Tag Archives: Business

The Cyclical Nature of the Hammer Industry

I love the hammer and nail analogy. Why? Because it’s so easy for people to understand what the purpose and role of a tool is. Sounds trivial, but I think it’s very hard for humans to separate the utility of the hammer, the carpenter and how these translate into the utility of the output of their work. It’s way too often we correlate the output of the tool simply with the features of the tool. The technology sector is rampart with this type of thinking. There are literrally millions billions of dollars spent every year on technology tools that we, as customers, believe are the sole reasons we either fail or achieve to “build our dream house”. Have we forgotten the importance and weight of the carpenter’s role?

Let’s say you decide one day you want to build a table. This table is going to be made using wood, nails and a hammer.  All things being equal, let’s say you build this table with hammer A that has a utility of 10. You build a second table with hammer B and it has a utility of 15. You, the carpenter, have now created two tables, table A and table B, respective to their hammers. The tables are identical, but the utility is different. Now let’s say your utility as a carpenter is 5 (we’ll call this carpenter ‘ME’). The value of the tables is now: Table A – 50 and Table B – 75. Now, my carpenter friend (we’ll call this carpenter ’FR’) has a utility of 4 and he builds the same tables using the same respective hammers. He now has two tables at the following values: Table A – 40 and Table B – 60. So we can build a simple comparative matrix now. Table B built by FR has a higher utility than Table A built by ME but it was built by a less skilled carpenter! We therefore logically assume the hammer is the key driver for the overall utility, not because it has a higher multiplier, but because we believe we have better ability over assessing what the utility of the hammer is. We then therefore place much more importance on it.

There is so much discussion about our tools being broken and I believe that statistically it’s the carpenter that is affecting the overall output. Unfortunately it’s much easier for us as humans to draw the simple conclusion – the tool is broken, update my tool.  Thus the hammer industry, or rather the technology tool industry, will continually go through cycles. New companies will be created year after year promising the dream house because you bought their shiny new hammer. I don’t doubt the necessity for these shiny new hammers, but I question how much weight we as humans put on them in order to create our dream house. Find a way for me to find a better carpenter, or fix the carpenter, and I’ll have my dream house…or maybe my dream table.

When Software becomes Bloatware

I recently took part in a BusinessObjects BI 4.0 implementation. The first thing you need to do after the server is up and running is to install the client facing tools. With on-premise, non web based (note – part of SBOP is web-based) technologies this means you need to go through the painful process of doing initial installs and patching. It took a solid 4 days just get one PC up to the latest patch spec. YES. 4. FRICKING. DAYS. To be fair, if you utilize some of the web-based features, it’s just a simple JRE install and you’re up and running. But that’s just for one piece of the whole solution set. So obviously my first reaction to this series of events is “Holy Bloatware Batman”!

So how does software become bloatware?

This happens all of the time in Enterprise technology and is no way limited to SAP products. How often do you hear “God Windows is so clunky” or “This thing keeps crashing”? Companies tend to buy on features that can help them do their business more effectively or more productively. Yet, you won’t ever hear an Enterprise CIO say “Well it doesn’t do XYZ but it is the fastest on the market so we’ll definitely use it”. And why not? Because the performance of the application is often overlooked as a major feature of the software. Read Jeff Atwood’s blog article about “Performance is a Feature” if you want to know more of what I’m talking about. I believe this overall concept is some form of Absence Blindess in that we don’t see performance as a feature of a solution unless it is of course missing to begin with.

What I find more interesting than anything is that most people tend to get more mentally frustrated when features are missing than when core features not performing well. A good example of this is Pixelmator versus Photoshop. Photoshop is super clunky. It takes a good minute or so to load up on my Mac. Pixelmator is very lightweight and generally takes 50% less time to load on my computer. I also rarely wait for the functionalities of the program to load. However I miss Photoshop’s Layer Style functionality. So much so that I tend to be willing to just switch over to Photoshop because of that one feature. Otherwise I sincerely hate waiting for Photoshop to load.

Letting your customers outgrow you

The guys over at 37 Signals, owners of the popular Basecamp project management tool, have a good preventative stance on this: Growing In vs Growing Out. They say:

We’d rather our customers grow out of our products eventually than never be able to grow into them in the first place.

Why is this important? Because they are actively promoting their software to preventing it to become bloatware. They realize that if they had more features it will eventually turn there customers away. One way other companies have circumvented this is to build add-ons or apps that are very modular. Meaning the user can add and remove as they go. This is important because the company can focus on the core technology while letting the user chose functionality over performance.

So to the Enterprise technology companies out there I must say to please re-consider your bloatware and stop the feature creep. Why? Because as soon as your products become clunky, you begin to represent what most visionary entrepreneurs see as a “market waiting to be disrupted”. Don’t believe me? Just ask Microsoft about Google apps and SAP about Workday. It may not happen tomorrow but it will happen eventually. My generation lives in a Google world, get used to it.

Why am I so productive at home?

Today I did the following:

  • Sent about 10 e-mails to potential leads
  • Tracked all of those leads in an excel spreadsheet
  • Showered
  • Wrote a proposal for potential business
  • Discussed idea generation for our innovation lab with my boss
  • Went to the Physio to check on my knee
  • Ate twice
  • Wrote two spec sheets for new hiring applications
  • Brainstormed ideas for a new business app
  • Setup multiple calls with partners and clients
  • Bought a flight to Stockholm

..and I worked from home. I liked to think I’m a fairly productive person regardless of the situation, but wow that felt great to get that all done. I think any job that is possible to do remotely should be allowed to work remotely. The monotony of going into a office everyday can be quite a drag. Also attending conferences, client meetings, etc also just drains you. Sometimes you just need to be in your room and just hack away at things.

Why can’t all businesses be like this? Are we forcing people down productivity paths that are, well, ummm.. non-productive? It leads me to think that regardless of what technologies promise “better productivity”, humans are still the limiting factor behind unproductive work.

Basics of Experience Pricing: Emotional or Economic

Over the past several years I’ve become much more acclimated with how pricing works. Obviously in order for your business to operate you need to be sufficient; bring in more money than it costs for you to create a product or service. In principal price is dictated by the market and is set in correlation to the value at which the person or group is willing to give up in monetary resources. Note – Price in of itself can add value.

What I find interesting about pricing is how people evaluate products and services today. Think about the following: why are people willing to pay substantially more for Apple hardware than Win-based hardware? Why do some people think buying an XBOX is expensive but still will drop $200 a weekend at bars? Why do some people spend $3000 on a bottle of wine or nice watch? Amazing huh? Thus, I’ve split these buying habits into emotional and economic. Therefore I like to think pricing schemes sit into two distinct subsets: Emotional and Economic.

Emotion based pricing, in a sense, means you can charge whatever you want. As humans we suck at assess value to experiences. It’s hard for our brain to process how much an experience is worth. Let’s look at the travel and entertainment  business, their pricing is based on emotions. How much happiness does a $2500 trip to Mexico bring us? What would happen if we upgraded the hotel and that now becomes $5000? Do we somehow enjoy that more? As humans we rationalize these type of decisions with emotions. I can’t begin to think about the ridiculous amount of times I’ve spent over $80 out boozing with friends, and yet that same $80 could get me something that last much longer than a night out on the town.

Economy based pricing means you can charge based on a specific invested value. When you addresses whether or not you’re willing to pay for something the left brain kicks in. When a business decides to procure something they always are using economy based pricing. They always assess things like “What am I doing today that will make my life better with this product or service?” “How much does that cost today?” These numbers are usually really easy to assess. I think most humans are able to quickly calculate ROI’s when it comes to money, but lack the ability to see what a return of emotion equals (whether they do it in a rational sense is another discussion). Maybe are brains are so complex that we associated price and value with the amount of endorphins our brain produces.

Both pricing markets are proven ways to make money. However, what I really like about Emotion based pricing is that you can pretty much charge anything you want (which means you dictate whatever profit margin you get). How do you think Apple is able to get away with pricing an iPod at $200+ and yet the costs to them are minimal? That’s because Apple isn’t selling you an iPod, they’re selling you an experience. If you can sell an experience on top of your product or service (or your product or service intrinsically becomes an experience) you can be sure to increase profit margin. This is why I think the costs associated with people who focus purely on UX will eventually become the most costly to any organisation.

That’s some food for thought. Mmmm, food, I think need some chocolate…