Category Archives: Analysis

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.

Starting Something

I have been blogging for a while (has it really been 10+ years?) about business and sales and the situations that arise in both. It’s been fun. I figured it was time to actually listen to some of the things I was saying and put them back into practice, again. As time passes and our work evolves it is easy to leave some of those things that we learned and enjoyed behind. To wit, a couple of weeks ago I opened my own little sole proprietorship business. I’ll spend a little time talking about it, what I learned, and what I relearned in the process.

First off, for those wondering, I didn’t quit my “day job”. I still enjoy it and need it to pay the bills, or more importantly pay for the medical insurance that helps pay for my son’s insulin for his Type 1 Diabetes. In case you were not aware, the price of insulin has increased one thousand percent in the last fifteen years. Yes, that means that insulin now costs ten times what it did then. But it’s actually cheaper now to make. Make of that what you will.

Without insurance it would be a significant financial hardship in addition the other problems it presents for him going forward.

In any event, I am still in the technology and services industry. I find that even though we can and probably should apply many of the things we learned before, to today’s issues, our new processes, outsourcings and corporate structures may make it a little more cumbersome to do so. We seem to have less and less capability to provide input into our own business decisions and directions in today’s process driven business environment. This is part of the reason I have taken on this additional endeavor.

The first order of business (if you pardon the blatant pun) was to get all the state licenses, company names and banking accounts set up. This is the equivalent of starting your company, putting your sign out on the door, and setting up the place where you get, and send your money. It needs to be separate from your personal finances. It would have been easier to just use the accounts we had, but if you are going to do it, do it right. It also makes it easier to keep score on how well, or poorly you are doing.

The business I chose was probably at the other end of the business spectrum from technology equipment and services. I wanted a full separation of functions. There can’t and shouldn’t be any conflicts of interest. This is strictly an after-hours business. I’m making game-boards and games out of various metals in my garage. I don’t think I can get much further afield than that from my day job.

Setting priorities and remembering whose clock you are on at any given time is a requirement. You cannot cheat those who are paying you when you are on their time, and you cannot cheat yourself when you are on your own time.

Like any good Product Line Manager, I had done my market research in looking at what types of similar products were out there (you truly can get just about anything from China, or eBay for that matter). I also looked at the relative prices to make sure that I could actually make a profit at the then going rates for competitive products (another business case). Finally, I looked at the various types of suppliers that I would need, both local and on the internet, for my piece parts. Thank goodness for Home Depot.

The next was acquiring the raw materials I would need to create the goods I would sell, as well as the equipment I would need to make and finish the products. These would be my sunk costs. Regardless of my success or failure, I will not get my money back from these expenses, unless I earn it back.

This brought up the first set of business cases. Do I go for the high-end expensive equipment that could make the work easier and help generate a higher quality product, or do I go a little less expensive, take a little more time, and rely more on my skills to save money, at least initially? I didn’t choose either end of the spectrum of equipment but did tend to go toward the less expensive brands and platforms to start.

I felt that these would get me started and reduce both my capital risk as well as my breakeven point for the business.

Then came the learning process. Just because I thought I had a good idea and a plan didn’t mean that I had it all figured out. As I started producing products the learning curve kicked in. I learned which components were better than others. I learned which manufacturing techniques worked best for me. After a few tries, I started to produce some products that I thought were of an acceptable quality level.

Now that I had products that I was happy with, it was time to see if customers would be interested in them as well. There were essentially two discrete paths to market for the products I was creating: Face to Face (F2F) at business and craft trade shows, and over the internet on the various electronic market places that were available. To start I selected the internet / electronic marketplace approach.

I made this selection for a couple of reasons: The start-up cost of this approach was minimal (basically the cost of creating a product listing on existing market place web sites), the charges were directly proportional to the amount you actually sold, there was a predisposed customer set that used them, and the mercantile systems (Credit card, charging, collection, payment) were already in place. The two I started with were eBay and Etsy. Both well known and respected

Trade shows require an investment / entry fee up front, regardless of whether or not you make any sales, as well as the investment of real-time attendance at the show in order to make any sales. I did not feel I could make these overhead investments at this point in time for the business I had chosen. They would also require some sort of Point of Sale (POS) system in order to conduct business with credit cards, the now preferred way for most to do business. I have signed up with one (Square, mainly again because the upfront investment was minimal, and the expense would only grow as my sales grew), but am still not fully operational yet.

I will continue to prepare and will eventually go to some of these F2F shows for a couple of reasons. One is to get the direct feedback from dealing directly with a customer. The other will be to test this channel to market for profitability. Could I actually sell enough at one of these shows where the profit (not the revenue) generated would cover the upfront costs of entry, and time spent and again provide profitability?

In addition, I needed to create a web site where I could both tell my story and display my products. This blog has been and is hosted by GoDaddy. I have written in the past regarding the quality of their service and support. Please look up “A Great Service Story” (March 7, 2019) for my views on them. I used them to create https://metalgames.biz/. They had some great tools to aid in the rapid set-up of the site.

Again, I held off on creating the commercial system for taking orders directly from my website due to the upfront costs associated with setting it up. Instead I opted for links from each product page to my Etsy site (https://www.etsy.com/shop/MetalGames?ref=ss_profile ) where I could take advantage of the existing commercial system. There may come a time where I do set up the Point-Of-Sale system on the web site, but for right now, I felt managing the business’ cash-flow was a little more important.

So, there we go. I’m now in business. https://metalgames.biz/ and https://www.etsy.com/shop/MetalGames?ref=ss_profile are both live and believe it or not doing business. It may be primarily for personal enjoyment, but that doesn’t mean I will not take it seriously. To date I have received two orders from eBay and four orders from Etsy. I don’t think that is too bad for having been up and operational for approximately three weeks.

This has brought up the next several issues associated with Inventory and Fulfillment when it comes to getting the product into the customer’s hands in a timely, efficient and economic manner. With such a small number of orders one would think that this would not be a significant issue, but it actually is. In fact it is a bigger issue than I had expected.

Marketing and Advertising will also be interesting topics for discussion.

All costs affect margins and profitability. Being a small business means that you cannot take advantage of any volume-based efficiencies, for either the components associated with production, or the costs associated with shipment and delivery.

I will go into these topics (and others) and what I learned about them some other time.

The bottom line is, that it is fun. Even though I am making games, I don’t want to treat it as a game. If it is going to be a business, even a very small one, it deserves the attention and respect that is required to make it successful. I’ll keep you all posted as this evolves.

Conflicting Internal Forces

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Territorial Imperative

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Really.

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

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

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

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

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

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

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

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

Customer Wants

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

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

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

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

Not so fast.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Good, Fast, Cheap and the Future

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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