Pathways to Success
Posted: July 21, 2014 Filed under: Business, Technology | Tags: Box.com, IBM, SaaS, Salesforce.com 1 CommentRecently there have been major write-ups on tech companies that have pursued very different strategies to achieve their desired financial results. The contrast between blue chip IBM and Software as a Service (SaaS) pioneer Salesforce.com is remarkable. Box.com, one of the newer cloud storage and file sharing services, is charting yet another course.
Image courtesy of cooldesign / FreeDigitalPhotos.net
Why IBM is in Decline. IBM, under the realm of CEO Samuel J. Palmisano from 2002 – 2011, doubled earnings under a plan called Roadmap 2010 and is on schedule for a repeat with Roadmap 2015. This extreme focus on profitability and wooing investors has left a trail of wreckage for new CEO Ginni Rometty, who, inexplicably, seems committed to follow the same path. Catastrophe may be looming for one of America’s greatest brands. The singular and narrow focus on quarter over quarter, year after year earnings may not be sustainable in the long term. There are many cycles in the economy and in business that may not fit this smooth curve approach. Also, while meeting short-term profit goals, IBM is paying the price in terms of low employee morale, suffering customer service, lack of innovation and lagging technology.
Understanding SaaS: Why the Pundits Have It Wrong. At the other end of the spectrum, there are many SaaS companies or cloud providers that lose more money annually than they earn in revenue. One example is Saleforce.com, one of the early pioneers (founded in 1999) of cloud-based CRM systems. They incurred a net loss over the past couple of years due to their focus on growth rather than margins. It’s a vicious cycle: to fuel growth, they spend a lot to acquire customers, which negatively impacts margins. See Salesforce Q1’15 Earnings: Revenue Growth Strategy Continues To Trim Margins to learn more.
Tech companies like Box.com spend more on marketing than they generate in revenue. Box.com has the dubious distinction of having a financial profile that it is out of line even compared to other SaaS companies. THE BOX IPO ANALYSIS: This Company Is Burning Twice As Much Cash As Any Comparable Company is enlightening. Customers and employees alike will pay a significant price if one of these companies implodes.
What is the right balance? How do mature companies continue to fuel innovation and growth while also serving their shareholders? How do you allocated monies in your budget for innovation and growth while also delivering bottom line results? Is there a balance of investments in people and customers to achieve long-term sustainable success?
A moderate approach that may serve both maverick and mature companies equally well is based on the patient use of capital and a balanced portfolio. Companies that plan seeds now for growth that will be ready for harvesting in three, five or ten years will experience some ups and downs, but the overall trend will be positive.
In the end, only time will show which path is sustainable.
Change and Self-Delusion
Posted: July 18, 2014 Filed under: Change 1 CommentOver the weekend I witnessed a number of “older” gentlemen sporting white socks and white tennis shoes. I said to my wife, while pointing to one of the fashion offenders, “Please never let me do that.”
Later in the weekend, my 18 year-old daughter said, “Boy, Dad, those tennis shoes sure are old.” Mind you, I had my lawn mowing shoes on…so I think just maybe I’m out of the danger zone, as awareness is the first step.
Photo by Mark Baker
However, I recently read a couple of articles where actual decisions on change were researched. We look back at the past and realize we’ve changed significantly, but looking forward we don’t think we’ll change as much. In the moment, we tend to make more conservative choices based on a bias toward future stability. Even though they may be the most risky given the actual changing environment.
Is it because it is easier to think of our past, but hard to imagine the future? Do we not perceive the world changing around us? Do we just get lazy and don’t care anymore? Do we see the world as changing more slowly than it actually is? Have our inherent values changed and we’re comfortable in what we’ve achieved, and thus are less motivated to change for the better?
I’ll keep wearing my white tennis shoes for mowing the lawn, but continue to observe, and accept advice and scrutiny from others on my fashion choices.
See On the End of History Illusion.
Intellectual Curiosity
Posted: July 16, 2014 Filed under: Business, Demographics | Tags: Gen X, Gen Y, intellectual curiosity Leave a comment
Photo by Mark Baker
Intellectual curiosity may be roughly defined as a willingness to explore something based on interest, a desire to learn something new and the pursuit of answers to “why” questions. It encompasses mental stimulation and the journey of the discovery process, as well as the satisfaction that comes with knowing more than you did before.
Recently I was engaged in a business conversation about this topic. It was precipitated by a colleague’s comment, “We don’t hire people who are intellectually curious like we used to be.” To which another colleague challenged, “Aw, come on – you really believe that?”
The initiator of the conversation meant that “back in the day,” young professionals studied technical subject matter relevant to their field. Becoming an expert, having deep understanding and being able to answer questions off the top of their head would help propel their career (and it apparently did). Another colleague challenged this notion, responding, “That’s what I thought, too, and I was totally wrong. I should have become expert in selling, because being able to generate business is what would have propelled my career.” The response was, “Well, I don’t think the young people we are hiring today are intellectually curious.”
This discussion revealed a nuance I hadn’t thought about before—that curiosity and our approach to learning and investigation may differ along generational lines. In today’s world, expertise is at our fingertips, and we have Gen X and Gen Y members newer to the labor market who have not known any other way. Vast digital libraries of information may be pulled up with just a few clicks, or via a quick tap to call on SIRI to do the search. “Just Google it” gets said many times at our dinner table, particularly when teenagers are present. So, why would you want to become a technical expert when all of this is available? Isn’t it more productive to learn how to ask the right questions, and apply brainpower to problem solving and innovation?
This brings me back around to curiosity. Recitation of facts or memorization of data was a form of curiosity that was valued in the past. Today, I believe a greater worth of a curious mind may be measured in the ability to formulate questions, navigate through the labyrinth of information that is available and embrace different perspectives generated by the answers uncovered.
More good stuff on the topic of curiosity:
- Cultivating Inquiry-Driven Learners: A College Education for the Twenty-First Century (book)
- 5 dangerous things you should let your kids do (video)
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