Posted tagged ‘business’

Wither now telcos (and cable companies)?

April 6, 2010

The one true measure all of us have of how smart is someone else is…how much they agree with you.

To that end, Danny Briere, in his column today on Connected Planet (formerly TelephonyOnline), showed himself to be brilliant.

I have been arguing for more than five years that the future of the telcos (and cable companies) is limited to being big, fat, pipe providers.  Their current business model simply cannot be sustained.  They are not fast enough, agile enough, or imaginative enough.  Their core business and competency (providing reliable connections 7/24 without fail) prevents them from becoming so.

Trust me, you do NOT want a network provider to move fast, change directions, and/or offerings in rapid, unexpected ways!  You want three things from a bandwidth provider:  lots of mbps; very little down time; and a cheap price.

Would you want the freeway designers & construction companies to change designs, methods, and materials as fast as car companies change models?  Probably not.  When it comes to freeways, we want them designed consistently, built reliably, and as cheaply as possible.

The telcos and cable companies keep thinking that they can create “stickiness” with their customers by becoming some kind of all in one shop.  In the mid-nineties, it was combining your phone, cable, and cell phone bills into a single bill.  How many of us have that now?  If you do, how much lower would a competitor’s single offering have to be to entice you away from the joys of “one bill”.

In the late 90’s, the idea was to be the customer’s portal to the new and confusing world of the internet.  Of course you would trust your phone/cable company to provide you with the “home page” that would guide you through the internet.  How many of us now use our ISPs portal as our home page?  As our email ID domain?

Now, the new siren call is Unified Communications….which Google is already doing and most of us can cobble together ourselves with things such as Call Forwarding, Smart Phones, and cutting loose of the land-line.

Don’t get me wrong.  There is money to be made in being a fat pipe provider.  But it will not be a low-cost, high-margin business.  Think of it more like the cargo shipping lines.  They make a “boatload” of money too, but it’s all low-margin business.

Briere, in his column gets it right when he says they will still make a ton of money.  But the money will be made by the ones who figure out how to become McDonalds, not Ruth’s Chris.


Complexity: Businesses, Bureaucracies, and People

April 5, 2010

If you listen to the pundits and want-to-be pundits (especially conservative ones), the word “bureaucracy” means “government bureaucracy” and nothing else.

But having worked in both the public and private sectors, I have experienced what most of us know:  Bureaucracies are in any and EVERY organization larger than 12 people (and in some smaller).

It does not matter if it is government, private-publicly held, private-closely held, or private non-profit, each of these types of organizations MUST create bureaucracies in order to monitor/influence the actions of its employees or agents.

In fact, the most ridiculous red-tape I ever had to deal with was with a major, private-closely-held major construction company.

A number of years ago, when I was starting out in IT, I worked for this company at a nuclear power plant they were constructing.  Among my other duties, I also was in charge of office supplies for my group.  If I wanted to order a box of #2 yellow pencils, I had to get the signatures of my group boss, his boss, and HIS boss!  The whole process could take a week just for the signatures, and the final signature was one rung below the Project Manager for the entire site!

One of the reasons my boss liked me was that I figured out a way to short cut that process.

< No, I am not going to tell how I did it.  Certain people trusted me, and even if the statute of limitations has run out, I may need to use that method again!  >

When I was working on my MBA, one of the things that surprised me was that the major focus of a company’s accounting department was not taxes or mundane things, such as profit and loss, but rather on how to measure what people were really doing, comparing it to what you wanted them to do, and figuring out how best to encourage them to work on what the CEO really wanted done.

Having grown up with the traditional American disrespect for “red-tape”, my business career has taught me that it is neither inherently good or bad.  What is good or bad is either an excess or a shortage of it!

The example I cited above is one of too much, but I can also cite examples where there was too little.  A medium-sized company I consulted with was bankrupted because the person who was responsible for balancing the company’s accounts could also write checks….

I think a good analogy for organizations and bureaucracy is that of the oil system of a car.  It keeps things cool, lubricated, and running.  Using too much oil is the sign of a problem.  Having too little oil causes problems.

This gets me to a link I came across today, courtesy of The Big Picture and Barry Ritholtz:  The Collapse of Complex Business Models by Clay Shirky.   When combined with a Rolling Stone article also referenced by today by TBP, it makes for very disturbing but needful pondering.

When does complexity cross over from helping to hindering?  How can you tell?  How can you stop it?  Can it be reversed short of collapse?

In my MBA program we had to read a lot of books on how to build a business.  Maybe we now need a slew of books on how to simplify a business.