Category Archives: Competition

Over Specialization

It seems as though business, or maybe more accurately organizations and the conduct of business, is at a crossroads. Like “process”, organizations seem to have drifted into the position that if a little bit of specialization (and process) is good, then a whole lot of specialization (and process) must be better, right? After all, if one man who is a four hundred meter specialist can run the distance in about forty five seconds, and four men who are hundred meter specialists can run the distance as a relay team in thirty six seconds, then forty men who are ten yard specialists should be able to do better than that, right? When does specialization run its course when it comes to creating an advantage?

I absolutely agree that some specialization can create a competitive advantage. As noted above, four one hundred yard sprinters working together will usually beat a single person running the distance alone. The focal point of this is the word “usually”.

Since 1920 the United States four hundred meter relay team has won the gold medal fifteen out of a possible twenty one Olympic games. One time they didn’t compete due to a boycott. So three out of every four Olympics they have run the race and won. The other twenty five percent of the time they either finished behind, or didn’t finish at all because of poor handoffs of the baton. The handoff either slowed them down, or they dropped the baton and did not finish all together.

On the surface this looks like a pretty good performance. From an Olympic standpoint there is no doubt. It is excellent. But what is our reaction if we translate this performance into business terms? What would you do if someone came up to you and said:

“I am going to quadruple your costs (going from one employee to four), improve your performance by just under twenty percent (reduce your time from forty five seconds to thirty six seconds), and introduce a one in four chance that you will not even finish the project (the baton gets dropped twenty five percent of the time). In return for these increased costs and risk, you will succeed three quarters of the time.”

Now admittedly I have stacked the deck here a little bit. The Olympics happen only once every four years. This rarity of opportunity has a tendency to breed a “Win at all costs / Win or go home” sort of mentality. It is indeed a high risk – high return mentality. But I think it helps to make my point.

Business on the other hand occurs every day. While there is competition, success is usually measured in relative terms. I think that the Sales role is the only one where there is a win – lose relationship with the competition. You either beat them, or you don’t get the customer order (“the gold”). After that everything is more of a “how well did you do” question as opposed to a “did you win” question.

What I think it also points out is that specialization does introduce incremental expense in the form of multiple specialized participants where in the past there may have been fewer potentially more generalized people. The idea here being that if you can grow the business to the point where you can break the increased work down into smaller more specialized roles that can be aggregated it can be more efficient. This brings up the next point.

How far can the work be efficiently broken down and aggregated? If four can do it faster than one, can eight do it faster than four? Can forty do it even faster than that? At what point do you spend more time passing the baton than actually running the race? If no one can ever accelerate to their potential ability (top speed) before they must pass the baton, will the relay team actually be faster in the total?

The final aspect of the added cost and complexity of over specialization is the risk it induces. If the best relay teams have three hand-offs of the baton (first leg-second leg, second leg-third leg, third leg-anchor), and manage to drop it one out of four races, what happens when more and more baton hand-offs are introduced. It is possible to theorize that there is a point where there are enough handoffs that it is statistically probable that there will always be at least one dropped transition, and no race (project) will ever be completed, at least without some secondary group to monitor the transitions and make sure that a final work project is in fact delivered.

I believe that this secondary group responsible for making sure that all business baton handoffs occur (amongst other process responsibilities) is usually called the “Quality” group, but that could just be my opinion. They are the group that is usually responsible to make sure everyone runs in their proper lane, and hands the baton off when they are supposed to.

Specialization is the logical extension of what is known as “Fordism” in the theory of production. As we all know Henry Ford was one of the first to recognize the values of specialization and the production line. Although Fordism was a method used to improve productivity in the automotive industry, the principle is thought to be able to be applied to any kind of manufacturing and by extension business process.

Fords major success is thought to have stemmed from a couple of major principles:
1. The standardization of the product (nothing hand-made: everything is made through machines and molds by unskilled workers)
2. The employment of assembly lines, which used special-purpose tools and/or equipment to allow unskilled workers to contribute to the finished product

I didn’t make that last bit up. I looked it up in my cyber wanderings regarding specialization.

Ford wasn’t the first to do this but he saw the value in breaking complex tasks down into component simpler ones in order to better utilize the available labor component. The point that I see here is that specialization was born from the need to get the most productivity possible from the predominantly unskilled labor force. Today we seem to be continuing to try and further apply these principles to a very skilled and in many cases knowledge based labor force.

I think some specialization does in fact produce returns that can be justified against the increases in complexity and added potential risk of a “missed hand-off”. I also believe that there is a point where the number of hand-offs and the added complexity of having tried to add too many runners into the relay race generates decreasing returns.

When a business gets to the point where it loses visibility of the overall delivery responsibility, it has probably decomposed its work products beyond its optimal granularity.

Most businesses today do not rely on unskilled labor. If fact most of the technology based organizations that are looked to as drivers of the new economy require not only college degrees as a minimum threshold for employment, but would prefer that employees come with previous experience for the job. In short, organizations are looking for smart people who already know how to do the job.

It is against this increasingly intelligent and skilled workforce requirement that organizations seem to be trying to reduce the skill and intelligence needed to do a job by ever reducing the scope of the job as it gets more and more specialized. Business in effect wants people who can do more, but wants them to be limited by specialization to doing fewer things – hopefully better.

In encouraging team members to focus on smaller and more specific roles instead of understanding and requiring more and broader capabilities, organizations run the risk of stifling future leaders. If team members are incited to only worry about their specific task, where will the next generation of leaders who will be responsible to the team’s performance of aggregated tasks come from?

Business leaders require a very good working knowledge of many different business disciplines in order to be successful: Sales, Finance, Marketing, Operations, and Service, just to name a few. A lack of knowledge in any of these areas, or an over dependence on any of these specific disciplines can weaken the leadership capability of the organization.

Even in the age of (over) specialization, the title of the “Worlds Best Athlete” still is bestowed upon the winner of the decathlon. The decathlon is the event where there are ten different aspects of the competition. The winner of the decathlon is not an expert in any one or two of these aspects. They don’t have to win all of them (or potentially any of them) but they must be very good in all of them.

Leadership today needs to recognize the trade-off between specialization in the drive for efficiency, and generalization in the need for a broader end to end view of business. Future leaders cannot be expected to easily move from a specialized discipline experience set to a generalized business leadership set, anymore than a sprinter should be expected to be able to effectively compete in the other nine aspects of the ten event decathlon. Nor does the decathlon allow for a passing of the baton between ten people, one for each event.

While business does depend on team work and the ability of the team, sometimes it is not a specialized relay race.

Free Time

What do you do with your free time? I don’t mean play golf, or spend time with the family. I mean your free time in the office. I know we are all busy and that the demands that have been placed on us require more and more of our focus, but we all have some free time. What do you do when you get off the call, or finish the meeting and don’t have anything scheduled on your daily calendar?




Some surveys suggest that one of the main things we do is go check our email. Not our business / professional email, our personal email. Other surveys also suggest that we go and surf the web to help us “decompress”. Do you leave your office to search out someone / a friend for a little social discussion and activity?




The world, not just the market continues to get more competitive. There are many qualified and talented individuals in many disciplines in the work environment. How can you start to set yourself apart?




The approach that I am taking for myself and my team is to try and re-vector my “free time” toward learning, training and certification. I used to look at people who put all sorts of letters and acronyms after their names with a little bemusement. The truth be told, I still do. I think its great to have the training and certification, but I also think that you need to be self confident enough to not have to continuously display it every time you electronically sign a document.




But I do think the idea that it is desirable to have that training, knowledge and certification to back up your capabilities and talents is starting to grow, and has value. Almost every professional discipline now has some sort of training / certification capability. Sales, HR, Engineering, Design, Project Management and many others all seem to have certifications available. Most of the “training” or course work required to get these certifications / pass the tests in most instances can be done without actually having to sign up and take classes. You just have to read, study and learn.




Reading
, studying and learning sounds like something most of us can do in our free time. It probably also will provide us more personal value than checking to see how much new spam we have in our personal mailbox. I like the idea of using free time to set yourself apart and at the same time increase your value to your business.




I am a little frustrated with myself that I didn’t figure this out sooner……

Sun Tzu, Competition and Customers

Sun Tzu was a Chinese military general in approximately the 5th century, B.C. He is renowned for never losing a battle. He wrote a treatise on conducting campaigns called “The Art of War”. It is an excellent book and I highly recommend it.




Most people apply what Sun Tzu wrote to the on going battles with competitors, and this may in fact be a very good application of some of his axioms. Most people apply Sun Tzu’s writings from the point of “winning” that battle, when in fact he wrote about “not losing” the battle. He was renowned for never losing a battle. He didn’t win them all. Many times he chose not to engage the competition because he felt he did not have a sufficient enough advantage to assure his victory.




Sun Tzu wrote;


“If you do not know your own capabilities, and you don’t not know your adversaries capabilities, you can not win.


If you do know your own capabilities, and you don’t not know your adversaries capabilities, you can lose half the time.


If you do not know your own capabilities, and you do know your adversaries capabilities, you can lose half the time.


If you do know your own capabilities, and you do know your adversaries capabilities, you can not lose.”




This is very interesting stuff, and I have written about it before. The question I would like to address here is how this relates to Customers, not competition.




Once the engagement with the competition has been won, a new engagement begins with the customer. Once the customer has been won, they are not guaranteed to be your customer for life. The idea here is to follow the idea of “not losing” the customer. If you know your own capabilities (and you probably do because you won against the competition) you must now learn the customer’s capabilities in order to be assured that “you can not lose”.




Over time (either short or long term) your corporate / business / group focus can change. These changes may not be perceived as congruent with the directions and desires of your customer. Over time the people and requirements of your customer will also change. These changes may change their perception of the value of having the current business relationship with you. The key is to be aware of and adapt to these changes in both your and the customers “capabilities”.




Research shows that it is 5 times easier to sell a new product or capability to an existing customer than it is to sell to a new customer. Every customer that is lost out of your customer base takes 5 times the effort to replace. What this shows is that winning customers is great. Not losing the customers you have is 5 times better.




Once the competitors are beaten and the customer is engaged, it stands to reason that you can modify Sun Tzu a little to read;



“If you do know your own capabilities, and you do know your Customer’s capabilities, you can not lose.”

Equipment is Becoming a Commodity

It used to be that if you made the best products, you had a distinct competitive advantage. However, today it appears that things have changed. If you are not making the best products, you are not at a competitive disadvantage, you are out of business.

Off-shoring, and its new euphemism “Right-Shoring”, have reduced the costs of everyone’s products. Moore’s Law (the doubling of technology’s capabilities approximately every 18 months) is well understood, and in some quarters is thought to be close to having run its course. With so many open standards, products are no longer comparable, they are virtually interchangeable.

As China emerges on the technology scene as an economic super power, it is using its competitive labor advantage (most technology based companies have their products manufactured in China by various Contract Manufacturers), and its technical parity to try and make every customer’s buying decision a price based one. In trying to make every buying decision solely a priced based one, it is in effect “commoditizing” the equipment.

If there is no ability to differentiate equipment, other than price, what can be done? The obvious choice is to start focusing on the non-equipment differentiators: the level of relationship and trust between the customer and vendor, ease of equipment installation, ease of product maintenance, warranty length and breadth of coverage, etc. In short Service.

As products become more technically capable, they can have a tendency to become more complex to operate. Their installation and implementation have become more specialized. Their maintenance and the ability to trouble shoot their problems require much more training and specialized support.

Customers do not seem to buy technology for technology’s sake. They are buying a “use” or application to fulfill their specific need. The ability to simplify and reduce the customer’s perceived risk associated with the implementation and operation of their equipment in the delivery of its functional usage can be significant equipment decision differentiators.

With it becoming so difficult to differentiate commoditized equipment, it will pay to try and differentiate the ease and simplicity of product usage, the depth and breadth of support, and the comprehensive level of service that will accompany the equipment. When the competition is trying to make the customer’s buying decision a price based one, you will need to try and make it a service based one to change the decision criteria back in your favor.


Sun Tzu Was Right

In his book “The Art of War”, Sun Tzu (a 5th century B.C. Chinese general) stated “If you know yourself, and you know your competition, you will never lose a battle” – I hope you don’t mind if I have paraphrased a little.

 

Sun Tzu speaks about the importance of knowing your own capabilities, whether they are personal, corporate, technological, whatever. You must assess if you have the skill and resources to achieve the desired goal. He also speaks about the importance of knowing your competitors (opponents) capabilities, along the same lines.

 

He also talks about taking into account the terrain, climate and intangibles when preparing for war / competition. These ideas can be roughly analogous to the market, the economy and the morale/status of your team.

 

What he does not say is that if you take these things into account that you will win. What he does say is that you will not lose. What this means to me is that after these reviews, you need to pick your battles and your objectives. Analyze the risk and the return. If after review you find yourself at a significant competitive or market disadvantage, it may be best not to engage in that competitive environment.

 

Use the analysis of yourself, your competitors, and the various markets to choose those opportunities where your probabilities of success are highest. It sounds simple enough. It should be simple enough. To use a modern day analogy, it’s like blocking and tackling in football. But as we have seen in football, the basics are not always that simple based on the high level of talent and competition out there, and even then it takes a significant amount of practice to get  the basics right.