347-878-3837

Business

Here are articles on Business

Fantasy football costs business $1.1 billion/year. NOT!

,

Reading Fortune Magazine’s “Leading Indicators” in the September 4, 2006 edition, I ran across this tidbit:

$1.1 billion. Projected value of work hours used for playing fantasy football this season. The player (there are 36.8 million of ’em in the U.S.) earn on average about $36 an hour and will spend about 50 minutes playing each workweek.

This kind of projections are sneaky, because the next step is to claim that Fantasy Football is “costing” business $1.1 billion/year. But that “cost” assumes that if they weren’t playing fantasy football, the people playing would be happily producing, producing, producing.

This is bull pucky, for two reasons:

First off, it assumes that if people weren’t playing fantasy football, they’d be making money for the business. Why do we believe that? It may be that people spend 50 minutes each workweek relaxing, and at the moment, that relaxation happens to take the form of Fantasy Football.

Second, people can’t work continuously. We need breaks. The Power of Full Engagement documented that thoroughly. Insisting people work during the time they currently play Fantasy Football would likely not increase productivity, because they wouldn’t be getting the breaks they need.

Second and a half, unless you work on an assembly line, productivity isn’t tied to time. Though that attitude pervades our collective psyche, it’s idiotic. White collar work depends on creativity, insight, and thought. Sometimes those happen in sudden flashes of inspiration. Other times, they require long dry spells. In no event are they proportional to hours.

Third, and most deeply, it simply isn’t the case that everyone should be working all the time. In an efficient business, the only person or system working continuously should be the bottleneck. Everyone else should experience times of calm and no needed work. In that case, working when the business doesn’t need you to actually reduces efficiency by creating excess inventory or worse, scattering energy into irrelevant projects that take on a life of their own. (See The Goal for a detailed discussion of this point.)

(For a sample article on the topic, see here. If employers really want to help employees recapture 10 minutes a day, I’ll bet simply requiring meetings to have an agenda and firm end time would have far more effect than eliminating Fantasy Football.)

Thinking ahead. How far? And how certain?

,

At a recent physical exam, my weight was a tad above what I want it to be (probably all muscle, but you can never be too sure). So I went web surfing a bit about weight gain trends and found an article proclaiming that obesity is becoming a world-wide problem. It seems the availability of cheap processed foods combined with less physical work is part of the problem.

What amazes me is that both of those are fully and completely under our control. There’s no reason our food companies have to produce food that’s bad for us. But they do, because that’s what we want to buy. Why do we want to buy it? Because our bodies are programmed to love the processed stuff, since back when we evolved, it was really hard to find usable carbohydrates, etc. It worked great on the tundra, but now, it drives us to crave things that create a market that is bad for us.

We weren’t thinking ahead when we developed our food production industry or laying down the rules of the market. We didn’t know. We didn’t look very far into the future, and if we could have, we didn’t have the knowledge or even the suspicion that our food production would have bad dietary consequences. And now, we look increasingly like little round beach balls. I suppose it makes clothes easier to design; all we need is a big circle.

So the question is: when we make decisions, how far ahead do we look? How certain do we have to be of the answers to take action? And what action do we take?

“Scenario planning” was all the rage in the late-80s and early 90s. It seems Shell had use future projections to predict the fall of the Soviet Union and they were all ready to take smart business action when they saw it coming. Which scenarios should we be considering? How likely do we think they are? And when do we decide we should prepare, given that we generally don’t know which scenario we’re living in until it’s too late to take action?

The part of the article I wasn’t expecting was the last two paragraphs, which point out that global warming, overfishing, and climate change could severely disrupt the food supply, even with a “modest” temperature increase of 2 degrees Celsius (and that’s below the lowest-end projections of the MIT climate scientist I asked about it).

So this time, we have the chance to think ahead. Other than speculating in food companies, what can we as businesspeople do to help prepare for something like that? Right now, we stick our heads in the sand and ignore the problem. Last time we did that, we turned into beach balls. This time, let’s think ahead, and not turn into something worse.

Focus days are heaven!

Ok, so I’ve been totally busy the last few weeks. I’ve been traveling, and a thousand little things have backed up and consumed my time. I’m lunching, working, running errands, starting some great new business relationships … everything except my high-thought projects. My newsletter, a white paper I’m writing, and a proposal are all receiving short shrift. My dry cleaner, though? She’s seen me twice in the last two days.

So today will be a focus day. I will shut off my email, turn off my phone, and set all my little “to do”s aside. Then I’ll walk around a bit, stretch and get my mind in gear, and do to activities that require focus.

Be good to yourself. If you need to focus, take a day now and then and really give yourself that time. You’ll be glad you did.

How much privacy should businesses guarantee?

,

Andy Wibbels reports that AOL has released data on hundreds of thousands of users’ queries. Reasonable? Of course, since they include no personally identifiable information.

But how reasonable is it? When you type in a search query, do you expect that search will be completely anonymous, not even matched up with other searches you do?

We’re in a world now where we leave electronic trails all over the place. Many aren’t even intentional. Toll booths, for example, use FastPass to provide the convenience of not stopping to pay cash. But the FastPass records who went where and when. Presumably, those records could be subpoena’d and used as evidence in a court case.

“So what?” you cry, “I’ve done nothing wrong.” Nope, you haven’t. Which is why you should be concerned that those FastPass records are unhackable, completely accurate, and unforgeable. But they aren’t. To the extent we even have legally enforced standards for data integrity, companies rarely even mention when they have security leaks, much less pay any kind of penalty for it.

My credit card number was one of the ones that got accidentally leaked last year. That could have resulted in identity theft. But the company wouldn’t be liable for the direct or indirect costs to me, despite it being their own negligent information protection that caused the problem.

So when someone trusts you with their information, be worthy of that trust. Either take the steps to keep their info private, and really use tight security so you know it’s private, or destroy it completely when you’re done with it. The issue isn’t whether people have done something wrong; it’s whether someone could be harmed by a misuse of their data.

Privacy isn’t just about hiding what you do. It’s about confidence that collected information can’t be falsified, forged, or misused.

Investors warn against eliminating guidance… especially if they have no talent.

Investors say it’s a bad idea for companies to stop giving quarterly guidance. I think investors are just flat-out wrong. Quarterly guidance certainly distorts management decision-making, so we know it’s bad for the companies. It’s good for investors because it relieves them of the burden of having to research the companies they invest in, and really understand the businesses and their industries.

To that, I say “pfshaw!” Warren Buffett became the second richest man in the world investing. Read anything he’s written, and he stresses again and again that one can learn a lot about a company from talking to suppliers, customers, and competitors. You can learn about management’s past investing and management track record by reading old annual reports (not quarterly reports, but annual reports). With the internet, all that should be even easier than when Buffett did it.

Investors cry that “oh! oh! without quarterly guidance, fraud will creep in.” Give me a break, people. Enron filed quarterly reports. If no one’s taking the time to understand the companies and the industries, then they’re not going to notice the irregularities in the quarterly reports. And if they do take the time to do a good job, then they won’t need quarterly reports.

In short, let’s eliminate guidance and let businesses make some decisions without worrying about quarterly earnings. Let the investors do some work and be true investors, not simple, short-term gamblers on quarterly reports.

Ballmer announces Microsoft’s “Multicore strategy” … which sounds sadly like pathetic flailing…

Steve Ballmer has announced that Microsoft will be following a multicore business strategy going forward. His horribly strained anology, likening Microsoft to a parallel computer processor, suggests that Microsoft will be tops in lots of businesses at the same time. Me thinks Mr. Ballmer is just a little bit looney.

In fact, he says “There really is a Sony that lives inside of us…an aspiring Yahoo! or Google… s an IBM mainframe-software business… a desktop-software business… … I want Microsoft to be in all of the good, important big-growth businesses in the world.”

What a recipe for utter disaster! It’s hard to be tops in multiple markets. And to be in all the good, important, big-growth businesses in the world? Hogwash.

This so-called strategy won’t work for the most basic of business reasons. When you make an extra dollar, you have to decide where to put it. If you have two businesses, one producing a 10% return and another producing a 15% return, you’d be insane to put it in the 10% business. You’ll make the most by investing in the 15% business. If you’re public, your shareholders can even blast you for wasting money in sub-par businesses.

Now imagine Ballmer is in “every good, important, big-growth business” in the world. Some of those businesses will do better than others. As Microsoft makes money, they should put it into the best businesses. Gradually, resources and people will move into the high-margin business, starving the low-margin business. And why not? Any other way you split your money, you’ll be making less.

Microsoft started in desktop software, the highest-margin business in the world. Once the software is developed (a largely fixed cost), each incremental copy costs virtually nothing, while Microsoft sells it for hundreds of dollars. Average business consumers don’t know enough about computers to make good purchase decisions, so Microsoft has invested much more in marketing to drive sales than in creating high-quality, user-friendly software(1).

Microsoft wants to be a Google? Give me a break. Google thrives on technological innovation. Microsoft has always been a me-too technological player, with their innovation being in strategy, channel development, marketing, and anti-competitive fraud. Even their recent “Cleartype” technology is just a slight modification of technology from the circa-1978 Apple ][, where Steve Wozniak used the same technique to produce more colors on a TV screen than the system could directly create.

Microsoft wants to be an IBM Mainframe software developer? Maybe they can do it through market power, but through software? Not likely. For all their faults, IBM has become a superb service company, and their software is pretty darned solid. Horrible to use, but solid. Microsoft has neither the service orientation nor the technical skills(2) to compete on those fronts.

Microsoft wants to be Sony? Should I even dignify that with a response? Microsoft’s grand contribution to the world of electronics is a Microsoft-branded mouse and an ergonomic keyboard. Where do they have the capability to compete in a world of Sony?

And oddly, Ballmer didn’t even mention game consoles, where the XBOX—a very late entrant into the world of console games—is successful, but pushes the edge incrementally rather than inventing any fundamental new product category.

In short, this Multicore strategy seems like a rotten idea. Maybe they’ll prove me wrong, but I think Microsoft’s decades-long devotion to winning by FUD (Fear Uncertainty and Doubt), channel manipulation, and technological copy-catting has to shift fundamentally for them to win in any markets in the future.

My advice to Ballmer? Find a strategy and stick to it. Don’t try to be all things to all people. The desktop-dominating strategy worked because the operating system and applications markets drove each other. That game is over. Now you have to produce products people want at a price they’re willing to pay. And how about products that are technically solid, reliable, and secure? Master that game in one market, then worry about being in every good, important, high-growth business in the world. Because until you can do that, the idea of you sticking your hand into other important businesses leaves one shuddering with fear. I do not want my airplane’s navigation system running on Windows, and neither should you.

 

(1) [Flame on] This is a religious issue with me, so I’m not open to reason or discussion. And even if you catch me in an open-minded mood on the topic (unlikely), if you got into computers post-1990, your arguments will fall on deaf ears. You’ve only worked in the post-Microsoft computer world, so you have no standard for comparison. The Pre-Microsoft world was a happy one. Operating systems were rock solid and never crashed. Installing a new application didn’t overwrite half your operating system. And if things got trashed (unlikely, because systems back then had real protection), you just reinstalled the OS and didn’t need to reinstall every application in existence. Viruses were unheard of … I could go on. Back then, UNIX was laughed at as a silly, toy, sad little operating system. It’s a grand joke of the marketplace that we’ve come to a place where UNIX is considered the technically sophisticated alternative. [Flame off] back

(2) No, Veronica, Microsoft doesn’t produce technically solid products. Mostly, they buy and repackage products (I used to use Powerpoint before Microsoft bought it… in the 15 years since, they’ve done almost no innovation to the basic feature set except to add productivity-wasting “builds”). The next Windows release is years late because Microsoft for decades shoved poorly-written, unmaintainable software out the door. It was the right strategy for dominating the market. And now it’s time to pay the piper. Their systems are so needlessly bloated and complicated that they can barely work on the next version. They conscious traded off quality for market timing and money, and now they’re suffering the consequences. The founders, however, still managed to pocket billions. back

Facing Facts – Some simple math can uncover surprising business results!

,

Get out your pencil and paper for this podcast. In it, I show how you can use simple math to uncover fundamental truths about business practices. We look specifically at how much it makes sense to overwork people, and I leave you with a surprising challenge about whether discounts are the bargain they seem to be.

Podcast: Play in new window | Download

Subscribe: RSS

Wisely using technology can free your productivity

,

Hi, all.

As I write this, I’m about to leave for a 10-day vacation camping far from civilization. No cell phones. No laptops. No internet connection. Just a chances to be away and in another world for a while. If past experience is any guide, I’ll come back refreshed, full of great ideas, and just rarin’ to go to work.

The catch? I’m writing this the day before I leave, but you’re reading it while I’m staring into a bonfire over a roasting marshmellow somewhere. And guess what? I’m not even wearing a suit. I’m probably wearing shorts and a T-shirt. And sandals. I’m even more casual than “casual Fridays!”

This is using technology for freedom. Use it so you can do work in advance yet have it maintain customer relations while you do long-term, creative, strategic, and otherwise important-but-not-urgent stuff. Send emails scheduled to go out over the next few weeks, so you keep a presence in your absence.

Some of my clients think that being productive is about bringing their Blackberry with them on vacation, so they can be constantly in touch with the office. Nonsense; that’s slavery, not productivity. Human beings need breaks. We need downtime. We need to relax. It might stimulate our creativity and help us with breakthroughs we otherwise wouldn’t have.

Have you noticed the error in my logic, yet? I’m trying to justify downtime by saying “it will be good for business.” It may. Or it may not. But there’s no need to justify downtime. Because downtime is life. There’s nothing “down” about it. It’s life-time.

So use technology to help you disconnect when you need it. Just because you’re human, and you want time doing something other than being a wage-slave.

Life is to be lived, people. Enlist technology to help.

Why do people always sabotage you?

Being betrayed by those around you is just no fun.

I was watching the finale of Bravo’s reality-based TV show, “Top Chef” the other night. The finalists were Tiffany and Harold. Tiffany lost. Her food was good. She took some risks, and some of her dishes paid off. But the other Chefs unanimously said she ran roughshod over them and she was hell to work with. There’s more to the job of running a kitchen than just the technical skill. She was disqualified because of her lack of leadership skills.

They cut to a scene of Tiffany and Harold in the kitchen, waiting for the final decision. At one point, Tiffany says to Harold, “I guess I ran my back into your knife.”

Tiffany has had consistent feedback that she doesn’t work well with others. People don’t like her and have publicly said she’s difficult to work with. In the finale, she even appeared to try to take credit for another Chef’s work. Yet her diagnosis: someone’s stabbing her in the back.

Do you ever find that it seems like people are betraying you? They’re not recognizing your true worth? They’re sabotaging you? Maybe they criticize from time to time… but they’re just jealous? Or small? Or petty?

If so, you might be pulling a Tiffany and fooling yourself. Whether or not it’s true, if you place the responsibility on others, there’s nothing you can do about it except try to sabotage them in return. And once you’re playing mutual sabotage, escalation is natural and everyone may well lose.

Instead, accept that it’s your fault, even if it isn’t. Maybe your true worth isn’t being recognized because you are overvaluing your contribution. Maybe Tiffany’s food really wasn’t as good as she thought it was. We’ve all eaten at restaurants where the Chef’s taste didn’t match our own. Yet to the Chef, the food probably tasted fine. So if you think you aren’t valued, you may be using a different scale than the people evaluating you. And if you’re trying to win their approval, you have to meet them on their scale, not your own. (See my Harvard Business School Working Knowledge article on what motivates your boss for more on this point.)

Also consider that maybe you don’t realize what actually matters. I’ve coached many executives whose technical skills were excellent, and they thought that should be enough. They didn’t realize that being a good team player, helping others, and creating high morale were job requirements, every bit as much as the technical skills. Businesses are communities of humans. If people like you, they’ll help you succeed. If they hate you, they’ll sabotage.

Either way, it’s under your control.