I was saddened a few mornings ago to hear of the death of Arthur C. Clarke, one of my (and, indeed, the world’s) favorite science fiction authors. When I first read 2001: A Space Odyssey
Clarke enriched literature with the awesome grandeur possible and accessible in scientific discovery.
This post (”We’re Screwed”) complained about the tough times Americans are in for, if the price of gasoline continues to rise as rapidly as it recently has. As Liz correctly points out, public transportation has given Europeans low-cost (and lower-pollution) alternatives to cars requiring expensive gas (”petrol”). Reduced dependence on automobiles also seems to improve social ties. Most places in America lack such a transportation system.
One reason Americans avoid public transportation, even in cities that have good systems, is that it requires considerably more walking (and pushing strollers and pulling luggage) than they are accustomed to. (Walking is good for you. Perhaps the rising price of gasoline will have the beneficial side effect of reducing epidemic levels of obesity in America?) However, this difficulty arises from the newness of these systems more than anything else. In cities like New York and Washington DC, shops and services have had time to cluster naturally around stops and hubs, thereby reducing walking distances.
In Portland, urban planners have created incentives for such clustering, with controversial results.
Unfortunately, this means most Americans are in for tough times in the near term: either they pay for gas or they drastically alter their lifestyles and activity levels to adopt public transportation.
I have learned to explain drastic changes as the popping of economic bubbles. The recent drastic change in the price of gas suggests that the price of gas has been held artificially low in the US. That may not be true, but I have yet to find a definitive answer for why gasoline is considerably more expensive, per unit volume, outside the US (e.g. $5/gallon in India this past December). A friend suggested that other countries simply tax gasoline at higher levels than the US does. If you have a solid reference validating or invalidating this, then please let me know.
Whenever I visited India, I wondered why the average quality of locally-made consumer goods is low. (Conversely, I wondered why the quality of goods made and/or distributed in America is high.) I’m talking about small things like the quality of the seal between a container and its lid, the color and weight of writing paper, or the fidelity of a logo or celebrity face rendered on a billboard.
There was never a shortage of ingenuity or innovation in India. I saw new product designs at every visit. Most were improvements in utility, energy efficiency or cost. Some weren’t, but the presence of these seemed to show that diversity was welcomed and free market enterprise flourished. However, due to poor quality, the operation of these products was degraded. They failed to withstand the sunlight, heat, humidity, rain, and pollution. They broke easily, sometimes in ways that were unsafe.
When I asked Indians about this, there were a couple of pat answers. One was to blame the government for not imposing and enforcing standards, especially for safety. Another was contempt for the manufacturers or the average factory worker. They were uneducated, lazy, lacked pride in their product, or simply had no commitment to quality.
Since my last visit I have adopted a new perspective, attempting to answer such questions by understanding the economic systems at play and the assumptions about business and psychology that apply—or fail to. I also have seen where my own employer focuses on quality and where it doesn’t, and why. When we look at the situation from the system perspective (“Individuals don’t produce outcomes. Systems produce outcomes.â€) we see that poor quality has less to do with regulation, personal pride or commitment and more to do with purchasing power, competition, and infrastructure. I have realized that the answer to the question, “Why do Indians produce so many poor-quality consumer goods?†is simply
“Because they can.â€
During my lifetime, India has had a vast population with a certain level of purchasing power. This level was (and still is, at least on average, per-capita) significantly lower than US purchasing power. As a result of international trade agreements meant to protect fledgling Indian enterprises, there were barriers to access high quality foreign goods. Awareness was also limited: if a foreign company could not hope to sell in India, then why would it bother advertising there? The result was that if an Indian manufacturer produced an item at the right price point, there was a good chance it could find a large number of buyers. This explains the proliferation of product designs.
As far as product quality was concerned, it suffered for two reasons: first, quality is perceived by immature businesses to cost money and in fact does require investment. In an otherwise rational attempt to cut costs, businesses may have chosen to sacrifice quality. Second and more importantly, the parameters of quality are defined by the consumer. Due in part to protectionist trade agreements, the vast majority of Indian consumers were unaware of what improvements in quality could mean. They lacked access to alternatives priced reasonably for their purchasing power. So, they continued to buy. When the consumer is buying without complaint, it is hard to blame the business for assuming that quality is good. It is more likely to invest in other areas. Only visitors could complain that the quality of Indian consumer goods was low, because they were accustomed to high foreign standards.
It may seem that I am not giving the Indian consumer enough credit for understanding what improvements in quality are possible. However, this is not a concern that is at the forefront of any consumer’s mind. Indeed, during my visits to India, I rapidly become accustomed to the level of quality and am surprised by the differences when I return to the US. Furthermore, as a consumer, I wish I could choose to pay a lower price for things like low-quality packaging. Do I really want to pay for a high quality seal between a container for stickers and its lid? Do I really want my drill bits a hard plastic shell?
In the US, I have observed a decline in the average quality of consumer goods as the source of most of these goods has shifted to China. The recent spate of recalls of Chinese-manufactured toys for lead contamination is the most stark evidence of corner-cutting in quality standards. Yet, consumers only seem to change their purchasing habits if personal safety is at stake.
Quality confers a competitive advantage and should therefore go up in highly competitive markets. But I think Indian regulations stifled domestic and international competition in a desire to maintain high levels of continuous employment.
This is not to say that top-quality goods could not be found in India. They could, at high prices accessible to a wealthy minority. However, the scale of such businesses was small. To enlarge their scale required an industrial infrastructure that took time to build up. This suggests that large-scale production of high-quality goods requires long value chains, specialization, division of labor.
In turn, these are founded upon infrastructure and logistics. Quality of components may be improved by outsourcing their development, but if delivery is unreliable, then a company may rationally sacrifice quality for the reliable delivery of internally-developed components.
I have observed project managers who provide fine-grained, long-term estimates of project effort. For example, the effort estimate may be expressed as “10,432 person-hours.” There are a number of negative consequences to such a fine-grained estimate:
The solution is to provide coarse-grained estimates. I prefer estimates expressed in team-iterations. Such estimates have the following benefits, all of which flow from the policy of “rounding up” the estimate to the next team-iteration:
Project managers sometimes express risk as “percent confidence” in an estimate. However, what does it mean for some one to be 50% confident that a project will take 10,482 hours? (It seems to me that, at the beginning of a project, the confidence in a fine grained estimate should be nearly zero, in which case estimators will be loath to say anything!) Does it mean that the project is equally likely to take more than 10,482 hours as it is to take less? How much more or less? Confidence, in such situations, tends to be very subjective. Such estimates are not useful to stakeholders financing the project.
I prefer estimates to be expressed with three numbers, corresponding to the best-case, expected-case, and worst-case scenarios. Such an estimate can be provided easily and early. Estimators can quickly place some constraints on the project, saying, “the project will take no more than x amount of effort even if everything I can imagine goes wrong; it could also be easy enough to take only y amount of effort, but no less”.
In order to express estimates in this way, you must enumerate and quantify risks. However, once this is done, it becomes rational to expend some effort on mitigating or eliminating the risks with the largest or broadest impact. I have observed a frequent conflict between the developers wanting to expend certain types of effort and investing stakeholders wanting to minimize effort (cost) expended on development. Such conflicts are best resolved by understanding the risks mitigated by those efforts. Developers often have a keen intuition about risk, but find it difficult to explain how certain efforts mitigate risk. Once risks are enumerated and quantified, it becomes obvious to developers that some efforts are not worth expending, and to investors that some are.
The biggest successes in business have been (or at least have been portrayed as) those individuals or companies who could deliver a product matched to a large scale need or want. Large scale could mean many low-budget consumers or a few large-budget businesses or both. Beyond matching a product to a need, success lies in marketing execution: price, place, and promotion.
In understanding needs and wants, Maslow’s Hierarchy provides a broadly-understood foundation or outline. Like other primal motivators, these needs manifest in a variety of ways at different scales. (For example, a desire for shelter may manifest as a desire to keep a job.) This only provides a rich and ever-changing set of opportunities: needs that, when met by a product, mean business success.
It is critical to meet and converse with people in person to understand their needs and test whether an offering or proposed offering meets their needs. This is the most important part of the inbound marketing function.
I’ve taken some ribbing for spending time composing long, thoughtful blog posts as well as e-mails.
Writing is a part of my core identity. I have written about my thoughts since I was a teenager. I feel that writing helps me think. Writing well helps me to think truer thoughts. I certainly derive tremendous satisfaction from crafting prose that captures my thoughts accurately. (There may be a genetic predisposition for this.) And I frequently refine and even change my opinions as I write. To me, anything worth thinking about is definitely worth writing about. Robert Atwan, editor of The Best American Essays, said that what makes a good essay is
to see an enactment of thought, and some process going on of thinking…There are people who are natural essayists. They ruminate. They’ll deliberate over something. They’ll look at it from multiple perspectives. Montaigne did that. Emerson did that. That quality is what you want to find in a good essay. You want to see that going on on the page, that mind-in-motion so to speak.
(You can hear him about 17 minutes into this broadcast.)
After filling a couple of journals with such writing, and after finding enjoyment in reading some of what I previously wrote, I wondered if others might find similar benefit from my thoughts. The blog became the perfect medium for me to make this possible.
So, I blog because others might enjoy some of what I write. Others might enjoy some of what I write because I do. And I write because it helps me think.
We purchased and began using a beautiful matched set of coffee mugs. Unfortunately, while nursing coffee around the kitchen and dining area on a leisurely weekend morning, we frequently lost track of which mug was whose. This is the same phenomenon that has led to the invention of wine glass charms
It was, therefore, a pleasant surprise to find a set of Hausenware mugs. They are painted identically on the outside, but the inner surface of each is a different color—form and function perfectly blended.
A sales-oriented business remains focused on the next deal and the opportunity it represents. This orientation is natural for start-ups going after their initial revenue, and for companies serving a small number of large customers, each with distinct needs. In order to control costs, grow revenue, and compete, such a business must find points of leverage, components of its offering that can be offered as-is to multiple customers. Inevitably, it must transition into a market-oriented business.
A market-oriented business focuses on a multiplicity of opportunities represented by an entire market. This orientation is required for mature companies pursuing continued revenue, and for companies serving a large number of small customers having common needs that are well-defined.
The transition from sales-orientation to market-orientation is a difficult one. The core product may have to be painstakingly separated from customer-specific innovations that were previously so precious in landing “the next deal”. Legacy support costs will mount if customers are not motivated to upgrade. Some may choose to leave rather than suffering through the transition.
Today for the second time, I heard some one say, “In lieu of…” instead of “In light of…”.
Really.
This is baffling to me, because it makes no sense. “In light of…” means “Considering…” while “In lieu of…” means “Instead of…”
I keep hearing people say (and seeing people write) “We need to flush out…” when they mean, “We need to flesh out…”
When I first heard some one say, “We need to flush out parts of this document” I laughed because I thought they were politely saying the document was a piece of crap.
Then, I realized that they meant “flesh out” because they thought the document was “skeletal,” incomplete.
Then, I realized they were making a certain amount of sense, if you thought of the missing parts as needing to be flushed out of hiding.
I twice heard some one say, “…the rest is mute.” when they really meant, “…the rest is moot.” This also makes a certain amount of sense: if something is moot, then it is of little enough value not to matter. If something is mute, then it is silent. It is being considered quiet enough not to matter. Try saying “…the rest is mote” meaning it is small enough not to matter!
I know this makes me seem like a geek, but what about the people who keep trying to use the word “lieu” in a sentence?
Say this out loud: “In lieu of this house, toilet overflowing.”
Recently, I have discussed the limits of meritocracy with some friends.
One question we have been considering is: How can CEOs get away with demanding enormous compensation packages as well as severance agreements that ensure they will walk away rich at the company’s expense, even if they are terminated for incompetence?
Here are some possible answers, none of which is completely satisfactory:
described former RJR Nabisco CEO F. Ross Johnson giving lucrative consulting business to members of the board that hired him.In any case, the astronomical rewards at the highest levels of a corporation seem to have less to do with proven results and more to do with political acumen, and the ability to sell one’s value before demonstrating results. This Business Week article attributes a CEO’s job security to his or her ability to satisfy a community of constituents, including some for whom the company’s performance is a secondary concern.
Another friend pointed out that meritocracy has its limits in martial arts as well. Higher ranks (symbolized by different colored belts) are supposed to be awarded on the basis of physical skill and knowledge of the culture, traditions, and moral code. Yet the highest ranks seem to get awarded to those who are well-liked by leaders, or who have brought money into the sport by forming schools or hosting tournaments. Furthermore, some schools make it easy to move up the ranks, to encourage their students to keep spending money on training.
Weekend America recently interviewed Rachel Toor, who worked in the Duke University admissions department and is the author of Admissions Confidential
Random thoughts: