Legacy Problems

The easiest way to build the newest, best, most-efficient anything is to start with a blank page, with no constraints from what came before. Sure, knowledge and experience are also important, as are learned skills and skinned knees, and can`t forget deep pockets. But Microsoft (to cite just one case) has all these things in abundance, but to no avail. Or at least no efficient avail.

Gate's gang, er, Balmer's bunch, have to use their skills, experience and dollars building upon an existing system, Windows, an uncertain vista if there ever was one. Indeed, Windows is perhaps the best technical example of a black hole (the opposite of a blank page), where new applications and features must be built upon and made compatible to whatever was done in the past, going back even to DOS.

(That would be a Disc Operating System, the first computer universe for everyone, Windows on just 64K; no mouse, no hard drive, just strange commands like autoexec.bat and configsys, where everything you did started the same way, with c:/ -- the command prompt.)

It is frightening to think of the total of all IQs at Microsoft, a giant, ferocious brilliance in one company. Yet projects arrive late, programs arrive bloated, not because of a lack of anything but because of too much of something: legacy. businessdictionary.com defines a legacy system as

obsolete computer system that may still be in use because its data cannot be changed to newer or standard formats, or its application programs cannot be upgraded.

Windows adds a third issue, that of creating new features or processes while simultaneously insuring that prior features, processes and programs, even from 3rd parties, still work. In other words if a mistake was made in the past you must continue using and building on the mistake. The legacy system is the environment within which you must work. It is the reality.

I am neither a hard nor soft computer professional (or even gifted amateur), so I mention this not to discuss computers in general or Windows in particular, but to introduce the problems of legacy systems. Why? Because of the N=1, R=G world described by C.K. Prahalad and M.S. Krishnan's in their book, The New Age Of Innovation.

P&K describe a world where services, products and delivery systems are customized at the most basic level: the individual. This is the N=1. (R=G describes a focus on access to resources--on a global scale--not ownership of resources.) All fine stuff, yet something kept me coming back to their ideas. Eventually (yesterday actually) I realized it was legacy systems.

P&K use medical insurance and diabetes in India as an example of N=1. Diabetes sufferers pay a unique-to-them premium based on their individual behavior and lifestyle. They argue that

This could be achieved (and the technology is already in use) via remote monitoring of blood sugar and other vital statistics, once a day at random, based on sensors attached to that person's watch or cell phone.

Through this data, the insurer, doctor and patient--based on the patient's full consent (italics added)--could assess the level of compliance of that person to a recommended regimen of medication, diet and exercise. <snip> If, however, the person refused to change her lifestyle and did not comply, the ... premium would then go up.

Personally I have no problem with this. I am a strong believer in user pays and being responsible for your own actions. I believe most obese people are not victims of the fast food industry but are simply lazy, and should have to pay more for health insurance (and for airplane seats, a pet peeve of mine when I fly). I would of course agree to a safety net for true victims and the truly disadvantaged, but for the most people, you do the crime you do the time, period.

Back to P&K. Such personalized N=1 service requires sharing information, personal information. Possible perhaps in India and other communal/collectivist-societies, would it be possible in individualistic-societies like the US or Great Britain? If there is a difference, and I believe there is--check a column by David Brooks in the Aug 11 New York Times for a good description of the differences--what do these differences mean for the N=1 service model?

I will continue this theme and what it might mean for Dick and Acme. In one sense Dick has the best possible position, a blank page upon which to build a company. Many questions arise though: how will his plans and structures fit into different societal types? Will Dick be forced to do N=1 on a macro scale, offering different service models to different locations? If so, what does that mean to business plans? How can Dick create a blank page environment in a dark hole area?

That's enough for today. It is now off to another day of downsize hell. Sigh. I'd much rather sit here and write all day. Heck, I'd much rather do anything. But I was (and still am) influenced by a quote from R.L. Stevenson, that (paraphrasing) "The true measure of a man is not in how well he does the things he likes to do, but in how well he does the things he does not like to do, but must do."

Helping my parent's downsize is a good example of the latter: So far I've done a pretty good job. I think.

We've Always Been On The Moon

Dick plans to offer custom services (N=1) to every customer, big or small; each will receive a service unique-to-them. From watching my daughter and her friends accept unique-to-them services as a given, like air or electricity, I realize N=1 is not an academic exercise but a reality, indeed a tsunami racing towards us.

Old people everywhere tend to remark, usually with a negative moan, that the young people today think differently, act differently, dress and speak differently. Luckily still remembering my hippie, counter-culture, long-hair (well, everyone else had long hair) background, I can see the situation from both sides. The young are different. They "see" things differently. And, as the pace of change (in culture and society as well as technology) gets faster and faster the difference in "seeing" increases as well. A story.

A few years back my good friend Robert told the story of the first moon landing to his young daughter. A space and technology buff, Robert explained the excitement of that day, his family (and mine, and most) glued to the grainy black-and-white TV images, thrilling to the time-lapse, echoey, "One small step for man, one giant leap for mankind," Neil first-foot-on-the-ground Armstrong homily.

Patience worn thin from listening to her dad wax on and on--as old people tend to do--about how the wonder of the event, his daughter answered,

But Daddy, we've always been on the Moon.

Yikes. To our generation the landing was a true seminal event, the culmination of Sputnik and of seeing the blue, green and white world suspended in the blackness of infinite space; we never felt more like global citizens than we did on that July 20, 1969 day.

Yet to Robert's daughter the moon landing was old news, just part of the furniture that makes up her world. Nothing special, no wonder attached.

(Which makes me wonder what might make this generation (X? Y? Z?), weaned on cell phones, text, Facebook, MySpace and iWhatevers, feel wonder? I recall the founding of Greenpeace for example, and wonder at what Rachel Carlson and her book, Silent Spring, created, the green movement that today has largely taken over--even if not always accepted. What will make my daughter feel wonder?)

Good Friends?

Anyway, I began this post with the intention to describe a truly fascinating example of N=1, the offering in India of 100% customized medical insurance based on each person's health and lifestyle, monitored on a daily basis by an R=G grouping of partners. An amazing example!

I will continue this post tomorrow (I promise!), my goal to use the medical insurance example to examine: a) what such a system requires; b) the obstacles facing implementing it today in Western countries (especially the US); and c) how the new generation (above) might accept this "based on lifestyle" method.

To bring this back to Dick and Acme, it is crucial that Dick and his key team do not simply use the way they "see" the world and the market to set policies and plans. In argument logic this is called the fallacy of Provincialism, that the way you and your friends think is the only (or the only correct) way to think. Dick must be able to step outside of his generation's and his culture's way of "seeing" if Acme is truly going to embrace the N-1, R=G world.

Partnering. Didn't I Already Learn That?

Talking to Dick is fun. Dogged but gracious, and, so rare, Dick always stays on point. A true logical argument. And bonus, you learn so much too.

Dick doesn't agree unless he really agrees. Last night he didn't. We were discussing "partnering," put in italics as I was arguing against the term, not the practice. The example I used seemed so clear to me, and by the end of Dicks rebuttal, so clear why I was wrong. It's in the video.

When I learned "partnering" it was called Quality Supplier Relationships, QSRs for short. Since then Win-Win, Shared Risk-Shared Return, Share Information, Communicate Roles and Objectives, has become common sense business. To me anyway.

Parents move day after tomorrow. Finally! Today I moved a pile of wood, boards and plywood and peg board and plastic sheet and who knows what, metal rods and these conveyer belt things, all told about half the size of my minivan. About ten hours work. Making it more fun was that it was all covered with 4-5mm of old sawdust, and cobwebs.

I did this all to get to the ShopSmith (expensive) multi-tool set up, get to, move and, yes, clean off sawdust and spiders.

Tomorrow I rise early and, in a borrowed truck head to town, list and credit card in hand. Two flat screen TVs, small home theater, wireless headphones--my folks have lived far from neighbors for near on 50 years, and you can hear their TV for miles--media stand, phone (3 receivers for 550 sq. ft.), small drop leaf table and two chairs, padded, coffee maker, toaster and weigh scales and, well, you get the picture. I hope they like my idea of their taste.

But Acme still goes on. Dick has an apartment now in India, no one likes hotels for weeks at a time, and is rolling up his sleeves in Management 101: staff need to know what you expect and you need to know if staff produce what you want. We will talk about that too. After the move, and the sale, scheduled for 9 days from now.

Of course then comes preparing the house and property for sale, a 900 pound gorilla no ones likes to talk about. Me included.

Good Night.

Partnering: What Does It Mean?

Partnering is a commonly-used "buzz word" in today's Fast Business 2.0 world. But what does it mean, and after we know the meaning, what does partnering mean to business, Acme and others? Back to the dictionary.

Most online dictionaries only include the common, time-worn definition, that partnering is some form of forming a partnership, in business, sports or whatever. Not very helpful. So, on to the specialized sites. BusinessDictionary.com defines partnering as:

Establishing a long term win-win relationship based on mutual trust and teamwork, and on sharing of both risks and rewards. Partnering arrangement can be between labor and management, subordinates and the executive, suppliers and customers, and suppliers and suppliers. The objective is to focus on what each party does best, by sharing financial and other resources, and establishing specific roles for each participant. See also joint venture and strategic alliance.

Phew. I left in the links so you could peek at how other words you thought you knew, win-win, trust and objective say, were defined in modern business parlance.

What are the keys for Acme and the larger 'partnering' thread here? Win-Win certainly, sharing risks and rewards and establishing specific roles jump out. In time I will look at these, and more, but for now let's focus on the "specific roles" part.

Establishing specific roles implies a high level of mutual understanding and shared knowledge. Back when the ABC Co. made a traditional deal with a supplier there was little or no "mutual," it was all ABC wants to know this [about capacity, ability, track record etc.] and wants you to do this. Period. Basically the only information ABC sends is the exact specs of "this:" how many, what size, when delivered etc. The poor supplier knew nothing else about ABC.

Supplier relationships are thus different than partnering: not only is information flow one way, there is no shared risk for shared reward. The supplier will receive the contracted amount when the contract is completed (properly). It means nothing (or little anyway) to ABC if completing the contract bankrupts the supplier, and the supplier certainly will not accrue additional benefits if the products it supplies helps ABC make record profits.

(I could make the argument that traditional supplier relationships most resemble master-slave pairings, but adding sociology to the blog would bog the blog. And no one wants a boggy blog.)

Setting specific roles requires two-way knowledge transfer. Not the company secrets of course, the "11 herbs and spices" in Kentucky Fried Chicken or the secret formula for Coca-Cola, but at least the broad outines of objectives, capacities and requirements.

And thus the (first) 900 pound gorilla enters the room: measurement. How do you create a fair and transparent way to measure efforts and results, for without this how can you distribute costs, reveues and ... profits? For while it remains to be seen if partnering also requires each company to have its hand in the other's profit pocket, if it does entail mutual risk it then must require some sort of mutual reward.

To be continued ...

Build or Buy

Build or Buy, that's what my good friend told me, that Dick's only real choices [to build capacity] were build it or buy it.


I am not so sure.

"The world is flat" argues Thomas Friedman in the book of the same name. Phahalad and Krishnan (in The New Age Of Innovation) take the next logical step in their R=G formulation. The authors argue that companies depend upon growing/accessing resources (R) and that in the bandwidth age a company can search the globe (G) to find the best partner.

Anyway, this partnering to build capacity is an issue I will look at in more detail in future posts. The next 'partnering' post will examine the role of clear metrics, performance measurements, in creating successful and lasting partnerships. Hint: if you can't measure success then how do you know you are successful?

I am off for the weekend. Dragon Boating. The Dragon Boat videos will be a treat, I promise.

Whither Capacity?

Capacity, must build capacity, you talk to Dick for five minutes (or less) and I promise he will mention capacity. As in, must have, so ... must build?

Build? Internally? Is that the only way to build capacity? Let's take a short walk down memory lane. Back to Henry Ford. Again.

Mr. Ford senior is famous for many things--the assembly line, anti-semitism, "any color as long as it is black"--among them is the River Rouge factory complex. Upon completion River Rouge was the largest integrated factory in the world. Ford believed efficiency came from controlling all aspects of production, vertically (raw materials to parts to power) and horizontally (all types and ranges of vehicles). Building capacity to H. Ford meant adding another building or coal mine.

Verticle integration went out of vogue in the 50s, replaced by building a chain of suppliers. The thought was, I concentrate on what I am good at, you on what you are good at, and by working together we'll both benefit.

Consider the Nike runners you own. While the shoes--and the shirt, tennis racket and golf balls--have the Nike swoosh logo, Nike did not make the shoes! Nike does not make shoes! Nike does not make anything. Nike designs and markets; others make and distribute the actual "swooshed" products.

This "do only what you are good at" business model reaches its most modern incarnation in Prahalad and Krishnan's, The New Age Of Innovation's idea that R=G. As the authors say,

Resources are accessed as needed from a global resource pool (R=G).

A company need not, nor maybe should not, build up its own verticle capacity and ability when other companies around the world already have, and are willing to rent/sell such to you.

Back to Acme. In our Skype yesterday Dick told me of his day-trip to an established company that offers the writing services Acme needs. The two entrepreneur owners, one Western, one Indian, discussed how to make cooperation work. Buy out? Buy in? Long term lease?

Both recognized that this was new territory, and they were making the map as the went along. Acme has never outsourced such a critical part of its service, and the Indian company had never met such a demand for its entire service. Wisely they put off making any final arrangement, deciding first to date rather than rush into a wedding.

I am unsure about Acme outsourcing (partnering, whatever) such a key part of its business. Maybe that is my age showing though: I gained business maturity (sic) during the time of "core competencies." I learned (and taught) that it was okay, even good, to outsource non-core fuctions (HR and IT are common examples) functions, but everything must be done to protect/build the company crown jewels, the skills that set the company apart from the corporate hoi polloi.

To my thinking, anything that touches the customer is core, but then Nike doesn't make the shoes that caress the soles, making production a core competency. Maybe I must broaden my thinking, must add "managing coutsourcing/partnering relationships" a new, R=G world. No doubt Dick and I will continue this discussion.

Before leaving, a word on horizontal integration. Horizontal integration, the ability to reach many different markets with essentailly the same service or product, is still in vogue. Rupert Murdock sells the same basic story (for example) in different types of media outlets in different countries. Yet I wonder how far the horizon will continue to stretch, how homogenous--one size fits all writ large--buyers worldwide will allow products and services to become. Prahalad and Krishnan suggest (strongly!) that the global marketplace is/will be guided by N=1 (see "Plans Are Decided By Customers" post), the concept that each service/product is unique to the purchaser. Will alterations around the edges offer the required level of customization (meaning horizons can stretch on uninterrupted) or will N=1 require a smaller and shorter horizon?

No answer today though, just the question.