Managing ⁽¹⁹⁾

There are 3 basic organizational structures-- each flawed in some way

In almost every political campaign, the opponent runs on the theme that they can successfully attack the huge waste, fraud, and abuse that exists everywhere in the government. Many will even have some facts showing how great this problem is, yet even after multiple successive new governments with this as a priority, the improvement is marginal at best.  This is not conspiracy, but the symptom of a very hard problem that does not have an easy answer.

In my business world, I see two similar paradoxical hard problems that the simple answer never provides a meaningful solution.  The first is sales cross-selling and the second is the re-use of designs (aka IPR management). Combine these two with the ever-present general corporate waste through communication barriers and you have the three justifications we typically see used for most every corporate reorganization.  You also have the reason why almost no reorganization can solve the hard problems.

The Chinese Market fallacy in business planning....

When you have a great idea, but the world will not come to you...

I was recently invited as a guest speaker and panelists for an entrepreneur development group.  My fellow panelist, Charles Leadbeater (a recognized proponent of innovation and Web2.0 thinking) started with a call for more collaboration and cited amazing successes and fantastic creativity.  While I agreed with his thesis, I could not help but recount the many initial business (tech initiatives) failures caused by an improper reliance on collaborators for their sales channel.  Charles was right to highlight a new paradigm of collaboration as a significant opportunity for small entrepreneurs, but for the sake of the technical entrepreneurs in the audience, I found myself taking a contrary position and highlighting the limitations of collaboration.

Engineers have a serious defect-- they cannot resist solving a problem.  The reason I call this a defect is that it keeps getting in the way of sensible business.  For the most naive, they normally worry about things like manufacturing, on-line order taking systems, and future developments, but dismiss the challenges of path to market by either assuming customers will come on their own (once they recognize the brilliance) or they assume that they will outsource sales through resellers.  The truth is that many people have very successful businesses using resellers and OEM relationships, but this will not be possible at the same time as you are just entering the market. (See earlier, related blog post "Production vs Prototype Sales").  I wish it were possible to simply outsource initial sales the same way you can outsource initial manufacturing-- in truth, I am a "recovering engineer" (an addictive and life long disease) and would likely have stayed a happy engineer if it were not for this unfortunate truth.

Definition of Experience:  A rich history of the many horrible mistakes one never wants to repeat

I touched on this subject in "Lawyer Rant No. 1" -- Get paid for the risks you know you are better able to manage or at least are perceived to be better able to manage.  Let's break this down a bit more and see what insights it brings.

In a market-based economy we sell products and services to willing buyers.  These could be as simple as an apple by a street vendor or as complex as an enterprise-wide information system.  But in its elemental form, I suggest that you can only sell a combination of five basic things:

1. Raw materials such as iron and oil mineral rights
2. Labor
3. Expertise as in intellectual property and knowledge transfer
4. Economies of scale
5. Management of risk.

The first three are obvious and the fourth, as it applies to the first three, is also obvious.  Let's consider the last two in their pure forms. Continue reading...

Services vs Product Business Models

It always struck me that there are very few companies that are equally as strong in products as they are in services. This is in sharp contrast to the number of companies that have moved from their core to embrace the other side.  Companies like Cap Gemini quickly abandoned the idea of becoming a product company and we see HP struggle with services by now trying to jump start it through the acquisition of EDS. IBM might be held as a contra-example with both products and services, but I would submit that they have switched from being a product company to the current service company that they are today (e.g., selling the laptop division to Lenovo and printer division to Lexmark)