Perfection is the Enemy of Progress
The title is a quote from Winston Churchill. I have learned in my career that these behaviors can be very costly from a business perspective, especially when decisions affect large parts of a business. It took me years to learn this lesson as I transitioned from perfectionist to “reformed perfectionist,” which was challenging.
Below are a few examples that could help you better understand people like this, and if you are someone like this, it might even provide motivation to try to change.
Early in my career, as I expanded my role from a Programmer to an Analyst Programmer to a Systems Analyst, I often found myself spending too much time and effort on things that only made a minimal impact. Applications and subsystems looked a little better, ran a little faster, integrated easier, were easier to modify, and generally had fewer problems. Those are all good things, but in hindsight, those benefits often did not justify the associated costs.
Some industries and applications require a degree of quality and reliability, such as nuclear power plants and lifesaving medical equipment. Since very few things are perfect, there are usually a variety of built-in safeguards to mitigate the impact of errors and failure. I have worked on a few of those systems, and I get it. But they are not in the majority.
Identifying the intersection of meeting the stated requirements, delivering the required quality, and knowing what “good enough” looks like is essential. That point is where there are diminishing returns on every additional hour spent on an activity.
I worked with a hardcore perfectionist at a small software and services company. On a consulting engagement, he spent two days on a task that I viewed as having a 2-4 hours level of effort. We discussed it, and he told me he had at least three more days to finish. We had a heated discussion, and he was frustrated with me for a while. Years later, he admitted I was right, talked about how difficult it was to change, and how much more productive he is now.
I consulted with a small software company that spent 10+ years on a SaaS product and was still “just two to three weeks away” from their MVP (minimally viable product). I started working with them over three years ago, and they are still at that point today.
I have also sold to companies stuck in analysis paralysis because they (leaders and teams) are always second-guessing decisions and want to be 100% certain before making a decision. Those companies need to solve a problem, or they would not be seeking a solution. In most cases, making an informed decision on a proven solution now will solve their problems and deliver value quickly. There is an actual business cost for every month of delay.
Are these behaviors costing you or your company money? If yes, dig a little deeper to understand the potential positive impact making small changes could have. Daily improvement is a great thing!
The Coming Changes to Manufacturing
Recently, I was speaking with a person who is part of a team analyzing ways to, “mitigate the risk of exclusive manufacturing in China” while not fully divesting their business interests in a growing and potentially lucrative market. This bifurcation exercise got me thinking about how many other companies are evaluating their supply chain relationships, inventory management, and the predictability of their cost of goods sold.
In the mid-1990s I had done a lot of work with the MK manufacturing software that ran on the Ingres database. Some of the issues were performance-related and fixed by database tuning, some fixed by using average costs instead of a full Bill of Materials (BOM) explosion using dozens of screws in a window, but some were more interesting and also more business-focused.
After NAFTA became law one manufacturer built a facility in Mexico and started having a few basic but important parts manufactured there. When I arrived as a Consultant the main problem they faced was a reject rate of roughly 20% and additional related QA costs. My suggestion was to treat this part (say a single piece of steel like the rotor from a disk brake system) as a component and build-in the cost of both the scrap and the QA. They could then benchmark the costs against other suppliers in an apples-to-apples comparison to determine if they were really saving money. That approach ended up working well for them.
While that approach helped manage costs it did not address the timeliness of orders or lead time required – important aspects of Just-in-Time (JIT) manufacturing. Additionally, it should be possible to estimate shipping costs by taking into account changes in petroleum costs or anticipated changes in demand or capacity.
There are systems that are out there that claim to estimate the cost and availability of commodities based on a variety of global factors and leading indicators. It is tricky, to say the least, and can’t anticipate an event like a pandemic. But, companies that are able to manage their inventory and production risk the best will likely be the ones that succeed in the long run. They will become the most reliable suppliers and have increased profits to invest in the further growth and improvement of their businesses.
The next 2-3 years will be very interesting times due to advances in technology and geopolitical changes. Those companies that embrace change and focus on real transformation will likely emerge as the new leaders in their segments by 2025.
New Perspectives on Business Ecosystems
One of the many changes resulting from the COVID-19 pandemic has been a sea change in thoughts and goals around Supply Chain Management (SCM). Existing SCM systems were up-ended in mere months as it has become challenging to procure raw materials to components, manufacturing has shifted to meet new unanticipated needs, and logistics challenges have arisen out of health-related staffing issues, safe working distances, and limited shipping options and availability. In short, things are a mess!
Foundational business changes will require modern approaches to Change Management. Change is not easy – especially at scale, so having ongoing support from the top down and providing incentives to motivate the right behaviors, actions, and outcomes will especially critical to the success of those initiatives. And remember, “What gets measured gets managed,” so focusing on the aspects of business and change that really matter will become a greater focus.
Business Intelligence systems will be especially important for Descriptive Analysis. Machine Learning will likely begin to play a larger role as organizations seek a more comprehensive understanding of patterns and work towards accurate Predictive Analysis. And of course, Artificial Intelligence / Deep Learning / Neural Networks use should accelerate as the need for Prescriptive Analysis grows. Technology will provide many of the insights needed for business leaders to make the best decisions in the shortest amount of time that is both possible and prudent.
This is also the right time to consider upgrading to a modern business ecosystem that is collaborative, agile, and has the ability to quickly and cost-effectively expand and adapt to whatever comes next. Click on this link to see more of the benefits of this type of model.
Whether you like it or not, change is coming. So, why not take a proactive posture to help ensure that this change is good and meets the objectives your company or organization needs.
Changes like this are all-encompassing so it is helpful to begin with the mindset of, “Win together, Lose together.” In general, it helps to have all areas of an organization moving in lockstep towards a common goal but at a critical juncture like this that is no longer an option.
Blockchain, Data Governance, and Smart Contracts in a Post-COVID-19 World
The last few months have been very disruptive to nearly everyone across the globe. There are business challenges galore; such has managing large remote workforces – many of whom are new to working remotely, and managing risk while attempting to conduct “business as usual.” Unfortunately for most businesses, their systems, processes, and internal controls were not designed for this “new normal.”
While there have been many predictions around Blockchain for the past few years it is still not widely adopted. We are beginning to see an uptick in adoption with Supply Chain Management Systems for reasons that include traceability of items – especially food and drugs. But large-scale adoption has been elusive to date.
My personal belief is that we will soon begin to see large shifts in mindset, investments, and effort towards modern digital technology driven by Data Governance and Risk Management. I also believe that this will lead to these technologies becoming easier to use via new platforms and integration tools, and that will lead to faster adoption by SMBs and other non-Enterprise organizations, and that will lead to the greater need for DevOps, Monitoring, and Automation solutions as a way to maintain control of a more agile environment.
Here are a few predictions:
- New wearable technology supporting Medical IoT will be developed to help provide an early warning system for disease and future pandemics. That will fuel a number of innovations in various industries including Biotech and Pharma.
- Blockchain can provide the necessary data privacy, data ownership, and data provenance to ensure the veracity of that data.
- New legislation will be created to protect medical providers and other users of that data from being liable for missing information or trends that could have saved lives or avoided some other negative outcome.
- In the meantime, Hospitals, Insurance Providers, and others will do everything possible to mitigate the risk of using the Medical IoT data, which could include Smart Contracts as a way to ensure compliance (which assumes that there is a benefit being provided to the data providers).
- Platforms may be created to offer individuals control over their own data, how it is used and by whom, ownership of that data, and payment for the use of that data. This is something that I wrote about in 2013.
- Data Governance will be taken more seriously by every business. Today companies talk about Data Privacy, Data Security, or Data Consistency, but few have a strategic end-to-end systematic approach to managing and protecting their data and their company.
- Comprehensive Data Governance will become both a driving and gating force as organizations modernize and grow. Even before the pandemic there were growing needs due to new data privacy laws and concerns around areas such as the data used for Machine Learning.
- In a business environment where more systems are distributed there is an increased risk of data breaches and Cybercrime. That will need to be addressed as a foundational component of any new system or platform.
- One or two Data Integration Companies will emerge as undisputed industry leaders due to their capabilities around MDM, Data Provenance & Traceability, and Data Access (an area typically managed by application systems).
- New standardized APIs akin to HL7 FHIR will be created to support a variety of industries as well as interoperability between systems and industries. Frictionless integration of key systems become even more important than it is today.
- Anything that can be maintained and managed in a secure and flexible distributed digital environment will be implemented as a way to allow companies to quickly pivot and adapt to new challenges and opportunities on a global scale.
- Smart Contracts and Digital Currency Payment Processing Systems will likely be core components of those systems.
- This will also foster the growth of next generation Business Ecosystems and collaborations that will be more dynamic in nature.
- Ongoing compliance monitoring, internal and external, will likely become a priority (“trust but verify”).
All in all this is exciting from a business and technology perspective. It will require most companies to review and adjust their strategies and tactics to embrace these concepts and adapt to the coming New Normal.
The steps we take today will shape what we see and do in the coming decade so it is important to quickly get this right, knowing that whatever is implemented today will evolve and improve over time.
Profitability through Operational Efficiency
In my last post, I discussed the importance of proper pricing for profitability and success. As most people know, you increase profitability by increasing revenue and/or decreasing costs. But, cost reduction does not necessarily mean slashing headcount, wages, benefits, or other factors that often negatively affect morale and cascade negatively on quality and customer satisfaction. There is often a better way.
The best businesses generally focus on repeatability, realizing that the more that you do something – anything, the better you should get at doing it. You develop a compelling selling story based on past successes, develop a solid reference base, and have identified the sweet spot from a pricing perspective. People keep buying what you are selling, and if your pricing is right there is money available at the end of the month to fund organic growth and operational efficiency efforts.
Finding ways to increase operational efficiency is the ideal way to reduce costs, but it does take time and effort to accomplish. Sometimes this is realized through increases in experience and skill. But, often optimization occurs through standardization and automation. Developing a system that works well, consistently applying it, measuring and analyzing the results, and then making changes to improve the process. An added benefit is that this approach increases quality as well, making your offering even more attractive.
Metrics should be collected at a “work package” level or lower (e.g., task level), which means they are related tasks at the lowest level that produce a discrete deliverable. This is a project management concept, and it works whether you are manufacturing something (although Bill of Materials may be a better analogy in this segment), building something, or creating something. This allows you to accurately create and validate cost and time estimates. And, when you are analyzing work at this level of detail it becomes easier to identify ways to simplify or automate the process.
When I had my company we leveraged this approach to win more business with competitive fixed price project bids that provided healthy profit margins for us while minimizing risk for our clients. Bigger profit margins allowed us to invest in our own growth and success by funding ongoing employee training and education, innovation efforts, international expansion, as well as experiment with new things (products, technology, methodology, etc.) that were fun and often taught us something valuable.
Those growth activities were only possible because of our focus on doing everything as efficiently and effectively as possible, learning from everything we did– good and bad, and having a tangible way to measure and prove that we were constantly improving.
Think like a CEO, act like a COO, and measure like a CFO. Do this and make a real difference in your own business!