Management

Why did Digital Equipment Corporation Fail?

ianwaring DEC, Learning, Management, Metrics 5 Comments

Digital Equipment Corp Logo

I answered that question on Quora, but thought i’d put a copy of my (long) answer here. Just one ex-employees perception from prisoner badge #50734!

I managed the UK Software Products Group in my last two years at DEC and had a 17 year term there (1976-1993). There are a wide variety of components that contributed to the final state, though failing to understand industry trends across the company was not among them. The below is a personal view, and happy for any ex colleagues to chip in with their own perspectives.

The original growth 1957 through to Jan 1983 has based on discrete, industry based product lines. In combination, they placed demand on central engineering, manufacturing and sales to support their own business objectives, and generally ran the show to dominate their own industry segments. For example, Laboratory Data Products, Graphic Arts (Newspapers!), Commercial OEM, Tech OEM, MDC (Manufacturing, Distribution and Control), ESG (Engineering Systems Group), Medical Systems and so forth.

The finance function ran as a separate reporting entity with management controls that went top to bottom with little ability for product lines to unduly behave in any way except for the overall corporate good.

The whole lot started to develop into a chaotic internal economy, albeit one that meshed together well and covered any cracks. The product lines were removed in Jan 1983, followed by a first ever stall in a hitherto unblemished Stock Market Performance. The company became much more centrally planned, and one built around a one company, one strategy, one architecture focus (the cynics in the company paraphrased this as one company, one egg, one basket). All focus on getting VAX widely deployed, given it’s then unique ability to run exactly the same binaries from board products all the way up to high end, close to mainframe class processors.

The most senior leadership started to go past it’s sell by date in the late 1980s. While the semiconductor teams were, as expected, pumping out impressive $300 VAX silicon, the elements of the leadership became fixated on the date on which DEC would finally overtake IBM in size. They made some poor technology investment calls in trying to extend VAX into IBM 3090 scale territory, seemingly oblivious to being nibbled from underneath on the low end.

Areas of the company were being frustrated at the high end focus and the inability for the Executive to give clear guidance on the next generation processor requirements. They kept on being flip-flopped between 32-bit and 64-bit designs, and brought out MIPS based workstations in a vain attempt to at least stay competitive performance wise until the new architecture was ready to ship.

Bob Palmer came to prominence by stopping the flip-flopping and had the semiconductor team ship a 64 bit design that completely outperformed every other chip in the industry by 50-100% (which ended up being the case for nearly 10 years). He then got put in charge of worldwide manufacturing, increasing the productivity by 4x in 2 years.

The company needed to increase its volume radically or reduce headcount to align competitively with the market as it went horizontally orientated (previously, IBM, DEC and the BUNCH – Burroughs, Univac, NCR, CDC and Honeywell were all vertically orientated).

Ken Olsen got deposed by the board around 1992, and they took the rather unusual step of reaching out to Bob Palmer, who was then a direct report of SVP Jack Smith, to lead the company.

While there was some early promise, the company focussed around a small number of areas (PCs, Components & Peripherals, Systems, Consumer Process Manufacturing, Discrete Manufacturing and Defence, and I think Health). The operating practice was that any leaders who missed their targets two quarters in a row were fired, and the salesforce given commission targets for the first time.

The whole thing degenerated from there, such that the company made equivalent losses in Palmers reign greater than the retained profits made under Olsen 1957-1982. He sued Intel for patent infringement, which ended up with Intel settling including the purchase of semiconductor operations in Hudson. He likewise sued Microsoft, which ended up with Microsoft lending DEC money to get its field force trained up on Microsoft products (impressive ju-jitsu on their part). Then sold the whole company to Compaq.

Text in some of the books about DEC include some comments by C Gordon Bell (technical god in DECs great years) which will not endear him to a place on Bob Palmers Christmas Card List (but words which many of us would agree with).

There was also a spoof Harvard Business Review article, written by George Van Treeck (a widely respected employee on the Marketing Notes conference maintained on the company network), which outlined the death of Digital – written in 1989 or so. Brilliant writing (I still have a copy in my files here), and he guessed the stages with impressive accuracy way back then. His words are probably a better summary than this, but until then, I trust this will give one persons perception.

It is still, without doubt, the finest company i’ve ever had the privilege to work for.

Rest in Peace, Ken Olsen. You did a great job, and the world is much better for your lifes work.

Start with the needs of the end user, and work back from there…

ianwaring Amazon, Future Trends, Internet, Management, Mobiles, Politicians, Samsung, Software, Xioami Leave a comment

Great Customer Service

A bit of a random day. I learnt something about the scale of construction taking place in China; not just the factoid that they’re building 70 airports at the moment, but a much more stunning one. That, in the last 3 years, the Chinese have used more cement than the USA did in the 100 years between 1900 and 2000. The very time when all the Interstate and Road networks were built, in addition to construction in virtually every major city.

5 of the top 10 mobile phone vendors are Chinese (it’s not just an Apple vs Samsung battle now), and one appears to be breaking from the pack in emerging markets – Xiaomi (pronounced show – as in shower – and me). Their business model is to offer Apple-class high end phones at around cost, target them at 18-30 year “fans” in direct sales (normally flash sales after a several 100,000 unit production run), and to make money from ROM customisations and add-on cloud services. I’ve started hearing discussions with Silicon Valley based market watchers who are starting to cite Xiaomi’s presence in their analyses, not least as in China, they are taking market share from Samsung – the first alternative Android vendor to consistently do so. I know their handsets, and their new tablet, do look very nice and very cost effective.

That apart, I have tonight read a fantastic blog post from Neelie Kroes, Vice President of the European Commission and responsible for the Digital Agenda for Europe – talking specifically about Uber and this weeks strikes by Taxi drivers in major cities across Europe. Well worth a read in full here.

Summarised:

  • Let me respond to the news of widespread strikes and numerous attempts to limit or ban taxi app services across Europe. The debate about taxi apps is really a debate about the wider sharing economy.
  • It is right that we feel sympathy for people who face big changes in their lives.
  • Whether it is about cabs, accommodation, music, flights, the news or whatever.  The fact is that digital technology is changing many aspects of our lives. We cannot address these challenges by ignoring them, by going on strike, or by trying to ban these innovations out of existence
  • a strike won’t work: rather than “downing tools” what we need is a real dialogue
  • We also need services that are designed around consumers.
  • People in the sharing economy like drivers, accommodation hosts, equipment owners and artisans – these people all need to pay their taxes and play by the rules.  And it’s the job of national and local authorities to make sure that happens.
  • But the rest of us cannot hide in a cave. 
  • Taxis can take advantage of these new innovations in ways consumers like – they can arrive more quickly, they could serve big events better, there could be more of them, their working hours could be more flexible and suited to driver needs – and apps can help achieve that.
  • More generally, the job of the law is not to lie to you and tell you that everything will always be comfortable or that tomorrow will be the same as today.  It won’t. Not only that, it will be worse for you and your children if we pretend we don’t have to change. If we don’t think together about how to benefit from these changes and these new technologies, we will all suffer.
  • If I have learnt anything from the recent European elections it is that we get nowhere in Europe by running away from hard truths. It’s time to face facts:  digital innovations like taxi apps are here to stay. We need to work with them not against them.

It is absolutely refreshing to have elected representatives working for us all and who “get it”. Focus on consumers, being respectful of those afflicted by changes, but driving for the collective common good that Digital innovations provide to society. Kudos to Neelie Kroes; a focus on users, not entrenched producers – a stance i’ve only really heard with absolute clarity before from Jeff Bezos, CEO of Amazon. It does really work.

 

Starting with the end in mind: IT Management Heat vs Light

ianwaring Amazon, Enterprise IT, Future Trends, Management, Marketing, Metrics, Open Source, Police, Politicians, Quality, Software Leave a comment

A very good place to startOne source of constant bemusement to me is the habit of intelligent people to pee in the industry market research bathwater, and then to pay handsomely to drink a hybrid mix of the result collected across their peers.

Perhaps betrayed by an early experience of one research company coming in to present to the management of the vendor I was working at, and finding in the rehearsal their conjecture that sales of specific machine sizes had badly dipped in the preceding quarter. Except they hadn’t; we’d had the biggest growth in sales of the highlighted machines in our history in that timeframe. When I mentioned my concern, the appropriate slides were corrected in short order, and no doubt the receiving audience impressed with the skill in their analysis that built a forecast starting with an amazingly accurate, perceptive (and otherwise publicly unreported) recent history.

I’ve been doubly nervous ever since – always relating back to the old “Deep Throat” hints given in “All the Presidents Men” – that of, in every case, “to follow the money”.

Earlier today, I was having some banter on one of the boards of “The Motley Fool” which referenced the ways certain institutions were imposing measures on staff – well away from a useful business use that positively supported better results for their customers. Well, except of providing sound bites to politicians. I can sense that in Education, in some elements of Health provision, and rather fundamentally in the Police service. I’ve even done a drains-up some time ago that reflected on the way UK Police are measured, and tried trace the rationale back to source – which was a senior politician imploring them to reduce crime; blog post here. The subtlety of this was rather lost; the only control placed in their hands was that of compiling the associated statistics, and to make their behaviours on the ground align supporting that data collection, rather than going back to core principles of why they were there, and what their customers wanted of them.

Jeff Bezos (CEO of Amazon) has the right idea; everything they do aligns with the ultimate end customer, and everything else works back from there. Competition is something to be conscious of, but only to the extent of understanding how you can serve your own customers better. Something that’s also the central model that W. Edwards Deming used to help transform Japanese Industry, and in being disciplined to methodically improve “the system” without unnecessary distractions. Distractions which are extremely apparent to anyone who’s been subjected to his “Red Beads” experiment. But the central task is always “To start with the end in mind”.

With that, I saw a post by Simon Wardley today where Gartner released the results of a survey on “Top 10 Challenges for I&O Leaders”, which I guess is some analogue of what used to be referred to as “CIOs”. Most of which felt to me like a herd mentality – and divorced from the sort of issues i’d have expected to be present. In fact a complete reenactment of this sort of dialogue Simon had mentioned before.

Simon then cited the first 5 things he thought they should be focussed on (around Corrective Action), leaving the remainder “Positive Action” points to be mapped based on that appeared upon that foundation. This in the assumption that those actions would likely be unique to each organisation performing the initial framing exercise.

Simon’s excellent blog post is: My list vs Gartner, shortly followed by On Capabilities. I think it’s a great read. My only regret is that, while I understand his model (I think!), i’ve not had to work on the final piece between his final strategic map (for any business i’m active in) and articulating a pithy & prioritised list of actions based on the diagram created. And I wish he’d get the bandwidth to turn his Wardley Maps into a Book.

Until then, I recommend his Bits & Pieces Blog; it’s a quality read that deserves good prominence on every IT Manager’s (and IT vendors!) RSS feed.

For Enterprise Sales, nothing sells itself…

ianwaring Books, Budgets, Enterprise IT, Future Trends, Management, Purchasing, Selling, Software Leave a comment

Trusted Advisor

I saw a great blog post published on the Andreessen Horowitz (A16Z) web site asking why Software as a Service offerings didn’t sell themselves here. A lot of it stems from a misunderstanding what a good salesperson does (and i’ve been blessed to work alongside many good ones throughout my career).

The most successful ones i’ve worked with tend to work there way into an organisation and to suss the challenges that the key executives are driving as key business priorities. To understand how all the levers get pulled from top to bottom of the org chart, and to put themselves in a position of “trusted advisor”. To be able to communicate ideas that align with the strategic intent, to suggest approaches that may assist, and to have references ready that demonstrate how the company the salesperson represents have solved similar challenges for other organisations. At all times, to know who the customer references and respects across their own industry.

Above all, to have a thorough and detailed execution plan (or set of checklists) that they follow to understand the people, their processes and their aspirations. That with enough situational awareness that they know who or what could positively – and negatively – affect the propensity of the customer to spend money. Not least to avoid the biggest competitor of all – an impression that “no decision” or a project stall will leave them in a more comfortable position than enacting a needed change.

When someone reaches board level, then their reference points tend to be folks in the same position at other companies. Knowing the people networks both inside and outside the company are key.

Folks who I regard as the best salespeople i’ve ever worked with tend to be straight forward, honest, well organised, articulate, planned, respectful of competitors and adept at working an org chart. And they also know when to bring in the technical people and senior management to help their engagements along.

The antithesis are the “wham bam thankyou mam”, competitors killed at all costs and incessant quoters of speeds and feeds. For those, i’d recommend reading a copy of “The Trusted Advisor” by Maister, Green and Galford.

Trust is a prize asset, and the book describes well how it is obtained and maintained in an Enterprise selling environment. Also useful to folks like me who tend to work behind the scenes to ensure salespeople succeed; it gives some excellent insight into the sort of material that your sales teams can carry into their customers and which is valued by the folks they engage with.

Being trusted and a source of unique, valuable insights is a very strong position for your salespeople to find themselves in. You owe it to them to be a great source of insights and ideas, either from your own work or curated from other sources – and to keep customers informed and happy at all costs. Simplicity sells.

11 steps to initiate a business spectacular – true story

ianwaring Management, Marketing, Microsoft, Pricing, Selling, Training 1 Comment

Nuclear Bomb Mushroom

I got asked today how we grew the Microsoft Business at (then) Distributor Metrologie from £1m/month to £5m/month, at the same time doubling the margin from 1% to 2% in the thick of a price war. The sequence of events were as follows:

  1. Metrologie had the previous year bought Olivetti Software Distribution, and had moved its staff and logistics into the company’s High Wycombe base. I got asked to take over the Management of the Microsoft Business after the previous manager had left the company, and the business was bobbing along at £1m/month at 1% margins. Largest customer at the time was Dixons Stores Group, who were tracking at £600K sales per month at that stage.
  2. I was given the one purchasing person to build into a Product Manager, and one buyer. There was an existing licensing team in place.
  3. The bit I wasn’t appraised of was that the Directors had been told that the company was to be subject to a Productivity Improvement Plan, at the same time the vendor was looking to rationalise it’s UK Distributor numbers from 5 to 4. This is code for a prewarning that the expected casualty was…. us.
  4. I talked to 5 resellers and asked what issues they had dealing with any of the Microsoft distributors. The main issue was staff turnover (3 months telesales service typical!), lack of consistent/available licensing expertise and a minefield of pricing mistakes that lost everyone money.
  5. Our small team elected to use some of our Microsoft funds to get as many front line staff as possible Microsoft Sales certified. I wasn’t allowed to take anyone off the phones during the working week, but managed to get 12 people in over a two day weekend to go from zero to passing their accreditation exam. They were willing to get that badge to get them better future career prospects. A few weeks later we trained another classful on the same basis; we ended up with more Sales accredited salespeople than all the other distributors at the time.
  6. With that, when someone called in to order PCs or Servers, they were routinely asked if they wanted software with them – and found (to their delight) that they had an authoritative expert already on the line who handled the order, without surprises, first time.
  7. If you’re in a price war, you focus on two things; one is that you isolate who your key customers are, and secondly you profile the business to see which are the key products.
  8. For the key growth potential customers, we invested our Microsoft co-op funds in helping them do demand creation work; with that, they had a choice of landing an extra 10% margin stream new business dealing with us, or could get 1% lower prices from a distributor willing to sell at cost. No contest, as long as our pricing was there or thereabouts.
  9. The key benchmark products were Microsoft Windows and Microsoft Office Professional. Whenever deciding who to trade with, the first phone call was to benchmark the prices of those two part numbers, or slight variations of the same products. However, no-one watched the surrounding, less common products. So, we priced Windows and Office very tightly, but increased the selling prices by 2-3% on the less common products. The default selling price for a specific size of reseller (which mapped into which sales team looked after their account) was put on the trading platform to ensure consistency.
  10. Hand offs to the licensing team, if the business landed, were double-bubbled back to the field/internal salesperson team handling each account – so any more complex queries were handed off, handled professionally, priced and transacted without errors.
  11. We put all the measures in place, tracking the number of customers buying Microsoft software from us 1 month in 3, 2 months in 3 and every month. We routinely incented each sales team to increase the purchase frequencies in their account base on call out days, with programs that were well supported and fun in the office.

The business kept on stepping up. Still a few challenges; we at least twice got reverse ram raids, emptying returned stock back into our warehouse on day 30 of a 31 day month, making a sudden need for sales on the last trading day a bit of a white knuckle ride to offset the likely write down credit (until Microsoft could in turn return the cost to us). The same customer had, at the time, a habit of deciding not to pay it’s suppliers at month end at the end of key trading months, which is not a good thing when you’re making 1% margins assuming they’d pay you to terms.

One of the side effects of the Distribution business is that margins are thin, but volume grows aggressively – at least until you end up with a very small number of really big distributors left standing. A bit like getting wood shavings from wood on a lathe – you want just enough to peel off and the lathe turning faster and faster – but shy away from trying to be too greedy, digging the chisel in deeper and potentially seizing up the lathe.

With a business growing 40%+ per year and margins in the 1-2% range, you can’t fund the growth from retained profits. You just have to keep going back to the stock market every year, demonstrating growth that makes you look like one of the potential “last men standing”, and get another cash infusion to last until next year. And so it goes on, with the smaller distributors gradually falling away.

With the growth from £1m/month to £5m/month in 4 months – much less than the time to seek extra funds to feed the cash position to support the growth – the business started to overtrade. Vendors were very strict on terms, so it became a full time job juggling cash to keep the business flowing. Fortunately, we had magnificent credit and finance teams who, working with our resellers, allowed us the room to keep the business rolling.

With that, we were called into a meeting with the vendor to be told that we were losing the Microsoft Business, despite the big progress we’d made. I got headhunted for a role at Demon Internet, and Tracy (my Product Manager of 4 months experience) got headhunted to become Marketing Manager at a London Reseller. I stayed an extra month to complete our appeal to the vendor, but left at the end of June.

About 2 weeks into my new job, I got a call from my ex-boss to say the company’s appeal had been successful at European level, and that their Distribution Contract with the vendor was to continue. A great end to that story. The company later merged with one of the other distributors, and a cheque for £1000 arrived in the post at home for payment of stock options i’d been awarded in my last months there.

So, the basics are simple, as are the things you need to focus on if you’re ever in a price war (i’ve covered the basics in two previous blog posts, but the more advanced things are something i’d need to customise for any specific engagement). But talking to the customer, and working back to the issues delivering a good and friction free experience to them, is a great way to get things fixed. It has demonstrably worked for me every time – so far!

Urgency, Importance and the Eisenhower Box

ianwaring DEC, Management, Metrics, Quality, Software Leave a comment

Eisenhower Box - Urgent, Important, non-urgent, non-important

I’ve seen variations of this matrix many times, though the most extensive use witnesses was by Adrian Joseph just after he joined Trafficmaster. The real theory is that nothing should be in the urgent and important square; it’s normally a symptom of bad planning or a major unexpected (but key) surprise.

When I think back to things i’ve done that have triggered major revenue and profit spectaculars, almost all fit in the important but not urgent box; instead, the pressure to move quickly was self inflicted, based on a clarity of purpose and intensive focus to do something that made a big difference to customers. The three major ones were:

  1. Generating 36 pages of text of ideas on how to increase software sales through Digital’s Industrial Distribution Division, then the smallest software Sales “Region” at £700K/year. Having been told to go implement, I never made it past the first 3 ideas, but relentlessly executed them. It became the biggest region two years later at £6m/year.
  2. Justifying and getting funding to do the DECdirect Software Catalogue. The teams around me were fantastic, giving me bandwidth to lock myself away for long periods of absence for nearly three months to work the structure and content of the work with Bruce Stidston and his team at USP Advertising plc. That business went 0-$100m in 18 months at margins that never dipped below 89% margin.
  3. Getting the Microsoft Distribution Business at Metrologie from £1m/month to £5m/month in 4 months, in a price war, and yet doubling margins at the same time. A lot of focus on the three core needs that customers were expressing, and then relentlessly delivering against them.

The only one I recall getting into the Urgent/Important segment was a bid document for a sizable supply contract that HMSO (Her Majesty’s Stationery Office), where I was asked to provide a supplementary chapter covering Digitals’ Servers, Storage, Comms and Software products. This to be added to a comprehensive document produced by the account manager covering all the other product areas for the company. I’d duly done this in the format originally requested by her, but asked to see the rest of the document to make sure everything was covered – and that we’d left no gaps between the main document and my own – with two days to go. At which point she said she’d had no time, and had decided to no-bid the work (without telling any of us!).

The sales team really needed the revenue, so they agreed to let me disappear home for two days to build the full proposal around the work i’d done, including commercial terms, marketing plan and a summary of all the sales processes needed to execute the relationship – but just for the vendor we were accountable for. We got the document to Norwich with 30 minutes to spare. Two weeks later, we were told we’d won the business for the vendor we represented.

The lesson was to put more progress checks in as the project was unfolding, and to ensure we never got left in that position again, independent of how busy we were with other things at the same time.

With that, i’ve never really hit the urgent/important corner again – which I think is a good thing. Plenty that is important though – but forcing adherence to what Toyota term “takt time” to measure progress, and to push ourselves along.

The precise art of a low margin business

ianwaring Amazon, Future Trends, Management, Pricing Leave a comment
Amazon Book Warehouse

I found this great article that explains Amazons pricing strategy eloquently. It’s also the first time i’ve heard that Apple rotate their stock faster than Amazon do, which is an amazing feat for a manufacturing company. Meanwhile, it doesn’t mention Microsoft, but if you try to insert the characteristics of their business model into the picture presented, you can see why Amazon, Google and Apple have them in a head lock and are emptying the room of oxygen needed to grow. Enjoy:

http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins

What do IT Vendors/Distributors/Resellers want?

ianwaring Budgets, Enterprise IT, Management, Marketing, Metrics, Pricing, Training Leave a comment

What do you want? Poster

Off the top of my head, what are the expectations of the various folks along the flow of vendor to end user of a typical IT Product or Service? I’m sure i’ve probably missed some nuances, and if so, what is missing?

Vendors

  • Provide Product and/or Services for Resale
  • Accountable for Demand Creation
  • Minimise costs at scale by compensating channels for:
    • Customer Sales Coverage and Regular Engagement of each
    • Deal Pipeline, and associated activity to increase:
      • Number of Customers
      • Range of Vendor Products/Services Sold
      • Customer Purchase Frequency
      • Product/Service Mix in line with Vendor objectives
    • Investment in skills in Vendor Products/Services
    • Associated Technical/Industry Skills useful to close vendor sales
    • Activity to ensure continued Customer Success and Service Renewals
    • Engagement in Multivendor components to round out offering
  • Establish clear objectives for Direct/Channel engagements
    • Direct Sales have place in Demand Creation, esp emerging technologies
    • Direct Sales working with Channel Partner Resources heavily encouraged
    • Direct Sales Fulfilment a no-no unless clear guidelines upfront, well understood by all
    • Avoid unnecessary channel conflict; actively discourage sharing results of reseller end user engagement history unless presence/relationship/history of third party reseller with end user decision makers (not just purchasing!) is compelling and equitable

Distributors

  • Map vendor single contracts/support terms to thousands of downstream resellers
  • Ensure the spirit and letter of Vendor trading/marketing terms are delivered downstream
  • Break Bulk (physical logistics, purchase, storage, delivery, rotation, returns)
  • Offer Credit to resellers (mindful that typically <25% of trading debt in insurable)
  • Centralised Configuration, Quotation and associated Tech Support used by resellers
  • Interface into Vendor Deal Registration Process, assist vendor forecasting
  • Assistance to vendor in provision of Accreditation Training

Resellers

  • Have Fun, Deliver Good Value to Customers, Make Predictable Profit, Survive
  • Financial Return for time invested in Customer Relationships, Staff knowledge, Skills Accreditations, own Services and institutional/process knowledge
  • Trading terms in place with vendor(s) represented and/or distributor(s) of same
  • Manage own Deal Pipeline, and associated activity to increase one or more of:
    • Number of Customers
    • Range of Vendor Products/Services Sold
    • Customer Purchase Frequency
    • Product/Service Mix in line with Vendor objectives
    • Margins
  • Assistance as needed from Vendor and/or Distributor staff
  • No financial surprises

So, what have I missed?

I do remember, in my relative youth, that as a vendor we used to work out what our own staffing needs were based on the amount of B2B revenue we wanted to achieve in each of catalogue/web sales, direct sales, VARs and through IT Distribution. If you plug in the revenue needs at the top, it gives the number of sales staff needed, then the number of support resources for every n folks at the layer before – and then the total advertising/promotion needed in each channel. It looked exactly like this:

1991 Channel Mix Ready Reckoner

Looking back at this and comparing to today, the whole IT Industry has gotten radically more efficient as time has gone by. That said, I good ready reckoner is to map in the structure/numbers of whoever you feel are the industry leader(s) in your market today, do an analogue of the channel mix they use, and see how that pans out. It will give you a basis from which to assess the sizes and productivity of your own resources – as a vendor at least!

Becoming More Efficient; Moonshot scale ideas available

ianwaring Amazon, Books, Future Trends, Google, Management Leave a comment

 

Efficiency Straight Ahead

The statistics below are from an unashamed promotion of a new book, but I thought this was well articulated. The authors cite some statistics to think about:

Examples of Energy Inefficiency

  • The average car spends more than 95 percent of its time …. doing nothing.
  • Less than 40 percent of electrical transmission capacity is in use at any given time.
  • A calorie of beef requires 160 times more energy to produce than one of corn—and as the world grows richer, more people eat beef.
  • The cost of bringing an oil well online has more than tripled over the last decade.
  • A Motorway operating at peak throughput is less than 10 percent covered with cars.
  • Phnom Penh has a lower water leakage rate than London.

There used to be a very small detached house just inside Pamber Forest which I used to pass daily, and often wondered whether I could live quite happily in such a small place. Not quite as extreme as the Capsule Hotels you find in some areas of Japan, but a step in that direction nonetheless. This would probably mean quite a ruthless clean of the miscellaneous stuff we have all over the current house, but i’m sure there would be impressive efficiencies if we knuckled down to it.

The good thing about looking at stats like this is to start having thoughts of what Larry Page (CEO of Google) terms “Moonshots“. What could be done to improve things 10x, 100x or 1000x better than is considered normal by the rest of us, and what changes will that lead us to.

The authors feel that there’s a lot of waste in the status quo, and thus a great chance to produce and use resources much more effectively. But they don’t think it means that the sky is falling, and that our grandchildren are fated to inherit a poisoned, angry, gloomy, planet. That is also the argument of their new book, Resource Revolution: How to Capture the Biggest Business Opportunity in a Century
by McKinsey’s Stefan Heck and Matt Rogers.

My brain starts to wander at this point, and I still have this nagging feeling that all the books in my bookcase could be summarised down to 1-2pages each of people really tried – or less than 30 if examples are cited. One of the neat things about Kindle Books is that Amazon actually allow you to produce and sell stuff at that length; the The Bitcoin Primer: Risks, Opportunities, And Possibilities book
I purchased was an excellent 27 page read.

In terms of manufacturing (I guess they must be manufacturing consultants by day), they suggest looking at five areas: substitution (replacing costly, clunky, or scarce materials with cheaper, better ones); optimization (using IT to improve the production and use of resources – to order rather than into stock?); virtualization (which must really mean sweating otherwise idle assets?); circularity (finding value in products after their initial use) and waste elimination.

However, then then start citing “having to deal with more complex supply chains”, while integrating “big data” (hmmm – fad alert!) and finding diverse talent with new skills in areas like software- and system-integration (while I thought those were pretty well established!).

They conclude, “any bet that we will succumb to a global economic crisis is a bet against human ingenuity. No such bet has ever paid off.”

Looks an interesting book nonetheless, and i’m sure some good nuggets to pick at. Duly added to my Wish List.

Avoiding the strangling of your best future prospects

ianwaring Books, Budgets, Enterprise IT, Future Trends, Management, Marketing, Metrics Leave a comment

Escape Velocity Book Cover

I’m a big fan of the work of Geoffrey Moore, whose seminal work “Crossing the Chasm” i’ve cited before (in fact, the one page version is the #1 download from this blog). However, one of his other books is excellent if you’re faced with a very common issue in High Technology companies; having successful, large product line(s) thats suck all the life out of new, emerging businesses in the same enterprise. The book is “Escape Velocity”:

Unlike Crossing the Chasm, i’ve not yet summarised it on one sheet of A4, but have outlined the major steps on 14 slides. It sort of works like this:

The main revenue/profit engines in most organisations occur between the early and late majority consumers of the product or services; that can last a long time, denoted by the Elastic Middle:

Product Lifecycle

That said, there are normally products that sales will focus on to drive the current years Revenue and Profit targets; these routinely consume a majority of the resources available. Given a fair crack of the whip, there are normally emergent products that while not material in size today, are showing good signs of growth, and which may generate significant revenue and profits in the 1 to 3 year future. There are also likely to be some longer term punts which have yet to show promise, but which may do so in a 3 to 6 year timeframe:

3 Horizons

The chief way to categorise products/services against the relevant Product Horizon is to graph a scatter plot of revenue or profit for each line on one axis, against growth on the other (10% growth is a typical divider between the High and Low growth Quadrants):

3 Horizons to Category Power

Any products or services on Horizon 0 needs to be shielded from core resources and to be optimised to be cash generative while it lasts. The other product/service horizons are segregated and typically have a different go-to-market team (with appropriate Key Performance Indicators) assigned to each:

Focus Areas

The development pattern for Horizon 2 products are typical of the transition from “Chasm” into the “Tornado” stage on the normal Chasm lifecycle diagram. It’s a relentless learning experience, ruthlessly designing out custom services to form a standard offering for the market segments you target:

Free Resources to Context

As you execute through the various sales teams and move between financial years, there’s a lot of introspection to ensure that the focus on likely winners continues is appropriately ruthless:

Action

The sales teams driving Horizon 2 offerings should be seeking to aim high in customer organisations and drive strategies to establish a beachhead, then dominate, specific focus segments. In doing so, be mindful that a small supporting community tends to cross reference each other. Good salespeople get to know the people networks that do so, and work diligently to connect across them with their colleagues.

Trusted Advisor

The positioning of your Horizon 2 offers tend to vary depending on price and benefit; this in turn looks about like the findings from another seminal work, “The Discipline of Market Leaders”. That book suggested that really successful companies put their relentless effort into only one of three possible core competences; to be the Product Innovator, to be Customer Intimate or to be Operationally Excellent:

Benefit Sensitivity

Once you have the positioning, the Horizon 2 sales team relentlessly focus on the key people or organisations that make up their target market segment(s):

Drive to Share of Segment

The number of organisations they engage differ markedly between Enterprise (Complex) and Consumer (Volume) markets:

Target Customers

So the engagement checklist needs to address all these areas:

Target Market Initiatives

The sales team need to be able to articulate “What makes their offer different”:

Differentials

Then pick their targets:

Growing Horizon 2

Above all, be conscious who your competitors are and where you’re positioned against them:

From Whom

That’s largely it. Just a process to keep assessing the source of future revenue and profits, and ensuring you segment your sales teams to drive both this years business, and separately working on the green shoots that will provide your future. And avoiding what often happens, which is that the existing high revenue or high profit lines demand so much resources that they suffocate your future.

You can probably name a few companies that have done exactly that. Yours doesn’t need to be the next one now!