All posts by Steve

The Causality Event

Technology marches ever forward. I understand that this statement is trite, but it is reasonably accurate none the less. One of the best examples of this is shown in Moore’s Law: “Moore’s Law states that we can expect the speed and capability of our computers to increase every couple of years, and we will pay less for them.” https://www.investopedia.com/terms/m/mooreslaw.asp We have also seen that just because a new technology or service exists, doesn’t mean it will be successful, or even accepted by its target market. A great example of this phenomenon can be seen with 8-Track and Betamax tapes.

Not everyone can have the brilliance of a Steve Jobs and create brand new markets just for their new technologies, such as the iPod. Many have tried. Most have not been successful at it. Something else needs to occur. Just like the oil embargo of the early 1970’s was the turning point for driving the demand for fuel efficient cars – a technology that had existed for some time – there usually needs to be some sort of a causality event that drives the uptake of new technology and service based products.

And boy oh boy, have we just gone through one of the largest causality events in recent history. Or maybe even in not so recent history. And we are not entirely through it yet. But I think you know what I mean.

Businesses are continually looking for ways to enhance their productivity, improve their culture, retain top employees, etc. etc. etc… The list goes on and on. Just when they think they may be on to something, a new idea or methodology evolves, seems to work well in some market, and the race is on to try and adapt it to other companies, markets and applications. The business decides which of these enhancements they will implement in the ongoing effort to increase sales, increase margins, reduce costs, and improve employee satisfaction.

The same process applies to the products and services that they produce. Products are designed and developed in anticipation of what the market will want or even possibly need. The difference here is that the business does not normally get to decide which products will be accepted by the market and sold to customers. The market does. And there is usually some sort event, or occurrence that directly affects this decision.

Sometimes it is great advertising. Don’t underestimate the ability to convince people that they want something. “Don’t sell the steak. Sell the sizzle” is a well-known sales phrase. This sales phrase was coined by Elmer Wheeler in the mid-1920s. It urged salespeople to focus on the experience around a product being sold rather than simply on the object itself.

And that is exactly what we all are going though: A multigenerational experience, which is another name for a causality event.

It is the type of event that will end many services, practices and products, as we know them, but it will also open the door for the introduction and acceptance of many new or existing products, services and practices that may not have enjoyed a desired level of acceptance prior to its occurrence.

In the 1980’s the term “cocooning” emerged. “Cocooning is staying inside one’s home, insulated from perceived danger, instead of going out. The term was coined in 1981 by Faith Popcorn, a trend forecaster and marketing consultant. It is used in social science, marketing, parenting, economic forecasting, self-help, religion, and has become part of standard English as defined by multiple dictionaries.” https://en.wikipedia.org/wiki/Cocooning_(behaviour)

Cocooning was a desire for a “cozy” location to retreat to. There were several articles talking about the virtues and detriments to society because of it. People like to point to the rise of the Barcalounger as a symbol of cocooning. Now we are told to cocoon for our own safety. Going out now entails a new risk.

Sport was viewed as an entertainment and escape, on all continents of the world. It was nothing to go out and sit shoulder to shoulder with tens of thousands of others to watch an event. Now they are all shut down with only the possibility of games and events resuming in the near future, and even then, with no fans in attendance.

Changing topics here, it is apparent that “content”, especially as it pertains to entertainment will continue to grow in importance as the cocooning associated with the health situation grows. Delivery methods and technology will also grow in importance. This could provide the needed causality events that new high-speed and mobile communication technologies were looking for to help their business cases and rapid adoptions.

We have seen the rise in security “checkpoints” at the entries to strategic or populated areas. We no longer think much of going through security at the airport. It has become common place to go through similar checkpoints when entering arenas and stadiums. We are also seeing the push and rise of similar functions at our schools. This is all being done in the name of safety.

The current causality event will just add another item to the current security checklist. In areas where people congregate, just as there is now a “weapon” checkpoint, there will eventually also be a “health” checkpoint. Just as you have had to empty your pockets and walk through the scanner at many of these selected locations, so will you in the future have to have your temperature checked to see if you are “safe” to enter. Just as you were not allowed to bring certain proscribed items into a location, now you will also not be allowed to bring in your germs.

This will be more far reaching than just the airports and stadiums. Businesses will also need to adapt. It was not uncommon to see the “dress code” for a restaurant (no shirt, no shoes, no service, was one of the first). But now stores may require more than shirts and shoes of their patrons. You may not be able to enter without a face mask.

It is stated that the current accepted prognosis is that a person may be asymptomatic for up to two weeks prior to exhibiting signs of the illness. So, even if someone passes the thermal check at the entrance to an airplane, wouldn’t you feel a little more comfortable if they (and you) were compelled to wear a face mask for the next several hours as you sit shoulder to shoulder in the interior sealed environment of an airplane?

In a round about way this also brings us to business. For some time, business has been drifting into two seemingly opposite directions. On one hand there has been a continual migration toward the “virtual” office. Teams are now located in separate and remote locations and communicate in a variety of manners to accommodate this structure. With the continued growth of cocooning in the face of the health fears, working at home will continue to grow.

On the other hand, business has begun (re)-recognizing the value of working together and collaboration. To this point we have seen the growth of “open” office environments where offices are designed to bring people into closer contact in an effort to both reduce office size and cost, as well as drive up the collaboration effect.

It seems that the shared office environment will run entirely contrary to the “social-distancing” and health conscious desires and directives that we are now all told to adhere to. Businesses will now need to shoulder the new incremental concern regarding their employee’s health.

Just as badge entries and secure locations have evolved to protect employees from unwanted entries into the work space, so will business need to (re)-adapt their work spaces to be more germ secure / resistant, and also to foster an environment that will not be so conducive to the spread of any germ or virus that may enter.

Could masks become a requirement for entry to work? Will businesses also require a health checkpoint (such as the simple taking of an individual’s temperature) before they are allowed entry? What sort of liabilities regarding the requirement to provide a safe and healthy work environment are businesses going to face?

What is yet to be seen are the next level of changes. What happens when so many people stay home to work that there are no more rush hours, or that they are significantly reduced? Will our insurance rates go down because we are not driving as much? Will we still need to build and expand our roads? With distance and remote learning will we still need to build as many schools?

There are a great many changes that will occur to other businesses due to the changes in behavior for both individuals, and the companies that they work for, as a result of the current health issues. I think we can see many of the changes that are directly related to the causality event. I think it will be the secondary changes that occur as a result of these direct responses to the causality event that may have the greatest impact on both business and society.

It’s Not Going Back

We are now something like four weeks into our self-quarantining process. The most fortunate of us have been able to maintain our jobs and work from home. Many in this position (myself included) had already moved our officing arrangement to our homes, for a variety of reasons. This quarantining event has driven this migration faster and further than was ever predicted. We have learned many things as wait and hope that things get back to what we remember as normal. I think one of the things that we need to accept and learn, is that things are not going to go back to what they were.

We all know that organizations learn and change at a dynamic pace. We have seen the entire education system within the United states pivot and change from an “in-person” mandatory attendance structure to an online, real time distance learning structure, in a matter of days as the quarantine hit. There were no longer issues associated with transporting students to schools. There were no longer issues associated with safety while at schools. The quarantine necessitated the change and it occurred.

It was not without it issues. Students may not have had access to the required technologies, platforms, and networks that they need for the new education and learning model. These issues are still being worked in many places. The point is, that it seems to be working. Children are being taught and learning in their homes. This is the objective of education.

There are complaints that some are not getting the meals and subsequent nutrition that they were provided at school. This is a different issue, distinct and apart from education. It was found that it was convenient to provide for basic nutritional needs for children while at school. Schools were not created so that children could be fed. They were created so that children could learn and be taught.

There is no doubt that child nutrition will continue to need to be addressed. In the future it will need to be addressed outside of school, as this location may no longer be the convenient focal point that it once was, due to distance learning. This demonstrates the interconnectedness of our structures. While one issue is resolved (education), another comes to the forefront (child nutrition).

Similar fundamental shifts are likely to occur in business as well. Customer contact has been demonstrated as the key to all business relationships and has been seen as the fundamental building block of the sales process. During this period, we are however seeing business carrying on and being conducted without this direct customer contact. We are seeing it in the time of the quarantine because it is necessary if operations are to continue.

Business has learned that those meetings that were once thought of as mandatory face to face, can now be conducted virtually with video conferencing techniques. This includes almost all internal organizational meetings but has also proven to be applicable to customer facing meetings.

It is expected that the “social distancing” guidelines that we should all be aware of at this point, will continue to be in place for many months as the quarantining phase of the situation begins to alleviate, and people begin to interact in the new world. Just because the “stay at home” directives are lifted, does not mean that contagion associated with closer social interactions are removed.

Sitting shoulder to shoulder in closed environments such as airplanes, buses and elevators will continue to be seen as a potential health issue. The idea of “open office” environments where space is removed and proximity to others is increased will also be seen as a potential health issue. Customers and vendors alike will be dealing with these new realities associated with where and how they conduct business.

If it has been shown that business can be conducted successfully in a virtual or remote manner, why would business want to go back to the way it was? Do they need to pay for expensive travel in the future, knowing that virtual and video now works as well? Do they want to risk the possible health issues associated with requiring closer than prescribed social distances and contact within their office environments? If business has proven that it can do without something such as travel, and the increased expenses associated with it, why would they go back to the previous arrangement or behavior?

The new normal will be different from the pre-quarantine normal. Where work at home was almost a personal decision, it will become almost a de facto standard as people who have now been told to work at home will most likely be told to stay there. As people stay at home and work, corporate facilities, and the expenses associated with them will be able to continue to be reduced.

The new normal will reduce traffic on roads and reduce the expenses (gas, tolls, etc.) associated with commuting. People will not be driving as much, and the traffic associated with “rush hour” will be reduced. The lost time associated with the commute can be better used toward more productive topics.

I think we have been party to a fundamental shift in business and society in general due to the quarantine. Many futurists warned about the possibility of “cocooning” in our homes as our ability to work and entertain ourselves in our home increased. Who would have thought that we would now be encouraged to cocoon in our homes for our own safety, and then learn the incremental benefits associated with it as the requirement is reduced?

The knock-on effects of the changes will be many. If you are not commuting, your automobile insurance requirements should be reduced. If you can buy anything you want on the web and have it delivered as quickly as the same day, why would you travel and go shop? If you are not driving as much, will you need or want a new car as often? With all the video on demand availabilities, will the entertainment networks as we have known them remain the same?

Business will also not go back to the way it was. Once it has been shown that business can be successfully conducted in the video based virtual world, the savings, and new opportunities that it presents are too great for business to ignore. Business travel will be significantly reduced, especially for internal meetings. Customers and vendors will also learn what many of the next generations have learned, that relationships can in fact be created online. Face time with the customer will become just that, face time.

Not to sound too trite, but the world has changed. Those that are waiting for the “all clear” so that things can get back to the way they were are going to be somewhat disappointed. The old social norms are probably not going to be coming back, at least in the forms that they were. The same should be expected of the business norms. We have had a very abrupt, global change to both our societal and professional environments.

Just because it appears as though some of these forced restrictions are starting to be relaxed does not mean that things are going to go back to the way they were on either front. It should be expected that once something is learned, for whatever reason, the “standard” going forward will also change. It is probably another curve worth thinking about and trying to get ahead of.

Deadlines

We live in a deadline-oriented world. There can be little question about that as we are hit with that fact since well before we are born. While it may be your “birth-day”, prior to that it was your mother’s “due-date”. When we have talked in the past about the three basic resources, Time, Money and People, it is only Time that we can not get more of. Throughout our lives and careers, we are given targets and times that we are challenged to hit. We are then measured, reviewed, graded, etc. on how we did and then progress accordingly. Or at least that used to be the case. Has it really changed?

As is typically the case, I read an article that got me thinking. This one was by Jessica Hartogs, an Editor at LinkedIn, titled: “Workforce Less Forgiving than School” (https://www.linkedin.com/feed/news/workforce-less-forgiving-than-school-4509203/). It was a very short blurb where she cited a Wall Street Journal article titled: “Young Workers Seek Mental Health Accommodations, Employers Try to Keep Up” (https://www.wsj.com/articles/managing-mental-health-at-work-is-a-juggle-of-rights-and-realities-11581523201?mod=business_lead_pos5).

As you might guess the gist of the topic is that we as a society are making progress with coming to grips with mental heath issues associated with our members. We all understand and try to make accommodations for mental and emotional disabilities, just as we do for physical ones. This is obviously done with varying levels of focus, and success. We have seen this with the evolutions and accommodations that have occurred in our institutions of learning.

Students with these types of disabilities and disadvantages are given the accommodations of extra support, extra time, etc., when it comes to delivering their assignments or taking their exams. I don’t think there is anyone who could or would argue with these accommodations for these students to assist them in their studies.

Now let’s shift to business and organizational environment. Here again we will find a situation where deadlines and demands will be placed on all participants. However, most of these deadlines and demands are usually created as a result of an interaction or demand by a customer, or some other external entity. I think we all understand and agree that when dealing with a customer, we will usually find ourselves in a “competitive” situation. When we are dealing with a customer-imposed deadline, there is usually little that can be done in the way of addressing accommodations.

This is just one example. Marketing programs have launch dates where everything must be in place before they can go live. Finance and accounting have rules, some of which may be mandated by regulation, where books must be closed, and reports issued by certain dates or time intervals. The list can go on and on.

The point here is, are we putting businesses into a no-win situation when it comes to providing accommodations for these disabled / disadvantaged individuals?

I am by no means qualified to make any judgements as to what or how any such accommodations should be put in place. I will say however that in the global competitive environment there are many competitors that are not even contemplating making any such accommodations. They are in the competitive environment and are subscribing to the adage “the early bird gets the worm”.

They have recognized that rightly or wrongly, customers will accord some advantage to those that are first on the scene and able to deliver on their requirements. This is part of the “Fast, Good, Cheap” trio of criteria in the customer decision making process. The usual addendum to this trio of criteria is that you can only “Choose Two”.

I have written in the past of how the importance of “Good” has fallen over the past while. We are in a disposable environment for both consumer and business purchases. “Good” now no longer seems to carry the weight that it once did. All quality levels are viewed as somewhat the same and are viewed more in the context of what is paid for them. We seem to now expect Superior / Good / Quality as table stakes for even playing, and will only pay more for it for our “luxury” purchases, and even then only when we are truly looking for and willing to pay for it.

This leaves fast and cheap as the primary customer decision criteria. How cheap is it, and how fast can the customer get it? No business wants to ask for extensions or miss any deadlines when it comes to dealing with customers. What’s more most customers do not well tolerate vendors who either cannot or do not meet their desired deadlines. I think that we all can agree that businesses that are slower to meet customer deadlines and demands will be at a competitive disadvantage.

It is against this backdrop that we seem to be requesting some businesses to make accommodations for those with disabilities and disadvantages, for the one item that up to now customers seem to have been unwilling to grant them, more time.

While it may be reasonable to make special accommodations for those with these types of disabilities and disadvantages in the university environment, where all members will be equally governed by the same accommodation rules (by the university representatives and professors), it may be entirely something else when the same accommodations are expected to be implemented in the open market environment where all do not have to play by the same rules, and the ultimate arbiter, the customer, gets to make their decisions based on the criteria of their choosing, which are usually price and speed.

This is a topic that I really don’t have an answer for. I believe we all wish to be socially conscious, but at what price? It is also obvious that we also live in a global, ever more competitive business environment. I have only touched on the competitive issues and disadvantages that could arise in certain situations. Many companies find themselves on the global stage competing against other organizations that may not have as strong a sense of social responsibility.

And all are dealing with customers who for the most part do not bring social consciousness or social responsibility into their decision-making criteria. They are dealing with customers who again, for the most part are concerned about their financial bottom lines, either corporate or personal.

It seems that adapting the rules of competition to accommodate those with disabilities and disadvantages can only work well, when everybody abides by the same accommodation rules and criteria. When it is attempted to be implemented unilaterally in an uncontrolled competitive environment, it would seem that it only passes the disadvantages along to those that make the accommodations.

While the article that got me started on this may have been titled “Workforce less forgiving than School”, it may be better stated that when it comes to deadlines and demands, customers are the least forgiving of all.

The Reckoning

For just about as long I can remember I have heard that what you have learned, and what you know, and your experience are valuable. They are the tools of your trade in the knowledge-based businesses and economies. And to some extent I think this idea may still apply, at least in part. I think that there will always be a need and desire for intelligent people in the businesses of today and in the future. One of the best accepted ways to demonstrate intelligence is through the attainment of a college degree. This may or may not actually demonstrate the intelligence level, but it is the now somewhat de-facto threshold for employment in the technology and knowledge-based economy. However, I think that now more than ever before, where you live is going to be one of the key driving factors to your employability.

This is particularly the case for the larger companies and organizations. I am sure that there are those that are reading this and are thinking: “What is he talking about? The rise of virtual offices, and working at home, and so on and so forth, have removed location from the context of the employment equation.” (That employment equation being the value that you generate for the company needs to be perceived as greater than the fully loaded cost of your employment by the company.) Please bear with me, as I think you may be thinking too small, as the true effects of globalization start to take effect in areas other than factory production.

As usual, there was a genesis for this direction of thought. It came in the form of an article by Erin Fuchs, Deputy Managing Editor at Yahoo Finance, titled “Why Wages Aren’t Rising Faster”. (https://www.yahoo.com/finance/news/why-wages-arent-rising-faster-192629608.html). In the article he examines why, in a period of historically low unemployment, what amounts to the usual economic model of high demand for labor versus a stable supply has not resulted in higher wages, as the model would predict.

He points out three things that are occurring that are holding wages down. The first element he points out is that the data now indicates that there is no longer a growth in employee productivity occurring. I don’t know if this is due the virtualization of the office and the accompanying loss of “synergy”, or if the process driven structure of organizations is starting to reach an asymptotic limit. What it does mean is that growth now will be linearly linked to the number of people doing the same type of work. Sort of like that factory production line model, and I think we all know what eventually happened to the factory production line job. I’ll come back to this idea in a minute.

The second element was the “…misleading nature of average wage growth figures…”. I take this as a direct reference to Mark Twain, who is credited with saying: “There are three kinds of lies: lies, damned lies, and statistics.” Simply put, this means that one Bill Gates retiring from the workforce can and will offset many of the lower paid positions’ wage gains that might for example affect the food service industry. This is also an interesting topic that I’ll revisit.

The third piece to the wage stagnation puzzle was the ability for companies to opt to hire overseas, in lower-cost countries, instead of paying the higher wages being demanded in the higher-cost countries.

This seems to me to be the element that ties the previous two items together.

If you are working at home, in a higher cost country, why can’t someone else do the same work at home in a lower cost country. As we noted earlier, we have removed the distance issue from the virtual organization. So, while it may not have mattered where in the country you lived in performing your job, it now seems to matter to a much larger level, what country you live in when performing your job.

When the employee productivity curve starts to flatten out, as it appears to be doing, the only way to continue to show business improvement is to reduce the cost of each of the linearly added employees. Processes that have more and more finely defined employee functions can now be applied to less costly employees in lower cost countries. Any quality or productivity issues can be absorbed in the overall value of the resulting total cost reduction.

I think we are already seeing the start of this approach to business. Those disciplines that do not require direct customer or market interfaces are already moving out of the expensive higher-cost countries. Production and manufacturing were the first to go. Research and Development were not too far behind. Don’t confuse the spark of creativity with the work associated with developing a product from it. Soon Human Resources, Finance and Accounting followed. These were also essentially well defined, repeatable functions with well-defined processes and procedures.

This essentially left Sales (a direct customer interfacing function), marketing (a culturally dependent function) and operations (the customer delivery function) as the only mandatory functions that need to remain in a high cost country (or any country for that matter). Any other corporate function, or support function could and would be moved as soon as it made economic sense to the organization.

In the past it was argued that when the average wage rates increased, it was the more highly educated that benefited as opposed to those in the lower paid roles and positions. It now seems that the fruits of this type of environment have also sown the seeds of the issue that is now faced. It is now the higher cost, well-educated roles that are being lost to lower-cost countries, while the lower waged roles are now benefiting from the new laws aimed at increasing the minimum wage.

The interesting dichotomy here is that while the government may be imposing a new, elevated floor to the wage pool in the form of an increased minimum wage, businesses are in the process of imposing a de-facto ceiling or upper limit on what wages they are willing to pay in the same market. So, while the minimum wage may be rising in the strong employment market, the group that had benefited the most from strong labor markets, the educated and experienced, are now losing ground.

This has created an interesting situation and some even more interesting trends. Highly educated, highly experienced, and highly paid people are being shed by larger organizations as the company looks to continue to show bottom line growth. This availability of talent is seeing their market opportunity change. They can bring their benefits to smaller organizations, but at usually smaller wages as that specific type of labor supply increases. This is indeed what has been seen in many instances.

Or they can move more toward the “Gig Economy” where there seems to be growth in what could best be described as “Fractional” employment. Fractional employment is a situation where a smaller company may need an experienced, knowledgeable employee, but just does not need them full time, or all the time. So instead of offering a lower paying full-time position, they can offer a higher paying (based on hourly rates) part time role. This then leaves the contracted employee with the opportunity to either fill the rest of their available time with other similar roles, or not, as they choose.

This enables both the employee to maintain their desired income level, but only through employment at multiple locations, and allows companies to reduce their resource employment costs by no longer having to employ expensive resources full-time, when they are desired, but not effectively needed.

The interesting addition here is that the “benefits” usually associated with employment (insurance, vacation, etc.) are reduced for both the employer and the employee. Remember, employee benefits cost employers more than thirty percent of total employee expenses and are not usually paid to contracted or part-time employees. (https://smallbusiness.chron.com/cost-employee-benefits-employer-2694.html)

This brings us to the reckoning. The trend has started in high cost countries and markets. Higher cost higher educated positions in the larger organizations for the most part have started moving to lower cost countries and markets in increasing numbers. It would seem that nothing short governmental intervention in this sort of labor migration will be able to stop it. These types of employment regulations may or may not exist to greater levels outside of North America, but again it would seem that they will only be effective in slowing down this evolution, not stopping it.

This change cannot but help to start to reduce the wage levels that were here to fore thought of as the higher-level incomes. There will be more, higher educated and experienced resources chasing fewer onshore opportunities. Even though employment levels may be high, the higher end, higher paying opportunities once thought of as only available to the highly educated will start to become less available.

One way to combat this outflow of positions is to reduce the cost of onshore employment. The movement to fractional employment should continue to gain traction. The reduction in the pay rates for these “highly paid” positions should also start to flatten out and even come down. Finally, as we have seen the end of pensions and retirement compensation in the last few decades, we should also expect to see a reduction in the benefits such as insurance, vacation, etc., (and the accompanying corporate expense) that companies offer.

So, while wages may be going up for some of the labor market, it would appear that they are heading down for those at the upper end of the labor market, even in such a strong employment market. Employment may indeed be at historical highs, but those that were once thought to benefit the most from these types of market conditions are now poised to face both reduced roles and reduced opportunities as businesses continue to try to reduce their labor costs.

Say What?

Ron White is one of my favorite comedians. He first came to my attention as part of the “Blue Collar” comedy tour (along with Bill Engvall, Larry the Cable Guy and headliner Jeff Foxworthy) some years ago. I remember that the entire night was a fun time, but it was Ron White who stuck in my mind. I have since quoted him several times in various pieces that I have written here.

One particular bit of his dealt with his penchant for mouthing off. This can be a great asset for a comedian, as it can lead to many great stories to relate to an audience. This bit resonated with me due to the fact, that even as difficult as it may be to believe, I too have had the occasional issue with keeping my mouth shut. Sometimes it has actually been beneficial. Some of the time, not so much.

Ron White likes to tell the story about his getting arrested. As part of getting arrested, he was read his “Miranda” rights. These are famously quoted in just about every police-oriented television show, whenever someone is getting arrested….

You have the right to remain silent. Anything you say can and will be used against you in a court of law. You have the right to an attorney. If you cannot afford an attorney, one will be provided for you. Do you understand the rights I have just read to you? With these rights in mind, do you wish to speak to me?”  (http://www.mirandawarning.org/whatareyourmirandarights.html)

Ron has often said that he may have had the right to remain silent, he just didn’t have the ability to remain silent.

It seems that I may have found myself in this same position, having the option to remain silent but not having the ability to remain silent, far too many times in my career, and probably in life in general. With that in mind, I thought I might go through things that I hope I may have learned in traveling down this somewhat bumpy road. There are both benefits and detriments to walking this path.

I guess from a strictly age point of view I sort of qualify as a baby boomer generation. (https://play.howstuffworks.com/quiz/are-you-a-true-baby-boomer). Although it is interesting that according to the test, I am not strictly a boomer. I guess I was either late enough in the generation, or enough of a forward thinker that I didn’t seem to entirely qualify.

Being a “boomer” meant I presumably went to school, played sports and participated in activities where there seemed to be very little worry about my self-esteem. Passing was based on what you earned, not based on the issues that would be faced if you did not pass. Trophies were awarded to those who finished either first, second or third, not based on participation. It was okay if there were winners and losers in activities because it was competition based.

I won’t harken back to these times and pronounce them a better time, because it is possible that they were not. It has yet to be determined because there is not enough information on the current status quo for comparison.

There is that fact finding, data-based approach to things that I like to use rearing its head, as opposed to just positing an opinion and claiming it as truth.

It is somewhat interesting in that I have actually heard “OK boomer” which I understand is supposed to be some sort of a mild insult when uttered by someone of a younger generation. I find this to be rather humorous as opposed to insulting. I have been told that I also have something of a “different” sense of humor. However, when I considered the source, and responded in kind, which I usually do, regarding that younger generation’s perceived peccadillos, it didn’t appear that my response was as well received. It seemed that even though I didn’t feel particularly insulted when I apparently should have, that it didn’t mean that the person who uttered the insult wouldn’t feel insulted when I responded in kind.

This is precisely the open mouth approach to things that I wanted to discuss. The learning topic here is that just because someone smarts off to you does not mean that they will take a return comment in kind well. This is usually especially true of management. They might, but don’t just assume they will.

Opening your mouth will usually get you noticed. Believe it or not this will usually be a pretty good thing. Being noticed, or better put, the ability to be noticed favorably can and will be a benefit in your career. Those that choose to keep their mouths shut and go about their work will take longer to be noticed in their roles by management and others, than those who speak up. How people will perceive you when you open your mouth will vary, however getting noticed is an important first step.

“There’s no such thing as bad publicity’ is often associated with Phineas T. Barnum, the 19th century American showman and circus owner. Barnum was a self-publicist of the first order and never missed an opportunity to present his wares to the public. As with many other supposed quotations, there’s no hard evidence to link the ‘bad publicity’ quotation to him.”

The proverbial expression began to be used in the early 20th century…” (https://www.phrases.org.uk/meanings/there-is-no-such-thing-as-bad-publicity.html)

This is a quote that will work well if you are running or working in a circus. Be aware that just because you may consider it a circus, does not mean everyone considers it a circus, regardless of how many clowns you may think are present. This can also become another hard-learned lesson.

Speaking up is one of the best ways to be noticed. Being right while speaking up is even better. It is that second part that has a tendency to trip a lot of people up. Make sure you do in fact know what you are talking about and are able to support your opinion with data and facts.

One of the greatest contributors to how you are perceived when you speak, is the content that you convey. Having command of the subject matter. Being knowledgeable about the topic. Having done your preparatory work will all come across when you talk. “Sounding” like you know what you are talking about may enable some to temporarily pass, but actually knowing what you are talking about becomes apparent to all in attendance very quickly.

How you address topics when you speak will also affect your perception. As previously mentioned, I usually chose a fact and data-based approach. This approach as noted lends itself to doing your homework and being prepared. Again, early on in my career this approach seemed to work well. Bringing data-based facts and solutions to the table seemed to be the right thing to do. I have continued to use and bring forward this analytical approach to my business communications to this day.

This is the part that can start to cause some issues as you matriculate up through management. As I said being noticed can be good when you are providing answers and solutions. As you matriculate up, the breadth and value of the topics discussed increases. Providing fact and data-based answers that do not entirely coincide with management proposed or desired directions can rapidly become a source of friction.

Questions that were once asked looking for an answer, can eventually become questions that are asked in looking for a particular answer. These particular answers usually come in the form of supporting the previously determined direction or solution. It should become quickly apparent that answering a question with what you feel may be the best fact-based answer, may not always coincide with the current or desired direction or response.

In other words, there will be times when management will ask a question looking for validation or agreement with the solution or answer that they have already chosen or would prefer. It may not matter that the facts and data do not fully support their position. It just may not be what they want to hear.

It is at times like these that I have found myself in Ron White’s afore mentioned position of having the right to remain silent, but not having the ability to remain silent.

What I have learned, eventually, was to pause and understand if there was in fact a desired answer that was being looked for, or if it was indeed a direct question. If there is a sought-after answer, look for those aspects that can be publicly agreed with and address those. Then, at a later, not so public time, try and address those issues and concerns that you feel need attention.

Instead of providing an answer that could be viewed as opposing the desired position publicly, you can be seen as providing input that will be thought of as enhancing or strengthening the desired solution.

It has taken a (very) long time for me to learn some of this. I am not so sure that I have mastered it yet. I have the right, I’m just not sure I have the ability.

Pressure is a Privilege

Most roles in business come with a certain amount of pressure. This is normally in the form of pressure to perform. This is the implied nature of the employment contract. They will give you money, and in return you will perform certain duties, jobs and tasks. Keep in mind that there are usually time constraints applied to these functions such as “it needs to be done by…”. Get used to it. In this instance, pressure is the requirement to perform or deliver on those functions associated with your professional position.

Stress however is a different story. No job comes with stress. It is not inherent to the employment contract. It is something else.

Let’s start (as usual) with a definition:

“Stress is the body’s reaction to any change that requires an adjustment or response. The body reacts to these changes with physical, mental, and emotional responses. Stress is a normal part of life. You can experience stress from your environment, your body, and your thoughts. Even positive life changes such as a promotion, a mortgage, or the birth of a child produce stress.”

(https://my.clevelandclinic.org/health/articles/11874-stress)

This is a crucial distinction between Pressure and Stress. As I said, pressure is the requirement placed upon you to perform those requirements and functions associated with your job. Stress is how you (and your body) respond to those pressures. As you might guess different people react to different situations and pressures differently.

I’ll illustrate with a typical sports analogy. I watch professional golfers and I am usually in awe of them. Their job is to hit the golf ball, as few times as possible while putting it into the specific hole. It is not just their abilities, but also the level of their performance, and the stage on which they perform this job. It is not uncommon to see them standing on the green, alone with the entire tournament riding on their ability to make a single putt. Make it and they win, miss it and perhaps someone else wins. Hundreds of thousands and possibly millions of dollars ride on a single swing of any club.

Talk about pressure.

But that is what their job description entails. It is what they signed up for. Every stroke counts. At the end of the tournament you total them all up. Three hundred-yard drives and three-inch tap-in putts. They all count the same. The one with the lowest number wins. It is the most quantifiable of any job performance review. And they all want to be in the position where they control their own destiny with that one last swing of the putter and take home the trophy.

As a side note, there are no “participation trophies”. It’s quantitative as I said, in the extreme. You get what you earn.

Lee Trevino was a competitive professional golfer with his hey-day back in the 1970’s. He won twenty-nine professional tournaments during his career. He is famously quoted as saying “Putts get real difficult the day they hand out the money.” He also tells the story of how he personally learned to deal with that pressure.

He tells the story of standing over a putt and realizing that if he made it, he would win half a million dollars. And his hands started to shake. He stepped back and realized that if he missed the putt, he would still win a quarter of a million dollars. He then realized where he had come from and the heights that he had risen to, were a blessing. He had worked his way into the position where he got the opportunity to make a putt like this.

He also famously remarked that even if he missed the putt, winning a quarter of a million dollars was still pretty good, all things considered. I guess he made the putt since he never said in the story.

He put voice to what most golfers and people who work in general should feel. He was fortunate to be in the position to be under that type of pressure. He had worked hard for that opportunity.

However, this is not always the case in golf, or in business. There are many instances where professional golfers lose that innate ability to deal with the pressure. They begin to dread having to make “that putt”. In many of these instances this pressure manifests itself in the form of something called “the yips”.

“”Yips” is a term most often applied to a putting problem that afflicts some golfers. The term describes a nervous affliction in which the golfer putting cannot make short putts due to the inability to create a smooth putting stroke.”

(https://www.liveabout.com/what-are-yips-1561044)

It is symptomatic of a golfer who cannot, for whatever reason deal with the pressure of that situation. The pressure to perform has now become a stress.

It is when one begins to question their ability to perform and deal with the pressure associated with a situation that stress can occur. Just like some golfers who seem to thrive on the pressure of the big stage and the destiny defining putt, there are business people who also thrive under the pressure of the business opportunity. We all know them. The sales person trying to make the big sale before the end of the year, or the executive making the difficult decision on what to do next.

And there are those that for whatever reason, the job, the position, the situation, the boss, etc., who can struggle in those situations. Many times, it is not the job level or the responsibility. It is something else. The internal mechanism that handles the pressure of the role isn’t working.

The privilege of pressure in the role, the opportunity to get paid to do something they want to do, has become the curse of stress. It is usually associated with the fear of no longer being up to the task. All the training, preparation, and experience are sometimes not enough.

Pressure is something we all must live with, to one level or another. It can be as large as life altering events such as marriage, the birth of a child, or finding a new job, or as seemingly small as just staying in the appropriate lane on the road. Expectations and the pressure to perform and react accordingly accompany all of them.

I remember my parents telling me that driving was a privilege when I first got my driver’s license (a long, long time ago…). I also remember them telling me that if I didn’t perform appropriately on the road, I would not get to enjoy the privilege of driving for a while. After a while they realized that the loss of the driving privilege was a pressure they could apply to other activities and behaviors as well.

Like many other things in life, and on the job, it might not have seemed fair at the time, but it was the reality that had to be dealt with. Needless to say, I tried to modify my behavior (within reason of course, I still had to try and get away with some things) but by and large I did not find myself overly stressed associated with the added pressure associated with the privilege of driving. It was not an entitlement. It was indeed a privilege.

Pressure is always present. The pressure to perform. The pressure to get to work on time. The pressure to achieve. I have seen some managers who have elevated the application of pressure to their teams to a high art form.

I don’t think highly of this technique. And I really haven’t met any team member that has functioned in such an environment who thought highly of it either.

I think the key is to understand that pressure can be used as an internal motivator, as opposed to a stress generator. The new phrase to define this type of approach is “Lean Into It”, and it is defined:

“The act of embracing something, or a situation, by using it to empower yourself. To “lean into” something is to own it, to cast off disparagement. You move forward and deal with it with unhindered confidence, casting off concerns and cares.

Instead of letting a shortcoming hold you back, you find acceptance in the situation, perhaps even going as far as to pride yourself on it. “Leaning into it” may even imply doing more of the “thing” in question, or highlighting it, as a means to overpower it and have it no longer be deemed a weakness or unfortunate hangup.” https://www.urbandictionary.com/define.php?term=Lean%20into%20it

I understand that it is far easier to say than do, but I keep coming back to what Lee Trevino said about missing the big putt. He had worked hard to get to where he was, and that despite missing, he still did pretty good. The best hitters in baseball still miss twice as often as they hit. Out of the one hundred plus golfers competing, only one wins on any given week, and half don’t even get to play on the weekend (they miss the “cut”).

Almost everyone has worked and performed under some sort of pressure to get to where they currently are. Because of that they get to continue to have the privilege of continuing to feel that pressure. I guess the key to it is to not allow it to stress you, but rather use it to drive you. You have to learn how to embrace it, because it is probably never going to go away.

Working From Home……and Dilbert

Let’s get one thing clear up front. I don’t like working from home. I don’t even particularly care for the idea of working from home. There are many who think that it is the absolute best idea since sliced bread, but I am not one of those. Yet it seems that situations and events have conspired in such a way that I now find myself working from home. However, it is pretty clear to me that when I take all things into account, that working at home is the best alternative for me right now. I’ll talk about the things that I have learned that I need to do to be as effective as possible in working from home.

I guess I may just be a creature of habit, but I have always “gone” to work. You know. Got up. Cleaned up. Went to the office. Just like I had “gone” to school. I didn’t “go to school” at home. I went to the then appropriate institution of learning.

This was back in a time before technology enabled “working from home”. In fact, it was not uncommon for people to have to relocate to different cities if their responsibilities changed, and they found themselves with a job in another location. This was what is now referred to as “the dark ages”….

Back then teams were not virtual. People actually had to be in the same place in order to work together. True synergies were achieved because everyone was in the same room when a meeting occurred. It was a time when process was not as dominant as it is now. Individual knowledge, experience and judgement were sought after to create the most effective team dynamic. It was all about finding the best and most efficient way to achieve the desired goal.

But I have digressed in my remembrances of those bygone times.

Times have changed. Companies now get merged and purchased with significantly increased regularity. The pendulum of workplace office arrangements has swung from the highly structured shared office environments of the 1950’s (where everybody had an assigned workspace within the shared space) to the cube farms (where everyone had there own individual work space and everyone measured their progress by cube square footage and wall height) of the 1980’s and 1990’s, to the current iteration of the 1950’s model where no one has an assigned work space, but they all work together in the shared environment, and you have to put everything away in your locker at the end of the day.

The last time I had to have a locker to put my things away in at the end of the day was when I was back in school.

Against this backdrop of office moves, business consolidation and “new and improved” office environments, should you find yourself with a pretty lengthy commute to get to a new office location, with the new shared dynamic seating environment, you might choose to give working at home a try. When I did this a few weeks ago I found out a few things that I needed to do to help with my effectiveness, even though I was no longer in my preferred working environment.

I also recalled several Dilbert ® cartoons by Scott Adams. I like to follow him because he appears to be scarily prescient when it comes to most interesting work topics. It shouldn’t surprise anyone that he has been addressing the work at home topic for over thirty years. Talk about being ahead of your time.

As I mentioned earlier, part of going to work was the process of getting ready for work. The getting up and cleaning up. I am an early to the office person. Since I have worked with several groups internationally in the past, I got it the habit of coming into the office early in order to facilitate communications with them. If I didn’t have calls or meetings scheduled early, I used the early quiet time to get a jump on the requirements of the day.

I also liked the idea that for the most part, my working time and my personal time had two fairly specific delineators; namely the commute to and from the office. There was a defined “starting time” when I got to the office, and a defined “ending time” when I left the office. Obviously, there were situations where calls, meetings and work would and could cross these thresholds, but for the most part, there was a beginning and an end to the work day.

When working at home the “start” and “stop” lines seem to begin to blur. There is no longer is any appreciable commute to the office. You can get up and walk into the home office and just start working. When working at home it is easy to say that I’ll go through the preparatory activities later. The idea is that you could just get up and go into the “office” without any preparation. This didn’t work for me. I found that the “ritual” of getting up and preparing to work helped me get into the proper frame of mind to do the work I needed to do. Needless to say, Dilbert recognized this activity as well.

As a side note, the above comic strip is from 1995.

I also found that I worked and concentrated best in a professional environment. That meant no turning on of the television to see what was on the news. No turning on of the stereo to create background music. These are distractions that do not normally exist within the business environment, and if you are going to extend the business environment to the work at home structure, they shouldn’t exist there either.

And again, Dilbert has addressed this very issue:

And again, this comic is from 1995.

Finally, despite all the assurances to the contrary, access to the corporate network, which is required in order to work from home to be viable, can be somewhat challenging. There are usually specific secure remote access applications that must be present and mastered in order to access the network. The issue usually arises in the form of needing access to the secure corporate network in order to request support in order to get access to the secure corporate network. There have definitely been improvements made in this area, but as I have noted, it can still be somewhat challenging.

Usually what happens here is that a trip must be made to the new office where access to the corporate network is available, in order to contact the Information technology group that is responsible for simplifying remote access to the secure network. This then ends up creating other issues since the remote access issue can no longer be replicated because you are no longer using remote access when requesting support.

The result of this interaction with the Information Technology support group is then the closure of the trouble ticket reporting the remote access issue, since the issue seems to have rectified itself by your coming into the office.

And you guessed it. Dilbert has also recognized this as an issue facing many today.

I have found that the best way for me to work at home is to make sure that I am preparing for and acting as though I am going to work in the standard office environment. Waking, preparing, dressing, etc., as though I were going into a standard business office helps me make sure that I am in the “work” mind set, as opposed to the “home” mind set. This of course is referring back to the time when home and work were indeed two separate entities.

Working at home does present its own set of unique challenges. It is almost too easy to fall into a new set of behaviors that may not be as conducive to creating a good work environment as many expected. While it is convenient, for me it doesn’t match the energy of the collocated team. I understand the value of the virtual team, but for me, it is hard to measure what was given up in exchange for what is hoped to be gained by the new.

Maybe it will just take some more time for me to get used to it.

More Lessons Learned Starting a Business

A while ago I wrote about starting my own small business. It’s a really small business. Just me in the garage evenings and occasionally on the weekend. It’s now about eight weeks in and it might be a good time to go through some of the simple lessons that I have learned and, in some cases, relearned during this process. I have to admit that many things I knew, learned before and even suspected, still hold true.

The first thing that was reinforced was the decision as to whether or not this was to be a real business, or what I would call a “hobby”. The baseline for this decision is how Cash Flow is treated. A hobby is something where you are aware of your expenses, but do not fully track them, as the difference between personal and business expenses can be somewhat blurry. In a hobby you know you are spending the money, but you’re not so worried about it as it has an entertainment value as opposed to a baseline for profitability.

For the business, I chose the tactic of keeping all receipts and tracking them (and revenues) via a spreadsheet. I set aside my initial cash investment for equipment (saws, sanders, grinders, etc.), as well as the initial payments for the raw materials that I would need to make the product. I viewed this as my Class “A” funding, to use entrepreneurial lingo. I didn’t want to have to go back to my investor (me) and explain to myself how my initial business case was flawed, if I in fact ran out of cash.

Fortunately, actually not fortunately, it was according to plan – orders did start to come in quickly.

Now came the balancing act of trying to grow. That meant ramping up production, which in this case meant making a couple more game boards than I actually needed each week, in order to build a little inventory. It is October, and the gift giving season will be here soon. It does take some time to build the products, and I am planning on a continued sales ramp through the end of the quarter. I would like to have some products on hand to turn into revenue as quickly as possible.

I don’t however have the ready cash, as part of my plan, to be able to just start producing fully in anticipation of such demand. Such is the balancing associated with cash flow. How much can you spend and how quickly can you get it back.

Another topic was quality. As I continue to produce the boards, I get better at it. I not only get better, I also get faster. I have gained confidence. I began to think I had it figured out. It took one inferior product produced to bring me back down to reality.

I am my own best, or in this case worst critic when it comes to what I produce. If it is not good enough for me, then it doesn’t get sold or shipped to a customer. Those resources, time and materials spent on making that inferior product were wasted. I will not get them back. It brought home the cost of quality, or in this case non-quality very quickly.

Speaking of manufacturing, as I mentioned I continue to learn how to manufacture better and faster. The old adage “practice makes perfect” does have some application here. I have gotten faster and more accurate at the measurement and cutting aspects of the process. I have learned that it is faster and easier to cut, and recut a straight line, than it is to try and sand a straight line. I have refined, changed and in some cased reduced the amount of raw materials required to manufacture. As might be expected it has had a beneficial effect on my bottom line.

As an aside, I have also learned that as soon as you bend what was once a straight piece of metal, it will never be straight again, no matter how long or hard you work at straightening it. Just a tip for those who may also decide to try and work with metals.

The value of having some inventory, as opposed to only starting to build when an order came in has shown its value. I have already mentioned the balancing act between tying up a lot of cash in inventory versus having it available for other expenditures. But it turns out that customers are actually pleased when they get their desired product faster than when it is promised to them. I recently had my first return customer (he originally bought a small board, and he came back to buy a large one). He mentioned that it was both product quality and the fast shipment that brought him back.

Imagine that.

Next comes looking for opportunities to expand both the market for the existing products and looking for new types of products to create. As I said, I am making metal game boards (and game pieces) for Chess, Checkers, Go, Pente and the like games. They seem to be pretty well accepted, at least initially by my go to market channels (in this case on-line purchasing sites eBay and Etsy).

The questions are:

Are there other board games that may be readily adapted to a metal platform?

And

Are there other channels to market for the existing and potentially new metal boards?

I am currently working on a potential backgammon board as a product platform expansion. Backgammon is an older and widely played game. I will not make many boards to start as it will be a much more involved manufacturing process (involving much more difficult angle cuts as opposed to the current right angles I use now). It may actually require outsourcing to a machine or cutting shop, at least initially to get it done. I will see how this goes.

As to expanding channels to market, on-line still appears the way to go for now. It continues to provide the broadest market coverage, while still providing the lowest investment associated with merchant systems and the like. I will continue to look at other artisan and mercantile type sites to see what it may cost to put my products up on those sites. That way I will be able (hopefully) to continue to expand the number of people who can see and purchase my products.

I have looked into attending trade and other types of craft shows, as another channel to market. These may be viable channels in the future, but I am not so sure right now. Almost all of these events require a registration fee of some type. Applying this fee against the margin I get from each product sale tells me how many boards I must sell during the course of the show (usually two days over a weekend) in order to just break even. It also means that I would have to probably invest a little more heavily in inventory as customers who attend these shows normally like to go home with the products that they buy at these shows. Not having available product to deliver would probably limit sales success here.

Most importantly, the weather is still nice, and I would like to golf at least once on the weekends as I continue to work at my chosen career during the week. Once the weather changes and it begins to get a little colder and a little less desirable to play golf, I will probably revisit the trade and craft show decision.

Did I mention that priorities are a must when starting your own business?

Finally, I come to marketing. I have the website up. It can be viewed at https://metalgames.biz/. I have the purchase and merchant systems working on Etsy at https://www.etsy.com/shop/MetalGames?ref=seller-platform-mcnav. I have started to get customer reviews (all positive so far) and am making sure that they are visible on both sites.

The next step was to create a site and presence on Facebook. It seems to be the granddaddy of all social networks at this point. Again, this is a relatively simple process. Facebook has all the required information to quickly lead you through how to set up a page for a business. Mine can be viewed at fb.me/MetalEnterprises. It seems that “Metal Games” was already taken by someone. Such is life.

I am looking into other media sites such as pinterest. I was actually just out there looking and trying to quickly understand their process and methodologies for getting “pins” out there. I will see if I can get that social media capability up and working in the next day or so.

Several things are similar for a one-person garage shop and a ten-thousand-person multi-national company. Knowing where your cash is and how quickly you can get back what you have spent dictates what your cash flow is. Profitability is great and will ultimately dictate longer term success, but cash flow is what allows you to keep the doors open. Product quality is a premium. “Good Enough” is not anywhere near good enough. Set your personal thresholds high and do not compromise. It matters. Continuing to seek out new customers and being as responsive as is possible to those you find will always be the keystone for business success.

And, as is the case for me at Metal Games (as in most of the work I do) have fun.

Budgets and Quotas

It seems to me that too many times I have heard the words “budget” and “quota” used interchangeably. I don’t know why, but this really concerns me. Perhaps I am over reacting. It doesn’t seem to bother others. At least if it does, they aren’t showing it. Perhaps it is just my recent dealing with budget-oriented groups that are acting like quota-oriented groups that is making me more sensitive to this phenomenon. In any event, I’ll do a little comparing and contrasting of budgets and quotas and see what the rest of you think.

First, let’s put a couple of definitions out there. It is always good for everyone to start from the same baseline. First off, do not Google “budget”. You will get far more than you ever wanted to know about some care rental company. But, as you might guess, let’s start with:

Budget

Budgeting for a business is a process of expressing a detailed quantification of resource requirements (capital, material or people) that are expected for given time period in future. Budgeting can be done for any person, business, government or anything that makes and spends money. Restricting in this definition to financial results for business firms we can explain budgeting as process of preparing a detailed statement of financial results that are expected in the future period of time.

https://www.mbaskool.com/business-concepts/finance-accounting-economics-terms/8632-budgeting.html

As you can see it primarily deals with the amount of money (or resources) needed or available for a purpose in a future period of time. This means it is a definition of how much you can spend on, or the expense for something. Let’s keep this “spending” idea in mind when we talk further about budgets.

Now we will move on to quotas. Hopefully this one will be a little more straight forward.

Quota

Sales Quota is the sales goal or figure set for a product line, company division or sales representative. It helps the managers to define and stimulate sales effort. Sales quota is the minimum sales goal for a set time span. Sales Quota can be individual, or group based e.g. for a business unit or a team.

https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/1919-sales-quota.html

Again, we have a financial goal for a future or set amount of time. Only this time it is focused on sales (orders and revenue) as income to the business, not the expenses of the business.

Now admittedly there are other definitions for both budget and quota, but these are also for utilizations of the terms for applications far outside the normal business usage. When you start discussing immigration, college acceptance and items such as those the line can become somewhat murkier. However, we will not go there, or anywhere near there today.

So here we have what I consider the crux of the issue. Budgets are associated with expenses for a set period of time and quotas are associated with sales for a period of time. This seems like a pretty simple set of definitions and differences. So why are people using them interchangeably?

I think some of my confusion may stem from the observation regarding “which side of the fence” people are speaking from. The example I will use here involves the government and everybody’s favorite topic, taxes.

For the longest time taxes were just that, taxes. Taxes were the amount that citizens paid the government. Taxes went up. Taxes went down. Periodically there was an attempt at tax reform when things go too complicated and it appeared that special interest groups were getting away with too much. By and large we all paid taxes.

But somewhere along the line this changed. From the government’s point of view (their side of the fence) taxes started to be referred to as “revenue”. Since taxes were, in the truest definition, the income that the government received, it did not seem like such a stretch or leap to go there. Soon the statement was no longer that the government was going to raise taxes (which was sure to irritate all citizens), they were going to raise revenue.

This is a much more palatable statement. Raising revenue. Everybody wants to raise revenue. Why should the government be any different? They should want to raise revenue too. The only slight difference might be that there is not another government around competing for our tax dollars. They can just vote themselves more revenue.

What doesn’t change is that from the citizen’s point of view, taxes are always an expense. Something that is paid. So, while it sounds more acceptable to raise government revenues, we need to remember that it is always raising the citizen’s expense.

This same governmental evolution occurred (in the US) when the Department of War thought it best to change its name to the Department of Defense, but that might be a discussion for a later date.

In business it appears that a similar evolution is occurring. In the past those organizations that had to live and work within budgets were called “cost centers”. They were associated with costs and expenditures. As such they were occasionally subject to reductions as most companies seemed to think that reducing costs was always a good idea.

It only goes to assume that these cost centers started to realize that the business’s expense budget was their revenue. This quantity was how much money was going to come into their piece of the business.

This was a master stroke.

No one ever wants to cut a revenue. They will cut, hack, chop and slash budgets all day long, but they will steadfastly refuse to cut a revenue.

I also think that some of the issue stems from business’s drive to remove as much overhead, or indirect cost from the business as is possible. There are essentially two way to do this. One is to actually reduce the number of resources associated with these indirect functions. The other is to try and translate these indirect cost functions into direct cost functions.

Below is a refresher on the difference between direct and indirect costs:

“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).

Examples of direct costs are direct labor, direct materials, commissions, piece rate wages, and manufacturing supplies. Examples of indirect costs are production supervision salaries, quality control costs, insurance, and depreciation.

Direct costs tend to be variable costs, while indirect costs are more likely to be either fixed costs or period costs.”

https://www.accountingtools.com/articles/the-difference-between-direct-costs-and-indirect-costs.html

The idea here is that when everything is associated with direct costs, everything is now directly associated with the sale and the generation of revenue. When that happens, almost all of those cost justifications for those groups now get aligned with sales and more importantly sales quotas. Now all budgets for those groups are supposedly aligned with sales, which in turn are aligned with, you guessed it, quotas.

And everybody likes to achieve their quotas.

In this way what were once cost centers have now aligned themselves with the sales function. Likewise, budgets which were once limits that were not to be exceeded became quotas that were to be achieved. This is a subtle but important difference.

Beating a budget meant that you came in with an expense that was lower than the budget. Success was reducing expenses below the targeted level. Efficiency and cost reduction were key targets. In short, the costs associated with the process were separated from the sales and prices associated with the process.

By now aligning everything with the sales and revenue process, costs now in effect do become quotas.

If sales do not achieve its quota, well then obviously costs will not be affected as they have a set cost quota. As long as they are on target for their quota of costs, they are achieving their goal, regardless of what the overall profitability of the process appears to be. This engenders a strange situation.

These cost groups are now of the opinion that as long as there is cost “quota” left to spend, they have the right to continue to spend it, regardless of sales performance. It in effect becomes the sales function’s responsibility to bring sales back into alignment with the sales quotas, instead of the cost function’s responsibility to bring cost “quotas” back into alignment with the sales function’s performance.

Costs “quotas” are really nothing more than verbal sophistry.

As business continues to look for ways to improve, some of the age-old axioms still do apply. Its always a good thing to achieve or exceed sales quotas. Cost budgets are an upper limit. It is always a good thing to “come in under budget” and return unused budgets back to the business in the form of bottom line profits. And, if you hear someone claiming that they are on target to achieve their cost quota, either they are not trying hard enough, or their cost “quota” needs to be reduced.

When to Say When

Blog 395 – When to Say When

Nobody likes to admit defeat. Nobody enters into a deal expecting to lose. Nobody starts a project that they don’t expect to complete. But sometimes, unexpected stuff happens. Partners don’t live up to commitments. Suppliers can’t supply. Developers forget how to develop or run into unexpected issues. It happens. The question that is now faced is, when do you say “enough” and cut the loss?

First and foremost, this is a time for a “business” decision. Pride and emotion should not come into play. Multiple issues and disciplines need to be reviewed. Prioritizations need to be made and weighted values need to be assigned. There will always be multiple stakeholders in the decision that will believe that their specific issue should take precedence and be the basis for the decision. There will also be those who are probably best ignored in the greater scheme of things. I’ll try to sort through some of the various topics and inputs that should go into this decision.

The first input is one of the most critical inputs of all: Time. No one immediately finds themselves in a failure situation. It is usually the compounding of many items over time that causes the “Ah Hah” moment where the issue manifests. It must be understood that “All errors are Additive”. Two wrongs do in fact not make a right. It is usually a series of small errors or issues that add and multiply to create the failure state.

If you are interested, there is a Harvard University paper on error propagation that can provide you the mathematical foundations of this idea at http://ipl.physics.harvard.edu/wp-uploads/2013/03/PS3_Error_Propagation_sp13.pdf.

The business equivalent here is that there are usually many disassociated errors across time that add up to what can be viewed as a non-recoverable situation. Always correlate all error or issue reports, then review how long the failure condition really existed before it was noticed.

The second is based on the business nature of the issue: Is it an External – Customer Related Issue, or is it Internal to the Business itself? If it is a customer related issue, then the loss of business, both current and future should be the deciding factor. If the customer is committed and dependent on the product, good or service at question, then there probably is no alternative than to continue to commit resources (money, people, components) until either a resolution or work-around is achieved. Here the pain of the customer must outweigh the pain to the business. Effectively, the plug cannot be pulled.

If the customer has recognized the issue and has taken steps to mitigate their exposure, or made other plans based on expected non-compliance, move quickly to achieve an appropriate solution (give them their money back, substitute other products or solutions, etc.,) and move on quickly. The same would apply if the effect on the customer’s business can likewise be minimized.

Understand that engineers will always say that with a little more time and budget they should be able to find a solution. Developers will always say with a little more time and budget they should be able to get the solution working as desired. All will point to the amount that has already been spent and how with just a little more it should be possible to recoup it.

Personally, I have yet to see this work. This argument usually results in an incrementalistic approach that ends up costing more people, time, money, with little more in the way of deliverable results to show for it. One thing to remember here is that if you have hit the point where you have to examine the business case for continuing on along a certain path, then you have probably already passed the point when it was appropriate to stop doing whatever you were doing.

Internal programs, projects and developments are far easier to analyze. The question will always be: Is it strategic to the future of the business? And of course, the answer to this question from those responsible for the topic in question will always be “yes”. Just remember that strategic topics and programs usually encompass years on the timescale and similarly large values on the funding scale. A good rule of thumb is: If multiple years have not already passed by the time you are examining the “Stop / Continue” decision, then it is probably not a strategic topic that is being discussed.

There will always be those that want to continue whatever program, project or development that is being reviewed. These will be the people and groups that have budget and resources stemming from the program. There will always be those that will want the program to be stopped. They will be the people and groups with competing programs that want the budget and resources. These groups can also almost always be immediately discounted as input into the decision.

The internal stop / continue decision must be taken out of the hands of the technical groups (engineering, research and development, etc.,) and put in the hands of the financial and business management teams. How much more will it realistically take to complete? How much revenue or cost reduction will be foregone if not completed? How much longer will it take? What is the project’s trajectory? Will it take a restart / rewrite, or is it truly a defensible incremental piece of work (be very careful here)? It is here that the money should talk, not the desires or beliefs.

Occasionally a business may find itself at the mercy of another business group or supplier as the cause of the program, project or product delay. Instead of a stop / continue decision, you will be faced with a “wait / continue” decision. This means instead of stopping permanently and moving all resources to other projects, the decision is now do you stop temporarily, move resources to other projects and await the outcome of the delaying party, or do you continue with your piece of the project and just hope the offending party will be able to catch up?

Almost every time when presented with this decision, those associated with the project in question will want to continue on and hope the other group or supplier catches up. From their own budgeting and staff assignment point of view, this is the best and simplest solution for them. They will always try to justify this decision by stating that it will be more expensive to stop, reassign the resources, then reassemble them and restart the project at a later date.

Most of the time, since they are the technical resources associated with generating the costs associated with this decision, their assertion is not questioned.

This is a mistake.

Always question, quantify and justify costs to both stop and restart a project. Stopping should usually be nothing more than the cessation of charging to the project. Starting may require some re-familiarization with the project but should not entail significant time. What this means is that from a business and financial point of view, it will almost always be less expensive, and better for the business, to pause all efforts on a third party delayed program or development than it is to continue to work while the third party is delayed.

It may add complexity to those groups whose budgets are now in somewhat of disarray due to the pause and inability to keep charging, but it is better for the business overall.

The only potential mitigating circumstance is how long the third-party delay is forecasted to be. If it is on the order of days to a few weeks (less than four as an arbitrary limit) than continuing may be the right solution based on future resource availability. If it is on the level of a month or more, the decision starting point should be biased toward stopping the costs and investments until such time as the third party has caught up.

So, summarizing the decision tree associated with when to say when on failing or delayed programs, projects and developments:

If the customer business is dependent on the commitment, then whatever it takes to complete is required. Not only current customer business, but potentially all future customer business is dependent on competing the deliverable.

If the customer business is not dependent on the commitment, then the business case for stopping, substituting or finding a work around should be examined. Only the current customer business is dependent on completing the deliverable.

For internal programs and developments, the question of how strategic the program or development is will be key. We all know that nothing ever fully goes according to plan. For those strategic topics, requiring large budgets and long time-lines this is even more evident. Those that are truly strategic it may be best to continue to push on through, but with significant monitoring to make sure further issues and delays do not continue to show up, causing incremental failure.

For those non-strategic programs and developments, it should be a financial / business case decision based on the cost to complete versus the foregone revenues or cost reductions associated with a successful completion. Question all inputs and let the numbers fall where they may.

Finally, when the decision to wait or continue when a contributing entity is the cause of a delay, it is almost always a financially better decision to reassign resources and wait for the third party to complete their work than it is to continue to work in the expectation that they will catch up. It may be more complex and disruptive to those entities assigned to the program, but it will be better for the business.

Finally, understand that any time you ask for the inputs on the decision from the groups that are directly involved with the program in question, they will almost always declare that the program should continue at current funding and spending levels. While this may be beneficial and easier for them, it is the least financially viable approach to the decision in question. Always question inputs and justifications from all parties. Remember, when it comes to money, either internally to the business, or externally from the customer, there will be those that want it, and those that want to spend it.