I’m a management consultant and writer serving organizations both large (Fortune 500) and small (nonprofit) on a range of strategic issues

Sari shops and the power of reciprocity

Quid pro tea
BusinessStrategy
Posted on March 20, 2019

Just browsing

A feature of the retail landscape across the state of Kerala in southern India is the large store devoted almost entirely to the sari, that single piece of fabric which, when draped and pleated in various ways, has become the default women’s garment in many parts of South Asia. These shops are stocked from floor to ceiling with tens of thousands of saris, covering the full spectrum of color in every imaginable design. They line the walls without any obvious organizing principle and are yet ordered in some inscrutable way for easy retrieval by employees.

Upon entering one of these emporiums the prospective purchaser can expect to be promptly greeted by a scrum of sales representatives, one of whom will oh-so-graciously offer a beverage of her choosing: hot tea if she wishes or perhaps something cold to better counter the tropical heat outside.1 The customer is shown to a cushioned seat from which to consider the merchandise, and upon indicating the barest hint of directional interest the staff will spring into action.

Suddenly from the stocked shelves a profusion of brocades and prints and filigrees and paisleys and iridescent silks with lace details or fringes or golden threads will be dramatically unfurled, cascading one on top of the other in front of the customer. No whimsy is too trivial to be indulged. If a different texture or a slightly deeper shade of green is sought the clerks will immediately find it and drape it over the growing pile.2 Throughout this display the customer is aware of the sheer extravagance of the effort and the knowledge that each sari will have to be painstakingly refolded and filed back in its place.

All this thoughtfulness may appear altruistic, but it conceals a far more calculated motive. Read more…

  1. Seriously, the ratio of sales staff per shopper can easily be above 5:1, which is partly a commentary on India’s vast population and its low cost of labor. ↩
  2. A real-world analogue of the title character’s attempts to woo Daisy through the ostentatious tossing of shirts in The Great Gatsby, which you probably read at some point if you attended high school in the U.S. ↩
  3. The purchasers of these saris are frequently expatriates that are high on money and low on time, so these transactions are infrequent, but when they happen these stores can really ring the cash register. ↩
  4. Even though it was over a decade ago, perhaps I should have valued my time more than the few dollars I received. In any case their social engineering was of dubious benefit, as I did not listen to the radio regularly and so sent back a virtually empty journal, which had some unknown effect on the media market of metropolitan Washington, D.C. ↩
  5. And if you’re ever in Kerala and not sure if you want to bring a sari (or six) home with you, politely decline the coffee. ↩

crank

BusinessJargon
Posted on March 18, 2019

to work hard, studiously, and/or without interruption, as in: “I was cranking on that analysis for six hours last night”; used when ambiguities have been sufficiently resolved and the next step is to execute along some determined course of action; the term confers on the worker the attributes of a machine, which goes through its motions relentlessly, without halt or complaint, and evokes the crankshaft of an engine, which spins continuously and rapidly as it operates; used most often for tasks that require attention to detail but are not intellectually rigorous; compare to riff, which refers to more casual attempts to address an issue

Skeuomorphism and the pull of mental models

What's past is prologue
BusinessStrategy
Posted on March 13, 2019

All the news that’s fit to post

The New York Times was one of the first traditional media companies to recognize the growing significance of the phenomenon known formally as the World Wide Web. It decided early on to establish a presence in this new space, launching its first public site in January of 1996. Although it was a trailblazer in an unfamiliar medium, the actual layout would have looked familiar to a first-time visitor. The home page was designed to closely resemble the front page of the printed newspaper, down to the masthead and prominent references to classified advertisements, at the time the financial lifeblood of many journalistic enterprises.

The digital format unlocked by new web browsers promised as-yet unknown capabilities. How readers would engage with the content was hard to envision. Lacking an alternative model, the newspaper’s leadership took the obvious step of translating the experience of reading the physical Times to the virtual world.

Even publications that were expressly created for the internet took an approach that seems quaint when viewed from today’s vantage point. A few months after NYTimes.com went live, a new online-only news magazine called Slate was launched with funding from an unusual patron, Microsoft.1 Shaped around the conventions of a paper magazine, it was actually designed to be printed out at home and then read much as a conventional publication would be. In its layout it aped a print magazine’s sections, and it followed their weekly, staccato publishing schedules—all despite the fact that the medium had no constraints of printing, mailing, or article length.

These were early internet examples of a phenomenon called skeuomorphism, in which objects in one medium are crafted to imitate the forms of a different one, usually a predecessor. Read more…

  1. A place not exactly known for launching magazines. Microsoft’s track record in media generally hasn’t been the best. Farewell Zune, we hardly knew ye. ↩
  2. And if Elon Musk has his way, to a network of cars being shot around on rocket sleds in subterranean urban tunnels, or something. ↩
  3. And if your phone isn’t using iOS or Android, bravo for your iconoclasm. Either that or maybe it’s time to graduate from the flip phone. ↩
  4. On the other hand BlackBerry decided to ride-or-die with the physical keyboard, itself a descendant of the typewriter. This slavish devotion to an earlier form was part of the reason why its maker was swept away so quickly and thoroughly by the touchscreen wave. ↩
  5. Back then if you wanted to unload your futon, posting an ad in miniscule type in the back section of the local newspaper and hoping someone stumbled on it was your best option. ↩
  6. Harvard Business School is one of the most notable innovators, investing tens of millions of dollars in the past five years under its separate HBX banner, which just now was deemed mature enough to be rebranded as HBS Online. ↩

juice not worth the squeeze

BusinessJargon
Posted on March 12, 2019

an expression indicating the expected benefits of a certain action will be too trifling to merit the expenditure of energy required to obtain them, usually deployed in relation to a discrete object, as in “Don’t redo the calculations to account for inflation, it’s so minor the juice won’t be worth the squeeze; similar to boil the ocean, which refers to something more expansive or voluminous, and to mouse milking, which is used when a more outré descriptor is required; a contrasting but also citrus-related phrase is squeeze the lemon, for when the metaphorical object in question is less desiccated

Grocery stores and hidden business models

Show me the money
BusinessStrategy
Posted on March 6, 2019

Rent the shelves

At some point almost everyone has been an unwitting participant in the anthropological experiment that is the modern grocery store. From bountiful displays of fresh produce at the entrance that entice with healthy greenery, to staples like milk that are tucked away in the farthest corners, sending shoppers past every aisle to find them, the layout has been carefully designed to extract maximum revenue. Managers place profitable items in eye-catching positions to ensure that impulses overwhelm any carefully-considered lists a customer may have entered with.1

The business model for these stores seems straightforward: source goods from manufacturers or farms, merchandise them in compelling ways, and apply whatever markup the market will bear. This seems simple enough until you realize how low the margins are in the grocery sector. Profits of 1 to 3% are the norm, leaving little buffer for any lean times or stock that fails to move.2 But this overall figure masks the parallel economy that bolsters much of the supermarket industry and is expanding into other areas of retail. Stores are increasingly making money not from selling products, but from charging fees to suppliers who want access to prime spots on their shelves.

This is possible because food manufacturers come up with thousands of new concepts every year, of which the overwhelming majority fail. There isn’t a store big enough to present all of these options to the public. Further the window to get traction is short, before antsy investors or category managers eyeing their annual bonuses bail out.3 As a result, instead of selecting goods on their own, retailers can capitalize on their scarce commodity, shelf space. They rent it out to the highest bidder in exchange for what are known as slotting fees. Read more…

  1. Hence the checkout lanes stocked with candy at high markups, testing the will of the drained shopper who feels like he’s earned it after finally figuring out which aisle had the capers. ↩
  2. Even juggernaut Walmart operates at around a 3% margin, making its billions from the massive volumes enabled by its scale. Despite its reputation as “Whole Paycheck,” Whole Foods isn’t much better either, with margins in the same range or just slightly higher.↩
  3. Maybe that sixth flavor of kombucha wasn’t the best idea.↩
  4. In 2017, Ford generated $2.2 billion in profits from financing, compared to $7.3 billion from traditional car sales, so about 25% came from financing in the most recently reported year. ↩

push back

BusinessJargon
Posted on March 5, 2019

(push back in verb form, pushback if used as a noun) formerly the sole domain of airplanes leaving their gates, this term is used to indicate resistance or disagreement without actually expressing those potentially controversial feelings explicitly, as in: “Let me just push back on your proposal for a second here” or “The new CTO is getting a lot of pushback on his plans to switch vendors”; although it suggests a milder opposition, it may belie a resolute determination to impede the progress of, or thwart entirely, the idea in question

Solving the handshake problem

The center can hold
BusinessStrategy
Posted on February 27, 2019

Things fall apart

By the late 2000s the New York law firm of Dewey & LeBoeuf had established itself as one of the largest and most prominent in its profession.1 With roots stretching back to the early 20th century, it reached its final form following a mega-merger in 2007 that brought together two firms with powerful networks. The partnership was growing, billings were up, and peers ranked it highly in multiple legal specialties.

Just five years later, after a cascade of internal failures, defections, and financial mismanagement, Dewey & LeBoeuf ceased to exist.

Its undoing stemmed from multiple factors, but what sealed its doom was leaders who were increasingly mercenary, focused less on building something enduring and more on establishing personal fiefdoms and ensuring cash flowed into their own pockets, heedless of the long-term health of the organization. When the financial crisis of 2008 dried up client pipelines, the firm quickly realized its prestige and accompanying profits were ephemeral. Read more…

  1. Not to be confused with the firm of Dewey, Cheatham, and Howe. ↩
  2. The solution to the handshake problem for any number n will be n*(n-1)/2, and is relatively simple to derive (e.g., for 75 people: 75*74/2 = 2,775. ↩
  3. They also serve to keep staff in the office and working long hours. Considering the pay of Silicon Valley engineers, inducing them to stick around for a $9 sandwich is a steal for Google. ↩
  4. Maybe not incidentally, these firms are also absurdly profitable. ↩
  5. In one of business history’s most fortuitously-dodged bullets, the consulting arm of Arthur Andersen split off from its parent due to internal squabbling and was forced to relinquish its name, becoming Accenture. A few years later when Arthur Andersen dissolved post-Enron, Accenture marched on unscathed instead of going down with it. ↩
  6. The profusion of litigation it spawned lasting many years seems poetically appropriate for a law firm collapse. ↩

sheep dip

BusinessJargon
Posted on February 26, 2019

(verb) to plunge rapidly and completely into a situation in a manner that involves some unpleasantness or surprise on the part of the dippee, as in: “Look we know working for Andrew is tough, everyone gets sheep-dipped on their first project with him”; from the farming practice of dunking sheep in a solution containing chemicals designed to protect them from various skin infestations, a process which requires full immersion to achieve maximum protection; the unsuspecting animals being so treated often react as you might expect, bleating in confusion and scrambling to escape the tank containing the liquid, unaware of the reason for dipping; in a business context can refer to something abrupt or shocking, which may or may not be beneficial to the one dipped

Activation energy and making things happen

Overcome the hurdle
BusinessStrategy
Posted on February 20, 2019

Get it started

It’s a safe bet that if you can read this sentence you partly owe that ability to the large quantities of hemoglobin that are being continuously synthesized in your blood. Without this essential molecule your red cells wouldn’t be able to distribute the oxygen that allows you to function. The process of creating it is extraordinarily complex, depending on several tightly-interwoven sequences and involving numerous intermediates. An especially noteworthy participant is an enzyme with the ungainly name of uroporphyrinogen decarboxylase, which plays a critical role by shrinking the time required for a key step down to milliseconds.1 Without it the production of heme would take a staggering two billion years or so to complete, which is just a bit longer than the average lifespan. It is one of the most effective biological catalysts known, allowing life as we know it to exist.

Chemistry is replete with examples of necessary reactions that proceed too slowly on their own to accomplish their intended goals, absent some energy source or catalyst that can kick-start the process. This hurdle that must be overcome is known as the activation energy. It must either be input into the system or somehow circumvented by an alternate pathway before the main work can begin. Read more…

  1. Those of you who took biochemistry might recall late nights spent trying to memorize hemoglobin production or similarly-intimidating processes. Right now it’s sufficient to know that decarboxylase takes off carboxyl groups or else bad things happen. ↩
  2. Apologies to electric vehicle proponents for the internal combustion engine-centric nature of this analogy. ↩
  3. Collins takes credit for introducing this concept to Amazon at a key inflection point in its early history, leading to a virtuous cycle of increased volumes, greater efficiency, and lower prices that has grown it to the global behemoth it is today. “Alexa, who is the world’s richest person?” ↩
  4. In a minimal way I can personally attest to this focus, having climbed the much-shorter mountain of Kilimanjaro. Despite nearly blacking out I kept on going to the top, although I required the help of porters to descend. ↩
  5. Public rewards and promotions, rankings in school or work, etc. are intended to catalyze performance by either making the effort seem less onerous, or by making the threat of public shaming seem worse than working hard. ↩

titrate

BusinessJargon
Posted on February 19, 2019

to fine-tune the balance of something in precise fashion in order to achieve a desired outcome, as in “I think we need to better titrate how we blend logic and emotion in the new marketing campaign”; derives from the process in chemistry of adding incremental quantities of a reagent to a test substance until a desired reaction occurs; also used in medicine to describe the process of adjusting a pharmaceutical dosage until the optimal trade-off of symptom relief and side effect minimization is achieved; coined by someone who spent too much time in the laboratory, or who wishes to co-opt the credibility of white-coated scientists by using their terminology; not likely to be understood when used in a business context, but as listeners would be loath to expose their own ignorance by asking for clarification usage of this jargon is unlikely to be questioned