Yes, it’s another re-run. I have a great excuse for this, but I’m not going to tell you what it is.
Anyway, I think you’ll like this one, and it’s old enough there’s good chance you weren’t a subscriber when it first ran (June 24, 2013).
Please enjoy the article while I enjoy my excuse.
– Bob
We need more engineers.
Not just in IT, bridge design, and electronics. We need them everywhere decisions are being made.
I’m not limiting engineers to those who know the niceties of load and stress computations, CPU design, gear ratios and such. No, to me, an engineer is anyone who understands you can’t cool down the kitchen by leaving the refrigerator door open.
Many business executives aren’t engineers, but they should be. Here’s what I mean:
Cooling off the kitchen is a metaphor for across-the-board cost-cutting.
The hot air blowing out of the back of the refrigerator is parallel to the impact of the all-too-common across-the-board cost-cutting that impairs the business more than it saves anything.
Any engineer knows all refrigerators do is pump heat out of an enclosed space and into a larger space. Leave the door open and the larger space and enclosed space become one and the same: The cooled air just mixes with the heat being pumped into the same space – even with perfect efficiency the net effect is zilch.
This describes most cost-cutting exercises pretty well, and especially cuts to the IT budget, because when costs are already too high, less automation probably won’t help. More might not help either, depending on what exactly is causing costs to be too high. But unless what’s being cut out of the IT budget are stupid ideas that shouldn’t have been approved in the first place, forcing employees to operate either manually or with obsolete technology just isn’t going to increase efficiency.
Which gets to the heart of why we need more engineers: Engineers generally think in terms of fixing problems rather than symptoms. So should business decision-makers.
So if a business is in trouble … if costs are too high … decision-makers need to first ask themselves some basic questions, like, are costs really too high? Or is revenue too low? Or is risk what’s too high, it isn’t being managed well, and as a result expensive problems that could have been prevented haven’t been?
Too many business executives act as if “our costs aren’t in line with our revenues” is a proper root cause analysis when profits are unsatisfactory. An engineer would insist on knowing how the business is supposed to work; then on identifying which of its moving parts aren’t moving as they should; and then on fixing the parts that are broken.
So if the problem is actually revenue, an engineer would determine whether the root cause is uncompetitive products, customer disservice, unappealing marketing and advertising, or a sales force that isn’t very good at selling. And fix it.
If the problem really is excessive cost, an engineer would figure out whether the root cause is cumbersome and inefficient processes, obsolete tools and technology that force employees into cumbersome and inefficient processes, poorly trained and unmotivated employees, or something else. And then the engineer would fix the actual problem.
Understand, this might sound simple. Conceptually, it is simple.
But it’s nothing like simple, because underneath it is the need for a clear understanding of how the business works … of the buttons and levers company management can push and pull that lead customers to buy products and services in acceptable volumes and margins.
This isn’t always complicated, but it can be complicated enough to tempt decision-makers to cut out a step or two. For example, one day in the distant past, the executives leading a not-entirely mythical automobile manufacturer discovered they could bump up the company’s profits by financing the purchase of their cars instead of leaving that business to the local banks.
Then they discovered they could sell more cars by discounting them, making up the slack by making more loans. And then they “discovered” the company was really in the financing business, and cars became just a means to an end.
Which led to its executives no longer caring whether their cars were desirable products. Instead it designed and built cars some people were willing to buy if they were cheap enough.
Which led to round after round of pointless cost-cutting, because cost wasn’t the company’s problem.
What was? It had forgotten how its business worked: With no cars to sell that people wanted to buy it ground to a halt, even though its profits no longer came from car sales.
The company’s execs outsmarted themselves.
It’s why we need engineers.
So maybe you should add an interview question for managerial candidates: “If you open the refrigerator door, how much will it cool off your kitchen?”
Here’s another example of executives outsmarting themselves…
Two companies in the business of manufacturing bulk chemicals, which I’ll call Blip and Blop, whose product lines did NOT overlap anywhere at all, entered into a joint venture to produce a chemical that was familiar in the industry but new to both of them, a chemical that I will call Kerplooee. They decided that the joint venture would not need, or have, a sales force of its own; Kerplooee would simply appear in the price lists and catalogs of both companies, and be sold by the sales forces of both companies alongside the already-existing products. At the end of the year, every year, the profits from the joint venture’s sales of Kerplooee would be divided half-and-half by Blip and Blop.
The executives of Blip told their sales reps: when you sell a million bucks of our existing chemicals to a customer, Blip gets all the profits; but when you sell a million bucks of Kerplooee, Blip only gets HALF of the profits, therefore YOU will be paid only HALF your usual commission rate. You WILL indeed get, however, ALL of that half.
The executives of Blop told THEIR sales reps the same.
At the end of the year, the joint venture was losing money. The Kerplooee was being produced at a reasonable cost, but it just wasn’t selling; the storage containers of Kerplooee were full to overflowing, and piles of unsold Kerplooee were spilling all over the place. A joint task force, tasked with investigating the mysteriously low sales of Kerplooee, eventually got around to asking the sales reps of both companies if THEY knew why Kerplooee wasn’t selling. The answer came back fast enough from ALL the sales reps of BOTH companies: Kerplooee is the only chemical in our catalog that earns me HALF as much commission as all the others, therefore I don’t bother to try to sell it unless I’m sitting around idle with nothing better to do. I will, of course, diligently take orders for Kerplooee if a customer asks about it, but I won’t lift a finger to ACTIVELY sell it, because I earn twice the commission for the EXACT same work selling literally ANYTHING else.
The moral of the story, which is a recurring theme around here: You Get What You Incent… so make sure that you structure your incentives to incent the behavior that you actually WANT.
And regarding THIS column… a generous dollop of Engineering Attitude, on the part of the executives of Blip and Blop, would have predicted this problem, and would have DESIGNED this problem out of existence before it ever happened. The solution is simple enough: the commission rate on sales of Kerplooee should be the same rate as on everything else already; no special detrimental EXCEPTION should be made for Kerplooee. And “half the profits” be damned. Blip gets half the profits from Blop’s sales of Kerplooee, Blop gets half the profits from Blip’s sales of Kerplooee, BOTH sales forces are earning profits on behalf of BOTH companies, therefore BOTH sales forces should get FULL commissions.
Again, no special detrimental EXCEPTION should be made for Kerplooee. Sometimes the best thing to do is DON’T.
Really nice article.
But, how do you get it to the younger generations who need it in IT and management?
The only way I know of is for subscribers like you to forward ideas you think are important … like this week’s re-run … to managers of whatever age you think would benefit from it.
I wish I had a better formula, for all the obvious reasons.
I believe I first learned of you from Infoworld articles you wrote when I was first starting in IT, but was only interested in pc database app development but couldn’t find anything in the stodgy, industry standard, Computerworld.
How about partnering with some young computer person (like your daughter???) and do a podcast. You could call it something like, “Young, Old…Oh #%IT!”
If not your daughter, surely you must have contacts at Apple or Google who could recommend someone.
Just a thought.
I appreciate the thought, and the compliment.
As it happens, I did try turning KJR into a podcast a number of years ago (I think that number was 15). It never drew any listeners. I’d try it again, but by now I’m just too lazy to make the commitment, so I limit my podcasting to being an interviewee on someone else’s podcast.
Bob:
You didn’t go far enough with the refrigerator story. You said that with the door open – “even with perfect efficiency the net effect is zilch.” It is worse than zilch because the refrigerator would run 24×7 and waste a LOT of electricity!
Dave the retired engineer
Not to mention that the fridge would generate waste heat, so the actual net would be to warm up the kitchen – it wouldn’t just be neutral.
But I decided to keep it simple. Anyway, thanks for pointing this out.