Category: Four pillars

Times are hard. And when times are hard, every firm has four choices:

• Stop Doing Something Completely
• Continue to Do Something, Just Less of It
• Start Doing Something New
• Do Something Differently

Stopping doing something completely is hard. Each firm is made up of values and relationships, habits and processes, people and culture, all built around their specific products and services and territories and markets. Firms that are global in scale and reach tend to operate shared-service models and matrix structures; it becomes considerably difficult to work out the precise impact of exiting a product or service or territory or market.

Accounting and related decision support systems tend to be built around jurisdictions and territories, using regional conventions or, at best, regional interpretations of global conventions; employee regulations and rights also follow fault-lines that are regional; the healthy contention envisaged in the matrix turns into open conflict. Presentations and spreadsheets circulate like snake-oil, accompanied by the requisite snake-oil salesmen.

In such an environment, good information is hard to come by, and as a result good decisions are hard to make. A few do get made. But for the most part, companies tend not to exit products, services, territories and markets in entirety. The things that do get stopped tend to fall into the category Yesterday’s-Necessities-Just-Became-Today’s-Luxuries, things that can be stopped despite the escalation of matrix war.

As a result, instead of Stopping Doing Something, many firms go for the Continue to Do Something, Just Less of It Option. Because Doing Less of Something is Easy. Targets get handed out, “haircuts” are cascaded down, and Death by A Thousand Cuts becomes the norm.

My sense is that the haircut is a losing strategy, it is just a way of improving the optics while staving off the inevitable for a short period. Haircuts are intrinsically the lazy man’s response, management-by-spreadsheet. There tends to be no real management involved (and even less leadership). Why do I say this? Reducing budgets and targets and tolerances is a reasonable thing to do, provided there is no cascade of the reduction. For it is in the cascade that a dereliction of duty occurs, an abdication of responsibility. Cuts are fine, haircuts are not. Adjusted targets need to be held at the highest practicable level in the organisation, and every attempt to cascade should be met with severe resistance.

Having said that, cutbacks are reasonable things to do, especially in environments where payroll and SG&A are the two biggest discretionary expense categories. Travel and entertainment are the traditional early targets, and this is a good thing. What is less good is the tendency to cut back on training and on graduate hiring, these can be short-sighted.

It was John Maynard Keynes who said:

For the Engine which drives Enterprise is not Thrift but Profit

So if you have to resort to cutbacks, try and remember Keynes’ words. Otherwise you may land up saving a lot of “cost” but, in the process, losing the firm.

Starting Doing Something New is also hard to do. In most firms, there is some concept of capacity planning, however rudimentary or makeshift. And firms tend to operate at perceived full employment. So in order to do something new, you have to stop doing something old. The immune system of the firm tends to be at the enterprise equivalent of DEFCON Five by this time, making it hard to stop things “organically”. As discussed earlier, making strategic decisions to stop doing something is also hard.

Having a separate focus on invention and creativity can solve this problem, but that too is hard to do. There are alienation, isolation and ivory-tower-thinking risks.

Which brings me on to Doing Things Differently. Covering a multitude of options, ranging from outsourcing and offshoring to the introduction of real innovation within the firm. Which leads to the Immune System response of Not Invented Here. I am reminded of an article written by Joel Spolsky maybe seven years ago, headlined In Defense of Not-Invented-Here Syndrome. It’s well worth reading. As is, coincidentally, Jeff Atwood’s recent take on the same issue, which can be found here.

Both Joel and Jeff make the point that whatever you believe your core business function to be, you should do it yourself. Deciding what is core and what is non-core is a hard thing to do, especially in an organisation with shared-service models. One man’s meat is another man’s poison, one man’s ceiling is another man’s floor. And one man’s core is another man’s non-core.

I would rather paraphrase what Spolsky and Atwood said: Figure out what you’re good at. Check that there is a market for what you’re good at, that people want to pay you for doing it. Then make sure you do it. From your perspective, everything else should be non-core. So get others to do the rest, focus very hard on what you’re good at.

Which brings me back to my old opensource rule-of-thumb:

• If the problem is universal, look to the opensource community for a solution
• If the problem is domain-specific, look to the “commercial” community
• If the problem is unique to your firm, look to your own resources

I think that every CIO should be looking hard at the tools being used to solve universal problems, and to make sure that opensource components are used aggressively. There is no better time.

Remember, the objective is to reduce costs, not heads. Given the option, what would you rather do? Fire people or increase your use of opensource? Think about it.

This is one of my more provisional posts; in it I bare my thoughts somewhat more vulnerably than I am normally wont to do, because it is about an important subject. I’ve been thinking about it for some time now, which means it is a long post. It’s rambling and woolly because it is provisional. Francis Bacon, in one of my favourite quotes, said:

If a man will begin in certainties he shall end in doubts; but if he will be content to begin in doubts he shall end in certainties.

I am content to begin in doubts. With your help I shall end in certainties. This is that kind of post.

Marshall McLuhan is meant to have said something along the lines of:

“I don’t know who discovered water, but it certainly wasn’t a fish.”

Fish have no understanding of water. Fish have no understanding of fire either.

Every one of us has a problem recognising what we’re immersed in; sometimes, because we’re so immersed in something, we also have a problem recognising things beyond that which we’re immersed in.

Take “abundance economics”. We don’t understand it. Why? Because we’ve all been brought up to understand and respect “scarcity economics”. Which seems to go something like this:

1. It’s all about supply and demand.
2. Uh, wait a minute. Isn’t it all about supply, provided you can corner the market?
3. So, if you could somehow continue to stoke up demand while controlling supply….
4. …Yes, it’s all about supply and demand. Provided you control the supply and excite demand.

Everyone understood it. And everyone played the game. And scarcity economics was seen to thrive. God was in His Heaven, and all was Right with the World. Just as long as you were a Seller and not a Buyer.

We have all been brought up in such a world. Become the seller in a seller’s market. Or be a wimp, a wuss, a loser. Caveat emptor. Morituri te salutamus. Monopoly is a game played by lawyers and regulators, and the customers always lose. Antitrust is just a US variation of the same game: same players, same losers.

Sellers traditionally look to create scarcity. When the goods for sale are physical in nature, this is not hard to do. All you had to do was to corner the market and hoard the goods. This happens all the time. Diamonds and oil. Gun mountains and butter mountains.

That’s the way it’s been. A seller’s market. Scarcity rules OK.

In a world based around scarcity economics, with everything under seller control, things are made to slow down. There’s a QWERTYing of the seller-buyer interaction, a direct consequence of disproportionate seller power. Which is what leads to nonsensical constructs along the lines of Assembly Line. Any color you like. As long as it’s Black. Warehousing and inventory management are nothing more than “legitimate” hoarding. Hoarding by sellers.

So, particularly in the West, we were brought up in a world where sellers were encouraged to hoard and buyers were encouraged to borrow. After all, what does a buyer hoard? Money. Time. Attention. Intention. And most of the time, sellers work hard to make the buyer stop hoarding. (Make a sentence with “fool”, “money”, “soon” and “parted”). At university, it seemed to me that one of the key differences between the East and the West was that people continued to save in the East. The savings rates I was used to in India were phenomenal, and there was no credit to speak of. People spent a part of what they’d saved.

Which sort of leads me on to the real reason for this post. [And no, it’s not an attempt to link all this up to the credit crunch. Though there is a link.]

I think scarcity economics goes with selling, and abundance economics goes with buying. I think selling goes with things static, and buying goes with things dynamic. I think selling can be plastic and artificial, while buying tends to be real and authentic.

And I think Web 1.0 was all about the seller, while Web 2.0 should be all about the buyer. A static web enables artificial scarcities, while a live, participative web, like nature, abhors the vacuums so created. As a result, equal and opposite artificial abundances emerge.

Esther Dyson called it “the customer’s in control”. Before that, the Cluetrain had come to town, and people were beginning to understand the importance of authenticity. Since then, Hugh Macleod, Kathy Sierra, Tara Hunt, Seth Godin, Doc Searls, they’ve all preached elements of this in different languages. Languages like Creating Passionate Users. Languages like Social Objects. Languages like VRM.

Buying is participative; it’s about relationships and conversations, not transactions. Unlike selling, which is all about transactions.

For many years I’ve wanted to publish RFPs and RFQs and RFIs on the web, because it seems a sensible thing to do. Tell the world what you’re looking for, and help them come and find you. No lies and no cheating, just the facts.

But people railed against me when I said things like that. “You don’t understand procurement, that’s for sure. Don’t ever play poker, because you’d lose a lot of money. Transparency is for losers. There’s no point negotiating unless you’re prepared to walk away. You’re an idiot”.

I guess I am an idiot. Because I still think that way.

You see, scarcity economics is about hiding needles in haystacks; abundance economics is about making haystacks out of needles. What would you prefer?

The worlds of advertising and search are deeply intertwined right now. Not surprising, because they’re all immersed in scarcity economics and staticness and Web 1.0.

Search means something else altogether when it becomes about intention and not inventory. So does advertising, when it becomes about recommendation rather than rationing.

Every day, more and more people are becoming connected. Affordably, sustainably, ubiquitously connected. The move from sellers and inventory to buyers and intention is already happening. Social media in all its forms (blogs and wikis, IM, e-mail and Twitter, electronic social networks) help make this possible. Tools continue to emerge and improve.

In many firms, in many markets, in many societies, we’ve had a number of Emperor’s-New-Clothes words and phrases, words like “transparency” and “collaboration”. Words that were smoothly wheeled out to mean the opposite, and everyone went along with it. Why? Because we were immersed in Scarcity Economics.

Scarcity economics was all about making the customer pay for what you had to sell; if you had to drum up demand first, that was fine. It was called advertising. If the customer didn’t need it that was also fine, you weren’t running a charity.

Abundance economics is all about giving the customer what she wants and then letting her pay for it herself. The only thing you have to do is make it easy for her to tell you what she wants, and, when she does tell you, to listen.

Of course customers don’t always know what they want. Of course there will always be customers who want what they had yesterday, only faster cheaper better. Of course there will always be customers who want “faster horses“. Of course there will always be an Innovator’s Dilemma. Always?

Always is a big word. Maybe it gets smaller as we move from a seller’s world to a buyer’s world.

It’s all about choices. It’s all about choice. Customer choice. Choice based on recommendation, choice signalled as intention, choice executed in abundance.

To paraphrase Michael Schrage, innovation is what the customer buys, not what the producer sells. As we move into the new world, the very concept of the Innovator’s Dilemma begins to change. All this is happening, happening now. The future’s already here, it’s just unevenly distributed. But you know what? I think the credit crunch is accelerating the change.

I’m done for today. Flame away. And I will learn. This one has been a Long Time Coming, it’s going to be a Long Time Gone.

[An aside. Even if you hated this post, even if you disagreed with every word of it, go on, do yourself a favour, listen to the song I’ve linked to in the paragraph above. Superb stuff].

[Another aside, for the more literary-minded amongst you. I’ve linked to the Wikipedia entry for Browning’s Pippa Passes earlier in this post. Go read it. I knew the poem well, yet learnt something today.]

There was a time when the most ridiculous headlines were to be found in the Sunday Sport: Killer Plant Stalks Queen Mum, Aliens Turned Our Son Into An Olive, London Bus Found On Moon, London Bus Disappears From Moon, and so on.

Today, you can find such headlines everywhere. See if you can spot the real headline amongst the set below:

Man killed wife in Facebook row

Legal case against God dismissed

Killer chef cooked dead boyfriend

Iran makes huge ostrich sandwich

What can I say?

Stephen Lewis, while commenting on a recent post of mine, referred in passing to Fowler. Henry Watson Fowler. Here are my two favourite excerpts from Modern English Usage:

I have written about them before, but that was before Google Books; I couldn’t resist embedding the original text in a rewrite, and in the expectation that many of you weren’t regular readers when I last wrote about Fowler.

There’s been a lot of kerfuffle about “journalism”, both in the press as well as in the blogosphere, over the past few years; much of it has been focused on some sort of polarised debate, suggesting there are two camps, one called mainstream media (MSM) and one called citizen media (CM).

This is a flawed view, one that I’ve written about before here,  here, and here. We have to avoid the temptation to make every issue a Blefuscudian one, pitching Big-Endians against Little-Endians. [An aside: I decided to take a look at Wikia for this definition; it still lags behind the Wikipedia definition, but I shall be tracking the differences more carefully from now.]

It doesn’t matter what kind of journalist you are, MSM or CM; these labels relate to methods and rules rather than professional core aspects. MSM people tend to follow a centralised rather than P2P editorial approach, while CM guys tend to be more independent; MSM people tend to use more traditional techniques to gather and publish news, as it were.

Even these statements are too simplistic, too generalised. The lines between MSM and CM are blurring, there are people who work in both “camps”, the tools and techniques are crossing over more and more.

One thing has not changed, and will not change. The job of an editor. MSM or CM, it doesn’t matter. Which is why it gives me great pleasure to link online to a Guardian article covering a Sunday Express story, headlined Furious email from senior staff member to Sunday Express editiorial department.

I implore you to read it. You won’t regret it. But perhaps you should put that cup of hot beverage down before you read it. Just for safety’s sake, and to protect your clothes.

[Thanks to Anant for the tip-off].