A Django site.
June 29, 2009

Peter Abilla
no nic
shmula
» “Reply All” and the Bystander Problem

bystander problem, bystander dilemma, bystander effect, reply allIn 1964, 38 people in Queens, New York, witnessed the murder of one of their neighbors, a young woman named Kitty Genovese. A serial killer attacked and stabbed Genovese late one night outside her apartment house, and these 38 neighbors later admitted to hearing her screams; at least three said they saw part of the attack take place. Yet no one intervened.

Social Psychologists call this phenomena the Bystander Problem or Bystander Dilemma or Bystander Effect. I believe the same effect happens in “Reply All” email communication.

Shortly after the incident, psychologists John Darley and Bibb Latané sought to understand this phenomena: How can a handful of people aware of a murder fail to do nothing — how can rational people choose to not help another human being?  In answering this thesis, they arrived at one of the most replicable social experiments even to this day.

Cubicle-Seizure Study

College students sat in a cubicle and were instructed to talk with fellow students through an intercom. They were told that they would be speaking with one, two, or six other students, and only one person could use the intercom at a time.  There was actually only one other person in the study — a confederate (someone working with the researchers).  Early in the study, the confederate mentioned that he sometimes suffered from seizures. The next time he spoke, he became increasingly loud and incoherent; he pretended to choke and gasp. Before falling silent, he  stammered:

If someone could help me out it would it would er er s-s-sure be sure be good… because er there er er a cause I er I uh I’ve got a a one of the er sei-er-er things coming on and and and I could really er use some help … I’m gonna die er er I’m gonna die er help er er seizure er ….

The results of the experiment:

  • Of the 2 person room, 85% left their cubicles to help.
  • Of the 3 person room, 62% left their cubicles to help.
  • Of the 6 person room, 31% left their cubicles to help.

Diffusion and Confusion of Responsibility

Notice that the more humans there were, the likelihood of receiving help decreases — there appears to be an inverse relationship between the likelihood of receiving help and the presence of other humans.  John Darley and Bibb Latané believed that the root cause of this behavior is attributed to a Diffusion and Confusion of Responsibility.

Smoke Room Study

Another experiment:

They asked participants to fill out questionnaires in a laboratory room.  After the participants had gotten to work, smoke filtered into the room — a clear signal of danger.  How would the participants respond if they were alone versus if they were accompanied by other humans?

The results:

  • When alone, 75% percent left the room and reported the smoke.
  • With 3 people in the room, 38% percent left to report the smoke.
  • With two confederates (working with psychologists) instructed not to show any concern, 10% reported the smoke.

In two seperate and distinct studies shown above, the results were similar.  John Darley and Bibb Latané conducted many more similar studies and other social psychologists have done a number of novel studies since, and the results are starkly similar and behavior is depressingly predictive: When others are involved, most of us are Bystanders.

Most of us are Bystanders

“Reply All”

In a business setting, the most egregious situation that invites Bystander behavior is the “Reply All” email.  When others are included in the “To” field, I submit most of us either glance the email or delete it wholesale.

Why?

John Darley and Bibb Latané would most likely attribute that response to a diffusion of responsibility — when many people are included in the email, we’re either confused of the request or believe that the request will be satisfied by one of the people for which that email was addressed — we believe that at least 1 of the 15 people will respond.

Unfortunately, this assumption is often wrong.

Indeed, when we engage in this type of email communication, we are creating an environment in which we invite others to be Bystanders.

We sometimes create an environment in which we invite others to be Bystanders – we are sometimes the root cause for others Bystanding

Anti-Bystander Behavior

Fortunately in the email communication space, the countermeasure to Bystander behavior is simple:

  1. Address only the relevant people in an email – and not too many people
  2. Address, by name, the person to whom you are requesting advice, help, or approval
  3. Be clear, concise, and make your request explicit — do not leave the recipient guessing

In this setting, the countermeasure is simple, intuitive, effective — but it’s not simplistic.

Conclusion

Let us not create business environments that encourage bystander behavior — let us act for good, let us do good, and allow others to do the same.

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June 19, 2009

Peter Abilla
no nic
shmula
» Elegance and Encapsulation

elegance, encapsulation, subtraction, simplicityHiding unnecessary information from a customer is good business. Have you ever had an interaction with a business, where your goal was to get served, but instead the business shares their problems with you? Were you left thinking “I’ve got problems of my own, I don’t need or care to know yours. Just give me my hamburger already.” Encapsulation is an elegant and simple principle to ease the burden on your customer by subtracting or covering the unnecessary and adding the meaningful.

Consider the image below:

encapsulation

The picture to the left is what I saw recently.  I was drawn to it: the image of 3 bushes appearing to be protecting something was seductive and curious to me.  So, I investigated further.  To my surprise, the 3 bushes were hiding and electrical box.

This is an example of encapsulation — information hiding, or not exposing unnecessary information, material, or anything your customer might not consider value-add.

Encapsulation is a principle that supports Mathew May’s argument that the best ideas have something missing.  Indeed, Encapsulation supports the principles of Symetry, Subtraction, Seduction, and Sustainability.

  • Symmetry: The 3 bushes, aligned so peacefully, is beautiful and geometrically well-formed.
  • Subtraction: Cover the ugly electrical box with 3 beautiful bushes.
  • Seduction: I was drawn to this scene — I was curious to know what was going on behind the 3 bushes.
  • Sustainability: Clearly, this principle can be applied to any field, function, business environment, or industry.

Subtract the junk if you can; If you can’t, then cover it.  That’s encapsulation.

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April 21, 2009

Peter Abilla
no nic
shmula
» Process Bloat, a Hidden Indigestion

indigestion, process bloat, wasteThe Hidden Factory is a term that refers to activities in an operation that were not designed into it, but grew over time as workarounds for the current process.  Most organizations have some form of a Hidden Factory and being able to “see” these hidden factories in an organization requires learning to see what waste is and understanding that waste in any operation — service or manufacturing — can be a substantial drain on the bottom line, top line, on employee morale, shareholders and, most importantly, the customer.

In fact, one very important litmus test for an activity is this:

If the customer knew the details of process x, would she be willing to pay for it?

In other words, suppose substantial rework was required to manufacture a widget and that rework cost was baked-into the cost of 1 unit of a widget, would the customer be willing to pay for the firm’s defects?  Would the customer be willing to pay for the firm’s internal inefficiencies?

What is a Process?

A process is an systematic activity comprising of smaller activities that culminate in an outcome — service or product. A process can take up time, space, and resources. All processes can be categorized into the following categories: Value-added, Non-value added but necessary, and Non-value added.

From the Customer’s Perspective:

  1. Value-added: This step in the process adds form, function, and value to the end product and for the customer.
  2. Non-Value-Added: This step does not add form, function, or assist in the finished goods manufacturing of the product.
  3. Non-Value-Added-But-Necessary: This step does not add value, but is a necessary step in the final value-added product.

(2) & (3) naturally create waste, of which there are 7 types:

  1. Over-Production: Producing more than is needed, faster than needed or before needed.
  2. Wait-time: Idle time that occurs when co-dependent events are not synchronized.
  3. Transportation: Any material movement that does not directly support immediate production.
  4. Processing: Redundant effort (production or communication) which adds no value to a product or service.
  5. Inventory: Any supply in excess of process or demand requirements.
  6. Motion: Any movement of people which does not contribute added value to the product or service.
  7. Defect: Repair or rework of a product or service to fulfill customer requirements.

It’s important to understand “Value” in terms of the customer.  From the customer’s perspective, “Value” could be defined in the form of a question:

Which process steps (and associated costs) do our customers not have to bear?

It’s a revealing question — most companies are glad that they do not have to reveal how their product or service is created, for fear of their inefficient processes and wasteful operations revealed to the customer.  This stance is sometimes aptly called “not revealing how the hot dog is made”, amicably referring to the unknown contents of the hot dog.

Process Cycle Efficiency

There is a metric that helps to identify how much of a process is actually value-added.  It requires a few things:

  1. Map the process.
  2. Identify the Value-added steps, non-value added steps, and the non-value added but necessary steps.
  3. Stratify your map according to the items in #2
  4. Add a time dimension to the process steps.

Once you have completed steps (1) – (4), then you can simply calculate how much is actually value-added, as a percentage.  The time for the entire process — end-to-end — is called a cycle time.  To identify the Process Cycle Efficiency, you just divide the value-added time by the cycle time for the process.

Process Cycle Efficiency = (Value-added Time / Cycle Time)

For example, take the hypothetical process below:

indigestion, process bloat, waste

The process above has a cycle time of 860 seconds.  So, the Process Cycle Efficiency could then be calculated by doing the following:

Process Cycle Efficiency = 182 / 860 = .21, or 21%

In other words, only 21% of the process above is considered value-added to the customer.

the customer would consider 79% of the process above as waste

Put another way, the customer might be bearing 79% of the cost associated with the waste above.  Knowing this, the firm should aim to increase the Process Cycle Efficiency of the process by eliminating or reducing the waste.

Data like this can help the firm increase their value-added percent to the customer by eliminating or reducing the waste in their process.  Doing this would put the customer first and allow the firm to “get their house in order.”  I consider the above exercise to be simple, yet incredibly helpful for the firm to make sure that they provide maximum value to the customer; it’s a fiduciary duty to the customer.

Think about your processes?  How much is really value-added to the customer?

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April 15, 2009

Peter Abilla
no nic
shmula
» Purposeful Simplicity, Unthoughtful Complexity

complexity, fractal, simplicityMost people or organizations do not, by design, create a product or service with the goal of “making the most complex product that nobody can use”.  In other words, rarely do we see purposeful complexity but instead we see much unthoughtful complexity.

i am going to create the most complex product or service and nobody will be able to use it!  i’ll make sure that after my customers experience my product or service, that they feel deflated & completely unsuccessful.

On the other hand, people and organizations that make it a goal towards simplicity and ease-of-use, actually make a very, very concerted effort — in other words, purposeful simplicity.

So, if great effort is required to achieve simplicity and almost no effort is needed to achieve complexity, why is there so much complexity in our products and services?  Why do so many of us feel stupid, dumb, and that it’s our fault after experiencing a product or service?

I believe the answer is simple:

lack of reflection and concern for the customer

Simplicity and Complexity need each other — @johnmaeda teaches this to us; I grant that some processes and products require complexity, but I argue that most complexity is achieved because of unthoughtful concern for the customer.

Here are some questions that can serve as anchors and keep us grounded to the customer experience:

  1. how will the customer feel after she experiences my product or service? (ala diego)
  2. what will the customer remember after they experience my product or service?
  3. why are they using my product or service?  how many steps does it take?
  4. could i make things simpler for my customer?
  5. if the customer were in my shoes, what would she do?
  6. if a 12 year old were in my shoes, what would he do?
  7. if my 72 year old filipino, immigrant, non-computer savvy mother were in my shoes, what would she do?

Stay anchored; Stay grounded.  The customer writes your paycheck.  Remember who you are working for.

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April 7, 2009

Peter Abilla
no nic
shmula
» Goodbye eBay, Hello Backcountry.com

backcountry.com, snowboard, biking, skateboarding, outdoor sports, extreme sports, skiing, mountain climbing, hiking, deals, valueI resigned from eBay and I’m happily joining Backcountry.

I covered the company in this post back in February 2007.  I was intrigued by the company then and have continued my relationship with them over the years.  I know and respect the management team and I am especially impressed by and attracted to their core values, which they genuinely follow:

  • Never compromise in hiring.
  • Never accept an asymptote – there’s always a better way; we can always do better.
  • Always aspire to create THE BEST customer experience imaginable.
  • Focus.
  • Say what’s there – do you have an idea or a concern? Speak up.
  • Be wary of hubris – we know we are both fallible & destructible.
  • Actively solicit advice.
  • Relentlessly cut waste and inefficiencies.
  • Always confront the brutal facts head on.
  • Experiment, be comfortable with risk, but always measure and adjust course based on the results.
  • Remember that fast and effective is sometimes preferable to perfection.
  • Be intolerant of bureaucracy.
  • Welcome change – see it for the growth opportunity it brings.
  • Break trail.
  • Stand on the shoulders of giants.
  • Celebrate mistakes.

Their values fit perfectly with mine and I have never been more eager for an opportunity than I am now.

Why Leave eBay?

eBay is a good company.

In the simplest terms, I left because my values are more closely aligned with the values of Backcountry and, sometimes, a plant can only thrive when it’s in new soil with more room to breath and grow.  I personally and professionally feel that this move was necessary for me to grow and I find a better fit at Backcountry.  I’m very excited for the challenges and opportunities ahead.

Plus, my kids and I snowboard and I was once a professional skateboarder — yup, me — sponsored by Concrete Jungle — no longer around, but, man, those were fun days.  And, in high school, I was amateur sponsored in Surfing by Leroy’z La Jolla, a Surfboard company.  I never made any money, but got free stuff, which was perfect for a poor immigrant kid like I was and am.

Now What?

Now much will change on shmula.com — I’ll still be writing about Lean Thinking, Design Thinking, Customer Experience, Humane Design, Ethnography, Queueing, and Stuff.  I’ll be happily practicing my craft at Backcountry, but I won’t be blogging anything confidential.

For more on Backcountry, please visit Backcountry.com and check out my ajaxified timeline below (click on image, hasn’t been updated in 2 years):

Backcountry is hiring — here’s one position that some of my readers might be interested in (props to James for this; also, don’t send me any resumes, please apply with the link provided):

Are you competitive? Do you train relentlessly to shave a second off your PR? Are you always looking for the next greatest (legal) thing to give you an edge over the competition? Do you like to experiment with unorthodox training methods? Do you find these traits creeping into your personal and professional life? Do you build code the same way bigger, better, faster stronger? If this sounds familiar we need to talk to you. Backcountry.com is growing rapidly, and we are looking for a Senior Software Engineer to join our Fulfillment Team.

In our Distribution Center we take tens of thousands of orders daily, manage hundreds of thousands individual products, and coordinate this with hundreds of the biggest names in the outdoor industry each and every day. Working in these scales, improvements of less than a second can yield savings of thousands of dollars per day. As we continue to grow the opportunities for improvement only get larger. Beyond just cool professional challenges that you wont find anywhere else, you will have the opportunity to work with like-minded engineers who are among the best in the business, have the chance to create innovative solutions with leading edge technology, and do it in the little outdoor playground we like to call Utah. What a better place to play with all that gear!

Fulfillment Engineers have a passion for process engineering/optimization, efficiency, and enabling business success. These engineers will integrate deeply in our warehouse operations and build/integrate technologies to enable our goal of blisteringly fast fulfillment. Creativity, innovation, the ability to suggest and take calculated risk, as well as an ability to fastidiously and rigorously analyze the performance of our systems and processes are hallmarks of this position. Working experience with LEAN methodologies and/or Six Sigma best practices are strongly desired skills. This position will build applications to support the entire fulfillment life-cycle including warehouse operations, distribution, and integration with our commerce, merchandising, and finance systems.

Primary Responsibilities:

  • Play a key role in software support of large-scale, multi-tiered, distributed software systems.
  • Gather and translate business and functional requirements into high-quality technical specifications for engineering robust, scalable, and maintainable enhancements to existing systems.
  • Troubleshoot software issues and create solutions.
  • Code and Design Reviews.
  • Mentor Junior Software Developers.
  • Apply LEAN methodologies to the warehouse operations to increase operational efficiency, decrease inventory overhead, and improve worker productivity.
  • Required Experience:
  • Prior experience working with and developing for Distribution/Fulfillment Center Systems and/or Manufacturing Systems.
  • SCADA.
  • Deep understanding of ladder logic and PLCs.
  • BS and/or MS in Computer Science or equivalent.
  • Three plus years of software development experience.
  • At least one year of experience involving the development of large-scale, multi-tiered, distributed software systems.
  • Strong SQL and relational database skills.
  • Perl and Java language skills are required and experience with C++ and/or C# a plus.
  • Strong communication and problem solving skills.
  • Desired Experience:
  • LEAN/6Sigma process engineering.
  • Experience developing software for Distribution Center and/or Warehouse operations.
  • ERP experience Contivo, SAP, Oracle ERP, etc.
  • Optimization systems, math modeling, and operations research.
  • RFID.
  • Previous web based / E-commerce development.
  • Experience building complex distributed systems, and implementing software in Java and/or C++.
  • Red Hat Linux operating system experience.
  • Software support experience.
  • Perks:
  • We use the gear we sell all employees are privy to incredible gear deals across a huge range of outdoor sports, action sports, and lifestyle products.
  • All employees have access to special opportunities with vendors, resorts, resort passes, industry events, etc
  • Backcountry.com is growing and evolving. All employees have strong opportunity for career advancement and growth.
  • Considerations:
  • Applications from Utah or those willing to relocate to Utah will be considered.
  • Position is based in our Salt Lake City office and may require occasional travel to our Park City location.
  • Salary based on experience.
  • Deep gear discounts, industry perks, and employee benefits.
  • Telecommuting is not desirable.
  • Please apply online here:
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    April 2, 2009

    Peter Abilla
    no nic
    shmula
    » On Queueing, Oil Change, and Customer Experience

    jiffy lube, waiting room, ethnography, observational research, shmula.com, customer experience, twitter, facebook, net promoter score, nps, detractor, promoterEarlier this week, I went to Jiffy Lube to get my oil change. I once worked for a person responsible for the redesign of many waiting rooms in various industries, so I went with an observant eye, looking for the items that he taught me about in his ethnographic work.   It was a very interesting 30 minutes. Here’s what I saw and learned.

    This person taught me a few things about observational research:

    1. Look for the ordinary, not the extraordinary: “ordinary” is what you are there to observe
    2. Nothing people do is “natural”: whatever happened could have happened differently.  Be the Master of the Obvious.
    3. Don’t fear the details: People nodding, pacing, worn-out carpet, etc. — details that point to a need or desire, but is not articulated by the customer.
    4. The most obvious things are only obvious in hindsight, and context doesn’t appear until you see it in real action.

    The waiting room was rectangular shaped, with 8 chairs.  There was a large bay window on one end of the room and four chairs on the other end of the room.  The first thing I noticed was that those four chairs with direct view into the car bay were filled and the lone chair, facing away from the window was empty.  Here’s my first observation:

    Observation 1: Those four chairs, with direct view into the car bay (where the cars are being worked) were filled because customers want to see their cars being worked-on.

    The car mechanic at the car register came to me several times during the 30 minutes I was there — probably 2 times — to give me an update.  It was just an oil change, but he tried to up-sell me on other stuff, which didn’t work.  Still, he gave me frequent updates, more than I expected.  Here’s my second observation:

    Observation 2: We know from our knowledge of the Psychology of Queueing that Uncertain Waits Feel Longer than Known, Finite Waits.

    Giving me updates reduced my perception of waiting time.  This is good, qualitative business practice in any waiting situation.

    There was a TV and plenty of magazines available.  Here’s my third observation:

    Observation 3: Unoccupied time feels longer than occupied time.

    In other words, if a customer is waiting and doing nothing, it feels longer.  A simple magazine or a TV show can help time feel as if it is going faster.

    What A Customer Wants

    Regarding Observation 1, Jiffy Lube failed to remember why they redesigned the waiting room in this way.  See below:

    shmula-jiffylube.jpg

    (click image for a larger view)

    The Customer wants direct, clear view into the bay and to their vehicle — the car is the Center Stage.  Yet, Jiffy Lube littered the window with stuff, propaganda, and ads.  The candy machine is a smart move — some added revenue for the company in a spot where they knew people would be frequently pacing.  But, by covering the window ruins the the main anchor and purpose of the waiting room — to ease the anxiety and impatience of the customer by providing a direct view into the very purpose of their being there.

    In the words of my former manager and mentor who redesigned waiting areas for many different companies:

    The car repair story is real - I once spent a week watching people nod off waiting for their cars to be repaired. I was Jane Goodall and they were the chimps. And I got more and more panicky as I saw less and less “happening.” Then I started thinking about the obvious things I could see. One seat in the waiting room actually had a pretty good view of the car repair bays, and two or three had decent views. None of the others really let you see your car at all. Luckily, I had detailed notes: I knew where people had sat and how long they sat in each seat.

    As I reconstructed scenes, it became more and more clear that people tended to sit in one of the “good” seats unless they were occupied or someone was sitting in the next seat and there were a lot of other empty seats available. When the waiting room was empty, I looked carefully at the carpet and the upholstery of the “good” seats and, sure enough, the wear patterns showed that what I had seen that week had been going on for a long time. There really were good seats and bad seats and you could tell which was which by checking out the sight lines.

    Since the project was about developing criteria for understanding waiting-area designs, this was an important piece of information. A good design would put the car center stage and use the fact that customers were riveted to that stage as a way to organize the space and its communication elements. The path for the rest of the analysis was pretty clear.

    Psychology of Queueing

    A reminder for those of us responsible for products or services, where waiting might be an element of the experience:

    1. Unoccupied time feels longer than occupied time.
    2. Process-waits feel longer than in-process waits.
    3. Anxiety makes waits seem longer.
    4. Uncertain waits seem longer than known, finite waits.
    5. Unfair waits are longer than equitable waits.
    6. The more valuable the service, the longer the customer is willing to wait.
    7. Solo waits feel longer than group waits.

    Please visit this page, for more on Queueing Theory.

    Design Thinking

    Design Thinking doesn’t mean just aesthetics, but it is a blending of many disciplines to solve for the customer.  In this example, we see Queuing Theory, Layout Design, Observational Psychology, and Lean Thinking working in concert, solving for a customer need.

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    shop@shmula or learn about Queueing Theory

    March 24, 2009

    Peter Abilla
    no nic
    shmula
    » Customer Service - A Chance for Redemption

    home depot, shmula.com, customer experience, twitter, facebook, net promoter score, nps, detractor, promoterIn a very tough economy, keeping customers happy should have more considerable weight and attention from companies.  I had a negative customer experience recently at Home Depot, where they had a chance to redeem themselves from a very poor customer experience.

    On March 18, 2009, I went to Home Depot to buy some tools to help my son with his Boy Scout Pinewood Derby car.  I’m completely unskilled when it comes to tools or wood carving, so I needed help.  I asked someone at Home Depot to help, but the person I asked was very irritated at me and sent me to another department.  At that department, the associate said: “sorry, can’t help you.”  It turns out, I just needed sand paper and a hand saw, which my neighbor let me borrow.

    Following that experience, I sent this Tweet:

    hd4.jpg

    I have 296 people following me on Twitter and all my Twitter updates also updates my Facebook page, where I have 350 friends.  So, ~600 people saw that Tweet.  Six people responded to that Tweet on my Facebook page:

    hd5.jpg

    So, negative word-of-mouth from 1 negative experience quickly reached ~600 people.  We know from Net Promoter Score (NPS) studies that a Detractor is quite costly to a company, with some studies showing that a Detractor carries a Net Cost of at least $300 USD, not to mention the 600 people that my negative word-of-mouth reached.  The same study shows that a Promoter carries a Net Benefit of $1,700 USD.

    Moreover, this blog has 1359 Feed Subscribers and an average daily visitor count of 930 unique visitors.  So, 1359+296+350+930 = 2935 people are quickly reached from one negative word-of-mouth experience.

    So, 1359+296+350+930 = 2935 people are quickly reached from one negative word-of-mouth experience.

    In this economy — no, in any economy — a firm cannot risk having negative word-of-mouth or risk producing a bad customer experience: not good for the customer; not good for company.

    A Chance for Redemption

    My original tweet above, however, caught the attention of Home Depot, to which they responded with the Tweet below:

    hd1.jpg

    My initial reaction was very positive — wow, Home Depot monitors Twitter and responds quickly to negative word-of-mouth in the Twitter stream.

    I sent @HomeDepot a direct message, containing my email address; I didn’t receive a response for a while, then I received the Tweet below:

    hd2.jpg

    The Tweet was followed-up with an email, which is below:

    Pete – I’m very sorry to hear that you were treated so poorly.  Which store did you visit?  I take your experience very seriously and would like to pass your comments along to our store and local leadership.

    We are making improvements across the board, but it takes feedback from customers like you to make direct changes in specific stores, send additional resources, etc…

    Also, I’ve alerted our Customer Care team, who may contact you as well to resolve this matter and thank you properly for taking the time to give us this feedback.

    Please let me know where this happened, and if it’s a normal occurrence at that location, or something unique to this visit.

    XXX XXX, Corporate Communications Manager

    The Home Depot

    I responded to @homedepot’s email with my detailed experience on March 20, 2009.  Since then, no feedback or response.

    Lessons Learned

    1. Most customers are charitable and give companies the benefit of the doubt; most customers are willing to give several chances to a company.  I’m certainly in this camp.
    2. This means that, from the firm’s perspective, there is ample chance to win-back customers through simple empathy, listening, and reaching-out, not necessarily by giving of anything monetary.
    3. If you are going to have an outreach effort like Home Depot above, execution is key.  This means that the initial outreach must reach a conclusion.  This is where Home Depot fails.  They made a good effort, but no conclusion was reached.  I’m happy they reached-out to me, but no feedback was given regarding the negative experience I shared with them.
    4. Monitor Twitter, Facebook, and other social media.  Negative word-of-mouth can quickly diffuse to millions of users.  My single negative word-of-mouth tweet quickly reached ~600 people.  Most likely, some of those ~600 people will not purchase or recommend Home Depot, because of my negative word-of-mouth experience.

    Insult to Injury

    One more word of advice: a customer’s 1st negative experience can be considered “injury”.  Customer Service can take on a balming effect or it can add “insult” to the initial “injury”.  Keep this in mind as you frame your Customer Experience strategy.

    Hippocratic Oath for Customer Experience

    “Do No Harm” ought to be our mantra; “Do No Further Harm” is a great one to have as well.

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    shop@shmula or learn about Queueing Theory


    Jordan Gunderson
    jordy
    Jordy Blog
    » Bad News for the Dollar

    China calls for new reserve currency. This could get scary.

    March 23, 2009

    Peter Abilla
    no nic
    shmula
    » Off-Topic: Win an AIG Maraca

    american international group, aig, bailout, shmula, tarp, obama, executive compensation, bonus, maracaLast night, I was on the floor playing with my toddler and I noticed that he was shaking a maraca — so we had a daddy/baby jam session, with me tapping on the carpet and with him shaking the maraca.  Then, I noticed what the maraca said: “AIG - Sun America”.

    I thought, “hey, maybe my baby boy won’t mind if I take this maraca and raffle this thing off on shmula.com” — today is your lucky day!

    Raffle Details

    All you have to do is:

    1. comment on this post with a valid email address or
    2. retweet this post URL using the hash #aig-maraca
    3. I’ll randomly pick the winner on 3/27/2009 at midnight, mountain standard time.
    4. Double-entries (comment post and tweets) are allowed
    5. More in FAQ below.
    aig-moraca-shmula.jpg aig-toys-shmula.jpg

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Frequency Asked Questions (FAQ)

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Say it Ain’t So?

    Yes, I’m afraid I’m giving this away.

    Is it For Reals?

    Yes, I have no idea where I obtained this one-of-a-kind collector’s item, but it is real, American International Group (AIG) maraca.

    Wow, thanks for doing this!

    No problem.

    You are crazy, an AIG Maraca is a super rare find!

    Enter the raffle, you might win!

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    March 13, 2009

    Jordan Gunderson
    jordy
    Jordy Blog
    » Alternatives to GoDaddy?

    I’m looking to replace GoDaddy as my primary registrar. I originally used them because they were cheap and well known; but I’ve always hated their interface, and I really dislike the offensive turn their marketing has taken. Let’s face it, GoDaddy sucks, and they don’t deserve my money.

    Anyway, what recommendations do you have for a domain registrar that is affordable, no-nonsense, and easy to work with?

    Thanks,
    Jordy


    Peter Abilla
    no nic
    shmula
    » Customer Service and the iPhone

    related update: apple-iphone.jpg

    In some organizations, the Customer Service function is largely viewed as a cost center, draining resources of the firm.  I maintain that this viewpoint is largely false and is one that less mature companies support.  I believe that Customer Service is an accurate litmus test of the overall health of the firm — indeed, Customer Service can play a very strategic role in the overall health of the product, service, and Firm.

    In what follows, I’ll take a hypothetical iPhone Case Study and show how Customer Service in this example plays a pivotal role in the overall iPhone Supply Chain — how Customer Service is a key player in the overall product value chain.

    Strategic Fit of Customer Service in the Supply Chain

    In a supply chain network, the Strategic Fit of Customer Service is often the voice-of-the-customer post-release of the service or product.  The phrase “start with the customer and work backwards” is really a misnomer.  Why?  Well, in most products or services, it really starts with the customer and ends with the customer — that is, the customer’s voice is heard at the level of product design and then the voice-of-the-customer is heard at the market monitoring level, post-release of the product or service.

    We know — through pretty accurate anecdotal evidence — that the supply chain of the iPhone looks like the following:

    From a high-level, we speculate that the following are the material suppliers of the Apple iPhone:

    1. Samsung: The Singapore facility manufactures CPU and Video processing chips.
    2. Infineon: The Singapore facility manufactures Baseband Communications hardware.
    3. Primax Electronics: The Taiwan facility manufactures Digital Camera Modules.
    4. Foxconn International: The Taiwan facility manufactures internal circuitry.
    5. Entery Industrial: The Taiwan facility manufactures connectors.
    6. Cambridge Silicon: The Taiwan facility manufactures bluetooth chipsets.
    7. Umicron Technology: The Taiwan facility manufactures printed circuit boards.
    8. Catcher Technology: The Taiwan facility manufactures stainless metal casings.
    9. Broadcomm: The U.S. based facility builds touch screen controllers.
    10. Marvell: The U.S. based facility builds 802.11 specific parts.
    11. The Apple Shenzhen, China facility assembles the hardware, holds inventory, and handles the pick, pack, and ship steps of the fulfillment process.

    Taiwan Wins Big

    If I am correct in my research and assertions in this article, Taiwan supplies 6 of the 10 parts that comprise the Apple iPhone. This can be viewed as a strategic approach by Apple, concentrating sourcing the majority of the parts from one country, or this could be seen as a bottleneck or constraint — a potential risk: if there is any turmoil in political economy in Taiwan, then material and product flow might be disrupted.

    iphone-geomap.jpg

    We also know that the Austin, Texas Apple Operation is largely where Apple Care physically sits, with another office just outside of Sacramento, California.  So, for any contacts into their Call Center, then that is most likely where the contacts will enter (they also have, we understand, outsourcing partners, but the Austin, Texas Apple Care is the headquarters).

    So, more completely, then, the high-level iphone supply chain may represented like this:

    Market Monitoring, Defect Data

    When a product is released into the market, there can be many channels of market monitoring of the health of the product.  In the medical device or pharmaceutical industry, where I once worked, the Market Monitoring phase of the product lifecycle represents a large portion of the product, especially in how it meets regulatory concerns, etc.  Marketing and Public Relations also have an especial interest in market monitoring since the voice-of-the-customer post-release can and, usually does, help the firm improve their product or service.

    Let us assume the following:

    1. Apple Care (Apple iPhone Customer Service) has a program for collecting product health, post-release, of the product.  These can be from inbound contacts to the Apple Customer Service or through blogs or through message boards.
    2. In this program, Apple has a simple and elegant way of making that information actionable, involving collecting data, stratifying of the data, root cause analysis, then practical countermeasures to improve the iPhone through upcoming releases of the product.

    iPhone Defect Data

    Extending this hypothetical iPhone case, let’s say that Apple Customer Service collects inbound iPhone Defect Data using a very simple check sheet, like the following:

    The first column shows very broad defects as reported by the iPhone customers.  On the right column are the simple counts.  This is called a check sheet.  Other variants of this simple quality tool are to collect by day, time, shift, product color, version, etc.

    The next step to make this data actionable is to visually render it in a way that points to an healthy area of opprotunity.  Below might be a picture that can help us — an iPhone Pareto of Defects:

    The above picture is a Pareto Chart, showing the check sheet data, in visual format.  As a consumer of this data, the Apple Customer Service folks might want to pay closer attention to the first and second bars of the Pareto, because those two bars represent “iPhone Touch Screen” defects.

    The Pareto above naturally leads the consumer of this data to ask “Why?” — “What’s going on with the Apple iPhone Touch Screen?”

    The next step, then, in the lifecycle of product monitoring and improvement is to conduct a Root Cause Analysis, focused on areas where the opportunity trade-off is good.  In other words, to truly get-to-the-heart of Touch Screen defects, Apple must meet with the suppliers of the iPhone Touch Screen technologies.  Based on the Supply Chain network drawn above, Apple should meet with BroadComm, the supplier of the iPhone Touch Screen technologies.

    In that meeting, both Apple and the supplier can look over the data, go to the Gemba, and conduct root cause analysis on what’s going on with the Touch Screen.

    iPhone Defects Root Cause Analysis

    There are several tools that can aid in the process of Root Cause Analysis.  Basically, it is a simple approach of asking “why” several times until you arrive at an atomic but actionable item (see Jeff Bezos conduct Root Cause Analysis).  To visually view the process of the “5-why’s”, a tool called an (Ishikawa Diagram) or a (Cause-and-Effect Diagram) or a (Fishbone Diagram) is often helpful — this tool is referred by either of these names.

    ishikawa diagram

    Main Components of an Ishikawa Diagram

    1. At the head of the Fishbone is the defect or effect, stated in the form of a question.
    2. The major bones are the capstones, or main groupings of causes.
    3. The minor bones are detailed items under each capstone.
    4. There are common capstones, but they may or may not apply to your specific problem. The common ones are:
    • People
    • Equipment
    • Material
    • Information
    • Methods/Procedures
    • Measurement
    • Environment

    After completing your Fishbone Diagram excercise as a group, it is helpful to test your logic by working the bones: top-down OR bottom-up like:

    this happens because of g; g happens because of f; f happens because of e; e happens because of d; d happens because of c; c happens because of b; b happens because of a.

    The excercise above is crucially important — you must test your logic so that it makes pragmatic sense and that the atomic root cause is actionable — that is, you can do something to correct it, reduce it, or eliminate the root cause.

    Once you or your team arrive at a root cause for a specific capstone, then you typically “cloud” it to identify it as a root cause. A good rule is that there is typically *NOT* 1 root cause for a problem, but potentially several. Below is a diagram of one fishbone, decomposed:

    ishikawa, fishbone, shmula.com

    Once the Apple folks and the Apple iPhone Touch Screen supplier arrive at the root causes of the iPhone Touch Screen defects, then the supplier needs to put-in-place countermeasures so that the next shipment of the Touch Screen — perhaps in the next version of the iPhone — won’t have this defect anymore.

    In fact, there can be much Public Relations and Marketing campaigns from this effort: Apple can show the public that it has listened the concerns of the market; Apple has done this by fixing the defects that most pains that market, in relation to the iPhone product.  There can be much branding from an effort like this.

    Conclusion

    Customer Service plays a key role in the value chain of a product or service.  Some firms view and, consequently behave, as if Customer Service were simply a cost center.  These firms miss the point altogether: Customer Service is a major vehicle for hearing and learning about what the market is perceiving and feeling and experiencing from our products or services.  This data and information can be made actionable through the strategic and smart utilization of Customer Service.

    Disclosure

    The data above is only hypothetical (but pretty dang accurate).  The process above works and, if done strategically and with an eye toward the customer, then Customer Service can be a major player in how our products and services can be improved and how we can shape the signals we send to the market and, consequently, how the market can begin to perceive the firm.

    InvitationApple can join the other companies that have sent me free stuff here.

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    Richard K. Miller
    no nic
    Richard K Miller
    » What Motivates Us to Work and Create

    I recently read Mind the Gap, an essay by Paul Graham on wealth, industry, and incentives. It’s almost 5 years old now, but it seems timely as our nation appears to be on a road toward socialism.

    Wealth is not money. Money is just a convenient way of trading one form of wealth for another. Wealth is the underlying stuff—the goods and services we buy….

    Where does wealth come from? People make it. This was easier to grasp when most people lived on farms, and made many of the things they wanted with their own hands. Then you could see in the house, the herds, and the granary the wealth that each family created. It was obvious then too that the wealth of the world was not a fixed quantity that had to be shared out, like slices of a pie. If you wanted more wealth, you could make it.

    This is just as true today, though few of us create wealth directly for ourselves…. Mostly we create wealth for other people in exchange for money, which we then trade for the forms of wealth we want.

    If you suppress variations in income, whether by stealing private fortunes, as feudal rulers used to do, or by taxing them away, as some modern governments have done, the result always seems to be the same. Society as a whole ends up poorer.

    You need rich people in your society not so much because in spending their money they create jobs, but because of what they have to do to get rich. I’m not talking about the trickle-down effect here. I’m not saying that if you let Henry Ford get rich, he’ll hire you as a waiter at his next party. I’m saying that he’ll make you a tractor to replace your horse. (Emphasis added.)

    Similar ideas can be found in a monologue from Francisco d’Anconia, the wealthy mine owner in Ayn Rand’s book Atlas Shrugged.

    “Money demands that you sell, not your weakness to men’s stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they offer, but the best that your money can find. And when men live by trade—with reason, not force, as their final arbiter—it is the best product that wins, the best performance, the man of best judgment and highest ability—and the degree of a man’s productiveness is the degree of his reward.

    “…you will see the rise of men of the double standard—the men who live by force, yet count on those who live by trade to create the value of their looted money—the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law—men who use force to seize the wealth of disarmed victims—then money becomes its creators’ avenger.

    “When you see that trading is done, not by consent, but by compulsion—when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed.

    “If you ask me to name the proudest distinction of Americans, I would choose—because it contains all the others—the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity—to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created….” (Ayn Rand. Atlas Shrugged. pp. 411-14. Emphasis added.)

    March 12, 2009

    Jordan Gunderson
    jordy
    Jordy Blog
    » Izeni to Demo CallClock Tonight

    Izeni will be at BYU’s Web Startup Group tonight to give a short demo of our first product, CallClock.

    CallClock is a mobile (hosted) timekeeping system to help employers and contract workers record work time for payroll, invoicing, job costing, and project management. CallClock is still in private beta, but Izeni joins other local companies in using it in-house while we’re finding bugs and adding features.

    If you’d be interested in being a part of our private beta, let me know. If you’re in the Provo area tonight and want to see it work, swing on by.

    March 10, 2009

    Peter Abilla
    no nic
    shmula
    » Mind Before Money, Creativity Before Capital

    chi sao, wing chun, lean thinking, mind before money, creativity before capitalMy Kung Fu brother and I spoke last week and he taught me something that remains with me:

    I continue to do Wing Chun because it allows me to create

    In a business setting, how many of us can say that we enjoy what we do because it allows us to create?   In fact, from my experience, when something becomes too difficult, businesses all-too-easily pull out their wallets and hire a consultant, preventing any need to think and creatively solve their own problems.  This is analogous to good-hearted-but-misguided parents that do everything for their children, robbing their children of precious life-lessons.

    I’m not casting judgment on consultants, but I am making a judgment on weak mindedness that companies often exhibit, robbing their employees of the opportunity to think, to create, and to contribute to solutions to the challenges the company is facing.

    There are times when organizations need outside expertise and help — and that is perfectly fine — but too often companies “give up on thinking” and quickly hire outside help.  This type of thinking is weak-minded and is antithetical to Lean Thinking.

    A Simple Principle

    An unsaid principle of Lean Thinking is this, said in two different ways:

    • Mind Before Money
    • Creativity Before Capital

    No explanation needed — before you spend money, think first; before you beg for resources, use your creativity first.

    A North Star

    My mentor taught me a long time ago about life lessons; growing up a poor, fatherless, immigrant has shaped my character — for that I am thankful.

    Just like people, organizations need a north star to follow — a guide that is steady regardless of market fluctuations.  Ideally, the company culture & mission ought to be the behavioral demonstration of that north star, but sometimes it is not.  These types of organizations that have a shallow culture are the ones, I submit, that will not be around when the market shakedown is over because their roots aren’t planted deeply.

    In these tough times, I am reminded of my dad’s favorite poem from his hero and mine, General Douglas MacArthur:

    Build me a son who will be strong enough to know when he is weak, and brave enough to face himself when he is a afraid; one who will be proud and unbending in honest defeat, and humble and gentle in victory.

    Build me a son whose wishes will not take the place of deeds; a son who will know Thee - and that to know himself is the foundation stone of knowledge.

    Lead him, I pray, not in the path of ease and comfort, but under the stress and spew of difficulties and challenge. Here let him learn to stand up in the storm; here let him learn compassion for those who fail.

    Build me a son whose heart will be clear, whose goal will be high, a son who will master himself before he seeks to master other men, one who will reach into the future, yet never forget the past.

    And after all these things are his, add, I pray, enough of a sense of humor, so that he may always be serious, yet never take himself too seriously. Give him humility, so that he may always remember the simplicity of true greatness, the open mind of true wisdom, and the meekness of true strength.

    Nevermind the Jargon Monoxide of Lean, Lean Thinking, Six Sigma, etc. — Mind Before Money and Creativity Before Capital is just plain good business.

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    shop@shmula or learn about Queueing Theory

    March 9, 2009

    Phil Windley
    pjw
    Phil Windley's Technometria
    » We Are the Ten

    Steve Fulling articulated some principles a few years back on business, leadership, and life that he called "We Are the Ten." While the ideas in general were not necessarily original with him, the document was a powerful vision ofhow self-actualized people go about working together. Here is the preamble:

    We believe teams are only as good as the values that bond them together. We reject the notion that in a team of one hundred, ten do the work. We are the ten. We believe values and culture can fundamentally transform the behaviors and actions of a team. We reject the idea that policies and procedures can fill the gap of individual accountability and responsibility. We believe that through individual practice and patterning we can break old school techniques that taught disengagement and laziness. To this end, we have identified our cultural values that are necessary in order to successfully become part of the ten.

    Dave McNamee, a mutual friend and someone we've both worked with has started blogging about the principles in We Are the Ten in an "every Monday" series. Follow along. I think you'll enjoy it.

    Tags: business philosophy

    March 4, 2009

    Phil Windley
    pjw
    Phil Windley's Technometria
    » Guy Kawasaki: How to Drive the Competition Crazy

    Guy Kawasaki

    Image by Thomas Hawk via Flickr

    Guy Kawasaki is speaking at the Infopia ecommerce conference in Salt Lake City today. (You might also enjoy reading my notes from the last time Guy was in Utah.) His topic is how to drive the competition crazy. In standard Guy style, he gives his talk as a list of ten things:

    1. Find a mighty opposite - find a great enemy who is trying to do something in direct opposition to what you're doing. Portray them in ways that emphasize how you're different. It doesn't have to be a company. It could be something like "ignorance." Finding an opposite allows you to make meaning instead of just making money.
    2. Know thyself - you can't fight the competition unless you know what you're about and where you stand. Guy recommends creating a mantra (not a mission statement) as the first step. Here's Kynetx' mantra: automate context.
    3. Know thy customer - everyone says this, but the key is the degree to which you do it. Don't farm it out; do it yourself. Making sense of who your customers are and what they want will drive you crazy--not just your competition.
    4. Know thy enemy - the best way is to become your competition's customer. What's the shipping policy, their credit policy, etc.? How do they do it? Get first hand knowledge. Go to their conferences.
    5. Focus on the customer/create good shitake - too many companies focus on their competition. People don't care about your battle with the competition; they only care about whether or not you serve their interests. The most important aspect of focusing on your customer, you have to build a good product that your customers want to buy. He takes a swipe at SEO: Google is in the business of finding good stuff. If you build good stuff, Google will find it because their interests are aligned with yours. Great products aren't a little better; they're 10 times better. Your product ought to be emotive and be polarizing. He references his DICEE advice.
    6. Turn customers into evangelists - if customers are emotional about your product they will talk about it--for free. Guy uses Nike as an example: they're not selling cotton and leather stiched together as shoes. They're selling ideas and emotion.
    7. Create your own day - Levi Strauss commissioned a study on the effect of casual dress on workplace morale and productivity. They made this available to the press and created a "casual dress implementation kit." Lots of papers picked it up. They created their own opportunity.
    8. Make good by doing good - align yourself with good causes.
    9. Turn your competition into allies - find ways to work with, rather than against your competition. Where can you be collborative to engage new markets? He gives the example of J.B. Hunt trucking teaming with railroads to put semi trailers on flatbeds.
    10. Play with the minds - Once you've done everything else, play games with the competition. He tells of a pizza company that offers 2 for 1 pizzas if you tear out and bring in the yellow pages ad of their competition. He talks of a small business person sitting next to a Home Depot who renamed his business "Main Entrance" to get people coming to Home Depot to come into his store.
    11. Use Twitter - A bonus 11th tip. What good is a cell phone that allows you to listen to random snippets of conversation? Use search to find out what people are saying anything about you or your company? When you see people talking about things your sell they are potential customers. Guy gives a demo of Twitter to a room of people who aren't Tweeple (for the most part). He demos Tweetdeck (FTW). He recommends using TwitterHawk but staying away from the autopost features.

    Good marketing pisses people off. If people aren't getting mad at you, then you're boring and bland. You can't let a vocal minority tell you what to do.

    I enjoyed this talk a lot. First of all Guy is an entertaining speaker. Second, and more important, even though he's using some material from older talks I've heard, he's constantly refreshing and rearranging his content. There's new stuff here and it adds new interest.

    Tags: utah events business kynetx

    February 18, 2009

    Peter Abilla
    no nic
    shmula
    » The Atomic Rules of Kaizen

    Systems that are internally consistent and externally pragmatic stem from just a few rules.  Systems with exceedingly many rules typically fail or will not endure.  For example,

    • Most mathematical truths stem from just a few axioms
    • Music stems from just a handful of finite notes
    • Most Martial Arts stem from a few principles of angle, attack, force, etc.

    This same approach is true for Kaizen.  In Kaizen, it is important to have fidelity to just a few atomic rules, from which a range of behavior will originate.  Below are the rules that I subscribe to:

    1. Spend no Money
    2. Add no People
    3. Add no Space
    4. Add no Steps (Touches)

    These four atomic rules collectively form constraints, leading to some creative tension.  For example,

    • We will be compelled to use creativity
    • We will be compelled toward elegance
    • We will be compelled to respect people
    • We will be compelled to question the status quo
    • We will be compelled to think “we can, if…” instead of “we can’t because…”
    • We will be compelled to focus on processes, instead of finger-pointing at others
    • We will be compelled to make many small improvements, instead of big, water-shed changes that take a lot of time and resources
    • We will be compelled to seek the collective wisdom of many people, instead of a few, select heroes

    In a tough economic climate in which we all find ourselves, a Kaizen worldview is needed more now than ever.

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    February 6, 2009

    Peter Abilla
    no nic
    shmula
    » The Profit Tree is not the only Tree

    shmula.com, profit treeIn this very tough economic environment, organizations turn more and more focus on the Profit Tree.  The course of history shows us that zeitgeist — or the movement of history at certain points of time — is a cascading phenomena where the collective focus and worldview is taken-on by large groups of people.

    It seems that these days, we are all required to think more about the Profit Tree.  But, are there other things to consider?

    The Profit Tree

    The model of the Profit Tree is a basic component of the free enterprise model.  Below is the Profit Tree:

    profit-tree.jpg

    The model above is simple, but often not understood even by most business folks.  To briefly explain, let’s use the following conventions:

    • Π = Profit
    • R = Revenue
    • P = Price
    • Q = Quantity
    • C = Costs
    • FC = Fixed Costs
    • VC = Variable Costs

    We know a few things from the model above:

    1. When R>C, then there is economic profit.  This is what most companies want.
    2. When C>R, then the company is not profitable; most likely, the company is eating its free cash flow or using its credit line from its creditor.
    3. When R is flat and C continues to grow, that is typically when most companies seek help from folks with experience in fundamentally transforming a business operation — typically, these are folks with experience in Lean and in Six Sigma or Turnaround experience.

    The principles above are required practice if a firm is to be financially viable.  While the Profit Tree is important, there are other trees that need to be nurtured.

    The Culture Tree

    Most firms with any depth to it, will have a history and some values that it claims.  These set of values will probably be codified into a document that explicates what is important to the company and these values dictate the behavior of the company employees.  The collective behavior is what we typicall call “culture“.

    Lead by Example: To nurture the Culture of a company requires the leaders of the company to behave in accordance to its said values and to lead by example.  This also includes hiring people that either already espouse the company values or can quickly and easily assimilate those values soon in the on-boarding process; similarly, firing those that don’t espouse and own those values in their behavior.

    Speak the Culture: An integral part of a culture is the language used within a company and in its public messaging.  It’s not just the words we use, but the stories we share with each other and with the public — stories that embody actual acts of culture — these stories carry organizational memory and last long after the people are gone.

    Ritualize the Culture: I was once at a company where we had specific rituals or traditions that everybody practiced — it was taught, people did it willingly, and it embodied the values of the company.  For example, prior to every meeting, this company always shared 3 things:

    1. Customer Success Story
    2. Safety Story
    3. Quality Story

    The attendees of the meeting would volunteer to share the items above in a 3 minute segment.  Because it was prior to a meeting, it set the tone for the meeting, especially since the first story was about the customer.

    Since hundreds of meetings are held each day in a typical company, imagine how the tone is set daily about what is important to the company.  Ritualizing the Culture can be powerful in mobilizing an entire company toward what is important.

    Conclusion

    The Profit Tree is not the only tree in the vineyard.  In these economic times, the companies that nurture one tree more than another will realize that, when things are well and fine again — and they will be fine again, America — that some trees have gone uncared-for and might present a “win the battle but not the war” situation for most companies.

    Take a balanced approach: grow economic profits and take care of the soft-stuff too, because the soft-stuff is truly the hard-stuff.

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    January 29, 2009

    Peter Abilla
    no nic
    shmula
    » How To Be A Human

    shmula.com, pete abilla, familyI had an experience recently where I spoke with a group of friends and acquaintances about the economy and the existential despair that is all around us.  Then, a friend said something that shocked me:

    . . . it’s terrible that (company x) went through such a huge delayering

    What?  “Delayering” as a euphemism for a human losing his or her livelihood — these are people who have spouses, children, a mortgage, dreams — that will be affected.  To refer to each of these human beings as a collective “Delayer” felt very wrong.

    I challenged her and asked what she meant by “delayer” — through a socratic dialogue, she finally said something that was less jargon-filled:

    . . . it’s terrible that so many people lost their jobs

    This experience caused me to reflect on Kierkegaard’s poignant question “what does it mean to be a human?”, then on Martin Buber’s explication of the “I/Thou” relationship, then on Martin Luther King Jr.’s notion of “nobodiness” and, more recently, on Josh Bernoff’s invitation for all of us to become more human.

    It’s an appropriate invitation and, in this post, wish to contribute a few ideas on how we can become more human with language: our language can convey meaning, an emotion, and a judgment.

    Worldview

    Martin Buber provides an appropriate context in his I/Thou description.  In plain language, we can respond to other human beings in the following ways:

    1. We can treat other human beings as objects: things that either help us progress or things that get in our way of progression.
    2. We can treat other human beings as humans: we can listen, have empathy, and treat each other with kindness despite other differences.

    I submit that to be human means to accept Martin Buber’s description #2 above.

    [SinglePic not found]

    A few basic characteristics that will help our understanding:

    1. Human development involves physical, mental, social, and the emotional.  On one aspect, Human Beings are quite complicated and have an inner-life that is rich, deep, private, and sacred to that individual.
    2. Human Beings also have the faculty of memory, that can be triggered by outside stimuli, color, smell and can further trigger emotions that can sometimes drive behavior or thought.
    3. Gadamer pointed out correctly that Human Beings are social creatures — sociality requires communication with others and a community is the outcome of our sociality.

    All in all, it is important to remember something my mentor taught me a long time ago:

    judge slowly.  people are hurting & struggling in ways that we cannot see

    Having this worldview as a context is helpful — we can now discuss some ideas in how we can treat others.

    Language

    The above-mentioned example of “delayer” is not sensitive — clearly — but it also points to a cultural challenge in business where we have, for the most part, replaced meaningful conversations with empty jargon.  This state-of-affairs results in a community of human beings that speak, but don’t really say anything at all.

    Here are some examples of jargon that I hear daily, but lack much meaning (if you are interested, Bob Sutton at Stanford, recently wrote about Jargon Monoxide):

    center of excellence, ramp up, upside, collaborate, sustainable, brain storm, mind shower, metrics, multitask, green policy, run the numbers, exposure, real-time, drop the ball, goal oriented, customer oriented, level set, touchpoints, streamline, high-level, mission critical, synergy, reach out, tasked, buzz, action item, service oriented, walk the talk, reinvent the wheel, occupy the field, quick win, bottom up, core competency, circle the wagons, share-of-wallet, non-productive headcount, full-time equivalent, downsizing, redundant employee, position elimination, go to market, BHAG, delayer, organization simplification, agile, etc…

    Admittedly, I am guilty of using some of the jargon I mention above.  But, my usage doesn’t justify the usage of some of those phrases — some are just cruel, whereas some are devoid of meaning, while some are actually descriptive of the concept.

    I’m not saying that we shouldn’t use any business jargon, but I’m proposing a greater sensitivity toward others and a bias for meaning and humaneness — which might mean that instead of saying “drop the ball”, one might say instead “fail” or instead of saying “core competency”, one might say “what we’re good at”.

    Share-of-Wallet or a Customer?

    Here’s my point: would you prefer to be called “share-of-wallet” or a “customer”?  There is a clear intention in our language: “share-of-wallet” satisfies Buber’s definition of being treated like an object; being referred to as a “customer” is more humane.  I prefer to give a larger share of my wallet with businesses that treat me as a human — that is irony.

    In sum, a businesses wouldn’t last long if it claimed in some form the following claim:

    we are passionate about our share-of-wallet

    But, a business can and should say and will likely last long-term if it claimed and behaved like:

    we are passionate about our customer’s happiness

    Herein lies my point and an irony: I prefer to give a larger share of my wallet with businesses that treat me as a human.

    Implications of Language

    Our condition as Human Beings requires us to engage in social interactions — to talk with each other; connect with each other; to commune with each other.  This means that communing with each other can be done in many types of contexts — including a business context.

    Which begs the question:

    Why are our interactions at home with our loved-ones more grounded and down-to-earth, but once we enter a business setting, our language and ways of communing with each other and with our customers take on an impotent tone, devoid of life or meaning?

    Can you imagine if we were verbally spoken to in the same manner that newspaper print advertisements look: “50% off, buy one, get one free — shop NOW!”  We might see that in print and, certainly, on TV and other media.  But, if a human said that in-person and verbally to our face, most of us would feel that was strange.  Why?  Because it’s just not how human beings talk with each other.

    Conclusion

    We can all stand to be a bit more human — starting today.  Are you with me?

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    shop@shmula or learn about Queueing Theory

    January 26, 2009

    Peter Abilla
    no nic
    shmula
    » My Experience with Twitter, Part 3

    twitter top-100 demographicsA few weeks ago, I posted on my experience with Twitter, Part 1.  That post was retweeted by Robert Scoble, the traffic came, got a bunch of new followers on Twitter (welcome folks), and a flurry of passionate comments on the post, including 3 comments from Guy Kawasaki.  Then, I posted on my experience with Twitter, Part 2.  This post is Part 3, here is Part 4, in case you were interested.  This post includes a quick analysis on the top-100 folks on twitter.

    There is a camp that argues that the top-100 on Twitter, ranked by followers, is a huge homogeneous blob — that is, this is a group that largely looks the same, that primarily follows each other, and engage with one another within the top-100 in a pat-each-other-on-the-back type of relationship.

    Furthermore, this camp argues that Twitter follows a long-tail model, such that “the hits” are the ones with the most followers and that the tail consists of the rest of us.  If that argument is true, then Twitter doesn’t really democratize the conversation, but that the conversation remains with the elite.

    This intrigued me, so I looked at some data.  All data was as of 01/22/2009

    Methodology and Data Sources

    I wanted to learn about the behavior and attributes of the top-100.  So, I went to Twitterholic, pulled their data into a snappy spreadsheet, and played with the data.

    Discoveries and Hypothesis

    There were several things I wanted to learn more about or, even conclude, from the top-100 list.  Below are the research questions I had in mind:

    1. What is the Demographics of the Twitter top-100?
    2. Does tenure on Twitter likely lead to more followers?
    3. For the top-100, what does the cumulative distribution and shape of updates-per-day?
    4. What is the impact of Twitter updates-per-Day on followers?

    Let’s address each question in succession.

    Top-100 Twitter Demographics

    The criticism of the top-100 as a homogeneous group really points to its demographics and, or, its psychographics.  But, the best data I could obtain provided me with very basic demographic information, but is descriptive.

    top-100-demographics.jpg

    The top-100 is mainly a male-dominated group, with women comprising only 12% of the group and men comprising 58% of the top-100.  For this quick study, I define “Company” as an entity — corporate or government — whose Twitter account represents that entity.  For that category, I judge that 29% of the top-100 are organizations with a Twitter account.  I define “Not Sure” as, well, not sure: this account is @darthvader — I know he is a male, but he’s also 1/2 machine and he’s also fictional.  I’m not sure how to categorize him/it, so I created the “Not Sure” category.

    shmula-darthvader.png

    Other interesting information would be to study the occupation of the top-100, so see if they are homogeneous in that respect (are they all social media journalists or consultants?); other attributes would also be interesting, including geography (are they all in silicon valley?), etc.

    Role of Tenure on Twitter

    We wish to know whether there is a relationship between Tenure and the number of Followers on Twitter.  To do this, I obtained days on Twitter for the top-100 from registration to current day (as of 01/22/2009).  Below is a regression between the variables of tenure and followers:

    top100-twittertenure-to-followers.jpg

    Based on the best-available data I had of the top-100, it appears that Tenure almost has nothing to do with the number of followers.

    Caveat: I grant that I am not an expert on the regression (though, my regression on Snoop’s “Ain’t nuthin’ but a G-Thang” is pretty darn creative); I also grant the role of outliers — for example, if I took out the outliers, the relationship of Tenure-to-Followers might actually become stronger, based on the R^2.  I considered all of that.

    What does Updates-per-Day Look Like for the Top-100?

    Earlier, we looked at Guy Kawasaki’s tweet behavior over time.  Do the rest of the top-100 tweet as much as he does?

    top100-histogramupdatesperday.jpg

    For the top-100, the data above shows that the average updates-per-day is 7.7, with an average spread of 12.4 updates-per-day.  The cumulative shape of updates-per-day for the top-100 can be approximated by a normal distribution.

    The ones that update the most from the top-100 are below:

    1. @alohaarleen, 99.2 updates-per-day
    2. @nytimes, 38.39 updates-per-day
    3. @chrisbrogan, 37.59 updates-per-day
    4. @perrybelcher, 34.63 updates-per-day
    5. @guykawasaki, 33.65 updates-per-day
    6. @newmediajim, 31.35 updates-per-day
    7. @breakingnewson, 23.64 updates-per-day
    8. @scobleizer, 21.73 updates-per-day
    9. @mashable, 19.13 updates-per-day
    10. @loic, 17.71 updates-per-day

    What is the relationship between Updates-per-Day and Followers?

    Similarly as before, I understand the role of outliers and how that can skey the data, but I chose not discard the outliers in this case (mainly out of laziness).  If I were actually getting paid to write this post, then I might have injected some data integrity and professionalism; instead, I’m opting for just plain fun and, hopefully, some traffic and a lively conversation.

    So,

    top100-updatefrequency-to-followers.jpg

    If I removed the outliers, the shape of the data shows that there might be an inverse relationship between Updates-per-Day and Followers: in other words, the more you update, the higher the likelihood that you will have fewer followers.

    Again, with a more professional approach (and if some monetary reward was involved as further incentive), I’d find the inflection point at which updates-per-day begins to degrade the number of Followers.

    This inflection point might be interesting to some or, might help some in their communication strategy — “when is overcommunication reached?” — for example, might be a very interesting question to answer for corporations on Twitter.

    Conclusion

    This was fun and I’m still very impressed with Twitter.

    If you’re interested, you can download the twitter top-100 spreadsheet here.  Enjoy!

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    January 23, 2009

    Peter Abilla
    no nic
    shmula
    » Jeff Bezos and Root Cause Analysis

    I’m always impressed when CEO’s demonstrate Deming-like behavior as they lead; it’s rare, but there’s almost a magical, mobilizing, and inspiring force that happens when CEO’s or corporate leaders behave in a respectful, inspiring, common-sense, and thoughtful way.

    Today, I’m reminded of an experience back in 2004 while I worked for Amazon.com — something Jeff Bezos did that I still carry with me to this day.

    During Q4, Bezos and his leadership team have a tradition of visiting the Amazon.com Fulfillment Centers, spends time with the associates, and also physically works on the floor alongside everyone else.

    During one visit, there had just been a safety incident where an associate had damaged his finger.  When Jeff learned of this during a meeting, he was very disturbed and got very emotional — angry at first, then felt very bad for this associate and his family.  Then, he did something remarkable.

    He got up, walked to the whiteboard and began to ask the 5-why’s (I quote the below from memory):

    Why did the associate damage his thumb?

    Because his thumb got caught in the conveyor.

    Why did his thumb get caught in the conveyor?

    Because he was chasing his bag, which was on a running conveyor.

    Why did he chase his bag?

    Because he placed his bag on the conveyor, but it then turned-on by surprise

    Why was his bag on the conveyor?

    Because he used the conveyor as a table

    So, the root cause of the associate’s damaged thumb is that he simply needed a table, there wasn’t one around, so he used a conveyor as a table.  To eliminate further safety incidences, we need to provide tables at the appropriate stations and update safety training.  Also, look into preventative maintenance standard work.

    There are several things amazing about this experience:

    1. Jeff Bezos cared enough about an hourly associate and his family to spend time discussing his situation.
    2. Jeff properly facilitated the 5-why exercise to arrive at a root cause.
    3. He involved a large group of stakeholders, demonstrated by example, and arrived at a root cause and he didn’t focus on symptoms of the problem.
    4. He is the founder and CEO of Amazon.com, yet he got involved in the dirt and sweat of his employees’ situation.
    5. In that simple moment, he taught all of us to focus on root causes — quickly — not heavily relying on data or overanalysis of the situation, and yet he was spot-on in identifying the root causes of the safety incident.

    Every company has its warts and zits, but, make no mistake — Jeff Bezos is a Lean and Six Sigma fanatic and, in my opinion, makes a strong effort to run his company in a very Deming-like way.

    How will you apply the 5-why’s today?  Will you focus on the root causes of your challenges and not just on the symptoms?

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    January 1, 2009

    Hans Fugal
    no nic
    The Fugue
    » War with Qwest

    Qwest is at war with my ISP, and on Tuesday and Wednesday I and thousands of others, including 911 services and government offices and numerous small and large businesses, got caught in the crossfire.

    You can read the story but I’ll sum it up here: there’s a money dispute and SkyWi (the parent company of my ISP, ZiaNet) took Qwest to court in early December. I’m told they had a restraining order against Qwest disconnecting them, and when that expired and SkyWi hadn’t paid Qwest the disputed money (would you pay money in dispute?), they cut them off. This left all of us civilians without internet abruptly mid-morning Tuesday.

    I’m not privy to all the details, but I’ve read all the reports and I talked to people at the ZiaNet offices. At first, when I had less information, I was mad at my ISP. That changed somewhat to sympathy when I heard more of the story. It sure does look like Qwest is trying to put them out of business with this shenanigan. There was probably a breakdown of communication between Qwest and SkiWi as well, no doubt exacerbated by the fact that we were smack in the middle of the holidays.

    But I don’t hold my ISP blameless. We weren’t noticed of impending doom at all. The phone message the first day said something about a major outage with no ETA. I assumed that meant a few hours, maybe into the evening. The second day, the phone message said happy holidays, here are our holiday hours. No mention of the trouble, and no update. Then passed straight to “the voice mailbox is full”. The voicemail being full and lines tied up I can understand, but there’s no excuse for not having an informative message.

    So I was briefly torn—do I stick it out with them on principle in this war against Qwest or do I find another source of internet. I decided it’s not my problem—my problem is getting internet. So I investigated switching ISPs, and of course with New Years day coming up and thousands of other people scrambling for internet it wasn’t pretty. I have an appointment to be set up by Comcast on Tuesday (out of the frying pan and into the fire). In the meantime, the PRC stepped in and my connection came back on just before the big apple fell in all its time-delay glory. Still, the Comcast deal is about $20/month cheaper and we’re hard up for cash now, and Comcast jumped on the opportunity and was waiving installation fees for ZiaNet customers.

    I’ve never been much a fan of Qwest, but this is a new low. Before I would have considered Qwest less evil than Comcast, but now the tables are turned. Still, I will miss the block of 4 public IPs.

    January 19, 2009

    Peter Abilla
    no nic
    shmula
    » Tony Hsieh, CEO of Zappos, Summary

    This is a summary post, highlighting the 5-part series where Tony Hsieh responds to over 20 questions submitted by shmula.com blog readers.

    Below is the post series:

    1. Interview Questions from shmula.com blog readers
    2. Tony Hsieh, CEO of Zappos, Part 1
    3. Tony Hsieh, CEO of Zappos, Part 2
    4. Tony Hsieh, CEO of Zappos, Part 3
    5. Tony Hsieh, CEO of Zappos, Part 4
    6. Tony Hsieh, CEO of Zappos, Part 5

    Quotable from the series…

    We actually have our 1-800 number on every single page of our web site because we actually want to talk to our customers and when customers talk to us for five to ten minutes we have their undivided attention and that’s really the best opportunity to brand ourselves as a company that unlike most companies, actually wants to take care of our customers.

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    January 16, 2009

    Peter Abilla
    no nic
    shmula
    » When Self-Help Does Not Help

    I’d venture to say that most people don’t have a desire to call customer service.  If one ever got lucky enough and passed the Interactive Voice Response (IVR), the customer service representative (CSR) is sometimes not all that helpful (like the time I spoke with Qwest Customer Service).  But, getting passed the IVR — the spaghetti-diagram-like IVR — is the first challenge.

    Recently, I came across an iphone application called Direct Line, which automates the IVR process and brings the customer straight to the customer representative.  In other words, instead of pressing #2, #3, #0, #0, #0, the iphone application does all of that for you and takes you straight to a human customer service representative.

    In their words,

    When you load up the app, you’re looking at a straight list of company names. You never really see more than just that when using Direct Line, but pressing on any company will immediately exit the app and launch a phone call. The phone number it calls may just have an extra digit at the end of it or sometimes nothing at all, but most of the time you’ll be looking at a good deal of comma’s and numbers trailing the companies standard number.

    Those symbols allow for the phone to delay in sending over the additional numbers, keeping the entire process automated for you. You will however, have to enter in account information in certain places (AT&T requires it to get anyone on the phone), but Direct Line makes sure to drop you off at that point, leaving nothing else but a live person your next step.

    I’ve tried this iphone app and I can tell you it works: bringing the customer straight to a human customer service representative is a great buy for $0.99 — money well-spent for sure.

    The development of this iphone application really highlights a few important conclusions for the customer:

    1. Make it easy for the customer to speak with a human; the customer needs to speak with a human: if a customer needs help, going through an IVR is the last thing the customer wants to do.  An IVR is a navel-gazing tool that helps firms manage demand, resource allocation, and operations, but the trade-off is that the firm is so busy navel-gazing that it fails to look at the needs of the customer.
    2. If a customer is calling customer service, there was already a service failure — do not add insult to injury: in other words, customers do not wake up one day and say “hey, i’m going to call customer service.”  Typically, customers call customer service because some failure somewhere happened and they are seeking help.  That first failure is “injury” and if the customer has a bad experience in their seeking help from customer service, then that is “insult”: hence “insult to injury” — do not add insult to injury.
    3. The converse of (2) is that, even though there was a first failure somewhere, customer service can act as an effective and strategic response to the customer — it can recover the customer from a bad experience.
    4. At the end of it all, help the customer say to herself “I Rock!”  — help the customer feel successful.
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    January 14, 2009

    Peter Abilla
    no nic
    shmula
    » My Experience with Twitter, Part 2

    Earlier this week, I posted on my experience with Twitter, Part 1.  That post was retweeted by Robert Scoble, the traffic came, got a bunch of new followers on Twitter (welcome folks), and a flurry of passionate comments on the post, including 3 comments from Guy Kawasaki.  Today, I’ll post my experience with Twitter, Part 2.

    A very basic observation I’ve discovered in my 40-something days on Twitter is this: my blog post frequency has gone down and my tweet frequency has gone up.  In other words, I observe an inverse relationship between my blog post frequency and my tweet frequency such as below:

    blog-to-tweet.jpg

    Implications

    • My Twitter audience and my Blog audience are different; so, on one respect, one will benefit and the other will not.
    • Conveying information and participating in a conversation is tough on Twitter — 140 characters is all one has and needing to convey more complex concepts or trying to make a point on so few characters might be difficult.  Blogging is better for that and the conversation can be had in the comment section but, since Tweeting more can lead to less Blogging, then that is a clear implication of the inverse relationship between the two.
    • Cash Money: if you make revenue from your blog and nothing on Twitter, then expect to lose traffic and cash money as you tweet more and blog less.

    Either/Or?

    As in most things, it’s not an either/or or dichotomous situation.  One can reconcile their tweeting habits with their blogging habits.  In fact, on shmula.com, my tweets are now integrated directly on my blog which, I’ve discovered, is helping like crazy on search engine optimization (SEO) and getting indexed by Google.

    Plus, my tweets can be additional or complementary content on my blog.  My tweet content provide a different type of content that is actually more human — more of my everyday life — rather informative content as is typically on my blog.  This means, then, that my readers can see a different aspect of the person behind shmula.com, not just the geek, but the human who does everyday human, non-interesting stuff.

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    January 12, 2009

    Peter Abilla
    no nic
    shmula
    » My Experience with Twitter, Part 1

    I’ve been on Twitter for 44 days now. In sum, I love Twitter: I find it to be a very helpful utility for both consuming information as well as for contributing to a conversation. But, I have some other observations too that I’d like to share in a series of posts. This is Part 1 of my observations on Twitter.

    Tweets come in all forms — useful, useless, agnostic, and bizarre. People who tweet also fall into the same categorization: useful, useless, agnostic, bizarre, and [use your imagination]. One observation is that there are some who tweet that have a lot of followers. As I’ve scoured the people with a lot of followers and tried to make a judgment on the value of their tweets — in general — I came away lacking: why would anybody follow these people?

    Case in Point: Guy Kawasaki has almost 47,000 followers. As a former follower for 2 days, I noticed that his tweets were robotic; unnatural; it felt like a bot was tweeting for him. So, I happily unfollowed him — he wasn’t interesting at all & just added noise to my already overcomplicated life.

    guy-kawasaki-twitter.jpg

    Then, it dawned on me — that Guy Kawasaki’s tweet behavior was like a rambling drunk at a neighborhood bar: he couldn’t stop tweeting and was, for the most part, rambling stuff nobody wanted to hear.  I also became curious about the quantitative nature of Guy Kawasaki’s tweets — so, I ran some numbers.

    • Guy’s earliest tweet I could find was dated November 8, 2008 — 64 days ago.
    • Within 64 days, Guy Kawasaki has 16,457 tweets.
    • This means the following:
      • 16457/9.14 weeks = 1800 tweets per week (tpw)
      • 16457/64 days = 257 tweets per day (tpd)
      • 16457/1536 hours = 10 tweets per hour (tph)
      • 16457/92,160 minutes = 0.17 tweets per minute (tpm)
      • 16457/5,529,600 second = 0.003 tweets per second (tps)

    Looking at the raw numbers above, it’s pretty astounding that a human can tweet that much. It’s pretty overwhelming and, hence, I unfollowed him. But, why does he have almost 47,000 followers?

    The Guy Kawasaki scenario led me the following hypothesis:

    • Those who tweet the most useless noise have the most followers1.

    Perhaps my hypothesis can be displayed as a simple table like below:

    twitter-chi-square.jpg

    To explain,

    • the top-left quadrant says that “there aren’t very many followers for low-value tweets”
    • the bottom-left quadrant says that “there are a bunch of followers for low-value tweets
    • the top-right quadrant says that “there aren’t very many followers for high-value tweets”
    • the bottom-right quadrant says that “there are a bunch of followers for high-value tweets”

    Based on this table, I’d consider Guy Kawasaki to occupy the bottom-left quadrant.

    Conclusion

    I’m not picking on Guy Kawasaki at all — in fact, my comments are more of an indictment on the followers than on Guy Kawasaki, the man. He can tweet whatever he wants — but, people have a choice to follow or not to follow. For some reason or other, he still has 47,000 followers.

    Let me generalize even further: beyond Guy Kawasaki — my hypothesis is a generalized theory on twitter as a community: maybe twitter is subject to the laws of Game Theory, namely, the paradox of conformity –

    Conformity: People in a group often believe and do the same thing as people around them. This leads to an Information Cascade — that is, you do what other people do, etc. For example, if you are eating at a fancy restaurant and don’t know which fork to use, you naturally look to see which fork the first person used, and you use the same one. Then, the third person notices which fork you and the first person used, and he does the same. And so on.

    In other words, perhaps Guy had a bunch of followers, so more joined his bus thinking that, if they didn’t follow him, they might be missing something or not be in the “in-crowd”.

    So, I only use Guy Kawasaki as a case study for this post. He can obviously do whatever he wishes with his tweets. I actually like him. He is Asian — which helps and, more importantly, he’s an adoptive father — so am I (baby 1, baby 2, baby 3). So, I like him and my observations are really more on Twitter as a community of conformity than it is anything personal about Guy Kawasaki.

    1. It would be easy enough to make this quantitative, such that we can actually prove or fail to reject this hypothesis.  What is required is to increase the sample size to something statistically significant and complete the cells in the chi-square categorical table above.  Using the Chi-Square hypothesis test and distribution, we can then conclude whether or not we can fail to reject this hypothesis.  Since I do not that, please take this post with a grain of salt, have a sense of humor, and have some fun with it.
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    January 5, 2009

    Jordan Gunderson
    jordy
    Jordy Blog
    » Got Contract Work?

    Gabe and I want to be sure that our start up company, Izeni, has a cash runway that’s long enough to ensure that we can have a proper lift off. To that end we’ve been doing some consulting and contract work (mostly low-hanging fruit) to slow our burn rate, and it’s worked fairly well because we’re in bootstrapping mode and our expenses are relativity low. So, although we’ve never really sought contract work, we do like it; and I thought I’d do a quick post officially soliciting it.

    So without further ado, Izeni will be accepting all kinds of technical consulting and contract work. Our specialities are Python coding; website development (particularly using the Django framework); Linux systems administration (Apache, *SQL, Postfix, Mailman, IPtables, Samba, Bash, etc.); and VoIP-based telephony (Asterisk and Freeswitch).

    We can also do general computer and network support, online marketing, and a myriad of other technical and business odds and ends.  :)

    Izeni is based out of Utah, but we can also telecommute.

    Please let me know if you have any contracting and consulting opportunities or know of any companies looking for web guys, programmers, or other technical contractors. Otherwise, feel free to repost this (pass the word along), or just keep us in mind.

    January 2, 2009

    Hans Fugal
    no nic
    The Fugue
    » War with Qwest

    Qwest is at war with my ISP, and on Tuesday and Wednesday I and thousands of others, including 911 services and government offices and numerous small and large businesses, got caught in the crossfire.

    You can read the story but I'll sum it up here: there's a money dispute and SkyWi (the parent company of my ISP, ZiaNet) took Qwest to court in early December. I'm told they had a restraining order against Qwest disconnecting them, and when that expired and SkyWi hadn't paid Qwest the disputed money (would you pay money in dispute?), they cut them off. This left all of us civilians without internet abruptly mid-morning Tuesday.

    I'm not privy to all the details, but I've read all the reports and I talked to people at the ZiaNet offices. At first, when I had less information, I was mad at my ISP. That changed somewhat to sympathy when I heard more of the story. It sure does look like Qwest is trying to put them out of business with this shenanigan. There was probably a breakdown of communication between Qwest and SkiWi as well, no doubt exacerbated by the fact that we were smack in the middle of the holidays.

    But I don't hold my ISP blameless. We weren't noticed of impending doom at all. The phone message the first day said something about a major outage with no ETA. I assumed that meant a few hours, maybe into the evening. The second day, the phone message said happy holidays, here are our holiday hours. No mention of the trouble, and no update. Then passed straight to "the voice mailbox is full". The voicemail being full and lines tied up I can understand, but there's no excuse for not having an informative message.

    So I was briefly torn—do I stick it out with them on principle in this war against Qwest or do I find another source of internet. I decided it's not my problem—my problem is getting internet. So I investigated switching ISPs, and of course with New Years day coming up and thousands of other people scrambling for internet it wasn't pretty. I have an appointment to be set up by Comcast on Tuesday (out of the frying pan and into the fire). In the meantime, the PRC stepped in and my connection came back on just before the big apple fell in all its time-delay glory. Still, the Comcast deal is about $20/month cheaper and we're hard up for cash now, and Comcast jumped on the opportunity and was waiving installation fees for ZiaNet customers.

    I've never been much a fan of Qwest, but this is a new low. Before I would have considered Qwest less evil than Comcast, but now the tables are turned. Still, I will miss the block of 4 public IPs.

    December 31, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » Republic Party Bones Up?

    Now we’re talking:

    EXCLUSIVE: RNC draft rips Bush’s bailouts
    Ralph Z. Hallow (Contact)

    Republican Party officials say they will try next month to pass a resolution accusing President Bush and congressional Republican leaders of embracing “socialism,” underscoring deep dissension within the party at the end of Mr. Bush’s administration.

    Those pushing the resolution, which will come before the Republican National Committee at its January meeting, say elected leaders need to be reminded of core principles. They said the RNC must take the dramatic step of wading into policy debates, which traditionally have been left to lawmakers.

    “We can’t be a party of small government, free markets and low taxes while supporting bailouts and nationalizing industries, which lead to big government, socialism and high taxes at the expense of individual liberty and freedoms,” said Solomon Yue, an Oregon member and co-sponsor of a resolution that criticizes the U.S. government bailouts of the financial and auto industries. Republican National Committee Vice Chairman James Bopp Jr. wrote the resolution and asked the rest of the 168 voting members to sign it.

    I hope this resolution passes. It would be a clear sign (to me) that the Republican party is worth saving.

    December 28, 2008

    Peter Abilla
    no nic
    shmula
    » Twitter as Combinatorics

    a.jpg Ever since I discovered Twitter, I’ve been amazed at @ev, @biz, and @jack’s idea of simplicity and usefulness.  Lately, @windley (Phil Windley’s article), @monkchips, and JP have approached Twitter from a more theoretical perspective.  This article is my contribution to that healthy conversation (this blog post will be followed by a short tweet, of course).

    ~~~~~~~~~~~~~~

    James Governor attempts to define a pattern found in Twitter and other social media and calls it “Asymmetric Follow”.  He defines Asymmetric Follow as the following:

    Asymmetric Follow is a core pattern for Web 2.0, in which a social network user can have many people following them without a need for reciprocity.  Asymmetric Follow is unlike email for example, which tends to be within small groups, with all users knowing each other (newsletters are a clear exception here). If you see a social network where someone has 5000 followers and only follows 150 back - that’s Asymmetric Follow.

    So, if I were to explain James’ definition to a teenager 1 , I might say something like:

    “Asymmetric Follow is when the popular kid in school is admired by a bunch of less popular kids and when the popular kid speaks, everyone usually listens and when the less-popular kids speak, the popular kid can choose to listen or respond or do nothing”.

    If I’ve been charitable in my understanding and summary of James’ definition of Asymmetric Follow, then his explanation and definition makes sense to me.  From my experience as a former High School student of the less-popular type, that’s how life was.

    I have to note, however, that James’ definition confounds the behavioral economics definition of Information Asymmetry — but he means something different.  The historical definition has more to do with the direction of communication and the “stickiness” of that information and how that “stickiness” can impact decisions and rational choice.  James Governor doesn’t address the definition in behavioral economics but does use a similar term.

    Twitter as Combinatorics

    But, let’s quantify what James is talking about.  In fact, when we do, we’ll find out that it’s actually basic combinatorics.

    Suppose there are persons A and B, who follow each other.  In this scenario there are 2 communication links (AB, BA).  Add person C who follows and is followed-by persons A and B, now we have 6 communication links, (ABC, ACB, BCA, BAC, CAB, CBA).  So, inductively, as inter-followership 2 permutation grows, the raw combinatorial communication link counts grows quadratically, not linearly.

    To demonstrate this, we use basic statistics of the form n-choose-r, where !, such as n!, is equivalent to n factorial, to arrive at the formula for how many pairs or permutations we can choose from n items:

    a.jpg

    For the number of pairs, we can reduce the above formula to the following:

    b.jpg

    Visually, as inter-followership grows, the communication links grows non-linearly, but quadratically (n! grows exponentially) — in either case, the function is clearly not linear:

    twitter-as-combinatorics.jpg

    Mutually Exclusive, Comprehensively Exhaustive (MECE)

    JP runs a really fun experiment that validates his hypothesis that tweets in the universe of Twitter are comprehensively exhaustive 3.  What his experiment does not show is the exclusiveness of the tweets — that is, their uniqueness from each other.  On its face, this is not a big deal, but in scientific inquiry, being able to compartmentalize objects in unique buckets is helpful.

    One reason it is difficult to classify tweets as mutually exclusive in content is because there are Replies and Retweets.  There is probably an innovative way to find the unique and mutually exclusive clusters in the corpus that is Twitter — that would be fun work for a computational linguist.

    For this post, this is not a big deal, but I just make this point for clarity — really great experiment, JP.

    A Conclusion

    Ummm, I don’t really have a conclusion or a point, except for that I think Twitter is pretty amazing and that Twitter can and should encourage computer scientists, computational linguists, behavioral economists, combinatorial mathematicians, set theory geekzoids, game theory freakonomica, cultural anthropologists, and others to participate in and learn from this massively human experiment.

    I really like Twitter — oh, by the way — retweet this post…

    1. my personal criteria for an atomic and pragmatic definition of a concept is if it can be explained to normally-functioning-and-average human that is 15 human years or younger
    2. I make a distinction between inter-followership and intra-followership where the former is a set where each member follows each other and the latter is a set where the followership is disjointed.  However, for the purposes of Twitter, inter-followership and intra-followership doesn’t matter so much since a follower has the same rank as the non-follower to the one being followed — their voices are not weighted differently
    3. This is my term that I use to explain his point, but he does not use the terms Mutually Exclusive or Comprehensively Exhaustive in his writings.
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    December 19, 2008

    Peter Abilla
    no nic
    shmula
    » Tony Hsieh, CEO of Zappos, Part 3

    Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the third installment to those questions, here are the first and second installments.

    Comment by Dave on November 26, 2008 @ 6:36 pm
    What are your plans for international expansion? Which markets do you see first, and why?

    We actually ship internationally today, but it’s from the US so shipping and duties/taxes make it expensive. To do it right, we would need to set up warehouse operations in other countries, which we aren’t planning on doing anything soon. Right now we’re focused on expanding into other product categories beyond shoes in the US (such as clothing).

    Comment by kc on November 26, 2008 @ 8:40 pm
    This is a general business question: What is your advice on working within a de-centralized organization and being charged with growing the e-commerce portion (approx. 15% of the whole) within the realm of a traditional company offering little support or understanding of the business model?

    If you can get the support and funding for it from the parent company as essentially a separate business, I would try to get the green light to build out your own culture, HR policies, etc. and have the parent company leave you alone and let you run your own show as long as you’re meeting your financial goals.

    Comment by Ben Shin on November 26, 2008 @ 9:04 pm
    Hi Tony - Zappos started with the shoe category and is now selling other stuff.  In one sense, Zappos is becoming more and more like Amazon. What is different between Zappos and Amazon?

    While it’s true that we’re in many of the same product categories, we don’t really think of Amazon as a competitor. Wal-Mart and Nordstrom are both in many of the same product categories, but nobody thinks of them as competitors.

    Amazon is really more about being a market place where you can find the best value. There are many 3rd party sellers offering products on Amazon.com.

    For Zappos, we just want our brand to be about the very best customer service and customer experience, which is why we’ve stayed away from the “easy money” of having other 3rd party sellers on the Zappos.com site, because we can’t control the customer experience as well when dealing with 3rd party sellers.

    Comment by Edward Cullen on November 26, 2008 @ 9:05 pm
    Have you seen Twilight yet? Did you like it?

    I have not seen it yet!

    Comment by Jeremy Hanks on November 27, 2008 @ 2:29 am
    What are your thoughts about drop shipping/supplier direct fulfillment? Id imagine that at some point as you expand into other categories, youll find yourself limited by space and $ that youre willing to tie up in inventory.  How would Zappos approach a strategy to use virtual inventory as a way to provide deeper SKU options for your customers? - Jeremy Hanks, Cofounder Doba

    This is not something we would consider doing under the Zappos brand even though it would result in more sales and higher profits because we can’t control the customer experience.

    Comment by Nathan on December 1, 2008 @ 11:49 am
    What leadership lessons have you learned in your time as CEO? Also, what mistakes have you made and how did those mistakes change you and change the company?

    I think the biggest lesson I’ve learned is that there is a lot more hidden talent and potential in your employees than you think. It’s just about building the right culture and figuring out how to unlock all of that talent, which isn’t always an easy thing to figure out.

    We’ve made a lot of mistakes at Zappos, but in general I think we do a pretty good job of learning from those mistakes. If we weren’t making mistakes, then I would say we weren’t taking enough risks.

    Our biggest mistakes in the past have probably been related to hiring the wrong people, especially those that were bad for the company culture. It’s actually made our culture stronger today because we want to try to avoid making the same mistakes.

    Go to Part 4

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    December 17, 2008

    Peter Abilla
    no nic
    shmula
    » Customer Loyalty and Customer Satisfaction

    If you buy from an online retailer this year, you will most likely receive an email communication about your purchase, probably showing something like:

    • Item Bought, Quantity, Price, and Amount Charged to your Credit Card
    • Date Shipped and Expected Arrival Time-Frame

    All pretty basic, right?  In fact, if the email only consisted of the above items and the product arrived within the expected time and in good condition, then you’d probably consider yourself a satisfied customer.

    But, how much more effort would it take the company to say something with a little more emotional hook; something that would engender a smile, laugh, and ultimately build positive memory and loyalty?  In other words, not just satisfaction, but loyalty

    My close friend recently purchased an item from CDBaby.com and the email he received went the extra mile — it showed the regulatory-compliance-payment items, but it also went a little bit further — and, that little extra effort created a smile, laughter, and loyalty:

    Your CD has been gently taken from our CD Baby shelves with sterilized contamination-free gloves and placed onto a satin pillow.

    A team of 50 employees inspected your CD and polished it to make sure it was in the best possible condition before mailing.

    Our packing specialist from Japan lit a candle and a hush fell over the crowd as he put your CD into the finest gold-lined box that money can buy.

    We all had a wonderful celebration afterwards and the whole party marched down the street to the post office where the entire town of Portland waved “Bon Voyage!” to your package, on its way to you, in our private CD Baby jet on this day, Tuesday, December 16th.

    I hope you had a wonderful time shopping at CD Baby.  We sure did. Your picture is on our wall as “Customer of the Year.”  We’re all exhausted but can’t wait for you to come back to CDBABY.COM!!

    Thank you, thank you, thank you!

    Sigh…

    shop@shmula or learn about Queueing Theory

    » Tony Hsieh, CEO of Zappos, Part 2

    Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions.  Today is the second installment to those questions, the first installment can be found here.

    Comment by Gary James on November 26, 2008 @ 10:43 am
    Zappos recently laid-off some of the workforce. I have a few questions:

    1) How is morale these days?
    2) Everyone is expecting a really tough Q4, what is Zappos doing to mitigate the effects of the downturn?

    1. Morale was obviously down in the days immediately following the layoffs, but it’s been over a month now and morale is definitely much better.
    2. We are watching our expenses closely and being proactive about reducing expenses, which was the reason for the layoffs. You can read more about the layoffs here and here.

    Comment by Bail Me Out on November 26, 2008 @ 10:48 am
    Given your predisposition for the customer, what is the right thing to do with the Big 3 Automakers? It seems to me that bailing them out is more about the employees and the US Economy as a whole than it is about peoples experience with Ford, GM, or Chrysler.  Would Tony Hsieh bailout the Big 3 Automakers?

    I actually don’t know enough about the details of the bailout or how the Big 3 Automakers’ companies work internally to be able to give a good answer to this.  I will say that in general, I think we should try to support companies that provide the best customer experience and customer service.

    Comment by Dustin Robertson on November 26, 2008 @ 1:22 pm
    Your free next day air promotion in 2007 skyrocketed your growth. Have you looking into cutting marketing expenditures to fund benefits for the customer like fast shipping?

    Yes, most of the money that we would have spent on paid advertising/marketing we’ve put into the customer experience, including free/fast shipping.

    Comment by Nancy Low on November 26, 2008 @ 3:13 pm
    I see Zappos participating at leadership events - How do you measure your ROI on leadership development within your organization?

    We don’t really measure ROI on that. We fundamentally believe that great leaders build great teams, and great teams can add orders of magnitude more value to a company than mediocre teams.

    Comment by chad on November 26, 2008 @ 3:26 pm
    I would like to know what Zappos is doing to monitor your brand on social sites like Twitter and MySpace. How many employees do you have monitoring social sites, and what is your strategic response when something negative is said?

    We don’t really have anyone whose full time job is to monitor social sites. We introduce Twitter to all new employees during orientation, and we currently have hundreds of employees using Twitter: http://twitter.zappos.com/employees

    Many employees, including me, monitor mentions of “Zappos” on Twitter simply because they are passionate about Zappos and about Twitter.

    Go to Part 3

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    December 16, 2008

    Peter Abilla
    no nic
    shmula
    » Tony Hsieh, CEO of Zappos, Part 1

    Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions.  Today is the first installment to those questions.

    Comment by Mack on November 26, 2008 @ 9:15 am
    I think its great how focused you are on the customer.  How do you financially justify going the extra mile and making cash money?  Isn’t there a tradeoff? Are MBA programs, on the wholesale, wrong on this tradeoff assumption?
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Tony Hsieh’s Response…

    The #1 driver of our growth has been through repeat customers and word of mouth. We simply decided to put most of the money we would have spent in paid advertising into the customer experience and customer service instead, and let our customers do the marketing for us through word of mouth. We still have financial goals to make, we just choose to invest more in customer service than in paid advertising.

    Comment by Karen Wilhelm on November 26, 2008 @ 9:26 am
    I have some wow experiences with Zappos. I placed an order in the evening on Memorial Day a couple of years ago. My shoes were at the door the next day!

    I dont understand, however, how Zappos can have free shipping and free returns (for 365 days, I believe)in some cases. My daughter-in-law orders a lot of shoes at one time, then returns most or all of them. I’ve done the same, and I feel bad about doing it. Can this be financially viable?
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Tony Hsieh’s Response…

    It depends on how much you and your daughter-in-law talk about Zappos to your friends and family. Obviously if you are returning every single shoe you order, then we’re losing money on that specific transaction. But our hope is that it’ll still be such a great experience for you, that you’ll tell your friends and family about Zappos. So rather than feel bad about it, instead just think spread the word about Zappos and think of that as your way of paying us back for the extra expenses.

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    November 26, 2008

    Peter Abilla
    no nic
    shmula
    » [Interview] Ask Tony Hsieh, CEO of Zappos

    Tony Hsieh, 1 CEO of Zappos.com, is on shmula.com to answer your questions today.

    Similar to previous interviews we’ve held — [2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15] — you, the readers of shmula.com, will have a chance to ask Tony anything you’d like in a structured and transparent conversation with a thought leader in customer experience management, a very successful entrepreneur, and a bona-fide social media freak (but has managed to use social media for the good of the company, adding value to its reputation, customer loyalty, and revenues).

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Here are the Q&A logistics:

    1. Ask your questions in the comment section of this post.
    2. I will keep comments open until December 5, 2008.
    3. Tony will respond to any, or all, or no question at all.
    4. I will post his responses in succeeding posts beginning on December 12, 2008, so stay tuned to shmula.com!

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    To better frame your questions, here is a quick background on Zappos.com and Tony Hsieh 16:

    Zappos.com is a Service Company that happens to sell stuff.  In their words,

    Internally, we have a saying:
    We are a service company that happens to sell ________.

    shoes
    and handbags
    and clothing
    and eyewear
    and watches
    and accessories
    (and eventually anything and everything)

    In terms of growth, below are their published numbers for Gross Merchandise Sales:

    1999: Almost nothing
    2000: $ 1.6 mm
    2001: $ 8.6 mm
    2002: $ 32 mm
    2003: $ 70 mm
    2004: $184 mm
    2005: $370 mm
    2006: $597 mm
    2007: $840 mm
    2008: Over $1 billion (goal)

    What I find most fascinating about the company is their relentless drive for service to the customer as a core tenet.  To engender a culture of service, Zappos subscribes to 10 core values:

    Deliver WOW Through Service
    Embrace and Drive Change
    Create Fun and A Little Weirdness
    Be Adventurous, Creative, and Open-Minded
    Pursue Growth and Learning
    Build Open and Honest Relationships With Communication
    Build a Positive Team and Family Spirit
    Do More With Less
    Be Passionate and Determined
    Be Humble

    The internal chatter is good, but the proof is in the pudding and — indeed — they have managed to create legions of Zappos.com promoters, recommenders, very loyal return customers, and die-hard fans.  Take this example of a customer wishing to return some shoes that didn’t fit her mother’s feet and, unfortunately, her mother passed away shortly after the customer requested to return the shoes:

    When I came home this last time, I had an email from Zappos asking about the shoes, since they hadn’t received them. I was just back and not ready to deal with that, so I replied that my mom had died but that I’d send the shoes as soon as I could. They emailed back that they had arranged with UPS to pick up the shoes, so I wouldn’t have to take the time to do it myself. I was so touched. That’s going against corporate policy.

    Yesterday, when I came home from town, a florist delivery man was just leaving. It was a beautiful arrangement in a basket with white lilies and roses and carnations. Big and lush and fragrant. I opened the card, and it was from Zappos. I burst into tears. I’m a sucker for kindness, and if that isn’t one of the nicest things I’ve ever had happen to me

    It’s incredible that a $1 Billion dollar company can still do the little things like this that make such a huge difference.

    And, finally, below is a presentation that Tony Hsieh gave recently on the topic of “Competing through Service”, which he has graciously published on SlideShare:

    1. Tony originally got involved with Zappos as an advisor and investor in 1999, about 2 months after the company was founded. Over time, Tony ended up spending more and more time with the company because it was both the most fun and the most promising out of all the companies that he was involved with. He eventually joined Zappos full time in 2000. Under his leadership, Zappos has grown gross merchandise sales from $1.6M in 2000 to $840M in 2007 by focusing relentlessly on customer service.  In the spirit of transparency, you can follow Tony daily work and life on Twitter and on his Blog.
    2. Ask Aza Raskin
    3. Aza on Poke-Yoka and the Humane Interface
    4. Aza on Quasimodal Design and the ATM
    5. Aza on Feature Bloat, Featuritis, and Site Clutter
    6. Aza on Google Search Results Page
    7. Aza on Cooperation and Team Size
    8. 12 Questions with Mary Poppendieck on Lean for Software
    9. Interview with Josh Coates of Mozy.com
    10. Interview with Spencer Raskoff, Zillow.com
    11. Interview with Brian Hansen, Kaboodle
    12. Interview with Ryan Kiskis, xFire.com
    13. Interview with Mark Jen, Plaxo.com
    14. Interview with Samuel Clemens, Bzzagent
    15. Interview with Gauri Nanda, Founder of Clocky
    16. Tony focuses on continuing to grow the business at a rapid pace while maintaining the culture and feel of a small company. Prior to joining Zappos, Tony co-founded Venture Frogs with Alfred Lin. Venture Frogs is an incubator and investment firm that invested in Internet startups, including Ask Jeeves, Tellme Networks, and of course, Zappos.com. Prior to Venture Frogs, Tony co-founded LinkExchange, an advertising network that was successfully sold to Microsoft for $265M in 1998.

    Related Posts:

    1. Tony Hsieh, CEO of Zappos, Part 1 Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to...
    2. Tony Hsieh, CEO of Zappos, Part 2 Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to...
    3. Tony Hsieh, CEO of Zappos, Part 3 Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to...

    November 23, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » Peter Schiff on the Collapse of the Dollar

    It’s End-the-Fed day today. I thought I’d commemorate it by posting a video featuring Peter Schiff (Ron Paul’s campaign finance advisor), who accurately predicted the sub-prime meltdown and the ensuing recession.

    Some great quotes (emphasis added):

    Our markets are going lower. This is not just a financial crisis; this is an economic collapse. Our entire phony economy is collapsing around us. There’s nothing the government can do to stop it; they should get out of the way and let it happen.

    —-

    Look, you have to understand: for the past several years everybody thought we had a real economy. We didn’t. We had a bubble. All we did was borrow trillions of dollars from the rest of the world, and we blew all the money on consumption. We can’t pay the bills. The asset bubbles that were inflated by reckless monetary policy are deflating around us, and we’re going to have to rebuild a viable economy; and it’s not going to be easy. A lot of companies are going to go bankrupt during the process. A lot of people are going to lose their jobs, but this has to happen: we have to go back to a sane economy where we save our money and actually make stuff.

    —-

    I’d be … getting out of the dollar because it’s a bottomless pit. When this dollar stops rallying, it’s going to fall like a stone. That is the next major economic crisis we are a setting up, a major major run on the dollar, and that’s going to have tremendous repercussions for our economy and our markets.

    —-

    We manufactured our way into becoming the wealthiest economy country in the world, and now we’ve consumed our way into bankruptcy.

    —-

    It’s time Americans take a long, hard look at the flawed monetary policy that’s behind all of this funny business; and that means understanding the history, operations, and goals of the Federal Reserve. If we don’t figure this out and get back to system of sound money, we may well “wake-up homeless on the continent their fathers conquered“.

    It’s frustrating that the only major party presidential candidate that was talking about these issues in any substantial way was written off from the very beginning. But you wanted empty platitudes? Well, you got ‘em.

    November 20, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » Izeni is Official

    Many of my readers will already know that Gabe and I have been busy launching a business for the last few months.

    Well, we’ve finally got Izeni officially incorporated, and since we hope to launch our first product soon, we decided we’d better get something of a corporate website thrown together.

    It’s really not much content-wise, but it is live; and it’s just in time for us to start pumping the engines of hype and hearsay. Check it out.

    Our other (product) website, which is where the majority of our development has been, will be launched shortly.

    So, how do you know you’re a developer in a bootstrapping high-tech startup? You have neither business cards nor a corporate website until your product is nearly ready to hit the market. This is pretty much opposite the spend-all-your-money-making-yourself-look-cool approach that many companies take. I hope our product-first approach is vindicated, but we’ll see. :)

    Anyway, sign up for Izeni news updates, and we’ll let you know how it goes.

    Until then, anyone know where we can get some great business cards?

    November 17, 2008

    Peter Abilla
    no nic
    shmula
    » Law of Instinct

    time.jpg I love data, but not much credit is given to hunch; gut, instinct.  Colin Powell, in his Laws of Leadership, shares what he calls his Law of Instinct.  He claims the following:

    Part I:

    Use the formula P@40-to-70, in which P stands for the probability of success and the numbers indicate the percentage of information obtained.

    Part II:

    Once the information is in the 40 to 70 range, go with your gut.  Don’t take action if you have only enough information to give you less than a 40 percent chance of being right, but don’t wait until you have enough facts to be 100 percent sure, because by then it is almost always too late.

    Today, excessive delays in the name of information-gathering breeds “analysis paralysis.”  Procrastination in the name of reducing risk actually increases risk.

    Visually, what Colin Powell is describing is the Law of Diminishing Returns where, over time, the value of information diminishes.  Perhaps that relationship might look like this:

    (click image for a larger picture)

    time.jpg

    The circle represents an inflection point at which for each marginal unit of information gathered, the value starts to go down or the cost-effort-benefit tradeoff for the next marginal unit of information is less than the cost to obtain it.

    Instinct in Product Development

    In product development — any type of product, software, material, or otherwise — there is often a discovery process at the outset.  The trap that most companies fall into is excessive market research, thinking that the more we know, the less risk we’ll face.  As General Colin Powell points out, that type of thinking is flawed.  The truth is that the more delays there are, the risk just increases: knowing more doesn’t translate to less risk or higher probability of success.

    Big-Design-Up-Front Design is the poster child for Analysis Paralysis in product development.  In product development, that typically takes the form of “Requirements Gathering Ad-Infinitum” — which is a term I use to indicate incessant requirements gathering with the aim of exhaustively gathering customer requirements, but the activity itself takes a form of its own and — often — it leads to documenting a lot of stuff, but nothing tangible has been produced that brings value to the customer.

    Little’s Law is your Friend

    A queueing system is a model with the following structure: customers arrive and join a queue to wait for service given by n servers. After receiving service, the customer exits the system. A fundamental result of queueing theory is little’s law.

    Theorem: for a queueing system in steady state, the average length of the queue is equivalent to the average arrival rate multiplied by the average waiting time. in other words,

    L = λW

    Little’s Law is a fundamental principle in business, mathematics, and has applications to many real-world problems. One of those real-world problems is in product development.

    First, a definition:

    WIP/TIP: Work-in-process of Things-in-process. For the purposes of this article, they are synonymous. Being “in-process” means the work or things have entered a state-of-affairs but have not yet exited. The “work” can be anything: materials, components, sales orders, software code, software testing, projects, customer inquiries, checks, phone calls to return reports suppliers to qualify, repair orders, or emails waiting to be answered, etc.

    For product development, we can use a transformation of Little’s Law, like the following:

    [(Throughput) = (Things-in-Process) / (Average Completion Rate)]

    What this equation tells us and what experience has shown time-after-time, is that the number one driver of Product Development Cycle Time are the “things-in-process”. There is no quicker way to reduce the cycle time by which your company can get a product from concept-to-delivery than through first prioritizing all the projects or products and focusing on the ones that make strategic and tactical sense, and killing the lower priority projects.

    You might be thinking: “True, but couldn’t we also increase the average completion rate”? You’re right, but the impact of doing that is much lower than reducing the TIP — that is, influencing the average completion rate is rather difficult and is often a function of available resources, scope creep, market demands and changes, etc. Here’s the bottom line: the number one driver for shipping products quicker is by focusing on the important ones and killing the unimportant ones.

    How Batchy Are You?

    From a Lean Thinking perspective, Powell is really advocating for a less batchy approach and one that obeys the one-piece flow principle.  Gathering a lot market research and a lot of data is really a batchy approach, whereas the one-piece flow approach from Lean is one for which Colin Powell is arguing.

    Specifically, Powell — whether he knew it or not — is really arguing for “What is the right batch size?”  In the case of information, Powell is arguing for ~40% to 70% relative to success as the batch size.  Since one-piece flow is not possible in some cases, then asking the right batch size is the better approach.  An approach that looked at the right batch size and also followed an iterative model — that would be an approach that is more customer-facing and will have a higher likelihood of success (or lower likelihood of failure).

    Little’s Law, The Law of Diminishing Marginal Returns & Powell’s Law of Instinct

    There are several principles at play: Little’s Law is true — as Work-in-Process grows and the Cycle Time to complete each unit increases, Throughput decreases.  The end result is that products aren’t shipped on-time or at all and the customer loses.

    The Law of Diminishing Marginal Returns teaches us that there is a point at which obtaininig the next marginal unit — of any type of unit — might not be worth the cost to obtain it.

    Colin Powell’s Law of Instinct teaches us how to reconcile the Little’s Law and the Law of Diminishing Marginal Returns.  He advocates that we rely on hunch, gut, and instinct.  Once we have enough information to be within the probability of success of 40% to 70%, then go with your gut.

    Related Posts:

    1. Little’s Law for Product Development This post is part of a series on Queueing Theory....
    2. Multi-Tasking Leads to Lower Productivity There is a predisposition for firms and people to think...
    3. queueing theory: part 1 This post is part of a series on Queueing Theory....
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    5. Shmula Goes Camping: Drum-Buffer-Rope My family and I went camping with my brother-in-law and...

    November 15, 2008

    Tristan Rhodes
    no nic
    The Open Source Advocate
    » ZipTie: New features, new name, new license?

    Introduction

    It has been over a year since I last posted about an exciting open source project called ZipTie. We use ZipTie to automatically discover our network devices, backup their configurations, and perform a variety of functions related to these devices. Many things have changed with ZipTie since my last post and I want to share those with you. I'll start with the positive changes first, because I am a positive type of person.

    New Features


    The most obvious improvement is the slick web interface that replaces the previous Java fat client. This interface is powered by Adobe Flex, so it has a great look and feel to it. Having a web interface also simplifies deploying ZipTie, because you don't have to worry about installing a Java application and all the required dependencies. Check out the screenshots:




    ZipTie has also added a great community resource called ZipForge, which is a place where anyone can publish custom tools that perform specific functions on network devices. This forge makes it easy to create these tools, without forcing the contributor to learn a lot about ZipTie internal functions.

    The new release also adds the ability to gather information about end nodes on a network. This means that I can find out which port a device is plugged into simply by entering the IP address (or MAC address) into ZipTie.

    I am not going to list all the improvements in this post, but I will tell you that these developers have been hard at work making ZipTie into an incredibly useful tool.

    New Name: NetworkAuthority Inventory

    Alterpoint has funded the development of ZipTie from day one. A handful of full-time programmers have been working on ZipTie for over two years, funded completely by Alterpoint. The ZipTie open source community has been growing steadily as this application matured, but most community contributions were in the form of beta testing and ZipForge tools. In the last year, Alterpoint began using ZipTie as the core engine inside their proprietary applications. In case you can't make the connection, these products are the ones that make the money that is used to pay for the open source developers working on ZipTie.

    I have often wondered why Alterpoint decided not to advertise their products alongside the ZipTie project. Indeed, their name and commercial branding was almost non-existent on the ZipTie website. The Alterpoint folks must have been thinking the same thing as me, because they have completely overhauled the ZipTie website and changed the name of the project. ZipTie will now be called NetworkAuthority Inventory. The new website has Alterpoint branding and provides information about their commercial offerings and what features you will get if you buy them.

    I strongly feel that it is appropriate for Alterpoint to push their products, given the fact that they are paying for ZipTie to be developed. It is important for people to realize that Alterpoint needs to make money if they are going to continue spending resources on this project.

    Regarding the new name, I personally don't like it because has five times more syllables than "ZipTie".

    New License: No longer open source?

    Here is a message from the lead developer of ZipTie regarding the license change:

    ZipTie has, up until 10/28/2008, been licensed under the MPL. Now that ZipTie has moved into our NetworkAuthority brand of products, we wanted to put a GPL license on it. Unfortunately, our use of EPL software prohibited us from using the GPL. To get around this, AlterPoint is licensing NetworkAuthority Inventory under the Open Technology License (OTL). It basically reads like a GPL.
    This is the area that I am most concerned about. Alterpoint has changed the licensing of this project from Mozilla Public License to a custom license created by Alterpoint. I am not a lawyer, but my conclusion is that this license severely limits the rights of users. Because of this, I do not think it can be considered an open source license. Alterpoint has taken an open source project and turned it into a closed freeware application.

    Now, I think I understand the reasoning behind this decision. Alterpoint needs to find ways to make money if it wants to survive. Using ZipTie as the core of their product stack is a great way to benefit from open source development and introduce users to their commercial products. However, changing ZipTie into a proprietary application is not required to accomplish this!

    The business model that accomplishes what Alterpoint is trying to do has recently been named "Open-Core Licensing". This model works by building core functionality as open source software, and then adding proprietary features on top of that core. As I will discuss in a future post, a successful open source business provides many benefits to the community and the project.

    What can we do about this?

    What can we do to encourage Alterpoint to continue using an open source license? There is always the possibility of forking the previous version of ZipTie that was released as MPL. However, forking a community should always be considered a last resort after all other options have failed. Even if ZipTie was forked, I don't know how successful it would be because 99% of the development is being done solely by Alterpoint employees. In theory, the threat of a fork is supposed to prevent software vendors from mistreating open source communities.

    I think the best thing we can is do at this point is educate Alterpoint about the benefits of using an open source license for their core product. If the community really cares about this issue, perhaps Alterpoint will re-evaluate their licence.

    I think we also need to address their concern with the GPL being incompatible with the EPL. I believe that the Alterpoint wants to use the GPL license because it offers the most protection from other businesses using ZipTie code inside their products without contributing their changes to the project.

    Can anyone answer that question? Both Eclipse and Wikipedia state that the licenses are incompatible. However, Ed Burnette from ZDnet points out that EPL code is found within Red Hat Linux:
    Take, for example, Red Hat Enterprise Linux. RHEL contains both free and non-free programs. It contains programs covered by GPL, EPL, Apache, BSD, and every other conceivable license. The last paragraph in section 5 says this is OK even though they’re conveyed as a single aggregate.
    Is there another OSI license that would be a good fit for this project, and still be compatible with the EPL?

    November 13, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » Places to Go, People to Meet

    I’m pleased with how much opportunity for personal development and professional networking there is in Utah. Yes, I do want to see it grow even more, but it’s nice have more good options than I could possibly attend.

    Tonight for example, the Utah Tech Events and Utah Business Events calendars show four events in which I have genuine interested, all occurring at the same time.  At 7:30 tonight I would be perfectly content to be at any of these four events:

    1. Twelve Horses: Brand Evolution
    2. Ignite Salt Lake
    3. BYU Web Startup Group
    4. Utah Python Users Group

    Incidentally, I’d also enjoy being at home with my family, but this abundance of events centered around professional networking and personal development shows that Utah really does have a great (albeit budding) tech and business ecosystem. These mostly non-profit knowledge-sharing groups constitute, I believe, some crucial intangibles that are important underpinnings to a vibrant economy. I’m glad to see them, and I’d love to see them grow.

    Anyway, there’s no excuse to not be developing your personal and professional skills at some of these events. Just don’t try to substitute them for hard and diligent work. :)

    If you’d like to be a contributor to out local tech and business calendars, please ping me or any of the other calendar admins. Especially if you’ve got a utah-based business or tech group and would like a channel to attract more people, we’d love to hear from you.

    November 15, 2008

    Tristan Rhodes
    no nic
    The Open Source Advocate
    » The evolution of open source software

    Introduction

    If you have followed this blog for a while, you will know about my passion for open source software. I have always predicted that open source software would revolutionize the software industry, but I didn't quite understand how this would happen. My initial views expected that open source would disrupt traditional software companies so much that it would eventually put them out of business. I am now realizing that the future of open source software looks much different than I first expected.

    Proprietary software will be quietly built on open source software

    One of the primary benefits of open source software is that it reduces the cost to produce software. Gartner agrees with this point; open source software is the most efficient method to create software. Traditional proprietary software vendors are realizing this fact, and are beginning to quietly build their closed software products using lots of open source software.

    I say "quietly" because these companies are not going to announce that they are using open source software. In fact, they will prefer if this fact is not known by their customers. There will even be some software companies who choose to use open source in violation of its license, and it is important for us to detect and prosecute this exploitation. However, most companies will abide by the open source licenses.

    Gartner has predicted this trend of building closed software with open source elements:

    By 2012, 80 percent of all commercial software will include elements of open-source technology. Many open-source technologies are mature, stable and well supported. They provide significant opportunities for vendors and users to lower their total cost of ownership and increase returns on investment.

    Ignoring this will put companies at a serious competitive disadvantage. Embedded open source strategies will become the minimal level of investment that most large software vendors will find necessary to maintain competitive advantages during the next five years.
    Re-using code is not a completly new idea to software companies. These companies have developed internal libraries of software that they can use in multiple products without having to re-write the entire application from scratch. Open source simply expands on this concept. Rather than being limited to an internal software library, open source software provides an enormous global library of software that is worth $25 billion dollars!

    Another way to look this is with the example of building a car. Open source software can provide the wheels, frame and engine of a car. This allows a proprietary software vendor to simply add the final touches that make the car unique to them. This development method greatly reduces the cost to build the car, because the software vendor does not have to "re-invent the wheel".

    I see open source software being used all the time when I look at closed products on the market today. Let's look at the example of a DNS appliance. You can bet that over 90% of the code used to create the appliance is likely to be open source code. The operating system is Linux, the DNS server application is Bind, and a variety of subsystems are probably open source. The DNS appliance vendor adds their 10% of value and then sells it to you as it they created the entire thing! This is not necessarily a bad thing, I just want you to realize what is happening.

    Open source software vendors will become more closed

    There are many open source companies who have formed to meet the need of supporting open source software. These companies are experimenting with various business models that take advantage of the large user base of open source software. Most of these models started by simply offering support services, and the software project remained 100% open source. As the global economy goes through hard times, I believe that these types of business models are not sustainable.

    What we are going to see are open source vendors who continue to contribute to a 100% open source project, but they will also add some special value that is only available to paying customers. This is already being done successfully by companies like Digium, the creators of Asterisk. Their Switchvox appliances are based on the open source Asterisk PBX, but it adds proprietary features that give customers a reason to buy the product.

    Both Savio Rodrigues and Matt Asay have predicted this evolutionary trend of offering proprietary elements to an open source project. Savio Rodrigues has even gone as far as saying "that proprietary is going to be the savior of the OSS business model".

    Before you get upset about proprietary software tarnishing open source, please look at the bigger picture. Open source vendors have paid for enormous amounts of new development to open source projects that would have taken many years of volunteer work. These resources were paid by venture capitalists who invested funds to develop open source businesses. If these business do not succeed, they will no longer be able to employ full-time programmers to work on open source projects. Hopefully you can see how this would have a negative impact on open source.

    In my opinion, open source vendors and open source communities provide mutual benefit to each other. The community gets free development resources, while the open source vendor gets money from the subset of paying users. This relationship needs to thrive to realize the maximum benefit to both parties.

    So, is this change good or bad?

    My prediction is that proprietary vendors will use more open source, and open source vendors will become more closed. The line between these categories is going to become very blurred as they converge around a common middle-ground.

    While this evolution of open source is not what I had predicted, I feel positive about these changes. If you are an open source advocate, you should be excited. In the future, not only will you have the same access to open source software that you do now, but successful companies will hire full-time programmers to daily improve upon that software.

    If you are a proprietary software user, you should also be excited. This is because open source software will reduce the overall cost of developing software. In the long-run, competition will force these cost savings to be passed to the consumer.

    What do you think?

    Do you agree with my predictions? Do you agree that this is a positive change? Either way, please let me know with a comment below.

    November 10, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » BYU Web Startup Group

    I just added the BYU Web Startup Group to my comprehensive list of Utah Tech Groups.

    From their website:

    The Web Startup group was founded to bring together people interested in creating new sites and services online. Group members include web developers (programmers and designers), marketing and business-minded individuals, creative idea people, and others with technology related skills. The group meets regularly to discuss and make Web Startups come to life. If you are interested in making a difference online then join us!

    Their next meeting will be this Thursday and will cover Android and “Jump Starting your Website”.

    I also added one of the founders, Adam Chavez, to Utah’s Business Blog Aggregator and invited him to contribute his events to the Utah Tech Events Calendar. If you or anyone you know should be added to these Utah business community sites, please contact me.

    BTW, there’s also a Utah Business Events Calendar which hasn’t caught on nearly as much. Let me know if you’d like to contribute. Maybe I’ll merge the two calendars in the future; we’ll see.

    Anyway, checkout the Web Startup Group. I think they could end up being a really valuable resource to the Utah business and technology communities.

    » Walled Gardens and Open Source

    I posted the other day about how universal wishlists are one of the ways the walls of traditional marketing are coming down. In a broader sense, this trend is going on all over the place: the walls of the walled gardens are coming down as big companies realize that customers don’t like to be corralled. Even the quintessentially walled AOL is allowing users to access their Yahoo mail through AOL. They’re still a long way from not sucking, but they’re making steps.

    Still remarkably walled: Apple. I understand that uniformity is a big part of their branding, but I predict some of the those walls will come down. Competition from open platforms (like Rockbox for the iPod and Android as an answer to the iPhone SDK) practically ensures it.

    And the greatest enemy to walled gardens (at least in the software world): open source. It’s big enough now that even regular folks should start figuring out what it’s all about. Open source is the reason Firefox kicks IE’s butt in terms of useabilty.

    Read Eric Raymond’s The Cathedral and the Bazaar for an excellent treatise on the way open source is changing the software world.

    Photo credit: historyanorak

    Photo credit: historyanorak

    November 7, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » Universal Wishlists: A Lesson in Open Marketing

    Universal Wishlist Review

    I’m not a big shopper, especially when it comes to traditional brick-and-morter stores, but the internet marketer in me loves new features that make online shopping more pleasant. Such is Amazon’s new Universal Wishlist feature. (OK, it’s not that new, but it’s still awesome.)

    I love Amazon’s Universal Wishlist because it allows me to save items from other online stores right to my Amazon wishlist. Being able to store all of the products I want in one place has made Amazon my de facto shopping site for filing away stuff that I want now, but can only afford to buy someday. It’s my new virtual den of covetousness.

    Other similar services exist as well. TheThingsIWant also looks kind of cool, and it has basically the same core functionality.  I haven’t tried it, but they supposedly have a feature that allows you to syndicate your wishlist to your blog. Very cool, and surely they’re getting some affiliate commission from that. I’m not sure that I would ever use wishlist syndication, but I can definitely see it being an interesting component of a personal or family blog.

    It occurred to me that Google Product Search must have some similar feature, and sure enough, they do. Google shopping list lets you save products you want and compare prices across tons of online stores. It also lets you save notes and publish products in either a public or private list. Very cool. The biggest feature that it’s missing (for me, anyway) is the ability to make your own wishlist submissions for items from smaller stores (like the Mises.org store) that don’t show up on Google’s radar. Too bad. Still, it’s great if you only buy from big retailers.

    Anyway, if you’re online shopping experience has been bound to one retailer, I now pronounce it unbound.

    Lessons in Open Marketing

    But, you might be asking yourself: “Why would Amazon extend it’s functionality to to other sites? Isn’t that giving away some of its secret sauce, let alone revenue?”

    Answers:

    1. Amazon uses the Universal Wishlists to make the “long tail” even longer, meaning it allows for even more product to be saved on it’s site. This is not necessarily to their direct benefit (since they don’t get the direct sale) but it does help build a shopping community around their site, and that’s as good as gold.
    2. I’m sure Amazon also gets a bit of a traffic boost from this. When else would I ever go from Mises.org directly to Amazon? Having a “Click to add” to my Amazon wishlist right in my browser makes Amazon one click away from any retailer on the net. Now that’s smart. (This is somewhat analogous to building a brick-and-morter store in the mall. Why build right next to your competition? Because you can both benefit from the increased traffic that being in the the place for shopping will bring. If it’s sybmiotic, it works for everyone.)
    3. Another win for Amazon: data mining. Suddenly Amazon knows what products I’m “eyeing” from other sites, often their direct competition. That’s great data to have when for making pricing, merchandising, and marketing decisions. That kind of competitive data is priceless, especially to an online store that process and act on that data quickly. Interested in a lawnchair from so-and-so? well here are our lawnchairs. X customer added Y watch from Z store? Why don’t we sell Y watch? You get the picture.

    Overall I think implementing the Universal Wishlist a great, although somewhat unintuitive, strategic move for Amazon. It’s gutsy to encourage and facilitate increasing sales for other retailers; but it also builds community, increases site traffic, and provides meaningful (and actionable) data for competive analysis. Plus it builds goodwill –or at least it did for me. I appreciate being able to use Amazon’s wishlist feature wherever I find good products. That’s just good marketing.


    Peter Abilla
    no nic
    shmula
    » Too Many Cooks in the Kitchen

    a.jpg Team size can make a big difference in the success of your service or product.  What is counter-intuitive for most people is that the larger the team size, the lower the likelihood of success for your service or product. Why? Communication Entropy can set in and large teams are inherently bad vehicles for communication.

    More sinister, however, is that the larger the team, there is a higher likelihood of accountability and responsibility being diffused across the team and when everyone is in charge, then nobody is in charge.  A good friend of mine calls this situation a state of affairs where “there are too many cooks in the kitchen” — but the big difference is that the Kitchen acts as an Obeya since all the actors are in the same location.

    In this article, I quantitatively show the inverse relationship between team size and productivity & how team size does impact the effectiveness of communication and accountability & the eventual success of the service or product.

    Here’s my hypothesis:

    • 2 people are smarter than one
    • 3, 4, 5, 6, 7, 8 people are smarter than 2
    • a team larger than 9 people is just a big dumb gelatinous blob (acronym: BDGB)

    Okay, that’s not true at a wholesale level, but it sure feels like it. A small team with highly smart and capable team members can do much more than 10 mediocre team members. The Wisdom of Crowds mentality doesn’t work that well when it comes to efficiency in teams.

    A more quantitative explanation is as follows: One of the root causes of failure in projects is communication — either a lack thereof, miscommunication, overcommunication, or hand-off’s. Large teams are inherently vehicles for bad communication.

    Indeed, this is basic combinatorics — for a given project, suppose there are persons A and B. In this scenario there is only 1 communication link. Add person C, now we have 3 communication links, A-B, B-C, C-A. Add person D, then we have 6; Add person E, then we have 10 communication links. Inductively, as team size grows, the raw combinatoric communication link counts grows geometrically, not linearly.

    To demonstrate this, we use basic statistics of the form n-choose-r, where !, such as n!, is equivalent to n factorial, to arrive at the formula for how many pairs we can choose from n items:

    a.jpg

    For the number of pairs, we can reduce the above formula to the following:

    b.jpg

    Visually, as team size grows, the communication links grows non-linearly, but exponentially:

    c.jpg

    “Reply All”

    A classic instantiation of this general rule that I’ve explained is the email diffusion through the “Reply All”.  In most cases, when somebody sends a message via “Reply All”, either nobody reads it, people do read it but do nothing about it, or the reader — in kind — does a “Reply All” and continues the vicious cycle.  At the end, nothing happens and people remained confused.

    A Rejoinder

    Do not let the above dissuade you from large teams; if the product requires a large team, then that is what is needed. Caution, is what I am arguing here. The facts are that the larger the team, the more communication channels there are and the entire process then becomes more error-prone. If the product requires a large team, then expect the above challenge and manage it.

    A Conclusion

    There is wisdom in Toyota’s usage of Obeya or “The Big Room” as a way to mitigate defects caused by large teams. A combining of the two will most likely make for a great team and a successful product.

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    November 3, 2008

    Phil Windley
    pjw
    Phil Windley's Technometria
    » It's Always a Good Time to Start a Web Business

    Howard Lindzon is up next speaking on by it's always a good time to start a web business. Howard runs a hedge fund. The headlines we're seeing today aren't good. Leaders need to look beyond the headlines. The goal: zig when other's zag (with hat tip to Warren Buffet's "the time to be fearful..." The best time to start a "premium" business or one base don ad revenue was the last four years.

    Now we need to focus on being "too small to fail." Get your idea and product ready and the first customer under your belt as soon as possible. Over the next 6 months, VCs are going to wake up and set up parts of their funds to address these kinds of businesses.

    It's never a good time to start any business. Good businesses can be started at anytime. 80-90% of small businesses fail--all the time.

    Businesses fail for lots of reasons: taking too much money, having the wrong partners, having an idea that isn't well tested or well thought through. Focus on getting the right product and the right customers. Fish where the fish are. Everyone wants to be the shark (Google), but better to find what you do and do it really well. Don't try to be everything all the time.

    The discussion of leverage comes up. Social leverage is good. Financial leverage is bad. You can't have too many friends. Eric asks Howard to talk about StockTwits, a site for twittering about stocks.

    Be an expert at something.

    Tags: defrag08 startup business

    November 1, 2008

    Peter Abilla
    no nic
    shmula
    » How Twitter Solves Voter and Other Types of Information Asymetry

    twitter.jpg A while ago, I wrote a post on how Digg is characterized by the principles of Game Theory.  As it turns out, that post was Dugg to the front page of Digg and almost fried my server.  Today, I want to briefly discuss something along the same lines of Behavioral Economics — how Twitter solves the problem of Information Asymetry.

    In Decision Theory, Information Asymetry deals with situations where one or more parties has more or better information than the other.  In the case of Voter decisions, Twitter, the fascinating microblogging platform, is a simple solution to a nasty problem of Information Asymetry.

    vote-report.jpg A really simple example is having to deal with the decision of where and what time to vote: this decision involves one’s personal schedule but also the conditions of the voting area — are the machines working?  super long lines?  weather? — twitter, in this case, becomes an uncomplicated solution to a historically and, theoretically, tough problem.  Specifically, Twitter Vote Report was created to aid the exact problem I just described.

    Even more broadly, imagine if more Stock Traders were on Twitter: most likely, Stock Traders would have been sending Tweets about the massive sell-off in the market last week several minutes before CNN could publish the news — the difference in minutes or seconds can be huge.  The problem of “Information Stickiness” or Information Asymetry is becoming less and less of a problem because of Twitter.

    +++++

    If you liked this post, you might like these also:

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    2. Sarah Palin Pareto Analysis
    3. Obama, Voting, Majority Rule, and Set Theory
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    shop@shmula or learn about Queueing Theory

    October 29, 2008

    Jordan Gunderson
    jordy
    Jordy Blog
    » Utah Mobile Developers First Meeting is Tonight

    Don’t forget about the inaugural meeting of Utah Mobile Developers Group tonight.  They’ll be discussing both iPhone and Android development and handing out some O’Reilly iPhone books.

    I have a feeling that this group is going to be awesome. At least it will be for me; it’s right up the alley of what my new business will be doing. Here’s UMDG’s mission statement:

    The mission of the UMDG is provide development-level education and networking around mobile applications. This includes device-specific apps, client-server apps and web-only apps formatted for use on mobile devices. We will cover all mobile devices for which there is interest, including iPhone, Android, Blackberry, Windows Mobile, J2ME and more.

    By the way, they’re looking for sponsors. I pledge to be one once we’re actually profitable.

    October 28, 2008

    Peter Abilla
    no nic
    shmula
    » Sarah Palin Wardrobe Break-Even Analysis

    palinshmulaLet’s face it: sometimes, people vote not based on character, policy position, or anything else that might be important or substantial.  Sometimes, people vote for a candidate because of the candidates’ fashion sense.

    So, if we were to quantify the price of a vote (in terms of revenue), the total cost of Sarah Palin’s wardrobe, and the variable costs for a voter, we can calculate how many votes Sarah Palin will need to off-set the costs of her Wardrobe.  Below is a picture of what that Sarah Palin Wardrobe Break-Even Analysis might look like:

    palin-break-even.jpg
    1. Note: this post is a parody — a joke.  I’m sure Sarah Palin is a fine human being and I have nothing against her and I wish her the best.
    2. Note: I’m not bashing conservatives (because I am one).  I’m just having fun so, before you cast judgment on me, try laughing at the silliness of this post.  Let’s face it — this post is silly.
    3. Note: I’m leaning toward Obama but, honestly, I’m not too excited for him either.  In fact, right now, I’m more undecided than anything.  I’ve even thought about writing-in some random name — like, Warren Buffet or something.
    4. Note: Also, if you came to this post to learn more about Break-Even Analysis, please move on.  This post doesn’t discuss anything related to finance.  But, if you enjoyed this post, you might also enjoy the Sarah Palin Pareto Analysis.

    +++++

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    2. Simplify The Product
    3. Ask Aza Raskin
    4. Aza Raskin on Poka-Yoke & The Humane Interface
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    6. Aza on Feature-Bloat and Site Clutter
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    8. Aza on Cooperation and Team Size
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    October 20, 2008

    Peter Abilla
    no nic
    shmula
    » The Role of The Warehouse in eCommerce and eRetailing: Trade-off and Benefits

    ope.pngEfficiently optimizing inventory, storage space, labor, costs, and time in eCommerce (e-retailing) is required to attain customer satisfaction and economic profit.  For the Operations Researcher, this is no easy task; for the in-the-dirt manager with competing priorities and pressures from her chain-of-command, it is even a bigger challenge.

    Most people are familiar with the front-end of eCommerce — the store, search, navigation, the cart, and payment.  But, what most consumers don’t realize is that the true magic and the more technically challenging piece of eCommerce is actually what happens after “click” — The Fulfillment, which often requires a Warehouse.

    In what follows, I’ll discuss the role of a Warehouse and how the Warehouse meets the current needs of eCommerce.

    Background

    After a customer orders online, the order is virtually assigned to a fulfillment center (FC), the item(s) at that fulfillment center decrement in quantity and then Age (wait to be picked).  An FC is several thousand feet in size and typically consists of a Picking Area and a Reserve Area, where items are stored in bulk on pallets and the items are used to Replenish the exhausted items in the Picking Area.

    The “splitting” of a Warehouse like I have described is technically called “Multi-Echelon, Two-Stage Serial Systems” in Operations.

    From a General Manager’s perspective, the Profit Tree below is a good reminder of what we’re all trying to achieve:

    profit-tree.jpg

    The Role of a Warehouse

    It takes labor, capital, space, equipment, and complicated information systems to have a Warehouse.  Unfortunately, most firms cannot avoid this expense all-together; reduce, yes, but the Warehouse plays a really important role in the supply chain.  Namely, The Warehouse is a strategic response to Supply & Demand, Transportation Costs, and Value-Added Processing.

    Supply & Demand

    A major challenge in managing supply chains is that demand can change very quickly, but supply is takes longer to change — that is, supply is not as responsive because there is usually some transformation that needs to happen, such as raw materials to finished goods, which takes time. But, demand is not very forgiving or patient and can change almost instantly. Supply is more “sticky”.

    As a response to unknown or seasonal demand, the Warehouse plays a strategic role in assuring that there is product available, so that customers don’t find themselves wanting and firm doesn’t find itself unable to meet demand and face loss of sales, goodwill, and morale for the employees.

    The Warehouse allows the firm to respond quicker when demand changes. The Warehouse acts as a buffer to changing demand, unreliable transportation, congestion in any part of the supply chain. As an added part of the complexity of supply chain management, the points of congestion in the system must also be managed.

    Some questions to consider:

    1. Given the approximate location of 80% of the customers and considering costs, response time, political climate of the country, and transportation reliability, what is the ideal geographical location of material sourcing, manufacturing, assembly, and warehousing?
    2. What inventory buffer stock levels are appropriate for The Warehouse to hold?  Replenishment levels?  Use-to-Exhaust policies?

    Consolidated Product Reduces Transportation Costs

    There is a fixed cost every time product is transported.  Given the price of fuel currently and the instability of the US Dollar to other currencies, this is especially true. To amortize or reduce the pain of this fixed cost, it’s necessary to fill the carrier to capacity. In the industry, this is typically called “Full-Truck-Load” and the opposite is “Less-Than-Truckload (LTL)”, regardless if transportation is achieved by truck, plane, or boat.

    Provide Value-Added Processing

    The final assembly could be done at The Warehouse.  For example, if you produce a product that is private-labeled for your customer, then the product differentiation could be done at The Warehouse.  Generic parts can be shipped to The Warehouse and then labeled to the customer specifications to achieve differentiation.

    Inventory Holding Costs

    It must be noted that holding inventory has some explicit and implicit costs associated with it.  Some explicit costs are the following:

    1. inventory investment
    2. insurance
    3. taxes
    4. damage
    5. theft
    6. relocation costs
    7. labor

    As a picture, the Inventory Holding Costs Tree might look like the following:

    inventory-holding-costs.jpg

    Notice that the costs above are within-warehouse costs.  There is also substantial opportunity on reducing Transportation and Packaging costs into the Warehouse and out-of the Warehouse.  The clear implicit costs associated with inventory are the defects and hidden factories that inventory tends to hide.

    Summary

    To meet the needs of customers in an eCommerce environment requires the use of a Warehouse.  There are clear trade-off’s: a Warehouse is costly and challenging to manage, but the upside is having the ability to meet the high levels of customer expectations in eCommerce.

    +++++

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    2. Simplify The Product
    3. Ask Aza Raskin
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    5. Aza Raskin on Quasimodal Design and The ATM
    6. Aza on Feature-Bloat and Site Clutter
    7. Aza on Google Search Results Page
    8. Aza on Cooperation and Team Size