Andrea Hill's Ruminations on Business: Recent Comments

Comment on Sunday_Evening_Reflection.MP3

Judy H. — Sun, 18 May 2008 21:34:44 GMT

This is great! I have attended your speeches in the past and it is delightful to be able to listen to you without traveling hundreds of miles. Keep up the podcasts but please don't quit blogging because I enjoy those too.

Comment on That Cash Won't Hatch Part Deux

Bill — Fri, 28 Mar 2008 16:53:50 GMT

Very interesting and useful material. You seem to confuse "cost" and "price", however. In a supply chain, your cost is the price set by your supplier. You have advocated several times not to compete on price even though you may be able to reduce your costs. Stepping back to the suppliers view, the supplier should not reduce its price even though is costs are reduced. One added point - 10% profit. If your supplier is only making 10% profit, either you are talking a commodity product, or your supplier will soon go belly-up due to lack of innovation. In one industry I'm familiar with, electronics, price is 3X material + labor costs. Profits are obviously much lower, but not as low as 10%.

REPLY TO BILL:

Hi Bill. I don't think I'm confusing cost and price - though I did find one place where it was useful to insert the word "manufacturer's" before the word price for the sake of clarity. Very much to your point, I agree that if each level in the supply chain is following this advice there will be tension between each level as to who can/should reduce their costs while each level is also trying not to reduce their prices. That is the inherent nature of supply chain dynamics, and that sort of dynamic tension should actually lead to innovation in the supply chain.

Regarding the 10% profit comment - as a consultant I see a lot of business operating at this level. Some of this is due to falling prey to the temptation to compete on price, and some is - as you point out - failure to innovate. Sometimes it is due to the dynamics of the particular industry they operate in. But if the point can be demonstrated at this conservative end of the spectrum, it is valid at higher profitability levels as well Take care! Andrea

Comment on That cash won't hatch! Don't let your strategic players just sit on it.

George — Fri, 21 Mar 2008 16:58:24 GMT

You could not be more correct. My company is turning the corner after struggling for nearly a decade. No matter what we did we never grew very much. We never made very big profits. We focused on problems in some different areas. A few times I thought we were on to something. But nothing. Then we got some outside help that spent about a week looking at our business and told us our problems were all tied to our purchasing operations. After a year we are seeing exciting news.I know the economy isnt so great. But this company is finally doing great. If you're not making money might be you should fix your supply side!

Comment on There’s Still Time to Prepare for Recession (but you’ve got to get focused)

Anonymous — Fri, 14 Mar 2008 16:33:57 GMT

You talked about exactly whats happening now in every Forum for a year in 2006 and the beginning of 2007. To bad nobody listened.

Comment on What Price Brand?

Janisue — Fri, 14 Mar 2008 16:19:57 GMT

Michael. I absolutely disagree with you. You are confusing marketing with brand, which is a common mistake.

Comment on Somebody Always Makes Money During a Recession

Jim S — Fri, 14 Mar 2008 22:23:59 GMT

Nice. Back when you wrote this the rest of the world was still trying to pretend this wasn't going to happen. Jim.

Comment on The Administrative Answer to Wisdom at Work

Bill — Wed, 13 Feb 2008 22:51:55 GMT

Right on, Andrea. Also people fail to consider that a policy made by one person can always be subverted by another so many of them are pointless.

Comment on You Can't Tell Me What to Do!

Bill — Wed, 06 Feb 2008 19:00:51 GMT

A couple of reasons Microsoft has been so good and creative:
1. Software is developed by teams of no more that 5 people.
2. Microsoft solicits feedback from and listens very carefully to its customers.

Comment on You Can't Tell Me What to Do!

Bill — Wed, 06 Feb 2008 15:14:29 GMT

Excellent blog as usual. Thank you for clarifying my thinking about employees.

The first couple of paragraphs apply to me in my new role as a novice CEO, and all of it applies to me as an employee as lead software developer.

The sticking point for me is that the systems you mention assume that the goal(s) are both well known and well defined.

Lots has been written about the creation of software and its systemization. Most of it does not take into consideration that the user(s) of the software "don't know what they don't want until they see it".

The approach that my team has settled on is to have the user(s) intimately involved in the development process. We meet with the user, who interacts with what we have created so far, for an hour each week. The user then sets the goals for the next week's efforts. This process works very well and the user gets exactly what is wanted.

I have tried to copy this model for the development of a physical product in my CEO role. The time scale stretches out due to mailing and the other commitments of the six evaluator-customers. I find the same results, however "they don't know what they don't want until the use it". Each of them has provided valuable information for product development.

I agree that planning and systems are important to have. Sometimes the planning and systems are just too narrowly focused and do not consider that there are ONLY FOUR activities that are useful to a for-profit company:
1. Getting customers
2. Adding value for the customers
3. Reducing costs
4. Complying with government regulations

Any other activity is waste. Sometimes systems you mentioned produce wasteful activities.

Comment on When Grownups Don't Do the Right Thing

Elaine Luther — Wed, 23 Jan 2008 19:35:40 GMT

Your comments don't sound old marmish to me at all. Just because something is old fashioned doesn't mean it isn't right. I like your Aunt Carrie.