All Posts in Strategy and Tactics

|In: Career Management|Last Updated:

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.

There is.

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.

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|In: Architecture|Last Updated:

Nuance is dead. May it rest in peace.

The headline: “PC shipments crater and tablets are the bogeymen,” (Woody Leonhard, InfoWorld, 10/10/2013).

First, let me assure you, Woody is a bright guy and I have a lot of respect for him. And second, writers don’t always write their own headlines. In any event, here’s what “crater” means: Worldwide, PC shipments are down around 8 percent, depending whose numbers you believe. In the U.S. PC shipments are up … up … a couple of percent.

Hardly the stuff of cratering.

The more interesting factoids in the story (and as I work for Dell I’m not an entirely disinterested party, although I have no connection to the product side of the company): The major manufacturers (HP, Lenovo, Dell) saw slight growth in their sales worldwide. Lenovo and Toshiba saw double-digit growth in the U.S. Yes, that’s right, growth … also not the stuff of cratering.

An interesting sidelight is that Apple’s U.S. sales took a sizable hit (more than 10%).

The truly fascinating bit was that Acer and Asus saw their sales plummet — down around 25% from last year. That really is cratering.

How to interpret these numbers? It’s probably much as pointed out here a few weeks back (“The post-PC era isn’t post-PC. It’s PC plus,” 9/16/2013). What cratered was consumer demand for PCs. Acer, Asus, and even Apple have a strong consumer orientation. Enterprise demand is, most likely, stable — enough from new ventures and replacement units to continue to support the major manufacturers.

It isn’t as attention-getting as “crater,” though.

As long as I’m quibbling with my friends at InfoWorld I might as well take issue with another recent piece they ran: “The end of the CIO as we know it — and IT feels fine,” (Galen Gruman, 10/11/2013). I’m afraid it got a lot wrong, starting with when the CIO title first appeared and what drove it. It wasn’t, as the article claimed, 15 years ago, driven by Y2K combined with the rise of ERP and eCommerce.

As evidence … why would any of those change “Director of Electronic Data Processing” to “Chief Information Officer”?

No, the CIO title came into existence twice that long ago, in the early 1980s. The driver: A newly introduced technology for mainframe computers called the database management system.

DBMS licenses were expensive. Very expensive in the context of what companies were already spending on their mainframe systems. The real, tangible cost-justification for spending the additional money was that it increased programmer productivity. Which it did. (Disagree? Imagine having to program without one.)

Except that, as anyone who’s tried it knows, programmer productivity is excruciatingly hard to measure, which means proving the tangible benefits of the new technology would have been excruciatingly hard.

So IBM’s marketing department came up with a new concept: The primary value EDP provided wasn’t increased employee productivity, as we’d been claiming until then. That was secondary. The big value was the information itself and what companies could do with it to improve decision-making. What, you thought this was new with data warehouses, data mining, and big data?

Whether you agree or disagree with the concept, the title “Chief Information Officer” flowed directly out of this idea — that information is where the big value is.

The concept’s legitimacy is questionable, by the way. Among its drawbacks: It elevates the importance of management decision-making above the value of actual work. But that’s a different, and very long diatribe.

Anyway, Galen’s piece is one of many that are appearing these days that predict we’ve entered the end-times for the CIO, and probably for corporate IT as well. Read any of these pieces. Squint at them sideways and you can predict the outcome of following this advice: A proliferation of “islands of automation,” because when companies push IT into business departments, nobody will be willing to pay for integration, let alone have the skills to handle it, let alone the authority.

And, the advice-followers will see significant fortification of political siloes. The reason? A big chunk of spending that used to be strategic (or at least enterprise in scope) will now be tactical, or, more accurately, departmental.

Siloed.

For a very long time … since, in fact, the advent of the DBMS … IT’s most important role has been integration. Maybe if CIO had stood for “Chief Integration Officer” we wouldn’t need to have this little chat.

* * *

Speaking of the 9/16 column, which talked about how IT’s role is expanding while its budget isn’t, I’m embarrassed. At the end I promised a follow-up that talked about what CIOs can do to survive the experience. But my vacation distracted me. Sorry. Next week for sure.

– Bob

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