Mass

by admin on March 25, 2015

Our first principle to convert from military to mainstream business usage is Mass. Here’s the original:

Mass – Concentrate combat power at the decisive place and time

What mass means from the military perspective is that you bring together whatever forces are necessary to achieve a desired result. An example would be moving forces from different locations to all take part in one operation, such as the seaborne invasion of Normandy in three locations with hundreds of ships coupled with airborne troops jumping behind enemy lines. The combination of the two achieved results far superior to either one, and if these pieces hadn’t come together at the same time (bad weather during the channel crossing) or at the right place (mistakes in the drop zone coordinates away from targets), the overall effect is diminished and could even lead to a non-victory: not necessarily a defeat but certainly a failure to accomplish the mission. When pieces fall away entirely, defeat is certainly possible, such as in the Bay of Pigs when air support was not available as planned.

Mass is, however, more about the concentration than the place and time elements. Concentration of resources requires us to choose the battlefield (literally and figuratively). The example that sticks out most for us in thinking about business applications of the principle of Mass is Jack Welch defining target markets for his businesses. Welch said that GE should select only those markets where they could be #1 or #2 in the market. (To prevent tweaking the definition of a “market” to ensure success, a condition was added that GE couldn’t have more than 10% of the defined market.)

GE marshaling its resources to achieve the required market position is an example of the principle of mass.

Another example that should be familiar to most readers is the seasonal or periodic business. In many industries, a disproportionate percentage of the business takes place during a season or around a specific time/space location. Vacation rentals match up with snow/beach season, depending on location, CPAs are most busy immediately prior to April 15, and trade shows in some markets dominate certain segments of commercial activity. A good example of the latter is fashion, where although people buy clothes all the time, manufacturers take most of their orders around trade show events, which are then delivered months later for the appropriate seasonal merchandising. Manufacturers who are not able to Mass their resources to produce marketing materials, samples, and presentations for buyers prior to the trade show risk calamity.

How do these thoughts impact our new definition of the principle of Mass? Originally, I thought that the GE market dominance example was going to be the heart of the new definition. But the principle isn’t one that’s static; it’s dynamic, like maneuver or flexibility. Mass is about doing things, making changes, and selecting goals (more on this later when we discuss Objective).

Version 1: Mass – organize your business to be able to take full advantage of decisive moments

For many businesses, their strategy will dictate what moments are in fact decisive. For consumer retail businesses, it might be the selection and stocking of products, i.e., getting all the boxes into Wal-Mart. For consumer product companies, it might be the end-user customer’s decision to choose one bottle over another sitting next to it on a supermarket shelf. Different companies will have different decisive moments, some of which will seem to be far from the moment of revenue recognition: think value creation instead.

Mass – organize your business to support the moment of value creation

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Here’s an interesting reference to the story about the “tech surge” to fix healthcare.gov. The story is interesting from a tech perspective, of course. It highlights interesting themes in the tech world about a discernable power law in the performance of great, versus merely good, developers. 

But that’s not why I’m writing this. I’m hearkening back to a much earlier post about the 9 principles of war. One of those is Unity of Command. This quote says it all:

What Abbott could not find, however, was leadership. He says that to this day he cannot figure out who was supposed to have been in charge of the HealthCare.gov launch. Instead he saw multiple contractors bickering with one another and no one taking ownership for anything. Someone would have to be put in charge, he told Zients. Beyond that, Abbott recalls, “there was a total lack of urgency” despite the fact that the website was becoming a national joke and crippling the Obama presidency.

 Unity of Command: For every objective, ensure unity of effort under one responsible commander.

It’s more than just a “failure of leadership.” Leadership is a vague, fuzzy word that we use when we want to lay blame or don’t want to sort out what’s going on. 

But here, a specific failure can be identified. Unity of Command. This project had a pretty clear mission, an Objective. There were substantial resources available. Harry S had it right: the buck stops here.

 

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My last point isn’t that it’s automatically the President’s “fault.” The government is, um, big. But someone should have been in charge of this project and those resources. If resources come from different groups with different bosses, a problem gets moved up the ladder and sorted out at that level. But some ONE has to be in charge. Or it just doesn’t work. That culture of assigning responsibility, or “seizing responsibility” if you’re a Wolfhound or a Ranger, isn’t automatic. It comes from the top, which is leadership by example.

I will be adding this to the book’s section on Unity of Command. It raises an interesting question of how this principle, Unity of Command, gets observed in crowdsourced efforts. Off the top of my head, I’d say first that many crowdsourcing contributions are tightly constrained so that not everyone is in charge — you add a rating on Yelp, sure, but Yelp decides what their information structure is, how to add pictures, and what you can and can’t contribute. Open source? Someone owns the project — Linus for the Linux kernel, and then him delegating down to committees and creating or approving rules that say how they’ll approve other changes. And the projects where anyone can contribute sort of anything, like Google Wave collaboratively written short stories, are art projects where the objective is to execute the process, not to build a bridge that won’t fall down or a website that hosts 50,000 concurrent users trying to buy health insurance.

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Great Expectations isn’t just the name of a Dickens novel

August 7, 2013

We’re continually amazed by the plethora of articles in newspapers and financial magazines that trudge over old ground, or what we thought was old ground. Short example, before we get to the article: why do otherwise wise-seeming publications continue to publish the historical results of mutual funds? Why do they ignore that whole efficient market […]

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Substituting expert judgment for business judgment

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I’ve been reading too much about some fundamentally misguided corporate governance notions from Cornell Law School professor Lynn Stout.  Maybe it’s the author of the piece trying to make something out of nothing, but the article reads as if Prof. Stout simply knows what’s best for corporations, individual shareholders, and institutional investors. While it’s not […]

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Spreadsheet errors aren’t the biggest problem

April 26, 2013

Following the recent hullabaloo about some seemingly simplistic spreadsheet errors in a recent study, many articles have decried the pervasive nature of spreadsheet errors.  What we’ve found though, is that just as typos are the not the biggest problem with written work, it is weak  or sloppy analysis that is the real problem in many more […]

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World Autism Awareness Day 2013

April 2, 2013

Today is World Autism Awareness day. My Facebook profile picture is my 8yo son Dylan, showing you, and me, what he thinks of autism. I imagine it’s something along the lines of “I just want to do what I want and have fun like every other boy. Sometimes it’s just hard.” Other times I imagine […]

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When you should stick to your knitting

January 17, 2013

How do you know when you should change your business or keep doing things the same way? Applying two principles, Security and Economy of Force, will help you determine what type of problem you’re facing before you decide how to analyze it. Here, we’re going to talk about making decisions that increase your business’s risk. […]

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Understanding alternative fees (ahead of our time)

July 12, 2012

A recent Forbes article describes the alternative fee problem, how to reasonably price legal fees using something other than an hourly basis, as a potential application of big data analysis. Conveniently, we said this over three years ago in describing the data needed to create alternative fee structures. Some corporate clients have enough legal liability […]

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NACD – Years late, Millions of $$$ short

June 26, 2012

The industry group for public company directors, the NACD, recently announced that they’re producing a guide to compensation structures to help connect pay to performance. The purpose is apparently to guide corporate directors, in part because  directors on compensation committees are under unprecedented pressure to define the strategy and rationale for their executive compensation decisions. […]

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Knowing how much money to raise

June 8, 2012

A founder recently asked about how much money to raise and when. Specifically, he asks about choosing between splitting a $1.4m, two-year round into $800k for year 1 and then $600k for year 2. The key issue in splitting rounds is raising enough money (including your cushion) to get you to the next major valuation-bumping […]

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