Category Archives: Differentiators

Don’t Do Your Job

Although we all like to think of ourselves and our careers as fully and totally unique, I think there are some experiences that we have all probably gone through, to one degree or another, that are probably somewhat similar. It is how we react and respond to these experiences that creates the differences in careers and career trajectories. As I think back on all the roles I have had in the same organizations as well as in new or different ones, I think of one thing that pretty much all of them had in common. They all had a specific job description.

They didn’t all have the same job description. Each role had a somewhat different or unique job description. It was usually that job description that helped the then hiring manager define the combination of experiences, traits and capabilities that led them to choosing me to fill that role. I think it’s probably the same for just about everyone else who doesn’t have some sort of genetic or familial tie to also trade upon in the organizational world.

I think we can all remember those first days in a new position (any new position) where the first thing you do is try to ascertain both what is expected of us and what we will be reviewed and rated on. This is only natural. We all want to do what is expected of us. We want to have objectives to work toward and be measured against. We like to know what we have to do to get ahead.

We then dig in and go on our merry way in trying to achieve or even possibly exceed our goals.

The end.

When review time comes around we are then tasked with the objective of trying to define whether we exceeded our goals in such a way as to merit an excellent “super-star” status (or some such similar ordinal ranking), or just merely a good, exceeded what was expected. Was it really an “exceed” or was it just in reality a “strong achieved”. Did the objective get achieved, or could it in reality have been done better.

It seemed what was once a defined and specific object has now turned out to be open to some interpretation, as it were.

Then there is the ever-present worry regarding whether the ratings that are being discussed are a true reflection of actual individual performance, or is it influenced by, or the result of the organization’s requirement that only certain percentages of the organizational populace can and must fall into certain ranking categories. The dreaded forced rank stacking.

This sort of ranking has been put in place to make sure that managers don’t neglect their responsibility to differentiate employee performance. Instead of having real, and sometimes difficult discussions with their individual team members, some managers have been known to give everyone a “good” rating, regardless of organizational performance.

It’s sort of like this grade inflation thing that everyone seems to be talking about in schools these days. I still don’t understand how you can do better than a 4.0 (straight “A’s”), but apparently, it is possible.

This employee ranking and review is also a good thing in that even outstanding organizations probably have some team members that could benefit in some areas by increased focus, and poorly performing organizations probably have some team members that have performed above and beyond the call.

What this has all led up to, and the point I am trying to make is that when you follow a job description and just do your job, it becomes a question of relative ratings when it comes to reviewing your performance. There is a certain amount of qualitative that inevitably seeps into the quantitative review.

Contrary to what you might think, in this age where the “process” has taken on ever increasing importance, where you would probably think that as a result the quantitative aspects of performance review would be at their strongest, the qualitative aspect of reviews has probably increased.

Think about that for a minute.

As processes continue to ever more granularly define roles, jobs, and their inputs and outputs, the ability to differentiate performance among similarly defined jobs, at least at the high level, becomes smaller. It can almost come down to interpersonal and soft skills as one of the differentiators between similar performers.

Now think back for a minute about that last statement. Have you ever seen that occur?

So, what do you do when just doing your job leaves you open to these types of performance interpretation vagaries?

Don’t just do your job.

Just doing your job is the easy thing to do. You have a job description. You were probably selected because your experiences and abilities matched that job description in such a way that there was a perceived high probability that you would be able to perform the tasks that were outlined in that job description. That was what made you uniquely qualified to fill that role. You were the chosen one.

Don’t flatter yourself.

There are a significant number of people in any organization that can perform any and each specific role in that organization. You may have been selected for that new role, but that doesn’t mean that there wasn’t anyone else around that could do it. Chances are that there were several candidates for that role, and from them they selected you.

I have had it explained to me in a couple of ways, that I will share. The first was that in business, all candidates that make it to the interview portion of the job search are judged to have all the requisite technical and experiential capabilities for the role. If they didn’t, they wouldn’t be called in to talk. All candidates enter the interview process as relative equals. It will be their soft skills demonstrated in the interview(s) that differentiate them.

Remember what I said about soft skills and reviews earlier?

The next is that if we each are truly “one in a million” as the old saying goes, and there is in fact close to eight billion people on the planet, then there are at least eight thousand people that are like each one of us.

There are a lot of people that can fulfill each and every job description.

I guess the point I am making is that the job description is the table stakes in the game. It is going to be what you do above and beyond that job description that sets you apart. Performing against only that job description, regardless of how well you feel you have, or even how well you may be able to demonstrate you have, still puts you somewhere on the “achieved” continuum when it comes review time. You are demonstrating that this is the role or job that you can do and no more.

Regardless of how well things were going, every role that I have been in had facets or areas that could be improved. Sometimes these opportunities for improvement were within my defined responsibility, but many times they were not.

This is where for leaders; the process focus must change. There must always be a bigger picture view that the leader must hold, and be able to rationalize against the more detailed and specific needs of the business. It is not enough to just do your job and fulfill a job description.

You have to recognize on the larger level what needs to be done, and then chart the way to do it. What needs to be done may not reside in your job description. It may not be within the realm of your responsibilities. It may not be immediately obvious and may take time to identify.

The issues that are causing the business issues will however become clearer for you as you perform the tasks that are expected of you. It will not be so much the identification of these business issues that will set you apart. Chances are that the issues are already very well known. It will be identifying the causes of these issues, and the resulting solution that you create (and potentially implement) that will be what sets you apart. Remember what I said earlier about how we react and respond to these issues will define careers and career trajectories?

Again, in short, it will not be doing what is expected of you via fulfilling your job description and objectives that will enable you to continue to move forward. It will be doing the unexpected. It will be questioning some of the basic business assumptions that “everybody knows are correct” and creating a new model. It will be questioning and causing issues as people are challenged by you to move out of their comfort zones.

It will be looking at old problems through the new eyes of someone coming into a new position. New employees in new positions are not yet beholding to the status quo. They have not yet become stakeholders in the existing process. It will be those who are not content to do their job that see the answers to questions, many of which may not have even been asked, and identify the new ways to move forward.

It is not how well you do what you are supposed to do that sets you apart from everyone else. It will be how well you do what you are not expected to do that will differentiate you. It will be important to don’t do just your job if you are to get ahead.

Off-Shoring

One of the hottest debates going on in business these days is the debate regarding what work, if any, will stay in the supposedly high cost country and what work will be sent to the supposedly low cost country. This is the function that is usually referred to as off-shoring. There are many factors that seem to be taken into account with this decision, but there are also several factors that don’t seem to be included. It appears that the only major factor that companies really consider in the off-shoring decision is the relative wage differential of the existent workforce versus the prospective workforce. Having gone through, worked with and reviewed some of these types of working environments, it has made me wonder if there are other factors that should be reviewed before these decisions get made.

The bottom line in all of these out-sourcing or off-shoring decisions seems to be doing what is perceived as best for the organization’s bottom line. This is also somewhat subjective depending on which of the shores you find yourself. The idea is to save money. All other factors will be dealt with or considered in due course. And one of the best ways to save money is to try and reduce the cost of your labor associated with the function in question. Are there other people in other places in the world that can and will be paid less per person to do the work in question?

On the surface the answer to this question is almost always “yes”.

If the only factor to be considered is the wage rate paid to the resources doing the work, then the decision is always an easy one.

But things are usually never that easy.

The first jobs to experience this sort of movement were the production and manufacturing jobs. Production lines and repetitive functions were sent elsewhere. Business cases were built containing the incremental cost of building a new factory as well as the reduced cost associated with the low-cost labor to staff it. Questions were answered about how long the pay-back was on the needed off-shoring investment and decisions were made. Factories and production lines were built in these low-cost countries. The production of simple and basic products was then moved.

I am not going to continue too far down this line of thinking because we all know where it goes. More and more, and more production functions have been off-shored. These are finite directed positions that perform repetitive processes at a fixed rate, to create large numbers of similar products.

Let’s now fast forward a few decades.

Almost every business function is now subject to the discussions associated with which shore it should be on. One of the biggest issues associated with any proposed move now, is that the work being considered is usually more variable than the production work of the past, and it is more subjective in its execution.

While a production line will move along at a fixed rate enabling all participants in the production line to work at the same rate, the same cannot, and should not be said about knowledge based disciplines. Do all people who write software code, or design hardware do it at the same speed? Are they all equally proficient at their respective disciplines? Are all accountants or financial managers at the same competency level?

On an even more basic level, do all locations have the same financial drives, work culture, language fluency and associated work styles when it comes to delivering the required work products? Remember now we are discussing complex or service oriented work products, not physical products such as consumer electronics or other real goods.

It is no longer just a question of the difference in the hourly wage rates, or salaries of the teams involved. The question now moves into the somewhat murkier areas of work force effectiveness and work force efficiency.

Efficiency and effectiveness refers to how many resources it takes in each relative location to accomplish the desired work, and how long it takes them to do it. Too many times it is assumed that one workforce is as proficient as another. This might have been the case on the fixed speed production line (after appropriate training and time to come up to speed), but is it correct to apply these same principles to non-production line types of work and service products?

This is neither a case for or against the off-shoring and cost reduction push. These are tidal type forces that will continue until some sort of economic equilibrium is reached. This is more a question of identifying, accepting and analyzing the total costs associated with each proposed workforce location decision.

Just because it takes ten highly motivated, well educated, relatively expensive resources in one global location to deliver a satisfactory work product, does not mean that it will take the same number of similarly motivated, similarly educated relatively inexpensive resources in another global location to deliver the same work product in the same amount of time.

Research has shown that it usually takes more people, and more time for the lower waged (and supposedly lower cost) locations to accomplish the same tasks and deliver the same work products. (https://cs.stanford.edu/people/eroberts/cs181/projects/offshoring/failures.html)

What this means is that it is not just the relative cost of each hour of work that must be examined in the off-shoring decision. It is also the relative number of hours of work that are required at each location that must be included in the equation. That means that the relative number of people (spending hours on the work) and the length of time that they spend (how many hours) should also be taken into account.

If it takes five people one month to do the work at a higher cost location, and it takes eight people two months to do the work at lower cost location, the resulting total cost of work delivery may yield a very different work location decision that just the straight hourly wage comparison that has been so popular in the past.

On the other hand, it should be noted that if the relative wage differential is great enough, even these types of labor inefficiencies can be overcome.

I try to focus on real and definable costs. The relative number of hours used and the relative wage rates at each location in question are either known or can be estimated with some relative amount of accuracy. These are usually real numbers that deliver real relative costs. As always there are other factors that can be associated with the off-shoring question. I’ll list a few of them, but as they are less quantifiable in their effect, it will be difficult assign an actual value to them.

Are there incremental but hard to quantify costs associated with the increased complexity of the operations, IT, infrastructure and security associated with an off-shoring. In today’s hacker infested world one would think that adding facilities and resources in other global locations would have an effect on these types of costs. However, it is hard to add them into any comparative costing discussion.

There are considerations that should be observed regarding the relative quality of the work product generated in each location. Are there bugs in the software? Are there differences in the way customer support is provided that affect customer satisfaction? These are difficult issues to quantify, at least prior to having to try and resolve them.

Communications will also become more difficult. What was once a real-time conversation may now become a series of emails, depending on the relative time zones associated with the differing locations, potentially across multiple days. The overall speed at which things are accomplished, or issues resolved can become problematic.

The cost of management should also be expected to increase as well. At least initially, expatriate management will need to be present at the off-shore site to setup the new functions and oversee them. Depending on how things progress, their presence could extend over a significant period.

For those of you not familiar with the expatriate role, these people are expensive. They are normally paid at the “high cost” location salary rate, and their expenses for staying in the low-cost location are usually also covered by the company. They are in effect paid close to twice for the inconvenience of living in one location and working in another.

The final “soft” cost that I will address is the public perception of moving jobs out of their current location and to another, as well as the potential exposure associated with future governmental regulations associated with this activity. Market movements associated with drives to “Buy Local” and legislation designed to increase the expense associated with off-shoring are gaining traction in multiple locations.

It is easy to see why low wage rates in other parts of the world may be attractive. As companies continue to become more virtual in their natures’ Virtual Office can mean an office anywhere on the globe. The initial success and savings generated by moving the simple and repetitive off-shore has given rise to the desire to move more and more complex and unique functions as well. This complexity and uniqueness affects the efficiency and effectiveness of the model.

While the relative wage differential will continue to be an important factor in the off-shoring equation, other factors will continue to increase in importance as the off-shoring drive continues to move up the business complexity curve.

The End of Maintenance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The race to the bottom was now on.

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

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

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

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

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

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

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

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

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

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

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

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.

Cost Plus

Do customers really care what it costs a company to provide a good or service to them? We have all heard that the vendor – customer relationship is supposed to be more like a partnership these days, but does it really? How much more would a customer be willing to pay to have that partnership? Do we really care what the cost of the car is that we decide to buy, and by extension how much that automobile manufacturer makes on each car we buy? I don’t think so. Do we really want to have a “partnership” with that automotive manufacturer, or do we just want to buy a car? I think people, and companies are more concerned about the price they pay and the value they receive for the good or service, more so than the cost the provider bears to provide the good or service.

I think this is a pretty interesting distinction. Customers are concerned with a supplier’s price, not with the supplier’s costs. Customers are concerned with the value they perceive they will get from the good or service, not the profit (or possibly lack thereof) that the supplier will recognize from the sale. In short, costs and associated profitability are an internal supplier issue, and prices are an external customer issue. In short it seems that it is the customer’s decision on whether or not they make the purchase decision, and it is the supplier’s decision on whether or not they stay in business.

I will look at a couple of examples to illustrate this point. People do not seem to care how much Apple makes on its iPhones or Macs or any of its other products. Apple is hugely profitable. They make an incredible amount of money on every product unit they sell, yet every year we see people line up (or even more unexplainably, camp out) in order to get the next new iteration of Apple’s products. They willingly spend the money. They don’t care how much Apple is making. They perceive the value and make the purchase. And every year Apple creates a new iteration of the product to feed this cycle.

On the other end of the spectrum, people did not perceive the value proposition of the products being produced by Studebaker, American Motors, Chrysler and General Motors at various times in the past. They didn’t care that these companies were not making enough margin on their products to remain in business. They did not like the designs, the quality or the prices enough to pay what the manufacturers needed to stay in business. Studebaker and American motors are long gone. Chrysler and General Motors would also have departed were it not for governmental intervention.

Economics teaches that the market sets the relative price for all readily substitutable goods and services. This price point is usually referred to as the intersection of the “supply” and “demand” curves. Unless you can influence or control the supply curve, you are pretty much at the mercy of the market when it comes to the price of the good or service.

Aha! You should be pointing to the fact that Apple does not control the supply of smart phones into the mobile phone market. As such, how can they set their price so high and make so much money? The answer here is that Apple does not in fact control the mobile smart phone market. Apple controls the supply of iPhones in the mobile smart phone market, and it has been shown that more than forty two percent of people buying smart phones want an iPhone.

While other manufacturers might like to try and convince the market that their product is a readily substitutable alternative to the iPhone, it looks like they have not been entirely successful there.

While on the other side of the example, it has been shown that one manufacturer’s car can be substituted for another’s. We have seen this in the branding and segmenting that goes on in the automobile market. Segmenting is a process where a very large market is in essence broken down into several smaller market segments. That is why we have “economy” cars all the way up market to “luxury” cars.

It may not be logical to expect that a Hyundai is readily substitutable for a Mercedes-Benz, but it could be expected that a BMW, Audi or possibly a Cadillac, could suffice. It has been shown that there are certain brand loyalties in the various automotive segments, but as market trends, automotive designs and prices move, these can be overcome and new loyalties established.

However the point remains the same. Customers are not so much concerned with the cost of the Hyundai, Mercedes, BMW, Audi or Cadillac. They are concerned with the price. And even more specifically the relative price and the relative perceived value. A person looking for a “luxury” car could buy a cheaper “economy” car for a lower price, but would not receive the perceived value they want. Conversely an economy car patron might want a luxury car, but can’t afford it.

So now the question that this leads to is:

If customers do not care what the supplier’s cost for a good or service is, why do so many suppliers create their customer market pricing based on their internal costs associated with their good or service?

This is known as “Cost Plus” pricing.

If it is the market price, or the relative competitive market price that is of primary concern to a customer, why would a supplier base their prices on their costs, which are irrelevant to the market? If you are a low cost supplier and use this method you could undershoot the competitive market price and forego significant revenue and margin. You can bet that Apple did not make this mistake, judging by their revenues and earnings reports. They saw the price the market would bear and adjusted their price upwards accordingly. They are letting the other suppliers try to compete on price.

On the other hand, if you are not the low cost supplier, but rather a less efficient higher cost supplier, basing your prices on your costs could bring you in well above the market price. While Apple may be able to sell its products at a premium, I’m not aware of too many other suppliers that enjoy a similar market position. You can ask the extinct Studebaker or American Motors how that higher cost versus the market price thing worked out for them.

I guess Oracle might be another company that tries and somewhat succeeds it setting its own market price. Larry Ellison, the CEO at Oracle has always done things his own way. But then again, he likes to build yachts to race in the America’s Cup (a really expensive pastime) and he does own his own Hawaiian island (Lanai) so he must have figured something out.

The major difference between Apple and Oracle is that I am not aware of anybody that “likes” Oracle the way the like Apple (they are rarely, if ever mentioned in the same breath), and I have never seen anyone line up in the street to be the first to buy the latest iteration of Oracle’s database systems and applications.

“Cost plus” pricing assumes that a supplier has a competitively based cost structure. This may or may not be the case. Regardless, the market doesn’t really care. What the market (and the associated specific customers) cares about is the price and the relative perceived value that is derived from the good or service.

Those goods and services where there is a perceived high value and not a readily substitutable alternative can and do charge a premium in the market regardless of their cost structures. Those goods and services where there is a perceived readily substitutable alternative, regardless of the market value, can only command the market price, also regardless of their cost structures.

It seems that the only times that cost plus pricing can be used is if the supplier has a competitive cost structure (which will be difficult to ascertain since suppliers rarely share such information), or if the supplier controls the supply of the desired good or service, in which case the supplier can price in any manner they choose include cost plus methods.

In most other cases suppliers need to be cognizant of the prevailing market prices and trends, and strive to keep their costs reduced so as to retain their profitability at those market pricing levels.

Walls, Windows and Corners

I think it is safe to say that we are truly a status conscious species. We are probably also somewhat obsessive and we seem to like shiny things. Where we live, what cars we drive, etc to one level or another are important to us. It is how we differentiate ourselves from each other, but it is also what makes us all the same on a larger level. So how do we differentiate ourselves in the far more homogeneous business environment? Since we all strive for some sense of individuality, how do we distinguish who is who in an office environment where the focus is usually far more on the collective than the individual?

Office environments seem to be designed with the twin objectives of both minimizing the differences between those of the same level and formalizing the differences between those of different levels. The differences are removed from the system through the use of standardized office constructions. Based on their relative position in the office hierarchy like levels get like office sizes, colors and furniture. Office component colors and furniture are standardized to the point where the days of the mythical executive reserve known as “Mahogany Row” where huge offices and plush office appointments have all but receded into the mists of time.

Now a days there are still many office differences denoting relative professional rank, but they are all somewhat less apparent. The first of several formal office differentiators is office size. The workspace naming nomenclature also reflects this size disparity. No one has an eight foot by eight foot office. They have a “cube”. And regardless of how much square footage they have for work space they will continue to be considered in a “cube” until the second major work space status differentiator is taken into account: that being the height of the walls around a work space. If there is any space between the top of the office walls and the office ceiling, it is a cube, despite any arguments to the contrary.

The best barometer of work space status is the height of the walls around the work space. A good rule of thumb is that if you can see into the work space over the walls surrounding the work space that the occupant is of the most junior of levels. Chances are that they will have the least floor space as well. The only way that these “low wall” denizens can differentiate themselves from other junior cubicle dwellers is by the type and amount of stuff that they jam into their cube. We have all seen it. The over abundance of pictures, knick-knacks, plants, college memorabilia, you name it, that is used to individualize what is an otherwise small, nondescript work space.

As responsibility, prestige and status grow, normally so do the height of the walls surrounding the work space and the area contained within those walls. Surprisingly enough as the walls get higher; the amount of individualizing “stuff” within those walls also seems to decrease. Perhaps it is only those without such office adornments that are selected for higher walls. I think further study on this relationship may be required. It doesn’t matter how high the walls get or how much room there is within them, if the walls do not reach the ceiling of the work area, as I have already said, it will still always be considered a “cube”.

At some point in time the normal progression of wall height and work space size will hit a nominal limit, one of which is the afore mentioned ceiling. Not some sort of metaphorical glass ceiling. The physical acoustic tiled one within the office work area. Once the walls hit the ceiling the area they contain is no longer considered a “cube”. It is now an “Office”. These constructs normally come with a real door that can actually be closed. A nominal amount of privacy is now possible since office doors do not usually contain a window.

Once the threshold has been crossed from cube to office, you might think that the opportunity for status differentiation would be limited. If you thought this you would probably be wrong. There is still the opportunity to differentiate offices by size and location. There is a point of diminishing returns with respect to office size so for the most part I will deal with the aspect of office differentiation based on location, or more importantly, the number of windows that it does or does not have.

Offices that are constructed on the internal walls and passage ways of the work area allow the external sun light to enter the windows and illuminate the entire work area. This allows the people with low walls to at least enjoy the sunlight. This sort of office structure usually indicates one of two possible scenarios: either that the company is truly work environmentally conscious and wants everyone to enjoy the sun light, or that the people inhabiting those offices still haven’t quite made it to the big leagues.

I have only worked in one company in one location where all the offices were intentionally placed internally away from the windows. Needless to say, this is a rare event. On the other hand I have also worked in several locations where you could not actually tell if the building had external windows, or if the sun was actually shining outside unless the doors to the external wall offices were open and the sun was shining through the open door. Chances are if there are internal offices and you are in a multi-story building, you have just not gone to a high enough floor to find the external wall offices.

But even window offices are subject to a status arrangement. The two status guides here are the number of windows that the office has and whether or not it has a “Corner”. This is where the phrase “Corner Office” came from. If you have an entire wall of a four sided office covered in windows, the only way you can get more windows is to have windows on a second wall of your office. According most accepted theories of geometry the most efficient way to achieve this phenomenon is to put your four sided office in a corner of the building so that two of the office sides have windows.

The corner office is generally accepted as the apex of the office status pyramid. If you have one of these you are generally regarded as someone to be reckoned with.

Corner offices are usually reserved for only those who reside within the “Executive Suite”. If you want to see more on the “Executive Suite” please see my May 8, 2014 article on this topic.

I think one of the most spectacular examples of the need and desire for corner offices can be seen in the United States military. Most buildings are build with four corners, which naturally limits the number of corner office opportunities. The US military built the Pentagon, which as we all know has five corners instead of just for. This increases the number of available corner offices by twenty five percent. I guess they had to find an appropriate way to office all the Generals, Admirals, etc that they had.

But now here comes a new office status disruptive technology; the home office. With all the new communication technologies that are available, many former inhabitants of the cube farm are now opting to work at home and cyber-commute to their work. Now it is possible for everyone to have their own office, that can be as big as they want, with as many windows as they want and decorated however they want, and no one will ever know the difference or be able to assess their relative rank in the office hierarchy.

As this work at home technology proliferates we will have to revert to the old tried and true methods of assessing your office status, namely: what city or neighborhood you live in, how big is your house, what kind of car you drive and how many shiny things have you accumulated.

Oscar Wilde once said “Life imitates art far more than art imitates life.” He may actually be correct. However now it appears that we are entering an age where work may be imitating life far more that life is imitating work. I wonder what Oscar Wilde might think of that since he actually worked at home as well.

Lead, Change or Get Run Over

Normally when I start off on an article I have a pretty good idea of the topic that I want to cover. Call me old school but this antiquated idea of writing coherently about a single topic appeals to me. That will not be the case this time. I have been thinking about change lately and I decided that I need to step outside of my comfort zone and practice a little of what I have here to fore been preaching. Hang on; it could be something of a bumpy ride, at least for me.

Since I have just mentioned change, I think we will go there first. I am going to propose what I humbly call “Gobeli’s Axiom of Change”. It goes something along the lines of the following:

In order to change, you must do something different.

There are so many wonderful quotes about change that are available. I have used many of them in the past. I am particularly fond of the quotes attributed to Albert Einstein regarding change. He seemed like a pretty smart guy to me but I won’t use any of his quotes again here. If you want to read them, go Google “Einstein quotes change” and see what you get. There are not only a bunch of quotes from Einstein; there are a bunch of sites that have a bunch of quotes from Einstein.

However it has been my experience in business that change is not about quotes. It appears to actually be some sort of arcane concept that business people pay little more than lip service to. They are more apt to put up posters encouraging change and quote Einstein when it comes to change, than actually changing anything.

The idea of change and the quotes surrounding change make it seem like a lustrous concept that is neat and clean and simple. It’s positioned as if it is your patriotic duty in business to change. Change however is not clean and simple. It takes effort. It involves risk. It is invariably messy. That is just the way change works. This is because you are usually changing from something you know, to something you don’t know, yet.

It is precisely for these reasons that many managers will talk glowingly about the need for change, but will never ever do anything different. Doing something different would mean that there would have to actually be some change involved and that would subject them to the effort, mess and risks noted above. Therefore there is usually a significant amount of discussion regarding change and the need for change, but due to the inherent reluctance to change anything, very few things are ever done any different.

When it comes to change, remember what Einstein said:

“Insanity is doing the same thing, over and over again, but expecting different results.”

Based on this and other topics that I have covered in the past, one could infer that leading change, or leading anything in business for that matter involves more effort, and more risks than following someone else who may be doing the leading. I think it is pretty safe to say that is the case. In the past managing has been much easier and less stressful than leading.

The shuffling of papers and paying lip service to all the change initiatives used to be a safer, lower profile approach to business. There are many people who have happily gone through their careers on this path.

If that is truly the case, it brings up the question:

Why would anyone want to lead?

The simple answer to this question is:

Because things have changed.

It used to be that people who took jobs and worked reasonably hard were pretty much assured that they probably had a job for the rest of their lives. They had reasonable job security and could look forward to a pension when they retired.

As Dorothy said to Toto in the Wizard of Oz:

“I don’t think we’re in Kansas anymore.”

When was the last time you heard of someone having job security? How about staying at the same company for an extended period of time? Lastly, when was the last time you heard of anyone talking about a pension when not referring to a corporate or municipal bankruptcy?
I don’t think this is a case of Dorothy and Toto leaving Kansas. It is more like Kansas slipping away out from under them when they weren’t paying full attention to the landscape.

With all that being said, it still doesn’t fully answer the question of why anyone would want to lead. This reminds me of a college survey that I once read a long, long time ago in a galaxy far, far away. The survey asked the question:

Which is a bigger threat to society: Ignorance or apathy?

The general consensus at that time was that no one knew, and no one cared.

I think the parallel here is that leaders do know and do care about what the threats to business are, and what needs to be done to avoid them. We have all heard the more than trite saying that the only constant in business today is change. I do not necessarily think that is true, or we would all be experiencing more change and it would be much easier to change than it apparently is. If change is truly a constant we seem to have far too many people constantly fighting against change.

I would not focus on the change function as a topic unto itself, but rather as a result of instability. When business seemed to be stable (and pensions were available) there was not much in the way of change. Now even this was not entirely true. Technology continued to change, but the way business and businesses worked remained reasonably constant. Hence the ability for the risk adverse follower to still make out a reasonable career existed.

The only thing stable about today’s business paradigm (I actually hate that word, but it does seem to fit well in this context) is the instability of business. I worked for a company that was once recognized as a world leader in their market with more than thirty billion dollars in annual revenues, and less than seven years later the company was bankrupt and gone from the market landscape.

In a business world where apparently so many do not know what to do, or are unwilling to venture forth with a plan, it would seem to me that the best way to go now is to lead. When it turns out that everyone is taking the safe route and everyone is following everyone else, then everyone ends up at risk. Inactivity or failure to act now presents a bigger risk than taking action, even the wrong action.

Leaders understand the risks involved with taking a stand or implementing change, and do it anyway. They don’t take unnecessary risks. They understand that the risks associated with today’s business environment are multiplied if they do not take action. They see that what was once a stable landscape is no longer stable. They understand that waiting for someone to tell them to take action is riskier than identifying the action that needs to be taken and then taking it.

Despite my affinity for quotes from Albert Einstein, I’ll close with a quote from someone else. John Cage was a renowned musician and composer. He said:

“I can’t understand why people are frightened of new ideas. I’m frightened of the old ones.”

In an ever more unstable business environment leave it to a musician to capture the essence of the new structure. Go figure.

Standing Out

I need to again give attribution to my Austrian friend. He made a comment about standing out in the crowd that rolled around in my head for a while and resulted in the following.

Standing out does not necessarily mean that you are outstanding. It will be wise to remember this. Write it on the inside of your notebook. Possibly even tattoo it on the palm of your hand in the spot where you once wrote your crib notes for tests in school. You will need to continually remind yourself of this fact as you go through your business career. That being said, while being outstanding is always nice, there is really only one way to make progress in the leadership ranks, and that is to stand out.

Standing out requires you to separate yourself from the rest of the office herd. This in itself is something of a risk. It is easy to stay quiet and do as you are told. This is also the way to be part of the crowd. The crowd is safe. If you really want to be safe you can stop reading here, and get up and go close your door, and lock it. You could also possibly put a desk or cabinet in front of it for further safety. This will assure that your door cannot be opened, from either side.

Also notice how I phrased it that you needed to stand out from the crowd and not necessarily be outstanding in the crowd. Being outstanding is always a good way to stand out, but not everyone is or even can be outstanding. As an example, let’s look at a few of the most significant military leaders for the United States in the twentieth century.

General George Patton commanded the US forces in the European theater during World War II. He graduated forty sixth out of one hundred three from the West Point Military Academy. He obviously was not outstanding at school. General Dwight Eisenhower, the Supreme Allied Commander (and future president of the US) similarly graduated in the middle of his class at West Point. Similarly not outstanding at school. General Norman Schwarzkopf, the most recent of the leaders being discussed and commander of the Desert Storm operation in the 1990’s, is the only one who graduated in the top ten percent of his class at West Point.

My point here is that only one out of arguable three of the most famous military leaders of our recent times was even remotely regarded as being outstanding during their formative years in their chosen profession. To further this point (I really don’t know how I got started on this military bent other than it brings forward historical figures that we should all be familiar with), General George Custer (yes, that one of Little Big Horn fame) graduated last in his class at West Point. Yes, Last. I bring this up because it should also be noted that at the age of twenty three Custer became the youngest general in the Union army during the Civil War and was regarded as one of the Union’s bravest and best leaders. Go figure.

With all that being said, how does one stand out in business? How does one become recognized as a leader? There are many different and various paths that can be taken in order to stand out, but I think they were in general reduced down to variations of the following three by my Austrian friend; be brilliant, be vocal, or be a pain in the ass. My addition to his analysis is that it may not be just any one of these paths that can lead to success. In some instances it may require someone to be a brilliant, vocal pain in the ass.

I would like to think of myself as nominally the brilliant leader of my family’s household, but I am pretty sure that my wife just considers me to be more of just a vocal pain in the ass.

Of the four leaders previously noted, only one, Schwarzkopf was considered to be brilliant. He was outstanding at West Point and was someone who was widely considered to be very intelligent and his class rank reflected that. But here as in business (as apparently in the military) brilliance will not be enough. There were plenty of cadets who graduated ahead of both Patton and Eisenhower who were probably likewise considered to be brilliant, but for some reason did not reach the heights that Patton and Eisenhower did.

This means that it is probably not just the brilliance that is important, but more so the application of that knowledge. You would assume that all the graduates from West Point accumulated roughly the same type and level of knowledge from that intnstitution, but it was not always the “brilliant” ones that advanced. Brilliance seems to be able to provide an edge or an advantage but in and of itself probably will not carry the day. I find this point to be somewhat heartening since I did not graduate at the top of my class nor can I claim to be particularly brilliant either.

That must mean that it is the being vocal, and / or the being a pain in the ass that will have a major effect on standing out and success. When you think about it, it only makes sense. Being vocal, or the being a pain in the ass means you are communicating, and it is the communicating of your ideas, positions or solutions that will enable you to stand out.

Please don’t get me wrong. I think being smart is better than not being smart. No one likes a vocal idiot, and an ignorant pain in the ass has all the attributes that Darwin’s theory of evolution would indicate nature would select against.

Custer performed the worst at West Point, but also achieved the general’s rank far faster than any of the others we are discussing. He is also probably best remembered for his reported folly in taking a contingent of approximately 500 soldiers into battle against a force close to 2,500 Lakota and Cheyenne warriors led by Chief Sitting Bull. However before that event, during the Civil War, Custer was acknowledged as a military strategist, tactician and leader who clearly proposed his goals and then would lead every one of his campaigns from the front of his column, and achieve his objective. He may have had many failings, some of which obviously may have led to his demise, but it seems that it was his ability to set and communicate his objectives (be vocal) to both his men and his superiors, and then to lead (successfully) from the front (taking the risk himself) that made him stand out from so many of the others in the military at that time.

With all that being said about Custer, it is also always a good idea to have much better information than he did when it comes to understanding any potential opposition that may be standing between you to your stated goals.

I guess you are considered vocal when your opinions, beliefs and actions are in alignment with those of your superior’s. If this is the case then it would seem that the equivalent definition of a pain in the ass would be when your opinions, beliefs and actions are not in alignment with those of your superior’s. If this is the case then it seems to me that I may have made a career out of being a pain in the ass (and not just according to my wife).

This does not mean that you should avoid being considered a pain in the ass. Most leaders that I know search out those people who have a considered different opinion from their own. As a leader I already have an opinion. I hope that it is considered and well thought out (however my wife usually doesn’t think so). I need other, different opinions to help me ascertain whether my opinion is the best one or if there are better ones out there. I can only do this when those other opinions are communicated to me.

Whether or not those communicated opinions come from people that agree with me (the vocal ones) or those that don’t (the pains in the ass), I have to figure out which are generated by the brilliant and which are not so much. Either way it is those that take a stand and put forth an opinion that get noticed. And of those it is usually the ones that have put in the effort, time and thought to intelligently support their opinion that truly stand out.

Now the last question left to resolve will be:
If I have an opinion that is different from my wife’s by logic it means that she has a different opinion from me. Does that make me a pain in her ass, or is she a pain in mine? I guess it depends on who is nominally in charge at our house.

Ouch. I think I may have to rethink that last little bit.

Secret Sauce

Do you know what your business’ “secret sauce” is? Secret sauce is the differentiator that makes your organization better at something than another organization. It can be your people, your products, and the way you do things or a combination of all three. I really don’t know where the idea of secret sauce came from. Possibly it came from the old McDonalds commercial where they are literally singing the praises of the Big Mac hamburger and they mention “…special sauce, lettuce, cheese…”. Regardless of where it came from, the idea of, and the phrase secret sauce seems to be gaining traction in the business world.

Many organizations might say that their secret sauce is their technology. This may be true for brand new or green-field type products, but for most cases I don’t think that this holds true in the longer run. Let’s look at Apple for instance. They are an acknowledged leader in several product categories, but is their “technology” really better, or so different from any other company’s? I don’t think so.

I remember seeing a rare clip of an interview of both Steve Jobs and Bill Gates, where they were both on the same stage answering questions. Bill Gates was asked what he envied about Apple and Steve Jobs. His answer was very telling. He said he envied Steve Jobs “taste”. He said that Steve Jobs had a way of looking at things and creating an elegance about his products that set them apart.

I think he nailed what Apple’s secret sauce was in that one discussion. There are many MP3 players out there in the market, but none really as cool as the iPod. The same goes for the smart phone market and the iPhone. iPads and MacBooks have also been lauded for their designs, capabilities and functionalities. It is interesting that Apple had problems after Jobs left the first time then recovered and became the most valuable company in the world after he returned. Now that Jobs is gone there is a question about what is next at Apple, and what is next from Apple. It seems the start of the recent thirty five percent decline from the all time high price of Apple stock coincides pretty closely with the loss of the keeper of their secret sauce.

Understanding what your particular organization’s secret sauce is takes some significant and sometimes difficult self analysis. The question is not just what do you do well. It is also why you do it well and how you do it well.

By staying in the computing market we can see another example of this set of questions with Dell. Dell was one of the pioneers of supply chain management and mass customization production. They didn’t just build personal computers; they built you your personal computer. They did it as quickly and as cost effectively as the other PC manufacturers built their standard products. This capability was widely regarded as Dell’s secret sauce.

Unfortunately, it really wasn’t such a secret. Many companies are now using many of the ideas and principles that Dell initially pioneered and employed. There is now a question if Dell has grown too large to efficiently employ the same concepts and precepts that enabled their growth and success in the first place. There is a concern that many of Dell’s competitors are now better at the Dell model and process than Dell is. It seems that this sentiment is also reflected in Dells current stock price which is only half of its five year high price, and about twenty five percent of its all time high price.

Now Michael Dell has led a leveraged buyout of the company bearing his name, and is taking it back as a private company. It appears that he may believe that he too was a keeper of the secret sauce at Dell, like Jobs at Apple, and will now be able to rework his magic. I guess we will all see if that is indeed the case.

Instead of staying at the market – macro level, high technology type of secret sauce examples, I’ll relate one of my own. I was once involved in an organization that manufactured metal enclosures and integrated technology components into those enclosures. We didn’t make the technology components, just what was in essence the metal box that we put someone else’s components in. I’ll simplify what we did greatly by saying we bent and welded metal and turned screw drivers.

Initially the organization thought that they bent and welded metal and turned screwdrivers better than anyone else. They were sure that these types of production capabilities were their secret sauce and that they were their competitive advantage.

When we really looked at what our secret sauce was, it became apparent that we were not better at the physical production of the enclosure or the component integration. We had an enclosure design team that was able to design enclosures that did not require as much material or welding for their production that made us more cost efficient. The enclosures were designed to enable faster integration and more dense packing of the enclosed technology components. This meant it took fewer of our lower cost units to deliver the customers desired functionality than it took the competition. The design team also created superior heat exchange and dissipation capabilities that enabled the cooling of the smaller more densely packed enclosures.

It wasn’t our production capabilities that were our secret sauce as was widely thought. It was our design capabilities that were the secret sauce that enabled our production team to create a competitively advantaged product. Knowing our secret sauce enabled us to change the focus of our business. We no longer tried to out produce the competition. We focused on out designing them.

We changed our business approach from pursuing large volume opportunities where we would try and provide products based on an existing enclosure specification, to pursuing opportunities where we could generate and use our own competitively advantaged enclosure designs. It worked great. We were very successful.

I think it is pretty safe to say that most businesses like most hamburgers have the basics that are required to be successful. It is the looking for and understanding of their respective special sauces that will make them different. Understanding, protecting and leveraging each business’s secret sauce is what enables them to differentiate from the competition and be successful. The Big Mac still has its special sauce and it is still a successful product, but now other hamburgers now have their own special sauces as well, so its competitive advantage has been somewhat diminished. The same progression seems to occur with each business’s secret sauce. That would mean that new secret sauces, like new products need to be developed all the time to maintain an advantage.

It also means that regardless of how hard some businesses try, and despite what they want to believe, ketchup is not a secret sauce.