Even more see-through

I wrote yesterday about the current business craze for "transparency," and as folks wrote in their comments I found the need to clarify:

• Both the Wired articles and some of you did make the point that many processes require secrecy. Industry mavens suggested that Steve Jobs and Apple did such a good job on the iPhone because they didn't seek input from everyone. Kenny pointed out that George Washington insisted on absolute secrecy during the first Constitutional Convention, presumably so the Founding Fathers could stay focused on building a lasting framework for a government and not get bogged down in the political influences of the day. I didn't mean to suggest that every aspect of business or life be made glaringly public. I just think that openness is generally more constructive than secretiveness, and that we could afford to let the pendulum swing the other way for a while.
• In my own personal work, I found that writing about transparency actually helped me be a little more transparent. That morning I shared a lot more of my current problems with my co-workers, and as a result I got extra help that I needed to deal with an emerging crisis with a customer. All too often, people hide their problems from the very people who can help them. (Ok, ok, I hide my problems from the people who can help me. Some people have no trouble complaining about all their problems to anyone who will listen.)
• The biggest surprise in greater transparency is how little people actually care to look. I remember in my teenage years when I was angsting about how I looked or acted, and my mom said, "Don't worry; everyone else is too busy worrying about themselves to notice." It was true then, and its still true in business. Nobody has time to ogle your calendar or read your notes. A lot of it is pretty boring. This is one of the great liberating insights of greater self-knowledge: there's an awful lot that you're hiding that you don't need to hide.
• As Montaigne wrote: "No man is a hero to his own valet." Some things need not be shared, not because their secret or important, but because they are mundane or boring or gross. As Ernest Becker emphasized in The Denial of Death, most of our social taboos revolve around hiding the fact that we are animals, and I see no reason why the notion of radical transparency needs to cross those lines. We don't need webcams in bedrooms or bathrooms.

See-through top

This month's cover of Wired declares that "radical transparency" is the future of business. (It probably wasn't just an excuse to put a naked Jenna Fischer of Office fame on the cover, either.) In a world of democratized instant communication, secrets are hard to keep, lies are quickly exposed, and jaded consumers are a rapt audience for under-the-covers views of what's going on. So why not embrace the reality and just "let it all hang out?" Ironically, the usually button-downed and secretive Microsoft is leading the way, encouraging its engineers to blog about all their projects, while the media darling Apple retains its super-secretive, always-on-message glossy image.

Really, none of this is new. I was fortunate to learn about transparency in a small software start-up, Raleigh Group International. RGI had an intensely sales-driven culture, and salesmen with quotas are used to having a big board with their numbers visible for all to see. Augie took that same sales-board transparency and applied it to the entire company. Not only were sales numbers on the board: company AR and cash in the bank were also up there. A lot of small-business owners would not be comfortable with their financials so exposed, but it actually quelled a lot of internal strife. Any time someone complained about having to take out the trash, or why didn't we do more marketing, or whatever, Augie always just pointed at the white board. Most of the time he didn't even have to say anything else. Occasionally he would say, "When that number hits x dollars, then we can have a cleaning service." Such exposure went a long way to dispelling the image of the business as a paternalistic power, and that the CEO has infinite control. People started looking at the company the way the CEO looked at it. They realized, very tangibly, that the good of the company really was their own good as well.

As a CRM consultant, I preach the same sort of visibility to my customers. Even the executives and managers who hired me to integrate all their data together in one collaborative system eventually get nervous: "You mean Joe is going to be able to see what accounts Bob is calling on? You mean the West Coast team can see what the East Coast team is selling? Ummmm . . . " Some people have spent their entire professional lives hiding behind trumped-up status reports, dealing with salesmen individually rather than collectively, and trying to enhance their aura of infinite power rather than sharing their pain. Take away all the secrecy and positioning and . . . well, there's not much left to play politics with.

But transparency requires trust, and our culture is rapidly losing its capacity to trust. All our lawyers, contracts, disclaimers, pre-nups . . . it all signals a fundamental distrust of the other guy. How can we expect people to trust their co-workers, when they can't even trust their husbands and wives? Fortunately, transparency and trust is a two-way street. As soon as a system creates two-way visibility, lying becomes harder, and we have no choice but to tell the truth, and trust.

Travel Time

I went to Birmingham this week for three days. I am fortunate that I had almost forgotten how un-fun travelling can be, especially travelling for business. I know that I should be grateful; it is a modern miracle that I can get 500 miles in couple hours for a little over a hundred bucks (thank you, Southwest). It's also a peculiarly modern hell that, for all the speed and ease of travel, getting from here to there is a series of stressful deadlines. Any one section of the journey is ok, but stringing it all together demands eternal vigilence. I counted out a dozen connections on this trip:

• House to car (Did I forget anything?)
• Car to airport lot (Am I going to get there on time? Did I forget anything?)
• Airport lot to terminal (Where did I park? When is the bus going to get here? Omigod omigod my wallet where . . . phew.)
• Terminal to gate (wait in line, walk, wait in another line, walk some more)
• Gate to airplane (wait in line, make five phone calls while departure time slips, move to another gate)
• Airplane to another city (exhausted sleep, cramped neck, ten minutes of productive work before someone tells you something about the "off position" -- who came up with that term?)
• Airplane to another gate (more waiting, phone calls, blaring CNN broadcast of non-news, happy families hugging, and no one to hug you)
• Another plane to another city (some enormous guy is taking up half my seat, can I get away with finding another seat on the almost-full flight?)
• Plane to rental car (no, Jesus Christ for the last time I don't need insurance)
• Car to final destination (where are the headlights on this thing? Where am I going?)
• Parking at final destination to real final destination (where can I park? How do I get to that building? Yes, they are expecting me. Yes, I'll wait.)

You've put in the better part of a work day just trying to get there. And, for all the stress, nobody particularly seems to appreciate what it took to get there. No wonder all those guys in suits are hitting their CrackBerries so hard. Thank God I'm only in purgatory once a quarter and not every day.

Please remain calm

"Kevin, I don't know what you're taking to remain so calm," I said to my client, a VP of Sales for manufacturing company. I had been through the wringer over the last three days. We had a dozen salesmen fly in from all over the country, almost all them needing major work on their computers to roll out a new CRM package. A couple machines teetered on the edge of unrecoverable after some OS upgrades blew up. We made some compromises on the training just to get everything finished in time for them to leave. A few big requirements for reporting and off-line printing came up within the training, and for which we weren't prepared.

All of this chaos provoked different reactions in the people present. Some of the IT staff reacted with indifference, then angry annoyance. The salesmen (like most salesmen) remained polite but pushy, continually lobbying to get their machines up and running as soon as possible. The marketing manager was quietly but visibly freaking out, imagining the worst. I was putting a brave face on it, but verging on freaking out myself. I expected that at any moment people would explode in angry accusations.

But Kevin was cool as a cucumber. Neither apathetic nor overwrought, he did everything he could do to keep things moving forward, and accepted the setbacks without complaint. At one point he turned to the marketing manager, smiled and said, "Tessa, it's just a job. Relax."

How can someone who works as hard as he, with as much bottom-line responsibility as he has, have such relaxed detachment? You'd think he was either a slacker or independently wealthy. But I suspect that he just had clarity. He knew what was important and what wasn't, and he knew that in the big picture, a rough roll-out of a computer system was not that important. It was one of the few times when I saw someone genuinely care more about his people than the things those people did, or the circumstances they faced.

And . . . it worked. I didn't freak out. We finished the job. And I have a slightly different idea of what it means to be a mensch.

Defensive Requirements

I’ve been through the wringer over the last couple of days with a software deployment for one of my customers. Nine salesmen flew in with their laptops to have the new CRM system installed and to get training, and we’ve spent the last day and a half just trying to get their systems ready: upgrading operating systems, patching operating systems, setting up wireless networking, adding computers to the networking domain, etc. My only salvation has been that the people I’m working for are the nicest people in the world and have been very understanding. Nonetheless, when nine pushy guys are all visiting you ever few minutes and saying, in that practiced sales tone, “Are you done with my laptop yet?” . . . it’s stressful.

All of which is the result of promising too much. I learned a ton of stuff about everything under the sun by being a go-to guy in a small software company, but the downside of being a generalist is that you don’t know when to say, “That’s not my job.” Had I been wiser, I would have forced someone else to be responsible for making sure the laptops were in good shape before they showed up with them. I might still have been the one to do all the work . . . but at least they would have understood that I was going out of scope.

The soul of an IT guy hangs in the balance of this sort of struggle. On the one hand, I can’t do everything for everyone. On the other hand, I don’t want to be one of those trolls who just reflexively says, “That’s not my job” ever time something unexpected comes up. The secret to responsible service seems to be finding the nicest possible way to say “no.”

Programming Karma

A couple people commented on my post yesterday about Programming Support by Google, and I wanted to clarify a few things. Mostly, just soften my position.

Both Janet and Kenny pointed out that giving help to others online, with little realistic expectation of being remembered, was pretty altruistic. One of the fundamental rules of building community is that people give as well as get; and if I benefit from the postings of others, I have karmic debt to repay. Not only should I feel free to post my discoveries (no matter how ego-motivated they may be) but I have a moral obligation to do so. That karma is bigger than just the geeky world of programming; all of society is ultimately based on collective action, and we can't expect to have world peace and justice unless people give in to the urge to help others just because it's the right thing to do.

There are also perfectly rational (but still self-serving) reasons to share one's knowledge. Most of the people who maintain blogs or post in newsgroups are consultants like me, programmers for hire who want to generate attention for themselves and demonstrate their chops. There is no pretense that they are sharing their code out of the goodness of their hearts, unless you're hanging out with the Richard Stallman crowd of GNUbies and think proprietary code is evil. The posters are just out stumping for their new book, or their professional services, or just doing their jobs as technical evangelists. So it isn't just cheap ego-thrills -- it's just good business.

And besides, it's not always the ego boost that you expect it to be. Often people will post to say that your code doesn't work for them, or doesn't work in all situations, or even that it's a retarded way to do it and you should try this instead. Those with superior knowledge will trump you constantly. The feedback can be bracing.

The best motivations are probably the predominant ones: sympathy, and enthusiasm. You, also, have suffered with intractable problems, and felt relief and gratitude when you found the answer thoughtfully prepared by someone else. It makes you feel good to know you can make someone's day, recover their lost weekend, and maybe save their marriage by your gift. But that's hardly ever spoken. It's the enthusiasm, the naked thrill of technology, that has voice: "Isn't this cool?!"

Executive Pay, Backdated Options, and Ethics

I've been a little confused by the Wall Street Journal's mixed messages on the recent issues of executive pay and backdated options. As you may have heard, many companies got into trouble recently for backdating stock options for its executives -- that is, lying about when the options were granted, so that the executives got the most money possible out of the grant.

At first, the Journal was out in front in breaking the story: their own analysts had crunched the numbers of various stock option grants and determined, Freakonomics-style, that many executives had been too "lucky" with their options dates, and that overwhelming statistical evidence suggested they had cheated. After the story ran, the SEC followed up with their own investigations. Yup, they had cheated. Some CEOs and board members were fired. Looked like a good chance to run some fatcats out on a rail. The Wall Street Journal has generally been good about standing up for the rights of the investor, and makes a fuss about overpaid executives on a regular basis.

But then Steve Jobs, the darling CEO of the darling Apple, was caught with his hand in the cookie jar as well. And not just a little in . . . a lot in. There were some middle men at Apple to take the fall for him, but at Pixar he was very directly involved at setting his options dates. Suddenly the mood changed. Nobody wanted to run Steve out on a rail. He was too popular. We love The Incredibles on our iPods too much. And, unlike so many CEOSs, whose mediocre performance hardly seemed to warrent the millions of dollars they were paid, Steve Jobs was clearly vital to his company. And, on balance, investors would rather keep their brilliant but slightly ethics-challenged CEO than lose huge chunks of stockholder value if he's sent down the river.

The Wall Street Journal editorial page suddenly joined in the excuse-making. "Welllllllll . . . the stock options were only a tiny portion of his overall pay. What's a million dollars more or less to Steve Jobs? That's pocket change to him. The board knew what it was doing, the board can pay him whatever it likes, let's not make too big a deal out this."

The incident is akin to finding out that a close and trusted associate, someone you've known for years and welcomed into your home regularly, stole a magnet off your refrigerator. On the one hand, you don't want to destroy a close friendship over a nearly worthless refrigerator magnet. On the other hand, goddammit, he stole something from my house. What else is he taking from me? And worse yet, do I want to hang around someone whose sense of entitlement is so great that they just help themselves to whatever they want, big or small, with no regard to whether it's right or wrong?

I have seen that same mentality prevail with certain rich people. My mother once noted that her richest clients for her landscaping business were often the ones who were the slowest to pay. "For some reason they seem to think that because they have so much, paying me is a trivial matter beneath their attention." Like a celebrity that walks into the bar and everyone jumps up to buy them a drink, they have somehow come to believe that they are so special that the rules don't apply to them anymore.

I don't think Steve Jobs should be fired. It was a small part of his compensation. (And, if you must know, I was the person who stole a refrigerator magnet from a friend's house. But that's another story.) But what he did was wrong, wrong, wrong, and we need to keep pointing that out. Rules matter. Honesty matters.

The Wal-Mart Effect, noch einmal

I finally finished reading Charles Fishman's The Wal-Mart Effect, about three months after starting. I would definitely recommend it to most anyone, though its thoroughness might encourage some to go for an abridgement.

Occasionally I've seen reviewers refer to this book as a "Wal-Mart expose," which feels a little too tilted to the anti-Wal-Mart side to be fair. The book does take an awfully critical view of some of Wal-Mart's practices, sometimes scathingly so. But it doesn't delve into those issues until it's spent at least the first half of the book trying to understand where Wal-Mart came from and how it really operates. The book is absolutely fair in extolling the virtues of Wal-Mart's culture and its stated mission of thrift: "Always low prices." If anything, Wal-Mart has become such a behemoth precisely because it has been scrupulously true to its mission, never losing focus on cutting costs. Wal-Mart is not a hugely profitable business; every efficiency it wrings out of the supply chain is dutifully passed on to the consumer in the form of lower prices. In that sense, Wal-Mart comes across less as an icon of corporate greed than as a symbol of misplaced values.

Nor was Fishman extreme in his prescriptions of what ought to be done about Wal-Mart. He did not propose restricting what Wal-Mart could do. He did not propose stopping Wal-Mart from setting up new stores, or pricing as aggressively as it does. What he does call for is more information. He points out how many key economic indicators related to consumer spending and inflation now need an asterisk: "Not including Wal-Mart sales." When a single company's activity can push the entire economy fifteen points up or down, don't you think we deserve to know a little more about them? Fishman is ruthless in pointing out how the culture of secrecy at Wal-Mart keeps people from properly understanding the effects Wal-Mart has, and how downright duplicitous the company was in trying to thwart economic studies, and then totally misconstruing them when they were finally published. (I suspect that Fishman was venting his own journalistic frustrations at the lack of data and, even more so, the lack of people brave enough to go on the record about Wal-Mart.)

So, just for the record, what are those effects?:

• Wal-Mart absolutely and categorically lowers prices, not just in its own stores but in the entire economy.
• Wal-Mart also lowers quality, as constant price pressures force manufacturers to design quality and features out of their products in order to arrive at a lower price
• Wal-Mart does not destroy the total number of jobs, though it does certainly steal lots of retailing jobs from other local vendors
• Wal-Mart does send manufacturing jobs overseas, and not just through indirect market forces. The book is rife with tales of Wal-Mart explicitly telling vendors they must move their manufacturing overseas or lose Wal-Mart's business.
• Wal-Mart does force other companies out of business. (Whether that is necessarily bad is open to argument. Competition does force bad companies out of the game, and forces others to get busy.)
• Wal-Mart does not always win in every market. Some companies, whose core differentiator is quality rather than price, decide that "always low prices" is anathama to their business models, and do quite well without Wal-Mart. Fishman cites Snapper and Starbucks as examples.
• Wal-Mart has no soul. It seems like a curious thing to say, but Fishman has a telling comparison of Wal-Mart to Southwest Airlines, another category-killer of a company with low prices and no-frills experience. Southwest has a sense of humor; Wal-Mart has none.

What I found most appealing about Fishman's study was his faith in the power of the consumers. He recognizes the fundamental truth: Wal-Mart gets its power from us, the people who shop there. We are responsible for the economic, social, and environmental consequences of everyday low prices. And Fishman's prescription of more information from Wal-Mart is geared toward trying to persuade the consumer that its a bad deal. "I don't think people would dress their kids in $5 shirts if they knew how the people who made them were treated," he says. He also generously holds out the hope that Wal-Mart could be a power for great good, if it used its buying power to establish better environmental and labor practices in the third world. But it's a slim hope. He recognizes how terribly difficult it is to change a culture -- Wal-Mart's, or our own. His final thesis: people shop at Wal-Mart because thrift is a distinctly American virtue . . . and they will only stop shopping at Wal-Mart when they begin to perceive it as a vice.

Everyday low respect for human dignity

The Wall Street Journal reported earlier this week that Wal-mart will begin rolling out to all its stores a new computerized scheduling system. Rather than working predictable shifts, the workers will now have to list the times when they will be "available" to work, and then they will be called in to work based on whether the computer predicts they are needed. Wal-mart asserts (probably correctly) that the new system will allow for faster checkout times and a better customer experience, because the stores will always have the right number of associates available to help. The workers, and all the anti-Wal-mart organizations shilling for the unions, are pointing out that the change will create vast disruptions in workers' lives, because they will never be able to predict their schedules or their income.

After having read The Wal-Mart Effect, I can see how this system is a classic Wal-mart move. Wal-mart, of course, is always looking for inefficiencies to wring out of their business and the businesses of their vendors. Sometimes they remove inefficiencies that are true inefficiencies -- for instance, telling all the deoderant makers to stop packing their products in little cardboard boxes. In cases like that, everyone wins: Wal-Mart gets more product on the shelves, the vendors save money on packaging, millions of acres of forest are saved from being turned into paper, and the customer ultimately gets a cheaper product. (The company that printed and produced the little cardboard boxes probably wasn't happy, but we can hardly blame Wal-Mart for that.)

However, there is another way for Wal-Mart to remove inefficiencies from their business: make them someone else's problem. For instance, Wal-Mart saves money on sending orders to its vendors . . . by making the vendor pay for the overnight delivery. Wal-Mart gets free market research for its products . . . again, by making the vendors do all the work. Of course, in a free market, all those vendor companies doing business with Wal-Mart are entering the business relationship freely, and, as one executive put it, "we're all big boys." The vendors might not like Wal-Mart wringing the nickels out of their hides, but they accept it in order to have the volume that Wal-Mart can provide.

Now Wal-Mart is turning that same "make-it-someone-else's-problem" approach on their single largest fixed cost: labor. Wal-Mart has been staunchly anti-union because their margins simply don't allow for expensive labor. With a computerized system handling scheduling, Wal-mart liberates an army of middle managers from tedious scheduling, and they also turn a fixed cost into a variable cost. The guys in Bentonville must be rubbing their hands together . . . what a spectacular way to bring new efficiency to the very center of their operations.

But the employees are not exactly the free agents that the vendors are. Most of the vendors have other channels besides Wal-Mart that carry at least two-thirds of their volume. The workers at Wal-Mart are . . . well, they wouldn't be working at Wal-Mart if they had anywhere else to work. And Wal-Mart can't lean on them much harder on wages -- those are already about as low as they can go -- so they are taking away what they can take away: their lives. Under the new regime, the worker could never (efficiently) schedule childcare, because they never know if they will be working or not. One could argue that the employees do have a choice: they can decide for themselves when to make themselves available. But the very efficiency that Wal-Mart aims for with the system guarantees they will not be working as many hours as they were before. They will only be able to get the hours they need if they make themselves available for night and weekend work, and management has strongly recommended they make themselves available for a weekend shift "if at all possible." And it's not likely they could fill those gaps in their work week with some other part-time job.

I am not a knee-jerk Wal-Mart basher. I like efficiencies. I like free markets, and occasionally I even like Wal-Mart low prices. But this system feels like a naked attempt by a corporation to steal away every vestige of human dignity from its employees. There is absolutely no way someone could even conceive of such a system and consider themselves to be "pro-family." The very nature of the system is geared to wring an efficiency directly out of the personal lives of the workers.

I am especially not a knee-jerk "let's-regulate-an-industry" kind of guy, either. I don't think one can outlaw what Wal-Mart is doing. It may be that the net effect is that Wal-mart runs its stores entirely with part-time employees, because no one will be able to afford to work full-time for Wal-mart without sacrificing their entire lives on the altar of low prices. The unions, in fact, see this as the entire point of the new system. And I haven't made up my mind yet as to whether that goal is morally wrong, or just morally repugnant. Either way, I am inclined to vote with my dollars . . . and hope that more people, those more fortunate than the Wal-Mart workforce, will do the same.

Paid on the Come

"We've got a great market, and this is going to be a great product. Just do this work for us, and we'll let you have a cut of the profits when it starts to sell."

When you hear these words, run. Every bad business deal I have ever been involved with as a consultant involved getting paid on the come.

Which is extremely sad, because the whole notion of profit-sharing is so appealing to the politically conservative, free-market, entrepreneurial spirit. In a perfect world, it seems like everyone ought to be paid this way: with a fair share of the actual profits. It should give everyone an incentive to work for the good of all, since everyone is sharing in the same pie. It makes people look to both the top and bottom line, controlling costs as well as maximizing revenues. Most importantly, it makes people share in risk, which provides a level of incentive beyond the mere humdrum, work-a-day sorts of incentives and disincentives.

So if it's so philosophically ideal, why has it been a source of so much lost revenue and venomous relationships in the real world?

• Profit-sharing relies on trust. You have to trust that you're going to get paid when the money actually comes in. It seems like this ought to be a simple thing to monitor, but it's not, because cash-flow is often a hand-to-mouth affair in entrepreneurial ventures, and absolutely everyone is hungry for the cash. "Gee, we got some money in this month, but next month might be weaker, and we still have to pay some bills, so I'm not sure we're really in the black yet . . . ". Worse yet, it is in the nature of businesses to immediately reinvest their capital, rather than cash it out. "Ummm . . . well, we've got some momentum now, and we won't be able to keep up with the competition unless we hire more salesmen now, so we still don't have the money..." In the end, you have to trust that whomever was going to cut you in "on the back end" will be able to withstand the pressures and deliver on what they promised.
• Requests for deferred payment usually reveal weak business plans. There is, of course, a reason that someone is asking you to get paid later. It means that no one else, including the client themselves, was willing or able to come up with the cash to pay up front. There are a few perfectly justifiable reasons why a business might be in that situation; there are also hundreds of bad reasons a company finds itself needing interest-free loans from workers. No matter how you slice it, there is a weakness in the business case, and you are being asked to fill in the gap.
• Lack of cash is the only natural check against stupid ideas. Most businesses and business ventures, even the ones that manage to get financial backing, fail in the end. Without the enforced discipline of cash management, many many more stupid business ideas are unleashed on the world. When you agree to take a back-end share of the profits, you are foregoing the most important protection against being involved in an ill-advised venture.
• Shared risk must be evenly shared to properly incentivize a team. You should only accept a share of the risk in a venture if everyone else is taking a share of the risk, too. If not, when the going gets rough, you will find yourself putting in extra time and energy while everyone else kicks back and takes a free ride.
• Desperation can masquerade as bold entrepreneurship. Even if the others are sharing in the risk, they may be risking so much because they have exactly nothing to lose. If a guy is 100 grand in the hole with a dead product and no business plan, he might in fact being sharing the same risk as you . . . but only because he has no choice.
• The continued relationship must be more valuable than the individual venture at stake. Trust can only operate if all parties have more to gain from continuing the relationship than from whatever can be gained in this particular deal. You can be much more assured that everyone will do the honorable thing and keep their commitments if they still have to work with each other in the future. If it's a one-time deal, and one or more of the parties has no interest in continuing on in the future, then the incentives to cooperate drop of drastically, and it becomes much more tempting to leave the other guy holding the bag.

If, after all the warnings and caveats, you still feel like you want to forgo up-front payment for a cut of the profits, here are some simple guidelines:

• Never take all your compensation on the back end.
• Never get so involved in a venture that you can't afford to walk away from it completely, unless it's your own business.
• Always make deferred compensation an explicit part of a written contract. Even if Accounts Payable asks if they can pay you a month or two later, get an explicit agreement of what they are going to pay and when they are going to pay it.
• From the beginning, demand an audit trail be regularly provided of profits, so you know whether you're getting your fair share.
• The moment the audit trail stops coming to you, or the moment you don't get your fair share of the profits, stop all work immediately. Don't move a muscle until you get what's coming to you. Even your best friends will put of paying you if they think they can get away with it.
• Only work with people who are as honorable as yourself.

The Demise of the Mid-range Product

I've kept plugging away at The Wal-mart Effect, mostly on my weekly trips down to Charlotte. Since I'm not the one doing most of the shopping for our family, I was somewhat dissociated from some of the factors that the book discusses. It had been at least a year and a half since I had even stepped foot inside a Wal-mart. But as Christmas shopping pulled me in for a quick look in a Sam's Club, I could see the Wal-mart Effect everywhere I looked.

The most noticable difference I've seen in the last few years is the drying up of the mid-market. Just look at coffee makers. Five years ago, it was possible to buy a cheap Mr. Coffee for $20, or a really solid Krups for $100. Now, the downward price pressure from Wal-mart has created a huge gap in the middle of the market. The brands like Krups or Hamilton-Beach that used to make solid last-you-a-decade products are now fielding items made a cheap and cheap-looking plastic. And if you thought you could spend $150 to find a really good coffee maker . . . forget it. You are either buying a $60 shadow, or spending $2,000 on a gleaming contraption that could stand in for a time machine on the Sci-Fi channel. When the hell did people start spending thousands of dollars on a coffee machine? But that, also, is the Wal-mart Effect; manufacturers must either play their game and make cheaper and cheaper products, or they have to boldly differentiate themselves on quality and put a bolder price tag on it to show you that you are not going to find it cheaper down at Target.

Top 10 Signs You're in a WTF Company

The Daily WTF website celebrates (or should I say reviles) "curious perversions in information technology". They recently launched a new service offering job postings to save people in WTF-prone companies with new jobs in (hopefully) WTF-free organizations. I am extremely grateful that I have had few personal encounters with such incompentence on such a grand scale . . . but I have seen a few.

So here it is:

Top 10 Signs You're in a WTF Company:

1. Months of work by the marketing department gets proactively wiped out by an IT deparment trying to "clean up the servers." None of the data is backed up.
2. When asked if the users call them much with issues, the IT staffer says brightly, "No, they don't ever call us unless the servers go down. They call us a lot about that."
3. When asked if the IT staff should be called to help resolve an issue, the end user snaps, "Don't you ever let them touch my computer!"
4. FoxPro 2 applications are still in production.
5. The IT department's testing server, where they try out new stuff, has SQL Server 7.0 installed.
6. Power in half the building goes out due to a cable being cut by construction crews. The switch is fried and most users cannot access the network. Surprisingly, nobody is yelling, screaming, or even laughing.
7. An intercom announcement says, "The network is back up. Repeat: the network is back up." A user turns to his computer, tries to log in. The network is not back up. The user does not yell, scream, laugh, or even cry. There is no expression at all on her face, except maybe a distant look of sadness.
8. When told that the network is still not back up, the IT manager says, "No, it IS back up!" and walks away.
9. When asked about any particular IT system, the end users say, "Well, that's the way it was when I first started here X years ago."
10. The IT manager gets irritated because the consultant keeps asking so many questions.

My IT Philosophy

I recently referred to "my IT philosophy," and I was slightly surprised that I did have a philosophy about this job, one that had evolved over time and had some unifying principles. Some of this is received wisdom, but most of it comes from my own experience. I imagine there are writers about patterns and anti-patterns who have better articulations of essentially identical ideas, but these are how I've thought about them in my own work:

1. Serve the business need first. IT staffers are sometimes so emeshed in their technical challenges that they forget that their mission is to solve business problems, not to merely build or maintain systems. When evaluating priorities or weighing possible solutions, an IT manager should always ask: "What's the business need, and how can respond to that need as quickly and effectively as possible?" For instance, if a salesman can't get an order processed on the last day of the month, a typical IT guy might just treat it like any other issue and tell them to wait for the technical issue to be fixed. A superior IT guy would address the business need first ("here's how we can manually by-pass the bug for this one issue") and then fix the system later.
2. Sales uber alles. Every IT guy has more issues pending than time to address them . . . which means they have to make decisions about which issues to address immediately and which to let burn. The typical IT person will address issues in the order they were received, or worse, reverse order in which they were received. Others categorically ignore everything and only pay attention to the squeakiest wheels. But ideally, issues should be addressed according to a hierarchy of how they impact the business. I work according to the following hierarchy: executive-level issues, then sales-related issues, then customer support-related issues, and then everyone else. Executives are first in line for purely political reasons: you don't get to keep your job unless the top brass are kept happy. But after that, sales is the number one priority. If an issue is keeping a salesman from selling, or keeping him from closing a particular deal, that's top priority. This reflects my overall business philosophy: I believe the most successful organizations are those that are sales-focused and sales-driven.
3. Start with the user in mind. Every aspect of application development should begin with the user. Requirements should be gathered first from the users themselves. Specifications should always flow from use-cases first, and then into underlying technology. Actual development should alway start with the user interface and then implement the actual business logic. All this flows from the first principle: stay focused on the business need, as it is experienced by the users.
4. Gather requirements from all levels. Nobody has the entire picture when it comes to a significant application. The mangers might think they know everything that needs to be known about what an app needs to do, but they often miss important details that are obvious to people working in the trenches. Likewise, end users may know what's important for day-to-day operations but be myopic about long-term issues. When gathering requirements for an application, talk to everyone involved if at all possible.
5. Be agnostic on technology. All that matters is that the solution works and is maintainable. If the solution works, and works soon enough to meet the business need, all kinds of other flaws can be overlooked. A solution might be ugly, use old technology, be less-than-ideal, or just plain un-hip, but the boss's boss won't care if the business need is met. It's amazing how many techies get stuck on trying to find the perfect solution while the world is burning.
6. Design for the long run, but implement for the smallest measurable change. A staggering number of IT projects never get completed, usually because the business needs change before the development could be completed. To avoid making perfect and irrelevant software, you need to always err on the side of making the scope smaller. Don't overbuild. Do exactly what is absolutely necessary to meet the business need, and no more. If the app proves to be effective and important, you will get a chance to build it out some more and add features.
7. Understand your issues (or be doomed to repeat them). This is probably the only exception to the "meet the business need first" principle. It is entirely possible that "try rebooting your computer" will solve the immediate problem, but that's not a satisfactory level of support. You have to make every reasonable effort to really understand what's going wrong, or issues will linger, multiply, and resurface at every turn.

Behold, all things are made New (Economy)

One thing that struck me as I’ve been reading The Wal-Mart Effect is how so much of Wal-Mart's “revolutionary” practices are so low-tech. Most of the talk about sophisticated retailing focuses on the “data-mining” – sifting through huge amounts of data looking for patterns in buying behavior. And yet, that high-tech analysis often results in a very low-tech, even primitive, solution, e.g. "let’s put pallets on the store floor instead of unpacking them in receiving." It seems that the most power that high-tech has is to find new value in very ordinary things.

The most dramatic portrayal of old technology liberated by new technology is NetFlix. Everyone in the entertainment industry was waiting with baited breath for on-demand delivery of movies over the wires – through the internet, or through cable. And then, out of nowhere, comes a very high-tech, web-enabled, data-crunching company that delivers movies . . . through the U.S. Postal Service. Huh?! Internet delivery is expensive, when you consider how much the bandwidth costs, and how complicated it is to work out security, anti-piracy, and whatnot. Once the DVD format was widespread, it became remarkably cheap to send movies through the mail. The business model is simplicity itself: sign up for a monthly fee, get movies mailed to you. It has all the features that Sam Walton would have loved: it’s cheap compared to other movie providers, it does a high volume of business with low cost and maximum efficiency, and it’s better for consumers. Oh, yeah, and it's absolutely killing the competition, i.e. Blockbuster. Sam would have loved that.

Again, this is the triumph of low-tech wedded to high-tech . . . NetFlix could not possibly have worked without lots of relatively new technology: really good websites, sophisticated databases managing inventory and fulfilment, and the newer, super-light-weight DVD media. And yet, all that technology is geared to making a low-tech solution possible: send movies through the mail.

So what's the next low-tech method to be rediscovered in the light of high tech?

Too much of a good thing

The Wal-Mart Effect is turning out to be much deeper than I expected it to be. Charles Fishman tells story after story about the management culture inside Wal-Mart, and the stories could easily have come out of In Search of Excellence: glowing tales of an organization galvanized by basic values. Sam Walton was all about hard work, thrift, and sales, and the relentless focus on performance gave me flashbacks to my time at RGI, working for a small software company struggling to survive and ultimate succeed.

And yet . . . Fishman traces those same admirable values in the managers of the 70’s and 80’s and sees how they manifest now. The relentless drive to cut costs led some managers to force associates to work off the clock, or to work through scheduled breaks. They were eventually busted for using illegal immigrants to clean their stores at night. What starts out as fundamentally good values – thrift and performance – becomes tyrannical and exploitive compulsions when they reach too big a scale and are pursued unchecked by other values.

What’s even better is that Fishman takes the right lesson away from all this. Nine out of ten people would see Wal-Mart’s labor practices and say, “There! I guess capitalism is ultimately evil.” But Fishman sees the virtue as well as the vice, and what he prescribes is reflection and self-understanding. The worst accusation he makes against Wal-Mart is: they do not understand themselves. They don’t understand what drives them, and they do not acknowledge the effects that they have on the rest of the world. He does not see them as greedy (their profits are staggeringly small compared to their size) nor mean-spirited; all the Wal-Mart people he talks to seem like decent, hardworking people. It’s their lack of perspective, their inability to see themselves as others see them, which makes for trouble.

"The Wal-Mart Effect" Effect

I recently downloaded The Wal-Mart Effect from Audible. It had been calling my name for a while, and I had resisted. It's one of the few times I've been drawn to a book that had absolutely no connection to technology, or spirituality, or any connection to business that would affect me. Finally I decided that it wouldn't kill me to read some non-fiction for sheer enjoyment.

One of the things that intrigues me about the book is the fact that more like it don't exist. Wal-mart had been a behemoth for almost a decade before Charles Fishman came along and wrote such a definitive and balanced book about it. Now he is a regular on all the business-related media -- TV, radio, print, and Internet -- because he's now the default Wal-mart expert. If Wal-Mart rolls out a plan for cut-rate medicines: "Call Fishman and see what he thinks." If Wal-Mart gets shut out of the business-banking sector: "Give Charles a buzz and get a comment." What a swell little niche. It's the kind of thing that makes any self-respecting author slap his forehead with the obviousness of it, wishing they had thought of it first.

The other thing that pulls me is the fact that Fishman is so even-handed in his treatment of Wal-mart. In a cultural climate that is increasingly anti-Wal-mart, its nice that someone can be so smart about it without sucumbing to political rubric. That said, I doubt the directors at Wal-mart are sending him any Christmas cards. While he's not making any mournful noises about the loss of mom-and-pop shops like everyone else, he is raking them over the coals for their treatment of vendors and their environmental impact.

Let's just hope the fun lasts through nine hours of an unabridged audiobook.

Cramming

For the first time in fifteen years, I’m cramming for an exam. I’m taking a Microsoft certification test in the morning, and I know I’m on the edge. I got 70% right on a practice exam, the bare minimum to pass, so I know I need to study a little more. I’m getting all these flashbacks from school.

The sad part is that I will probably be able to pass the test without really having done much hands-on work with the product. Nearly useless book-learning geared strictly towards passing the test lives on, even outside of academia.

Back to the books, before I fall asleep.