The Blueprint

Don't Be The Turkey

Nassim Talem makes the point in his popular book, The Black Swan, that it is human nature to predict the future based on the results of the recent past, no matter how much evidence exists that the recent past may not be a good indicator of what the future holds.  The illustration he gives is a turkey on a farm thats wakes everyday to to be fed by the farmer.  He comes to believe that the farmer is benevolent and that humans are "looking out for its best interests".  He believes this until the day before thanksgiving when he comes to the rapid and startling revelation that his belief system may have wrong.

A recent example is the earthquake in Haiti.  It was well known that Haiti was susceptible to earthquakes.   Since Haiti had did not have a major earthquake in the recent past its government and citizens planned their lives as if an earthquake wouldn't occur.  There is also the question "what could they do about it?".  This is a related but different and more grim discussion.  For example scientist estimate based on past data that a large asteroid will strike the earth about every 100 million years.  The last impact was 65.4 million years ago and wiped out most life on the planet.  A smaller asteroid would be pretty darn devastating and these impacts have happen much more frequently (about every 10,000 years).  What are we doing to prepare for this?  What can we do?

Another recent example is the recent financial crisis.  This is probably the reason Nassim's book became so popular.  Wall street firms, many business and individuals were making so much money due to the increasing value of housing assets.  They thought it would never end.  The recent past was a prediction of the future.  They used the positive affirmation they received from the paper value of the properties and ignored (and often ridiculed) the contrarian feedback that this growth wasn't sustainable.

There are cases of this every day, and a many of these situations are within our control.  There is a personal example that hits home.  I was leading a team of consultant for some departments of transportation in the 90's.  We saw huge bid set distributions being created and distributed to contractors and subcontractors.  When we followed the sets we found that a majority of the documents (whole sets or partial sets) were thrown in the garbage when they arrived.  I thought to myself "this is not sustainable".  

As the market changes rapidly we need to be looking for clues as to what will be more or less valuable in the future and what are we doing today that might not be sustainable in the future.  We need to maximize the profits we make out of the services we have but not come to believe that these profits will continue for ever.

What Does Starbucks and AEC Reprographics Markets Have in Common?

When I first entered this industry I was curious when I would hear two companies in the same market claim that they didn't see the other as true competition and rarely ran into each other.  They would claim that the reason the other company wasn't competition was because of their superior service.  What I came to realize is that these companies didn't run into each other because they were servicing different market segments.  They often didn't realize they were servicing different segments because over time Mr. Market did the segmenting.  The segmentation was mostly down the lines of design market versus construction market.

The economic downturn has caused business owners to look much more closely at their business and the market in general.  They are understanding what markets they are currently servicing and looking to expand into the other segments.  What is important to understand is that these different segments have very different requirements especially price requirements.  If your pricing and service differentiation are not carefully thought through it will erode your margins instead of growing your business.  In this environment nobody needs more margin erosion.  An article in CNN Money talks about Starbucks struggle between the competing value propositions of fidelity and convenience.  This is very similar to differences in the AEC community.  Design professionals want fidelity and construction professionals want convenience.  Your pricing and service differentiation should match these market requirements otherwise you will loose business by charging too much, or erode margins by charging too little and having to provide more services.

Chinese Wisdom

The Chinese word for crisis is written in two characters.  The first stands for danger, and the second for opportunity.

Entrepreneurs Can Change the World

Smart marketing and inspirational.  This is a purple cow.

R&D and Amazon's Digital Services Strategy

Anyone who has seen presentation of mine recently has seen me talk about "R&D".  It is not
research and development" as you may initially think.  It is "rip-off and duplicate".  I actually ripped this off from Cameron Herold, the former COO of 1-800-GOT-JUNK, and the founder of BackPocket COO.   The concept is when you are struggling with a strategic decision in a changing market it is easy to feel alone.  That is because you are sitting in your conference room thinking that the challenges your company or your industry are facing are unique and novel.  The concept of "R&D" is to look at other industries and how they dealt with the same or similar challenges.  Try to figure out what worked and what didn't.  What is different and what is similar about your business or your industry?  How can you learn from their mistakes and replicate their success?

Along these lines I believe it a company to watch is Amazon.com.  They started in the business of distributing hardcopy content - books.  They are now seeing the business of distributing digital content grow.  A couple days ago they launched the Amazon Kindle DX.  A larger version of their eBook reader.  I have a kindle and it is great.  I read most of my content on line, on my iPhone, or I listen to eBooks (via Amazon's Audible.com) service on my iPhone.  I am buying more content now, and I am not buying many books.  Because it is digital and more portible I am finding better and more convenient ways of experiencing the content.  I suspect my children will buy even fewer books, if any at all.  I read an article recently that said the next market that Amazon is going after with their Kindle product line is education.  Instead of buying paper books every year you can buy them or rent them for use on your Kindle.  Pretty smart!  

As the Kindle gets bigger could you view construction plans on it?  How will your business fit into this model?  Have you embraced digital services enough to make a profit in this model?  Do your customers see you as the company to go to for this type of service?

Why Not You?

This truck was parked in front of our office.  In cash you can't read the text on the photo taken from my iPhone.  They advertise Document Management Solutions, Secure Destruction Services, and Data Protection Services.  Sounds pretty good...maybe even strategic.  Could you offer document retention and document destruction services to your existing customers?

Turbo-Charged Inkjet Technology on the Horizon

Almost exactly two years ago I had a post on the Memjet technology.  It seemed that this technology had promise, but the road from prototype to production is often a longer than marketers and consumers would like.   At the CES show they are demonstrating technology for the office market and make claims that products will be available in mid 2009.  Memjet representatives have been sighted at wide-format tradeshows as well including the IRgA trade shows.  Below is a video of the Memjet technology being demonstrated at the 2009 CES show.

Approaching Infinity

A fascinating interview with Eric Schmidt, Chairman & CEO of Google, on Charlie Rose.  In discussion about Moore's Law Eric says "in 15 years computing power will be 1,000 times cheaper and faster...... I have a grandson.  He will be 18 in 15 years.  He will have all of the worlds information every video, every movie and so forth on a single hard drive.  if he started watching it, he cannot finish watching it in 85 years."  

 

What will your business look like in 5, 10, 15 years and how will these changes in technology change the services you offer your customers?

The Cure for the American Economy...Immigration

Thomas Friedman has a thought provoking op-ed in the New York Times.  America is a melting pot of people from many cultures.  We can all trace our ancestors to another country (save the Native Americans).  Our ancestors came here for a better life if not for themselves for their children.  They worked extremely hard and built the largest economy in the world.  But have we lost some of that ambition and drive.  Have we become to comfortable?  When I was a teenager, I mowed our lawn and nine others.  Today I have a young Hispanic man who mows our lawn.  He probably mows at least nine others.  I have had many discussions with business owners about this and many of us wonder if we are spoiling our children.  I tend to believe we are.

Friedman references research by Vivek Wadhwa, a senior research associate at the Labor and Worklife Program at Harvard Law School, "more than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, said Wadhwa in an essay published this week on BusinessWeek.com"

Friedman also references Shekhar Gupta, editor of The Express newspaper said, "All you need to do is grant visas to two million Indians, Chinese and Koreans. We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

Look at the reprographics industry.  The most successful businessmen in an old industry were from Sri Lanka.  They were not born in America and they did not grow up on this industry. 

I do not believe the ultimate answer is to increase immigration, but this article highlights part of the problem.  It is time for Americans to get back to our roots.  Hard work and innovation.  We need to focus less on consumption and more on investment and productivity.

It's Not as Far Fetched as it May Seem

Here is a funny video published by TechCrunch showing a 1981 report on the news being delivered electronically.  Funny unless you work for a traditional news paper (i.e. New York Times or Chicago Tribune).

Most newspapers have and continue to hold-on to the old business model.  They have tried to change, but are too reluctant to break with the past.  Most news is funded by advertising.  In the 1980's, the newspaper was a good place to spend advertising budget. Today Google is getting more and more of that budget.  Companies are still spending money on advertising and people are still reading the news.  Its just a different business model.  I personally read the newspaper less and less.  I get more of my news digitally.  I don't think my children will read newspapers.

Imagine a news report recorded today about the construction document distribution industry being shown 20 years from now.  What would people in 20 years find funny?  My 16 year old son has never seen rotary phone (shown in the video).  20 years from now few will remember a diazo machine.  What will the business be like?  What will it be like in 5 years?