Last week I promised you organizational solutions this week to trends hitting IT, like Cloud 3.0, increasing levels of shadow IT, and the so-called “digital enterprise.” But it’s my birthday tomorrow, and as Leslie Gore didn’t quite say back in the days of my youth, it’s my party and I’ll lie if I want to.
I will get to organizational solutions. Just not this week. Be patient.
Anyway, there are two more trends we have to deal with before we get to solutions, and unlike last week’s trends, you aren’t going to read much about these any place but here. Which either means you should be glad you’re reading this, or they aren’t real because if they were, someone else would be writing about them too.
The return of Excellence
Forget Tom Peters. As regular visitors to this space know, business processes, practices and functions can be optimized in exactly six dimensions of analysis that trade off among one another:
- Fixed cost — the cost of turning the lights on before any work gets done.
- Incremental cost — the cost of processing one more item.
- Cycle time — how much time elapses processing one item from start to finish.
- Throughput — how much work the function churns out in a unit of time … its capacity, in other words.
- Quality — the absence of defects.
- Excellence — flexibility and the ability to tailor to individual needs and outcomes.
Excellence in this restricted sense is going to be increasingly important for business success. Why? Wealth stratification.
The wealthiest segments of society are becoming wealthier, controlling an increasingly disproportionate share of the world’s total assets. As is by now well-known, the wealthiest 85 people on earth control as much wealth as the poorest 3,500,000,000. As is also well-known, and is more important from a business planning perspective, in the United States 95% of the economic recovery since 2009 went into the coffers of the wealthiest 3,000,000 citizens. Meanwhile, the poorest 270,000,000 became poorer.
This isn’t a we-gotta-do-something-about-this!” column, although doing something about this would probably be a good idea.
This is a there-must-be-a-way-to-take-advantage-of-this column.
If fewer and fewer people own more and more wealth, the two safest business strategies are to either find goods and services that will appeal to the wealthy, or to sell necessities more cheaply to everyone else.
The world of business has concentrated on “more cheaply” for decades. It’s a well-worn subject and most of the big opportunities were mined out long ago. This has generally translated to capital investments (increased fixed costs) that pay off in low incremental costs (scalable mass production), along with a focus on quality, mostly because high defect rates result in a lot of returns and customers who take their business elsewhere.
Excellence has been a casualty of this relentless focus on incremental cost and high quality, because the more a company tailors, customizes, and adds features and functionality, the more each item costs and the harder it is to prevent defects.
Luxuries — the growth market
Now imagine you’re unimaginably wealthy. (Try to parse that sentence. Go ahead. I dare you!) The question: What are you going to spend your wealth on? Politicians? Sure, go ahead, but once you own a few the enjoyment will pall. After that?
The short phrase is, on luxuries, so if you want to make a profit from the wealthy becoming wealthier, you either create ThePoliticanExchange.com or you sell luxuries nobody else can provide.
Start here: Luxury is comparative, not absolute. What this means: If you live in a neighborhood where most people drive a Toyota, or a Chevy, or a Dodge, if you drive a Lexus you’re the one with a luxury car.
But if you live in a gated community where one neighbor drives a Bentley, another a Maserati, and Mercedes and BMWs are commonplace, your Lexus is just basic transportation.
Luxury is comparative, not absolute. If anyone can have one it isn’t luxury no matter how good it is.
The logical consequence: Uniqueness will be an increasingly important characteristic of successful products and services.
Which is why traditional business processes will increasingly give way to business practices — the domain in which skills, expertise, and judgment trump process standardization, and tailored outcomes trump product simplification.
How about your applications portfolio. Will it support practices that focus on excellence?
Heck, look at your applications methodologies. Do they support the creation of excellent software?
Probably not, because for the most part, tailoring and customization aren’t considered best practice.
Quite the opposite — according to most business theorists, excellence is bad.