there, but that he was not going to overhaul a system just because he had lost in this year’s championship game. He came in second out of three hundred and seventy-five schools, which when thought of in that way, wasn’t really too bad. Yes, the loss hurt, but there are literally hundreds of other schools and coaches that would have wanted to be there in his place. He understood what it took to get there, and he also understood what it would take to get back next year.

It was at this point that he made the comments that resonated so strongly with me. He discussed that having learned what it took to be successful, he learned that there are no short cuts. He referred to it as “the illusion of choice”. He said that so many people want to make the easy decision, or take the supposed easier road to success. A new process, or a new system were the quick cure. He said this was an illusion. If you wanted to be successful (in his profession) there really were no choices.

It required the recruiting of the best talent available. Alabama’s recruiting classes of new freshmen out of high school are routinely viewed as some of the best in the country. Think about the fact that every three to four years, he (like every other college football coach) has close to one hundred percent turnover of his team. But every year he contends for a championship.

It requires a work ethic that is second to none on his part, and it has to be transferred and translated to the rest of his staff and the players on the team. There can be no illusion that talent is enough. It takes hard work and dedication. There is a base line process and preparation that needs to be adhered to.

Many have heard me discuss my aversion to the perceived over-utilization of process that seems to be plaguing businesses today. Yet here I am praising it. Here process is used to prepare the team. They have practiced and been trained on how each individual need to prepare, perform and act as part of the greater team. A process is not used during the game or against the competition. If so the competition would quickly adapt and defeat it. There is a game-plan, but not a game process.

He assembled the best staff possible, that he vested with the authority to get things done and that he held accountable for those various aspects of the team (Offense, Defense, Special Teams, etc.) he had assigned. However he only held himself responsible for the outcome. He never blamed anyone else. It was his responsibility.

It was this litany of decidedly unglamorous basics that he pointed out were responsible for getting him and his teams (multiple, different teams) to arguably the acme of his profession. He pointed out and reiterated that there really was not choice if you wanted to be successful. It took talent, it took outworking the competition, it took everybody’s commitment and buy-in for the team succeed. There were no “get rich” or “get successful” quick schemes.

That didn’t mean that he wouldn’t change and adapt. He is also recognized as one of the best leaders at innovating and modifying his game plans when his team’s talent, or the competition called for it. He has noted that the basics of the game have not changed, but how you apply them can vary greatly in each situation.

As I noted, by design his team membership turns over every four years. He also turns over his leadership (coaching) staff with significant regularity. His assistant coaches are in high demand to become the leaders at competing college programs because of their success and what they have learned. No less than seventeen of his assistants have gone on to lead their own programs.

It looks like the players are not the only ones that are mentored, taught and become leaders.

Sun Tzu, from almost twenty-five hundred years ago, also talks about talent selection, training and preparation as immutable keys to an organization’s success. He is also quick to point out that flexibility and the ability to adapt to new and different situations, and to be able to take advantage of them while either in or on the field are also the keys to success.

It looks like the idea of putting well trained teams in the field and letting their leaders lead them is in fact an idea that has been around for over two millennia. It sounds to me like Nick Saban may be right when he says that if you want to be successful, and enjoy a sustained success, it really is an illusion of choice. While a new process or system may come into vogue, success is really built on the basics of talent, hard work, and planning, and then letting your leaders lead, and not relying on the illusion that some other process or system can be a substitute for one of those basic building blocks of success.

Organizational Chemotherapy

One of the most hackneyed, trite and stale topics to talk about in business is change. Of course that is all the more reason for me to talk about it. We all know we need to change. This is a given. I do not think there is one person out there that could not identify something associated with their occupation, or some aspect of what they do, that needs to be changed. If that is truly the case, I think the greater question associated with change is not what to change, but how and when to change it.

I recently read an article which featured a discussion with Mark Cuban, the owner of the Dallas Mavericks NBA basketball team and erstwhile member of the board on the television show “Shark Tank”. I am neither a particular fan of the Mavericks (I prefer the Dallas Stars hockey team), nor do I watch the Shark Tank, but I was intrigued by the article. Mark Cuban is known for speaking his mind quite often, or at least he appears to speak his mind quite often based on the media coverage he receives, and upon first blush this particular article didn’t seem to be any more important than any of the other myriad of times that he has chosen to speak up.

I guess I speak up quite often too, but since I neither own a professional sports franchise, or appear regularly on TV, there are not nearly as many media articles that cover what I have to say or write. Therefore, I seem to have to write my own.

I guess having a couple billion dollars can influence the media’s opinion of you. Go figure.

Mark Cuban, while appearing on CNN’s “New Day,” morning infotainment, talk show and celebrity-fest referred to President Donald Trump as “political chemotherapy” for the system. He then went on to explain the genesis of the term was from one of his “smart friends” who said:

“Mark, I’ve voted for politicians my entire life. Do you know what the definition of insanity is? Doing the same thing over and over and expecting different results. So I voted for Donald Trump. Is he poisonous in a lot of respects? Yeah, this is out chemotherapy. We hope he’s going to change the political system. And if that’s the way you’re evaluating Donald Trump, he’s doing a phenomenal job.” (

I am in no way or form going to get into any discussions regarding politics or the relative values, or lack of values of any politician. I am merely interested in the term “political chemotherapy”.

Using this example, I would extend Cuban’s example to the professional environment in that when an organization or business continues to do the same thing and apply the same process over and over again, and does not seem capable of doing anything else, but continues on hoping for a different result, it would seem that it would also become time for what I would call organizational chemotherapy.

And indeed, we often see that this as the case when it is finally recognized that there is a need for a change of direction within the organizational system. This change usually comes in the form of a new business or business unit leader, usually from outside of the stricken organization, who is brought in. Since they are not beholden to, or vested in the existing processes or structures, it is their role and responsibility to be the change agent, much like chemotherapy, that changes the way the existing business system is operating.

I do not seek to minimize or reduce the hardship that people must go through when they are forced to endure chemotherapy. Everyone I have spoken to who has gone through it, and everything I have read about it indicates that it is as an unpleasant process to endure as can be imagined. Having to ingest a proscribed list of toxic and poisonous chemicals into one’s system on a regular basis for the purpose of eradicating items that if left unchecked will destroy the system, cannot be thought of in any sort of lighter terms.

I am however interested in the analogy that was drawn by Mark Cuban’s friend to the political process, and the similar analogy that can be drawn to the business process and organization.

It seems in both the political system, as well as in the business system, it sometimes takes the injection, or introduction of something that can best be described as a known toxin into the system to get the system to change. This usually occurs when it is recognized that if left unchecked the system can become, or may have already become somewhat compromised, and are unable to correct themselves. The inertia of the organizational and business process in these cases, once compromised are almost impossible to correct from inside the system.

Almost all business systems are risk averse. It doesn’t matter what the organization says. It doesn’t matter if the organization claims a culture that rewards risk. Almost all business processes are created to reduce risk. And one of the greatest perceived risks to business is change.

Change in business requires the system to do something it hasn’t done before. It can be small or it can be large. Regardless, it will be resisted. Over time the resistance to change will become ingrained into the system. The resistance to change can almost become a process unto itself. This point is usually achieved when the stakeholders in the status quo structures and processes have neither the authority or inclination to “buck the system”.

The perception in the organization evolves that the return for the risk of challenging the system is lower than the potential penalty for the continued less that optimal performance under the current methodologies.

This is the point in time for the organization, when it will probably take nothing less than business chemotherapy to force the system to change. There will probably be both good and bad effects associated with it. A stable if underperforming system will become at least temporarily unstable. There will be uncertainty and risk for the members of the organization as they must change what they do and adapt to the changes being imposed, or face exiting the system as part of the corrective solution.

One of the side effects of organizational chemotherapy is that like its sourcing namesake, it doesn’t specifically correct the system. It is actually designed to remove something that is detrimental to the system. While similar, they are in fact two distinctly different actions. It hopefully allows the treated system to return to its normal, more healthy performance level.

I think we have all seen high profile instances of organizational chemotherapy. I have actually lived through one, where a CEO was brought in specifically to change and remove a “good old boy” culture that was hampering the growth and evolution of the organization. It seemed he was successful beyond even the board of director’s expectations in that he seemed to alienate everyone including the board that hired him, and he genuinely seemed to enjoy those aspects of his role.

The issue was that once the culture had changed, there was not a new beneficial system and process available to put in place to replace the old one. The CEO knew how to remove what was unwanted, but did not know how to replace it with what was desired. The company began to falter and performance began to fail. The board then had to step in again and replace the chemotherapy agent with a new CEO who rapidly built back up a new culture based on merit and performance. The company then took off.

The progression was one of starting with an organizational system where performance was secondary to “who you knew” or were politically aligned with; to one where it was essentially toxic to be associated with the old system and regime, but again where performance was secondary; to one where performance and merit were moved to the forefront.

It took approximately three years from when the chemotherapy CEO was installed to when he was replaced. And this represented three distinct organizational systems and processes. It was also interesting that as the solution to the first cultural problem, he only knew how to remove the problem. He did not have the capability to implement the desired final solution for the organization. He focused on his strength which was to remove the undesirable aspects of the original organization. It took someone else with a different skill set to rebuild the new system.

Organizations have a tendency to want to drift into comfortable, known and reduced risk structures and processes. It takes careful stewardship and an eye on the future by the organizational leader to continue to drive a balance between acceptable risk, challenge and new directions, and the continued implementation of risk reducing processes and decisions.

Regardless of how hard an organization tries, it continues to be exceedingly difficult to violate or even change the Risk-Return economic equation. As an organization constrains itself with the drive to reduce risk, it also by necessity also reduces its related opportunity for gaining an acceptable return. Invariably the solution to this issue is for the organization to try and implement even more of the constraining systems and processes to address the new issues, which in turn creates even more organizational drag.

At some point it becomes apparent that a chemotherapy type solution will be required to change the self-defeating process constraints. As shown in the above example, organizational chemotherapy may solve the current problem, but it needs to be closely monitored, because correcting the current set of problems is in many instances not the same as creating the desired final solution and system.