Business Evolutionist

I've moved...

2004-01-13T18:45:00.000-05:00

I've moved to a new blog: jstrande.typepad.com.

You can click the link above or you can wait and you will be automatically redirected there in 10 seconds.

comments..

2004-01-13T15:46:00.000-05:00

I was trying to add comments, through BlogSpeak, but it looks like the site has been down for two days. Oh well, I am probably going to add a typepad blog in the next day or two as opposed to the limited features here.

If you were able to post a comment - it looks like they are gone, my apologies.

In the meantime, if you are interested in "Lean", check out The Northwest Lean Manufacturing Network - the mailing list if fantastic! I've been subscibing for the last 8 or so months, great stuff.

Huge mention!

2004-01-12T12:51:00.000-05:00

Just wanted to thank you Jeremy Wright over at Ensight.org for the VERY kind words about The Cash Register Principle.

Jeremy is hosting Carnival of the Capitalists this week and pointed people to the site. I am blown away by his comments - I am speechless, totally speechless.

this huge pile of...

2004-01-10T10:21:00.000-05:00

I am, or should I say was, taking the day to clean up my office... wow, it is amazing how much stuff I have accumulated. I can tell it has been about eight months since the last "cleaning" because that is how many issues of Wired, Fast Company, HBR, Inc., and Business 2.0 there are in the pile.

Oddly enough I was having lunch with an old friend, Ross, on Thursday and we were talking about information management systems. Seems Ross built this neat little piece of software that allows him to search across disparate data-sources. From what he was talking about it seems very cool.

But, my question is this, how do you manage the ALL the content in your life?

I have about 11 magazine subscriptions, countless books, about 50 or so web sites that I visit, 2 dozen email newsletters, several mailing lists, etc, etc.

How do you manage information? I would love to hear!

Nice feedback

2004-01-09T06:05:00.000-05:00

Got a really great email last night from Todd at A Penny For. He posted something on his blog about The Cash Register Principle.

You should check out his blog, and be sure to check out: The Business Blog Book Tour he has going on... How cool is that?

Why free?

2004-01-06T09:14:00.000-05:00

So, The Cash Register Principle eBook is available, people are hitting the site, and I am getting some nice feedback. I couldn't be happier... but the reason that I am happy is that I wrote a book. The feedback is nice; it validates the importance of the topic and perhaps some of my ideas. But my happiness is the direct result of me accomplishing some of my goals...

I had several goals in writing the book:

Writing a book is always something that I have wanted to do and now I have proven to myself that I can do it.
The topic of employee motivation and productivity is huge - my hope is that I have added to the conversation in a meaningful way
I'll consider it a enormous success if one person comes back and says that it made a difference.

If you're questioning why I released it for free, as my wife did... here's why:

One of the best selling books of 2001 was called 'Unleashing the ideavirus'. It was written by a pretty famous author and marketing expert, Seth Godin. He did something very simple: He wrote an article about the subject, gave away a copy of the book for free in digital format, asked people to give their email address if they would like to know more, and then contacted them when the book was published. He did something very similar with his next book as well, 'Purple Cow', again with GREAT success (both on the NY Times bestseller list).

By reducing the "friction" to spread his ideas, he is able to speed up the rate at which they are adopted.

Of course, that only works if your content is worthy of spreading.

A great example of this is Eric Raymond. In case you're not familiar with the name, Eric wrote "The Cathedral and the Bazaar". This essay/paper/book brought an understanding to the Open Source software movement. His "essay" changed the entire business model at Netscape... he is oft-quoted and has a book deal with O'Reilly.

I have had about 15 articles published over the last couple of years, and I can count on one hand the number of email comments I have received from people. But when I wrote the intro article to The CRP and offered a free eBook, I got 30 replies... that is astonishing. To give you a contrasting number, my last article in the Central PA Business Journal, which was sort of a review of 'Purple Cow', I offered to give away 25 free copies of 'Purple Cow' - I got seven replies.

I have 30 people, some of whom I have engaged in wonderful conversation with, that wanted to learn more about The CRP. Those folks, lets call them my "early adopters", now know about the content and will help me to spread the idea. I may work more on this book and get it ready to print - if enough people show interest. Otherwise, I will begin work on the next book. I am using the internet to its fullest potential - as a testing mechanism for what content I should be focused on.

$3.7 million dollars... urgh.

2004-01-03T07:34:00.000-05:00

Okay, this post may show my political bias... and I apologize, sort of.

So I'm watching Fox News last night and saw a clip that Wesley Clark had raised enough money to qualify for matching funds - to the tune of about $4 million. Yikes.

According to a story in The Boston Globe, Dean turned down his matching funds, probably because in order to qualify you have to adhere to a $45 million spending cap. Same for President Bush (specualtion is that he has raised $120 million).

My guess, and please correct me if I am wrong, but this is our tax dollars that he is collecting. Why should my tax dollars go to help the political campaign of someone who holds a different ideology than me?

But that is a story for another day....

If I were Clark, I would do one of the following with the money:

Return the money - say that the country can't afford to help political candidates while were fighting a war (or any of the other problems were going through).
Take the money and do something creative with it - like start writing $10,000 checks to families whose husbands, wives, sons or daughters lost their lives in Afghanistan or Iraq.
How about start a national training center for displaced workers - all those folks who lost their jobs during the recession. Perhaps it is matching funds for training up to $5,000. Think of all the people that would help.
How about donate the money to the SBA - give even more small businesses a chance.
Create an innovation grant - $100,000 block of cash for helping get an idea off the ground. This country was built on innovation, you want to help ensure it's future, encourage innovation.

Anyway, I think you get the idea (Think Robin Hood and the redistrubtion of wealth).

I'm picking on Clark here because he is the one getting our tax dollars. But, this sort of applies to Dean and Bush as well. What else are they going to do with those HUGE sums of money? Run ads bad-mouthing each other? If you want to help us voters, do something to help us. Don't waste our time by running meaningless ads. They don't work.

Reading X-Engineering

2004-01-02T20:13:00.000-05:00

I had high hopes for my reading over the holidays - that has not materialized due to all the normal holiday stuff and some assignments I am working on.

The top of the stack is X-Engineering.. which I am taking my time with and writing a summary as I read it. So far, so good. It is nothing new, but it is producing a lot of good thoughts.

Next up, which I hope to get to tomorrow is Lean Six Sigma, then Darwins Dangerous Idea, and lastly Anti Patterns. If all goes well, I'll get through at least two of the books.

Also, I might add one to the list, John Moore suggested I read GUTS! - so I may move that into third. It is on the list for sure, it looks very interesting.

Well - back to reading...

The eBook is available

2004-01-02T20:07:00.000-05:00

The site is up and the ebook is available! Finally...

CashRegisterPrinciple.com

I will be posting some comments about the book over the coming days... also, I will probably be moving this blog over to that site and changing to moveabletype.

Hope you had a great holiday!

Fixing the broken music industry?

2003-12-23T05:32:00.000-05:00

So, as I mentioned, my friend Rick sent me some new CD's - it got me thinking about the music industry... now I don't want to get off on a rant here.

Are lawsuits a replacement for fixing a business model? The record companies seem to think so. That’s why they’re suing people instead of spending time fixing their business model. The record companies are typical middlemen who create nothing and profit from the work of other people – certainly not a strategy for long-term success.

Choices in music are limited - art has been replaced by commerce. A few large conglomerates control the ‘shelves’ and ‘airwaves’. In total, there are less than a dozen companies that dictate the music we are exposed to. Four record companies sell about 90% of the CD’s every year. There are a total of about three companies that own a vast majority of the radio stations and when it comes to retail, there are a handful of places that account for a majority of the sales that take place.

The Record Companies
The conglomerates, the umbrella companies that own all the record labels and control the recording industry, have replaced the time-consuming task of cultivating talent with the quick-sell packaging of ‘sensation’. It isn’t cost effective to try to develop talent anymore, their goal is to maximize profit as quickly as possible, and the result is homogenization, and fewer choices for consumers.

“McRadio”
The airwaves, owned by only a few companies, shut out independent artists – the Alt Rock station in Albany plays the same songs by the same artists as the Alt Rock station in Wichita. Just like a burger at McDonalds, radio has become packaged and predictable.

Retail
There are just a few companies that result in a large percentage of all the CD’s sold, these companies are Wal-Mart, Best Buy, etc.

The combination of the record companies, radio, and retail outlets are well-oiled trio that has the business locked down and running smooth – for them. However, it no longer works for consumers. Here is my take on the current record business as well as some ways to fix it:

File Sharing Works
The recorded music industry had $13.7 billion in sales in 2001 according to the RIAA. This was a decline from $14.3 billion in 2000, also according to the RIAA. The decline, according to most industry pundits is the proliferation of Internet based ‘file-sharing’ programs. I disagree with this contention as the numbers clearly show that while the leading file-sharing program, Napster (over 70 million users at its height), was in existence, the record industry enjoyed their best year ever (1999), when the industry had sales over $14.5 billion.

Studies have shown that people use file sharing as a means of discovery, a tool to find new music. The RIAA and the rest of the industry spent most of the last 5 years trying to stop file sharing. In short, they focused on the short term copyright infringement & theft that is inherent with file sharing, and not on the long term, big picture – which is that most people still want to ‘own’ the CD of the bands that they like. Industry groups like the RIAA have now proven this.

Word of mouth and friends sharing music built the music industry – so we know that “file sharing” works… the industry just wants to control the extent of the sharing.

Lower Prices are a Good Start
It has been reported that Vivendi is going to lower their prices on CD’s, this is a great start. But, $14 dollars for the same old stuff is still too much.

One of the reasons for the popularity of file sharing, is that ‘free’ is better than $14 dollars, which is what the average CD retails for today. Most consumers feel that the cost of a CD is too high, however, 60% of consumers rate a CD as a ‘good’ value. Most people buy CD’s for the full music experience – the packaging, liner notes, lyrics, etc. according to industry groups. The problem is that, typically, there are no more than one or two good songs on a CD. So, I surmise the reason most people use file sharing is to figure out which CD’s are worth buying. People want to have a product that they can use however and whenever they want. This is the key fact that the industry has still not caught onto. To prove this, look no further than your average periodical, or daily newspaper. The Internet makes most, if not all of the information in these publications available for free, yet the printing & publishing industries have experienced some of their best years ever during the Internet’s growth years: $188 billion in 1995 to $240 billion in 2000.

If you look at what goes into the retail price of a CD, the actual manufacturing costs have declined in the last ten years. Plastic is cheaper, technology & innovations have helped to lower the overall cost of the physical product. According to the industry, the real ‘cost’ of releasing a CD, after the artists have created the music, is in the actual recording of the material and subsequent marketing and promotion of the music. The RIAA claims that marketing and promotion are perhaps the most expensive aspects of the business today. For example, the RIAA writes; “When you hear a song on the radio… that didn’t just happen. The record labels make sizable investments to promote an artist. It requires some entity, whether a traditional record label or some other kind of company, to market and promote artists so that consumers are aware of the new releases.”

Yeah, it’s called payola…

Change the way you market
The cost of marketing an artist is ridiculous, the whole pay for play is an expensive nightmare that has gotten out of control… but, you made your bed, now you have two choices; either...
1.) Sleep in it or
2.) Remake it.

I would opt for the later if I were a record company executive. Lets go back to Napster for a minute, possibly as many as 70 million users and they never spent a dime on advertising – hmmm, how can that be? Its called word of mouth… friends telling friends about something, it is how people discover things.

If I were you I would spend every bit of energy I had on coming up with ideas on how you can keep your relevance… here are some ideas:

More Selection
Everything sounds the same. Can anyone really tell the difference between the average artists you hear on the radio today? Britney Spears, Mandy Moore, Christina Aguilera, Jessica Simpson – these top 40 artists all sound about the same and they will all be replaced by the next candy coated cover girl that you package and push down our throats. It’s the same with other genres as well – since Korn is popular, why not sign 10 more bands that sound just like them? The homogenization of the industry is boring – sure, artists that don’t fit the mold might not sell 2, 4 or 6 million records, but, do all of them have to? If you sign a truly great artist and they have a 3 or 4 record career, each selling 500,000 copies, isn’t that just as good as a short lived, 1 record, career selling 2 million? I know it isn’t from a business perspective; you want the easy one-hit wonders that sparkle and fade as quickly as the average “breaking news” story on CNN.

Pass it along
Create CD samplers that people can give to their friends, helping spread the word of mouth that is so vital to bringing this exposure to your artists.

Customer Intimacy
Stop courting promoters and radio stations and start courting your customers. The consumer is the focal point of your ‘demand pipeline’; your goal is to create demand, so why not start there? Get to know us. Tell us about all the new artists you’ve signed and what you think we might like based on the artists we enjoy.

Whew - I guess I just needed to get that out... thank's!

Wow - what a gift

2003-12-22T18:00:00.000-05:00

I just got a huge stack of new CD's from my buddy Rick at Acetate Records... If you like hard driving good old rock & roll, check out some of his bands. I really dig The Hangmen and Dragbeat. If you like bands like the Supersuckers and Social Distortion (my tastes are very eclectic - everthing from Al Green to Chopin), check some of these bands out.

Actually, I'll be writing more about Rick in the coming weeks - he is an inspiration to me.

Consumer Value Delivery Process

2003-12-22T09:15:00.000-05:00

Just added a new section to my upcoming book (The Cash Register Principle): The Comsumer Value Delivery Process. If you think about it, everything we do is part of a process that should have as its goal the delivery of value to a consumer.

Something cool...

2003-12-16T21:57:00.000-05:00

I love the book Survival is Not Enough by Seth Godin. Here is one of my favorite lines from the book:

"Change is the new normal. Rather than thinking of work as a series of stable times interrupted by moments of change, companies must now recognize work as constant change, with only occasional moments of stability."

The business rationale for component development

2003-12-16T21:40:00.000-05:00

Abstract
Currently, most application development teams deliver solutions in a “make-to-order” fashion; in this environment applications are built from scratch every time – which is very expensive. The goal for application development should be to move to an “assemble-to-order” development process – where the end product is assembled from an inventory of pre-built, pre-tested, high-quality components.

The business problem
The increasingly competitive environment in which companies operate will force them to demand more and more customized solutions from its information technology departments. While requirements for customization increase, the expectations around "time-to-value" will increase as well. This means that application development teams will be required to deliver more complex applications and those applications will need to be delivered in shorter and shorter periods of time.

Introduction
The goal of this article is to outline how CBD (Component Based Development) can help companies greatly increase velocity & flexibility while lowering costs of application development. If the ideas outlined in this article are realized, application development will become less and less expensive with every new application development project. Experts have shown that Component Based Development can lower development costs by as much as 75%, and reduce time to market by as much as 40%.

Application Development Supply Chain
If you look at the application development process as a supply chain, today it is a “make-to-order” environment. This typically begins with a well-defined or identified business requirement and ends with the delivery of an application. The steps within the process involve such things as; defining requirements, developing a model, determining an architecture, identifying data requirements (storage and retrieval) writing code for all of the functionality that is needed, testing and deployment among other things. Regardless of the methodology that is followed, the majority of the time spent on the project will be spent implementing and testing (the code).

With an “assemble-to-order” development methodology, code is ‘pulled’ from a ‘virtual inventory’ of pre-built, pre-tested components and assembled according to the business requirements.

Both the “make” and “assemble” to order methodologies can follow an iterative process. With the assemble-to-order methodology the development portion of the process is called ‘Provisioning’. During this step of the process the developer enters a workflow like progression of steps that involves searching a catalog of pre-existing functionality. If a matching piece of functionality is available, that piece is used. If closely matching functionality is discovered, the developer assesses the impact and cost of altering the existing functionality. If the required functionality does not exist, this is the point where a decision can be made to buy or build the required functionality.

Typically, both methodologies are iterative processes that rely on feedback from the domain or business expert - whose role is to ensure that the business needs are being met. From a technology perspective, the business/domain constituents are not concerned with ‘how’ the application is developed – only that it is done in some reasonable time frame (and for a reasonable cost if the business unit is paying for it).

The goal becomes the ability to deliver flexible, high-quality, loosely coupled applications that allow for the quick and easy replacement of any part of the system that is no longer meeting business needs and to be able to do this in a cost effective and timely manner. Over time, as more components are built, the inventory becomes useful in real terms from a cost saving standpoint for all future application development.

The Benefits of a CBD Approach
CBD has several benefits. The primary benefit is to address change through the ability to quickly replace the functionality of one part of a system with a component that better addresses the needs of the business. Other benefits include Reuse, Improved & Known Quality as well as Productivity Gains (application assembly).

An Example Application using CBD
Lets take for example a system that enables the management of raw material ordering. Today, the ‘User Interface’ provides a means for entering the materials needed and the application may generate an order paper that can be faxed to the supplier.

If the system were built with a component approach, the ordering functionality could be replaced with a new component that more closely fit the current business needs – all without the user interface changing.

Successful Alignment of Business & Information Technology
Most companies have two core process areas – manufacturing and sales, all functional departments feed into one of those two core process areas. Focusing on these two areas lends itself nicely to the beginnings of taxonomy for a library of software functionality. Part of the process that needs to be put in place is a ‘catalog’ for documenting available functionality. The catalog taxonomy should also be aligned with the business in this manner.

Cost & ROI
Nothing is free, and this is certainly true with Component Based Development – there is a cost associated with component methodologies. The true cost comes in the buying or building an inventory of these components and the math is quite simple; the cost of acquiring or developing the component versus how many times and in what context the component is used. The return on investment is measured in months and years, not days and weeks.

Conclusion
Whereas this document has painted a fairly broad picture of what is possible, there are some important things to keep in mind:

CBD addresses change followed by Reuse, Quality & Productivity
CBD enables faster implementation of business functionality
CBD helps align application development with the business

2003-04-10T05:33:00.000-04:00

A Framework for Technology Decisions

Abstract: Determining which projects to invest in can be a daunting task, having a common set of criteria that you use for filtering requests can go a long way to ensure you are funding the right projects.

Several years ago, I worked for a Fortune 100 company that is in the Consumer Packaged Goods (CPG) industry. While I was there, I had the pleasure of working on the companies Internet Focus Team - a group of people with various skills, ages, backgrounds, etc., whose charter it was to figure out how the company would use the Internet and determine which projects we would recommend. The leader of the group introduced me to something called the Framework for Value. This framework was the barometer by which decisions were made - if the proposed project met the criteria identified in the Framework, we would give it a green light.

The Framework was brilliant in many ways, not the least of which was simplicity - there was little chance you could look at it and not understand it in a few seconds. The idea behind the framework was this: Identify the key drivers for sound business decisions and then use those drivers to filter or judge proposed projects. The business drivers for the company I was at might not be the same as yours, so I won’t go into detail here, but I will share one of the three main drivers: Improve Efficiency, which I think is universal to all businesses. It is pretty straightforward to look at a proposed project and ask - "will this improve efficiency?"

After I left this company, I was working at another CPG and engaged in part of a business redesign/ERP selection process that was being lead by one of the larger consulting firms in the US. During one of the breaks of the "Order to Cash" session, I brought up the framework to the facilitator - he had an interesting spin on it: People, not processes. He suggested looking for value in people terms - like customers, suppliers, and employees. This also made sense to me, and is fairly universal to all businesses. Almost every business has those three groups of people (customers, suppliers and employees). If you think about it, a lot of coverage has been given to one of those groups over the last several years - customers... ever hear of CRM? Customer Relationship Management - which has a different connotation to different people - is a pretty universal thing at this point. There are two different ways to look at CRM, 1.) From an internal standpoint - where you are providing employees a system for dealing with customers and 2.) From an external standpoint - which, in my opinion, it is analogous with Web Self Service.

What has been covered in CRM can easily translate into suppliers and employees. Think about an order status web site that has been built to provide customers with an alternative means for getting status information. The same premise can be applied to suppliers – can we give our suppliers visibility into future demand to better enable them to provide us with material? Seems pretty straightforward to me – and reminded me of a great book I read: Advanced Supply Chain Management – How to build a sustained competitive advantage by Charles Poirer. I am not sure about the sustained part... if you don’t have things people want to buy, the greatest supply chain in the world won’t help you. However, lets assume - hopefully correctly - that your products are in demand, which I am sure they are... any opportunity you have to improve relationships with key parties will go a long way to improving the efficiency of your organization. With suppliers, they help you in meeting market demand - if you don’t get material from them, you can’t provide products.

The same goes for employees - what costs are associated with servicing employee requests? Can you streamline human resources tasks to better enable your employees to keep vital information up to date?

SIDEBAR: Quite a bit of press has been given lately to IT Portfolio Management, which is a great tool for helping drive decisions - these tools, however, can be pricey and require an investment in training beyond the cost of any software you might choose. My take is that unless your business is in the more than $500 million a year revenue range, this is probably not the direction to go at this point, since it is not widely adopted yet. Over time costs will come down and these tools can provide you with something to help drive decisions from a financial standpoint.

Summary:
Opportunities exist everywhere to use technology to improve business, deciding which projects to ‘fund’ can be as simple as having a framework - or common set of criteria - by which you filter all requests. Please feel free to contact me if you would like a copy of the framework or you would like to discuss this.

To do:
1.) Make a list of the 3 companies that you find easy to work with - why are they so "accessible"? Figure out what your company can do to be equally as accessible.
2.) Make a list of the 5 most paperwork intensive tasks in your organization; can those processes be streamlined using technology?
3.) Ask customers, suppliers and employees what is the most frustrating part of dealing with your company - use that feedback to improve the organization.

What I am reading right now...
Survival is not enough - Seth Godin [ISBN: 0743225716]

Last book I read...
The Project 50 - Tom Peters [ISBN: 0375407731]

2003-03-29T13:16:00.000-05:00

Welcome to Business Evolutionist - this is a blog by Jon Strande from TSA, Inc..

I love business and technology... so I'll be discussing things related to those two topics.

I'll also keep you up to date on my writing, including books and articles.

Anyway, welcome and good reading!

Jon