malvasia bianca

Today’s book: It’s Not Luck, the second of Eliyahu Goldratt’s business novels. Which I actually read after the third; cleared up a few issues, but the reading order didn’t matter too much. (I would recommend starting with The Goal, though.)

This book presents some thinking tools for analyzing situations that confuse you, where you’re stuck in a bind and don’t know how to get out of it. On the surface of it, this doesn’t have much to do with other aspects of the Theory of Constraints; there may be some sort of deeper pattern going on here, though. After all, agile methods are usually linked with retrospectives, and root cause analysis / five whys is part of lean (as are other thinking tools, for that matter), so it would seem that methodologies that I’m currently interested in each recommend some sort of disciplined introspection.

Certainly something that I’m interested in these days: one of my problems is that I sometimes leap to canned answers of the “right” way to handle a given situation, which has obvious (and less obvious) flaws. Don’t get me wrong – the opposing attitude of “it doesn’t really matter how you do things” is also a real loser, but I/we could use some help looking closely enough at my/our concrete situation to figure out how to improve. I’m glad we started doing retrospectives before the teams changed; I don’t think I want to revive that quite yet, but hopefully we’ll be able to have one by the end of the month. And the ToC thinking tools might well be a good match for resolving issues that I have personally; if nothing else, they seem admirably concrete. (I imagine there’s also a book explaining lean thinking tools in concrete terms, I just don’t happen to have read it.)

I also liked the comment from this book (on one of the more elaborate tools) that it’s not that hard, or even that time-consuming to do, you just have to force yourself to do it. I certainly have experience with watching myself shy away from doing things that I know are important, for all sorts of unsatisfactory reasons. (And perhaps occasionally for satisfactory reasons, but never mind that.)

Some of the examples that they worked to led to interesting places, too. The “local optimization is the root of all evil” example was a bit too canned for my preference (though the methods that they used to come to that conclusion were interesting). But I did like the idea that business can benefit much more from segmenting markets, including segmenting previously undifferentiated markets, than they currently do. One point of view that lean books rightly attack is the cost view that the appropriate price for a product is its cost plus a reasonable profit margin: the market is under no compulsion to agree with you that a price determined in that manner is worth paying, so if you can’t convince them that a product worth what you charge for it, any amount of whining about a reasonable profit margin is useless. Instead, find ways to tweak your product offerings so as to maximize their perceived value; if you do it right, and if other people can’t easily copy you, then your profit margin can be quite a bit larger than what might a priori seem “reasonable”.

In this light, Sun’s recent strategy of selling hardware while giving away software, or giving away hardware while selling support for software, or providing subscription plans for hardware, or probably other variants that I’m forgetting, starts to make rather more sense. Find ways for customers to choose the package with highest value for them, do so in ways that almost no other companies can easily copy, and do so in ways that put excess capacity to use, and you will start making money. Sounds good in theory; we’ll see if recent positive news is a sign that this strategy is starting to make traction, or if it’s just another mirage.