Category Archives: Speed

Good, Cheap, Fast – Pick Two

This has been a well-known conundrum in business for quite some time. There are always three variables associated with getting the product or service that you want. The variables are Quality, Price and Speed. They are normally associated with the words Good, Cheap and Fast. The conventional question has always been that you cannot get all three variables at high levels at any specific time. If that indeed is a limitation, the question arises: If you are a vendor or supplier dealing with your customers, which two of the Good, Cheap and Fast variables do you choose when delivering your products and services?

As a customer, the simplest answer has always been to demand all three variables, and to demand them immediately. They want the lowest price, the fastest delivery and the best quality. They want it now and please don’t argue. We have all been there. However, even the most demanding of customers recognize that this is usually only an opening gambit and that there will always be negotiations associated with what is actually obtained and when it is to be delivered.

In the past customer hierarchy of desirable product attributes, Quality has ruled as king. The higher the quality, the more reliable the product, the better the customer liked it. They would possibly make concessions to either Cheap and Fast, if they got the best Good there was.

If Quality, or Good, was the given, then the customer (and vendor) needed to decide which other variable, Price or Speed was going to be sacrificed. I think that history will show that for the most part it was speed. (In support of this position I will submit that almost all product and productivity focus in the last few generations of products have been on how to take time out of the equation). Even the axiomatic statements associated with business in general refer to the fact that the pace of change within business has been accelerating.

That meant that a good customer would wait for a good product, and that they would get at a good price.

Those were the days. That does not seem to be the case anymore.

As I just noted, everything about business has accelerated. Cycle times for everything from product development to customer billing have been reduced. No one wants to wait for anything anymore. What was once fast or accelerated is now the new normal. Full speed is now the minimum accepted and if you expect to get ahead you had better figure out how to go even faster. They want it all now.

We have become an immediate gratification society.

What was once saved for, and purchased later, is now purchased today on credit, and paid for later.

So, if this increased focus on Speed, or Fast, is the new primary given requirement (instead of Quality, or Good) for driving customer satisfaction, then which of the two, Good and Cheap, will be the second factor chosen in the customer purchase decision? (remember, the axiom of you can only have two of the three variables at any time still pretty much holds in reality – or does it….) One would suspect that since Quality was so important in the past that it would also be of high importance today. That would leave cheap as the odd variable out.

That would also mean that customers want their products and services Fast and Good, and would hence be willing to pay the requisite higher price associated with this variable selection.

I do not know about you, but it has been a very long time since I have dealt with a customer that is willing to pay more for anything, regardless of speed and quality.

I think the reality is that price is still king. It is very difficult to sell a higher price versus a competitive product regardless of the speed and quality delivered. It can be done, but you are starting out at a significant competitive disadvantage if you start with a higher price than your competition.

As I have noted in the past Good in the business vernacular has been replaced by “Good Enough”. As product life cycles have become shorter (there’s “Fast” again) and prices have come down as components, support, warranties and service have been reduced (there’s “Cheap” again), Good has been reduced down to Good Enough to compensate.

The answer to the Good, Fast and Cheap, pick two conundrum in today’s business environment is now Fast and Cheap.

How quickly can the product be in the market? It has to be fast because there will be another, better competing product put out by a competitor soon enough. It better be cheap because customers most likely won’t buy a more expensive product, regardless of any (temporary) advantages. As for quality? That’s now a given. It is almost impossible to differentiate in the market based on a quality variable. Almost all manufacturers in just about any given market can be viewed as having a high-quality parity.

Today, if a company is not viewed as having a high / acceptable quality level in its products, they won’t be surviving for very long.

As an example, look at automobiles. Manufacturers have tiered the market into sub-markets based on car size (e.g. Sub-compact, compact, mid-size, etc.). Many manufacturers have created specific models to address and compete in each specific market tier.

The model for buying a car has “Fast” as a given, since I don’t know anyone willing to wait for a specific car to be manufactured for them – they want to drive off the lot in their new car when they buy it, not at some later time. That leaves Price and Quality as the final negotiation variables. I think Quality for the most part is also a given since now almost all cars come with similar warranties, usually somewhere between six and ten years. If you don’t believe Quality is a given in cars, try negotiating a longer warranty for your car as a term of the purchase agreement.

Let me know how that works out for you.

That essentially leaves Price as the next (only) selected variable in your car purchase decision. The starting price can vary a little, based on the feature set that the car is equipped with (X, SX, LX, etc.), but even that is limited. Fast (you want to drive off in it) and Cheap (you don’t want to pay anything more than you absolutely have to), are the criteria.

Fast and Cheap. That’s it. That’s where we are in business.

Now there may be other variables that you input into the decision criteria such as the car must have an appealing design. This is a matter of personal taste. Car companies spend incredible amounts of money in creating appealing designs for each of their cars. Car companies also spend incredible amounts of money advertising these appealing designs with the objective of convincing you that theirs is the most appealing, (Mazda has gone so far as to create a commercial showing what I suppose is a sculptor, sculpting the latest appealing design of their latest car model) and hence getting you to come to their dealership where you can negotiate the price and then drive off in that appealing (work of art) car.

There are always exceptions to every rule in business. That is also probably also a rule of business as well. However, when putting together a strategy on how to attack a market in general, and to pursue specific customers on an individual basis, with quality now thought of as a given in the market where “Good Enough” is now good enough, focusing on speed and price will most likely provide the best competitive advantage.

Answering questions as to how quickly the solution can be acquired and more importantly implemented will be a differentiator. Price, more so than almost ever before will be a decision driver. With almost all products now being viewed as easily interchangeable, why would a customer pay more for anything?

I remember the good old days where management would blithely tell the sales team to sell “quality” when their market price was higher than the competition. Management would say reference the product’s “quality” when there was a delay in product availability.

Now if a product takes too long to arrive in the market, or the price is too high, the opportunity is most likely lost. It doesn’t matter what management will want to tell the sales team. A competitor will have a substitutable product available when the customer wants it at a price they can afford.

Times have changed. Quality was once a product differentiator. It is probably not anymore. Of all the resources available to everyone, time is the only one that we cannot readily get any more of. Hence Speed has become the new prime differentiator. With Quality a given, and speed a differentiator, that leaves Price as a decision driver.

Customers might pay a little more for a preferred product, but that differential is closing fast. The more expensive you are versus the competition, the more disadvantaged you are. There will always come a point where the Price differential will always outweigh any Speed or Quality advantages. That Price differential point is always moving closer and closer to the Cheapest solution.

The Voicemail Curtain

Voicemail is an interesting technology. I remember its inception and introduction. It was hailed as a space, time, energy, cost, etc, etc, saving technology. A panacea. A cure all. Initially, and possibly in some instances today it continues to provide business efficiencies and cost reductions. It has become so ubiquitous that we almost never even think about it. Almost never, with the possible exception of when we actually want to talk to someone about a problem or issue that may have some urgency associated with it. It is in these instances that voicemail no longer provides its Dr. Jekyll based higher minded benefits and services, and reveals its darker, far less beneficial Mr. Hyde side.

I have mentioned several times that I am old school in many of my approaches to business. That doesn’t mean that I reject new technologies and capabilities. On the contrary, I would like to think of myself as something of an early adopter in an effort to always try to improve what business does and how it gets done. However I hope to never lose site of the fact that business is conducted by and between people. While asynchronous or non-real time communication such as voicemail can provide increased productivity in certain instances and applications, such as when individuals are in significantly different time zones around the world, it seems to me that in many instances it is becoming a detriment and an inhibitor to getting business done now.

It appears that asynchronous communications such as voicemail (and email for that matter) may have removed in some people’s minds the necessity to actually have to conduct business by and between people. Instead of talking to people, we now have slow motion conversations over some other type of media instead of a real time discussion over the phone. We have evolved our use of voice mail to the point that instead of answering a call and potentially having to deal real time with an unexpected issue or request, that we will now let the call roll over to voicemail instead. This enables the called party to review the potential issue or request at their leisure and then decide on a potential course of action with which to respond, if they so choose to become involved at all.

When you combine voice mail with other technology advancements such as calling line identification, we have now created a recipe for people to actively avoid answering calls from specific displayed numbers where they know or suspect the caller may be requesting time or support that the called person may not be able or want to provide. We are now enabling and in some instances inciting a behavior where the avoidance of work may now be perceived as being previously engaged, or even over worked. People are in effect hiding behind the voicemail curtain. Regardless, the result is that things get slowed down.

Business is about solving issues, and solving them as quickly and efficiently as possible. That is how value is generated. If you cannot solve customer issues, it is very difficult to generate customer value. I think this is a pretty widely accepted premise for doing business. In a great many instances the way a customer issue is solved is by internalizing it within the vendor organization. Another way to say this is that many businesses bring value to their customers by taking customer issues away from the customer, solving them within their own confines and presenting the customer with a solution.

The result of this process is that the customer is so thrilled with no longer having a problem to deal with, that they give you money.

Up until recently I would have said that this model worked admirably well. Not everyone likes issues but in solving them we provide the needed or desired value. What I have noticed was that in the drive to solve internalized customer problems I was starting to have more and more discussions with the voicemail system mailboxes where I would explain my issue in the hope that the intended party would hear my plea, be provided with enough information to act, and would get back to me with what I needed, than I was having with the actual people I needed to get solutions from.

What has been happening as time has passed and voicemail usage has matured has been that the called party usually returns the initial voicemail with another voicemail (I didn’t know until recently that you can actually do that. You don’t even have to call and forward to the voicemail system. You can now remain in the system and respond to a voicemail with another voicemail) where they either ask for more data (to be left on another voicemail) or explain that I need to contact another different party with the issue (where I will probably have to start the whole extended voicemail message process over again). If they had just answered my call in the first place I would have been able to learn this then and there instead of the several hours or days that it took for them to get back to me.

Voicemail in itself as a technology is not inherently bad. It is the misapplication of the technology by the user that is the cause of the issue. Voicemail was created to help us receive those phone calls that we would otherwise miss. It automated an otherwise labor intensive administrative function. Best of all it got rid of those ever present pink phone message notes that covered your desk every time you came back from lunch.

It seems that because we know that our automated greeting avatar will now answer the phone every time we cannot or decide not to answer the phone, we have increasingly decided to continue on with whatever we were doing, even if it was nothing in particular, and let our voicemail answer the phone. The result is that the business that could have been conducted by and between people real time has now been slowed down.

The speed at which business must be done continues to accelerate. The workloads of those involved continue to grow. People are busy. I understand and accept this. I just don’t believe that everyone is so busy that they cannot answer their phone anymore. It doesn’t take that much time or effort. It gets things done.

To prove my point I’ll close with a scenario and a question. How many times have you been out to lunch with business friends and associates, the food is served and you are eating. You are discussing the business or even social topics of the day, and someone’s cell phone rings? They have voicemail on the cell phone, but what do they do? They interrupt the conversation flow; stop eating and or talking and answer their phone is what they do.

We have all seen it happen and may have possibly even have done it.

My question is: Would they have behaved the same way if they had been sitting at their desk?

We need to start treating our business phone like our cell phone and answer it when it rings, and not expect to conduct our business via voicemail.

Why Reorganize?

I have heard a number of reasons why a business needed to reorganize, but in reality I can think of only two reasons that are a business should go through a reorganization. Reorganizations are inevitably messy, become somewhat political in nature and distract the entire organization from its primary goals; providing value to the customers and in return of that, providing value to the business owners. There may be several other different names for the reasons to reorganize, but for me they return to these two basic reasons; you reorganize your business to better match your customers’ business model, or you reorganize to cut costs and try to improve profitability.

Sun Tzu in his book The Art of War stated that war is not to be undertaken lightly as it will cost the state that goes to war its resources, its people and the time and attention that it could place on other more beneficial and constructive projects. The same could very easily be said about reorganizing a business.
Reorganizations cost businesses resources and money in their creation and execution. They cost businesses people, both those that are directly affected by the changes as well as those who decide to leave based on the incremental uncertainty that has been injected into the business. Reorganizations also cost the business the opportunities that are missed both in the market and within the business while the organization’s focus is on the creation of a new internal structure.

Businesses live and die by providing value to their customers. Over time customers and their needs can change. Just as records gave way to CDs, which in turn have given way to MP3s, and “mailing a check” has given way to on-line e-commerce (to use a few consumer products for illustration), businesses have had to adapt to the changes customers have demanded. In the past I have written about business “momentum” as the inertia that has a tendency to keep a business moving in the same direction and doing the same things until a force acts on it to change things. A reorganization would be such a force.

The net result here is that if your customers have changed the way they do business, the types of products they demand, or any other fundamental structures associated with their needs, you will have to modify your business structures to match them in order to be efficient and provide your customers with the maximum value that you can.

The other primary reason to reorganize is to cut costs. Refocusing resources away from outdated or unprofitable markets and products, taking advantage of new streamlining operational techniques, or reacting to fundamental changes in the market or economy are examples of reasons for a cost cutting reorganization.

When a business decides to engage in a cost cutting reorganization, the focus needs to be two-fold. What work is going to be stopped or removed from the organization, and what functions are going to be retained or enhanced? When you are cost cutting you are removing expense – and people – from the organization. Some of the work that those people were doing can and will be absorbed by others within the organization, but a significant portion of it will not. The key will be to clearly define the work and roles that are no longer providing the required value to the business and to focus on them.

In either type of reorganization change will be met with some resistance. Those whose roles may be changing will have some aversion to having to learn new roles. Those whose roles and work are no longer seen as providing the desired value to the company will resist being defined in those terms. The longer this situation exists the more disjointed the organization risks becoming.

The key to the reorganizations success will lay both in the final perception of the changes by reorganized group, and the speed at which the changes were affected. If fundamental changes in both the management structure and just as importantly the number of managers – remember, if cost cutting requires less work it also requires fewer managers to manage the work – have been enacted then the team can and will recognize the value of the reorganization. If the changes are enacted in a very timely manner where the opportunity for the business to be distracted from the primary focus of providing value to the customer is minimized, the reorganization will also be much less disruptive and accordingly far more successful.

Confidence and Time

When was the last time you were 100% sure about a business or sales decision? We all like to say we are when we make a decision. Occasionally we might even be that sure. Most of the time I don’t think we are that sure. We usually have an acceptable amount of information or input that enables us to feel confident enough to make our decision and move forward. If we didn’t feel confident, we would ask for more information and decisions wouldn’t get made and things wouldn’t get done.

Have you heard the phrase “paralysis by analysis”?

Confidence and how it affects decisions can be looked at on many levels and seems to vary significantly with both the economic climate and the business culture. In harder economic times, such as those we have been experiencing for the last while, it seems we need more information to make us feel confident enough to make decisions. The return for making the right decision seems to be outweighed by the risk of making the wrong decision. We also seem to be in many instances encouraging a “matrix” business culture where “consensus” is almost a requirement for any decision to be made.

Pareto would tell us that we will get 80% of the information in 20% of the time or inputs. It would follow that on average with this input you would make the right decision at least 80% of the time based on this 20% input. You would be right at least 4 out of 5 times. Just think how well you would do if you had this kind of accuracy with respect to your decisions in the stock market.

It seems we are now in economic times where the risk of being wrong once outweighs the benefits of being right 4 times. So now where do we go? Is it acceptable to only be wrong once out of every 10 times? Once out of every 20 times?

We need to remember that as we require this greater and greater accuracy on our decisions, we also require greater and greater amounts of information on which to base the decision and more importantly greater and greater amounts of time with which to make the decision. The result is we end up moving slower and slower. It ends up taking us longer to react. It takes us longer to get moving. It takes us longer to recover. When then layer in a matrix / consensus business structure and environment where the process has to be repeated for each individual associated with the consensus, it is almost a wonder that progress can be made at all.

Of the major resources available to a business, Money, People and Time, the only one that can not be replaced or replenished it Time. Physics tells us that Time only moves in one direction, and unless you are travelling at relativistic speeds (close to the speed of light) and doesn’t slow down. It would seem that if we focused more intently on Time as it affects our businesses that we would probably get a better return on our decisions, and start moving faster.

Moving our businesses forward will require the confidence to make right decisions as well as the acceptance of wrong decisions. We need to understand that no decision will engage reality and remain intact. They will all need to be modified. The “correct” decisions will only need to be modified slightly (if at all). The “incorrect” decisions will need to be modified to a greater extent.

The point here is that it will probably take less Time to modify the one potentially wrong decision out of five (the 80 / 20 rule) than it would take to gather all the information and gain the consensus required to get a higher level of surety across all five decisions.

I think that in these economic times with businesses focusing on the risk, and hence moving slower and slower, the business that has the confidence to focus on Time will gain the advantage by starting to move faster than the competition, and get the return.