Leadership

There Has to Be a Better Way to Lose $800 Billion

November 4, 2022 Leave a Comment

Earlier today, I read an article in the Wall Street Journal titled: There Has to Be a Better Way to Lose $800 Billion— https://www.wsj.com/articles/meta-facebook-metaverse-mark-zuckerberg-11667424987?st=dxn07v3lgwobx82 . I read the whole thing, something I rarely do with the WSJ. I recommend reading it as this post is not a synopsis, but a companion to that piece.

The WSJ piece is about Meta, not Twitter, but you already know that if you tracked Twitter’s stock price over the past year. That said, the article is about Mark Zuckerberg’s, so far, failed attempt to lead Meta and the rest of social media players to his vison of the future of the industry.

I believe that both Zuckerberg and Musk have made the same fatal mistakes in their attempt to co-opt the future:

They are doing it on too large a scale. Transformations like the ones they are attempting are (very, very) rarely successful. Bet-the-ranch investments should not be done at the expense of killing your golden goose, i.e. the engine that is paying the bills. In Meta’s case it looks like the company is abandoning a very successful model before they even have the glimmer of what its successor will be. In Twitter’s case it is even worse. Musk has loaded the company with so much debt that he is cutting staff and capital costs to manage the income statement because the deal doesn’t make sense (period) and to the bean counters, the only solution is to cut—even if it is deeply into the muscle. In both cases (worse for Twitter because its finances are much more precarious) this does not bode well for the short-, medium- or long-term health of either company.

They are over-funding their efforts. Keep new (revolutionary) efforts small, lean and hungry. Well-financed efforts waste money! And from my experience they do not produce measurably better outcomes. Use an angel/venture capital model to fund these efforts. Make the leaders prove themselves (vision, execution, passion) and earn the resources they need to realize their venture’s potential. Musk should have bided his time and developed a complete, workable business and operating plan prior to pulling the trigger on his purchase of Twitter. If he had done that homework, he might never have done the deal. And after doing the homework, if he still decided to do the deal, he probably would be executing better than it appears he is so far. Zuckerberg has a large enough umbrella that he could have incubated a dozen ideas before picking one to commit to.

Do not bet the business on one path to the future. Both Musk and Zuckerberg think that they can drive the vision. They are both very gifted businessmen, but they have convinced themselves that they (and only they) are right. This is not likely the case. Both Zuckerberg and Musk are living inside of a boxes of their own construction. These boxes, while admittedly bigger than most of us can conceive—giving them credit where credit is due) are still limiting and is likely to eliminate the true new golden goose from the field of vision. So, I would identify and then incubate ideas and the (best and brightest) leaders to shepherd the efforts through a series of gates that would eventually deliver one or more golden geese.

In both cases these mistakes are driven by arrogance. Musk and Zuckerberg have more reason than most to be self-confident in their visions. They are two of the most successful entrepreneurs in history. But that does not mean that the rules do not apply to them and the bigger the stakes and scale, the bigger the consequences and likelihood of failure. And the bigger the consequences of failure, no matter how rich they are, for failure on their current respective efforts is consequential (maybe even record setting) in both cases.

These are both cautionary tales and worth remembering for those of you who are trying to take their company on to its second act.

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

The Sorry State of Tech Support… and what to do about it.

August 24, 2022 1 Comment

If you are like me, you spend too much time trying to fix the problem in a vain attempt to avoid making a call for technical support. Why is this? Because the technical support experience is most often both frustrating and time consuming. I won’t mention, or maybe I will, that the chance of a satisfactory outcome is vanishingly small.

And the sorry state of technical support is a serious problem because products and services increasingly depend upon technology as a critical component in their ability to deliver the value that is promised to their customers. All too often the technology is fragile and fails in difficult-to-diagnose ways. Consequently, the issue is not going to go away, it is going to get worse, much worse.

So why is it that companies cannot seem to support the technology underlying the products that they sell:

Generally, the technical support function intimidates/bores company managers who are more likely to have come up through the sales or product development organizations than technology. More specifically many top managers do not understand technical support which includes two dimensions: 1) technology and 2) support. Neither of these disciplines are part of their core competencies. So, it does not get the attention, funding or talent it needs to be successful;
Because they do not understand it, company management generally do not see technical support as being a critical component to a robust, complete and well-defined customer service offering;
Technical support is not sexy. This is another reason that top management does not give it the attention it deserves. And, or should I say as a result, ambitious employees do not see it as the most direct route for advancement within a company. That said, not being “sexy” does not mean that it is not vitally important;
The pool of technically competent candidates is small and the players that have the skills necessary to be successful generally take engineering jobs which are perceived as more prestigious—see previous point;
Good technical support staff need to be both technically competent and good communicators. For whatever reason these two skills often do not seem to be found in the same person. So, the good communicators don’t know what they are doing, and the technically competent individuals cannot interact with the client in the most productive way;
Products, specifically their software modules, are not as robust as they should be. Quality assurance for the software components is not nearly what it is for manufactured components of the product. This is the reason that they fail and thereby generate demand for technical support; and
Finally, I want to emphasize that technical support can not be optimized unless the solution includes training for support staff, an established process for the delivery of technical support and technology to support delivery. And that just is not being done. Sometimes a company will get one (or part of one) of these items right, but I have never seen a company nailing all of them. That said, even getting one of them right has a tremendously positive impact.

Does your company have a technical support issue? There are several questions you need to answer:

How integral is technology to the success of your product or service? If you are a computer (hardware or software) company, it surely is. If you sell furniture, it likely is not;
Are your products well-designed, i.e. is it obvious: 1) how to use them; 2) what is wrong when they are not working; and 3) how to get them operational after a failure. Poorly designed products need more technical support;
Do your customers make a lot of calls to your technical support line and if they do, what is the NPS for that service? A “yes” answer to this question is likely driven by the answers to the first two questions, but also speaks to how well your technical support organization handles the failures implied by a positive response to the first question and a negative one to the second.

Further to the second bullet point directly above, a quality product does not fail and when it does, it is obvious what is necessary to affect a recovery. So well-designed products mitigate a lot of the need for technical support. That said, even the best designed products are going to need support and even the best designed products have complexities that need to be sorted by qualified resources. As a side note, it is not a bad investment to have your product development team members (all of them) spend time taking calls for customers, it will give them a real feel for how their efforts affect your customers and will make them better (more empathetic) product development players.

Big Ass Fans and eero are examples of products that depend on technology, are extremely well-designed products that work well, are designed to be easily deployed, and are easy to remediate when things go wrong. They also have exceptionally high performing technical support organizations, so when something does go wrong and it does, they are capable of quickly getting things back on track.

These companies have somehow figured out how to build quality software (which means fewer calls) and deploy knowledgeable staff, which fixes two of the issues I see in the provision of technical support. And, their success in these two areas results in good outcomes for their customers.

There is a business opportunity here and I am surprised companies like Alphabet, Microsoft, Amazon and IBM are not all over it. First, they all have internal need for tools that can support the provision of technical support for products that they sell to their clients. Second, once the technical frameworks for are developed, they could be deployed as a cloud service to companies that are looking to build their own technical support capabilities.

I believe that technology will be a key component in improving this situation. It will solve two problems. It will make it easier for companies to provision expertise and it will allow companies who use it to better leverage the scarce staff that is available. And I believe that AI should be the technology of choice. AI is extremely good at detecting patterns which is exactly the skill that is needed in doing diagnostics—the second step in resolving an issue. There are numerous examples of systems that have been trained to identify/diagnose/predict problems in mechanical devices (e.g., jet engines) and the human body (certain types of cancer). I can imagine AI software designed to explore and diagnose failed systems and recommend solutions or even implement fixes. This would require building and implementing processes to capture training data. This is no small task but given shortages of technical resources that are likely to be persistent, the return on investment could be substantial.

I can also imagine an implementation plan that is incremental. This would speed the delivery of features that provide the biggest marginal return and allow for the development of a sound (tested) foundation before more difficult and risky components are tackled.

A company like IBM has the capability to both develop the tools and provide consulting services to develop technical support processes and assist in the deployment of the complete and well-defined solution. Companies like Alphabet, Microsoft and Amazon are certainly capable of developing the technology and providing a cloud-based deployment of that component of the solution. They could use third party consultancies to configure the software to each of their client’s needs, develop processes and deploy the solution.

Further, the market is big and growing. Everyone from home appliance suppliers to car manufacturers are incorporating technologies that are both integral to their products and complex in their implementation and operation.

So, why isn’t progress being made on this front? A couple of reasons:

It is a hard problem to solve.
It is a multifaceted issue (see list above) that requires a systematic approach by a multi-disciplinary team—I said it is a hard problem!
It will take considerable resources to bring a solution to market.
It is a risky venture. There is no guarantee of success.

The upside is that I do not believe that it will be easily replicated. So, a business provisioning technical support infrastructure and consulting assistance, should have a sustainable competitive advantage.

In the meantime, there are several things that you can do to improve your technical support capabilities:

Develop a plan to improve your technical support capabilities. Focus on figuring out how to improve the quality of your technical support staff (it is possible) and make sure that you adopt a service level commitment that is appropriate to the reputation you want your company to have;
Put the proper management in place. That would be management who is capable of formulating and implementing the plan;
Focus on process, training and staff; and
Never forget to have enough resource to support your customer base. Do not be fooled: A bad customer service experience has costly consequences. They may not be immediate, but it will cost you.

Finally, and this should have come first, place an emphasis on quality. Because quality code is a lot less likely to require technical support and when it does, a well-designed product will be easier to diagnose and fix!

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

How to Kill a Business– Slowly

July 31, 2022 Leave a Comment

There is a joke going around: How do you make a small fortune in Bitcoin? Answer—Start off with a big one! There is parallel line of thought that applies to companies: How do you make a small, unprofitable company? Answer—Start off with a big one and don’t invest in it.

As is always the case it is not that simple. Not investing is the result of one or both of the following:

Lack of imagination; or
Lack of understanding about the business.

It is often hard to tell which of these is at play, but it seems to me it is almost always a combination of the two. Let me give you an example. This comes from the cable industry as I believe that they are an exemplar for both issues.

I recently contacted my cable provider, Spectrum (Charter Communications), for the 4^th time this year. There are multiple issues:

Quality of service, e.g. they only provide a 1080p service. This is well behind what can be had from other sources;
Management of their customer service organization. Their technicians are not given the provisions, tools or training to properly do their job;
UI/UX. It is embarrassing. It doesn’t deliver a clean complete or consistent user interface or experience.
And the reason I called—their software is buggy.

Further they do not seem to be making investments to solve these issues:

The hardware they are using is at least 6 years old. This was based on being told that I had the most up to date hardware and a quick check of the FCC registration database on the unit in my possession. That is ancient by technology standards;
They are letting bugs go unresolved for a year or more. That is how long I have been experiencing a situation where I schedule recordings which are then unviewable. After replacing the hardware (twice), I was told it was a “known issue”;
I have not seen a significant software update in the year I have been subscribing to their service;
Their service offering has not accounted for changes (like streaming) to how their customers are now consuming content; and
They have not developed a vision that would keep them relevant, i.e. figure out how to provide a seamless set of services (a content delivery platform) that would delight their customers and provide a long term competitive advantage. My apologies if they have, but there is no evidence of it.

The description provided above is not unique to Spectrum. It applies to all the big players: AT&T, Cox, Comcast, Dish, etc. I would note that AT&T took an expensive detour into content (a business they had no experience or expertise in) with the purchase and subsequent divestiture of Time Warner. And they wonder why they are losing subscribers.

The streaming providers have similar problems. Users like the idea of streaming, but the big streaming players (Netflix, Amazon, Disney+ etc.) have not recognized the shortcomings in their products and customers are tiring of the deficiencies and have been losing interest in that model too, as far as it has matured, and are showing signs of abandoning these services too.

Content may be king, but as both Google and Amazon have proven if you do a better job of helping your customers discover, manage and access the prodigious volumes of content (i.e, what they are looking for), the profits will follow. Further, Roon has proven that people are willing to pay for products that help the user discover, organize and enjoy content (in their case music) that comes from a variety of sources, not Roon. The folks at Roon provide a comprehensive (in terms of functionality) platform that encourages and enhances the enjoyment of music thereby delighting its customers.

Given the revenue the players in video delivery industry, both the linear (traditional cable) and streaming varieties generate, there is no excuse for the state of their offerings. With just a small allocation (relative to revenue) these players would have state of the art offerings that would redefine how media is consumed and would not only be delighting their customers, but also growing their businesses and margins.

The large retailers (Sears. JC Penny, Macy’s, etc.) have already been through this process and the same lack of imagination and understanding of their business (as it is and will be rather than what it was) provides a cautionary tale for both the cable companies and any other business that forgets how to innovate and keep their business fresh and vital. They had large prosperous businesses, now…

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

Beating a Dead (Cryptocurrency) Horse!

May 31, 2022 1 Comment

Have you ever considered what you might propose if you had the opportunity to revise the way we pay for things, hold our wealth and keep records regarding what we have purchased? Satoshi Nakamoto did when he developed and implemented Bitcoin.

Based on the design, I believe I can safely say that Mr. Nakamoto had a serious lack of trust in the banking system. And not just the commercial banks, but the investment banks and the central banks. The banks had done plenty (remember this was 2008) to engender distrust. They:

Were key players, if not the primary cause of the financial crisis;
Backed/promoted/protected a system that many felt (and still do) extracted rents far more than the value provided, but they were the only game in town; and
Did not innovate or even properly maintain/modernize the infrastructure that supports the banking system.

And the leadership that controls the banking system has not recognized how dissatisfied and angry their customers really are. It reminds me of the situation the French aristocracy got itself into just before the French Revolution. And we know how that turned out. I could go on with my analogy, but I will spare you.

That said, I have been (fairly) accused of not letting things drop and will not disappoint. Cryptocurrency is one of those things that has been the focus of more than one of my blog posts. One thing that has been consistent is my belief that Cryptocurrency’s acceptance is a visceral reaction to the failures of a banking system that has not been responsive to its constituents. Queue back to my comment about the French revolution.

That said, my thinking about Cryptocurrency has become more nuanced and multidimensional. In fact, I think I now have a story that: 1) makes sense; and 2) can provide a basis for thinking beyond Crypto, allowing us to move to the next stage regarding making serious improvements to the services that have been traditionally provided by banks:

Issue money and ensure its stability. This is the role of the central banks. They control the money supply and thereby are both responsible that it is available and that it remains stable. Over time I believe they have done a C+ job. This is mainly based on the periodic spikes in inflation and subsequent downturns in the economy over the past 100 years.
Provide a secure depository for its customers money. This is the job of the commercial banks and to some extent the investment firms. As in the previous bullet, they have a mixed performance. The banking system has done a generally good job with insured demand deposits, but in other areas tends to either over or under regulate leaving lots of room for crooks (like Bernie Madoff) to take people’s life savings.
Provide loans. This is the job of the commercial and to some extent investment banks and venture capitalists. Most people think that banks take advantage (one example being student loans) when they can. And fail miserably regarding responsibilities to their clients because of a combination of greed and incompetence, e.g., the financial crisis.

In all three of these cases the situation was/is exacerbated by an unwillingness to address some basic problems. This includes an archaic technical infrastructure and functionally impoverished/deficient system that provides the foundation for the operation of the banking system. Further the banking system establishment has done a terrible job of communications i.e., they have done painfully little to explain what the banking system does and why it provides value for money.

To summarize, the banking system:

Has engendered a profound lack of trust driven by greed, incompetence and bad communications.
Delivers poor functionality and performance largely based on archaic infrastructure that is both technically and functionally deficient.
Does a terrible job of communicating the value proposition, i.e., where is the value for money, for its products and services? These leaves customers believing that the rents are too high and that they are being, once again, taken advantage of.

This brings us back to Mr. Nakamoto. He promised a technocrat’s solution to all the problems outlined above. The Blockchain technology, in the form of Bitcoin, would eliminate the need for banks. It would provide the functionality of the banking system and eliminate the need for all those deplorable bankers.

There were a lot of appealing aspects to the solution. The most attractive was that it would eliminate the need for banks. It would provide the three main functions of money:

Store of value/wealth
Unit of account
Medium of exchange

And, the story goes, do it in a way that eliminates the greedy bankers from the equation and replace them with a transparent set of algorithms that is managed in a decentralized (democratic) way and is therefore responsive, efficient and incorruptible.

So, we have an established system (current banking system) that is seriously flawed and a potential alternative (Bitcoin and more generally Cryptocurrency) that, on the surface looks pretty good. But, does it?

Cryptocurrency is expensive. I am not saying that it should not be, security comes at a cost. But I do not think we really understand that cost. And when would anyone buy into a long term investment when you do not know what it costs?
Cryptocurrency has trouble scaling. This is a real issue when you are talking about having to process hundreds of billions of transactions a year.
Cryptocurrency has not proven to be stable store of value. This is an issue when many people use it to transact business and also might be holding a large portion of their personal wealth in this medium.
While much is made about the integrity of Blockchain and the core technology has proven to be bulletproof, a chain is only as strong as its weakest link (forgive the play on words). And, while the core technology does live up to its press, there are many associated products (like exchanges and wallets), that do not fare so well. Just Google “5 biggest blockchain scams” for a scary look at how crooks have hacked around the blockchain technology to steal people blind.
And finally, Cryptocurrency is a technical solution. It assumes: 1) that Crypto is capable of supporting all of the use cases associated with replacing the “banking system”; and 2) that a functional solution will spontaneously form around it. I would observe that Bitcoin is 14 years old (ancient by technology standards), and a usable replacement for the legacy system has not formed around it, whether the “it” is Bitcoin or any other Cryptocurrency.

What I can tell you is that if I was to design a replacement for money it would not look like either the present bank-centric system or one built around Blockchain (at least based on what I know today). And I can say that, for those of you who do know, as a person who designed a payment system that is still operating successfully today.

That said, if I were to undertake to design a replacement for our current system, I would follow a process:

Develop evaluation criteria against which candidate replacement systems would be evaluated. This would include both functional and technical requirements. The focus would be the creation of specifications that are complete and well defined, but more importantly meet the needs of the constituencies that will be depending on the system. The evaluation criteria would include checks for efficacy, efficiency, extensibility, maintainability and that the product includes the functions necessary to objectively be considered a winner.
Identify/specify all of the solutions that might be capable of winning the evaluation that I outlined above. This would undoubtedly include setting up several competing teams to identify candidates and develop detailed competing proposals for each candidate. Each proposal would include a detailed description of how it would meet the functional requirements outlined for the system and an outline of the underlying technical solution being proposed.
Evaluate the candidate solutions against the evaluation criteria and pick a winner.

I know what some of you are thinking. This guy is obsessive-compulsive and is overengineering the solution. Furthermore, you are thinking that this is going to take a lot of time and money. My response is that this is a very high stakes game and we cannot afford to iteratively prototype a solution and hope that, at the end of the road, it will do what we want it to. This is a moonshot. The size, scope and impact are enormous. In fact, it is bigger than the Apollo program. This effort needs to be handled with care. It needs to be a well specified (to requirements that are complete and well defined) and engineered/implemented in a way that helps to ensure our long-term competitive advantage, serves all of it constituencies and maintains the integrity of our money system.

This does not mean that the solution must be fully specified up front—note that I have never said functionally complete, “just that the product includes the functions necessary to objectively be considered a winner”. In addition to being functionally rich (enough to delight its constituencies out of the box) it must also be buildable, high quality, maintainable, extensible and efficient.

I would propose (here) that there are two ways an effort of this size, scope and importance can be undertaken. One would be to set up an organization like DARPA (Defense Advanced Research Projects Agency). Let us call it F(inance)ARPA and it could be overseen by the Fed or the Department of the Treasury. The other route would be for the private sector to (as it already should have) undertake a program to fund and execute the process I have outlined above. I believe that there are other mechanisms, but my purpose here is to induce thought, and not to write a book.

The establishment has clearly failed us. While I think they should be penalized for their incompetence, apathy and lack of action, I am not one to cut my nose off to spite my face. The need is great the size and scope of the effort is enormous and the established players are the ones best resourced to undertake the endeavor. That said, we need to hold them accountable because failure would have dire consequences. Society stops functioning in the absence of an ability to do commerce!

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

If you are trying to Attract, Develop and Retain the Best and the Brightest you should read this!

May 5, 2022 3 Comments

I was indoctrinated. From the day I started at Price Waterhouse (now PricewaterhouseCoopers) it was clear that if we were not on-site, we were doing something wrong. Being on-site with our clients built trust that was essential to our change-management role, and it helped to build strong interconnections that are integral to long lasting relationships—which helped us sell further work.

As you can imagine, nearly 20 years at PwC instilled in me a strong predisposition to be “in the office”. Fast forward 20+ more years and I am not so sure the lessons I learned from my time at PwC are universal, at least as they relate to a subset of jobs that are important to our economy. Why have my views changed?

After leaving PwC, I spent a good deal of my time at both Mayer Brown and Textura working to get (and retain) the right talent. Attracting the best and brightest was a struggle. We always seemed to be 25- 50 people short of what we needed to be able to meet the aggressive technology goals that we set for ourselves. During my tenure at these organizations we never solved the problem. We found some stopgap fixes, like opening an office in downtown Chicago for Textura, as it was a more desirable location to work than our suburban headquarters and partnering with outsourcing companies. This helped, but also pointed out that people, even then, were sensitive to the logistics and the potential time commitment of getting to and from work.

After I left Textura, I joined a new company as a board member. The challenges of finding good people remained, but collaboration software that supported working at distance had matured. We simply couldn’t attract enough people to Charlottesville, Virginia to support our software development ambitions. The CIO, who was a visionary in this respect, pushed successfully to hire people in place, i.e. we allowed people to work where they wanted to live. We started a grand experiment. At least that is how I saw it. There was no requirement to be in the office. Eliminating the need to be in the office vastly enlarging the talent pool, making it infinitely easier to attract top talent. And, this was done pre-COVID.

Then came the pandemic. It supercharged to motivation for a broad range of companies to adopt the strategies and tactics from Co-Construct’s “grand experiment”:

It made an already tight labor market even tighter. This made recruiting and retention even more challenging and will continue to put pressure on companies to be flexible and support their employees desire to work-at-home;
It forced many companies to adopt work-at-home constructs. Governmental requirements to adopt social distancing made working at home the only practical way to keep employees working. It accelerated a trend that I would argue had already started and largely proved it workable; and
It proved that within limits that we have technology that can support a flexible working environment.

That said, many CEOs, a good number of whom are my age or slightly younger, were brought up to think that a necessary part of work was being at work. So now with COVID waning they are beginning to think that it is time to get everyone back to work. I would counsel them not to move too quickly or unconditionally in that direction.

Why do I say this? There is a shortage of skilled labor. And there is a serious war for talent underway. Flexibility (in terms of where and when people work) weighs heavily in the decision-making process as current employees and candidates decide where to work. Just to be clear (according to a study by Marissa Baker at the University of Washington) we are probably only talking about 25% of the workforce. She breaks it down:

Likely can work from home (25%)
- Business
- Computer Science
- Engineering
- Finance
- Management
Likely cannot work from home (56%)
- Health Care
- Education
- Manufacturing
- Industrial Processes
- Material Movement
Cannot work from home (20%)
- Retail
- Food Services
- Hospitality
- Personal Car Services
- Transportation

https://deohs.washington.edu/hsm-blog/most-people-cant-work-home

You can quibble with a percentage point or two here and there, but the order of magnitude is correct. So, when we hear that companies need to consider whether it is a good idea to continue to let their workers carry on working at distance, those eligible to work at distance are a fraction of the workforce. Albeit, if you look at the functions listed in Dr. Baker’s study, an important part of the workforce.

I believe that there are several things that need to be considered when deciding if workers need to be in the office. And, to make things more complicated, there are three general groups of considerations:

Can you attract and retain workers:

We have a hot labor market. And, some of the hardest to fill jobs are amongst those who fall in the category of those who can work at home.
“Compensation” is a multifaceted concept and flexibility concerning when and where you work has become an attractive (from the workers point of view) and viable (from the employers’ point of view) tool when specifying job parameters.
The bottom line is that companies that adopt hiring strategies that adjust to account for the realities of points one and two above will have a significant competitive advantage when it comes to attracting the best and brightest.

What are the attributes of an employee’s job responsibilities that make someone a good candidate, or not, to work at distance?

Some of the choices seem obvious. If the employee’s work requires face to face interactions, like a health care worker’s interaction and a hospitalized patient, working from home would be impossible. On the other hand, one could argue that a call center employee could work as well at a desk in their home as at an in-office call center.
And, there are individual employee-by-employee situations that need to be considered. Does the employee have a workspace at home that is conducive to work. A household where the employee is constrained to sharing space with young children would mitigate against a worker qualifying to work at home since working conditions would not be conducive to high quality, productive job performance.
Are there tools to support the function you are looking to deliver via distance working? Fortunately, in many cases, tool sets that support in-office working and collaboration port very nicely the distance working arena. I would point to the service desk function as a prime example. While I can think of several tweaks that would improve its ability to support distance working, it is well set, as is, to support workers at distance.

Software development is another function that already has many of the tools necessary to support working at distance. There are excellent project management, collaboration and software development tools on the market. Between them, the tools to effectively manage the software development process in a distributed environment are robust and capable.

That said, the functions requiring upstream (gathering and specifying requirements) processes are less well covered. I would argue that the collaboration between the people who need the software and those that capture requirements and specify design is still best done in person, which suggests in-person office-based interactions.

And, do you have the management practices need to manage at distance in place?

While many of the techniques used to manage people in the office transfer nicely to the management of employees at distance, I would suggest that there are differences, and ignoring those differences has its costs.
There is a fundamental need to maintain a discipline around people management irrespective of whether they are working at home or the office. While there are more mature processes around office related people management, I would not say they are good. So, there is work to be done.
And finally, do your employees have the skills and experience necessary to be successful working at distance.

I will expand on this last set of ideas in a future blog post.

In summary:

Carefully choose which functions are eligible for distance working and specify the requirements that eligible employees must meet to individually qualify to work at distance.
Make sure to communicate who (and why) distance working applies to, so that employees who are and are not eligible for distance working understand the reasoning
Make sure that you have the policies and procedures in place to support distance working.

And don’t forget to read the follow-on to this blog post where I talk about what it takes to get the most out of a working-at-distance program.

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

DeSantis vs. Disney

April 21, 2022 1 Comment

I am not happy to be writing this post. The situation saddens me on several levels, but maybe not the ones you might be expecting.

Disney albeit somewhat tardily stood up against Florida HB 1557 (the “Don’t Say Gay” bill). For a company that is in the business of communicating, they did a terrible job of explaining the motivation (or what should have been the motivation) for their opposition to the bill. So, I will tell you what I believe they should have said:

Disney has a large and diverse workforce. Quite of few of those workers live and work in Florida and Disney’s plan is to increase those numbers over time. This bill makes it harder for Disney to attract and retain the best and the brightest to their new work locations in Florida and that makes it harder for Disney to be competitive in an exceedingly competitive market.
Disney strongly believes that diversity is what has made the United States the world’s leading economy. Similarly, Disney’s success is based largely on a diverse and capable workforce.
If you want Florida to continue to be a dynamic environment that draws world class companies to the state, HB 1557 has to go!

Further, had Disney dealt with this issue in a timely fashion (they had to see it coming ) rather than waiting for its employees to protest its lack of action, it might have been able to finesse the situation rather than apply blunt force in a hurried and, in retrospect, ill-conceived manner.

Governor DeSantis has decided to send Disney a very strong message for taking a stand against HB 1557. He is threatening to revoke a status that enables Disney to operate its theme parks independently of local governments — a situation that has been beneficial to all parties, including the municipalities surrounding Disney and the State of Florida.

He has let his ego get in the way of good decision-making. It is becoming clearer by the day that his decision to revoke Disney’s ability to operate within the authority of the Reedy Creek Improvement Act, if successful, will have short term consequences (i.e., operating costs and debt will need to be assumed by surrounding counties) that will negatively impact the surrounding areas.

His actions will also certainly be noted by other companies that might be considering Florida as a location to do business. They will rightly wonder how stable and predictable the business environment is and likely decide against Florida. Governor DeSantis’ actions are not business friendly and that (as California seems to be now learning) is a really bad idea. Even if Governor DeSantis wins this battle, it almost certainly means he will lose the war.

It truly pains me that I must make these observations and it embarrasses me that this conflict is taking place in the state in which I now reside especially given all of the other more substantial issues that should be taking up both Governor DeSantis’s and Disney’s time.

That said, I am not taking sides here although I am definitely on one of them. I think that each of the parties has a right to their opinion. I am suggesting that if each of the parties had done their jobs, there were several places where this situation could have taken a productive turn and not left us in the predicament we are now clearly in, i.e. this probably never would have happened if both of the parties had thought through their actions, done their jobs and considered the consequences of their actions.

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

Mind the (Performance) Gap

March 7, 2022 Leave a Comment

I recently had an experience with Lowe’s (both online and in one of their stores) that crystalized some thoughts that I have been pondering for way too long. In this post, I am going to put them to paper.

Here is the story. I ordered some shelves for a closet in my office—there were four of them. My plan was to place the order and pick them up at the store—which is a five-minute drive. The website would not permit that. I was only allowed to order them for delivery. So, I did.

I will not include pictures of what arrived. What I will say is that the merchandise did not arrive in good shape, they (and these are shelves that were going in a closet, so it is a low bar) were no longer fit for purpose. There were a couple of issues:

I am guessing here, but the person who packed the order was being measured on how many boxes they packed per shift and not whether the merchandise arrived in good working order;
Shipping this product (4 particle board shelves, 36”x12”x 1” weighing 7 pounds each) directly to the customer had to be the most inefficient/costly way possible to transfer the merchandise to the customer; and

This meant that Lowe’s had spent a lot of money (labor, materials, shipping) just to make a customer unhappy.

I had to take the product to the store (which as I have already pointed out was five minutes away) where I spoke to a “customer service representative” who initially let me know that it really was not his (i.e., the store’s) problem. He talked about the Lowe’s fulfillment center like it was a different company.

When I refused to accept that assertion, he got himself into problem solving mode and finally said that he would get the product into the store in the next day or two. He also said that he would have a store manager call me. He did neither.

This was a colossal waste of resources. Time was spent processing, packing and shipping the order. I then returned it to the store which wastefully consumed an hour of my time and 45 minutes of the “customer service representative’s” time. And, then another hour and a half of my time sourcing a similar product from Home Depot—which is a 26-minute (each way) ride. Not to mention, the Lowe’s product was damaged and not fit for sale. These were all costs associated with the transaction.

I see a lot of this: Companies thinking that they are saving money by keeping costs (personnel and training, logistics) down when they are really lowering productivity, alienating customers and slowly/painfully killing their businesses. Over the past several months, I have had conceptually similar experiences with Spectrum, Lenovo and Walmart (twice) where their lack of understanding of business processes design and optimization leads to significant inefficiencies and is costing these businesses their margin and reducing productivity in an extremely tight labor market.

I come from a place where our focus was optimizing business processes. I spent much of my career helping my clients improve their business processes. While my focus was developing/implementing technology to support business process reengineering, I understood that the real gold came from my colleagues who figured how to optimize business processes. At Textura we help our customers eliminate large quantities of wasted work. Our sales process involved mapping the customer’s current (as is) payment activities and then generating a target (to-be) process that often eliminated 40% to 50% of the steps involved in paying their subcontractors.

We found that an effective/efficient process results in improved productivity, happy customers and higher profit margins. As a consultant we helped our customers take unproductive steps out of their business processes, understand what kind of organization changes were necessary to support those processes and what kind of personnel plan (training and motivation) would be necessary to deliver the desired results. This made an enormous difference in our clients’ competitive positioning.

I offer a second example, this time using a service rather than a product example. My broadband service started having intermittent issues. Over the period of two weeks (so far) I interacted with 4 technicians, one of who spent the better part of five hours looking through the company’s inventory for a working cable box. The technicians who attempted to remedy the issues with my broadband were clearly motivated and had been taught how to use their tools but did not understand how to methodically troubleshoot an intermittent service problem and had not been provisioned with adequate spares.

In this case the broadband provider, Spectrum, did some of the right things (their people were clearly focused on serving the customer), but missed on others: 1) troubleshooting process; and 2) the logistics involved in making sure that the technician had the spare parts likely to be needed in the repair. Economizing on training and spares ruined productivity and made it impossible to achieve any kind of customer satisfaction. And don’t make the mistake of thinking that my experience was a one off, it is pretty clear the issue is systemic.

You might think that I am just taking an opportunity to complain about vendors who failed to deliver. That might be part of my motivation 😊, but the real point is that in a time when: 1) employees as a group are not particularly happy; and 2) there is a deficit of labor which is not likely to resolve itself anytime soon, we really might want to think about improving processes and training our workforce so that they can add value.

To provide counterexamples I offer both eero and Big Ass Fans and (of course) Textura. While none of these organizations is perfect, they understand the value of investing in process and providing their staff with the resources to effectively and efficiently deliver. From a customer service prospective all three make sure their organizations have the resources necessary to do their jobs right the first time. This includes:

Good training. This means providing staff with a good understanding of the product or service you are supporting. At Textura, the folks at the help desk were motivated by understanding that doing well on the help desk (and this meant understanding the product inside and out as well as being a good communicator) meant a promotion to directly serving clients in the field. Deep knowledge of the product, by highly motivated staff eliminates the need to “escalate.” The first person you talk to is capable of closing the ticket;

Having robust data collection, analysis and internal communications capabilities. Knowing the product is only one dimension of helping customers troubleshoot issues. Having knowledge of the current top issues (and their resolutions) is key to quickly resolving customer inquiries.
Having an organization that effectively deals with exceptions. Exceptions (which can’t involve more than 5% of issues) take up an inordinate share of any organization’s resources. When true exceptions (not excuses to shunt a problem off to the next person because you do not have the training that you should have to solve the problem) come into the queue, the process should direct them to a group with the skills to evaluate and resolve them. I would note that some “exceptions” are in fact just the first instance of a new class of issue that will become part of the routine set of issues flowing into the queue.

My experience suggests that investing in “doing it right the first time” has a payback that: 1) reduces the direct costs associated with running the business; and 2) improves the customer experience, thereby improving net promoter scores and reducing customer churn. This is good for your customers and your business!

PS I wanted to say, because I believe, that making these changes could add 20% to 30% to the productivity of our economy, but I didn’t because I don’t like to make assertions that I can’t support.

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

What does Ferrari know that Chevy (and others for that matter) doesn’t?

February 14, 2022 Leave a Comment

During a recent conversation with a friend who is in the process of trying to buy a 2022 Corvette, he told me a story that I have heard before. The dealer:

“Promised” him a car sooner than anyone else would;
Took a non-refundable deposit;
Has not yet delivered;
Now wants more money, i.e. is raising the price; and
Will not provide a firm delivery date for the car.

To be fair, at the beginning of this misadventure my friend should have been suspicious when all of the local dealers told him that the cars were in short supply and it might be quite a while before he would be able to take delivery.

That said, I began to wonder how a brand (not Chevrolet) that has products that are in continual short supply and whose customers usually get what they want when they want it can not only thrive but keep those customers both happy and loyal. So, what is Ferrari’s secret:

They build a fabulous product;
They have developed and maintained one of the world’s most powerful brands;
The always build fewer of their products than there is demand for them; and
They reward their loyal customers.

Fabulous Product

Any product that is going to be able to differentiate itself in the long term needs multiple hard to replicate attributes and Ferrari has 3:

First Class Engineering—Enzo Ferrari sold cars to the “public” to pay for his racing habit. The early road-going cars were detuned versions of the cars that he raced competitively. They were built to the exacting standards necessary to compete in a punishing racing environment. They were examples of the best in industrial engineering. As a result, they present as the industrial version of works of art to be appreciated for the quality of construction and the resulting durability and performance.
Exquisite Design—Most people agree Ferrari cars, old and new look the way they do because they perform better that way. At the same time, they are visually appealing and Ferrari has done a great job of making the most of necessary aerodynamic design requirements by hiring designers who leveraged the necessary into a visual art form
Top Performance—the Brits coined a phrase: Fit for Purpose” and the Ferrari delivers. It is a first-rate performance car and performs brilliantly as a statement about the owner.

While there are some automotive products that can hit on one or two of these attributes, very few can claim the trifecta.

Powerful Brand

Ferrari is arguably the most powerful automotive brand (maybe even across product classes) in the world. It is a luxury brand and it is a performance brand. It is also an aspirational brand. The brand is not only built on the products that Ferrari builds today, but also on Ferrari’s heritage. The cars that Ferrari built is the 1950s and 1960s are even more valuable than those that they build today. A Ferrari is an appreciating asset largely because of the strength of the brand. And the brand is strong not only because of the products Ferrari produces today, but also because Ferrari invests in the heritage. Ferrari will service/restore your 1963 250GT and certify that it is both real (not a copy) and correctly assembled with the right parts. This is important when the average retail price is nearly $1.6MM. This commitment reinforces a history of greatness that continues today. I would note that this particular model is nowhere near the most expensive Ferrari you could buy.

Ferrari’s heritage only partially based on its roadgoing cars. The real anchor is racing. Today Ferrari races to support its roadgoing brand, but as I noted earlier, in the beginning, Enzo Ferrari sold cars to pay for his racing team. And many people buy a Ferrari to own a piece of that history and the potential, given the capabilities of the street cars, of driving like one of the many talented Ferrari F1 drivers. And, if not that, to be able to drive down just about any road and have everyone turn to look at your ride.

Demand Exceeds Supply

Enzo Ferrari once famously said that he would always deliver one car less than the market demands. His point, that the goal was to leave people wanting. This is technically part of the brand discussion. Exclusivity is an important part of the Ferrari brand. And customers wait (sometimes many) months to be able to get their car. This means that even if you have the money, the product might be out of your reach. And the fact that you can not get it is part of the allure—a characteristic of the brand.

Customer Rewards

Ferrari rewards its clients several ways:

The product delights their clients whether they are buying it as a grand tourer, a track car or a prestige vehicle. Ferrari is very good at exceeding its owner expectations;
The company takes care of you. It does cost, and it really costs, but the service is exceptional; and
This is where we started this post. Ferrari has a very well-defined way to buy one of their cars and it does not include paying premiums over list. If you want a new Ferrari, you go into the dealership and sign a sales contract and agree to pay a lot of money. Then you wait. When the car is an exceptionally high demand vehicle when/if you get it does not depend on paying more money. It depends on how many Ferraris you have already bought.

The idea is that if you are a really good customer, you get first dibs.

The bottom line here is that if you make a great product, you can charge a lot of money and still keep your customers happy (and loyal— Ferrari buyers are incredibly loyal) if you follow the rules and treat them right.

And finally, I believe that every company that I have dealt with during the course of my career would have been better off had they studied Ferrari’s brand/product philosophy and incorporated elements of it into their own.

BTW—I don’t own a Ferrari and don’t intend to😊

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

Why Leaders Fail

February 7, 2022 Leave a Comment

I believe that I know why Presidents of the United States (over the period of my memory and probably longer) have had difficulty delivering on a broad set of promises that they make while running for office. And politics is only part of it.

As bright and capable as many of them were/are, they do not know how to Manage—and that is, intentionally, with a capital M.

The Executive Branch of government was designed to define (with the concurrence of the Legislative Branch) the Federal Government’s agenda and then to:

Undertake on initiatives to ensure that the government can do its job effectively and efficiently; and
Execute on the routine operation of government.

Many elements of the Executive Branch (especially ongoing operations) are well managed because they have experienced managers who operate according to the principles I have outlined below. However, the Chief Executive has rarely delivered on more than a handful of the initiatives that they promised while running for office.

To explain why this is true, I will point out that the President has 15 direct reports. They include the Secretaries of:

Agriculture
Commerce
Defense
Education
Energy
Health and Human Services
Homeland Security
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Veterans Affairs

And this does not include a laundry list of sub-agencies, Bureaus and organizations that reside in the Executive Office of the President.

McKinsey identifies five “managerial archetypes”— https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/how-to-identify-the-right-spans-of-control-for-your-organization . The President would fall into the category of Player/Coach or (probably more appropriately) Coach. According to McKinsey, the most a person in either of these roles should have reporting to them is five to seven individuals. That is the first problem. The President does not have enough time in the day to spend time with the people who are running the operational departments that currently need his attention.

The second problem is that the President does not realize that it is impossible to manage 15 direct reports, i.e., no President in my memory has been trained (or been in positions that give them the experiences) to be a competent professional manager. During my career I advanced, stepwise, from being an individual contributor to progressively managing larger and larger groups of people. Along the way I received training and plenty of coaching to ensure that I was prepared to take the next step in terms of the size of the organization that I would be managing. PricewaterhouseCoopers was (and I am sure still are) particularly good at developing managers. PricewaterhouseCoopers had rigorous career development programs that helped their staff prepare to succeed.

In many business organizations, I have observed that Chief Executives often have a Chief Operating Officer (COO) who is an experienced manager and who can take managerial load off the CEO. I believe that the position, Chief of Staff, was supposed to serve that function for the President, but has never been accorded the authority or given enough responsibility to successfully service that function. The Chief of Staff, seems to me, to be more of a gatekeeper. I don’t think that I am the only person to think that: Reference The Gatekeepers: How the White House Chiefs of Staff Define Every Presidency by Chris Whipple. It is possible that the Vice President could play the COO role. It would have the added benefit of: 1) preparing the Vice President to take on their next logical role; and 2) giving the VP the opportunity to show off their capabilities.

Finally, it is not clear to me that the Presidency has the processes and procedures needed to promote independent operation by the President’ direct reports. To effectively manage an organization as large as the Executive Branch, key players need to:

Clearly understand and agree to the goals and objectives they are expected to achieve. This takes planning which is facilitated by a robust collaboration between the President and his subordinates. This includes a time-consuming process of defining and agreeing on the goals and objectives. But not with 15 subordinates, especially if the Chief Executive wants to contribute meaningfully to the process;
Giving the President’s reports the responsibility and authority to achieve their agreed goals and objectives, including a feedback system that facilitates the President holding them accountable for their performance;
Undertake a thorough business process reengineering of the Executive Branch. This includes:
- Restructuring the organization to reflect the size and scope of the Executive Branch;
- Recruiting managers who can oversee an organization with more than four million employees;
- Revising management processes and procedures to allow delegation of authority, but also putting controls in place that hold managers responsible and accountable for their performance;
- Implementing information systems that provide the information necessary for managers at every level of the organization to effectively manage their domain.

Anyone who has spent any time around organizations of any size has probably seen at least some of the dysfunction I am describing here. And I hope many of you have seen some or all the recommendations listed here implemented at organizations you have been affiliated with. Two points:

While I have said something that had to be said about the Executive Branch, these observations apply equally to business organizations; and
Management is a skill. If you don’t have the skill, you can not manage effectively. And, the bigger the management challenge, if you are not properly prepared, the bigger the failure!

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

Shocks to the System– how do they motivate radical change?

October 17, 2021 Leave a Comment

I had not until recently considered (in any kind of structured way) how significant shocks to the system, like the pandemic, motivate radical change. An article in the August 2021 issue of IEEE Spectrum, What We Learned from the Pandemic—Most of all it taught us how to adapt under pressure, got “the little grey cells” agitated—in a good way. The authors outlined a taxonomy for thinking about how disasters can promote radical change. They laid out four change agents:

Habit Disruption— this happens when a significant change in the environment causes one to rethink how they do something. A disaster can do this, but the introduction of new technology can too. When we founded Textura, we leveraged several new technologies (especially software as a service, but also electronic signature) to change the way that commercial construction companies pay their subcontractors. The introduction of the Construction Payment Management (CPM) software significantly improved the efficiency of the payment process and made it difficult (if not impossible) not to move to electronic payments. I note that Textura recently crossed the $1 trillion mark in payments made thought the system.
Selection— this happens when companies will not (or cannot) adapt. There is a weeding out process where these companies (or individuals) are no longer able to compete because the world has changed, and they have not. Sometimes this is voluntary (please notice, I did not say smart), like when U.S. chip makers decided to focus on design and not fabricating, and sometimes it is not, as has happened to so many companies in the auto industry over the past 120 years. The companies that survive do so because they have adapted and can compete, i.e. have made the changes necessary to thrive in and support the new environment.
Weakening of Inertia— this is another way of saying that the forces that maintain the status quo are overcome by even stronger pressure for change. I would argue that the remote working movement, which had been slowly gaining momentum over the past decade, was supercharged by the pandemic. There is a notion by leaders in my generation that work needs to be done at work. And there was/is an imperative, driven by COVID, that was even stronger and motivated companies that might have waited years (or longer) to implement remote work.

With regard to remote working, I would note:

That the pandemic motivated companies to jump on board, but technology enabled it.
- The last word has not been written (even in the short term) on what remote work means and what forms it will take.
Coordination— I see this as suggesting that the “establishment” becomes motivated to get behind change because they see it as necessary to maintain their position in world. The Federal Government’s decision to make domestic chip production a priority combined with Intel’s recent decision to invest in two new U.S.-based Fabs (manufacturing facilities) is an example of two “establishment” players getting behind an initiative (caused by concerns about the availability of chips) to make things happen.

After reading the Spectrum article and digesting the taxonomy that I restate/rework above, it struck me that the world would change for the better if we could institutionalize (within companies, and society as whole) these change agents into the fabric of our thinking and replace the more prevalent predisposition to look back to the past and maintain the status quo at all costs.

I spent the better part of my career working with companies that desperately needed to change. During the portion of that career where I worked at PwC (and its predecessors), we used a process that we referred to as “change management” to help our clients understand the need for change. Many of the principles that were embedded in that methodology are incorporated into the four points that I outlined above. And I would have been very pleased had I had such a clear and concise set of statements to use to communicate with my clients and support me in my actions.

In closing I would note that the authors of the article that prompted this post might not agree with my “summarization” of their ideas, so I encourage you to read the article and draw your own conclusions.

— you can find this (days earlier) and other posts at www.niden.com.

And, if you like this post: 1) please let me know; and 2) pass on your “find” to others.

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