Category Archives: Decisions

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.

Low Hanging Fruit

There are many “executive speak” phrases that seem to dot the business vernacular landscape. I have talked about this before. Many of these phrases seem to have evolved due to the desire of managers to fill a void in a conversation by saying something without actually providing any valuable information. I liken these phrases in business communications as the nutritional equivalent of Pop Tarts to food. There are probably some calories for sustenance in there somewhere, and as a change of pace they are sweet and acceptable on occasion, but if you make a steady diet of them, it is probably bad for your health.

With that in mind, I can’t seem to help myself but to go after the one executive speak phrase that seems to continue to grow in popularity, never ceases to amaze me, and all the while driving me crazy at the same time. Am I the only one that must fight the urge to speak up and call people out when they hear the phrase “Low Hanging Fruit”?

I Googled the phrase, just to see if it was really there as well as to provide a relatively equal basis to start this discussion from. I don’t know what I really expected, but it definitely was not the relatively large number of hits that Google delivered. I guess it is even more ubiquitous that I suspected. I selected Dictionary.com as my initial source, since I seem to go to them quite often for just these types of definitions. They said:

low-hanging fruit
noun
1. the fruit that grows low on a tree and is therefore easy to reach
2. a course of action that can be undertaken quickly and easily as part of a wider range of changes or solutions to a problem first pick the low-hanging fruit
3. a suitable company to buy as a straightforward investment opportunity
https://www.dictionary.com/browse/low-hanging-fruit

Now, I get the first definition. There really can’t be any argument about it. It is logical and follows directly from the phrase. Its fruit and it is low to the ground. Got it. It is the second and to some extent the third definitions that I take issue with.

It is at times like this that I feel compelled to step up on any available soap box, set my feet approximately shoulder width apart for good balance and announce to all who might listen, what I like to call “Gobeli’s First Law of Low Hanging Fruit”. In this case, it goes like this:

“There is no such thing as low hanging fruit when it comes to business courses of action, or investment opportunities. Anybody who says there is, is trying to sell you something.”

It doesn’t seem to matter what the discussion is about, or which business discipline is being mentioned. Everybody seems to want to use the term “low hanging fruit”. At the risk of sounding like I am propellering off on some sort of a rant, I need to start out by saying, I just don’t get it.

The instances where I have witnessed the phrase low hanging fruit being used are relatively succinct: During a presentation. When implementing something new such as a new program, project or product. When describing in a new recovery plan because the last program, project or product failed to enable the attainment of the then described low hanging fruit.

The basic idea that is trying to be conveyed is that whatever is being attempted, is going to get off to a fast start because there are quickly and easily obtainable results, as definition number two above would indicate, that are available. This phrase is designed to get management agreement and approval for whatever is being discussed.

It also sounds good and seems to indicate that this should be a “Oh my gosh, how did I miss that!” kind of moment.

It implies that the person uttering the phrase either knows that much more or is that much smarter than everyone else associated with the then current discussion. It hints at that person having either mysteriously or miraculously unlocked some sort hidden business or universal truth or secret that will enable them to make the difficult, challenging, or here to fore unsuccessful, easily attainable and wildly successful in the future.

I will be the first to say that just because I have never witnessed a miracle does not mean that they do not happen. I will say however, that I have heard “we will first grab the low hanging fruit” exponentially more often than I have ever seen such fruit actually grabbed. This leads me to Gobeli’s Second Law of Low Hanging Fruit:

“There is no such thing as Low Hanging Fruit. There are a lot of very bright people around. If there ever was anything even resembling low hanging fruit, one of these very bright people has probably already been there and grabbed it.”

Most people who truly recognize the existence of low hanging fruit keep their mouths shut and just go get it. Once they get it they will then take a bow, and then usually indicate how much more difficult it will be to get any further fruit, thereby keeping management’s expectations somewhat in check for future fruit attainment forecasts.

They don’t go and broadcast or publish the existence and location of low hanging fruit. It is not up for debate or discussion. It is like “Dark Matter”. There is a lot of somewhat esoteric evidence (that only physicists seem to be able to understand) that it probably exists, but nobody (including said physicists) has actually found some and examined it. If low hanging fruit ever did exist, it was an immediate challenge and all out race to get it first. Once obtained, it is gone. If it continues to exist while remaining only slightly out of reach and requiring only a little more time or investment needed to obtain it, it was probably not low hanging fruit in the first place.

As I noted Low Hanging Fruit is a term that is usually used to try to convince someone to do something. My personal experience is that when the term has been used, it was usually used to try and convince someone to do the wrong thing. This leads me to Gobeli’s Third Law of Low Hanging Fruit:

“Low Hanging Fruit is a term that is used to make something look easy. Nothing in business is that easy. It takes a lot of smart people working hard, together to be successful in business.”

Everyone wants an easy answer. We have all been inured to it by our thirteen second soundbite television environment. Simple answers may sound simple, when in fact they are surprisingly complex and difficult to implement.

I understand that on occasion I can sound something like a skeptic. The good thing about being a skeptic is that it is relatively hard to be disappointed. I also like to remember the old adage: “If it sounds to good to be true, then it probably is.” This doesn’t seem to stop us from wanting low hanging fruit to be true, though.

There are inevitably other competing ideas and directions vying for management attention and blessing. Several of them also probably have their here to fore unidentified low hanging fruit out there just waiting to be grabbed as well. All that they need is the time, money and management blessing that is currently being sought.

To me, low hanging fruit is a myth. It will always take time, money, effort, determination and possibly even a little luck (as defined by the phrase “Luck is when preparation meets opportunity” – the Roman philosopher Seneca) for any initiative to be successful. The idea that success in business can be had as simply as wondering over and picking all the fruit off a tree that is within arm’s reach is not something that I have ever seen occur.

The theory of the Black Swan (just because you have never seen something does not mean it doesn’t exist. Swans were only thought to be white until black ones were actually discovered) suggests that such improbable events can occur. However, in all the world, up to this point, only one species of black swan has ever been discovered. And it does prove that there are indeed exceptions to just about every rule.

On the other hand, I have heard that we will be grabbing the low hanging fruit twice already today.

The only story regarding low hanging fruit that I think truly applies comes from the Bible, of all places. It involves a serpent, the first woman and low hanging fruit. It doesn’t seem that that one turned out very well either.

It doesn’t seem to stop us though, from looking for that supposedly easy win.

Careers and Gigs

A new year has started and that has got me thinking again. Always a dangerous pastime for me. I watched my dad go through his career. He was and still is a scientist. One of those guys who actually conceptualized and then created things. A PhD in physics. He worked at Bell Labs and got put on permanent loan to the United States federal government for research. Later in life he went on and did some other interesting stuff. He created some forecasting capabilities to predict price movements in the commodities markets. Most recently he started to lose some of his hearing, so he created a new type of hearing aid (which he and my mom sell), and from that technology he is working on the creation of true High-Fidelity ear-buds for listening to music.

That to me was, and still is an amazing career. He will be eighty-nine next month. He is still having fun. I hear it in his voice when I talk to him.

I bring this up because I believe for the most part, that the age of the career in business as we have known it, is just about over. Most people in the workforce, and certainly those that are just entering the workforce are probably not going to be able to enjoy what has in the past been described as a career. Like everything else, the definition, and expectation of a career is changing.

It used to be that a career was built on what you learned and then how you applied it to the next opportunity or situation. You learned, you internalized, you synthesized, and you applied it elsewhere. You built, and you grew. There was an investment in you and you were vested in them.

I’m going to change gears here a little bit and talk about music, one of my other advocations. I like to play in some of the Jazz bands located around here. It has been a long road to get there. I had to learn, practice and apply what I had learned in order to get to the capability to play with some of the musicians in the area. Even then I feel as though I am barely able to keep up. I enjoy that challenge.

However, there doesn’t seem to be a lot of demand for Jazz bands. There is some, but it is a decidedly niche type of audience. What this means is that the opportunities to play for people, particularly people who specifically like and appreciate Jazz are somewhat limited. The opportunity to be a “house band” or have steady employment as a Jazz musician is pretty limited.

The opportunities to play for an audience are usually referred to as “gigs”. Dictionary.com defines “gig” as:

gig
[gig]Slang.
noun
a single professional engagement, usually of short duration, as of jazz or rock musicians.
https://www.dictionary.com/browse/gig

So, as a Jazz musician, you are usually always looking for the next opportunity to play, or gig. Even if you currently have one, you are looking for the next one because you know that in a reasonably short period your current gig will be over, and you will need to find the next one.

I think you can see where I am going with this. Dictionary.com also defines “gig” in the following way:

gig
[gig]Slang.
noun
any job, especially one of short or uncertain duration
https://www.dictionary.com/browse/gig

I looked back over my career and realized that I have had the opportunity to work for no less than eight major corporations. Some of the moves and changes were of my own volition. Some of the changes were due to corporate mergers and acquisitions. Some were due to corporate downsizings and changes in strategic direction.

The point I make here is that my dad worked for basically one company (Bell Labs, even while on loan to the Federal Government) for the vast majority of his career. I have considered myself nominally stably employed for the majority of my career, but even so I have worked for eight companies. I think that going forward that corporate tenures are going to continue to become shorter and shorter, either through the individual’s own volition, or the company’s.

In short, it would seem to me that business employment is going to take on many of the characteristics associated with gigs. Opportunities are going to be shorter term as both the employee and the employer begin to expect and react to the gig environment. It does not appear that there will be the longer-term commitment or investment by either the company or the employee going forward.

In other words, don’t expect a career. It will be a job. And as time goes by, it will probably be best described as a gig. You sign up, work and then sign off.

A side benefit to the company with the new gig business structure will be the corporation’s ability to better control their labor costs. Due to the fluidity and replaceability of labor associated with the gig structure, annual, merit, seniority and cost of living raises will probably become things of the past. Instead of increasing someone’s pay to perform the same gig, it will be cheaper to just hire someone else to do the work.

In the past it was sometimes viewed as a sign of instability if there were too many different positions and companies on one’s resume. I think that will obviously change. In fact, I think in the future having multiple assignments, or gigs, with various companies will be seen as a strength. If you don’t have enough, varied assignments with different companies, employers will wonder why.

Employees should no longer look to or expect to matriculate upwards into management, in a single company. As the horizon continues to shorten, each gig will be viewed as just a step in an overall body of work. (Very similarly to each album is an increment to the musician’s bodies of work.) If you don’t change your direction and content often enough you will run the risk of being type-cast or worse, thought of as lacking in aggression or creativity.

As companies continue the drive toward being process driven, the gig will continue to be defined and refined into smaller and smaller, discrete functions. The only way to get broader experience will be to have multiple, different gigs. The best way to get that will be to go to different companies.

This could have a disillusioning effect on those that are coming into the workforce with expectations that may be unaligned with the current corporate directions and trends. Simon Sinek, the British-American author on business and organizations, had a very interesting video discussion where he addresses the millennial in the workplace topic.

In it he discusses how he believes that organizations are going to have to change and adapt to this new millennial force in the workforce. I think he is partially correct in that there is a mismatch between the millennial generation’s expectations and the direction that business is moving. As business moves to contractor / gig / low-cost labor model, the new employees are going to have less and less of an opportunity to have an effect on the corporation. This is the direction that companies appear to be moving, of their own volition. There is a drive for this inter-changeability.

Just as when a musician becomes unhappy with the band he may be in and leaves, the ability to replace them with another musician becomes paramount. So it will be in business. The process will define your gig. The way to move forward will be to have multiple gigs. The way to get multiple gigs will be to move from organization to organization.

As with any new organizational or employment structure, there will be ways for people to prosper. Just as good musicians are always in demand for bands and gigs, so will competent and capable employees be in demand. It will however change the dynamic between employees and employers in the extreme. Employees will be more and more apt to leave at any time. Employers will more and more structure employment around gig concepts and temporary assignments. When the assignment is up, it will be incumbent on the employee to find something else, either internally or externally to the company.

Just as all musicians, even those with a current gig, are always looking for the next gig, employees will also have to start preparing for their next gig, even when they have one. Times are changing. Cycle times are getting shorter, and so are the horizons that companies are willing to invest in research and development, new products, new markets and employees. The returns will need to be seen almost immediately or they will move on to something, or someone else quickly.

Just as a musician likes to have his next gig lined up even before he is done playing the current one, I think in the coming environment it will be almost a necessity to line up your next business gig before the one you are on is over. No one likes to be waiting on, or without a gig.

The “Hail Mary” Career Strategy

I was riffing through the Yahoo! Finance page the other day and saw what I thought might be an interesting article: “The Real World Is Increasingly Rough For 30-Year-Old Americans”, by Katie Krzaczek. https://www.huffingtonpost.com/entry/the-real-world-is-increasingly-rough-for-30-year-old-americans_us_5b574ae2e4b0fd5c73c947fe
So, I clicked on it, hoping it was not the obligatory “click-bait” that we have all come to love. To my surprise it wasn’t. But it did send me to “The Huffington Post” page. Before I went any further, I did a little research on just who the Huffington Post is. I didn’t want to be responsible for furthering some Russian troll’s agenda.

It turns out that Wikipedia has this to say about the Huffington Post:

“HuffPost (formerly The Huffington Post and sometimes abbreviated HuffPo) is a liberal American news and opinion website and blog that has localized and international editions.” https://en.wikipedia.org/wiki/HuffPost

With that out of the way, and despite the fact that am probably far from being considered either a thirty-year-old, or a liberal, I read on.

The article dealt with the idea that despite the fact that all the available empirical evidence that that should logically lead to a different conclusion, this age group demographic was by and large positive about their earning potential.

The article cited the available data that the current percentage of thirty-year-olds earning more than their parents was at an all-time low: approximately fifty percent as opposed to almost ninety percent fifty years ago. It brought up these additional facts:

“Bloomberg recently used Federal Reserve Bank of St. Louis data to highlight how today’s young people “are weighed down by student debt and stagnant wages”, and

“Axios published several charts to show how more of today’s 30-year-olds are living with their parents, paying higher college tuition, taking on significant debt, and buying fewer homes than 30-year-olds four decades ago.”

In short it was painting a pretty bleak picture for what has been termed Generation Y, but was noting that they were still positive about their earnings prospects. In fact, it pointed out that more than half the people in this demographic expected to be millionaires.

Now, perhaps with inflation a million dollars neither goes as far, nor is as difficult to obtain as when I was in this age group, but even so, this seemed pretty amazing to me. What was even more amazing to me was the way they thought that they would get there.

Ethan Wolff-Mann and Melody Hamm of Yahoo Finance noted in the article:

“I’m not exactly sure where all of this positive sentiment is coming from… I’m not sure whether the stagnant wages are contributing to this or anything like that. I do think … people [are] just hoping that something comes along that they walk into luck.”

“… some young people “think they can become influencers or they can sort of get a following, perhaps have a YouTube channel, perhaps be on Instagram and get $5,000 to pose with a bag or a beauty product.”

“Unfortunately, the power of social media, and the “Hail Mary shot” it presents …. works for only a fraction of those hoping to get rich quick.”

Oh, my goodness…

This approach strikes me as betting your future on winning the lottery, or the Readers Digest Sweepstakes, or some such equivalent opportunity. Yes, it is true that someone usually wins, but as noted above, it is usually a small fraction of those that are playing. However, planning on being “lucky” does not strike me as either a good or intelligent strategy for making money, or prospering in business.

If you don’t believe me, just walk into any casino on the planet. When inside, look around. Notice all the nice employees, luxurious prizes, and very nice crystal, wood and marble appointments. Then look at all the people in there gambling. Understand that those are the people paying for all those nice things in that casino. Yes, there may be a very small percentage of them that actually win and are held up as examples to all the rest, but by and large, the vast majority of people that enter a casino leave it with less money than when they entered it. That’s how casinos stay in business and pay for all the nice appointments.

It seems that many may now have the opinion that you no longer have to work hard and excel at something to be successful. Perhaps it is the constant bombardment from the media depicting reality “stars” who seem to only excel at being famous as opposed to being talented, that is influencing this generation as to what success is. Perhaps it is the commercials only showing the Publishers Clearing House winners, and not the millions who don’t win.

Rightly or wrongly I have learned to associate success with hard work. Yes, there has to be some innate ability, but it is the drive and hard work to make something of that ability that leads to success. It seems that too often we attribute success to “luck”. Perhaps that is why so many now are relying on this Hail Mary approach to success. They just expect to get lucky.

The Roman philosopher Seneca is attributed as being the source of the following quote on luck:

“Luck Is What Happens When Preparation Meets Opportunity”

But we now depict the successful as not being prepared to be anything other than famous and successful. They are no longer famous because they were successful, they were successful because they were famous.

Too often we see the successful after they have “paid their dues”. Gates, Bezos, Jobs, Buffet and the others all worked long hours and were driven to be successful. I guess watching people work hard doesn’t make for good television, although the “Jobs vs. Gates” episode of the “American Genius” series on The National Geographic channel was an outstanding depiction of what hard work looked like.

It was also condensed down into a one-hour time frame and put together thirty years after the actual events. It seems today that people want to know and see who will be kicked off the island, or out of the house, tonight.

In business there are very few opportunities for the Hail Mary approach to success. I am sure that they happen occasionally. I just have never seen one, let alone had the opportunity to participate in one. That doesn’t mean that they don’t exist. Just that they appear to be very rare opportunities and events.

As an example, when discussing the rarity of events, for the longest time people thought that the only type of swan that existed was a white one. There was even an old proverb relating to them (“A rare bird in the land”, first attributed to the Roman satirist Juvenal.)

It was not until relatively recent times that it was found that black swans do actually exist (in western Australia). This idea of “The Highly Improbable” was then put into a theory by Nassim Nicholas Taleb, present day scholar and statistician, https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb to explain the rarity of certain events:

“The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based on an ancient saying that presumed black swans did not exist – a saying that became reinterpreted to teach a different lesson after black swans were discovered in the wild.” https://en.wikipedia.org/wiki/Black_swan_theory

Furthering the idea of the rarity of the business Hail Mary, or Black Swan event, is the continued relative drift away from critical thinking business opportunities in favor of process expansion and edification. Simply put, the business structure of today does not lend itself to many Hail Mary opportunities for success.

Instead business presents the opportunity for focused and hard work, and the potential opportunity for advancement and increased responsibility. “Potential” being the key word. In business today, many have the ability and intellect for advancement, but few have the focus and drive that Gates, Jobs, Bezos and others have demonstrated as a requisite for their levels of success.

The opportunity for success in business is still there, as shown by those that do rise to the most senior levels of leaders in it. It seems it is more the internal drive (and hard work) that separates the successful in business as opposed to them planning on being lucky.

This idea does not play as well when stacked against reality TV, or YouTube channel auteurs who are seemingly being successful at being famous – although I am sure that being famous is probably hard work as well.

What is interesting to me is the way Krzaczek ends her article on thirty-year old’s plans and methodologies for success and getting rich, in a seemingly “liberal” publication. She cites Andy Sewer, Yahoo Finance’s editor-in-chief, who said:

“Get real, work hard, and don’t spend money. The best way to get rich in America is not to spend money.”

That sounds like a pretty conservative, but smart approach to success to both getting rich, and being successful in business to me.

Not Making Decisions

I think we have all probably had the opportunity to work either for, or with people who when presented with a decision-making opportunity would actively avoid making the requisite decision. This is an interesting phenomenon in business, and one that seems to be far more common than anyone might expect. We all have been indoctrinated (well, obviously not all, the subjects of this article seem to have avoided this indoctrination) from early ages that leaders advance in business because the make good decisions. They are right far more often than they are wrong. They seize the moment. They are proactive, not reactive. They are the masters of their own fate. Why then does it seem that there so many managers around in what should be positions of what should be leadership, if they actively avoid making a decision when the time comes to make one?

I had been contemplating this decision-avoidance management style for a while, when I saw a Facebook posting that pushed me over the edge into writing about it.

Yes, Facebook.

I mean, after all, if you see it on Facebook, it has to be true, right? Twelve thousand Russian internet trolls can’t be wrong, can they? But I digress….

The following is the post I saw (It was actually re-posted by a friend of mine. Below is the actual URL):

(https://www.facebook.com/REALfarmacyCOM/?hc_ref=ARTa6SNGQ99wX_NW_jDp2bf-MzzSqL-Lr1SXCVjnWX09uq0fonu7AiT5_p8DhES1MLM)

It was originally a much larger post, in what was obviously an effort to assure attention, not to mention veracity, by being that much larger than anything else on the screen at that time.

It is also in my opinion, patently wrong.

It has been my experience that the decision avoidance approach to management must be a viable approach to business, especially for those with what is referred to as “bad judgement” (or judgment challenged, if you prefer) based on the number of managers who seem to avoid making decisions. Many have survived and even flourished in business without being decisive. More on this in a moment.

Peter Drucker is a famous business management leader, consultant and writer in the twentieth century. He said:

“Whenever you see a successful business, someone once made a courageous decision.”     (https://www.goodreads.com/quotes/451403-whenever-you-see-a-successful-business-someone-once-made-a)

On the surface, this is correct, but only as far as it goes. Making decisions is good really only when you make the right decisions. Being courageous and wrong in your decision making is probably a good way to end your employment. Drucker probably should have said:

“Whenever you see a successful business, someone once made the correct courageous decision.

The difference is small, but crucial.

Almost every business will try to tell you that they value risk takers and encourage their teams to take risks, and that risks are good, and we should all risk, and so on and so forth.

What the business is really saying is that they want you to take risks, as long as you are correct, and the risk works out. What I have observed is that while companies say that by taking risks and being wrong, there can and will be a learning experience, the usual item that is learned by the risk taker is that they shouldn’t have been wrong. This conclusion is invariably arrived at later, normally in the process of looking for their next opportunity.

This would then lead us to the slight modification of the Facebook post, so that it would read in the following way:

Be decisive.
Right or wrong,
make a good decision.
The road of life
is paved with
Flat Squirrels
Who made a
Bad Decision

This revision of course begs the question:

Who wants to be a flat squirrel?

We now understand how the decision avoidance approach to management has come about. The up-side to making multiple good business decisions is that you may get the opportunity to make more, larger and more important business decisions. The down side is that if you make one bad decision, there is the potential to become a flat squirrel that will not be given the opportunity to make any further business decisions in the future. This sort of risk-return associated with business decisions results in driving many to avoid making decisions.

So, with this in mind, how do managers who won’t make a decision appear to become leaders?

The answer is the same with all questions of this type: Very carefully.

When presented with a decision-making opportunity, instead of making a choice, most managers will opt for pseudo-decision-making activities that will give the appearance of taking action, but will not directly subject them to the decision making risk. Examples of these activities can be:

Socialization, where the decision options, criteria and possible outcomes are presented to multiple other entities. This can result in opinions and responses with suggested options, or even just general feedback that can be used to diffuse the decision source and responsibility.

Discussion, where a meeting is called where the decision options are discussed and presumably the best option will be chosen. This process can actually take multiple meetings, depending on the amount of research that may be called for. Again, the result here is the diffusion of the responsibility for the decision. It is no longer a single manager, but now a team or group decision.

Escalation, where a decision avoiding manager can escalate the decision, either directly or indirectly, to a more senior level where it can then be made. This usually happens when a decision / risk averse manager reports to a decision inclined supervisor. In this situation, this kind of decision behavior may actually be encouraged.

And delaying, where the decision is put off or postponed long enough for the required decision option to become self-evident enough that there is relatively little risk in finally selecting it.

There may be many other behaviors and responses that can be observed by decision avoiding managers, but I think these are probably the most prevalent.

So, what does this all mean? Is decision avoidance an acceptable management style?

I think the answer is yes, and no. It has proven to be a workable strategy for many either risk averse, or judgement challenged, people. The proof lies in how many of these decision avoiders exist in management. But I think it is by nature a strategy of limited potential. If the goal is a middle management low risk and lower reward position and career, then it can probably be a workable approach. However, I think regardless of your preferences or career position there will always come a time when a decision will need to be made.

It may be small, or it may be large, but there always comes a time in business that will call for an answer. Those with decision making experience (analytical skills, judgement, etc.) will have an advantage. Those that don’t, won’t.

These instances are definitive examples of what is known as “The Peter Principle”. The Peter Principle stems from:

“Observation that in an hierarchy people tend to rise to “their level of incompetence.” Thus, as people are promoted, they become progressively less-effective because good performance in one job does not guarantee similar performance in another. Named after the Canadian researcher Dr. Laurence J. Peter (1910-90) who popularized this observation in his 1969 book ‘The Peter Principle.’”
(http://www.businessdictionary.com/definition/Peter-principle.html)

The Peter Principle would lead us to believe that eventually a decision averse manager will find themselves in a position that will require the ability to make good decisions. After all, as Peter Drucker noted, business will eventually come down to making a courageous (read: correct) decision. Unless they have been keeping this ability in reserve, or well hidden, they will have then reached their upper limit on their management mobility.

It would appear that the successful method of applying a decision avoiding management strategy is to not desire or aspire to a role of such a level of responsibility that it requires a number of high visibility decisions to be made.

I don’t know of many business managers that knowing opted for the decision avoidance approach to business. I do know of some (I think we all do) who may have drifted into this business approach. It would seem to me to be a seductive, but probably slippery slope that could lead managers in this direction. The avoidance of issues instead of the difficulty of dealing with them can be attractive. If the opportunity and capability to do this was made available, there would of course be some who would take advantage of it. Matrixed organizations and well rooted processes for dealing with all manner of issues that will ultimately require a decision of some sort to resolve, may actually begin to drive this type of behavior.

It is at times like these that I hear the lyrics to the Rush song “Free Will” off of their 1980 released “Permanent Waves” album.

Yes, I listen to and appreciate Rush. I also applaud their finally being inducted into the Rock and Roll Hall of Fame in 2013.

The passage that comes to mind is:

“….You can choose a ready guide
In some celestial voice
If you choose not to decide
You still have made a choice….”

(https://www.rush.com/songs/freewill/)

Wow, Facebook (Decisions), Peter Drucker (Decisions), Laurence Peter (The Peter Principle) and Rush (Decisions) all in one business article.

Future Jobs

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

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

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

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

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

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

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

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

I think for starters focus on one word: Customers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Race to the Bottom

I had a phone call drop the other day. It wasn’t a big deal. In this wireless world I think we have all had phone calls drop. We also get static, interference and garbled messages, but hey, we’ve gotten used to it. The difference was that this call wasn’t a wireless call. It was a call using a land line desk phone. Come to think of it, having a land line call drop isn’t such an uncommon event these days either. I have commented in the past that not quite good enough is now good enough. I think this is just a symptom of what I call a race to the bottom.

Benjamin Franklin once said:

“The bitter taste of poor quality remains long after the sweetness of low price is forgotten”

I think for a very long time this was the case. It was accepted that there was a trade-off between quality and price. However it seems that times have changed. What was once true in a handmade, almost artisanal world does not seem to apply quite so steadfastly in the modern, mass production, readily interchangeable, short life span high technology world of today.

It used to be that you could get things cheaper but they invariably didn’t last as long as the more expensive better made items. This was a period when it took a while to make just about anything, and it was a requirement that it last based on what it cost to acquire. Back then when you bought something you expected to have it for a while. You expected quality almost directly in proportion to the price that was paid. You paid less, you expected less. If it wasn’t high quality you were going to have to live with that mistake for a while. As a manufacturer your reputation rested on every product you made.

I think the new approach today is to ask what is the best “relative” quality available at the absolute lowest price. Now it seems that the search is for as much quality as is obtainable at the lowest price. It is a somewhat subtle change in the relationship between price and quality, but I think it is an important one. I think in today’s world Ben Franklin would be asking what the minimum quality level is that can be endured at the target price point.

We are no longer buying quality. We are buying price and hoping for quality.

I guess that there still is a relationship of sorts between quality and price, it’s just that now it seems almost impossible to up-sell a customer (raise the price) based on quality. If you are not the cheapest, your chances of gaining the sale are probably going to be severely hindered by the other product that is the lowest price. Customers for the most part seem to view products as readily substitutable with each being able to perform essentially the same functions as the next, hence the “why pay more” approach.

I think it can also be traced somewhat to the public perception in the change of relative life expectancy the products. The shorter the life expectancy of a product, the quicker the next generation or replacement product hits the market, the more it seems that there is a tolerance for lower quality. It came out quick so a few bugs are always expected initially. As we have moved into the disposable high technology world, it seems the more tolerant the market is of lower quality, as long as the product is available for cheap.

Just over fifty years ago Gordon Moore noticed that technological capabilities doubled roughly every eighteen months. It seemed everything got either twice as fast or half as small on a very regular basis. This observation strangely enough became known as Moore’s Law. It basically ushered in the era of short product life cycles and rapid product replacement.

I have mentioned several times that I am probably a dinosaur. I remember (vaguely) my parents color television. All twenty three inches of that then massive cathode rate tube screen. Wow, what a monster. I also remember the repairman actually coming out to the house once or twice to repair it. Of course this was across the approximately fourteen years of its operational life in their living room.

Now televisions are huge with many larger than sixty or seventy inches. Unfortunately they are only expected to last a few years. Then they either break and must be replaced since the cost of repair is now so prohibitively high as compared to a new one, or are just replaced by the newer level of product technological advancement.

My point here is that while the absolute cost of the product may have come down in both real and time adjusted costs, I don’t think the total costs across the sample period have actually been reduced. In other words, the total cost of ownership across fourteen years and two repair visits is probably far less than the three to four televisions that might be expected to be purchased across the same time period today. However, it is only fair to note that who can say what the capabilities of a television will be in fourteen years at its current rate of evolution.

It seems again if you have a short technology cycle, short life expectancy, readily substitutable, mass production product, such as televisions, or smart phones, or personal computers, or just about every other electronic platform in the market today, quality is not the concern. Price is. And when that happens it looks like the race to the bottom is on.

The reason that I have gone into such belabored detail on what is obviously a consumer goods example is that it has been the bellwether for the business world as well. Let’s get back to my dropped call scenario.

For the longest time the communications infrastructure was a source of pride. I seem to recall when “five nines” of reliability, no down time, and always being able to place a call were proudly pointed to aspects of both the public and private communications systems. You could not get a higher quality infrastructure.

So you didn’t. You got a cheaper infrastructure. It now experiences issues and outages that in the past were unthinkable. And over time people have accepted it. Quality was sacrificed for price. You don’t hear anybody asking “Can you hear me now?” We all seem to be okay with it. We seem to have lost the drive and desire for “better” and have just settled for “cheaper”.

I don’t know if it is the consumerist behavior driving the business world in this direction or the business world drive for newer and cheaper technology that is stoking the consumerist behavior. As the apparent acceptance by customers for low quality continues, even though there seems to be an inordinate amount of business focus on creating the “relative” quality levels in technology products, price becomes an ever greater decision criterion. This trend can only benefit the low cost producers and providers in the market.

When quality is addressed as a cost as in the “cost of low quality” as it is measured today in business, instead of a generated value to the customer, then I think the bottom may be in sight. Feature, form, fit, function and quality no longer seem to be viable differentiators in the eyes of customers. Price and its financial partner, cost, now seem to be all that matters.

Maybe Ben Franklin was right in his time. I think Kurt Vonnegut may be right in this time. He was the one that said:

“In this world, you get what you pay for.”

The only issue now, is that we don’t seem to be willing to pay for it.

Growth Industry

I think it is safe to say that most everyone is looking for their next career opportunity. What do they do next? Where do they go next? What is the next step in their career progression? When I have been asked in the past what someone’s next career step might ought to be I have invariably said that everyone should spend some time in sales, and that everyone should do whatever they can to be able to understand the business numbers.

I am not going to back away from that comment. Good leadership needs to understand what it takes (and just how difficult it is) to generate a top line. No matter what everyone who has not been in sales may think, I have found that it is just not that easy to get someone to give you their money, regardless of how good the product or service is that you are selling. (Apple products don’t count here. I truly believe that customer set has been brain washed.) Even so, I think we have all been in situations where management has predicated all of their well scripted strategies for sales growth, regardless of product, business or market conditions, only to miss those growth targets and then try to deal with the business consequences.

I also stand by the assertion that numbers, and derivation of such numbers (or in some cases the divination of said numbers) is required for business and organizational operation. I have cited several quotes on numbers in the past. Robert Heinlein said “If it can’t be expressed in numbers it is opinion not science.” Mark Twain said “There are lies, damn lies, and then there are statistics.” A leader’s long term (and short term) success will be based on their ability to understand and communicate what the business’ numbers are, and why they are what they are.

What I think I am now going to add to these two suggested experiential requirement sets is that leadership needs to spend some time in what my experience has proven to be the only consistent growth industry that I have seen across all industries, markets and businesses: Cost Reduction.

In business there are many things that can (hopefully) be influenced in business performance, but very few things that can truly be controlled. Businesses can try and influence the market to perceive them differently. They can employ various media and advertizing to try and create a progressive image in the market for their goods and services. They are in essence trying to convince the market of their particular product or service advantages and benefits.

Whether or not the market accepts, agrees or is influenced by this positioning is outside the direct control of the business. The business will always try and craft its market message in the most beneficial light possible, but it is the market which gets to decide which parts if any in the message and value proposition are accepted. Entire industries of analysts and consultants have grown up around this market value proposition analysis in efforts to try and actually decipher the facts associated with these messages.

Whether individual customers accept or agree with the proposed business value proposition is also somewhat outside the control of the business. The business can employ dedicated sales staffs and teams to tailor the message specifically to each customer as well as work to identify the value of the solution to that customer. This provides greater input and positioning for the business, but yet again it is the customer that ultimately controls the relative success of the business proposition. They get to say “yes” or “no” to the proposition.

The point here is that a business can do absolutely everything right in the dissemination of its message to the market and its pursuit of the ever elusive customer order, and still fail, sometimes for reasons that are entirely outside the control of the business. They can work and influence and sell in every way imaginable and still not get the order, or enjoy the top line growth they have planned for and need.

Herein lays the rub.

Senior management doesn’t really care about that. A plan has been made and the numbers have been committed. Those numbers have been combined with the overall organization’s other business’s numbers and an total organizational plan has been committed to the corporate leadership. You don’t get to easily miss your financial commitments to the organization.

Where do you think all those ideas for those colorful punishments on your favorite Game of Thrones or Walking Dead television shows came from? Exactly, people who missed their planned or forecasted targets.

While it may be generally frowned upon by senior management to miss the top line plans and forecasts for growth, it is wholly unacceptable and more than likely to be a punishable offense to miss the business profitability and earnings commitments. Herein lies the squeeze: While the top line may not be achieving the required heights, the profitability and earnings commitments to the organization cannot be reduced proportionately, if at all.

The only solution is to cost reduce.

I don’t want to make it sound as if cost reduction is only something to be taken on in times of business stress or top line under performance. It may have once been that way, although I cannot remember it. Suffice it to say in today’s day and age that for a healthy business cost reduction is both a growth business and a never ending process. If you are not doing it now, you had better get started because it will probably be necessary sooner rather than later.

It is well known that the sooner you can make adjustments of any kind in a business year, the less drastic the adjustments need to be. If you can recognize in month two that there is an issue, you have ten months to correct. If the issue is not recognized until month seven, you only have five months to correct, and now the correction must be twice as large.

What I mean here is that if there is a one million dollar short fall in the earnings commitment / forecast and it is recognized in February, you can correct spending (costs) to the tune of one hundred thousand dollars a month. If the same one million dollar issue is recognized in July, you will need to reduce costs by two hundred thousand dollars a month to recoup the same million dollar correction.

Remember that. The later you wait, the more drastic the cost reduction action will have to be. Plan early, act early. Hoping things that are not fully within your control (sales) will improve usually results in much more painful activities associated with those things that you can in fact control – costs.

There are all kinds of costs associated with a business, not just people costs. Here is where knowing the numbers thing comes into play. What are these costs? How do you control or reduce them? And, almost more importantly, how long will it take to implement the changes associated with reducing them?

We have probably all seen these knee-jerk cost reduction actions:

Travel bans – which basically just limited the people who should be traveling and not so much reducing the number of people who shouldn’t have been traveling in the first place. Travel is not a light switch with only the “On” and “Off” positions.

Hiring Freezes – that really aren’t freezes because there will always be the need for the flow of the life blood of new talent that every organization requires.

I have even seen the removal of coffee and other amenities from the corporate break rooms. I don’t know how much was saved, but it did succeed in generating a significant number of grumpy people.

There are any number of other “cost reductions” of these types, but they are for the most part superficial. They do not address the specific issue that the business’s basic cost structure does not match its revenue and hence earnings positions. True cost reduction comes from addressing the long term and fixed costs associated with a business. Can fixed assets be reduced? If so, how and how long till they are affected? Is there outsourcing or off shoring that may be needed? Not everyone can be the best at everything, so looking for external help may be a potential solution. Are there allocations or other programs that need to be reviewed? The list goes on, but the costs must be dug out, isolated and analyzed before action can or should be taken.

This activity will serve to teach the leader, or would be leader what the costs are, in human terms or otherwise, associated with cost reduction. Changing the course or the costs associated with a business is much more fundamental than just freezing travel or hiring. It is also much more invasive. It’s not easy. You have to challenge yourself, your team and your business to change, and that is never easy. No preconceptions regarding business costs should be exempt. All costs should be questioned. When addressing cost reduction, remember what Sun Tzu said about war (as in this case they will be somewhat similar):

“The art of war is of vital importance to the State. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.”

So is the art of cost reduction.

Darwin and China

I think it is safe to say that we are all experiencing some sort climate change. I am not just saying that because it is one hundred and four degrees here in Texas. It is mid-August in Texas. It is always one hundred and four degrees in Texas in mid-August. Remember Climate is what you expect. Weather is what you get.

What is interesting about this year in Texas is that we had almost four feet of rain in the first five months of the year, and now it hasn’t rained since then. That is a little odd. We have had something of a drought for the last few years where all of the water resources were way below normal. Most municipalities had instituted water conservation rules because of it. Needless to say, there were a lot of dirty cars because we could not wash them and a lot of brown lawns because we could not water them.

We then had a short period of a few months where it rained a lot and filled all the reservoirs to literally over flowing. Everything got green and lush. Most importantly, the golf course fairways were lush and the greens were soft. Life was good. And now we are back to no rain, a drought, but with full lakes. And on top of that it’s August and really hot, again. Go figure.

There are many that would like to point to man as the cause of this perceived global climate change (global warming). I am not entirely convinced of this causality since the geologic record across hundreds of thousands and millions of years indicates that we have had multiple periods of global glaciations (ice ages) followed by significant periods global warming in the past. I’m pretty sure that man didn’t cause these as he (we) weren’t around for most of them. It is possible that man is potentially affecting or exacerbating this cycle with carbon emissions and the like but with a data sample of only a few hundred years (against a historical record of millions of years), as I have said, I am not sure I am entirely convinced.

Be that as it may, this entire introduction regarding environmental change brings up the topics of how do you recognize environmental change, and how do you cope with that type of change. As always there seems to be some significant parallels between what is going on (and has gone on) in the environment and what businesses are facing on almost a daily basis.

Darwin in his “Origin of Species” postulated that organisms either adapt to their environments, or they go extinct. This is pretty interesting stuff when you remember that he figured this out by looking at some little birds in what are now Galapagos Islands. This is now a basic tenet that we all seem to agree on.

It is those that adapt to their changing surroundings that survive.

About ten to eleven thousand years ago North America experienced a period of rapid warming associated with the end of the last glacial period. During this time lions, cheetahs, mastodons, and various types of bears that were present in North America went extinct. It is interesting to think that there were lions, cheetahs and mastodons as little as a few thousand years ago in North America, and that they are now extinct. That is a veritable “blink” of an eye in climate or geologic time.

It is believed that several of these species were unable to adapt quickly enough to the changing environment associated with the post glacial period warming and began to die off. It is then thought that other species in that particular food chain (predators and such) also began do die off as they could not quickly enough adapt to utilizing other prey. The net result is that they are gone, and we only know about them here because of the bone and fossil record.

When we look at what is going on in the various markets, not only in the Americas, but globally, we see similar adaptation and extinction events occurring. Businesses and organizations must be quick to recognize shifts and changes in their environments and be agile and flexible enough to be able to adapt to them.

This adaption – extinction pressure requires businesses and organizations to continually perform a balancing act between their desire to codify and stabilize the activities and functions that allowed them to succeed yesterday into a repeatable format, and the ability to be flexible and change these activities and functions in order to meet the new demands of the environment (and the competition) of tomorrow.

There is an old joke that if you are a member of the group that is being chased by a bear, that you don’t have to be faster than the bear. You just have to be faster than the slowest member of the group.

This idea works for a while, until the bear has caught all the other members of the group that are slower than you. Now you had better be faster than the bear, or able to figure something else out. Just running, like you always do is no longer good enough. If you don’t change, you are probably in line for the next personal extinction event.

All this leads to the rather simple position: Changing environments require businesses and organizations to change.

We have all heard the platitudes that organizations have with respect to change and their ability to change. They have to plan on change. They have to react to change. The only constant is change (a particular favorite of mine). This is all well and good. They may or may not do these things. It appears certain that if businesses cannot accept and come to grips with the idea that the way they are doing things today will not be good enough “to outrun the bear” tomorrow they may not get to see the next “tomorrow”.

Climate change may involve the possible change of tenths of a degree across tens or hundreds of years. It is not constant or consistent, as demonstrated by the fact that average temperatures have actually declined slightly in the last few years. It seems the past changes were small and slow, but it was enough to send multiple species into extinction, rather rapidly when looking at things from a climate and evolution time frame point of view.

Such is not the case in business.

Over the last few days the Chinese government has “officially” devalued its currency, twice. In global warming terms this is the equivalent of announcing tomorrow the world will officially be five degrees warmer and good luck to all you seals, walruses and polar bears. This move in China fundamentally alters a business’s ability to move products from other countries into the world’s second largest market by making them significantly more expensive, and at the same time makes products manufactured in China far more competitive in other global markets by making them significantly less expensive.

A business that finds itself on the wrong side of this type of import-export governmental cost equation manipulation has a very short time to change its model for doing business. Maintaining that a company is flexible and that it prides itself on its ability to change isn’t any good here. When there is a recognition that the environment has changed, there needs to be the accompanying recognition that in reality the bear is now running faster.

The only thing that counts in a situation like this, or just about any other situation where a business is confronted by a reality that is in conflict with its current operating model is, does the leadership recognize the new environmental reality, and do they have what it takes to get to the new required business reality? Discussions, meetings and attention to process improvement do not “change” the need for a new approach to doing business when you find yourself in a change or extinction situation.

Sometimes the changes in the business environment occur like they just did in China. They are blatant, easily recognized and either drives a business response, or extinction. However sometimes they are more similar to the changes associated with global warming in that they have occurred slowly, and somewhat erratically and inconsistently over time. There will be those (like me for instance) that recognize and agree that an environmental change is occurring but differ on the attribution of its cause, and there will be those who deny that any change has actually occurred.

It is very clear though that in either case there comes a business morning where you wake up to an unseasonably hot day, and smell bear breath over your shoulder. What you change and how you change will then decide which side of the adaptation – extinction equation you are on.

I think Darwin would be agree.

Cartoons and Strategy

My son was being abnormally quiet the other day. Actually he was being quiet with periodic outbursts of laughter. This is not the normal state of affairs. For those of you with teenage boys you also probably know this to be the case. There is normally an ongoing chatter followed by screams of either anguish or happiness depending on who was most recently vanquished in the current on-line military game being played. I won’t mention which one. They all seem the same to me. We have all seen the commercials on television.

It was so odd to hear him in this mode that I did the unthinkable. I went upstairs to the game room to check on him. He wasn’t wearing his gaming headset. He wasn’t even on the internet. He was watching the Roadrunner and Coyote (more specifically Wile E. Coyote for those fellow purists like me) cartoons. I remembered watching these cartoons when I was young. It was amazing to me that they were still on. He had stumbled across them on a network that only played old cartoons; surprisingly enough called the “Classic Cartoon Network”.

Being of sound mind and body, a guy, and having cartoons on the television, I did the only logical thing. I went in, sat down and watched old cartoons with my son. Some of them I remembered and some I didn’t. It was fun to hang out with my son, but as usual, it got me to thinking. The humorous aspect of the Roadrunner and Coyote cartoons was based on the simplicity of the task at hand; catching the Roadrunner, and the ever more complex slate of strategies employed by the Coyote in his attempts to complete the task.

Leave it to me to compare perfectly good classic cartoons to business. It’s an insult to the cartoons.

Sometimes his failures came from obvious, predictable and expected issues. Sometimes they came from unexpected directions. They were all entertaining. The Coyote’s single mindedness regarding catching the Roadrunner always made me smile.

I always wondered, if he could actually buy, build and fly his own ACME rocket, why didn’t he just use that same intelligence to order take-out from his favorite restaurant, or switch to chicken, which might have been an admirable substitute for Roadrunner and bought some at the grocery store? It probably would have saved him a great deal of wear and tear from all the falling off of cliffs and having large rocks fall on him.

Undaunted by each successive failure, the Coyote would generate a new strategy to capture the Roadrunner. Each new strategy would invariably contain maps and charts and plans on what to do and where to do it. Each new strategy was usually also more complex and more intricate than the last, but was guaranteed to work this time. They never did.

What Wile E. Coyote Inc. teaches us about strategy is something we all probably recognize but occasionally need to be reminded of: Simpler is better. This obviously applies to other business strategy as well.

A good strategy has only a few major attributes. I’ll try and go through at least my opinion of them, just as a refresher course.

First: The goal must be achievable.

On the surface one would think that catching a Roadrunner should be an attainable goal. It probably was, but it was how the Coyote went about it that was entertaining.

As a corollary it’s also okay to want to double or triple in size as a business. It may also on the surface appear to be an attainable goal but the question that should always be asked is: What is going to fundamentally change in the business that is going to enable, or even drive this kind of growth? Everybody else in the market wants to grow too, and they also have strategies. You need to have a very solid and strong precept that makes you different.

Second: The strategy must be simple.

Rube Goldberg is a name that is synonymous with creating very complex machines to achieve very simple goals. He also appears to have been the chief strategist for Coyote Inc. in its desire to overtake Roadrunner Inc. There is even an annual competition in his name where a simple task must be accomplished in no less than twenty different steps. The 2015 objective was to “shine a shoe”, and due to the complexity of some of the past entries (with over two hundred steps) the contest has been limited to a maximum of seventy five steps.

In business the goal should be to shine the shoe. Find the shoe, apply the polish and buff till the desired luster is achieved. That’s it. As the Coyote taught us, the more complex the strategy, the greater the chance there was for something to go wrong.

Third: No strategy survives contact with the real world intact.

This is a paraphrasing of the original quote:
“…no plan of operations extends with any certainty beyond the first contact with the main hostile force.”
Field Marshall Helmuth Karl Bernhard Graf von Moltke (The Elder)

Now for those of you who are not up on your nineteenth century Prussian military history, Moltke was the Prussian military commander during the middle part of the century, and he wrote this in his book “On Strategy” in 1871.

Again we look to Coyote Inc. for examples of what not to do here. He would usually achieve one of the attributes he was striving for in his quest to get the Roadrunner. With the help of his trusty ACME rocket he could achieve the speed of the Roadrunner. He would close in only to see the Roadrunner demonstrate his ability to stop before running off a cliff, or turn sharply before running into a cliff. The Coyote with his ACME rocket usually would not be able to match this agility and maneuverability, with the (now) expected results.

The very act of implementing his strategy caused a change in the behavior of his target. Coyote Inc. was able to go as fast as Roadrunner Inc., so Roadrunner Inc. learned to stop or turn quickly in order to elude its pursuer. The same goes in business. Things change. The competition will react to competitive behavioral changes. Customers will do the same. You had better be able to learn how to change direction quickly.

The idea is to be ready for it. The simpler the strategy means there are fewer moving parts in it. The fewer the moving parts means the fewer number of things that can go wrong, which in turn means the fewer the number of things that will need to be modified as conditions in the market change. This is especially useful when it comes time to change direction because a cliff suddenly appears in front of you.

Keeping goals attainable, strategies and the number of contributing components simple, and preparing change direction as the conditions warrant seems to be enough for any business. It is the complexity that is introduced into the plan that is usually the cause of issues. When it comes to strategy and its components, I am a firm believer in the adage that “Less is more”.

It was an enjoyable time with my son watching old cartoons. It didn’t last nearly long enough. It seemed in no time he had his headset back on and was busy wiping out whichever opponent was on line at the time. I on the other hand was ready to impart all of these strategy and strategic insights that I had drawn from the Coyote’s obviously poor performance to him. He didn’t seem very interested.

I really didn’t expect him too, but still it was mildly disappointing after sharing a solid thirty minutes of quality time as we did. Still the cartoons stuck in my mind and the basic tenets about strategy were there. I suppose if Wile E. Coyote Inc. had actually employed the simple and straightforward strategies it should have in its quest to overtake Roadrunner Inc. the cartoons would have been much shorter, and probably not nearly as funny.

And I probably wouldn’t have gotten to spend some extra time with my son.