A New ERA in ERP - Part 3

[Continuation]

I do not, for one minute, doubt that the vast majority of technology vendors actually do offer products and services that can be “solutions” for a good many SMBs. If I did not believe this with vigor, I would not be involved in the industry. But saying that a store offers shoes does not automatically imply that they have the correct “solution” for your particular foot. Your foot may be too wide or too narrow to fit comfortably in the shoes they offer. You may need a shoe for hiking in the woods and they sell only dress shoes. Or, the store may have the color and style you find suitable, but they don’t have the 10-1/2 size you foot requires.

Unfortunately, most – but not all – of the salespersons that I have encountered in this industry over the last quarter century are salespersons first, even though they may be engaged in a process that they refer to as “solution selling” or “consultative sales.” All too frequently they do just enough to “consulting” to find a place to get their foot in the door to “sell.”

The problem – more likely than not – is not the salesperson. The problem is almost certainly to be found in the policies and compensation plans under which the salesperson is engaged with their employer and the training that they have received. Even the bulk of “solution selling” and “consultative selling” training courses are only thinly disguised presentations of ways to get more salespeople in the door at clients’ and prospects’ offices and not, in fact, actually focused on the “solution” or “consulting” part of the equation. This is evident by the fact that those giving the training in “solution selling” or “consultative sales” need to know little or nothing about the actual product being sold or how to actually “consult” a business toward achieving more of its goal (read: making more money).

If vendor/VARs are interested in becoming real and practical “solution” sellers, they must also become real and practical “consultants” that understand how to guide management teams in the process of discovering:

1.       What needs to change in order for the system (i.e., the entire enterprise) to improve and make more money

2.       What the change should look like (read: Does the vendor/VAR actually have a product that “looks” like what your management team believes the “solution” should “look” in its working and effectiveness?)

3.       How to effect the change (read: Can the vendor/VAR help in deploying their technology in order to make it effective in the end result?)

On vendors providing low-cost or no-cost solutions

I, personally, find it hard to believe how many vendors today are supplying valuable applications at no-cost or low-cost to huge numbers of users. Everyone knows about Google, which alone provides search-engine capabilities, a blogging site, Google Apps – used for document sharing and collaboration, email services and more. EverNote provides a service that I find absolutely invaluable and allows me to store up to 40MB per month on their servers at no cost to me. EverNote also allows me to use their site for sharing and collaboration. Then there are low-cost applications like CEOexpress.com and eFax that also furnish me with huge benefits for pennies per day.

Jan Hichert is right! People are expecting more and more for less and less out-of-pocket expense. This is a trend that is not likely to end in the near future. The question is: what should vendor/VARs be doing about it?

My recommendation to the industry is that they convert all of their salespeople into genuine whole-hearted consultants – at least insofar as that is possible. (Some, I fear, cannot be converted. They will, perhaps, never be anything but a salesperson through and through.)

Note: Those that cannot be thus converted should remain salespersons, but they should be making three or four face-to-face sales calls per day making “incremental sales” being fed by a sound program of relationship marketing. It is beyond the scope of this article to go into more detail, but if you are interested, see Justin Roff-Marsh’s book entitled Reengineering the Sales Process for more information.

The vendor/VAR’s new staff of through-and-through consultants should be turned loose in a program of incremental transactions. Unlike today’s one-big-gulp approach to sales, allowing a relationship to build over time while gradually increasing the size of the transaction simultaneously builds a solid relationship between the prospect/customer and the vendor, while allowing the vendor/VAR to prove to your management team that a) the vendor/VAR really does have your enterprise’s best interests at heart; b) the vendor/VAR really does know how to help your business improve – i.e., make more money; and c) the vendor/VAR really can be trusted with delivering on its promises.

Allow me to give an example of what such a program might look like:

Step 1: A no-cost one-day “proof of concept” engagement about how the vendor/VAR’s approach can help you unlock valuable knowledge already present in your organization in a way the leads to improvements which, in turn, help you make more money.

Step 2: A $795 one-day engagement to plan the execution steps on just one of the ideas resulting from the “proof of concept” engagement (Step 1).

Step 3: A engagement called the “Next Steps” program to help formulate step-by-step plans to leverage additional concepts stemming from Steps 1 and 2.

Step 4: A one-year engagement to help the client develop and execute on a POOGI (Process Of On-Going Improvement) program.

Step 5: Sale of an updated or upgraded ERP system or tactical extensible technologies that support the POOGI or “Next Steps” initiatives

Note: The reference to “Insert Value Price” has to do with value-price, not by-the-hour consulting. This means that, if you, as a client, are going to benefit to the tune of say $100,000 in Throughput from a particular initiative, you might be willing to pay on a plan such as: $30,000 up front, plus n% of the increase in Throughput over the next 12 months.

Arrangements and sales approaches such as these are a win-win for the parties involved. You and your management team are more likely to reap benefits from real – not hyped or hypothetical “solutions” – and the vendor/VAR can make more money because you are making more money.  That sounds fair, does it not?

Summary

We are not entering a new ERA in ERP. We are – for better or worse – already into the new era. The question is how will vendors/VARs and you, as the buyer, respond in this new age. By keeping the roles of each party clear and by you and your management team taking full responsibility for sound and rationally calculated ROI for each new IT investment, everyone wins.

Plus, if vendor/VARs become really and truly solution-oriented, this team of people that work day after day with SMBs and have considerable experience can learn to bring no-cost and low-cost solutions to your doorstep by helping you unlock what you already know – but frequently do not know that you know. This, too, is a win-win for all involved.

(c)2010 Richard D. Cushing

A New ERA in ERP - Part 2

[continuation]

How can we make it right?

First of all, we should begin by clarifying the proper roles and boundaries in the arrangements between vendor/VARs and you, the buyer. W. Edwards Deming once said, “It’s management’s job to know.” That is a sweeping statement, but I am absolutely convinced that it is true. If you are an executive manager (meaning you have authority to “execute” – to take action), then it is your job to know the impact (or potential impact) of every action you undertake. It is not the vendor’s or VAR’s job to tell you with certainty impact of your actions regarding his or her product or service in your particular circumstances.

So, what is the role of the vendor/VAR?

The vendor/VAR should be fully equipped to understand what the product or service under consideration for purchase is capable of doing – including being fully aware of its limitations. Furthermore, the vendor/VAR should be equipped to help guide your management team into a rational evaluation of the benefits your organization might receive through the proper application of the product or service under consideration. In my opinion, the evaluation assistance should not be predicated on sweeping generalizations. Rather, the vendor/VAR should be willing and able to provide proof of concept based on what your knowing management team has concluded is the change required to be regarded as “improvement” or “sufficient improvement” in some measurable way.

Example:

If your management team has determined that your warehouse operations can presently process (i.e., pick, pack and ship) an average of 68.7 shipment lines per hour, but with significant growth on the horizon, your team has decided that you will need to ship an average of about 100 lines per hour (a 45.6% improvement) without a change in personnel or the number of persons staffing this function, then the vendor/VAR should be able to demonstrate to you – in a proof of concept environment – that their technologies will, in fact, help your current staff achieve an average of 100 lines per hour.

By the way, the buyer’s management team should also know, by this point in the process, the estimated value of these three critical factors:

·         delta-T: The change in Throughput [T], where T = Revenue less Truly Variable Costs

·         delta-OE: The change in Operating Expenses [OE], which may be implied to be zero in the scenario stated above

·         delta-I: The change in Inventory or demand for other Investment, which would be the “capital budget” the management team has established for the purchase and implementation of the new technology in order to achieve a predetermined ROI

These three important financial metrics come together in the following formula:

 By assuming these appropriate roles and division of labor, the vendor/VAR avoids the risk of making claims about ROI that the product might be able to deliver, but may fail to deliver due to circumstances beyond his control in the customer’s environment. Similarly, you and your management team avoid making rash and risky assumptions about ROI predicated on “averages” and other “promises” insinuated by the vendor/VAR. Both parties know precisely where they stand in the arrangement and, yet, an ROI has been effectively calculated.

On the need for technology vendors to shift from selling “products” to selling “solutions”

A lot of salespeople who presently work for technology companies are going to throw stones at me for this, so let me get some clarifying statements on the table right away:

·         I know that there are technology firms, and even individual salespeople, that are 100% genuine in the desire to sell “solutions” rather than “products,” and this is to be applauded.

·         I know that, in general, salespeople at technology firms get compensated for selling their technologies and not for selling “solutions” – which “solution sale” cannot be measured.

·         I know that technology salespeople can and do walk away from prospects where it is abundantly clear that the sale of their firm’s technology would not be a “solution” for the particular prospect in question.

“Solution selling” – so-called

Now I know that so-called “solution selling” is all the rage in the technology industry. Every firm in the industry certainly wants to be known for selling “solutions” and not just their particular brand of technology. Nevertheless, the process described as “solution selling” has its limitations, even when properly and diligently applied by conscientious practitioners.

Consider the fact that no matter how long a salesperson is engaged with you as a client or a prospect, there will always be things that the salesperson does not know about your firm and how it works, about your industry, and about your particular environment, people, and intentions with the product under consideration. On the other side of the same coin, there will always be things that you and your management team do not know about the product you are considering – its capabilities, its capacities, its limitations, and more.

This is not to suggest malice or subtlety on the part of either party. The salesperson may be as honest as the day is long and full of good intentions. Nevertheless, lacking clairvoyance or omniscience, there will be questions that are not asked on both sides of the pending transaction that do not get asked. And, these questions do not get asked simply because neither party ever thought to ask them because neither party – at the time – felt that the question had any relevance given their understandings of the circumstances at the time.

The problem with “solution selling” is that it confuses the roles and boundaries once again. The process implies that the vendor/VAR knows and understands more about the client or prospect’s business and environment than he or she does. It implies, in fact, that the vendor/VAR knows and understands the actual matters of what needs to change in order for the organization (as a whole) to improve – where “improvement” is defined as making more money tomorrow than they are making today (in a for-profit scenario). I say this because, only then – only if and when the vendor/VAR actually understood what needs to change – would the salesperson be in a position to offer an actual and effective “solution.”

However, knowing what needs to change to make the enterprise – as a whole and integrated system – improve is the purview of you and your executive management team and not that of the vendor/VAR. Once these roles are re-clarified and each party in the engagement takes proper responsibility for their part of the “knowing,” then real and effective “solutions” may be the result.

[To be continued]
(c)2010 Richard D. Cushing

A New ERA in ERP - Part 1

Jan Hichert, CEO of Astaro Corporation recently wrote, “[A]s a slow recovery begins it is becoming clear the emerging economy will not be the same as we became accustomed to before the recession and businesses will not be run as they were prior to the economic collapse in late 2008. Budgets will remain small and despite growth, businesses will continue to be wary of investing in new solutions causing them to scrutinize the cost and benefit of new products. Because of this change, business to business vendors, especially technology vendors will need to shift the business model from providing products to providing solutions and focusing on customer needs rather than product capabilities. Vendors that are able to provide low cost or even free business solutions like Vistaprint, will be better positioned to survive and thrive in this new economy.”

Mr. Hichert’s words set forth three salient factors surrounding SMBs (small-to-mid-sized businesses) in the new economic era in which we find ourselves operating today:

1.       Smaller budgets and increased return-on-investment (ROI) vigilance on the part of the technology buyers

2.       Increased need for technology vendors to shift dramatically from selling “products” to selling “solutions”

3.       Vendors that are able to provide low-cost or no-cost solutions will be better positioned to survive and thrive

On smaller budgets and increased attention to ROI

Some history

Since the emergence of PC-based accounting and ERP (enterprise resource planning) applications for SMBs beginning in the 1980s, software vendors and resellers (VARs) have gone through some schizophrenia over the whole matter of talking about ROI with their prospects and customers. In the early days, there software vendors and VARs offered considerable “hype” about the ROI available to those who adopted computer-based accounting solutions. Unfortunately, it was the vendors or the VARs doing the calculations and, when some firms did not reap the benefits anticipated from the so-called “promises” made by the vendors, law suits ensued. Of course, the legal wrangling, and the fallout thereof, squelched much of real and legitimate discussion regarding the benefits that should accrue to the organization that buys and implements new technology.

Soon, technology vendors were making only the vaguest of references to ROI with benefits being stated in the roundest of numbers using remarks that include many qualifications and limitations. Frequently there were expressions of “results obtained by others” without reference to who these “others” might be, nor an opportunity – in most cases – for the prospective buyer to discuss the specifics surrounding these published “results” with a living reference. Gradually, even that dissipated into merely discussions around “the ways” in which an organization “might” reap benefits from the purchase of this technology or that one, but even the language of assurance slipped away.

Of course, this diminishing willingness on the part of technology vendors to discuss solid ROI calculations with their prospects was accompanied by an increasing number of troubling stories appearing in trade – and even mainstream – publications about ERP implementations going vastly over budget, not producing business benefits that had been anticipated, or both. Some ERP deployments even failed entirely – usually after the expenditure of some millions of dollars – and the proverbial “plug was pulled” on some of these projects. Even more devastatingly (though rare), there was the occasional firm that, itself, failed to survive after its ERP implementation went awry.

Where this went wrong

There any number of directions one might point a finger of blame for this whole matter of technology and return-on-investment going wrong. However, allow me to suggest a few that might be worthy of consideration:

·         Technology vendors/VARs – For better or for worse, many folks that became involved in the explosion of PC-based technologies over the last 30 years or so did so because they simply enjoyed technology. This makes sense, and I have nothing against one enjoying the work they do. In fact, I believe it should be so. However, some of these vendors and VARs were convinced that the technologies they offered were the answer to every question. Some of them sincerely believed that if a process could be automated, then it should be automated.

Since moving companies off paper-based accounting processes, or even off very costly mini- or mainframe computing systems, was easy to sell and typically allowed companies to grow several times over without dramatically increasing back-office overhead, ROI was a “no-brainer” and most companies that purchased were virtually assured to benefit – at least enough to make it worth the buyer’s investment, even if not as much as buyers had hoped before closing the deal.

This ease-of-selling and ease-of-ROI caused many technology vendors to get rich. It also caused far too many of them to get lazy. “ROI? Absolutely! No problem. You’ll probably get between x% and y% increase in revenues and your operating expenses will probably decrease by between n% and m%. You’ll be sittin’ pretty. Trust me.” Thus was the standard sales chatter, and many first- or second-time buyers of PC-based accounting and ERP technologies bought it – hook, line and sinker.

·         The SMB executives – Just like the vendors sold it, the SMB executives bought it. Both sides of the transaction were pretty certain that new technology worked just like “new and improved” additives for your car’s engine. Just pour it in and the engine would run smoother, quieter, longer and with less friction. So, these vendors and executives poured in new technologies from time to time expecting the companies to run smoother, more efficiently, and make more money – it was as simple as that.

·         The SMB IT departments – Unfortunately, just like folks getting into PC-based technologies as a vendor or VAR, many of the people who got into corporate IT got into the field for exactly the same reason as the vendors/VARs. They simply liked working with the latest and greatest technologies – and, for the most part, they were good at it.

Nevertheless, this led many corporate IT staffers and managers to take on the same sense that engulfed the vendor/VAR community: namely, if it can be automated, then it should be automated. In fact, many corporate IT staff and managers actually moved pretty fluidly back and forth between working for vendors/VARs and working on IT departments. Some of the relationships even bordered on incestuous and provided little cause for rethinking the ROI value of technologies available or proffered by the vendors.

[To be continued]
(c)2010 Richard D. Cushing

A logical approach to making more money

IF [100] we sometimes make changes in our business expecting one result, but we get a different (e.g., unexpected or even negative) result…

THEN [110] we sometimes miss or misunderstand the cause-and-effect relationships in how our business is actually working; AND [120] we sometimes have doubts about what we think we know about how our enterprise actually works.

IF [120] we sometimes have doubts about what we think we know about how our enterprise actually works… AND [130] we (as a management team, or the company as a whole) could somehow put our intuitive knowledge about how our business works on paper…

THEN [140] we could read and reread our logic about how our organization really works (and fails to work) in reaching our goals.

IF [120] we sometimes have doubts about what we think we know about how our enterprise actually works; AND [140] we could read and reread our logic about how our organization really works (and fails to work) in reaching our goals…

THEN [150] we might discover flaws in our thinking and reasoning regarding how our organization really works (or fails to work) in reaching our goals.

IF [130] we (as a management team, or the company as a whole) could somehow put our intuitive knowledge about how our business works on paper…

THEN [160] others can also read and review our logic concerning what we believe is really happening in our business and how it all works.

IF [160] others can also read and review our logic concerning what we believe is really happening in our business and how it all works…

THEN [170] others may be able to help us find flaws in our thinking about how our business works (or fails to work) in reaching our goals.

IF [170] others may be able to help us find flaws in our thinking about how our business works (or fails to work) in reaching our goals;

OR IF [140] we could read and reread our logic about how our organization really works (and fails to work) in reaching our goals…

THEN [180] we may realize that we have some flaws in our thinking about what is really happening in our business enterprise.

IF [170] others may be able to help us find flaws in our thinking about how our business works (or fails to work) in reaching our goals;

THEN [190] others may also gain a better understanding of how our organization works (or fails to work) in reaching our goals.

IF  [190] others may also gain a better understanding of how our organization works (or fails to work) in reaching our goals; AND [200] discussions based in documented logic may help convince others (in a way presumption or other discussions may not)…

THEN [210] other stakeholders (e.g., employees, vendors, customers, board members) may be persuaded to help us in taking effective action to change our enterprise in ways that will help us achieve more of our goals.

IF [210] other stakeholders (e.g., employees, vendors, customers, board members) may be persuaded to help us in taking effective action to change our enterprise in ways that will help us achieve more of our goals; AND [220] other stakeholders want to help us in taking effective action to change our enterprise…

THEN [230] other stakeholders will help us in taking effective action to improve our business.

IF [150] we might discover flaws in our thinking and reasoning regarding how our organization really works (or fails to work) in reaching our goals; OR [180] we may realize that we have some flaws in our thinking about what is really happening in our business enterprise…

THEN [240] we will gain a better understanding of how our business really works (or fails to work) in reaching our goals.

IF [240] we will gain a better understanding of how our business really works (or fails to work) in reaching our goals; AND [250] we want to take actions that will really help our enterprise achieve more of its goals…

THEN [260] we will be guided (by what we have learned through this process) to take effective action to help our business reach more of its goals.

IF [260] we will be guided (by what we have learned through this process) to take effective action to help our business reach more of its goals; OR [230] other stakeholders will help us in taking effective action to improve our business…

THEN [270] our business will improve and we will achieve more of our goals.

What you have just experienced is “reading through” a logical “tree” as used in the Thinking Processes. In this case, the end result [270] is a business that is virtually assured of improving and reaching more of its goal (read: making more money, if it is a for-profit institution).

What was their first step: First, to realize that their own history of false-starts and attempts at improvement that produced little or no beneficial results proves to them that they do not really understand their own business enterprise. This is revealed in entities 100, 110, and 120 above.

This management team does not necessarily need a consultant; but what they do need is a framework (a theory) by which to understand how their organization really works – and, indeed, fails to work – in attempts to make more money tomorrow than it is making today.

“Experience teaches you nothing without theory.” – W. Edwards Deming

Second, this management team needed a method by which create a theory or framework as to how their organization really works and fails in its attempts to reach more of its goals. Most organizations have no such framework to guide them and have discovered no method by which to build and document such a framework. As a result, they tend to be guided by numbers (which frequently lie to them) and by “tribal knowledge” (which is all of the important intuitive knowledge contained in your organization that is valuable but entirely undocumented).

That’s it: It took this management team a realization that trial-and-error was no longer a satisfactory way to run a business enterprise – especially in a recession; and the discovery of a tool to help them document and reconsider what they already knew but did not know how to exploit for a breakthrough.

Read more about Goldratt’s Thinking Processes as developed in the context of the Theory of Constraints (ToC) by doing an online search for terms such as:

·         Thinking Processes

·         Theory of Constraints

·         Goldratt

·         Current Reality Tree

If you and your management team would like help in getting started with these tools that can bring rapid and dramatic improvement, contact me at rcushing@geewhiz2roi.com.

©2010 Richard D. Cushing

Surviving the recession with breakthrough thinking - Part 3

 [Continuation]

As you and your management team will realize as you work through the Thinking Processes (TPs), this approach to achieving breakthrough thinking recognizes that each challenge you and your organization faces requires a unique approach and a unique solution. Unlike other methods of problem-solving, applying the TPs recognizes the distinct needs, interests, abilities, limitations and power of all of the stakeholders. This capability of the process helps achieve breakthroughs by maximizing the quality and the effectiveness of the solution. Furthermore, the fact the solution will be invented by you and your management team, the likelihood of full implementation is increased. After all, people seldom work against their own inventions.

Discovering the transitional steps

One of the dangers of adopting or adapting a solution from a previous effort or somewhere or someone else is that, in doing so, the “easy answer” too frequently leads your team to also accept an “easy implementation” in which the transitional requirements are never fully understood. Warning! If the transitional steps are not understood – and usually not even clearly articulated – then the transitional steps are never fully developed for implementation.

What your management team may have previously understood as “the problem” and “the solution” have usually been nothing more than cryptic images shrouded in a fog of language leading to lots of action but seldom (if ever) a real breakthrough in improvement. However, if you have undertaken to build and understand the Current Reality Tree (CRT), then you have in your hands a document that depicts clearly and logically what is constraining your organization from making more money tomorrow than you are making today. Chances are that, as a result, you and your managers have a clearer understanding of your organization as a whole than you have ever had previously. You may be feeling a sense of empowerment – a renewed sense of being in control – that you have been lacking as manager for years now.

However, the Thinking Processes have more to offer than helping you clearly understand the “root” of your problem – the one thing (or very small number of things) that is your bottleneck (constraint) to achieving more of the goal. The CRT you have built has helped you answer a critical question for good management: What needs to change?

But two additional questions need to be answered, as well: What should the change look like? And, How do we effect the change? Fortunately, the Thinking Processes supply powerful tools to help your team discover and clearly articulate answers to these questions.

By building a Transition Tree (TrT), your management team will go through a Thinking Process that will help you apply sound logic to determining the transitional steps necessary to move from your organization’s Current Reality to your intended Future Reality. When you are done, your team should have three Thinking Process logical “trees” – a Current Reality Tree, a Transition Tree, and a Future Reality Tree. These three documents represent answers to the three critical questions to which your management team needs sound answers:

1.       Current Reality Tree – What needs to change?

2.       Future Reality Tree – What should the change look like?

3.       Transition Tree – How do we effect the change?

Note that the TrT should become your “road map” to change. This document, you will find, should clearly define the necessary steps to achieving the desired change right along with the rationale for taking these steps. Without such a map it is easy to get lost or lose focus on the breakthrough your team has calculated for achieving more of the goal.

Don’t get derailed

Chances are, while you and your management team are building the Transition Tree, that there will be some that will step forward say, “We won’t be able to do that because….” There are a couple of important points to consider when this happens.

First, keep your focus on what happens most in making more money for your organization. If you can increase Throughput on 97% of your transactions, do not let the unpredictable 3% of exceptions keep you from achieving the breakthrough change for the vast majority of circumstances. Paying too much attention to these exceptions will likely distort your solution.

However, if there is an objection raised that needs to be evaluated and where it could have an impact on effecting the overall change anticipated by the FRT, then there is a Thinking Process for this, as well. Under such circumstance, you and your team should consider what Eliyahu Goldratt called “Negative Branches.” These are smaller logic trees that supply answers to questions such as: “What will we do if…?”

Don’t get stuck

Sometimes – in fact, with some frequency – management teams such as yours get caught on the horns of a dilemma. They find that there appear to be rational arguments for two mutually exclusive paths to the same interim objective in their Transition Tree development.

For example: A manufacturing manager is measured and rewarded on two different metrics – defect rates and equipment maintenance expenses. Of course, he wants to be a good manager and to be rewarded properly for being a good manager, so he wants simultaneously produce quality parts and hold-down the equipment maintenance expenses. He knows that he can reduce maintenance expenses by doing on-demand maintenance only. He also knows that he can achieve lower defect rates if he applies routine preventive maintenance on the equipment under his management. Which of the two approaches to equipment maintenance should he choose?

Fortunately, the Thinking Processes have an answer for this situation, too. The tool is called the Evaporating Cloud and is critical to actually achieving breakthrough solutions.

Summary

To my knowledge, no for-profit organization in the world has ever achieved ascendency in its industry through “cost-cutting” efforts. Companies that grow and gain market share are more likely to be those that have achieved breakthroughs.

There are three basic ways to reach a breakthrough in your organization’s thinking:

1.       By chance

2.       By hiring people who are intuitively breakthrough thinkers

3.       By finding and applying a tool that is proven in drawing out breakthrough thinking from ordinary executives and managers – like the Thinking Processes

Which will your organization choose?

©2010 Richard D. Cushing

T-Mobile myTouch 3G Fender Limited Edition sells out, next batch not due for a while -- Engadget Mobile

T-Mobile myTouch 3G Fender Limited Edition sells out, next batch not due for a while -- Engadget Mobile

The referenced article brings to light an important point on under-estimating the impact of lost sales due to out-of-stock conditions. I wrote about it in a blog post at Kinaxis. The post will appear early next week.

Watch for it.

Surviving the recession with breakthrough thinking - Part 2

[Continuation]
Thinking should be a process
Now that your management team is has identified a goal and they have a theory by which to consider the data they might collect, they are far better situated to determine what information might be valuable to them. If your team is focused on gathering relevant information where the goal is making more money, and the framework or theory tells us that there must be at least one bottleneck or constraint in our system (the whole enterprise), your team now knows the very first question to ask and answer. That question is: “What is our constraint or bottleneck to making more money tomorrow than we are making today?”
 
While we might find some hints in the data stored within your existing ERP database and other computer systems, it is far more likely that what is really valuable in finding the answer to this critical question is presently being held in the minds of your own firm’s managers and leaders all across the organization. We call this kind of undocumented information consciously or subconsciously filed away by the organization’s people day by day “tribal knowledge.” Tribal knowledge is what they have learned through facts and circumstances accompanied by their subjective intuition about what they have garnered objectively.
 
The relatively limited amount of information that is required to soundly answer the key question we have identified is actually better defined from probing the staffs’ intuitions – tribal knowledge – regarding the context of the organization, the uniqueness found in it and its products, and how it works or does not work in delivering value to its customers.
 
In almost every problem, the value of the factual details pales in significance when compared to the framework and setting in which the details transpire. Breakthrough thinking comes from the application of intuition that gives meaning and cohesiveness to the observations made.
 
Traditional information-gathering efforts focus on the past (historical data captured in computer systems or elsewhere) or the present failings. Unfortunately, since these cannot – by their nature – be an effective guide for the future, the real breakthroughs emerge from the intuition of those closest to the workings of the “system” – the organization taken as a whole.
 
You and your management team might begin by gathering a cross-functional team of staff whom you deem to be trustworthy and experienced in their functions within your enterprise. Then, simply commence by asking this simple question: “What small handful of things do each of you see as keeping our firm from making more money tomorrow than we are making today?”
 
 Give each of them several three-by-five cards or large stick-notes and ask them to jot down these factors for you. Before they begin writing, give them the following guidelines:

• State each thought as clearly as possible 
• Include an “actor,” as in “Our vendors provide us with too many defective components for Product Line A.”
• Do not include assumed cause-and-effect statements. For example, do not say “Competition is driving prices down, so our salespeople offer too many discounts to make sales.” Instead, make each of these comments stand on their own if you believe them to be true. Write them as separate items thus: “Our competitors are driving prices down,” and “Our salespeople offer too many discounts in order to make sales.”
• Put each statement on a separate card or stick-note.

You should refer to these as undesirable effects or UDEs (pronounced: YOU-dee-ees) as did Eli Goldratt when he first promulgated the Thinking Processes. Naturally, some of the participants will have more ideas to jot down than others. Your object in this part of the exercise is to come up with roughly 20 unique UDEs with which to begin creating your organization’s Current Reality Tree – a logical tree that will depict what is not working – what is keeping your organization from making more money tomorrow than it is making today.
 
You can learn more about Eliyahu Goldratt and the Thinking Processes, including Current Reality Trees by doing an Internet search on any or all of these terms, or review this and related Wikipedia articles. You will also find additional references and application of the Thinking Processes right here at GeeWhiz to R.O.I.
 
Every problem is unique and is likely to require a unique solution
A wise man once said, “No man crosses the same river twice: for both the man and the river have changed with each crossing.” The must be said in the realm of business problem-solving.

One of the most frequently occurring and devastating errors executives and managers make in problem-solving and planning is that one problem or situation is identical to another. Fads in management come and go, but no fad or prior experience can take into account fully the differences in time, place, people involved, surrounding conditions, and the present purpose of reaching a breakthrough. The Thinking Processes, however, are able to leverage the “tribal knowledge” and intuition available within your organization to discover unique responses to unique situations even when they may appear (on the surface) to be “just like” what you faced last month or last year.
 
Furthermore, the Thinking Processes are able to decipher and disarm cultural differences and conflicting values within your organization without compromise – which is nothing more than accepting the best of the worst options and blending it with the worst of the best solutions.
 
Far too many managers and executives go out of the way to draw comparisons between their present reality and some other situation believed to be similar. These similarities may be expounded to great length even though the two situations may be separated by miles, years and even involve entirely different companies and personnel. This propensity stems from a desire to reach an “efficient” solution while feeling some satisfaction about being “objective,” as well. It also reduces or eliminates much of the requirement for actually thinking about the uniqueness of the organizations present situation. The Thinking Processes’ Current Reality Tree (CRT) simplifies that while providing management with a truly objective and rational view of what is keeping the “system” from achieving more of its goal.
 
[To be continued]
©2010 Richard D. Cushing