Erik on Software

New Book Review: "Diagnosing and Changing Organizational Culture"

New book review for Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework (Third Edition), by Kim S. Cameron and Robert E. Quinn, Jossey-Bass, 2011, reposted here:

In the introduction to this book, the authors share the familiar Tom Peters quote, "If you're not confused, you're not paying attention", because the purpose here is "not to offer one more panacea for coping with our turbulent times or to introduce another management fad." In the words of the authors, this book "provides a framework, a sense-making tool, a set of systematic steps, and a methodology for helping managers and their organizations adapt to the demands of the environment. It focuses less on the right answers than it does on the methods and mechanisms available to help managers change the most fundamental elements of their organizations" at the cultural level.

While the authors also state that other proposed approaches to measuring organizational culture have been proposed, and that their intent is not to provide an extensive review of this literature, they also provide what I consider important background information to the Organizational Culture Assessment Instrument (OCAI), which includes the facts that the OCAI (based on the Competing Values Framework) is probably the most frequently used instrument for assessing organizational culture in the world today, and that although some versions are longer, some including up to 24 items that together describe organizational culture, the 6 items that are used in this book provide a simpler synthesis that addresses fundamental manifestations of organizational culture.

After walking through the OCAI current profile worksheet, which addresses basic assumptions (dominant characteristics, organizational glue), interaction patterns (leadership, management of employees), and organizational direction (strategic emphasis, criteria of success) that typify the fundamentals of culture, the authors present the two major dimensions organized into four main clusters that define organizational effectiveness. The first dimension differentiates effectiveness criteria that emphasize flexibility, discretion, and dynamism from criteria that emphasize stability, order, and control. The second dimension differentiates effectiveness criteria that emphasize an internal orientation, integration, and unity from criteria that emphasize an external orientation, differentiation, and rivalry.

These four main clusters can be visualized as the Clan, Adhocracy, Hierarchy, and Market quadrants of a graph. Because these quadrant names were derived from the scholarly literature, the authors also conveniently provide counterpart names to which they think business executives and other nonacademic audiences might better relate (Collaborate, Create, Control, Compete). The authors note that while designed to assess organizational culture, these clusters can also be used to assess leadership roles, organizational effectiveness, and management roles, and provide several examples that demonstrate applicability to these other areas. In chapter 6 and Appendix B, the authors even provide an extension to the Competing Values Framework based on the Management Skills Assessment Instrument (MSAI) to address the personal behavior change on which a change in organizational culture depends.

In my opinion, the nine managerial competencies addressed for management across the four quadrants are more tangible (Clan = managing teams, managing interpersonal relationships, managing the development of others, Adhocracy = managing innovation, managing the future, managing continuous improvement, Hierarchy = managing acculturation, managing the control system, managing coordination, Market = managing competitiveness, energizing employees, managing customer service), although while the authors present at length the fact that the four quadrants for organizational culture depend on a "Means-Does Not Mean" analysis to be completed by stakeholders in order to determine what chosen future state organizational culture actually means in a relative sense, this analysis is not provided in the context of managerial competencies directly since these are intended to lead to the desired future state organizational culture.

Overall, however, Cameron and Quinn present the process to diagnose organizational culture extremely well, and they do note repeatedly, as can be expected, that it is not possible to present a cookie-cutter approach because of the continuum nature of culture. From the perspective of a consultant, I especially appreciate the many examples that the authors provide that demonstrate example company profiles and shifts in company culture over time. The average culture profiles for various industry groups that the authors present are also well received, although it is important for potential readers of this book to realize that the categorizations for these groups are very broad.

For example, consulting services might technically fall under the "services" group, which obviously encompasses a wide spectrum of companies, although in such a case it might be beneficial to look at cultural profiles of client industry groups. As a consultant in the software industry, I could not help but notice that this book ties in well with a book I read several years ago entitled "Balancing Agility and Discipline: A Guide for the Perplexed", by Barry Boehm and Richard Turner. While that text is narrowly focused on choosing a software development methodology, a culture dimension of plots reminiscent of those seen in the book under review here can be seen as output from what Cameron and Quinn provide.

Interestingly enough, while the term "changing" sits alongside "diagnosing" in the title of this work, it is really not until Appendix C and Appendix D that the former is addressed with any substance. It is actually understandable why this is the case - change is multifaceted and covered by numerous other titles - but I would personally like to see the authors expand on these appendixes in another book, because the content provides hints for initiating organizational culture change and improving personal management competencies that specifically address the quadrants discussed in the book. Well written and focused business text recommended to anyone seeking understanding of organizational culture or personal management competencies as they relate to their own situations or to situations of customers and clients.

New Book Review: "The Limits of Strategy"

New book review for The Limits of Strategy: Lessons in Leadership from the Computer Industry, by Ernest von Simson, iUniverse, 2010, reposted here:

In my opinion, it is amazing that so few reviews have been posted for this extremely insightful effort by Ernest von Simson, veteran consultant and co-founder of Research Board, an international think tank that investigates developments in the computing world and how corporations should adapt. Ever since an editorial on cloud computing in "The Wall Street Journal" mentioned this book in passing in March 2011, I have been working through the dense but conversational 400-pages that von Simson offers the reader, arriving at the conclusion that not only is this book one of the best business texts I have ever read, it should be considered required reading for the business- and technology-minded in school, as well as anyone involved in strategic decision making in the workplace.

Not only does von Simson present very detailed notes from many of his conversations with business leaders from 1974 through 2000 when explosive changes in the computer industry took place, he provides insightful analysis throughout, while even briefly discussing the initial failed business efforts of he and his wife, Naomi. In the words of the author, their friends prescribed that they "build a group of clients, major companies that needed to mesh their strategies with the exploding world of computing", "investigate what developments were coming, what adjustments they should make, and how to integrate information technology into their operations", and "scrutinize all the major technology companies and advise our clients on what the IT leaders were doing, how good they are, and who was ahead in which new fields."

Later, von Simson notes that "by the time we sold the Research Board to Gartner Group in 1999, we had written nearly one hundred reports. Every year, we would assess the overall condition of the industry - which companies were doing what, and how well; what big breakthroughs seemed near. We also researched how the largest enterprises used new technologies to the best advantages as well as demographics and the labor force and the relationship of IT departments to the other activities in a company. What we learned, we recorded in thousands of written pages and in our memories. The lessons learned over that entire period are distilled and related here."

While this text provided natural follow-up to recently read texts "The World's Newest Profession: Management Consulting in the Twentieth Century", by Christopher D. McKenna, and "IBM and the Holocaust", by Edwin Black (see my reviews), what sets this work apart from these related efforts are two seemingly opposed characteristics: industry-wide breadth, and intimacy that is only available through face-to-face interaction. However, as with these other sizeable books, a review limited to the space available here is difficult, so what follows are some quotations that I especially appreciated and which hopefully prompt other visitors to read through the pages of this text, even if only by skimming, if that is even possible.

In chapter 6, "First Movers: The Dawning of the Personal Computer", Sam Bernstein, VP of Marketing at Commodore Computing, is quoted as saying that "in 1970, when everyone else was selling calculators for $1,000, [Victor] had one for $195. We thought that the entire industry would sell 100,000; actually, as prices declined, fifty million were shipped (a classic case of price elasticity). Everyone asked us, 'What about service?' I said, 'Nonsense. For $195, let them send it to the factory.' They said, 'What about salesmen? How will customers learn to use their equipment properly?' I said, 'For $195, let them teach themselves.'"

In chapter 7, "Defeated in Succession", the author notes that "during the seven years of pointless internal dithering, the Doctor [An Wang] had remained determined to leave the company to his son, notwithstanding the availability of a more capable choice. But could the old man listen to his born successor as Tom Watson Sr. had listened to his? It's impossible to imagine Fred saying, as Watson Jr. had told a journalist after his father died: 'My father and I had terrible fights. He seemed like a blanket that covered everything. I wanted to best him but also to make him proud of me. I really enjoyed the 10 years with him.' Instead, it appeared, Fred received a vote of no confidence from his parents, though he was allowed to remain on the board."

In chapter 11, "Self-Accelerating Economies of Scale: Apple, Microsoft, and Dell", von Simson recounts when he and Naomi first met Steve Jobs just three days before Apple's 1983 introduction of the Macintosh, when during their meeting Jobs "leapt to a whiteboard and began sketching a visual analogy: By the 1890s, the telegraph was already fifty years old, and 25,000 people worked as trained operators. Someone may have suggested putting a telegraph key on every office desk to expand communications, Steve said, but it was impractical and time-consuming to teach everyone Morse Code."

"About the same time, though, the telephone was invented. The function was the same - communications - but now anyone could talk or even sing to anyone else, no training required. In just ten years, 200,000 telephones were installed. Steve Jobs was selling to people who could use the telephone; Digital, IBM, and the others were still targeting the telegraph operators. Price and ease of use, he concluded, carried implications for sales approach, customer training, and field maintenance similar to those experienced previously by the makers of electromechanical calculators."

In chapter 12, "Choosing the Wrong War: IBM Takes on Microsoft", in the midst of the author's recounting of his visits to Microsoft in Redmond, quotes "Big Blues: The Unmaking of IBM", by Paul Carroll, a "The Wall Street Journal" reporter, as writing "One of the biggest fights IBM and Microsoft developers had came when a Microsoft developer took a piece of IBM code that required 33,000 characters of space and rewrote it in 200 characters, 1/160th of the original space." Comments von Simson, "the episode makes the IBMers seem muddily stupid. Certainly, Microsoft had the advantage in attracting brilliant computer science graduates steeped in the latest programming techniques from the best universities."

"But IBM had years of experience tightening 'path lengths', that is, the number of instructions in the path to complete any routine." Later, "Mike Maples was correctly philosophical with us: 'We faced Hobson's choice - either delay release for a year or go to market with what we had and learn from early-user experience. We chose the latter.' Good strategy, great product, but not necessarily a model of disciplined or efficient programming." Although many practitioners today might argue otherwise, this philosophy is much in line with "The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses", by Eric Ries (see my review).

In chapter 18, "Squandered Competitive Advantage: IBM Mainframes and Minicomputers", after the author remarks that "competitive advantage can be squandered by executive indecision in a surprisingly short time", and "a delayed decision can be far worse than a mediocre decision", describes his IBM visit following the 1981 reorganization, during which time a merge or discontinuance of five midrange product families was discussed with Mitch Watson."

"Mitch offered four alternatives: "(1) create an outer skin of compatibility by making applications programming languages like COBOL work identically everywhere, (2) mask the differences with a software layer of microcode while leaving the underlying hardware and software, (3) find each mini a distinct market niche, and (4) kill a couple. 'That last would make some customers unhappy', allowed Watson. Yes, 'but the only assurance we'll regain economies in manufacturing and field support is to simplify our product line,' added the planning manager, Mike Maples."

New Book Review: "The Lean Startup"

New book review for The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, by Eric Ries, Crown Business, 2011, reposted here:

Good introduction to the application of Lean principles to the startup effort. As with its Lean ancestry in the manufacturing world, and later other areas of business such as software development, Lean seeks to eliminate any waste that does not add value to the end customer. Applied to the startup, Lean enables entrepreneurs to determine what customers want during product development to help minimize wasted efforts when rolling out products to the marketplace. As Ries states in his introduction, this is a book for entrepreneurs and the people who hold them accountable.

The five principles of the Lean Startup that are pervasive throughout this text are as follows: (1) entrepreneurs are everywhere, (2) entrepreneurship is management, (3) validated learning, (4) build-measure-learn, and (5) innovation accounting. While presenting these principles, the author first walks the reader through his vision that the products a startup builds are really experiments and that the outcome of these experiments is learning how to build a sustainable business. The author then examines the build-measure-learn feedback loop, the core of the Lean Startup model, and then turns his discussion to the growth of startups within this model.

The bulk of the material that Ries provides is in these first two parts. As a Six Sigma practitioner familiar with Lean, I especially appreciated how the author interwove the startup journey with Lean practices, while providing some of the historical background with which some readers might not be familiar. To a degree, some of the comments that other reviewers here have provided, however, are a demonstration of the build-measure-learn feedback loop as applied to book publishing in that readers in this space often expect detailed, step-by-step instructions on how to implement presented ideas, but doing so is not the purpose of this text.

The other common thread of criticism throughout the other reviews here is that the author concentrates on the technology space, and although I agree that he spends considerable time talking about web related businesses and agile software development, he does so because these areas are what comprise his background. And as a technology consultant, I can attest to the fact that many of the practicies discussed that started in manufacturing have been successfully adopted in the software development world. Many of these practices can be further pursued in other industries, but much of the drive has been concentrated in these two areas and so such examples are more readily available.

In his epilogue, the author reminds the reader of the Peter Drucker quote that states that "there is surely nothing quite so useless as doing with great efficiency what should not be done at all." Ries furthers this thought by stating that "most people I meet believe that in their industry at least, projects fail for good reasons: projects are inherently risky, market conditions are unpredictable, 'big company people' are intrinsically uncreative. Some believe that if we just slowed everything down and used a more careful process, we could reduce the failure rate by doing fewer projects of higher quality. Others believe that certain people have an innate gift of knowing the right thing to build. If we can find enough of these visionaries and virtuosos, our problems will be solved."

"These 'solutions' were once state of the art in the nineteenth century, before people knew about modern management. The requirements of an ever-faster world make these antique approaches unworkable, and so the blame for failed projects and businesses often is heaped on senior management, which is asked to do the impossible. Alternatively, the finger of blame is pointed at financial investors or the public markets for overemphasizing quick fixes and short-term results. We have plenty of blame to go around, but far too little theory to guide the actions of leaders and investors alike. The Lean Startup movement stands in contrast to this hand-wringing. We believe that most forms of waste in innovation are preventable once their causes are understood. All that is required is that we change our collective mind-set concerning how this work is to be done." Well said.

New Book Review: "Entrepreneur Journeys v.4"

New book review for Entrepreneur Journeys v.4: Innovation - Need of the Hour (Volume 4), by Sramana Mitra, CreateSpace, 2010, reposted here:

A sidebar interview with the author in a recent issue of "IEEE Spectrum" magazine made me aware of this "Entrepreneur Journeys" series of books. Although Mitra does write introductions to each of the sections of this book, other than the comments she shares as part of her questioning, the bulk of what she provides to readers are the interviews themselves. In this respect, this collection of interviews reminds me of "Coders at Work: Reflections on the Craft of Programming" (see my review), by Peter Seibel, although the interview direction here is not as weighty, and is concentrated at the business level, although technology is discussed to some extent because of the nature of the products with which the interviewee entrepreneurs have been associated.

Mitra groups the 13 interviews in this series entry into 4 loose categories: "Legendary Innovators", "Innovators in Academia", "Cross-Domain Innovators", and "Shoestring Innovators". The reason I use the term "loose" is because the interviewees can feasibly be categorized in a multitude of ways, and the interviewer decided to concentrate on innovation. The author notes in her prologue that "In this volume, I offer a multitude of lenses through which entrepreneurs can look at innovation in its various forms and decide on the right course of action for themselves. And as before, I have included a discussion on bootstrapping and shoestring innovation, which still remains one of the most practical ways to circumvent the early-stage fund crunch while maintaining control and freedom."

What the author provides here are really case studies in entrepreneurship, and while she presents a wide variety of technology business scenarios to which not all readers will be able to connect directly, the discussions provide substantive material to ponder and apply to their own journeys. For example, Judy Estrin, who co-founded Bridge Communications, remarks that "We were very passionate about this idea of interconnecting networks. However, we were not so passionate and so fixated that we were unwilling to realize that the interconnect business opportunity would take longer to develop and that it was too far ahead of its time."

Paul Cook, who co-founded Raychem, remarks that "The main principles I believe in, in terms of succeeding in business, are as follows: First, pick a technology niche that you can lead in, that others haven't done before, and that you can master. Then develop products based on that technology to enable high prices relative to cost, yielding a good gross profit. This will allow you to continue to spend on additional product development as well as investing in sales and marketing necessary for new innovations." And later, "You have to have a market pull. There has to be a market out there that wants your product."

Founder of FireEye, Ashar Aziz, comments that "For an entrepreneur, it's tricky to balance timing. You can be too early and the market is not there, or too late when there are too many competitors. There is a strike window, but it's not obvious where that strike window is. It's like landing a fighter jet on an aircraft carrier, the landing strip is very tiny and moving all over the place. Here is my very generic advice for entrepreneurship, which you can apply to any domain. Generally, an entrepreneur is looking for opportunities. The question to ask is why are incumbents not taking advantage of the opportunity? If there is food at the table, why are the bigger guys not eating it?"

Athenahealth founder Jonathan Bush mentions that "We've been hard at work bringing about the death of the old-fashioned software companies that dominate healthcare IT. Their business models and companies should be dead - they've been doing a great job of falling apart. Now, thanks to the federal government, they'll be given another five years to live, which will slow us down and prevent the evolution of software-enabled service business models. Eventually, they're going to die because at a fundamental level they do the wrong thing. This is a long-term lesson about how important it is for marketplaces to disrupt themselves. But overall it won't hurt us. In fact, it has brought a lot of attention, energy, debate, and focus. That may allow the best model to win yet."

As a consultant, I especially enjoyed the "Open Source Means Business" group of interviews within the "Shoestring Innovators" section of this book. CollabNet founder Brian Behlendorf comments that "I had never worked for a big company, so I always assumed the software engineering management had all the development problems sorted out - that it was just us cheapskates in the open-source world who were making do with simple tools. In reality, corporations had no tools to enable engineering teams to work across geographic boundaries with insight into other team's efforts." And John Roberts, founder of SugarCRM, remarks that "This notion of building proprietary software that was a complete secret, followed by massive high-end sales forces selling it door to door didn't make sense when in reality only a dime per dollar was used on the product."

New Book Review: "Information Systems Transformation"

Recently posted book review for Information Systems Transformation: Architecture-Driven Modernization Case Studies, by William M. Ulrich and Philip Newcomb, Morgan Kaufmann, 2010, reposted here:

Since the marketplace is largely absent of texts discussing the modernization of software systems architecture, this reviewer did not know what to expect from authors William M. Ulrich and Philip H. Newcomb. In addition, the space of this topic can be very large depending on how it is defined. In the opinion of this reviewer, the best part of what the authors present are the ten case studies, which comprise the bulk of the content, but the initial chapters and concluding chapter provide some initial high-level guidance for managers looking to pursue modernization projects for the first time.

While the case studies presented here offer a variety of scenarios, the potential reader should note that there are some commonalities across these scenarios as well. The tooling and processes utilized across these case studies are shared to a large extent, although there is definitely variation depending on the systems and firms involved. Newcomb is CEO of The Software Revolution, Incorporated (TSRI), and so some of the commonality is due to the tooling and services provided by his firm, for example. The variation provided is largely due to type of system, associated technologies, and modernization approach.

During their initial discussion of challenges facing most enterprises today, the authors note that there is "a lack of understanding by executive teams regarding the impact of these issues and the actions that can be taken to address them for the betterment of the business environment" and that "it is of great concern that software and data assets are largely a mystery to management and planning teams". In following up this discussion with salvaging or rehabilitating legacy systems to provide business value, the authors offer "architecture-driven modernization".

Architecture-driven modernization is defined by the authors as "a collective set of tool-enabled disciplines that facilitate the analysis, refactoring and transformation of existing software assets to support a wide variety of business and IT-driven scenarios". Ulrich later discusses "the four corners of modernization", which consist of modernization scenarios, modernization tasks and disciplines, modernization technologies, and modernization standards, and argues that scenarios form the basis for modernization roadmaps.

Common modernization scenarios include IT portfolio management, replacement/rewrite, COTS package deployment, architecture consolidation, Model-Driven Architecture (MDA) migration, SOA transformation, data architecture migration, user interface refactoring, application improvement, language/source artifact transliteration and platform migration, and data conversion. Ulrich argues that management should be creative and look at a mix-and-match approach that addresses their requirements, and as a consultant who has been a participant in several such endeavors, this review wholeheartedly agrees with this assessment.

As an architect, this reviewer especially enjoyed the following case studies: "Modernization of the Eurocat Air Traffic Management System (EATMS)", "PowerBuilder/4GL Generator Modernization Pilot", and "Veterans Health Administration's VistA MUMPS Modernization Pilot". Note that each of the ten case studies was written by a different set of authors, so the subject concentration and writing style differ greatly between each. Diagram and table effectiveness also varies considerably, and it is no accident that apart from the subject matter of the three case studies sited, these case studies also excel in these areas.

The first of these three spends considerable time discussing all of the steps performed during transformation of Ada 83 code into C++ and Java (the Java solution won). concentrating on performance and duplication of the exact functionality provided in the original system. In contrast to low-level detail, the second of these three concentrates at the high-level, providing a high number of relevant architecture diagrams (to which this reviewer is partial). This reviewer enjoyed the third of these case studies from a business domain perspective, since it concentrates on health care system modernization.

While no book can offer detailed advice specific to the challenges a given potential reader might face in this space, in the opinion of this reviewer the authors offer solid introductory advice on how to start tackling a modernization project, and provide a wide enough variety of case studies that readers can get a feel for what they might encounter in pursuit of such a project. The discussions that the authors provide here definitely delve into the technical, but it is perhaps managers that will benefit the most from a reading of this book, especially the sections that discuss assessments and scenarios and issues underlying traditional approaches such as greenfield replacement and use of COTS software.

Technology == Salvation ?

Due to service disruption with my print subscription to The Wall Street Journal (WSJ) this past week, I was not aware of the interview with Peter Thiel entitled "Technology = Salvation" by Holman W. Jenkins Jr. in last weekend's edition until today. Thiel was one of the co-founders of PayPal and an early investor in Facebook, and now serves as president of Clarium Capital, a global macro hedge fund that he founded in 1998.

Thiel offers some interesting perspectives in the interview of interest to the technology community. Some excerpts:

• Except for computers and the Internet, the idea that we're experiencing rapid technological progress is a myth.
• "People don't want to believe that technology is broken...Pharmaceuticals, robotics, artificial intelligence, nanotechnology - all these areas where the progress has been a lot more limited than people think. And the question is why."
• "The big variable that [Bernanke, Geithner, and Summers] are betting on is that there's all this technological progress happening in the background. And if that's wrong, it's just not going to work. You will not get this incredible, self-sustaining recovery."
• The great exception is information technology, whose rapid advance is no fluke: "So far computers and the Internet have been the one sector immune from excessive regulation."
• Some companies and countries will do better than others. "In China and India," he says, "there's no need for any innovation. Their business model for the next 20 years is copy the West."
• The West, he says, needs to do "new things." Innovation, he says, comes from a "frontier" culture, a culture of "exceptionalism," where "people expect to do exceptional things" - in our world, still an almost uniquely American characteristic, and one we're losing.

The fact that so many comments were posted in response to the online version of this interview in such a short time period demonstrates that there is a lot of interest here, but the substance of most of the comments is unfortunately lacking (probably due in part to the text of the interview being available to the public without a WSJ subscription).

As someone who studied economics as an undergraduate, I agree with Thiel that politics plays a heavy role in how the U.S. economy will play out in coming years. It is difficult enough to predict the future when the markets are able to work things out on their own, but when the government gets involved it is nearly impossible. Of course, I use the term "predict" loosely here - what I am referring to is estimating event probability.

And while I was not overly impressed with Michael E. Raynor's "The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It)", in my review of the book I noted the following:

Any future strategy, according to the author's explanation of the Strategy Paradox, may fail because the future cannot be predicted: "strategies with the greatest possibility of success also have the greatest possibility of failure". Planning and executing well a strategy does not necessarily increase the chances of success. Instead, companies should hedge their bets by developing practical strategies based on multiple options that respond to the different requirements of several possible futures rather than commitments on singular strategies.

There exists no public talk regarding the development and execution of multiple strategies for the U.S. economy. At present, the driving singular strategy is offshoring work in order to gain very short term profits. Offshoring complete industries will render the U.S. heavily dependent on other countries until the strategy is changed, and it is becoming increasingly clear that this dependence is not feared.

I agree with Thiel that the unfortunate business model that has been the main driver for growth in economies such as China is to "copy the West". The U.S. rebuilding of Japan and Germany following the second world war acted as a powerful catalyst for economic growth, but that growth would have been less probable if it were not for the intelligence and work ethic inherent in those countries.

While it might be true that China is "coming back" rather than "rising up" (as Chinese economist Dr. Peter Zhao Xiao noted in the recent conference I attended), the economic progress in China over the last few decades would have been unlikely if it were not for the vast investments from the West. And one of the resultant problems is that the accompanying knowledge and skills have followed these investments.

As a consultant, I need to be able to keep up with advancements in my field and reinvent myself on a continual basis in order to remain viable. Every year I experience periods of time where I am running in order to learn new skills in order to provide what is best for my clients. Knowledge transfer and mentoring are typical products by design during these periods of time, but the lifetime of each growth spurt is limited.

Applying this running analogy to the U.S. as a whole, there is a mathematical limit to how fast these sprints can be executed, and how long they can endure, when a sizeable part of the end products is also the ability to do the work itself without regard to whether subsequent sprints continue to contain innovation (and there are legal implications when products and processes are copied).

While my field is fortunate in that innovation still occurs, and there continues to be opportunity to advise clients and develop solutions, it is unknown what will happen if U.S. innovation in my field ever ceases. In my opinion, part of the country will be lost.

New Book Review: "Rules to Break & Laws to Follow"

New book review for Rules to Break & Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism (Microsoft Executive Leadership Series), by Don Peppers & Martha Rogers, PhD, John Wiley & Sons, 2008, reposted here:

 

Purchase of this text by this reviewer followed on the tails of "The Strategy Paradox: Why Committing to Success Leads to Failure (and What to Do About It)" by Michael E. Raynor (see my review) and "Strategy Safari: A Guided Tour through the Wilds of Strategic Management" by Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel (see my review). While initial interest in this work by Peppers and Rogers was due to its seeming focus on the strategic versus the tactical, however, potential readers should note that the authors instead investigate and present general principles that any firm should follow.

At the outset, this text does not beat around the bush. For example, in the first chapter the authors respond to the following first three rules to break by writing "No, no, no. No to all the above. These Rules to Break are really just assumptions about how business works, at the most basic level. They probably aren't written down anywhere in your strategy document, but they have almost certainly backed up your thinking and your company's actions for as long as you remember.": (1) "the best measure of success for your business is current sales and profit, (2) "with the right sales and marketing effort, you can always get more customers", and (3) "company value is created by offering differentiated products and services".

The authors further this instruction by pointing out that all of these assumptions are wrong. "If you operate according to these false assumptions, not only will your business fail to create much value, but you'll also soon find yourself trapped in a Crisis of Short-Termism. Everything you do will be so furiously centered on making today's numbers that you will become increasingly blinded to everything else. Business swept up by this crisis find that even as they try to do the right thing for their shareholders, they end up destroying value rather than creating it. So while these Rules to Break may look no more dangerous than ordinary common sense, in truth they're deadly."

According to the authors, executives need to change their mental models of what it means to succeed. The new model that Peppers and Rogers is based on the understanding that long-term business success relies on customer success as a prerequisite, and that employee trust of their employer precedes employee drive to earn customer trust. Interestingly, even though new technologies are presented as making possible sophisticated analytics, subverting the power of hierarchies, connecting consumers electronically, and undermining the advantages of new products, the authors state that it is customer trust that will provide a guideline for action even if financial metrics are not yet at the needed level of sophistication.

In the opinion of this reviewer, the third chapter entitled "Customers Are a Scarce Resource" is one of the best in the book, and if the potential reader does not have enough time to read all the chapters, they need to read this one. In this chapter, the concept of customer lifetime value (LTV) is discussed. "New customer acquisition has always been the quintessential goal of traditional marketing and is something often trumpeted to shareholders. But raising your customers' lifetime values is just as important, because over and above whatever profit you are earning currently, increasing your customers' LTVs increases the value of your business."

The authors continue by stating that the philosophy of some businesses is "based on the belief that as long as its sales and marketing effort is effective, it can always acquire more customers from somewhere. But this is a false assumption - a Rule to Break. Instead, to make the right decisions as a business, you must always take into consideration the population of customers and prospective customers truly available to you. After considering the whole population of customers and prospects, your job is to employ that population to create the most possible value for your firm. Because customers are scarcer than other resources, using up customers is more costly than using up other resources."

The fifth chapter was also especially enjoyed by this reviewer, where in discussing how to increase the value of one's business the authors present the concepts of "customer equity" and "Return on Customer" (ROC) that follow a discussion of ROI. The examples and accompanying tables in the third and fifth chapters are very well done. The thoughts that the authors share on innovation in the tenth and eleventh chapters were also appreciated, where the production of new ideas is said to be more important than making money from every new idea, and where the need to differentiate between "wise failures" and "fiasco failures" is said to be an important distinction, reminding this reviewer of a quote by James Cameron, who was recently quoted as saying "If you set your goals ridiculously high and it's a failure, you will fail above everyone else's success".

Global Leadership Summit 2010 Day 2:Blake Mycoskie

From the conference notes:

Acknowledged as one of today's most dynamic serial entrepreneurs, Blake Mycoskie launched five successful companies before the age of 30.

Best known as the founder and "chief shoe giver" of TOMS Shoes, a for-profit company with a unique "One for One" business model that provides a new pair of shoes to a child in need for every pair sold. To date, TOMS has encouraged conscious consumers to purchase and give more than 400,000 pairs of shoes to children around the world.

In December 2009, TOMS Shoes was awarded the State Department's Award for Corporate Excellence by Secretary of State Hillary Rodham Clinton.

Between business ventures, Mycoskie competed in the CBS primetime series The Amazing Race. With his sister, Paige, he came within minutes of winning the $1 million dollar grand prize.

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From my personal notes:

• Buy one pair of shoes, give one pair away - "One for One".
• A spontaneous response to the desire to give shoes to the needy.
• Giving feels good and is also a good business strategy.
• "All we have to do at TOMS is focus on giving."
• TOMS has given away 600,000 shoes since the business began 4 years ago.
• Employees are encouraged to give.
• All employees with the company 2 or more years are paid to travel to hand deliver shoes.
• TOMS began through the reinvestment of profit gained from selling Mycoskie's online education business.
• Mycoskie explained that if he had instead started a non-profit, resources would have been depleted quickly, and asking for donations would have been required in order to continue the business.
• The first "Day without Shoes" involved 250,000 people not wearing their shoes for one day. The word got out in part by the "tens of millions of dollars" that was donated by Microsoft.
• Strategic partnerships have enabled the giving away of more shoes than would have otherwise been possible.
• Asking people is a requirement for change - you can't be bashful when you want to see change.
• Proverbs says to give your first fruits - it's a Biblical principle that has blessed TOMS shoes - they really did give their first fruits by not giving away after first wasting financial resources.
• "It's never too early to start giving."
• The next "Day without Shoes" will take place in April 2011.

New Book Review: "Don't Just Roll the Dice"

Recently posted book review for Don't Just Roll the Dice: A Usefully Short Guide to Software Pricing, by Neil Davidson, Simple Talk Publishing, 2009, reposted here:

This white paper sized introductory guide to software pricing is very well put together. After Davidson walks the reader through some basic concepts from economics and marketing that specifically relate to pricing software products, he addresses some of the more advanced aspects of pricing that include areas such as versioning, bundling, and licenses. The discussion provided in the fifth chapter, "What Your Price Says About You (and How to Change It)" is especially well written.

The author reminds the reader that one should never forget that practice trumps theory, and that product pricing is as much art and craft as it is science: "Sure, it helps to understand the economics and psychology of pricing, but theory can only tell you so much. At some point, you need to make a decision and do it. Use the information in this handbook to make an informed stab at what a good price would look like, and how your customers will react, and try it out. The exact price almost doesn't matter - get it broadly right, don't screw up totally - and you can tweak it later. You're never going to know if you've chosen the exact right price or not, but you should experiment once you've set your initial price; not experiment in the scientific sense of forming a hypothesis, changing a single variable, and accepting or rejecting the hypothesis, but in the sense of changing something and seeing what happens."

Especially well recommended to those new to economics and marketing theory. Note that this book is currently available free of charge as a PDF document download at the author's "dontjustrollthedice" website.

New Book Review: "Strategy Safari"

Recently posted book review for Strategy Safari: A Guided Tour through the Wilds of Strategic Management, by Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel, Free Press, 1998, reposted here:

Authors Mintzberg, Ahlstrand, and Lampel provide the oft-cited "The Blind Men and the Elephant" by John Godfrey Saxe as a backdrop to their discussion on the ten schools of management (Design, Planning, Positioning, Entrepreneurial, Cognitive, Learning, Power, Cultural, Environmental, and Configuration), because while at the outset they indicate that "we are the blind people and strategy formation is our elephant", since "everyone has grabbed hold of some part or other and 'railed on in utter ignorance' about the rest" because "no one has had the vision to see the entire beast", the authors end their discourse by showing that there is not necessarily one safari beast with which to contend, but multiple, although "we shall never find [the whole beast of strategy formation], never really see it all". Corresponding to each of these ten schools is a different view of the strategy process - strategy formation as a process of conception, strategy formation as a formal process, strategy formation as an analytical process, strategy formation as a visionary process, strategy formation as a mental process, strategy formation as an emergent process, strategy formation as a process of negotiation, strategy formation as a collective process, strategy formation as a reactive process, and strategy formation as a process of transformation.

The chapter introductions to each of the schools provide superb historical information, and the last chapter discusses the evolution of the the ten schools and provides an excellent bulleted summary table that whimsically assigns different beasts to each school as well as easy-to-remember homilies such as "take us to your leader" for The Entrepreneurial School, "I'll see it when I believe it" for The Cognitive School, and "If at first you don't succeed, try, try again" for The Learning School. In the opinion of this reviewer, the chapters on these three schools are also the best, even though the authors indicate that The Cognitive School is "characterized more by its potential than by its contribution. The central idea is valid - that the strategy-formation process is also fundamentally one of cognition, particularly in the attainment of strategies as concepts. But strategic management, in practice if not in theory, has yet to gain sufficiently from cognitive psychology. Or perhaps more accurately, cognitive psychology has yet to address adequately the questions of prime interest to strategic management, especially how concepts form in the mind of a strategist".

The authors draw from many research sources (some readers may be interested in knowing that the bibliography is 18 pages long), including some of their past works, most notably Mintzberg, and their liberal use of well-placed sidebars and diagrams in the material is extremely effective in bringing these together. Their use of humor is also well received by this reviewer, especially when placed in the midst of some of the rather lengthy discussions that some readers new to his subject matter might otherwise receive as dry. For example, the chapter on The Design School starts with a quote by an anonymous manager about a Harvard MBA: "The damn guy just sits there waiting for a case study." This reviewer completely agrees that, in the words of the authors, this book makes sense of a field that often seems to make no sense. Well recommended to anyone in business, especially those struggling through the vast, sometimes confusing terrain of strategic management.